Lords Sitting of 23 January 1992

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Chelmsford.): The LORD CHANCELLOR on the Woolsack.

Industrial Tribunals: Hearing Delays
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
What steps are being taken to eliminate delays in hearings before industrial tribunals of unfair dismissal and other cases.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, to deal with the high level of applications Her Majesty's Government increased the budget for the industrial tribunals by over £2 million in the current financial year, enabling more chairmen and administrative staff to be recruited. Measures are also being taken to improve efficiency.
Baroness Turner of Camden: My Lords, I thank the Minister for that response. However, is he aware that from figures issued by his department in October it would appear that only a small minority of cases are heard within six weeks? Most of them take between 15 to 26 weeks before they are heard. Is he also aware that his right honourable friend in the other place, in dealing with the Maastricht agreement, made the following statement:
"We have a comprehensive set of employment rights in law, and rapid and effective recourse to Tribunals for all those whose rights may have been infringed"?
Is that not inaccurate in the present circumstances?
Viscount Ullswater: My Lords, no, I do not believe it is. I recognise that there will be some delay between the time the application is made and the case being heard. That is often a question of gathering the evidence together. The target remains that 60 per cent. of cases be heard within 12 weeks. Over 80 per cent. of the cases coming to a hearing do so within 26 weeks. The Answer I gave acknowledges the fact that there has been an increase in the number of cases.

Uniform Business Rate
3.3 p.m.
Lord Monson Lord Monson asked Her Majesty's Government:
Whether they will consider mitigating the burden of the uniform business rate while the recession persists, given that the applicable rateable values in England and Wales were based on the high rentals prevailing in April 1988.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, rents in some sectors have fallen since the base date used for the 1990 revaluation. However, we have no plans to change the burden of non-domestic rates. Our
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transitional arrangements are protecting many ratepayers from their final bills and giving them time to adjust to the new system. Once ratepayers have arrived at their final bills, their rates cannot increase by more than the rate of inflation. Changes in rents since the levels used in the 1990 revaluation will be taken fully into account when the next revaluation on non-domestic property is undertaken in 1995.
Lord Monson: My Lords, I am grateful to the noble Baroness for that full reply. However, does she agree that the valuations on which uniform business rates are payable were fixed during the somewhat artificial property boom of the spring of 1988 and are now totally unrealistic? Partly due to our ERM membership it may be years rather than months before property values regain their mid-1988 level, certainly in London and the South-East of England. Does the noble Baroness agree that while big businesses, with luck, may be able to pull through, for many small businesses the burden of the uniform business rate may literally be the last straw?
Baroness Blatch: My Lords, perhaps I can explain to the noble Lord that certainly there was a fixed point when valuations were made. Indeed, the valuations proved that some properties were a great deal more valuable at that point. However, it was deemed at the same time, which is important, that the yield from the business rate should remain the same, so there was no increase in the yield. Poundage was therefore adjusted to take account of that. The only anomaly that remains concerns those properties that were wrongly valued and for that there is an appeal system.
Lord Jenkins of Putney: My Lords, does the noble Baroness agree that an advantage of the uniform business rate is that it serves to dispel the illusion that the Conservative Party is the friend of the small businessman?
Baroness Blatch: My Lords, I wholly disagree with that. The enemy of the small businessman was the high spending council, from which he is now protected.
The Earl of Onslow: My Lords, if the small businessman was protected from the high spending councils, why was it that the low spending councils were forced to increase their uniform business rate by large amounts? Is my noble friend aware that Liverpool charged high business rates and Guildford charged low? Liverpool has been rewarded for its profligacy and Guildford penalised for its sensible policy.
Baroness Blatch: My Lords, my noble friend is somewhat distorting the case. The valuation of business across the whole country was on the same basis. It was known that, by and large, businesses in the South and South-East were more affluent than businesses in the North and North-West. It is true that Liverpool was overcharging businesses and also true that low spending councils were being fair to businesses. We now have the best of all worlds. We have a system in place that is fair and provides

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protection against any kind of profligate council by the fact that no business can be charged an increase greater than the rate of inflation.
Lord Stoddart of Swindon: My Lords, does the Minister agree that the operation of the unified business rate has dispelled the myth that it was high spending local authorities which led to high business rates? Is she aware that business now understands that the unified business rate has worked against business and led to many bankruptcies of small businesses? Is it not time that the Government realised their mistakes and handed business rates back to the local authorities where they properly belong?
Baroness Blatch: My Lords, the noble Lord has a short memory.
Lord Stoddart of Swindon: My Lords, I do not.
Noble Lords: Order!
Baroness Blatch: My Lords, the noble Lord does indeed have a short memory. Perhaps I can remind him that increases of rates to all businesses—small, medium and large—by some local authorities were extremely extortionate. An increase of 63 per cent. was made by one council; my own authority put up business rates and took £20 million from business and commerce in one year by a rate increase of 33 per cent. In those days businesses were fleeing from the High Streets of many of our inner cities. That does not happen any more because in law they have a protection that no increase can be greater than the rate of inflation.
Lord Stoddart of Swindon: My Lords, the noble Baroness will find that I have a long memory and that memory tells me that the reason for high business rates—
Noble Lords: Question!
Lord Stoddart of Swindon: My Lords, will the noble Baroness take it from me, will she understand and will she agree that the reason for high business rates was the reduction in government grant to local authorities from 59 per cent. to 40 per cent?
Baroness Blatch: My Lords, the noble Lord and the Government will have to agree to differ about their interpretation of what happened. There was a direct correlation between the rate increases to business and commerce to high spending and profligacy in local authorities. That is now at an end and cannot happen again. The health and wealth of business and commerce as a whole are important to the Government nationally and I believe the present system is the best system to serve business and commerce well.
Lord Mackie of Benshie: My Lords, does not the indignation on both sides of the House indicate that perhaps the business rate or business taxes may be based with much greater equity on profit?
Baroness Blatch: My Lords, a number of factors are taken into account when the valuation is made.
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Clearly the buoyancy of business in an area is one of those factors. If buoyancy is related to profit then at least there will be some account taken of it. That is why there was a difference between the affluence of the South, South East and South West as opposed to the rather less affluence of the North and North West.
Lord McIntosh of Haringey: My Lords, is it not the case that the problem to which the noble Lord, Lord Monson, was drawing attention was the fact that any valuation made at a specific time runs the risk of going out of date? Is not the problem of the Local Government Finance Bill which is before the House at the moment that the Government have drawn up bands for the valuation of residential property which will inevitably go out of date and be as meaningless and dangerous as the bands to which the noble Lord, Lord Monson, referred?
Baroness Blatch: My Lords, we have gone into this matter in some detail. No doubt for many hours today and for another five days in dealing with the Local Government Finance Bill, the second point will be gone into in great detail. As to the first, any fixed point in time will be fair so long as it is applicable across the country. For the uniform business rate it is important because each business is valued separately and uniquely. It is important that there should be regular valuation. The next valuation is due in 1995.
Lord Monson: My Lords, the noble Baroness argued that businesses which felt that their 1988 valuation was excessive had the right of appeal. Is she aware that the appeal process is stretching into years rather than months? Is she further aware that even if businesses eventually obtain a reduction in their valuation, as I understand it they have no right to reclaim the excessive rates paid in the interim period? Can something be done about that?
Baroness Blatch: My Lords, I have every sympathy with the point that the noble Lord makes. My department is putting some pressure on the valuation office to clear the backlog of appeals. If there is a modification downwards, any funds lost in the interim will be paid with interest.

Spitting in Public
3.11 p.m.
The Viscount of Falkland The Viscount of Falkland asked Her Majesty's Government:
Whether they will act to discourage people from spitting in the street.
The Minister of State, Home Office (Earl Ferrers): My Lords, such disagreeable conduct is more suitably regulated by private decorum than by government intervention.
The Viscount of Falkland: My Lords, I thank the noble Earl for his Answer. I agree with him. Is it not the case that although spitting can be excused in dire cases where people have to spit or perform some other personal habit which is disagreeable, it should be done discreetly? Is it not also the case that nowadays more

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people spit repeatedly without consideration for others? Cannot the Government take a lead in the same way as they have concerning people who throw cola cans and litter? Will they bring to the attention of people who spit the potentially anti-social effects of their behaviour?
Earl Ferrers: My Lords, I believe that all noble Lords would agree that it is offensive behaviour. However, there is a difference between spitting at people and spitting in the presence of people. Spitting directly at or on to somebody might, if one can so put it, be caught by the law. It could constitute a criminal offence. It could be an assault at common law which would carry a level 5 fine of £2,000 or six months' imprisonment or both. It could be caught as an offence under Section 5 of the Public Order Act 1986. If a court decided that such behaviour was threatening, abusive or insulting (in my judgment, it could be all three) and was likely to cause, or did cause, harassment, alarm or distress (it might also follow that all three of those matters apply) there would be a level 3 fine of £400. Alternatively, the behaviour could be caught as being likely to cause a breach of the peace. In that case a person could be bound over.
Lord Kennet: My Lords, is the noble Earl old enough to remember, as I do, the notices in buses and tube trains—on the Continent, certainly, and, I believe, also in Britain—
saying "Spitting spreads TB"? Is not the appearance of the so-called killer mutant strains of the TB bug now a reason to consider reintroducing such notices?
Earl Ferrers: My Lords, my advice is that there is no medical or public health hazard which arises from spitting. The Department of Health regards the latest article which has appeared suggesting that there is a risk as inaccurate. My information is that there is no risk of contracting TB from exposure to somebody coughing or spitting in the street. I am old enough to remember the same things as the noble Lord, Lord Kennet; but whether I do remember them or not is another matter. There are plenty of examples of spitting being prohibited in other countries. For example, in Singapore it is an offence to eat or drink on the tube; it is an offence to chew gum; it is an offence to spit; and it is also an offence not to flush the lavatory. All are excellent inducements for people to carry out those functions or not to, but the Government do not intend at this moment to follow those measures.
Lord Monson: My Lords, is the noble Earl aware that during Ramadan, which, as the noble Earl knows, begins in early March this year, strict Moslems are not meant to swallow even their own saliva, which is the reason why there is so much spitting in Moslem countries? Does that not present certain difficulties, given the religious composition of this country today?
Earl Ferrers: My Lords, I thought that the main difference was that in the example given by the noble Lord one was swallowing the saliva, but in the instance given by the noble Viscount, Lord Falkland, it was a question of ejecting it.
Lord Renton: My Lords, is my noble friend aware that spitting can result in trespass to the person if it is done with sufficient accuracy?
Earl Ferrers: My Lords, I can only say that I am reminded of a little ditty relating to Julius Caesar which I was taught when I was at school. It was:
"Julius Caesar let a greaser right across the street,
And hit Agrippa on the nipper
And knocked him off his seat".
Lord Rea: My Lords, while it is extremely difficult to cap that one, can the noble Earl remind me whether or not there was a song in the 1960s called, "No Spitting on the Bus"? Does the noble Earl agree that that habit has now become rather rare? Does he further agree that it would be a good idea to commission the noble Viscount, Lord Falkland, to write a song to deal with the present problem which he finds offensive?
Earl Ferrers: My Lords, that is certainly an idea which the noble Viscount may care to follow. However, I can tell the noble Lord that there were conduct regulations in 1936 which created the specific offence of spitting on buses. Those regulations have now been replaced by the Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) Regulations 1990 and it is no longer an offence.
Lord Tordoff: My Lords, does the noble Earl remember that in the 1930s in the fair town of Manchester—I am sure that his noble friend Lord Wade recalls it—there were two notices in awkward juxtaposition. The messages said, "Do not spit" and "Use the ship canal".
Earl Ferrers: My Lords, that just shows the fertility of the imagination of the noble Lord.
Baroness Masham of Ilton: My Lords, will the noble Earl consult the medical dictionary in the Library where he will see that TB can be spread by sputum? This is quite a serious question.
Earl Ferrers: My Lords, I dare say that the book in the Library does say that. I have taken advice from a more current source and I am advised that it is not so.
Lord Whaddon: My Lords, leaving aside the more draconian regulations in Singapore, is the noble Earl aware that in certain other countries—I recall that it happened in Poland where spitting in the street was prevalent—a government advertising campaign against the habit of spitting was very effective? Will the Government consider such action here?
Earl Ferrers: My Lords, I do not believe that we have got to the state where we wish to use that kind of advertising in preference to other more suitable kinds of advertising.
Lord Annan: My Lords, does the noble Earl agree that there has been an improvement in your Lordships' House in this matter? I believe it is now 230 years since Lord Cobham showed his disapproval of Lord Harvey by spitting in his hat.

Liquidators' Fees: Taxation Proposal
3.19 p.m.
Lord Morris Lord Morris asked Her Majesty's Government:
Whether they will consider instituting a procedure to allow the taxation of liquidators' fees and costs, along the lines of taxation of costs in judicial proceedings.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay): My Lords, such a procedure, in essence, already exists. The Insolvency Act 1986 and the insolvency rules set out how liquidators' remuneration should be calculated and make provision for the setting of that remuneration by creditors, either through a liquidation committee or in general meetings. Creditors also have the power to make application to the court for an order to reduce remuneration which they consider excessive. Where creditors are not in a position to resolve the question of remuneration, it will be payable at a rate equivalent to that where an official receiver acts as liquidator unless the court directs otherwise.
Lord Morris: My Lords, I thank my noble friend for that very full answer. However, does not he find it somewhat disturbing that one major firm of accountants failed to demonstrate its much vaunted independence and courage by certifying the accounts of companies known to be questionable as showing a true and fair view and then for another assistant firm of accountants to step in and charge scandalously high fees, as pre-preferential creditors, thus jeopardising the possibility of the ordinary creditors getting anything from what was left of the companies?
Lord Reay: My Lords, fees are a matter for the creditors or the court and the Government are not in a position to comment on the costs of any particular liquidation.
Lord Bruce of Donington: My Lords, is the noble Lord aware that there is some public anxiety about this matter? Would he consider it advisable for either him, or his Ministers, to consult the appropriate professional accountancy bodies on this matter with a view to obtaining at any rate some reassurance from them?
Lord Reay: My Lords, as regards the professional bodies—and in particular the Institute of Chartered Accountants—we see their role as being primarily to regulate the conduct of their members generally and doubt whether they could be expected to devise a tariff for liquidators' charges. Charges can vary enormously from case to case, as we have seen, reflecting the complexity of the work involved in different liquidations.
Lord Williams of Elvel: My Lords, in view of the very high costs associated with liquidation and also with administration and receivership, do the Government believe that it is right that accountancy firms—who, after all, have their major business as auditing firms—should be also in this business?
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Would it not be right to separate out the auditing function so that accountancy firms can engage in auditing and other firms with this speciality can do liquidations and administrations?
Lord Reay: My Lords, I had something to say on this question in the debate yesterday. However, in this context I must say that the court may appoint a provisional liquidator at the moment when the court is presented with a petition for a winding-up order. It is then the court that fixes the remuneration of the provisional liquidator according to the insolvency rules.
Lord Williams of Elvel: My Lords, I am sorry to press the noble Lord, but I was not asking that particular question. I was asking him about the role of accountancy firms who also have departments which deal in liquidations and with administration and receivership. Is it right that one firm should cover those two activities?
Lord Reay: My Lords, the Government's view Is that auditors should not take such appointments.
Lord Williams of Elvel: My Lords, in that case will the Government persuade the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants in Scotland to introduce the necessary rules?
Lord Reay: My Lords, I shall be happy to look into that matter.

"Polar Circle"
3.25 p.m.
Lord Shackleton: My Lords, I beg leave to ask a Question, of which I have given private notice, namely: To ask Her Majesty's Government what decisions they have reached concerning the future of the "Polar Circle"?
The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran): My Lords, I should like to announce today the Government's decision on a permanent replacement for HMS "Endurance".
"Polar Circle", a Norwegian built logistic support and scientific research ship, was chartered by the Government in October 1991 to carry out the programme planned for "Endurance" this season. The structural condition of HMS "Endurance" made it no longer safe for her to operate in ice, and she has been paid off from the Royal Navy. "Polar Circle" was commissioned into the Royal Navy in November last year, and set sail for the Antartic in early December. She is due to return in May at the end of her current patrol.
The contract under which we chartered "Polar Circle" gave us the option, exercisable until 24th January, to buy the ship or extend her charter. I said in your Lordships' House on 4th November that we would make our decision on how to support our long term commitment to the ice patrol task by that date, and I am able to announce that decision today.

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Before making our decision, however, we undertook an extensive assessment of "Polar Circle's" operational performance in the Antartic. This has established to our satisfaction that she will prove a capable and worthy successor to HMS "Endurance". Therefore, the Government are to purchase "Polar Circle" as "Endurance's" long term replacement. We are notifying her owners, the Norwegian company, Rieber Shipping, that we intend to exercise the purchase option.
I informed your Lordships' House in November that, were "Polar Circle" to be retained permanently in the Navy, we would reconsider the name she would carry throughout her operational life. For obvious practical reasons, she will retain her current name for the rest of this season's deployment. Consideration of her future name can now begin and the Admiralty Board intends to make a decision by the time she returns to the United Kingdom. An announcement will follow that decision. As I have said before, "Endurance" is one of the names we will consider.
During this summer, we intend to make some minor modifications to the ship, principally to install further communications and hydrographic equipment, and also to improve her helicopter facility. These will enable her better to perform her tasks in future seasons.
I am conscious of the great importance attached by your Lordships to the ice patrol task. The Government have expressed their continuing commitment to the task, and I am sure your Lordships will agree that the purchase of "Polar Circle" exemplifies that commitment, and will be welcomed by your Lordships' House.
Lord Shackleton: My Lords, before I comment may I say how grateful I am to the noble Earl for his Statement and to Her Majesty's Government—particularly to the Leader of the House—in allowing this Question so that the House of Lords gets the first information? I am very grateful to him.
Is the noble Earl aware—and I know that he sometimes has a little difficulty in knowing what is going on; I do not mean that offensively—that as of today no less than three nations are bidding to buy the "Polar Circle"? There are the Italians, who have been there all along, the Indians, who want a ship of that exact description, and finally a Scandinavian joint expedition. I hear from the broker, Rieber Shipping, that anything less than an unqualified declaration of the options runs a very serious risk of the vessel being no longer available. We have 24 hours in which to exercise that option. I should be grateful if the Minister would comment on whether he expects to be able to fulfil the time requirement.
The Earl of Arran: My Lords, I regret that the noble Lord, Lord Shackleton, thinks that I have difficulty at times in knowing what is going on. However, in this case I can assure him, as I have already said, that we are committed to the purchase of "Polar Circle".
Lord Williams of Elvel: My Lords, we on these Benches congratulate the Government on their decision. Will they also accept—and I am sure the
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noble Earl will accept—that it is due to persistent questioning from my noble friend Lord Shackleton and others, including the noble Lord, Lord Boyd-Carpenter, that this information has been dragged out of the Government? In congratulating the Government, therefore, will the noble Earl please have the kindness to congratulate my noble friend Lord Shackleton for his persistence?
The Earl of Arran: My Lords, naturally, and of course most willingly, I congratulate the noble Lord, Lord Shackleton. At the same time I congratulate many other Members of your Lordships' House.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that his Statement will give very great pleasure indeed? Will he join with the rest of your Lordships in indicating what a considerable part the noble Lord, Lord Shackleton, played in securing this sensible decision from the Government?
The Earl of Arran: My Lords, I confirm what I said before. I know that your Lordships will be very pleased and grateful for the most prominent part played by the noble Lord, Lord Shackleton.
Lord Jenkins of Hillhead: My Lords, will the noble Earl accept that there is widespread feeling that the noble Lord, Lord Shackleton, has shown remarkable wisdom, persistence and foresight in this matter? A good deal of trouble might have been saved if his advice had been taken earlier and more consistently.
The Government, in considering the re-christening of the new ship, might do well not to exclude calling it HMS "Lord Shackleton". I think the "Lord" will have to be included in order to deal with the problem of generations.
The Earl of Arran: My Lords, all names will be taken into consideration, but as I said in my Answer the name HMS "Endurance" will most certainly also be taken into consideration.
Lord Wyatt of Weeford: My Lords, can the noble Earl confirm that we are still within the time limit? The noble Lord, Lord Shackleton, was worried that unless the Government acted within 24 hours we might lose the opportunity of exercising the option to buy the "Polar Circle".
The Earl of Arran: My Lords, I can assure the noble Lord that we shall most certainly not lose the opportunity to purchase "Polar Circle".
Lord Kennet: My Lords, if the Government had planned ahead from the beginning and had surveyed the likely date on which the old "Endurance" would become no longer usable, would it not have been possible—I am sure that it would have been possible: this is a rhetorical question—for this ship to have been built in a British yard? Will the noble Earl and the House accept that I ask this question not in the least in a spirit of detraction from the right decision which has been taken and in which we rejoice but simply to make a point about naval planning in general?
The Earl of Arran: My Lords, we consider that we have done the right thing in the circumstances. I can assure the noble Lord that we have got good value for money.
Lord Chalfont: My Lords, is the Minister able to say anything about the armaments proposed for "Polar Circle"? Is he aware that concern has been expressed that neither the ship nor the Royal Marine detachment on board will be sufficiently armed to carry out many of the tasks which may arise in the course of their operational duties?
The Earl of Arran: My Lords, I can tell the noble Lord that personal weapons only are embarked as part of the ship's self-protection in the normal way.
Lord Stoddart of Swindon: My Lords, if the ship is to be called "Endurance"—I certainly support that —should it not be called "Endurance II", bearing in mind the distinguished record of the first "Endurance"?
The Earl of Arran: My Lords, that is another consideration that will be borne in mind.
Lord Sefton of Garston: My Lords, as this announcement appears to have been welcomed by almost all Members of the House and as it appears to be a reassertion of the fact that we intend to keep the Falkland Islands British, can the Minister give us up-to-date figures for the cost of so doing?
The Earl of Arran: My Lords, I am not quite sure what the noble Lord means. If he is asking for the cost of the operation of the Falkland Islands, that is something that is held in commercial confidence.
Lord Sefton of Garston: My Lords, perhaps the Minister will write to me so that the House can know the full cost of what it wants.
The Earl of Arran: No, my Lords, and I have already given the reason why not.
Lord Shackleton: My Lords, I much appreciate the suggestion of the noble Lord who leads the Liberal Democrat Party in your Lordships' House, but "Endurance" is the name that the family prefer. As I think my noble friend explained, it is based on the family motto "Fortitudine Vincimis"—By endurance we conquer. I think "Endurance" is the appropriate name but I fully accept that the Minister is entitled to postpone a decision until further consideration has been given to it. I am grateful to him for undertaking to do so.

Business
Lord Hesketh: My Lords, at a convenient moment after 4 p.m. my noble friend Lord Arran will, with the leave of the House, repeat a Statement that is to be made in another place on the new frigate order.
It may be for the convenience of the House to know that the Committee stage of the Local Government Finance Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the European Parliamentary Constituencies (England)
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(Miscellaneous Changes) Order 1991 and the European Parliamentary Constituencies (Scotland) (Miscellaneous Changes) Order 1991 will be taken.

Local Government Finance Bill
3.34 p.m.
Baroness Blatch: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Baroness Blatch.)
Lord Williams of Elvel: My Lords, I have to apologise to the House and to your Lordships for the fact that my noble friend Lord McIntosh is not at the moment in his place. I should be grateful if your Lordships would give that point a little consideration. We expected the defence Statement to come after the Private Notice Question but I understand from the Chief Whip's announcement that it is to come later. I very much hope that my noble friend will appear immediately.
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Schedule 5 agreed to.
Clause 5 [Different amounts for dwellings in different valuation bands]:
The Chairman of Committees (Lord Aberdare): I call Amendment No. 42. If this amendment is agreed to, I cannot call Amendment No. 43.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 42:
Page 3, line 17, leave out subsection (1) and insert:
("(1) The amounts of council tax payable in respect of dwellings situated in the area of any billing authority (or the same part of such an area) shall be in proportion to the rateable value of the property in that area held on the valuation list.").
The noble Lord said: Before I enter into the substance of the amendment I want to register as strong a protest as I can against a statement of the Minister for Local Government and Inner Cities, Mr. Portillo, in the House of Commons yesterday. During oral answers to Questions Mr. Portillo said (at col. 305 of the Official Report)—
Baroness Blatch: I am not certain that the noble Lord is in order. Amendment No. 42 has been called and I do not know whether that opportunity can be taken to talk about a matter that is wholly unrelated.
Lord McIntosh of Haringey: If any Member of the Committee wishes to move that I be no longer heard, that is his privilege. At present, I have something very strong to object to which relates directly to the conduct of this Bill; and I propose to do that.
Lord Hailsham of Saint Marylebone: I beg to move that the noble Lord be no longer heard.
Moved, That the noble Lord be no longer heard. —(Lord Hailsham of Saint Marylebone.)
Lord Stoddart of Swindon: This is a debatable Motion. If people want to waste the time of the Committee before listening to what my noble friend has to say, then so be it. As far as I know, the rules of the House do not preclude any Member of the House in moving an amendment saying what he believes is right in accordance with that amendment—
Lord Graham of Edmonton: And germane.
Lord Stoddart of Swindon: And germane, as my noble friend says, to that amendment. Unless we hear my noble friend we will not know whether what he has to say is germane to the amendment. I therefore hope that if this absurd Motion goes to the vote Members of the Committee on all sides will, in the interests of free speech, vote it down unanimously, or nearly unanimously.
Baroness Blatch: Perhaps I may intervene. My point at the beginning was that I believed that what the noble Lord, Lord McIntosh, was doing was out of order. Amendment No. 42 was called and the Committee would expect Amendment No. 42 to be addressed and not for there to be a continuation of a debate that took place in another place yesterday.
Lord McIntosh of Haringey: In moving Amendment No. 42, which I have done, I propose to speak to Amendment No. 42, but I propose to do so in my own way.
The Chairman of Committees: The Question is that the noble Lord be no longer heard.
Lord Hailsham of Saint Marylebone: With the agreement of the Committee, I beg leave to withdraw my Motion. I say in parenthesis that I had assumed from the way in which the noble Lord, Lord McIntosh, accepted the view of my noble friend Lady Blatch that he was accepting that he could not do so within the terms of the Motion. If he now says that he can, there is no purpose in my Motion.
Motion, by leave, withdrawn.
Lord McIntosh of Haringey: We are concerned this afternoon with a number of individual amendments to the Bill and we are concerned with the issue of the progress of the Bill. As has been stated on a number of occasions during the Committee stage of this Bill and during proceedings on many other Bills, it is the responsibility of the Opposition in this Chamber to produce from the consideration of a Bill the best possible result within a reasonable time. In introducing the amendment I should like to seek the confirmation of the Minister that the timetable for the Bill, which has been a matter for discussion in Committee—it can only be a matter for discussion on individual amendments in this Committee—was agreed between the usual channels. The Government asked me whether six days would be adequate for the Bill and I agreed to the six days which were offered. I wonder whether the Minister will be good enough to agree to that statement.
Baroness Blatch: I am not absolutely certain what I am being asked to agree with. I know that there are to be six days for the Committee stage of the Bill. I also
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know that a number of noble Lords have thought that rather excessive because it is unusual for the process to take six days. However, I am afraid I was not privy to all the negotiations that took place through the usual channels.
Lord McIntosh of Haringey: That is the Minister's privilege. However, yesterday in another place Mr. Portillo, speaking as a Minister—and therefore I am able to quote him—said:
"On the question of abolishing the community charge, it is the Labour Party which has done what it can to delay the progress of the Bill through the House and another place". —[Official Report, Commons, 22/1/92; col. 305.]
I take the greatest possible objection to a Minister in another place accusing my party of something which is strictly and factually not true and which in any case is completely outwith the rights of Ministers in another place. I suggest to the Committee that it is totally wrong for the Government to make such statements criticising the conduct of proceedings in this Chamber. I shall gladly give way if the Minister wishes to intervene; if not, I shall continue with the content of the amendment.
Baroness Blatch: It is not for me to defend, or otherwise, what was said in another place. I still believe that the matter has nothing to do with Amendment No. 42. However, perhaps I may say that I have no doubt that my honourable friend was doing no more than expressing his surprise, as indeed many people have done, that there are to be six days for the Committee stage. But the fact that it was agreed through the usual channels is not in doubt.
Lord McIntosh of Haringey: The fact is that six days were offered and six days were accepted. If that is some form of apology for the behaviour of the Minister's honourable friend, I accept it in the form that it has been offered.
Amendment No. 42 deals with one of the most important aspects of local government finance and with the credibility of the council tax as an alternative to the poll tax. I remind Members of the Committee that it has always been the Government's position that there was nothing wrong with the poll tax in itself: it is simply that it did not achieve the confidence of the people and they failed to be satisfied that it was fair. There are many reasons for that. But the reason I suggest above all is that the poll tax was seen not to be related to ability to pay, which is a condition not only for the fairness of taxes but for their collectability.
In the Bill before the Committee we have a version of a property tax, combined with a poll tax, which is apparently deliberately designed to be as unfair as possible and to be as far as possible from any system of local government finance which would actually reflect ability to pay. The proposed amendment would replace the provision in Clause 5(1) which provides that the charges in the different valuation bands—and we shall deal with those bands in a further amendment to subsection (2)—shall be assessed according to the proportions set out in the list which, in summary, vary from six to 18; in other words, a proportion of three

