§ 7.51 p.m.
§ Report received.
§ Clause 1 [Limit on increase in non-domestic rates for 1994 financial year]:
Baroness Hollis of Heigham moved Amendment No.1:
Page 1, leave out lines 14 to 17 and insert ("dependent upon the annual employer's contributions payments (as defined by section 158(4) of the Social Security Contributions and Benefits Act 1992) paid by the non-domestic ratepayer in the previous financial year, so that-—
§ The noble Baroness said: My Lords, this amendment deals with small businesses. I am delighted to be able to return to the amendment on Report as I have every hope that it will enjoy government support. We argued in Committee that the combination of the move to a uniform business rate with the impact of revaluation had had a major impact on business rates, with more than two-fifths of all companies seeing increases, or if necessary decreases, of 50 per cent. in their bills.
§ The Government decided— we do not object to it— to phase in those increases in steps of 20 per cent. Of 160 the increase together with inflation for each of five years. But so that it would be cost neutral it also meant that the gainers too saw their business rates fall not overnight but in incremental stages. After they understandably protested at being asked to subsidise firms in more prosperous parts of the country, the Government agreed that the gainers should gain in full but the losers should still enjoy the protection of transitional relief.
§ So far, so good. But it meant that over three years transitional relief was no longer a self-balancing account, for a reason which I think we all understand and sympathise with but one which has needed heavy public subsidy— almost £ 2 billion of revenue foregone to the Exchequer. By any standards that is a considerable sum, especially when one bears in mind the figures of the Red Book.
§ Our objections in Committee were not to transitional relief or even to the gainers gaining immediately but the losers being protected. We had two objections. First, the subsidy to protect the losers was offered indiscriminately to all businesses whether they needed it or not. Secondly, the willingness to pick up the need for central funding was not guaranteed on the face of the Bill. The noble Baroness, Lady Hamwee, will move an amendment on that point.
§ To return to our first point, we objected to a subsidy protecting the losers being offered indiscriminately to all businesses whether or not they needed it. Whatever their profitability they were having money thrown at them by courtesy of the taxpayer. For some, it was clearly necessary; for others, it was useful; for others, it simply added to their profitability. I include here the major utilities, which means in other words that taxpayers are passing on subsidy to well-to-do shareholders.
§ We have only to remind ourselves of the pre-tax profits of the privatised utilities. British Telecom made profits of nearly £ 2 billion last year; British Gas made profits of more than £ 1 billion; the water companies made profits of £ 150 million to £ 200 million; the electricity companies made profits of £ 100 million to £ 200 million; National Power made profits of £ 580 million; PowerGen made profits of £ 425 million. It is hard to believe that such companies should enjoy the privilege of subsidy— that is, not moving on to their proper rate base, as they would otherwise have done given that level of profitability. Such subsidy is simply adding to the very large profits of already extremely profitable organisations.
In Committee we moved a probing amendment to the effect that transitional relief should be targeted at small businesses — those with under 10 staff— on the grounds that they suffered the worst effects of recession and they had the least margin of profitability with which to face increases in uniform business rates. It was a probing amendment to see whether Ministers accepted that public subsidy should be targeted and that its recipients should be carefully selected according to the circumstances, to quote a phrase. To my pleasure, the Minister was kind enough to agree. He said:
Yes … depending on the circumstances we are, of course, sympathetic to the principle that public money should be targeted,
but we would have to decide the correct procedure, what the targets are and at whom they are aimed".— [Official Report, 8/2/94; col.1520.]
We all agree that public money should be targeted. We have established that principle in relation to this Bill. The question today therefore is a second order question. As the noble Earl quite rightly said in Committee, it is the question of at whom it should be targeted and what are the proper procedures for so doing.
§ This amendment is a second version of the amendment we moved in Committee. We are still seeking to ensure that transitional relief goes proportionately and preponderantly to small businesses but is calculated now not by the number of employees but by their national insurance bill, which is a useful proxy for the wages of the staff. And because it inevitably focuses on companies with low-paid staff rather than the small but perhaps highly profitable professional businesses, it will make sure that subsidy goes to those who most need it.
