Lords Sitting of 9 January 1992

Preamble
Reassembling after the Christmas Recess, the House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Liverpool.

Local Government Structure: Review
Lord Jacques Lord Jacques asked Her Majesty's Government:
Whether they will ask the proposed Local Government Commission for England to consider as a priority making recommendations for structural changes where these changes have the strong support of the local community and are likely to result in economies.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, the proposed Local Government Commission will be required to recommend the structural changes that it thinks desirable having regard to the need to reflect the identity and interests of local communities and to secure effective and convenient local government. The Government will set the commission's programme of areas for review. Areas where there is known to be widespread dissatisfaction with the existing structure of course will be high priorities.
Lord Jacques: My Lords, I thank the Minister for that kind reply. Is she aware that in the City of Portsmouth, which had county status until 1972, the widespread opinion in the local community is that the guildhall is more attuned to its needs than the shire hall which is some distance away? Is she further aware that one-tier local government has the support of all the parties in the city, because they believe that it will produce economies?
Baroness Blatch: My Lords, first, I know Portsmouth well. I know it to be a city of great distinction. I have met Mr. Gibson a number of times and discussed these very matters with him. It will of course be a matter for the people of Portsmouth, local authorities and the organisations in that area to press their case with the commission when it is in place to do its work.

National Transcommunications Ltd: Sale of Assets
2.38 p.m.
Lord Thomson of Monifieth Lord Thomson of Monifieth asked Her Majesty's Government:
What steps are being taken to ensure that any disposal by National Transcommunications Ltd. of the intellectual property and patents formerly belonging to the Independent Broadcasting Authority is consistent with the national interest.
Viscount Astor: My Lords, the disposal of assets, including intellectual property and patents, is a commercial matter for the company to decide.
Lord Thomson of Monifieth: My Lords, is the Minister aware that engineers in the former IBA engineering research and development department produced developments which give Britain and the European Community a potentially important competitive advantage in terms of future high-definition television technology? Is he further aware that his Answer will cause a great deal of anxiety that the Government will allow purely short-term market considerations to prevail which will result in those advantages being squandered?
Viscount Astor: My Lords, I do not believe that there is any likelihood of those advantages being squandered because the new company will be able to use its technology, assets and engineering skills to compete in the market in Europe.
Lord Peston: My Lords, will the Minister enlarge on his original Answer to the noble Lord, Lord Thomson of Monifieth? Does his Answer mean that with respect to this enormously important area of intellectual property, there is no national interest and therefore the Government themselves have no interest; or do the Government rely on the company's commercial interest to serve the national interest? Is that what used to be called the Thatcherite view, which I thought had gone? Will he tell us what his Answer means?
Viscount Astor: My Lords, the Government have an interest because when National Transcommunications Ltd. was sold, it was sold with various IBA patents. The Government have procedures so that if those patent incomes reach a certain level, they will benefit from a clawback of some of the profits. Equally, if the company is floated on the stock market between 1994 and 1998, there will be a clawback on the extra profits that the company might receive and on some of the property assets, and so the Government do have an interest.
Lord Trefgarne: My Lords, is my noble friend aware that his Answer will provide some reassurance to those of us on this side of the House? What are noble Lords opposite seeking? Is it some sort of national quango to preside over all intellectual property? Heaven forfend!
Viscount Astor: My Lords, I am grateful to my noble friend for his support. The patents form an important part of the new company's assets; but the company's main assets are the 500 or so masts throughout the country which are used to transmit television programmes.
Lord Dean of Beswick: My Lords, does the Minister recall what happened to Inmos? The same arguments were put then: that Inmos should not be sold in the private sector to EMI; but it was. EMI then sold it to French companies with the result that the industry now has a massive balance of payments deficit. From

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where does the Minister draw his conclusion that such a thing cannot happen again, if the Government do not take a certain course of action?
Viscount Astor: My Lords, the noble Lord makes an interesting point, but it is wide of the Question on the Order Paper and the company that we are discussing.
Lord Renton: My Lords, is my noble friend aware that it would defeat one of the main purposes of privatisation if Ministers were to bear the responsibility for the kind of decisions referred to in the Question?
Viscount Astor: My Lords, I must agree with my noble friend.
Lord Thomson of Monifieth: My Lords, is the Minister saying that if these important national assets which have such big implications in terms of our future technological competitiveness were to be sold to our Japanese or American competitors, the Government would stand idly by?
Viscount Astor: My Lords, the Government have safeguarded their interest in the patents. The company is a British company. Its main assets are in this country. Its MAC system and its patents are part of a European project.
Lord Peston: My Lords, does the noble Viscount fully understand the problem? The problem is precisely the one to which his noble friend Lord Renton referred. Is he not aware that the danger here is that such a company when strapped for cash and anxious to raise some cash rapidly will sell valuable patents, the result being that in future the users of such intellectual property in this country will end up paying Japanese or other people for licences, and so on? If this country has any future at all, it is in the area of exploiting our intellectual property. The whole point about privatisation is whether this new body is capable of doing so.
Viscount Astor: My Lords, if any company or any person uses the patents, a certain amount of money must be paid for doing so. That applies whoever owns the company, whether it be English or Japanese-owned. It is important to note that those patents are in this country and that both the country and the Government have an interest in the matter. The company cannot sell or transfer the patents presently held by it through the GIE MAC system (which is part of a European project) without the Government retaining their ability for the clawback of extra flotation profits.
Lord Molloy: My Lords, in respect of the answers which the Minister has given to the noble Lord, Lord Thomson, and other noble Lords on both sides of the House, can he say that what he has said now will be rigidly adhered to in the security interests of our nation, and that in a few months' time those answers will not be changed by the Government thus putting security at risk?
Viscount Astor: My Lords, I am not entirely sure what the security interest might be on transmitting ITV programmes. However, I do not think that it has any relevance in this matter.
Lord Morris: My Lords, does my noble friend agree that the fears of noble Lords opposite are totally groundless? If a company has valuable patents—assuming that such patents have any value—it would not be necessary to sell those assets in order to raise cash. Indeed, there are many other ways of raising cash on the open market.
Viscount Astor: My Lords, my noble friend makes an important point. That is indeed the case. The company has backing and the patents are a fairly small but important part of its assets.

Teachers
2.45 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What action they are taking to deal with the shortage of teachers.
Baroness Blatch: My Lords, there is no overall shortage of teachers, though there are some shortages centred on certain subjects and geographical areas. The Government have supported over £74 million in expenditure since 1986 on a wide range of measures to combat teacher shortage, and a further £72 million is already earmarked to continue and extend these. Those measures are working. The number of vacancies in 1991 fell by 20 per cent., and recruitment to teacher training rose by 21 per cent., which is the highest increase since 1976.
Lord Dormand of Easington: My Lords, do the Government accept the important point made in a recent study carried out by Manchester University—a study, incidentally, commissioned by the Department of Education and Science—that teachers are being appointed who are inadequately qualified, especially in the sciences, in mathematics and in modern languages? Is that not disguising shortages in vitally important subjects? Of course, this is not a new problem. One would have thought that after 13 years in power the Government would have done something about the matter. However, is not the fact that the Government are highlighting the matter showing just how important it is?
Baroness Blatch: My Lords, I do not accept those remarks. However, I can say that teacher recruitment in those shortage subjects is on the increase. I can also say that in the particular subjects which he mentioned—namely, maths and science—90 per cent. of children are in fact being tutored in those subjects by teachers who are appropriately qualified; in other words, that means that they do have post-A-level qualifications in the subject.
Lord Campbell of Alloway: My Lords, can my noble friend the Minister say what is, broadly speaking, the position on the well-known desperate

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shortage of qualified teachers to teach not only dyslexic children but also the teachers who teach those children? Is she aware that I have recently received correspondence on that subject from teachers?
Baroness Blatch: My Lords, my noble friend asks an interesting question about the quality of teaching in a particular aspect of education. I can say that in-service training, especially for children with reading-learning difficulties, is seriously being addressed. Of course, teacher training itself is being changed in order to ensure that that particular aspect of learning is addressed.
Lord Stallard: My Lords, in replying to my noble friend, has the noble Baroness considered the effect on the teacher shortage of the proposals about which we have recently read in relation to teaching youngsters, aged seven and onwards, who have reading difficulties? I understand that a new project has been embraced by the Secretary of State and others. Indeed, a great speech was made about it and about how good it will be. However, it will mean teaching tutors to teach teachers before they in turn can teach this new method which has been imported from New Zealand to the children.
Baroness Blatch: My Lords, quality does not pose a difficulty. It is absolutely essential that the standards of entry into teaching remain high and are not altered at all by the different measures that have been put into place. It is not only important that the entry into teaching should be of a high standard but also that the training received by future teachers should be of a high standard.
Lord Stallard: My Lords, from what has been said for one second I believed that we were talking about a one-to-one situation. That must, of necessity, increase the number of persons required to perform that function. Has that matter been taken into account?
Baroness Blatch: My Lords, perhaps the noble Lord is referring to the most recent proposals on the teaching of reading. He will also know that a large sum of money has been allocated to make sure that the new measure that is being put in place is properly delivered.
Lord Thurlow: My Lords, has any progress been made in the vitally important sector of foreign languages?
Baroness Blatch: My Lords, as regards modern languages, recruitment is much more buoyant than it was. In the past 12 months recruitment for modern language teaching was 35 per cent. up on that of the previous year.
Lord Strabolgi: My Lords, in view of what has been said on this matter, will the Government do something rather more positive about the teaching of foreign languages with the aim of starting to teach them at the primary level in the public sector, as is the case in most other Western European countries? Will the Government do something about the central funding of foreign language assistants so they may be recruited
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from the Continent to alleviate the shortage of teachers here? Will the Government also do something to encourage married former teachers to return to teaching after their families have grown up?
Baroness Blatch: My Lords, I am not unsympathetic to the point made by the noble Lord. However, this Government have done a great deal to put this country in a position to respond to these problems eventually as all children in secondary schools will learn a minimum of one language. Therefore, young people leaving our schools will have received a better training in languages. That will mean more young people will study languages in higher education and more young people will be able to teach languages in schools. The first step is to improve the teaching of languages and in that way we shall increase the number of people who are trained to teach younger children. Is it the policy of the noble Lord's party to take such measures when and if that party enters office?
Lord Strabolgi: My Lords, I am not aware of the policy of my party in that regard. However, is the noble Baroness aware that I am a member of the Franco-British Council and the policy I have outlined is the policy of that council?
Baroness Blatch: My Lords, I was not aware of that fact and I am pleased to hear it. I am sympathetic to the original point the noble Lord made as I believe children are receptive to learning languages at a much younger age than is the case at present.
Lord Monkswell: My Lords, bearing in mind the text of the Question on the Order Paper, does the Minister agree that one of the reasons for the shortage of teachers is that teachers have left the profession prematurely for three reasons? First, they have received excessive criticism from the Government. Secondly, the Government have imposed an enormous amount of change on the education and teaching professions over the past few years. Thirdly, the remuneration of teachers is not adequate. What steps are the Government prepared to take to deal with those three specific points?
Baroness Blatch: My Lords, I disagree profoundly with what the noble Lord said. I shall illustrate what measures the Government have taken. Teaching as a career unit (TASC) has been established. A major national advertising campaign has been established. Last year more than 40,000 people responded to that campaign and 40,000 have responded this year. We have made grants available to help former teachers and mature students return to teaching. We have established initial teacher training bursaries for shortage subjects. Some 7,000 young students have been funded this year. We have established flexible ways into teaching; for example, we have set up a licensed teacher scheme and an articled teacher scheme to which there is a buoyant response.
We have established teaching tasters for people changing career. In 1991 some 55 courses were established. Some 49 per cent. of those attending those courses have either entered teaching or plan to enter

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teaching. We have increased in-service training for teachers in shortage subjects by allocating £76 million in 1991–92. An additional £85 million has been set aside for 1992–93. We have funded the Open University by £2.3 million to develop distance learning for postgraduate courses. We have provided work experience for students and recent graduates who work for four weeks in September and are paid £100 a week. That experience enables them to decide whether or not they wish to enter teaching. We have addressed the issue of pay and we have set up a review body. The Government are not complacent. We are concerned about this matter and we have done a great deal to make sure that our young people are taught by the best qualified teachers.
Baroness David: My Lords, I wish to pursue the matter of language teaching. Is the Minister aware that a report issued by the Labour Party last year found that 87 per cent. of the LEAs who responded to the report stated they had difficulties in recruiting language teachers? Is that not a bad forecast for our prospects in the single market? However much recruitment may have increased this year, it will take a long time before those who are now being recruited enter the schools. It is important to do something now.
Baroness Blatch: My Lords, there have, of course, been some difficulties in the recruitment of language teachers. However, we have done a great deal in this area. Recruitment is up by 35 per cent. We must not scoff at that achievement. We want recruitment to continue to increase. This Government have put languages at the forefront of the national curriculum to make sure all our children learn a language. That will provide a much more buoyant and healthy supply of young people who are competent to teach languages.
Baroness David: My Lords, it is all very well having modern languages in the national curriculum, but they cannot be taught if there are insufficient people to teach the languages.
Baroness Blatch: My Lords, young people in our schools are receiving language tuition. We shall continue to try to increase the number of language teachers and we shall continue to make sure that future language teachers are better qualified. In the meantime, it would be quite wrong to remove modern languages from the curriculum just because there may be teacher shortages in some areas.
Baroness Seear: My Lords, does the Minister believe there would be more language teachers if the Labour Party had tackled that issue more effectively when it was in power?
Baroness Blatch: My Lords, I was hesitant to refer to that matter on the first day after the Recess. Nevertheless, the noble Baroness is absolutely right. How would the Labour Party tackle the issue?
Lord Dormand of Easington: My Lords, is the Minister aware that I have been made to feel guilty for tabling this Question as I have been told that
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everything is perfect? Does the Minister accept a finding of a survey on teacher shortages carried out by six unions—issued as recently as November of last year—which stated that the most common vacancies occur in infants schools and in the junior classes of primary schools? Those vacancies account for 44 per cent. of all vacancies in primary and secondary schools. That represents a vital stage in children's education. What are the Government doing about that?
Baroness Blatch: My Lords, I do not agree with those remarks. The case is much exaggerated. The take-up for initial teacher training for primary education is up by 13.5 per cent. It has also increased for secondary school teachers. The trend for recruitment is upwards. All the measures we have put in place are designed to improve that position. I wish to place on record the fact that everything is not perfect. I began my initial reply by stating that there were some problems. Nevertheless, I believe I have given a good account of this Government's attempts to address the problems. I have shown that the measures that have been put in place are working.

Ravenscraig
2.58 p.m.
The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde): My Lords, I should like to make a Statement on Ravenscraig. Yesterday's announcement by British Steel that it is to close its main Ravenscraig plant is hugely disappointing.
To anyone aware of the market conditions for steel at present it cannot come as a complete surprise that British Steel has had to take this regrettable decision. But it is particularly regrettable that British Steel has been unable to maintain the plant at least until 1994. My right honourable friend has pressed the chairman of British Steel to make public his assessment of the market conditions which justify the unwelcome decision.
The closure of Ravenscraig will bear hardest on north Lanarkshire. In the light of the recommendations of the Lanarkshire working group, substantial extra help has already been provided, and there is already a wealth of planning and activity in the area geared towards economic growth. The recent announcement that British Rail is to locate its Channel Tunnel rail freight terminal at Mossend is a welcome example. We have given priority to Lanarkshire in our spending plans, and have made available very substantial sums through Scottish Enterprise—£15 million this year and up to £25 million next year—to tackle the problems of the area and to help open up new opportunities. We have increased the capital allocations to local authorities in north Lanarkshire for factory building in the current year, and we have agreed extra resources for upgrading key motorway junctions in the area.
As we announced yesterday, the Government have also now completed their appraisal of the suitability of sites in north Lanarkshire for enterprise zone status. I am pleased to announce today that, following such

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appraisal, we have decided to support enterprise zone status for the area. We shall now seek the necessary agreement of the European Commission. An enterprise zone should bring major economic benefits to north Lanarkshire. Preliminary estimates are that net additional public sector investment associated with an enterprise zone of some £50 million over a 10-year period should secure 7,500 net additional jobs for the area.
Given today's news my right honourable friend will consider whether, as well as the very large programme of extra investment now proposed for north Lanarkshire, there are other ways in which its economic needs can sensibly be addressed. To that end the Minister responsible for industry in Scotland is to secure the effective co-ordination of efforts of the Lanarkshire Development Agency, the Scottish Office, Scottish Enterprise, Locate in Scotland, the local authority and British Steel (Industry) so that all the bodies involved play their full role in the economic regeneration of Lanarkshire.
We have no doubt about the impact of this very regrettable decision on the people and communities of Motherwell, in particular, and north Lanarkshire, but we have taken and will continue to take action and to invest in the economic development of the area. As in the cases of Consett and Corby—affected by earlier steel closures—we believe that Lanarkshire's prospects are by no means dismal.
3.2 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the Minister for making his Statement, although I note in passing that the Statement was forced out of the Government by a Private Notice Question tabled by me and the noble Lord, Lord Ezra, on the Benches to my right.
This is a sad day for Lanarkshire. The Statement describes the decision to close the main Ravenscraig plant as "hugely disappointing". It is not hugely disappointing: it is utterly devastating. It is utterly devastating for the people of Motherwell and of north Lanarkshire. Are the Government really taking the matter as seriously as they should? It is a breakdown of government regional policy. The Lanarkshire Development Agency estimates that over 15,000 jobs will be lost as a result of the decision. Many of those who lose their jobs will never work again. Is not that a matter of public interest to which the Government ought to be paying more attention?
It is not enough to talk about Consett and Corby. Consett and Corby took between five and 10 years to re-establish themselves after the shutdown of the steel plants, and that was in times of economic growth rather than in times of recession. It also required massive infrastructure investment from central government.
Of course we welcome the decision to apply for enterprise zone status for north Lanarkshire. However, that will take an extremely long time. It will take months or even years for the community to re-establish itself. None of this appears to have been planned by the Government. Your Lordships will recall that on 3rd December 1987 the noble Lord,
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Lord Young of Graffham, who at that time was Secretary of State for Trade and Industry, made an announcement about the privatisation of British Steel. At col. 1141 of Hansard for that day he is recorded as saying:
"Those noble Lords with an interest in Scotland will be pleased to hear that the corporation will be putting out a statement today making clear that subject to market conditions there will continue to be a commercial requirement for steel making at Ravenscraig for at least the next seven years".
That statement was made with the full authority of the Secretary of State. We now hear that the Government have no idea of the market conditions which have led British Steel to take its decision. Will the Government, in addition to insisting that a ministerial Statement has been made on market conditions, insist that the chairman of British Steel publicises and confirms that the Government agree with his assessment of market conditions which have led to the decision? No other solution will save the Government's face.
Secondly, were the Government consulted about the proposed closure and, if so, at what stage? If they were consulted, at what point did the chairman of British Steel say that closure was being forced? Did the Government see the analysis? Did the Government recognise their own role in creating the recession which forced the closure?
On 3rd December 1987 the noble Lord, Lord Young of Graffham, as Secretary of State, made a second Statement to this House:
"The corporation has also indicated that even if it should wish at some stage because of market conditions to close its steel-making facilities in Ravenscraig it would consider, on a commercial basis, any wholly private sector offer for those facilities as an alternative to closure".
Is that commitment, which as I understand it was supported by the Secretary of State, being met? If so, will British Steel co-operate in exploring the possibilities for the introduction of new technologies such as thin slab casting by an appropriate private consortium? How long will the offer for sale be open? Will it be long enough for an incoming government to explore possibilities if the general election is to be postponed until as late as July? And will British Steel offer redundancy terms as good as those agreed on the closure of the hot strip mill last year?
This is a sad day for Scotland and it is a sad day for this country. If Ravenscraig is to be shut down over the next few months what will happen to Scunthorpe? What will happen to the plants in South Wales? As a result of market conditions and market forces are the Government prepared to see us go out of steel making altogether? This is yet another example of the Government hiding behind privatisation when difficult decisions have to be taken. The economy of Lanarkshire will be devastated as a result of a systematic attempt to break the Scottish economy, and this Government will suffer for it at the next general election.
Lord Ezra: My Lords, like the noble Lord, Lord Williams, I am obliged to the Minister for making the Statement in response to initiatives taken on this side

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of the House. I should like to put three questions to the noble Lord, some of which are similar to questions put by the noble Lord, Lord Williams.
The first question is in respect of British Steel having brought forward the closure of Ravenscraig in advance of the stated date of 1994. In the Statement the Government say that it is particularly regrettable that British Steel has been unable to maintain the plant at least until 1994. Therefore, I join with the noble Lord, Lord Williams, in asking whether the Government were advised well in advance of British Steel's intention because of the wide social and economic implications of the decision and, if so, whether they were satisfied with the reasons given.
I see that the Government have stated that they are pressing the chairman of British Steel to make public his assessment of market conditions. Does that imply that the Government were not aware of the detail of that assessment before the decision was taken? This is a very serious issue and it would be surprising if, even though British Steel is in the private sector, there was not full and detailed discussion with the Government in advance. The Government must presumably have been satisfied that it was the right decision to take. We need to know more about that.
Secondly, there is the question of whether an independent steel company in Scotland could have survived. That was an idea mooted a long time ago. Ravenscraig has been part of the large grouping of British Steel. We know from experience that the larger the grouping, the more the parts can suffer in difficult situations. However, had Ravenscraig been on its own, it might well have been able to carve out a market niche which would have enabled it to survive. So was that idea given serious consideration? If so, at what stages and why was it rejected?
Thirdly, the closure of Ravenscraig represents the virtually complete elimination of heavy industry in Scotland. There is now very little left, as I know from my own experience in the coal industry. Only one major coalmine remains. The change in the economy of Scotland may have been inevitable. Whether or not it could have been timed differently, we do not know. But is it not now time to have some clearly defined alternative industrial strategy for Scotland?
The Government have said that they will look in particular at the special region of Lanarkshire affected by the closure. Is there not scope now for taking a wider look at strategy for the industrial regeneration of Scotland as a whole?
Lord Strathclyde: My Lords, I suspect that the noble Lord, Lord Williams of Elvel, has been waiting a long time for this moment. He appears in the House like a vulture gleefully picking over the entrails of Ravenscraig. He has produced conjecture and false facts. He has not done his research; he has accused the Government of bad faith.
The noble Lord said that 15,000 jobs would be lost. That is untrue. There are 1,200 jobs which will be lost in September. We calculate that a further 1,200 will go, making a total of around 2,500, as a result of the announcement made by British Steel. The noble Lord criticised our proposals for an enterprise zone saying
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that it would lead to massive public investment. What was the investment made by British Steel over the catastrophic years of the Labour Government in the 1970s when British Steel was losing record amounts of money? That money came directly out of the public purse and from taxpayers. It did not help one little bit the long-term future of industry in this country.
The noble Lord brought into the argument my noble friend Lord Young at the time he was Secretary of State for Trade and Industry. Clearly, part of the undertaking made in the prospectus by British Steel was that it would seek to maintain the integrated steel plant in Scotland at Ravenscraig for as long as possible, subject to prevailing market conditions. We all know that market conditions have changed substantially, not only in this country but throughout the world. Market conditions in the steel sector are very difficult. There is fiat demand. As a result, excess capacity has continued to create fierce competition and low prices. Major competitors such as Krupp in Germany and Usinor Sacilor in France are also experiencing substantial falls in demand and prices. British Steel's interim results for the current year show profits down from £307 million to £19 million.
Both the noble Lords, Lord Ezra and Lord Williams, asked about the consultations that we may have had with British Steel prior to the announcement. My right honourable friend the Secretary of State was told by the chairman of British Steel on 20th December that British Steel would be making this decision and it was confirmed on Monday this week. There was no formal consultation in the sense that the Government had a direct role to play in allowing British Steel to make its decision. British Steel is a private company. It makes its decisions on commercial likelihood and in the interests of its shareholders. That is the only way in which it can make its decisions and it is the only way that a government should behave.
Both the noble Lords, Lord Williams and Lord Ezra, asked about the commitment to sell Ravenscraig. I understand that the undertaking that was given at privatisation will still be honoured. The noble Lord, Lord Williams, accused the Government of many things. I accuse the Labour Party of having no alternative. It has not come forward with any proposals. If a Labour Government were to be elected this year, they would do absolutely nothing to protect Ravenscraig.
3.16 p.m.
The Earl of Lauderdale: My Lords, as a former Lanarkshire MP may I ask my noble friend whether he recalls that the original decision to establish Ravenscraig strip mill was at least partly political and only partly economic? Indeed, the political decision—worthy as it was and I supported it—flew in the face of wider economic considerations.
Secondly, does he not feel that it is very late in the day to propose an enterprise zone? This is not a day on which I want to help the Opposition but I want to help Lanarkshire. Surely the enterprise zone project

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should have been put in hand two years ago when it first became evident that Ravenscraig might be closed down.
Thirdly, is my noble friend aware that the Government have a lot of clout with the offshore oil industry? There is a boom in Aberdeenshire, thanks to engineering and other ancillary activities produced by the North Sea oil industry. Can the Government now use some of that clout to create employment in Lanarkshire? Can some effort be directed to pressing the offshore engineering industry on the one hand and electronics on the other into north Lanarkshire? The most likely future for north Lanarkshire lies in new industries, not the old ones.
Lord Strathclyde: My Lords, I welcome the words of my noble friend Lord Lauderdale who is a past Member of Parliament for Lanarkshire. He is right to highlight the fact that political decisions tend to be made for political reasons rather than for sound economic reasons, which are the ones which have the greatest possibility of success. My noble friend questioned whether the enterprise zone should be brought in now. For the past few years the Lanarkshire working group has been in operation. It has undertaken an in-depth study of what would happen in the area if British Steel were to withdraw. It has stressed a practical approach to reverse the damage done to the Lanarkshire economy. The creation of new jobs in Lanarkshire is best done by increasing private sector investment in the area. We look to the Lanarkshire Development Agency, supported by Scottish Enterprise, to take the lead in implementation of the LWG early action programme.
The various agencies in Scotland will do what they can to encourage the private sector to come to Lanarkshire. I am confident about regeneration. Lanarkshire has many good assets: central location, good communication links, natural and man-made visitor attractions and a dynamic development agency. An enterprise zone will further enhance the area's prospects for recovery.
The Earl of Halsbury: My Lords, can the noble Lord confirm my memory of those matters? The origin of the tragedy at Ravenscraig was misconceived central planning. There was to be an automobile assembly plant next door which Ravenscraig would supply with rolled steel strip on very advantageous terms. That plant was never built and from that time on Ravenscraig was redundant.
Lord Strathclyde: My Lords, the noble Earl simply highlights what happens in centrally planned economies. It is a lesson to us all to see what has occurred in the past few years in Russia and Eastern Europe.
Lord Monkswell: My Lords, the Government will be aware, as we all are, that there are currently three production sites for bulk steel production in this country: Ravenscraig, Llanwern and Redcar. On the closure of Ravenscraig there will be only two sites. Have the Government asked the joint chiefs of staff about the ability of our defence forces to defend steel
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plants in the event of a threat to national security and thus to maintain British steel production as a national strategic resource?
Lord Strathclyde: My Lords, British Steel has confirmed that it sees no difficulty in being able to provide steel in this country for the foreseeable future.
Lord Monkswell: My Lords, will the Minister answer the question that I put? Did the Government ask the joint chiefs of staff for their opinion?
Lord Strathclyde: My Lords, the Government do not believe that there is any shortage of steel for strategic purposes.
The Earl of Onslow: My Lords, would it not have been better to have shut down Ravenscraig a long time ago? We have listened to a lot of Scots complaining—they are quite extraordinarily good at it—and asking English taxpayers for money. It is true that the Scots are over-represented in Parliament, are over-subsidised by the central government and are extremely good at complaining. Surely, the successes of the Scottish economy are the IBM factory in the central belt and silicon glen. Those are what Scotland should be proud of, not out-of-date, redundant steel mills.
Lord Strathclyde: My Lords, British Steel is not subsidised by the taxpayer, whether he is Scottish, English or from anywhere else. It is a private company supported by its private shareholders. The best future for the area is for people to invest in their own enterprise and to use the natural talents that are already produced in the area.
Lord Stallard: My Lords, will the noble Lord accept that I do not wish to follow the racist comments of the noble Earl, Lord Onslow?
The Earl of Onslow: My Lords, perhaps I may—
Noble Lords: Order!
Lord Stallard: My Lords, I can honestly say that I have far more experience of Ravenscraig and its forebears than he ever had or will have. I can speak from experience. I do not wish to refer to the political football about what the Labour Government, the Tory Government or anyone else did. I am anxious about what will happen now to the workforce. A number of people whose livelihood depended upon Ravenscraig and who had been expecting to be able to depend upon that livelihood for another few years yet will now be cast on to the scrapheap with no prospects. As the noble Earl, Lord Lauderdale, said, discussions regarding an enterprise zone, a planning zone and so on should have taken place long ago if there were fears that Ravenscraig would close. We know from the Corby experience that it takes many years to get such a scheme off the ground.
Nothing that the noble Lord has said today will reassure those fellows, who are asking, "When did the Government know that the pledge that Ravenscraig would not be closed before 1994 would not be honoured?" Did they know it when conferences took place in Scotland as recently as just before Christmas

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last year on alternative proposals put to the Government in the hope that they would be able to exert some influence on the employers and on the steel federation to try to protect those jobs until 1994? Had it been known then that there were only two or three weeks to go, the discussions would have taken place in a completely different context. The Government would have been expected to do much more.
Nothing that the noble Lord has said will assuage people's fears. I do not believe that the Minister has taken into account the devastating effect that the closure will have on that part of Scotland. It has been a depressed area for many years in the previous history of cold mills at Ravenscraig. We are going straight back to those days now. The noble Lord says that he can hide behind privatisation and do nothing. The people expect the Government at least to be constructive, to tell the truth, and to say, "We didn't know that this private company was going to put you on the scrapheap so soon. We shall try to find out the background and come back for further discussions."
Lord Strathclyde: My Lords, the noble Lord says that nothing that I have said will reassure the workforce at Ravenscraig. However, I am not sure that anything that the noble Lord said will reassure anyone either, even the rest of the Labour Party. Will the Labour Party renationalise British Steel? Clearly, it has said that it will not. The answer is that it will do nothing for the people of Ravenscraig.
I am uniquely interested in what happens to the working community of Motherwell and north Lanarkshire. That is why we have made the announcements that we have over the past 24 hours. That is why over the past couple of years we have had the Lanarkshire working group which has produced a report. That is why we have offered substantial extra finance for the area to allow for regeneration and to give those people the hope that they need.
Baroness Faithfull: My Lords, is the Minister aware—I do not see why he should be—that I was at Consett the night that Consett closed? I believe that 13,000 men were out of work overnight. I understand that the enterprise zone set up there has been so successful that the men in Durham say that they prefer what is going on now and that they are much happier. Is that not likely to happen at Ravenscraig?
Lord Strathclyde: My Lords, some personal experience is always useful in this House. It is my great wish that in Motherwell we shall see a far more diverse economic base which will allow the area to prosper in the way that other steel areas have prospered.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that his answer to my noble friend Lord Williams was rather long on insults but short on measures to deal with the real problem? Is he aware that the only vultures in the steel industry are those who, with the encouragement of this Government, battened on the steel industry after nationalisation and took everything they possibly could from it? Will he now answer the question put to him by my noble friend Lord Williams? What is to happen to the
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remainder of the steel industry in this country bearing in mind that the noble Lord himself said that profitability had dropped from £307 million a year to £19 million at present? Will British Steel continue to close plant after plant until it reaches parity?
Lord Strathclyde: My Lords, the natural question to put to the noble Lord is this: will he and his party renationalise British Steel? That is the logical approach. The future of British Steel is up to the management of British Steel and its shareholders. The chairman of British Steel has said that he believes that the future of British Steel and its integrated plants at Redcar and Llanwern will be assured.
Lord Stoddart of Swindon: My Lords, if the Government were to go to the country, they would soon find out what the Labour Party's answer is, because we should then be in government.
The Earl of Lauderdale: My Lords, do the Government agree that they do have power, which they do use, to lean on the oil industry to steer orders in a particular direction? Surely, that is a power which can be used to assist north Lanarkshire into a new age without encroaching on political issues about the politics of interventionism.
Lord Strathclyde: My Lords, through the massive new resources that we have put into the hands of the public bodies that we shall be concentrating on north Lanarkshire, we shall be encouraging new businesses and new enterprises to invest in Lanarkshire and its people.
Baroness Robson of Kiddington: My Lords, I am a great believer in private enterprise. The Minister said that British Steel took this decision because it was in the interests of the shareholders. Is the Minister aware that I believe that any private company should also keep in the centre of its decision-making the interests of its workforce and that in view of the assurances given to the workforce about 1994 it has been let down?
Lord Strathclyde: My Lords, I am not responsible for British Steel. The Government are responsible for the economic well-being and performance of this country. We believed that the best way of assuring that was to make the announcements that we made today. Those will lead to the regeneration of north Lanarkshire.
Lord Mackay of Ardbrecknish: My Lords, does the Minister agree that the decision, although highly unwelcome, has been inevitable some time? Mr. George Younger and Mr. Malcolm Rifkind while each was Secretary of State for Scotland made strenuous and at the time successful efforts to keep steelmaking in Lanarkshire. However, it was inevitable that the problem of market forces would in time act against Ravenscraig and that day has now come. Will the Minister say how long it will take the Government to obtain clearance from the European Commission for an enterprise zone? I believe that the matter must go to the European Commission. Will the Minister also bear in mind the need for funding from

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the Government or from British Steel for the rehabilitation of hundreds of acres of land in north Lanarkshire used by the steel industry? Although it has been environmentally poisoned it could easily be rehabilitated and made attractive to incoming investors.
Finally, will the Minister confirm and underline a point he made earlier? It is that we are not talking about the loss of 15,000 jobs, as the people who wish to talk down Lanarkshire and Scotland have been so quick to do during the past two days, but about the loss of some 3,000 jobs. Bad as that may be, it is not nearly as bad as the loss of 15,000 jobs, which gives an even blacker impression of the economy of north Lanarkshire than it deserves.
Lord Strathclyde: My Lords, my noble friend Lord Mackay speaks from personal experience. He was a Minister in the Scottish Office during the 1980s when so much work was done to ensure that Ravenscraig could stay open. However, as he recognises, that time has now come to an end. The setting up of an enterprise zone requires approval from the European Commission. I am not sure exactly how long it will take to obtain that, but it will be a considerable period of some months.
British Steel has said that it will raze to the ground the current buildings at Ravenscraig and that it will sell the land to public bodies at a peppercorn price so that redevelopment can take place. My noble friend Lord Mackay was absolutely right in saying that we are not talking about the loss of 15,000 jobs. That would be a veritable tragedy. We are talking about the loss of 2,500 jobs. We always regret the loss of jobs but the best hope for those people is to find new jobs to promote enterprise in the area. That is the best way for their future to be assured.
Lord Carmichael of Kelvingrove: My Lords, the Minister will know that I live in the area and that I am familiar with it, as is the noble Earl, Lord Lauderdale, who was an MP for the area. It was hit badly by industrial dereliction in particular during the interwar years. Ravenscraig was to be one of its saviours. However, whether true or not, the general feeling in Scotland, in particular in the Ravenscraig area, is that the chairman of British Steel, Sir Robert Scholey, never wanted to keep Ravenscraig going. Indeed, his behaviour before the Select Committee on Energy was not in line with someone who really wanted to keep the steelworks going.
I wish to ask the Minister a number of questions. Can application for the designation of the area as an enterprise zone be speeded up? Can the abolition of the East Kilbride Development Corporation be delayed in order to assist the application? Lanarkshire desperately needs a good technical college. Can central institution status be given to Bell College? Can application for an enterprise zone, to be dealt with by Mr. Allan Stewart, be speeded up? Although a great deal has been delegated to the local authority for further study, a great deal more could be done if Mr. Stewart took the matter in hand and dealt with it personally.
Lord Strathclyde: My Lords, the noble Lord, Lord Carmichael, has a positive approach. We shall speed up as much as possible the application to the European Commission for enterprise zone status. We have already allocated substantial funds to East Kilbride, to the Lanarkshire Development Agency and to a variety of other public agencies. We shall be doing everything that we can to bring together all the different strands in a group chaired by my honourable friend Allan Stewart in order to co-ordinate the long-term regeneration of the area.