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at the highest to one at the lowest. It will be obvious to the Committee that that in no way reflects the distribution of income in the country.
Even if one were to ignore the extremes of income on the grounds—with which I do not necessarily agree—that there is a limit to which you can tax millionaires or multi-millionaires and those with the lowest incomes are protected from taxation, including taxation by the rebate system, nevertheless the distribution of income in the country bears no relationship to the relatively flat distribution which is proposed in the legislation.
We have before us a proposal that gives very crude bands which do not reflect the differences in income. Indeed, they do not just fail to reflect the differences in income in total; they fail to reflect them in terms of the valuation of property. For example, because we have such crude bands, the situation could arise where two houses with a difference in valuation of only £2,000 could be taxed differently by as much as 20 per cent. or even more, whereas two other houses with a difference in valuation of £20,000 could be taxed exactly the same.
There may be no absolute measure of fairness, but I suggest to the Committee that such a situation will be seen to be unfair and not to reflect ability to pay. Therefore, the system will bring upon itself the same level of incomprehension and reluctance to pay which has been so evident with the poll tax. Mr. Major may say, as he said in the Daily Mail article of October 1990 which was quoted by my noble friend Lord Stallard earlier this week, that the Government have one more opportunity to get it right and if they do not do so this time they will never be forgiven. But I suggest that the opportunity to get it right has not been taken by this legislation and that we are about to embark upon the introduction of a new tax which will arouse the same sort of antagonism, although perhaps not to the same degree, as the unlamented legislation which it replaces. The bands proposed for the council tax do not adequately reflect the differences in property values, let alone in ability to pay.
There are other problems about the proposed bands—and they will be a matter for future amendments—which centre on the fact that in most parts of the country there will not be an even distribution of properties within the bands or an even distribution of households paying different amounts reflecting their ability to pay. What will happen very largely in the North of England is that there will be a concentration of properties in the lowest bands of the eight proposed and in other areas, especially in London, without very great differences as between poverty and riches, there will be a concentration of properties in the highest band. The effect of that, whether it is in Bury, Hackney or somewhere like Chelmsford or Barking and Dagenham, where there is a concentration in the middle band, will be that most people will pay the same. They will perceive that as being unfair and as being closer to the poll tax than any rational system of financing local government.
In turn, that means that people will not believe in the valuation system. Ministers appear to think—or at
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any rate they claim to whether they do or not—that the fact that there are crude and wide bands means that there will be fewer appeals. They seek to make that a self-fulfilling prophecy by not telling people what their actual valuations will be and where their properties stand within the bands. I suggest to the Committee that the contrary is the case. If there are wide bands, by definition, the difference between one band and another will be worth fighting for. If someone can get 20 per cent. off his council tax by winning an appeal and moving into a lower band, there is much more chance of him wishing to do so rather than appealing against his assessment—as the noble Baroness, Lady Gardner of Parkes, charmingly confessed she did—for the sake of an extra £5 or £10 off the rates as was the case in the old days. I suggest to the Committee that the Government will end up with a system that will be much more litigious than the rating system, although perhaps not quite so litigious as the poll tax.
Another reason why the banding system will not work effectively is that it is based—as became clear at Question Time this afternoon—on a series of valuation figures, and the relationship between individual figures, produced in 1991 which is supposed to be valid for all time. We all know that that is not the case. What is proposed is fundamentally regressive.
It is worth spelling out again what is meant by regressive and progressive, because some people do not seem to realise what is meant. I shall spell it out by example. A flat rate poll tax is regressive. A property tax like the rates is mildly progressive. A property tax like the council tax is mildly regressive, and income tax, whether a local or a national income tax, is progressive. It is especially progressive if there is a higher rate of taxation at higher rates of income. What is proposed is the nearest in the scale to the completely regressive taxation of the poll tax which could possibly be imagined. It is not fair. It will not be seen to be fair. For that reason it will fall, subject to the Government's own strictures. I beg to move.
3.45 p.m.
Baroness Blatch: It is extraordinary that the noble Lord should be so critical of the system proposed in the Bill when he knows that his party, when in office, never faced the pain of a revaluation. That was pointed out by either my noble friend Lord Renfrew or my noble friend Lord Jenkin of Roding. What is even worse, he advocates returning to a system that is already 19 years out of date.
I am sure that this will not be the last attempt by Members opposite to return to the Labour Party's proposal for rates. Amendment No. 42 deals with what I can only presume to be an integral part of the Labour Party's rates proposals. I say "presume" because Members opposite have not been very explicit about the detail. I had hoped today that this Committee might learn what the term "fair rates" actually stands for. Alas, having studied the amendment and listened to the arguments put forward in support, I am afraid I have gleaned almost nothing.
Lord McIntosh of Haringey: Perhaps the Minister will allow me to intervene. I hope that the noble and learned Lord, Lord Hailsham, is paying attention.
Lord Hailsham of Saint Marylebone: I am paying very great attention.
Lord McIntosh of Haringey: The Minister is talking about fair rates. Where in the amendment does she find the words "fair rates"?
Baroness Blatch: I am dealing with the amendment. The noble Lord has been saying that his party has a better system. He used a good deal of his time to criticise the proposed system. The amendment proposes to return us much closer to the Labour Party's fair rates proposals where each house is uniquely valued according to its rateable value. That is to be coupled with some form of income-related system which will require that the details of occupants' incomes be known so as to make individual adjustments to the rates payable.
We have already debated a number of amendments proposed by Members opposite seeking to abandon valuation bands in favour of precise capital valuations. The Committee rejected those amendments as impracticable and unnecessary. The amendment would take us a step towards the Labour Party's proposal of convoluted assessments of valuation based on capital and rental values, repairs and rebuilding costs. All that on an annual basis.
I would remind the Committee however that under the old rating system high value properties faced disproportionately large local tax bills. That is an arrangement which the Labour Party proposes going back to and which is implicit in the amendment. All those people whose income is above the level for reduction or rebate under Labour's proposals will suffer greatly if we are to believe what the noble Lord, Lord McIntosh, has told us about proposals to introduce a form of income tax with the property tax. An interesting question for the noble Lord is: in each household whose income will be taken into account —the liable person and/or everybody who lives in the house? How will that information be collected? Will it be via the Inland Revenue or will local authorities use their assessment of income? Could this be the beginning of a Lib/Lab pact on the issue? Couple all of that with the 50 pence in the pound top rate tax increase and no limit on national insurance contributions, and hundreds of thousands of people on middle incomes will indeed suffer greatly. All that is reminiscent of squeezing the people until the pips squeak.
The amendment poses a threat to those people who are, as I said, just above the level for rebate and those on middle incomes. A banded system of local taxation ensures that everyone is asked to make no more than a reasonable contribution to the cost of providing local services. Those with high value properties will pay more, but not too much more. We believe that the range of bills we have proposed, where the highest can be no more than three times the lowest, is fair and sustainable. I urge the Committee to reject the amendment.
Lord Monson: Perhaps I may suggest to the noble Lord, Lord McIntosh, that the flaw in his argument is that the proposed council tax, just like the poll tax and the rates before it, is partly a genuine tax in so far as it covers services from which not every resident benefits, such as education, libraries, swimming pools, sports facilities and so on, and partly a charge from which every resident does benefit, for services such as street lighting, refuse collection, road and street repairs and so forth.
To the extent that it is a tax the noble Lord is right that it should be progressive; but to the extent that it is a charge I cannot see any argument for it being progressive any more than people pay different prices for food and clothing according to their income. By recognising that the council tax is partly a tax and partly a charge, and making it mildly progressive in that respect, the Government have it more or less right.
Baroness Gardner of Parkes: As the noble Lord, Lord McIntosh of Haringey, drew attention to the fact that I had always argued about my rates, I should say that I have always sought a revaluation. I have never obtained as little as £5. I should have been very disappointed if that were all. I did the whole street at one stage. The minimum reduction was £150 and the highest was about £700. They were large savings. The whole point about the banding system—this is the point that the noble Lord is missing—is that people who are irritant types like myself and who argue over small amounts will have nothing to gain, because unless one falls close to the boundary one will not be moving into the next band. The bands are so wide that for most people it will not be worth arguing.
I also take issue with the noble Lord's comment that the tax will not be related to people's ability to pay. I understood that that is what the rebates were for. I believe it to be right that a value should be attached to each property. The point has been made that if all the occupants were students they would all be exempt. I do not know that I go along with that, but perhaps I have misunderstood. There should be a charge related to each property which should then be fully rebated, according to the incomes or circumstances of the occupants, up to a possible full rebate. I believe that the banding system is good. Built into the proposal is the ability of people to pay.
Baroness Hamwee: Has not the noble Baroness, Lady Gardner, made the point by telling us that her being an irritant achieved savings of as much as £700? I thought that we were going to have another argument today about the balance between administrative convenience and fairness but I believe that we are talking about fairness only. The Minister did not mention administrative convenience.
I was interested to hear the Minister lay the blame for the failure to face up to revaluation entirely on the Labour Party. That may give rise to some further private amusement at some point. The point again is whether the proposed system is fair. We on these Benches do not believe that it is. I support the

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amendment. The amendment would provide a mechanism for making the tax rather fairer than it otherwise would be.
We keep hearing about the penalty that will be paid by those who live in high value properties. I am much more concerned that we should be fair to those on middle and lower middle incomes who find themselves in property of a high value. We have talked about this a great deal and we know that they will find themselves badly off as a result of the tax. The banding system will cause immense resentment, and although we do not support the rates as a system, as we have made perfectly clear, in supporting this amendment all we would be trying to do is to make the system fairer.
4 p.m.
Baroness Blatch: Will the noble Baroness allow me to come back on two points that she made? First, she made a comparison about how fairly middle income people would be dealt with. Under the proposals before the House, middle income people are protected because of the dampening effect of the banding system proposed under the Bill. Middle income people under a local income tax, and middle income people under the system proposed by Members of the Committee opposite (which has no limit whatever) would, I am afraid, be substantially worse off.
Secondly, on revaluation, I should make the point that it was this Government who faced the pain of revaluation. It was also this Government who determined that that factor was decidedly unpopular with the electorate. I made the point that we shall not go back to a system that requires frequent revaluations, but Members of the Committee opposite advocate not only going back to a system that is 19 years out of date but they also plan annual revaluations. That is the point I was making.
Baroness Hamwee: Perhaps I may respond to that. There is nothing in the amendment about annual or rolling revaluations. The point has been made before and will be made again, particularly in debates later today about banding, that house prices and values do not necessarily reflect people's incomes or ability to pay. In many cases people are forced to pay for houses of a high value because of the area in which they live. They pay far more than they comfortably can. That is the short point to which we shall return.
Baroness Elles: I wish to support my noble friend Lady Blatch. If I understand the banding system properly, surely the one strength of it is that people who own properties can spend money on them and improve them rather than letting them deteriorate. One of the housing problems in the country is the number of houses in a bad state of repair. The landlord resents spending money when it will increase the rateable value of the property. Surely banding is the one system that gets rid of the problem. It should therefore improve the number of houses for rent and for suitable accommodation rather than having them deteriorate under the old system which, as I understand it, the noble Lord, Lord McIntosh, supports.
Lord Stoddart of Swindon: There is just one point that I wish to make. The noble Baroness criticised the amendment on the grounds that it goes back to the rates. It does not. It merely tries to find a system of valuation which is related to something which people understand and of which they have experience.
We find that under band D the scale is from £68,000 to £88,000, so the difference is £20,000 between the lower and the upper range. When people consider the cost and value of their houses, £20,000 represents about 30 per cent. of the value and it is a lot of money. In valuation band F, we find that the difference between the lower and the upper figure is £40,000. Again people will simply not understand the enormous difference in value between one house and another, although the difference in the houses themselves may not be all that great.
In band G we find that the difference is no less than £160,000. How on earth will people relate to such bands? The contention that my noble friend makes is that we shall reach a position where people do not understand the system and are unable to relate it to their own circumstances. That is precisely what has happened with the poll tax. Thus, the Government are making the same mistake again. All the Opposition is trying to do is to help them not to make that mistake because we think more about local government and its future than about party politics.
Lord Stallard: I wish briefly to intervene on the point my noble friend raised about the differences and the disadvantages of living in London. I listened carefully to the noble Baroness and did not hear her comment on that point. She spoke about a hypothetical Bill that is not yet before the House that concerns the Labour Party's electioneering. At this point I am not interested in that Bill although I shall be when it comes before us. For the time being I am interested in this Bill, and I had hoped that the noble Baroness would address her remarks to it rather than to something that may come up in the future. She did not satisfy me, nor will she satisfy the people in Hackney, which my noble friend mentioned. I could use the example of Camden or any other place, but she did not mention them.
Baroness Blatch: Does the noble Lord agree that the amendment before the Committee takes us back to a unique revaluation of each property based on rateable values? That takes us away from what is in the Bill and back to what Members of the Committee opposite advocate.
Lord Stallard: That was adequately explained by my noble friend; it takes us back to a basis for valuation. At the moment it has nothing to do with the issues that might arise next April, May, June or whenever. We are dealing with this Bill now and it was perfectly reasonable to put forward this amendment. The point raised by my noble friend was that the average household in Hackney will, on the Government's figures, pay £520 council tax compared with, for example, £346 in Scarborough for the same size dwelling. How would the noble Baroness explain that? She has not mentioned it.

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I am also concerned about the widow whose plight comes up under every Bill which concerns privatisation. The noble Baroness, Lady Elles, mentioned the difficulty of maintaining older properties which is one problem on which we have always campaigned. Elderly people who are capital rich but income poor bought their houses when they were cheaper. The houses have increased in value and as a result they will be put in a higher band. Those people are only living on their pensions plus a few shillings and they may have some money in the bank to pay for their funerals. They will now be taxed at a far higher level than anywhere else in the country.
Baroness Blatch: The noble Lord makes my point for me. First, there would be a reduction for a widow for the lost partner. That is not so under the scheme advocated by Members opposite. Under the system advocated by the Bill, the house would be in no higher band than H; but there would be no limit whatever for that same widow under the scheme advocated by Members of the Committee opposite. Nothing would be done for the widow who previously paid rates. Under the scheme advocated by Members opposite, there is to be no ceiling on the value of the property.
Lord Stallard: I do not wish to go into what the Labour Party would do but I can say what they did before. Many Labour local authorities had a special hardship scheme on rates which took care of most of the widows. They simply applied on a hardship basis and said that they could not afford the higher rates because of their circumstances. A rebate was granted by most Labour local authorities, certainly in London. No doubt that would be one of the principles that would still obtain.
I see nothing in the Bill to justify what the noble Baroness suggested about the rebates to widows in the circumstances I describe. Those who have money in the bank and are therefore outside the benefits are a subject to which we shall come later when we deal with benefits. That is our consideration. The noble Baroness did not refer to it, nor to the massive difference in the average council tax proposals for London compared with exactly the same circumstances for the same properties in other parts of the country.
Lord Monkswell: I hope I may suggest another way of looking at the clause we are discussing. I believe we would all accept that one of the big problems over public acceptability of the poll tax was that it was seen to be unfair. I have heard a number of people say on their doorsteps, "Yes, my local tax has gone down with the introduction of the poll tax, but I am fairly well off. I know that the local authority expenditure has not decreased, therefore if my tax rate has gone down, other people must be paying more tax".
What happened, effectively, was that fairly well off people paid less and poorer people paid more. One of the difficulties with the valuation of the bands is that well off people will pay less compared with people who are not so well off. I hope I may remind the Committee of the words of my noble friend Lord Desai on Second
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Reading, when he explained the theory and practice of rates. Effectively this council tax is a form of rates in the sense that it is a tax on property.
Tax on property, whether it is rates or the council tax, is effectively a tax on the notional income stream from that capital. The way the Government seek to implement the council tax and the banding system means that the tax on the income stream of well off people whose property has a high value will be less than the tax on the income stream of people with low capital assets. That will be seen to be unfair. That is why this council tax will not succeed. British people will not put up with unfairness. I make a plea to the Committee to accept this amendment because it seeks to tackle the basic unfairness of this Bill.
Baroness Gardner of Parkes: The previous speaker appears to be rather confused on this matter. He has overlooked several points. I do not wish to take up the time of the Committee in going over those points. However, I should say that central Government have taken on a much greater burden of expenditure—85 per cent. That accounts for one part of the difference we have been discussing. Further, the Bill proposes a 100 per cent. rebate for those who cannot afford the new tax. That point is extremely significant.
The noble Lord, Lord Stallard, was right to refer to the position in London. I understand that in another place the Minister has talked about some help being given to London although I do not know what has come out of that. At one time great pressure was exerted to establish a different banding system for London, or some special concession for London. However, if one lives in a place that incurs higher expenditure, it seems fair that properties in that place should be valued more highly in terms of banding. However, I appreciate that London might lose a sum of £300 million. I believe that was the figure mentioned. Therefore there is something to be said for giving special consideration to the position in London.
4.15 p.m.
Lord McIntosh of Haringey: We have tabled amendments which address that matter. I hope that when we reach those amendments, we shall gain the support of the noble Baroness, Lady Gardner. I am grateful to all Members of the Committee who, unlike the Minister, have spoken to this amendment. The Minister completely ignored the amendment and gave an election speech of her own. However, that is an election speech we have heard before and no doubt we shall hear it again.
The noble Lord, Lord Monson, made an interesting point about the distinction between a tax and a charge. He will recall as well as I that during discussion on the Local Government Finance Bill in 1988 the pretence was maintained that the poll tax was a charge for services rather than a tax. It is obvious that that pretence has not been sustained. The Government have, in effect, abandoned it by calling the new provision a council tax. I suggest to the noble Lord there is no significant element of charge as opposed to tax in the council tax as now proposed. What there is, however, is something which is quite

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different; that is, a system of discounts, which is a clumsy and inadequate way of providing for rebates. When we debate the difference between discounts and rebates, no doubt we will pursue this matter further. Charges, other than individual charges for using a swimming pool, tennis court or any particular minority service of a council, are no part of the council tax. They could not effectively be part of any system of local government finance other than the charges made directly by a local authority for specific purposes.
The noble Baroness, Lady Gardner, puts herself out on a limb in the nicest possible way by saying she is an awkward person who would appeal over relatively small amounts. I congratulate her for obtaining rather larger amounts for people living in her street. I hope when the noble Baroness thinks about this matter she will realise that the very fact that there are significant differences between the bands, combined with the fact that no individual knows where he stands in a band, make it an attractive temptation to appeal on the off chance that one might be towards the bottom of a band and therefore might save as much as 20 per cent. or even 22 per cent, on one's tax.
Baroness Gardner of Parkes: I believe the point the noble Lord has overlooked is that the amounts that will be demanded from people under the council tax will be nothing like the amounts that were demanded under the rates through a poundage system. One could devote much effort to moving to another band, but that would not make a huge amount of difference. One would benefit more if one's income was low enough to merit paying less.
Lord McIntosh of Haringey: I am sorry that the noble Baroness should seek to defend a system which allows 80 per cent. of local authority expenditure to be controlled by central Government. That is not our policy and has never been our policy. It is not a policy that anyone who is concerned with the true independence and integrity of local government ought to support.
I now wish to discuss the later intervention of the noble Baroness, Lady Gardner. If she thinks that the fact that the expenditure of this central Government is being raised in a different way justifies the regressive nature of the council tax, I am afraid she is not taking account of the changes in central Government taxation which have taken place under this Government. While there has been an overall increase over the past 13 years in the proportion of people's income which has been taken up in central Government taxation—there has not been a decrease as Conservatives so often claim—the way in which that taxation has been levied is substantially less progressive than it was in 1979. That is the case for two reasons. The first is because a much higher proportion of taxation is levied in indirect taxation with valued added tax at 17.5 per cent. instead of 8 per cent. Secondly, income tax has been made more pleasant for the rich and therefore, by definition, more unpleasant for the poor.
Noble Lords: No!
Lord McIntosh of Haringey: That is the effect of it. The effect of the whole taxation system of central Government has been that the rich are relatively better off and the poor are relatively worse off.
Baroness Blatch: If there are to be no limits on what local authorities spend, will that burden fall on local people or will government raise to some unlimited level their grant to local authorities?
Lord McIntosh of Haringey: The Minister has asked a question to which she knows the answer very well. She knows perfectly well that it has been the practice in the past both of Labour and Conservative governments to tailor the grant they make to local authorities according, fundamentally, to the needs of the latter. They are perfectly at liberty to penalise local authorities—Labour governments have done this in the past —by reducing grant on occasions when they think local authorities are charging excessively. That is not the same as capping. However, I do not think we should anticipate debates which will take place next week. I shall not be tempted into defending capping either in individual cases or in the wholesale form proposed by the Government in this legislation.
My noble friends Lord Stallard, Lord Stoddart and Lord Monkswell made it very clear that this is not merely a matter of what the taxation does but of what the taxation is seen to do. I must point out that the Government's own chosen battlefield is the perceived unfairness of the taxation system, not that it is genuinely unfair. They still think that the poll tax is right but they moved away from the poll tax because they recognised that the public perceive it as unfair. I suggest to the Government that this tax will be perceived to be unfair in very much the same way as the poll tax and for very much the same reasons. I suggest that it would be in their interest to accept the amendment and recognise the reality of the situation. I wish to take the opinion of the Committee on the amendment.
4.20 p.m.
On Question, Whether the said amendment (No. 42) shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents,136.

Division No. 1

CONTENTS

Airedale, L.

Donaldson of Kingsbridge, L.

Ardwick, L.

Donoughue, L.

Aylestone, L.

Dormand of Easington, L.

Beaumont of Whitley, L.

Ennals, L.

Birk, B.

Ewart-Biggs, B.

Blackstone, B.

Falkland, V.

Bonham-Carter, L.

Gallacher, L. [Teller.]

Boston of Faversham, L.

Gladwyn, L.

Bottomley, L.

Graham of Edmonton, L.

Bruce of Donington, L.

[Teller.]

Callaghan of Cardiff, L.

Greene of Harrow Weald, L.

Carmichael of Kelvingrove, L.

Grimond, L.

Carter, L.

Hamwee, B.

Cledwyn of Penrhos, L.

Hirshfield, L.

Cocks of Hartcliffe, L.

Hollis of Heigham, B.

David, B.

Holme of Cheltenham, L.

Dean of Beswick, L.

Hooson, L.

Desai, L.

Houghton of Sowerby, L.

967

Hughes, L.

Rea, L.

Hunt, L.

Redesdale, L.

Hutchinson of Lullington, L.

Richard, L.

Jeger, B.

Sainsbury, L.

Jenkins of Putney, L.

Seear, B.

John-Mackie, L.

Sefton of Garston, L.

Judd, L.

Serota, B.

Kagan, L.

Shackleton, L.

Kennet, L.

Stallard, L.

Kilbracken, L.

Stoddart of Swindon, L.

Listowel, E.

Strabolgi, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Blackburn, L.

Lovell-Davis, L.

Tordoff, L.

McIntosh of Haringey, L.

Turner of Camden, B.

Mackie of Benshie, L.

Underhill, L.

McNair, L.

Wallace of Coslany, L.

Mayhew, L.

Warnock, B.

Monkswell, L.

White, B.

Morris of Castle Morris, L.

Williams of Elvel, L.

Mulley, L.

Wilson of Langside, L.

Phillips, B.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Abinger, L.

Gridley, L.

Acton, L.

Grimthorpe, L.

Aldington, L.

Hailsham of Saint Marylebone,

Alexander of Tunis, E.

L.

Allenby of Megiddo, V.

Halsbury, E.

Alport, L.

Harding of Petherton, L.

Ampthill, L.

Hayter, L.

Arran, E.

Henley, L.

Astor, V.

Hesketh, L. [Teller.]

Auckland, L.

Hives, L.

Balfour, E.

Holderness, L.

Belhaven and Stenton, L.

Holmpatrick, L.

Beloff, L.

Hooper, B.

Belstead, L.

Howe, E.

Bessborough, E.

Hylton-Foster, B.

Blatch, B.

Ironside, L.

Blyth, L.

Jeffreys, L.

Boardman, L.

Joseph, L.

Boyd-Carpenter, L.

Kimball, L.

Brabazon of Tara, L.

King of Wartnaby, L.

Brigstocke, B.

Knollys, V.

Brougham and Vaux, L.

Lauderdale, E.

Butterworth, L.

Lawrence, L.

Byron, L.

Long, V.

Caithness, E.

Lucas of Chilworth, L.

Campbell of Alloway, L.

Lyell, L.

Carnarvon, E.

Mackay of Clashfern, L.

Carnegy of Lour, B.

Manchester, D.

Carnock, L.

Mancroft, L.

Carrington, L.

Marlesford, L.

Cavendish of Furness, L.

Merrivale, L.

Cockfield, L.

Mersey, V.

Colnbrook, L.

Middleton, L.

Constantine of Stanmore, L.

Milverton, L.

Cork and Orrery, E.

Monson, L.

Cottesloe, L.

Morris, L.

Cross, V.

Mottistone, L.

Cullen of Ashbourne, L.

Mountgarret, V.

De Freyne, L.

Mowbray and Stourton, L.

Denham, L.

Moyne, L.

Denton of Wakefield, B.

Munster, E.

Downshire, M.

Nelson, E.

Elibank, L.

Newall, L.

Ellenborough, L.

Norrie, L.

Elles, B.

Northbourne, L.

Elliot of Harwood, B.

O'Cathain, B.

Elliott of Morpeth, L.

Orkney, E.

Elton, L.

Oxfuird, V.

Erroll of Hale, L.

Pender, L.

Faithfull, B.

Perry of Southwark, B.

Ferrers, E.

Peyton of Yeovil, L.

Flather, B.

Plummer of St. Marylebone, L.

Fraser of Carmyllie, L.

Reay, L.

Gainford, L.

Renfrew of Kaimsthorn, L.

Gainsborough, E.

Renton, L.

Gardner of Parkes, B.

Rippon of Haxham, L.

Glenarthur, L.

Saltoun of Abernethy, Ly.

968

Sandford, L.

Terrington, L.

Savile, L.

Teviot, L.

Selsdon, L.

Thomas of Gwydir, L.

Shannon, E.

Thorneycroft, L.

Skelmersdale, L.

Thurlow, L.

Slim, V.

Trumpington, B.

Soulsby of Swaffham Prior, L.

Ullswater, V.

Stanley of Alderley, L.

Waddington, L.

Strathclyde, L.

Wade of Chorlton, L.

Strathmore and Kinghorne, E.

Westbury, L.

[Teller.]

Wharton, B.

Swinfen, L.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.29 p.m.
Baroness Blatch: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

New Frigate Order
The Earl of Arran: My Lords, with the leave of the House I shall now repeat a Statement being made in another place this afternoon by my right honourable friend the Secretary of State for Defence. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement on a further order for type 23 frigates.
"The type 23 frigate will form the backbone of the Royal Navy anti-submarine surface force in the future and is in addition a highly capable all-round warship. Four are already in service and six more are under construction. In June we invited tenders for up to three more frigates. The benefit of our competitive tendering policy was clearly shown in the extremely keen prices offered, which are significantly lower in real terms than previous ships. The benefits of privatisation of the yards, and the greatly improved productivity now, ensure better value for money for our own defence expenditure and help the yards themselves to compete once again overseas as the opportunities with Malaysia and Oman have shown.
"Before I turn to the outcome of the competition, I remind the House that the contract with the shipbuilder is for less than half the total estimated cost of the frigates. The larger part is made up by the host of specialised equipments that such a frigate contains. For some of these, contracts have yet to be awarded. But some are already known; for instance, the ships' 4.5 inch gun will be ordered from VSEL in Barrow, the machinery control equipment from Vosper Thornycroft in Porchester, the Vertical Launch Sea Wolf missiles from British Aerospace in Bristol. The four Spey gas turbine engines for each ship will be ordered from Rolls-Royce at Coventry, main gearing from GEC Rugby and diesel generators from Paxman Diesels at Colchester. The shipbuilder will itself also have many sub-contractors. Hundreds of firms across the United Kingdom, large and small, will benefit from this order over the next few years.

