HL Deb 03 May 1984 vol 451 cc639-717

3.59 p.m.

Lord Gray of Contin

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Gray of Contin.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

The Chairman of Committees (Lord Aberdare)

Before I call Amendment No. 1, I have to explain that this amendment should have been printed as two amendments: the first amendment, that headed "Part 1A"; and the second amendment that headed "Part 1B". I therefore first call the amendment to insert the new clause headed "Part 1A".

Lord Ross of Marnock moved Amendment No. 1 A:

Before Clause 1: Page 1, line 4, at end insert—


The Secretary of State shall establish within six months of the passing of this Act a Committee to enquire urgently into the Scottish rating system and its need for reform and to make recommendations to that end.").

The noble Lord said: First, I should like to express a word of gratitude and thanks to the Public Bill Office for their patience, efficiency and the way in which they have helped—certainly the Opposition—in respect of not just these amendments but others. I know that they are hard pressed with legislation and I am unfailing in my admiration for their unflagging patience with people like myself.

This amendment is a fairly simple one. I hope that it will commend itself to your Lordships. It is headed "Reform of Scottish Rating System". It reads: The Secretary of State shall establish within six months of the passing of this Act a Committee to enquire urgently into the Scottish rating system and its need for reform and to make recommendations to that end.".

It ties the Government only to setting up the committee. Thereafter it is for those people in Scotland who for a long time have been expressing their concern about the unfairness of the whole rating system to make their voices heard. Opposition to or disaffection with the present rating system is widespread. At one time I thought that it was shared by the Government. Indeed, it is not so long since the Government themselves said that within the lifetime of a Parliament they would get rid of domestic rating. Your Lordships will remember that during the last Parliament a Bill came before us to enable the Government to postpone revaluation in Scotland. That is the first time that that has happened in Scotland. I know that there have been constant postponements of revaluations in England and Wales, to the extent that revaluations are completely out of date. I believe that the last revaluation in England and Wales was in 1973. The last one in Scotland was in 1978, and then we had the first postponement. The Government gave the impression then that there would be only partial revaluation. Then they changed their mind and scrapped all idea of revaluation.

We were given an indication that they would make sweeping changes in the rating system and in valuation. Therefore, we were disappointed when we received a very patched-up White Paper, which I doubt mentioned the word "Scotland" at all, and which said that the Government had changed their mind and thought that: The rating system is basically sound".

The one thing that the rating system is not in Scotland is basically sound. We work on the basis of a rating system in respect of which, if there is not an existing rent, there is a notional rent fixed by the assessors, who eventually decide the annual rateable value upon which people then pay rates. The expenditure of Scottish local authorities is over £2,000 million per year. Last year the local authorities' percentage of that was roughly £1,400 million. To fix the raising of the local authority's percentage on the narrow basis of the occupier being assessed upon the rent of his property means that the system becomes more and more unwieldy and more and more anomalies arise, and anomalies have been countless.

Sometimes there have been amendments. One of the first large amendments arose about 50 years ago, which is within my lifetime. In Parliament there have been very considerable changes. The rating system used to be divided between owners and occupiers. Then the owners were wiped out and the whole burden was placed on the occupiers. At that time there was a notional reduction of rent, so the whole burden is upon the occupier.

Then there is the case of agricultural land. That used to be rated. I believe that farmers paid one-eighth rates. That was taken away; no rates are paid on agricultural land in Scotland now, but there is full rating on dwelling-houses. Even last year changes were made in respect of outdoor machinery. Every time such a change is made, we narrow the base of those who bear the burden of rates but we make no change in the actual burden itself. With every Act that passes through this House we place further burdens on the local authorities, and the result is that the whole thing becomes unwieldy and more and more complaints are received from people about the unfairness of the rating system.

There is another aspect which is unfair, which is the unfairness of the Scottish rating system as compared with the English rating system. To a certain extent we have only ourselves to blame. When we passed the Valuation and Rating (Scotland) Act 1956, we decided that we should keep our present system under which we employed our own assessors, who were elected to their posts by the then county councils and large boroughs and who are now elected by the region authorities, and we paid for them ourselves. In England, this is done by the Inland Revenue. Of course, different sets of assessors give rise to different interpretations even of the same law. We discovered that in an amendment which is being made to this Bill in respect of caravans, but it does not apply only in that respect.

I do not know how many noble Lords know Glasgow. I do not know whether they know Parkhead, which the locals call Paradise and where a football team called Celtic plays. Another very well known team called Rangers plays at Ibrox. But noble Lords would be surprised if I told them that the rates paid by Celtic are double those paid by Manchester United. The assessments and the rate poundage are such that there is this inequality between England and Scotland. Partick-Thistle used to be a very prominent team in Scotland, and it is based in Glasgow. The stadiums in which these teams play are rated very high, and had to be remodelled because the Government said so. This was done under legislation dealing with the safety of sports grounds. So millions of pounds had to be spent—and I mean millions; I believe that Celtic had to spend £ 1¾ million on their ground; Rangers spent far more on theirs and have a very up-to-date stadium, as does Aberdeen. But, by virtue of the fact that they improved and reduced the capacity of their grounds, they had to pay even more rates. It is not fair. Why should Rangers have to pay more than Arsenal? It is a big enough ground as far as gates are concerned.

The matter is simple. The assessors could not work on the basis of a rent formula in respect of stadiums in Scotland; the assessors work on the basis of a contractors' formula and the cost of construction. It depends when a stadium is constructed. If it is constructed this year, the rate assessment will increase tremendously. On the other hand, in England it is worked on a revenue basis. Therefore, you get a very different answer, which virtually means that in Scotland the assessments are three times as much as they are in England and Wales. Of course, this is unfair. The assessors themselves are probably the first to admit it, but they are working upon Scottish law and Scottish legislation and practice.

It is time we had a reconsideration of how we levy our rates in Scotland. We are now being manipulated in Scotland into being the most highly-rated part of this country. Rates are to meet the expenditure of the local authorities. That expenditure is for all the various duties placed upon them by the Government, and then apart from that there is another account which is the housing account. It is separate from the reckonable expenditure which was met in part by the Government through rate support grant.

When I was Secretary of State the Government met over 70 per cent.—this is the average in Scotland—of local authorities' reckonable expenditure. That is apart from their charges, their income from various sources. That has been reduced now. This year it is being reduced by a further 1.2 per cent. It is now just over 60 per cent. If we take the accumulated withdrawal of that support from Scottish local authorities, in the last five years it must come to over £1,000 million. Because the expenditure has not been reduced by that amount, how are the local authorities going to meet it? They can only put up their rates.

Now the Government are telling them, "We are going to fix the rates for you". We have a ludicrous situation. So far as housing is concerned, the position is exactly the same again. I see Members of this House who were in another place for as long as I was, and who saw Housing Bill after Housing Bill in which the Government were urging local authorities to build houses, and gave them subsidies to do it. But in giving Government subsidies to do it, they insisted that the local authority take from its general rates usually about a third of what they were applying per house.

That third is still being paid, and probably more, because suddenly the Government departed from their bargains and created something called housing support grant. When this Government took office £214 million was paid in Scotland in that regard. Last year it was £52 million. How have the local authorities to make up the difference? Out of their rates. If they do that, up go the rates.

In Scotland we have a big public sector housing because of the whole history of Scotland, the bad housing, the poor conditions in respect of employment, and the rest of it. In some areas 50 per cent. of the people live in local authority housing. There has always been a cry from the Government that there is not enough owner occupation in Scotland, people owning their own houses. If there are more people in England owning their own houses, then the cost to the Government in mortgage relief must be much higher in England than in Scotland. Therefore, there is a greater sense of fairness. If we are asking for less in mortgage relief, we should have housing support grant at a far greater rate than we are getting; but we are not getting it. So by reducing the rate support grant, by reducing the housing support grant, automatically up go the rates in Scotland, and it is not the fault of the council but the fault of the Government's policies and the effect of the rating system.

The extent to which Scotland is being manipulated into high rates, which affects business, is now a scandal. It affects industry, too, although in Scotland industry seems to get round the anomalies of the nonsense of our rating system. Industry in Scotland is derated by 50 per cent. Who pays for that? The other ratepayers, of course. There is every case for a committee to inquire into the Scottish system and to make recommendations. That is the sole purpose of this amendment. I beg to move.

4.15 p.m.

Lord Mackie of Benshie

I rise to support this amendment strongly. The Government are introducing this rather ludicrous Bill; a patching up of a bad system. It is a system they condemned in their manifesto and which they intended to put right. Instead of that they have abandoned the search for alternatives. They are patching up a system that they themselves think is totally unsatisfactory, and in so doing they are introducing curbs on local government, and direction of local government, which make a nonsense of the whole question of putting responsibility nearer to the people.

It is the Government's fault. Therefore, they really must accept that this proposal is a sensible thing; and I am assuming that a reform of the Scottish rating system will include a look at the alternatives available, on which the Government do not seem to be able to make up their minds at present. The way that local government has developed has been scandalous. I do not think that the Labour Party in Scotland are totally without blame for the high rates. However, the fact is—and the Government knew it very well before the election—that the people who pay the rates in many cases are not the people who are obtaining the benefit, or who are electing the local councils.

What we must do is bring back responsibility to the local councils, and bring back the ability of the people who pay to shift the local councils if they do not like them. That would do away with the need for this extraordinary legislation which takes responsibility completely away from the same local councils. Therefore, I cannot believe that the Minister can resist this amendment. It is part of Conservative policy.

The Government have run away from taking a decision on rates. Therefore, the least that they can do is to agree to set up a committee to inquire into what is, by their own admission, an urgent need. I hope that the Minister will tell us that he can accept this amendment and set up a strong committee.

Goodness knows, there is enough evidence from all over the world. There are old Liberal policies on site value rating about which I have no doubt many Members opposite would be able to inform the Minister. There is evidence from all over the world of different systems which have been tried, some of them very successfully. I am sure that the noble Lord will accept this amendment and try to shed some light on a fairly murky subject.

Lord Grimond

If no one else is going to address the Committee on this important matter I shall take it upon myself to say a few words, largely adopting those that have already been said. I do not think that the noble Lord the Minister will be able to deny that Scottish rating is now on a very narrow base indeed, and getting narrower. Nor can he deny that over the last two or three years the Government have put more and more responsibilities on local authorities. We have had at least two long Local Government (Scotland) Bills, mostly on unimportant matters, evading the main troubles of local government but nevertheless putting new duties on local authorities. Meanwhile, the base upon which they raise their finance is being steadily narrowed. It is long past the time when we need a new system of raising local government finance.

We now have the position that industry is 50 per cent. derated, agriculture is derated, crofting is derated, many people get assistance over the rates, and there is no relationship between the power to elect the local council and the payment of rates. The argument by industry that it is not represented locally is a false argument, because it is not represented nationally either. If we are to be told that the oil industry, for instance, should not pay rates because it has no representation on local councils, then perhaps it should not pay taxes either because so far as I know it does not directly elect people to Parliament; and we should soon find that our taxation system as a whole was in some difficulty. But industry is perfectly entitled, I think, to say that the rating system in Scotland is now highly deleterious to an expansion of its operations in Scotland. Therefore, the first point is the narrow base.

The next point is that there is no relationship between the use which people make of local services and the amount they pay. The third point I have touched upon is that if you think that taxation and representation should be connected, I would point out that they are now severely disconnected in Scotland.

There is then the question of the unfairness, which has also been mentioned. We have had trouble over the last year at race courses and on football grounds, but we have had more serious troubles. Still, a very large proportion of the rates of Shetland, for instance, and those of certain other local authorities arises from oil installations. Suddenly there was an alteration in the rating of outdoor installations, and the Shetlands local council found that its rateable base had been slashed by about half.

Now what happens? I believe—and I have no doubt that the Government will confirm this—that the oil companies set off their rates against tax. So this is really a transfer to the people of Shetland of the obligations previously borne by the Exchequer. That cannot be right; nor can it have been intended. Furthermore, when the rateable base is slashed what happens is that the rates on ordinary people—householders and so forth—continue. This is one matter which certainly needs examination by a committee.

In addition, I should very much like to know what is the effect of the rates in big cities. When I go through Glasgow I find enormous alterations involving, I think, additions to office accommodation. Branch offices of insurance companies and so on are going up in Glasgow while shops are going out of business, and so is industry. Has this anything to do with the rating system? If so, why, and what is happening about it? To my mind there is scope here for another examination. I am sorry that we must have it, since we have had a great many. But as the Government cannot make up their minds and have gone back on all their pledges to reform the system, all we can hope is that another body might persuade them to do something about the system in general, abolish the rating system, and have a local income tax or other form of local taxation which would be far more sensible and far fairer.

At the same time, such a body would be useful for examining the numerous anomalies which now exist in the rating system and the very unfair way in which it falls on certain people and types of business, as well as the way in which others have been exempted from rates, largely for historical reasons. I speak in the presence of my noble friend Lord Mackie who. of course, is a small farmer in his own right, but of course I would not dream of putting any rates on his property. Nevertheless, there are in Scotland some quite large farmers who are doing quite well and I wonder whether they might not make a contribution to the rates. I say that with all due deference to many of my friends and supporters. However, I only illustrate the anomalies of the system and the peculiar situation which has arisen in which, for purely historical reasons, the rating system has become grossly unfair. So I hope the Government will look with some favour upon this very sensible amendment.

Lord Drumalbyn

Perhaps I may make one observation on this matter. I am less qualified than many people here to make it, but I am sure most of us would agree that in fact it was the intention to review the rating system. As I understand it, the only reason for not doing so now is that there are more important things to do than to change the rating system. I simply want to ask my noble friend whether, even though there is no immediate prospect of changing the rating system, it would not be a good thing to look at it.

As I understand it, that is what the amendment is proposing. Surely we should be able to look at it and take plenty of time to do so now, because it is quite conceivable that if we go on as we are at present, there may be a breakdown in the system. Then we should have to look at it quickly. Surely it is better to give it full consideration now. I commend this to my noble friend and I hope we shall not divide on the amendment today because we are not at the moment a very representative body of Scotland in the Chamber. So I think it would be a good thing if the noble Lord, Lord Ross, would withdraw his amendment today. However, I hope that the greatest possible pressure will be brought to bear to have this matter looked at very fully, starting from now.

Lord Stodart of Leaston

My noble friend Lord Drumalbyn, who has just spoken, has said much of what I wanted to point out and I shall not be repetitive. However, it is a fact that during the last five years two committees have been set up to look into certain aspects of local government. Modesty naturally prevents me from referring to one of them, particularly as the noble Lord, Lord Grimond, slightly deflated me by saying that neither of them had examined anything of any importance at all. I hope I am not misquoting him, but that was the impression I got—

Lord Grimond

If the noble Lord will permit me to interrupt, perhaps I may say that I would hate him to go away with that impression; I hope I said no such thing. What I said was that the Government had introduced two Bills, much of which I thought was unnecessary, but of course the noble Lord's committee had made a very great contribution of thought. I am very glad of this opportunity to put that on record.

Lord Stodart of Leaston

I am much obliged to the noble Lord. I should certainly say that though I think both those committees made useful suggestions—and indeed your Lordships' House took it upon itself to support one of them not very long ago—I would fully subscribe to the view that neither of the subjects inquired into, be it the functions of local government in Scotland or the particular problems of the islands, is basically as important as looking into the rating system itself. I am particularly moved to say that in view of what I think everybody knows—which has been referred to today—regarding the unfairness of the system asit applies in many cases in Scotland. That may be because—undoubtedly it is because—the law of Scotland in many matters to do with land and inheritance is different from, and in many cases better than, the law of England. These are matters which I believe should be inquired into.

However, where I would agree with the noble Lord, Lord Drumalbyn, is that I do not think that such a committee need necessarily be set up next week. What I should like my noble friend to do is to give some kind of undertaking to us that the Government will take note of this matter, regard it as being of importance, and take steps, basically because of what I regard as the unfairness of the system as it at present exists.

The Earl of Perth

I have been listening to the noble Lords who have spoken in support of this amendment and I must say that in my experience too one finds gross anomalies overburdening certain sections and giving relief to others, which is not very fair. Like the noble Lord, Lord Drumalbyn, I think we ought to ask that in the rather near future this question is all looked into. I recognise that the amendment says "within six months", and then "urgently". I know that even with those words in the practice with these committee reports means that it will probably be a year or so before there is any outcome. That takes us to 1986. Then the Government will think about it for a year or two, and so it will probably be 1988 before we reach any outcome. Because the last revision was in 1978, for 10 years we shall have been labouring under what many of us feel is an unfair system. I hope that the noble Lord, Lord Gray of Contin, will consider accepting this amendment in principle, if not in its entirety.

4.30 p.m.

Lord Gray of Contin

We have had a very interesting, if short, debate on this amendment. It would be quite wrong of me not to consider very carefully the contributions which have been made. In doing so I should be absolutely frank with the House. It would be wrong to suggest—nobody has directly suggested this, although it has been implied in certain ways—that the Government have not really considered this matter all that carefully. Let me remind the Committee of what has happened. The aim of this amendment is to set up a committee of inquiry into the Scottish rating system. After all the consideration that has been given to rates over recent years, I believe that what is really needed and what is taking place in the Bill, is action. It may not necessarily be action which commends itself to all parts of this Committee, but the Government are trying to do something about the rating system.

Let me first go back a little way. In 1976 we had the report of the committee of inquiry into local government finance chaired by Sir Frank Layfield; an extensive examination of the whole isssue. We drew on this in drafting alternatives to domestic rates which we published in December 1981. We consulted widely on this but, as we reported in Valuation and Rating in Scotland: Proposals for Reform, published in August 1983, the results of the consultation were not conclusive for radical change. Having considered them all very carefully indeed, we decided to make reform to the rating system, which is basically sound but needs improvement.

From what I have said I think I have made it abundantly clear that the Government have certainly not been sitting back and not paying any attention to the problems. We have considered various proposals very carefully indeed, but the difficulty has been that we did not think it an advantage to replace an existing system with something which would not prove very much more acceptable and satisfactory all round. Therefore we decided—and my noble friend Lord Perth made a good point—that speed is important in these matters. If at this stage we were to follow the suggestions contained in the amendment, of necessity a considerable period of time would elapse before we should be in a position to legislate upon it.

I take the point made by my noble friend Lord Stodart of Leaston, and also by my noble friend Lord Drumalbyn, that this is something which the Government should not put aside but should look at for the future. I am not in a position to tell the House today that we shall take any new initiative in this matter, but the deliberations which take place in your Lordships' House are always carefully read and carefully considered. I have no doubt that what has been said in the course of this Committee stage will be read and studied.

The results of our decisions on reform are contained in this Bill. At this stage and after all the consideration we have given to the rating system, I can see no point in agreeing at this time that we should set up a committee of inquiry such as this amendment proposes.

It was interesting that those who moved the amendment, the noble Lord, Lord Ross of Marnock, supported from the Liberal Bench by the noble Lords, Lord Mackie of Benshie and Lord Grimond, made criticisms of the rating system. That is perfectly justified, but they put forward no suggestions, or even the hint of suggestions, about how this might be put right. The setting up of an inquiry is something which could look into the whole matter and perhaps might come up with some proposals. But in the meantime the rating system would continue in its present form. But for the Bill and but for the excellent proposals which the Government are putting forward in the Bill, the position would not be improved at all. I give way to the noble Lord.

Lord Mackie of Benshie

I rise to say to the noble Lord the Minister that the hint was given by my noble friend Lord Grimond, who said that a local income tax could be investigated. This was a hint. It really is not good enough for Ministers to say to the House, "We have considered everything enormously carefully and anything the Government have considered is bound to be right". That is not debate. He should really give the arguments.

I should like him now to explain why local income tax has been turned down as wholly impracticable; not that he has carefully considered it and turned it down but, rather, giving us perhaps one reason why the Government have turned it down.

Lord Gray of Contin

I do not accept what the noble Lord has said. The amendment we are debating calls for a committee of inquiry into the Scottish rating system. It does not specifically deal with the question of local income tax. It might be significant if I turned the argument the other way to the noble Lord—that nobody who spoke in favour of the amendment mentioned specifically the virtues of a local income tax or developed it in any way.

Lord Grimond

I am most grateful to the noble Lord. I do not wish to delay matters. I did mention it. To have gone into it in detail at this time in this debate might have irritated the Committee and indeed possibly, if there is such a possibility, have been out of order.

Lord Gray of Contin

I shall not rule on the relative merit of what might be in order or out of order in your Lordships' Committee. That would be out of my province as well.

I do not believe that it would be in the best interests of the Committee to accept an amendment calling for a committee of inquiry into the Scottish rating system at this time in connection with this Bill, but I take the point made by several of your Lordships that you would like to see the Government consider this for the future. I shall make the views of the Committee known, but more than that at this stage I cannot say. What I can say is that I am not prepared to accept the amendment at this time in relation to this Bill.

Lord Wilson of Langside

Before the Minister replies to the mover and the supporters of this amendment I should like to say that I resisted the temptation to express the strong support which I feel for the amendment for a number of reasons. In particular, I resisted the temptation because—and I must say this—I think that a very formidable case was made out in the three speeches from this side of the Committee by Lord Ross of Marnock, Lord Mackie of Benshie and Lord Grimond: it was so formidable that I should have thought it was unanswerable. I thought it unlikely that the Government would resist it. I should have known better, because they resisted the last amendment on the last Bill before your Lordships' House but with a happy outcome, showing the great common sense of your Lordships' House.

Quite apart from the formidable arguments which were presented in the three speeches from this side of the Committee, there was no suggestion from the Government side of hostility to the amendment. The noble Lord, Lord Drumalbyn, shared the kind of feelings which I have and which the noble Lord, Lord Stodart of Leaston, and the noble Earl, Lord Perth, from the Cross-Benches also share. In these circumstances—I have great affection and respect for the Minister—I should have thought that before your Lordships rejected this amendment we should have a more impressive answer to it from the Government.

Lord Dean of Beswick

May I briefly say that the noble Lord the Minister in his reply in effect has said: "Trust the Government; they will look after the situation!" Although I know that the present amendment and the Government proposals refer to Scotland, they embrace a far wider field than that. We have had similar arguments concerning proposals originating in England. The Minister is saying: "We will look at the situation and we will decide. We think that we can come to a more equitable situation"—when, in fact, the obverse clearly is the case. I hope that noble Lords will support the amendment and base their support on the fact that although the Government are asking noble Lords to trust them to come up with an alternative, they are producing no such alternative.