Local Government Finance Bill
3.36 p.m.
Baroness Blatch: My Lords, I beg to move that this Bill be now read a second time. This Bill provides for the community charge to be replaced by the council tax from 1st April 1993. The council tax is a fair way of seeking a contribution to local services from local residents. It is based on the capital value of property. But it is not a crude property tax. It recognises that the capital value of property and the income of the residents are not necessarily a perfect match. It also recognises that the variation in property values between different areas of the country could lead to disproportionately high bills in some areas if those values were used directly in calculating tax bills.
The council tax is fair between areas. Property will be put into one of eight bands according to its value. There are separate sets of bands for England, Scotland and Wales. The Government recognise that there are some areas of the country where property values are higher and where a greater proportion of properties will fall in higher bands. The council tax has been designed to limit the effect of house price variations by limiting the range of bills which people can pay. The highest bill for a standard level of service is only three times the lowest. Therefore, no household can be asked to pay an excessive bill.
If two similar houses in different parts of the country fall into different bands the difference in the council tax payable is limited. This approach is much preferable to any system based on regional banding which would have led to visible and controversial anomalies across regional boundaries.
Protection for individuals is provided in four ways. First, there is a system of discounts which ensures that single adult householders pay a reduced bill. This tackles one of the most unpopular aspects of the rates. It was the fact that a single adult household—and most people living on their own are pensioners—paid exactly the same as a household of several earners living next door.
Secondly, we are providing special discounts for certain groups of people. Those groups include students, student nurses, trainees and apprentices. But there will also be discounts for all those groups which are currently exempt from the personal community charge, including those who are severely mentally impaired. These discounts mean that the presence of

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people in these groups can never add to the bill for a household. Households consisting entirely of students will be exempt.
Thirdly, there is a system of rebates in the form of council tax benefit. This will protect people on low incomes. Rebates of up to 100 per cent. will be available to those on the lowest incomes—there is no minimum contribution to the council tax.
Fourthly, there will be transitional arrangements to ensure that households do not face an excessive increase in bills as a result of the change from the community charge to the council tax.
It may be for the convenience of the House if I give a brief explanation of the main features of the Bill. Part I deals with the council tax in England and Wales. The first chapter establishes the council tax in respect of chargeable dwellings, which are defined, broadly, as domestic properties which would have been separate units under the old rating system.
Clause 5 sets out the eight valuation bands—bands A to H —for England and Wales, and the tax rates associated with them. Those are so structured that a property in band D will pay one-and-a-half times as much as a property in band A, and a property in band H will pay three times as much as a property in band A, and twice as much as a property in band D.
Clause 6 sets out the categories of person who are liable to pay the council tax. Liability goes, in general, with residence, and the principles are based on common sense. If the property is owner-occupied, either freehold or under a lease, then the owner-occupier will be liable. If the property is rented then the resident tenant will be liable.
Those categories will cover the great majority of occupied property. Other occupied property will be occupied under licence, or without the owner's permission. In such cases the licensee or the residents will be liable. For unoccupied property the owner will be liable.
Clause 11 provides for discounts where either there are fewer than two residents in a property, or where residents fall into one of a number of categories which are listed in Schedule 1.
Where there is only a single resident in the property a 25 per cent. discount will apply. The figure is 25 per cent. because the council tax comprises two elements: a property element and a personal element. We think that half-and-half represents an appropriate balance between these two elements. Where a house contains two or more adults there will be a 100 per cent. bill. Where it is unoccupied two discounts will apply, and the bill will represent only the 50 per cent. property element. Where there is only one resident the bill will be reduced by half the personal element, or 25 per cent.
Clause 13 provides for reduced amounts of council tax to be payable in prescribed circumstances. We intend to prescribe reductions in two kinds of case. The first is where the transition from the community charge to the council tax would result in an excessive increase in a household's bill. Reductions will be made in bills in those circumstances to phase in the increase over a number of years.
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The second is where people with disabilities need more space or special facilities in their homes which may mean that their property has been placed in a higher valuation band than would otherwise be the case. To ensure that people do not have to pay more on account of disability there will be one-band reduction in the tax payable on the property.
Clauses 15 and 16 deal with appeals. Householders will be able to appeal against the banding of their property, and against the billing authority's assessment of their liability and discount entitlement. If no agreement is reached between the parties appeals will go to independent tribunals.
Chapter II of Part I deals with the compilation of valuation lists. Those lists will show the address and band of each dwelling in a local authority area. Valuation of all properties is currently under way under the Local Government Finance and Valuation Act 1991, under the supervision of the Inland Revenue Valuation Office Agency. Private sector valuers are assisting the valuation office in England and Wales, and will bring their local knowledge and expertise to the process. The assessors are carrying out the valuation in Scotland.
Chapter III of Part I deals with the mechanics of setting the amount of council tax. Chapter IV of Part I is concerned with the arrangements for precepts by major precepting authorities, such as county councils, and local precepting authorities, such as parish councils.
Chapter V of Part I deals with council tax capping. It enables the Secretary of State to select an authority for capping if he considers that its budget requirement is excessive, or shows an excessive increase over its budget requirement for the previous year. We are determined that there should be effective capping powers, as now, to ensure that the very substantial amounts of Exchequer funding provided for local government is used to keep taxes at reasonable levels and not to boost spending.
Part II of the Bill makes broadly equivalent provision for Scotland.
Part III provides for the abolition of the community charge from 1st April 1993. It also remedies for next year a problem under the community charge affecting those who leave school and go on to become students. Currently there is a short gap between their ceasing to be exempt from the community charge as schoolchildren and becoming eligible for student relief. The Bill provides that in 1992 the exemption for school children aged 18 or 19 who leave in the summer will extend until the end of October.
Part IV provides for rebates in the form of council tax benefit. It also makes provision for amendments to the Local Government Finance Act 1988 in respect of non-domestic rating, grants and funds. So far as non-domestic rating and grant are concerned, the Government intend no major changes to the current system but the Bill provides an opportunity to make one or two improvements to the detail of non-domestic rating. Among those are changes to the rating exemption for administrative buildings belonging to the Churches. The Churches had made

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representations that certain buildings of an administrative nature fell strictly outside the original definition of the exemption. The Government were happy to consider the case, and the Bill contains a widening of the definition.
Also in Part IV are important provisions relating to local authority councillors who do not pay the community charge or the council tax. The Bill provides that councillors who are two months or more in arrears with their payments will be unable to vote on specified financial matters.
Those are the important features of the Bill. No doubt we shall hear much from noble Lords opposite during our discussions advocating different solutions. But the council tax is by far the best approach. Noble Lords opposite would like to return to a version of the old rating system. Let us be clear what their proposals would mean. There would be no capping. That means higher bills all round. There would be no limit on valuations. That means there would be no limit on bills. In areas with high property values, bills would be high for everyone.
There would be complex valuations based on four inconsistent factors, mysteriously mixed to form a single value. It will be impossible for ordinary householders to understand their valuation, and most would have no idea as to whether there were reasonable grounds for an appeal.
The local income tax favoured by noble Lords on the Liberal Democrat Benches is no better. It would be an administrative nightmare. The Inland Revenue would face the task of maintaining a national register of taxpayers' addresses and incomes on a daily basis. Such information is not needed with the PAYE system operated in this country, and the Inland Revenue holds only a limited number of home addresses. Extending the database would take some years.
Under the scheme proposed by the Liberal Democrats there would be end-year adjustments. That means millions of cheques being written at the end of each financial year. Many taxpayers would face a large bill which they would have to pay immediately. It is hard to believe that people would welcome that any more than they would welcome a chancellor in each town hall with immediate access to their pay packet.
We believe that the council tax is the right way for local people to contribute to local services. It is based on common sense. It is fair. It pays special attention to the needs of individuals, including single people and vulnerable groups. It ensures that bills in high price areas are not excessive. It is easy to understand and to administer. I beg to move.
Moved, That the Bill be now read a second time —(Baroness Blatch).
3.48 p.m.
Lord McIntosh of Haringey: My Lords, I do not have a very long memory in this House but I have a long enough memory to remember the occasion on which the late lamented Lord Chelwood was squeezed off the Government Benches and had to sit on the floor. He was squeezed off by noble Lords who have
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never been seen since the day on which they were dragooned in to vote for their own pockets and to vote for the poll tax legislation.
It was clear at that time, as we said and as the Government denied, that the intention of the poll tax was nothing to do with local authority accountability or the efficient conduct of local government services. It was to make the rich richer and the poor poorer. That was the object of the exercise. The noble Earl, Lord Onslow, shakes his head but I remember that he made an extremely effective speech at the time of the poll tax legislation in which he said that, unlike the Government, he believed that it was wrong that he should pay the same as, I believe it was, his head gamekeeper.
The Earl of Onslow: My Lords, I quite accept that the poll tax was unfair and wrong. I seem to remember comparing the taxation policies of my right honourable friend the first Lord of the Treasury with those of Selim the Sot. But—and this is a very big "but"—the object was not to make the rich people richer. It is correct to say that it was unfair and wrong, but that was not the objective. In any event, there is great joy in heaven about sinners who repent. It is as simple as that.
Lord McIntosh of Haringey: My Lords, the noble Earl shows a touching faith in the motives of his colleagues. However, I have complete faith in his own motives in this matter.
The question we must now ask ourselves regarding the replacement legislation concerns not so much the detail of it but whether the overall effect will remedy the patent injustices produced by the poll tax legislation. The closer we examine the legislation the closer we must come to the conclusion that it is the minimum change required from legislation designed to be enacted before a general election but implemented after a general election.
Let us look back to what we are comparing it with—the poll tax. By any estimate the poll tax lost the country approximately £10 billion; by any estimate there is now £1 billion underpaid due to non-payment of the poll tax. Seven-and-a-half million summonses were issued or are in preparation, including summonses to two out of three of the people of Scotland. As a result of the changes made last year we had a 2.5 per cent. increase in value added tax—a regressive tax by comparison with income tax.
As a result of the poll tax legislation, as shown by the census of 1991, 1 million people were lost from the census register in this country. They are no longer willing to put forward their names for the census because they are afraid of the unjust taxation effect of the poll tax. We do not know how many people are missing from the electoral roll which comes into force on 15th February; there will undoubtedly be several hundred thousand people missing from the electoral register, denied the right to vote because of the poll tax.
At the beginning of the poll tax legislation we said that it was unfair and could be seen to be unfair. All that the Government conceded was not that it was unfair but that it was seen to be unfair. Whether or not

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it was within the motives of all noble Lords opposite, the effect of it was to make the rich richer, the poor poorer and to benefit Conservative voters at the expense of voters for other parties. That is what the poll tax was all about and that is what this legislation is about. That is the basis on which it will be judged.
Lord Skelmersdale: My Lords, perhaps the noble Lord will give way at that point. Is it not a fact that the rich man paying the same amount of poll tax as the poorer man—as is accepted—in fact pays a much greater total amount of tax towards local government finance?
Lord McIntosh of Haringey: My Lords, as is well known, total taxation under this Government has gone up in comparison with the position when the Conservative Party came into office in 1979. Not all taxation even under this Government is as regressive as the poll tax. However, in the scale of "regressiveness" at one end is income tax, in the middle is value added tax and at the other end the poll tax. The question we will ask in regard to the legislation is what the effect will be on the total burden of taxation. It is not satisfactory for the noble Lord, Lord Skelmersdale, to attempt to escape from the regressive nature of the poll tax by referring to the undoubted fact that income tax is not regressive.
It is not as though there were no alternatives on offer. In July 1991 the Labour Party made an offer to collaborate with the Government in legislation to abolish the poll tax in April 1992 in the only way in which that could be achieved —by a return to the rating system. At that time it was not clear that the Government would return to what the Minister called a "version" of a property tax, not a proper property tax. However, it was clear that we had an opportunity by cross-party agreement to get rid of the poll tax and all its problems this year.
Instead, we are faced with a Bill that has clearly been drafted in haste; a Bill that was not adequately considered in another place because, remarkably, it was guillotined at the beginning rather than given an opportunity for proper consideration with the possibility of a guillotine if it looked as though time was to run out. As I said, we are faced with a Bill deliberately produced to be enacted before a general election but not intended to come home to roost, nor to be implemented, until after a general election. In that way the Conservative Party hopes to achieve an absolution from its responsibility—from the shambles of local government financial legislation of the past few years —without being required to account for the solution it is proposing.
In those circumstances it is not surprising that we on these Benches feel that there is a greater need for vigilance regarding the detail of the legislation than in almost any other legislation which may be placed before your Lordships. It is not surprising that we feel that the pedigree of the legislation is shaky—though perhaps I should not use horse racing metaphors as almost all other noble Lords know far more than I about that. The origins of the legislation are extremely dubious. As we can see, the prospects of a successful
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transfer to a new system of local government finance in the timescale and on the terms proposed are slim indeed. Instead of producing something we understand and which we know can be made to work and will be capable of subsequent modification without undue pain, we are going through a whole series of proposals which have never been tried and for which all the prognostications must be that the chances of failure are great.
We are faced with a system of discounts. Though they are not called discounts in quite those terms, that is what they are. There is a 25 per cent. discount for single person households which will cost approximately £780 million. Is that being offered on the basis that it reflects a greater approximation to ability to pay? No such thing. The discount is being offered regardless of the ability to pay. That means a millionaire in a single person household will be paying far less than a two-person household almost on the poverty line. Ability to pay has nothing to do with it; it is simply a sop to the example continually given by Government spokesmen, as though it were a gramophone record, of the poor old lady in one house and the four strapping wage earners in the next. The Government were carried away by their own example to such an extent that they are proposing to spend £780 million to implement that provision.
There will be a discount of 50 per cent. for second homes. One of the unintended effects of the poll tax was that all those people fortunate enough to own a second home found that they were paying more for their second home rather than less. But all the legislation does is juggle at the margin. It is not a real attempt to obtain a better approximation to ability to pay. It contains a whole complex series of what are called status discounts. My noble friend Lady Hollis, who knows far more of those matters than I, will be dealing with that when she winds up the debate from these Benches.
The legislation contains a property element. We are told that it is not a property tax but contains a property element. That element is quite clearly designed to cause as little pain as possible to Conservative voters without continuing too many of the principles of the poll tax. It does not work and it is quite clear that it will not work. Having had 14 bands, seven bands and heaven knows what in between, we have now come to eight bands. That is a crude banding system designed in such a way that the council taxpayer paying the most pays only three times as much as the council taxpayer paying the least. In other words, it is a strictly regressive system in relation to the known range of income variation.
We have a system which clearly will give rise to considerably more appeals against valuation than under the old rating system. In the old days one could appeal against a rating valuation, but the result of such an appeal would only achieve at the margin a few pounds either way. Now it is in the interests of everybody who feels hard done by because of the banding system to appeal, because the effect of a successful appeal would be to decrease the council tax obligation substantially as the difference between one band and the next is, in individual terms, quite

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significant. It will be seen to be unjust because people still do not really understand the difference between rate poundage and rateable values. That is why there has been all this discussion (not least from Conservative Benches) about regional banding.
I shall not go into that issue. It is the banding system rather than the lack of regional differentiation which is the real problem. We shall have all the problems caused by calculation on a daily basis. All those problems will make the council tax not only unfair but seen to be unfair. The legislation does not propose to make any change in what has been the most damaging and regressive introduction regarding local government finance in recent years; namely, the standard spending assessment. Surely the opportunity should have been taken to move to a system of central government grant which reflects the needs and the resources of the local authority rather than to make a central determination, as the Government do, of the size of the cake for local government expenditure and then their own assessment of how that cake should be divided between the different authorities.
The Audit Commission itself has pointed to a lack of confidence in the standard spending assessment not just by local politicians, but by those involved in local government administration. The standard level of service, which is the basis of the standard spending assessment, is a false idea. The opportunity should have been taken to abolish it in this legislation. As a result of this legislation we shall have a halfway house. There has been great disagreement in the Government's own ranks about local authority finance and because of that the Government have not had the guts to make a complete break with the poll tax. They are trying to satisfy their own supporters financially while giving the impression to the rest that the poll tax has been abolished.
We believe that instead of this halfway house, which will inevitably collapse under the burden of its own complexity, we should have the return of business rating to local authorities. There should be the immediate abolition of the 20 per cent. rule for discounts on the poll tax. That would save an enormous amount of money. It costs two-and-a-half times as much to collect that 20 per cent. as was returned by the tax. There should be a return to a proper valuation and revaluation system—not the perpetual banding system which is proposed here. There should be a return to the principles of taxation as they have been established over hundreds of years—that is to say, the tax should be based on the ability to pay.
Baroness Blatch: My Lords, I am most grateful to the noble Lord for giving way. If, as he believes, responsibility for the uniform business rate should go back to the local authorities, would the noble Lord also advocate the removal of the protection to businesses that they will not receive any rate increase greater than the rate of inflation?
Lord McIntosh of Haringey: My Lords, there are many more complex issues than that. That question cannot be answered in a simple way. There are
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conditions under which we could link the business rate to the rate of inflation. However, those conditions do not exist in local authority finance at the present time.
Lord Ross of Newport: My Lords, as someone who owns commercial property, I would give my right arm to go back to the old rating system for property decreed by local authorities rather than by the Government. The rates have gone up by leaps and bounds since the Government took an interest in the subject.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Ross, is perfectly correct. The increases in business rates have been greater under central government control than they were under local government control and for a very good reason. When the business rates were collected and determined by local government, they were linked by statute to the domestic rate. It was the rate for which the local authorities were accountable to their ratepayers and therefore they had to keep the business rate under control in the same way as they had to keep domestic rates under control. Therefore, the question posed to me by the Minister is not a realistic one.
There are many amendments which we shall need to table to this Bill. We shall need to see that the proposed taxation system is related to the ability to pay. We shall have to deal with the crudity and ineffectiveness of the banding system. We shall need to ensure that the three-to-one ratio between rich and poor is changed to reflect more adequately the incomes of the households concerned. We shall need to deal with the standard spending assessment and make sure that it properly reflects needs and resources.
As regards discounts, we must get rid of the single person discount because it does not adequately reflect the ability to pay. We shall seek to ensure that the 20 per cent. rule for the poll tax, which has already been abandoned in principle from 1993, is also abandoned from April of this year. As I have said, we shall seek to return the non-domestic rate to local authority control. As regards a civil liberties issue, we shall be dealing with the problem of joint and several liability between spouses. There are many other more detailed amendments which I do not have time to go into at the moment. My noble friend Lady Hollis will speak about some of the amendments that we shall be looking at in social security terms and on the issue of status discounts.
Perhaps I may make it clear that our attitude to the Bill is not one of unnecessary delay or delay for the sake of it. We are not anxious to have the poll tax continued for one day longer than is necessary. We made that clear when we made our offer in July last year. We are anxious to ensure that the poll tax is replaced by a tax which is fair and which reflects the principles which Lord Chelwood tried to encourage his colleagues to accept were the right principles for local authority taxation. We believe that those principles are not adequately reflected in the Bill before the House this afternoon.
4.8 p.m.
Baroness Hamwee: My Lords, I was struck by some words which I read early in the Christmas break when I was beginning to understand the Bill. Those words were as follows:
"Parliament has entrusted to local government the responsibility for securing the provision of some of the most essential of our public services. The responsibility for the quality of these services and the efficiency for their provision is determined by locally elected councillors. The Government believe that they should continue to have powers to raise taxation locally".
Those words will be familiar to a number of your Lordships because they are not those of a government of many years ago; neither am I looking into a crystal ball and giving the words of a government of a different regime some time in the future. However, what is sad is that those words preface the current Government's consultation paper on the new tax for local government. It is not sad that those words were written but it is sad that almost everything that has followed has shown just how hollow those words were.
It would be hard to imagine a tax which is underlain by fewer principles which, according to the consultation paper, guided the review. What were the principles? I doubt whether many of your Lordships would disagree with most of them. But does the Bill achieve them? We on the Liberal Democrat Benches are quite clear that it does not. What is much more to the point is that the taxpayers and the electorate will see the measure for the quick electoral fix which it clearly is.
The first principle is that of accountability. People should see the link between what they pay and what their council is spending; for accountability was the cornerstone of the poll tax. We all know the history of that not quite yet late lamented tax which the honourable Member for Brent, North, in another place called the "Ribble Valley business". How can a tax be truly accountable if so little is raised locally? We are all familiar with the gearing effect which distorts the picture so that, for instance, in Waltham Forest 1 per cent. of spending will mean a 7 per cent. rise in council tax and in Tower Hamlets a 1 per cent. increase in spending will mean an 11 per cent. rise. As has already been said, many people are advising that the opportunity really should be taken to restore the local business tax to a local base.
The Government are clearly bent on replicating the very process which lost the poll tax. It is hardly more than a semblance of accountability. For all the fine words about the responsibility for local services, central government will not allow local government the freedom to take its own decisions about expenditure—and that, again, is simply a question of capping. The Government say they will not hand over control to extreme authorities. The truth is that the Government do not trust either local councils or the local electorate who, after all, have the ultimate weapon in the ballot box. I do not say this lightly. The centralising effect of this tax is yet another attack on local government. The casualties will be local services and all those voluntary organisations which are supported by local government.
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Another principle was restraint—that the system should not allow bills to become too high because that would lead to unreasonable levels of spending. But how does that square with the acknowledgment about local responsibility for services? Restraint is said also to be necessary to prevent a disproportionately high burden on any individual or household. The principle is expressed as an equitable distribution of the burden. But look at the explanation; that most adults should make some contribution. Does that mean protecting those with the most means rather than those with the least? Let us consider the banding—the lowest band will pay one-third of the rate of the top band—and look at the disparity and effect of that across different parts of the country. We were told by the Minister that regional banding will lead to visible discrepancies across the boundaries. Let us compare rural Cornwall, say, with a Scottish city such as Aberdeen. If Scotland is to have a different banding system from that of England I see no logic in applying that difference but not allowing for regional differences.
Because of national banding people on low incomes in London and the South East will find themselves in very high value property areas with the effect that that will have; while ironically areas in the North and in the Highlands and Islands will have to pay high bills because the bands do not sufficiently take into account their low property prices.
The high band—again, ironically, the top band that has now been applied in London and the South East —is going to lead to a shift in grant away from London. The whole system is a nonsense. Banding may give the impression that it is arbitrary, but it is not so.
I should like to ask the Minister a specific question in regard to the variation of banding. The power to vary the bands in the future will be very important to local authorities because of the effect on the grants to those local authorities. While I do not expect the Minister to give the details today I should be glad to hear from her whether she would be prepared to give the House exemplifications of the effect on changes in the banding on the distribution of the grant so that we may look at that in more detail during Committee stage.
When there were calls for a band above £160,000 the Minister for Local Government and Inner Cities said that one of the greatest mistakes made during the rating system was the assumption that if one lived in a more valuable property one should contribute limitless extra amounts to local government. I suggest that the Minister should have paid more attention to those who live in properties which may have a high value—high because of the way the housing market has moved quite out of proportion to incomes during the past decade—compared, say, with the amount of money the owners have in the bank. The high value of that property is in reality not a high value because it is not realisable. The occupants of such properties may well be almost bankrupted by their mortgage payments. The banding will not produce a fair distribution of the grant or reflect the ability of people to pay.

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Ease of collection is another matter to which we must have regard. The administrative arrangements, as the consultation paper states, should be straightforward and the costs should be reasonable in relation to the yield. I am sure we must all be aware from reports in the press how worried and sceptical are the practitioners that the running costs really will be lower than the costs of the poll tax. However, it is not just the running costs. There will be the costs of setting up the new tax. Central government are said to be picking up 75 per cent. of the costs, not 100 per cent. However, because part of that 75 per cent. is not actually grant, but supplementary credit approvals, not even 75 per cent. will come from central government. Local government will have to bear that and as a result there will he a knock-on effect on other services.
What about the costs that have been wasted on the poll tax? The capital costs of setting up the equipment that was required have been enormous. In many authorities those costs will not yet have been written off. I am sure that the Government would have criticised councils if they had gone in for accounting which wrote off a piece of capital equipment over a period of only three or four years. Can the Minister give an assurance that costs which are not written off during the life of the poll tax will be treated as part of the setting up costs of the new tax?
The tax must be understandable to taxpayers. The consultation paper stated that rental values might not readily be understood by owner-occupiers or by people renting council houses or from housing associations and that that could lead to a number of appeals. I wonder whether people who are renting in those sectors will more readily understand the capital values, particularly people who are living in high value property areas. They are often renting because they cannot own the houses that they occupy. The comments that were made by Ministers before the introduction of this tax—and there were many—to the effect that a tax on homes was unfair were spot on.
I have a particular anxiety which I should like to voice today. The first notification about banding will not be sent out until the tax demand is sent. A list is to be published which will be open to inspection, but that is not quite the same. In fact, it is very different from informing people of the banding into which their own home falls. If that notice as originally proposed were to be sent out at an earlier date then I would expect—and I know that practitioners agree—that there would be much better prospects of the tax being paid when it comes into effect rather than running right into the usual problems of collection when it does apply.
We are told that there is no register required for this tax. That is a point to which I am sure we shall return at Committee stage. It is playing with words to say that there may be a list but there will not be a register. Whether there is a register or a list—
Baroness Hollis of Heigham: Or a record, my Lords.
Baroness Hamwee: Or a record, my Lords, as the noble Baroness, Lady Hollis, says—I do know that if
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there is no register, list or record then the Government will criticise local authorities for their lack of efficiency in not keeping one.
I, too, knew that I would not be the first to make this point today and I am sure that I shall not be the last. However, for reasons of practicality as well as of humanity, from the next financial year the minimum contribution of 20 per cent. to the poll tax must be abolished. The principle has been conceded. We have heard already today of the cost. The courts are overloaded and the councils are overloaded. It is just plain daft to continue it.
I have spoken to CIPFA about this. When I asked what one measure would most aid the introduction of the council tax it said the abolition of the 20 per cent. rule in respect of the poll tax. CIPFA believes that that would most help the new council tax to become workable. We are also concerned about common humanity. The professionals who know of the hardship caused to significant numbers of people by the 20 per cent. rule are rightly calling loudly and clearly for its abolition.
Finally, I turn to the principle of fairness. The consultation paper said that the tax must not only be fair but must be perceived to be fair. Of course it must. Everyone—and I mean everyone, including, I believe, the Secretary of State—acknowledges that the relationship between people's circumstances and the value of their property is a very imprecise and imperfect measure. We shall be told that the 25 per cent. discount for single people is given because the tax is only half a personal tax. That is a tortuous piece of logic which I do not think will impress taxpayers. They will take the view that discounts should reflect the decreased purchasing power of many single people and the lower level of services used by others. We should bear in mind the position of single parents and widows. The widow has become something of a caricature in these debates but she is a real person. We should bear in mind the position of those who find it difficult to make ends meet. I accept the lack of logic in giving greater allowances to the single millionaire, but I think that there are far fewer single millionaires than there are single parents or widows who are in those difficult circumstances.
We shall be told that the rebate system will take care of those on lower incomes. That may be true to a limited extent and within a very complex system. The amendments to be moved in Committee will, I hope, make the system a little less unfair. I know that we shall be looking at the interaction between discounts and the benefit system.
We have heard nothing about transitional arrangements. I wonder whether there are proposals for transitional arrangements.
Baroness Blatch: My Lords, it may interest the noble Baroness to know that my speech included a paragraph on transitional arrangements.
Baroness Hamwee: My Lords, in that case I apologise to the House. I shall read that paragraph. However, I hope it says that it will not be the gainers

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who assist the losers. The safety net arrangements was one of the major factors that swiftly brought the poll tax into disrepute.
The first debate to which I listened when I came to your Lordships' House a short time ago was that on the Local Government Finance and Valuation Bill. During that debate I could not help thinking that every argument being put forward seemed to be a good argument for a local income tax. I shall not spend a long time today referring to the merits of a local income tax but it is the view of those on the Liberal Democrat benches that the council tax is not a good tax and that a perfectly good and workable alternative is available. The Minister said that a local income tax would create an administrative nightmare. That is a little rich coming from the Government who introduced the poll tax and who are about to introduce the council tax. The more I have read the Bill the more I have been strengthened in my view that local income tax is the right way to approach local government finance.
Why not have a tax that can be collected through the existing system, a tax that will be understood by the taxpayer, a tax that works in Europe and in the United States, a tax that was recommended by the Layfield Commission and a tax that does not have to go through as many hoops as a council tax will in terms of complicated qualifications to a basic scheme in order to achieve a semblance of fairness? A semblance of fairness is all that this tax will have. Why not have a tax that is directly linked to income and reflects one's ability to pay?
If the council tax does not take us back to a culture where tax is something to be paid rather than to be avoided—the poll tax fiasco must be the largest debt collection exercise that the country has ever seen—it will fail. We on these Benches will do what we can through amendments to make the tax more workable and more fair but every amendment will reinforce the fact that a property tax cannot be related directly to ability to pay. The very fact of banding emphasises that. The personal element of the tax makes no real attempt to relate to what people can pay. The tax will cause unfairness and hardship. It is not a tax of common sense.
4.25 p.m.
The Lord Bishop of Chelmsford: My Lords, I want to turn from the heights of the broad philosophy of the council tax and its wider effects to one particular area of its application. In the debates on the Bill both here and in another place there has not been until today any mention of the way in which the provisions of the Bill affect the Church in general and the clergy in particular. I am therefore grateful to the noble Baroness, Lady Blatch, for what she said earlier. I speak as chairman of the Churches Main Committee, a body which represents some 35 Churches and denominations.
There are particular problems for the Churches and not all of those are recognised by the Bill. By and large the clergy live in tied houses. Unlike most people they cannot choose where they live. Moreover the official
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accommodation, which is generally a condition of their office, bears little or no relation to their modest income. That fact is recognised for income tax purposes as it was also recognised in the way domestic rates were levied. In contrast, however, there has been no special relief from the community charge, which, even allowing for the reduction scheme which has taken effect this year, represents a very heavy burden on the Churches and one that they could well do without.
Essentially, what the Churches are looking for is a local tax regime, the effects of which are comparable with what they experienced under the rating system rather than what they have been suffering under the community charge. The Bill now before us does not contain any special provisions giving relief for the clergy. I am bound to say that that is cause for disappointment and concern. However, I am pleased to say that in one important respect the treatment of the clergy for council tax will be more akin to their treatment for rates than for the community charge.
At present, where the Church pays the community charge on behalf of a clergyman for whom it has provided accommodation that payment is treated as a benefit and is grossed up for income tax. However, it has now been agreed that under the provisions of the new council tax such payments by the Churches will not have income tax implications for the clergy. That is a considerable advantage. The Churches Main Committee thinks it right and fair and we are glad that the Government see it in the same way. Furthermore, we are glad that it has been agreed that, through designation as the owner of the property, a Church may be made responsible for payment of the council tax, so freeing the clergyman of any personal liability. We are led to believe that, as a result of these concessions, the Churches will suffer much less from the council tax than they did when the community charge was introduced. I devoutly hope that that will prove to be so, but it remains to be seen just how it will work out.
Frankly, we should have liked more generous treatment in matters such as the taxing of religious communities, property banding and other areas. We are, nevertheless, grateful for the steps which have been taken to meet us, and we appreciate the goodwill that Ministers have shown in the exchanges that we have had with them. Financially speaking, these are difficult days for the Churches, as they are for so many voluntary bodies which are part of the nation's life. I trust that there will always be the will to see that they are not hindered unnecessarily in fulfilling their appointed purposes, and that that goodwill may be increasingly evidenced in such fiscal policies as are from time to time introduced.
4.31 p.m.
Lord Trefgarne: My Lords, it is extraordinary, (is it not?) that on an occasion such as this when we are, for all practical purposes, pronouncing the last rites over the community charge, that the two principal speakers from the Opposition Benches have so disappointed your Lordships—or so disappointed me, at least—with regard to what they have as alternative

