Lords Sitting of 4 July 1988

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Blackburn.

Alcohol Abuse: Rural Violence
The Viscount of Falkland The Viscount of Falkland asked Her Majesty's Government:
What action they consider appropriate in the light of the report by the Association of Chief Police Officers which links youth and alcohol with the recent increase in rural violence.
The Earl of Arran: My Lords, officials and representatives of the Association of Chief Police Officers are now examining together the problems which are faced by the police in tackling the kind of disorder highlighted in the report and how best to overcome them.
The Viscount of Falkland: My Lords, I thank the Minister for that encouraging Answer. Does he agree that one of the most depressing aspects of many of the reported cases of attacks on police in rural areas by groups of youths, some under the influence of drink, has been the attitude of the public standing in the vicinity of the attack? The noble Earl will correct me if I am wrong, but is there not a common-law duty on every citizen to assist the police wherever possible? Is it not a sombre comment on today's society that often people in the vicinity of a callous attack —such as the recent attack on a woman police officer at Maidstone— offer no assistance but actual opposition to the police in the commission of their duty?
The Earl of Arran: My Lords, the noble Viscount is right; there is a common-law order whereby each and every citizen should go to the help of a police officer if he sees that that police officer is in trouble. However, I believe that I am right in saying that that
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is not the case should the citizen feel that his or her life is endangered.
The noble Viscount made another point which is right; namely, it is abhorrent to see such disorder taking place in the streets and the public not going to the assistance of the officer in question. My right honourable friend the Home Secretary and the Government have never held back from trying to stress to parents and schools the importance of teaching children at an early age the difference between right and wrong, and the importance of orderly and responsible behaviour and respect for their fellow citizens.
The Earl of Kimberley: My Lords, does my noble friend agree that in the days of National Service there was far less hooliganism? Will the Government consider bringing forward some form of compulsory community service for youngsters so that they learn a little more after they have left school?
The Earl of Arran: My Lords, I believe I am right in saying that that point has been discussed previously both privately and publicly. I can make no comment other than to say that I shall bring that point to the attention of my right honourable friend the Home Secretary.
Lord Soper: My Lords, will the Minister agree that one of the contributory factors to the suggested factual increase is what might be called the "mobility of alcohol'"? Alcohol consumed more or less in a sedentary condition and at specified times is one thing, but does not the carrying around of alcohol in beer cans, and the mobility provided by the motor cycle and the car, have a good deal to do with the vast increase, particularly in rural areas? Can the Government suggest a way of reducing the ability of young people to drink out of doors and to carry around the cans as a kind of status symbol? I have had a great deal of experience over the years and I believe that the increase has much to do with the increased opportunity of drinking during all hours of the day.
The Earl of Arran: My Lords, I do not think that I can make any particular apposite comment with

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regard to mobile drink or drinkers. However, at present licensing justices can refuse to renew licences at their annual review in the light of applications from the police and local residents. Under the Licensing Act 1988, they will in future be able to revoke a licence at any licensing session. In considering those matters, they will wish to take into account factors such as the amount of disorder associated with a licensed premise. That is a problem for the police and the licensing justices to tackle in concert. We plan guidance for licensing justices and the police.
Lord Mason of Barnsley: My Lords, if Her Majesty's Government are seriously concerned about alcohol-related incidents, why do they not make strong representations to the Brewers' Society to bring down the price of non-alcohol and low-alcohol drinks? It is not ludicrous that such drinks are more expensive in public houses and clubs than are alcoholic drinks?
The Earl of Arran: My Lords, in response to the noble Lord's question, licensees have the right to refuse to serve those whom they judge to have drunk enough. They also have a duty to ensure that their premises are properly and adequately staffed and supervised. Brewers can help by ensuring that good practice guidelines for landlords are prepared and circulated so that they have advice on how to prevent, avoid and deal with difficult customers and circumstances.
Baroness Masham of Ilton: My Lords, will the Minister agree that farming has become much easier, that young people now sit in comfortable, heated cabs and have vehicles to drive around in and that. therefore, they do not use up as much energy as they used to do when they rode bicycles and had a much harder life? Will he also agree that often in rural areas there is nowhere but the pub to go to in the evening?
The Earl of Arran: My Lords, I believe that my noble friend makes a point that I cannot refute.
Lord Glenamara: My Lords, the noble Earl referred to right and wrong. Will he bear in mind that the present generation of young people has a much greater problem than previous generations in knowing what is right and what is wrong? With the abandonment of religious belief by so many people and the decay of the Christian ethic in so many households, it is difficult to know what is right and what is wrong. So many things which were previously wrong are now right and so many things previously right are now wrong. Will the noble Earl bear in mind that young people have that problem?
The Earl of Arran: My Lords, of course I will bear that in mind. However, as I said in answer to the supplementary question of the noble Viscount, Lord Falkland, I believe that the answer simply lies in Christian beliefs and Christian teaching, as the noble Lord pointed out.
Baroness Ewart-Biggs: My Lords, is the Minister aware that the report also found that disorders were primarily caused by white, affluent, employed youths? Therefore, can the Minister say a little more about what the Government intend to do to enhance the respect of these young people for the community, in the light of the Prime Minister's comment that there is no such thing as society?
The Earl of Arran: My Lords, the ministerial group on alcohol misuse has been looking at how to encourage co-ordinated local action and disseminate examples of good local practice. The group is about to agree the terms of a joint Home Office, DHSS and DES circular on local action to tackle alcohol misuse. This will cover not only crime prevention but alcohol education, treatment and counselling. Interested organisations will need to be consulted, but we are looking to issue the circular as soon as possible.

Riverside: Health Service Provision Proposals
2.45 p.m.
Lord Ennals Lord Ennals asked Her Majesty's Government:
When they expect to take a decision on future health service provision in Riverside in the light of proposals both for the Riverside District Health Authority and the Westminster Hospitals Development Fund.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Skelmersdale): My Lords, exactly a week ago the Government received the documentation from the regional health authority following consultation on proposals for future health service provision in Riverside. This runs to 719 pages. We will also receive shortly the approval in principle documentation for the proposed new hospital. It will take the Government a little time to digest all this material and reach a decision.
Lord Ennals: My Lords, there is very strong feeling in Westminster, including opposition by the Westminster City Council and the Community Health Council, concerning the plans to close the Westminster Hospital and the Westminster Children's Hospital. Therefore, will the Minister confirm that the Secretary of State is giving careful consideration not just to the proposal rejected by the Community Health Council but to the proposal from the Westminster Hospitals Development Fund? That has the advantage not only that it retains the Westminster Hospital and the Westminster City Hospital but also that it does so in a way that fits into the financial guidelines set down by the Secretary of State.
Lord Skelmersdale: My Lords, most certainly we shall look at the fund's proposals, as we shall look at all representations made to us about the scheme. In our broader consideration of the health authority's proposals, the sort of issues Ministers will need to consider include the implications for patients—as the noble Lord would suspect—the building proposals

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themselves, their environmental consequences and. of course, the financial arrangements.
Lord Nugent of Guildford: My Lords, is my noble friend aware that, however great the affection for Westminster Hospital among noble Lords in this House and right honourable and honourable Members in the other place, the regional health authority has responsibility for providing for the whole region and integrating into the development plans no less than six existing hospitals? The RHA's proposal is undoubtedly sounder both financially and technically, hospital-wise, than that from the Westminster Hospitals Development Fund.
Lord Skelmersdale: My Lords, I am extremely interested in what my noble friend has to say on this matter. I should perhaps have added, in answer to the noble Lord, Lord Ennals, that "implications for patients" means wherever they happen to reside either permanently or temporarily, within the district health authority's area.
Baroness Masham of Ilton: My Lords, is not Westminster and Riverside a slightly special case, bearing in mind the number of tourists and people who come to work in the areas? Those people have strokes and heart attacks; so, with those additional people coming into the area, should it not be treated as a special case?
Lord Skelmersdale: My Lords, again, that is an interesting point of view. I am not aware of any evidence to suggest that in the day-time, or indeed the night-time, population of the Westminster area there is a higher incidence of spectacularly violent and unpredictable disease than in other parts of London, but I will certainly check that.
The Earl of Halsbury: My Lords, will the noble Lord bear in mind that on the campus of Westminster Hospital there is a large nurses' hostel? The idea of dispersing patients into other hospitals without providing accommodation for nurses is a non-starter.
Lord Skelmersdale: My Lords, we have discussed residential accommodation for nurses at various times in this Chamber over the past few years. I am very much aware of the problem, especially as it applies to London. Obviously I must be careful in what I say, but the closeness of any hospital to its nurses' accommodation would be a factor.
Lord Cocks of Hartcliffe: My Lords, as the noble Lord said that there is such a substantial body of evidence to be studied before a decision can be reached, will he undertake that his decision will not be announced during the long Summer Recess but will await the return of this House in the autumn?
Lord Skelmersdale: My Lords, I cannot give that undertaking. However, I shall certainly put the point to my right honourable friend.
Lord Ennals: My Lords, as regards the last exchange on the point raised by my noble friend Lord Cocks, does the Minister agree that, in view of
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the importance of the issue, it is far better to get it right than to rush into a decision? Further, does the Minister accept that the closure of accident and emergency units in other parts of central London is a snag as regards the closure of the accident and emergency unit at the Westminster Hospital? Does the Minister accept that from the patients' point of view there would be no provision whatever in Westminster whether for residents, those who work here or for visitors, if the Riverside proposals were to be carried through?
Lord Skelmersdale: My Lords, as regards the last two-thirds of the comments addressed to me by the noble Lord, I note what he said. However, I should not wish to comment upon them at this moment. With reference to the first point raised by the noble Lord, he regularly chides me for not producing the Government's reaction to reports quickly enough and I note his change of view on this occasion.
Lord Colnbrook: My Lords, is my noble friend aware that not everyone on this side of the House agrees with my noble friend Lord Nugent? There are many of us who feel that the closure of the Westminster Hospital, particularly the accident and emergency unit, will be a major disaster.
Lord Skelmersdale: My Lords, again I note what my noble friend says.

Personal Alarm Systems and VAT
2.52 p.m.
Lady Saltoun of Abernethy Lady Saltoun of Abernethy asked Her Majesty's Government:
Whether they will exempt from VAT personal alarms and personal alarm systems for the elderly or disabled.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, distress alarm systems are zero-rated when supplied to a person who is chronically sick or disabled or to a charity for making them available to the chronically sick or disabled. The Government have no plans to extend this relief further to cover supplies to the able-bodied elderly or others. The case for doing so cannot be considered in isolation from many other equally deserving candidates for special VAT treatment.
Lady Saltoun of Abernethy: My Lords, while thanking the noble Lord for that reply, may I ask him whether, in view of the saving to the Exchequer of keeping elderly people in their own homes for as long as possible, the Government will reconsider extending exemption to elderly people living in their own homes who do not qualify under the Chronically Sick and Disabled Persons Act?
Lord Brabazon of Tara: My Lords, I take the point made by the noble Lady. VAT is intended to be a broadly-based tax and exemptions from it should be used very sparingly. Here we are talking only about

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VAT added to the price of goods, which is only 15 per cent.
Lord Bruce of Donington: My Lords, in giving further consideration to the position of the elderly, who very often are just as immobile as the disabled, will the noble Lord bear in mind that there is nothing in the sixth VAT directive that prohibits the United Kingdom Government from granting exemption? Even though the European Court ruled otherwise, the Government can easily circumvent it, as has been illustrated by a recent court judgment.
Lord Brabazon of Tara: My Lords, I am not sure to what the noble Lord is referring when he says that we can easily circumvent the rulings of the European Court of Justice. As regards the application of this relief to non-domestic construction such as local authority communal homes or hospitals, we are consulting with charities about that ruling.
Lord Bruce-Gardyne: My Lords, as one who used on various occasions to explain in another place that VAT was a broadly-based tax, does my noble friend agree that the real problem with our VAT system is that it is not broadly-based enough and that it is riddled with far too many exemptions and zero ratings, which makes it more like Gruyere cheese than a comprehensible tax?
Lord Brabazon of Tara: My Lords, my noble friend seeks to extend the Question somewhat wider than the one on the Order Paper which is extremely specific. I believe that on this occasion I should be unwise to enter into debate with him.
Lord Murray of Epping Forest: My Lords, will the Minister seek to persuade the European Commission that the definition of VAT as a broadly-based tax should take full account of social considerations as well as narrow, economic considerations of a fiscal kind?
Lord Brabazon of Tara: My Lords, again we stray rather wide of the Question. We are still exempt from VAT on very many important items, such as food and domestic fuel. Ay my right honourable friend the Prime Minister said, we continue to pursue that policy.
Baroness Macleod of Borve: My Lords, does the Minister agree that elderly people living on a pension can, with confidence, go out at night if they have a personal alarm system in their hands? I have personal experience of this and I understand the system is now working throughout the country. The personal alarm is held in the hand and it emits a very loud shriek, thereby giving confidence to the person who owns it.
Lord Brabazon of Tara: My Lords, I am sure that my noble friend is quite right on that matter. However, the question is whether that personal alarm should be free of VAT for elderly people. I imagine that my noble friend realises that there would be a number of practical difficulties if VAT were to be
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allowed on personal alarms for elderly people and not for everyone else.
Lord Annan: My Lords, as regards what the Minister said about the extension of VAT to so large a population as those deemed to be elderly, it is certainly true that some elderly people are as immobile as the disabled. Can such people be treated as disabled?
Lord Brabazon of Tara: My Lords, I am not certain what is the definition of "disabled" for this purpose. If a person is disabled then he qualifies for zero-rating on the system.

Greater Manchester: Chairman's Interests
2.58 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Under what circumstances the chairman of the Residuary Body of Greater Manchester has assumed control as chairman of the G Mex Company in Manchester.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, the chairman of the Greater Manchester Residuary Body was appointed chairman of Greater Manchester Property Trust Limited at a meeting of the board of that company on 29th April 1988. The company had been established by the Greater Manchester Council to safeguard the public sector's investment in the G Mex Development. Since abolition the company has ceased properly to represent the public interest. The residuary body took the view that it was necessary for it, in seeking to discharge its responsibilities, to secure control of this company.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that reply. I realise that in this case there is certain commercial sensitivity. The Minister will know that, nearly three years ago, I met the previous Secretary of State for the Environment with his ministerial team, including two Members of your Lordships' House. In complete confidence I expressed to them my fears as regards what might happen. In view of the Answer that the Minister gave, can he tell me whether it is in order for the chairman of a residuary body to become the chairman of a commercial trading company? Can the Minister tell me whether the appointment as chairman ceases when the residuary body itself ceases to exist, bearing in mind that as yet the 10 districts have no input into the situation?
The Earl of Caithness: My Lords, as I understand, it is in order for the present situation to exist. I further understand that when the residuary body is wound up then the interest of the present chairman will finish because the residuary body will no longer have an interest in the company. I assure the noble Lord that we are also in touch with the districts on this matter.
Lord Dean of Beswick: My Lords, in view of the enormous debt that has been run up under the previous chairman in his dual role as chief executive—I do not wish to quote the figure because it has already been quoted in the Sunday Times—and because of the way in which this matter has been mishandled by that person, can the Minister give an undertaking that his services will not be retained in any position, either as an officer in the corporation or as a consultant, bearing in mind the whole debacle which the chairman of the residuary body is trying to resolve?
The Earl of Caithness: My Lords, I cannot give that undertaking. As the noble Lord knows, following the board meeting, the previous chairman was no longer chairman but, as I understand it, remains a director.
Lord McIntosh of Haringey: My Lords, in his reply the noble Earl said that the association was no longer in the public interest. Will he indicate to the House whether this change, so that it is no longer in the public interest, has resulted in any loss to the public purse?
The Earl of Caithness: My Lords, the position is extremely complicated because not only is G Mex involved but there is at least one other property and one development site of 26 acres adjacent to G Mex. The residuary body is doing its best to protect the public interest and in my view is doing an extremely good job in reducing the liabilities. We hope therefore that it will be sorted out in the not too distant future.
Lord McIntosh of Haringey: My Lords, when the noble Earl talks about reducing the liability, does he mean that there is some extra liability to the public purse as a result of this affair, even though it may be reduced by the actions taken?
The Earl of Caithness: My Lords, as I understand it, not to the public purse. Certain liabilities were entered into by GMC and that is what is being sorted out at the moment.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Report stage of the Local Government Finance Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Sex Discrimination (Northern Ireland) Order 1988 will be taken.

Local Government Finance Bill
3.2 p.m.
The Earl of Caithness: My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(The Earl of Caithness.)
On Question, Motion agreed to.
Clause 40 [Occupied hereditaments: liability]:
Lord Hesketh Lord Hesketh moved Amendment No. 154:
Page 25, line 18, leave out ("sub-paragraph") and insert ("paragraph").
On Question, amendment agreed to.
Lord Sandford Lord Sandford moved Amendment No. 155:
Page 25, line 27, leave out from ("be") to end of line 29 and insert ("nil").
The noble Lord said: My Lords, this amendment stands in the names of my noble friends Lord Renton and Lady Faithfull and myself and of the noble Lord, Lord Hayter, to whom the House owes a debt of gratitude for having raised this matter at the Committee stage. I should like at the same time to speak to Amendments Nos. 160, 161 and 162.
I welcome the Bill for finally ending 15 years of prevarication over the financing of local government, 15 years of increasing damage to local government and of damage to the relationship between local government and central government. I congratulate the Government on at last grasping this nettle and on the radical approach they have chosen for it. However, at this point, at Clause 40(5) and (6), their nerve seems to have failed them.
Here was, and still is, an opportunity to stick to the clear and simple principle underlying Part III and the new national non-domestic rate and, by doing so, further to encourage the vitality and the growth of the whole charitable sector of our national life. That sector now has an annual turnover of something like £9 billion and releases an amount worth immeasurably more than that figure in voluntary drive, flair, skill and care.
I hope the House will allow me time to explain how these amendments would ensure that this opportunity will not be lost.
Under both the old and new regime for rating non-domestic properties, farms and churches are all fully exempt from the rate. The properties of registered charities are relieved of half of this rate—to put it in the jargon, they enjoy 50 per cent. mandatory rate relief. They may be relieved of some or all of the other 50 per cent. at the discretion of their local authority—that is, they have 50 per cent. discretionary rate relief. Our amendments are designed to cut out that discretion concerning the second 50 per cent. of relief and to give all registered charities the same 100 per cent. relief that farms and churches have enjoyed for decades. I doubt whether we shall hear many right reverend Prelates or noble farmers arguing that their churches or their farms deserve more certain and more generous treatment than registered charities. If we do not hear that, it will not be because these two groups are not well represented here.
I should like to say why we are now proposing this change and what we expect the effects of our amendments to be. Under the old régime the non-domestic rate was a local matter. The poundage was determined locally, the rate was raised locally, the money raised was spent locally, the relief, if any, was decided locally and its effect was felt locally. It was all local and it had a logical consistency. Under the new

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régime the non-domestic rate poundage will be decided nationally. The local authority will collect it and put it straight into a national pool from which it will be redistributed back to the local authorities right across the country on a straight per capita national formula. The old concept of a local rate relief cuts right across the grain of this new national system. Noble Lords can see that it could be carried forward into it only by means of a corpus of complex and contrary regulations. However, this could be done if a strong case could still be made out for persevering with the 50 per cent. discretionary rate for charities, and if that system had worked well and consistently in the past.
I should like to touch briefly on the track record of this 50 per cent. discretionary rate relief. I ask noble Lords who are, for instance, church wardens, farmers or businessmen to reflect how odd and inconvenient it would strike them if each year, as they drew up their farm budget, or their PCC budgets or their company budgets, they had to wait to see whether their local council would continue to give them their 50 per cent. discretionary rate relief; how irritated they would be if their colleague down the road in another district received it and they did not; or, having had rate relief for the previous three or four years, they did not get it next year. Under the old régime all the national charities have to face this uncertainty with each year's budget. My noble friend Lord Renton will be able to enlarge on that with his long experience of MENCAP.
The views of the local authorities come into this matter. One can understand sensitive Ministers wanting to be cautious in removing from local authorities discretions they have had previously and perhaps enjoyed exercising. However, I doubt whether local authorities will want it in the future under the new national system. I have asked them and I have had a formal reply from the Association of Metropolitan Authorities, part of which I should like to read to your Lordships. It is from Sir Jack Layden, who is the chairman of that association, and reads,
"I understand that you are seeking to give charities 100 per cent. relief from the new National Non-Domestic Rate. I am writing to you to let you know that I support the amendment you are proposing".
He then continues with a fairly long, and necessarily elaborate, paragraph to explain how the thing would strike individual authorities. He ends this paragraph by saying:
"Local authorities will be faced with a dilemma—do they help charities or increase the poll tax. I fear that the result of the new NNDR and poll tax will be less help for charities".
In the final paragraph he says:
"The best way forward is for the Government to recognise charitable relief as a national problem and for 100 per cent. to be granted and funded nationally".
So far, I have not received a formal reply from the Association of District Councils, and today I do not see in his place my noble friend Lord Rippon, who is now its president, who could pass one on. But I have received a telephone call from the association to say that its view corresponds with that of the AMA because of the awkward and inconvenient way in which the old discretion sits in the new régime.
There is one argument for continuing the 50 per cent. discretionary rate relief by local authorities, but it is not an argument that I am sure my noble friend on the Front Bench will use because, with two years' experience as Minister of State in the Home Office, he will know how little substance it has. That argument runs to the effect that there are some fringe, but registered, charities whose activities fall far outside of what most people would regard as deserving any kind of relief—either from VAT, or tax or any other rate. The Moonies and the Scientologists are often quoted as examples of such charities. However, that is a matter which can best be—indeed, can only be—dealt with by tightening up the law of charity and by strengthening the supervisory role of the Charity Commission. That should be done without delay. Many of your Lordships know from the Woodfield Report, and the work following it up, that that is something we can now look forward to. Thus in respect of dubious and fringe charities we should be looking to the removal of all their tax and rate privileges nationwide; not hoping that it can be done in a piecemeal way here and there by the separate exercise of the discretions of about 400 individual local authorities.
A very proper question which we must ask ourselves is who will bear the cost of the relief that is given to charities. The extra 50 per cent. of mandatory rate relief involves a total sum of up to £80 million. Although some might think it is a little on the high side, I shall not disagree with that figure, which comes from a letter sent to me by my noble friend on the Front Bench since the Committee stage. If registered charities are not to pay rates under the new regime, then someone else will have to, so as to meet the cost of the same quantum of local authority services.
To suggest that the Treasury should pay would of course kill the amendment dead. Further, I am sure noble Lords will agree that to suggest that the community charge payer should stump up would sorely test the popularity of charities. So, what should happen?
The whole of the national non-domestic rate amounts to £8 billion. That sum is raised by and large from commerce, business and industry—but, of course, excluding the farmers. The full relief, amounting, as I say, to a sum of not more than £80 million, represents 1 per cent. of that £8 billion on business and industry. So obviously I had to seek their views on the matter. I understand from the Director General of the CBI that his members would be glad to be associated in that way and to that extent—that is, 1 per cent. on their bills—with the relief, the support and the encouragement of charities. I say: good for them.
Finally, and I must apologise for taking so long, your Lordships will have read and heard—indeed, we heard again this afternoon—of the recent ruling on VAT which came last month from the European Court. There is no appeal against that decision. One of its many painful effects is to increase the charities' liability to VAT by between £80 million and £100 million. For instance, I believe that it will cost Dr. Barnardo's a sum in the region of £500,000.
However, my noble friend Lady Faithfull, with her links in this field, will confirm and enlarge upon that fact.
If there were no other good reasons for now giving registered charities 100 per cent. instead of 50 per cent. relief from rates, I suggest that this single reason would be enough. It commends itself as a way of making amends for this latest blow. I beg to move.
3.15 p.m.
Lord Hayter: My Lords, I am most sincere in my thanks and congratulations to the Minister for the improvements in the Bill which have helped the voluntary organisations enormously—or rather the people that the voluntary organisations serve. However, that still leaves a need to ensure that the charities themselves have the necessary finance to provide support services that have become increasingly important today. To put it around the other way, I feel that it is our job in this House to ensure that this novel form of taxation—because that is what it is—does not have the effect of destroying some of the real voluntary bodies and very seriously harming others.
However, I have made it clear to some of those voluntary bodies that this is not a charity fundraising Bill; it is a local government finance Bill and must be treated as such. But the combination of a shift to nationally based non-domestic rating and the revaluation of non-domestic properties is set greatly to increase charity costs. While industrial premises will be least hard-hit by the revaluation, it is the offices and shops, especially the charity shops—precisely those premises upon which charities rely and which are in the greatest demand—that will consequently face the greatest rate rises under the revalued system.
The impact of such bias within the rating system is demonstrated by the public survey of the effects of the new system of which I gave notice to the House on the last occasion when this question was raised. The report suggested, for example, that the Children's Society will face an additional rate bill of £24,000 per year, if the Bill before us is not amended. Other charities of national prominence, for instance, Dr. Barnardo's, Oxfam and the Sue Ryder Fellowship will also face large cost increases. I have seen no suggestion from the Government that such figures are wrong and there is no public government survey—that I know of—to prove that they are wrong.
Therefore it is clear that something must be done. In Committee I suggested that the introduction of the 80 per cent. mandatory relief would be a step in the right direction. I now believe that it would be far better—for reasons of good public policy—to adopt the amendment standing in the name of the noble Lord, Lord Sandford, and place the charities in the same rate-free position as the Churches and, to my surprise, the farmers because I had forgotten about them. I say that for three reasons.
First, I have become more and more convinced that local authorities are simply not in a position to give the discretionary relief upon which the Government laid such stress in Committee. We
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already know that three-quarters of the discretionary relief is not given. Moreover, contrary to the Government's assertions, I see no new incentives for local authorities to exercise their discretion in favour of charities—a view which I gather the local authorities share. What use is a discretionary power to grant rate relief to charities if the local authority cannot afford to give it? It will be of no use to the charities, which are the ones that will suffer. As the noble Baroness, Lady Faithfull, pointed out in Committee, some of those charities are more national than local—a point about which I hope we may hear from her later.
Secondly, the suggestion contained in the amendment is more in tune with the national basis of the new non-domestic rating system. Whatever noble Lords may feel about the shift to the nationally based rating of businesses, it has become a reality. I feel therefore that consistency must prevail and that if commercial businesses are to be rated nationally and uniformly, so should charitable organisations. Where a high street represents a council boundary, commercial shops of the same size on opposite sides of the street will pay the same rates under the new system even though they may not be placed in the same local authority area. However, under the Government's proposals, two charity premises in a similar situation would pay different rates. That seems to be illogical. It would be far better to give the uniformity to charity premises that business still, and will, enjoy.
Thirdly, the charities' financial position has been seriously changed by the new VAT rules which the noble Lord, Lord Sandford, has mentioned. A full move to mandatory rate relief would just about cover the increased costs involved.
Ministers argued in Committee that the higher levels of mandatory relief benefited some of those organisations that we are ashamed to find rated as charities. I do not think that that is an argument any more than did the noble Lord. Lord Sandford. It is no consolation to the thousands of worthwhile charities. There is little to be gained by penalising the majority for the perceived sins of the few. If the charity law needs amendment, let us do it through changes in charity law and not through punitive sanctions against the majority of charities.
If that point is uppermost in the Government's mind still, and if they still admit, as the Minister did in Committee, that some charity shops would face significant rate increases if they did not obtain the full discretionary rate relief, at the very least, if the amendment is not approved in its entirety, let us ensure that the charity shops are recognised nationally as having 100 per cent. relief.
There is no argument about whether those shops belong to genuine charities. They are the life blood of charities and there are a great many of them. If the amendment is not agreed to in its entirety, I would press the point about the charity shops in the hope that the Minister can do something about it. Meanwhile, I support the amendment.
Baroness Faithfull: My Lords, I support my noble friend Lord Sandford and the noble Lord, Lord Hayter. I wish to take up the point about the charity shops which has already been taken up by the noble Lord, Lord Hayter. First, there are 25,000 volunteers serving in Oxfam shops. Barnardo's, with which I am associated, has an enormous number of shops up and down the country. Those volunteers do a magnificent job. As has been said, they work for the people who need help from those societies.
I wonder how such organisations will react if they feel that they are subsidising local authorities instead of working for the people they intend to help. Perhaps I may take up a point made by the noble Lord, Lord Hayter. Barnardo's decided some years ago to concentrate its resources in the most needy areas of this country. Therefore there are few Barnardo projects in the South of England and perhaps the South-West. They have been concentrated on the North and areas of great need.
If the local authorities decide to withdraw subsidy, in the areas where there is a Barnardo's project—a home for physically or mentally handicapped children, intermediate treatment or delinquents—the local authorities will support shops in their areas. However, if the Barnardo shops are in an area where there are no projects, I fear that the local authorities will not help. That is perhaps understandable because they say that they are responsible to the ratepayers for the services in their areas. That point relates especially to Oxfam. I wonder whether some of its shops will cease to be kept going if the Government cannot concede that point.
The rates for Barnardo shops would rise from their current level of £230,000 to something like £375,000—just over £500 per shop. It is true that in some areas there might be a saving of 6 per cent. but in other areas there would be an increase of 140 per cent. If the money received by voluntary organisations, especially Barnado's, drops, there will be difficulties as between the local authorities and the voluntary organisations. Voluntary organisations now work in partnership with the local authorities. In many cases they subsidise the work of the local authorities. If their income drops, that expenditure will have to go on to the local authorities or the work, especially that with handicapped children, will not be done. It is a serious situation. I support the amendment.
3.30 p.m.
Baroness Ryder of Warsaw: My Lords, there are many arguments of principle and logic to back up the amendment. I endorse them, but I am no expert in the field of local government finance and would not presume to trespass on the territory of noble Lords with wider experience in that field. Instead my perspective on the Bill, especially the provisions concerning charity shops, is influenced by the effect it will have on the foundation I represent and work for. The Sue Ryder Foundation exists solely for the relief of suffering. By that I mean we are for the sick and handicapped, from tiny babies to our eldest patient,
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who is 102 years of age. It is no exaggeration to say that your Lordships today hold the key to the financial security of many other charities.
In Committee, when we first raised the issue and Ministers agreed to think again about the proposals, I said that the Sue Ryder Foundation cared for 2,000 people in this country alone, excluding those overseas. They are people who are dying of cancer and suffering from Huntington's chorea, motor neuron disease, Parkinson's disease and at least 17 other diseases and disabilities. Their families, if they have any, cannot cope, or the patients may be alone and have no support. We are dependent upon voluntary contributions from the public, which is aghast to think that we should be so penalised when not only do needs grow but, alas, costs increase.
I can give an illustration of one Sue Ryder home which receives £8,500 per year from two area health authorities towards the £700,000 which must be raised every year to cover the full nursing and caring costs. From just 1st January to 30th June 1988 in this particular home 109 patients attended a day care centre, staff made daily bereavement visits, 160 visits were made by a domiciliary nurse and 293 patients were cared for, of whom 104 died.
No other facilities are offered in an area with a population of over 800,000 except for 10 beds in a small hospice. So pressed are the local consultants and doctors that the cobalt unit in the local hospital—again paid for by local funds—only has 30 beds. It admits patients on Mondays for radiotherapy. They are discharged on Friday, and at the weekend patients are admitted for chemotherapy. As I have already said, there is also a shortage of nurses there.
The foundation, which tried to absorb some of the patients being discharged from the National Health Service hospitals as well as people from society in general, is faced with a vast and appalling increase in VAT and the sudden though belated 15 per cent. increase in nurses' salaries. No one knows how the foundation will cope, year in year out. It is not the practice of the foundation to turn sick people away. I ask the Minister and noble Lords how they think the foundation can cope.
We are always hearing that needy people depend upon the voluntary sector. But this is a blatant example of a situation where no help is given by the Government to the very people for whom it suggests that the voluntary sector should care. This work does not come cheap, either in terms of money or of human effort. An absolutely crucial and important element in the fund raising of the foundation, and the one we rely on most throughout Britain and elsewhere, is the work carried out through our gift shops up and down the country. We already have about 350 and we hope that by 1992 or sooner we shall have raised that number to 500 or more.
The gift shops are literally the financial lifeblood of the foundation. At the same time they use the talents of thousands of volunteers. Charity shops are of benefit to the community wherever they are sited, besides raising money for the needy people whom the foundation assists, locally or internationally. In many cases they occupy shop premises which would

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otherwise stand empty for a period of time, perhaps attracting vandalism or allowing a deterioration of the property. Empty shops are detrimental to a shopping area and to society. Charity shops help bring trade to an area.
These same shops provide a service to people on low incomes. They offer a place where those people can purchase clothing, furniture, bric-a-brac or essential items at prices they can afford. The charity shops also provide a social centre for lonely people. Teenagers and children come to us for advice and help. Others who are lonely often come into our shops for company. Thousands of the helpers, too, are lonely or bereaved people for whom the shops are a lifeline. Retired people, men and women, are often glad to help as an occupation. Over the years many friendships have been forged in these shops.
Charity shops help to recycle goods and prevent waste. People's unwanted goods can be purchased by other people who want them, and the money raised thereby goes to the relief of suffering. If some of these goods were not sold in charity shops, local councils might find themselves responsible for disposing of them. Then there are those in society who do not necessarily want to give in the form of donations. They may not have a social conscience, but they may gradually become involved in the up-market gift shops which we also run. Thus they become aware, by giving and selling goods, of the poor and needy throughout the world.
This whole work is jeopardised by the provisions in this Bill. Whatever the kind words and arguments used by the Minister and noble Lords, I can only say that if noble Lords do not amend this Bill today they will be increasing the costs of just this foundation by a minimum of over £500,000 a year. Alas, it is no good the Government saying that discretionary relief is available. They do not have to undergo the daily hunt for premises and funds as I do. I know that in very many cases discretionary relief is not given now, and that in the future there is little hope of greater generosity on the part of hard pressed local authorities.
Of course, charities vary and this matter is now being properly looked into. But I can only plead for charities such as my foundation and others which rely upon the income of their gift shops for feeding the hungry, the destitute, the sick and the dying, of whom there are thousands every year. I am quite sure that Ministers in this House do not wish to punish either this foundation, Dr. Barnardo's, Oxfam or any other such charities because of the Moonies or because of some doubtful charities, which of course exist. But Ministers surely cannot believe it right that an extra burden of a quarter of a million pounds or more should be imposed on the foundation to make up for what they see as deficiencies in the Home Office charity law regulations.
In conclusion, I must say to the Government that two bad laws do not make a good one. Charitable work is trumpeted by this Government. Here is an excellent chance for them to show that they mean what they say in that regard. The removal of the rates burden will give us a greatly needed boost in a sphere
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of public life long held in high regard in this House. I beg to support the amendment.
Lord Boyd-Carpenter: My Lords, I hope my noble friend the Minister will treat this amendment very seriously. I hope that he will either accept it as it stands—to my amateur eye its drafting looks impeccable—or, if with the aid of his experts the Minister finds some deficiency in the drafting, will be prepared to accept it in principle and bring forward a corrected version at the next stage of the Bill. Your Lordships have just heard an extremely moving speech from the noble Baroness opposite. I think very few of us were unaffected by it, spoken as it was with the immense experience of the noble Baroness in these matters and her record of wonderful service to unfortunate people.
However, one could perhaps look at the present position more coldly on the logic of the matter. Under the present rating law the possibility of a discretion on the part of local authorities to remit the remaining 50 per cent. makes some sense. After all, it was the local authorities' own finances which were directly affected by the decision to remit or not. But, as I understand the Bill, if now a local authority does not exercise its discretion in favour of a charity, the money simply goes into the general fund for the business rate and will then be distributed over the whole country as Her Majesty's Government may see fit. Therefore the point—which used to be a very valid point—that local authorities were being asked to forego revenues they would otherwise directly receive and that therefore it was right for them to have that discretion, does not now appear to stand up, as we are now concerned only—as I understand the Bill—with the general fund. In respect of that, if my noble friend Lord Sandford is right, the sum of £80 million is substantial but plainly not of decisive significance against the total.
It is curious that the amendment should come up so soon after what I regard as the unfortunate and foolish ruling of the European Court on VAT for charities. I confess that I have never had any respect for the European Court. It seems that there are few mistakes that it is unable to make. This mistake could do a great deal of damage to charities if some step were not taken to compensate them. Indeed, if the occasion had not arisen on this amendment, I think that some of us would have been putting questions to Her Majesty's Government to ask what they were going to do to help charities in the unfortunate position created for them by that unfortunate ruling. However, by happy coincidence, as I understand the figures the acceptance of this amendment would not make the charities any better off but would at least offset practically the whole of the loss which the VAT decision imposes on them.
Therefore, the Minister has been presented by my noble friend Lord Sandford with a convenient and easy opportunity to put the matter right without raising other and more difficult problems. On the merits of the matter, the noble Baroness has outlined the position of charities and their work so very effectively that there is no need to add anything, except that this debate added in my mind a reminiscence of another occasion when your

