Sitting of 30 April 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    MASONIC TRUST FOR GIRLS AND BOYS BILL
      ASSOCIATED BRITISH PORTS BILL
      Read the Third time, and passed.

    LONDON REGIONAL TRANSPORT BILL (By Order)
    Order for consideration, as amended, read.
    To be considered upon Tuesday 5 May.

    YORK CITY COUNCIL BILL [Lords] (By Order)
    Order for Second Reading read.
    To be read a Second time upon Thursday 7 May.

    CITY OF WESTMINSTER BILL (By Order)
    Order for Second Reading read.
    To be read a Second time upon Thursday 7 May at Seven o'clock.

    TEIGNMOUTH QUAY COMPANY BILL (By Order)
    Order for Second Reading read.
    To be read a Second time upon Thursday 7 May.

    LONDON DOCKLANDS RAILWAY (BECKTON) BILL (By Order)
    Order for Second Reading read.
    To be read a Second time upon Tuesday 5 May.

Oral Answers to Questions
  NATIONAL FINANCE

    Family Taxation
    Mr. Nellistasked the Chancellor of the Exchequer how the tax position of a couple with two children, receiving half average earnings, has changed since 1979; and if he will make a statement.
    The Financial Secretary to the Treasury (Mr. Norman Lamont): Their real take-home pay is up by 17½ per cent., but despite that they pay almost £1 a week less in income tax and national insurance contributions than they would have if Labour's 1979 tax regime had simply been adjusted in line with inflation.
    Mr. Nellist: I asked a question about the Tories' tax position, not Labours' tax position. Why does the Minister
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    not at least repeat the answer given in Hansard on 27 March this year—that the real position for a couple, with two children, on half average earnings is that in 1979 they paid 12 per cent. of their income in direct tax while today they pay 16·5, per cent. a real rise of over a third in direct taxation? At the same time, yuppy employees in the City of London on 2,000 times average earnings pay 25 per cent. less in direct taxation. The Prime Minister said before the 1979 and 1983 general elections that taxes should be cut. Taxes were not cut then, so why should we believe her today?
    Mr. Lamont: I repeat, for the hon. Gentleman's benefit, that the take-home pay of a person on half average earnings is up by 17½per cent. That is a very substantial increase. As the hon. Gentleman is so indignant about the burden of taxation, perhaps he could say what the effect will be of Labour's policies.
    Mr. Chapman: If national insurance conributions are included in assessing the take-home pay of a person on half average industrial earnings, as my hon. Friend the Financial Secretary said in his first answer, does he agree that, although great progress has been made in reducing the overall taxation and increasing the amount of take-home pay of such a person, it is still about a quarter of his total gross pay? Therefore, does he agree that it must remain a high priority to reduce taxation levels further for such people?
    Mr. Lamont: Of course. We are very firmly of the view that taxes ought to be reduced, and we keep on saying that. It remains the Government's objective to reduce further the burden of taxation. As my hon. Friend said, this is particularly important for the lower paid.
    Dr. McDonald: Why will Ministers not come clean about this issue? Tax and national insurance contributions for those on half average earnings have gone up, as my hon. Friend the Member for Coventry, South-East (Mr. Nellist) stated, from 12 to 16 per cent. According to the Government's answer, even 2p off the standard rate has made no difference in the proportion of tax paid. Is the Financial Secretary not aware that the post-tax pay increases for the top earners have been at double the rate of increase of those on half average earnings? Since this question refers to the total burden of tax, will he admit that indirect taxes, including VAT, cost the very poorest almost a quarter of their income but the richest merely one sixth? When will Ministers come clean about their distribution of the burden of taxation?
    Mr. Lamont: If the hon. Lady is so indignant about the burden of taxation on the poor, why did she vote against reducing it yesterday?

    Profit-related Pay
    Mr. Hickmetasked the Chancellor of the Exchequer what response he has received to the proposals for profit-related pay announced in his Budget.
    Mr. Soamesasked the Chancellor of the Exchequer what response he has received to the proposals for profit-related pay announced in his Budget.
    The Chancellor of the Exchequer (Mr. Nigel Lawson): I am glad to say that over 3,500 employers have registered their interest in profit-related pay with the Inland Revenue.
    Mr. Hickmet: Is not the attraction of profit-related pay much the same as privatisation to those who work in the industries? It gives them a share in the industries and a share in the profitability of the industry in which they work.
    Mr. Lawson: Yes, I believe that my hon. Friend is right. Indeed, I would go further and say that there are two distinct benefits that arise from profit-related pay. The first is the greater interest that employees have in the profitability of their company and the better labour relations that stem from that. The second is the greater degree of flexibility that is introduced into the pay system. One of the big problems in this country has been an excessively rigid pay system. Therefore, I am particularly glad that as many as 3,500 employers, many of them large employers, have already registered their interest in profit-related pay with the Inland Revenue.
    Mr. Speaker: Mr. Soames.
    Mr. Skinner: He is not here.
    Mr. Speaker: Mr. Skinner.
    Mr. Skinner: Ever present.
    Now that the Chancellor seems to be in full stride regarding profit-related pay, will he answer the question that has been put to us continually by the lobbies of the nurses and the other Health Service workers? How could the nurses, ill-paid as they are, obtain any benefit from the profit-related pay system that the Chancellor keeps bandying about?
    Mr. Lawson: Nurses should benefit considerably from the reduction in the basic rate of income tax by 2p in the pound, which the hon. Gentleman and his hon. Friends voted against yesterday.

    Rates
    Mr. Holtasked the Chancellor of the Exchequer what estimate he has made of the impact on the economy of the level of local authority rates and spending now announced for 1987–88.
    The Chief Secretary to the Treasury (Mr. John MacGregor): Local authorities in Great Britain are planning to increase their current expenditure by more than 8 per cent. this year over last, well above inflation and what the Government believe to be necessary. The excess will be met from the reserve, and will not add to the planning total, but this inevitably means less is available for other services. The result of this overspending is rate increases averaging nearly 7 per cent., so it also means a higher than necessary additional impost on businesses.
    Mr. Holt: Does my right hon. Friend agree that the Audit Commission has established that there are potentially £2 million-worth of savings that could be made within local government, particularly if places such as Cleveland cut out the £250,000 being spent this year on political advertising at the ratepayers' expense?
    Mr. MacGregor: I agree with my hon. Friend. By a slip of the tongue I think that my hon. Friend said £2 million-worth of savings. In fact, just to get it clear, the Audit Commission believes that £2 billion-worth of savings are available. He is absolutely right about Cleveland. I understand that that Labour-controlled council is increasing its total expenditure by over 13 per cent. this
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    year, which is the third highest increase for the counties. It is no wonder, therefore, that Cleveland has the second highest county council rate in England, and that is bound to have a heavy adverse effect on businesses there. My hon. Friend is entirely right.
    Mr. Robert Sheldon: Before the right hon. Gentleman quotes the Audit Commission too much, he should recall that the head of the Audit Commission, John Banham, now the head of the Confederation of British Industry, has gone on record as saying that local government is more efficient than central Government. Should the right hon. Gentleman not be looking to his own areas of expenditure rather than berating those local authorities?
    Mr. MacGregor: The right hon. Gentleman, who is always fair in these matters, will know that we have done a great deal in that respect. We have got the numbers of civil servants in central Government down substantially without reductions in the effectiveness of services. In many other ways, and through many initiatives, we are making substantial savings in administration and in the cost of the programmes. I entirely agree with the right hon. Gentleman that it is important to achieve efficiency in central Government as well as local government, and we devote a great deal of our time to doing that.
    Mr. McLoughlin: Does my right hon. Friend agree that, although most Conservative local authorities have increased rates by 5·5 per cent., Labour, alliance and hung councils have increased their rates by about II per cent.? Will he also consider what the alliance leader of Derbyshire county council said? She said that she supported the Labour party on most matters but could not support it on its rate increases. Is that not gross hypocrisy on the part of the alliance? Is the alliance trying to have it both ways by supporting extra spending without considering the consequences of such spending? Will he acknowledge that Derbyshire is the highest rated council in the country?
    Mr. MacGregor: On the latter points, my hon. Friend is entirely right. Indeed, I listened with interest to what he said about the alliance leader in his county. It rather mirrors what the Liberal and Social Democratic Members do in the House. They urge a good deal more expenditure, vote against tax cuts and then do not know where to go from there. I agree also with what my hon. Friend said at the beginning of his question. It is significant that rate increases in Conservative councils this year are 5·4 per cent., whereas in Labour councils, other than rate-capped councils, they are 12·4 per cent. That speaks for itself. The burden on domestic ratepayers and businesses is clear.
    Mr. Campbell-Savours: Is it not true that the new rating system—the community charge—will have a dreadful, catastrophic impact on many industrial towns and their economies in the northern region? Have the Government measured the impact that the new tax will have in so far as it will wipe out tens of thousands, hundreds of thousands, indeed millions, of pounds from spending power in such communities?
    Mr. MacGregor: When the hon. Gentleman talks about business, he is talking, not about the community charge, but about the new non-domestic national business rate that we shall introduce. He will discover that many businesses in his area will find that it is more beneficial to them than the present system.
    Mr. Greenway: Will my right hon. Friend comment on the effect on people in Ealing, and my constituents in particular, of the rate increase of 65 per cent. that was imposed by Ealing council? That will represent an average increase of £5 or £6 per week, and some people will have to pay £12 a week. It will hurt the elderly, the disabled, industrialists, jobs, prices and everything else. Is it not wicked and disgraceful? Is it not typical of members of the modern Labour party? That is just what they would be like in government, and that is why they must be strongly rejected.
    Mr. MacGregor: I entirely agree with my hon. Friend. He has clearly made the point about the impact of a Labour council in Ealing. Bearing in mind the rate increases in Conservative-controlled councils, I am sure that many ratepayers in Ealing will wish that they lived under a Conservative administration at local level and therefore benefited from the much lower rate increases that are happening elsewhere.
    Mr. Nellist: When the Minister replied to the hon. Member for Langburgh (Mr. Holt) about the amount of money spent on political advertising, why did he not admit to the House that £42 million — [Interruption.] If the Chancellor would keep quiet, the Minister could hear me. The sum of £42 million was spent on the sale of British Gas. Hundreds of millions of pounds have been spent by the Government on political advertising of Rolls-Royce, British Telecom and the rest. The Minister prays in aid the Government's record on the Civil Service and the spending by central Government. If the Government are so clever, why are thousands of civil servants in Coventry and elsewhere out on strike this week because of pay cuts over the past seven years?
    Mr. MacGregor: The hon. Gentleman is only envious that our policies on privatisation are so hugely successful and of great benefit to the economy and are being copied around the world. It is just a pity that he does not understand the significance of them.

    Charities
    Mr. Nicholas Baskerasked the Chancellor of the Exchequer what representations he has received seeking changes to the taxation treatment of charities.
    The Economic Secretary to the Treasury (Mr. Ian Stewart): Charities have enthusiastically acknowledged the very substantial measures on the tax treatment of charitable giving and other aspects of charitable work introduced by the present Government.
    Mr. Baker: Is my hon. Friend aware that charities have been and are conducting political campaigns? Oxfam has been conducting one, and War on Want is in the process of doing another. Indeed, the director of Oxfam has conducted a campaign in The Times today. Does my hon. Friend agree that for four charities to conduct these campaigns is a fraud on those who subscribe to them and endangers the taxation advantages that the charities enjoy?
    Mr. Stewart: Like my hon. Friend, I agree that the abuse of charitable funds in the way that he has described is deeply to be deplored and that that is not the basis on which tax relief is given. I shall draw my hon. Friend's remarks to the attention of my right hon. Friend the Home
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    Secretary, because the Charity Commission has responsibilities for seeing that charities do not abuse the funds that are entrusted to them.
    Mr. Ashton: But is it not true that public schools enjoy charitable status, and have they not been turning out apparatchiks and Lobby fodder for the Conservative Benches for a century? What does the Minister intend to do about that?
    Mr. Stewart: I am sorry that the hon. Gentleman does not regard education as a suitable matter for charitable support.

    Opposition Parties' Policies (Costs)
    Mr. Simsasked the Chancellor of the Exchequer whether he will prepare estimates of the cost of the programmes announced by the Opposition parties.
    Mr. MacGregor: I have already costed the Labour party's commitments, which would amount to an additional £34,000 million in a full year. The SDP and Liberal parties' pledges are so vague and confused that they cannot be costed.
    Mr. Sims: I thank my right hon. Friend for that reply. I assume that the £34 billion figure that he has mentioned has been calculated by assessing the cost of various items of policy to which the Labour party is pledged. Can he tell the House whether he has received any representations or objections about specific items that he has costed? If he has not, does he agree that, if the Labour party does not object to the parts, it can hardly object to the whole?
    Mr. MacGregor: I have often made clear exactly what items are in the £34 billion commitment and how it has been costed. I have made the costings available to the Labour party and have said that, if it will point out a single one that is not official Labour party policy, I will withdraw it. The Labour party has not done so. Almost weekly, Opposition Front Bench spokesmen for social security, education, overseas aid and health keep confirming the pledges. I again ask the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) when he is going to repudiate them. It is perfectly clear that we would have the same situation as the one that we had under the last Labour Government, because if a Labour Government carried out their spending programme they would be back to the International Monetary Fund in no time.
    Mr. Winnick: As regards costing programmes, would the Chief Secretary be good enough to tell the House and the country how much extra the average household would have to pay if VAT were to be charged on children's clothing and other essential items, including food? Is it not perfectly clear that what is now being planned by the Tories, should they return, is precisely to levy VAT on such items?
    Mr. MacGregor: It is quite extraordinary that the hon. Gentleman can come forward with suggestions like that, when he must know that, in order to pay for the kind of programme to which his party is committed, VAT would have to go up very substantially. The cost of his party's programme would be the equivalent of a VAT rate of just under 50p in the pound. The hon. Gentleman puts that point because he is so desperately anxious to find a smokescreen for the cost of Labour's programmes and their tax implications for ordinary people.
    Mr. Maclean: In view of the pledge made recently by the hon. Member for Stockton, South (Mr. Wrigglesworth) that the alliance would publish the costings of its policies before the election, purely in the interests of open government would my right hon. Friend agree to run the alliance programme through his Treasury computer? Will he also get his Treasury experts to cost the alliance programmes? Or are they so vague that it would be impossible to tell what they cost?
    Mr. MacGregor: Indeed, there is nothing as vague as the alliance programme. I have been through the entire document "The Time Has Come", and it is impossible to cost its contents because the Liberals and the SDP do not pledge themselves specifically to anything. Whenever they do, they immediately have to go back to the drawing board, either because they are incapable of agreeing on the policies, or because they have not thought them through.
    Mr. MacKenzie: First, might I ask the Chief Secretary, who precisely is paying for those costings? Is he using public money to do his own costings for the benefit of his colleagues and to prepare election ammunition? Secondly, if he is using public money for that purpose, will he note that some of us take strong exception to that? Thirdly, if the civil servants have got it massively wrong, where has that money been coming from and who is paying for the costings?
    Mr. MacGregor: No additional public resources are employed in the costings.

    Life Funds (Capital Gains)
    Mr. David Atkinsonasked the Chancellor of the Exchequer if he has received representations concerning his plans to change the treatment of capital gains in the life funds.
    Mr. Norman Lamont: A number of representations have been received and are being considered. I have also discussed the matter with the Association of British Insurers. There will be an opportunity for detailed debate in Committee on the Finance Bill.
    Mr. Atkinson: Is my right hon. Friend aware that the life industry is concerned that his proposed changes in the capital gains of life funds will be at the expense of the savings of existing policyholders, who will as a result be put at some disadvantage against other forms of collective savings such as unit trusts?
    Mr. Lamont: I note what my hon. Friend has said. Obviously, there will be further discussions about this. I do not necessarily accept that life policy holders will be disadvantaged compared with unit trust holders, because there are advantages for them too. For example, a unit trust holder will pay income tax up to his marginal rate and will pay capital gains above the threshold. We believe that the impact of the changes will be minimal, but, of course, we shall listen to what is said.
    Mr. Blair: Is the Financial Secretary aware that this is of critical importance to mortgage holders? Is he also aware that 50 per cent. of new mortgages last year were endowment mortgages? Can he confirm that more than £1,500 will be lost on the payout from an ordinary £30,000 endowment mortgage if the Government's proposals go through? Why are the Government hitting millions of small investors with higher rates of tax, while leaving their friends in the City untouched?
    Mr. Lamont: The impact on particular policies will vary according to different companies. I do not accept the figure that the hon. Gentleman mentioned. Some companies have said that there will be practically no effect. We estimate that the extra tax that would have been paid in 1985 on those policies would have been less than £20 million. That compares with the policyholders' funds of some £70 billion, so the impact will be very small.

    Payroll Giving
    Mr. Alan Howarthasked the Chancellor of the Exchequer what information he has about the response to the new payroll giving schemes.
    Mr. Ottawayasked the Chancellor of the Exchequer whether he will make a further statement about the implementation of payroll giving schemes.
    Mr. Ian Stewart: The new payroll giving scheme has made an encouraging start. The Inland Revenue has approved 11 agencies to run the scheme and 300 employers have already signed contracts to participate. I expect many more to follow.
    Mr. Howarth: Does my hon. Friend agree that in the figures that he has given those 300 employers represent nealy 1 million employees, and that those figures mark a most auspicious start for the payroll giving scheme? Will he confirm that, since this Government came to power, giving to the 280 charities has already doubled? Does he expect that, with the payroll giving scheme, we shall see a further large increase of charitable giving to charities great and small? Will he also confirm that the administrative costs to employers of operating the schemes will be an expense allowable against tax?
    Mr. Stewart: I welcome my hon. Friend's support for the payroll giving scheme. As he said, it has made a most encouraging start. I understand that information about new employers who will be taking part is coming in every day. The scheme will clearly involve a big increase in charitable giving, which has already doubled since the Government came to power in 1979. Already, tax relief of about £500 million is given by the Revenue in respect of charitable giving and we shall be only too pleased if the scheme greatly increases that. So far as I can comment on my hon. Friend's last point, I believe that to be the case, but if there is any problem I shall let him know.
    Mr. Yeo: Does my hon. Friend agree that the vast majority of charities do extremely valuable work, which fully deserves the introduction of tax concessions such as the payroll giving scheme, but that organisations such as War on Want, which have used their funds to finance overtly political advertisements, are abusing not only their charitable status but the tax concessions that that status bestows?
    Mr. Stewart: I deplore the abuse of charitable status of the sort that my hon. Friend has described. My hon. Friend the Member for Dorset, North (Mr. Baker) made heroic efforts to be in the Chamber to raise the matter earlier, and I know that it is one of widespread concern.
    Mr. Raynsford: Does the Minister accept that it is an appalling indictment of the Government's policies that an increasing number of well-respected charities, such as Oxfam, along with other well-respected bodies such as the

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    Archbishop of Canterbury's commission on urban priority areas, have felt the need to criticise the Government's policies?
    Mr. Stewart: Political behaviour by those involved in charitable work is always to be regretted. However, that does not invalidate the wish of all those in the House to support genuine charitable activities, and I hope that we will be able to continue to do so.
    Mr. Thurnham: Does not the much increased level of charitable giving give the lie to those who claim that Britain is much less generous under this Government?
    Mr. Stewart: The public have been increasingly generous to charitable causes since 1979. As I have said, charitable giving has about doubled. That is one of the beneficial consequences of the strong increase in standards of living and take-home pay, that have been enjoyed at all levels of the population since 1979.
    Mr. Gould: Does the extent of charitable giving show that the people are more compassionate than the Government?
    Mr. Stewart: In measures that we have been discussing and in many other ways; the Government are encouraging charitable giving. In this sense I am sure that the Government are entirely with the grain of the population.
    Mr. Pawsey: Does my hon. Friend accept that the payroll giving scheme has been widely welcomed by many charities, and even by those which are evidently involved in political activities? Will my hon. Friend accept also, however, that the view is gaining ground that some of the giving is almost irrevocable and is difficult to cancel by employees, while some employers regard the scheme as being unduly bureaucratic? Will my hon. Friend take this opportunity to reassure charities, employers and employees that the scheme is easy to administer?
    Mr. Stewart: I think that I can give the assurance that my hon. Friend seeks. We went to great lengths to try to ensure that the operation of the scheme would not be unduly onerous or bureaucratic for employers. That is why we insisted on having independent agencies. The excellent start that the scheme has made suggests that it cannot be too off-putting to employers, otherwise there would not be so many of them either already contracted or wishing so to be.

    Value Added Tax
    Mr. Dubsasked the Chancellor of the Exchequer if he has any plans to extend the scope of value added tax.
    Mr. Ian Stewart: No, Sir.
    Mr. Dubs: Is it not becoming increasingly clear to the House and to the country that the Conservative party intends to fight the next general election on two manifestos — [Interruption.] — one that will be published openly, and a secret document in which there are to be proposals to increase the rate of VAT and to extend its scope to food and other products? Despite the fact that the Minister has answered no to my main question, the Prime Minister is not prepared to deny the assertion categorically? When will the Government be honest with the House and the people?
    Mr. Stewart: We shall certainly fight the next election on two manifestos, ours and yours.
    Mr. Speaker: Order. I shall be standing at the next general election, but I shall not have a manifesto.
    Mr. Stewart: Our manifesto, Mr. Speaker, will be of great assistance to us, but I think that the Opposition parties' manifestos will be of even greater advantage to us.
    Sir William Clark: Does my hon. Friend agree that if any of the Opposition's pledges are put into effect VAT will have to be increased to about 49p in the pound? Will my hon. Friend accept also that the collection costs of VAT, given the thresholds that apply on the turnover of a small business, which is roughtly twice the national average wage, are extremely high? Does he agree that the administrative burden on small businesses is onerous and, despite the EEC, would it not be a good idea to have a threshold of about £50,000 a year to assist small businesses?
    Mr. Stewart: I note what my hon. Friend said about the threshold. I hope that he and my other hon. Friends will recognise that the measures we are introducing this year for cash accounting and annual accounting should greatly reduce the burden of income tax for small businesses.
    Mr. Madden: Why have papers concerning the extension of VAT in Britain been withdrawn from the May meeting of Common Market Finance Ministers?
    Mr. Stewart: The hon. Gentleman can ask whatever questions of the Commission he likes. The Government's policy is to reduce taxation; the Labour party's is to increase it. I am sorry that Labour Members have to resort to repeated smears to cover up the fact that they are the party of high taxation and we are the party which has reduced taxation.
    Mr. Higgins: May I draw attention to the report of the Treasury Select Committee entitled "The Defence of VAT Zero-Rating" which contains clear evidence that the Government are determined to fight the case in the European Court, where the European Commission is seeking to extend the base of VAT? Is that not a very clear indication of the Government's views on the subject?
    Mr. Stewart: I thank my right hon. Friend for making that clear to the House. The actions of the Government are well known and have the support of the House.
    Mr. Hattersley: Does the Minister's answer mean that he is saying to the House what up to now the Prime Minister has not been prepared to say, that when the EEC recommends that Britain imposes VAT on food, fuel, children's clothing and new building, the Government will veto it?
    Mr. Stewart: The Commission has not put forward such proposals. I mean what I say.

    Exchange Rates
    Mr. Pikeasked the Chancellor of the Exchequer if he will make a statement regarding the current level of exchange rates.
    Mr. Lawson: The sterling index at noon today stood at 73·2.
    Mr. Pike: Does the Chancellor realise how much damage the present high rate of the pound is doing to our manufacturing industries? Is it the Government's policy to keep an artificially high pound as their only means of controlling inflation?
    Mr. Lawson: My impression, from a number of visits to manufacturing industries during the Easter recess and from reading very carefully the CBI survey of industrial trends for manufacturing industry, is that manufacturing industry is very well satisfied with the economic conditions at present. It is doing very well and I am very glad that it is. The one thing it dreads and fears is the possibility of a change of Government.
    It is well known that the Labour party—this came out from the report to the Treasury Select Committee of the hon. Member for Great Grimsby (Mr. Mitchell), who is a member of the Opposition Front-bench — is in favour of putting up corporation tax to 52 per cent. and of having a dramatic devaluation of the pound, as a result of which inflation would rocket back to the 27 per cent. it was when a Labour Government were last in office. That would be the worst possible thing for manufacturing industry.
    Mr. John Townend: Does my right hon. Friend agree that one of the main causes of the strength of sterling at present is the fact that the world financial markets are convinced that the Government will be re-elected? If there were to be a change in polls, with the possibility of a Labour Government or, even worse, a hung Parliament, is it not likely that there would be immediate pressure on sterling?
    Mr. Lawson: It is true, as my hon. Friend has said, that if there were to be a change of Government it would be an economic disaster for Britain. The massive confidence that there is worldwide in the British economy, which is demonstrated by the strength of the pound in the foreign exchange market and in a number of other ways, would evaporate overnight. Fortunately, that nightmare will not turn into a reality.
    Mr. Roy Jenkins: Can the Chancellor tell us whether he is now endeavouring to pursue the same exchange rate policy that he would if we were a full member of the EMS, and, if so, what is the advantage of doing that from outside?
    Mr. Lawson: I am happy to answer the right hon. Gentleman's question. As he will be aware, six of the seven Finance Ministers of the Group of Seven met in Paris in February, when we agreed that, having achieved a substantial realignment of currencies following the Plaza meeting in September 1985, it was now right to try to keep the major exchange rates roughly stable. That is what we are seeking to do, and the British Government's policy is in line with that agreement, which was reaffirmed in Washington when we had a meeting of the G7 at the spring meeting of the IMF. That is not only part of an international agreement which would be beneficial worldwide, but it is in the interests of British industry that that should be maintained.
    Mr. Forman: Is it not clear that the recent co-ordinated efforts by my right hon. Friend and other Finance Ministers of the Group of Six have had considerable success in bringing exchange rate stability in recent times through the agreements to which he referred, and has that not been excellent not only for output in Britain but for exports and import substitution?
    Mr. Lawson: It has been, and, as I mentioned in the House yesterday in the course of the Finance Bill Committee stage debates—which the right hon. Member
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    for Birmingham, Sparkbrook (Mr. Hattersley) was, unfortunately, unable to attend because he was busy expelling a black activist from the Labour party, but it is good to have him back today — yesterday's Financial Times headed its leading article about the United Kingdom "An island of success". However, despite the indications that we are successful, there are problems in the rest of the world which have to be addressed and it is of first importance that there should be a successful outcome of the meeting today between President Reagan and Prime Minister Nakasone of Japan.

    Budget
    Mr. Jack Thompsonasked the Chancellor of the Exchequer what recent representations he has received about the Budget.
    Mr. Lawson: The proposals in my Budget have been widely welcomed.
    Mr. Thompson: Is the Chancellor aware that there has been little evidence of any improvement, or potential improvement, of the economy of the northern region as a result of the Budget proposals, that there is little evidence of the standard of living being improved there, and that, in fact, wage levels there are decreasing and the north-south divide is becoming even more evident since the Budget proposals? What is he prepared to do about it?
    Mr. Lawson: I am glad to be able to inform the hon. Gentleman that he is misinformed. The most recent report from the Association of British Chambers of Commerce made a particular point of saying how big an improvement there has been in the prosperity of business and industry in the north of England. The whole point of the policies that we are pursuing is that they benefit the whole country.
    Mr. Hayes: May I say to my right hon. Friend that the Budget has been welcomed by the people of Harlow because, thanks to the success of the Government's economic policies, Harlow is now a boom town with one of the lowest rates of unemployment in the south of England. Does he not find it ironic that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had the nerve to come to my constituency and unveil a plan — after lunch — for a thousand new jobs to be created, the majority of which would have been created by the local authority, which is Labour-controlled and is crippling my local industry?
    Mr. Lawson: I should like to take this opportunity to congratulate my hon. Frend on the manful efforts that he has made throughout the time that he has represented his constituency — which will ensure his continued representation of that constituency — against the activities of the local council, which have been consistently anti-business and anti-industry, as, indeed, have so many Labour councils up and down the country.

    Building Societies (Interest-Only Loans)
    Mr. Meadowcroftasked the Chancellor of the Exchequer if he has any plans to permit derogation from the prohibition on building societies making interest-only loans.
    Mr. Ian Stewart: The Building Societies Act gives those societies which have total commercial assets of over £100 million the power to lend money to individuals regardless of whether interest is charged on the loan.
    Mr. Meadowcroft: Is the Minister aware that building societies believe that that helpful facility, which enables elderly people to liberate the capital in their own homes to make necessary repairs, has not been stopped by the Building Societies Act? Am I right in believing that that was never the Government's intention, and will the Minister make it clear that the facility is still widely available?
    Mr. Stewart: Certainly the Building Societies Act does not stop building societies from making such loans. In fact, some societies have shown reluctance to conform with the requirements of the Consumer Credit Act 1974, but other lenders are coping without difficulty. I hope that building societies will not mislead borrowers of the kind that the hon. Gentleman describes by implying that such loans cannot be made.

  PRIME MINISTER

    Engagements
    Mr. Gerald Howarthasked the Prime Minister if she will list her official engagements for Thursday 30 April.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Howarth: Does my right hon. Friend agree that in implementing promptly and in full the recommended 9·5 per cent. pay increase for nurses the Government have demonstrated their continuing commitment to improving the lot of the nursing profession, which has grown by 30,000 under the present Government? Does she also agree that there is no justification for the lightning teachers' strikes, such as those that are happening in my constituency at present, when the Government have awarded teachers a 25 per cent. average increase? That is far more than my constituents in manufacturing industry have been able to obtain.
    The Prime Minister: I agree with my hon. Friend. Under the last Labour Government nurses' pay actually fell in terms of what it would purchase. Under the present Government it has gone up by 30 per cent. over and above the rate of inflation. As my hon. Friend says teachers have also done very well. Their pay will have increased by 27 per cent. over and above the rate of inflation. That shows that, under this Government, the growth that we have experienced has been put to very good use, not only in reducing taxation, but in bringing an enhanced standard of living to those who work in education and the social services.
    Mr. Hattersley: On the basis of the information now available to her, will the Prime Minister admit that the Government's poll tax scheme, when combined with the so-called social security reform, will result in most families in this country on joint incomes of less than £21,000 a year being worse off than they are now, before the two schemes are implemented?
    The Prime Minister: The right hon. Gentleman is aware of some of the tables that have been published. He will now have to wait until we see what net incomes are and how much Labour authorities in particular spend and charge in rates.
    Mr. Hattersley: The Prime Minister is trying to deny a fact that she either knows to be true or ought to know to be true. Such conduct only confirms that the Government are ruthlessly determined not to tell the truth about the financial consequences of their re-election. I put the question to the Prime Minister again. It is a matter of fact on which work has been done and has been published. Is it not true that the majority of families with joint incomes of £21,000 or less will be worse off, regardless of whether their local authority is Labour, Conservative or anything else?
    The Prime Minister: What people will have to pay in rates, or later in community charge, will depend upon some of the expenditure of local authorities. Now I understand why the Leader of the Opposition is not present. It is because Ealing has increased its rate by about 62 per cent.
    Mr. Hattersley: The Prime Minister is devious and disingenuous at the same time. The whole country will understand that she is determined not to tell the truth about the financial consequences of the re-election of her Government. It is all part of the secret manifesto, and we shall expose the lot.
    The Prime Minister: Perhaps the right hon. Gentleman would give a list of the high rates of Left-wing Labour-authorities and the catastrophe, not only of the high rating of ILEA, but of the appalling education.
    Mrs. McCurley: Will my right hon. Friend confound the dismal Jimmies and agree with me that Scotland's economic performance is one of the success stories of this Government and that that success story will continue if a Conservative Government are re-elected?
    The Prime Minister: Yes. The CBI survey relating to England, Wales and Scotland was very optimistic. It showed a level of optimism that we have not seen for a very long time. The reports of the top 50 companies in Scotland are excellent and unemployment is now falling.
    Mr. Roy Jenkins rose—[interruption]
    Mr. Speaker: Order. I know that we may be getting close to an exciting time, but—Mr. Jenkins.
    Mr. Jenkins: I recognise that the Prime Minister is bound to attach considerable importance to the views of the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) on the subject of an MI5 inquiry, but will she none the less repudiate, on reflection, the extraordinary constitutional doctrine that she appeared to be propounding on Tuesday, namely, that the activities of a permanent Government agency, however monstrous they may be alleged to be, cannot be inquired into once there has been a change of Government?
    The Prime Minister: I have nothing to add to the replies that I have given before and to what I said on Tuesday.
    Mr. Skinner: Frit.
    Mr. Speaker: Order. When I call the hon. Member for Bolsover (Mr. Skinner) he may say what he wants to say., but I have not yet called him.
    Mr. Skinner rose——
    Mr. Speaker: Order. If the hon. Gentleman goes on like this, it will be a long time before I call him.
    Mr. Maples: Will my right hon. Friend find time today to assure the House that the Government have no plans to raise the rate of VAT to the 25 per cent. that was reached under the last Labour Government?
    The Prime Minister: Yes, and there are no plans to put VAT on food, either.

    "World in Action"
    Mr. Dalyellasked the Prime Minister if she will acquire for the library of No. 10 Downing street a video recording of the Granada TV programme "World in Action" on the Law Officers' letter in the Westland affair, broadcast between 8 and 9 pm on Monday 30 March.
    The Prime Minister: No, Sir.
    Mr. Dalyell: May I ask the Prime Minister a question of fact which has not been put to her and which she has had no opportunity to answer? Is it, or is it not, true, as the programme suggests, that her Attorney-General summoned her Cabinet Secretary to confront him with the prospect of the New Scotland Yard police at No. 10 Downing street with the Department of Trade and Industry unless she agreed to an inquiry? Is the programme telling the truth, or is it not?
    The Prime Minister: I have nothing to add to the many, many answers that I have given in statements and in reply to questions. I recognise that the hon. Gentleman will go on asking questions, but nothing can conceal the poverty of his policy.
    Mr. Jackson: Further to my right hon. Friend's earlier answer——
    Mr. Speaker: Order. This is a definitive question.
    Mr. Foulkes: Is the Prime Minister aware that I am one of the 8 million viewers who heard that most respected reporter, James Naughtie, say—[Laughter.] He went to the same school as I did. James Naughtie confirmed that the centre of operations for releasing the Solicitor-General's letter was No. 10 Downing street. Can the Prime Minister tell us, therefore, why only selected parts of that letter were released? Was it because 10 Downing street considered Chris Moncrieff's shorthand not good enough to take down all of it?
    The Prime Minister: The hon. Member's source did not go to the same school as I did, and I am not responsible for the press.

    Engagements
    Mr. Phillip Oppenheimasked the Prime Minister if she will list her official engagements for Thursday 30 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Oppenheim: In view of Government policy on local government expenditure, will my right hon. Friend reflect on the fact that Derbyshire county council recently announced a programme of massive spending increases in
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    line with Labour pledges, but has suddently and without explanation withdrawn the programme that it had submitted? Can my right hon. Friend think of any possible reason or any event in the near future, that might have influenced the county council's decision?
    The Prime Minister: I understand that Derbyshire is the highest-rated county in England. This is very damaging to business in an area that needs more jobs, and it is highly damaging to domestic ratepayers. The county council may have had that in mind in considering future matters and events which will come about in the next 15 or so months.
    Mr. Dormand: In view of the overwhelming evidence that unemployment affects the health of those without a job, confirmed in yet another medical report issued last week, will the Prime Minister say whether she feels any personal responsibility for the ill-health, some of it very serious, of thousands of people in this country, arising directly from her economic policies?
    The Prime Minister: Overall, health in the United Kingdom has been improving steadily. Life expectancy continues to rise. Infant mortality has fallen by one third since 1979. When we came to power in 1979, only £7¾ billion was spent on the National Health Service. This financial year we shall spend about £20 billion, which shows the priority that we have given to the health of the people.
    Sir Anthony Kershawasked the Prime Minister if she will list her official engagements for Thursday 30 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Sir Anthony Kershaw: With regard to disarmament negotiations, is it not clear that this hopeful situation which we now have has come about because of my right hon. Friend's robust attitude and her refusal unilaterally to throw away our armaments before negotiations begin? Are there not hopeful attitudes in this negotiation which we are about to start?
    The Prime Minister: Yes. I do not believe that the Soviet Union would be thinking of taking out the majority of her SS20s unless we had stood firm and deployed the cruise missiles and Pershings, something that the Labour, Liberal and Social Democratic parties voted against in this House when the decision was made. We would prefer the Soviet Union to agree to a global zero-zero on intermediate nuclear weapons. So far it has been unwilling to do that, but that is what we shall continue to ask for.
    Mr. Allan Roberts: Before repeating her usual assertion that there is no connection between the 20 per cent. increase in youth unemployment in Merseyside since 1979 and the 40 per cent. increase in crime on Merseyside over which her Government has ministered since 1979, will the Prime Minister tell the House what she thinks about that well-known Victorian saying, oft repeated in Finchley, that the Devil finds work for idle hands?
    The Prime Minister: I am sure that the hon. Gentleman has heard references several times to studies which show that there is no direct relationship between unemployment and crime. I am sure that he is very much aware that there are countries which have lower unemployment than we

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    have but which have higher rates of crime. I further refer him to an article in the Daily Mail on Wednesday 22 April by Dr. Alice Coleman, who said:
    "Historically, there is no evidence that joblessness is the major stimulus to crime."
    She went on to say:
    "The runaway growth in offences began in the post-war period of full employment, and it was then often suggested that young delinquents were the spoilt products of affluence."
    The hon. Gentleman is aware that the peak age for crime is 15. That is not related to unemployment.
    Mr. Stokesasked the Prime Minister if she will list her official engagements for Thursday 30 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Stokes: Is my right hon. Friend aware that many of my constituents in the west midlands are trade
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    unionists, many of whom are supporters of mine? Is she aware of the tremendous change in attitude that has taken place on the shop floor in recent months as a result of Government legislation, with such things as no strike agreements, the end of the closed shop and a generally much healthier and more realistic attitude among the workers? Is she aware that many of them are now capitalists, owning their houses, and shares too?
    The Prime Minister: I agree with my hon. Friend. Our trade union reforms have helped to transform the climate for business. We now have the lowest number of days lost through disputes for 20 years. It is our reforms, and the way in which trade unions have responded, that are in part responsible for the excellent optimistic business survey that we have seen this week. I am delighted that under this Government far more trade unionists own their own homes and shares and have more savings than ever would have happened under Labour.

Business of the House
3.31 pm
Mr. Peter Shore: May I ask the Leader of the House to state the business for next week?
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:—
TUESDAY 5 MAY—Proceedings on the Chevening Estate Bill (Lords).
Remaining stages of the Landlord and Tenant (No. 2) Bill.
Motion on the Rate Support Grant Supplementary Report (England) (No. 1) 1987–88 (HC 330).
Followed by motion on the Welsh Rate Support Grant Supplementary Report 1987–88 (HC 325).
Motion relating to the Education (School Teachers' Pay and Conditions of Employment) Order.
WEDNESDAY 6 MAY—Debate on the security situation in Northern Ireland, on a motion for the Adjournment of the House.
Motion on the Police (Northern Ireland) Order.
Motion on the Industrial Relations (Northern Ireland) Order.
THURSDAY 7 MAY—Commons consideration of Lords amendments to the Banking Bill.
Remaining stages of the Fire Safety and Safety of Places of Sport Bill (Lords).
Motions on financial services orders. Details will be given in the Official Report.
The Chairman of Ways and Means has named opposed private business for consideration at Seven o'clock.
FRIDAY 8 MAY—Private Members' Bills.
MONDAY II MAY—Private Members' motions.
Debate on nuclear power and the Government's decision on the CEGB's application to construct the Sizewell "B" power station, on a Government motion.
[Debate on Thursday 7 May

1. Financial Services Act 1986 ( Delegation) Order 1987.

2. Financial Services (Transfer of functions Relating to Friendly Societies) Order ( Northern Ireland) 1987.

3. Financial Services (Transfer of functions Relating to Friendly Societies) Order 1987.]

Mr. Shore: The House will want to thank the right hon. Gentleman for honouring so promptly his promise to find time for a debate on security in Northern Ireland and the renewed Provisionals' campaign of murder and terror there. May I ask four questions? First, will the right hon. Gentleman consider again the timing of the debate on the Industrial Relations (Nothern Ireland) Order? It is an important and controversial measure which should not be smuggled away from the public gaze in a late night debate. Secondly, will he consider relocating on Tuesday the Education (School Teachers' Pay and Conditions of Employment) Order? This measure, too, should be debated in the light of day. We would like it to come on before the rate support grant motions. Thirdly, when will those rate support grant supplementary reports be tabled?
Finally, will the right hon. Gentleman note our continued frustration at not having a debate on the run-down of the Merchant Navy? Early-day motion 515 is now supported by no fewer than 270 right hon. and hon. Members on both sides of the House.
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[That this House notes with anxiety the continuing rapid reduction in the size of the United-Kingdom-owned and registered merchant fleet; notes that this reduction is only partly offset by the increase in the number of United Kingdom-owned ships on overseas registers; expresses its concern at the adverse impact of these developments on the United Kingdom's and North Atlantic Treaty Organisation's defence capability and the United Kingdom economy, including shipbuilding, employment and the balance of payments account of the United Kingdom, notes the dearth of new investment in British-owned ships, whether new or secondhand, which alone can remedy the situation; and calls on Her Majesty's Government to take urgent steps in the forthcoming Budget to encourage such investment and to initiate action in the European Community to adopt domestic policies which will restore the profitability of ship owning and international policies to scrap surplus ships and unfair practices in shipbuilding and trading.]
Can the right hon. Gentleman think of any reason why we should not have a clear promise of a debate in the week beginning 11 or 18 May?
Mr. Biffen: What a provocative way for the right hon. Gentleman to end his questions. As to the hon. Gentleman's final point concerning a debate on the Merchant Navy, this matter was put to me last week and I indicated my views then. I shall take into account what the right hon. Gentleman has said, but for the moment I shall have to rest my reply where it was a week ago.
The right hon. Gentleman asked when the rate support grant reports would be tabled. I am told that they have gone down already today.
I take note of what the right hon. Gentleman said about the placing of the education order in the business for Tuesday. I cannot hold out hope that that matter can easily be rearranged, but, none the less, it can be considered through the usual channels.
I take note of what the right hon. Gentleman said about the Northern Ireland industrial relations order, which is scheduled to come on late at night. That is something that we can consider again through the usual channels.
Sir John Farr: Has my right hon. Friend had a chance to consider early-day motion 602 relating to the difficulties of British pensioners living in Canada?
[That this House urges Her Majesty's Government to provide retirement pensioners living in Canada with pension increases as and when they become due in Britain, with or without a social security agreement with Canada.]
As that early-day motion has been signed by more than 150 right hon. and hon. Members expressing their concern, is the House likely in the next few weeks to get some idea of the Government's attitude towards this matter?
Mr. Biffen: I thank my hon. Friend for the constructive way in which he put his point about early-day motion 602 concerning British pensioners living in Canada. I would have thought it might first be ventilated to see whether it could be debated within the context of the Finance Bill, and I shall make inquiries to that end.
Mr. David Alton: Will the Leader of the House say, before the Wednesday debate on Irish affairs, whether there will be a statement on the creation of the promised Anglo-Irish parliamentary tier? Will he also say whether he expects the Government, before dissolution, to complete their existing business?

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Does he agree that the public would regard it as an incredible waste of parliamentary time and money if the Criminal Justice Bill, which has had 36 sittings, were to be lost? In those circumstances, will the Leader of the House say whether he has come round to the idea of fixed-term Parliaments?
Mr. Biffen: I note the hon. Gentleman's second point. I am sure that the whole House noted the views that he expressed. I think that any comment upon them could be construed as revealing more than it was able to conceal, so I shall leave the matter there. As to the hon. Gentleman's first point, I can confidently say that there will not be a statement about the possibility of an Anglo-Irish parliamentary tier ahead of the debate that we plan for Wednesday.
Sir Edward du Cann: Has my right hon. Friend observed that the Secretary of State for Defence and the Secretary-General of NATO have now added their powerful voices to the anxiety that has been expressed by an overwhelming number of Members in the motion on the Merchant Navy, to which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) referred? In those circumstances, does my right hon. Friend agree that the suggestion made, not for the first time by the right hon. Gentleman, about the good sense of having a debate on the Merchant Navy should be accepted by the Government, in the general national, economic and defence interest?
Mr. Biffen: I very much understand and sympathise with the points made by my right hon. Friend, but he also knows that I am, as it were, the guardian of the agenda at a time of the year when there is great pressure for committed Government business. That is a fact of which I have to take account, but I shall bear in mind what my right hon. Friend said.
Mr. Merlyn Rees: Will the Leader of the House remind the Home Secretary and the Foreign Secretary that the American Department of Justice and the American State Department, jointly, have received information from a unit, which I think works for the Department of Justice, called the Anti-Nazi Tracking Unit, which has made allegations, as a result of which the President of Austria, Dr. Waldheim, will not be allowed to go to the United States unless he goes there as the President of Austria? This information is important. It is available in the United States. It is relevant to activities in this country. Will the right hon. Gentleman ask for that information to be provided to us so that we can make our judgment on it?
Mr. Biffen: When the right hon. Gentleman asked for the information to be made available so that we can make our judgment, he rightly underlined the fact that we are talking about allegations and not about proof. Of course, I shall relay the right hon. Gentleman's request to my right hon. Friend the Home Secretary.
Mr. Robert Rhodes James: Following the question asked by the right hon. Member for Morley and Leeds, South (Mr. Rees) concerning President Waldheim, is my right hon. Friend aware that I have seen the documents relating to this case and that there is a difference between allegations that have never been tried in court — there is an interesting story why they were never brought to court — and proof, but it is
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incontestible that President Waldheim has lied consistently about his war record and that he has proved himself by these lies to be totally unfit to hold public office? Although that is a matter for the people of Austria, surely the Government of this country can recognise the outrage that has been felt, and surely we should follow the lead given by others.
Mr. Biffen: My hon. Friend, who clearly speaks with known experience and authority on these matters, claims that there are certain self-evident situations. I say to him in all friendliness that these are matters for individual judgment. I am being asked to find out whether there can be a ministerial responsibility for making certain documents available, and I have said that I shall look into that.
Mr. Lewis Carter-Jones: Will the Leader of the House ask the Secretary of State for Trade and Industry to make a statement on the A330 and A340 Airbus project? Is he aware that more than 400 A320s have been sold, but we guess that 200 sales were lost because of delays? It looks as though we have lost some sales of A330 and A340 aircraft including sales to Alitalia. Will the right hon. Gentleman please urgently consider this matter?
Mr. Biffen: I shall certainly pass those points on to my right hon. Friend the Secretary of State for Trade and Industry.
Sir John Biggs-Davison: Has my right hon. Friend noted the progress made in another place with the Irish Sailors and Soldiers Land Trust Bill, which in its present form has been welcomed by the Royal British Legion? On its arrival in this place, will the Government seek to expedite a measure which should not take too much time but which would bring comfort to former members of Her Majesty's forces and their dependants living across the Irish sea?
Mr. Biffen: I am sure that once the legislation has completed its stages in another place and comes to the House of Commons the usual channels will do their utmost to see that it is dispatched with appropriate regard for the susceptibilities of the House.
Mr. Stephen Ross: Can the Leader of the House tell us whether, and when, he expects there to be a debate on the Control of Pollution (Landed Ships Waste) Regulations 1987, which came into force on 6 April, which were laid before Parliament on 16 March and which were prayed against by the Leader of the Opposition, when I gather that there were six days remaining? Will the regulations be debated? What will happen if Parliament is dissolved? Will the regulations be in force?
May I also press the right hon. Gentleman — [Interruption.] This is an important matter in my pocket of the country. May I press the right hon. Gentleman on the issue of the parliamentary tier of the Anglo-Irish Agreement? My hon. Friend the Member for Liverpool, Mossley Hill (Mr. Alton) was dead right about that. It is an initiative that Parliament should take on board.
Mr. Biffen: I shall look into the hon. Gentleman's first request. I am afraid that I cannot give him an authoritative answer, but I shall see that he is given an answer.
As to the hon. Gentleman's second point, I do not think that I can reasonably add to what I have already said. I

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know that no statement will be made, but that does not mean that, subject to the views of the Chair, reference may not at least be made to it in the debates that will follow.
Mr. Teddy Taylor: Has the Leader of the House, as a member of the Government, read the astonishing written answer issued late last night, but not yet published in Hansard, by the Minister of Transport rescinding the letter of instruction to British Rail that it should not make advance payments to the Channel tunnel project? In view of the implications of this for that project and its viability, and also in view of the implications for the general public travelling on British Rail having to pay a virtual levy to give advance payments for the construction of a tunnel, may we at least have a statement, if not a debate, on the implications of this astonishing change of policy, which appears to throw aside the assurances given in the past about public or quasi-public funding of the tunnel?
Mr. Biffen: I take note of the point that my hon. Friend has raised. Clearly it is one that commands much interest in the House. I shall see that the point is put to my right hon. Friend the Secretary of State for Transport.
Mr. Greville Janner: Reverting to the matter of President Waldheim, it is certainly the responsibility of the Home Secretary whether this very evil man is allowed into the United Kingdom——
Mr. Speaker: Order. I must remind the hon. and learned Gentleman and the whole House that we should not cast reflections upon the presidents of countries with which we have friendly relations.
Mr. Janner: It is the responsibility of the Home Secretary to decide whether President Waldheim or any other such person should be allowed into the United Kingdom. May we have a statement on that?
Will there be time, before the House rises, for a debate on the shortage of resources for hospitals in Leicestershire? This is a matter upon which hon. Members on both sides of the House were agreed, and I discovered that at the Groby road heart hospital people are waiting six months for open-heart surgery because of the lack of one doctor, one anaesthetist and two beds. [Interruption.] Conservative Members find this a laughing matter, but it is a matter of life or death for my constituents.
Mr. Biffen: With regard to the first point raised by the hon. and learned Gentleman, I have already said that I shall refer the matter to my right hon. Friend the Home Secretary. In so doing, I shall refer him to the points that the hon. and learned Gentleman has raised.
As to the second point, the hon. and learned Gentleman will know that the matter was debated in the recent Adjournment debate. My hon. Friends then put the case for health care in Leicestershire all the more effectively because it was put that much more moderately.
Sir Kenneth Lewis: My hon. Friend is aware that the House has spent quite a lot of time and travail putting through the Criminal Justice Bill, which is at present proceeding in another place. Can he assure me that the Government will do everything that they can to get the Bill—I am prepared to give up some of my extended summer holiday, which I may not get for another 30 years — through in this Parliament? It is
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important that some deals be done in the House of Lords so that, even if it means that the election is delayed for a week, we get that Bill through and thus save a lot of bother in the next Parliament.
Mr. Biffen: I note the fullhearted concern of my hon. Friend that the Criminal Justice Bill should receive Royal Assent, and I know that because of all the hard work that has gone into the drafting and debating of the Bill it is a view that must be echoed throughout this Chamber.
Mr. D. N. Campbell-Savours: Is it not extraordinary—I am sensitive to the legal position, Mr. Speaker—that, while the Attorney-General was willing to bring actions against the London Daily News, The London Evening Standard and The Independent newspapers, he failed to bring an action against ITN news, which repeated all the allegations in The Independent during the course of three bulletins on Monday, at 1 o'clock, 6 o'clock and 10 o'clock? Will the Leader of the House deny that Ministers met and, with the Attorney-General, took a decision that they would bring no action against ITN news because they were worried that they would have to stand the criticism of the British people that this was an attempt to censor ITN news?
Mr. Biffen: I shall draw to the attention of my right hon. and learned Friend the Attorney-General the clear dissatisfaction that the hon. Gentleman entertains about his conduct.
Mr. Derek Spencer: Can my right hon. Friend tell us when we might have a debate on the workings of the Child Care Act 1980? Is he aware of the Alice in Wonderland situation that obtains in Leicestershire over the workings of the Act, where, in 1983, as a result of the Lib-Lab pact, a secure house for unruly children was closed? Since then the local authority has laid down its own criteria, which, incredibly, means that the suspicion that somebody is likely to abscond is insufficient evidence for that person to be incarcerated? This has given rise to great concern by the courts and the police and has lead to unruly behaviour in other children's homes. May we have an early debate on this intolerable state of affairs?
Mr. Biffen: I understand the point that my hon. and learned Friend raises and the considerable local significance and topicality that it possesses. In the nearest future there is no prospect of such a debate in Government time, but I wish him every success in whatever other route he chooses to try to have the matter raised.
Mr. Andrew Faulds: Since it has now become clear that the Prime Minister allowed the use of the Lakenheath base for the F111s to bomb Libya with the excuse that precision bombing was needed, was she aware that it was President Reagan's intention to kill Colonel Gaddafi? Since it has also now become clear from the evidence of the West German police that the bombing of the Berlin disco was not done by Libyan agents, when can we debate the Prime Minister's massive misjudgments before she leaves office?
Mr. Biffen: I say at once that I do not accept as a premise practically anything that the hon. Gentleman has said. As he requires a debate before the Prime Minister leaves office, that gives us plenty of time to consider his request.
Mr. Patrick McLoughlin: Will my right hon. Friend please advise me what would be the best course of action if I explain to him that recently in my constituency a leaflet circulated by the alliance stated that the alliance team was pressing the Minister of Transport for urgent correspondence on the Ashbourne bypass? I asked a question of the Secretay of State for Transport some few weeks ago, in reply to which he said that six weeks after the alliance has put out this leaflet no representations had been made. It is more serious than that, because I challenged——
Mr. Speaker: Order. This is not the object of business questions. The hon. Member must ask for a statement, if not a debate.
Mr. McLoughlin: Mr. Speaker, I am coming to the important part. I got in touch with the Department of Transport about this very serious item and was told that no correspondence had been received. However, Mr. Speaker, after I wrote——
Mr. Speaker: Order. That has nothing to do with me. The hon. Gentleman must address his question to the Leader of the House and make it relevant to next week's business.
Mr. McLoughlin: I should like the Leader of the House to investigate my claim that I asked the Minister about this and that he responded that no correspondence had been received. After I had raised the item locally, a letter arrived at the Department of Transport dated 13 April, but postmarked 28 April. Will the Leader of the House investigate how this letter got lost in the Department for two weeks?
Mr. Biffen: My hon. Friend has asked me a question that implies a responsibility that I am sure I do not possess. There is only a modest ministerial responsibility on any point in this matter. My hon. Friend has to remember that when confronted by this unseemly and unwholesome performance of his political opponents in West Derbyshire he played the dirtiest trick of all time when he won the by-election, when they were so confident that they would win it.
Mr. Tam Dalyell: In view of the no less unwholesome performance of the Prime Minister over the question of the Law Officers' letter on Westland, and in the light of the fact that question 2 to the Prime Minister has been on the Order Paper for over three weeks and that I had the courtesy on 12 April to set out a whole range of questions that might be asked, if the Prime Minister will not answer, will the Leader of the House ask the Attorney-General to come and tell us whether it is true that he confronted the Cabinet Secretary, Sir Robert Armstrong, saying that he would bring the police from New Scotland Yard to No. 10 if the Prime Minister did not agree to an inquiry? It is a question of fact, nothing else. It is simply a factual question that has been on the Order Paper for more than three weeks. In view of the seriousness of the television programme, does that not deserve an answer?
Will the Leader of the House go and commune, or whatever he does, with the Lord Privy Seal, and ask the Secretary of State for Scotland to answer the question that I put on Monday, which the Lord Privy Seal said he would refer to the Scottish Office, about his knowledge of the raid on the BBC in Glasgow?
Mr. Biffen: On the first point, the hon. Gentleman argues that he has tabled a question and is not entirely happy with the answer. That is hardly surprising, as he puts down a great many questions. Even those of us who are far less devoted to Question Time frequently have the experience of not being entirely satisfied with an answer. As a consequence of that, the hon. Gentleman asks whether I will see that a question is put to my right hon. and learned Friend the Attorney-General. The hon. Gentleman has made the request, and I shall see what can be done. However, it is perfectly within the hon. Gentleman's competence—he is not exactly a novice in these matters — to table a question to the Attorney-General.
On the hon. Gentleman's second point concerning the Scottish Office and the answer that I gave on Monday, I shall look into the matter.
Mr. Roger Sims: Was my right hon. Friend present earlier when the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) did not make the slightest effort to refute, either in whole or in part, the figure of £36 billion as the cost of implementing Labour party pledges? Does he not think that the time is fast becoming ripe for a debate on the implications to the individual ordinary taxpayer of that figure? Would not such a debate also provide an opportunity for the Liberal party and the Social Democratic party to tell us what their policies are and what the cost of them would be?
Mr. Biffen: My hon. Friend makes a valid political point. My only regret is-that I have to be rather sparing in my response because of the problem of Government time. However, there are some hours ahead of us today devoted to the Finance Bill. I hope that my hon. Friend will be able to make some of those points at greater length during that time.
Mrs. Ann Clwyd: I am sure that everybody in the House is concerned about the terrible pictures coming out of Mozambique showing men, women and children dying in their thousands. There ought to be a statement on the situation in Mozambique, including what further assistance can he given by the Government, particularly towards implementing sanctions against South Africa to stop it attacking its neighbours in that terrible way.
Mr. Biffen: The hon. Lady has made a request that there should be a statement on what is undoubtedly a great human tragedy in Mozambique, and I shall convey that request to my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs.
Mr. Michael McNair-Wilson: Can my right hon. Friend say whether he has received any request from the right hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) to make a statement about his answer in 1977 relating to the allegations in the Peter Wright book?
Mr. Biffen: I have had no communication with the right hon. Gentleman.
Mr. David Winnick: Does the Leader of the House not recognise that there is a great deal of pressure and a wish, certainly from Opposition Members, that a statement should be made on the allegation that up to 30 MI5 officers were involved in subversion and treachery? If a Government profess themselves to be in