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proposals. The noble Lord, Lord McIntosh of Haringey, had a golden opportunity, if I may say so, to explain to your Lordships the merits and advantages, as he sees them, of the return to the rates which is proposed by noble Lords opposite. But of those proposals, we heard virtually not a word. Why can that be?
Lord McIntosh of Haringey: My Lords—
Lord Trefgarne: My Lords, the noble Lord has had his chance. It must be because when those proposals were put before the public during the course of last year they received the appropriate raspberry. The noble Baroness, Lady Hamwee, referred to the local income tax proposals to which her party has adhered itself. Those proposals too, as my noble friend has explained and will no doubt explain further, have considerable shortcomings. The noble Baroness told us nothing about the advantages except to say how many there were.
Baroness Hamwee: My Lords, perhaps I may say on behalf of myself and the noble Lord, Lord McIntosh, that had we spent most of our speeches advocating our solutions to the problem and only two minutes on the Bill the noble Lord would have asked why the Opposition spokesmen had not spent time discussing the Bill.
Lord Trefgarne: My Lords, I shall give way to the noble Lord, Lord McIntosh, if he now wishes to intervene. Both parties opposite have proposed distinctly different solutions to the problem—and it is a problem—of local taxation; but none of the details or merits was put before your Lordships this afternoon.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for reconsidering his view that I should not intervene. I can say only that he and I have a different view of the role of the House. This is an unelected, undemocratic Chamber whose job is to consider Government legislation and, if possible, to improve it. That was the thrust of my speech and that of the noble Baroness, Lady Hamwee. When it comes to making new policy statements, they will not be made by my party in this House.
Lord Trefgarne: My Lords, the proposals are not made in this House, as the noble Lord rightly says, but the proposal for a return to the rates, which the noble Lord and his honourable and right honourable friends have sugested, was not made in this House; it was made in a public forum some months ago. I am surprised—I put it no more strongly than that—that the noble Lord did not think it right to tell us more about those proposals.
I shall now return to the Bill. Be that as it may, I support the proposals contained in it which, as I said earlier, pronounce the last rites over the community charge which has, as we have frequently said on this side of the House and elsewhere, caused us some considerable difficulty.
There is however one element of the Bill with which I have some difficulty and about which I have been in discussion with Ministers in the Department of the
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Environment. It is the issue of attachment of earnings. As your Lordships will be aware, under the community charge legislation, once an order has been made by the magistrates' court against poll tax defaulters, as they came to be called, they can have their community charge compulsorily deducted from their salaries by their employers. That arrangement has caused considerable difficulty, especially for smaller companies. Poll tax defaulters who are in employment, almost by definition, are not paying their community charge because of political objections, not because they do not have the necessary funds. I do not say that that is so in each and every case, but clearly the majority of those in employment can pay their community charge, if they choose to do so, and are not paying because of political objections.
The result of that action is that in small companies, as I have said, there is great difficulty between the employer and his employee, because the employer is seen to be doing the Government's dirty business in collecting the community charge. In small companies, that has caused a great many problems. In some of the companies in which I am interested, as president of one of the trade associations, there may be as few as 20 employees. The owner of the company is often the manager, knows each and every one of those employees personally, and finds it unpleasant under present legislation to have to deduct the community charge from the wages of the employee involved.
In representations that I made to Department of the Environment Ministers, I was therefore anxious that those arrangements should not appear in the council tax legislation. I am still in discussion with Ministers. The arrangements are included, but I hope to be able to persuade Ministers that some alternative proposal would be better. I may have to return to that matter in Committee.
There are powers to make regulations in Schedule 4, and in Schedule 8 which broadly applies the same provisions in Scotland. It may be that I shall receive appropriate assurances about the intention to make regulations which will, for example, exempt small companies from the compulsory attachment provisions, but that is a matter which I can explore only at future meetings with Ministers and perhaps in Committee.
4.37 p.m.
Lord Stoddart of Swindon: My Lords, before I speak I should declare that I advise NALGO. When the Minister introduced the Bill, I noticed that she referred to the community charge; but when I read the Second Reading debate of the other place I noticed that the right honourable gentleman, the Secretary of State, mentioned the poll tax in every reference he made to the tax. I do not know whether that is just a matter of semantics, or whether the Minister regrets the passing of the poll tax, whereas of course her right honourable friend never supported it in the first place. That is an interesting point, and perhaps the Minister will respond to it in due course.
I also want to know why there has been no apology for forcing the poll tax on an unwilling Parliament and an unsuspecting country against virtually all advice,

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political and professional. Indeed the Minister had the temerity—I use that word advisedly—to criticise the Opposition Front Benches for their proposals which they will rightly put forward in due course at the proper time. She had the temerity to criticise those proposals when the proposals which she supported were so disastrous for the country and the Tory Party. We must go back over the matter. We cannot let the Government get away with it. The poll tax caused enormous damage and huge costs in respect of collection. Let us not forget also that it caused riots.
Baroness Blatch: Caused by your colleagues!
Lord Stoddart of Swindon: My Lords, they were not caused by our colleagues. Let us not make any mistake in that respect. That fact would have to be proved. The poll tax caused riots which resulted in injuries to policemen. In countless cases it doubled—and in some, trebled—the amount paid by domestic ratepayers thus causing them much distress, not least among Tory supporters. What is more, it lessened respect for the law in that a huge proportion of those liable to pay the poll tax have not done so. As I said, considerable damage has been done.
The Earl of Onslow: My Lords, I must briefly interrupt the noble Lord. It is worthwhile pointing out that the community charge or poll tax, call it what you will—and I speak as someone who has been against it all along—was a main plank of the 1987 election manifesto upon which the Government were elected with over a 100-seat majority.
Lord Stoddart of Swindon: My Lords, I must confess that I took part in a lot of canvassing during the 1987 election. That fact was not mentioned to me on the doorsteps. Perhaps the reason is that it was summed up in only five lines of the Tory Party manifesto; in other words, they were trying to hide it. They were not trying to advertise it.
As I said, the poll tax has caused an enormous amount of damage. Indeed, it has led to many people not paying it. Those people who have not paid are having their poll tax paid by other people. That is one of the great anomalies of the system. In fact, I paid £118 of my bill—that is 18 per cent. of the total bill—because of defaulters in respect of this iniquitous poll tax. I see that the Minister wishes to intervene. I am happy for her to do so.
Baroness Blatch: My Lords, I am most grateful to the noble Lord. As I shall not be summing up the debate, perhaps I may clear up two points. First, a full Green Paper was issued in 1986. That was one year before the election. Secondly, I should like to put on record my own personal view point. I call it, and have always done so, the community charge. I voted for it and supported it. However, I also conceded the point that it was perceived to be unfair. I believe that with considerable courage a very good alternative, which I think will be perceived to be fair, has been put in its place.
Lord Stoddart of Swindon: My Lords, that is an interesting confession and one of which I am sure we
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shall all take note. I feel sure that the House will understand the reasons why the noble Baroness has now repented.
Baroness Blatch: Never!
Lord Stoddart of Swindon: My Lords, if the noble Baroness has not repented why on earth is she supporting this Bill? She cannot have it both ways. However, I do not wish to be unkind to the noble Baroness because she is a very nice person. Indeed, it would not be fair to do so.
I was in the process of dealing with the point of non-payment of the poll tax. That was a disaster for so many people who have had to pay a great deal more as a result of such non-payment. The 18 per cent. in my case compares with only 3 per cent. to 4 per cent. non-payment under the old rating system.
The poll tax was supposed to be about accountability and local control. Indeed, I took the trouble to read the Hansard report of the debate on the Local Government and Finance Bill which took place on 19th May 1988. In cols. 832 and 833 the noble Earl, Lord Caithness, who was moving the Second Reading debate, said:
"Without these reforms the alternative is continuing and increasing central government involvement to protect those who are penalised by the unfairness of the domestic rating system and to safeguard the interests of businesses, particularly those in high spending areas. The choice is central versus local control".
That is what he said. But what has happened? Instead of more accountability and local control, we have had less accountability and more central control. None of the objectives of the poll tax was met—yet there has not been a word of apology to Parliament or to the people for the introduction of that tax. Instead, we have a brazen attempt by the Government to shrug off the poll tax disaster and the pretence that it was some other government that introduced it in the first place. One would never think that the same government which introduced the poll tax is now introducing the council tax. It is a conjuring trick. But I suppose that that would happen with Mr. Major as Prime Minister —he has had some experience of sleight of hand.
But, to add insult to injury, the Government now have the nerve to introduce this Bill which, far from settling the issue of local taxation, simply substitutes one tax full of unfairness and anomaly for another full of other anomalies. The new tax, the council tax, is based on property capital values. Thus the Government have accepted a basis which they previously decided was unworkable. They told us that capital values was an unworkable system. Yet they have now accepted them as the basis of the new tax.
However, as we know, the Bill proposes that tax should be levied not according to the actual value of individual properties, but according to bands. That in itself is a recipe for unfairness and dispute. There will be hundreds of thousands, if not millions, of appeals. But, even worse, is the provision in the Bill to limit the amount paid by the rich to three times that paid by the poor. That is a great anomaly. So ability to pay is not part of the Bill.
The chairman of British Telecom or of British Airways on a salary of £500,000 a year will pay only

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three times that of, say, an electrician on a annual salary of £11,000. Perhaps the Minister can explain why it is right for salary differentials to vary by factors of 50 and more, yet local tax liability is to be confined to a factor of three. That cannot be fair. Taxation, whether it be national or local, should be related to the ability of a person to pay and not to some arbitrary relationship plucked out of thin air by Tory Ministers anxious not to offend their friends and paymasters.
When householders understand the details of the Bill—that is, the absurdities, the anomalies, the unfairness and the increased amounts that they will have to pay—there will be another explosion of anger similar to that experienced over the poll tax. It would have been far better to have worked out a fair local tax system based on real property values and related to the ability to pay.
Perhaps I may now say a few "words—because I believe that something ought to be said—about the staff of local government who have had to bear the brunt, first, of preparing and implementing the poll tax and then of ironing out the anomalies. While doing so they have had to bear the brunt all the time of public anger often to the extent of being at risk from physical attack. We should take note of that fact. They are the people at the sharp end. Now, with only a week or two to prepare, they have had to implement the Government's panic measure to transfer local expenditure to the national exchequer to reduce poll tax bills by £140. This year and early next year they will have another rush job to implement the council tax by 1993. I do not know whether they can do that, but they will have to do it in a rush.
The staff have received precious little thanks or recognition for their efforts. Indeed the Local Government Bill which will leave this House next Monday will put many local government officers' jobs in jeopardy. All our efforts to give them some protection were brushed aside by the Government during debate in Committee and during the Report stage of that Bill. Perhaps even at this late stage the Government might reconsider their position and give local government staff some better reward for their patient loyalty and dedication than putting their jobs out to competitive tender and imposing compulsory redundancies.
My next point I have made in the House on a previous occasion. In my view it is quite wrong that local authorities should have only one source of independent income, that is the domestic rates, the poll tax or whatever form a local tax may take. Local tax now meets only 14 per cent. of local expenditure in England. In Scotland it meets only 11 per cent. of that expenditure. Under those circumstances there can be no independent local government. Indeed the Government already have the power—that power will be entrenched by the Bill—to cap the expenditure of every single local authority in the country.
Lord Strathclyde: Hear, hear!
Lord Stoddart of Swindon: My Lords, in saying "hear, hear" it is obvious that the Minister does not believe in independent, democratically elected local government. He wishes local government to be
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elected, but he then wishes central government to control everything done by local government. That is a nonsense and is quite unworthy of the Minister.
Lord Strathclyde: My Lords, this Government are not willing to see local authorities and their councillors abuse their powers and charge their local council taxpayers as much money as councillors wish. That is blatantly unfair and that is why we have introduced capping powers. Incidentally in Scotland there has been a capping power provision since 1929.
Lord Stoddart of Swindon: My Lords, there is no evidence that local authorities abuse their powers. Local rates increased because of the enormous reduction in government resources that were made available to local authorities. If we believe in local democracy, we should believe that local people should decide what level of expenditure they want and should be allowed to elect the people who will provide that level of expenditure and the corresponding level of services. If we want a return to realistic democratic local government, we must allow local authorities a greater level of their own resources. We should return control of business rates to local councils. That would help the position a great deal. However, I go even further than that. My party does not agree with my next point but I believe nevertheless that there should be a local sales tax.
I also believe that local authorities should be allowed a proportion of excise duties levied on petrol and diesel fuel. That would give them additional finances of their own to use on behalf of their ratepayers. Until local authorities are given much larger resources of their own, they cannot operate, as they should, as providers of services that their electors want and need, and as innovators and experimenters in many fields.
The Bill does not address the real problems of local government and it was conceived in haste to save the Conservative Party from an ignominious rout at the next election. The Bill is being rushed through Parliament without sufficient time for proper thought and debate of its provisions. The Bill does not deserve the support of your Lordships' House. I am only sorry that the conventions of this House prevent a vote from taking place this evening and therefore deny me the pleasure of voting against what I deem to be a thoroughly bad Bill.
4.55 p.m.
Lord Selsdon: My Lords, I shall speak in general terms rather than go into detail as I foresee a long Committee stage of this Bill where I hope detail after detail will be ironed out. The original rating system, while properly conceived, became archaic and needed changing long before changes were made. It is probably unfortunate that some form of change was not begun 20 or 30 years ago. Various distortions in our society made the system inevitably archaic. One such distortion was the breakdown of the family unit and the move towards smaller families. Another distortion was the advent of the property owning

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society. Perhaps the greatest distortion was the adjustment caused by the inflation of property prices. That distortion made the rating system totally unfair.
The unfairness became relevant only when what I regard as one of the saddest breakdowns in society in my living memory occurred. I refer to the decline in the integrity and the image of councillors. I was brought up to believe that politics were about people and cities. It was a marvellous achievement for a citizen to become an alderman or to join a council. It was an achievement in which the citizen took great pride. From that moment he took on a great responsibility. In general, over many generations, that responsibility was properly fulfilled and the powers were properly used. Even in cities where unfair anomalies existed adjustments were somehow made without the need to resort to the law. I cannot comment on whether we were a more caring society in those days. However, over some years a change occurred. I do not know whether it was motivated by political selfishness. The change led to what some people would term council bashing. Good councils destroyed themselves. It was politicians at a local level who brought about the destruction, causing frustration and despair among officials who in general have high standards.
A town clerk or a chief executive of a council was a man of utter integrity. Officials were continually concerned with public accountability. Then a problem emerged. This Government, whom I support, decided to decentralise and give more power back to the people. However, the bodies that represented people at a local level had almost destroyed themselves. There was hardly anyone to give power back to or anyone who could responsibly handle that power. That applied particularly to issues of spending.
What I have just referred to illustrates why there was a need for more urgent reform of the rating system. There was a need to hurry. Undoubtedly, the community charge became a political issue. I forget how and when it came to be called the poll tax. That was a politically clever term. Now we have a new Bill and an opportunity to debate it. We are all agreed that the brave step of moving towards reform has been taken. I hope that reform has been well conceived and well guided. Reform is on its way.
I have studied the Bill; I believe it is well conceived. A council tax for residents should be based upon property. Such a tax is easier to collect and perhaps easier to assess. However, I am a little more worried about the uniform business rate. In recent years there has been an overall increase in taxation—quite apart from allowances and receipts to the Exchequer—which is important, but I believe the uniform business rate is destructive for businesses and for regeneration at a time when we need that movement and that growth.
Because it is a topical and an easy example, I take Scotland as an example. I hope I shall be forgiven for that, as I am a descendant of a dying but not yet extinct breed—the Conservative Member of Parliament in Scotland. My grandfather was Member for Lanark and Maryhill. I have been reading his
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election addresses, which are very similar to those which are made today. In those days much more attention was paid by Members of Parliament to the economic strength of their community. Since historically it is my city and since one of the councils bears the name of my noble friend Lord Strathclyde, I shall deal with Glasgow in particular.
Glasgow, which was the second city of the Empire and an industrial society proud of its considerable strength in building 70 per cent. of all the steam locomotives and perhaps 50 per cent. of all the ships floating on the seas of the world at the start of the First World War, changed gradually over time. Its council has always been a subject of pride; it has been well managed, irrespective of its political masters.
At present Glasgow faces an interesting situation. I believe that there were 490,000 poll tax payers but 100,000 disappeared. They could not be found and their poll tax could not be collected. Having been the city of culture and now pushing towards a new future, Glasgow recognises the need to shift from heavy industry to what might be termed higher tech and higher levels of education. In Scotland people spend an extra year at university and may be deemed to be slightly better trained than those in England. That is not a partisan remark. Here is a city which wishes to regenerate itself. The private and public sectors are finding a way to work together. Yet the uniform business rate is 41 pence in England and 65 pence in the city which we wish to encourage, particularly post Ravenscraig. I should be grateful if my noble friend the Minister would look at that issue.
We also find that in an area where regeneration is necessary—and there will be other such areas around the country—there is a shortage of funds, as the noble Lord, Lord Stoddart of Swindon, pointed out. In the case of Glasgow 15 per cent. of finance is raised locally and 85 per cent. centrally. In areas where regeneration is vital there is a need for government and councils to work more closely together and with the private sector. I believe that many of those divisions have now disappeared. I also believe that, perhaps wisely, the parties of noble Lords opposite are beginning to shift in the direction of my own party in much of their political and social thinking and that the divisions in our society are no longer as great as they used to be.
I say to noble Lords that this Bill deserves a fair hearing, which it will have over time. If some political aspects can be set aside—and let us assume that those were dealt with in the previous Bill—we can now look pragmatically at how we can raise more money to be consumed at a local level without creating inflation, particularly taking into account the current depressing situation in terms of world economies. There is an opportunity for the future.
I support the Bill. I applaud the courage of the Government in having sought to reform the rating system in the first place and their greater courage in producing a new Bill to replace the previous scheme.
5.4 p.m.
Baroness Seccombe: My Lords, it is with pleasure that I rise to speak in wholehearted support of the Government's proposals for the council tax. The tax

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will raise the necessary finance for local government. Measures to raise tax will never be the most popular which any government bring before Parliament, but people want to see this tax in place as soon as possible. Therefore, it is important to support the legislation which will achieve that.
The measures I shall mention have already been referred to many times. I therefore ask for your Lordships' customary forbearance, but I wish, by repetition, to stress the importance of those measures.
I welcome the introduction through the council tax of one bill for each household. While based on the value of the property the bill will also reflect the number of adults living there. Thus the council tax preserves in some measure that element of accountability which was such an important and acceptable part of the community charge. It seems eminently sensible to base the level of the council tax for each household on the assumption that two adults live there, with single households receiving a 25 per cent. discount. Since 87 per cent. of all households have either one or two adults 38 million out of a total of 41 million adults living in Britain will be taken into account in the calculation of the tax. Working on that basis will eliminate the need for a separate register and make the collection and enforcement of the tax much simpler, saving time and therefore taxpayers' money.
The property element of the tax will be based on the value of properties. In England that will range from the lowest band of under £40,000 to the highest band of over £320,000, with six bands in between. The resulting tax will mean that a household in the highest band will pay about three times more than a household in the lowest band in the same area.
The necessary legislation has already been passed and the task of putting all residential properties into bands has begun. That enormous task should be completed within the next six months so that the new tax is in place to fund local government from the financial year beginning in April 1993.
I am delighted that the Government are not proposing a local tax which resembled the old rates. The obvious unfairness of the rating system meant that it was thoroughly discredited. The very high rates bills in many areas caused great problems and real hardship for many ratepayers who were unable to cope with the dramatic rises which took place year by year. Those problems were particularly acute in Scotland where revaluation had made a significant difference, producing sudden and extortionate rises in rate bills.
The structure of the council tax ensures that there will be no return to the very high bills which characterised the old rating system. So does the new balance of central and local financing of local government with central government now funding 85 per cent. of the overall local government budget. That shift has already substantially reduced the burden of local taxation through its funding of the £140 reduction in community charge. It will continue to lead directly to lower bills.
It is pleasing to know that under the council tax there will be an extensive rebate scheme of up to 100 per cent. for those on low incomes. Households in
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which all the residents are students will be exempt from the tax. Students, including student nurses, apprentices and YT trainees, who are sharing with other adults will not be counted for council tax. Therefore, if they share accommodation with one other non-student that person will qualify for the 25 per cent. discount.
I am sure that members of your Lordships' House were delighted to see some of the changes accepted at the Committee stage of the Bill in another place. I refer in particular to the new provisions affecting disabled people. Under those provisions a disabled person who needs additional space in a property for wheelchair circulation or an extra room for special needs will have the property valued one band lower than its actual value. That will benefit up to 160,000 households.
The Local Government Finance Bill also includes provisions to bar councillors who have not paid their community charge or council tax bills from voting on the level of local authority spending or bills. Councillors' allowances will be treated as earnings so that provided a local authority has obtained a liability order against a councillor for non-payment of the council tax an attachment of earnings order can be made. That seems eminently fair. Councillors who break the law bring disrepute to the whole system of local government.
We are all well aware of the importance of local government, an area of national life in which so many of your Lordships have played a distinguished part. We must therefore be concerned that it should be financed in the most efficient way possible, producing not only good value for money but also better services for the local taxpayer. I believe that that will be achieved by the council tax.
5.10 p.m.
Lord Ennals: My Lords, I pick up the last point made by the noble Baroness who said that we all recognise the importance of local government. As my noble friend Lord Stoddart said a few moments ago, local government officers and councillors have taken a terrible amount of stick as a result of the clear decisions taken over the years by this Government to undermine the powers and responsibilities of local government and to transfer to the centre powers which ought to be held locally. The Government have a great responsibility for the damage which has been done to local government. I wish I could agree with the noble Baroness who uttered such reassuring words about how much we all support the principles of local government.
I congratulate my noble friend on the Front Bench on the presentation of his case. I have four brief points (which will be picked up at Committee stage) to make about the effects of this tax on particular interest groups: citizens advice bureaux, voluntary organisations, people with disabilities and nurses. Perhaps I may start with a few general comments.
Following from the events in another place, I was staggered by the arrogant way in which this legislation was presented to Parliament, without any apology for the Government's crass stupidity in forcing the poll

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tax on the country against all advice—certainly against the advice of the Opposition parties—and at great cost. They have imposed great hardship on the nation and caused immense hardship to poor people. As my noble friend said, the poll tax has cost about £10 billion, quite apart from the contribution which I believe it has made to the present sad situation of this country's economy. In the present controversy about tax levels I have heard no statement of regret that 2½ per cent. of the level of value added tax is due directly to the poll tax.
In the Second Reading debate in another place the approach taken by Mr. Heseltine, the Secretary of State for the Environment, staggered me. He said:
"The only apology that is required is one from the Labour party, which is frustrating our attempts to get rid of the poll tax".
I must say that is really a bit much. It is as if somehow or other it was this side of the House—the Opposition—which imposed that appalling tax upon the nation.
He went on:
"The poll tax is going, and nothing that Opposition Members can do will deter us from doing what we intend to do".—[Official Report, Commons, 11/11/91; col. 783.]
I have no doubt at all that all my noble friends here and in the other place want to see the poll tax go. We never wanted it. We ran campaigns to get rid of it. Thank heavens, the Government eventually listened, but they listened in a most extraordinary way. It seems to me that they have taken no trouble to ensure that what is put in its place is better than what they removed. As the mistakes become apparent, it is extraordinary that they now want to rush this Bill through Parliament.
I understand that they want to have maximum freedom to go to the electorate and say: "We have got rid of the poll tax that we introduced. It was of course done by some other people". It was interesting to note in Mr. Heseltine's representation that he made clear that he had opposed the measure. But what was the position of the Prime Minister, the Chancellor of the Exchequer, the Foreign Secretary, the Leader of the House and the Home Secretary? They all supported the measure. They seem to be getting their facts and figures wrong again.
When the Government introduced the poll tax they said that the average bill would be £178. They soon revised that figure to £278. In fact the average turned out to be £357. The signs are that this time they have once again got their figures wrong. The Government determined that the average house price in England was £80,000. According to the Nationwide Anglia Building Society the average price of a home in Britain on 1st April 1991 was £57,731, which was some £22,000 below the Government's figure. The Halifax Building Society put the price at £64,086, which was merely £16,000 below the Government's figure. If the Government have miscalculated the number of properties which will be in each band—
Lord Strathclyde: My Lords, perhaps the noble Lord will give way. Will he accept that local authorities, particularly socialist run local authorities, increased their spending by over a third between the old rate system and community charge?
Lord Ennals: My Lords, the Minister is not going to say that that was the reason why the Government had to put billions of pounds into helping protect people from the horrors of the poll tax payment—billions of pounds (I notice that the noble Lord, Lord Trefgarne, nods his head) which ought to have been spent on other things, such as the health service and community care. They mortgaged the money that they had in order to buy themselves out from the mess that they made with the poll tax. I am by no means certain that the Government have got their figures right this time.
I want to return to the way in which this measure was forced through another place. A quite extraordinary decision was taken to impose a guillotine right at the beginning of the consideration of the Bill. The guillotine Motion resulted in committee sittings from 10.30 each Tuesday morning through to 2 a.m on Wednesday, recommencing at 10.30 a.m. on Wednesday until the early hours of Thursday and resuming on Thursday morning until 10 p.m. that night. That is an absurd way to proceed, forcing a controversial measure through another place without giving proper time for consideration, consultation or representation by voluntary organisations. It is disgraceful that the Government should treat the other place with such disrespect. As a result, we in this House have a very special responsibility imposed upon us. Because the Bill was not properly considered in another place, we have to make sure that it is put right here. I hope that the Government will not curtail the time available for this House to consider amendments in order to get the matter straight.
The Government's tactics are to be deplored. The poll tax was forced through both Houses without adequate consideration, to the great disadvantage of the whole nation. As my noble friend on the Front Bench said, consider the number of people who have been unable to pay it, the number of court cases that are waiting to be heard and the number of people who have refused to register—which undoubtedly will change the fair pattern of an election result. We do not know exactly how many people are involved. It appears that there may be up to 1 million people who have decided not to register. That means a great distortion of a fair general election result.
Apart from those few comments, I want to touch briefly on some special interests which we shall want to look at carefully at Committee stage. The first one is the interest of the citizens advice bureaux. Their service believes that there should be a statutory duty on local authorities to make and fund the provision of independent advice in their areas. Without such a duty there is an increasing danger that advice services will be treated as an option which however desirable has to be sacrificed in order to protect other services that have statutory backing. The citizens advice bureaux believe that explicit provision for advice needs should be made within the standard spending assessment. I hope that a statutory duty to fund independent advice can be placed on local authorities in the Bill. We shall come to that issue when we reach Committee stage.
There are many aspects to the problem affecting voluntary organisations. I speak as president of MIND and also, like many other Members of this

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House, as one who is involved with many other voluntary organisations working at a local level. Voluntary organisations are worried that the new tax will continue to undermine local authority support for voluntary activity. Many voluntary organisations rely on local authority support through direct grant and discretionary rate relief. The introduction of the council tax with the continued use of revenue capping will further squeeze local authority discretionary spending.
A recent survey by the NCVO shows that local authorities in England and Wales have cut their funding to voluntary organisations by at least £29 million in real terms during 1991. About two-thirds of the cuts have been made by London boroughs and other metropolitan authorities. The survey indicates that urban authorities accounted for 85 per cent. of funding cuts. It is in those areas that needs are most concentrated and that difficulties with poll tax collection, revenue capping, and so on, are most acute.
As the Bill goes through this House it is important that we ascertain its effect upon individuals and the voluntary organisations which do so much to meet the needs of individuals. The noble Baroness, Lady Seccombe, referred to disabled people. People with severe disabilities who live in residential care will be exempt from the council tax as they are now from the poll tax. However, severely disabled people living in the community will not be exempt. If disabled people are forced into residential care because they are unable to afford the personal and domestic assistance that they need, the council tax may well be the last straw. Not only will they lose their hard-won independence, the Government's bill for residential care will increase greatly. We must ensure that disabled people are not put at any disadvantage.
My final point, which will be taken up again at Committee stage, refers to the interests of nurses. A reference was made to them by the noble Baroness, Lady Seccombe. The Royal College of Nursing welcomes the Government's decision to abolish the community charge. The regulations defining the term "student" for the community charge distinguish between nursing students pursuing new Project 2000 courses who are in receipt of bursaries and those students financed by means of a training allowance. The incomes of both groups of nursing students are broadly similar. However, under the community charge provisions, Project 2000 students pay 20 per cent. of the tax while other nursing students pay 100 per cent. That extraordinary anomaly remains in the Bill. We shall wish to direct our attention to it at Committee stage.
Like my noble friend Lord Stoddart, I cannot possibly welcome the Bill. I have great fears that local authorities and the public will suffer severely, although Perhaps not as severely as they do from the poll tax. Unless we do our job carefully, thoroughly and substantially in this House, we may have a Bill that is as bad as the previous Act. I note that the noble Baroness, Lady Blatch, shakes her head. She said earlier that she recognised the error of her ways. After four years of monumental, crass stupidity, there comes a moment when people have to mend their ways
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in particular when the boss has decided that a totally new system will be introduced. If they do not mend their ways, they cannot continue to use the same arguments. I give way to the noble Baroness.
Baroness Blatch: My Lords, the noble Lord misinterprets what I said. I stated that I voted for the measure; I supported it; but I readily conceded that it was perceived to be unfair. I believe that courageously an alternative has been put in its place which I support. I believe that it will be perceived to be fair. That is what I said, not that I conceded the error of my ways.
Lord Ennals: My Lords, I am most grateful to the Minister for clarifying the situation. I do not agree with the last sentence. I believe that the measure will be seen to be another gross error. That is why I stated that at Committee stage we must examine the Bill with the greatest possible care.
5.25 p.m.
Lord Mackay of Ardbrecknish: My Lords, it is said that confession is good for the soul. Before any noble Lord opposite accuses me of selective amnesia, I should admit that I played my part in the abolition of domestic rates and in the introduction of the poll tax. Over the Christmas Recess, I read some of the notes that I took at the time and the press cuttings. My defence—if it is a defence and if that is allowed—is that even I forget with the passage of time the mayhem that was created by the revaluation of rates in Scotland in 1984. We ought perhaps to have realised that because a fair degree of mayhem fell around the heads of the Labour Government in 1977 when they had the previous revaluation.
However, it was out of that mayhem of revaluation and from the considerable trouble that occurred in Scotland at the time that the poll tax evolved. Interestingly enough, the concept came first from the Adam Smith Institute in a pamphlet in 1985 by Mr. Douglas Mason—I believe he still considers that it was a splendidly good idea. Secondly, later in 1985, another pamphlet was published entitled The Case for the Poll Tax by Michael B. Forsyth who was then and is now the Member for Stirling. By the end of 1985 we had decided that that was the way to get round what looked like the awful problem of the revaluation of the rating system that had taken place. We sought what I considered a fairer method of levying local government finance. It seemed a good idea at the time. In case any noble Lord opposite decides to intervene to help me on this particular course, the Conservative Party in Scotland paid a fairly heavy price for moving along that particular road. I had thought that I was preventing the noble Lord from intervening.
Lord McIntosh of Haringey: My Lords, the noble Lord will forgive me. He does not need any help. We would not intervene to help him. We love him leading with his chin in this way.
Lord Mackay of Ardbrecknish: My Lords, I do not know whether I should thank the noble Lord for that intervention. When considering the Bill I apply some tests and draw comparisons with the community

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charge and poll tax. I remind myself of the problems that occurred in the rating system up to 1984 which led to change. I ask myself whether this legislation will last a little longer than the half a decade approximately that the poll tax lasted.
I warmly welcome the Bill. The provisions cover Great Britain; they cover Scotland, England and Wales at the same time and in the same piece of legislation. The timetable to introduce the new tax will be exactly the same north and south of the Border. There is absolutely no doubt that previously the different timetable—albeit introduced to try to help Scotland as quickly as possible—was seen as manifestly unfair and discriminatory to Scotland. I believe that the Government are absolutely right in this regard. The critics of the Government are hypocritical. In 1984–85 they said that it was wrong for Scotland to go first. Today when provisions relating to Scotland are in the same Bill as those relating to England and Wales they still say that that is wrong and that the provisions should be separate. I believe it is right that we should consider local government finance in the same legislation and run the show at the same speed.
I believe that it is equally right that local government should raise some of its own money. There is always a temptation to say, "Let's have 100 per cent. grant and let's fund local government centrally". I do not believe that that would be right. Equally, I do not believe that it would be right—as Members on the Liberal Democrat Bench consider12/1/2006—hat we should add a minor tag on to income tax. I do not believe that it would be clearly identifiable by the people who pay it. It would be seen as a little piece of central government tax.
One of the arguments that I found difficult to counter in the mid-1980s was the argument that most other countries had some form of property tax but at that time we were moving away from it. Therefore, I believe that to move back to a property-based tax is not as revolutionary as some people may believe. One of the problems with the rates and the poll tax was that they had to carry too large a percentage of local government finance. Whatever system we chose to use to provide local government finance would have been improved—indeed, the poll tax was improved and rating would have been improved—if the Chancellor's decision of last year to increase VAT by 2.5 per cent. in order to increase the revenue support grant to local authorities had been taken six or seven years ago. If that had been done we may have managed to stick with the rating system, albeit with considerable amendments to improve the problems that it contained.
Noble Lords who live in England have not faced the traumas of revaluation. However, in Scotland quinquennial revaluations were enshrined into the legislation. Every time that comes about—not quite every five years—and during the change from rates to poll tax to council tax there is a huge temptation on local authorities quietly to increase their expenditure hoping that no one will notice. They do so under cover of the system being changed. I reluctantly welcome the
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Bill's powers to cap and control that portion of local authority expenditure that it receives directly. Without such powers the reduction of £140 in the poll tax would quickly be eroded by local authorities gradually pushing up their expenditure faster than they ought.
Perhaps I may look at one or two of the difficulties that have occurred with the poll tax. For example, there was the huge and unforeseen difficulty with registration. The council tax does not have that difficulty. The poll tax also had the difficulty of taxation of certain groups such as the mentally and physically handicapped, students and nurses. A property tax will not have such problems. The poll tax also carried the difficulty of the minimum 20 per cent. rule. That could have been changed, but I suspect that if it had not existed the poll tax would have been easier to sell. However, the water has gone under the bridge and now we have a different situation. The rule was seen to be manifestly unfair despite the fact that income support was increased. I welcome the proposal in the Bill of a 100 per cent. rebate for those who cannot afford to pay. I believe that the property tax, the council tax, has huge advantages over the poll tax and I suggest that it will be seen to be very much fairer.
I have asked myself what were the real problems about the rates and whether the council tax improves the situation. It would make no sense to return to the position that existed before the mid-1980s. I believe that rating was asked to carry too heavy a burden of local authority expenditure. That matter has now been attended to by my right honourable friend the Chancellor of the Exchequer. The details of the rating system, the assessed rentals and other complexities were never understood by a great majority of the population. I speak as someone who in a previous life tried to teach children about the rating system. I suspect that I and every other mathematics teacher in the country made a total and abject mess of doing so. That was partially due to the fact that no assessor was ever able to explain to me exactly how he reached his calculations. At one stage I appealed against my assessment. The appeal was not found in my favour and at the end of the day I was as wise as I had been at the beginning, despite the assessor's best endeavours to explain the matter. I believe that we had to move away from the artificial idea of assessed rentals.
Furthermore, I believe that one of the previous problems with valuation was that people asked, "Why is the valuation of my house £5 different from the house next door?". For that reason I believe that banding is easier to understand. The broad mass of people will be able to see clearly that their houses should be in such a band because of the other houses in the band. The banding system is broadly based, whereas the previous rating system to which the party opposite would favour a return would make people ask why there was a difference of £1, £2 or £5 between the valuation of their house and that of their neighbour's house.
I know that problems will occur about boundaries. However, there will be fewer problems about the boundaries of the seven or eight bands than there were

