Local Government Finance Bill

HL Deb 09 June 1988 vol 497 cc1557-605

House again in Committee.

The Earl of Caithness moved Amendment No. 107ZC: After Clause 42 insert the following new clause:

("Discretionary relief

.—(1) Where the first and second conditions mentioned in subsections (1) and (2) below are fulfilled for a day which is a chargeable day within the meaning of section 39 or 41 above (as the case may be)—

1. (a) the chargeable amount for the day shall be such as is determined by, or found in accordance with rules determined by, the charging authority concerned, and
2. (b) sections 39(4) to (6) and 40 or (as the case may be) sections 41(4) and 42 above shall not apply as regards the day.

(2) The first condition is that one or more of the following applies on the chargeable day—

1. (a) the ratepayer is a charity or trustees for a charity, and the hereditament is wholly or mainly used for charitable purposes (whether of that charity or of that and other charities);
2. (b) the hereditament is not an excepted hereditament, and all or part of it is occupied for the purposes of one or more institutions or other organisations none of which is established or conducted for profit and each of whose main objects are charitable or are otherwise philanthropic or religious or concerned with education, social welfare, science, literature or the fine arts;
3. (c) the hereditament is not an excepted hereditament, it is wholly or mainly used for puposes of recreation, and all or part of it is occupied for the purposes of a club, society or other organisation not established or conducted for profit.

(3) The second condition is that, during a period which consists of or includes the chargeable day, a decision of the charging authority concerned operates to the effect that this section applies as regards the hereditament concerned.

(4) A determination under subsection(1)(a) above—

1. (a) must be such that the chargeable amount for the day is less than the amount it would be apart from this section;
2. (b) may be such that the chargeable amount for the day is 0;
3. (c) may be varied by a further determination of the authority under subsection (1)(a) above.

(5) A decision under subsection (3) above may be revoked by a further decision of the authority.

(6) A decision under subsection (3) above is invalid as regards a day if made after the end of the financial year in which the day falls.

(7) The Secretary of State may make regulations containing provision—

1. (a) requiring notice to be given of any determination or decision;
2. (b) limiting the power to revoke a decision or vary a determination;
3. (c) as to other matters incidental to this section.

(8) A hereditament is an excepted hereditament if all or part of it is occupied (otherwise than as trustee) by a charging authority or a precepting authority falling within section 142(2)(a) to (f) or (h) to (k) below.").

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 107ZD: After Clause 42, insert the following new clause:

("Discretionary relief: supplementary

.—(1) This section applies for the purposes of section (Discretionary relief) above.

(2) A hereditament not in use shall be treated as wholly or mainly used for charitable purposes if it appears that when next in use it will be wholly or mainly used for charitable purposes.

(3) A hereditament not in use shall be treated as wholly or mainly used for purposes of recreation if it appears that when next in use it will be wholly or mainly used for purposes of recreation.

(4) A hereditament which is wholly unoccupied shall be treated as an excepted hereditament if it appears that when any of it is next occupied the hereditament will be an excepted hereditament.

(5) If a hereditament is wholly unoccupied but it appears that it or any part of it when next occupied will be occupied for particular purposes, the hereditament or part concerned (as the case may be) shall be treated as occupied for those purposes.").

On Question, amendment agreed to.

Lord Hesketh moved Amendment No. 107ZE: After Clause 42, insert the following new clause:

("Reduction or remission of liability.

.—(1) A charging authority may—

1. (a) reduce any amount a person is liable to pay to it under section 39 or 41 above, or
2. (b) remit payment of the whole of any amount a person would otherwise be liable to pay to it under section 39 or 41 above.

(2) But an authority may not act under this section unless it is satisfied that—

1. (a) the ratepayer would sustain hardship if the authority did not do so, and
2. (b) it is reasonable for the authority to do so, having regard to the interests of persons subject to its community charges.

(3) Where an authority acts under this section, section 39 or 41 above shall be construed accordingly as regards the case concerned.").

The noble Lord said: A charging authority is implicitly required by its general fiduciary duty to collect rates as diligently as may be and to refrain from enforcing debts only when to pursue a debtor further would not be cost effective. This new clause gives authorities a discretionary power to refrain from enforcing a debt for unpaid non-domestic rates where this would cause hardship to the ratepayer.

There are provisions in current rating legislation which allow an authority to remit rates on the grounds of poverty or hardship. But it was not thought that the provision was designed for use in the non-domestic sector. As a consequence the Government's "yellow paper" on Amendments to rating legislation in England and Wales proposed that the provision should not be retained. The responses from local authorities, professional and business organisations all argued strongly that there were circumstances where the reduction or remission of rates can make the difference between survival or bankruptcy of a business.

The Government accepted the force of these arguments and gave an assurance in another place that an amendment to the Bill would be tabled. The new clause provides authorities with the power to reduce or remit the payment of rates, but only where the authority is satisfied, first, that the ratepayer would sustain hardship if it did not do so and, secondly, it is reasonable to do so having regard to the wider interests of the people in the area, on whom some or all of the cost will fall as community charge payers. I therefore commend this new clause to the Committee. I beg to move.

Lord McIntosh of Haringey

We on these Benches are in general sympathy with the amendment but we are rather worried by the phrase "having regard to the interests of persons subject to the community charges", if that phrase means that the revenue that will be forgone by these provisions comes from the general community charge pool.

As the noble Lord will be aware, the present situation is that it is discretionary rate relief. What we would prefer to see is that the revenue foregone should come from the national non-domestic rate pool. I understand that in another place the Minister responsible indicated that this is what would be done, but we do not see an appropriate amendment in the appropriate schedule. I should like to have some assurance from the noble Lord that this is the intention, and I should like him to tell us how it will be given effect to.

Lord Renton

When we were discussing Amendment No. 103 in the name of the noble Lord, Lord Hayter, and my noble friend Lord Caithness gave a welcome assurance that he would consider this question of discretionary and mandatory relief being given to charity, I assumed that the undertaking he gave was an undertaking to consider this new clause in the light of all that was said in that debate. I should be very disappointed if I found that in passing this new clause we were doing it in a way which was not covered by that undertaking.

Lord Hesketh

In answer to the question of the noble Lord, Lord McIntosh, the fact is that part of that charge will come from the national pool but that is a matter which is still under discussion so I cannot give him a specific answer this evening. If I may, I shall write to the noble Lord, Lord Renton, about his point concerning charity.

Lord McIntosh of Haringey

I do not think that either of those answers is entirely satisfactory. Having willed the end, the Government must have thought about the means and should be able to reply to the noble Lord, Lord Renton. As regards my question, will the Minister give an assurance that we shall receive an answer on this point before we reach Report stage?

Lord Hesketh

I do not think I can go further—

Lord McIntosh of Haringey

Does the noble Lord wish me to speak for a few minutes longer? If so, I should be happy to do that. This is not the first occasion on which I have been required to play the role of cover for the messenger. It seems to me to be rather like covering the back when a loving cup is passed at a City banquet. I am becoming quite used to the role. Perhaps I have now carried on speaking for long enough to permit the noble Lord to answer.

Lord Hesketh

As I was just about to say before being so ably assisted by the noble Lord, Lord McIntosh, we hope very much that the consultations that are taking place will have been completed before the Report stage, in which case we shall be able to give a specific answer. Obviously I cannot give him an undertaking that they will have been completed at that time.

On Question, amendment agreed to.

Clause 43 agreed to.

Schedule 5 [Non-domestic rating: exemption]:

Lord Mason of Barnsley moved Amendment No. 107A: Page 100, line 45, after ("livestock") insert ("or the breeding or rearing of horses or ponies").

The noble Lord said: I apologise for the absence of my noble friend Lord Colnbrook, who unfortunately is unable to be present as he has to chair a meeting abroad. To be quite honest, we mistimed the arrival of this amendment on the floor of the Chamber. It therefore falls to me to move Amendment No. 107A and I hope that the Committee will bear with me as I attempt to persuade the Minister that, although it is not the Government's fault, they have been thrust into a taxation muddle and this amendment is designed to help them in the awkward and difficult predicament in which they find themselves, particularly in view of the court case of last December.

This amendment seeks to extend exemption from rates in respect of agricultural premises to include buildings which are used in the breeding and rearing of horses and ponies. Because of the decision that emanated from the Whitsbury Manor Stud case, it seems that the present legislation does not exempt from rates the buildings that are used for the breeding and rearing of horses and ponies. That decision caused a major disturbance in the industry. Prior to the decision, rates had not been levied on buildings used for the breeding and rearing of horses and ponies on farms. Every section or organisation within that vitally important industry believes that the previous position should be restored. Those organisations include the National Light Horse Breeding Society, the British Horse Society, the Jockey Club, the Country Landowners' Association, the Horse Racing Advisory Council, the National Farmers Union, the National Pony Society and the Thoroughbred Breeders' Association; and of course one must not forget the agricultural workers who can readily see some of their jobs put at risk. That is quite an important and formidable Lobby.

All those people wish to see the previous position restored and ensure that in this legislation it is made clear that the breeding and rearing of horses and ponies is regarded for rating purposes as an agricultural activity, as it has been for nearly 50 years until quite recently and as it still is for purposes of income tax, corporation tax and capital taxation.

If the position is not restored, not only will it be a deterrent and curb breeding, but it will also be much to the detriment of the racing industry and affect our exports of horses and horsemeat. I believe it to be Parliament's will that the previous position should be restored. During the 50 years of exemption Parliament had ample opportunity to change the situation but chose not to do so. Obviously Parliament was satisfied. It could have removed the exemption if it so desired when tax relief was enlarged to include fish farms and broiler houses, or when agricultural relief for estate duty purposes was debated in Parliament. It did not do so. There was never any suggestion that horse and pony breeders should not qualify for rate exemption on their agricultural buildings.

Again in 1984 Parliament confirmed the importance of horse breeding and stud farms. The then Financial Secretary to the Treasury stressed the role of the bloodstock industry and said, during the course of a speech in the other place which I shall paraphrase, that it was an important part of our national heritage and a valuable part of our economy. Exports of well bred horses exceed f100 million a year and the industry employs 150,000 to 200,000 people. The racing industry also gives pleasure to millions and the Government appreciate the sizeable sum contributed to the Exchequer by the racing industry in the form of the betting levy. Time after time Parliament has understood and fully appreciated the importance of the industry and the assistance that should be given to it. What is more, the Treasury has concurred.

The Government are actively encouraging farmers to engage in making alternative uses of their land. For that purpose grants towards the capital cost of buildings are available. That makes sense. Accordingly, farmers are being advised to diversify by MAFF and ADAS (the Ministry of Agriculture and the Agricultural Advisory Service), especially in the light of falling returns from food production. Horse and pony breeding and rearing is a natural diversification for a farmer. Therefore exemption from rates on buildings used for that purpose is simply common sense and in line with the Ministry's general objectives.

Also both thoroughbred and non-thoroughbred horse breeders supply national hunt horses, point-to-point horses and event horses and the breeders of those types of animal find it difficult to be certain of trading profitably because of the length of the breeding cycle to the point of sale and the high risk nature of the exercise. There is also always the possibility that horse and pony breeding is judged wrongly as just for the rich. That is not so. I draw the attention of the Committee to a speech delivered in the House of Commons in 1984 by the then Financial Secretary to the Treasury in the course of the debate on the Finance (No. 2) Bill, when he said: the industry, like many others, undoubtedly includes some very wealthy individuals, but its bedrock comprises the many small breeders countrywide with a few acres and a handful of mares". [Official Report, Commons, 11/7/84; col. 1071.]

So the vast majority of all horses and ponies come at the bottom end of the market where production costs are critical. Most of the small breeders are incorporated in mixed farming enterprises, and their activities are an integral part of their farming business. The rating imposition could be quite important to them and adversely affect them, especially as the United Kingdom breeders have suffered some disadvantage in the treatment of VAT within the European Economic Community. In this respect, we must note that much business is done selling horsemeat and the United Kingdom is the largest producer of horsemeat for human consumption in Europe.

It is a useful diversification for farmers that should be encouraged and rating exemption will help. Just as the Treasury through the Financial Secretary stressed the importance of the bloodstock industry, I believe that this activity of breeding and rearing horses and ponies equally should receive recognition by the derating of buildings used for this purpose. I emphasise that horse and pony breeders are seeking not a special concession in the Bill but merely a restatement of the exemption that prevailed in practice for nearly 50 years.

In brief, the Ministry of Agriculture, Fisheries and Food desires it; ADAS, the advisory service, advises it; the Treasury has said it, and Parliament has not disagreed. I hope that the Committee will agree with the amendment and support it accordingly.

8.30 p.m.

Lord Middleton

I support the noble Lord, Lord Mason of Barnsley, and endorse his statement that what we are asking for is a confirmation of the pattern of taxation affecting the breeding and rearing of horses that, up to last year, was accepted and agreed by successive governments for nearly half a century. We are asking the Government to put sense into a situation where at present there is no sense. This implies no criticism—indeed, I would not dare so to criticize—of the decision in the Whitsbury stud case only last December. There was then a doubt as to how the law stood. Because of the way the case was resolved on appeal, there is this anomaly, to which the noble Lord, Lord Mason, has referred. The amendment would remove any doubt as to whether horse breeding is an agricultural activity.

