HL Deb 23 April 1991 vol 528 cc149-62

3.48 p.m.

TN Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch)

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for the Environment on the local government review. The Statement is as follows:

"With permission, Mr. Speaker, I will make a Statement about two consultation papers which the Government are publishing today on the structure of local government in England and on our proposal for a new council tax to replace the community charge.

"The consultation paper on local government structure builds upon the announcement which I made on 21st March. As I made clear then the Government intend no significant changes in the structure of local government in London or the metropolitan areas. In the remainder of England today services are provided both by county councils and by district councils.

"The Government believe that this structure of two tiers needs to be re-examined for the following reasons. First, unitary authorities are more clearly responsible for the delivery of services and more clearly accountable for the bill local people are expected to pay. Secondly, two tiers may lead to excessive bureaucracy and duplication of effort.

"Thirdly, the Government are committed to develop the concept of enabling authorities. Councils will increasingly be able to take advantage of competition between those seeking to provide a service. It is therefore less important today to insist on councils of a particular size. Fourthly, the Government intend to increase the momentum of their existing policies to enable decision-making and responsibility to be more directly in the hands of the people. Fifthly, the present structures of local government do not universally win favour with local people who have their own ideas about what sort of structure would better reflect local loyalties and communities.

"We therefore propose to establish a body to draw up recommendations for improving the structure of local government area by area taking account of local views and the costs and benefits of the change. The local government commission which we propose would consult on its recommendations and submit them to the Secretary of State. Final decisions would rest with Parliament.

"The Government do not intend that either county or district councils should be abolished wholesale. In some places it may be best for existing authorities to be merged; in others, the best approach may be to create or re-create quite different authorities. In some areas there may continue to be two tiers. In all cases the Government will expect a proper regard for economy and effectiveness of service delivery to feature in any new arrangements. The consultation paper maps out how this process would work and invites views.

"The second paper sets out the details of the council tax with which the Government intend to replace the community charge. Subject to consultations, that will be in 1993.

"The House will know that the Chancellor of the Exchequer in his Budget announced a significant reduction in the amount of local tax revenue to a level which the Government believed should be maintained in the longer term. In consequence, the new tax will need to raise less than either the rates during their last years or the community charge during its first. So average bills can be substantially lower than the last average rates bills or the average community charges paid last year.

"The council tax will have a property and a personal element. Each household will receive a single bill on the assumption that it consists of two people. Households with only one adult will be entitled to a 25 per cent. personal discount. This means that 90 per cent. of all adults will be taken into account in household bills. It is therefore not the Government's intention to provide for supplements for households with more than two adults. There will be no need for a register of council tax payers. Since each household will receive only one bill, the tax will be easy to administer. The amount of council tax payable will vary according to the value of the property, but will vary only within a limited range.

"Properties in England will each be allocated to one of seven bands. There will be no need for precise valuations of every house or flat, nor need there be regular general revaluations. People in the lowest band of property will pay about two-thirds of those in a property in the middle band in the area. Those in a highest band property will pay about two-thirds more than those in the middle band in the area. This means that a household in a highest band property will pay about two-and-a-half times as much as those in the lowest band. We shall avoid the very high bills which discredited the old rates.

"Each year the Government will announce for each band the amount of council tax necessary for a council to provide a reasonable level of service. The grant mechanism will remain broadly unchanged. This year a council which spent reasonably would have charged a household of two or more people in the top band property no more than £668 and such a household in a lowest band home no more than £267. This year households with one adult would have paid no more than £501 in the top band and no more than £200 in the lowest band.

"People on low incomes will receive rebates in addition to any discount to which they are entitled. There will be no minimum contribution to the council tax. The maximum rebate for those at the income support level will be 100 per cent. Students, student nurses, apprentices and YT trainees will be automatically entitled to personal discounts.

"The council tax payable will relate to how much the council spends. Where councils spend more, all households will have to pay more. The same percentage increase will apply to all household bills. Similarly, the benefit of low spending will be passed through to all council tax payers. The Government will restrain increases in local authority spending through capping. The threat of capping has been effective this year and we shall ensure that we have the powers appropriate to the new tax. We shall ensure that no one faces an unreasonable increase in their bill between one year and the next as we change to the new system by the use of appropriate transitional relief.