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in respect of the rating system. Every valuation had a boundary; it was between, say, my £780 valuation and my neighbour's of £781.
I have read the Bill carefully but did not see the word "quinquennial". I hope therefore that massive revaluations will not occur in the future. I also hope that there will be consistent valuations throughout the United Kingdom. One of the previous problems was the difficulty in explaining why a house in Scotland was valued differently from a house in England which appeared to be of the same type and value. Although the assessors will carry out the work in Scotland and the Inland Revenue will do so in England I hope that they will work together to achieve consistent valuations both north and south of the Border.
Noble Lords opposite have been a little cavalier in dismissing another problem with the rating system—that of the single person. The noble Baroness, Lady Hamwee, freely conceded that it was not fair to talk about the sole millionaire because there were many more people at the opposite end of the scale. They were single people who were being asked to pay considerable rates. I believe that the 25 per cent. single person's discount is sensible. I hope that it can be properly policed to ensure that people do not abuse it.
I tried to understand the provision about residential caravans. They presented an enormous problem for the rating system and the poll tax. There are individual caravans, caravans on sites, caravans with permanent residents and caravans with holiday residents. I hope that amidst the legal jargon of the Bill these issues have been properly addressed.
I am not sure about the 50 per cent. discount on second homes. Yesterday I noticed that the Highland Regional Council increased the multiplier from 1.5 to 2 and that it will build a couple of new primary schools with the extra £600,000 that it will collect. I shall be interested to hear the Government's defence of arriving at 50 per cent. I do not suggest that people should pay 100 per cent. but to assume that almost no one ever lives in them is not correct.
I hope that as regards enforcement the Government have Schedule 8 correct. Major powers are given to arrest earnings when people do not pay the new tax. One of the most worrying aspects about the poll tax is that certain irresponsible politicians have encouraged people not to pay. I am worried that an attitude of, "If I do not like the tax I won't pay it" has grown up. I hope that enforcement will be strict because it will be unfair if local authorities cannot collect the money that they need.
I have concluded that the council tax is better than the poll tax and the rates. Underlying it is an agreement on both sides of the House that some money must be raised locally, that there should be a 100 per cent. rebate and that it should be a property-based tax. Disagreement appears to exist about the broad or narrow bands, the 25 per cent. single person's discount and capping. However, the important point is that there appears to be a general agreement that this is the correct way to go. The Opposition will be tempted, naturally, to try to make it appear as though the Government are going down a road which is quite different from that which they
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would like to go down. However, the general agreement to return to some form of property tax, amended to take the problems out of rates, will be seen as sensible and will give a stable base for the funding of local government into the future.
5.40 p.m.
Lord Skelmersdale: My Lords, as almost every noble Lord has discovered, it is impossible to discuss the council tax without referring to the community charge, although I shall not go quite so far back in history as did my noble friend Lord Mackay when he referred to the rating system.
Another point which has been made on this side of the House is that for some of us it is confession time. While not being involved in the DoE at the time of the introduction of the poll tax, I voted regularly and unashamedly for it as a Member of the Government at all stages of its passage. I did that because I was and remain one of those who believes that it could have, should have, and indeed would have, worked as an acceptable method of local charging for services provided by local authorities had—and this is important—the Local Government Finance Act 1988 been amended extremely rapidly. I noticed several nods of agreement by noble Lords on the Front Bench opposite to some matters mentioned by my noble friend Lord Mackay. It is interesting that I now see one nod and one shake of the head. I do not know which one I should note.
Lord McIntosh of Haringey: My Lords, there is such a thing as a pitying shake of the head.
Lord Skelmersdale: My Lords, that must be a hybrid and we shall hear quite a lot about hybrids during the course of this Bill, shall we not?
There is much in this courageous Bill—as my noble friend Lord Selsdon called it—to correct the unfortunate side effects of the poll tax. I believe that there were two main reasons why that system did not succeed, one of which could have been rectified by an enabling Bill which would have made this Bill unnecessary. However, it would have been needed to rectify the other defect.
Although it was a fair tax in the sense that almost every voter was liable to pay something, the Government were unable to persuade enough people that it was so. Those people, not unnaturally because they were hit in their pockets, saw the financial unfairness of the Bill which is a distinction which needs to be made. Therefore, it is hardly surprising that the Opposition's duke and dustman argument carried weight, even though it was conveniently forgotten that the duke pays more taxes in total.
When I interrupted the noble Lord, Lord McIntosh, on that point, he rather clouded the issue by talking about regression. In this case I do not see that it matters whether a tax is progressive or regressive. The importance of the point which I was trying to address then and am trying to address now is the total tax levied.
Adults had to pay something according to their resources, and large discounts were available. They were not as large as those available under this Bill;

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but, nevertheless, they were large. Even so, a vast majority of the electorate believed that those with limited resources could not afford to pay even the discounted amount. It is a fact that income support was increased to enable those receiving it to pay the 20 per cent, of the average poll tax bill. Very few people believed that that increase was sufficient, and indeed by last year it was not. That belief was perpetuated by the fact that the Government never identified the amount by which they increased income support levels. They were extremely secretive about that following a well worn precedent that amounts for social security benefit are never sub-divided into amounts for, for example, food, fuel, and so on. Precedents are all very well, but I believe in this case that there are good and bad precedents and that that was of the latter variety.
However, the money was there. The irony of the situation today is that people receiving income support in Wandsworth have seen their standard of living rise slightly compared with those receiving income support living in more profligate local authority areas. Inevitably, too, some local authorities took advantage of the situation and the community charge was higher than the Government expected in many cases. Therefore, the increase in income support to which I have referred was not large enough. The Government have gone a long way towards correcting that major fault by subsidising the 100 per cent, charge payer by £140 per head and the 20 per cent, charge payer by £24 per head. That will certainly help to mitigate the fact that honest tax payers are subsidising the dishonest ones who refuse to pay their poll tax.
While the surcharge is to remain under the new regime, the 20 per cent, formula is to disappear. It was unpopular and mistrusted. However, that is no reason to abandon the community charge. Amendments and other concessions could have been made to achieve the same objectives as those of this Bill.
I believe that the second and main reason for the failure of the community charge was the difficulty of collection due to what I can only describe as a floating reference point. The charge was attached merely to people who of course move around rather than to property as it was under the old rating system and will be again under the council tax. That necessitated a much-hated register which people had to be on by law. I believe that they took grave exception to that for two reasons. If asked, those eligible to pay the tax had to inform the registration officer of all relevant details. It was a criminal offence not to do that, and they had to notify the registration officer when they moved. Some of our fellow citizens believed that to be so intrusive as to justify breaking the law in the most serious civil disobedience campaign in modern history.
In general, people look up to their elected representatives, whether they be local or national. When they heard of well-publicised cases of elected representatives breaking the law by not paying the charge, they joined them in ever-increasing circles. Moreover, they believed that to be on what came to be called the poll tax register was a passport to being placed on other lists and registers and that those other
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lists and registers were also a passport to the poll tax register. The Government spent much time and energy, and indeed taxpayers' money, to say as emphatically as they could that there was no crossing over between registers, but that was to no avail.
There is an irony to which the noble Lord, Lord McIntosh, and the noble Lord, Lord Ennals, referred. Recent suggestions have been made that no fewer than 1 million people in each of the past two years have disenfranchised themselves by not entering their names on the electoral register in the mistaken fear that their poll tax debts would catch up with them if they did. Even if the noble Lord, Lord McIntosh, is right in his figures, it is argued that most of those lost voters would have cast their votes in favour of the Labour Party. If that is so, by acquiescing in the civil disobedience campaign by not being harder on their supporters who were acting illegally, surely the Opposition are hoist with their own petard.
Lord McIntosh of Haringey: My Lords, the noble Lord makes two very serious allegations. First, that I am inventing the figures which are census figures. The April 1991 census figures show that there has been a reduction of 1 million, which is clearly not a real reduction in the population. The second is the accusation that we have acquiesced in civil disobedience. We have done no such thing. That has never been the position of the Labour Party. We have actively expelled those who have indulged in civil disobedience.
Lord Skelmersdale: My Lords, I am glad to hear that; but that is not my recollection. There were suggestions in some newspapers—and I confess that I have not seen the census figures—that there could have been as many as 1 million voters per year over two years, which would make 2 million voters. Nevertheless, the point remains as it was.
Baroness Blatch: My Lords, perhaps I may intervene and make a point related to that raised by my noble friend. Noble Lords opposite and their colleagues in another place did a great deal to promote the scare story that there may be a fear in people's minds that by registering on the electoral roll somehow or other there would be cross-referencing to the community charge registers. It was the promotion of that scare story that was responsible for a large number of people not registering.
Lord Monkswell: My Lords, I must intervene. That is a travesty of the truth. In this House and in another place we pointed out the risks attached, with the introduction of the poll tax, to people dropping off the register. In my own Labour authority and other Labour authorities throughout the country we tried time and again to make a distinction. We set up separate departments to keep the poll tax computers and registers completely separate from the electoral register. We did everything in our power to try and persuade the population of this country that coming off the electoral register would not impinge on their poll tax liability. It is the introduction of the poll tax that caused the devastation to democratic procedures in this country.
Baroness Blatch: My Lords, perhaps my noble friend will once again forgive me for intervening. The noble Lord opposite misses my point. It was the hyping-up of the idea that there would be a risk that caused the problems. In fact there was no risk in registering for a vote unless people deliberately wished to evade payment of their poll tax. There was no risk. However, it was the hyping-up of that idea that accounted for a large number of people believing that if they registered on the electoral roll, somehow or other they were at risk. They were never at risk. It was the hyping-up of that issue promoted by noble Lords opposite and their colleagues in another place that produced the problem.
Lord McIntosh of Haringey: My Lords, the reverse is the case. It is certainly not in the interests of Labour local authorities—as my noble friend Lord Monkswell made clear—nor of the Labour Party nationally to "hype up", as the noble Baroness so inelegantly puts it, a relationship between the electoral register and the poll tax list. It has always been in our interests both at local authority level and as a party nationally that everybody should pay their poll tax. Is the noble Baroness seriously suggesting that 7.5 million people are not paying their poll tax because of political motivation? If so, all I can say is that Trotsky must be revolving with glee in his grave.
Lord Skelmersdale: My Lords, we should perhaps return to some sort of order. Nonetheless, I hope that the noble Lord, Lord McIntosh, will agree that the most hated issue in the poll tax was the register.
Lord McIntosh of Haringey: My Lords, it was.
Lord Skelmersdale: My Lords, opposition to the tax grew and grew. In my own mind I am sure that that opposition could have been overcome if the concessions embodied in the Bill had been effected in an enabling Bill. However, that is not to be. As an Arian, I, for one, do not believe in crying over spilt milk. It is far better to cut one's losses and go on to other things. I do not call that panic; I call it practical politics.
That is exactly what the Government did in introducing the Bill. By linking the locally raised element of local finance once again to a fixed point—property—there is no need for the hated register. That was the only good element of the rating system. The bad elements were numerous but the most unfair element was that houseowners and tenants were taxed for improving their homes. Under the council tax legislation there will be no register and no tax on improvements. There will be no need, because of banding, to have regular or frequent revaluations. As I understand it, once placed in a band a house will remain there until it is sold for a greater or lesser amount or until there is a general realignment of house prices of which a future government will have to take notice. I do not believe that that happens more than once in a blue moon. I am sure that my noble friend will return to the point when replying to the debate.
The owner or occupier will normally be responsible for paying the tax which consists of a 50 per cent. housing element plus a 50 per cent, people element.
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There is anxiety among noble Lords opposite in regard to that hybridity. I cannot think why. After all, it is the people in the houses who pay the tax. It would be tremendously unfair for a single pensioner to be expected to pay an average occupant's charge when the average house—in fact, well over the average—is occupied by two adults or more. For example, if a recently widowed single pensioner does not want to move house, he or she should expect to pay the housing element as before. However, because less council services are being used those people cannot be expected to pay more than their fair share. Another and much better system applies under the Bill than it did under the poll tax legislation. Instead of registering to pay the council tax in the first place, people must apply for a reduction in their bill. That is much more likely to happen.
The greatest benefit of the new system is simplicity. I do not mean the Bill. Local government finance Bills are never simple, as many noble Lords have already pointed out. I mean simplicity for the taxpayer. No matter how many adults are in the house they will be charged twice the property element. How they pay will be a matter for them. Single people and students will be eligible for a single person's rebate. People on 100 per cent, income support, if I have read the Bill correctly, will pay nothing at all. Everyone, according to their resources, will be eligible for up to 100 per cent, discount.
The system is not totally fair set against the poll tax where everyone paid something. However, the proposals in the Bill will be seen to be fair and will be acceptable to the great mass of the British public. For example, I am sure that disabled people in specially adapted accommodation will be pleased to have their homes moved down a band.
I congratulate the Government on producing a hybrid that is almost fair and will be widely seen to be fair by the taxpayer. My only regret is that we are getting further away from the relationship between the voter and the taxpayer. That said, I wish the Government well in operating the system, as I am sure that the electorate will allow them to do.
5.56 p.m.
Lord Desai: My Lords, first, let us note that the Bill represents a missed opportunity for reform of local authority finance. Over the past 17 years there have been many discussions since the Layfield Committee reported on how there should be a proper system of local authority finance. Many noble Lords pointed out that the rating system contained problems. Of course it did. But they were not insuperable. They were problems which could have been solved at a fraction of the cost imposed by the poll tax.
Despite what the noble Lord, Lord Mackay, said, the rating system is a simple idea. It is the idea that any piece of capital yields a stream of income and that stream of income can be a basis of taxation for that piece of capital. It is an inverse of the process of compound interest. In assessing the rental income of a property all sorts of specific adjustments must be made, because houses one from another are not alike. They are not comparable because that is the nature of

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housing property. It is not like a piece of machinery. That means rental income is not easily comparable. However, the principle that there should be a rental income related to the capital value of the property is perfectly straightforward.
Many years ago, when the revaluations were introduced, politicians throughout the country should have received a modicum of education in economics to enable them to explain to citizens that when one lives in an inflationary climate where capital values rise, it is absolutely straightforward that the capital values must be revised upwards. Then the rental income can be revised upwards. To me it is so elementary that I would not teach it to my first year undergraduates. However, the politics of the country have been burdened by people saying, "Oh my God, isn't it horrible that we should have revaluations?" What do they expect when one is richer and one's property is worth more? That is a fact admitted to the bank when a person wants to borrow money; it is only when the taxpayer comes along that they say it is not fair. They take one story to the bank and another to the taxpayer. It will not do.
We need a proper, sensible rating system in which there is an indexed property valuation—based on some general index —with periodic proper evaluation. It can easily be done. There are a number of house price indeces. It would be virtually cost-free. But since this administration does not do things cheaply, we shall abandon that. Instead, we had the complete opposite of property taxation. I will not dwell too much on the poll tax—others have already done so.
Lord Strathclyde: My Lords, does the noble Lord agree with the Leader of the Labour Party, who said in September 1980 that rates are the most unjust of all taxes which take most from those who can least afford it?
Lord Desai: My Lords, I do not have to agree with the Leader of the Labour Party in 1980 or at any other time. I am an economist and talking sense.
The Earl of Onslow: My Lords, is the noble Lord therefore saying that the Leader of the Labour Party is economically illiterate?
Lord Desai: My Lords, I said that the then Leader of the Labour Party and many other politicians have pretended to economic ignorance; but whether they are or not, I cannot say. They did not go to the London School of Economics. I cannot teach everybody. My only regret as regards the poll tax, among many other disasters, is that it gave Adam Smith a bad name. I do like Adam Smith. The Adam Smith Institute should not have associated his name with such a ghastly tax. The late-lamented poll tax is another matter. Now we have come back to a very curious creature which is one of those Edward Lear animals; namely, a hybrid of many things. It is a property tax and as such we are admitting that the principle of a property tax in the rates was not wrong, but correct. Bands or points do not matter. We have to admit that we have returned to the principle of a property tax.
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Of course, we cannot return to that principle as such because that would involve too gross an admission of error even by the Secretary of State. Therefore we have to have a little element of poll tax; a concession for one person as against two persons. There is a little per capita element there. There is also a little element of income tax because there is a threshold of people who will not pay anything. We have here a little property tax, some poll tax and some income tax. We also have the very kindly treatment of second homes. As many noble Lords have pointed out, as a principle there is a deeply regressive property tax because it is people at the lower end of the property ownership market who will pay much more than anyone else.
There has been a great deal of misunderstanding about a progressive tax. The fact that a Duke pays £1 more than a poor man does not prove that the taxation is progressive. The taxation system is still regressive even if there is an absolute amount. A Duke may pay more than a worker, and that does not make any difference. It is proportionately whether a Duke pays as much, more or less that makes the taxation system regressive overall. We should not bandy words. It is true that the income tax system is only feebly progressive since the late taxation reforms, and because the council tax is deeply regressive, while VAT is mildly regressive, we shall end up with a deeply regressive form of taxation in this country. That cannot be gainsaid. I am sure that calculations can be done on the effect of this taxation; but we can await that at a future stage of the debate.
Banding will be as arbitrary as anything else. There will be battles about that and complaints about banding. As long as there is a finite number of bands, people will complain. However, I am curious as to what the Government's attitude is about revaluation. Will there be no revaluation ever? I hope that the Government will not remain in power so we shall not have a council tax. Therefore, this may be an academic question in the true sense of the word. I do not believe that any property tax system which does not admit of revaluation can actually survive as an efficient system of taxation. If the Government have not thought about it so far, then they should do so.
I know that it is not customary at this stage to speak about particulars of the Bill itself. The Bill bears all the marks of a hurried document. Perhaps I may mention one matter regarding the important Clause 33. That clause contains the following little formula:
R-P/T
It is said that that is an amount. It is not an amount, it is a co-efficient which lies between zero and one. If anyone in the Civil Service believes that
R-P/T
will produce £100 £200 or £300, then that person has another think coming. The definitions have not been looked at. I can state what the correct definition is, but I shall not bore noble Lords right now.
Clearly, if those responsible for Clause 33 believe that that is an amount of tax, they are totally wrong.
This is not a partisan matter; it is a matter of simple mathematics. There are harsh laws of mathematics. If one divides one amount by another, one has a co-efficient and one does not get an amount. I shall stop there.
I hope that the Government will think again. One can only hope that as they have changed their minds about everything else before that they will change their minds again about this matter.
6.5 p.m.
Lord Ellenborough: My Lords, I welcome this Bill as a vast improvement. No doubt it is far from perfect as will be the case whatever form of local tax is devised. It is infinitely better than the community charge or the old, discredited rating system. I therefore congratulate the Government on introducing a new local tax far more related to the ability to pay. I also congratulate them on depriving the Opposition of what I have always called their best recruiting agency in years—that is, the poll tax.
From the outset I have always opposed the flat rate concept of the poll tax. I spoke against it; I voted against it, and, in common with a good many of my noble friends on these Benches, warned against the dire consequences. The insensitive way in which the poll tax was introduced meant that it was doomed before the ink on the legislation was dry. A flat rate tax can only be acceptable if it is so low as not to hurt. There was never much chance of that. The then Secretary of State for the Environment failed to cap excessive spending by councils, which were mostly Labour, at the time of the introduction of the poll tax. There was the insistence that it be introduced all in one year and not phased in. The revenue grant, far from being increased, was actually reduced.
Thus, the whole community charge system became more and more discredited and the principle behind it that all should pay equally was undermined by the necessity lo introduce rebate after rebate, reduction after reduction, and concession after concession so that hardly anybody knew what they were paying or supposed lo pay. Above all, and worst of all, the tax was considered unfair or, as some put it, it was perceived not to be fair by a very substantial proportion of the electorate, not least those whose circumstances placed them just above the rebate level.
I wish that were not so. The Second Reading of this Bill is a complete vindication of the brave stand, much ridiculed at the time, taken by Lord Chelwood at the beginning of the Committee stage of the Local Government Finance Bill in May 1988. Lord Chelwood had a great many friends in all parts of the House. I know that all agree that he has been very sadly missed these past few years. His amendment was supported by a considerable number of my noble friends, including some very senior members of the Conservative Party. The Government were warned. The amendment called for the Government to pause and introduce legislation which would take account of the ability to pay. How much better it would have been if the Government had accepted that amendment.
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A few months would have been lost—possibly even a whole year—in devising a scheme to take account of ability to pay. But the political will to take such a decision was lacking. As it was, the Government lost not one year but three or four years—almost a whole Parliament—in marching up to the top of a hill and down again, fighting a desperate rearguard action in extricating themselves from the poll tax morass. But now, in the nick of time, the political will is there. This misconceived legislation is on the way out and a proper and sensible measure to replace it is being introduced to take effect next year in 1993.
The Prime Minister and the Government deserve much credit for their courage. It cannot have been easy in recognising that a bad mistake had been made and in deciding to introduce new legislation. The Prime Minister has shown very great courage which deserves to be rewarded, and I have little doubt that it will be as people respect a Government who admit to making a mistake and, even if somewhat belatedly, take drastic action to rectify the matter.
Governments are not infallible—not even Conservative Governments—and an occasional mistake should be allowed, especially in a government which overall has performed remarkably well for a period of nearly 13 years; a period which I am sure will soon be extended.
I turn now to one or two of the provisions in the Bill. In my opinion the banding arrangements, especially now that the eighth band has been added, is about right. It should avoid the extreme anomalies of the old rating system. I should have thought that any apparent or inevitable injustices of the margins between bands are not likely to be large or to provoke great anger. Because the calculation of values is on a national basis, the differences between properties in each council area will seldom be vast. Therefore, the scope for resentment between neighbours should be nothing like that which existed with the rates or the poll tax, and by promising to cap excessive rises the Government will continue to restrict that scope.
Regional banding has far too many anomalies. Those of us who live in the crowded South East must be prepared to pay much more for a house than, say, those in the North East. We expect to pay more for repair bills and local taxes but in selling a house one will get more for it in the South East than would be the case in the North East. The difficulties as to where to draw the boundaries for any particular region are quite immense. The old GLC area is an obvious region in itself. But where does it stop? Neighbouring counties like Kent and Surrey, Buckinghamshire and Berkshire all have properties of equivalent value and very much akin to properties in the GLC area. If those areas are included the problem would be what to do further afield; say, in the most prosperous parts of the West Midlands, the Bath and Bristol areas and so on. Once started, no natural boundary would be easily found.
I thoroughly support the single person's discount. It will be one of the major differences between the Conservative and Labour parties. One of the major objections to the old rating system was the way a single retired person lost out so badly in comparison

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with two, three or four salaried earners in similar properties. It may be thought that the 25 per cent. discount is rather less than generous and there were quite a number of my honourable friends in another place who thought it should be higher. I would have preferred perhaps 33 per cent. However, it should be emphasised that any such discount will most certainly not apply equally to rich and poor alike. The better off individual will probably be paying more because he will be almost certainly in a higher band and he will receive no rebate. But the single elderly widow, or an unmarried mother with children on income support will, as I understand it, pay nothing.
I certainly welcome the abolition of the 20 per cent. rule which was vastly expensive to administer and has caused a great deal of resentment. I think that the Labour party will ignore at their peril this combination of the single person discount and rebates of 100 per cent., which will make the council tax much fairer than the rates and much more so than the poll tax. It is certainly much fairer than the Labour party's proposals of which we hear less and less.
Before I conclude I should like to raise one point in relation to capping. This is essential, at any rate in the foreseeable future. Local government is now centrally financed to a figure as high as 85 per cent. Perhaps I may ask my noble friend for some clarification as to the position of parish councils in capping, which is a matter greatly worrying some district councils. I live in the Wealden district of East Sussex where there are some 40 parishes. That includes four or five very large parishes, of which at least three have become town councils and whose annual expenditure is now becoming relatively high—equivalent to between £25 to £30 per head of population in some cases and with precepts going up to about £400,000.
The district has no control over parish expenditure but parish councils are exempted from capping. As I understand the current proposals, parish and/or town expenditure will not count against the district capping target. That is a matter of great importance to a council such as Wealden because it will make a difference between being some 8 per cent. over the Government's standard spending assessment and as much as 22 per cent. over if parish expenditure is included. I feel the position is somewhat confused and I should like to know whether there is to be any provision to restrict undue spending by, at any rate, the larger parish councils.
I look upon this Bill as a big step forward in a great many respects. It is a vast improvement on what has gone before. If Lord Chelwood, whom I knew well—after all, I seconded his amendment—had been here today he might not have given the Bill three resounding cheers but I am pretty sure he would have given it two-and-a-half; and that goes for me.
6.19 p.m.
Viscount Mountgarret: My Lords, I should like to add a couple of points to this debate. I ask at this stage for your Lordships' indulgence if I am not in my place at the end of the debate when my noble friend winds up. I have an engagement in the North of England for
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which I must return and public transport does not provide for getting there early in the morning. Therefore, I must leave here in about an hour's time.
While welcoming the Bill in general I am worried that not too great attention has been paid to the agricultural side of matters and in particular to tied cottages. I should like to know on what basis farmhouses might be valued. There seems to be some complication. Is a farmhouse deemed to have land with it, or is it taken separately? Land with a house always enhances the value of that house. A house without land is not, generally speaking, as valuable. Are all tied cottages farmhouses? It is necessary not only in agriculture but also in other areas for employees to be housed in property related to their employment. Many farmworkers, forestry workers and estate workers live in accommodation that has nothing to do with surrounding land. Such accommodation may be in a nearby village.
In the days of the rating system—in many ways the new council tax is not dissimilar—allowance was made by the district valuer if a house was being used solely for agricultural purposes. Could not the same guideline be applied in this case? In the old days farms, estates and timber operations employed many more staff than is the case today. New technology, machinery, and so on, have led to a great change. In many places and on many estates there is now a surfeit of houses. The employer, generally speaking, wishes to see his staff housed in the best possible accommodation. The better one looks after one's staff the longer they stay. If staff are put into first class accommodation it is likely under the proposed system that that accommodation will fall into a band which staff could not afford to buy and that therefore they will be penalised in terms of what they can afford to pay. Will my noble friend consider whether tied cottages can be banded together regardless of what their supposed commercial value might be on the private market? Alternatively, will he consider bringing back the provisions of the rating system whereby the amount charged on a house occupied for agricultural purposes is brought down by a certain percentage? If a valuer has recently valued a property in order to make the system ready for 1993 he probably will have looked at a house that has been let on a shorthold tenancy because the owner did not have anyone to occupy it. The valuer may have thought that the house was not being used for agricultural purposes and therefore gave it a value X. However, in two years' time the owner may need to use the house for agricultural or forestry purposes. If that happened it would be unfair for the value given to the house when inspected by the valuer to remain. It should be possible, as it was under the rating system, for the employer to inform the district valuer that the property is now an agricultural dwelling and for it to be so registered. I ask my noble friend to consider that point and perhaps to give some assurance when he comes to reply.
I refer to the excellent speech of the right reverend Prelate the Bishop of Chelmsford regarding the payment of the council tax in so far as it relates to "tied" cottages for clergy. I was extremely heartened to hear that somewhere along the line the clergy and

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the Church have managed to steal a march on the agricultural industry. It would appear that they have agreement from the Government that, for all practical purposes, vicarages and the like are deemed to be in the ownership of the Church and that therefore the council tax can be paid by the PCC or the Church without the incumbent having the payment grossed up for taxation purposes. If that is so, why cannot the same provision be applied to agriculture? Where an employer owns the house in question and puts an employee into it, he owns the house. It is not the same as a vicarage, which is only deemed to be owned by the Church. If it is sauce for the goose—I hope that the right reverend Prelate will not mind me referring to his flock as geese—it may fairly be regarded as sauce for the gander. I wonder whether this point can be looked at too.
I draw my noble friend's attention to what happened under the rating system. The point was understood and agreed by the Inland Revenue. It was fairly and simply written into a contract of employment that the employee would occupy a house for the betterment of the execution of his duties. The employer was in a position to pay the rates due on that house. The Inland Revenue accepted it as part of a necessary emolument to the occupier without the amount being grossed up for taxation purposes and it was an allowable deductible expense by the employer against his business. That worked perfectly fairly under the rating system. I ask my noble friend to take that point away and consider it. I accept that it is probably a taxation point and is not perhaps too relevant to the Bill before us but I wonder whether it could be considered in the next Finance Bill. At the moment, as the poll tax is a personal charge, no such provision can be made. That is another way in which the system was unfair on those who occupied cottages. Before we get the whole legislation off the ground I hope that this point can be considered and in some way be accepted.
My noble friends Lord Mackay and Lord Skelmersdale made an important point. Non-payment of poll tax is naughty. We should not say anything more than that. The measure was passed by Act of Parliament and people should jolly well pay. However much they do not like it, they ought to pay. The Inland Revenue has a good system for dealing with people who do not pay, as I certainly know to my cost and as I suspect one or two other people may know to their cost. If one does not pay one's tax by the relevant date the Inland Revenue charges interest. It is as simple as that. I cannot for the life of me see why provision was not made under the poll tax legislation that people who did no: pay should be charged interest. Could there not be provision under this new tax, which I welcome in principle, that interest charges will be triggered if it is not paid within a fair and reasonable time of it being demanded?
6.30 p.m.
Lord Momkswell: My Lords, we usually have interesting debates on Second Reading. On this occasion I am torn between the culinary references of the noble Viscount and the almost religious flavour of
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the revelation and repentance of sinners, and that type of thing, coming from some quarters. One element that I hope to introduce into the debate is that of legitimacy. Another part of the debate is about tragedy, a tragedy of almost Greek dimensions. We have had some interesting contributions and I shall touch upon one or two.
This illegitimate—almost bastard—tax does nothing to change the Government's essential direction of the past 13 years. It is a fundamental attack on society, local government, public services, and people, because of the shift of taxation from rich to poor. People are starting to appreciate that over the past 13 years taxation for the average taxpayer has not reduced. The average taxpayer is now paying a higher proportion of his or her income in taxation than in 1979. That explains why we have a problem over local government finance.
We should remember the early 1980s and the Government's taxation regime. They reduced income tax with great trumpet fanfares; but they increased VAT and reduced central government support to local government. The requirement for local government to provide services, and demand for those services, if anything, increased because of the recession and the mass unemployment resulting from the Government's economic policies.
At a time when the demand for local authority services, and therefore the cost of those services, was rising, the Government reduced their support for local government. The only result was an increase in rates. At the same time, there was no revaluation. Revaluation is essential to maintain fairness as between one ratepayer and another. A revaluation does not increase the overall amount of rates to be paid; it merely reduces unfairness. My noble friend Lord Desai, in an illuminating contribution, mentioned the effects of inflation. In reality, revaluation takes into account the effects of differential inflation as it applies to properties in different areas. The value of a property will always rise differentially compared to other local properties.
The two problems—the lack of a revaluation and decreased support by central government—resulted in rate increases which I am sure we all agree caused difficulties for ratepayers. Because of the differential nature of inflation, and the lack of a revaluation, some ratepayers were hit harder than others. What did the Government do about that? Instead of having a revaluation and providing central government support to help hard-pressed local councils provide a reasonable level of service, they used the problems which were virtually of their own making to introduce the poll tax. They called it the community charge. They tried to persuade people that it was a fair tax which would pay for local authority services. But that was not the case.
It might have been fair to levy the same amount from every person if everyone had the same income and everyone received services of the same value, but neither of those things was true. In fact, the introduction of the poll tax coincided with an increase in the disparity of incomes. The rich were getting