969
"Turning now to the results of the competition, I can tell the House that the tenders produced a winner by a very clear margin. We have accordingly decided to place a fixed-price contract for three type 23 frigates with Yarrow Shipbuilders on the Clyde. The construction of the first ship will start in the second half of this year. These ships will join the Duke class and will be named HMS "Somerset", HMS "Grafton" and HMS "Sutherland".
"This is very good news for Glasgow, and for Scotland as a whole. I recognise that it is, equally, a disappointment for the other yards that had tendered for the work, and for people in those areas. However, this type 23 order is but one part of a substantial on-going programme of vessels for the Royal Navy. This will include a new anti-air warfare frigate, a second batch of Trafalgar class submarines and other significant vessels to ensure that we maintain a modern and effective Navy in the future.
"This order brings to 13 the number of type 23 frigates ordered since 1984 and the number of vessels ordered for the Royal Navy since 1979 to seventy-one. It is yet more evidence that this Government are committed to ensuring the capability of the Royal Navy's surface fleet and to the wider aim of ensuring our forces of the future have the modern equipment that they need."
My Lords, that completes the Statement.
4.33 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the Minister for repeating the Statement made in another place. We welcome the announcement that has been made. We are glad that the Government have decided to purchase three type 23s rather than possibly leave one on option, as it were. We also wish to congratulate Yarrow, the successful yard. As the noble Earl said, it is very good news for Glasgow and for Scotland.
In congratulating the successful yard, I hope that the noble Earl will accept that we must sympathise with the loser yards. There is an unanswered question about the know-how charge imposed on the loser yards in the tendering process, which we discussed at Question Time yesterday. I should like to ask him when the tendering process for the next batch of type 23 frigates will begin. What are the Government's long-term plans for that project? Will they discuss with our NATO allies the naval requirements and indeed naval strategy in the light of the collapse of the Soviet Union and its consequences?
Perhaps I may also ask the Minister whether the Defence White Paper which ensures, in its own words:
"sufficient warship building capacity to meet likely future defence requirements",
was borne in mind when the contract was placed. If that commitment stands, can he explain what will happen to the loser yards and what plans the Government have to ensure that those yards will be able to remain in business as warship building yards in the future? Perhaps the noble Earl will confirm that, apart from what has been announced, the only
970
significant naval orders available until 1995 are the three type 23 frigates which are currently under order and that the tenders for the minehunter Sandown class have been shelved. Is that the case? Proposals to replace two rather old amphibious support craft and to construct an aviation support ship have been deferred, as have proposals for a further auxiliary oiler replenishment vessel.
In the light of that programme, is it the case, as some people in the industry feel, that there will not be room for more than two or at best three warship building yards by 1995–96? Is that the Government's impression and view? If so, what do the Government intend to do to ensure that those yards, which in their own right are extremely efficient, are helped to diversify out of warship building into civil and commercial ship building, and possibly other activities?
Having asked those questions, of which I gave the noble Earl prior notice, I again wish to emphasise that from these Benches we congratulate Yarrow and we are pleased for Scotland. We believe that this is a good decision, but we recognise that there are obligations on the Government to make sure that Tyneside, Merseyside and indeed Southampton are carefully looked after as a result of that decision.
Lord Mayhew: My Lords, I should like to ask the noble Earl, was the decision by the Government cleared in advance with our NATO allies? Does it link in with the United States' decision to reduce its naval strength by 4 per cent. to 5 per cent. a year over a great number of years? I hope that he knows the answer to that question already.
Does he recall that nearly three years ago the Government decided on a destroyer-frigate fleet of 40 ships? Is that still the target for the Government? Are the wartime tasks given to the fleet the same as they were three years ago? Has no adjustment at all been made for the break-up of the Soviet Union? Do not we now need a coherent long-term plan for the navy in the new circumstances?
4.39 p.m.
The Earl of Arran: My Lords, I am grateful to the noble Lord, Lord Williams, for welcoming the final confirmation that three type 23s are to be ordered. I welcome his remarks about Yarrow and accept that at the same time other shipbuilding yards inevitably have to be disappointed.
With regard to future numbers of the type 23, certainly more type 23 frigates are planned after this order. We cannot comment on size or timing at this particular stage.
The noble Lord, Lord Williams, moved on to speak of our NATO requirement. In reply to him and also to the noble Lord, Lord Mayhew, as has been said many times in this House, the Government remain committed to a force level of about 40 destroyers and frigates.
The noble Lord, Lord Williams, asked, for instance, about single role minehunters. Certainly

971
further single role minehunters will be ordered but the size and timing of the order yet remain to be determined.
He then asked about auxiliary oilers replenishment. Again the size and timing of orders for further auxiliary oiler replenishment ships remain yet to be determined. The noble Lord then asked about the future of shipyards. He asked me really to speculate too much about that. However, yes, I can say that there is over-capacity in the warship building industry. The Ministry of Defence orders alone will not generate sufficient work to alter that position. Ship-builders really must seek other markets in addition to the Ministry of Defence work. As the warship programme is slimmed, and with completion of the main Trident submarine build, some contraction of the industry seems likely.
As regards the workforce, it has always been the Government's view that it is the decision of the defence industries, the shipbuilding yards themselves, to make their own way forward, to make their own decisions in line with their directors and their shareholders. We do not regard it as the Government's job to interfere with that.
As regards the questions of the noble Lord, Lord Mayhew, yes, the situation has been notified to our NATO allies. Of course the final commitment, as I have already said, of about 40 destroyers and frigates is well known by our NATO allies. All that is taken into consideration as regards the future planning of the Royal Navy and its capability.
4.42 p.m.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many people believe it extremely sensible to award all three contracts for those frigates to the same builders inasmuch as it must be economical and efficient whatever disappointment the decision causes to other yards? However, will my noble friend state the Government policy on maintaining in potential operation other shipyards which can construct warships? It would obviously be dangerous to allow the number of suitable shipyards to be reduced too far. Have the Government a policy on a minimum provision of that kind?
The noble Earl referred to 40 frigates and destroyers, and certain other craft. Have the Government in mind in due course to replace one or more of the three by now ageing aircraft carriers now serving in the Royal Navy? I believe that they have some years of operational life ahead but they are a type of ship which does not necessarily age well. I shall be interested to know whether the Government have in mind the idea of replacing aircraft carriers too.
The Earl of Arran: My Lords, first I understand and indeed appreciate the remarks of my noble friend concerning the economical efficiency of placing all the orders in the same shipyard. Of course that is very evident; that is why we have done it.
As regards the number of shipbuilding yards in the future, we talk at all times to defence industries on the procurement side and give them as far ahead as possible as much notification as we can of our future
972
requirements. Therefore as regards the number of shipyards in the future, it is a hypothetical question to ask, but we are aware of it. As I said to the noble Lord, Lord Williams, after we have informed the shipbuilding industry as much as possible it is up to the companies themselves to determine their own future.
The noble Lord, Lord Boyd-Carpenter, asked about aircraft carriers. I cannot answer that point at this time. However, I understand it well. I shall write to the noble Lord to see whether I can be more enlightening.
Lord Dormand of Easington: My Lords, the Minister has very properly expressed sympathy with those yards which have not on this occasion obtained an order. However, I am sure that he will bear in mind the point made by my noble friend Lord Williams that the need in all such yards is as great as ever. He will not be surprised to hear me mention Tyneside which has an absolutely first class record of shipbuilding of all kinds. It is an area where unemployment remains the highest in the United Kingdom outside northern Ireland. While stressing the unemployment aspect, on this occasion one has to stress the sheer expertise and dedication in that area when considering such projects. At this stage will the noble Earl go a little further? Is anything being considered for other yards without a decision having been taken?
The Earl of Arran: My Lords, I cannot say at this moment whether there is anything in the pipeline or whether decisions are about to be taken on other yards. The noble Lord is quite right to say that in this field in this decision there are bound to be winners and losers. The losers will be very disappointed. Of course they have one of the finest reputations in the country as a shipbuilding yard. As regards the future, I have to say again because of that we are very aware of the difficulties of some of the yards. We talk regularly to those yards about the future.
Lord Glenarthur: My Lords, with the announcement following so hard on the heels of my Question on the same subject yesterday, will my noble friend accept from me that it is extremely good news for Yarrow, for the subcontractors to which he has referred, for Clydeside and indeed for Scotland, coming as close as it does to the recent announcement about Ravenscraig? I do not in any sense gloat over yards such as those to which the noble Lord, Lord Dormand, referred which have not been so fortunate with this order. They all tried extremely hard. I am sure my noble friend will recognise that this order will preserve jobs, create others and possibly enhance the prospects for further jobs if orders from abroad come to fruition.
Having given the dates for the start of the construction programme, will my noble friend give an indication when the three frigates are likely to be completed?
The Earl of Arran: My Lords, the intention is that the three frigates will come into service in the second half of this decade. I take the point of my noble friend with reference to Ravenscraig. Of course there is

973
absolutely no connection with the Ravenscraig announcement. Clearly what I have announced is welcome news for Scotland.
Lord Hutchinson of Lullington: My Lords, perhaps I may ask the noble Earl a question on the armaments of the destroyers. Will they be fitted with some effective answer to the Exocet missile? It became perfectly clear in the Falklands War and the Gulf War that ships were being sent to sea without an appropriate answer to that missile. The noble Earl has spoken about the navy having the most efficient and up-to-date armaments. I ask the question as one who was sunk in 1941 in the most modern destroyer then built, when the ship had no answer whatever to the Stuka bomber which was effective at that time. Ships were then sent to sea without the answer to hostile attack armament. Will provision be made for those destroyers to be sent to sea with an effective answer to the Exocet type missile?
The Earl of Arran: My Lords, I am almost certain that I am right in saying that the type 23 frigate will have a very clearly defined Exocet defensive system. It will be fitted with the harpoon anti-surface ship missile and will provide an all round surface warfare and naval gunfire support capability. Certainly air defence will be provided by the vertical launch Sea Wolf system.
Lord Monkswell: My Lords, I share the welcome from all sides of the House on the placing of the order. However, there is concern from all sides of the House about the capacity of the shipbuilding industry to build warships in the future. We must also be cognisant of the ability of our shipyards to build merchant vessels.
I wish to ask two specific questions. First, did the Government ask the firms involved what effect placing the orders would have on employment or unemployment in their localities? Secondly, will the three frigates that have been ordered be built in parallel or in sequence? Will they be built at the same time or one after the other? We are in the midst of one of the longest running recessions to which this country has been subjected since the war. The building of the frigates presents an opportunity to provide employment and to inject economic activity into the country at this time of recession. If the warships were built in parallel—that is, all at the same time in different yards —rather than as I suspect in series, one after the other in one yard, we should have the opportunity of preventing the continued rise in unemployment.
The Earl of Arran: My Lords, I am almost certain that they will be built in series, one after the other. If I happen to be wrong or incorrect on that point I shall certainly advise the noble Lord. When he stresses again the importance of the future of the shipyards, yes, he is right. I have already said several times that it is up to the shipyards themselves to decide their future. Every consideration was taken into account before placing the order with Yarrow but its price was
974
significantly less than other shipbuilders. At the end of the day it all comes down to a question of value for money, and that is what the taxpayer has to pay for.
Lord Lyell: My Lords, will my noble friend accept that many of us on these Benches were delighted to hear the news that he has announced? I am sure that the Royal Navy will also be delighted with the quality of the ships that were previously built at Yarrow. No doubt that quality will continue with the present order. Three vital words appeared in my noble friend's Statement. He said that it was by a "very clear margin" that Yarrow won the contract. Will he confirm, perhaps not today but in writing, that the rules referred to by the noble Lord, Lord Williams, and the know-how payments are part of the tendering process for such contracts? Is it right that before any of the yards competing for the orders took part in the process they were informed of the rules? Will my noble friend also confirm that, in spite of all the rules, Yarrow won the contract on quality, delivery and value for money by a very clear margin?
The Earl of Arran: My Lords, I think that I have already indicated that that is indeed the case. I have said that several times. As regards the actual terms of the contract—we do not normally publish what exactly are the terms of a contract other than to those who are competing—certain specifications were made very clear to the builders.
Viscount Allenby of Megiddo: My Lords, on behalf of Members on these Benches, I too welcome the announcement of the new orders being placed. It will be a tremendous boost to Yarrow. Will the Minister kindly confirm that the earlier ships in the line will be updated to the same specification as the new ships? The noble Lord, Lord Williams of Elvel, referred to LPDs; that is HMS "Fearless" and HMS "Intrepid". I did not hear an answer from the Minister. I know that the matter has been put on hold, but I must point out that those ships have been in service for more than 25 years and are a considerable worry to the Royal Navy. Will the Minister now or in the future indicate when a decision is likely on that type of ship?
The Earl of Arran: My Lords, certainly as regards the LPDs a project definition phase for the replacement of HMS "Fearless" and HMS "Intrepid" is under way, with some study contracts let and more to follow. Indeed, the decision on the ship orders will follow the assessment of the outcome of the project definition phase.
Lord Mayhew: My Lords, I warmly endorse the tributes paid to Yarrow. Does the Minister not find it strange that during the past three years the Government have not reassessed in any way the role or size of the frigate fleet? Does that mean that there will never be such a reassessment, or are they waiting for something more important and relevant to happen than the break-up of the Soviet Union?
The Earl of Arran: My Lords, I find that a somewhat strange question. We have made continually clear time after time that we have taken a long, hard and strategic look across the whole of the world.

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In view of that we have said that we are committed to a force level of about 40 destroyers and frigates. Prior to our paper entitled Options for Change it was about 50.

Local Government Finance Bill
4.55 p.m.
House again in Committee on Clause 5.
Baroness Hamwee Baroness Hamwee moved Amendment No. 43:
Page 3, leave out line 20 and insert ("6: 7: 9: 11: 15: 18: 24: 30: 36: 42: 48: 54").
The noble Baroness said: In moving the amendment I shall speak also to Amendments Nos. 48 and 49. We are still dealing with the question of whether the range of banding proposed in the Bill is appropriate. We have debated the question of whether there should be any banding at all. In tabling this amendment I suggest to the Committee that if we are to have banding there should be a broader spread which would allow a fairer solution.
We know that the proposed banding is designed to protect the better off in largish houses who were hit by the rates. I do not use that term as pejoratively as it may sound but a statement has been made more or less in those terms. In fixing the proportion that people in each band will pay, one aim is to avoid Left-wing councils charging a high rate for top value properties. I believe that the Government have gone too far to protect those at the top of the range and that there are not enough bands. The fixed proportion, the increase of three between the lowest and the highest, is too small.
Amendment No. 43 would increase the number of bands from nine to 12. It would do so by adding a greater number of top value bands. As the Bill is written, the burden of the tax falls too heavily on those in average-priced properties. In expensive property areas the highest band, as currently proposed, will trap too many people. Increasing the number of bands would ensure that millionaires in mansions paid a fairer contribution. In the context of this Bill we talk about millionaires almost as often as we talk about widows. I do not believe that there can be many people living in a property valued in excess of £500,000 who cannot afford to pay a significantly higher proportion of the tax than most others.
If we are to have a property tax, the logic should be to look at the effect on the people who live in high value properties as against those who live in low value properties. I feel even more strongly that we should be looking at those in the lower middle bands paying less than those in the high bands rather than penalising those in high value properties.
Amendments Nos. 48 and 49 are to complement the increase in the number of bands and increase the proportion between the bands. At the moment the proportion is three times. Our amendments would increase the proportion to nine times across the 12 bands. That is to protect those on lower and average incomes and to ensure that those who can afford very expensive properties make a fair contribution to local taxes.
976
We are conscious of the effect of the property boom in the 1980s and that many people in different parts of the country are living in property that they bought or acquired many years ago, and that they occupy property that they could not afford to buy now on the open market. Under the current proposals in many cases those people would have to pay the same as millionaires, or at least the very wealthy, living in homes that cost very large sums of money. Those in starter homes, the first time properties, where prices have gone rocketing up over the past few years, will be paying one-third. Our amendments are to attempt to ensure that the burden of local taxation will fall more fairly than it does as currently proposed. I beg to move.
5 p.m.
Baroness Hollis of Heigham: We on this side support the amendment. Obviously we would prefer individual valuations, but if we are not going to get that then anything that either stretches the range of bands or alters the relativities between bands, or alternatively goes for regional banding, would have our support. To that extent the amendment moved by the noble Baroness makes the unfair and overcompressed banding system somewhat fairer, and to that extent we should like to be associated with it.
The Earl of Balfour: I feel on this occasion that if this amendment were to be accepted the banding stretches far too wide. To jump from a range of three all the way up to a range of nine is not on. Even in my own part of the world I was sad to learn that three of my friends, because they lost their jobs, had also lost their homes. Many people have taken on mortgages and are really struggling. Although there is a lot of talk about millionaires, they can usually leave the country if they want to.
I feel that in limiting the range we are being much fairer to the cross section of the community. Those on the lowest incomes can have support through social security legislation, but there are those in the middle band who have to buy their houses and I feel that a person purchasing a house, with or without a mortgage, is probably buying the most expensive thing ever in his life. There are few other occasions in one's private life where one would ever write out a cheque for five or more figures. The next most expensive purchase in the ordinary course of a person's life is buying a car from time to time, which we all have to do.
These people have all their capital tied up in a house. It does not earn them s single penny. Usually the larger the house the greater the upkeep, the greater the responsibility, and the greater the expenditure involved. That has been my practical experience. Equally, it is sometimes wrong, as has happened in the past, where rents are kept so low that the landlord, be he a private person or a local authority, is in the position where he simply cannot find the money to repair his properties. I support the present range proposed by the Government within this legislation. They have got it about right.
Baroness Blatch: These amendments deal with the council tax valuation bands and with the relationship between bills for dwellings of different values. They are, therefore, about the balance of the proposals for the council tax. I must tell the noble Baroness and the Committee that they have this wrong.
Let me deal first with the principle of adding additional bands to the council tax. I have explained to this Committee the advantages of a banded system of property valuation. One of these advantages is that it solves at a stroke the problems involved in undertaking a detailed valuation of each and every dwelling. If banding is to be truly effective, however, it is imperative to avoid the detailed valuation issues, which were the bane of the rating system.
The eight broad bands we have chosen will minimise administration and keep the number of appeals to a minimum, while ensuring that the council tax is related to the value of the property. We believe that the eight broad bands we have chosen for the council tax in England, Wales and Scotland fairly reflect the range of property values across Great Britain.
Amendment No. 43 reveals the real reason why the noble Baroness is so anxious to introduce additional council tax bands. A family in a property in the noble Baroness's proposed top council tax band would pay almost five times as much as they would if their home was in band D, and nine times as much as in a band A property. The amendments therefore do no more than widen the difference between the highest and lowest bills. They would take us back to the unfairness of the rating system when a disproportionate burden fell on a minority of local taxpayers. I must say that I find it hard to accept that noble Lords would wish to lead local taxpayers back to such a punitive and unfair system.
As noble Lords will know, we propose a system where a couple in the highest band would pay twice the amount they would pay in band D and three times the amount in the lowest band. This will avoid disproportionately high bills in high-priced areas and will mean low bills for low-priced properties across the country. If these amendments were accepted many people would be paying far more than their fair share. The Government, however, recognise that property values are not a perfect guide to ability to pay. That is why we will limit the bills for the highest value properties to three times the lowest. Attempts to make people in high-value properties pay even more are no more than the politics of envy.
The Committee will recognise that those who can afford to pay most towards the cost of local government will do so. Fifteen per cent. of the cost will be met by the council tax, the remaining 85 per cent. having been raised from national taxation and the uniform business rate. I cannot help feeling from the discussions that we have had both on the first day in Committee and today that noble Lords opposite on both Labour and Social Democratic Benches cannot wait to get their hands on the incomes of those on middle and high incomes. It is the politics of envy.
The noble Baroness professes a sympathy with those who live in large houses but who have little cash
978
flow. However, here we have an amendment on the Marshalled List that will penalise those very people. Unless noble Lords opposite, again on both Benches, advocate a much more generous rebate system then I cannot help feeling that those people will be seriously disadvantaged by this and other amendments.
I hope that I have made clear the importance that the Government attach to finding the right balance between the number of valuation bands and the relationship between bills actually sent out to dwellings in each band. We believe that our proposals strike the right balance and I urge the Committee to reject the amendment.
Baroness Hamwee: The invitation to propose a more generous rebate system is welcome; we shall come to it later in our debates. The Minister says that the compressed banding is to avoid the detail of valuation. Again, what is the balance between dealing with the administration of it and arriving at the right answer? The Minister says that widening the difference between the highest and lowest bills would be punitive. I explained—and meant it—that I was not trying to impose a penalty on those who had the highest value houses. I was seeking a means of supporting those at the low to middle part of the range.
I resent the amendment being described as the "politics of envy." We on these Benches and I am sure Members on the Labour Benches are attempting to make the Bill fairer. The Minister may shake her head but I know my own motives. They are the politics of fairness. On that basis I should like to test the opinion of the Committee.
5.11 p.m.
On Question, Whether the said amendment (No. 43) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 115.

Division No. 2

CONTENTS

Addington, L.

Hanworth, V.

Airedale, L.

Harris of Greenwich, L.

Aylestone, L.

Hollis of Heigham, B.

Beaumont of Whitley, L.

Hooson, L.

Birk, B.

Hughes, L.

Blackstone, B.

Hunt, L.

Boston of Faversham, L.

Jeger, L.

Bruce of Donington, L.

Jenkins of Putney, L.

Callaghan of Cardiff, L.

Judd, L.

Carmichael of Kelvingrove, L.

Kagan, L.

Carver, L.

Kilbracken, L.

Cledwyn of Penrhos, L.

Kirkwood, L.

Cocks of Hartcliffe, L.

Listowel, E.

David, B.

Lovell-Davis, L.

Dean of Beswick, L.

McIntosh of Haringey, L.

Donaldson of Kingsbridge, L.

Mackie of Benshie, L.

Donoughue, L.

Mayhew, L.

Dormand of Easington, L.

Meston, L.

Ennals, L.

Monkswell, L.

Ewart-Biggs, B.

Morris of Castle Morris, L.

Falkland, V.

Mulley, L.

Fitt, L.

Phillips, B.

Gallacher, L.

Rea, L.

Graham of Edmonton, L.

Redesdale, L.

[Teller.]

Richard, L.

Greene of Harrow Weald, L.

Seear, B.

Grimond, L.

Serota, B.

Hamwee, B. [Teller.]

Shackleton, L.

979

Stoddart of Swindon, L.

Wallace of Coslany, L.

Strabolgi, L.

White, B.

Tordoff, L.

Williams of Elvel, L.

Turner of Camden, B.

Wilson of Langside, L.

Underhill, L.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Abinger, L.

Killearn, L.

Acton, L.

Kimball, L.

Aldington, L.

Kinnoull, E.

Allenby of Megiddo, V.

Knollys, V.

Ampthill, L.

Lane of Horsell, L.

Arran, E.

Lauderdale, E.

Astor, V.

Long, V.

Auckland, L.

Lucas of Chilworth, L.

Balfour, E.

Lyell, L.

Belhaven and Stenton, L.

Mackay of Clashfern, L.

Belstead, L.

Manchester, D.

Bessborough, E.

Mancroft, L.

Blatch, B.

Marlesford, L.

Boardman, L.

Merrivale, L.

Boyd-Carpenter, L.

Mersey, V.

Brabazon of Tara, L.

Montagu of Beaulieu, L.

Brougham and Vaux, L.

Morris, L.

Byron, L.

Mottistone, L.

Caithness, E.

Mountgarret, V.

Caldecote, V.

Mowbray and Stourton, L.

Campbell of Alloway, L.

Munster, E.

Carnegy of Lour, B.

Nelson, E.

Carnock, L.

Norfolk, D.

Cavendish of Furness, L.

Norrie, L.

Clitheroe, L.

Northbourne, L.

Coleraine, L.

Orkney, E.

Colnbrook, L.

Orr-Ewing, L.

Constantine of Stanmore, L.

Oxfuird, V.

Cork and Orrery, E.

Pearson of Rannoch, L.

Craigavon, V.

Pender, L.

Cross, V.

Peyton of Yeovil, L.

Denham, L.

Quinton, L.

Denton of Wakefield, B.

Reay, L.

Elibank, L.

Renfrew of Kaimsthorn, L.

Ellenborough, L.

Renton, L.

Elles, B.

Renwick, L.

Elliot of Harwood, B.

Sandford, L.

Elliott of Morpeth, L.

Savile, L.

Elton, L.

Selsdon, L.

Faithfull, B.

Shannon, E.

Ferrers, E.

Skelmersdale, L.

Flather, B.

Soulsby of Swaffham Prior, L.

Fraser of Carmyllie, L.

Stanley of Alderley, L.

Gainsborough, E.

Strathclyde, L.

Gardner of Parkes, B.

Strathcona and Mount Royal,

Geddes, L.

L.

Glenarthur, L.

Strathmore and Kinghorne, E.

Hailsham of Saint Marylebone,

[Teller.]

L.

Swinfen, L.

Henley, L.

Teviot, L.

Hertford, M.

Thomas of Gwydir, L.

Hesketh, L. [Teller.]

Thurlow, L.

Hives, L.

Trumpington, B.

Holderness, L.

Tryon, L.

HolmPatrick, L.

Ullswater, V.

Hooper, B.

Waddington, L.

Howe, E.

Wedgwood, L.

Jeffreys, L.

Wharton, B.

Joseph, L.

Wise, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.19 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 44:
Page 3, line 22, at end insert:
("( ) Regulations shall make provision for a formula to determine the amount of council tax payable in respect of a dwelling in valuation band A where the listing officer has determined that there has been a material reduction in the
980
value of the dwelling caused by the presence of facilities or adaptions suitable for the use of a disabled person as defined under section 24.").
The noble Baroness said: Amendment No. 44 refers to the situation of a disabled person's property. Under the Rating (Disabled Persons) Act 1978 the value of facilities needed by a disabled person can be deducted when calculating the rateable value of the property. That reduction would automatically lead to a reduction in the size of the rates bill.
We fear that the Government's proposals for disabled tax relief are much more restrictive in this Bill than under the provisions of the rating Act for two reasons. First—and this is a matter to which we shall return in a later amendment—the range of facilities which will qualify for a material reduction is much more limited under this Bill than under the old rates. I hope that we shall receive support throughout the Committee for the more generous interpretation in a later amendment. Secondly, the banding scheme means that where a material reduction has taken place it leads to a reduction in the bill of the property by one band. Originally there was no such concession, but during the passage of the Bill in the other place the Minister, Mr. Portillo, conceded that special provision should be introduced to ensure that a property moved down a band where a material reduction in its facilities was the result of the occupant being disabled.
At that stage he said that the decision follows discussions with RADAR and other groups and that it will provide fair treatment for people with disabilities who often need more space or special facilities in their homes. It would be wrong for such people to have to pay more council tax because those special features had increased the value of their homes. Therefore, the scheme would restore the relief that people with disabilities enjoyed under the old rates scheme. In 1989–90, the final year, rates relief was granted to about 160,000 properties.
That very welcome and entirely honourable concession or move forward by the Minister was widely accepted. But it leaves a problem. Given that we are dealing with bands, although a property in band D can come down to band C where there are special facilities for a disabled person, or from band C down to band B or from band B to band A, properties which are in band A cannot drop any lower. Therefore, the occupants would have to pay the same irrespective of whether the property had had changes made to it as a result of the occupier's disability whereas people in more expensive properties enjoy and experience a reduction. It is that anomaly, the result of banding, that this amendment seeks to address.
The situation is made worse because of two problems which, I am sure, are familiar to Members of the Committee. As a result of the banding inequalities, to which we shall be returning time and again, in many parts of the country, particularly in the North, very large proportions of properties are in band A—for example, 48 per cent. of the properties in Wolverhampton; 55 per cent. of those in Chester-le-Street; 56 per cent. in Gateshead; 59 per cent. in Sunderland; and 63 per cent. in Tameside. Yet in those areas people who are disabled, very many of whom,

981
proportionately, will be living in those properties, cannot enjoy the relief. That is made sharper because not only are those properties in band A, but the disabled people living in them have both lower incomes and higher costs. Approximately seven out of 10 of all disabled adults are receiving state benefit. Not only do they have lower incomes; they also have a higher cost of living because of the increased costs of diet, heating and laundry, estimated by the Disablement Income Group at about another £60 a week.
We are dealing therefore with a group of people on lower incomes and facing higher costs who will be disproportionately in band A properties. They will experience no discount in their bills by virtue of the fact that they are in the bottom band. I am sure that Members of the Committee opposite and the Minister recognise the problem. Since the principle has been accepted for all other categories except those who are the poorest, I hope that the Minister will feel able to make some movement on the matter.
The amendment does not suggest a precise figure. A reasonable approach might be that properties in band A, which have a material reduction because someone is disabled, have a reduction of between 12 per cent. and 12.5 per cent. That figure represents the same gearing down as exists between band B and band A or between band C and band B. It is a suggestion: there may be other ways of dealing with the matter through regulations. There is a problem that the disabled disproportionately occupy band A properties and that they have lower incomes and higher costs, although they can experience no rating relief such as they enjoyed previously. It is clearly an anomaly. We hope that the Minister accepts that. We hope too that the Government will work with disability groups to seek to overcome that anomaly. I beg to move.
Baroness Faithfull: The noble Baroness puts forward a very good case, but I cannot agree with it. I wonder whether the proposal is based on the recommendations of disablement groups or is that of her own party. My understanding from RADAR, BLESMA and other disablement groups, is that they are very happy with the situation as it stands. They feel that they have had many concessions from the Government. They have been in close touch with the Government. Therefore, I oppose the amendment on the ground that the disablement groups are happy with the situation as it is.
Baroness Hollis of Heigham: I am grateful to the noble Baroness for giving way. The amendment is based on a RADAR paper. In other words, I have complete confidence in the statement that RADAR, MENCAP, the Disablement Income Group and the Association of Disabled Professionals support the amendment.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): The noble Baroness sees this matter as a problem and suggests that it is an anomaly. I do not accept that. I wish to stress that RADAR is happy with the
982
discussions it has had with the Government and the responses it has received as a result of those discussions. I shall be able to quote from a letter which RADAR sent to my honourable friend Mr. Portillo some time ago on the matter. I shall also be able to quote from a letter sent to me by the chairman of BLESMA on exactly the same point. Comment was made on the very constructive approach of the Government in this matter.
The important point that we must try to remember is that disabled people should not be in the position where they pay more than others simply because they have to live in specially adapted property or in some cases, because an individual is in a wheelchair, in a larger property. They should be in the same position as able-bodied people and special concessions should not be made. Consideration should be given for alterations made to their homes. As the noble Baroness said, we shall be able to get on to the detail of that in connection with a later amendment.
Perhaps I may stick to this particular amendment which seeks to deliver a reduction for the bottom band, the band A dwelling, where the value has been reduced because it has been adapted for a disabled person. We have already provided in regulations made under the Local Government Finance and Valuation Act that in allocating properties to bands, valuers will take into account any special fixtures provided for a physically disabled person which reduce the value of a property; for example, a lift for a wheelchair user. But where such fixtures have increased the value of a property, valuers will ignore them, and they will not affect the banding of a property. It is the only fair way—and the noble Baroness accepts it—to treat such properties.
Once valuation lists have been compiled, regulations under Clause 24 will allow lists to be altered if certain changes bring about a reduction in value which result in the property falling into a lower band. If adaptations are made for a disabled person which have the effect of reducing its value, then the listing officer may alter the list if the reduction in value is large enough to place the property in a lower band. In the case of a band A property, a reduction in value cannot result in the property falling into a lower band because there is no lower band. But the taxpayer is already paying the smallest amount of tax possible for his area. It is entirely irrelevant what percentage of properties in that area are in that lower band. It would not be fair if he were allowed to pay less than others in the same band.
I point out to the noble Baroness that as regards the less well-off disabled people—the noble Baroness quite rightly stressed the success of the benefits policies pursued by the Government—a large number of them are in receipt of various allowances for their disabilities. Those people, particularly if they are on income support, will be assisted. The scheme of disability premiums in income support means that they will be entitled, or are likely to be entitled, to some rebate at a much higher level of income than other, able-bodied people.
I stress that we discussed these arrangements with RADAR and other bodies. Their main concern was