I think that the amendment calls for an inquiry into the whole situation on the basis of providing a more equitable financial situation in local government. The Government are extremely fortunate in the role that they have adopted, bearing in mind that some of the original manifesto promises on which they were elected were based on the fact that they would destroy or re-jig the rating system. But the Government have run away in cowardice from that promise, for they have done no such thing. They are not prepared to alter anything at all.

I think that it is incumbent upon noble Lords here to say that they are not prepared to say that the Government should have a blank cheque to deal with the situation as they see it. I think that the amendment is worthy of support and I commend it to the Committee.

Lord Hughes

I should like to intervene briefly to make three points. The first relates particularly to what the Minister of State has said. He referred to the various inquiries which have taken place. Probably the most important of these was the Layfield Committee of inquiry. That committee reported on its proceedings before the Government gave their undertaking at the 1979 election that it would be part of their programme to abolish domestic rates. One of two things obviously emerges from what he has said. Either the Government made that undertaking purely for electoral purposes without having gone into the matter at all or, if they went into the matter fully, we should like to know the reasons which have emerged since to make them state that they were wrong in 1979.

My second point relates to the amendment which is before us. The Minister was listing those things which the Government have done to improve the rating system in its effects but without altering the system. He did not seem to realise that, even if the Bill as it stands was absolutely unchanged, it would still be relevant to have this amendment at the beginning. In fact, if the Bill is unchanged, it will be even more necessary to have this amendment carried so that there is a firm commitment to investigate the system.

My third point, he will be glad to hear, has nothing to do with the Minister. It relates to the remarks which were made by the noble Lord, Lord Drumalbyn, in suggesting that this was perhaps not the best time to decide this matter as this was not a very representative Scottish attendance. I have been looking at the Members present in Committee and I am quite certain that if this Bill were being discussed at any other day there would be no more Scots on either side of the Committee than there are at present. If the noble Lord, Lord Drumalbyn, will look behind him he will see that Scotland is as well represented by his colleagues as ever it is on that side of the Committee. So far as this side is concerned, there are very few of us present in any event. But to the best of my knowledge there is only one noble Lord who might have been here but who is not here today. I suggest to the noble Lord, Lord Drumalbyn, that this is possibly the best time to consider this, particularly in view of the fact that he supports the amendment in principle and that, if we go on the experience of the last Division, there is a fair chance that it will be carried.

Lord Carmichael of Kelvingrove

I am sure that we are all rather disappointed at the answer of the Minister. I think he should realise that, within the amendment, there is no demand for immediate action. There is just a feeling that the present rating system—and we have heard this from all sides of the Committee—is very, very perplexing to a great number of people in Scotland, including we, ourselves, who are supposed to be the ones who should understand it. We find great difficulty in understanding it. Many examples have been given of the difficulties. Something is happening when—whether it is because of the fact that the rates are based on the rental system or not—we are finding, as the noble Lord, Lord Grimond, has said, cities like Glasgow becoming mainly insurance branch offices, when very good shopping streets are disappearing and are becoming either building societies or banks or television showrooms and when all the little shops are disappearing. We do not know what the answer is; and I am sure that the noble Lord the Minister also is not aware of the answer. Certainly the Committee is not aware of what should happen.

It may very well be that following a committee examination it will be decided that there is no alternative to the present rating system. The Minister has spoken of the studies that the Government have made and of what they have discovered. But they have not told the rest of the population about it; far less this Committee. Therefore we feel that this is an amendment which is well worth pressing merely to impress upon the Government the fact that it is not a party matter. The decision on how rates will ultimately be allocated is a matter for politics; but the basis of the rating system is something which the whole Committee and the whole country and, in particular, Scotland would like to know about. At present, it seems merely to have gradually grown up over the years. There are so many anomalies existing now, anomalies that have been pointed out in all parts of the Committee. An investigation such as this, a committee to inquire urgently into the Scottish rating system, is something that I think the Committee should press for. I urge all my colleagues and all noble Lords in all parts of the Committee to support the amendment.

Lord Gray of Contin

By leave of the Committee may I briefly say a few words? It would be quite wrong of me to be so insensitive as not to appreciate the views which have been expressed in all parts of the Committee regarding this amendment. I am sure that the noble Lord, Lord Ross of Marnock, would be equally reasonable in appreciating that I simply could not accept an amendment of this kind which binds the Government to setting up any inquiry of this sort within six months. I suggest to the noble Lord, Lord Ross, and to other noble Lords who have participated in the debate, that, if he were prepared to withdraw his amendment, I would take it back and discuss it with colleagues, making them aware of the views of the Committee. Perhaps then we can consider the matter at a later stage when I might be able to have some alternative proposal to put to noble Lords.

Lord Ross of Marnock

I am very grateful for the way in which the Minister belatedly has sensed the feeling of the Committee in relation to this. We have not put the proposal forward in any sort of party spirit at all. In Scotland the whole thing is creaking: it just cries out for it. And when the noble Lord says, "This is what we are doing in this Bill", does he not realise that if the Bill takes rush beds out of rating and reduces rates on caravan parks it just means that the burden, on a narrow base, is greater for the others? It is this we are complaining about, and there must be some other way.

The Minister says he is prepared to take it back. What surprises me is that the Government have not looked at this before. Admittedly, by the very nature of things, since Second Reading there has been only a matter of a week or so and I think I put my amendment down the day before yesterday. But the Government are supposed to consider amendments as soon as they go on to the Marshalled List. I have a feeling that the speech the Minister delivered—and full marks to him for it—was not the speech that was written for him, because after he heard the feeling of the Committee he decided he had better alter his tune.

I am the most reasonable man in the world—I must be, to be here on a Thursday, although I have given an ultimatum that at half-past ten I walk out for the night train—but we are to take the next session of this next Thursday when I suppose we shall deal with valuation. That means it will be the following week, at least, before we get to the next stage of the Bill. If I can have a pledge from the Minister of State that he will inform your Lordships of the results of his reconsideration, then I will gladly withdraw the amendment; but I must warn him that we shall have to cover ourselves by putting it down at the next stage in case the Government were to decide that they have gathered enough force to be sure of defeating us on the next occasion.

I have been too long in politics, and so have other noble Lords on the opposite side. I can see all the moves that are likely to happen; but, as I say, I am a reasonable man and always have been. Why should my reason desert me at this stage? In view of that, and of the promise that has been made, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ross of Marnock moved Amendment No. 1B:

Page 1, line 4, at end insert—


  1. .—(1) The Secretary of State shall establish within three months of the passing of this Act a Scottish Rating Advisory Council consisting of 16 members of whom ten shall be appointed from a panel of persons nominated by the Convention of Scottish Local Authorities and the remainder shall include persons experienced in the law and local government finance.
  2. (2) The Secretary of State shall appoint a Chairman and a deputy Chairman from among the members of the Advisory Council.
  3. 652
  4. (3) The functions of the Advisory Council shall include—
    1. (a) advising the Secretary of State on any matter relating to rating which he may refer to them; and
    2. (b) making representations and recommendations to the Secretary of State on any matter relating to rating.
  5. (4) Without prejudice to subsection (3) above the Advisory Council shall comment and advise the Secretary of State on any guidance which he proposes to issue to local authorities as to what their expenditure ought to be.").

The noble Lord said: We now come to the Scottish Rating Advisory Council, and I have suggested that we should ask the Secretary of State to set up within three months of the passing of the Act a Scottish Rating Advisory Council. I suggest that it should have 16 members and I have suggested the kind of persons it should have— … of whom ten shall be appointed from a panel of persons nominated by the Convention of Scottish Local Authorities and the remainder shall include persons experienced in the law and local government finance. …

(3) The functions of the Advisory Council shall include—

  1. (a) advising the Secretary of State on any matter relating to rating which he may refer to them; and
  2. (b) making representations and recommendations to the Secretary of State on any matter relating to rating.".

So there is a two-way traffic. Even more important is a matter not unconcerned with this Bill, and it is this: (4) Without prejudice to subsection (3) above the Advisory Council shall comment and advise the Secretary of State on any guidance which he proposes to issue to local authorities as to what their expenditure ought to be.".

That is a reference to the following clause of the Bill. I think this is important from the point of view that the Secretary of State is more and more taking upon himself an executive power in respect of the rating system, the actual rates. He is giving guidance to local authorities as to what they should spend. He is now going to prescribe in the first clause something in relation to the needs portion of the actual apportionment of grants for rating purposes. More and more he is taking powers, and as we go further through the Bill we shall see where he is going to give orders, and all the rest of it. This means that civil servants are replacing the local authorities, and if they are not going to give the powers back to the local authorities I think there should be a watchdog committee for the public to advise the Secretary of State and to whom the Secretary of State must go for advice in respect of orders and the issuing of guidance.

There is a perfectly reasonable precedent for all this. In respect of valuation, there is the Scottish Valuation Advisory Committee, which has been helpful to the Secretary of State when there have been problems in relation to valuation. There used to be an excellent committee, which I think existed for 40 or 50 years and which published splendid reports on Scottish housing. That was the Scottish Housing Advisory Committee, and some of their reports were classics. I do not know whether the noble Baroness, Lady Carnegy, remembers that particular committee.

I think nothing would be lost and everything would be gained by the Secretary of State if he had such a committee at his hand, and it would be much more reassuring to the public and to local authorities, who would not be represented but who could nominate members for the committee, that there should be a committee of this kind to give advice and to make recommendations to the Secretary of State. I beg to move.

Lord Gray of Contin

I do not think I am going to be able to be as sympathetic to what the noble Lord seeks to do in this amendment as I was in relation to the last one.—

Lord Ross of Marnock

I am sorry to interrupt the Minister so early, but when he started speaking on the last one he was not sympathetic at all.

Lord Gray of Contin

I shall be surprised—shall I put it that way?—if the Committee feels about this amendment as it felt about the last amendment; but whether or not that is so I am always reasonable and perfectly prepared to listen to what others have to say. But at this stage I shall need a lot of convincing so far as this amendment is concerned.

As the noble Lord, Lord Ross of Marnock, will know well—because, so far as I know, he found them perfectly adequate—there are already satisfactory arrangements for discussing local government financial matters with the Convention of Scottish Local Authorities. My right honourable friend the Secretary of State has quarterly meetings with the convention on such matters. The convention are free to raise any matters; and any matters affecting rating, as a matter of course, would be discussed at these meetings or at one of the official committees supporting them. In particular, current expenditure guidelines are discussed fully and I cannot really see what would be gained from setting up a further committee which would have the majority of its members drawn from the convention, which already has adequate arrangements to make representations on any matters relating to rating and to comment on current expenditure guidelines.

For these reasons I do not feel that it would be in any way beneficial to what we are all seeking to achieve in this legislation, or indeed in any legislation relating to rates, to create yet another committee, when we already have facilities which are perfectly adequate to enable local government to make its views known adequately to the Secretary of State.

The noble Lord, I have no doubt, in his time as Secretary of State, had little difficulty in having his meetings with various local authority bodies. Even at that time—those were earlier days—there were adequate facilities. If I felt that the noble Lord was proposing something which would make a genuine contribution over and above what is already available, then I should certainly be prepared to consider it. But I really feel that in this case what he is suggesting is just a duplication of what already exists and what is already working satisfactorily. For that reason, I would ask the noble Lord to consider withdrawing this second amendment.

Lord Wilson of Langside

Again, I find the Minister's answer somewhat disappointing. Are we not in a new and special situation, so far as the relations of local and central government are concerned? I know that historically there have always been tensions; I am not so naive as to be unaware of that. But when there is a climate which is very akin to a cold war between local and national government, would not a body of this kind have a very useful function to perform, which the Committee should consider very carefully before rejecting?

Lord Ross of Marnock

The Minister of State suggests that this would serve no useful purpose and would lead only to duplication. I do not know whether he has recently been in touch with members of local authorities. I can well remember meeting them and the one big meeting used to be the rate support grant meeting, when we had a great round table and everyone said his piece. I have never had any difficulty at all with local authorities. The fact of the matter now is that it is not so much a meeting as a monologue. The Government tell the local authorities; they no longer discuss with the local authorities. This is absolutely clear from the nature of this kind of legislation.

We have to get away from that kind of confrontation. The Minister need not deny that there is confrontation and he need not say that it is working well. It is not necessarily working well. Furthermore, I want more of a searchlight of public opinion on what is happening, so that the public can be aware of the points of view, of the justifications and of the support that there is within what would not necessarily be a particularly independent committee, but a knowledge-able committee of this kind, as regards what the Government are doing.

There can be no denying that the extent of the participation of the Scottish Office in local government affairs is greater now than it has ever been. It is not good enough just to have meetings of civil servants and councillors, or indeed meetings between civil servants and municipal servants as very often happens. We want overall a Scottish body which is advising on these rating aspects. I consider it very important indeed. I do not consider that it would duplicate. It would be very annoying for the Secretary of State, but most of these things are not even coming to your Lordships' House.

There is new power being taken in respect of guidelines and we shall come to that later. It is not good enough for this just to be decided by a few little committees or sub-committees of COSLA and the Scottish Office with, finally, a large meeting being told what is the answer. I want to know what advice the Government are getting. Are they getting the right kind of advice? Even Secretaries of State need advice!

The same arguments could have been used about the Scottish Valuation Advisory Committee, because the assessors in Scotland have a group which could equally meet with those concerned about valuation matters in the Scottish Office. But, no, we set up—I think in 1956—the Scottish Valuation Advisory Committee, and the Government have found it invaluable in supporting what they propose to do. Some of the things which the noble Lord, Lord Grimond, mentioned in respect of changes in valuation that have been made within the present rules had the support of the Scottish Valuation Advisory Committee. The same is true in respect of rating.

More and more, in every branch of rating, the Government are coming in, and I want a kind of in-between body which will give advice and to which the Government can go for advice. I am quite convinced that, if they had gone for some advice in respect of this Bill, they would not have in it the kind of things they have. So I am disappointed with what the Minister said, and I think that this is an amendment on which we should test the feelings of the Committee.

5.5 p.m.

On Question, Whether the said amendment (No. 1B) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 95.

Airedale, L. Irving of Dartford, L.
Ardwick, L. Jacques, L.
Aylestone, L. Jeger, B.
Banks, L. John-Mackie, L.
Beaumont of Whitley, L. Kearton, L.
Bernstein, L. Kilmarnock, L.
Beswick, L. Kirkhill, L.
Birk, B. Leatherland, L.
Boston of Faversham, L. Listowel, E.
Bottomley, L. Lloyd of Kilgerran, L.
Briginshaw, L. Longford, E.
Brooks of Tremorfa, L. Lovell-Davis, L.
Bruce of Donington, L. Mackie of Benshie, L.
Carmichael of Kelvingrove, L. Milverton, L.
Cledwyn of Penrhos, L. Mishcon, L.
Collison, L. Molloy, L.
Crowther-Hunt, L. Mulley, L.
Darling of Hillsborough, L. Nicol, B.
David, B. [Teller.] Ogmore, L.
Dean of Beswick, L. Oram, L.
Diamond, L. Parry, L.
Donaldson of Kingsbridge, L. Phillips, B.
Donnet of Balgay, L. Pitt of Hampstead, L.
Elwyn-Jones, L. Ponsonby of Shulbrede, L.
Ewart-Biggs, B. [Teller.]
Gaitskell, B. Ross of Marnock, L.
Gallacher, L. Seear, B.
Gladwyn, L. Stallard, L.
Graham of Edmonton, L. Stoddart of Swindon, L.
Grimond, L. Stone, L.
Hale, L. Strabolgi, L.
Hampton, L. Taylor, L.
Hanworth, V. Taylor of Blackburn, L.
Harris of Greenwich, L. Wallace of Coslany, L.
Hatch of Lusby, L. Wells-Pestell, L.
Hooson, L. White, B.
Houghton of Sowerby, L. Wilson of Langside, L.
Hughes, L. Winstanley, L.
Airey of Abingdon, B. Erroll of Hale, L.
Alexander of Tunis, E. Fanshawe of Richmond, L.
Ampthill, L. Ferrier, L.
Auckland, L. Gainford, L.
Avon, E. Glenkinglas, L.
Belhaven and Stenton, L. Gray of Contin, L.
Belstead, L. Gridley, L.
Brookes, L. Hailsham of Saint
Bruce-Gardyne, L. Marylebone, L.
Carnegy of Lour, B. Hanson, L.
Cathcart, E. Henley, L.
Chelmer, L. Hertford, M.
Cockfield, L. Holderness, L.
Coleraine, L. Hornsby-Smith, B.
Cottesloe, L. Hylton-Foster, B.
Cromartie, E. Ilchester, E.
Cullen of Ashbourne, L. Inchcape, E.
Daventry, V. Killearn, L.
Davidson, V. Kintore, E.
De Freyne, L. Lane-Fox, B.
Denham, L. [Teller.] Lawrence, L.
Donegall, M. Long, V.
Drumalbyn, L. Lucas of Chilworth, L.
Dundee, E. Luke, L.
Ebbisham, L. Lyell, L.
Eccles, V. Macloed of Borve, B.
Elton, L. Margadale, L.
Marley, L. St. Aldwyn, E.
Marshall of Leeds, L. Saltoun, Ly.
Maude of Stratford-upon- Sandys, L.
Avon, L. Selkirk, E.
Merrivale, L. Sempill, Ly.
Mersey, V. Skelmersdale, L.
Morris, L. Somers, L.
Mottistone, L. Spens, L.
Murton of Lindisfarne, L. Stamp, L.
Newall, L. Stodart of Leaston, L.
Northchurch, B. Strathspey, L.
Nugent of Guildford, L. Suffield, L.
Onslow, E. Swansea, L.
Orkney, E. Swinton, E. [Teller.]
Orr-Ewing, L. Terrington, L.
Pender, L. Teynham, L.
Penrhyn, L. Trenchard, V.
Plummer of St. Marylebone, Trumpington, B.
L. Vaux of Harrowden, L.
Porritt, L. Vickers, B.
Rankeillour, L. Whitelaw, V.
Renton, L. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 1 [Basis of apportionment of needs element of rate support grants]:

5.15 p.m.

The Deputy Chairman of Committees (Lord Hayter)

I have to point out that if Amendments Nos. 2 to 6 are not agreed to, I cannot call Amendments Nos. 13A to 13E.

Lord Carmichael of Kelvingrove moved Amendment No. 2: Page 1, line 16, leave out (", in his opinion.").

The noble Lord said: Amendment No. 2 is a small but important amendment. Already local authorities are losing a great deal of their status because of the powers taken under various Acts during the last few years. This amendment omits the opinion of the Secretary of State. The Bill specifies that only expenditure allowable in the opinion of the Secretary of State will be proper. We believe that not just the Secretary of State but other people should be involved in making the decision as to whether or not expenditure is proper, by means of the normal way of arriving at these decisions. In an effort, therefore, to remove the authoritarian nature of the clause, the omission of the words "in his opinion" would give more authority and power to the local authorities concerned which have to bear the responsibility for the operations in their areas. I beg to move.

Lord Grimond

On the face of it, this seems to be a reasonable amendment. I shall be interested to hear the views of the Government upon it. Perhaps they will be able to explain what the clause means. After the words have regard to the extent to which, in his opinion", there follow two matters: the actual expenditure of an individual authority and the estimated expenditure. These are facts about which one cannot have an opinion. The expenditure would be known. The estimated expenditure would also be known. Do the Government infer that they will dispute the estimates with the authority? Or in what way do they expect that the opinion of the Secretary of State will differ from the facts set out by the local authority? I should be grateful if this point could be clarified.

Lord Gray of Contin

I shall try to deal with this point as quickly as I can, because I do not believe that there is as much in this amendment as the noble Lord, Lord Carmichael of Kelvingrove, has suggested.

The amendment would delete from the clause the words "in his opinion", thus removing a well-nigh essential flexibility from the operation of what is generally agreed to be a worthwhile change in the arrangements for grant penalties. If these words were removed, the relationship of expenditure to guidelines and subsequently to the share of any general abatement would turn into a matter of application of mathematical formulae, and there would be no room to take into account special circumstances affecting expenditure. For instance, the Secretary of State might well decide that extra expenditure to cope with some quite exceptional and unforeseeable natural disaster, for example, should not be taken into account for grant loss purposes. If it had kept prudently within guidelines, and then, as could happen, a local authority was faced with such an event, causing its outturn to go above the guidelines, it would lose grant in the same way as an authority which had budgeted above the guidelines and persisted in this overspending. Therefore we feel that the benefit of this is that it gives flexibility. This amendment, quite unintentionally, would remove that flexibility. For that reason, I must ask the noble Lord, Lord Carmichael of Kelvingrove, to consider withdrawing it.

Lord Ross of Marnock

I have listened to the noble Lord, but I do not know whether he has read his own clause. To suggest that the dropping of these words will deprive the Secretary of State of flexibility is absolute nonsense. In any case, if the noble Lord refers to the Acts of Parliament setting this up—I think in 1966 but I do not want to go too much into this—he will find that in respect of these grants, and so on, the Government have the power to make additional grants available where there are extraordinary emergencies. All that is already covered by legislation. The Bill states that the Secretary of State shall, have regard to the extent to which, in his opinion". What we are dropping is "in his opinion". The facts are there. If there is to be any doubt let us go to law. The opinion of the Secretary of State and the opinion of the local authority may well be different.

This is one of the favourite ways of a Secretary of State getting his own way; just by putting in the few words "in his opinion". He merely says that something is his opinion, whether or not that opinion is justified by the facts. There is no judge in Scotland who can argue with that. That is why the words are there. They are not to give him this flexibility to be generous. It is not the intention of this clause to be generous. This clause deals with one element of rate support grant. Rate support grant is divided into three elements: a needs element; a resources element; and a domestic element. The Secretary of State is now taking powers—this is what I said should go to a rating committee but we voted on that and, for your sins, your Lordships turned it down—to determine how, not the whole grant but this needs element will be apportioned. If anyone opposes his opinion that the actual expenditure or the proposed expenditure differs from, or does not conform to, his guidelines, then he will take certain powers. Of course, that will be to claw back from a local authority which offends.

This is where the Government get into a bit of a mess. They take the power of clawback, then discover that in clawing back generally they may well be penalising a local authority that "in his opinion" has been behaving itself. Authorities do not all bear the burden according to the orginal apportionment of these elements of the rate support grant. I want to take away some of the autocratic powers and leave some room for argument—that is the flexibility I want—where the local authorities have been, in their opinion, conforming as far as possible with the guidelines.