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richer and poor were getting poorer, so the concept of the poll tax being fair was undermined by changes in income distribution.
The introduction of the poll tax, as many speakers have said, resulted in a massive rise in lawbreaking. All of us in Parliament have been worried to see a government who portray themselves as the party of law and order presiding over a massive increase in lawlessness and not appreciating why that has taken place. I am not surprised at that when former Ministers do not seem to understand the issues involved. I can understand Members on the Government side of the House objecting to proposals made by the Opposition because they are fundamentally opposed to our philosophy. But when they say that they do not understand—the noble Lord, Lord Trefgarne, said that he did not understand what was being proposed by the loyal Opposition—our proposals, I am almost at a loss for words.
One of the advantages of our debates is the opportunity to hear speakers who have great knowledge of the subjects we are discussing. One of the most interesting contributions today was that of my noble friend Lord Desai. He talked of rates as a tax on the income stream from capital. That was one of the most understandable ways in which I have heard rates explained. We must recognise that the proposed council tax will not be fair because it will not tax that income stream fairly as between different individuals. We can see from the figures contained in the Bill that those individuals whose capital worth is at the lower end of the spectrum will have their income stream from that capital taxed penally and much more heavily compared to the tax on the income stream of rich people. That is unfair. As time goes on, it will be perceived to be unfair. That is one of the reasons why the council tax will not survive in any shape or form.
I shall deal with the longevity of the council tax. As other speakers have said, the Bill contains no proposals for a revaluation. We have only to look back and see what has happened within the last few years to house prices—that is, the capital value of housing—to realise how large a change on the taxation base can occur over a short period of time. As I said, there is nothing in the Bill which gives any indication of how that might be accommodated.
The Government have tried to project this action on their behalf as the abolition of the poll tax. However, it is not really the abolition of the poll tax because the concept which we on this side of the House oppose and which the Government propose to introduce is in fact a son of poll tax. But it is not just that; it is also son of rates. On that basis it is really illegitimate; in other words, its parentage is suspect.
The other illegitimacy with which we are confronted is the fact that, unlike the poll tax, the Government have no mandate for the introduction of this hybrid tax. No election has been fought on the basis of the proposals contained in the Bill. As I said, that is another source of illegitimacy.
Lord Renfrew of Kaimsthorn: My Lords, before the noble Lord concludes, I should like to ask him or his noble friend Lord Desai to clarify the extraordinary
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concept of the "income stream" which is notionally being taxed under a rating system. For example, if one is an owner-occupier of a house, where is the income stream? The notion of taxation when there is an income presupposes that there is some effective income. Clearly, the objection to the rates was that many people of no great income of any kind found themselves occupying valuable properties, no doubt enjoying benefits thereby if they could maintain such properties. But there was no income. So where is the concept of the income stream? If the noble Lord, Lord Monkswell, does not wish to explain it, perhaps his noble friend Lord Desai will do so.
Lord Desai: My Lords, the idea is that the sum of capital yields a notional income or an actual income. A property was deemed to yield an income equivalent to what it would fetch if it was rented. That was the basis of rate. That principle is applied to industrial property all the time and was transferred to residential property. I admit that it caused anomalies because people could not see that they were getting something; but they were not paying rent. That rent which they were not paying was deemed to be the income that they were earning from occupying the property. It is straightforward.
Lord Monkswell: My Lords, I thank my noble friend for that explanation. One of the interesting things about this debate is the amazing to and fro of discussion which has taken place. It has been very useful and has brought out a number of points.
Inevitably, in such a debate, the "little old lady" argument will arise. In other words, we must address ourselves to the problem of the little old lady living in a house on her own. She must be protected and supported in some way by parliamentary action. Having listened to the arguments that have been put forward thus far in the debate—and there has not been much in the way of counter-arguments—I am struck by the fact that too much emphasis has been placed on the top end or, if I may put it this way, the upper-age limit or band of the spectrum.
However, no speaker has talked about the lower end of the age spectrum. I put it to your Lordships that we should consider that section. I say that because if one thinks about it, what the Government, and not this side of the House, are seeking to propose is nothing more nor less than a tax on marriage. That is one of the problems with which they will have to contend when they try to explain the concept to the public.
If one takes, for example, a young couple who are engaged and thinking about getting married. They both live at home with their respective parents. They buy a house and their tax level is determined at one level while they do not live in the property. But if one of them—let us say, the putative husband—goes to live in the house in order to carry out some work on it the tax level increases a notch. Thereafter, having got married, or perhaps it might be better to consider the matter in terms of two people living together, if the other partner moves in, the tax increases. So one effectively has a tax on people living together. Government Ministers sitting on the Front Bench may

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grin and shake their heads. But to my mind it introduces a further element of illegitimacy into the poll tax
Lord Strathclyde: My Lords, perhaps I may interrupt the noble Lord. I should point out to him that we are shaking our heads because we do not quite understand the point that he is trying to make. If the noble Lord is trying to say that while a person is living at home with his parents he will pay nothing and that when such a person sets up home with his partner he will then pay something, that is absolutely right. We are trying to raise taxation out of a mixture of a property and a capitation tax.
Lord Monkswell: My Lords, is it really the Government's intention that when a couple get married they should be subjected to an additional tax burden? If that is what they mean, that is fair enough. Let us have a general election on that basis. The Conservative Party want to increase tax when people get married and live together. I find that fact amazing.
Baroness Blatch: My Lords, I should like to clarify the point. It is an important one and one which clearly will be subject to further debate. Let us take, for example, the case of a single person living in a house who is just above the level where he or she could receive any kind of rebate and who is living next door to another single person. They then come together either married or simply living together in that house. That would mean that there would be two wage earners living in a property; indeed, two, three or more wage earners. Is the noble Lord saying that under the scheme which he advocates there would be no distinction whatever? Is he saying that there could be two or more wage earners in one house and that it would make no difference to the bill; that is, whether it is a rates bill, a community charge bill or whatever one advocates at the end of the day? Is he really saying that the single person living in the house next door, just above the level of rebate, would simply have to pay the same bill? Is that what the noble Lord is advocating? That is what he appears to be doing.
Lord Monkswell: My Lords, I am just a simple sort of character. We have income taxes and purchase taxes through VAT and excise duty. It seems logical and sensible that we should have a tax on capital— that is, the rates—as explained by my noble friend Lord Desai. Obviously, in our society, we have developed a system of rebates to cover anomalies where people run into problems because their particular situation does not quite fit in with the general broad regime of taxation which is determined by Parliament.
Government Ministers may shake their heads. I wish to try to convince the Government that they should think in terms of the implications of what will follow from the introduction of the council tax. As I said, with the introduction of the poll tax we have seen a shift in taxation from the rich to the poor. We have also seen an increase in lawlessness and people disregarding the laws of Parliament. Moreover, we
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have seen a large number of people going off the electoral register. Therefore, three major problems have arisen with the introduction of the poll tax.
I hope that the Government will recognise the fact that virtually none of those problems is being seriously addressed by the introduction of the council tax. They do not have the legitimacy for it. It is the unfortunate offspring, if I may use that word, of the poll tax and of the rates. It does not have the advantages of one or of the other; indeed, it has all the disadvantages of both. As I have pointed out, the provision will be a disincentive for people living together in marriage. I hope the Government will think about the problems I have referred to and will try to address them.
6.50 p.m.
The Earl of Onslow: My Lords, I shall endeavour to speak for considerably less than 20 minutes. The noble Lord, Lord Monkswell, introduced an interesting new doctrine when he suggested that no government with any legitimacy could introduce an Act of Parliament which was not in the mandate. That offends my constitutional sense of history. The noble Lord also pointed out that tax in the upper brackets of income tax is lower than in the past, but what he failed to add was that the top 10 per cent. of income tax payers now pay a larger percentage of the income tax gathered than they did in 1979. Noble Lords opposite may shake their heads when they do not like being confronted with the facts, but my comment happens to be a fact.
I believe that the point made about revaluation was reasonably fair as government Ministers, especially Ministers in the Scottish Office, failed to understand that those whose property went up in value under the revaluation —consequently their rateable values went up—all screamed blue murder, while those whose property values went down—consequently their rateable values went down—kept their heads not only below the parapet but also under the foundation stones as their tax decreased. When people's taxes decrease they keep quiet and grin and probably find something else to complain about. However, when their taxes increase, they complain and complain again.
There is nothing more fun than saying, "I told you so". One revels in it and one enjoys it beyond peradventure. It is bad for one's character, but I must say to my noble friends on the Front Bench, "I told you so". I found it odd that my right honourable friend the First Lord of the Treasury should emulate the taxation policies of the more failed of Plantagenet kings, the more drunken of Turkish sultans and the more intolerant of noble emperors. All of those rulers produced a poll tax and all of them failed disastrously in doing so.
I have been reading a book written by the son of the noble Earl, Lord Longford. The book concerns the scramble for Africa. I have just reached the chapter which describes how General Gordon was massacred at Khartoum. The first thing the Mahdi did when they captured Khartoum was to abolish the hated poll tax.

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Perhaps my right honourable friend the present First Lord of the Treasury can be compared to the Mahdi, but that is perhaps a little unfair.
Having made all those jokes and enjoyed myself, I must say that the Government are to be congratulated on admitting that they are wrong. We should not ask the Government to grovel. The Government have admitted they are wrong by changing the situation. It requires courage to do that and involves a considerable amount of eating humble pie. The Government have been as delicate as possible in changing the situation but they have done so and they must be seriously congratulated.
The noble Lord, Lord Desai, was immensely amusing when the issue of economically illiterate politicians was raised. I suggest to him that before the study of economics was even invented in the 19th Century, the English economy did much better without economists. However, that remark also may be a little unfair. My noble friend Lord Bauer informs me that he was a student at Cambridge before the war. He says that there are now more dons of economics than there were economics undergraduates before the war. I do not know what that tells us and it has absolutely nothing to do with the subject we are discussing.
The principle that the poll tax was intended to pay for services and to provide those services went against all the principles of English taxation. As your Lordships will be aware, money was raised in taxes by Charles I to pay for the Royal Navy. It was hypothecated revenue and caused a civil war. This poll tax has very nearly done the same thing. One taxes to raise revenue and then the Government spend money to provide for the general welfare of the Queen's subjects as the Government see fit. That seems to be the old established English method of taxation. However, the poll tax strayed from that method. That is enough said about the poll tax.
I have one criticism of the present arrangements and some suggestions that I hope are helpful. I see no reason why those who own holiday homes should not pay the full whack of the council tax. If a person is rich enough to own two houses, he should be able to afford to pay tax on his additional home, especially as he will probably let it out when he is not occupying it.
I have had a long talk with my local borough chief executive and his treasurer. The chief executive informed me what would go wrong with the late lamented poll tax. He was proved 100 per cent. right. His remarks on the new tax strike me as being sensible. He remarked that it will be levied on the basis of self-assessment and people will apply for reductions. Guildford, for example, will have 50,000 things, which cannot move, called houses as opposed to 100,000 things called humanoids, which can scarper rapidly the moment someone appears with a tax bill. I do not know how any of my children have ever paid any tax. They do not admit to having done so and they are not there when any form is delivered which they need to fill in. I suspect that I am not the only Member of your
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Lordships' House whose children behave in such a way. They do not make any fuss about it. But perhaps I had better stop talking about that matter.
That situation was foreseen to happen. It is like the old army joke—if it moves, salute it; if it is still, paint it white. One could paint houses white and still get the tax for them. That is what will make this tax much easier to collect than its predecessor. The tax bill is sent to the head of the household who will be responsible for paying the tax for the household. If he needs a disability allowance, he can then ask for one. If there is only one householder, that householder can prove that is the case. If the council suspects someone is telling lies and cheating, the simple answer is that the council should levy a tax of three or four times the level of tax the person concerned should have paid if he had not been cheating. A gentler solution would involve charging the offender on a basis of interest. If someone applies for a discount and is proved to have told lies, he should be punished.
The new provision will obviate the need for a registry. If matters are handled in the way that I have suggested, I believe the system will be much fairer. I was pleased to hear my noble friend Lord Mountgarret refer to agricultural valuations. I must declare an interest as I live on a farm. In former times one paid the rates of one's agricultural workers and that was not regarded as a taxable benefit for those workers. The estate owner could discount it from his own tax. Rate discounts were applied to farm houses.
I am someone who does not like discounts for anything as I believe one man's discount is another man's subsidy. If we have a trough of discounts, it is reasonable to advocate the abolition of the trough but still to place one's nose in it when the occasion arises, as under the old system of rate discounts on farm houses. I hope that that trough will continue.
I end by re-congratulating the Government on the new tax. Rates lasted from the reign of Elizabeth I to the reign of Elizabeth II. The poll tax lasted briefly in the reign of Richard II and even more briefly in the reign of Elizabeth II. The council tax seems to me a fair and reasonable tax and I hope that it will have a reasonably long and happy life. It does not need to continue for 400 years, but that is not a bad start.
7 p.m.
The Earl of Balfour: My Lords, I am delighted to follow my noble friend Lord Onslow, particularly in view of his comments on the disadvantages of the poll tax. I should like to tell the House a little about the other side of the story.
Under the old rating system in Scotland, the regional assessor drew up the valuation roll for rates and the electoral roll for national and local elections. Anybody could obtain a copy of those rolls for their area and it was quite easy to check any entry. The valuation roll was revised every five years and it was fairly easy to arrange to meet the assessor to discuss any disputed valuation or alteration of circumstances. The regional director of finance or returning officer for any election could simply issue whatever notices were required for the local authority rates or elections as the case might be.

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Since the introduction of the Abolition of Domestic Rates, Etc. (Scotland) Act 1987 the system has been fragmented. The electoral register and the community charge register are now completely separate, although administered from the same building, and there appears to be little if any communication between the regional director of finance and the registration officer.
I can say that with confidence because, although the assessor sent a local person round every parish in order to make up his roll, the assessor either failed to make up his roll correctly or failed to pass on that important information to the regional director of finance. Within the parish of Whittingehame—my home—there are more than 40 households on private water supplies. Although I told the local person which houses were on the public supply and which were on the private supply, many persons who were on a private supply were charged for water in their community charge.
I telephoned the assessor's office in Queen Street, Edinburgh, to make an appointment to clear the matter up. I was told over the telephone that if I went in on any morning, the matter would be attended to. A few days later, I went to the Queen Street office where a minor clerk told me that this was a confidential matter and could not be discussed. I wasted over half an hour until I finally persuaded him to fetch a supervisor, with whom the whole problem was settled in about 10 minutes.
Unfortunately, that was not the end of the matter because, although no notice is given by either the assessor or the region, every community charge payer is expected to make a fresh application every year for any rebate or in respect of any unusual circumstances. Even where the same person is living in the same house year-in year-out, he is expected to claim exemption from water charges if he is on a private supply.
To add insult to injury, I received a registered letter, with "Community Charge" written on it in large letters, demanding that I deduct the community charge from the wages of a Mr. Peacock. I happened to know the person concerned. He lived in a council house in the parish. However, he had never been employed by me and he was severely disabled. I therefore called in the regional councillor, Mr. John Stephenson, to see whether the matter could be settled. I do not know how Mr. Stephenson got on, but I know that he went to see Mr. Peacock. However, Mr. Peacock died six months later. I have since had to call on Mr. Stephenson over many matters relating to the community charge such as not receiving any notice of the charge, receiving no reply to a request for rebate or relating to persons moving from or into the area.
The officials seem to have a peculiar desire for secrecy and to wish to remain remote from the electorate of their area. As the poll tax registration number, although as long as your arm, changes each year, it is only by sending a registered letter that the ordinary citizen has any hope of receiving a competent reply. One of my employees recently became a widower. Both the region and the assessor were informed, but he still received a community charge notice for his wife a month later.
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I have given your Lordships a few examples from a country parish. I hear similar stories from neighbouring villages and towns, some far worse than my experiences. No matter what the legislation proposed by this great Government at Westminster, I cannot see any local government finance being raised efficiently so long as the majority of the present regional councillors seem to condone the failure of their officials to issue correct notices and to collect poll tax.
I have the distinct impression that Labour-controlled Lothian Regional Council wishes to blame all its financial shortages, including its failure to collect the community charge, on this Conservative Government at Westminster; and we, the electorate of the Lothians, are merely pawns in that political battle.
7.7 p.m.
Baroness Gardner of Parkes: I apologise to the House that I was not present at the opening of the debate, but this afternoon I was fortunate to be present at my daughter's admission as a solicitor. That had been arranged long before this unusual one-day sitting was arranged. I am delighted to be here and to have heard so many contributions to the debate. I am also pleased to support what I believe is the very good new law which is now before us.
The fact that the council tax is to be property-related is a welcome reversion, not to the rate system about which we were so unhappy because it had got out of hand, but to a property based system because property does not move, it does not vanish overnight, it is easily identifiable and it is simple to attach a value to it. Some time ago when we debated the form the new tax should take, I was concerned about the possibility of a capital value tax because values fluctuate very quickly. However, I believe that that problem has been resolved by the banding system. It is so broad that instead of there being hundreds or thousands of revaluation appeals, people will apply only if they believe that they will move significantly from one band to another. That is an important point.
During the last local authority elections in London, I canvassed with my husband in Westminster. I met many people who said that they felt that it was wrong that they were paying such a low community charge, and they felt that they should pay more. I find that people are keeping very quiet now that costs will rise considerably. In the case of Westminster, in some instances the increase will be 600 per cent. That sounds alarming, but an increase of 600 per cent. on a base of £36 does not result in a figure about which one would feel entitled to complain.
The Westminster figures, based on the current level of spending, which is below the standard spending level, show that a home with two adults would be charged £368, which is an increase of 411 per cent., and a home with one adult would be charged £276 which represents 667 per cent. increase. One can build those figures into what sounds like an alarming story. But consider one adult in a home at £276. I do not believe that anyone in Westminster paid any less than that in the days of rates. Most Westminster ratepayers paid on average about twice that sum, even when there were rates.

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The old rating system had become quite unrealistic because it was based on the notional rent in 1973. Even on appeal everything was referred back to the 1973 value. I live in a street of post-war houses backing on to a street of Georgian houses. I put forward the argument on rateable values for all the people in our street. It seemed that if we could all argue together we would have a better result than if we were to put our cases individually. But no matter what argument we brought before the valuation officer, we could not win because in 1973 Georgian properties were not highly valued. People did not like living in old fashioned houses and thought the new ones much better. The rate per square foot was therefore much higher in the new houses. Yet, since 1973 values have risen considerably. The old properties have become more valuable and sought after, especially if they are listed buildings or in a conservation area. They seem quite different from the unattractive, comparatively new stuff in the street next door. That is reflected in the capital value when properties are sold. Again, therefore, I think this measure has a much fairer basis. The previous system had become quite out of date. There had been revaluations before 1973 but none later. One had almost reached the point where if a revaluation had been done, people would have found it terrifying.
If I understand correctly the new tax, there will be almost the equivalent of a rolling revaluation all the time. The Inland Revenue will keep details of properties that are sold and, if they are sold for prices above a certain value, they will move into the next higher band. The Bill means that home improvements will not affect the value banding until the house is sold. That is most valuable. It was a great discouragement for people to find that if they improved their home, they paid higher rates. It was very unjust that the more neglected the home, the better off were the owners.
I should like to comment on the good points. Many statements have been made about this measure and I do not want to waste the House's time. It is good that there will be no register of adults. It is good that there will be 100 per cent. rebates available. It is very good that there will be retention of capping powers. In my GLC days, people who were greatly distressed came to me. They were living in an area where the rates had gone through the ceiling. They had been trying to save in order to move out of the area but had no hope in the world of ever saving enough. Any savings that they made were being taken by soaring rates. They were trapped because they could not afford to pay the rates; but no-one wanted to buy the house because the rates were so high.
I think it right to retain capping powers. The Government must recognise that greater expense must be met from the centre. That is now recognised in the new system. It must also be appreciated that local authorities should not be burdened with an unlimited list of statutory responsibilities unless there is funding for it. My memories of local government go back 20 or 30 years. All governments have imposed more obligations on local authorities and rarely have they provided the means to meet those obligations.
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I am pleased that there will be transitional relief. I am not clear whether that will be implemented in the same way as the uniform non-domestic rate relief at so much a year. It will be interesting to see that. I am pleased that students will be exempt and, as someone involved in the health field, I am particularly pleased that student nurses on the Project 2000 course will be exempt.
One of the questions that I must raise is how often an owner or occupier will be entitled to apply for a revaluation. I said earlier that I hoped that people would not apply too often, but I wonder what the time limits will be. As was mentioned by the noble Lord, Lord Monkswell, a situation may arise in which the purchase price of a property is known but no longer realisable. That might create some difficulties.
The matter of the precepting authorities worries me. In my time as a Westminster councillor, we had the spending of something less than 10p in every pound collected. We had almost no control in terms of setting expenditure because of the 90 per cent. precept which could not be dealt with. I wonder whether identifying it on a single bill is the answer. People tend to attribute any bill that comes to them to the authority that sends it. Perhaps when we come to the general reform of local government and the system that is under consideration now, we can discuss those points. However, the ratepayer or charge payer who receives the bill rarely looks at the pie chart or graph which shows how much money is allocated to which area.
I am pleased that the Government will help with start-up costs. I must ask for no changes once the system is in operation. That has been the most disastrous aspect of the community charge. I may not have liked it, but I believe that people were beginning to get used to it. Every change cost local authorities a tremendous amount of time and money. The Government tended to underestimate the cost to the local authority of each change. On that point, it is very important that the transitional relief should be set out as early as possible and clearly, so that when authorities build their computer programs they will be able to deal with it and not have to alter it subsequently.
The noble Earl, Lord Onslow, made a point about second homes. I have a certain sympathy with the notion that second home owners should pay the full charge. Certainly Westminster is in a strange position in that there is a great amount of foreign ownership there, and under the present system those people would all be getting a discounted value. However, it is surprising perhaps to realise that half the households in Westminster are single person households. Clearly it is quite a factor there. It is not only the 25 per cent. itself. The cost of providing and administering the discounts will be quite an expensive business.
I should like to put Westminster's point to the Government. I appreciate that it will not necessarily be answered this evening but perhaps the Government will think about it. The Government's proposals imply that the cost of funding the discounts will be met automatically through the revenue support grant which will compensate for the differing levels of

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taxable resources. The city council is worried that the revenue support grant will be based on data required for the number of personal discounts which will relate to some specific data some months before the commencement of the financial year. Consequently, the authorities would be exposed to an erosion of their tax base from a rise in claims for discount after that specific date. In the council's opinion, such volatility in the tax base is most undesirable. The city council believes that this potential problem could be eliminated by adopting grant arrangements similar to those existing for benefit subsidy. That is a complicated point which I do not intend to press tonight. However, I believe that it should be considered.
My points therefore are basically these. I welcome the introduction of the new tax. I emphasise the need to ensure that any form of equalisation should be made through the needs element of the grant system and not on the resource base of the local authority. The grant system and the SSAs should not be altered or altered as little as possible—for example, the homeless should be included as an SSA indicator. As I mentioned before, details of the transitional arrangements should be made as early as possible and well in advance of the implementation of the tax. They should then not be altered. I support the Bill.
7.20 p.m.
Lord Renfrew of Kaimsthorn: My Lords, I hope that it is not inappropriate for me to say a word. I had not expected to find the debate as interesting as it has proved. I believe that this is the appropriate occasion to say a few words without having put my name on the list of speakers.
Clearly, as we have heard from many if not from all sides of the House, the new Bill represents a significant improvement over the old rating scheme. I was fascinated to hear a vigorous exegesis in favour of the rating scheme and its economic benefits from the noble Lord, Lord Desai. It was interesting to hear, but I believe that both sides of the House will agree that it comes a little late in the day.
Very few people will now justify or support the poll tax scheme. The great merit of the present scheme is its simplicity. No doubt the Bill has a number of complexities when one considers the formulae for calculating the scale of taxation which councils may apply, and with regard to rate capping. However, it is admirable to see the formulae set out so explicitly. If one gives it sufficient attention, one can calculate what level of taxations are appropriate and whether capping on taxation applies.
I welcome the fact, as I understand to be the case, that students are exempt. I have read the Bill with some care. Students are explicitly disregarded for the purpose of the reduction. However, I was unable to find it expressed clearly in the Bill that students and other categories which are disregarded are in no way liable. It is a small, technical point which may be clarified. However, it is a great satisfaction that students will be exempt.
Baroness Gardner of Parkes: My Lords, perhaps the noble Lord will allow me to intervene. I may have misled him. If the student is the owner of the property, I do not believe that he will be exempt. I believe that we are referring to the same disregard of the student when he is a second person in the property.
Baroness Blatch: My Lords, perhaps I may also intervene. If the student is the owner of the property and all the people who live in the property are students, they will be exempt.
Lord Renfrew of Kaimsthorn: My Lords, that is most helpful. I am grateful for that intervention. A feature of the poll tax was that although students pay poll tax at a reduced rate, it was still burdensome when they had no obvious source of income to pay their poll tax contribution. I emphasise that that provision is a very beneficial feature of the Bill. I thank noble Lords.
7.23 p.m.
Lord Ross of Newport: My Lords, I congratulate the noble Baroness, Lady Blatch, on making one of the shortest speeches of the debate today. It took exactly 11 minutes. As usual she was explicit in describing the Bill. I would have hoped that she would have been a little more forthcoming. I have some questions, although not many, which have not been tackled in the debate.
I am sorry that the noble Baroness is still so adamant about capping. I am afraid that Marsham Street has overtaken her. I would like her to go back a little to her Cambridgeshire days. I believe that Cambridgeshire local authority accomplished many things of which it can be proud. I was proud of my local authority when I led it. I am now disappointed and disillusioned. Last night I watched Central Television showing Warwickshire County council—a Tory-controlled, rate-capped council—shutting old people's homes. One looks at the faces of old ladies who do not know where they will go in the next few months. There is the laying off of school teachers. Travelling through Ludlow yesterday I saw that half of the sports field of one of the big schools is up for sale for residential building.
That is what is happening in rate-capped authorities. They have probably run their affairs extremely well but have come foul of the way in which the SSA has been distributed. It was always difficult to understand the factors that went into the old rate support grant settlements. I am sure that it is exactly the same with regard to the SSA. The noble Baroness has some experience of such systems. Perhaps she can have a word with some of her superiors.
Most local authorities try to carry out a government diktat whether from Labour or Conservative governments. If one is asked to cancel contracts, as we were in 1974, one cancels. It cost us another £500,000 when the swimming pool was built. But we carried out the government request.
I realise that there have been aberrations. Some councils have gone way over the top, but not the majority. It is sad to hear them attacked increasingly in debates in this House. The noble Lord, Lord Trefgarne, attacked us for not talking about "LIT". I

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remind him that he was a Minister, and probably flying around the world, but we spent half a day on the subject only last year. I moved amendments to the poll tax bill on LIT. I believe that the House was thoroughly sick of hearing about local income tax. My noble friend Lady Seear and I agreed that we would not raise the matter again although we still support it.
I agree with much of what the noble Lord, Lord Stoddart, said. I should like to turn the whole situation of raising finance in this country upside down. I would let central government precept on local government, perhaps on regional authorities. Let them have the 20 per cent. to deal with defence and foreign affairs. Let regions do the work. I believe that we might then get some sense back into the way in which we run our affairs.
I draw the attention of the House to an excellent article in the Guardian yesterday by Will Hutton. He concluded by stating:
"If Britain wants to avoid accelerating economic decline, it will have to network, decentralise and build institutions that support its industry. Labour, and indeed the Liberal Democrats, insist this is their aim, but do they understand the deep-rootedness of the forces ranged against them?".
They are in this House. I believe sincerely that if we are to get Britain back on its feet we have to reverse present processes. We have to do something about our constitution. We have to put power back at local level and then things will get done. We are going totally the wrong way at present.
The noble Lord, Lord Selsdon, mourned the passing of councils. I share that sentiment. I am sad that many people who ought to be in local government are not. However, I ask him this question: who reorganised local government in 1973? It was not this side of the House. That led to a lot of the difficulty. He had praise for Glasgow as I do. What has been achieved by local effort in Glasgow by co-operating with the private sector is commendable. I look at what has happened in Birmingham with great admiration. Birmingham has had the guts to achieve things and to spend some money. Its populace supports it. It has a great musical centre, the biggest indoor racing track, a fantastic symphony orchestra, the ballet and the National Exhibition Centre. Birmingham has spent money. I suppose that its ratepayers will have to pay it back but Birmingham had the guts to do that.
I wish to put back to councils the uniform business rate. Two years ago I paid £700 in rates on the shop that I have in Knighton. The amount is now £1,100. I dread to think of the amount that I shall pay for premises that I still own on the Isle of Wight. The figure was previously £4,500. It is about £9,500 now. I automatically appeal on those figures. I believe that Mr. Ridley gave us one month to appeal. I hope that the Government will be more generous in this Bill. I have had no communication from the valuation officer in nearly two years. One case will come to court in March; of the other I have heard absolutely nothing.
I suspect that people will appeal when they receive their banding. Something will have to be done to speed matters up. I have heard it rumoured—I hope that it may be the case—that there will be six months in which to appeal. That does not appear in the Bill. That
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is another matter which comes under regulation, to which I shall refer. The period should be at least six months. I believe that valuation officers should have one year to resolve the matter. Otherwise it will go on for ever. It is annoying that one pays at the top current rate. One cannot pay at the previous rate. I want some money back from Inland Revenue and I want interest on it too.
The noble Earl, Lord Onslow, said that the wealthy are paying more tax. He has left the Chamber but I would have reminded him that income tax has been reduced from 89 per cent. to 40 per cent. I do not believe that the wealthiest in the land are paying more taxes unless they are buying gold bathrooms and so on. I was at a City dinner where the chairman of the evening said how delighted he was to be able to say personally to the Chancellor, "Thank you very much. I am £100,000 a year better off." I hope that his local inspector of taxes does not read this speech because his children might be in trouble. Sometimes that happens, as I have found out for myself.
The noble Baroness, Lady Gardner of Parkes, raised a most interesting point. It relates to Clause 24(4). When houses change hands, will the Inland Revenue tell the valuation office what the price was and whether the valuation should increase? The valuation could also go down. We do not know the answer because the Bill states that regulations may provide for that. Perhaps we could have some answers.
There are far too many regulations in the Bill. There are 43 order making powers and 295 powers to make regulations. We do not know exactly how the Bill will operate. I understand that the Government have issued draft circulars for consultation to local authority associations but the drafts are to be treated in confidence. Will Ministers be more forthcoming and tell us exactly what is going on?
In a frank and honest speech the noble Lord, Lord Mackay of Ardbrecknish, reminded the House of the roles played by Mr. Douglas Mason and Mr. Michael Forsyth. I have crossed swords with Mr. Douglas Mason. He thought that my Homeless Persons Act was an utter disgrace. What has been revealed is the role that fairly right-wing Scottish Members have played and the influence that they have had on government legislation. Apart from Mr. Michael Forsyth I should add Mr. Eric Forth to that list. Perhaps Mr. Forth might not agree. I know that when I was hoping to retire to Worcestershire and suddenly realised that Mr. Forth was the Member of Parliament for Mid-Worcestershire I moved quickly to Shropshire. I did not want to read his ruddy speeches in the Worcester Evening News every Saturday night!
Far too many issues are left to regulations, presumably because many problems have not yet been properly thought through. Once again we are left to the whims of a Secretary of State. The most serious omission is a definition of capital values. A version appeared in the 1976 Layfield Report at Annex 22. The Royal Institution of Chartered Surveyors sent a comprehensive draft with its submission made last March. All that appears in the Bill is contained in Clause 21(2) which states:

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"The valuations shall be carried out by reference to 1st April 1991 and on such assumptions and in accordance with such principles as may be prescribed".
I gather that tenders have already been accepted for the work which has been started. Therefore, can we know what guidance is being given to valuers? I nearly put in for the job myself but I do not believe that I should have been acceptable.
How are valuers to handle property suffering from subsidence or agricultural dwellings for which there is no ready market? The subject of agricultural dwellings has already been raised in the debate by the noble Viscount, Lord Mountgarret. Someone who has had a bungalow built for a retiring farmer who dies is left with a property which is virtually unsaleable. One must find another farmer retiring from agriculture to take it. One generally goes pleading to the local authority to take off the planning restriction. If it does not do so the property is difficult to sell. I am wondering about the poor residents of Ventnor on the Isle of Wight. The town is slowly slipping into the sea and not too many people are queueing up to buy the houses. How will they be valued, therefore? I believe that we should insist on a definition being given to the House before the Bill receives its Third Reading.
I recognise that the Government, albeit 15 years late, are largely accepting one of two Layfield options; namely, rating based on capital values. I believe that if we set up Royal Commissions we should listen to their recommendations. The Government have also accepted the recommendation of banding. However, I understand that there is to be no use of a divisor which will bring the figures down to a more sensible level. Will there be a divisor on the capital values? It should be acknowledged that prices of property can fluctuate widely as we witnessed only two years ago. Indeed, prices are now falling fast. However, rents in the free market, even for houses suffering from subsidence, would have a more stable basis if it were not for the limited evidence that is available. As all parties in this House now appear to agree that we must build up the rented sector and move towards market rents it might make more sense to wait a little longer and in the meantime fall back on the old lists. In that respect Labour has a fair point to make.
Although I believe that the Government have taken the wrong option under Layfield and that it is a less fair option I believe that the system proposed can be made to work. I accept that most professional bodies, including my own Royal Institution of Chartered Surveyors, prefer it. I could add "They would, wouldn't they?" Obviously they are interested. Moreover, to change the system yet again will probably lead to the mass suicide of local government treasurers already punch drunk with poll tax problems. I do not for one moment retract from my party's adherence to local income tax and to land value taxation. I believe that it would have been better to return to that system, but never mind. I think it must be introduced in due course if this country is ever to revive its economy.
I assume that the Government intend to get their way regardless and, therefore, we must try to make the best job of the Bill that we can. The following are some of the questions that I wish to raise and to the best of
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my knowledge they have not yet been cleared up. I apologise if they were answered in Committee or on Report in the other place. However, I must confess that I have not read those debates from cover to cover. First, is Crown property to be included? That is not clear in the Bill. Layfield said that it should be and we on these Benches think so too. Secondly, why should councils consult only organisations representing non-domestic ratepayers? Are all our chambers of commerce to be full of all those wise people? We used to discuss issues with non-domestic ratepayers when I was leader of a council but we did not have to. Some of them should have been elected councillors anyway. I believe that councils should consult all people who are obliged to pay rates by calling public meetings. There was some disappointment when the council of which I was a member did so because not too many people turned up. However, councils should do so; they should explain their actions to the public. Why consultation should be restricted to non-domestic ratepayers I do not know and find absolutely monstrous.
It is part of today's Tory philosophy that all councillors are the enemy. It is supposed that the only people who are Tory supporters are retail shopkeepers and industrialists. In fact, not all such people are, but that is assumed to be the case. They are being appointed to our health authorities and so forth. It is also supposed that people who have the courage to stand for election and issue a manifesto in order to get themselves elected are not to be trusted to make decisions. That is a sad situation. Ministers and MPs now appear to regard all councillors as the enemy within. That is a lamentable state of affairs.
Thirdly, I wish to know why rates on second homes are being cut. The matter has been raised three or four times during our debate. I believe that it is utterly wrong. However, that will not be the case in Wales because there second homes are set on fire and so the councils can charge 100 or 150 per cent. That is the only reason why I stayed on the English side of the border. However, what about people in Cornwall, in the Isle of Wight and in other holiday areas—even people in Westminster? Why should they not pay the proper rate? If they have a second home let them pay. I was in favour of paying a little more. Indeed, I understand that the Highland Regional Council is in favour of charging more. Why not? Why is the provision restricted to Wales? That is absolutely daft. We must amend that provision before the Bill appears on the statute book.
The noble Lord, Lord Mackay, raised the issue of the review of the valuation lists. He said that he hoped the word "quinquennial" did not appear in the Bill. I think that reviews should take place not every five years but every three years because the prices of houses change quickly. I believe that we shall have a kind of running system. I hope that I shall receive an answer to a matter which I raised earlier as to what will be the role of the Inland Revenue when it has knowledge of completions of house sales and prices. It should be written into the Bill that there will be reviews every three years, which is recommended also by the Labour Party. If that is done, it will not be

