Abolition of Domestic Rates Etc. (Scotland) Bill

HL Deb 28 April 1987 vol 486 cc1434-72

Consideration of amendments on Report resumed on Clause 2.

[Amendments Nos. 10 and 11 not moved.]

The Earl of Dundee moved Amendment No. 12: Page 1, line 9, after ("the") insert ("financial").

The noble Earl said: My Lords, it may be for the convenience of the House if in speaking to Amendment No. 12, which is concerned with the financial year of a local authority, in Part I. of the Bill, I deal also with the other similar amendments, Nos. 13, 21 to 23, 48, 50, 51, 55 to 58, 62 and 63 and with other amendments involving changes to definitions in the Bill, concerning Part I, Clause 26, and Schedules 5 and 6, involving Amendments Nos. 24 to 38, 40, 42, 60, 71 to 73, 189 to 199, 207, 208 and 209. This might seem to result in a rather formidable looking group of amendments, but really there is nothing difficult or forbidding about them. They are, for the most part, concerned with definitions in the Bill and where these should appear.

The amendments fall into four sets. First, there are the amendments concerned with references in Part I of the Bill—which includes Schedule 1—to the expression "year". Your Lordships will recall that this point arose at our Committee stage. Clause 6(1) provides that "year" is to mean the financial year of a local authority. However, in view of the proposals in Amendments Nos. 73 and 190 to 199 to relocate in Clause 26 the definitions in Clause 6(1) and (2), the appropriate references in Part I of the Bill to "year" in relation to a local authority are now being changed to references to "financial year", which is the approach already taken for the other parts of the Bill.

In relation to Amendment No. 190 by my noble friend Lord Gray, I would say that the Government consider that it is strictly unnecessary to define "financial year" in relation to a local authority, since this is already clear from the context of the Bill itself. However, I recognise that the amendment is helpful, and am therefore willing to accept it.

I would remind your Lordships that in this context Section 96(5) of the Local Government (Scotland) Act 1973 already provides that financial year means a period of 12 months ending on 31st March.

Lord Ross of Marnock

My Lords, the lights in the Chamber have dimmed. That is the problem with accepting an amendment!

The Earl of Dundee

My Lords, that will teach me not to do so again!

I turn now to the second set of amendments within this group. This set is concerned with where in the Bill words and expressions used in the Bill should be defined. At present Clause 6 contains definitions for the purposes of Part I of the Bill, because, as was explained during Committee stage, Part I of the Bill is intended to form part of the Valuation Acts, and the Government had taken the view that it was appropriate for that part to have its own definition clause.

However, some of your Lordships, including the noble Lord, Lord Gray, and the noble Lord, Lord Morton of Shuna, found it confusing and considered it unnecessary to have two definition clauses in the Bill. We have considered carefully what the noble Lords had to say on this, and, in an attempt to meet the concerns expressed, Amendment No. 73 proposes the removal from the Bill of subsections (1) and (2) of Clause 6, while Amendments Nos. 191 to 199 insert into Clause 26 those definitions currently in Clause 6 which are not also found in Clause 26. This includes the definitions of rates in the 1956 and 1966 Acts. I note that the noble Lord, Lord Morton of Shuna, has tabled amendments to similar effect.

As a consequence of moving all the definitions into Clause 26, a revised definition of Valuation Acts has had to be included, to ensure that the Bill itself will be included within the term, Valuation Acts, rather than only Part I as had previously been the case in Clause 6. The Bill itself is only included as part of the Valuation Acts in so far as it relates to matters of valuation—in effect, again Part I of the Bill.

We have also considered the views expressed at Committee stage when we removed the definition of "net annual value" from the Bill. The terms of that definition were incorrect, but several of your Lordships were concerned about the consequences of the term remaining undefined. We have come to the view that it would be advisable to have a definition of net annual value and rateable value in the Bill and thus Amendments Nos. 191 and 193 provide for this.

These definitions are by reference to Section 6 of the Valuation and Rating (Scotland) Act 1956 as it will be amended by Schedules 1 and 6 to the Bill. This will be appropriate for all of the provisions of the Bill except Clause 5, which, as your Lordships will realise, is concerned with values and matters of valuation prior to 1st April 1989. In Clause 5 the gross annual, net annual and rateable values referred to will require to be calculated according to Section 6 of the 1956 Act as it will be in force immediately before the domestic valuation and rating systems are abolished. Amendment No. 71 achieves this.

The third set set of amendments relates to Schedules 1, 5 and 6 and are consequential on the changes which I have just been describing. At Committee stage, the noble Baroness, Lady Phillips, indicated that in view of the general definition of rate for all enactments which the Bill was providing for, it was unnecessary to have the non-domestic rate under Clause 3 and the non-domestic water and sewerage rates under Schedule 5 specifically defined in other legislation where reference is made to them.

In addition, the definition of Valuation Acts in the 1956, 1966, 1973 and 1975 Acts is brought into line with that now proposed for Clause 26 of the Bill. All these changes are contained in Amendments Nos. 24 to 37, 189, 208 and 209.

Finally, there are two other amendments which, for convenience, have been included within this group. First, Amendment No. 38 is concerned with Part III of Schedule 1 to the Bill and liability to the non-domestic water rate. Under paragraph 33(4) of Schedule 32 to the Local Government, Planning and Land Act 1980, industrial and business premises situated in enterprise zones are exempt from rates but are liable to pay the domestic water rate. The amendment provides that they will in future be liable for the non-domestic water rate. In other words, the basic principle of liability remains the same. The premises will otherwise however continue to be exempt from rates and thus will be exempt from non-domestic rate and the non-domestic sewerage rate.

Secondly, Amendment No. 207 relates to Schedule 6 to the Bill and Section 7 of the Local Government (Financial Provisions) (Scotland) Act 1963. At present, Schedule 6 provides for the repeal of the whole of Section 7. However, under subsection (4) of Section 7, assessors are required to send to the Secretary of State and to local authorities estimates of rateable valuation relating to a year of revaluation.

Subsection (4) of Section 7 is therefore very relevant for the purposes of Clause 3(4) and the calculation of maximum non-domestic rates in years of revaluation. Section 7(4) of the 1963 Act should therefore, as the amendment proposes, continue to be kept in force. With that full explanation of the various sets of amendments involved in this group, I commend the amendments to your Lordships as representing an improvement to, and a tightening of, the Bill's provisions. I beg to move.

8.45 p.m.

Lord Gray

My Lords, I must first thank my noble friend Lord Dundee and through him my noble friend the Minister for the 16 amendments which insert the word "financial" before the word "year". I suppose the lights went out at the shock of hearing the Government accept 16 amendments simultaneously from a Back Bencher, albeit such comparatively insignificant drafting ones. This series of amendments fully meets the point I made at Committee stage. It makes the effective sections and paragraphs absolutely clear as to what is meant by "year" and in consequence makes the Bill more readable.

I turn now to Amendment No. 73 which, as my noble friend Lord Dundee has explained, abolishes Clause 6 and, when taken together with other amendments, adopts the course which I and other noble Lords suggested at Committee stage leaving the Bill with only one interpretation clause rather than two and a better Bill for that. I am grateful that the Government have taken this course and acknowledge that the point made in Committee, by myself at least, has been fully met.

Finally, I should like to turn to Amendment No. 190 which stands in my name. It is the sole survivor of a series which I drafted but managed to stop getting on to the Marshalled List at the last moment when I learned of the Government's equivalent series of amendments to Clause 26. My noble friend Lord Dundee has kindly and generously said that the Government will accept this amendment on the grounds that it is helpful rather than necessary. Perhaps I should explain exactly the reason for it. I wish to make it quite clear that "financial year" means the financial year of a local authority and not the national governmental financial year which might otherwise have been assumed. With that welcome for what the Government have done and my thanks to them for meeting the points I made at Committee stage, I am happy to support all the amendments.

Lord Morton of Shuna

My Lords, it is always pleasant to see the Government accept suggestions coming from other places. Both the noble Lord, Lord Gray, and myself made the proposition that it was ridiculous to have two definition clauses quite apart from having other definitions spattered about like stray currants at various places in the Bill. It is better to have one definition, and I welcome the change.

I confess that I have some difficulty in understanding why we have to refer throughout the Bill to "financial year". If the Government had accepted my Amendment No. 198, which defines the word "year" in the Bill as meaning the financial year of the local authority, it would have saved the word "financial" coming into about 10 amendments. It may be that the noble Earl, Lord Dundee, who has had to deal with such simple, clear and easy amendments to this Bill both at Committee stage and since, will be able to point to another occasion when "year" as used in the Bill does not mean the financial year of a local authority. If so, I congratulate him because I have been unable to find it.

The amendment makes the Bill slightly more comprehensible. To that extent I congratulate the Government. It is an unusual situation that Amendment No. 196 stands in the name of the noble Lord the Minister and myself. It is obviously therefore a non-contentious amendment and I am perfectly prepared to accept the Government amendments and withdraw those in the grouping that are in my name.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 13: Page 1, line 9, after ("subsequent") insert ("financial")

The noble Earl said: My Lords, I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

[Amendment No. 14 not moved.]

Lord Campbell of Croy moved Amendment No. 15: Page 2, line 4, at end insert— ("(aa)(i) any caravan which is the only or main residence of the occupier thereof with any buildings ground pertinents heritable facilities and services, whether or not part or parts of a caravan site, used in connection with the occupation of such caravan but excluding any leisure caravan and any caravan pitch entered in the valuation roll in terms of section 3 of the Rating (Caravan Sites) Act 1976; (ii) for the purposes of this part of this Act the words "dwelling house" shall include a caravan and the buildings ground pertinents heritable facilities and services used in connection with the occupation of such caravan and the words "caravan", "caravan site" and "caravan pitch" shall have the meanings respectively assigned to them by section 6 of the Rating (Caravan Sites) Act 1976.")

The noble Lord said: My Lords, I believe it is intended that Amendment No. 18 might be discussed with this amendment. I would point out that although it is on the same subject of caravans it deals with a quite separate matter, but I am perfectly content if those who tabled Amendment No. 18 are willing to allow it to be discussed with Amendment No. 15.

On 30th March (at col. 447 of Hansard) during the Committee stage of the Bill I raised the subject of caravans as a matter of concern to the tourist industry. I gave notice that I would table an amendment at Report stage if a way had not by then been found to meet the point in question. It is a matter of writing clearly into the Bill what is intended by Parliament because the assessors in Scotland are independent of government. They make their own decisions on the interpretation of statutes. In that they are different from their counterparts in England and Wales.

The substance of the matter is the way in which a caravan park is to be assessed when the residential caravans have been removed from the valuation roll. Amendment No. 18 starts by referring to static leisure caravans. I make it clear that that is not the kind of caravan that my amendment deals with.