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favour of the rule of law and parliamentary democracy, how can they take such a dismissive attitude about such allegations? Will there be a statement next week?
On the matter regarding Waldheim, has the Leader of the House seen my early-day motion 921—
[That this House welcomes the decision by the United States and Canadian authorities that Kurt Waldheim will not be permitted to visit privately their countries; trusts that the same decision will be reached by the United Kingdom Government; believes that all those held responsible for participating in Nazi crimes against humanity should continue to be brought to justice; and expresses its sorrow that someone with Waldheim's war-time record should actually he President of Austria.]
—regarding this scoundrel?
Mr. Speaker: Order. The hon. Gentleman must withdraw that word. It is not in accordance with our conventions. He took the right course yesterday in putting down a motion. That is the right way of dealing with such matters.
Mr. Winnick: I always obey your wishes, Mr. Speaker. I believe that the man is a scoundrel. If I am not allowed to say so in the House because of the rules, obviously I shall withdraw the word, but only in so far as the Chamber is concerned.
Mr. Biffen: As to the first point that the hon. Gentleman raised, the Government's position has been made clear, not least by my right hon. Friend the Prime Minister. I have nothing further to say. As to the second point, I cannot helpfully add to what I have said to other hon. Members on the matter of Mr. Waldheim and the newspaper reports. I shall refer the matter to my right hon. Friend the Home Secretary.
Mr. David Harris: Despite the entreaties of my hon. Friend the Member for Stamford and Spalding (Sir K. Lewis) that the House should be kept sitting well into the summer to deal with the Criminal Justice Bill, does my right hon. Friend agree with me and many others that this Parliament has virtually reached the end of its natural life? In view of the abysmal attendance last night and, no doubt, tonight on the Finance Bill, and the early rising of the House, will he convey to our right hon. Friend the Prime Minister the feeling of hon. Members on both sides that the time has come to go to the country and secure a third term for the Government?
Mr. Biffen: That question does not helpfully require a reply. I have heard what my hon. Friend has said.
Mr. Dennis Skinner: I am not so sure that the Leader of the House is anxious to have an early election, in view of what was stated in one of the newspapers recently, that if the right hon. Member for Finchley (Mrs. Thatcher) got back into power one of the first people to get the chop will be the Leader of the House, apparently because some time ago he made a statement about a balanced programme.
Mr. Speaker: Order. Again I say that this is not the purpose of business questions. The purpose is to deal with business for next week.
Mr. Skinner: It was just a preamble to what I am about to say, Mr. Speaker.
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Picking up the debate as it went along, will the Leader of the House consider the possibility of having a debate, at this fairly late stage, on the MI5 destabilisation allegations of the Wilson and Callaghan Governments? Perhaps it will provide a wonderful opportunity for my right hon. Friend the Prime Minister at the time, the hon. Member for Cardiff, South and Penarth (Sir J. Callaghan) to come to the Chamber and take part in the debate and tell us who was protected and why.
Mr. Biffen: First, in respect of the preamble to the hon. Gentleman's remarks, I am grateful for the character reference. As to the second and more substantial point that he made, I cannot do more than refer the hon. Gentleman to what I said to the hon. Member for Walsall, North (Mr. Winnick).
Mr. Eric Forth (Mid-Worcestershire): In view of events yesterday in Walworth road and the almost certainty that, after any election, some hon. Members will seek to represent sections of the community rather than the community and constituents as a whole, will my right hon. Friend arrange for a debate next week to discuss the procedures of the House in the future, and particularly how individual Opposition Members can be protected against their own leader, in case what happened at Walworth road yesterday is repeated?
Mr. Biffen: The relationship between Walworth road and the procedures of the House is absolutely fascinating. I do not wish to make any comment that would add to the difficulties. Therefore, my hon. Friend should release us all from the difficulties by rendering his advice direct to the Procedure Committee.
Several Hon. Members rose——
Mr. Speaker: Order. It might be good for the House if we get on to the Finance Bill quite soon. I shall call hon. Members who have been rising. Questions should relate to the business for next week.
Mr. Andy Stewart: Will my right hon. Friend find time next week for a debate in view of the distorted statements made last Saturday at the Nottinghamshire Federation of British Coal Tenants conference by the hon. Member for Bassetlaw (Mr. Ashton) against Conservative Members, British Coal and the Government?
Mr. Biffen: It is an extremely good subject. With all my heart I wish that I could offer Government time next week, but I fear that pressures are such that I cannot do so, I shall certainly bear it in mind for the future.
Mr. Tony Marlow: As part of the Labour party's smear-a-day campaign, apparently the right hon. Member for Chesterfield (Mr. Benn) is putting it about that Airey Neave plotted with MI5 to bump him off. The right hon. Gentleman is useful to us. Is the right hon. Gentleman not of more use to us alive than dead?
Mr. Biffen: I was not aware of such exotic developments in the national debate. Therefore, I do not think that I can make an adequate reply, except that I suppose that if I hang around I shall hear much more of the same.
Mr. Edward Leigh: May we have a debate on the Abortion Act 1967, which celebrates its 19th birthday this week, under which 2.5

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million innocents have lost their lives? In particular, may we have a debate on clause 1 of the Infant Life (Preservation) Act 1929, which makes it an offence to kill any child who is capable of being born alive? In the light of recent research, which shows that about 70 per cent. of foetuses of 22 weeks gestational age are survivors, the whole country would welcome such a debate.
Mr. Peter Bruinvels: Support my Bill.
Mr. Biffen: I note what my hon. Friend said. I note that my hon. Friend the Member for Leicester, East (Mr. Bruinvels), said that he has a Bill that will aid in this matter. The topic is possibly more appropriate for private Members' initiatives than those of the Government. In any case, Government time in the near future is simply not available. I shall, as ever, look with benevolence upon what my hon. Friend requires.
Mr. Bruinvels: Will my right hon. Friend consider having a debate on the report by Sir Gordon Downey, the Auditor-General, on the £87 million overpayment of benefit? Does he agree that it is totally unacceptable at this time for so much money to be paid out? Perhaps it might be understandable when many civil servants are putting their own financial interests ahead of national interests by going on strike and taking industrial action, particularly members of the Civil and Public Services Association and the Society of Civil and Public Servants? Is he aware that my constituents in Leicester, East will suffer on 11 May unless the strike is ended quickly? People in need of important benefit will certainly not get it because, unfortunately, civil servants care more about their own money than about my constituents.
Mr. Biffen: I note what my hon. Friend has said. I was not absolutely clear, but I got the impression that he referred to evidence contained in the Public Accounts Committee report. I assure him that plans are afoot to have the Public Accounts Committee's report debated in the reasonably near future.
Mr. William Cash: Is my right hon. Friend aware that the United States Patent Office has recently
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authorised the patenting of animal genetic engineering? Is he further aware that an official within that department acknowledged that it would he likely to, or could, lead to human genetic engineering? It represents a severe danger to the future of mankind of a nature equivalent to the nuclear debate that has been going on for the past 30 years. Will my right hon. Friend be good enough to ask the appropriate Minister to authorise a debate on the matter to ensure that we do not go down this line, particularly as during the last week the European Patent Office has received two animal genetic engineering patent applications, which is an inevitable first step towards moving the goalposts down such an extremely dangerous and slippery path?
Mr. Biffen: My hon. Friend, in a compelling way, requests a debate that would widen a little further the request that I have already had for debates on the topic of abortion and like matters. I have explained why I do not think that such matters are particularly suitable for Government initiatives. I shall bear in mind what he had to say. I recognise that there is a real desire in the House that such matters should be debated, particularly ahead of any legislation that might eventually be brought before it.
Later——
Mr. Frank Haynes: On a point of order, Mr. Speaker. A short time ago the hon. Member for Sherwood (Mr. Stewart) made a comment to the Leader of the House. His comment would not stand up in a court of law. The hon. Member was not even there. I was there and I am defending my hon. Friend the Member for Bassetlaw (Mr. Ashton). The hon. Member for Sherwood made comments, but he was not even there. It was pure supposition on his part. [Interruption.]
Mr. Speaker: Order. I think that both hon. Members have now had fair shares. It is a pity that the hon. Member for Ashfield (Mr. Haynes) did not raise that point with the Leader of the House. I am afraid that I was not there either.

Members (Medical Checks)
4.9 pm
Mrs. Ann Clwyd: On a point of order, Mr. Speaker. As you know, an exhibition has been taking place this week in the Upper Waiting Hall and it has been organised by the Family Heart Association. It has been providing a useful service checking Members' cholesterol levels, some of which have worried some hon. Members. I am sure that you will agree that, while that proves the point, made several times in the House, that there ought to be more frequent mobile screening of this kind available in the House, not only for Members but for others who work in the House, the results obtained ought to be confidential medical information.
I have some evidence that a Lobby correspondent has been compiling a list of Members' cholesterol levels. I do not know what he intends to do with that list but it is a serious matter, particularly as Lobby correspondents are able to move freely about the House. That Lobby correspondents should be standing by the screen and checking Members' cholestoral levels as an hon. Member is sitting in a chair waiting for the result is extremely undesirable. Will you inquire into this matter Mr. Speaker?
The Lobby correspondent concerned is a Mr. Mike Steele and I saw him with a list. The hon. Member for Leicestershire, North-West (Mr. Ashby) spoke to him yesterday about the list and asked him what use he meant to make of it. That kind of information ought to be private to hon. Members and ought not to be used now or in the future by Lobby correspondents. There is a possibility that the information has already been used, but I ask you to inquire into this matter and to report to the House.
Mr. Speaker: I thank the hon. Lady for raising that matter. I shall certainly look into it.

Parliamentary Conduct
4.12 pm
Mr. Frank Cook: On a point of order, Mr. Speaker. My concern is for the honour of hon. Members and for the way in which our business is conducted. For that reason I turn to you, Mr. Speaker, as the protector and custodian in such matters. I should like to raise the matter of an occurrence during business questions.
You will know, Mr. Speaker, that the microphones are switched on in specific locations, depending on the hon. Member who is on his feet. Within the immediate location of a live microphone an hon. Member from a sedentary position used the first name of a very prominent and internationally known member of a party of which I am not a member, and was heard to attribute to that name the epithet "mass murderer". Is such a practice in order? That remark might be broadcast on newscasts later today. If that is in order, can you tell me, Mr. Speaker, whether I am allowed to use the first name of the Member who made the allegation and call him a liar?
Mr. Speaker: I do not know whether the hon. Member for Stockton, North (Mr. Cook) is referring to the episode about the President of Austria.
Mr. Cook rose——
Mr. Speaker: No. If it was a reference to an hon. Member of this House, it was totally out of order. These microphones are tuned into my Chair. I hear clearly the hon. Member who has been called to speak, because that is the object of the microphones. I frequently do not hear things that are said at the far end of the Chamber, and perhaps that is just as well. I certainly deprecate any epithet of that kind from any hon. Member.
Mr. Cook: Further to that point of order, Mr. Speaker. Would it be right for me to ask you, as custodian and protector of the honour of the House, to ask the hon. Member to withdraw that statement? [Interruption.]
Mr. Speaker: Order. I did not hear it, so I cannot ask him to withdraw it.
Mr. Cook: It was the hon. Member for Tatton (Mr. Hamilton).
Mr. Speaker: Order. I can hardly believe that an hon. Member would use a phrase of that kind.

Parliamentary Conduct

  STATUTORY INSTRUMENTS &c.
  Ordered,
  That the Teesside Development Corporation (Area and Constitution) Order 1987 be referred to a Standing Committee on Statutory Instruments, &c. — [Mr. Lightbown.]

Orders of the Day
  Finance Bill

    (Clauses 11, 18, 20 to 23, 33, 45, 147 and 160 and Schedule 4)
    Considered in Committee. [Progress 29 April.]
    [MR. ERNEST ARMSTRONG in the Chair]

    Clause 11

      ACCOUNTING FOR AND PAYMENT OF TAX
      Question proposed, That the clause stand part of the Bill.
      4.18 pm
      The Minister of State, Treasury (Mr. Peter Brooke): The story that leads to this clause begins most directly with the VAT small business review that was published on 24 October last year. The proposals in the consultation document followed a wide-ranging view of the VAT policy towards small businesses to see whether special arrangements could be provided for them. The review was announced in the White Paper entitled "Building Businesses … not Barriers".
      A major concern expressed by small businesses and often expressed to me directly in letters from hon. Members enclosing correspondence from constituents, is that they often have to pay VAT to Customs and Excise before they are paid by their customers, who frequently take long periods of credit. A further concern was that they were obliged to complete and pay four VAT returns a year and would prefer a system more akin to that for other bills, such as the rates, with regular advance payments.
      The changes proposed will overcome these problems by helping with cash flow and budgeting, and thus ease the VAT burden on small businesses. The consultation exercise that the Government asked Customs and Excise to conduct last October was wide-ranging. Not only were responses received to the consultative document from 192 trade bodies and individuals, but the views of small business were canvassed directly. A question and answer leaflet was sent to 5,000 randomly selected small businesses and 1,256 were completed and returned. The consultative document and leaflet contained a package of proposals targeted specifically at assisting the small business and included a scheme for cash accounting and a scheme for annual accounting.
      The overwhelming majority of respondents welcomed the small business review and, in particular, the proposals for these schemes. There were, and this is the purpose of consultation, suggestions for change to the proposals for both schemes. The most important of these was about the higher limit to allow more businesses to use the scheme and that in itself was a commendation for the principle of the schemes. Other suggestions concerned the detailed operation of the schemes. All these suggestions were carefully considered by the Government and many have been accepted in whole or in part. The result was the
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      Chancellor's announcement in his Budget statement about the introduction of schemes for cash accounting and annual accounting.
      Clause 11 provides the enabling provision for regulations to be made covering the cash accounting and annual accounting schemes. The scheme for cash accounting will give a small business the option of accounting for VAT when it receives payment rather than when it issues a tax invoice. This will give automatic bad debt relief to businesses using the scheme. Similarly, it will be able to reclaim the VAT that it has incurred on its purchases only when it make payment rather than when it receives a tax invoice. Under annual accounting a small business will have the further option of making one VAT return a year rather than four as at present. Businesses choosing to use that option would make nine payments by direct debit on account and a tenth balancing payment would be made with the annual return.
      This enabling clause tells the House little about how the scheme will work, and the conditions for their use. Those details will be contained in the regulations. As I said on 8 April in a reply to my hon. Friend the Member for Berkshire, East (Mr. MacKay), the regulations for cash accounting will not be made until the necessary Community derogation has been approved. A draft of -.he proposed regulations has been placed in the Library and copies have been sent to trade bodies. The regulations for annual accounting will not be made until next spring and again a draft will be sent to trade bodies before they are made.
      As the Chancellor announced in his Budget statement, the schemes will be open to businesses with an annual turnover not exceeding £250,000. That represents a considerable advance on the £100,000 which was originally proposed in the consultative document last October, and covers over half of all the businesses that are registered for VAT. Once admitted to use either scheme, a business will not normally be required to leave until its turnover has exceeded the limit by 25 per cent. to a figure of £312,500 in a year.
      Cash accounting will be available to businesses registering for VAT, as well as for existing registered businesses, but for annual accounting a business must have been registered for at least one year. The regulations will also detail the other conditions to be satisfied for Customs and Excise to give approval to use the schemes and the circumstances in which use of the schemes may be withdrawn. Refusal to use a scheme, or the withdrawal of an approval, would be appealable to the independent value added tax tribunal. The regulations will state the procedures to be used by a business on entry, while using, and on ceasing to use, a scheme, and will be framed to take account, in whole or part, of many of the representations received. Those for cash accounting especially meet the points that have been made about leaving the scheme and receipted invoices.
      Subject to the necessary derogation from the Community, cash accounting will start on 1 October 1987. Annual accounting will start in the summer of 1988 when the necessary computer reprogramming has been completed. Broad details of the scheme will be available from local VAT offices at the end of May. Further information will be contained in a leaflet that will be sent to all businesses with the July, August and September VAT returns.

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      A business wishing to receive the public notice, which will give the conditions for joining and using the scheme, will be able to return a tear-off slip to its local VAT office. A business wishing to join, having read the public notice, should complete and return to the VAT office the application form which will be part of the notice. Provided that the conditions are satisfied, approval will be given to use cash accounting from the beginning of the business's net VAT accounting period, on or after 1 October.
      Mr. D. N. Campbell-Savours: I welcome the concept behind this scheme, for which I have argued for many years. However, will the Minister explain to the House why the current system was built in the way it was? What was the justification for the existing system? Historically what arguments have been deployed against the arrangements that he now seeks to introduce?
      Mr. Brooke: That question goes back into history a little. The legislation was introduced originally in 1973. At that stage neither the hon. Gentleman nor myself were Members of the House. In those days I was not in the habit of reading Hansard to see what was happening in a body of which I was not a Member. However, I am grateful for the hon. Gentleman's welcome for the legislation, in which he is joined by many other people in the country who feel that it is a good development.
      Although the scheme for annual accounting is not being introduced until the summer of 1988, information will be available on a broadly similar time scale. An information sheet will be available in local VAT offices at the end of May, and a public notice, including a tear-off application form, containing the conditions for using the scheme, will be available after Royal Assent. The cost of cash accounting is a once-and-for-all loss of about £100 million, with on-going annual costs of £10 million. The revenue cost of annual accounting is broadly neutral.
      I should report to the Committee on the Community derogation, about which my right hon. Friend the Chancellor spoke in the Budget debate. For cash accounting, the Government acted urgently on Budget day by lodging with the Commission of the Community a formal request for the necessary legal derogation, with the proposed operative date of 1 October 1987. There has been no suggestion that the Commission sees any significant difficulties with the proposal and the Government are optimistic that it will take the next step of formally notifying other member states shortly. If, within two months of that notification, neither the Commission nor any member state requests that the matter be raised by the Council, the approval will have been obtained.
      In summary, there are rare occasions in ministerial life when one can lay proposals before the Committee which enjoy widespread and even possibly universal approval.
      Mr. Robert Sheldon: Now that the Minister has dealt with the details, perhaps I can ask him just one detailed question that he might care to answer. It concerns those people who opt to take cash accounting and, for some reason, have one year with a very high turnover, which is different from their normal expectations. Would those people automatically go out of the scheme, or would there be some discretion? The Minister seemed to suggest the possibility of some discretion.
      Mr. Brooke: It may help the right hon. Gentleman if I state what is contained in the regulations in that regard. The draft regulations have been placed in the Library. The regulations state:
      "(2) A person admitted to the scheme shall remain in it for a minimum of two years, unless:

      (a) at the end of any quarter or prescribed accounting period his turnover in the year then ended has exceeded by 25 per cent. the figure of £250,000 and in the year then beginning is expected to exceed the figure of £250,000, in which case he shall notify the Commissioners and leave at the anniversary of his joining; or

      (b) if at any time there is reason to believe that his turnover in the year ahead will exceed by 25 per cent. the figure of £250,000 in which case he shall notify the Commissioners who may require him to leave the scheme at the end of the next accounting period."

      Clearly, if he goes above £312,500, and is not expecting to come below it again and to go back to the original figure, he has that freedom. I repeat that the regulations state:
      "in the year then beginning is expected to exceed the figure of £250,000".
      Under those circumstances, he would have to leave the scheme. However, if he expected his turnover to go back below £250,000, he could remain within it.
      In summary, as I was saying, there are rare occasions when one can lay proposals before the Committee of the House, which enjoy widespread or, even possibly, universal approval. Those outside bodies that approved the original principle of cash accounting in the consultative document have a fortiori applauded the extension and expansion of that principle that was made by my right hon. Friend the Chancellor in his Budget. In particular, small business federations, institutions, organisations and lobbies have been generous in their praise of my right hon. Friend's imaginativeness and helpfulness.
      Those of us who have run small businesses and been responsible for payrolls and answerable for profits, and who have run them for enough years to have had to have lived with the consequences of our actions, and who have had the time to experience both the downs and ups of what the textbooks of one's youth called the "business cycle", know just how significant and beneficial for small businesses is the change to cash accounting for VAT.
      I have been heartened that my hon. Friends, who follow this scene closely and who have done so much in an informed and reasoned way to advance the small business cause, have been so enthusiastic about the difference that the schemes will make. As they know, anything that makes life simpler for small businesses is potentially good for jobs. Such knowledge of how a small business works was not shared by Opposition Members who, in a purblind way, said that there was nothing in the Budget for the unemployed, in bright and blissful ignorance of how 1 million jobs have been created in the economy during the past four years, and by whom.
      The measured reaction of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), 24 hours after the Budget, when he demonstrated total confusion between cash accounting and partial exemption, suggests that Opposition Members do not understand VAT either. The preternatural interest that Opposition Members have latterly been taking in the subject of VAT might usefully have been taken earlier in the interests of good opposition. I appreciate that cash accounting and partial exemption

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      are complicated and esoteric subjects, difficult to grasp readily, but it is as well for this country that the right hon. Member for Sparkbrook, will never have to grasp them in government.
      Apart from the trumpet's uncertain sound from the Opposition, these provisions have been widely welcomed by the rest of the nation, and I commend them to the Committee.
      4.30 pm
      Mr. Tony Blair: I think that the Minister may regret his peroration when we come to deal with partial exemption later in our debates. We shall be putting certain matters to him that will demonstrate an adequate grasp of the difference between partial exemption and cash accounting.
      Clause 11 has a history that goes back beyond the VAT review for small businesses, which was published in October 1986. When considering the Finance Bill of 1985, in a debate on cash accounting initiated by the Opposition, my hon. Friend the Member for Workington (Mr. Campbell-Savours) spoke eloquently in favour of it. At that time Ministers were much less certain about the benefits of cash accounting. It would seem that the reason for their change in outlook between 1985 and now is the draft 22nd directive from the EEC Commission. That draft directive asked for cash accounting for small businesses, and it was following its publication that for the first time there was a VAT review for small businesses, which called also for cash accounting.
      It is correct, as the Minister has said, that the Commission suggested a limit of £100,000 on the turnover of small businesses, which the Government have upped to £250,000. We welcome the clause and the uplift, and we shall be supporting the clause because of the help that it gives to small businesses. However, certain specific questions arise from the manner in which the Government have introduced the clause, and these I shall put to the Minister.
      First, will the Minister tell me how many firms will be involved in cash accounting? How many, potentially, which have a turnover of less than £250,000, could opt for it? I should like to know also how many firms have turnovers of more than £100,000 but less than £250,000? In other words, how many firms will be affected by the Government's uplift of the EEC's recommendation?
      Secondly, the Minister has said that on Budget day the Government made an application to the Commission for derogation from the sixth directive. Will he confirm that and tell me when he expects the derogation to arise? Until the EEC has given permission for there to be a derogation from the sixth directive, the change to the VAT rules in clause 11 and the regulations promulgated under it cannot take effect.
      Thirdly, will the Minister tell me whether he expects any difficulties with the Commission arising from the different limit on turnover that has been recommended by the Government as opposed to the EEC?
      Fourthly, will he tell me how a loss in VAT revenue will arise at the end of the first year of the implementation of the system of about £100 million and only £10 million thereafter? I am sure that there is an adequate explanation, and it is as well that we are aware of it when we are debating a system that involves such large sums for the Revenue.
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      Finally, now that the Minister has acceded to the pressure that came as much from the Opposition Benches as from the Government Benches for cash accounting for small businesses, is he prepared to accede to the request that came last year and the year before that for some power of mitigation within the new system of VAT penalties? There is much concern among small businesses on this score. I shall be grateful if the Minister will respond to that and to my other questions, bearing in mind our welcome for the clause overall.
      Mr. Malcolm Bruce: The Minister was right to say that the proposals have been welcomed by Conservative Members, by the Opposition and by alliance Members. I know that the implications of cash accounting for bad debts will be welcomed by many small businesses. The downturn in North sea oil activity, for example, has led to an embarrassing amount of bad debt, and the VAT implications have been potentially quite serious.
      It is right that the clause should be welcomed. but I should like to know why, when representations were being made on behalf of individual companies that were facing difficulties—I do not wish to be churlish—it was not possible to say that the change would be introduced at the earliest opportunity. Like the hon. Member for Workington (Mr. Campbell-Savours), I am puzzled by the delay that has taken place in introducing it, but it is only right that it should be welcomed.
      I should like to know also whether, in interpreting the regulations, any distinction will be drawn between the balances of businesses opting for cash accounting or annual accounting. Depending on the sector in which a business operates, it is possible for a business mostly to recover VAT. I trust that that will still be allowed and that there will be even greater advantages for businesses that essentially recover VAT. The ability to recover it at an earlier stage will be beneficial to cash flow. It will be helpful if the Minister will make clear that no distinction will be drawn.
      The questions that I would have asked about cash accounting have essentially been asked and dealt with, and I merely say that in this context there is likely to be a welcome benefit for small businesses. Much more radical reforms of VAT could still be introduced. First, the overall threshold could be raised to a much higher level. Secondly, we should explore the possibility of abolishing VAT on inter-business transfers. Such a step would radically simplify the administration of the system. Administrative burdens are a major problem for small businesses.
      In response to the Minister's attack on those who occupy the Opposition Benches, I wish to say that before I was elected to the House of Commons I was involved in running small businesses on behalf of others, and once on my own account. I am well aware of the real practical problems that are faced by a business that employs two or three people when it has to administer and handle VAT. The simpler the administration can be made, the more a business can concentrate on making and selling its products or services. I hope that the Minister, satisfied though he may be that this measure has widespread support, will not let up and will pursue further every way possible of simplifying the administration and lifting the burden that falls on small businesses. None the less, the measures that are before us are welcome and will be helpful.
      Mr. Brooke: The hon. Member for Sedgefield (Mr. Blair) has asked a number of questions which I shall do my best to answer. First, he asked how many firms would be involved that would normally be within the threshold of £250,000. The answer is 840,000 out of a total of 1.49 million VAT traders.
      The hon. Gentleman went on to ask me how many I thought were likely to take up the new system. That is to some extent a conjectural question until there is a take-up, but there had to be a calculation to ascertain the cost tht would be incurred as a result of introducing the system. After we have eliminated the repayment traders, to whom I shall return in response to the intervention of the hon. Member for Gordon (Mr. Bruce), and those governed by the retail trading scheme, which effectively have had similar benefits historically, we are left with about 300,000 traders who are potential candidates for the scheme. We are expecting that about 200,000 traders will take advantage of the scheme.
      That is our best estimate. The hon. Member for Sedgefield asked me for percentages. My recollection is that the limit of £250,000 involved just under 65 per cent. of all traders—that is, 840,000 against the total—and that 44 per cent. of all traders—in other words, about 660,000 — were involved in terms of the original £100,000 limit.
      The hon. Gentleman asked whether the Government sought and applied for a derogation on Budget day. I said so in my introductory remarks, and added that we were encouraged to believe that there had been no suggestion that the Commission saw any significant difficulties with the proposal. That includes the proposal of the new limit that we have set.
      The Government are optimistic that the next step of formally notifying other member states will be taken very shortly. If within two months no member state or the Commission requests that the matter be raised by the Council, automatically the approval will have been obtained. Assuming that the Commission circulates it in the near future, we are looking to early July when we might expect, assuming all goes well, that the derogation had been obtained.
      The hon. Member for Sedgefield asked about the cost of £100 million in the first year and £10 million in subsequent years. The cost is effectively a cash flow cost, because all we are doing is delaying the taking in of the money. On the figures that I quoted, we estimate that in the first year, when the main bulk of traders will come into the scheme, we shall defer about £100 million of revenue into subsequent years. In subsequent years new traders, and other traders who did not register in the first year, will come in. We will lose some bad debt money because bad debt relief will be furnished through this scheme in the way that I suggested.
      Finally, the hon. Gentleman asked about mitigation. I have confirmed on many occasions, and my right hon. and hon. Friends have likewise confirmed, that the working of the penalty and surcharge regime will be reviewed in advance of the 1988 Budget, in the light of a decent span of experience. The scheme will be examined and, assuming my right hon. Friend the Chancellor brings in the 1988 Budget, we will report on the result of that review.
      The hon. Member for Gordon asked whether the repayment would be better for those engaged in cash accounting or annual accounting. The cash accounting principle will apply when traders making returns pay their
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      bills, as well as when they receive money. In the normal course of events, it will not be of interest to repayment traders because they have the advantage of earlier payment or earlier receipt of money under the present arrangement. Repayment traders would normally not be part of the annual accounting scheme because they would be advancing money even earlier than it would normally be received. The regulations for annual accounting will not come out until the spring of next year, but we do not envisage that repayment traders will be included in them.
      The hon. Member for Workington (Mr. Campbell-Savours) intervened to ask about the history. I have not been able to receive advice on the detailed debate in 1972, but there is no evidence that cash accounting was a strong runner at that time. I was not a member of the Finance Bill Standing Committee in 1985, so I am grateful to the hon. Member for Sedgefield for having described the contribution of the hon. Member for Workington. It sounds as though cash accounting was a late runner in the stakes, rather than running the whole time.
      Mr. Campbell-Savours: I rise to intervene because this is one of a number of initiatives that I have been asking to have reformed since I was elected in 1979. I hope that the Minister will ensure that small businesses understand the effect of this clause. It will mean that instead of delaying invoices—as invariably small businesses do to avoid making substantial payments in a particular quarter—if there is a sudden blip in their supply arrangements, they will be able more efficiently and accurately to keep records and send invoices in the knowledge that they will not he affected in the way they previously would have been.
      I remember very well that, on occasions, one delayed invoices because one was concerned that substantial debt to the Exchequer would be incurred because of the rules as they existed in the early 1970s. It is important that small businesses get the message clearly that, if they use this system correctly, it will benefit them substantially.
      Question put and agreed to.
      Clause 11 ordered to stand part of the Bill.

    Clause 147

      REDUCED RATES OF TAX
      4.45 pm
      Mr. Bruce: I beg to move amendment No. 2, in page 96, line 5, leave out lines 6 to 14 and insert:—

      'Table of Rates of Tax

      Portion of Value Lower limit £

      Upper limit £

      Rate of Tax per cent.

      0

      80,000

      Nil

      80,000

      130,000

      30

      130,000

      190,000

      40

      190,000

      317,000

      50

      317,000

      —

      60'.

      The Minister will not be surprised to hear that I had not expected to be on my feet quite so early. for reasons which I cannot fathom, we seem to be getting through this Bill at a faster rate than has been the case in previous years. No doubt others will have some speculative reasons as to why that is happening. This amendment—I make no apology for this—is tabled in a constructive spirit. We

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      contend that the Government have—leaving aside the philosophical argument for and against tax cuts and how those tax cuts should be applied—cut taxes at the top end of the scale more substantially than at the lower end. They have increased net payable taxes at the bottom end of the scale.
      This amendment aims to modify the Government's enthusiasm for cutting taxes on inheritance, which have been reduced substantially in recent years and will yield in the current financial year about one third of the yield 60 years ago. No doubt the Conservative Government regard that as a great triumph of change, but it is a switch which is regrettable. The amendment represents a substantial uplift on the current level. The reason for that, rather than a straight indexation of the rates, is that we have taken on board the argument put forward about the increase in house prices. Houses are the single source of most people's wealth. This is a constructive amendment, which we hope Government Members will see in that light.
      It may be appropriate to return to the wider argument, if we debate the question that the clause stand part, when I could elaborate on the alliance's view of how inheritance taxes and gift taxes should be developed. At this stage rest the argument on the contention that the right thing to do is to modify the relief the Government are proposing and to target that relief at the other end of the scale, so that under our proposals people with moderate estates — I believe that is the Government's stated objective—will benefit more than those with larger estates. That is a reasonable objective.
      I have been somewhat surprised on the occasions when, either as a witness or a participant in the debate, I have heard Ministers argue about the burden of taxation on the low paid and those of relatively modest means and use that argument to describe the imbalance and to justify tax relief at the opposite end of the scale or right across the board. If the Government really are concerned about reducing the tax burden on people of modest means, they should be thinking in terms of limiting the relief that they are giving to people on higher incomes and targeting it to those at lower levels.
      This is a modest amendment which is put forward in a constructive spirit. It seeks, as I said at the outset, slightly to modify the Government's enthusiasm in this direction, and we hope that it will be considered in that light.
      The Chief Secretary to the Treasury (Mr. John MacGregor): The hon. Member for Gordon (Mr. Bruce) has put me in a little difficulty because he said that he would explain his party's wider views on inheritance tax and so on, in the clause stand part debate. Since his amendment simply proposes an alternative scale, and, therefore, we are talking about inheritance tax, it is much better for me to explain the clause and to deal with the amendment at one and the same time. The hon. Gentleman will have the opportunity in a later debate or in this debate to make his other remarks, but it would be more sensible for me to make one contribution.
      Let me start with the actual rates to which the amendment is proposing changes—that is to say, what is in clause 147. In 1979 we came to office committed to drawing the teeth of the capital transfer tax introduced by the right hon. Member for Leeds, East (Mr. Healey). The combination of rampant inflation and the failure to index the starting point had meant that by 1979 capital transfer tax was a penal tax.
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      In 1980 we doubled the threshold for CTT. In 1981 we reduced the rate of tax on lifetime gifts. In 1982 we introduced the requirement to index the thresholds—to follow the income tax example—to avoid a repetition of the 1970s experience. In 1984 we reduced the death rate and made the rate on all lifetime gifts half the death rate. In 1986, in last year's Finance Act, we made a major reform—the abolition of CTT on lifetime gifts. It was then that the tax was renamed inheritance tax. That measure was widely welcomed as being of great help to those seeking to pass on to the next generation firms and farms that they had built up.
      Our intention this year is rather different, but equally important. Since 1979 our policies have encouraged a large expansion in the owner-occupation of housing and the trebling of private direct share ownership. More and more people now own property—houses, shares, and so on—that they will wish to pass on to their children. If no action is taken, more and more of those modest estates will be brought into inheritance tax liability. The purpose of the clause is to take many of those small estates out of inheritance tax altogether and significantly to reduce the charge on the others.
      Clause 147 increases the starting point for inheritance tax from £71,000, as it was up until this point, to £90,000. That is an increase of 27 per cent. Had we simply indexed that starting point, it would be £74,000. The result of this substantial increase is to reduce the number of estates paying inheritance tax this year by about one third. or some 12,000 estates in all, compared with the number that would be paying tax with indexation.
      The new scale produces reductions in inheritance tax liabilities at all levels. The four point scale—replacing the present seven point scale — is in itself a welcome simplification. But—I make this point again the largest reductions are concentrated at the lowest end. An estate of £ 100,000 will see its tax bill reduced by some 60 per cent. The estate of around £1 million will see only a 3 per cent. reduction in its tax bill. As with the income tax changes which we debated yesterday, we have deliberately skewed the changes to give maximum benefit at the lower end.
      The amendment is another example of the confusion that the alliance sometimes gets into in the way in which it approaches such matters. It is either that or it is an example of the alliance's neither-one-thing-nor-the-other approach or split-the-difference approach to policy. Or perhaps the alliance does not know what it is about. From the way in which the hon. Gentleman moved the amendment, I am not sure whether he knows what it is about.
      It is true that the effect of the amendment is to increase the burden of inheritance tax, but it would reduce the starting point from £90,000 to £80,000. The effect would be to make 7,000 more estates liable for inheritance tax than would be the case under our proposal. That is why I was astonished to hear the hon. Gentleman say that those with modest estates would benefit more under his proposals than ours. The reverse is true.
      Dr. Oonagh McDonald: The Chief Secretary is being a little unkind. He will have noted that the hon. Member for Gordon (Mr. Bruce) said that the debate had began too early. He obviously had not had time to work out the policy. The Chief Secretary should be a little more generous in his remarks.
      Mr. MacGregor: I think that the hon. Lady is right. We were told yesterday that the Liberals and Social Democrats needed a little more time to work out their income tax proposals and what they were going to do following the vote last night. Clearly, they have lacked the time to put forward this amendment, because they have got it wrong.
      Not only does the amendment show confusion, but it underlines the difference between our parties. The Social Democrats and Liberals want to see more people paying inheritance tax. Moreover, their proposals would cause the greatest relative increase to those to whom we are giving the maximum benefit. Rather than impose the greatest additional charge on the largest estates, the Social Democrats' and Liberals' proposals would place the greatest additional charge on those at the lower end and that is completely alien to the spirit of our proposals. Therefore, I am sure that he will not be surprised to hear that we prefer our clause to his amendment and I would certainly urge my hon. Friends to oppose it.
      Nor are the Social Democrats' and Liberals' proposals necessary to protect the yield of tax. Even after the changes that we are proposing. we are still expecting a yield of about £1,100 million in inheritance tax next year, well above the expected yield in 1986–87. That illustrates yet again the point that the Opposition parties have so often failed to grasp—that lower tax rates do not necessarily mean lower tax yields if they are underpinned by a buoyant and flourishing economy. Indeed, even more to the point, if, as has been happening under the Government, they help to bring about such an economy, that is very much their effect.
      Mr. Campbell-Savours: Is there any connection between these substantial reductions in capital transfer tax, and, indeed, inheritance tax, over the past seven years, and the £110,000 million which has been shipped abroad in investment overseas since 1979? Is there a connection between the great collapse in taxation for rich people in society and the vast amount of money that has run away and been frittered away overseas?
      Mr. MacGregor: There has not been a great collapse in taxation on the richest people. What has been done, and rightly, is that we have reduced the rates of income tax from the absurdly high levels that existed under the Labour Government and so given incentives and encouragement to people to earn more. We have also made some changes in other areas such as investment income surcharge, I believe correctly. I see no parallel between the changes that we have made and the fact that we have been so successful in building up overseas assets. That is due to a completely different set of circumstances.
      Because Britain is so much better off under this Government than under the Labour Government, despite all the alleviations that we have introduced in CTT, and now inheritance tax, the yield of the tax will be almost 50 per cent. higher next year that it was in 1978–79. It is a favourite cry of Labour Chancellors and Shadow Chancellors that they will tax and tax until the pips squeak, but that demonstrates that squeaking pips do not produce money for the Exchequer. A resurgent economy based on widely distributed wealth does.
      The amendment will be welcomed by all those who believe in a capital and property-owning democracy. As I have said so often before in the House, tht is what we are
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      constantly and increasingly achieving by increasing wealth and savings and by spreading it to ever wider numbers of the British people. The sale of council houses is but one of the many ways in which that is being achieved. For those who benefit from the sale of council houses, certainly in a generation to come, they will have a profound effect in bringing in financial and other assets and giving the opportunity of financial independence to millions more families. The proposal embodied in the clause enables us to take a further step in that direction.
      I believe that the proposals will be welcomed by all who believe in the importance of encouraging the creation of wealth, rather than the vain attempt to use the tax system to achieve a redistribution of wealth that is inimical to its creation. They will be welcomed by those who think that it is a healthy development that more and more people, lower down the income scale than ever before, will be able to leave property to their children, and to enable them in turn to enjoy the independence that property ownership can bring. The proposals are a further modest contribution to our wider objectives, and as such I commend them to the Committee.
      5 pm
      Mr. Ian Gow: Nothing illustrates more clearly the confusion of thought in the minds of members of the Social Democratic party than the amendment moved by the hon. Member for Gordon (Mr. Bruce). As my right hon. Friend the Chief Secretary pointed out, the effect of the amendment is precisely the opposite to the intention that the hon. Gentleman explained to us. If we accepted it, we should penalise the least well off. It is quite extraordinary that the Social Democratic party should bring such an ill-thought-out, ill-considered proposal before the Committee. Mercifully, however, there is no prospect whatever of the amendment being accepted.
      My right hon. Friend made another important point. The whole philosophy of the Government, rightly, is to reduce the burden of taxation on the British people. A major cause of the modest economic performance of this country since 1945 has been the burden of taxation. However, there is still too much of a guilt complex about reducing taxation, which some people think is somehow immoral. I make the opposite assertion. I say that high taxation is immoral, and that it has been a dead hand on the economic performance of the country. Now we are beginning to see that, as my right hon. Friend so clearly explained, lower rates of tax produce a higher yield and greater wealth in which all can share.
      The hon. Member for Workington (Mr. Campbell-Savours) illustrated how out of touch he, his party and the Social Democrats are with what has been happening all over the United Kingdom since the right to buy was given for the first time to those who previously had no choice. One million houses and flats, whose tenants were previously condemned to live in them for ever as local authority tenants, have now been sold. My right hon. Friend was right to mention that the acquisition of that wealth by over a million former tenants will bring some of them nearly up to the figure that appears in clause 147. From now on, £90,000 will be the limit below which no inheritance tax will be paid. It is not far-fetched to say that the value of some former council houses is now approaching that figure. I welcome the raising of the threshold from £71,000 to £90,000, and the fact that we are

      439
      able to obtain a higher yield from lower rates and higher thresholds for inheritance tax is proof positive of the economic justification for the Government's proposals.
      My right hon. Friend told the Committee that many estates in the coming year would have been subject to inheritance tax but for the proposed changes in clause 147. That will mean a significant reduction in the burdens placed upon the Inland Revenue. I do not know whether my right hon. Friend will speak again in this debate, but it would be interesting to hear from him whether there will be any reduction in the staff of the capital taxes office as a result of the changes that he proposes in the Bill.
      I hope that, should there be any more contributions from members of the Social Democratic party or the Liberal party during the Committee stage of the Bill, they will be better informed than the hon. Member for Gordon.
      Dr. McDonald: First, let me point out that we entirely agree with the Chief Secretary about the confusion contained in the amendment, and in what was said by the hon. Member for Gordon (Mr. Bruce). We do not intend to support what he said. The upshot of his amendment would be a decrease in the tax take from the present regime, but an increase in taxation on the proposals in the Bill.
      I do not think that it is worth spending much more time on the points made by the alliance, as they were indeed confused. Perhaps by the time that the election comes, the alliance will have thought out its policy. But I feel that it is more important now for us to consider inheritance tax in the context of the general issue of taxation on individuals; and to bear in mind that, since 1979, the Government have reduced the annual yield of capital transfer tax — inheritance tax, as we now refer to it. Between 1979 and 1986, the reduction was about £488 million.
      The Chief Secretary referred to some of the changes in capital transfer tax that the Government have made since 1979. However, he omitted to mention the costs as they were described in the Red Book. If I may take the most expensive example, the doubling of the threshold in 1980 cost £125 million. The full-year cost of clause 147 is estimated in this year's Red Book to be £170 million. That makes a total of £658 million by way of reduction in capital taxation.
      The Chief Secretary made great play of reducing the rates and getting more tax. That does not fit very well with what the Minister of State, Treasury said in Standing Committee on last year's Finance Bill. He said:
      "There is no disagreement between the hon. Lady"—
      he was referring to me—
      "and the Government that the yield from capital tax has fallen. The hon. Member for Workington (Mr. Campbell-Savours) and I had a prolonged exchange on the Floor of the House on clause 80 … I gave him a global sum that acknowledged that the yield had been substantially reduced during the life of the present Government." — [Official Report, Standing Committee G, 10 June 1986; c. 387.]
      At the immense full-year cost of £170 million, the Government have reduced the burden of capital taxation. That figure compares badly with the mere £10 million spent on special tax relief for the over-80s. The Government have shown plainly that they put their money in the pockets of their friends. They weep crocodile tears for the plight of the elderly, but spend a mere £10 million on them.
      The Chief Secretary also made great play of the benefits that the proposal would bring to home owners. But what
      440
      he forbore to mention was the extent of house price inflation, particularly in London and the south-east, where house prices are rising much faster than inflation. I see that the Chief Secretary is nodding away as though that just happens and as though it is no responsibility of the Government, but since 1979 the Government's record on both private and public sector house building has been dismal indeed. It is only recently that there has been an increase in private sector house building. Many Opposition Members are only too well aware of the fact that there has been no public sector house building whatsoever. It is not surprising, therefore, that house prices are inflated.
      Many people have been able to buy their own homes, but those hon. Members with constituencies in London and in the south of England know that the price of a new house is well beyond the means of couples on average, or even above-average, incomes. Those who come to our advice surgeries are not worried about the amount of tax that they will have to pay on the house that they have inherited from their parents; they are worried about finding somewhere to live because they cannot afford to buy their own house or flat.
      The price of a very tiny house in my constituency is about £50,000, which is well beyond the means of most people. They are therefore faced with a long wait for council accommodation. A young couple with a child may often be housed in the third bedroom of their parents' council house. Alternatively, they have nowhere to live at all. About 1 million people are far more worried about homelessness than they are about having to pay inheritance tax on their parents' home. The Chief Secretary pretends that the Government are concerned about such people but he has it all wrong and he is trying to give the wrong impression to the House. This clause is designed to deal not with the problems of home ownership but with the Government's determination to relieve the burden of taxation on the better off while increasing the burden on the worst off.
      During Question Time today there was an exchange on the increase in the tax burden on those who are on half average earnings. A comparison of the 1978–79 tax system with the regime that applied up to the Budget—and in no way has it been altered by the Budget and the Finance Bill—shows that the top 1 per cent. of tax units on an income of £40,000 or more a year have had a reduction in the amount of tax for which they are liable of £7,700, while the bottom 50 per cent. of tax units have had a reduction of only £120. The Chief Secretary spoke at great length about helping people to own their own homes, but that is not the purpose of reducing the rates of inheritance tax. It is another part of the rigging of the tax machine to ensure that the better off pay far less tax while the poor pay tax to line the pockets of the rich.
      We have seen at every turn during the last eight years that, sometimes blatantly and sometimes subtly, that is what has happened. The Parliamentary Private Secretary to the Chief Secretary to the Treaury is looking somewhat sceptical. I only wish that he would read Hansard from time to time, especially the Financial Secretary's answers to written questions in which he is forced to tell the truth and puts his name to very detailed answers that make that perfectly clear to all concerned.

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      5.15 pm
      It is also somewhat disingenuous of the Chief Secretary to take this clause in isolation. It has to be seen in the context of all the measures that deal with inheritance tax in the Finance Bill. In clause 148 and schedule 13 the Government have accepted the principle of the amendents that were moved by the hon. Member for Corby (Mr. Powell) during the proceedings in Standing Committee on last year's Finance Bill. It will be interesting to find out why that was done, and we shall pursue the point in Committee. The Minister of State says more in Standing Committee than the Chief Secretary would like him to do. He is an open and honest man, and it is most refreshing for Opposition Members to hear all that he has to say.
      Referring to the amendment that had been moved by the hon. Member for Corby, the Minister of State said:
      "The amendments deal with the effects of termination and creation of life interests … and are intended to probe the reason for those interests being treated in the same way as an absolute gift of free estate."
      The Minister of State then made it clear that these interests were fully discussed when the matter was first introduced in 1982. He said:
      "The trust regime was subject to consultation in 1982 and it has been widely accepted … The Government propose to leave the present trust regime in being, as a defence against the death charge, to prevent the death charge becoming voluntary."—[Official Report, Standing Committee G, 10 June 1986; c. 389–91.]
      However, the thrust of the proposals of the hon. Member for Corby suddenly appear in other clauses of the Finance Bill that have been carefully left out of the proceedings in Committee of the whole House. The Minister will say that all will be made safe by the anti-avoidance provisions of schedule 13, but that schedule will be subjected to the strictest parliamentary scrutiny. It is not possible to rush through that schedule before the election.
      Once again we are deeply suspicious of the reduced rates of inheritance tax. The Chief Secretary put the best gloss on it that he possibly could from his point of view, but it has little to do with protecting the interests of the so-called modest home owner. It has much more to do with the Government's usual trick of lining the pockets of the rich. We reject the way in which the Government continue to rig the tax regime in their favour.
      Mr. Campbell-Savours: I want to raise an issue on this amendment that was touched on by my hon. Friend the Member for Thurrock (Dr. McDonald). It relates to my theory about the effect of capital gains tax and capital transfer tax in the south of England on property prices. During the last seven years one of the greatest movements in property prices nationally has taken place in the home counties and also in many other areas where there are no Labour Members of Parliament. It is about time that the people in those areas, who in the last seven years have increasingly been willing to move towards Conservatism, stopped to consider what is happening, why they are paying higher and higher prices and why hundreds of thousands of young people in the southern counties cannot afford to buy a home. I can give them the answer tonight.
      Large numbers of people in the south, when they buy a property, acquire substantial tranches of wealth, that arise directly out of the reductions in capital transfer tax that have taken place during the last seven years. The reductions that have taken place in capital gains tax as well, certainly as they affect some people, have also
      442
      liberated funds there for use in the purchase of property. It is those two things separately, and in their interaction, as they are used in the process of acquiring property, that force up property values in the south.
      Perhaps I can give some examples. Let us take a Georgian house in my constituency. For what might be regarded as a typical London Georgian house, one would probably pay probably £20,000 to £25,000. In London the price might be £400,000. In the constituency of my hon. Friend the Member for Thurrock it might be £70,000 or £80,000. Although that is only one fifth of the price of a similar property in central London, it is still three times higher than the price of a similar property in the north of England. The reason is very simple. The money does not circulate in those communities in the north, in the midlands, or in Scotland in sufficient volume to influence the property market by being available for the purchase of property.
      One of the most efficient ways of bringing some sanity back into property prices in the London area and the south of England and giving people the opportunity to buy their own homes — which, the Government tell us, is their policy—would be substantially to increase taxes in this area and take out of the economy this money, which is being used for industrial investment, and so on, overseas, and also for inflating the property boom in the south of England.
      I tell people outside the House that they would do well not to sit and gloat over the substantial increases in their assets in London and other parts of the south. They ought, rather, to consider the hundreds of thousands, indeed millions, of people in the south of England who will never own a home if we allow the current tax regime to go on well into the future. We are not talking only about Labour voters. We are talking also about many Conservatives who also want to own their own homes but who will never have the opportunity to do so because of the fund of money that is being made available to prop up prices in the south.
      One of the facets of the "two nation" argument that has developed over the past few years is this difference that exists in property prices between the south and the rest of the country. It is accentuated by the concentration of wealth here. If we were to look at the figures — this reduced tax base, but greater revenue, which the Minister tells us he is getting from these taxes—they would show that there is a heavy concentration of wealth in the south. It is all splashing about in what is geographically a very small area and it is inflating house prices in a way that is against the public interest. I think that the Government should act accordingly.
      Mr. William Cash: A recent survey in Stafford indicated the required income for a person who lived at the upper end of the income scale so that he could have a five-bedroomed house, a fairly substantial car and a child away at school, and also at the lower end of the scale, which is where the houses are somewhat cheaper. I have just bought a house in Stafford for £8,000, which was extremely interesting to me, and it leads me to the point that there are significant reasons—this is the other side of the argument of the hon. Member for Workington (Mr. Campbell-Savours) — why people should move to the midlands or the north, because they get significantly better value for money as regards the cost of living and the value of property in what is quite often a prosperous town.
      Mr. Campbell-Savours: I am grateful to the hon. Member for giving way to me when I have just made a contribution.
      Will he accept that the fact that people move north should be weighed against the fact that many do not move north because they are scared to jump off the escalator of property prices in the south? They are concerned that if they move from the south to the north they will never be able to move back to the south because they will not be able to afford to do so. That is part of the north-south divide.
      Mr. Cash: That is an interesting point, to which I have an immediate answer. GEC recently moved its transformer division to Stafford. The proof of the pudding is in the eating, because a substantial proportion of the people who lived in Broadstairs, when they saw what was on offer and what value they could get by moving to Stafford, did so with alacrity. I hope that I have dealt with the point that the hon. Gentleman made. There is a considerable incentive for people to move, because it is to their advantage.
      We are here, however, dealing with inheritance tax. The hon. Member for Workington raised the question whether it was unfair that people on lower incomes were unable to acquire property and hold it in trust for, or for the benefit of, their children. It is the Labour party's policy of denying, or at any rate inhibiting, the right of people to buy council houses that is causing serious difficulties for those who would like to be members of the property-owning democracy.
      Mr. Campbell-Savours: That is not part of Labour's policy.
      Mr. Cash: That may be so, but there has always been this inhibition. It may be that this is a reaction to prospects of electoral success and the party is trimming its policies.
      Dr. McDonald: I am sure the hon. Gentleman is aware that not only would we insist on people having the right to buy council houses, but that we would ask the hon. Member to accept the extension of the right to buy privately rented property. Is he prepared to go the whole hog on the question of private home ownership?
      Mr. Cash: I am impressed by the hon. Lady's conversion. If she and her colleagues have now seen the light on this policy, which is fundamental to the Conservative philosophy, all I can say is that they really have got the skids under them and that their conversion to this policy, in electoral terms, is to be encouraged. If the goings-on in the far north, or rather, if I may say so, in the pockets of Militant Tendency and Left-wing politics in London and elsewhere, are shared by the Front Bench of the Labour party, we really will be travelling. But the reality is that the Left wing of the Labour party does not believe in the policies put forward, purely for electoral reasons, by the hon. Member for Dagenham (Mr. Gould).
      I shall deal briefly with the alliance, because this is its amendment. Do the proposers of the amendment believe that it is a good idea to have a 100 per cent. inheritance tax? I have no doubt that the hon. Member for Gordon (Mr. Bruce) will give me quick, straight answers. Particularly with regard to agricultural land, should there be a complete prohibition of the opportunity for farmers to pass on their land to their children? Does the alliance believe that it is essential that farming land should be
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      nationalised? In the agricultural context, I believe it to be essential that farmers and those who own the sort of property that I have mentioned should have the opportunity to pass it on to succeeding generations. The hon. Member has indicated not, but I should like to hear it from his lips.
      5.30 pm
      Mr. Bruce: The hon. Member for Stafford (Mr Cash) asked three questions. The answers are no, no and no.
      The First Deputy Chairman of Ways and Means (Mr. Ernest Armstrong): Does the hon. Gentleman wish to reply to the debate?
      Mr. Bruce: I will reply briefly to the debate. As the Committee has indicated a wish to be tidy I will make a couple of other points so as to avoid having to speak again.
      The exchanges at the beginning of the debate reminded me that in Scotland we are used to referring to the auld alliance. Speeches from the Tory and Labour Benches against me showed alliance at work and perhaps the reactions were predictable. The hon. Member for Eastbourne (Mr. Gow) must be under pressure from the alliance in his constituency, judging by the speeches which he constantly makes. He chose to launch a strenuous attack on an amendment which concedes the need to raise the threshold but is not as enthusiastic about it as the Government. I feel that he protested a little too much to be convincing.
      On house prices, which I shall not deal with other than as they relate to the amendment, when the Government are raising thresholds, which we think is legitimate up to a point, it is reasonable to take account of house price increases, given that the home is the main capital asset of most families. The Government have to be careful that they do not get ahead of the field to the point where their tax changes actually fuel increases in house prices rather than reflect them.
      We believe that the increases the Government have gone for are more likely to fuel than to reflect increases in house prices, especially when coupled with tax relief above the standard rate of income tax for the purchase of houses. That is why we have argued that mortgage tax relief, which should continue, should be restricted to the standard rate of tax and that the increase in inheritance tax should reflect rather than add to the increase in house prices. In our amendment we have sought to get the balance right. Certainly we feel that we are closer to the correct balance than is the Government's proposal.
      The Chief Secretary made the slightly spurious and perhaps unprovable contention, which was echoed by some of his colleagues, that by cutting the incidence of tax the Government have boosted revenue. If they had not cut the burden of tax, would not the buoyancy of the revenue have been further enhanced? The reliefs that the Government have allowed over the years on capital taxes have accumulated to about £800 million. I think that we are entitled to assume that that should be available for spending on services which should have higher priority than increasing relief to the better-off members of the community, who have done exceptionally well out of the Government.
      If more relief is given to the richer members of the community, the Government are less able to attack the

      445
      problems facing the people at the bottom. There is any amount of evidence to show that as a direct result of Government policy over the last eight years the rich have got richer and the poor have got poorer. The provisions of the clause will increase rather than reduce the gap. That is why we have drawn attention to it and have sought to modify the increase.
      One argument that the Government use against both major Opposition groupings is that when we put forward plans for increasing investment in the Health Service, in education or in housing it is not possible to achieve that without paying for it. We acknowledge that. On the alliance Benches we have assiduously costed our plans and we will put detailed information to the electorate when the time comes.
      The converse is that, if the Government go on giving away in extra relief substantial sums of money, their ability to fulfil their pledge to maintain standards in the Health Service and in education is shown to be a sham. The people know that these services have not been safe in the Government's hands because they have been keener on giving money back over-generously to the better-off and have therefore reduced their ability to provide funds for services needed by the whole population and for dealing with the problems of poverty.
      The alliance believes that there should be taxes on capital and that there should be fair and effective methods of redistributing wealth. The Conservative Government have said nothing about the distribution of wealth; they talk only about its accumulation. As I have said, the distribution is getting more rather than less unequal.
      Mr. Cash: The hon. Gentleman has said that we are not interested in the distribution of wealth. Nothing could be further from the truth. By making the most of resources and by developing wealth from the basis of a profitable property-owning democracy, including the principle of inheritance, one is able to accumulate wealth and as a result to distribute it. The hon. Gentleman has demonstrated that he does not have the faintest idea about economics. I am surprised that he holds his present position in the alliance.
      Mr. Bruce: These interventions come from quarters of which we know the composition of the electorate the last time it was tested. Contrary to what the hon. Gentleman asserts, I repeat that the concentration of wealth has become more unequal during the eight years of the Government's tenure of office. That is a fact for which there is ample evidence and support.
      In tabling the amendment we have recognised the changes that have taken place. I have already said that we think it proper to reflect changes in average house prices but that we do not think it right for the Government to go too far down the road so that they no longer have the ability to achieve balance and justice.
      The Government should promote taxes on capital which are effective at redistributing wealth and which are seen to be fair. That is why we have argued the case for tighter taxation of lifetime gifts and have recommended consideration of an accession tax. That is a simple tax on the recipients rather than on the holders of wealth. The tax efficiency point is that, if a wealthy person chooses to distribute his or her wealth by dividing it among a large number of recipients, the total tax burden accruing to that
      446
      wealth is reduced. For example, if £1 million is given to one person, that person will inevitably pay a substantial amount of tax on accession of that wealth. If the money is given to 100 people, the total tax take to the Treasury will be reduced because the people receiving the gift will not reach the higher threshold. It is a simple tax-efficient system which would encourage wealthy people to distribute their wealth widely in a way that has not happened recently. As I have said, the reverse has been the case.
      The debate has been worth while. It has opened up some interesting avenues. I acknowledge that the diference between our amendment and what the Government propose is not substantial but in our view it would be a more balanced approach to the problem. The purpose of the amendment was to secure the debate which we have had. We wanted to argue the case that the Government are going too far. I make no apology for repeating that, as the house price argument has been a major factor in justifying the Government's action, I believe that the Government have gone too far down the road and may be responsible for increasing house prices, particularly in the areas where prices are highest. In those circumstances, I believe that our amendment has considerable merit.
      Given the thinness of our numbers, for reasons which puzzle many of us and about which people outside speculate, I do not wish to press the amendment, but I thank the Committee for the debate.
      The First Deputy Chairman: Is it the will of the Committee that the amendment be withdrawn?
      Hon. Members: Yes.
      Amendment, by leave, withdrawn.
      Question put, That the clause stand part of the Bill.
      The Committee divided: Ayes 186, Noes 69.

