Sitting of 9 May 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  ENERGY

    Energy Production
    Mr. Forth: To ask the Secretary of State for Energy what proportion of the nation's energy production is provided by the private sector; and what was the proportion in 1979.
    Mr. Hunter: To ask the Secretary of State for Energy what proportion of the nation's energy production is provided by the private sector; and what was the proportion in 1979.
    The Secretary of State for Energy (Mr. Cecil Parkinson): Provisional figures indicate that the private sector currently accounts for 70 per cent. of indigenous production of primary fuels, compared with 55 per cent. in 1979.
    In terms of final energy consumption met by the private sector, that represents an increase from 41 per cent. in 1979 to 73 per cent. now. After the privatisation of the electricity supply industry that figure should rise to 87 per cent.
    Mr. Forth: I thank my right hon. Friend for that most encouraging reply. Will he confirm his belief that this
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    process has been good for both the consumer and the country as a whole, and will he say whether he has any immediate or long-term plans to extend that proportion of private provision even further?
    Mr. Parkinson: The Government have made their position clear. They believe that energy provision, as well as most other industrial and commercial activities, are best carried on by the private sector, and we shall be pursuing that policy with the other industries for which, at present, we have no immediate plans for privatisation.
    Mr. Hunter: Although I quite unreservedly welcome and applaud the private sector's increased role in energy production, will my right hon. Friend take this opportunity to comment on the successful implementation of the Government's wish to see increased competition in energy production?
    Mr. Parkinson: As my hon. Friend knows, a prime purpose of our electricity privatisation proposals is to create competition in generation. We believe that, in the long term, that offers the best prospects for keeping down prices to the consumer.

    Neighbourhood Energy Action
    Mr. Knapman: To ask the Secretary of State for Energy what level of grant he has approved for neighbourhood energy action and energy action Scotland in 1988–89.
    The Minister of State, Department of Energy (Mr. Peter Morrison): My Department's grant to neighbourhood energy action will be £392,000 and to energy action Scotland £68,000.
    Mr. Knapman: I thank my hon. Friend for that reply. Will he confirm that those figures represent an increase, and will he tell us what part the private sector plays in those projects?
    Mr. Morrison: I confirm that those figures are an increase. Last year we paid £341,000 to neighbourhood energy action and £57,000 to energy action Scotland, so

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    there are increases of about 15 and 19 per cent. respectively. The private sector plays a part, but I have made it clear that I hope that next year the two bodies will be able to encourage the private sector to play a substantially increased part.
    Mr. Matthew Taylor: The Minister may be aware that, under the new employment training programme, there is worry that funding will not be sufficient for energy projects and that approved training organisations will not be keen to keep them going? Will he liaise with officials at the Department of Employment about that, and has he any helpful advice to offer for those projects?
    Mr. Morrison: I appreciate, as does the hon. Gentleman, that negotiations must take place as a result of the change, but I am assured that the Manpower Services Commission is keen to ensure that those projects are able to continue.

    Electricity Supplies
    Mr. Tam Dalyell: To ask the Secretary of State for Energy, pursuant to his reply of 28 March, Official Report, columns 719–20, what consideration he has given to the implications for the promptness with which electricity supplies can be called up in an emergency by the grid controllers, of possible differences in interpretation of the contractual obligations to be placed on private generating companies; what assessment he has made of the effects on the cost of operating the grid of changing to a contractual relationship between the grid controllers and private suppliers; and if he will make a statement.
    Mr. Parkinson: All generators will have a commercial and contractual interest in ensuring that the power supply system does not fail in an emergency. Operating procedures in emergencies will be set out clearly in their contracts, and the ability of the grid controllers to manage emergencies should be unaffected. We believe that any costs will be outweighed by the benefits of competition and diversity.
    Mr. Dalyell: Why do the Government think that they know better than Lord Marshall?
    Mr. Parkinson: The Government think that they know better than Lord Marshall because, although he is a learned and powerful figure in the industry, he is only one voice. There are many other people in the industry who know just as much about transmission as he does and who do not agree with him. The president of the Institution of Electrical Engineers does not agree with him. Our professional advisers advised us that what we wished to do was technically possible. Lord Marshall accepts that it is technically possible. He believes that costs will be involved. We believe that those costs are sustainable and will be more than outweighed by the savings from diversity.
    Mr. Rost: What assessment has my right hon. Friend made of the benefits that will result when area boards are able to use the grid to shop around for competitive contracts from new private producers?
    Mr. Parkinson: We think that that is precisely the sort of competition and diversity of supply of electricity that will give rise to competition in prices and will benefit the customer. That will compensate for some of the possible additional costs of ensuring that the system remains safe.
    Mr. Prescott: The technical argument over whether the Secretary of State or Lord Marshall is right will continue, but can the right hon. Gentleman assure us that it is still his belief that prices will be cheaper under the privatisation system and grid separation? He may have seen a recent report by National Utility Services Ltd.—it was produced two days ago—that electricity prices under privatisation will be far more expensive than hitherto and are likely to be the most expensive in Europe.
    Mr. Parkinson: The company to which the hon. Gentleman referred is not entirely unbiased in this instance. It makes its living by giving advice on how to reduce power bills. It therefore has a vested interest in pretending that the bills are extremely high. It has an entirely unrepresentative sample of customers and we prefer to believe the CBI and the Electricity Council, which have agreed figures. I congratulate the hon. Gentleman on discovering—wrongly in this instance—an enthusiasm for the private sector.

    Flue Gas Desulphurisation
    Mr. Heathcoat-Amory: To ask the Secretary of State for Energy how many flue gas desulphurisation units are being fitted to coal-fired power stations.
    The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): The CEGB has announced plans to retrofit FGD equipment to the six generating units at Drax power station and four generating units at Fiddler's Ferry. In addition, FGD equipment will be fitted to the generating units of all new coal-fired power stations.
    Mr. Heathcoat-Amory: This equipment is essential to prevent acid rain, but is my hon. Friend aware that each unit consumes 300,000 tonnes of limestone a year? This has to be quarried at places such as the Mendip Hills in my constituency. Will my hon. Friend take this environmental damage into account in deciding which type of power station to order in future?
    Mr. Spicer: I can give my hon. Friend a number of assurances. First, there is no question of the Mendip Hills being used for the extraction of limestone for this purpose. Nor is there any question of national parks being used. I understand that less than 0·3 per cent. of the limestone that is nationally produced is used for each power station.
    Sir Trevor Skeet: Will my hon. Friend give me advice on the cost of removal of sulphur dioxide and NOx from a 2,000 MW power station? Obviously this will increase the cost considerably.
    Mr. Spicer: The best available figure for a 2,000 MW power station is £200 million.

    Electricity Industry
    Mr Thurnham: To ask the Secretary of State for Energy what recent representations he has received about statutory obligations and supply regulations in the electricity supply industry following privatisation; and if he will make a statement.
    Mr. Parkinson: I have received many representations on electricity privatisation, including comments on the proposed revisions to the electricity supply regulations.
    Mr. Thurnham: In looking ahead to 1992, can my right hon. Friend say whether reciprocal registration agreements will be used with our European partners, most of whom, I understand, require registration now?
    Mr. Parkinson: This is strictly a matter for my right hon. Friend the Secretary of State for Trade and Industry, who is dealing with this aspect of 1992. We have a meeting arranged with the Electrical Contractors Association, and I shall he interested to hear the views of its members.
    Mr. Cryer: Does the Secretary of State agree that privatisation and competition involve cost-cutting exercises to increase profits? That is the main motivation of running private concerns rather than services. What guarantee does he have that directors in the privatised sector will not be as incompetent and criminally irresponsible as the directors of Townsend Thoresen?
    Mr. Parkinson: The hon. Gentleman is making the mistake of assuming that profits can come only from what he describes as cost cutting, which implies sacking employees and behaving anti-socially. Operating efficiently can provide a useful source of profits and a useful source of help for the customer, who enjoys a keener price.
    Mr. Andy Stewart: When the supply regulations are introduced after privatisation, will British Coal be allowed to compete fairly and equally with foreign imports, which can be dumped here in the short term to decimate the British industry before prices are increased?
    Mr. Parkinson: My hon. Friend knows that there is a huge market for coal that will exist way into the foreseeable future. Most of our electricity will come from coal. The Government have invested more than £9 billion in the past nine years to ensure that we have a modern, efficient British coal industry. Therefore, there is a market and the industry has been given the investment. If that is used properly, the British coal industry has nothing to fear.
    Mr. Prescott: Will the Secretary of State confirm that his consultative document, in which he promised new rights for consumers, includes provision in the regulations for the duty to supply—which may be prosecuted for at the moment—to be prosecuted only through civil actions agreed by the director general of electricity supply? Will he also confirm that the duty to supply will now be reduced to supply on reasonable terms? Finally, will he confirm that the right to disconnect—which is qualified at the moment—will be unqualified? That is clearly a reduction of consumers' rights and in conflict with the Secretary of State's promise in his White Paper.
    Mr. Parkinson: I do not know where the hon. Gentleman got those findings. No decisions have been taken on those matters. We are in the middle of a process of consultation about the possible supply regulations and no decisions of any kind have been taken. They will be taken after consultation.

    Electricity Costs
    Mr. Hannam: To ask the Secretary of State for Energy what plans he has in drawing up the regulatory framework for the electricity industry to include energy efficiency as an option for ensuring that electricity is supplied to the consumer at the lowest possible cost.
    Mr. Michael Spicer: The details of the regulatory framework, including their effect on energy efficiency are being considered with the Department's advisers. The regulatory system will encourage the industry to meet its customers' requirements at least cost.
    Mr. Hannam: While welcoming my hon. Friend's reply confirming that energy efficiency is one of the options under consideration, may I ask whether he accepts that if we are trying to achieve the right balance between low-cost electricity for the consumer and profitability for the utilities, the means of ensuring energy efficiency must be included in the powers given to the regulator and they must be strong enough to ensure efficiency at the generating and distribution ends?
    Mr. Spicer: I listened carefully to what my hon. Friend said and we shall bear his remarks closely in mind. Our regulatory framework will be designed to promote energy efficiency through competition, especially among generating companies.
    Mr. Darling: Is the Minister still convinced that the insistence on providing a substantial proportion of electricity generation through the nuclear industry is the best means of providing low-cost electricity, especially in view of the difficulties and unknown costs of decommissioning and in light of this morning's report in The Guardian which suggests that nuclear power stations are running at below their generating capacity because of loading and unloading difficulties?
    Mr. Spicer: The Government's position on that is quite clear. We believe that there should be a minimum of nuclear energy in this country, for efficiency reasons. Also, there is no way in which we can tell at the moment what the price of fossil fuels will be in 20 years' time. Therefore, there is a very good reason for nuclear energy on economic grounds. Leaving that aside, we believe that there should be a thriving nuclear industry, to ensure that we have a wide variety of energy sources.
    Mr. Jack: What steps is my hon. Friend taking to ensure that all branches of the Government respond enthusiastically to offers of private sector money to invest in energy-saving measures?
    Mr. Spicer: The first step that I can take is to ensure that my hon. Friend's remarks are widely read.
    Mr. John Garrett: Will the Minister agree that for years the Government have claimed that their objective is to make Britain the most energy-efficient nation and that the Prime Minister set us a target of a saving of £7 billion on fuel bills? How will that be achieved unless the regulatory body has very strong powers and a duty to promote energy conservation? Is it not a fact that the present Secretary of State for Energy has much less interest in and commitment to energy efficiency than his predecessor had?
    Mr. Spicer: I listend carefully to my hon. Friend the Member for Exeter (Mr. Hannam) and to what the hon. Member for Norwich, South (Mr. Garrett) has just said about the need for efficiency as one of the criteria within the regulatory regime. I must repeat that a prime way of achieving efficiency, at least thermal efficiency, is through competition among generators, and we shall ensure that the regulatory regime includes that.

    Fast Breeder Reactor, Dounreay
    Mr. Haynes: To ask the Secretary of State for Energy if he will make a statement on the future funding of the fast breeder reactor project at Dounreay, Scotland.
    Mr. Parkinson: My Department reviews its expenditure on research and development each year, including that on the fast reactor. All options are considered, but no decisions have yet been taken.
    Mr. Haynes: I know what the Secretary of State is up to. I can read it like a book, and I can read him like a book, too. There is a cut back on the financing of future projects. The same is true of research and development.
    Mr. Parkinson indicated dissent.
    Mr. Haynes: The Secretary of State should not look surprised. We know what is going on. The Government are cutting back on expenditure with a view to privatisation, so that they can have a cheap rake-off in other public industries. Here we go again, this time with electricity.
    Mr. Speaker: Briefly, please.
    Mr. Haynes: I shall be brief, Mr. Speaker. I ask the Secretary of State to come off it and to be honest at the Dispatch Box with the people of this nation.
    Mr. Parkinson: I thank the hon. Gentleman for his brevity and for the quietness with which he asked his question. This matter is in no way connected with the privatisation of electricity. The only connection is that the CEGB has been funding 30 per cent. of the cost of the fast reactor. The fact that it has taken a decision about its expenditure in no way affects the overall decision on the fast reactor. It is a complex issue and one to which we are giving serious consideration. It also has international aspects. Above all, it has enormous implications for the people of Caithness and Sutherland. We recognise our obligations to them, and when I am ready I shall come to the House with a statement about our policy. We are not ready to do so yet, and we are not prepared to be bounced by inaccurate newspaper articles.
    Mr. Haynes: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.
    Mr. Maclennan: I thank the Secretary of State for his robust recognition of his obligations.
    Mr. Speaker: Order. I am not able to hear the hon. Member. I shall have to call him on another question, because this matter is to be raised on the Adjournment.

    Magnox Reactors
    Mr. Frank Cook: To ask the Secretary of State for Energy what recent information he has received from the Nuclear Installations Inspectorate about the future decommissioning of Magnox nuclear reactors.
    Mr. Michael Spicer: The future of the Magnox nuclear power stations in the United Kingdom is a matter for the operators concerned, subject to their meeting the requirements of the Nuclear Installations Inspectorate.
    Mr. Cook: I should like to be able to thank the Minister for that reply, but there is not a great deal for which I can thank him. It was a fairly empty statement. Can the Minister tell the House whether he is prepared to require the NII to consider the option, on decommissioning Magnox stations, of strengthening their primary and secondary cladding to improve the integrity of their structure, and perhaps use the redundant, cavernous capacity of disused turbine halls for storing—under managed, monitorable and redeemable circumstances—the nuclear waste that is causing so much trouble? It would not have to be transported all over the country to new sites because we would have on site the expertise to do the job that needs to be done.
    Mr. Spicer: The hon. Gentleman is extremely knowledgeable in these matters and has demonstrated his knowledge on this occasion. The Government do not tell the NII what it should do about its inspections, because the NII sets its own standards. We have full confidence in it and have made sure that it is fully staffed. The NII is the Government's expert body for ensuring standards, and we give it every support in maintaining those standards.
    Mr. Campbell-Savours: Has the Minister received representations from the private sector on electricity generation under the fast breeder reactor programme? Will he place on record the statement that the FBR programme has been, and continues to be, a useful programme?
    Mr. Spicer: I believe that that relates to the previous question and not to this one, which is about Magnox stations. They have nothing to do with fast breeder reactors.
    Mr. Campbell-Savours: No, I am sorry, Mr. Speaker.
    Mr. Speaker: Order.
    Mr. Campbell-Savours: It was absolutely in order.
    Mr. Speaker: I call Mr. Alexander Eadie.

    South of Scotland Electricity Board
    Mr. Eadie: To ask the Secretary of State for Energy if he has been informed by British Coal of progress made in its meetings with the South of Scotland Electricity Board regarding future coal burn at power stations.
    Mr. Parkinson: These negotiations are a commercial matter for the two industries concerned, but I have asked to be kept informed.
    Mr. Eadie: Does the Secretary of State not agree that, in the midst of the negotiations with British Coal, the South of Scotland Electricity Board is being provocative and threatening? We have learnt that between 20,000 and 30,000 tonnes of foreign coal are now at Rotterdam awaiting delivery to the SSEB in small cargoes, and that 3,000 tonnes have already arrived at the Kincardine power station in Scotland. Did the Secretary of State not endorse the three-month agreement to halt foreign coal imports, to give time for British Coal and the SSEB to reach an agreement on coal burning in this country?
    Mr. Parkinson: As the hon. Gentleman knows, I have made my position very clear. I cannot force either party to reach an agreement, although I should like them to do so,

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    and I have been doing all that I can to encourage them. The negotiations are in hand, and I hope that they will be successful.
    Mr. Maclennan: Is the Secretary of State aware that the SSEB is among the generating boards that are impressed not only by coal burn rates but by the burn-up rate of the fast breeder reactor—which is why it has put its weight behind the project for the future?
    Mr. Parkinson: Yes. I want to make it clear that we wish to retain the fast breeder reactor technology for this country. The question is how we do that in the most economic way possible. As I said in answer to an earlier question, we are looking at all the aspects of the problem very carefully. I look forward to discussions with the hon. Gentleman when he comes to see me tomorrow.

    Flue Gas Desulphurisation
    Mr. Pike: To ask the Secretary of State for Energy whether he has recently discussed with the Central Electricity Generating Board its proposals for flue gas desulphurisation to reduce acid rain.
    Mr. Michael Spicer: We are fully aware that the CEGB plans to fit FGD equipment at a cost of £600 million to 6GW of existing plant as well as on all new coal-fired stations.
    Mr. Pike: In view of the growing concern about acid rain, both in this country and elsewhere in Europe, is the Minister satisfied that the CEGB is proceeding with the work as speedily as possible? Does the Minister not believe that it may be necessary to take action on some of the other power stations?
    Mr. Spicer: The United Kingdom now has a 10-year sulphur dioxide emission control programme costing about £1 billion. We accept that that speed is appropriate for controlling emissions. It is not often realised that Britain has reduced its emissions by 40 per cent. since 1970, and by 25 per cent. by 1980. We have done a tremendous amount already to reduce emissions, and we intend to continue the programme.
    Mr. Butler: My constituents will be very grateful for the £200 million investment in Fiddler's Ferry, but when my hon. Friend next meets the CEGB will he suggest that some disruption may be caused to the local community in Cuerdley and ask the CEGB to minimise that disruption?
    Mr. Spicer: I am sure that the CEGB will read carefully in Hansard what my hon. Friend has said. The matter is clearly causing some local concern, and I am sure that the CEGB will be aware of that.
    Mr. Patchett: With gas desulphurisation in mind, has the Minister discussed the future of the fluidised bed experiment at Grimethorpe, in my constituency? Will he make a statement?
    Mr. Spicer: I am afraid that I cannot make a statement now, but the Grimethorpe plant is being considered very carefully.

    Coal Industry
    Mr. Greg Knight: To ask the Secretary of State for Energy, how much has been invested in the coal industry since April 1979.
    Mr. Parkinson: Since 1979 the Government have provided British Coal with £9 billion of grants—together with substantial loan finance—of which £6 billion has been spent on capital investment.
    Mr. Knight: Is not a healthy economy one of the prerequisites of any Government policy of substantial and continuing investment? Should not those who work in the coal mining industry be grateful to the Government, not only for supporting worthwhile investment, but for helping to create an excellent economic outlook for Britain? Does my right hon. Friend agree that the biggest threat to the industry and to jobs within it comes from those who instigate unnecessary strike action, such as Mr. Arthur Scargill, and those who support such action, such as the Leader of the Opposition? [Laughter.]
    Mr. Parkinson: We shall all be voting for the hon. Member for Kingston upon Hull, East (Mr. Prescott).
    It is important that modern working practices go with capital investment and that strikes and waste are eliminated. Provided that we have modern working practices to go with modern machinery, I see a very bright future for British Coal, but every strike and work to rule lessens the prospects for the industry.
    Mr. Douglas: Will the Secretary of State concede that a substantial proportion of the investment in Scotland has been in the Longannett complex, and that that investment has been endangered by the cavalier attitude of the South of Scotland Electricity Board in importing foreign coal at dumped prices? I recognise that the Secretary of State has shown an interest in this matter, but what steps is he taking to protect the nation's investment in the Scottish coalfields—an investment that can get a return only if the coal is burnt in SSEB stations?
    Mr. Parkinson: There are two things in our proposals which I believe will improve the prospects for the Scottish coal industry. First, we are strengthening the inter-connector to England and Wales, which means that there is a big potential market for the electricity produced from Scottish coal. Secondly—and I am pleased to say that Scottish miners have shown great good sense about this—we are encouraging the adoption of modern working practices.
    Although the investment has been made, Scottish coal is still relatively expensive. Therefore, we have to find ways of reducing the costs and opening up for Scotland the prospects of a good market. We are also encouraging the two parties to get together. I believe that the Government are doing what they can to ensure a good future for Scottish coal.
    Mr. Gow: Despite my right hon. Friend's legitimate pride in the amount invested in the British coal industry during the past nine years, will he confirm that the whole of that investment could have been made by the private sector? What greater justification is there for retaining the ownership of British Coal in the public sector compared with the Government's conviction that the oil industry should be in the private sector?
    Mr. Parkinson: We have no plans at present, but it is our ambition that all the energy industries should be returned to the private sector. However, there is a limit to what we can do at any given time. I believe that privatising the electricity supply industry is a big enough job for us at present. I assure my hon. Friend that we have ambitions for the rest of the industries for which we are responsible.

    Magnox Reactors
    Mr. John Garrett: To ask the Secretary of State for Energy what representations he has received about the share of the costs of maintaining and decommissioning Magnox reactors to be borne by the privatised electricity supply industry.
    Mr. Michael Spicer: After privatisation, nuclear power station operators will continue to be required to make appropriate financial provision for decommissioning and other long-term liabilities.
    Mr. Garrett: Given the recent report on the very high cost of maintaining safety at Bradwell for the next four years, the likely costs of maintaining safety and maintenance at the other 10 Magnox stations and decommissioning costs of £250 million to £300 million each, who will be expected to pay for the deteriorating safety standards and decommissioning? As those stations are likely to have to be encased in concrete for 100 years, should not the Department make a statement on this issue as soon as possible?
    Mr. Spicer: First, I deny that there is any question of deteriorating safety standards. The British nuclear industry has had a tremendous track record for safety, and we mean to keep it that way.
    Secondly, all forms of energy safety have costs in terms of protection of the environment. Noisy and obtrusive windmills, potential radiological hazards from nuclear power, sulphur emissions from coal, which we have been discussing, or, indeed, disruption to bird life from estuarial barrages involve costs in protecting the environment. In that sense, there is nothing special about the nuclear industry. I repeat that, with privatisation, proper provision will be made for those costs in the accounts.
    Mr. Matthew Taylor: The Minister will be aware that the advisory committee on the safety of nuclear installations has recommended that there should be a 50 per cent. increase in the number of Nuclear Installations Inspectorate personnel working on decommissioning. Will he tell the House how many are currently working on decommissioning and whether he will accept the advice to increase the numbers?
    Mr. Spicer: I cannot give the precise number of those within the Nuclear Installations Inspectorate who are working on decommissioning, but I shall write to the hon. Gentleman if that figure is available. However, we are up to the complement of 120 inspectors, the target that we had set for 1 April, and I assure the hon. Gentleman that the Government will ensure that there is an adequate number of inspectors for the future requirements of the NII.

