§ 4.58 p.m.
The Earl of Caithness
My Lords, with the leave of the House, I shall now repeat a Statement a Statement that has recently been made in another place by my right 1470 Honourable friend the Secretary of State for Scotland. The Statement is as follows:—
"With permission, Mr. Speaker, I wish to make an announcement about revaluation and rate support grant in Scotland. As honourable Members know there has been a revaluation of property in Scotland which will come on 1st April this year. I believe that such regular revaluations are essential to maintain a fair distribution of burdens within the rating system. In considering the rate support grant settlement for 1985–86, I have had very much in mind the special issues which revaluation raises.
"It is however now becoming very clear that authorities are not heeding my repeated warnings to contain their expenditure. Spending in both 1984–85 and 1985–86 will continue to be above the Government's plans. I will, of course, be closely examining the budgets of all authorities to see if any are planning expenditure of a level which would make in necessary for me to take selective action to reduce their rates. I would also remind all authorities that the penalties for overspending in 1985–86 will be much more severe than in 1984–85.
"I consider that the increases in rate bills now emerging are in general so steep that I must take further action to protect domestic ratepayers. I have therefore decided to increase the total of aggregate Exchequer grant and, within it, the domestic element of rate support grant by £38.5 million making it possible to increase domestic rate relief to 8p per pound of rateable value. This is an eight-fold increase over 1984–85 from £12 million to £102 million. Domestic rate relief is a direct relief on each £1 of rateable value and accordingly the benefit from it increases with rateable value. The necessary order will be laid shortly.
"The increase in domestic rates will in total now be reduced from 24 per cent. to about 17 per cent. The increases for individual domestic ratepayers will in many cases be higher, and in many cases lower, than this figure, depending on the level of spending in their local authorities and changes in the pattern of valuation. It is pf course open to ratepayers to appeal against their valuation and we have made improvements in appeal procedures in the Rating and Valuation (Amendment) (Scotland) Act 1984. The cost of increasing domestic rate relief in this way will be financed by adjustments within my existing policies and expenditure programmes.
"As I have said, 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".
My Lords, that concludes the Statement.
§ Lord Carmichael of kelvingrove
My Lords, may I first thank the noble Earl for repeating the Statement made by his right honourable friend in another place? Is he aware that this Statement is primarily necessary only because of the dreadful mess the Scottish Office 1471 has made of the whole revaluation exercise? The Statement suggests that regular revaluations are important, and that is something with which we on this side would completely agree, because continual adjustments are needed. But does the noble Earl accept that the delay in revaluation has made the medicine a great deal more bitter than it would otherwise have been—and this is where it becomes slightly ironic for the Secretary of State to say that he believes in regular revaluation—and that the Secretary of State delayed revaluation at the appropriate time because it would have arrived in the middle of the 1983 election, and that would have been extremely embarrassing for the party opposite?
The Statement makes it clear that the rate increases now emerging are very steep indeed. Would the Minister accept that, contrary to what is suggested in the Statement about Certain local authorities not heeding the repeated warnings to contain their expenditure that the Secretary of State has issued from time to time, the implication being that the effect of the revaluation is only going to hit what the Secretary of State would call the recalcitrant authorities, the higher rates are in fact hitting even the traditional true blue Tory areas, such as, for instance, Eastwood and the Border region, where the rate increases are respectively estimated to be about 38 per cent. and about 22 per cent.? So the implication in the second paragraph of the Statement is somewhat bordering on the misleading, and perhaps even on the dishonest.
Is the noble Earl aware that this belated concession that he has made of 8p in the pound as against 5p in the pound is quite inadequate and that at least 10p would have been needed in order to make it reasonable for the thousands of families who are going to have a particularly difficult time because of the revaluation? Is he aware that this concession is unlikely to reduce the anger of prominent Scottish Tories, who have publicly attacked the Secretary of State for forcing revaluation as he has done—not least the chairman of the Conservatives in Scotland, who made a futile trip to London to try to persuade the Secretary of State that the whole revaluation exercise should be postponed?
Can the Minister tell us what results we can expect in the other areas of Scottish Office financing when the adjustment (as it appears in the Statement) of £38.5 million is made within the Secretary of State's existing policies and expenditure programmes? Where will this money come from? Finally, does this Statement really mean that we can forget about the promises made repeatedly by the Secretary of State for Scotland from 1979 right through almost to the eve of the election in 1983, that the Scottish Conservatives would abolish the whole rating system?
§ Lord Wilson of Langside
My Lords, from these Benches I should like to echo our thanks to the Minister for repeating the Statement. It will of course do little or nothing at all to allay the acute anxieties among so many people in Scotland—if not indeed all ratepayers in Scotland—over the increasing burden of rates which they face.
May I ask the Minister, first, about the question of revaluation? I share much of the feeling behind the 1472 concern and shock expressed by the noble Lord, Lord Carmichael of Kelvingrove, about the delay in the revaluation. It is, of course, part of the conventional wisdom of the Scottish Office, and I think we all accept, or have done up to date, that regular revaluations are essential to maintain a fair distribution of the burdens. Why delay the revaluation?