Perhaps I may illustrate how nonsensical and illogical the present situation is. If on one's farm one has a brood mare or a pony turned out by day in a field, it is agricultural. When one brings it in at night for shelter in a loose box, as one will do in winter, it is non-agricultural and the loose box is rateable. If, as is so often the case, the loose box is part of a complex of farm buildings, it will be the only part of that complex that is rateable. It must make sense either to treat horse breeding as an agricultural activity for all fiscal purposes, including rating, or to regard horse breeding as non-agricultural for fiscal purposes, including all taxation purposes.

However, if one did that, not only would it require elaborate amendments in a Finance Bill but, as the noble Lord, Lord Mason, pointed out, it would not be in line with government policy. He has reminded us of the passage of the 1984 Finance Act, in which it was confirmed that for tax purposes the breeding and rearing of horses and ponies and the land, houses and ancillary buildings used in connection with those activities shall be taken as agricultural. The Financial Secretary in that debate in another place said: This is not a concession; it is a confirmation of the pattern of taxation". The noble Lord, Lord Mason, referred to the implications for United Kingdom agriculture and the need for diversification. One of the measures agreed by the European Council of Ministers this year, designed to bring the CAP under much stricter budgetary control along with the so-called stabilisers that will lower guaranteed prices as production exceeds an agreed level, is that member states shall adopt a plan for what is called set-aside of agricultural land. It is highly probably that under the United Kingdom scheme, which has to be finalised by the end of next month, farmers will be encouraged to put a proportion of their cornland down to grass. That would make good sense, providing that it does not lead to a rapid increase in our livestock numbers leading to yet more surpluses. This may very well provide encouragement for farmers to turn to breeding and raising horses and ponies on this set-aside land, but they would surely hesitate if they are to be penalised through the rating system.

It would be wrong to penalise our bloodstock industry, as the noble Lord, Lord Mason, said, which is acknowledged by the Government to play an important role in the economy, especially if it is to be put at a disadvantage in comparison with its competitors on the Continent and in Ireland. The rearing of horses is labour-intensive. It would be a great pity if the money and employment generated by the breeders of thoroughbreds were to be transferred abroad. There is a danger that it will be unless we can get the Bill right. I am sure that the development commission will have strong views on this.

The noble Lord, Lord Mason, referred to the lower end of the market. He said that some 3 million people who now use horses for recreation need to be supplied with animals to ride. Here surely is an alternative crop for British farmers that should be encouraged and not penalised. All that is needed is for horse breeding to be treated once more as an agricultural activity for all fiscal purposes, including rating.

I hope that my noble friend the Minister will consider this modest proposal carefully. It has a great bearing on the well-being of our rural community.

The Earl of Balfour

Heavy horses are being used more in agricultural work now than they have been for many years. There is a steady increase in the use of heavy horses in place of the tractor. On land that can take that kind of animal, it is kinder to the land and of great benefit to the farmer.

The Earl of Radnor

I wholeheartedly support the amendment if only because it is so irregular that horses should be left out of the farming scene in this way. So far as I know, every single form of livestock is included. There has been the recent addition, in which I myself have to play a part, of fishes. If fishes could be added in, horses surely should be for the reasons so well given, particularly when farmers are in for a harder time probably than they have been used to. Times have been getting gradually worse over the past few years. It is ridiculous to say that diversification should take place and then to penalise that diversification but not the crops from which one wishes to diversify. It is wrong in every way. I hope that my noble friend will agree to tidy up the situation once and for all and make horses part of the farm regardless of whether they are smart racehorses or Shetland ponies bred for the amusement of children and suchlike.

Lord Renton

I wish to refer to a matter that has not so far been mentioned. There has historically been exemption of agricultural land and buildings for a number of reasons. In modern times I think the strongest is the contribution that agriculture makes to the balance of payments.

If I may, I shall take the Committee back rather a long time to 1960 when Lord Butler of Saffron Walden was Home Secretary. He charged me with the responsibility of some rather tough negotiations with the bookmakers. We then prepared and piloted through another place the Horserace Betting Levy Act, which has undoubtedly been of great benefit to racing. At that time it was acknowledged that the bloodstock industry also had a valuable contribution to make to the balance of payments. Also at that time the bloodstock industry had the exemption—through the definition of "agricultural land and buildings"—that it had until this recent case.

All that I am suggesting is that what held good in 1960 about the value of that industry in contributing to the balance of payments is just as valid today, in fact perhaps more so. One could elaborate, but I hope that this is a point of which my noble friends will not lose sight. I strongly support the amendment.

The Earl of Carnarvon

I should declare a vested interest to the extent that I am president of the Thoroughbred Breeders' Association and I am a breeder. However, I should like to help the Committee by giving a few statistics in support of the excellent proposition suggested by the noble Lord, Lord Mason. On the thoroughbred breeding side, there are about 6,500 breeders: 4,500 own one mare; 1,000 own two mares and 1,000 own more than two mares. Of that last 1,000, only 50 thoroughbred breeders own 15 mares or more. I believe that those 50 breeders provide an enormous amount of employment within the industry. They provide an enormous amount of foreign currency and retain very important blood lines in the stallions in this country.

I felt that it was important to explain to the Committee that although they may be wealthy people, they benefit the bloodstock scene in a very big way. I fully support the proposition made by the noble Lord, Lord Mason.

Baroness Blatch

I feel that most of the speakers tonight are speaking for the amendment. I believe it behoves someone not to speak against it—I do not intend to do that—but to broach rather sensitively the area of thinking behind the possibility that somebody may wish to tax this group of people in a new way under the proposed reform.

If we are to take the amendment and all the points made by the noble Lord, Lord Mason, seriously, this is an argument for consistency. It is not special pleading on behalf of these people; it is asking the Government to make very clear in all their determinations on this subject whether or not this group of people should come under the umbrella of agriculture. The temptation is to confuse this with the other subject which needs mentioning which concerns whether or not agriculture should be brought into the rating system.

That however is a different subject which should be tackled quite separately and distinctly from the proposition made by the amendment. The amendment is asking for the status quo. It is suggesting that while the Bill is being discussed the status quo should prevail, that agriculture should subsume the horse and pony breeding businesses. If anybody is tempted to think—and this point was made by the previous speaker—that this group of people is disproportionately affluent in the community, evidence has been given to the contrary. If they are tempted to believe that these people should be brought into the rating system, I would seriously suggest that that should be the subject for another day and another debate. We must concentrate on the point that the noble Lord, Lord Mason, made so well and which was reinforced by the comments of my noble friend Lord Renton; namely, that historically such people have been accepted as being part of the agricultural scene. That today is more significant than ever when enormous efforts are being made to pursuade farmers to diversify. Many of them will diversify into this line of business and I believe that the argument for consistency is very great. I support the amendment.

Lord Boardman

I follow my noble friend in support of the argument for consistency. Whatever mental aberrations the court had in deciding that horses and ponies were not livestock I know not, for I have not read the judgment. Surely the consistent argument is that horses and ponies are just as much livestock as Hereford bulls and all the other kinds of animals that farmers breed. I very strongly support the amendment put forward by the noble Lord, Lord Mason.

Lord Borthwick

I should like to support the amendment as well. There is another matter that I have not heard mentioned since I came here this evening and that is forestry. In Scotland much of the hill country presents a very difficult situation when planted up. How the timber will be extracted when the trees are only half grown and when thinning has to take place, I am not quite sure. It will be rather difficult. Therefore I suggect that in the future when these trees require thinning and felling, horses will be required for extraction. I support the amendment.

8.45 p.m.

The Earl of Caithness

There have been many cases about whether particular types of buildings should enjoy agricultural exemption. The question as to whether buildings used for the breeding and rearing of horses and ponies should qualify has a long and convoluted history. Some noble Lords assert that the ruling of your Lordships' House in the appeal case of Whitsbury Farm and Stud Ltd. has introduced a new interpretation of the present law which has overturned a practice that has existed for nearly 50 years.

I must admit to the Committee that even when I was a surveyor I used to agree with the assertion that has been put forward tonight that it was clear that stud farms were derated up to 1981. I cannot agree with that assertion any more because I have discovered that there was some uncertainty between the mid-1930s and the early 1980s. Although it is agreed that many stud farms did not pay rates, I understand however that some 40 to 50 stud farms were assessed for and accepted rating during that time.

But, Lands Tribunal decisions in 1981 and 1984, the Court of Appeal's affirmation two years later, and the ruling of your Lordships' House all provide clear evidence that all stud farms should, in fact, have been rated throughout the period. The basis for claiming that they had originally been derated as a matter of law rests on the Special Commissioners for Income Tax acceptance in 1933, in a different context, that stud farm activities are "husbandry". It is also asserted that this was backed up by the decision of the Newmarket Assessment Committee in 1936 that the principle in the 1933 case could be applied in a rating context. Decisions of assessment committees are not, however, binding precedents in law, and if stud farms were not assessed as a result, that practice grew up on a misunderstanding of the earlier decisions.

I move now to the area of tax and the link with tax and rating which my noble friend Lord Middleton mentioned. There is no inconsistency here. If the breeding of horses is taken to be agricultural for capital transfer tax purposes—because there are particular reasons connected with that activity and that tax—it does not constitute a valid reason for it to be agricultural for other purposes if those purposes do not require it. If horse breeding were to be treated as agricultural for rating purposes it would be wholly exceptional.

I shall now answer the point of my noble friend Lord Boardman. The horse would be the only mammal, or indeed bird, within the definition of "agricultural" that was not kept for food or wool or for its use in farming the land.

The Earl of Radnor

We have heard this evening that the meat of the horse is used for food.

The Earl of Caithness

I am just coming to that point. The dictum of Lord Justice Lawson on the appeal of the Whitsbury Farm and Stud Ltd. pointed out that under the Local Government Act 1929—which I know my noble friend is fully conversant with—agricultural land meant land used for the purposes of contributing to human subsistence. That did not include breeding thoroughbred racing stock. Despite the fact that horsemeat is exported for consumption, we are not considering the breeding of horses specifically for that purpose tonight.

I cannot accept assertions that there is an inconsistency in Government policy over the initiative, on the one hand, to find alternative uses for surplus agricultural land and current rating practice. The boundaries for any exemption or relief from the payment of rates have to be drawn as tightly as possible. Any shift of the line invites new pressures and perhaps I can give an example. While I appreciate that we are considering the breeding and rearing of horses and ponies, it would in practice be very difficult to resist pressure for extending exemption to other establishments using horses including racing and livery stables, pony trekking centres and even to other animal breeding establishments. The potential loss of rate income could therefore be considerable and would have to be met by other ratepayers and eventually community charge payers. I hope that my noble friend Lord Middleton will give consideration to that matter.

The Government are of course aware of the contribution that the various activities concerned with breeding, rearing and keeping horses make to the economy. To encourage these activities further, my right honourable friend the Minister for Agriculture, Fisheries and Food has recently announced the availability of grants under the alternative land use proposals for livery and pony trekking. This, together with the considerable increase in leisure riding generally, will help to stimulate greater demand for horses and ponies and provide a further impetus for breeding.

But the fact remains that, unless horses are used in the farming of the land—and that covers the point raised by my noble friend Lord Balfour—they are not agricultural animals and for rating purposes the breeding of horses and ponies is not an agricultural operation. There have been assertions, so far unsubstantiated, that the imposition of rates will deter farmers from breeding and even force some breeders out of business. I cannot conceive that the typical rateable value of £20 to £25 for each purpose-built loosebox is likely to have such drastic effect on those solely or mainly engaged in horse and pony breeding as a commercial activity. I am able to accept however that a rate burden of that size could be a significant blow for the large numbers who keep on their farms—and I stress "on their farms"—one or two horses for their own enjoyment or for breeding on a small scale, largely as a hobby. Such cases also cause some practical valuation difficulties where buildings are shared for different purposes. In such cases this activity probably does not detract materially from the agricultural use of the farm. The Government are therefore prepared to provide an exemption from rates where there is a de minimis use of buildings for breeding and rearing of horses and ponies and will table an appropriate amendment at Report.

Having covered the ground fairly fully, and having removed some of the assertions that have been made in good faith but which have been proved in law to be incorrect, I should like to say that I understand the Committee's feeling about this matter. I should like to take the matter away for consideration between now and another stage, notwithstanding the concession that I have already announced. I hope that Members will read what I have said about the difficulties that are imposed. I also ask the Committee to consider that the land must be agricultural. Some of the people mentioned by the noble Earl, Lord Carnarvon, will find that they will not benefit because their land is not agricultural but merely a paddock adjacent to the house or a couple of looseboxes at the end of the garden. As I understand the matter they will not be covered because in most cases their land will not be agricultural. There are many complications and the more one looks at the issue the more difficult it becomes. I suggest to the noble Lord, Lord Mason, that we all go away and have another think. I shall be happy to meet the noble Lord between now and another stage to discuss the matter.