I drew attention at the Committee stage to an earlier episode when, after there had been a lapse in not writing something clearly into the Rating (Caravan Sites) Act 1976, it had been necessary later in 1984 to bring in remedial legislation because the assessors had taken their own interpretation which was quite different from what Parliament had intended. I had hoped that lessons had been learned from that episode. Since the Committee stage my noble friend Lord Glenarthur has written to me, as he said he would if he could. His letter reached me only at the end of last week so I have had little time to consider it further with him. It brought out a misunderstanding of the intention and the effect of my amendment. My amendment deals solely with residential caravans not leisure or static caravans. For example, if a site had 50 residential caravans on it occupied as residences all the year round, the caravans would be subject to the community charge. Those caravans may be accompanied by items which go to make a residential caravan park such as access roads, lighting and washing facilities. Such items should not be a rating charge against the site operator. That is the present position. All rates for residential caravan parks are levied against the individual caravan occupiers. There is no charge to rates against the site operator. The only entry in the valuation roll is for residential caravans.

My noble friend Lord Glenarthur has indicated that he wishes to keep the position as it is, that he does not wish to change that situation. My amendment does exactly that. It is necessary I believe because I argued at Committee stage that the Bill should make clear what is required to be done by the assessors. They need to have it made clear in the Bill. As my noble friend's letter appears to bring in the leisure and static caravans, clearly a misunderstanding of the point I have been raising about residential caravans has arisen. I hope that my noble friend will be able to look further at this because we are not in any way at issue on the substance of what requires to be done.

It is a technical matter of great concern to the tourist industry in Scotland. It needs to be set out clearly because the assessors need to have this written into the Bill. They cannot be directed later when the Bill has been enacted. They must know what is intended. I beg to move.

Lord Carmichael of Kelvingrove

My Lords, since this Amendment, No. 15, is being taken with the amendment in my name, Amendment No. 18, perhaps I should say a brief word on the differences. When the noble Lord, Lord Campbell of Croy, spoke about the importance of this amendment to the tourist industry I became slightly more confused because he was talking about static caravans used as the main or sole home of a resident, whereas I should have thought that the tourist industry was much more concerned with mobile caravans.

Lord Campbell of Croy

My Lords, I am grateful to the noble Lord for giving way. I have tried not to repeat everything I said at Committee stage. The whole point is what is the effect on the holiday caravans after the residential caravans have been taken out?

Lord Carmichael of Kelvingrove

My Lords, I see the point now. This reinforces what I said on an earlier amendment which to some extent was helped by the Minister's letter I quoted earlier. He said that he would be able, as soon as the Bill was enacted, to put down the regulations. By covering these points and the distinctions between the two types of caravan sites, my amendment (which is much the same as the one I moved at Committee stage) was merely to try to have the definition put more clearly into the Bill. With the assurance the Minister gave me and the courtesy he showed by sending me the letter which I dealt with more fully on an earlier amendment, I shall be happy not to move my amendment.

9 p.m.

Lord Glenarthur

My Lords, the amendment in the name of my noble friend Lord Campbell of Croy, requires us to consider the treatment under the Bill of what are generally termed "residential caravans". I find the amendment somewhat difficult to respond to because in some respects it is unnecessary, in so far as what it seeks to achieve is already covered by other provisions in the Bill. In other respects, however, it goes further than I believe is appropriate.

At the outset, I should explain that I have great difficulty in reconciling the two paragraphs of my noble friend's amendment. Whereas the first explicitly excludes static leisure caravans from its scope, the second paragraph seems to be seeking to bring within the scope of the term "dwelling house" all types of caravans. This is certainly the effect of seeking to define caravans by reference to Section 6 of the 1976 Act.

But, as I understand it, the amendment's first objective is clearly to secure the exclusion from rating of caravans which are at present described as "residential" caravans, and to which certainly on the second page of my letter I referred when I replied to my noble friend. I can give him the assurance that the Bill as it stands will achieve this. Such caravans can be distinguished from leisure or holiday caravans because they are licensed for occupation throughout the year.

Residential caravans are valued by assessors in just the same way as ordinary dwellinghouses and as such will come out of rating under the provisions of Clause 2(3)(a) without the need for any further or more specific provision. This will be so whether or not the caravan is used as someone's sole or main residence, so again the parallel with ordinary dwellinghouses holds good. The amendment does not achieve this comparability of treatment, because it seeks to define a residential caravan by reference to whether it is the only or main residence of the occupier.

I come now to the question of the pitches on which residential caravans are stationed, because I accept that that is also a source of some anxiety. It is a well established principle that a building or structure cannot be divorced in valuation terms from the site on which it is built or erected, and in practice this means that when residential caravans are removed from the valuation roll, the pitches on which they stand will be removed automatically at the same time, and again there is no need for the Bill to secure this result.

The amendment does however seek to go further because it seeks to bring into the category of domestic subjects, Any buildings, ground, pertinents, heritable facilities and services, whether or not part or parts of a caravan site, used in connection with the occupation of such caravans". In other words, it seeks to exclude from rating not just the caravan pitches, but also other buildings facilities and services which are, to use a broad term, associated with the residential caravan. It is in this area that I believe the amendment goes too far. To take one obvious point first, the words, whether or not part or parts of a caravan site", seem to me to bring within the scope of the amendment property which has nothing to do with the caravan site other than the fact that it is used in connection with the occupation of such caravans. The local newsagent's might be one example and there are others. But even if one puts that point on one side, I do believe that it would be going too far to exclude from rating the "infrastructure" of a caravan site which is used by the occupiers of residential caravans. It is, of course, the operator of the site and not the occupier of the caravan who is regarded as being liable to pay rates in respect of these services at the moment, and both now and in the future he will be able to recover contributions towards his rates bill for the services which he provides. I do not believe that this situation in unfair to the caravan occupier. The services which he enjoys on the site are additional to those provided by local authorities for all their local population such as education, roads, police and so on. He is, in fact, in exactly the same position as the occupier of a service flat. who will continue to pay for the services and facilities provided under an arrangement which is quite separate from that which leads to liability to domestic rates at present or the community charge in the future.

As I explained at the outset of my remarks, this amendment is to some extent unnecessary, and I hope that my noble friend will see the force of that. I hope also that he will understand that it would go further than we think would be desirable. I trust that my explanation of our policy on residential caravans has been helpful. I am the first to accept that this is a complex matter and I felt it would be worth while to take a few minutes to explain precisely what we have in mind. I hope that that has satisfied my noble friend.

Lord Kirkhill

My Lords, I did not quite understand what the Minister was saying. I do not blame the Minister for his explanation but I should like him to expand it somewhat. I do not understand his analogy of a newsagent who might be off-site. Will he develop that point? It seemed to be a palpable nonsense, if I may say so.

Lord Gray

My Lords, I think that there is no meeting of minds between my noble friends Lord Campbell of Croy and Lord Glenarthur on this point. I had understood the amendment, whether or not it is drafted correctly, to intend to import into the Bill the actual definition of domestic subject which is contained within Clause 2 of the Bill.

Lord Glenarthur

My Lords, I hope that we are not arguing at cross purposes. I sincerely hope that I am not arguing at cross purposes with my noble friend Lord Campbell of Croy. I do not believe I am with the noble Lord, Lork Kirkhill.

With the leave of the House, perhaps I may develop a little the argument paraded just now by the noble Lord, Lord Kirkhill. My noble friend Lord Campbell seemed to be arguing that the rates payable on site facilities will be recoverable by the site operator only for holiday caravan occupiers. That is not the case as I understand it. The site owners can make charges to the residential caravan occupiers and the holiday caravan occupiers to cover the cost, including rates, of the site facilities which both classes use. As for the connection with newsagents, the words which are used in the amendment relate to, part or parts of a caravan site". It is conceivable that close to or on the periphery of a caravan site might be a newsagent, a local launderette or something like that. By bringing them in, we should be going way beyond the scope of what I believe my noble friend is intending to do. Perhaps I have misunderstood the point.

Lord Kirkhill

My Lords, I am sure I have as well. My point, which I am sure I explained badly, was this. I did not think the amendment went as far as that. I thought the Minister took the amendment further than the amendment went.

Lord Glenarthur

My Lords, with the leave of the House once more, all I can say is that the amendment gives that appearance to me. When we looked at it, that is what we thought it would achieve. It would be for others to establish whether it went that far. I hope that my noble friend will be satisfied that that is one of the considerations that we had to take into account when we looked at the amendment.

Lord Ross of Marnock

My Lords, I am grateful for the noble Lord's speech. I had in mind a caravan park at Maidens which has a shop, cafés and so on. Those are on the grounds and, because they were not there before the caravan park, are definitely related to the caravan park.

I heard the noble Lord, Lord Campbell, say that he thanked the Minister for the letter he sent him. I heard my noble friend Lord Carmichael saying that he thanked the Minister for a letter. I am sure that the noble Lord, Lord Kirkhill, and I, had we received these letters, would have been more enlightened about the Government's policy and intentions. If the Minister is writing letters to anyone in future, I hope that he will let other people have the advantage of seeing them as well.

Lord Glenarthur

My Lords, with the leave of the House once more, if I failed to copy letters, I can only apologise. I wrote several letters over that period. sincerely apologise if the noble Lord and his colleagues were not aware of our intentions. It was certainly far from my intention to try to confuse them or deprive them of information. I will ensure that any other letters written are copied to leading spokesmen on all sides of your Lordships' House, and I apologise unreservedly in this case.

Lord Campbell of Croy

My Lords, I am grateful to my noble friend for considering this so carefully and answering in some detail. I have no apologies for raising this because, as all Members of the House will know, self-catering is a very important part of the Scottish tourist industry in which there is great potential, and it is still expanding.

When my noble friend was making his first reply before the noble Lord, Lord Kirkhill, made his very apposite intervention, he said—and this agreed entirely with what I have said—that the infrastructure that went with the residential caravans was rated, and those rates were paid by the residential occupier. When our words are read tomorrow, it will be seen that we are not disagreeing in that respect.

In the terminology of the tourist industry, there is the site operator, and the site operator now pays none of those rating charges. The industry wants to be certain that when the residential caravans are taken out of the system, the infrastructure, where the rates are also paid by the residential occupiers, goes with the residential caravans and the site operator is not left with having to pay the equivalent of rating on the still existing infrastructure which had gone with the residential caravans. There is, therefore, a difference in what my noble friend said, because it is the site operator rather than the occupier who will find that he is either assessed or not assessed, depending on how the assessors in Scotland deal with the Act when they are eventually faced by it.

My noble friend said that the amendment is not necessary. I think I made clear that I felt it was necessary only because we have to elucidate what is intended to the assessors in Scotland. I agree that in England and Wales it would not have been necessary. In the United Kingdom Bill to which I referred, which became the 1976 Act, the district valuers in England and Wales were told what to do by the Government and followed the intention of Parliament. The assessors in Scotland did not. They went their own way, and there was no way of stopping that until another Act was passed. I agree that it may not be thought to be absolutely necessary except to give clear guidance to the assessors when the Bill has been enacted.

Those who have studied the amendment will recognise that it has been drafted by experts in parliamentary drafting. It is therefore somewhat difficult for a layman such as myself to follow. However, I understand what the intention is: it is usually given away by a deficiency in commas in various parts of the amendment. That deficiency shows that it has been drafted by experts and has references to other statutes. I am sure that those who did the drafting for me will study carefully what my noble friend the Minister has said and take into account his views on the fact that it might be going too far. I hope that the assurance my noble friend has given extends to making sure that the Bill is completely clear for the benefit of the assessors what course should be taken when the amendment is carried out.