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possible to postpone reviews because of political expediency. That is half the cause of the present problem. Governments dodged the quinquennial review because it was not popular. The reviews were carried out in Scotland, and Scotland took the can for it. It is true that we laid Scotland wide open to that. I believe that Scottish Tories have some reason to feel rather bitter about it. However, in England the review was dodged. That is why the rating system became so out of date.
What about inspections? Are we really going to say that a row of houses will all be put into one bracket? That will not work. Some houses will have short leases which are about to expire. Why should it be necessary to pay the proper open market value? It will not be the same. What about country properties? Those vary from place to place. It is not possible to put country properties into one band because their value can vary from £50,000 to £300,000. What instructions will be given to valuers on those matters? We are entitled to know.
I raised earlier the matter of appeals and time limits on hearings. Those matters should also be written into the Bill.
Finally, I hope that the Government will be persuaded, during the course of our debates, to withdraw the 20 per cent. minimum contribution. It is nonsense to continue with it. That should disappear from 1st April next year. I hope that the recommendation of the Audit Commission is accepted.
7.41 p.m.
Baroness Hollis of Heigham: My Lords, first I must apologise for the absence of my noble friend Lord Desai who has been called away to an unavoidable appointment.
Today we are discussing this Bill—not in the context of a Wednesday debate. I was intrigued that many of the contributions of noble Lords and Ministers opposite attack the Labour Party and my noble friend Lord McIntosh for failing to say more about the Labour Party's views. That suggests to me that after 13 years in government, the Government have started to act like an Opposition. Perhaps they are getting in practice.
We on this side welcome unreservedly 19 words in the Bill—those which abolish the poll tax. Since the Prime Minister confided to the Daily Mail that the Cabinet, and he in particular, were bounced into it and that, to use his words, it had become "virtually uncollectable", MPs and civil servants have been wandering the party circuit plaintively asking us whether we have come across a good tax recently. By a good tax they mean a tax from which everyone gains and no one loses; a tax which helps the poor but also protects the rich; and a tax for which, if it is popular, central government get the credit and for which, if it is unpopular, local government gets the blame. In that context the Government have produced, as my noble friend Lord Desai said, a cross between a household property tax and a poll tax, which I suggest is not really fair and probably not workable.
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Despite the Minister's opening remarks, it is not fair between property, between people and between authorities; and nor is it workable because basically it is a rebate scheme based on income alongside a discount scheme based on occupation grafted onto a basic property tax which will go on to be mitigated by transitional relief arrangements. The result will produce anomalies and problems which, by comparison, will produce a new found clarity in the poll tax.
In terms of fairness under the council tax, is the tax bill fair between properties? Is the bill which will go to each household fair as regards ability to pay? Is the levy fair which each authority will have to charge, given its needs and resources? I think not. At present the council tax, before some of the amendments which we wish to see, fails all three tests. That is why, unamended, it will not last.
It is not fair between properties. I am not sure how much confidence your Lordships have in a valuation procedure in which the original estimated cost was £120 million which has now decreased to £20 million—20p for some property. Far from the valuation being carried out from the back of a car, it is now being carried out from the back of an office rather like the writing of the news stories for the Sunday Sport and we all know what we think about the Sunday Sport.
Beyond that, the proposed system is structurally unfair. First, as many of your Lordships have said, the bands are compressed so that most properties fall into two bands. In my authority—Norwich—two-thirds of all properties will be in two bands and in Hull, two-thirds of all properties will be in one band. Effectively, that means that it is a flat rate and, therefore, it is a regressive tax like the poll tax.
The valuation system is unfair a second time over because, as noble Lords have said, the tax rates between each band are not proportional to their values. There are not just too few bands, but the relativities are artificially and deliberately compressed or dampened, as the Minister said in another place. Therefore, band A, which is worth a maximum 50 per cent. of band D, will contribute 67 per cent. proportionately in tax. Why is that? That is so that more expensive properties will pay less. We need a steeper progression between bands so that values will be reflected more effectively.
The valuation system is unfair a third time over because national banding fails properly to match regional property prices with local incomes. I give one example. One per cent. of London's property is in the bottom band, but 16 per cent. of London's households are in that band. All the professional and local government bodies are rightly critical. We need more bands, possibly regional banding and above all we need a steeper progression between the bands if the Bill is to be fairer.
It is also unfair between people because of the discounts, the interlock of discounts with rebates and the way in which the joint and several liability clauses will operate. As my noble friend Lord McIntosh said, one third of households will be eligible for single person discount. That means that an affluent, high

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earning single person will pay considerably less than a lower earning household in which the man is at work and the wife perhaps looking after the children.
The assumption behind that discount is that the council tax is not so much a tax as a charge for services used. Even that assumption, fallacious though it is in my view, does not have the evidence to support it. If one looks at the major areas of local government spending, education, which accounts for 50 per cent. of local authority spending, is determined by whether or not one has children and not by whether or not one is single. Therefore a widow with several children will use that service more than a childless couple.
Street services, police, fire, cleaning, lighting and so on, are enjoyed equally by all. Transport accounts for 10 per cent. of local government expenditure. I suggest that car usage depends on job and gender and not on whether or not one is single. Equally as regards social services, the elderly widow may well use the service more than a pensioner couple. Those services which I have mentioned account for 90 per cent. of local authority spending. Therefore, there is no obvious or self-evident connection between single people and a lower usage of services. If that is the case, why stop at two people and why not have an additional charge for the third or fourth person? Of course, the concept that local government services should be funded by charges, just like salt or sugar, is wrong. It is a tax, and that is what it should be.
All pay for education through income tax because it is recognised to be a public good. We all need each other's education. Why should there be an assumption for local government that that should take the form of a charge? Local government services are a tax and not a charge. Therefore, what matters for the elderly widow is not what use she makes of the services nor whether she is single, but whether she is poor. That £780 million, as my noble friend Lord McIntosh said, being spent on discounts should be recycled into alleviating hardship and not into throwing money at a single person discount.
What is more, that issue is made more problematic because although rebates are financed 95 per cent. by the DoE, discounts are not. Some 30 to 40 per cent. of households are likely to receive those discounts, both personal and status, from the local authority tax base, as the noble Baroness, Lady Gardner of Parkes, mentioned. Therefore, not only will the low earning couple pay more than the high earning single person; they will pay more because of the discount to the high earning individual. I do not doubt that the Minister will tell us that the revenue support grant is designed to compensate for the number of discounts given by local authorities. However, that assumption depends in turn on the reliability of SSAs. We know that they are crude, inaccurate and volatile, and I shall return later to that point.
Two more perks arise, both mentioned by other noble Lords. The 25 per cent. discount for a single person is worth proportionately more on more expensive property. It therefore once again benefits the more affluent. I am sure that the noble Earl, Lord Onslow, is entirely right regarding the charge on second homes. By reducing two poll taxes, as currently
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exists, to half a council tax not only does one subsidise the most affluent but also pushes up the price of rural cottages still further beyond the reach of local people.
However, when we come to joint and several liability the council tax Bill is downright perverse. Let me give some examples. Consider the position of a married woman at home with a husband who works. He leaves her and his council tax debts behind. She goes on to income support. She must then pay back his debts, incurred when she had no income, out of her income support, thus pushing her income support well below the poverty floor. Consider the case of a person who suffers from Alzheimer's disease, a situation referred to in part by my noble friend Lord Ennals when he referred to care in the community. Perhaps parents left a home to a brother and sister together. The sister suffers from Alzheimer's. She is not liable for any council tax bill because she receives the personal discount. Though it is recognised that she is too mentally infirm to pay her own council tax bill, she is nonetheless jointly and severally liable for her brother's. She is incompetent for her own but competent for someone else's! If that were not so cruel it would be bizarre.
Let us consider the position of a student. Let us say that next year my student son—I hear the reservations from the noble Earl, Lord Onslow, on the matter—completes his undergraduate degree in June. He stays on in his university town and looks for work but cannot find it part-time and goes on to income support. Poverty quickly palls and he comes home. He goes on to income support until he can find part-time work whereupon he may move into a flat and after a few weeks be joined by a friend. Bored by all that in October, if he is lucky, he may go to another university in another town to start a postgraduate degree.
That is an unremarkable and not untypical career, one may think, except that he would have been invisible as an undergraduate, eligible for rebate on income support, eligible for a single person discount in a flat until joined by a friend when he went back to receiving rebate unless the friend was lowly paid, in which case they would claim the low income second adult benefit. From that he would go on to be invisible again, no doubt to the relief of parents, treasurers and your Lordships, as a postgraduate student. In six months he would have gone through three local authorities, four different benefits, five changes of address and six changes of status all to be calculated on a daily liability. I believe that I am right and I can assure the House that no local authority can cope with that. It will not be an untypical pattern.
Let us consider an example of a second person low income discount—perhaps father and son. The father calculates his own rebate and must do a separate calculation on the basis of the second adult—the son—to see whether that produces a higher rebate or discount of 25 per cent., 15 per cent. or 7½ per cent. If so, he substitutes one for the other. The implications for the invasion of privacy, on the one hand, and fraud, on the other, to say nothing of the administrative burden, are, to say the least, perturbing.

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Like the noble Lord, Lord Mackay, we welcome 100 per cent. rebates and no clawback of benefit. I pay tribute to that. However, we deplore the fact that the rebate will be withdrawn at a much steeper taper than hitherto. It is to be 20p in the pound rather than 15p for every additional £1 earned. That adds not only to the poverty trap but makes 100 per cent. rebates virtually self-financing—virtually paying for themselves. Therefore, the poor will be funding the very poor while the better off are enjoying the artificially compressed ceiling on valuations and their artificially reduced or dampened contributions to the council tax and recovering from that burdensome impost in their weekend country cottages at half rates. It really will not do.
I turn to fairness between authorities. The Bill proposes new links between block grants and local tax through the concept of common tax levels for each band of local authority spend at SSA. In other words, SSA will determine grant and, as now, capping; it will also shape the revenue support grant which will compensate for discounts and limit transitional relief. SSAs will become more important even than they are now at just the time when every professional body bar none has registered its profound distrust of SSAs and has denounced them as crude, inaccurate and volatile.
Why? Crude because SSAs are based on 13 factors and only three affect most shire district councils. For example, as I believe the noble Baroness, Lady Gardner of Parkes, mentioned, one of the factors is the privileging of such relatively trivial factors as "tourist nights" spent in an area—while ignoring altogether the major issues facing local government; that is, homelessness and unemployment. Therefore it is crude. It is also inaccurate. It calculates the debt charge figures wrongly and gets the demography wrong. It is also volatile. Local authorities experience huge swings between 17 per cent. and 30 per cent. from one year to the next without any predictability.
If I am right, and I believe that I am, that standard spending assessments can be out by as much as 5 per cent. —not a large sum—then given the gearing effect that the Government have built in to local government finance, which means that the council tax must pay for all the discretionary spending, the council tax will need to rise by 35 per cent. to compensate for a 5 per cent. error in SSAs. The poorer the area, the worse the gearing and the more the tax bills will rise. Standard spending assessments must be refined, reviewed and, I hope, reformulated.
My final point concerns whether or not the Bill will work. I remind the House of the timetable. In the three months between September and December of this year local authorities must receive draft valuation bands; they must canvass to calculate the number of discounts by valuation band to structure their tax base; or simultaneously prepare their forthcoming year's budgets; they must close down the rates and try to collect a poll tax in a growing no-pay culture and diminishing revenue flow. New valuations, new bands, new discounts, new rebate structures will all interlock at the same time, and that is before we have even touched on the question of appeals.
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As each household is due to receive one bill and that bill is to be a net bill, local authorities are expected to do the work on discounts and rebates as far as possible up front and in advance. The administrative implications of that are horrifying. I say to the Government, as the noble Lord, Lord Ross, said, that if they would abolish the 20 per cent. contribution as of April it would at least ease the pressure on the dying years of the poll tax. If they were to scrap the single person discount scheme and put that resource into more generous rebates, that would be the right, fair, proper and administratively simple way to compensate for individual, family and local hardship.
When the poll tax was first debated every local authority association and every professional body warned that it was unfair and unworkable. But the Government—I do not use these words lightly—in their triumphalism and ideological fixity would not listen even to Members on their own Back Benches. In other words, they had to learn the hard way, by reversing their own flagship Bill. As was said in the Address on the Queen's Speech, that is almost without precedent. The Government are about to do the same thing all over again.
The council tax system is deeply flawed. It is frequently unfair and will be hard to work. Again the same local authority associations and the same professional bodies, from the Audit Commission on, are warning the Government and the Government seem once again to be afflicted by a belief that political will is all. Without an amended Bill and without the intervention of a general election I can assure your Lordships that the council tax will have as short a shelf life as the poll tax. But this time around will the Government listen?
7.59 p.m.
Lord Strathclyde: My Lords, throughout our debate today the importance of the issues covered by this Bill has been fully recognised. It provides in effect no less than a blueprint for the financing of local government into the next century. What has emerged as well, both today and in another place, is that while clearly the council tax has to be judged and examined on its own merits—we shall be subjecting the proposals to detailed scrutiny in Committee—it must also be compared with what else is on offer.
What has been particularly interesting throughout the consideration of the Bill so far has been the extent to which the alternatives have been found wanting. By contrast, the council tax proposals have stood up well. What this Bill offers is a comprehensive package of measures which strike an appropriate balance between the achievement of administrative efficiency and of fairness for the local taxpayer; and between the maintenance of local accountability for local tax and spending decisions and of central government oversight of fiscal policy in general.
The noble Lord, Lord McIntosh of Haringey, may not be willing to discuss what the Labour Party has to offer. Certainly the noble Baroness, Lady Hollis, did a good bit of ducking and diving at the beginning of her speech when she said that she would not mention what

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the Labour Party policy actually is. I am not going to let them get away with it and neither is my noble friend Lord Trefgarne. The Labour Party has produced a policy document called Fair Rates. What that offers is essentially a return to the old domestic rating system with valuations based on four separate factors together with increased but undefined help through the rebate arrangements. What has emerged is that this is not the fair rate system that it would introduce if it had the chance on 1st April 1993. What would be inflicted, although entitled "Fair Rates", would incorporate none of the new valuation arrangements which the Labour Party has recognised could only be introduced after a number of years.
Instead we would have the old system of domestic rates based on rental values in accordance with the 1973 valuation roll in England and the 1985 roll in Scotland. All the old anomalies would be there; the out-of-date and somewhat arbitrary basis of valuation; the need for regular revaluations, the failure to take account of the number of people in the property and failure also to take proper regard of particular categories of persons such as students and people who are severely mentally impaired.
To that however would be added a new and glaring omission—that is to say, the lack of any power for central government to restrain local authorities' expenditure. The Labour Party has been quite categorical about that. The precise words of Brian Gould in the debate on the Queen's Speech in another place were:
"There will be no provision for capping in any legislation that we introduce".—[Official Report, Commons, 6/11/91; col. 472.]
What that means of course—
Lord McIntosh of Haringey: My Lords, is it in order for a Member of another place to be quoted who is not of the Government? I have never heard that it is. The rules of debate state that the speeches of Members of the Government in another place may be quoted, but not other speeches.
Lord Trefgarne: My Lords, I believe I am right in saying that Members of the Opposition Front Bench can be quoted.
Lord Strathclyde: My Lords, if I have broken the rules of the House then I apologise.
Lord Ennals: My Lords, whether or not it is in order, can the Minister say whether this is a reply to the debate? Part of the noble Lord's complaint is that the Opposition has not been setting out its policy. We have been debating the policy set out in this Bill. Do we have to listen to this diatribe?
Lord Strathclyde: My Lords, the noble Lord spent an immense amount of time discussing the poll tax. This Bill has nothing to do with the poll tax; it is to do with the council tax. I am not going to let the Labour Party get away with talking about the poll tax and not coming forward with their own policies. We have an election in a few months' time and the people of this country want to know what the Opposition are going to provide.
Baroness Hollis of Heigham: My Lords, will the noble Lord accept that Clause 100 of the Bill refers to the abolition of the community charge? Therefore, does he agree that it is in order to discuss it?
Baroness Seear: My Lords, will the noble Lord also agree that this is an extremely important Bill? Does he further agree that if we have to wait four months for an election we do not want either side of this House to continue electioneering and nothing else?
Lord Strathclyde: My Lords, perhaps I may continue. If there is no capping that will allow the Lambeths, Liverpools and the Lothians of this country to once again indulge in a spending spree at the expense of their ratepayers, and not only domestic ratepayers but business ratepayers as well.
Lord Monkswell: My Lords, does the noble Lord include his own Conservative local authorities which would be capped under these categories?
Lord Strathclyde: My Lords, there are no Conservative-run authorities that have acted with the gross irresponsibility of the socialist-run Lambeths, Liverpools and Lothians in the United Kingdom.
Baroness White: My Lords, does the noble Lord agree that it would be a good idea if he were to renounce his Peerage and stand for election in the other place where he would be far more suitable?
Lord Strathclyde: My Lords, I understand that I am too late for that. As I said earlier on in the debate in reply to an intervention, the principle of capping in Scotland has been around since 1929. The late Willie Ross defended capping in another place in 1966. Many noble Lords opposite have said in this debate that they would seek to remove the powers of capping in the interests of local democracy. I believe that that is an untenable position.
Lord Stoddart of Swindon: My Lords, will the noble Lord allow me to quote from his speech in this House as regards the Local Government Finance Bill? He said:
"I believe in consistency and because I spoke to support the legislation to abolish domestic rates in Scotland it seems sensible to support this Bill. I am just as convinced now as I was then that community charge will rescue us all from the corruption into which local government has fallen".— [Official Report, 9/5/88; col. 939.]
The noble Lord was wrong then as this Bill proves. Why should we listen to anything that he says tonight?
Lord Strathclyde: My Lords, the point has already been made. We voted for the community charge because we believed that it was the right thing to do then. We have seen through experience that the community charge legislation did not work in practice. That is why what we are producing today is something considerably more practical. We have already seen throughout the country that it is much more acceptable. That is why it will last considerably longer than the poll tax legislation did.
Lord Stoddart of Swindon: My Lords, the noble Lord has been waxing eloquently against the Labour Party and other people on this side of the House. Does

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he recall that we predicted that the poll tax would fail whereas he predicted that it would succeed? Has he not learnt that the advice from this side of the House is much better than his own advice and conscience?
Lord Strathclyde: My Lords, it is fascinating. The Labour Party has found a single issue on which this Government are wrong. Perhaps I may begin a list: when is the Labour Party going to apologise for the gross mismanagement of this country's economy in the 1970s? When is the Labour Party going to apologise for not supporting council house sales in the early 1980s? When does it propose to apologise for its role in privatisation; its role as regards the nuclear bomb and of training in this country? There is an endless list of issues as regards which the Labour Party has finally had to recant. Perhaps that is the last intervention that I should take from the noble Lord, Lord Stoddart.
Lord Stoddart of Swindon: My Lords, we do not need any more.
Lord Strathclyde: My Lords, the council tax is a property-based tax. Most countries have some form of property tax. It is an important principle of taxation that it should be spread across the field of economic activity and not be concentrated in a few areas. That is one of the weaknesses of a proposal for a local income tax. I shall not go into that in any great detail. Domestic rates in particular failed to take account of the truism that taxes are paid by people and not by property. They were levied in respect of a property regardless of the number of people living in that property.
With our discount proposals the tax levied in respect of a property will take account of the level of occupancy. A dwelling occupied by a single person will qualify for a discount of 25 per cent. and an unoccupied dwelling for a discount of 50 per cent. In addition, account is taken, through the discount arrangements, of people in particular categories where it would be inappropriate for their presence in a household to add to the Bill of that household. The categories include students, student nurses, apprentices, YT trainees and people who are severely mentally impaired. These categories are, in terms of the Bill, "disregarded" for the purposes of discount which means that if a student nurse lives with her mother and nobody else, her mother will continue to qualify for a 25 per cent. discount. If two student nurses share a house and no one else lives there, there will be a 50 per cent. discount entitlement.
So far as the administration is concerned, there is no reason for this to be complicated and certainly there is no question of a register. The Bill requires local authorities to take reasonable steps to find out about people entitled to discount and that makes administrative sense. It is clearly sensible to send out appropriately discounted bills wherever possible rather than issuing standard bills to everybody and then rebilling them. There is no absolute requirement to issue discounted bills in all cases and if the local authority is not sufficiently satisfied that there is a
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discount entitlement in a particular case, it can issue a standard bill and then await either an application for discount or an appeal against that bill. Since a discount entitlement may exist in relation to only one-third to one-half of all households, the remaining households will simply get the standard bills without the need for local authorities to check or record the composition of those households.
We have heard some nonsense spoken today about the discount arrangements. We have heard from the noble Lord, Lord McIntosh, and the noble Baroness, Lady Hollis, that they will unfairly favour the single millionaire. Such criticism demonstrates a fundamental failure to understand the purpose of discounts or their overall place in the council tax arrangements. The purpose is to provide a broad reflection within the tax structure of the level of services which a household may use. It stands to reason that a single person will use fewer services than a household comprising two or more people.
Baroness Hollis of Heigham: Not necessarily, my Lords.
Lord Strathclyde: My Lords, nor does the argument that some single millionaires might benefit from the discount arrangements offer any justification for ignoring the problem of the levels of taxation faced by single person households. Under domestic rates millionaires could minimise their liability by living in a small and low rated property.
Baroness Hollis of Heigham: They could, my Lords!
Lord Strathclyde: My Lords, in any case—and this is the important point—some 60 per cent. of single adult households comprise people aged over 60 and others include the homes of single parents or young people setting up house for the first time. There can surely be no serious justification for not introducing discounts simply on account of an occasional millionaire qualifying for 25 per cent. of his bill.
There is a fundamental difference of approach between the Labour Party and ourselves over the question of placing a limit on the range of local tax payments to which particular households may be liable. The council tax arrangements propose that dwellings in band H should attract a tax of no more than three times that of a property in band A. This recognises once again the link between the use made of local services, democratic accountability and the amount of local tax to be paid. We do not share the view of the noble Lord, Lord Stoddart, among others, that the contribution people make to paying for local authority services should be solely related to the specific value of their houses. Nor do we believe it to be desirable that a minority of people should be required to carry a disproportionate share of the burden of paying local taxation. The national tax system already ensures that those with higher incomes make a larger contribution to taxation than those with lower incomes and the council tax is intended to meet only a small proportion of local authorities' needs.
The banding arrangements have been welcomed by professional organisations. They will simplify the valuation process. They will reduce the amount of

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movement in the system, creating a more stable tax base and eliminate the need for regular or frequent revaluations. We must not forget the enormous problems caused by revaluations under rates—not by the revaluations themselves, which were generally carried out in a thoroughly professional manner by those responsible —but by their effects. Although technically, revaluations were fiscally neutral they inevitably produced losers and gainers and they presented local authorities with an irresistible opportunity to increase their expenditure and blame the revaluation for the resultant increases in rates. That is clearly what happened in Scotland in 1985. If revaluations are required under the council tax then banding will tend to dampen their effect and many dwellings could be expected to remain in the same band even after a revaluation.
My noble friend Lord Mackay made a point about general revaluations. There will be no need for regular or frequent revaluations because of the banding arrangements. The Bill does, however, provide for general revaluation to take place at the discretion of the Secretary of State. My noble friend Lord Mackay asked many detailed questions to some of which, as for other noble Lords, I will reply by letter or deal with in Committee. One question that he raised, among many others, was the principle of the second home—the 50 per cent. reduction. That is because the council tax is made up 50 per cent. on a property base and 50 per cent. on a personal basis. Therefore, where there is a second house and it is by definition no one's sole or main residence, only the 50 per cent. property basis is payable and not the capitation fee on top of it.
Lord Ross of Newport: My Lords, why do not the Government apply that in Wales?
Lord Strathclyde: My Lords, in Wales there is a different cultural history and attitude to second homes. It is for that reason that it was felt necessary by the Secretary of State for Wales to have a different system. It is one of the charms of the British Parliament that we can have these different ways of doing things for different parts of the United Kingdom.
Baroness Hollis of Heigham: Good effort, my Lords!
Lord Strathclyde: My Lords, the noble Lord, Lord McIntosh, the noble Baronesses, Lady Hamwee and Lady Hollis, among many others, asked about the 20 per cent. contribution to the community charge. Everyone will be aware that the Government increased the level of income-related benefits in 1989 to help benefit recipients pay the minimum 20 per cent. contribution to the community charge. In the current year the weekly up-rated values of these amounts are at least £1.31 per week for single people and £2.62 for couples. The estimated net average community charge level of £210 in the current year for Great Britain as a whole implies an average 20 per cent. contribution of 80p a week for a single person or £1.60 per week for a couple. The up-rated value of these amounts is therefore more than sufficient to cover the estimated 20 per cent contribution to the community charge this
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year. I understand that this is an issue that will be raised at Committee stage. No doubt we shall be able to go into it more fully then.
My noble friend Lord Trefgarne talked about the attachment of earnings orders. However, I know that he is having a discussion with my right honourable friend the Secretary of State for the Environment and perhaps that is a matter that can best be pursued then. The noble Baroness, Lady Hamwee, asked about details of banding being given to people before bills go out in March or April 1993. The local authority practitioners have told us that they could not be sure that they would have the software in place to enable an earlier notice and that such a requirement could in fact delay implementation of the council tax. Therefore, as the noble Baroness said, the list will be available for anyone who wishes to find the banding of their property well before the bills go out.
The right reverend Prelate talked about the treatment of clergy. I am very glad that he welcomes the announcement that has been made. I am glad that it has been possible to reach a satisfactory agreement on the basis that he explained to your Lordships' House.
My noble friend Lord Ellenborough asked about the capping of parish spending. The Bill provides as a general rule that parish spending will not be subject to capping either directly or through the capping of district councils on which the parish is precept. There is, however, a reserve power in Clause 54(6) of the Bill to bring parish spending within the definition of district expenditure to which capping applies. This will allow the Secretary of State to take appropriate action if it appeared that parish councils were abusing their exclusion from capping to make excessive increases in spending.
Many of my noble friends, particularly my noble friend Lord Mountgarret, asked why there was different tax treatment for agricultural workers. Agriculture is beneficially treated in many aspects of the tax system and it would be unfair to bring in yet another anomaly.
My noble friend Lady Gardner asked how often a taxpayer could apply for a revaluation. A taxpayer can propose a change in his band in the first six months after he receives his first bill. He can then propose a change whenever there is a material decrease in the value of his house due to either a change in the property or a change in its surroundings.
The noble Lord, Lord Ross of Newport, asked very sensibly about the basis of valuation. This was dealt with in the Local Government Finance and Valuation Act 1991. The main basis was introduced under the Domestic Property Valuation Regulations 1991, which came into force on 23rd September 1991. The regulations lay out fully and clearly exactly what the terms of valuations should be. The noble Lord also asked what the Inland Revenue should do when it learns about the sale of a property. Of course, properties will only be revalued upwards when they have been altered and they have been sold. The revaluation will be based on 1991 prices, not prices at the time of revaluation, and so house inflation will be stripped out of the calculation.
Lord Ross of Newport: My Lords, I am grateful to the noble Lord for that reply. I am sure that it is right and I assume that that has been circulated to valuers. The provision states that the valuations,
"shall be based on such assumptions and in accordance with such principles as may be prescribed".
Lord Strathclyde: Presumably, my Lords, that is just a form of words that can be used if the situation changes. I understand that the regulations are clearly written.
The noble Baroness, Lady Hollis, made an interesting speech. She had some fun and entertained us with some carefully chosen hard cases. I am sure she will admit that she chose some hard cases. We shall have much more of the same to look forward to in Committee. No matter what system one creates some people will fall into a grey area. That is true under domestic rates, under so-called fair rates, under the community charge, under the local council tax and indeed under a local income tax as well. The noble Baroness also referred to joint and several liability provisions. We shall deal with that matter at some length in Committee. The discount is not awarded to the wife in the example that she gave of Alzheimer's disease. It is simply—
Baroness Hollis of Heigham: My Lords, it was a brother and sister case. Clearly, discount does not apply in that case.
Lord Strathclyde: My Lords, it is my understanding that brothers and sisters are not jointly and severally liable for each other.
Baroness Hollis of Heigham: My Lords, as I understand the Bill—I would be happy if the Minister could elucidate—if they were left a property so that they were co-owners or if they were co-tenants they would be jointly and severally liable.
Lord Strathclyde: My Lords, I shall look into that point and write to the noble Baroness. It is my understanding that brothers and sisters are not jointly and severally liable. I said at the beginning of my speech that there would undoubtedly be some questions which I could not answer in my reply. My noble friend Lady Blatch and I will write to noble Lords who require more specific answers.
In conclusion, we have already shown a tremendous willingness to listen to arguments put to us and to make changes to our proposals where appropriate. Thus we have introduced a new top valuation band; we have improved the arrangements for ensuring that disabled people do not face higher bills as a result of their disability; we have announced new arrangements whereby student halls of residence and any dwelling occupied entirely by students will be exempt from the tax; we have proposed restrictions on the voting rights of councillors who refuse to pay their community charge or council tax; and we have provided that in England and Wales, as is already possible in Scotland, arrears of council tax would be recoverable from councillors' allowances. I need hardly say that we shall be listening most carefully to all the arguments presented during the Bill's passage through this House
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and that we shall continue to be prepared to respond to those where we consider that a case has been made for doing so.
Overall, I believe that the package which the Government have presented is a good and reasonable one. From the local authority point of view, there will inevitably be an enormous amount of work to get the necessary arrangements in place for 1st April 1993. This will be difficult but we are confident that it can be achieved. Thereafter, we believe that the new tax will be much simpler to administer than the community charge. Inevitably it could have been made even easier, but that would have been at the expense of a fair deal for local taxpayers. That is the route taken by the Opposition. From the point of view of local taxpayers, the council tax proposals offer a fair and acceptable system for paying for local authority services. In preparing their proposals the Government have drawn on the recent experience of both the domestic rating system and the community charge. The alternative on offer is ill-considered and ill-advised. I feel that what we are putting forward is something of which this country can be proud. I therefore commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Arab-Israeli Negotiations
8.26 p.m.
Lord Mayhew Lord Mayhew rose to ask Her Majesty's Government what steps they are taking to assist the Arab-Israeli negotiations and the implementation of United Nations resolutions on Palestine.
The noble Lord said: My Lords, it is now 10 months since President Bush said:
"The time has come to put an end to the Arab-Israeli conflict".
He said that the settlement,
"must be grounded in United Nations Security Council Resolutions 242 and 338 and the principle of territory for peace".
As we all know, little progress has been made since then. The Israeli Government still specifically reject the principle of exchanging territory for peace. They resisted joining the negotiations and give little sign of wanting them to succeed. Nevertheless, there are some hopeful signs which I believe give the British Government an opportunity of making a positive contribution to the negotiations.
The first hopeful sign is that in rejecting the principle of land for peace the Israeli Government are at odds not only with world opinion but with opinion in Israel and in the Jewish community in the United States. The last Israeli public opinion poll that I saw showed that 76 per cent. of Israelis were prepared to accept the principle. Equally remarkable were the opinions of leaders of the Jewish community in the United States in opposition to the views of the Israeli lobby in Washington. At the end of last year Mr. Shamir received a letter from 225 rabbis from Jewish communities across the United States. The letter stated:
"We call on you to accept the separation of the two peoples and partition the land … This conforms to the wishes of the