"Following the conclusion of our consultations in mid-June, it is the Government's intention to introduce legislation to give effect to the conclusions in the next Session of Parliament. Copies of the consultation documents and examples of council tax bills are available in the Vote Office and in the Printed Paper Office and are being sent to all local authorities and their associations today.

"The council tax will be simple and cheap to collect. It will require less of single adults than larger households. It will not impose excessive demands on any household. It will make a very clear connection between what councils spend and what people pay. It will be seen to be fair. I commend these proposals to the House and the country."

My Lords, that concludes the Statement.

3.55 p.m.

Lord McIntosh of Haringey

My Lords, the House will be grateful to the Minister for repeating the Statement which was made in another place. I hope that I shall be forgiven if I spend very little time on dealing with the matters of structure. I propose that my noble friend Lady Hollis should ask questions about and make comments upon that consultation paper.

However, from the outset, I should like to say that the Labour Party both nationally and locally will take part in the consultation procedure on the structure paper. There is one proviso; namely, that during this period there should be no further moves towards centralisation of local authority services. In other words, the Government must not jump the gun and proceed to diminish the powers and responsibilities of local authorities while the consultation procedure is taking place. On that basis, I believe it is right that we should participate in the consultation on the structure paper.

As regards the taxation paper, the issue is very different. I say that because the Labour Party has a proposal before another place. We have a well-drafted and perfectly well worked-out Bill which shows that it is possible to move to a fairer system of local authority taxation by 1992. If the Government wish to adopt a fairer system as quickly as possible, they will adopt the Bill put forward by my right honourable and honourable friends and then all of us will be in perfect harmony. However, I fear that they will not do so and that we shall have to subject the taxation paper to three major modes of judgment.

First, we must ask whether the Government's proposals are fair and certainly whether they are as fair as the fair rates proposals which the Labour Party has publicly and clearly put forward. Secondly, we must ask whether the Government's claims that their proposals are simple are justified; and, thirdly, we shall have to look at the timing and make a judgment as to whether such proposals are being introduced as speedily as they might be.

I shall deal first with the fairness of the system. Perhaps I may point out in passing that we have had the consultation papers for only 15 minutes and therefore anything we say about them will be provisional and possibly indeed inaccurate. However, we understand from the finance part of the Statement that the ratio of the highest value properties to the lowest value properties will be in the order of 2.5:1. That means that the proposed system will be less progressive than even the rates system was in the past.

It is well known that the rates system was less progressive than the income tax system. I have no doubt that the Liberals will have a word or two to say about that aspect. In effect, it means that the very rich are being protected at the expense of the very poor. The very rich will be the dukes—to repeat Mr. Ridley s analogy which was so helpfully used by the noble Earl, Lord Onslow—who will pay a little more than the dustman or the head gamekeeper but not as much more as we, or even the noble Earl, Lord Onslow, think that they should. In other words, relative to other taxation systems, this is still a pretty regressive form of taxation because of the way in which the banding procedures are being adopted.

In other ways, what is proposed is a significant advance. Noble Lords will recall the debates on the Local Government Finance Bill when we spent many hours discussing the issue of accountability, arguing with the Government that it was not necessary for everyone to pay something—a minimum 20 per cent.—to achieve accountability. We have won that argument. We spent many hours arguing the case for student nurses. We won that argument in a vote only to see it overturned by another place. We have also won that battle. So far as student nurses are concerned, we might say that we have won the war. We argued strongly that the poll tax collection costs—even if nothing else was wrong with the system—put it out of court. Now, as I look at the appendices to the consultation document, it is clear that the collection costs for the new system are estimated to be 40 per cent. of the poll tax collection costs. So everything we said about the incompetence and wickedness of the poll tax has now been proved to be true.

With all the changes, this tax will still be unfair. It will be more unfair than it needs to be. It will be more unfair than the rates and more unfair than income tax.