I do not think that I can say any more—I do not wish to add to the technicalities in the debate. I think that this matter needs to be made perfectly clear. If my noble friend thinks at this stage of the Bill that any changes might he necessary, I hope that on Third Reading he will not hesitate to make some alterations. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Wilson of Langside moved Amendment No. 16: Page 2, line 4, at end insert— ("( ) shall include properties held for the purpose of their preservation for the benefit of the nation, open to the public and maintained and furnished as domestic subjects, and").

The noble and learned Lord said: My Lords, I beg to move Amendment No. 16 which stands in my name and in the name of the noble Lord, Lord Mackie of Benshie. The effect of the amendment is to take off the valuation rolls properties of the National Trust and other analogous organisations and thus exempt them from rates. The amendment is much in the form of that proposed by my noble friend Lord Taylor of Gryfe at the Committee stage. The matter was then dealt with quite fully by a number of your Lordships who took part in the discussion which followed.

The Minister indicated that he appreciated the fact that for an organisation such as the National Trust a potential burden might be placed upon it which required looking at again, and he undertook to do that. I have looked at the amendments which are proposed on behalf of the Government and in presenting the amendment tonight I am concerned to ask the Minister to inform the House of the outcome of the further consideration which he undertook to give this matter. I beg to move.

9.15 p.m.

Lord Glenarthur

My Lords, I have considered very carefully indeed the points which were made when we debated this subject in Committee. I made clear on that occasion that I very much recognised the anxieties of the National Trust for Scotland on this matter, and I acknowledge that that recognition is shared by a number of noble Lords who spoke in Committee and who have contributed to our discussion today. But having said that, I must advise the House that in the light of my consideration I am still no happier with the amendment that I was earlier.

I think that we must first of all accept that if an amendment along these lines were to be made, it would affect many properties other than those in the hands of the National Trust for Scotland. The National Trust is by no means the only body to maintain places of exhibition which are maintained and furnished as dwelling houses; indeed my inquiries suggest that there are nearly twice as many in the hands of bodies and individuals other than the National Trust. So we should be clear that we are not just talking about National Trust properties.

The basic argument in favour of the amendment is that without it the provisions of the Bill for part residential subjects would somehow change the presumption about the way in which National Trust and similar properties should be valued. The argument appears to be that properties which are treated as domestic subjects at present would somehow inevitably become non-domestic subjects, with only minor elements such as residential flats being excluded from domestic rating through the part residential mechanism. This is not the intention of the provisions in the Bill and there is no reason to suppose that they will have this effect. The judgment about whether a subject is domestic or non-domestic will in future be based on exactly the same criteria as at present. It will be up to the assessor to justify any proposal he makes for a change in the basis of valuation and the rateable occupier of the property will have the opportunity to challenge that under the appeal system, just as at present. There is no indication at present that, just because a property is in the ownership of the National Trust, there is any kind of automatic presumption that it should be non-domestic. Indeed, it is my understanding that the majority of such National Trust properties are at present valued as domestic even where substantial parts of them are open to the public for considerable periods of time. My first objection to the amendment is therefore that it is unjustified and unnecessary.

The National Trust has argued that an anomaly could arise, in so far as a house which is accepted by it and which has been valued on a domestic basis when it is in private hands, whether it is open to the public or not, may on its transfer to the trust become liable to rates as a non-domestic subject. From what I have already said I hope that it will be clear that I do not accept the underlying presumption that property owned by the trust will be regarded as non-domestic. I do not therefore consider that there will be an anomaly of the kind which the trust suggests and I therefore cannot agree that its argument on this score justifies the amendment.

The National Trust for Scotland has referred to the possibility of creating an anomaly. I can assure the House that if we accepted this amendment it would very definitely be creating real anomalies, because the amendment does in fact discriminate in favour of certain kinds of places of exhibition. I am referring here to the use of the words in the amendment: maintained and furnished as domestic subjects". Let me say straightaway that I do not like the term "domestic subjects" because it has the effect of giving the amendment a circular quality. "Dwelling houses" would surely be more appropriate. But that is not my main point, which is that it would surely be extremely odd to take places of exhibition out of rating only if they were maintained and furnished as dwelling houses.

Perhaps I may give your Lordships an example. In Scotland there are a number of places of exhibition consisting of restored croft houses or black houses which have been furnished and equipped as near as possible to their original state so that the visitor can see exactly the conditions in which the crofters lived. As I understand it such properties are valued and rated at present as non-domestic subjects because they are museums, and I expect that they would come within the scope of the amendment. But what of the museum which is also a restored croft house but which is laid out in perhaps the more traditional way with exhibits arranged not to provide a replica of the original interior but displayed in glass cases and such? I do not think that such a place would come within the scope of the amendment, but it would be grossly unfair to assist one kind of museum and not another.

Were I to develop this argument further, I should say that we also run the risk of being unfair to industrial museums, because again in Scotland there are museums which provide working exhibits of industrial plant and machinery. The amendment does not cover industrial museums at all, so again it would create anomalies.

As I made clear at the outset of my remarks, I appreciate the concerns of the National Trust for Scotland in this matter but I am convinced that it would be quite wrong to accept this amendment. It is not simply the fact that it has a circular quality through its use of the term "domestic subjects", because that is a relatively minor point. My principal objections are, first, that it is unnecessary because the concerns that it sets out to remove are unfounded, and, secondly, that the classification of domestic subjects of all property of the type described in the amendment with its consequent removal from rating would create unfairness and anomalies which could not be justified.

With that explanation I hope that the noble and learned Lord will understand the difficulties that would arise and that he will not feel that it is necessary to press this amendment.

Lord Mackie of Benshie

My Lords, before the Minister sits down perhaps I may ask a simple question. Has he any suggestions to make which would overcome the undoubted difficulty in which the trust would be placed by many of the subjects? I can think of one in particular, which is the Laidhay Museum in Caithness, where the croft house is fitted up as he said and classed as a museum. What remission of rates or rating can it hope for?

Lord Glenarthur

My Lords, with the leave of the House, let me say that I certainly should not like to embark on a study of any individual case from the Dispatch Box to decide how the organisation should seek to alleviate any problems which might arise in regard to particular property. I hope that in answering the point made by the noble and learned Lord, Lord Wilson of Langside, I have stressed the difficulties that would accrue if we were to follow the route that he suggests. If the noble Lord has a particular case in mind and brings it to my attention explicitly and in detail, I shall certainly be very happy to look into it, but I think that that is too narrow and too particular an example for me to respond to without thought.

Lord Ross of Marnock

My Lords, can the Minister tell us how the National Trust houses and the other places that he mentioned will be dealt with under the new system?

Lord Glenarthur

My Lords, I am not sure that I quite understand the noble Lord's point. Is he asking me to go into detail about every aspect of National Trust property or is he asking a question in relation to any specific area? I am not quite sure of the burden of his question.

Lord Ross of Marnock

My Lords, I am dealing with properties that are held for the purpose of their preservation for the benefit of the nation. In future how will they be dealt with as regards rating and in relation to all the new personal charges, selective standard charges and so on that are causing concern and worry? How will they be dealt with? At what point do the worries of these people arise and are they right to be worried, or is there some misconception in their minds that they will be subject to burdens of rates or charges that they do not have at the present time?

Lord Glenarthur

My Lords, with the leave of the House, I point out that as I understand it the National Trust for Scotland has 55 properties which are maintained and furnished as dwelling houses. They are divided into three broad categories. First, there are those unsuitable for residential use—for example, a Glasgow tenement. There are 11 of those. Then there are those which are wholly or partly used for residential purposes, for example, the House of the Binns with which the noble Lord will be familiar. There is a total of 15 of those.

Lord Ross of Marnock

My Lords, I do not know it.

Lord Glenarthur

My Lords, I thought that the noble Lord would have been familiar with it but he certainly knows someone who is familiar with it. Then there are those which are the subject of short or long-term lets—for example Malleny House, Balerno—and which are not open to the public. There are 29 of those in total.

Lord Ross of Marnock

My Lords, there is Culzean and Brodick Castle.

Lord Glenarthur

My Lords, the noble Lord is making comments. Does he wish to intervene?

Lord Ross of Marnock

My Lords, I was merely adding Culzean and Brodick Castle to the list.

Lord Glenarthur

My Lords, I could give many examples myself but in the interests of time I was keeping it to one example of each.

The property in the third category—that is, property which is not open to the public—would presumably not fall within the scope of the amendment before us. That suggests that a total of 26 National Trust properties might benefit from the amendment. A survey of the Scottish Museums and Galleries Guide suggests that there are a further 47 museums in Scotland which fall within categories 1 and 2 above and which are liable to benefit from the amendment.

I refer the noble Lord, Lord Ross of Marnock, to the point I made earlier when I said that the basic argument in favour of the amendment was that without it the provisions of the Bill for part-residential subjects would somehow change the presumption about the way in which National Trust and similar properties should be valued. I cannot repeat all that. If the noble Lord studies what I have said, he will understand precisely how the mechanism works.

Lord Ross of Marnock

My Lords, I shall not.

Lord Glenarthur

My Lords, I hope that if the noble Lord studies what I have said he will understand it. If he would like to hear it again, I shall repeat it; but I hope that what I have said has set in context the mechanism and the details of what kind of properties would be affected.

Lord Mackie of Benshie

My Lords, I wish to ask for clarification. As I understand it, non-residential parts of National Trust and other properties will now be subject to non-domestic rates with no remission of any kind.

Lord Glenarthur

Yes, my Lords. With the leave of the House—and I am not sure how many times I can return to the Box and ask for your Lordships' leave—a number of properties are commercial in their nature and some of them no doubt fall into the category of the examples that I have just given. Some will fall within the category of non-domestic rating. Therefore, I fail to see what else I can add to the remarks that I have already delivered.

Baroness Carnegy of Lour

My Lords, before the noble and learned Lord, Lord Wilson, decides what to do with his amendment, it is important to remember that the categories of houses furnished as houses but which in effect are museums of the type that my noble friend has just described, are very much dependent on local government services. If they were totally exempt from rates other payers of the community charge would be paying extra for them. Where would those museums be which are furnished as houses and which are open to the public without the roads that lead to them, without the road signs erected by the roads authority (which is the regional island council) to show the way to them, without the recreation and tourism departments of the districts which advertise those properties, without the education departments which send school parties round them and which pay to do so, without the fire services which make arrangements for their safety, without police advice on safety, without rubbish collection, without, in the case of some houses, coastal protection, which is a regional function, without sewerage facilities, and so on?

Those are all local government services and it would seem wrong that, because a house was furnished as a house as opposed to being furnished as any other sort of museum, it should be totally exempt from a contribution to the funding of local authorities, and that that should be picked up by other payers of the community charge. It seems to me that this amendment is not aiming in the right direction of assisting the National Trust.

9.30 p.m.