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majority of Israelis, American Jews, the world community and finally, after years of rejectionism, of the Palestinian people too".
That is brave and true. Those views were endorsed in another poll of 205 leaders of the Council of Jewish Federations in the United States. This is encouraging. Plainly, the prospects of success in the negotiations would be improved if moderate Jewish opinion inside and outside Israel were strengthened and pressure on the Israeli Government increased. Thus there is a strong case for spelling out more clearly than has been done so far the gains in security and prosperity that Israel would enjoy by trading land for peace. Surprisingly, that has not been done. No country is better placed to do it than this country.
If there is a settlement the following security provisions are inevitable. The formerly occupied territories would be demilitarised except for a powerful peace-keeping force which would include European and American detachments. The withdrawal of such a peace-keeping force would be possible only by a unanimous decision of the Security Council. There would also be treaty guarantees underwritten by, among others, the United States. All that is wholly acceptable to the Palestinian side, and, I believe, to the chief actors on the world scene. Israel would have a degree of security far higher than it has now and indeed than it has ever had in its history. And both sides would have better protection against terrorism, another vital need. Details of that security package could and should be negotiated, spelled out and publicised now. This country should take the lead in doing so.
Next, the economic gains to the Israelis of a settlement should be spelled out. A plan should be made now for the economic development of the region in the event of a settlement. It should provide for an end to the Arab blockade; for the development and sharing of water resources; and for binding trade, industrial and environmental links between Israel and Palestine and other Arab countries in the region. I believe some work has already been done on the matter at the official level in the European Commission. If so, the British Government should now intervene, upgrade, speed up, spell out and publicise the work.
Those actions would show Israeli opinion most vividly what was to be gained from implementing the policy of land for peace and what is now being lost through the intransigence of the Israeli Government. Although the ideas would not affect the negotiations directly, they would make a powerful contributions towards their success. However, by themselves they are unlikely to change the views of the extremists who form and sustain the Israeli Government.
By rejecting the land-for-peace principle, those people have now isolated themselves not just from world opinion but from their own people. In addition, they are constantly and blatantly breaching Security Council resolutions and the Geneva conventions: building settlements illegally in land not belonging to them; imposing curfews and collective punishments; taking Palestinians from their homes and dumping them in neighbouring countries without trial for an indefinite period; even harassing Palestinian delegates
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at the talks; holding up their exits at the frontiers; threatening Dr. Ashrawi with arrest, and so on. I will not spell it all out.
If that small group of extremists is allowed to continue in that way, it will be disastrous not just for the Israelis and Palestinians but for the United Nations and our hopes for establishing a firm, international border. In those circumstances it is not merely the right but the duty of the world community to bring the strongest economic and financial pressure to bear on the Israeli Government to co-operate with the peace process. The European Community takes in 50 per cent. of Israel's exports on privileged terms. The Commission should now make the continuance of that privileged access dependent upon progress in implementing the principle of land for peace. That would greatly assist the United States Government in taking similar action by relating its immense programme of aid to Israel to Israel's co-operation in the peace process.
Again, the British Government are well placed to help bring about those things. The Government could also improve the prospects for negotiations if they were to strengthen the moderate Palestinians against the extremists, especially Hamas, the fundamentalist movement which challenges the PLO leadership in the occupied territories and is mainly responsible for the violence against settlers there. As Dr. Hanan Ashrawi, one of the distinguished Palestinian delegates at the negotiations, has said:
"The strength of Hamas is in inverse proportion to the achievement of the moderates. The longer the time that goes by without any accomplishment, the sooner the voice of reason among Palestinians will be undermined".
That is profoundly true and important.
It is hard to exaggerate the courage of Palestinians who stand up publicly and pre-eminently against their rejectionist enemies. Several PLO leaders—two of them known to me personally—have paid for their courage with their lives. In those circumstances, it is lamentable that PLO leaders and officials who have committed themselves to the peace process, and to recognising Israel, should be cold-shouldered by British Ministers. The PLO representative in London is one of the bravest supporters of the peace process. He has been received by Ministers in several other European countries. He has been received by the Pope. He has been kindly received by the most reverend Primate whose knowledge of Palestine—if I may say so—is profound, and to whose remarks this evening we shall listen with special care. Yet that gentleman is ostracised by Mr. Douglas Hogg and other Ministers, and is thus exposed to the derision of his extremist enemies. That is a serious diplomatic mistake which the Government must take immediate steps to rectify.
When I raised this matter last July, I was criticised for doing so by one or two of Israel's enthusiastic supporters in the House. I must, I suppose, expect to be criticised again tonight; but I make no apologies. The problem of Palestine should be debated more often and more frankly than it frequently is. Israel's misdeeds, like Robert Maxwell's, have been shielded for too long by the timidity of opinion formers.
The Israeli Government are extremist. They oppress the Palestinians. Their territorial claims are preposterous. Their actions misrepresent and dishonour the Jewish people. If they now reject the security and economic gains which are on offer, persist in stalling the negotiations and defying the Security Council, they must be met by resolute, decisive economic pressure from the United States and the European Commission.
8.38 p.m.
The Archbishop of Canterbury: My Lords, I congratulate the noble Lord, Lord Mayhew, on his interesting and stimulating speech on a Motion which, it is already clear, provides us with an opportunity for a lively debate. For me, the Motion is most timely because late last night I returned from a five-day visit to Jordan, Israel and the occupied territories where I was a guest of the Anglican Diocese of Jerusalem. I went there to join the celebrations to mark the 150th anniversary of the founding of the diocese. Ours is a small and courageous Church, mainly Arab Christians, focused on the cathedral of St. George's, Jerusalem and our energetic and fiery Palestinian Bishop, Bishop Samir Kafity.
It was not my first but my sixth visit. I do not want to say that I have a profound knowledge of the Holy Land. It is a complex country, and every time I visit, I realise how much I have to learn, and begin again. My visit began in Jordan. It was there that I was able to appreciate the generous help it gives to the thousands of refugees to whom it offers hospitality. I admire its people and have a great affection for them, as I do for the people in that whole region.
I pray for the peace of Jerusalem; but peace will not come until there is a healing of the deep conflicts between the inhabitants of the land—Jews and Palestinians—who call the place their home. As some of your Lordships will be aware, the traveller or pilgrim who visits Jerusalem usually enters it from the Plain of Sharon, and ascends by way of a narrow gorge that leads to the hill country of Jerusalem. On left and right one sees the burnt-out trucks and cars in which the Jewish settlers of 1948 bravely and tenaciously fought to liberate their fellow Jews besieged in Jerusalem. The battle of 1948 secured the state of Israel. The further wars of 1967 and 1973 led to their establishing military control over the land that we now call the occupied territories.
Today Israel is in many respects a strong modern nation with much of which to be proud. But in other respects it remains deeply insecure, haunted by the fear that only force of arms has prevented its destruction, distrustful of any other path to security. We recognise Israel's great achievements. But let us not underestimate its fearfulness of hostile neighbours. Hers is a small country. It is not surprising that she feels that her borders are brittle. Nevertheless, when I met the Israeli leaders, including the President and the Prime Minister, I was left in no doubt about the seriousness of their determination not to be diverted from the peace process.
But another proud people also live in the land. I
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refer to the Palestinians who were there long before the waves of settlers of this century. Christians and Moslems, they call the land their home—indeed, in simple truth they have no other home. I say "their home"; and yet it is not their home because it is occupied. Year by year and day by day they see their land being appropriated and in myriad different ways they feel marginalised and maligned. I had a very valuable conversation with members of the Palestinian delegation to the peace talks, which includes several Christians. It is very important that they should be listened to.
In the few remaining moments at my disposal, all I can do is to convey a few personal impressions of the pain and anguish, the hope and the hopelessness of people. I think first of the fact of violence in the land. I am sure that all of us in the House would condemn violence whether by Palestinian, Jew or any other person. The recent killing of a Jewish settler was morally wrong as indeed are other killings of other innocent Jewish people. So too is the violence of retaliatory action by Jewish soldiers as houses are bulldozed, as men are randomly rounded up and interned, or threatened by deportation, as the recent example so tragically typifies.
During the curfew we have seen the lawless action of some—and I repeat the word "some"—armed Jewish settlers shooting up Palestinian villages. Your Lordships will remember that the curfew is imposed only on Palestinians and not on Jewish settlers. Terrorising villages under curfew is behaviour that we dare not tolerate in any civilised state.
There is another serious side to the presence of armed soldiers patrolling and containing the occupied territories. Some of them are very young conscripts. They are in danger of becoming brutalised by their experience, perhaps even in danger of thinking that the Palestinian is a despised and inferior human being. I think also of the closure of Palestinian universities. Bethlehem University has recently reopened after a three-year ban, but Bir Zeit remains shut. Such action only exacerbates the conflict between the peoples, thus feeding hatred and hostility.
There is also the high unemployment among the Palestinians and the sense of despair that that creates. For Arab Christians it is often the last straw. Because they are usually the better educated of the Arabs they have a greater chance of settling in the West. Indeed, they are doing so in greater numbers. If that continues, as I have said on a few occasions this week, Jerusalem and Bethlehem could become Christian theme parks. They would cater merely for Christian pilgrims and tourists—bereft of their Arab-Christian communities which have been in the land since our Lord walked it. As one layman put it so movingly to me, "Will Christians be made strangers in the land of Christ?"
We should also consider the occupied territories now under Israeli military control for a quarter of a century. Since 1967, the state of Israel has not only controlled the areas which were taken in conflict, but it has built over 160 settlements in the West Bank and Gaza in which over 100,000 Jews live permanently. In the past year, 140,000 Soviet Jews have arrived in

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Israel. Within a short while most of them will find a home. But that is not so for the Palestinians who will find it extremely difficult, if not impossible, to obtain a permit to build a home in their own land.
It is therefore understandable that the sight of these impressive and often fortress like settlements outrages and embitters the Palestinian population. An educated Arab-Christian lady in her sixties asked me, "Can you explain to me how a Jew born in Russia can. emigrate to my homeland in 1991 and have more rights, more opportunities and greater freedom than I have?" Many of them feel that the intifada is their only effective way of protesting and, even though it hurts the most, they feel that they have no choice.
Perhaps I may recount two particular incidents which struck me as going to the heart of the problem. On Monday evening I had the great joy of sharing in the Orthodox celebrations of Christmas in the Church of the Holy Nativity in Bethlehem. The day before a young English priest came up to me and said, "I must tell you of my experience last week. I had to go to Bethlehem Police Station to collect the permit that would allow me and my students to get to the service. I had to queue up with the Palestinians. I felt humiliated by my experience. I was treated like a dog as I queued with them. I was shocked by the experience and I realised what they have to put up with day after day."
Then on Tuesday I chaired a seminar at which 30 Jewish and Christian theologians attended. It was a great shock to me to discover that many of them had never met before in that kind of way and in that kind of dialogue with their counterparts from the other side. They were not used to the kind of freedom of expression and dialogue that the Chief Rabbi, myself and other religious leaders enjoy in this country. The most revealing feature was their obvious difficulty in entering into the pain and distress of the other side—so intense was their own feeling of alienation, suffering and injustice that neither of them could feel the pain of the other.
I realised that there are no easy answers to the Palestinian-Israeli issue. As the noble Lord, Lord Mayhew, mentioned, there are many Jews who are alarmed by what is happening to their land and to the Palestinian people. They, too, are anxious to find a solution to a conflict which is creating such bitterness on both sides. However, I am also aware that the wider world must not be allowed to forget the pain and suffering going on in a land which three world religions call "Holy". The Israelis have a home now and they deserve peace. They should have it. A visit to Yad Vashem, the holocaust museum, on Tuesday morning brought home to me afresh and so poignantly the horror of the holocaust and why the land is so important to them. We do not deny that fact. However, the Palestinians are also crying out for their rights and for self-determination in their own land. They should have that too, whatever form it may take. Both groups need to be given certain reminders. The Israelis need to be reminded that secure borders are created by friendly neighbours and a contented population. The Palestinians need to be reminded that the state of Israel is here to stay. Surely the ultimate
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goal must be to secure equal rights and a fair distribution of resources in the land which Israelis and Palestinians share. For this to happen, compromise, negotiation and patient talking through of the issues at all levels are required.
The international community has a moral duty to safeguard the security and interests of both parties. Her Majesty's Government deserve our active support in encouraging the peace process towards a successful conclusion. Only when this is achieved will our prayer for the peace of Jerusalem be answered.
8.51 p.m.
Lord Quinton: My Lords, I am sure that we are all grateful to the noble Lord, Lord Mayhew, for introducing this subject at this time. It is an appropriate occasion on which to do so as next Monday the negotiators involved in this slow process of argument on the future of Israel and the surrounding areas will recommence talks in Washington. There is still life in the matter and surely that is some reason for hope.
However, I felt, listening to the noble Lord, that one large tract of relevant material had somehow become obliterated. This is not just a problem between the state of Israel and Palestinians who themselves, or whose parents, at some stage lived within what is now the state of Israel, or in areas which the state of Israel now controls. If that were the case, or if beyond the River Jordan the neighbouring nations were, for example Canada, Denmark and Switzerland, I imagine that the problem of the Palestinians would be relatively easily solved. But the Palestinians with all their misfortunes are merely the leading edge of an enormous pressure exerted by nations and societies much more powerful than themselves.
A reasonable degree of adjustment has been made with Egypt, but as one moves round in a clockwise direction one finds things are unpromising elsewhere. Lebanon, after all its appalling turmoil, seems to have become comparatively quiet as a kind of Syrian fief. Syria is ruled with the utmost savagery by a member of a minority group who governs with an iron hand and needs to preserve himself by animating further hostility to Israel. Then there is the kingdom of Jordan. The Hashemite kingdom of Jordan is a somewhat precarious political institution. It is amazing how King Hussein, perhaps with luck and good management, has managed to survive assassins' bullets, coups d'etat and other such attempts to overthrow him. His progress is rather like a film or a cartoon when one considers the dexterity or wildness with which what might seem the most plausible outcome for the kingdom of Jordan has been avoided and deferred.
All those issues draw attention to the fact that round the Palestinians is a great ring of other Arab communities, nearly all animated by intense hostility to Israel. Few of those communities, with the exception of Egypt, have substantially made clear their recognition of Israel. Resolution No. 242 of the United Nations is now 25 years old. Much has happened in those ensuing 25 years and large population changes have occurred in that time.

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Nevertheless there are certain features of that resolution which still remain relevant. I refer not only to the part that is ordinarily insisted upon, that is the return of the occupied areas. I refer also to the requirement of mutual recognition and the requirement of secure boundaries for the states involved in conflict in this area.
We all know the geography of the state of Israel as it emerged in 1948 to 1949. The great central area of Israel —the western edge of the West Bank of Judea/Sumaria—is situated on average about 10 miles from the Mediterranean coast. That area is not seriously defensible against a modern nation in arms that is properly organised for warfare. If one of the aims of the resolution is to arrange secure borders for the nations of the area, it cannot be presumed that the borders laid out as a result of the 1948 fighting are absolutely immutable. However, I believe that there are strong reasons for thinking that the security of Israel needs to be considered seriously. Therefore Her Majesty's Government should not lend themselves to applying pressure seriously to undermine it.
There are three points here. First, the governments in the area are unstable. That means that even if a government out of prudence or a temporary excess of moderation, veiled or even abandoned the desire to destroy Israel and to kill or expel its Jewish inhabitants, there would be no guarantee that an agreement made with any such government would be honoured by any of their successors. Constitutional continuity is not a notable feature of the Arab governments of the area. That is in marked contrast to Israel where a liberal democratic form of government of absolute continuity, with the proper and constitutionally legitimate transfer of power, has now existed for more than 40 years.
Lebanon is an extreme case of constitutional disorder. Admittedly Assad has been in power in Syria since 1970. However, he was preceded by a kaleidoscope of violent transmutations of government. Jordan has a mystic persistence, but it is a precarious one. Jordan lies in between Iraq and Israel as a point of access for any really determined repeater of previous Arab aims of total demolition of Israel. There is barely a touch of contact with Saudi Arabia, but even there we are confronted with an essentially medieval polity where the great national wealth may defer for some time radical political changes. It seems not at all unlikely that the Saudi monarchy may go the way of the kingdom of Iraq. The revolution in Iraq unseated its monarchy and replaced it with a succession of military dictatorships.
My second point, which is connected with my first, is that there is an apparently not seriously abandoned aim of destroying Israel. The governments in the region cannot bring themselves to affirm this unequivocally or enter into any arrangements which would solidify it.
My third point brings my previous point to the fore. Perhaps one of the most unsettling changes occurring in the surrounding Arab world is the increasing power in political life of Islamic fundamentalists. We have had a magnificent run of this and an
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experimental proof of what it amounts to in the experiences of Iran since the expulsion of the Shah. Only a week ago the Algerian Government was replaced by a fundamentalist party which gained a sweeping victory in the elections. Even the comparatively reasonable President Mubarak of Egypt has to cope with a powerful and vigorous fundamentalist opposition. Those are dangers quite independent of any abrasion between displaced Palestinians and the state of Israel and constitute a terrifying danger to that state. By comparison, the Palestinians are only the manipulators of pinpricks.
Perhaps it is naive of me to hope that Her Majesty's Government might be animated by some mild sense of political gratitude to Israel. The behaviour of Israel during the Gulf War has not been sufficiently praised. Without any direct relevance to what was happening Saddam sent his fortunately not very good missiles into Israel—though they were damaging enough in terms of human lives, well-being and property. His aim was to provoke a violent Israeli reaction with the object of undermining the rather fragile knitting together of Arab states on the Western side in the Gulf War in an attempt to remove Saddam from Iraq. The Israelis, perceiving that, held their hand in circumstances in which it was extremely difficult for them to do so. A country which had had three major wars for survival in the living memory of people who are not very old was again suddenly subjected to full-scale aerial bombardment. Nevertheless it stood firm and the people accepted the advice of their government not to intervene.
One might say that that is long-term self-interest. It is, but it is difficult to retain one's sense of long-term self-interest when someone is throwing missiles at one. That shows that, whatever might be said about particular episodes of unpleasant violence on the part of the Israeli authorities, Israel is in a completely different category of general political responsibility from the nations by which it has been menaced since its creation and by which it is still menaced. I hope that any thinking about how the peace process should continue will take into account that much larger issue than the immediate topic of settling the conflict between Israel and the Palestinians who used to live there or still do.
9.1 p.m.
Lord Cocks of Hartcliffe: My Lords, when I was a boy occasionally I went to the cinema. In those days the performance was continuous and a phrase came into the national consciousness—"this is where we came in". Once they had seen the programme right through people would leave their seats during the running of the films. I have the same feeling tonight.
The noble Lord, Lord Mayhew, has returned once again to his well-worn theme. He invited comment tonight about the fact that he should not have raised the issue. I believe that this is not a timely debate. When the noble Lord tabled the same Unstarred Question before we rose at the end of the last Session I thought that it was not timely. I do not think that it is timely now because the most delicate negotiations

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are taking place. I believe that there will eventually be a fruitful outcome to those negotiations, but I do not believe that external comments at this time are helpful.
As he invited comment on the point I shall quote from the noble Lord's own autobiography in which he says that when replying as a Foreign Office Minister to a colleague in the other place, he had hoped that his honourable friend would yield to his request:
"that we might be spared a debate on this subject at this moment. It is a bad time politically, diplomatically, psychologically … to discuss the question of Palestine".
I make a plea yet again to the noble Lord, Lord Mayhew, to widen his vision beyond his excessive concentration on one very small part of the world where there are problems.
We have spoken before about the comparatively small size of Israel, which is about the size of Wales, and the undue attention which is paid to it in terms of public debate. There is almost a mythology about the matter which bemuses me. We have recently seen the release c f the hostages in the Middle East. There have been hours of news coverage on both radio and television and great celebrations and features on the return of the hostages. However, hardly anything has been said about the people who incarcerated those people and who robbed them of years of their active lives. It seems to me that the whole issue is out of balance.
I was very pleased when I saw that the right reverend Prelate had put his name down to speak today because on 7th April last year in this House I drew attention to the fact that there had been a singular lack of comment from the Bishops' Benches on the persecution of Christian minorities abroad. I said that I felt that if there was any subject in which the spiritual Lords should interest themselves it should be that. I said that I hoped that the inauguration of Archbishop Carey would usher in a new interest and concern not only for the social and moral welfare of the people of this country but also of our Christian brothers and sisters abroad. Therefore, I looked forward to his speech tonight, but I found it disappointing. He spoke only from his own personal experience, having recently visited Israel. It may be said that I am being unreasonable because one should speak only from personal experience. However, some noble Lords may recall that the most reverend Primate spoke some time ago about disturbances in the North East of England and later had to make a fact-finding visit to the area in order to see what had happened. I had hoped that he would have tried to widen the debate tonight because we do not do ourselves any credit by constantly concentrating on one very small part of the world's problems.
I should have thought that we might have learnt something tonight about the problem of the Jews in Syria, the problems of the people in what should be Kurdistan, about the problems of the Christian minority in the Sudan and the problems of the African continent as a whole. While we have great freedom in this House to raise subjects, for the human race time is ebbing away. There is a disaster looming on the African continent as a whole from which we cannot absolve ourselves of responsibility. I have mentioned the problem of Christians in the Southern part of the
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Sudan, but throughout Africa as a whole, with the problems of drought in the Sahel and of the environment generally and of unstable governments following the departure of the colonial powers, there are immense difficulties building up and we are not addressing them.
Guided by the noble Lord, Lord Mayhew, and others we are concentrating on one very small sector. The whole issue is out of balance. We would do much better to widen our concern because unless we look at the entire continent of Africa—in which I include this part of the Middle East—there is a time bomb which will explode to the detriment of everybody.
We have some responsibility apart from the colonial phase when the European powers moved in in the last century. There is the problem of the depredations of the slave trade before that. Noble Lords will realise that in the past few weeks voices have been raised to argue that compensation should be paid in respect of the whole matter of the slaving trade. There are problems there which dwarf the problems raised tonight by the noble Lord. We should concentrate much more on those matters. I feel that the whole thing is out of proportion.
I make one point on the remarks made by the noble Lord, Lord Mayhew, about extremists forming and sustaining the Israeli Government. I made the point the last time that we held a debate of this kind. He is saying in effect that proportional representation in electing a government puts the power into the hands of a very small group of people who can make the difference between having and not having a majority. He once again made that point. I do not make very much of it because matters are much more serious than that. However, I ask the noble Lord to widen his perspectives, look at the world as such in a much broader spectrum and try to address some of the problems which are so serious that, if they are not faced up to, will put in jeopardy the kind of world in which we now live and which many of us enjoy.
I am grateful that my noble friend Lord Judd will wind up the debate. I am sure that, with his experience in trying to help the third world, he appreciates the points that I have tried to make.
9.10 p.m.
Lord Annan: My Lords, what we are discussing tonight springs from an unimaginable wrong. That wrong was the Holocaust. It is unimaginable because I do not believe that any of us can quite comprehend the scale and horror of the action that took place in Europe during the Second World War. As a result the Jews left in Europe fled to the one place where they felt that they could be with their own kith and kin; namely, Palestine. So began the tensions, disputes and guerrilla warfare between Arabs and Jews which culminated in the war of 1948. As a result of that war another great wrong was done, which was the expulsion of the Palestinian people from the Israeli territory.
Those two wrongs have ever since been mesmerising the world —mesmerising in the sense that we cannot see how a solution can be found to remedy them. Tension began immediately after 1948 when the

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Arabs refused to accept the state of Israel. The result was the war of 1967 and then came the Yom Kippur war. When the Arab states realised that they could not militarily defeat that tiny country, they resorted—again one may say perfectly understandably—to guerrilla warfare, hijacking and kidnapping hostages. In their turn the Israelis made the terrible mistake of invading Lebanon with the intention of destroying the PLO. The PLO was not destroyed and Lebanon is now a client state of Syria.
I fear that the bitterness and hatred of 70 years of fighting will not disappear through one conference. It seems to me that the essence of the problem is contained in the question: what guarantees does Israel require to render its borders and existence inviolate and what should those borders be?
I believe it innocent to think that Israel will agree to swap land for peace at the present moment. It is innocent also to think that the UN Resolution 242 that requires Israel to return to its 1948 borders has any chance of success. It is a dead letter. However, there are some good signs. The noble Lord, Lord Mayhew, was right to draw attention to them, in particular to the good sign that the Palestinians are at least willing to propose some compromises and to call off the intifada.But what reliance can Israel place on President Assad who has just been re-elected president with 99.98 per cent. of the popular vote. Under 400 out of a population of over 6.75 million voted against him. Indeed, he did better than last time. In 1985 he achieved only 99.7 per cent. of the vote.
Israel is often attacked for its brutal treatment of Palestinians within its borders. I do not condone those bestialities and brutalities and I hold no brief for Prime Minister Shamir. But what about the plight of the Jews in Syria? Where human rights are concerned, the Moslem states have a far worse record. We all know about Saddam Hussein's record. Who can forget what happened in Iran? Saudi Arabia's record on human rights is deplorable. How do the Sudanese Moslem Government treat their Christian population? They starve them to death. The spirit of Moslem fundamentalism is not dead. There is every sign that it is augmenting in Algeria of all places, as the noble Lord, Lord Quinton, in a remarkable speech—a tour d'horizon of these Arab countries—reminded us.
Meanwhile, Syria, Iraq, Iran and Pakistan are fishing in the attractive waters of the newly independent states of the Soviet Commonwealth. They are hoping to catch a general or two, who earn not much more than £12 a week, to part with the secrets of their nuclear arsenals which, for instance, Kazakhstan possesses.
The Minister may remember how the noble Earl, Lord Arran, defended the air-to-surface missile system. On 18th December the noble Lord, Lord Mayhew, asked a Question about it. The noble Earl, Lord Arran, replied that we, the British,
"live in an extremely uncertain world and we must be prepared for and expect the worst in some circumstances".—[Official Report,18/12/91; col. 1327.)
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Good heavens, my Lords, if our Government require that weapon in addition to Trident and all our conventional forces to make this country feel secure, is it any wonder that Israel is anxious about security?
I believe that only by creating a 50-mile wide or more buffer zone between Israel and its neighbours, a zone demilitarised and belonging to no single country, can there be any hope of agreement. None of the interested parties, I suspect, would agree to such a drastic solution. Again, it will be a chance lost if that does not occur. A chance was lost after 1948 when, had the oil rich Arab states provided a fund to resettle the expelled Palestinians, there might have been a hope of peace. It was too much to expect, and perhaps it is now too much to expect any kind of demilitarised zone being agreed.
However, I do not believe that it is for this country to put forward solutions or, as the Question of the noble Lord, Lord Mayhew, suggests, to take steps to assist the negotiations. Our past history and involvement in Palestine makes us quite unfit to offer assistance except that of benevolent neutrality. We are distrusted by the Arab states who see in the Balfour Declaration and all its consequences the root of their troubles. We are distrusted by Israel as having for years put our oil interests in the Arab world before Israel's survival. Unpopular as these words may be—and I know that they will be unpopular—let us not meddle where we are powerless to do good.
9.20 p.m.
Lord Beloff: My Lords, I am in agreement with the final words of the noble Lord, Lord Annan. However, I arrive at that conclusion by a slightly different route. As noble Lords who have taken part in or listened to our previous debates will be aware, I am what is known in Israeli circles as a dove. I believe in much of what has been said by the noble Lord, Lord Mayhew; that Israel has a great deal to gain by the termination of hostilities and a great deal to lose if they continue. It will lose materially and also spiritually, as has been referred to in previous debates by the noble Lord, Lord Jakobovits. A nation which is engaged in part in thwarting the wishes of a neighbouring nation suffers itself therefrom.
The question then arises of how we reach the state in which an Israeli Government—not necessarily and probably not the present combination—is prepared to go some way along this road. As I have said to your Lordships before, the question appears to be one of creating a climate of confidence or at least of removing the mutual distrust vividly put before us by the most reverend Primate at the beginning of the debate.
It appears to me that the prescription of the noble Lord, Lord Mayhew, runs in the opposite direction. If it is merely suggested that further countries involve themselves in a pressurising of the government in Israel, that government will receive the support of citizens who might otherwise be critical of its policies and be prepared to see them change. A country which is asked to take great risks for peace must do so out of conviction. As I have said before when the noble Lord, Lord Mayhew, has brought the issue before us, as he has every right to do, it distresses me that he and his

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friends, Members in the other place and people in the country at large who have intimate contacts in the Arab world have not tried to use them in order to persuade Arab states to give some credence to the view that they no longer intend or wish for the destruction of Israel—
Lord Mayhew: My Lords, perhaps the noble Lord will allow me to intervene. My friends and I pioneered the whole concept of the two-Palestine solution. We put that forward before any Palestinian did so. We had some effect in persuading the Palestinians to accept it and thus by implication to accept the recognition of Israel.
Lord Beloff: My Lords, that is a satisfactory phase in the noble Lord's long record of involvement in the affairs of that part of the world. However, it is in itself insufficient. It is true that the new Palestinian leadership appears to accept the two-state formula or whatever formula is used for the solution. However, against that must be set the attitudes of countries which are far more numerous, powerful and important than the Palestinians themselves can ever be even if they acquire a state of their own. For example, I remind noble Lords—and I do not believe that it has been mentioned so far—that one apparently hopeful feature c f the past few weeks has been the rescinding by the United Nations of the resolution that Zionism is a form of racism. For a long time, understandably, that was used by the Israeli Government as an unwillingness to see United Nations' participation in any settlement of their affairs.
While it is satisfactory that the General Assembly of the United Nations should have rescinded that resolution, I remind your Lordships also that a number of Arab countries—including not only Syria but what is sometimes held out to be a moderating influence, Saudi Arabia—did not vote in favour of rescinding the resolution. Therefore, they are committed to an outlawing of the basic idea of the Jewish national home.
After all, it is very much a question of confidence. Did the Syrians, in their rather brief appearance in the negotiations in Madrid and Washington, give any sign that they were prepared to negotiate on equal terms with the state of Israel? They would not even shake hands with the negotiators on the other side of the table. Compared with Saddam Hussein's missiles and now, again, the possibility of his acquiring nuclear weapons, those matters appear minor. But they are not, because one is looking at the reactions of a whole people and not merely the reactions of a government. As my noble friend Lord Quinton reminded us, that government can be changed by ordinary democratic electoral procedures which are likely to take place in any event in the not too distant future.
The noble Lord, Lord Cocks of Hartcliffe, and other noble Lords have called our attention to what they see when they look around them in that part of the world. We must all sympathise with the most reverend Primate's anxiety for his own flock in the Holy Land and understand his distress that its numbers should diminish. However, the economic or even psychological pressures on the Christian Arabs in
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the occupied territory or, indeed, in Israel itself, are as nothing to the wilful massacre of Christians in the southern Sudan by a government who devote themselves in the United Nations to the rejectionist cause. On the tape today one sees that that government have proudly said that they have massacred 3,000 infiltrators, as they call them, in the southern Sudan. That government are supported by the Government of Iran: they are working together in the interests of Moslem fundamentalism. If that is how Christians are treated by triumphant Moslem governments, why should Jews think they will be treated any better?
The world is not compartmentalised. It is not merely a question of a dialogue between two communities. There are rather more Jews than Palestinians but the balance locally is one which, one imagines, could, if established, be retained. It is a question of an isolated community in a world in which it has been forced on three occasions at least to rely wholly on armed strength being asked to give up some elements in that military posture in order to bring about the lasting peace which it desires. However, it still finds that the people who make speeches on the subject are in some cases concerned not to bring the necessary reassurance but simply to suggest external pressure. In that way, I am sure, there is no route to peace.
9.30 p.m.
Lord Chalfont: My Lords, His Holiness the Pope is reported to have said that there are two possible solutions to the problems of the Middle East, one realistic and one miraculous. The realistic would involve divine intervention; the miracle would he agreement among the parties.
That is perhaps a somewhat jaundiced view of the situation. Nevertheless, I believe that it underlines the extreme urgency of the problem that we are discussing this evening. In the brief moments at my disposal I should like to concentrate on one aspect of the problem mentioned by a number of other noble Lords; that is, the implications of the spread of weapons of mass destruction, of nuclear weapons, especially in the Middle East.
Before I do that I should like to comment on one aspect of the matter, which found its place in the speech of the noble Lord, Lord Mayhew, which somewhat puzzles me. It concerns the uproar which has greeted the action of the Israeli Government in removing and deporting some members of terrorist organisations from the occupied territories. At this stage I do not intend to enter into the basic argument regarding what the Israelis should be doing about the occupied territories in return for this or that settlement. I simply make the point that it is surely perverse to expect the Israelis to allow terrorist incidents to take place in the occupied territories without doing something to prevent a recurrence. It seems to me that the actions taken against known members of known terrorist organisations are at least consistent with the Israeli aim to preserve some kind of security within its existing borders.