    Electricity Prices
    Ms. Quin: To ask the Secretary of State for Energy what further representations he has received about the rise in electricity prices.
    Mr. Parkinson: I have received a number of representations about electricity price rises.
    Ms. Quin: What is the Minister's reaction to the report that was published last week by National Utility Services, which shows that the United Kingdom is well on the way to becoming one of the countries with the most expensive electricity because of the targets that have been imposed on the industry by the Government? What initiatives does he intend to take to help those at the lower end of the income scale who are faced with electricity price rises?
    Mr. Parkinson: As I told the hon. Member for Kingston upon Hull, East (Mr. Prescott), that company draws its statistics from a very narrow range of its own customers. It does not pretend to cover the whole industry. The CBI and the Electricity Council produce the most authoritative figures. They show that Britain is firmly in the middle of the list, for both industrial and domestic prices. The price increase this year is the first since 1985. Under the Labour Government prices increased ahead of the rate of inflation by more than 30 per cent. Under this Government they are 12 per cent. less than the rate of inflation, even after taking the present price increase into account.
    Mr. Watts: Does my right hon. Friend agree that the best prospects for low-price electricity will come from his proposal to introduce competition into the generation of electricity and also from giving to the generating companies the right to buy their fuel, including coal, at competitive market prices?
    Mr. Parkinson: Yes. Generation costs cover 80 per cent. of the cost of electricity. Competition in that area of the industry offers the best prospect of keen prices for the customer.
    Ms. Gordon: Is the Minister aware that because of the increasing cost of electricity a growing number of poorer people are late in making their payments? In London they are receiving very aggressive and unpleasant letters from the electricity authorities, threatening them with court orders allowing the authorities to break into people's homes and install electricity meters if those poorer people are not prepared to sign a statement to the effect that they are willing voluntarily to have meters. A number of these letters have been received by people who are in hospital—often elderly people—and they have caused great distress. Will the Minister do something about it?
    Mr. Parkinson: The hon. Lady knows that under the code of conduct the electricity authorities do not disconnect elderly people during the winter months. I should like her to tell her constituents that the electricity authorities are ready to listen to representations on behalf of consumers who have a real problem and who need help in the staging of the payment of their bills. I hope that the hon. Lady will agree that people should pay their electricity bills, just as they pay other bills. If they do not do so, the price of electricity for everyone will have to be increased.

    Electricity Generation
    Miss Widdecombe: To ask the Secretary of State for Energy when he last met with the electricity area board chairmen; and whether new electricity generation developments were discussed.
    Mr. Parkinson: I have meetings from time to time with the area board chairmen, at which we discuss a number of issues of common interest.
    Miss Widdecombe: In the course of those discussions, how supportive is my right hon. Friend of the idea of emphasis being placed on the future of renewable sources of energy?
    Mr. Parkinson: We have a substantial programme of support for investigations into various sources of renewable energy. We are supporting about 218 individual programmes into sources of renewable energy, but most of the area board chairmen and other members of the industry recognise that the main source of electricity will be coal, atomic, gas and oil and that, although renewables will be a valuable peripheral supply, the prospect at present is that they will be a peripheral supply only.
    Mr. Campbell-Savours: Has fast breeder reactor electricity generation been discussed? Will the Secretary of State place on record the fact that the fast breeder reactor programme has been, and continues to be, a useful and effective programme?
    Mr. Parkinson: There is no question but that the fast breeder reactor offers a useful future source of energy. One of the problems is that, commercially, we are not likely to develop the technology for another 30 years. The debate is not whether we abandon the technology, but how we preserve it until we need it. I am pleased to confirm that we regard the fast breeder reactor as a potential source of electricity.

    Electricity Industry (Regulatory Authority)
    Mr. Moss: To ask the Secretary of State for Energy what progress he has made in considering the setting up of the regulatory authority for the electricity supply industry; and if he will make a statement.
    Mr. Parkinson: All aspects of the regulatory regime are being actively considered with our advisers. We have also had helpful discussions with the electricity supply industry and other interested bodies. I am pleased to say that we are making good progress.
    Mr. Moss: I thank my right hon. Friend for his reply. Will he endorse the conclusions of a recent study of energy utilities in the United States, which showed that the companies with the best credit rating and whose bonds were most popular on the market incorporated energy-efficiency responsibilities into their regulatory framework?
    Mr. Parkinson: As my hon. Friend said, we intend that the regulators should be responsible for the promotion of the advantages of energy efficiency. We are not prepared to go as far as some critics would wish. We do not seek to impose on people the obligation to save electricity in their homes and to impose on companies an obligation to make energy-saving arrangements. We are in the business, as will be the regulator, of encouraging the efficient use of energy.

  THE ARTS

    National History Museum
    Miss Lestor: To ask the Minister for the Arts what have been the administrative costs of admission charges at the Natural History museum in 1987–88.
    Mr. Boyes: To ask the Minister for the Arts what was the level of admission to the Natural History museum in 1987–88.
    The Minister for the Arts (Mr. Richard Luce): The administration and monitoring of admission charges at the Natural History museum are matters for the museum's trustees. On 9 April the trustees announced that the number of visitors to the public galleries, including the geological and zoological museums, during 1987–88 was 1,633,000, and that the net receipts from admission charges were £1,352,000.
    Miss Lestor: Does the Minister put in the debit or credit column the amount being charged to the 50 Third world countries which use the Natural History museum for research into a variety of matters, such as mosquitoes, blood worms and various parasitic diseases? As the Overseas Development Administration uses that museum for research, will he say what discussions he has had with his hon. Friend the Minister for Overseas Development about the effect that that will have on the ODA's budget?
    Mr. Luce: There are a number of sectors in which it is sensible for the Natural History museum to collaborate on research projects with people in other countries. It is for the trustees to decide what priority should be given to projects, but it is only reasonable that the essential costs of that service should be covered.
    Mr. Boyes: Do not the figures that the Minister has given hide the fact that attendances at the Natural History museum are at least 40 per cent. down? Does that not mean that many people who get much pleasure and education from visiting the museum are, because of charges, being denied access to it? As the figures show that the numbers of visitors are dropping, will that not inevitably lead to redundancies and low morale among the staff? Should not the Minister withdraw these charges immediately?
    Mr. Luce: The trustees must decide whether to accept voluntary donations or make admission charges. It is absolutely right that they should decide whether to introduce charges. The Natural History museum introduced charges just over a year ago. It has increased its overall resources by £1,300,000 and announced that it will improve its facilities as a result. The public, therefore, will get a better service. We find that although in the initial stages of the introduction of admission charges there is a drop in attendances, it does pick up. Attendances at the National Maritime museum increased by 16 per cent. last year compared with the previous year. That museum has introduced admission charges. It is only right that we should leave such decisions to the museums. And they should use that money to increase overall services and facilities for the public.
    Mr. Jessel: Have the Government upheld their grant to the Natural History museum, regardless of any charges?
    Mr. Luce: I can confirm that without any shadow of doubt. The amount given to the Natural History museum has gone up in real terms by 37 per cent. during the past nine years. Moreover, it has had its funding earmarked for the next three years so that it knows what money it will have. In no way has punitive action been taken on account of the introduction of charges.
    Mr. Harris: Can my right hon. Friend explain why museums and galleries are sacrosanct? Why should trustees not be able to raise extra revenue to supplement Government grants if that is what they want, just as their counterparts do in practically every other country?
    Mr. Luce: My hon. Friend is right. As he says, it is for the trustees to decide. Western and Communist countries have museum charges in addition to basic Government funding. The choice should be open to museums and galleries. If they make charges, however, what matters is that they show the public how facilities will be improved to their benefit.
    Mr. Fisher: Does the right hon. Gentleman not understand that the figures that he gave the House should be compared with the 3·3 million admissions the year before? Is he aware that his figures show a drop of 40 per cent. on the previous year? The trustees have not been anxious to introduce charges, but they have been forced to do so because the Government are under-funding and neglecting their service. That neglect is documented in the National Audit Office report, which shows under-funding in conservation, research, display, cataloguing, building maintenance and the rest. Is it not time that the Minister faced the time bomb ticking away under our national museums, recognised his responsibilities, and funded museums and galleries properly?
    Mr. Luce: The hon. Gentleman is talking nonsense. He is fishing around for a crisis when there is none. He says that funding has been diminished, but since 1979 it has increased by 26·5 per cent. in real terms. That is not a crisis. Funding has increased. Moreover, in the next three years we shall increase funding for museums and galleries by just under 16 per cent., and this year we shall increase by 20 per cent. the money available for building and maintenance. The Government are earmarking £11 million for increased storage. We can be proud of our record.

    Museums and Galleries
    Mr. Key: To ask the Minister for the Arts how much income is generated by public museums and galleries through providing shops and refreshment facilities on their premises.
    Mr. Luce: In the present financial year the national museums and galleries that I sponsor expect their income from non-grant sources, including catering and trading, to exceed £20 million. I have taken a number of measures to encourage and facilitate their efforts to increase such income.
    I have given the Museums and Galleries Commission a special allocation for the next three years to help non-national museums and galleries improve their performance in this area.
    Mr. Key: Can my right hon. Friend assure those galleries and museums that respond to public demand for these services and generate extra income from them that they will not have their grant cut pro rata?
    Mr. Luce: I can confirm without any doubt that there will be no reduction whatever; nor will there be any adjustment to grants for any of the national museums and galleries on account of extra income from the private sector.
    Mr. Menzies Campbell: Does the right hon. Gentleman agree that any contribution made by shops and cafes is no substitute for proper public funding of museums and galleries? Does he also agree that this generation has an obligation to pass on the nation's heritage in at least as good a condition as we inherited it? Is he satisfied that sufficient money is being provided for storage, maintenance and restoration of the many objects in musums that are in sad need of proper care?
    Mr. Luce: My sole interest is to see an overall increase in the resources of museums and galleries. It would be absolute folly to say that if private sector income increases we should reduce the private sector income accordingly. That would not be an incentive to increase the overall resources. That is my objective, and that is what we are doing, to such an extent that today the national museums and galleries raise at least £20 million from private sector resources.

    USSR
    Mr. Knapman: To ask the Minister for the Arts what steps he is taking to encourage cultural exchanges with the Union of Soviet Socialist Republics.
    Mr. Luce: The majority of cultural exchanges with the USSR take place within the framework of the Anglo-Soviet cultural agreement. The memorandum of understanding signed by my right hon. Friend the Prime Minister at the time of her visit to Moscow last year has helped to provide a further impetus for such activity. I shall be making an official visit to the Soviet Union next month and shall do what I can to encourage further exchanges.
    Mr. Knapman: Does my right hon. Friend agree that such exchanges and visits help the cause of world peace and detente? Can he give any details of likely exchanges over the next few months?
    Mr. Luce: There is no doubt that arts and culture help to break down national barriers, because in so many areas culture does not know or understand those barriers—it goes beyond that. Therefore, exchanges between the Soviet Union and this country in the performing arts and heritage should be warmly welcomed. The National Theatre is about to tour the Soviet Union, and arrangements are being made for the exchange of exhibitions between museums in this country and the Soviet Union.

  CIVIL SERVICE

    Recruitment
    Mr. Mans: To ask the Minister for the Civil Service what new initiatives have been introduced to encourage recruitment to the Civil Service.
    The Minister of State, Privy Council Office (Mr. Richard Luce): Examples of a number of initiatives aimed at attracting as wide a field of qualified candidates as possible are given in the Civil Service Commissioners' annual report for 1987, which was placed in the Library of the House on 20 April.
    Mr. Mans: I thank my right hon. Friend for that answer. What efforts are being made to recruit people into the Civil Service at a later stage who have already benefited from careers outside the Civil Service? Will he say what experience they can offer if they are recruited into the Civil Service at that age?
    Mr. Luce: I am grateful to my right hon. Friend for raising that question. It is important to encourage into the Civil Service people who have experience in other areas. A recent direct entry competition for grade seven in the service has led to the recruitment of a number of people in their late 30s and early 40s. Many of those people have had experience in local government or education, and at least 50 per cent. of them have had experience in commerce and industry. That is something that I welcome.
    Dr. Marek: What will be the effect on recruitment to the Civil Service of the recently announced 40 per cent. drop in attendance figures for the Natural History museum?
    Mr. Luce: That is a good try. I am now wearing a different hat and it is that of the Civil Service. Recruitment and retention in the Civil Service are broadly satisfactory, but there are areas in which it is difficult to recruit people with specific skills and in specialist areas and, of course, we have a regional problem. It is true that in the south-east, in particular, we have acute recruiting difficulties. As the hon. Gentleman knows, my right hon. Friend the Chancellor of the Exchequer is seeking to contain that by the introduction of more flexible pay and allowances for the London area.

    Management Improvement
    Mr. Thurnham: To ask the Minister for the Civil Service what proposals for reorganisation in his Department he is making following the recommendations of the Efficiency Unit report, "Improving Management in Government: The Next Steps."
    Mr. Luce: Like other Ministers, I am reviewing the functions of my Department to see what areas might be appropriate for agency status. I have already identified the Civil Service college and the occupational Health Service as promising candidates for closer examination.
    Mr. Thurnham: I welcome that positive lead. May I ask my right hon. Friend to stir his ministerial colleagues to share his sense of urgency in making those much needed reforms?
    Mr. Luce: In fairness to some of my colleagues, as my hon. Friend will know, we have already identified 12
    18
    possible candidates for the creation of agencies in other Government Departments. Some of my right hon. Friends are looking urgently at the practical implications of that, and I hope to have something further to say before the summer is over.
    Mr. Winnick: Have any steps been taken to reorganise the post of chief press officer to the Prime Minister and to change the manner in which he goes out of his way to give warnings to the press and the media generally on what they should or should not publish and broadcast? Is the right hon. Gentleman aware that Mr. Ingham is increasingly seen as the Deputy Prime Minister?
    Mr. Luce: That is principally a matter for my right hon. Friend the Prime Minister, but there is no shadow of doubt about the outstanding calibre of Mr. Ingham and the job that he does.
    Mr. Beaumont-Dark: Does my right hon. Friend agree that one of the problems of improving management in government is that for some vital skills industry can pay far higher salaries than the Government—for example, computer and tax experts? Are the Government urgently considering the fact that, to be efficient, they must be able to compete with private enterprise, or they will not get the best people whom they so urgently need?
    Mr. Luce: My hon. Friend puts a finger on a problem that we face. As he rightly says, there is a disparity in certain specialist skills between what the Government can pay and what can be achieved in the private sector. It is partly for that reason that we are losing a number of people. My right hon. Friend the Chancellor of the Exchequer has judged it right to introduce more flexible allowances and pay to deal with that problem. Pay additions are now available for certain jobs, and that is one way in which we can help to contain the problem.

    Agencies
    Mr. Allen: To ask the Minister for the Civil Service what representations he has received from Civil Service or civil servant unions about the proposals for the privatisation and creation of new agencies to assume the work of some sections of Government Departments.
    Mr. Luce: I have received two representations about the creation of agencies.
    Mr. Allen: Is the Minister aware that he needs to state clearly from the Dispatch Box the exact position that the Government are adopting on agencies in relation to trade unions? On 18 February the Minister's Office issued a central guidance note to managers in Departments. The note said:
    "the new arrangements for agencies will not undermine national bargaining on terms and conditions of service including pay"
    and
    "the unions will be fully consulted on the handling of the proposals."
    That contradicts many of the Minister's statements in the House. Which view is correct—the Minister's, or the one issued by his Department?
    Mr. Luce: There is a clear commitment that, when final decisions are to be taken on the implementation of certain agency proposals, there will be proper consultation with the unions. Until we have identified which agencies are to

    19
    have that kind of agreement, we cannot say. The unions will be fully consulted at that stage. As for national bargaining, negotiations on most conditions of service for departmental agencies are conducted centrally, and that will continue.
    Ms. Mowlam: What percentage of first division civil servants are women? How has that percentage changed since 1984, when the programme for action was introduced—
    Mr. Speaker: Order. It would be more appropriate to raise that point on the next question.

    First Division Staff
    Mr. Barry Field: To ask the Minister for the Civil Service how many first division grade civil servants have had industrial or commercial experience.
    Mr. Luce: This information is not held centrally. The Government place great value in attracting to the Civil Service at all levels those with industrial or commercial experience.
    Mr. Field: Does my right hon. Friend agree that such commercial and industrial experience is invaluable to the Civil Service? Will he do his utmost to ensure that the Civil Service recruits people with the skills that may not be available to it? May we look forward to the day when a member of the first division is seconded for a short period to industry?
    Mr. Luce: I agree with my hon. Friend on the importance of doing that. As I said in answer to an earlier question, following the recent direct entry competition for people who are older than the normal recruitment age, at least 50 per cent. of those recruited came from industry and commerce. The Government want to encourage that.
    We have a policy on arranging secondments. The number of Civil Service secondments from and to the private sector has doubled in the past nine years. The number increased substantially last year on the previous year. We have a number of other arrangements—for example, the Whitehall and industry scheme, under which civil servants go for short periods to industry—to enable greater contact between the private sector and the Civil Service.
    Ms. Mowlam: Let me try again. What percentage of those first division grade civil servants are women, and how has that percentage changed since 1984 when the programme for action to increase the percentage of women at the high levels in the Civil Service was introduced?
    Mr. Luce: There has been an increase, and the report shows that, in the proportion of women in grades up to senior positions, although for the very senior positions—grade 3 and above—the proportion of women is still very low. My concern is to ensure that there is equality of opportunity and that any obstacles to that are ironed out. I am pleased that in the recent promotions to very senior positions, 11 per cent. were women. The hon. Lady may think that that is a low figure, but it is much higher than the proportion in the senior grades.
    Mrs. Virginia Bottomley: I welcome the improvement in the representation of women, but has my right hon. Friend any further plans for improving matters?
    Mr. Luce: Yes. There is a recommended programme of action and the Government will do their best to implement it. It is noticeable that there is now more scope for part-time jobs in the Civil Service, and a large proportion of women are taking up those opportunities. There is also scope for job sharing in the service, and a large number of women are taking up that opportunity, too. I shall ensure with my colleagues in other Departments that the programme of action is implemented as well as possible.

    Prime Minister's Office
    Mr. Dalyell: To ask the Minister for the Civil Service what action he is taking on issues not covered by his reply to the Adjournment debate on Friday 22 April on the conduct of the Prime Minister's Private Office.
    Mr. Luce: None, Sir.
    Mr. Dalyell: Does the Minister recollect that in the Adjournment debate that he courteously answered I referred in detail to the statement by Sir Frank Cooper, former permanent secretary at the Ministry of Defence, that Mr. Bernard Ingham ought not to be a civil servant, given the role that he performs? May we refer back to the question posed by my hon. Friend the Member for Walsall, North (Mr. Winnick) and ask seriously whether those who talk in the terms in which Mr. Ingham did over the weekend about the hysteria of the press ought to be paid from party rather than taxpayers funds?
    Mr. Luce: I noted in that Adjournment debate, and again today, that the hon. Gentleman seeks to dredge up old issues that have already been dealt with and adequately answered. He does that because he knows that my right hon. Friend the Prime Minister has been an outstanding success and is a Prime Minister of great integrity. It is because of that that the hon. Gentleman seeks to undermine the whole position.

P and O Dispute
3.32 pm
Mr. Michael Meacher: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the latest developments in the seamen's dispute."
It is a specific matter in that P and O's insistence that its package of 400 job cuts, increased working hours, less leave and a cut in pay should be implemented almost immediately has provoked a 14-week strike. It is equally specific and relevant that the National Union of Seamen has repeatedly made clear its willingness to accept the P and O proposals if they are phased in over three years—which is what the company itself originally asked—well in advance of the Channel tunnel. It is also a specific and relevant matter in that the NUS has been willing to accept binding arbitration and has been asking for it for 13 weeks, but P and O has turned it down.
It is an important matter because the safety of the public is at stake. Under P and O's proposals, if the Herald of Free Enterprise were sailing tonight from Zeebrugge, it would have 15 fewer crew than on the night of 6 March last year when it went down. Department of Transport officials have been checking the structural seaworthiness of the ferries, but the dangers involved in having untrained crews, reduced crewing levels and 18-hour shifts are outside their brief. It is critical for the public, as well as for the seamen, that the safety risks in the proposals, as revealed in the "Brass Tacks" television programme, are fully known and publicly scrutinised.
The matter is urgent because the possibilities of resolving the dispute by negotiation are coming to a head. Whether or not the current Sealink plan proves acceptable, there is now a real risk that the primary dispute with P and O at Dover may harden to the point where compromise becomes difficult, if not impossible.
The NUS has shown itself willing to compromise. The dispute could be resolved by further negotiations between the two sides. I submit that it is vital that all public pressure he brought to bear now to ensure that any intransigence on the part of P and O is not allowed to stand in the way of the wider public interest.
For all those reasons, Mr. Speaker, I earnestly seek your support for a full and early debate on this matter of crucial public concern.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the latest developments in the seamen's dispute."
I have listened with care to what the hon. Member has said. As he knows, my sole duty in considering an application under Standing Order No. 20 is to decide whether it should be given priority over the orders set down for today or tomorrow and also to consider the critieria laid down in the Standing Orders. I regret that under those criteria I cannot submit the hon. Member's application to the House.
Several Hon. Members rose—
Mr. Speaker: No, there is another application under Standing Order No. 20 from Mr. Dave Nellist.

GEC Plessey Telecommunications Limited
3.35 pm
Mr. Dave Nellist: I beg to ask leave to move the Adjournment of the House under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the announcement at 11 am on Friday 6 May of 1,800 redundancies by GEC and Plessey through the new telecommunications company GPT."
Of those 1,800 redundancies, 40 per cent. are due to take place in Coventry, 40 per cent. in Kirkcaldy and the rest in the constituencies of my hon. Friends the Members for Bishop Auckland (Mr. Foster) and for Liverpool, Broadgreen (Mr. Fields). The Spon street plant in Coventry is destined for virtual closure. This will affect not only hundreds of my constituents, but also those of my hon. Friend the Member for Coventry, North-East (Mr. Hughes).
My constituents are bitter and upset. Many have given their lives to GEC. The GEC-Plessey merger of October last year, with the rationalisation and streamlining taking place now, is simply about profit—about increasing dividends to shareholders, while 800 of my constituents and those of my hon. Friend the Member for Coventry North-East have to pay the price of being thrown on to the scrap heap. Hundreds more people in our city could be affected.
GEC is not a poor company. It is not for financial reasons that all these redundancies and closures have been announced. The company has hundreds of millions of pounds in liquid assets at the bank. In a letter to me the company speaks of senior management spending many months since the plans were first announced in order to endorse
"plans consistent with the objectives and needs of the merged Company."
It says that there will be retraining and hope for redundant people finding other employment.
If there is really a cash flow problem, perhaps the Butcher of Bowden—Lord Weinstock—could sell a couple of racehorses. He spends half a million pounds a time buying them. There will not just be 800 redundancies. There will be several hundred more in ancillary sub-contractors, service companies, shops, and so on. Above and beyond that, in the city of Coventry, where already only 14 or 15 per cent. of school leavers get real jobs when they leave school, a further thousand school leavers will have no jobs to go to.
GPT is the biggest telecommunications firm in Britain and the tenth biggest in the world. If the limit of its social responsibility rests on profit margins, it is about time the House redebated the privatisation of British Telecom and the monopoly position of GPT within that supposedly expanding industry, and brought back into extended public ownership these crucial firms in the economy and put them into the hands of the workers instead of profit managers like Weinstock. If workers ran those companies, the horizon of their responsibilities would not be the bottom line of shareholders" dividends, but would be the families of those who have given their lives to GEC and Plessey for the past 34 years in Coventry, Warwickshire, Liverpool, Kirkcaldy, Beeston and Bishop Auckland.
I urge you to grant this debate, Mr. Speaker.
Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the announcement by GEC Plessey of 1,800 redundancies in the telecommunications firm GPT."
I have listened with care to what the hon. Gentleman has said, but I must repeat what I said to the hon. Member for Oldham, West (Mr. Meacher). I regret that the matter that he has raised does not meet the criteria laid down under Standing Order No. 20. I hope that he will find other opportunities to bring the matter before the House.