      Division No. 150]

      [5.40 pm

      AYES

      Alison, Rt Hon Michael

      Fox, Sir Marcus

      Ashby, David

      Franks, Cecil

      Atkins, Rt Hon Sir H.

      Fraser, Peter (Angus East)

      Atkins, Robert (South Ribble)

      Freeman, Roger

      Baker, Nicholas (Dorset N)

      Galley, Roy

      Baldry, Tony

      Gardner, Sir Edward (Fylde)

      Banks, Robert (Harrogate)

      Garel-Jones, Tristan

      Bennett, Rt Hon Sir Frederic

      Goodhart, Sir Philip

      Biggs-Davison, Sir John

      Gorst, John

      Blaker, Rt Hon Sir Peter

      Gow, Ian

      Boscawen, Hon Robert

      Grant, Sir Anthony

      Braine, Rt Hon Sir Bernard

      Greenway, Harry

      Brinton, Tim

      Gregory, Conal

      Brooke, Hon Peter

      Griffiths, Peter (Portsm'th N)

      Browne, John

      Grylls, Michael

      Bruinvels, Peter

      Hamilton, Hon A. (Epsom)

      Buck, Sir Antony

      Hamilton, Neil (Tatton)

      Carlisle, John (Luton N)

      Hampson, Dr Keith

      Carlisle, Rt Hon M. (W'ton S)

      Hannam,John

      Cash, William

      Harris, David

      Chalker, Mrs Lynda

      Harvey, Robert

      Chapman, Sydney

      Hawksley, Warren

      Clark, Sir W. (Croydon S)

      Hayes, J.

      Coombs, Simon

      Hayward, Robert

      Cope, John

      Heathcoat-Amory, David

      Cormack, Patrick

      Heddle, John

      Corrie, John

      Henderson, Barry

      Couchman, James

      Higgins, Rt Hon Terence L.

      Dorrell, Stephen

      Hind, Kenneth

      Eggar, Tim

      Holland, Sir Philip (Gedling)

      Farr, Sir John

      Holt, Richard

      Fenner, Dame Peggy

      Howarth, Alan (Stratf'd-on-A)

      Forman, Nigel

      Howarth, Gerald (Cannock)

      Forth, Eric

      Howell, Ralph (Norfolk, N)

      447

      Irving, Charles

      Raison, Rt Hon Timothy

      Jackson, Robert

      Rhodes James, Robert

      Johnson Smith, Sir Geoffrey

      Rhys Williams, Sir Brandon

      Jones, Robert (Herts W)

      Ridsdale, Sir Julian

      Jopling, Rt Hon Michael

      Rippon, Rt Hon Geoffrey

      Kershaw, Sir Anthony

      Roe, Mrs Marion

      King, Roger (B'ham N'tield)

      Rossi, Sir Hugh

      Knight, Dame Jill (Edgbaston)

      Rumbold, Mrs Angela

      Knowles, Michael

      Ryder, Richard

      Lang, Ian

      Sackville, Hon Thomas

      Latham, Michael

      Sainsbury, Hon Timothy

      Lawler, Geoffrey

      Sayeed, Jonathan

      Lawrence, Ivan

      Shaw, Sir Michael (Scarb')

      Lawson, Rt Hon Nigel

      Shelton, William (Streatham)

      Lennox-Boyd, Hon Mark

      Shepherd, Richard (Aldridge)

      Lester, Jim

      Silvester, Fred

      Lewis, Sir Kenneth (Stamf'd)

      Sims, Roger

      Lightbown, David

      Skeet, Sir Trevor

      Lilley, Peter

      Smith, Sir Dudley (Warwick)

      Lord, Michael

      Speller, Tony

      Lyell, Nicholas

      Spencer, Derek

      McCrindle, Robert

      Squire, Robin

      McCurley, Mrs Anna

      Steen, Anthony

      MacGregor, Rt Hon John

      Stern, Michael

      MacKay, Andrew (Berkshire)

      Stevens, Lewis (Nuneaton)

      Maclean, David John

      Stewart, Allan (Eastwood)

      McLoughlin, Patrick

      Stewart, Andrew (Sherwood)

      McNair-Wilson, M. (N'bury)

      Stewart, Ian (Hertf'dshire N)

      Major, John

      Stradling Thomas, Sir John

      Malins, Humfrey

      Taylor, Teddy (S'end E)

      Malone, Gerald

      Tebbit, Rt Hon Norman

      Maples, John

      Temple-Morris, Peter

      Marland, Paul

      Thomas, Rt Hon Peter

      Marshall, Michael (Arundel)

      Thompson, Donald (Calder V)

      Mates, Michael

      Thompson, Patrick (N'ich N)

      Mather, Sir Carol

      Thorne, Neil (llford S)

      Maude, Hon Francis

      Thornton, Malcolm

      Merchant, Piers

      Thurnham, Peter

      Miller, Hal (B'grove)

      Townend, John (Bridlington)

      Mills, Sir Peter (West Devon)

      Tracey, Richard

      Mitchell, David (Hants NW)

      Trippier, David

      Montgomery, Sir Fergus

      Twinn, Dr Ian

      Moynihan, Hon C.

      van Straubenzee, Sir W.

      Murphy, Christopher

      Vaughan, Sir Gerard

      Nelson, Anthony

      Wakeham, Rt Hon John

      Neubert, Michael

      Waller, Gary

      Newton, Tony

      Wardle, C. (Bexhill)

      Nicholls, Patrick

      Warren, Kenneth

      Onslow, Cranley

      Watson, John

      Oppenheim, Phillip

      Watts, John

      Oppenheim, Rt Hon Mrs S.

      Wells, Bowen (Hertford)

      Ottaway, Richard

      Whitfield, John

      Page, Sir John (Harrow W)

      Wiggin, Jerry

      Page, Richard (Herts SW)

      Wilkinson, John

      Percival, Rt Hon Sir Ian

      Winterton, Mrs Ann

      Powley, John

      Wood, Timothy

      Price, Sir David

      Young, Sir George (Acton)

      Prior, Rt Hon James

      Proctor, K. Harvey

      Tellers for the Ayes:

      Pym, Rt Hon Francis

      Mr. Michael Portillo and Mr. Peter Lloyd.

      Raffan, Keith

      NOES

      Abse, Leo

      Dalyell, Tarn

      Archer, Rt Hon Peter

      Davis, Terry (B'ham, H'ge H'l)

      Beckett, Mrs Margaret

      Dewar, Donald

      Bidwell, Sydney

      Dixon, Donald

      Blair, Anthony

      Dobson, Frank

      Bray, Dr Jeremy

      Dormand, Jack

      Buchan, Norman

      Dubs, Alfred

      Callaghan, Rt Hon J.

      Fatchett, Derek

      Campbell-Savours, Dale

      Faulds, Andrew

      Canavan, Dennis

      Field, Frank (Birkenhead)

      Clark, Dr David (S Shields)

      Foot, Rt Hon Michael

      Clwyd, Mrs Ann

      Foster, Derek

      Cocks, Rt Hon M. (Bristol S)

      Freeson, Rt Hon Reginald

      Cook, Frank (Stockton North)

      Garrett, W. E.

      Corbett, Robin

      Godman, Dr Norman

      Cox, Thomas (Tooting)

      Golding, Mrs Llin

      Crowther, Stan

      Gould, Bryan

      448

      Hamilton, W. W. (Fife Central)

      Nellist, David

      Harrison, Rt Hon Walter

      Patchett, Terry

      Hattersley, Rt Hon Roy

      Pike, Peter

      Healey, Rt Hon Denis

      Powell, Raymond (Ogmore)

      Heffer, Eric S.

      Prescott, John

      Hogg, N. (C'nauld & Kilsyth)

      Ross, Ernest (Dundee W)

      Kaufman, Rt Hon Gerald

      Sheldon, Rt Hon R.

      Leighton, Ronald

      Shore, Rt Hon Peter

      McDonald, Dr Oonagh

      Short, Ms Clare (Ladywood)

      McKay, Allen (Penistone)

      Skinner, Dennis

      McNamara, Kevin

      Smith, (C.flsl'ton S & F'bury)

      McWilliam, John

      Spearing, Nigel

      Madden, Max

      Torney, Tom

      Marshall, David (Shettleston)

      Williams, Rt Hon A.

      Maynard, Miss Joan

      Winnick, David

      Meacher, Michael

      Millan, Rt Hon Bruce

      Tellers for the Noes:

      Miller, Dr M. S. (E Kilbride)

      Mr. Frank Haynes and Mr. Tony Lloyd.

      Mitchell, Austin (G't Grimsby)

      Morris, Rt Hon A. (W'shawe)

      Question accordingly agreed to.
      Clause 147 ordered to stand part of the Bill.
      Clause 160 ordered to stand part of the Bill.
      Clause 18 ordered to stand part of the Bill.

    Clause 33

      EMPLOYEE SHARE SCHEMES, ETC.
      Mr. MacGregor: I beg to move amendment No. 4, in page 23, line 7, after 'Schedule', insert
      'and the consequential provisions relating to capital gains tax in Part IIA thereof.
      The First Deputy Chairman: With this it will be convenient to take amendment No. 8.
      Mr. MacGregor: It might be helpful if I discuss clause 33 and schedule 4, which have two main purposes. They introduce an improvement to the 1980 and 1984 Finance Acts and share option schemes—[Interruption.] I can understand the puzzlement of the hon. Member for Dagenham (Mr. Gould). I was rather surprised to find myself speaking on this amendment so soon.
      Mr. Bryan Gould: Perhaps we could jointly clear up this slight confusion. I had assumed, Mr. Armstrong, that, in accordance with the business motion which the Committee passed yesterday, we were proceeding to deal with clause 160.
      The First Deputy Chairman: That is true. I put the Question, That clause 160 stand part of the Bill, and it was carried. I also put the question on clause 18.
      Mr. MacGregor: There were no speakers on clause 160. Apparently, no hon. Member wanted to speak to it.
      Sir Brandon Rhys Williams: On a point of order, Mr. Armstrong. I came with the intention of speaking on clause 160. I think that we were expecting a speech from my hon. Friend the Economic Secretary. I did not think that it was my place to rise before my hon. Friend had done so. In fact, I had a personal assurance from him that he was about to speak on that subject. I am surprised that the Committee will not be able to debate this important matter.
      The First Deputy Chairman: I understand the hon. Member's disappointment but, when I put the Question that the clause stand part of the Bill, no hon. Member rose. I cannot call hon. Members who do not rise
      Mr. MacGregor: Clause 33 and schedule 4 have two main purposes. They introduce an improvement to the 1980 and 1984 Finance Acts and share option schemes. This is a new facility to enable employees whose company is taken over to exchange their existing share options under an approved scheme for options over shares in the acquiring company. This meets representations on the point, and I am sure that it will be welcomed. Until now, an employee in this situation has been forced either to realise his existing option with the risk that, if three years have not elapsed, the gain will be liable to income tax, or to maintain the option in a company in which the shares will be mostly held by the new parent. There is to be no statutory obligation on the acquiring company to extend this opportunity to the employees of the target company. However, this factor will certainly become one of many discussed between all the parties concerned at the time of the merger or acquisition.
      The intention is that the employees concerned should be no worse off and no better off, technically, than if the takeover had not occurred, and they had simply held on to their original options. To qualify, therefore, the new options must, first, continue to be governed by the rules of the target company's existing schemes — this will ensure, for example, that the employees do not lose any rights attaching to the options which they had hitherto enjoyed or, for that matter, gain any rights that they did not previously have—and, secondly, be equal in value to the old options at the time of the exchange. This is very much a technical matter. This condition will be satisfied where the total market value of the shares under the old and new options at the time of the exchange is the same and the total price payable on exercise of the new option is also the same as the total exercise price under the old option.
      The two Government amendments ensure that employees are not faced with an unintended capital gains tax charge as a result of such an exchange. Under an amendment which has not been called, although its purport may be discussed in the debate, there is a suggestion to make the approval of a company's Finance Act 1984 share option scheme conditional upon it also introducing an all-employee 1978 or 1980 Finance Act scheme. We want to encourage the take-up of all three kinds of approved scheme. A restriction of that sort would not help that objective. For many companies, an all-employee scheme may initially be inappropriate—that is why I would not wish to make a restriction.
      We would want this change to be available to both 1980 and 1984 schemes at once. For many companies, an all-employee scheme may initially be inappropriate or seem to burden them. There is a danger that a condition of this kind would discourage such companies from introducing any scheme at all—discretionary or all-employee. There is no evidence to suggest that the introduction of the 1984 scheme has had an adverse impact on the other schemes. On the contrary, all three schemes are popular and successful in their own right. For example, in the year to March 1987 a record total of over 200 new all-employee schemes were approved by the Inland Revenue, bringing the total to over 1,250 such schemes, and there are now more than 2,000 approved 1984 schemes.
      Clause 33 and schedule 4 also introduce certain technical changes to the close company material interest provisions as applied when determining whether employees may participate in their company's approved share
      450
      or share option schemes. Some of these changes were announced by my right hon. Friend the Financial Secretary on 13 November last year. All of them —clause 39 deals with a related matter—are designed to help to ensure the smooth running of all three kinds of approved employee share schemes, but there are also some consequential changes in the way in which these provisions apply for close company interest relief purposes.
      The main effect of the present provisions will be to ease the position so that trust-held shares may be disregarded in calculating the material interest disqualification where the individual irrevocably disclaims or otherwise surrenders his interest in the trust and he has received no benefit from it. This will help those individuals who might otherwise have been unable to participate in an approved scheme. There are also certain other more technical changes mainly designed to clarify and ensure the smooth running of the existing rules.
      6 pm
      The spread of share ownership to all levels of a company is, and has been throughout, a major objective of the Government. These modest changes will enhance the employee share ownership movement still further.
      We seem to be making very good progress today, Mr. Armstrong, and I thought that in order to facilitate the progress it would be better to talk about clause 33 and schedule 4 in general, but in particular I have referred to the purposes of amendments 4 and 8 and I commend them to the Committee.
      Mr. Gould: In accordance with the lead provided by the Chief Secretary, I propose to speak briefly in a debate which I assume will cover the clause itself and the amendments.
      My hon. Friends and I generally support employee share option schemes and welcome the measures in the clause and in the schedule, and indeed in the amendments. It is clearly right to take account of the immense impact that takeovers have had over the last year or two years, and there seems no reason to believe that that impact will be very much reduced in the immediate future. Huge sums have been involved. I will not weary the Committee with a recital of the billions of pounds' worth of assets involved in bids over recent years. We have the prospect of that continuing, although I suppose it is fair to say, judging simply by a reading of newspaper headlines, that there has perhaps been a temporary lull over the last month or two.
      But the conditions that prompted the takeover fever and the merger mania still prevail. The deregulation of the City and the cash-rich companies which now, both as victims and as predators, feature in these takeover bids are still there. Those who are victims still continue to offer very attractive targets and those who are predators clearly have the cash and the resources with which to make their predatory raids. They do so and they are likely to continue to do so, largely because the conditions in which investment in new capacity might be attractive are absent.
      For those reasons it seems to me that the spate of takeover bids is likely to continue and it is therefore absolutely right, and indeed commendable, that the Government should be legislating to take account of the likelihood that more and more employees will be affected by takeover bids in the future. Indeed, in January 1986 the Transport and General Workers Union estimated that no fewer than half a million people worked for firms which

      451
      were the subject of or were involved in takeover bids. Therefore, it is, potentially at any rate, a very substantial problem.
      In those circumstances, I think it is right that those who are members of employee share option schemes should have the sort of protection that is provided in these new provisions. Nevertheless, the provisions leave open a number of questions, and certainly leave a couple of questions hanging in the air. It is to those questions that I should like to draw the Chief Secretary's attention.
      If employees who participate in share option schemes are to be given this protection in the case of a successful takeover bid, why is similar protection not being given to the beneficiaries of pension funds? Why is similar provision not being made for employees in general, simply by virtue of their position as employees? After all, far and away the most important piece of property which is at risk as a consequence of a takeover bid is not a small holding in a share option scheme but the job of a worker, not to mention his or her rights as a beneficiary under a pension fund. Therefore, we are bound to ask what is so special about rights conferred by share ownership. Why should the protection of this provision he made available to those who own bits of paper in respect of their shareholdings but not to employees as workers — in other words, not in relation to their jobs?
      The Chief Secretary must surely be aware of the problems. He must know that on almost every occasion on which a takeover bid is mounted the workers, usually the employees of the victim company, are extremely nervous, and often with very good reason, about whether their jobs are going to be placed at risk. It is remarkable that in these circumstances it is the employees whose jobs are most on the line who are often kept most in the dark. It is they who have the fewest rights to information and who, generally speaking, are not consulted about what is going on. They know that rationalisation — which is the term usually applied to the objective of takeovers—is almost always a euphemism for laying people off. Therefore, why is no protection being provided to workers qua employees, quite apart from the question whether they own shares?
      More particularly, what about the rights of pension fund beneficiaries? Again, the Chief Secretary must be aware—I know that his Department is, because it has taken some small action already — of the abuses and scandals which have disfigured so many takeover bids with respect to the rights of beneficiaries and the treatment of pension funds. All too often we have seen instances in which pension fund surpluses, which are truly the property of the beneficiaries, have been traded away as part of the assets of the target company or in other circumstances have been the target of the predator company, which has got its hands on those surpluses and in some cases actually used them to pay off part of the purchase price of the company which it has acquired, or even to make redundancy payments to the workers whom it then proceeds to lay off.
      For all those reasons, it seems remarkable to me, and remiss of the Government, that they should have rushed to legislate—quite rightly and commendably, as I have said — in this area, but not in respect of those many thousands, indeed millions, of workers who have rights under occupational pension schemes.
      The Chief Secretary may perhaps remark that these matters do not arise directly under the clause, but I think he will accept that they are legitimate questions in this
      452
      context. We make the point very strongly that if we are to legislate to take account of the impact on employees of the current and projected spate of takeover bids, we must pay attention to the matters that I have sought to raise.
      The next Labour Government will certainly take steps to provide new rights of consultation and information for employees. We will also provide appropriate new rights for the beneficiaries of pension funds so that they too can be protected when their interests are affected by takeover bids.
      Mr. MacGregor: I think it would be right for me to reply briefly to the point made by the hon. Member for Dagenham (Mr. Gould). One answer, as I think he recognises, is that clause 33 is entirely about employee share schemes and not about anything else. Secondly, it is designed simply to remove a technical tax difficulty that had arisen.
      On the third point, I think that the most important answer to his question is that what is being proposed under clause 33 is not to make it obligatory for the acquiring company to extend the opportunity of having a share option to those in the target company who already have share options. There is no new statutory obligation being imposed as a result of this clause. It is up to the acquiring company to decide whether it wants to extend to those employees with share options in the target company the possibility of having share options in the new company. What the clause does is to remove a technical tax obstacle to that. In that sense there is a difference between this and the extension of statutory obligations, in the case of a merger on the acquiring company.
      In the case of the jobs of the employees, which was one of the examples that the hon. Gentleman gave, where employees become employees of the acquiring company because it wishes them to remain in their jobs, their tax position is not adversely affected. But if we had not made this change it is possible that those who had share options and were given the opportunity of new share options would have found that their position had been adversely affected, because if, for example, three years had not elapsed since they acquired the option the gain would have been liable to income tax. All we are doing is removing an obstacle, to enable the acquiring company to make that offer. That is probably the crucial difference. That is why I put such stress on the fact that employees should be technically no worse off as far as their share options are concerned and no better off had the takeover not occurred, but it is still available to them not to have the share option at all.
      Mr. Gould: I am not seeking to argue that the points I made are on all fours with the precise problem addressed by this clause. I take the point entirely that it follows, therefore, that the mechanism for removing an obstacle in this case may not be appropriate in the cases that I have sought to raise. I am asking the Chief Secretary to address the principle that lies behind this provision—a principle that we endorse and welcome—and the absence of any consideration, so it seems, in the Government's mind of the rights of employees in a more general sense on the occasion of a takeover and. in particular, of the precise rights of beneficiaries under pension funds. At present, as he knows, beneficiaries often have to rely on perhaps badly drawn-up trust instruments of some sort that have very little protection from statutory law.
      Mr. MacGregor: We are at one on this clause. The hon. Gentleman is raising much wider issues. Off the top of my head I do not see that there are any obstacles that we are removing here in relation to the straightforward job position of an employee being taken over, because the similar tax obstacles are not there. The question of information goes rather wider than we might be able to discuss on the Finance Bill.
      On the pensions issue, again the hon. Gentleman raised much wider issues that should be debated on other occasions. The clause and amendments are fairly narrow but I believe beneficial, and I hope that I have answered the points that the hon. Gentleman raised.
      Amendment agreed to.
      Sir William Clark: I beg to move amendment No. 5, in page 23, line 7, at end insert—
      '(1A) In paragraph 15(1) of Schedule 10 to the Finance Act 1984 for the definition of "qualifying employee" there shall be substituted the following words "qualifying employee" in relation to a company, means an employee of the company (other than one who is a director of the company or, in the case of a group scheme, of a participating company) who is required, under the terms of his employment, to work for the company for—

      (a) at least twenty hours a week where the employee has been employed continuously by the company for not more than one year, or

      (b) at least sixteen hours a week where the employee has been employed continuously by the company for more than one year but not more than three years, or

      (c) at least twelve hours a week where the employee has been employed continuously by the company for more than three years but not more than five years, or

      (d) at least eight hours a week where the employee has been employed continuously by the company for more than five years.'.

      The First Deputy Chairman: With this it may be convenient to take amendment No. 6, in page 23, line 7, at end insert—
      '(1A) in paragraph 15(1) of Schedule 10 to the Finance Act 1984 for the definition of "qualifying employee" there shall be substituted the following words—"qualifying employee" in relation to a company, means — an employee of the company (other than one who is a director of the company or, in the case of a group scheme, of a participating company) who is required, under the terms of his employment, to work for the company for at least twenty hours a week; and any other employee provided that in such a case the number of shares which he is granted the right to acquire bears the same proportion to the number of shares which he would have been granted the right to acquire had he worked for twenty hours per week as the number of hours he is required to work bears to twenty.'.
      Sir William Clark: I do not think that I need detain the Committee for long. The share option scheme has been a great success. All parties have welcomed it because the practicality of it and the benefits it gives employees are beyond doubt. It is a great asset and is of great benefit to employees. In the legislation, only employees who work at least 20 hours per week for a company are entitled to participate in share option schemes. Most economic pundits would agree with me that the number of part-time workers will increase in the future. Accordingly, I wonder whether 20 hours per week is the right figure or whether we should reduce it.
      Amendment No. 5 proposes that, where an employee does not work at least 20 hours a week but only works 10 hours, 16 hours or whatever, the number of hours worked
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      plus the length of service should entitle an employee to participate in a share options scheme. If the Government do not like that proposition, amendment No. 6 proposes an equation based on the figure of 20 hours a week. If an employee who worked 20 hours a week under a share option scheme was entitled to 100 shares, an employee who worked only 10 hours a week should be entitled to 50 shares. That is the idea behind amendment No. 6.
      I hope that my right hon. Friend the Chief Secretary will not dismiss this out of hand. It is absolutely essential that we give the benefit of share option schemes to regular employees who work, albeit part-time. In the retail trade, in which I have no vested interest, part-time employees who work on a Friday or a Saturday quite obviously do not work 20 hours a week, but they are still regular employees. They may work only 14 hours or 16 hours a week, but the Government should give some thought to including in this legislation those sorts of employees.
      The purpose behind my amendment, with which I am sure my right hon. Friend will agree, is that I do not want any loopholes on the matter of share option schemes. Many of these part-time workers, particularly married women, have worked for up to 20 years for a particular employer. Consequently, they should have similar benefits to their colleagues who work 20 hours a week or more. They should not get the same benefits as employees who work 20 hours a week, but, depending on the number of hours they work per week, and upon their length of service with the particular employer, they should receive some benefit. I hope that my right hon. Friend will give sympathetic consideration to both those amendments and I ask the Committee to accept them.
      6.15 pm
      Mr. Tim Smith: I support what my hon. Friend the Member for Croydon, South (Sir William Clark) has said. My name is attached to amendments Nos. 5 and 6. I think all hon. Members agree that the employee share scheme legislation first introduced in the Finance Act 1978, which has been improved in two succeeding Finance Acts, has been an enormous success. I do not know what the numbers are today of employees who participate in Finance Act 1978 schemes, but I believe that not only do a very large number of schemes now qualify but that there are a large number of employees who now hold shares in the companies which employ them as a direct result of this legislation. That is welcome.
      It has been possible for any company with a stock exchange listing to set up a scheme of this kind to enable most, but not all, employees to participate. The concern that my hon. Friend and I have is that this should be widened a little. There is no doubt that part-time employment is growing all the time. That is to be welcomed. The object of the two amendments is to achieve some sensible and equitable way of ensuring that part-time employees can participate in these schemes.
      My hon. Friend will correct me if I am wrong, but amendments Nos. 5 and 6 suggest alternative schemes to enable part-time employees to participate. Clause 5 proposes reducing the qualifying number of hours in accordance with the number of years that a part-time employee has worked for his company and clause 6 tackles the problem in another way by reducing the number of shares that a part-time employee is able to take in any one

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      year. When my right hon. Friend the Chief Secretary replies, I hope that he will look at the principle underlying the amendments sympathetically.
      Mr. MacGregor: I am grateful to my hon. Friend the Member for Croydon, South (Sir William Clark) and my hon. Friend the Member for Beaconsfield (Mr. Smith) for raising these amendments. I certainly agree with both of them about the great importance of employee share schemes and I share with them the delight about the way in which they have grown and the way in which benefits have been extended to so many more employees over recent years. I also agree with both of them 'about the importance of part-time employment. In no sense in what I am about to say are any of my remarks directed against that.
      As my hon. Friend the Member for Croydon, South made clear, the purpose of the amendments is to admit part-time employees to Finance Act 1984 approved employee option schemes. His amendments give us a choice. We considered this carefully when the 1984 scheme was first introduced. Indeed, we modified our original proposals to reduce the qualifying limit for employees who are not directors from 25 hours to 20 hours a week. However, we felt then, and we continue to feel, that it would not be right to go any further, certainly at this stage, and perhaps I can explain why.
      My hon. Friend referred to part-timers in a retail shop. Of course, those part-timers can benefit under the schemes in the Finance Act 1978 and the Finance Act 1980. Both those schemes must be available to all the company's employees on similar terms and there are relatively low limits on the level of benefits. Therefore, they are available to part-timers but the scope for abuse in respect of part-timers is limited.
      By contrast, the benefits under the Finance Act 1984 schemes can be much greater. Those schemes are discretionary. They do not have to be available to all employees. The point on which one has to reflect is that the scheme in the Finance Act 1984 offers generous tax reliefs and it is aimed particularly at improving the motivation of key employees who can contribute substantially to their company's success. Part-time employees, such as those in a retail shop to whom my hon. Friend referred, may, of course, have an important contribution to make — indeed they do — but by definition it is unlikely to be as substantial or capable of enhancement by improved incentives as in the case of full-time workers. Of course, as with any such limits, some individuals will always find themselves on the wrong side, wherever a dividing line may be drawn. As a matter of judgment we believe that the present rules strike a reasonable balance of 20 hours a week.
      It is possible for companies to grant share options to their part-time employees in other ways. For example— I do not float this as particularly likely—they could do so under an unapproved scheme. That would mean there would not be any special tax relief for the employee's gain on exercising the option. More importantly, they could set up a Finance Act 1980 approved savings-related share option scheme. As I said, that would allow part-time employees and directors to take part.
      My hon. Friends the Members for Croydon, South and Beaconsfield have made their point succinctly. I agree with both of them on the objective of achieving as wide a spread of share ownership as possible. I have no doubt that my
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      hon. Friends will continue to watch the progress of the 1984 schemes and may return to the matter in future debates. We can consider it again then. For the reasons I have given, I cannot recommend the Committee to accept the amendments.
      Mr. Tim Smith: Under the Finance Act 1978 scheme, what is the qualifying period for participation? I am not clear whether any employee can participate, regardless of the number of hours per week they work or whether there is a minimum number of hours per week that one has to work before participating in a 1978 scheme.
      Mr. MacGregor: My recollection—if I am wrong I shall write to my hon. Friend—is that, since the scheme has to be available to all employees, it covers part-time employees of any sort.
      Sir William Clark: I understand from the response of my right hon. Friend that he will keep the matter under review and that we can come back to it at some time in the future. I am convinced, as is my hon. Friend the Member for Beaconsfield (Mr. Smith) and I am sure other right hon. and hon. Members, that wider share ownership should be extended. In view of the fact that my right hon. Friend has promised to keep it under review and that we can come back to it in the future, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 33, as amended, ordered to stand part of the Bill.

    Schedule 4

      EMPLOYEE SHARE SCHEMES, ETC.
      Amendment made: No. 8, in page 122, line 38, at end insert—
      'PART IIA
      CONSEQUENTIAL PROVISIONS RELATING TO CAPITAL GAINS TAX
      3A. In section 47 of the Finance Act 1980 (savings-related share option schemes) after subsection (2) there shall be inserted the following subsection—
      "(2A) Where a right to acquire shares in a body corporate which was obtained as mentioned in subsection (1) above is exchanged for a right to acquire shares in another body corporate in accordance with a provision included in a scheme pursuant to paragraph 10A of Schedule 10 to this Act, the exchange shall not be treated for the purposes of the Capital Gains Tax Act 1979 as involving any disposal of the first-mentioned right or any acquisition of the other right, but for those purposes the other right shall be treated as the same asset acquired as the first-mentioned right was acquired."
      3B. In section 38 of the Finance Act 1984 (approved share option schemes) after subsection (6) there shall be inserted the following subsection—
      "(6A) Where a right to acquire shares in a body corporate is exchanged for a right to acquire shares in another body corporate in accordance with a provision included in a scheme pursuant to paragraph 4A of Schedule 10 to this Act, the exchange shall not be treated for the purposes of the Capital Gains Tax Act 1979 as involving any disposal of the first-mentioned right or any acquisition of the other right, but for those purposes the other right shall be treated as the same asset acquired as the first-mentioned right was acquired.";.—[Mr. MacGregor.]
      Schedule 4, as amended, agreed to.

    Clause 45

      CARRY-BACK OF RELIEF
      Question proposed, That the clause stand part of the Bill.
      The Economic Secretary to the Treasury (Mr. Ian Stewart): Last year we extended the life of the business expansion scheme indefinitely and, in putting it on a longterm footing, we made a number of changes to focus the impact of the scheme more closely on its original objectives and to improve its operation. After such major changes we think that there is a good case this year for keeping further revisions to a minimum. I am glad that the changes we have proposed were welcomed by the Leader of the Opposition on Budget day.
      Clause 45 is intended to reduce bunching of investment towards the last quarter of the tax year. As hon. Members will know, under the scheme relief is given for the tax year in which shares in a qualifying company are issued to an investor following subscription. Therefore, in order to obtain relief in any particular year, there is a deadline for investment of 5 April. Naturally, many people delay making their investment until near that deadline so that they have an idea of what their personal financial affairs are like towards the end of the financial year. For some it may be because they wish to minimise the length of time between paying for the shares and recovering the tax relief. Others may not have a clear idea until a late stage as to what their financial position for that tax year will be, so they have no idea how much money may be available or what tax relief they would get.
      As experience of the scheme on the part of investors and promoters has grown, there has been an increase in the amount of investment earlier in the tax year, parti:ularly in the third quarter. However, there is no doubt that it remains more difficult for companies to raise equity under the scheme in the first half of the tax year.
      There is no simple solution to the problem. Whatever deadline is set for the making of investments under the scheme, it is likely that there will be a concentration of investments shortly before it. Therefore, simply putting back the deadline would hardly help the companies concerned. However, we believe that the proposal now before the Committee will provide an incentive for more investment to be made under the scheme in the first half of the tax year.
      We propose that an investor should be allowed to claim relief in the preceding tax year on up to half of any investments made under the scheme in that period, subject to a limit of £5,000 on the total amount of relief for all investments that can be carried back from any tax year to the previous one. To take advantage of that option, the investment would have to be made during the first half of the new tax year—between 6 April and 5 October. The normal limit of £40,000 on the amount of investment on which relief might be claimed for any one year would continue to apply. I do not suggest to the Committee that that change will eliminate completely the phenomenon of bunching. However, I believe that it will have a valuable impact and will make it easier for companies to raise business expansion scheme finance in the first half of the tax year.
      Mr. John Maples: I want to say a few words about the clause, but before I do I should declare
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      an interest. I do some work for a company that manages a business expansion scheme fund. I hope that what I lack in objectivity will be made up for by a little personal experience.
      My hon. Friend the Economic Secretary described the problem fairly accurately but, in fact, there are two problems. One is in connection with BES funds and the other is in connection with individuals. The amendment to the law that he has proposed will go a long way towards solving the problem for individuals. There will be BES issues aimed at them in the first part of the tax year which will give them some relief in the previous part of the tax year, enable the sort of carry-over to which he referred and remove bunching. However, it does not solve the problem of BES funds.
      I think that BES fund managers find that they cannot raise money for a BES fund until towards the end of a calendar year because people have no idea what their tax position will be and they want to leave it late. At the same time, the BES fund manager has to give himself room to invest the money. Most of us find that we cannot raise the money until about October in a calendar year and that effectively means that we reach Christmas by the time we have the money. Therefore, we have effectively three months to invest it. My practical experience of the company for which I do some work is that fund managers are running around looking for things in which to invest in March. That is a bad thing. It often means that money is thrown at deals that the scheme was not intended to help promote. The clause will not solve that problem. I shall explain why and ask my hon. Friend whether he will deal with it, if not on this occasion, at a later date.
      6.30 pm
      The first problem is that if a fund is not fully invested by 5 April, the carry-over relief is of no use, first, because it applies only to half the uninvested amount and. secondly, because the maximum is £5,000. If an individual had put £40,000 into a fund and that fund was 75 per cent. invested by the end of the tax year, the carry-over relief would entitle him to a reduction of only £5,000, not the £10,000 remaining uninvested in the fund. The second problem is that, regardless of how much money one puts into the fund—even if one puts in only £10,000—one is still entitled to a reduction of only half the amount that is uninvested at the end of the year.
      The clause represents an attempt to come to grips with a real problem, but it does not do so in respect of BES funds. Although most of the money that has been raised for BES issues in the past couple of years has been in one-off public prospectus issues, my hon. Friend would do well to consider trying to encourage people to make such investments through funds. There is a considerable amount of evidence that many public prospectus issues are put together specifically for the purpose of raising money under the business expansion scheme. They are not preexisting companies that are looking for development capital. Business expansion scheme funds are in a position to find the sort of investments that my hon. Friend wants to see made under the scheme. BES funds are in a position to seek out relatively small companies that are looking for £100,000 to £200,000. However, if a City institution is to promote a BES issue, it has to consider raising £2 million to make it worth the effort.
      Not enough of the companies that one wants to help with BES are trying to raise that amount of money.

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      Therefore, the sorts of issues that are put together in public prospectuses to raise money under the business expansion scheme are — not always, but often — artificially put together solely to take advantage of the BES. One can however, say with a good deal of honesty that money that is raised by BES is often development capital that is genuinely needed in an existing small business.
      Although the clause will help to solve the bunching problem for an individual and allow him to wait until the end of the tax year to see how much money he will have to pay on and therefore how much he should invest in the BES because of the relief that he needs, something slightly different is needed for BES funds. I ask my hon. Friend to consider proposing that, as long as the money is invested in a BES fund, perhaps not even by 31 March, but some earlier date such as 31 January in a tax year, the fund managers should have an additional four, five or six months after the end of the tax year to invest the money. In that way, one will encourage people to invest in BES funds and give BES funds a little more time to look for the sort of businesses in which they should invest and not find themselves in the last couple of weeks of March, scrambling around for deals to throw money into. If 5 April arrives and they have not done so, all the tax relief is lost and everybody—the managers and investors—will be in an extremely difficult position. I shall be grateful if my hon. Friend will consider introducing an amendment to that effect at some stage during the passage of the Bill or, if the Bill is lost, in the Finance (No. 2) Bill.
      Mr. Tim Smith: There is always a slight danger, on occasions such as this when the Government introduce an extension to an existing tax relief, to say that it is all very well as far as it goes. The business expansion scheme has been a tremendous success. It is an imaginative tax relief, and it has encouraged an enormous amount of investment in new and existing businesses. Treasury Ministers at the time introduced it against fierce resistance from the Inland Revenue. Indeed, the original proposal was that tax relief would be only at the standard rate of tax. If it had been, it would have been stillborn. It is because it is a generous relief that it is a successful scheme. Can my hon. Friend give the Committee some idea of the amount of investment that has been encouraged by the scheme?
      On occasions such as this one knows that there will be some abuse. However, we must consider the net benefit. The Government, quite rightly, when it has been clear that the scheme has been abused, have introduced restrictions on qualifying investment. Overall, it has been a successful scheme. Last year, I was glad when the Government decided to make it a permanent scheme. This relatively modest extension recognises one of the difficulties that has occurred — the bunching of investment and the artificiality that that brings, which my hon. Friend the Member for Lewisham, West (Mr. Maples) described. To some extent, the clause gets to grips with that problem.
      It might be helpful if my hon. Friend the Economic Secretary would explain why the figure of £5,000 was chosen. I think that I am right in saying that the maximum relief available to an individual in any one year is £40,000. Having decided in principle that it is sensible to allow carry-back on any investment made in the first six months, there must be a case for saying that, that being half the year, one should allow half the relief to be carried back.
      Dr. McDonald: In his Budget statement the Chancellor said:
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      "Last year I put the business expansion scheme on to a permanent footing. However, the present rules still produce too much end-year bunching of BES investments, and hence may crowd out some projects and lead to bad decisions on others. I propose, therefore, to permit someone who invests in the first half of the year to claim part of the relief against his previous year's income. This will make it easier for companies to raise BES finance throughout the year"—[Official Report, 17 March 1987; Vol.112, c.820.]
      Of course, that has been expressed in the clause.
      If the Chancellor had been a little more frank, he would have said, "We tried to get people to invest in small new companies by offering them tax relief. Of course, because people wanted the tax relief, but not to take any entrepreneurial risk, they were only willing to invest in asset-backed enterprises such as private nursing homes. We did try to sort out the worst abuses last year, so give me some credit for that. However, because BES is seen as just a tax dodge"—hence its popularity, which the hon. Member for Beaconsfield (Mr. Smith) did not explain—"people have been thinking about investments only in the last three months of the tax year—January, February and March. This has meant that any half-baked scheme can raise cash in that period, but for the other nine months of the year virtually no project, however well thought out or beneficial to the nation, can raise a bean. Therefore. we shall patch up the BES a bit more by allowing people who invest in the period April to September to claim relief against their previous year's income."
      The real question. if the Chancellor had been frank, is whether it is sensible to direct a state subsidy to investment according to the tax planning needs of wealthy BES investors — bearing in mind that the Peat Marwick report showed that 85 per cent. of recipients of BES relief were higher rate taxpayers — rather than some wide-ranging criterion such as the need to create jobs or to improve the nation's industrial performance. They are certainly the criteria that we would apply to any money that is given to support industry, whether directly by grant or through tax relief.
      The Inland Revenue statistics for the latest year available, 1984–85 — this is from "Inland Revenue Statistics 1986" — show that 61 per cent. of all BES investment went into companies in the service sector, compared with just under 2.4 per cent. in manufacturing. I mention that, not out of any disrespect for the service sector, but to emphasise that manufacturing needs the greatest Government support. It is the area in which the Government have dismally' failed over the past eight years, as we see if we look at the huge losses in the manufacturing sector and note the Government's own forecast of a deficit. Britain has lost one fifth of its manufacturing sector and the Government expect a vast deficit of £8,000 million this year in manufactured goods. Therefore, it is manufacturing industry that needs the greatest support and encouragement if we are to avoid the expected balance of payments deficit this year.
      The regional analysis of business expansion scheme money shows that the destination of just over one quarter of it was described as unknown. That cannot he satisfactory for any Government. Perhaps the Economic Secretary has done a little investigative work on this matter since the financial year 1984–85. If he has. perhaps he will tell us the destination of that quarter of BES money. Of the 74 per cent. that was traced, over 62 per cent. went to the prosperous south-east, 5·5 per cent. went to the north and north-west combined and only 1·6 per

      461
      cent. went to Northern Ireland. Those are extremely worrying statistics. The BES scheme weights the relief that is given at the expense of taxpayers in favour of schemes that have been brought into existence in the south-east of England. The BES does nothing to help the serious unemployment in the north and north-west and in Northern Ireland.
      The total BES investment was about £140 million. Assuming that all investors pay tax at a rate of 60 per cent., this represents a Government subsidy of £84 million. That expenditure is large. It is important that £84 million of Government money is properly directed, but there is no indication that it has been. The Department of Trade and Industry figures for regional and general industrial support show a steady fall from £791 million in 1980–81 to £277 million in this financial year. Since 1984 a mere £370 million has been given by way of regional developments grants for eligible capital projects.
      The Government have provided relief through a scheme that is heavily concentrated in the south-east. It benefits the better-off taxpayers and, as the hon. Member for Lewisham, West (Mr. Maples) said, means that tax relief will go to ill-thought-out schemes and will not be of great benefit to anybody except the taxpayers who receive that tax relief.
      There must be better ways of spending £84 million. There must certainly be better ways of keeping track of Government money that has apparently disappeared to an unknown destination. I am sure that the Economic Secretary is extremely worried about that — or is he? Perhaps it does not matter if better-off taxpayers, the higher rate taxpayers, benefit from it. It matters only when we are looking at those who receive unemployment benefit or social security benefits.
      The Government have allowed money to be spent—tax relief is a form of spending-without proper checks. This is an ill—directed scheme and it is high time that it was examined once again to see whether there are better ways of giving support to industry, especially in the deprived regions. Instead of accepting the assumption made by either the hon. Member for Lewisham, West or the Economic Secretary that this scheme is permanent, I hope that the Minister will think again. He is prejudging the outcome of the general election. This scheme requires careful examination and we need a redirection of that £84 million.
      Mr. Ian Stewart: A number of points have been raised during the debate. The hon. Member for Thurrock (Dr. McDonald) concentrated on her dissatisfaction with the way in which the business expansion scheme works in practice. It is inherent in any scheme of this kind that full information becomes available only gradually. It is important that as more information about past years becomes available to the Inland Revenue the Inland Revenue and Ministers should consider the implications of that. From time to time we should, if need be, make adjustments to the scheme to take account of the information that becomes available. That is what we have done.
      6.45 pm
      In earlier Budgets we tightened up the focus of the scheme to deal with the problem of asset backing. In this Budget we made the change by way of the clause that we
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      are discussing about the timing of the investment. I do not think that it is an ill-directed scheme. Funds should be available, and are available, through such a scheme to small and growing companies that need the funds for investment. I disagree fundamentally with the hon. Lady that it would be sensible to try to direct the tax relief to a specific sector such as manufacturing. I hope that more manufacturing and other sorts of companies will be able to take advantage of the scheme, expecially in view of the change that we are now making.
      The whole of manufacturing industry is becoming increasingly profitable, and that is the best way to encourage the growth of that industry. When that happens, no doubt more companies within it will look for extra finance. The hon. Lady spoke about 62 per cent. of the money being spent on the south-east. The location is determined by the registered office of the company, not necessarily by the operating area of its activities. Therefore, the fruits of the investment may occur anywhere in Britain, and no doubt frequently do.
      Mr. Tim Smith: I was not aware of that important piece of information. Many new or very small companies are extremely unlikely to have their registered offices at the same location as their place of operation. Many of these funds raise their capital in London and are London-based and, of course, their registered offices will often be in the London area. However, the investment might well be elsewhere. Can we get a better survey to find out where these businesses actually are?
      Mr. Stewart: The more information that we can obtain on the operation of the scheme the better. I have already said that. As the tax relief relates to the investment in the company itself rather than to the activities that are carried out by the company, it is inevitable, as my hon. Friend said, that the figures will come forward on the basis of the registered office of the company.
      Dr. McDonald: The Minister speaks about registered offices, but presumably tax relief is given for a specific scheme. Therefore, one surely knows, not just the location of the head office, but the purpose for which the scheme is designed. I spoke about private nursing home schemes. Presumably one knows the location of the various nursing homes for which relief might be given through a scheme of this sort. Is the Minister saying that he has information only about head offices, and has no information about the purposes of the scheme for which tax relief is given? Surely a geographical element must come into the matter, at least for some schemes, if not for every scheme.
      Mr. Stewart: The Inland Revenue does not have information on where the activities of a company as a taxpayer take place and whether it operates through the benefit of business expansion scheme finance or through any other scheme. Such information is not available in the form that the hon. Lady seeks.
      I have said, and I repeat, that it is important for us to continue to obtain as much information as possible about the scheme as it goes along. The Peat Marwick report referred only to the operation of the scheme in its infancy. I have no doubt that we shall want more information as the scheme develops, especially in the light of the changes that we have made during the past two years, because we shall wish to see the way in which those changes are reflected in the behaviour of investors and, indeed, in the

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      behaviour of the companies in which the investment is made. I do not think that there is any difference between us about the desirability of such information, but the matter is not nearly so straightforward, or the information so readily available, as the hon. Lady implies.
      My hon. Friends the Members for Beaconsfield (Mr. Smith) and for Lewisham, West (Mr. Maples) raised several points about the proposal in clause 45. My hon. Friend the Member for Beaconsfield asked why the figure of £5,000 was chosen for the amount that could be carried back. My hon. Friend the Member for Lewisham, West complained that only £5,000 could be carried back, and also that it applied to only half the figure. I should like to comment on those points, but before I do so I should like to mention the actual figures. For 1984–85, which is the latest year for which full data are available, a total of 807 companies benefited from the scheme and the amount raised was approximately £150 million. Information on the following year, 1985–86, is not yet complete. However, the indications are that the figures are likely to be considerably higher than they were for 1984–85.
      The Peat Marwick report on those figures concluded that the great majority of those funds would probably not have been raised by other means if the business expansion scheme had not been available. Clearly, the scheme has had an important impact in that respect, and has helped smaller businesses and companies to get going in a way that otherwise would not have been open to them. That fully justifies the initiative that the Government took in introducing the scheme.
      Let me now deal with the figures. The evidence for the years completed so far, which is all that we have to go on at this stage, is that 80 per cent. of all investors put in sums of up to £10,000 a year. Therefore, £5,000 will be half the figure that covers 80 per cent. of all investors. Although one might argue for another or a higher figure, it is clear that, in the great majority of cases, the figure of £5,000 will be significant and will cover the amounts involved.
      My hon. Friend the Member for Lewisham, West made a particular plea on behalf of the funds and said that he thought it would be helpful to have a different regime for the funds because, by their nature, they could spread risk and find investments more readily than could individuals who were looking for direct investments. I beg to differ on that point. I do not in any way wish to denigrate the funds, which have played an important and useful role, but they should not be given special advantages over individual direct investments. In fact, we are in favour of investment of both types. The arrangements that we are now introducing will make such investments easier because, as I have said, it will not be necessary for an individual to wait until the end of the tax year before making an investment that he knows can be set against the taxable income that has already been earned because it fell in the previous year.
      Wherever one puts the cut-off date, there is bound to be bunching before the date concerned. However having said that, we shall obviously keep that under review—as, indeed, we have done the entire operation of the scheme
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      so far. As I said in my introductory comments, the provisions will not necessarily remove all bunching, but they will have a significant effect. If, during the first half of a new tax year, someone knows his taxable income for the previous year, he will now, up to a figure of half of £10,000 — be able to make an investment that will be usable, retrospectively, for tax credit against the previous year, the earnings for which he should know by that time. That should benefit individuals and fund managers. I do not think that it is beyond the ingenuity of fund managers for the BES to work out the best ways of taking advantage of the new proposal.
      Mr. Maples: The point that I was trying to make was that this amendment is of no relevance to the BES funds, for the reason that I gave. I understand that My hon. Friend wants the same tax regime to apply to individuals and to BES funds, but the amendment to the law that he is proposing will not be of any benefit to the BES funds, because in no circumstances will they be able to carry over uninvested funds from the end of one tax year to the first half of the next.
      Mr. Stewart: The value of the funds is not only to the companies in which they invest, but to the people who invest in them. To the extent that it is easier for those who invest to make such investments at different times of the year, which they cannot readily do at the moment, the provisions are bound to make it easier for the funds to raise money at times other than later in the tax year. The earlier in the tax year that the funds can raise the money, the longer they have to make the underlying investments themselves. Therefore, although the benefit is not directly available to the funds as a result of what we are doing, the advantages to the investors will, by definition, make it easier for the funds to raise money throughout the year.
      I do not want to deny that my hon. Friend has a point in emphasising that there are different considerations between funds and individuals. However, I am not persuaded that we should make a separate regime for individuals and funds, because I am in favour of encouraging individuals also to make direct investments through the business expansion scheme. It should be possible for the funds to gain some of the benefit of the willingness of individuals to make investments in the first half of the year, which are encouraged by the clause, and which otherwise they might he reluctant to make. On that basis, I hope that we shall have my hon. Friend's support, and that of others, for the clause.
      Question put and agreed to.
      Clause 45, order to stand part of the Bill.
      Bill (Clauses Nos. 11, 18, 20 to 23, 33, 45, 147 and 160 and Schedule No. 4), reported, with amendments; to lie upon the Table.

    CHEVENING ESTATE BILL [LORDS]
    Ordered,
    That the Order [23rd April] relating to the committal of the Chevening Estate Bill [Lords] be amended, in line 15, by leaving out the words 'Standing Committee' and inserting the words 'Committee of the whole House'.—[Mr. Ryder.]