983
very much that a disabled person should not have to pay more tax because of his need for special fixtures or extra space. Perhaps I may quote from a letter from RADAR to my honourable friend Mr. Portillo—
Baroness Hollis of Heigham: May we have the date of that letter?
5.30 p.m.
Lord Henley: The date of the letter is 26th November 1991. In writing to my honourable friend RADAR stated:
"I would like to thank you for the proposals you announced on 25 November concerning recognition of the extra space requirements which disabled people have. I am delighted that the Government was able to act so positively. Your officials conducted discussions with open minds and a co-operative attitude".
Similarly, with my interests at the Department of Social Security in war pensioners, I wrote to Mr. Holland, the General Secretary of BLESMA. On 2nd December I received a response which read:
"This was one area which has worried us as we believe that unless an individual was on the margin of a band the concession which had applied under the old rating system would be lost in the majority of cases. The new amendment"—
that is, the concessions that were announced then—
"certainly resolves this and will be warmly welcomed by our membership in particular and by the disabled in general. Perhaps on some suitable occasion you can convey our very grateful thanks to Mr. Portillo and his colleagues".
I hope, therefore, that the noble Baroness will feel that we have gone far enough in this matter. As I have stressed, those on low incomes are at an advantage in that their premiums in income support allow them to receive a higher income and still get full benefit from the rebates. In view of the welcome received from many of the disability organisations I hope that the noble Baroness will be prepared to welcome our proposals in this Bill and feel able to withdraw her amendment.
Baroness Hamwee: I support the amendment. I am sure that the noble Baroness, Lady Hollis, will deal with the question of who does or does not support the proposals that are before us today. However, it has been accepted by the Government that there is an anomaly for disabled people who live in properties which are in band A.
Lord Henley: The noble Baroness should take care to listen to what I said. I said that the noble Baroness, Lady Hollis, said there was an anomaly, but that I did not accept there was. If the noble Baroness cares to read Hansard tomorrow she will find that that is what I said.
Baroness Hamwee: I apologise. I thought that I had heard, and wrote it down at that point, that there was an anomaly. The point is that there is an anomaly whether or not the Minister accepts it. There clearly is. Common sense tells us that that is so. The provision in the Bill applies to all bands except band A. What puzzles me is that this proposal would require very little extra work on valuations and would lead to very little loss of tax raised but would make a very great difference to the, perhaps small, number of individuals who are affected. I find it quite puzzling that having
984
accepted that there is a point in looking at how the homes of this group of people are affected by the proposals, one group within that group is not to obtain the benefit. I support the amendment.
Baroness Gardner of Parkes: I find this a most interesting amendment and I understand the logic that there is nothing below band A. But I do not understand the noble Baroness, Lady Hollis, when she says that the majority of disabled peopled live in homes in band A.
Baroness Hollis of Heigham: Perhaps I may correct any misunderstanding. I said a disproportionate number; in other words, disabled people were not scattered across bands. A disproportionate number would be in band A by virtue of their poverty and high costs.
Baroness Gardner of Parkes: Indeed, I accept that is exactly what the noble Baroness said—a disproportionate number. I really wonder what the noble Baroness meant by that. Can she quantify it? I cannot support the amendment today because I would need to see some sort of substantiation of figures.
The Minister has been very understanding in terms of disability in agreeing that each one should move down a layer. If it was really proven that there really is a disproportionate number of people he might well be persuaded to look at it again. However, I am not satisfied that the evidence that we have had produced here today has clearly established that point. I should like to have more factual information.
I ask the Minister to investigate and ascertain the proportion of disabled people who would not benefit from the rebate system. If it is to be so fully rebated that they will not have to pay anyhow, then there may be no point at all in creating some sort of complicated formula that will only establish something that will be met in another form of need. Therefore, I cannot support the amendment as it stands.
Lord Henley: Obviously I cannot go as far as my noble friend asks. I cannot, off the top of my head, give her the proportion of people with disabilities who are in receipt of one benefit or another, or the proportion of people who would be entitled to a full rebate. The important thing to remember is that, whether or not they are entitled to a rebate, those people with disabilities in band A are paying the lowest possible rate of council tax. Therefore, they cannot possibly be paying more because of their disability; they are in the lowest rate. There is not, therefore, any anomaly as the noble Baroness, Lady Hollis, suggested. I hope that she will recognise that that in no way lessens the undertaking given by my honourable friend.
Baroness Gardner of Parkes: Perhaps I may come back to the Minister on one point. It was made clear that the properties in band A would mostly be in certain areas in the north. For example, in London I believe there is hardly a property in that category. Do the pensions and disability benefits that are paid to people vary according to different areas? Or will those

985
people who are living in those lower banded properties in the North be getting a disproportionately higher benefit?
Lord Henley: In the main all benefits are the same, irrespective of whatever part of the country the individual claimant happens to live. My noble friend will know that there are certain variations in some of the premiums available in income support in relation to residents in nursing homes and residential homes but in the main all benefits are the same in all parts of the country.
Baroness Hollis of Heigham: I have deliberately tried not to be party political or provocative about this matter. I genuinely believe that there is a real issue here that reflects some of the anxieties expressed.
I am entirely appreciative of what the Minister and his colleagues have done in terms of the other bands. Given that the Government have a structured banding system—and the response of reducing properties by one band for the disabled is an entirely honourable and proper way forward for which I am very happy to give credit—it was interesting that when pressed the Minister told us that the letter he received expressing appreciation came the day after his honourable friend's announcement: one day after. Quite rightly they were delighted that a substantial part of the problem had been addressed. It was only subsequently, when the judgment of RADAR, DIG, and disability groups had had time to reflect on the Minister's statement, that they realised that the properties in band A could not, by definition, be covered by the Minister's response. That is why I have a letter from MENCAP saying that it supports this amendment, which is designed to ensure that disabled people living in a house in band A will be able to get a reduction in the amount of council tax that they are liable to pay where the house fits the Government's own criteria for a reduction in bills related to disability. That is why I have received similar support from RADAR, from DIG and from the Association of Disabled Professionals; because the anomaly came to light notwithstanding the appreciation of the moves made by the Government.
Perhaps I may respond to the helpful comments made by the noble Baroness, Lady Gardner of Parkes. She asked whether the numbers were disproportionate. I wish that we could give that information, but clearly no one can do so until the valuation exercise has taken place. We shall then see. I have to say that if the numbers in band A are large then there is clearly an injustice. If the numbers in band A are small, then clearly the expense and the problem of overcoming it is relatively trivial. Either way, I should have hoped that we could get some support for this amendment. At the core of the issue lies the fact that in large parts of the country between 50 per cent. and 65 per cent. of property will be in band A. In other words, in poorer parts of the country, in the north, large sections of property will be in band A and there will be virtually a flat rate tax.
That means that it is regressive. It means that the disabled, with lower incomes and higher costs, are not
986
protected against that regressiveness. I am not confident about the right way to address the problem. It might be that we simply gear down by 12·5 per cent., as you would for a person with a similar income in a different part of the country, with higher property values, whose house, as a result, went into band B. That seems to me a sensible and administratively simple and convenient way forward. The amendment does not do that. It asks the Committee to recognise that there is an anomaly. If the Committee were minded to accept the amendment we could then hope that Ministers would come back at Report stage with a remedy for it. I should like to take the opinion of the Committee.
The Earl of Balfour: Before the noble Baroness sits down, I cannot see what Clause 24 has to do with the amendment. I may be wrong but I do not see the connection.
Baroness Hollis of Heigham: We shall come to Clause 24 at a later stage. It deals with the description of what counts as a material reduction with regard to facilities within the house. With this amendment we are saying that on the presumption that we agree on what "material reduction" is, property in band A should then enjoy the same kind of proportionate reduction as the property of other disabled people.
5.40 p.m.
On Question, Whether the said amendment (No. 44) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 110.

Division No. 3

CONTENTS

Addington, L.

Hughes, L.

Airedale, L.

Hunt, L.

Aylestone, L.

Jeger, B.

Beaumont of Whitley, L.

Jenkins of Hillhead, L.

Birk, B.

Jenkins of Putney, L.

Boston of Faversham, L.

Judd, L.

Carmichael of Kelvingrove, L.

Kagan, L.

Carter, L. [Teller.]

Listowel, E.

Cledwyn of Penrhos, L.

Lovell-Davies, L.

Cocks of Hartcliffe, L.

McIntosh of Haringey, L.

Dainton, L.

Mackie of Benshie, L.

David, B.

Meston, L.

Dean of Beswick, L.

Monkswell, L.

Donoughue, L.

Morris of Castle Morris, L.

Dormand of Easington, L.

[Teller.]

Ennals, L.

Perry of Walton, L.

Ewart-Biggs, B.

Rea, L.

Falkland, V.

Redesdale, L.

Fitt, L.

Richard, L.

Gallacher, L.

Seear, B.

Graham of Edmonton, L.

Serota, B.

Greene of Harrow Weald, L.

Stoddart of Swindon, L.

Grimond, L.

Strabolgi, L.

Hamwee, B.

Turner of Camden, B.

Hanworth, V.

Underhill, L.

Harris of Greenwich, L.

White, B.

Hollis of Heigham, B.

Williams of Elevel, L.

Hooson, L.

Wilson of Langside, L.

Houghton of Sowerby, L.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Abinger, L.

Arran, E.

Acton, L.

Ashbourne, L.

Aldington, L.

Astor, V.

Allenby of Megiddo, V.

Auckland, L.

Ampthill, L.

Balfour, E.

987

Belhaven and Stenton, L.

Kitchener, E.

Belstead, L.

Knollys, V.

Bessborough, E.

Lane of Horsell, L.

Blatch, B.

Lauderdale, E.

Boardman, L.

Long, V.

Boyd-Carpenter, L.

Lucas of Chilworth, L.

Brabazon of Tara, L.

Lyell, L.

Brougham and Vaux, L.

Mackay of Clashfern, L.

Byron, L.

Mancroft, L.

Caithness, E.

Merrivale, L.

Campbell of Alloway, L.

Mersey, V.

Carnegy of Lour, B.

Morris, L.

Carnock, L.

Mottistone, L.

Cavendish of Furness, L.

Mountgarret, V.

Coleraine, L.

Mowbray and Stourton, L.

Constantine of Stanmore, L.

Munster, E.

Cork and Orrery, E.

Nelson, E.

Craigavon, V.

Norfolk, D.

Cross, V.

Norrie, L.

Denham, L.

Northbourne, L.

Denton of Wakefield, B.

Orkney, E.

Dilhorne, V.

Orr-Ewing, L.

Elibank, L.

Oxfuird, V.

Ellenborough, L.

Pearson of Rannoch, L.

Elles, B.

Peyton of Yeovil, L.

Elliot of Harwood, B.

Platt of Writtle, B.

Elliott of Morpeth, L.

Quinton, L.

Elton, L.

Reay, L.

Erroll, E.

Renfrew of Kaimsthorn, L.

Faithfull, B.

Renwick, L.

Ferrers, E.

Sandford, L.

Flather, B.

Savile, L.

Fraser of Carmyllie, L.

Seccombe, B.

Gainsborough, E.

Seldson, L.

Gardner of Parkes, B.

Skelmersdale, L.

Geddes, L.

Soulsby of Swaffham Prior, L.

Glenarthur, L.

Stanley of Alderley, L.

Hailsham of Saint Marylebone,

Strathclyde, L.

L.

Strathcona and Mount Royal,

Halsbury, E.

L.

Henley, L.

Strathmore and Kinghorne, E.

Hertford, M.

[Teller.]

Hesketh, L. [Teller.]

Thomas of Gwydir, L.

Hives, L.

Trefgarne, L.

HolmePatrick, L.

Trumpington, B.

Hooper, B.

Tryon, L.

Howe, E.

Ullswater, V.

Hylton-Foster, B.

Waddington, L.

Jeffreys, L.

Wedgwood, L.

Joseph, L.

Wharton, B.

Killearn, L.

Wise, L.

Kimball, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.48 p.m.
The Deputy Chairman of Committees (Lord Aylestone): I call Amendment No. 45. If this amendment is agreed to, I cannot call Amendments Nos. 46 to 48.
[Amendment No. 45 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 46:
Page 3, line 23, leave out from ("dwellings") to end of line 40 and insert ("in each region of England shall be determined as follows—

(a) the range of values for band A shall be no more than is sufficient to include 18 per cent. of all dwellings in the region;

(b) the range of values for band B shall be above the range for band A and no more than is sufficient to include 18 per cent. of all dwellings in the region;

(c) the range of values for band C shall be above the range for band B and no more than is sufficient to include 18 per cent. of all dwellings in the region;

988

(d) the range of values for band D shall be above the range for band C and no more than is sufficient to include 18 per cent. of all dwellings in the region;

(e) the range of values for band E shall be above the range for band D and no more than is sufficient to include 13 per cent. of all dwellings in the region;

(f) the range of values for band F shall be above the range for band E and no more than is sufficient to include 8 per cent. of all dwellings in the region;

(g) the range of values for band G shall be above the range for band F and no more than is sufficient to include 5 per cent. of all dwellings in the region;

(h) the range of values for band H shall be above the range for band G.

(2A) For the purposes of subsection (2) above—

(a) region shall have the meaning of the standard economic region, except that Greater London and the rest of the South East shall be treated as separate regions;

(b) the percentage of properties falling into each band shall be determined with reference to the number of properties and their values on the list the listing officers propose to compile at the date specified in section 22(5) below or as that date may be modified by section 25(3) (b) below.".).

The noble Lord said: Amendment No. 46 seeks to provide an objective way of securing what some Conservative Back-Benchers in another place want to provide in a non-objective way. We have already had a full discussion of the way in which the single banding system and the single valuation system in different parts of the country will have different effects. In some local authorities the number of effective bands will be drastically reduced. I could read out a long list of authorities where, as far as we know, the percentage of properties falling into each band is heavily skewed to the top, to the bottom or to the middle. But I shall spare the Committee a full list. In Barrow-in-Furness 61 per cent. of properties are in band A and not a single property is expected to be in bands E, F or G, while in Stratford-upon-Avon only 1 per cent. of properties are in band A, 5 per cent. are in band B and 53 per cent. are in bands F, G and H. In Islington no properties are expected to be in bands A and B but 49 per cent. are expected to be in bands F, G and H. It will be obvious that for an individual local authority and for clusters of local authorities in regions there will be a tax with in effect only three or four bands rather than the eight bands proposed in the legislation.
The number of effective bands in a local authority area does not in itself determine the expenditure needs of a local authority—for example, Barrow-in-Furness needs to spend money on local services, as does Stratford-on-Avon, Islington and the county councils concerned outside of London. Neither does it reflect the ability to pay of the people in those areas. Of course there are people who are better off in Barrow-in-Furness and in Islington; but the vast majority of people in Barrow-in-Furness who find themselves in band A will be paying very much the same as the rest of the people who are in bands B and C. There will very nearly be a flat rate tax. Because of the expenditure needs of the local authority in Barrow-in-Furness, the charge in band A will be very much higher than it will be in some other areas.
Perhaps I may put the relationship between income and the banding system as graphically as I can. In London, we know from the Family Expenditure Survey that there are 16 per cent. of people in the

989
lowest income band but that only 1 per cent. of properties are expected to be in the lowest council tax band. However, in East Anglia where nearly 16 per cent. of the people are in the lowest income band, 24 per cent. of properties will be in the lowest council tax band.
I have been giving examples of individual authorities, but if one takes the northern region as a whole, 46 per cent. of properties are likely to be in band A. What we have is very nearly a flat rate tax. That matter causes concern not only in Barrow-in-Furness and in Islington but also in some of the leafier suburbs and exurbs around London. People like Sir Rhodes Boyson are breathing fire about it and seeking to table amendments.
It is important that we should establish the basis upon which the proposed amendments should be conceived and that we should establish so far as is possible an objective basis which could apply in any region to secure an adequate range of bands. What we have in effect is a sleight of hand: we have the pretence from the presence on the face of the Bill of an eight-band process with a 3:1 taper, whereas, in practice, for individual local authorities—and, after all, individual local authorities will raise the council tax—we have far fewer bands and a far flatter tax. We think that the objective way to deal with the situation is to secure, as Amendment No. 46 would do, that there should be a maximum percentage of dwellings in any one region which falls into any one band.
Of course, what we are proposing here is nothing like as good as replacing the council tax by a proper system of local government finance; we are accepting that there is to be a banding system because that is what the Bill says and we are seeking to amend it. We are trying to make it less unfair than it will be in practice and we are trying to expose the fact that the banding system which is on the face of the Bill is not in fact as fair as Ministers claim. Without being a dramatic change, we believe that what we have proposed is certainly a change which will be widely welcomed and will increase the fairness and therefore the acceptability of the council tax. I beg to move.
The Earl of Balfour: The amendment before the Committee would have the effect of making a false valuation of the dwellings in England. That cannot be right. I certainly admire the hard work that is done by noble Lords and noble Baronesses on the other side of the Committee. I know from past experience on other legislation how often I have received appeals from worthy bodies asking me to support amendments that they have drafted. Yet when I have studied the legislation I have realised that such amendments would have a most unfortunate result. I am certain that that is the reason for the present amendment appearing on the Marshalled List.
In the first place, the amendment talks about regions, which applies only in Scotland. Secondly, it would force the valuation officers to place all the dwellings in every billing authority's area into bands based on a percentage ranging from 18 per cent. for bands A, B and C down to 2 per cent. for band H. That is the result of a complete misunderstanding of
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the proposals in the legislation. I know that England and Scotland are rather different, with the English setting of the council tax commencing in Clause 30 of Chapter III and going on to Clause 36, where it states that,
"D is the number … applicable to dwellings listed in valuation band D".
Perhaps Members of the Committee will turn to Clause 93 on page 63 which refers to the setting of the council tax. I should like to read the clause as if it applied to England. It says that a billing authority shall in respect of each financial year,

"(a) set an amount of … council tax, as appropriate, to be paid in respect of a chargeable dwelling in their area listed in valuation band D (whether or not there is such a dwelling in their area) as specified in [Clause 5(2)];

(b) determine the amount of council tax to be paid in respect of a chargeable dwelling in each of the other valuation bands specified in [Clause 5] in accordance with the proportion mentioned in [Clause 5(1)]".

In other words, a range from six to 18. I ask my noble friends to insert into Clause 36 between now and Report stage those very important words in brackets,
"whether or not there is such a dwelling in their area",
for the sake of clarification.
As I understand the legislation—this is the result of my own research—under Clause 21 the Government have wisely chosen the valuation of dwellings to be assumed as at 1st April 1991 when the market was at its lowest. The same date (1st April 1991) is in Clause 86 for Scotland. I should have thought that the average house value in England in April 1991 would have fallen into the band D range of between £68,000 and £88,000. I cannot speak for Wales, but the equivalent range of band D for Scotland under Clause 74 is between £45,000 and £58,000, and that is about right.
If the majority of houses—assuming roughly the same number of houses—in a district council's area were below band D, which would result in the council tax for "D" houses being relatively high, that authority should—I hope my noble friend the Minister will confirm this point—receive a greater—for want of better phrase—rate support grant than an authority which had most of its houses in, let us say, band F, where the council tax for band D would be lower to raise the same amount of money for the same number of houses.
Under the old rating system, an authority that had a high proportion of low value properties received more in rate support grant than an authority with high value properties. That is the point that I wish to put forward. If I am wrong, my noble friends on the Front Bench would have every right to shoot me down in flames; but I am sure that I am about 98 per cent. correct.
6 p.m.
Lord Renfrew of Kaimsthorn: I was going to speak more immediately to the wording of the amendment and observe that there will clearly be some dissatisfaction in Barrow-in-Furness when, under the proposed arrangement, a number of houses which would formerly have been in band A find themselves in band C or D. That is an inescapable consequence of

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the additional complexity introduced by the amendment. The great merit of the Bill had always seemed to me that it was of considerable simplicity. That can of course bring injustice. Members on the other side may well hold that view, but there are also injustices in introducing more arbitrary elements. That is what will happen if the amendment is accepted.
Members on the other side of the Committee made great play about how arbitrary it is if one falls on one side or the other of a band valuation in monetary terms. How much more arbitrary it will be if one is on one side or the other of a boundary in regional terms so that the same house—if one is talking about houses built to a model—on one or other side of the boundary will artificially fall in different bands. I concede that they will no doubt be in adjacent bands; but they will be in different bands. That is an inevitable consequence of adding to the arbitrary divisions in this way. It is surely undesirable.
I am not altogether sure that Members opposite have their logic right. On Second Reading, the noble Lord, Lord Desai, gave a clear indication of the logic underlying the fair rates philosophy advocated by Members opposite. His point was that when we are talking about a property element, or a property tax —here we are talking about a property element —a tax should be related directly to value and paid in proportion to value, on the grounds that residents enjoy an amenity, to be calculated in relation to the notional rental value which is directly related to the property value. That principle is clearly not being followed if we monkey about with the banding in the way suggested.
The proposal contained in the amendment is arbitrary in two ways. If we are to depart from the Bill's simplicity—I agree that we can be over simple—the proposal should have merits which overcome the additional arbitrary elements. I for one am not persuaded that the amendment has such merits.
Lord Stoddart of Swindon: I am surprised that the noble Lord should take the view that he has just taken. He is accusing Members on this side of the Chamber of trying to introduce arbitrary proposals; but I thought that my noble friend had made it clear from the start that he was trying to be helpful to those Conservative Members of Parliament who had expressed anxiety about how the banding as proposed in the Bill would affect certain parts of the country.
The amendment is a serious attempt, as I see it, to try to meet those anxieties, and they are very real. Undoubtedly there is a suspicion, in London plainly and many parts of the South East, that they will be clobbered both ways. There will be more properties within the higher bands, so they will receive a lower grant than they would if there were a better distribution of property values throughout. That is one of the worries. The other worry that Conservative Members of Parliament have expressed is that their constituents, who already bear higher mortgage charges than in the North, will in addition bear higher rate charges. My noble friend was trying to deal with those problems. The amendment is an attempt to be helpful. I hope that the noble Lord will withdraw his allegation that we are trying to be unhelpful.
Lord Renfrew of Kaimsthorn: I very much welcome the helpfulness of the noble Lord, but I should be interested to hear him reconcile the position he has taken with advocacy of a straight property tax, which is the position of Members opposite. It is most charming that the noble Lord is being so helpful, but I cannot understand how he can be so while simultaneously advocating a straight property tax about whose principles he was so eloquent only a couple of days ago.
Lord Stoddart of Swindon: If we were discussing a property tax, we should be discussing a different Bill; but we are not now discussing a property tax. We may be discussing it later this year. We may be discussing a Labour Bill later this year but, with respect, we are not discussing it now. I should very much like to be discussing it now but we are not; we are discussing the Bill brought forward by the Government. To attempt to put down an amendment which would put forward Labour Party proposals would be out of order because it would be considered to be a wrecking amendment; and the noble Lord would be the first on his feet to accuse us of trying to be party political.
We are trying to improve the Bill. That is the job of the Opposition in this place, and that is what we are trying to do. I hope that the Minister will take our proposals seriously and give a serious answer as to why they are not relevant and helpful.
Baroness Blatch: The Committee can be assured that I shall take all the amendments seriously; but have to say that my noble friends Lord Balfour and Lord Renfrew have most elegantly demolished all the arguments. I cannot better what they have done. My noble friend Lord Renfrew was saying to the noble Lord, Lord Stoddart of Swindon, that there was an inconsistency—my noble friend was not comparing what we advocate on these Benches and what is advocated on the Opposition Benches—in what is being advocated by the Benches opposite about the systems and the amendment. That is the inconsistency that was referred to.
Perhaps I may deal with the questions posed by my noble friend Lord Balfour. He asked us to include the words "whether or not" in Clause 36. The words that he quoted are from Clause 93(1) (a) which related to the setting of taxes in Scotland. For England, the same point is dealt with in Clauses 30(5) and 40(4), so we do not believe that it is necessary to deal with it again in Clause 36. My noble friend is most diligent in these matters and I am sure that he will read what I have had to say and will certainly come back if I have not satisfied him on that point.
The linkage set out by my noble friend Lord Balfour between rate support grant and the banding system as he understood it is absolutely right. However, I also point out that if we were to accept an amendment later on the Marshalled List which prohibits the Secretary of State from making any link between the banding system and the rate support grant, there would be a serious vacuum in how the Secretary of State would distribute grants.
The Government believe that regional banding would not only be unfair but that it would also give

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rise to unacceptable regional distortions. Distortions arise because at the boundaries of regions there would be a sudden change in the band, and therefore the council tax bill, of otherwise identical properties. That would be a problem and the point was well made by my noble friend Lord Renfrew.
To take a specific example, taxpayers in Enfield would be delighted to find that their homes had been allocated to a lower band than similar properties of the same value just over the border in Hertfordshire. The house in Enfield would be in a lower band because, on average, house prices are higher in London than in the rest of the South East. This is despite the fact that house prices just outside London are often higher than in the capital itself. Such anomalies should be avoided.
Noble Lords should be clear what regional banding would mean. It will result in higher bills in low price regions. A typical property in the North would pay the same as a typical property in the South East, regardless of the fact that earnings and average property prices are lower in the North. That also would not be fair.
The Government recognise that there are areas with high property prices. Under the council tax, in any street, the most valuable homes will attract the largest bills. Similarly, in any town the most valuable homes will attract the largest bills. The same rationale applies not only to larger homes, but also to homes in more expensive parts of a town.
A three-bedroom house overlooking the park will be more expensive than an otherwise identical property with a less scenic view. It is fair that council tax bills should reflect this. The same logic applies across a county, a region or the whole country. I hope that the amendment will either be withdrawn or rejected.
Lord McIntosh of Haringey: I did not understand a word of what the noble Earl, Lord Balfour, said. I shall read it carefully and attempt to understand it with the gloss put on it by the Minister.
The noble Lord, Lord Renfrew, struck me as sticking his neck out in a quite extraordinary way. He accuses us of being arbitrary, but he speaks from a position—if it is physically possible—at the top of both the twin peaks of arbitrariness which are the fundamental basis of the Bill. The council tax is arbitrary first because it is based on one peak of arbitrariness by having a totally arbitrary banding system. There is nothing logical or rational about the banding system put forward in the Bill. Secondly, there is a completely arbitrary relationship in the council tax which is to be charged between one band and another. The more arbitrary the tax is, the cruder it is. The more one tries to reduce the differences and the crudeness, giving more bands or finding a more rational basis for the differences in the tax to be paid between the bands, the less arbitrary it is.
I do not claim that we have produced something free from arbitrariness; far from it. The points made about the differences at the margins of regions are perfectly valid; but they are not as bad as what is proposed in the Bill. That is certainly the case.
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For many years I have had great difficulty with people who do not understand one of the fundamental principles of property taxation in local government finance. They do not understand the difference between rateable value and rate poundage. It is an understandable error which occurs all the time. It led the Conservative Party to panic in Scotland and introduce the poll tax. The Conservatives did not understand that the fact that rateable values increase does not mean that more money is being collected from the rates.
Noble Lords: Oh!
Lord McIntosh of Haringey: It does not mean that. It means that individual properties are either paying more or paying less, but there is a zero sum gain.
I expected to hear that from public platforms, and read it in letters and in the less well informed press; but to hear this afternoon that misunderstanding from the Government Front Bench between rate poundage and rateable value took me aback.
6.15 p.m.
Baroness Blatch: Does the noble Lord agree that if the valuation of the house increases, the multiplier increases with it?
Lord McIntosh of Haringey: I do not understand what is meant by "the multiplier".
Baroness Blatch: Whatever one pays in the pound, if there are more pounds in rateable value, one would pay more times that amount.
Lord McIntosh of Haringey: If a council raises £1 million from a rate base of £1 million, the rate poundage is £1 in the pound. If a revaluation takes place which increases the rateable value from £1 million to £2 million, the council may levy a rate of 50 pence in the pound.
Lord Henley: Not Labour councils.
Lord McIntosh of Haringey: The amount levied has nothing to do with the revaluation. A council needing the same money levies a rate at 50 pence in the pound. If there are differences in the increase, in other words if some properties increase in value more than others, then they pay more. If some properties increase less than others then they pay less. But it is a zero sum gain.
Baroness Carnegy of Lour: I know that the noble Lord, Lord McIntosh, lived a long way from Scotland where the trouble began, but perhaps I may quote an example to him. In the Tayside region at that time, the total rateable value was virtually identical to what it had been before. The problem was that there had been such variations within the regions that some values had halved and others had doubled or trebled. So when the value was fixed, what some people had to pay increased enormously and what others paid decreased. The rateable values stayed exactly the same. That was what was wrong with the system. Had the revaluation taken place in England, 13 years later

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instead of seven years later, as in Scotland, the whole problem would have been greatly exacerbated. The noble Lord must understand that.
I believe that the argument should end there because it only partly relates to banding. In his amendment, the noble Lord, Lord McIntosh, is trying to move away from the rating system, not towards it. That is where the illogicality exists.
Baroness Gardner of Parkes: I wish to take up the same point. Members of the Committee opposite may wish to prevent me doing so, but I gave way to the noble Baroness, Lady Carnegy, and I should now like to comment on the same point, if the noble Lord will allow me. We are all perfectly clear on the poundage. Where the noble Lord is mistaken is that after revaluation councils have always tended to increase the poundage; it creeps up and up. If it is a Labour controlled council it does not creep up, it rushes up.
Baroness Blatch: Perhaps I may complete the interventions and then the noble Lord can reply to all of us. We understand that the poundage is adjusted in order to make sure that the yield does not change and the noble Lord is quite right in his description. However, he has not covered the situation where the occupier of a property with a rateable value of £200 pays a certain amount in rates. If the size of the property is considerably increased and there is a revaluation, the property may be revalued at £300. There is no adjustment of poundage on that. The property has a higher multiplier; more rates will have to be paid on it because it has a higher rateable value.
Baroness Hollis of Heigham: It has a higher value.
Baroness Blatch: That is the only point I am making to the noble Baroness. When one revalues a property to a higher value, the owner will have to pay more in rates to the local authority.
Lord McIntosh of Haringey: I think we must go back to primary school. This situation is difficult to believe. The noble Baroness, Lady Carnegy of Lour, understands precisely the difference between rateable value and rate poundage. I believe the noble Baroness, Lady Gardner, also understands that difference. However, I am certainly not sure the Government Front Bench understand that difference or they would not have panicked in the way they did as regards Scotland and they would not be panicking as they are now.
The Minister referred to subsequent revaluation and made a valid point. This amendment does not address that point but we shall deal with it on later amendments. We have tabled amendments which will tackle the problem which the Government are creating for themselves by providing that the values which will be assigned now will apply in perpetuity unless a property changes hands or some exceptional circumstances arise as determined by the Secretary of State. All the fears about revaluation will come back in the form of a multiplier—I hope I may use the Minister's words—if this legislation is adopted without amendment.
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This amendment is concerned with a very different matter. The unfairness of the banding system comprises two elements, its crudity and its flatness. In attempting to amend it on an incremental basis, as it were, rather than rejecting it as a whole, the only thing we can do is to attack the flatness—we have already done that in existing amendments—and the crudity. That is the purpose of this amendment. I shall not divide the Committee, although in the light of the answers given from the Government Front Bench I am sorely tempted to do so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (The Viscount of Oxfuird)Before I call Amendment No. 47 I must advise the Committee that, if this amendment is agreed to, I shall not be able to call Amendment No. 48 due to pre-emption. I now call Amendment No. 47.
Baroness Hamwee Baroness Hamwee moved Amendment No. 47:
Page 3, leave out lines 25 to 40 and insert:

