§ 3.45 p.m.
§ Lord Hesketh
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
§ Moved, That the House do now again resolve itself into Committee.—(Lord Hesketh.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD ABERDARE in the Chair.]
§ Clause 39 [Occupied hereditaments: liability]:
Lord Hesketh moved Amendment No. 102D:
Page 23, leave out line 15 and insert ("the following conditions are fulfilled in respect of any day in the year—").
§ The noble Lord said: In moving Amendment No. 102D, for the convenience of the Committee I propose to speak also to Amendments Nos. 102E, 102F, 102G, 125A, 125B, 125C, 125D, 125E, 125F, 125H, 126A, 126C, 186A and 187A.
§ Clause 39 replaces the present yearly liability to rating with a daily liability. The reason for this is simple. While the present yearly liability works well at the moment, without the body of precedent and usage that attaches to the present system there could be scope for misinterpretation of the method of calculation, where a ratepayer had occupied a property for part of a year. The change is therefore necessary in the interests of greater precision. I might add that the results arrived at by the two methods for the amount due for part of a year should be the same, subject to any differences in the treatment of part days.
§ Clause 38(1) and Clause 66(1), which make provision for local non-domestic rating lists and residual rating lists, are drafted in terms that the list must show for each day in a chargeable financial year each hereditament which fulfils various conditions. This expression is chosen to reflect the fact that there can be retrospective corrections to an entry on a list. Therefore on the day in question there might not be an entry but, because of a later correction to the list for that day, an entry may have been made. These 1500 drafting amendments do nothing more than ensure that there is a consistent approach and use of language in the liability clauses which follow the clauses providing for the contents of the retrospective lists.
§ It is convenient to take with the amendments to Clause 39 the correspondig set which apply to Clauses 60 to 63, Clause 67 and Schedule 13, which cover the provisions for residual domestic rating and eligibility for community charge benefit. Liability in all these cases is calculated on a daily basis, and it is appropriate to clarify the meaning correspondingly. I therefore commend these amendments to the Committee. I beg to move.
§ Lord McIntosh of Haringey
We are prepared to accept that these are drafting amendments. My only complaint and the only reason I am speaking at all is that the noble Lord read out at high speed a large number of amendments which, according to the groupings, are not as agreed. This is a point which my noble friend Lord Underhill has just picked up. Perhaps the noble Lord will not read them out again at dictation speed but arrange that we are informed what amendments are being spoken to now.
§ Lord Underhill
As my noble friend said, I have just picked up this list from the Printed Paper Office. It contains only Amendments Nos. 102D to G, 125A to F, 125H, 126A and 126E. There is no mention of the other amendments to which the noble Lord referred.
§ Lord Hesketh
I quite accept that. I have just spotted that Amendments Nos. 186A and 187A are not on the list, as the noble Lord, Lord Underhill, has pointed out.
§ Lord Boyd-Carpenter
I understand that the list of groupings as originally placed in the Printed Paper Office has been withdrawn and a subsequent amended one put into issue. Perhaps my noble friend can arrange for amended copies to be made available to the Committee in the Chamber.
§ On Question, amendment agreed to.
Lord Hesketh moved Amendments Nos. 102E to 102G:
Page 23, line 16, at beginning insert ("on the day").
Page 23, line 18, after ("shown") insert ("for the day").
Page 23, line 24, leave out ("on") and insert ("in respect of").
§ On Question, amendments agreed to.
Lord Hayter moved Amendment No. 103:
Page 23, line 33, leave out ("2") and insert ("5").
§ The noble Lord said: We have strayed on to the question of the groupings of amendments. So far as I am concerned, they can be torn up. I was not 1501 consulted about the grouping of my amendment with others, of which there is quite a galaxy, including one on fisheries and sporting rights in fisheries. I cannot imagine how one can have a sporting right in fishery, but I presume that there is such a thing. I am talking about charitable rate relief, and I shall confine my remarks to that subject.
§ The amendment tabled by my noble friends and I must strike most people as being curious. It seeks to strike out the figure 2 and insert 5. What does it mean? In Clause 39(5) one finds a mathematical formula in which there is the figure 2. We want to take that out and replace it with the figure 5. So far, so unclear. The Government propose that charities should receive a mandatory rate relief of half their rates—in other words, the rates payable will be the rates bill divided by two. Our amendment seeks to restrict the liability of these charities to one-fifth of the rates—in other words, the increase to relief will be 80 per cent. of the bill. Our amendment would leave to local authorities discretion whether to grant a further relief on the remaining 20 per cent.
§ Why on earth do we suggest that? I was reflecting only yesterday on the element of guesswork that is inherent in connection with the Bill. For instance, as the public approaches the next election, will it really want to see the homeless clobbered or a wife or husband put into prison because a spouse will not pay up? Will the charities (which undertake more and more of the services that used to be provided by government) still be in the position they are today? It may be argued that from the Opposition's point of view—and in this respect I am speaking from the Cross-Benches, so to speak—it would be good tactics if they are sure that they are right on some of these subjects to let the Government get on with the Bill as it stands and let the heavens fall on them. However, on the subject of charity, as I have said before, there is no monopoly in any part of the Chamber, and the Opposition are joining with us in this effort to ensure that charities are given the compassion that they deserve.
§ The amendment relates to charities and the rates they pay. It seeks to protect them from the cost increases that are likely to arise from the Government's present proposals for non-domestic rates. It would be no exaggeration to say that in our opinion we are now discussing the viability of many charitable organisations after 1990 when the proposals come into effect. The charitable sector in Britain is burgeoning, no doubt encouraged by the Prime Minister's promptings. More than 50 new charities are registered every week, adding to the 150,000 already in existence. Some are very large and some are very small. In many spheres charitable organisations have become household words—Shelter, Dr. Barnardo, Oxfam, and so on. What is more they are enthusiastically supported by the general public. Someone has reckoned that more than half the population participates in some voluntary activity or another, and nine out of 10—and I am sure this figure is about right—give money to charities. They will not want to see it dissipated unnecessarily. They want to see it well-used.1502
§ These organisations are heavily reliant on the partnership with central and local government—which is why we have become involved in this Bill—as well as the public at large. A major element of this co-operation is the rate relief given to charitable premises—charity offices, shops, sports centres and village halls. One set of such premises are the care homes catering for the elderly and the disabled. They are granted full relief from the rates and this practice is to be continued under the new arrangements. Let us be glad of that. For the rest, however, a different prospect looms.
§ The current arrangements provide for remission of 50 per cent. of rate payments for charities on a mandatory basis, with a further 50 per cent. relief granted at the discretion of the local authority. One does not know whether one will get that. However, the Government have also set in train a revaluation of rateable values. This subject cropped up during earlier discussions on the Bill. Combined with the introduction of the new uniform rate of businesses, which will affect these charitable organisations, it seems that the charity premises will face severe absolute cost increases even though the proportion of relief will remain the same.
§ In the new revalued system, offices and shops will face particularly severe rate increases as opposed to industrial premises which will fare better. For example, it is estimated that the rates bill for Oxfam's shop in Kensington High Street will rise from £2,551 to £9,635. Examination of the effect of these rates seems to have been minimal. In fact, I know of only one survey. It was done not by the Government but by the National Council for Voluntary Organisations, which as I have explained before is the national representative body for voluntary organisations and all the charities in England. It published a report this week focusing on the position of charity shops. I do not need to emphasise how very dependent many charities are on the efforts made in the charity shops and the results which they get from them.
§ The report shows that very large rate rises are in the pipeline. The Children's Society is expecting a rise of £24,000. It runs 108 shops. Help the Aged is expecting a rise of more than 100 per cent. on current costs for its 21 shops. I know that the noble Baroness, Lady Ryder of Warsaw, is in the Chamber behind me and I know of the grave concerns she has about the effect of the proposals on her foundation. She will be able to tell the Committee about that later on.
§ These figures are alarming but they are not alarmist. They are based on conservative estimates of the impact of the new system. They affect groups in society whose work is regularly praised in this Chamber. Those are not sectional groups about which we hear little. Throughout the charitable world there is a great unease about the wisdom of these proposals. Our amendment sets out to ensure that such worries are allayed. By increasing the level of the Government's mandatory relief, we can ensure that the valuable charity effort does not become an unintended casualty of what may be a hastily-prepared clause of the Bill. If that was to happen the nation would never forgive the government in charge. 1503 At the same time, by restricting the level of mandatory relief to only 80 per cent., we have allowed for local authorities to have some discretion. That is fair enough and was a point made by the Minister in another place. Those local authorities can favour the particular charities that they feel perform valuable services locally.
§ I said in my Second Reading speech that in drawing up the Bill the Government seem to have failed to take sufficient account of the role of the charities and the voluntary sector as a whole. The issue of charitable rate relief is a major example of the effect of this approach. Whatever the verbal protestations of good intentions by Ministers may be, we fear that severe damage will occur. The Government are therefore presented with a clear opportunity to put into practice their oft-quoted commitment to charitable endeavour, and I hope that they will seize this chance. It may be that they have not had the opportunity of studying the report to which I have referred, although I know that it has been sent to the department. It may well be that we shall be calmed by the assertions of the Minister in relation to this amendment. Meanwhile, I beg to move.
§ Baroness Faithfull
Knowing the Government's support of the charitable and voluntary sector in our society, I have put my name to this amendment. I think it would be wise for all of us to hear what the Minister has to say, as I cannot believe that great thought has not been given to the matter.
I should like to make a few comments on the role of charities, and especially that of charity shops. It is absolutely essential in this day and age that money is raised for charities and that we are not entirely dependent upon trusts. Everyone is calling for money from trusts, and it is extraordinarily difficult for such trusts to meet the needs of the voluntary sector. Therefore, one way in which the community can really help the voluntary organisations is by helping in their shops so as to make money for the charities. For example, we have 25,000 volunteers serving in the Oxfam shops. I think that a by-product of such shops, and the volunteers who serve in them, is that people begin to know about the work being done by the voluntary organisations.
I am concerned with the shops of Dr. Barnardo's, Oxfam, The Richmond Fellowship and others. I must also say that it is essential that the voluntary organisations raise money for themselves because there must be a partnership between the statutory social services, the statutory health services, education and the voluntary services. Without such a partnership the community will not receive the good service which it deserves.
I must also point out that with rate-capping in the statutory services more people are relying on the voluntary services. I ask the Minister whether full account has been taken in the Bill of the fact that charity shops are rated as shops and offices and not as industrial projects. We know that revaluation is taking place with a view to implementation in 1990. However, will charity shops not face rate rises despite the Government's intention to continue a mandatory 1504 grant as laid down, and which has been referred to by the noble Lord, Lord Hayter? Further, will Her Majesty's Government consider raising the rate to a mandatory 80 per cent., instead of the present 50 per cent? It is important that this debate takes place so that we can all understand the Government's point of view with regard to charities, and especially with regard to charity shops.
§ 4 p.m.
Baroness Ryder of Warsaw
The Committee's decision on this amendment will have a profound effect on the Sue Ryder Foundation which I, as founder, represent. It is an international charity which works day and night for people of all age groups who are dying and others, who are handicapped. In this country alone the foundation cares for over 2,000 people who are severely ill. It costs over £300 per day to care for those with cancer, motor neurone disease and Huntingdon's chorea—to quote but three.
At present there are 347 Sue Ryder shops in this country, all of which pay rates. However, by 1992 we hope to have 550 shops or more to serve the community; to raise interest in the relief of suffering; to raise desperately needed funds and to bring more people together from all walks of life, especially the lonely. Indeed, the Ryder shops are the lifeblood of the whole foundation.
However, this lifeline could be most seriously affected by the Government's current proposals. Such proposals would cost us a staggering £250,000. I am absolutely shocked to hear that our rates will increase from £1.25 million to £1.5 million per annum. That is absolutely dreadful, especially when we look to the Government for support and compassion. The Government always say that they mean to help and encourage charitable work. Nevertheless, it would seem that they have not thought sufficiently about charities when drafting the Bill.
The amendment would relieve a great and unwanted extra burden from all charities, including the Sue Ryder Foundation. The struggle for funds is so hard each day and, further, the number of children and people in need increases daily. I beg the Committee to support the amendment and urge others, with all my heart, to do likewise.
§ Lord Renton
It is well known that charities are able to obtain rebates of income tax which has been paid by donors of covenants. It was originally thought that charities could obtain a rebate of rates from local authorities. Indeed, power is given to local authorities to grant such rebates at their discretion. However, over the country as a whole that power has been used most unevenly. The Bill therefore provides an opportunity for the position to be rationalised. I should have thought that this amendment gives us the opportunity to raise that point.
Therefore, I hope that when the Government consider the matter they will deem it desirable to ensure that there is uniformity of practice, and that charities receive the exemption from rateable liability which they need. Indeed, the matter has already been pointed out by other Members of the Committee.
The Minister of State, Department of the Environment (The Earl of Caithness)
The amendment of the noble Lord, Lord Hayter, deals with rate relief for charities and other non-profit making bodies. I think perhaps it would assist the Committee if I were to outline the Government's policy on the whole subject of rate relief for such organisations.
First, I should explain that the Bill as it stands does not fully reflect the Government's policy. For that reason we have tabled the amendments which appear in the next group. They give effect to our long-standing policy of retaining the full range of mandatory and discretionary release currently available. Of course, it is quite right that charities should not have to pay the full rates and that there should be scope for reducing the rates bill of other non-profit making bodies.
The provisions now contained in Section 40 of the General Rate Act 1967, which have been developed over many years, command widespread public support and generally seem to work well. I am most happy to confirm that the Government's policy is to replicate the existing provisions as closely as the change to the new system will permit. The Bill already contains provision in Clause 39(5) and (6) whereby charities will have their rate bills automatically rebated by 50 per cent. That is the function of the factor "2" shown in the bottom line of the formula in subsection (5). It is that provision which the noble Lord, Lord Hayter, seeks to amend by substituting a factor of "5" to give the 80 per cent. relief.
The provisions we now intend to introduce will permit charging authorities to increase the rebate for charities up to 100 per cent. They will also give relief of up to 100 per cent., at their discretion, to other bodies which, in the words introduced by Amendment No. 107ZC, are:charitable or … philanthropic or religious or concerned with education, social welfare, science, literature or the fine arts",or those who occupy premiseswholly or mainly used for … recreation",subject, in both cases, to the requirement that the body concerned must not be conducted for profit. Thus, I can confirm to the noble Baroness, Lady Ryder of Warsaw, that her shops would be included in that definition. Therefore, not only those organisations meeting the definition of a charity, but also other bodies established to benefit the community, including non profit-making amateur sports clubs, will qualify for relief.
The Government believe that local authorities should make full legitimate use of their powers to give discretionary relief. We therefore intend to ensure that the full cost of giving relief to charities and other non-profit making bodies does not fall on community charge payers.
For mandatory relief, the position is simple: local authorities will be obliged to give this relief, so of course this will be deducted in calculating their contributions to the national non-domestic rate pool. For discretionary relief, it is a little more complicated. At present, the whole cost of any discretionary relief that local authorities give is borne locally. But, of course, that cost is spread across local business as well as domestic ratepayers. If we did 1506 nothing further, under the new system the entire cost would fall on local community charge payers. That might make authorities less keen to give relief than they are now, which is certainly not the result we want. We have therefore proposed that authorities should be allowed to offset half the cost of any relief they give against their payments into the national non-domestic rate pool. Regulations under Schedule 8 will deal with that. This will roughly mirror the present situation, since at present just under half the total rate bill—and thus half the cost of relief given—comes from domestic ratepayers.
I turn to the detail of Amendment No. 103, in the name of the noble Lord, Lord Hayter. The amendment would, as he has said, increase the level of mandatory relief for charities from 50 per cent. to 80 per cent. It is fair to say that the noble Lord, Lord Hayter, is not attacking any new government proposals in the Bill. He is trying to change the existing system, which has worked well and which we will replicate. I remain not only unconvinced by the noble Lord's arguments, but wonder whether charities have taken fully on hoard the advantages of our new proposals to alleviate the worst excesses of the present rating system.