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Lordships decided on a course designed to help a good cause. That was when the noble Lord, Lord Callaghan, to whom I believe all your Lordships want to wish a rapid recovery from his present illness, moved an amendment to the copyright legislation in order to continue help to the Great Ormond Street Hospital with which his distinguished wife has been so long concerned. On that occasion your Lordships took the view that, whatever the logic of the matter, that was so good a cause that it had to be met.
In this case the logic of the matter is perfectly clear. We are no longer concerned with local authorities dealing with money which otherwise would come directly to them. We are concerned simply with whether charities as such should pay rates.
I join with other noble Lords in saying that of course there are so-called charities which deserve no concession at all. Indeed, they do not deserve the 50 per cent. concession. That is another matter and it is up to the Government, if the Charity Commission will not move, to take steps to end the scandal of one or two of those organisations being classified as charities. However, their existence is certainly no reason for damaging the vast mass of genuine charities about which your Lordships are concerned. If we leave the matter as it is, with no amendment to the law of rates and no suggestion by the Government of any other way of helping those charities, the major charities in this country are in for a very difficult time.
Therefore, although I fully understand my noble friend's position—it is difficult at this stage of the Bill to agree to quite an important amendment—I think he will find that there is a great deal of opinion in the House that believes that that is what he should do. I for one would increase my already enormous admiration for my noble friend if he were to accept the amendment.
3.45 p.m.
Lord McIntosh of Haringey: My Lords, all of us in this House must approach the amendments with the utmost respect for their movers—for their knowledge, experience and compassion—and for the work of the charities which they have described to us. Those charities are enormously valuable to our society. I cannot hope to compete with noble Lords who have already spoken in describing the work they do.
The threat to those charities is paradoxically most serious for those who choose to perform a socially worthwhile function while raising money. In other words, they do not choose to go round to doorsteps with envelopes to collect money or carry out appeals to the wealthy by asking them to send cheques to an office which could be very small and rated very low. They choose to provide a social function, particularly in dealing in second-hand goods for those most in need, at the same time as they raise money for their charities. They therefore do good in two ways. They choose to do it in a peculiarly effective way which, because it takes place in non-domestic premises, renders them vulnerable to the national non-domestic rate. For that reason alone, in making a
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judgment between one charity and another I believe that what is proposed in the Bill is peculiarly unfair.
I confess that I had two reservations about the thrust of the amendments. Neither of them will commend themselves to noble Lords opposite. The first was that, as a dyed-in-the-wool local government man, I have always been against taking discretion away from local authorities. Where local authorities can reasonably express a discretion and make a judgment about financial matters, I believe that they should be left with the power to do so.
The second reservation I had concerned the nature of some charities. That has been referred to by other noble Lords. There are some organisations which have achieved charitable status in law which none of us would wish to support. I do not expect that many noble Lords opposite will feel, as I do, that public schools should have their charitable relief taken away from them. However, as the noble Lord, Lord Boyd-Carpenter, has said, that is a matter for charity law and not for a local government finance Bill.
It is neither good enough to seek to brush away amendments of this kind nor to seek to avoid all changes in charitable status simply because we have not got around to making a charity law which draws a proper distinction between worthy and unworthy causes. Therefore, my reservations, which I expressed at an earlier stage—the Minister taunted me at that time with appearing to support public schools—do not seem to me to be strong enough arguments to oppose the amendments.
What has finally convinced me that the amendments are right is the nature of the national domestic rate. If we have money being raised by local authorities which are responsible for the level at which the money is being raised, it is a proper exercise of responsibility to say, "We make the judgment that we must have a higher level of rates because we have a higher level of need", or whatever the argument may be, "but we recognise the value of the work of charities in our area and are prepared to use the discretionary rate relief provisions in order to protect them against the high rates which we feel we must levy". That is a judgment which can be made rationally. It is probable that it is sometimes made irrationally. However, we can see how that arises in the context of a proper consideration of local government finance.
The national non-domestic rate is not a local authority rate at all. It is a national tax, fixed at a national level. Therefore, the concept of discretionary rate relief given by local authorities, even if part of that relief is then reimbursed through the rate support grant, is simply no longer logical. If we have a national tax, the level of that tax, set by government, must take into account the needs of those charities which need business premises in order to do their work. It is a national responsibility and one which ought not to be put on local authorities in any way. I dread to think of the differences that might arise between one local authority and another if they had to make a direct choice between support for charities in their areas from a tax over which they have no control and an increase in the community charge which they may well feel is a particular burden

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on the people in their area. In logic, in compassion and in reason I believe that we would be right to support these amendments and I urge my noble friends to do so.
Lord Renton: My Lords, before my noble friend rises to reply, perhaps I may briefly introduce one or two thoughts which have not so far been mentioned. In his strong and convincing arguments in moving the debate my noble friend Lord Sandford mentioned that from experience at MENCAP that one could demonstrate that the present system, which must be our starting point in all this, is not satisfactory.
There are thousands of different kinds of charity—small and local, large and national. If one has, as MENCAP has, a national organisation covering the whole of England and Wales—we do not cover Scotland and do not intend to make a takeover bid there—one has as many branches as there are local authorities. In fact we have more. We have to budget centrally for those branches although they are locally accountable and also have to do their own budgeting. The worst feature of the present system which the Government wish to perpetuate is the uncertainty about what will happen. That makes the financial arrangements for national bodies very difficult.
We have heard from my noble friend Lady Faithfull and the noble Baroness, Lady Ryder of Warsaw, about the difficulties in respect of the Barnardo shops and Lady Ryder's foundation shops. I would remind your Lordships that the problems concerning charity shops will occur over a very wide field—for example, all the British Legion shops—and we in MENCAP also have shops. Many other charities, both large and small, have shops which will be affected by the decision which your Lordships make this afternoon.
Of course it is right that we should be careful about committing either local authorities or the Treasury to expenditure which we would not wish to foist upon them. However, I hope that in replying to this debate my noble friend will not oversimplify the matter by referring to the fact, which has properly been mentioned, that the present mandatory relief costs £80 million. That is what the 50 per cent. amounts to. However, it would be a mistake to assume that either under the present arrangements and still less in future the non-mandatory relief would amount to an equivalent sum.
Even under the present system only about 20 per cent. of the potential costs to local authorities is given as relief to charities. Therefore it is not £80 million but something like £16 million, or at the most £20 million, which is involved. From that sum has to be deducted the local authority's administration costs, which it is impossible for us to estimate. I have not heard that any local authority organisation is able to say what that amount will be because it is included in the general administration of rates by local authorities.
What has to be considered, as my noble friend Lord Boyd-Carpenter put so admirably, is whether in altering or perpetuating a system which is
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unsatisfactory at present one produces a system for the future which is just as bad or is better.
If it were a question of foisting £80 million of public expenditure on the Treasury I would not support the amendments. However, it is nothing like that sum. As has been pointed out, the local authorities will not suffer if they have no discretion in this matter because any potential costs will have been passed on to the centre. Therefore I warmly support what has been said.
The Earl of Radnor: My Lords, I wonder if I may have the temerity to oppose this set of amendments. My temerity is all the greater since I am a derated farmer, although I feel that the parallel drawn between charities, farmers and the church was not a correct one.
The subject is very emotive. I should very much like to support the amendments, and the speeches which have been made in favour of the amendments have been both able and very moving. However, like all questions I think that there is another side to the issue. I am thinking particularly of the question of charitable shops, which as we have heard from all sides of the Chamber have proliferated, and rightly so. They do a very good job. However, there are other shops which are not derated; they are small businesses and are in direct competition with the charitable shops.
Furthermore, there is a theme which runs through the Bill. As soon as someone is exonerated from rates somebody else picks up the bill. To me that seems to make worse the rather unequal competition that I see beginning to evolve. It is quite likely that the shop which is in competition with the charity shop will be among those that have to pay something more than they would otherwise have had to.
It seems to me also that on the whole charities—and I am intimately concerned with one—are quite well served so far as concerns taxation. Although I think that it is a very nice idea that they should be given this particular advantage of being exonerated from all rate burdens, I cannot see that it is absolutely right. I think that the Bill as written probably strikes a balance which is reasonable, although not perfect. I would not be happy about the discretionary part of it in any way. However, my temerity does not take me far enough to suggest that the provision should be abolished altogether. Therefore, I fear that, sadly, I shall not be able to support the amendment.
Lord Rochester: My Lords, in the rather lowly capacity of president of a youth club in Cheshire, where I live, which is a registered charity I should like very briefly but strongly to support the amendment from these Benches. I have nothing of substance to add to what has already been said so cogently by other noble Lords who have spoken in favour of the amendment. All I would say is that I think that it may well be that the fate of this amendment will determine whether or not the particular club of which I speak survives. I therefore join with other noble Lords in strongly urging the House to accept the amendment.
Lord Harmar-Nicholls: My Lords, I have no doubt that my noble friend will have recognised that this is one of those occasions when the strength of the debate may well decide how noble Lords will respond if the amendment is pushed to a vote.
One point which I should like to be made quite clear is whether the sum of money involved is £80 million or the £16 to £20 million mentioned by my noble friend. I think that that information will make a difference. If it is the higher figure, that will have to be taken into account and weighed against the very strong arguments that have been put so very well by the supporters of the amendment. I think that we ought to have the authority of words from the Dispatch Box to clear away any doubt. Would the new formula cost £80 million or would it be less than that? Would it be the £60 million mentioned by my noble friend?
4 p.m.
Lord Ross of Newport: My Lords, perhaps I may speak very briefly on the situation in which many local authorities will find themselves if this amendment is not accepted by the House. Those of us who work in the arts or have anything to do with charities already know that there is great difficulty on the part of local authorities to fund the arts. In my part of the world we have an arts centre and it was faced with impending closure. In fact it still is. It is something that I believe most of the public would wish to see remain but in fact the local authority now finds itself in such a position that it cannot give it adequate funding. As a result, the Southern Arts says that it will withdraw its contribution and what is known as the Visual Arts Centre in Newport, Isle of Wight, will almost certainly close unless there is a change of mind.
We know that local authorities are having great difficulty in finding finance for citizens' advice bureaux; in fact ours was shut at one time when finance was withdrawn. For the moment it is going ahead and provides a wonderful service but its continued existence is in doubt. That is the answer to the noble Lord who spoke against this amendment. When it comes to the crunch I do not believe that local authorities will be able to fund the other 25 per cent. for which the charities will be looking. Surely it is wrong that they cannot budget. They should be able to budget and see ahead. They may know that there will be meetings in February, March and so on, but it may be well into the next financial year before they know whether or not they will receive additional funding from the local authority. I do not believe that they can possibly work on such a basis.
As I said when this matter came up at Committee stage, I am quite convinced that many charities and their shops will face very substantial rate rises if this concession is not granted. Therefore I hope that when the Minister responds he will not take the line that it is up to the local authorities. With the best will in the world most councils will want to give that concession but they also have the problem of keeping the rate within a reasonable increase, and they have the Secretary of State behind them threatening rate capping and so on. If we are to keep the community
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charge within bounds, such things as the arts, citizens' advice bureaux and charity shops will be in front of the firing-line and it will be difficult for authorities to be able to maintain support and be generous in their regard. I think that that is the crucial issue and I hope that the Minister will not say that he will leave it to the local authorities. It is a government decision and should be taken today.
Lord WolfsonMy Lords, I rise to support this amendment. Whatever may be the theoretical niceties, I believe that the deeply moving speech of the noble Baroness, Lady Ryder, with her immense practical experience and tireless efforts on behalf of charity, must carry great weight in every part of this House. I do not think it necessary to add to what has already been said. I was very taken with the views of my noble friend Lord Boyd-Carpenter, and I hope that all parts of the House will support this amendment.
Baroness Blatch: My Lords, I rise to acknowledge that I share the concern about the wide-sweeping nature of the amendment and also to pose two questions. First, I should like to repeat a concern that has already been put. There now appears to be some confusion about the cost of the amendment in the minds of the noble Lords who may be required in a moment or two to record their vote. It is very important that we know more precisely what the cost is likely to be.
My second question relates to the definition of charitable status. I also have some difficulty with the problems which are faced by local authorities concerning the definition of charitable status and the relative needs of one charity to another. Tremendous examples have been given this afternoon of very needy causes about which we should find it very difficult to argue. But within this amendment are we to include, for example, recreation clubs which as part of their facilities now have the facility for dispensing drinks and which are in direct competition with local public houses and hotels? Are they to be included in this amendment? Are we also to include schools, universities and polytechnics? If so, and if we are speaking about anything upwards of £20 million to £80 million, I seriously ask whether we are to put that cost not on to CBI members who control relatively large businesses but on to the very small businessmen, about whom we shall spend some time later today arguing the case that we should not be putting any more of a burden on them.
I rise merely to put those questions. Are we speaking about substantial sums of money? Are we, with alacrity, simply putting that burden on to small businesses? It has been said not once but many times in this debate that it is not a cost that we would wish to put on the Treasury, and therefore quite knowingly we are putting this burden on to the business sector. It is therefore important that we should know precisely what is the burden, what is the definition of charitable status and what will go under the umbrella of this rather wide-ranging exemption.
The Earl of Caithness: My Lords, the rating of charities is an important subject. We discussed it at

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length in Committee on 9th June and it comes as no surprise that we return to it today. Then, the amendment of the noble Lord, Lord Hayter, proposed 80 per cent. mandatory relief for charities instead of the 50 per cent. that applies at present and which has applied since 1961. Today, in his Amendment No. 155, the noble Lord, Lord Sandford, seeks to increase that to 100 per cent.
The Government are very much in favour of charitable endeavour. Most charities do valuable work that deserves public support. We think it is right that charities should receive substantial help from the state on behalf of the public at large by way of tax reliefs, and they do indeed receive such help. We do not, however, think that they should be totally exempt from all taxation. In particular, we do not accept that they should receive automatic full relief from rates.
Let me stress the word "automatic". The possibility of 100 per cent. relief exists, and many charities receive it. But before they can do so, a case-by-case judgment is applied by the local authority, and part of the cost falls to be borne locally. I shall come later to how large that part should be.
Let me summarise our reasons for believing that giving 100 per cent. mandatory relief for all charities is too blunt an instrument. They are: first, that not all charities merit or need such assistance; second, that this would create too sharp a dividing line between charities and the many worthy bodies which do not quite qualify as charities; third, that there should be a local as well as a national element in public support for charities; and fourth—and a poor fourth—cost.
I shall deal with those arguments in turn, and then come to what the Government propose. I might say that I approach this debate with all humility and trepidation, bearing in mind how hard it is to argue against any concession to charity. Better men than I have tried, and also failed. Mr. Gladstone, speaking in the other place on the 1863 Finance Bill, gave what was described by Mr. Disraeli as a "glittering oration" lasting 2½ hours advocating the withdrawal of income tax relief from charitable bequests. He lost. I do not aspire to match Mr. Gladstone for length, still less for glitter. My sole advantage over him is that the rating treatment of charities is today very much more favourable than in his day. In 1865, a hospital had its beds seized by the baliffs for non-payment of rates. Charities owe their better treatment today, as I owe my quotations, to the Pritchard Committee on the Rating of Charities and Kindred Bodies, whose recommendations for 50 per cent. mandatory and 50 per cent. discretionary relief were given effect by the Rating and Valuation Act 1961. I know that much has changed since 1961, but there is little in that report that does not hold good today.
Returning to the main point, I said at Committee that not all charities do merit 100 per cent. relief. When we think of charities, we normally think of the big national charities, such as Oxfam, or the Save the Children Fund, whose work commands almost universal support. But the definition of "charity" is a very broad one. It includes the universities, which are mainly publicly funded, and the fee-paying schools. In terms of rateable value for charities, these are
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thought to account for approaching half the total. It includes all religious bodies, not just the mainstream denominations, but the minority and exclusive fringe sects. Perhaps most relevant of all, it includes some bodies which are charitable in name only. I quote from the 16th Report of the Public Accounts Committee:
"The Comptroller and Auditor General noted that … there was disturbing evidence of charity-related fraud and abuse".
We may all feel warmly disposed towards Oxfam, and in particular towards the foundation of the noble Baroness, Lady Ryder. But is the right way to help them to give more public money to fringe religious cults? Is it not better to encourage local authorities to use their knowledge to increase the 50 per cent. mandatory relief to 100 per cent. for those charities that need and deserve it?
Secondly, as I have said, these amendments would differentiate much more sharply than now between charities and what I might call near-charities. Indeed, my noble friend Lady Blatch made this point for me. The definition of charities is broad in places, but narrow in others. It does not include non-profit-making research organisations. It does not include amateur sports clubs. These bodies get no mandatory rate relief. They have to seek discretionary rate relief from the local authority. I would find it hard to justify to these bodies that we were enhancing the already more privileged treatment of charities but doing nothing for them.
Thirdly, there is local discretion. As I said, the Government support charitable endeavour, but they do so on the basis of encouraging voluntary giving, not simply making charities into surrogates for the public sector. Requiring local authorities to consider case by case whether to give the extra 50 per cent. relief serves two purposes. It helps to weed out those charities which do not command wide support or which are ineffective in meeting their stated objectives; but it also recognises that a great many charities have a local character, and enables local people to play a part in deciding whether they should get relief.
Fourthly, I turn to cost. I said that this came a poor fourth because I want to stress that I am not resisting these amendments for Scrooge-like motives but the concession proposed by the amendment of my noble friend Lord Sandford is not cheap by any standards. Here I pick up the point of my noble friend Lord Harmar-Nicholls. We estimate that it would cost around £80 million a year. I cannot, with respect, follow the figures of my noble friend Lord Renton. I have had it confirmed now that the cost on this amendment will be £80 million. However, I should like to look at my noble friend's figures when they are printed in the Official Report.
Lord McIntosh of Haringey: My Lords, we must be grateful to the noble Earl for his confirmation of the cost. Perhaps he would be good enough to help the House further by telling us what percentage that is of the total national non-domestic rate.
Lord Renton: My Lords, in giving this figure my noble friend has made the assumption that the total non-mandatory relief to charities so far, and the relief

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refused to charities although they might have been given it, is covered by £80 million. I had been given the figures for 1985–86. While mandatory relief was £80 million worth, the level of discretionary relief was only £20.4 million. It would seem that the figure that he is now giving us of £80 million, which would be the cost of this amendment, cannot therefore be right.
The Earl of Caithness: My Lords, no, I beg to differ from my noble friend. My figures show that in a full year, if there were no relief, charities would have had to pay about £190 million. Therefore the 50 per cent. of mandatory relief is £90 million; and the 50 per cent. of discretionary relief is a further £90 million or so. But the discretionary relief that they receive is about £15 million. That leaves the balance of £80 million, which is the sum about which we are talking as a result of this amendment.
4.15 p.m.
Lord Boyd-Carpenter: My Lords, while my noble friend is referring to these figures, will he tell noble Lords how much money the Government are expecting to receive from charities as a result of the European Court decision? Surely that should be taken into account.
The Earl of Caithness: My Lords, I shall deal with that when I come towards the end of my speech.
We estimate that the cost of this £80 million would be an extra £2 on everyone's community charge, or 1 per cent. on the business rate. That answers the point raised by the noble Lord, Lord McIntosh of Haringey. Put like that, it may not sound much. I for one would be delighted if every adult in the country decided to give another £2 to the charity of their choice; but that is not a reason for giving that sum—as a compulsory donation—to all charities regardless of their effectiveness.
My noble friend Lord Sandford has said that the CBI has expressed itself happy to pay. That is very generous of the CBI. But it is one thing for the big manufacturers represented on the CBI to take that view: many of them are expecting to gain from the revaluation, and some from the NNDR as well. It is quite another thing for us to impose an extra burden on the small shopkeepers, many of whom are, as your Lordships know, already very worried about the results of revaluation and in particular about the competition for limited spaces in the high street.
I noted with care the point that my noble friend Lord Radnor made about the small businesses, to which some of your Lordships are seeking to give further aid later in our discussions this afternoon, but which indeed will be asked to pay more as a result of the amendment proposed by my noble friend Lord Sandford.
I explained in Committee why the Government did not consider 80 per cent. mandatory relief to charities to be justified; and I have now explained why, a fortiori, we take the same view of 100 per cent. mandatory relief. Before I risk surpassing Mr. Gladstone for length, if not for oratory, let me now turn to the positive side.
28
I explained in Committee that where a local authority uses its power to increase the relief from 50 per cent. to 100 per cent., half the cost of that second slice, as well as the whole of the first, would be met from the national pool, leaving only a quarter of the total to be met by local charge payers. That would roughly preserve the present position, whereby the cost of discretionary relief falls locally but, typically, half is met by businesses leaving only half to be paid by residents.
Since then we have looked at this issue again. Besides bringing forward amendments to meet your Lordships' concern I can announce a further concession now. In the light of the concern expressed by noble Lords, we have decided that it would be right to give them a rather greater incentive to use their powers to give relief. We have therefore decided that rather than 50 per cent. of the cost being met centrally the figure should be 70 per cent. That will leave only 15 per cent. of the total cost, including the mandatory element, to fall on local people. I hope that my noble friend Lord Boyd-Carpenter realises that the community charge payer will be contributing to this in a proportion which, up to the concession now, used to be 25 per cent., and will now be reduced, under the Government's proposal, to 15 per cent. That should give a substantial extra incentive for authorities to be forthcoming while retaining the local involvement which I have argued is essential. We can make this change without amendment to the Bill by way of regulations under Schedule 8, paragraph 4.
As I said in Committee, we also intend to issue new guidance to local authorities stressing that the power to give discretionary relief is there to be used. Charities and other bodies seeking relief will be able to cite the Government's guidance in support.
Still on a positive note, let me briefly mention the Government amendments, Amendments Nos. 157, 158 and 190 which we might take next. These are modest but helpful to charities. They provide for charities to get the same 50 per cent. mandatory relief from empty property rating as from ordinary rating, reducing rates in such cases to a quarter of the full amount.
Perhaps I may now turn to the three points that I believe need to be answered and which were raised during our discussions. My noble friends Lord Sandford and Lord Renton and the noble Lord, Lord Ross of Newport, said that there were problems for charities in budgeting. However, I should like to draw attention to Clause 44(7) which would enable us to require local authorities to give a minimum period of notice of withdrawal of relief. We plan to use this to require them to give a minimum of 12 months' notice expiring on 31st March. Contrary to having no time to budget, this gives charities the security they need to plan for the budgeting.
I turn next to VAT and charity relief, which was of particular concern to my noble friend Lord Boyd-Carpenter. Without being an expert on this, I found the figure of £80 million mentioned by my noble friend Lord Sandford quite difficult to justify. I am advised that the Economic Secretary to the Treasury announced a package of measures which would

29
reduce the cost to all taxpayers from a possible £425 million down to £160 million. Although I do not have full details at my fingertips, it does not seem plausible to me that half of that cost of £160 million—the £80 million to which my noble friend referred—would fall on charities, and charities alone.
Lord Somers: My Lords, is the noble Earl satisfied that all charities that the Government support are really deserving ones?
The Earl of Caithness: My Lords, I am not convinced that all the charities that have received relief are deserving ones. That is why we still believe that there should be an element of discretionary rating relief to those charities.
Before I conclude I turn to charity shops, which was a point raised by the noble Lord, Lord Hayter, and by the noble Baroness, Lady Ryder of Warsaw. It is true that there will be a tendency for rateable values of shops to increase relative to those of other premises such as offices and factories, but I do not believe that that is a reason for more favoured treatment of charities at large. We are aware that charities occupy an increasing number of shops and that is why the rate relief for charities—which previously excluded shops used purely for fund raising and was limited to charities' operational premises—was extended in 1976 to include charity shops. We believe that it would be a mistake, however, to allow a possibly temporary increase in the rateable value of shops resulting from the present market conditions to lead to a permanent restructuring of the law on rate relief for charities.
We have heard some very large figures quoted today on the cost of revaluation for charities. For example, one noble Lord quoted a 50 per cent. increase for Dr. Barnardo's. I suspect that some of those figures may be derived from figures quoted by some of the small business organisations which, for reasons I explained in Committee, are substantially overstated. We expect that many charities will face much smaller increases than they have been led to fear. I cannot give a figure on those rate increases because the rate revaluation, which is the key to it, has not yet been completed.
Returning to the main issue of the amendment of my noble friend Lord Sandford, I hope that I have persuaded the House that 100 per cent. automatic mandatory relief for charities really would be going much too far. We have offered two substantial steps towards helping charities through encouraging authorities to give rate relief by reducing the cost to taxpayers. Removing the local element altogether, though, I must at this stage continue to resist.
I am convinced that there is very strong feeling in your Lordships' House about this matter. Some figures are exaggerated, but nevertheless I should like to consider this again between now and another stage. I propose not to move the Government amendments shortly to come. I hope that my noble friend will withdraw his amendment so that we can look at this between now and a later stage. There is no doubt that it is the Government's intention to help charities. Your Lordships will know that charitable giving has doubled since 1979. That has been made
30
possible by what this Government have done. We shall not turn our backs on charities now. The proposals that I have enunciated already today are a great improvement on the present situation and on the proposed situation which was to translate the present position. I intend to withdraw those amendments to give myself, my noble friend and my right honourable friend the Secretary of State a chance to discuss the matter between now and another stage.
Baroness Faithfull: My Lords, before the noble Earl sits down, if he intends further to consider will he be discussing with his noble friend the Secretary of State in the Department of Health and Social Security what will happen perhaps not to so many now, but to the people who will not be able to be cared for by Lady Ryder's Foundation, Dr. Barnardo's and others, who will have to be looked after by the Department of Health and Social Security or the Social Services Department?
The Earl of Caithness: No, My Lords, I shall not be discussing it with my noble friend; I shall be discussing it with my right honourable friend.
Lord Sandford: My Lords, we have had a very thorough and comprehensive debate on this amendment. My first hope after the Committee stage was that my noble friend would have learnt enough from the opinions expressed then to have reconsidered this whole business of rate relief for charities and come back with the Government's own scheme for providing 100 per cent. mandatory rate relief. That would have been, and still will be, the best way to deal with this. I was disappointed that my noble friend with his Home Office experience—which points exactly in the opposite direction—argues that the existence of the Moonies, the scientologists and the fringe charities was a case for discretionary rate relief for the local authorities. He must know that that is quite unsound and that the remedy for that is a proper review of the law of charities and the enforcement powers of the Charity Commissioners. I do not believe that anybody in this House, and I do not believe my noble friend himself, is persuaded by the force of that argument, though it was, I suppose, inevitable that it would be deployed.
My noble friend argued for local discretion, but as I have told your Lordships and I must perhaps repeat it again, I have heard now from both the associations which will be involved with the collection of this rate that they do not want this discretion within the national framework that is now being devised. My noble friend Lord Boyd-Carpenter made that point so much better than I did. The shift from a 50–50 balance to a 70–30 balance does not make any difference to that view. I could not say so in my first speech because I had not then heard of this proposal from the Minister, although my colleagues in the associations knew that it was in the offing and they had examined it. However, they assure me that it does not make any difference to their view. It is merely tinkering with the system. The offer that my noble friend has made about empty properties is welcome too, but that also is tinkering.

31
There was some talk about the cost of all this. I rest my case on the fact that the sum involved might be anything up to £80 million. I agree with my noble friend Lord Renton that it is almost certain to be reduced by possibly £16 million or perhaps £20 million, but it is not more than £80 million. That is 1 per cent. on the rate bills of business, commerce and industry. Of course we do not want to impose new and extra burdens on small businesses and perhaps the CBI is not in a position to speak for all of them. But 1 per cent. is not a huge addition.
Equally, I agree that shifting £80 million about is not something which my noble friend—even though he is a Minister of State at the Department of the Environment—can do on his feet. Therefore, I welcome the undertaking that I understand he has given to the House that he will take this away to look at it. On the other hand, with the enormous measure of support all around the House—I do not remember any amendment that I have tried to move which has commanded so much support—he will have to go a little further than that. My noble friends Lord Caithness and Lord Belstead both knew that this subject would arise at this stage, because my noble friends and I in whose names this amendment stands have discussed it with them. I believe that my noble friend the Leader of the House will agree that the House deserves a rather firmer commitment to bring back something rather more positive than we have been given so far. We should like something more in the nature of an undertaking to consider what has been proposed and to see whether there really are any practical reasons why it should not be adopted. That would not be an undertaking to bring back precisely this amendment: it would be a promise to consider it carefully and to see whether it is possible for the Government to get somewhere much nearer to it.
I wonder whether my noble friend, with the leave of the House, could reinforce his undertakings to us before I decide what to do about this amendment.
The Earl of Caithness: My Lords, I believe it is right that I should respond to that. I gave the House the assurance that I would look at this again. As it stands I believe that my noble friend's amendment goes too far. I realise that the two major concessions offered by the Government did not go far enough to meet your Lordships concern. However, I believe it is right that we should consider it again between now and another stage.
Lord Sandford: My Lords, I believe that my noble friend knows the position he will be in if he fails to deliver. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 42 [Unoccupied hereditaments: liability]:
4.30 p.m.
The Earl of Caithness The Earl of Caithness moved Amendment No. 156:
Page 26, line 28, leave out ("sub-paragraph") and insert ("paragraph").
On Question, Amendment agreed to.
[Amendments Nos. 157 and 158 not moved].
Lord Ezra Lord Ezra moved Amendment No. 159:
After Clause 42, insert the following new clause:
("Rating of machinery used for power generation.
. Schedule 3, Class 1, to the General Rate Act 1967 (c.9) (Classes of Machinery and Plant deemed to be part of Hereditament) shall be amended to read—
"1. Machinery and plant (together with the shafting, pipes, cables, wires and other appliances and structures accessory thereto) which is used or intended to be used mainly or exclusively in connection with any of the following purposes, that is to say the heating, cooling, ventilating, lighting, draining or supplying of water to the land or buildings of which the hereditament consists, or the protecting of the hereditament from fire:
Provided that, in the case of machinery and plant which is in or on the hereditament for the purpose of manufacturing operations or trade processes, the fact that it is used in connection with those operations or processes for the purpose of heating, cooling, ventilating, lighting, draining, supplying of water, or protecting from fire shall not cause it to be treated as falling within the classes of machinery or plant specified in this Schedule.").
The noble Lord said: My Lords, the amendment that I propose relates to an anomaly in the existing non-domestic rating structure. The purpose of the amendment is to place plant, whether for the production of electricity or for any other form of energy or power which is to be either exported from the cycle or used on site for a manufacturing purpose, on the same basis for rating as any other manufacturing plant.
It is perfectly true that the Government have indicated that after the new rating arrangements come into effect on 1st April 1990 the electricity supply industry, which by then may be partly or wholly privatised, and the private generators of electricity will be rated on the same basis. The Secretary of State for the Environment has further indicated that it is the intention that power generators should be rated on the same basis as the rest of British industry. Formula rating working groups for all the formula rated industries have been set up, and those for electricity have been charged with suggesting how those aims can be met. However, the undertaking of the Secretary of State for Energy of 10th March 1988 excludes stand-alone private generators from fair rating. This seems to be a continuing anomaly.
There are other possible anomalies in the Government's intentions, quite part from the delay that there will be. For example, combined heat and power, which was meant to have been stimulated substantially by the 1983 Energy Act (in the debates in which I took part) has not in fact come about. As regards rating, there is still some doubt as to whether the various parts of combined heat and power installations such as the piping of the hot water or the steam will or will not be included in the rating concession.
The CEGB's generating stations already enjoy a preferentially low rating value (RV) compared with private generators. The CEGB's RV is just over £1 per kilowatt of installed capacity, but depending on the method of assessment chosen by the valuation officer RVs up to 40 times as much as that are being set for private generators. Rates of that order would absorb much of the money paid by the boards for electricity sold to them under the 1983 Energy Act.
That is one reason why that Act has never really produced the results at which the Government appeared to be aiming at the time. If the passing of the amendment puts the CEGB at a disadvantage, the Secretary of State for the Environment has powers by order to put that right.
I should like to give your Lordships an example of the cost of the anomalous situation. Existing independent generators are spending time and money contesting valuations based on the present system. An industrial combined heat and power station in the North-West produces 128 million kilowatt hours per year of electricity from steam and diesel generators as well as further steam which is used in processing plant. As a result of recent re-equipment, a new RV of £147,000 has been set on the contractors' basis. This compares with an RV for a normal generating plant which would be of around £80,000 and on the CEGB's basis of £38,000. This indicates that the present system is totally anomalous. If the amendment which I am proposing were to be agreed that would be put right immediately.
I realise that the Government's intentions are to correct that anomaly, but as I have explained there are doubts about exactly how they will set about it, and there is a time lag. In this Bill we are presented with a unique opportunity of putting the matter right. I therefore commend the amendment to your Lordships' support, and I beg to move.
Lord Hesketh: My Lords, the Government are well aware of the body of opinion among private electricity generators which considers the methods used to assess the rateable value of these generating hereditaments as unfairly discriminating against the private supplier. They cite the rate burden as a factor that stifles fair competition and penalises the use of alternative energy sources.
However, I should like to emphasise that the Government are fully committed to introducing greater competition into electricity supply through privatisation. My right honourable friend the Secretary of State for Energy set out his plans in February in a White Paper which firmly sets the place of existing and potential private generators within the proposed new structure of the industry.
It is our intention that private generators exporting electricity to the grid should be rated on a comparable basis to the rest of the electricity supply industry from 1990. This matter will be given full consideration in the working group of officials, representatives of the Electricity Council, the local authority associations and the independent producers which has been set up to review the present rating arrangements for the electricity supply industry. This is one of a number of groups which are currently reviewing formula rating in parallel with the revaluation of non-domestic property. The outcome of those reviews will be incorporated in regulations under Schedule 6, paragraph 3, of the Bill and will come into effect on 1st April 1990. The remit of the electricity group requires them to look specifically at those issues.
Turning to Amendment No. 159, the amendment proposed to Schedule 3 of the General Rate Act 1967
34
would have the effect of removing from rating all electricity generating plant and machinery which is currently deemed to be part of the hereditament. It would take effect from the commencement of this Bill. It would apply not only to those private generators that have the capability of supplying electricity to the national supply network but also to the many private generating plants which supply electricity within or to industrial complexes.
The proposed amendment would not have any effect on the electricity supply industry formula rating. Given that the private generators are looking for comparable treatment with the generating board, it seems to us that this proposal introduces even more disparity of treatment. The effect extends beyond plant used for the production of electricity for supply to the national distribution network to include small on-site generators for which there is no intention of changing the basis of assessment, unlike those private generators in competition with the CEGB for which there may be a change.
The amendment does not provide for comparable treatment between the private electricity generators and the Central Electricity Generating Board. Comparable treatment is, however, being dealt with under the remit of the electricity formula rating working group. It is essential that it is developed in the light of the proposed privatisation of the industry. The amendment proposes a change to the provisions in the General Rate Act 1967. That Act will be repealed with effect from 1st April 1990. The short-term stop-gap solution proposed would only create further disparity and anomalies which would cause considerable difficulties in the introduction of longterm measures. The Government are committed to comparable treatment for all private generators exporting electricity to the supply distribution network. On that basis, I invite the noble Lord to withdraw his amendment.
Lord Ezra: My Lords, I thank the noble Lord for that reply. I am glad that he has restated the Government's firm commitment to put private generators on the same basis as the existing electricity supply industry. The Government cannot support the wording of the amendment, but I regret that they are not prepared to come forward with an alternative which can deal with the matter more quickly.
I hope that the various other anomalies to which I referred, and particularly my reference to combined heat and power, will be fully taken into account in this matter because there are a number of projects now being actively developed, and indeed some of them positively financed, on the expectation that they will be treated on all fours in all respects with what is at present the public generation of electricity.
On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 44 [Discretionary relief]:
Lord Hesketh Lord Hesketh moved Amendment No. 159A:
Page 27, line 12, leave out ("or (as the case may be) sections 42(4) and 43 above") and insert ("above, sections 42(4) to (4B) and 43 above, regulations under section 53 below or regulations under section 54 below (as the case may be)").
The noble Lord said: My Lords, in moving Amendment No. 159A, I should like to speak to Amendments Nos. 161A and 162B. The amendments go a little beyond being mere drafting amendments; they are very technical, and I shall not detain your Lordships for long. What they do is to regulate the relationship between the various grounds on which a person's liability to rates may differ from what I might call the basic rate bill calculated under Clause 40 for occupied property or Clause 42 for empty property.
There are three such grounds apart from mandatory relief for charities, which is dealt with in the body of Clauses 40 and 42. They are, first, transitional regulations under Clauses 53 and 54 in so far as they apply to the hereditament; secondly, any discretionary relief under Clause 44 from which the ratepayer benefits; and thirdly, any decision by the authority under Clause 46 to remit the rates on grounds of hardship. These three amendments taken together make clear that any transitional protection is calculated on the basis of the full basic rate bill. That adjusted amount may then be subject to discretionary relief, if the ratepayer qualifies and the authority so decides. Finally, the resulting rate bill may be reduced or remitted on grounds of hardship, again if the ratepayer qualifies and the authority so decides. Although it might be argued that authorities and the courts would have arrived at this result without the assistance of these amendments, it seemed to us that it was worth the expense of a few words to put the matter beyond doubt. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 160 and 161 not noved.]
Lord Hesketh Lord Hesketh moved Amendment No. 161A:
Page 27, line 38, at end insert—
("(4A) In deciding what the chargeable amount for the day would be apart from this section the effect of any regulations under section 53 or 54 below shall be taken into account but anything which has been done or could be done under section 46 below shall be ignored.").
On Question, amendment agreed to.
Clause 45 [Discretionary relief.. supplementary]:
[Amendment No. 162 not moved.]
4.45 p.m.
Clause 46 [Reduction or remission of liability]:
Lord Hesketh Lord Hesketh moved Amendment No. 162B:
Page 28, line 29, at end insert—
("(2A) The amount as regards which a reduction or remittance may be made under subsection (1) above is the amount the person would be liable to pay (apart from this section) taking account of anything done under section 44 above and the effect of any regulations under section 53 or 54 below.").
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 162C:
Page 28, line 31, at end insert ("and where such reduction or remission is granted the income foregone by the charging authority shall not be deemed to have been collected for the purposes of calculating the authority's contribution to the National Non-Domestic Rating Pool under section 56 and Schedules 7 and 8 below.").
The noble Lord said: My Lords, the opportunity for this amendment is given by the amendments to which the House has just agreed on the motion of the noble Lord, Lord Hesketh. The argument for it is greatly strengthened by the speech of the noble Earl, Lord Caithness, in response to Amendment No. 155.
In his definition of charities and his discussion of the definition of charity and the inadequacy of the definition, the Minister pointed out that there were a number of non-charitable organisations whose case for relief on grounds of hardship or of the public interest was greater than that of some charities. I agree with him. I think that many noble Lords who attended the debate also agreed with him that the case for those amendments was affected by, although in our view not fatally weakened by, the difficulties of the definition of charities.
The purpose of the amendment is to deal with non-charities, those non-domestic ratepayers who find themselves in a position of hardship that is recognised by the local authority to be a position of hardship. As the noble Lord, Lord Hesketh, said, we are dealing with occupied properties under Clause 40 and unoccupied properties under Clause 42(2). The effect of the amendment will be to see that the loss of income by the charging authority will be deemed to have been collected for the purpose of calculating the authority's contribution to the national non-domestic rating pool; in other words, it will be paid nationally rather than by the local charge payers.
I think that the argument is at least as strong for the businesses that the local authority recognises as being in a position of hardship as it is for many of the charities that we discussed at great length in a more fully attended Chamber a few moments ago. It does not seem fair for local charge payers to bear the costs of rates remitted on grounds of poverty, for example, when there is the problem of a business going into liquidation. In many local authorities, particularly those in areas of traditional industries—what one might still call sunset industries—it is difficult for them to survive, and their continued existence is important to the local economy. Their continued existence probably encourages the existence of other businesses dependent on them or trading with them in the local area, and a proper economic judgment is that they should be protected.
We say that the logic of that argument should be pursued through to the end and the cost should go to the national non-domestic rate pool rather than to the community charge payers in the area, who almost by definition will be in a particularly difficult situation and will find it hard to meet the extra charges.
The noble Lord, Lord Sandford, in his parting shot to the Minister, left him with a clear impression, I hope, that unless he came back with a proposal very much better than that offered in his last intervention, he would suffer defeat in the Division Lobbies on Third Reading. It would be a paradox if he were to resist the amendment now, which follows so closely the thinking of the earlier amendment, and then find that he had to make concessions or face defeat in the Lobbies on Third Reading. I hope that the Minister will see that in this case discretion is the better part of