§ In addition, the amendment not only targets subsidy more carefully, as the Minister would wish us to do, but it does a second thing. It suggests that the subsidy of transitional relief should be tapered; that employers paying a national insurance bill of under £ 5,000 a year would face increases of just 2.5 per cent.; that employers paying a bill of under £ 10,000 a year would pay 5 per cent.; that employers paying a bill of under £ 15,000 a year would 7.5 per cent.; and so on; until firms with a national insurance bill of some £ 30,000 or above would pay the full transitional increase and would not enjoy any protection from that increase.
§ In the forthcoming year business will receive £ 150 million in transitional relief. But instead of all business finding the increment they would have paid cut in half, this amendment would taper it so that the smallest business with the poorest paid employees would get virtually full remission. The large companies with national insurance bills of more than £ 30,000 would get little or no remission but would pay the full increase. It is financially neutral. It is simple to administer, as national insurance figures are already well known to government. The formula is graded and tapered and need present no additional administrative burden to government or to businesses. Above all, it would do what the Minister agreed in Committee was desirable and appropriate. It would target relief on the needy. Because — and this is the most telling point— of the £ 150 million proposed in additional transitional relief, £ 100 million will otherwise be going to plcs, public corporations and privatised utilities— firms which on no scale can be said to need public subsidy, particularly when one takes into account the pressure on public finances in the current year. Two-thirds of the subsidy is going to major businesses whose profits are rising and whose shareholders will enjoy even larger dividends courtesy of the taxpayer. I beg to move.
§ 8 p.m.
§ Baroness Hamwee
My Lords, I support the noble Baroness in this amendment. I see its attraction not only in logical terms, but in terms of making the provision 162 more intelligible to the taxpayer. That is important in every form of taxation. A taxpayer paying tax on a business— in this case business rates— will far better understand and will be far better prepared to accept the fairness of the tax if it is related to the scale of his business. One can think of many businesses which may use relatively small premises— that is the basis for the relief in referring to the particular hereditaments — which are nevertheless large businesses in terms of the number of employees and, one hopes, the profits which are generated.
The noble Baroness has gone through the arguments very clearly and I shall not take up your Lordships' time by repeating them. Perhaps I may ask her a question in summing up as regards paragraph (a) (ii) of the amendment which refers to annual contributions where the payments are £ 30,000. Is that intended to be more than £ 1,000 and less than £ 30,000? I was trying to follow the scale set out in the amendment. If it is not easy to answer that tonight, so be it, but the principle is a very good one.
§ The Parliamentary Under-Secretary of State, Department of the Environment (The Earl of Arran)
My Lords, the noble Baroness, Lady Hamwee, picks up an extremely important point concerning this particular amendment which seems to me to be an attempt yet again to effect change for the sake of change. It is another amendment which seeks to target transitional relief in a different way from the present arrangements, but for no apparent good reason.
Rates are a tax on property rather than on individual businesses. Our current transitional arrangements target relief on smaller businesses by reference to the value of their property. This value is shown in the local rating list so is readily available to billing authorities.
Before I say a few words specifically about the defects of the amendment, may I remind your Lordships exactly what the transitional arrangements do. First, they target relief only on those businesses which faced the largest increases in their bills after 1990. Secondly, they were deliberately targeted to give small businesses more protection than larger ones. They target small businesses by reference to the value of property. Businesses occupying property with a rateable value of less than £ 15,000 in London or £ 10,000 elsewhere have lower increases in bills than larger properties. Without the provisions of the Bill, those increases would have been 15 per cent. in real terms as opposed to 20 per cent. in real terms for larger property. The bills for businesses occupying small mixed domestic and non-domestic property— that is, composite property— would have increased by only 10 per cent. in real terms.
The Bill will reduce the increases for a third consecutive year. Larger properties will face 10 per cent. increases in real terms and smaller ones 71/2 per cent. increases. Small composite properties will have their increases held in line with inflation. But transitional relief is still being targeted mainly at small businesses, using the simple, readily understood and accessible criterion of rateable values as a determinant of size.
163 With this amendment, it seems that the noble Baroness, Lady Hollis, wants to keep the existing rateable value threshold but apply it only to businesses with employers' national insurance contributions of over £ 30,000. Any business paying national insurance contributions of £ 30,000 or less will face increases of between 0.5 per cent. and 15 per cent. determined by reference to some sliding scale. Who sets the sliding scale is left to our imagination for it is certainly not set out in this amendment. Nor is there any provision to make rules which set the scale to apply equally across the country.