The Government make wide claims for the simplicity of the new tax. They say that because of the banding principle there will be no need for detailed valuations. Yet when we look at the consultation paper in more detail, it is clear that each property will not just be put into a band. I ask the Minister to consider whether those who find themselves at the very bottom of a band will not appeal to be put into the top, of a lower band, which will mean just as much argument, debate and controversy. The bands will have to be consistent across the country even though they are drawn up locally. That means, as the consultation paper says, that the Inland Revenue valuation department will be involved. When we come down to it, I am pretty sure that it means that we shall have a Valuation system just as we had with the rates. It is not clear whether it will be a capital valuation system, a rental valuation system or a rebuild cost valuation system. Those three systems are discussed in the consultation paper. They are all rubbished. In other words, their disadvantages are pointed out.

The Government seem to think that they have found a philosopher's stone by banding and have got away from all the difficulties of each valuation system. I can assure the Government that that is not the case. One does not turn base metal into gold by making the definition of gold a little less rigorous than in the past. In terms of simplicity, if it is the Government's case that they are avoiding valuation, I can tell them that that is not so.

The Government also claim that the tax will be simple because there will be no need for a register. A register will be required to discover whether there is one or more than one person in a household. What will that register be? It is more than likely that we shall not have a poll tax in the strict sense but a tax based on the electoral register, which is the poll tax principle. Only the electoral register will tell us whether there is more than one adult living in a household. Some procedure will have to be designed to guard against those who choose to pretend that there is not more than one person in a household or even those who choose to go camping on the night when it is decided how many people there are in the household. There is no philosopher's stone here either. There is no possibility of avoiding the need for verification of the number of adults in a household. To that extent also, the Government's claims for the new system are wildly exaggerated.

Finally, I come to the question of how quickly the tax can be introduced. We have a proposal before Parliament. If that proposal is adopted, we can proceed and join without difficulty in the consultation about what follows. But, since the Government are determined not to do anything effective before 1993, I fear that our reluctance to participate in that part of the consultation must stand. If the Government propose to introduce legislation in November of this year, that means that if they want to get it through by 1992 and implement it in 1993—it is a tight timetable anyway—they will have to forswear any idea of an early general election, but perhaps, for obvious reasons, they have forsworn that already.

Lord Ross of Newport

My Lords, I thank the Minister sincerely for repeating the Statement made in the other place. We welcome the proposal for a commission to be established to review the current structure of local government. We have much in common with the proposals within the document although the omission of London and the metropolitan areas is a grave mistake. London cries out for some type of overall authority, free from Whitehall domination.

With regard to local government finance, we are obviously disappointed that a local income tax has been rejected by Her Majesty's Government. Is the Minister aware that a local income tax seems to find favour with the majority of the electorate, especially as it takes into account the ability to pay, and could, with a little help, be introduced in the next financial year? At least the banded tax proposal, if it is to be based on capital value, accords roughly with the Layfield recommendations made at a time when property values were not so volatile as they are today. That in itself, as the noble Lord has just said, will cause enormous problems for valuation officers. There will have to be some type of a list; otherwise how will people find out which band their property has been placed in? Some people may want the property lifted a band if they want to sell their property. They might want a higher price put upon it.

The method proposed will continue to expose a number of unfairnesses well known to Members of the House and clearly explained by the noble Lord. If the Government are to implement their proposals and if local government is to be able to operate with any degree of sanity, any further change will be totally irresponsible. But why, oh why, the rush? It is important that we get it right this time. There are some in the House, especially on the Labour Front Bench, who believe that we should move into some type of regional structure and remove a great deal of the power from Whitehall.

We continue to regret the capping restraints. We consider that the sooner an electoral system based on proportional representation and annual elections is introduced the better it will be for all. That would at least enable the present over-centralisation of power to be reversed drastically. It could only be of great benefit to the nation.

In conclusion, can the Minister give any indication of what the average community charge is likely to be next year? Will she confirm that VAT is to continue at 17.5 per cent.? I understand from the Budget that it is for one year only.