Lord Rippon

I am surprised by the Minister's answer. It seems to be totally against the weight of the views expressed in the Committee. It has confirmed me in a view that I have long heard and believed. It is that surveyors are awfully good on law but not so good on values, they are best left to the lawyers.

I do not believe that anyone is disputing the fact that there have been doubts about the state of the law and that a certain judgment has now been made which is no doubt correct. However, it is not the judgment that Parliament intended. I believe that it has taken everybody by surprise. Therefore, the Government should accept the amendment. I am bound to say that merely inserting a de minimis provision adds to the difficulties and uncertainties. I hope that the amendment will be pressed and the de minimis answer not accepted.

Lord Middleton

I do not know what the noble Lord, Lord Mason, will say. However, I agree with the noble Lord, Lord Rippon. I am glad that the Government are willing to look at the matter; it is excellent. My noble friend Lord Caithness referred to the fact that there is no intention of asking for the exclusion from rating of such establishments as training stables, riding schools and so on. As the noble Lord, Lord Mason, has said, we are very much concerned with the agricultural side of the horsebreeding enterprise.

The noble Earl referred to the complications; of course there are complications. The uncertainties to which he referred gave rise to the case which has been resolved in the way that we have described. I believe that the beauty of the amendment tabled by the noble Lord, Lord Mason, is that it removes all the uncertainty and makes the issue so much simpler. I hope that between now and Report stage we can persuade the noble Earl that this is a simple matter to resolve. I wonder what he means by the de minimis proposal. I do not know how one can differentiate between large and small breeding establishments. It is a question of, how long is a piece of string? I am encouraged by the noble Earl's reaction but I do not know what the noble Lord, Lord Mason, will say.

Lord Renton

In view of the fact that my noble friend has said that any exemption must relate to agriculture, I should like to emphasise the fact that the amendment is so drawn that if accepted it would relate only to agriculture.

The Earl of Caithness

I should be sad if the advice which my noble friend Lord Rippon gave to the noble Lord, Lord Mason, were accepted. If one makes a suggestion in good faith that we can discuss the matter between now and another stage one hopes that that will be accepted.

I stress the difference between agricultural and non-agricultural land to put it firmly on the record in case some people who believe that they might benefit from the de minimis provision, which we have already said we shall bring forward, find that ultimately they do not. I believed that it would be clearer if I spelled it out now.

Lord Mason of Barnsley

Of course the Minister will recognise the fact that the thrust of the argument was based on the reinstatement of the previous position which was held for 50 years until last December. However, we are obliged to him for his reply.

He was partly supportive and we appreciate that, but I am sorry that he has not gone as far as we should like. I do not think that at this stage it would be wise to exchange views with the Minister on the degree of ministerial support that we have received. I do not want to press the matter to a Division at this stage. However, I must remind the Minister that every contribution that was made supported the amendment. First he offered to consider fresh words at the Report stage. Secondly, he said that he would be prepared to meet Members who have prepared the amendment and spoken during the course of the debate. In the hope that we shall make further progress and have further discussions at the Report stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 108 not moved.]

9 p.m.

Lord Stallard moved Amendment No. 108ZA: Page 105, line 3, at end insert—

("Property used for homeless persons without means of support

15A. A hereditament is exempt to the extent that it consists of a charitable property which, on a voluntary basis, caters for homeless persons without means of support or persons receiving supplementary benefit or the equivalent thereof.").

The noble Lord said: I beg to move Amendment No. 108ZA standing in my name on the Marshalled List. Schedule 5 outlines a number of exemptions. The amendment adds one more exemption to that list. It deals with the exemption of property used for homeless persons without means of support. I know that many Members of the Committee are involved with organisations that might fit into this category. So far this evening we have dealt with big businesses and small businesses; we have dealt with sporting premises; we have dealt with social club premises; we have dealt with horses, ponies, salmon and trout. I want to deal with the Simon Community and its properties.

The Simon Community is a registered charity catering for people who are often referred to as "down and outs": people who have severe problems stemming from alcohol dependency, drug dependency and abuse and, in many cases, illiteracy often accounted for by mental illness and various physical and psychiatric ailments. It is that that forced me to put this amendment into this area because there are other amendments which seem to hint at the same problems.

Perhaps I may mention Clause 15(1)(a), which could be interpreted as an exemption for this community, to the extent that it refers to property used for keeping suitably occupied people who have been suffering from illness—and "illness" is defined as being something in the National Health Act 1977. I even looked up what "illness" meant in that Act, and it simply said that it includes mental disorder within the meaning of the Mental Health Act 1959.

Sadly, many of the people I have met recently among the homeless are people who are being moved into community care from the big mental institutions, but are finding themselves on the streets because of all sorts of problems in finding places to live and so on. I have found a number of people who within weeks, have been in the predicament of so many of the people who are looked after by the Simon Community because they have been released from psychiatric institutions into community care, which is very often not there. They then gravitate towards being homeless with all the problems which that brings. Therefore, I believe that it could be argued that the Simon Community could come within that category.

I had doubts, but I gave myself the benefit of the doubts and left the amendment to stand. As matters stood when I tabled the amendment—and I have heard nothing this afternoon that would change that—then the future looks financially bleak for the Simon Community. I shall not give all the reasons, but I shall outline one or two of them. At the moment the Simon Community pays a maximum of 50 per cent. of its rates because it is a charity. Under this Bill that situation will disappear and there will be no such exemption unless some alterations have been made by way of the amendments of the Minister this afternoon. I have heard all the amendments, but I have not cleared my mind as to what they all mean in relation to this amendment.

In the case of the Simon Community the Government intend to levy a collective community charge on properties where people come and go frequently. A local government official will estimate a likely occupancy rate on each of the Simon Community properties and will make it pay a collective charge on the basis of that assessment. One does not have to be a genius to understand the problem that that will cause to an outfit like Simon. In order to recoup the money the community will be expected to levy a nightly charge on each and every occupant, even those who are invited in for just a few hours overnight. In inner London that charge has been estimated to be at least £1.50 per person per night. The Simon Community would normally have about 50 members in the community each night, both workers and resident members. That would mean paying £75 each night or £27,375 a year to the local authority, and sometimes there are more than 50 people there.

Of course, that is out of the question for an organisation which relies solely on donations from supporters and sponsors. There is no government money or funding involved in this organisation at all. It depends entirely on its own resources. Therefore, I believe that we should look at the question of this community because it deals with people with whom no one else wishes to deal. These people are sometimes extremely difficult to cope with. They cannot be fitted into any of the excellent structured programmes that we know exist—and we are grateful that they do exist—which are operated by many admirable voluntary organisations. However, these unfortunate homeless people that I am discussing are taken in by the Simon Community and are usually without means of support. There are a number of reasons for that. They are taken into one of the four properties managed by the community, staffed by voluntary workers and maintained by donations from supporters with no outside grant.

When I say that they are taken in by the Simon Community, they are picked up on what is a "street run". I do not know whether the Committee is familiar with that, but I should like to take one or two of the Committee on this street run, when volunteers tour the streets of London and find these people in street doorways, on the pavements or on the main line stations. They are people who are obviously very ill, who are immobile and suffering from something in addition to their dependency. They are offered assistance. Very often the only assistance that can be given is for them to be taken back in the van, given a blanket to cover themselves and a cup of tea and something to eat, if they can manage it. For that assistance and service they will have to go through this paraphernalia of charging £1.50. I do not know from where they will get it. How can you charge these people £1.50 before they go away in the morning? How can you recoup your losses? How can they keep these registers? It is absolutely impossible to structure these people into the tidy little slots into which we should like these organisations to fit, according to a clause in this Bill.

I am really pleading a special case here as regards the Simon Community. These people do not receive any benefits. The other night when I went on the street run to see what the latest situation was I met a person who does not really exist. He is unable to obtain benefit because he has no identification papers. He does not know where his birth certificate is and has no recollection of either his identity or his age. How can you charge such people who have no benefits from any source?

It might be a useful exercise if Members of the Committee on their way home this evening passed through one of the main line stations or walked up one of the roads concerned to see these people because, sadly, they are there. In doing so, one should ponder for a moment on where they will be tonight if the Simon Community does not pick them up and give them shelter for the night, or refer them to somewhere suitable. From there, one should ponder further and ask how could one get £1.50 per night from those people. If they cannot pay, how can the Simon Community foot the bill for all of them? It would be ludicrous to allow the Bill to remain as it stands without special treatment and consideration being given to the Simon Community.

I should have hoped that we would be discussing not so much how to get this money from these people in the circumstances I have tried briefly to describe, but how to recompense organisations such as the Simon Community which are providing services no one else can provide, including us. One way, I suggest, we could perhaps help is to agree to this amendment, and perhaps go further and discuss the whole predicament of the Simon Community to see whether we can be of further assistance. I beg to move.

Baroness Faithfull

I am involved in a large Simon Community and also a Church Army hostel for the homeless where people come in for a night, sometimes for only half a day and perhaps for two days. As the noble Lord, Lord Stallard, said, assessment of such people is extraordinarily difficult.

I should like to make a further point. These people are what we used to call tramps. There is no question of them knowing to which local authority they are responsible. On one day they will be in, say, Banbury and the next day in Oxford; then moving on to Salisbury, or wherever it may be. The local authority, its charge, and the accounts of the authority mean absolutely nothing to them.

The running and administration of hostels is extremely difficult. At the same time, I have to say that the hostels save many men from getting into trouble with the police. As the noble Lord, Lord Stallard, said, they are saved from sleeping rough—though too many people are still sleeping rough. The whole administration is an absolute nightmare without having further complications. Perhaps my noble friend the Minister will take up the matter of accountability to local authorities, which simply cannot exist in these circumstances.

Lord Dean of Beswick

I am delighted to support this amendment because my colleague and noble friend Lord Stallard, as he has done throughout his political career, has again chosen to champion people at the lower end of the social scale. The Committee may recall earlier in our proceedings on this Bill that I referred to what happened in tramp wards in the old days. They were given a night's lodgings, even if in a low standard bed, and a frugal breakfast in the morning of perhaps a slice of toast and cocoa on which they were expected to do a day's work; but they rapidly disappeared.

The case has been expertly put by my noble friend. I was interested also in the point forcefully made by the noble Baroness, Lady Faithfull, regarding identification with an authority. In London, both inner and outer, the borough boundaries merge and tramps can have no concept of which borough they are in. The same situation can exist in Manchester where there are 10 metropolitan districts which, in a geographical sense, are closely related to one another. While I suspect that the biggest problem will be in the centre of Manchester, there is no doubt it will exist on the edge of town. People like myself, who lived on the outskirts of Manchester, have seen these people of no abode, with no identification, passing through daily. One could see them going to and returning from various places, sleeping rough in the park, and so on.

It is a fact that the organisation to which my noble friend Lord Stallard referred has taken to itself what is, in some respects, a very unpleasant job on behalf of the community and which, if we had the time and resources, we should be doing ourselves. It is incumbent upon the Government, on behalf of society, to do their best to help that type of organisation. Are they to be asked to fund, collect and pay the community charge on behalf of these people? There is no doubt that they will have to pay if they are legally obliged to, but whether they will ever collect it is another matter. This will mean that the meagre resources they are able as a charity to collect from generous people and organisations who are prepared to fund them will be further dissipated.

I hope that in his reply to my noble friend this evening the Minister will be able to give as sympathetic a reply in response to this amendment as he did to the previous one. I do not carp at Members, but it seems strange to me that while nine or 10 Members of the Committee can speak with conviction on an amendment concerning horses, there is a diminishing interest when we are talking about people at the bottom end of the scale. I have a great respect for the noble Lord, Lord Rippon of Hexham, who unfortunately has left the Chamber. He made the point as though the whole of the Committee was speaking in favour of the previous amendment. In fact we know it was special pleading by a particular lobby. No one is grumbling over it because that is what politics is about.

As I said previously, throughout the whole of the political life of my colleague who sits behind me, both in another place and here, he has been recognised and identified as a champion for the homeless, the deprived and for people—we are talking about the inner London area in the widest sense—who cannot look after themselves. His voice has been almost a lone one, with the support of myself and of the noble Baroness, Lady Faithfull. I hope that the Minister will not take the number of speakers as a criterion for what society shoud be doing. I have pleasure in supporting the amendment.

9.15 p.m.

The Earl of Caithness

The noble Lord, Lord Stallard, referred yet again to the very important subject of charitable hostels for the homeless and similar institutions. He has proposed that they should be exempt for non-domestic rating From what the noble Lord said, I believe that the establishments about which he is concerned are predominantly residential, providing living accommodation for longer or shorter periods to people who would otherwise be homeless. If so, they would fall within the definition of domestic property in Clause 56. They will not be subject to non-domestic rating and so there can be no question of specifically exempting them.