First, not every body which in law is a charity, would be generally agreed to be operating wholly in the public interest. This subject received some public attention in response to the 16th Report of the Public Accounts Committee published earlier this year. I need only refer to some of the more fringe religious cults, which meet the relevant definitions of a charity, but which I think most of the Committee would not wish to see supported with additional public funds.
I am also surprised, but delighted, by the conversion of the Opposition. It is noteworthy to see Opposition spokesmen putting their names to an amendment which would mean additional support from the taxpayer for public schools. I mention that only to remind the Committee just how wide is the definition of a charity. I commend the noble Lord, Lord McIntosh of Haringey, for taking that positive step forward.
Secondly, it is only right to draw attention to the cost of the noble Lord's amendment. Last year, charitable relief cost £80 million, so these amendments would increase that cost to some £130 million. Depending on how that was dealt with, it would mean nearly £5 for every community charge payer, or 2 per cent. on the business rate. There is of course no particular magic about 50 per cent. However, since the Pritchard Report on the rating of charities in 1959 (cmnd. 831), it has been accepted that 50 per cent. rate relief for charities, with the possibility of topping this up to 100 per cent. if the local authority thinks fit, strikes the right balance between the charity's interests and the ratepayers. Charities benefit from very many other tax reliefs. It is right that they should pay something towards local government services if the local authority decides not to use its full discretion. There will be nothing to stop local authorities from giving 80 per cent., 90 per cent. of even 100 per cent. rate relief to charities if they think that is justified. If they give 100 per cent. relief—as many do, selectively, at present—then 75 per cent. of the cost will be borne by the national 1507 non-domestic rating pool; that is, the whole cost of the first 50 per cent. and half the second 50 per cent. Only 25 per cent will be left to be borne locally by community charge payers. That seems to me to strike the right balance, and I hope will go towards meeting the concerns of the noble Lord, Lord Hayter.
I turn now to the core of the noble Lord's amendment. As he said, recently the National Council for Voluntary Organisations sent out a paper which centred mainly on charity shops. I gather it argued that if they do not receive full rate relief they could face large rate increases resulting from the revaluation in 1990. It is true that some charity shops will face significant rate increases if they do not obtain the full discretionary rate relief. I sympathise with any charity shop in that position, but I do not think that the way to deal with it would be to raise the percentage of mandatory relief. My reason for saying that is that the Government are fully aware of the concerns of charities and businesses, not only in respect of the current annual rates assessment but of the effects of the revaluation. That is why we have proposed improvements to the present system and, I hope with the Committee's agreement, will strengthen those improvements later today.
As the noble Lord, Lord Hayter, is aware, charity shops, which at the moment do not receive the full 50 per cent. discretionary relief, are entirely at the whim of the local authority when facing the next year's rate increase. I know that charities, along with other businesses, are delighted that in future their rate increases will be an amount equal to the retail prices index or even less. At last, there will be no more substantial increases at short notice, which have plagued our system. On revaluation we will be introducing for the first time transitional provisions to phase in the increases, if and when they occur. Furthermore, I would draw the Committee's attention to Amendment No. 117E which is in my name and which will be discussed with Amendment No. 105. That extends the transitional provision to include the next revaluation. I look to the noble Lord, Lord Hayter, and to my noble friend Lady Faithfull for support for the Government on that proposal.
I have to say to the noble Lord, Lord Hayter, and the noble Baroness, Lady Ryder of Warsaw, that even if we were not to proceed with the Bill, a revaluation of business rates—that means charity rates—would inevitably happen. The cost then to the charities would be considerably more than under the proposals contained in the Bill.
Perhaps I may sum up. There is no new system. What there is is extra relief to businesses and charities, not only in the transition but in the amount of rate increase that they might have to face in the future. Those are the additional safeguards that the Government propose. I am sure that the noble Lord, Lord Hayter, will not argue against them.
The effects of the revaluation will be to reduce rates in the North and Midlands by some £700 million. I am sure that the noble Baroness has shops in the North and Midlands which will be longing for the revaluation so as to receive some of that benefit, and which will be saddened if we did not proceed with the revaluation and the assistance we give in it.
1508 Lastly, I can assure the Committee that we shall be asking local authorities to look on a more comprehensive and a less piecemeal basis at the use of their discretionary 50 per cent. so that in some areas the noble Baroness's shops receive 100 per cent. relief and in others they do not receive any of the 50 per cent. relief. We have thought about charities. We have given the matter a great deal of thought. I believe that we have gone a long way towards enhancing the present system which is the one we replicate in the Bill.
§ Lord Sandford
Has not my noble friend just explained that, by leaving the discretion with the local authorities, he and the Treasury are prepared to contemplate that the cost of the relief might rise from £80 million to the full amount of £130 million? I should have thought that that objection does not carry much weight. In dealing with non-domestic rates, are we not now dealing with rates which will be collected locally and then re-distributed on a national formula? Does it not follow from that that any discretion that local authorities exercise is almost entirely watered down and diluted so that it has practically no local effect at all? Would it not therefore be better to take this opportunity to give all charities the same full relief as is enjoyed by the Churches? Where would be the harm in doing that?
§ Lord Renton
Before my noble friend answers that question perhaps I may just add that it is quite clear from what he said that when the Bill comes into operation, the treatment of charities by local authorities, will be an improvement on the present system. However, we shall still be left with the disparity of treatment in different parts of the country by different local authorities from which charities suffer now. I give the example of MENCAP with which I have been associated for many years. We have premises in various parts of England and Wales. Those premises have to be budgeted for centrally as well as accounted for locally. A difficulty which we have always had is that we just do not know, from year to year, how our charitable premises in different parts of the country will be treated by different local authorities. As my noble friend has pointed out, the Government have been very generous; but I should have thought that in order to get the full treatment which noble Lords have argued charities should receive, and in order to get a more consistent system, the Government might have gone a stage further and said that the relief which they intend should still be discretionary shall be mandatory, like the other relief which they mentioned.
§ Lord Sandford
Perhaps I may intervene again. I should have thought that the right thing at this stage is for my noble friend on the Front Bench to look at the arguments which have been put and see whether there would not be a great advantage. We are now moving to a much simpler system, and it could be made even simpler still if we used this opportunity to give not only the Churches but all the charities the full rating relief, not just 80 per cent but the whole amount. This is something to which we could come back at the next stage, after my noble friend has thought about it.
§ Lord McIntosh of Haringey
We reached Part III of the Bill (which deals with non-domestic rating) well after midnight on Tuesday night, or in other words in the early hours of Wednesday morning. Then was not the appropriate time for us to open a general debate about the merits or de-merits of centralised business rating. I do not think that the Committee wish me to make a Second Reading speech on this matter, particularly since it was referred to at some length on Second Reading. In summary, I think the position that we take about non-business, centralised non-domestic rating is that the very fact that it takes away another quarter of local government spending from the decision-making powers of local authorities, and local authorities are now left in control of only a quarter of their expenditure, must be a bad thing. It must be a centralising tendency which we can only deplore.
When we come to the practical impact of it, I must say frankly that most of the speculation which has taken place about the impact on particular areas of particular types of business on non-domestic rating is pure fantasy. The existence of a unified business rate, a national business tax, will in itself—to take the regional example first—have a very severely damaging effect on areas which are at present lowly rated; in other words, rural areas, small towns, the North of England, Scotland and so on. But the Government argue that that will be more than offset by the revaluation which will put up the rateable values in the South, in London and the South-East of England. That is pure speculation. In general terms, it may be true; but nobody knows what the net effect will be on any particular type of property, any region, town or city in this country. Therefore when we talk about the effects of a unified business rate, we are talking almost entirely in the dark.
That applies with much greater force to the Government's justifications of their position than it does to the calculations made by the noble Baroness, Lady Ryder, who may well be wrong in detail, although I am sure that the thrust of her argument is sound when she talks about the effect on the Sue Ryder shops.
We now come to the specific issue of charitable relief. In general, I think that we on these Benches wish, if it is possible, to see a continuing degree of discretion on the part of local authorities. In that context, I thought that the Minister slipped below his normal standard of debate when he accused us of supporting the public schools. He knows perfectly well that for several years many of us have opposed charitable relief for what he calls the "public schools"—what I call "fee paying schools for the wealthy". We shall certainly not withhold our support for the real charities just because, by a quirk of legislation of long standing, public schools have achieved charitable status which they ought not to have. Thus I pay very little attention and very little respect to that argument.
In the amendments which the Minister has put clown for discussion in the next group, he has certainly given effect to the undertakings given by his honourable friend in another place on 21st April. So much so that he read out, virtually word for word, the statement of his honourable friend, at cols. 1030 and 1510 1031 of Hansard. I give credit to him and the Government for the Government having been as good as their word.
I have one remaining concern about this: that in order to achieve the result that the authority should be allowed to offset half the cost, it is proposed to offset their payments into the national non-domestic rate pool. I do not think it is good enough for that to be done by the regulation under Schedule 8. I think that the Government ought to do more than say that it ought to be done by regulation. There is no reason why this should not be introduced as an amendment to the Bill. I hope that the Government will look again at that aspect of the matter.
In general, I think that the amendment moved by the noble Lord, Lord Hayter, and supported by other noble Lords from the Cross-Benches has been a very valuable opportunity to debate the whole question of charities. The noble Earl would do well to listen to the advice given to him by his noble friends Lord Sandford and Lord Renton. Despite the Government's intention to continue the existing system, there are quite serious anomalies which remain and which deserve further attention. I hope that the noble Earl will be able to go further in that respect than he has done so far.
§ Lord Ross of Newport
I shall speak very briefly because I intend to speak in rather greater detail on the next amendments. I think that the document which I received at lunch-time from the NCVO, which gives on its back pages some of the figures which they fear they will face from the increase in rates which will descend upon them, is fully justified. I hope to show this when I speak the next time, if I am called in the next debate.
The amendment is right to go for the full 80 per cent. I concede that the Minister has made a concession when he says that 50 per cent. will remain and that the local authority will be reimbursed for a further 25 per cent. However there is the final 25 per cent. I am not sure whether all Members of the Committee or even the Minister or the Secretary of State fully appreciate what has been going on in our high streets, and not just in our high streets but in secondary shop positions throughout the country, in the South of England, the West of England and the Midlands. I cannot speak for the North. People have been paying huge sums for premiums just to get leases. These are not multiples but quite small shop owners who want to get away from the rat race. They sell a property for a lot of money and buy up small businesses, stores and the rest of it.
I am wondering what will happen when the lists are finally published because there has been a huge increase over the past 18 months. It may well be that the valuation officers have been basing their returns on figures given to them which were supplied six or nine months ago and which are now totally out of date. I can certainly give examples in my part of the country where they are out of date already. I think that those lists will have to be amended right up to the date when this provision comes into force. If valuation officers do assess on current rentals, even an 80 per cent. relief is going to mean a sizeable 1511 increase in payments from charities. I am quite sure that I shall be proved correct on that point.
I also wish to make the point about water rates. We are now experiencing in a trial area the metering system. That is already showing double charges. The Minister will agree that there is no compensation for that. So charities are facing increases in that area too. Privatisation will mean that they will not come off that system at the moment. I honestly think that charities have a real case, and I hope very much that that case will be pressed.
§ 4.30 p.m.
§ Baroness Blatch
I rise to support the concessions made by the Government, but I want in particular to refer to the comments of the noble Lord, Lord McIntosh of Haringey. I think that there have been some crocodile tears shed this afternoon as regards concern for small businesses. The noble Lord will know that his colleagues in council chambers up and down the land have said that rates are not an issue for business and commerce, that they are a small percentage of turnover—
§ Lord McIntosh of Haringey
If the noble Baroness will forgive me, I should like to remind her that we are debating charities rather than small businesses.
§ Baroness Blatch
I am referring to the precise comments that were made by the noble Lord, Lord McIntosh, when he commented on a centrally collected uniform business rate. I simply want to say that I have long argued that the health and wealth of business and commerce to the country as a whole is too important to be left to the vagaries of local government, and it seems to me that where there have been rate increases in the London area of up to 60 per cent. and in my own county of one-third, that that cannot continue either for charities or for local businesses and our shops in the high street. To refer specifically to the concessions that are now being suggested for charities, I think we have the best compromise of the uniform business rate being a national concern, but giving local authorities the particular discretion to know the local charities in their areas and to suggest rebates right up to 100 per cent. I support that process.
§ Baroness Gardner of Parkes
When the Minister replies will he please clarify this point? As I have listened to the debate, it seems to me that some Members of the Committee are implying that local authorities will no longer have the discretion to waive the rates for charities. At least that was the way that I interpreted the comments of my noble friend Lady Blatch just now. But perhaps I misunderstood, and that is why I ask for clarification.
There is no doubt that if local authorities have the right to waive the rates for charities, areas such as Westminster, which at present collects £460 million in business rates, will get back from the Government something like £17 million in business rates. There will be no incentive whatsoever to encourage any business to continue and we in Westminster shall be delighted to be able to relieve charities because it will not be costing us a penny. That will be the first time 1512 that we have not had to be provident and careful and to really think about every penny and where charity really first began—in relation to our ratepayers. Now that policy will not help our community charge payers one bit. It will not help them for us to be thinking of anything else, and we may see quite remarkable differences coming about because of this provision.
§ Baroness Faithfull
I should like to take up a point made by my noble friend Lord Renton. I am sure that local authorities will certainly support charity shops if they serve the people of the area in which that shop is located. But there are many charities, for instance Oxfam, that do not directly help people of a particular area, but help people in an overall global area. I know that the noble Baroness, Lady Ryder of Warsaw, has shops in places where she does not have a home, but that nevertheless those shops do support homes in other areas. I fear that local authorities will help those charities that are helping their own ratepayers, but that they will find it a little difficult to help those charities which are global. Therefore, I take up the point made by the noble Lord, Lord Renton, and support it.
§ Baroness Carnegy of Lour
I have listened very carefully to what the noble Lord, Lord Hayter, said. I have not had the privilege of seeing the NCVO brief or its figures, but I see the point of it very much because it is an area in which I myself am involved north of the Border. Recollecting as I do the process within a local authority of going through applications for 50 per cent. discretionary relief to be given by the local authority on top of 50 per cent. mandatory relief, such as we have at the moment, I realise that charities do vary enormously. The staff on local authorities find this as regards the applications that come before them from charities. Some really do not merit 80 per cent. relief because they have ways of raising funds for themselves within the organisation. They do not necessarily have ways of making a profit, but they can raise funds which partly meet the rates that they have to pay.
I think it is satisfactory to continue with the system of the mandatory 50 per cent. and the local authority deciding on the other 50 per cent. My noble friend Lady Gardner of Parkes said that a local authority would happily sit there granting rate relief because it would not suffer from it. My understanding of what my noble friend on the Front Bench said was that 25 per cent. of the amount that had to be met through the local authority's decision would be met by the community charge payer. Therefore I do not think that my noble friend Lady Gardner is quite correct.
The decision taken by the local authority as regards relief will be a very responsible decision. That is important. If it were not for that aspect of the decision I would not be inclined to agree to it because I think that the decision would not be correctly made by the local authority.
It sounds to me as if the Government are getting as near as they can, within the new arrangements, to carrying on the existing system. Because this matter has cropped up and been dealt with only within the past few weeks, I think I am right in saying that it 1513 does not appear in the Scottish Bill at all. I should like my noble friend the Minister to tell us whether it is intended that a similar arrangement to that which Parliament decides will be carried into Scotland. It may be that he cannot find that out, but it would be very comforting for those of us who live north of the Border to know about that.
