HL Deb 05 July 1988 vol 499 cc226-36

Commonwealth Secretariat Act 1966 (c. 10)

29.—(1) In paragraph 3 of the Schedule to the Commonwealth Secretariat Act 1966 for "the general rate" there shall be substituted "any non-domestic rate".

(2) In its application to England and Wales, this paragraph shall have effect for financial years beginning in or after 1990.

(3) In its application to Scotland, this paragraph shall have effect for financial years beginning in or after 1989.

International Organisations Act 1968 (c. 48)

30. In section 2(2) of the International Organisations Act 1968 after paragraph (a) there shall be inserted — (aa) the like exemption or relief from being subject to a community charge, or being liable to pay anything in respect of a community charge or anything by way of contribution in respect of a collective community charge, as in accordance with that Article is accorded to a diplomatic agent, and".

Tribunals and Inquiries Act 1971 (c. 62)

31. In Part I of Schedule I to the Tribunals and Inquiries Act 1971 (tribunals under direct supervision of Council on Tribunals) the following shall he inserted after paragraph 12—

"Local taxation.

12A. Valuation and community charge tribunals established by regulations under Schedule 14 to the Local Government Finance Act 1988."

Road Traffic Regulations Act 1984 (c. 27)

32.—41) In section 55(2) and (4) of the Road Traffic Regulation Act 1984 (financial provisions relating to designation orders) for "general rate fund" there shall he substituted "general fund".

(2) In its application to England and Wales, this paragraph shall have effect for financial years beginning in or after 1990.

(3) In its application to Scotland, this paragraph shall have effect for financial years beginning in or after 1989.").

On Question, amendments agreed to.

[Amendment No. 245ZP had been withdrawn from the Marshalled List.]

Clause 150 [Judicial review]:

The Earl of Caithness moved Amendments Nos. 246, 246ZA, 246ZB, 246ZC, 246ZD, 246ZE, 246ZF, 246A, 246B and 246C: Page 86, line 41, at end insert ("whether originally or by way of substitute,").

Page 86, line 42, at end insert— ("(ee) a special levy issued under regulations under section (Special levies) above,").

Page 87, line 4, at end insert ("and").

Page 87, line 8, leave out paragraphs (j) and (k).

Page 87, line 14, leave out ("(k)") and insert ("(i)").

Page 87, line 14, after ("levy") insert (", special levy").

Page 87, line 16, leave out subsection (4).

Clause 155, page 89, line 17, leave out ("(4)") and insert ("3A").

Page 89, line 20, at end insert— ("(3A) The power to make regulations under section 53 or 54 above shall be exercisable by statutory instrument, and no such regulations be made unless a draft of them has been laid before and approved by resolution of each House of Parliament.").

Page 89, line 20, at end insert— ("3A) As regards the power to make regulations under section (Special levies) or (Rates: power to abolish or modify) above, subsection (3) above shall have effect without the words from "subject" to the end.").

On Question, amendments agreed to.

[Amendments Nos. 247 and 247A not moved.]

The Deputy Speaker

My Lords, there is a printing error in Amendment No. 247B on the Marshalled List. It should read: Page 89, line 39, at end insert".

The Earl of Caithness moved Amendment No. 247B: Page 89, line 39, at end insert— ("(7A) Before he makes regulations under section (Special levies) or (Rates: power to abolish or modify) above, the Secretary of State shall, by means of a notice in a newspaper or newspapers, take such steps as he thinks reasonably practicable to bring the contents of the proposed regulations to the notice of persons likely to be affected.").

On Question, amendment agreed to.

Clause 156 [Interpretation: authorities]:

The Earl of Caithness moved Amendment No. 248: Page 89, line 43, leave out paragraph (b).

On Question, amendment agreed to.

[Amendment No. 249 not moved.]

Baroness Gardner of Parkes moved Amendment No. 249A: Page 90, line 16, leave out subsection (6) and insert— ("(6) A charging authority is a special authority if the following criteria are satisfied—

  1. (a) its daytime net inflow of population exceeds its total resident population. and,
  2. (b) the number of visitor nights per year exceeds 20 times its total resident population.

(6A) In subsection (3)(i) above— daytime net inflow of population" means the estimated number of persons working, but not resident, in the area of the charging authority less the number of persons resident in the area of the charging authority, but working outside the said area as estimated by the Secretary of State, and, visitor nights" means the total estimated number of nights stayed by visitors in the area of the charging authority per year as estimated by the Secretary of State.").