37
valour. I hope that he will recognise the justice of the amendment and accept that it should be written on to the face of the Bill. I beg to move.
Lord Hesketh: My Lords, the noble Lord has explained that the amendment would require us, in calculating the contributions that local authorities are required to make into the national non-domestic rate pool, to give 100 per cent. allowance for any relief that authorities have given to ratepayers on the grounds of hardship. Your Lordships will recall that we have discussed the point briefly hitherto. The power to make full or partial allowance for such reliefs already exists in Schedule 8 paragraph 4(5)(a). That power extends the cost of discretionary relief given as well as that of remission on grounds of hardship. The purpose of the proposed amendment is to make the Government do what they already have power to do.
When we discussed the issue earlier, I explained that we shall consult the local authority associations on the rules that will be needed for calculating contributions into the pool. That is an important consultation exercise raising complicated issues and concerning large sums of money. We set it in motion early with the paper that we sent to the local authority associations in October last year. I do not think that the noble Lord could have expected us to complete it between Committee and Report.
Perhaps I may help the House by explaining what we shall by saying to the associations when we meet them. In considering the whole issue of the treatment of the possible causes of shortfall in non-domestic rate income, we need to strike a balance between, on the one hand, ensuring that the authorities remain accountable for their decisions and act diligently in collecting the rates in the interests of all the other authorities that will receive payments from the pool; and, on the other hand, ensuring that local community charge payers are not left to meet the costs outside local authority control where rate income is reduced for reasons over which the charging authority has no influence—for example, where a major ratepayer goes bankrupt or where rateable value is reduced on appeal.
It is obvious that full allowance must be made, but where there is an element of local discretion it is right that some part of the cost should fall locally. Without such a rule it would be easier for authorities to fall into the temptation of showing how generous they were to their own ratepayers, knowing that it was entirely at someone else's expense.
My noble friend Lord Caithness explained earlier, when we debated the treatment of charities, that where an authority gives a discretionary relief under Clause 44 we propose that 70 per cent. of the cost of that shall be met centrally, leaving 30 per cent. to fall locally. In the case of remission for hardship we have the power to treat the cost similarly; in other words, to bear some of it on the pool. We shall ask the local authority associations whether they similarly wish us to provide that cost possibility in excess of a de minimus threshold shall be split between the pool and local charge payers.
38
I cannot say yet whether 70 per cent. might be the right percentage. In this case I believe that it will be too high. We need to consult the local authority associations before deciding on that. I must remind the noble Lord opposite that for the associations we would regard it as a generous percentage and a high one. They will be aware that. with a high percentage, generosity by one authority will be at the cost of every other authority and that most authorities will receive much more out of the pool than they pay in. Therefore they will be more concerned with their position as beneficiaries than contributors. It is not sensible to go too far in encouraging authorities to play "beggar my neighbour" in this fashion. The power to remit rates on grounds of hardship is there to deal with hard cases, where a business will go under if it is forced to meet its rates bill. It is not there to enable authorities to give cover subsidies to businesses in their areas.
The noble Lord, Lord McIntosh, has argued that without a 100 per cent. allowance from the pool the provisions are unfair as between authorities because there are many more businesses in some areas than in others; therefore, even the same proportion of generosity in giving relief will cost far more in a major city than in a rural area. I am aware that that is a theoretical problem, but I believe that to worry about it is to exaggerate the scale with which the power to remit rates on the grounds of hardship is likely to be used. It is there to deal with extreme cases and I expect the cost falling on community charge payers to be very small indeed.
The right course here is for the Government to discuss the issue further with local authority associations which are well equipped to balance the interests of individual authorities against those of authorities collectively. On that basis, I hope that the noble Lord will withdraw his amendment.
Lord McIntosh of Haringey: My Lords, I listened most carefully to what the noble Earl, Lord Caithness, said in response to an earlier amendment, about the Government's regulating powers under Schedule 8. I also listened most carefully to what the noble Lord, Lord Hesketh, said about those regulating powers and the present consultations with local authorities. It is a pity that what he said was written before our previous debate. It has not taken into account the discussion that we had and the strength of feeling shown on all sides of the House about the inadequacy of the proposals to use the regulating powers under Schedule 8 for such purposes.
I do not believe that he can seriously expect me to be taken in by the bland obfuscation that he has proposed to serve out to the local authority associations. I am sure that the associations will not be satisfied with what was said, just as the House was patently not satisfied with what was said in relation to the previous amendment. The local authority associations are in favour of my amendment which will provide proper recognition of a number of very hard cases; not charities but businesses which, as the noble Lord said, will go under unless they are helped in this way.

39
It seems to me that the Minister has given ground even less on this matter—perhaps because the House is emptier than it was earlier—than did his noble friend in respect of an earlier amendment. I believe that logic requires me to seek the opinion of the House on this amendment. I beg to move.
4.55 p.m.
On Question, Whether the said amendment (No. 162C) shall be agreed to?
Their Lordships divided: Contents, 85; Not-Contents, 128.

DIVISION NO. 1

CONTENTS

Airedale, L.

Kilbracken, L.

Amherst, E.

Leatherland, L.

Ardwick, L.

Listowel, E.

Attlee, E.

Lovell-Davis, L.

Aylestone, L.

McIntosh of Haringey, L.

Banks, L.

McNair, L.

Beaumont of Whitley, L.

Mais, L.

Bonham-Carter, L.

Mason of Barnsley, L.

Boston of Faversham, L.

Molloy, L.

Bottomley, L.

Monson, L.

Briginshaw, L.

Morton of Shuna, L.

Bruce of Donington, L.

Mulley, L.

Cledwyn of Penrhos, L.

Nicol, B. [Teller.]

Cobbold, L.

Northfield, L.

Cocks of Hartcliffe, L.

O'Neill of the Maine, L.

David, B.

Pitt of Hampstead, L.

Davies of Penrhys, L.

Ponsonby of Shulbrede, L. [Teller.]

Diamond, L.

Donaldson of Kingsbridge, L.

Prys-Davies, L.

Elwyn-Jones, L.

Ritchie of Dundee, L.

Ennals, L.

Robson of Kiddington, B.

Ewart-Biggs, B.

Rochester, L.

Ezra, L.

Ross of Newport, L.

Falkender, B.

Scanlon, L.

Falkland, V.

Seear, B.

Fisher of Rednal, B.

Serota, B.

Gallacher, L.

Shepherd, L.

Galpern, L.

Stedman, B.

Gladwyn, L.

Stewart of Fulham, L.

Glenamara, L.

Taylor of Gryfe, L.

Graham of Edmonton, L.

Taylor of Mansfield, L.

Grey, E.

Tordoff, L.

Hampton, L.

Turner of Camden, B.

Hanworth, V.

Underhill, L.

Harris of Greenwich, L.

Vernon, L.

Hatch of Lusby, L.

Wallace of Coslany, L.

Hunt, L.

Walston, L.

Irvine of Lairg, L.

White, B.

Irving of Dartford, L.

Williams of Elvel, L.

Jacques, L.

Wilson of Rievaulx, L.

Jeger, B.

Winchilsea and Nottingham, E.

Jenkins of Hillhead, L.

Jenkins of Putney, L.

Winterbottom, L.

John-Mackie, L.

NOT-CONTENTS

Alexander of Tunis, E.

Boyd-Carpenter, L.

Allerton, L.

Brabazon of Tara, L.

Ampthill, L.

Brougham and Vaux, L.

Arran, E.

Broxbourne, L.

Auckland, L.

Bruce-Gardyne, L.

Beaverbrook, L.

Caithness, E.

Belhaven and Stenton, L.

Cameron of Lochbroom, L.

Beloff, L.

Campbell of Croy, L.

Belstead, L.

Carnegy of Lour, B.

Birdwood, L.

Carnock, L.

Blatch, B.

Carr of Hadley, L.

Blyth, L.

Chelwood, L.

Borthwick, L.

Clitheroe, L.

40

Colnbrook, L.

Montgomery of Alamein, V.

Constantine of Stanmore, L.

Mowbray and Stourton, L.

Cottesloe, L.

Munster, E.

Cowley, E.

Murton of Lindisfarne, L.

Davidson, V. [Teller.]

Nelson, E.

Denham, L. [Teller.]

Nugent of Guildford, L.

Dundee, E.

O'Brien of Lothbury, L.

Eccles V.

Onslow, E.

Ellenborough, L.

Orkney, E.

Elliot of Harwood, B.

Orr-Ewing, L.

Erroll of Hale, L.

Oxfuird, V.

Faithfull, B.

Pender, L.

Fanshawe of Richmond, L.

Peyton of Yeovil, L.

Fortescue, E.

Porritt, L.

Fraser of Kilmorack, L.

Portland, D.

Gainford, L.

Pym, L.

Gibson-Watt, L.

Radnor, E.

Glenarthur, L.

Reigate, L.

Greenway, L.

Renton, L.

Gridley, L.

Rippon of Hexham, L.

Hailsham of Saint Marylebone, L.

Romney, E.

Russell of Liverpool, L.

Henley, L.

St. Davids, V.

Hesketh, L.

St. Germans, E.

Hives, L.

Saltoun of Abernethy, Ly.

Home of the Hirsel, L.

Sanderson of Bowden, L.

Hood, V.

Sandford, L.

Hooper, B.

Seebohm, L.

Hylton-Foster, B.

Sharples, B.

Ilchester, E.

Skelmersdale, L.

Jenkin of Roding, L.

Slim, V.

Johnston of Rockport, L.

Somers, L.

Killearn, L.

Stanley of Alderley, L.

Kimball, L.

Strathcona and Mount Royal, L.

Kimberly, E.

Knutsford. V.

Strathspey, L.

Lauderdale, E.

Swansea, L.

Layton, L.

Terrington, L.

Long, V.

Teviot, L.

Lurgan, L.

Thomas of Gwydir, L.

Lyell, L.

Thomas of Swynnerton, L.

Lytton, E.

Thorneycroft, L.

Macleod of Borve, B.

Trafford, L.

Malmesbury, E.

Trefgarne, L.

Margadale, L.

Trumpington, B.

Marley, L.

Vaux of Harrowden, L.

Marsh, L.

Whitelaw, V.

Marshall of Leeds, L.

Wise, L.

Merrivale, L.

Wolfson, L.

Mersey, V.

Wyatt of Weeford, L.

Middleton, L.

Wynford, L.

Milverton, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.2 p.m.
Lord Hesketh Lord Hesketh moved Amendment No. 163:
After Clause 46, insert the following new clause:
("Joint owners or occupiers.
.—(1) The Secretary of State may make such regulations as he sees fit to deal with any case where (apart from the regulations) there would be more than one owner or occupier of a heredatament or part or of land at a particular time.
(2) Nothing in the following provisions of this section shall prejudice the generality of subsection (1) above.
(3) The regulations may provide for the owner or occupier at the time concerned to be taken to be such one of the owners or occupiers as is identified in accordance with prescribed rules.
(4) The regulations may provide that—

(a) as regards any time when there is only one owner or occupier, section 40 or 42 (as the case may be) shall apply;

(b) as regards any time when there is more than one owner or occupier, the owners or occupiers shall be jointly and severally liable to pay a prescribed amount by way of non-domestic rate.

(5) The regulations may include provision that prescribed provisions shall apply instead of prescribed provisions of this Part,

41
or that prescribed provisions of this Part shall not apply or shall apply subject to prescribed amendments or adaptations.").
The noble Lord said: My Lords, this new clause deals which the position of people who own or occupy non-domestic property jointly with other people. It is designed to deal with a problem under Clauses 40 and 42. The problem arises because Clause 40 provides that a person is liable to pay non-domestic rates in respect of a hereditament if he occupies all or part of it. The clause goes on to provide that the amount of liability is the rateable value multiplied by the multiplier or poundage for all of the relevant part of the financial year.
Where there is just one occupier, this is all plain sailing, but where there are two or more it becomes more complicated. Two or more people cannot occupy a hereditament separately. Longstanding case law preserved by Clauses 59(1) and 60(2) provides that in such cases either there are two or more hereditaments or the person having control of the whole building is treated as occupying all of it. However, two or more people can occupy a hereditament jointly. The obvious example of this is a professional partnership.
The problem that arises is this. It would be possible to argue, by reading Clause 40(1) strictly that, in a case where two or more people occupy a hereditament jointly, each of them fulfils the prescribed conditions, and each of them is therefore separately liable for the full amount. We have therefore prepared this new clause, which empowers the Secretary of State to regularise the position if this seems necessary. He can do so in one of two ways. He can provide that one of the joint occupiers and not the other is liable in accordance with prescribed rules. For example, the rules could provide that the first partner in alphabetical order was liable; so that Mr. May would have to pay, but never Mr. Slaughter, as would Mr. Chinnock, but not Messrs Debenham and Tewson. Alternatively —and in our present view this is the better course —the regulations could provide that all the joint occupiers would be jointly and severally liable, but for an amount which was the same as if there was only one occupier.
Joint and several liability, as your Lordships will be aware, means that the bill will be sent first to the partnerships or other joint occupiers. If it is unpaid, the authority can then bring proceedings against any or all of the joint occupiers, but as soon as it has recovered the appropriate amount from one it cannot proceed further against the others.
I have said that joint and several liability is the preferred course, reflecting as it does both the present position and the normal way of treating other liabilities of partnerships. It does however bring a couple of drafting problems in its wake, which may have mystified your Lordships on reading the new clause. First, although liability is in respect of a year, the chargeable amount is calculated on a daily basis. It is therefore necessary to provide that joint liability relates only to the part of the chargeable amount relating to days when there was joint occupation. That is the purpose of subsection (4)(a), which at first sight appears to deal with a situation to which the clause does not apply.
Secondly, in a few cases —most obviously where the occupier is a charity —the amount of liability is affected by the identity of the occupier. There is a very remote possibility that a charity might occupy a hereditament jointly with someone else. In this case, it may be necessary to make rules for determining how much each party is jointly and severally liable for. That is why subsection (4) (b) refers to "a prescribed amount" rather than simply the amount due in respect of the hereditament. In short, the new clause ties up what just might have been a loose end. I beg to move.
On Question, amendment agreed to.
Schedule 5 [Non-domestic rating.: exemption]:
Lord Hesketh Lord Hesketh moved Amendment No. 164:
Page 113, line 8, leave out ("kept or preserved") and insert ("used").
The noble Lord said: My Lords, I need not detain the House too long on these technical amendments. They are about unoccupied partially exempt hereditaments.
The Bill at present contains provision, in Clause 59(10), to ensure that, when a property is unoccupied but would be exempt if it was occupied, it should also be exempt while it is unoccupied. This is obviously sensible. Suppose a farmer has two barns, but his crop one year is only enough to fill one of them. It would be a nonsense if the other, because it was empty, became liable to rating. It is necessary to spell out this, perhaps rather obvious, point in legislation simply because a number of the exemptions are defined by reference to a building's use or occupation, so, without specific provision, the exemption would lapse if it were not occupied.
However, Clause 59(10) does not go quite far enough. Besides buildings that are wholly exempt, there are also those which are partly exempt. For example, a farm building may be used as a cowshed at one end and a farm shop at the other. It is desirable to provide that, when such a building is unused, the exempt part—which will of course not have been included in the rateable value —remains exempt. Amendment 169 achieves that, by providing that in all cases one looks at what the use or occupation would be if the building was occupied. Amendment 164 is consequential, and Amendment 188 removes the existing more limited provision. I beg to move.
On Question, amendment agreed to.
Lord Colnbrook Lord Colnbrook moved Amendment No. 164A:
Page 113, line 30, after ("livestock") insert ("or the breeding or rearing of horses or ponies").
The noble Lord said: My Lords, this amendment is in precisely the same terms as the one which I put down for consideration by the Committee and which was moved by the noble Lord, Lord Mason of Barnsley. It is very simple and straightforward. It is designed to restore the law relating to the rating —or non-rating —of establishments where horses or ponies are bred or reared to what for a period of approximately 50 years everybody assumed it to be. Following the judgment of your Lordships' House on 10th December last, it was realised that the law was not what everybody had assumed it to be for all those

43
years. That does not alter the fact that, since 1933, breeders, valuation officers, government departments, Ministers, Parliaments, have all assumed that the law provided that breeders or rearers of horses or ponies should not pay rates. They were clearly content with that position because, in spite of the fact that between 1933 and 1981 there have been countless Ministers and no less than 13 successive Parliaments, no attempt has been made to alter the position, which has been generally accepted.
I do not intend to rehearse again all the arguments that were deployed so ably in the Committee by noble Lords because those arguments are the same today as they were three weeks ago. We had hoped, obviously, that those arguments would have convinced my noble friend the Minister to accept the amendments and to do what we were asking. Unfortunately, he was not convinced at that time, but he said three important things.
First, my noble friend said he acknowledged the strength of the feeling expressed during the debate. That was not altogether surprising because no less than nine noble Lords from all parts of the Committee spoke in the debate, all expressing the same view. The only dissenting voice was that of my noble friend the Minister. Secondly, perhaps because of the strength of feeling, my noble friend said that he was prepared to go some way to meet us, though he could not then say exactly how far nor how he could do it. Thirdly, he said that he would be happy to have further discussions before Report stage.
Well, my noble friend has had those discussions and I am grateful to him for the time that he spared and for the care and attention that he paid to the arguments advanced. I hoped, and still hope, that the arguments have led him to the conclusion that these amendments should be accepted.
I am not convinced, however, that we have persuaded my noble friend because I see that he has tabled his own Amendment No. 164B, about which I should like to say a few words. To a layman, Amendment No. 164B means simply that the Government want to do something, but they do not know precisely what; that they want to go away and think about it and then come back with a regulation. I do not think that is the best way to legislate. Ministers have delegated to them enormous powers to make regulations in all sorts of areas and Parliament has no power to alter them.
Yes, to be sure, regulations can be annulled by resolution, but they cannot be altered. I do not regard that as satisfactory. It is far better for governments to say what they want to do in a Bill and then discuss the details with Parliament. Times without number, when they do that, governments realise that the details are not quite right and they alter them —consider, for example, the number of government amendments to this Bill alone. Therefore, it would not be right for us to accept Amendment No. 164B. The Government would do much better to accept Amendment No. 164A, and I hope that my noble friend the Minister will do that. I beg to move.
5.15 p.m.
Lord Mason of Barnsley: My Lords, undoubtedly the Minister's reply to our amendment in Committee, reported at cols. 1565 –68 of the Official Report for 9th June, has caused a great deal of concern among all those bodies which were understandably expecting a more sympathetic and fulsome response to our plea that agricultural premises used for the breeding and rearing of horses and ponies should be exempt from rates.
I must stress, as I did on that occasion, that all the organisations involved —the British Horse Society, the Jockey Club, the Country Landowners' Association, the National Farmers' Union, the National Pony Society and the agricultural workers—are not seeking a new special concession. Indeed, by far the majority have enjoyed de-rating for many years. Historically they have been accepted and recognised as being part of the agricultural scene. Even the Minister admitted in Committee that, prior to becoming a Minister, as a surveyor he used to agree with the assertion that has been put forward that stud farms were indeed de-rated up to 1981 and he only disagrees now because, he says, he discovered that there was some uncertainty between the mid-1930s and the early 1980s. By accepting this amendment, the Minister will be removing that uncertainty. In doing so he will be restoring the de-rating position which practically everybody in the industry understood to be the position until the Whitsbury Manor Stud case.
It is also obvious that Parliament as a whole has always thought that de-rating of agricultural premises for the breeding of horses and ponies has been right and proper, so often has it had the opportunity to apply rating and has not done so. Moreover, it is not easy to understand why the Minister should be cutting across the general views held by the Ministry of Agriculture and ADAS, the agricultural advisory service, which would like to see this activity of breeding and rearing horses and ponies as a natural diversification for farmers to undertake. Surely that should be encouraged.
What of the breeding and rearing of horses for human consumption? I refer to agricultural land and buildings being used for the purposes of contributing to human subsistence. Should not they qualify for de-rating? Of course, one could go on questioning the Minister's reply and the de minimis proposal which he put before the Committee. I believe it will worsen matters and, what is more, it is quite unclear. The noble Lord, Lord Middleton, said in the last debate, that he did not know how one could differentiate between large and small breeding establishments. It was a question of how long was a piece of string? So it is. I believe that the Minister has in mind only those who keep on their farms one or two horses for their own enjoyment or for breeding on a small scale, as he said, largely as a hobby.
In view of the historically accepted position, covering about 50 years, that premises for breeding and rearing horses and ponies have been de-rated, this de minimis proposal would be ludicrous. It would be difficult to operate; it would be a major blow to many in the industry who have rightly benefited from

45
de-rating for so long, and it would fly in the face of Parliament, especially the general goodwill that Parliament has given in the past to this industry. Therefore, I sincerely hope the Minister will give further consideration to the main request contained in the amendment.
Lord Middleton: My Lords, it was agreed when the rating of buildings used for keeping and breeding horses was discussed in Committee that this was a complicated question. As we have just been reminded, the decision in the Whitsbury Manor Stud case last year has cast doubt on the principle that for rating and taxation purposes horse breeding is an agricultural activity.
Amendment No. I 64A removes that doubt in the simplest way possible. As noble Lords have reminded us, in Committee my noble friend the Minister said that the Government would provide an exemption from rates where there was a de minimis use of buildings for horses. As I see it, that is what would be done by Amendment No. 164B, which empowers the Secretary of State to lay down a minimum floor area for a relevant building. That could be a very restrictive area and not at all satisfactory for all the reasons that I and other Members gave in Committee.
Therefore, I very much hope that my noble friend will agree to Amendment No. 164A, which would remove the glaring inconsistency between taxation and rating practice, and that he will not seek to include the new paragraph 8A contained in Amendment No. 164B.
Lord Renton: My Lords, my noble friend resisted an earlier amendment because of the cost to public funds. Before resisting this amendment I suggest that he gives further thought to the effect on the balance of payments, to which our bloodstock industry contributes many millions of pounds a year.
It does so in two distinct ways: first, by the export of thoroughbred stock and, secondly, by attracting millions of pounds to this country which are spent here by breeders from Arabia and elsewhere who have established valuable stud farms. They are rich men, but if we cease to make it worth their while they will take their money and go elsewhere, to Eire or to France. Therefore, on broad national and economic grounds, the bloodstock industry should not be divided into rich and poor because each has a contribution to make.
I now turn to consider my noble friend's alternative, the so-called de minimis provision. As my noble friend has taken up part of the phrase, it is only fair that I remind your Lordships of the whole of the phrase in which it arises, and has arisen in our law for hundreds of years. The total phrase is de minimis non curat lex, which not too freely translated means "The law does not bother about trivialities". In his amendment my noble friend is dealing with this big and important subject in a somewhat trivial way. It does not seem to make sense. He is speaking on the principle that a particular floor area—we are not told whether it is to be large, medium or small —will be described in a regulation which we shall have no
46
chance to amend. If I understand the intention of the Government and that of my noble friend by what he said during the earlier debate at the Committee stage, it seems that the intention is to make the floor area no larger than that which will enable two brood mares to be kept in a stable.
I wonder whether the consequences have been thought through? For example, let us consider a person who has the good fortune to have a very large racing stable. On the face of it, it seems that he has only to keep two brood mares there and, though the place where the horses in training are kept would not be exempt, the rest of the curtilages of the stable would be because of the presence of the brood mares. I believe that my noble friend's amendment may not suit the circumstances. I am sure that my noble friend and the noble Lord, Lord Mason of Barnsley, who so effectively moved this amendment at the Committee stage, are right when they advocate that the law should be kept as it has been for 50 years, on the basis of which money has been invested by farmers and other people in this country. In addition, people have been employed on the basis of that law. There does not seem to be any good reason for change.
Lord McIntosh of Haringey: My Lords, when this matter was debated in Committee I held my peace. I took the view that this was a matter upon which there should not be a party Whip. I still take that view, and I would not have the temerity to advise my noble friend Lord Mason of Barnsley and still less attempt to instruct him, as to what he should do. We could take a relaxed point of view about it at the Committee stage and see what was the force of the arguments. I have never heard a longer succession of speeches of blatant special pleading as I did at the Committee stage in favour of the amendments put forward by my noble friend and others. As a Party we are not exactly lovers of agricultural derating and we are certainly not going to attempt to extend or reinstate it for what is clearly a money-making business. It does not differ in any social way from any other kind of industry which pays rates.
The noble Lord, Lord Renton, said that there are millions of pounds of foreign currency coming into the country as a result of the stud farm business. Surely, a small percentage of that is available to contribute to the national non-domestic rate. I still take the view that this is a personal matter and that my noble friend Lord Mason of Barnsley must do as he thinks fit. If it comes to a vote, on a personal basis I shall support the amendment tabled by the Government as opposed to this one.
Lord Gibson-Watt: My Lords, this is a matter which affects a number of people personally. I cannot confess to a personal interest in the matter but I confess to an interest because I am chairman of the Royal Welsh Show which has the largest showing of Welsh ponies and cobs in the world. The meeting will be held in a fortnight's time.
I largely agree with a good deal said by my noble friend Lord Renton about the bloodstock industry. I wish your Lordships to realise that many of the people who keep Welsh ponies or others, are women and many of them are in a very small way of business.

47
It is somewhat ridiculous that those of us who keep cattle should be rated in one way and those who keep ponies in another. I ask my noble friend to consider this matter very seriously.
Lord Peyton of Yeovil: My Lords, I wish to add a word or two to what has been said by noble Lords speaking in favour of this amendment. My noble friend Lord Colnbrook has moved an amendment which is simple, clear and easily understood. I readily appreciate why this should be regarded with horror by those who currently frame our laws, because anything approaching simplicity or comprehensibility is something which we regularly eschew at all costs. Instead of my noble friend's quite simple and comprehensible solution or suggestion, we have this hideous paragraph. Every now and again a phrase occurs which flashes at one. For example,
"The relevant floor area is the floor area of the building in question."
With the exercise of the minimal intelligence that was given to me, I could have reached that conclusion without the aid of an Act of Parliament. I wonder what the parliamentary process is for? We are presented with an amendment and then we are told that the real guts of it will be decided after we have put in place a set of words which by themselves mean but little. I find this kind of legislation difficult to accept, or to accept with good grace, even though over many years I have tried to do so in another place.
I end my remarks by saying that I believe—I hope I may use the word without any pejorative sense —that the task of junior Ministers in your Lordships' House is extremely difficult in regard to making or accepting alteration in legislation which has succeeded in finding its way through that ghastly machine which the House of Commons provides in the framing of legislation. I accept that it very difficult for a junior Minister to impose his limited weight at a late stage and say that he has been unable to persuade your Lordships to accept some awful piece of codswallop. Nevertheless, my noble friend has had such a huge task placed upon him in recent months.
I hope that my noble friend will take to heart the fact that there is a good deal of sympathy behind him when we see him faced with the task of pushing through this kind of legislation. I hope that he will bring to the notice of his right honourable friend the fact that not all of us regard this mumbo jumbo with pleasure, pride or satisfaction. I listened with sympathy to the arguments of my noble friend on the Bench in front of me and of the noble Lord, Lord Mason, and, if only in the interests of decent, tidy and comprehensible legislation, I hope that my noble friend will take another look at this.
5.30 p.m.
Baroness Blatch: My Lords, I rise not with a vested interest in the subject nor to support the notion of special pleading, because I do not believe that this is about special pleading. It is a matter of consistency. One government department treats this group of people for taxation purposes as part of the
48
agricultural community and regards this as an agricultural activity. Another government department proposes that for rating purposes it should not be part of the agricultural community. At present, farming is in some difficulty, although that may not be appreciated by the noble Lord, Lord McIntosh. Farmers are being asked to diversify and this is an area of activity in which farmers can diversify. It therefore seems inappropriate to choose this moment to treat this group differently for different purposes.
I wish to support the argument for and principle of consistency. If we are to consider the whole issue of whether or not the agricultural community should be brought into the rating system—this issue may be at the back of some noble Lords' minds—that is separate from taking one small part of the agricultural community and bringing it into rating in this way. On the principle of consistency, if for taxation purposes they are to be regarded as part of the agricultural community, then for the purposes of the issue before us they should also be regarded as part of the agricultural community.
Baroness Seear: My Lords, there is another argument about consistency. If, as the noble Lord, Lord Renton, said, an important part of the process is breeding for sale overseas, surely this is more akin to industry than to agriculture, and should be treated as an industrial and not an agricultural interest.
Lord Renton: My Lords, before the noble Baroness sits down, agriculture makes a contribution to our balance of payments by exporting overseas, and is therefore in a position no different from the bloodstock industry which does the same.
The Earl of Caithness: My Lords, I am grateful to noble Lords for so clearly putting the case for the exemption of stud farms from rating and for their comments on the government amendment which I gave a commitment in Committee we would table.
As I said in Committee, I accept there has been uncertainty about the status of stud farms over the past 50 years; but there is little to be gained from the historical position. The uncertainty that prevailed then has, as my noble friend recognised, been clarified by the ruling of your Lordships' House in the Whitsbury Farm and Stud Ltd. appeal case which has confirmed that the breeding and raising of horses is not an agricultural activity for the purposes of the General Rate Act exemption. That must provide the starting point for our consideration.
I have read the Official Report of the debate on this subject in Committee. I have had the further discussions which I promised then, and I have listened carefully to what has just been said. However, I am still not persuaded that buildings used for large scale commercial breeding of horses and ponies for sport or leisure use should be exempt from rates. I appreciate that for income tax, corporation tax and capital transfer tax the rules which relate to agriculture are applied to stud farms. Those rules do not, however, provide for the total exemption of horse breeding activities from those taxes, nor do they constitute a valid reason for horse breeding to be

49
agricultural for other purposes if those purposes do not require it.
Agricultural de-rating was introduced primarily as a subsidy to encourage the production of food for human consumption. I am of course aware that horse meat is exported for human consumption and is used as animal food but, with a few limited exemptions, horses are not specifically bred for that purpose. At the moment I cannot therefore see that there is a compelling case for exempting essentially commercial activities from rating.
However, when we considered a similar amendment in Committee, I conceded that where farmers kept one or two horses for their own enjoyment or for breeding on a small scale, largely as a hobby, rating could be an unwelcome additional burden as well as presenting some practical valuation problems. I gave a commitment that we would table an amendment to provide an exemption where there is a de minimis use of buildings for breeding and rearing of horses and ponies. The House has just heard my noble friend Lord Renton chide me for not using the full de minimis exemption. As my noble friend knows, my comprehension of Latin is very limited, and I thought I had done rather well to get two words out. I am sorry that I could go no further.
We have honoured that commitment in Amendments Nos. I 64B and 243CC, which cover England, Wales and Scotland. I have listened carefully to what has been said in your Lordships' House and elsewhere and I recognise that there may be better ways to approach the definition of a de minimis exemption. However, the particular anomaly to which my noble friend drew attention would not arise from our amendment. We have specifically left the floor area to be decided by regulation so that we can have further consultations with the industry. That seems to be a reasonable position. We have indicated a view of the size of breeding activity that we are prepared to exempt, but we are open to argument about how to define that. As the provisions of the Bill will not come into effect until 1st April 1990 that gives us time to look at the boundary question more fully and to legislate later.
In view of what noble Lords have said, I propose that we look further at the problems in conjunction with representatives of the horse breeding industry. If my noble friend is prepared to proceed on that basis and to withdraw Amendment No. 164A, I shall be quite willing to do likewise with Amendment No. 164B, and I am sure my noble friend Lord Sanderson will also agree to withdraw Amendment No. 243CC.
Lord Colnbrook: My Lords, that is an invitation which I cannot possibly refuse, and I shall not. The further discussions which my noble friend foreshadows will, I hope, persuade him that the way he is seeking to set about the matter is not the right way. One of the difficulties in the debate was that too much attention was paid to rich owners of very fast racehorses. There are some of those, but there are a good many other people who own rather small, slow horses, or ponies for that matter, and do not have large businesses and are not possessed of enormous fortunes. Nobody would wish to damage their
50
prospects. I am grateful to my noble friend for what he said, and I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 164B not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 165:
Page 115, line 25, at end insert —
("Fishing
9A. A hereditament is exempt to the extent that it consists of a right of fishing exercisable in a fishery regulated by an order which —

(a) is made under section 28(3) of the Salmon and Freshwater Fisheries Act 1975, and

(b) contains such provision as is mentioned in paragraph I (a) of Schedule 3 to that Act (contributions imposed by water authorities).").