I did not fully grasp what my noble friend Lord Renton was proposing, but it sounded as if he was putting his finger on something which could be a refinement of the existing system but might well be looked at by the Government in relation to the smaller organisations. However, on the whole, I would say to the noble Lord, Lord Hayter, that from the point of view of the way in which a local authority has to take its discretionary decisions, it should have the ability to go from 50 per cent. rates to nil—that is what it can do at the moment. To say that local authorities can go from 80 per cent. to nil is not enough because many organisations which are registered as charities do not merit an 80 per cent. rate rebate.
§ Lord Renton
I should like quickly to help my noble friend Lady Carnegy of Lour. I was merely suggesting that the relief given by local authorities to charities should be mandatory instead of being discretionary.
The Earl of Caithness
We have had a useful addition to our discussion. It appears that my noble friends Lord Renton and Lord Sandford do not like the existing system and would like it to be changed. That is interesting and obviously something that I should like to look at and read about in detail. I found some points a little hard to follow as regards what my noble friend Lord Renton was saying. But when I read the Official Report I shall of course be able to take note of what he says.
What is interesting is how the debate has continued on the question of whether there should be discretion. The noble Lord, Lord Hayter, does not want local authorities to have discretion, but the noble Lord, Lord McIntosh of Haringey, who has also put his name to the amendment, does want local authorities to have discretion. Similarly, my noble friend Lord Renton does not want discretion, but my noble friend Lady Carnegy of Lour does want discretion. So the argument is an interesting one and I should like to look at those points again.
As regards the rates revaluations, I have not seen the report of the NCVO. It arrived in the office only yesterday and it is something that I should like to look at. However, perhaps I may suggest to the noble Lord, Lord Ross of Newport, that he should have a word with the noble Baroness, Lady Seear. At an earlier stage she said, "Don't worry about the revaluation; if the rates go up, the rate poundage goes down". I contradicted her at the time. However, I believe that there is a slight discrepancy on that Bench as usual.
§ Lord McIntosh of Haringey
The noble Baroness will speak for herself. However, if the rate poundage is set nationally, as it is for the business rate, then that 1514 is untrue. What the noble Baroness said previously about rate poundage going up when rates go down is correct for domestic rates. In other words, the noble Lord is wrong twice.
The Earl of Caithness
If I am wrong twice, perhaps I am right! Perhaps I may say to my noble friend Lady Carnegy that the provision will of course apply to Scotland. I believe that it will be beneficial for all of us to look at what has been said in the Official Report. There have been new arguments and much debate.
I should have mentioned earlier to the noble Baroness, Lady Ryder of Warsaw, that we do not know what the effect of the revaluation will be. Some figures have been bandied about. The work is being undertaken at the moment. We shall take as representative a sample as possible out of that work, analyse it and publish the results, we hope in the autumn. Until that groundwork is done, the figures mentioned are fairly hypothetical and they need to be firmed up. I am sure that some of the worst fears of businesses and charities will not be realised. However, I cannot say anything for certain at this stage and the matter must be looked at in detail. The rate poundage is an important factor to be taken into account. Perhaps we should all read the Official Report and look at the matter again.
§ Baroness Seear
Perhaps I may say to the noble Lord, before he says too much about disagreements on these Benches—I find them hard to identify—that he should take note of the number of occasions during recent weeks when very distinguished members of his party, including eight Secretaries of State, put down amendments criticising the Government's proposed legislation.
§ Lord Hayter
I am sure that the Minister speaks wisely when he suggests that we should digest what has been said. We should all look carefully at the Official Report. In those circumstances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 4.45 p.m.
Lord Moran moved Amendment No. 104:
Page 23, line 37, at end insert (" or where on the day concerned the hereditament is occupied for the purposes of a club, society or other organisation not established or conducted for profit and is wholly or mainly used for purposes of recreation")
The noble Lord said: In speaking to Amendment No. 104 I should like to speak also to my Amendment No. 106 and to No. 108 standing in my name and that of the noble Lord, Lord Mason of Barnsley. To explain in a nutshell what I am seeking to do, I can do no better than to quote the resolution passed by the National Anglers' Council, which represents some 3½ million anglers in this country, at their annual general meeting on 21st May. It reads:
To call on Her Majesty's Government in reforming the rating system by the Local Government Finance Bill to include in the Bill—
§ The objectives of the resolution are supported by the Country Landowners' Association. I acknowledge the help of its chief legal adviser in drafting the amendments more efficiently than I could have hoped to do. They are also supported by the Salmon and Trout Association and by the British Field Sports Society.
§ Perhaps I may deal first with the question of recreational clubs, including angling clubs, covered by Amendments Nos. 104 and 106. At present, under Section 40(5)(c) of the General Rate Act 1967, local authorities have discretion to reduce or remit rates to angling or other sporting organisations, provided that they are not established or conducted for profit. That discretion is quite widely used and is valuable to many of those clubs. I do not have to tell Members of the Committee how important such clubs often are in enabling those without substantial means to fish and take part in other sports. But at the moment that discretion is not written into the Bill. It was, I think, being left to regulations to be made after the Bill becomes law. Such regulations might or might not be made and in any case could not be amended by the House.
§ In my view, it would be better to retain the present discretionary reliefs for recreational clubs in the Bill. That is what my Amendment No. 106 seeks to do. It may be that this is now taken care of by the amendments which the Government have tabled. I have only recently seen those amendments and I confess that I have some difficulty in following the wording. However, if they achieve the retention of discretionary rating for such clubs, I welcome them.
§ However, one defect in the present arrangements is that rate relief for these recreational clubs operates capriciously. Some local authorities remit rates for them entirely; some give partial relief; some give no relief at all. The object of my Amendment No. 104 is to reduce this element of caprice by giving a mandatory 50 per cent. relief to all eligible clubs, so that they would get at least that reduction and under my Amendment No. 106 possible further relief at the discretion of local authorities. This would be a great help to these clubs, and I hope that the Government will be prepared to amend the Bill on these lines.
§ I now turn to Amendment No. 108, which deals with the destination of fishery rates. I must first declare an interest as part owner of a short stretch on the upper Wye on which we pay rates on the right bank to the Brecknock District Council and on the left bank to the Radnor District Council, and a small fishery contribution to the Welsh Water Authority. At present rates are payable to local authorities on all fisheries in England and Wales which are severed from the occupation of the land. In addition, some fisheries, for what I believe are historic reasons, pay 1516 a fishery contribution to a water authority. In Wales that applies to the Rivers Usk, Wye, Teifi and Towy. Those fisheries are double rated. However, no one has made a fuss as the fishery contribution is at present very small, though it could always be increased.
§ More generally, under Section 28(3) of the Salmon and Freshwater Fisheries Act 1975 the Minister of Agriculture or the Welsh Secretary can make an order for the levying of a fishery contribution. In practice, such orders have not been made, perhaps because of the reasonable objections of principle to double rating. An application for such an order was made by the Welsh Water Authority, alone among water authorities. However, no order was forthcoming.
§ At Second Reading I pointed out that fishery rates are often substantial and, unlike domestic rates, no services are received for them. I said that we had a unique opportunity, which might never recur, for the Government were bringing in legislation abolishing most rates and establishing a National Rivers Authority. The noble Lord the Lord Privy Seal was good enough to say that my argument was interesting and would be considered by his right honourable friend.
§ Under the proposals for privatising the water industry, the NRA will have the statutory duty to maintain, improve and develop fisheries at present exercised by the water authorities, and the power to impose the 1975 Act levies. Anglers have long regarded it as thoroughly unsatisfactory that their rates go to local authorities who have no duties to or interest in fisheries. It would be far more sensible, and would I believe be welcomed by all anglers in England and Wales, if fishery rates now payable to local authorities were to be replaced by an equivalent contribution to the NRA. That would be beneficial and logical. It would give the NRA an increased income, thus reducing by the amount of those rates the need for Exchequer grant to the NRA and the burden on the taxpayer.
§ In Wales, for example, at present about £1½ million is spent by the Welsh Water Authority on fisheries, £½ million of which comes from licence fees. If a contribution in place of rates could be added it would probably provide them with another £300,000 to £500,000. The Wye itself produces something like £112,000 in rates. That would mean that in Wales the NRA would be two-thirds self-sufficient.
§ Riparian owners who now pay rates would pay no less but they would see their money spent on maintaining and improving the fisheries. I am sure that the vast majority would like to contribute in that way to the care of the rivers they fish. Through the advisory committees they would have more say in how the money should be spent and they would be encouraged to co-operate more effectively with the NRA in its important work.
§ I believe that all that would be achieved very simply by Amendment No. 108 standing in my name and that of the noble Lord, Lord Mason. It would remove the possibility of double rating and encourage the levying of a contribution in place of fishery rates to help fund the fishery services of the NRA. I beg to move.1517
§ Lord Mason of Barnsley
I rise to speak specifically to Amendment No. 108 concerning fishery rights and to support Amendments Nos. 104 and 106 in the name of the noble Lord, Lord Moran. I believe that the amendment could work in practice, although I guess that the Minister may regard it as exploratory.
It is anomalous that there can be double rating of fisheries; namely, local authority rating and a levy imposed by the water authorities under the Salmon and Freshwater Fisheries Act 1975. In fact levies are not made under the 1975 Act because of the double-rating objections, leaving the odd and indeed farcical position that all rates on fisheries go to local authorities which have no duties towards fisheries. That has always been wrong and most local authorities do not pay any respect to fisheries in return for the rates. Some do, and quite honourably, but they are in a minority.
Therefore, the amendment's first aim is to iron out the anomaly of possible double-rating. Its second aim is to remove rating by local authorities. They are obviously not the bodies which should deal with the maintenance, improvement and development of fisheries in their areas. The amendment would also pave the way for all rates or levies under the 1975 Act to be paid to the projected National Rivers Authority under the proposed privatisation of water resources.
The national angling bodies—the National Anglers Council, the Salmon and Trout Association, the Anglers Co-operative Association and the Country Landowners' Association—have urged that fishery rates should be payable to the NRA when it is formed and not to local authorities.
There is concern that the NRA may well have insufficient Exchequer finances to fund its services and that the fisheries and rivers will suffer. Obviously if there were to be a switch of rates to the NRA it would be logical and beneficial to the fisheries and to fishing, the sport and the environment.
So, in brief, the effect of the amendment of the noble Lord, Lord Moran, would be to remove the possibility of double-rating of fisheries and so help or encourage the levying of fishery rates to help fund the fishery services of the NRA. It would exempt fisheries or fishing rights from rating under the Bill if and when a contribution is levied on them under the Salmon and Freshwater Fisheries Act 1975.
The noble Lord, Lord Moran, has already mentioned the annual general meeting of the National Anglers Council. It represents 3 million anglers, and has placed on record that that is its desire.
The present duty of water authorities is to maintain, improve and develop the fisheries in their areas. They are supposed to establish and consult fishery advisory committees in their respective areas. Their fishery function is paid for by the income from fishing licences, rod licences and net licences. The shortfall is made up from the environmental services charge which is recovered from ratepayers by the water rate. I have already mentioned that Her Majesty's Government may prefer the NRA to have a new form of income; namely, the fishery contribution under the Salmon and Freshwater Fisheries Act 1975 and be less dependent upon the 1518 Treasury. I also suggest a change which may now be seriously considered especially to assist the finances of the projected NRA—that is, a national rod licence.
The Salmon and Trout Association Sub-Committee on Still Waters—of which I am a member—researched this matter. I must say as a still-water trout fly fisherman who travels all over the country I am aware of most of the problems. I believe that this is the appropriate time to plant the seed in the minds of those preparing the Bill for water privatisation and the setting up of the NRA. The Department of the Environment will be involved and that is why I have raised the point today.
The present system of rod licensing in England and Wales is chaotic. It causes great annoyance to anglers, and to one who fishes in many areas of the country it is ridiculously expensive. Each water authority has its own licensing and prices. There are 10 water authorities and they are all different. There are far too many different classes of licence—adult, junior, pensioner's, disabled, one-day, one-week, two-week tickets, and season licences—each of which varies from one to another of the 10 water authorities.
I often buy trout licences from the Yorkshire Water Authority, the Severn and Trent Water Authority, the Thames and Southern Water Authorities and even in Cumbria. The licences cost between £5 and £7 each permitting me to fish. My annual licence therefore for those five areas would be almost £30, and it would be much more if I go to any of the other water authorities. In addition, my licence for salmon and trout in Northumbria alone costs me £41.25.
When I travel to different still waters and reservoirs to fish—and I may have travelled many miles to do so—if no licence is immediately available at the bailiff's lodge I am tempted to fish without a licence. It is obvious that hundreds do so in a season, resulting in huge losses to the water authorities. A working party of the Salmon and Trout Association, at the request of the Water Authorities Association, undertook a survey of 1,500 anglers in eight water authority areas. The results revealed that there was a considerable amount of licence dodging, mainly due to the complexities of the rod licensing system. The survey indicated that 974 fishermen should have bought 2,140 licences to fish outside their areas. They actually bought 1,297 licences. There were more than 700 people fishing without a licence and about £2,500 was lost. I must also stress that many are not dodging paying. The problem often is that licences are not readily available. A national rod licence is necessary to eliminate such fishing without a regional licence and to produce a saving of thousands of pounds in licence fees.
The water authorities have often turned down such a scheme as impractical but the establishment of a National Rivers Authority creates the perfect opportunity to introduce a national rod licence. The Post Office would be an ideal means of issuing licences—and I guess it would be agreeable to doing so—which could also be checked nationally year by year. The introduction of a well-designed plastic card licence would assist control.
1519 Such a scheme could provide additional financing for the National River Authority's fisheries management. It would be in the interests of fishery managers, of owners and lessees to ensure that the fishing public paid their share through the purchase of a national rod licence. At the moment fisheries and fishermen have good cause for concern as to what percentage of licence revenue actually goes to the maintenance, improvement and development of fisheries. If the entire income from a national rod licence were to go to the NRA there would be some guarantee of the right and appropriate use of the licence money so generated. A national licence is obviously required. It would be a great step forward and I recommend the idea to the Minister and to the Committee. In doing so I give my total support to Amendment No. 108.
§ 5 p.m.
§ The Earl of Radnor
Perhaps I may intervene, declaring my interest as a fish farmer, to support the broad principles of the amendment. Perhaps I should also issue a word or two of warning about the idea so eloquently put forward by the noble Lord, Lord Mason, of uniformity throughout the country.
Perhaps I may first deal with rod licences. Uniformity is a nice idea, with everybody paying the same for their fishing; but the fishing itself is not uniform. Therefore, I am not sure that that hat fits quite so nicely as the noble Lord would like to think.
The other point is that it seems eminently reasonable that money from fishermen should go to the sport of fishing. The obvious vehicle that presents itself for this will be the National Rivers Authority. I wanted to take the opportunity to voice a small fear here on the part of fish-farm owners, who of course ply a trade which often provides fish to stock rivers and lakes, and indeed many artificial and natural areas of water. I sense from conversations all round the place that the National Rivers Authority, when it arrives, will be keen to enter this commercial field. I am not sure whether it is right that they should enter that commercial field, held up by large funds from fishermen, to the detriment of those doing it already in competition with each other. I agree with the broad principle of the amendment.
§ Lord Kimball
Before my noble friend replies may I ask him whether, in his reply, he would look particularly at the point on Scottish fisheries which is covered by Schedule 15 to the Bill, and to which there is an amendment down, 194ZA. It is only a probing amendment. Exactly the same arguments apply north of the Border as south of the Border where a fishery board north of the Border is making an assessment under the Section 15(2) of the 1986 Act. I should be grateful if my noble friend, in his reply, could give some indication of whether or not the district fishery boards in Scotland, where they levy a rate, will be able to retain that rate for the benefit of the fisheries they look after.
§ Lord Gibson-Watt
Before my noble friend replies, may I support this amendment. I shall not repeat the arguments put so well by the noble Lord, Lord Moran, whose knowledge of this subject is immense. 1520 I would only add that there has been a deterioration in our fisheries in many rivers. I do not put this down entirely to the responsibility of the water authorities. I think in many cases they have been short of funds to deal with the fishery aspect. However, I believe that we ought to be aware of the contribution that fisheries can and do make to the tourist industry of this country. It is often overlooked. Without further ado, I support both the amendments to which the noble Lord, Lord Moran, has spoken.