The noble Baroness said: My Lords, the amendment will have the effect of putting the City of Westminster into the same category of "special authority" as the City of London. The Government have already accepted that special provision will be needed for the determination of the community charge in the City of London. This is because the City of London has a very small resident adult population but provides services for a much larger daytime population. The Government consider that the City of London is sufficiently different from any other authority in this respect to be labelled "exceptionally difficult" to reflect its needs fully through the new grant system. In justifying the arrangements for the City of London, the Government have also made the point that the City finances certain services that benefit an area wider than just the square mile.

The City of London's case is by no means unique. It is just a question of degree. The City of Westminster also finances services that benefit people well beyond the boundaries of the City of Westminster. I refer in particular to the arts—the English National Opera, the Festival Ballet and a number of other art institutions in the City of Westminster.

The proportion of rates paid by businesses in the City of London is 99.4 per cent. The proportion of rates paid by businesses in Westminster is 84 per cent. Nowhere else in England does the proportion come near the percentage paid by business people in Westminster. Westminster is the heart of London. To most overseas visitors who shop in the West End, go to the theatre and visit the Abbey and Parliament it is indeed London.

Westminster has been an economical authority, and its rate level has stayed the same for the past four years. It provides services for 1 million people daily, including visitors, tourists and 400,000 commuting business workers, yet it has a resident population of only 150,000 adult residents who would pay the community charge. Westminster is the showroom for British enterprise in the heart of London. It is important that it should be maintained as an area to be proud of. If, on the other hand, the pressures from the voters who will be asked to pay a high community charge are so great that instead of money being spent to maintain the business centre there is every disincentive to do so, we will instead see a shabby, neglected heart of London. That would be unfortunate.

The present system will create a great disincentive for any money to be spent in support of business or enterprise in Westminster. In fact, there will be a great incentive for voters to put pressure on councillors to neglect the business centres which give them nothing in return.

The extra services include refuse collection, street cleaning, public conveniences, trading standards, highways, libraries, leisure centres, public health and, of course, the special inner city problems concerning drugs, AIDS and homelessness. There is also the policing of major processions such as the State Opening of Parliament (and the cleaning afterwards) and a great many other public events that take place in the centre of London. Without doubt those will all suffer if nothing is done.

I know that on a previous amendment the Minister indicated that he intended to deal with all these problems by giving more in the grant. In theory, the new revenue support grant should compensate for the additional problems. However, it never has. Westminster receives no grant now but it is still assessed as if it were receiving it and is assessed as meriting £18 million for these additional services. In reality, an independent study carried out by Peat, Marwick shows that those services are costing £35 million; so there is a considerable shortfall even at present in the Government's assessment of the needs element for Westminster.

The movement of people in inner London, particularly in Westminster, is considerable and that will add to the cost of collecting the charge. It would be a great pity if the Government left the resident population in Westminster to be called upon to produce a disproportionate amount of money which will be spent on other services rather than benefiting the resident community. Therefore, it is important that the Minister gives me some assurance in that respect. Certainly any past assessment of need has not taken into account the homeless people in Westminster or the fact that Westminster hotels are used by nearly all the London boroughs as a base for their homeless people. That creates a great additional burden on the council in terms of social services and the education that is provided; and those people are not Westminster homeless but come from other parts.

The council is prepared to spend money in looking after such people when it has the money. However, if the time comes when it does not have the money things could be very different. Therefore, the purpose of this amendment is to put forward a formula which will cover both the City of London and the City of Westminster. No other authority is in even a similar situation in terms of the proportion of business rates and the small number of residents in the area. I ask the Minister to consider this matter carefully and to give me a reply. I beg to move.

7.30 p.m.

Lord Graham of Edmonton

My Lords, I take a minute or two of the time of the House to say, as my noble friend Lord McIntosh said on a previous occasion, that this is one of those cases which we fully understand and with which we sympathise. As local government people—and we know the noble Baroness, Lady Gardner of Parkes, is in the same category—we understand the pressures at local council and councillor level. We have every sympathy.

I refer hack the noble Baroness to some of the Minister's previous responses—and we have had two bites at this particular cherry. The Minister said something on which we would hack the noble Baroness in ensuring that he delivers. The noble Baroness is saying that as a result of the unique circumstances of Westminster as a business centre, a showplace, and so on, the people of Westminster have to pay more than they should because they are providing services not just for Westminster but for the rest of the capital and in some cases for the country.

