§ Lord Gray of Contin
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Scotland. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a statement about the Government's proposals for legislation to give some relief to certain ratepayers in Scotland who have in 1985–86 seen the rateable values of their property increase very steeply.
"In the August 1983 White Paper on rating reform in Scotland (Cmnd. 9018) the Government reaffirmed our earlier decision to have a full Scottish revaluation in 1985. This was approved by all parties in Scotland and by COSLA, who considered it important that the valuation rolls should reflect fairer and more up-to-date values.
"As information became available from assessors about the likely general effect of revaluation, I took various steps to offset the more extreme effects. In particular, I have twice increased the domestic element of the rate support grant—by a total of some £88 million—so that it now amounts to 8p in every £1 rateable value for domestic ratepayers: and because of the benefits secured by industry overall I reduced the percentage of industrial derating from 50 per cent. to 40 per cent.
"Nevertheless it is all too clear that there are still many domestic ratepayers whose valuation increases have been particularly steep and who still face very substantial increases in their actual rate bills. Furthermore in the commercial sector, though the average effect of revaluation has been neutral, there are significant numbers of businesses facing very severe increases. No small businessman, however enterprising, could ever have been expected to plan for a rates demand like some of the hugely increased bills which have now arrived.
"The Government have therefore decided to introduce a scheme to help ratepayers faced with 1065 very high increases in their valuations. They will be given a new statutory right to claim 100 per cent. relief in respect of that part of their 1985–86 rates bill related to all of their new valuation which is in excess of three times their 1984–85 valuation. This will be subject to a limit to the total relief payment in the case of any particular subject, to ensure that maximum help is targeted towards the smaller business. The right will extend to domestic and commercial ratepayers alike; it will not extend to property occupied by local authorities and the Crown, public undertakings valued by statutory formula and manufacturing industry and freight-transport subjects. The scheme will be administered by rating authorities, to which I will reimburse the full cost of the payments. The new relief will have no effect on statutory rights of appeal or on other rights and duties, though where an appeal is successful the amount of relief will fall to be adjusted accordingly.
"The new relief is intended to ease the immediate burden arising from the high valuation increases which took effect at 1st April, and will apply in the year 1985–86. I will consider in due course whether there is a case for any special relief in 1986–87. I estimate that the relief will probably cost at least £50 million. This will be new money from the taxpayer.
"A Bill providing for the new relief will be published as soon as possible. I hope that honourable Members opposite will, as the Honourable Member for Glasgow, Garscadden (Mr. Dewar) has already indicated, give support to us in our endeavours to bring the scheme into force at the earliest possible moment.
"There is no need for any ratepayer who thinks he will benefit from the scheme to act until the Bill has been brought into operation."
My Lords, that concludes the Statement.
§ Lord Ross of Marnock
My Lords, we should be grateful to the noble Lord the Minister for repeating this Statement, rather unhappily for him, because it was not very long ago—less than a year—when we debated rating and valuation in Scotland and suggested from this side, with very strong support from the other side of the House, that it was time we had an inquiry into the rating and valuation system in Scotland.
That amendment was defeated by five votes here. But I remember the words of the noble Lord the Minister. He said, "We do not need an inquiry". I remember the remarks of the noble Baroness, Lady Carnegy of Lour, that the people in Scotland did not want an inquiry; they were satisfied with the rating system. I remember the words of the White Paper, that the rating system in Scotland was sound; it was on a sound basis; all it required was some alteration and we should wait until the Act which was passed less than a year ago took effect.
Here we are with this archaic, crumbling structure of Scottish rating, patched up practically every two years, patched up again this last year—and now what do we get? This fairer system in which it is important that the valuation rolls should reflect fairer values. Fairer?—so fair that the Government have to come 1066 along in the first instance to give £88 million in respect of domestic relief, and now £50 million again in respect of domestic relief. This is the third bite at the cherry. First of all, the Minister gave an additional 3p, then 4p, and now he is giving something like £10 million for domestic relief and still ratepayers are going to pay probably an average increase of 20 per cent.
Let us remember that, with all he is saying, the valuation roll remains unchanged, with the unfairness that the Government accept and that the Minister has got to do something this year.
I regret the importance being placed on the last words:There is no need for any ratepayer who thinks he will benefit from the scheme to act until the Bill has been brought into operation".Most ratepayers think they have a right to an appeal and I trust they will not be put off by these words. They should appeal out of the Statement itself. No one is to get relief unless his valuation is more than three times what it was last year—I repeat, more than three times what it was last year. When that is translated into rates, that is still going to be a very considerable increase in rates for everybody.