The exclusion of domestic property from rating will encompass facilities which are normally provided along with living accommodation, such as dining and recreation rooms. There are issues concerned with the application of the community charge to residents in such institutions. As the Committee will recall, there was a thorough debate on these issues when we were dealing with Part I of the Bill. We all recognised that we would need to return to them at Report stage. Now is not the time to anticipate that further debate. This is absolutely no discourtesy to the noble Lord, Lord Stallard, or to my noble friend Lady Faithfull; it is that we are considering further the situation raised by the noble Lord this evening.

I said that most of the premises with which the noble Lord is concerned will be domestic under the terms of the Bill. His amendment would also apply to some which would be treated as non-domestic. For example, there may be day centres for homeless people, and a few hostels may provide facilities that go beyond what can reasonably he described as domestic; for example, in-house medical facilities. In such cases non-domestic rates will he payable. However, as we discussed on an earlier amendment, when an establishment is run by a charity the rates will be automatically reduced by a half and the local authority will have power to remit them entirely.

I believe that it would be misguided to single out the category of establishment referred to here, worthy as it is, for more favourable treatment than other charitable property. This has been a useful opportunity for the noble Lord, Lord Stallard, with his very considerable experience in this field, to add to the arguments he used in the debate on Part I of the Bill. I can give the noble Lord the assurance that my right honourable friend the Secretary of State and I will bear in mind very carefully what he said. I am grateful to all Members of the Committee who have taken part in this debate tonight.

Lord Sandford

Before my noble friend sits down and the noble Lord responds, can my noble friend on the Front Bench confirm that this, being a charity, will be included in the reconsideration that he has already promised to undertake?

The Earl of Caithness

If it is a non-domestic property run by a charity, then of course.

Earl Russell

As the Minister said, we have been here before. Last time, during the debate on the first part of the Bill, the noble Earl said, at the third time of asking, a little more than he said just now. He used the magic words, "I will take this back and think about it". Once again, we are up against the idea that these hostels are residential.

Not to put too fine a point on it, the noble Baroness, Lady Faithfull, said that we are here dealing with tramps. The concept of residential accommodation for a tramp comes close to a contradiction in terms. We have here people who are proverbially of no fixed address, which is why, as the noble Baroness, Lady Faithfull, said, the concept of accountability does not and cannot be made to apply to them. They have to go somewhere. The Minister might consider whether there is a distinct risk that if they are turned away from hostels that are able and willing to receive them they might go to places where people will make them a great deal less welcome. This is not practical. I hope the Government will take it away and think about it.

The Earl of Caithness

The noble Earl will, I hope, know by now that, when I say I shall take it away, I shall take it away.

Lord Stallard

I am grateful to those who have contributed to this short debate and I thank the Minister for replying in such a constructive way. I readily admit that I had reservations when I put down the amendment. I am grateful for the way in which he dealt with it. I am grateful too for the consideration which he said will be given to the amendment and I look forward to something helpful being proposed between now and Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Schedule 5 shall stand part of the Bill?

Lord Monson

The Minister will be aware that English vineyard owners, who produce increasingly well made and drinkable wine against all the climatic odds, have for many years complained about the unfavourable treatment they receive in terms of tax, rates and subsidies in comparison with their Continental counterparts. As the Bill stands, not only their land—that is, their vineyards—but the buildings used in their business are to be treated as wholly agricultural, bringing them into line with all other agricultural enterprises. If that is not the case, should this not be put right at a later stage of the Bill?

The Earl of Caithness

I am grateful to the noble Lord, Lord Monson, for giving me a little notice that he might ask me this question. Although, like many noble Lords, I am quite keen on wine, I am not too knowledgeable about vineyards. However, I am able to tell him that vineyards are exempt by virtue of the agricultural exemption in Schedule 5(2) and (1)(d), since they are treated as market gardens. Also exempt are the fermenting and bottling facilities. Only the retail premises, if any, are rateable, in the same way as farm shops. Complications arise, however, where the vineyard also imports wine from elsewhere. Then the ancillary buildings may have a value attached to them reflecting the proportion of their use attributable to the bottling and handling of the imported wine.

Lord Monson

That is on the whole a satisfactory answer.

Schedule 5 agreed to.

Clause 44 agreed to.

Clause 45 [Contents of central lists]:

Lord Hesketh moved Amendment No. 108A: Page 25, line 36, leave out from ("require") to first ("the") in line 38 and insert (", a central non-domestic rating list must show, for each day in each chargeable financial year for which it is in force,").

The noble Lord said: In moving Amendment No. 108A, I should like to speak also to Amendments Nos. 108B, 108C, and 108D. I have already explained to the Committee, when introducing Amendments Nos. 102D to 102G relating to the local rating lists in Clause 39, that the present yearly liability to rating is being replaced with a daily liability. We now come to a similar group of technical amendments to Clauses 45 and 46, which relate to the central rating list.

Amendment No. 108A removes an implication in the present drafting that a central list might not be in force. Amendment No. 108B corrects an erroneous cross-reference. The amendments to Clause 46 simply tighten up the precision of drafting by making it clear that what matters for liability purposes is what the list shows for a day, not on a day. This is because the list could be adjusted retrospectively—for example, where a ratepayer successfully appeals against rateable value. I beg to move.

On Question, amendment agreed to.

Lord Hesketh moved Amendment No. 108B: Page 26, line 2, leave out ("(3)") and insert ("(1)").

On Question, amendment agreed to.

Clause 45, as amended, agreed to.

Clause 46 [Central rating: liability]:

Lord Hesketh moved Amendments Nos. 108C and 108D: Page 26, line 8, leave out ("on") and insert ("for"). Page 26, line 14, leave out ("on") and insert ("for").

On Question, amendments agreed to.

Clause 46, as amended, agreed to.

Clause 47 [Alteration of lists]:

[Amendments Nos. 108E and 108F not moved.]

The Earl of Caithness moved Amendment No. 108G: Page 27, line 5, at end insert— ("(bb) as to the period within which a proposal must be made,").

On Question, amendment agreed to.

Lord Ross of Newport moved Amendment No. 108GA: Page 27, line 9, leave out subsection (5) and insert— ("(5) Where there is disagreement about the accuracy of a list between a valuation officer and another person making a proposal for its alteration, or between a valuation officer who has made a proposal and another person, an appeal may be made to a valuation and community charge tribunal established under Schedule 14 below. In any appeal the onus of proof for an alteration in the valuaton list shall lie with the person who made the proposal.").

The noble Lord said: This amendment is tabled in the names of the noble Earl, Lord Lytton, and myself. As is already known, the noble Earl is unavoidably detained on business somewhere in the West Country, so I shall speak on his behalf.

The amendment deals with the situation where there is disagreement about the accuracy of a valuation list. We seek to obtain from the Government an undertaking that the onus of proof in a dispute should lie with whoever has made the proposal to change the list, and that the Bill should clearly specify that he/she is responsible for justifying it—as is the present position. We should like an answer to that question.

The Earl of Caithness

The noble Lord's amendment would have two effects. First, whereas the existing Clause 47(5), which the noble Lord wishes to delete, merely empowers the Secretary of State to make regulations providing for disputes about rateable values to be referred to valuation and community charge tribunals, the amendment would write into the Bill that they should be so referred. I have to say that this is a distinction without a difference. There is no serious possibility of the Secretary of State not making such regulations without which there would be no right of appeal against rateable values. For all practical purposes the word "may" in this context means "shall", so there is no need for the amendment to ensure that a right of appeal exists. However, I can give the Committee an undertaking that there will be such a right. Moreover, the amendment would not avoid the need to make regulations dealing with the form of appeals, the time for making them, and so on.

Secondly, the amendment would provide that when the tribunal came to hear such an appeal the burden of proof would lie on the person seeking to have the rating list altered. Thus, if the occupier was proposing a reduction he would have to justify it; whereas if the valuation officer was seeking an increase—which normally he does only when there is a material change of circumstances—the burden would fall on him.

I have to say that the valuation process does not work like a criminal or a civil trial. When the valuation officer first values a property he assembles all the evidence, especially about market rents from comparable properties in the area, and forms a professional judgment about the rent that the property could be let for on the statutory terms to that well-known figure in rating law; namely, the hypothetical tenant.

When there is an appeal the local valuation court—now to be called the valuation and community charge tribunal—goes through the same process. It listens to the arguments from both sides and forms its own judgment of the appropriate value, subject to one limitation which I shall come to shortly. There is no question of proof because one cannot prove anything about what a hypothetical tenant would pay and it is therefore a matter of judgment.

That being so, I must say that if the noble Lord's amendment were to be incorporated into the Bill I am not at all sure what effect it would have on tribunal practice. To the extent that it did have an effect, this could well be to the disadvantage of the ratepayer. In the early years, after a revaluation, there will be far more appeals by ratepayers against the new rateable values than there will be by valuation officers who will have set those rateable values and will, as I said, normally alter them only if the state of the property changes.

Given the worries that many ratepayers have about changes in rateable value they might face on revaluation, despite the generous transitional measures we have proposed, I do not think that it would be right to erect a new hurdle for them to leap in order to succeed on appeal. As I explained to the Committee on Tuesday, we are taking some steps to discourage misconceived appeals, but we do not want to make life any more difficult for the appellant in a genuine case. I hope that that covers the point raised by the noble Lord and has set his fears at rest.

Lord Ross of Newport

I am grateful to the Minister for that response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 108H not moved.]

Clause 47, as amended, agreed to.

Clause 48 agreed to.

Schedule 6 [Non-domestic rating: valuation]:

[Amendments Nos. 108J and 108K not moved.]

9.30 p.m.

Lord Ross of Newport moved Amendment No. 108L: Page 107, line 5, at end insert— ("The decapitalisation rate levied on hereditaments rated under the contractors test method shall be determined by the formula: A=B+1½ where A=decapitalisation rate, per cent. B=interest rate on 20 year index-linked government securities, per cent.")

The noble Lord said: The amendment deals with capitalisation. Many Members of the Committee will have received a somewhat complicated document from the Chemical Industries Association. There are problems—I intend to be brief—about the rating of industrial premises in Scotland, and the object of the amendment is to try to bring Scotland and England into line.

The rateable value of heavy industrial plant such as oil refineries is calculated by applying a decapitalisation rate to a capital value. It is believed by most of the industry and by the CBI that the rate should be specified in the legislation and should relate to long-term interest rates.

The Chemical Industries Association, which I suspect has written to many Members of the Committee, says that underlying all its thoughts is the belief that it is vital that the decapitalisation rate should be set centrally on a uniform and logical basis by the Secretary of State by calculation with reference to external financial bases. Anything less would undermine the long-term benefits of any adjustments. It has recently submitted proposals setting out how that might be done. It is apparently becoming concerned that there may be moves towards setting the rate arbitrarily and somehow by agreement. Any tendency to compromise between the position in Scotland and England would not ameliorate the Scottish position sufficiently and would worsen the English position to no good purpose and for no logical reason.

This is highly specialised material dealt with by rating specialists upon which I am not competent to comment from personal knowledge. I am sure that the Minister will have some answer for us and I look forward to hearing from him. I beg to move.

The Earl of Caithness

Over the years, valuers in England and Wales on the one hand and Scotland on the other have adopted different approaches to working out the capital value, bearing in mind the fact that such properties are not often sold, and deciding what is the appropriate rate of interest to use. That has resulted in some odd anomalies—most notoriously the pipeline whose owners have to pay more than twice the rates per mile for the stretch north of the Border than for that in England.

The Committee will be aware that the Government hope to move towards a uniform poundage throughout Great Britain in the longer term. Clearly though, that makes sense only if there is also a common basis for assessing rateable value. We have therefore taken power in Schedule 6 to prescribe the interest rate to be used on contractor's tests valuation. An equivalent power is being taken for Scotland.

It is too soon, however, to say whether the Government will use this power to impose a common decapitalisation rate by statute. It may be possible to arrive at a common percentage by agreement between the Inland Revenue valuation office and the Scottish Assessors' Association which will then be the subject of review by the courts. This is a thorny issue. We are giving it very great consideration but I have to say to the Committee that Amendment No. 108L is premature until we can take the matter further.

Lord Tordoff

As someone who has been involved in the industry for a number of years, perhaps I may say that that answer will be less than satisfactory to the industry. The industry had hoped that the noble Earl would give some encouragement to the view that the Secretary of State might be prepared to take this into his hands, to produce some form of equalisation. One recognises that different parts of the chemical industry in this country use different feedstocks, therefore one can get a certain situation where there are curious competitive anomalies arising out of this kind of legislation.

I still hope that the Secretary of State may find it possible to take it unto himself to make the final decision and not leave it to some local arbitration, because this is an industry which contributes an enormous amount to the balance of payments of the UK. Perhaps the Minister could give some indication that the Government are prepared to rethink the matter without my necessarily pressing the amendment to a conclusion.

