HL Deb 17 June 1985 vol 465 cc71-86

7.13 p. m.

The Minister of State, Scottish Office (Lord Gray of Contin)

My Lords, I beg to move that the Rating (Revaluation Rebates) (Scotland) Bill be now read a Second time.

Your Lordships may recall that on 14th May last, I repeated in your Lordships' House a Statement about the Government's proposals for legislation to give some relief to certain ratepayers in Scotland faced in 1985–86 by very steep increases in the rateable values of their property. The Statement promised a Bill to give effect to the Government's proposals. The measure which I have just moved is that Bill. The statement of 14th May outlined some of the background to the recent revaluation in Scotland and measures which the Government had introduced to mitigate the effect of revaluation on the domestic ratepayer. I hope your Lordships will bear with me, and find it helpful, if I repeat something of that background.

By law, regular revaluations have to take place in Scotland every five years. It is generally accepted that this is the fair way, as long as we have a rating system, to keep up to date the relative values on which rates are levied.

The Government's intention to have a full Scottish revaluation effective from April 1985 was published in August 1983 in the White Paper on Rating Reform in Scotland, Cmnd. 9018. That intention was approved by all parties and by the Convention of Scottish Local Authorities. It is not surprising that the principle of regular revaluations is generally accepted. It is manifestly unfair to perpetuate indefinitely old rateable values which become increasingly out of date. The revaluation we face today was, of course, postponed from 1983. But when the time came when the 1985 revaluation could have been postponed in an orderly manner, there was no further justification for postponement.

Notification of the results of a revaluation proceeds by stages. The first results of the assessors' work began to become available in the autumn of last year. At the time the rate support grant for 1985–86 was announced on 7th December the Secretary of State had been made aware of a very substantial shift of rateable value away from manufacturing industry and towards domestic property. It has been suggested that this reflected arbitrary or even political judgments. It does nothing of the kind, but reflects that the assessors have measured over a period of seven years, in which there has been substantial economic change, increases in value which are not the same for the heritable assets of Scottish industry as the increases in value of domestic properties in Scotland.

The Government responded to the situation that this presented by using both the instruments available to the Secretary of State to moderate the general effect of that shift. Accordingly, the Secretary of State adjusted the level of industrial derating down from 50 per cent. to 40 per cent. and at the same time provided in the Rate Support Grant Order for 1985–86 a level of domestic rate relief which, at 5p in the pound, is five times the level prescribed for 1984–85. I must emphasise that the information available from assessors at that time was on the broad indication of the average effect of revaluation in different sectors and not on the effect on individual subjects. The action we took reflected the general information that domestic subjects would lose, commerce would neither gain nor lose, and industry would by and large gain.

Assessors are required by law to deliver valuation rolls to rating authorities by mid-February, and it was very soon after that that it became clear that some domestic ratepayers would be faced with very large increases in their bills once the local authorities had determined their rates. This was a marked change in the situation with which we had been faced in December when there was still some prospect of more general compliance with the Government's guidelines than was becoming evident would be the case in February. This was an exceptional situation and we took the exceptional measure of increasing the domestic rate relief yet further, from 5p to 8p in the pound, at an extra cost of £38.5 million. This was announced early in March.

We were still at this point concentrating on the effects of broad movements of rateable value in terms of the averages for different sectors. It seemed at that time that it was not unreasonable to expect that the measures that we had taken would provide sufficient mitigation of the results of the revaluation, even where those were exacerbated by high rates to fund overspending, to allow the various sectors of ratepayers to live with the results of revaluation in terms of the broad view of the effect on the various sectors which was at that time still all that was available.

It is, however, important to bear in mind that the reason for having a revaluation is to give effect to changes in values both up and down. It is not merely a matter of increasing all values by a common index. That would merely perpetuate the old values and relativities which revaluation is designed to bring up to date.

Up to that time we had been working on the basis of—without being disparaging—statistics and averages. But by the time individual valuation notices had gone out and been associated with individual rate demands, it became clear that however good the information on which we had based the measures we had taken up to that time had been, there were still very many ratepayers whose valuation increases were so steep as to lead to unacceptably large increases in their actual rate bills. This was especially true of the commercial sector, for which, as I have said, the indications were that the overall effect of the revaluation would be that the gainers would balance the losers. This is, however, small consolation to those who are worse off to the extent that the viability of their business is in jeopardy.