§ Lord Gisborough
I should like to support the amendment. I should particularly like to support the words of the noble Lord, Lord Mason, about the national rod licence. For people to pay for two licences to fish on two rivers not very far apart is absurd.
The Earl of Caithness
May I remind the Committee that the main purpose of the Government's amendments, to which I spoke on the last amendment, is to preserve the existing rules which empower local authorities to increase the rate relief for charities from 50 per cent. to 100 per cent., and to give up to 100 per cent. relief to other non-profit-making bodies, including sports clubs.
§ Lord McIntosh of Haringey
I wonder whether we could be clear as to what amendments we are talking to? The noble Lord, Lord Moran, in moving Amendment No. 104, said that he was speaking to Amendments Nos. 106 and 108. He did not indicate that he was speaking to any other amendment. Since Amendment No. 103 had been taken separately, it would be as well if these three, which are not like any of the others, could be disposed of before going on to the Government's amendments.
The Earl of Caithness
They cannot be, for the simple reason that I spoke to the government amendments on the last amendment. I did not move them because one cannot move them, but there is nothing to stop anybody talking to amendments subsequent to the one being discussed. Indeed, I had to do that in order to set the picture for the Committee.
It is the new clause brought in by Amendment No. 107ZC, which I hope to move shortly, that does precisely what I have just said, with the supplementary provisions in Amendment No. 107ZD. I have to say to the noble Lord, Lord McIntosh, that of course these are very relevant to the arguments in Lord Moran's amendment.
I should also like to mention briefly the other government amendments to which we shall be coming and which are also connected with this. Amendment No. 123ZC is an important technical provision which clarifies that charity shops are to be treated as occupied for the purpose of a charity and can therefore benefit from rate relief, and Amendment No. 123CA is a further technical amendment. Amendment No. 123E clarifies the point that to be a charity for rate relief purposes a body does not have to be a registered charity provided that its objects are exclusively charitable.
1521 Turning to Amendments No. 104 and 106 in the name of the noble Lord, Lord Moran, who has spoken to them primarily in relation to fishing clubs, I should point out that if implemented these amendments would apply to all sporting clubs. That is precisely the point that ties up with the government amendments to which I have just referred. The first of these amendments would extend to 50 per cent. mandatory relief for charities to sports clubs. The second more briefly, and without the supporting detail, would do very much the same as the government amendments; that is, to allow local authorities to give discretionary relief.
First, I see no reason why sports and recreational clubs should receive more favoured treatment than the other cultural or other worthy bodies which qualify only for discretionary relief, though I am aware that not all sports clubs see it in this way. The reason we think that local discretion and not mandatory provision is the right course for non-profit-making bodies in general is that this allows the authority to tailor the level of relief to the benefits that the local community derives from the facilities. It recognises that not all non-profit-making bodies are equally deserving of relief, and that the best people to make local decisions on particular cases are local authorities.
In the case of sports and physical recreation clubs in particular, I appreciate the tremendous contribution that the majority of these organisations provide towards the health and well-being of the local community. I am particularly aware of the value put on the facilities provided by these clubs by young people who wish to further develop and practise their sporting skills beyond the level provided in schools. There are, however, a number of such clubs where sport takes second place to drinking and other social activities, and other clubs which are socially exclusive and which local people may be unable to afford to join. There is no reason at all why ratepayers or community charge payers should subsidise such clubs. We therefore think it is right to allow authorities to go on making a case-by-case judgment of the benefits conferred on their area.
I have no indication that local authorities in general are failing to discharge their duties properly in the exercise of that discretion. It is inevitable that some bodies will be disappointed in the level of relief granted. That does not necessarily mean that authorities have failed to give proper regard to their application. Many authorities do in practice make extensive use of the existing powers. I believe that local authorities should continue to be allowed to develop their own policies and make decisions in the light of local circumstances.
What I can say is that we propose to take steps to remind authorities of their powers and to exhort them to make the most constructive use of them. We intend that there should be guidance issued centrally to which non-profit-making bodies can point if particular local authorities adopt unduly restrictive policies.
The noble Lord, Lord Moran, in Amendment No. 108, also raised the matter of rates paid on fisheries and fishing rights. He has argued that anglers receive 1522 little or no benefit from the services provided by local authorities and that the rate income from fisheries and fishing rights should be diverted to water authorities or, in the future, the proposed National Rivers Authority, to fund the maintenance and improvement of fisheries.
Rates are not a direct payment for services. They are a tax on the beneficial occupation of property used to fund a wide range of local services. I appreciate that, in the case of fishing, it is an incorporeal right rather than the occupation of a physical asset which is taxed; but, as with all taxes, not everyone benefits from all the services they help to fund all the time. However, I am aware of a very strong body of opinion in favour of transferring the rate income from fishing rights to a body that is more directly concerned with fishery activities. I have to say that I have some sympathy with that point of view.
The noble Lord's amendment has much to commend it in that it does not seek to exempt fishing rights across the board but only if a payment is to be made to a water authority under the powers in the Salmon and Freshwater Fisheries Act 1975. Those powers have been used only to a very limited extent. Part of the reason is that it would in effect impose double taxation on anglers. The problem would be overcome if exemption from local authority rates were given in exhange for a contribution to the water authority or in future the National Rivers authority. I therefore accept in principle the substance of Amendment No. 108. However, I should like to consider further the detailed drafting with a view to bringing forward at Report stage an amendment which has a similar effect.
I should like to say now to my noble friend Lord Kimball, who has tabled Amendment No. 194ZA, which has a similar effect in Scotland, that the Government also accept the principles of his amendment.
The noble Lord, Lord Mason of Barnsley, raised the issue of a national rod licence. I was interested in what he said but, as he knows, the responsibility for rod licences will ultimately be transferred to the National Rivers Authority. I have no doubt that that body will wish to consider the matter in due course and that the noble Lord will soon be raising the matter with that authority when it takes over its responsibilities.
I hope that the noble Lord, Lord Moran, will now agree with our view that his Amendment No. 104 would go too far and that his Amendment No. 106 is dealt with by the Government's amendments—which I intend to move—and accept that we have promised to consider Amendment No. 108. On that basis, I hope that he will agree to withdraw his amendment.
§ Lord Moran
I should like first to say that I am very grateful to all Members of the Committee who have supported my amendments. I am very much encouraged by the reply which the Minister gave on Amendment No. 108. All anglers in England and Wales will be delighted to know that the Government accept the substance of our proposals. Of course the Government know better than I what the precise wording should be but I think that it will be very good 1523 news for all anglers that the Government will consider seriously diverting fishery rates to those who have the responsibility for looking after the rivers and the fisheries.
On the question of clubs, I am very glad to learn that the Government's amendment, as I understand it, preserves the discretion in the present legislation. As for the mandatory relief that I was proposing by Amendment No. 104, I am disappointed to learn that the Government are not prepared to accept that suggestion. I hold no brief for unsatisfactory clubs, such as the drinking clubs and so on that the Minister has mentioned, but I believe that there is a wide difference up and down the country between different local authorities, some of which support fishing and other recreational clubs and are anxious to help them while others are much less keen to do so. I am pleased that the Government propose to remind local authorities of their responsibilities but I hope that in the future, if things do not work out well, they will not exclude the possibility of making some change on the lines that I have suggested. Having said that, I am grateful for the Minister's remarks and I shall withdraw the three amendments, Amendments Nos. 104, 106 and 108. I beg leave to withdraw Amendment No. 104.
§ Amendment, by leave, withdrawn.
§ 5.15 p.m.
Lord Graham of Edmonton moved Amendment No. 105:
Page 23, line 37, at end insert—
("(6A) (a) Where paragraph (b) below applies the chargeable amount for a chargeable day as calculated in accordance with section 39(2), (3) and (4) shall be reduced by an amount of up to 100% of the sum due on a basis to be determined by regulations made by the Secretary of State.
(b) This paragraph applies where a hereditament is occupied by a ratepayer wholly or mainly for small business.
(c) "Small business" is to be defined in Regulations and in defining the term regard shall be had to—
§ The noble Lord said: I am moving this amendment, which has been tabled in the name of my noble friend Lord McIntosh of Haringey. The Committee will appreciate that once again we seek to pursue what these Benches consider to be inequity and injustice in the Bill and in the manner in which this section bears unduly heavily upon the business community.
I see the noble Baroness, Lady Blatch, in her place, as she normally is. A few moments ago she reminded the Committee of the injustice of certain increases in rate levels imposed by some authorities in recent times. I shall shortly indicate to her what the National Chamber of Trade has forecast will be the increase in rates to be borne by both small and large local businesses as a result of this provision in the Bill. This amendment seeks to test and probe. It appeals to the Government to take note not of what they say they intend to do but of what the business community has told us this measure will do to business. The
Minister is on record in the Financial Times of 3rd June as saying:
I have lots of sympathy with small businesses but this time they are asking for too much".
The extract continues:
However, he stressed that their worst fears of rate increases would not be realised".
The Minister must know more about this matter than does the newspaper even though he is not prepared to say very much more than that until the autumn in respect of certain easements and major impacts of the unified business rate on the businesses that have been in touch with us.
§ We hope by this amendment to enable the Minister to reduce the charge under Section 39—that is the liability—by up to 100 per cent. That is a global figure and we do not remotely think that it should be that percentage. However that figure is offered in order to avoid getting caught by stating a more precise figure. We urge the Minister to take account of the catastrophic situation that will face many businesses. It is hard to believe that the impact of the Bill will be seen by small and large businesses as anything other than catastrophic. Briefs have been sent to me by many of the large organisations which are household names in this and other countries. They all confirm that the Government's present intentions are unfair and unjust. Among the large bodies which have drawn their problems to our attention are: the Association of British Chambers of Commerce, the Association of Independent Businesses, the Confederation of British Industry, the Forum of Private Business, the National Chamber of Trade, the National Federation of Self-Employed and Small Businesses, the Union of Independent Companies and the Retail Consortium.
§ We recognise that the difficulties are compounded by the long delay in revaluation, which will certainly make a very large impact upon businesses, and perhaps the Minister intends to make a political point when offering reasons for it.
§ I simply want to remind the Minister of the effects of revaluation in sector terms. In 1985 the effect of the revaluation in Scotland was that the rates to be paid by the retail sector went up by 2.5 times, the service sector by 2.2 times and the manufacturing sector by 1.5 times. One might say, "So what?" but the Minister knows, because he is in touch with these matters, about the impact of rate increases and local payments. As the Committee is well aware, there has been controversy over what they are supposed to pay for, but the fact is that the element of the business rate that will be borne by local businesses, small businesses as well as large ones, is of major and increasingly vital concern. Local rates—this is leaving aside wages—have a great impact on the amount of money that businesses have to find just to keep going.
§ I should like to quote some of the consequences that will arise throughout the country that have been drawn to my attention by the National Chamber of Trade. Even taking into account anything that the Minister might say by way of relief or limit on the impact to be borne, members of the National Chamber of Trade have said that the rate bill of 100 1525 of their members has been estimated in 1990 by comparison with 1988. In Bury St. Edmunds members of the National Chamber of Trade are faced with an increase of 240 per cent. That is in line with the estimate of two and a half times for the retail trade. In Colchester the figure is 240 per cent.; in Eastbourne, 145 per cent.; in Epsom, 386 per cent.; in Henley-on-Thames, 240 per cent.; and in Loughborough, 110 per cent. Members of the Committee who know their geography well will say that those are substantially in the southern part of the country. That is correct. My noble friend Lord Mason of Barnsley will be interested to know that members of the National Chamber of Trade in Barnsley have estimated that in 1990 by comparison with 1988 their rate bill will decrease by 18 per cent.; in Doncaster there will be a decrease of 30 per cent.; and in South Yorkshire of 31 per cent.
§ The Minister is entitled to tell us that we are in the game of losers and gainers. We have had arguments of that kind in respect of social changes in particular and other changes. Those who benefit will take their benefit and smile. The losers are expected to say, "Hard lines, we are among the losers and we have cheerfully to lose so that the gainers may have some equity". In this instance, however, we are speaking of catastrophes that can face not only individual businesses but the high streets of our towns and commerce in general. It is no good the Minister telling us that if the North benefits by the decreases, the South must have increases. Those who have far more experience of running a retail business than I have will know that situations can develop whereby the increase in rates will be so great that large businesses will decide to pull out of the high street. This will not be the result of a decision of a local council of any particular colour but because of the imposition of the NNDR.
§ I want the Minister to face up to the argument that whatever happens there will be no net cost upon the Treasury in regard to this aspect of the Bill. We say that it is not unreasonable in a revolution of this kind for there to be gainers—so be it. However, if there are losers, the cost of the loss should not be borne by those businesses that will have to face the cost of subsidising the gains of the gainers. This is not a political point; it is a point of equity. It is not even a vested interest point. If the Minister so wished, I could quote instances that have been given to us by respected organisations—not that in which I am mainly interested, the Co-operative Movement—that will be affected in general as well as by other organisations. These are small and large businesses in the North and the South, big household names that are pointing out the detrimental impact upon them of the business rate.
§ My name is associated with Amendment No. 117, which the Committee will consider later. I have no doubt that the noble Lord, Lord Ross of Newport, will speak to it and argue the case for the small businessman. In Amendment No. 105 we argue that it is the responsibility of the Minister to take on board the serious impact on the small business. The Minister in his speech last week, which I quoted, spoke of the small business. One needs to know his definition of "small business"—whether it is in terms 1526 of employees, turnover, profit or square footage. The business community wants to know.
§ The Minister must also recognise that business decisions by the business community are being held up because of the failure of the Minister's parliamentary colleague to do what he promised last December. It was said that a statement would be made "very soon" in regard to the increase on an annual basis, whether it be 15 per cent. or something less. The Minister has carefully not given the figure. The autumn is the magic period that has been quoted more than once as the time when the decision will be made. Meantime, however, both big and small businesses must live and make their decisions this year for next year and the year after that. It cannot wait until the autumn.
§ The Minister has a major responsibility, even if he is unable to accept the amendment. If he asks me to withdraw it, he should do so with the intention of coming forward later with some proposal after consultation with both big and small businesses to meet the pressing points that have been raised.
§ Lord Somers
I wholeheartedly support the amendment. The noble Lord, Lord Graham of Edmonton, has given some convincing financial statistics.
I speak from personal experience. I live in a town where, because of the policy of the local government, small shops have been closing one by one. It is therefore very difficult to get anything that one wants or any kind of personal service. It must be remembered that large business may be a very good thing from its point of view—it is probably very profitable to itself and to its shareholders—but it is no use to the general public. As a rule, there is no personal service. The workers in such a business have no personal interest in their customers and no personal desire to ensure that their customers get what they want. They do not know their customers' requirements, and they do not care. This is becoming an urgent matter in some of the smaller towns. An amendment such as this is essential if we are to maintain the standards of what I may call day-to-day shopping.
§ 5.30 p.m.
§ Lord Rippon of Hexham
I share to a considerable extent the concerns expressed by the noble Lord, Lord Graham of Edmonton, in relation to this matter. I believe that the Government have been courageous, imaginative, and to a large extent have shown immense ingenuity in bringing forward the Bill. But as I said on Second Reading, I think there remains real anxiety about the way in which the proposals in the Bill will in effect turn non-domestic rates into a national tax with the revenue assigned to local government on a per-adult basis in perhaps a rather arbitrary way.