The Earl of Caithness

I can assure the noble Lord, Lord Tordoff, that we attach very great importance to the speedy achievement of harmonisation in this difficult area. As I am sure the noble Lord will be aware, we have listened carefully to the representations of the CBI, the Chemical Industries Association and the Petroleum Industries Association on this subject and sympathise with their concerns. I can assure the noble Lord that we have given priority to work on this issue and will shortly be receiving the formal recommendations of the Inland Revenue valuation office and the Scottish Assessors' Association. We shall then consult with the rating profession and the industry on the way in which harmonisation is to be achieved; the level at which the common decapitalisation rate is to be set; and whether it is necessary to impose that by statute. I think the situation is perhaps more active than the noble Lord, Lord Tordoff, thought.

Lord Ross of Newport

I think that that response satisfies my colleague on this Bench who has much more knowledge of the oil industry than I. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 6 agreed to.

Schedule 7 [Non-domestic rating: multipliers]:

Baroness Stedman moved Amendment No. 109: Page 108, line 14, leave out ("retail") and insert ("local authority").

The noble Baroness said: We come now to a fairly large group of amendments. I wish to move Amendment No. 109 and speak to Amendments Nos. 111,112,114 and 116. No doubt the noble Lord, Lord McIntosh, will be speaking to the others. I do not think there is a lot of difference between us; it is just a question of wording.

As I see it, one of the major problems of the Bill is that it is linking the national non-domestic rating multiplier to the movements in the retail price index. However, those of us who have been, and still are, in local government know that local government costs tend to be dominated by the employees' costs, and in recent years these costs have moved much faster than prices. So it would seem sensible to take note of this fact when varying the national non-domestic rating multiplier.

There is considerable concern to ensure that proper account is taken in future of such increases in pay and prices which are actually incurred by local government. These have to be fully and fairly recognised in the future indexation of the grants and the business rates. That is why I propose the use of a local authority index rather than the retail price index which takes no account of the teachers', the police, the fire service and the manual workers' pay awards which are not included in the retail price index but which bear especially heavily on local authorities. They cause an increasing proportion of local authority costs to have to fall on the taxpayer.

It is essential that central government, who now determine the level of the teachers' pay awards and the police pay, are tied to increases in what is known as the upper quartile of male manual workers. Therefore local authorities and their associations have no control at all these days over the pay of about one-third, which represents about half the total pay costs of local authority employees. It would surely be unfair if the real local taxpayers—the ones who are paying the community charge—have to bear a disproportionate share of local government costs in order to protect non-domestic ratepayers.

CIPFA has done a lot of work on this which shows that if the new system of local government finance had been introduced in 1986–87, and the size of the national non-domestic rate pool were calculated initially on the basis of actual rate poundages in 1986–87, and in subsequent years on the basis of index-linked non-domestic rate poundages, after only two years of index-linking the pool would be some £650 million smaller than might reasonably have been expected. That means that the community charge would have to have risen by £18 for every adult in the country to make good that deficiency.

The Association of County Councils obviously takes an interest in this as well. On the local authority side, Lincolnshire County Concil has been preparing annual repricing factors for local authority measures of the inflation facing local authorities which are used in the various official returns and publications. There are quite a lot of facts and figures about that, but in fact over a full nine-year period of local authority inflation which Lincolnshire has measured, it exceeded both the government sponsored inflation indices—the gross domestic product and the retail prices index.

In the most recent three years, local authority inflation has been relatively stable at around 6 per cent. per annum, and it has been rising at roughly 1.5 per cent. ahead of both the retail prices index and the GDP deflator. So it is straightforward to assess what the effect on the community charge would be nationally if this situation were to continue for a further three years after the introduction of the proposed system of local government grant and finance. It would show that an inadequate increase in the national non-domestic rate over that period could mean a 19 per cent. increase in spending which, of itself, would result in a 30 per cent. increase in the community charge. To put it another way, if one takes as a base year a community charge at £225, in the first year after that it would have to increase to £245; in the second year it would be £267, and in the third year, £291.

What this really means is that if the price indices used are not the ones which reflect the actual costs of local government, one has to consider this in terms of the shift in burden from business ratepayers and government grant to community charge payers. Even if local authority inflation were only to exceed the increase in the retail prices index by the observed nine year average of 0.7 per cent. in each year, after 10 years there would have been a shift of over £1.25 billion from business ratepayers to community charge payers. I do not think that is fair; I think that the index that should be used should be one which is geared to local authorities' actual costs. I beg to move.

9.45 p.m.

Lord McIntosh of Haringey

I wish to speak to Amendments Nos. 110, 111, 113, 115 and 117. My amendments perform an elegant dance around the amendments of the noble Baroness, Lady Stedman, in the Marshalled List. We come together very happily at Amendment No. 111, which is in both our names. Unfortunately there is an intrusion of some vulgar amendments with the letters A and B appearing after them which come in the middle, standing in the name of the noble Earl, Lord Caithness.

There are three important points in these amendments. I very much support what the noble Baroness, Lady Stedman, has said. The first point (on which she rightly placed the most emphasis) is that everyone who knows about local authority costs knows that they are heavily influenced by wages and labour costs. Those are not labour costs in general but a specific kind of labour costs. History has shown, as the noble Baroness has said, that over a period of years the inevitable costs—often imposed by central government; teachers' salaries are a good example—are ahead of the retail prices index. To that extent, the risk of the revenue available to the local authority from sources other than the community charge declining in real cost terms is very considerable.

The second point, raised in Amendment No. 111, refers specifically to the potential for increases in the national non-domestic rate. As the Bill is drafted, there is a possibility that the national non-domestic rate poundage could be increased by a figure which is even less than the retail price index. That is entirely in the hands of the central government. The inevitable effect of such an increase would be to shift the burden from the national non-domestic rate to the community charge. Although one might think that that would have the desirable effect of increasing the proportion of a local authority's expenditure which is under its control, it would be a proportion of a smaller figure and it would be a thoroughly undesirable way of achieving those objectives.

The third point, which is perhaps of less significance, is raised in Amendment No. 117. I believe that the Minister will be very familiar with the point that there should be appropriate consultation procedures between the Secretary of State, representatives of local government and representatives of non-domestic ratepayers. The significance of that is not simply that there should be consultation but that there should be consultation before the non-domestic rating multiplier for a chargeable financial year is calculated.

We shall come to that matter later in the Bill. However, there is a serious danger that the Secretary of State can intervene virtually at any stage in the financial year to change the boundaries of the financial resources of local authorities. I shall refer to that in connection with rate capping when we come to it. However, it also applies to the non-domestic rate and I hope that the Minister feels able not only to agree to consultation but to agree that it should take place before the figure is calculated so that we do not have the shifts in ministerial diktat which have tended to occur in recent years, particularly when we look at rate support grant.

Lord Boyd-Carpenter

The speech and the amendment of the noble Baroness, Lady Stedman, are obviously inspired from the point of view of local authorities. Looked at solely from their point of view, there is plainly a good deal of logic in what she has said. However, the Committee must also consider the non-domestic ratepayer. His income may well not be rising any faster than the retail prices index. Indeed, in some cases it may be rising more slowly. The Committee should be careful in going all the way with the interests of the local authorities and ignoring the ratepayers. One of the major objectives of the Bill is to give the ratepayer a better deal than he has been getting in recent years.

I take the point made by the noble Baroness that some items of local expenditure—teachers' salaries, for example—are fixed not by the local authorities but by the central government. On the other hand, I think that very few noble Lords with any experience of local government would dispute the fact that local government, if it has to, can make economies in its administration. I would suggest to the Committee that if the local authority index, as the noble Baroness describes it—that is, the way in which local authority costs are rising—is rising faster than the retail price index, surely it raises the question whether or not local authority expenditure requires looking into. If, indeed, one important item of local authority expenditure—to wit, teachers' salaries—rises for reasons beyond the control of the local authority, surely it is up to the local authority to reduce expenditure in one direction or another so as to keep its total rise in line with the retail price index. If we have to choose between the interests of the local authorities and the interests of the ratepayers, I am on the side of the ratepayers.

Lord Monson

Before the noble Lord sits down, I should like to ask whether or not he is aware that Lincolnshire County Council, to which the noble Baroness, Lady Stedman, referred—which is a Conservative controlled council—is run as an extremely tight ship. I think that if there had been any economies which it could have made, it would have done so.

Lord Boyd-Carpenter

I admire the noble Lord's simple faith in any local authority. Simply to say that if any economies could have been made it would have made them, argues a credulity which I am not prepared to share.

The Earl of Caithness

The simple effect of Amendments Nos. 109 to 117 would be to force business rates up by more than the rate of inflation. By contrast, the Government wish to provide at least the possibility that they might be reduced. I hope that the business organisations which have expressed concern about the possible effects of revaluation and the national non-domestic rate are taking note of the real attitude to the business community of both parties opposite. As my noble friend Lord Boyd-Carpenter has suggested in his helpful intervention, it is with these amendments that we hear the true voice of the Labour and SDP parties who are concerned to go on subsidising the high-spending policies of some local authorities at the expense of precisely those small businesses they seemed so anxious to protect earlier.

The Government on the other hand seek to limit the tax burden on businesses. We have provided that business rates cannot rise faster than general inflation. In another place we allowed for the possibility that they may rise a little less by taking power to trim the increase resulting from the RPI link in any year. Our basic position is that business rates should rise in line with general inflation. That will give businesses the protection they need against the excessive rate increases that many local authorities have been prepared to impose on them year after year. It will mean that business rates should go on making the same contribution towards keeping community charges at a reasonable level.

There are, however, several reasons why we might from time to time want to consider abating some of the inflationary increase in business rates in any one year. First, the total yield from business rates tends to rise in real terms over time by about 1 per cent. to 2 per cent. a year. In a normal year we would propose to leave the benefit of that buoyancy with local authorities to reflect the extra cost of providing services to the new buildings. Occasionally it may be right to stop and think whether some of that benefit might be given back to the business community which is generating the extra revenue.

Secondly, business rates have increased excessively in recent years and are now higher than we should like. There may be a case over the longer term for shifting some of the burden on to some other tax, the benefit of which could be fed back into the system through grant. That incidentally is one of the reasons why the power is conferred on my right honourable friend the Chancellor of the Exchequer rather than on my right honourable friend the Secretary of State.

Thirdly, we all know that authorities can make savings from greater efficiency. The pressure of proper accountability through the community charge should make them look much harder at where the fat can be trimmed. If and when they succeed there may be a case for giving some of that benefit back to business. Again, those powers—which the amendment of the noble Baroness would remove—would permit us to give business a share of any savings that authorities were able to make, though I do not expect the power to increase business rates by less than the RPI to be used often.

Turning in detail to the amendments before the Committee, in different ways these would replace the RPI in the formula for uprating the poundage by a local government cost index to be maintained by the Secretary of State. Behind these amendments lies the concern, possibly even the hope, of the noble Lord, Lord McIntosh of Haringey, and the noble Baroness, Lady Stedman, that local authority spending will continue to rise faster than the retail prices index, as it has done for many years past despite the Government's best efforts.

For the future, if authorities increase their spending faster than inflation they will no longer be able to obtain a share of the cost of the increase from the non-domestic ratepayer. The full cost of increases in spending will therefore fall on the community charge payers who will have the chance to make their own judgment about whether their authority's high spending is justified.

In other words, under our proposals the full cost of irresponsible, profligate local government spending is going to be brought home to all the voters who can express their views at the ballot box. That surely is as it should be. These amendments are therefore trying to link the non-domestic rate to the actual cost of local government by means of a local government cost index in order to help hide spending increases from the voters.

Underlying this is the view that because a high proportion of local government spending goes on wages and salaries it is reasonable that local government spending should increase in line with wages rather than prices. This is a view that we unequivocably reject. In the private sector the pressure of competition means that wages can rise faster than prices only if a firm can make productivity improvements—making the same number of goods with a reduced workforce, or more goods with the same workforce. There is no reason why this principle should not apply to local authorities too.

We know that there is scope for productivity improvements in local government. The Audit Commission has identified many areas where costs could be saved without cutting services—indeed, while improving them. But authorities show a remarkable reluctance to realise these savings. Instead they just accept that costs should go on rising year after year. It is perhaps only in the world of local government that some of the bad old attitudes survive, where authorities decide first on the services they want and only then think how they are going to pay for them.

These amendments would serve to reinforce that attitude. If local authorities decided to pay all their staff more, then up would go this local authority cost index and up would go the business rate. Businesses would have no say in what was going to be well hidden from the community charge payer. We see no reason why local government spending should rise by more than the RPI. We in fact believe that there is plenty of scope for it to rise by less. But even if it rises by more there is no reason for businesses to be forced to pay. As I have said, there is an arguable case that they pay too much now. It is for the community charge payers, the electors, to consider whether they want more services at higher cost. They can only take a balanced view if that cost would fall on them.

Perhaps I may answer one point of the noble Lord, Lord McIntosh. I think he worked from a misapprehension when he said that my right honourable friend the Secretary of State could intervene at any time during the year. The Secretary of State cannot intervene in the course of the year. Local authorities will know the income that they will get from grant and non-domestic rates from before the start of the year, and there will be no—and I repeat "no"—scope for changing this after 1st April.