The Minister pointed out on a previous occasion that this is not the way to do it. He said: We assess the cost of services in Westminster to be almost twice the cost of those in Reading … We are reviewing the needs assessments and I assure the Committee that the cost of the extra services in city centres—Westminster, Birmingham or wherever—will be fully taken into account'.—[Official Report, 13/6/88; col. 36.] There was a wry note in the voice of the noble Baroness when she said that the Minister had said that; but the Minister has not taken that fully into account. However, the Minister is on record as saying that those extra costs will be taken into account and we believe that he should do so, not only for Westminster but for other authorities. However, that is another fight.

I also note that the Minister said (reported in the same column) that he is having discussions with the local authority associations later this year. He said: It will be open to the Secretary of State to reflect the net daytime inflow as one of the indicators in assessing the needs". My noble friend Lord McIntosh pleaded in aid the views of the city of Birmingham, which are sympathetic. It has nothing like the same problems in depth but does have the same kind of problems as a regional capital. The ratepayers often feel that they are paying for something which they are not enjoying but someone else is.

On this side of the House we feel that what the Minister said on the previous occasion is fair and reasonable. We would certainly join the noble Baroness, Lady Gardner of Parkes, on any future occasion if, in attempting to bridge the gap—and tens of millions of pounds are involved—the case is validated but not accepted. We should certainly want to know. However, we do not believe that this amendment is the way to deal with the special problems of Westminster.

The Earl of Caithness

My Lords, my noble friend Lady Gardner of Parkes has explained that the purpose of these amendments is to redefine special authorities as provided for in the Bill so that instead of there being one such authority (the City of London) there would be two—the City of London and the City of Westminster. My noble friend explained that her main object is to give Westminster City Council extra resources to provide services for such items as tourists and commuters, which she mentioned in Committee.

I shall explain why special provision for Westminster is not needed and why this would certainly be the wrong way to go about it, as the noble Lord, Lord Graham of Edmonton, reminded your Lordships. It will help your Lordships if I take the points in reverse order, since it is in large part the very features that distinguish Westminster from the City that explain why special provision for Westminster is not required.

The special authority arrangements which will apply to the City of London are set out in Part II of Schedule 7. They are necessary because the City is indeed a very special authority, providing services for an army of 300,000 commuters but able to levy a community charge on only a tiny resident adult population of 4,500. The disproportion between the City's expenditure of some £70 million and this very small resident population makes the assessment of spending need much more difficult than elsewhere. The City spends gross some £18,000 per adult resident. Of course, the City's grant includes an element for its need to spend on services for commuters but that has to be based on general principles and cannot take full account of local circumstances. Thus, the City appears as a very high spender and would have a high community charge in consequence.

Even if that were not so, the ratio between the City's expenditure and its population is such that a 1 per cent. change in its spending would increase or reduce its community charge by £150. Clearly, that would make the level of charge intolerably unstable. To avoid those consequences we have introduced special provisions which will enable the City to meet the larger part of its spending over and above that met from central grant from a very small locally variable domestic rate. The level of national non-domestic rate charged in the City will be correspondingly slightly reduced so that businesses in the City will pay roughly the same poundage as those elsewhere unless the City chooses to increase its level of spending.

Westminster shares some of the characteristics of the City. It too caters for an army of some 400,000 commuters. But its population is 30 times that of the City at 150,000. Consequently, commuters in Westminster outnumber residents by only 2½ to 1, compared with 70 to 1 in the City. The total spending of Westminster is only £650 per adult compared with £18,000 per adult in the City. A 1 per cent. increase in spending in Westminster would cost residents only some £6 compared with £150 in the City. So that special problem with the City of instability in the community charge simply does not apply to Westminster.

Nevertheless, my noble friend has argued that Westminster still has to provide for that army of commuters and for the other seasonal army of tourists, and that it needs to be compensated for doing so. It is compensated. The grant-related expenditure assessments on which local authorities' grant income is based take account of daytime population and of temporary residents. For some services they are taken into account directly, and for others it is done indirectly. For example, the amount of shopping and restaurant floor space, which itself reflects the number of tourists, is taken into account in calculating the need to spend on environmental health services.

Partly as a result, Westminster's GRE per adult resident is among the highest. It is some 60 per cent. above that for a suburban London borough such as Barnet, and 20 per cent. above that for a provincial centre like Manchester which also has to face the cost of large inflows of commuters, visitors and support for local arts. Lest it be said that the provision is insufficient, I should point out that Westminster spends some £40 per head or 7 per cent. below its grant-related expenditure. Of course, Westminster has a policy of moderate spending but those figures do not suggest that the needs of Westminster are under-assessed as the city council has recently sought to argue.