("Greater London

Range of Values

Valuation band

Values not exceeding £52,000

A

Values exceeding £52,000 but not exceeding £68,000

B

Values exceeding £68,000 but not exceeding £88,000

C

Values exceeding £88,000 but not exceeding £120,000

D

Values exceeding £120,000 but not exceeding £160,000

E

Values exceeding £160,000 but not exceeding £210,000

F

Values exceeding £210,000 but not exceeding £420,000

G

Values exceeding £420,000

H

The noble Baroness said: In the matter of regional banding we return to something of the same issue we have already discussed. No one would argue, and no one has attempted to argue, that property prices are consistent across the country. In addition, property prices fluctuate differently across the country. For example, prices have fallen recently in the South-East but risen a little in the North, although there are, of course, still big differentials. In London average property prices are now about 136 per cent. higher than in 1983, whereas the national average is 123 per cent. higher. I mention that to deal with an administrative point first. Fluctuations in prices are different in the different regions. Therefore if we adopt a regional banding system, there will be less of a need for revaluations because prices will tend to move in proportion within the different regions. However, that is only one aspect of this problem.
Once a week the London Evening Standard has an article which shows readers what they might purchase outside London if they were to sell their properties in London. The newspaper has attractive photographs of mansions set in rolling acres which cost approximately the same price as a small, modest
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property in London. I do not know whether—I adopt the terminology used earlier today—that is the journalism of envy. However, it is certainly something that must catch people's attention a good deal.
High property prices are evident in London and the South-East. The London Research Centre has revealed, using figures provided by the Halifax Building Society, that London's house prices are something of the order of 45 per cent. above the national average. House prices in the rest of the South-East are 35 per cent. above the national average. In the North house prices are 25 per cent. below the national average. Data of the Halifax Building Society for the whole of 1990 show that the average house in London and the South-East would come under band E; that is, has a value between £88,000 and £120,000. However, the average house in the North or the North-West would come under band C; that is, has a value between £52,000 and £68,000. I am referring to figures that were published in November.
A league table of London boroughs reveals the problems that exist in certain boroughs. The average house in Westminster, Kensington and Chelsea comes under band G; that is, has a value between £160,000 and £320,000. In five other boroughs houses fall into band F. Those figures confirm the fears that have been expressed so vividly and loudly in another place and even more strongly outside the precincts of the Palace of Westminster. The figures confirm the fears that London and the South-East will lose out as a result of this legislation.
The proposal for regional banding is designed to allow high and low values to be taken more fully into account. Why is this important? As the noble Baroness, Lady Gardner of Parkes, mentioned earlier today, this is not just a question of the compression of the bands; it is also a matter of the grant arrangements. As under the former rates, where property values are low, the rate base is low. The grant, in effect, is like an extra ratepayer. One is looking to grants to make up what the tax is not raising. Where values are low, the grant will be higher and, conversely, where values are high the grant will be low. Taxpayers will be expected to find a higher proportion of the total costs.
The noble Baroness, Lady Gardner, has already mentioned a figure of £300 million of grant that would have been lost in London if the council tax were introduced in the year 1992–93. I believe that for 1993–94 the figures are even higher because of the area protection grant which currently applies to some London boroughs. That would add another £100 million to that figure. In other words, we are talking about £400 million of grant likely to be lost to London on the basis of this tax. The adverse effect of the loss of area protection grant does not affect simply a small number of what Members on the Benches opposite might regard as rather dubious boroughs but will also affect the flagship borough of Wandsworth.
CIPFA informs us that gaining regions are those with relatively low property values where the number of equivalent band D properties is low in relation to the actual number of homes, or where there is a

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relatively high number of relevant adults per equivalent band D property. Losing areas are those where the converse applies.
The banding that is proposed in this amendment is more realistic than the provisions contained in the Bill. By concentrating on London I am not ignoring the problems in other parts of the country. However, it is in London that the problems are starkest. We know of the difficulties of finding housing in London that is affordable in the widest sense. That is not so bad once one is on the property ladder, but getting started is an appalling prospect. The cost of mortgages for high priced London properties can literally bankrupt a person.
We will all be aware of the publicity that has been given to the doctor leading a research team who is moving to the United States with his team. There was an article about that doctor in the Observer last weekend which spelt out vividly how his problems arose from the cost of housing. The article stated the doctor's monthly take home pay was just under £1,500 but he was paying £913 for a mortgage and £175 for a mortgage protection policy. That came to a total of over £1,000; in other words, two-thirds of his monthly income. In other words, the cost of housing is not a true reflection of wealth. It was no surprise that in that article people from outside London were quoted as being somewhat puzzled by that case because they do not experience the same difficulties.
The Government argue that a regional banding system will create anomalies on the boundaries. I suggest to the Committee that no more anomalies will be created than between, say, Carlisle and Kelso or between Ludlow and Llangollen because the principle of regional banding is accepted and is reflected in different banding in the Bill for England, Scotland and Wales. The anomalies arise because this is a property tax and not from regional banding. The anomalies result from the fact that a tax based on property does not reflect ability to pay.
The greatest anomaly will occur on the England-Wales border. I assume that in their examples of anomalies the Government have pointed to some of the worst cases that they could find. The worst under their own banding proposals are on the Welsh border where on the English side the average household in an average detached house will pay £490 whereas on the Welsh side of the border the amount will be £199. If the Government are serious in arguing that an anomaly of £90 or £100 is unacceptable I am not sure how an anomaly of almost £300 could be considered acceptable.
It was put to me yesterday by an academic who understands the finer esoteric points of local government finance that a question had been put to him which illustrates the interdependence of property values for the purposes of this tax and central government grant and the unfairness of the Bill. Someone approached him saying, "I have a house in London worth £80,000 and I pay an enormous mortgage on it. Am I, through tax to central government, going to be supporting someone in the
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North who has a house which is also worth £80,000 but on which he has a small mortgage?" The answer is yes. I beg to move.
6.30 p.m.
Baroness Blatch: I must tell the Committee that I find it very strange that, Members of the Committee having railed against the perceived iniquities of national valuation bands for so long, we now have before us an amendment that proposes not eight regional bands but six. The amendment amalgamates five of the standard regions into two super regions before going on to split another into two sub-regions. The net result is only six regions and six sets of bands.
The Committee has already listened to our arguments against regional banding and I do not propose to repeat them after such a short interval. Let me instead remind the Committee of the distortions which regional bands would cause. House prices in Milton Keynes and neighbouring Northampton are similar. With the bands we propose, a £65,000 three bed semi-detached home would be in the same band whether in Milton Keynes or Northampton. With regional banding the property in Northampton would be in a higher band than the one in Milton Keynes and hence face a higher bill for the same level of services simply because the average property price is higher in the South East than in the East Midlands.
The effect of regional banding is clear—lower council tax bills in regions with high average property values such as the South East and London at the expense of higher council tax bills in low average value regions. That may be defensible if house prices did not vary throughout each region. However, as I have already said, property prices vary greatly within a town, let alone a region, and also in a village. While there is no doubt that properties in much of the South East are more expensive than in much of the North, the difference is not as great, nor as uniform, as many people believe.
I believe that the amendment moved by the noble Baroness would create many more anomalies. She cited Scotland, England and Wales. They are already different, unless the Labour Party in returning to the old rating system intends to revalue on a constant basis all properties in England, Scotland and Wales. People in Scotland and Wales would be interested to hear that. There would be many more anomalies as a result of the amendment. We support what is proposed in the Bill. I hope that the amendment will be withdrawn.
Baroness Hamwee: I am sorry that no other Member of the Committee feels moved to take part in the debate. I do not profess to understand the relevance of variations within a village. Of course there are variations within a village under any system.
I had hoped that we might have heard a little more from the Minister about what might be done to deal with the London problem. The noble Lord, Lord McIntosh, referred to an article which appeared in a newspaper the other day. The Times recently reported that there would be some sweeteners for London. The noble Lord was accused of reading too many

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newspapers. I do not think that The Times is what it was but even so I do not disbelieve it on this issue. The Minister said two days ago that these were not the final words on the matter of London. Perhaps the Minister wishes to speak; she looked as if she was about to stand up. I am happy to give way.
Baroness Blatch: Perhaps I may respond to the noble Baroness regarding the relative differences in affluence in London as compared with the North, which she made much of. She drew particular attention to the size of mortgage repayments in London. It is true that on average people in London borrow three-quarters as much again to purchase houses as people in the North. We have looked at the family expenditure survey to establish disposable incomes after deduction of housing payments—which include mortgage and rent—as well as income tax and national insurance. The highest weekly disposable income is in London and the lowest in the northern region. People in London have more left to spend after deducting their housing costs than people in other parts of the country. There is no reason to believe that someone with a house worth £80,000 in London will necessarily have a larger mortgage than someone with a similarly priced house in the North.
Baroness Hamwee: I should be interested to see the detail of those figures. The Minister has told the Committee that the Bill was introduced not because the poll tax was unfair but because it was perceived to be unfair. One of my reasons for proposing the amendment is the perception of unfairness as well as the reality. I do not believe that we shall be able to take the matter further tonight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 48 to 50 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 50A:
Page 4, line 19, after ("order") insert ("in the third year following the coming into force of this section and not less frequently than in every third year thereafter").
The noble Lord said: In rising to move Amendment No. 50A I should like to speak also to Amendment No. 74, which is the Scottish version of the amendment. There have been scattered references in previous discussion to the issue of revaluation. Some have been historical references made with great passion. The passion has usually been reserved for the injustices and hardships caused by belated revaluation rather than by revaluation itself.
It has been noticeable that the interventions from the Government Benches have always concerned the cowardice of Labour governments in failing to have revaluations. It is therefore all the more curious that we should find ourselves with a Bill which proposes a crude valuation system which is not proposed to be subject to revaluation on a regular basis. I suppose one could justify values which were frozen and never changed.
I remember doing market research in the Republic of Ireland in the late 1960s and sampling households on the basis of the valuation roles applicable in the
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Republic of Ireland at that time. The valuation rolls had not been subject to revaluation since 1856. They appeared to work to some extent. You could justify that position; say "Leave them alone" and never touch them.
The Government do not do that in this Bill. They say, first of all, that the Secretary of State has exceptional powers to order revaluation; but, secondly, they say that there should be revaluations on change of status—in other words, revaluation when a property is sold. An extraordinary state of affairs can then arise with two identical properties; one of them may be sold when prices are very different and thus come into a different band from the identical property next door.
A lot of passion has been expended on the injustice of charging people more if they improve their properties. The noble Baroness, Lady Elles, was very eloquent on that point earlier. If the property is improved, under the provisions of the Bill one escapes if the property does not change hands but if it changes hands anything that has been done to it is taken into account. One could not conceive of a more arbitrary way to deal with valuation.
The idea of perpetual valuation with such changes seems to us to achieve the worst of all possible worlds. Basically these amendments propose a three yearly revaluation. It need not be a complicated process. For reasons of which we do not entirely approve, the valuation will be carried out very economically. The Government are proud of that fact. They cannot accuse us of wasting vast amounts of public money by demanding a three-yearly revaluation on their terms but the amendment seems to us to be a protection against injustice.
Baroness Gardner of Parkes: Surely the Bill as set out will do a great deal to protect people from the injustice which has occurred, in particular where people have bought a house at a low figure in relation to their income and what they could afford and that house has increased greatly in value. So long as the individual remains in the house, which is the situation of many people whose means have declined over the years, there will be no increase to face. On the other hand, if the property deteriorates or suffers in any way, those people will be able to apply for an immediate revaluation downwards. That would do a great deal to protect them. On the other hand, if the property is sold and money realised, it crystallises the improvements that have been carried out and it is only fair that at that point the person buying the property should buy on the new basis.
I believe that that arrangement is one of the most marvellously fair provisions in the new tax. For that reason I oppose the amendment.
Baroness Carnegy of Lour: I notice that there is no Scottish based peer on the Front Bench opposite or behind the noble Lord. I appreciate that it is Thursday and his colleagues may have had to return to Scotland (for which I do not blame them at all). However, as they are not there, I wonder whether he could tell us

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whether CoSLA (the Convention of Scottish Local Authorities) is happy with the Scottish amendment to which he spoke.
Lord McIntosh of Haringey: Perhaps I may deal with that point now and get it out of the way. Amendment No. 74 does not come from CoSLA but from the Law Society of Scotland.
Baroness Carnegy of Lour: So the Convention of Scottish Local Authorities has not been consulted, or those who would do the valuation and so on. This is simply a Law Society amendment. I thank the noble Lord for that information.
6.45 p.m.
The Parliamentary Under-Secretary of State, Scottish Offie (Lord Strathclyde): I appreciate the reasons why these amendments have been brought forward. However, I am not sure that the noble Lord fully understands our proposals. The amendments introduce statutory revaluations into the council tax arrangements at a maximum of three-yearly intervals. Three-yearly revaluations will simply not be necessary under the council tax. It was an undoubted fact that revaluations under the rates were very unpopular. That is why there was no revaluation in England or Wales from 1973 until they were abolished in 1990. It is also why there was such a clamour after revaluation in Scotland in 1985 and at that stage there was a push to get rid of the rates.
It is no good for the noble Lord to say that the same amount of money was raised. If that had been true, people would have been quite happy with their revaluations. The fact is that they were not happy.
The reason for the unpopularity is that, while in themselves revaluations are fiscally neutral, providing simply for redistribution of the overall tax, they inevitably produce winners and losers. Added to that is the fact that the disturbance caused by a revaluation provided excellent cover for local authorities to increase their spending and blame it on the revaluation. One can understand why we were concerned so far as possible to reduce the need for revaluations with the new system.
We recognise that that will not necessarily remove the need altogether for revaluations. That is why we included Clauses 5(4) and 74(3) in the Bill. At this stage it would be impossible to predict how frequently such a revaluation might be required. However, I think it would be simply wasteful to require a revaluation, with all the associated expense and turmoil, every three years or more frequently if there were no need for one at such intervals. It is much better to have a power which allows a revaluation to be ordered when it is needed, as in the Bill at present.
The noble Lord offered the example of two houses which were next-door to each other. He said that if one were sold after a period of years it would change bands. It would not change bands except when it had been substantially altered and improved. As my noble friend Lady Gardner said, that would be quite right. I hope that I have explained the situation in the Bill and in the light of my explanation the noble Lord will feel able to withdraw his amendment.
Lord McIntosh of Haringey: The Minister has no difficulty in identifying that I am not an expert on this subject. If my examples were inadequate, I shall try to improve on them. There is expert advice on the subject available to the Government. That advice entirely supports our case. I quote from the response by the Royal Institution of Chartered Surveyors to the consultation document on the subject. The RICS notes that paragraph 2.30 of the consultation paper states that:
"There would be no need for regular or frequent revaluations of properties under a system of banding".
Indeed that is what is proposed in the Bill before us. The consultation paper goes on to suggest that:
"There might be a reserve power for a general revaluation in a particular area which could he used if there had been significant differential movements in the values of different sorts of properties".
That is a half hearted attempt to do what the noble Baroness, Lady Hamwee, and I suggested in Amendments No.s 46 and 47, although we were severely criticised for bringing them forward.
The RICS reminded the Government that:
"If the new Council Tax is to be accepted by the public, it must be seen to be fair. We believe that a method of updating the value of the property base will have to be introduced if the Council Tax is to be both equitable and understandable … We believe that the only way that the Council Tax will be assured of a successful future will be if Council Tax payers see a clear, distinct and continuous relationship between the value of their house, the band it is placed in, and the Council Tax bill they receive".
Lord Strathclyde: Because we have this reserve power, if people want a revaluation it will be possible to do it. Under the system which the noble Lord, Lord McIntosh, wishes to introduce, a revaluation will have to be done every three years whether or not people like it.
Lord McIntosh of Haringey: The Minister has revived my worst suspicions about the Government's intentions. As the noble Baroness, Lady Hamwee, reminded us, when we said that there was a secret agenda, that there were sweeteners being planned and that the Government were planning to make things easier for Conservative voters by subsequent changes to the Bill which they were not willing to put on the face of the Bill itself, we were told that that was nonsense and that they had no such ulterior motive. We were not told in so many words that the Bill is the last word on the subject. Ministers were too cautious for that. However, we were certainly told in essence that it was the basis on which the council tax would be introduced. We are now told directly by the Minister that it will be done in another way and that the reserve power will be used for exactly the purpose that we consider a regular valuation should be used.
If I were given the choice of having a reserve power by the Secretary of State to introduce a revaluation when he, a Conservative Secretary of State, thinks it politically convenient, or having on the face of the Bill a provision that there should be a regular revaluation, I know which I prefer. I know which the public prefer. They will want the Government to come into the open and state their intentions rather than hiding behind reserve powers.

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I am convinced that it is a matter to which, in one form or another, we shall return at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 51:
Page 4, line 24, at end insert:
("( ) The Secretary of State shall establish an additional band to those set out in subsection (2) above that shall be for dwellings provided and occupied solely in respect of a person's employment.").
The noble Baroness said: The amendment is grouped with a number of amendments tabled by other noble Lords. It is designed to protect those occupying tied property and other property by reason of the individual's work. It establishes a separate band for such properties.
One of the difficulties of a property tax is that the property which people occupy because they are in an occupation which requires them to live in a particular property bears no relation to their income. Since such occupation ceases with the job they have no long-term material benefit from the property either.
Agricultural workers are an obvious example. On the commercial market the type of houses in which they live might well fetch much larger sums than they can possibly afford from their own incomes because of the age, size or location of the property. There are many other such examples. The amendment provides a simple way of ensuring that people in that situation will be protected from unrealistic bills. It would be the simplest and easiest way to administer such protection.
The provision would not be perfect because, as we have said and will go on saying, the property tax is not a perfect tax. No doubt some people may be let off bills that they could afford. However, we have to find the balance. I suggest that it is sensible to place such properties in a separate band. The first band would probably best reflect the likely income of those involved but that would be a matter for the Secretary of State under the amendment. I beg to move.
Lord McIntosh of Haringey: Before we continue, will the noble Baroness indicate whether she expects the amendment to be debated with the others in the grouping?
Baroness Hamwee: Yes. Perhaps I should have stated on the record that the amendment is grouped with Amendments No. 53, 68A, 75, 76A, 90, 103 and 127. I understand that that grouping was agreed with the proposers of those amendments.
Viscount Mountgarret: The noble Baroness's amendment is grouped with Amendments Nos. 53 and 75 in the names of the noble Lady, Lady Saltoun, and myself. I do not believe that Amendment No. 68A is relevant to this discussion. In principle I strongly support Amendment No. 51. I recognise that it relates to people who live in tied cottages. Amendments Nos. 53 and 75 relate purely to agricultural workers. Nonetheless Amendment No. 51 provides for others who, under the requirements of their duties, live in houses appertaining to their employment.
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Under the rating system a property occupied for agricultural purposes by someone employed or engaged in agricultural or related activities was valued by the valuation officer at the agricultural rate. That was less than the normal domestic rate. Amendment No. 53 suggests that such a property, if accepted as being occupied for agricultural and related purposes, shall be valued at half its value. Some might feel that that provision is too generous. But we are discussing a principle.
My noble friend Lady Blatch was good enough to write to me on 17th January. I wish to quote from the letter because I believe that the thinking is misguided. She said:
"It would not be fair if we were to make special arrangements for people whose homes were tied to their jobs, or for properties which are in agricultural use, if that meant that someone else in an otherwise identical house (perhaps a pensioner with an even lower income) were placed in a higher band and so paid more council tax".
With respect to my noble friend, that argument is flawed. There is provision in the Bill for rebates and reduction in the amount of tax payable by those on a lower income, pensioners and so on. Therefore I put the argument the other way. An agricultural worker may live in a very good house on an estate or farm. Employers try to give their employees the best possible accommodation. It is likely to be in excess of what the employees would be able to afford if they had to buy or rent their own property. By giving the best possible accommodation one has the best chance of retaining one's valued and skilled staff. It does not seem fair for those employees to be charged a higher rate of tax than would be payable by a domestic resident.
I do not wish to plead the cause of poverty for farmers. The noble Baroness is right. The amendment relates to tied cottages. However, farm incomes have fallen by an average of 17 per cent. this year. The industry is not in a healthy position to take on extra, rather onerous charges. I hope that when the Minister replies he will bear that factor in mind. The state of agricultural wages is, and always has been, geared to the fact that employees occupy a house rent and rates free. If the occupants have to pay the council tax, or the employer has to pay it for them—we shall discuss that at a later stage—it does not seem entirely fair that the rate at which they pay the tax should be the same as the domestic rate.
The argument may be that it is up to the agricultural industry—the agricultural wages board, the NFU and so on—to gear the wages of employees so that they take account of their outgoings. I sincerely agree with that argument. When we discussed the poll tax, I hoped that the wages of agricultural workers would be increased fairly substantially to take account of the fact that they had a personal charge to pay which they did not have to pay previously. Unfortunately, that has not happened and, so far as I can see, it will not happen. Unless and until it does the amendments ought to be considered and taken on board by the Government.
7 p.m.
Lord Stanley of Alderley: Amendment No. 103 tabled in my name is grouped with this amendment. Therefore, it might help the Committee if I tried to explain it. The amendment addresses much the same problem but is somewhat different and tackles a wider set of problems.
The classic example of the problem that my amendment addresses is that of a period farmhouse in a highly sought-after area. If the property were offered on the open market it would fetch a very high price and therefore the listing officer would be forced to put it in a high band. As in this case the house must be occupied as part of the farmer's job—indeed it might be a vicarage in which the parson has to live—that would be plainly unfair as has already been mentioned. The high band would not reflect the income and wellbeing of those individuals. Indeed, Ministers have written to say that:
"this will mean that in areas where there is a demand for farmhouses by people who are not farmers any increase in the value of a farmhouse over what a farmer might expect to pay in the context of his ownership of the entire farm will be ignored".
Although I should not have been capable of such lucid phraseology it implies that the Government are prepared to accept that such properties should be placed in a lower band. However, there is nothing in the Bill to provide for that. For instance, does the assurance apply only to farmhouses? What about the clergy?
In order to clarify the position my amendment would, first, ensure that those living in houses tied to their work have their council tax fairly valued, be they farm employees, clergy or policemen and not only farmers. Secondly, my amendment would ensure that those living in tied houses which do not have an agricultural restriction on them are charged council tax at the same rate as a similar property not so restricted. Perhaps the property was built before the restrictions came into force. In both cases the property is tied to the job.
Assurances were given on 20th November 1991 by my honourable friend Mr. Portillo to my honourable friend Emma Nicholson in the Standing Committee of another place and appear at cols. 217 to 219. However, my honourable friend's assurances, which of course I welcome, were not spelt out. Therefore, the Committee will note that the amendment puts meat on the bones of my honourable friend's assurances that such properties will be devalued by the listing officer, by stating that the listing officer must assign the property to a lower band.
Being of a suspicious nature it occurred to me that it would be possible for my honourable friend's assurance to mean nothing if the listing officer merely devalued the property from the top of the band to the bottom of the same band. I am sure that was not the intention of my honourable friend. Therefore, I hope that my noble friend will be able to accept this necessary clarification.
The Earl of Balfour: If a property is let to a tenant who has security of tenure it is bound to be valued less than if it were available on the open market because it
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would not be able to be sold in the ordinary way. Under the groupings of the old rating system the owner-occupier was rated highest. Then came the private tenant, then the local authority tenant and finally and lowest the tied house. There have always been a number of extremely important tied houses in the public sector; for instance, those of hospital caretakers, janitors in schools and so forth. Such a house should not be valued as though it were a privately-owned house in its own right. I have no doubt that the provision may be made by regulations. However, it needs to be at least introduced within legislation in order to satisfy everyone who must deal with the Bill, be it a local authority or an individual.
Lord McIntosh of Haringey: The noble Earl has raised an important point. We are concerned not only with agricultural tied cottages but with all tied accommodation. The Government must explain how the reduction in the value of the property due to the fact that it is connected with employment, whether as that of a janitor or agricultural labourer, is reflected in the valuation. I suspect that they will say that the matter must be taken to appeal because I do not see in the Bill any provision under which such a restriction can be taken into account on the valuation that is proposed, and certainly not on the crude and makeshift valuations which are occurring at the moment.
That is the answer that must be given and not that there should be special treatment for tied accommodation. I hope that the Government will resist any amendment which encourages farmers or anyone else to pay too little because they are providing tied accommodation. Such a provision would encourage tied accommodation itself. We must make a distinction between the value of the property, which would have to be dealt with in the valuation or by appeal on the valuation, and the income of the person concerned, which would have to be dealt with by rebate. I do not believe that on the face of it we can give our support to these amendments.
Lord Monson: It is a pity that so many amendments have been grouped together because they are not all the same. It would have been better to take separately, for instance, the amendment tabled by the noble Lord, Lord Stanley. Of the various amendments his is better in most respects, although I have a qualification to make. While I consider that paragraph (a) is totally worthwhile and meritorious I am not sure about paragraphs (b) and (c), for the reasons mentioned by the noble Lord, Lord McIntosh. When people are obliged to live in accommodation by virtue of their employment—for instance, caretakers, janitors, lighthouse keepers, some foresters, some full-time chauffeurs and some farm workers —there is a case for accepting the type of proposal that has been made. However, in cases where the accommodation is provided as a perk, has all the amenities and is not isolated nor convenient in any way, there is no particular case for giving favourable treatment. As was said by the noble Viscount, Lord Mountgarret, it

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would be better to pay people more money and allow the employees to stand on their own feet—a good Thatcherite principle—and pay their own tax.
Lord Monkswell: I rise again tonight to speak about fairness. The amendment that we are discussing raises two problems. First, it gives power to the Secretary of State and, secondly, it introduces the concept of taxing people differently depending on their employment. We should reject the amendment for those two reasons. It will be seen to be unfair, and it will be unfair, to tax people at different rates just because of their employment. Further, it gives power to the Secretary of State to do this.
I hope that the Government will resist this amendment. I am sure that they would not wish their Secretary of State, or far less our Secretary of State when we come into office, to have to face the criticism that a decision of his or hers is going to result in unfair taxation. Effectively some people will be taxed more than others because of their employment, and that surely is wrong.
Viscount Mountgarret: I must make one point on what the noble Lord has just said, and that was that it would be unfair to treat people differently by nature of their employment. The Government have already taken on board the fact that clergy will not pay a council tax if it is deemed that the church itself is in occupation of the vicarage. The church or diocese, or whatever the appropriate fund is, will pay. They will be liable for this tax and not the incumbent.
We have already got an anomaly, if indeed it is an anomaly. People have to occupy their properties for the betterment of the performance of their duties, and their pay is structured to relate to the fact that they occupy those premises, in the old fashioned term, rates and rent free. It seems unfair for those people to suddenly find—well, it was unfair that they should have to pay their poll tax—that the council tax should be based on the value of that property when their occupation of it is necessary for the carrying out of duties to which that property is related.
Lord Stoddart of Swindon: I have no sympathy with these amendments at all. If we are talking about a property tax we must try to protect the integrity of the property base. If you suddenly introduce special properties which shall go outside the normal valuation process, then you interfere with that integrity. The noble Viscount, Lord Mountgarret, instanced the farm worker who might live in an attractive farmhouse. Because that is so does not reduce the value of the farmhouse as a desirable property. There is no reason why the value should be reduced because a particular person lives in it; but that is what he seems to be seeking to do by his amendments.
There are better ways of dealing with the property rather than undermining what I believe to be the integrity of the taxable base. First of all, if the income of the person occupying the desirable property is of a given level, he will be able to claim from the state. If the income of a person is above the state benefit level, then it is up to the employer to ensure that his
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employee should pay any additional council tax by virtue of the fact that he occupies that property because it is essential for him to do so for his job. That is the answer that the Government ought to give. I hope that that is the answer that the Government are going to give. If they do I shall find pleasure in, for once, supporting them.
Lord Monk Bretton: I feel that there is every justification for particularly the amendment of my noble friend Lord Stanley. This is really the position that always existed. I cannot believe that it was wrong that in the old days the tied cottage was given certain reliefs under the old rating laws. That situation should be preserved, and it is well justified. The properties that I am talking about are in fact worth less because they are tied to land than they would be if they were not tied to land.
If we are to be able to look after land and to continue agriculture there is need for a certain amount of this kind of accommodation. It will not be possible to look after the land without this type of accommodation. I hope I make that point clear. But the question to which I and my noble friend want an answer is, what is the lister going to do under the valuation proposals in this Bill?
7.15 p.m.
Lord Strathclyde: This has been one of the most interesting debates so far on this Bill. No doubt it is a prelude to many more that we will have on this subject. I am grateful to the noble Baroness, Lady Hamwee, for raising it, and to my noble friends Lord Mountgarret and Lord Stanley of Alderley. I fully understand the difficulties that my noble friends have with the current state of agriculture. As an agriculture Minister I know the problems that that industry is going through at the moment, but I am not at all convinced that creating another special case for agriculture is the way to deal with that problem.
My noble friend Lord Mountgarret talked about the principle involved, and that is what we must discuss now. I was slightly confused by the speech of the noble Lord, Lord McIntosh. I was not sure whether he was for or against the principle of allowing people in certain occupations to have reductions in the council tax.
Lord McIntosh of Haringey: I am sorry that I did not make myself clear. I agree with my noble friend Lord Stoddart that the integrity of the tax base has to be preserved. If there are special needs that are reflected in the value of the house, then that fact should be reflected in the valuation. If they are in an individual's income then they should be reflected in rebates. But there should not be special treatment for any one group.
Lord Strathclyde: I am grateful for that clarification. One thing that noble Lords opposite have failed to understand is that one of the reasons why tied cottages have been so important in recent years is that the socialist legislation governing the Rent Acts has meant that people had to have tied cottages, otherwise employees would have security of tenure often for