Lord Monson

I do not think that the noble Earl has answered the pertinent point made by the noble Lord, Lord McIntosh, which was also on my mind, about teachers' salaries and other centrally-imposed price rises.

The Earl of Caithness

I covered the point of wages and salaries. I admit that some are done from the centre, but I think, as the Audit Commission said in its recent report, that there are considerable savings to be made in the way that local authorities conduct their business. We do not see why the extra costs above RPI should fall on the business community.

Lord McIntosh of Haringey

The Minister makes the same tired old cracks about the irresponsible and profligate expenditure of local authorities. He ought to look at the balance between those parts of his script that come from Conservative Central Office and those that come from the department. It seems to me that the former is taking over in quite a large part of the speeches he is given to read.

When he is talking about local authority expenditure the noble Earl ought to remember that central government expenditure has been going up faster than local government expenditure in the course of this decade.

Noble Lords

Control it!

10 p.m.

Lord Ross of Newport

I must make a protest about the Minister's comments concerning local government. It really does not help when the Government constantly criticise local authorities that are trying desperately to comply with the Government's diktat. God knows, they are implementing any number of things at the moment to try to save money, particularly cutting back on the arts and that sort of thing which I think, quite frankly, is proving disastrous for the country. It is not clever to stand at the Box and constantly gripe about local authorities—and incidentally, some of the local authorities in which the Alliance party has some interest have actually had a lower rate increase this year than those that are controlled by Conservatives. Let us have that put on the record, although I do not want to make party political points on this subject. The breakdown of the relationship between central and local government in this country is an absolute disaster. Why do not the Government abolish local government altogether? That is what they really want to do.

Baroness Stedman

I am very disappointed with the Minister's reply and, like my colleagues on the other Benches, I am becoming fed up with the continual disparagement of local government that we hear from the Benches opposite. I should like to see us return to the day when local and central government consulted each other and worked together in the same frame of mind as they enjoyed 15, 20 or 25 years ago. That will not happen if all the time central government are picking on local government and making them the scapegoat for everything. Salaries comprise the biggest part of most local authorities' budgets. When central government fix the salaries of a very high proportion of people, then local authorities have very little money left in the kitty with which to fund projects. I see that the noble Lord wishes to say something.

Lord Dean of Beswick

I am grateful to the noble Baroness for giving way. Perhaps she remembers that only a few years ago the police forces received from the Government, or at least by government negotiation, a very substantial increase in salary to which the local authorities objected because of the proportion of that increase that they would have to meet. Nevertheless, they were completely ignored.

Baroness Blatch

Before the noble Baroness continues, perhaps I may say something that has not been mentioned by any Member of the Committee today; namely, that the Government meet 51 per cent. of the actual costs of police pay. That has not been mentioned at all. They pay 51 per cent. of the actual cost to the local authority, whatever it is. We are talking about having a kind of blank cheque in advance of funding local government. We are trying to get away from that blank cheque policy. It is not an attack on local government. Local government still has a very real input into negotiating bodies, as it did into what was the Burnham Committee. It is for the local authorities to go to the negotiating bodies with sums that people can afford to pay, whether they are national or local taxpayers, and to take a realistic attitude towards funding. They should be able to talk to whoever it is on whatever pay settlement is being negotiated and not have on the negotiating table in advance the knowledge that whatever the bill comes to the Government will pick it up.

Lord McIntosh of Haringey

I think it is rather unwise of the noble Baroness to refer from those Benches to the Burnham Committee, when it was her party's Government that only last year abolished that body and took the entire control of teachers' salaries into the hands of the Secretary of State for Education and Science.

Baroness Blatch

Considering the record of the Burnham Committee, it was a good thing too!

Baroness Stedman

Perhaps after four interventions I may continue. The noble Lord, Lord Monson, is quite right. Many of the counties are running very tight ships. I was in local government before I came to this Chamber 14 years ago. In Cambridgeshire, which is the county of the noble Baroness, Lady Blatch, we were even then making considerable savings and beginning to reduce our expenditure. That has gone on year after year. I think that it is very unwise and unfair of the Government Benches—and perhaps the Minister will listen to what is being said—

The Earl of Caithness

I am listening.

Baroness Stedman

I think it is very unwise and unfair of the Government continually to blame local government as a whole for what a few authorities have done, and done badly. All we are asking in this group of amendments is for the Government to base their returns on the real, practical considerations of local government. Local authorities are given statutory duties to do a job but there is not enough money left in the kitty to do that job without considerably putting up charges to the community charge payers.

Yes, we have consideration for business and, yes, we know that when the costs of business rise too high they are likely to make business non-competitive. But we are also concerned about the people who pay the rates in the local authority areas. We should like to see them granted some salvation and receive some consideration when the Government are working out how the grant should be effected.

I am very disappointed. However, I am not prepared to press my amendments at this hour, but I hope that the Government will take note of what has been said and will at least try to work with local government and not continually go against it.

Lord Ross of Newport

Would the noble Baroness agree that one of the biggest growths in the costs of bureaucracy to local government will come from implementing this very Bill?

Baroness Stedman

It will indeed put up the costs tremendously, and we do not know who will met them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 110: Page 108, line 14, leave out ("retail prices") and insert ("prescribed").

The noble Lord said: I have already spoken to the amendment. I beg to move.

10.6 p.m.

On Question, Whether the said amendment (No. 110) shall be agreed to?

Their Lordships divided: Contents, 18; Not-Contents, 45.

DIVISION NO. 2
CONTENTS
Airedale, L.	Pitt of Hampstead, L.
Dean of Beswick, L.	Ponsonby of Shulbrede, L [Teller.]
Graham of Edmonton, L.
Hacking, L.	Ross of Newport, L.
Hayter, L.	Russell, E.
Hughes, L.	Seear, B.
McIntosh of Haringey, L.	Stedman, B. [Teller.]
McNair, L.	Tordoff, L.
Monson, L.	Underhill, L.
Mountevans, L.

NOT-CONTENTS
Abinger, L.	Glenarthur, L.
Arran, E.	Henley, L.
Balfour, E.	Hesketh, L.
Beaverbrook, L.	Hives, L.
Belstead, L.	Lindsay, E.
Blatch, B.	Long, V. [Teller.]
Boardman, L.	Mackay of Clashfern, L.
Borthwick, L.	Munster, E.
Boyd-Carpenter, L.	Radnor, E.
Brabazon of Tara, L.	Rankeillour, L.
Caithness, E.	Renton, L.
Cameron of Lochbroom, L.	Rippon of Hexham, L.
Carlisle of Bucklow, L.	Saltoun of Abernethy, Ly.
Carnock, L.	Sanderson of Bowden, L.
Carr of Hadley, L.	Sandford, L.
Craigmyle, L.	Skelmersdale, L.
Croft, L.	Stanley of Alderley, L.
Denham, L. [Teller]	Teviot, L.
Dundee, E.	Thomas of Gwydir, L.
Elliot of Harwood, B.	Trafford, L.
Faithfull, B.	Trumpington, B.
Ferrers, E.	Wynford, L.
Gardner of Parkes, B.

Resolved in the negative, and amendment disagreed to accordingly.

10.13 p.m.

[Amendments Nos. 112 and 113 not moved.]

Lord Hesketh moved Amendment No. 113A: Page 108, line 19, at end insert— ("(4A) But where the base month for the retail prices index for September of the financial year which precedes that preceding the year concerned (the first year) differs from that for the index for September of the year which precedes the year concerned (the second year), C is the figure which the Secretary of State calculates would have been the retail prices index for September of the first year if the base month for that index had been the same as the base month for the index for September of the second year.").

The noble Lord said: In moving Amendment No. 113A, I shall speak also to Amendments Nos. 114A, 115A, 115B and 116A. These are straightforward technical amendments, the purpose of which is to plug a gap in the drafting of the Bill. I beg to move.

Lord McIntosh of Haringey

I accept that this is a drafting amendment but I cannot help observing that, if attention had been paid earlier to the wise words of the noble Baroness, Lady Stedman, and my own wise words, we should not have needed it. The RPI is an unsatisfactory means of measuring local authority expenditure. It is particularly unsatisfactory because the index is recalibrated so often.

On Question, amendment agreed to.

The Deputy Chairman of Committees (Lord Renton)

Before calling Amendment No. 114, I must point out that, if it is agreed to, I cannot call Amendments Nos. 114A, 115 or 115A.

[Amendment No. 114 not moved.]

Lord Hesketh moved Amendment No. 114A: Page 108, line 32, leave out ("and (4)") and insert ("to (4A)").

On Question, amendment agreed to.

[Amendment No. 115 not moved.]

Lord Hesketh moved Amendment No. 115A: Page 108, line 35, leave out ("either") and insert ("any").

On Question, amendment agreed to.

Lord Hesketh moved Amendment No. 115B: Page 108, line 37, at end insert— ("(7A) For the purposes of sub-paragraph (4A) above the base month for the retail prices index for September of a particular year is the month for which the retail prices index is taken to be 100 and by reference to which the index for the September in question is calculated.").

On Question, amendment agreed to.

[Amendment No. 116 not moved.]

Lord Hesketh moved Amendment No. 116A: Page 109, line 9, at end insert— ("(1A) Where the financial year is one for which the Secretary of State has calculated a figure for C under paragraph 5(4A) above, the notice must contain the figure he has calculated.").

On Question, amendment agreed to.

[Amendment No. 117 not moved.]

Schedule 7, as amended, agreed to.

Clause 49 [Special provision for 1990–95]:

The Earl of Caithness moved Amendments Nos. 117A, 117B, 117BA and 117C: Page 27, line 35, leave out ("before the beginning of the year"). Page 27, line 39, leave out from ("be") to end of line 42 and insert ("an amount found in accordance with prescribed rules (which may be the same as or different from the amount he would be liable to pay apart from the regulations)."). Page 28, line 13, at end insert— ("(3A) In relation to a hereditament or hereditaments in the area of the Common Council, subsection (3) above shall have effect as if the reference to a general rate included references to a rate in the nature of a general rate, the poor rate and the St. Botolph tithe rate."). Page 28, line 13, at end insert— ("(3A) Without prejudice to section 141(1) below, regulations under this section may contain different provision in relation to locally listed hereditaments whose rateable value exceeds, and those whose rateable value does not exceed, a prescribed figure; and a locally listed hereditament is a hereditament for the time being shown in a local non-domestic rating list. (3B) Regulations under this section in their application to a particular financial year (including regulations amending or revoking others) shall not be effective unless they come into force before 8 March in the preceding financial year.").

The noble Earl said: I beg to move Amendments Nos. 117A, 117B, 117BA and 117C en bloc. I have already spoken to these amendments.

On Question, amendments agreed to.

[Amendment No. 117D not moved.]

Clause 49, as amended, agreed to.

The Earl of Caithness moved Amendment No. 117E: After Clause 49, insert the following new clause:

("Special provision for 1995 onwards.

.—(1) In relation to any relevant period the Secretary of State may make regulations under this section.

(2) The regulations may provide that, in any case falling within a prescribed description, the amount a person is liable to pay in respect of a relevant financial year under section 39 or 41 above as regards a hereditament, or under section 46 above as regards hereditaments, shall be an amount found in accordance with prescribed rules (which may be the same as or different from the amount he would be liable to pay apart from the regulations).

(3) The rules prescribed under subsection (2) above may be framed by reference to—

1. (a) the amount (or a prescribed proportion of the amount) payable by way of a non-domestic rate under this Part as regards the hereditament or hereditaments in respect of the financial year preceding that for which the amount is to be found.
2. (b) the amount (or a prescribed proportion of the amount) which would have been so payable by the person mentioned in subsection (2) above if facts identified under prescribed rules had been the same in that preceding year as in that for which the amount is to be found, or
3. (c) such other factors as the Secretary of State thinks fit.

(4) Without prejudice to section 141(1) below, regulations under this section relating to a relevant period may contain different provision for different relevant financial years.

(5) Without prejudice to section 141(1) below, regulations under this section may contain different provision in relation to locally listed hereditaments whose rateable value exceeds, and those whose rateable value does not exceed, a prescribed figure; and a locally listed hereditament is a hereditament for the time being shown in a local non-domestic rating list.

(6) Regulations under this section in their application to a particular relevant period shall not be effective unless they come into force before 1 January immediately preceding the period; but this is without prejudice to the power to amend or revoke.

(7) For the purposes of this section—

1. (a) a relevant period is a period of five years beginning on any 1 April (other than 1 April 1990) on which lists must be compiled;
2. (b) a relevant financial year, as regards regulations relating to a relevant period, is a financial year falling within the period.").

On Question, amendment agreed to.

Clauses 50 and 51 agreed to.

Schedule 8 [Non-domestic rating: pooling]:

Lord Hesketh moved Amendment No. 117F: Page 112, line 10, at end insert— ("(4A) The Secretary of State may incorporate in the rules provision for deductions (of such extent as he thinks fit) as regards—

1. (a) the operation of sections (Discretionary relief) and (Reduction or remission of liability) above;
2. (b) costs of collection and recovery;
3. (c) such other matters (if any) as he thinks fit;

and sub-paragraphs (2) and (3) above shall have effect subject to this.").