Points of Order
3.39 pm
Mr. Tony Banks: On a point of order, Mr. Speaker. Will you clear up some confusion that arose during business questions last Thursday? At columns 1021 and 1024 points of order were raised by the hon. Members for Hertford and Stortford (Mr. Wells) and for North Down (Mr. Kilfedder), and you allowed them to be heard. At the end of business questions, and after an application under Standing Order No. 20, at column 1031 I suggested that you had adopted a practice different from the one previously followed in your rulings on when points of order can be made during Question Time. I was supported in that by my hon. Friend the Member for Stockton, North (Mr. Cook).
In reply, Mr. Speaker, you said:
"I dealt with those points of order because they appeared to require my immediate intervention. If the hon. Gentleman had risen at that time, he would certainly have been heard in the same way. There is no change at all. In our debates, the points of order raised are dealt with immediately."—[Official Report, 5 May 1988; Vol. 132, C. 1031–32.]
I accept that that is true for debates, but that was not the case at Question Time, and had not been the case until that point.
I refer you, Mr. Speaker—I have supplied your office with the references in the Official Report—to an incident that took place in the House on 19 November 1986. At column 548, the Secretary of State for the Environment implied that I had stolen some articles of silver that had belonged to the Greater London council. I shall not go into the issue again, but I say simply that I had taken them into protective custody. When I tried to rise on a point of order, you said:
"Order. We shall deal with this later."
My hon. Friend the Member for Copeland (Dr. Cunningham) also tried to raise a point of order, and at column 549 you said:
"Order. No, I cannot take points of order in the middle of questions. I shall take them at the end of Question Time."—[Official Report, 19 November 1986; Vol. 105, c. 549].
It is clear that what happened last Thursday was a variation on a rule that we have come to accept. Indeed, it has been accepted by the House because it makes for good order. It is pointless people making points of order during Question Time when they should make them at the end of Question Time.
Will you consider, Mr. Speaker, making a statement on the matter so that we are all absolutely clear? If you reaffirm the rule that points of order arising from statements made or incidents during Question Time should not be made until after Question Time, will you consider doing what you did for me on the previous occasion, which was to get the Official Report to insert the point of order that was made after Question Time at the point where it was originally raised? The matter is slightly confusing, but if you made a ruling, it would assist us all.
Mr. Speaker: I thank the hon. Gentleman for his courtesy in giving me some knowledge of what he was going to say—
Mr. Jeremy Corbyn: He is a gentleman.
Mr. Speaker: He is, indeed.

25
I adhere to what I said last Thursday. I shall hear points of order during questions only if they concern matters that require my immediate intervention, such as the use of a grossly disorderly expression. I do not propose—I think that the hon. Gentleman will understand this—to reopen today what occurred on 19 November 1986. I have looked again at the interventions and points of order during business questions last Thursday, and I agree that they should have been taken, not when they were, but immediately before the business of the day.

Points of Order

  P and O Dispute
  3.43 pm
  Mr. Jeremy Corbyn: On a point of order, Mr. Speaker. This morning my hon. Friend the Member for Newham, North-West (Mr. Banks) and I visited the picket line at the P and O dispute at Dover. Although I do not wish to challenge your response to the application made my my hon. Friend the Member for Oldham, West (Mr. Meacher) under Standing Order No. 20, may I say that several people involved in the dispute drew to our attention serious unsafe working practices on the P and O vessels that are attempting to sail and the mad and desperate search by P and O to find people to scab in the dispute?
  Many of the people on the picket line asked us how safety could be debated in the House and by what means Parliament can express its view on the dispute. They looked to us, as we look to you, Mr. Speaker, to find some means by which the serious matters of safety at sea, the appalling treatment of those who are in dispute with P and O and the mad drive for profits by that company can be brought to public attention through the House.
  Mr. Speaker: This is a serious matter. There are plenty of opportunities to raise the matter; for instance, on Opposition days, in Adjournment debates and at Question Time.

Social Security Reform
3.45 pm
Mr. David Winnick: As you will appreciate, Mr. Speaker, one of our responsibilities is to try to ventilate the concern of our constituents. You are no doubt aware as, first and foremost, a right hon. Member of this House, that many elderly people simply do not know whether the housing benefit increases are to be paid and, if so, from what date, and when they will be compensated. There is total chaos and confusion on the ground, which is causing tremendous hardship, worry and anxiety.
I know that you are not responsible for a statement being made. No statement has been made by the Secretary of State for Social Services since he first made his statement on the Government's climbdown. You may well say that tomorrow is the day for social services questions. I have looked at the Order Paper and believe that I am right in saying that only two questions on this matter are likely to be reached.
It is wrong that we should be denied the opportunity to express on the Floor of the House of Commons the worries of so many people in this country. Literally hundreds of thousands of those people could well be faced with substantial increases. They do not know whether they will have to pay, whether they have the means to do so and when they will receive compensation.
The other point—
Mr. Speaker: Order. We had a debate on this about 10 days ago and, as the hon. Gentleman correctly said, there are social services questions tomorrow. I have not yet looked carefully at them, but, if the hon. Gentleman says that there are only two on this matter that are likely to be reached, no doubt he is right. I am sure that, as this is a major matter, those on the Front Bench responsible for the organisation of business will have heard what the hon. Gentleman has said, but it is not a matter of order for me.

Abortion (Amendment) Bill
3.46 pm
Mr. Bob Cryer: On a point of order, Mr. Speaker. Following the conclusion of the debate on the Abortion (Amendment) Bill on 6 May, you may have seen a number of press reports and television interviews in which it was suggested that there had been a parliamentary mugging, foul play and, according to one broadcast, cheating.
I should be grateful if you would confirm that on 6 May the Standing Orders were fully and properly followed in Parliament, that the rules of debate were properly followed, that the treatment of the hon. Member for Liverpool, Mossley Hill (Mr. Alton) appeared to many of us very generous, in that closures were granted within an almost unprecedentedly short time and that, in all, there was a perfectly fair and proper debate on a number of amendments throughout the morning. There was no parliamentary mugging, no foul play and certainly no cheating on that day.
Mr. Speaker: I cannot be held responsible for the extravagant adjectives that have been used elsewhere, but I confirm what the hon. Gentleman has said. To my knowledge, the debate proceeded in good order and under our usual procedures.

Standing Order No. 20 Debates
3.47 pm
Mr. Eric S. Heffer: On a point of order, Mr. Speaker. The other day my right hon. Friend the Member for Chesterfield (Mr. Benn) asked for a debate, under Standing Order No. 20, on the seaman's dispute, and he was turned down. Today, my hon. Friend the Member for Oldham, West (Mr. Meacher) asked for a debate under Standing Order No. 20, and he was also turned down.
For many years I have noticed that Back Benchers have sometimes been granted debates under Standing Order No. 20—or, as it used to be Standing Orders Nos. 9 and 10—and that Front-Bench spokesmen, who have then made an application, have usually been turned down.
This is a matter of great importance. Over the years we have had many debates on issues affecting seamen and on trade union strikes. How on earth can any hon. Member obtain a debate under Standing Order No. 20? In my 24 years here I have known Speakers of all sorts—and sizes—grant Standing Order No. 20 applications from Back Benchers on precisely such issues as this. I should like to know how a Back Bencher or an occupant of the Opposition Front Bench can obtain a Standing Order No. 20 debate on a matter of this importance. Are we reaching a stage when it will not be possible to discuss such issues unless they fall in Government time or Front-Bench time generally? Such a situation would represent a serious departure from the rights of Members of this place as we now understand them.
Dame Elaine Kellett-Bowman rose—
Mr. Anthony Beaumont-Dark rose—
Mr. Speaker: Order. Do the hon. Members for Lancaster (Dame E. Kellett-Bowman) and for Birmingham, Selly Oak (Mr. Beaumont-Dark) wish to raise points of order on the same issue? If so, I shall respond to them in one reply.
Dame Elaine Kellett-Bowman: Further to the previous two points of order, Mr. Speaker. Admittedly you are not responsible for this, but as extra time was given in 1967 to what I shall call the Steel Abortion Bill, can you not understand—
Mr. Speaker: Order. That is a different matter.
Mr. Beaumont-Dark rose—
Mr. Speaker: Does the hon. Gentleman wish to raise a point of order on the NUS dispute?
Mr. Beaumont-Dark: My point of order relates to the rights that attach to debates in this place and points of order that are being raised in the Chamber. Many of us have not heard such disingenuous nonsense. There are calls for a debate on the dispute affecting the National Union of Seamen. We heard these calls last week and we have heard them again today. The Opposition, quite rightly in a democracy, are able to initiate half-day debates, a one-hour debate or a three-hour debate. Why should the time of the House be taken up when it has other important debates before it, when it is clear that if the Opposition feel so strongly about the mad idiots in the

29
NUS who want to destroy seamen's jobs, they could have a debate on them? Why should we be kept here listening to this disingenuous rubbish?
Mr. Speaker: I can answer both the hon. Member for Liverpool, Walton (Mr. Heifer) and the hon. Member for Selly Oak by saying that it is an extremely onerous responsibility of Mr. Speaker to decide whether to grant an emergency debate that will take precedence over the orders that are set down for this day or the next day. The Chair must take into account all the criteria that are set out clearly in Standing Order No. 20, to which I draw the attention of hon. Members. One of the criteria, as the hon. Member for Walton well knows, is the other opportunities to raise issues before the House, and these have been mentioned by the hon. Member for Selly Oak.

Orders of the Day

  Finance (No. 2) Bill
  (Clauses Nos. 22, 23, 26 to 28, 31, 42, 49, 91, 98, 127 and 128 and Schedule No. 7). [Progress 3rd May.]
  Considered in Committee.
  [Mr. Harold Walker in the Chair.]
  Ordered,
  That the order in which proceedings in Committee of the whole House on the Finance (No. 2) Bill are to be taken shall be Clause 22, Clause 23, Clause 27, Clause 28, Clause 49, clause 31, Clause 98, Clause 26, Clause 127, Clause 91, Schedule 7, Clause 128, Clause 42.—[Mr. Norman Lamont.]
  3.53 pm
  The Chairman of Ways and Means (Mr. Harold Walker): The Committee will note that amendments to clause 42 appear on the first page of the Amendment Paper. However, the Committee resolved last Tuesday to consider clause 42 at the end of its proceedings. The first clause to be taken today is clause 49.

  Finance (No. 2) Bill
    Clause 49

      PRIVATE RENTED HOUSING
      Mr. A. J. Beith: I beg to move amendment No. 1, in page 49, line 15, after 'tenancies', insert
      'let at or below a reasonable rent as determined by a rent assessment committee under the Housing Act 1988'.
      When the Chancellor of the Exchequer announced in his Budget statement that he would expand the business expansion scheme to cover properties to let in the private rented sector, there were immediate cries of "Rachmanism". It was claimed that such an expansion would bring back the worst of the Rachman era. Those cries are understandable for anyone who remembers the evils of that period, which became, in the words of the right hon. Member for Old Bexley and Sidcup (Mr. Heath), the unacceptable face of capitalism.
      The Committee must ask whether there are ways of attracting private capital into housing that will not bring back Rachmanism. My right hon. and hon. Friends do not think it right to dismiss out of hand the use of the business expansion scheme as a possible approach. In view of the housing crisis, those who appear to take that approach and who represent other Opposition parties do a disservice to the people.
      I believe that by the means that they have chosen the Government will open the door to the worst sort of private landlord. Instead, they should use a carefully tailored device to attract private capital back into rented housing, but ensure that that is done in a way that will provide adequate security and rent protection to tenants. Given the scale of the housing crisis, it would be irresponsible to say that there is no place for private capital and that we should not be attempting to attract it back into housing.
      It is clear that the public authorities alone have not been able to solve some of our most serious housing problems. Even if they were not subjected to the unnecessary restrictions to which the Government have subjected them, they would still not be able to solve those problems.

      31
      Much more could be achieved if the Government were not preventing housing authorities from spending the capital receipts that they have obtained from selling houses on more investment in housing. The Government are clearly placing many unnecessary and inappropriate restrictions on the ability of local authorities to play their part in tackling housing problems. The Government are also tightening the reins on the voluntary housing sector in many ways.
      With the present serious crisis we cannot exclude the role of private capital in housing. If we were to do so, we would perpetuate the monopolistic aspects of rented housing that are among the worst features of the problem. I have experienced that problem in all its different forms during my years as a Member of Parliament. I have experienced the dangerous consequences of a private monopoly on rented housing where people are afraid to reveal their political allegiances for fear that they will not get a cottage from the big landowner. I have seen exactly the same thing in its municipalised form where people fear that if they have said anything rude to any member of the family of the housing officer, they will not be considered for a council house.
      The same kind of feudal deference arises in the municipal rented sector as has arisen over the years in the private rented sector. Any kind of monopoly of rented housing tends to be extremely dangerous for rights of choice or a sense of independence.
      Many groups of people who want or need rented housing are not getting it. One obvious group includes people who have to move in search of work. The previous lack of privately rented accommodation in many areas is a serious impediment to those looking for work elsewhere who find that the public housing sector cannot help them.
      Many people looking for jobs in different parts of the country have found that they cannot obtain housing when they apply for those jobs. The national mobility scheme does not provide those people with sufficient access to council housing in the area to which they want to move. I am thinking particularly of people who move from areas like mine in the north-east to the south-east of England. They cannot afford to enter the private housing market in the south-east because prices are so high. They cannot get council houses in the south-east where there are relatively few council houses as the rate of council house sales has been so high. There are very few privately rented houses available and that is a strong argument for ensuring that more are provided.
      The Committee should consider whether we can tailor the business expansion scheme incentive to ensure that it provides adequate protection for tenants. The fear is that the people most likely to use the scheme will be those who regard it as a get-rich-quick opportunity, and will take advantage of the changes in tenants' protection to exploit tenants in near monopolistic situations.
      The Government appear to have removed many of the aspects of tenants' security and protection on rents on the argument that that was the only way to get private capital back into housing. Is the business expansion scheme really necessary on top of what the Government have done already? They have greatly weakened the tenant's position
      32
      by arguing that if they did not do so there would not be many houses to rent and therefore tenants in general would suffer.
      Mr. D. N. Campbell-Savours: I want to ask the hon. Gentleman a question in the most comradely terms about a statement that was made in the middle of the previous election campaign which suggested that a policy should be pursued whereby people who let a room in their home would not pay tax on the income that they derived. Will the hon. Gentleman develop that concept so that we may hear the argument explained more fully?
      Mr. Beith: That suggestion was an extremely good idea. It was an attempt to unlock the large amount of accommodation that could be available in the short term to deal with the housing problem for single people. Several disincentives have been suggested as reasons preventing people from offering such accommodation. It was suggested that people might be unable to remove an unsatisfactory tenant or regain the use of a room when the family required it. It was also suggested that there was not a great financial incentive to provide that accommodation.
      That incentive could have been increased by the scheme that we put forward. It combined a degree of financial incentive with a system of administration designed to relieve the landlord—who might in many cases be a widow living alone in a house of three or four bedrooms—of the problems and complications of tenancy protection. It was a sensible scheme, but I cannot address it in connection with the amendment, which does not bear directly upon that scheme.
      Nevertheless, that scheme was another attempt to acknowledge the fact that we have housing and property that could be put to better use and that private capital is available which could be used to expand the provision of rented housing.
      4 pm
      I am worried, as are others who are critical of the Chancellor's proposals, about what will be the position of tenants if the business expansion scheme is used without giving them any protection. The purpose of the amendment is to ensure at least that rents are set at reasonable levels. It is no longer possible to tie the business expansion scheme proposals to fair rents, because the Government have abolished that provision. Fair rents are on their way out. There will remain only rent assessment committees, which are normally used not for the assured tenancies with which we are dealing but for shorthold tenancies. Indeed, access to rent assessment committees in respect of assured tenancies is very limited and is available primarily to the landlord. That is a fairly weak limitation.
      If a business expansion scheme tenancy conferred upon the tenant the right of access to a rent assessment committee, that would provide some means of ensuring that the tenant was not exploited. That would be particularly when the landlord—perhaps a company—had a monopoly or near-monopoly of rented property in the area. It would at least limit the ability of the business expansion scheme to create exploitable tenancies and the ability of landlords to push up rents in an area.
      A company that wanted to make a lot of money fast out of the business expansion scheme could move into an area where there was a shortage of rented accommodation and buy a number of properties. It could then push up the rents in that area. It would have the benefit of the business

      33
      expansion scheme in financing that operation in the first place and could then, by use of its monopoly, push up rents to an exploitative level.
      Mr. Anthony Nelson: I wonder whether the example that the hon. Gentleman has given is correct. If a company tried to do what he said by acquiring existing properties which were tenanted, the people occupying those properties could continue as fair tenants and there would be no advantage to the company. If the company were to purchase instead vacant or newly developed properties, in either case there would be a net introduction of new accommodation for rent that would not otherwise he available. How could a net new supply force up rental levels?
      Mr. Beith: It could do so if the net new supply fell far below the level of demand. Provided that supply was less than demand, the company could force up prices. Indeed, no market price can be calculated if there is no rented property available. I could take the hon. Gentleman to various parts of London and elsewhere in the country where virtually no rented property is available. If he were able to obtain in such an area two or three properties—which had, perhaps, been in single occupation—and turn them into tenanted properties, he would have a virtual monopoly of rented housing and could set what rents he chose.
      The situation is further distorted by the complications of housing benefit. There is not a free market in rented housing. I have submitted another amendment which, although it cannot be debated now, the Minister might like to keep at the back of his mind. It is designed to probe why it was necessary to apply the higher rate of tax relief to the business expansion scheme. A landlord who takes advantage of the scheme without the protection that I am suggesting will be investing in property with a potential for capital appreciation that is greater than almost anything else into which he could put his money. Why should he need such a large incentive? With existing schemes, no more that 50 per cent. of net assets may be represented by property. It is already recognised within the business expansion scheme that it is not the purpose of the scheme to finance property ownership and that there is not the degree of risk in property ownership to justify the conferring of substantial incentives.
      The Government are offering large incentives to draw people into projects in which they can make a great deal of money without being offered a big incentive, and in which they will find it easier to participate if tenants are not given a measure of protection. The Minister may feel that my amendment to make use of rent assessment committees is not the best way of maximising tenants protection. However, unless he is able to offer some guarantee that tenants will not be exploited under the scheme, he will do the cause of expanding privately rented housing no good.
      If the business expansion scheme is used in that way it will get a very bad name after the first two or three landlords are found engaging in the kind of activity I have described. Considerable harm will be done, when we should be looking in every possible direction for means of tackling an appalling housing problem. It is a problem which creates social injustice, reduces people's economic opportunities, and prices people out of a free society—if they cannot obtain access to housing in areas where there is work available to them.
      34
      If the Minister wishes to win our support for the business expansion scheme in the private rental market, he must do something to afford protection to tenants. Otherwise, the scheme will be too easy to abuse. Unless the Minister can offer such protection, either by accepting my amendment or by an alternative, he cannot expect our support for the clause.
      The Financial Secretary to the Treasury (Mr. Norman Lamont): I hope that the hon. Member for Berwick-upon-Tweed (Mr. Beith) will forgive me if I reply briefly to his remarks, because some of the wider issues on which he touched might be more conveniently discussed in the clause stand part debate. The hon. Gentleman may agree that he went wider than the narrow terms of his amendment. None the less, I am grateful to him for the moderate way in which he proposed his amendment and did not express total hostility to the idea of the business expansion scheme being used to provide more privately rented property. Indeed, he went further and indicated that he felt there was a shortage of such accommodation, which was a great impediment to mobility in locking people into areas of high unemployment. That is one of the major reasons why we want to see a revival in the privately rented sector.
      The hon. Gentleman was essentially trying to strike a different balance between the landlord and tenant than that being struck by the Housing Bill and by the concept of the new assured tenancies. I do not want to open up the whole Housing Bill debate this afternoon, but the tax relief in question is built upon the assumption that the Bill will be enacted. The proposals that we have put before the House try to strike a balance between the landlord and tenant that we believe is reasonable. The hon. Gentleman knows as well as I do that there have been many attempts by previous Conservative and even by Labour Governments—for example, by the late Richard Crossman—to alter that balance within an adminisrative framework and to try to achieve a greater, albeit regulated, supply of private rented accommodation. Those previous attempts all came to grief because they did not move far enough towards allowing genuine market rents to be charged in the private sector.
      Mr. David Winnick: Is it not at the core of this debate that a previous Conservative Government set out to deregulate the housing market under the Rent Act 1957? All new rented dwellings were deregulated with the promise, at the time when that Bill was going through the House of Commons, that that would lead to a substantial increase in rented accommodation. However, the opposite occurred. The Minister mentioned the late Richard Crossman. but he was responsible, as Minister for Housing, for repealing the 1957 Act, which was so discredited that the then Conservative Opposition did not even vote against his doing so.
      Mr. Lamont: I do not think that in the first part of his observation the hon. Gentleman was really disagreeing with what I was saying. I was saying that Conservative Governments in the 1950s did not go far enough and that what they did did not have the intended effect.
      Although it is largely my fault that we are doing so, I do not think that it serves our purpose this afternoon to go too far back into the policies of Henry Brooke, or indeed the late Richard Crossman. I merely say to the hon.