Lord Wilson of Langside

My Lords, I am most grateful to the Minister for his careful explanation. I am very conscious, and was very conscious even before the noble Baroness spoke, that the drafting of the amendment raises questions. Perhaps I made a mistake in putting it in this form, and I apologise to the Minister for that. It may be that I should have taken time and considered with others the possibility of meeting the kind of points which I was fully conscious of right at the beginning.

The Minister said, very fairly, that he would consider the possibility of some action to relieve the burden on the trust. He has done that, for which I am grateful to him, and I accept his criticisms of the drafting. I shall look at the amendment again and if there is time before Third Reading, in consultation with those interested in the National Trust and others on these Benches, I shall try to get something which is more likely to meet the needs and the concerns expressed by the National Trust itself. In these circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carmichael of Kelvingrove moved Amendment No. 17:

Page 2, line 5, leave out paragraph (b) and insert— ("(b) any lands and heritages consisting of or any combination of a garden, yard, garage (having a floor area not exceeding 25 square metres), outhouse or pertinent close to but discontiguous or otherwise separate from one or more dwelling houses but occupied along with, used wholly in connection with, and only for the private purposes of such dwelling house or dwelling houses.").

The noble Lord said: My Lords, this is a very small but important amendment. We had debates earlier in Committee about paragraph (b), which reads: such class or classes, or such parts of any class or classes, of other lands and heritages as may be prescribed". We have made an effort to try to understand this paragraph, which my noble friend Lord Morton of Shuna, among others, has suggested is almost unintelligible. A certain form of words has been offered to me which I offer to the Minister. It tries to define rather more clearly and precisely what is meant than do the present words.

I feel that the Minister is being left with enormous powers which are too vague and obscure. I hope that following our earlier discussions the Minister will have looked at the point and is prepared to make the position clearer, rather than merely saying that something may be prescribed. I hope that the Minister will have thought over the matter and will be able to help us a little more. My Lords, I beg to move.

Lord Glenarthur

My Lords, it might be going a little far to describe this amendment as a curate's egg. Parts of it are indeed quite unacceptable. The rest, while by no means excellent, at least shows some understanding of what we are trying to achieve.

The power in paragraph (b) of Clause 2(3) is to be available to add to the category of domestic subjects such classes or parts of classes of lands and heritages as may be prescribed. The intention is that it be used to cover two broad types of property. First, there are private lock-up garages and comparable small buildings which at present have separate entries in the valuation roll because, by virtue of their situation, they cannot be valued along with dwellinghouses as a single unit. They do not fall within the description of subjects in paragraph (a) of the subsection, but it would clearly be unfair if they were left within rating when garages valued with dwellinghouses as a single unit will, by virtue of paragraph (a), come out of rating.

Secondly, there is property such as student halls of residence and nurses' homes, which is likely to provide a sole or main residence for most, if not all, of the residents. They do not fall within the scope of paragraph (a) either. However, it would be unsatisfactory to leave them in rating, given the liability of their residence to a community charge, because there would in effect then be double taxation.

The amendment seeks to deal with the first type of property only. For that reason alone I could not accept it. More fundamentally the amendment shows the difficulties inherent in the approach of referring to specific types of property. It mentions garages, yards and gardens. But what about storage sheds or car ports? How could one defend car ports being left in rating when garages are to come out?

I must say that the latter part of the amendment showed some promise, if that is the right word, in that it tries to secure a link between the property in terms of occupation, use and purpose. Possibly the tests it lays down are too restrictive. But in general terms it reflects the approach which we are considering in consultation at present with the Scottish Assessors' Association. I hope that the explanation of our intentions, and of the problems associated with listing exclusively in the clause the types of property involved, will demonstrate the need for and the advisability of leaving these matters to prescription.

I have to stress than I am firmly opposed to any attempt to replace the regulation-making power in paragraph (b) in Clause 2(3) with specific definitions or criteria. It is difficult enough—as the noble Lord has perhaps discovered for himself—to draw up definitions which look right on paper. It is harder still to guarantee that they will operate fairly and reasonably in practice. A regulation-making power seems to me essential in principle to ensure flexibility for resolving difficulties which may arise in practice.

Perhaps in the light of what I have said the noble Lord will agree that it would be best if he withdrew his amendment.

Lord Mackie of Benshie

My Lords, before the Minister sits down, may I ask him whether, if paragraph (b) is left as it is, that would enable him if he were sympathetic to the National Trust to prescribe National Trust properties which he felt were deserving of aid?

Lord Glenarthur

No, my Lords, I do not think so. If the noble Lord were to suggest that, I should have to ask him to expand a little on the reasons which he believes underlie the assumptions which he makes that possibly paragraph (b) could be used in that way. I do not know whether he feels that this is the right moment to do so. However, I do not think that it would be and the matters of principle to which I referred earlier so far as the extension on the National Trust and connected matters are concerned would still apply whether or not paragraph (b) was a suitable vehicle in the way in which suggested. I shall certainly look at that matter. But I fear that I shall probably have to disappoint him.

Lord Carmichael of Kelvingrove

My Lords, I am grateful to the Minister for his explanation. Without it, I do not know how anyone would he able to make a reasonable stab at what the paragraph means, although I was grateful for his praise when he said that the amendment, which I did not invent myself but which I was prompted to put down, was getting close to the mark. I do not know how such a complex subject can be dealt with without giving specific examples. I accept the fact that perhaps my amendment, which talks about actual floor areas, is going a bit far. On the other hand, I think the Minister was going a bit far when he spoke of car ports away from the house. The mind boggles. I have never heard of a car port which is not attached to a house or at least to a wall adjoining it. I thought that a car port, by definition, was something which used one wall of a house as a principal support. However, having listened to the explanation of the Minister, I beg leave to withdraw the amendment.

Amendment by leave, withdrawn.

[Amendment No. 18 not moved.]

Lord Wilson of Langside moved Amendment No. 19:

Page 2, line 7, at end insert ("premises used as Womens Aid Refuges and").

The noble and learned Lord said: My Lords, the object of this amendment is to ensure that Women's Aid Refuges will be rated as non-domestic premises. In this case I make no apology for repeating the amendment which was presented in Committee and to which the Government eventually responded with considerably sympathy. I had great expectations that there may be something in the government amendments which would cover the case. Perhaps I oversimplify some of the complexities in the Bill, but I believe that the obvious thing to do in common justice is to rate these refuges for women—who are the victims of the violence of their husbands and who flee their homes and are given refuge in these establishments—as non-domestic premises. These are premises to which the unfortunate women are driven sometimes accompanied by their children, and their stay may be anything from one or two nights to a considerably longer period. However, from what I have read and heard my impression is that it is usually for a fairly short period.

The common sense of the situation should be that while resident in their family home with their husbands and children these unfortunate women should he responsible for their personal community charge, or poll tax, however you care to describe the wretched thing. Equally, once they are free of the refuges and have either returned to their husband and the marriage has been restored to more or less normality or they have established a home of their own with their children they will become responsible for the personal community charge or poll tax. I believe that is a sensible approach but perhaps in the context of this Bill it is too sensible to be acceptable to the Government.

Certainly the matter was explored fairly fully at Committee stage and my impression was that the Government were fully alert to the needs of the situation and would either accept an amendment of the kind which has been put down tonight or would suggest another solution which would deal adequately with the position of these unfortunate women. Although we read a great deal about them I suppose over the years their numbers are relatively few. I beg to move.

9.45 p.m.

Lord Glenarthur

My Lords, I listened carefully to the explanation which the noble and learned Lord gave. I have to say to him that in accordance with the undertaking which my noble friend Lord Dundee gave when we discussed this matter in Committee we have had further consultations with Scottish Women's Aid on the best treatment for women's refuges under the new system. However, against the background of the system as a whole I do not think that the most appropriate solution would be for all such refuges to remain in rating as this amendment would provide for. That would mean that all those who were solely or mainly resident in the refuges would be exempt from personal community charge liability for the period during which they were so resident. This would have the curious effect of differentiating between the inhabitants of refuges who were not solely or mainly resident there—and who would normally be registered for the personal community charge at their home address—and those who were solely or mainly resident in the refuge who would be exempt. I do not therefore consider that this solution would be a sound basis for the treatment of women's refuges. I should also mention that a further unintended effect of the proposition would be that in many cases women's refuges would be the only ordinary dwellinghouses which remained on the valuation roll. That could, I think, lead to the very difficulties of confidentiality about which so much concern was understandably expressed in Committee.

After full consideration therefore we have reached the view that the most equitable treatment of women's refuges would be that they should be subject to liability for the collective community charge. Scottish Women's Aid has made clear to us the desire that, whatever the solution ultimately adopted, there should be consistency of treatment for all refuges. We think that that is a reasonable request. The pattern of residence of people in such refuges is very variable and while in many cases registration officers might decide that they should be subject to the collective community charge, it would be preferable, for the avoidance of doubt and possible administrative complexity for women's aid themselves, for them to be prescribed as liable for the collective community charge under Clause 11(2) of the Bill. That will mean that the charge payable will be determined by the multiplier set by the registration officer to reflect the typical occupancy rate of the premises by people whose sole or main residence is there. In many cases this might be a relatively low figure if most of the residents are not in fact solely or mainly resident in the refuge but are only staying there for a matter of days before returning home or going on to other accommodation. While the setting of the multiplier will not, I accept, be straightforward in every case the factors which the registration officer will take into account will of course be prescribed and further central guidance may be issued in the light of experience of the working of the system.

The advantage of collective community charge treatment is that it avoids any distinction in tax liability between those who are solely or mainly resident in a refuge and those who are not. Those who are solely or mainly resident will be required to pay the landlord a contribution relating to the period of their stay or the same amount as the personal community charge which will, as I have said, normally be paid by those who are not solely or mainly resident in the refuge but continue to be registered at their home address.

Finally, I should say a word about the question of confidentiality of the addresses of refuges. I fully accept the point made by Scottish Women's Aid that under normal circumstances a refuge which was liable for the collective community charge would be identifiable as such from the presence of the multiplier in the public register. I propose, however, that in the case of women's refuges the multiplier should not appear in the public register. This will be achieved by prescribing women's refuges under Clause 20(2)(a)(iii) as a class of premises whose multiplier does not appear on the public register. This power of prescription was added to the Bill as a result of an amendment brought forward in Committee by my noble friend Lord Strathclyde.

I understand the point that the noble and learned Lord has made. As I said, we have discussed this with Scottish Women's Aid and I think that the solution I have described is the best and fairest possible in the circumstances for women's refuges. Therefore, in the light of that further explanation and particularly the clear understanding which I have given to ensure the confidentiality of the addresses of refuges—which I believe is the point which really underlay the concern of your Lordships in Committee—I hope that the noble Lord will feel able to withdraw his amendment.

Lord Taylor of Gryfe

My Lords, I am sure we are grateful to the Minister for honouring an obligation to the House. He has given further consideration to the matter and has discussed it with Scottish Women's Aid. We appreciate his assurance with regard to the matter of confidentiality. That is important, but rather more important is the treatment, the subject of the amendment. While the Minister told us he had spoken to Scottish Women's Aid I presume that the proposition before the House tonight was put to its representatives. I hope that they could understand it more readily than I.