So far as concerns the effect on business generally, the Government have gone a considerable way towards meeting the anxieties expressed by the Confederation of British Industry and others,. However, there still remains, as the noble Lord Graham, has pointed out, real anxieties and doubts 1527 about the effects of the proposals on re-development and expansion of businesses. It is difficult that so much will remain unknown until October, until the Bill has long left this Chamber and that so much will be determined by regulations. The introduction of the uniform business rate at the same time as the community charge has involved such a fundamental change that the Government have found it necessary to repeal the whole of the General Rate Act 1967 and all the subsequent amending legislation. That means that the law on rating has been condensed to a considerable extent. As a result, the primary legislation is, even more than is now almost customary, in even more of a skeletal form leaving the main detail—the vital detail in many cases—to be prescribed in secondary legislation.
I do not wish to go into great detail in a general discussion of this kind or to quote many of the examples which have been brought to the attention of many noble Lords. But the combined effect of the introduction of a centrally determined poundage and, at the same time, the coming into force of a revaluation will have a substantial effect on the size of the individual's rate bill, particularly the individual business rate bill. Of course the Government have accepted the need for transitional arrangements in a situation of considerable uncertainty about what will happen. I hope therefore that my noble friend the Minister will make it perfectly clear—there is another amendment on the subject later—that there will be continued discussion with the CBI, the local authority associations, with the bodies which are expert in these matters and which will have to administer the law and make it work, such as the Rating and Valuation Association. There is a great deal of expertise at the Government's disposal. It is accepted that the policy in the Bill has been determined in another place. However, giving effect to the Bill, making it acceptable, making it workable and making it as equitable as possible is a very difficult task. It can be successfully accomplished only if the Government will work with the local authority associations and the other bodies who are so vitally concerned.
I hope that the Government will have regard to further changes which, according to the CBI and others, may be necessary, and that they will in particular ensure that there will be transitional provisions to limit individual rate bills and that those transitional provisions shall not be financed by a charge on other businesses which have suffered from high rates and distorted revaluations.
Secondly, I hope that consideration will be given to limiting in some way the business rate. It is possible that it should be limited to no more than 3 per cent. of RPI in any one year, assuming that the RPI is the right basis, and not everyone accepts that.
When the Government talk about flexibility in subsequent regulations, I do not believe that that is a good enough assurance for Parliament in passing primary legislation involving such fundamental changes in the law. I am sure that the Committee will agree that it is absolutely necessary to avoid sudden and significant changes in the rate burden on 1528 businesses, whether they be large or small, although it may be necessary to make the distinction between the two.
As the noble Lord, Lord Graham, indicated, I believe many of us have received an enormous volume of correspondence about this matter, all of it from people who are deeply concerned that the measure should be able to work.
For example, perhaps I have had a valuable and useful memorandum from 10 of Britain's largest retailers. Perhaps other noble Lords have had the same experience. The point they make is valid. They have suggested a maximum percentage increase in the rates bill of 10 per cent. plus inflation with a maximum of 15 per cent. I do not suggest that those are the right figures; but I believe that before the Bill leaves this Chamber, the Government should give some indication of the way in which they intend to approach problems which are of great concern to businesses throughout the country.
§ Baroness Stedman
I speak to my Amendments Nos. 106ZA and 106ZC, which narrows the field somewhat for me. We are still within the small business area but concerned with village shops and post offices. I raised this matter with the noble Earl at Second Reading. He assured me then (and I believe he hoped to allay my fears) that only the business part of those premises would be revalued. He implied that it might not make very much difference. I have been making some inquiries and I find that within my own village the community charge is likely to approximate the present rates and the shop keepers will still have the business rate to pay on that part of their property which is used as a shop.
Following that intervention, I was given the copy of a resolution from some 250 local councils that had been sent to the Secretary of State by the Cambridgeshire Association. They urged the Government to introduce measures to ease the situation for village shops and village shops and post offices. In small villages there is often only one shop and it often doubles as the post office. The incomes from both these operations usually produce enough to support the shop owner; but few of those shops support enough on their own to produce very large profits. Any substantial increases in their expenses could lead to the closure of the shop and possibly the consequent loss to the village of the village post office. That would be a real calamity in many of our villages where public transport is not easily available and not everyone has his own car to get into town. It would also create difficulty for the elderly and those in receipt of benefit which they now draw at village post offices. If the shop and post office had to close they would not be able to do that.
We have to remember that there is also a cloud hanging over many of those sub-post offices at present because of the pressure on their viability from the new community sub-post office policy, where a sub-office can be downgraded to become part-time with a reduction in salary if enough business is not transacted. That will tend to reduce the smaller post offices attached to the only shop and the shop itself may be closed. The post office would therefore go as well.
1529 The rating of village shops is being altered, like all other rating, as a result of this new legislation. There is to be a change in rateable values as a result of the revaluation and a change in rate poundage as a result of the fixing of the poundage at the same figure throughout the country. That is instead of it being locally fixed, relating to the requirements of the district council rates situation in the area where the shop or post office is.
I suspect that revaluations are likely to produce higher than average increases in values in rural areas because of the increased popularity of property within our villages since the last revaluation in 1973. That would not have happened too much in the past because generally the increased rateable values were compensated by a reduction in the local rate poundage. In 1990 the change in the values will put pressures on the village shops because of the proportionately higher increases than the towns alone may have absorbed. In villages price increases may occur as a result of the increased valuation and that could mean that shops are no longer competitive with their counterparts in the urban districts.
The effect of the standard rate poundage over the whole country will be to increase the poundage in the rural areas disproportionately. At present the urban poundages are higher and it is the Government's intention in 1990 to fix a national poundage which will raise the same total nationally from businesses as at present, and leave a business paying the same sum in rates wherever it is.
The combination as seen by the National Association of Local Councils and those connected with it is one of disproportionately higher values and disproportionately higher poundage leading to substantial actual increases in rate payments for village shops even though the businesses in total will pay the same.
At this stage the two amendments are only probing in order to provide the Minister with an opportunity to comment on our suggestions. However, they attempt to give similar relief to village shops as may be given to charities. The total payable could be reduced by a percentage whereas the reduction is already prescribed in respect of charities. We suggest that such relief would apply only to the retail goods businesses which are carried on at only one set of premises. The whole case is that it is the risk in which a particular shop in a village finds itself which must be met. The factors which could be taken into account in calculating relief are turnover, expenses and proximity of other premises, and anything else which the Secretary of State wishes to consider. Shops which can no longer trade at a profit, but which are the only shops available, need to be protected to the extent which our amendments would provide.
It would be only such a percentage as emerged from calculations carried out as prescribed by ministerial regulations. Therefore the percentage would differ from shop to shop according to the circumstances. The use of Z in the formula we have suggested in Clause 39(6)(a) enables that flexibility because Z is worked out through the regulations already provided for in Clause 40(8).
1530 I hope that the Minister will give the Committee his views on the matter. At the moment they are only probing amendments but I believe that this section of our small businesses needs to have special consideration.
§ 5.45 p.m.
§ Lord Jenkin of Roding
I should like to make one or two brief points. I listened to the noble Lord, Lord Graham of Edmonton, with growing surprise. In his argument, which concentrated upon the effect of the national non-domestic rate coupled with revaluation on the businesses which wil find themselves paying more, he did not appear to recognise at all that those which will face the largest increases over the years (there are to be transitional provisions to which I shall refer in a moment) are those which, by definition, have benefited the most from the absence of revaluation since 1973.
Massive changes have taken place, particularly in many retail areas. But what has happened since 1973? One listens to surveyors and valuers seeking to establish an appropriate 1973 rateable value on the assumption that the large shopping areas which were not then in existence are not in existence now and cannot be taken into account in fixing the value of a small shop or whatever. One then realises how far into the relams of fantasy the rating system has gone because of the failure of governments to revalue.
I remind the Committee of a point that I made at Second Reading. I believe that it is true to say that in its entire history in government the Labour Party has never had the courage to introduce a revaluation in England and Wales. Therefore, we shall not hear arguments from that party. Those who point to themselves as the biggest losers in the move to the national non-domestic rate from the current rateable values, are those who, by definition, have over many years enjoyed the privilege of paying a substantially lower rate than many of their competitors who have been in different circumstances.
My second point is that that does not meet the argument of the small businessman in particular who will find himself facing a substantial increase in his local taxation. However, that is essentially a transitional problem. I hope that the Committee will not be tempted to accept amendments which seek to build in some kind of permanent bias in favour of the small business or small shop. That would be to distort the pattern of competition and to raise all kinds of arguments about government interference in the retail trade of this country.
Of course there must be transitional provisons. It is right to mitigate the effect of change. I was greatly relieved when I read that in another place the Secretary of State, the right honourable Nicholas Ridley, had announced that in addition to the transitional provisions already provided for in the Bill—and we await the details for reasons which everyone at least on this side of the Committee will understand—there is to be a special transitional provision for small firms. I believe that that goes a long way towards meeting the anxieties that have been voiced on both sides of the Committee about this matter.
1531 I make my final point in enormous deference to my noble friend Lord Rippon. He suggested that possibly the maximum increase in the non-domestic rate might be lower than the retail prices index. I may have misunderstood but he suggested a figure as low as 2 per cent. or 3 per cent.—
§ Lord Jenkin of Roding
If that is a CBI figure it would totally undermine the whole construction of this reform. It would mean that one would be building into the community charge an increase charged on individuals, because that is the residual. The proportion of the local expenditure met by the distribution of the national non-domestic rate would reduce annually. The only consequence of that would be that the community charge would rise annually faster than the retail prices index. I believe that the retail price index is a very fair measure of the increased costs of local government. Some local government costs rise more than that and some less but it is not a bad target at which to aim.
The Government have indicated that they are prepared to have transitional provisions—perhaps even, generous transitional provisions—to ease the change during the few years after the introduction. However, I hope that they will not be tempted to try to build-in any particular bias in favour of this or that group because by then one will have up to date rateable values, revalued at regular intervals by whichever government may be in power.
There will be a national figure so that businesses will no longer be, as they have been in a good many areas, the milch cow of extravagant councils with no vote and very little say as to what should happen to them. That is the great prize for business and, subject to the transitional provisions, I believe that many in the business world recognise that this is a substantial advance.
§ Lord Ross of Newport
I hope that the noble Lord, Lord Jenkin, is here in two years' time if there are not adequate transitional arrangements for small businessmen, because I believe we shall be facing a situation here that faced us in 1974 at the time of the last revaluation which of course is the reason why the Mayhew Committee was set up. There were indignation meetings attended by many thousands in places like Manchester and elsewhere.
I go along with the noble Lord entirely when he asks for particularly favourable treatment towards the smaller businesses. I have some confidence that we may get rather more out of the Minister when he replies because in a letter to me recently, which no doubt went to other Members, he inferred that there would be provision for a lower ceiling for small firms although he says that while there is no evidence that small firms will face disproportionately large increases, the Government recognise that small firms are less capable than large ones of absorbing them. I hope to show that small firms are in danger of facing exceptional increases. A letter from the Minister's colleague in another place to the Retail Consortium also said that the Government would look closely at 1532 the question of a lower ceiling for small businesses on the grounds that they may find it more difficult to accommodate substantial increases quickly.
I think those have to be phased over a much longer period. I take heart that we are now going above the figures of five years but the 15 per cent., if that is what is suggested, is too high. I shall indicate why I think that. Of course, the idea of a rate the index of which is tied to a cost of living index is appealing but it is the base from which one starts that matters most. The Minister criticised the noble Baroness, Lady Seear, for her comment that when the rating revaluation takes place the rating power comes down. However, that is what will happen. At the moment the Government are saying that the average will be about 224p and most people are predicting—although I have not seen the Government's prediction—that when the new lists are published we shall have to look at something like 50p.
For the last 12 years I have been trying to sell to the citizens of Newport the products of Doulton, Wedgwood and a few others. I am just about to leave that because I am retiring. I have employed a manageress and I can promise this Committee that I have not taken a penny out of the till for myself. This is a business which has been run totally honestly and has increased its turnover from year to year from a base of about £12,000 to something like £35,000 per year. I wish to quote a few figures from that and to translate them into what I think will happen if we have a 50p rate. I want to show how it would affect me.
I want to make a point about water rates because we do not receive any relief on water rates and they are increasing fast. The Isle of Wight is one of those areas which was a test case for putting in meters. A small business on the south coast of the Isle of Wight reported to me this morning that its water rate bill last year was £120 and this year it is £264. That business is only open for a few days and weekends in the summer, and mostly closed throughout the winter except on Sundays because it is a restaurant business. Therefore, that shows what some of us may face when metering is adopted throughout the country. I do not say that it is not a fair way to pay for water but it will bring another increase.
I paid £592 for water and general rates in 1986; I paid £695 in 1987 and I was paying around £800 in the current year. My landlord charges me £2,600 for rent and I believe that that is virtually what the rateable value will be because that falls in line with the definition of rateable value. If the DV puts a valuation of £2,600 on me, 50 per cent. of that will be something like £1,300 plus water rates. That is a fairly substantial increase.
I have just sold the lease of my business to someone else coming in for £4,500 plus a substantial premium which is over £10,000. He will not sell ceramics to anybody. He will clear it out and sell clothes, but he is in a secondary trading position. I think the valuation officer—and I suppose I am a mug to put this on record but if someone else is going to have to pay the rates then it is not my responsibility any more—would be perfectly justified to say that the 1533 rent has suddenly leapt up in the last six to nine months and that he wants to base it on £4,500. That means a very large increase of more than 100 per cent.
For the last 12 months I have been concentrating on trying to sell commercial and industrial property. From my own knowledge of the business all over the South of England, West of England and the Midlands the property market has not just been in a huge "hype" in domestic properties but also in secondary shops, stalls, post offices and so on. People have been paying much larger sums. Quite frankly they have not asked about rates because they do not regard rates in our part of the country as being extremely high. They may ask about them in Cambridge with a 30 per cent. "hype" this time. They probably do so in Camden but they do not in most parts of the country. Extraordinary sums are being paid as "key money", just to get into secondary shops. There may be no hope of surviving for very long but perhaps it is done solely to get into the living accommodation that goes with those shops.
I say that because I believe, rightly or wrongly—and of course it is due to the fact that we did not have a revaluation—that people have done these things and I am quite convinced that when these new lists are published and the rating assessments come out people will face grave difficulties. That is why we tabled the amendments on behalf of the Small Business Association and that is why I am speaking to those amendments. I do not say they are the right answer, although the Minister has looked at figures about possible rateable value cut offs. Although he may criticise, we already do that with corporation tax and on rateable values with regard to housing legislation. Therefore, perhaps the figure of £30,000 is rather high.
In the past 12 months when the "multiples" have been coming into Newport on the Isle of Wight, the rental base for what we call Zone A which is a main trading area, has suddenly shot up from something like £25 per foot to £45 a foot. It is an enormous "hype". Whether or not we like it, to say that you are going to stand firm and not give too many concessions is really running in the face of what these people will be told by their bank managers and pressure will be put on them to pay off the mortgages, overdrafts and so on. Of course it will help them because houses have gone up very very substantially. One hardly sees anything priced under £200,000 in The Sunday Times these days and I wonder how my own children and the younger generation will ever be able to afford to buy a house. Others more fortunate are selling their homes and getting away from London and the crowds so as to be able to do their own thing. Who can blame them for doing that? However, if we are not careful and do not give real concessions then those people will certainly be at the doors of these two Houses of Parliament in 12 to 18 months' time and they will have every right to do that.
§ 6 p.m.
§ Lord Dean of Beswick
I wanted to follow the noble Lord, Lord Jenkin. I listened to the noble Lord, Lord 1534 Jenkin, who is a former Secretary of State—and I listened to him with care—but I was listening to him as a former leader in local government. The noble Lord, Lord Jenkin, gave the quite definite view that people in England and Wales had been protected over the years because there had been no revaluation of rateable values and that had there been such a revaluation, there would have been substantial increases in the rates that they would have had to pay.