In the course of the spring, evidence became available that the effect of the more extreme valuation changes would be very damaging, and the Government decided that the effect of revaluation should be limited. Revaluation increased the value of all property in Scotland on average 2.33 times. It has been suggested that we might have set out to compensate for increases above that level. That would have meant that revaluation would only have been effective in decreasing the share of the rate burden borne by those who gained. This would have gone far beyond mitigating the impact of revaluation. Having gone through the exercise, and in the light that revaluation is generally accepted as desirable, it would have been wrong to have set a threshold for relief at such a low level. The Bill provides therefore for relief to be available to those whose rateable values have increased by more than three times.

The Government are very much aware that even after the proposed rebates there will be many ratepayers in Scotland who will face substantial rate increases in the current financial year, especially in the areas of those local authorities budgeting to spend at a level which I can only describe as less than responsible. The Bill does not, however, aim to reduce high rate bills as such. It is an exceptional measure intended to reduce the burden and hardship which would be suffered by those individuals and businesses facing extremely high increases in the rates they would otherwise have to pay.

The Bill itself is, quite deliberately, a short measure. It provides for two new statutory duties. The first of these is to oblige rating authorities to grant rebates to those whose valuations have increased more than three times between the value appearing in the valuation roll on 31st March this year—the last date on which the "old" roll was valid—and the value for the same lands and heritages in the new roll which came into force the next day. Entitlement to rebate under the Bill is essentially a matter of comparing different values for the same property.

Rebate will not be available for all properties. The Bill lists in Clause 1(2) those properties which are excluded. These are properties already valued by a statutory formula approved by Parliament, properties which benefit from their valuations being already reduced by statutory derating, and local authorities' own properties. Crown properties—hospitals, Government offices and the like—are not liable to local rates and no exclusion is necessary in respect of them in the Bill. The Treasury Valuer makes payments in respect of Crown properties in lieu of rates and this arrangement will continue unaffected by the Bill.

The Bill also creates a duty for the Secretary of State to reimburse to rating authorities the amount of the rebates which they grant. Rebates are, of course, a reduction in rate income and for that reason and because they will be reimbursed 100 per cent. by the Scottish Office, rebates will not be relevant expenditure for rate support grant purposes and will not count against local authority guidelines.

The Bill is an enabling measure. The Secretary of State intends immediately after it is enacted to bring to another place an order making necessary provisions for operating the rebate scheme. These will include a ceiling of £10,000 on the rebate which may be granted for any single property. The Convention of Scottish Local Authorities is being consulted about the terms of the order. The convention's representatives have already made several useful contributions. In particular, they pointed out that it would be better for rating authorities to take the initiative in calculating and granting rebates rather than for ratepayers to send in individual claims. Only if a ratepayer feels that he has been missed out will there be a claim procedure. The Secretary of State has agreed with the convention that its proposal seems desirable. The administration of the scheme should thereby be more economical and less trouble for rating authorities and ratepayers alike.

As I have said, this is an exceptional measure designed to deal with an exceptional situation. In introducing it, the Government are taking swift, effective action to deal with a situation which has swiftly and comparatively recently developed. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Gray of Contin.)

7.26 p.m.

Lord Ross of Marnock

My Lords, we are grateful to the Minister of State, the noble Lord, Lord Gray of Contin, for his exposition of the Bill. It was calm, it was lucid, it was factual; but, oh dear!, oh dear!, he then said that this was something that had arisen swiftly and that the Government were acting with due expedition and speed. Acting with due expedition and speed? The last statement that I read in the Bill was: This Act … shall come into force on the expiry of 2 months beginning with the day on which it is passed". So it is to be two months after it is passed before the Government take action. That is speed! Can the noble Lord say how one prepares and passes an order in relation to a Bill that has not come into force? It may be the case that, although the Government do not want to do so, they will have to amend the Bill.

I thank the noble Lord for his explanation. It was far better than that of the Secretary of State in another place. The Secretary of State managed, somehow or another, to get an Order in Council into this. That was not the only thing on which he went more than slightly wrong. And you can excuse him. We had a Statement, not just on 14th May. We had a Statement on 7th March, when he thought he had taken action. However, he thought that he had taken the right action way back in the autumn, when he increased the domestic relief in rate support grant by five times, that is to say, it was raised from a penny—it had never been lower, and the Government had reduced it in other years—to five pence. That was at a cost, I believe, of £19 million to the Secretary of State and £31 million to the local authorities. What did he say then about swift action? He said: the increases in rate bills now emerging are in general so steep that I must take further action to protect domestic ratepayers He finished up by saying: the object of revaluation is to apportion the rate burden fairly. This means that some pay a larger share and some a smaller share. That is justifiable, but it is necessary to have regard to the effects on domestic ratepayers in current circumstances. This I have done with a substantial increase in domestic rate relief".—[Official Report, Commons, 7/3/85; col. 1177.] So he increased it to eight pence. First it was five pence—that was a good increase—and then it was eight pence. That cost another £38.5 million. Where did that come from? It came from the Secretary of State's budget—in other words, £38.5 million worth of cuts in the other services provided and financed by the Secretary of State. That is what he said in his Statement in March.