I wonder whether the Minister, with the permission of the House, could tell us the reaction of Scottish Women' Aid to the proposition which he has now submitted. I must say I thought it unsatisfactory. Anyone who has seen these refuges would feel that a special case could be made. These are dreadful situations in which women arrive with their children at all hours of the night, frequently pursued by husbands or lovers. They are subject to a great deal of brutality and ill-treatment and I should have thought that we might be able to go further than the Minister has gone tonight.

I should appreciate it if the Minister would tell me exactly what was the reaction of Scottish Women's Aid to the proposition he has put to us tonight.

Lord Glenarthur

My Lords, with the leave of the House, I should say that the clear preference of Scottish Women's Aid remains for refuges to be left in rating. But we discussed it and this solution which it prefers, and which the noble and learned Lord prefers, would not be without its problems. It would result in the exemption of certain women from personal community charge liability for the period during which they are solely or mainly resident in a refuge.

There seems to be no overwhelming reason in favour of the amendment. I can understand that it is perfectly possible to develop a theme of support for those whom the noble Lord so rightly describes as being extremely unfortunate. I can understand their point of view, but, basically, we think that their concerns are misplaced and that they are wrong to feel that they should remain in rating. We believe that the collective community charge will be the best way of preserving the confidentiality mentioned by the noble Lord, Lord Taylor of Gryfe, who suggested that these unfortunate people might be pursued by others who wished to deal with them in one form or another. That is, of course, a very unsatisfactory way to proceed. I would have thought that the method we are proposing—the multiplier not appearing in the register—relieves to a very great extent the concerns that have been expressed while leaving those concerned subject to the collective community charge.

Lord Mackie of Benshie

My Lords, I apologise for troubling the Minister. Perhaps he can tell us what would happen if a husband—and I understand that the husband is responsible as the head of the house—six months through the period beats up his wife and she leaves, but he is responsible for her community charge during the six months that she had been with him. She then moves into a hostel and stays there for two months and a collective charge, a collective sum, is recovered from her by the hostel. Then, for a further four months, she has a refuge, a home to which she removes her children. Surely that will give rise to unbelievable complexities. The husband, as head of the house, is responsible for the personal charge while she is with him. She is then in a hostel for two months and a collective charge is made. She then moves into a home of her own with her children. It will he enormously difficult.

Lord Glenarthur

My Lords, with the leave of the House again, I do not think that I can return to the Box many more times without trespassing on your Lordships' patience. There is a limit to the number of times that I can return on Report. It is possible to dream up more or less any scenario which could point to complexity. I dare say it is especially easy to do so in a Bill of this type.

The point about the woman who leaves her husband because she has been bashed up, or whatever, and who goes to a refuge relates to the husband's liability to pay. That is the noble Lord's first point. Joint and several liability will not apply when the couple no longer live together. The first point, which is the precursor to the noble Lord's later points, causes the whole proposition to fall. I accept that it is possible to dream up a scenario which is beyond the realms of probability, without looking at the matter in great detail to see whether an occurrence leads to the circumstances which the noble Lord suggests. In this case, joint and several liability will not apply when the couple no longer live together and so the first part of the noble Lord's premise falls.

Lord Wilson of Langside

My Lords, the Minister intrigued me by suggesting, in response to the point made by my noble friend Lord Mackie of Benshie, that it is possible to dream up all kinds of complex scenarios. The complexity of the social lives of the wives and families who resort to these refuges is not a dream; it is, for them, the reality, or as my noble friend Lord Taylor of Gryfe has said, a nightmare. That is the reality. I am profoundly disappointed by the Minister's response to the amendment.

When the matter was first raised there was a great deal of sympathetic response from this side of the House. I also remember the noble Lord, Lord Sanderson, urging the Minister to treat the matter as a special case. That seems to be the utmost common sense. It is a special and terrible kind of case.

My recollection is that in Committee the noble Earl, Lord Dundee, responded with a reading of his bureaucratic brief and showed an utter heartlessness which disturbed even a relatively easygoing person such as myself. I cannot help feeling that the Minister has returned to that approach. He is treating the matter as a little problem to be dealt with by some elaborate bureaucratic mechanism. If I understood him aright, he suggested that the amendment presented him with a problem. We all knew that. I knew that. I could see the difficulties. Governments are there to help solve people's problems. The Minister and the Scottish Office have a problem sorting out this tiny little aspect of the matter. It is tiny to us in this House, but it is of enormous importance to many unfortunate women. Their problem is far greater than anything which the Scottish Office has to deal with. I should have thought that the Government would sort it out on a sensible basis.

I shall consult Scottish Women's Aid further to find out what it feels. In the circumstances, the matter will have to come back at a later stage. I am tempted to put the amendment to the vote just to show the complete contempt I feel for the Government's attitude and approach to this problem and their apparent lack of sensitivity. However, I shall not do so. I do not suppose that I should get much support from the other side of the House. I therefore beg leave to withdraw the amendment but I shall bring it back later.

Amendment, by leave, withdrawn.

[Amendment No. 20 not moved.]

10 p.m.

Schedule 1 [Valuation and rating]:

The Earl of Dundee moved Amendments Nos. 21 to 38:

Page 26, line 8, after second ("the") insert ("financial")

Page 26, line 16, after second ("the") insert ("financial")

Page 26, line 24, after second ("a") insert ("financial")

Page 27, leave out lines 22 to 28 and insert— (" "rate" means the non-domestic rate and, for the purposes of Part V of this Act, includes the non-domestic water rate and the non-domestic sewerage rate;")

Page 27, line 40, leave out from ("rate") to the end of line 44 and insert ("or the non-domestic sewerage rate;")

Page 27, line 44, at end insert— ("19A. In section 43(1) of the 1956 Act (which defines terms used in the Act), for the definition of "the Valuation Acts" there shall be substituted— "the Valuation Acts" means the Lands Valuation (Scotland) Act 1854, the Acts amending that Act and any other enactment relating to valuation;" ")

Page 28, line 1, leave out from second ("rate") to end of line 14

Page 28, line 27, after ("Act") insert ("—(a)")

Page 28, line 31, at end insert ("; and

(b) in the definition of "Valuation Acts"—

1. (i) the word "and" shall be omitted, and
2. (ii) at the end there shall be inserted the words "and any other enactment relating to valuation" ")

Page 29, line 1, at end insert— ("25A. For subsection (8) of section 116 of the 1973 Act (which relates to valuation areas and authorities and the appointment of assessors, etc.) there shall be substituted— (8) In this section the expression "the Valuation Acts" means the Lands Valuation (Scotland) Act 1854, the Acts amending that Act and any other enactment relating to valuation.".")

Page 29, leave out lines 21 to 25

Page 30, leave out from beginning of line 1 to ("in") in line 5

Page 30, line 5, leave out from ("Acts" ") to end of line 6 and insert ("for the words "any other Act relating to valuation and includes this Act" there shall be substituted "and any other enactment relating to valuation" ")

Page 30, line 9, leave out from ("substitute") to second ("the") in line 10 and insert ("rates,")

Page 30, line 14, leave out from ("levying") to first ("the") in line 15 and insert ("rates,")

Page 30, line 25, leave out from ("1987;") to end of line 33

Page 30, leave out lines 38 to 53

Page 30, line 53, at end insert—

("The Local Government Planning and Land Act 1980. 37A. In paragraph 33(4) of Schedule 32 to the Local Government Planning and Land Act 1980 (which relates to lands and heritages exempt from rates), for the word "domestic" where it second appears there shall be substituted "the non-domestic" ").

The noble Earl said: My Lords, with the leave of the House, I beg to move en bloc Amendments Nos. 21 to 38 which have already been spoken to.

The Deputy Speaker (Lord Murton of Lindisfarne)

My Lords, I should point out that there is an error in Amendment No. 34 which may not have been drawn to the attention of the House. In Amendment No. 34 the word "community" should read the word "the", as I understand it.

Lord Glenarthur

My Lords, can the noble Lord on the Woolsack repeat that? I missed the word.

The Deputy Speaker: My Lords, Amendment No. 34 says: leave out from ('substitute') to second ('community').".

The word should be "the" and not "community".

On Question, amendments agreed to.

Lord Ross of Marnock moved Amendment No. 39:

Page 31, line 1, leave out paragraph 40.

The noble Lord said: My Lords, we now come to something really important. I was brought up with the Gaiety Theatre and every Friday night inevitably there was a comedian whose war cry was, "Should a blind man pay for the stair-head gas?". The subject of this amendment is the stair-head gas. The common closes of Glasgow are lit and the light extinguished by the leerie. I wish to know what this paragraph is doing here. Is it essential that this matter should be dealt with? We dealt with it fairly recently in the Civic Government (Scotland) Act 1982. It seems only yesterday that we dealt with this subject.

It is a matter with which the Secretary of State and the Treasury are not concerned. They leave the decisions to the local authority. Have they really thought about this? Is this a matter with which they can trust the local authority so that we shall not have to bring in the noble Lord, Lord Boyd-Carpenter, and his legions of bureaucrats from the Treasury to tell the Secretary of State what to do? In fact the Secretary of State is going to leave it to the local authority to decide who pays, how much and to whom they will remit the whole or part of the charge. Why is the paragraph there? I beg to move.

Lord Glenarthur

My Lords, this amendment takes us into the realm of what are sometimes termed secondary uses of rateable values—in other words, instances where rateable values are used for purposes other than the assessment of rates.

Subsection (9) of Section 90 of the Civic Government (Scotland) Act 1982 deals with the basis on which local authorities can recover the costs of providing or maintaining lighting in common stairs. In its present form, the subsection enables expenses to be apportioned among the owners who have a right of access by the common stair on the basis of rateable values. So if, for example, the total rateable value of all the flats on a stair was £4,000, the owner of a flat with a rateable value of £400 could be made liable for one-tenth of the local authority's expenses. This method of apportionment will no longer be appropriate when entries for dwelling houses and other domestic subjects are removed from the valuation roll, and so paragraph 40 of Schedule 1 substitutes a new subsection (9) which would allow a local authority to recover such proportion of the expense as it may determine.

The amendment merely represents a necessary piece of tidying up following the abolition of domestic rates. I might just add that the approach we are taking in the amendment will bring Section 90 into line with subsection (4) of Section 87 of the same Act which deals with the situation where local authorities seek to recover the cost of necessary repairs to common property. That subsection does not provide for a method of apportioning the costs but rather leaves the method to be determined by the authority. So in no way are we entering unmapped territory in making this amendment to the Civic Government (Scotland) Act.

I hope that with that further explanation the noble Lord is a little more enlightened and will feel able to withdraw his amendment.

Lord Ross of Marnock

My Lords, that is certainly a very illuminating reply and I am a little more enlightened. Certainly I am not in the dark. I could have guessed what the answer was going to be but I was fascinated with the fact that the Government were prepared to leave this apportionment not to prescription or anything else but to trust the local authority to do the right thing by the people concerned. I am still concerned about the words: the council may remit any sum or part of any sum due to them under this subsection". Does that mean that at long last the council may decide that a blind man need not pay for the gas or electricity on the stair-head?