  University College of Wales, Aberystwyth
  Motion made, and Question proposed, That this House do now adjourn. —[Mr. Ryder.]
  6.58 pm
  Mr. Geraint Howells: I am delighted that I have been given the opportunity to debate the future role of the University college of Wales, Aberystwyth. The college has a special place in the hearts of the Welsh people as it was the first college of the university of Wales to be established, in Aberystwyth. The institution was built through the efforts of many dedicated men and women and by the scarce pennies that were contributed by the people of Wales over a century ago.
  The University college of Wales is held in high esteem for sentimental reasons and because of the excellent academic standards that it has achieved over the years. Many distinguished ex-students, many of them in public life, in education and in industry, are making an important contribution to the wealth and welfare of the nation.
  It is with horror, therefore, that we learn of the drastic cuts that were imposed as a result of the Government's higher education policies on all the university colleges in Wales, and on Aberystwyth in particular. As a result, between 1981 and 1986 the University college of Wales suffered cuts of about 22 per cent. in its University Grants Committee grant, which led to a reduction of 20 per cent. in its academic staff and of 22 per cent. in other staff. There are now to be further reductions and the future looks even more bleak.
  To cope with continuing financial restraints between 1987 and 1990 and to avoid huge deficits, the college is being forced to make further painful decisions that could involve a reduction, either by amalgamation or closure, of the number of departments from 32 to 22 and the loss of up to 75 academic and non-academic posts. When we consider that this is happening in an institution with about 3,000 students and with fewer than 300 academic staff, the seriousness of the situation becomes obvious to anyone.
  Over the past few years the college administration has applied itself to coping with immense difficulties. Expenditure on academic services, administration and maintenance has been cut to the bone. The college has been successful, however, in increasing research income and in attracting a growing number of overseas students. At the same time it has pioneered significant developments in transbinary co-operation, which include working with the Welsh college of agriculture and the college of librarianship in Wales. It is therefore discouraging for all those involved — students, staff and anyone concerned about the future of the college—that decisions affecting an important institution in the heart of Wales should be taken by a centralised committee without sufficient weight being given to the special circumstances of the institution.
  First, the college is relatively small but broadly based. It is geographically remote from the other constituent colleges of the university of Wales. Any rationalisation within the university has therefore to be limited because of the practical and geographical difficulties involved, and the need to offer an adequate range of mutually supporting disciplines on the one campus.
  Secondly, the college has a special role to play in the cultural and linguistic life of Wales. It has therefore to use
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  a significant part of its resources to accommodate bilingualism and Welsh medium teaching, and to fulfil its obligations as a guardian of Welsh culture.
  The college is situated in the heartland of rural Wales and it makes a significant contribution to the economy of that area. It has close ties with the community around it. It is one of the largest employers in an area that is devoid of large-scale industry and business. It is integrated with the life of the surrounding area in a way that few other colleges outside Wales can be. To take away the viability of the college through the implementation of further cuts would be a serious blow to Aberystwyth in terms of jobs and economic prospects. My constituents are aware of this, but their displeasure goes further than that. They are fiercely proud of their university college and of its fine tradition, and anything which diminishes that tradition diminishes us all.
  I maintain that the way in which the UGC allocates its funds is grossly unfair to Wales, and especially to the UCW. I do not believe that it takes fully into account the unique character of Welsh colleagues and their special place in Welsh society. The Welsh university tradition is entirely separate from that of England, and this should be taken into account. That is why I share the serious concern of the college at the attitude of the Croham report, which dismisses any idea of a Welsh committee within the UGC. In my view it is essential that such a committee should be set up immediately, as it is the only way to defend the interests of the UCW of Aberystwyth in a climate of dwindling resources and Government indifference to higher education in Wales.
  The Government must take responsibility for the serious problems in higher education, because they are starving it of funds. It is demeaning to treat education in terms of profit and loss. I know that it can be demonstrated that Aberystwyth uses its resources with care and responsibility, but the immense contribution that it makes to the community, to Wales and to the world of education cannot be measured in money and its future must be sustained by increased resources and encouragement by the Government.
  At this late hour I make a plea to the Minister to reconsider the grants that are allocated by the UGC to the UCW. I hope that she will give the matter favourable consideration and that I can return to my constitutents to say that the future of the college at Aberystwyth is secure for generations to come.
  7.7 pm
  The Minister of State, Department of Education and Science (Mrs. Angela Rumbold): The hon. Member for Ceredigion and Pembroke, North) (Mr. Howells) has presented his case eloquently for the University college of Wales, Aberystwyth. With him, I wish to pay tribute to the UCW's long history of service to the community and to its special place as the senior college of the university of Wales. I recognise with the hon. Gentleman the high esteem in which the college is held within its own area. I recognise also that the funding changes to which the hon. Gentleman has referred that have been introduced over the past five years, the reductions that have gone with them and the policies that underlie them have presented all seven of the colleges in Wales with problems of adjustment. Some of these have been shared with other universities in Great Britain and some have derived from the college's own characteristics.

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  I am standing here this evening instead of my hon. Friend the Under-Secretary of State for Education and Science with special responsibilities for higher education because he is even now returning from another part of the Principality. My hon. Friend has been visiting University college, Swansea to see for himself how it is coping with change. On a wider front, my right hon. Friend the Secretary of State for Education and Science and my hon. Friend have had the opportunity of discussing these matters directly with senior members of the university of Wales, and have recently met a deputation from the Association of University Teachers in Wales. We are not unfamiliar within the Department with the matters which the hon. Gentleman has raised, and the Government are not unsympathetic. As Minister of State, I take an interest in higher education so I, too, have been following the matters to which the hon. Gentleman has referred with considerable interest.
  The public funds available to universities through the University Grants Committee are the subject of at least three levels of decision, and in Wales there is a fourth, owing to the federal structure of the universities. It is important that these levels are not confused.
  The first level is the decision made by the Government on the amount of funding; then the UGC decides on the distribution of grants to universities; then the universities settle their internal distribution. Conventions are attached, quite rightly, to the extent to which the Government comment on the decisions, both of the UGC and the individual universities. Those conventions are designed to protect the autonomy of universities. Because those distinctions are sometimes confused, it is important to be clear about where matters now stand.
  The Government have made known their expenditure plans for the current financial year and the following two years. Although they are the subject of review, they at least give some indication of what is in the Government's mind. The UGC has informed universities of their initial basic allocation for the academic year 1987–88 and the provisional allocations for 1988–89 and 1989–90. I stress that it is an initial allocation, because the UGC has held in reserve certain funds for special purposes, including measures to promote rationalisation within and among universities. Universities are preparing academic and financial plans which accord with the level of grant they expect to receive.
  Within the university of Wales, a related exercise is being conducted by a special working party on rationalisation. The hon. Member referred to the outcome of the rationalisation working party exercise, the report of which has been passed to the colleges, and to Aberystwyth's outlined academic plan. It would not be proper for me to comment on those documents as they are still in a formative stage. At Government level, both the resources we are providing and the policies outlined in our recent White Paper on higher education, to which the hon. Member referred, demonstrate our firm commitment to universities within a wider higher education system.
  Last November my right hon. Friend announced an additional £95 million for universities in the current financial year. Additional funds have been made available following the conclusion of a satisfactory academic pay settlement. That means an increase in funding for universities of some 10 per cent. The benefits of that additional funding and the extra money flowing through
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  the science budget will not be felt immediately, although the benefits of the higher pay are immediate. The funds will not be spread evenly among the universities.
  We come to the second level of decision-making; the decisions taken by the UGC. The outcomes of the UGC's resource allocation procedure have been widely misunderstood in Wales as in other parts of the country. It has sometimes been presented, unfortunately, as being discriminatory. It is discriminatory in the sense that it discriminates in favour of research excellence, but it also uses criteria that have been applied fairly to all universities.
  Except in respect of certain additional sums made available in recognition of special factors, the UGC's method treats Welsh universities the same as any other universities. I hope that all parties will accept that this is as it should be. All universities, wherever they may be located, should be judged against the same standards, using the same measure of performance.
  There is room for debate about what these criteria should he. One criticism levelled against the UGC's allocations is that it tends to favour the larger institutions at the expense of the small ones. Colleges such as UCW are consequently disadvantaged and disfavoured, but that is a matter for the UGC, which has said that it will look at that again, although it appears from the preliminary statistical analysis that smaller institutions generally do not have higher unit costs than larger institutions., I reiterate that the UGC has pointed out its willingness to look further at that.
  I should mention two further factors that are relevant to the UCW. The first is the importance of achieving effective rationalisation of provision. That means looking again at the small departments to see whether they are being cost-effective or whether there is a better means of securing academic strength through the concentration of provision.
  The Government welcome the lead taken by the university of Wales in promoting and co-ordinating rationalisation among the colleges. I understand that the UCW has the strategic objective of substantially reducing its departments, although that does not imply a corresponding loss of opportunities for students, particularly as it relates to disciplines within larger departments.
  The second factor I emphasise is research excellence. The Government have been encouraging the UGC to pursue selectivity in the funding of university research. Selectivity favours those institutions with a proven record of success or where the prospects of success look brightest.
  The UGC first introduced more specific selectivity in its grant allocations for the current academic year. In doing so, it made judgments on research quality in 37 subject-related cost centres in every university. Although the UGC was able to identify departments microbiology, botany and international politics-within the UCW, which were above the national average ranking on research, the college did not fare particularly well from the exercise, but I am glad to see that one of the college's explicit objectives is to improve its research ratings. It intends, in its internal resource allocation procedures, to effect that aim.
  The hon. Member talked about the Welsh factors arid teaching through the Welsh language. The Government and the UGC recognise the commitment of the university of Wales to Welsh medium teaching and the provision made at Bangor and Aberystwyth. That recognition is given expression in two ways: first, as a special factor, in

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  effect, as an addition to grant in the allocations made to the two colleges and, secondly, in a separate grant made to the university of Wales registry which covers, among other items, the activities of the board for Welsh medium teaching.
  The hon. Member made plain his views about the current committee report and how he feels it would be best to deal with universities in Wales. I take note of those views and will report them to my hon. Friend.
  I accept that grant levels have not permitted as much expansion of the board's activities as the board and the university would have liked, but equally the past seven years have seen a substantial development of Welsh medium provision and I hope that more will come. I am assured by the UGC that the level of provision, in its calculations, has not been reduced, although, in accordance with the conventions, the separate elements of each university's block grant are not identified.
  Some members of the UCW have argued that the college's commitment to Welsh medium teaching imposes upon it the need for a more generous student-staff ratio than might apply in other areas. I accept that that is the case. The purpose of the special recognition made in the UGC's formula is to take account of the additional staffing need. If the present allowance turns out to be insufficient, that matter can be taken up with the UGC.
  Another matter about which the hon. Gentleman made a particular point was the relative geographical isolation of Aberystwyth and the fact that it is located in a mainly rural area of disadvantage in terms of its place and other respects. If there is a case to be made, I am sure that the UGC will listen to it with much sympathy.
  One possible disadvantage is that the college might be less attractive to overseas students, but that is not entirely borne out by its success in recent years in considerably increasing the number of overseas students. Therefore, the point about it perhaps being in a disadvantaged area with less opportunity to attract people, and being isolated and in difficulties because of its situation and lack of resources is not entirely borne out by what has happened with overseas students.
  Over its 115 years, University college, Aberystwyth has demonstrated great flexibility in responding to changing circumstances, and for that we give it all credit. Now is the time for similar flexibility in order to build on the college's strengths and to improve its overall cost-effectiveness. I am confident that the ingenuity and talent of the present generation of academic leaders within the college will be able to match up to the present challenges in the spirit of their predecessors.

  Secondary Education
  7.21 pm
  Mr. Patrick Thompson: I am grateful to you, Mr. Deputy Speaker, for giving me this opportunity to speak on the Adjournment on reform in secondary education. We should be debating reform not just because change is a good thing for its own sake, but because there is no doubt that education will be a matter for ever-increasing debate, including debate which may well take place during any coming general election campaign.
  It is important that all hon. Members should address themselves to the way in which we can get politics—I mean the wrong kind of adversarial politics—out of our education system. I hope later this evening to give an example of the way in which that might be done.
  We must be moving to a way forward in education where we can remove the obvious diversions which appear to exist between political parties and, more often, within the education system itself. After all, the education of our young people is one of the most important matters to which the Government and people of the nation must address themselves.
  I am grateful to my hon. Friend the Minister for being prepared to reply to the debate. I hope that she will be able to confirm that, given the present dispute about recent pay talks, the door is open to teachers, administrators and union leaders to discuss the way forward after the interim period through which we are now going. I hope that she will also be able to make a few remarks about the way forward, although I do not propose to devote my speech to the present pay dispute in the teaching profession.
  The divisions that exist within education are not helped by the fact that there are at the moment four separate teaching unions. I was a member of the Assistant Masters and Mistresses Association. They are all perfectly respectable institutions in the sense that they all have a history of support, and many teachers have loyalty to all four of those unions. I have excluded the head teachers' unions, which can be added to my remarks.
  All the unions take a different stance at different times—and that they are perfectly entitled to do—but in the longer term we should be looking for less division and for a way in which teachers can be represented by a less diverse group of bodies. In particular, I support the stance of the Professional Association of Teachers, at least in one respect. It has always said, and I support this without hesitation, that—if I may use an outdated term—to take industrial action is not the best way for the teaching profession to put its case.
  I want to go on record as saying that the best advice for the majority of teachers who want to do the best for children and for the education service, whatever their political views, is that the way forward should not include the taking of industrial action — working to rule or taking strike action. That is not the best way forward, and I join the many others who are appealing to the members of the teaching profession to think again. It is fair enough that they should have different views and put their case strongly, even—with respect to my hon. Friend the Minister — to disagree with Ministers, but industrial action is not a good way forward and in my opinion, as an ex-member of the profession. it does not achieve the best results.

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  If anyone had any doubts that change was needed in education, they might have been removed if they had looked at the survey in The Independent this morning. It highlighted, as far as I could see without any political bias, the deficiencies in the present system, which is mainly comprehensive. The survey was not criticising the comprehensive system as such. As I understood it, the survey said that, because of all the changes in education since 1945, we have not addressed ourselves properly to what it is we are trying to do in the schools. After all, we are not just trying to get the maximum number of pupils to Oxford, Cambridge or the other universities, or the maximum pass level at GCSE or any other exam; we are trying to decide what skills, qualifications, numeracy, literacy, and so on, we want from our pupils when they come out of the schools. The analysis in The Independent, which has been reproduced elsewhere, put that very well and I would recommend not only my hon. Friend the Minister but any other hon. Member to read it.
  Let me take a few moments to point to one or two reforms in the secondary education system that I would welcome. I hope that there will be at least a debate, and perhaps action. In any school in any education system there is nothing more important than the quality of the head teacher and the way in which he leads his team of teachers, ancillary staff and pupils.
  My right hon. Friend the Secretary of State has obviously been addressing himself to that problem, but I want to encourage the idea of a staff college to provide specialist training for head teachers and potential head teachers. After all, that system works extremely well in the services. I am not suggesting that such a staff college in education should somehow mimic the staff college at Camberley, but there is a strong case for rigorous, meaningful training for head teachers in management and all the other skills that they will need in addition to their teaching skills.
  I am not devaluing the teaching skills required by head teachers, because it is good teachers who should be promoted to headships, but they need other skills as well which they may not have had the chance to develop during the earlier part of their careers. For that reason, I again urge the Government and my hon. Friend to respond positively to the idea of a staff college and management training.
  Let me pass on to another suggestion that relates to my remarks about the profession, its behaviour and the unions. The majority of teachers have high professional standards and are committed to their work. Indeed, I should like to take this opportunity to pay tribute to the schools and to the overwhelming majority of teachers in Norwich who are doing sterling work, far beyond the call of any special contract or written agreement, for the sake of their pupils. That is continuing all the time and must be recognised by hon. Members.
  Nevertheless, there is still the problem of industrial action and other actions by teachers which do not have a good effect on their professional status. Therefore, I should like to recommend for serious consideration by the Government the setting up of a professional teachers' council. That is quite distinct from the unions. After all, any body of employees has a perfect right to set up a union under the law, and I shall not comment on that now. But, in addition, we could set up a professional teachers' council which would have the task of setting and monitoring professional standards for members of the
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  teaching profession—whether ensuring that political bias is not introduced into schools, or setting standards or a code of conduct for teachers.
  There are many roles that such a body could fulfil, in the same way as the British Medical Association and other bodies perform such functions for doctors and members of the fraternity. I hope that my hon. Friend the Minister of State will comment on that, and perhaps suggest that the matter may be considered in the future.
  I should now like to move on from the teaching profession to the way in which the secondary school system is now run. I am delighted that my hon. Friend the Member for Norwich, South (Mr. Powley) has joined me, as I wish to refer to a topic that has caused considerable unease among my constituents and his. At present, the local education authority administers the way in which children are allocated to various secondary schools. Of course, there is the Government principle of freedom of choice for parents, but we all know how that works out in practice. Many parents write to me, as their Member of Parliament, saying that they have been unable to secure the school of their choice. They then go on to appeal; but even after they have appealed, the system still seems to work against them. The present arrangement is causing a great deal of unhappiness, which we in Parliament should at least consider, and perhaps try to legislate to remove it.
  I recommend to my hon. Friend the Minister serious consideration of the question of open entry to our schools. Anyone who knows anything about education — including my constituents—will know that there are all sorts of snags inherent in such a scheme; but I ask my hon. Friend to consider the matter seriously and see whether those snags can be ironed out. As I said at the beginning of my speech, I should particularly like to see politics taken out of education, and that is one of the reforms that will be necessary if we are to achieve our aim. I believe that entry to a school should be determined mainly through discussion between its head teacher and governors, and indeed members of staff and parents.
  While some schools may not necessarily be able to expand fast enough to take all the pupils who want to go to them, it would at least be a step in the right direction if we took the matter out of the hands of the present administrative structure and introduced open entry. We may have to couple that with a change in the way in which funding goes into schools. In the short time available, let me hint at what I should like to see happen.
  Under the system I should like to see in operation, a capitation allowance would be paid directly to a school for each child who attended that school. If the school were expanding, there would be at least the possibility of its receiving more money, and putting up extra buildings and employing extra staff to cope with the demand. Many people say that the less good schools that are not so popular will go into a vicious spiral of decline and disappear out of existence. But, from my experience of the independent sector, I do not believe that that will happen. If for any reason a school becomes less popular, it may go into a short-term decline. That, however, presents a challenge to the head teacher, the staff and the governors. They will ask, "What are we trying to do? Why are we not attracting the number of pupils that we are able to take?" After suitable discussion, they will take action to arrest the decline, and the inevitable result will be an improvement of standards all round. That argument, therefore, can be rejected.
  Mr. John Powley: I am grateful to my hon. Friend for giving way to me, particularly on a point about which I have some feeling and knowledge.
  Is my hon. Friend agreeing with the philosophy expounded by the present Government about giving greater autonomy to the governing body of a school for its financial management? As he may know, I was a governor of the Manor school in Cambridge before I moved to Norwich. That school participated in an experiment to give the headmaster and governors greater autonomy in the financial management of the school. I hope that my hon. Friend will agree that, if that philosophy were followed — I do not hear many encouraging noises from some teaching unions, but I hope that it will be followed — one of the ways in which governing bodies and teaching staff could attract pupils to their schools would be by having greater independence and more say in how their school is run and how disciplines are operated, and thus being given greater management of their own affairs.
  Mr. Thompson: I thank my hon. Friend for his intervention; I entirely support what he has said. I trust that he will allow me to give an example that illustrates my point — although the matter is out of our hands at present and, indeed, I cannot make any comment on the actual processes involved.
  Bowthorpe school, in my hon. Friend's constituency, is now a highly controversial subject, and I am recommending that politics should be taken out of education, not put back into it. However, I will say that, if the open-entry system that I have recommended were adopted—along with the independence of schools and governors referred to by my hon. Friend—any future problem similar to that faced by the Norfolk education committee and the head teachers of Bowthorpe school would be dealt with in an entirely different way. If the roll of a school in the position in which Bowthorpe school has found itself was declining, it would be up to the head teacher and the governors to decide together how to address the problem of decreasing finance, and how to move forward into the future. I hope that my hon. Friend will agree that, under such a system, politics would probably be partially—if not totally—taken out of such circumstances.
  Let me say in passing how much I welcome the move already made by my right hon. Friend the Secretary of State to devolve more power to head teachers. I do not wish to comment on that in detail, because we have already heard welcome announcements about it.
  I referred earlier to pay and possible future negotiations. Let me now make a further point connected with the issue of the independence of head teachers. I should like pay negotiations in the longer run — whatever form they may take in the future — to be mainly concerned with the basic or minimum rates. In the independent sector, head teachers have much more room for manoeuvre on how much they pay individual teachers—possibly because they want to attract more teachers, particularly in shortage subjects such as physics, mathematics, craft design and technology. If we laid down that pay negotiations should address only the minimum levels and gave head teachers more power—as my hon. Friend the Member for Norwich, South and I both wish—that could be applied to pay as well. That is something that we might consider in the longer term. I should be interested to hear the response of my hon.
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  Friend the Minister, and I hope that she will comment on how we are progressing with the serious shortage of physics and mathematics teachers, about which I have often spoken in the House.
  It would be foolish, in my implied criticism of the way in which secondary schools are run, to minimise the severity of the problems posed for local education authorities by the dramatic fall in school numbers since 1979. Hard decisions about administrative reorganisation and school closures have had to be taken. Unfortunately, attempts have been made to pass on responsibility for those problems to the Government. An unholy alliance has been formed between the Labour-led local authorities trying to extort further resources from the taxpayer and teachers' unions seeking pay increases beyond the local authorities' income.
  The debate on the future of education is not, therefore, just the product of the recent disruption in the schools. The fundamental problems lie in the structure of the system itself. I have not had time to develop all the changes that I should like to see, but I have referred to some of them. The basic objectives of education are poorly defined at the moment, as was pointed out in this morning's article in The Independent. Furthermore, the educational attainments to be sought by pupils are highly obscure. The active and effective participation of parents has been impossible until very recently.
  Largely because there is little or no effective freedom of choice for parents or pupils within the state sector, the vested interests in the educational establishment — the civil servants in the Department of Education and Science, the administrators working for the local education authorities, the union leaders and some local authorities have been able—how can I put this courteously, Mr. Deputy Speaker?—to resist positive change. It is for this reason that a whole range of issues, covering the restoration of educational standards, open entry and capitation, the formulation of a national curriculum to which my right hon. Friend the Secretary of State is addressing himself, and about which, if I had had more time, I should have spoken enthusiastically — perhaps my hon. Friend the Minister of State will comment on that point—have been treated as politically taboo.
  This is a challenge that the Government and the Conservative party, as we approach the general election, must accept. There must be a fundamentally new strategy for education that draws pupils, parents and teachers into an effective partnership, enlarges the range of choice and provides real freedom in education, while reducing bureaucratic control. That will require clear educational objectives, better administrative arrangements and proper safeguards for the teaching profession. I look forward to my hon. Friend's comments, enthusiastic or otherwise, on what I have said.
  Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Lady seek the leave of the House to speak again?
  7.44 pm
  The Minister of State, Department of Education and Science (Mrs. Angela Rumbold): Yes.
  Mr. Deputy Speaker: The hon. Lady has the leave of the House to speak again.
  Mrs. Rumbold: With the leave of the House, Mr. Deputy Speaker, may I respond to the very interesting

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  points that have been made by my hon. Friend the Member for Norwich, North (Mr. Thompson) about the reform of the education system. I believe, with him, that for too long we have allowed our education system to wander without very much sense of direction. It is important that we have a clearer idea of where we want to go.
  I accept with alacrity my hon. Friend's point about the politicisation of some local education authorities. Sadly, one has to look no further than the recently published HMI report on the London borough of Brent to see what happens if a local education authority decides that its priorities are other than the needs of the children for whom it ought to provide a sensible system of education.
  The report saddened me, not just because it is apparent that the management of the local education authority has become completely out of touch with the needs of the children, but because I believe profoundly that young people should be served well by the schools that they attend and by their teachers. Therefore, my right hon. Friend the Secretary of State for Education and Science and my colleagues and I are very worried that children in Brent are not receiving the education to which they are entitled.
  My hon. Friend referred to his concern about the action that some teachers are taking on pay and conditions of service. It is worth putting on record yet again exactly what has happened in the last few years. I was a member of the Burnham committee, and according to the records there were 12 pay negotiations. Of those 12 pay negotiations, only three ended in a negative settlement. In the other negotiations, there were interventions, sometimes ACAS had to be brought in, and at one time there was a pay policy. No clear and straightforward settlement was reached in the very unsatisfactory Burnham committee negotiations. Therefore, its passing has not been regretted by anybody.
  Apart from the Burnham committee being put out of its misery, equally unsatisfactory arrangements have been in existence for about six years. The local education authorities were supposed to sit down with the teachers unions and discuss conditions of service, but the working party failed to meet on a number of occasions because one or other of the union leaders did not wish to attend the meeting. That shows how impossible it was for the local education authorities and the unions to get together to determine conditions of service.
  To put that matter right the Government decided to introduce legislation that would lead to the setting up of an interim advisory committee to look into pay and conditions of service for teachers. At the same time, the Government granted a pay award to teachers which, in this calendar year, amounts to a 16·4 per cent. increase. Taken together with the negotiated arrangements for the immediately preceding period, over 18 months that will amount to a 25 per cent. increase in the basic rate of pay for teachers. By no stretch of the imagination can that be considered to be other than a most generous pay award.
  When people look at what is happening now in the schools and see that the major unions are still involved in action because not all of the package is entirely to their satisfaction, they find it hard to understand why, after such a generous pay award, the teachers are not seeking other means to discuss their differences with the Government.
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  My hon. Friend would obviously like me to say more about how, ultimately, we hope that the pay and conditions of service of teachers will be determined. My right hon. Friend has said on a number of occasions that the interim advisory committee is indeed an interim body and that he does not wish to have to determine teachers' pay and conditions of service. Later this year, therefore, he hopes to open discussions with the teacher unions, the churches, parents and all those who have an interest in education in an effort to find the best way in which rates of pay and conditions of service can be determined. My hon. Friend's suggestion that there should be a professional council for teachers may then be considered.
  Of course, we need to look at other matters too. I have a great deal of sympathy with my hon. Friend when he talks about the management of schools. It is of great importance, not only that our schools are clear in their objectives, about what they are in business for, but that they are managed well. The head teachers in our schools have a heavy responsibility. It is not simply a matter of becoming a super teacher. It is also a matter of going into an institution, into a business. One can draw a parallel, as many do, between the management of a school and that of a business, because a considerable degree of management skill is needed for a school to be run effectively. This applies not just to a large comprehensive of 1,500 children or so but to the smallest primary school. The skill of managing how the children are taught and how best to cope with staff is something that many teachers need. It seems to me fair to suggest that an institution or organisation might be set up to provide potential head teachers with the specific management skills needed to run a school.
  That leads on logically to the whole question of how schools are governed. When it comes to what Government have already done to ensure that the customers, the parents, are more involved in the schools which their children attend, the 1986 Act, which I am proud to have had a very small part in putting through the House, is the first step in making sure that parents have a firm part in the government and management of schools.
  It is not enough, however, just to give parents a role in governing. We must ensure that they have more than a vague idea of their role. They need a clear managment objective when they become governors. It is more than simply going to a few meetings and doing one's duty as a governor in attending and making decisions. There is the whole business of what the school is doing, how its curriculum is managed and whether the funds for which the head teacher is responsible are being well spent. Governors must also consider the ethos of the school and its discipline, because it is the head teacher, on the whole, who is responsible for the ethos of the school. Nevertheless, that can be determined by a strong governing body, and certainly by a strong chairman of governors. So it is not just the training of head teachers but the training of governors that is an important part of the philosophy that we want to develop.
  Greater financial delegation to schools has been broached by my right hon. Friend the Secretary of State, who believes that the experiments and pilot schemes currently being run in Cambridgeshire, Solihull and other parts of the country demonstrate clearly that, where schools and, in particular, head teachers, are given the chance to manage the finances, the schools are more likely to be better run and those involved are more likely to feel

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  that the decisions taken actually relate to the institution. In this way one can draw together the responsibility of the governing body, the responsibility of the head teacher and the good management of the school much more easily and reasonably.
  Earlier today my attention was drawn to a report about furniture in schools. Hon. Members may wonder why I want to talk about furniture in schools, but it seems to me a good example. The report concludes that where furniture is purchased in bulk by people who do not use it themselves, those who use it feel no great responsibility for it, and that the state of the furniture in schools at present is rather deplorable. The Government have taken that into account in their funding of local education in this next financial year. We have given a substantial increase to local authorities, amounting to almost 19 per cent., to allow them to put right furniture and equipment which may not be up to the best standards. Financial delegation, however, would vastly improve the chances of purchasing furniture that was well made and represented good value for money, and once the furniture was installed, governors and head teachers would be much more interested in how it was cared for.
  My hon. Friend also touched at some length on the matter of open enrolment. In other words, he developed a theory that is very close to his heart, that it should not be possible for a local authority to restrict, even under the more recent Act introduced by the Government, the number of children going into any given school. He developed the view that if parents had access to the school of their choice, and if that school could take the number of children who wanted to go there, the authority should fund that school according to the number of children attending it.
  I understand that philosophy very well. When I was chairman of a local authority, I had on one occasion, because of a vast over-subscription to one extraordinarily popular single-sex girls' school, a very difficult problem. We had about 100 more people wanting to go to that school than we could possibly accommodate. It seemed to us almost impossible to tell 100 sets of parents that their children could not go to that school. To everyone's horror, I went to the headmistress and asked whether it was possible to take two more forms of entry for that particular year. Could she take 60 more girls? She said that it would be difficult, but not impossible, and we managed to accommodate the vast majority of parents who wished their children to attend that school, by the use of a simple
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  methodology, flexibility. Of course, we had to give extra resources to the school and make sure that there were sufficient classrooms, books, and so on, but by being flexible as an authority we met the parents' wishes. That was exactly the right thing to do, in my view.
  I note with interest exactly what has happened to Bowthorpe school. I note also my hon. Friend's views on how one could extend entrolment to schools within authorities. I hope that he will accept with me that such a philosophy, which I would welcome, would have to be worked out with our colleagues in local authorities, because it is not something that we would wish to go into unless we were certain that the schools that were not as popular with parents would not suffer dramatically and overnight, since that would jeopardise the education of children already in schools whose popularity was or might be declining.
  It is important to point out to my hon. Friend that his philosophy on the way in which he would fund a school depends very much on how good that school is. Schools are chosen by parents for different reasons, but mainly because they have discovered, by the normal process of talking to other parents at the school gate or by talking to their neighbours, why they have chosen certain schools.
  For the most part, schools get a good reputation if the leadership is good. Often a good head teacher will make a school greatly desired by parents. It is not always the case that a good head teacher or a head teacher who has created the impression that his or her school is excellent is actually delivering excellent education. Therefore, while one accepts that there should be financial delegation to heads, that open enrolment should be encouraged, and that head teachers should be trained, there is another facet to the reforms that I hope my hon. Friend will accept, namely, the introduction of a basic national foundation curriculum, on which my right hon. Friend hopes there will be a wide national debate.
  While all the ideas about management and about how children can get into schools can be discussed at length and can be put into practice, unless what goes on in the schools is coherent, well thought out and based on the best practice, and unless the fundamentals of what children are learning are understood by the people as being valuable, we shall not make any progress in our plan to reform education.
  I hope that with those few words I have managed to reassure my hon. Friend that we are talking much the same language and that the Government are studying closely many of the ideas that he has put forward.

  Higher Education
  8.2 pm
  Mr. Timothy Wood: I am grateful for the opportunity to speak on higher education in the Adjournment debate, particularly following the Government's recent publication of a White Paper on the subject. That White Paper sets a most encouraging tone for the future of higher education, which I greatly welcome.
  Good education, whether at school or in higher education, is one of the most important investments for the future of the individual and of the nation. There is no doubt in my mind that the quality and quantity of higher education will be important factors in enabling the country to develop new products and services from which our businesses and industry can enable the country to flourish.
  There is a good story to tell on student numbers. Over the past eight years the number of British students in higher education has risen by more than 85,000 to over 500,000, an increase three times greater than was achieved during the previous decade. This has resulted partly from the peaking of the number of 18 and 19-year-olds in 1982. Perhaps more significant is the steady increase in the number of able young people who wish to take advantage of higher education. With Hatfield polytechnic being only a few miles from Stevenage I am pleased to observe that polytechnics have played a major role in providing for the growth in student numbers.
  As regards the future, I am pleased and relieved that the White Paper plans for a growth in student numbers over the next few years and envisages steadily increasing participation. The larger figures now projected are vital if we are to compete effectively as a leading nation in an increasignly competitive world.
  There are four areas upon which I should like to dwell briefly: first, the position of polytechnics; secondly, funding for higher education thirdly, the emphasis on different types of courses; and fourthly, the funding for research in higher education institutions. The polytechnics have clearly established themselves as institutions providing excellent education. Industry values particularly the sandwich courses that are often provided and the close co-operation that frequently exists between the polytechnics and industry and commerce, both in the locality of the polytechnics and sometimes more widely. Again, Hatfield polytechnic has close contacts with British Aerospace, Marconi Instruments, STC and various companies which are able to co-operate with it in producing useful courses for students and also in developing various scientific research projects.
  I have noticed at Hatfield and at other polytechnics that there have been strains in the relationship between the polytechnics and the local education authorities. Although the local education authorities frequently regard polytechnics as the jewel in the crown of the spectrum of education for which they are responsible, nevertheless there is a great deal to be said for the proposal in the White Paper of a system of control analagous to that applying to universities. Therefore, the proposal for a polytechnic and college funding council is an important step forward for the future of polytechnics. They will be able to advance even more effectively in such a structure. Quite a few local education authorities have found the polytechnic to be such an unusual item in the education activity in which
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  they are involved that they have not been able to address the problems of the institution effectively. Under the proposals in the White Paper there are much better prospects of polytechnics being treated more satisfactorily.
  On the general question of the funding of higher education, concern has frequently been expressed to me and to other hon. Members about the funds being provided to universities, polytechnics and colleges. I understand and sympathise with some of the worries put forward but I also believe that in the 1970s there was much waste in various sectors of higher education, with numerous courses being indifferently controlled and monitored. There is a great need for a much more stringent examination of the financing of courses and of the need for certain courses. Nevertheless, the substantial increase in higher education funding for this year is greatly to be welcomed. Some institutions were finding the pressures very great. Hatfield polytechnic had commented to me on several occasions that with the substantial increase in the number of students, the strains on staffing activities and so on were considerable.
  I should like more funds for research, particularly scientific and technological research. There is considerable potential for funding from industry and commerce. To encourage the provision of such funds more imagination should be shown to ensure better co-operation between higher education institutions and industry and commerce. A number of higher education institutions have complained to me that if they are successful in obtaining extra funds perhaps their funding from the local education authority or Universities Grants Committee has been adversely affected. That is hardly an encouragement for higher education institutions to seek to co-operate more.
  The final point concerns priorities and emphases on different types of courses being provided in higher education. Criticisms have been made that the Government were taking a philistine position in urging that larger numbers should be educated in mathematics, certain sciences and technologies, and perhaps relatively fewer in the more abstruse subjects. I reject these criticisms. With half a million students in higher education, it seems perfectly sensible to encourage the expansion of those activities that will be most directly relevant to the various needs that industry may have in this country in the coming years.
  A total of 500,000 people are in higher education—a large number. Those young people must be encouraged to pursue courses and to develop ideas in areas that will benefit both them and the country as a whole in the future. Therefore, I hope that the Government will not be deterred — and the White Paper suggests that the Government are not being deterred—from making sure that the priority will be to encourage higher education being well directed to the future needs of the country, its industry and commerce.
  8.13 pm
  The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden): I am glad to respond to the positive and forward-looking speech of my hon. Friend the Member for Stevenage (Mr. Wood). He has been a lecturer in high-tech subjects with one of our largest firms, and he is talking from personal knowledge and a more general interest. The Hatfield polytechnic is very close to Stevenage. I was there recently and I had an opportunity to discuss with the deputy director some of

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  the problems and prospects facing that institution. My general impression was of optimism and forward-looking attitudes.
  My hon. Friend is right to stress the importance of polytechnics in higher education. Polytechnics have improved their efficiency greatly and are now a major part of higher education. The Government has been following with gratitude the efforts that polytechnics have been making to accommodate more students.
  My hon. Friend next raised the question of funding. Last year we increased funding for polytechnics and colleges by 8·5 per cent., which is well over the current rate of inflation.
  The third point my hon. Friend dealt with was research in the polytechnic system. Although there has been a lot of contact between polytechnics and industry, as in the universities, we recognise—as do other members of the educational and business communities — the need to expand contacts between education and industry. We have seen positive proof of this expansion in the polytechnics, in increased investment, industrially related development, and also a major increase in the role of the provision of training by the polytechnics.
  Government policy in this regard is to do everything we can to encourage these developments. That is the reason why we set aside last year £15 million to be directed specifically to encouraging a number of initiatives, including research in polytechnics. We were careful to stress, as we shall continue to stress, that the sort of research that we want to be pursued in polytechnics and colleges must be of the applied variety and closely associated with industry. This has been accepted by the polytechnic community. The sums that we offered, which in effect doubled the amount of finance available for
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  research, were applied for by many polytechnics and colleges. Our philosophy is to encourage contacts with industry by encouraging polytechnics to bid with a business plan for the available funds.
  Finally, my hon. Friend mentioned courses and the pattern of courses between the arts and sciences in higher education. There is a widespread misconception that this Government have a philistine attitude to education and to higher education in particular. Nothing could be further from the truth. Not only do we not underestimate the contribution of the arts and humanities but, in simple figure terms, such has been the expansion in the number of students since 1979 that there are now not only far more students doing science-related courses than ever before, there are also more students doing arts-related courses. Since 1979 we have increased student numbers by 160,000 full and part-time. We hope now to add to that another 50,000.
  Whereas I welcome the stress that my hon. Friend placed on the need for vocationally orientated courses, particularly in science-related subjects, I am sure he agrees with me that the humanities — whether languages, economics, business studies, or humanities in their purer form, the classics, or whatever—have a very important role to play in higher education, both for their own value in themselves and also for training the mind in rigour and dexterity.
  I am glad to have had this opportunity to respond to my hon. Friend's points. I share his optimism about the future of higher education in this country in general and about the new prospects that the White Paper offers for polytechnics in particular.
  Question put and agreed to.
  Adjourned accordingly at seventeen minutes past Eight o'clock.

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

Message from the Queen
The Earl of Airlie: My Lords, I have the honour to present to your Lordships a message from Her Majesty the Queen signed by her own hand. The message is as follows:
"I have received your Address praying that the Statistics of Trade Act 1947 (Amendment of Schedule) Order 1987 be made in the form of the draft laid before your House.
"I will comply with your request".

McGarvey Alcohol Unit, Mendip Hospital
The Lord Bishop of Bath and Wells: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what alternative is being offered to patients following the planned closure of the 30-bed McGarvey Alcohol Unit in Mendip Hospital in March 1988.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, in answer to the right reverend Prelate, Somerset Health Authority is planning to improve the services available to patients with alcohol problems by providing 16 community-based beds in four smaller units round the county to replace the 15 currently in use in the McGarvey ward in the Mendip Hospital in Wells. In the meantime, patients will be accommodated in other beds in the Mendip, Tone Vale (Taunton) and Yeovil general hospitals, where they will continue to receive proper care.
The Lord Bishop of Bath and Wells: My Lords, I thank the noble Baroness for that reply. As chairman of the Somerset Council on Alcoholism, may I ask whether the Minister reckons that, given a limited pot of gold, on the whole the Somerset authority is using the money in the best available way?
Baroness Trumpington: My Lords, it gives me great pleasure to pay tribute to the Somerset Health Authority for its sensitive, sensible and efficient approach to this problem. I should also like to pay tribute to the right reverend Prelate for the hard work that he does on this issue. I know that the voluntary Somerset Council on Alcoholism, of which the right reverend Prelate is chairman, provides an advice and counselling service and has a local drink-watchers group based at Taunton, with sub-centres at Bridgwater, Yeovil, Minehead, Wells, Shepton Mallet
1604
and Chard. It is the sort of community involvement towards which this Government are looking.
Lord Ennals: My Lords, is the noble Baroness aware that if this provides a better service than that which is now already provided, the House would wish to welcome it? Perhaps I may ask her whether the community health council has taken a position on this and has supported it, and, if it has not done so, whether this is a decision that has been taken by the Secretary of State to close the existing service.
Baroness Trumpington: My Lords, the noble Lord, Lord Ennals, will know that any closure goes through various channels before closure takes place. Had there been any complaints from the local community health council, the matter would have come to the Secretary of State. I am unaware that it has done so.

Japan: Trade Relations
3.4 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress is being made to remove discrimination against imports into Japan of whisky from the United Kingdom.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lord, as a result of a request from the European Community, a GATT panel has been established to investigate Japan's treatment of imported alcoholic drinks. The panel had its first meeting on the 28th of this month and is expected to report by the end of July.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for reporting the progress of the panel. Does he agree that the Japanese, having failed in all their attempts to copy Scotch whisky—no doubt because of certain essential ingredients available only in the Highlands—have now resorted to discrimination in taxation to try to reduce, or exclude, these imports?
Lord Lucas of Chilworth: My Lords, I accept, of course, what my noble friend says with regard to the special ingredients. But as for copying and failure so to do, I think the real point here is that the Japanese have failed over a number of areas to open their markets to world traders, notably ourselves. There is a significant imbalance in our trade. We are therefore taking the opportunity of pressing the Japanese to redress that balance.
Lord Williams of Elvel: My Lords, is the noble Lord aware that the Japanese are not impressed by ministerial statements or by British Ministers who visit Tokyo uttering dire threats like a latter-day King Lear? They are not impressed unless action is taken. Either the Government are going to take action, or they should keep quiet.
Lord Lucas of Chilworth: My Lords, I can understand why the noble Lord, Lord Williams, says that. But, really, it is in our best interests to persuade the Japanese to open their markets. Indeed the Japanese trade minister will be talking with my right honourable friends the Prime Minister, the Foreign Secretary and the Secretary of State for Trade and Industry this afternoon in an endeavour to break the deadlock. I am sure the House will accept that it is not in our long-term interests to engage in a battle with the Japanese on this matter. It is in our long-term interests to persuade them that their interests lie parallel with ours in opening their markets to world trade.
Lord Mottistone: My Lords, can my noble friend say whether there has been any progress in the GATT negotiations over processed foods, and biscuits and confectionery in particular?
Lord Lucas of Chilworth: Not without notice, my Lords. I am sure my noble friend will accept that he asks a question about solid foods and the original Question was about liquid foods.
Lord Taylor of Gryfe: My Lords, would the Minister agree that it is desirable to exhaust all avenues of negotiation before embarking on protectionist measures which could have international implications?
Lord Lucas of Chilworth: My Lords, I am sure that the noble Lord, Lord Taylor of Gryfe, is right. I agree with him. Protectionist measures are in the interests of nobody in any country in the trading world.
Lord Bruce of Donington: My Lords, will the noble Lord say whether he will inform Her Majesty's Ministers who are negotiating with the Japanese that they should also tell the Japanese that it is not in their long-term interests to wage a trade war with us?
Lord Lucas of Chilworth: My Lords, I am happy on this occasion to agree with the noble Lord, Lord Bruce of Donington. It is in nobody's interests at all to engage in either trade wars or protectionist measures which reduce the economic growth of the world.
Lord Campbell of Croy: My Lords, while agreeing with that statement by my noble friend, is he aware that the discrimination to which I referred started many months before the difficulties with Japan which have recently emerged? Can he tell us about the assurances given to Britain at the highest level a year ago? With reference to the previous Question on the Order Paper, is my noble friend aware that this is an excellent beverage for the health—taken in moderation, of course?
Lord Lucas of Chilworth: My Lords, as regards the last question, I am sure my noble friend is absolutely right. It has sustained me through many difficult periods. I think the House will be aware that the Japanese Prime Minister had some difficulties with his budget and that the proposed tax reforms have now been referred to a special committee.

Metropolitan Special Constabulary
3.10 p.m.
Lord Orr-Ewing: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will list the total number of special constabulary in the Metropolitan Police in each of the last 10 years and explain why their numbers have fallen.
The Minister of State, Home Office (The Earl of Caithness): My Lords, the strength of the Metropolitan Special Constabulary was 1,490 on 14th April this year compared with 2,017 at the end of 1977. I shall, with permission, place a table containing the full information requested by my noble friend in the Library of the House.
The reasons for the fall in strength almost certainly include the reduction in the normal age of retirement from 60 to 55 and the policy of not retaining special constables who cease to be active. Both my right honourable friend the Secretary of State and the Commissioner of Police of the Metropolis are keen that the number of special constables should be increased.
Lord Orr-Ewing: My Lords, I am grateful to my noble friend for that reply. However, does he not think it strange that while the strength of the Territorials in London has steadily risen—and they give a great deal of their time during the week, on weekend evenings and during weekends—the strength of the Specials has fallen markedly? That is true at a time when the regular police force has expanded immensely in London. Is it not a fact that the Specials play a very valuable part in building a bridge of understanding, which is so essential, between police and local communities? Should they not be encouraged in every conceivable way?
The Earl of Caithness: My Lords, my noble friend is absolutely right. The Specials do an excellent job and they are encouraged. I am grateful for the tribute which has been paid to them and on behalf of the Government I should like to join in thanking them for their work.
Lord Mellish: My Lords, that really is not good enough. To say all those nice things and then do nothing is insulting to this House and to the noble Lord who has asked the Question. What are the police doing to recruit more Specials? I have not read or seen anything in the London area asking people to come forward. I am sure that there are hundreds of decent people who would back up the police in this most difficult time. It is about time that we had more than platitudes from the Minister.
The Earl of Caithness: My Lords, as the House will be aware, there has been no greater commitment to the police force than there has been in the seven years since this Government took over in a situation of ridiculously low manning.
Lord Mellish: But I am speaking of Specials.
The Earl of Caithness: We are giving equal effort to recruiting Specials by means of posters, advertisements in the local press and displays in public places. A new recruitment video is also nearing completion.
Viscount Slim: My Lords, is it not a fact that with regard to recruitment of Specials careful consideration should be given to recompense and to terms and conditions? It is a voluntary force and I think that some expenses or something of that kind would be well deserved and should be considered.
The Earl of Caithness: My Lords, those matters were looked at most recently in 1981 by a working party on the Police Advisory Board. However, I shall draw the points which the noble Lord has made to the attention of my right honourable friend.
Lord Orr-Ewing: My Lords, will my noble friend bear in mind that when his right honourable friend the Home Secretary takes this matter up he should also consider whether the Specials are receiving encouraging and challenging work worthy of a volunteer force of this sort and that they are not being discouraged by being given dull and uninspiring work? Everyone in every part of the House would like to see recruitment stepped up. Perhaps my noble friend can report that this House is united today on that issue.
The Earl of Caithness: My Lords, I shall certainly put those words to my right honourable friend. However, I can tell my noble friend that I believe that the work is sufficiently challenging. One of the things which we have noted is that an increasing number of Specials who resign as Specials go on to join the police force. Therefore, the police force actually benefits although the Specials may lose a few members.

Cannon Group Film Library
3.15 p.m.
Lord Graham of Edmonton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will indicate what steps they have taken to implement their undertaking to monitor the activities of the Cannon Group after it had acquired the Thorn-EMI film empire, in the light of the reported intention of the Cannon Group to sell its film library to a foreign buyer.
Lord Lucas of Chilworth: My Lords, the Director General of Fair Trading continues to keep the position under review. The Cannon Group's proposal to sell the film library formerly belonging to Thorn-EMI is also being considered by the director general under the provisions of the Fair Trading Act 1973 relating to mergers. He will advise my right honourable friend on the question of possible reference to the Monopolies and Mergers Commission if it is a qualifying merger.
Lord Graham of Edmonton: My Lords, I hope that the Minister will accept my assurance that that is a most heartening reply. Perhaps he can also accept that if the archival records of Britain's film and cultural heritage leave these shores, it will be an appalling and irreplaceable loss. Bearing in mind that the British film industry is fighting for its commercial and artistic life, will the Minister review carefully the powers available to him so that the film industry and those who work in it will take on board the fact that he is as concerned as they are with the cultural aspects as well as the commercial aspects of these undertakings?
Lord Lucas of Chilworth: My Lords, I thank the noble Lord, Lord Graham, for his reception of the Answer. I accept what he says with regard to the value of the archives. The Government have and always have had regard for the cultural and artistic aspects of the film industry. I think that the House will recall that my honourable friend the Minister for the Arts makes substantial grants to the National Film and Television School and to the British Film Institute in order to support their activities.
Lord Jenkins of Putney: My Lords, has the Minister been in touch with the British Film Institute to discover whether or not they have expressed an interest in acquiring this addition to their library? Presumably it is the case that they would be the best body to have charge of the library which has now become available for acquisition.
Lord Lucas of Chilworth: My Lords, that is a matter for the British Film Institute. Until that proposition is put before my right honourable friend, I do not think that I can make any comment.
The Viscount of Falkland: My Lords, is it not curious and rather sad that, set against the financial embarrassment of Cannon and their selling of cinemas and of 60 per cent. of our feature film heritage in this country, over the past two years we have seen cinema audiences double from February 1985 to February 1987? That shows that what is commonly known as the culture of the moving image is centre stage in our cultural life. May it not be appropriate for the Government to take firm steps to protect our audio-visual heritage in the form of films so that the young, who are a major part of the audiences in our cinemas, can have safe access in the future to films without having to apply to either Mr. Weintraub, who has bought or is going to buy the Cannon films, or anyone else abroad who may buy the rest?
Lord Lucas of Chilworth: My Lords, the noble Viscount has raised two issues. I think that I have answered the first question with regard to the archives. The Government, through the Director General of Fair Trading, are keeping the matter under review. So far as the second question is concerned, I am able to agree with the noble Lord that audiences have increased substantially since he and I last discussed the matter in 1985. I have little doubt that that is due to the excellence of film-making talent in Britain and the ability of the industry to export. That in itself provides the industry with more funds to make more and better films which are acceptable to both English and overseas audiences.
Lord Williams of Elvel: My Lords, am I right in understanding the noble Lord, when he refers to a qualifying merger under the Fair Trading Act, to be referring to the assets threshold below which mergers cannot be considered for reference by the Secretary of State? If that is the case, is there an assurance that the price that is to be paid—in other words, the assets that have been acquired, including the goodwill—will come above the threshold and that that is why the Office of Fair Trading is considering it?
Secondly, may I ask the noble Lord whether the competition criteria laid down by Mr. Norman Tebbit in 1984 as being the guideline for a Secretary of State for reference to the Monopolies and Mergers Commission are going to be operative in this particular case?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Williams, is right in his understanding of what I said with regard to mergers. The threshold here for transfer of assets—I speak from memory but I think I am right—is £30 million. The value of the archives is not known at this stage. That will be a point which the director general will of course take very much into account.
In so far as concerns the competition issue, two points arise. First, it is for the Director General of Fair Trading to make an assessment and advise my right honourable friend of his view on that matter. Secondly, the noble Lord, Lord Williams, will recall that the competition issue is currently under review by my department.
Baroness Phillips: My Lords, will the Minister recommend that these films are passed to the BBC, who would use them until they fell apart? We see the same films certainly every Christmas. It seems to me they never waste any films and I think that an archive would be an absolutely invaluable source from which they could steal for their screens.
Lord Lucas of Chilworth: My Lords, the noble Baroness's suggestion is an interesting one. It is probably more for the commercial judgment of the BBC than for anybody else.
Lord Graham of Edmonton: My Lords, will the Minister accept that when he uses the term "a difficulty in putting a value on the archive film library", many of us would consider that it is priceless? It is a national heritage and it ought not to leave this country in any circumstances.
Lord Lucas of Chilworth: My Lords, I am sure that those responsible will take note of the view expressed by the noble Lord, Lord Graham of Edmonton.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Report stage of the Abolition of Domestic Rates Etc. (Scotland) Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Second Reading of the Crossbows Bill will be taken.

Abolition of Domestic Rates Etc. (Scotland) Bill
3.22 p.m.
The Minister of State, Scottish Office (Lord Glenarthur): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report—(Lord Glenarthur.).
On Question, Motion agreed to.
Clause 7 [Creation and purpose of community charges]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 74:
Page 7, line 17, leave out ("three community charges") and insert ("two local taxes").
The noble Lord said: My Lords, it may be for the convenience of the House if I speak also to Amendments Nos. 75, 76, 78, 79, 80 and 83.
The purpose of these amendments is that the words "the three community charges" will be replaced by the words "two local taxes". Also, the following words would be deleted from the Bill:
"the personal community charge, the standard community charge and the collective community charge."
Instead, there would be inserted the words:
"a personal poll tax and standard property tax."
The effect of the amendment will be to create a local tax concept which will reduce the requirement from three taxes to two. The important point is that it would dispense with a collective charge, which I think all of us who have been involved closely with the Bill realise is a very complicated and, I believe, unsatisfactory arrangement. Such an arrangement is likely to be plagued with great administrative and operational difficulties, all for the sake of maintaining the so-called accountability aspect of the Bill. However, I feel it would fall far short of the real objects of the Bill.
The non-domestic rates arrangement for premises which may be liable for a collective community charge would be much simpler and easier to understand and better for all concerned. Perhaps I may give an example which was sent by a number of voluntary organisations in Scotland who are very much concerned with this subject; namely, the single homeless and other such groups.
They maintain that the community charge system, which includes provision, in limited circumstances, for a collective community charge to be levied on the landlord of short-stay hostel-type accommodation will mean a greatly increased administrative burden on voluntary organisations who offer such accommodation. The charge shall be fixed at least three months in advance by the local authority registration officer by applying a multiplier to the personal charge. The multiplier will be based on an expected or estimated occupancy rate of the accommodation. The landlord then collects from residents the contributions, which are calculated on a daily basis.
Precise daily records will have to be kept to administer very large numbers of small amounts of money. What happens to the people who are registered? Will they be given a slip of paper telling

1611
them they have paid 1/365th of whatever their community charge (perhaps £250 to £300) will be? This is something we have never been told.
I imagine it will be essential that they are given a piece of paper to show that they have paid their part of the community charge, or at the end of the year they may be liable for the whole charge. A more important aspect, from the point of view of the voluntary organisations, is that they believe it would damage their relationship with residents who use their accommodation because it would force the organisation into some sort of policing role. It would be particularly difficult for young people living in such accommodation who were under 18 years of age. Ascertaining whether they were under 18, or over 18 and therefore liable to pay some of the community charge, would be a very difficult and perhaps an invidious task for a voluntary organisation to probe into if it was at the same time trying to help these people.
The contributions will act as a disincentive to clients who otherwise may well not pay any charge because on many occasions they sleep rough even though in the circumstances the law says each individual living indoors or outdoors will be required to pay a community charge. While the fact that people sleep rough in Glasgow, Edinburgh, Dundee and Aberdeen and other such places may not be a valid example, I am sure that most noble Lords will have passed Embankment station and seen people sleeping out.
Under the new system such people will be required to pay a community charge. However, I do not know how it will be collected. The argument I am trying to put forward is that records will need to be kept if such people go into hostels for two or three nights or even three weeks in the winter, but I do not know how it will be possible to find them when they have left the hostels and started to sleep rough. This is a problem which has never been fully appreciated or answered.
Perhaps the most important point is the honesty of the amendment. The amendment tries to suggest that the community charge is really a poll tax, and whatever the Government try to do that name has now stuck—it will always be known as a poll tax. Because this charge is known now as a poll tax—incidentally, I understand the poll tax was abolished in America in 1965, and here we are bringing it back in 1987—it will always be known as a poll tax. I think it should be called what it actually is. I could give more examples, but because of the late stage we have reached in the Bill I think the reasons I have given will suffice to illustrate the point I am trying to make. Therefore I beg to move.
3.30 p.m.
Lord Wilson of Langside: My Lords, I support this amendment from these Benches. It may be for the convenience of the House if I speak also to Amendment No. 75 and the other amendments in my name which are grouped together with this amendment.
The noble Lord, Lord Carmichael of Kelvingrove, spoke a special truth when he said it would be more honest to change the designation of these charges. I am
1612
sure that there are many of your Lordships who are tired of the bandying about between this side of the House and the other as to what these charges can properly be called. Noble Lords on this side of the House have been saying that it should be called a poll tax and noble Lords on the other side that it should not. The stage has been reached when we are behaving rather like children who call one another names and say, "Yes you are" and "No I am not". The argument does not get very much further.
This may seem very tedious to your Lordships but it is in this context that one of the clues is found to the complete and fundamental flaw in this Bill. The poll tax has a bad name. The noble Lord, Lord Carmichael, was right. He referred to the most recent, as far as I am aware, modern example of a poll tax. This was used by the southernmost states of America to disfranchise American negroes. That was only put right in America by, I believe, the 14th Amendment to the American Constitution.
No one is suggesting—certainly I am not—that the Government are seeking to disfranchise the Scots by virtue of this poll tax, although there have been suggestions in debates both here and in another place that it might have that effect. Indeed, there might be those among the Scots who try to escape liability by ensuring that they are not registered. Therefore it would be much more honest as well as much more sensible to designate these charges in terms which are nearer to the truth than "community charge".
I do not know who came up with the idea of calling them community charges. I wonder whether it was a Minister or a clever civil servant. Certainly there is no doubt that they are poll taxes. Every dictionary which I have consulted and every encyclopaedia says that the essence of the poll tax is that there is the same tax on every man, woman and child. To begin with, even lunatics and Peers would have been liable for this tax, though I gather some concessions are being made for the mentally handicapped, and others, later today. However, that is the essence of a poll tax and the Government cannot escape from that. It has been greatly discredited.
At some stage in the Government's deliberations the problem had to be faced as to what it should be called. My own suspicion, my best guess, is that it was a clever civil servant. It occurred to me this morning that one could write an illustration of that based on that well-known television programme "Yes, Minister". Sir Humphrey would say, "Well, Minister, we could always call it a community charge". That is the essence of the matter. It is a confidence trick on the people of Scotland.
Of course it will bring benefits to many people but, by and large, it will be in an aggressive way. We on these Benches think that it would be much better to face the reality. In our amendments we suggest a compromise. We do not like the designation "charge" and we have said repeatedly that we do not think that it fits into the context. We have said that the phrase "poll tax" is nearer to the truth. In the amendments to which I have put my name we suggest a consensus and call it a local government charge. That would be a sensible compromise which comes nearer to the truth than the phrase "community charge". Therefore I commend these amendments to your Lordships.
Lord Glenarthur: My Lords, perhaps the first point I should make in relation to the bulk of the remarks made by the noble Lord, Lord Carmichael of Kelvingrove, which related to the collective charge, is that the collective community charge addresses a problem which now presents some intrinsic difficulties. The personal community charge system will cope and, I believe, work well for the vast majority of the population who have a settled mode of existence and who therefore can be registered for the personal community charge.
With this division of duties and responsibilities between responsible persons at each address and individual residents this system strikes the right balance and will be able to operate efficiently. However, we have always recognised from the time of the Green Paper onwards that there would be a problem of fitting into the community charge system the minority of people who do not have a settled mode of life and who move frequently from one address to another—so frequently that it would not be reasonable to expect registration officers to record every change of their address or for local authorities to collect the personal community charge from them.
Therefore the collective community charge provides a mechanism for integrating people in this category into the community charge system. I make no apology for saying again—I fear I said it several times in Committee—that we hope it will have to be used only in a small number of cases. However, for that small number it represents what I believe to be the only practicable means of allowing individuals to discharge their community charge responsibilities.
Turning specifically to the amendments, I first deal with the proposal by the noble Lord, Lord Carmichael, to rename the personal community charge a personal poll tax. As I said in Committee, we have no objection to the words "poll tax" when properly used, but I cannot agree that in this case they are being properly used. Much of the play with words made by the party opposite demonstrates how susceptible those words are of improper use and how they can be made to appear to relate to a tax on the right to vote, which of course the personal community charge most emphatically is not.
The second suggestion contained in the amendments tabled by the noble Lord, Lord Carmichael, is that the standard community charge should be renamed the standard property tax. We have already discussed this point in the past and will have the opportunity to discuss it again on Clause 10. Therefore I shall restrict myself now to saying quite clearly that the standard community charge is not a property tax in any real sense of that term. Like the personal community charge it is payment for the local authority services a person receives in relation to his ownership of, and periodical residency in, a second home.
The third proposal made by the noble Lord is that the collective community charge should be renamed a collective contribution tax. There seems little merit in this proposal other than simply the invention of a new name to replace the words "community charge", which for some reason I do not fully understand despite the comments of the noble and learned Lord,
1614
Lord Wilson of Langside, appear to be particularly unwelcome to various Members of your Lordships' House.
Finally I turn to the amendments in the name of the noble and learned Lord, Lord Wilson of Langside. They certainly have the merit of originality, if not much else. I can appreciate their intention to make it clear that the system of charges which the Bill sets up is a means of paying for local government services. I am not sure that it is as sensible a proposal as the noble and learned Lord thinks it is. I do not think that it is sufficiently specific. After all, a local government charge could be any type of fee or charge for a local authority's services. For instance, it could be a fee for planning application for a building warrant. It might even be argued that bus fares on municipal services were a form of local government charge.
I consider that the entire new form of taxation which is introduced by the Bill should be given a new title which runs no risk of confusion. The Bill provides for the charging of all members of local communities for the services provided for that community. It therefore seems to me to be entirely logical to call this new entity a community charge. I am not therefore persuaded by any of the amendments in this group. I believe that they would lead to uncertainty.
The noble Lord, Lord Carmichael, made the point about short-stay hostels. Short-stay individuals, who are not solely or mainly resident, could not be taken into account when settling the multiplier, so there would be no need for landlords to recover contributions for them. The multiplier will be set on a fairly broad basis with adjustments every three months. The administration charge for the short-term hostel will be much less, I fear, than the noble Lord suspects that it will be. I believe that the nomenclature is something of a red herring, and that more confusion would be added to what is proposed by the Bill by what both noble Lords suggest that if we leave the words as they are.
Lord Kirkhill: My Lords, I wish to refer briefly—at least I hope it will be briefly—to two propositions to which the Minister has not addressed himself at any time during the course of his protracted remarks during the various stages of the Bill. I should have thought that the suggestion made by my noble friend Lord Carmichael of Kelvingrove that the word "contribution" might be considered appropriate is valid because the Minister has frequently referred to a short-term stay and to the transient individual. At no time has the Minister sought to define what he or the Government mean by short-stay, nor has the Minister at any time sought to define what he means by "transient individual". Until he does, surely the proposition of my noble friend Lord Carmichael should command support in your Lordships' House.
Lord Carmichael of Kelvingrove: My Lords, I am sure that the Minister was trying hard to put the case against the amendments, but I still feel that they are much more likely to get rid of problems than will the Bill as at present worded. I shall deal with the poll tax. It was not invented by us. In the Government's Green Paper of 1981 a charge similar to a community charge was discussed. They called it a poll tax. The Government discarded it. It was not our idea.