I was on Manchester City Council at the time of the last rate revaluation in England and Wales. I believe that on a rough calculation rateable values were almost doubled by the Inland Revenue. It did not follow automatically in Manchester that the rate which people had to pay the next year doubled. What happened was that as the rateable values increased, the rate poundages plummeted so that it was still possible for someone to have a tremendous rate increase but it was based on prolific spending and not to do with rating revaluation. In Manchester, for example, if it was necessary to collect £100 million from the ratepayers, the poundage might be £1 in the pound to raise that amount—these are hypothetical figures, but I am seeking to make a case. If the rateable value doubled and you were budgeting for a nil increase, then the charge would be 50p in the pound, not £1 in the pound.
It is misleading for the noble Lord, Lord Jenkin, to say that re-rating in England and Wales would automatically mean substantial increases in what ratepayers pay to local authorities. That is a completely false premise unless a council overspends prolifically; but that would have nothing to do with revaluation because the council would have to charge a higher poundage had the revaluation not taken place. The record should be put right. I am saying this with my ex-local authority hat on, having had to operate the system. The former Secretary of State has never had to do that.
§ Lord Jenkin of Roding
I intervene just to say that I hold myself entirely responsible if the noble Lord has been so sadly misled on the point I was seeking to make. I was endeavouring to say that since 1973 there have been massive differential changes in land values, and that the people who will have the largest increases are those who would have had increases over those years but who have not had them and therefore have been paying rates on much lower levels. That is the point I seek to make. The noble Lord was right to say that if rateable values go up the poundage should come down. However, it is the differentials which have become so out of kilter, and that is where the losers come in.
§ Lord Dean of Beswick
If one considers this matter in areas, over 40 per cent. of the population are in the urban areas. In my opinion, they would not be affected as the noble Lord predicts. From the way in which he put his case the only conclusion that can be drawn is that revaluation would automatically explode rates upwards. That is nonsense; it would not.
§ Baroness Carnegy of Lour
Following that exchange, I should like briefly to refer to what happened in Scotland because it is important to understand that. In the region in which I was operating as a councillor, when we had revaluation the total rate base of the region stayed the same; that is, the total valuation of properties in the region stayed the same. However, for some of the commercial properties in the town where I live the rateable value increased enormously. In other places it dropped.
Over and above that, there was a rate increase that year of, I believe, 18 per cent. so that the distortion was brought about by the high increase in the rate as well as by a changing differential within the area. Therefore, some small shops in Forfar were having to pay four times as much in rates, while some small shops in Dundee, 15 miles away, were paying half as much in rates.
There had to be swift remedial action. The message is two-fold. First, the rate is not going to increase by 18 per cent. It will be predictable, and therefore will lessen the distortion. Secondly, the distortion will be greater in the rateable value because the time since the previous revaluation is much longer—ours was only seven years and it is now 15 years. There will be much greater distortion in the actual valuations.
That means that the people who are living in an area which has become much more attractive since the last valuation—I imagine that Bury St. Edmunds is probably one of them—can look forward, I am afraid, to greatly increased valuations. There is no question about that. If, in addition, they are paying less than the average rate for the country because they are in a low rated area, that will distort the position in the wrong way for those people. However, people at present in a high rated area, and also in an area which is becoming less attractive, will benefit enormously.
No government can calculate now what is going to happen. The Government will not be so surprised as they were for Scotland. I do not think they knew anything of what was to happen in Scotland until it happened. That was part of the problem that triggered the whole thing off. The Government cannot estimate, and nor can the shopkeepers, exactly what those figures will be because they do not know what the valuations will be. It is therefore absolutely essential that the transitional arrangements should include the flexibility to cater for what will happen; particularly in those places which will suffer most. However, there cannot be a blanket flexibility. My noble friend Lord Rippon, with all his experience, I am sure appreciates that if one keeps the whole thing down for everyone the people who benefit will simply benefit much more. That is not what is required. One must even out differentials.
The message for my noble friend on the Front Bench, therefore, from this extremely interesting and informative debate is that there must be flexibility to cope with such situations when the time comes.
§ Lord Taylor of Gryfe
I am glad that the Scottish experience is being aired in Committee. Listening to 1536 the debate in general, I have had the feeling that I have been round this course before. In fact, two years ago we had this argument when the Scottish Bill was dealt with. We have now had two years' experience in getting nearer its operation.
I am delighted that in this Bill there has been some recognition of anomalies and some promise of transitional arrangements and special considerations in relation to small businesses. The Minister will be aware, of course, that since the Scottish legislation passed through this Chamber and became law a general election has taken place. The Scottish people gave their judgment in relation to that legislation. The Government managed to win 10 seats out of 72 and moved into third place behind the Scottish Nationalists. That is some indication of the strength of feeling on this legislation.
That applied not simply to the domestic rating provisions but also to business rates. When the Bill was going through this Chamber I was asked by the National Federation of Self-Employed and Small Businesses, the Federation of Private Businesses and the Forum of Private Business to draw the attention of this place to the different structure of retail trading and the importance of rating in the total costing of small businesses. I can speak more freely since my good friend and colleague, my noble friend Lord Sainsbury, has left the Chamber. If one considers Sainsburys and the large public limited companies, about 1 per cent. of costs relates to rates. It is an insignificant amount. However, for small businesses the cost of rates could be 15 per cent. It is the third largest overhead after wages and rents. Therefore, it is significant that if there is a change in the basis, and if there is not to be more consideration for the small business community, the burden will be too great for many of them to carry.
For all the reasons expressed by the noble Baroness, Lady Stedman, about the village post offices and small stores, it would be wrong and socially undesirable to place burdens on small traders that would mean their elimination from the provision of a decent service in the smaller communities. I ask the Minister to look at that aspect because small businesses are not in a position to increase prices to recover costs in the way that some of the larger businesses can do with their greater volume of trade. Therefore, I make a special plea in that respect. My name is attached to Amendments Nos. 117C and 117E which deal specifically with that point.
In view of the concessions which are now being made in the Bill and which are very welcome, I shall welcome advice from the Minister as to how he will deal with these concessions in relation to Scotland, and whether transitional arrangements and other benefits are to be applied there. If not, then the glaring anomalies which exist between rating in Scotland and in England will be further exaggerated. I shall welcome the comments of the Minister on these points.
The Earl of Caithness
The noble Lord, Lord Graham of Edmonton, moved Amendment No. 105. Since then the noble Baroness, Lady Stedman, has spoken to her two amendments, Nos. 106ZA and 106ZC; the noble Lords, Lord Ross of Newport and 1537 Lord Taylor of Gryfe, have also spoken to Amendments Nos. 106ZB and 117D. I, too, shall speak to all those amendments and include in my remarks the Government's amendments, Nos. 117A, 117B, 117C, 117BA and 117E. The reason for doing that is that the amendments in this group are all concerned with cushioning the impact of revaluation and the introduction of the national non-domestic rate on small businesses. As such they cover ground that has already been thoroughly discussed in another place.
We are extremely grateful for the very constructive and helpful debate that we have had today. The Government amendments are concerned with transitional arrangements for all businesses, but include special provision for transitional arrangements for small businesses. The non-government amendments all seek to provide special treatment for small businesses. In all cases what is proposed would be a permanent benefit, though the large increases some small businesses will face in 1990 are strictly temporary problems.
Amendment No. 105 moved by the noble Lord, Lord Graham of Edmonton, is drafted in similar terms to that moved in another place. It would place a duty on the Secretary of State to reduce the non-domestic rate for small businesses permanently, by up to 100 per cent. on a basis to be defined in regulations. The definition of small business will also be in regulations, but will take account of a business's profits, assets, number of employees, and whether it was a plc. I doubt that the noble Lord is absolutely serious about giving my right honourable friend such a wide-ranging discretionary power, but his amendment has served a very useful purpose in allowing him to make the points on small businesses. This new-found concern from the Labour Party about the rates burden on small businesses is a little confusing in view of the record of many Labour authorities in increasing rates under the present system. The 60 per cent increases in Waltham Forest and Ealing last year or the 20 per cent. plus increases in Humberside this year, give perhaps a more practical demonstration of their true concern.
Amendments Nos. 106ZA and 106ZC moved by the noble Baroness, Lady Stedman, provide for a similar duty to set a lower rate that would apply only where the ratepayer was a retailer operating from a single property. In calculating the factor by which rates for a qualifying property shall be reduced, the Secretary of State would be required to take into account the turnover and gross operating expenses of the business or businesses operating from the property, and the proximity of similar businesses. Oddly, my right honourable friend would not be required to take into account profit or whether the rate bill in question had gone up or down.
I ask the Committee at this point to pause to consider the amount of work and extra costs that these two amendments would cause local authorities, who at present have access to none of the information about turnover or profit or the company status as proposed. They would have to collect that information or arrangements would have to be made to breach the strict rules of confidentiality of information of the revenue department, to pass over 1538 information which many companies would regard as commercially sensitive. I wonder how far small businesses would really welcome that information being in the hands of their local authority. The proposers of the amendment have not explained how their scheme would apply to businesses with more than one property, perhaps in more than one local authority. As all Members of the Committee appreciate, a business does not have to be a large one to be in that position.
Amendment No. 106ZB, in the name of the noble Lord, Lord Ross of Newport, is also similar to one considered in another place and would abate the first £1,000 of any rates due on a hereditament by 50 per cent. In other words, it would mean that everyone would pay £500 less, permanently, except, of course, that someone would have to pay more to make up for this. The amendment does not indicate whether this should be other businesses, the community charge payer, or the national taxpayer. Its effect would be to benefit very small businesses most, but if the cost was met by other businesses—some quite small businesses; namely, those with rate bills over £4,000—they would end up paying more to subsidise their competitors.
Amendment No. 117D moved by the noble Lord, Lord Ross of Newport, provides for the ceiling on year-on-year rates increases to continue indefinitely until the increase had been absorbed. It would also provide for non-plcs, occupying property with a 1990 rateable value of less than £30,000, to be subject to a 10 per cent. ceiling on annual rates increases and a special national non-domestic rate set at 70 per cent. of the standard NNDR.
These proposals would mean that the branches of quite large organisations would benefit from the concession. Building societies, Unwins Wines, K Shoe Shops, and many other non-chains owned by non-plc companies or friendly societies operating from a large number of small outlets would benefit at the expense of their competitors. 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 pay more to finance this concession. The National Federation of Self-Employed and Small Businesses and the Forum of Private Business claim that this would be a small addition. I say to the Committee that it would not. We have done our best to estimate the cost. However, because we expect 55 per cent. of all properties to have rateable values below £30,000, even allowing for a proportion to have plc status, that still leads us to the conclusion that we might have to increase the rate bills of other businesses by about 14 per cent. Like the noble Lord, Lord Taylor of Gryfe, I too am sorry that the noble Lord, Lord Sainsbury, is not in his place to hear that comment. I do not believe that he would be particularly pleased.
The theme that runs through all these amendments is the false idea that small businesses as a group will be badly hit by revaluation and the introduction of NNDR. This is a distorted view of what is likely to happen in 1990. I must therefore answer the arguments. The first point to make is that we believe that the great majority of small businesses will not in fact face the kind of large rates increases in 1990 that 1539 the small business organisations have been predicting because relatively few will. Away from retailing, large rates increases will be rare and small businesses in industry will generally stand to gain.
As I have said, the full details will not be available until the revaluation is complete. As soon as the sample survey is available the results will be made known and at that stage we shall know much more what is the position.
§ 6.15 p.m.
§ Lord Ross of Newport
I am grateful to the noble Earl for giving way. Can the Minister give some authoritative indication of when that might be? One hears that there are problems within the revaluation office, such as a shortage of staff and the rest. Can the Minister give some idea when information will be available?
The Earl of Caithness
I hope it will be in the autumn. However, I cannot give the noble Lord a clear indication at the moment. Having been a surveyor and a small business man, I appreciate the need to get out the figures as soon as possible, because it is in the interregnum period, when we are not sure what the figures will be, that all the worries surface and the most extreme examples are naturally put forward.
The second and perhaps key point, is that even in retailing we expect very large rates increases to be confined mostly to those who have been most successful since the last revaluation 15 years' ago. That relates to retailers in prime high street sites, mainly in the South of England. The Committee will appreciate that these are the areas where larger retailers predominate. Secondary shopping centres and neighbourhood shops—the location of the vast majority of small retailers—are much less likely to face large increases. Some, particularly in the North, will even gain. Many will see a relative fall in their rates when compared with their large high street or out-of-town competitors.
So let us be clear: neither small businesses as a whole nor small retailers as a group are more likely to face high rates increases than their larger competitors. This is not to deny that there will be some businesses in particular locations that will face large increases. But we must keep the problem in perspective.
My noble friend Lord Rippon of Hexham said that Amendment No. 105 failed to discriminate between businesses. The amendments do not seek to discriminate between those small businesses that will face large increases, those that will not and indeed those that will gain or even gain substantially. All are to enjoy a subsidy from their competitors.
Who is to pay for this permanent blanket subsidy? Well, it can only be either other businesses or the national or local taxpayer. The amendment of the noble Lord, Lord Ross of Newport, Amendment No. 117D, makes it clear that this unjustifiable permanent subsidy—a subsidy of 30 per cent. seems to be the preferred figure—is to be paid for by what he described as a small addition to the NNDR for 1540 medium and large businesses, some of which will of course themselves already be facing large rates increases as a result of the revaluation and the introduction of NNDR. Such a subsidy would, as I have already said, put up their rates by around 14 per cent. I question whether this is either small or fair.
I am aware that rates form a higher proportion of costs for small businesses. But rates are a tax on property values. Why should small businesses pay less in proportion to the value of their property than their larger competitors? If small units command higher rents in the market than large, that must reflect a greater demand for small units.
Perhaps the greatest weakness of the case for a permanent subsidy, and of the amendments before us today, is that such a subsidy would be largely self-defeating in the long run. We cannot escape the fact that rates per square foot are higher for small businesses because they reflect a greater demand. A relative reduction in rates for small business premises would serve only to increase that demand. It would not take the large chains long to work out the advantages of operating via wholly-owned private subsidiary companies in smaller units. Rents would then rise further which in turn would, in due course, push up rateable values and hence rates. The proposals would in the long run tend to benefit no one but the landlords of small business premises. That seeks to reinforce the argument made by my noble friend Lord Jenkin of Roding in regard to the comments and worries of my noble friend Lord Rippon of Hexham.
Another major point that these amendments fail to grasp is the fact that, with the rise in the NNDR limited to the rise in the RPI, business rates will in future rise by much less than they have in recent years, or indeed would have if the present system had continued. If the NNDR had been in place now, this year's business rate rise everywhere could have been no more than 4 per cent compared with actual rises averaging 7 per cent., but were far higher in many parts of the country, as I have already pointed out. I ask the Committee to accept therefore that these amendments, however well intentioned, are misguided, unjustifiable, largely impractical, and would give rise to great unfairness. They are also unnecessary.
They are unnecessary because, as my noble friend Lord Jenkin of Roding said, the Government are already completely committed to ensuring that those relatively few businesses which will face large rates increases in 1990 should be cushioned against their effects. We fully accept that businesses in that position—large or small—must be given time to adjust. We are therefore committed to generous transitional arrangements which will take the form of a ceiling on year-on-year rates increases as I have said earlier—for so long as is necessary. The amendments are unnecessary because, in addition, we accept that those relatively few small businesses that face large rates increases will find it more difficult than large ones to absorb the increases quickly. That is why we are committed to taking power to set a special lower ceiling for small businesses while we are against a permanent subsidy. We have also made it clear that 1541 we will take power to have continuing transitional arrangements in the period after the 1995 revaluation if that is still necessary.
The whole Committee was grateful for the contributions of the noble Lord, Lord Taylor of Gryfe, and my noble friend Lady Carnegy of Lour. Both said that the experience of Scotland showed the need for flexibility. The Government amendments, Amendments Nos. 117A, 117B, 117C, 117BA and 117E, deliver what we have promised. They will give the Secretary of State power to provide through regulations for the transitional arrangements to take the form of a ceiling on year-on-year rates increases, to be paid for by a limitation on year-on-year rates reductions; and a special lower ceiling for small business premises, to operate for properties with a rateable value below a threshold to be defined by regulation. We shall consult widely on the level at which this small businesses threshold should be set. They will provide for fresh transitional arrangements to accompany the 1995 and subsequent evaluations. This will enable us to set the ceilings on rate increases at a level lower than would otherwise have been possible.