Then we are told that the domestic rate element has been increased, twice, first by 3p, then by 5p, totalling 8p, and the figure given here is £88 million. But where is that money coming from? From the Scottish Office block grant. In other words, services have got to be reduced in order to make that possible. That has already been admitted by the Government and now, following all the outcry in Scotland and the virtual hysteria of the Tory Party in Perth we have an extra £50 million in respect of mainly commerical rating, small shopkeepers and the rest.
This is to be new money. But the rate element is negotiated every year. The Secretary of State can change it at a stroke. This new relief that we are going to hear about in legislation carries with it no guarantee it will be continued. The one thing that is going to be continued is the impossible valuation rolls.
What are we going to get, my Lords? We are just putting off the evil day. What we are going to get in Scotland are reduced services and higher rates. The rating system should have been dealt with long ago. This House gave the Government a chance to do something about it, and they have not done it.
There is one other question I should like to ask about this three times the valuation point. We have heard about there being a limit to the total relief payment on any particular subject. How was this formula calculated? How did they assess that it might cost at least £50 million? The Government must have something in mind. What is the limit to be? Can we be told? Can we be told how the inquiry is going that the Government have suddenly discovered they should have despite all the words of the noble Lord to this House? What about that inquiry? When are we going to get it? When are we going to get legislation from it?
At Perth, the Prime Minister said that when she got agreement they would go ahead. Agreement with whom? They have not got an agreement. Is it an agreement within the Cabinet or with all the people who have to be consulted outside? Nothing is going to 1067 be done effectively in the life of this Parliament, and the people should not be kidded—certainly not by this holding Statement. The Tory Conference in Perth must be the most expensive conference ever held in Scotland.
§ 5.59 p.m.
§ Lord Mackie of Benshie
My Lords, like the noble Lord, Lord Ross of Marnock, I should like to welcome the reading of the Statement by the noble Lord the Minister and to welcome the £50 million. Like the noble Lord, Lord Ross, too, I have one or two statements to make on the way this has been done. I must say I was really rather pleased with the Government when they produced the new figures for the assessed rentals. I have never seen such indignation among long-time Tory Party members in the town of Forfar. It was absolutely delightful. They spoke to me in warm terms. I thought that, in the long term, this would do a great deal of good. Far from the Secretary of State having a tremendous amount of foresight, he was absolutely shocked by the reaction. To pretend that £88 million is being given to help the domestic rate grant, in view of the enormous cuts in the block grant, as the noble Lord, Lord Ross, has already said, is really if I may use a vulgar phrase, coming it a bit.
The other point, again made by the noble Lord, Lord Ross, is this business of being able to claim relief if your assessment is more than three times what it was in 1984–85. Is the noble Lord really saying that in, say, the small town of Forfar the rates of the properties in the main street have trebled in real terms since the last revaluation? They have not. The noble Lord must look at the base on which the assessors are working. It is ludicrous.
Again, in the town of Forfar, one of these enormously rich building societies—I do not know where they get the money—came in, bought a pub in the main street and closed it down and installed an office to collect money from the citizens of Forfar. The assessor takes the figure that an outside body paid for one property in the best situation.
The same is true of supermarkets. They come in, pay a lot of money and ruin many of the small traders. In the town of Forfar, many shops are empty. The assessors base their valuations of properties on totally false premises of outside money coming in for a totally different purpose to that of the native traders of Forfar.
The Government really cannot pretend that this is anything but a swift, panicky and proper reaction to the appalling mistakes that they have made in not pursuing the policy that they have talked about for a long time—the revising of the rate system, its reform and abolition. Instead, we have the thing compounded and made infinitely worse. It really is not good enough. I should like to ask the Minister what it means when the Statement says:I will consider in due course whether there is a case for any special relief in 1986–87".Unless there is going to be reform, certainly there is a case and must be a case for relief against the sort of assessments that have been made on the good citizens of many towns, large and small.
I cannot believe that it was a great step in many districts of Scotland to reduce industrial de-rating by 1068 10 per cent. What is needed in most areas in Scotland is more encouragement for industry. I had thought that this was what the Government were doing. We really must have some promise from the Government not that this bribe will come across again, but that they really intend to do something about a system that is manifestly unfair and seen to be so by many of their own supporters.