In reality the Government were guessing at what was happening. They were complacent and satisfied that they had done the right thing. Small shopkeepers, retailers and some domestic ratepayers proclaimed their dissatisfaction. Sir James Gould came down to London to see the Secretary of State and he went back with a flea in his ear—the Secretary of State was going to do nothing.

Suddenly the Government realised that they had a Tory conference on their hands and even the noble Lord, Lord Home of the Hirsel, could not pull them out of this without increasing the pressure upon the Chancellor to do something. The Government moved from complacency to panic in a fortnight. The most expensive conference ever held in Scotland was the last Tory Party conference at Perth. It cost £50 million.

On 30th May the Daily Express carried an article in which the Secretary of State admitted that the figures for the original calculations were produced hurriedly and were necessarily speculative. As a result of that we had the rebate. It applies only if your revaluation is greater by a multiple of three—that is, if it is three times the last valuation. Therefore, everyone who is in a position of having a valuation multiplied by three is all right. It is only after that point that you obtain any relief. This Bill was produced so speedily that those who were to furnish the figures were not consulted until about 29th May, after the Government had produced this figure. Of course, I refer to COSLA. With the aid of their computers, COSLA have produced calculations of what this will cost and have come to the figure of £29.5 million, not £50 million.

So here we are with people still dissatisfied, the Government having resorted to a scheme which will not satisfy them and which will not spend the money which on this occasion comes from the Treasury. Your Lordships may remember what the Chancellor said at Perth—that everyone was brought up to appease the multitude. The Chancellor had baled out Mr. Younger in his crisis with exceptional funds. That same day, 11th May, in an article published in the Guardian the Chancellor said that no more money was likely for Scotland next year. He said: I do not think that Mr. Younger will find me in the same compassionate, open-handed and generous mood next time. That is important from this point of view. The Government took this action because they wanted the rating system to be fairer and to reduce the unexpected hardship which may fall on people. However, the valuation roll remains in force for five years. If it is unfair this year, it will equally be unfair next year. So the Chancellor is saying "No more money from me, I shall not bale out Mr. Younger again"; he did not say that he would not bale out the Secretary of State. There may be some justification for saying that, in that Mr. Younger may not be the Secretary of State next year. So that pledge can go and a new Secretary of State can approach the Chancellor. But is that likely to meet with generous help? I doubt it very much indeed.

However, the valuation roll is subject to appeal. If people pay by instalments, they would already have paid the first instalment of their rates. It may be that the rates are applicable for this rebate if a particular revaluation is more than three times the last valuation. It is not the rates that must have increased, but the revaluation must be three times the last valuation. They receive relief only on that part of the rateable burden which is calculated as being responsible for an increased revaluation of three times the valuation. It means that people will receive a rebate.

Some people may be satisfied with that, when it is paid. From what is said in the Bill and from all that has to be done, I do not know when it will be paid. Then there is the appeal procedure, which may take place about four years from now. A group of people in Troon only settled their claim against the last revaluation last year. What a mess we are in! If by any chance someone receives a rebate, he may have to pay it back, probably when he least expects it.

There is another point that I should like answered this evening. The Government are responsible for this mess. There is a very considerable administrative burden in relation to this Bill. The local authorities have to go through all the valuation rolls and pick out those who are eligible to receive a rebate. They have to calculate the rebate. It may be that those people will have to return it. That will involve a considerable amount of manpower. If it is to cost a fair amount of money—and although the Government say that it will cost £50 million, I do not believe it will be as high as that—the local authorities will have to wait for that money. The local authorities must have the money or borrow it. If they borrow it, they have to pay high interest charges. Who will pay for all this? Will it be the local authority or the Government? I know that the Government will reimburse the local authorities in respect of the rebates; but what about the cost of the scheme and the cost of the Bill? Surely it is only fair that they should do so.

I was interested in the history given by the Minister of State. In 1983 everybody agreed that there should be a revaluation. Perhaps I may remind the noble Lord that a Statement was made and an Act of Parliament was passed in this House on this subject in 1981, at which time the Government said that there would not be any revaluation for domestic ratepayers but that there would be revaluation for non-domestic ratepayers. What did they lay down in that Bill? The noble Lord, Lord Gray of Contin, probably will not remember, but they said that the ratio of the burden between non-domestic and domestic should remain, and that there should be no change. Why could not the same thing have been done in respect of this revaluation and it be left to appeal tribunals to sort out those who were at a disadvantage? The noble Lord said that everyone agreed with it. I do not remember anyone asking me whether or not I agreed with it, but then I am not very important now. That was the start. Why did they do that? I see the noble and learned Lord the Lord Advocate smiling; he was not even consulted. The party to which he belongs and which he supports as a Minister had pledged that it would get rid of domestic rates; so it thought that there was no point in having a revaluation of domestic rates if it was to get rid of them.