One of my final comments covers the point raised by the noble Lord, Lord Graham of Edmonton, about how a small business is to be defined. It is to be on rateable value, and it is on that that we wish to consult. I do not exaggerate when I say that this Government are more actively and favourably disposed to small businesses than any in living memory. I do not resist the amendments of the Opposition because of a hostility to small businesses but because we believe the amendments are not justified. They are unnecessary and ultimately self-defeating. The Government are very aware of the concerns and worries of business, and so we have brought in for the very first time substantial transitional provisions not only to cover this valuation but the next one and to take special care of small businesses.
§ Lord Rippon of Hexham
My noble friend referred to me. Perhaps I may say that I do not wholly recognise his comment on my observations. I do not in any way doubt the good intentions of the Government or the general merit of what he said. However, I should like some assurance, for which I ask definitely, that the CBI, the local authority associations, and others, will continue to be consulted about what will go into the regulations.
§ Lord Taylor of Gryfe
What will be the impact on Scotland if we pass the arrangements contained in the subsequent amendments in the Minister's name which give effect to the transitional arrangements? What will this do to the existing Scottish legislation?
The Earl of Caithness
It is good news for Scotland which I am sure the noble Lord will welcome. I can assure him that there will be powers for transitional arrangements in Scotland. Perhaps I may refer him to Clause 127.
§ Lord Graham of Edmonton
We have had a useful and constructive debate. I would not want to detract from anything the Minister said about what the Government have done for small businesses. They have created more small businesses than many other governments. The simple fact is that when the Government came to power those small businesses were large businesses.
The Government ask those outside the Chamber to believe that relatively few small businesses will feel themselves badly affected and unjustly dealt with by the Bill. They will listen carefully to what the Minister has said. Of course we on this side of the Committee have our political imperatives; but all that I have said and all that others have said has been put to us by representatives of the business community. Of course, they may have got it wrong; of course they have a vested interest, and of course they will see things on the black side. However, when the day dawns and they are in business with the changed circumstances—the Minister says that relatively few small businesses will find that the impact is unduly large or unfair—they will have to open their shops and try to trade and then succeed in business.
Increases will be rare, said the Minister, in respect of small businesses. We are puzzled that the Minister is not prepared to accept the burden and the pain of the change. The Minister is putting forward a revolution. He is entitled to take credit for courage and enterprise in the change. However, it is nonsense to say that it will be painless or relatively painless to the business community. They see it in a different way.
The Minister makes some play about the terms of our amendment. He was careful to say to the Committee that it is similar to an amendment moved in another place. His briefing note did not include the fact that it was moved by Sir Hugh Rossi, who spoke from his experience as a Minister in local government in a previous Administration. Sir Hugh Rossi is the Conservative Member for Hornsey and Wood Green and served as a Minister in the department. He may have got it wrong. Before he came to the House Sir Hugh Rossi was a long-serving and successful member of a local authority. Therefore he spoke with the advantage of two relevant experiences. In my view, the Minister has failed to answer the charge. Our argument is that it is unfair that in order for one element of the business community to gain an advantage, another element must bear the cost and thereby be disadvantaged.
The Government are telling the country that the economy is booming and indeed the Chancellor was able to distribute billions of pounds to certain sectors of the community in the last Budget. However, we are arguing the issue in order to get the matter as smooth as possible. I can tell the Minister that I accept the Government have moved a long way in the transitional arrangements and have generously conceded many points. However, he has certainly failed to satisfy me, and I intend to press the amendment to a Division.
§ 6.31 p.m.
§ On Question, Whether the said amendment (No. 105) shall be agreed to?1543
§ Their Lordships divided: Contents, 77; Not-Contents, 120.1544
|DIVISION NO. 1|
|Addington, L.||Listowel, E.|
|Airedale, L.||Lloyd of Hampstead, L.|
|Attlee, E.||Longford, E.|
|Aylestone, L.||Lovell-Davis, L.|
|Basnett, L.||McIntosh of Haringey, L.|
|Blackstone, B.||Mackie of Benshie, L.|
|Broadbridge, L.||McNair, L.|
|Bruce of Donington, L.||Mason of Barnsley, L.|
|Carmichael of Kelvingrove, L.||Meston, L.|
|Carter, L.||Monson, L.|
|Cledwyn of Penrhos, L.||Nicol, B.|
|Cocks of Hartcliffe, L.||Northfield, L.|
|David, B.||Oram, L.|
|Dean of Beswick, L.||Peston, L.|
|Diamond, L.||Pitt of Hampstead, L.|
|Donaldson of Kingsbridge, L.||Ponsonby of Shulbrede, L. [Teller.]|
|Dormand of Easington, L.|
|Elwyn-Jones, L.||Prys-Davies, L.|
|Ewart-Biggs, B.||Rea, L.|
|Falkender, B.||Rochester, L.|
|Fitt, L.||Ross of Newport, L.|
|Gallacher, L.||Russell, E.|
|Galpern, L.||Seear, B.|
|Graham of Edmonton, L.||Serota, B.|
|Grey, E.||Somers, L.|
|Hampton, L.||Stallard, L.|
|Harris of Greenwich, L.||Stedman, B.|
|Hart of South Lanark, B.||Stewart of Fulham, L.|
|Hatch of Lusby, L.||Stoddart of Swindon, L.|
|Hooson, L.||Taylor of Blackburn, L.|
|Houghton of Sowerby, L.||Taylor of Gryfe, L.|
|Hughes, L.||Tordoff, L. [Teller.]|
|Hunt, L.||Underhill, L.|
|Irvine of Lairg, L.||Wallace of Coslany, L.|
|Irving of Dartford, L.||Wells-Pestell, L.|
|Jay, L.||White, B.|
|Jeger, B.||Willis, L.|
|Kilbracken, L.||Winchilsea and Nottingham, E.|
|Abinger, L.||Cottesloe, L.|
|Ailesbury, M.||Craigmyle, L.|
|Alport, L.||Croft, L.|
|Arran, E.||Cullen of Ashbourne, L.|
|Ashbourne, L.||Dacre of Glanton, L.|
|Auckland, L.||Davidson, V. [Teller.]|
|Balfour, E.||Denham, L. [Teller.]|
|Belhaven and Stenton, L.||Dundee, E.|
|Beloff, L.||Eden of Winton, L.|
|Belstead, L.||Erroll, E.|
|Benson, L.||Fairhaven, L.|
|Bessborough, E.||Faithfull, B.|
|Blatch, B.||Ferrers, E.|
|Boyd-Carpenter, L.||Foley, L.|
|Brabazon of Tara, L.||Fortescue, E.|
|Brougham and Vaux, L.||Fraser of Kilmorack, L.|
|Bruce-Gardyne, L.||Gardner of Parkes, B.|
|Butterworth, L.||Gibson-Watt, L.|
|Caithness, E.||Gisborough, L.|
|Cameron of Lochbroom, L.||Glenarthur, L.|
|Campbell of Alloway, L.||Goold, L.|
|Campbell of Croy, L.||Hailsham of Saint Marylebone, L.|
|Carlisle of Bucklow, L.|
|Carnarvon, E.||Hanson, L.|
|Carnegy of Lour, B.||Harmar-Nicholls, L.|
|Carnock, L.||Havers, L.|
|Carr of Hadley, L.||Hayter, L.|
|Cathcart, E.||Henley, L.|
|Chelmer, L.||Hesketh, L.|
|Clitheroe, L.||Hives, L.|
|Coleraine, L.||Hood, V.|
|Constantine of Stanmore, L.||Hooper, B.|
|Hylton-Foster, B.||Prior, L.|
|Ingrow, L.||Radnor, E.|
|Jenkin of Roding, L.||Rankeillour, L.|
|Johnston of Rockport, L.||Reay, L.|
|Kimball, L.||Renton, L.|
|Kinnoull, E.||Rippon of Hexham, L.|
|Lauderdale, E.||Saltoun of Abernethy, Ly.|
|Layton, L.||Sanderson of Bowden, L.|
|Long, V.||Sandford, L.|
|McAlpine of West Green, L.||Seebohm, L.|
|Mackay of Clashfern, L.||Skelmersdale, L.|
|Macleod of Borve, B.||Stanley of Alderley, L.|
|Manton, L.||Stodart of Leaston, L.|
|Marley, L.||Strathcona and Mount Royal, L.|
|Middleton, L.||Swinfen, L.|
|Mottistone, L.||Teviot, L.|
|Munster, E.||Thomas of Gwydir, L.|
|Murton of Lindisfarne, L.||Trafford, L.|
|Napier and Ettrick, L.||Trumpington, B.|
|Nelson, E.||Ullswater, V.|
|Nelson of Stafford, L.||Vaux of Harrowden, L.|
|Newall, L.||Ward of Witley, V.|
|Norrie, L.||Weinstock, L.|
|Nugent of Guildford, L.||Windlesham, L.|
|Onslow, E.||Wise, L.|
|Orkney, E.||Wyatt of Weeford, L.|
|Orr-Ewing, L.||Wynford, L.|
|Oxfuird, V.||Young of Graffham, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.38 p.m.
§ [Amendment No. 106 not moved.]
§ [Amendments Nos. 106ZA and 106ZB not moved.]
§ Clause 39, as amended, agreed to.
§ Clause 40 [Occupied hereditaments: supplementary]:
§ [Amendment No. 106ZC not moved.]
§ Clause 40 agreed to.
Lord Stanley of Alderley moved Amendment No. 106A:
After Clause 40, insert the following new clause:
§ ("Protection for rural services.
§ Where a charging authority considers it desirable in the interests of maintaining or encouraging the provision of services to residents in rural areas, it may specify such hereditaments or classes of hereditaments as it considers appropriate where the non-domestic rate chargeable shall be reduced by an amount equivalent to the personal community charge of that authority in that chargeable financial year.").
§ The noble Lord said: The noble Baroness, Lady Stedman on a previous amendment, posed our concern over the need to protect the village shop. In supporting her by moving this amendment, I make two points. First, I hope that my noble friend will make an uncompromising and categorical statement that the Government appreciate the importance of the village shop in the rural scene. Now that the Church has, much to my regret, temporarily declined in influence, the village shop is the village's social centre and, as such, plays a more important role than dishing out icecreams and lollies to the children and pensions and social security payments to many of us.
§ I therefore disagree with some of the remarks made by my noble friend Lord Jenkin on the previous amendment. The high street shop does not provide that social service. I hope that my noble friend the 1545 Minister will see the need to bend over backwards financially to prevent further closures of such shops. Provided that my noble friend agrees with that first point, it is merely a question of how we achieve what I call the especially favoured rating of the village shop. My noble friend was kind enough to write to me saying that there is no question of village shops paying twice on the non-domestic part of the house. I am concerned that when the rating officer does his valuation of the shop part of the house he should use a criterion that deals much more leniently than in the case of a high street shop. Will my noble friend give me some idea of what guidelines will be used when the shop part of the house is revalued?
I was not, I am sorry to say, reassured by my noble friend's remarks on this matter when he referred to it on the previous amendment. In particular, what evidence can he give me to support the words of his helpful letter, in which he wrote:
We would expect to see a relative decrease in the rateable values of many village shops"?
I suspect that that phrase sounds a bit "Yes, Ministerish" and that the words upon which he will rely are "rateable value" rather than actual value.
§ Will my noble friend assure me that the village shop will be no worse off under the Bill than under existing conditions? Our amendment would ensure that by releasing the shop from one community charge. We leave the decision as to which shops are to receive that concession to the discretion of the local authority, so avoiding the long-term problems described by my noble friend on the previous amendment. I beg to move.
§ The Earl of Radnor
I put my name to the amendment, first, because it was a matter of rural business; and, secondly, because this is not so much a question of the intricacies of the Bill or past or future rating regimes, but more of the decline of important parts of country life.
I should cast my net a little wider than merely the village shop. The amendment in fact casts its net wider. I have in mind the small engineering works which serve the countryside so well, to which the farmer goes and upon which he relies because it may not always be practical to go to larger concerns in the nearest town.
It has already been said by the noble Baroness, Lady Stedman, that the shop is under tremendous pressure. It is. I think that commercial reasons—the supermarket and the hypermarket—and ease of transport into the local town make it difficult for shops to survive in relatively small villages; but they are still terribly important, because there are always people in every village who do not want or cannot go to the supermarket.
The village shop is vital because some villages are far away from towns. I feel that this form of subsidy—if I may so describe it—arrived at by taking off one personal community charge may be a good way to ensure that such businesses go on into the future and serve the people who live in the countryside, who will not be well served otherwise. I support the amendment.
§ 6.45 p.m.
§ Lord Jay
In the case of the village shop, should we not also take into account the fact that in the common case of a village shop run by a husband and wife who live on the premises, when the Bill becomes law they will presumably by paying not merely the non-domestic rate but also the ordinary domestic rate—the poll tax, as it is commonly called—in each case? That will be an additional tax in their case. As a result of the Bill, they will have to pay both imposts. Surely, that is something that should be taken into account when we consider the case of the village shop.
The Earl of Caithness
As my noble friend Lord Stanley has made clear, the principal motive behind the amendment is the fear for rural services, especially village shops and post offices, many of which, as customer mobility increases, face increased competition from town supermarkets. The amendment gives me an opportunity to expand upon points that the noble Baroness, Lady Stedman, raised on the previous amendment.
Coupled with my noble friend's concern is fear about the effects of the introduction of NNDR and revaluation on the position of village shops and fear that where a trader lives on the premises, the combined burden of community charge and NN DR may be such that he can no longer compete with the urban supermarkets and may be forced out of business. I understand those concerns and having considered them I find that there are several points to make in response. The first is to correct a misapprehension which is commonly held, that where a trader lives on the premises he will pay both NNDR on the premises and a community charge. Let me make it clear that, while a community charge will be payable, rates will only be charged on that part of the premises used for business purposes, so any community charge should be compared with the rates previously charged on the domestic part of the property.
My noble friend Lord Stanley asked about the guidelines as to how shops will be valued. The guidelines will be as now. Shops will be valued on a rental basis which will be considered in relation to the square footage of the shop which is allocated for retail or commercial purposes.
Secondly, contrary to the impression given by some village small traders—some of the Committee may have received some of the more unrealistic forecasts given by them—I doubt whether village shops, as a group, will have a great deal to fear from the effects of the introduction of NNDR and revaluation. We are all well aware of the problems that village shops face as a result of competition from supermarkets and new urban shopping centres. That is where the revaluation will in all probability help, because the revaluation will follow the market. If the trading position of village shops has been undermined by supermarkets, one would expect that to be reflected in the rents that they are paying.
There is therefore no reason for us to expect the rates for village shops to increase substantially in real terms. It is too early to make detailed forecasts, but 1547 we would expect to see a relative decline in the rateable values of village shops, at least when compared with those of high street shops in the main shopping centres and out-of-town superstores, which are likely to increase substantially. That will go some way to redress the competitive balance to the small rural shops' benefit.
My noble friend Lord Stanley of Alderley asked me whether village shops would be any worse off than they are at present. I cannot say categorically as regards each rate for each village shop because I do not know the particular circumstances. But I can say to the noble Lord generally that of course they will be much better off. Not only will they have transitional provisions following the revaluation of which they never had the benefit before, but there will be special transitional provisions for small businesses. In addition to that, their rates can only be increased in future by the retail prices index and will no longer be subject to the whims of the local authority giving them substantial rate rises, totally unrelated to the retail prices index. So I hope that my noble friend will be comforted by that.