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many generations, and that has been one of the difficulties in housing in the rural areas. Amendments Nos. 53 and 75 propose that such homes should be registered with the local authorities.
Lord McIntosh of Haringey: Would the Minister allow me to intervene? He should not reject our support when we are giving it to him, by misrepresenting history. After all it was a Labour Government who freed up tied cottages by providing a requirement that those concerned could be rehoused in local authority houses. It was the Labour Party that in fact attempted to deal with this problem. Conservative Governments have never attempted to do so.
Lord Strathclyde: The point is that if you had an entirely free market in the private rented sector you would not need tied cottages. That is true. If there was freedom for people to come and go in private rented accommodation, then the position could change.
Amendments Nos. 53 and 75 propose that such homes should be registered with the local authority, and their value for council tax purposes should be halved. Amendments Nos. 90 and 127 provide for the removal of registration. This entirely overlooks the nature of the exercise, which is one of placing properties in bands and not ascribing an exact value to them.
Amendment No. 103, tabled by my noble friend Lord Stanley, proposes that properties occupied in connection with agriculture should be assigned to an unspecified lower valuation band than would otherwise be the case. Amendment No. 51 would oblige the Secretary of State to establish an additional band for properties where residency is tied to the occupier's employment.
My noble friend Lord Stanley talked of the agricultural restriction. The point is quite plain. Where an agricultural restriction exists it will have a material effect on the value of the property. Depending on what the valuation is, it may not affect the banding in which it is placed but it will have an effect on the overall market value. Where an agricultural worker lives in a house with no agricultural restriction, then it is right that that market value is the one that is most appropriate to fit into the banding. If a farmer is willing to put his agricultural worker in a splendid house, in the best possible accommodation, as my noble friend Lord Mountgarret said, then it should surely be for that farmer to pay for the increased expenditure of his worker. That would be the right way to deal with the problem.
My noble friend Lord Mountgarret made a comparison with the Church. My noble friend Lord Howe will later deal with amendments relating to the clergy. The essential difference between that and what we are dealing with here is that the Government have reached an agreement with a central authority, the Church, that the Church will be paying the council tax of all its vicarages in one go. Nobody is being excused the payment of the council tax. That approach is not possible when one is dealing with thousands of individual farmers.
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The amendments seek also to provide that payments made by an employer in that way should not count for income tax. Income tax is a matter for my right honourable friend the Chancellor of the Exchequer and not a matter for this Bill. Nonetheless, I know that he is already giving careful consideration to the income tax implications of the council tax but, as noble Lords will be aware, in the context of changes which are not due to take place until the 1993–94 fiscal year.
As I said, I feel that the biggest problem with the amendments is that the principle is wrong. The problems arise from the difficulties currently affecting the agricultural industry. It is through those structures that we need to find solutions to the problem and not by these provisions.
In the light of that explanation I hope that the amendment will be withdrawn. I suspect that it is a matter to which we shall return on Report. I look forward to that occasion.
Lord Stanley of Alderley: Before the noble Baroness replies perhaps I can make one or two points that may be helpful. As I understand it, my noble friend says that there is no need for a special arrangement for a tied house in a lower band because the listing officer will already have taken account of the matter when valuing the property. I hope that I understood him correctly. If my noble friend is saying that it will apply to the farm house—certainly letters from Ministers have said that—does it apply also to the rectory and the tied cottage? As I understand it, if it is a tied house, the listing officer will put a different value on it than if it were free.
If that is what my noble friend is saying, I may not be so hopelessly, dreadfully sad. I am not sure that he is saying that. That is, however, what I am seeking to persuade him to say. I am not sticking to my amendment as such. We await what my noble friend will say when we come to my Amendment No. 110. I hope that the noble Lord, Lord McIntosh, will look at that amendment carefully. It brings out the point that he raised concerning appeals. It ties in, and I am sure that we can reach some agreement.
A point which I did not understand and which no one else raised is the question of the two farm workers living in identical accommodation one of whom has an agricultural restriction on his cottage and the other does not. My noble friend tells me clearly that the one with the agricultural restriction on it could well have a lower price than the one without. Therefore, one farm worker—it is easier to deal with farm workers—living in a restricted cottage will be in a lower band than the man next door receiving the same wage whose cottage is not restricted. That may not be too bad, but perhaps I can remind my noble friend that many cottages were built before the agricultural restrictions came in. I am therefore not happy about that and I hope we shall return to it on Amendment No. 68A.
My amendment has not yet been called and I have a right to have it debated again on Monday and indeed on Report. I do not know whether my noble friend wants to reply to my first point regarding how the valuation will take account of a tied house.
Lord Strathclyde: Let me clear up the two points. First, with regard to tied cottages, my noble friend did misunderstand me and I apologise if I did not make myself completely clear.
There is no reduction in market value simply because a house is tied. A tied cottage can become vacant within a short time. Therefore, it is valued on the basis of its market value. Where there is an agricultural restriction or another legal restriction which affects the full vacant possession market value, then clearly the value is reduced.
That brings me to the second point of my noble friend. There is a possibility that two identical cottages may exist side by side, one with an agricultural restriction and one without. The agriculturally restricted cottage could be in a different band. My noble friend makes a good point. Some of the cottages may have been built before there was an agricultural restriction. I am happy to look at that. But I would not want to give my noble friend any hope that we will be willing to change our policy.
Viscount Mountgarret: Before my noble friend sits down perhaps I may make a point. He referred to the possibility that a lower value house could suddenly become that much more valuable if it were no longer used for agricultural purposes. In that respect perhaps I can refer to Amendment No. 127—I did not speak to it earlier because I did not want to prolong the debate —which provides for the eventuality of that happening. If it were to happen, then the house would revert to the normal banding. I hope that my noble friend will bear that point in mind.
Baroness Hamwee: It has been an interesting and wide-ranging debate. I understand the point that the Minister made regarding the distinction between a tied property and a property which has a specific restriction on it. I hoped that we would have more help with regard to valuations as a means of alleviating the problem we identified yet again—that of ability to pay.
Amendment No. 51 does not simply deal with agricultural workers. There are many other examples of jobs such as caretaking and, perhaps school teachers and park keepers. The list is no doubt longer. The Minister said that it was a matter to which we may return. I hope that we shall return to it on Report, not only at the instigation of those on these Benches and Back-Benchers on the Government side. The issues raised are clearly worrying and it does not appear to me that the questions asked have been satisfactorily answered. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Howe: I beg to move that the House do now resume. In moving the Motion I suggest that the Committee stage on the Bill be resumed at 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

European Parliamentary Constituencies (England) (Miscellaneous Changes) Order 1991
7.30 p.m.
Viscount Astor Viscount Astor rose to move, That the draft order laid before the House on 4th December be approved [6th Report from the Joint Committee].
The noble Viscount said, My Lords, there are two draft orders before you this evening; of these, one affects two European parliamentary constituencies in England and the other seven European parliamentary constituencies in Scotland.
The purpose of the two orders is the same—to ensure that the next European parliamentary elections are fought on the appropriate boundaries. The European parliamentary elections Act 1978, as amended, requires that European parliamentary constituencies, or EPCs as I shall call them, are made up of whole parliamentary constituencies. When the Parliamentary Boundary Commissions have completed a review of parliamentary constituencies and an order is made implementing their recommendations, the commissions are obliged to consider what effect the changes in constituency boundaries have on EPC boundaries and to conduct what is called a supplementary review of the EPCs concerned.
The last changes to EPC boundaries were made in February 1989 before the European Parliamentary elections in June of that year. Since then, both the English and the Scottish Boundary Commissions have carried out interim reviews which affect the boundaries of European parliamentary constituencies. The purpose of these orders is to realign the EPC boundaries with the boundaries of the parliamentary constituencies which comprise them.
The background to the English order is as follows. In February 1990 the English commission completed an interim review of the constituencies of Buckingham and Milton Keynes. This has resulted in alterations in the boundaries of parliamentary constituencies which also affect two EPCs, Bedfordshire South and Oxford and Buckinghamshire. In that review the creation of the new parliamentary constituency of Milton Keynes South West involved the transfer of three wards from the Buckingham constituency into the new constituency. The number of electors involved was 16,523.
The commission's provisional recommendation was that the European parliamentary constituency boundary should be redrawn to include the whole of the Milton Keynes South West constituency within the Bedfordshire South EPC. Hence the whole of the borough of Milton Keynes would be within one EPC. In consequence of this the commission also recommended that the new EPC be named Bedfordshire South and Milton Keynes. Not a single representation was received objecting to the proposed new boundary.
There were, however, several objections to the proposed name of the Bedfordshire South and Milton Keynes EPC and this necessitated the holding of a

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local inquiry. This was held on 4th April 1991, presided over by Mr. Michael Harrison QC, as assistant commissioner.
At that inquiry the assistant commissioner considered both the current and proposed names for the EPC and a number of alternatives that were suggested. He recommended that the name North Chilterns was the least unsatisfactory. His recommendation was accepted by the commission and this is the name proposed in its report and in the order before your Lordships' House today.
Turning now to the Scottish order, this simply gives effect at the European level to the adjustments to parliamentary constituency boundaries which your Lordships approved on 25th October 1990. The source of these adjustments is the slight alterations which are made from time to time to the boundaries of local government areas. It is important to keep all of these boundaries in alignment with one another but on this occasion only some 500 electors are affected across the seven EPCs and the proposals have generated no comment from either Members of Parliament or from the general public.
These orders implement the recommendations of the two commissions in full and substitute the new EPCs for the existing ones. Once the draft Orders in Council are approved and made by Her Majesty in Council, the new boundaries will come into full effect at the European parliamentary election to be held in 1994. I commend these orders to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 4th December be approved [6th Report from the Joint Committee]. —(Viscount Astor.)
Lord Stoddart of Swindon: My Lords, I am not going to oppose these orders. The reason is that they are based on the good and well-tried British system of elections; that is, that the elections will be based on parliamentary constituencies and that the Member will represent real people in the European Parliament. That is unlike some other European countries where the representatives are party hacks rather than direct representatives of the people. Therefore, I shall not oppose the orders tonight, although the noble Viscount may know that I am not in favour of a directly elected European Parliament.
I voted against the Bill when it came before the other place. I resigned from government because a three-line Whip was imposed which I was not prepared to obey. I am not in favour of a directly elected Parliament in Europe. If there were to be a Parliament at all, I would very much prefer that the representatives there, as was previously the case before direct elections, were responsible to the national parliaments which could keep an eye on what they were doing and see that they did not become too uppity. At the moment some of the representatives are getting a little uppity. Some of them believe that this Parliament and the other national parliaments should be subordinate to the European Parliament.
I believe that I have already made the point that our constituency system is a very good one. It makes sure that the representatives in the European Parliament represent real people. The reason why I am speaking
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tonight is that I have a very nasty fear that before long either the European Parliament or the Commission will say, "It is not good enough that the United Kingdom should elect its representatives to the European Parliament by one method and other countries elect them by another".
The European Parliament may very well seek to impose on this country a standard method of electing people to the European Parliament by virtue of proportional representation which is perhaps not based on the representation of real people. I hope I can have the assurance of the noble Viscount that the Government will resist that to the bitter end. I doubt whether the noble Viscount will be able to give me that assurance, but it would be nice to have it. It is an interesting point to raise. I support the orders for the reasons I have mentioned. Long may these orders continue to be brought before another place and this House.
Lord Underhill: My Lords, having heard the excellent explanation for the two orders by the noble Viscount, it is not my intention to say much at all. I am very pleased that my noble friend Lord Stoddart supports the orders, but, having said that, I do not necessarily support what he has said on other matters. Tonight we are dealing with the very simple matter of two supplementary reviews which refer to England and Scotland and are in accordance with the European Assembly Elections Act 1978.
As far as the Opposition are concerned we want to be satisfied that there is nothing at all in the orders which in any way affects the position of the 1978 Act. I am glad that the noble Viscount has stressed that the number of constituencies in the different parts of the United Kingdom remains unchanged as far as the European elections are concerned and the fact that the constituencies must comprise whole parliamentary constituencies. I am satisfied about those matters.
We welcome the orders because they comply with the 1978 Act and carry out the provisions that we require not only as regards the redistribution of European constituencies but all constituencies. I hope that approval is given to the two orders.
Lord Harris of Greenwich: My Lords, I have a slight feeling that the noble Lord, Lord Underhill, who has just spoken would not wholly associate himself with the remarks of the noble Lord, Lord Stoddart of Swindon. I have news for the noble Lord, Lord Stoddart of Swindon. I fear that he will not get a wholly satisfactory answer to the question that he has put to the noble Viscount.
These orders are entirely reasonable. I am tempted to follow the noble Lord, Lord Stoddart of Swindon, down the interesting avenue that he was exploring a few moments ago, but I shall resist that temptation. The orders are perfectly reasonable and we support them.
Viscount Astor: My Lords, I am very grateful for the support for the orders from the noble Lords, Lord Underhill and Lord Harris of Greenwich. All I have to say to the noble Lord, Lord Stoddart of Swindon, is that we have heard a great deal recently about the

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unity of view of the Labour Party on Europe. If his views demonstrate the unity of view in the Labour Party, I hate to think what the views would be if there were to be any disagreement.
On Question, Motion agreed to.

European Parliamentary Constituencies (Scotland) (Miscellaneous Changes) Order 1991
Viscount Astor: My Lords, I beg to move.
Moved, That the draft order laid before the House on 25th July be approved [28th Report from the Joint Committee Session 1990–91].—(Viscount Astor.)
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.40 to 8.30 p.m.]

Local Government Finance Bill
House again in Committee on Clause 5.
Baroness Hamwee Baroness Hamwee moved Amendment No. 52:
Page 4, line 27, at end insert:
("(5A) An order made under subsection (4) above shall not be valid unless it is made on or before 31st March in the financial year before the year preceding the year in which the change is to take effect.").
The noble Baroness said: This is a short and, I hope, simple amendment. There are provisions in the Bill for the Secretary of State to substitute different proportions from those set out in Clause 5(1) and to substitute valuation bands other than those set out in Clause 5(2) and (3). That has implications in a number of areas. Administrative matters also arise in reassessing properties and amending databases. Computer software may need to be dealt with and, on a separate matter, the distribution of grant may be affected. It is not unreasonable—this matter was raised with me by CIPFA—to suggest a date after which an order cannot take effect at the beginning of a financial year; in other words, to give those concerned an opportunity to consider the implications and to act on them. The amendment proposes a minimum of one year. I beg to move.
Earl Howe: If the amendment were accepted, notice of at least one full year would need to be given before the ratio establishing the relativity of bills in each valuation band could be changed. I can tell the Committee that the Government do not intend altering this ratio. As my noble friend Lady Blatch explained to the Committee, the 3:1 ratio between the highest and lowest bills achieves the right balance. It is fair to all.
However, if the Government were minded to alter the ratio, we would of course do so in good time. In particular, we fully understand that local authorities would need to be given time to absorb the change. I entirely take the noble Baroness's point about
1018
software. I am bound to say, however, that I am confident that authorities would not need as much as a year's notice. One would have to take a view at the time.
The amendment would also require notice of at least one year before different bands were introduced. I have to tell the Committee that a year might not be long enough. The valuation office has been planning for the valuation now in progress since April last year, when our intention to introduce the council tax was announced. It had two years' notice. Few people suggest that the valuation could have been completed in less time.
As the Committee knows, one of the attractions of banding is that frequent revaluations are not needed. Even though property values may have changed, a large number of properties would be in the same band both before and after a revaluation. That is an important point which bears repeating. Banding means that revaluation does not affect all dwellings. Only when there has been a significant, long-term shift in relative house values would a general revaluation be needed. Local taxation should not be subject to short-term fluctuations in the property market. Our proposals ensure that it is not.
There may be a need for a general valuation and that is why the Bill provides for one. If that were the case, it would be announced in good time. I therefore suggest to the noble Baroness that the amendment is unnecessary.
Baroness Hamwee: I thank the Minister for that answer. It was worth raising the matter and having those assurances on the record, not that I would doubt the good faith of the Government or indeed of any government. All governments would want to see a provision implemented in a moderately sensible way when it came down to that kind of detail.
Lord McIntosh of Haringey: Before the noble Baroness withdraws the amendment, I hope that she will think again about that statement. I have great misgivings about the good faith of all kinds of governments. The noble Baroness may have such misgivings as well.
Baroness Hamwee: Yes, I do. I had not intended to be quite so controversial with that comment. However, one would hope that any government would understand the practical matters that arise.
With regard to valuations, the amendment does not suggest that there should be notice of just a year. It suggests at least a year—in the words of the amendment, on or before the preceding 31st March. However, on the basis of the assurances given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 53 not moved.]
Clause 5 agreed to.
Clause 6 [Persons liable to pay council tax]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 54:
Page 4, line 39, leave out ("a resident") and insert ("an occupier").
The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 55, 56, 58, 60 and 67. This is intended to be a helpful amendment. There was quite a considerable debate in Committee in another place on this subject. I was not convinced from reading it that the Government have given an adequate reason why they should wish to abandon the definition of occupation, which is well established over 25 years under the General Rate Act 1967, in favour of a definition of residence.
When they abandoned the definition of occupation for the purposes of the poll tax considerable difficulties arose. One of the definitions of residence was whether the person concerned kept his or her possessions in the home. In the leading case of Bradford v. Anderton—Anderton being a merchant seaman who claimed that his residence was his merchant ship—it was found that his residence was his home in Bradford because he kept his possessions in the home. However, in another case which did not reach or need to reach the courts the same kind of test was applied to Terry Waite, who after all kept his possessions in his home in Lewisham at the time that he was a hostage in the Lebanon. Lewisham Council decided—I am sure correctly and not least on humanitarian grounds—that it would not be right to charge him for the poll tax during the time that he had been a hostage in the Lebanon. Therefore the definition of keeping possessions in the home does not really work.
In the absence of a clear definition of a main or sole residence there is not an adequate definition. I fear that the Government are in danger of prolonging the rather confusing legal situation that arises over the definition of a residence, whereas the definition of occupation has been well established for many years, is not subject to legal doubt and could save the Government and therefore the taxpayer a great deal of time and money. I beg to move.
Earl Howe: We have considered this matter carefully and discussed it at length with local authority practitioners. Local authorities saw advantage in the use of the word "occupier" since the term, although nowhere defined in statute, had been the subject of many judicial decisions concerned with rateable occupation. We concluded, however, that its use in the context of the new tax would not produce sensible results in all cases.
Rates were, as the noble Lord, Lord McIntosh, reminded us on the first day, a tax on the beneficial occupation of property. The council tax is a tax in respect of chargeable dwellings which takes account of the number of residents. As the Bill itself depends on residence, it would be strange to attach liability to people on the basis of who would be liable under the law of rateable occupation. To be sure, the two concepts are not wholly dissimilar. Thus the order in which residents are to be liable under Clause 6(2) is similar to the way in which it was the paramount occupier who was liable to rates. However, there are cases where the person who would have been the rateable occupier is not a resident of the dwelling: for example, certain dwellings owned by charities, cases
1020
where an employee is provided with accommodation for the better performance of his duties and some dwellings where the residents were licensees.
In such cases where the dwelling is the sole or main residence of a person, it is right that he or she should be liable. Therefore, it would be necessary in any event to modify the doctrine of rateable occupation to bring that about. But rather than change an old-fashioned doctrine to make it fit, it seems sensible to provide a modern basis of liability for a modern tax.
In the majority of cases the authority will send a standard bill to the household. That bill will be paid. The liable person or persons will be the residents of that property. That is the common-sense approach. In the case of a household with one resident adult which is entitled to a discount there can be no doubt who the liable person is. There can be no difficulty in identifying him or her in those cases. In other cases it will be no more difficult to identify the liable person than identifying the person with the paramount interest under the rates. When there is no resident we propose that it will be the owner who is liable. Authorities will have to take steps therefore to identify the owner of the property. But that is no more difficult than was the case under the rates where the owner of unoccupied property was also liable.
Our proposals provide local authorities with the simplest and easiest way of assessing liability. We have set out clearly the order in which liability is to be assessed. It will be the owner-occupier or the tenant where such people live in the property and the owner where there is no resident. Everyone understands the question, "Where do you live?". But I doubt whether people would readily know whether they were in rateable occupation of a dwelling.
I must emphasise once again that the council tax is not the rates. It is, therefore, not necessarily appropriate to use the same criterion on which to base liability. Rateable occupation is a rather old-fashioned concept for an old-fashioned tax. I would emphasise that we have reached the conclusion that residence is a sensible basis for the council tax after very careful consideration and advice from those with detailed knowledge of such matters. Therefore, I hope that the noble Lord will feel able to withdraw the amendment.
Lord McIntosh of Haringey: I am sorry to say that that sounds to me very much as if the Government are putting ideology—that is, their hatred of the rating system—ahead of common sense. Rateable occupation did not cause difficulties. There were no significant problems with definition, and if there were they were resolved a long time ago, whereas the concept of residence, which the Government have taken from the poll tax, has caused enormous difficulties and is continuing to do so because there are tribunals throughout the country giving different judgments on a day-to-day basis.
When the Minister says that using the concept of occupation would not produce sensible results, he is flying in the face of the evidence about the way in which courts and tribunals are interpreting the law. I believe that the proof of that is to be found in the Bill. The noble Earl said that Clause 6(3) gives a series of

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definitions of what is meant by a "resident"—so indeed it does; and in a subsequent amendment we shall have a discussion on that matter. However, it is a very complex series of definitions. It does not resolve some of the issues to which I have in a very short speech drawn attention. The fact that it is not adequate is recognised by the way that the Bill provides that billing authorities will have the ability to identify an individual to be charged the council tax in cases, for example, of houses in multiple occupation. Again we have amendments to cover that point. But that would not be necessary if the definition of "resident" was clear and unambiguous. It would not cause the difficulties which I have anticipated and which the noble Earl has denied will happen.
I do not think that there is any ideological animus on our side in what we propose, but I very much fear that an ideological animus against the rates is leading the Government astray on a matter of sheer practicality of administration.
8.45 p.m.
Lord Jenkin of Roding: Before the noble Lord sits down perhaps I may make a speech. I make that plea because I do not want to be charged on this occasion with having interrupted a speech before the noble Lord had finished.
Noble Lords: We are in Committee.
Lord Jenkin of Roding: I am most grateful.
It is interesting to note that before it acquired its name the community charge was known in Whitehall as "the residents' charge". It was eventually renamed because it was felt that the difficulty of "residents' charge" was whether it was "residents" or "residence" because manifestly it was not a charge on a residence; it was a charge on a resident. It was felt that that could have given rise to much confusion. However, after I left the Government it was changed to the community charge.
When charging a person it is quite different, as my noble friend Lord Howe said, from a charge on rateable occupation of a property. In cases—and I am rather persuaded by my noble friend's argument—where there would be no liability for the council tax but there would have been a liability on the grounds of rateable occupation, it seems somewhat strange to call in aid a term from the rating legislation—namely, the "occupier"—because then one would presumably need to have a number of exclusions in order to ensure that it would not have the same meaning given to it by the courts in relation to the rating legislation.
One faces an inevitable problem here: whenever such terms are first used they are for some time the subject of judicial interpretation. However, that gradually settles down; the courts make the meaning clear, define the parameters and there is no more problem. If you introduce a tax which is based on an entirely different principle it should take a new name. Of course, as the noble Lord, Lord McIntosh, described, there have been many cases where the courts have been asked to decide whether the issue falls within the term "resident". Eventually—and it
1022
may not take as long as it did for the word "occupier" as regards the occupation of property—the definition will settle down and we shall be back to a position of clarity.
In the light of some of the difficulties, perhaps my noble friend may be able to say that we can add a definition which will make the position clearer. I am not sure whether the fact that one leaves one's house with one's belongings in it is necessarily a test. As I understand it, different decisions have been or could be taken on the issue. It seems to me that this is entirely appropriate where you are having a tax primarily on people, though it be calculated by reference to one's property. I see that the noble Lord raises his eyebrows, but it is primarily on people. After all, taxes are paid by people, not houses. It is, as was described on the first day of Committee and on Second Reading, a tax with a property and a personal element. However, it is a tax on a person who resides in a house and who is therefore a resident. I think that the word is right.
When my noble friend looks again at the matter between now and Report stage, I hope that he will consider whether he could perhaps circumvent some of the possible court cases which may arise by adding a rather clearer and more limiting definition of what is actually meant by "resident". It is certainly not the occupier because that has a specific meaning given by the courts. If the word "occupier" is put into the legislation it would require a new definition with other exclusions in order to ensure that the tax would not apply in circumstances for which it was not intended.
Lord McIntosh of Haringey: I am grateful for those historical insights, but the noble Lord bases his argument upon the assertion that every new definition takes some time to settle down in judicial interpretations. The Government are choosing to reject a definition which has already settled down—it was introduced 25 years ago and has been adequately judicially interpreted—in favour of a definition which has not settled down, not merely because that part of the poll tax does not work, but because the poll tax itself does not work. The definition is contained in Clause 6(2). There are six parts to the definition in a hierarchy. It is not a simple definition, by any means.
The difficulties that local authorities will have will be to discover where in that hierarchy any individual falls, because, as the noble Lord, Lord Jenkin, rightly says, the tax is a mixture of a property tax and a personal tax. Clearly individual liability is a critical part of the tax. I do not see how, within that hierarchy of liability, local authorities will find out who is liable. In his reply, the noble Earl, Lord Howe, said that everyone knows where they live. All I can say is that the experience of the poll tax is that not everyone knows where they live, and even if they do, they will not say, and local authorities will not be able to find out. The replies are not adequate to the case that has been put which, as I said, is made without any political animus.
Earl Howe: The Government approached this matter with an open mind. We were not biased one way or the other. We were persuaded that the concept

1023
of a rateable occupier was so encrusted with outdated case law—for example, certain types of employees were deemed not to be the occupier when, under the ordinary meaning of the term, they were resident—that we felt that it was better to start with the term "resident" as the basis for the legislation.
Lord McIntosh of Haringey: Look at the difficulty the Government had with the farming lobby an hour or so ago! I do not believe that the problem has been resolved. I shall think again about this matter and read carefully what has been said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 55 and 56 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 57:
Page 5, line 1, after ("statutory") insert ("assured").
The noble Lord said: I should like to speak also to Amendment No. 68. The amendment, again, relates to the hierarchy of persons who are liable for council tax under Clause 6(2). What appears to be missing from that complicated hierarchy is a form of residence or occupancy—I cannot find a better word than that—which has become common after the Housing Act 1988, and that is an assured tenancy. The Government may say that an assured tenancy is covered by Clause 6(2) (e); in other words, by the fact that a person is a resident. When we are talking about other forms of tenancy I should have thought that it would have been as well to be explicit and to include assured tenancies which were introduced by the Government's legislation in 1988. I beg to move.
The Earl of Balfour: Is this not a case of where we are dealing with the old Rent Acts and the comparatively new Rent Acts? If I remember aright, the old Rent Acts were consolidated in 1968, and there, of course, the words "statutory tenant" are introduced. I am not sure that the word "assured" would fit in here. The matter is reasonably well covered by the words "a secure tenant" in the Bill. There are assured tenancies and short assured tenancies. They are different. An assured tenancy holds good for six months only, if that is what is wanted. It can hold good for 20 years. The categories need to be considered.
Lord McIntosh of Haringey: All I can say is that the noble Earl did not have the misfortune to sit through the Housing Bill 1988 to the same extent that I did. We had many debates on assured tenancies and shorthold assured tenancies, and I can assure him that the assured tenancy—dubious as we are about its security and political merits—is the common form of tenancy now for private landlords and housing associations.
The National Federation of Housing Associations is anxious that there should be explicit recognition of assured tenancies. It is not just a matter of definition or semantics, under the legislation as drafted it appears that in a self-contained dwelling there would be no adequate distinction as to liability between a lodger and an assured tenant. I cannot believe that that is what the Government want.
Earl Howe: I hope that I can clarify the issue to the satisfaction of my noble friend and the noble Lord, Lord McIntosh.
The amendments seek to include assured tenants, as defined under Part I of the Housing Act 1988, as one of the categories of resident on which liability for the council tax will be based.
Assured tenants are already included within the provisions of Clause 6. A tenancy under which a dwelling-house is let as a separate dwelling is an assured tenancy for the purposes of the Housing Act 1988, subject to certain exceptions. It may be either a fixed term tenancy or a periodic tenancy. A person who has such a tenancy has a leasehold interest in the dwelling and, if a resident, will therefore fall within Clause 6(2) (b).
There is separate provision in Clause 6 for statutory tenants under the Rent Acts because they do not have a leasehold interest in a dwelling. In addition, secure tenants under the Housing Act 1985 may have a licence only and not a tenancy. Statutory tenants and certain secure tenants would not therefore fall within Clause 6(2) (b) and are included in a separate category —Clause 6(2) (b).
I hope that the noble Lord will be satisfied with that explanation and will agree that the amendments are unnecessary.
Lord McIntosh of Haringey: I shall read that answer carefully, but no one should be under the illusion that this is a simple matter, or that the use of the term "resident" has resolved the issue. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 58 not moved.]
[Amendment No. 59 had been withdrawn from the Marshalled List.]
[Amendment No. 60 not moved.]
Lord Renfrew of Kaimsthorn Lord Renfrew of Kaimsthorn moved Amendment No. 61:
Page 5, line 10, at end insert:
("( ) No person who is a student, student nurse, apprentice or youth training trainee or who otherwise falls to be disregarded under paragraph 4 of Schedule 1 shall be liable to pay council tax on the grounds that he is a resident of a dwelling.").
The noble Lord said: The amendment was set down as a probing amendment at a time when this place had no inkling of what was intended for students. I was therefore greatly gratified when my noble friend Lord Strathclyde made the matter clear on the first Committee day. His observations were published in Hansard (cols. 830 to 832). I can well see that in one sense my amendment was inappropriate because the system under the Bill is to make dwellings rather than individuals exempt. Individuals may incur rebates, but not exemptions in that sense.
However there was at least a well-meaning point in the tail of the proposed amendment. One can imagine that a wealthy student might own a number of properties, and whereas it may be appropriate that the property that the student occupies should be subject to discount or that the property may be subject to exemption, that should clearly not apply automatically to other properties that that individual might