There are the costs which Westminster will inherit when it takes over from ILEA and which I know it is already planning to get under control. Without that ILEA overspend, Westminster would have a very low level of community charge. As it is, Westminster residents stand to benefit substantially over time from the abolition of domestic rates. At present spending levels, including ILEA, the average domestic rate bill in Westminster is £535 per adult. In the first year of the community charge, it will be £87 lower and ultimately it will be £162 lower per adult. So residents are not faced with intolerable burdens. When we come to set up the detailed arrangements for the new grant system we shall look again to see whether sufficient account is taken of the need to spend on services for tourists and commuters.

My noble friend Lady Gardner has also raised the issue of continued funding for the English National Opera and the London Festival Ballet once the new system comes into force. This is not a new issue. My noble friend will be aware of the extent of the correspondence which has already passed between Westminster City Council and my department on this topic. I am also aware of the particular concern of my noble friend Lord Carr of Hadley. I say to both of my noble friends that the Government, through the Arts Council, recognise the quality of the work of the English National Opera. They have no desire to see it in financial difficulties. Apart from the Government, the English National Opera draws its income from sales and sponsorship as well as indirectly from the London boroughs through the present resource equalisation scheme.

I hope and expect that all parties currently contributing will wish to continue their funding arrangements in the light of the changes in the local government finance system. The relative share which each will shoulder can be adjusted in future and in the light of experience. The noble Lord, Lord Graham of Edmonton, mentioned that we would be calculating the assessment for needs on a basis for Westminster and all other local authorities. Yesterday, my noble friend Lord Carr of Hadley asked how this is calculated. As I said then, we are still considering the final details.

Perhaps I may show your Lordships what is involved in the block grant system. I have before me the technical handbook of grant-related expenditure put out by the Department of the Environment for the year 1988–89. It gives information for every borough and local authority in the country in some detail. In addition, there is the blue booklet concerning grant-related expenditure 1988–89; how the expenditure needs of local authorities are assessed for block grant. If your Lordships look at that booklet there will be seen the considerable detail which it provides. Finally, I draw the attention of your Lordships to the rate support grant report for England which has to be laid before the other House and debated there. If my noble friends care to look at Annex J, they will see that in some places the calculations are taken to six decimal points.

In addition, each local authority receives a detailed computer print-out of how its needs are assessed under the present grant system. A similar system will continue in the future. I do not believe that my noble friend has need to fear that we shall not be looking very closely at the needs assessment of all local authorities or that all local authorities will not have the opportunity to come back to the department and to raise matters in another place, because indeed they will.

I hope I have persuaded the House that this amendment is neither necessary nor appropriate. It is not necessary because Westminster can spend at a modest level without this extra support, and it can go on making contributions to the English National Opera and the London Festival Ballet if it so chooses. It is not appropriate because Westminster does not share the special features of the City of London; namely, its very low population which makes it imperative to make special arrangements to protect residents there from unreasonably volatile community charges.

7.45 p.m.

Baroness Gardner of Parkes

My Lords, I thank the Minister for that detailed reply. I cannot say that I am particularly happy with many of the points that he made. For example, I refer to his statement that so far as the arts go, those boroughs that are now funding them and which wish to continue, may do so. When the community charge is introduced, any borough which wants to do something will be able to, but it will certainly be at the risk of unpopularity with its voters if it means that more money is to be taken from the pockets of local residents. In the case of Westminster, I believe that the funding of the English National Opera and the London Festival Ballet represents £15 per head of what our residents will be paying. Many of them never had the opportunity to visit these places.

I believe that the Minister does not understand—

Lord McIntosh of Haringey

My Lords, I wonder whether the noble Baroness will permit me to intervene. The residents of Westminster are not contributing to the English National Opera or the London Festival Ballet. This was a specific grant given by the London Residuary Body to be spent by Westminster but it comes from all the inhabitants of London and not simply from those of Westminster.

Baroness Gardner of Parkes

My Lords, I do not believe that is correct; but I do not wish to take issue with the noble Lord about it.

The Earl of Caithness

My Lords. I am grateful to my noble friend for giving way. The noble Lord, Lord McIntosh of Haringey, is absolutely correct. Following the abolition of the GLC, the funding of the English National Opera was put upon the shoulders of Westminster by the agreement of all the London boroughs. As a result, Westminster did not make a full contribution to the London rate equalisation scheme which it would otherwise have made. Therefore, at present all London boroughs are contributing.