      35
      Gentleman that I do not think that past Governments, Labour or Conservative, went far enough in giving freedom to landlords to charge a market rent.
      The new assured tenancy scheme will allow a tenant and landlord to agree any rent that they choose. We believe that that is right, because the best way to arrive at a reasonable rent is to allow it to be determined by competition and market forces. In the past we have seen, all too clearly, attempts to restrict rents causing properties to leave the private sector or not to appear in it, so that people who wanted to rent and were willing to pay a market rent found that no property was available. Indeed, there has been almost no worthwhile investment in private rented property for 50 years, and the sector is declining considerably.
      The clause extends the business expansion scheme to investment in companies that let residential property on the new assured tenancy basis. We consider this necessary in the early years of deregulation, to speed up the process of bringing more rented property on to the market. It would be counter-productive and foolish to restrict the rents that could be charged by the BES company. The likely outcome would not be that the benefits of the tax relief would be passed on to the tenant in the form of lower rent. It would simply discourage the supply, and discourage landlords from making more rented property available. Again, we would find willing landlords and willing tenants being frustrated by Government restrictions.
      It is doubtful whether the amendment would have any effect. Under the Housing Bill, a rent assessment committee determines the rent when the landlord proposes an increase under a periodic tenancy and the tenant chooses to refer it to the committee. The committee, however, has no role in connection with the initial rent that is charged, and no role in fixing the rent when the mechanism for increasing it is built into the tenancy agreement.
      Furthermore, the Housing Bill does not use the term "reasonable rent", which the hon. Member for Berwick-upon-Tweed has incorporated in the amendment. What the Housing Bill does is to provide for the committee to determine a rent at which the property might reasonably be expected to be let on the open market by a willing landlord: in other words, the market rent. We believe, however, that imposing a rent assessment committee's view of what would be a market rent on all tenancies from the outset, as the hon. Gentleman suggests, so that a higher rent could not be charged even if the landlord and tenant were in agreement, would not be right. It would create uncertainty, and would discourage landlords from providing property for letting.
      I am afraid that, despite the moderate way in which the hon. Gentleman proposed his amendment, I do not think that I can accept it. I hope to deal on clause stand part with some of the wider issues that he raised.
      Mr. Gordon Brown: The tragedy is that, good as the intentions of the hon. Member for Berwick-upon-Tweed (Mr. Beith) are in relation to fair rents, no tenant would save money, no rent would be reduced and no family would be better off as a result of the amendment. The reason is that he has totally misunderstood what rent assessment committees are there
      36
      to do, under the Housing Bill. They will not set the initial rents. They will determine rents only on appeal, and, as the Minister has conceded, they will have no remit in regard to fair rents.
      One strong objection to the business expansion scheme is that we are not in a position to force fair rents, but we have a number of other objections. We believe that the major problem of the scheme is that money that ought to be used to provide better housing under housing associations and local authorities will be frittered away in tax reliefs. For those reasons—which we want to debate this afternoon—I hope that the hon. Gentleman will withdraw his amendment, which will have no force whatever, and allow us to get on with the major debate on the business expansion scheme.
      4.15 pm
      Mr. Ian Gow: I understand that the hon. Member for Berwick-upon-Tweed (Mr. Beith) is making his parliamentary debut in his new role as shadow Chancellor and in addressing the Committee on the Finance Bill. [Interruption.] If I am wrong about the hon. Gentleman's experience, I shall gladly give way and apologise to him.
      Mr. Beith: The hon. Gentleman may have failed to notice that I have been addressing the House on this subject for about a year.
      Mr. Gow: I think that I may be right. I said that this was the hon. Gentleman's debut as shadow Chancellor in addressing a Committee of the Whole House on the Finance Bill. If he has done it before, I can only say that this afternoon was not a triumph. We understand the the hon. Gentleman is not only the shadow Chancellor for the newly formed party, but a possible candidate for the leadership. You may care to reflect, Mr. Walker, on the hon. Gentleman's good fortune in not being surrounded by all his colleagues. Only one has been here to learn the truth, which is that the hon. Gentleman has misunderstood the Finance Bill and does not understand the Housing Bill, of whose Standing Committee his hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) was a rather undistinguished member. It would have been greatly to the advantage of the shadow Chancellor if he had studied both Bills more carefully. I hope that he will not detain the Committee any longer, and will withdraw the amendment.
      Mr. Beith: I thought that the hon. Member for Eastbourne (Mr. Gow) was going to make a speech discussing the issues raised in the amendment. I used to think that he was interested in housing issues; he was, after all, Minister for Housing at one time. He clearly prefers, however, to engage in discussion of wider political matters at a pretty superficial level.
      I also thought, when the hon. Member for Dunfermline, East (Mr. Brown) spoke, that I had intruded on a private quarrel which could be conducted only on the basis of being either in favour of private landlords or wholeheartedly opposed to them. Indeed, the hon. Member for Walsall, North (Mr. Winnick) intervened when they were mentioned, and said that they should go. It is a widespread view in the Labour party that there is no role for the private rented sector.
      My purpose in tabling the amendment—and I am strengthened in my view that we should press it—is to

      37
      suggest that there is a role for private rented housing, and that the Government should be looking for ways to encourage a responsible private rented sector without doing so in ways that afford no protection to tenants. I can hardly be criticised for the unsatisfactory features of the Government's housing legislation—including the rent assessment committees—given the effort put by my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) into criticising those proposals when they were put forward. The amendment offers the Government an opportunity to find a way of moderating their own proposals.
      Let us suppose for a moment that the Government are right in their assumption that the change in the balance between landlord and tenant will attract more people into private sector housing. That must have been their intention. The argument that they used throughout all the debates on the housing legislation was that the balance was wrong, and that shifting it would bring more capital into private housing.
      If there were anything in that argument, the business expansion scheme would be of only limited relevance to the expansion of the private rented sector. As it accords considerably greater benefits to landlords who will already have been released from their former obligations, which the Government believe kept some of them out of the housing market altogether, why should not a greater obligation towards tenants be imposed on that group of landlords—particularly as it may prevent the scheme from being abused, and becoming a means of returning to the days of Rachmanism?
      We have put forward a reasonable proposal, and have offered the Government an opportunity to suggest alternatives. But they seem determined to drive ahead with an unrestrained incentive to landlords, with no tenant protection at all. The Labour party seems determined not even to consider ways in which the private sector could play a larger role in tackling the enormous housing problems. In those circumstances, I feel that we are entitled to differ, and to say that there is a role for a responsible private sector. 1 therefore intend to press my amendment.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 145, Noes 221.

      Division No. 290]

      [4.20 pm

      AYES

      Allen, Graham

      Campbell, Menzies (Fife NE)

      Anderson, Donald

      Campbell-Savours, D. N.

      Archer, Rt Hon Peter

      Clark, Dr David (S Shields)

      Banks, Tony (Newham NW)

      Clay, Bob

      Barnes, Harry (Derbyshire NE)

      Clwyd, Mrs Ann

      Battle, John

      Cohen, Harry

      Beith, A. J.

      Cook, Frank (Stockton N)

      Benn, Rt Hon Tony

      Cook, Robin (Livingston)

      Bennett, A. F. (D'nt'n & R'dish)

      Corbett, Robin

      Bidwell, Sydney

      Corbyn, Jeremy

      Blair, Tony

      Cox, Tom

      Blunkett, David

      Cryer, Bob

      Boateng, Paul

      Cunliffe, Lawrence

      Boyes, Roland

      Cunningham, Dr John

      Bradley, Keith

      Dalyell, Tarn

      Bray, Dr Jeremy

      Darling, Alistair

      Brown, Gordon (D'mline E)

      Davies, Rt Hon Denzil (Llanelli)

      Brown, Nicholas (Newcastle E)

      Davies, Ron (Caerphilly)

      Bruce, Malcolm (Gordon)

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

      Buchan, Norman

      Dixon, Don

      Buckley, George J.

      Dobson, Frank

      Caborn, Richard

      Doran, Frank

      Callaghan, Jim

      Douglas, Dick

      38

      Dunnachie, Jimmy

      Michie, Bill (Sheffield Heeley)

      Dunwoody, Hon Mrs Gwyneth

      Millan, Rt Hon Bruce

      Eadie, Alexander

      Mitchell, Austin (G't Grimsby)

      Eastham, Ken

      Moonie, Dr Lewis

      Evans, John (St Helens N)

      Morgan, Rhodri

      Ewing, Harry (Falkirk E)

      Morris, Rt Hon A. (W'shawe)

      Fatchett, Derek

      Mowlam, Marjorie

      Faulds, Andrew

      Mullin, Chris

      Fearn, Ronald

      Murphy, Paul

      Field, Frank (Birkenhead)

      Nellist, Dave

      Fisher, Mark

      Orme, Rt Hon Stanley

      Foot, Rt Hon Michael

      Owen, Rt Hon Dr David

      Foster, Derek

      Patchett, Terry

      Fyfe, Maria

      Pendry, Tom

      Galloway, George

      Pike, Peter L.

      Garrett, John (Norwich South)

      Prescott, John

      Golding, Mrs Llin

      Quin, Ms Joyce

      Gordon, Mildred

      Randall, Stuart

      Gould, Bryan

      Redmond, Martin

      Griffiths, Nigel (Edinburgh S)

      Rees, Rt Hon Merlyn

      Griffiths, Win (Bridgend)

      Richardson, Jo

      Grocott, Bruce

      Roberts, Allan (Bootle)

      Harman, Ms Harriet

      Rogers, Allan

      Hattersley, Rt Hon Roy

      Rooker, Jeff

      Haynes, Frank

      Rowlands, Ted

      Heffer, Eric S.

      Ruddock, Joan

      Hogg, N. (C'nauld & Kilsyth)

      Sedgemore, Brian

      Hoyle, Doug

      Shore, Rt Hon Peter

      Hughes, Robert (Aberdeen N)

      Skinner, Dennis

      Hughes, Roy (Newport E)

      Smith, Andrew (Oxford E)

      Hughes, Sean (Knowsley S)

      Smith, C. (Isl'ton & F'bury)

      Hughes, Simon (Southwark)

      Smith, Rt Hon J. (Monk'ds E)

      Illsley, Eric

      Snape, Peter

      John, Brynmor

      Soley, Clive

      Kinnock, Rt Hon Neil

      Spearing, Nigel

      Leighton, Ron

      Steel, Rt Hon David

      Lestor, Joan (Eccles)

      Stott, Roger

      Litherland, Robert

      Straw, Jack

      Livingstone, Ken

      Taylor, Mrs Ann (Dewsbury)

      Lloyd, Tony (Stretford)

      Taylor, Matthew (Truro)

      McAllion, John

      Turner, Dennis

      McFall, John

      Wall, Pat

      McKay, Allen (Barnsley West)

      Walley, Joan

      McKelvey, William

      Wareing, Robert N.

      McLeish, Henry

      Welsh, Andrew (Angus E)

      Madden, Max

      Williams, Alan W. (Carm'then)

      Mahon, Mrs Alice

      Winnick, David

      Marek, Dr John

      Marshall, Jim (Leicester S)

      Tellers for the Ayes:

      Martin, Michael J. (Springburn)

      Mr. James Wallace and

      Meacher, Michael

      Mrs. Ray Michie.

      Michael, Alun

      NOES

      Alexander, Richard

      Bright, Graham

      Alison, Rt Hon Michael

      Brittan, Rt Hon Leon

      Allason, Rupert

      Brown, Michael (Brigg & Cl't's)

      Amos, Alan

      Browne, John (Winchester)

      Arbuthnot, James

      Bruce, Ian (Dorset South)

      Arnold, Jacques (Gravesham)

      Buck, Sir Antony

      Atkinson, David

      Burt, Alistair

      Baldry, Tony

      Butcher, John

      Beaumont-Dark, Anthony

      Butler, Chris

      Bendall, Vivian

      Butterfill, John

      Bennett, Nicholas (Pembroke)

      Carlisle, John, (Luton N)

      Benyon, W.

      Carlisle, Kenneth (Lincoln)

      Biffen, Rt Hon John

      Carrington, Matthew

      Biggs-Davison, Sir John

      Cash, William

      Blackburn, Dr John G.

      Channon, Rt Hon Paul

      Blaker, Rt Hon Sir Peter

      Chapman, Sydney

      Bonsor, Sir Nicholas

      Chope, Christopher

      Boscawen, Hon Robert

      Clark, Sir W. (Croydon S)

      Boswell, Tim

      Clarke, Rt Hon K. (Rushcliffe)

      Bottomley, Peter

      Conway, Derek

      Bottomley, Mrs Virginia

      Coombs, Anthony (Wyre F'rest)

      Bowden, A (Brighton K'pto'n)

      Coombs, Simon (Swindon)

      Bowden, Gerald (Dulwich)

      Cope, John

      Boyson, Rt Hon Dr Sir Rhodes

      Couchman, James

      Braine, Rt Hon Sir Bernard

      Cran, James

      Brazier, Julian

      Currie, Mrs Edwina

      39

      Curry, David

      Lloyd, Sir Ian (Havant)

      Davies, Q. (Stamf'd & Spald'g)

      Lloyd, Peter (Fareham)

      Davis, David (Boothferry)

      Lord, Michael

      Day, Stephen

      Luce, Rt Hon Richard

      Devlin, Tim

      McCrindle, Robert

      Dickens, Geoffrey

      Macfarlane, Sir Neil

      Dicks, Terry

      Maclean, David

      Dorrell, Stephen

      McNair-Wilson, M. (Newbury)

      Douglas-Hamilton, Lord James

      Malins, Humfrey

      Durant, Tony

      Mans, Keith

      Evans, David (Welwyn Hatf'd)

      Maples, John

      Fallon, Michael

      Marshall, John (Hendon S)

      Favell, Tony

      Marshall, Michael (Arundel)

      Fenner, Dame Peggy

      Martin, David (Portsmouth S)

      Field, Barry (Isle of Wight)

      Mates, Michael

      Forman, Nigel

      Maude, Hon Francis

      Forsyth, Michael (Stirling)

      Maxwell-Hyslop, Robin

      Forth, Eric

      Mellor, David

      Fox, Sir Marcus

      Miller, Hal

      Franks, Cecil

      Mills, Iain

      French, Douglas

      Mitchell, Andrew (Gedling)

      Fry, Peter

      Mitchell, David (Hants NW)

      Gardiner, George

      Moate, Roger

      Garel-Jones, Tristan

      Montgomery, Sir Fergus

      Gill, Christopher

      Morrison, Hon Sir Charles

      Goodlad, Alastair

      Moss, Malcolm

      Gorst, John

      Moynihan, Hon Colin

      Gow, Ian

      Mudd, David

      Gower, Sir Raymond

      Nelson, Anthony

      Grant, Sir Anthony (CambsSW)

      Neubert, Michael

      Gregory, Conal

      Newton, Rt Hon Tony

      Griffiths, Peter (Portsmouth N)

      Nicholls, Patrick

      Grist, Ian

      Page, Richard

      Ground, Patrick

      Paice, James

      Grylls, Michael

      Patten, John (Oxford W)

      Gummer, Rt Hon John Selwyn

      Price, Sir David

      Hanley, Jeremy

      Rathbone, Tim

      Hannam, John

      Rhodes James, Robert

      Hargreaves, A. (B'ham H'll Gr')

      Riddick, Graham

      Hargreaves, Ken (Hyndburn)

      Rossi, Sir Hugh

      Harris, David

      Rost, Peter

      Haselhurst, Alan

      Rowe, Andrew

      Hawkins, Christopher

      Sackville, Hon Tom

      Hayes, Jerry

      Sayeed, Jonathan

      Hayhoe, Rt Hon Sir Barney

      Scott, Nicholas

      Hayward, Robert

      Shaw, David (Dover)

      Heathcoat-Amory, David

      Shaw, Sir Giles (Pudsey)

      Hicks, Robert (Cornwall SE)

      Shaw, Sir Michael (Scarb')

      Higgins, Rt Hon Terence L.

      Shepherd, Richard (Aldridge)

      Hind, Kenneth

      Shersby, Michael

      Hogg, Hon Douglas (Gr'th'm)

      Sims, Roger

      Hordern, Sir Peter

      Smith, Tim (Beaconsfield)

      Howard, Michael

      Speller, Tony

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

      Steen, Anthony

      Howarth, G. (Cannock & B'wd)

      Stern, Michael

      Hughes, Robert G. (Harrow W)

      Stevens, Lewis

      Hurd, Rt Hon Douglas

      Stewart, Andy (Sherwood)

      Irvine, Michael

      Stradling Thomas, Sir John

      Irving, Charles

      Sumberg, David

      Jack, Michael

      Summerson, Hugo

      Jackson, Robert

      Tapsell, Sir Peter

      Janman, Tim

      Taylor, Ian (Esher)

      Jessel, Toby

      Taylor, John M (Solihull)

      Johnson Smith, Sir Geoffrey

      Taylor, Teddy (S'end E)

      Jopling, Rt Hon Michael

      Temple-Morris, Peter

      Kellett-Bowman, Dame Elaine

      Thompson, D. (Calder Valley)

      Key, Robert

      Thorne, Neil

      King, Roger (B'ham N'thfield)

      Thurnham, Peter

      Knapman, Roger

      Tracey, Richard

      Knight, Greg (Derby North)

      Tredinnick, David

      Knight, Dame Jill (Edgbaston)

      Trippier, David

      Knox, David

      Twinn, Dr Ian

      Lamont, Rt Hon Norman

      Waddington, Rt Hon David

      Lang, Ian

      Wakeham, Rt Hon John

      Latham, Michael

      Waldegrave, Hon William

      Lawrence, Ivan

      Walker, Bill (T'side North)

      Lee, John (Pendle)

      Waller, Gary

      Lester, Jim (Broxtowe)

      Walters, Dennis

      Lightbown, David

      Ward, John

      Lilley, Peter

      Warren, Kenneth

      40

      Watts, John

      Young, Sir George (Acton)

      Whitney, Ray

      Younger, Rt Hon George

      Widdecombe, Ann

      Wiggin, Jerry

      Tellers for the Noes:

      Wilshire, David

      Mr. Mark Lennox-Boyd and

      Winterton, Nicholas

      Mr. Richard Ryder.

      Wolfson, Mark

      Question according negatived.
      Question proposed, That the clause stand part of the Bill.
      Mr. Norman Lamont: This clause, together with schedule 4, extends the business expansion scheme to investment in companies which let residential property on the new assured tenancy terms. It complements the current Housing Bills, which introduce this kind of tenancy. The aim is to encourage the provision of private rented accommodation. The shortage of such accommodation in many areas in our cities has been one of the main causes of homelessness, and it has also been an obstacle to labour mobility.
      In the longer term, the freedom for landlords to charge market rents under the new-style assured tenancies will stimulate more investment in private rented housing, but we see a strong case for speeding up this progress by providing a special incentive in the early years of deregulation. Therefore, we propose to extend the business expansion scheme to investment in companies letting properties on the new assured tenancy terms, which give tenants security of tenure. This relief will be available for only five years. The Bill provides for BES relief to be available for shares issued after Royal Assent and before the end of 1993.
      Mr. Gordon Brown: Will the Minister assure the Committee that companies formed under the business expansion scheme to provide private rented accommodation will have to subscribe to a social landlords' charter that has been proposed by the Minister for Housing and Planning?
      Mr. Lamont: No. The terms of the assured tenancies under which investment can take place under the legislation are precisely the same as those in the Housing Bill. Any proposal that is made by my hon. Friend the Minister for Housing and Planning would be incorporated and would have to be observed by any company which was benefiting from the business expansion scheme. I shall return to that question in order to confirm or amend my answer.
      Relief will apply to shares that are issued after Royal Assent to the Finance Bill and before the end of 1993. The new assured tenancy basis will not be available immediately. We expect it to come into force early next year. In the interim, a company will be able to use the business expansion scheme to raise money to buy or build properties, but it will be unable to let them. Nevertheless, we felt that it was right to make BES relief available during the interim period, because the purchase of properties and any necessary preparations to make them ready for letting could take some time. We want companies using the BES to be able to let properties on assured tenancies as soon as possible.
      As the aim of the BES relief is to encourage the continuing provision of rented property, the relief will be available only for assured tenancies that give the tenant long-term security. There will be a limit on the value of each let property. This will prevent tax relief from being

      41
      used to provide expensive properties for renting. The limit will he £125,000 in Greater London, and £85,000 elsewhere. If the value of the property exceeds this limit, the letting will not qualify. The Bill contains a power to amend these limits by statutory instrument.
      Mr. Gordon Brown: What are the mandatory reasons that will allow houses to be repossessed? Does the Minister agree that it may be in the financial interests of a company to attempt to repossess its houses after five years?
      Mr. Lamont: The hon. Gentleman is arguing against the whole basis of the Housing Bill. He is saying—and I expect that it will be the major point in the debate—that it provides an incentive to evict people. The hon. Gentleman knows as well as I do that my hon. Friend the Minister for Housing and Planning has produced a battery of new safeguards for tenants that will strengthen the criminal law and give the tenant the right to compensation if he is unfairly evicted. There is a risk of eviction from rented property, but that is more likely to arise from controls that make it impossible for landlords to receive a decent return on their property. The Housing Bill provides tenants with security of tenure, backed by changes to the legal protection that is available to them. Moreover, in certain circumstances, there will be access to the rent assessment committees. The legislation strikes a balance between the needs of the landlord and the tenant.
      Mr. Brown: Does the Minister agree that intention to redevelop is one of the means by which tenancies can be repossessed on a mandatory basis, and that it may be in the financial interest of a company to repossess the tenancies after five years?
      Mr. Lamont: Yes. Under the business expansion scheme the property has to be let on a long-term basis. The hon. Gentleman believes that there will be an incentive for a landlord to get vacant possession or to develop a property with vacant possession, but a company will be unable to qualify for BES relief unless it is letting the property as rented property. The BES relief will bring into existence companies which will let property on a continuing basis and also on an assured tenancy basis.
      Mr. Campbell-Savours: Is the Minister able to foresee circumstances in which a person who is a tenant and an investor under a business expansion scheme will be able to rent from his own investment? Is it not possible that he might receive tax relief on an investement from which he had already received a benefit?
      Mr. Lamont: That is not possible. If the hon. Gentleman can demonstrate any way in which that is possible we shall take action to stop it, because that is not the purpose of the business expansion scheme.
      The Opposition refer to harassment and to incentives to evict, but that is not the purpose of the legislation. We are prepared to look at any reasonable provisions that the Opposition may wish to put to us to safeguard the rights of tenants that do not cut across the Housing Bill, which we believe strikes the right balance between the rights of tenants and the need to give landlords a proper incentive to invest in rented property.
      Mr. John Battle: When we discussed the Housing Bill the Minister accepted that practices of landlords or property developers such as Nicholas Hoogstratel were not covered by the law and that changes
      42
      in the Bill would make it easier for him to carry on such practices. Although the Minister expressed grave reservations about that landlord's practices, when that landlord came before the courts his case was dismissed. What is there to prevent that person and his companies benefiting from the business expansion scheme and continuing to keep properties in bad condition and charge prices that tenants cannot afford to pay?
      Mr. Lamont: I wish to make no comments about one individual. Bad landlords are a product of previous Rent Acts. This legislation, the housing legislation and the BES are intended to provide a continuing supply of property on an assured tenancy basis. That is not compatible with the examples that Opposition Members are giving.
      I was explaining about limits on the values of properties prescribed under the legislation, but if the value of a property exceeds the limit it will not necessarily cause BES relief to be lost, because a company will be allowed to carry on some non-qualifying activities. If those non-qualifying activities are substantial, BES relief will not be available. What that means in practice will depend on the facts of each case, but the Inland Revenue's existing practice is that if non-qualifying activities amount to less than 20 per cent. of total activities they are not regarded as substantial.
      That rule will ensure that the company specialises in the provision of qualifying tenancies, which will give some desirable flexibility. For example, a company may from time to time have money on deposit while it is preparing to buy or improve properties. It would clearly be wrong to withdraw BES relief because it received a relatively small amount of interest on its deposit. Indeed, these provisions reflect the general provisions of the BES for all types of companies. The Bill excludes sub-standard properties by reference to standards laid down in the Housing Act 1985 and the Housing (Scotland) Act 1987.
      There is a further feature of BES relief that I should mention. Clause 50 imposes a limit on the total amount of investment in a company in any year that can qualify for BES relief. Ordinarily the limit will be £500,000, but for companies letting residential property on assured tenancies it will be £5 million. It is not our intention that the BES should be used to finance large property companies, which should have less difficulty obtaining equity finance from the markets. Thus, a limit is necessary. We want to enable a company to benefit from economies of scale in offering shares to the public and in managing a large number of properties. We felt that the £5 million limit, which we have extended to ship chartering, was about right.
      The privately rented sector has been in continuous decline since rent control was introduced in 1915 in response to wartime shortages. It has continued ever since and has been reinforced by other Governments. In 1915, 90 per cent. of the population lived in privately rented homes, but today barely 8 per cent. do so.
      The lack of a ready supply of rented housing has become a major obstacle to labour mobility. Many people have been losers, including many unemployed people. Many people have been unable to take jobs because of the lack of a privately rented sector in areas where work is available. The country has lost from the economic activity that has been forgone. A battery of legislation, statutory rent controls and other rent restrictions are largely to blame for that profoundly unsatisfactory position.
      Mr. Campbell-Savours: I press the Minister about this simple question and I want a simple answer. Can a person rent a flat from a company in which he is a BES investor? The answer is either yes or no.
      Mr. Lamont: I answered that question earlier and said that I believed that the answer was no. I shall return to this issue later.
      Mr. David Shaw: Is not the question asked by the hon. Member for Workington (Mr. Campbell-Savours) answered by schedule 4 to the Bill, on page 123, which says:
      "In subsection (2) of section 291 (individuals qualifying for relief), after paragraph (a), there shall be inserted—
      '(aa) a tenant of a dwelling-house of which the company is the landlord;'."
      Consequently, a tenant is unlikely to obtain relief under that subsection.
      4.45 pm
      Mr. Lamont: The answer to the question is no, but I shall return to it if the hon. Member for Workington (Mr. Campbell-Savours) wishes to pursue it.
      The Government have decided to take action to reverse that profoundly unsatisfactory position by introducing a new assured tenancy scheme. Under its proposals, existing tenants will have the same protection as at present, but we are relaxing controls for future tenancies. Landlords and tenants will have a choice of two types of tenancies. Assured tenancies will provide long-term statutory security, and assured shorthold tenancies will give the tenant at least six months' security. In both cases, market rents will be payable. These proposals will provide the incentive for landlords to invest and, at the same time, give protection to the tenant.
      For the new assured tenancy scheme, but not for assured shorthold tenancies, we are introducing tax relief under the BES scheme for a limited five-year period. We have a considerable task in pressing ahead with deregulation in the privately rented sector, and we believe that the extension of BES relief will give a significant boost to plans for deregulation. Decades of legislation have left this sector demoralised and in decline. It is important to reverse that decline, to give the unemployed a greater chance to find work and to give the population a greater choice in their housing.
      Mr. Gordon Brown: The one thing that we can say about the Minister and his speech about tax concessions for the BES is that, despite all the criticisms that have been made of BES and of this new proposal in particular, his enthusiasm for the scheme remains undiminished.
      Since the scheme was set up in 1983—it was originally intended to provide tax concessions for high-risk investment in high-technology industry to create jobs—Ministers have had to come to the House at least twice to say that, because of the increasing dependence on property and fixed assets, they intend to change the terms of the scheme. First, they had to admit that there were abuses in the scheme as it applied to expensive wines and antiques. They said that they intended to rule out those abuses. They then said that, because land and buildings form such a large part of the capital issued under the scheme, they would limit the amount that could be used to 50 per cent. Today, they appear to have turned full circle. Instead of saying that they will limit the dependence of BES
      44
      companies on property they are saying that privately rented sector companies can be 100 per cent. dependent on property assets.
      There is a further irony in what is happening. For months we have been saying that public funds that should have gone to the National Health Service, local authorities and social services departments for the benefit of the many have been going in tax concessions to private hospitals, nursing clinics, private health clinics, private schools and private accommodation for bed and breakfast for the benefit of the few. We said that those abuses should be limited. Yet the Government have opened up a new area of opportunity, with tax reliefs for a new area of the private sector, which is as yet unexploited under the BES. That is why we now have this proposal to extend BES relief to the private rented sector.
      All Opposition Members recognise the housing problem—250,000 more people are on waiting lists than in 1979, there has been a 30 per cent. increase in the number of homeless people, there are twice as many people in bed-and-breakfast accommodation and 500,000 houses have been lost from the rented sector, even after taking account of council house sales.
      As has been said, more houses have been lost from the rented sector under this Government than at any other time since the infamous Rent Act of 1957. In response, we believe that the Government's proper action should have been to give funds to housing associations and local authorities to enable them to build houses, and to encourage housing co-operatives. We believe that, for the same money, local authorities and housing associations could achieve far more than is possible under this new business expansion scheme.
      Mr. Winnick: Does my hon. Friend agree that, as the rents are to be market rents, it will often be the case, especially in London and the south-east, that rents will be higher than the cost of a mortgage, so the very people about whom we are worried, who cannot afford a mortgage, are hardly likely to benefit from the Housing Bill. Is that not a measure of the hypocrisy of the Government's legislation?
      Mr. Brown: If my hon. Friend will stay with me, I shall return to that point, which goes to the heart of our objections to the scheme.
      We know what the scheme will do for the private investors whom the Minister is anxious to encourage. We know that someone who invests £40,000 in a BES company can save £16,000-worth of tax. We know that, on the occasion of houses being rented, complete decontrol is proposed under the Housing Bill and that companies can charge whatever rent they want. We know, too, that, after five years, shares in BES companies can be sold without there being any liability to capital gains. We know what gains there are—they come three times over—for those who invest in such schemes. What we do not know and what we have not heard, however, are the gains to tenants.
      There is no guarantee—the Minister confirmed it—of fair rents, of long-term security in accommodation or of good quality landlords. It is small wonder, therefore, that this proposal did not surface in the Conservative party manifesto. As far as we can understand, it has never been advocated by any local authority and it has never been put out to anyone for consultation, and when it was