The noble Earl said: My Lords, I should like to speak also to Amendment No. 243CE in the name of my noble friend Lord Sanderson of Bowden. With these two amendments perhaps I may deal also with Amendments Nos. 166, 186, 187, 189, 244 and 245, in the names of my noble friends Lord Kimball and Lord Wynford and the noble Lord, Lord Brougham and Vaux.
The government amendments give effect to the undertaking given at Committee stage that we would bring forward an amendment to give effect to the proposals made then by the noble Lord, Lord Moran, that fisheries which are assessed for a contribution under the Salmon and Freshwater Fisheries Act should be exempt from non-domestic rates. In accepting that amendment in principle we accepted that the possibility of double rating which exists at present is undesirable, and that if there is to be only one rating charge it is more appropriate that it should be directed at the authority responsible for the maintenance of fishing. Amendment No. 165 will achieve that for England and Amendment No. 243CE will produce the comparable result for Scotland. I think there will be wide agreement that this is a satisfactory outcome.
I should say that the amendment is however unlikely to be the end of this matter. Although the powers to assess contributions under the 1975 Act exist they are very little used because of the reluctance to make a double charge. If these powers are to be more extensively used it will be appropriate to review the basis on which contributions are set. It may also be desirable to review the procedures by which orders under the 1975 Act come to be made. It may be that it will be appropriate to return to such matters in any future Bill.dealing with the privatisation of the water industry.
We also know from the speech made by the noble Lord, Lord Mason of Barnsley, in Committee, that there is wider concern about the charges made to fishermen. He made the case then for a national rod licence. However, such matters are not matters for the present Bill. The question of charges, in particular, will be a matter on which the National Rivers Authority will have an important view.
Nevertheless, the question of the rating of fishing rights is a matter for the present Bill and, without prejudice to the outcome of the other matters that I have mentioned, I am happy to give effect to the undertaking which was given earlier.
There is one final matter in relation to this amendment. As your Lordships know, a part of the River Esk which runs in Scotland is dealt with under the 1975 Act, which applies principally to England and Wales. Similarly, part of the River Tweed which runs in England is dealt with under the equivalent Scottish Act. It is a minor matter but it is one which I give notice that we shall be tidying up on Third Reading.
I think it would be right to wait to hear what my noble friend Lord Kimball has to say with regard to the amendments tabled in his name before replying to them. In the meantime, I beg to move.
Lord Moran: My Lords, I should just like to say a brief word about this amendment. First, perhaps I may thank Her Majesty's Government, especially the noble Earl, Lord Caithness, and his right honourable friend, for bringing forward this amendment, which meets the substance of the case which I raised on Second Reading and in Committee. From what I have heard from many fishermen and from many fishing organisations since the Committee stage, it is clear that there is an enormous welcome among anglers all over the country for the change which is being brought about. We are all extremely grateful to the Government for making it so.
I am also glad that the noble Earl has told us that some of the consequential questions raised by the change will be reviewed. That seems to be most necessary. I hope that one particular point will be looked into. I think it would be equitable, if in the future contributions are to be made to the water authorities and in due course to the National Rivers Authority, that they should extend to all fisheries and not merely to those separated from land which at present pays rates. I hope that is a matter which will be considered between now and the time when the legislation introducing the National Rivers Authority is brought forward.
It will of course be necessary, as the noble Earl said, to consider how contributions will be assessed. Presumably, as fishing rates are now, they will be based largely upon the numbers of fish caught over a five-year period. But it would be interesting to know—if the noble Earl is unable to say now, perhaps he will write to me on the matter—what will be the machinery for making such assessments. For example, will the NRA in due course take over from the valuation officers who determine rates and what provision there will be for appeals—as there are at present against—rating assessments? There is of course a revaluation of non-domestic rates taking place at present and presumably that expertise will be transferred to the NRA in some form or other
I understand from what the noble Earl said in Committee —and now—that the issue of licences is a separate question which will be dealt with in due course by the NRA. I think it is important that, when the time comes from them to be reassessed, the cost should not be made so high that it drives people off the rivers or limits the right of fishing to the well-off. Of course in Scotland there are no licences at all because the Scots have some feeling that it would be
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against nature to pay for licences to fish. However, the costs are at present disproportionately high in many regions for people who come to fish for one day, or perhaps for a weekend. That is something which ought to be looked at in due course by the NRA. Having said that, I am most grateful to the noble Earl for what he has done.
5.45 p.m.
Lord Kimball: My Lords, perhaps I may address my remarks to Amendment No. 166, in so far as it affects England and Wales; and to Amendment No. 244, inasmuch as it affects Scotland. The amendments were specifically put down in order to try to find out what is the Government's intention about the rating of shooting.
I think that my noble friend must admit at this stage that the best way of describing the present system as regards the rating of shooting is as an unfair anachronism. If you shoot and farm your own land in England and Wales it is not rated. However, if you let it—I think the words are,
"if it is severed from the occupation",
then you pay rates on it. So we have a situation where the same right is sometimes rated and at other times is not rated. Surely the shooting is actually taking the game crop from the land. We do not rate land which is producing other crops. Therefore it seems quite wrong to rate land which is producing a game crop. The excellent argument put forward by my noble friend Lady Blatch —which she advanced during the debate about the rating of horses and ponies—applies equally to the rating of shooting. I think if my noble friend the Minister were to take the view of the valuation officers he would find that most valuation officers with whom one comes into contact regard this rate as a bugbear which is riddled with technicalities.
I turn now to the second amendment, which deals with Scotland. I hope that, if the Government intend to do away with the rating of shooting in England and Wales, they will also bring Scotland into line. I suppose I should declare an interest here. I find myself as the owner of a vast area of land in Sutherland paying a shooting rate for purely mythical grouse which we never seem to find. There is no way, except for the quinquennial valuation, of getting the rate altered even if one has no grouse to shoot. If ever there was a natural crop from the ground, whether it be in England, Scotland or Wales, it is the red grouse of Great Britain.
The other side of the Scottish question is: what about the red deer—that is, the wild natural red deer of the hills of Scotland? Here again, they are the natural product of the land. Why should red deer in their wild state be rated, when their brothers the tame deer on a deer farm are not? I hope that my noble friend will be able to give a sympathetic reply to the two amendments.
On Question, Amendment No. 165 agreed to.
Lord Kimball Lord Kimball moved Amendment No. 166:
Page 115, line 25, at end insert —
("Sporting rights.
9A. A hereditament is exempt to the extent that it consists of any right of sporting (that is, any right of fowling, of shooting, or taking or killing game or rabbits, or of fishing).").
The noble Lord said: My Lords, I beg to move.
The Earl of Caithness: My Lords, before I respond to my noble friend Lord Kimball, perhaps I may say to the noble Lord, Lord Moran, in regard to the previous amendment that many of his concerns will be addressed in future legislation. However, where I can write to him to give some clarity regarding consequential difficulties that we must sort out, I shall of course do so.
I now turn to the amendments tabled in the name of my noble friend Lord Kimball. As he so cogently explained, these would exempt all forms of sporting rights from the payment of rates. I must tell him that this is a much harder case for the Government to accept. Some sporting rights are extremely valuable and are run on very commercial lines. They have been rateable for many years and the law in that respect is well settled. As my noble friend rightly said, in Scotland they tend to produce a significant amount of revenue, even if—sadly—there are no grouse or deer in many parts of the area.
However, in practice, particularly in England where the law is different, the rating of sporting rights leads to anomalies. Sporting rights are in any case unusual in being incorporeal hereditaments; in other words, there is nothing physical to be rated. They are also affected strongly by the existence of the agricultural exemption. Sporting rights over agricultural land are only rateable if they are severed from the land by deed. Since there are other ways of letting the benefit of the right, it takes on something in the nature of a voluntary tax. The result is that the incidence of the tax can be unfair. That can happen with fishing rights just as with shooting. Where fishing takes place on agricultural land, it is exempt; where the fishing is, say, domestic it is liable to rates.
One solution would be to exempt all sporting rights from rates, but we are convinced that there would be the right solution, especially when there is not, as there is with fishing, the possibility of alternative contribution on the shooting side. For that reason I must resist my noble friend's amendment, but I totally sympathise with him about the clear anomalies which exist with relation to sporting rights. It is something of which we are aware.
Lord McIntosh of Haringey: My Lords, I apologise for coming in after the Minister, but the debate has taken a slightly unusual form because the grouping did not quite work. I cannot let this matter go without expressing a deep sense of nausea at the idea that we should have to fight every inch of the way for the rights of the homeless, those in deep poverty, and those who go to Crisis at Christmas and to the Sue Ryder workshops, and over and over again have to plead a humanitarian case for those in real need while the noble Lord can stand up with a straight face and ask for the derating of sporting rights.
Lord Graham of Edmonton: My Lords, he knows it.
Lord Kimball: My Lords, in view of the indication which I read into my noble friend's reply that he may be prepared to have a look at the unfairness of this matter before Third Reading, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hesketh Lord Hesketh moved Amendment No. 167:
Page 115, line 36, at end insert —
("(1A) A hereditament is exempt to the extent that it —

(a) is occupied by an organisation responsible for the conduct of public religious worship in a place falling within subparagraph (1)(a) above, and

(b) is used for carrying out administrative or other activities relating to the organisation of the conduct of public religious worship in such a place.").

The noble Lord said: My Lords, in moving Amendment No. 167 I shall speak also to Amendment No. 168, and Amendment No. 243CD which unfortunately was omitted from the group of amendments. I must apologise to the House for the late inclusion of Amendment No. 243CD. As noble Lords will see, that amendment does for Scotland what Amendments Nos. 167 and 168 do for England and Wales. These three amendments give effect to three modest but, I hope, helpful extensions to the existing rate exemptions for churches.
Your Lordships will recall that on several occasions during our debates concern has been expressed about the effect that parts of this Bill might have on the churches. In particular, it has been argued that whereas at present clergymen's houses receive 50 per cent. rate relief, there will he no equivalent reduction in the community charge, and that in so far as the churches feel bound to compensate their ministers for this they will be using resources that could be spent in other ways, some of which are also of concern to my right honourable friend with his responsibility for our heritage.
I have explained to the House why we think that it would be inappropriate to treat clergymen differently from their parishioners for the purposes of the community charge, and indeed I doubt whether most clergymen would wish it. As was mentioned on Second Reading, however, we have looked at whether there are other ways in which we might assist the Churches. These amendments, as I hope the House will agree, are a welcome step in that direction.
The first of them, Amendment No. 167, exempts from rating what I would describe broadly as church administrative and ancillary buildings. At present there is an exemption for churches—that is, the actual place of worship—and for most church halls. Other church buildings are liable to rates, though they normally receive 50 per cent. mandatory relief as charities and may have the other 50 per cent. remitted by the local authority.
The amendment extends the full exemption to what are broadly described as buildings used for carrying out administrative or other activities relating to the conduct of public religious worship. That will include the national and local administrative headquarters of the various

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denominations. It is also designed to include such buildings as seminaries for the training of ministers, since their existence is clearly an essential prerequisite to the conduct of religious worship.
I should perhaps stress that the exemption applies to all denominations, not just the established Church. The only limitation is contained in the reference to public religious worship, which may exclude some sects which confine admission to their services to initiates.
The exemption will not extend to, for example, social or welfare facilities provided by the Churches, nor to bookshops and other commercial activities. The reason for this is that such buildings are no different from equivalent facilities provided by charities and other organisations, and it seemed wrong to treat them more favourably. Such buildings will, however, continue to qualify for 50 per cent. mandatory and 50 per cent. discretionary relief.
The second amendment, Amendment No. 168, relates to church halls. At present these are generally exempt from rating. If, however, they are let for non-church purposes, and the income exceeds the expenditure attributable to the lettings, they become rateable with the rateable value being equal to the excess income. Besides other considerations, it seems to be a waste of valuation officers' time to have them ferreting about in the accounts of church halls to find out whether the amount that the local amateur dramatic society paid to hire a church hall for a week exceeded the extra cost of the caretaker's overtime. We have no evidence that church halls are used for large-scale commercial purposes which ought to be rated to avoid unfair competition. It therefore seems far more straightforward to provide that church halls should be wholly exempt. Amendment No. 168, by deleting sub-paragraphs (2) to (4) of Schedule 5, paragraph 10, achieves that result.
I am sure your Lordships will agree that we all wish well to the Churches collectively, whichever particular Church we as individuals belong to. The Churches do not seek subsidies from public funds, but it has long been accepted as right that they should benefit from favourable treatment under the rating system. These two amendments consolidate that position. I beg to move.
Lord McIntosh of Haringey: My Lords, as one who is not a member of any Church, I do not feel disposed to oppose the amendment. Since the amendments seem to be wide-ranging concessions, it would be helpful if the Minister could tell us what the cost of the exemptions is likely to be. That was considered to be an important matter when we were dealing with charities and it would be helpful to have those figures on this amendment as well.
Lord Hesketh: My Lords, the cost, which is the equivalent to the savings to the Churches, will be f1.5 million per annum.
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 168:
Page 115, line 37, leave out sub-paragraphs (2) to (4).
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 169:
Page 118, line 28, leave out paragraph 20 and insert —
("20. —(1) This paragraph applies for the purposes of this Schedule.
(2) "Exempt" means exempt from local non-domestic rating.
(3) Any land, building or property not in use shall be treated as used in a particular way if it appears that when next in use it will be used in that way.
(4) Any land or building which is not occupied shall be treated as occupied in a particular way if it appears that when next occupied it will be occupied in that way.
(5) A person shall be treated as an occupier of any land or building which is not occupied if it appears that when it is next occupied he will be an occupier of it.").
On Question, amendment agreed to.
Clause 50 [Central rating: liability]:
Lord Hesketh Lord Hesketh moved Amendment No. 170:
Page 29, line 40, leave out ("sub-paragraph") and insert ("paragraph").
On Question, amendment agreed to. 6 p.m.
Clause 51 [Alteration of lists]:
The Earl of Lytton The Earl of Lytton moved Amendment No. 170A:
Page 30, line 17, at end insert ("and notify any ratepayer affected by the alteration that he has done so").
The noble Earl said: My Lords, I apologise for returning to the fray on two amendments that stand in my name and that of the noble Lord, Lord Ross of Newport. Both amendments are somewhat technical but I feel strongly enough about them to want to investigate matters a little further. Amendment No. 170A deals with the right of a non-domestic ratepayer to be notified of any change in the entry on the local or central rating list.
In Committee I thought that I had extracted from the Minister a plausible answer, but upon reading it afterwards I continued to have some doubts. In particular, he said that the ratepayer is informed of the level of his valuation when he receives a rate demand, but of course that demand may come a long time after the alteration to the valuation list is made. It may be weeks or months. If it does not affect the valuation as such, and therefore does not come through in the form of a revised rate demand, it may not turn up until the following April. This is an important point: it may be too late for the ratepayer to make legally valid representations on the alteration.
There is no doubt in my mind that the Bill will produce a large number of changes and that there will be a great deal of fine tuning on the way. I contend very strongly that a non-domestic ratepayer is as much entitled to know of any changes in his entry in the valuation list that affect his property as a private taxpayer is entitled to know of changes in his PAYE code.
It is not enough to say that a copy of the list will be available for inspection at the local town hall, or that the matter will be apparent from a rate demand which, as I have said, may arrive some time after the event. I am seeking a categoric statement from the Minister that all changes in description and valuation will be notified to the ratepayer as at present and as

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a matter of right. I do not feel that that is too much to ask.
Many noble Lords will wonder why I am so troubled by this particular point. However, I should point out that rateable values are used commercially for very many purposes which are not strictly related to the amount of rates payable as such. They may relate, for instance, to the apportionment of service charges. Under the landlord and tenant legislation there may be alterations to compensation receivable from a tenant arising out of an alteration in the rateable value.
So, quite apart from the total rates bill per se, these things can have a considerable impact on the occupier. In composite hereditaments particularly —an area which will, I feel, be something of a minefield for the future—the proportion charged to rates will be a particularly relevant criterion to the occupier, while the description for rating purposes of the premises may be of importance to landlord and tenants alike. I ask the Minister to reconsider and clarify his earlier response in respect of that particular item.
Amendment No. 170B is on a different point altogether. There is a misprint in the wording of that amendment. It should read:
"rateable occupier of a hereditament",
and not:
"Ratepayer occupier of a hereditament".
I can only apologise to the House that I did not pick up that error in time for it to be altered before today. That amendment is a distillation of several that I moved in Committee. In short, it sets out to give every occupier of a non-domestic rateable property the right on at least one occasion within the five-year currency of a valuation list to make a general proposal to alter his assessment on valuation grounds. There may, of course, be other occasions when alterations will be made and when a right of appeal will arise, such as changes in the physical nature of the hereditament, but I am not concerned with those in particular.
When I moved some similar amendments in Committee, the Minister confirmed that his earlier proposals had been modified. He said that he intended to provide for a right of appeal by a new occupier on any grounds provided—and this is the important point —that an appeal had not already been made against the valuation in question.
There are literally dozens of circumstances in which a previous appeal against a valuation by a ratepayer may not be in the least acceptable to another ratepayer moving into the premises. Quite apart from the unique circumstances of each occupant, the earlier appeal may have been withdrawn without it being pursued any further, or the ratepayer may not have been professionally represented, or the presentation of his case may have been related to some unconnected factor that was itself in turn related to the rateable value. A particular example of this may be matters to do with compensation under the landlord and tenant legislation. Therefore, I ask the Minister to reconsider. If his argument is still that the inland
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revenue valuation office is likely to be swamped with appeals resulting from this small plea for the non-domestic ratepayer, I believe that such an argument would be misconceived. I suspect that non-domestic ratepayers will guard very jealously their one unrestricted general right of appeal.
I do not see any adverse knock-on effect of these amendments. But if there is a restricted right of appeal there may be a helter skelter flurry of activity while non-domestic ratepayers jockey for position between now and 1st April 1990. If the way in which the legislation operates after 1st April 1990 is slightly more liberal, that may have advantages in the short-term which the Minister may have overlooked.
There is one other knock-on effect which I wish to bring to the Minister's attention. I have already mentioned this to him. if there is an unduly restricted right of general appeal, I envisage a proliferation of appeals connected with alterations to the physical hereditament which will be as it were, attempts to get round the legislation. A typical example of this occurred under a piece of rating legislation, the Local Government Act 1974, and in particular Section 21 of that Act. That section provided that certain items in domestic properties should not be taken into account when valuing those properties for rating purposes. The result was that if they could see that it was going to be to their advantage to remove such things as garages and central heating plant from their houses, householders did so before making a proposal to reduce their assessment on the grounds that those facilities were no longer present. Subsequently valuation officers were debarred from making a proposal to bring the assessment back up to the level that it previously had been when those items were in due course reinstated.
I should hate to think that the Bill with which we are concerned at the moment would bring that kind of activity into play in the non-domestic sector. I strongly commend both these non-controversial amendments to your Lordships' House. I beg to move.
Lord Ross of Newport: My Lords, I rise in support of the amendments so ably spoken to by the noble Earl, Lord Lytton. Amendment No. 170A is only equitable because it relates to Clause 51(1) where a valuation officer:
"alters the list before it comes into force".
The list covers the period between 31st December and 1st April. Surely it is only right that if there is to be an alteration to the list before it comes into force, the ratepayers should be notified of that fact. I should have thought that the Minister would agree with that.
I thank the Minister for writing to me about the matter of material change of circumstances. In Committee I made the point very strongly that I considered that owners were just as entitled as occupiers to be included in the right to make an appeal where there had been a change in the character of the property or in the rental value. The owner owns the freehold in a property and he has an interest in its value. If the owner's tenant does not appeal and the owner thinks there should be an appeal, surely that should apply to him also. I know that the

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Minister did not turn down this proposal. He said that he would consider it further with the professionals involved. However, I wish to make the point again. I believe that the owner has just as much a right as the occupier to make proposals, if the occupier fails to do so and fails to look after the owner's interest. If the occupier fails to make a proposal he is not looking after the owner's interest.
I wish also to support Amendment No. 170B. I know what the Minister is getting at. He thinks that there will be far too many appeals and that the valuation courts will be inundated. Therefore, the appeals procedure has been restricted to the first six months. I think that many appeals will be lodged in those six months, but that many of them will probably be withdrawn after discussions with the valuation officer. But the courts will not handle the domestic side at all. There is a recipe for people who make unnecessary appeals. In the case of frivolous appeals, the courts can impose the sanction of costs if they believe that a case has been unnecessarily pursued.
I do not believe that people are going to submit proposals willy-nilly for the whole period of five years before there is a further review. Therefore, it is only right that there should be at least one opportunity for each separate occupier, where there has been a change, to make an appeal during the period of the list rather than restricting the right to the first six months. That seems equitable.
Lord Graham of Edmonton: My Lords, we on these Benches support the sense of the amendments. They have been reasonably moved. As we move towards implementation of the Bill, the Minister should bear in mind that the assessment and perception by the public of how fair the Government have been—even to the extent of falling over backwards—will have a great deal to do with how well the Bill works. If the amendments are not accepted, the operation of Clause 51 will be seen to be harsh, if not punitive, by many people. The noble Earl, Lord Lytton, and the noble Lord, Lord Ross, have provided the Minister with an opportunity to accept the amendments in principle as he has done three or four times at Report stage and to come back at the final stage of the Bill with other amendments.
The noble Lord, Lord Ross, is right in saying that there will be many people who will try to take advantage of any loophole to delay and procrastinate. However, we are talking about reasonable people who are affected personally and who are entitled not only to a fair crack of the whip but also to a second bite of the cherry.
6.15 p.m.
The Earl of Caithness: My Lords, Amendment No. 170A repeats an amendment which was tabled by the noble Earl, Lord Lytton, in Committee and which I undertook to look at further. I have done so, but I am afraid I have not been persuaded that an amendment would be justified.
The amendment would require the regulations to include a requirement that the charging authority
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inform the ratepayer if his entry on the list were altered during the period between the list being deposited with the local authority and its coming into effect. In our view such a provision is unecessary. The arrangments set out in the Bill seek to parallel those of the existing system. During this period, the list is provisional and must be treated as such. If ratepayers look at the list during that period to get a first indication of what they are likely to have to pay, they will know that it is still subject to amendment by the valuation officer in the light of new or more accurate information. For this reason there is no provision either in the Bill or in the present legislation for a right of appeal against a change in a ratepayer's entry in the list during the three-month period. There is no point in appealing against something that is provisional and still subject to amendment.
I can understand the noble Earl's argument that a ratepayer who has looked at the draft list may be taken by surprise if when he receives his rate bill in April, it is based on some substantially different figure. But this is likely to be a rare event, occuring only when there has been some substantial change in the building of which the ratepayer is just as well aware as the valuation officer. Most alterations to the draft list will be technical. It would be unduly time-consuming and costly to require ratepayers to be informed of every tiny change in description. Once the list comes into force the situation is of course different and we shall be providing by regulation for the valuation officer to be required to inform the ratepayer of any alteration to his entry and for a right of appeal.
In the light of what I have said I hope noble Lords will be able to agree that the Bill does no more than continue the present position. In that connection, perhaps I may say to the noble Lord, Lord Graham of Edmonton, that I think that position is very tenable. It is one that the public will understand because the rights of the ratepayer are adequately protected.
I turn to Amendment No. 170B, which would entitle a ratepayer to make one proposal on general grounds for the alteration of his entry on the list during the currency of the list. Noble Lords will recall that we have already had a discussion of appeal rights at Committee stage during which I fully explained the Government's conclusions on the recent consultation document and the rights we intend to provide for by regulation. I also explained the need for flexibility and adaptability which lies behind our wish to provide for appeal rights through regulations rather than primary legislation. I explained that there is to be wide consultation on the framing of these regulations.
Our proposals differ from the existing position solely in the way they deal with the right of appeal on general grounds; that is, against the value first entered in the new list. The right of appeal due to a material change in circumstances or against an alteration of the list by the valuation officer will remain the same as at present.
The present law provides for an unlimited right of appeal on general grounds throughout the duration of the list. Our intention is that the right to propose

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an alteration in the rateable value entered in the new rating list at a general revaluation should have to be exercised within six months of the new list coming into force. The present unlimited right of appeal on general grounds gives rise to a problem of a continuous flow of often misconceived appeals, sometimes even regardless of whether an earlier appeal has been rejected.
I am aware that the noble Earl's amendment would close off that latter possibility by providing for an appeal only once on general grounds. But misconceived appeals may also result where, for example, a businessman is in financial difficulty and decides to take pot luck with the possibility of coming before a sympathetic tribunal. Such speculative appeals, even if they occasionally secure a small reduction in rateable value, place a disproportionate burden on valuation officers and the local valuation courts.
In his strong argument for the amendments, the noble Lord, Lord Ross of Newport, said that if there were frivolous appeals, there was a power to award costs. I beg to differ. I do know of a power to award costs on frivolous applications. Perhaps the noble Lord will be able to correct me on that point.
During our consultations it was put to us strongly by various representative bodies and professional organisations that responded to our consultation document that some occupiers simply do not bother to appeal and that a new occupier can come in and find that his rateable value is substantially out of line. It is for this reason that we have said that we also now intend to provide for a right of appeal by the occupier on general grounds throughout the duration of the list after a change of occupier provided the valuation in question had not already been appealed against. That final qualification is one we might be willing to reconsider. The point has been put by the noble Earl that sometimes occupiers enter appeals but do not pursue them actively and therefore fail to secure any reduction and that the subsequent occupier should not lose out in these circumstances. That is a good point and I am prepared to look again at it when we come to make the regulations.
A great deal of argument in this area seems to be postulated on the assumption that if a ratepayer does not appeal, he will be paying too much in rates. This is not so. Mostly valuation officers get it right. Sometimes they are wrong. It does not seem unreasonable to expect a ratepayer to decide within six months whether he considers his new rateable value to be fair, to take professional advice if necessary and to lodge an appeal.
In conclusion, perhaps I may say to the noble Lord, Lord Ross, that owners will have the same right of appeal as occupiers when the list first comes into force. They will have the same right as occupiers when the list is altered. The difference is that a new owner will not have the same special right of appeal as a new occupier. That provision is perhaps wider than the noble Lord suggested.
Our proposals ensure that the ratepayer remains fully protected, while at the same time reducing the flow of misconceived and speculative appeals that can clog the system at present and hold up genuinely
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based appeals. I ask your Lordships to bear in mind that we are talking here about a power to make regulations, on which we shall consult further with the professional bodies and consider their views carefully. On several issues we have already been persuaded to change our proposals. On this one, despite listening carefully, we have not.
Perhaps I may make one final point to both the noble Lord and the noble Earl, who are as concerned with the industry, as I was and still am. I am sure that they will agree that it will have the benefit in future of the five-yearly review and that many of the problems which all surveyors have faced and which have been mentioned by the noble Earl and the noble Lord this afternoon will not need to be faced in future when we have a regular five-yearly review.
Lord Ross of Newport: My Lords, perhaps I may respond first. I apologise if I have misled the House on the question of costs in valuation courts. One would certainly award costs on frivolous planning appeals, from which I have suffered. If there is no provision regarding frivolous appeals on valuations, I suggest that is one way in which the Government could get round the problem. If I have misled the House, I apologise.
Perhaps I may also say that the noble Earl, being a practitioner, will know what will almost certainly happen as soon as the lists are published, Rating surveyors who have only six months in which to get going will undoubtedly advise their clients to slap in appeals. Therefore, valuation courts will have vast numbers of appeals, some of which may later be withdrawn after discussion with the valuation officer. I should have thought that the second amendment would have lightened the load of the valuation officer, which is something about which I know the Minister is concerned. After six months there would still be opportunities to submit that appeal, one of which would occur on change of occupier. I still think that a new owner who purchases a property half-way through the five-year period should also have that opportunity.
I shall leave that point and hope that it will be raised again in the noble Earl's deliberations and that he will give it some further thought. I do not think that we should be seen to be too restrictive in these matters. I do not believe that the courts will be inundated once they have got through the initial burst of appeals. They will undoubtedly receive appeals because people will be frightened to death at some of the assessments and will not know what the rate in the pound will be or will just be finding out. I think that many people will almost certainly submit appeals. After that I think, as the Minister rightly says, the situation will simmer down. Once there are five-yearly reviews that situation will not happen again and the role of the courts will be much less. So far as I know, valuation courts at the moment are hardly inundated with work. I leave it to the noble Earl, Lord Lytton, to decide what he wishes to do about this amendment.
The Earl of Lytton: My Lords, first of all perhaps I may thank the Minister for his very helpful replies to my two amendments. I should also like to thank

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the noble Lords, Lord Ross of Newport and Lord Graham of Edmonton, for their support. I should particularly like to express my thanks to the Minister and his department for the very helpful way in which they have dealt with various queries that I have raised over the past weeks. That has certainly been of great assistance to me.
I note what the Minister said about Amendment No. 170A; namely, that it is unnecessary. I think that he has very fairly put the matter in sharp focus. I accept that in the relatively limited circumstances of the period between the deposit of a new list and its coming into force it would be an administrative headache to include a right of notification, especially having regard to the provisional nature of the list. Therefore, comforted by his assurances regarding what will happen once the list comes into force and the notification procedures that will be adopted after that date, I feel it unnecessary to press that amendment.
With regard to Amendment No. 170B, I was very gratified to hear the noble Earl say that he will reconsider the point as part and parcel of the consultations that he is to enter into in compiling the regulations which will form the administrative machinery of the Bill. I am grateful to him for that assurance. The position depends very heavily on the quality of the valuation list that will result from the present revaluation process. I am particularly grateful to the noble Lord the Secretary of State for Trade and Industry for replying to a query that I had relating to the funding of the Inland Revenue Valuation Office to ensure that that is dealt with satisfactorily.
I think also that it is fair to say that the five-yearly revaluations will be of great assistance. Of course a lot can happen in a period of five years. I am only concerned that in a rapidly changing property market—which will not change any less rapidly because of the revaluation and a national non-domestic rate—we shall not find that there are local hot spots or cold spots, as the case may be, in the property market which cannot be rectified for long periods; namely, until 1995. I have always said that I thought that that was a long time to wait for justice to be done. My only consolation is that the Minister has confirmed that there will be grounds for an appeal where there are physical changes in the locality.
All in all, I am considerably heartened by the response of the Government. Therefore, I beg leave to withdraw Amendment No. 170A.
Amendment, by leave, withdrawn.
[Amendment No. 170B not moved.]
Lord Middleton Lord Middleton moved Amendment No. 171:
Page 30, line 42, leave out from ("effect") to the end of line 43.
The noble Lord said: In moving Amendment No. 171 I should like to speak also to Amendments Nos. 172 and 191.
Subsections (6)(a) and (b) allow the Secretary of State to make regulations empowering alterations of the rating lists to be retrospective. That seems to be
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contrary to the fundamental principal that the citizen should not be penalised by retrospective legislation. A breach of that principle is bad enough, but surely the provision in Clause 51 is worse. That provides for the regulations, which could not be amended by Parliament. Subsection (6) would give power to a valuation officer to increase the rateable value of business premises from some date in the past.
I should be grateful if my noble friend the Minister could say what possible reason there could be for including this apparently objectionable provision in the Bill. I beg to move.
Lord Peyton of Yeovil: My Lords, perhaps I may briefly support what my noble friend Lord Middleton has said. All the time I was a Member in another place the establishment persisted in its attempts from time to time under different governments to introduce retrospective provisions. If there is not some very good reason in this case—and it is certainly not apparent on the face of the Bill—I hope that my noble friend will look again at the matter. As my noble friend has pointed out, the whole principle of retrospective legislation, the details of which are not approved by Parliament, is odious.
Lord Dean of Beswick: My Lords, I rise briefly to support the amendments moved and fully explained by the noble Lord, Lord Middleton, and supported by the noble Lord, Lord Peyton. As the noble Lord, Lord Peyton, said, in the past we have seen governments of various political colours indulge in retrospective legislation. It is not a good thing.
While this measure is not in itself a financial measure, the end result is a financial charge. I think that to talk in terms of retrospection is more than a little unfair. On the day the Bill becomes an Act people will know where they stand and I think that it ought to be left at that and not subject to changes imposed retrospectively by the Secretary of State. On that basis, we support the amendment as moved. We think it is worthy of deep consideration and of acceptance.
The Earl of Caithness: My Lords, with respect to my noble friend, I have to say that I fear he may be under some misapprehension about the present situation. The present situation under Section 79 of the General Rate Act is that an alteration to the list following a proposal by the valuation officer or the ratepayer can be backdated to the start of the financial year in which it is made or the date of the relevant change of circumstances, whichever is the later. So any retrospective effect can never exceed 12 months from the date that the alteration is proposed. It can be more than that from the date when the alteration is made, which may not be until after appeal proceedings have been settled. I shall come back later to that point.
Broadly the Government's intention is to preserve the existing position. I should say that the thrust of my noble friend's amendment is one with which the Government have some sympathy. Indeed, in our July 1987 consultation paper, Amendments to the Rating Legislation in England and Wales, we proposed that there should be a time limit, possibly

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of three months, on the period for which a proposal could be backdated.
Our object in making this proposal was to avoid the situation that sometimes arises at present whereby a ratepayer is notified in March that, as a result of an alteration to his premises nearly 12 months earlier, his rateable value and therefore his rate bill for the whole financial year would have to increase. We made it despite misgivings that it would encourage ratepayers to delay notifying local authorities of the completion of improvements.
The response to this proposal from private sector respondents to this part of the consultation paper was, I have to say, decidedly unenthusiastic. Most respondents focused not on the benefits of avoiding backdated increases through alterations proposed by the valuation office where a building had been improved or expanded, but rather on the possible cost to the ratepayer if his claim for a reduction where the amenities of the building had deteriorated could not be backdated by more than three months.
On the basis of that consultation exercise, the Government drew the conclusion that—and I think that this is the key point as regards my noble friend's amendments —the present arrangements on backdating of alterations to the list is not seen by ratepayers or by the profession as being to the disadvantage of the ratepayer. We decided to continue the present system.
I therefore suggest to my noble friend that not only would his proposal have the disadvantages of encouraging ratepayers to delay notifying local authorities of the completion of improvements to their property but it would also provoke strong opposition from those whom it seeks to help—the ratepayers.
I have to say that my noble friend's amendment as drafted would, I think, go much further than he intends. It would not only rule out alterations to the list being made retrospective to before the date a proposal is made (which is I think what concerned him and on which there are legitimate differences of opinion); it would also rule out the backdating of alterations which are made when a proposal is eventually settled after a tribunal hearing. I am sure my noble friend would agree that it would be unjust if, when a ratepayer succeeds in showing that his rateable value is too high, he could not have the reduction backdated at least to the date when he first sought to have it reduced. We have tested opinion on this issue and I have to tell my noble friend that it is opposed to his proposal.
6.30 p.m.
Lord Middleton: My Lords, I am certainly reassured by my noble friend's statement that a revaluation could not be backdated more than 12 months except in certain circumstances. In view of that explanation and his technical criticism of the amendment, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 172 not moved.]
Lord Hesketh Lord Hesketh moved Amendment No. 173:
Page 31, line 8, leave out paragraph (a) and insert —
("(a) provision requiring payments to be made,
(aa) provision requiring repayments to be made together with payments of interest at a prescribed rate, and").
The noble Lord said: My Lords, in moving this amendment I should also like to speak to Amendment No. 221. The purpose of Amendments Nos. 173 and 221 is to provide for payment of interest by the charging authority where a rateable value is reduced as a result of an appeal and a repayment is made to the ratepayer. The second amendment simply provides that such amounts shall be met in the first instance from the collection fund. We already have power to provide in regulations that such costs may be wholly or partly offset against authorities' contributions to the national pool.
The amendments discharge a commitment made at Committee stage when the noble Earl, Lord Lytton, tabled an amendment with the same intent but which we were unable to accept as it stood for drafting reasons. They provide for interest to be at a prescribed rate. We shall consider and consult further before deciding how that rate should be set.
It must be right that people who appeal successfully against their rating valuation, and have thus effectively paid too much in rates, should be reimbursed for the use of their money by the payment of interest, especially when they may have had to wait some time because of the period it can take before appeals to tribunals can be heard. I beg to move.
Lord Dean of Beswick: My Lords, I think that the Minister when giving part of his reasons for moving this amendment used the word "consult". Can be explain what he means by that—consult in what terms, with whom and when? It is simply a request for information.
Lord Hesketh: Those involved, my Lords!
Lord Graham of Edmonton: My Lords, can the noble Lord make it quite clear that the repayment of interest upon delay applies to individuals as well as to businesses? Is he saying that the impact of this amendment is to place the individual charge payer in the same position as the business charge payer? If so, we shall be satisfied. We should like the Minister to give some indication as to whether that is so, because that is the impression that he gave.
Lord Hesketh: My Lords, similar arrangements are not proposed in respect of overpayments on the community charge because that would generally involve much smaller amounts and local authorities would be unable to deal with the administative effort involved.
Lord Graham of Edmonton: My Lords, how does the noble Lord know that? Is he saying that the Government decided that the local authorities were not prepared to meet the demand?
It is amazing how an impression given by the noble Lord can be altered by asking a simple question. The impression that was given was that this was a fair business, that is to say that anyone who had paid and