Baroness Gardner of Parkes

My Lords, I thank the Minister for that reply. However, the situation is that after the abolition of the present system there will be a different situation. If the same £4 million has to be found for the arts, we shall no longer be saving anything under the London equalisation scheme because that scheme goes when the community charge is introduced. I understand the point that is being made. If the situation at the present time is that the sum of £4 million is being deducted from what Westminster contributed to the London equalisation scheme—I wonder whether the Minister can confirm that that is the exact amount —then I accept the point that at the moment the residents of Westminster are not paying. After the abolition of the equalisation scheme, 150,000 residents will pay £4 million. My mathematics are poor but that works out at around £15 a head.

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Baroness for giving way. I rise partly to tempt the Minister to his feet. Surely there will have to be a new equalisation scheme anyway because of the abolition of ILEA.

Baroness Gardner of Parkes

My Lords, if there is to be a new equalisation scheme, then for the first time Westminster might be getting something out instead of always paying in. Perhaps that will be a help. We have not discussed any new equalisation scheme. It has certainly not come up during the time we have been discussing the Bill.

I thought that from now on under the Bill the whole procedure would be related to grant. The total business rate is to be taken into a central pool and given back according to the number of residents and according to the needs assessment. Presumably, instead of the equalisation levy which existed in the past, this system will be based on that needs element. Whereas in the past Westminster had vast income from the business rate and therefore the Government arranged for that money to be paid over in the form of an equalisation grant, instead that money will now go to a central pool and the equalisation aspect will he dealt with in the way suggested by the noble Lord, Lord Graham. Everything will be dealt with through the grant, the needs assessment and the grant related to that. We are becoming slightly lost in this matter.

Education has just been mentioned. That brings me to another point. Under the present arrangements for the abolition of ILEA, Westminster has been asked to take on a special responsibility for music provision. That, again, will be a special expense. Instead of the present system which assesses some needs, I should like to be assured that all needs will be assessed. During the previous stage of the Bill the Minister quoted Reading in comparison with Westminster. I had those figures examined: no one could agree the proportions between Reading and Westminster. There is a large difference. Westminster believes that the calculation offered by the Government at the moment would leave a shortfall of £38 million. The Government say that Westminster has underspent by £15 million. That still leaves a gap of £23 million. And that is the gap we are talking about.

We are talking about special things—the ceremonial occasions and processions in the heart of London which cost extra money and which are not being assessed at true value. I brought forward this amendment because I felt that the answers on the previous occasion did not deal with all these points.

There will be one very unfair result in Westminster. Foreign residents who do not live in the houses very much but who have a resident caretaker will pay one resident community charge whereas now they might be paying £5,000 in rates on the property. Instead 20 people may flood to occupy that building.

Lord McIntosh of Haringey

My Lords, I am delighted to find that the noble Baroness is converted to the principle of ability to pay for the community charge. She is a welcome conversion.

Baroness Gardner of Parkes

My Lords, there will be large problems. If the Government answer in the way they say they intend to and take into account all the needs, I believe Westminster may be covered in the way the noble Lord, Lord Graham, has said. I am prepared to consider the matter carefully and will not press the amendment tonight. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 250 not moved.]

Clause 157 [Interpretation: financial years etc.]

The Earl of Caithness moved Amendment Nos. 250A and 250B: Page 90, line 27, leave out from ("first") to end of line 28 and insert ("transitional year is that beginning in 1990."). Page 90, line 29, leave out subsection (3).

On Question, amendments agreed to.

Clause 158 [Interpretation: other provisions]:

The Earl of Caithness moved Amendment No. 250C: Page 90, line 36, at end insert— ("2A) A special levy is a special levy under regulations made under section (Special levies) above.").

On Question, amendment agreed to.

Clause 159 [Power to make supplementary provision]:

The Earl of Caithness moved Amendment No. 250D: Page 91, line 8, leave out from ("passed") to ("and") in line 9 and insert ("before or in the same Session as this Act, or of an instrument made under an Act before the passing of this Act,").

The noble Earl said: My Lords, this is a technical amendment. It will be the last amendment I speak to and will bring the Report stage almost to an end. After four gruelling days all noble Lords are entitled to a relatively early night. I beg to move.

On Question, amendment agreed to.

Schedule 16 [Repeals]:

Lord Sanderson of Bowden moved Amendment No. 251: Page 173, line 55, column 3, at end insert—

("and in subsection (7) the words "(other than a copy made available for sale under subsection (4) above)".").

On Question, amendment agreed to.

Clause 163 [Extent]:

Lord Sanderson of Bowden moved Amendment No. 252: Page 91, line 33, leave out ("and Schedule 13 below") and insert ("Schedule 13 below, and part III of Schedule 15 below,").

On Question, amendment agreed to.

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