      45
      announced immediately after the Budget the reaction of housing authorities and housing associations was anything but supportive.
      Mr. Quentin Davies: The hon. Gentleman asks what is the benefit to the tenant. Is not the provision of new, additional rented accommodation of inestimable benefit to potential tenants?
      Mr. Brown: The hon. Gentleman should read the details of the scheme. There is no guarantee of new accommodation. There is no guarantee that houses will be newly built rather than merely bought for renting under the scheme. As for rents, the hon. Gentleman will see clearly that the people who will benefit are not the migrant workers from the north looking for jobs in the south, which was the original intention of the scheme, but people looking for second flats, such as executives wanting accommodation in London or other major cities.
      Mr. Gow: The hon. Gentleman unintentionally misled the House. He said that there was no reference in our manifesto to the proposal before the Committee. I shall read what we said:
      "We must attract new private investment into rented housing—both from large institutions…as well as from small private landlords…to encourage more investment by institutions, we will extend the system of assured tenancies. When introducing the motion, my right hon. Friend followed precisely the promises made on page 13 of our manifesto.
      Mr. Brown: I hope that the hon. Gentleman does not wish to mislead the House. He failed to mention that at the heart of the scheme is the provision of a tax concession to people who, primarily, will be top rate taxpayers. There was nothing in the Conservative party manifesto which said that public money—taxpayers' money—would go to BES companies or any other companies to stimulate the private rented sector. That is the basis of the objection to the scheme—public money is being used to finance accommodation in respect of which there is no guarantee of fair rent, secure accommodation or good quality landlords. That money could be far better spent by local authorities or housing associations to build more houses or to repair houses for which fairer rents are charged.
      I shall consider the drawbacks of the scheme. The Minister said that it is based on the principle of assured tenancies, and that people who rent under the scheme will have what he would regard as security of tenure under assured tenancies. We know that assured tenancies will provide less protection than secure tenancies under the Rent Acts, that there are seven mandatory reasons for tenancies to be repossessed and several other discretionary powers, that among them is the failure of the owners to pay the mortgages and that another is rent arrears after three months.
      We know that another justification for repossession, at least in England, is the offer of alternative accommodation, which is vaguely defined as "suitable". We know that one of the principal loopholes that is likely to be used is the landlord declaring his intention to redevelop, whereupon he automatically has the right to repossession without, as we understand it, even having planning permission to carry out the redevelopment. We know, therefore, that there will be considerable abuse of the scheme.
      The Financial Secretary has conceded that there is a financial benefit to companies which sell up after five
      46
      years, and therefore secure vacant possession to enable them to sell up. We know that assured tenancies are more likely to be five-year tenancies at best. The people who gain them are likely to find themselves in other accommodation at the end of that period.
      It is small wonder that those who advise investors in this matter have already said—an estate agent has said it:
      "the grounds for possession are much more extensive than under the Rents Acts and include some previously available only under part II of the Landlord and Tenant Act 1954 for business purposes".
      The latest publication from the BES advisory group called "Best BES" concludes with a paragraph entitled, "Likely Exit Routes" thus:
      "more likely perhaps properties will be sold either untenanted or with tenants".
      The idea that people will be advised that they are in the business of providing long-term accommodation lasting beyond five years, and the guarantee that these will be assured tenancies which cannot be broken will, under the new Housing Bill, I believe, prove groundless.
      What are the guarantees about the quality of landlords? Housing associations are debarred from involvement in the scheme. Assurances involving the registration of landlords under assured tenancies, are, as in the previous legislation, being abandoned. There is no provision such as that involving the Housing Corporation whereby landlords are registered and approved. The proposal for social landlords will not come within the remit of BES landlords—the Financial Secretary confirmed that. What guarantees do we have, therefore, that landlords who have no experience, no track record and no approvals or supervision will have any commitment to proper standards of property and the proper treatment of tenants?
      Is it not as my hon. Friend the Member for Leeds, West (Mr. Battle) suggested—that the landlords that local authorities and housing associations are trying to outlaw because of their atrocious record will be brought back to life? Indeed, under this scheme, they will be guaranteed state support in the form of tax concessions. Far from eliminating exploitative landlords, there is nothing here which will guarantee, under a social landlords charter or anything else, that the landlords who are being outlawed will not reappear. That is why one firm of accountants recently said:
      "Rachman one suspects would not have been slow to take advantage of the scheme had it been around in the Sixties."
      Under these proposals, Rachman is subsidised by the state with an open-ended commitment which the Government think might cost £40 million in its first year.
      5 pm
      That is not the only problem. There is another problem that the Minister did not properly address. We are being told by Ministers that the aim of the scheme is to help the mobility of people round the country. We are told that it is to help workers in the north find accommodation once they find employment in the south. However, the information available to us suggests that the rent for a house costing up to £125,000, which is the limit of the scheme in London, could be as high as £240 a week and the rent on a £85,000 house, which is the limit in the cities and turns of the rest of Britain, could be as high as £154 a week on a market basis. When rent is as high as that and the housing benefit maximum will be only £114 in Westminster, £70 or £75 in other parts of London such as Kensington and Chelsea, £88 in Camden, £39 in the west

      47
      midlands and £34 in Humberside, there is little chance, even with housing benefit support, of the migrant worker being able to afford the rents that will be charged under the business expansion scheme.
      In other words, the rents that will charged will rule out the very people the Government say they are trying to help. It is the higher paid business men, with the rent probably paid by the company, who will benefit from such tenancies. It is not the first home for migrant workers that it likely to result from the scheme but a second home for temporarily resident business men. That is not the group in the country with the highest claim upon the charity of taxpayers.
      Instead of suggesting that ordinary average wage workers are likely to benefit under the scheme, surely it would be better if the Government took up the suggestions made by the Employment Institute in its pamphlet published a few days ago. It said that if the Government are to continue to reject the proper answer to these problems, which is an active regional policy, the best solution for people moving south is publicly provided accommodation at rents that people can afford.
      On top of the insecure tenures that are likely to result, the high rents that are likely to debar all but the best-off workers and the failure to provide guarantees against bad quality landlords, we come to the problem at the heart of the scheme. The same amount of money as the Government will give in tax subsidies to the rich could have been used to build local authority housing, sponsor housing associations or develop housing co-operatives.
      We asked the housing associations what they believed could be done with the sum of money that the Government have set aside for the first year cost of their tax concessions. They told us that for that amount of money they would be able to build more than 2,000 new houses—2,000 extra houses, not houses taken from the accommodation sector now—and charge sensible rents for them.
      We asked the Association of Metropolitan Authorities what it could do with the same amount of money—£40 million. It said that that would be sufficient capital to enable it to borrow sufficient money to build 10,000 local authority houses a year. Therefore, in return for a provision that will probably bring about 1,000 rented properties in its first year, we could have provided the capital to help to build up to 10,000 local authority houses. That is the scale of the missed opportunity caused by the Government's obsession with providing tax reliefs under the business expansion scheme.
      As a result of the Government's policies, the number of public sector starts is at its lowest since 1945—and at a time when the need is becoming greatest. At the same time, the annual figures for house building in the public sector have fallen from 81,000 in 1979 to what is estimated to be only 29,000 this year. The Minister should respond to us by saying that, after looking at the finances of the business expansion scheme and recognising that the £40 million could be far better spent in the provision of local authority or housing association finance, the value for money achieved by this proposal is far less than would be achieved in the public sector.
      It is a tragedy that the Government seem to feel that there is a psychological need to circulate cash around
      48
      property developers and speculators before it can do any public good. The truth is that ideology in the Conservative party is now so rampant that it would prefer to subsidise the private sector to do the job inefficiently than support the public sector to do the job efficiently.
      We are aware of a number of deficiencies in the business expansion scheme and my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) will deal with them when he winds up. Money that should have been raised for businesses in the north has been diverted to the south, money that should have gone to small businesses has gone to large businesses, money that should have gone to the manufacturing sector has gone to the service sector and money that should have gone to projects that would have created far more jobs has been frittered away on projects that the Minister has latterly had to ban.
      The truth of the business expansion scheme for private rented housing accommodation is that it has been founded on dogma about the benefit of the private sector. It has been fired by selective generosity towards top rate taxpayers who stand to benefit far more than any tenant can benefit from the scheme. It has been justified on the myth about the average migrant worker being able to do well out of the scheme when the Government know that that cannot be the case. It is riddled with abuses and anomalies that will force the Minister back to the House to change the legislation in a short time.
      In this debate the scheme has been exposed for what it is. It is a mechanism for taking the housing problems of the many and transforming them into the tax havens for the few. The scheme will do little for those who most need housing help. The money that is being spent on it should have been given to local authorities and housing associations to allow them to build the houses that we need. It is for those reasons that we will vote against the scheme.
      Mr. John Watts: There would be little disagreement in the Chamber about the fact that there is a need for greater provision of rented housing in this country. Home ownership has increased at a rapid rate. That is commendable and desirable if it is a matter of free choice. However, if home ownership is merely a matter of Hobson's choice for those who would prefer to rent but who are denied the opportunity because there is no supply of rented housing, it is not a matter for congratulation. Therefore, one reason for wishing to see a greater supply of rented housing is to give individuals the same choice of renting accommodation as they have of owning their home.
      Mr. Battle: Is the hon. Gentleman still in favour of the policy of increasing the number of owner-occupied homes in Britain? At present, that stands at 62 per cent., and I understood it was the Government's policy to increase it to 75 per cent. Has it not occurred to the Conservative party that perhaps the reason for the shortage of private rented accommodation is that owner-occupation has increased? Is the hon. Gentleman now saying that his party feels that we have gone too far in the direction of owner-occupation and that we should pull back from that policy?
      Mr. Watts: Not at all. I am happy that we should continue to encourage and assist those who wish to become home owners. However, there should also be the option of renting. I believe that we have reached the point where, because of the fast dwindling private rented sector,

      49
      many people do not have that choice. That is what the proposals in the Housing Bill, supported by this clause in the Finance (No. 2) Bill, are designed to redress. Therefore, the first justification for what we are putting forward is the freedom of individual choice. The choice of renting is as valid as the choice of owning.
      Mr. Winnick: How can the hon. Gentleman talk about choice? I do not know about his mailbag or surgeries, but people write to me daily asking for rehousing and they come to my surgery with housing problems. They do not know about choice. They cannot afford a mortgage. In the main, they are family people who, on their restricted incomes, cannot obtain a building society mortgage. How will they he in a position to pay market rents when in many cases the rent will cost more than a mortgage and when housing benefit is being drastically reduced?
      Mr. Watts: I cannot understand how a market rent on a property could possibly be greater than the cost of funding a mortgage to purchase the same property. If it were, no would-be tenant would take that option. There will not be any choice for people who wish to rent if the hon. Member for Walsall, North (Mr. Winnick) and his hon. Friends continue to seek to frustrate any measure designed to increase the supply of rented accommodation. If the Labour party does that, it will not in any way give greater choice either to my constituents or to those of the hon. Member.
      Mr. Ian Taylor: Few lenders are prepared to advance a 100 per cent. mortgage. The difficulty for people trying to get a mortgage is in finding the differential capital amount. The attraction of rented accommodation—at least while people are establishing themselves in new working environments—is that people do not have to find the capital deposit that is required.
      Mr. Watts: My hon. Friend makes a valid point. In addition, people do not necessarily wish to put down permanent roots—as is often implied by home ownership—early in their careers, when they may make many job moves.
      After choice, the second justification for seeking to increase the supply of rented accommodation is that it will improve labour mobility. Labour Members pooh-pooh this, but every Friday 30 or 40 pages of vacant jobs are advertised in my local newspaper. There are unemployed people in Walsall, North who would love to come to Slough for a job, but they are prevented from doing so because they cannot obtain accommodation there.
      We have heard from Labour Members, predictably, the bleat for more council housing. The Labour party has only one solution to any housing problem—build council houses. That will not improve labour mobility. One need only look at the poor supply of council housing in the pool for the national mobility scheme to see how true that is. Obviously, the claims of existing constituents of local authorities are given priority over those of potential constituents. The demand of an existing tenant to transfer to better accommodation will always be accorded priority over the claim of someone who wishes to move into the area to take up employment. No conceivable level of capital expenditure on public housing will ensure that there is such an oversupply that the needs of those wishing to move into an area to take employment can be met by expansion of public sector housing.
      50
      There is no advantage for labour mobility in providing greater funds for the public sector. By contrast, the private rented sector is available equally to local people who are seeking rented accommodation and to those who want to move into the area for employment. There is no bar to the latter being granted a tenancy. They compete in the same market with others seeking rented accommodation.
      The importance of expanding the private rented sector is recognised in the Housing Bill, which is the main vehicle for encouraging a resurgence of supply of private rented housing. Clause 49 of the Finance (No. 2) Bill, extending the business expansion scheme to assured tenancies, is intended to provide an initial boost to the intentions behind the Housing Bill. It is common sense and essential that the BES should apply to the same categories of assured tenancy as are defined in the Housing Bill. Any move to impose on housing investment further qualifications and requirements that would qualify under the BES—such a suggestion was made in amendment No. 1, which we have rejected—would blunt the impact of the useful boost that we are able to provide through this fiscal measure. Any such additional qualifications would he bound to defeat the pump-priming purpose of clause 49.
      5.15 pm
      The Opposition have professed concern for the future security of assured tenants. Their form of protection would prevent potential tenants from ever having the opportunity to obtain a tenancy. It would so constrain the conditions under which anyone could offer accommodation for rent in the private sector that no one would offer it. The purpose of providing housing for rent, and providing for greater choice and the needs of labour mobility, would be defeated by the Opposition's professed concern to provide protection.
      The hon. Member for Dunfermline, East (Mr. Brown) criticised the tax relief that will be given under the scheme as squandering money that should be given to the National Health Service, local authorities, and so on. We have heard that bleat throughout our consideration of the Budget and the Bill. The hon. Gentleman missed the point that incentives to encourage investment maximise the benefit to potential tenants who are looking for property to rent and minimise the cost.
      With tax relief at a maximum of 40 per cent., it must follow that two and a half times as much housing is provided for every £1 in lost tax revenue as would be provided if the same amount of cash were expended through local authorities. For every £1 lost in tax revenue through this relief, it would be necessary to spend £2·50 if the same amount of accommodation were provided through the public sector, and that is even making the generous concession that the public sector could provide housing as efficiently and as cheaply as the private enterprise system.
      The Government's proposal maximises the benefit for people who need houses to rent—people for whom the Conservative party cares and whom the Opposition would sacrifice to their hatred of the private enterprise system in general and of landlords in particular. I give the clause my full support. I hope that it will be carried with a substantial majority to show how serious we are about expanding the provision of private rented accommodation.
      Mr. Alistair Darling: The Government's support of the clause is indicative of their

      51
      attitude to a major problem. The primary purpose of the clause is to provide a tax shelter for a few, using the housing shortage as an excuse. It has potentially unpleasant side effects. There is no doubt that there is a major housing shortage. The high demand is ruthlessly exploited by many private sector landlords. There is a particular shortage of rented accommodation at prices that people can afford. The people who find it most difficult to move about and to secure any accommodation at all are those on low incomes, who cannot afford the price of housing.
      The hon. Member for Slough (Mr. Watts) asked why the private sector has been in decline. The answer is simple: successive Governments have subsidised home ownership. It is obvious that anyone who has the means will attempt to buy his or her own home because it is very much to his or her advantage to do so. That is why the private rented sector has declined throughout this century.
      It is interesting to note that in home ownership the subsidy goes to the purchaser of the home, whereas under this scheme, rather than the public subsidy being given to the tenant, it goes to the landlord. On Second Reading I said that if the Government were serious about promoting tenants' choice it would be far better to subsidise tenants so that they could shop around and use their increased purchasing power to choose suitable accommodation. Instead of that, the cuts in housing benefit have greatly reduced the purchasing power of prospective tenants, especially at the bottom end of the market.
      What is the answer to the housing shortage? The Government are providing an opportunity for a few people to obtain further tax relief. The clause provides a tax break for the better off. Rachman rides again, and this time the taxpayer is providing the horse.
      Mr. Ian Taylor: The hon. Gentleman has got it the wrong way round. The Government are trying, through the medium of tax incentives, to provide much more rented accommodation for people who need it.
      Mr. Darling: I shall develop that argument shortly. I do not think—and I do not think that the Government believe—that this scheme will bring on to the market the thousands of extra houses that are needed. In any event, any houses for rent will be at the top end of the market, particularly in the south-east of England, where high profits can be made. Other parts of the country where there is a demand for accommodation and a need to encourage increased mobility will not be so attractive to people who wish to invest under the business expansion scheme.
      One of my objections to the clause is that it specifically excludes organisations such as housing associations which have done much to provide low-cost housing. Clause 49(2) (b) specifically states that the qualifying activities are
      "activities which … are, during the relevant period, conducted on a commercial basis and with a view to the realisation of profits."
      Clearly it is those who would profit from providing accommodation who will be subsidised.
      I have three basic objections to the clause. First, it provides a tax shelter, giving a 40 per cent. discount to higher rate taxpayers. We must remember that only a few people in this country have between £500 and £40,000 to invest. They are not the ordinary, run-of-the-mill people.
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      Very few people have that sort of money to play around with. The Government are aiming the provision at those who have a great incentive to reduce their tax liability and who have vast sums of money available to tie up for five years.
      Mr. David Shaw: Is the hon. Gentleman aware that about 70 per cent. of all those who have invested under the business expansion scheme are taxpayers at below the highest rate and that many standard rate taxpayers have invested in the scheme over the years?
      Mr. Darling: Most of the money has gone to those paying higher rate tax. I repeat that the scheme is aimed at those with substantial sums of money available to invest which they are willing to tie up for five years.
      The second objection is that after five years investors can sell up and get a profit, free of capital gains tax.
      The third objection is that in some cases those providing accommodation at the bottom end of the market will receive a subsidy from the public purse because their tenants will have their rents financed through the Department of Health and Social Security. A few will provide accommodation at that level, but for the most part investors will be looking for market rents to improve the return on their investment, and that means high rents. Those with low incomes will not be properly catered for.
      The scheme provides a tax break for the rich instead of looking after the least advantaged. It exploits those who have no choice. Furthermore, it is open to abuse, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said. If the capital gains tax advantages are to be realised, it is necessary to ensure that there are no tenants in the building at the end of the period. Clearly, the value of a property increases if it is not burdened by tenancies. This will give landlords the incentive to get rid of tenants by using the powers to be made available to them under the Housing Bill. By arguing that there is alternative suitable accommodation and that he wants the house for redevelopment, the landlord will be able to get the tenants out and realise his profits.
      Who is to police the scheme? The Inland Revenue has enough trouble as it is in tracking down people who push tax advantages to their very limits. To give powers to local councils would be anathema to the Government, who have a pathological dislike of local authorities. With the money that is to be made available, local authorities could provide properly supervised accommodation for those who need it. If we are prepared to make funds available by way of tax forgone under the business expansion scheme, it would be far better to give that money to public bodies to provide accommodation, without the need to make a profit, thereby making a saving to the public purse.
      We should invest in the public sector. I cannot see what is intrinsically good about the private sector providing accommodation, or what is intrinsically bad about local authorities and public bodies providing it. We should be willing to look after local authorities and housing associations, many of which have a very good track record of providing accommodation where it is needed.
      The Government have completely abandoned any regional policy. We know that most of the money under the business expansion scheme has been invested in the south-east and that less than 4 per cent. has been invested in Scotland. If we are serious about encouraging businesses to set up outside the south-east of England, we