But in any case, employers' national insurance contributions are not a good indication of the size of firm. Large mail order firms or hotels, for instance, may employ many part-lime workers for whom, depending on their earnings, no contributions may be made. Such firms would, therefore, have a relatively low contributions bill. Equally, a small firm which may employ very few highly skilled and relatively highly paid workers may have a high contributions bill.
The amendment therefore would link relief for 1994– 95 to national. employers' contributions paid by the ratepayer in 1993– 94. But the contributions totals would not be available from the Inland Revenue's contributions agency until late 1994. To send out the right bills, local authorities would need to be able to gain access to this data. And even so, businesses would not know until towards the end of that year whether or not they were to benefit from the relief. That uncertainty would most certainly not be welcomed. It is not simple to administer.
This amendment is incomplete and it is unnecessary. It would add yet another layer of complexity to what noble Lords opposite have already complained is a complex scheme. For those reasons, I urge your Lordships not to accept it.
Baroness Hollis A Heigham
My Lords, perhaps I may first respond to the question posed to me by the noble Baroness, Lady Hamwee, as regards the shape of the amendment. Basically, the proposal is that for each £ 1,000 extra of national insurance there should be a reduction in protection of 0.5 per cent. For example, with the employees' national insurance bill coming to £ 1,000, that would mean that only 0.5 per cent. would be paid towards the increase which might otherwise occur. At £ 5,003 it would be 2.5 per cent. and upwards in steps. Therefore the relationship between paragraphs (a) (i) and (ii), and (b) is that at £ 1,000 or so it will be 100.5 and go up in incremental stages until one reaches a ceiling of 115 al £ 30,000. If the wording of the amendment does not indicate that adequately, I apologise. It seemed inappropriate to put down an array of figures. That is the presumption— that is to say, a simple, sliding scale taper.
As to the noble Earl's point, I do not recall complaining that this matter was complex. We did say that we were "phasing in the phasing in", which is another matter. We did not say that the matter was complex, but that it was unfair and an indiscriminate use of the taxpayers' money. Nothing that the noble Earl, Lord Arran, has said challenges that at all.
164 He said that this provision would be difficult to administer. The Federation of Small Businesses disagrees with the noble Earl and says that it is very simple to administer. Some of the difficulties may have been underestimated, but it is not a complex issue because national insurance statistics are well known. After all, they are the basis of two other Bills in relation to social insurance and statutory sick pay, with which some of us have been involved recently. This is information which is well established in the public domain.
The noble Earl was right in saying that national insurance bills are not a complete proxy for small firms with low-paid staff, possibly facing hardship. I accept that there is not a complete proxy. The noble Earl used the example of hotels. I am sure he knows the level of wage at which national insurance starts to be paid. If he does not, perhaps I may help to remind him. It is at £ 56 going up to £ 57. Therefore, something like 500,000 people in this country are too poor to pay income tax, but are witnessing their social insurance contributions going up from 9 per cent. to 10 per cent. this year. In other words, unlike income tax, the implementation of national insurance comes very low down indeed. A hotel worker would probably have to be working under family credit hours (under 16 hours a week) and if he is taking tips, to be getting less than £ 56 a week. While I take the noble Earl's point, nonetheless it is not a valid one, given the level at which national insurance begins to bite.
That is not the real substantive issue, which is that this is a form of relief which is untargeted. Perhaps we may remind ourselves of the argument. Rates are a property tax. At the last revaluation it was determined that businesses, firms, shops and office premises were due to pay a new figure. That new figure should have been paid from day one. Quite rightly— and we understand the reasons why— because those increases were swingeing in many cases, as well as some of the decreases, the provision was phased in. That meant that firms had been paying less to the Exchequer for a number of years than they would otherwise have done as part of their contribution to aggregate external finance. Therefore it is Exchequer revenue foregone— a subsidy to them and a requirement for the Exchequer to raise that money foregone from other payers; namely, the taxpayer. That is irrefutable. As £ 2 billion is not being levied by the Exchequer on companies, that money has to be made good by the taxpayer in a difficult financial situation in which we are facing cuts in services in other areas of public policy.