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then had to be repaid because he had been charged too much would get back that overpayment. It needed my question to ascertain that what was really meant was businesses and not individuals.
The noble Lord says that he is not bothered about this matter because the sums involved are small. To a person of small means a small amount is just as valuable as a big amount would perhaps be to someone else. I find it very unreasonable of the noble Lord glibly—or perhaps I should say tritely—to say that he knows that local authorities have said that the administrative burden is too great. I should be very surprised if any local authority were prepared to say to its ratepayers or charge payers, "In those instances where you have been overcharged, that is to say when we have had your money and have been using it in our funds, when we repay it you will not get interest". I should like to know the local authority that would say such things.
If the noble Lord is an individual who places great store on consultation, who listens and then puts that consultation into effect, I ask him to reflect and tell the House how he has formed the view that the administrative burden of this work would be too great for local authorities.
Lord Hesketh: My Lords, as the noble Lord will be aware, the community charge is paid in instalments and the situation is rather different from that of the NNDR, which of course is also payable by individuals as well as businesses.
Lord Graham of Edmonton: My Lords, the noble Lord has successfully wriggled a little way out of that difficulty. Of course I understand that the NNDR will be paid by individuals. However, I think that the noble Lord could have been much more helpful and sympathetic than he was in his original reply.
On Question, amendment agreed to.
Schedule 6 [Non-domestic rating: valuation]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 174.
Page 119, leave out line 22 and insert —
("(a) matters affecting the physical enjoyment of the hereditament,").
The noble Earl said: My Lords, in moving Amendment No. 174 I should like at the same time to speak to Amendments Nos. 175, 234, 235, 236 and 237. These are further amendments arising from the Addis and Cakebread cases which were the subject of new clauses adopted at Committee. As the House will recall, my right honourable friend the Secretary of State announced on 9th March his decision to amend both the present and the new rating systems in order to restore the law on the matters that can be taken into account on valuations made between general revaluations to what it previously had been understood to be.
When the House was in Committee, I moved a new clause, now Clause 133, which achieved that result for the present rating system for its remaining life. I explained that we were still considering the drafting of the amendments that would be needed to produce
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the same results for the new non-domestic rating system and that we would table them at Report stage.
The first two amendments in this group, Amendments Nos. 174 and 175, fulfil that commitment. Broadly speaking, they do the same as those we discussed in Committee; that is, they provide that where a property is valued between general revaluations, for example because it has been altered, the valuer will take account of its actual physical state and the physical state of the neighbourhood as it now is but will take economic factors, including the general level of market rents, as they were at the time of the last general revaluation.
I wish to explain two points. The first is the reference to "matters which, though not affecting the physical state of the locality, are nonetheless physically manifest here". To cast a light on that, I would give the simple example of a bus service. A bus service is physically manifest in an area. What we are seeking to rule out are changes based on purely economic or market-related factors that have no effect on the value the occupier derives from his property. Thus, for example, it should not be possible for the valuation officer to argue for an increase in rateable values when office rents in the City of London went up before "Big Bang", nor for a ratepayer to seek a reduction if they fell when the stock market fell. Those are the sort of matters which we think can be sensibly dealt with only at a general revaluation.
In drafting these further amendments, we gave some more thought to their precise wording, and came up with something slightly different from the words we had used in Clause 133. There is no material difference in the meaning. However, in order to avoid any inference that, because different words were used, there must be some difference in meaning intended, we decided to carry our second thoughts about Schedule 6 back into Clause 133. This is done by the fourth and fifth amendments in group Amendments Nos. 235 and 236.
When we discussed the Addis and Cakebread cases in Committee, your Lordships will recall that concern was expressed over the amounts that local authorities are being required to repay to ratepayers where proposals to reduce or delete certain entries from the revaluation lists were made before the changes to the law in Clauses 133 and 134 take effect. However, in addition, some ratepayers affected by the Addis and Cakebread decisions have made applications under Section 9 of the General Rate Act for the refund of up to six years overpayments not covered by proposals. In doing this they may well have in mind the implications of your Lordships' recent decision arising from the case of Totter Hamlets v. Chetnik Developments, in which it was held that the discretion of an authority under Section 9 is limited when an overpayment of rates is made as a result of a mistake in law.
As I indicated when this issue arose at Commitee stage, we are doubtful that local authorities could be required to make Section 9 refunds as a result of the Addis and Cakebread cases. But nor do we believe that they should, and I promised at that time that we would be tabling an amendment to clarify that

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position. Amendment No. 234 ensures that, where rates were duly paid on the basis of the law as it was generally understood at the time, no repayments under Section 9 are due even if the prevailing interpretation of the law is subsequently found to be incorrect.
As your Lordships will he aware from the debate in Committee, local authorities stand to lose some £120 million by way of proposals made, in the light of the Addis and Cakebread decisions, before the change in the law embodied in this Bill. This is the necessary consequence of those decisions. Were Section 9 refunds to be available in addition, this sum could more than double. Section 9 was never intended to be used in this way and it would be unreasonable to ask local authorities to bear the additional cost. This amendment ensures that they need not do so. I beg to move.
On Question, amendment agreed to.
6.45 p.m.
The Earl of Caithness The Earl of Caithness moved Amendment No. 175:
Page 119, leave Out lines 26 to 29 and insert —
("(d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and
(e) the use or occupation of other premises situated in the locality of the hereditament.").
On Question, amendment agreed to.
The Deputy Speaker (Lord Murton of
Lindisfarne): My Lords, if Amendment No. 175ZA is agreed to, it pre-empts Amendment No. 175ZB.
Schedule 7 [Non-domestic rating: multipliers]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 175ZA:
Page 120, line 38, leave out from ("concerned") to end of line 40.
The noble Lord said: My Lords, the first amendment, Amendment No. 175ZA, would remove the Treasury's power to increase the national non-domestic rate index by less than the increase in the retail prices index. The second amendment would allow the Treasury to increase the index by less or more than the RPI.
During the Committee stage, Opposition amendments were moved which would have replaced the RPI with a local authority cost index. This would have more accurately measured the cost to the non-domestic sector of the local authority services they consume. But the Government justify their proposals on the following grounds. There is buoyancy in the rate base which will increase the yield from non-domestic rates. The Government may wish to give back to the business community some of the extra revenue being generated. Business rates are now higher than the Government would like. They would like over the longer term to be able to reduce the business rate burden. Loading cost increases above the RPI on to poll tax payers will enhance accountability, thereby forcing authorities to reduce expenditure.
During the debate in Committee, the Minister emphasised the business rate. It is important to
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remember that the non-domestic rate is borne in the following way: by the commercial sector 51 per cent., by industry 19 per cent., and "other"—including statutory undertakers, local authorities and so on —by 30 per cent. The Minister also referred to the need to protect business from excessive rate increases. A large amount of rate increases in recent years can be attributed to the Government's substantial reductions in rate support grant, from 66 per cent. to approximately 50 per cent.
It is true that local authority cost increases have been in excess of the RPI, but this is mainly because local authorities have had to follow market forces in negotiating pay increases for employees. This is across the board in local authority wage rates that are negotiated. Over the last few years there has always been a drift away from the authorities. The authorities have had to make up the difference from the general rate fund. I beg to move.
The Earl of Caithness: My Lords, as the noble Lord, Lord Dean of Beswick, has explained, the effect of the amendment would be to delete from the Bill the power for the Government to decide in any year to increase the national non-domestic rate poundage by less than the rate of inflation, subject to affirmative resolution in another place. It would thus mean that business rates automatically rose every year by the full amount of the increase in the retail prices index.
I explained in Committee that the Government intend that in a normal year—in the great majority of years—that is what will happen. We think it is right that businesses should go on paying broadly the same proportion of local government spending as they do now. Of course, if local authorities increase their spending, businesses will pay less in proportion, but they will go on paying the same amount in real terms. In any case, with the new disciplines of accountability through the community charge, we do not expect local authority spending to display the same endemic growth as it has done in the recent past. So the power to increase rates by less than inflation is decidedly not one that we expect to use routinely. Rather it is a power to have available for use if occasion requires.
When we debated the subject in Committee, I set out the grounds on which the Government might consider using the power. One would be to offset the natural buoyancy in the system, without which the yield from non-domestic rates will tend to rise by 1 or 2 per cent. a year as the stock of buildings rises. Another would be to give business a share of any efficiency savings that local authorities are able to make—and we know from the work of the Audit Commission that there is appreciable scope for such savings. A third would be if my right honourable friend the Chancellor of the Exchequer were to decide to adjust the balance of business taxation between business rates and some other tax on businesses. Some representatives of the business community have argued that we should use the power for this reason, on the grounds that taxes on profits pose less of a threat to businesses in difficulties. We have not accepted their arguments; but it is right that the power should be there for possible use. I come back to the point that in any particular year, none of these

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reasons is likely to apply. Index-linking will be the norm, with under-indexation very much the exception.
Concern has been expressed that using this power would blur the accountability to community charge payers about which the Government are as concerned, because it could lead to increases in the community charges which did not result from increases in local authority spending. We agree that that is an objective devoutly to be avoided. That is why, as I have explained, the likeliest uses of the power would be in circumstances where the yield of business rates would otherwise increase, or where the reduction was offset by an increase in the proceeds of some other business tax which might be used to increase the amount available in Exchequer grant. When we come to the next amendment of the noble Lord opposite, which would allow the Government to raise business rates without any safeguard, we shall see the the real concern is not to protect community charge payers, but to allow local authorities to go on increasing their spending without fear of the consequences. The Government, on the other hand, are offering business the crucial guarantee that rates will rise by no more than inflation. This will give business the stability it needs to plan for the future. But we have also listened to the anxiety of business that rates are too high already. We think it is right that there should be the possibility of an occasional downward adjustment.
Lord Dean of Beswick: My Lords, I do not think that I have misunderstood the Minister, but I conclude from what he was saying was that if there are surpluses they would be made available in rebate form to the business sector, but that no such rebate would be available for the domestic sector. Have I understood the Minister correctly to say that rebates would be available? If he is saying that, it will appear overwhelmingly to the domestic poll tax payer and ratepayer that there is a privileged sector within the local community —that is, the commercial sector. If rebates are available to only one sector, that is a biased way in the extreme of looking at it. The Minister may shake his head and may think that I have misrepresented him, but I am putting myself in the position of the ratepayer who finds that somebody in commerce close to him receives a rebate because that sector has done rather well, but no rebates would be available to him as a domestic ratepayer. It may be good for the commercial sector and no doubt it would be welcomed. But I should have thought that a ratepayer in a local authority with a healthy bank balance at the end of the year is as much entitled to benefit as the commercial sector from that healthy balance. If I have misunderstood the Minister perhaps he will correct me.
The Earl of Caithness: My Lords, with leave of the House, I should perhaps clarify the situation. As I understand it, if there is a surplus both the domestic and the business community charge payers will benefit. We are considering an exceptional circumstance where it might be appropriate to give the benefit back to business by a slight reduction in
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the increase. As I explained fully, we do not expect this to occur on a regular basis.
Lord Dean of Beswick: My Lords, it still shows an element of more favourable treatment to one sector. However, I have no desire to test the will of the House and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 175ZB not moved.]
Clause 53 [Special provision for 1990 –95]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 175A:
Page 31, line 17, leave out subsections (2) to (4) and insert —
("(2) The regulations may contain such provisions as are mentioned in subsection (3) below as regards any case which falls within a prescribed description and where —

(a) as regards a hereditament or hereditaments the chargeable amount for a chargeable day falls to be determined under section 40, 42 or 50 above, and

(b) the day falls within the financial year concerned.

(3) The yprovisions are that —

(a) the chargeable amount shall be such as is found in accordance with prescribed rules, and

(b) sections 40(4) to (6) and 41 above, sections 42(4) to (4B) and 43 above, or section 50(4) to (7) above (as the case may be) shall not apply.

(4) A chargeable amount found in accordance with rules prescribed under this section may be the same as or different from what it would be apart from the regulations.
(4A) Rules prescribed under this section may be framed by reference to such factors as the Secretary of State thinks fit.").
The noble Earl said: My Lords, I should also like to speak to Amendments Nos. 176, 176A, 176ZA, 176ZB, 177, 177A, 246A and 246B. This large group of amendments concerns the transitional protection that we shall be giving to those businesses which would otherwise face large rate increases in 1990.
The amendments in the names of the noble Lord, Lord Graham of Edmonton and my noble friend Lord Stanley of Alderley are grouped with the government amendments here for fairly technical reasons, but I do not want to anticipate what the noble Lords will say in moving their amendments, and for the present I shall speak only to the government amendments.
There are effectively two sets of government amendments here. The first set, Amendments Nos. 175A, 176A, 176B and 177A, are designed to improve the drafting of Clauses 53 and 54. I remind the House that the first of those two clauses deals with the transitional arrangements which will follow the revaluation and the move to the national non-domestic rate in 1990, and will last until 1995. The second of them provides the power to make further transitional arrangements in 1995 to continue the protection for those very few ratepayers facing large increases which will not have come through in full by then, and to take account at the same time of changes resulting from the 1995 and subsequent revaluations.
The drafting problem arises because the clauses as drafted referred to the transitional ceiling being based on the rate bill for the hereditament for the previous year. The problem with this is that rates are

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calculated on a daily basis, and the rates bill for the whole of the previous year would not necessarily be the appropriate baseline if liability had changed in the course of the previous year. The amendments therefore take a rather simpler approach, leaving the detail to be filled out in regulations.
At the same time the opportunity has been taken, in Amendments Nos. 176A and 177A, to give an additional reassurance to the business community by providing that the transitional regulations cannot be used deliberately to increase—or for that matter reduce—the total amount payable in business rates in any year.
The two remaining government Amendments Nos. 246A and 246B, give effect to a commitment which my right honourable friend the Secretary of State gave in another place, to provide that the regulations containing the transitional arrangements shall not have effect until they have been approved in draft by a resolution of each House. I am sure that your Lordships will agree that that is justified, bearing in mind the way that concern among the business community has focused on this issue.
No doubt we shall have further debate on these issues when the noble Lord, Lord Graham, and my noble friend Lord Stanley of Alderley have moved their amendments, but meanwhile, I beg to move government Amendment No. 175A.
The Deputy Speaker: My Lords, I should remind your Lordships that if Amendment No. 175A is agreed to, I shall not be able to call Amendment No. 176 because it pre-empts it.
Lord Graham of Edmonton: My Lords, I rise to deal in this series of amendments with Amendment No. 176A. The noble Earl and those who follow these matters closely will have sifted through the formula contained in the amendment I am pleading by comparison for special treatment for small businesses. I am not asking that they be given advantages so that others will be disadvantaged, although I recognise that, by virtue of the nexus of the community charge, if somebody is eased in one way or another then somebody else will be disadvantaged. To that extent the Government are on a good thing because few people will voluntarily accept being disadvantaged although in equity somebody else will be advantaged.
The case for the small business—the small business is defined in the amendment—is very well put. I am not suggesting that other people are better able to pay, but I am asking the Minister to consider some of the salient facts that have been given to me by the National Federation of the Self-Employed and Small Businesses. The federation tells me that on average 15 to 25 per cent. of small firms' pre-tax profits are swallowed up in rate bills compared with only 1 to 5 per cent. of plc companies. If the impact of the rate bill on small business is disproportionately as high as that, we are asking the Government whether they are entitled to some special treatment. The small business community will experience a greater change in their 1990 rate bills than will the big business community. If that happens and the Government genuinely want
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to help small businesses I am asking them to accept the thrust of this amendment. If they do not accept it, how will they help the small businesses?
Small businesses are less able than big businesses to increase prices and/or reduce costs to offset increases. I realise that I am making a number of assertions which can all be challenged, but I believe that those who have asked us to listen to their case and to provide the Government with an opportunity of taking that case into account deserve an answer. I am also told that small business shops in the high street are more at risk resulting in less good service and choice for customers. The Government may take the view that the marketplace is the marketplace, and if it is the will of consumers and shareholders that 100 shops are finally reduced to three shops, so be it. But the Government need to say something to satisfy the small businesses which feel they are to be sacrificed on the altar of efficiency in the marketplace.
The proposed amendment of a special small business rate of the NNDR of 70 per cent. of the standard rate is intended to redress the present injustice whereby small businesses pay disproportionately more in rates than large businesses. If the Government are looking for precedents, for equity, continuity or comparability, a precedent for a lower rate for small businesses has already been set by the present structure of corporation tax. If the Government find two levels of corporation tax to be acceptable, why not two levels of rates of the NNDR?
The bodies and businesses which have put their arguments to me feel very aggrieved. They are in business and they believe in enterprise. They recognise the nature of the jungle in which they operate, but they are asking for fair treatment which gives them a slight advantage because of their smallness. The smallness is spelt out in the amendment, in the amounts and in the formula. If the Government really mean what they are saying —that they support the small business nexus —the small businesses are asking the Government to put their money where their mouth is.
7 p.m.
Lord Stanley of Alderley: My Lords, it would probably be for the convenience of the House if I spoke to Amendments Nos. 176 and 177, which really relate to village shops. This problem of village shops was discussed at Committee stage, in particular the disadvantages which they face economically from the large high street retail shop, as the noble Lord, Lord Graham, said. Under this Bill, these shops will be paying a business rate on the shop part of their house as well as having to pay a personal community charge; so they could be paying twice over.
I have carefully read what my noble friend Lord Caithness said at Committee stage about the relatively lenient way these shops should be dealt with on revaluation in relation to the high street shop. Since then, he has been kind enough to take note of our concerns, and he managed to find time this weekend to discuss the matter at length with me. I am most grateful to him for that. I know he understands that we are anxious not to make it more difficult for

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the village shop to survive. I think he would agree with that philosophy.
However, I accept that the situation will vary from one rating area to another. I accept the technical difficulty in defining what is or is not a village shop. We have therefore tabled this amendment as a follow-up to the one that my noble friend tabled at Committee stage. It would allow the Secretary of State to take into account the specially disadvantaged position of certain village shops in certain areas.
The Earl of Caithness: My Lords, I turn to the amendments which have now been presented by the noble Lord, Lord Graham of Edmonton, and my noble friend Lord Stanley of Alderley. Amendments Nos. 176ZA, 176 and 177 are concerned with transitional arrangements for those relatively few businesses which will face large increases in their rate bills in 1990.
Amendment No. 176ZA, in the names of the noble Lords, Lord Graham of Edmonton and Lord Ross of Newport, is exactly the same as Amendment No. 117, tabled by the noble Lord, Lord Ross of Newport, in Committee, when it was fully discussed. The noble Lord's amendment would result in the anomalous position of there being separate transitional arrangements for 1990 and 1995 running simultaneously. This would be quite unnecessarily confusing both for the ratepayers and for the local authorities which will have to operate the system.
As your Lordships may recall, the transitional arrangements will take the form of a ceiling on the percentage year-on-year increase in rates for as long as is necessary. In addition, we have also taken power for a special lower ceiling for small businesses. We cannot yet take a final view on what is the right level for either ceiling. Some in the business community have argued that 15 per cent. is the right figure for the main ceiling, and that may not be too wide of the mark. However, as I said in Committee, we shall not know until the autumn.
If the purpose of the first part of the noble Lord's amendment is simply to draw attention to the need for the largest increases in 1990 to be spread over a period longer than the initial five-year duration of the 1990 transitional arrangements, then we are on common ground. Given that there is to be further general revaluation in 1995, it must be sensible, however, for there to be a fresh set of transitional arrangements in that year to take into account both the outstanding increases from 1990 and the effects of the 1995 revaluation. That is what we have provided for in Clause 54.
This brings me to the second strand of the noble Lord's amendment. The level of the small businesses ceiling depends on that of the main ceiling, but it is worth reminding your Lordships that my right honourable friend the Secretary of State said at Report stage in another place that it may be appropriate to set it at about 5 per cent. below the main ceiling.
Turning now to the third part of the amendment, the proposal for a 70 per cent. national non-domestic rate for non plcs occupying property with a rateable
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value of less than £30,000 at 1990 levels, as I explained in Committee this would mean that any business wanting to expand would face a massive increase in its rate bill if its rateable value increased from £29,900 to £30,000. All other businesses would have to pay more to finance that concession because about half of all properties have rateable values below £30,000, even allowing for a proportion to have plc status; which still leads us to the conclusion that we may have to increase the rate bills of other businesses by possibly 12 per cent. to 15 per cent. That is something that would not be welcomed.
Even in retailing we expect some large rate increases to be confined mostly to those who have been most successful since the last revaluation 15 years ago; that is, retailers in prime high street sites mainly in the South of England. Your Lordships will appreciate that these are the areas where larger retailers predominate. Amendment No. 176ZA does not discriminate between those small businesses which will face large increases, those which will not, and indeed those which will gain, perhaps substantially. All are to enjoy subsidy from their competitors.
I have explained that the 1990 increases will be phased over as long a period as is necessary, and that we cannot make a sensible decision on the ceiling on year-on-year rate increases until the autumn. I have also explained that the proposal for a 70 per cent. national non-domestic rate for a section of business cannot be justified and would not achieve its purpose.
Amendments Nos. 176 and 177, in the names of my noble friends Lord Stanley of Alderley and Lord Radnor, and the noble Baroness, Lady Stedman, are concerned with the position under the transitional arrangements of those traders who live on the premises. As my noble friend has explained, they are designed to permit the Government, in setting the transitional ceilings, to make further, special provision for small shops where the owner lives on the premises by taking account of the likely community charge bill as well as the rate bills.
I have to say to my noble friend that I believe there is a misapprehension which lies behind his thoughts on this amendment. It is that in the case of the live-in shopkeeper the community charge will simply be an addition to the rates bill; that is, on top of any change to the bill resulting from revaluation and NNDR. That is not so. Whereas at present the rateable value of a shop with living accommodation takes account of the value of both parts, for the future it will relate to the shop part only. Those who live over the shop, like everyone else, will pay no rates on their living accommodation but will pay the personal community charge as individuals living in a particular local authority. Therefore, the community charge paid by a live-in shopkeeper should not be regarded as a completely new burden but should be compared with the rates previously charged on the domestic part of the property. If the community charge comes to more than that, it is entirely the result of our policy of breaking the link between personal liability and rateable value and nothing to do with non-domestic rates.

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The trader who lives on the premises pays the community charge as an individual and non-domestic rates on the business part of his property. The trader who has a lock-up pays the community charge as an individual and pays non-domestic rates on his property. There is no difference. It does not matter whether one lives above the shop or a mile away: one will pay the community charge set by one's local authority and non-domestic rates dictated by the value of one's business property. If the rateable values of a shop with living accommodation and a lock-up shop are the same, the same will be paid in rates. If the shopkeeper lives in the same local authority, the same will be paid in the community charge.
I turn now to village shops, which I know are of particular concern to my noble friend. Your Lordships will recall that I said in discussion of an amendment in Committee that I doubted whether village shops as a group had a great deal to fear about the effects of the introduction of NNDR and revaluation. I said I expected the revaluation to follow the market and therefore to result in a relative decline in the rateable value of village shops at least when compared to high street shops and superstores. I have to say that that remains my view. if the competitive position of village shops is likely to benefit in this way, it is difficult to argue for them to be given special privileges under the rating system. On the other hand, if we are wrong about this, the powers in Clause 53 are broad enough to allow a special arrangement to be made.
I do not believe that the particular cushioning that my noble friend had in mind in tabling the amendments or the rate relief suggested in Committee could be properly focused on those who needed and deserved help. Both would create unfairness and distort competition.
To recap, Amendment No. 176ZA is unnecessary since its purpose—the protection of those relatively few businesses that face large increases—is already achieved by the Bill. I hope that I have already demonstrated that Amendments Nos. 176 and 177 may be based on a mistaken premise and would, if agreed, be arbitrary in their effect.
7.15 p.m.
Lord Graham of Edmonton: My Lords, I am disappointed at the Minister's reply. He said more than once that relatively few small businesses would be detrimentally affected by the implementation of the Bill.
The National Federation of Self Employed and Small Businesses has told me of the results of a random survey of 263 small businesses. I emphasise that this is not put forward as being global, and some Members would shout down the random survey premise upon which the prognostications are made. In regard to 263 small businesses, these are the small increases that they will have to bear. A total of 75 will face increases of between 1 and 50 per cent.; 62, between 51 and 100 per cent.; 39, between 101 and 150 per cent.; 17, between 151 and 200 per cent.; and 17, between 201 and 250 per cent. and 29 —increases over 250 per cent. Only 8 per cent. of the 263
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businesses, that is, 21, will have decreases between 1 and 15 per cent., based on the Government's uniform business rate poundage estimate of 45p. The average for the 263 businesses is over 250 per cent. The largest increase is 626 per cent.
Baroness Blatch: My Lords, I am fascinated by what seems to be a precise set of figures based on a revaluation that has not taken place. Therefore, the precision must at least he questionable.
Lord Graham of Edmonton: My Lords, the Minister has told the House fairly that he cannot be precise until the autumn. However, certain figures are being given. The Government have hinted at a uniform business rate poundage of 45p. Other organisations have brought forward similar figures in an endeavour to estimate. Based on a poundage of 45p, this is what has been said. If the poundage is less, the prognostications will have been alarmist. However, organisations like CIPFA and others estimate that the uniform business rate poundage may be 47p or 48p. I do not put this forward as global. I say that when the Minister attempts to tell the House and small businesses that a few people only will be affected in a small way, they will laugh all the way to their shops —as long as they are open.
Baroness Blatch: My Lords, to take my authority as an example, two years ago we put up the rate to all people including small businesses by eight times the rate of inflation. One year ago we put it up by twice the rate of inflation. Whatever the interregnum, in my view the difficulties arise in moving from the present postion to the situation when the Bill is enacted, that is, the transitional arrangements. Once that point is reached, the guarantee that the rate of increase will never be greater than the rate of inflation must surely be the prize for small businesses. I think that more damage has been done to small businesses under the present system than we can ever do under the proposed system.
Lord Graham of Edmonton: My Lords, the noble Baroness is taking advantage of Report, in which she ought not to have had the licence to do what she has done. All that she has done is to point to the dilemma of small businesses. They are fearful of the impact of the Bill. When they read what the Minister has said, I am satisfied that they will be no less fearful. As I understand the procedure, if the amendment is carried I shall be unable to move subsequent amendments. I am disappointed at the Minister's reply. I believe that he and his friends will hear from many small businesses in the country in the months ahead.
The Earl of Caithness: My Lords, with the leave of the House, I know that many figures have been banded about. There is no basis to the figures until the revaluation takes place. People are hypothesising about the increases. I am delighted that at long last the noble Lord and his party are taking small businesses as a serious body.
Lord Graham of Edmonton: Rubbish!
The Earl of Caithness: It is because of that concern of small businesses that we added the further transition provisions after 1995.
Lord Graham of Edmonton: My Lords, if the Minister seeks to make a party point, I ask him to consider the experience in Scotland. I have before me indications bearing out to good effect the prognostications for England based upon the Scottish position. There were 32 businesses in the sample. In Edinburgh there are increases of 416 per cent., in Callendar, of 415 per cent., in West Lothian, of 323 per cent., in Aberdeen, of 390 per cent. and in Glasgow, of 450 per cent. People in England are entitled to try to find out how this will occur. The noble Baroness and others are entitled to ask how one knows. If you want to read the book and not the crystal ball, the crystal ball is what the Minister said and the book is what has happened in Scotland. It is very bad.
The Earl of Caithness: My Lords, I have never denied that there would be increases, particularly in the South of England. The advantage that England and Wales will have over Scotland after revaluation will be in terms of the phasing provisions.
On Question, amendment agreed to.
[Amendment No. 176 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 176A:
Page 32, line 4, at end insert —
("(6A) In making regulations under this section the Secretary of State shall have regard to the object of securing (so far as practicable) that the aggregate amount payable to him and all charging authorities by way of non-domestic rates as regards the financial year concerned is the same as it would in his opinion be likely to be apart from the regulations.").
On Question, amendment agreed to.
[Amendment 176ZA not moved.]
Clause 54 [Special provision for 1995 onwards]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 176B:
Page 32, line 9, leave out subsections (2) and (3) and insert —
("(2) The regulations may contain such provisions as are mentioned in subsection (3) below as regards any case which falls within a prescribed description and where —

(a) as regards a hereditament or hereditaments the chargeable amount for a chargeable day falls to be determined under section 40, 42 or 50 above, and

(b) the day falls within the relevant period concerned.

(3) The provisions are that —

(a) the chargeable amount shall be such as is found in accordance with prescribed rules, and

(b) sections 40(4) to (6) and 41 above, sections 42(4) to (4B) and 43 above, or section 50(4) to (7) above (as the case may be) shall not apply.

(3A) A chargeable amount found in accordance with rules prescribed under this section may be the same as or different from what it would be apart from the regulations.
(3B) Rules prescribed under this section may be framed by reference to such factors as the Secretary of State thinks fit.").
On Question, amendment agreed to.
[Amendment No. 177 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 177:
Page 32, line 40, at end insert —
("(6A) In making regulations under this section the Secretary of State shall have regard to the object of securing (so far as practicable) that the aggregate amount payable to him and all charging authorities by way of non-domestic rates as regards a particular financial year is the same as it would in his opinion be likely to be apart from the regulations.").
On Question, amendment agreed to.
Lord Hesketh: My Lords, I suggest that this is a suitable hour to break for supper and that we should return at 8.20 p.m. I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Sex Discrimination (Northern Ireland) Order 1988
7.20 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyle) said: My Lords, I beg to move that the House do approve the draft Sex Discrimination (Northern Ireland) Order 1988 which has been laid before it under the Northern Ireland Act 1974. The draft order contains provisions analogous to those enacted in Great Britain by the Sex Discrimination Act 1986. Together with Articles 7 to 10, which replicate changes introduced in Great Britain in 1976 subsequent to the enactment of the Sex Discrimination (Northern Ireland) Order of that year, the amendment will bring Northern Ireland law into line with that in Great Britain. The contents of the order demonstrate the Government's continuing commitment to promote equality of opportunity in employment between men and women and to eliminate all unjustified discrimination on the grounds of sex.
Your Lordships will be aware that Northern Ireland has its own separate legislation and administrative framework for the promotion of equality of opportunity between the sexes and the control of unlawful sex discrimination. In reality, however, the law in Northern Ireland has tended to mirror that in Great Britain. This is hardly surprising because much of the provision is rooted in our obligations as a member of the European Community and they bite as much in Northern Ireland as elsewhere in the Kingdom. Similarly, the issues addressed in the Sex Discrimination Act 1975 and the Sex Discrimination (Northern Ireland) Order 1976, and in subsequent measures in this area, are common to Great Britain and Northern Ireland.
Of course it is important that, in following the 1986 Act, we should also take account of Northern Ireland views. For this purpose separate consultations were held in respect of Articles 3 and 11 and 4 and 5 on a par with earlier exercises in Great Britain. The totality of the order has also been the subject of consultation as part of the normal arrangements for Northern Ireland legislation of this type.
Several of the main provisions of the order, namely Articles 3 and 11 and Articles 4 and 5, stem from

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separate judgments of the European Court of Justice and are designed to meet the court's ruling that, on the issues concerned, the United Kingdom's sex discrimination legislation did not fully meet the requirements of the European Community Equal Treatment Directive.
Articles 3 and 11 are a response to a judgment which found that the 1976 order was deficient on three counts covering its exemption of private households and of small firms with five or fewer employees, and its application to collective agreements and the rules of undertakings, independent professions and occupations. Articles 4 and 5, on the other hand, reflect the court's ruling in the case of Marshall v. South West Hampshire Area Health Authority in February, 1986; that the dismissal of a woman solely because she had reached state pensionable age, where that was different for men and women, was contrary to Article 5(1) of the Equal Treatment Directive.
That, then, is the background to the production of the draft order. I now turn to deal swiftly, but with reasonable courtesy and detail, with the substance of the articles. Article 3 repeals Article 8(3) of the 1976 order which exempts private households and businesses with five or fewer employees from the requirement not to discriminate in employment. The article goes on to make a new, more limited, exception for private households. This will protect an employer's freedom to choose a man (or woman) for a job living or working in a private home where there could be reasonable objection to someone of the other sex having the degree of physical or social contact with a person living in the home, or the knowledge of such a person's affairs, which the job is likely to entail.
Noble Lords may recall that there was considerable discussion in this House during the passage of the 1985 Act on the extent to which the law governing employment relationships should impinge on a person's freedom to choose the sex of employees who will be closely involved in his or her home life. In the Government's view, the wording of' this article achieves an acceptable balance between eliminating unreasonable sex discrimination and reflecting the view of the European Court that the principle of respect for private life was also fundamental.
Article 3 also removed the exemption for small firms. Noble Lords will be aware that while Government are committed to freeing such firms from burdensome and inappropriate rules and regulations, they accept that the removal of this exemption is a requirement of our membership of the European Community. In any case, it is good economic sense for companies, regardless of size, to recruit the best person for a particular job irrespective of sex.
Your Lordships may also recall that during the passage of the 1985 Act their suggestion that partnerships consisting of five or fewer persons should also be brought within the scope of the sex discrimination legislation was accepted. This was a logical extension which reflected the increase in the number of women entering business on their own account and the Government's commitment to self employment. This provision has been replicated in
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full in the draft order. It is to be found at the top of page 3; Article 3(3).
Articles 4 and 5 are a particularly welcome extension of equality for women in employment. These articles, as I have already mentioned, deal with the implications of the European Court of Justice judgment in the Marshall case. The court in that case rule that the dismissal of a woman solely because she had reached state pensionable age, which is different for men and women, constituted sex discrimination contrary to Article 5(1) of the European Equal Treatment Directive. The judgment meant that women employees of' a state authority could rely directly on community law to protect themselves from compulsory retirement at a different age from male colleagues. As, however, the position of private sector employers was unclear the Government readily accepted that they should legislate to ensure the same rights for women in the private sector.
Article 4 makes it unlawful for an employer to treat a woman differently from a comparable male solely on grounds of age, in relation to retirement, promotion or training. In consequence of this change Article 5 gives a woman unfairly dismissed by her employer the right to claim unfair dismissal up to age 65 or as appropriate, the same retirement age applying to men and women in the organisation. Employers will have up to six months to rearrange their procedures and adjust their personnel planning to comply with the new provisions, but we hope that all of Northern Ireland's employers will implement these changes as quickly as possible.
The aim of Article 6 is to remove an administrative hurdle facing bodies which wish to provide training for persons of one sex—I shall explain that in due course —the need to be designated for this purpose by the Department of Economic Development under Article 48 of the 1976 Sex Discrimination Order. Experience in Northern Ireland, as in the remainder of the UK, has shown that this procedure has been of no particular value as a check against abuse of Article 48 and there is no practical reason to retain it. Trainers in firms or in Government areas however will still have to comply with the other strict requirements of Article 48. For example, single sex courses should only be provided for women (or men) in occupations where they are seriously underrepresented or in special need of training because they have been out of the labour market discharging domestic or family responsibilities.
I move on now to Articles 7 to 10 of the draft order. These extend to Northern Ireland the provisions which were introduced into the Great Britain sex discrimination legislation by the Race Relations Act 1976.
Article 7 will enable the Equal Opportunities Commission for Northern Ireland to prepare and issue codes of practice. The aim of such codes will be to give practical guidance aimed at eliminating discrimination and promoting equality of opportunity. The Equal Opportunities Commission in Northern Ireland already publishes a range of booklets of high quality. Its booklet on sexual harassment for example is considered to be a model and has been used as such in Great Britain. These

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codes will be admissible as evidence before an industrial tribunal and can be taken into account by a tribunal in deciding whether or not an act of unlawful discrimination has taken place. They will, therefore, be an important reference point for employers, trade unionists and individuals in understanding their rights and responsibilities under sex discrimination legislation.
Article 8 specifies a new requirement which the Equal Opportunities Commission must fulfil before it can embark on a formal investigation. When the commission proposes to inquire into whether a named individual has committed an unlawful act, it will be required to inform that individual of the commission's intention to investigate and to offer that person both the right to make oral or written representations and to be legally represented. It is clearly right that in the field of sex discrimination the powers of the investigating body, and the rights of those who might be the subject of such investigations, should be the same throughout the United Kingdom. That is what we believe Article 8 will achieve.
Article 9 clarifies the maximum amount that an industrial tribunal is to apply in complaints presented to it by individuals under the Sex Discrimination Order. This limit has been set at £8,500 since 1st April 1987. Article 10 is a minor amendment that the Equal Opportunities Commission will welcome since it extends the commission's discretion to assist individuals in the preparation and presentation of complaints to industrial tribunals.
Turning to Article 11, I should stress, first that this also is designed to bring our equality laws into line with the European Community Equal Treatment Directive. The European Court judgment which gave rise to the Article 3 changes also required us to make void any discriminatory provisions in collective agreements, internal rules of undertakings and rules governing the independent occupations and professions. The court accepted that United Kingdom law partly embodies this aspect of the Equal Treatment Directive by virtue of Section 77 of the Sex Discrimination Act 1975 and Article 77 of the Sex Discrimination (Northern Ireland) Order 1976. Article 77 of the Northern Ireland legislation makes void discriminatory terms in contracts—which would include legally binding collective agreements—but it is necessary to make corresponding provision for agreements and rules which are not legally enforceable.
Although the judgment concerned only the European Community Equal Treatment Directive, there is a parallel requirement in the Equal Pay Directive. Article 11 therefore amends Article 77 of the Sex Discrimination (Northern Ireland) Order 1976 to make void any term of a collective agreement, whether or not it is legally enforceable, and any rule made by an employer for his or her employees in so far as it would breach the Sex Discrimination Order or the Equal Pay Act (Northern Ireland) 1970. This also applies to any rule by an organisation of employers or workers, a professional or trade association or a body which confers qualifications. The voiding of discriminatory terms and rules will
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not impair employees' rights under their contracts of employment, which are specifically protected by the article.
I should not expect this article to have major practical effects. Trade union interests and employer organisations are, I am confident, fully committed to eliminating sex discrimination, and I should be surprised to find negotiators having joined collective agreements that were contrary to sex discrimination or equal pay legislation. The 1976 order already makes it unlawful for the organisations concerned to discriminate between male and female members or would-be members and already provides a remedy through the industrial tribunals for any employee who suffers discrimination, whether or not it flows from a collective agreement.
Another objective of the order is the repeal of restrictions on hours of work. We find a major step in this direction in Article 12 which provides for the removal of outmoded and discriminatory restrictions on hours of work for women from the Factories Act (Northern Ireland) 1965. It also removes the power to impose such restrictions under the Mines Act (Northern Ireland) 1969 and the Quarries (Northern Ireland) Order 1983. These repeals will not only put women in the manufacturing section in Northern Ireland on a par with men in the same occupations but also with women in other jobs where there are no legislative restrictions on hours of work. A number of these restrictions date back to the middle of the 19th century when working conditions, the status of women, and society in general differed greatly from today. We think your Lordships will agree that it is illogical that women in the one sector should be denied the opportunity to determine their own hours of work with their employers without the law's intervention. The change is directed at discriminatory legislation that has outlived its usefulness and will allow women in the manufacturing sector to shed the somewhat second-class status which these restrictions imply.
I should stress that these proposals increase women's freedom to choose. Repeal of the existing measures should not lead to a situation where women are forced into working hours they do not want, any more than male workers are forced into shift working at present. In the unlikely event of a woman employee coming under pressure to work hours which are currently prohibited, it would be open to her to refuse and, if as a result she was dismissed, to claim unfair dismissal.
The repeals will also lift the bureaucratic millstone from employers in the manufacturing sector. The current restrictions are complex and entail a mass of paperwork detailing the period of employment, hours, overtime, meal breaks, etc., of women employees. They will allow employers and their workforces additional flexibility with the prospect of organising working hours to optimum effect for both employees and employers.
I am particularly sensitive to the need not to expose women to greater hazards to their health, safety and welfare at the workplace. I should emphasise that there is no question of repealing those provisions aimed at protecting the unborn child or women who