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      should provide accommodation and give industry other incentives to move out of the overheated south-east. One of the laudable aims of the Scottish Special Housing Association, for example, was that it sought to provide accommodation where the labour was needed. Such a policy would get round the argument of the hon. Member for Slough.
      In short, the clause is a tax break for those who have always been looked after by the Government—the few people to whom the Government have always attached a high priority and shown great favour. Those who have are to benefit at the expense of those who have not. The provision is, first and foremost, a tax shelter. Everything about the scheme points in that direction.
      The serious problem of homelessness is not being addressed either in this Bill or in the Housing Bill. The business expansion scheme will not solve the problem. It will not bring on to the market the rented accommodation that is so desparately needed. According to the Government, there was a need to cut back on housing benefit because it was an open-ended commitment. This proposal is an open-ended commitment if ever there was one. We do not know how much it will cost the Exchequer in tax forgone, yet the Government are prepared to allow this blank cheque to be written to look after the few. The provision is a tax break first and foremost, and it will take a great deal to convince us that it is anything else.
      Mr. Gow: The Committee may want to take note of the fact that, having lost his amendment, the shadow Chancellor of the Social and Liberal Democrats has left us and made way for others on the Liberal Benches.
      The debate is about whether the clause should stand part of the Bill, but quite rightly, my right hon. Friend the Financial Secretary and the hon. Member for Dunfermline, East (Mr. Brown) spent much of their time dealing with the housing aspects of the Bill. I, too, intend to talk mainly about the housing aspects, although at the very end I shall have to say something about the fiscal desirability of the proposal.
      When the Chancellor made his Budget statement, he said:
      "For years, the shortage of private rented accommodation has been an obstacle to labour mobility. The Government's proposals to deregulate new rents are already going through the House. Deregulation will, over time, substantially increase the supply of housing for rent. But this will not happen overnight, and there is a case for a special incentive to speed up the process in the early years."—[Official Report, 15 March 1988; Vol. 129, c. 1002.]
      I entirely agree with what the Chancellor said on 15 March.
      There is no doubt that there is available and empty today a large amount of property which is underused or unused. Part of the purpose of the Finance Bill is to bring that unused or underused accommodation into use. The fact that it is empty at a time of considerable homelessness is a massive indictment of the present state of the law. It is to the redressing of that evil that the Housing Bill is in part directed. That Bill is designed not just to bring into use existing unused or underused accommodation, but to achieve something that has virtually not happened at all in the past half century—to attract new investment into the building or conversion of housing for rent in the private sector.
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      5.30 pm
      Everyone should welcome the provision of new investment for the building of houses or flats to let in the private sector The Labour party should welcome it, especially for its employment consequences. Labour Members are rightly deeply concerned about employment. They used to tell me constantly that we needed to spend more money on housing. Part of the reason for that was the fact that construction of houses and flats is highly labour intensive. [Interruption.] The hon. Member for Workington (Mr. Campbell-Savours), clad in the Liberal colours, seeks to intervene from a sedentary position. He would be wiser to make his own speech in due course if he manages to catch your eye, Sir Paul.
      I do not wish to be led astray by the hon. Gentleman who, like me, has this afternoon escaped from the Public Accounts Committee. Even he should welcome the prospect of still further employment in the construction industry as a result of this measure. It is not enough just to encourage those who have empty accommodation to let their property. It is high time for some new investment in the private rented sector.
      Mr. Battle: Will the hon. Gentleman explain why he has not supported an increase in housing investment programme allocations so that cities such as Leeds can put money into private rented accommodation through improvement grants in housing action areas? Local authorities have a strategy which seeks to deal with housing in both the private and the public sectors, but the cuts in HIP allocations have meant that money could not go into improving private rented accommodation.
      Mr. Gow: As the hon. Gentleman well knows, in this financial year there has been an increase in the Treasury allocation to the public sector of housing, so his intervention is somewhat self-defeating. [Interruption.] I was comparing this year with last. The hon. Gentleman wants more money and my right hon. Friend the Chancellor has provided it this year.
      A dramatic increase in private ownership of houses must by definition mean a diminution in the rented sector, but one of the consequences of the drying up of the private rented sector has been that many people who would be only too happy to rent accommodation are today unable to do so. The hon. Members for Edinburgh, Central (Mr. Darling) and for Dunfermline, East asked how we could prove that migrant workers would go into the houses and flats that will be built as a result of clause 49 of the Finance Bill. Of course we cannot prove that, but whoever goes into them, someone somewhere in the country will move up. The hon. Member for Edinburgh, Central should not laugh. It is self-evident that an increase in private rented accommodation will make itself felt throughout those parts of the kingdom in which there is currently an unmet demand for such accommodation.
      The provisions of the Finance Bill on their own will make it more attractive for private money to go into the building of houses and flats for rent, but because for the past 50 years there has been virtually no private sector investment in that area, I believe that my right hon. Friend the Chancellor is right to give it an extra boost for the first five years. Clause 49 will accelerate the revival of the private rented sector by accelerating the long overdue return of private investment in that sector.

      55
      The Labour party is thus in a dilemma. Even the hon. Member for Walsall, North (Mr. Winnick), except in his most eccentric mood, must agree that it is no bad thing to have more accommodation available in the United Kingdom. The hon. Gentleman, however, finds it difficult to reconcile that with support for clause 49.
      For us, there is no such dilemma. We support the renewal of the private rented sector and believe that clause 49 will accelerate that renewal. We congratulate both my right hon. Friend the Chancellor and my hon. Friend the Minister for Housing and Planning, who was here a moment ago, on the combination of the Housing Bill, which has completed its Committee stage, and the Finance (No. 2) Bill which has just started its Committee stage. We believe that the two together will achieve that purpose which has eluded Governments for the past 50 years, and the sooner the clause reaches the statute book, the better it will be for housing.
      Mr. Win Griffiths: It gives me some pleasure to follow the hon. Member for Eastbourne (Mr. Gow) as he has clearly shown the link between the extension of the business expansion scheme in the Budget and the Housing Bill. The Government argue that those two measures will bring an extension of the private rented sector because they believe that the problems of rent control for landlords have resulted in the decline of the private rented sector, but all the evidence collected by reasonable people who might be considered experts on this tells us virtually the opposite.
      The vacant property survey carried out by the Department of the Environment showed that rent control was not the reason for empty property. The survey showed that 60 per cent. was vacant due to the poor condition of the property and only 2 per cent. because of the landlord's dissatisfaction with Rent Act controls. The Institute of Housing—scarcely a bastion of Socialist thought—took a similar view. One of its reports states:
      "In the Institute's view statutory controls on both security and rent have contributed to the decline but the evidence is inconclusive to say the least."
      The Select Committee on the Environment, in its 1981–82 report, states that the real problem for the private rented sector has been the massive advantage to owner-occupiers through mortgage interest tax relief.
      Mr. Winnick: I was a member of that Select Committee. My hon. Friend may be interested to know that when we took evidence from the Small Landlords Association, it dismissed assured and shorthold tenancies as being of no use, and evidence has shown that they were not taken up. Moreover, the association said that small landlords—the same probably applies to large property companies—would be willing to rent only if there was no protection of rents and no security of tenure. If those circumstances could not be achieved, there would be no incentive for the private sector to intervene in housing.
      Mr. Griffiths: I thank my hon. Friend for pointing that out and for reinforcing the view of the Select Committee.
      A survey carried out in London in 1983–84 found that fewer than two thirds of households were protected by the Rent Acts, and that during the period covered by the survey fewer than one third of new lettings were covered by rent controls. When one adds to that the ease of evasion
      56
      of existing rent controls, one would have imagined that there would be an increase in lettings, but that has not been the case. The number of lettings has decreased.
      In 1983–84, rents that were not protected in any way were an average of £345 a month. Protected tenants were paying £158 a month and registered tenants were paying £128 a month. Translated into current prices, that would mean £450, £190 and £154 a month, respectively. Rent controls have had little influence on the reduction of activity by private landlords. Indeed, the abolition of some controls after 1957 did not result in an increase in the private rented sector.
      We can all agree with the view of the Select Committee on the Environment about what is needed to encourage private investment in housing for rent. Its report said that a healthy independent rented sector would require that landlords could obtain a return on investment similar to that obtainable elsewhere and that tenants could, without hardship, pay rents for suitable secure accommodation. There's the rub. Although it is possible for landlords to obtain a return on investment—I dare say that many right hon. and hon. Members pay hefty monthly rents for property in London with which their landlords are well satisfied—the problem lies in tenants being able to pay those rents without hardship. In a city such as London, many people could not dream of paying rents in excess of £400 a month.
      The Halifax building society said that the market rent for a terraced property worth £45,000 in the south-east—it must be a little way out of London—would be £86 a week, whereas the mortgage repayment would be £76 a week. There would be no advantage in renting such a house.
      Mr. Sydney Chapman: Apart from the valid point made by my hon. Friend the Member for Esher (Mr. Taylor) about the need to put down a deposit on such houses, which must be a material factor, does the hon. Gentleman agree that mortgage interest rates can increase as well as decrease? Although the position is favourable at present, anyone going into the serious business of home ownership, which we wish to encourage and expand, should take those unpredictable factors into account.
      5.45 pm
      Mr. Griffiths: We can all agree about changes in the mortgage rate and that, until recently, mortgage interest rates have been at record levels under this Government, but we should not deal with that now. We must discuss what is happening. At almost every stage during the past 20 years it has been more expensive to rent decent accommodation that it has been to buy that accommodation, notwithstanding the problems of finding a deposit.
      By introducing property companies into the business expansion scheme, the Government are not making a significant contribution to tackling the problems. Will there be a large take-up of the extended business expansion scheme? The Chief Secretary to the Treasury said that the demand for the business expansion scheme remains uncertain. Although the Treasury has estimated that it will cost £40 million in the first year, no one knows for sure. In April, there were reports that Barratts would become involved in the scheme in a big way, although according to the magazine Housing in May—only a few weeks later—Barratts was already considering drawing in its horns and

      57
      not becoming so involved. When one considers the advantages of tax relief and owner-occupation against the fact that those who rent accommodation obtain no relief, it is difficult to understand how the scheme can be successful.
      With the Government's policy of reducing higher rates of tax, although the 40 per cent. relief may prove to be attractive for many people, other schemes will be equally attractive and perhaps less burdensome than this scheme—unless the so-called assured tenancies prove to be less effective and less well-meant than the Government claim.
      Under the Housing Bill, tenants will not be as well protected as they were in the past. Landlords could run a coach and horses through some tenancy agreements and get their tenants out without too much trouble. The Government more or less admitted as much by the exclusions that are provided under the assured tenancy scheme—for example, for redevelopment.
      The outcome of the business expansion scheme is uncertain, yet the Treasury is committed to pouring millions of pounds into it. The money may not be spent at the end of the year. If in the first year the £40 million is not taken up, it will be interesting to know whether the shortfall will be used to provide money for home improvements or for building new properties in the public sector. We would welcome a commitment from the Minister on that.
      We must also consider how the business expansion scheme has dispersed its money throughout the United Kingdom. Anyone from outside the south-east of England must wonder whether the scheme will do his region any good. In the south-east, the business expansion scheme took up 43 per cent. of the money expended in the last year for which information is available. In the same year, only 2·7 per cent. of the money available was spent in Wales. The amount spent in Scotland was less than 4 per cent. Less than 5 per cent. of the money went to the north-west, the north-east and the west midlands.
      It appears, therefore, that this will be an opportunity primarily for unregistered and unlicensed landlords, who may not be controlled in any way, to run riot in the south-east because the money is unlikely to be spent elsewhere. The opportunities to boast that Rachman rides again, subsidised by the taxpayer, will be legion.
      We call upon the Government to reconsider the clause and to expunge it from the Bill. We must ask whether it is a suitable vehicle for encouraging long-term growth in the private rented sector, or whether it will simply provide for a tax-subsidised property development scheme with a brief rental interlude. Obviously, the Government hope that, having extended the lollipop to potential investors in the property market, the aftertaste will be so sweet that they will keep their money there. They are building that hope on an illusion. All the evidence suggests that investors will make some money out of the scheme while it lasts, but, when it finishes in 1993, there will be a flight of investment away from this area, the money to provide decent housing at a decent cost will be lost, and we shall be no further forward in dealing with the problems of providing housing than we are today.
      Mr. Chapman: I am grateful to have the opportunity to contribute briefly to this part of the debate. The Minister reminded the House that in the last 70 years the number of private rented houses has declined from 90 per cent. of the total to just under 8 per cent. today.
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      There are many reasons for that. First, although it may appear to be a strange reason, there are more houses, or dwelling units. Secondly, there has been a great growth in private home ownership, which Conservative Members welcome. Thirdly, there has been a growth in the past 70 years in the public rented sector; and, more recently with the housing association contribution, which is an invaluable part of our housing stock today.
      I have no doubt that there is another reason—that until recently our rent legislation has been framed on the assumption that every landlord is a villain and every tenant a saint. We now have a more equable and fair regime of rent legislation. We must have this better balance on the one hand, while assuring security of tenure to the reasonable tenant on the other. The reasonable tenant represents the vast majority of tenants in this country.
      There have been one or two inconsistencies in contributions from Labour Members. The hon. Members for Edinburgh, Central (Mr. Darling) and for Bridgend (Mr. Griffiths) have fairly pointed out that the business expansion scheme is taken up mainly in the south-east. Clause 49 may or may not assist the provision of housing principally in the south-east, where, in certain areas, there is a particularly severe housing shortage. If the Bill is effective, it will help meet the housing needs of people in our capital city and in the south-east generally.
      Mr. Andrew Smith: Given the tight constraints on planning permission in my constituency and in many parts of the south-east, will the hon. Gentleman tell us how that additional housing subsidy can have any effect other than to fuel price inflation and carry owner-occupation further beyond the pockets of many people? It is already way beyond the reach of many people in the south-east. I presume that the hon. Gentleman is a market economist. Will he explain how, with extra money available and no more housing being built, this can be other than property speculation subsidised by the state?
      Mr. Chapman: I say, with relief, that I am not a market economist. I do not quite know what that means. However, I take the hon. Gentleman's point. There is pressure for development in the south-east, and there is a shortage of land for development in the south-east, compared with many other parts of the country. Nevertheless, there are plenty of opportunities and there is much spare land in the south-east. I can take the hon. Gentleman to parts of this great capital city and show him sites that are crying out for development.
      Be that as it may, not all the housing needs in the south-east can be provided on existing under-used or derelict urban sites. I do not wish to stray too far from the clause, but I invite the hon. Gentleman to attend the Chamber this time next week, as I have been fortunate enough to draw first place in the ballot and intend to bring up the subject of planning controls and the problems facing us, particularly in a sustained expanding economy.
      Mr. Darling: I do not want to accept the hon. Gentleman's invitation to attend a debate next week, but he appears to be developing a theme that was developed to some extent by his hon. Friend the Member for Eastbourne (Mr. Gow). He appears to be saying that if a business expansion scheme creates tenancies in London it will create surplus accommodation in other parts of the country. Is not most BES property likely to be at the top end of the market, because market rents will be charged?

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      Even if someone came to London to take up a place, that would not help someone in Newcastle who wanted to come to London to seek work but did not have very much money.
      6 pm
      Mr. Chapman: The hon. Gentleman makes a series of important points, but the issue cannot be divided into black and white. There is a capital limit in paragraph 13 of schedule 4. I do not think that there will be provision only at the top end of the market. House prices and land prices are extremely high in the metropolis, and these prices will be reflected when comparison is made with other areas. I do not accept that the business expansion scheme will play into the hands of those who can afford to provide the most expensive private rented accommodation.
      It is said that my right hon. Friend the Chancellor of the Exchequer is wrong to provide a tax incentive which is open-ended. How dreadful. It is then said that we shall be lucky if 1,000 houses are built under the scheme. There is a difference between offering a tax incentive and finding public funds to pay for subsidies in another area of housing. I am not saying that we should have one to the exclusion of the other. I am advocating a fair balance. We need to encourage private rented sector investment much more than we have done in recent years.
      If I recollect correctly the words of the hon. Member for Dunfermline, East (Mr. Brown), he said something about ideology running rampant on the Conservative Benches. Having listened to some of the contributions of Opposition Members, it is clear that the well-worn political prejudices are alive and thriving on the Socialist Benches. I am confident that with such antiquated thinking the great Socialist ship will go down at the next general election, as it has in the past three.
      I welcome the provisions in the clause and the schedule. Private rented dwellings can and should have an important role in housing provision. An increasing number of young people are unable to start the process of home ownership, for reasons which have been mentioned already, especially by my hon. Friend the Member for Esher (Mr. Taylor). These young people need temporarily and initially to find rented accommodation so that they can save for a deposit and then step on to the ladder of home ownership.
      Secondly, there is increasing mobility in our nation. People are seeking jobs in different parts of the country. The hon. Member for Islington, South and Finsbury (Mr. Smith) will be aware that, in some areas of the south-east and some parts of London, employers are crying out for people to work for them and are offering attractive income levels. If the business expansion scheme is a success and creates market rents, those who take employment in the south-east and in parts of London, and who have come from other areas, will be able easily out of their incomes to afford market rents. We must keep an open mind if we care about encouraging the maximum number of people to be in employment.
      My third example—the list is not exhaustive—is that there are people who, for various reasons, choose not to own their own home. Instead, they choose to rent. Some of these people would not qualify by any calculation for public sector housing, and provision should be made for
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      them. We must encourage more private capital into rented housing because of the demands that I have mentioned, and others.
      I accept that the business expansion scheme is not the only approach, but I am sure that it will make a valuable contribution. Clause 49 will help to add accommodation to the existing meagre stock. I have gone carefully through the detail of these provisions, as have hon. Members on both sides of the House. I recognise that there are exclusions that apply to tenure and type and value of property. After a careful study of the clause and the schedule, I see nothing to prejudice a tenant or prospective tenant.
      For example, the Bill excludes property where the landlord or the owner demands a premium. As well as having the market rent established—that has to be done by agreement—the landlord will be prevented from saying, "I can charge only this amount of rent, but if you pay a higher premium than the other person who wants the place, you can have it." I accept that there is a shortage of housing in my area, and I see advantages in the scheme.
      I have one detailed query to put to the Minister; and it is appropriate to do so now, as we are in Committee. It concerns the provisions in paragraph 13(1) of schedule 4, which relate to clause 49. I cannot understand why the market value limit is £125,000 in Greater London and £85,000 elsewhere. I agree that there should be value limitation, but I should like to know why my hon. Friend the Minister hit upon these figures. My constituency is an area where the metropolis meets the countryside. In one road in the constituency one comes across the boundary with Hertfordshire. One of the houses in that road adjoins a house that is deemed to be in Hertfordshire. Why should a value limit of £85,000 attach to the house in Hertfordshire, while the house next to it, which is in my constituency, is the subject of a £125,000 limit?
      More important, does the limit refer to a dwelling house that may subsequently be divided into units of accommodation, or does it refer to the unit of accommodation that might be derived out of a greater whole? That is worth looking into. Much depends on the value of properties in any one area when compared with values elsewhere. Prices are extremely high in constituencies such as mine and in many other parts of London and the south-east. This could be a material factor. I shall be glad if my hon. Friend will respond to those points. However, I fully support the intention and spirit behind the clause and commend it to the House.
      Mr. Campbell-Savours: When the business expansion scheme was originally introduced, I did not show outright hostility, because I believed that it could be made to work. That is still my belief. In a way it has helped in part to create jobs in the regions and in other parts of the United Kingdom. However, what has always worried me is abuse.
      It might be worth reflecting for a moment on the origins of the scheme and the conditions in which the Government produced it. It came at a time when industry was not investing in the way that it should. The Government then produced a number of schemes, some of which were quite successful, to produce jobs. Those schemes were on a small scale and they were operated in every part of the United Kingdom. One of the problems at that time—to some extent it persists—was that high interest rates meant that there was a reluctance to invest. Some people said that it was easier to sit on a pot of gold in the bank and live on

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      the interest than to invest. Against that background, schemes such as BES were introduced to offset the damaging effect of high interest rates on the small investor, especially in areas of unemployment where, invariably, small investors were not too inclined to congregate. Such areas do not normally have living within them people of great economic means. Workington is such an area.
      When we originally discussed these matters three or four years ago, I made a somewhat ambiguous speech in that I partially welcomed the scheme but drew attention to a number of areas where I believed that abuse would take place. If I may say so, with modesty, I have been proved to be correct because there have been abuses. I can only repeat what I said then. I believe that the Government have produced a perfectly good scheme, but it was not targeted to avoid the inevitable abuses that have taken place.
      I am concerned about one area of abuse. Although the Minister has replied to two of my interventions to reassure me, I want to present him with a scenario in which abuse will occur. I hope that I will not have to return to this point in two or three years' time in the way that I have had to refer to abuses about the scheme in general today.
      I refer to comments made by Mr. Stephen Howe of BES Investment Research. I am not sure whether my hon. Friend the Member for Dunfermline, East (Mr. Brown) referred to those comments earlier. However, we seem to have missed the point that a new ceiling has been introduced for the business expansion scheme. Many people have set up companies which have benefited from the scheme. They now believe that there will be a policy shift in the organisations in terms of where they place BES money. They believe that the ceiling will prevent them from adopting—or direct them away from adopting—the schemes that I would have wanted or perhaps would not have wanted if they involved abuse, and force them into investment in housing.
      To what extent has the Minister been able to assess in advance the impact and scale of that movement away from the previous investment areas towards housing? The statements from Mr. Stephen Rowe are quite strong. He is quoted in the Financial Times of 16 March 1988 as saying:
      "It would take a lot of money into the residential property market which would otherwise have gone into genuine businesses."
      Mr. Rowe might be correct. I hope that those areas where the scheme has been successful will not suffer as a result of the switch in investment.
      I also received a letter from a gentleman in Kent, an area in which I have taken a great interest over recent months. The gentleman, whom I am unable to name today, drew my attention on 2 February to an area of BES investment which he believed was an abuse. I do not know whether it is an abuse, but it certainly shows some remarkably high returns. He said:
      "The scheme was prompty abused by the City so much so that some measures were introduced to prevent this, but it would seem without much success. One measure was to limit investment in property to 50 per cent. of the funds raised which has turned out to be something of a joke."
      He refers to BES managers looking for a minimum return of at least 30 per cent. per annum, something that was quite easy to achieve with retirement homes where a profit of £100 a week per patient is considered modest. He writes:
      "I know of one home here in the south-east"—
      that is in Kent—
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      "which was purchased for £200,000 under the BES and has now 50 occupants each paying an average of £1,034 a month plus extras."
      That is £600,000 a year to run a home that was purchased for £200,000 under the business expansion scheme.
      If the firm concerned is offering a high quality of care in Kent, I am sure that we would all welcome it. However, I wonder whether the Minister believes that that is the kind of investment that he would have wanted to attract when the scheme was established. Surely the benefits paid by the Department of Health and Social Security, which in many areas are the minimum fees that these homes ask, are enough to insulate people against the heavy expenditure involved in setting up and running those homes.
      6.15 pm
      I want to refer to my previous interventions and the Minister's responses. The Minister told me that someone could not be a tenant—not officially—of a house or flat in which he had invested under the business expansion scheme. Is it not possible for one, two, three or four people to join together and invest in a house? They might split up that house, perhaps in London, into a number of flats so that each flat, dependent on how the scheme was put together, would fall under the £125,000 threshold for London. If I have been slightly misled in that, I am sure that the Minister can imagine another scenario in which four people might join together to invest in that way.
      Mandatory grounds for repossession after four years of assured tenancy require that where the landlord acquired the property before the tenancy began and now wishes to occupy it as his only or principal home, notice must normally be served that this ground will be used before the tenancy begins. My hon. Friend the Member for Leeds, West (Mr. Battle) tells me that those are self-standing grounds for repossession.
      Is it not possible that someone seeking to secure a £40,000 discount, which is effectively what the tax deduction would mean, on a £100,000 investment, might make that investment and put in place someone who could not be deemed an associate under the Income and Corporation Taxes Act 1988, specifically section 291, subsections (2), (3), (4), and (6)?
      Is it not possible that those people might not necessarily be associates? Might somebody be installed in that residence at a rental agreed between the two parties—remembering what the Minister said—which might effectively be £1 a year? Is it possible that the tenant might be fictitious or even a friend? Someone may become a resident and be given notice at the beginning of the term of four years that he would hand over tenancy after four years while the investor simply lived in the property.
      The hon. Member for Dover (Mr. Shaw) intervened earlier when I put my case—no doubt because he is wise about these matters. He said that my point was dealt with in section 291 of Income and Corporation Taxes Act 1988. Perhaps he would intervene now and tell me where the Finance Bill precludes the scenario to which I have referred. Could a person put a friend in a flat in London, save £40,000 or £50,000—through a concession on the higher rate—with an agreement signed at the beginning of a four-year term to state that at the end of that time the friend would release occupation and the investor would move into the flat having procured it with a 40 per cent. discount? Is that not possible?
      If it is possible, it will be an abuse. If the Minister wants to check the records, he need simply look back at the