Lord Glenarthur

My Lords, with the leave of the House, the noble Lord is raising a matter which, while it is an extremely interesting point, probably goes rather wider than anything I should comment on without thinking about the remark that he has just made. As I remember from my DHSS days, we get into very difficult territory when we start talking about all sorts of matters to do with blind people. I should not like to respond off the cuff to the noble Lord without considering his remarks unless I am able to provide any precedents, which I fear from experience earlier in the Bill might prove to be difficult for me.

If I refer the noble Lord to subsection (9) of Section 90 of the Civic Government (Scotland) Act 1982 he will see that it refers to district or islands councils which have under subsections which are referred to provided or maintained lighting or lit or extinguished lights shall lot entitled to recover from the owner the proportion of the expense thereby incurred by the council which the rateable value of the lands or premises owned by him which have right of access by the common property bears to the total rateable value of all the lands and premises which have a right of access by the common property but may remit any sum or any part of any sum due to them under this subsection as they think fit". So from what must be one of the longest sentences in any Act of Parliament, I can only assume it can be remitted if they think it is fit to remit it, and that might apply in the case of a blind man.

Lord Ross of Marnock

My Lords, by the leave of the House, I thank the Minister for repeating a second time what he said the first time. He probably said it a little better, but the fact is that at the start he did not have a clue as to what I was talking about. Maybe I have more knowledge of what stair-heads are like than he has, having been brought up with one.

Amendment, by leave, withdrawn.

Clause 3 [Non-domestic rates]:

The Earl of Dundee moved Amendment No. 40:

Page 2, line 29, after ("the") insert ("financial").

On Question, amendment agreed to.

Lord Taylor of Gryfe moved Amendment No. 41:

Page 2, line 29, leave out ("and each subsequent year").

The noble Lord said: My Lords, at this late hour I return to the subject on which we had some discussion at Committee stage. Since then I have had so much support for the argument of the day that I feel encouraged to reintroduce the principle which we discussed on that occasion. What we are dealing with now is the question of ability to pay, which we discussed earlier in relation to domestic ratepayers. In this case we are talking about ability to pay on the part of small businesses.

I am encouraged to introduce this amendment because of surveys of small businesses which I have undertaken in the interval between Committee stage and tonight. I have been encouraged and supported in this by two organisations. First, the Forum for Private Business. That is the organisation devoted to the promotion of free enterprise—a cause which I thought would have commended itself to the Minister and to the Government. The other organisation is the National Association of Small Traders. Both organisations have over 4,000 members in Scotland. Just as we suggested in an earlier discussion on a referendum, I suggest to the Minister that in this case he should listen to the people—people I suspect who are traditional supporters of the Conservative Party. Any organisation committed to promoting free enterprise and small traders is not normally a supporter of parties on this side of the House.

We are seeking to introduce the ability to pay in this area. I should have thought that a Scottish Minister had two responsibilities. He has a responsibility to ensure that Scottish business was in no way disadvantaged by any legislation that may be introduced. There is no doubt that Scottish business feels disadvantaged, despite the principle of harmonisation in rating which will take place on the subsequent revaluation of English properties. I should have thought too that the interests of small businesses was an area in which the Government had some responsibility for stimulating or at least protecting.

Yet here we have a survey in which 95 per cent. of the businesses employ fewer than 50 people and 70 per cent. of them employ fewer than 10. Who are these people? They are small traders who provide a useful community service in the towns and villages of Scotland. They find that the percentage of profits which they now have to devote to the payment of rates represents 25 per cent. of their pre-tax profits, compared with the large companies and PLCs in general where the rates represent between 1 and 5 per cent. of pre-tax profits. There is no doubt that the existing provisions and the provisions under which this will be based in a national harmonisation scheme will do little to alleviate the position of small traders and the small businessman.

I make a special plea tonight to seek the Minister's assurance that some improvement or some alleviation might be considered in these cases. In support I should like to quote a letter that I received from the CBI in Scotland which simply says: Whilst the government's proposals would lead to radical reform of the financing of local government, they do not tackle the fundamental problem of the burden of taxation currently paid by business through local rates under the present system". This is the view of business. It is the view of the CBI which represents large business; but it is the view of the people whom I have surveyed in the small business community.

They believe that this will do nothing to assist them, and ability to pay would suggest a much more equitable basis for the allocation of the burden. Ability to pay would be based on some percentage of the net profit. We would work on ability to pay in the same way as we work on ability to pay in the domestic field. This a complicated and difficult matter so do not ask me to spell out the detail of how it could be done. I am prepared to do so but it would take a little more time. All I ask is that the Minister give further consideration to this important principle. I beg to move.

10.15 p.m.

Lord Sanderson of Bowden

My Lords, I am not quite sure what the noble Lord, Lord Taylor, is getting at but harmonisation is a matter about which I am concerned. It is so important and fundamental for the future. I refer not necessarily to the implementation in Scotland but to the implementation of the whole scene for the United Kingdom. I must come back to what my noble friend Lord Glenarthur said at col. 499 of the Official Report of 31st March. He said: Some legislation will … be required, but the difficulty is that much valuation practice is not at present statutory and thus amenable to instant alteration". He went on to say that discussions were taking place between assessors and valuers north and south of the Border, to make significant progress towards more common valuation practices in time for 1990". Much the most important sentence referred to the need to, identify the outstanding differences thereafter that might need to be cleared up by legislation". I honestly believe that there will have to be legislation if we are going to knock their heads together north and south of the Border so far as assessing is concerned. We are keen in Scotland that we should have a unified non-domestic rate across the country, and not one just for England and Wales on their own or Scotland on its own. This hits at the root of one of the major complaints about the commercial side of the whole affair. If we are to have harmonisation as a reality we must impress upon the Minister the importance of his officials starting to look now at how it is going to be done.

The noble Lord, Lord Morton of Shuna, knows more about this than me. The case law in Scotland is great on this subject as it is south of the Border. Those are two different systems. We must impress on the Minister at this stage of the Bill that unless we see real progress and legislation on the front of the assessors and valuers being dealt with at a fairly early stage and indications that this will happen, I have little hope of seeing this other than as a dream. It has to be a reality. If it is not to be a reality not only small traders in Scotland but large firms will turn around and say, "You have not achieved what you set out to achieve". We must convince the industrial communities, small and large, north of the Border, that this is our ultimate aim and that we mean to get on with it. Legislation, if it is necessary, should be looked at soon so that it can be implemented as fast as possible when we have a Bill for England and Wales as well on the statute book.

Lord Carmichael of Kelvingrove

My Lords, Amendment No. 47 has been grouped with Amendments Nos. 41 and 44. Perhaps I may say a few words in support of the general tenor of the amendments.

The noble Lord, Lord Sanderson of Bowden, is absolutely correct in saying that we shall require legislation. It is rather sad that this Bill, which was triggered largely because of the revaluation of non-domestic properties, has not done that job. The amendment in my name and those of some of my noble friends goes a little further in giving flexibility to local authorities to be able to introduce non-domestic rate rebate schemes targeted to specific categories of ratepayer. It is perhaps rather a big subject to be introduced into the Bill almost as an afterthought. If the noble Lord the Minister could find a way of putting into effect without legislation the idea proposed by the noble Lords, Lord Sanderson of Bowden and Lord Taylor of Gryfe, and by the amendments, I am sure that we should all be delighted. However, it appears to me, as the noble Lord said earlier, that when we get to the stage of harmonisation there will need to be distinct legislation, particularly binding Scotland, England and Wales and giving some sort of rationality to the three rating systems.

Lord Gray

My Lords, I wish to raise a drafting point. Perhaps my noble friend the Minister would take note of it.

Regardless of any indirect intention of Amendment No. 41, I believe that it draws our attention to words that might well be misinterpreted. I invite my noble friend to consider whether Clause 3(1) as drafted would not allow the interpretation that the rate determined for 1989–90 is the rate to be levied not only in that year but in subsequent years.

Lord Glenarthur

My Lords, my noble friend Lord Gray is gaining something of a reputation for producing drafting points. All I can say is that I will consider that. I should not like to be taken further on it. On a quick re-reading of the subsection, I do not think that it imparts that meaning to me. My noble friend has made the point, and I will consider whether there is anything in what he said.

The amendments in the name of the noble Lord, Lord Taylor of Gryfe, take us back to our discussions in Committee on the question of the local business profit tax. I accept that the amendments do not refer explicitly to such a tax, but a tax of such a nature is clearly implied. If one is to have a local non-domestic tax based on the principle of the ability to pay, one must have regard to the means of the taxpayer. Inevitably, questions of profit have to enter into the discussion.

When we were in Committee, I placed on record the Government's firm view that a local business profits tax was unworkable. First, there is the problem of how to measure profit. There is also the bigger problem of how to decide to which local authority the tax should be paid. This is especially problematical in the case of organisations like building societies and insurance companies which have branches throughout the country. It would be nonsense if the headquarters of such concerns were regarded as the only profit centre, even assuming that the headquarters were in Scotland at all. There are insuperable problems of measuring the profit of one particular branch in a town to ensure that the local authority concerned gets a fair contribution.

I can see the attractions of a local business profits tax for a private trader. We have a great many forms of business enterprises. It is necessary for the Government—as indeed for your Lordships—to have regard to that fact when we consider the whole issue. The attractions of a local business profits tax are purely superficial. The concept does not in any way stand up to hard analysis, I believe.

I hope that the noble Lord, Lord Taylor of Gryfe, will accept that the Government have studied the matter and that my negative reaction to his argument is firmly based on a careful analysis of the problems involved. We are firmly convinced that the procedures set out in Clause 3 are in the best interests of all non-domestic ratepayers. I hope that in time, and after further reflection, this point will be accepted.

My noble friend Lord Sanderson raised the question of the possibility of legislation and quoted from remarks that I had made in Committee. I stand by what I said. I think my noble friend will accept that very much the first step—and it is an essential first step—lies in the harmonisation of the valuation systems north and south of the Border. That must be a prerequisite before we reach the point of legislation. I very much take on board the remarks of my noble friend. I hope that he will accept from me that that harmonisation is the prerequisite. After we have reached that point we shall be able to proceed. As I have said, work is already going on to try to achieve the process.

Lord Morton of Shuna

My Lords, will the Minister consider the point of the noble Lord, Lord Sanderson of Bowden? I believe that it was that one cannot achieve harmonisation without prior legislation. I believe that that is a point on which I and the noble Lord would agree.

Lord Sanderson of Bowden

My Lords, with the leave of the House, I am no lawyer but I happen to believe that if case law is built up on either side of the Border it will take more than just getting together to arrive at a common harmonised programme. The noble Lord, Lord Morton of Shuna, is nodding his head. Therefore I think that it should be looked at in the light of the fact that we shall probably need legislation, and we must be looking at that alongside all the efforts which are being made which do not need legislation.