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Let me move on to the subject upon which I really want to concentrate. I believe that the question of the possible spread of nuclear weapons in the Middle East has two implications. One is that it increases the immense urgency of finding some kind of solution to the problems of the area. Secondly, I believe that it should cause us to think far more deeply about the perceived security problems as seen by the Israeli Government. It is no longer simply a question of being surrounded by potentially hostile states. It is a question of being surrounded by potentially hostile nuclear weapon states. That may be a different matter.
Of course it is true to say, and I say it at the outset of this brief survey, that Israel is generally believed to possess advanced nuclear weapons capability. However, Israel has said, and I believe that it means what it said, that it is ready to take part in negotiating a nuclear-free zone in the Middle East of which Israel would be a part and a participant.
What are the chances of achieving that? I believe that they are small and growing smaller with every day. In the immediate area of the Middle East and in some of the surrounding countries there are a number of countries which have neither signed nor ratified the non-proliferation treaty and which have no international inhibitions against developing or acquiring nuclear weapons if they so wish. I speak of Algeria, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Some have signed but not ratified, and some have not even signed the non-proliferation treaty. Syria, Tunisia and the two Yemens have not accepted compliance with the safeguard requirements of the International Atomic Energy Agency.
The potential for the proliferation of weapons of mass destruction in the Middle East is therefore enormous. There are already disturbing developments in that direction. We know that Iraq, which was engaged in sophisticated developments of three enrichment techniques, was on the verge, when operation "Desert Storm" began, of acquiring an advanced nuclear capability; an effective capability to make nuclear weapons and to deliver them.
Iran is now believed to be engaged in a similar clandestine uranium enrichment programme. From all the intelligence that is available I believe that there is very little doubt that that is so. Algeria has received from the Chinese the technology which has enabled it to set up a nuclear installation of some kind. It is claimed that that nuclear installation is entirely for peaceful purposes—that is, for the generation of electricity—yet it is interesting to note that satellite photographs of that installation show no electricity lines running from it at all. Therefore, it is at least possible that it is there for some other purpose.
In that context Iran is an extremely dangerous case. It has both signed and ratified the non-proliferation treaty. As one who helped to negotiate and who was present at the signing of the treaty, I draw the attention of your Lordships' House to Article 10 which allows anyone who signed and ratified the treaty to withdraw from it at three months' notice. Therefore, under the NPT it is possible, even if a
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country is a party to the treaty, and if it can be done secretly, for it to manufacture all the components for a nuclear weapon, give the International Atomic Energy Agency and the United Nations three months' notice of withdrawal, then simply assemble the components and it has a nuclear capability.
It appears that there are other countries in the area which are equally interested, from all the information we can get, in acquiring nuclear weapons know-how in one form or another. Colonel Gaddafi of Libya has been shopping around for nuclear weapons for years. Benazir Bhutto has told us that Pakistan has the capacity to build nuclear weapons when the political decision is taken to do so. So all around this area there is a growing number of countries—especially with the increasing ease with which nuclear weapons can be exported, transferred and manufactured—which within the next five, 10, or 15 years can become nuclear weapons powers.
It is not only a question of nuclear warheads. Those who follow these matters are deeply worried by the disturbing proliferation of delivery systems. There are now 11 third world countries in the Middle East which have ballistic missiles, ballistic missile technology, and in many cases the ability to manufacture effective ballistic missiles. As we know, the missile technology control regime has been set up to try to prevent such a situation, but so far one has to confess that it has had singularly little success. Throughout the Middle East not only are there potential nuclear weapons powers, but in many cases they are the same countries which have the ability, in a very short time, to make or acquire ballistic missiles to deliver those weapons.
Finally, there is the new problem which has also been mentioned on several occasions this evening; namely, the problem of proliferation from the former Soviet Union. Twenty five per cent. of the whole nuclear capability of the former Soviet Union was outside what is now the Republic of Russia. As the noble Lord, Lord Annan, pointed out, there are a great number of weapons, both strategic and tactical, in the predominantly moslem republic of Kazakhstan. I need hardly point out the geographical location of Kazakhstan. It does not have a common border with Iran, but it does have a border on the Caspian Sea and so does Iran. It is perhaps not entirely irrelevant to point out that the Iranian installation, which we suspect to be a nuclear enrichment plant, is on the Caspian Sea in the north of that country.
As the noble Lord, Lord Annan, said, there is also the danger of the transfer of these weapons, or the technical know-how, from disaffected or poverty-stricken technicians and experts from the Soviet Union selling their knowledge, or even selling their hardware, to people who are prepared to pay for it. All this is when the situation in what is now known as the Commonwealth of Independent States is relatively stable. What might happen when that situation ceases to be relatively stable?
In that context I believe it was Samuel Goldwyn who said that it is dangerous to make predictions, especially about the future; but I will make a prediction now about the immediate future. I suspect that there will be a convulsion of a most catastrophic

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kind in the Commonwealth of Independent States—in what used to be the Soviet Union—in the very near future. We are not talking here of months, perhaps not even of years, but when that happens the whole of this Pandora's Box will fly open with the most appalling potential implications for the rest of the world.
However, tonight we are talking about the Middle East and my conclusion is that the spread of nuclear weapons—the spread of weapons of mass destruction—is now, in the post-Cold War period, one of the major problems which endangers international order and stability. It is most dangerous and most urgent in the Middle East.
The noble Lord, Lord Annan, talked of the preoccupations in Israel for making the existence of their country secure, which of course is really what is at the heart of this problem. Israel sees itself surrounded by people who are openly volubly committed to its destruction. With all respect to the noble Lord, Lord Annan, it is no longer a question of creating a 50 mile cordon sanitaire around Israel. That is no longer enough. Before we can bring any lasting peace to this area we have to ensure that in the Middle East, perhaps more than anywhere else in the world, we take whatever action we can to prevent the further spread of nuclear weapons.
In his Unstarred Question the noble Lord, Lord Mayhew, has invited the British Government to take action in the context of the negotiations that are taking place now between Israel and the Arab and Palestinian countries. My plea to him would be to ask the British Government to put all their efforts not into that aspect of the problem but into ensuring that this development does not go any further. If it does, I suspect that the chances of peace in the Middle East will become more and more remote with every day. It was Abba Eban, one of the most moderate and thoughtful of Israeli leaders, who once said that politicians may be relied upon to make wise, intelligent and statesmanlike decisions, having first exhausted all other options.
There are not many options left in the Middle East and I would urge Her Majesty's Government not to waste those options on apparent solutions which might quite soon prove to be totally irrelevant to the real problem.
9.45 p.m.
Lord Weidenfeld: My Lords, the answer to the unrelenting question of the noble Lord, Lord Mayhew—can Britain contribute to the Arab-Israeli peace process?—must, I submit, be an oracular one: very little if we are unimaginative and petulant: and very much if we are perceptive and generous.
The fact that Britain and France, who sat at the cradle of the modern Middle East, who drew the political map of the region and put so firm an impress on its infra structure, are marginalised and play such a modest role in this process is the answer to one part of the noble Lord's question. There is little more that we can do in Washington than we did in Madrid. But by counselling calmly, compassionately and evenhandedly we can perhaps further the currents of common sense and conciliation and go one step
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further and reassure the contestants that Britain can ultimately be relied upon to play an important role in consolidating any understanding reached between the parties. After all, we Europeans, just as much as any other grouping of powers or even more so, are in fact neighbours of that region. We are in the Mediterranean. This area, the former British mandate of Palestine—Israel, Gaza, the West Bank and Jordan—is as much or more Mediterranean as it is part of the wider Middle Eastern hinterland. Bui to play this constructive part successfully we need steady nerves and a greater dosage of patience and a better sense of proportion than we seem to display at the moment.
To the Israelis nothing that has happened since the Gulf War has squashed the visceral fear that the Arab world—they do not instinctively distinguish between Palestinians and other Arabs—is still implacably opposed to Israel's existence. Saddam Hussein survives, fundamentalism thrives and the spectre of one or more Islamic atom bombs is beckoning from Tadjkistan to Algeria and North Korea. It is true that the infamous "Zionism equals racism" resolution has been rescinded—I pay tribute to the Prime Minister and Foreign Secretary, who played such an important part in that gesture—but it is equally true, as has been said before, that, with the exception of Egypt, Tunisia and Oman, which abstained or were not in the council chamber, the entire Arab/Islamic bloc voted for the retention of that lethal resolution.
It would not be improper to talk about the hostage issue in this context. Though all civilised mankind must be grateful that those wretched men have been released, in Israel's eyes—and I hope in ours too—this has been one of the most shameful chapters in recent history, a story of Western self-abasement and shady moral compromise. Future historians will not look benignly on that whole chain of events, from the day that Mr. Edward Heath parleyed with Lela Khaled and let a terrorist go free and Willi Brandt paid a ransom for a captured Lufthansa plane, to the more recent hypocritical or, worse still, self-deluding messages of gratitude by Western leaders to Damascus and Tehran for having "so generously helped to free" those traumatised victims whose very abduction they had either originally planned or actively aided and abetted. Nor is the attempt to play down the Syrian and Iranian involvement in the Lockerbie massacre exactly reassuring to anyone who would like justice seen to be done.
When I plead for patience and a sense of perspective it is because from the speeches of the noble Lord, Lord Mayhew, and other noble Lords it would appear that Israeli antics alone stand in the way of resuming the peace dialogue; that Israeli transgressions against Palestinians could justify Arab reluctance to take part in further proceedings. That is grossly unfair. We in Britain have been living for decades with the Irish problem. Death and terror stalk daily unhappy Northern Ireland. Indeed they menace our lives on our very doorsteps. We have learnt to live with this curse sufficiently not to make apocalyptic judgments after each outrage. Yet if we learn that on the West Bank 12 men with criminal records, some of them members of the very network that planned the

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Lockerbie murder, have been expelled or that young Israeli recruits have shot in self-defence, reacting—I repeat, reacting—to a terrorist attack, a murder, a car bomb or an ambush, all hell is let loose and Israel is the breaker of the peace.
The most reverend Primate talked movingly about his experiences in Jerusalem and Bethlehem. I have also had the privilege of spending successive Christmas holidays in that area. I have talked to many of my Christian Arab friends. Is the most reverend Primate aware that the Intifada, intimidation and threats from PLO terrorists hit the Christian community? I tried to rethink the incident that he quoted about the young Englishman who wanted to visit a shrine of worship and who was herded into a queue by a local Israeli sentry. Will he pause and reflect upon the security problems that those young men have to endure? What would world opinion have said had a bomb exploded near or in a shrine of Christian worship?
On the ground, the relationship between the Christian Churches and the Israeli Government, especially between Mayor Kollek and Teddy Konni, and members of his faith and members of the Church of Rome are exemplary, and the mayor and the people around him who are interested in Jewish/Christian relationships are doing a good job and are caring and concerned.
I am also not unmindful of the change of tone (the more conciliatory tone) of the leaders of the Palestinians at the peace talks in Madrid and Washington. I know and respect Faisal Husseini. I admire Mayor Frey of Bethlehem. I am impressed by Hanan Ashrawi. They are more realistic, balanced, constructive and trustworthy spokesmen than the terrorists of Tunis or, for that matter, the ruling junta of Damascus, but their friendlier tone and realistic stance are of recent origin. They are relatively new players and I am afraid that their occasional relapses into classical PLO rhetoric are still too frequent to allow Israel to lower its guard dramatically.
I have a sheaf of BBC monitoring reports for the past four days. They are of PLO broadcasts from Tunis to the West Bank and Gaza. Their tone is different from that of Faisal Husseini. Yassir Arafat, only three or four days ago, congratulated Saddam Hussein on his most recent exhortation to further violence and continued struggle in the occupied territories. They are full of threats and exhortations to further violence and acts in the armed struggle; so one must admit that that is confusing for the people who wish to form a balanced picture of the state of mind of the Arab world and Israel's Arab neighbours.
It is also true that the Israeli coalition Government are obviously at loggerheads over various important nuances of policy. Government by coalition is a delicate affair at the best of times. It is more so in Israel. The late David Ben-Gurion used to say that the Jews were a people like any other, only more so. Israel's complex and somewhat antiquated electoral laws bear that out. They are, if one likes, excessively democratic. That is the price we have to pay when dealing with a free society rather than a tyranny, and
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that is why I feel that we should show patience. I am optimistic and feel strongly that after the procedural teething troubles, the real and substantive negotiations will resume.
On the bilateral talks between Israel and the Palestinian-Jordanian delegations, I feel that progress can be achieved within the framework of an autonomy plan in a timeframe of, let us say, five years and a break of three years, after which the final shape and scope of a Palestinian self-governing entity can be resolved. It is obvious that before long elections in Israel will intervene, and equally obvious that the men sitting at the opening sessions will scarcely be the same as those who will sign the final protocols on the Jewish or the Arab side of the table.
On the Syrian-Israeli front, things look initially more problematical, but the Syrian-Israeli problem is in one way easier and in other ways much more difficult to settle. Fortunately, neither history nor religion are profoundly involved. The frontiers of the Golan Heights were not determined by God, no prophet brought his tablets down from those mountain peaks. Those frontiers were inspired by two frock-coated gentlemen in Whitehall and the Quai d'Orsay: Sir Mark Sykes and Monsieur Georges-Picot. They were the result of intensive horse trading between two colonial powers set on demarcating their respective spheres of influence.
Nor in fact is the frontier between Israel and Lebanon more immutable and sacrosanct than the frontier separating the West Bank of Jordan and that kingdom which is only called Hashemite because Whitehall had to pay a debt to a fugitive ally who lost his home and crown to a desert conqueror.
If Mr. Shamir, and the overwhelming majority of Israelis, are reluctant to move from the Golan Heights which they won and held in three defensive wars, we must not show total incomprehension if they want to hang on to them. Of course, a compromise must be sought and found. But there is no reason to stigmatise, demonise and curse the state, the people and the Government of Israel because they want to hold on to a slice of land that they consider viscerally important for their defence and survival.
Where Europe and Britain may well have most to contribute, where ultimately its influence could be best exerted is in the multilateral forum destined to meet in Moscow later in the month. It is there where Arab states within and beyond the immediate radius of the conflict are to participate and talk about common issues. Any confidence building deed and gesture must be encouraged. That is whether it is Saudi Arabia's tentative offer through Prince Bander in Washington for a possible lifting of the economic boycott, certain Saudi and Kuwaiti hints at magnanimous investment in the greater Palestinian area, including even—as I have seen somewhere—financial support for a Russian-Jewish settlement in pre-1957 Israel; whether it is the offer of the King of Morocco to help to bridge the gap between Jews and Arabs through the positive contribution of north African Sephardic Jewry; or whether it is a much closer relationship between the European Community and Jews and Arabs in the region. All such gestures, or even mere mentions,

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could have a galvanising effect on Israeli public opinion and an encouraging impact on Israel's well-wishers throughout world Jewry.
There could be great friendly pressure brought on the decision makers in Jerusalem to meet Arabs and Palestinians more than half way. The slowing down of settlements on the West Bank, the reopening of universities and schools, a greater understanding in matters of water resources and Arab industrial expansion on the West Bank and Gaza could all be achieved if the man and woman in the street in Israel could be made to believe that they are not ringed round with implacable enemies.
But beyond all those issues and beyond all desirable symmetrical concessions, is one factor that must not be overlooked. There can be no real peace in the Middle East without the restructuring of Middle East society in the direction of democracy and the more elementary freedoms and observancies in the rights of man. Why is it that wherever there is change in the world today and where the West is able to make its will felt materially and intellectually we firmly insist, indeed unconditionally, on a transition to democracy and observance of human rights?
In Eastern Europe and Central and South America, and in carts of Africa and Asia, we make any form of serious material or military commitment dependent on governments adhering to the minimal standards required of a civil society; but we do not do this in the Arab or Moslem Middle East. Have we openly made help to General Assad dependent on abrogating terror and letting people live in freedom? I am not dwelling on the fate of the 4,000 Syrian Jews as other speakers have done this evening; I am talking about the freedom of speech and assembly of the Syrian people or the Lebanese people who are now smarting under Syrian control. Unless and until we are applying the same standards that we apply to others to the Middle East region and unless we ask them to subscribe to the same rules of moral conduct that we now require of the successor states of the Soviet Union, we shall not be able to achieve real peace or make peace last.
Even formal treaties will not be worth the paper or parchment on which they are written without a move to a more democratic and civil society. Therefore as we are now preparing to become the next incumbents of the presidency of the European Community, we should prepare ourselves for the long haul of the peace process between Israel and her neighbours. We must not sacrifice moral standards to transient expediency. Instead, we must resolutely and doggedly uphold those loftier aims of freedom and human dignity which won through so decisively in the crucial two years that lie just behind us when the collapse of communism was brought about.
10 p.m.
Viscount Buckmaster: My Lords, I must apologise for not having added my name to the list of speakers at an earlier stage. During the Recess I have been out of touch with your Lordships' House and I only learnt of this Unstarred Question when I entered the House this afternoon. I hope your Lordships will therefore excuse any shortcomings in my speech.
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As usual I shall speak on behalf of the Council for the Advancement of Arab-British Understanding, of which I am a vice-chairman. With the greatest respect to the noble Lord, Lord Mayhew, whom I have supported on similar subjects on eight or nine occasions since I joined your Lordships' House some nine or 10 years ago, I must say that I found his drafting of the Unstarred Question a little limited. Therefore, I have had the temerity to draft a further Unstarred Question which I hope will be discussed when the current Arab-Israeli discussions are over and may include some of the wider issues which the noble Lord, Lord Cocks of Hartcliffe, mentioned.
I very much enjoyed the speech of the most reverend Primate the Archbishop of Canterbury as I know the area of which he spoke so well. I wish to emphasise a point that the most reverend Primate made. We in the Council for the Advancement of Arab-British Understanding feel strongly about that point, which is the continued closure of the Bir Zeit University. Most of the other educational establishments are now functioning, but the closure of the Bir Zeit University is widely resented.
In his address to the Madrid conference, the leader of the Palestinian delegation, Dr. Haider Abdelshafi, eloquently and with great restraint expressed both the plight of his people and their aspirations for independence and co-existence with Israel. That is a most important point. I was pleased to hear the noble Lord, Lord Weidenfeld, acknowledge the intervention of the Arabs in that conference.
Dr. Haider Abdelshafi drew his speech to a splendid conclusion. I shall not quote from his speech at length as the hour is late and I realise that long quotations are tedious to listen to. However, I shall quote the final lines of his speech when he said:
"Let us end the Palestinian-Israeli fatal proximity in this unnatural condition of occupation, which has already claimed too many lives. No dream of expansion or glory can justify the taking of a single life. Set us free to re-engage as neighbours and as equals on our holy land".
That was a splendid conclusion and what a contrast it is with the unbending attitude of the Israeli Government!
One of the major concerns of the Palestinians today is Israel's settlement policy in the West Bank and Gaza Strip. Some 120,000 settlers have already been moved into those areas. That figure does not take into account occupied East Jerusalem, where there are approximately 150,000 Israeli citizens settled on lands which Israel has illegally annexed. Israel has now taken control of no less than 67 per cent. of the West Bank and 50 per cent. of the Gaza strip and intends to increase the settled population there to over 200,000 in the next two years with the object of blocking any chance of a genuine territorial compromise in that land. That is a very serious situation which Her Majesty's Government ought to consider.
My final and most important point is that Her Majesty's Government—and I hope that the Minister will confirm this —have long made clear their view that the settlement programme is an obstacle to the peace process. Would it not be possible, therefore, to find ways to bring effective pressure to bear upon Israel to freeze its settlement programme? For

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example, we might do that acting in consort with our European partners. Might we not thus be able to find some means of persuading the Israelis to think again?
10.6 p.m.
Lord Judd: My Lords, I am sure that we are all delighted that the noble Viscount, Lord Buckmaster, managed to enter the debate because he had some telling points to make, not least his powerful quotation. I am sure also that we are grateful to the noble Lord, Lord Mayhew, for giving us the opportunity for the debate tonight, if only because it has enabled Members on both sides of this House to bring a great deal of considered judgment and wisdom to bear. I have taken heart from the absence of unbridled emotion in debating an issue which can become dangerously emotional.
It is also a great privilege that the most reverend Primate came here so quickly after his visit to the area to share so honestly and directly with your Lordships' House the graphic examples of what he had seen and to make his own wise comments about the basis on which progress could be achieved.
There is somebody not present in the House tonight who also deserves a tribute. I do not believe that we would be having such a debate, looking positively to the future in so far as we have been able, if it had not been for the incredible commitment and energy of Secretary of State Baker of the United States. I am surprised that no tribute has been paid to him more fulsomely in the course of the debate for the work he has done and the results he has already achieved in bringing the different parties to the conflict together.
It is absolutely clear that inescapably, historically, taking into account the Balfour Declaration and the rest, we in the United Kingdom have a special responsibility in the area which we ignore at our peril. It seems to me that there is a paradox. On the one hand—and this has been referred to in the debate—we live in a totally interdependent world where it is very difficult to look at any acute political crisis in a watertight compartment without seeing its implications for the international situation as a whole. Very much in the Middle East the interests of us all are at stake, particularly—as was starkly brought home by the noble Lord, Lord Chalfont, in his telling remarks—in an age of weapons of mass destruction and the capabilities of less predictable international terrorism. In recent months and years the Gulf and Lebanon have brought home to us the reality of that interdependence and its implications for the world as a whole. Yet the paradox is that an effective, lasting solution can only be found by the immediate parties to the confrontation and conflict. A solution cannot be imposed by those from outside.
Taking that point, I was struck by what my noble friend Lord Cocks emphasised. It is indeed true to recognise that while there are special dimensions to the problems of the Middle East, and we do have a particular historical involvement, the lessons of the Middle East are not unique. The issues at the centre of the Middle East crisis are in no way unique. We can see them in Yugoslavia and in the former Soviet
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Union. We can see them in many parts of Africa, including the Sudan. They are certainly there in Iraq, both north and south. Mention has been made of the Kurds but in my recent visit to Iraq I was at least as disturbed by the ethnic issues affecting the Shi'ites in the South. They are there in Kashmir and in Sri Lanka; and, dare I say it, they are also nearer home, in the story of Ireland.
The noble Lord, Lord Quinton, in a very important review of the total situation, put the Middle East crisis in a wider regional context. The noble Lords, Lord Annan and Lord Beloff, emphasised the tremendous importance of security. Although, as I said, these issues are true of other parts of the world also, it seems to me that in the Middle East there are two essential elements which we cannot disregard in our search for a solution. Those are the principles of security and justice. That means security for Israel, and particularly we may focus on the Golan Heights which have projected Syria into a key role if a solution is to be found. It means justice for the Palestinians: the occupied territories, settlers, political prisoners, human rights, the way in which universities have been closed and the rest. But it also involves security for the Palestinians because the Palestinians do not see the issues to which I referred as issues only of human rights. They see them also as security issues because they view settlers who come on to their land as an aggressive threat.
Similarly, the issue of justice does not apply only to the Palestinians. One of the realities that has struck me in visits that I have been able to make to Israel and the region is that justice is a very real issue for the younger generation of Israelis who find themselves in a situation in which they have no other home and no other residence. It is a situation which they have inherited but which is not altogether of their making. The principles of justice apply for the Israelis as well.
It seems to me that the outside world must resist the temptation to be too prescriptive, let alone more partisan than the wiser, moderate and more courageous leaders in both communities. As the noble Lord, Lord Weidenfeld, and my noble friend Lord Cocks underlined, at this critical time self-restraint and statesmanship should be the order of the day. Our task is surely to help create a context conducive to progress by the parties themselves, to enhance the confidence of the parties as they negotiate.
However, there are two matters on which clarification of the British Government's position would greatly help. The first concerns the fourth Geneva Convention, which is again back in the news following the Israeli decision to begin deportation procedures against 12 activists. Calculations suggest that Israel has expelled 1,200 people since 1967. But it has used that tactic only sparingly in recent years, presumably to avoid antagonising those who seek to establish talks.
Following the American decision on Monday night to back the unanimous UN resolution condemning the planned expulsions, the Palestinian delegation to the peace talks is demanding international action to achieve immediate implementation of the fourth Geneva Convention of 1949. That, together with the

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fourth Hague Convention of 1907, constitutes international law on belligerent occupation. The two conventions set out mandatory rules which should govern the conduct of the Israeli state as an occupying power. Adequately observed and enforced they would offer an important degree of protection of the most basic human rights of the population of the occupied territories putting an absolute ban on the deportation or transfer of protected persons, on the transfer of the civilian population of the occupying power into the occupied territories as well as on collective punishment and reprisal against protected persons or their property.
Israel recognise the Geneva Conventions as customary international law but the problem is that Israel does not recognise the de jure applicability of the fourth Geneva Convention to the occupied territories. Both members of the European Community and the United States have consistently voted in favour of UN resolutions calling on Israel to recognise de jure applicability.
Security Council Resolution 681 was one of a number of US inspired resolutions designed to show "even-handedness" and sensitivity to Arab concerns in the build-up to the Gulf War. It again reiterated international concern to implement the fourth Geneva Convention in the West Bank and Gaza Strip, but went further in considering the possibilities of sanctions in the event of continued Israeli non-compliance. The resolution specifically called for a meeting of the high contracting parties to the fourth Geneva Convention to determine if Israel was complying and, if not, what to do about it. Will the Minister today clarify what is happening on that front? What is the Government's own position? When will a meeting be convened?
Britain is not only among the high contracting parties but as I have suggested also has a particular responsibility as an ex-colonial power. In the past, the United Kingdom consul general in East Jerusalem took that responsibility seriously and was active in visiting the scenes of disturbing incidents, often, I gather, against specific instruction from the Israeli Foreign Ministry and defence forces, in order personally to monitor events. Of late we seem to have been more quiescent. Will the Minister explain the reason for that? Are the Government able to give an estimate of the number of political prisoners currently detained by the Israeli authorities? By the same token it would be helpful if the Minister could confirm the current level of settlement within the occupied territories.
The second matter concerns European Community representation in East Jerusalem. The European Community aid programme is considerable. The assistance programme was expanded following the decision of the European Parliament in March 1991 to make an emergency allocation of 60 million ecus. That was to compensate Palestinians for the disruptions and economic losses which resulted from the Gulf War—for example, expulsion of Palestinian workers, loss of remittances, the massive drop in per capita GNP in the occupied territories, which is now only 750 dollars in Gaza —loss of Arab markets for Palestinian
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produce, disruption to industry and agriculture caused by prolonged curfews, and so on. The 60 million ecus were supposed to go directly to Palestinian institutions in the occupied territories. However, the European Community has no presence on the ground in East Jerusalem and no locally-based staff to monitor and evaluate expenditure. I understand that Brussels is having great difficulty in ensuring that this money is well used and has been pressing Israel to allow the establishment of a permanent representative in East Jerusalem equal in status to the European Community representative in Tel-Aviv.
Israel has so far been unforthcoming on the issue. I understand it has said that representatives of the European Community are most welcome to visit and to put up in a hotel in East Jerusalem but they cannot open an office. I also believe that the Minister for Overseas Development is on record as saying that our Government appreciate the need for a permanent EC presence and have communicated that to Israel. Can the Minister confirm tonight that we are continuing such representations? Has the issue been linked with ratification of trade and financial protocols with Israel? Would it not be helpful to explain to Israel that any further discussion on closer ties with the Community must be contingent on allowing a fully fledged and accredited European Community representation role in East Jerusalem?
I mention those two issues because they are important matters over which we have some direct influence. They deeply affect the political environment in which progress can be achieved. However, having mentioned those two specific points, I wish to conclude by re-emphasising that the two principles which must be central to any solution are those of justice and security. I wish also to re-emphasise that in our approach to these matters, this is a time above all for sensitivity, self-restraint and patience. I hope that the noble Lord, Lord Mayhew, will take that point in the spirit in which it was made.
To the degree that any formula does not command the commitment and identification of the most significant parties to the confrontation on the ground it will be destined as likely to fail. God knows what the eventual costs of failure will be. The stakes are high but I believe that the Government will enjoy the support of all parts of this House if they put at the top of their foreign policy priorities a determination to do everything possible to assist a positive outcome.
10.23 p.m.
Lord Cavendish of Furness: My Lords, I am grateful to the noble Lord, Lord Mayhew, for giving us the opportunity to discuss this matter once again. I am also grateful to the many noble Lords who have contributed to the debate. I offer my congratulations to the noble Lord, Lord Judd, who speaks for the first time from the Opposition Front Bench. It is a pleasure to welcome him.
Many noble Lords will remember that the noble Lord, Lord Mayhew, tabled a similar Question six months ago. It fell to me then, as now, to answer on

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behalf of the Government. But this is not a repetition of an old debate. So much has been achieved in the last few months.
Perhaps I may list just a few significant steps. On 30th October in Madrid Israel sat down at a table with all her Arab neighbours—not only with surrounding states but also with representatives of the Palestinians. On 3rd November bilateral negotiations were launched. The participants agreed that these would be based on Security Council Resolutions 242 and 338. Israeli and Palestinians shook hands. All parties agreed to continue their talks and despite setbacks they are meeting again in Washington this week. We now look forward to further rounds of bilateral negotiations and to the launch of multilateral discussions of regional issues in Moscow on 28th January.
This is a start. But there is still a long way to go. Negotiations will not be easy. All parties will have to make further compromises. But the very fact that the peace process has moved so far demonstrates a very real desire on the part of all those caught up in the Arab/Israel dispute to resolve it and make peace. There is now a great opportunity to achieve a just and lasting settlement for which we have been working so long.
All parties should refrain from provocative statements and actions which may hinder the negotiations. This debate was not hampered by anything provocative although there was a recognisable partisanship at some points. However, it is important that that state of affairs is sustained while those delicate talks are in progress. We deplore the recent Israeli decision to deport 12 Palestinians from the occupied territories. That is contrary to international law and is particularly provocative at this stage of the peace process. It is right and proper that the UN Security Council has unanimously adopted a resolution condemning the decision.
The noble Lords, Lord Chalfont and Lord Weidenfeld, put another side to that story from the Israeli point of view. We deplore all violence but its perpetrators should be dealt with in accordance with the law. I understand that at present Israel proposes to deport 12 Palestinians without charge or trial.
Perhaps this is an appropriate moment to respond to the noble Lord, Lord Judd, as regards the fourth Geneva Convention. We and our European partners have repeatedly exercised our right under Article 1 of that convention to take up breaches of international law under human rights obligations in the occupied territories. There is no doubt that the fourth Geneva Convention applies to those territories. Israel should comply fully with its obligations under the convention.
We believe that a meeting of the high contracting parties to the Geneva Convention to consider ways in which to protect the Palestinians may be useful. However, it should be convened only after the most careful preparation. If badly prepared, such a meeting could exacerbate existing tensions without having any practical effect on the Palestinian situation. Therefore, we have suggested to the UN Secretary General that
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a smaller consultative committee might meet first to examine ways to ensure Israeli respect for the fourth Geneva Convention.
We commend the Arab decision to participate in the present round of talks despite the apparent provocation of the deportations. Only by negotiation can the underlying causes of the problem of the occupied territories be eliminated. The most reverend Primate spoke movingly of conditions in Jerusalem and the West Bank and of his anxiety for the Christian community there. We are especially grateful for his attendance at your Lordships House to contribute in the debate on his return from the region.
Until a settlement is reached, we shall continue to work to improve conditions in the occupied territories not only through our approaches on human rights but also through aid. In March the EC agreed to provide a grant of £42 million emergency aid to the occupied territories to compensate for the economic impact of the Gulf crisis, as mentioned by the noble Lord, Lord Judd. In response to his question, a representative of the occupied territories has been appointed to ensure that that money is spent quickly and effectively. Britain also has a bilateral aid programme and remains a major contributor to the UN Relief and Works Agency for Palestinian Refugees. However, our work on human rights and aid can be no substitute for a solution to the political dispute.
I have spoken about the British Government's role in the negotiations. As the noble Lord, Lord Annan, said, it is not a leading role. This was an American initiative from the start and it was the Americans who created the opportunity and the Americans who are best placed to carry forward the process. Secretary Baker has worked tirelessly to bring the parties to the negotiating table and I am pleased to join the noble Lord, Lord Judd, in his tribute to Secretary Baker. He and President Bush and the Russian co-sponsors continue to take an active interest in the negotiations. We and our European partners decided at the start that the most valuable role that we could play was to support the American initiative and subsequent developments have shown that to be the right choice.
Since the end of hostilities in the Gulf we have been doing everything we can to support the peace initiative. We have used our contacts with the parties to the dispute to urge them to come to the negotiating table. We have encouraged other states in the region to lend their support. We have worked closely with the Americans and with our EC partners. We were represented at the conference in a delegation led by the EC presidency. That delegation played a full part in the events of Madrid, speaking at the conference as a full participant and using its influence to push the process forward.
We and our EC partners will have an important role to play in the multilateral negotiations on regional issues which are due to be launched at the end of January in Moscow. Those negotiations are an integral part of the process and should complement and support the bilaterals. Progress in the multilaterals will depend on political progress. But given

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that, there is scope for a range of initiatives on economic development to benefit the region as a whole.
We will do what we can to help the talks along. We hope that a wide variety of states from both inside and outside the Middle East will be involved, all contributing their expertise. The EC and individual governments will expect to play a leading part in the negotiations on regional economic co-operation and arms control.
The responsibility for progress in the peace process now lies primarily with the parties to the dispute. Only they can make the compromises necessary for peace. No one can negotiate on their behalf or dictate the terms of a settlement. We are urging them to keep the momentum going. As the noble Lord, Lord Mayhew, said, they all have so much to gain from a peaceful settlement. I listened carefully to what the noble Lord said. I do not know how much more we can do to spell it out or, as he put it, publicise it. However, I shall read carefully what the noble Lord said on the matter and draw it to the attention of my department.
The noble Lord, Lord Mayhew, mentioned the need for privileged access to the EC to be dependent on progress towards land for peace. We hope that a settlement to the Arab-Israel dispute will open the way to closer EC co-operation not only with Israel but with the region as a whole. It seems inevitable that major changes of that nature will flow from, rather than precede, progress in the peace process.
The noble Lord, Lord Chalfont, was good enough to give me notice regarding his anxiety about proliferation. I can only say that so wide and detailed were the cases that he mentioned that I shall not answer them this evening in full. I shall need to write to him hut, as the noble Lord is aware, a debate is to take place on Monday in the name of the noble Lord, Lord Kennet, where that subject will be examined exhaustively.
The noble Lord mentioned the danger that the disintegration of the former Soviet Union may lead to the proliferation of weapons in the Middle East. We look to individual republics to minimise such risks and have made clear to them that their approach on non-proliferation will be crucial in our developing bilateral relations with them. The close Western co-ordination on recognition has helped to bring the republics to a responsible approach on these questions. We and our Western allies are broadly satisfied with the assurances given, although I understand what the noble Lord, Lord Chalfont, says when he speaks of the instability of the area. One must hope and pray that the disaster that he expects can be averted.
We expect Russia, as the continuation of the former Soviet Union, to uphold Soviet rights and obligations under the non-proliferation treaty. We made clear to other republics with nuclear weapons on their territories that we expect them to accede to the non-proliferation treaty as non-nuclear weapon states as soon as possible. As I said, the noble Lord, Lord Chalfont, developed the argument much further and I do not believe that there is time to deal with it all at this hour.
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The noble Lord, Lord Mayhew, mentioned the need for a security guarantee for Israel, as did other noble Lords. We have always said that any settlement should provide for the security of Israel. The noble Lord, Lord Annan, is surely right when he says that Israel has legitimate fears in that respect, and it is certainly understood that it will be looking for security. We believe that there is a role for the international community, particularly the UN Security Council, in endorsing and guaranteeing any agreement reached. As the noble Lord, Lord Mayhew, suggested, there will almost certainly be a need for security guarantees in any overall settlement. The shape of those will emerge in any negotiations and may indeed involve a United Nations role.
I heard it suggested, and my noble friend Lord Quinton raised his anxiety, that Israel would be forced to take decisions against her security interests. There is no question of that. On the contrary, Israel's security is best assured by a negotiated peace with her Arab neighbours as the Gulf crisis has shown. Yes, I am pleased to pay tribute to Israel's courage and sense of responsibility during the recent conflict.
Israel has always called for direct talks with her neighbours and at last these are possible. Israel should seize the chance to make peace with her enemies. A solution cannot be imposed; it must be freely accepted. Only then will it bring stability and only then will it reconcile Israel's right to security with the legitimate concerns of the Arabs, not least the Palestinians' right to self-determination.
The noble Lord, Lord Mayhew, asked about upgrading the Government's relations with the PLO. I cannot agree with his conclusions. The arrangements for the Palestinians' negotiating team are carefully and skilfully balanced. They have enabled effective and authentic representation for the Palestinians. We have not renewed ministerial contacts for reasons of preserving that balance. Officials will continue to meet the PLO. Ministers are more than happy to meet members of the Palestinian negotiating team.
There is no prospect for a lasting peace unless there is justice for the Palestinians. That is why we believe that Israel should withdraw from occupied territory. As President Bush said on the opening day of the conference in Madrid, territorial compromise will be essential for peace. We and our European partners have been firmly opposed to Israel's settlement activity. I believe that that is a matter which the noble Viscount, Lord Buckmaster, raised.
We believe that the policy of establishing settlements in the occupied territories is not only illegal, but an obstacle to peace, as are all Israel's policies of repression which contravene the fourth Geneva Convention. Israel's continued failure to administer the occupied territories according to international law and human rights standards gives added urgency to the search for a settlement to the underlying political dispute.
My noble friend Lord Beloff spoke of the rescinding of the resolution. We would like the resolution equating Zionism with racism repealed by an overwhelming majority. The resolution is

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obnoxious. We have always been against it. Its repeal should open the way for further constructive UN involvement in the Middle East area.
The most reverend Primate drew our attention to the situation as regards universities, as did the the noble Lord, Lord Judd. We welcome the Israelis' gradual re-opening of the universities in the occupied territories. That follows repeated approaches by the Twelve. We join the most reverend Primate in deploring the decision to extend the closure order on Bir Zeit University to the end of February. We call on Israel to allow Bir Zeit to re-open. We shall continue to speak up against this denial of basic human rights. The closure is not justified by security concerns. Education is a focus of EC aid and efforts in the occupied territories.
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If there are matters outstanding which I have not raised then I can give your Lordships an assurance that I shall write in the near future. There are signs that the opening of negotiations has already had a positive effect on public opinion in the region. A growing majority in Israel (over 70 per cent.) is now said to be in favour of giving up land for peace. At the time of Madrid we saw Palestinians in the occupied territories approaching Israeli soldiers with olive branches, not stones. We must do all we can to sustain this mood of hope. That should make the compromises less difficult.
House adjourned at twenty-one minutes before eleven o'clock.