The noble Lord said: Amendment No. 117F is little more than a drafting amendment. It deals with the amounts the charging authorities will, under rules that the Secretary of State will make, be required to pay into the national non-domestic rate pool. Clearly the amount that an authority has to pay in cannot be just the amount it actually manages to collect. That would mean that authorities would be under no pressure to pursue defrauding ratepayers to collect the money on behalf of all the other authorities which will be sharing in the pool. On the other hand, it is equally important that authorities should not have to pay in money which they could not reasonably have collected; for example, because a ratepayer has gone bankrupt.

There will need to be rules for calculating the amount authorities are deemed to have collected and are required to pay in, taking account of the various causes of shortfall in collection. We have already discussed with the local authority associations what the rules are to provide and we shall consult them further before the regulations are actually made. In particular, we intend that the rules should allow authorities in calculating their payments into the pool to offset a standard allowance for the cost of rate collection. We also intend that the pool should bear part of the cost of any discretionary relief which authorities choose to give to charities and other nonprofit making bodies under the new clauses which we discussed earlier. There may be other cases of variation in income for which allowance needs to be made.

Paragraph 4 of Schedule 8, as drafted, refers to the rules being framed so that the amount calculated under them would be broadly the same as the amount which the authority was able to collect if it acted diligently; in other words, if it made all reasonable efforts to collect the full amount owing to it. We believe that as they stand the words would have allowed us to provide for allowances for cost of collection, discretionary relief and so forth. However, to make that assurance doubly sure the amendment spells out in unambiguous words that such allowances can be made. For that reason, I would expect it to be welcomed by the charging authorities as giving them the assurance that the power is there to make the allowances as we have promised. I beg to move.

Lord McIntosh of Haringey

We welcome the amendment, but I cannot help thinking that if the Deputy Chairman had been in his place on the Benches he would have been suspicious of the phrase "little more than a drafting amendment".

On Question, amendment agreed to.

Lord Hesketh moved Amendments Nos. 117G to 117J: Page 112, line 35, leave out ("by its auditor") and insert ("under arrangements made by the Audit Commission for Local Authorities in England and Wales"). Page 112, line 37, leave out paragraph (c) and insert— ("(c) notify the amount to the Secretary of State, and send to him a copy of the certification of the calculation and the amount."). Page 113, line 29, leave out sub-paragraph (6).

The noble Lord said: In moving Amendment No. 117G, I should also like to speak to Amendments Nos. 117H and 117J. These are technical drafting amendments concerned with the arrangements for auditing the accounts of local authorities' contributions into the national domestic rate pool. I beg to move.

On Question, amendments agreed to.

The Deputy Chairman of Committees (Lord Renton)

Before calling Amendment No. 118, I have to point out that if it is agreed to I cannot call Amendments Nos. 119, 119A or 120.

Baroness Stedman moved Amendment No. 118: Page 114, leave out lines 9 to 39.

The noble Baroness said: Again, we have a rather lengthy list of amendments which have been grouped together, and I wish to move Amendment No. 118 and speak to Amendments Nos. 122, 134, 142, 143, 145A, 149, 150A, 158A, 159A, 160A, 161A and 162ZA. Having said all that and knowing that this group of amendments is also in support of county councils, I rise with a somewhat heavy heart in view of the treatment we had from the Benches opposite in the last set of amendments.

The county councils feel that there is a need to bring into being the same system for dealing with the collection and allocation of the new rates in England in line with the system proposed for Wales. What is being done at present is proposed to be done in Wales. Under the system that is proposed for Wales, the grant and non-domestic rate redistribution is made direct to counties and that means that the county levy will represent the amount that the community charge payer actually has to pay and that must enhance their accountability.

As the Bill stands, the counties in England will be obliged to precept on districts rather than raise their poll tax separately. Those registered to pay should be able to see what individual districts are spending. They should be able to see how much they are paying towards the expenditure of the county services and of the district services.

However, the revenue support grant and the non-domestic rate is to be paid into the district collection fund and counties and other precepting authorities will then precept on the collection fund for their total expenditure net of any specific grants, fees and charges. The bill received by the community charge payer will only show one community charge for the area as a whole. That means there is no direct link between an authority' spending and the composite community charge which is being levied. Therefore, the charge payers cannot see how much they are paying towards the authority's services and an authority cannot measure the impact of its budget decisions on the community charge payers in its area.

As the bill is sent out by the district councils in the shire areas, the responsibility for explaining what is to be paid lies with the district treasurers; and the link of accountability between an authority and its local residents is substantially weakened.

The Bill itself recognises the unsatisfactory nature of these arrangements. In order to cope with the possible need for additional grant to be paid to recognise exceptional circumstances arising during the year, the Secretary of State may direct that additional grant can be paid to specific local authorities.

In Wales different arrangements will apply. The grant and the non-domestic rates will be paid direct to the relevant authorities; those authorities only precepting on the collection fund for their net community charge. Therefore, the Welsh districts and counties will have their own separate community charges.

My understanding is that the Government's main argument for the collection fund approach is that it will remove the need for what they deem to be disaggregation of grant between tiers of authority—that is, the counties and the districts—and so reduce the complexity of the grant. However, neither of those ought to be an issue. The violent swings in the current grant system have been the product of the grant penalties, of rate-capping, of safety nets and high grant recycling followed later by its abolition. The intention, as I understand it, is that the new grant system will be simpler and more stable, with grant entitlements being fixed in advance of the year, a much simpler needs assessment system and the presumption against any annual changes in the methodology.

This group of amendments would introduce arrangements for England similar to those which will apply in Wales. The grant and the non-domestic rate would be paid direct into all the main precepting authorities—at this stage excluding parishes—with the collection fund remaining purely for the collection and distribution of the community charge.

I have been supplied with a couple of what are believed to be the pro formas which the authorities will send out. If they send them out from the district collection fund, as proposed in the Bill, they will have all the details of the county councils' spending, the district councils, parish councils and the collection fund, with the government assessment of spending on the other side. From the actual spending they will take away the government grant and the contribution from the non-domestic ratepayers, which will leave the community charge for the area.

On the other side, when those same items have been deducted it will leave what is estimated will be the community charge if the authorities had calculated it according to their grant-related expenditure. On the bottom of the form will be stated what is the registered population and the government assessment of population. In the example I have, there is a difference between 55,860 as the registered population and the government assessment of 58,800.

If one adopted the form which these amendments propose, and we had the same system as in England, one would have, again, the community charge bill and set out under community charges the county council community charge, the district council community charge and the parish council precept so that the persons receiving the bill could see exactly what they are being asked for together with an amount for collection fund expenses. One would then know the total community charge payable and on the other side have the government assessment which, in this case, is on the same population and shows the same deficit. At least people are able to see what each authority is precepting and it enables members of county councils and district councils to argue properly and fairly who is responsible for the rise or fall in the expenditure. If the English system can be brought into line with the Welsh proposals then the grant and the non-domestic rate redistribution will be made through the counties. The county levy will represent the amount that the community charge payer actually had to pay. I think that this will greatly enhance accountability at all levels of authority. I beg to move.

10.30 p.m.

Baroness Blatch

This is a point with which I have always had enormous sympathy. The noble Baroness, Lady Stedman, and I have attended the same meetings and we have been well briefed by one highly-regarded local government officer from my own authority. Since those meetings I have done a great deal of thinking about the problem.

I have a view about both the present system and the new one. It is that too little regard is paid to the spending levels of authorities. I am not saying this as a criticism of any local government authority, but we are terribly preoccupied with the level of rates and all kinds of comparative tables. In the present system the actual level of spending is very often masked by the complexity of the system.

One of the advantages of the new system, I believe, is that it is more simple and that it exposes absolutely everything. It exposes the spending level of the local authority, whether district or county, and it rightly exposes the involvement of government with local authorities. For example, it will expose the national government when they make a determination about the RPI and their contribution to local authorities. The proposed pro forma referred to by the noble Baroness ensures that the spending levels of the county councils are set out clearly, as also are the spending levels of the district councils. The Government's own assessment of what the spending levels should be is also set out alongside. The resultant consequential community charge is there as a figure at the end of the day.

I believe that if we return to splitting up those figures and talking about two community charges, we shall be returning to the difficulty the public anyway have in understanding local government. More than that, I believe we shall start to fuel an already attractive thought in the minds of many in the community as regards dividing and ruling between county and district authorities, which I consider to be an unhealthy step to take.

Having talked it through with officials and having gone back to my own director of finance, I am convinced in my mind that the information required by those who will pay the community charge is clearly set out in the forms, which separate district from county councils. I shall be supporting that, because I believe it is clear, although I understand the point made by the noble Baroness that it would be desirable for the counties to be treated separately. I do not honestly believe that it is going to resolve some of the problems set out. Anything that brings home accountability between the people who have to pay for the services and the spending authorities is important. This pro forma does not preclude the most important part of all, which I believe was referred to towards the end of the presentation by the noble Baroness. It does not preclude both the county and the district councils from setting out the breakdown of their spending, which will be very important.

An enormous amount of progress has been made by all local authorities in giving their electorate proper information about spending.

Indeed, they are now required to give such information. It will be for the county council to set out not only in clinical form in this pro forma what its total spending will be, but to break it down to make comparisons with what happened last year and what is to happen next year. The districts will do the same. I believe that all the information is there and the simpler it can be kept the better. I am convinced that this pro forma provides all the information in a relatively simple form.

Lord McIntosh of Haringey

I rise to speak to Amendments Nos. 119, 121, 146, 149, 151, 155 and 157 and to the amendments already spoken to by the noble Baroness. Like the noble Baroness, Lady Blatch, I have been having second thoughts. There is a real difficulty in that the Government are proposing a system whereby for Wales the grants go separately to the district councils and to the county councils, and for England they go to the district councils which set up a collection fund which is then allocated to the county councils. Clearly, whichever view one adopts as being correct, what one cannot do is to have one system for Wales and another system for England. I know that the Government will have a complex and no doubt Jesuitical series of reasons to explain that Wales is totally different from England in this respect. I do not think that we need spend too much time on them. Either the argument for accountability works better with a collection fund or it works better with the grant being separately allocated to each of the two tiers of local authority.

The argument for having a collection fund would have to stand on the basis that the allocation of grant between the two tiers was in some way artificial. I have not heard that convincingly argued so far. It may well be that there are arguments on that basis and that in consequence the community charge payers would be misled by a division of charges. I am bound to say that, having thought about my amendments, having thought about the amendments of the noble Baroness, Lady Stedman, and having thought about the objective which we must all have of achieving the greatest level of simplicity of explanation to the ratepayers, I have come to the conclusion that she is right, that I was wrong and that we in England ought to adopt the Welsh system of a separate grant rather than adopt in Wales the English system of a collection fund. For those reasons I shall not be moving the amendments standing in my name.

I appreciate that this is a difficult matter. I appreciate that it divides local authorities. For example, the Welsh members of the Association of District Councils are in conflict about this with the English members of the association. Nothing we do will please all local authority associations. The conclusion we have to draw is that perhaps it is not so important to please local authority associations. What is important is to produce the best result for community charge payers and to increase accountability. I do not think that the Government proposals do that. The Government must come down on one side of the fence or the other. I suggest that they would be well advised to accept the amendments in the name of the noble Baroness, Lady Stedman.

The Earl of Caithness

As we have heard, these amendments would change the basis of payment of the revenue support grant. There are those who would have the English system like the Welsh and those who feel that the Welsh system should be brought in line with what we have proposed for England.

I am interested that the noble Lord, Lord McIntosh of Haringey, is now changing ground on this matter. The arguments, which continue outside the Chamber as well as inside it, convince me that we have it right and I hope to persuade the Committee that what we propose for both England and Wales has been well thought out and is workable and appropriate in each case. We have proposed different systems for each of the two countries for very good reasons. The fact that we have before us amendments in favour of both the Welsh and English systems demonstrates that there are arguments for both courses.

In England there are three main problems with the present system. First, it is complicated. Very few people can understand the link between council spending, grant and rate bills, so reducing the accountability of authorities to their ratepayers and voters. Secondly, the present system is unstable. Authorities' entitlements to grant can change markedly from year to year and even within a year, often for reasons beyond their immediate control. One of the reasons for grant shifts has been any change in the priority given to services, as reflected in differential increases in spending provision. We just cannot do away with these grant shifts even though they have little effect on ratepayers. Such shifts are a by-product of our decisions about spending need and overall distribution of grant across the country.

Thirdly, the grant system provides a hidden and little understood subsidy to some regions through the present system of resource equalisation which gives more grant to authorities with low rateable value. Resource equalisation puts up the rate bills of some, entirely independent of the spending decisions of their own councils and gives equally randomly uncovenanted benefit to others. This serves to confuse accountability even further.