However, by 1983 it discovered that it could not get rid of them. We were back with a revaluation situation. If this had happened in the middle of an election, a great many people in another place would not be there. One Member of Parliament—I think the Member for Renfrew West and Inverclyde—suggested that thanks to the muddle and the mess and the Secretary of State's incompetence there will be only four Scottish Conservative Members of Parliament after the next election.

A noble Lord

That is too many.

Lord Ross of Marnock

My Lords, I know that it is too many. That lady herself will not be one of them, and that is what is worrying her. That is what is worrying a lot of them. That is why the £50 million was provided. If the Government do not spend the £50 million, they are going to get no thanks for their generosity. It will be seen as £20 million, if there is that difference, filched away from Scotland.

Everybody says—it was said by the noble Lord's own colleagues in another place, and I could list them all—that if there is a shortfall in the expenditure, that must be given back to the Scottish ratepayers. But according to the Government's statements, so far they just do not know what they are going to do with it. I know what Mr. Lawson has probably agreed. It will come back to him. These are points to which we must have an answer.

The other point is: what about future assistance? Have they to be saved this year and perish next year? The Government have given no pledge that they will continue this assistance for another year. I want an answer from the Minister. Then there is the question of appeals in respect of someone who feels that he has been passed over by the local authorities.

I do not know what the Minister of State is going to say about it. I should like to hear in a maiden speech that we are to have in a few moments from my noble friend Lord Morton, who is learned in the law, what he thinks of the idea that the aggrieved ratepayer who has been passed over by the local authority should have an appeal to the Court of Session. To the Court of Session! This was said by a Minister in another place, and he wondered at that time why Mr. Dewar, who is also a lawyer and leads for the Opposition in another place, burst out laughing.

The Government have made an absolute mess of this. Their panic is understandable, considering the position at the present time of the Conservative Party in Scotland and the Conservative Government, never mind the English opinion polls. I suppose the noble Baroness realises that in Scotland the last poll showed Labour with 51 per cent., the Conservatives with about 18 per cent. and 20 per cent. for the Alliance. That is how low they have sunk, and they are going to sink lower from this.

It all could have been considerably helped by an action in this House. I moved an amendment to the last rating Bill exactly a year ago, asking for an inquiry into the Scottish rating system. The noble Baroness, Lady Carnegy, will remember the speech she made on that occasion when she helped to save the Government by five votes. She said that everybody in Scotland to whom she had spoken—presumably both of them—thought that the rating system was right and fair. Of course that is what the White Paper said. It said that the rating system was basically sound but needed improvement, and the improvement was in the Bill about which we are speaking and with which no one is now satisfied.

Does the Minister remember what he said? He said that we did not need another inquiry into the rating system. They had already looked at it. Well, I gather that there is one going on now. They have made a mess of the rating system. They did not take action when they should, and the action they have now taken in respect of this dramatic increase of valuations is not satisfying the people of Scotland at all. We have to accept the Bill. It is something. But we want some reassurances about the future for the rating system and in respect of the continuation of this kind of help, which many people will need for next year.

7.45 p.m.

Lord Morton of Shona

My Lords, I am in a position of great nervousness, and I would ask your Lordships' indulgence. My trepidation has been increased by the fact that I have been introduced to some of your Lordships as a successor to the noble and learned Lord, Lord McCluskey. It will quickly become apparent that I am very different and far less able a person than that noble and learned Lord.

This Bill arises out of the recent revaluations in Scotland, which by itself created a feeling which may be right, or may probably be wrong, that Scotland by this revaluation is losing out as against England, which has no revaluation. That feeling of dismay would be increased considerably if it became apparent that the £50 million that we heard about in May was in fact not going to be the figure spent on the rebate for those with high increases in valuation.

In addition to the lower figure suggested by the Convention of Scottish Local Authorities, it is in the nature of things that there will be an eventual decrease, because one would suspect that people with more than a 300 per cent. increase in their valuation may be the people who are likely to appeal against that valuation, and that at least some of these appeals will succeed. The time that it will take them to succeed may be shown by the fact, as I understand it, that not all the appeals out of the 1978 revaluation have yet been disposed of, but eventually some of them may succeed, and that will reduce again the total amount that central Government require to be paid.