That would be acceptable if we believed that those receiving that £ 2 billion subsidy were among the needy. On the contrary, they are among the most profitable, affluent and asset-rich businesses in this country because the Government have helped to make them so. I am talking about companies such as BT and British Gas. When BT's profits are so high that even Oftel is requiring it to reduce its high prices, how can the Minister justify throwing a rate subsidy at such a company? The same applies to the water companies.
The Minister knows that this case is right. The real problem is finding the most effective and economical 165 way of targeting the money. I invite the Minister to comment. Surely he cannot justify major companies such as BT, British Gas and PowerGen, which have huge profits that are spent in giving high and generous dividends to their shareholders, paying less in what is effectively a tax to the Government — the business rate — than they would otherwise, with that money having to be made up by people who are often very poor and at the bottom level of taxation. I invite the noble Earl to respond.
§ The Earl of Arran
My Lords, with the leave of the House, the noble Baroness, Lady Hollis, said that she never said that the provisions would make the matter more complex, but this particular amendment would certainly make the Bill exceptionally complex. I believe that the Opposition are seeking that a test of hardship should apply to each ratepayer in order to decide the level of transitional relief to which that ratepayer is entitled. But that relief is not set against particular economic or market circumstances. The relief is intended to move ratepayers from their old liabilities to their new ones as painlessly as possible. If one took the argument of the noble Baroness to its ultimate conclusion, one would have to say that the only sure way of targeting relief on the cases of true need would be to invite the billing authorities to scrutinise the accounts of each ratepayer. I think that the noble Baroness would agree that that would require an army of accountants for each local authority area and would certainly be likely to cost more than the relief that would be distributed.
§ Baroness Hollis of Heigham
My Lords, I thank the noble Earl for that reply, but I realise that as this is not a Committee stage this is not the time or place to pursue the matter. I simply remind the Minister that under the old system of local domestic rates, local authorities could not only introduce transitional arrangements but had the power to offer hardship schemes whereby they could decide to make a judgment on the value of supporting that local company as against the losses forgone. Local authorities still have a power to offer hardship relief, but only at the expense of their own budgets and standard spending assessments and, therefore, of the revenue coming under their external aggregate finance.
In other words, until the UBR, it was a well-established principle that local authorities could offer hardship relief where the circumstances warranted it. In most cases there were only a few bidders for it, but it allowed the authorities to target help where it was most needed. However, as it is clear that we shall not be able to move the Minister tonight, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 8.15 p.m.
Baroness Hollis of Heigham moved Amendment No.2:
After Clause 2, insert the following new clause:
("Consultation by Secretary of State
Before making any regulations under section 58 of the 1988 Act in relation to the financial year beginning in 1995 and to subsequent financial years, the Secretary of State shall consult persons or bodies appearing to him to be representative of persons subject to non-domestic rates about the effects of the compilation of new non-domestic rating lists. ").
§ The noble Baroness said: My Lords, this amendment asks the Secretary of State to put a requirement for consultation on the face of the Bill. This Bill is before us precisely because of the need to protect businesses from the consequences of the combination of the last revaluation together with the move from local to national business rates. All the evidence shows that revaluation contributed to perhaps three-quarters of the change in people's bills. As we explored in Committee, the revaluation had significant regional effects, benefiting the North and manufacturing industry as against the South, the City of London, offices and shops. The increases were so severe that the Government had to phase them in and then to phase in that adjustment. In order that those who were due to have their rate bills reduced should have their demand for relief met immediately, the provisions could not be self-financing, but cost us £ 2 billion over three years.
§ We accepted that that was a difficult situation for the Government and the series of Bills that have been presented to this House and the other place have been intended to mitigate the effect of what could and should have been anticipated, given a revaluation following a 20-year delay.
§ This time around, with the revaluation due in 1995, I understand that considerable research from the R&D side of chartered surveyors indicates the likely new pattern of that revaluation. It looks as though it will reverse some of the shifts of the previous revaluation, aiding inner London, the South East, offices and shops, but that it will relatively disadvantage the North, the Midlands and manufacturing. As I understand it, it looks as though retailers in central London will see their valuations fall by 15 per cent, but that there will be increases of, say,20 per cent. in the East Midlands and of between 15 and 50 per cent. in the North and North West. It looks as though the figures for office developments will be reduced in the South, but go up by 15 to 30 per cent. in the North and North West and by 50 per cent. in the Midlands. It looks as though the figures for industrial premises will be up 5 to 10 per cent. in London and the South East, but by perhaps 30 per cent. in the East Midlands, North and North West. Even within a region there may well be marked differences which will affect the competitiveness of individual firms and businesses.