There is another point, and I am perfectly sure I am right in this. We use in this clause—and it is vital for this "opinion"—the guidelines issued—not prescribed, but issued—by the Secretary of State. Is there anywhere in legislation, Scottish or English, where the word "guidelines" is defined or where the power in respect of guidelines has statutory authority? I do not think there is. I probably should not have told the Minister that because he will no doubt hurry away and try to include it in this Bill. To my mind, "guidelines" has no statutory authority. Now we are trying to give such authority and weave it into the powers of the Secretary of State so that his opinion and his guidelines will have statutory authority.

It is not the flexibility that the Minister suggests is being denied to him, it is the assurance that he can do nothing wrong in respect of what happens in the guidelines. It is that that I am taking away and leaving a certain flexibility between the local authorities and the Secretary of State.

Lord Gray of Contin

By leave of the Committee, I shall try to anwer the last point made by the noble Lord, Lord Ross of Marnock. Whether he intends to or not, he is removing a flexibility with his amendment. Indeed, the amendment might, in fact, make this useful reform on occasion unfair. I urge the noble Lord to consider that. I am asking him to withdraw the amendment not because I have any vigorous objection to it but because I genuinely believe that if he removes these words there will be occasions where the provision could have an unfair effect. I assume that his amendment is, in any event, a probing amendment. I understood it to be so from the way he described it. He would do more damage than good if he insisted on pursuing the amendment.

Lord Hughes

I cannot possibly agree with the Minister that if this amendment is carried the Secretary of State will lose flexibility. In reading the wording of the Bill the Minister will see that flexibility does stay. The Bill would read: The Secretary of State may, in prescribing a basis for apportionment under either of those paragraphs or in providing for apportionment under paragraph 3 above, have regard to the extent to which either or both". The very fact that the Bill states that the Secretary of State "may" take this into account gives him all the flexibility that he needs.

My noble friend Lord Ross of Marnock has put his finger on the objectionable part of these words. It is not that "in his opinion" gives him flexibility. I submit that the Bill does that anyway. The words mean that he is unchallengeable in the courts because, as my noble friend Lord Ross said, no judge in Scotland can challenge the Secretary of State's opinion. If the Secretary of State says "I am acting on my opinion", that is conclusive. Sometimes, to put it on no worse a basis, the Secretary of State may be wrongly advised in arriving at his opinion. But, having done so, the harm is done.

I suggest that the amendment is reasonable from the point of view of the Secretary of State always having to look at the possibility, "Am I making a decision which, if challenged in the courts, is likely to be upheld?" At the same time it gives him discretion to do the sort of thing which he feels may be desirable at some time, and to ignore strict adherence to the guidelines because of unforeseen circumstances which have arisen. I do not know the extent to which it may arise in Scotland, but we have seen unforeseen circumstances occurring daily south of the Border, where local police authorities are incurring the most extraordinary expenditure which obviously would never have been taken into account in any guidelines. If this were an English Bill and applying to the present English circumstances, the absence of the words "in his opinion" would not deprive the appropriate English Minister from taking into account such exceptional expenditure.

Lord Gray of Contin

The amendment would remove the discretion of the Secretary of State in relating apportionment of the needs element of rate support grant to the actual and estimated expenditure of the local authority. The point that I am trying to emphasise is that it would mean that the grant reduction would proceed automatically regardless of any special circumstances that there might be in the case of an individual authority. That was why, in an earlier intervention, I said to the noble Lord, Lord Ross of Marnock, that there could be occasions where there would be unfairness if these words are removed.

I suggest to noble Lords opposite that it would be unfortunate if we were to take a step which would have quite the opposite effect to that which we all seek in passing legislation in this House. We do not want to create a situation which, by the interpretation of the Act, as it would ultimately be, might result in unfairness; whereas, if we leave it as it is at the moment, that discretion and flexibility remain. In my view that is an advantage. I think that the amendment would take away that advantage.

5.30 p.m.

Lord Hughes

If the Minister is right in his contention, how does he interpret the words, "may … have regard to"? How can that phrase be interpreted as being obligatory on the Secretary of State? We have had many arguments in Parliament about "may" or "shall". "May" quite obviously does not always mean "shall" or "must". I submit that, "may … have regard to", gives the Secretary of State all the discretion that he requires. It has been sufficient in many Acts of Parliament in the past without including the words, "in his opinion".

Lord Gray of Contin

I do not think that I shall be able to convince the noble Lord. I will not be drawn on an argument about "may" or "shall" at this stage. We are discussing the words "in his opinion". I believe that by removing those words we should be removing a flexibility, and that could have unfortunate effects on the way that the Act was interpreted in the future. It is for that reason that I disagree.

Lord Ross of Marnock


Lord Gray of Contin

I know that the noble Lord does not agree with me, but I have my opinion and he has his. I am sorry about that!

Lord Ross of Marnock

That is the very thing: "in his opinion". The Minister thinks that his opinion is final.

Lord Gray of Contin

No. By no means.

Lord Ross of Marnock

Oh, yes. As far as he is concerned it is final. The Minister is turning down the amendment. That is the thing I am guarding against in respect of the power of the Secretary of State. The noble Lord is saying, "You can have your opinion but it is my opinion that counts". The Secretary of State will be able to rule out the local authority's attitudes, arguments and everything else. The inflexibility is there with the words. The inflexibility will be removed if we take the words out.

Lord Stodart of Leaston

Will the noble Lord, Lord Ross of Marnock, go to the stake and contradict me if I say that my recollection is that in the Scottish Standing Committee on several occasions either he or one of his Ministers defended the words, "in the Secretary of State's opinion", and insisted on them being left in legislation?

Lord Ross of Marnock

If the noble Lord can produce these things, I will gladly justify my words on a particular occasion. But it is a purely hypothetical point that he raises. The words may well have been there and the noble Lord just did not realise what he was doing when he agreed to them, and he may now have learnt what he should have done on that occasion. But I do not know of any particular occasion when this matter was raised with me. I am raising it now. The actual attitude and words of the Minister of State prove how right I am to do that.

The flexibility is there, as my noble friend Lord Hughes said, with the word "may". If the Secretary of State may do a thing, he also may not do it. That is the flexibility. He, "may … have regard"—that is fairly flexible—or he may not have regard. Why do we need the words "in his opinion"? The real reason is that the Secretary of State would be unchallengeable at law if there was an argument between him and the local authority.

Let us remember that this is to take away money from local authorities in a particular way. That is its purpose. I think that the whole principle of clawback is wrong, but to do it in this particular way so that the Secretary of State is unchallengeable is utterly wrong. The arguments used about emergencies and the rest of it are far from the truth. I am sure that the noble Lord, Lord Grimond, will remember many pleas to the Scottish Office in respect of special events in the Shetlands. We did not require to look at the needs apportionment in respect of them. We were able to do it.

I do not know whether the Minister has been misled by his civil servants. He had better go back to them. This is only the first Committee day in respect of this. I can assure him that I will have every piece of housing legislation that has been passed since 1924 down in my room and will bring it up to prove to him just how wrong he is in pleading this argument that it would be harmful to certain local authorities. I know that it will be harmful to certain local authorities in apportionment if the apportionment is done in a different way from the way that the Secretary of State does it. If you are apportioning among 53 local authorities, obviously some will get more and others less. The real purpose of the clause is to try to get a better system of apportionment so that you will inflict the heaviest punishment on those who in the opinion of the Secretary of State have sinned in respect of expenditure. That is the real argument about the clause. The phrase, "in his opinion", is purely to cover the Secretary of State at law.

Lord Hughes

May I put a question to the Minister? Does he agree with what my noble friend has said and which I backed up, that these words make the Secretary of State's decision unchallengeable in the courts?

Lord Gray of Contin

It is not on those grounds that I have been arguing against this amendment. I have clearly stated my case as to why I do not feel able to accept the amendment. The reason is quite simple. It is because it removes a flexibility from the Secretary of State. If we were to accept this amendment, it is conceivable that the interpretation of this Bill could have unfair and unintended results. I do not think that it is the intention of noble Lords on that side of the Committee any more than it is the intention of noble Lords on this side that that should be the case. I do not believe the amendment improves the Bill at all, and for that reason I am not prepared to accept it.

Lord Hughes

That is very interesting, but I repeat my question. Does the Minister agree that the inclusion of the words, "in his opinion", makes the Secretary of State's decision unchallengeable in the courts?

Lord Gray of Contin

I am not the Lord Advocate and nor am I the Solicitor-General. I am not competent to comment on what the result might be in a court of law.

Lord Hughes

I think the answer has just come along.

Lord Ross of Marnock

Could we ask for the presence of Lord Lyell? I am sure that he might be able to help. We miss the Fifth Cavalry.

Lord Carmichael of Kelvingrove

The Minister must appreciate that the points put by several noble Lords from this side of the Committee have not been fully answered. I accept that he is not a lawyer, but I am sure that he has sufficient understanding to realise that, "in his opinion", quite distinctly would appear to take the matter out of the hands of the courts. I am not inclined to ask for a Division on this amendment, but I do not think it would be right to let the matter pass without at least asking the Minister to take the amendment away and consider whether the phrase will put the Secretary of State above the courts by giving him this incredible power. There are other words which would give him flexibility, such as the old legal stalwart "reasonable"—"reasonable authority" or "reasonable powers"—instead of merely "in his opinion". Local authorities which represent large numbers of people might feel badly done by, but because of those words they would have no way to challenge the Secretary of State's decision once it had been made.

I would hope that the Minister would at least be willing to look and see if there is a way to retain the flexibility he spoke about, which he doubts, although other noble Lords do not doubt, is always available to the Secretary of State. If he would take the matter away and look at it in that respect, without any promises—merely look at the question of giving flexibility while still leaving, if necessary, a very serious matter challengeable in the courts—I would certainly be willing at this point to withdraw the amendment.

Lord Gray of Contin

I am always willing to be reasonable, and in golfing terms the noble Lord is using up his bisques rather quickly. But let me say this to him. Yes, of course I will take it back. I will look at this again, without any commitment whatever, because I am practically sure that the conclusion to which I will come will be the same as that which I have expressed today. I shall certainly take it back and have a look at it. If I find that my arguments are not as convincing as I believe them to be, then we shall look at it again and see what we can do.

Amendment, by leave, withdrawn.

5.40 p.m.

Lord Carmichael of Kelvingrove moved Amendment No. 3:

Page 1, line 18, leave out ("has conformed").

The noble Lord said: It would be for the convenience of the Committee, as the grouping suggests, that we take Amendments Nos. 4 and 5 with this amendment. Page 2, line 3, leave out from ("authority") to first ("to") in line 6 and insert— ("is reasonable and consistent, in respect of the statutory duties"). Page 2, line 6, leave out from ("relates") to end of line 7.

The purpose of this amendment, or this set of amendments, is to make it clear that local authorities have certain statutory responsibilities that are continually being laid upon them by this House. Therefore, Amendment No. 5 suggests that the expenditure and the estimated expenditure of local authorities shall be reasonable and consistent in respect of the statutory duties which they are forced or which they are bound to accept.

The reason that there must be this flexibility, which is a word that was used frequently by the Minister on the last occasion, is that local authorities have statutory duties—or statutory duties that they believe they have and which Parliament have put on them—which might be misinterpreted by the Secretary of State. He may feel that the duties that they are performing are outwith the statute law that they believe they must adhere to.

One example of this, of course, is the Bill we were discussing earlier today; that is, the Tenants' Rights Bill. A great responsibility could be put on certain local authorities by this Bill, and it would depend on the response of the public and the local authority householders as to exactly how much statutory expenditure a local authority would be involved in because of the demands of tenants. So it is suggested that this Bill be changed merely to the extent that it is not the view of the Secretary of State only but also the statutory duties as seen by the local authorities that must be conformed to. The local authorities have these statutory duties and it is up to them. Or in many cases, particularly after the passing of the last Bill, the Tenants' Rights Bill, it is really the responsibility of the tenants, who can put very, very high demands on the local authorities to which they will be obliged to conform.

I hope the Minister will realise that the words we propose to insert or to omit make it more likely that local authorities will be able to carry out their statutory duties with a flexibility and an understanding of their own electorate and also for the laws that have already been passed by this House. I beg to move.

Lord Gray of Contin

Before I answer the noble Lord, perhaps for the convenience of my noble friend Lord Drumalbyn I would read out what Amendments Nos. 4 and 5 seek to do. Amendment No. 4 states: Page 2, line 3, leave out from ('authority') to first ('to') in line 6 and insert— ('is reasonable and consistent, in respect of the statutory duties')". Amendment No. 5 reads: Page 2, line 6, leave out from ('relates') to end of line 7". I was a little surprised that attempts were to be made to amend this clause at all. In another place it received very full consideration. Perhaps it might be rather an exaggeration to use the word "welcome" given to it by members of the Opposition, but I think it was generally agreed on all sides that it was a real improvement on the current position. We are clear that this clause removes an unfairness from the present way in which grant penalties are allocated among authorities.

The clause as it stands is designed to allow my right honourable friend the Secretary of State the power to distribute any general abatement of rate support grant having regard to the extent to which actual and estimated expenditure conforms with the guidelines he had issued before the financial year in question started. The noble Lord now proposes to amend this clause in a way which will make this impossible, replacing what is generally regarded as fair with the vague formulation based on a concept of expenditure, reasonsable and consistent, in respect of the statutory duties to which the expenditure relates.

It is a little difficult to see how this will work. It will certainly make impossible what is generally accepted as an improvement in the grant penalty arrangements. If the aim is to ensure that the Secretary of State takes into account the responsibilities of authorities in distributing grant, he already does this. The Secretary of State indeed is required by statute so to do. He is required to take into account the expenses incurred by local authorities in carrying out their statutory duties. The guidelines and the rate support grant settlement are all calculated with this in mind, especially since the introduction of the client group approach which allows this to be done much more systematically. Really, I find it difficult to see any merit in the amendments which the noble Lords put forward. In view of this, I ask them if they would consider withdrawing them.

Lord Ross of Marnock

I am prepared to consider anything at all, provided I am persuaded. The noble Lord says that the Bill provides a fairer way of doing things. It is only fair if the guidelines are fair, if the guidelines in respect of each authority are fair. But the guidelines, as I understand it—and the noble Lord might have taken the opportunity of negativing my opinion about this—have no statutory authority at all. When they were first mentioned in Parliament it was said, "Oh, there is nothing rigid about this; this is just a guideline". But the guidelines have now become something more important on which one can apportion penalties. That is what we are talking about: apportioning the amount of money that can be taken back from each authority according to the heinousness of their crime, in the opinion of the Secretary of State.

The provision is fair only if the guidelines are fair, and it is only fair if the Secretary of State's opinion is justified. But no one is going to be able to argue with the Secretary of State's opinion, so the Secretary of State has it all his own way. I think it is far, far better to judge the extent of the "criminality" of a local authority according to whether they have carried out their statutory duties—spent the money, in other words—reasonably and the expenditure is consistent with their duties. I am substituting that for guidelines. I do not care what the other House did or what it thought. I am telling you what I think about guidelines.

The year before last, 53 of the Scottish local authorities planned to spend more than the guidelines. Even this year, the number of local authorities planning to spend above the guidelines is about 36, based on their estimates of what is needed. It has to be remembered that the Government in respect of these guidelines are giving 1.5 per cent. more to the local authorities in their budget compared with last year, when they know that the rate of inflation is about 4.7 per cent. He is deliberately cutting down.

There has been a reapportionment in respect of what has been given. The guidelines of the district authorities are, I think, up on average by about 9 per cent. and the regional authorities by a lot less. The guideline for Strathclyde, which has possibly the greatest problems, is up by just over 1 per cent. This is how the Secretary of State can manipulate the manner in which grants are paid and the extent of clawback by which he can bring back more from particular authorities. I can remember Conservative authorities and Conservative MPs being very worried in 1974 because they felt that the Labour Government, in the apportionment of grants, had manipulated the formula and had taken away what rural areas were entitled to receive and given it to the borough and metropolitan areas.

This is the kind of freedom being given to the Secretary of State to manipulate the formula. Guidelines which have hitherto had no statutory authority are now being given statutory authority. In the same way that he can decide whether local authorities are guilty, in his opinion, of offending him, it has to be remembered that the guidelines are also "in his opinion". I should like to know—I have not received the answer yet from the Minister of State—what statutory authority these guidelines possess. There is a later amendment dealing with this, so I hope that he will look it up and get the information on what Parliament has to do and say about this.

I still believe, irrespective of what anyone says, that what the Government are putting into the hands of the Secretary of State is a dangerous power. At the moment, he has to apportion according to the original apportionment. Now he is acting in relation to his opinion of the extent to which they have departed from, or not conformed with, his guidelines. I am not satisfied with the Minister's answer.

Lord Gray of Contin

I shall try again. I doubt that I shall be able to satisfy the noble Lord, but let me try to deal with one or two of the points he has raised. The amendments that he has tabled remove the clear comparison between expenditure and guidelines and replace it with a rather vague relationship based on what his amendment describes as reasonable and consistent expenditure. Again the term "reasonable and consistent" is arguable. We were arguing a little earlier about the Secretary of State "in his opinion". I suggest to the noble Lord that "reasonable and consistent" gives just as much cause for argument and speculation as "in his opinion" would do. The noble Lord is not substituting anything more positive or easier to define for what is already in the Bill. The necessary expenditure of authorities in carrying out statutory duties is already provided for in legislation. In arriving at the rate support grant settlement each year and particularly the level of relevant expenditure and grant, the Secretary of State is bound under Section 2 of the Local Government (Scotland) Act 1966 to take into consideration, the latest information available to him as to the rate of reckonable expenditure and any probable fluctuation in the demand for reckonable expenditure so far as the fluctuation is attributable to circumstances prevailing in Scotland as a whole which are not under the control of local authorities. The noble Lord has been most concerned about the question of guidelines. He suggested that guidelines are unfair and have no statutory authority. Guidelines do not need to be statutory to be fair. Guidelines are the subject of careful consideration designed to ensure that they are fair. That is really the starting point of the argument. For the noble Lord to question whether or not guidelines are statutory is really beside the point. So long as the guidelines are fair, that is what we all seek to achieve. I do not really consider that the noble Lord's amendments would do anything to ensure that a greater degree of fairness was achieved at the end of the day over and above what we are seeking by the measures we are adopting. I do not think that there is very much more I can say to the noble Lord other than to suggest that his proposed amendments would not be an improvement in this instance. I hope therefore that he may be prepared to withdraw them.

Lord Carmichael of Kelvingrove

The noble Lord suggested that by putting in "reasonable and consistent" we had in some ways made things more rigid. In fact, when I was speaking earlier about the Secretary of State "in his opinion", I suggested that words like "reasonable" were the old lawyer's way of giving flexibility. But the words "in his opinion" take away flexibility completely. I am surprised that, in so quick a juxtaposition, the noble Lord should use the very words that I used. He seemed to have the impression that the words "in the opinion" of the Secretary of State gave more flexibility. We have been saying for some time that this was not the case.

Guidelines can be fair but they can also be unfair. My noble friend was merely asking what was the statutory basis of guidelines. I do not feel that the Minister has fully answered the case, at least not to my satisfaction. I do not know, however, whether this is a matter that we would necessarily press to a vote.

Lord Ross of Marnock

I do not know whether the Minister of State realises how all this is done. There are three elements in respect of rate support grant. The Government do not do anything except say what proportion they will meet. It has been reduced from 70 per cent. to just over 60 per cent. in the last five years. Then the committees get together with the Government to work out what will be the apportionment in respect of needs, resources and the domestic element. Now we see that the Government have introduced a new element called guidelines. This year, a change in the distribution formula saw the district councils have their total guidelines upped by 9.5 per cent., the islands by 14.1 per cent. and the regions by only 1.8 per cent.

In the distribution within the regions, Strathclyde's share has dropped, and it gets only 1.5 per cent. This means that our overall share under the guidelines dropped by about £17 million. That is the practicality of the working of the guidelines. It may well be the case, having been given an artifically low and unfair guideline, that, should Glasgow exceed the guideline, it will be still further penalised by a clawback in the apportionment of the penalty. It does not necessarily mean that it is fair. It may well be that this clause is not unfair; probably it is the whole principle of clawback. That being so, I am not prepared to withdraw this amendment at the moment; I will allow it to be negatived and then we shall get on to probably some of the more important parts of this Bill where the unfair way the local authorities are being dealt with by the Government is much more clear cut.

On Question, amendment negatived.

[Amendments Nos. 3, 4 and 5 not moved.]

6.1 p.m.

Lord Ross of Marnock moved Amendment No. 6: Page 2, line 7, at end insert— ("( ) No guidance shall be issued to Scottish local authorities until it has been approved by resolution of the Commons House of Parliament..')

The noble Lord said: This amendment says that, No guidance shall be issued to Scottish local authorities until it has been approved by resolution of the Commons House of Parliament.

Why not? I beg to move.

Lord Gray of Contin

This amendment seeks to require the Secretary of State to submit the guidance he issues to local authorities on expenditure to the approval of the other place. In practice, the only guidance he issues are the current expenditure guidelines which are issued in the late autumn each year and indicate what level of expenditure for each authority is considered appropriate by the Government. These guidelines were first issued in 1976–77 when the party of which the noble Lord was a member was in power. I doubt whether there was any question of their being submitted to Parliament for approval, but if I am not correct I am sure the noble Lord will very soon correct me.

At the time of year when guidelines are issued, authorities are keen to know how they stand for the coming year and what their expenditure should be. They would not welcome the delay and uncertainty occasioned by the need proposed here to seek parliamentary approval. It is difficult to see what would be gained by such a procedure, especially as the guidelines are already the subject of discussion with the Convention of Scottish Local Authorities. With that explanation I trust that the noble Lord will withdraw his amendment.

Lord Ross of Marnock

If the noble Lord knew very much about it, he would know that I resigned from that Government in April 1976. He would also appreciate that guidelines carried no mandatory authority. They were not followed up by things such as clawback and penalising of local authorities for not paying enough attention, strict attention, to conforming—that is the word in the Bill—to guidelines. The whole thing has changed, and it is because it has changed, and because apportionment of penalty now relates to guidelines, that Parliament should know a little more about the guidelines.

I am perfectly sure that there is not a noble Lord on the other side of the Committtee who knows exactly what guidelines have been laid down for his district authority or his regional authority and how they compare with last year. If noble Lord opposite want to correct me, I shall sit down gladly and they can tell me. I presume they have all voted in today's election, yet they do not realise the extent to which the Government have been putting down for local authorities' expenditure for next year guidelines which do not meet the known facts of inflation. This is the ironic bit about it, in view of the quotation from the 1966 Act that we had from the Minister of State.