Baroness Blatch

My Lords, I am grateful to both noble Lords for giving a cautious welcome to parts of the Statement. The noble Lord, Lord McIntosh, spent some time looking backwards. We believe that the whole Statement is about looking forward. His idea of looking for a fairer alternative has a hollow ring about it. As I understand it, the noble Lord and his party would return to the old rates system with a 1973 base. As we all know, that was grossly unfair and is almost 20 years out of date. It would go on with all its unfairnesses.

If we are to believe him, Mr. Bryan Gould has categorically stated that there would be no transitional relief. It would apply to the uniform business rate but not to domestic rates and therefore with all the iniquities and inequities there would be no transitional relief scheme, and that could be a problem. Not only that, but we would then go in for wholesale revaluation, not only on one basis but on capital values, rental values, rebuilding costs and repair costs. All four aspects would be built into the valuation system.

Further, if we are to believe what is said in Fair Rates, there would be a rolling, annual revaluation which would get us away from fluctuations every five years. Annual revaluations on the basis of four different factors would be extraordinary and unbelievably bureaucratic. To end it all, there is a commitment to no limits on local authority expenditure. Suppose this year we had had no limits on local authority expenditure. It is quite interesting that in all its calculations the Labour Party has taken spending this year as a basis for the amount of money that it would raise. However, it is only with the Government's capping system that we have a sensible basis for spending this year. If the Labour Party had been in power, spending would have been let rip all over the country in Labour-controlled authorities. That would be the basis on which it would create its system.

Thus, on any count the system is fairer and simpler. Yes, we have left for consultation the specific way in which houses will be valued. However, they will be valued in one way and for the purpose of putting houses into a band. Once in that band of course there would be an appeals system which would have to work. We suspect that there would be fewer appeals by people to go up a band than to go down a band.

The noble Lord's revaluation system would be extremely sensitive, and a difference of £1 in rateable value would be substantial. There would be fluctuations on every single property. By having seven bands the stability of people on one band relative to another would last a good deal longer. Revaluations would not be required on anything like the scale suggested by the noble Lord. If house prices increased, then any one band in relation to another would rise. If they went down, again the relative difference between bands would also go down.

The argument on simplicity is well won by this Statement. The argument on fairness is also well won by it, unless the noble Lord says that those in the highest band are not being charged enough and that he would levy an even higher rate on those people. We await more details; a considerable amount of detail in the noble Lord's alternative is lacking.

The noble Lord, Lord Ross, first gave a welcome to the commission. I know that he and his colleagues have said on a number of occasions that it is time to review the two-tier system of local government. That was a strong message which came to the department as a result of the review being set in train. It is important. I note what he says on London and hope that he will read the chapter on it. We still believe that there is room for improvement in arrangements for London government. It is our view that we do not wish to create a one-tier overall London government.

The noble Lord asked, slightly provocatively, "Why the rush?" We have spent some weeks listening to everyone asking, "Why are we waiting?" The Statement is here. I believe that by all judgments, given that there is no perfect answer on how to raise local taxes, it is fair, it is simple and it will be considerably easier to collect. Most adults in the country will be taken into account in the pricing of the charges on properties.

Lord Boyd-Carpenter

My Lords, can my noble friend say a little more about the system of appeals in respect of banding? To whom will those appeals lie? What will be the points relevant to them? Can she also say whether in the system of discounts to which she referred there will be a special system for students? Many people feel strongly that the student is in a special position in the context of local taxation. They hope very much that there may be a system of discounts for students.

Finally, will my noble friend allow me to say how glad some of us are that these proposals involve relating the amount that people have to pay to local government spending? It seems to repeat one of the merits of the older system, that when people vote in local government elections they will vote either for more or for less public expenditure which they will have to meet. Is my noble friend aware that this system seems on the face of it to have considerable merits? Nevertheless, it is obvious that we shall want to discuss it fully when the Bill comes before your Lordships' House.

Baroness Blatch

My Lords, first I thank my noble friend for his comments which I imagine he made only on the basis of what has been said so far. I have considerable confidence in his being just as complimentary when he has studied the detail.