§ The Government may again be minded to phase in any new revaluation because in many ways these increases are almost as substantial as the revaluation increases and decreases that were introduced in 1990. If they are minded to phase them in, that can only be at substantial public cost if the Exchequer is going to pick up the bill and if the provisions are not meant to be self-balancing. We have spent £ 2 billion on phasing in the last revaluation effectively. We must be talking about substantial sums (if not fully of that order) in the next round if the Government are to pick up the bill.167
§ However, as far as we can tell that pubic money will again be thrown at businesses without any prior consultation about the impact of revaluation, the need for businesses to receive transitional relief or, following the previous amendment, the need to target what scarce public money there is. Again, we are confident that the Government cannot want to throw money indiscriminately at all corners. They should therefore consult about the impact not only of revaluation but also of any transitional relief and on the possible need for any elaborated hardship scheme.
§ This amendment would begin that process of consultation and make it a right. We are suggesting that the Secretary of State should consult the representative bodies of business and local authorities which could give him relevant guidance and avoid the need not only to have subsequent Bills of this order, but also the subsequent effort that is involved in trying to target relief on where it is most needed.
§ The amendment would have a second advantage. I hope that it would a low us to spend public money more wisely than currently. It is clearly a nonsense to throw transitional relief and Exchequer subsidy at major companies which ate so profitable that their profits are having to be curtailed by bodies such as Oftel.
§ There would be a further advantage. Under the old local rating system, local authorities were rightly required to consult local businesses about the level of rates both to establish that they offered value for money and that, where there were areas of business need that remained unmet in that community, the local authority should work with the local chamber of commerce and the like to further those needs. Such a need might be for local starter units, better distributor roads or the need to have a fast track for certain planning consents. It might relate to the scale of parking for key workers in those companies. Like the noble Baroness, Lady Hamwee, I have been a local authority member and I am sure that we would both feet that we had failed if, after our meetings with local businesses in the local chambers of commerce, we did not all agree on a handshake that we had offered a splendid budget, exactly targeted on the needs of the local economy. In return, as a local authority, we expected to carry loss leaders such as airports and the like to further that local economy.
§ That local consultation has now effectively gone because national business rates, in the UBR, have made it redundant. Precisely because it is no longer relevant at local level (even though it was valuable) it is even more important that the Secretary of State undertakes to maintain it. Revaluation will have not only national but regional implications and any proposals for transitional relief will have significant effects on us all
§ We believe that this is a modest amendment. It would be inexpensive but useful. It would require the Secretary of State to undertake towards business that which the local authority was rightly required to undertake when it, rather than the Secretary of State, determined the level of the business rate. I beg to move.
§ Baroness Hamwee
My Lords, I support the amendment for the reason anticipated by the noble 168 Baroness, Lady Hollis. I have experience of consultation at local level, as does the noble Baroness. I hope the Minister does not believe that an adequate response will be, "Of course, the Government always consult". I hope that that is the case. Let us say so and provide for it.
The noble Baroness says that consultation with business rate payers has effectively disappeared because the rate is now nationally set. The position is more bizarre, because although consultation continues there is very little on which the local authority can consult. It is certainly useful to have an annual meeting involving the local authority and local businesses. But those discussions continue throughout the year in any event. The statutory consultation remains. The local authority meets the business rate payers but they are not its ratepayers— if your Lordships take my meaning.
§ The Earl of Arran
My Lords, the Government fully understand the need to consult widely on any proposals they may have for introducing transitional arrangements following the 1995 and subsequent revaluations. But they see no need to add to the length of the Bill by accepting such consultation as a formal duty.
At Second Reading and in debate in another place the Government sketched out their intention to consult businesses on the effects of the 1995 revaluation by the early summer. We know that local authorities will need advance warning of any proposals, and we shall certainly take their views into account.