Teachers in Scotland accepted a rise of 4.5 per cent. But what increase for inflation is there in the guidelines? Can the Minister tell us? He should be able to do so, since he thinks guidelines are so wonderful. Will I have to tell him? They do not meet it by half. This is how local authorities cut their expenditure. If they do not, and if they put up their rates, then the Government are going to deal with them again in the same way.

I am sorry to say it, but I do not think the Minister understands local government expenditure at all. He does not understand what development there has been in respect of guidelines and the new importance they now have as the result of this Bill. For the first time guidelines have come into legislation, but they are not defined, even in the interpretation clause. I hope someone in the Scottish Office will have a look at that. I am not going to divide the Committee on this amendment; we must just have it negatived.

Lord Grimond

Before we pass from this point, if the Minister intends to reply to the noble Lord, Lord Ross, could he also reply to the question I am going to ask? The noble Lord has an important point when he says that matters have changed since he was Secretary of State for Scotland. I am not convinced that everything he did as Secretary of State was itself ideal, but certainly things have changed.

Can the Minister tell us whether there will be any opportunity in the Commons to discuss these guidelines, which have become very much more important? If this amendment is negatived—I see the argument that it would delay the matter a great deal and might be inconvenient to local authorities—will there be an opportunity at all for discussion of these guidelines? I do not think it is enough to say they will be discussed with the Convention of Scottish Local Authorities. This is now a matter which can carry heavy penalties and there should at least be an opportunity to ventilate it in the other House of Parliament.

Lord Gray of Contin

I believe that I can answer the noble Lord. There will not be an opportunity for the House to discuss the individual guidelines because the guidelines are discussed with each local authority and the forum for discussion of the whole concept of guidelines is COSLA. It is not intended that Parliament should discuss those guidelines individually, for the reason I explained. The time factor is such that local government would be very upset if they thought there was to be a delay in order to allow Parliament to discuss these matters at the very time when they want to get on with them. It would be wrong for me to suggest to the noble Lord that it is intended that the other place should discuss the guidelines.

Lord Ross of Marnock

The guidelines are discussed, but who makes the decision? It is the Government who hand it down to the local authorities. The local authorities have no argument; they just have to accept them. If the guidelines came before Parliament, the Government would have to justify them publicly in the House of Commons, which I think is right. Not only that; the individual Members from outside who have got to cope with the problems of cuts in expenditure and the effect they have upon their constituents would be able to get up and argue the case in respect of their particular local authorities.

It is this attitude of the Scottish Office today that appalls me. Their attitude is, "Whatever we say is right. We summon these people; we tell them what the guidelines are; that is discussion". That is what it is coming to. I do not know how many of these meetings the Minister of State has attended. Can he tell me, or may I venture a guess that he has not attended any? That is what happens today. The local authorities are told what are the guidelines; there is not a suggestion of discussion. It is in circumstances such as this that there is a complete erosion of democracy in Scotland, in particular in local government. That is one of the reasons why if that is happening there we should strengthen the ties and the interests of Parliament with the Scottish Office and particularly watch out for what they are doing. I am not going to withdraw this amendment; I think we should press it.

On Question, amendment negatived.

Clause 1 agreed to.

Clause 2 [Procedure under section 5 of the Local Government (Scotland) Act 1966]:

Lord Carmichael of Kelvingrove moved Amendment No. 7: Page 2, line 13, leave out ("subsection") and insert ("subsections")

The noble Lord said: It will be convenient to take Amendments Nos 7, 8, 9 and 10 together.

Page 2, line 15, leave out ("more than one") and insert ("two") Page 2, line 15, leave out ("authority") and insert ("authorities") Page 2, line 18, at end insert—("(5B) A report thus relating to more than one local authority shall be presented to Parliament in such a way as to allow the House of Commons if it so wishes to vote separately on the proposals affecting each local authority." ")

This is one of the very important and highly contentious parts of this Bill. It has been very thoroughly discussed but it will be discussed a great deal further as long as the Government still cling to the view that these very important matters of penalising local authorities can all be discussed—no matter how many local authorities are involved—under the one order in the House of Commons.

Amendment No. 8 suggests leaving out "more than one" and inserting "two". In certain circumstances that would be a fall-back position. At least one would only be discussing two local authorities which had overstepped what, in the opinion of the Secretary of State, were reasonable rating levels; even that, as I say, would be a fall-back position. It would be less satisfactory and less fair than taking each local authority separately. Obviously there could be difficulties on the question of time in doing it individually, but the matter is so important to local authorities that the idea that local authorities such as Glasgow, Edinburgh or Falkirk could all be taken in one-and-half hours on one night is really quite preposterous. We are therefore suggesting that the very most which can be done is to make it two local authorities—repugnant as the principle is.

There was a great deal of discussion in another place, so may I ask the Minister whether there is such a thing as a list of local authorities who are already over the guidelines or who are likely to be over the guidelines? One of the lists I have is a most varied one. It starts with Edinburgh; it has Glasgow in it; it has Strathkelvin; it has Eastwood, Bearsden and Milngavie, Cumnock and Edinburgh. I do not think any such list actually exists, but merely looking at the "possibles" which have been suggested in another place makes the idea of discussing the problems of Edinburgh, Cumnock, Glasgow, Eastwood, Bearsden and Milngavie in an hour-and-a-half in another place, probably very late at night, seem at the very least a negation of any sort of democracy.

This is one of the most fundamental parts of the Bill. Not only is the Bill itself considered by local authorities and many people in both Houses to be draconian, but there is not going to be a proper opportunity even for discussing the effect of the Bill or the actions of the Government upon local authorities; the opportunity will be quite inadequate for the Members. After all, in Strathclyde there are something like 40-odd Members of Parliament, many of whom would want to speak on this matter. Glasgow itself has 11 Members of Parliament, and if Glasgow was involved all of them would certainly want to speak. Every other city and town in Scotland, many of which are represented by more than one Member of Parliament, would certainly want to air the views of their constituents. It is a quite ridiculous procedure.

I am sure the noble Lord the Minister is, in his own way, silently and quietly ashamed of this, and I only hope he will give us some indication in his reply that the Government are seriously considering that they have made a very bad mistake. If it is not something which people in Scotland are speaking about just now—other than those who are involved in politics in a local or national way—but the minute the Government are seen to be taking half a dozen or more orders in the one evening, or an order covering half a dozen local authorities in an hour and a half, with very serious consequences for the ratepayers, I think the people of Scotland will realise what an appalling mishmash has been made of this procedure. I hope the noble Lord the Minister will have the foresight to see this, will give us a response and will perhaps reconsider this matter despite what has happened in another place. I hope he will realise that this is too serious to be put off very easily or for much longer. I beg to move.

Lord Mackie of Benshie

I must say that this is an extremely sensible amendment. I cannot see how the other place can judge a whole batch of authorities which misbehave without being able to judge whether one has misbehaved more than another or deserves the penalties more than another. It is rather like the Chinese general who was converted to Christianity and had his troops baptised with a hose—it is not really a very effective or fair way to proceed.

It must be that in this case the Secretary of State is asking the House to accept that his opinion is valid over a whole range in spite of the individual cases. If Parliament cannot vote on individual cases, it appears to me entirely illogical to ask for its approval: because no two authorities are the same. The noble Lord, Lord Carmichael of Kelvingrove, cited the differences in Glasgow, but Scotland contains authorities far removed from Glasgow—for example, in the islands—and the problems which exist in the East of Scotland are different from those of the West. The opinion of the Secretary of State has to cover a very wide field and it must be logical that each case—if another place is to consider them—must be considered on its own merits. It appears to me that this is a sensible and fair amendment.

Lord Gray of Contin

Perhaps I may at the very outset reassure the noble Lord, Lord Carmichael, that there are available budget guideline comparisons for 1984–85; I have a list of them here. These have been available for some time and I can easiy ensure that the noble Lord is given a copy of them. There is no difficulty about that at all, and I shall be very happy to let him have them in due course.

The amendments would severely restrict the operation of the clause by allowing reports proposing rate or grant reduction to be combined for only two authorities. The third amendment in the group then attempts to fetter the standing order of the other place by making specific provision on how it should conduct its business. The sole purpose of this clause is to streamline the procedures, and my right honourable friend the Secretary of State has made it clear that this power will not be used to combine reports of individual authorities regardless; it will only be used when it seems reasonable to do so. On this basis, I cannot see any advantage in confining the extent of the combining of authorities in one report to two authorities.

The other place, not unnaturally, is very jealous of its standing orders and its own right to change them if necessary. They would regard it as improper to have an Act specify how they should conduct their business. For that reason I feel that I cannot accept these amendments and I invite the noble Lord to withdraw them.

6.20 p.m.

Lord Ross of Marnock

As I understand it, if we pass an amendment here it goes to another place. Therefore, we will not be offending the other place; the other place will have an opportunity to say what it thinks about our amendment, and if we have offended them then they can either turn the amendment down or they can amend the amendment. That is possible in respect of amendments. So do not come crying to us about offending another place. We remember a lot of the history of the relations between the one House and the other.

Lord Drumalbyn

I wonder whether the noble Lord will allow me to intervene. Is he quite certain about that? From my experience of looking at the amendments that come up from another place, it seems to me that in some cases they disagree without assigning any reason—the reason generally being that they have decided to ignore our amendment because it is not a matter upon which they think that we are entitled to comment.

Lord Ross of Manock

I do not know whether the noble Lord, when he was in another place, was ever privileged to participate in the following practice. Every time the House of Commons disagrees with the House of Lords, before they send the amendments back they have a committee meeting and certain Members attend and assess what report they will make and why they disagree. In case the noble Lord does not know, all that is done in a little room behind the Speaker's House. I attended on several occasions and on one occasion I was even appointed the chairman of the committee.

A very delicate dance goes on between the two Houses in respect of disagreements that take place. One of the most famous disagreements concerned local government reform or reorganisation when this House turned down the proposal to create Strathclyde. The Government did not accept that proposal. In case we tend to forget it, it was a Tory Government which reorganised Scotland and which created Strathclyde which contains half the population of Scotland. They proceeded to disagree with the amendment and to add, as amendments to that proposal, matters which made changes in respect of the Glasgow district as well, which the House of Commons had never discussed. Therefore, so far as offending the other place is concerned, the noble Lord can take it from me that I would be much more cautious in respect of them than, historically, his own party have been.

Is it right to give power to the Government to take more than one authority at a time and to put those authorities into one report and to have that report discussed in perhaps an hour and a half? I do not know whether the noble Lord the Minister was present in the last Session of Parliament—I think that perhaps he was present—when the Government had five separate orders in respect of offending local authorities. Out of the goodness of their heart, the Opposition agreed to take them all together, one after the other, and they were then entitled to vote at the end, if they wanted to do so, on each of the authorities. What happened was that inevitably time was spent in such a way that there was one particular authority which was highly offended because there was not time to discuss it properly or to vote on it.

If we are to deal with this matter properly—and that is what the Government intend—then it can only be done if we limit the number within any one order. In my view two is enough, and then we have to make arrangements to enable them to vote on each of them. I remember the time when we reorganised constituencies. It was done in one order but we talked about them one after the other, and if we so wished, we voted in respect of them. I am sure that the noble Lord, Lord Drumalbyn, will remember that occasion which took place in about 1950. That was how it was done then. Not all of them may be highly offensive and people may not be determined to vote on all of them, but the opportunity should be given so that proper discussion can take place on each and they should not be all lumped together. There is no limit to it. There could be six, seven or eight, but in England and Wales there are likely to be very many more than that.

The noble Lord has said that he was streamlining the procedure—steamrollering it is far more like it. It suits the Government because they can get through it more quickly; but it does not suit me. Any fair-minded person would not accept it. We want matters to be fairly discussed and this is the only way in which we can achieve that. I am being fairly generous because at present the Government have to put each offending authority into one report and one order. Now we are allowing them two. I think that we should be given a vote of thanks rather than be treated in the way in which the Minister of State has treated us in this regard. They are going too far by just saying "more than one". I suggest that there should be no more than two, and I think that we should make our views known about this in the Lobby.

Lord Drumalbyn

Surely my recollection is correct. I hope that the noble Lord's recollection conforms with mine. One way of dealing with an order with which you disagree—at least on one respect—is to get the Government to withdraw it, and then reintroduce it. Surely that is possible, and that is perfectly democratic.

Lord Ross of Marnock

But surely it is far, far better to vote on each individual one rather than the whole lot together. A government which has the kind of majority that this present Government have in another place, find it very easy to deal with one order and to get it out of the way rather than, as the noble Lord suggests, to withdraw the order. I can remember that being done on only about four or five occasions.

Lord Stodart of Leaston

I should like my noble friend to reassure me on one point. My recollection of the other place is that a resolution of the kind referred to here is either negative or affirmative. Am I right in thinking that the discussion is limited to an hour and a half, or can there be unlimited time? If by any chance there were to be a discussion on six or seven different authorities, I find it difficult to see how justice could be done to them in the course of 90 minutes.

Lord Ross of Marnock

If the noble Lord looks at the report for last year, he will discover that reports were issued in respect of Glasgow, Stirling, Lothian and, I think, Central. There were four or five individual orders. The decision of Parliament was to take them all together. They sought to divide up the time, but it did not work out that way because there was not enough time for the proper discussion of them all or for the proper voting on them all, and the question of voting was quite easy on that occasion because they were separate orders. That practice is followed often and it can work.

Lord Stodart of Leaston

I am not being in the least bit discourteous, but I was addressing my question to my noble friend and I still would like him to tell me about the 90 minutes.

Lord Gray of Contin

I am most grateful to the noble Lord, Lord Ross of Marnock, for answering my noble friend on that point. The noble Lord of course did not make it absolutely clear—and his recollection of the other place is the same as mine—that the times are agreed between the usual channels. It is perfectly correct that an order can be discussed for an hour and a half, but it does not mean that if there are a number of orders relating to similar subjects they cannot be taken together. But if they are taken together, they are taken together only after agreement has been reached through" the usual channels. Therefore, if the House decides that it shall not debate them altogether, an hour and a half is allocated for each one. It is purely for the parties in the House to make that decison. So there is no question of it automatically being only an hour and a half for all the orders; they can all be taken separately, if that is the wish of the House.

Lord Carmichael of Kelvingrove

I was intrigued when the Minister suggested that all the orders could be taken separately. I thought that the whole purpose of the clause in the Bill was (as he said) to streamline the procedure. There was no suggestion that Parliament would have an opportunity to deal with them separately.

As I remember the procedure in the other place, an order is made, and the order must either be passed or not passed. On one very disastrous occasion I was involved when the whole of an order had to be taken away; it was a long time before it came back, because no amendment was possible—it just had to go through as it was. That is my recollection.

I was also intrigued when the Minister suggested that, in putting forward orders, the Government would combine offending authorities "realistically and sensibly" I took a note of the actual words. The noble Lord, Lord Mackie, raised the point of a highlands local authority, a lowland local authority and a major city local authority. How would the Minister propose to combine them, or can he give an assurance that only Highlands authorities would be taken together? Each Highlands authority may be guilty of different offences; in fact, their offences (if that is the right word) may perhaps be closer to those of one of the major cities. I was rather intrigued when he suggested that the Government would realistically and sensibly combine orders. He suggested that perhaps on some occasions there would be more than one order. But the Bill does not say that. It suggests that the Government can name as many authorities as they wish in the one order. Therefore, it is quite impossible to accept this proposal without putting it to the vote. I beg to move.

6.32 p.m.

On Question, Whether the said amendment (No. 7) shall be agreed to?

Their Lordships divided; Contents, 56; Not-Contents, 86.

Airedale, L. Graham of Edmonton, L.
Aylestone, L. [Teller.]
Beaumont of Whitley, L. Grimond, L.
Beswick, L. Hampton, L.
Boston of Faversham, L. Houghton of Sowerby, L.
Bottomley, L. Howie of Troon, L.
Broadbridge, L. Hughes, L.
Brooks of Tremorfa, L. Irving of Dartford, L.
Carmichael of Kelvingrove, L Jacques, L.
Cledwyn of Penrhos, L. Jeger, B.
Collison, L. John-Mackie, L.
David, B. Kennet, L.
Dean of Beswick, L. Kirkhill, L.
Diamond, L. Longford, E.
Elwyn- Jones, L. Lovell-Davis, L.
Ennals, L. Mackie of Benshie, L.
Erroll, E. Mishcon, L.
Ewart-Biggs, B. Molloy, L.
Gallacher, L. Mulley, L.
Gladwyn, L. Nicol, B.
Ogmore, L. Stoddart of Swindon, L.
Oram, L. Stone, L.
Parry, L. Taylor of Blackburn, L.
Pitt of Hampsted, L. Tordoff, L.
Ponsonby of Shulbrede, L. Wells-Pestell, L.
[Teller.] White, B.
Ross of Marnock, L. Wilson of Langside, L.
Segal, L. Wilson of Rievaulx, L.
Stallard, L. Winstanley, L.
Airey of Abingdon, B. Lothian, M.
Auckland, L. Lucas of Chilworth, L.
Avon, E. Lyell, L.
Belhaven and Stenton, L. Macleod of Borve, B.
Belstead, L. Margadale, L.
Boothby, L. Marley, L.
Brookes, L. Marshall of Leeds, L.
Bruce-Gardyne, L. Maude of Stratford-upon-
Caccia, L. Avon, L.
Campbell of Alloway, L. Mersey, V.
Carnegy of Lour, B. Milverton, L.
Cathcart, E. Morris, L.
Cockfield, L. Murton of Lindisfarne, L.
Colville of Culross, V. Nugent of Guildford, L.
Colwyn, L. Onslow, E.
Daventry, V. Orkney, E.
Davidson, V. Orr-Ewing, L.
De Freyne, L. Pender, L.
Denham, L. [Teller.] Penrhyn, L.
Donegall, M. Plummer of St. Marylebone,
Drumalbyn, L. L.
Dundee, E. Rankeillour, L.
Elton, L. Redesdale, L.
Ferrier, L. Renton, L.
Fraser of Kilmorack, L. St. Aldwyn, E.
Gainford, L. St. Davids, V.
Gardner of Parkes, B. Saltoun, Ly.
Gray of Contin, L. Selkirk, E.
Greenway, L. Sempill, Ly.
Gridley, L. Skelmersdale, L.
Hailsham of Saint Somers, L.
Marylebone, L. Spens, L.
Halsbury, E. Stamp, L.
Hanson, L. Stanley of Alderley, L.
Henley, L. Suffield, L.
Holderness, L. Swansea, L.
Hornsby-Smith, B. Swinfen, L.
Hylton-Foster, B. Swinton, E. [Teller.]
Killearn, L. Teviot, L.
Kinnoull, E. Teynham, L.
Kintore, E. Trumpington, B.
Lane-Fox, B. Vaux of Harrowden, L.
Lauderdale, E. Whitelaw, V.
Lawrence, L. Wise, L.
Lindsey and Abingdon, E. Young, B.
Long, V.

Resolved in the negative, and amendment disagreed to accordingly.

The Deputy Chairman of Committees (Baroness Wootton of Abinger)

Before calling Amendment No. 8 I must point out that if Amendments Nos. 8, 9 and 10 are not agreed to, it will not be possible for me to call Amendments Nos. 11,12 and 13. Amendment No. 8.

[Amendments Nos. 8 to 10 not moved.]

6.40 p.m.

On Question, Whether Clause 2 shall stand part of the Bill?

Their Lordships divided: Contents, 78; Not-Contents, 58.

Airey of Abingdon, B. Lauderdale, E.
Auckland, L. Lindsey and Abingdon, E.
Avon, E. Long, V.
Belhaven and Stenton, L. Lucas of Chilworth, L.
Belstead, L. Lyell, L.
Boothby, L. Macleod of Borve, B.
Broadbridge, L. Margadale, L.
Brookes, L. Marley, L.
Bruce-Gardyne, L. Marshall of Leeds, L.
Caccia, L. Maude of Stratford-upon-
Campbell of Alloway, L. Avon, L.
Carnegy of Lour, B. Mersey, V.
Cathcart, E. Morris, L.
Cockfield, L. Murton of Lindisfame, L.
Colville of Culross, V. Nugent of Guildford, L.
Colwyn, L. Onslow, E.
Davidson, V. Orkney, E.
De Freyne, L. Pender, L.
Denham, L. [Teller.] Penrhyn, L.
Donegall, M. Rankeillour, L.
Drumalbyn, L. Renton, L.
Elton, L. St. Aldwyn, E.
Ferrier, L. St. Davids, V.
Fraser of Kilmorack, L. Saltoun, Ly.
Gardner of Parkes, B. Selkirk, E.
Gray of Contin, L. Skelmersdale, L.
Greenway, L. Spens, L.
Gridley, L. Stamp, L.
Hailsham of Saint Stanley of Alderley, L.
Marylebone, L. Stodart of Leaston, L.
Halsbury, E. Suffield, L.
Hanson, L. Swansea, L.
Henley, L. Swinfen, L.
Holderness, L. Swinton, E. [Teller.]
Homsby-Smith, B. Teviot, L.
Hylton-Foster, B. Trumpington, B.
Killearn, L. Vaux of Harrowden, L.
Kinnoull, E. Whitelaw, V.
Kintore, E. Wise, L.
Lane-Fox, B. Young, B.
Airedale, L. Kennet, L.
Aylestone, L. Kilmamock, L.
Beaumont of Whitley, L. Kirkhill, L.
Beswick, L. Longford, E.
Boston of Faversham, L. Lovell-Davis, L.
Bottomley, L. Mackie of Benshie, L.
Brooks of Tremorfa, L. Mishcon, L.
Carmichael of Kelvingrove, L. Molloy, L.
Cledwyn of Penrhos, L. Mulley, L.
Collison, L. Nicol, B.
David, B. Ogmore, L.
Dean of Beswick, L. Oram, L.
Diamond, L. Parry, L.
Elwyn-Jones, L. Pitt of Hampstead, L.
Ennals L Ponsonby of Shulbrede, L.
Erroll,E. [Teller.]
Ewart-Biggs, B. Ross of Marnock, L.
Gallacher, L. Segal, L.
Gladwyn, L. Stallard, L.
Graham of Edmonton, L. Stoddart of Swindon, L.
Grimond, L. [Teller.]
Hampton, L. Stone, L.
Hatch of Lusby, L. Taylor of Blackburn, L.
Houghton of Sowerby, L. Tordoff, L.
Howie of Troon, L. Wallace of Coslany, L.
Hughes, L. Wells-Pestell, L.
Irving of Dartford, L. White, B.
Jacques, L. Wilson of Langside, L.
Jeger, B. Wilson of Reivaulx, L.
John-Mackie, L. Wootton of Abinger, B.

Resolved in the affirmative, and clause agreed to accordingly.