To overcome such difficulties we concluded that amending the present system would not be enough. We would have to make radical changes and make the grant system simpler. The key simplification is that grant will depend only on assessed need and not spending. An authority's entitlement in a year will not vary with its spending that year and certainly not with any other authority's spending. By not basing the whole local government finance system on rateable values, we do away with resource equalisation through the grant system.

Those two elements taken together mean that it will be quite clear that the size of the community charge in an area depends upon what the authorities in that area spend compared with what, in total, they need to spend. However, those elements will not alone overcome the difficulties of dividing grant between tiers. When we came to consider this, we realised that there is another simpler way of looking at grant and that is to consider it as a payment in support of the local domestic taxpayers of an area. If there were no grant and no business rates, local domestic taxpayers would have to finance all of the expenditure of the authorities providing services in their area. That would be a heavy burden which would fall unfairly as between areas of high and low need.

So grant and business rates are paid not so much to help authorities as to support local community charge payers and so reduce the amount they personally have to contribute. The relationship between the taxpayer, as provider of revenue support grant, business, and the charge payer is embodied in the concept of the collection fund.

As my noble friend Lord Glenarthur explained when we were considering Part II, a collection fund will be established for each area. The fund will receive revenue support grant and community charges and the non-domestic rates for the area. Local authorities will make demands for their revenues on the collection fund. Such demands represent the costs of the services that the authority is providing; costs which will have to be met by the charge payers supported by the taxpayer through grant, and business, through NNDR. This arrangement means that charge payers will be able to see clearly the full cost of local services. I know that my noble friend Lady Blatch believes that to be an important consideration. Indeed, I was most grateful for her contribution to the debate.

While it would be possible to achieve some of this with a system which paid grant and NNDR to each tier of authority, we would nevertheless be faced with the technical problems of dividing up every stream of income which under our proposals goes into the collection fund—that is grant, NNDR and the charge—between all the authorities in an area. That would at once begin to complicate the system all over again.

It has been suggested that the system would encourage greater accountability if each authority set its own charge, taking account of its spending and its own share of grant and NNDR. I disagree. Not only would we have the technical problems that I have just described, but it would mean that each tier of authority would spend as much time worrying about whether it was getting its fair share of grant as about its actual spending and the level of services it provides. This happens under the present system. All it does is generate a lot of misplaced effort by authorities trying to show that the district, or the county as the case may be, is getting too much and they are getting too little.

Under the collection fund arrangement, income will not be hypothecated. It will all flow into one big purse and each authority will draw what it needs without having to worry about whether the money comes from the taxpayer, the charge payer or business. What that does is put the major focus where it belongs—on the actual level of spending compared with need—because it is spending which will determine the final level of the charge. If charge payers see that the charge they are being asked to pay is £20 more then the national norm for spending at need, they will be able to see that this is not due to the level of business rates or whether the district is getting more or less grant, but because the authorities in that area are spending £20 per adult more than they need to. We intend that on the charge demand note the charge payer will be able to see which authorities are responsible for that £20 and how much each contributes to it.

So far I have spoken chiefly about grant, but many of the amendments we are considering relate to NNDR. Similar issues arise here. Once we had decided that grant should not be divided between tiers but put into the collection fund it was clearly right that NNDR should be treated in the same way. Paying NNDR and grant into a collection fund avoids the majority of the problems which have plagued the present grant system in England. More importantly, it forces the debate to focus on spending as the real issue underlying questions about the level of community charge.

That outlines the system which will apply in England, but we do not think such radical change is needed for Wales. The noble Lord, Lord McIntosh of Haringey, has proposed that NNDR should be paid into a collection fund in both England and Wales rather than to counties and districts in Wales. We have proposed a different arrangement for Wales because the position there is in our view quite different. In most respects, the new grant system in Wales will be the same as that for England. There will be a separate distribution report in Wales, and each year a separate revenue support grant report; but in Wales NNDR and grant will be paid separately to county and district councils.

Wales has a less complex system of local government, and has its own separate and different grant arrangements at the moment. I do not see the logic of the noble Lord, Lord McIntosh, when he says that they should be the same. By and large these have worked very well in the Principality. A system of needs distribution has evolved in discussion with the local authority associations there, which is simpler and more stable than the equivalent one in England. In addition, there is in Wales a closer relationship between local authority spending and assessed need. There have not been the year-to-year fluctuations of grant between tiers, partly because in Wales grant is split between districts and county councils on a tier basis rather than a service basis, as happens in England. Nor has there been the acrimony between districts and counties about shares between tiers which has at times characterised the English scene. So, in Wales, the system has worked well up to now on the basis of splitting grant between district and county councils and there seems little reason to change those arrangements.

Disaggregating grant and NNDR allows the charge payer to see how much of the community charge which he or she pays goes to each tier of local authority; but in Wales, as in England, it is important that charge payers should also be made aware of actual spending per head compared with assessed need, and that information will also be provided in Wales with the charge demand.

Despite the conviction with which the noble Baroness and the noble Lord have argued their case this evening they have not made me doubt that we are correct to propose two different solutions for the two different sets of problems in England and Wales.

There have been two sets of amendments backing each of the different arrangements, which shows that this place recognises that each arrangement has its merits, although, as he said, the noble Lord is shifting on that point. From outside government there has also been recognition of the benefits of both systems. The Association of District Councils has welcomed the proposal not to pay grant to two tiers and has asked why the Welsh system cannot be like the English. The Association of County Councils has asked why the English system cannot be like the Welsh. We believe that this is very much a case of horses for courses and we have drawn up these different arrangements to tackle different problems.

Baroness Stedman

I thank the Minister for giving us such a comprehensive reply so late in the day. It was rather much to take in. I should like to read what the Minister said to see whether we can come back to the matter at a later stage.

Can the Minister now say whether there will be a standard way in which the charge will be sent out? Will it be obvious from that how much of the costs are attributable to county services and how much to district services? If not—if it is to be a general bill on the whole of the services—I can see a great deal of passing of the buck between one authority and another, either placing the blame or taking the praise for whatever they have done.

Whatever system finally evolves—it looks as though it will be the one already in the Bill—I hope there will be a standard form when it is sent out to the charge payer, and that it will be obvious from that form which expenses go to which authority and for which services those authorities are responsible.

The Earl of Caithness

The noble Baroness and I are on common ground; that is exactly what we seek to achieve.

Baroness Stedman

In the interests of saving time I shall withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 119 not moved.]

The Deputy Chairman of Committees

Before calling Amendment No. 119A, I must point out that if it is agreed to I cannot call Amendment No. 120.

The Earl of Caithness moved Amendment No. 119A: Page 114, line 21, leave out sub-paragraph (6) and insert— ("(6) The relevant population in relation to an authority shall be calculated by—

1. (a) taking the number of those members of the population of the authority's area who fall within such description as is specified in regulations made by the Secretary of State, and
2. (b) making such adjustments (if any) by way of addition or subtraction (or both) as are specified in, or calculated in a manner specified in, the regulations.").

The noble Earl said: I beg to move Amendment No. 119A and at the same time speak to Amendments Nos. 122A and 130A. Doubtless my noble friend Lady Gardner of Parkes will move Amendment No. 120 and I shall therefore respond to her after she has moved it. Our aim is so to define "relevant population"—

Lord Sandford

Perhaps I may interrupt my noble friend. I think the noble Lord the Lord Chairman said just now that if Amendment No. 119A was carried—and I imagine my noble friend Lady Gardner intends to move her amendment, No. 120—it will pre-empt Amendment No. 120. I should have thought that it would be for my noble friend Lady Gardner to speak to her amendment in the discussion on the noble Earl's amendment.

The Deputy Chairman of Committees

The noble Lord is quite right.

The Earl of Caithness

I am sorry, I think I said that my noble friend would move her amendment. What I meant was that she would speak to it. My noble friend is absolutely right.

Our aim is to so define "relevant population" that it is a fair representation of the tax base for community charges. These government amendments are to ensure that we have the powers to make regulations that allow us to fulfil that aim. Our amendments will allow my right honourable friend to make regulations which will enable the definition of "relevant population" to reflect for example that students pay 20 per cent. of the community charge. I am sure that Members of the Committee will agree that it is appropriate to reflect these in the definition of "relevant population". We shall in due course be talking to the local authority associations about the fine-tuning of the definition in the regulations.

We intend that the same definition of "relevant population", broadly reflecting the taxable capacity of the area concerned, should be the same for all aspects of the new system of local government finance. "Relevant population" will therefore be the basis on which a precepting authority apportions its precepts among the charging authorities in its area. This is provided for in Clause 76 and Amendment No. 130A relates to this matter. Likewise "relevant population" will be the basis on which contributions from the NNDR pool are distributed and Amendments Nos. 119A and 122A relate to this. "Relevant population" will also be the basis on which we distribute revenue support grant and this will be specified in the distribution reports we shall be making under Part VI of the Bill.

These amendments will give us the powers we need if we are to define "relevant population" in the way I have described and I commend them to the Committee. I beg to move.

Baroness Gardner of Parkes

Is this the appropriate moment for me to speak to Amendment No. 120? I listened to the Minister's comments on Amendment No. 119A, but I am not sure that they really make any difference to my own view and to my wish to see my amendment agreed to rather than that of my noble friend. I am somewhat concerned that although this amendment gives all sorts of powers according to the regulations, nothing is spelt out or in any way made clear as to what that means. As those regulations are not before us and nothing is known about them, it makes it very difficult to comment on that point at this stage.

The Minister, in speaking to his amendment, asked me to declare an interest in Westminster. I do this without hesitation. I have just recently finished my year as Lady Mayoress of Westminster. My husband is an elected councillor. I am a resident of Westminster and one of those poor unfortunates who will pay a very high community charge by comparison with other areas after this Bill comes into force. I think the situation of Westminster is very different from that of anywhere else in the whole country save the City of London.

The Government have recognised that the City of London is a special case, but they have made no recognition whatsoever of the particular problems which will face the City of Westminster under this Bill. The City of Westminster is not opposed to this Bill, but it does believe that there should be fairness to its ratepayers and to those who will meet its community charge. Westminster has an adult resident population of 150,000 people. It has a daily commuter population—a working population—of an additional 400,000 people. Even the City of London has a working population of only 300,000.

I see that the Chief Whip has come into the Chamber. I should say that not only do I wish to speak but a number of others do, too. This is an important amendment and I should like to clarify the position as regards whether we are going to deal with the whole amendment tonight. We certainly do not want to hear just half of the speakers. I know that there are at least 10 or 12 other speakers who want to speak and who will be happier to be here on Monday. Perhaps the Chief Whip would prefer that. I defer to the wishes of the Committee on this matter. It seems that I am to continue.

Lord Denham

As my noble friend has particularly mentioned me, I should say that the agreement is that we do not go beyond 11 o'clock tonight. If we can get this through by 11 o'clock we shall of course do it.

Lord Ponsonby of Shulbrede

The position of course is that we have already started to debate Amendment No. 119A in the name of the noble Earl, Lord Caithness, and we must finish our debate on that amendment.

Baroness Gardner of Parkes

I thank the Members of the Committee for their comments. The latest figures that are available are the 1981 figures from the Office of Population Censuses and Surveys. That means that even the figures I am quoting will be almost 10 years out of date by the time the Bill comes into force. But it is clearly very unjust for 150,000 people, through their community charge, to bear the very heavy expenses of the services that have to be provided not only for themselves but for the additional 400,000 people a day. Westminster City Council gets no rate support grant, and indeed it pays an equalisation levy to help poorer boroughs in London of £77 million. But there is an assessment for—

Lord Denham

Will my noble friend give way just for a minute? We are actually discussing Amendment No. 119A. I think that my noble friend is discussing a later amendment which is grouped with that.

Lord Ponsonby of Shulbrede

The position is quite clear. We are discussing the amendment standing in the name of the noble Earl, Lord Caithness. If this amendment is carried, then Amendment No. 120 cannot be called.

Lord Denham

I have a guarantee from the Members opposite that the Committee will not sit later than 11 o'clock tonight. If we can get somewhere near 11 o'clock, or well before a quarter past, that is fair enough. But if not, I think we shall have to adjourn at this moment.

Lord Carr of Hadley

There are very important issues to be raised here. I certainly wish to support—not oppose—the Government's amendment; but before I support it, and certainly before one is prepared to be satisfied by it, we need to get answers to questions which can only be raised by a proper discussion of Amendment No. 120. It would not be satisfactory to be cut short. I say that particularly as those of us concerned with this amendment made it clear (in ways it is possible to make clear) that this is a probing amendment that we did not wish to force to a Division, if only we could have the opportunity to raise the questions and get answers to them.

Lord Denham

Perhaps I may say that when the House is sitting on a Friday, we cannot sit much beyond eleven o'clock on a Thursday night. Obviously, if we had known that the amendment was going to take this amount of time, we would not have begun our discussions on it. If we adjourn the House now, the amendment can be considered afresh when we are next in Committee on the Bill. I apologise to my noble friend and other noble Lords who have already spoken on the amendment. However, I believe that we should start afresh when we next consider the Bill. I beg to move that the House now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at eleven o'clock.