If in the end there is a substantial reduction even below the £29 million figure, I would suggest that the Scottish ratepayer would feel that he had been corned by the offer of £50 million, and the logical position is that the crucial figure should not be a multiplier of three, but some slightly lower figure.

As a secondary matter—as the noble Lord. Lord Ross, suggested—the question of to where ratepayers who think they should get a rebate and the rating authority which thinks they should not should appeal has been dealt with in another place by a suggestion that they should go to the Court of Session. Even with the new procedure in the Court of Session for a review of administrative decisions that would be an expensive and cumbersome procedure.

One can imagine a ratepayer with a house in Wick, Inverness, or Portree, having to go to the Court of Session to argue whether, because he had put up a garage attached to his house, it was the same lands and heritage or a different lands and heritage. It would be much easier to have an appeal on that issue to the local sheriff, which would be both cheaper—which I trust might be acceptable to the Government—and much quicker. I gather that it is the practice for maiden speeches to be about 10 minutes. I hope that I have not offended your Lordships by speaking for a much shorter period.

7.49 p.m.

Lord Kirkhill

My Lords, it is with much pleasure that I rise to remark upon this Bill following the maiden speech of the noble Lord, Lord Morton of Shuna. It is a pleasure greatly enhanced because it gives me the opportunity to welcome a fellow Scot to your Lordships' deliberations. Moreover, one disciplined, as is the noble Lord, in the mystery of Scottish law can only be of great benefit to Members of the Opposition, although whether in the course of time the Lord Advocate will take that view is something which remains to be seen. As to the speech itself, it surely followed in the great tradition of this House, essentially uncontroversial, yet with subtlety, indicating the probable attitude of the noble Lord. It is clearly a harbinger of many which will follow, which are awaited by the rest of us with keen anticipation.

As to the Bill, the Minister properly said in his introduction that it was an enabling Bill and the statutory instrument will follow, I suppose, in July. Whether that is by design on the part of the Government I am not too sure, but I can see advantages from their point of view. It is the main holiday month in Scotland, and perhaps the part of this Bill which is not effective may slip past without the appropriate public comment which I believe to be necessary.

The main reason I put my name down to speak this evening was because at the time that the Minister repeated the Statement being given in another place in your Lordships' House I took issue with him, as I do today. I challenged him then and I now repeat that I do not believe that the Government could not have postponed revaluation. I believe that his colleague the Secretary of State for Scotland made a political miscalculation which reverberated against him at the Scottish Conservative Party Conference in Perth; a fact mentioned by my noble friend Lord Ross of Marnock. Because of this political miscalculation, as I believe it was, we are now faced with this most imperfect, albeit short, Bill. I believe it is imperfect, principally because it is becoming clear from all informed opinion which I have contacted—and I have made some contacts—that, although there will be a measure of relief on the factor-of-three formula to some offices, some shops and surprisingly to all licensed premises—

Lord Ross of Marnock

And to lockups, my Lords.

Lord Kirkhill

My Lords, and to lockups—there will not, in any meaningful way, be relief to the domestic ratepayer. There is, of course, the £10,000 cut-off beyond which no one will receive relief. It is clear now in considering what is likely to happen that many will see, as I do and as the Minister might admit, a higher number of the very large commercial concerns will benefit more than most others. Although they are entitled to benefit, it is not the most desirable thrust of a piece of legislation which comes before your Lordships' House.

As both the noble Lord, Lord Ross of Marnock, and the noble Lord, Lord Morton of Shuna, have said, the figure discussed in the Financial Memorandum is £50 million. Informed professional Scottish opinion suggests that the maximum will be £30 million, and that shortfall will occasion serious criticism in Scotland when it becomes more widely known than it presently is. I suggest therefore to the Minister that the thrust of the Bill is not in the right direction and that the factor of three is the wrong formula calculation. Again I should tell the Minister—he will know anyway but I will still tell him—that informed Scots professional opinion shows clearly that a factor of about 2.75 would have taken up the Government's £50 million and would have spread the load as it should have been spread over a proper and widely-shared basis.

7.55 p.m.

Lord Monkswell

My Lords, I hope no one will object to my entering this debate. I arrived at a late stage, but no doubt the House will accept my apologies for that. My reason for speaking in this debate is that there are a number of issues that an Englishman can raise in this debate which might bear listening to. The first is that I must declare my own attitude to taxation in this country. To my mind there are two taxes which are basically progressive, in that they tax the rich, who are more capable of paying those taxes, more heavily than they tax those who are poorer and less able to pay the taxes. Those two taxes are income tax and the rates. One is a tax on income, the other is effectively a tax on property and wealth.