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own. So it was with great relief that we heard that there are to be regulations to exempt dwellings wholly occupied by students, I presume under Clause 4(3). It will of great interest to read the draft regulations. I look forward to seeing them in detail but, as I understand it, the student hostels, halls of residence and houses exclusively occupied by students will be exempt and that will be it. The Bill makes clear that when students live with non-students, the students fall to be disregarded and are, in a sense, invisible to the Bill.
However, as the noble Baroness, Lady Hollis, indicated, the problem arises in that the students may be invisible to the Bill but not to the landlord. That presents a difficulty, but it was made clear by my noble friend Lord Strathclyde that the difficulty was disregarded. He pronounced that whether or not the landlord charges them rent to make up what he pays in council tax depends on the relationship between the two; that is, between the landlord and the student tenants. It was a candid analysis of the situation.
It is worth pondering for a moment longer. We may imagine a landlord who occupies a house with four rooms available for letting. If two of the rooms are let to persons who are not students and two to students, it is likely that the landlord will decide to divide the council tax either by five or by four. It is much more likely to be four, so passing the burden on to his lodgers or tenants. He may well decide to divide the amount equally in four so that it falls equally on the students and non-students. So far as I can see, the present regulations say nothing about that. My noble friend Lord Strathclyde made clear that it was a matter for discussion between the landlord and the tenants.
I am not sure that that is entirely satisfactory. Perhaps I should have begun my remarks by saying that it is enormously satisfactory that students in halls of residence and students who are sole occupiers of dwellings will find themselves in premises which are exempt from the council tax. That meets a great part of the problem. I am addressing myself now to perhaps a relatively detailed point. The solution may well lie along the lines proposed by the noble Lord, Lord McIntosh, and others in Amendment No. 69. Perhaps the matter should be more extensively discussed under that amendment.
I wish to allude to the point because the Government have, to a significant extent, solved the problem for students. One should emphasise how satisfactory that is. The poll tax has not been a happy experience for students and I heard my right honourable friend the Secretary of State observe today in another context that it had not been an entirely happy experience for those trying to collect the tax from the students. So this is a happy circumstance.
One other point to throw into the discussion is what happens when a fair rent has been determined. Will the council tax be added to it or not? That point may also merit further discussion. In conclusion, I believe that the Government have gone a long way to meet the
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anxieties of those concerned with the burden of taxation on students. I am satisfied, although I feel that specific points still merit clarification.
9 p.m.
Lord Henley: My noble friend referred to Amendment No. 69 in the name of the noble Lord, Lord McIntosh. My noble friend Lady Blatch will deal with that; I merely refer to the remarks of my noble friend Lord Renfrew on Amendment No. 61. The Committee will know that the Government propose that all the people mentioned in the amendment—students, student nurses, apprentices or youth training trainees—will be entitled to the personal discounts. They will not add to the bill for such a property. However, we propose that in certain cases such people will be liable for the tax.
First, perhaps I may point out that my noble friend's amendment makes no alternative proposal, as he said. It suggests that these people should not be liable, but it does not suggest who should be liable. It is perfectly proper to put down such an amendment to draw out the logic behind the Government's proposals but I hope to show the Committee that the provisions in the Bill are logical and there is no feasible alternative.
If a student, student nurse, apprentice or YT trainee—that is, a discounted person—lives with one or more other adults the bill for the dwelling will be the same as if the discounted person were not resident. It will be one or more of the other adults, rather than the discounted person, who is liable for the tax in many such cases. For example, if a student lives with his or her parents, it will presumably be the parents who own or rent the dwelling, and hence it will be the parents who will be liable for the tax.
However, there will be some dwellings where the liable person is a discounted person. These will often be dwellings where one discounted person is the head of the household, or where the household comprises a number of such people.
I shall consider first a household comprising, say, an apprentice and his brother, where the apprentice is the tenant and hence the person liable for the bill, which will be 75 per cent. of the full amount because he is the discounted person. It may well be that he has a low income; in that case, he will be able to claim benefit of up to 100 per cent. of his bill. But if some amount remains payable after benefit, who should be liable to pay it? Should it be the brother, who may have no income of his own and may not be personally responsible for any other bills? Or should it be the apprentice, who pays the rent and certainly has some income? The Government have concluded that it should certainly be the latter—that is, that the general principles of liability set out in Clause 6 should continue to apply.
Let me now look at a dwelling occupied only by students, student nurses, apprentices or YT trainees. This would give rise to a 50 per cent. bill—that is, the property element of the tax only. The residents would be able to have this bill further reduced or even eliminated by rebates if they were on low incomes. Because most students cannot claim rebates, we have

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decided that any property where all the residents are students should be entirely exempt from the tax, as my noble friend said. I can assure him that draft regulations on the matter are already in the Library and were put there with the other draft regulations mentioned by my noble friend Lady Blatch yesterday.
In such a dwelling, there is no alternative person upon whom liability could be placed. It must be the discounted person who is held liable. But the Committee should remember that the amount for which they are held liable will reflect their entitlement to personal discount and rebates.
I turn to rents and what the landlord may charge for his various tenants, some of whom might be students and some not. I believe my noble friend Lord Strathclyde has said on a previous occasion that this must be a matter for the landlord as it concerns his contractual relationship with his tenants. We do not think it would be practical for the Government to insist in legislation on any alternative arrangement.
We accept that these are not simple issues, but the Government have considered them long and hard and we are confident we have reached the right solution. We are confident we have identified the only sensible alternative. I hope with that explanation my noble friend will feel able to withdraw the amendment.
Lord Renfrew of Kaimsthorn: That was a most helpful explanation. There are matters which perhaps could be explored further but no doubt that will occur in the context of Amendment No. 69. I am most grateful for my noble friend's helpful observations. I shall hasten to the Library to read the draft regulations. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 62 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 63:
Page 5, line 10, at end insert:
("( ) Where two or more people fall to be treated as jointly and severally liable under subsection (3) above and the persons concerned or any other persons managing the premises agrees, the levying or billing authority shall divide the liability for the council tax equally between the persons who are jointly and severally liable and send separate bills to each of them.").
The noble Baroness said: We are about to discuss a series of amendments on joint and several liability. Under the former rating system the concept of joint and several liability did not really exist although in practice the concept of beneficial occupation led, through a series of court cases, to concurrent responsibility of spouses for a property bill, that is the rates bill. The poll tax has not been a property bill but rather a bill that is levied per capita, whereupon the Government perversely invented the concept of joint and several liability between spouses. That concept has been deeply unpopular and has been considered unfair even within the logic of an unfair tax.
We are now moving towards a property poll tax. We are not at this point challenging the principle of joint and several liability for a property tax between spouses, or that of the property element between spouses. The council tax maintains the principle of
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joint and several liability not only as regards the property element within the council tax—that is 50 per cent. of the tax—but also as regards the two personal individual elements of 25 per cent. each. What is more, the council tax extends that provision from the spouses to any two people or more who occupy the same position in the hierarchy of liability, for example between brother and sister who are co-owners, or between two unrelated adults who are co-tenants who then each become responsible for the other's personal element of the council tax. We raised this issue on Second Reading and the noble Lord, Lord Strathclyde, kindly confirmed in a subsequent letter that our reading of joint and several liability was correct—perhaps unlike his brief at the time.
Each of the following amendments raises a slightly different issue but they all share the common aim of seeking to end joint and several liability for what is meant to be the personal element in the council tax. After all, even under the poll tax, the DoE practice note No. 16—we shall return to that—makes it clear that even between spouses joint and several liability would not normally be pursued where the defaulting partner had the money to pay but failed to do so.
The purpose of Amendment No. 63 is to seek that local authorities provide individual bills at the request of the residents, or the person who manages the premises, where two or more residents fall to be treated as jointly and severally liable. Under the poll tax individual bills were sent out even where joint and several liability operated between spouses. In so far as this tax contains a personal element—as Ministers opposite have been at pains to indicate—we feel the same principle should apply. That would restrict the right to individual bills to residents only of the same status, for example joint freeholders, three tenants sharing a flat and the like. That is certainly a simpler method. It is easier for both the local authority and the individuals concerned to know where they stand. So far as I can tell—I stand to be corrected by the Minister—it is largely financially neutral.
I wish to give one brief example of why this provision might be useful. Three strangers might respond to a newspaper advertisement in which rooms are offered in a three bedroom flat. They each have separate tenancy agreements with the landlord but they share the living room, kitchen and bathroom. The council tax bill is £300. There is no logical basis for the local authority to decide in such a case who should receive the council tax bill or be pursued for payment. The owner cannot be liable because in terms of liability he or she comes further down the hierarchy than the resident tenants.
It cannot be reasonable in those circumstances to expect one tenant to pay the bill and collect a share from the other two, particularly as they may be relatively unknown to each other. If there is only one bill, even if it is sent to a named individual, how will the council know which other residents are also tenants of the property? I believe the concept of joint and several liability will not work if there is no method for the council to discover who is liable.
This amendment proposes a simpler and more rational method for billing and collecting in such

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cases. It would simply split the bill equally between those residents who all had the same occupancy status, be that as tenants or as licensees. Each of them would be personally liable for the period when they were resident. Their names would be known to the council and they could be pursued for any arrears in the same way as any other taxpayer. The residents would divide the Bill. They would equally have separate eligibility for rebates because only the liable person can claim a rebate. Yet an amendment such as this would allow us to overcome some of the complexities of swinging from a discount or rebate on the first person to bringing into play the second adult low income discount with all its complexity.
On this side of the Chamber we recognise that the introduction of a second adult low income discount was an honourable move made in response to a problem in which the second adult might have a much lower income than the first person yet the bill applied to both. However, we feel that that response would make the system extremely complex to administer. The amendment would allow for separate bills and separate eligibility for rebates, but each rebate would apply on only a fraction of the bill. So far as we can see, the constituency eligible for the second person discount would be the people who would benefit from the proposal. Therefore, we believe that it would be financially neutral.
We also believe that such a provision would be extremely helpful for those voluntary organisations which offer shared living schemes, for example, under community care programmes. The amendment is strongly supported by the National Federation of Housing Associations.
It is a simple amendment seeking separate bills for people in the same category of liability who are jointly and severally liable together with separate eligibility for rebate. As far as we can tell it is financially neutral. It is infinitely more simple to present and to administer, both for the local authority and for the individuals, than the extraordinarily complicated structure which the Government have so far devised. I beg to move.
Baroness Hamwee: I should like to say for the record that I support the amendment, which seems to be entirely logical and appropriate.
9.15 p.m.
Lord Henley: The noble Baroness made a perfectly valid point. I should not want to reject the amendment totally out of hand but I should like to stress some of the practical problems with what the noble Baroness put forward and say that we think that it is better to stay as we are and retain the joint and several liabilities.
There are certain practical problems which I shall come to. I start by saying that even where the parties agree to separate bills that is contrary to the basis of the council tax under which it is the dwelling which gives rise to the tax. The amount of tax might vary according to the number of residents but it is a single
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amount in respect of the property. It follows, therefore, that all those liable are liable for the full amount.
It is possible for the people who live in a property and who, as the noble Baroness put it, all have the same occupancy status to agree among themselves the shares each will contribute to the bill. However, no separate part of the amount can attach to any individual who is jointly and severally liable with others. I do not think that that causes any practical problems for joint tenants with similar occupancy status. As the noble Baroness will know there will be other household bills which they will have to share in the same way, such as the telephone bill. They might keep records to show who uses the telephone most. They might share the electricity bill, unless there happen to be separate coin meters for each to pay individually. However, the residents will have to agree among themselves how such bills should be divided. I do not think that it would be practical—and one should consider the practical implications—for local authorities to have to send out separate bills, thereby adding to the cost, even if all the residents agreed.
I am trying to be helpful and I recognise that the noble Baroness has raised a perfectly valid point, but I believe that it would be simpler if all the people in the house remained jointly and severally liable.
Baroness Hollis of Heigham: I thank the Minister for that helpful reply, which I shall study. He is right to say that given a certain amount of good will one can apportion the bills. However, there was a second part of the argument that I tried to advance which he has not addressed. That is why I welcome his offer at least to think about the matter to see whether we can move forward.
That second point is that the proposal would also overcome an aspect which I am convinced will be extremely difficult for local authorities to administer, namely, the problem of the second adult resident in the household who has a low income. I identified the problem of a bill falling on two people for which the person eligible for a rebate is the person liable for the tax who has a higher income than the second person, who has a low income. That is why the Minister in the other place helpfully produced proposals for 25 per cent., 12½ per cent. or 7 per cent. discounts and the like in respect of that second adult with a low income. The matter is extraordinarily complicated because that then interlocks with the issues of rebate. The individuals in that household have to do elaborate calculations to determine whether they seek rebate on the first person or the discount for the second person, and their situation may change. My proposal would overcome that complexity and make the position much more transparent to the residents in that household and much simpler for the local authority to administer.
I welcome the Minister's comment that he will consider the matter. If, on reflection and after discussion, he feels that there is some substance to the argument—and I hope that he will explore the matter with the local authority associations which will implement the scheme—then I am content. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham: moved Amendment No. 64:
Page 5, line 10, at end insert:
("( ) Subsection (3) above shall not apply to any person in respect of any day when he had an income which would not have exceeded his applicable amount as a single person or where applicable as a single parent for the purposes of entitlement to income support calculated according to Part 1 of the Social Security Act 1986 if he had made a claim for that benefit on any day during the period when the liability arose.").
The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 71. Joint and several liability for poll tax only arises when a spouse has failed to pay the bill. Ministers have said that it will apply to council tax from the beginning and that the council could choose to collect the tax from any of the people jointly and severally liable. However, I accept that in practice that is only likely to arise as an issue when there is default on the bill.
These amendments seek to protect the position of a joint occupier or a spouse who becomes liable for arrears of council tax because the person named on the bill has failed to pay it. They provide some limited protection by ensuring that anyone who qualified for income support in their own right during the period when the debt accrued cannot now be pursued for that debt. I tried to give an example at Second Reading of a husband and non-working wife with children when the husband leaves her and his debts for the council tax behind him. She is jointly and severally liable for his debts during the period when she had no income of her own and would have to repay those debts out of income support when she is on the poverty line; that would push her well below it.
Under the poll tax the DoE Practice Note 16 is fairly generous in its interpretation. Para. 2.2 states that:
"In theory joint and several liability would also apply if either the husband or the wife were exempt. It seems in practice unlikely that charging authorities would wish to use the powers in those circumstances".
The note goes on to suggest that in particular where the defaulting husband—presumably it would normally be a defaulting husband—had resources but failed to pay, the wife would not normally be expected to cover that debt.
Ministerial responses in Standing Committee in another place suggest that there need be no problem because the local authority could offer a backdated rebate in respect of the liability to the jointly and severally liable person in their own right. Unfortunately, the legislation on rebates gives considerable discretion to the local authority. It cannot be guaranteed that people will so qualify because, whereas a rebate claimed at the time that it is incurred attracts 95 per cent., subsidy from the DoE, a backdated rebate claims back only 20 per cent. subsidy back from the DoE. There can therefore be no necessary confidence that the local authorities will be as generous in their backdating of rebate as should otherwise be the case.
The amendments do not preclude claims for rebate but offer protection to those individuals who may be refused it or who cannot get a rebate to cover the
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whole period. This point interlocks with certain of the social security issues and I hope that we can receive a supportive response from the Minister opposite. I beg to move.
Lord Henley: I have already stressed that we see the joint and several liability as being the central principle of the council tax. I went on to say that the way in which household residents divide that bill between them is not something in which the Government or legislation ought to interfere. However, if the council tax bill is not paid, the local authority must have power to act and be able to recover the amounts due without becoming involved in the internal arrangements of the household. It should therefore be able to send the bill or summons to anyone who is liable to pay the bill. It should not be required to consider the circumstances of each individual. One resident's personal income might be below the income support level but if he is supported by other residents, there may be more than adequate resources to meet the bill.
The noble Baroness mentioned a case of a wife deserted by her husband who has also left certain arrears on the bill. From the moment that he leaves, all is well. She is able to obtain benefit that will cover her bill. With his departure —presuming that the family is a husband, wife and children who are not yet adult—there will be a reduction and benefit will cover that. He will remain jointly and severally liable for the council tax for the period up to the day on which he left. Daily liability ties down precisely the period for which he remains liable. We discussed daily liability earlier this week. The person who remains will also be jointly and severally liable for the period up to that time and for the period after that that she remains in the property. We agree that there is no problem for her after that day.
It is up to the local authority to decide from whom to recover the unpaid debts—from which partner. Clearly, it would be more sensible for them to recover the sum from the person with the greatest resources or the one who is in fulltime employment—for example, the ex-husband if he has a job or has significant financial resources. As I said, if the remaining partner is left with low income and few resources she will be able to claim council tax benefit; but benefits will not help her discharge debts for the period before the separation occurred. That position must remain. It must be for the local authority to decide who to pursue in this case. One would have thought that if the wife obviously had no resources it would pursue the absconding husband.
Baroness Hollis of Heigham: I am grateful to the Minister for giving way. On the assumption that the absconding husband has moved to a different part of the country, and that the local authority is unable to recover that money, what is the Minister's advice?
Lord Henley: That must be a matter for the local authority. It cannot be for the benefits system to pay back the debts that have already been built up before the separation. That would create far worse anomalies with the encouragement to build up debts and then to abscond, leaving the benefits system to pick up the

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debts. At the time that those debts were built up they would not have been eligible to be covered by the benefits system. Before said husband's departure there was no entitlement to benefit because the husband had a considerable income. He has now gone. It must be for the local authority to pursue the debts from him. He would be the obvious person if he still has adequate resources to pay them. It cannot be for the benefits system to pick up the tab for those debts incurred before his departure. That would create a perverse incentive to build up debts and then to pass them on to the benefits system.
I hope that the noble Baroness accepts my argument. Obviously people who choose to share a dwelling share many responsibilities, and it is reasonable that they should share that responsibility. I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Hollis of Heigham: I thank the Minister for his reply. We clearly understand the nature of the problem. Like the noble Lord, I would not wish to give a perverse incentive to people to abscond and to slough off debts knowing that no one would pay them. I entirely accept that point. However, the problem remains. Which situation is the lesser of two evils? It is obviously desirable that the local authority should recover the debt from an absconding husband with a higher income. However, on the assumption that it cannot, the wife is then liable for the repayment of those debts out of her income support levels. With possible top slicing, such repayment may push her well below the poverty line and could involve her income support levels being reduced to half of what is regarded as the minimum subsistence level. What advice does the Minister give when the local authority in good faith has tried but failed to recover the debt from the absconding husband?
I press the matter because under the poll tax the DoE guidance in Circular 16 made clear that in those circumstances the local authority would be encouraged not to press the wife for recovery. But in that case the local authority must expect some proportional compensation from the DoE through a backdated rebate scheme of recovery of sums paid out.
Lord Henley: Perhaps I may consider the matter. Obviously it would be available for deductions to be made from income support as with other bills. I do not at present know where those deductions will come in the hierarchy of bills. However, I do not accept that payment would push the individual claimant below what the noble Baroness calls the poverty line; I do not accept that there is such a thing. There are safeguards in the income support system which prevent deduction of more than a certain level from income support. The noble Baroness knows that perfectly well. There is only a set limit that can be deducted from income support.
I shall consider the matter further and write to the noble Baroness about our intentions as to where those issues should come within the hierarchy of deductions from income support or from benefit. However, the
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wife would remain jointly and severally liable for that bill as would the husband, wherever he had absconded to.
9.30 p.m.
Lord Jenkin of Roding: Having listened to the debate I believe that the noble Baroness has made a case. The question that occurs to me is this: is it not open to the department to issue guidance of the type that existed for the purposes of the community charge? While totally accepting the view that in the circumstances described there should not be an inducement to people to pass on the bill to the Social Security, some people will be left with only the minimum income and a substantial debt which is owed by somebody else. There must be some guidance to indicate the circumstances in which it would not be sensible to recover that debt.
Lord McIntosh of Haringey: The noble Lord's suggestion is sensible provided that the guidance is that to which the local authority shall have regard rather than guidance which they would have to observe or contravene.
Lord Henley: I take the point made by my noble friend and shall consider whether guidance might be given on how these matters should be proceeded with. I am grateful that my noble friend and I believe the noble Baroness recognise that there is a considerable danger of creating what I referred to as a perverse incentive.
Baroness Hollis of Heigham: The discussion has been most helpful and I was grateful for the intervention of the noble Lord, Lord Jenkin. My fear is that if local authorities cannot track down the errant husband they will simply send in the bailiffs and the wife will lose her property. I am happy to respond to the Minister's offer to look at the matter again and I take pleasure in withdrawing the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 65:
Page 5, line 10, at end insert:
("( ) Subsection (3) above shall not apply to any person who on any day is a person to be disregarded under paragraphs 1, 2, 3 or 4 of Schedule 1; or").
The noble Baroness said: In moving the amendment I shall speak also to Amendment No. 70. No doubt to the relief of Members opposite this may be the last discussion for the time being on joint and several liability. The effect of the amendments is to exempt in a straightforward way from joint and several liability four categories of people. First, prisoners and others in custody who are covered by paragraph 1 of Schedule 1. Secondly, people who are severely mentally impaired as covered by paragraph 2. By normal reference one tends to refer to Alzheimer's cases. Thirdly, people over the age of 18 but still at school who are covered by paragraph 3, because child benefit is still being paid. Fourthly, full-time students covered by paragraph 4.
Perhaps I may indicate briefly why all those cases raise real problems within the structure of the council

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tax. First, the prisoner is in jail and obviously not at home. He is not liable for his personal element and therefore the wife in the marital home—I make that assumption for this purpose—is paying 75 per cent. of the council tax. Let us suppose that he does a flit leaving accrued debts behind. He is in jail, in destitution and in ignorance and finds himself liable for her bills while he is exempt from his own. That cannot be sensible and I should welcome the Minister's comments.
1 find Alzheimer's disease especially cruel. I wrote to the Minister about the matter and I have his reply which I may need to refer to later. Joint and several liability applied only between spouses under the poll tax and not under guidance where one party could but did not pay. We now find that joint and several liability applies to less intimate relationships than that of spouses; for instance, brothers and sisters. Unlike the poll tax, the council tax gives the Alzheimer victim joint and several liability for the personal element of the other person even though he may not be and is not liable for his own. Would the Minister tell me why someone with Alzheimer's disease is given a personal exemption of 25 per cent. from the poll tax on the ground of being mentally incompetent but is then held jointly and severally liable for the other 75 per cent. of the bill? Someone who is incompetent to pay his own debt is held to be jointly and severally liable for someone else's debt.
That cannot be sensible. It was not the case under the poll tax but it will be the case under the council tax. A person judged not competent to pay his own debt is held to be competent to pay someone else's. I hope that the disability groups recognise that the provisions for joint and several liability under the council tax are far more harsh and severe than they were under the poll tax. Concessions wrung from the Government in relation to the poll tax, which we were pleased to acknowledge, are being partly dismantled under the council tax.
My third example is the 18 year-old. A relative, a kindly uncle, leaves a home jointly to a mother and daughter and the 18 year-old daughter is still at school, mother receiving child benefit for her. If the mother defaults on the council tax bill, the child, who is still at school and with no income at all of her own, is jointly and severally liable for it. How can this be sensible? Again it is perverse.
Finally, I come to the full-time student. Similarly we can consider a student sharing a house with a friend who is not a student. They are not cohabitees; they are just friends. They are joint tenants, and because both are in the house the house itself is not exempt. It is instead treated as a single-person household. The student is properly exempt from liability for his own 25 per cent. of the bill and is invisible, to repeat the words of the noble Lord, Lord Renfrew. But that student, though invisible for his own bill, remains jointly and severally liable for 75 per cent. of the bill not only for the property element, which if he lived with another student would not exist, but for the personal element—and this is the case with all of these —of the non-student. Even though the student may be on a grant which is below income
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support level, and by far, and the defaulter on a substantially higher income, the student remains liable.
While there may be a case for somebody who is exempt from the personal element of 25 per cent. having some liability for the property element, the council tax goes further than that. They are jointly and severally liable for the other person's personal element, albeit exempted from their own. This has to change. It is not only unfair; it is deeply illogical within the conceptual structure of this tax itself. It is offensive, and I have to say so far as the Alzheimer's case is concerned it is downright cruel. I beg to move.
Baroness Hamwee: I briefly support the amendment. The noble Baroness has explained the position clearly. I share her concerns and hope that they can be resolved.
Lord Henley: The noble Baroness gave a number of different examples. As she said, this was something on which my noble friend Lord Strathclyde has written to the noble Baroness. I hope that she found that letter of some use in setting out the problems in this area. Let me start with one of her examples, and that is the case of the person who is severely mentally impaired or has, as she put it, Alzheimer's. Disapplying joint and several liability in such cases could give rise to some serious difficulties, and not least for the people who would be affected.
Let us take the example given by the noble Baroness of, for example, a married couple where the husband has developed Alzheimer's but all the assets, including the house, were in the husband's name, and he, before developing Alzheimer's, will have been meeting all of the household bills. But despite his illness and his impairment he is still the partner who has the resources to continue to meet the bills. It would be hardly fair to transfer the sole liability to his wife. In practice of course the wife may have responsibility for administering his financial affairs. In that case she will be able to make the council tax payment from his financial resources.
Baroness Hollis of Heigham: Could the Minister then tell me, given that reasoning, why the person with Alzheimer's should have any discount or invisibility at all if he has resources?
Lord Henley: Because he is disabled. We have therefore offered that concession. Is the noble Baroness arguing that she would not like to have that discount?
Baroness Hollis of Heigham: On the contrary, I am probing to see what the logic is to exempt somebody who is ill but to continue to make them responsible for someone else's debts?
Lord Henley: It is a mere discount. It is not an exemption. May I continue with the example of the husband suffering from Alzheimer's? In that case, if the wife has responsibility for managing his affairs, she can and will be able to make the council payment. But it may well be that someone else has this responsibility. It depends on how they have managed their affairs since his illness. For example, it might be