6.49 p.m.

Schedule 1 [Sections 2 to 7 of and Schedule 1 to the Local Government (Scotland) Act 1966 set out as amended]:

The Deputy Chairman of Committees

Schedule 1. Owing to the fact that Amendments Nos. 8, 9 and 10 were not agreed to, I cannot call Amendments Nos. 11, 12 and 13 to Schedule 1. We must therefore proceed to the Question that Schedule 1 shall stand part of the Bill?

Schedule 1 agreed to.

Clause 3 [Power of Secretary of State to control rates]:

Lord Ross of Marnock moved Amendment No. 14: Page 2, line 23, at beginning insert ("In any financial year in which the average of the proposed rates in Scotland shows an increase of more than ten per cent, above that of the preceding financial year")

The noble Lord said: I think it would be convenient if we took Amendments Nos. 14, 15, 16 and 17 together.

Amendment No. 15: Page 2, line 23, after ("may") insert ("after full discussion with and the approval of the Convention of Scottish Local Authorities") Amendment No. 16: Page 2, line 25, leave out ("any") and insert ("the") Amendment No. 17: Page 2, line 26, after ("year") insert ("following revaluation")

This will take us some time because we now reach a very important clause indeed. Clause 3 deals with the power of the Secretary of State to control rents. The rent of every single local authority in Scotland can be determined by the Secretary of State; I wonder why he is not one of the candidates today in Scotland. But in all the local authorities and district authorities in Scotland today candidates think they are going to go in and control, among other things, the expenditure and the rates for the ratepayers.

I do not know whether they know about this power taken by the Secretary of State who is a member of a party which used to proclaim freedom. The man in Whitehall does not know best; it is the local man who knows best. Here is that very man taking power to determine what will be the rate of every single authority in Scotland. It really is appalling—the extent to which local democracy is being eroded by a party that claims to be the party of freedom.

I remember when we set up the Wheatley Commission to reconstruct or reorganise local authorities one of the things we were concerned about was the lack of interest in local government; the interest was in the quality of candidates that there would be. The word will get round that the candidates who people are electing will not have the power, or will already have had the power taken away from them by the Secretary of State. He will determine the standard of services. He will determine what will be the rents of the houses. He will determine whether or not the councils will sell the houses—and here the Government take the power to fix the rent of every single house. What real power is then left to the local authorities? They are becoming puppets.

It is no use the Government coming along and saying, "We are only taking this power, we shall never use it". They think they have an armoury of power which is sufficient and certainly sufficiently oppressive. But still they take this power. They know exactly what is the attitude to their guidelines at the moment. The majority of Scottish local authorities, with the best will in the world, cannot keep to their guidelines, and if they do, they will try further to cut the services.

I remember in the Second Reading debate telling your Lordships of the cuts that would have to be made in Glasgow, whose increase in expenditure over the last year is remarkably little, but they are £50 million above the guidelines. This means cuts all round. But here are the Government taking the power to circumvent even potential increases in our services by saying what the actual rate poundages will be.

For a Government who have not made up their minds yet as to whether or not they should have a committee to look into the need to reform the rating system in Scotland, I think that is appalling. The fact that they themselves have to resort to this power shows that the rating system, the whole local government system in Scotland, needs drastic reoganisation; or if it does not, then it is the Government who need drastic reorganisation.

There is more and more power going to the centre, with less and less power locally. That will apply to Dumfries, Galloway, the Western Isles, Orkney, Shetland—the whole lot. I do not know whether people realise exactly the kind of Government we have and the extent to which they are prepared to deny democracy. There was a time when local authorities in Scotland vied with one another in respect of the kind of service they provided. I remember Glasgow used to pride themselves that they had the best teachers from the training colleges. They paid them an extra £50 a year and they used to come down as soon as the training college year was over and pick out the teachers they wanted. Of course, all that is streamlined now; they all pay the same salaries under the scales.

But there is still considerable power. I remember that Kilmarnock, my own constituency, which I represented for a long time—and was honoured to do so—pioneered services for the old poeple, with old people's homes. While the neighbouring town of Ayr, which was reckoned to be much more wealthy, did little or nothing about it, Kilmarnock had four old people's homes of a character or calibre that people could be proud of.

They did the same thing with sheltered housing and the best of each local authority became the envy of the others, and so the standards rose. There was a certain measure of competition, there was a variety in expenditure and rates; but what people were concerned about was whether they got value for their rates. Very often it was well worth while.

But here sitting in St. Andrew's House is a man who will determine the rate poundage, with the help of half a dozen civil servants. Do not tell me anything about civil servants. They are pretty good as civil servants, but as far as being adminstrators of local government is concerned, they just do not begin to appreciate what should be done. They are going to determine what will be the rate poundage for every single authority. That is the power we are seeking to give to the local authorities.

I say that we must limit this in some way. My first amendments, to this extent, are to say that in any financial year in which the average of the proposed rates in Scotland shows an increase of more than 10 per cent. above that of the preceding year, local authorities should be free to act.

The people who discipline local authorities are those people who are doing so today in Scotland at local elections—not a government who have not got a mandate to do anything at all in Scotland. May I remind the Government that so far as Scotland is concerned, with its 72 Members of Parliament, there are only 22 Tories and there are 42 Labour Members. That may be why the Government are doing this; it is purely political dogma.

I have already today demonstrated—I think effectively—that the people who determine whether or not there shall be increases in rates in Scotland are the Government. They determine what will be the reckonable expenditure and they pitch it low—lower than is realistic. Then they determine what share of that they will pay. When I was Secretary of State it was over 70 per cent.; today it is 60.2 per cent.

Then, if you are going to meet your expenditures, how do you do it? You put the rates up; that is one side of it. The people who have created the rates scandals and the rates crises in Scotland are the Government themselves.

That is only one aspect of expenditure in Scotland—that which is supported from the rates support grant. The other part is that for supporting housing. As for the district councils in Scotland, just about under one-third of their expenditure is spent on housing. That is about the only service they have left under the functions of reorganisation. Why have they spent as much on housing?—because the Government have consistently refused to meet their historic commitments in respect of housing.

I have here the 1935 Act—a Tory Government Act dealing with slum clearance. The Government paid a generous subsidy to each local authority in respect of each house, but the condition was that nearly half of the amount that the Government paid was also paid out of the rates. Now they are denying power to pay out of the rates any more than the Secretary of State decides. The Government's contribution in many local authorities is nil. Under a Labour Government it was £214 million a year and under the Tories this year it is £52 million. How can the local authorities carry out their statutory obligations without increasing the rates, because of what the Government have decided? The real crisis of rates in Scotland is the Tory Government.

To take this further power to deal with the situation that they have created, which means they fix the rates, which means the money is no longer available to the local authorities, means automatic cuts in services. There are many people who think the services have already been badly cut. Our standards in education, our standards in local health and our standards in local services are no longer things to be proud of. Last year the Government were proclaiming and Scotland was proclaiming the fact that we had opened a great new exhibition in Glasgow, the Burrell Collection, thanks to the Glasgow authority. They would not even give them credit for the additional £1 million that it will take to keep that place open. This is the crisis of rates. It is the crisis of the Tories.

What I seek to do here is to put a restricting hand on the Government. They can only interfere with the rates if there has been a departure from the preceding expenditure of more than 10 per cent. I think that is fair. I think it is right. I beg to move.

Lord Grimond

It seems to me that the two basic objections to the Government's attitude towards rates are these: first, that instead of laying down more precisely what local authorities have power to do and relieving them of many duties, they have left it very largely open-ended in some directions about what they can do and they have laid new duties upon them. It is absurd to proceed by allowing the local authorities to take on commitments of all sorts, indeed encourage them to do so, then say that they are spending too much and that they must be cut.

In my part of the world there is large duplication; for instance, in agriculture the local authorities have agricultural advisers and officers, so does the North of Scotland College and the Crofters' Commission, and altogether there are no fewer than five authorities dealing with agriculture. There has been no attempt by the Government to clear up the basic responsibilities of local authorities and no one can undertake good management until that is done.

The second point, to revert to what was discussed earlier today, is the position over the rates. Of course, it is true that the right sanction against over-spending local authorities should be the electorate; and at the local elections those authorities which have been grossly extravagant should be turned out. But the ratepayers are now a minority. Many people are relieved of rates by one method or another and other people work in occupations which are derated. Therefore there is not, as I said earlier today, that connection between taxation and representation which is supposed to be the foundation of democracy, national or local. Until the Government have reformed the method of financing local authorities, until they have set in order the powers of local authorities, they will, in my view, make the position of local authorities impossible and they will make the muddle of local government worse still.

There are many other points to be made but these are the basic troubles. There is no proper definition of the responsibilities of local authorities. There is no attempt to prevent gross overlapping in Scotland between the various authorities, and there is no logical or efficient method of raising local authority finance which will be related to the voting at local government elections.

Lord Howie of Troon

My noble friend Lord Ross of Marnock in his interesting opening remarks at the beginning of this debate said that this was a highly political Bill. Coming from such an authority on political matters as he, this is something which we have to listen to very carefully. My noble friend's experience of politics and politicians goes back in my recollection for at least 40 years, and probably long before that, so when he says a Bill is political in its intent, as apart from merely being an adjustment of legislation that is something to which we must pay great care and great attention.

While I was ruminating over these comments of my noble friend I took the opportunity to discuss briefly and quickly certain aspects of this clause with my noble friend Lord Pitt of Hampstead, who unfortunately is not a Scot but is experienced in English matters. My noble friend Lord Pitt drew to my attention something which had escaped me. I sincerely hope the Minister will be able to enlighten me and to assure me that my noble friend Lord Pitt is correct.

This is the political point which my noble friend Lord Pitt drew to my attention. He claimed that this Bill, the Scottish Bill, is rather more draconian than its English equivalent. That seems an odd thing to be doing because my noble friend Lord Ross of Marnock has drawn attention to how shallow the Government's writ runs in Scotland in terms of the electoral strength of the respective parties in that part of our common country. Why should the Scots be treated more harshly than the English? If I am right, the Minister will tell me.

Under the Bill the Government are taking power to fix not only the maximum amount by which rates should be greater, but also the minimum amount. As I understand it, under the English Bill the Government are taking powers to fix only the maximum. For the moment they are not taking powers, as I understand it, to deal with the minimum. If it is appropriate to deal only with the maximum in England and to deal with the minimum at some other time in the future, surely it is sensible to apply exactly the same criteria to Scotland. If the maximum is enough for the English to bear it must be enough for the Scots to bear as well. If powers are not to be taken to fix the minimum in England is there any reason why they should be taken to fix the minimum in Scotland? Is it merely that the Government are looking on Scotland as some kind of test bed in which to try out their powers to fix both maxima and minima? On the strength of what happens in Scotland will they decide what to do at some later date in England?

As noble Lords will realise, I am not one who thinks that everything should be the same in Scotland and England and even in Wales—I see one of my noble friends from that Principality looking at me. I do not think that things should be equal, but when there are differences in legislation of this nature between the various parts of the United Kingdom the reasons for these differences and the justification for them should be made plain and we should be convinced that there is reason for them. I am perfectly sure that the noble Lord the Minister of State, whom we have referred to often in this Chamber as a reasonable man, will have some reasonable explanation for this farrago of nonsense. I wait with interest to hear it.

7.10 p.m.

Lord Wilson of Langside

I, too, shall await with interest. I support these amendments because the clause, unamended, (which is the basis of the Bill) focuses on bringing into perspective how utterly misdirected is the Government's policy in this field. A vast amount has been said on the subject in relation to the English Bill, a Bill which produced something of a revolt in the Conservative party. There has been no similar revolt (which, I must say, I find disappointing) in relation to this Bill. But so much has been said that I content myself with adding only this. The clause shows the basic misdirectedness of the Government policy in this sphere because, on the one hand, they say in their White Paper that the Scottish rating system is basically sound; and then, on the other hand, they put before Parliament, before your Lordships' House, a Bill which effectively takes away from local government their rights in relation to the rating system.

Lord Gray of Contin

I think that I should start replying to this debate by putting right two of the claims made by the noble Lord, Lord Ross of Marnock, when he made his opening speech. The noble Lord is extremely articulate and he is extremely impressive when he is on his feet; but he is not always totally impartial. Therefore, I think it only right that I should highlight on occasion some of the suggestions which he makes which might be acceptable by his standards and his beliefs but to which I would take exception.

The noble Lord, first of all, suggested that rate limitation will stop any local discretion. This is not the case. If rate limitation has to be used as a last resort, local authorities will continue to be able, within that limit, to make their own decisions on service priorities in exactly the same way as they do at present. The noble Lord also suggested that services have been cut under this Government. If that is the case, why is it that local authorities are planning to spend more this year than they did in 1978–79—the last year in which the party opposite were in power—with inflation having been taken into account in that figure? I think that we have to bear in mind that when the noble Lord, Lord Ross of Marnock, is talking to us—and I nearly said "lecturing" us; because while he does not lecture the opposite side, he certainly lectures this side from time to time—we have to temper his comments with his passionate beliefs which we respect but with which we do not agree.

Amendment No. 14 which is the first of the group we are discussing, would restrict the circumstances in which there was the power to put a general limit on rates to occasions when the proposed average rate was 10 per cent. above that of the previous financial year. This would be unworkable. It might help if I outlined at this stage the procedure envisaged for general rate limitation. In late February or early March, authorities strike their rate and notify the Secretary of State of their rate and planned expenditure for the following year. If rates and expenditure were unacceptably high, the Secretary of State, about this time, would notify authorities of his intention to place a general limit on rates in the following financial year.

The necessary order under Clause 3 of this Bill would be laid in the autumn and applications for derogations dealt with in time for authorities to set rates in accordance with the general rate limit, or any individual exemption from it, by 5th March, the date by which rates must be fixed. However, this amendment, if accepted, would mean that the possibility of general rate limitation for a given financial year could only be considered once the rate for that year had been struck and it was clear that they were on average 10 per cent. above the preceding year. Thus it would be possible to consider taking action only after 5th March; that is, three weeks before the financial year to which the rates applied actually started. It would be impossible to complete the procedures for a rate-limitation order until well into the financial year and the result would be chaos and very unwelcome to the local authority. I hope that the noble Lord, if he reflects on the practicalities of his proposals, would accept that it is completely unworkable. It may be that the noble Lord has this in mind; but I suggest to him that that would, in effect, be what it would lead to.

Amendment No. 15 would remove the requirement to consult the Convention of Scottish Local Authorities and, instead, give them a veto over any limitation proposals. Local authority expenditure accounts for one-quarter of public expenditure. No Government could accept that local government itself should be given a veto over whether or not measures designed to control that expenditure could be used. The final two amendments, Amendments Nos. 16 and 17, would restict rate limitations to the year following revaluation. It is difficult to see the logic of this. Revaluations take place every five or seven years. There is no reason why local authority rates and expenditure may only need to be controlled by the last-resort power in a year following revaluation. Rate poundages can certainly change substantially following revaluation; but it is the rate Bill which concerns the ratepayer and that could give rise to concern whether or not there was a revaluation.

The noble Lord, Lord Howie of Troon, suggested that the Scottish Bill is harsher than the English, especially since the English Bill fixes only maximum rate increases. So far as the general rate limitation is concerned, both Bills have the same objective—to give a last-resort power to set a limit on the rates of all authorities. However, the method chosen is different. The English Bill will enable individual maximum rate poundages for each authority. These would be reductions to be set for each authority. A maximum is only necessary in such a situation. However, the Scottish approach is different. It sets a general limit for changes in rates, and since these could be either up or down both maxima and minima are included.

The two Bills are aiming to achieve the same objective but the routes are slightly different. I sense that there is an air of hunger in the Committee and I suspect that it would not be welcome if I were to extend this debate for too long. Therefore, I would say to the noble Lords, Lord Ross and Lord Carmichael, that I am not able to accept their amendments and I hope that they will consider withdrawing them.

Lord Howie of Troon

Would the noble Lord the Minister reflect for a moment on the intervention that I made earlier, which was intended to seek enlightenment more than anything else? What he has done in response to my question is what he very often does in response to a question from this side of the Chamber and especially from up here—that is, he has said quite distinctly and quite firmly what the situation actually is. But my question went a little further than merely asking to be told what the situation was because, following my discussions with my noble friend Lord Pitt of Hampstead, I had a fair idea before I spoke of what the position was. The question I asked the noble Lord really was: why was it different? I know that "how?" or "in what way?" is usually an easy question to answer and he is usually very adroit and adept at doing so; but "why?" is a question of a different dimension. I really wonder why the Scottish Bill should differ from the English one.

I am sure the noble Lord would agree with me—indeed the noble Lord, Lord Ross of Marnock, has said this in this Chamber and in another place on many occasions—that it simply is not good enough that Scottish legislation should necessarily be modelled entirely on English legislation, and that just as Scotland is a totally different place and as Scots are totally different people, then it is quite natural that from time to time there can be differences in legislation. There are many Bills which have gone through this Chamber and another place which do precisely what this one does: that is, achieve the same objective but take a different route.

Lord Ross of Marnock

This is a completely new power that the Government are taking. I am still waiting for the justification of that. It may be that we shall get it on clause stand part; but the noble Lord has not told us just why they need it. When he tells me that the effect of my amendment would be to make it difficult and, he suggested, even unworkable, I am not exactly weeping tears over that because I do not want the clause at all.

The other point he made was: why did I suggest that it might be in the year of revaluation? I do not know whether or not he has a long memory, but in the last year of revaluation we saw a very considerable jump on rate poundages because of the tendency there is sometimes with local authorities, because revaluations go up and automatically rate poundages should go down, to keep them higher than they should. There are more likely to be difficulties on that point in a year of revaluation than at any other time, and that was the reason for that. Experience has shown us that if it is going to be used at all, it might be used then. But because it is such a power that no Government ever dreamt of taking I sought in some way or other to restrict the effect of it. If that is the best the Minister of State can do, then the sooner we vote on this amendment the better.

7.23 p.m.

On Question, Whether the said amendment (No. 14) shall be agreed to?

Their Lordships divided: Contents, 42; Not-Contents, 71.

Aylestone, L. Collison, L.
Beaumont of Whitley, L. David, B. [Teller.]
Beswick, L. Dean of Beswick, L.
Birk, B. Diamond, L.
Brooks of Tremorfa, L. Elwyn-Jones, L.
Carmichael of Kelvingrove, L. Gallacher, L.
Cledwyn of Penrhos, L. Grimond, L.
Hampton, L. Nicol, B.
Hatch of Lusby, L. Parry, L.
Houghton of Sowerby, L. Pitt of Hampstead, L.
Howie of Troon, L. Ponsonby of Shulbrede, L.
Hughes, L. Ross of Marnock, L.
Irving of Dartford, L. Stallard, L.
Jeger, B. Stoddart of Swindon, L.
Kilmarnock, L. [Teller.]
Kintore, E. Stone, L.
Kirkhill, L. Strabolgi, L.
McGregor of Durris, L. Taylor of Blackburn, L.
Mackie of Benshie, L. Tordoff, I.
Mishcon, L. White, B.
Molloy, L. Wilson of Langside, L.
Mulley, L.
Alexander of Tunis, E. Lawrence, L.
Auckland, L. Lindsey and Abingdon, E.
Avon, E. Long, V.
Belhaven and Stenton, L. Lucas of Chilworth, L.
Belstead, L. Lyell, L.
Boothby, L. Macleod of Borve, B.
Brookes, L. Margadale, L.
Bruce-Gardyne, L. Marley, L.
Caithness, E. Marshall of Leeds, L.
Campbell of Alloway, L. Maude of Stratford-upon-
Carnegy of Lour, B. Avon, L.
Cathcart, E. Merrivale, L.
Colville of Culross, V. Mersey, V.
Cornwallis, L. Montagu of Beaulieu, L.
Craigavon, V. Morris, L.
Davidson, V. Mountevans, L.
Denham, L. [Teller.] Murton of Lindisfarne, L.
Donegall, M. Orkney, E.
Drumalbyn, L. Pender, L.
Dundee, E. Rankeillour, L.
Elton, L. Redesdale, L.
Ferrier, L. Renton, L.
Gardner of Parkes, B. St. Aldwyn, E.
Glenarthur, L. St. Davids, V.
Gray of Contin, L. Saltoun, Ly.
Greenway, L. Selkirk, E.
Gridley, L. Skelmersdale, L.
Hailsham of Saint Stodart of Leaston, L.
Marylebone, L. Suffield, L.
Halsbury, E. Swinton, E. [Teller.]
Henley, L. Trenchard, V.
Holderness, L. Trumpington, B.
Hornsby-Smith, B. Vaux of Harrowden, L.
Hylton-Foster, B. Vickers, B.
Kinnoull, E. Whitelaw, V.
Lane-Fox, B. Wise, L.
Lauderdale, E.

Resolved in the negative, and amendment disagreed to accordingly.

7.32 p.m.

Lord Lucas of Chilworth

This might be a convenient moment to adjourn for dinner. I beg to move that the Committee stage be adjourned during pleasure until 8.15 p.m.

[The sitting was suspended from 7.32 until 8.15 p.m.]

[Amendments Nos. 15 to 17 not moved.]

Lord Mackie of Benshie moved Amendment No. 18: Page 2, leave out lines 27 to 32 and insert ("an abatement of the first £500 Of rateable value of commercial properties.").

The noble Lord said: I rise to move this amendment, which is extremely important and towards which I am sure the noble Lord the Minister will be very sympathetic. By this amendment, I should like to probe the Government's intentions with regard to the encouragement of small business, which is extremely important—and perhaps more so in Scotland than elsewhere—because I do not see how we are to get energy and enterprise into the economy unless it comes from small business. Our unemployment problem in Scotland is much worse than it is in some areas of Britain, and small business can play a tremendous part in increasing employment; indeed, it is the natural source of the sort of growth that we require in this country.

The rates burden is a very heavy one on a lot of people who are starting up. The intention behind this amendment was quite sympathetically treated in the other place, but the amendment there would have applied to a whole lot of big business as well as small business. So we have put down this amendment simply to abate the first £500 of rateable value, which would be a very substantial contribution to a whole lot of people who are starting up, but it would not be a sort of present to a big prosperous business.

Particularly in the retail area, we hear a great deal of nonsense talked about the number of jobs created when a supermarket or a large hypermarket opens up. It is reported that there will be 200 or 400 new jobs, but the fact is that such places destroy far more in the way of employment and enterprise around them than they create, because small firms go out of business when a supermarket opens up, taking an enormous slice of trade—admittedly, in a very efficient manner.