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      abuses that I predicted some years ago about a scheme that I supported. I am not rejecting the scheme out of hand. However, I believe that it will lead to abuses.
      I want the Minister to assure us that the abuses will be dealt with. The Inland Revenue cannot police these matters. We cannot have teams of funny little men from the Inland Revenue running around blocks of flats in London to see who is living with whom, who happens to be in residence or whether there is any connection between a person in residence and someone investing in a business expansion scheme who has gained 40 per cent. relief. I do not believe that the system works like that. Understanding the way in which the Prime Minister's mind works about civil servants, I believe that that is the very last thing on earth that she wants to happen. Will the Minister give me an absolute assurance that that will never happen? If he cannot do so, he has a duty to the Committee to withdraw the whole proposition or to amend it in such a way that the Committee will be reassured.
      Mr. Quentin Davies: This Government have been faithful to two important principles in their fiscal policy so far. The first is the desirability of simplifying the tax system. The second is the desirability of getting away from the fatal temptation—I almost called it addiction—to which so many of the Government's predecessors were subject.
      That temptation consisted in using each Budget to introduce new tax incentives or penalties with a view to persuading various agents, in one sector or another of the economy, to change their behaviour patterns and to take decisions they would otherwise not have taken—or not to take decisions they otherwise would have taken. Over the years, that tendency has produced, in effect, an increasing attempt administratively to second-guess the market. The distortions that that produced were cumulative and did enormous damage to our economy. I am glad that we have moved away from that tendency to the extent that we have over the past seven or eight years.
      The Government have acted pragmatically and not dogmatically. They have been prepared to retain fiscal incentives where there seemed to be a special case for them and introduce fiscal incentives where there seemed to be a very special case for doing that. There are two questions for the Committee to examine. First, is there really a special case? Secondly, if there is, is the particular means of intervention foreseen in clause 49 the appropriate one?
      Mr. Gow: Before my hon. Friend addresses himself to those questions, will he explain to the Committee why not a single member of the Liberal party is in his place?
      Mr. Davies: Since entering the House I have attempted to interest myself in a number of matters. I find some of them simple to grasp and others more complicated. Some of them I find completely inscrutable. The behaviour of the Liberal party falls into the latter category, and I can offer no help or light in regard to the interesting mystery to which my hon. Friend the Member for Eastbourne (Mr. Gow) has drawn attention.
      It seems to me more appropriate, where a special case of the kind I have outlined has been identified, to intervene by means of a tax break rather than by means of a subsidy—simply signing a cheque with taxpayers' money, which is the preferred course in such circumstances of the Labour
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      party. My reason for making that distinction is twofold. First, a tax break tends to reinforce the logic of the market rather than go against it, so it takes investors a little further in the direction in which they might otherwise have been inclined to go more cautiously—rather than turn people back from the course which the market appears to have dictated.
      Secondly, as has already been pointed out, if one produces a tax break, one generates a great deal of additional money that is leveraged into the same purpose. I refer to the arithmetic that we have used today, and to the fact that for every £1 that it costs the taxpayer by way of tax breaks, we shall generate £2·50 of new money for investment in private rented accommodation by means of clause 49.
      Another question to which I address myself is whether the argument has been made that the priority of rented private accommodation represents a special case. I believe that it does and I shall mention three reasons that seem to me to be cumulatively convincing. First, there is the present state of the private rented sector in this country, but I shall not elaborate on what was said by my right hon. Friend the Minister when he spoke of the important social and economic need to revive the private rented sector.
      Secondly, the tax incentive will fit neatly, productively and fruitfully with the Housing Bill that is before the House, with its new concept of assured tenancies, which will involve the tenant paying a market rent. If one has market rents, one finds again that one can with reasonable confidence predict the future real value of rents and therefore of properties, which is the function of rents, over a number of years. It is arguable that, under a restricted rent system, one can more easily predict nominal values. What is important for investment decisions are real prices and values.
      If we are to offer the private investor a stake in projects to provide private rented accommodation, and if we are to syndicate investments of that kind, as is foreseen in the Bill, one must produce a reasonable projection of cash flow. That can only be based on some reasonably reliable estimate of what the real value of the rents to be derived in future years is likely to be.
      The third reason why I believe there is a special case, and why clause 49 embraces a good and appropriate concept, is that, whether one likes it or not, the memories of the past 30 or 40 years have had a traumatic effect on private investors. The history of rent controls and of excessive security of tenure way beyond the long-term interests of the tenants themselves has left investors with many unhappy memories.
      Mr. Battle: Like me, the hon. Member for Stamford and Spalding (Mr. Davies) served in Committee on the Housing Bill. He will surely agree that schedule 2 to that Bill took away tenants' rights under which there was a measure of discretion. There could be a row with the landlord about whether tenants should be evicted, but the Bill is weighted in favour of the landlord, who can say that his tenants will be mandatorily evicted. Tenants have lost their rights and could now, for very small reasons, be evicted. Does the hon. Gentleman think that that is a good thing? Also, what guarantees can he give, from his financial analysis, that moneys from rents will be reinvested in improving properties, to ensure a decent private rented housing stock in Britain?
      Mr. Davies: To answer the hon. Gentleman's second question first, the question whether the return from an investment is reinvested in the same sector will depend on the continued attractiveness of that type of investment. The Housing Bill, together with the provisions before the Committee in clause 49, will go a long way, inasmuch as governmental and legal action can, to ensure that investment in the private housing sector remains attractive.
      As to security of tenure, one must strike a balance between the apparent and immediate interests of tenants in providing maximum security of tenure and the fact that, if there is absolute security of tenure, no landlord will rent his property. I believe that the Housing Bill strikes a good balance, but that matter is slightly outside the scope of the Committee.
      My final point is that, after the traumatic effect of the controls on investors of the past 30 or 40 years, if we are to attract investors—and particularly private investors—back into private rented accommodation, given that there is tremendous hesitation in doing that, we must do something to counterbalance the ill effect on investor confidence of the policies which have been pursued up to now.
      Governmental action up to now has been very damaging. I feel that it behoves us to take the need of the economy seriously, and do something to sugar the pill additionally before we invite a whole new range of private investors to swallow it. The Bill does that very neatly. It is well conceived and presented, and clause 49 merits the support of the House.
      6.30 pm
      Mr. Battle: Although the hon. Member for Eastbourne (Mr. Gow) made great play of the fact that this proposal was in the Conservative manifesto, those of us who served on the Standing Committee considering the Housing Bill were slightly surprised that it was not mentioned once during that Committee stage. The Minister said that the provision builds on the assumption that the Housing Bill will become law. In practice, it will go much further than that Bill towards undermining the rights of tenants.
      Conservative Members have expressed the view that rights have swung too far in the direction of the tenant and that power has shifted away from the landlord. However, the myth should be scotched immediately that any tenant has—in the words of the hon. Member for Stamford and Spalding (Mr. Davies)—had "absolute rights". That has never been the case. Under the Housing Bill, tenants' rights to appeal are being eroded and leverage is being provided for the landlord. Clause 49 of the Finance Bill will underpin and assist the landlords by giving them a tax break—as the hon. Member for Stamford and Spalding put it—from the Treasury.
      During consideration of the Housing Bill, the Minister for Housing and Planning made great play of introducing a new concept, that of the social landlord. I suspect that he introduced that concept because he felt that the reputation of landlords—particularly private landlords—needed tempering, because there were examples of bad landlordism throughout the length and breadth of Britain. The Minister introduced the notion of a social landlord charter—stretching the language, as it were, between the public and private sectors.
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      Will those who take up the business expansion scheme have to register with the Housing Corporation? Will they have to register with anyone? Will they be required to have any record in property management, tenant management and rent management? Will the rent be controlled? We know that controls on rent will be taken away by the Housing Bill, but we were also assured that any increase imposed by a private landlord would be matched for those who could not afford to pay by an increase in housing benefit—a public subsidy. That point should not be neglected by those who refer simply to the capital subsidy, taking no account of revenue subsidies.
      What guarantees can be given that people will have decent and appropriate housing to rent in the private sector? What will the clause do to improve the standard and quality of housing? It is sometimes suggested that the Rent Acts alone got rid of the private landlord. The hon. Member for Elmet (Mr. Batiste) nods in assent. It seems to me that the private landlord was disappearing in the city that he and I represent long before the Rent Acts were introduced.
      In Leeds, at the turn of the century, 72,000 private rented houses called back-to-backs were built in the inner-city areas alongside the rivers and the courtyards of the pubs and inns. That was so that they could plug into the drainage systems and inside lavatories did not have to be provided. Although indoor lavatories had been invented by the Romans, the builders decided, for some unknown reason, to cut the costs of providing decent sanitation. As a result, the drainage system was overloaded. Lo and behold, at the turn of the century the streets where those houses were built were rife with tuberculosis. It was not the Labour councils that introduced the Public Health Acts and public housing to replace the private sector because it had done such a bad job in providing decent conditions.
      Mr. John Butterfill: Does the hon. Gentleman not accept that we have moved on rather since those days? We have Town and Country Planning Acts, building regulations and Public Health Acts, with all of which any new builder must comply whether he is building for rent or for sale. The problems that the hon. Gentleman recites from the past are hardly likely to recur today.
      Mr. Battle: I am delighted with that intervention. I invite the hon. Gentleman to visit my constituency, for some of the conditions that existed under private landlords then exist today. I could show him flats full of people who live in basements—[Interruption.] Conservative Members may find it amusing, but when environmental health inspectors have to take to court the cases of elderly people who live in basements without a window to provide them with light because the landlord is breaking the law, I take the view that such conditions must be tackled.
      When a local authority includes in its plans a housing action area to put money direct into the private rented sector and to improve and tackle those conditions, when an £88 million plan is put before the Government and their response is that the city can spend only £22 million so that there can be no grant for the private rented sector, we do not get very far in tackling he problems of at least 50,000 houses in the private sector in Leeds which are sub-standard and in need of major repair and modernisation.

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      I hope that the fabric of houses is part of the equation. This is not simply an issue of supply. Quality is also important. Homes must be supplied that people find decent, at a rent that they can afford. The clause is merely a pocket-liner. It has nothing to do with the supply of decent and appropriate housing, and it will not improve the housing stock. Everyone, from the Duke of Edinburgh downwards, has highlighted the crisis in Britain's housing stock. Nor will it give tenants security. Conservative Members may hide behind the word "assured", but they need only read the report of the Committee stage of the Housing Bill to see how past assurances have now been weakened.
      I urge hon. Members to think again and to reject the clause. It will do nothing to improve housing conditions in this country.
      Mr. Spencer Batiste: It is fortunate that I should rise immediately after the hon. Member for Leeds, West (Mr. Battle), because I should like to present a rather different perspective on current events in the city of Leeds, which contains both our constituencies.
      Before I do that, it may be worth recalling that the business expansion scheme as a whole came out of particular needs in 1979. Those of us who at that time were specially concerned with small business and the development of investment in it—in the many sectors of the economy where venture capital was woefully lacking—saw the scheme as a prime lever to get money into those sectors. It has been spectacularly successful. The Peat Marwick McLintock report showed that 50 per cent. of the investment raised under the scheme would not have been raised without it.
      Perhaps the most valuable part of the scheme is that it signposts areas of investment in which further investment is needed. It signposts them in such a way that further investment follows rapidly from the wider market place, because it is seen, when the business expansion scheme leads, that there is an opportunity for the venture capital market to benefit from it.
      It follows from that that the needs for the scheme will vary. The position is now quite different from that of 1979: there is a substantial and much better developed venture capital market. It is surely wrong to adopt a static approach to the business expansion scheme, because if there are sectors of the economy in which there is patently adequate investment in more conventional forms, there is no need to provide tax relief in channelling further money into it.
      It is right that from Budget to Budget the Government repeatedly look at the business expansion scheme and try to change its focus to meet changing needs. That seems entirely sensible and logical. From the speeches that we have heard, it seems that no hon. Member has denied that further substantial, varied and flexible investment that can come only from the private sector is needed in rented accommodation. I have no difficulty in warmly endorsing the clause as a method of encouraging a new investment focus by the private sector in rented accommodation alongside the reforms in the Housing Bill.
      I must say to many of my hon. Friends who have spoken that for me, and no doubt for the hon. Member for Leeds, West (Mr. Battle), this is not a matter of helping migratory workers going to live in the south-east. If that
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      were the sole justification for the scheme, it would be relatively slender. In Leeds and my constituency, we do not want our workers migrating to the south-east. I came here today from the opening of a £20 million factory in my constituency. It represents the state of the art, as do so many other places in my constituency and in Leeds. When I visit the chamber of commerce and the chamber of trade, they say that we need more skilled people, and we do not want them to be drawn off to go to the south-east.
      However, we have a corollary of the problem of the south-east. Because of the success of certain areas, many of the people born and bred in those areas find it difficult to find homes there. Particularly in a constituency such as mine, which consists of countryside abutting on to a city, people who are born and bred in the towns and villages, because of the rapid rise in house prices—exactly the same phenomenon as the south-east—find it difficult to live and work in their home areas where they first chose, and where they have spent so much of their lives. Equally, people who have retired and who are looking for sheltered rented accommodation find it very difficult to find homes near their families who live in the villages and towns around the cities.
      It seems to me that success of the business expansion scheme will be measured not just in terms of whether it encourages further investment into the south-east in rented accommodation, but whether it provides a solution in other regions of the country, in areas where there is a desperate need for further rented accommodation. We are hoping that it will produce more units of accommodation out of the existing housing stock.
      In many of our constituencies, there are large houses that are not really economic as single family homes. There are many derelict farm buildings which could be converted into smaller homes for renting. That is precisely the operation in which the private sector, and in particular the small business man, seeing an opportunity, needs some fiscal encouragement. With land prices rising as rapidly as they are in the area that I represent—in the triangle between Leeds, York and Harrogate—it is extremely difficult for someone to buy land and buildings for rented accommodation unless there is some form of financial incentive. I believe that the success of the scheme will be judged in those situations.
      A number of hon. Members have mentioned that much of the business expansion scheme seems to be centred around the south-east. About a year ago, along with some of my hon. Friends who are particularly interested in small businesses, and with some BES fund managers, I investigated why so much investment was channelled into the south-east. The answer was really quite simple. The scheme is relatively expensive to set up and relatively complex to administer. There needs to be a measure of sophistication in terms of the advice and the support services for setting up and running such schemes.
      Until now, all too often those centres of sophistication and the people who are able to handle that complexity tend to set themselves up in the London area. They have many opportunities to invest the money available to them, and naturally, they choose to invest it in places that are most convenient for them to run, to look at, to visit and to monitor.
      Mr. Michael Grylls: Does my hon. Friend agree that the limit of £500,000 which the Budget has put on individual investment under the BES, is

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      likely to draw the scheme out of the City of London, because it is unlikely to prove all that attractive to the big institutions that were investing very large sums in individual companies? I believe that one of the objectives of my right hon. Friend the Chancellor was to make the funds more locally generated.
      I agree with my hon. Friend, and I hope that there will be more investment outside the south-east. Does he agree that the scheme could he attached to some of the enterprise agencies that could get together groups of business men who could provide funds locally? That would be much more attractive and would target the scheme to small businesses that need investment, and not to larger ones who can get it through venture funds.
      6.45 pm
      Mr. Batiste: My hon. Friend, who is chairman of the Small Business Bureau, makes the point that he made so eloquently in his submission to my right hon. Friend the Chancellor prior to the Budget for precisely that kind of amendment to the Bill. I agree with him completely that the lowering of the ceiling to £500,000 may well have that effect.
      Equally, one has to bear in mind that the scheme is still complex to administer and that the start-up and monitoring costs can be relatively high. The growing sophistication of the professional advice services in the provinces may provide the best answer, alongside the development of the business expansion scheme. In the various islands of investment around the country where there are very high instances of BES investment, it is usually because some big player locally has taken a scheme by the scruff of the neck and decided to make it work in that area.
      The scheme has unlimited potential for further investment in the regions, and in that context it is particularly sad that, with the sole exception of the hon. Member for Workington (Mr. Campbell-Savours), Opposition Members have been so critical of the scheme. I have no hesitation in welcoming it. I believe that it will produce many more units of accommodation out of the existing housing stock, it will improve much sub-standard accommodation, and return it to the rented market, it will assist the mobility of labour, and I hope that it will also increase the accommodation available in the cities and villages of the north and the midlands.
      My only regret about the debate is that, with the sole exception of the hon. Member for Workington, there has been such a negative attitude to this important scheme from Opposition Members, and most importantly from the Opposition Front Bench, but that is hardly surprising, as the views of today's Labour party are increasingly irrelevant to today's needs.
      Mr. Winnick: The hon. Member for Elmet (Mr. Batiste) says that our arguments arc irrelevant to housing in Britain. I must say that his speech was totally irrelevant to the housing needs of so many people throughout the country.
      We have heard two main themes from Conservative Members. First, they argued the case for private investment in housing, and one would expect that from Conservative Members. Their second theme is that the housing shortage in the rented sector is all the fault of wicked Socialist controls, and that, if there had not been rent controls since 1915, there would be a flourishing
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      rented sector in the private market, no one would need rented accommodation and all would be absolutely well. If anyone believes such nonsense and such an absolute fallacy, they would believe anything.
      During one of my interventions in his speech the hon. Member for Slough (Mr. Watts) disputed that market rents would be as much as, if not higher than, a mortgage. Last November, the Evening Standard carried some advertisements for rented accommodation that clearly would be outside the Rent Act 1977. Houses were advertised for rents ranging from £130 to £240 a week. Some flats—not many, but one or two one-bedroom and two-bedroom flats—were costing up to £70 a week.
      Bearing in mind the escalating property prices in London and the south-east, surely it is obvious that market rents under the Housing Bill would not he much less, if anything, than the rents which were quoted in the Evening Standard last November. That demonstrates the Opposition's basic point that people who are in desperate need of rented accommodation will be unable to afford market rents of the kind that will be allowed by the Housing Bill.
      We do not object for reasons of dogma or prejudice. We object because the genuine housing needs of our constituents who write to us or who come to see us will not be satisfied if the only rented accommodation that is available is to be let at market rents. That is why we oppose the Housing Bill and this clause.
      I intervened during the speech of the hon. Member for Berwick-upon-Tweed (Mr. Beith) because I consider that the private rented sector has a limited role to play. I do not believe that housing should lead to private profit. It is perfectly acceptable that an owner-occupier should be able to let a room in his house. In many cases that is highly desirable, but housing should be in owner-occupation or provided by local authorities and housing associations. It should not be the subject of private profit.
      Mr. Butterfill: Would the hon. Gentleman oppose the provision of private sector rented housing by building societies, insurance companies and pension funds? That is what happens in other countries, which provide better housing conditions than we do.
      Mr. Winnick: I would oppose it to the extent that market rents would be payable by the prospective tenants, for all the reasons that I have given.
      The business expansion scheme is a form of tax shelter that can easily be abused. My hon. Friend the Member for Workington (Mr. Campbell-Savours) referred to one form of potential abuse. I shall be interested in the Minister's reply. In his usual simplistic way, the hon. Member for Eastbourne (Mr. Gow), who is not in the Chamber, said that the provision of new rented buildings would provide work and that it would help to reduce unemployment. But assured tenancies and shorthold tenancies will not necessarily be provided only in new buildings. Those two forms of tenancies under the Housing Bill will apply to all new lets. The hon. Member for Eastbourne cannot have read the Housing Bill if he believes that such tenancies will apply only to new buildings.
      When the Housing Bill becomes the law of the land and landlords let on shorthold tenancies, the minimum length of letting will be reduced to six months. I am aware that the business expansion scheme does not apply to that

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      form of letting, but I do not accept that the Bill will lead to the provision of a large amount of new rented accommodation.
      Sheer dogma and political prejudice lie behind the Government's policy not to allow local authorities to build and not to allow genuine housing associations to provide much-needed rented accommodation. The hon. Member for Bournemouth, West (Mr. Butterfill) implied that local authorities are not perfect. I accept that there have been many shortcomings over local authority accommodation, but local authorities have done a great deal to replace the slums and hovels that were such a curse. They have provided accommodation at a reasonable rent and enabled ordinary people, often for the first time, to live in decent, adequate accommodation. I pay tribute to the local authorities. That is why the Opposition are not on the defensive.
      Local authorities are said to be too bureaucratic and centralised. My local authority was one of the first to decentralise its housing services by providing 28 neighbourhood services and neighbourhood offices throughout the borough. That example has been copied by many other local authorities. The way to satisfy the acute housing needs of those who cannot afford market rents or mortgages is to provide them with local authority housing or housing association accommodation. They have as much right to be adequately housed as any Member of Parliament.
      The Minister said that the Housing Bill goes further than the Rent Act 1957. That is interesting. When the Secretary of State for the Environment spoke on Second Reading of the Housing Bill, I compared that Bill with the Rent Act 1957, but he said that the Housing Bill does not go as far as the 1957 Act. Who is right?
      I do not deny that we face all kinds of disadvantages when we grow old. However, one advantage of getting on in years is that one remembers, certainly if one has been in politics for many years, what happened in the past. I am one of the very few Members of Parliament who served on a local authority when the Rent Act 1957 was being implemented. That local authority in north-west London, despite all its difficulties at that time, had to spend a large amount of money on rehousing people who were lawfully evicted as a result of the Rent Act 1957.
      Conservative Members say that all the trouble stems from the tight rent control restrictions that were introduced by a wicked Socialist Government, but I ask them to consider what happened when the Rent Act 1957 was enacted. We were told that if the rented housing market were deregulated, plenty of accommodation would be provided, but by the time that the Conservative Government left office there had been, to some extent as a result of the 1957 Act, not an increase but a substantial reduction in rented accommodation. The Housing Bill will have much the same result. Tax shelters, tax relief and subsidies to those who provide private rented accommodation at market rents are completely without justification. For that reason, we shall vote against the clause.
      Mr. David Shaw: It is appropriate that before I comment on the clause I should declare an interest. I have been involved in the setting up of a number of business expansion scheme companies. I have also been involved in
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      the setting up of two business expansion scheme funds. I am pleased to say that those companies and funds have resulted in the creation of about 1,000 jobs.
      It is relevant to consider the success of the business expansion scheme. Since 1983 it has provided £150 million a year and created about 20,000 jobs. It has also helped small businesses. Often, the money that was raised was below £100,000. Up to half the small businesses that have been given help are not in the south-east. That is quite an achievement. To help small businesses in areas other than the south-east has been a problem, but a number of the clauses will help them to expand. An investment limit of £500,000 in any one company is being imposed under the expansion scheme. That is helpful. Furthermore, the ability of a fund to invest its money after the end of a tax year will help a number of regional funds.
      I commend the BES to the House. The Government will find that the tax revenues of the more successful companies that have been set up under the scheme will exceed the relief given to private individuals to invest in those companies. One of the companies with which I have been involved has already paid the Government, in PAYE, national insurance, corporation tax and VAT, more than the relief originally given to the investors. The BES is not intended only for those at the top of the income range, because 70 per cent. of those who receive it are below the highest rates of taxation.
      7 pm
      It is good to extend the BES to investment in housing. Over the past 20 years there has been little money for private housing. I used to live in my right hon. Friend's constituency of Kingston upon Thames. He used to have advice centres and, as one of the members of the housing committee, I used to assist from time to time. Many of the complaints and problems with which I have to deal relate to housing and the shortage of rented housing. Most hon. Members will confirm that they have similar problems in their constituencies.
      Job mobility and the opportunity for people to move around the country to find jobs elsewhere will be helped by this measure. Much reference has been made to the fact that the money given will go to executive second homes. Nothing could be further from the truth. There is a limit of £125,000 in London and £85,000 for the rest of the country, and those amounts will not be used to purchase executive second homes.
      The overall limit of £5 million for companies is about right. It will attract much investment, and it has been suggested that about £500 million might be invested in a short time under the BES if the clause is passed. I hope that it will be passed, because that money will provide a lot of rented accommodation.
      I was upset when the hon. Member for Dunfermline, East (Mr. Brown) quoted from the BES publication, because he did not quote the last paragraph, which said that people will not be required to leave their homes at the end of the five-year period and that it should be possible to sell the houses to pension funds or investment trusts. I was upset by the suggestion that housing associations will be excluded from involvement in the scheme. There is no reason why they should be. They may be excluded from receiving money under the scheme, but they are not excluded fron managing the housing. I expect that many companies set up under the scheme will delegate management to housing associations.