In considering our present rating system there are several matters we need to bear in mind. The first is the way that our rating system works, as far as I can gather, which is on the basis of the rentable value of property rather than the capital value of property. That has implications: with a property such as a large factory or municipal undertaking such as a power station, it is almost inconceivable that the owners of that property will rent it. What a nonsense it would be if, for example, Fords or British Leyland rented their factories from somebody else. No, they will buy them outright or build them as part of their own capital investment so that the value of those properties in rentable terms will be significantly different and effectively lower than the value in capital terms. Thus the rates assessment will be correspondingly lower. The implication of that is that the largest establishments in our land, which could probably afford to pay higher taxes, will end by paying less tax.

Another factor in paying rates is the way that values can change over time. We are told that the problems faced by the people of Scotland are because they have had a rate revaluation. I make a plea that in fairness the rateable values in England should be reviewed at an early opportunity because for many years rates have not been reviewed in the same way as they have in Scotland. In fairness we should have the same medicine that the Scots have had.

This brings me to my final point. Surely the major reason for the increases in rates in Scotland and those in England, which have been considerable, has been the lack of support through the rate support grant given by this Government. Effectively we have been subjected for a number of years to cut after cut in the support for local government provided by this Government. That is one of the fundamental problems facing us at present not only in Scotland but in England.

8 p.m.

Lord Wilson of Langside

My Lords, I think I am right in saying that it has been made known in your Lordships' House in the mysterious way in which these important matters are made known that it should not be customary for more than one speaker after a maiden speech to express his congratulations and good wishes to the speaker. I hope your Lordships will forgive me if I make an exception in this case. I have known the noble Lord, Lord Morton of Shuna, over these last 30 years, and I have always had the highest regard for his personal and professional ability and integrity. He talked about the noble and learned Lord, Lord McCluskey, and of course the noble and learned Lord, Lord McCluskey, was a great advocate. He is now a judge.

I think that at one stage, if my recollection does not play tricks on me, they were both members of the same team in the Crown Office for a period, and they both contributed differently to a team which, as far as I remember, was never savaged either in Parliament or in public. So I should like to add my congratulations and my best wishes to the noble Lord, Lord Morton, and to hope that we shall hear him often again. He is obviously a man of considerable character because he had been told, as one is told when one is introduced here, that a speech for a maiden speaker should last for 10 minutes. He took three. If I may say so, this could well be an example that might be followed by older and more experienced Members of your Lordships' House. But who am I, a mere tyro myself, to make such an ignoble suggestion?

On these occasions, when we have these almost set-piece exchanges between the two noble Lords, Lord Ross of Marnock and Lord Gray of Contin, I often think about Tweedledum and Tweedledee. Your Lordships will remember them. They agreed to have a battle. Tweedledee said that Tweedledum had spoiled his nice new rattle. Judging by what was said in the other place, I should not be surprised if the noble Lord, Lord Gray of Contin, in reply to the very valid criticisms and the power attack on this Bill after the Opposition had agreed to co-operate in getting the Bill through quickly, felt that the noble Lord had perhaps spoiled his nice new rattle.

But this Government have a remarkable capacity for presenting the steps which they are taking and the measures which they are presenting (which are necessarily only in consequence of their own incompetence) as anything from statesmanship to the smack of firm government—and this is the way both in this House and in the other place that this Bill has been presented. The very clear introductory background report which the noble Lord gave us was very useful and very helpful, but, in the outcome, the noble Lord, Lord Ross of Marnock, is absolutely right: the situation is a mess. If I may use a good Scots phrase, it is in a "proper guddle". And it is in a guddle because of the Government's incompetence, because the Government have failed to tackle the problem of a radical reform of local government finance.

That is the simple fact of the matter with which I am sure that few of your Lordships, at least in private, would quarrel. It is as plain as a pikestaff. And, of course, this is where Tweedledum and Tweedledee come in again, because we have not always had a Government of this particular party. As far as I am concerned, speaking from these Benches, the one lot are just as bad as the other. I am not sure which is Tweedledum and which is Tweedledee; and the sooner we get rid of them, the better it will be.

That is all I have to say, because I think that we have taken rather longer on this debate so far than the House authorities expected. Just to make it quite clear, let me say that I did not disagree at all with any significant part of what the noble Lord, Lord Ross of Marnock, said or with what the noble Lord, Lord Kirkhill, said. But the proof of the pudding is in the eating. In their day, they never made a speedy attack on the rating system or recognised the need for a radical reform in that area. Indeed, as I have mentioned in your Lordships' House before, the Labour Government of which I was a member pursued the same sort of lines as had previous Governments of both parties so far as concerns worsening that tension between local and central Government which has done so much to damage the government of this country. The only thing is that this Government have made it even worse.