There is a great deal more that could be done for small business, although that is not what we are discussing tonight, but this would be a very significant factor. Some incredible figures were recently produced, applying particularly to the United States of America and Japan, where they have been creating new jobs at some 10 times the rate of new job creation in Britain, and at a much greater rate than our more successful co-partners in the European Community. Much of the improvement is concerned with the encouragement of people starting up in business. I admit that this has got to come off somebody else. If one abates £500 of rateable value, somebody else has got to pay it. However, the reward to the community would be substantial if we encouraged the growth of new businesses, whether retail, or manufacturing, or some other form of service, because that is where enterprise begins.

Some of the Government's legislation has been very favourable for small businesses. A number of bodies have been set up to encourage small businesses. If the Government were to follow this up by treating the amendment sympathetically and by assisting us to find a slightly more workable place for it than we have at the moment, it would be a step forward towards the fulfilment of their promise and of their desire to see small businesses grow and enterprise flourish. I beg to move.

8.22 p.m.

Lord Gray of Contin

I have sympathy for what the noble Lord, Lord Mackie of Benshie, seeks to do. There are difficulties, which he has recognised. I am grateful to him for moving his amendment as a probing amendment. I know that it would not be his intention to wreck Clause 3, but there is a danger that this would happen if this amendment were passed. The noble Lord's purpose is to aid the commercial ratepayer. However, he will recognise that the amendment renders Clause 3 incapable of its original purpose of providing general control of rate increases. In wrecking the clause we should remove a power which is designed to help all ratepayers. In doing so, we should harm the very people the noble Lord seeks to help.

The clause as it stands provides an important reserve power for the Secretary of State. We envisage that it will be used only as a measure of last resort if local authorities fail to bring their rates and expenditure into line with the Government's plans. It will enable the Secretary of State to prescribe the maximum rate increases which an authority may impose or, if necessary, to require minimum rate reductions. We hope and, indeed, expect that as authorities see the benefits of bringing their expenditure to a level which the country can afford this power will not be needed.

The Government are very conscious of the problem which rates can cause for businesses, especially for small businesses which this amendment is particularly designed to help. It is for this reason that since they came to office the Government have pursued a policy of reducing local authority expenditure in order to reduce the burdens on taxpayers. The selective action powers have successfully brought down the rates and expenditure of a number of authorities. The improved method of distributing general abatements for grant, contained in Clause 1 of the Bill, will put further pressure on high spending authorities. Under Clause 4, commercial ratepayers, along with other non-domestic ratepayers, will be consulted each year before any local authority can fix its rates. From all this, commercial ratepayers will benefit, along with ratepayers generally.

While the amendment would help small businesses, the rate rebate proposed, as the noble Lord rightly pointed out, would have to be paid for by somebody—householders, perhaps, and industry. If one gives rate rebates of this kind and somebody has to pay for them, one should try to decide where that money is to come from. It is difficult to calculate what the loss of rate income would be if this amendment were made. However, it would be substantial and local authorities would have to make it up by increasing everybody else's rates. Thus, for instance, a small industrial firm would face increased rates in order to provide reduced or even complete exemption from rates for small commercial firms.

To take some examples, a small knitting firm, a small steel fabrication firm, a small type-setting firm, since they are classified as industrial, would not benefit and would have to pay increased rates, although they are small businesses. All other ratepayers would also have to continue to pay rates. Therefore, the problem is one of trying to find a way to achieve what the noble Lord seeks to do, quite reasonably, to help small businesses. However, the irony of the situation is that one could have a small business association in a particular part of the country in which some members of that association would be suffering as a result of the benefits given to others. So it is a quite difficult problem and I am glad that the noble Lord recognises that it is a problem.

I have no doubt that between now and another stage of the Bill the noble Lord will try to devise a method to overcome this problem, and the Government would be happy to find a means of overcoming it. However, we have been unable to devise a method. Nevertheless, I am grateful to the noble Lord for giving us the opportunity to discuss this very interesting point, to which we may return on a future occasion. In the meantime, perhaps the noble Lord would be prepared to withdraw his amendment.

Lord Ross of Marnock

When I first read the amendment I wondered what it meant. I had the feeling, which has not left me, that it was misplaced and that it would be better placed in Part II of the Bill. The Government spokesman said something which would have been ruled out of order in another place. He told us about his sympathy for commercial businesses. I do not have the same amount of sympathy for commercial businesses. The Government should know, if nobody else knows, that the basis of commercial business valuation is rental. The noble Lord, Lord Mackie of Benshie, spoke about his lack of sympathy for big department stores and objected to people claiming that big department stores create many more new jobs. He quite rightly said that big department stores mean the departure of small businesses and small shops.

I do not know whether it is still the practice of many of these big department stores, but I remember that Mr. Hugh Fraser, later Sir Hugh Fraser and then Lord Fraser of Allander, bought up a business and, as soon as he had bought it up, sold it, usually to an insurance company. He then rented it back at what anybody else would have thought was an inflated rent. But the fact that he was prepared to pay that inflated rent meant that his valuation was determined by that high rent. But it did not stop there. The assessor was bound to know that the premises next door were under-rated. Therefore, many small businesses in the centre of our towns were driven out by an action which suited a very large businessman who came in to work this financial wangle, whereby a business was bought and sold and then rented, and all that he owned were the goods in the store. That is one of the weaknesses of the Scottish rental system.

The Government say, "Of course, we would like to help", but remember, the amendment would reduce the first £500 for large and small. That is one of the biggest weaknesses. It is the same problem that the Treasury are up against in relation to raising a threshold. It gives a benefit to everyone whether they need it or not. The Minister is right in saying that it did not reduce expenditure and that it just meant a further concentration on a narrow base for those who have to pay for that expenditure through rates. He said that it was, of course, inevitable. With respect, it is not inevitable because we have rate abatements in Scotland. Industry is abated to the tune of 50 per cent. It used to be 75 per cent. Remember, there is a gap at the moment between the amount that the Government grant to England and Wales compared with the Government grant to Scotland. We receive a higher proportion of grant and there are very good reasons for it.

One of them—and this is one of the arguments—is that it was to make up for the abatement that was given to industry; so the Government, to meet the cost of this to local authorities, could have increased their share of the expenditure if they are so anxious to help industry. I know that because at one time the abatement to industry in Scotland was 75 per cent. and then it was changed to 50 per cent. That was a very considerable gain in rateable value and in rates to the local authority. But in stepped the Treasury and said, "Ah, we must take a share of that because we have been paying a considerable part of it". Therefore, when the Minister is thinking up his arguments in respect of the next amendments I hope he will remind his right honourable friend that the Government can do something to help in shouldering this burden and not leave it to the local authorities. He is right in that he appreciates the weaknesses. It has been an interesting debate.

Lord Gray of Contin

I cannot let the noble Lord, Lord Ross, get away with that last remark. The abatement of rates for industrial companies is certainly helpful, but our concern is for ratepayers as a whole. Tackling the problem of high rates at source, high expenditure, reduction of corporation tax, removal of the National Insurance surcharge, increases in the tax threshold on investment income, the VAT threshold—all these are major matters which are helpful toall businesses.

The only objection I have to the noble Lord's amendment is that it removes a power which is available as a last resort to help all ratepayers, including the small businesses which most concern the noble Lord. As I said earlier, we have to try to find some means of overcoming the problems which I have mentioned and which have been mentioned by the noble Lord, Lord Ross of Marnock, in order to create assistance for these small businesses. Everyone is concerned about the small businesses and if there is a way of helping, then I am sure we would be interested. Whether a way will be found in Part II of the Bill, as suggested by the noble Lord, I do not know. I do know that the amendment in its present form would not suffice. Perhaps between now and the next stage of the Bill we can turn our minds to it.

Lord Ross of Marnock

I hesitate to speak again because it means that the Minister will have time to read over his brief again and find another bit that he missed and plague us with.it. May I add to his long catalogue of how the Government are aiding business? It may be of interest to the noble Lord, Lord Mackie, on a future amendment. There is something called an enterprise zone; there is postponement; there is a 100 per cent. rebate for a period on rates in an enterprise zone. So there are plenty of precedents for doing something for small businesses, either along the way mentioned by the noble Lord, Lord Mackie, or in some other way which is more specifically related to the actual size of the business.

However, let us not get led away on this. It depends whether the Government are prepared to support it. The Minister talks to me about high rates but the fact is that there is the rates portion which is paid by the ratepayers, and there is the portion that is paid by the Government through rate support grant or specific grants—although there are fewer and fewer specific grants as they are all wrapped up into a block rate support grant. If the Government reduce their share of that then automatically, unless one cuts the services, the rates go up. What the Government are now talking about is the rates going up; or the fixing of a lower rate and a compulsory cut in services. That is far away from the £500, but it does mean that, unless the Government give support, whatever the Minister is going to say, the rates will increase further for the others.

Lord Mackie of Benshie

I am much encouraged by the response and the help that has come from the noble Lord, Lord Ross of Marnock, and from the Minister. In Scotland we have a very energetic and busy Small Business Federation with whom I have been in touch, and that will be much encouraged, too, by the Minister's sympathetic attitude. I am perfectly certain that we can find a method which will not lay too much of a burden on other people.

It is worth doing. The noble Lord, Lord Ross of Marnock, is right. The Government might well consider making a contribution to an abatement because there is nothing more important, and more important to the other ratepayers, than the encouragement of fresh enterprise in Scotland. Only out of that can we get the sort of growth that we need; can we attain the Government's objectives of expanding our industrial base and get ourselves once more into the black as regards exports. It all has to come from the people and it cannot all come from large business and large investment.

I am, therefore, much encouraged by the Minister's reply. I will certainly be working on it and hope to produce at the next stage some form of amendment which will enable the Government to help small business to expand in all these fields without its costing too much; because, whatever it costs, it will eventually be useful for the community. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carmichael of Kelvingrove moved Amendment No. 19: Page 2, line 32, at end insert— (" ( ) In any financial year in which the power in subsection (1) above is exercised the percentage of reckonable expenditure met by the Secretary of State shall be not less than that of the preceding financial year.").

The noble Lord said: The purpose of this amendment is to try to persuade the Government to incorporate in the Bill provision for the fact that there is inflation. Local authorities have the same burdens arising from inflation as do everyone else. In fact, as my noble friend Lord Ross said earlier, Scottish teachers have just been given a 4.5 per cent. salary increase which, according to Government figures, is at or above the level of inflation. Therefore, local authorities' expenditure, if they are to keep anything like the same services going, would need in real terms to be the same as in the preceding financial year. If not, it is axiomatic that there will be a decrease in services to the ratepayers.

The whole purpose of the amendment is to ask the Minister to accept the fact that local authorities suffer in the same way as the Government. We wish to insert at the end of line 32: In any financial year in which the power in subsection (1) above is exercised the percentage of reckonable expenditure met by the Secretary of State shall be not less than that of the preceding financial year", in order to ensure that the people voting in Scotland today do not suffer poorer services than they would do if the amendment were not made. I beg to move.

Lord Gray of Contin

This amendment would restrict rate limitation to years in which the percentage of rate support grant had been reduced. Reductions in grant percentage have been used by all Governments to put pressure on local authorities to reduce expenditure. It is in these situations, when expenditure is high, that general limitation might well have to be used. What I said when we were discussing Amendments Nos. 14, 16 and 17 applies equally to Amendment No. 19. Therefore I am very sorry that I cannot accept the amendment. I must ask the noble Lord whether he will consider withdrawing it.

Lord Ross of Marnock

I heard most of what the noble Lord said. So far as I can gather, he does not like the amendment. It would give a certain measure of justification to the Government for doing this if in that year they decided that by way of rate support grant they would meet the same percentage as they had the previous year. There would require to have been some serious runaway or proposed runaway of expenditure in respect of the rates to justify the kind of increases that would mean Government intervention. There might then be some justification for it. But the Government themselves may make the position of local authorities intolerable by reducing their share of the reckonable expenditure. That is only the part of the expenditure not met outside of housing and beyond that met by specific grants, which is covered by the block grant, and after deduction of income, be it from charges, property, or that kind of thing. That is then the aggregate of reckonable expenditure. At the moment in Scotland the Government meet 60.2 per cent. It is under that for England.

The Government just make the decisions. If there is no reduction in expenditure—and expenditure has been cut and cut—and the Government further reduce their share, the only alternative, if the local authority wishes, and decides, to maintain its services, is to increase the rates. The Government can manipulate a local authority into a position which the Government say is one of excessive expenditure. Where the Government construe that there has been excessive expenditure all over Scotland, so that they need to exercise this power, they should be able to say, "At least we are not to blame because we have not cut our share of rate support grant".

It is asking an awful lot of the Government. Year after year during the past five years, they have cut about nine points. It is not really 9 per cent. Nine parts of 70 is a lot more than 9 per cent. This year the cut is 1.6 per cent. That would justify them doing it. That is why I put this amendment down. It is an important provision. I think it is realistic. If the Government are not sure of this and turn it down, it will mean that in the following year they will again cut their percentage. I fear this is what will happen. The Government are opting out of meeting their financial commitments in respect of all kinds of expenditure, and this is leading to the cutting out of services which this House and the other House have said are necessary.

Not all that long ago we had a Bill on mental health. Eventually this Government accepted the will of the House that in Scotland there should be an after-care service for people who leave mental hospitals. Who was to provide it? It was the local authorities, and that meant more money. If the Government will the service, they should be prepared to meet their share of the cost. That is not happening. Many of the services are not being cut; they are just not being introduced, and that is a cut in the standards laid down by the House.

That is the purpose of the amendment. I do not think it has been dealt with by the Minister, but at this moment I shall not press it. Perhaps like the noble Lord, Lord Mackie of Benshie, I shall rephrase the amendment and put it back in the same place. I still hope to convince the noble Lord; after all, he is quite a reasonable person. If he gets the Highland air about him, and once he receives the plaudits of the islands authorities for what he wanted to do and what the House forced him to do today, he may well seek a little more popularity in that area by accepting a few more of our amendments. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.47 p.m.

Lord Ross of Marnock had given notice of his intention to move Amendment No. 20: Page 2, line 35, at end insert ("and that percentage shall not exceed five per cent.").

The noble Lord said: I shall not pursue this amendment at this hour of the night and with so much work to do, though it is one that I would ask the Government to have a look at, because they will see it again. But it is not moved.

[Amendment No. 20 not moved.]

The Deputy Chairman of Committees (Lord Renton)

If Amendment No. 21 is agreed to, I cannot call Amendment No. 22.

[Amendment No. 21 not moved.]

Lord Mackie of Benshie moved Amendment No. 22: Page 3, line 8, after ("consult") insert ("individually each authority affected by the order and also").

The noble Lord said: I put down this amendment because at the moment the clause reads a little unreasonably. It states: The Secretary of State shall, before making an order under this section, consult such associations of local authorities as appear to him to be concerned".

That rather reads as though he will not give the authorities concerned the time nor the opportunity to make a case. I cannot believe that that is so. There may well be special circumstances, and he would surely consult them in order that they can explain why they are displeasing him by putting the rate at a certain level. Certainly he should also consult the local authority associations. As it is, the clause reads as though the offending authorities are not to be allowed to make their case to the Secretary of State. I beg to move.

Lord Gray of Contin

As the noble Lord has pointed out, this amendment proposes that before making a rate limitation order, the Secretary of State shall consult each authority affected by it. The Bill provides that an order may cover one or all three classes of local authorities: regions, districts, and islands. All authorities in the class or classes will be affected by the order, whether they fix a rate in accord with the order or seek a derogation.

Consequently, the amendment, if carried, would require the Secretary of State to consult each and every authority before making the order. This is clearly impracticable and completely at variance with the procedure accepted over many years—a procedure for consultation on the rate support grant order—which also affects every authority. This is a well-established principle of collective consultation with the convention on matters that affect all authorities, and provision is made in subsection (5) of this clause for this form of consultation on any rate limitation order.

If the noble Lord is concerned about the exceptional case, I would point out that this is fully provided for under the derogation procedure, where exceptional, individual circumstances can be taken into account. There would therefore be no justification for discussing the general limits with each authority individually. In the light of what I have explained about the effect of this amendment, I would invite the noble Lord to withdraw it.

Lord Mackie of Benshie

I thank the Minister for the reply and I shall study what he has said to see whether the derogation procedure covers the situation; I hope it does. In the meantime I shall withdraw the amendment and have a look at what the Minister has said and the effects thereof. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ross of Marnock moved Amendment No. 23: Page 3, line 15, leave out subsection (7).

The noble Lord said: There is a very simple reason why this amendment has been put down. I could not make head nor tail of the subsection, but I knew we would get a very long and lucid explanation from the Minister of State. I beg to move.

Lord Gray of Contin

I shall endeavour to give a lucid, if not too long, explanation, which I hope may satisfy the noble Lord. The amendment would remove the provision under which an authority which failed to determine a rate in accordance with the rate limitation order would be deemed to have determined its rate in accordance with the maximum increase or minimum increase in the order, whichever was appropriate. This is intended to deal with the authority which decided to challenge the Government at the expense of its ratepayers, either by failing to set a rate in accord with the general limitation order and leaving it with inadequate income to provide essential services, or by actually setting a rate involving an increase above the limit. That would obviously be unacceptable and subsection (7) will ensure that an authority has income to provide adequate services.

I am sure that the noble Lord will see that the provision he seeks to remove is useful and sensible. He may therefore wish to withdraw his amendment.

Lord Ross of Marnock

No; I just still do not understand it. You see, you get a maximum or a minimum. There is certain latitude each way. But if an authority does not fix its rates—and, remember, a rate is a fixed rate; it is not within a range—it shall be deemed to have … determined the rate at which the maximum or, as the case may be, the minimum amount referred to in the order is exactly complied with". I just do not understand how you can deem what is a fixed rate to be either a maximum or a minimum.

Lord Gray of Contin

The purpose and effect of the amendment which the noble Lord seeks to move would be to remove the provision under which an authority which had failed to determine a rate in accordance with a general rate limitation order would be deemed to have determined a rate in accordance with the rate limit. I am sure the noble Lord can follow that. I do not think I can make it any clearer, but I shall try again. It would remove the provision under which an authority which had failed to determine a rate in accordance with a general rate limitation order would be deemed to have determined a rate in accordance with the rate limit.

Lord Ross of Marnock

Yes, but they have not. The point is that the power that the Secretary of State takes is to determine a maximum or a minimum. Then it is up to the local authority to comply by fixing a rate which is within the maximum or, as the case may be, the minimum. However, when they have not done anything but it is deemed that they have, and it is said that the matter must be ended in relation to the original order, nobody has fixed anything. Nobody has fixed anything within the maximum or within the minimum. So how can you possibly deem it as having been done? If the Government had said, "This is a figure" and they refused to fix that as the figure, then you can deem that figure which has been laid down by the Secretary of State as the figure. But it is not a figure; it is a maximum or a minimum.

Lord Gray of Contin

I do not think we are in disagreement as to whether it is a maximum increase or a minimum decrease in the order, whichever is appropriate. This provision is to deal with the authority which decided to challenge the Government at the expense of its ratepayers, either by failing to set a rate in accord with the general limitation order and leaving it with inadequate income to provide essential services, or by actually setting a rate involving an increase above the limit. Deeming a rate is designed to deal with authorities which do not comply. Therefore the only way that they can have a rate at all is for one to be deemed at the appropriate maximum or minimum.

Lord Ross of Marnock

It does not say that.

Lord Gray of Contin

I am trying to explain to the noble Lord what "deeming a rate" means. If the authority does not fix a rate then the only way that a rate can be deemed is for one to be deemed at the appropriate maximum or minimum.

Lord Mackie of Benshie

I wonder whether I may come into this private argument. When the Government have made an order, which, as it says in paragraph (a) of the subsection, has effect in relation to a local authority do they actually specify the rate maximum or minimum which may be charged? If that is the case, I understand it, but they would have to specify which one applied.

Lord Gray of Contin

That, with respect to the noble Lord, is not actually the point. The point is that deeming a rate is intended to deal with authorities which do not comply. Therefore the only way they can have a rate at all is for one to be deemed at the appropriate maximum or minimum rate. If they comply, they then make their own rate. If they do not comply, then one has to be deemed for them.

Lord Mackie of Benshie

I understand that. But if an authority is to charge a rate of £5 in the pound, then I would presume that the Government, when they made the order—if an order under this clause has effect in relation to a local authority—would say, "You cannot charge £5 for a pound's rateable value; the maximum you can charge is £1.50". If that is what is provided for, then I can understand the rest of it. If not, then I cannot understand it.

Lord Gray of Contin

Perhaps I may explain to the noble Lord. When a rate limit is set, it is set either as a maximum increase or a minimum decrease. It cannot be both. It is set as one or the other.

Lord Ross of Marnock

I gather that the intention is that if a local authority does not comply, then automatically it is deemed that the increase is the maximum laid down or the minimum laid down. I hope that there is only one of them laid down, not both. There must only be one of them laid down. If that is the case, I would ask the draftsman to have another look at this and see that it is much more clear. The only latitude a local authority has is to be within the maximum or within the minimum. If they do not determine the rate, they have no option. It will be either the maximum or the minimum. I presume that that is the case, but it is not clearly stated.

I think that I know what was intended but I received little or no help from the explanation of the Minister. That means that there is something wrong with the drafting. If a brief cannot be drafted properly, it is a pretty poor look-out for the actual drafting of the Bill. Perhaps the Minister can promise that the draftsman will have another look at this point to make more explicit what will happen to a local authority that decides not to determine a rate in accordance with the Government's wishes. We are told that this will never be introduced, anyway. But we had better get it right at the start. That being so, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 3 shall stand part of the Bill?

Lord Ross of Marnock

This is the important clause. It is the clause that deals with rate capping. I could not possibly allow this clause to stand part of the Bill without saying a word or two. We have come to a pretty sorry pass when we have so to interfere with local democracy as to deny the right of local authorities even as a last resort to fix their own rates. The Government keep coming to this business of last resort. If the powers are there in a Bill the Secretary of State will use them. It was the powers in the 1966 Act that started us all on this. They stemmed, I think, from an Act of 1949, carried through in consolidation and the rest of it. Eventually they were used—and used by the present Government.

Year after year—I think that this is the third Bill—one power led to another power and led to the power that we are now discussing. No doubt in the next Bill we shall get another. Really, this has gone far enough. I do not care how few people are here today. I am determined that we must oppose this clause standing part of the Bill.

9.3 p.m.

On Question, Whether Clause 3 shall stand part of the Bill?

Their Lordships divided: Contents, 48; Not-Contents, 14.