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one of his relatives other than his wife. In that case, making the wife solely liable for the tax would be perverse and possibly harsh in its effect. As I stressed on previous amendments, benefits will continue to be available for up to 100 per cent. for those on low incomes, including couples on low incomes.
As I have been trying to point out throughout the debates on all the amendments moved by the noble Baroness, joint and several liability is a difficult area and creates problems. It has given rise to careful consideration within the Government. Having considered the arguments carefully and sympathetically we believe that the position at which we have arrived is both logical and sensitive to the people's circumstances.
In the light of the example I gave I hope that the noble Baroness will feel able to withdraw her amendment. However, if she would prefer to have further explanation following the letter from my noble friend Lord Strathclyde, I shall be more than delighted to write or my noble friend Lord Strathclyde, I am sure, will be delighted to write yet again.
Baroness Hollis of Heigham: I understand what the Minister is saying; what I cannot do is accept it. The Minister mentioned the Alzheimer's case and quoted at some length the letter kindly written to me by the noble Lord, Lord Strathclyde, saying that the position was sensitive and logical. He referred primarily to the Alzheimer's case because there is a Civil Service draft in existence in that regard.
The situation is not logical and it is not sensitive. It is not logical to give a person a personal discount of 25 per cent. on the grounds that they are so severely mentally impaired that they are not competent, and yet continue to make them jointly and severally liable for another person's debts. That cannot be right. It is certainly not logical and it is certainly not sensitive.
Lord Henley: Perhaps the noble Baroness will give way. I believe that she is misunderstanding the nature of the personal element. One should not look at the personal element in the council tax as being what the noble Baroness would like to call the poll tax. The standard bill assumes that there are two adult residents. That standard bill will not be increased if there are more than two adult residents. However, as the noble Baroness says, it will be reduced if there are fewer than two or if one of those residents is discounted. It is not increased if there are more than two.
The Bill is designed to help single-person households and those containing certain groups; for instance, the person suffering from Alzheimer's disease and hence the discount. It does not represent a part of the tax which attaches to any specific individual. There may be three people in the house. That does not increase the council tax chargeable on that house.
Baroness Hollis of Heigham: That is true. Nonetheless, Mr. Portillo in another place, throughout the Committee stage, was at pains to establish —it was reconfirmed in the debates that have already
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taken place in this Chamber—that it is a property poll tax Bill, or a property personal Bill, if the Minister wishes me to use the vocabulary employed by the noble Lords opposite.
Lord Henley: It is only the noble Baroness who calls it a property poll tax Bill. We call it a council tax Bill.
Baroness Hollis of Heigham: Your Lordships, including the noble Baroness, Lady Blatch, in moving the Bill at Second Reading referred to it as a tax with two elements—a property and a personal. The personal element was based on a two-person household and the rest of the structure of the Bill—including, for example, the discount on second homes, including the comments made by Mr. Portillo in another place, including the 25 per cent. discount for one person-all show that the property element is regarded as amounting to around 50 per cent. of the bill and the personal element is two times 25 per cent. of the bill.
That is why, if somebody is invisible and therefore a two-person household becomes a single-person household—for example, if one resident is a student —the bill goes down by 25 per cent. There can surely be no disagreement between us on that. In which case, somebody suffering from Alzheimer's disease, somebody who is in prison or where there is an 18 year-old still at school and the like, the household bill will accordingly be reduced by 25 per cent. For their own invisibility they have a personal discount. Nonetheless, while recognising that they are invisible for the purposes of the Bill, they continue to be jointly and severally liable not just for the property element which they share, but for the other person's personal element. That is the structural problem of the tax. I see Ministers opposite shaking their heads.
Lord Renfrew of Kaimsthorn: I can only follow the noble Baroness so far. There may be some point in what she is saying, but the element of discount clearly does not prevent somebody from being in a position financially to pay if they are of great wealth. That is what I found so effective in the points that the Minister was making. If we imagine that there are cases where persons with disabilities, whether Alzheimer's disease or something else, are persons of great wealth, then it is naturally appropriate that from those resources they should meet the bill. The fact that they are liable to discount through disability is not relevant. Quite clearly, it makes sense to have a blanket discount eligibility through grounds of ill health. It would be absurd to inquire whether a person is wealthy before offering a discount. It is much simpler to ask whether the person is in a category which falls to be disregarded. If that is so, then that person is eligible for discount. It is an interesting but completely separate issue.
I believe that the noble Baroness may have a point of interest; but if the person involved is not wealthy, that would be another matter. The discount is one thing and the personal resource is another. Surely that is an element that the noble Baroness should bear in mind. She is flogging the one horse, whereas it may be that the other horse will go further.
9.45 p.m.
Lord Henley: My noble friend could hardly have put it better. It is not an invisibility which affects the mature student or a person with Alzheimer's disease; it is the question of the discount. The only occasion when one has invisibility is when one has a household of students. There is no invisibility in the case of the person I have mentioned—that is to say, someone with Alzheimer's disease, but there is a discount on that household's liability.
Lord Monkswell: Can the Government help me in understanding this matter? There seems to be a conflict in logic. We are advised by the Government that if a person such as a child, a student, someone in prison, or a person suffering mental incapacity is affected, then there is a discount of 25 per cent. if there are two persons in the household. That is entirely logical in the sense that all four categories of people will either have no income or they will be poor. Rather than go through the benefit system to assess their income and become involved with the red tape of bureaucracy, it makes laudable and logical sense to say, "Yes, we shall knock 25 per cent. off".
However, I am confused because the argument put forward by my noble friend means that the issue is being turned on its head. The Government argue that these people will be rich and therefore they can afford the cost. Can the Government explain this apparently logical inconsistency?
Lord Jenkin of Roding: I have listened to the argument with a growing sense of puzzlement. I say with no sense of criticism whatever of either the noble Baroness or my noble friend, but there seems to be some difficulty in making the arguments meet head-on. I get the impression that people on either side of the Committee are seeing somewhat different aspects of the argument. I wonder whether we shall be able to resolve this matter tonight.
I have been sufficiently persuaded by the speech of the noble Baroness and by that of my noble friend Lord Renfrew, to accept that there is a point here. I have yet to be convinced that my noble friend has wholly answered it. I wonder whether the right answer at this hour of the night is for my noble friend to take the matter away. We can all read Hansard and make sure that we have understood the arguments. Somewhere along the line there is a matter here which has not yet been thoroughly thought through. It is better that it should be resolved after careful thought given at leisure rather than to seek to argue it out and reach a Division tonight so that the matter cannot be returned to at Report stage.
Lord Henley: It is entirely for the noble Baroness to say what she wishes to do about her amendment. I cannot offer, as my noble friend has suggested, to take the matter away and have further thoughts about it. I can certainly write again to the noble Baroness. However, I suspect that the noble Baroness and her noble friend Lord Monkswell have misunderstood the point that I have been trying to make. In addition to that, I also suspect that there might be a fundamental disagreement between us. If that is so, then we must
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continue to differ. If the noble Baroness wishes to bring back the amendment at Report stage, I can do nothing to prevent her. I hope that by now she understands the point that we are trying to make.
Baroness Hollis of Heigham: I do actually understand what the Minister said; that is the problem. But given the comments also being made from his side of the Chamber, in a constructive spirit I would hope that perhaps we could meet to discuss this rather than continue to exchange letters—which then get read into Hansard—to see whether we can find a way forward. In the light of that, and in the hope that we can arrange a meeting to discuss the matter, I take pleasure in withdrawing the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 66:
Page 5, line 10, at end insert:
("( ) A person who would otherwise be held jointly and severally liable under either subsection (3) above or under section 9 (liability of spouses) and who is a person who falls to be disregarded for the purpose of discounts under Schedule 1 shall only be liable for a maximum of 50 per cent of the daily liability for any period to which subsection (3) above or section 9 applies.").
The noble Baroness said: This is a much more modest and a much briefer amendment. It is weaker than the other two, which would exempt certain people from joint and several liability. This amendment seeks to confine joint and several liability to 50 per cent. of the tax, which Ministers say is the property element for the most part—as reflected, for example, in the debate on second homes. As a result, where the wife has Alzheimer's disease and the bill is reduced by 25 per cent. because the husband is treated as a single person, she is not then liable for his personal element though they may continue to share the problem of joint and several liability for the property element. I beg to move.
Lord Henley: I am glad the noble Baroness herself has said that her arguments are somewhat weaker—
Baroness Hollis of Heigham: No, I did not. Absolutely not. The noble Baroness, Lady Blatch, sometimes complains that I put words into her mouth, but I think that none has been such a transgression of propriety as that which we have just heard from the Minister. What I said was that the amendment was weaker. However, I am sure the noble Lord will listen more carefully in future.
Lord Henley: I certainly accept the correction from the noble Baroness. I also accept that the amendment is somewhat weaker. I was about to say that the proposal to limit liability in these circumstances has very little indeed to commend it. The council tax is a single amount chargeable in respect of a dwelling. The amount may well be determined by the number and status of the people living in the dwelling, as we have already discussed, but it is a single integral amount. It is the amount in the tax which the local authority expect the dwelling to contribute. As I said earlier, how the residents themselves decide to choose to

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divide that contribution among themselves is a matter for them. Where all, or some, of the residents need help they may be entitled to benefit according to their circumstances. But at the end of the day all the residents, as we have said before, are equally responsible for ensuring that the due amount is paid.
The amendment could also give rise to certain anomalies. Where the person giving rise to the discount has all the resources this amendment would limit his or her liability to 50 per cent. That would mean that the liability for the other half of the council tax would fall on the other partner, who may well have no means to meet it. It is far better for households to make their own financial arrangements, as I said earlier, and to make their own arrangements without the authorities having to concern themselves with the status and resources of the residents. I hope therefore that the noble Baroness will feel able to withdraw her amendment.
Baroness Hollis of Heigham: The gap of misunderstanding is still there, is it not? In response the Minister said—if I quote his phrases accurately —that it is for the individuals concerned to make their own financial arrangements and to decide for themselves. I think I have paraphrased him accurately. The point remains: how can those with Alzheimer's disease rationally make their own financial arrangements and decide for themselves? How can those who are imprisoned and therefore absent from the home make financial arrangements and decide for themselves? They are not, in that sense, consenting partners to the financial arrangements that need to be made. That is at the core of this argument. That is why they were given a personal discount in the first place and that is why, with the same logic, they cannot be held responsible for someone else's debts.
We have probably pushed this point far enough tonight. As I said, we shall obviously need to discuss the matter further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Howe Earl Howe moved Amendment No. 66A:
Page 5, line 12, leave out from ("person") to end of line 13 and insert ("as regards whom the following conditions are fulfilled—

(a) he has a material interest in the whole or any part of the dwelling; and

(b) at least part of the dwelling or, as the case may be, of the part concerned is not subject to a material interest inferior to his interest;").

The noble Earl said: Amendments Nos. 66A and 67A redefine "owner" for the purposes of the council tax.
Clause 6 provides for the owner of a dwelling to be liable to pay the council tax where there are no residents. The existing definition of owner in Clause 6(4) states that the owner would be the person entitled to possession of the dwelling or any part of it. This is the same definition as that used for non-domestic rating purposes, for which it works well. However, we believe that in certain circumstances the existing definition may not produce a satisfactory result for council tax purposes. This is because the person
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entitled to possession may not always be the owner as usually understood. Take, for example, the position of a person for whom temporary accommodation has been provided under a licence, as part of his or her job. Where the accommodation has not become that person's sole or main residence we believe that liability for the council tax should fall on someone who has a substantial proprietary interest in the dwelling. However, the individual for whom the accommodation is provided may be held to be entitled to possession of the dwelling; he or she would then be the liable person under the present clause. This situation may also occur with holiday lettings where liability might attach to the person who had taken the letting, rather than the person letting the property.
The amendments therefore revise the definition of owner. The new definition relates to a person's interest in the dwelling and covers both freeholders and long leaseholders. This is similar to the definition currently used for the standard community charge. It means that the person who has the freehold, or if there is a lease of any part of the dwelling, any person who has an immediate interest in the dwelling under a lease of six months or more, will be liable. Leases of under six months will not be taken into account.
Clause 8 contains a power to place liability on the owner of prescribed dwellings instead of the residents. There is also a power to prescribe who should be regarded as the owner in certain cases. The new definition of owner proposed by Amendments Nos. 66A and 67A may not, however, cover the person on whom it would be appropriate to place liability in all situations. Amendment No. 68B seeks to clarify the position with regard to the definition of owner. It extends the order-making power to provide for liability to be place on a prescribed person, in particular cases.
Dwellings occupied by ministers of religion are one such example. It is our intention that ministers of religion should not be liable to pay council tax on dwellings in which they reside in order to perform their duties. Liability instead will be placed on the Church, but the definition of owner will not, in all cases, cover the appropriate body. The provision also allows for flexibility should difficult cases arise in the future.
Amendments Nos. 76ZA and 80A to the Scottish Clauses 75 and 76 achieve similar effects in Scotland. We have, of course, already amended Clause 75 in another place in a manner which aligned Scottish policy more closely with that for England and Wales. The further change is required to maintain a consistent approach. The differences between the two sets of amendments reflect differences in existing law relating to land tenure in Scotland and England and Wales which require, in the context of the present Bill, different approaches to achieve a similar effect.
These amendments are necessary to ensure fairness and will assist in the administration of the council tax. I therefore commend them to the Committee.
Lord McIntosh of Haringey: I am glad that the noble Lord, Lord Renfrew, is still in his place because he is the one who commends the Bill as having the virtue of simplicity. If he still thinks, after that

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explanation, that the Bill is simple, all I can say is that he has a greater gift of reduction to simple elements than I would lay claim to.
Clause 6(2) provides what is intended to be an exhaustive list of persons who are liable to pay the council tax. The list is in a hierarchical order. What the Government are in effect doing in these amendments is taking the bottom category—category F of the list in hierarchical order—and saying, "We shall define it to mean what we like to make sure that no one is left out". That is a laudable intention in some ways but it certainly does not conform with the view of the Bill held by the noble Lord, Lord Renfrew. I suppose we must recognise that the amendments are inevitable given the way the Government have structured the Bill.
On Question, amendment agreed to.
[Amendment No. 67 not moved.]
10 p.m.
Earl Howe Earl Howe moved Amendment No. 67A:
Page 5, line 17, at end insert:
(""material interest" means a freehold interest or a leasehold interest which was granted for a term of six months or more.").
On Question, amendment agreed to.
[Amendment No. 68 and 68A not moved.]
Clause 6, as amended, agreed to.
Clause 7 agreed to.
Clause 8 [Liability in prescribed cases]:
Earl Howe Earl Howe moved Amendment No. 68B:
Page 6, line 17, leave out from ("may") to end of line 19 and insert ("provide that, in relation to any dwelling of that class, subsection (3) above shall have effect as if for the reference to the owner of the dwelling there were substituted a reference to the person falling within such description as may be prescribed").
On Question, amendment agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 69:
Page 6, line 22, at end insert:
("(7) A person who is liable in respect of any chargeable dwelling under subsection (3) above shall have a duty separately to notify each resident of—

(a) the amount that resident shall pay to that or any other person in respect of council tax for that dwelling; and

(c) the amount that that resident shall pay to that or any other person in rent.

(8) At no time shall the total of the amounts, in respect of any chargeable dwelling, referred to in subsection (7) (a) above exceed the council tax due for that dwelling for that day or any other period.
(9) The amount each resident may be asked to pay shall be no more than the amount that would reasonably reflect the proportion of the dwelling occupied by that resident.").
The noble Lord said: The amendment now before the Committee has already been referred to in debate. I trust that its importance has not been overestimated. It is a modest and relatively non-controversial amendment, as I hope Members of the Committee will agree. The Bill provides that where there are houses with multiple occupation—although it does not actually use those words—and where it is appropriate, the local authority may determine that the owner is liable; in other words, it will push the owner up the hierarchy of Clause 6(2) so as to ensure that the tax is
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actually collected. If there is, for example, a floating population in bedsitting rooms, a residential hostel which falls within the scope of the council tax or if part of a dwelling is being used to house another member of the family, such as a granny flat, it is much easier for the local authority to collect from one person (the owner) rather than from all of the people who might otherwise be liable. The Bill quite properly covers that point.
However, safeguards are needed and it is to those that we want to draw attention. Noble Lords will recall that, when both the Scottish and the English poll tax Bills were being introduced, we on this side of the Chamber gave the warning that the fact that the poll tax was to be collected from an individual meant that where in the past there had been rents inclusive of the rates, landlords would not deduct the rating element from the rent and would therefore make windfall profits.
Estimates have been made of those windfall profits which arose from the fact that the Government refused to take heed of our warnings. I have with me some estimates. However, I do not know how the information was collected and therefore I would not put my professional judgment on them. Nevertheless, estimates which appear to have been widely accepted reveal that something like £40 million in windfall profits was made in Scotland and perhaps as much as £90 million in London.
It may be thought that that is a matter between landlord and tenant and not the concern of government. But of course many of those rents are being subsidised by housing benefit. If the rents are excessive because the rating element has not been taken off, then it is the public purse through the housing benefit scheme which is losing out because of such profiteering.
The amendment seeks to provide that the landlord, in this case, who is liable in respect of a chargeable dwelling, shall notify each resident of the amount that the resident shall pay in respect of council tax, and, under subsection (8), shall never charge more than the amount due for the council tax. In other words, there should not be, as there has been in the past with electricity meters, for example, a bumping up of the amount to be paid because of an excessive amount claimed to be due in council tax. So we say in subsection (9):
"The amount each resident may be asked to pay shall be no more than the amount that would reasonably reflect the proportion of the dwelling occupied by that resident".
The amendment is not a theoretical one. It is based on the experience of the bad drafting of the poll tax legislation. The amendment does not just affect other people, it affects the public purse. It is obviously a matter of simple justice that tenants should be protected in this way. I beg to move.
Baroness Hamwee: I support the amendment. I did not move Amendment No. 62 because I thought that it would be more useful to debate the proposed measure rather than the more general provisions of the earlier amendment.
The noble Lord, Lord McIntosh, said that the responsibility lay with government, for financial

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reasons. It is also the responsibility of government, for the reason he mentioned at the end, where it is known that there was a form of exploitation—I do not believe that it is too strong a term—as there was with regard to the poll tax, to ensure that that is not replicated in the new tax.
Baroness Blatch: I am not surprised that the noble Baroness did not move Amendment No. 62, because it would have required an incredible amount of bureaucracy. Details of tenants' incomes would have been required in order to make a report to Parliament.
The amendment would provide an unwarranted interference in people's private affairs. It is up to individual owners or landlords to decide how they will reflect council tax in rent payments. Landlords do not have to account separately for other overheads such as gas, electricity, water or maintenance costs when determining rents. It is not therefore appropriate, nor would it be possible, to single out one element, because a landlord can say almost anything. He can say there is no element in the rent for tax, or there is, or it is small, or it is medium. It is not possible, without knowing all the elements involved in making up the rent. It may be the policy of Members opposite to have a system in place so that every landlord has to submit evidence with respect to each element of the rent to ascertain which part of it relates to the council tax.
There is no reason to believe that a landlord would be more or less fair and equitable when levying, as part of his overheads, the council tax as an overhead than a landlord would be when levying any other overhead: heating, lighting, gardening, possibly cooking, cleaning or whatever element is built in to make up the rent. How is it possible separately to identify the council tax? It is not possible.
Under the council tax, liability will normally fall on the residents of a dwelling, and the power to make the owner of a dwelling, or other prescribed person, liable for the council tax will be used mainly in the fairly rare cases where it would be difficult to bill the residents. Houses in multiple occupation, where the residents are likely to be occupying the dwelling under licence, and hostels are two such cases.
In contrast, rates were paid by the landlord in a greater number of cases, and, accordingly, a contribution for the rates was often included in the rent payable by tenants. The issue has therefore attracted a substantial amount of attention, but inclusive rents will not be so common under the council tax. They will be the exception rather than the rule. I ask that the amendment be rejected.
Lord Monkswell: I should like to question the noble Baroness about one point she made. If I heard her correctly, she said that a landlord could, in the rent that he charged for the property, include an element of the council tax or an amount in proportion to the council tax. I am concerned about this because surely the council tax is a tax on people for the benefit of the use of the property. It is a combination of a property tax and a personal tax, as has been mentioned.
Is the noble Baroness saying that it is legitimate for an intermediary party between the taxpayer and the
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Government to decide who shall and who shall not pay the tax? In practice it would mean that the landlord would have to levy an extra charge on some people and tax them more heavily, but allow other people not to pay the tax. That cannot be fair.
Baroness Blatch: The noble Lord has totally misunderstood the point. There is a liable person who is responsible for paying the tax. Unless otherwise decided, it is deemed that there should be a property element, which is 50 per cent., and a personal element which is also 50 per cent. That is the liability for the liable person in the household. For the purpose of this amendment, we assume that that is the landlord. He will have a number of overheads which will include the council tax, heating, lighting and many other items. There will be a negotiated rent between the landlord and the tenant or tenants. The way in which the landlord negotiates a rent, containing all these different elements, is a matter between the landlord and the tenant or tenants. That is all there is to this.
It is not possible separately to identify items, or it would be easy for a landlord to evade the duty, if he had to submit evidence that he had levied a fair element, a fair proportion of the council tax. The choice of the landlord would be to pay the bill as it comes to him, without levying it at all, or to levy it among the tenant or tenants. That is all there is to it. It would be quite impossible and bureaucratic to insist that there had to be evidence that there was fair and equitable levying of that one overhead. It could only be deemed to be fair if there was evidence of all the other elements within the rent. That is not something we could support. However, no doubt Members of the Committee opposite would like to impose that on landlords.
Lord McIntosh of Haringey: This is a most astonishing series of arguments. We are accused of wanting to know the details of all the elements in a rent. There is no need for that and it is not what the amendment says.
Baroness Blatch: How would the noble Lord identify specifically within a rent the element that is related to the council tax?
Lord McIntosh of Haringey: The residence, the property or whatever we care to call it will be subject to a council tax. The landlord will know how much he pays and how many tenants he has. It does not matter what rent he charges for other items—space, lighting, heating or anything else—he will be required to say, "Because in the past you have been paying your poll tax yourself, I am now going to put up your rent because I am going to pay your council tax for you". But if the council tax is, for example, £200 and there are four people, he will not be able to charge more than £50 a head, provided each has an equal share of the dwelling, the property. That seems to me entirely reasonable. It does not require anyone else to know anything about what other elements of rent there are. The landlord simply says, "I can't receive a council tax bill of £200, go along to my tenants and put their rents up by £400 in total and make a windfall of £200 profit". That is what happened when inclusive rents

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were replaced by poll tax liability when the poll tax was introduced. It happened in Scotland, England and Wales.
Lord Jenkin of Roding: The noble Lord, Lord McIntosh, has got it quite wrong. That is not what happened at all; it was exactly the opposite. I would not attempt to deny that there were cases where a landlord failed to make a reduction because he was no longer paying rates when the tenant was paying the community charge. However, that is a totally different matter. In many cases tenants were able to make the necessary representations to their landlords as they recognised their landlords were no longer paying rates. Some landlords might have said they had not increased the rent for some time and therefore they wished to do so by the amount of the community charge. Often an agreement was reached between tenant and landlord and tenants stayed in their rented accommodation. In cases where rents are regulated or controlled, there is machinery to deal with these matters.
The noble Lord, Lord McIntosh, seems to be obsessed with a person who is letting out property for the first time and who says to his tenants, "This is the rent and in addition I am charging you additional amounts for services I provide". The noble Lord believes it is possible to isolate that element in the rent that accounts for the council tax. It just does not work like that.
In the vast majority of cases where a tenant rents accommodation he will pay his council tax because that is what this Bill provides. However, we are discussing those cases where the landlord pays the tax. The landlord tells his tenant what the rent is. The tenant may ask about other expenses. The landlord tells him that X and Y are included but the tenant will have to pay for A, B and C himself. The landlord may say that X and Y that are included in the rent include the council tax. However, it is a matter for the landlord to decide how much of the total charged represents the council tax and how much of it is the rent. It is not a case of a landlord charging his tenant an additional amount simply to make more money. What he is doing in fact is charging a higher rent. I do not see how one can isolate the different elements of the rent. I believe the noble Lord, Lord McIntosh, is barking up the wrong tree. I totally accept the arguments made by my noble friend. I hope this amendment will be rejected.
Lord McIntosh of Haringey: If I wished to be even more moderate than I usually am, I would say that that speech represents the triumph of hope over experience. Where inclusive rents should have been altered when the individually collected poll tax was introduced, some landlords profited from the situation. Anyone who has any experience of offering advice to tenants knows that that was the case. Landlords did not reduce their rents by the amount of the poll tax.
In the case of tenants who received housing benefit, the public purse stood the cost of that profiteering. The rents should have been reduced but were not and that offered an opportunity for profiteering to
1048
landlords. There is now a second opportunity for profiteering when it is recognised that rents will have to be increased to cover the new tax and the Government are refusing to make provision to protect tenants from an excessive increase in rent over and above that which is required in order to pay the council tax. Again, if those tenants are in receipt of housing benefit, the public purse will bear the loss.
It is scarcely credible that having got this matter wrong once, and having seen the effects of getting it wrong once, the Government should insist on getting it wrong again in exactly the same way. However, that is what they are doing. It is only the time of night that prevents me from seeking the opinion of the Committee on this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8, as amended, agreed to.
Clause 9 [Liability of spouses]:
[Amendments Nos. 70 and 71 not moved.]
Clause 9 agreed to.
Clause 10 agreed to.
Clause 74 [Different amounts for dwellings in different valuation bands]:
10.15 p.m.
Baroness Hamwee Baroness Hamwee moved Amendment No. 72:
Page 49, leave out line 13 and insert:
("Values not exceeding £20,000 AA
Values exceeding £20,000 but not exceeding £27,000") A
The noble Baroness said: It is neat that as we approach the end of the day we return to the question of banding. It is a shame that the Scots have had to return to the Highlands and Islands.
Lord Strathclyde: On your side!
Baroness Hamwee: Nevertheless, the phantoms behind me support this amendment. It may be difficult for those of us sitting in central London to accept that a band up to £27,000 is unrealistically high for areas in the Highlands and Islands which are sparsely populated and where property has a low value as a result. That sum is too high as a starter band. It is another example of too many properties falling within the same band. In Caithness 39 per cent. of houses are in the first band; in Ross and Cromarty the figure is 32 per cent.; and it is 33 per cent. in Sutherland. In those districts only 3 per cent. of houses fall within the top three bands.
What we have here is not a true reflection of the cost of housing in remote rural areas. We run the danger once again of requiring Highland residents to pay more than the value of their houses suggests that they should. Many of them live in property which has a low value. They are particularly badly hit. That is particularly so in communities where property values are inflated because people pay high prices for holiday homes, causing the difficulties which we all know about for local communities.
I suggest that we should look again at the low banding for Scotland and insert the two new bands which are proposed in the amendment. I beg to move.
Lord Jenkin of Roding: The amendment which the noble Baroness moved on behalf of her Scottish colleagues—and I thought that she led with her chin—allows me to raise a point which Members of the Committee will recall was raised during the passage of the Local Government Finance Bill which introduced the community charge. What is the liability in respect of occasionally occupied mountain huts and similar properties, many of which would be affected by the amendment which the noble Baroness moved? Such buildings, if they were to change hands, would come well at the bottom end even of her lower band.
In the case of the community charge the argument was put forward that if the building was not occupied for more than a few weeks in the year there was no question of liability for the community charge. I am not clear whether such properties which would fall within the lower band proposed by the noble Baroness would be liable for the council tax. Perhaps I should declare an interest as having an occasional occupation right of such a property, although I hasten to add that I am not the owner. I recall that there was no question of liability to community charge. Will there be liability to council tax?
The point is relevant. The noble Baroness indicated that in certain Highland areas a substantial proportion of properties would fall within the lower band if it were not amended and that therefore there should be an additional band. One wonders what proportion of those properties are the kind of temporarily occupied hostels and huts which do not come within the council tax because they are not occupied for more than a few weeks of the year.
Lord Strathclyde: It is amazing that at this time of the night we should be having yet another debate on banding. Is there anything left to say which will satisfy the noble Baroness, except that this time she has decided to hit Scotland rather than England and Wales?
The noble Baroness came up with a figure of £20,000. There is no evidence to suggest that £20,000 would be better than any other figure. Why not £17,000 or £25,000?
In addition, the noble Baroness has not considered the fact that if there were to be an additional lower band that would benefit the people who currently live in band A properties. Is that what the noble Baroness wants?
Turning to the question of my noble friend Lord Jenkin, if the mountain hut is somebody's sole or main residence it would come under the council tax. If it is unoccupied but belongs to somebody it would receive a 50 per cent. discount. If it is occupied only for very short periods I dare say that it would probably escape council tax altogether. I hope that that explains the matter and that the noble Baroness will decide to withdraw the amendment.
Lord McIntosh of Haringey: The council tax is liable on a daily basis and not an annual basis. Is the Minister encouraging law-breaking?
Lord Strathclyde: The noble Lord on the other side of the Chamber would know far more about that than I do.
Baroness Hamwee: I thought that the words "hit Scotland" were a bit much. Yes, it does hit Scotland. But it is not my amendment that hits Scotland; it is the Bill and the unfair banding. I noticed that the noble Lord, Lord Strathclyde, did not say that he hoped that the explanation would satisfy me. It does not do so. At this hour I shall not press the matter further. However, I am not satisfied and I do not believe that the people in the areas affected will be satisfied.
Lord McIntosh of Haringey: Before the noble Baroness withdraws the amendment, I wonder whether the Minister would care to think again about the words he just used to me.
Lord Strathclyde: If I have an apology to make, it is for making the words personal. I shall broaden my comment to the Labour Party. Clearly in the past the Labour Party has supported law-breakers. In its ranks are Members of Parliament who have refused to pay the poll tax. If the noble Lord would care to deny that, I shall be most pleased to hear it.
Lord McIntosh of Haringey: This exchange is becoming repetitious, but I have to deny it. There have been no such occasions. I assume that the noble Lord refers to the poll tax. The Labour Party has never encouraged any disobedience to the law. The Labour Party has never encouraged that. Individuals of all parties and none have encouraged disobedience but not the Labour Party.
Lord Strathclyde: Not the Conservative Party. It is quite clear that many Members of the Labour Party nationally have refused to pay the poll tax.
Lord McIntosh of Haringey: I accept the noble Lord's apology to me personally.
Baroness Hamwee: It is perhaps inevitable that as we start and end the day with the issue of banding so we have yet again the symmetry of that repeated allegation. I was asked whether I would not leave alone the question of banding. It is relevant to the Bill. Time after time we hear the same allegation. I hope that after hearing clearly quite heartfelt denial after denial, it might be accepted that there should now be an end of the matter. I do not take a party political point but the comments are quite extraordinary.
Baroness Blatch: Neither do I make a party point. However, there was a sensible grouping of all the amendments which covered topics. We have had several discussions about banding. There is almost nothing left to say about it. It is very unfortunate that we have been brought back only to repeat the arguments. The noble Baroness has heard absolutely all that we can have to say on banding. We are not going to concede the point.
The amendment could so well have been, as originally it was, grouped with the other amendments on banding. We have had a long day and are quite unnecessarily now discussing arguments that we had in the middle of the afternoon.
Lord Monkswell: I am sorry to intervene but my reading of the amendment makes it different from the other amendments on banding. One of the effects of the amendment is to take properties that are at the low end of the valuation list—small properties that are used only a few days a year—and remove them from the council tax regime altogether because there is no multiplier. I may have misunderstood the amendment but it seems to me to be significantly different from the other banding amendments. If I have misread the situation, I apologise to the Committee.
Baroness Hamwee: I certainly have no wish to keep people unnecessarily. It is late, but not very late. The interests of Scotland on this point are not the same as the interests of England which we debated earlier. I am sad to hear it suggested that because we know that the Government have set their face against banding we should accept that and not have even a short debate on the topic. However, having said that, I beg leave to withdraw the amendment.
Baroness Blatch: Perhaps I may say to the noble Baroness that we have taken Scotland so seriously that we have chosen to put a Scottish Minister on the Front Bench for the whole of the Bill. We have not seen that happening on the Labour or Liberal Benches.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee had given notice of her intention to move Amendment No. 73:
Page 49, leave out lines 23 and 24 and insert:

('£180,000

Values exceeding £180,000 but not exceeding £250,000

H

Values exceeding £250,000 but not exceeding £400,000

I

Values exceeding £400,000 but not exceeding £500,000

J

Values exceeding £500,000

K")

The noble Baroness said: I am tempted to move the amendment although I wrote a note to myself about half an hour ago to the effect that I would not. Therefore, I shall not do so at this stage.
[Amendments Nos. 73 to 75 not moved.]
[Amendment No. 76 had been withdrawn from the Marshalled List.]
Clause 74 agreed to.
Clause 75 [Persons liable to pay council tax]:
Earl Howe Earl Howe moved Amendment No. 76ZA:
Page 50, line 16, leave out paragraph (f) and insert: ("(f) he is any of the following—

(i) the sub-tenant of the whole or any part of the dwelling under a sub-lease granted for a term of 6 months or more;

(ii) the tenant, under a lease granted for a term of 6 months or more, of any part of the dwelling which is not subject to a sub-lease granted for a term of 6 months or more;

(iii) the owner of any part of the dwelling which is not subject to a lease granted for a term of 6 months or more.").

The noble Lord said: The amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
[Amendment No. 76A not moved.]
Clause 75, as amended, agreed to.
Clause 76 [Liability in prescribed cases]:
[Amendment No. 77 not moved.]
[Amendment No. 78 had been withdrawn from the Marshalled List.]
[Amendment No. 79 not moved.]
[Amendment No. 80 had been withdrawn from the Marshalled List.]
Earl Howe Earl Howe moved Amendment No. 80A:
Page 50, line 44, leave out from ("may") to end of line 46 and insert ("provide that, in relation to any dwelling of that class, subsection (3) above shall have effect as if for the reference to the owner of the dwelling there were substituted a reference to the person falling within such description as may be prescribed.").
On Question, amendment agreed to.
Clause 76, as amended, agreed to.
Clauses 77 and 78 agreed to.
Earl Howe: I beg to move that the House do now resume.
Moved accordingly, and on Question, Motion agreed to.
House resumed.
House adjourned at twenty-seven minutes before eleven o'clock.