There will be a system of appeals. The details still have to be worked out, but anyone who believes that they have been wrongly banded will have grounds for appeal. A judgment will have to be made as to whether the evaluator has made a right or wrong decision. It will be for the local valuation office to make sure that there is consistency not only locally—a point which the node Lord, Lord McIntosh, raised—but across the country. There must be consistency, and anyone who appeals will have to be measured against that consistency.

My noble friend also raised the question of students. There will be a discount for students, student nurses and young people on YTS courses.

As for accountability, it will be clear that an authority spending above the standard spending assessment will levy extra costs on its ratepayers. An authority spending below its SSA will pass on a direct benefit to ratepayers. Thus there will be a clear exposition of what an authority is doing in terms of its spending. I believe that that answers all my noble friend's questions.

4.15 p.m.

Baroness Hollis of Heigham

My Lords, as my noble friend Lord McIntosh said, we on this side of the House welcome the consultation paper on local government structure. It is right that in the document there should be no tidy uniformity, provided the Minister will give an undertaking that there will be no gerrymandering. It is also right that the new local authorities should relate more closely to the communities with which people identify. Recent research shows that three times as many people know their district councillors as their county councillors.

It is also right, as the document states, that local government should be fully accountable for its services and bills. As the Minister must accept, that makes a presumption against poll tax capping. It is right to emphasise the role of an enabling authority and therefore the move away from mere size as determining the basis of the dimension of the local authorities. It is right to give a presumption in favour of unitary authorities so that people will at long last know who does what, at what cost and to what standard. All this is to be welcomed and makes a presumption in favour of district councils being, so far as possible, the new local authorities.

However, some questions remain for me to ask the Minister On the first point made by my noble friend Lord McIntosh, may we have an assurance from the Minister that in the meanwhile there will he no further undermining of local authority functions? If education and the police are stripped from local government and if there is further compulsory competitive tendering, much of the proposals will be an empty exercise. What would be welcome is for the Government to consider whether other related functions such as community health may be brought back again into local government.

My second question to the Minister is this. Will the Government use this opportunity, particularly with the unitary authorities, to consider—as many of us including the noble Lord, Lord Rippon, have urged—signing the European Charter of Local Self-Government, with the principles of subsidiarity and general competence? As the Tory Association of District Councils urged, this will bring us into line with the Europe of 1992.

Thirdly, will the Minister think again about the implications of her timetable? After a quick look at the document it seems as though, first, the local government commission has to be appointed; then it must give the outline series of proposals for a structure. Then local authorities will be invited to produce alternative proposals; after which the local government commission will make its recommendations. After that, there will be public consultation, and, finally, the Secretary of State will decide. Then there will be legislation. All that will take place within six months. I suggest to the Minister that, with all the good will in the world, that will probably be an impossibly tight timetable. However, we shall do our best to help it along.

Widdicombe said that local government is government by communities, not of communities. Over the past few years with charge capping, revenue and capital controls and court actions, the Secretary of State has turned himself into the majority vote in every local authority in this land. If by the proposals in this document today the Minister is saying that the Secretary of State proposes to return moral adulthood to the citizens and communities of this country, this structural review will have our full support.

Baroness Blatch

My Lords, the noble Baroness began her remarks by saying she thought there should be a presumption in favour of district councils. I must make it clear right at the outset that we are not pre-empting the outcome of the consultative phase. We do not presume in favour of any single tier of authority. The noble Baroness made a statement about district councils and perhaps she will stand by it. We are not pre-empting the work of the commission, and there is no prescription from the outset. It will be a question of identifying communities of common interest and identifying what is appropriate for different parts of the country.

The noble Baroness asked me whether I would give an assurance that there would be no further undermining of local authorities. I disagree profoundly with the assumption that the noble Baroness made that there has been such undermining. That is the view of the noble Baroness, but I do not agree with it. There is to be a paper on functions, but there is no threat as regards the proper and effective delivery of services. However, I do not wish to give assurances today on the outcome of the consultative stage on all the issues concerned.

The noble Baroness also referred to compulsory competitive tendering. That system has been successful when it has worked well. I am afraid there is still considerable resistance to the process, but that is changing by the day. We believe that competitive tendering has considerably benefited services. We shall review that measure. My right honourable friend the Prime Minister has already stated publicly that there may be an extension of compulsory competitive tendering. Therefore I cannot give the noble Baroness any assurances on that point.