1615
The Minister says that there should be no problem with the vast majority of people who are regularly and fairly stably domiciled. We would agree with that to an extent. However, we come back to the probability that electoral registers will be used, and that because the payment of money is involved there will be an avoidance of registration. That will probably disfranchise a number of people. In 1981, when the Government called the charge a poll tax, they were probably reasonably correct.
I still find the Minister's discussion about short-stay hostels and of an estimate being made every three months difficult to understand. If the Minister looks at Clause 11(10) (c) he will see that a person will be liable to pay a personal community charge:
"for each day of his residence in the premises".
He shall:
"pay to the person liable … for that collective community charge an amount equal to the amount mentioned in paragraph (a) below".
The charge is to be paid daily. I still do not understand whether people will be given a little slip of paper saying that they have paid 1/365th or 4/365ths, and that they are therefore entitled to a rebate. If someone decides to sleep rough for three months and has no piece of paper, is the charge wiped out at the end of the three months or is he still due to pay and to show a certificate at the end of the month?
This matter is incredibly complicated. The Minister says that only a small number of people will be involved. If that is the case, we should be able to handle the problem with greater ease than by the complicated machinery that the Minister suggests. Therefore, as this is a question of such major importance, I feel that I should like to obtain the opinion of the House on it.
3.46 p.m.
On Question, Whether the said amendment (No. 74) shall be agreed to?
Their Lordships divided: Contents, 84; Not-Contents, 123.

DIVISION NO. 1

CONTENTS

Amherst, E.

Evans of Claughton, L.

Ardwick, L.

Ewart-Biggs, B.

Attlee, E.

Falkender, B.

Aylestone, L.

Falkland, V.

Banks, L.

Fisher of Rednal, B.

Basnett, L.

Gallacher, L. [Teller.]

Beswick, L.

Gladwyn, L.

Blackstone, B.

Graham of Edmonton, L.

Blease, L.

Grimond, L.

Bonham-Carter, L.

Hampton, L.

Boston of Faversham, L.

Houghton of Sowerby, L.

Bottomley, L.

Hunt, L.

Brockway, L.

Irving of Dartford, L.

Bruce of Donington, L.

Jeger, B.

Campbell of Eskan, L.

Jenkins of Putney, L.

Carmichael of Kelvingrove, L.

John-Mackie, L.

Carter, L.

Kilbracken, L.

Cledwyn of Penrhos, L.

Kirkhill, L.

David, B.

Leatherland, L.

Dean of Beswick, L.

Listowel, E.

Diamond, L.

Llewelyn-Davies of Hastoe, B.

Dowding, L.

Lockwood, B.

Elwyn-Jones, L.

Mackie of Benshie, L.

Ennals, L.

McNair, L.

1616

Manchester, D.

Serota, B.

Mar, C.

Shackleton, L.

Mayhew, L.

Simon, V.

Meston, L.

Stallard, L.

Mishcon, L.

Stedman, B.

Morton of Shuna, L.

Stoddart of Swindon, L.

Mulley, L.

Strabolgi, L.

Nicol, B.

Taylor of Blackburn, L.

Phillips, B.

Thurso, V.

Pitt of Hampstead, L.

Tordoff, L.

Ponsonby of Shulbrede, L. [Teller.]

Underhill, L.

Wells-Pesteil, L.

Rathcreedan, L.

Whaddon, L.

Rea, L.

White, B.

Ritchie of Dundee, L.

Williams of Elvel, L.

Rochester, L.

Wilson of Langside, L.

Ross of Marnock, L.

Winstanley, L.

Sainsbury, L.

Young of Dartington, L.

Seear, B.

NOT-CONTENTS

Alport, L.

Hooper, B.

Beaverbrook, L.

Hylton-Foster, B.

Bellwin, L.

Ilchester, E.

Beloff, L.

Johnston, L.

Belstead, L.

Kitchener, E.

Bessborough, E.

Lane-Fox, B.

Biddulph, L.

Lauderdale, E.

Blake, L.

Lawrence, L.

Blyth, L.

Layton, L.

Boyd-Carpenter, L.

Long, V.

Brabazon of Tara, L.

Lucas of Chilworth, L.

Brougham and Vaux, L.

Luke, L.

Broxbourne, L.

Mancroft, L.

Caithness, E.

Marley, L.

Cameron of Lochbroom, L.

Massereene and Ferrard, V.

Campbell of Alloway, L.

Mersey, V.

Campbell of Croy, L.

Milverton, L.

Carnegy of Lour, B.

Montgomery of Alamein, V

Carnock, L.

Morris, L.

Cork and Orrery, E.

Mottistone, L.

Cottesloe, L.

Mowbray and Stourton, L.

Cullen of Ashbourne, L.

Moyne, L.

Dacre of Glanton, L.

Munster, E.

Davidson, V. [Teller.]

Nugent of Guildford, L.

De Freyne, L.

Orr-Ewing, L.

Denham, L. [Teller.]

Pender, L.

Denning, L.

Perth, E.

Donegall, M.

Peyton of Yeovil, L.

Dulverton, L.

Polwarth, L.

Dundee, E.

Porritt, L.

Eden of Winton, L.

Portland, D.

Effingham, E.

Rankeillour, L.

Elliot of Harwood, B.

Rawlinson of Ewell, L.

Elton, L.

Reilly, L.

Erroll of Hale, L.

Rochdale, V.

Faithfull, B.

Romney, E.

Ferrier, L.

Rugby, L.

Fortescue, E.

St. Davids, V.

Fraser of Kilmorack, L.

Saltoun of Abernethy, Ly.

Gainford, L.

Sanderson of Bowden, L.

Gisborough, L.

Sempill, Ly.

Glanusk, L.

Shannon, E.

Glenarthur, L.

Shaughnessy, L.

Goold, L.

Skelmersdale, L.

Gormanston, V.

Slim, V.

Gray, L.

Somers, L.

Greenway, L.

Stockton, E.

Gridley, L.

Stodart of Leaston, L.

Haddington, E.

Strathspey, L.

Haig, E.

Sudeley, L.

Hailsham of Saint Marylebone, L.

Swinton, E.

Terrington, L.

Harvington, L.

Teviot, L.

Hayter, L.

Thomas of Swynnerton, L.

Henderson of Brompton, L.

Trumpington, B.

Henley, L.

Tryon, L.

Hesketh, L.

Vickers, B.

Hives, L.

Vinson, L.

Home of the Hirsel, L.

Ward of Witley, V.

Hood, V.

Whitelaw, V.

1617

Windlesham, L.

Wolfson, L.

Wise, L.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.55 p.m.
[Amendments Nos. 75 to 81 not moved.]
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 82:
Page 7, line 21, after ("Act") insert ("with the exception of these functions listed below—

(a) education, (including teachers) salaries and police

(b) any other statutory duty which Parliament by affirmative resolution determines.").

The noble Lord said: My Lords, this amendment should not come as a surprise to Members opposite. In fact some of the words may be familiar to them because they appeared in the Tory manifesto of 1974. Indeed, one of the great supporters of this solution to the difficulties of local government was the present Prime Minister who suggested taking away payment for education from local authorities and having the cost of that and other items met centrally.
We have been loading local government with service after service. Many of those services are really national services. There has certainly been an attempt to achieve national standards. Services that may originally have been local government services are increasingly becoming national services. To suggest that the financing of these functions should be taken away from the local authority may be said to be reducing the local authority to the position of agents of the Government. Anyone looking at education in England at the present time will see that that is exactly what local authorities are. Government are even laying down curriculum and the teachers' salaries. Local authorities have their own ideas on salaries brushed aside. Salaries are imposed upon the teachers.
We have not reached that stage in Scotland. To everyone's surprise, after Mr. Younger had had a battle with the teachers that lasted well over two years with no solution reached, Mr. Rifkind came in and made a settlement more or less based on the Main Report, although departing from it in some respects. It surprised me until I realised that having so much on his plate at the time, he had to get rid of one problem. And he therefore got rid of the problem with the teachers.
The problem rests now with the local authorities who have to pay for what was agreed. Year by year the costs of services that are virtually national services are being borne by the local authorities. Calculations were made in a Green Paper in January last year. It was suggested that Strathclyde's personal community charge would be about £240 to £250. I am satisfied, having made inquiries and taking account of the increased costs of education, other items that have gone up and new services which have been demanded, that the cost of the personal community charge will now be about £300.
Remember, my Lords, that we have another year to go before we lay down what the community charge will be for 1989–90. The charge will become a very considerable burden—very much more expensive on every individual than even the Government originally
1618
thought. They would have done far better to have provided some other fall-back charge. I cannot see the Government making a grant, considering what they have been doing recently.
Most of the problems in local government arise from the fact that the Government's share of relevant expenditure has been reduced year by year. But the Government will need to do something like this to reduce the load on local government and to keep personal community charges at a reasonable level. If they do not, we shall have to find some other form of grant. That is why Layfield wanted to keep rates; anything further thereafter was to be a supplement—something in the nature or form of local income tax. But we are falling into a great difficulty with this by laying it all on the personal charge, freezing the incidence of domestic rates so that if any new duties are passed on to local government, if there are unexpected increases which the Government suggest are not as high in relation to the retail price index as every other person would think, that means that the community charge will rise and rise. This has not been thought out. It has been so hasty.
I am sure that before the next year is out, no matter who forms the government, we shall have another Bill to sort out all the difficulties of this one. The Government should consider covering themselves by making some gesture towards the reduction of the load that is left on local authorities. I beg to move.
4 p.m.
Lord Glenarthur: My Lords, I must say first that the amendment raises much wider issues than those which are dealt with by the Bill. It is not at all clear from the amendment itself how the noble Lord, Lord Ross, proposes that these services should be financed. If, however, education and possibly other services were not to be funded like other local government services, at least in part through the community charges, there may be some implication—indeed there seemed to be more than an implication in what the noble Lord, Lord Ross of Marnock, said—that these services would have to he wholly funded by central government.
I make two points on that proposition. The first is that at the moment central government pay their share of the costs of these services through the rate support grant and in other ways. That will continue under the new system. I described at Committee stage that many factors are—the noble Lord, Lord Mackie of Benshie, will be familiar with the words—taken into account when these sort of things are considered.
However, the second point is a more fundamental objection to the proposal that central government should fund certain local authority services in full. That was indeed one of the options considered for education by the Green Paper, but in that case the Government would have to become responsible for setting each local authority's budget for education and for determining the policies necessary to implement it. Local authorities would not be spending any of their own money on the service. They would merely act as agents with no incentive to manage it efficiently. It is the improved accountability of the whole procedures in this Bill that will lead to more moderate costs.

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I cannot see therefore that this would be a reasonable approach to the reform of local government finance which the Bill seeks to address.
So far as concerns the police service, what the noble Lord has proposed would represent a fundamental change in the tripartite arrangement involving the police authority, central government and the chief constable which has been the bedrock of the policing system in Britain for many years. This is not an arrangement which should be set aside lightly and it should certainly not be done through an amendment to this Bill. What the noble Lord is suggesting would amount to a complete shake-up of the whole structure of local government which is not what this Bill is about. I hope that the noble Lord will withdraw his amendment.
Lord Mackie of Benshie: My Lords, I think that the best argument put forward by the noble Lord, Lord Ross, was the simple one that every single charge and increased charge will be piled on to the community charge or personal poll tax. The fundamental objection that we have and that the Tory Reform Group has was the piling on of every single item on to the personal charge. Our other main objection—that the poor pay more and the rich pay less—will be compounded as time goes on.
The arguments of the Minister are quite sound when he says that the whole of the accounting for education would be taken away from local government. That may have some force in it, but the strong and simple argument remains: that on to the personal charge will go more and more money and that will hit the poorer sections much more than the richer sections. Again, it is fundamental to our argument that ability to pay must be the major factor.
Viscount Massereene and Ferrard: My Lords, when the noble Lord says that the poorer will suffer and the richer will not suffer he forgets always that the richer have to pay other rates such as non-domestic rates. That is always forgotten.
Lord Grimond: My Lords, before we pass from this, I add to what has been said that it seems to me that the Minister has admitted three very important things in his speech. First, he rightly says that this is a matter which is not really dealt with by the Bill, but the problem is that the Bill does not deal with the main troubles of local authorities and that is a fundamental objection to it. Secondly, he states that this will make the local authorities mere agencies, but they are mere agencies in most respects already. Our complaint is that the Government keep on treating them as agencies and putting new duties upon them. They might face up to the logical conclusion of that.
Thirdly, and most importantly, the Government's argument for this Bill is that by enforcing responsibility and making everyone pay for the demands which they may make on local authorities they will get a more economic and efficient service. But many of the duties which are thrust on local authorities are thrust on them by central government. No one, neither ratepayers, personal taxpayers nor any local people, have any say whether they wish to have new duties or whether they do not. Therefore this goes
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to the whole argument that this will enforce greater accountability.
While I have some sympathy with the Government that it may be difficult to deal with at this stage in this extraordinary Bill, I hope that they will give some indication that they understand these difficulties and that the present situation is profoundly unsatisfactory. If local authorities have to go on bearing the costs of police and education when these costs are fixed not by them but by central government then we shall need to scrap the whole of this Bill sooner or later, which we may have to do anyway, and get down to what are the real difficulties in local government expenditure.
Lord Boyd-Carpenter: My Lords, it is not quite fair for the noble Lord, Lord Grimond, to say that the local authorities have to bear the full weight of increases in the education charges. I think the correct figure for the Government's latest contribution was 46 per cent. If education charges increase, the full weight of them is almost evenly divided between central and local government.
Nor, with respect, was the noble Lord, Lord Grimond, right when he said that the local authorities were now mere agencies. On the contrary, local education authorities under the present system have very considerable powers. Indeed, your Lordships' House may recall that we were discussing at some length the misdoings of a number of English local education authorities not very long ago. They were certainly not, whatever else they were, agencies of central government. They were abusing, in the view of many of us, the very high degree of administrative freedom that they have. Therefore, with due respect, I do not think that the argument of the noble Lord, Lord Grimond, carries even the Liberal point of view very far.
Coming to the noble Lord who proposed the amendment, I suspect a certain element of tongue in cheek about it, because with his great experience he knows that what he is proposing is a revolutionary change in the whole structure of government, central and local, in this country. Whatever its merits—and I am not for one moment saying that it lacks merits—this proposal would not be an appropriate one to introduce at this stage into this Bill—a Bill relating exclusively to Scotland.
I am increasingly coming to the view (which I think is shared by many people) that education is almost too important a subject to be entrusted to local authorities. However, that is a very large issue indeed which one day perhaps your Lordships' House will have to consider. On that occasion, quotations from the noble Lord's speech this afternoon may come in handy for somebody.
Lord Campbell of Alloway: My Lords, I support everything that has just been said by my noble friend Lord Boyd-Carpenter. I too would welcome the day when we could have centralised education wholly funded by Government and with the Government responsible for it. That matter goes right beyond the intendment of the Bill and it would not be right to seek to introduce it by a back door.
Lord Ross of Marnock: My Lords, that is interesting! I am very glad to note that the noble Lord, Lord Boyd-Carpenter, realised from where I had obtained my facts in relation to the amendment. The idea came from the Tory manifesto. It was inspired by the then Minister for Education, a lady called Mrs. Margaret Thatcher. That was her idea, not mine. I thought it might have commended itself to the party opposite in view of its reverence for that lady's ideas. It is not my idea at all. That takes us right back to what the Tory Reform Group said, and it has to be discussed sooner or later. I admit that the amendment takes us further along the path of centralisation.
The Tory Reform Group said that we have to sort out what we want in relation to the centralisation of power in respect of central and local government. There is no denying that we are at the end of the road so far as concerns education in England. Mr. Baker is in command and he wants command of even more: the curriculum, the organisation of the schools, the imposition of settlements. I admit that there are difficulties in the degree of centralisation. In Glasgow we used to have six or seven separately elected education boards. Because one did not want a different education in different parts of Glasgow, one moved towards centralisation. We have probably gone far too far now. As the noble Lord, Lord Grimond, said, we are acting only as agents.
There was a time when Aberdeen had probably the best education in Scotland. It was prepared to pay more for it. All that has been taken away now. Even within the Bill the powers are there for the local authority to be jumped over by the Secretary of State in respect of anything it wants to do which he pronounces unreasonable and excessive when it thinks it is a worthwhile improvement.
I tabled the amendment to hear the reflections of noble Lords opposite, but none of them has appreciated the difficulties that are arising and have to be settled between local and central government. Unless power is given to local government to raise more money on its own, local authorities will be agents.
There is another point. Although the Government are taking more power, and so the agency role is even greater within local authorities, the Government are refusing to give them the money properly to carry out the function which is theirs. The Minister talked about the rate support grant. He had better get to know the subject quickly as it has only a year to go. When he used these words he said he had heard them a few times. He will hear them a few times more before today is out:
"It will be taken into account in the calculation of the rate support grant".
I do not think that he has been in his post long enough to attend one of the meetings between CoSLA and the Secretary of State in order to fix the rate support grant. Shall I tell him what happens? The Secretary of State makes up his mind about what will be the aggregate expenditure. Then he makes up his mind what will be the relevant expenditure. Then he makes up his mind what the support will be in respect of rate support grant.
It does not finish there. Then he has to decide how it will be distributed. He has sufficient powers in his
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hands to see that Glasgow will be done down and Edinburgh will be improved. There is far too much power in that way. As I have already pointed out, since the Government came to power the support for local authorities has been reduced from 68 per cent. to 56·6 per cent. That is the cause of the crisis in local government. We were prepared to wear that even with the powers that were given to the Secretary of State until we got something called revaluation. Then the whole thing was turned upside down, not by local authorities but by the mismanagement or miscalculations of the Government in respect of having the revaluation at the time they did and as a result of the outcome of it.
I am sorry we have not yet solved the problem of lightening the financial load on local authorities. Unless something is done, or some other way is found by which they can levy some kind of tax, the personal community charge will rise and rise. Because, as the noble Lord, Lord Mackie, said, it is unfair, the unfairness will grow. We know what happened with poll taxes before. We had one in Scotland. The hardship of the poor arising from it was such that it was removed. They had one in England. It created a revolution. Here we are with the crudest form of tax being placed upon people—the rich paying the same as the poor. This amendment would at least have helped to keep it down and would have removed a rising element of what I think is danger for democracy in Scotland. I shall not ask the House to divide on the amendment but I shall ask noble Lords to think about it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 83 not moved.]
4.15 p.m.
Clause 8 [Liability for personal community charge]:
[Amendments Nos. 84 and 85 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 85A:
Page 7, line 28, at end insert ("and any personal community charges that cannot be collected once the debt recovery procedures have been exhausted will be specifically reflected within the Rate Support Grant Settlement and apportioned accordingly to each authority in a manner to be prescribed.").
The noble Lord said: My Lords, this is a probing amendment. It asks the Minister what will be the situation if, even after all the efforts of the local authority to get a full register, the registers are less than the anticipated figure and if, having obtained the register, the number of defaulters is higher than was expected after the local authority had used every debt recovery procedure possible. Will the Government include in the rate support grant a settlement to compensate the local authority for the figure? That is after every possible effort has been made. This is a probing amendment and I should like to know the opinion of the Government. I beg to move.
Lord Glenarthur: My Lords, may I say that we do not accept the exaggerated forecasts of shortfall which have been claimed by many and about which the noble Lord is concerned. In the first place, the community charge registration system will be based on similar procedures to those already in use for electoral

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registration, although of course, two separate registers are involved and separate canvass procedures will be carried out for the community charge register.
A study by the Office of Population Censuses and Surveys carried out in 1981 showed that at the time when it was made up, the electoral register was, on average, around 95 per cent. accurate in Scotland, which, I think, by any stretch of the imagination, is pretty good. That accuracy was achieved by a system relying on a single canvass without large resource implications. The annual cost in Scotland is under £3 million. The Government are therefore confident that the community charge register, which will be kept continuously up to date by the procedures that we discussed earlier—and to which we could conceivably return later—will improve on the level of accuracy. I am sure that the fears that have been expressed of widespread evasion of registration are most unrealistic and that the system will be able to operate efficiently and effectively.
Given an accurate register, bills will be issued and rebates calculated. In many cases the sums of money that people are required to find will not be large and payments will normally be made on an instalment basis. It is therefore unrealistic to envisage a wholesale increase in the level of debt. However, where people get into debt, the debt recovery procedures will be based on those at present used for rates, including summary warrants. These provisions are set out in paragraph 7 of Schedule 2 to the Bill. Experience has shown the procedures to be both economical and effective. There is no reason why they should not operate similarly in relation to the community charge.
We do not share the alarmist views which have been expressed about the likely shortfall in registration and collection. Hence we cannot accept that there is a need for specific compensation of the sort that the noble Lord describes, whether or not within RSG as the amendment proposes. I hope in the light of that explanation that the noble Lord is happier and will feel able to withdraw his amendment.
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for that explanation. I am amazed at his great confidence. Since, in most of the other areas of the Bill, the Minister has power to make arrangements by regulation, I thought he may have put in a reserve power on this particular subject. But he is confident that this is unnecessary. I shall watch the situation with great care. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 85B not moved.]
Lord Mackie of Benshie Lord Mackie of Benshie moved Amendment No. 85C:
Page 7, line 28, at end insert—
("( ) Where an employee occupying accommodation tied to his employment as part of a contract of employment, is reimbursed by his employer under that contract for all or part of the Community Charge or where the Community Charge is paid by the employer directly to the local authority the amount shall not be treated as an emolument for income tax purposes.").
The noble Lord said: My Lords, before I am tackled on this amendment I should like to say that I have already been informed that it is rather too wide and
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that a bank could buy a house in a new town, instal an employee and then pay his community charge. While that might appeal to the present Government, it is not the intention of the amendment.
I shall be interested to hear what the Minister has to say about a real problem in farming. We have been over this ground before, but I wish to stress the importance of the matter. In cash terms, our men in farming—and, of course, I declare an interest—are not particularly highly paid. In real terms, because of the emoluments, they may not be as well off as they should be compared to other people. Nevertheless they are reasonably well off. But to replace rates with the personal poll tax takes away a large part of the advantage they enjoy.
It is true that most farmers will pay this tax as they did rates. We have been assured that the farmers will be able to put down a proper and legitimate business expense. But we have no assurance, I understand, as to what will happen in the case of the men. Will they have to pay a considerable amount of tax on what was previously tax-free?
It is important in agriculture that more expense is not loaded on to the employers, the farmers. Everyone should know that in Scotland their income has dropped drastically. Indeed a large number of farmers are in a very precarious position indeed due to the steady decline in prices, the rise in expenses, and, of course, the appalling harvest of 1985 which resulted in enormous losses. Rest assured. The industry is not in a state to stand a rise in expense to cover the new income tax paid by the employee.
I realise that there are difficulties. There are other categories such as ministers, and probably a great many others, who will be in the same position. I am asking the Minister what he thinks we can do about it. It is a real problem that will add largely to the costs of Scottish farming or reduce even further the population of the countryside. I beg to move.
Lady Saltoun of Abernethy: My Lords, at Committee stage I moved an amendment to which I think the noble Lord, Lord Mackie, had his name to provide that any such reimbursement should not be regarded as a taxable emolument to the employee. The noble Lord, Lord Glenarthur, said in effect that he thought his right honourable friend the Chancellor of the Exchequer would view such an idea with a jaundiced eye since rates were incurred in respect of accommodation in which the employee was required to live as a condition of his employment and the community charge was not. The noble Lord has clearly not persuaded his right honourable friend to change his mind.
I would not be prepared to support the noble Lord, Lord Mackie of Benshie, in the Lobby should he wish to press this amendment—I did not get the impression that he does intend to press it—because it is a matter which I think can be dealt with only in a Finance Bill. As such, I think that it is outwith the powers of this House. I may be wrong but I think that is so.
I suggest that it is now up to the employers and the employees, through their associations and unions and through Members of another place, to press the Chancellor of the Exchequer to deal with this situation

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in a Finance Bill. The ball is, I believe, in their court, although the Minister and his colleagues could perhaps add their weight.
Some of your Lordships may recall that in Committee I also expressed concern for employers registered as charities who therefore do not pay tax against which they can charge reimbursement but who at present are receiving rate rebates from the local authority in respect of tied accommodation. The churches, the Royal National Lifeboat Institution (who have a few tied houses in Scotland), the Royal National Mission to Deep Sea Fishermen, and possibly others such as Dr. Barnardo's, spring to mind. But try as I might, I could see no way in which this Bill could be amended to mitigate its effect on them. I have, however, satisfied myself that there is nothing to prevent a local authority from making a donation to a charity; many authorities do. Therefore were any charitable organisation, faced with a loss of rates rebate on that type of accommodation, to ask the local authority concerned for a donation to compensate it for that loss, there is nothing to prevent the local authority looking kindly on such a request. I think that is the way we shall probably have to proceed.
4.30 p.m.
Lord Polwarth: My Lords, perhaps I may add my voice and say that I think there is a real problem here. I appreciate that by tradition we are inhibited from going into the detailed tax implications of this, but the fact remains that where an employer, as all good employers will do, I am sure, offers to reimburse his employee for the community charges, and that probably means for his employee and the employee's wife, he will, if he wishes the employee to be no worse off than before, have to pay something. I think I worked it out as being about 30 to 40 per cent. in addition, above the charges, because of the tax which will fall to be deducted as a taxable benefit from the employee. I do not think we can deal with this here, but it is a genuine injustice. As others have said, it is not just the agricultural workers but the ministers of the churches and others who occupy tied accommodation.
I hope my noble friend Lord Glenarthur will use all his efforts with his colleagues in another place to ensure that a solution to this evident injustice is found through the proper channels.
Lord Boyd-Carpenter: My Lords, perhaps I may support the procedural point which has been taken by the noble Lady. It seems to me that to put on the Marshalled List an amendment directly affecting the income tax liability of individuals is going beyond what are normally regarded as the functions and powers of this House in the context of another place.
I am perhaps a little surprrised that this has appeared on the Marshalled List at all. But whatever the merits—and I make no comment on the merits—it seems to me we are getting on very dangerous ground if we even start to appear to legislate on taxation.
Lord Mackie of Benshie: My Lords, before the noble Lord sits down, I should say that it is a spurious
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argument, when we have been talking in the whole of the Bill about personal tax on individuals, to say that we cannot discuss other matters of tax.
Lord Boyd-Carpenter: My Lords, perhaps I may be presumed not to have sat down, contrary to what some noble Lords may have thought. There is all the difference in the world between taking an existing system of taxation, income tax, and your Lordships' House seeking to intervene to affect the tax liability of individuals under that, and a general discussion of a charge which may or may not in law be a tax—I offer no opinion there—which has not yet come into being, which is not yet in effect and therefore not yet within the responsibility of another place. If the noble Lord will think for a moment, he will see that there is all the difference in the world between those two.
Lord Campbell of Alloway: My Lords, have we not been through all this before at the Committee stage? Is it not evident that there is a manifest injustice? And is it not equally evident that this is a revenue matter for a finance Act and not for this Bill?
Lord Morton of Shuna: My Lords, without wishing to get into the procedural mess, I should add my voice to those who say that obviously an unfairness exists. With all possible respect to the Government, it illustrates the fact that they have not thought this Bill through far enough. Not only are there the tied cottage situations and a change which will inevitably mean a change in the way farm workers are paid, but it also, as the noble Lady, Lady Saltoun, said, affects the question of charities, churches and the rest of them. It will put on to these charitable organisations a very considerable burden in trying to get people to do jobs for the charities or to be ministers in the churches which will, as a result of this, suffer a considerable loss in disposable income.
This has not been thought through, as I endeavoured to say on a similar amendment at Committee stage. The difficulty about this amendment as it stands is that it opens the way to any employer in any situation to give any employee whom he might wish to favour as a condition of his employment, the opportunity to live in a flat in the new town of Edinburgh or, if he comes into London, in Mayfair or wherever he happens to be. It would be a very considerable change in the tax approach, or it could be. Therefore one could not support this amendment as it is framed.
Lord Sanderson of Bowden: My Lords, I should like to follow what the noble Lord, Lord Morton, has said. I think it proves the difficulty of trying to be extremely fair to one group while disadvantaging another. I am sure that the noble Lord, Lord Mackie, will understand what I say because I read today in the Financial Times that his own party has pulled back from the brink about the married men's allowances being frozen, for the simple reason that to take such a dramatic step would be singularly unfair to a tremendous number of people.
I should have thought that this was a complicated area. Going back to yesterday's debate on the National Trust, there may be some relief for the National Trust,

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as the noble Lady, Lady Saltoun, has said, through the local authorities' relief powers, if it is a non-domestic rate. I should like the Minister to comment on this in passing.
However, to be perfectly honest, I find it very difficult to listen to the noble Lord, Lord Mackie, pleading this cause when only yesterday his own party voted not to reduce income tax by 2p in the pound.
Viscount Thurso: My Lords, surely the difficulty here is that once again we do not really know whether we are talking about a rate, a tax or a charge. In the old days when there was a rating system, the buildings were rated, the farm worker's house or the minister's manse was rated and the person living there was put down as an inhabitant occupier, IO, on the valuation roll. It was known that he was not the person who paid the rate. The person who paid the rate was the owner of the building.
By this charge or whatever we call the tax or the impost which we are talking about we have produced a new situation where instead of the money for running local authorities being raised out of the building, it will now be raised out of the person. I think my noble friend is trying to make sure that at the same time as doing this we are not making this class of person, the farm worker or the minister in his manse or whoever was previously receiving some sort of shelter as a shorn lamb from the wind of the rates, twice as badly off. That is what he would be if the Bill went through as it is.
What I think my noble friend is asking the Minister is how he hopes this situation will be dealt with. It is obviously appreciated by a number of people in your Lordships' House that a difficulty has arisen here which did not exist before. We should like to know what the answer will be. It is obviously perfectly proper for us to discuss this. Had the amendment of the noble Lord, Lord Mackie, been improper, the Table would surely have advised that it should not be put down. However, I should be most interested, with my noble friend, to know what the Minister will have to say about this.
Lord Henderson of Brompton: My Lords, before the Minister replies perhaps I may briefly say a word on what the noble Lord, Lord Boyd-Carpenter, has called the procedural point. The noble Lord, Lord Mackie of Benshie, when he introduced this amendment, said quite frankly to the House that he did not propose to press it to a Division. Then the noble Lady, Lady Saltoun, quite rightly drew attention to the fact that this was a matter for the House of Commons rather than for ourselves. Then I thought that the noble Lord, Lord Boyd-Carpenter, in his zeal to defend the House of Commons financial privilege, tended slightly to diminish the privilege of this House. I am sure that he did so inadvertently, but I rose so that we should not be misled into the suggestion which he made that we should not even discuss, by way of amendment, a matter which is a concern of the House of Commons.
Lord Boyd-Carpenter: My Lords, if the noble Lord will allow me to intervene, he has raised an interesting point and bearing in mind his great experience I shall be interested to hear what he says. Is the noble Lord
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saying that it is all right to put down an amendment affecting national taxation, provided that one does not divide on it?
Lord Henderson of Brompton: My Lords, that is the substance of the advice. I should have thought that it would be inhibiting the proceedings of this House too greatly if we feared Commons financial privilege to such an extent that we denied ourselves our privilege of discussing financial matters in the House, which includes putting down amendments of this nature. The Commons financial privilege only attaches when we send such an amendment down to the House of Commons, if we do so. Until that happens—and it will not happen in this case—Commons financial privilege does not arise. The House is entirely in order in discussing this amendment. If, unfortunately, we were to take the view that I understand the noble Lord, Lord Boyd-Carpenter, to take, we should inadvertently be diminishing the privileges of this House.
Lord Glenarthur: My Lords, I have considered carefully the arguments put forward in support of some form of special taxation arrangement to meet the position where workers living in tied houses, who at present have their accommodation provided rent and rates free, will be faced with liability for the personal community charge.
There are two points here. The first is the question of the position under the national taxation system of employers in these circumstances. As I said at Committee stage, my right honourable friend the Chancellor of the Exchequer has confirmed that payments made by an employer to an employee in respect of the rates payable on his tied house—or the payments deemed to be made in these circumstances if the employer meets the rates bill directly himself—are already a legitimate business expense from the point of view of the employer's tax position and this would not change if he met the personal community charge liability of an employee as part of his contract of employment.
Secondly, as the noble Lady, Lady Saltoun of Abernethy, said, payments of this kind made towards rates at present do not incur any liability for tax payments by the employee. This is the point addressed by the noble Lord's amendment. The present arrangements are justified because the rates are incurred in respect of a house in which the employee is required to live as a condition of his employment. He cannot therefore choose, for instance, to move into a house with a lower rateable value and hence a lower rates bill. It is therefore right that the taxation system should take some account of the fact that he necessarily lives in a particular property.
The personal community charge, however, will not be directly connected to the occupation of a particular property: it will be the same for everyone, subject of course to the availability of a system of rebates for those on low incomes. In these circumstances there is no justification for special treatment for certain groups of employees simply because they receive tax relief on their domestic rates payments at present. Moreover, a tax concession of this kind on payments made by employers in respect of the personal community charge would make it very difficult, as my noble friend

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Lord Sanderson indicated, to deny similar concessions in respect of any payments, whether in cash or in kind, which employers might choose to make as a supplement to basic wages. My right honourable friend the Chancellor of the Exchequer would not therefore be willing to consider the right to give a tax concession of the kind which is proposed. I hope that with that explanation the noble Lady, Lady Saltoun of Abernethy, will understand the complexities of the issues that she has raised.
The question of agricultural workers in particular was raised by the noble Lord, Lord Mackie—
4.45 p.m.
Lord Morton of Shuna: My Lords, as regards that explanation, which I understand, does it not illustrate a need at least for a transitional arrangement until and unless (perhaps that is the order of the words) a similar English system arrives? In that event, someone employed on a farm in Berwickshire will be very keen to obtain employment on a farm in Northumberland because he will be very much better off.
Lord Glenarthur: My Lords, as the Bill does not come into effect until April 1989 and, as we have discussed on numerous occasions, we have the prospect of a Bill to cover England and Wales in the not too distant future, I do not think that the noble Lord's point arises. Let me continue—
Lord Morton of Shuna: My Lords, in relation to that proposal, there is no suggestion that the English Bill will come into effect at the same time as the Scottish Bill. We voted against that on Tuesday. The Bill is to come into effect in Scotland at least a couple of years before it can come into effect in England.
Lord Glenarthur: My Lords, there would be a minimum time. However, we are moving away from the main point—which I have not yet had a chance to deliver—on the question of agricultural workers. It is that it will be for employers to decide whether to take account of the personal community charge liability of workers in tied houses in considering the minimum wage they set for 1989–90 and subsequent years. I should however point out that any such arrangements would by no means be straightforward: if an argument is to be developed that employers should thus meet the personal community charge liability of their employees living in tied accommodation, I can envisage that they may also come under pressure to make similar arrangements in relation to employees who do not live in tied accommodation, but who will nevertheless equally find themselves with a new personal community charge liability. I think that at Committee stage I was able to give the figures for such people. As the noble Lord will know, they are pretty substantial.
In the case of agricultural workers therefore it will be for the Scottish Agricultural Wages Board to decide whether, and if so how, to take account of their personal community charge liability in considering the minimum wage they set for 1989–90 and subsequent years. But as only 10 per cent. of the workforce is paid at the minimum rate, and the average wage is
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considerably higher than the minimum, the amendment would achieve nothing in these cases. Neither would it succeed in achieving what is presumably the desired effect; namely, again as my noble friend Lord Sanderson said, to help only those faces with a new form of outlay, because it would also apply to some 3,000 workers in tied houses—nearly 25 per cent. of the total number—who already pay their own rates. I think that that is the answer to the point raised by my noble friend Lord Polwarth, and I respect the sincerity with which he made his speech.
It would be neither desirable nor sensible for this Bill to lay any kind of specific duty on the Scottish Agricultural Wages Board in advance of their own consideration of the matter. In setting wages orders in the past the board have separated different classes of worker at different age levels but have not drawn any distinction between workers in tied accommodation and others, or between workers who pay rates and others. There is, however, nothing to prevent the board taking account of such matters and setting differing minimum rates accordingly. A wages structure of this kind would of course be more complex but it is open to the wages board to provide such a structure if they decide to do so.
I am afraid therefore that I cannot give the noble Lord any assurance in response to his amendment. Rebates will be available for those on low incomes. However, there would be no justification for making any concessions simply because of the accommodation occupied by the employee. I hope with that explanation the noble Lord will feel able to withdraw the amendment.
Lord Mackie of Benshie: My Lords, I should first like to thank the noble, skilful and knowledgeable Lord, Lord Henderson of Brompton, for setting down the fact that the amendment is within the scope of matters which the House should discuss. I think that with common sense backed up by precedent the House must discuss matters arising from a Bill which will result in a good deal of hardship to a considerable number of people. I think the noble Lord said that 75 per cent. live in tied houses: certainly a very large number of the more skilful men do. It appears to me extraordinary that a tax concession is allowed because a man has the disadvantage of living in a tied house on one system of tax but that such a concession, on another system, cannot be allowed. That does not appear to me to be logical; but then much of what the Inland Revenue does is not logical.
I am sorry that the Minister has suggested no avenue. It is a considerable problem. Of course the wages can go up to cover it, but he must know that the industry is not in a position to cover a substantial rise in wages and the problem remains. I will certainly beg leave to withdraw the amendment but I reserve the right to consult about another amendment for Third Reading which might be within the law and even within the bounds of acceptance by the noble Lord, Lord Boyd-Carpenter. That might help to resolve this very real problem. I beg leave to withdraw the amendment.
Lord Sanderson of Bowden: My Lords, before the noble Lord sits down, with the leave of the House, may

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I ask the Minister to answer my point about the National Trust?
Lord Glenarthur: My Lords, with the leave of the House, I apologise for not answering my noble friend. It has a bearing in any case on the generality of the amendment moved by the noble Lord, Lord Mackie of Benshie. The National Trust will continue to be entitled to charitable relief of 50 per cent. on non-domestic rates. I hope that helps the noble Lord.
I should also have said to the noble Lady, Lady Saltoun, who particularly raised the matter of charities when she referred to the Royal National Lifeboat Institution and others, that if a charity is enjoying tax relief across the board, as certain of the charities she mentioned may be doing, that is a substantial benefit. If it means that the charity cannot benefit from a specific tax relief—and of course here we come back to what the noble Lady is asking for in this particular case—that is perhaps unfortunate. I accept that; but it does not mean that overall—and I stress the word "overall"—the charity is necessarily being treated badly.
Amendment, by leave, withdrawn.
[Amendment No. 86 not moved.]
Lord Gray Lord Gray moved Amendment No. 87:
Page 7, line 35, leave out third ("the") and insert ("that").
The noble Lord said: My Lords, I beg to move.
The Earl of Dundee: My Lords, I am happy to accept this drafting amendment, which clarifies the reference of the phrase "the year" at the end of subsection (2) of Clause 8. I am grateful to my noble friend for it.
Lord Gray: My Lords, I am grateful to my noble friend for readily accepting what is a very miniscule drafting amendment. I put it down only because it brings this particular phrase into line with other phrases in the Bill.
On Question, amendment agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 87A:
Page 7, line 38, leave out from ("until") to end of line 39 and insert ("he ceases to be solely or mainly resident in that local authority area".).
The noble Lord said: My Lords, if we take with this Amendment No. 88 it gives a choice to the Government which of the two amendments to select. Obviously they are in a generous mood but I warn them that this is not drafting, as no doubt we will be told. However, it is very sensible just the same and could be construed as good drafting.
As the Bill reads at the moment, as soon as somebody becomes 18—or older for that matter—and moves into an area the liability to pay the personal community charge within that area starts. The words are:
"as from the date on which he becomes so resident",
he is liable to pay. But when does he cease to be liable to pay? I suggest that logically it should be when he ceases to be resident, when he moves out.
However, that is not what this subsection says. It refers to the time when the removal of his name from the register takes effect: in other words, when somebody else takes some action. He may have sent a letter to the registrar and the letter may have gone astray, or it may have been misinterpreted. It is not until the registrar takes action that he ceases to be liable. Therefore I suggest that we should be logical. If liability starts when he becomes a resident it should end when he ceases to be one.
The Minister may tell me that the informing of the registrar is a matter for him. But that is covered by the rest of the Bill when we come to the administration. So from a drafting point of view we should be content that liability should start when he becomes a resident and should end when he ceases to be a resident. There are obligations on someone to say when he ceases to become a resident, but it is common sense.
Scotland will not shiver if the Minister accepts this amendment. I know it took a lot out of the Scottish Office to accept that last amendment of changing "the" to "that". It shocked us all, and I hope that the Minister is still in a state of shock so that he will rise and say, "Yes, we accept this amendment". I beg to move.
Lord Glenarthur: My Lords, I am sorry, but I am going to disappoint the noble Lord. He shakes his head, but I hope he will allow me to explain why we cannot do this. We considered the point raised by both these amendments during Committee.
I shall first restate our intention that liability for the personal community charge should be exactly coterminous with residence in a local authority's area. The basis of billing and collection of the personal community charge, however, is of course the register. It is in practical terms only when someone is registered as liable to pay the personal community charge that the local authority involved will send him bills. The noble Lord's amendments therefore would leave open the possibility that someone might claim that he had ceased to be resident in a local authority's area even when the register did not substantiate that claim. In these circumstances the whole justification for the issue of bills and the collection of the personal community charge could be called into question. It is therefore formally necessary for a person's liability for the personal community charge to last until the date on which the removal of his name from the register takes effect.
I should make quite clear that this does not mean that there will be any danger of people being required to pay the personal community charge twice when they move and register at their new address. The date on which a person's liability begins will be entered in the register for his new area. It will normally be the day following the date on which his name was removed from the register in his previous area.
If there is any difficulty about this in any particular case, the registration officers concerned can be expected to communicate with each other under the provisions of Clause 17(3)(a) of the Bill to establish the exact dates involved. If in a rare and extreme case there was considerable difficulty and misunderstanding leading to a person finding himself registered on two registers, Clause 16(3) and (7)

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provide that the person may appeal to a single sheriff to consider the whole question, and when he has so appealed he will only be liable for the first of the two personal community charges. So there is explicit provision set out in the Bill to prevent double charging in this, as I have said, very rare case. I hope that, with that explanation, the noble Lord will feel able to withdraw his amendment.
5 p.m.
Lord Ross of Marnock: Well, well, my Lords, what a long explanation! Logically if one says that liability starts when someone moves into the area, it should end when he moves out of the area. In the first place it is not when he goes on the register and in the second place it is when he is taken off the register. There should have been no difficulty at all about accepting this amendment because the questions of when the individual goes on to the register and when he comes off the register or ceases to be resident are subject to further procedures in relation to this Bill. There is nothing that mentions "as from the date when he becomes so resident". That is dealt with later in the Bill. Someone moving into an area has to notify the registrar that he is there and the registrar puts his name on the register.
I know that this is a complicated Bill but it has been made so much more complicated that even a Minister of State with all his powers cannot rise to his feet and depart from the words in front of him. I saw him hesitating and perhaps he was saying to himself, "Shall I dare it? Shall I risk it?" and then he said to himself, "Oh, no, there is my noble and learned friend the Lord Advocate and he would advise me not to do it. I'll stick to the brief and say no". I do not want to upset the whole of the Scottish Office—not today, but perhaps another day. I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 88 not moved.]
Lord Wilson of Langside Lord Wilson of Langside moved Amendment No. 89:
Page 7, line 40, leave out subections (4) and (5)
The noble and learned Lord said: My Lords, I beg to move Amendment No. 89 and will speak also to Amendment No. 110, the effect of which would be to exempt from liability to pay the personal community charge those undertaking a full-time course of education of full-time industrial or professional training. In view of concessions that may be made in due course, I like to think that perhaps they were influenced by the robust language with which my noble friend Lord Mackie of Benshie moved a similar amendment at Committee stage. I beg to move.
Lord Glenarthur: My Lords, we debated the position of students in relation to the community charge very extensively during Committee. The amendments that are before us today and which comprise a whole group—the noble and learned Lord, Lord Wilson of Langside, has referred to two of them—namely, Amendments Nos. 89 and 110—but the group also includes Amendments Nos. 90, 90A, 91, 92, 92A and 101 to 103—are all matters related to
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this issue. I undertook to take away for consideration without commitment the various matters which had been raised and therefore it may be appropriate for me to intervene fairly early in this debate in order to explain to the House the conclusions which the Government have reached on those matters and in particular the effect of Amendment No. 92, which is in my name and is I think a very positive response to many of the concerns which have been raised.
Our discussion in Committee began with the question of the position of overseas students. The noble Earl, Lord Perth, and the noble Lady, Lady Saltoun, spoke to amendments which would have reduced or, in the latter case, eliminated entirely the liability of those students to pay the community charge. My impression was that the Committee found persuasive the argument that liability to pay the full charge could act as a marginal but possibly significant deterrent to overseas students who were thinking of coming to Scottish universities. As I shall explain in a minute I think that the solution offered in the amendment that stands in my name goes a long way to meeting those concerns.
Our debate in Committee also examined very thoroughly the question of whether home students should be liable to pay the community charge. Some noble Lords argued for complete exemption; others for 100 per cent. reimbursement through the grant mechanism. The view was forcibly expressed that to make students liable and to increase their grants in order to enable them to pay the charge involved needless additional administration. My noble friend Lord Sanderson expressed the view that our proposal for a flat increase in grants based on the Scottish average could lead to some unfairness.
Replying to the debate then I held out little prospect of general exemption for students. The Government have considered very carefully the arguments for exemption that were put forward, but I have to say that we cannot accept them. We remain firmly of the view that, like other adults, students must make some contribution toward the cost of the local services which they use and, consistent with the fundamental principle of accountability that underlies the introduction of the community charge, they must have some financial interest in the cost implications of the policies for which they can vote. So I have to rule out the possibility of exemption for students.
However, my Amendment No. 92 responds positively to many of the other points that were made during the debate in Committee. The purpose of the amendment is to provide that students should pay only a reduced charge. We envisage that the amount payable will be equivalent to the amount that would be paid by an individual receiving the maximum rebate. Your Lordships will recall that the illustrative assumptions that we have made about the rebate scheme involve a maximum rebate of 80 per cent. so that everyone is called upon to pay a minimum contribution of 20 per cent. as the personal community charge. On the same basis, therefore, we envisage prescribing that students should pay 20 per cent. of the charge. Tackling the matter in this way dispenses with the need for any addition to grant.
I believe that the new approach envisaged by my amendment has a number of important advantages.