The record of the Department of the Environment in consulting on business rates is exemplary. There was extensive consultation on our proposals for transitional arrangements following the 1990 revaluation. Since then the department has listened carefully to the views of individual ratepayers and to business representatives. Officials have regular discussions with members of the valuation profession about the effects of revaluations and the detailed operation of the non-domestic rating system. They have regular meetings with local authority associations on all such matters. These are not just talking shops. Most of the dialogue is constructive and gives rise to positive action. The Bill and its predecessors are good examples of the Government's willingness to respond to the views of business and others about the operation of the system.
No purpose would be served by imposing a formal duty on the Secretary of State, as proposed by the noble Baroness, Lady Hollis. Therefore, I can see no reason for the amendment.
§ Baroness Hollis of Heigham
My Lords, when one bears in mind what the Minister said in Committee it is perturbing to be told, on the one hand, to rely on Government intention and, on the other hand, to rely on Government regulation, but never to rely on Government legislation. I have heard nothing tonight which persuades me that although the Government are proposing this step it will hurt to have it in legislation so that it becomes an entitlement and not a courtesy or a favour. However, if the Government were proposing not to do so, the amendment would require them to have consultation that would ensure that public money was being better spent. Either way, I cannot see that 169 Government have anything to lose. If they are willing to give the undertaking, why not have it on the face of the Bill where it becomes enforceable?
I am sure that the Minister means what he says but he cannot bind his successors unless the provision appears on the face of the Bill. That is why so much of our pressure is to add to the Bill, often in the spirit of what the Minister intends and undertakes. However, as he resists putting the provision on the face of the Bill we have no way of ensuring that his intentions will be carried out by his successors with integrity. Except through the process of judicial review we cannot make them stick.
§ This may not be the time to press the amendment. I beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ The Deputy Speaker (Lord Hayter)
My Lords, I must point out to the House that if Amendment No.3 is agreed to, I shall be unable to call Amendment No.4.
§ Clause 3 [Non-domestic rating: transitional pooling]:
Baroness Hamwee moved Amendment No.3:
Page 2, line 41, leave out from ("Act)") to ("for") in line 42.
§ The noble Baroness said: My Lords, the amendment is drafted in the same terms as an amendment I tabled in Committee. I do not wish to take up the time of the House unnecessarily by repeating arguments. However, the ground needs to be covered a little more effectively. I cannot find a new argument but I do not believe that it is incumbent on those of us who are anxious about the provisions of the Bill to find arguments. After all, we are not seeking to change what is currently enshrined in statute. That is an obligation on the Secretary of State. The words of the Bill will change that obligation from being mandatory to merely permissive.
On Second Reading and in Committee the Minister gave a commitment. I do not doubt his sincerity. He said that we should regard him as giving an assurance that the proper steps would be taken in the future. He continued, referring to the permissive aspect:
I can add no more other than to say that we do not feel that it should be on the face of the Bill".
The noble Baroness, Lady Hollis, has generously said that she trusts me; she must trust what the Government say in this instance". — [Official Report, 8/2/94; col.1523.]
We know that change happens and that Ministers change. Without for one moment impugning the integrity of the noble Earl's remarks tonight, given that the Government are already under an obligation it is incumbent upon them to explain more fully why the current position should be altered. We are seeking to defend the current position. I beg to move.
§ Baroness Hollis of Heigham
My Lords, I strongly support the amendment. I hope that the Minister will address a profound worry. As I said in Committee, we have no doubts about the integrity of the Minister's intentions. It would be quite improper for us to express such doubts if we had them. However, the Minister cannot bind his successors. As a result of my experience in local government as chair of finance and the like, I 170 have seen positions announced by one Minister later amended and disavowed by others. They were statements in another place and therefore the local authority could not make those assertions and intentions stick.
I hope that in response to the noble Baroness, Lady Hamwee, the Minister will answer a simple question. Let us suppose that the Minister's successor on his side will not feel able to fund such an account from central government moneys but instead removes it from the aggregate external finance of local authorities. How can local government make the Minister's intention stick if it is not on the face of the Bill? I understand that a local authority can seek a judicial review. At such a review the local authority will be told that the Minister cannot bind his successors merely by verbal statements. All that can bind his successors is primary legislation and the will of Parliament is required to change that. If the Minister has such an intention but if his successor will not honour his promises, what advice does he offer to local government to ensure that those intentions stick if they are not on the face of the Bill?