The noble Baroness then asked whether we would sign the charter of local government. We have debated such a step many times in this House. We know of a number of countries which have signed the charter but do not abide by it. I believe that Sweden has substantially interfered with the rights and responsibilities of its local authorities although it has signed the charter. We know of some countries which have signed the charter but have not ratified it. We agree with the charter's broad principles and we have never said otherwise. However, we do not consider local government to be a suitable subject for regulation by international convention. We remain of the view that it is proper for local government to derive specific powers from Parliament. The power of general competence is not something that we agree with. The power of general competence is a constituent part of the charter.

Lord Monson

My Lords, does not the Minister agree that it is a complete fallacy to suppose that the majority of people in this country oppose the principle that every able-bodied adult should contribute something, however small, towards the cost of local government? What most people objected to as regards the poll tax in its final form—they were quite right to do so—was that it took no account of ability to pay, except in the case of some—not all—of the very poorest people in the community. However, by abandoning the excellent principle of no representation without taxation—many Ministers and Members of both Houses of Parliament and people throughout the country have spent many days in effectively upholding that principle—the Government appear to be swinging from one extreme to another. What incentive will there now be for those—admittedly a minority—who will no longer contribute a single penny towards the cost of local government—an example of such people are strapping 22 year-old scaffolders earning £400 a week and living at home whom we always used to hear about when the Government were plugging the merits of the poll tax—to vote at local government elections in favour of efficiency and against extravagance and the loony Left?

Baroness Blatch

My Lords, I must first put the record straight for the noble Baroness, Lady Hollis. I believe I told her that a separate paper on functions was to be issued. I meant to say that functions will inevitably form part of the discussion on the paper about structure because clearly functions will form part of that debate whether they are delivered by single-tier authorities or two-tier authorities. I meant to say that the discussion on functions will form part of the consultation process.

I would say to the noble Lord, Lord Monson, that a survey was conducted on how many households in the country contained one to two adults. We were pleasantly surprised to find that just under 90 per cent. of all households are either two person or one person households.

Lord McIntosh of Haringey

My Lords, I believe that 90 per cent. of adults live in one or two person households and not 90 per cent. of households.

Baroness Blatch

My Lords, I may have to be corrected, but I believe that the percentage of households is as follows. There are 33 per cent. of households with one person and 54 per cent. with two people. That accounts for 87 per cent. of households. Adults come under another column in the document on page 5. Some 2 million households—that is, 10 per cent. of households—contain three people and 3 per cent. of households have four or more people. Therefore by targeting two person households, we cover almost all households. I understand that a high percentage of the 4 million people who constitute the third or subsequent adult in a household are students or people who are exempt, either through the rebate system or through pure exemption. One is left with the kind of people mentioned by the noble Lord, Lord Monson. One might refer to them as yuppies, for want of a better word. I am told that those people account for only 2 per cent. of the population. Had we opted for a system based on three adults per household, the bureaucracy involved in adjusting to two adults or one adult households would have outweighed the benefits.

Lord Jay

My Lords, will the Minister explain how the business rate or contribution fits into this scheme? Is it wholly separate, or is it affected by the seven bands and the other measures?

Baroness Blatch

My Lords, the business rate is entirely separate and remains totally unchanged.

Lord Hankey

My Lords, I have a question arising from the Statement on the structure of local government. I was not quite sure about the matter of a county council or a district council structure in any given area. That matter seems to be rather a mixed bag from the Minister's comments. There are certain areas where special considerations will apply. I am thinking particularly of Kent where the Channel Tunnel and the measures to be taken in 1992 with regard to the Common Market will result in immense economic changes and a great deal of industrial pressure. I cannot believe that it would be wise to abolish our particularly efficient county council for Kent and adopt a local structure in an area where there will be such a great need for consideration of the changes that will affect the whole area.