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First, for home students it means that their financial outgoings will be substantially reduced. That will be helpful to them in budgeting, particularly during the vacation period when they do not normally have any direct income from grant.
Secondly, it will mean that the amount payable by each student will not depend on the difference between the charge in his area and the Scottish average but will simply be a set proportion of the charge in that area. This meets the criticism of our proposals that was made by my noble friend Lord Sanderson.
Thirdly, there will be important administrative simplifications. I acknowledge that our earlier proposals, which involved a non-means tested addition to grant, would have involved some extra administrative burden on the Scottish Education Department and local education authorities in England and Wales in administering the awards scheme for students coming to Scotland. Within a scheme of grant additions it would have been difficult to remedy the unfairness that my noble friend foresaw without incurring quite a heavy administrative burden but the new approach will achieve the required result very simply.
Finally—and I turn back to the original concern of the noble Earl, Lord Perth, and the noble Lady, Lady Saltoun—the amendment will improve very substantially the position of overseas students. It would have been difficult if not impossible to have offered them compensation through the student awards system, as was proposed for home students eligible for awards, but the amendment will mean that the amounts that they are called upon to pay will be substantially reduced on our illustrative figures to less than one half of the 50 per cent. figure proposed in the earlier amendment of the noble Earl, Lord Perth. It seems to me that this new approach substantially meets the concerns that were expressed in our earlier debate about the position of overseas students.
To sum up, I believe that the Government's amendment represents a clear and positive response to the understandable concerns that were so clearly expressed by noble Lords in our earlier debate. It maintains the principle that students should be liable for the community charge, like other adults who use local services, and influence them through their votes. It achieves the result which the Government have all along intended, that students should be in broadly the same position as those in receipt of maximum rebate by a mechanism that is simpler than what we had hitherto envisaged. It also greatly improves the position of overseas students and others who would not have been eligible for assistance through grant, thereby removing important points of concern about the impact of the new system. So when we finally reach the amendment in my name, I shall be commending that amendment to your Lordships.
5.15 p.m.
Lord Morton of Shuna: My Lords, I wonder whether your Lordships will allow me to deal with that amendment and then go back to Amendment No. 89 and the other amendments in this group. This amendment improves to some extent the position from the point of view of students. The only difference
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is that they are now to pay 20 per cent., as we understand it, of the community charge of the area where the university or other full time course is, whereas previously they were to receive grant of the average Scottish community charge. We do not know whether that makes them better off or worse off. But the one area that it makes worse off—and I am surprised that the Minister has not dealt with this—is the local authority in which the student lives.
If you have several thousand students who are having services, and all the rest of it, provided for them under the previous scheme the Government were going to provide that 80 per cent. of the full community charge would be paid. There may be something of the order of 15,000 university students, quite apart from the other colleges of full-time education, in Edinburgh or in Glasgow. If there is a sudden change from 15,000 full community charges to 15,000 20 per cents., it will make a difference to the rest of the people who have to pay community charges. I do not have figures, but I should not be surprised if the effect was even more dramatic in a small university town like St. Andrews, where the university student population as a proportion of the whole population of the local authority might be rather different.
On that approach, this is another example of the way in which finance is being put on to the local authority even by the Government's amendments to this Bill. Previously for every student the Government, through the grant system, were going to provide 80 per cent. of the full community charge. Now the Government will provide nothing and the student will provide 20 per cent. The remainder has to be found by the local authority; in other words, by the other personal charge payers. That, I suggest, is unfair.
Of course, it saves central government some money—that may be one of its advantages—but it also retains the difficulty that this House discussed at length in Committee, that there is a disadvantage on the universities in Scotland, as opposed to the universities and colleges in England and Wales, for the time that this legislation is effective in Scotland and not in England and Wales. There will be that distinction.
It is for that reason that Amendment No. 91, which is in my name, is put down. That, I suggest, is one way of dealing with overseas students; and I apologise to the English for classifying them as "overseas" for this purpose. I have drafted the amendment to allow the universities and other colleges in Scotland to continue to attract students from England and Wales. That is why I have drafted it to read,
"provided that a person undertaking a fulltime course of education whose main and ordinary residence is outwith Scotland shall be regarded as being solely or mainly resident outwith Scotland".
That would take such overseas students—using a short phrase—out of having to pay the community charge.
The whole point of having to pay the community charge is this accountability argument. It becomes very difficult to deal with this accountability argument, because it is not only in regard to students, and it is not only in regard to local authorities, that people are supposed to be accountable and people have the vote. If this argument is taken to its logical conclusion, there is no reason why students should have any vote in national elections because, far from doing anything about working out how the money is to

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be spent, they are usually totally supported by state grants. Therefore, their argument is always that the grant should be greater for the students. It is very difficult to see that this government amendment really meets the difficulties, and it certainly increases the costs on local authorities.
As regards the other amendments in the group—if I may deal with them at one time—it is important that we do not restrict education and that we have the cover of education or training. I refer to Amendment No. 90 in the name of my noble friend Lord Ross of Marnock. Amendment No. 90A is on the question of, so to speak, the Scottish student choosing where he wishes to be resident. I find it difficult to understand why, if the student is resident for six months of the year in an area which has a low community charge, he should be forced to be registered—because of the university that he happens to attend—in an area of high community charge such as the cities.
Amendment No. 92A is in this group for reasons that I cannot fully understand. It is just to specify what is meant by full-time student. Amendments Nos. 101, 102 and 103 are in this group along with No. 110. Amendment No. 101 deals with people who are exempt from paying the community charge. It adds the words,
"persons undertaking a full time course of education".
This is another way of doing the same thing. Amendment No. 102 reads:
"any person undertaking an apprenticeship, or vocational education or training if the emoluments received do not exceed 100 per week or such higher sum as may be prescribed".
That was specifically drawn with the intention of dealing with the situation of trainee nurses.
As I endeavoured to suggest at the Committee stage, it is very difficult to attract trainee nurses to live-in at the Royal Infirmary in Edinburgh if they have to pay £6, £7 or £8 a week in community charge out of their £4,000 a year income, whereas if they go to Newcastle they can get the same training and not have to pay. That is the purpose of that amendment. I think it is necessary, if we are to do anything on the basis of ability to pay, that we look at the people who receive very small earnings during training, and do not just say,
"undertaking a full-time course of education".
Otherwise, there may be people earning £5,000 a week or whatever. Amendment No. 103 reads:
"persons employed in a Youth Training Scheme",
and so on. This is really the same idea. Such persons should not be required to pay the full or a restricted community charge.
Amendment No. 110 in the name of the noble and learned Lord, Lord Wilson, is much the same as some of the amendments to which I have already spoken. When we come to Amendment No. 91, unless the Government are prepared to accept it, I may well suggest that the opinion of the House be sought.
The Earl of Perth: My Lords, I am not clear whether the Minister wishes to answer the various points which have been raised by the noble Lord, Lord Morton, or whether he wishes the House to concentrate on the
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importance of Amendment No. 92 which particularly concerns overseas students and students as a whole. I listened very carefully to what the Minister said and so far as I am concerned it is far preferable to my earlier amendment, which some of your Lordships will recall asked that overseas students should only bear 50 per cent. of the charge. It is worth going back a bit to recall that at Committee stage we very nearly had a Division. I am grateful to those who, at the last moment, went along with me and decided that it would be better to see what the Government would do rather than dividing when the outcome was uncertain and knowing that the Minister had told us that he would think about the matter again.
During the holidays, I became more and more anxious not only about overses students but also about students from England and Wales, as had been pointed out by others during Committee stage. Therefore, I thought seriously of introducing an amendment which covered those students as well. Happily, during the holidays the Government thought again on the question of students, be they from overseas, from England and Wales or simply Scottish students. I understand what the Government have done on the question of the principle of some responsibility for one and all to pay something. However, what I wish to say above all is that I am extremely grateful that we have had from the Government such a considerable concession. It went further than I had asked, not because I did not want more but because I did not think we would get it. We have got it and I think (and I am sure many other noble Lords will also feel) that we welcome the amendment in so far as it is concerned with students.
Lord Home of the Hirsel: My Lords, dealing with Amendment No. 92, like my noble friend the Earl of Perth, I was concerned at Committee stage lest the payment required of students in the form of a community charge might discourage students—especially overseas students—from coming to Scottish universities. The proposal which my noble friend has now made is, as I understand it, that no student shall be charged more than 20 per cent. of the community charge. That, while it preserves the important principle upon which the Government have insisted during the passage of the Bill that all who use services should pay a certain amount towards them, is also entirely reasonable in relation to the student. I cannot see any student, faced with a 20 per cent. charge, could possibly find it too difficult to cope with that.
I agree with my noble friend Lord Perth that the fact that all students have been included is a bonus which I had not expected that the Government would be able to concede. They have done so and I accept with gratitude what my noble friend has said.
Lord Mackie of Benshie: My Lords, we must all be very grateful to the Minister for thinking again and for reducing the charge on overseas students. I thought that he was perhaps less than gracious when he said that the concerns to which he was reacting were only expressed from the Cross-Benches and by his noble friends. I remind him that we on this side of the House were deeply concerned as well. Indeed, we offered our advice. But we must concede the form that advice can

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only be taken from friendly sources—not that we are not friendly in a different context.
However, I think it shows the total illogicality of the Bill that suddenly, when faced with the result of his actions, the Minister has been forced to think again and has reduced the charge to 20 per cent. It would have been much more logical to have abolished it. A charge will still be imposed on English and Welsh students who come into Scotland; a charge will still be imposed on overseas students which may well influence them greatly. Although the charge is only 20 per cent., if that happens to result in a charge of £60 and if one multiplies that in terms of pints of beer it becomes quite a lot of money. The small charge will be collected from the students instead of the illogicality of their paying the whole of it. I accept the amendment happily; obviously, it is an improvement. However, it is not logical.
Concerning the amendment moved by my noble friend, and particularly Amendment No. 110 which is covered by the rest of the group, will the Minister tell us, when he comes to reply to the other amendments, if he is accepting the fact that others in full-time education or training are to be included in this exemption? Again, it is entirely illogical to exempt only university students or students at technical colleges when there are a great many other people who are very necessary to the future welfare of the nation who are in full-time training of one kind or another or in the sort of training that keeps them a great deal poorer than they would be if they were in a full-time job. We require an answer to that question. I much prefer the simple Amendment No. 91 put forward by the noble Lord, Lord Morton of Shuna, which I think is logical and which I think would do infinitely more good. However, that is not to say that I am not grateful for the concession made by the Minister.
Lord Campbell of Alloway: My Lords, I wish to intervene briefly to thank my noble friend the Minister, having spoken in favour of exemption under Clause 8(7) at Committee stage. The Minister has taken a median line between exemption under Clause 8(7) and rebate under Clause 24. As I understand it, that does not take into account, in the true sense of the term, ability to pay. However, it sets a percentage charge of 20 per cent. in the area. As I work out the material which I have been given by the Scottish Office—although I probably have it wrong—that means that the student will pay £36 a year on a flat rate basis. If that is not correct, I find it difficult to understand the Scottish Office news release as to how the rebate system works where there is a reference to a new schedule to the community charge. If the Minister can explain how this works in practice, it will be appreciated.
There is no direct acceptance here that one takes into account ability to pay as such. Using the terms of the amendment concerning the liability for such a percentage as may be prescribed, I assume that that will be determined according to implementing machinery in some regulations. Again, I should like to understand how it is to work. Following the approach of Lord Perth's amendment, I assume because of the set percentage charge there will be no question, in an
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appropriate case, of reducing that percentage liability to pay to zero. However, subject to clarification in order to be able to understand exactly how it will work, in principle I congratulate the Minister and his advisers on what on the face of it appears to be a fair, workable and reasonable resolution to the problem.
There was a point raised by the noble Lord, Lord Morton of Shuna, generally, which involved the question of whether at this stage the Bill ought to have a schedule of transitional provisions to prevent certain financial disparities. That is really a wide question.
Lord Morton of Shuna: My Lords, I am sorry if I gave that impression. It was not the impression I intended to give. What I intended to make clear was that while there is one system in England and a different system in Scotland. one has to have something that compensates for any loss that the Scottish situation therefore has.
Lord Campbell of Alloway: My Lords, if one has something that compensates one has to do it in some way, and the only way it can be done is to produce a schedule of transitional provisions to prevent financial disparities pending the English Act. I believe that will be complex and difficult at this stage of the Bill and I wonder whether it is really necessary.
5.30 p.m.
Lord Grimond: My Lords, I am sorry to take up further time on this matter, upon which the Government have behaved rather well. For my part I should like to thank them for the proposed Amendment No. 92. As some of us will have to explain the Bill to students, it may be as well if we really understand it. There has been a lot of talk as though certain students would pay only 20 per cent. I think that that is not in the Bill. There is a prescribed amount in the Bill which may be more than 20 per cent. The Government may intend the figure to be 20 per cent., and that of course is very valuable, but they cannot bind their successors. Am I right in saying that 20 per cent. is what the Government hope the students will pay but it is not in the Bill?
Am I also right in thinking that a Scottish student who goes to an English university will gain both as regards a Scottish student who goes to a Scottish university and also as regards a foreign student who goes to a Scottish university? The people whom the Bill will penalise, though it may be a small or large penalty, are the Scots who go to their own universities.
Lord Kirkhill: My Lords, no doubt when the Minister comes to make his contribution he will inform the House who will pick up the tag for this concession—whatever the percentage is to be. The point raised by the noble Lord, Lord Grimond, is valid because we do not really know what it will be at this stage. Clearly the local authorities are not going to receive additional subvention—or are they? On the supposition that they are not then I presume that the average payer of the community charge will have to pay an additional burden as a consequence of this concession. This rightly pleases the noble Earl, Lord Perth, and others, but I have considerable reservations.
Baroness Carnegy of Lour: My Lords, I was going to ask a similar question. The noble Lord, Lord Morton of Shuna, suggested that local authorities which have large universities within their boundary were going to suffer because the students' total community charge would not be coming to them, part of it from central government as part of students' grant and part of it direct from the students themselves. Are we to understand that what is happening is that they are being rebated in the same way as others who receive a rebate? If so, presumably that is taken into account when fixing the revenue support grant as described in Schedule 4(2) to the Bill, which states that regard will be paid to what in the Secretary of State's opinion are the respective needs in that year of the local authority.
Presumably a local authority which has a large university in its midst will not be expected to provide services for these countless students without receiving a compensatory amount through the revenue support grant. That must be built into the system, or it is totally unjust to local authorities. I think that was the point that the noble Lord, Lord Morton of Shuna, was making and the point that the noble Lord, Lord Kirkhill, was implying in his question.
An answer to that question, whether now or at a later stage, is important. Having said that, I think that the solution that has been found to this question is the best that is possible. It will be clear to students what the involvement is. The temporary difference between the way students contribute to local government in Scotland and in England will presumably be ironed out in due course. The amount involved is not something that will be a major element in a decision as to which university one attends in the next year or two. It seems to me a very good solution and I am rather sorry that it has had such a lukewarm reception from some noble Lords whom I should have thought would consider that very great justice has been done, not only to the students but to the universities of Scotland. This is a very helpful proposal for them because overseas students will not be discouraged in the way that some noble Lords described in the previous debate.
Lord Sanderson of Bowden: My Lords, I too should like to thank the Minister for this very considerable advance on this difficult question. I also declare an interest in that I have a son going to Aberdeen university next session.
I should say that it also takes a tremendous administrative burden off hard-pressed government officers. I am glad that averaging has disappeared. I should like to ask one question of the Minister, which was also raised by the noble Lord, Lord Morton of Shuna, concerning nurses. Nurses concern me too, because in Scotland we need and deserve to have a good flow of nurses coming into our hospitals.
Am I right in thinking that nurses who are better paid—but not as well paid as some of us would like to see—will be covered by a rebate scheme if they are on low incomes, as indicated in Clause 24? Unlike students, nurses are paid while they are being trained. I should have thought that this is the way to deal with nurses who are getting some recompense for their hard labours.
Lord Ross of Marnock: My Lords, I think the quick answer to the noble Lord's question is that nurses are above the rebate scheme. However, the point being made is that compared to people with a similar occupation in England they will have about £7 a week deducted from their salaries. At present they pay £2 a week in respect of rent. They will be at least £5 a weeek worse off than nurses in England and Wales. If we lose nurses, then the noble Lord will remember that he has been applauding a change that does not include nurses, unless we are going to be surprised and told that also includes nurses in training. We do not know. We do not know what a full-time course of education is. We do not know who is in it. We do not know what the community charge will be. We do not know what the rebate scheme will be. But let the noble Lord go round Scotland and tell people who are sympathetic towards the nurses in respect of this that they should go to the DHSS and ask for a rebate—he will get a quick answer from the Scots to that one.
Someone mentioned a lukewarm reception. Before this amendment, how much did the students have to pay? Effectively they had to pay 20 per cent. but it was done in a roundabout way. They paid 100 per cent. and received back 80 per cent. through their award, leaving them 20 per cent. worse off. Now the Minister says, "Look how generous I am. Students will have to pay only 20 per cent.". That is exactly the same as they were paying before, only they are paying it in a different way. I admit to the noble Earl, Lord Perth, that the overseas students will also pay only 20 per cent.
I do not know where the Scottish figures came from or the university to which the Scottish Office referred. I believe a figure of £36 was given. As far as I can gather, it must be somewhere in the Highlands where there is no university and which can be the only place where a community charge would be low enough for one-fifth of it to be £36. In Glasgow it will be nearer £60 and in Edinburgh probably £65 or £70. I was a student and £60 was way beyond my dreams of avarice. Anyone who thinks that £60 or £70 is nothing to a student today should speak to the students. Noble Lords should listen to what the students have been saying and read all that has been sent to us. The students have been objecting to the 20 per cent. which they had to pay before this amendment and which, after this amendment, they will still have to pay.
The only people who gain—not fully and not by as much as we wanted—are those from overseas. The noble Earl, Lord Perth, is delighted and has a right to be. But those people still have to pay 20 per cent. which they are not asked to pay in English or Welsh universities. So there is still an attraction in by-passing Scotland to attend university.
The Scottish principals have referred to the poll tax. The Minister and the Government should say to them that if they are not more polite and use the language of the statute, they will be losing something from their grants. I quote from the Glasgow University magazine. The item is headed:
"The Scottish Principals and the Poll Tax".
The article begins:
"The Principals of the eight Scottish universities recently joined together to petition their local MPs with regard to the proposed community charge. Their comments centre on three main points

1643
raised by the outlined legislation which could have major repercussions for the universities: 1. If there is no change in the way grants are allocated, Scottish students may go elsewhere to avoid the new charge".
That comment was made when the charge was 20 per cent. It is still 20 per cent.
"2. Students from elsewhere in the UK will be deterred from coming to Scottish universities because not only will they incur the new charge, their parents will still be paying rates as before. 3. Overseas students will find English universities much more attractive from the financial point of view".
That has been mitigated, I admit, from 100 per cent. to 20 per cent. They are the people who gain some advantage. But it is rightly said that it is the Scots who will meet the full bill. The charge will be paid differently. Administratively, the Scottish Office will be delighted. The Scottish Office was going to pay out, I believe, to 24,000 or 26,000 students who receive their awards direct from the office. Now, of course, it will not pay them anything at all apart from their normal university grants and the students will be left to pay the 20 per cent. That is more sensible but it does not make any difference, in the end, to the students' pockets. There is no indication that their grants, which they are not happy about, are going to increase to take account of any of the 20 per cent.
There is another point. I do not know whether any noble Lord has noticed, but this is the only case in which anyone is being asked to pay less than the full personal community charge. I hope the Government realise what will happen. There are many other groups who feel that they should have a reduced charge. There are the crofters. Crofters and cotters, according to present legislation, pay only 50 per cent. rates. That is by statute. The Government are doing nothing about them. Having done something for students, it is logical for the other groups to say, "Why do we not pay only 25 per cent.?" What about the disabled, and many others?
Hitherto the Government have been saying that everyone is being treated equally and that everyone will be paying the full personal community charge, even students. The only difference is that students are going to get it back by an increase in their awards covering 80 per cent. of it. I do not think the Government realise what they have done. If that had been done in Committee, my goodness, we would have had people from all sides saying, "Give us a reduction of four-fifths in our charge. Give us a reduction of 50 per cent." This is the first time it has been done and, having been done, I am perfectly sure that the noble Lord, Lord Campbell of Alloway (I am still happy that he has chosen Alloway, which is about a mile from where I live) will be wondering about this breach of a principle to which the Government have held time and again.
The noble Lady wonders about some of us being lukewarm towards the amendment. All we can rejoice in is that overseas students will not pay the full amount, but only 20 per cent. They are the only ones who gain. The English will still pay 20 per cent. That they were going to pay. The Scots will pay 20 per cent. They were going to pay 20 per cent. before the amendment. While we welcome the changes to be made, we hope to introduce the Government in
1644
further amendments to some hard cases other than students.
Lord Glenarthur: My Lords, I am grateful to those who have commented on these amendments. I am especially grateful to the noble Earl, Lord Perth, to my noble friend Lord Home and others who have at least accepted that we are doing something which we had not otherwise expected to do. The noble Lord, Lord Ross of Marnock, drew attention to the remark made by my noble friend Lady Carnegy about the lukewarm response which some of your Lordships were giving to the proposal, but that was before the noble Lord, Lord Ross, spoke, when I thought that the reception went rather further than lukewarm and became decidedly icy.
Nevertheless, we must remember what the new approach enshrined in the Government amendment is. It is twofold: first, to achieve the results we have intended all along in relation to the majority of foreign students, whereby they would be in broadly the same position as individuals in receipt of the maximum rebate, but to do so by a simpler procedure than we have envisaged hitherto; and to meet the understandable concern expressed about students generally.
We all accept that students are in a special position because they are dependent for support on student awards from the Government or local authorities, supplemented only by parental contributions and vacation earnings. Their access to the benefit system, including housing benefit, is already limited, and it is the Government's intention in the long term that they should not have access to that system. They are in a fundamentally different position from other groups in society, such as those mentioned in our debate in Committee and who have been again referred to by the noble Lord, Lord Ross of Marnock, and my noble friend Lord Sanderson, who also mentioned nurses. They are in a fundamentally different position from other groups in society such as, for example, apprentices, and those on youth training schemes.
My noble friend Lord Sanderson was right when he suggested that if such people qualified for rebate, they would receive them. They will. It will depend of course on the circumstances of individual cases. All those individuals, whether they be apprentices, student nurses, those on youth training schemes or whatever, either have earnings—it is an entirely different debate to discuss the level of those earnings—are in receipt of allowances, or have access, if necessary, to the rebate scheme. There is therefore no case for treating them differently from other adults liable to pay the community charge.
There is no contradiction in that approach and the Government's attitude to the training needs of particular groups that have been mentioned. We accept the importance of training and the need for it to be encouraged. But to do so through an artificial exemption from the community charge would not be the right approach. It would create artificial distinctions and immense problems of definition with little certainty of practical benefit. That, with respect, is the answer to the question of the noble Lord, Lord Mackie of Benshie, who asked why we did not go ahead and abolish the charge.
Lord Mackie of Benshie: My Lords, may I ask the noble Lord whether I heard him aright, and that the categories I mentioned, other than full-time students at recognised colleges, could apply for exemption and for the lower rate of poll tax?
Lord Glenarthur: My Lords, I was about to answer that point and the point raised by the noble Lord, Lord Ross, about the coverage of the proposals. The Government's intention is that those paying the reduced charge should be students undertaking full-time courses of education. The basic definition will be aligned with that applied by the DHSS for the purpose of determining students' access to benefits so that the mechanism of the reduced charge applies instead of the possibility of access to rebate. Those arrangements will be specified in regulations after consultation with local authority and education interests. It would be quite impractical to make those regulations within 14 days of the enactment of the Bill, as would be required by Amendment No. 92A tabled by the noble Lord, Lord Carmichael.
That description of how the mechanism will work and its connection with the DHSS mechanism, as it relates to benefits, is an answer to my noble friend Lord Campbell of Alloway. However, I think that when my noble friend referred to costs he was referring to a press release which came out before this change was agreed. I hope that that explains the point to him.
Lord Ross of Marnock: My Lords, was the figure of £36 accurate?
Lord Glenarthur: My Lords, my noble friend was not accurate when he gave that figure, because it will depend upon the local authority area. My noble friend may have been labouring under a misapprehension. All students will have to pay only that 20 per cent. of the personal community charge at their term-time addresses, so the amount will depend upon the local area.
Lord Campbell of Alloway: My Lords, with the leave of the House and to avoid confusion, I accept that I must have misunderstood the Scottish Office document.
Lord Ross of Marnock: My Lords, that is quite easy.
Lord Campbell of Alloway: My Lords, I clearly have the wrong figure and I apologise.
Lord Hughes: My Lords, did not that figure arise from the fact that in the original proposal the charge was not to be related to the area but to a notional figure which the Scottish Office then estimated would be £180?
Lord Glenarthur: My Lords, I think that it may be, but I am not sure how my noble friend calculated that figure. I shall have to look at it. The noble Lord may be right; that may be how it arose.
Lord Ross of Marnock: My Lords, it is the Scottish Office.
Lord Glenarthur: My Lords, the noble Lord suggested that it was the Scottish Office, but things
1646
have moved on as the Bill has progressed through Parliament. When he consulted that document my noble friend may not have taken that fully into account.
I come now to Amendment No. 91, tabled by the noble Lord, Lord Morton, and the position of students from south of the Border coming to study in Scotland. That was very much the burden of the amendment, although the noble Lord addressed it in a slightly different way. We are referring to the period before the community charge is introduced in England and Wales.
At the technical level, it is not entirely clear how the amendment would achieve the result that I think the noble Lord, Lord Morton of Shuna, expects that it would. The concept of main and ordinary residence would require definition and, particularly in view of the established position and the electoral registration law by which students may be registered in two places, would not necessarily produce what is clearly the noble Lord's intention of the home address south of the Border.
Lord Morton of Shuna: My Lords, I thought that the whole business of personal charges was to depend on where people were solely or mainly resident. If someone is solely or mainly resident outside Scotland my idea was—and perhaps I misunderstood the Bill totally—that they did not have to pay Scottish community charges. That is the purpose of the amendment.
Lord Glenarthur: My Lords, perhaps the noble Lord has totally misunderstood the Bill, but I must not be facetious. The concept of main and ordinary residence, which is the form of words that he uses, would require definition, and that is not there. In view of the established position and the electoral registration law by which students may be registered in two places, the amendment would not necessarily produce what I thought was the noble Lord's intention of the home address south of the Border.
Apart from those technical points, I resist the amendment on the grounds that it is unnecessary. But this perhaps is the more important point: my right honourable friend the Secretary of State for the Environment, as your Lordships are well aware, is committed to bringing forward legislation to introduce the community charge south of the border no later than the first Session of the next Parliament, so the period during which a charge is payable in Scotland but not in England and Wales will be very short.
Also, the government amendment reducing the amount of charge payable by students to an illustrative figure of 20 per cent. still further narrows the gap between north and south of the Border. In those circumstances, I cannot see much justification for attempting to single out students whose home is south of the Border for special treatment in the manner proposed.
The noble Lord, Lord Morton of Shuna, my noble friend Lord Campbell of Alloway and the noble Lord, Lord Kirkhill, raised the question of rate support grant implications. The requirement that students should pay only some 20 per cent. of the personal community

1647
charge will of course mean that their community charge income will be less than it would otherwise have been. In that sense, it resembles the various rating reliefs which are at present taken into account in the distribution of rate support grant.
Under the proposed future arrangements for revenue support grant it will be possible similarly to take account of the effect of the concession for students which I have proposed. The mechanism will have to be the subject of consultation in due course with the Convention of Scottish Local Authorities.
When I spoke earlier, I referred to the administrative simplifications. I ought to say that our proposals will require registration officers to determine who falls within the definition of student. In order to avoid any possibility of fraud I must explain to your Lordships that we are considering whether, in order to check that point, registration officers should have access to records held by education institutes. If we decide that that would be a desirable provision, I shall bring forward the necessary amendment with the leave of your Lordships at Third Reading. It is an important point.
6 p.m.
Lord Mackie of Benshie: My Lords, this is an entirely new facet of the whole student question and one which we should certainly require to examine very carefully before Third Reading.
Lord Morton of Shuna: My Lords, perhaps I may add to that. My understanding is that Third Reading is due to take place on 11th May, which is not all that far away. If we are to have a threat that at some point—presumably next week—an amendment will be put forward to give the registration officer power to go into records kept by universities and other colleges, this is a matter about which the universities and colleges have not heard. All kinds of questions of privacy and confidentiality may be involved. It would require more consultation than could possibly be done in 11 days.
Lord Glenarthur: My Lords, that may well be the case. However, I thought it only right to raise the matter now because it is a specific point which has cropped up as a result of the changes for students that we have made to the Bill which generally, but not entirely, seem to meet with approval from your Lordships.
The noble Lord, Lord Grimond, queries the percentage that would be paid by students. As I think he appreciates, the percentage figure so often referred to, 80 per cent. or 20 per cent., does not appear on the face of the Bill because it is an illustrative figure. It is the term that has been used throughout the passage of the Bill. The 20 per cent. is indicative. I hope that what I have said reassures the noble Lord. It cannot be put on the face of the Bill because of the requirement—
Lord Grimond: That confirms what I thought.
Lord Glenarthur: If I have confirmed what the noble Lord thought, that is a help to me. However, I cannot agree with the noble Lord, Lord Ross of Marnock, that
1648
what we have done has not changed the Bill at all. I should have thought that with what is embodied in the amendments that I have put forward the Bill will be fairer than was the case beforehand. It will cover all students. It is not based on the average, a very important point raised by my noble friend Lord Sanderson. It will also be easier to administer. If the noble Lord feels for one second that by providing something which is easier to administer we are not helping students, or anybody else, that seems to go very much against the flavour of many of the comments that he has made in relation to many aspects of this Bill when he has largely charged the Government with providing administrative complexity for nearly everybody.
I hope that what I have said reassures the House that we have gone a very long way indeed towards meeting the concerns raised—an unusually long way, in fact. I hope that the noble and learned Lord, Lord Wilson of Langside, will feel able to withdraw his amendment and that in due course your Lordships will be able to accept mine when I commend them to the House.
Lord Campbell of Alloway: My Lords, before the Minister sits down, may I thank him for his explanation. May I ask him whether he will consider these regulations to which he has referred having affirmative resolution? I give this reason. Constitutionally, the objections which have been raised by the noble Lords, Lord Morton of Shuna and Lord Mackie, would not run if those regulations were to be subject to affirmative resolution because they then come back here and there could be no mischief and no objection.
Lord Wilson of Langside: My Lords, I understood that further interventions by Members of the House could be made only with leave. That seems to have been forgotten, if I may say so—I am no authority on the matter—but as the debate continues the situation seems to get worse.
The Lord President of the Council (Viscount Whitelaw): My Lords, perhaps I may intervene. I have heard some of this. I have to confirm that what the noble and learned Lord says is correct.
Lord Wilson of Langside: My Lords, then I am very happy to express warmest appreciation of the concessions which the Government have made and for those which I understand are to follow later. I do so without reservation. Indeed I think that the Minister must be somewhat of a bonny fechter to get anything out of the Government in their present mood with regard to these matters.
Nevertheless, I must say that I was diverted by the scolding that we all received on this side of the House from the noble Baroness, Lady Carnegy. As some of your Lordships who attended the Second Reading debate will recall the noble Baroness called us girners and she spelt it out. If anyone does not know the word girning, it is spelt out in Hansard and recorded there for all time.
The noble Baroness reminded me of the old Scotsman who had been guilty of stealing the sheep of his feudal overlord many centuries ago, and was duly

1649
sentenced to death, as was appropriate in the matter. As he awaited death in the baron's pit into which he had been thrown, someone managed to smuggle in a sword. When the hangman arrived there was Donald, fully armed and ready to do battle. He battled for quite some time and then his wife came in and said "Come oot of there, Donald, and be hang'it and dinna anger the laird." That is what I felt about the scolding of the noble Baroness, Lady Carnegy. She was quite wrong with regard to the appreciation of the Government's concessions from this side of the House. The enlightening discussion that we have had, which has raised some new matter, I should have thought very useful. It has given us all food for thought. What the noble Lords, Lord Kirkhill, Lord Morton of Shuna, and Lord Ross, have said on the Bill contains much wisdom. I should have thought that instead of scolding, a more constructive response would have been appropriate. It has been repeated on this side of the House over and over again, that this is a fatally flawed piece of legislation. Everything that was said in response to the Minister's intervention was further evidence of this truth. I do not myself, quite apart from whether there is a general election or not, believe that this Bill can ever become law. I hope that is not being too optimistic. The matters raised particularly by the noble Lord, Lord Morton of Shuna, require the judgment of the House one way or the other.
I shall not press the two amendments in my name—assuming that it is in order to leave it to the noble Lord, Lord Morton, to move his, and in particular Amendment No. 91.
Amendment, by leave, withdrawn.
[Amendments Nos. 90 and 90A not moved.]
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 91:
Page 7, line 44, at end insert ("provided that a person undertaking a full time course of education whose main and ordinary residence is outwith Scotland shall he regarded as being solely or mainly resident outwith Scotland").
The noble Lord said: My Lords, we have had this discussion and I want to make clear that I wish to have the opinion of this House on the amendment. I beg to move.
6.12 p.m.
On Question, Whether the said amendment (No. 91) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 107.

DIVISION NO. 2

CONTENTS

Amherst, E.

Carter, L.

Ardwick, L.

Dean of Beswick, L.

Attlee, E.

Diamond, L.

Aylestone, L.

Elwyn-Jones, L.

Basnett, L.

Ennals, L.

Beswick, L.

Ewart-Biggs, B.

Blackstone, B.

Falkender, B.

Bonham-Carter, L.

Foot, L.

Bottomley, L.

Gallacher, L. [Teller.]

Brockway, L.

Graham of Edmonton, L.

Campbell of Eskan, L.

Grimond, L.

Carmichael of Kelvingrove, L.

Harris of Greenwich, L.

1650

Houghton of Sowerby, L.

Pitt of Hampstead, L.

Howie of Troon, L.

Ponsonby of Shulbrede, L. [Teller.]

Hughes, L.

Hunt, L.

Prys-Davies, L.

Irvine of Lairg, L.

Ritchie of Dundee, L.

Irving of Dartford, L.

Rochester, L.

John-Mackie, L.

Ross of Marnock, L.

Kilbracken, L.

Sainsbury, L.

Kilmarnock, L.

Seear, B.

Kirkhill, L.

Shackleton, L.

Listowel, E.

Stallard, L.

Llewelyn-Davies of Hastoe, B.

Stedman, B.

Lockwood, B.

Stewart of Fulham, L.

Mackie of Benshie, L.

Stoddart of Swindon, L.

Morton of Shuna, L.

Thurso, V.

Mountevans, L.

Tordoff, L.

Mulley, L.

Underhill, L.

Murray of Epping Forest, L.

Wells-Pestell, L.

Nicol, B.

Whaddon, L.

Peston, L.

Williams of Elvel, L.

Phillips, B.

Wilson of Langside, L.

NOT-CONTENTS

Alexander of Tunis, E.

Henley, L.

Allen of Abbeydale, L.

Hesketh, L.

Ampthill, L.

Home of the Hirsel, L.

Bathurst, E.

Hooper, B.

Beaverbrook, L.

Hylton-Foster, B.

Belhaven and Stenton, L.

Johnston, L.

Beloff, L.

Kitchener, E.

Belstead, L.

Lauderdale, E.

Biddulph, L.

Layton, L.

Boardman, L.

Long, V.

Boyd-Carpenter, L.

Lucas of Chilworth, L.

Brabazon of Tara, L.

Lyell, L.

Brougham and Vaux, L.

Macleod of Borve, B.

Broxbourne, L.

Massereene and Ferrard, V.

Bruce-Gardyne, L.

Mersey, V.

Caithness, E.

Milverton, L.

Cameron of Lochbroom, L.

Molson, L.

Campbell of Alloway, L.

Monk Bretton, L.

Campbell of Croy, L.

Montgomery of Alamein, V.

Carnegy of Lour, B.

Mottistone, L.

Carnock, L.

Mowbray and Stourton, L.

Coleraine, L.

Murton of Lindisfarne, L.

Colville of Culross, V.

Newall, L.

Colwyn, L.

Nugent of Guildford, L.

Craigavon, V.

Onslow, E.

Cranbrook, E.

Perth, E.

Cross, V.

Peyton of Yeovil, L.

Cullen of Ashbourne, L.

Polwarth, L.

Davidson, V. [Teller.]

Rankeillour, L.

Denham, L. [Teller.]

Rawlinson of Ewell, L.

Donegall, M.

Ridley, V.

Dundee, E.

Rochdale, V.

Eden of Winton, L.

Saltoun of Abernethy, Ly.

Elliot of Harwood, B.

Sanderson of Bowden, L.

Enroll of Hale, L.

Sandford, L.

Faithfull, B.

Sempill, Ly.

Ferrier, L.

Sharpies, B.

Fraser of Kilmorack, L.

Skelmersdale, L.

Geddes, L.

Stockton, E.

Gibson-Watt, L.

Stodart of Leaston, L.

Gisborough, L.

Strathcarron, L.

Glanusk, L.

Sudeley, L.

Glenarthur, L.

Swinfen, L.

Goold, L.

Swinton, E.

Gray, L.

Teynham, L.

Gray of Contin, L.

Trafford, L.

Greenway, L.

Trefgarne, L.

Gridley, L.

Trumpington, B.

Haddington, E.

Vickers, B.

Haig, E.

Ward of Witley, V.

Hailsham of Saint Marylebone, L.

Whitelaw, V.

Wolfson, L.

Harvington, L.

Wyatt of Weeford, L.

Henderson of Brompton, L.

Ypres, E.

Resolved in the negative, and amendment disagreed to accordingly.
6.20 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 92:
Page 7, line 44, at end insert—
("( ) A person undertaking a full-time course of education shall, in respect of the period beginning when he undertakes the course and ending when he ceases to do so, be liable for only such percentage as may be prescribed of the amount of the personal community charge for which he would otherwise be liable.").
On Question, amendment agreed to.
[Amendment No. 92A not moved.]
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 93:
Page 8, line 7, leave out subsection (6).
The noble Lord said: My Lords, this amendment deals with the problem under Clause 8(6) of people living together. We had a discussion in Committee about the difficulties caused by subsection (6)(b):
"persons who—
(b) live together as if they were man and wife".
It is encouraging to see that in other amendments in the group in the name of the noble Lord, Lord Glenarthur, he has put in the requirement that they are to be a man and a woman. To save other misunderstandings it is important that that should be there. It is also important that in the previous debate the noble Lord, who I am sorry to say is not here, managed to confuse something that had been said by the noble Baroness, Lady Carnegy, and attribute it to the noble Lord, Lord Campbell of Alloway, which suggested a difficulty in knowing with which sex he was dealing.
This subsection is entirely unnecessary. It is out of step with the way we are going in that a wife is no longer to be regarded as a chattel and she should be regarded as a separate individual. This is regarding a wife in the same way as the Inland Revenue now regards, but is suggested that it should no longer regard, a wife's income as part of her husband's income.
There is no need for this despite what the noble and learned Lord the Lord Advocate said in Committee about the difficulties of the social security system. The way to put that right is to put the social security system right rather than make a change that goes away from the individual liability of each person for the community charge.
The Lord Advocate (Lord Cameron of Lochbroom): My Lords, as the noble Lord has just said, we discussed this at some length in Committee. I should like again to put the reasons for the arrangements which we propose.
There is no question that this places wives in the position of being a chattel. They are for the purposes of the community charge, as the clause itself suggests, taken as individuals each having a liability. That is said at the end of subsection (6). But we have to face facts. Where a woman and a man are living together either in a formal married relationship or in an informal one of a sufficiently stable nature as would, for instance, be recognised if they sought social security benefit, in such circumstances one partner may have no independent means. He or she is therefore content to be entirely dependent financially on the other party with whom he or she lives and, as
1652
must follow, the other party is content to provide that dependence to secure the relationship.
In those circumstances it is surely wholly reasonable that local authorities should be able, where the one without independent means has failed to pay the charge, to look to the other partner for payment. As has been said before, the purpose of this is to assist local authorities in the collection of the community charge where that may remain unpaid. Accordingly, it is not possible to do without the provision entirely, and for that reason I resist the amendment in the name of the noble Lord and of the noble and learned Lord, Lord Wilson of Langside.
Similarly, a joint and several liability will only be invoked at the stage when local authorities have had some difficulty in collecting one or other of the personal community charges involved. At this point perhaps I may refer to two other amendments, Amendment No. 95A in the name of the noble Lord opposite and Amendment No. 96 in the name of the noble Lord, Lord Ross, both of which are to the same effect. It would not be realistic, as these amendments suggest, for joint and several liability to depend on the agreement of the couple concerned, because by definition in the circumstances in which the question is likely to arise couples would be unlikely to agree to be considered as jointly and severally liable.
As I said, the fact of joint and several liability will not appear in the register. Each person will receive an individual bill for charge and it is only at the stage when that has not been paid that the question of joint and several liability can possibly arise. One could conceive difficulties about Amendments Nos. 95A and 96 because it is not clear at what point such election is to be made. Is it to cover the whole of the period in which the couple anticipate living together? What will happen if they move from one place to another? It is perfectly plain that these are not practical suggestions.
Government Amendments Nos. 94 and 95, which were referred to by the noble Lord, are intended, as he hinted, to clear up what might be a possible ambiguity, if I may so put it, in the relationship which is intended to be covered. I am grateful to my noble friend Lord Campbell of Alloway for drawing attention to it. The amendments accordingly make it clear beyond doubt that a cohabiting couple who are to be jointly and severally liable must be a man and a woman. There is no intention or need to apply the provisions to homosexual couples.
These amendments are a tidying up of the drafting and I do not think that they can be other than helpful to the Bill. However, I must take issue with the noble Lord's amendment. I cannot accept it for the reasons which I hope I have put as firmly as I can before the House.
Lord Morton of Shuna: My Lords, the noble and learned Lord was no doubt well founded in pointing out some difficulties about "can elect to" in Amendment No. 95A and "if they so agree" in Amendment No. 96. However, what will happen if the census-taker going around is not having much difficulty with people who are in fact married but when he asks Johnny, "Are you living with Jeannie as man

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and wife?", Johnny says "No" and Jeannie says "Yes"? What will he do?
What will happen if they disagree about the time they have been living together? Subsection (6)(b) says:
"shall be jointly and severally liable for the personal community charges, relating to the period during which they lived together".
What will happen if they disagree as to when they ceased to live together or when they started to live together? One can make much fun of the clause as it is drafted, even allowing the government amendment to leave out the homosexual relationships.
The difficulties from the point of view of whoever is responsible as the registration officer to establish joint and several liability are immense. I suggest that it would be much better to leave it that each individual is responsible for his own tax or charge. But the Government do not seem to want that. I do not think it would be worth while to cause the consternation of a Division of the House at this point and so I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 94:
Page 8, line 9, at beginning insert ("being a man and a woman)".
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 95.
Page 8, line 9, leave out ("man") and insert ("husband").
On Question, amendment agreed to.
[Amendments Nos. 95A to 97A not moved.]
6.30 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 98:
Page 8, line 16, at end insert—
("(aa) persons who are severely mentally handicapped within the meaning of subsection (8) below;").
The noble Lord said: My Lords, I beg to move Amendment No. 98, and with the leave of the House I shall speak also to Amendment No. 111 in my name, and also Amendments Nos. 99, 100, and 104 to 109. They all relate to the various possible categories of exemption from personal community charge liability which we discussed in some detail at Committee on the basis of amendments put forward by the noble Lord, Lord Henderson of Brompton, and others. It may be for the assistance of the House if, in moving Amendment No. 98, I set out the Government's position on all the categories of people covered by the amendment.
Amendments Nos. 98 and 111 have been tabled by the Government in fulfilment of an undertaking I gave on 2nd April that I would look very carefully at the question of whether mentally handicapped persons living in the community should be exempted from the personal community charge. I took careful note of the argument put forward by my noble friend Lady Carnegy that the severely mentally handicapped should be exempt on the grounds that such persons do not have the mental capacity to take part in the local democratic process.
I am bound to say that I found that argument persuasive. It is indeed very difficult to sustain the proposition that accountability has any meaning in their case. We have accordingly accepted that persons who are severely mentally handicapped should he exempt from the charge, and Amendments 98 and 111 would give effect to this. The amendment provides for a single exemption on the grounds I have given, without reference to the means of those to be exempted.
The amendment also provides that the definition of what constitutes severe mental handicap may be revised by subordinate legislation. This provision draws on Section 1(2) of the Mental Health (Scotland) Act 1984, but we think that it would be prudent to provide for the subsequent amendment of the definition of severe mental handicap to take account of any suggestions which are put to us by interested professional bodies in the course of consultation on the implementation of the provision, and of possible future changes in the clinical assessment of such conditions.
I now turn to the proposition, put forward at Committee Stage and now repeated in a slightly different form in Lord Morton of Shuna's Amendment No. 108, that the residents of certain residential care and nursing homes should be exempt from the personal community charge. The Government accept that in many cases people living in these kind of establishments will have relatively little contact with the local democratic process. In addition, problems of definition might arise if—as we have always proposed—residents in hospitals were exempted from personal community charge liability but residents in homes were not.
We therefore propose that residents in residential care homes and nursing homes should be exempt from the personal community charge. This will be achieved by the use of the various powers of prescription in Part I of the Bill, to ensure that these homes are not treated as domestic subjects or part residential subjects and therefore remain in rating. We a lso propose similar treatment for certain hostels which are akin to homes. Their position will therefore be exactly the same as under the present system, and if any element of rates are payable by the residents that arrangement will continue. The noble Lord's amendment would restrict the exemption, by implication, to those in receipt of pensions or invalidity benefits.
The intention behind the amendment will, I can assure the noble Lord, be taken into account in formulating the detail of the regulations, but it would not be directly possible to achieve exactly that effect within the framework of the approach that we propose.
I turn now to the position of the physically disabled which is addressed by the amendments put down by the noble Lords, Lord Ross of Marnock and Lord Morton of Shuna, and was addressed principally by the noble Lord, Lord Henderson of Brompton, at Committee. We have looked again carefully at the proposition that the physically disabled as a group should be exempt from personal community charge liability. I have to say that we have concluded that an exemption along these lines would run too wide. Many

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disabled persons can and do play a full part in the life of their community and in the local democratic process. Where they do not, however, they may well in any case come within one of the exemptions I have described—if they are also severely mentally handicapped, or if they are resident in hospitals or homes.
We recognise, however, that there will nevertheless be a category of severely disabled people living in the community who at present enjoy full rates relief and who should in equity maintain that position under the community charge system. We therefore propose that additional help, which could extend up to 100 per cent. of the community charge, should be available for a clearly defined group of severely disabled people. We are still considering the exact scope of this provision, which will be brought forward in the rebate regulations under the provisions of Clause 24 of the Bill.
I have set out in some detail the Government's proposals for exemptions in the light of our earlier discussions. With the leave of the House I shall be happy to expand on these proposals in the light of further points that may be raised by your Lordships on the various amendments to which we shall come. I commend to the House Amendment No. 98 dealing with the severely mentally handicapped, and I beg to move.
Lord Morton of Shuna: My Lords, it is obviously fair that people who are suffering from severe mental handicap should be excused from paying, quite apart from any other people who should be excused. We on this side fully accept that. However, there are various difficulties that I foresee and perhaps the Minister will clarify them.
The definition is taken from the Mental Health (Scotland) Act, but it is not the complete definition in the Mental Health (Scotland) Act, which defines severe mental impairment in a different way and talks about severe mental impairment rather than severe mental handicap. Mental impairment under the Mental Health (Scotland) Act depends, to use the last phrase, on somebody being of,
"significant impairment of intelligence and social functioning and is associated with abnormally aggressive or seriously irresponsible conduct".
That concept is left out, and I am not quarrelling with the fact that it is left out. What I am trying to get at is who decides. That is left completely blank in the Bill. There is nothing to say.
So far as we can see, the only person who can possibly have this responsibility of deciding who is severely mentally handicapped is the poor old registration officer. I should have thought he was the last person who would want that responsibility. Surely some method must be provided in the Bill saying how to set out to establish it, whether you need one medical certificate or two medical certificates is needed. There must be something more definite. A definition is required. One of the difficult situations which will clearly arise, quite apart from homes in the sense of nursing homes, is the common situation where an elderly person who is suffering from senile dementia to a greater or lesser extent is in the family house, being looked after by members of the family. Is that person—assuming they reach the level, whatever it
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may be—of severe mental impairment, handicap, to be excused? If so, how does one set about it?
Although we welcome this amendment, I think we need far more information. It is a great pity that it comes at such a late stage because we only discussed it in detail at Committee and at Second Reading, but it has already been through another place. The Government must have thought before they put forward this basis of what they were going to do with the people—or they should have thought if they did not do so. It tells us a lot about how they approached the personal community charge if they did not think of the status of people who are handicapped in one way or another. They should have done so.
We must assume for the benefit of the Government that this is a change of sense, and it is a pity that we do not know enough about it. For example, what is the intention of the Government in the sort of mental illness one frequently sees where somebody has periods of lucidity and periods of total incapacity? For instance, will some schizophrenics be classified as severely handicapped, or is mental illness to be left out because it is different from mental handicap? Does "mental handicap" include mental illness? This is the sort of situation which we should have had in the Bill for Second Reading, I would suggest, then we could have put down amendments and come back at Report. But we are having to do this too late.
Turning to the other amendments in the group, the Government's approach is that the mentally handicapped are to be excused on the grounds put forward by the noble Baroness, Lady Carnegy, that because of their mental impairment they cannot take any part in the democratic process. That is a perfectly valid approach. However, the other difficulties which arise for the other handicaps cause trouble. They, like the mentally handicapped, use the services to a very great extent. But in places like the Thistle Foundation in Edinburgh and other organisations which do similar good work one gets very severely handicapped people who receive invalidity pensions or some other pensions which are restricted because they are in a place which gets assistance. I am quoting totally from memory but I think they are restricted to about £7·75 per week which is supposed to be their pocket money.
There is the same situation in old people's homes which are assisted by local authorities or by the state in one way or another. There is this allowance. It is unfair if people are restricted to this low level because they are in an assisted home and are not going to get some assistance for paying a new personal charge. And that at least until the English Bill comes in—if it ever comes in—is not going to be paid by their counterparts south of the Border, If we are talking about them paying 20 per cent. of community charge of, say, £300 a year, that is asking them to cough up £1 a week, broadly speaking—and £1 a week out of £7 is a great deal of money.
Then we have to consider whether we want to deal with the matter in this way or whether the best way to do it is to increase the payments which they receive. I should have thought that the easiest and fairest way is to excuse them from any liability once they fit into this category. That is the reason for the other amendments which we have put down in this group; that is,

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Amendments Nos. 100, 104, 105, 106, 107, 108 and 109. The latter deals with the power to add categories.
The difficulty is that if you consider only the capacity to vote sensibly in an election, that would allow in only the mentally handicapped. However, I think we are in a society which already puts enough disadvantages on the severely disabled. As a society, those of us who are fit should be prepared to accept that the severely disabled and the physically disabled should not be required to pay any part of the personal community charge.
6.45 p.m.
Viscount Thurso: My Lords, we on these Benches also welcome this change of mind by the Government and the inclusion of the mentally handicapped among those who receive a rebate. Like the noble Lord, Lord Morton of Shuna, I feel that this does not quite go far enough to include the people described by the Minister. In particular, had he not referred to those suffering from senile dementia I would have brought that matter up.
It seems to me that the Minister's definition of persons who are severely mentally handicapped as being persons suffering from a state of arrested or incomplete development of mind makes this apply only to people who are congenitally mentally handicapped. It does not apply to people who have become severely mentally handicapped and have regressed to the stage which the congenitally mentally handicapped have reached. It does not apply to those whose mental capacity has been damaged by accident, a physical or chemical accident, or any other form of accident which could impair the mental function and make a person unable to take part in the democratic process or to understand what is happening.
In welcoming these amendments which the noble Lord, Lord Glenarthur, is putting forward, I urge him to look again carefully at his definition and even perhaps at some later stage to come back with an improvement on it. I urge him to listen most carefully to what the noble Lord, Lord Morton of Shuna, has said. He touched on some very valid points which we need to consider most carefully before passing these regulations into law.
Lord Campbell of Alloway: My Lords, I very much welcome the extension of the categories of exemption to include the mentally handicapped. This is within Clause 8(7). I thank the Minister for that. As I said at the Committee stage, albeit in context with Clause 24, the principle of accountability is not apposite here and it makes no sense. I am most grateful to the Government for having taken that view.
I hope that the noble Lord, Lord Morton of Shuna, will be with me on this point: I had assumed that the definition of "mentally handicapped", and the way in which this would certify, would be a matter of machinery dealt with in regulations, and that, in the ordinary way, it would not properly form part of the substantive provisions of the Bill. Perhaps my noble friend Lord Glenarthur would confirm that. Quite clearly, the substance of the point made by the noble Lord is right. These matters require attention. With
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respect, I suggest that they are more properly to appear in the regulations which, one hopes, will come before your Lordships' House in due course for affirmative resolution.
At the Committee stage I also raised the case for the extension of categories of exemption under Clause 8(7) to include those in receipt of income support. That is broadly dealt with in Amendments Nos. 99, 100 and 105. In a second category are those in receipt of state benefit and allowances, including disablement, dealt with in amendments such as Amendments Nos. 104 and 106.
On reconsideration I think that on both those counts I was wrong. These matters really fall within the rebate disposition rather than the exemption disposition. In respect of the first matter—those in receipt of income support—I think that the money merry-go-round argument that I raised was unsound. That is, if the regulations issued under Clause 24—and it is an "if"—adopt with the ability to pay principle the 100 per cent. rebate adverted to by the noble Lord, Lord Ross of Marnock, in his Amendment No. 186. It is not an "if" as regards the severely disabled, and I am so pleased to hear that from the Minister. In that case there will be the maximum 100 per cent. rebate. It will ensure that when income support is granted, liability to pay the community charge, subject to rebate, is taken into account, the means test operating at the time when support is granted, so that ability to pay is given full weight. This is the obverse or trailer (whichever way one looks at it) for Amendment No. 188 in the name of the noble Lady, Lady Saltoun of Abernethy. It will be helpful if it is dealt with at this stage by my noble friend, Lord Glenarthur, if it is convenient for him to do so.
Again, for the same process of reasoning, those in receipt of state benefit and allowances—I have dealt with disablement—fall within rebate under Clause 24 as distinct from exemption. Taking the example of disablement, some in receipt of the allowance are well able to pay and have complete ability to pay. Others are not able to pay and may have difficulty, and therefore rebate is the appropriate course. I totally accept the Government's approach in respect of that matter.
I think the disparity of treatment which arises between mentally handicapped people and the other two categories to which I have referred is wholly justified on the basic principle of accountability. At this stage it would surely be premature to consider the means of implementation of rebate under Clause 24. However, I point again to the fact that no machinery is proposed in the Bill. I still raise the question of governing principles in the Bill—to govern the regulations at Clause 24—as I did at the Committee stage. No doubt we shall come to that in due course.
I can only repeat my gratitude to the Government for having changed course and taken this matter on board.
Lord Henderson of Brompton: My Lords, I do not believe that due gratitude has yet been expressed to the Government for having fulfilled the undertaking which the noble Lord, Lord Glenarthur, made at the Committee stage late in the evening. I think that the

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words of the noble Lord, Lord Morton of Shuna, were slightly grudging and that he was biting the hand that was feeding him.
Lord Morton of Shuna: My Lords, if the noble Lord will give way, I am sorry if I sounded grudging. Last week I was accused of being one of a class who had no sense of humour. I seem to be having a rough time. I did not mean to be grudging; I meant to accept this fully and wholly, and welcome it as broadly as I could. I am sorry if I have given the wrong impression.
Lord Henderson of Brompton: My Lords, I am delighted to hear that. Although it was late at night, I think that the sense of the House all round was that something should be done, and the Minister took this on hoard. He has obviously had very deep and searching consultations in the department and has come up with a rather spectacular package so late in the parliamentary progress of the Bill. After all, there is a section in the Bill dealing with the mentally handicapped and a promise that regulations under Clause 24 will include the severely physically handicapped.
There is a third element which I do not think any of us so much as hoped for, although some of us may have asked for. It is that those in residential homes shall be exempt from the personal community charge. As a package that is a very considerable concession and we must pay tribute to the noble Lord for having wrung this out of a perhaps reluctant ministry. I have great sympathy for those in the department who have worked on this package over the holiday.
However, as has been made plain by the noble Lord, Lord Morton of Shuna, there is a great deal of work yet to do. Although I appreciate their force, I am not convinced by the arguments that have been put forward for putting the mentally handicapped under the exemption category and not under the rebate category. Putting them under the exemption category has meant that the Government have introduced this very difficult test. We do not know who will apply the test and it is a most important point made by the noble Lord, Lord Morton of Shuna. I think that it should be in the Bill and not in regulations. I think that the test is invidious both for those being tested and for the person who must carry out the testing. There is also the question of those mentally handicapped people who experience remission, and so on. The anomalies are legion. Why the Government should have chosen this particular course, because the test of accountability is so attractive, I do not understand.
I suppose that it is too late to plead with the noble Lord that he might consider treating the mentally handicapped in the same way as he is treating the physically disabled. I believe that somehow that would be more equitable, fair and understandable. Also in accordance with what we have been used to is treating the mentally disabled or handicapped in the same way as we treat the physically disabled or handicapped.
It is very hard for those of us who are interested in the welfare of disabled people to understand why this tradition, which has now been with us for a very long time, should suddenly be disturbed in this Bill when you have the mentally handicapped treated in one way and the physically handicapped in another way. I
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think that is an important point and I regard it as regression. However, these are only criticisms of detail and do not in any way detract from my extreme gratitude for the way in which the Minister has received the representations made to him in Committee.
Perhaps I may ask him very briefly about the residents, because I should like to know whether this includes the residents of both private and voluntary residential homes and also of local authority homes. One might think at first sight that there is no need to include local authority homes, but there is the problem that certain local authorities have high populations and few businesses to tax. It may well be that anomalies will occur as between one local authority and another. I think we ought to know, if we possibly can at this stage but, if not, on Third Reading, which categories of homes are to be included.
I thought the noble Lord, Lord Morton of Shuna, made a very valid point about so-called pocket money in respect of those disabled people who are in assisted homes. I very much hope that will be taken on board. The sum of £7 a week is called pocket money. People tend to think that this is just spent on sweets and cigarettes but it includes all personal necessities, and £1 out of £7 could be a matter of very great deprivation for some of those people.
Having said all that, I wonder whether it would be possible to think again about this separation of the mentally and the physically handicapped and whether they could be treated in the same way under the Bill. If it is not possible and the noble Lord has a valid explanation to give us, I should of course accept it. However, that is only a criticism of detail and it in no way qualifies my thanks to him.
7 P.m.
Lord Allen of Abbeydale: My Lords, I have not previously contributed to the debates on this Bill and I should like to make just a brief contribution and repeat the appreciation which my noble friend Lord Henderson has just expressed for the way in which the Government have responded to the representations put to them at an earlier stage. On a point which was raised by the noble Lord, Lord Morton of Shuna, it seems to me that this amendment applies only to the mentally handicapped and not to the mentally ill: sometimes the distinction is not always kept as clear as it might be.
I must confess that when I first saw this amendment and the accompanying Amendment No. 111 which follows familiar wording in that it repeats at any rate part of the definition of "severe mental impairment" in other legislation, I was puzzled, like the noble Lord, Lord Morton, to understand how it would be determined whether or not an individual fell within that definition. It is certainly not a matter on which the registrar and his supporters could claim to have any especial expertise. I hope the Minister will be able to explain how it is proposed that this determination should be carried out. Like the noble Lord, Lord Morton, I should myself very much like to see it in the Bill.
I am still slightly uneasy—I do not want to sound grudging—about whether this amendment goes far

