HL Deb 24 May 1988 vol 497 cc772-5

2.54 p.m.

Lord Taylor of Gryfe asked Her Majesty's Government:

Whether they intend to delay the proposed introduction of the uniform business rate in 1990–91, and if so, what steps they will take during the interval to remove the anomalies which at present disadvantage the Scottish business community.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

My Lords, the Local Government Finance Bill provides for the introduction of uniform business rates in England and in Wales from 1990–91 but we have always made clear that the extension of a uniform business rate to Scotland cannot be contemplated until non-domestic property north and south of the Border is valued for rating purposes on a comparable basis. In the meantime all Scottish business will benefit because from next year non-domestic rate poundages will be subject to index-linked ceilings.

Lord Taylor of Gryfe

My Lords, while I welcome the statement about an index-linked ceiling, will the Minister agree that it makes no contribution whatsoever to removing the glaring anomaly in which an industrial plant based in Scotland pays £9 million in rates but if it were situated south of the Border in Carlisle or Newcastle its bill would be £1.5 million in rates? Can the Minister give Scottish industry any hope that there will he a degree of harmonisation in valuation which will take care of such anomalies?

Lord Sanderson of Bowden

My Lords, as the noble Lord, Lord Taylor of Gryfe, knows because he was present at the passing of the Scottish Act, discussions had to take place as a first stage between the Inland Revenue valuation office and the Scottish Assessors' Association. Progress in those discussions has been significant. Perhaps I should draw your Lordships' attention to the simultaneous revaluations in 1990, which will be a major step not least because they will help to clarify the extent to which differences north and south of the Border arise from different valuation practices.

I am very well aware of this particular issue, which is germane to the fortunes of Scottish industry. I think that the noble Lord will understand from my reply that the first steps have been taken. I shall be happy to elaborate on those further should the noble Lord wish.

Lord Jenkin of Roding

My Lords, is my noble friend aware that the noble Lord, Lord Taylor of Gryfe, is treading on dangerous ground in calling for harmonisation between England and Wales and Scotland? Is it not the case that the amount of government support per head of population in Scotland is some 27 per cent. higher than in England and Wales? When my noble friend is considering harmonisation in the interests of some of the hard-pressed areas of the North of England will he bear that fact in mind?

Lord Sanderson of Bowden

My Lords, I do not think that this is the time or the place to go into a Scotland versus England and Wales debate. However I appreciate what my noble friend has said. I have to say to him and to others that the one thing that has to happen before we can have a unified business rate which will be effective north and south of the Border is for harmonisation to take place. That could well lead to legislation but I am very happy to report that so far the discussions between the two bodies have gone extremely well.

Lord Carmichael of Kelvingrove

My Lords, the Minister will recall that during the discussion of the Scottish Bill on the community charge great concern was expressed because the last revaluation in England had taken place about 15 years ago and because of the passage of time the necessary skills had been lost. Therefore, although Inland Revenue staff and Scottish assessment people are getting together now, a very large body of others will need to be trained for the mammoth task of harmonisation. Is the Minister sure that they will be available in the year 1990, when the harmonisation becomes imperative?

Lord Sanderson of Bowden

My Lords, while I thank the noble Lord for that remark, I am very well aware of the amount of work that has to be done. Perhaps I may elaborate on the steps already taken, which will indicate the direction in which we are going. First, those bodies have looked at the handling and interpretation of rental evidence to ensure that it is in line north and south of the Border. Secondly, they have identified certain classes of subject where there have been differences of practice—namely, racecourses and petrol stations—with a view to developing a more common approach.

Thirdly, they have studied in detail the operation of the contractor's principle. As the noble Lord, Lord Carmichael, will be aware that is one of the biggest problem areas to be faced and could perhaps lead to legislation. They have identified the major underlying causes of the differences. One of the differences is decapitalisation rates and the Government are considering whether the rates should in future be prescribed on a Great Britain basis.

Finally, there is the whole question of plant and machinery and the valuation thereof and the differences north and south of the Border. That is a very complex area. While I thank the noble Lord for indicating that it will mean a lot of work, I think that the principles of achieving a unified business rate north and south of the Border are well understood and we are well on the way to removing some of the difficulties.

Baroness Gardner of Parkes

My Lords, will the Minister say whether the same injustices will occur with the uniform business rate in Scotland in large cities with commuter populations? Or will the problem arise only in London and the South, where inner cities will be adversely affected by low resident population and high commuter population and the full business rate will go into a central pool?

Lord Sanderson of Bowden

My Lords, I thank my noble friend for her question. I think that that is a matter which ought to be addressed during the debate of the Bill presently before your Lordships' House. So far as concerns Scotland, as noble Lords will know, at the moment the basis of business rates—which will have ceilings applied to them—is regional.

Lord Stodart of Leaston

My Lords, harking back to the last question, may I ask my noble friend whether he is advocating unity or uniformity?

Lord Sanderson of Bowden

My Lords, I am advocating a sensible arrangement north and south of the Border so that business both north and south of the Border will be able to prosper. The rates will be those which can be paid by business and not those that some people think that business should pay.

Lord Parry

My Lords, as regards the issue of comparative funding raised by the noble Lord, Lord Jenkin of Roding, will the noble Lord accept that that is something which, even though it is accidental, we appreciate very much when there is some benefit to Wales and Scotland as distinct from the English regions? Does he appreciate that there is a very serious reason behind this: that the fundamental basis of the economies in those countries of Wales and Scotland has been so badly eroded that some difference in funding is only to be expected?

Lord Sanderson of Bowden

My Lords, I thank the noble Lord for his question. I hope that he will be in his place tomorrow when I shall have something to say to the House about the Scottish economy.

Lord Parry

My Lords, I can assure the Minister that I shall be in my place.