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have just given birth. The Health and Safety at Work (Northern Ireland) Order 1978, which is analogous to the Health and Safety at Work Act 1974 in Great Britain, continues to impose on all employers a general duty to ensure, as far as is reasonably practicable, the health, safety and welfare at work of employees. Employers must still consider the effect of changes in the hours of work of all their employees. This issue was widely debated during the passage of the Sex Discrimination Act 1986 and clearly the outcome of that debate is equally applicable to Northern Ireland. The draft order provides the basis for advancing the necessary repeals.
Finally. Article 13 of the draft order closes a small loophole in the sex discrimination laws by preventing district councils from using public entertainment licensing powers in a discriminatory way. No district council in Northern Ireland is known to discriminate in this way but as the European Commission considers our legislation to be deficent in this respect the Government have taken the necessary steps to remedy it.
This order represents a further step in the promotion of equality of opportunity and flexibility in employment. I hope your Lordships will give the House the benefit of your thoughts on it. I hope and I believe that it will secure necessary and worthwhile changes in existing legislation. Therefore, I commend it to your Lordships.
Moved, That the draft order laid before the House on 17th May be approved.—(Lord Lyell.)
Lord Prys-Davies: My Lords, I thank the noble Lord, Lord Lyell, for his presentation of this order and for his explanation of the background of its main provisions. I am sure that most of the articles in this order will be warmly welcomed in Northern Ireland.
According to my count, five of the main provisions have been specifically introduced to comply with the terms of the important European equal treatment directive, 76/207. Identical changes have already been made to the Great Britain legislation. I am sure that the Department of Economic Development in Northern Ireland will know that there is, in general, a great deal of criticism in Northern Ireland about the delay—described by one organisation as inordinate—in introducing these changes into Northern Ireland, particularly as the need for the reform is almost certainly greater in Northern Ireland than in Great Britain. That is borne out by the research on the subject of attitudes to all women in Northern Ireland by Dr. Kremer and Ms. Curry which was carried out in 1986. I am sure that the department is fully aware of that report.
Therefore, why the delay? Why the delay particularly as one of the possible effects of the order is to extend the remit of the equal opportunities legislation to cover small firms employing less than five employees? Given the nature of Northern Ireland society, many more people are employed in small firms than is the case in Great Britain. Therefore, I am tempted to ask whether the department is a reluctant legislator in this field.
I understand that the Equal Opportunities Commission for Northern Ireland considers that it
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could be argued—I do not put it any higher than that—that at least two sub-paragraphs contained in the order may be in breach of the equal treatment directive. That mischief, notwithstanding the assurances from the noble Lord, Lord Lyell, this evening, is possibly to be found in Article 3(2)(ii) and again in Article 4(2)(c). I am sure that we are all agreed that we do not want to produce legislation which can be the cause of a long, tortuous and costly journey to the European Court of Justice. Is the Minister therefore in a position to assure the House that the department has taken proper steps to satisfy itself that there is no reasonable basis for the Commission's concern?
I now turn to the new articles contained in the order, which mirror the provisions to be found in the Sex Discrimination Acts of 1975 and 1986. While the general thrust of these provisions is to be welcomed, I understand that there is opposition to Articles 8 and 12 as drawn. It may be for the convenience of the House if I deal with those two articles before going on to raise one point of detail on Article 11.
The Equal Opportunities Commission for Northern Ireland is disappointed that Article 8 imposes on the commission the obligation to satisfy itself that it has grounds for believing that a person may have acted in breach of the order before it is at liberty to investigate his or her conduct. The effect of this new requirement it to stiffen considerably the test which the commission has to satisfy before it can embark on an investigation of a person's conduct.
The Minister may reply that this amendment merely brings the legislation in Northern Ireland into line with legislation in Great Britain. That would be correct, but this is one situation where the Northern Ireland commission does not want parity thrust upon it, because parity will be an obstacle rather than a help. Indeed, the Minister may mention to his ministerial colleagues that this is a situation where Great Britain could, with benefit, seek parity with Northern Ireland. I am told that what is needed in Northern Ireland is encouragement for the commisson to continue with its good work rather than putting up obstacles which will constrain its ability effectively to discharge its functions.
By stiffening the test, Article 8 introduces a limitation, a constraint, and indeed a significant departure from existing practice. Yet this major restriction was not brought out in the explanatory document published last December. Indeed, the article is described in the explanatory note printed at the back of the order as, if you please, a "minor amendment". One would conclude that this was merely a piece of tidying up. The commission will not swallow that one.
I should now like to say a few words about Article 12, which the Minister explained at length. This article removes restrictions on working hours and conditions of employment. There is some opposition to this article as drawn. I do not think that can be dealt with by merely calling on the services of logic, as the Minister appears to have done. This opposition has been expressed in particular by the Northern

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Ireland Committee of the Irish Congress of Trade Unions. It puts part of its case in this way:
"There is no guarantee that women would have a choice whether to work at night or not. At present, night shifts can be worked by women with their consent. This would not be the case in the future. The abolition would alter the shift-work patterns and would necessitate all workers to operate the new shift patterns, or risk them losing their jobs."
The Equal Opportunities Commission pursues another worrying aspect of this article, which states:
"The Commission is concerned that any removal of protective legislation should not adversely affect the health of employees. It recommends that the Government should carry out detailed research on the implications of the removal of protective legislation concerning shift work and overtime on all employees".
I believe that the Minister made some reassuring and sympathetic observations on the application of this article. If I have correctly understood him, I am sure that those observations will be well received in Northern Ireland. Nevertheless, if the Minister can give more assurances when he comes to reply that this article will not have the adverse effects which the Northern Ireland Committee of the Irish Congress of Trade Unions and the Equal Opportunities Commission fear that it may have, that will also be welcome.
Article 12 also gives power to the department to make consequential and transitional provisions. Can the Minister elaborate on the scope of those provisions? I understand that this has been the subject of consultation, but I do not know how prolonged the consultation was and how thoroughly it was prosecuted. Perhaps the Minister can tell us something about the consultation. In particular one would wish to know whether the consequential provisions will provide protection for existing employees and will they provide some safeguards to prevent the misuse or exploitation of Article 12. Is it anticipated that the provisions will differ in any material respect from the GB provisions?
I wish to raise a question as regards Article 11. I found this article to be a complex one dealing with collective agreements. As I understand the article, a discriminatory provision in a collective agreement will henceforth be unenforceable. That is fine. But does any person or body have the power to remove the offending provision from the collective agreement? Will that power be available to the Equal Opportunities Commission? Again it is not clear what remedy is available to an employee who suffers as a result of the employer acting as if the provision were enforceable.
For example, if the exercise of the discrimination means the dismissal of the employee, what is her remedy? Presumably she can recover damages, or does she have to prove that she suffered a detriment before she can recover damages? A possibly more important question is whether she can recover her job. Where will she seek relief —in the county court or before a tribunal? Will legal aid be available to take such proceedings? Perhaps the Minister can answer some of those questions when he comes to reply or perhaps he will write to me at a later stage.
The explanatory document states that the order will have no significant effects on public expenditure.
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But as the functions of the Equal Opportunities Commission will be extended, if only by extending its remit to cover firms of five or fewer employees, will its budget be increased to reflect the anticipated increased burden? I have asked those few questions and I indicated to the noble Lord, Lord Lyell, that I would be raising some of them in the course of the discussion this evening.
It remains for me on behalf of these Benches to express our appreciation of the contribution of the Equal Opportunities Commission in Northern Ireland under the committed, vigorous and effective leadership of its chairman, Mrs. Mary Clark-Glass, and all its chief officers.
Lord Harris of Greenwich: My Lords, I propose to say a few words only about this order. I do so in the context of the situation when I remember speaking in this House as a Home Office Minister and we were dealing with legislation as regards Great Britain in the period of the then government. I welcome the general thrust of this order. I believe that it improves the position as regards working women. I do not think any of us should have doubts about that. It is also clear that the position of working women would not be improved if we were not members of the European Community. In this country there are constant complaints from some tabloid newspapers and some politicians directing criticism at our membership of the Community. If we were not members of it we would not be discussing this order today. I believe it is necessary sometimes to say that with a degree of emphasis.
I make two other observations. Unlike the noble Lord who has just spoken, I do not take the view that Article 12 is in any respect objectionable. I believe a question arises as regards the case of Mrs. Marshall, which I believe all of us recognise as having been a landmark case. It seems to have taken an astonishing amount of time for the Northern Ireland Office to take action upon it. I recognise the pressures upon public servants in Northern Ireland as elsewhere, but why has it taken so long? We would very much value some explanation from the noble Lord, Lord Lyell, combined, I hope, with an assurance that in future there will be more speedy action.
Lord Monson: My Lords, the bland and innocuous-sounding title of the order conceals contents some of which are far from innocuous, albeit not wholly unexpected. Time is short so I shall confine my remarks to the three articles which in my view merit criticism, starting with those which are marginally less objectionable.
As the noble Lord, Lord Prys-Davies, pointed out, Article 12 removes certain safeguards which have traditionally protected women in certain fields of employment, safeguards which the great majority of people of either sex and throughout the United Kingdom have hitherto thought to be entirely reasonable. There are some who will claim that the removal of those safeguards constitutes some kind of liberation. The women working in the jobs concerned may take a somewhat different view. I can see it only as one more step in the insidious campaign to defeminise women, with all the dangers—not least

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demographic ones—to the long-term future of our society which this implies.
Incidentally, it is interesting to reflect that one of the features of the Soviet Union which attracts the greatest criticism from foreign visitors is that most of the heavy manual jobs in that country are performed by women. How curious it is that we should wish to follow the Soviet Union down that road.
Article 4 forbids discrimination by employers in the field of retirement age. This sounds fair and reasonable until one considers that once it comes into effect many women, doing exactly the same job as a man of the same age and ostensibly drawing the same net salary, will in reality have that salary augmented by the retirement pension to which her male fellow worker is not entitled. It is curious that, while both the Equal Opportunities Commission and evidently the European Court, never cease to castigate, perhaps rightly, retirement age discrimination by employers, they remain strangely muted about retirement age discrimination by governments. That is a much greater scandal, given that women have a life expectancy seven and half years greater than men.
The really objectionable article in this order is Article 3. As the noble Lord, Lord Lyell, mentioned, we have been here before when in 1986 similar legislation was proposed for the rest of the United Kingdom, legislation which attracted a great deal of strong criticism from various parts of this House.
I remember my noble friend Lady Saltoun of Abernethy, who I am sorry to see is not present tonight, being particularly scathing about the then equivalent of what is now Article 3. It is one thing to back this kind of legislation, which can be described as coercive liberalism, when one is dealing with large and rather impersonal firms and partnerships or even with medium sized firms and partnerships. It is quite a different matter when one is dealing with a partnership of six or fewer or with a firm with five or fewer employees. As an employer in such a case one does not necessarily want the best qualified man or woman for a job irrespective of other considerations. Naturally, skills and qualifications are always most important but whether the new individual fits in and whether the chemistry is right between an employer and an employee are equally important factors. This applies with much greater force to employment in private homes, where additional considerations come into play over and above those of personal compatability.
A woman employer in a private home may prefer to employ a woman rather than a better qualified man because of some traumatic sexual experience at an early stage of her life. An elderly male employer may prefer to employ a female nurse rather than a better qualified male nurse because he likes to have a pretty face around. Conversely, either sex may prefer to employ a male gardener or a male chauffeur rather than a better qualified female one, because the employer lives in an area with a growing crime rate and wants somebody around who is able bodied enough to fend off burglars, vandals and hooligans.
The tragedy is that the number of potential private employers preferring one sex is probably exactly balanced by the number preferring the other sex, so
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the preferences cancel one another out and there is really no need for this repressive legislation. Interfering social engineering measures of this nature are profoundly unconservative—both with a capital C and a lower case C. I am absolutely certain that the Prime Minister, for example, has no love in her heart for this kind of measure, whatever she may be forced to agree at the official level, and that in this distaste, as in so many other things, she reflects the feelings of the majority of the people of the United Kingdom.
8 p.m.
Lord Lyell: My Lords, I should like to thank those noble Lords who have spoken on the order this evening. Their remarks clearly show that there is a great amount of detail and interest in the order before the House and that it is not only the Equal Opportunities Commission which will be grateful for the questions that have been asked of the Government.
The noble Lord, Lord Prys-Davies, took us mildly to task over the delay in implementing Articles 7, 8, 9 and 10. The noble Lord, Lord Harris of Greenwich, also asked a number of questions on this matter. I am able to tell the House that this is the first opportunity—I have in my notes "substantive" opportunity but I would call it the first realistic opportunity—the Government have had to incorporate the four measures into legislation. We have had further consultation and I note that the noble Lord felt that there was still a lacuna in that area. In balancing the consultation process and the need to push such legislation on to the statute book, this is the first occasion we have had to bring forward these four articles.
The noble Lord, Lord Harris, asked about the Marshall case. There is separate Northern Ireland legislation in the area of sex discrimination and once again I have to give the noble Lord the same answer as I gave the noble Lord, Lord Prys-Davies. This is the first opportunity we have had to bring all the aspects of the Marshall case into law. The noble Lord will accept that it was wise to consult on the two or three items that rose as a result of the Marshall judgment. We took note of those questions and hiccoughs and we hope that Articles 4 and 5 provide the relevant remedies. I shall come back in a moment to the other item raised by the noble Lord, Lord Harris, who kindly supported Article 12.
The noble Lord, Lord Prys-Davies, also mentioned Article 3, as indeed did the noble Lord, Lord Monson. The noble Lord asked me about Article 3(2) (bb) (ii). In response to his question, a judgment in the European Court of 8th November 1983 held that an exception for all private households from the prohibition on sex discrimination was too broad. The judgment indicated that, in attempting to reconcile the principle of equality of treatment with the principle of respect for private life, some degree of exception was permissible. Perhaps I may quote an example which we think is realistic. I am sure that the noble Lord Lord Monson will also take this to heart. I take as an example a job involving access to the knowledge of the intimate details of the life of a person living in the home. In this respect we think the 1983 judgment to be well founded. In the case of

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a companion to an elderly lady (who might well take exception to a man dealing with her laundry) the provision makes an exception in the interests of privacy.
In the same context the noble Lord, Lord Prys-Davies, asked me about Article 4 and wondered whether it might not be too narrow. Article 4(2)(c) repeats the provision of the Sex Discrimination Act 1986. This has not drawn any complaint from the European Commission of failure to meet any of our obligations under the equal treatment directive of the European Community and matters are still covered by the retirement exclusion—the Marshall case. They include:
"other benefits, facilities or services and any other detriment other than that which results in dismissal or demotion".
The "benefits, facilities or services" would be appropriate to all the issues raised by the Marshall case.
The noble Lord, Lord Prys-Davies, also asked about the budget increase for the Equal Opportunities Commission. The Commission recently made proposals to the Department of Economic Development in Northern Ireland for an increase in staffing and budget levels. A review of the implications of these discussions is being conducted. We hope to consider the outcome jointly with the department and the commission. I am afraid that I cannot be too conclusive this evening. If I gain any helpful information perhaps I may write to the noble Lord after tonight's debate. If there is nothing to report I may have to get in touch with the noble Lord at some stage in the future.
The noble Lord asked about Article 8, which is what we like to call, particularly in relation to Northern Ireland legislation, a parity measure. We think it right, and I am sure all your Lordships will agree, that employers in Northern Ireland should enjoy the same right in respect of formal investigations—which is what Article 8 is concerned with—as their counterparts in Great Britain.
I do not think that the provisions of Article 8 will in any way constrain the Equal Opportunities Commission in Northern Ireland from undertaking any formal investigations. So far as we are aware, the commission has only undertaken two such investigations under its existing powers in the 12 years of its existence. I do not think that the mild changes which we are making in Article 8 will have any earth-moving effect.
The noble Lord also had one special query on Article 11 about collective agreements and the enforceability and unenforceability modes. At the outset, we would hope that with trade union help, if the lady concerned was a member of a trade union, she would be able to seek a solution through discussion with her union representatives and her employer. However, if that brought no satisfaction or solution then the next step, which is indeed logical and which I think is enjoyed throughout the United Kingdom, would be that she should seek relief through the industrial tribunal. In the case of a dismissal, she may seek resinstatement if that is what she wants. But if she is still not satisfied with the
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decision of the tribunal she may appeal against that decision.
Article 11 goes on to make discriminatory terms void. Paragraph 5 of the article is designed to ensure that what we call voiding will not leave individuals worse off than they were before. In practice, this would mean that the term involved would be frozen and would continue to operate until the question of whether it was discriminatory was finally resolved. Noble Lords can see the relevant paragraph at the bottom of page 8.
The noble Lord also had a further query about legal aid. I am advised that it is not available. If I can glean any further details on the matter or can amplify that fact, perhaps I may reply to the noble Lord in writing. I think that if we start discussing legal aid now we may go quite wide of the mark this evening. So if I can gain any further information on the subject, I shall certainly write to the noble Lord.
Article 12 caused a good deal of discussion with your Lordships. The noble Lord, Lord Harris, very much supports it and we are most grateful for that support. The noble Lord, Lord Monson, was especially worried about it and I was fascinated by the thought of the noble Lord comparing the Soviet Union with Northern Ireland. I must assure the noble Lord that he will not find squads or gangs of ladies involved in heavy roadwork in Northern Ireland. Therefore I hope that I can assure him, and your Lordships, that there is no insidious campaign to deprive women of any work where they want it.
However, I should like to stress to the noble Lord, Lord Monson, and indeed to the noble Lord, Lord Prys-Davies, that Article 12 really gives women freedom; it removes restrictions which they might find, or quite often do find, burdensome. It is not in any way seeking to exploit women or to place them in conditions which are unfavourable. If women believe that any of the provisions in Article 12 will be detrimental to them, they have the usual mechanism of the industrial tribunal and the usual avenues of complaint available to them. I must stress that Article 12 is purely permissive and seeks to place women where they wish to be; that is, in the same position as men.
The noble Lord, Lord Monson, also raised one or two points about Article 4, which deals with pensions and that particular aspect of the Marshall judgment. Perhaps I may consider more carefully what he said and write to him on that stated case.
As regards Article 3, I think that all the remarks I made in my opening speech agree totally with what was said by the noble Lord. However, I shall stress them again. In the Government's view, the wording of Article 3 achieves an acceptable balance between eliminating unreasonable sex discrimination and reflecting the view of the European Court that the principle of respect for private life is also fundamental. That is the Government's view and I think that it also reflects the judgment in 1983 of the European Court. I believe, as do the Government, that it will strike the balance between what is acceptable in private homes and in private life for private individuals and seeing that there is no unreasonable discrimination.

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I think that I have said everything I can about the order this evening. However, if there are any points that I have missed, I can surely deal with them when I write to your Lordships. I commend the order to your Lordships.
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until twenty minutes past eight.
Moved, accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.16 to 8.20 p.m.]

Local Government Finance Bill
Consideration of amendments on Report resumed. Schedule 8 [Non-domestic rating: pooling]:
Lord Hesketh Lord Hesketh moved Amendment No. 177B:
Page 126, line 3, leave out from ("above") to end of line 4 and insert—
("(1A) Such a calculation shall be made on the basis of the information before the person making the calculation at the time he makes it; but regulations under paragraph 4 above may include provision requiring a calculation under paragraph 5(2) or (3) above to be made on the basis of that information read subject to prescribed assumptions.").
The noble Lord said: My Lords, this is a straighforward, almost technical amendment. It deals with the calculation of the provisional contributions that local authorities will be required to pay into the national non-domestic rate pool during the year. These are provisional, because obviously many relevant matters, such as the level of irrecoverable losses in collection, and any changes in rateable value during the year, will not be known in advance. There will be a conclusive calculation after the end of the year; meanwhile, payments on account will be based on authorities' own estimates of the amount they will eventually have to pay into the pool.
It is obviously important that authorities should make those estimates on a consistent basis. It would not be right if one authority could effectively obtain an interest-free loan from all other authorities by deliberately underestimating its likely contribution. The Bill of course already contains, in Schedule 8 paragraph 4, power to make rules for how the contributions are to be calculated, but this does not cover the need to set consistent standards governing the method by which the provisional estimates are arrived at. This amendment fills that gap. I beg to move.
Lord Graham of Edmonton: My Lords, we can see some merit in what the Government are seeking to do, but will the Minister explain why the Government persist, throughout the Bill, to build in further complications and refinements of this kind? More scope for complications will be involved in this matter. The amendment is not as straightforward as the Minister tried to make it appear. We should like to know the riason d'être for the amendment at this late stage in the Bill. What evidence has accrued, what experience has been gained and what advice has
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been tendered to cause the insertion of the amendment at about the fifth opportunity in the passage of the Bill through both Houses? What has happened in the past two or three weeks to cause the amendment?
Lord Hesketh: My Lords, the noble Lord, Lord Graham of Edmonton, referred to complications and refinements. The best answer I can give is that the amendment is a refinement rather than a complication.
Lord Graham of Edmonton: My Lords, the Minister answered part of the question. What has caused the refinement to be thought necessary at this stage in the progress of the Bill? The Minister is entitled to say that all the pieces of the Bill are coming together and will fit and work better, and I would accept that. However, I am intrigued to know why, at this late stage, the Government are adding this further refinement to a requirement which will be difficult for local authorities to handle.
Lord Hesketh: My Lords, I can add little to what I said in my original description. For the benefit of the noble Lord, Lord Graham of Edmonton, I shall repeat that it is obviously important that authorities should make estimates on a consistent basis. It would not be right if one authority could effectively obtain an interest-free loan from all the other authorities by deliberately underestimating its likely contribution.
On Question, amendment agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 177C:
Page 127, line 19, at end insert—
("(6A) The Secretary of State shall inform all local authorities, the local authority associations and such other bodies as he considers appropriate of all calculations of population made under the regulations and shall take into account all representations made by such persons or bodies to him before making a final determination of population figures for use in connection with this Act.").
The noble Lord said: My Lords, I beg to move Amendment No. 177C standing in the name of my noble friend Lord McIntosh. The Minister is entitled to tell us that this is the second bite at this cherry, but we were not satisfied by what the Minister said earlier. The basis of the calculations of population is important. We wish to know whether the Government have rethought their arguments about the premises upon which the population estimate will be made. I should like to know what the Minister says before I say more. I beg to move.
The Earl of Caithness: My Lords, the purpose of the amendment moved by the noble Lord, Lord Graham of Edmonton, would be to require the Secretary of State to inform local authorities and other bodies of the calculations made under regulations which define relevant population and to take into account representations made by those bodies before making any determinations.
I apologise to the noble Lord if I did not make myself clear, or was not as helpful as I should have liked to be; but as I have explained on earlier occasions we intend that the relevant population used

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at a number of places in the Bill should be essentially a measure of the taxable capacity of the area concerned. As we debated last week, a number of groups of people will be excluded from liability to pay the community charge, while students will have to pay only one fifth of the amount. The figures we use for distributing grant and the NNDR must take account of that, otherwise areas with a high number of students, for example, might lose out.
The regulations will explain how that calculation is to be done. We shall be discussing the regulations with the local authority associations. There is a possibility that they will be debated. There will therefore be a full opportunity for representations to be made about the regulations which set out the way the calculation is to be done. Once the regulations are in place, the calculations under them will be a matter of arithmetic; 80 per cent. of the number of students in the area will have to be subtracted, for example. I do not think it is necessary for the Secretary of State to go through formal procedures before he makes that calculation.
I dare say that, as now, we shall send local authorities copies of all the data which is used in their grant and NNDR calculations so that they can reproduce them themselves and satisfy themselves that everything has been done correctly. In this case, I imagine that many of the figures will be provided by the local authorities themselves. They are best placed to count the number of students claiming the benefit of their partial exemption.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister. He has told us that consultations will take place with the local authority associations, that the basis upon which the calculations will be made will be explained to them and that they will understand the procedure. Will the Minister tell the House now upon which basis the calculations will take place? The Minister is telling us that that is part of an ongoing consultation and refinement, and that once the regulations have been arrived at Parliament will be told in one way or the other what has been agreed.
We recognise that we cannot be precise about every detail on the face of the Bill. The Government say that the local authority associations are the right bodies with whom to discuss these matters. We are not arguing about the Bill's philosophy; we are arguing about what the Government say on the face of the Bill. If the Minister is telling us that the basis of the calculations can be influenced by the evidence that is put forward, and can assure me that he and his colleagues will be out to satisfy the local authority associations, which have a big responsibility in representing their members—the ACC, the AMA, the ALA and the ADC—I shall be satisfied that when they are satisfied the Minister will have done a satisfactory job.
I should like the Minister to help them to understand the position. The Minister understands that many of our amendments are inspired by their worries. He knows how this place works. We do not pretend to dream up ourselves every amendment that we put down.
8.30 p.m.
The Earl of Caithness: My Lords, I did not imagine that the noble Lord did.
Lord Graham of Edmonton: My Lords, illusions are shattered every night here. The Minister and I play our part to keep that process going. We are talking about equity, but we are also talking about fairness. Local authorities have a big responsibility to ensure that when the Bill becomes an Act it works. They are anxious to get it right. I am not being offensive when I ask the Minister for an assurance that the consultations which will take place will be real and earnest, and not a charade. Sadly, it is sometimes the case that on other occasions with other Ministers consultations have been a sham. I should like the Minister to give us a little more help on this matter.
The Earl of Caithness: My Lords, with the leave of the House I shall try to exemplify the position. The basis for the population figure is clear; it is the taxable capacity of the area. That will depend to some extent on your Lordships' amendments or agreement to the Bill. If the noble Lord, Lord Graham of Edmonton, were to say that he would not press any further amendments to change the taxable capacity of the area, I should be able to help him a little sooner than I am able to help him. That is the broad position. The detail as regards the best way to assess that figure is the legitimate area for discussion with local authority associations.
I cannot guarantee that they will be 100 per cent. satisfied because the AMA may want something different from the ADC. But of course we shall discuss that so that we reach the right and fair balance which, I am sure, is in the interests of all local authorities involved, as indeed those of the Government and those who have to pay for this provision.
Lord Underhill: My Lords, can the Minister tell the House what is meant by the taxable capacity of an area? I am sure that many of us would like to know precisely what is meant by that. Although there is provision here to notify each charging authority of the amount and the population, is there any opportunity for them to make representations?
The Earl of Caithness: My Lords, I am sorry that I have not made myself clear to the noble Lord, Lord Underhill. We have been through this matter at great length in Committee and again on this occasion. However, I shall try once again to explain the position. We are talking about the population in the area. That is the basis of the figure.
Lord Graham of Edmonton: My Lords, where will the figure come from?
The Earl of Caithness: My Lords, the figure will come from the local authorities to some extent and from the information that we have in the department. That is the basis on which the population, which is the taxable capacity of an area, is arrived at. But we then have to take into account the number of students, as a result of the amendments which were agreed earlier last week. Then the nurses have to be

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taken into account as well. We must take those goups into account in order to arrive at the correct figure. That is the figure that we must discuss, and the best way to discuss it is with the local authority associations.
Lord Graham of Edmonton: My Lords, do I understand that taxable capacity relates to population'? Is it the number of heads or portions of heads upon which the tax shall be levied? Therefore, we are down to being satisfied that the population figure is an acceptable basis. The Minister may recall that earlier we were arguing about the up-date validity of the census of population figures, and when that comes into effect. As we all know, quite apart from the inner London areas or the inner city areas, some dramatic changes are caused by shifts of population. Basildon, Harlow and Stepney and other areas have grown quite dramatically. We understand that syndrome. Is the Minister telling us that, as near as possible, there will be an attempt to seek satisfaction from the people who represent those populations, and that the basis of the figure is fair even though it is bound to fluctuate from the time that the Minister sets the figure based upon whatever decisions have been taken and whoever is included or excluded?
If we consider the London borough of Enfield where I live, the population figure will be based upon a census which is adjusted each year as the town hall seeks to bring its electoral register up to date. That occurs on 10th September.
Is the Minister telling us that the taxable capacity will be based upon the best means of satisfying the authorities that the population is, as near as makes no difference, the right one and is up to date? The Minister will understand that we are talking about a number of situations which may occur where people will be a part of the population but will seek to avoid going on to the register.
We have already discussed the situation of people who leave home in order to avoid the community charge. But situations will occur where the taxable capacity will be affected in one area or another, depending upon what the Minister may call the wilful refusal or the avoidance of people going on to the register. This is the last time that I ask the Minister to help me in this respect. He has been very helpful so far in everything that he has said.
The Earl of Caithness: My Lords, I hope that I shall explain for the last time that the taxable basis will be the number of people liable to pay the community charge. As I have said before, this is where the consultation with local authorities is the best way of defining that, taking into account the very valid points that the noble Lord has raised.
Lord Graham of Edmonton: My Lords,
"the very valid points that the noble Lord has raised"
is as good a peg as I shall get upon which to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Caithness The Earl of Caithness moved Amendment No. 178:
After Clause 58 insert the following new clause:
("Death
(1) The Secretary of State may make such regulations as he sees fit to deal with any case where a person dies and at any time before his death he was (or is alleged to have been) subject to a non-domestic rate.
(2) Nothing in the following provisions of this section shall prejudice the generality of subsection (I) above.
(3) The regulations may provide that where before his death a sum has become payable by the deceased but has not been paid his executor or administrator shall be liable to pay the sum and may deduct out of the assets and effects of the deceased any payments made (or to be made).
(4) The regulations may provide that where before his death a sum in excess of his liability has been paid (whether the excess arises because of his death or otherwise) and has not been repaid or credited his executor or administrator shall be entitled to the sum.
(5) The regulations may provide for the recovery of any sum which is payable under the regulations and is not paid.
(6) The regulations may provide that proceedings (whether by way of appeal under regulations under section 51 above or otherwise) may be instituted, continued or withdrawn by the deceased's executor or administrator.").
On Question, amendment agreed to.
Schedule 9 [Non-domestic rating: administration]:
Lord Hesketh Lord Hesketh moved Amendment No. 179:
Page 130, line 16, leave out ("including") and insert ("which may include").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendments Nos. 180 to 184 en bloc:
Page 130, line 20, leave out ("payments on account may") and insert ("in prescribed circumstances payments on account must").
Page 130, line 22, leave out ("may") and insert ("must").
Page 130, line 37, leave out ("within a prescribed period beginning with") and insert ("on the day after the end of a prescribed period which begins with the day of).
Page 130, line 41, at end insert—
("(3) Any reference in this paragraph to a payment on account of an amount is to any payment (whether interim, final or sole) in respect of the amount.").
Page 130, line 49, at end insert—
("(cc) allowing a bankruptcy petition to be presented.").
On Question, amendments agreed to.
[Amendment No. 185 not moved.]
Clause 59 [Hereditaments]:
[Amendments Nos. 186 and 187 not moved.]
Lord Hesketh Lord Hesketh moved Amendment No. 188:
Page 34, line 30, leave out subsection (10).
On Question, amendment agreed to.
Clause 60 [Owners and Occupiers]:
[Amendment No. 189 not moved.]
Clause 61 [Domestic property]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 189A:
Page 35, line 44, leave out ("or").
The noble Lord said: My Lords, some noble Lords will recall that this was a matter which caused some

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astonishment in Committee when it became apparent that there could be a quite new imposition on those who used a spare bedroom for occasional bed-and-breakfast use. It was not at all clear at that stage whether the tourist industry had been properly consulted.
At that time it was not clear at what level of use there would be the possibility of a non-domestic rate being added to the community charge for those who provided that very valuable service. I believe that I referred at the time to the fact that this was not the only example of a possible difficulty. Another very major example is the case of child minders who use a front room of their house for the very valuable purpose of minding children for mothers who go out to work. They may do that for a limited number of days a year, and they may only provide a service for a very limited number of children. The noble Lord, Lord Glenarthur, promised at that stage to write to me very quickly and he was good enough to do so on 15th June. I am grateful for that response.
Having considered the matter, I thought that it was as well to put down our amendments. I have no doubt that they will be faulted in drafting terms. However, the issue is important. There should be a de minimis provision for child minders, bed and breakfast accommodation and so on to avoid the spectre of community charge registration officers or non-domestic rating registration officers (if that is the correct term) rushing around the country looking for bed and breakfast signs in handwriting rather than those which are printed, and spying on children arriving at homes at 9 o'clock in the morning rather than leaving them in the hope of finding a transgression.
The two amendments specify the principal use of accommodation as living accommodation and the Secretary of State is given the opportunity to prescribe in regulations a level which will be the maximum level to provide a service such as child minding or accommodation for persons whose sole or main residence is elsewhere. This simple amendment is in line with thinking that the Government have acknowledged on other issues. It recognises both business and social realities. I hope that the amendments will commend themselves to the Government. I beg to move.
Lord Stanley of Alderley: My Lords, I believe that I put up this hare originally and it ran faster than I expected, helped by the noble Lord, Lord McIntosh, and my noble friend.
I have also received a copy of the letter which my noble friend wrote to the noble Lord on this matter. I am grateful for the information that it contained and particularly, as I understand it, that the Government intend to treat bed and breakfast accommodation in a de minimis way. I am rather frightened of using that term since my noble friend Lord Renton has pulled it apart. However, he is not present in the Chamber to give me a Latin lesson.
I am glad to learn that de minimis uses will not attract a national non-domestic rate. However, I am still at a loss as to how the Government intend to
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treat holiday accommodation—either self-catering flats or houses. Your Lordships may remember that at Committee stage we proposed that such accommodation should be dealt with under the national non-domestic rate. I hope that my noble friend will be able to give me an assurance tonight that that will happen when the regulations are published.
I accept that, as always, there may be a grey area as to what is a holiday let. Therefore, I ask my noble friend whether, before the regulations are published, his department will consult and give due weight to the views of the tourist associations and other interested parties, including the farming organisations. Perhaps my noble friend will be prepared to say that the Government recognise the importance of holiday lets as alternative sources of income in rural areas, expecially as food production is often frowned upon today.
The Earl of Caithness: My Lords, I am glad that the noble Lord, Lord McIntosh, has tabled these amendments because they give me an opportunity to place on record a decision which the Government have taken following the debate in Committee on 13th June. Your Lordships may recall the noble Baroness, Lady Stedman, asked my noble friend Lord Glenarthur how a house would be treated under the new system if part of it was used on a casual basis to provide bed and breakfast accommodation to holidaymakers. My noble friend replied, quite correctly of course, that bed and breakfast accommodation should be subject to non-domestic rating. This led to what I think I might fairly describe as a minor storm of protest from, among others, the noble Lord, Lord McIntosh, and my noble friend Lord Jenkin of Roding. They made the point rather forcefully, that it makes no sense to attempt to rate domestic property which is used on a very casual basis for a non-domestic purpose.
As a result of that debate, we took a very careful look at the issues at stake. Our conclusions were set out in a letter dated 22nd June to the noble Lord, Lord McIntosh, copies of which I have placed in the Library. For the benefit of those members of your Lordships' House who have not seen a copy, I should like to summarise what I said. I do not believe there is any disagreement in principle between the Government and the noble Lord, Lord McIntosh, on the treatment of bed and breakfast accommodation. A house which is given over for the whole of the summer to the provision of bed and breakfast accommodation to holidaymakers clearly ought to be subject to non-domestic rating, just as a hotel will be rated. It would lead to quite unfair competition if we were simply to exempt holiday bed and breakfast accommodation from rating.
I think it is clear therefore that the concerns expressed in Committee rest not so much on a point of principle as on practical and administrative considerations. The crux of the argument is that it would not make good administrative sense to attempt to bring within non-domestic rating one or two rooms in a private house which are offered as bed and breakfast accommodation for very short periods. As I have explained to the noble Lord in my letter,