Avon, E. Hornsby-Smith, B.
Belhaven and Stenton, L. Long, V.
Belstead, L. Lothian, M.
Boothby, L. Lucas of Chilworth, L.
Brookes, L. Lyell, L.
Bruce-Gardyne, L. Macleod of Borve, B.
Campbell of Alloway, L. Margadale, L.
Carnegy of Lour, B. Marshall of Leeds, L.
Cockfield, L. Morris, L.
Coleraine, L. Murton of Lindisfarne, L.
Craigavon, V. Napier and Ettrick, L.
Davidson, V. Rankeillour, L.
Denham, L. [Teller.] Renton, L.
Donegall, M. Saltoun, Ly.
Elton, L. Skelmersdale, L.
Ferrier, L. Soames, L.
Gardner of Parkes, B. Stodart of Leaston, L.
Glenarthur, L. Swinton, E. [Teller.]
Gray of Contin, L. Trumpington, B.
Greenway, L. Vaux of Harrowden, L.
Hailsham of Saint Vickers, B.
Marylebone, L. Whitelaw, V.
Halsbury, E. Wise, L.
Henley, L. Young, B.
Holderness, L.
Airedale, L. Pitt of Hampstead, L.
Carmichael of Kelvingrove, L. Ross of Marnock, L.
Collison, L. Stoddart of Swindon, L.
David, B. [Teller.] [Teller.]
Dean of Beswick, L. White, B.
John-Mackie, L. Wilson of Langside, L.
Lockwood, B. Winstanley, L.
Mackie of Benshie, L.

Resolved in the affirmative, and clause agreed to accordingly.

9.11 p.m.

Lord Carmichael of Kelvingrove moved Amendment No. 24: After Clause 3, insert the following new clause:

("Restriction of Secretary of State's power to control rales.

. After section 108C of the Local Government (Scotland) Act 1973 there shall be inserted the following section—

Restriction of Secretary of State's power to control rates.

"108D. No order under section 108B of this Act may be made in respect of any local authority whose expenditure has not risen in real terms in the immediately preceding financial year." ")

The noble Lord said: The proposed new clause, 108D, is an amendment to the Local Government (Scotland) Act 1973. Amendments similar to this one were moved in another place in an effort to modify the very severe effects of this Bill, particularly Clause 3, if it is enacted by this House and the other place. Under Clause 3 the Secretary of State has power to reduce in any year the rate poundage as against that levied in the previous year. We have already discussed the ability of the Secretary of State to group offending local authorities in any one order, although I understand there will be powers for some local authorities individually to appeal to the Secretary of State for special dispensation. Nevertheless, the Bill is fairly draconian from that point of view.

This amendment suggests that an order under Clause 3 should be laid only if the rise over the previous year in that local authority's expenditure is greater than any rise due to inflation. This is close to the earlier amendment that I tried to get the Minister to accept. In real terms it is saying that as long as the local authority has not spent more it should not be possible to use this power.

With hard pressed local authorities—and local authorities in Scotland are extremely hard pressed just now—merely to stand still will be quite a feat because all the time restrictions in Government expenditure are in vogue. It is not just a question of inflation; deprivation in many of our areas is increasing. The age profile is increasing quite noticeably, throwing additional expenditure and additional work and responsibility on to local authorities and social services.

We are finding more problems, as the noble Lord the Minister knows very well, with the young unemployed. It is a hopeless situation to have left school hoping to work and finding there is nothing for you. It is the old story: you leave your house in the morning not knowing whether to go left, right or back indoors because nobody cares. From that emerges a great deal of anger, frustration and depression. It hits young people, and it is amazing that a great many more are not affected in this way. There are strains on those who find unusual and sometimes illegal ways to break their boredom, and therefore great strains are put on the social services because of the existing policies of the Government. The local authorities would like to spend more to try to relieve these tensions but they find it impossible, and they will find it even more difficult if we cannot get the Government to accept this new clause or something very close to it.

The dilapidation in local authority housing and buildings is very noticeable despite the money they have been spending and the very great efforts they have been making. Cities like Glasgow, Dundee and Edinburgh, partly because of the problems of the type of building that was encouraged by various Governments immediately after the war (the systems building, the hurried building, the inadequate supervision because of the rate at which we were trying to build at one time with the new methods involved) we now find are paying off to the detriment of the tenants. This is because faults which were not apparent on the drawing board or in the test lab are beginning to come out in the Scottish weather. Local authorities are running hard, and as every year goes by a higher percentage of houses built immediately after the war is beginning to reach the point where the houses need fairly serious reconditioning. The findings of the housing stock has to be kept in a decent condition.

In the present depressed state of Britain the only people who can pick up the tab for a great deal of the open and hidden costs of deprivation are national or local government. The very thought that a local authority will be penalised for spending just the same as it had in real terms last year, and would perhaps have even this limited amount reduced, would cause even greater despair. Many responsible people who entered local government in an attempt to try to ameliorate the conditions of people and to give some sort of service, find it is impossible to give that service because of the way the Government is depriving them of money. They themselves get tired of trying to stem the waters and we shall lose some of the best people we have in local government.

It is, however, interesting when the Government talk about the profligacy of local government to look at the Government's own record in terms of expenditure. The findings of the famous report of the Treasury and Civil Service Select Committee of 1983–84 (chaired, as the noble Lord the Minister knows, by a very distinguished senior Conservative Back-Bencher) have been quoted since the election and are most interesting when contrasted with the way that the Government criticise local authorities. The Government want local authorities to reduce their expenditure although, with all their powers, they have not been able even to hold their own expenditure steady.

In Table 1 of the report to which I referred, it appears that, since 1979 when the present Government first came to power, local government expenditure has increased by 6.9 per cent. in real terms. But central Government expenditure in the same period, according to the report, has increased by 11.2 per cent. My noble friend Lord Ross of Marnock has already given the figures for housing alone in Scotland. The housing support grant in 1979–80 was £213 million. In 1983–84 it was down to £72 million and this coming year it will be down to just over £50 million.

Glasgow, for example, was originally asked in 1980 to increase its rents by 70 per cent. It was severely castigated by the Government because it increased its rents by only 31 per cent. The story about Glasgow's rents being ridiculously low is very much out of date. Considering conditions in Glasgow, Glasgow rents are about the average for most of the country. However, the penalty that was imposed on the City of Glasgow for not increasing its rents by 70 per cent. was £11 million. In 1982–83 the Government demanded that Glasgow increase its rents by 32 per cent. Because it was not able to comply completely with that request in view of the concern felt for the tenants, Glasgow lost £17 million from its housing capital allocation.

Notwithstanding all this saving from local authorities which are hard pressed (as they always are) by the Government and by Government policies, the Government still outspend the very people who run local authorities and at whom this Bill and many other pieces of legislation are aimed in order to try to control them. The Government certainly have not been able to keep their house in order although they expect others to do so with fewer powers ultimately and a great deal of responsibility literally on their own doorsteps. When those people leave their town halls and city chambers in Glasgow and Edinburgh to go home, they see deprivation and they feel that they have responsibilities which they are covering inadequately because they do not have sufficient income.

Therefore, when we ask in Amendment No. 24 that no local authority shall be reprimanded or penalised if their: expenditure has not risen in real terms in the immediately preceding financial year

we do not think that we are asking too much. When one considers that the Government have been in power since 1979, it would be almost insulting if the Minister suggested that this provision had to be introduced because there may have been a very high expenditure year. For the last three or four years local authorities in Scotland have not been allowed by this Government to have a high expenditure year. Therefore, any increase in line with inflation and merely allowing the local authorities to keep pace with what they were doing in the previous year, is the least that the Government can do if they are going to continue with their quite irresponsible general economic policy. I beg to move.

Lord Stodart of Leaston

I should like to raise one point for clarification, and I hope that the noble Lord will forgive me if by any chance my thoughts were wandering when he moved this amendment. There is reference to the Local Government (Scotland) Act 1973 and references are also made to Section 108C, 108B and 108D. I have the Local Government (Scotland) Act 1973 in my hands and I find that Section 108 bears no reference whatever to the subject under discussion. The rubric to Section 108 is: Determination and levy of regional, district and general rates", and it has nothing to do with the restriction of the Secretary of State's power to control rates.

Lord Carmichael of Kelvingrove

According to my Bill, Section 108 of the Act, and Section 108B are concerned with the power of the Secretary of State to control rates. Perhaps the Minister, who has the power behind his elbow—

Lord Ross of Marnock

If my noble friend will allow me, if the noble Lord looks at the Bill which we are seeking to amend, in Clause 3 on page 2 he will see the reference to Section 108B, which is an insertion into Section 108A of the Local Government (Scotland) Act, 1973. If he looks further down the page he will see that his own Government have put in the actual rubric of the clause: Power of Secretary of state to control rates". May I remind him that this is the third go that we have had at changing these local government Acts, and it may be that the answer to the noble Lord's problem is that the Act of 1973 has been changed more than once. I believe that it was changed in 1981 and again in 1982.

Lord Gray of Contin

The amendment would prevent an authority being affected by a rate limitation order if its expenditure in the year to which the order applied was no more in real terms than it was the previous year. Leaving aside the question of definition of real terms, on which the amendment is imprecise, the Government clearly cannot accept this limitation on the general rate control power, and I should like to make one or two points about it.

First, this amendment assumes that it is possible for a general rate limitation order not to apply to individual authorities. This is not possible. A general rate limitation order is what its name suggests, and if it applies to all authorities in the class or classes to which the order relates, all authorities covered by an order have to set their rates in accordance with it. If there are any exceptional circumstances affecting individual authorities, this can be dealt with by means of the derogation procedure in Section 108C of this clause.

Secondly, the Government could not accept an amendment which made it impossible to apply this power if it meant a reduction of a local authority's expenditure in real terms. The expenditure of Scottish local authorities, despite the Government's exhortations, is still above the level that the Government consider acceptable, and they are looking for reductions in real terms in the interest of both the national economy and of the ratepayer. In this situation it would clearly be unacceptable to exclude an authority from general rate limitation simply because it would mean a reduction in that authority's expenditure in real terms.

Local authority current expenditure has for many years exceeded the provision made for it by the Government. It has been growing at a faster rate than central government current expenditure. In 1983–84 authorities planned to spend about 96 per cent. more in cash than they did in 1978–79, whereas the comparable figure for central government is 79 per cent. The claim that central government spending is growing faster than that of local authorities is based on total provision, including capital expenditure, to which different considerations apply. Current expenditure is what we have to bring under control if rates are to be controlled.

In view of what I have said, the noble Lord will not be surprised that I cannot accept his new clause, and I ask him to consider withdrawing his amendment.

9.30 p.m.

Lord Ross of Marnock

I hope that my noble friend will not consider withdrawing the amendment in view of the figures that have been produced by the noble Lord. I can quote figures as well. I can give him a figure of the increase in central government spending in Scotland—and remember we are talking about Scotland and not talking generally. Between 1978–79 and 1983–84 central government spending showed an increase of 102.8 per cent. Even if you deduct from that the increase in social security spending it would be somewhere about 89 per cent. The expenditure rise of local authorities is very much lower than that.

When the noble Lord says, "We cannot do that because this is a general application", the fact is that the Government can do anything they like. That is what they are going to do anyway. If Parliament said that you will leave out of that general rate fixing the question of this authority and that authority which have kept their expenses down, I do not think that anyone would complain. In fact, judging by what the Government said they were doing in the Clause 2 apportionment in respect of the needs section of rate support grant, and ensuring that those who were the sinners in respect of excessive spending should be penalised rather than the others on the new apportionment basis, then the noble Lord should welcome this particular clause.

I do not think that the noble Lord, Lord Stodart of Leaston, was here when we started this in the House of Lords. Those were his fallow years when he was involved with inquiries for the Government, and so on. Little did he think then that he would come back to help the Government or have to sit and suffer the kind of explanations that we have had about why they would not do this or that in respect of local government now.

But we had first the 1966 Act, which itself had been amended by the 1973 Act. We had a complete distortion of the power that was there in respect of the standards of service and the expenditures of local authorities. There was a double-edged power at that time; first, to penalise local authorities that were not reaching the proper standard of service, and then there was another power which related to excessive and unreasonable expenditures. The noble Lord will find that the 1966 Act is now so bad that it has to be reprinted in the Schedule here in order to be understood. If the 1966 Act had been brought into the House, you would not have understood a word of what we have been talking about trying to relate it to that Act. I think that is what has happened with the 1973 Act.

The whole thing was based upon excessive and unreasonable expenditure. If a local authority in real terms holds its expenditure this year to what it was last year, that local authority is doing pretty well. That itself should be a criterion. as to whether or not it should be penalised in respect of the Government interfering with its power to fix its rates. It has shown itself as responsible.

The fact is that this year the Government are giving an actual increase of 2.7 per cent. to the local authorities. But that is not an increase in real terms, when the same Government are telling us that the inflation rate will be just over 5 per cent. We already know that the teachers have settled for 4.5 per cent. That is above the increase that has already been allowed by the Government. Now what are the local authorities to do? The Government should do it. Instead of fixing the rate, they are the people who should sack the teachers. They are the people who should cut the services. But no, they say, "We do not interfere. We will let the local authority apply their priorities and make their own cuts".

They put it a little more politely, they say they can determine the priorities on which they will spend what little money we leave them. That is what they really mean. We would draw attention to the fact that there are local authorities who are not spending more in real terms, but they are being penalised and we are trying with this particular new clause to prevent them from being further penalised.

If the Government want to do what Parliament tells them has to be done, then it will be done. The last thing any Minister should do is to come along and say: "We can't do it". We can do anything if we put our minds to it: if it means changing it from a general control to a less general control in respect of this type of authority, then they should do it. I think that my noble friend was quite right in his speech.

On Question, amendment negatived.

Clause 4 [Consultation with non-domestic ratepayers]:

Lord Carmichael of Kelvingrove moved Amendment No. 25: Page 4, line 7, after ("procedure") insert ("and in accordance with such a timetable").

The noble Lord said: This is really an amendment which the Minister may very well say is purely technical, and it could be, unless he can assure the House that a timetable is included in the procedure. Otherwise I can see very easily that if the local authority had to consult with non-domestic ratepayers, there could be a great deal of time involved and a great deal of additional pressure. In most terms this would mean additional expenditure laid on local authorities before they were able to decide or to publish or to make other arrangements for the other expenses and the other sources of income. They might have to wait too long because of delay not caused by them but by non-domestic ratepayers.

It is a fairly simple amendment which I am sure the Minister will be able either to accept or explain clearly. The purpose and thrust of the amendment is contained or will be contained in the procedure which the Secretary of State may direct the local authorities to apply when they are approaching the non-domestic ratepayer. I beg to move.

Lord Gray of Contin

This amendment is intended to ensure that the consultation exercise with non-domestic ratepayers should proceed along a prescribed timetable, as well as under a prescribed procedure. The answer to this is simple: procedure includes timetable. We have already had discussions with the Convention of Scottish Local Authorities and the Scottish Business Rates Committee on the basis of a draft of a code of practice. This draft code has a section headed "Procedure" which includes the time-table.

In brief, the timetable envisaged is that the first set of prescribed information would be made available by October, followed by meetings with bodies representa- tive of non-domestic ratepayers. The second set of information would be made available by the end of January for a further meeting with bodies representative of non-domestic ratepayers. Individual non-domestic ratepayers could make written representations at both stages. In the light of these consultations, local authorities would fix their rates, fully aware of the views of the non-domestic ratepayers in their area.

I hope that that explanation satisfies the noble Lord, and I think that the point which he was making is already well taken. I am sure that he would wish to withdraw his amendment in view of that explanation.

Lord Carmichael of Kelvingrove

Yes, I can accept that fully and agree with the Minister, but he mentioned a code of practice. It would be for the interest of the Committee if before the Bill ultimately left the House we could have some view of the code of practice. I know there is a feeling among some local authority people that there could be unnecessary delay. That is not a frivolous thing. I have known local treasurers who have had their holidays disturbed during the period of budget making and it has been a most difficult job for them. Therefore, they and we must be assured that these people, who are giving so much of their time, are given every facility by the procedure to be able to budget their time as well as the money with which they are entrusted. I shall be happy to withdraw on the assurance that the Minister will give us some idea of the code of practice he intends to use or to issue to local authorities.

Lord Gray of Contin

I can respond to the noble Lord in that I mentioned that at the moment it is a draft code of practice. It will not be finalised until the local authorities concerned have been fully consulted.

Amendment, by leave, withdrawn.

9.42 p.m.

Lord Ross of Marnock moved Amendment No. 26: Page 4, line 19, leave out ("and") and insert ("or").

The noble Lord said: This is a simple amendment. Subsection (4) says: The persons referred to"— that is those who receive this information, should be— those liable to pay rates in respect of lands and heritages other than dwelling-houses"— that is the non-domestic ratepayers— and bodies appearing to the local authority to be representative of persons"— who are non-domestic ratepayers. I wondered whether it was desirable to have both of these. The individual ratepayers—a wonderful collection of them, and there is no doubt that it could become quite a thing—would disrupt much of what happened. Or it could be limited, and here I suggest "or" to be added rather than "and": or bodies appearing to the local authority to be representative of persons so liable".

This will most likely be done on the basis of representatives of bodies. It may be of individual ratepayers, non-domestic ratepayers either industrially or commercially based. That I can understand. Many local authorities in Scotland tend to try to bring them in and give them much information about what the situation is in respect of the rates and expenditure. There is a lot more understanding of this than people would imagine. There has been much over-playing of the cost of rates to particular people and the rates burden compared with the burdens of other things placed upon them by Governments.

I am not too happy about the extent of this. It would be far better to have one or the other rather than paragraphs "(a)" and "(b)" because it could be troublesome at a time when local authorities are trying to strike rates, give information to the Government, and get information back from the Government about what they think the situation should be in relation to the guidelines. It will be a complex business. While one is giving rights which may be desirable to particular people the work of the local authorities still has to go on efficiently.

The Minister of State in reply to some of my amendments referred to the possibility of the practical difficulties of meeting deadlines and what other people have to do. I hope he has this in mind too. The Secretary of State has to determine the procedure. I had hoped that by this time in the Bill we would have had a sight of what the Government or the Secretary of State have in mind. I am with my noble friend when he suggests that we should see this before the next stage of the Bill. I suppose it is only a draft of what the Secretary of State has in mind, but we should have a chance to see it, to see whether it is sensible and wise, as well as the representatives of the local authorities. That is the purpose of this amendment: to leave out "and", which is additive, and to put in "or", which gives the alternative.

Lord Gray of Contin

Clause 4 introduces an important new right for non-domestic ratepayers, who do not have a vote but pay more than 60 per cent. of the rates. It will require them to be consulted before a local authority fixes its rate. This amendment would restrict that right, in that it would enable a local authority to decide to consult, for example, only representative bodies of non-domestic ratepayers or only individual non-domestic ratepayers. It is possible to conceive of cases where only comparatively few of the non-domestic ratepayers were represented by a body and it would very much weaken the clause if in those cases the local authority could in effect ignore and not consult the individual non-domestic ratepayer.

The procedure we envisage for this and on which we are carrying out consultations is as follows. Local authorities would have to provide certain prescribed information as the basis for consultation. They would have to hold meetings to discuss this information with such bodies as appeared to them to be representative of the non-domestic ratepayers in their area. The authorities would also have to make this information available for inspection by individual non-domestic ratepayers and to enable them to make written representations. We believe that both bodies representative of non-domestic ratepayers and individual non-domestic ratepayers (especially in sparsely-populated areas where there may not be representative bodies) have a part to play in this process.

I know that the noble Lord would not seriously wish to exclude any grouping which might be affected, particularly in sparsely-populated areas. It is important that we keep both groups involved. I am sure that the noble Lord would accept our reasons for wishing to maintain what we have spelled out in the Bill as far as this is concerned. With that in mind, I hope that he may be prepared to withdraw his amendment.

Lord Ross of Marnock

I still think that it could be unduly troublesome. It may well not be so; but if I were one of the ratepayers, or if there were a group with myself, we could cause endless trouble to those setting the rates—not that I should ever dream of doing it. But there are troublesome people in Scotland, quite apart from Ross, who are interested in the details of politics. I see the noble Lord, Lord Stodart, with a revived interest in these things. I am sure that he will make life difficult for local authorities who presume to do things and deny him the right to go out at a time inconvenient to them but convenient to him.

Did the Minister say what opportunity there would be for us to see the code of practice? I do not think that he mentioned that point. It is an important one. It might blow away all the fears that I have about people being a bit of a trial and about being troublesome to local authorities. Does the noble Lord want to answer that point? If he wants me to put the amendment down again at another stage in order that he can answer it—in different words, words more directly related to codes of practice—then I shall certainly do so. We are going to have plenty of time. But since there is no response from the Minister, I shall withdraw the amendment and think about it again.

Amendment, by leave, withdrawn.

Lord Ross of Marnock moved amendment No. 27: Page 4, line 24 leave out subsection (6).

The noble Lord said: This is an important amendment. I am sure that it has caused considerable vexation to a lot of people to have to track down Sections 108A, 108B, 108C, the 1966 Act, as amended, of course, and the 1973 Act, as amended. But this duty, this new right of ratepayers, which is so important, shall "not apply". As soon as I see these words, "not apply", I see that you give a right and then you take it away.

How do we take it away in relation to the determination of rate under Section 108A of this Act—and remember that we are talking about the 1973 Act, as amended by paragraphs (a), (b), (c) and so on? I hope that the Minister of State will tell us what is stated in Section 108 A or Section 5(4)(b) of the 1966 Act. I hope he will tell us what is the position in relation to, a deemed determination of a rate under the Proviso to the said section 5(4)(b) or under section 108B of this Act.

We know about "section 108B of this Act"; we can look at it.

They are not going to get the right when the Secretary of State fixes the rate. Is that fair? Really, why should the Secretary of State be so protected? Why should the very civil servants who advise the Secretary of State about this Bill be so protected? Why should the ratepayers be denied the right to go and see them? It is all right for them to go and see the local council, but when the Secretary of State fixes the rate, no, they must not go and bother him. They do not need to bother him—but they might want to. Why should they not be given the same right when the Secretary of State fixes the rate? That is the simple question I am asking.

I could make a guess that Section 108A and those other provisions are all of the same kind when it comes to the Secretary of State intervening to fix a rate. But is not the fixing of the rate by the Secretary of State important for the non-domestic ratepayers and for those people who live in the rural areas, about whom the Minister of State is so concerned, to ensure that they all get the right to go and harry, or go and help, the local council to fix the rate? When it is the Secretary of State who fixes it, it is a case of, "Don't come near us: we are far too busy. We are preparing another Bill to hammer the local authorities." The civil servants are not concerned about this; they are far too busy; they must not be troubled. The same right should be given to the local authority when the rate is being fixed by the Secretary of State. It is simple justice. I beg to move.