§ 8.30 p.m.
§ The Earl of Arran
My Lords, before considering these amendments in detail, it might help if I remind the House how the top-up provisions work. The Non-Domestic Rating Act 1992 introduced a duty to top up the pool to make good the shortfall arising from that particular Act, which froze rate increases in real terms and allowed remaining gains to come through in full in 1993– 94. Last year we extended its provisions to cover the shortfall arising from the 1993 Act, which froze rate increases for a further year. This Bill extends it further to cover the changes made by the November Budget. But, as we have explained, this Bill also looks ahead to the provisions we will require from 1995– 96 onwards. We sought flexibility in those arrangements because we did not know what transitional arrangements, if any, would continue to be needed. Had we not extended the 1992 Act provisions forward to cover future years as well, we would have left ourselves with neither a duty nor a power to top up the pool.
We are fully aware of the importance which local authorities attach to ensuring that the pool is not depleted. That is why the Bill addressed this issue by providing us with a power to make good any shortfall if one arose in the future. There was nothing sinister in this; we could have given ourselves a duty but chose not to on the basis that a duty would not always be appropriate and that a power would therefore allow us greater flexibility.
Given our good faith in bringing forward this power, we have been surprised and rather dismayed by the strength of feeling on this matter, which, I must say, we feel has been somewhat exaggerated. My honourable friend the Minister of State for Local Government and Planning listened carefully to the views expressed by the Opposition in another place and was able to give the unequivocal assurance, which I have also given in this House, that we would always top up the pool if the circumstances warranted it. In our view, the 171 Government would be hard-put not to honour this commitment even if the complexion of the Government were to change.
We have been anxious all along to try to minimise delay on this Bill so that local authorities know where they stand before they send out their rates bills in early March. The department has received a number of telephone calls from local authorities of all political persuasions, up and down the country, concerned about the risk of delay Many will want to send final instructions to their printers before the end of February. Any delay in sending out rates bills could give rise to cash-flow difficulties for local authorities. Given the commitments we have made, we see no reason to delay this Bill any further.
I should perhaps add that we would see particular difficulties with. Amendment No.4 tabled in the name of the noble Baroness, Lady Hollis of Heigham. That tries to turn the power into a duty in a rather indirect way, by making the Secretary of State account for any decision not to exercise his power to top up the pool. Given the commitments we have made, we would always do so where necessary. But even if it was clearly not necessary, this amendment would nevertheless require the Secretary of State to lay an order for debate in both Houses to explain why. Furthermore, the Secretary of State would have to return to both Houses each year and go through the whole process over and over again. That would seem a roundabout way of proceeding.
As I have said repeatedly, the Government have given their word that they will always top up the pool whenever transitional arrangements leave it short. Anything else is un necessary and would only serve to delay the Bill. That is why we believe that we have gone as far as we car' to meet the Opposition's concerns and why we believe that both these amendments are unacceptable.
§ Baroness Hamwee
My Lords, there is perhaps a trite comment with which I could reply to the Minister when he accuses us of seeking to delay the implementation of the Bill; that is, if the Government accept the amendment, there would be no question of delay.
He identifies very neatly the intention behind Amendment No.4. I thought that that was an imaginative crabwise rather than direct approach to the issue. The noble Lord says that a duty would not be appropriate; that a power would enable the Government to approach the matter flexibly. I wrote down the noble Earl's words— and I shall be corrected by the Official Report if I am wrong. He gave unequivocal assurances that if circumstances warrant, steps would be taken to top up the pool. He then said that where necessary, the pool would be topped up. Towards the end of his speech — and this was the clearest commitment— he said that the Government would always top it up when transitional arrangements leave it short.
It is the very fact that there can be so many different ways to describe that which leaves those of us who have a little cynicism about these matters still cynical as to what may happen in the future. It is a fair point to say that a different government may be stuck with a 172 commitment, but that does not appear to frighten any of us who may look to there being a different government in the future. I fear that we have not progressed further. I had hoped that the Government would take the opportunity to do so, but I shall not tax the patience of your Lordships any longer or allow the Minister to do so, and I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No.4 not moved.]