Lord Glenarthur

My Lords, I accept that and I think that the two can run concurrently. Whether one is in advance of the other at any particular point is something which can be considered as the matter is taken forward. However, we do not disagree with my noble friend that in the end the need will be to achieve precisely the kind of harmonisation which he seeks. I do not think that we are at odds on that point at all, and nor are we at odds with the noble Lord, Lord Morton of Shuna.

I come now to Amendment No. 47 which raises the possibility of a non-domestic rate rebate scheme in place of the arrangements in Clause 3 for the index-linking of maximum non-domestic rates. The point should be put on the record that there is already a system of mandatory rate relief for charities and of discretionary rate relief for recreational bodies and the like. But a rate rebate scheme would take us far beyond the existing arrangements, and I have to say that to be worth the name the scheme would have to have regard to the resources of the non-domestic ratepayer at any particular point in time. Leaving on one side the complexity of the administration of such a scheme—though that I fear would be considerable—the basic difficulty is the same as that with a local business tax based on ability to pay. It would be an essential aspect of a rebate scheme to measure these resources, and I can see no easy way of deciding how resources are to be measured and what kind of resources should be taken into account. Should one, for example, have regard only to revenue or should capital also be taken into account?

I do not think that it is sensible to be thinking in terms of a non-domestic rate rebate scheme. In the Government's view, the mechanisms provided under Clause 3 provide a much more straightforward way of dealing with the difficulties faced by non-domestic ratepayers. They will meet a real need by providing from year to year a guarantee of stability and predictability in non-domestic rate burdens and I think that the House should support them.

I hope that with that further explanation the noble Lord will not feel it necessary to press his amendment.

Lord Ross of Marnock

My Lords, surely the Minister realises that we already have a rebate scheme for non-domestic rates. It is now in its second year. It was introduced at the time of revaluation when £50 million was made available by the Treasury and a formula was drawn up whereby people would receive a rebate in respect of the increase in their valuation. That applied for the first year; it is now in its second year and it is still being applied. Will the Minister look at that matter, because it sponsored our suggestion in Amendment No. 47? It is there and it may have to be continued.

Let us not forget that there already exists, and there is being continued, a 40 per cent. derating rebate for industrial rates. So we are not breaking new ground in that respect. The fact is that we do not know where we are going with this new system. We do not know the problems that will arise. It may well be that we shall have to resort to such measures in order to achieve fairness.

I appreciate the point made by the Minister about the rebates that we give to non-domestic rates—unless of course that charge is met directly by the Government, as happens with industrial rating and with non-domestic rating at the present time, the difficulties of which arise from revaluation. It may well be that we may want that, but we do not want to do it at the expense of the personal community charge. I understand that every time one changes the position, even a 1 per cent. reduction in non-domestic rating means an increase in the personal community charge by 4 per cent.

That is why when we discussed this matter earlier the point was well made that one should not start to make calculations about the personal community charge at the present time and think that they will last for ever. I am perfectly sure that by the time we come to the introduction of the personal community charge in 1989–90 we shall need to do the calculations again with considerable care and will still find that the facts are way beyond the figures that have been quoted, such as £250 for Strathclyde, £200 for Aberdeen, and so on. They will be very much greater than that. We shall once more need to do our sums in relation to the incidence of the personal community charge against the present rating system. Because we are entering such an unlit region, it may well be that we shall be glad to have something of this kind on the statute book to which we can resort.

10.30 p.m.

Lord Taylor of Gryfe

My Lords, this has been an extremely interesting discussion at a late hour. I am indebted to the noble Lord, Lord Sanderson of Bowden, for expressing so forcibly the necessity for starting soon on harmonisation, if there is to be harmonisation. It is a very complex business.

I sat for a number of years on the local valuation appeals court in Glasgow which covered the west of Scotland. We had to make judgments on the assessor's valuation and it was a long and wearisome process—longer and more wearisome than is our proceeding now. We sat for days looking at cases of variations in valuation and had time to make sensible judgments. The calculation was made on the basis of what the property would fetch given the conditions of a free market. On that kind of mythical concept we had to decide on the valuation. It took a bit of doing.

It was bad enough doing it for the Glasgow district, but we are now talking about the harmonisation of valuations throughout the whole of the United Kingdom. I certainly echo the remarks of the noble Lord, Lord Sanderson, about the complexity of this matter and how time-consuming it can be. Once more we are indebted to the noble Lord, Lord Ross of Marnock, for his experience in this field and for reminding the House that the rebate system already works in a number of cases.

I recall that in the court to which I referred there was an appeal from DCL which argued that it was entitled to industrial derating on the barrels of whisky that were kept in store because the mere fact that a chap went along once a year and knocked on the barrel to ascertain that the whisky was still there constituted an industrial process and consequently industrial derating was claimed on that industrial process. So we are talking about a complex and difficult area. It will be an immense job to harmonise it for the United Kingdom, and I am not sure that the Government realise the full complexity of the job that they have taken in hand. Of course there is one escape for the Government. If the system of ability to pay is adopted, it abolishes the necessity for harmonisation of property values. That may commend itself to the Minister at some stage.

I agree that the Minister has a point in saying that it would be difficult to operate. The assessment of profit would be extremely difficult with the variety of businesses that exist in the country. However, taxation in relation to profit is not novel. It has been imposed on a variety of businesses from time to time; so it is not a totally original concept. However, in view of what the Minister has said and as we aired this matter at an earlier stage, I do not propose to press the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Dundee moved Amendment No. 42:

Page 2, line 29, after ("subsequent") insert ("financial")

The noble Earl said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Lord Wilson of Langside moved Amendment No. 43:

Page 2, line 39, at end insert ("provided that there shall be excluded from the lands and heritages referred to in this subsection such lands and heritages as are occupied by a club, society or other organisation for the purposes of amateur sport or physical recreation").

The noble and learned Lord said: My Lords, this amendment seeks to exempt from the payment of non-domestic rates, lands and heritages… occupied by a club, society or other organisation for the purposes of amateur sport or physical recreation".

This question has been examined at some length, both in the other place and in your Lordships' House. The various arguments and concerns of those engaged in running or organising such clubs and of their members are familiar to your Lordships and to the Minister. Accordingly, I shall not elaborate upon them at this late hour. However, my impression is that for a long period the Government have expressed anxiety and concern to find a solution to the problem. The search has gone on, and it is time that we found a solution. I await with interest the Minister's view on the situation as it stands at present. I beg to move.

Lord Glenarthur

My Lords, the amendment which the noble and learned Lord has proposed is unnecessary and undesirable. It is not necessary because local authorities already have discretion to provide rating relief to non-profitmaking sports clubs. The amendment that I moved at Committee stage has removed any financial disincentive to a local authority granting such relief. In these circumstances I cannot believe that any rating authority will fail to give relief to all clubs which deserve it.

As well as this approach to tackling the problem of sports club rates, we also have longer term plans to resolve it. Many comparisons have been made between the rate burdens of clubs in Scotland and England. The differences arise largely because the valuation systems are not the same. The Government have set up a committee, which includes representatives of the Scottish assessors, to look at how valuation practices in England and Scotland can be harmonised. Rating of sports clubs is essentially a valuation problem which should be tackled through the valuation system.

I said that this amendment was undesirable. It illustrates the severe problems that arise in trying to prescribe centrally something that is best left to local discretion. As well as the many deserving amateur sports clubs, this amendment would potentially take many other premises out of rating. It would take sports club bars out of rating and thus provide unfair competition for the licensed trade. It would take out of rating clubs set up for the purpose of sport whose activities are almost entirely social. The provision is not restricted to non-profit making organisations and might apply to many commercial organisations providing facilities for use by amateurs.

I sympathise with noble Lords for the problems they have had to wrestle with in framing this amendment and the earlier amendment that they proposed in Committee. But the difficulties that they have had in so doing are precisely those which the Government have encountered in considering the action that we were going to take in the first place, and these difficulties led us to the conclusion that this is a matter best left to local discretion.

The noble and learned Lord says that we have examined it. We have done more than examine it. We have taken a major step to assist local authorities in exercising that discretion which is rightly best left to them. I hope that the noble and learned Lord will accept the benefit that will accrue from that amendment and will feel able to withdraw this one.

Lord Wilson of Langside

My Lords, I am grateful to the Minister for his explanation and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 44 to 47 not moved.]

The Earl of Dundee moved Amendment No. 48:

Page 2, line 42, after ("each") insert ("financial").

The noble Earl said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

[Amendment No. 49 not moved.]

The Earl of Dundee moved Amendments Nos. 50 and 51:

Page 2, line 44, after ("the") insert ("financial").

Page 3, line 4, after first ("the") insert ("financial").

The noble Earl said: My Lords, I beg to move Amendments Nos. 50 and 51.

On Question, amendments agreed to.

Lord Ross of Marnock moved Amendment No. 52:

Page 3, line 9, leave out ("retail") and insert ("local services").

The noble Lord said: My Lords, very briefly, I should like to move Amendment No. 52. This has to do with the formula that is being created for the non-domestic rates. What it means is that the non-domestic base rate will be the rate in the year before abolition, and if a local authority has to increase the rate thereafter it is limited to a sum equal to the retail price index.

The suggestion has been made—and I make it very earnestly—that the retail price index has little to do with local government services. I have had this paper delivered to my home: Rates in Strathclyde. Who pays rates? Where the money comes from. Where the money goes. Net cost of services. Employee costs are 55 per cent., which is more than half the cost of the local government services. Nobody is going to tell me that the make-up of the retail price index is weighted to the extent of 55 per cent. related to salaries.

What will be the inflation rate increase this year? One thing we do know is that the teachers are, on average, having the second part of their 16 per cent. increase. The noble Viscount the Leader of the House will remember that the Government made a decision the other day about the police. They will get more than the inflation rate, as will others. These increases must be properly matched with the increase allowed in non-domestic rates. We have to consider the education of the future workforce and the training costs of local authorities. They are concerned about the fire and police services.

I ask your Lordships to remember what I said before. If you go wrong by 1 per cent. in what you allow in respect of the non-domestic ratepayers, it means that the personal community charges go up by 4 per cent. It is no use screaming about local authorities and the rates. If the local authorities are hidebound for a formula it will create difficulties.

That is why we suggest that instead of using the retail price index, which I believe is being changed yet again, we ought to have something better related. Some have suggested earnings. I have suggested a local authority price index which has a properly based proportion in relation to employee costs, property costs, interest rates and the like. That in short is the reason and purpose for the amendment. I beg to move.

10.45 p.m.

Lord Glenarthur

My Lords, we discussed this matter quite thoroughly in Committee. However, I noted that whereas the opinion of the Committee was taken on the suitablility of a prices index appropriate to local authority costs, we are now being asked to consider specifically a local services index, the average earnings index and the local government inflation estimates when we consider the group that was agreed, with Amendments Nos. 52, 53, 54 and 64 as well.

The main reason for using a general index such as the RPI to determine increases in maximum non- domestic rates is that it would break the link between rates and local authority spending so that non-domestic ratepayers would then be able to rely on local authority rates moving in line with costs generally. That is the fundamental objective of Clause 3 of the Bill. If we were to substitute any of the indices covered by the amendments, we would not be able to give non-domestic ratepayers the same degree of protection that they would otherwise get under Clause 3. To that extent I cannot accept the amendments even in principle.