Baroness Blatch

My Lords, the noble Lord has made an interesting point. This is not the time to defend a particular local authority. However, the noble Lord made the point that it is not necessarily appropriate to impose a single system on the whole country. We know there is a strong view that the road down which we should go is that of unitary authorities. The scheme will be an orderly one and each part of the country will be considered area by area. The areas will consist of two, three or even more county areas. We shall invite views as regards which areas should be considered first. We hope that after the commission has identified communities of common interest and appropriate tiers of authority as regards the delivery of efficient and effective local services, it will make a recommendation to Parliament, and it will be for Parliament to decide the matter. However, as I said at the outset, the measures adopted for different parts of the country may well differ.

4.30 p.m.

Lord Sefton of Garston

My Lords, it has been said in the Statement that there will be no need for precise valuation of every house or flat. In speaking to the Statement, the noble Baroness said, referring to Labour's proposals, there would be no need for valuation on anything like the scale that had been mentioned by us. Can she reconcile those two points?

When the uniform business rate was going through the House, two elements were debated, both of which caused concern. From my point of view, the main concern was that the northern parts of the country were considerably subsidising the southern parts, and a rebate was given in regard to the uniform business rate in the South because most people considered that it was too high an increase on the old rateable system.

In the Statement we are told that the level of government grant on business rates is assumed to be the same as in 1992. I should like to ask whether the process established under the old Bill—that is, that the difference between the subsidised rates in the South and North would be slowly whittled away—will stop, or whether the subsidy given to the South by the North will remain in being. Before any noble Lord on the other side of the House starts thinking that this is a good scheme he should consult some of the commercial interests in the south of England as to the possible effect on them of maintaining this measure.

Baroness Blatch

My Lords, the noble Lord, Lord Sefton, referred to the uniform business rate. That rate is not part of this system, which is quite different and separate. The noble Lord was quite wrong about the shift of subsidy. In fact, the shift went from the South to the North under the changes. Previously it was the other way round. The change in the uniform business rate was to lessen the burden in the North and to carry the burden in the South.

To compare the two systems of revaluation, the revaluation on whatever basis is chosen for the system that I have advocated today will take the average value of a house countrywide. The highest house will be banded at two and a half times that of the lowest house, so the lowest will come down from average in the middle and the highest will go from average to the top. There will be a difference of 2.5:1 between the top and the bottom.

Therefore, for the purpose of banding only, once a house is in a band the requirement to revalue may not arise at all. There can be no comparison with the scale of revaluation proposed by the Labour Party; it will not be necessary. As we understand it—this is taken exactly from the rates document—revaluation for the Labour Party will be on an annual rolling programme. In other words, there will be a revaluation every year which will take into account four factors: capital values, rental values, rebuilding costs and repair costs. If that is added to there being no capping of local authority expenditure, it will be bureaucratic and highly sensitive to every house that will have to be revalued annually with no transitional relief scheme. There is no comparison whatsoever in terms of which system is the more favourable.

Earl Ferrers

My Lords, I believe the arrangement is that questions on Statements should last no more than 20 minutes. In fact, we have had 20 minutes and I think it would be right if the House resolved itself into a Committee on the Criminal Justice Bill.

Lord Sefton of Garston

My Lords, this matter is so important that perhaps we may extend the 20 minutes.

Earl Ferrers

My Lords, the rule is an inflexible one, agreed by all parties, that questions after Statements should last for 20 minutes. In the old days the rule used to be relatively flexible, but now it has become more rigid.

Lord Hatch of Lusby

My Lords, surely the noble Earl is not quite correct in saying that this is a rule. It is not a rule but a recommendation, and there is a distinction between the two. Surely the House has the right at any time to extend a discussion even though there has been a recommendation that in normal circumstances a time limit should be set.

Earl Ferrers

My Lords, the recommendation is that the limit should not exceed 20 minutes. If it were extended on any occasion when your Lordships wished to extend it there would be no point in having a rule. That rule was made because a lot of Statements which interrupt the normal business are made in the House nowadays, so one has to have a time limit. I think that the whole of this Statement has lasted about an hour, which makes inroads into the other business. Therefore, while I accept the anxieties expressed by some noble Lords, I beg to move that the House do now again resolve itself into Committee on the Criminal Justice Bill.

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