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this is a view, which is shared by the Government. It has never been our intention that the de minimis use of domestic property to provide bed and breakfast accommodation should lead to that property being asessed for non-domestic rating. We have taken the view that, in practice, such properties would escape rating just as they currently escape classification as non-domestic property and therefore retain the benefit of domestic rate relief.
Having reconsidered this question in the light of the concerns expressed in Committee we have reached the conclusion that it would be preferable not to rely on the expectation, however well-founded, that these properties will simply slip through the net. We believe it would be clearer and fairer to provide expressly that where the use of domestic property for a non-domestic purpose does not materially detract from the domestic use, that should not result in that property being rated. We shall be able to give effect to this decision by use of the order-making power in Clause 61(9). Before making an order we shall consult the local authority associations and representatives of the tourist industry.
I hope that, in the light of these very clear assurances, the noble Lord, Lord McIntosh, will agree to withdraw his amendments. His amendments mention only two non-domestic uses—childminding and bed and breakfast—whereas I am sure he will agree we ought to cover all small-scale non-domestic uses. I appreciate that he would prefer to have the matter dealt with expressly on the face of the Bill; but in fact his own amendments reflect the fact that it will be necessary to make regulations in order to specify the level of non-domestic use which should be disregarded. This is simply not a matter which can be dealt with immediately without consultation with all the interested parties.
My noble friend Lord Stanley of Alderley has returned to a question that he first raised at Committee stage; namely, the treatment of holiday-let self-catering accomodation. As my noble friend Lord Glenarthur explained in Committee, the treatment of this kind of accommodation is far from being easy or clear cut. We are concerned with property which, on the one hand, is used for the purposes of living accommodation and would normally be domestic, but which on the other hand is run as a business and arguably, like other business premises, should pay the national non-domestic rate. As my noble friend Lord Glenarthur, also explained, the position is further complicated by the fact that many self-catering properties are let to holidaymakers during the summer and to more permanent guests during the winter.
In view of the difficult issues at stake, my noble friend Lord Glenarthur indicated that the Government had not yet taken a final decision on whether self-catering accommodation should be treated as domestic property and subject to the standard community charge, or as non-domestic property and subject to rating. My noble friend Lord Stanley quite understandably pressed for a decision to be taken by Report stage. As a result the Government have given considerable further thought to the issue, and I am therefore in a position to
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announce our decision in principle on the treatment of holiday-let self-catering accommodation.
Our decision is that such accommodation should, in principle, be treated as non-domestic property and should therefore remain in non-domestic rating. I know that is a decision which will be welcomed by my noble friend and by others who spoke on this issue at an earlier stage, including my noble friend Lord Radnor. We shall give effect to this decision by use of the order-making power in Clause 61(9) of the Bill.
I should, however, add two qualifications to what I have just said. The first is that property which is used to provide holiday let accommodation for only part of the year will not necessarily remain in rating for the whole of the year. For example, property let to holidaymakers in the summer and to permanent residents in the winter will be rated in the summer; but it will not be rated in the winter, because the permanent guests will pay the personal community charge.
The second qualification concerns single units of holiday let accommodation. There is a practical problem so far as these are concerned which is as yet unresolved. The problem is that, although it is relatively easy in most cases to distinguish between a block of holiday let flats and a block of residential flats, it is by no means so easy to distinguish between a cottage which is used as holiday let accommodation and a cottage which is used as a second home. This is, as I have said, a practical difficulty rather than one of principle; but it is potentially a significant one, because we do not want to oblige the valuation officer to value all second houses merely in order to catch those which are used for holiday let purposes. The Government's decision, in principle, that holiday let, self-catering accommodation should be left in rating is therefore subject to further consideration about the treatment of single unit properties.
I know that my noble friend Lord Stanley will welcome the Government's general decision on self-catering accommodation, which meets the concern he raised in Committee. I hope that he will accept that further consideration is necessary before we can reach a final decision on the one outstanding issue—the treatment of single unit self-catering accommodation.
Lord Stanley of Alderley: My Lords, with the leave of the House, I should like to thank my noble friend for that statement. I did not realise how complicated the issue was when I raised it. I am glad that in principle he accepts that those properties should be rated under the non-domestic rate. I am very grateful for his efforts and for the efforts of his department.
Lord McIntosh of Haringey: My Lords, I too should like to thank the noble Earl for his response to my amendments. I accept that on this occasion the need for additional consultation makes it more appropriate to use order-making powers rather than have this on the face of the Bill. I think that that is entirely proper. I shall withdraw my amendments on that basis with renewed thanks.
Before I do so I should like to raise an issue about child minders which I think that I should have raised earlier. I do not think that I can expect the Minister

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to answer now, but perhaps he will be good enough to write to me. The issue I should like to raise is that of child minders who, as self-employed people, claim an amount for their rates against their tax liability. I understand that the common practice is that they can claim one-tenth of their rent and rates liability against tax. The National Childminding Association is concerned about the risk that that might come to an end with the community charge legislation.
As I said, I do not expect the Minister to reply now. That would be quite unfair, but I should be grateful if he would write to me in due course. I am glad to see him confirming that he will. On the basis of his response, I beg leave to withdraw Amendment No. 189A.
Amendment, by leave, withdrawn.
[Amendment No. 189B not moved.]
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 189C:
Page 36, line 1, after second ("is") insert—
("(a) ").
The noble Lord said: My Lords, we spent much of the afternoon seeking concessions and exceptions in respect of charities. We were told that if those amendments had gone through it would have cost the non-domestic rate fund some £ 80 million. I am trying again with an amendment which would give some finance back to the Government. I wonder whether there has been any change in the attitude of the Department of the Environment.
It seems an extraordinary concession to exclude private residences and nursing homes from non-domestic rating. We know that the nursing homes in particular are highly profitable. That is confirmed by the enormous pressure which is put on local authorities—particularly in my part of the world—for planning consent to convert hotels into nursing homes. Vast sums of money are available for the purchase of the buildings if that consent can be obtained. It seems extraordinary that they should be excused from paying the non-domestic rate.
I shall not flog that horse a second time at any length because I have raised this issue before. However, I thought that it was worth one more attempt to see whether there had been any second thoughts.
I should also like to say that I welcome the Minister's statement on the question of holiday lets. That applies in my part of the world every bit as much as in other places. I think that the clarification on that point will be welcomed in the Isle of Wight. I beg to move.
Lord McIntosh of Haringey: My Lords, before the Minister replies, perhaps I may add my general support to the point made by the noble Lord, Lord Ross. The position which we have tried to adopt in respect of this Bill as regards those issues which concern care in the community—that is the issue of the community charge or rates status of those who might be in hospital, being cared for at home, or in a nursing home—is that so far as possible the Bill should be neutral. The provisions of the Bill should
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not in any way affect the medical judgment as to whether any individual is better off being cared for in a hospital or nursing home or being cared for at home.
It seems to me that the amendment of the noble Lord, Lord Ross, points to the possibility of a breach of that principle. In other words, nursing homes run for profit may appear to be attractive as an alternative to more professional care or care with a higher medical content just because the tax status and the status in respect of the community charge or the national non-domestic rate is different from what it would be if the individual were a patient in a hospital rather than a nursing home which is not run for profit. I hope that the Minister will be able to assure me that that is not the case and that in this respect—as it ought to be in all others—the Bill is medically and socially neutral and does not affect the other considerations which ought to be predominant in relation to the issue of care in the community.
The Earl of Caithness: My Lords, I am grateful to the noble Lord, Lord Ross of Newport, for raising this matter again. Notwithstanding the fact that we discussed it in Committee, I think that it is right and proper that it should be raised again because it is undoubtedly a matter of concern to the noble Lord.
We are opposed to these amendments because they breach one of the basic principles that underpin the whole Bill; the principle that non-domestic property is property which is not used as long-term living accommodation. The effect of the amendments would be that property which is clearly used as longterm living accommodation would be subject to non-domestic rating. That would be illogical.
Further, the amendments would result in properties that were used for exactly the same purpose being treated quite differently under the Bill according to the nature of the organisation by which they were run. The effect of this would be discriminatory and would increase the costs of private homes.
We also oppose the amendments because they would have the effect of taking away from those in residential care homes a benefit which the Government agreed to give when, after strong pressure from your Lordships' House during the passage of the Scottish legislation, they agreed to exempt residents of such homes from the community charge.
Contrary to what the noble Lord, Lord Ross of Newport, suggested, the amendments would serve little purpose in terms of revenue raising.Most such homes benefit at present from exemption from rates under the Rating (Disabled Persons) Act 1978. Although the original intention of the Act was not to benefit old people's homes at large, it has been interpreted in this way. If privately run residential homes were reclassified as non-domestic property and therefore subject to rating, it would be extremely hard to justify not maintaining the provisions of the 1978 Act—in other words, to justify not exempting them from rating. I am not clear whether the noble Lord is inviting us to remove that concession.

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Finally, if rates were imposed, they would simply be passed on in charges to the residents of these homes, many of whom are by no means well off and some of whom will of course be receiving state benefits. Rates are a tax on property, not on profits. Like all overheads they are passed on to the customer before profit. Taxes on profits, on the other hand, are not passed on to the customer— here the resident—in increased charges. I suggest to the noble Lord that if he wants to make a tax on the profits of a company more effective, which I think was his idea, notwithstanding the fact that he said at Committee stage that most of them were very well run, the way to do it is not through the rating but through the taxation system.
Lord Ross of Newport: My Lords, I am grateful for that answer. I am still not terribly convinced by it. I admit that the concessions were given in the first instance for the highest motives. I think that they have been abused. I think the time will come when the Government will appreciate that this concession was generous and ought to be withdrawn. It certainly upsets local authorities in a very big way, particularly in my part of the world. However, I accept that this explanation has been given and there is no point in dividing the House at this stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 189D not moved.]
Clause 62 [Interpretation: other provisions]:
[Amendments Nos. 190 and 191 not moved.]
Clause 63 [Charging authorities affected]:
9 p.m.
The Earl of Caithness The Earl of Caithness moved Amendment No. 191A:
Leave out Clause 63.
The noble Earl said: My Lords, in moving this amendment I wish also to speak to Amendments Nos. 191 B to 191E inclusive, 192A to 192M inclusive, 193A and 193B, 203A to 203C inclusive, 204C, 218A and 218B, 220A, 241EA, 241EE and 241EF, 241 FK, 241 FL and 241FM, 243ZA and 243CA, 246ZB to 246ZD inclusive, 246ZF, 250A and 250B. I believe that makes 42 amendments. I start with Amendment No. 191A. Your Lordships will recall that when we considered the provisions contained in this part of the Bill during Committee stage we had a lively discussion on the merits of dual running of residual domestic rates and the community charge over a four-year period in the 10 inner London authorities. The arguments that certain of your Lordships made then for the abandonment of these provisions have since been repeated and reinforced in further representations made by a number of the authorities involved.
We have reflected long and carefully on the points made. We have noted that the authorities affected were unanimously of the view that they neither wanted nor needed the cushioning effect of dual running. We also noted that they felt that it would be very difficult for them to cope effectively with the two
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systems of charging, particularly in view of the other new responsibilities that they would be taking on.
In addition, it was suggested that with dual running being limited to 10 authorities, it would be difficult to recruit or buy in the skills needed to maintain residual domestic rating.
These points were by no means new to us, although the force with which they were put at this fairly late stage in the progress of the Bill came as something of a surprise. We have always accepted that more work would be involved in managing the two systems and provided extra grant for that. The case for maintaining residual rating has always been to protect the charge payer from excessive charges during the early years of the new system. The benefits of doing that have to be balanced against the kinds of problems to which I have just referred. I am pleased to say that this balance now appears to be shifting. There are signs that expenditure levels in the authorities concerned are coming down. Last week my right honourable friend the Secretary of State published new exemplifications of charge levels based on authorities' 1988–89 budgets. These showed that in all the authorities within dual running spending is going down, in some cases by quite significant amounts.
Moreover, as the noble Lord, Lord Graham, pointed out in the debate in Committee, there are signs of a new realism emerging in London local government. We have been somewhat reassured to note that a number of authorities are beginning to develop plans that will bring their spending down to more realistic levels. If present trends continue there is a prospect that these reductions will be carried through into sustainable charge levels.
In the light of that emerging picture and on the likely levels of community charge, it seems that we can respond to the insistent requests of the authorities themselves and many Members of your Lordships' House that the provisions for the dual running of domestic rates and the community charge should be dropped from the Bill. I therefore propose that we delete from the Bill Clauses 63 to 81 and Schedules 10 to 12. A number of lesser consequential amendments are required elsewhere.
In dropping these provisions so that all authorities will move straight over to the community charge in 1990, in the words of the noble Lord, Lord Hayter, in Committee, we are putting the onus squarely on the local authorities from the outset. We shall be taking a keen interest in how the community charge is implemented and the level at which it is set throughout the country, but nowhere more so than in the 10 authorities.
We believe that with prudent spending it will be possible to keep charges down to tolerable levels. However, if not, and rises get out of line, we shall be prepared to take whatever further steps are necessary to protect the charge payer.
Before I finally move the amendment, may I say what a pleasure it is to remove something from a Bill rather than add to it. I beg to move.
Lord Graham of Edmonton: My Lords, I say sincerely to the Minister that those who outside the

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House bring to our notice their real concerns want me to express their appreciation of what has been announced tonight. It is a great puzzle to them that, as the noble Lord has said, there is nothing new in the background or the facts. There is an impending collision inside many local authorities which are seeking to grapple with what the Minister and his colleagues have heaped upon local councils. That has been as plain as a pikestaff for the last six months.
I used the term "new realism". Part of that new realism is of the Government's own making; namely; the rate capping process—and not only that, but also the charging process which has been capped. As a consequence it was quite clear that the figures have altered upon which these various matters were judged. The facts which the noble Lord, Lord Hayter, and I brought to the Minister at Committee stage certainly made a very powerful argument, but the Minister then said no. He is now saying that there has been a steady drip from various sources until finally, very late in the day, the Government have decided not just to listen, because they have been listening all the time, but to act.
I can assure the Minister that the burden which is carried not least in the treasurers' departments of authorities—London as well as elsewhere—must have been the final argument that convinced him. I do not move among officials and treasurers but among politicians in London. They obviously try to make sure that their boroughs are run as effectively and as efficiently as possible. The way in which they could see their administration being affected as a result of the dual running, not at a political but bureaucratic and administrative level, was a nightmare indeed.
I am glad to say that the Minister and his colleagues have recognised that. Whatever the final weight that has been added, it is in the lap of the gods. We can only guess. Most, if not all, of those that were left were members of the association of London authorities. That is one burden which they have had removed from their shoulders over the next few months. They are very grateful indeed.
Lord Boyd-Carpenter: My Lords, I find myself for once in agreement with the noble Lord opposite. I am delighted to tell my noble friend how glad I am to see these proposals. From the beginning the dual system looked as though it was going to be complicated and difficult to operate and very difficult to justify in principle. It seems to me a great improvement to move straight over to the new system.
The noble Lord opposite referred, as did my noble friend, to the new realism which has assisted the provision of this amendment. I think that what is meant is that local authorities are already beginning to look more carefully at their expenditure. It is perhaps the kind of advance reaction that they are making to the proposals of the Bill. Even in advance of the Bill becoming law, they are becoming more truly accountable, and this is introducing the new realism.
I am very glad indeed that my noble friend and the Government have decided to act on this and to get out of the way this cumbrous, intermediate system and go straight over.
Lord Ross of Newport: My Lords, we on these Benches very much welcome this change of heart. The situation was too complex. I think that the Government have come to the right decision. We are delighted with the announcement that has been made this evening.
Lord McIntosh of Haringey: My Lords, I hope that it will not be thought that our support for these proposals—which has been known for a long time —implies agreement with what the noble Lord, Lord Boyd-Carpenter, has just said. The reason why rates have been coming down in certain London boroughs is rate capping. I suppose that the noble Lord is not fully aware of the effects of that.
In many parts of London very serious damage is being done to local services. There are boroughs in London which are drastically reducing their provision for nursery schools and adult education, for example. There are boroughs which are having to increase the price for services such as meals on wheels. There are certainly boroughs around the Greater London area which have been cutting out systematically, and without any educational justification, the number of teachers in each school. A loss of one, two or even more teachers per school is not uncommon. There are many important and valuable services which are being lost as a result of the cuts imposed by the rate capping process.
I should not like the word "realism" to be applied to that. I think that these are deplorable moves backwards in the provision of local authority services and should not be prayed in aid as a justification for the changes which the Government are now proposing.
Lord Boyd-Carpenter: My Lords, before the noble Lord sits down, may I say how sorry I am that he insists on attributing all the credit for the new realism to the Government and denies any of it to the local authorities.
The Earl of Caithness: My Lords, perhaps I may thank all noble Lords for the welcome that has been given to our new proposals. The noble Lord, Lord Graham, said that it was late in the day. However, better late than never. It shows that we continue to listen through to the end of the Bill. Perhaps I may say what a delight it is to have my noble friend Lord Boyd-Carpenter back on our side.
On Question, amendment agreed to.
The Deputy Speaker (Lord Strabolgi): My Lords, does the noble Earl wish, with the leave of the House, to move the rest of the amendments en bloc?
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 191B to 191E:

Leave out Clause 64.

Leave out Clause 65.

Leave out Clause 66.

Leave out Clause 67.

On Question, amendments agreed to.
Clause 68 [Liability]:
[Amendment No. 192 had been withdrawn from the Marshalled List.]
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 192A to 192M:

Leave out Clause 68.

Leave out Clause 69.

Leave out Clause 70.

Leave out Clause 71.

Leave out Clause 72.

Leave out Clause 73.

Leave out Clause 74.

Leave out Clause 75.

Leave out Clause 76.

Leave out Schedule 10.

Leave out Schedule 11.

Leave out Clause 77.

On Question, amendments agreed to.
[Amendment No. 193 had been withdrawn from the Marshalled List.]
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 193A and 193B:

Leave out Clause 78.

Leave out Clause 79.

On Question, amendments agreed to.
[Amendment No. 194 had been withdrawn from the Marshalled List.]
Schedule 12 [Residual rating: administration]:
[Amendments Nos. 195 to 200 had been withdrawn from the Marshalled List.]
[Amendment No. 201 not moved.]
[Amendments Nos. 202 and 203 had been withdrawn from the Marshalled List.]
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 203A to 203C:

Leave out Schedule 12.

Leave out Clause 80.

Leave out Clause 81.

On Question, amendments agreed to.
Clause 84 [General and special expenses]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 204:
Page 50, line 8, leave out paragraph (a).
On Question, amendment agreed to.
[Amendments Nos. 204A and 204B not moved.]
Clause 87 [Information]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 204C:
Page 51, line 19, leave out (", 9 or 12") and insert ("or 9").
On Question, amendment agreed to.
Clause 88 [Levies]:
9.15 p.m.
Lord Underhill Lord Underhill moved Amendment No. 205:
Page 51, line 45, at end insert ("except in the case of a levy by a metropolitan county passenger transport authority:").
The noble Lord said: My Lords, this amendment is in the name of myself and the noble Lord, Lord Teviot. In moving Amendment No. 205 it may be convenient if I also speak to Amendment No. 207. As noble Lords are now aware, the Bill includes provisions for a change in precepting by passenger transport authorities to that of levying. That means that the sum requested will be billed to the district councils.
Efforts were made at the Committee stage and earlier in the Report stage to retain the precepting procedure for PTAs. That proposal was supported by noble Lords from all parts of the House. Nevertheless, the decision was contrary to what we wanted because many noble Lords had not heard the sensible arguments that had come from all sections of the House. The Bill also proposes that the Secretary of State shall be empowered by regulation to impose a maximum limit on levies.
The Transport Act 1985 gave the Secretary of State power to lay down the expenditure of each of the PTAs for a transitional period of three years. As the noble Lord, Lord Jenkin of Roding, stated in his two excellent speeches, we are still in the third year of those three transitional years. If the Bill remains as it is, that control for three years will in effect be extended indefinitely by the power of the Government or the Secretary of State to impose a maximum limit on levies which will include those of the passenger transport authorities.
On 18th December last the Secretary of State stated that 1988–89 will be the third and final year in which the amounts charged to ratepayers in metropolitan areas for their public transport will be automatically controlled. That might suggest that the amendment I am now proposing will receive the support of the Minister and his right honourable friend the Secretary of State. I pointed out at Committee stage that passenger transport authorities will now have their expenditure controlled in two ways: first, by the provision to impose a maximum limit on the PTA's levy and, secondly, the possibility of community charge capping which the Bill permits. This could cause a district council to cut down its support for transport expenditure. I emphasise as strongly as I can that this is an unacceptable degree of central government control over the expenditure of the important passenger transport authorities.
What were the Government's arguments against that amendment at Committee stage? At col. 97 of the Official Report for 13th June the noble Lord, Lord Brabazon—who I am pleased to reply to the debate this evening—said:
"I can assure my noble friend"—
that was the noble Lord, Lord Teviot—
"and the Committee that we have no present intention of using this power to set limits on PTA expenditure. Indeed, we would not wish to do so except in very exceptional circumstances—both because of the very absence of a statutory mechanism for consultation and appeal."

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I draw attention to the reference to the absence of provision for appeal to which I shall return later.
The first amendment attempts to exempt a passenger transport authority from the provision for setting a maximum amount on a levy by a PTA. The argument of accountability is used, yet we have argued time and time again that the levy will be determined by the elected councillors appointed by their district councillors to the PTA.
The second amendment, Amendment No. 207, takes up a point made by the Minister that there is the absence of a statutory mechanism for consultation and appeal. At col. 98 on the same date the noble Lord said:
"I can assure him"—
that again is the noble Lord, Lord Teviot—
"that in the remote event—and I emphasise that it is remote—of our proposing to use the power to impose a maximun on the levy, we should discuss the matter fully with the PTA concerned before final decisions were taken".
That is surely a step forward, but it is not good enough. Other local authorities have the right of appeal against determination. During the three-year provisional period the PTAs have had the right to ask for a redetermination of the pre-set level, and for the current year, five out of six PTAs accepted that right of appeal to the Secretary of State for redetermination. Therefore the present procedure would suggest that Amendment No. 207, asking for the provision to be made for the levying body to appeal to the Secretary of State against any decision he may make to impose a maximum amount on a particular PTA, is one which would appeal to the Minister.
I beg leave to move Amendment No. 205. At the same time, I hope that the points I have raised on Amendment No. 207 will be considered by the Minister.
Lord Brabazon of Tara: My Lords, I have to say that I was a little surprised to see these two amendments tabled by the noble Lord, Lord Underhill. When we debated similar amendments tabled by my noble friend Lord Teviot in Committee, I felt that I had reassured him and the Committee of our intentions with regard to the setting of maximum limits on the PTA levy.
It may assist the House if I briefly repeat now the assurances I gave to my noble friend in Committee. On the question of retaining the power to limit PTAs' levies I gave the assurance that we have no present intention of using this power to set a maximum limit of PTA expenditure. Also, I assured the Committee that we would not wish to use the power except in exceptional circumstances and that we had no intention of using it to operate a dual system of charge and levy limitation.
The noble Lord, Lord Underhill, has now tabled Amendment No. 205 to disapply the power to set a maximum for the PTAs, but I could not assure the Committee and I cannot now assure the House that we would never have cause to use the power. I repeat that it is not our present intention to do so, and it is a very remote possibility that we ever would, as we
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firmly believe that the change to billing will lead to increased realism in PTA budgeting. But I am sure the House will appreciate that in later years it may prove a useful power to have in reserve.
Turning to the question of a right of appeal to which the noble Lord's Amendment No. 207 refers, I assured my noble friend in Committee that were we ever to use the power to impose a maximum on the PTA levy we would discuss the matter fully with the PTA or PTAs concerned. There would be no question of simply imposing a limit without allowing the PTA a chance to present a case for a higher one. In fact, the noble Lord's amendment would provide a statutory right of appeal not only for the PTAs but for all levying bodies against the limit set on the size of their levy.
As I explained in Committee, the primary purpose of the power to set a limit on levies is to enable the replication of existing statutory limits on existing levying bodies. Many of those statutory limits are expressed in terms of the existing rating system and could not be carried into the new system without specific provision. It would not be appropriate for large numbers of such minor boards to have a statutory right of appeal. A typical levying body may have a present limit on its levy set at less than a penny in the pound. A statutory right of appeal is not only out of scale with the expenditure concerned but is also inappropriate to a simple continuation of existing limits.
I am sorry that the noble Lord, Lord Underhill, and my noble friend Lord Teviot have not found my earlier assurances to be satisfactory. I can only repeat to the House that we see the power to set a limit on the PTA levy very much as a reserve power for use in extremis, and in the remote event of our using it we should wish to discuss its application fully with the PTA concerned. I trust, therefore, that the House will accept the assurances that I have given and that they are more than adequate to meet the noble Lord's concerns.
Lord Underhill: My Lords, the difficulty of dealing with the comments made by the Minister is that they are made in such an agreeable way that they suggest everything is nice and cosy and that we need not worry at all, but it may be remembered that at the Committee stage the amendment would have cut out the provision of all maximum levies by levying bodies, whereas we are now merely wanting to except the PTAs. While it is nice to hear the Minister say there is no rush, indeed, no intention to use the reserve power, we do not know how long the present Secretary of State will be in office. Secretaries of State for Transport seem to have changed more quickly than other members of the Government. We therefore want to know about the future. If the Government have no intention of using the power, why not include the exemption of the levy on the PTA in the Bill?
The Minister says they want the levy because they believe it will make for more accountability. We have already debated this at some length. No one can convince me that councillors elected by popular vote and appointed by their district councils to be representatives on a PTA are any less accountable

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than under the procedure in the Bill. If the Government really thought that, there would be direct election for PTAs as happened with ILEA, which is now abolished. The councillors are elected representatives appointed by their district councils and responsible to them.
The Minister says finally that this means that all levying bodies would have the right. If his dislike of that is because some relatively small, unimportant bodies would have the right, I should like the Minister himself to bring forward a proposals that the appeal would be for PTAs only. If it is possible for a PTA to ask for a redetermination of the precept maximum applied for three years and the last year is now up, why should the opportunity for application for redetermination henceforth be continued?
We have considered carefully what the Minister said. It will be the question of appeal and redetermination that we wish to bring forward on Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Caithness The Earl of Caithness moved Amendment No. 206:
Page 52, line 8, after ("Act") insert ("(originally or by way of substitute)").
On Question, amendment agreed to.
[Amendment No. 207 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 207A:
After Clause 88, insert the following new clause:
("Special levies.
.— (1) This section applies as regards any body—

(a) which has no power to levy a rate by virtue of regulations under section (Rates: power to abolish or modify) below, or

(b) whose power to levy a rate is modified by regulations under that section.

(2) The Secretary of State may make regulations conferring on any such body power to issue in respect of prescribed chargeable financial years and in accordance with the regulations—

(a) a special levy (to be so called) to such charging authority as is prescribed as regards the body concerned, or

(b) special levies (to be so called) to such charging authorities as are prescribed as regards the body concerned.

(3) The regulations may include provision as to the body's expenditure, or the proportion of its expenditure, which may be met from the proceeds of a special levy or special levies.
(4) The regulations may include provision—

(a) as to when special levies are to be issued;

(b) imposing a maximum limit on special levies;

(c) as to apportionment where a body issues special levies to more than one charging authority;

(d) conferring a power to issue special levies by way of substitute for others;

(e) as to the payment (in instalments or otherwise) of amounts in respect of which special levies are issued;

(f) conferring a right to interest on anything unpaid.

(5) The regulations may include provision requiring a charging authority to treat as special expenses any expenses needed to meet a special levy issued to it.
(6) The regulations may include provision—

(a) that a charging authority making calculations under section 109 below (originally or by way of substitute) may anticipate a special levy;

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(b) as to the treatment as special expenses of amounts so anticipated;

(c) as to the treatment of any special levy actually issued.

(7) The regulations may include —

(a) provision equivalent to anything in section 35 above or in sections 82 to 86 above (subject to such modifications as the Secretary of State thinks fit);

(b) provision amending or adapting any provision of this Act in consequence of any provision included under subsection (5) above.").

The noble Earl said: My Lords, in moving Amendment No. 207A, I wish to speak also to Nos. 222A, 231A, 233N, 246ZA, 246ZE, 246C, 247B and 250C.
The noble Lord, Lord Ross of Newport, raised the question of Wimbledon and Putney commons early in Committee. I said that I could not quite remember what our answer would be but that I had remembered it the day before. Here is the answer. There are a number of private Acts giving various bodies the power to make a rate or levy in precept generally for the upkeep of roads, street lighting and such things as garden squares and public open spaces. These Acts rely heavily for their operation on elements of the present rating system, most commonly the use of rateable values in the valuation list as a base for levying or apportioning the charge. There is no problem where these bodies are established levying bodies. We would ensure that they would be able to issue levies under the regulations made under Clause 88. In other cases the body may currently make a rate on local residents.
While the Bill will not specifically preclude such arrangements continuing—only rates under the General Rate Act are repealed—the abolition of domestic rates means that domestic rateable values will cease to be maintained after 1st March 1990. The valuation list will therefore become progressively out of date as new dwelling houses are built and existing ones altered and demolished. Domestic rateable values will therefore become an equitable base on which to levy a rate. We therefore propose that bodies constituted under a private or local Act with a power to levy a rate should, if they so wish, be allowed to be special levying bodies. This group of amendments gives effect to that proposal.
Briefly, the effect of giving special levying body status would be to enable the body to make a levy on the appropriate charging authority or authorities in its area to cover administrative and operational expenditure. Charging authorities would recover amounts through the community charge. It will be necessary initially to consider whether special levying body status is appropriate and also what safeguards need to be included in the scheme. These may cover such items as limitations on the amount of the levy. Existing powers are often limited in this way.
There may also need to be directions as to how the charging authority is to treat the special levy for charging purposes. In circumstances where a rate is levied on non-domestic as well as domestic property it will be necessary to provide for the non-domestic rate to continue so that community charge payers do not have to bear an additional burden. Where special levying body status is considered appropriate, those bodies affected will be notified and given an

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opportunity to make representations about any aspect of the proposed scheme before it is made. I beg to move.
9.30 p.m.
Lord Underhill: My Lords, in broad terms we can see no objection to the proposals contained in the new clause. However, this method of financing—especially in the case of Wimbledon Commoners and other bodies—appears to be anachronistic in the light of what is supposed to be a wide-ranging reform of local government finance. It also seems strange that the House has had to wait until the Report stage before the Government have realised that such a provision must be made.
It may be helpful to ascertain from the Minister whether any of the proceeds of the non-domestic rate— which will be organised in a national pool—will be available to the bodies which formerly enjoyed part of the proceeds of the local business rate as well as the domestic rate. Can the Minister make clear whether the sum available to, for example, the Wimbledon Commoners, which is an important body, will be not less than that currently available to it?
In connection with the proposed new clause after Clause 131, can the Minister give assurances that any modifications of the powers to abolish or modify rates will not adversely affect the position of the Wimbledon Commoners?
The Earl of Caithness: My Lords, I can give the noble Lord, Lord Underhill, the assurance that he is seeking in that the revenue to be raised will not be less than is currently available to such bodies. I believe that the noble Lord highlights a valid point; namely, in dealing with private Acts there are difficulties which must be taken into account. These were by no means last-minute thoughts; they were problems which we knew had to be resolved. However, we were so busy arranging concessions to the noble Lords and other Members of your Lordships' House that it has taken rather longer than we had hoped to reach this point.
On Question, amendment agreed to.
Clause 89 [Interpretation]:
Baroness Stedman Baroness Stedman moved Amendment No. 208:
Page 52, line 28, leave out ("in the application of this part to Wales,").
The noble Baroness said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 209, 219 and 220. With this group of amendments we turn to the question of revenue support grant and the non-domestic rate being paid to the district collection funds. The counties and the other precepting authorities then precept on the collection fund for their total expenditure, net of any specific grants, fees or charges. The bill that is ultimately received by the charge payer will then show one community charge for the whole of the area. This is a departure from the present procedure in England, although in Wales it will remain as it is now.
Under the proposed arrangements there is no direct link between the amount an authority spends and the composite community charge which is levied. Therefore in future a charge payer in England will not be able to see how much he is paying towards a particular authority's services; neither will he be able to judge whether he is getting value for money, nor work out what kind of impact budget decisions have had on the charge payer. This does not offer the accountability which has been widely extolled as a virtue during the passage of this Bill.
The community charge bill will be sent out by the district council in the shire areas. The responsibility for explaining the charge will lay with the district treasurer, with the result that the link of accountability between an authority and its local residents in England will be substantially weakened. This will not be the case in Wales, where the grant and the non-domestic rates will be paid direct to the relevant authorities, with those authorities precepting on the collection fund only for their net community charge. Welsh districts and counties will have their own separate community charge. If they can have it, why cannot we have it in England?
The Bill recognises that the arrangements are not as good as they might be because in exceptional circumstances, if there is a need for an additional grant to be paid at some time during the year, the Secretary of State can direct that a specific local authority may be paid an additional grant.
The Government believe that their proposals in the Bill will remove the need for disaggregation of grant between counties and districts and reduce the instability and complexity of the grant. The instabilities of the current grant system have been aggravated by the present Government over the past years by their systems of penalties, rate capping, safety nets, frequent changes in the way in which GREA is worked out and in grant recycling—and, more latterly, in even the abolition of that.
We have been told that the new grant system will be simpler and more stable; authorities will know their entitlements well in advance; and the needs assessment will be simpler and will not need to be changed so often. All I ask is that the system and arrangements for England should be the same as those which will apply in Wales. Grant and the non-domestic rate would be paid direct to all the main precepting authorities and the collection fund would remain simply to collect and distribute the community charge. We have included in it the metropolitan joint boards, the London-wide authorities and, at the moment, ILEA.
At the Committee stage we considered the format of the community charge bill. These amendments, if accepted, will enable the bill to show a much clearer relationship between an authority's spending and the community charge. Charge payers will easily be able to see which authority is accountable for which services. I beg to move.
The Earl of Caithness: My Lords, as the noble Baroness has explained, these amendments would change the basis of payment of revenue support grant and make it payable direct to the districts, counties,