8.5 p.m.

Lord Gray of Contin

My Lords, we have had a useful debate, constructive until the last speaker; but I shall come a little later to what the last speaker had to say. First of all, I should like to reply to the serious part of the debate and to the serious points which were put to me by the noble Lord, Lord Ross of Marnock. As I explained in my opening speech, the Government, in setting a threshold of three times the old valuation, were mitigating some of the most adverse effects of revaluation. We are not nullifying or neutralising revaluation. That is certainly not the purpose of this Bill. Nor, again, are we seeking to spread thinly some meagre relief over every ratepayer whose share of the rate burden has increased from revaluation. The new rebates are designed to meet the extreme cases on which revaluation is most harsh in its effect. Using a multiplier of 3 extends protection to those who have been hardest hit without entirely wiping out the intended effect of redistributing the rate burden.

No one can deny that there are often very good reasons for changes in assessment. After all, if, in individual cases, the assessor's reasons are not sound, he will be unable to defend such valuations if they are challenged in court. A multiplier of 3 will convey a very generous measure of rebate; indeed, much more generous than the schemes proposed by, for example, the National Federation of Self-Employed and Small Businesses and in a 10-minute Rule Bill in another place. The total amount of rebates will be the sum of the individual rebates ultimately settled on the basis of a multiplier of 3.

The scheme is demand-led and, I would emphasise, not the share-out of a predetermined pot of money. These points worried not only the noble Lord, Lord Ross of Marnock, but the noble Lord, Lord Kirkhill, also. I acknowledge his wide experience in local government. The noble Lord, Lord Kirkhill, suggested that a multiplier of 2.75 as a threshold would use up the £50 million. Using up the £50 million is not really the point. It is a demand-led scheme based on a multiplier of 3. Setting a threshold multiplier of 2.75 would virtually remove the effect of revaluation for all domestic property. The average for domestic property is, in fact, 2.7. A multiplier of 2.75 would greatly increase the number qualifying, and put up local authority administration costs enormously.

The noble Lord, Lord Ross of Marnock, asked me about the timetable of implementation and suggested that really it was too leisurely. An order can be passed through the Commons after Royal Assent but while the two-months period is running. No problems are envisaged in getting the Bill into operation in time. COSLA accept this, and the Opposition in another place did so. Indeed, they withdrew an amendment which might have had a contrary effect.

The noble Lord, Lord Ross of Marnock, as I think I suggested to him at the time I repeated the Statement that had been made in another place, found it rather difficult to find penetrating questions about that Statement because—although knowing the noble Lord as I do he would never admit it—he secretly welcomed in his own quiet way what the Government were trying to do. I think this time the noble Lord decided to fire a barrage of questions at me but I shall not duck them and I shall do my best to try to follow them through.

Lord Ross of Marnock

My Lords, would the noble Lord tell me when I was quiet?

Lord Gray of Contin

My Lords, it is very difficult to find such an occasion, I have to admit! The noble Lord suggested that the borrowing costs of local authorities while they waited for reimbursement would be quite considerable. The Government will consider making some early payment to the rating authorities in advance of audited claims. The noble Lord also asked—as did the noble Lord, Lord Kirkhill—about the situation next year. As the noble Lord is well aware, decisions on rate support grant and on the domestic relief element of the rate support grant are taken in the autumn each year. Obviously the noble Lord would not expect me to pre-empt these decisions. But I would remind him that the Bill is drafted as an enabling measure by order and that can be applied in any year. There is no question of there not being the power to apply it in future.

Lord Ross of Marnock

My Lords, one can deal with the domestic ratepayers under an increase of domestic rate relief but one cannot deal with commercial ratepayers in respect of the rate support grant.

Lord Gray of Contin

My Lords, the Bill which we are discussing tonight is not a one-year Bill and it would be possible for the Government to deal with any problems which arise in future years in the same way that they are dealing with the problem this year. But obviously I cannot pre-empt decisions which are taken on such issues in the autumn of each year.

I was delighted that the noble Lord from south of the Border decided to participate in our discussions. Scottish business is something which we consider of such importance that we are always delighted when anybody, whether they have a direct interest or not, takes part. We welcome the noble Lord to our deliberations.

I would suggest to the noble Lord, Lord Morton of Shuna—and in saying that I would break the rule, as did the noble and learned Lord, Lord Wilson of Langside—that his contributions to our debates will be most valuable and, in congratulating him and welcoming him to Scottish debates, I would also commend him for his great brevity by which he lost nothing in his speech. He made his points; and we all appreciated them. I am sure that the brevity with which he made his maiden speech will be widely applauded throughout your Lordships' House.