§ Lord Gray of Contin
My Lords, I am grateful to the noble Lords, Lord Ross of Marnock and Lord Mackie of Benshie, for the enthusiastic welcome they have given to the Statement that I read. I think really that both find themselves in great difficulty. There is precious little that you can say against a Government who want to give £50 million to people who have been very harshly treated by the rating system. Indeed, I would say to the noble Lord, Lord Mackie of Benshie, that some of his friends in another place were calling for aid to help those people who were being very severely penalised as a result of revaluation. The figure that they suggested was £4 million or £5 million. And here we are, having made a decision that the figure which we are going to make available is in the region of £50 million. I am not really surprised therefore that neither noble Lord had any penetrating questions to ask on this subject.
Let me touch on some of the matters to which they did refer. The noble Lord, Lord Ross, reminded us that he and some of his friends had called for an inquiry when we were debating legislation last year. Well, if we had had an inquiry, the inquiry would certainly not have reported by now. Indeed, there would have been little hope of stopping the revaluation. There would certainly not have been any possibility of the sum of money that the Government are producing to help those who have been harshly treated. The fact is that noble Lords opposite find themselves facing a Government more sensitive, more sympathetic and more generous than anything they could imagine coming from this side or from their own side. I do not think that anyone can suggest that the £50 million being made available is anything other than generous. The noble Lord, Lord Ross, pays tribute to the Tory Party conference in Perth as being the victors in this.
The question of the duplicator has been raised. Three times the valuation is what has been offered. The noble Lord, Lord Ross, asks where we are going to find properties that have risen by three times. The noble Lord, Lord Mackie, I think, raised the same point. There are cases where the revaluation has revealed increases of this sort. It is for that reason that the Government are prepared to make considerable efforts to try to cushion those people against the increase. The average domestic increase is 2.6; the average commercial increase is 2.33. That is the average. But there are some examples, for one reason or another, of difficulties, perhaps partly due to the methods used by the assessors, although I would be reluctant to criticise a professional body very experienced in its work. The noble Lord, Lord Mackie, gave some instances in his part of the country. The noble Lord, Lord Ross, asked about the limit. The Secretary of State is still in the process of having discussions on this question. He has in mind at the moment, although it has not been finalised, a limit of £10,000.
1069 The noble Lord, Lord Mackie, asked what is meant towards the end of the Statement by the reference to special relief in 1986–87 and the fact that the Secretary of State will give consideration to that. That is exactly what it means. What has been announced is help for the current year. The Secretary of State will give consideration in due course to the position regarding 1986–87. I am sorry that noble Lords could not find it in their souls to be a little more generous on an occasion when an announcement of this sort has been made. I am, however, grateful to them for participating in our deliberations.
§ Lord Kirkhill
My Lords, the Minister of State should accept and should understand that the main reason why we on this side cannot accept his remarks with the generosity that he thinks we should is that his right honourable friend the Secretary of State made a massive political miscalculation when he agreed that the revaluation—something that has not happened in England for more than a decade—should go ahead again a couple of years ago. That was the major political mistake and the reason why the noble Lord is now defending the indefensible here this afternoon.
§ Lord Gray of Contin
My Lords, no. With respect, the noble Lord has, I think, forgotten the point. He certainly knows it because he did this job himself once. He will appreciate that the situation so far as revaluation is concerned is quite different in Scotland to that which exists in England. Indeed, the Secretary of State would have been required to come back to Parliament not to have a revaluation. But the Secretary of State took the decision that as long as the system is as it is, it was right that properties should be revalued—
§ Lord Gray of Contin
My Lords, indeed, the spokesman in another place for the party which the noble Lords, Lord Ross of Marnock and Lord Kirkhill, represent was emphatic in his remarks that he entirely agreed with the Secretary of State, as did the other parties in another place.
§ Lord Ross of Marnock
My Lords, let us get the facts right. The Government came to the House and said that there would not be a revaluation. In fact, they passed an Act through both Houses to say that there would be revaluation of only non-domestic properties. Then they came back again, scrubbed that and said that there would be a full revaluation. They have been floundering for years on this subject.
§ Lord Stodart of Leaston
My Lords, I should like to ask my noble friend two questions. As regards the three-times limit, can my noble friend give an indication as to what extent it will benefit domestic ratepayers, or can he say whether the balance will lie in favour of the commercial ratepayers? As one whose rate assessment has gone up by 2.8, I find myself just below reaping any advantage from this. Secondly, am I right in saying that the Scottish system of revaluation every five years originally enjoyed—and I dare say that 1070 it still does—all-party support? If that is the case, if it is of all-party benefit in Scotland, why is it not of all-party benefit in England?