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enough. The underlying justification is the argument about accountability and the inability of these people to understand the democratic process. This means that nothing is being done, in the example quoted on my behalf by my noble friend Lord Henderson at Committee stage, where you have parents with, say, two mentally handicapped children at home, over 18, who do not qualify under the strict criteria laid down in the definition. Even with the full rebate it will land their parents with an additional bill of perhaps £100 year. I find this just a little difficult to reconcile with the government policy of increased care in the community.
Like the noble Lords, Lord Henderson and Lord Morton, I am a little puzzled about the pocket money problem, which if I may say so the Minister tended to rather brush aside when he was speaking of this at Committee stage at col. 784 of Hansard on 2nd April. Actually, I thought the figure was £9 and not £7, but a cut of something like 10 per cent. in what is itself a pretty modest figure is something which is going to be very hard to take. So although I very much welcome the gesture made by the Government, the provisions made in the Bill, the additional provisions which are to be made in regulations, as the Minister has explained, and the difficulty of sorting out anything on a rather more consistent and logical basis at this late stage, I think I should put it on record that when we get comparable provisions relating to England and Wales we may not feel able to let a simple copy of these provisions go through without challenge. Having said that, I end as I began by thanking the Government for what they have done.
Lord Ross of Marnock: My Lords, I too should like to begin by thanking the Government for accepting in part the amendment that I put down at the Committee stage and which I have repeated at this Report stage, where I linked the severely handicapped, physically and mentally, together. I think they could have gone a little further. In many ways the tightness of the first part of the Minister's acceptance of this in relation to mental handicap is very cruel. When you take the tightness of that definition in his Amendment No. 111, I do not think it goes nearly far enough towards what most rather sensitive people would have expected in respect of this. Even now we do not quite know. It is going to be left to some unnamed experts to arrive at some definition that we are going to get in a regulation later.
Like the noble Lords, Lord Henderson and Lord Allen, I too should have liked to see a more generous spirit in relation to the physically handicapped—severely physically handicapped—and in this case I do not think that accountability is the only thing that should be considered.
In my amendment I suggest the wording:
"so severely handicapped physically or mentally as to render them incapable of earning a living".
We have to take that into account. People can be so poor that they have to obtain additional help, and they know that what they are left with is simply pocket money for buying soap, toothpaste and so on. They cannot really afford anything else. I am referring now to the physically handicapped who are being left to the
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rebate system. I think we should be grateful because as I understand it we shall be given more information about this matter when we come to Clause 24, which deals with rebates. But the Minister said that in respect of certain of the physically handicapped it will be possible for them to receive rebates of up to 100 per cent. I hope that he will correct me if I am wrong but I understood that a rebate of 100 per cent. was possible for the severely physically handicapped. I shall be glad to give way to enable him to confirm that, or not.
Lord Glenarthur: Yes, my Lords, that was very much the burden of my remarks. I am glad to make that clear.
Lord Ross of Marnock: My Lords, I hope that it is not confined to certain hospitals that are registered and the like. I hope the Minister appreciates what another part of the Scottish Office is doing. At the moment the noble Baroness, Lady Carnegy, is busy with matters about which I shall have something to say next Thursday—if there is a next Thursday in parliamentary time—in relation to changes made in establishments that are registered under the Acts mentioned by my noble friend: namely, the Social Work Act and the Nursing Home Act. Has he looked at that matter and the effect there may well be on the proposed changes?
On the whole I think we have to welcome this measure. Once again it will depend on regulations. That is the trouble. I am very glad to hear the noble Lord, Lord Allen, say that this measure would not, if it dealt with England and Wales, be looked upon with favour unless it were in a Bill. But this Bill affects only Scotland so it does not really matter. We have been faced with this situation right through from Clause 2; there are 78 items.
Of course this is what the Government set out to do. The Bill is just a skeleton enabling Bill. The Government have said that there would be a lot of work for the registrar to do. Is then the registrar the least busy man in the whole of Scotland? Let us not forget that the registrar is also the electoral registration officer. Within a few weeks he will be the busiest man in Scotland and certainly he will not be looking at this Bill for over a month. He will be dealing with demands to be put on the register and queries about why people were not put on the register, the rights they have to vote and so on.
This Bill is very tightly drawn and much depends upon it. We have complained about the prescriptions that it contains and what will be settled in relation to a number of issues. The registrar is the kingpin who will draw up the register, but he will not be able to pay any attention to it at all for at least a month. We thought that the timetable was too tight but people said that the Government would be able to meet it. If the registrar is concerned with a general election that will be more difficult than ever. However, that is by the way.
The question arises of when we shall see the regulations and when we shall see the amendment. The noble Lord, Lord Henderson, suggested that it would be before Third Reading. I hope that we shall see the amendment by Tuesday of next week before we come to debate the rebate system as a whole. It should

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not be beyond the wit of the Government to do that. After all, they produced this Bill quickly, though certainly they have made a lot of mistakes in it. I think that we are entitled to have some further information on their intentions by next Tuesday when we come to Clause 24 so that we can decide whether they are being fair to the severely physically disabled as well as the mentally handicapped.
I think that we should be grateful to the noble Lord, Lord Home, for being here when we discussed this matter the last time. His observations have been very effective. When he saw that the Government were in trouble he told them to take the matter back and do something about it. He has been one of the best attenders, though I should like to see him here more often. If the noble Viscount the Leader of the House, who has just entered the Chamber, had been here at that time we should probably have had the Bill scrapped a long time ago because such is his Scottish common sense that he would not have stood for a lot of the rubbish that is in it.
However, so far as concerns the amendment that has been moved, it "isna bad". I shall not commit myself too far. I want to see the regulations about the physically handicapped, but the Minister is on the right road. The trouble is that we are getting to the end of the road.
7.15p.m.
Baroness Carnegy of Lour: My Lords, before the Minister replies I must say how much I enjoyed the smile that was seen on the face of the noble Lord, Lord Ross of Marnock, just now. It was a welcome and most enjoyable sight. It may have had something to do with the fact that we are about to break.
Perhaps I may add a word of gratitude to the Minister. He referred to my amendment regarding the mentally handicapped. I think I have deployed all my arguments during the two previous stages of the Bill. I welcome this amendment.
Baroness Darcy (de Knayth): My Lords, I also should like to welcome this very real move by the Minister to help the physically and mentally handicapped. I apologise that I arrived too late to hear all his remarks. I think I agree with my noble friend Lord Henderson of Brompton in what he said concerning the mentally handicapped but as I did not hear his observations I believe I must confine myself to making one point on the question of the physically handicapped.
I agree with the Minister that not all the physically disabled should be totally exempt. I appreciate that he cannot give the exact details of how they should be helped. I too should have been glad to see something concrete on the face of the Bill but I am greatly cheered by hearing that in certain cases exemption can extend up to 100 per cent.
I just want to be sure that when the Minister comes to draw up the regulations they will cover one group that has been mentioned several times at Committee stage. Indeed my noble friend Lord Henderson of Brompton has mentioned them again. That group consists of those with physical disabilities who are living in community homes such as Cheshire Homes
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and young chronically sick units. They may be covered—I see the Minister nodded—by hospitals, hostels and homes, but, if they are not and exemption is tied to income support, I think that it is important to remember (and I am sure that the Minister is aware of it) that people in such homes will not be receiving income support even if their families are on income support, and all that they receive is the reduced amount of £7.75 a week in respect either of their invalidity benefit or of the SDA. It is not just a question of pocket money. It is not money just for cigarettes, drinks and sweets. It is money for clothes, shoes, writing paper and essential toiletries, and that small amount of money does not go very far.
I am sure that that is not the Minister's intention and indeed it would be ridiculous if, in a home with both physically and mentally handicapped residents, some of them received total exemption and some none. I regret that I was not present to hear the Minister's initial remarks but I welcome his move and recognise that he has achieved a great deal. I just want to make sure that that group does not fall through the net.
Lord Glenarthur: My Lords, I am grateful for the support of all those who have felt that we have moved a long way toward meeting concerns that have been raised about the severely mentally handicapped. I am very grateful for the kind remarks that were made by the noble Lord, Lord Henderson of Brompton, and other noble Lords.
In winding up this debate, with the leave of the House—which I may not need at this particular point—I think I should refer to income support. With regard to the amendments that have been put down by the noble Lord, Lord Morton of Shuna, which propose that all those who are in receipt of income support are eligible for it and all pensioners in receipt of income support should be exempt from the personal community charge, I have to say that those exemptions go much too wide. They would affect large numbers of people who of course play a full part in the local democratic process and who use local authority services. I need not repeat the principle of the Bill that the minimum contribution to local authority finance, from those who can do so and who benefit in the way I have described, should of course be made.
As for the question in Amendment No. 109 that the Bill should contain provision for further categories of exempt persons to he prescribed—again, this is in the name of the noble Lord, Lord Morton of Shuna—I cannot accept that it would be appropriate here for such a wide-ranging power to be granted. We have considered very carefully during the passage of the Bill the categories of people who should be exempt and I think—and indeed your Lordships have said—that we have gone a very long way towards meeting those concerns.
As for the question of residents in homes eligible for pensions or invalidity benefit—and here I begin to touch upon the remarks of the noble Baroness, Lady Darcy (de Knayth), and the noble Lord, Lord Henderson of Brompton—I fully sympathise with the approach in the amendment by the noble Lord, Lord

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Morton of Shuna, that of those resident in homes only those who have little or no disposable income should be subject to the proposed exemption.
However, as I said, the approach we prefer allows for the exemption of all residents in various categories of homes through the mechanism of their being left in rating. The noble Baroness, Lady Darcy (de Knayth) and the noble Lords, Lord Morton of Shuna, Lord Henderson of Brompton and Lord Allen of Abbeydale, referred to the question of pocket money for those in homes. Those receiving pocket money will be those who are resident in the homes and hostels which we are proposing to leave in rating, so that their residents are exempt. No question of adjusting their benefit therefore needs to arise. Perhaps I should expand further and say that the exact scope of the exemption which we propose to provide will be subject to further consideration.
In general terms, we would take as a starting point the proposition that the homes concerned will provide care for their residents. Exemption will not extend to homes or other types of communal accommodation where to all intents and purposes the residents lead independent lives. Eligibility for the exemption is likely to depend on the categorisation of the various types of homes under a number of enactments.
These are likely to be—and I think that this will go a long way to meeting the concerns expressed—first, nursing homes registered under the Nursing Homes Registration (Scotland) Act 1938; secondly, staffed houses provided by a local authority under Section 59 of the Social Work (Scotland) Act 1968 or Section 27 of the National Health Service (Scotland) Act 1947 and staffed houses provided by the private or voluntary sector and registered under Section 61 of the Social Work (Scotland) Act 1968. These provisions are, I think, very similar to those which were proposed by the noble Lord, Lord Henderson of Brompton, and the noble Lord, Lord Morton of Shuna, at Committee stage, and I believed when we were working this through that these would find favour with your Lordships.
The question of the severely mentally handicapped and its scope, which was raised by a number of your Lordships, raises the important principle to which I have referred many times, that mentally handicapped persons living in the community should wherever possible be treated as if they were normal citizens. There are of course very many first-class examples up and down the country where this is precisely what happens. Many of these people—I have seen with my own eyes—have jobs and they make a valuable contribution to their own communities.
It is entirlely appropriate that those who are in that category should be liable for the personal community charge. So only where the degree of mental handicap is so severe that that individual cannot reasonably be expected to take part in the processes that I have described would it be appropriate to exempt him from liability to pay, and the amendment in my name provides for that exemption.
As for the question, which I understand, and which has been raised by the noble Lord, Lord Henderson of Brompton, that it might have been preferable to
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encompass the severely mentally handicapped with the physically disabled, I think the answer to that really lies in the fact that this concession that we have been able to work out here relates very much to the fact that it is on the grounds that those persons do not have the mental capacity to take part in the local democratic process, which is the peg upon which to hang this important amendment.
That is, I think, the very great difference between the severely mentally handicapped and the very severely physically disabled. Although I appreciate the point that both the noble Lords, Lord Henderson of Brompton and Lord Allen of Abbeydale, made, I believe most sincerely that there is a very important difference here. That is why we have cast these amendments in the way that we have.
As for the position of the mentally ill, which was raised by the noble Lord, Lord Morton, I think your Lordships will appreciate that mental illness is not a stable constant condition. The great majority of mentally ill people recover quite quickly and many of them continue to lead active lives in the community, even while undergoing treatment. If the illness is of such severity that the person is unable to work, or his income is in any case too low, it would be possible for a rebate to be claimed under Clause 24 of the Bill. There is certainly no justification for exempting such persons from liability to pay the charge.
I fully appreciate that there is concern expressed by a number of your Lordships on the question of the mechanism for determining who is severely mentally handicapped. The mechanism that we envisage would be that the name of a severely handicapped person would not be entered on the register as liable for the personal community charge if the registration officer was satisfied that the person was indeed severely mentally handicapped. The registration officer is already under a duty, under Clause 14(1)(a), when the register is being set up, to undertake inquiries to determine who will be liable to pay the personal community charge. In the case of those claiming exemption on the grounds of severe mental handicap, those inquiries could involve him in seeking medical assessment of those claimants. Similarly, under Clause 17(1) the general duty on the registration officer would reasonably require him to seek such assessment.
In addition, guidance will be provided for registration officers on this point and detailed arrangements will be worked out in consultation with the professional bodies who will be involved in this process. I envisage that, given his duties under Clause 14(1) and Clause 17(1) and the provision of guidance, it will be possible for registration officers to establish clearly in the vast majority of cases who falls within the scope of the exemption.
However, where there is doubt the registration officer is required to determine the matter on appeal under Clause 16(1)(a). Regulations can prescribe what material relating to a person's mental state should accompany the appeal.
Lord Morton of Shuna: May I—
Lord Glenarthur: My Lords, may I just finish before the noble Lord intervenes? In relation to the registration officer's determination of such an appeal,

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regulations may also provide for his obtaining independent medical assessment. When we come to prepare the regulations, we shall consider what provisions on this account are necessary and shall of course consult appropriately.
Lord Morton of Shuna: My Lords, I wonder whether it is not an easier way just to say that the person suffering from the severe incapacity has to have produced for him a medical certificate, and the registrar operates on a medical certificate. That is something that in severe mental illness, severe mental impairment and severe mental incapacity the Mental Health Act has been telling us about for years—not only the 1984 Act but all its predecessors. Why not just work on the same certificate?
While I am on my feet, will the noble Lord have a look at the question raised by the noble Viscount, Lord Thurso? This seems to be unnecessarily restricted. What happens to somebody whose mind becomes impaired so that he cannot think properly? It has nothing to do with arrested development or incomplete development. It has to do with an accident, such as a motor-cycle accident. That seems to be excluded from this definition and it could be quite easily included if the phrase that is mainly in the third line of the amendment were omitted.
7.30 p.m.
Lord Allen of Abbeydale: My Lords, I wonder if there is not some confusion here between mental handicap and mental illness, since the clause is limited to the mentally handicapped. It is expecting rather too much of an ordinary GP to be able to certify whether someone comes within the definition. However, I do not object to what the Minister has said.
Lord Glenarthur: My Lords, I am grateful to the noble Lord, Lord Allen of Abbeydale. Like him, I have had a close association in my responsibilities with the mentally handicapped and the mentally ill for about four years. Much of what the noble Lord said ties in with my own views. There are problems here. That is, I think, the whole point of putting the extra prescriptive power in the definition. I appreciate the connections which the noble Lord has with these matters. Anyone so connected would, I think, appreciate the difficulties in this area. That is why I believe that the matter ought to be cast in the way in which we have cast it. This takes care also, I believe, of the point raised by the noble Viscount, Lord Thurso.
The noble Lord, Lord Ross of Marnock, suggested he would like to hear more in due course concerning the physically handicapped. At this stage I can only say that your Lordships will recall that the rate rebate arrangements in the revised housing benefit scheme on which the community charge rebate scheme will be based already includes special provision for the physically handicapped who will also have higher income support thresholds and whose income will thereby be enhanced. The people who qualify for the disablement premium include those receiving attendance allowance, mobility allowance or invalidity benefit or those who are registered blind. That will be the starting point for the detailed consultation which will be set in hand. The exact scope
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of the provision will be subject to further consultation and proposals will be brought forward in due course as part of the draft rebate regulations to be made under the provisions of Clause 24.
In summary, I believe that we have gone a long way towards meeting the concerns which your Lordships raised at Committee stage. I beg to move.
On Question, amendment agreed to.
The Earl of Dundee: My Lords, your Lordships may consider that we have reached a suitable moment at which to break in order to return to this subject at 8.35 p.m. I beg to move that consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Crossbows Bill
7.35 p.m.
Lord Brougham and Vaux: My Lords, I beg to move that this Bill be now read a second time. It is a privilege for me to introduce the Bill into your Lordships' House. The measure was ably taken through all its stages in another place by my honourable friend Mr. Peter Bruinvels, the Member for Leicester East. It is a short and, I am sure your Lordships will agree, non-controversial Bill designed to outlaw the sale and hire of crossbows to people under the age of 17. I am grateful to all noble Lords who have indicated their intention to speak this evening. I look forward very much to hearing the maiden speech of my noble friend Lord Haddington. If anyone knows anything about crossbows, I am sure he does, as he used to make them.
This small but urgently needed Bill not only has had the support of the Government, for which I am very grateful, but has also had support from all quarters of another place, as well as the support of the British Crossbow Association, the Daily Mail and other newspapers, the Police Federation, the National Farmers Union, the Royal Society for the Protection of Birds, the British Veterinary Association, the Royal Society for the Prevention of Cruelty to Animals and many others, as well as my own society, the Royal Society for the Prevention of Accidents. It has been introduced not to stop the sale of crossbows to clubs and to responsible people but to curtail the misuse of crossbows and to bring them in line with firearms legislation with regard to age restriction on sale, purchase and unsupervised possession.
Crossbows were first brought into this country by the Normans in 1066. One of the earliest casualties was William II who was accidentally killed when hunting deer. Crossbows were used by armies until about 1522. In the 15th century they were commonly used for deer and buck shooting and in 1621 Archbishop Abbot of Canterbury, while out hunting for a stag, accidentally killed a park keeper.
Crossbow laws were among the oldest in the country until being repealed not long ago. In the Royal Gallery there is a copy of an Act regulating shooting with crossbows which was published in 1512. That Act restricted the right to use a crossbow to Lords and to owners of land of a yearly value of 300 marks—about £200. That was to encourage others to use the long

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bow which was regarded as very important for the defence of the kingdom. Those days are long gone.
Since then there have been many tragic and disturbing crossbow incidents involving not only animals but also humans—numerous cases of deliberate maiming and killing of animals and of human suffering. There have been many stories and pictures of swans, ducks, sheep and cats, to name a few, with bolts in various parts of their anatomy. Some are killed instantly; all too often, they go away to die in a corner out of sight. It would take too long to go through the list of suffering. However, the gruesome pictures which we have seen tell the story all too vividly.
Then there is the human side. Only a few months ago a postman standing at a bus stop was hit by a bolt from a crossbow which went seven inches into his thigh. That is just under half the length of a bolt which can be up to 15 inches long. It was just one of a number of accidents relating to human beings and I am pleased to say that the postman recovered. Some victims do not. In a case reported in the Daily Mirror only the other day a 27 year-old man died of a bolt through his chest. The headline was:
"Crossbow terror victim dies".
A lady who cared for the injured man said that the metal bolt protruded a foot from his back.
In 1986 police records show some 115 specific cases of injury or death to animals or humans. A crossbow in the wrong hands is a lethal weapon and can kill or injure without much sound. At present there are about 200,000 in circulation with about 1,700 being sold each year. They are easy to buy through mail order or over the counter. They cost from £30 up to about £250 or more. They are vividly described in catalogues. One example is the Trident which is accurate up to 50 yards. Others are known as Panzer II, Wildcat II, and Thunderbolt. Some carry up to about six bolts lined up on the bow, ready for use. The bolts cost about £2 each. As I have said, they are usually up to 15 inches long and some have tungsten-tipped ends that screw in. If the rules of the House had permitted, I would have shown one of the bows to your Lordships. However, I am not allowed to do so.
Crossbows can be very accurate and they will kill at a range of 25 yards. Even at a 100 yards, they can wound. I have described bows which are at the top end of the range. At the other end, there is the Bandit Bow for family fun which has rubber suckers at the end of the bolt. Those toy crossbows need very little draw weight to propel the bolt and are exempt from the Bill, to which I shall come in a moment.
The draw weight is the measurement of the actual weight which would need to be exerted on the string to pull it into a cocked position. The figure of 1·4 kg. (or 3 lb) was reached in consultation with the crossbow manufacturers. More powerful crossbows have a draw weight of between 50 lb to 150 lb.
The principal manufacturer of crossbows is a firm called Barnett International who, in 1985, had a turnover of £4 million. The company employs about 230 people, and about 85 per cent. sales go for export. In all about 700 people are employed with the crossbow industry, excluding retail outlets.
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The Bill is designed to keep a balance between the need to improve restrictions, the desire to protect the sportsman and the need to protect the industry. In that respect, and turning to the Bill, Clause 1 makes it an offence for any person, be it by mail order or over the counter, to sell or let on hire a crossbow, or part of a crossbow, to anyone under the age of 17 unless he has reasonable grounds to believe the purchaser or hirer to be 17 or over. The Home Office will be issuing guidance notes to all traders urging them not to sell to persons under 17.
Clause 2 makes it an offence for a person under 17 years of age to purchase or hire a crossbow or part of one. Clauses 1 and 2 bring the age restriction in line with the Firearms Act 1968. Clause 3 covers possession and makes it an offence for a person under 17 to have with him a crossbow, or parts of a crossbow, unless he is under the supervision of someone aged 21 or over. This applies to the possession of a complete crossbow, in kit form or one that has been dismantled. The offence may be committed in any place, whether public or private.
Clause 4 gives the police the power of search and seizure in respect of a person, vehicle or property if there is reasonable cause to believe that a person is committing or has committed an offence under this Bill. The Bill does not create any new powers of arrest. Clause 5 excludes the toy crossbow which I have already mentioned. This is a small market and excludes bows with rubber suction pads which could not do any harm as they do not have enough draw weight to hurt anything.
Clause 6 lays down the punishment. Under Clause 1 a person guilty of an offence will be liable to six months' imprisonment and/or to pay a fine of scale 5, which is £2,000, and in subsection (2) and (3) sets the level of fine as scale 3, which is £400. Subsection (3) of this clause gives the courts powers to order the forfeiture or disposal of the crossbow if an offence has been committed. Clause 7 relates to Northern Ireland and this will be done by an Order in Council to be introduced when the Bill has been enacted. Clause 8 speaks for itself.
I should like to thank Her Majesty's Government and my noble friend in particular, and his colleagues for their help and support with this Bill and also the sponsors in another place for all the support the Bill has received nationally.
As I have said, the Bill has been designed to combat the growing menace of this silent but lethal weapon. In 1965 only 1,000 crossbows were sold; while in 1985 there were 17,000 sold and 200,000 were in circulation.
Crossbows are here to stay and one day it may even become an Olympic sport. I can assure people who have reservations, and crossbow sportsmen, that we do not want to stop field sports. It is the increase of the misuse of the crossbow that this Bill is designed to stop.
Some people would like the Bill to go further—namely, to impose a total ban. That could not be justified when other weapons are not subject to a ban—for example air weapons. Other people advocate licensing crossbows. That would be difficult, if not impossible, to justify when other weapons do not

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have that restriction. Other suggestions have been made but this Bill has the right balance to curb these lethal weapons. It is the animals who have suffered most and who now need our protection. That is the reason for this Bill and I commend it to your Lordships. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Brougham and Vaux.)
7.45 p.m.
Baroness Phillips: My Lords, I should like first of all to congratulate the noble Lord for bringing this very simple, concise and explicit Bill before your Lordships. I should also like to say how grateful I am to the honourable Member of another place who managed successfully—and it is much more difficult in that House—to bring this Bill to a good conclusion. I think we can safely say that this is a Bill which cannot have anybody rising, either in this House or the other place, to criticise any of the clauses. It is simple and deals with something which is a very real menace.
Recently I put down a Question concerning the fact that shops are opening up everywhere where people can buy all kinds of the most appalling lethal weapons. As a result of that Question, I received dozens of letters expressing dismay, and making particular reference to crossbows. One of the groups which have been concerned have been teachers who have written about the kind of mail order books that circulate around the schools. I have one such book here which was actually purchased in an ordinary newsagents. It describes the most horrific weapons which we are not discussing this evening, but it certainly includes crossbows.
There is no doubt the book is not referring to a sport. If crossbows are included with survival knives, Rambo sidearms, and blank firing pistols, they are not something for amusement, but must be regarded as being lethal, as indeed a crossbow is.
Over the years I have listened to women's organisations moving resolutions on crossbows and they have given the most horrific examples of injuries sustained to animals to which the noble Lord has referred; and now human beings have been injured. As the noble Lord said, sadly the animals crawl away to die in absolute pain. Quite recently there were three such very harmless animals found in a park. Whatever argument we may advance for the kind of person who wants to buy a crossbow, if such people live in the middle of a city and are under the age specified in the Bill, what can they possibly want with a crossbow except to use it for destruction, the maiming of animals or, in many cases, humans? They cannot justify it in any other way.
There is only one slight comment I should like to make on the Bill, and I am not going to suggest any amendments because the Bill has to go through Parliament speedily. However, I would suggest that the punishments are not as severe as they might be. But, this is a great start in a campaign which many of us have conducted over the years and which I shall continue on other fronts.
I am delighted to know that we are going to have the privilege of a maiden speech this evening from the noble Earl, Lord Haddington. We look forward to this
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as I understand he is expert in this field. It is quite a scoop on the part of his noble friend to achieve his maiden speech on this particular occasion.
We are not asking here for anything that is not needed. It is a simple Bill and it is an explicit Bill which I hope has the blessing of the Government. I ask your Lordships to support it and to support the noble Lord who introduced it to the House this evening.
7.50 p.m.
The Earl of Haddington: My Lords, I crave your Lordships' indulgence for this my maiden speech. I share the concern of noble Lords about the increase in crimes and hooliganism associated with the use of crossbows. However, I must immediately declare that I have an interest in an archery manufacturing company in Scotland. Until three years ago we made a high quality target crossbow which sold successfully throughout Europe. However, we ceased to make this weapon at that time for the very reasons that this Bill is before your Lordships' House today; but we continue to make target bows of a high quality.
From past experience of the manufacture and use of crossbows I feel that I may be of some help to those noble Lords who are unfamiliar with this weapon. A well-made crossbow with a draw weight of 1001b. armed with bolts of equal weight and size, and properly fletched, can consistently hit a six-inch diameter target at 100 yards. In free flight a bolt can travel 600 yards or more and still deal a damaging blow to anything in its path. At 100 yards a bolt fired from this weapon can penetrate one inch of timber or go straight through a London telephone directory. That is on a par with a 0.22 calibre rifle bullet.
The only difference between a quality crossbow and a rifle is that the rifle uses a noisy explosive charge to release a small projectile at great velocity—around 1,500 feet per second—whereas a crossbow is silent and sends the heavier bolt away at only 250 feet per second; but the damage done to the target is much the same in both cases. No child should ever have access to one of these weapons and I have grave doubts as to whether anyone under the age of 18 should be allowed to possess one.
The crossbow has become a favourite weapon of the poaching fraternity, and in Scotland one hears many stories of bolts being found stuck in trees where game has been illegally sought. In the Highlands red deer have been found alive or dying with bolts still stuck in their bodies. More disturbing still are the reports of the NFU from farmers whose stock has been the subject of assault by crossbows.
People must be protected from this incredibly irresponsible behaviour by certain individuals and I fear that if nothing is done the problem will soon escalate. It is a pity that this minority has spoilt the sport for those who are genuinely interested in using a crossbow in an acceptable manner for target practice and competition.
I read that one archery company claimed that 230 men would be laid off if the crossbow is legislated against. To that I can only say that after we discontinued the manufacture of crossbows the four men we employ at our works still have their jobs and we continue to make bows for the archery enthusiast and competitor.

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One problem in the manufacture of crossbows is the difficulty of making an adequate safety catch. A clause in the Bill stating that crossbows should always be fitted with a safety catch of a high standard would prevent many accidents. Some designs that I have seen are faulty and others have no safety catch whatever. I can also add to the list of different heads for bolts that are on the market in Europe. One particularly horrific head contains an explosive charge timed to detonate one-tenth of a second after impact. I have never seen an example of this missile but heard tell of it 10 years ago.
In America, where anyone can buy a gun for sporting purposes over the counter, crossbows are banned from being used for game hunting. It is not a quick death for a rabbit to be hit by a bolt. A gun is a surer way of killing any form of animal in a humane way. In my opinion, crossbows should he banned as a method of game shooting or vermin control.
I concur that the cult of Rambo has inspired certain teenagers to arm themselves wth a variety of exotic weaponry. The crossbow is way at the top of the list of powerful weapons that are available without a licence. If no controls are introduced to prevent their misuse more people and animals will be at risk, particularly as the weapon is widely advertised in glossy brochures. Young people are impressionable and require expert guidance where weapons are concerned. Archery clubs provide that service and young persons should be encouraged to compete in their legitimate surroundings. Any haphazard use of the crossbow should be severely discouraged and I hope that we shall soon see measures taken in that direction.
7.55 p.m.
Lord Houghton of Sowerby: My Lords, I have great pleasure indeed in congratulating the noble Earl, Lord Haddington, on his maiden speech. One of the most fascinating features of your Lordships' House is that it does not matter what subject is under discussion, however obscure or technical, however remote from the lives of many of your Lordships; there is always someone who can come to your Lordships' House with a degree of expert knowledge which rivals anything we could get from any other source.
I noticed that the noble and learned Lord the Lord Chancellor, in an article published over the weekend, paid high tribute to the expertise and experience of Members of your Lordships' House, which, with the presentation of our affairs to the world at large through television, has raised our prestige to heights never before known. This is very gratifying and the noble Earl, Lord Haddington, has contributed to this enviable reputation. No other part of the parliamentary system can claim anything comparable with our knowledge and experience—especially experience.
One of these days when we are debating these weapons which we have not seen or have not seen fired—and we have not seen what harm they can do—we will have some visual aids as well as the expertise of Members of your Lordships' House who can tell us a great deal about them. I am sure we are very grateful to the noble Earl for his technical descriptions and his references to the capacity and the nature
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of such weapons. As for the noble Lord, Lord Brougham and Vaux, we are grateful to him for introducing the Bill into your Lordships' House and outlining the history of this weapon.
What a wicked weapon it is. It goes back to the beginning of time. In fact, when the ancestors of the noble Earl, Lord Haddington, were breathing their first breath of life crossbows apparently were in common use to wage war, to kill animals and generally to assassinate anything moving. That gives the noble Earl greater qualification for telling us about crossbows.
This can be described as a good little Bill—very good, very little. It rests upon the assumption that young people below a certain age are irresponsible, ignorant, vicious or in some way incapable of using particular items, or indulging in certain activities, with the sense of responsibility of an adult. Probably that is true up to a point—but only up to a point. I wonder how much real difference this Bill will make to the havoc that this weapon is creating throughout the country at the present time.
Will the banning of the weapon in the hands of young people under 17 make that much difference? I notice that the noble Earl, is shaking his head and indicating that it will not. That does not mean to say that this Bill is not worth passing. It brings control over the weapon into line with the control of other offensive weapons. It will establish a uniformity of deterrence. We hope that it will be effective in reducing the irresponsible use of the weapon.
One wonders what the crossbow is for. What are bows and arrows for? They are a bit out of date now as weapons of war or instruments for the killing of animals. They have to do with sport—archery, rifle ranges and target practice. They provide fascinating forms of recreation. The danger is that crossbows are freely used for offensive purposes.
According to my information, about 17,000 new crossbows were introduced into the country last year. About 250,000 have already been sold. What are 250,000 people doing with crossbows? They are not all engaged in innocent sport and practice. One apparently cannot trace more than about 3,000 crossbow owners who belong to what I would call the inoffensive group of crossbow owners. Many of the others are in the hands of poachers and those who go about at night. The crossbow is an almost silent weapon. It has an effectiveness in the hands of poachers which a rifle may not have, especially at night.
We have had the most horrifying accounts of the condition of animals. We have heard from the noble Lord who introduced the Bill of the incidents that have been caused deliberately or otherwise, to human beings. The real damage with the crossbow is being done by people over the age of 17. The Bill proposes to deny the use of a crossbow to people up to the age of 17. It will be an offence to supply a crossbow to anyone under the age of 17.
The question has been asked as to whether "supply" will cover the mail order business which is now so popular for a wide range of goods. Difficulties about that have been mentioned. The Government do not feel disposed to include in the Bill a clause dealing with

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mail order. I understand that they are ready to give the best possible advice to mail order firms and to tell them what precautions they should take to avoid inadvertently supplying crossbows to customers under the age of 17. That is all to the good.
Those of us who have been engaged in reforming legislation for many years must be content with taking one step at a time. One is bound to admit that the creation of more offences with more penalties and increased imprisonment, imposes an additional burden on an overworked police force and on the community because we shall be banning articles that some people find pleasurable.
We should be grateful to the RSPCA, because whenever we do more to protect animals we are inadvertently and probably unknowingly unloading a great deal of extra work on the RSPCA. That is because generally the police do not regard offences involving animals as in the same category as offences against human beings. Many a time when people have gone to police stations to ask the police to take an interest in something they have seen or heard, they receive the reply, "We are too busy dealing with crime to take up such investigations".
I offer the opinion that the RSPCA undertakes more investigations that lead to prosecution than is generally realised. I have tried to get at the bottom of that, but it is difficult to do so. However, I know that the RSPCA spends a great deal of money every year on prosecutions for which it does not receive any reimbursement. At present it is asking for greater powers of entry to discover offences against animals, but that is another and bigger question that does not arise tonight.
The proposals in the Bill go as far as one can go on this occasion. They give the police the right to inspect and investigate and to go as far as is reasonable, short of giving them the right of entry into someone's home. I do not press that matter; I merely refer to it.
Whenever such matters are raised, one must get them into some perspective, put them against the background of the treatment of animals generally and help the educational process in Parliament and outside to make people more aware of the extent of the cruelty that goes on. I think that cruelty is the biggest crime on earth. I regret to say that it is innate in humans. We are working against human nature nearly all the time, but if we aim to have civilised living, we must try to do that.
If we are to allow humans forever to indulge their primary instincts without education or restraint and without securing a higher standard of behaviour, then the world will remain uncivilised until it blows up. One might ask what regrets there would be if it did. That is a long way from crossbows; nevertheless, it is all part of the general problem which deeply concerns everyone, morally and in other respects—the relationship of man to the animal kingdom.
We are grateful for the Bill. It takes us a little way along the road. Later we may approach the wider question of the use and existence of offensive weapons in society generally. There are similar problems with airguns. However, I do not think they are as serious as the crossbow. There is no doubt that it is a lethal
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weapon. Much harm can be done by the misuse of air weapons. The crossbow can be wicked when used on animals and dangerous if human beings get in the way. That is all I want to say. It is quite a lot.
One of the great things about your Lordships' House is that time and opportunity to talk briefly about subjects of this kind are given far more liberally than in the other place. One can be in the other place for many, many years—I say this from experience—and not have the opportunity to raise matters which in your Lordships' House are regarded as worth discussion and which give satisfaction to those of us who have now been here for a long time.
8.10 p.m.
Viscount Massereene and Ferrard: My Lords, it is my pleasant duty to congratulate my noble friend Lord Haddington on his maiden speech. It was absolutely magnificent that, although I understand he is with a company that manufactures crossbows, he also said that he would recommend the banning of crossbows apart from use for target shooting. That shows what an honest man he must be. I should like to thank my noble friend Lord Brougham and Vaux for introducing this Bill. It is a very good Bill and it is certainly a start. I would prefer the Bill to be stronger but I shall not put forward any amendments because I should like the Bill to get on to the statute book quickly.
Ten or twelve days ago I asked a Question in the House on the subject of crossbows. From my experience I spoke of the appalling wounds inflicted on wild animals. I have also seen them on sheep but we lose many sheep—so far as I know, most disappear into the boots of cars. I have seen red deer stags—which are very large animals—very badly wounded by crossbows, though I have only seen one stag killed by a crossbow. It had a crossbow in the head which killed it instantly.
The worst experience with crossbows I have seen occurred on my estate in East Kent. In summer the public come into the gardens. I have a pet park of about two acres there for children. One morning the pet park manager reported, "Something appalling has happened". I had five little muntjac deer there. They are the smallest deer in this country, although they are not native. They came here about 25 years ago or perhaps earlier. Of the five, three had been killed with crossbows. One was running about with a bolt through its neck. I am astounded that it remained alive because I should have thought that the bolt would have hit either the spine or the jugular vein. However, it was alive; I soon despatched it with a rifle.
The Home Office and the police have statistics on crossbows but the statistics do not show anything like the amount of cruelty involved, or the number of animals killed by crossbows. Last year there were 115 cases of the misuse of crossbows where animals had been killed or wounded. Humans had also been wounded. Of those cases there were 10 which involved burglaries where the inhabitants of the house were threatened by crossbows.
The public may not have realised the danger of crossbows. As one or two noble Lords have said, the crossbow is a most lethal weapon because it is silent. Today it has telescopic sights and a flat trajectory of up

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to 70 or 100 yards. As the noble Earl said, if I heard correctly, it can have a range of 600 yards. It used not to have that range in Norman days. It is interesting that in the 16th century crossbows were made illegal apart from use by a few large landowners. A few people were exempt because they required them to shoot wild boar and stag. It is amazing to consider that in the 16th century there were various enactments against the crossbow. It could not be used by the public mainly because so many people were murdered by crossbows. Highwaymen also used to use them. Today we are supposed to be highly civilised—although I often doubt it—but there is no law to prevent the use of crossbows. However, we now have a Bill which is certainly a step in the right direction.
Perhaps I may turn to the Bill for a moment. I know that my noble friend has explained it extremely well. With regard to crossbows being sold by mail order—a matter which I brought up in the House a short time ago—I should like to know how the shop owner is to know whether the individual ordering the crossbow is under or over 17. I do not understand how he will find that out. To find that out, the individual would have to send his birth certificate, but I do not think that that would be likely.
On the proposal for search of vehicles by the police, I should like to raise the question of search of boats. On my estate in the Highlands there are many miles of shoreline. In the winter the deer come down on the seaweed at night to feed on it. We have had trouble with people in boats—presumably trawlers and fishing boats—using powerful lights and shooting the deer on the seaweed. Whether they are using crossbows I do not know: they shoot the deer and then take them on board. We have found one or two wounded deer which have survived. They had certainly been shot by crossbows. Whether they were shot by people coming in by boat we cannot tell of course., but I should have liked the measure with regard to searches to include boats.
The crossbow is ideal for poachers, in particular in hill country. In the hills one can hear a rifle from a long way away, whereas one cannot hear a crossbow. Crossbows have been used by poachers for quite a long time. Some modern crossbows have been used for poaching for perhaps 15 or 20 years. I refer to a newspaper cutting about a poor man who was killed the other day by someone shooting at him with a crossbow. That is appalling.
I should like to say how glad I am that we now have this Bill, and I sincerely hope that it has a swift passage through your Lordships' House. I believe that it would be a mistake to put down any amendments, although I should have liked to do so. I am extremely encouraged by the noble Earl, Lord Haddington, when he said that he would like crossbows banned apart from target shooting. I suggested that myself a couple of years ago.
When my noble friend Lord Brougham and Vaux introduced this Bill, he mentioned field sports. I think he implied that crossbows were used in field sports. With due respect to my noble friend, no field sportsman would ever use a crossbow. That is completely unknown. It has never been done because
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of the dangers of wounding. The only weapon to shoot an animal with is a high velocity rifle.
Lord Brougham and Vaux: My Lords, while my noble friend is on this subject, in order to put his mind at rest, perhaps I may say that there is the Grand National Archery Society, the governing body of archery and also the National Field Crossbow Federation.
Viscount Massereene and Ferrard: My Lords, there may be a National Field Crossbow Federation, but shooting with crossbows is not a field sport. That is quite another matter.
I hope the Bill will have a speedy passage through the House.
8.22 p.m.
Lord Ferrier: My Lords, like my noble friend I welcome this Bill and congratulate the noble Lord, Lord Brougham and Vaux, for introducing it. I thank the noble Earl, Lord Haddington, for his competent and constructive speech. I have only a few words to say but I am a fairly experienced shikari, to use the Hindustani, and a member of the Royal Company of Archers.
I have consulted a number of knowledgeable people about this Bill. The only possible amendment which I put before your Lordships is that the Bill might be improved with a definition of a crossbow and perhaps a definition of the bolt. I feel that this is something that I am not competent to advise on, but the police and the Administration and perhaps the RSPCA might be called on to see whether, first, such a definition is possible, and, secondly, whether it is prudent that it should be included in the Bill. I hope that the Bill will go forward without delay.
The Earl of Haddington: My Lords, I should like to interrupt to define a crossbow. It is a bow which is fixed to a stock with a trigger mechanism attached to that stock to prevent the release of the string before one places an arrow in it.
8.23 p.m.
Baroness Ewart-Biggs: My Lords, from these Benches I should like to congratulate and thank the noble Lord, Lord Brougham and Vaux, for presenting the Bill in such a clear and lucid way and also for giving us a fascinating historical background. In the other place the debate was exceptionally thorough. Having read the debate in Hansard, one realises that there was no point that was not covered in the debate there about this Bill.
As my noble friend said, we are most fortunate in this House to have an extra quality about a debate of this kind because we have the expertise of certain Members. I should also like to congratulate and thank the noble Earl, Lord Haddington, for adding that invaluable expertise to this debate and also for giving a physical description of a crossbow, the article we are discussing today and which not all of us know. I was horrified this afternoon when I was shown a bolt by the noble Lord, Lord Brougham and Vaux. He told me that he unfortunately could not bring it into the Chamber to show all your Lordships, but when one

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sees it it brings home to one that it is such an extremely lethal and dangerous weapon. Seeing the bolt, one can imagine the propelling instrument behind it and can imagine very easily the danger to human or animal life that it can inflict.
There has been no shortage of proof from previous speakers that there is overwhelming support for this measure. My noble friend Lady Phillips confirmed that when she put down a Question she received unequivocal support from members of the public who wrote to tell her how welcome they would find even this slightly restrictive measure. My noble friend Lord Houghton made the point that he was rather sad that it only targeted young people and that perhaps it was not young people who were of the most concern in this matter. From my experience I have found that young people are most idealistic and show an enormous concern for animals: in fact, most of them are vegetarians. I agree with my noble friend Lord Houghton that it is a pity this Bill cannot go a little further.
We have had unequivocal proof of the suffering that has been caused to animals and in some cases to humans as well. In this context I should like to impress that there is a growing worry about accessibility to all sorts of weapons. There is accessibility for virtually anyone who wants seriously to get hold of them. For that reason I should like to point out that a number of my honourable friends in another place have made representations on numerous occasions to the Home Office in favour of much greater controls on the advertising and sale of all weapons, about the establishment of shops that sell such weapons and about whether we can agree changes in the law concerning the possession of weapons. After all, we must all want the public and the police to be protected from the growing use of weapons. The Bill is trying to stem the use of one.
Perhaps the only regret we have, as I have said, is that the Bill does not go a little further. We also agree that it must be accepted that there is an urgency for even this minor measure to get on to the statute book. Perhaps later we could bear in mind that it will be possible for the Home Office to watch matters very carefully as a result of the passing of the Bill, which presumably will discipline minds and make people realise the importance that Parliament attaches to this matter. Perhaps the Home Office will see how the statistics move after the passing of the Bill. It will then be possible to consider whether to extend the provisions to other groups of people. Perhaps if the circumstances appear to warrant it, it may be necessary to introduce licences for crossbows.
The two small points I should like to make are, first, that I find, as the noble Earl found, that the choice of the age of 17 rather than 18 as a minimum age at which one can legally possess a crossbow is less satisfactory. I should have preferred it to be 18. I understand the reason why 17 has been chosen, as described by the noble Lord, Lord Brougham and Vaux, but the age of 18 is the measuring stick for many other measures and therefore I should have thought it would be a possibility.
The second question is one that I wish to put out of curiosity. We have an expert, and perhaps the noble Earl, Lord Haddington, will answer it. I realise that toy
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crossbows are exempted—quite rightly. They have missiles which have a rubber sucker at the end. It occurred to me that a sharp tipped missile of the kind I was shown this afternoon fired from a crossbow with a draw weight of over 3 pounds could inflict serious injury. I can see that a small bow would not inflict serious injury if it had its own missile but if a sharp tipped and heavier missile was put in its place, could it discharge a strong force and therefore be able to inflict some damage? I should be interested to have an answer to those questions if the noble Earl would be good enough to tell me from his experience.
In the meantime I welcome the Bill and wish it a safe passage.
The Earl of Haddington: My Lords, in answer to the noble Baroness's question, I would say yes, there could be severe injury if somebody removed the rubber suction pad from the end of the bolt for a toy crossbow and put a sharp needle or even a pointed stick in its place and then fired. It could put out somebody's eye. I hope that answers the noble Baroness's question.
Baroness Ewart-Biggs: My Lords, I am very grateful.
8.31 p.m.
Lord Beaverbrook: My Lords, I am delighted that my noble friend Lord Haddington has made his maiden speech, or three maiden speeches, tonight on this subject. I should like to add my congratulations and say that we look forward to hearing him many times in the future, particularly on subjects such as this about which he clearly knows a great deal.
The Government are very pleased that my noble friend Lord Brougham is guiding the Crossbows Bill through the various stages in this House. The Bill has been most ably handled in another place by my honourable friend the Member for Leicester, East, where it received a very warm welcome from all sides.
There has been a good deal of public concern arising from reports in newspapers and elsewhere of crossbow attacks both on people and on animals. In several instances these attacks have resulted in serious injuries. The Government believe that legislation is needed to prevent these potentially lethal weapons falling into the hands of young persons under 17. This Bill aims to do that without imposing unnecessary restrictions on adults and young persons, suitably supervised, who participate in the legitimate and growing sport of crossbow archery.
It is important to put the problem of crossbow misuse into perspective, since crossbow attacks tend to attract a great deal of publicity, and this can give the impression that they are more frequent than is in fact the case. Comprehensive figures relating to misuse are unfortunately not available but we do know that during the 12 months to April 1986 the police in England and Wales recorded only 115 cases of crossbow misuse.
Of these, 54 were offences of criminal damage, 25 involved the injury or death of animals, and there were 10 cases of injury to persons. The Royal Society for the Prevention of Cruelty to Animals recorded a total of 117 crossbow attacks on animals between 1980 and 1986, the main victims being sheep, ducks, cats, swans

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and deer. Moreover, there have been five further incidents recorded by the RSPCA so far this year. Overall, although any misuse of such weapons is to be deplored, crossbows still feature in only a tiny proportion of crimes, whether against humans, animals or property.
For these reasons, although the Government welcome this Bill, they do not think that there is a need at present for the much stricter control advocated by some. There have, for example, been calls for a licensing system along the lines of that for firearms. This would, however, impose a considerable administrative burden on the police, and the time spent on this work would have to be at the expense of other arguably more important tasks. It has also been suggested that membership of a recognised crossbow club should be a requirement for anyone wishing to purchase or possess a crossbow. But the club system is not sufficiently developed at present for this, and the registration of clubs would itself pose problems. Moreover, given the comparative ease with which a crossbow can be made at home, and the number of crossbows already in circulation, we doubt that a requirement of this kind would have a significant impact on the incidence of misuse.
The Government do not, however, underestimate the potential dangers of these weapons, and I am sure noble Lords will agree that it is very necessary to keep crossbows out of the hands of unsupervised young people, which is what this Bill will do. My noble friend has already covered the clauses in the Bill very fully. There are only one or two further points which I shall make.
The age limit of 17 laid down here has been said by the noble Lord, Lord Houghton of Sowerby, to be too low for this kind of weapon. It is, however, the same age as that required for the purchase of a firearm or air weapon as laid down in the Firearm Act 1968 and it would be difficult to justify a higher age limit for crossbows than that for firearms. While any legal age limit is always likely to be the subject of debate, it seems to me that there should be some consistency in this matter.
My noble friend Lord Haddington suggested that a crossbow is a very inhumane way of killing animals. Indeed, my noble friend Lord Massereene gave us a graphic example. I can tell your Lordships that the Protection of Animals Act 1911 creates an offence of causing unnecessary suffering to a domestic animal, while under the Wildlife and Countryside Act 1981 it is an offence to kill or take any wild animal or bird with a crossbow. It is clear therefore that the necessary legislation to prevent the misuse of crossbows does exist, although enforcement may be difficult.
My noble friend Lord Ferrier suggested that the Bill might be improved by the addition of a definition of a crossbow. The Shorter Oxford Dictionary defines a crossbow in terms of a bow fixed across a wooden stop with a groove for the missile and a mechanism for holding and releasing the string. We see no reason to repeat this in the Bill. Indeed, to do so might create unnecessary doubt. Crossbows have already been referred to in the statute book without being defined, including in the Wildlife and Countryside Act 1981. It
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will be obvious from the appearance of the object whether it is a crossbow and ultimately it will be for a court to determine, if it should prove to be necessary, which we think unlikely, whether a weapon falls within the dictionary definition.
Under Clause 1, which creates offences of selling or letting on hire a crossbow or part of a crossbow to a person under the age of 17, it will be a defence where the accused believes the purchaser or hirer to be 17 or older and has reasonable grounds for that belief. Your Lordships will be pleased to know that this clause applies to all forms of sale, including mail order. There are some, I know, including the noble Baroness, Lady Phillips, who would like to see a total ban on mail order sales, but I do not think this could be justified while shotguns and air weapons can be purchased in this manner. Nor is there any evidence that the availability of these items by mail order makes them more likely to be acquired by juveniles. In practice mail order firms selling goods of this kind require an age declaration from would-be purchasers. This procedure is followed by traders in respect of low powered air weapons which do not require a certificate under firearms legislation. We are not aware that there is any widespread abuse.
We are also satisfied that Clause 6 contains the right penalties. An offence against Clause 1 of the Bill will carry a maximum penalty of six months' imprisonment or a fine up to level five on the standard scale, which is currently £2,000, or indeed both. This is in line with the penalties under the Firearms Act 1968 for selling a firearm to a person under 17. Offences of purchase or unsupervised possession of a crossbow by a person under 17 will attract a fine of up to level three on the standard scale, which is currently £400. By reason of the Magistrates Courts Act 1980 as amended, this is the maximum fine that can be imposed on a person of this age by a magistrates' court.
This Bill is short and straightforward. Its purpose is quite clear. The Government welcome the measure and I hope that your Lordships will feel able to give the Bill the support that it so justifiably deserves.
Viscount Massereene and Ferrard: My Lords, before my noble friend sits down, the government statistics on the misuse of crossbows are not accurate. How can they know of the hundreds of cases where poachers have been using them in the night or at any time of day? If the poachers kill the animal, which presumably in these cases they do, the carcase is taken away, so there will not be a record anyway. The Government's statistics must be very limited.
Lord Beaverbrook: My Lords, with the leave of the House, I agree. In all aspects of crime I should think it reasonable to expect that there is an unreported element. I am sure that the noble Viscount himself would have great difficulty in being able accurately to report every case where his deer in Scotland have been taken while feeding on the seaweed.
Lord Brougham and Vaux: My Lords, I am most grateful to all noble Lords who have taken part in the debate this evening, and particularly to my noble friend. As the noble Lord, Lord Houghton, said, so

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often we get a case where we have a Bill, be it on wildlife, this Bill or any other Bill, where we always have one noble Lord who knows more about the subject than anybody else. I congratulate my noble friend on his excellent maiden speech. I think we have got one up on the other place this time in that we knew more about it than they did. I hope to hear my noble friend again very soon.
My noble friend on the Front Bench has kindly relieved me of the burden of answering all the questions. The noble Lord, Lord Houghton, wanted visual aids. I should have liked to bring in a crossbow and bolt, but we are not allowed to; not even the bolt, which is still an offensive weapon. It remains for me to thank all noble Lords who have spoken, including my noble friend on the Front Bench. I thank all noble Lords for their support. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Abolition of Domestic Rates Etc. (Scotland) Bill
8.41 p.m.
Consideration of amendments on Report resumed on Clause 8.
[Amendments Nos. 99 to 110 not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 111:
Page 8, line 22, at end insert—
("(8) In subsection (7)(aa) above, "persons who are severely mentally handicapped" has the following meaning, that is to say, persons suffering from a state of arrested or incomplete development of mind which includes severe impairment of intelligence and social functioning, or such other meaning as may, in substitution, be prescribed.").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 98. I beg to move.
On Question, amendment agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 112:
Page 8, line 22, at end insert—
("( ) Any loss of income to the local authority arising from exceptions under (7) above shall be made good by the Secretary of State.").
The noble Lord said: My Lords, with Amendment No. 112 I beg leave to take Nos. 113, 114A and 114B. This is a matter of growing importance in view of the relaxed mood of the Government in making further exceptions and also in making certain remissions under subsection (7) of this particular clause. Any exception that is made, any remission that is made, is automatically a loss of revenue to the levying authority.
The question was asked more than once, and we were not entirely happy with the answers that we got from the Minister of State, as to the loss of revenue to the levying authority from these exceptions. What we suggest is that it should be made up directly to the authority from the Scottish Office, and not left to the business of "taking into account" when it is a matter
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not of the rate support grant but of the new RSG, the revenue support grant as it is going to be known.
When you take the remissions that were to be granted to students, for instance, where instead of paying 100 per cent. they now will have to pay only one-fifth of that, that is a loss of four-fifths of each of the personal liabilities that were going to fall on students. There are to my calculations, and it may be many more, at least 100,000 students who will be covered by this. Taking the sum that will now have to be paid as against what should have been paid, £60 as against about £300, it will be a loss of over £10 million to the Scottish levying authorities.
But when you take the student population, knowing that they are concentrated in Glasgow with its two universities, its technical colleges, commercial colleges and the rest, and when you take Edinburgh with its considerable number of students, St. Andrew's, Aberdeen, Stirling, the loss is going to fall not on a great many particular areas but a definite number of particular areas. We suggest that this should be made up not through purely rate support grant, or revenue support grant as it is going to be called, but directly to the authorities affected—I think it is sensible to appreciate that—otherwise it means that the same expenditures are going to fall on many fewer people. The fewer people who pay the personal charge, the higher that personal charge will be.
It is bad enough in relation to the normal growth of expenditures with the limitations being put on the levying powers of the local authorities in respect of non-domestic rates, limiting it to a base plus a rather fictitious index of retail prices which bear no relation to the expenditures of local authorities. Very soon—and I have said this before—the personal charge is going to be as big a thorn in the flesh of people in Scotland as ever rates were.
It will depend on how this is made up to a considerable extent, and we insist that it should be made up by the Scottish Office. The suggestion has been made that there ought to be a special grant in respect of this kind of thing, but certainly it should be made up directly to those most affected. It is not good enough just to say, "It is all right, we will make this up through calculations on the need support". These are special expenditures, special levies, replacing what they could rightly estimate in respect of rates, when any rebates which they gave they gave knowing what the result would be. This is going to be much more difficult to estimate.
I admit that the word "remission" is not in the amendment but it virtually follows from our limiting this to what the Government have said and where they actually put the amendment in relation to students as an addition to subsection (7) of this particular clause. These specific authorities are going to suffer the heaviest of all, and they should be given the satisfaction of knowing that it is the Government who are paying for the exceptions and remissions and not the local people. I beg to move.
Lord Glenarthur: My Lords, at Committee we discussed similar amendments to those which the noble Lord has moved and referred to. I made it clear that under the proposed future arrangements for revenue support grant it will—even if the noble Lord