Lord Gray of Contin

Before dealing with this point, perhaps I may put the noble Lord, Lord Ross of Marnock, at ease regarding the question of the code of practice, which he raised with me. I can confirm to him that there will be absolutely no problem about sending a draft of the code of practice to the noble Lord.

With regard to this amendment, subsection (6) disapplies the duty laid on local authorities in terms of the new subsection (3) in relation to rates determined under Section 108A of the 1973 Act or Section 5(4)(b) of the Local Government (Scotland) Act 1966, or in relation to a deemed determination of a rate under the proviso to the said Section 5(4)(b) or under Section 108B of the 1973 Act. That is where an authority voluntarily reduces a rate already fixed as a result of the initiation of selective action, or where an authority is forced to reduce its rate as a result of selective action.

This provision does not, however, absolve a local authority from the duties imposed on it under sub-section (3) of making available to non-domestic ratepayers the information as directed and consulting on that information and the rate it proposes to determine. All it does is to make clear that where a rate is determined or deemed to be determined in accordance with the provisions set out in sub-section (6), there is no requirement on a local authority to carry out a subsequent round of consultation on that rate. I know that the noble Lord is using this as a probing amendment and I hope that I have been able to answer his query.

Lord Ross of Marnock

It is more than probing. I have been asking for justice.

Lord Gray of Contin

I have given it.

Lord Ross of Marnock

No. The noble Lord read his brief very nicely. It was not like the minister about whose sermons complaints were made among the congregation. It was said about a sermon, first, that it was read; secondly, that it was not very well read; and, thirdly, that it was not worth reading. That has applied to one or two of the briefs which the noble Lord has been inflicting on us. I wish that the civil servants would remember that we have to listen to what is said. But I was doing more than probing; I was seeking justice. When the Secretary of State actually fixes the rates and is making these determinations, as he does under some of these other sections, other people are entitled to be satisfied that they have all the information and have something to do with it. They want to know that they are part and parcel of this business of consultation in respect of rates. But I shall not inflict this very much longer on the noble Lord. The hour approaches and we had better make a little more progress. But, meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Premises qualifying for rates relief for institutions for the disabled]:

9.57 p.m.

Lord Carmichael of Kelvingrove moved Amendment No. 28: Page 4, line 40, at end insert— ("( ) after subsection (1) there shall be inserted the following subsection— (1A) The cost of any rate relief granted under this Act shall be met in full by grant from the Secretary of State." ")

The noble Lord said: I shall try to be brief on this amendment. This refers to the Rating (Disabled Persons) Act 1978. At this point, I look nervously at the noble Lord, Lord Stodart. He really should not do things like that when someone is moving an amendment. I remember that one of the first jobs I had was in the building industry, and the first lesson I was taught was that before you start building anything make sure that you are in the right field. I suddenly began to wonder whether I had forgotten that when the noble Lord, Lord Stodart, suggested earlier that I was speaking about the wrong Act.

This is evidence of the fact that the noble Earl, Lord Selkirk, was quite right in saying that there have been calls for some sort of consolidation in the rating and valuation laws, as well as in many other matters. However, while the giving of rate relief to a disabled person is a laudable one and one with which no one would disagree, there may be groups other than the disabled, whom we can perhaps discuss when we come to the later clauses on valuation. But we certainly think it very reasonable that there should be rate relief for disabled people, although we could argue about the floor area and the details.

But the important point about this amendment is that this relief should be nationally accepted. A local authority may have a higher percentage of people who, quite correctly, get rate relief because of disablement, and may have additional expenditure compared with another authority which has lower expenditure of this kind. I do not think that the sum would be very great, but the principle behind this amendment is one that will be very much appreciated as being fair, decent and honest.

Therefore, if rating relief is admissible on the basis of criteria laid down in the Bill and adjudicated upon and measured by professional assessors, I hope that the Minister will accept that, in order that there shall be balance throughout Scotland, the cost of this additional relief should be borne by central government, not by the local authorities upon which, just because of a borderline drawn on a map, the cost happens to fall. In that spirit, I hope that the Minister will give the matter serious consideration. I beg to move.

Lord Mackie of Benshie

I regard this as a splendid amendment which could be used for other purposes for which the Minister has sympathy. I hope that he will accept the principle embodied therein.

Lord Gray of Contin

I am grateful to the noble Lord for moving this amendment and for the opportunity it gives me to draw to the attention of your Lordships' Committee the very generous contribution which the Government currently make towards the rate rebates given by rating authorities under the Rating (Disabled Persons) Act 1978. Under Section 69 of the Local Government, Planning and Land Act 1980, the Secretary of State pays a grant to rating authorities equal to 90 per cent. of the aggregate amount of the rebates they are required to give under the 1978 Act. The balance of 10 per cent. of aggregate rebates, which shows as a loss of local rating resources, is taken into account in determining total rate support grant and in the distribution of resources element. In the Government's view, there should be some direct financial interest by local authorities in the granting of this rebate, as there is under the general scheme for rate rebates within housing benefit, where the direct grant is also 90 per cent.

A residual burden of 10 per cent. of rebates, which is taken into account in determining general support through rate support grant, is not an onerous burden on rating authorities. For the information of your Lordships, the current amount of rebates under the 1978 Act is estimated at about £7.5 million. Inquiries have been made of local authorities to attempt to assess the cost of the provisions in Clause 5, but such an estimate could only have been made by local authorities undertaking a detailed survey at disproportionate cost. The financial effect of the Clause 5 provision will, in common with other local authority financial matters, be kept under review by the Secretary of State.

I hope that the noble Lord will accept the explanation which I have given and that he may be prepared to withdraw his amendment.

Lord Carmichael of Kelvingrove

I am grateful to the Minister for his reply. I understood him to say that it leaves the authority which has a higher percentage than a neighbouring authority with 10 per cent. to be met because of its circumstances. I firmly believe that this should be a national rather than a local responsibility. However, it is a point to which we could return later. As the noble Lord, Lord Mackie of Benshie, suggested, there are one or two other areas which we may be encouraging the Minister to look at, as well as this matter which comes under the Rating (Disabled Persons) Act 1978. I shall not press the amendment on this occasion but will take the opportunity to say that at a later stage we shall want more information from the Minister.

Amendment, by leave, withdrawn.

10.5 p.m.

Lord Ross of Marnock moved Amendment No. 29: Page 5, leave out lines 18 and 19.

The noble Lord said: It is nice to be able to approach this Table to move an amendment that one knows, in the presence of the noble Viscount, is going to be accepted. It is to him that I now speak. We are concerned here with a benefit which is being given to the disabled in respect of rates, but it is left to the assessor to determine the extent of the provision that is to be made. Having said all this on what the assessor has to do, a certificate has to be obtained. Then in lines 18 and 19 on page 5 come the important words that I want deleted. They are: and, subject to subsection (7) below, the assessor's certificate shall be conclusive

In other words, in subsection (7) we find that the assessor's certificate is not conclusive because there is an appeal to the valuation appeal committee, or to the lands valuation appeal court, and so on.

If the certificate is not conclusive why on earth do we say that it is conclusive? There is no reason why we should say that it is conclusive when there is a right of appeal. Therefore, those two lines are just a red herring. Flags are waving that the certificate is conclusive. However, it is not; it is subject to subsection (7). It states: An appeal shall lie in respect of a certificate under subsection (5A) above".

The words should not be there. They add nothing. As a matter of fact, they might mislead someone who reads quickly—someone who is as blind as myself, anyway—when they see that the certificate shall be conclusive. It is not conclusive because there is a right of appeal, so we should get rid of those words. I beg to move.

Lord Gray of Contin

I am grateful to the noble Lord for raising this point. Perhaps I should emphasise that the responsibility for determining entitlement to rebate and the amount of rebate rests with the rating authority. The assessor's function is to assist the rating authority by providing a certificate of the rateable value attributable to the parts of the lands and heritages qualifying for rebate. Almost certainly, the rateable value attributed by the assessor to the qualifying parts will have been arrived at, at least in part, by a process of estimation. But the basis of any estimates will not change in the same way that estimates of expenditure made before the beginning of a financial year change as the financial year progresses. One attribution of rateable value and one related certificate should be sufficient in each case. To avoid administrative difficulties it is important that it should be clear that these should be conclusive.

Of course, if an attribution of rateable value is considered to be wrong by the ratepayer concerned it is open to him to pursue the matter through the normal valuation appeal procedures. For those reasons I have to ask the noble Lord, Lord Ross of Marnock, to consider withdrawing his amendment.

Lord Ross of Marnock

No, I shall not, because the subsection does not make sense. The certificate is not conclusive if it can be appealed against, and that is what the next words say. An appeal shall lie in respect of a certificate under subsection (5A) above. People want to know their rights. There is no justification for the two lines I wish to delete. I hope that the noble Viscount is paying attention to this kind of thing. This is what we have to contend with. This is why things take longer and my temper gets shorter. They add nothing at all.

Lord Gray of Contin

I always find it difficult to convince the noble Lord, but probably I am not alone among Ministers in that. Let me say this to him. I tried to explain that the basis of any estimates will not change in the same way as estimates of expenditure made before the beginning of a financial year change as the financial year progresses. One attribution of rateable value and one related certificate should be sufficient in each case. To avoid administrative difficulties it is important that it should be clear that these should be conclusive, but the fact that these are conclusive should not necessarily mean that they should not be appealed against. It is conclusive with the one exception, and the one exception is subsection (7).

Lord Ross of Marnock

Yes, that is right; which means that they are not conclusive. It is as simple as that. They are not conclusive.

Lord Gray of Contin

With respect to the noble Lord, anything is conclusive until such time as an appeal is launched against it. If there is no appeal against it, it is conclusive. If the ratepayer concerned considers that he is not being treated fairly he has the democratic right of appeal. I really do not understand what objection the noble Lord has to that. That seems perfectly fair and democratic.

Lord Ross of Marnock

I know it is fair and democratic but we are not talking about that. We are talking about the words in the legislation, and these two lines are unnecessary.

The Deputy Chairman of Committees (Lord Murton of Lindisfarne)

Amendment No. 29; the Question is that this amendment be agreed to?

Lord Ross of Marnock

I think that I shall withdraw this amendment. The whole Scottish Office, and I hope the Secretary of State, the Lord Advocate, and the Solicitor-General will all be brought in to discuss this point, as it is so terribly important. It is so terribly important that it amazes me that a Minister of State does not have the guts to get up and say, "Of course you are right", and withdraw the objection. But I shall not let this amendment go to the determination of the Committee. I shall withdraw it to give the Government time to have another look at it.

Amendment, by leave, withdrawn.

On Question, Whether Clause 5 shall stand part of the Bill?

Lord Stodart of Leaston

May I make one very small point and ask my noble friend for clarification. This clause amends Section 5 of the 1978 Act, as has been mentioned, which to my mind was a very clearly written section, whereas the present one strikes me as being very much more complex. Perhaps I may briefly paraphrase the 1978 section. It says that rating rebates will be granted to certain premises which fulfil certain purposes. It defines the purposes—whether the premises form residential accommodation, people are being re-trained and welfare services are involved. It says that the rebate will be given provided that the premises are used wholly for one of the purposes in the list, or partly for one of the purposes in the list.

What puzzles me—and I am sure that my noble friend has the answer—is that both he and the Minister in another place said that the 1978 provision was a question of all or nothing. I find it very hard to understand why it was all or nothing when in fact it was wholly or partly. I cannot really see at first sight in what way there is any improvement to this. It is a much more complicated provision than it was formerly.

Lord Gray of Contin

My noble friend is correct. This matter is very complicated and if he is agreeable, I shall write to him in due course about it.

Clause 5 agreed to.

Clause 6 [Power of Secretary of State to limit estimated rate fund contributions to housing revenue account]:

Lord Ross of Marnock moved Amendment No. 30: Page 6, line 4, after ("State") insert ("after holding a public inquiry into the housing and other relevant circumstances in the area").

The noble Lord said: With Amendment No. 30 we come to an important clause whereby the Secretary of State takes power to limit the estimated rate fund contribution to the housing revenue account. From the point of view of district authorities, housing is the one important function that they have. Indeed, a considerable proportion of the rates that they raise is related to the maintenance of their housing stock. That is that part of the housing revenue account that is not met (a) by Government grants, (what used to be considered housing subsidies), and (b) the actual rents. That has to be made up from a rate contribution.

A rate contribution has always been part of the whole area of housing finance in Scotland, right from the very beginning of the Addison acts, right through to the Wheatley acts. Then there was the 1935 Act of the Conservative Government; I have that here as a matter of a fact; it just happens to be by my hand today. When we were seeking in 1935 to get rid of the slums and start on slum clearance, the Government made a contribution which was to be a sum payable annually for a period of 40 years. This was in 1935. Of course, this was used by local authorities up until about 1940–46 and beyond.

The Act stated that a local authority to whom the department had undertaken to make a contribution in respect of any house should make a contribution out of the appropriate rate in accordance with the provision of the Act. The local authority had to make a rate contribution. It was half of the conditions of receiving a subsidy from the Government. It is interesting that the Act goes on to say that a contribution shall be provided by equal annual instalments during a period of 60 years. This started in 1935, so the obligation was to last for at least 60 years from the completion of any of the houses built under that Act. Even my simple arithmetic takes me to 1995.

What I am trying to bring out is that it was part of the whole policy of building houses by local authorities that the Government made a contribution, and the local authority also had to make a contribution out of the rates—a rate contribution. If we take this particular Act, the contribution out of the rates was to be about one half of what the Government paid. Now it has suddenly become a matter of concern over the years that monies were taken out of the rates. They had to be taken out of the rates in order to get the support of the Government in the first instance. We now have the position where the obligation that was given in Acts of Parliament, right up to the early 1960s, where subsidies were paid over a period, was wiped out later on and the housing support grant was introduced.

When the Labour Government left office in 1979 the amount of the housing support grant payment in Scotland was £214 million. The Government had been forcing, forcing and forcing local authorities, by the particular formulas of payment of this grant, into the position of raising the rents and thereby putting themselves out—despite all the pledges of 60 years' support and the rest of it—of the position of receiving any housing support grants.

Last year, the amount paid in housing support grant had dropped in five years from £214 million to about £52 million. It is dropping further this year. if the Government are withdrawing their support, it means that the rate support has to grow unless you are to get into the position of making rents unreasonable. My noble friend Lord Carmichael quoted earlier what Glasgow was supposed to do in one year: increase rents by 70 per cent. What this Bill already does in taking powers from the local authority to fix its rates and enabling the Government to fix the rates is bad enough. Now, the Government are virtually fixing the rents.

This means that a limit will be placed on the rate contribution that has always been respectably present as a condition of building houses at all. If the Government are going to limit the rate contribution and put it fairly low, two things will happen. There will have to be a tremendous increase in rent or there is going to be a reduction in the maintenance standards of houses—this at a time when we have just passed a tenants' rights Bill that tries to ensure that houses will be properly and adequately repaired.

That was the basis of the new right given to the tenants. It presupposed further expenditure by local authorities in maintaining and repairing houses. Here we have the Government limiting what can be taken from the rates in order to perform that function. All that can be done in that case, if you are to survive, is to have rents go up. This, again, is encroaching upon the democratic rights of local authorities—something that has been accepted certainly in Scotland if not in England and elsewhere.

If the argument is that ratepayers are paving too much in rent, may I remind members of the party opposite that only £52 million was paid in respect of all the houses—about a million in Scotland. I should like to know what was paid by the Treasury last year in England in mortgage relief to owner occupiers. The pendulum has swung far too far the other way Rents in Scotland are no longer low. They are now reasonable. But the Government are bent on further increasing them to get themselves out of a dilemma. Their manipulations have led to considerable increases in rates.

It is the Government's withdrawal of support from the housing revenue account that has led to the position of increases in rents and rates Now they are going to try to keep the rate business lower by limiting the rate contribution to housing. The only possible answer is that rents will go up. The Government create a dilemma and cause difficulties for everyone else. We are getting to a point where I shall require to leave you. In the meantime, I have pleasure in moving the amendment.

10.24 p.m.

Lord Gray of Contin

I know that I speak for the whole of your Lordships' Committee when I say how sorry we are that the noble Lord, Lord Ross of Marnock, will have to leave us soon. I shall try to answer one or two of the points that he raised before he departs. He made the point about rate contribution and suggested that this has always been part of housing finance. The rate contribution meets the balance between expenditure and income but there is no right to make a rate contribution where authorities can reasonably be expected to balance their books without it. In too many cases nowadays authorities are making contributions beyond what is justified by need. I do not accept the noble Lord's suggestion that reductions in rate support grant are a relevant factor. Housing support grant is intended to meet the difference between what the authorities can reasonably expect to receive by way of income and what they might realistically be required to spend on their housing account. Where an authority can balance its books without Exchequer subsidy—that is, without housing support grant—I do not see why the ratepayer should be expected to step into the breach. Nor do I accept that it is unreasonable to expect some increase in rents. Average weekly rents in Scotland are running at only about two-thirds of the level of average rents in England. But the average wages of a Scottish manual worker are now slightly ahead of those of his English counterpart. I do not think this differential can be justified.

I accept that we shall need to look carefully at the circumstances of individual authorities. Much of the relevant material is already gathered by my department as part of the annual housing expenditure limits and housing support grant exercises and there are regular discussions with the local authorities on these matters. I do not believe, therefore, that this will lead to any significant addition to the workload of my department or of the local authorities. I make no bones of the fact that we want to see a reduction in aggregate rate contributions. The subsidy from the ratepayers towards rents is already higher than can be justified by need and is pre-empting resources which will be better spent on the modernisation and improvement of stock.

I am afraid that I cannot accept the noble Lord's amendment. To accept it would cause very serious problems for the implementation of Clause 6, and I hope that before he leaves us he will consider withdrawing the amendment.

On Question, amendment negatived.

Lord Ross of Marnock moved Amendment No. 31: Page 6, leave out lines 14 to 16 and insert— ("(2) The limit referred to in subsection (1) shall not be such as to require any local authority to reduce the proportion of expenditure on their housing revenue account met by a contribution out of their general fund below 20 per cent.").

The noble Lord said: I still have a few minutes; I am leaving at half past ten. I have already complained about the treatment of Scottish Members and Scottish business, and I hope that the Leader of the House will take due note.

I quoted the Act of 1935 where the proportion in relation to what the Government were giving was 50 per cent. I think this percentage is fair and reasonable in this respect. This amendment was prompted by discussions and correspondence we had with Shelter, who are concerned that the reduction of the rate contribution that may well be forced upon local authorities by the Government will lead to lower standards of maintenance and repair—measures that the Government are pressing on local authorities in another Bill which we dealt with today and on which the Government had the rather unfortunate experience of being defeated on a particular clause.

What the Minister of State said is not good enough. I have been in this housing field all my days, long before I came into this Committee. It was always the case that the Government gave a subsidy on the understanding and on the condition that the local authority paid a rate contribution. The facts in Scotland were that poverty was such that even with that rate contribution the rents were too high and a further rate subsidy had to be made. Those were the facts, and it is no great glory to this Government that they have reduced and reduced the support that was long promised to Scottish housing and in respect of which local authorities in Scotland borrowed money over 60 years. The money has still to be paid back at a time when support has been withdrawn from the Government. To say that all this is for the good of this, that and the other person, is not good enough.

I want the Scottish householders to be treated as fairly and as generously as the English householders. There has been no reduction in mortgage relief to owner-occupiers in England. The complaint has always been that there are not sufficient owner-occupiers in Scotland. One of the reasons why we have not got them is that we cannot afford them, and we had to build houses to provide people with anything at all. This withdrawal has just meant a continual pushing up of rents.

I know that the Government will probably get no joy today from the results of the municipal elections in Scotland any more than they did from the general election in Scotland. Quite apart from their failure to get support, they should appreciate that there is a sense of justice. It is little wonder that the people of Scotland really want to have this kind of discussion that we have here. I have been counting the number of people on the other side of the Committee who are interested in Scottish business—I am talking about the House of Lords. You see, I do not approve of the place. The kind of thing which has happened today and is happening now justifies my plea in respect of Scotland —that this kind of thing should be done in Scotland. I am in favour of devolution; the Government are opposed to devolution. That indicates that they should be interested in Scottish business. Look at them—a "crowded" Committee again at half-past ten!

I am not satisfied with what we have from the Government, and I sincerely hope that they will think about this in a much more constructive way than they are thinking at the present time. They certainly have no sense of knowledge of the history of local authority building in Scotland, all that went before it and all that was promised in respect of it.

Lord Gray of Contin

The noble Lord, Lord Ross, has explained the purpose of this amendment, and we are grateful to him for doing so. Once again, I am afraid I cannot accept the amendment and I cannot agree with what he has said. I have explained already that Clause 6 will enable my right honourable friend the Secretary' of State to limit by order the contributions local authorities budget to make from their rates towards current expenditure and their housing account.

We have been prompted to take this power because we are concerned that local authorities continue to budget for rate contributions in excess of the levels which we believe are reasonable and necessary. In the current year, for example, local authorities have budgeted for rate contributions some £22 million in excess of the levels which we consider to be reasonable, and fully £5.5 million of that figure is accounted for by Glasgow alone. This is unfair to the ratepayers and tenants, because authorities by their decisions pre-empt for a general subsidy on rents resources which would be otherwise available and would be better spent on the modernisation and improvement of housing stock.

Of course, in setting limits by order under Clause 6 and in determining what rate contributions local authorities might reasonably need to make in order to balance their books, we shall need to look carefully at the circumstances of individual authorities. The present amendment, however, suggests that there is a minimum proportion of the housing budget which local authorities should have a right to meet from the rates without reference to any other considerations. Whether that proportion is set at 10, 20 or 30 per cent., this is not an argument which the Government could accept. Our concern is that the rate contributions to housing are in general too high.

A number of authorities are already able to balance their housing revenue account without any contribution from the rate fund, and without needing to charge excessive rents. I am not saying that it should be possible for every authority, or even a majority of authorities, to reach this position; we shall need to look very carefully at individual circumstances. But I am saying that in general the level of rate contributions is at present too high and this is giving rise to misdirection of resources. I regret that I cannot agree with the comments of the noble Lord; nor can I accept his amendment.

Lord Ross of Marnock

In view of that unsatisfactory answer, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 32 not moved.]

Clause 6 agreed to.

Lord Denham

I think that this is probably the time of day when it would be most satisfactory to move on. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.