§ 6.13 p.m.
§ Lord Gray of Contin
My Lords, I am grateful to my noble friend for his questions. My noble friend asked me about the balance between the benefits to domestic and commercial rates. I cannot give him an exact figure for that, but he is right in his assumption. I would assume that there would be a balance in favour of commercial rather than domestic rates. There is no doubt that there will be benefits for certain domestic sectors as well, but the balance would certainly be in favour of the commercial rather than the domestic ratepayer.
As regards the five-year revaluation, I agree with my noble friend. As far as I am aware, the Scottish five-year revaluation method has the broad approval of all parties. Indeed, all parties have indicated their agreement to the Secretary of State over the question of revaluation. I should not care to comment on the position in England and Wales; this must be a matter for their own judgment. However, in Scotland it has all-party support.
§ Lord Grimond
My Lords, noble Lords will have heard the noble Lord the Minister tell us in his cheerful way that it is the Government who are showing such extraordinary generosity by giving £50 million to the ratepayers of Scotland. Is it not the case that it is the taxpayers who will produce the money? Is this not a prime example of one of the worst features of modern administration?—instead of going to the root of the trouble, which is the ridiculous rating system, the Government attempt to off-set it at a cost to the taxpayer. Will the Minister say whether he still maintains his admiration for the rating system which he has expressed so recently in this House?
§ Lord Gray of Contin
My Lords, I am grateful to the noble Lord, Lord Grimond, for his intervention. The noble Lord is right; of course it is the taxpayer. Governments have no money. Any money that Governments have they take from the taxpayer, and that is why this Government have been so prudent in the way in which they have spent money since 1979. They are frequently criticised for being tight with money and for not being very forthcoming in distributing money. But on this occasion we are distributing money where we think that the present rating system has caused an injustice.
As regards the system, yes, it is correct that we shall be looking at a variety of possibilities. However, there is no point in changing something until we find something with which to replace it which will not create as many problems as it solves. Therefore, we shall have to wait and see what the pros and cons of the various possibilities turn up before we make a final decision.
§ Lord Boothby
My Lords, perhaps I may offer my sincere congratulations to the Minister of State and to the Secretary of State for Scotland on a most remarkable achievement. They have obtained £50 million from the present Chancellor of the Exchequer 1071 in one weekend. Nobody else has approached that, and I think that we should all be profoundly grateful to the Chancellor.
Having said that, I should like to ask the noble Lord whether the Government now realise at long last that the present rating system in Scotland is rotten and that it has been rotten for years. Many Secretaries of State of different political persuasions—and I am not sure that I can completely acquit even the noble Lord, Lord Ross of Marnock—have looked at this problem, flinched from it and ducked away. It is now absolutely necessary for the Government to go straight ahead with an exhaustive inquiry into the whole rating system, which needs to be radically reformed.
§ Lord Gray of Contin
My Lords, I am grateful to the noble Lord, Lord Boothby, for his generous remarks, and I would say that the Government are doing just exactly what he suggests they should be doing. They are looking, and will be looking, at a variety of possibilities. I would go along with the noble Lord in what he has suggested about the noble Lord, Lord Ross of Marnock. In fact, I am not at all sure that there was not a revaluation during the period when he was Secretary of State, but if there was not, I am quite sure that he will very soon tell us.
§ Lord Howie of Troon
My Lords, I should like to take up the point that was raised a few moments ago by the noble Lord, Lord Stodart of Leaston, concerning the difference between England and Scotland in this respect. I ask my question with a certain amount of trepidation because, although a Scot, I pay my rates in England. As the noble Lord the Minister regards his endeavour as such a munificent affair, will he try to induce his colleagues on the Government Front Bench to apply the same rules to England as he applies to Scotland? We may then have the interesting spectacle of a similar uprising in the Conservative Party in England to that which we saw in Perth a week or so ago.
§ Lord Gray of Contin
My Lords, the noble Lord, Lord Howie of Troon, has made an interesting suggestion, but I would not become too enthusiastic over it because at present the actual average domestic rate contributions, when one takes rates and water added together, show that the average in England and Wales is £393 and the average in Scotland is £328. It is not as big a difference as one might have expected.