Let us nevertheless take the hypothetical situation where costs increase. Is it right that rate relief should be used to help these properties? Rates are a tax, the proceeds of which are a major element in the financing of local government. Granting relief from rates to one sector of business would create a shortfall in the yield which could only be made good by increasing the rates of other ratepayers or by increasing the burden on the national taxpayer. It would be difficult to explain to the many other small shopkeepers, many of whom might be facing significant increases, that they should face a further burden to assist shopkeepers in other areas, regardless of whether their rates were higher or lower or had gone up less than their own.
However, we have considered how help can best be given. I should also remind the Committee that should any particular rural business face a large increase in its rates bill, not only could it benefit from both the transitional arrangements that I have just mentioned, but it could also benefit from any special scheme for a longer transitional period for small businesses on which I look for support from my noble friend in due course. The rural businesses about which my noble friend is concerned are most likely to be beneficiaries of such a scheme, should they be in need of it.
As I have said, we understand the concerns of the small rural businesses. That is precisely why we have allowed for the transitional provisions which do not apply under the present rating system.
§ Lord Mackie of Benshie
I should like to ask the Minister this question. As the Minister knows, we have had the experience of revaluation in Scotland. It was a fact that the valuers did not take into account the situation in every case. In other words, it was rather uneven; there were cases of small rural businesses which suffered enormous increases in valuation, as the Conservative Party found out at their conference in Perth. Those increases came as the result of odd things like a whole lot of building 1548 societies coming into a small town, thereby upping the value. In many cases the assessors certainly did not take enough account of the difference between the town and the small country businesses.
I cannot really see the Minister's objection to putting in some guideline to the assessors which would say precisely what this amendment says. The Government have stated often enough that they have a rural policy to maintain the rural population.
§ Baroness Stedman
The point which the noble Lord, Lord Mackie of Benshie, has raised is worrying the rural village shopkeepers. What the Government do not seem to have grasped at the moment is that the rural rate poundage on the whole has been lower than that in the urban area. Therefore it will be a burden on those who have village shops, particularly those in the more remote rural areas. They will now be faced with paying their community charge on the domestic part of their property; having their shop valued and paying the national business rate at the same level of rateable poundage as those people in the city. We want some concession or some guidelines so that the valuers are able to take account of the fact that in our remote rural areas there are not the same services nor the same facilities provided for the ordinary residents and particularly for the village shopkeepers as there are in our conurbations and bigger areas.
§ Lord McIntosh of Haringey
As I was in considerable sympathy with the amendment, although I did not feel that I had anything very much to add at the beginning, I listened very carefully to what the Minister said in reply. It was when he used the phrase:I doubt whether village shops, as a group, will have a great deal to fear",that I realised that there was a great deal to fear. When Ministers have a brief which puts their views in those words, then we know that there is something quite badly wrong.
The fact of the matter is that we are not just considering the case of the non-domestic rate. Village shops tend to be run by a husband and wife; it is very difficult for one person alone to do it. The husband and wife running a village shop will pay two personal community charges and the business rate set at the national level. I think that is the thrust of the argument and that is why, even if this amendment is not right, the Government must find some way of protecting village shops.
The Earl of Caithness
The reason why I said the words which the noble Lord, Lord McIntosh of Haringey, repeated, about village shops as a group, was as a result of my knowledge of rural village shops and of rating and valuation. I do not think that as a group those shopkeepers have the concerns that are being expressed. Undoubtedly there will be some who, because of the changes in circumstances, will face rate increases. That has not been denied.
However, that is precisely why we have already built in the transitional provisions together with the extension that I propose to move later on this evening for a further transitional provision for as long as necessary, to make sure that the small businesses and 1549 indeed large businesses adapt to the new system that we propose of regular five-yearly revaluations. I suggest to the Committee that, combined with the linking of rates to the retail prices index in the future, is a considerable benefit to the small business.
§ Lord McIntosh of Haringey
That does not even attempt to answer the point I made; namely, that it is a combination of the burden of two personal community charges with the business rate on the shop which will be the difficulty.
§ Lord Stanley of Alderley
I should like to thank noble Lords for the contributions which they have made, and particularly the noble Lord, Lord McIntosh. Village shops have much to fear. I shall keep my powder dry now because I have some fairly nasty figures which will come up at the next stage but I do not think my noble friend understands the vital social role which these shops play in the village. That must be brought clearly home to the Government who time and time again say that they are worried about this. Meanwhile I shall reserve my position to come back at Report stage. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 41 [Unoccupied hereditaments: liability]:
The Earl of Caithness moved Amendment No. 106B:
Page 24, line 20, leave out from beginning to end of line 26 and insert ("the following conditions are fulfilled in respect of any day in the year—
§ The noble Earl said: I beg to move Amendment No. 106B and at the same time to speak to Amendment No. 107ZB. These two government amendments replace the present yearly liability to rating with a daily liability. The reason for this is simple. In the view of parliamentary counsel, while the present yearly liability works well at the moment, without the body of precedent and usage that attaches to the present system there could be scope for the misinterpretation of the method of calculation where a ratepayer had occupied a property for that part of a year. The change is therefore necessary in the interests of greater precision. I commend these amendments to the Committee. I beg to move.
§ The Deputy Chairman of Committees (Lord Alport)
I have to advise Members of the Committee that if this amendment is agreed to, I shall not be able to call Amendment No. 106C or Amendment No. 107.
§ Lord McIntosh of Haringey
I think we shall have to do something about the grouping arrangements on this Bill. The noble Earl has moved two amendments which I am the first to agree are mainly drafting amendments. However, partly because of reasons of 1550 pre-emption to which the noble Lord, the Deputy Chairman of Committees, has referred and partly because the grouping covers it as well, I wish to speak now, and I think it is proper that I should speak now to Amendment No. 107 which is by no means a drafting amendment.
The Earl of Caithness
I quite agree with the noble Lord, Lord McIntosh, that it is right for him to speak to Amendment No. 107 and to some other amendments grouped with it. The reason I did not speak to them before is that the noble Lord has not spoken to them and I thought it would be discourteous.
§ Lord McIntosh of Haringey
I am grateful to the noble Earl. Amendment No. 107 which will fall if Amendment No. 106B were agreed to, is on a very major matter. We are discussing the whole issue of the rating of empty properties. As proposed by the Government, decisions about the rating of empty properties will be taken by the Secretary of State in the form of regulations. I put it to the Committee that rating of empty properties has historically been a very sensitive issue in local government. It has been one on which there have been disagreements between different residents in particular areas, and strong differences of view between one local authority and another.
This is a matter where really the local knowledge of local authorities—the circumstances under which they find themselves, the extent to which there are empty properties being kept empty deliberately in hope of a capital or rental gain, and the extent to which empty properties are empty for no discreditable reason—enables them to consider the situation very much better than the Secretary of State. I am not making a party point here. This has been a matter of great concern to Westminster City Council which wanted to take action on empty properties in its area, in my view rightly.
There are many things which the Secretary of State has to provide for by regulation—although nothing like as many as there are in this Bill. But this is a very clear example of something which should be dealt with by the local authority with full knowledge of local circumstances and in accordance with the wishes of the electorate. I hope very much that before the noble Earl moves Amendment No. 106B, which would pre-empt my amendment, he will indicate sufficient sympathy with this amendment to enable me to bear its loss under pre-emption without saying, as I would otherwise have to do, that this must be dealt with at a later stage of the Bill.
§ 7 p.m.
§ Lord Rippon of Hexham
I hope that the Minister will give consideration to this question of the rating of empty properties, either now or at some subsequent stage. As the noble Lord, Lord McIntosh, said, there is a history of discussion about the rating of empty properties. I hope that it will never happen to my noble friend the Minister that he will follow what increasingly has become a practice, namely, that of former Ministers getting up subsequently and declaring, "I am afraid I got it all wrong."
1551 In this instance I can say mea culpa, because I recall how I was caught by an undertaking of a predecessor that the Government would rate empty property if the developer of Centre Point did not either let it or sell it. The poor man could do neither, but such was the pressure of public opinion at a time when property values were rising and he was thought to be gaining an unearned increment, that we rated empty property.
I am not sure that that is always the right thing to do, especially in regard to new development. A developer may start off in a boom period, but after a year or two he may find himself in the middle of a slump. Therefore he is unable to let his property. I think that at least some provision should be made whereby a ratepayer could demonstrate that he has made his best endeavours to let or sell the property concerned. Otherwise it might result in an unfair penalty being superimposed on a developer who is already incurring a financial loss. There should be some discretion built into this.
My own view is that it is right that the local authority, which after all can assess the problem, given that there is a suitable right of appeal for the ratepayer to show that he has used his best endeavours to let or to sell the property, should be given this discretion. I hope that the Government will be willing to give consideration to this matter. It may be that if empty rate provision is to continue, it should not apply to newly constructed property, or at least not for a period of time. That indeed is already the case in the City of London which acts under local powers. In Tower Hamlets, where a great deal of redevelopment is going on, in practice what is now happening is that an extended period is given when no rates are payable. I hope that, as regards some of the points that the noble Lord, Lord McIntosh, has made, the Government will be sympathetic in looking at this matter, either now or in the future.
§ Lord McIntosh of Haringey
I am grateful for the support of the noble Lord in general terms. I was amused to find Harry Hyams described as a poor man.
§ Lord Weinstock
The Members of the Committee have been mostly concerned in what they have been saying with office property and residential property in urban areas. I hope that they will remember that there are industrial sites where there are many factories and where sometimes it becomes necessary to close a part of a site—a factory. If there were no discretion to allow a rebate of rates for that part of the site, perhaps a firm would decide to move away entirely. That would not necessarily be desirable. The local authority would be the best judge of such a situation.
§ Lord Ross of Newport
The noble Lords, Lord Rippon of Hexham and Lord Weinstock, have spoken to Amendments Nos. 107 and 107ZA. The latter appears under my name. I am very glad to have the support of the noble Lords. I think they are right, and I totally support the words of the noble Lord who has just sat down. In the past ten years or so the rating of empty properties has led to necessary 1552 demolition or taking the roofs off industrial premises, particularly in the West Midlands. It is perfectly true too, although it is hard to imagine now, that in 1975 to 1976 occupiers of shop properties could not sell them. They found that they literally could not sell them, but they were paying substantial rates on empty properties.
On the other hand, I have tried to show in the amendment which I gather I cannot move, that there is a middle passage, and that perhaps after six months a local authority would be entitled to levy a rate or could levy a rate where it was shown that the owner was not using his best endeavours to let or sell that hereditament.
I wish the Government would go further. If we are to have regulations, I wish to put to the Government the question of land or property which is totally without a roof over it, and therefore incapable of occupation. I think that those types of properties sometimes should be rated. I should like to move on to that matter later.
It seems to me that we are falling between two stools. On the one hand, if we are not careful, we shall rate people who should not be rated and who are genuinely trying to sell. On the other hand, there are people who are sitting on land and who have been sitting on land for many years which should be developed and which is zoned for development. Such land is causing a blight in many parts of our towns, but we do nothing to those people at all. I wish we could get this right.
§ Lord Monson
I wish to support the words of the noble Lord, Lord Ross of Newport. The Government are proposing to give relief from the community charge where domestic properties are vacant for three months. Logically speaking therefore they should apply the same formula to industrial and similar properties.
The Earl of Caithness
The effect of Amendments Nos. 106C and 107ZA would be to exclude from rating, by primary legislation, all non-domestic property unoccupied for less than six months. The effect of Amendent No. 107 of the noble Lord, Lord McIntosh, is slightly different and would be to restore local authority discretion over the categories of property to be subject to unoccupied property rating, and over the level of that rating.
In dealing with these amendments it might be helpful if I deal with the background to the rating of unoccupied property and our policy. Under the present system rates are not payable on empty non-domestic property for up to three months. After that, local authorities may decide to rate such property, up to a maximum of 50 per cent. of full rates—and with the exception of empty factories and warehouses which are excluded from rating altogether by order of the Secretary of State, and various other categories such as listed buildings which are excluded by main legislation.
Historically, the purpose of empty property rating has been partly to reflect the fact that empty properties do benefit from some local authority services—police, fire and so forth—and partly to encourage owners to bring empty property back into 1553 use. Authorities have had a discretion whether to levy empty rates to enable them to take account of local market conditions, which will affect the speed with which owners can reasonably be expected to let or sell their empty properties. However, when types of property have been in excess supply in many parts of the country, as with factories and warehouses, the Government have stepped in to exclude them from empty rating.
About half of the local authorities in England exercise their discretion to levy rates on unoccupied property. But these include almost all the London boroughs and the majority of metropolitan districts. The proportion of empty properties subject to rates at the moment is therefore substantially over half, and some £40 million of income is generated.
In considering the treatment of unoccupied non-domestic property under the new system, we face a choice between three options. We can continue with something like the present system under which authorities can exercise discretion within limits over whether to rate unoccupied domestic property; we can go for a standardised approach under which the Secretary of State has power to prescribe categories of empty property to be rated; or we can simply exempt unoccupied non-domestic property from rating altogether.
The option of continued local authority discretion which would be allowed by the amendment of the noble Lord, Lord McIntosh of Haringey, must be seen in the context of the national non-domestic rate pool. We have heeded the representations of the local authority associations which have made it clear to us that it would be unrealistic to expect authorities to exercise a discretion on the matter which offers few direct benefits to their areas if community charge payers are to be expected to make good lost revenue in whole or in part. On the other hand, if the costs were to be borne by the national pool it is clear that local authorities would have no incentive to exercise the discretion sensibly, particularly in view of the difficulties often associated with enforcing empty property rates. We feel that following that approach would, over time, lead to a situation where empty property rating would fade away altogether with a short-fall of some £40 million in the national non-domestic rate yield which could only be met by increasing the poundage on occupied non-domestic property or by placing the burden on the community charge payer or the national taxpayer.
In view of the benefits enjoyed by even empty business properties and the case for providing some clear incentives not to keep property empty unnecessarily, we believe that some empty property rate is appropriate. We accept the logic that under the national non-domestic pool arrangements the matter should fall to be determined by the Secretary of State in the regulations. Under Clause 41 it will fall to the Secretary of State to decide which categories of hereditament should be subject to the standard 50 per cent. empty property rate. The cost of that relief will then be borne by the national pool under separate regulations.
We believe that for England and Wales the Bill represents the best approach. In those areas where 1554 empty property rating is not practised presently it will lead to some new burdens. We hope to use the regulation-making powers so that the scope of empty property rating reflects general market conditions. So, for example, we would not at present wish to bring empty factory and warehouse premises within the scope of the provision. We shall also retain the present exclusions for listed buildings. It will be possible to make separate regulations for England and Wales to reflect differences in market conditions in the two countries.
We accept part of the argument which lies behind the amendments of the noble Lord, Lord Ross of Newport. We wish to allow a reasonable period during which property may remain unoccupied following a change of owner or tenant without becoming liable to rating. I cannot follow him in the period of exemption in whole or in part. I have listened to what has been said, and I can give an assurance that we shall consider and consult on the length of the period of grace before empty property rating is to apply. From my own experience as a surveyor I believe that the use of primary legislation to define and fix the exemption period would be inappropriate and unduly restrictive. That is what it has proved to be.
The regulations, however unpalatable they are to the noble Lord, Lord McIntosh, give the necessary flexibility. I am sure that the noble Lord, Lord Ross of Newport, will understand that. I therefore hope that Members of the Committee who have taken part in our useful discussions will read and consider what I have said when it is printed in the Official Report.
§ On Question, amendment agreed to.
§ [Amendments Nos. 106C, 107 and 107ZA not moved.]
The Earl of Caithness moved amendment No. 107ZB:
Page 24, line 31, leave out ("on") and insert ("in respect of").
§ On Question, amendment agreed to.
§ Clause 41, as amended, agreed to.
§ Clause 42 agreed to.
§ Lord Hesketh
I suggest that this is a suitable hour to break for dinner and that we should resume the Committee stage of the Bill at 8.15. I beg to move that the House do now resume.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.