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does not like the words—be possible to take account of reliefs and exemptions from the personal community charge. The mechanism will be the subject of consultation in due course with the Convention of Scottish Local Authorities.
I cannot accept, however, the proposition in the amendment that there should be some form of specific compensatory payment. The approach followed under successive governments has been that general support for local authorities should be provided through the rate support grant mechanism. It therefore seems sensible to continue this in relation to exemptions from the community charge. It would however be premature to go into the details of the procedures by which account should be taken of exemptions in the distribution of revenue support grant. Basically, however, exemptions represent a reduction in the number of tax paying units and the eventual mechanism will have to ensure that that is taken into account in the calculations in a way which produces fair and reasonable results.
I should have thought that not only does fairness take account of the particular areas—a point which the noble Lord. Lord Ross of Marnock, raised—but students come into this matter in the way in which I think he hoped they would. So pending the detailed development of the system in consultation with CoSLA, it would be wrong to say more than that at this stage.
I hope that in the light of that further information, and with the explanation that students come into the category which would have the effect which the noble Lord has described, he will be able to withdraw the amendment.
Viscount Thurso: My Lords, I sympathise with the Minister in his wish not to pre-empt discussions on the mechanism for the way in which these sums are repaid. I should like him to assure us, however, that there is every intention that they should be repaid in full in the sense that the decisions which give rise to the rebates are being made by central government and not by the local authorities. They are imposed upon the local authorities, they are totally different from the constraints and considerations which control the rate support grant.
The rate support grant is supposed to take into account the differences between local authorities, but in this case there is no difference between one local authority and another, except in the amount of the rebates. The effect of the rebate is the same, whatever the local authority. If there are students within your local authority area who are rebated, they will automatically qualify for rebate. You will automatically get the 20 per cent., or whatever it is. If you have mentally handicapped people, they will automatically qualify for 100 per cent. and the local authority will automatically get nothing on their behalf.
It is important that we should know whether it is the intention of the Government, where the burden of rebating falls heavily on the local authority, that it should not unduly disadvantage that local authority in being able to cut its coat according to its cloth. That is
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surely what the Government intended that local authorities should do. I should like to receive that assurance if that is what the Minister means.
Lord Glenarthur: My Lords, with the leave of the House, I hope that the noble Viscount will accept that the point which he has made is surely encompassed by the words which I used when I said that the eventual mechanism will have to ensure that that—the concerns which have been addressed by the noble Lord, Lord Ross of Marnock—is taken into account in the calculations in a way which produces fair and reasonable results. I cannot conceive for a moment that the concern which the noble Viscount raises and indeed the concerns raised by the noble Lord, Lord Ross of Marnock, are not exactly the matters which go towards achieving those results.
Lord Ross of Marnock: My Lords, I said earlier when we spoke about this that it is all very well to stand at the Dispatch Box and say that the concerns will be taken into account. It is the Secretary of State who makes all the decisions. He can have all the discussions he likes with the local authorities, but when they come down to the business of the revenue support grant, the aggregate expense of the local authority is determined by the Secretary of State. I have never known the local authorities in recent years to accept as fair what the Government have decided.
A second point arises as to what percentage the Government will pay. Once again, there is no discussion about this; it is just laid down by the Secretary of State. Then the other important matter from this point of view, and where the university area is being directly affected to a great extent, is the allocation system. I have never known local authorities be satisfied with changes which were made—and they could be made every year. You decide that the figure will be 56·6 per cent. (which is what it is now) but Strathclyde does not get 56·6 per cent. Strathclyde gets only 49 per cent. There are other areas which get far, far more. There was a time when Orkney and Shetland received very considerable sums; but they do not do so now for the very simple reason that the resources of Orkney and Shetland increased very considerably as a result of oil. But that is not so this year; things are slightly different.
This power of flexibility and variation has been used in surprising ways by the Scottish Office in recent years. I have heard them accused of gerrymandering; they can hit a local authority by a formula which they dream up or they can help a local authority. Here is something which we have decided today, and we want to ensure fairness.
Quite apart from all these calculations and possibilities in the revenue support grant, we could do it virtually by a specific grant where it will go directly to the areas affected. It is easy to know where the university towns are and the areas which will be affected. Surely it is fair to ensure that they will be recompensed by decisions which were not taken by them but by Parliament itself, guided of course by the Secretary of State.
It is my concern, that we shall not get that. People have for a long time stopped believing in the fairness of the Scottish Office in relation to grants to local

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authorities. It has spread even to doubts about their fairness in respect of the allocation of those grants. We shall now have a new system of allocation this time and I think it is all the more important. We have not come to it yet and I shall not say very much about it when we do so. I shall just point out the difficulties which will arise. We are going to try and see that it is fair. There are enough questions about this Bill and its fairness without getting into doubts which are being thrown on the credibility of the Government being fair in relation to grants and to the allocation of these grants.
However, this crowded House is not in the mood to hear very much more from me tonight. The House will hear more, but not on this subject. I beg leave to withdraw the amendment. I trust that probably at the next stage—it is never too late for repentance—the Government will change their mind again. I am very glad that the noble Lord, Lord Home, is still with us. He can use his influence. I hope he has reflected on what I told him about his presence at the Scottish Grand Committee and has checked up on it. It is quite right; it was perfectly true.
Amendment, by leave, withdrawn.
[Amendments Nos. 113, 114, 114A and 114B not moved.]
The Deputy Speaker (Lord Strabolgi): My Lords, I have to inform your Lordships that if Amendment No. 115 is agreed, I cannot call Amendment No. 115A.
Lord Ross of Marnock Lord Ross of Marnock had given notice of his intention to move Amendment No. 115:
Page 8, line 23, leave out subsection (1)
The noble Lord said: My Lords, It would be disastrous, would it not, if there were acceptance by the Government of such an amendment. It would have such a terrible effect that I had better not move it.
[Amendment No. 115 not moved.]
9 p.m.
Clause 9 [Determination of amount of personal charge]:
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 115A:
Page 8, line 25, after ("prescribed") insert ("being not earlier than three months after the Secretary of State announces the Rate Support Grant settlement").
The noble Lord said: My Lords, this amendment is merely to give the local authorities a little more time before they actually set the rate. Subsection (1) directs the estimating of the personal community charge before the beginning of the financial year in the same way as rates are presently determined. If, later, it is found that the yield is insufficient or that reliefs are inadequate, what happens under this subsection of Clause 9? This is especially true in the early years before trends have become apparent, or experience of variations has been gained.
In the case of rates, most local authority officials have long experience and understand the system fairly well. There is a relatively stable property base and a
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stable domestic rate base. I understand that in 1985 in Fife there was only a 4·8 per cent. appeal rate against rates. That is very good indeed and shows how accurate the local authority assessors have been.
As regards the adjustment of rates, a fraction of 1 per cent. becomes easy if one knows the system which is being operated. But this is all new, and relatively minor decisions to increase rebates or abatements, or to regulate exempted or included classes, could greatly alter the yield. I hope the Minister will agree that it should be possible to prescribe in good time and certainly not earlier than three months before the rate must be made. I hope that he will so prescribe and announce the rate support grant settlement in order to allow the local authorities some degree of freedom at the beginning of the operation of the Act in settling their community charge. I beg to move.
Lord Glenarthur: My Lords, we debated at the Committee stage a previous incarnation of the rather more specific amendment in the name of the noble Lord, Lord Carmichael of Kelvingrove. This seeks again to probe the timetable on which the revenue support grant settlement, which will of course replace the rate support grant settlement, is to be announced. As I have said on numerous occasions, these arrangements will of course be discussed with CoSLA and its views on the amount of time necessary between the announcement of the revenue support grant settlement and the determination of the personal community charge will be taken very carefully into account.
I can repeat the assurance which I gave at Committee stage that the procedures for announcement of decisions on revenue support grant, like those for rate support grant, will allow adequate time for local authorities to make their expenditure decisions. We are convinced that the present degree of flexibility in that timetable, which will be carried over into the new system, will enable a workable system to be set up leaving room for late adjustments when circumstances warrant these, as was the case for 1987–88 when the Rate Support Grant Order was revised early in February to provide extra expenditure provision and grant for the teachers' pay settlement reached in January.
With that example and in the light of that explanation I hope that the noble Lord will feel reassured.
Lord Carmichael of Kelvingrove: My Lords, I cannot say that I am overwhelmed, but I take at least some comfort from what the Minister said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Liability for and calculation of standard community charge]:
[Amendment No. 116 not moved.]
Lord Gray Lord Gray moved Amendment No. 117:
Page 9, line 4, leave out ("and") and insert—
("(bb) part-residential subjects: or")
The noble Lord said: My Lords, I tabled this amendment because, not for the first time, I encountered a crisis of understanding when

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confronted with the not altogether easily understood working of this piece of legislation. I am surprised that part-residential premises have been excluded from this clause. I am unable to understand whether this is deliberate government policy. If it is, I am surprised. If not, then, surely, if part-residential property is excluded, many people will escape what the Government wish them to pay—the community charge. If the draftsman does not consider that such a dwelling can exist, I am happy to invite him to spend this coming week-end with me. I shall introduce him to premises where there is a place of business on the ground floor and where upstairs there are premises which the proprietor of the business lets to someone for a year, 18 months or more. I should have thought that the exclusion of part-residential premises from this clause is a mistake. I beg to move.
The Earl of Dundee: My Lords, I am grateful to my noble friend Lord Gray for that explanation and for the useful work which he is undertaking in connection with this Bill.
However, I do not feel able to accept this amendment. I think that it is unnecessary. I believe that the answer to my noble friend's problem is to be found in Clause 4 which, as my noble friend Lord Glenarthur explained at Committee stage, deals with premises which the noble Lord, Lord Gray, perhaps has in mind, part occupied as a dwelling house and part used for business purposes. The typical example is a shop with a flat above.
Under Clause 4 the dwelling house part and the shop part will be regarded as separate subjects. The shop, as the non-domestic subject, will be entered in the valuation roll and non-domestic rates will be levied on it. The flat will be a domestic subject. It will be removed from the valuation roll and if it does not constitute the sole or main residence of any person the standard community charge will be payable in respect of it. Therefore it seems unnecessary to introduce an amendment on its account. In the light of that explanation, I invite my noble friend to withdraw his amendment.
Lord Gray: My Lords, I patently have no support from any part of the House. I am surprised that I have to make this journey back to Clause 4. However, I have confidence in my noble friend Lord Dundee and am prepared to accept his explanation. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Glenarthur Lord Glenarthur moved Amendment No. 118:
Page 9, line 13, leave out ("have been let for a continuous") and insert ("are let for a").
The noble Lord said: My Lords, in moving Amendment No. 118, it may be convenient if I speak at the same time to Amendment No. 119 and also to related Amendments Nos. 132, 133 and 134 on Clause 11. I should like to say one thing in connection with Clause 11, which is that there is a misprint: there are two sets of paragraphs (a) and (b) in subsection (10). I am advised that this will be corrected on the next print of the Bill.
We discussed in Committee the circumstances in which, in accordance with subsection (4) of Clause 10,
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a tenant rather than the owner of premises should be liable to pay the standard community charge. The Government's policy is that liability should shift from the owner to the tenant only in cases where the tenancy is for a substantial period. Twelve months is the figure we have taken, and I do not think there was any serious challenge to that. I have to acknowledge, however, that there has been some difficulty in getting the drafting of the relevant provisions quite right.
At Committee stage the noble Lord, Lord Morton of Shuna, drew attention to the fact that the words that appeared in subsection (4)—
"renewals of a lease (or sub-lease) shall for the purposes of this subsection, count towards its period"—
could mean that the simple act of renewing a lease and thereby taking its total period over 12 months could produce a retrospective liability. The Government accepted that point and the noble Lord's amendment. The purpose of Amendment No. 134, which comes at the end of this group I have described, is to make the comparable change in Clause 11.
But in looking at the relevant provisions we have decided that they are in need of further improvement. At present. paragraph (b) states that liability should shift to the tenant if the premises,
"have been let for a continuous period of 12 months or more".
It is not necessary for the lease to have existed for 12 months before it becomes appropriate for the tenant to be liable: merely that the tenant should have a lease which lasts for a period of at least 12 months. It is the purpose of Amendment No. 118 to achieve that.
If a lease is renewed and thereby its total period exceeds 12 months the tenant thereupon would become liable to pay the standard community charge rather than the owner, but with the deletion made by the noble Lord's amendment to Clause 10 at the Committee stage and the corresponding deletion in Clause 11 which is proposed by Amendment No. 134, there would be no question of retrospective liability arising. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 119:
Page 9, line 15, leave out ("have been sub-let") and insert ("are sub-let").
On Question, amendment agreed to.
Lord Grimond Lord Grimond moved Amendment No. 120:
Page 9, line 20, leave out from ("authority") to end of line 21.
The noble Lord said: My Lords, this is a simple probing amendment and I make no defence of the drafting. I put it down because I and certain people I have consulted would be grateful to the Government for an explanation of exactly what subsection (5) means. Subsection (4) tells us who is liable to pay the standard community charge and subsection (5) tells us to whom the charge will be due. I am not sure that any equivalent subsection appears in relation to the other charges, and that makes me think there is something about the recipient authority of this charge which differs in some way from the other charges.
The subsection reads:
"The standard community charge shall be due to—
(a) each local authority".
That seems fair enough. In fact, it seems so obvious that at first reading I am not quite certain why it is necessary to put it in the Bill. The reason presumably—and I ask the Government to confirm it—is that in most of Scotland two authorities are concerned.
I live in an island area in which there is a single purpose authority but I take it that the reason for these words may be that on the mainland of Scotland there is the region and the district. However, am I right in thinking that even so only one payment of rates is made and the rate is then divided or set between the region and the district? Does this mean that part of the charge will be payable directly to each local authority? That is what it might be taken to mean but I cannot believe that that is the Government's intention.
The subsection continues with paragraph (b):
"(in the case of an islands council)"—
I am not quite certain why that phrase is in brackets but no doubt there is some reason for it—
"the local authority in the area of which the premises in respect of which it is payable are situated".
Again, that would seem to be so fair as to be obvious and I am not quite certain why it is necessary to put it in the Bill. I should find it very peculiar if I were told that I had to pay my charge to the Outer Hebrides or Glasgow. No doubt the Government will be able to explain. Further, as there are two paragraphs (a) and (b) presumably there is some difference in the methods of payment between islands council areas and other areas. Apart from the fact that islands council areas are single authorities, I cannot see what the difference can be. I should therefore be most grateful if the Government will clear up these small but no doubt very obvious points. I beg to move.
9.15 p.m.
Lord Glenarthur: My Lords, as it stands this amendment will simply leave in doubt the position of the islands councils in relation to the standard community charge. It provides that the standard community charge should be due to each local authority in the area of which the premises in respect of which it is payable are situated. That implies that there are two local authorities in all areas, which, as the noble Lord, Lord Grimond, has accurately described, is not the case in the islands.
I cannot accept the proposition that certainly lies within the amendment, even if it does not lie behind the noble Lord's concern, that the standard community charge in some way is not applicable to the islands. That is not the case. Both at Committee and earlier in our discussions today we have considered in some detail the principle and justification for the standard community charge and those considerations apply to the circumstances of the islands in the same way as they apply elsewhere in Scotland.
The intention is that the standard community charge should be payable to all local authorities in the two-tier areas; that will be the regional and district councils. In the island areas it will be the islands council alone. The drafting of subsection (5) simply
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reflects that intention. The noble Lord may not feel that it is particularly elegant but I would argue that the wording is clear.
Viscount Thurso: My Lords, is the noble Lord saying that in Caithness I have to pay Inverness and Wick? Surely "each" implies two. I am resident within the highland region where the headquarters are in Inverness and in Caithness district where the headquarters are in Wick. If I pay each local authority then I pay the region and the district and so I pay twice, whereas the noble Lord, Lord Grimond, who in his wisdom lives in Orkney pays Kirkwall only once.
Lord Gray: My Lords, I think that if the noble Viscount. Lord Thurso, takes a little exploratory trip through the Bill he will find that the authority to whom he will pay will be the regional authority and that the district council will be absorbed into the charge which is levied on him. He has to pay only one authority.
Lord Morton of Shuna: My Lords, surely it would be easier to put it back in something like the words of Clause 8, in which it is quite clear that the person has to pay the community charge to the authority in whose area he is resident. That is quite a simple concept. One could reword this clause to make it fairly clear that it meant the same whether there were one local authority for that area or two. That is surely the point.
Lord Glenarthur: My Lords, with the leave of the House perhaps I may say that the noble Lord, Lord Morton of Shuna, indulges in redrafting at the Dispatch Box with beguiling simplicity. I shall not attempt to follow him down that road. However, in reply to the noble Viscount, Lord Thurso, I think that perhaps he has failed to appreciate one or two other elements of the Bill. The arrangement for setting and paying the standard charges are that each tier sets its own charge but that the charges are payable together to one or other authority. That is provided for by Schedule 2 to the Bill, with which no doubt the noble Viscount is familiar.
Viscount Thurso: My Lords, with the leave of the House, may I come back on this point? It is a question of the use of English. One or other cannot be each. "Each" surely means both.
Lord Glenarthur: My Lords, with leave of the House again, I beg to differ with the noble Viscount. Without going on at very great length about this amendment, I do not think the noble Viscount is right. I think it stems from a misappreciation, for which I do not blame him one little bit, about the way the charge is to be set and the way it will be paid, which, as I have said, is set out in the Bill and again in Schedule 2. I am sorry that I cannot agree with the noble Viscount; but I can assure him that what I have said, and what my noble friend Lord Gray suggested, describes accurately the circumstances. I am also quite content with the drafting, although I have to admit that while it provides clarity it certainly does not provide elegance.
Lord Ross of Marnock: My Lords, I doubt whether it provides clarity. The subsection reads:
"The standard community charge shall be due to—
(a) each local authority".

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That is more than one. We all know that there are two tiers, but I understood that there was only one levying authority and that was the upper tier. I should have thought that the charge was due to the levying authority. The noble Lord, Lord Grimond, has given us something at which we should ask the Government to have another look. The English is not at all good. If we cannot understand it—and we have been dealing with this Bill for weeks—and if the noble Baroness, Lady Elliot, cannot understand it, then nobody can understand it. There is no sharper mind than hers.
Now I see the cavalry have arrived!
Lord Morton of Shuna: It's the crocodile.
Lord Ross of Marnock: My Lords, that is a lawyer, with no sense of humour, suggesting that it is not the cavalry but the crocodile! I thought it was America that the crocodile went to, not the House of Lords.
To my mind, there is a case for taking the clause back. Is there to be a district charge and a regional charge? Will they each claim on the owner of the premises within this area or will the charge be paid and then divided? Is there to be just the one charge and later on, when it is levied, will it be taken by the authority which receives the money and paid down to the other authority? The clause is very badly drafted. I can understand what it means because I have been looking at so many papers telling me what the district standard charge will be and what the regional standard charge will be and then the two come together. I do not need to do that now because there is only one authority. But these words do not properly and adequately describe the position, so I suggest that the noble Lord takes this back and has a look at it, without the noble Lord, Lord Home, telling him to do it.
Lord Wilson of Langside: My Lords, if I may contribute to these hilarious exchanges, there is of course a legal statutory construction. If Parliament in its wisdom passes a Bill which is open to two constructions, the courts will interpret it in accordance with that interpretation which is most consistent with common sense. I do not think the draftsman would want to put the courts in that position too often and perhaps another look would be advisable.
Lord Glenarthur: My Lords, with the leave of the House, perhaps I may have one more shot at explaining to the noble Lord what this means. Of course I shall take the matter away and look at it. However, I am not going to give any commitment as to any sort of changes, and I hope that the noble Lord will feel—although he may well not—after my further explanation that it makes sense.
Clause 10(5) refers to,
"Standard community charge shall be due".
That is to say that each local authority gets the standard charge it determines but it is payable only to the regional council in the case of regions or districts in the case of others—
Lord Ross of Marnock: What others?
Lord Glenarthur: —or rather in the case of the island authorities. That introduces two different concepts. Further explanations are being showered upon me. I think that the best thing I can do is to write to the noble Lord with a lengthy explanation. However, I do not feel that it will be possible to change this. I am happy to look at it constructively and seriously. I hope that with that undertaking the noble Lord will be happy.
Lord Grimond: My Lords, I am grateful to the Minister, not only for struggling with this serpent but for saying that he will write to the noble Lord, Lord Ross of Marnock, and indeed that he will think about it again. However, I must say that I think we all understand what is meant and that there is all-party agreement about it—including the noble Lord, Lord Gray. The point is that the Bill does not say it. That is the difficulty we are in. When the attention of the Minister is drawn to this by such eminent grammarians as my noble friend Viscount Thurso and the noble Lord, Lord Ross of Marnock, I hope that he will consider the point. I assure him that the officials of my local authority were puzzled as to why it is put in this particular way in this particular part of the Bill and nowhere else.
The noble Lord has been given a loophole by the noble Lord, Lord Morton of Shuna. In that connection, I must make a general apology to the House. For some time I have been referring to the noble Lord, Lord Morton, as learned. It has been drawn to my attention that he is not learned at all! That comes as a blow to me and I assure the House that I shall regard him as learned but in pectore in future and not in public. However, he was supported by my genuinely learned friend Lord Wilson of Langside. Surely, when two such eminent lawyers, learned or not, agree that the wording could be improved, it is up to the Government to put it in simple English. I hope that that will be done. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 121:
Page 9, line 30, leave out from ("number") to ("as") in line 31.
The noble Lord said: My Lords, I do not think that there is any doubt about what this amendment means. Subsection (7) deals with the question of the multiplier. It lays down that the standard community charge multiplier means,
"such number, being neither smaller than 1 nor greater than 2, as the local authority which determines the personal community charge to which the multiplier is applied shall … determine".
The charge may be standard. The premises to which it applies are not standard. We can take the example of a cottage in Argyll which is probably worth about £100 with a rateable value of £20, or we can take a mansion, only three miles away from it and owned by somebody who lives in the stockbroker belt, or anywhere else for that matter. They both have to pay the same amount. It just is not right that they should all pay between one and two. The discretion of local authorities lies only between one and two. That means that the discretion lies between £200 and £400 and that it must be standard for all. If the amount is £200, that is too high for the small cottage but not high

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enough for the mansion, which may be owned or let. The rates the owners are presently paying are probably three times that amount. In one case it is too dear and in the other case too cheap.
In the amendment I suggest it should be left to the discretion of the local authority as to what shall be put, and they should also be given power to vary the multiplier in respect of the premises concerned. We can take the business of standardisation of charge too far and we then get into difficulty. Certainly there is no justification in respect of this matter, be it a second home or a place that is rented for five years.
I do not know what it is going to mean in respect of the actual rent in the future. The rent will increase and the personal charge will be very much lower than the rates. In the case of the small house it will be very much more than it is worth; in fact, owners will probably pay as much in standard community charge as would be the capital value of one small cottage—and an uncomfortable one at that. I do not think it is fair or right. It is wrong to tie the multiplier down to between one and two for all properties and give no further latitude to the local authorities. I beg to move.
9.30 p.m.
Lord Sanderson of Bowden: My Lords, on a point of information can the Minister say whether or not the noble Lord, Lord Ross, is right when he says that the figure has to be standard at, for example, 1·5 for all cottages or big houses right across Strathclyde; or is there any discretion between a small house and a large house? I have not studied the point and so I do not fully understand. I thought there might be some discretion between one and two, but does it have to be the same for each particular property?
Lord Ross of Marnock: My Lords, if that is not so, then it is not standard.
Lord Glenarthur: My Lords, this amendment was originally to be connected with Amendments Nos. 116 and 122. The effect of the amendments would presumably be to make the standard charge what the Opposition have always claimed it is; namely, a property tax. I am in complete disagreement with the proposition that a standard charge is a property tax, and I have to go further and say that I am wholly opposed to the proposition that it should be made one by the mechanism of the amendments.
As the Green Paper explained, the standard charge is intended to recognise the fact that, with the abolition of domestic rates, the owners of second homes or other domestic property which does not have a registered resident would have a substantial windfall. The intention of the standard charge is therefore broadly to replace the income which local authorities would otherwise lose. The proposal originally contained in the Green Paper was that the standard charge should be set at two units of the personal community charge, but on consideration the Government decided that local authorities should have discretion—and this I think is the answer to my noble friend Lord Sanderson—to set the multiplier in the range from one to two units, allowing a measure of local flexibility.
In the course of the Committee stage noble Lords opposite argued that the standard charge was a
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property tax. I could not accept that then, and I cannot accept it now. I think it should more properly be viewed as a contribution towards the cost of the local services enjoyed by the owner of the property in question. Some of these will undoubtedy be what might be described as property-based services, such as the fire service, but others will not. When a second homeowner is in residence there he uses local services such as roads, street lighting, cleansing or sewerage, and has access to the local library and the protection of the local police, for example—all of which are services which are not related to his property, be it large or small. There is no question but that the contribution he makes towards these services is a property tax. Nor is there any justification for varying that contribution according to the size or value of his property, or whatever other factors in relation to his property the noble Lord has in mind.
It may be that this amendment will reveal something which the noble Lord, Lord Ross of Marnock, and those supporting him have not addressed in any great detail during our debates, although they have referred to it. That is their attachment to the concept of a property tax. I notice that the noble Lord referred to capital value, which is one of the points that his party has raised from time to time in suggesting alternatives to the community charge. In the same way, the Alliance has addressed its attachment to a local income tax.
If the noble Lord is arguing for the retention of the present rating system in some form, I hope he will develop that theme rather more; he has not yet done so. In any case, I find the proposals unacceptable and I hope that the noble Lord will not press them.
Lord Morton of Shuna: My Lords, the noble Lord has made it perfectly clear that we are dealing with the same multiplier, one or two or anywhere between, whether it is for something of the size of Inveraray Castle or a room and kitchen cottage in Inveraray. Both are assumed to be used as a second home. The allegation made by the noble Lord is that they use the services equally.
I recollect that Inveraray Castle caught fire some years ago. The cost to the local authority of bringing fire appliances from Dumbarton, Glasgow and elsewhere, was rather higher than might be involved for a room and kitchen cottage. Surely that is something to be looked at again.
Lord Gray: My Lords, living very close to Inveraray, I must take slight issue with the noble Lord, Lord Morton of Shuna, on behalf of my most noble friend the Duke of Argyll about the fire. The noble Lord has produced a red herring which is simply not appropriate tonight or at any time.
Lord Ross of Marnock: My Lords, at least we have learned something. I hope that the noble Lord, Lord Sanderson, learned something. I was right. The size of the house does not matter. It relates purely to the house, even if it is a second home which presently has rates of £3,000. In future it will incur a charge based on a multiplier of between one and two. There is no power to vary it either up or down. It is a standard charge. It will be welcomed by some; it will not be understood by another who has an uncomfortable but enjoyable little cottage in Argyll.

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It could be someone in another part of Scotland who is already paying personal charges in respect of himself, his wife and family. They are already paying for the country cottage even when they are not there. They will be paying an amount that is far more than they are presently paying in rates for that country cottage. The Minister cannot justify a country cottage costing the same as a palace, a castle or a mansion house. Mansion houses are let out. I have come across surprising people in certain parts of the Highlands of Scotland I have been touring who have taken out the let on a place. There is no justification of fairness. The point that we make is that there is as little fairness in this as there was in respect of the personal charge. It would be far better to take such properties out of the personal charge and not call them domestic subjects but make them liable to the non-domestic charges which will continue.
Once again we have shown the unfairness and the inequity of this monstrous Bill. If people do not know that now, they will know it soon enough. The smiles on the faces of some people at present at what they will gain from the Bill will disappear when they realise how many people will lose from it in surprising ways. This proposal will not affect the working people of the Gorbals. They do not have second homes in the country. A great many honest-to-goodness people who have managed to save for or rent something within their means will now discover that they will pay as much for that property as someone from the well-heeled parts of England who has let out his spare castle.
There is no fairness in that. It may be a mistake to try to persuade the Government of that. It might be just as well if we let them go on their way and gave them no time for repentance. This provision is unfair. I am glad that the noble Lord, Lord Sanderson, now realises what "standard" means in respect of this proposal. I gained the impression that he was rather surprised to find that the discretion relates solely to the amount to be levied no matter the state of the property, provided it is occupied and furnished.
However, at this late stage when I can almost hear the trains leaving Euston I think that I had better beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 122 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 123:
Page 9, line 40, leave out ("subsections (9) and (10)") and insert ("subsection (9)").
The noble Earl said: My Lords, we had of course an extensive discussion in Committee on the proposition that the standard community charge should not be payable for three months on property which becomes unoccupied and unfurnished. This was put forward in order to avoid properties becoming liable for the standard community charge for very short periods; for instance, they were being sold but the new owner had not yet moved in. During the debate we had on this point in Committee a number of strong arguments were put that in particular circumstances the period of three months might not be sufficient and might cause hardship. In particular, this was argued in relation to changes of property ownership, where the owner might
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have difficulty in selling his property, or in the case of agricultural tied houses which cannot be let to anyone but an agricultural worker.
I have to say that on consideration the Government find these arguments persuasive. The amendments which I have put down therefore allow for the levying authority to have discretion to extend the period of grace to any period longer than three months. This will allow levying authorities to take fully into account particular local conditions and particular individual circumstances, while providing for a minimum period of grace of three months (or the period for which the property is actually unoccupied and furnished, if it is shorter). This, as I understand it, is exactly the intention of the amendment put down by the noble Lord, Lord Morton of Shuna, and, I think, of Amendments Nos. 123A and 124A in the name of the noble Lord and his noble friend Lord Carmichael of Kelvingrove. However, we have adopted a slightly different drafting approach. I therefore commend the government amendments to the House and hope that in the light of this explanation the noble Lord will be willing to withdraw his amendment.
9.45 p.m.
Lord Morton of Shuna: My Lords, although I have not been here very long, I learnt long ago that even if one proposed an amendment that was acceptable in principle to the Government it was necessary that the Government reword it in some way or another. That basic rule is inflexible. Of course I accept that the Government's word must always be better—it is the natural rule of things—and that any amendment suggested by any other Peer must always be worse. Again, that is the natural rule.
I am very pleased that my argument at Committee stage is acceptable in principle even though the amendment had to be reworded. I am pleased to accept the amendment. I shall in due course withdrawn those in my name.
On Question, amendment agreed to.
[Amendment No. 123A not moved.]
The Deputy Speaker (Lord Airedale): My Lords, in calling Amendment No. 124 I have to say that if it is agreed to I cannot call the next amendment.
Lord Glenarthur Lord Glenarthur moved Amendment No. 124:
Page 9, line 41, leave out from second ("of") to end of line 43 and insert ("whichever is the shorter of the following—

(i) the period for which the premises are unoccupied and unfurnished;

(ii) a period of 3 months or such longer period as the local authority to which it is due may determine").

On Question, amendment agreed to.
[Amendment No. 124A not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 125:
Page 9, line 47, leave out subsection (10).
On Question, amendment agreed to.
[Amendment No. 126 not moved.]
Clause 11 [Liability for and calculation of collective community charge]:
[Amendment No. 127 not moved.]
The Deputy Speaker: My Lords, in calling Amendment No. 128 I have to say that if it is agreed to I cannot call the next amendment.
The Earl of Dundee The Earl of Dundee moved Amendment No. 128:
Page 10, line 27, leave out subsection (2) and insert—
("(2) This section applies to—

(a) premises which are not subject to non-domestic rates and either are designated by the registration officer under subsection (2A) below or fall within such class or classes of premises as may be prescribed;

(b) premises which are part residential subjects and either are so designated or fall within such class or classes of premises as may be prescribed.

(2A) Premises may be designated under this subsection if, in the opinion of the registration officer—

(a) in the case of premises not subject to non-domestic rates, they are used; or

(b) in the case of part residential subjects, the residential use made of them is

wholly or mainly as the sole or main residence of persons most or all of whom reside there only for short periods.").
The noble Earl said: These are technical drafting amendments to correct a flaw in the Bill which was pointed out at Committee stage by my noble friend Lord Gray. I am most grateful to my noble friend for having pointed out this drafting flaw. I commend the amendment to the House.
Lord Morton of Shuna: My Lords, the noble Lord, Lord Gray, no doubt knows what this is about but he is not here. Perhaps the noble Earl, Lord Dundee, can explain to those of us who are here what it is about.
The Earl of Dundee: My Lords, I shall certainly be delighted to provide the noble Lord, Lord Morton, with further details. The amendment relates to the provisions whereby, in certain circumstances, part residential subjects might be designated as suitable for the collective community charge. This might arise, for instance, in cases where premises housed both a hostel and an associated day centre providing a service for people other than its residents. In that case, the premises would be part residential subjects as defined in Clause 26, and the assessor would be required to apportion the net annual and rateable value as between the day centre and the residential use made of the subjects.
If, however, the registration officer wished to designate the residential part of the premises as suitable for the collective community charge, the difficulty pointed out by my noble friend Lord Gray arises; namely, as presently drafted subsection (2) of Clause 11 requires such premises to be designated as premises which are used wholly or mainly as the sole or main residence of persons, but under the definition of part residential subject in Clause 26 the premises would be used only partly as a sole or main residence. There is therefore a mismatch between the two provisions.
Therefore these amendments correct that fault by providing that in the case of part residential subjects, it is the residential use made of them which the registration officer would have to look at in considering whether to designate the premises. If that residential use was wholly or mainly as the sole or main residence of persons most or all of whom reside
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there only for short periods, he could designate the premises as suitable for collective community charge treatment. This gets round the problem.
Lord Carmichael of Kelvingrove: My Lords, I cannot say I am grateful for the efforts the Minister has made in trying to explain the amendment that he moved; and I am afraid that I shall need to give this considerable thought and have it examined very carefully. I am concerned that because he has moved Amendment No. 128—the part that Amendment No. 128A changes or amends—that means that this simple amendment I thought I had, which dealt with houses of refuge, is not able to be applied. Therefore, unless the Minister can assure me that the substance of Amendment No. 128A will in some way be accepted by the Government, I shall not oppose it; but I wish to look at Amendment No. 128 very carefully and will try to find an amendment for Third Reading that will bring in the meaning and reach the same purpose as Amendment No. 128A which seeks to include homes of refuge in the collective community charge.
Lord Morton of Shuna: My Lords, having heard the explanation, I thought I heard the noble Earl, Lord Dundee, say that "part residential subjects" meant "part" in the sense of a physical part rather than a time part that was used for residence. That seems to be inconsistent with the position of university residences. His noble friend the Minister told us about university residences, which are used during term time as residences and during vacations for commercial, holiday or conference purposes, where one took the part to be a time part rather than a physical part. It seems to me that the two explanations, in so far as I understood them, were inconsistent. I wonder whether the noble Earl can clear that up.
Are we talking about time, like a university residence which for 26 weeks of the year is used as a residence for students and for the rest of the year is used for commercial purposes? Or are we talking about part of a subject, the bedroom area of the subject which is being used, or are we talking about both?
The Earl of Dundee: My Lords, with the leave of the House, the answer to the question posed by the noble Lord, Lord Morton, is that the reference to residential use is that it can be both for time or physical.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, I should have said that Amendment No. 128 having been agreed to, I cannot call Amendment No. 129.
[Amendments Nos. 128A, 129 and 129A not moved].
The Deputy Speaker: My Lords, before calling Amendment No. 130, I have to say that if this amendment is agreed to, I cannot call the next amendment.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 130:
Page 10, line 36, leave out subsection (3) and insert—
("(3) The Secretary of State shall prescribe factors to be considered in determining whether premises are to be designated

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under subsection (2) above, including the definition of what is to be considered a "short period" and the registration officer shall have regard to such factors in determining whether to designate any such premises.
The noble Lord said: My Lords, one of the troubles in respect of this is the matter of definition. We have asked about and drawn attention to this before. This concerns the definition of "reside there for only short periods", which arose in Amendment No. 129A. We suggest in the amendment:
"The Secretary of State shall prescribe factors to be considered in determining whether premises are to be designated under subsection (2) above, including the definition of what is to be considered a 'short period' and the registration officer shall have regard to such factors in determining whether to designate any such premises".
We started off saying not only here but in another place that collective community charge would he used very rarely. It was going to be very restricted indeed. But as we have gone along discussing these matters I have heard it applied to hostels and to various other establishments and I have even heard it applied to students in respect of the flats they share. Those of us who have had children at university and know how students group together with five or six of them sharing a flat will appreciate just what this means.
We want to be absolutely clear what are the factors to be considered in determining whether premises are to be used in this respect. It is a simple question. We have made our suggestion here that it should be done by regulation. I hope that the Government will see their way to accepting the amendment put down by the noble Lord, Lord Kirkhill. Unfortunately, he was probably anxious to get back to Aberdeen and see bow they get on with Rangers on Saturday. It would be a delight if, as well as Aberdeen scoring a few goals, we were able to convey to him the good news that the Government had seen fit to accept his amendment in his absence. I beg to move.
Lord Glenarthur: My Lords, one of the main criteria for application of the collective community charge will be that individual registration of the residents of particular premises would be not practicable. One of the other amendments which was originally grouped with this one—Amendment No. 129, which has not been moved—would have sought to include that criterion on the face of the Bill. That would not, however, have been appropriate. The words on the face of the Bill—that the collective community charge will apply to premises which are used solely or mainly as the sole or main residence of persons most or all of whom reside there only for short periods—provide a more precise description of the circumstances in which the collective community charge is to be applied.
In prescribing under subsection (3) the factors to which the registration officer is to have regard in designating premises, we will bear in mind the question of the practicability of individual registration and this may be supplemented by guidance issued by the Secretary of State. But I cannot agree that the criterion should appear as such on the face of the Bill.
Amendment No. 130 would seek to expand subsection (3) to include the provision that the meaning of "short periods" would be prescribed, and Amendment No. 129A would require such definitions to be prescribed within 14 days of enactment of the
1702
Bill. I can confirm that the regulations will in effect provide guidance on what is to be considered as a "short period". It might indeed make sense to set some limits on the frequency of moves with which the registration system would be expected to keep up on the basis of individual registration. That would have regard to practical factors like the time it would take to make an entry in the register, notify the individual concerned and send him a bill: that process is bound to take several working days. These provisions will be the subject of consultation with interested bodies in due course. I must say, however, that the form of drafting of the amendment of the noble Lord, Lord Kirkhill, is not necessary since the point is covered by the more concise form of the present subsection (3); and that it would be quite impracticable, and unnecessary, to bring forward regulations on the timescale suggested by Amendment No. 129A.
Lord Ross of Marnock: My Lords, did the Minister say that it would be undesirable or impracticable to bring forward the regulations within this timescale? I appreciate that it will be impracticable within 14 days of the passing of the Act. We are now within about a week of the passing of the Act, somewhere around 12th May. If we allow 14 days after that I think Ministers will be preoccupied with other matters and they would not be able to bring forward the regulations as we probably would suggest.
I accept that in the circumstances it would not be practicable, even though it may be desirable, to do this within 14 days of the passing of the Act, but I thank the noble Lord for his explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 131:
Page 10, line 37, leave out ("(2)") and insert ("(2A)").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 128. I beg to move.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 132 to 134:
Page 10, line 43, leave out ("have been let for a continuous") and insert ("are let for a").
Page 10, line 45, leave out ("have been sub-let") and insert ("are sub-let").
Page 11, leave out lines 1 and 2.
The noble Lord said: My Lords, I spoke to Amendments Nos. 132, 133 and 134 with Amendment No. 118. I beg to move Amendments Nos. 132, 133 and 134 en bloc.
On Question, amendments agreed to.
The Deputy Speaker: My Lords, in calling Amendment No. 134A I have to say that if it is agreed to I cannot call No. 135.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 134A:
Page 11, line 15, leave out subsection (7) and insert—.
("( ) The collective community multiplier specified in relation to any premises in the register shall be subject to a monthly re-assessment by the Registration Officer.").
The noble Lord said: My Lords, I beg to move Amendment No. 134A. It is to inquire of the Minister how often the collective community charge can be changed. It is suggested in the amendment that it would be possible to do a monthly reassessment. For many premises this may seem rather too frequent, but on the other hand at least in the beginning until some sort of pattern has been established there are certain types of premises—I think particularly of lodging houses—where the occupancy will vary greatly according to the weather and the season of the year.
I know that in certain lodging houses in Glasgow in the winter people queue up as early as four o'clock in the afternoon to get a bed, whereas I understand that in the summer it is relatively simple to get a bed. At least in the early stages there will be no pattern and there will be great difficulty in establishing the numbers who are going to be in the lodging house or the community premises. I wonder whether monthly would be too frequent, and if so what would the Minister suggest? Will he take it away and perhaps look at the possibility of even varying it between one type of property and another? I beg to move.
Lord Glenarthur: My Lords, this amendment and Amendments Nos. 138A and 138C relate to the mechanics of collective community charge arrangements which we have already discussed in detail in Committee. Amendment No. 134A would provide that the collective community charge multiplier should be subject to a monthly reassessment by the registration officer. But this amendment of course goes against the specific provision in Clause 15(1)(b) that,
"no amendment of the collective community charge multiplier … shall be made or take effect until three months, or such other period as may be prescribed, after the date when the current entry [in the register] is made or takes effect".
We recognise that there may well be a need to adjust the multiplier from time to time to take account of changes in occupancy rates or in the accommodation available. However, there is also a need to guard against persons liable for the collective community charge making unreasonably frequent requests for changes to the multiplier and thereby wasting the registration officer's time. We believe that a restriction of three months is a sensible one and more reasonable than the monthly review which the noble Lord suggests. By making a monthly reassessment of all premises subject to the collective community charge mandatory, the amendent would also require the registration officer to spend large amounts of time checking on information which was in any case unlikely to have changed. I therefore cannot accept the amendment.
The other two amendments, Nos. 138A and 138C, would, in slightly different ways, provide for the reimbursement of the administrative expenses incurred by landlords in gathering collective community charge contributions. We have already discussed the question of whether some form of management fee or its equivalent should be made available to those liable for the collective community charge. Our view is that it would be more appropriate for such a fee to be expressed as a deduction from the actual collective community charge liability of the landlord than that an inevitably cumbersome system
1704
of reimbursement should be set up. We consider that it is indeed reasonable that landlords should be allowed some consideration for the work they will have to undertake in collecting collective community charge contributions, and to that extent I am sympathetic to the amendments in principle. But we consider that a better mechanism for achieving this would be to build into the calculation of the collective community charge multiplier an element taking account of that consideration. We will therefore consider this matter carefully in the course of discussions about the factors which should be prescribed under Clause 11(9)(b).
In the light of this explanation, I hope that the noble Lord will be able to withdraw his amendment.
Lord Carmichael of Kelvingrove: My Lords, I thank the Minister for his explanation, and particularly for the flexibility shown on the other two amendments. On Amendment No. 134A on the frequency and possible frequency of assessing the collective community charge multiplier, I accept that perhaps for the first time three months is reasonable. Thereafter, the local people in the assessor's office will soon get to know the managers they are dealing with and will be able to make some assessment of their rectitude.
At this late hour I hope that the Minister would think over whether there is enough flexibility in the Bill. For instance, it struck me that there could be a particular reason for a lodging house (I am thinking mainly in terms of lodging houses) being almost empty for a short period. Would it be possible for the multiplier to be changed if there were some specific problem, an illness or a fever, which went right through the lodging house? Some of these lodging houses have many rooms. I know of one with a couple of hundred rooms and it could be very serious for the management if they were suddenly paying the multiplier on about 150 rooms, if they were using only about 50. I am asking the Minister if he will take this suggestion away without any commitment, and think in terms of whether there is enough flexibility in this part of the Bill. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Gray Lord Gray moved Amendment No. 135:
Page 11, line 19, leave out third ("the") and insert ("that").
The noble Lord said: My Lords, it is with a sense of great anticlimax that I move this very insignificant drafting amendment which merely brings the phrase affected into line with every other similar phrase in the Bill. I beg to move.
The Earl of Dundee: My Lords, as with the similar amendment to Clause 8 by my noble friend Lord Gray, I am happy to accept this amendment. It clarifies the matter and I see that noble Lords are satisfied with the amendment.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, in calling Amendment No. 136 I have to say that if this is agreed to I cannot call either of the next two amendments.
Lord Glenarthur Lord Glenarthur moved Amendment No. 136:
Page 12, line 29, leave out subsection (15) and insert—
("(15) Without prejudice to any rule of law, where a person—

(a) in respect of his residence in any premises, pays, by way of collective community charge contribution, any sum which (for whatever reason) is not due; and

(b) within 3 months of that payment, claims reimbursement of the sum from the person who, at the time of the payment, was liable to pay the collective community charge in respect of the premises,

the person so liable shall reimburse the other in that sum.").
The noble Lord said: My Lords, in speaking to this amendment I should like to refer to Amendments Nos. 137 and 138. They seek to address the same issue.
It was argued at Committee stage that the present provisions of subsection (15) of Clause 11 might be unduly onerous on landlords of collective community charge premises. Under those provisions a person to whom there has been paid by way of collective community charge contribution any sum which is not due is required, without limit of time, to repay that sum. The amendments therefore have the same effect: of requiring the person who had paid the contribution in error to reclaim payment from the person to whom he had paid it within three months of the incorrect payment. The only difference between my approach and that of the noble Lord, Lord Morton, of Shuna, is—as he will have guessed—a question of drafting, and I hope therefore that he will be willing to withdraw his amendment in the light of mine. I beg to move.
Lord Morton of Shuna: My Lords, I am delighted to accept it. This is the usual situation. I tried to put the amendment into two lines but the Government draftsman managed it in nine lines. No doubt nine lines are far clearer, shorter and easily understood. However, I am perfectly prepared to accept it.
Lord Grimond: My Lords, I hope that the Government will explain why their amendment is considered superior to the two lines of the noble Lord, Lord Morton of Shuna. We must look at these Bills from the point of view of ordinary people and not lawyers.
I hope that the Government will tell us what is meant by:
"Without prejudice to any rule of law".
No doubt it is a phrase well known to lawyers, but I suspect that it is a matter seldom discussed in the pubs of Orkney. As I am doubtful about the effects of both these community charges, I think that what has been said about them is all too true. We should look very carefully at them because I think they will have extraordinary effects.
I should like to know what is meant by:
"Without prejudice to any rule of law".
I should like further to know why the rather long and complicated government amendment is preferred to the short and, I should have thought, intelligible amendment proposed by the noble Lord, Lord Morton of Shuna.
Lord Glenarthur: My Lords, with the leave of the House, I think that part of the difficulty is that this is
1706
not a case where the words must be interpreted by the people at large. It is a fact that they are required to be accurately interpreted by lawyers, as is so often the case. It is very often the case that in legislation we spell out matters with very great accuracy to put them beyond doubt.
I accept that there will always be a difference of view on the drafting of issues such as this. However, I hope that the noble Lord, Lord Grimond, will accept from me that we have looked at this matter particularly carefully and we have found it necessary to use the form of words which we have used.
On the question of the term:
"Without prejudice to any rule of law",
I can say that these words were included to ensure that the common law remedy available in respect of money paid in error is preserved. Therefore, broadly speaking, money paid in error of law would be capable of recovery, whereas money paid in error of fact would not. People will of course be free to use the common law remedy if they wish. That is the effect of the opening words. They may have to do so if their case would be time-barred by the three-month period. However, I imagine that the statutory remedy which we are providing will be sufficient in most cases.
On Question, amendment agreed to.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 138A:
Page 12, line 31, at end insert—
("( ) The person liable under this section to pay a collective community charge in respect of any premises shall be entitled to receive a central government grant equivalent to the administrative expenses incurred in collecting the community charge contribution from persons resident.")
The noble Lord said: My Lords, many people object to becoming unpaid taxgatherers for the Government. This amendment seeks to give them a claim for the administrative costs incurred in collecting these sums for the Government and passing them on. I beg to move.
10.15 p.m.
Lord Glenarthur: My Lords, this amendment, in a slightly different way, would have approached the matter that I believe we discussed on Amendment No. 134A. It would provide for the reimbursement of the administrative expenses incurred by landlords in the collective community charge arrangements. I do not think I can add to what I have already said but if the noble Lord wishes I can repeat my remarks. We have discussed the question of whether some form of management fee should be made available to those liable for the collective community charge. Our view is that it would be more appropriate for such a fee to be expressed as a deduction from the collective community charge liability of the landlord than that an inevitably cumbersome system of reimbursement should be set up.
Lord Ross of Marnock: My Lords, in view of that very clear explanation I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 138B, 138C and 138D not moved.]

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Clause 12 [Community Charges Registration Officer]:
[Amendments Nos. 138E. 138F, 138G, 138H and 138I not moved].
The Earl of Dundee The Earl of Dundee moved Amendment No. 139.
Page 12, line 47, leave out from ("area") to end of line 48.
The noble Earl said: My Lords, the noble Lord, Lord Ross of Marnock, and I are obviously of one mind on this point. There was considerable discussion about the phrase,
"so that it is as comprehensive as possible"
at Committee stage. We originally intended that the phrase should make it quite clear that it was the registration officer's duty to maintain a comprehensive register. On consideration, however, and in the light of discussions, we take the view that the simple duty to prepare, maintain and keep the register up to date is sufficiently clear, straightforward and comprehensive without the added gloss of a phrase that attracted some criticism on the grounds of lack of clarity. For those reasons, I commend the amendment to the House. I beg to move.
On Question, amendment agreed to.
[Amendment No. 139A not moved.]
Clause 13 [Community Charges Register]:
The Deputy Speaker: In calling Amendment No. 140, I have to tell your Lordships that if this is agreed to, I cannot call either of the next two amendments.
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 140:
Page 13, line 27, leave out paragraphs (d) and (e).
The noble Lord said: My Lords, we are naturally concerned about the information that is to be put on any form which is thereafter to be the property not merely of the registrar, and which will be put on the register, but which can also be seen by members of the public. We are told later on the local authority could sell it. I do not know how many people have been watching certain programmes on television about what is done with registers, rolls and the like, and the amount of information that can be acquired about people.
That is the reason for the amendment. It is very late at night to be discussing this important issue. But I am concerned, for instance, about dates of birth. Some people are rather chary about letting the world know what their date of birth is. Politicians do not need to worry: the newspapers have a habit of telling us and reminding us every year that so-and-so is a year older. My birthday was on the 7th, a day when I think we were discussing this issue. I could think of happier days to read that I am a year older. However, there are many people who are a little more coy. Surely, from the point of view of paying this new charge, all that is needed to be known is that the person is over 18 years of age. I could say a lot more but I think that your Lordships have the gist of my concern which has also been expressed elsewhere.
Paragraph (e) refers to:
"the date (which may be before, on, or after the date on which the entry is made) from which he is liable to pay any of these community charges; and"
paragraph (f) continues:
"such other matters as may be prescribed".
That gives a very wide power to probe into the personal lives of quite a lot of people—in fact every single individual over the age of 18. I wonder whether the Government have given any thought to how they will circumscribe the kind of question that will be asked in relation to the personal community charge, the standard community charge and the collective community charge. I beg to move.
Lord Glenarthur: My Lords, this amendment and Amendments Nos. 141 and 142 which are connected relate to the requirements that dates of birth and dates of liability should appear in the register. The provision that dates of birth should appear in the register was brought forward after consideration of the views of local authority practitioners as expressed through the Rating and Valuation Association's rating forum. In order to assist the identification of individuals, it is desirable for the register in all cases to record the date of birth of people who are liable to pay any of the community charges. In the simplest instance that would allow people at one address who shared the same name to be clearly distinguished. More generally, however, the inclusion of dates of birth will be useful when the identity of an individual has to be checked when he moves from one local authority area to another.
I suggest therefore that the inclusion of dates of birth in the register is a sensible provision. I should make it clear that dates of birth will not appear upon the publicly available part of the register so there is no difficulty about breach of confidentiality in that area. The proposal by the noble Lord, Lord Morton of Shuna, in Amendment No. 141 to enter dates of birth only for people under the age of 20 would seriously limit the usefulness of the information for the purposes that I have mentioned, and I cannot accept that amendment.
As for the question of "such other matters" about which the noble Lord, Lord Ross, was concerned, examples of that would be whether someone was a student or was in receipt of child benefit. There may be others as the system develops. That is why there is a need for the power of prescription.
Turning to the provision in Clause 13(1)(e) whereby the dates of a person's liability to pay any of the community charges are recorded in the register, the amendment by the noble Lord, Lord Ross, would delete this provision. The main function of the register is to record the liabilities that people have for the various community charges and there is no point in these liabilities being recorded if the dates from which they start are not also recorded so that for billing and collection purposes the exact nature of any person's liability can clearly be established.
Should the noble Lord wish to move his Amendment No. 142, I look forward to hearing what he has to say. I must say that I find that amendment rather easier to accept.
Lord Morton of Shuna: My Lords, as the noble Lord has mentioned, Amendment No. 141 is in my name. The reason for that figure being put in is that, as I understand, it is the general practice with the electoral register that one has the date of birth only for somebody who becomes 18 during the year. It was to take that into account. If the electoral register has, for example, two John Smiths living in the same house—father and son, perhaps—and no difficulty is encountered in working out which one is voting, I cannot see that it will cause insuperable difficulty for the registrar of community charges, who might even think of putting "junior" after the younger one if he is thinking hard.
Lord Ross of Marnock: My Lords, bearing in mind what the noble Lord said about my next amendment, I think I had better withdraw this one quickly. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 141 not moved.]
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 142:
Page 13, line 29, leave out ("in the register").
The noble Lord said: My Lords, I beg to move Amendment No. 142 formally. I am dying to hear what the Minister has to say.
Lord Glenarthur: My Lords, I was going to say that I recognise that the words in the register are not absolutely essential and I am prepared to accept the amendment.
Lord Ross of Marnock: My Lords, I hope that the hour, the date and the year will be noted and marked down. I express my thanks to the Government.
On Question, amendment agreed to.
[Amendment No. 142A not moved.]
Clause 14 [Setting up of register]:
[Amendments Nos. 142B, 142C and 142D not moved.]
Clause 15 [Amendment of register]:
The Deputy Speaker: My Lords, in calling Amendment No. 143 on the Marshalled List, I have to say that if it were agreed to I could not call Amendment No. 144.
Lord Glenarthur Lord Glenarthur moved Amendment No. 143:
Page 14, line 14, leave out ("three") and insert ("two").
The noble Lord said: My Lords, we recognise, in view of the arguments put forward in Committee, that the period of three years might be considered too long for the purposes of the maximum period for which an amendment can be made with retrospective effect. I have to say, however, that the noble Lord's Amendment No. 144 suggesting a period of one year
1710
still seems too short. While it is likely to be very rare that someone should succeed in keeping his name off the register for more than one year, it is not inconceivable.
If, as we envisage, registration officers will as a normal rule carry out annual canvasses of the roll of their district, the noble Lord's amendment would imply that each annual canvass should pick up all those who are resident but have not declared their liability under the provisions of Clause 18. I think it might be possible that someone who was determined to avoid registration could equally succeed in avoiding being registered as a result of one annual canvass. For that reason, my amendment proposes that the maximum period should be two years. I think that this is a reasonable compromise. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 144 and 144A not moved.]
Lord Ross of Marnock Lord Ross of Marnock moved Amendment No. 145:
Page 14, line 21, leave out from first ("any") to ("entry") and insert ("entry which does not conform to the original intention of the").
The noble Lord said: My Lords, I hope that the Government will look at this amendment. It is well intended and it will be appreciated if, having looked at it, the noble Lord accepts it. I beg to move.
Lord Glenarthur: My Lords, I am not sure that I fully understand what is meant by the words, "the original intention of the entry". At the time an entry is made, both the registration officer and the person to whom the entry relates will have some idea of its intention. If a person to whom it relates thinks that it misrepresents that intention, he can appeal to the registration officer and, if necessary, to the sheriff against the entry and the matter can be sorted out in that way.
However, under the proposal of the noble Lord I take it that it would be for the registration officer to make a judgment of the original intention of the entry and amend the register accordingly. In that case, he would not be required to notify the person affected, so that that person would not necessarily know about the alteration and would not therefore be able to exercise his right of appeal if he disagreed. I fear that the wording of this amendment is dangerously wide.
Lord Ross of Marnock: My Lords, I shall not argue with the noble Lord at this time of night. However, the amendment was well intended and worthwhile. If he had any sense he would have accepted it. Since he has not, and since he has taken so many words to say no, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Dundee The Earl of Dundee moved Amendment No. 146:
Page 14, line 21, leave out from ("and") to ("subsections") in line 22 and insert ("subsection (1)(b) above and").
The noble Earl said: My Lords, this is a drafting amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 147:
Page 14, line 26, leave out ("three") and insert ("two").
The noble Earl said: My Lords, I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 148 to 150 not moved.]
The Earl of Dundee: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Associated British Ports Bill
Brought from the Commons; read a first time, and referred to the Examiners.

Masonic Trust for Boys and Girls Bill
Brought from the Commons; read a first time, and referred to the Examiners.
House adjourned at twenty-eight minutes before eleven o'clock.

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