The Earl of Selkirk
My Lords, as I understand it, my noble friend says that the rates have risen by an average of two-and-a-half times. If that is the case, why is the poundage not reduced? Is this a matter of delay, or is it for some other reason?
§ Lord Gray of Contin
My Lords, the revaluation has shown an average increase of 2.6 on domestic properties and 2.33 on commercial properties. As regards the poundage, it is very difficult to give exact figures as to how the whole question of revaluation and rating is made up, but about one-third of the increase is attributable to revaluation, inflation and other matters for which central Government are responsible, and about two-thirds is attributable to local authority decisions reflected in rate poundage.
§ Lord Carmichael of Kelvingrove
My Lords, I think the House will be pleased that the Minister has made the Statement and at the fact that £50 million has been obtained from the Treasury. As the noble Lord, Lord Boothby, said, it is quite a feat to get £50 million from the present Chancellor. On the other hand, the Chancellor did say that it would never happen again. Herein lies part of the problem for ratepayers of Scotland, particularly the small business people. I was pleased that the Minister said that small business people would possibly benefit more than most. The problem arises because we do not know what will happen in 1986–87. Therefore, there is the difficulty of small business people, for instance, retiring, or wanting to sell their business. They do not know, nor does whoever is likely to buy the business have the faintest idea, whether the rates in the future will go back to what they were originally assessed at, and whether that will put them out of business. As the Minister will realise from looking at the press, for some of the small businesses in parts of Fife it was just impossible. Had no relief been given, the rates would have been so appalling that they would have had to give up.
When the Minister suggested that it was generous on the part of the Government to produce this he could not have read the Scottish papers that I read over the last few weeks. They were almost unanimous in the view that it was really a decision of pure panic and that the Government had to do something. Rather than generosity, it was the panic of the Conservative rank and file which forced its way through to the Ministers and to the Members of Parliament in Scotland which ultimately made the Chancellor decide to give the money.
When the noble Lord says "never again", what is going to happen in 1986–87? It is not enough to say that it is too far ahead. It is close enough for people trying to sell a business, or who are retiring, and how are they going to get rid of their businesses?
§ Lord Gray of Contin
My Lords, the noble Lord, Lord Carmichael, must have misunderstood me. I did not say "never again". I said that what the Secretary of State announced today were measures for the current year. In the Statement the Secretary of State indicated that he would look again at the situation for 1986–87. I certainly did not say "never again". It would be wrong if that were the impression that was given. I do not know what others may have said, but I certainly did not say that and the Secretary of State did not say that. I want to make the record clear on that point.
The noble Lord suggested that this was an act of panic. This has been suggested by others. I think that the noble Lord has aligned himself with those of his friends who find it difficult to criticise what the Government are doing, and therefore the best they can come up with is that it is an act of panic. It is a fact, a £50 million fact, and as they say in Scotland, as the noble Lord, Lord Ross of Marnock, will know, facts are chiels that winna ding, and it is a fact, and that is it.
§ Lord Ross of Marnock
My Lords, there is one thing on which I think I should correct the noble Lord. He asked me whether I had presided over a revaluation. He should know that I did not. The revaluations in 1073 England, Wales and Scotland were in 1973. They have not had one in England since then. The next one in Scotland was 1978. The next one in Scotland should have been 1983. The Government postponed that. We had it in 1985. I think his muddle with statistics is just equivalent to his knowledge of history.
There is one thing that I should like to ask the noble Lord. There is mention in this of "the valuation". But rates are not calculated on valuation; they are calculated on net valuation. Therefore he has given to domestic ratepayers and others something complex to work out in relation to his 300 per cent.; his three times factor. Has the noble Lord estimated now what will be the average increase in rates for domestic and for others after he has taken this beneficial action, as he calls it?
§ Lord Gray of Contin
My Lords, I cannot give the noble Lord that figure off the top of my head. What I can remind him of is that his countrymen and my countrymen will not be found deficient in their knowledge of mental arithmetic if there is something to be gained in a rebate at the end of the day.
§ Lord Wilson of Langside
My Lords, the Minister complained about the lack of penetrating questions. Since he has failed to answer at least four penetrating questions, may it ask him whether he is aware that there are a number of us from Scotland who have what we consider to be penetrating questions, and that we are refraining from asking them only because we are conscious that the House is anxious to get on with the arts, and to be damned with the Scottish philistines?
§ Lord Gray of Contin
No, my Lords, I am afraid that the noble and learned Lord cannot get away with that one. If he looks, he will see how long we have been talking about this Statement; so that will not wash.