The noble Lord, Lord Ross of Marnock, suggested that we should prescribe the proportional effect of revaluation for different sectors. The order-making power in the 1981 Act is to adjust for properties not valued under powers introduced by the Act for partial revaluation. Such powers do not apply to a complete revaluation such as that in 1985. Both the noble Lord, Lord Ross, and the noble Lord, Lord Morton of Shuna, suggested that the ratepayers' right of appeal against not getting a rebate was likely to cause problems. This is intended to be a simple scheme. There should be no need for the complexity of extra procedure. Where a ratepayer disagrees with an authority's decision not to give a rebate there is indeed no specific provision mentioned in the Bill although recourse could be, as the noble Lord, Lord Morton of Shuna, rightly pointed out, to the jurisdiction of the Court of Session. It seems to us most unlikely that such a measure would require to be employed. The noble Lord, Lord Kirkhill, also raised the point about the benefit for domestic ratepayers. I would answer him by saying that an estimated 132,700 domestic properties will qualify. Total rebates on these are estimated by COSLA at £4.2 million. The increase in domestic rate relief in 1985–6 is some £88 million.

Lord Kirkhill

My Lords, I wonder whether the Minister would give way for one moment. Can the noble Lord tell me what proportion of the total the 142,000 represents?

Lord Gray of Contin

My Lords, I cannot answer the noble Lord off the top of my head, but I shall certainly make a point of finding out. Perhaps I may write to the noble Lord with that information for him.

Lord Kirkhill

My Lords, yes.

Lord Gray of Contin

My Lords, I am quite sure that the noble Lord, Lord Ross of Marnock, could tell the noble Lord. There is very little about the rating system that the noble Lord cannot tell us. I am sure that his great modesty would prevent him from giving us that information at this moment; but he will no doubt have a letter to the noble Lord before I shall.

The latest estimate by the Convention of Scottish Local Authorities of the total amount of rebates has been mentioned by a number of speakers. Their estimate is of the order of £30 million. We accept that this is a better indication than the first estimate of £50 million because it is based on a much more lengthy and detailed exercise than it was practical to carry out in the time immediately before the Government's scheme was announced. But the total cost is of relatively less importance. What really matters is getting to ratepayers the right level of help. That is what we think a multiplier of three will do. The total cost, whatever that turns out to be, follows from that. We shall not know what the total cost may be until the last ratepayer has been paid.

I think that we have had a very useful debate. In conclusion, as I promised I would do, perhaps I may refer to the contribution of the noble and learned Lord, Lord Wilson of Langside. I often find it quite amazing that when Members move from one party to another their enthusiasm for reform increases. Although they had been members of their original party for many years, that bursting zeal for reform had never surfaced. It is encouraging that the noble Lord takes such a view and no doubt as we move through the remaining stages of this Bill he will enlighten us as to how he envisages that the system might be reformed. We are certainly looking for reforms and I am sure that the noble Lord will give us the benefit of his own deliberations and those of his colleagues.

I take no exception to his alluding to Tweedledum and Tweedledee. I am sure that the little bit of levity which he was able to introduce into our debate was welcomed by all sides of the House. I commend the Bill to the House.

Lord Wilson of Langside

My Lords, before the noble Lord sits down, I should like to apologise to the House and to the Minister. I was a little impatient in view of the time factor and I neglected to refer to this matter. I wish to ask the noble Lord whether he was aware of the great concern which the Retail Consortium has expressed about the detail of the Bill. The Retail Consortium represents some 90 per cent., so it says, of retailers in the United Kingdom. It is known that the concessions in the Bill will amount to about 4 per cent. of the total bill in the commercial sector. The concern of the Retail Consortium is that the impact, so far as the retail trader is concerned, will be even less. I have a number of figures which I received from the consortium this morning and I had intended to put them to the Minister. I should simply like to ask whether he can tell the House that he is aware of the consortium's extreme concern and its rather pessimistic assessment of the Government's proposals in the Bill.

Lord Gray of Contin

Yes, my Lords, I am aware of the letter to which the noble and learned Lord refers. I think that many other noble Lords have received a similar letter. I am studying it at the present moment and in due course I shall be sending a suitable reply to my noble friend Lady Carnegy of Lour, who raised the subject with me earlier this afternoon. I shall make sure that a copy of that letter is sent to the noble and learned Lord, Lord Wilson of Langside.

On Question, Bill read a second time, and committed to a Committee of the Whole House.