If I may turn for a moment to the matter of local authorities' salary and wage costs, which the noble Lord, Lord Ross, specifically mentioned, I said in Committee that I followed the process of reasoning that because such costs formed a high proportion of overall local authority costs it was appropriate that wage and salary increases should be reflected in increases in maximum non-domestic rates. Although I followed the reasoning, I did not accept it because we might then slide into the situation of leaving non-domestic ratepayers having to meet a share of excessive increases in staff costs through the automatic operation of the index. I have to say that I am not impressed by the counterargument that for most local authority staff, pay increases are determined nationally rather than by each authority on its own. I think that that point applies at whatever level pay is settled.

I should also comment on the specific suggestions which were made that the RPI should be replaced in the clause by a local services index or the local government inflation estimate for Scotland. There is at present a local authority cost index which is drawn up by the Scottish Office in consultation with CoSLA. However, the arrangements for preparation and production are entirely informal with the result that it does not have the same status as the RPI which is subject to external monitoring and scrutiny through the Retail Price Index Advisory Committee.

As I have tried to make clear to the House, I remain unpersuaded by the arguments which have been put forward in favour of the indices referred to in these amendments. The use of the RPI is central to the objects of Clause 3. I know that noble Lords opposite feel strongly on this issue. But I hope that they will realise the force of the arguments which I have put forward and will not press their amendments.

Lord Ross of Marnock

My Lords, I do not think that there is any force in the arguments put forward by the Government. What we should be talking about are the costs of the services of the local authority. Those costs have no relation at all to the retail price index, which is outmoded and outdated.

We have had experience in the past of what is allowed by the Government as an inflation rate in respect of the costs of local authorities. It is beyond even the local authority index and I hope that the Government will think again about this matter. It is all very well protecting non-domestic ratepayers. However, what they do not pay has to be paid by the individual. Once we have rebates and the people who do not register and cannot be traced, there will be fewer of them. It means that those who will be paying the community charge will be paying far more than they think they will be paying at the present time.

If somebody is made an exception, somebody else has to pay, because the cost of the services does not go down. We have a monster that we shall not recognise in 10 years' time with this personal community charge. I hope that the Government and especially the Leader of the House, will appreciate this fact. The noble Viscount has considerable responsibility for this matter. It is a hasty decision and an ill-considered tax which might look all right for a year but, given the passing of the years, I assure noble Lords opposite that it will be very difficult to justify in terms of equity and fairness, as well as in terms of simple justice to the local authorities and those who they serve.

I shall withdraw the amendment because I think we need to look at it again. We always have Third Reading. I have plenty of time. I am not going anywhere in the month of June. I am not even going to the polls when they take place. I have decided not to vote Conservative this time. In the meantime, I withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 53 and 54 not moved.]

The Earl of Dundee moved Amendments Nos. 55 and 56:

Page 3, line 12, after ("the") insert ("financial")

Page 3, line 12, at end insert ("financial").

On Question, amendments agreed to.

Lord Ross of Marnock moved Amendment No. 57:

Page 3, line 14, at end insert ("+ ASP")

The noble Lord said: My Lords, in speaking to this amendment I speak also to Amendment No. 59. I thought I had better have a go at this formula business—I hate it. I am surprised to see such things in legislation because they do not make any great sense. You see a formula and you try to find out what "A" is, what "S" is, what "I" is, and so on. I gather that it is something which is favoured by draftsmen nowadays. It certainly does not make great sense to those who try to read it.

One of the points missed out in relation to non-domestic rates is that there may be developments especially for non-domestic ratepayers, and there is a section of them. This is one of the difficulties that may well arise. There will be a static non-development occurring in respect of things that non-domestic ratepayers may want; for example, a conference centre, an exhibition centre or something to suit business or industry and which is not to the benefit of the general ratepayer. If we are to be limited to the base rate plus only the inflation rate, which is itself inadequate, it means we are taking no notice of possible developments which are desirable from the non-domestic ratepayers' point of view, and non-domestic ratepayers make demands. I suggest that one of the considerations to be taken into account by the Government when they come to decide what will be the maximum allowed under the formula for the non-domestic rate charge are possible future developments.

In so far as concerns ASP, I thought of other initials that may represent the additional special provision. I thought at one time of calling it "additional special services", so that we could have "M" multiplied by "I" multiplied by "R" plus ASS, but I thought I had better leave that aside, and ASP with the sting in the tail may be just as satisfactory. Possible projected developments which are desirable and wanted must be taken into account. Such information may come out in the discussions which are to take place with the local authorities concerning non-domestic ratepayers, but they may be developments which could not be justified in respect of the personal services for those who are going to pay personal community charges. That is the reason for Amendment No. 57. The definition of ASP comes in Amendment No. 59. I beg to move.

Lord Glenarthur

My Lords, my main difficulty with the amendments is that they make an assumption about the financing of local services which in practice I do not believe to be justified. If we were to accept the amendments, we would be introducing into rating law for the first time the term "additional service provision", and while I do see the general point which the noble Lord, Lord Ross of Marnock is making, the basic problem underlying his amendments is one of apportioning the cost of local authority services between the non-domestic and the domestic sectors.

It would, quite simply, be extremely difficult to identify any additional services provided for non-domestic ratepayers or to identify from local authorities' budget or out-turn figures a sum which could then in any fair and reasonable way be added to the maximum non-domestic rate as calculated on the basis of the formula currently in subsection (4) of Clause 3. Local authorities provide services for the local community generally, and it seems to me that if we were to try to distinguish between expenditure on different classes of recipients of these services, we should be creating immense problems for central government, let alone local authorities.

This brings me to another reason for opposing the amendments. In view of the difficulties there would be in ascribing a figure to ASP, we would, in accepting the amendments, be jeopardising the basic principle of Clause 3, which is that maximum non-domestic rates for each local authority should be determined according to precise formulae so as to ensure predictability and certainty in non-domestic rate burdens from year to year. To introduce ASP into the formula would, I believe, lead to a considerable loss of precision.

I hope that in the light of that explanation the noble Lord will feel able to withdraw his amendment.

Lord Ross of Marnock

My Lords, I did not fully understand or completely follow the argument of the Minister. I accept that the responsibility is mine as I was preoccupied at the time. I am sure I did not miss very much and that he was turning down the amendment. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Dundee moved Amendment No. 58:

Page 3, line 17, after ("preceding") insert ("financial").

On Question, amendment agreed to.

[Amendment No. 59 not moved.]

The Earl of Dundee moved Amendment No. 60:

Page 3, line 21, after first ("the") insert ("financial").

On Question, amendment agreed to.

[Amendment No. 61 not moved.]

The Earl of Dundee moved Amendments Nos. 62 and 63:

Page 3, line 26, after second ("the") insert ("financial").

Page 3, line 34, after ("the") insert ("financial").

On Question, amendments agreed to.

[Amendments Nos. 64 to 66 not moved.]

Clause 5 [Statutory and other references to rateable values etc.]:

Lord Glenarthur moved Amendment No. 67:

Page 5, line 24, at beginning insert ("subject to subsection (3A) below").

The noble Lord said: My Lords, the amendments in this group are technical and they have the common purpose of clarifying certain of the provisions in Clause 5. Their broad purpose is to ensure that for the purposes of subsection (3) of that clause proper account is taken of material changes in circumstances which affect the value of the property concerned. I beg to move.

Lord Morton of Shuna

My Lords, this batch of amendments—and I hope we are speaking to Amendments Nos. 67, 68, 69 and 70—illustrates the difficulty that is being caused because according to these amendments at some time in the future—say in the year 2010—the assessor will have to go back to the system that has been abolished. He will have to assess what would be the net or gross annual value of various house properties—domestic subjects—apportion them between the ones in the same tenement or adjoining properties, or whatever, and adopt exactly the same procedure.

I would suggest that the Government should look at this again, if only on the ground of the method of appeal, because what we are concerned with is sharing the common cost of repairs. If we are talking about something of the order of £500 being shared among five or six properties, it is ridiculous to suggest that this whole procedure, which is basically the present valuation appeal procedure, should require to be gone through for something which will only matter in paying a bill which, for each property, may be something in the order of tens or perhaps low hundreds of pounds. It seems to me a quite excessive procedure for dealing with this sort of activity, because as the noble Lord opposite may well appreciate, appeals to the valuation appeal committee and then to the valuation court are not cheap. If the assessor makes a certificate with which somebody disagrees in this situation (somebody is always bound to disagree with it), that is the only way an answer can be given. Surely there is some cheaper way of dealing with resolving the issue.

Lord Glenarthur

My Lords, In the interests of time, I did not go into a lengthy explanation of how these amendments fitted together. I certainly hear what the noble Lord says about the difficulties of appeal, and I shall, if I may, study his remarks. If I can help him in any way between now and the next stage of the Bill, I shall certainly do that.

On Question, amendment agreed to.

Lord Glenarthur moved Amendments Nos. 68 to 70:

Page 5, line 26, at beginning insert ("subject to subsection (3B) below").

Page 5, line 29, at end insert— ("(3A) Where, before or after 1st April 1989, there is a material change of circumstances, within the meaning of section 37(1) of the 1975 Act—

1. (a) in relation to any such property as is mentioned in subsection (3)(a) above; and
2. (b) in respect of which no alteration has been made to the valuation roll in force immediately before that date,

references in that subsection to the gross annual, net annual or rateable value of that property which appears in the roll in force immediately before that date shall be construed as references to the gross annual, net annual or rateable value which would have so appeared had that roll been altered to take account of that material change of circumstances. (3B) Where there is a material change of circumstances, within the meaning of section 37(1) of the 1975 Act, in relation to any such property as is mentioned in subsection (3)(b) above, references in that subsection to the gross annual, net annual or rateable value of that property which would have appeared in respect of it in the roll in force immediately before 1st April 1989 shall be construed as references to the gross annual, net annual or rateable value which would have so appeared had that material change of circumstances been taken into account.")

Page 5, line 36, leave out paragraph (b) and insert— ("(b) what would have appeared in that roll as the gross annual value, net annual value or rateable value of any such property as is mentioned in subsection (3) above had that roll been altered to take account of any material change of circumstances, within the meaning of section 37(1) of the 1975 Act, occurring before or after that date.")

On Question, amendments agreed to.

The Earl of Dundee moved Amendment No. 71:

Page 6, line 12, at end insert— ("(8) For the purposes of this section "gross annual value", "net annual value" and "rateable value" shall continue to be construed in accordance with the provisions of section 6 of the 1956 Act as those provisions have effect immediately before 1st April 1989.")

On Question, amendment agreed to.

Clause 6 [Interpretation of Part I and minor and consequential amendments]:

[Amendment No. 72 not moved.]

The Earl of Dundee moved Amendment No. 73:

Page 6, leave out from beginning of line 13 to end of line 8 on page 7.

On Question, amendment agreed to.

Lord Denham

My Lords, I beg to move that consideration on Report be now adjourned.

Moved accordingly and, on Question, Motion agreed to.

House adjourned at three minutes past eleven o'clock.