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police authorities and fire and civil defence authorities rather than into the collection fund. This would reproduce what happens under the present grant system, and that fact alone should set the alarm bells ringing. The present system is incomprehensible, and the payment of grants to every authority plays a major part in that.
At an earlier stage in our consideration of this part of the Bill we discussed similar amendments, and I outlined the merits of the collection fund. The noble Baroness said that she would read my words and return to the matter on Report, as she has now done. I also took the opportunity to look again at what the noble Baroness said. I hope that I can deal with some of the points she raised, while trying to persuade the House that the Government's proposals are the fairest and most accountable way of dealing with the payment of grant.
The first helpful point to remember is that the payment of revenue support grant is not to help local authorities but to support the local domestic taxpayers in an area. If there were no grant and no business rates, local domestic taxpayers would have to finance all the expenditure of the authorities providing services in their area. This relationship between the taxpayer, as provider of revenue support grant, business and the charge payer is embodied in the concept of the collection fund.
As your Lordships have heard, the fund will receive grants, community charges and non-domestic rates for the area. All authorities providing services in the area will draw upon the collection fund for their reserves. The major focus will be on the actual level of spending of each authority compared with need. I believe, therefore, that this arrangement meets one of the key points made by the noble Baroness that the charge payer should be able to see what each authority is spending. That is precisely what will happen, because each authority will have to ask the fund, and hence the charge payer, for the whole of what it wants to spend.
The noble Baroness is also concerned that there should be a direct link between an authority's spending and the charge levied. We agree that that is vital to accountability and that link will be made. If charge payers see that they are being asked to pay £15 more than the national norm for spending at need, they will be able to see that this is not because of the level of business rates or because the district is getting more or less grant but but because the authorities in that area are spending £15 per adult more than they need to.
The charge demand notice will show which authorities are responsible for that £15 and the authorities will know that if they budget to spend more than their needs assessment every extra £1 will go straight on to the community charge. These amendments would require the payment of grant to each tier of authority and the Metropolitan Police, fire and civil defence authorities and other such authorities.
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As I have explained, to pay grant in this way would cause several technical problems in England because of the more complex structure and the range of needs. Every stream of income which under our proposals goes into the collection fund—grant, NNDR and community charge—would have to be divided between all the authorities in an area. There are a number of ways in which that can be done, but whichever we chose it would complicate the system without achieving anything that cannot be done anyway.
Under the system proposed in the amendment, charge payers would be able to see a separate charge figure for each authority, but they will be able to see what each authority is spending more clearly under our proposals. They can compare the district charge with the county charge, but that achieves nothing since the two have different functions and provide services on a quite different scale. They can compare this year's county charge with last year's, but that alone tells them nothing. To understand the difference they would have to look at this year's overspend compared with last year's and look at the levels of grant and NNDR. However, they can do all that better under the system we have proposed. Looking at a rise of, say, £20 in a separate county charge would not show the charge payer why the increase has come about and who was responsible. He certainly could not simply conclude that the county was spending £20 a head more.
I realise that we are asking authorities and charge payers to take a different approach to accountability and assessing financial performance, but I am convinced that the key comparison in our system between the actual charge and the charge if every authority spent at need is simple and easy to understand and will enable more people to take an informed view of their local authority's performance.
We have chosen not to replicate the arrangements for Wales, as your Lordships know. Wales has only two principal tiers and there are no separate police, fire and civil defence authorities. There is a much simpler and more stable grant system which has operated relatively well. There have not been the same disagreements about needs assessments or the split of grant between tiers. In Wales, grant and NNDR will continue to go separately to county and districts, but the charge payer in Wales will receive with his charge demand information to make him aware of the same comparisons of spending per head in relation to need as will be available in England.
Your Lordships should not be surprised to find a different treatment for Wales and England in this respect. For some years Wales has operated a totally self-contained system of local government finance, which has been different from that of England. It reflects the differences of Wales and is tailored to the needs of Wales. After 1990 there will continue to be separate and different systems, and we perceive this as a virtue rather than a handicap. The noble Baroness said that all she wants is similarity between England and Wales. Some diversity of approach is surely to be welcomed when it reflects genuine local differences.
9.45 p.m.
Baroness Stedman: My Lords, the noble Lord has been very persuasive. I am still not completely convinced by his argument. I am still not sure that the charge payer will be able to see from the bill he receives exactly who is providing what and what he is paying for. In the light of having tried three times—I mentioned it at Second Reading; I had a go at the Committee stage and again now—I had better give
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up my "little Englander" act and withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 209 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 210:
Page 52, line 34, leave out paragraph (c).
On Question, amendment agreed to.
[Amendment No. 211 not moved.]
Lord Teviot Lord Teviot moved Amendment No. 211A:
Page 52, line 40, after ("is") insert ("a metropolitan county passenger transport authority or").
The noble Lord said: My Lords, in moving this amendment I speak to Amendments Nos. 211B, 216, 217 and 218. The amendment to Clause 89 is to provide for revenue grants to passenger transport authorities. As PTAs are to become levying authorities as a result of this Bill, they lose their direct access to government revenue grant. At present, they are treated in the same way as any local authority. They are, in principle, eligible to receive rate support grant from central government; provided, first, their individual circumstances qualify them for grant; secondly, their spending relative to their grant related expenditure assessment stays within limits set by the Government. This grant is spent directly on public transport, in particular for support for socially necessary bus and rail services, concessionary fares, special needs transport, promotion of public transport, servicing debt on capital expenditure on investment projects. The grant cannot be diverted to other expenditures outside transport because the PTAs are single-purpose authorities.
Under the Bill as now drafted, all central government grants are paid into a collection account. If they had remained precepting authorities, the PTAs would be entitled to obtain their share of this grant, which would continue to be spent on public transport. However, as they are becoming levying authorities they will not necessarily have direct access to the collection account or to their own source of income. They will levy for the full amount of their expenditure on the districts. The districts will receive the grant but will be able to use it for any purpose they wish. Grants for public transport can be diverted to other purposes. In addition, the cost of public transport to the charge payer will appear higher than it does now because it will be the gross figure, not the figure net of grant as it is now, and will continue for other joint authorities for police and fire.
This amendment seeks to remedy this by ensuring that passenger transport authorities continue to be eligible for central government grant under the same principles or eligibility as would apply if they remained precepting authorities. Amendments Nos. 216, 217 and 218 are to Clause 101 and are designed to give the Secretary of State power to make capital grants to passenger transport authorities for public transport schemes. The Secretary of State already has the power to make grants under Section 56 of the Transport Act 1968, but the criteria that he has adopted for grants under this section are such that no PTA has yet succeeded in receiving grant.
One of the criteria adopted is that schemes must exceed £5 million in estimated cost. Thus it rules out all but the most major schemes. For example, the proposed trolley bus scheme in Bradford in West Yorkshire, which it is estimated will cost about £3 million, is ruled out.
PTAs are almost unique among public sector bodies that provide major services in that they receive no government grant towards the cost of capital
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schemes. This cannot be right. These amendments would restore the Secretary of State's power to give transport supplementary grant for public transport schemes in the same way that he does for highway and traffic congestion schemes.
In the debate on 20th April on public transport and traffic congestion, initiated by the noble Lord, Lord Underhill, to whom I must apologise soon, it was clear that the former has a vital role to play in the relief of traffic congestion in our towns and cities. It is therefore logical that in considering transport supplementary grant the Secretary of State should take account of public transport schemes as well as highway schemes. For example, bus stations can be an important facility in city centres in relieving congestion, particularly by removing the need for buses to lay-over on the streets, which looks fairly ghastly. One can remember the example in Hereford. The right reverend Prelate for that diocese is not present, but I am sure that he would agree if he were here. Other schemes which can make a similar contribution are interchanges and railway stations.
Finally, our major provincial cities lie in the metropolitan areas and it would be wise to give the Secretary of State this additional power to grant aid smaller public transport schemes which could nevertheless make a significant contribution to the relief of congestion. The power could be extended to cover shire counties as well if the Government felt it appropriate. This would leave Section 56 grant for major national schemes which it is designed to do. I beg to move.
Lord Underhill: My Lords, I support the various amendments moved by the noble Lord, Lord Teviot. He has covered the ground fairly extensively, but I should like to underline two or three points. First, he made the important point that passenger transport authorities were set up only to deal with transport policy, as the name implies, and therefore as single service authorities grants cannot be diverted to other purposes. We know that grants for transport purposes other than to PTAs can be diverted for other purposes. Noble Lords will recall that we have had a debate and Questions in the House about the upkeep of local roads. Highway authorities have to deal with highways and with other problems, whereas passenger transport authorities have to deal only with transport services. The amendments seek to ensure that grants are made to the PTAs.
The noble Lord also said that the amendments would restore the power of the Secretary of State to give transport supplementary grant for public transport just as he does at present for highway and traffic management schemes. The Minister will have to justify why he does not wish to give that same facility to passenger transport authorities. One of the key areas of uncertainty in the change of the PTAs to levying concerns the assessment grant for public transport.
Noble Lords may recall that we referred to the Department of Transport's consultation paper,

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which announced the proposed change to levying. It stated that the needs assessment would reflect the need for transport services for which the PTAs are responsible. But no reference was made in that document to capital grants, which is one of the important points made in the amendments now before the House. The way in which needs assessment has implications both for PTAs and for the finance of the individual districts is obviously paramount.
We suggest that the best possible solution is that PTAs should continue to be needs assessed and to receive revenue grants from central government. The amendments are designed to urge the Government to accept the proposal and to explain how the system of needs assessment will work. One of the big problems with this Bill is, first, that it is a devil of a problem to understand how GREA works; and, secondly, it is also important to understand how the needs assessment will work for transport services. I have great pleasure in supporting the amendments tabled in the name of the noble Lord, Lord Teviot.
Lord Brabazon of Tara: My Lords, my noble friend has put down two groups of amendments which both, in different ways, have the effect that grant would be paid direct to the passenger transport authorities.
I turn first to Amendments Nos. 211A and 211B. As my noble friend said, they would have the effect of including PTAs within the category of specified bodies. Perhaps it would be helpful to your Lordships if I were first to remind you of what these are. A specified body under subsection (4) of Clause 89 is one for which the Secretary of State may make a determination under Section 91 to pay grant. The grant paid to specified bodies is quite separate to the grant distributed to local authorities under the normal mechanisms of needs assessment. It will be paid separately, and reflects existing arrangements whereby grant is paid direct to certain bodies on the recommendation of the local authority associations.
The key point is that specified bodies are already quite precisely described in Clause 89(4) as bodies which provide services for local authorities. The PTAs' services of course are for the charge payers of the area, not for other local authorities. Let me give the House some examples of specified bodies. One is the Local Authorities Conditions of Services Advisory Board (LACSAB), which advises authorities on employment issues; another is the Local Authority Management Services and Computer Committee (LAMSAC) which provides management services advice; then there are LACOTS—the Coordination of Trading Standards—the Local Government Training Board, and several more. I think your Lordships will see that none of the bodies which are specified bodies is responsible for local authority services in a particular area, and none of them falls into the category of either charging, precepting or billing authorities. They are organisations of a quite distinct type for which special grant arrangements are appropriate.
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The grant power is wholly inappropriate to the PTAs. Grant for local services, including public transport, in the metropolitan areas will be part of the normal grant arrangements for local authorities and will be paid into the collection funds at district level. My noble friend's amendment strikes at the root of this principle.
My noble friend and the noble Lord, Lord Underhill, are concerned to avoid PTA expenditure being squeezed due to pressure from the spending needs of other district services. It seems to me entirely appropriate for the individual districts whose representatives make up the PTA to make decisions on spending priorities over their entire range of services but I have little doubt that the districts will continue to attach importance to the provision of socially necessary public transport.
I can see no justification then for special grant treatment for the PTAs, and to include PTAs in the arrangements for LACSAB, LACOTS and the rest would make a nonsense out of the grant structure. If PTAs were to be paid directly, what about the English shire counties, say, or the other levying bodies? They would surely have equal claim. But to do that would be to undermine the whole grant structure of this Bill.
I now turn to my noble friend's Amendments Nos. 216, 217 and 218. These amendments would have the effect of enabling supplementary grant to be paid on public transport capital works undertaken by the passenger transport authorities. I can assure my noble friend that there is already a satisfactory power for direct grant funding of major public transport capital schemes in the PTAs' areas provided by Section 56 of the Transport Act 1968. I shall give an example. Grant may be paid, for example, to the Greater Manchester Light Rapid Transport Scheme. We have just agreed to pay grant for land and preparatory works costs.
Clauses 100 and 101 are designed to permit the continuation under the new system of the existing arrangements for paying transport supplementary grant. TSG is a 50 per cent. grant towards capital projects. In England TSG is paid only on the rolling programme of roads spending. PTAs are not unique in not receiving TSG. Shire districts do not receive the grant and nor do any other authorities in England for public transport.
Unlike the present legal basis for TSG, Section 56 grant funding is unaffected by the other provisions of the Bill and there is therefore no need to re-enact it or to amend Clause 101 in order to provide for grant aid to such schemes.
I have indicated that there are perfectly adequate systems for funding both revenue and capital expenditure on public transport in the PTA areas and I hope that on reflection my noble friend will feel able to withdraw these amendments.
10 p.m.
Lord Underhill: My Lords, before the Minister sits down and the noble Lord, Lord Teviot, replies,

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perhaps I may ask a question about "specified body" to which the Minister referred. When I look at Clause 89(4) I find:
"A specified body is any body which provides services for local authorities and is specified in regulations made by the Secretary of State under this subsection; but a body is not a specified body as regards a financial year unless the regulations specifying it are in force before the year begins".
Will the Minister tell me where is the interpretation of "specified body" which he outlined to your Lordships? If the amendment proposed by my noble friend Lord Teviot were carried, the provision would read:
"A specified body is a metropolitan county passenger transport authority or any body which provides services for local authorities".
Will the Minister explain why he rules out the amendment and where the explanation he gave of a "specified body" is mentioned in the Bill?
Lord Brabazon of Tara: My Lords, with the leave of the House, the explanation is in the words:
"which provides services for local authorities".
These bodies provide services for local authorities. Of course the PTAs do not provide any services for local authorities.
Lord Underhill: My Lords, with the leave of the House again, does the Minister agree that with the levying proposal the PTAs will be providing transport services for local authorities? Surely that is one of the arguments.
Lord Brabazon of Tara: My Lords, with the leave of the House again, the point I was making was that they are not services to the local authorities as such; they are services to the people in the local authority areas. That is not the same thing as providing services "for the local authorities" such as the type of services I described.
Lord Teviot: My Lords, without the leave of the House, I am rather unhappy about this subject. I should like an assurance from my noble friend that the districts, which will be the levying authorities, can spend this money on transport and nothing else. If he can tell me that he has every confidence that the districts will spend the money on transport, I shall be happy, or I may have to think again.
Lord Brabazon of Tara: My Lords, with the leave of the House once more and I think for the last time, I cannot give the assurance that my noble friend seeks. As I said in my original remarks, the money goes to the districts. It is up to the districts, whose representatives make up the PTA, to make their decisions on their spending priorities over their entire range of services. However, as I said, I have little doubt that they will continue to attach importance to the provision of socially necessary public transport.
Lord Teviot: My Lords, I feel that we are in rather a cleft stick. The main amendments on this matter failed twice, both in Committee and on Report. This is not an issue on which I wish to divide the House but I have received rather an unsatisfactory answer. The hour is fairly late. However reluctant I am to do so,
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I shall withdraw the amendment. I feel rather wet about the whole situation, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 211B not moved.]
Clause 90 [Information]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 211C:
Page 53, line 24, leave out from ("account") to end of line 26 and insert ("any other information available to him, whatever its source and whether or not obtained under a provision contained in or made under this or any other Act.").
The noble Earl said: My Lords, I shall at the same time speak to Amendments Nos. 213 and 233A. All these relate to provisions about information. Amendment No. 211C will enable the Secretary of State to take into account any information from any source, including information from representations made to him, in deciding whether to exercise his powers and how to perform his functions under Part VI of the Bill.
Amendment No. 213 relates to ILEA. It will treat ILEA as if it were to remain a precepting authority and allow the provisions of Clause 90 to apply to it before 1st April 1990. This will allow the Secretary of State to obtain information from ILEA before it is abolished under the provisions of the Education Reform Bill on 1st April 1990.
Amendment No. 233A will enable the Secretary of State to take into account information that is available to him from sources other than under the provisions of the Act, orders or regulations. This carries forward the effect of Section 8 of the Rates Act 1984 into the new system. I beg to move.
On Question, amendment agreed to.
[Amendment No. 212 had been withdrawn from the Marshalled List.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 213:
Page 53, line 26, at end insert—
("(5) This section shall have effect before 1 April 1990 as if after "precepting authority" in subsection (1) there were inserted "or the Inner London Education Authority".").
The noble Earl said: My Lords, I beg to move.
On Question, amendment agreed to.
Clause 91 [Revenue support grant]:
[Amendment No. 214 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 214A:
Page 53, line 36, at end insert—
("(bb) the matters to which he has had regard in determining the amount of grant to be paid to receiving authorities").
The noble Lord said: My Lords, this amendment and Amendment No. 215A to which I also wish to speak are pale imitations of the kinds of amendment that I should really like to put down about the grant system. However great the difficulty we had over the years in keeping up with the grant related expenditure assessment and the target system which the Department of the Environment imposed on local authorities, however frequently it changed and

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however many U-turns there were in the calculation of the grant related expenditure system, at least there was some attempt in the past to explain the basis on which grant was given to local authorities. That occurred even at a time when the percentage of local authority expenditure covered by grant was decreasing quite dramatically.
I believe that if the percentage of local authority expenditure covered by grant was the same now as it was in 1979, local authority rates would be some 20 per cent. lower than they are at the present time. That should be a sobering reflection to those who talk about the extravagance of local authorities.
But there is no attempt whatsoever in the Bill to explain on what basis the Secretary of State will set the revenue support grant. Whenever Ministers are questioned about this here or in another place, they talk about needs assessment. But even the phrase "needs assessment" cannot be found anywhere in the Bill. It is something in the minds of Ministers. We are supposed to take all of this on trust. We are supposed to believe that it is an adequate way of dealing with local authority finance and with the fact that the needs and resources of different local authorities are clearly greatly different one from another, and that therefore some national system of equalisation at the very least is going to be necessary.
That would not be so bad if it were not for the fact that the government grant and the national business tax combined will now account for some three-quarters of all local authority expenditure, with the effect that the Government will have a greater influence than local authorities on the level of poll tax. How completely arbitrary, unexplained and secretive ways of calculating grant and assessing the level of national non-domestic rate can be considered to be an improvement in accountability is quite beyond me.
Perhaps I may give an up-to-date example. Within the last month the Government have recalculated the indicative level of the poll tax for spending at a needs assessment. In 1987–88 the level was £178. In 1988–89 it is £202. That is an increase of 13 per cent. How do the Government explain that to the charge payers? How does that further accountability? The amount can go up and down without any explanation being given and without any justification being required from the Secretary of State.
The amendments that I should like to move would impose duties on the Secretary of State to set out his reasoning in detail and to be open to challenge on them. The amendments which we have put down are much more modest. In Amendment No. 214A we ask that the Secretary of State report on the matters to which he has had regard in determining the amount of grant to be paid to receiving authorities. In Amendment No. 215A we ask for the estimates that he has used in calculating the distributable amount for the year of the national non-domestic rate.
It seems to me that that is the absolute minimum of information to be required if the Secretary of State is to maintain any sort of level of accountability to local authorities and, through them, to the charge
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payer. Otherwise, the concept of accountability as it is put forward in the Bill is even more of a farce than I believe it to be. I beg to move.
Lord Carr of Hadley: My Lords, I hope that my noble friend the Minister will be able to give the House more specific information about how needs are to be calculated by his department. Following an earlier debate, I wrote to him about the situation in Westminster. I took Westminster as an example and I raised it in a speech which I made a week or two ago in connection with an amendment moved by my noble friend Lady Gardner of Parkes.
It is clear that the gap between what the department estimates Westminster should spend to provide what the Government call a standard service and that which Westminster is currently spending is almost, if not wholly, accounted for by a difference in educational expenditure. Westminster is currently meeting ILEA costs. I agree with the Government—as I am sure that Westminster City Council would—that when the council takes over educational services it will expect to save a substantial sum compared with what it presently pays to ILEA.
However, the basis on which the Government assess the savings concerns me. I do not believe that it will be as great as they estimate. I do not have the precise figures in mind. However, broadly speaking the Government have suggested that when Westminster City Council takes over education it will be able to reduce the cost of education per head of population by not far short of 50 per cent. That is an enormous reduction in the highest cost area in the country.
In a letter which my noble friend the Minister wrote to me, he put forward a lot of general arguments. He told me that
"The needs assessment for ILEA is calculated on the same principles as the assessment for other LEAs. These take into account not only pupil numbers, but also the extent of 'additional educational needs' which is a measure of socio-economic deprivation and the additional cost of providing services in London, due to higher wage costs etc."
Yes, but no quantity is give to any of those things. Without some quantity being given I do not understand how we can give a precise amount per pupil in our estimates.
I believe that before we can take the figures on board and accept them we need more factual evidence of how the analysis of needs is carried out. If all goes well, then according to the Minister's theory:
"although there is no directly comparable education authority"
with which the efficiency of Westminster can be compared, nevertheless:
"the assessment measures the cost for ILEA as for other LEAs of providing a standard level of service".
What is the meaning of that phrase "a standard level of service" in relation to the City of Westminster? I cannot believe that there is a standard level of service as between one area and another.
Just to take one small example, I understand—I am not sure whether or not I am right about this but I believe that I am—that at the request of the Govern-

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ment themselves Westminster City Council has agreed to take on responsibility for the teaching of music not just in Westminster but throughout the whole of the London area. That is something which many of us are delighted to hear because some of the changes have given those of us with an interest in music teaching in London considerable concern. It is a comfort to know that. How much of the pence per head which the Government estimate Westminster will properly spend on education has been allowed for that far from standard level of service, that special service which Westminster has agreed to take on at the request of the Government? They have done so not of their own volition—although I understand that they acceded to the request readily—but at the request of the Government.
If we could be given a breakdown of how the Government arrive at a reasonable charge per head for the Westminster City Council area for the future and the proportion of that amount which has been allocated to special services of that kind as opposed to standard services, then I for one would be able to accept what the Government are saying much more easily. I can understand and accept the theory, but I wish that my noble friend the Minister and his colleagues would realise that, unless those general principles and theories can be illustrated by some hard factual analysis, it is very difficult for us to accept that theory and practice will ever come together.
10.15 p.m.
The Earl of Caithness: My Lords, as we have heard, these amendments seek to require the Secretary of State to include additional information in the revenue support grant report for each year. The first concerns the matters to which he has regard in determining the amount to be paid to authorities and the second concerns the estimate to be taken into account when calculating the amount of non-domestic rate available for distribution.
I had assumed that the noble Lord, Lord McIntosh of Haringey, proposed the amendments because he thinks that the Secretary of State will not act reasonably and fairly and that in some way authorities will not benefit as much as they could from national non-domestic rate and grant. I should just like to reiterate that this will not and cannot happen. The Secretary of State must act reasonably and fairly as always when determining the amount of grant and in using his discretion to make the estimates for calculating the amount of NNDR for distribution. Furthermore, he is of course accountable to Parliament. In the past, local authorities have not been slow to challenge any such similar calculations. I think it is most unlikely that this will be any different in the new system.
The amounts of business rates paid in by local authorities and the amounts paid out to them will in any case be evident from the non-domestic rating account and money coming into the pool can only be used for redistribution and will be used for that purpose. It cannot be siphoned off for any other purposes. In addition, and perhaps more pertinent to what the noble Lord, Lord McIntosh, said, this section of the Bill requires the Secretary of State to
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consult representatives of local government before making the determination of grant. This will be a further opportunity for challenging and questioning our decisions.
Members of another place will have the opportunity in the debate on the revenue support grant report to question the Secretary of State. The revenue support grant will include the determinations of both the amount of grant and the amount of NN DR available for distribution to authorities. Therefore, any of the additional information which the noble Lord is suggesting should be included in the report will be available to that forum and I have no doubt that Members will represent the interests of their constitutents most vigorously.
Perhaps I may take up a point raised by my noble friend Lord Carr, which also refers to something that the noble Lord, Lord McIntosh, said. At present, needs are calculated by looking at a large number of indicators which are designed to reflect the need to provide services to the local population. I give as an example the number of pupils who are to be educated and the miles of road that are to be maintained. Those are the kinds of things used in the assessment figures. Under the new system, simpler indicators but the same principle will apply. Assessment based on the number of clients for each service and the weighting or quantities to be given to each factor will depend on decisions still to be taken and on the government assessment of the amount to be spent on each service as part of the annual decisions on grant.
I can say to my noble friend that at the moment I think there are something like 63 indicators that are taken into account. We and the local authorities have found that to be an unwieldy and complicated system. We intend to have a simpler and more straightforward system and are working on the details at the moment.
My noble friend raised a point about Westminster. Rather than pre-empt tomorrow's discussion, perhaps he will allow me to deal with that point then. I could deal with it now but in fairness to my noble friend Lady Gardner of Parkes, who will move the amendment on which I want to deal with these points specifically on Westminster, perhaps he will agree that I may defer responding to him on Westminster's particular needs until tomorrow.
I could not help but rise to the bait put in front of me by the noble Lord, Lord McIntosh, when he said that the reduction in grant support had resulted in rates being 20 per cent. higher. Perhaps I may reply that if the grant percentage had been maintained, income tax would have been 4p in the pound higher; and perhaps that is something that we ought to consider too.
Lord Carr of Hadley: My Lords, before my noble friend sits down, certainly I am prepared to wait until tomorrow and the debate on Westminster. I just happened to be citing Westminster as an example with which I am a little familiar, but the point is a perfectly general one: the need to give reassurance that these needs assessments are based on measured realities and not on theories.

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Without pressing for an answer tonight, perhaps I may just draw to the Minister's attention the fact that the Government's assessment of what Westminster should spend on education is a very precise figure of £318 per head per adult compared with the current £570. When one arrives at a precise figure such as £318, it implies that behind it lies a pretty scientific and presumably describable method of assessment and of weighting for different factors.
I am perfectly happy to wait for tomorrow to know about Westminster, but I should like to say to my noble friend that I think your Lordships' House as a whole deserves some better and more accurate description about the methodology of calculating those needs. This aspect of the Bill depends on the credibility, the validity, the integrity and the stability of the way in which these needs are to be defined. That is what determines the essential grant on which calculation of the community charge is based. My noble friend has not yet convinced me for one that such methodology exists or is capable of description to us.
Lord McIntosh of Haringey: My Lords, the charitable way to describe the Minister's answer is that it is the argument of last resort. When one has no real case to put forward one relies on the fact that under law any Minister or Secretary of State must act reasonably and fairly. One cannot show that the law is obliging him to act in a proper way. One therefore relies on the last remnants of common law responsibilities. It really is not good enough. My noble kinsman, Lord Carr, rightly said, in a very penetrating speech which was not really answered, that there must be calculations there. They must be in the minds of those who are doing the sums in Marsham Street. A first principle of management, I should have thought, would be that one should share these thoughts with the people who are so heavily affected by them.
The point that I was trying to make—a point to which the Minister did not respond in any way in his reply—was that the level of grant and the level of the national non-domestic rate, now accounting for 75 per cent. of local authority expenditure, are so critical that a small change in either or both of those will lead to a very large change in the community charge. That is what the community charge payers will not understand unless the Government behave in a proper and businesslike way, communicating with the people who are affected by their decisions. That is what management is about: communicating with the workforce and with the customers.
Why cannot the Government apply those basic good management principles to the management of our public affairs and our local government finance? I fail to see why the Government should continue to resist what, according to any good capitalist Conservative Party principles, ought to be accepted as being a minimum requirement of accountability. This is not the time of night to divide the House on this issue, but it is certainly a matter to which I shall feel justified in returning at Third Reading. I hope to have some better understanding from the Government about
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this very important, indeed critical, issue in this Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 215 and 215A not moved.]
Clause 93 [Distribution reports]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 215B:
Page 54, line 28, at end insert—
("(1A) The report shall also include a statement showing for each receiving authority—

(a) the national normative community charge for spending at needs assessed by the Secretary of State; and

(b) the effect on the authority's community charge of increases in spending measured in financial and percentage terms.").

The noble Lord said: My Lords, I suppose that we shall have to take this fairly briefly. It is very closely related to the previous amendments.
As I introduced Amendment No. 214A I was talking about the changes that have already been made in the Government's indicated assessment of the normative community charge. It is implicit in any normative statement that the Government have standards to which local authorities should adhere in terms of their spending and of the level of services they provide for local people. This has been expressed by Ministers over and over again in terms of a needs assessment. Where does the needs assessment come in the Bill? What assurance do we have that a needs assessment will be properly conducted? It is not good enough to fall back on the "reasonably" and "fairly" criteria. We demand rather more of our rulers than that. We demand that they set out the principles upon which they propose to spend very large amounts of public money and how they propose to see that that public money is properly spent.
We wish to know the thinking behind it. I am not suggesting that the money should be hypothecated to individual services. We are not going away here from the block grant principle, but we are saying that if the poll tax is to work as an improvement in accountability— which I beg leave to doubt for all the other reasons that have been advanced—then surely the poll tax payers must see how the poll tax fits into the rest of local authority expenditure. At the moment it is impossible for them to see how that will happen, because the people who are responsible for three-quarters of the expenditure are simply not coming clean about the thinking that they are imposing. Let us not hear again about reasonably and fairly and let us not hear again about consultation. Let us have a proper answer this time. I beg to move.
10.30 p.m.
The Earl of Caithness: My Lords, the noble Lord, Lord McIntosh of Haringey, seeks to have extra information included in the distribution report. As the name implies, the distribution report is intended to set out the basis on which grant is to be distributed. We do not intend to make a new distribution report each year because one of our aims is stability, which is something I am sure the noble Lord will agree is lacking in the present system. Having decided on the way in which needs are to be assessed, and having

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established all the relevant weights between the particular factors, we intend to keep those arrangements for some while and not to make annual changes in the methodology, although the data used in calculating the needs assessment will be updated annually.
The extra information which the noble Lord would have included can only be calculated each year once the details of the RSG settlement for that year are known. It would therefore not be possible to achieve what the noble Lord wishes other than by reprinting the report annually after the RSG settlement, merely to include this data. I do not think that that would be appropriate. However, there will be no secret about the community charge for spending need. Indeed, I anticipate that it will feature largely in the annual debate in another place on the RSG settlement. Similarly, anybody can calculate quite easily what the effect on the community charge will be of any change in the local authority's expenditure. The key principle is simple: every £1 that an authority spends above or below its assessed need will add or subtract £1 from the national community charge figure for spending need.
I take issue with the noble Lord, Lord McIntosh of Haringey, on clarity. The proposed system that we shall introduce is a great deal clearer than the system we have at the moment. It identifies, through the needs system and through the spending of the local authority, exactly in which area overspending or savings are being made, and that for once will be clear to the charge payer. I believe that it is a clearer system for the Government too, because any charge payer for the first time will be able to look back at his previous charge, notice where the difference is and then be able to attribute that either to the Government changing their mind or to the local authority increasing or reducing expenditure. There are considerable benefits in the system we propose.
Lord McIntosh of Haringey: My Lords, as Dr. Johnson would have said, that is not even assertion; that is mere asseveration. There is no justification anywhere on the face of the Bill—we have only the words of the noble Earl—that it is the Government's intention to carry out what he says. There is nothing which talks about a needs assessment; there is nothing which says how the needs assessment is to be explained or calculated. None of these things appears on the face of the Bill. There has been no firm indication of how the regulations are to be framed. I am not doubting the good faith of the noble Earl—far from it— but I am saying that the Government have a duty which is wider than ministerial statements at Report stage in your Lordships' House.
I am sorry to say that this answer again is totally unsatisfactory. I am sorry that the noble Earl should fall back on the administrative argument that we cannot do the final figures until the revenue support grant has been calculated. Of course that is the case. We always knew that and we do not disagree with the Government's intention to maintain some relatively stable calculation and not to change matters from year to year. That does not mean it would not be valuable in communicating the Government's intention and having a serious and proper debate
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about the calculations and about the level of financial support at whatever time the figures become available. I hope that the noble Earl, irrespective of what else he says about this amendment, will think again about whether at such time as they become available he would recommend to his right honourable friend that the calculation should be made and that there should be a greater degree of glasnost about this matter.
Without in any way feeling that I have received a satisfactory answer, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 216, 217 and 218 not moved.]
Clause 102 [Transitional Grants]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 218A and 218B:
Leave out Clause
In Clause 104, page 60, line 15, leave out ("or residual").
On Question, amendments agreed to.
[Amendments Nos. 219 and 220 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendments No. 220A:
Page 60, line 39, leave out ("residual").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 221:
Page 60, line 40, leave out ("and") and insert—
("(ee) payments to be made by the authority to another person in respect of interest on repayments of excess receipts by way of non-domestic rates, and").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 222:
Page 61, line 11, after ("repaying") insert (", under regulations under this Act,").
The noble Lord said: My Lords, this amendment is very simple and straightforward. It involves and clarifies the drafting of Clause 104(4)(b) by making reference to regulations. I beg to move.
On Question, amendment agreed to.
Clause 109 [Calculations to be made by authorities]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 222A:
Page 64, line 2, leave out from ("levy") to end of line 4 and insert ("or special levy issued to it for the year but (except as provided by regulations under section 88 or (Special levies) above) shall not anticipate a levy or special levy not issued.").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendment No. 222B:
Page 64, line 7, at end insert—
("(7A) The Secretary of State may by regulations do one or both of the following—

(a) alter the constituents of any calculation to be made under subsection (2) or (3) above (whether by adding, deleting or amending items);

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(b) alter the rules governing the making of any calculation under subsection (2) or (3) above (whether by deleting or amending subsections (5) to (7) above, or any of them, or by adding other provisions, or by a combination of those methods).").

The noble Lord said: My Lords, this amendment seeks to improve and clarify the purpose of Clause 109, which is to determine the amount that a charging authority is to transfer from its collection fund to its general fund in order to meet its estimated expenditure for the year. This is a technical and non-controversial amendment and I commend it to the House. I beg to move.
On Question, amendment agreed to.
Clause 114 [Power to designate authorities]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 223:
Page 66, line 34, leave 'ut paragraph (b).
On Question, amendment agreed to.
[Amendments No. 224, 225, 226 and 227 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 228 and 229:
Page 67, line 9, at end insert—
("(6) In construing subsection (1) above any calculation for which another has been substituted at the time designation is proposed shall be ignored.
(7) In construing subsection (2) above any precept for which another has been substituted at the time designation is proposed shall be ignored.").
In Clause 115, page 67, line 38, at end insert—
("(5) In construing subsections (1) and (3)(a) above any calculation for which another has been substituted at the time designation is proposed shall be ignored.
(6) In construing subsections (1) and (3)(a) above any precept for which another has been substituted at the time designation is proposed shall be ignored.").
Clause 116 [Designation of authorities]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 229A:
Page 67, line 40, after ("shall") insert ("before the end of the previous financial year").
The noble Lord said: My Lords, in moving Amendment No. 229A, I shall speak also to Amendment No. 229B. They are in a sense probing amendments, although it may seem curious at this stage in the passage of the Bill. As may be recalled, we had quite a lengthy debate in Committee about the fact that the poll tax capping procedure is what is technically called an in-year procedure. It is only when the community charge has been declared that information goes to the Secretary of State, who then makes a judgment, and there is a 28-day period for a reply, after which he makes a final decision. We pointed out that the effect will be that the final capping procedure, if it is to be implemented, will probably be in early June of each year whereas the community charge will have been in operation from the beginning of April. In-year procedure therefore means that the community charge will be levied and people will have to start paying it on a basis that could be upturned by the Secretary of State through the capping or limitation procedure.
We argued—we still feel this strongly—that it is an unsatisfactory way to run local authority finance. It would force local authorities to go back to the community charge payer two months after the demands had gone out and to say, "The Government have said that we must charge a different amount. Please send some money or amend your standing order". That is not an efficient way to proceed with public business. It is also damaging to public accountability. It is difficulty to explain why two different assessments should be made of the same needs except in so far as it becomes clear that a difference between central and local government in these circumstances will be a political disagreement. People will take political sides about it and will not accept that there is any rational judgment as between the two.
The amendments attempt to regularise the procedures and make them as short as possible. I do not know whether they may lead to a rational process resulting in a capping or limitation procedure that could be implemented before the demands go out. Personally, I doubt it. It is clear that the procedures proposed by the Government for in-year capping of the community charge are inefficient, unjust and derogatory to the principle of accountability that the Government claim to put forward. I hope that the Government will see the impossibility of what is being claimed and at least acknowledge that there are difficulties that they should consider further.
The Earl of Caithness: My Lords, it is the Government's intention that Part VIII should be a means by which relief can be rapidly extended to hard-pressed charge payers if a local authority chooses irresponsibly to ignore the accountability that the community charge will introduce, and levies a demand that is excessive and contrary to the interests of its electors.
However, although I would agree with the sentiment behind the amendment—that the Government should complete their part of the charge capping process as quickly as practicable—I must say that the amendments significantly weaken the effectiveness of the capping provisions. The effect is that my right honourable friend would have at most one week after an authority set its charge in which to designate it for charge capping. My right honourable friend could be left with no time in which to make a designation if the authority set its charges on 1st April. Obviously that would not be satisfactory.
Amendment No. 299A would also mean that it would be feasible for an authority to put itself outside the scope of capping if it failed in its duty to set a charge by lst April. Notwithstanding the illegality of such an action and the consequences which the authority would face, I am sure that noble Lords will agree that it would also be totally wrong for charge payers to be left as a result of such legal action without the means of respite which Part VIII provides.
I hope that, given the great practical difficulties which the amendments would introduce and the fact that they run counter to the intentions behind Part VIII, the noble Lord will withdraw them, notwithstanding the fact that I agree with the sentiment behind them.

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The noble Lord talks about the reductions in in-year spending. I should like to point out that this system of rate capping operates in Scotland and has been tried and shown to work there, as I said in Committee. We believe that it is a better system than that which we have at the moment. It is for that reason that we propose it in the Bill.
Lord McIntosh of Haringey: My Lords, local authority finance officers are very able and dedicated people and almost any system can be made to work somewhere. It does not mean that it makes sense managerially to do this. It does not mean that it is right to have a capping system which applies after the charge has already been levied and involves the possibility of a charge changing. I am totally unconvinced by those arguments but I thought that they would be put forward. If I needed convincing, the Minister has convinced me that in-year capping is a deeply flawed system and that, if they had to have any capping at all—with which I do not agree—the Government approached the issue better in the Rates Act 1984, the previous-year capping system. That is an issue to which we must return having elucidated the possibility of a rational and effective in-year capping system. I beg leave to withdrawn the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 229B not moved.]
Clause 118 [Challenge of maximum amount]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 230:
Page 70, line 8, at end insert—
("(12) In construing subsection (4) above any calculation for which another has been substituted at the time of designation shall be ignored.
(13) In construing subsection (7) above any precept for which another has been substituted at the time of designation shall be ignored.").
On Question, amendment agreed to.
Clause 121 [Substituted calculations and precepts]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 231:
Page 71, line 18, after ("year") insert ("under this section").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 231A:
Page 71, line 20, leave out from ("above") to end of line 22 and insert ("the following provisions apply accordingly—

(a) Part II,

(b) sections 88, (Special levies), 111, 113 and 114(1)(b) and (6) above, and

(c) sections 124(1), 150(2)(f) and 151(2)(c) below,").

On Question, amendment agreed to.
[Amendment No. 232 had been withdrawn from the Marshalled List.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 233:
Page 71, line 23, leave out from ("above") to end of line 25 and insert ("the following provisions apply accordingly—

(a) sections 30(4) and (5), 31(3) and (11), 33(1) to (3), (5) and (8), 85(5) and (6), 86, 88, 113 and 114(2)(6) and (7) above, and

(b) sections 124(2), 150(2)(d) and 151(2)(6) below.").

On Question, amendment agreed to.
Lord Hesketh: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

County of South Glamorgan (Taff Crossing) Bill
Committed to an Unopposed Bill Committee.
House adjourned at eleven minutes before eleven o'clock.