Could the Minister tell us, perhaps—some people better informed than I will already know, but could the Minister tell us for the benefit of the people of Scotland—why we have so much concern for regular revaluations in Scotland when, of course, there has not been any revaluation in England, as I understand it, since 1973, if the press is right?
May I comment, secondly, on the third paragraph of the Statement, which reads:I consider that the increases in rate bills now emerging are in general so steep that I must take further action to protect domestic ratepayers".That statement takes my breath away, coming from a Minister in a Government which we thought was committed to radical reform of the rating system in Scotland, after six years in power. The only thing to be said in favour of that statement is that it is extraordinarily frank, and that at least is something, coming from this Government.
But what follows—and I wonder what comment the Minister would care to make on this—is in effect too little and too late. It is too late because, of course, everyone has been telling the Scottish Office about the grievous increased burdens that people would have to bear so far as rating is concerned. To that extent, therefore, the Secretary of State's conversion would seem to come too late. I agree with, and would just acknowledge, what the noble Lord, Lord Carmichael of Kelvingrove, said: that it is far too little.
May I ask the Minister to comment on a point raised in the fourth paragraph, where it says:The increase in domestic rates will in total now be reduced from 24 per cent. to about 17 per cent."?I understand that COSLA said that the increase in domestic rates before this Statement would be in the region of 27 per cent. I wonder whether the Minister has any comment to make on that, as against the figure in the Statement of 24 per cent.?
Finally, may I ask the Minister whether he can tell the House and the people of Scotland when this Government, who have paid so much lip service to the need for radical reform of the financing of local government—with which I and my noble colleagues on these Benches entirely agree—intend to give us that radical reform and to introduce a little sanity? I am sorry; I get a little excited about this, but we really ought to have a little sanity in the relationship between central and local government—instead of which, does the Minister not agree, it gets madder and madder? I know that in 1966 the Labour Government, and maybe other governments before, adopted this approach to local government finance, but enough is enough. When are the Government going to do something about it?
§ 5.10 p.m.
The Earl of Caithness
My Lords, I am grateful to the noble Lord, Lord Carmichael of Kelvingrove, and 1473 to the noble and learned Lord, Lord Wilson of Langside, for their welcome to this Statement. It was a rather muted welcome to good news, but there we are. It was welcome to some extent. If I may try to reply to some of the points that they raised, both noble Lords said that this was, in effect, a dreadful mess by the Scottish Office and that there were anxieties over the change. I suggest to them that perhaps they should go and ask some of the industrialists in Scotland, whose rate bills have gone down as a result of this revaluation, and ask them whether they consider that it was a mistake.
The noble Lord, Lord Carmichael, said that we ought to put the domestic rate relief at 10p in the pound and not 8p. All I can tell him is that COSLA asked the Secretary of State for £31 million, but the Secretary of State said, "No, it will be £38.5 million", so that was rather beneficial to the domestic ratepayers. He asked me also about savings. About £26 million of the savings will come from reductions in my right honourable friend's cash limited programmes in 1985–86. The programmes mainly affected are likely to be industry—and that is largely the SDA—roads and transport, the urban programme and health and housing. My right honourable friend has also taken some account of the grant penalties which are likely to arise from authorities through overspending. There is also some underspending in the current year that can be brought forward but, as the noble Lord will appreciate, without coming to the end of the financial year these figures cannot be finalised.
The noble and learned Lord, Lord Wilson of Langside, asked: What about England? As I am sure the noble and learned Lord of all people does not need reminding, there are totally different systems in Scotland and in England. In England, the revaluation is made at the request of the Secretary of State for the Environment and it is done by the Inland Revenue. In Scotland, it has to be carried out every five years unless Parliament agrees to a deferment and it is carried out by independent assessors. I cannot stress that too strongly. It is not a Government revaluation; it is an independent assessor's revaluation.
The noble and learned Lord also said that COSLA had suggested that the increase in domestic rates was 27 per cent., whereas the figure that I quoted earlier was 24 per cent. I think that the figure of 27 per cent. comes from the article in The Scotsman today, which I believe was put out partly by COSLA. I understand that the figures contained in that article include water rates and that probably accounts for the difference. If it does not, I will write to the noble and learned Lord. So that clarifies the situation. With regard to the reform of the rating system, we have discussed this fairly lengthily in the past and perhaps this would be an inappropriate time to take the matter a stage further.
My Lords, would the noble Earl care to comment on the fact that the new valuations in Grampian region are, on average, two-and-a-half times what they have been in the past five years, and that the proposed domestic rates increases in Banff and Buchan district are, in many cases, in the region of 21 per cent. up on last year, which will hit householders very hard indeed and is far in excess of inflation?
The Earl of Caithness
My Lords, I am grateful to the noble Lady for what she has said. The figures that I have before me relating to Banff and Buchan—and this is confirmed by COSLA—are that the domestic rate increase, on average, is about 15.3 per cent. That will be reduced by 6 to 7 per cent., following the Statement that I have repeated on behalf of my right honourable friend. So that will bring the figure down to under 10 per cent. As she will appreciate, when there is a revaluation some values will go up and some will come down. But the advantage that we have had in Scotland of a regular revaluation is that when there are these discrepancies they are sorted out at an early stage. As the noble Lady will be aware, there has been enormous pressure for the revaluation to be delayed. But if it were delayed, it would only compound the problems.