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      The opportunities offered by the extension of the BES will be tremendous. It is with regret—I am advised that the Front Benches wish to make their winding-up speeches—that I cannot speak further about the benefits that the clause will bring.
      Mr. Beith: I shall be brief mainly because I shall not have to respond to the second jibe this afternoon from the hon. Member for Eastbourne (Mr. Gow). He is not present and is unlikely to be for some time.
      In the preceding debate I gave the reasons why I believe that it is wrong to proceed with the BES for private sector rented housing unless it is accompanied by significant safeguards for tenant protection on levels of rent and security of tenure.
      Mr. Quentin Davies rose—
      Mr. Beith: I promised to be brief, so I shall not give way.
      The Minister said that he was willing to consider elements of protection, but no Conservative Member has shown any willingness to accept such a measure. Nor have I been convinced yet that the incentive offered calls for a 40 per cent. level of tax relief. The Minister may yet convince us about that, but I find it hard to believe that he will do so, given the nature of the asset that is involved in rented housing—property. The security and prospect of capital appreciation of property is such that it is unnecessary to have 40 per cent. tax relief. Surely standard rate relief would be adequate for the purpose.
      The Minister has left us with ample reason for voting against the scheme in the form that he has presented it.
      Mr. Rhodri Morgan: I should like to raise a couple of matters that have not been raised so far about the way in which the Government believe that clause 49 fits in with the Housing Bill and why it does not achieve the objective, shared by all hon. Members, of improved choice in housing.
      Clause 49 is an attempt, late in the day, to cover the inadequacies of the Housing Bill, which was presented as the great deregulating measure which would lead to investment flowing back into the privately rented sector. It was said that it would do so by creating two new forms of tenancy—the assured tenancy and the assured shorthold tenancy.
      During consideration of the Housing Bill, the point was made that the assured shorthold tenancy conferred so many additional advantages on the landlord, compared with the assured tenancy, that it would undermine the effective use of the assured tenancy. That point was never denied by Ministers, and I think that it sunk in that there were severe dangers that the assured shorthold tenancy, which gives an approximate six-month tenure, would continuously undermine the likelihood of tenants and landlords agreeing on longer tenancies of 12 months or two years.
      Clause 49 emanates from the Government conceding the argument of Labour Members that the assured shorthold tenancy will undermine the assured tenancy if nothing is done about it. As a result, by clause 49 the Government have made the assured tenancy a little more attractive to the landlord by conferring on it but not on the assured shorthold tenancy the benefits of tax incentives at the top rate and the capital gains tax exemption if one sells at the end of four years.
      74
      The measure has nothing to do with an attempt to improve labour mobility. If anything, it will have the reverse effect. If the Government intended to improve labour mobility one would have expected them to confer tax advantages on the shorthold assured tenancy, which is far more likely to be used by people moving into a town for the first time. It was expected that people could have an assured tenancy for anything up to 10 or 15 years. This measure cuts out the assured shorthold tenancy. It is merely an attempt to cover over the difficulties that the Government got themselves into with the assured tenancy. A tenancy that confers almost no rights on a tenant is bound to be more attractive to the landlord than one that confers some rights.
      The logical dilemma facing the Government is that they do not know what to do to create a level playing field for landlord and tenant. They have undermined the concept of the assured tenancy and are attempting to cover it up with a most unsatisfactory tax break, which itself shows every sign of following the path of failure that the BES has followed since 1979.
      Certain specific sectors, which are not highly risky, will tend to attract all the BES investment. That has been the case with old people's homes, and I fear that the BES will not help to cover the equity gap in highly risky investments and new technology but will grow and be invested in safe investments such as property. As investment previously went to old people's homes, it will go in future to the private sector. This measure has no contribution to make to solving our labour mobility problems.
      Mr. Nigel Griffiths: I am sad, but not surprised, that the Government are introducing this clause to increase the potential for exploitation of tenants and to champion the rights of private landlords.
      The clause reinforces the Housing Bill, which has deprived tenants of many rights and in particular robbed spouses of rights of succession. We all accept that there are conscientious private landlords. Indeed, when I meet them in my constituency they complain of being driven out by the irresponsible, crooked landlords, who, they tell me, receive support and succour from the policies and philosophies of the Government.
      I shall not vote for the clause because elements of the private sector have an appalling record. Yesterday, Mary Marshall, the director of Age Concern, said:
      "Some private sector homes are making huge killings"
      exploiting the elderly. Like me, she believes that
      "the law is not strong enough to deal with the cowboys."
      We know that the Government have done nothing to strengthen the law to protect private tenants. An excellent article in the Sunday Post yesterday revealed that the private sector has not been contracting as all Conservative Members have claimed. Provision for people in private nursing homes in Scotland has doubled in two years to 6,132, and with it has come rampant exploitation. One company operating in Scotland is making £6·5 million a year, mainly from the Department of Health and Social Security, and plans to increase its income to £9 million over the next year.
      The £85,000 tax limit on properties will have an horrendous effect on the Edinburgh property market. In Marchmont in my constituency there are already far too many flats in multiple occupation—properties where the landlord's interest in the behaviour of tenants is limited to their payment of rent. I fear that the clause will cause an

      75
      explosion of such tenanted flats, to the detriment of neighbours and local residents. It is not that the clause will increase the number of houses or flats. Owner-occupied flats will be taken out of the home-owner market and replaced by tenanted flats, and flat prices will soar as a result.
      We are entitled to ask whether the money could be better spent. There are 12,000 families on the council house waiting list in Edinburgh alone, 2,000 of them in my constituency. The Government's investment for one dwelling in Edinburgh under BES is estimated by the Treasury at £34,000. The same sum would enable the local council to finance a loan to build 10 houses to rent.
      The clause shows that, when the Government have to choose between giving the private sector £34,000 to provide one house and giving the public sector the same money to provide 10 houses, their heads are ruled by dogma and not by the practical necessities which the whole country would support.
      Mr. Chris Smith: The Opposition have made clear for some considerable time their doubts about the operation of the business expansion scheme. We believe that it is an inadequate and inappropriate mechanism for raising equity finance for high-risk small ventures. It is, however, a highly appropriate mechanism for avoiding tax; and even when the tax rate being avoided is 40 per cent. rather than 60 per cent., though less attractive, it is still attractive.
      The Government are introducing changes, which we shall no doubt spend some time discussing in Committee, to ensure that there is a limit of £500,000 on the investment. It is only a marginal improvement. It is worth noting that that limit does not apply to the rented housing provisions which form the burden of clause 49.
      The Government have relied heavily when praising BES—the hon. Member for Elmet (Mr. Batiste) did it again today—on the Peat Marwick report. The Financial Secretary has mentioned it several times in our debates thus far, but he ignores and fails to tell us that that report dealt only with the first year of BES. It did not go into any detail for subsequent years.
      During the later years, however, there have been changes in the nature of investment under BES. For example, there has been a significant increase in the average size of investment. There has been an increase in the proportion invested in non-manufacturing enterprises. There has been a growth of prospectus issues as opposed to individual issues. Above all, there has been an increase in the cost per job of BES. It is worth remembering that, even in 1983–84—the first year of operation—the cost per job of BES was higher than the cost of creating or saving jobs in other small business promotion ventures.
      Mr. David Shaw: Would the hon. Gentleman care to comment on something that I said—that one of the companies in which I am involved will pay more in tax to the Government after five years than the Government gave in tax relief to investors?
      7.15 pm
      Mr. Smith: Of course I heard what the hon. Gentleman said. I was listening with great care, as he is closely involved with seven BES companies and funds. His
      76
      comments ignore the fact that that is not the universal experience. Moreover, the Peat Marwick report reveals that BES has been more successful at saving than creating jobs. It is worth examining carefully what money the Exchequer has paid out, and what it has got in as a result.
      The business expansion scheme has many flaws, but clause 49 represents a wrong use of an already inefficient scheme. It is being applied inappropriately and unacceptably when it comes to the provision of housing. It is worth noting that Housing said of the BES:
      "Cut-price property deals giving short-term pets for those who can't afford to buy their own homes and tax breaks for the rich—that's the reality of the Government's latest scheme to boost private rented housing."
      That is indeed the reality. We should consider what will be provided by the scheme that is proposed in clause 49.
      Rents will be high. They will be at market levels. The Housing Bill, which sets up the system of assured tenancies, establishes a two-stage process for the establishment of rents. The first is what is called an agreement between landlord and tenant. It is effectively the amount at which the property is advertised by the landlord. The second stage is the rent assessment committee, which acts as a final court of appeal. It has a statutory duty to take account of market forces. There is no question of fair rents. There is no mention of a rent officer or of a comparison with housing association or local authority rents. Market forces, and market forces alone, will determine rents.
      Mr. Butterfill: Can the hon. Gentleman conceive of any way in which it would be possible to encourage the private sector to invest in the provision of housing for rent if it had to provide the subsidy? Does he agree that if subsidies are to be provided, they must come from the public?
      Mr. Smith: The hon. Gentleman ignores the basic point at the heart of the debate. A subsidy is being provided by the taxpayer through tax relief available under BES. We do not believe that that is a particularly sensible or sensitive way in which to target public subsidy.
      If the hon. Gentleman wants to find out about market rent levels, he should come and see what happens in my constituency. Only this morning, at my advice surgery, I saw a family with no recourse to local authority accommodation who are desperately looking for somewhere to rent. They have no capital and cannot afford to buy. The cheapest property for rent in the private market that they can find in the borough of Islington costs £200 a week.
      If the Government say, "Ah, but housing benefit will take care of their problems if their income is low," they have clearly forgotten that the higher rent limit on housing benefit for the borough of Islington is £61 a week. Clearly, that puts such accommodation out of the reach of anyone in any of the categories mentioned by Conservative Members as those likely to be helped by the scheme. It puts accommodation to be provided at market levels under this scheme completely beyond the reach of ordinary people. The rents will be high and, as a result, ordinary people will not be helped by the provision of accommodation under the scheme.
      Not only will rents be high, but there will be little security of tenure. "Assured tenancies" is an Orwellian phrase to describe tenancies that will be anything but assured. There are 12 different grounds for possession in schedule 2 to the Housing Bill. For example, ground 7

      77
      enables possession to be regained by a landlord simply because work is to be carried out on the accommodation. That will be the easiest, simplest, and, I predict, the commonest ground on which possession will be sought. Also, the prospect of sale to another landlord offers little ground for security under the provisions of that schedule to the Housing Bill.
      If a BES company is looking for a mechanism to maximise its profit, maximise the capital gain available to shareholders, which will be tax-free at the end of a five-year period, and a way to get rid of the tenants involved, all it needs to do, at the same time as it sets up the BES-funded company, is to set up a non-BES-funded company with the same directors. It can sell the property from the first to the second at the end of five years and put the capital gain that will be made to the benefit of the first.
      It will be easy for landlords to get rid of awkward tenants. They have requirements and needs and, on the whole, they tend to be treated badly by private landlords. The Financial Secretary was asked by my hon. Friend the Member for Dunfermline, East (Mr. Brown) whether he would agree that redevelopment is one of the grounds on which repossession can take place and that it would be to the financial benefit of the company to sell after five years. His answer, which I heard clearly, was yes. If he now wishes to say that he has had second thoughts, I should be delighted to give way to him. If not, that is clearly the position—that it is to the financial benefit of the company to sell after five years.
      Not only will rents be high and tenancies anything but secure: it will be a relatively unregulated sector. Who will police the operation of the assured tenancies offered under the scheme? Who will police the companies involved? It will not be the Department of the Environment or the local authority. The only body that will be able to do that is the Inland Revenue, and that is hardly geared up to examining whether a social form of landlordism or a bad form of landlordism is being offered.
      The tenancies will be at high rents and there will be little or no security for tenants. The letting will effectively be unregulated. It will be bad, high-cost housing and the scheme will do nothing for tenants. It will do everything for those who want to avoid paying tax. It will do nothing to solve our housing crisis, but it will do everything to create splendid new tax shelter opportunities. I strongly urge my right hon. and hon. Friends to vote against clause 49.
      Mr. Norman Lamont: The hon. Members for Workington (Mr. Campbell-Savours) and for Islington, South and Finsbury (Mr. Smith) referred to the wider changes that had been made in the business expansion scheme. The hon. Member for Workington said that he had been fairly favourably disposed towards the scheme originally. Indeed, I remember that. If he will forgive my saying so, it was slightly curious to observe his anxiety about the new ceiling that we have imposed because he is worried that it might affect genuine growing businesses, whereas the thrust of much of what was said by other Opposition Members was that the Government had not done enough to curb abuses under the scheme. I am grateful to the hon. Member for Workington for saying that he approaches the matter with an open mind.
      The hon. Members for Islington, South and Finsbury and for Dunferline, East (Mr. Brown) did not acknowledge what has happened under the other changes
      78
      in targeting the BES much more on the smaller company. One reason why we have been able to do that, as my hon. Friend the Member for Dover (Mr. Shaw) said—I know that he is strongly in favour of the change that has been made—is that after several years' experience of the scheme we now have a venture capital industry that is more able to finance start-ups and new businesses. We do not need a tax relief that goes on for ever for that sort of business. After a few years' experience we decided that it was better to return to the original purpose, which was to concentrate on the smaller business and start-ups.
      The hon. Member for Islington, South and Finsbury criticised the BES because, he said, it has started up too many businesses in the south and not enough in the north. He might have acknowledged the fact that the change that we are to make is likely to have a much more favourable effect on areas such as the north where there are fewer entrepreneurs and start-ups.
      As my hon. Friend the Member for Elmet (Mr. Batiste) said, it has been widely commented that the changes are likely to bring about a much more even spread of BES activity throughout the country. I am sorry that Opposition Members do not feel more able to welcome the changes in the scheme, which have been widely welcomed outside and which are overwhelmingly sensible.
      The hon. Member for Workington raised a specific point about avoidance under the BES as applied to the new lettings. He described a situation in which somebody might let a property to an associated person. My hon. Friend the Member for Dover drew his attention to schedule 4(4). That was a reasonable point to make, but I believe that the hon. Gentleman's imagination has been at work. He will be aware that the provisions for the BES as applied to rented property are also governed by other general BES provisions.
      Section 289(11) of the Income and Corporation Taxes Act 1988 has a general anti-avoidance provision as applied to the BES. It says:
      "An individual is not entitled to relief in respect of any shares unless the shares are subscribed for and issued for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose, or one of the main purposes of which, is the avoidance of tax."
      That provision covers the point made by the hon. Gentleman.
      Mr. Campbell-Savours: I would be happy to be reassured, but the Minister must be able to assure the Committee that the Inland Revenue will be able to establish the position. The staff are not in place to check on the personal lives and habits of people and the relationships that might exist between people who might be able to make an arrangement which would be an abuse and which the Inland Revenue could not identify. The Minister has not given me that assurance. He simply says that the matter is covered by the Income and Corporation Taxes Act 1988. I cannot find that provision.
      Mr. Lamont: The hon. Gentleman is changing his question. His first question was: is this covered by the Act? The unequivocal answer is yes. His second question was: is it impossible? We do not want an army of snoopers. The Revenue's provisions and resources in this respect are similar to those that it has for checking on many other types of abuse. Given the relatively small number of business expansion schemes, I do not believe that it will he impossible for us to identify those sorts of cases.

      79
      7.30 pm
      My hon. Friend the Member for Chipping Barnet (Mr. Chapman) asked about the limit of £125,000 in Greater London and £85,000 elsewhere and about properties that were subsequently divided. We determined the figures after consultation with the Department of the Environment. We could have fine-tuned them more for different areas, but that would have made the legislation much more complex. Where property is divided, the value of each separate dwelling as let on an assured tenancy is relevant, not the value of the whole property.
      Some Labour Members seemed to doubt that we were talking about the provision of new lets. They may not all be new build, but they will be new lets. That is provided for in paragraph 15 of schedule 4.
      The Opposition have very much misrepresented the position on security of tenure. Assured tenancies will provide considerable security of tenure. A landlord will be able to repossess a property only by court order, on one or more specified grounds. The general approach is similar to that in the Rent Act 1957, although the grounds for possession differ in some respects. The vital difference is that tenants will pay market rents. Housing benefit will be available to qualifying tenants.
      Mr. Battle: Will the Minister concede that whereas the grounds for a change in security of tenure under schedule 2 of the Housing Bill were discretionary before, they are now mandatory? This means that a tenant will have no right to appeal, but will have to go if the landlord applies for a court order.
      Mr. Lamont: The grounds have changed in a number of respects. There are fewer grounds than under the original Act.
      The Opposition have spent a large part of the debate talking about harassment and Rachmanism. I do not know how resonant the name of Rachman is today, but obviously the Opposition's points are serious. I suggest, however, that they are confusing the incentive to get vacant possession, which exists under present legislation, with deregulation and tax relief, which, if anything, will work in the opposite direction and lessen that incentive. There is no point in getting tenants out if they must be replaced with others, which is what a landlord would have to do under the business expansion scheme, because he must be in the continuing business of letting property.
      It is less likely that people will have that incentive if there are market rents, because the values of properties tenanted and of properties untenanted will be much closer. The Opposition, in their desire to misrepresent our proposals, again have totally ignored the steps taken by my hon. Friend the Minister for Housing and Planning to strengthen the criminal law and the civil rights of tenants.
      Mr. Chris Smith: Will the Minister confirm two crucial points? Will he confirm that it is easier for a landlord to gain possession under the terms of schedule 2 to the Housing Bill than it is at the moment under the Rent Acts? Will he confirm that there is every incentive for a BES-established company, after the five years of BES funding are up, to gain vacant possession and sell the property?
      Mr. Lamont: The hon. Gentleman is—[HON. MEMBERS: "Answer the question."] I am answering. The hon. Gentleman assumes that at the end of the four-year period the landlord can regain possession of the property. Under the Housing Bill, when the tenancy ends, a statutory periodic tenancy arises automatically, so the tenant's security is protected and the landlord cannot count on getting possession. The hon. Gentleman misrepresents the position.
      The hon. Member for Islington, South and Finsbury talked about security of tenure. It is clear that, despite all the assurances that have been given, the Opposition simply want to surround rented property with a plethora of controls that will make it extremely unlikely that anyone will ever rent any property. There must be some grounds on which people can regain possession.
      Mr. Winnick: A few moments ago the right hon. Gentleman said that there was no incentive for an unscrupulous, Rachman-type landlord to get the existing tenant out. There will be every incentive if the Housing Bill becomes law. I accept that the tenant continues to have protection, but once he leaves voluntarily, or is forced out, that place can and will be re-let, at market rents. There is every incentive for the unscrupulous landlord to act as he would under the Rent Act 1957, and the Minister for Housing and Planning knows that very well.
      Mr. Lamont: The hon. Gentleman ignores what I have said about what happens at the end of a fixed-term tenancy. A periodic tenancy then arises automatically. A tenant also has the right to go to a rent assessment committee.
      The hon. Member for Dunfermline, East talked about the money that could have been spent on other types of property instead of on this tax relief. As my hon. Friends the Members for Slough (Mr. Watts) and for Stamford and Spalding (Mr. Davies) said, we are getting, not just the 40p in the pound tax relief, but the additional non-taxed relief money, which is going into the provision of rented accommodation. Through tax relief we are harnessing additional resources from the private sector and putting them into the provision of rented property.
      The hon. Member for Dunfermline, East said that tax relief would not help the tenant. As my hon. Friend the Member for Stamford and Spalding said, it will help the tenant if it increases supply. The hon. Member for Dunfermline, East said that it would not help to alleviate the problem of moving from the north to the south. As my hon. Friend the Member for Eastbourne (Mr. Gow) said, it will if it increases supply. Of course tax relief will not do so on its own. We need deregulation as well. The Labour party always threatens to reimpose controls, but all the evidence is that rent decontrol by itself cannot always increase supply. The threat of legislation from the Labour party is one factor that has forced us to put forward the proposition that there should be tax relief.
      The hon. Member for Walsall, North (Mr. Winnick) does not believe that anyone should be allowed to make a profit out of private housing. No doubt he was opposed to anyone making a profit out of the supply of owner-occupied housing a few years ago. No doubt he would extend his argument to many necessities—clothing, food and so on—but most of us think that the basic things in life can be provided better, more efficiently and at a higher quality by the private sector.

      81
      My hon. Friend the Member for Slough said that the Labour party has only one answer—to build more council houses. We believe that if decent rented private accommodation were available on a larger scale it would appeal to the British people. The Labour party will find itself overtaken by events and opinion, just as it was on the sale of council housing and on privatisation. Labour Members will live to regret the day that they voted against the clause.
      Question put, That the clause stand part of the Bill:
      The Committee divided: Ayes 255, Noes 194.

      Division No. 291]

      [7.40 pm

      AYES

      Adley, Robert

      Curry, David

      Aitken, Jonathan

      Davies, Q. (Stamf'd & Spald'g)

      Alexander, Richard

      Davis, David (Boothferry)

      Alison, Rt Hon Michael

      Day, Stephen

      Allason, Rupert

      Devlin, Tim

      Amess, David

      Dickens, Geoffrey

      Amos, Alan

      Dicks, Terry

      Arbuthnot, James

      Douglas-Hamilton, Lord James

      Arnold, Jacques (Gravesham)

      Dover, Den

      Arnold, Tom (Hazel Grove)

      Dunn, Bob

      Aspinwall, Jack

      Durant, Tony

      Atkinson, David

      Emery, Sir Peter

      Baker, Nicholas (Dorset N)

      Evans, David (Welwyn Hatf'd)

      Baldry, Tony

      Fallon, Michael

      Banks, Robert (Harrogate)

      Favell, Tony

      Batiste, Spencer

      Fenner, Dame Peggy

      Beaumont-Dark, Anthony

      Field, Barry (Isle of Wight)

      Bellingham, Henry

      Forman, Nigel

      Bendall, Vivian

      Forsyth, Michael (Stirling)

      Bennett, Nicholas (Pembroke)

      Forth, Eric

      Bevan, David Gilroy

      Fox, Sir Marcus

      Biffen, Rt Hon John

      Franks, Cecil

      Biggs-Davison, Sir John

      Freeman, Roger

      Blackburn, Dr John G.

      French, Douglas

      Blaker, Rt Hon Sir Peter

      Fry, Peter

      Bonsor, Sir Nicholas

      Gardiner, George

      Boscawen, Hon Robert

      Garel-Jones, Tristan

      Boswell, Tim

      Gill, Christopher

      Bottomley, Peter

      Goodhart, Sir Philip

      Bottomley, Mrs Virginia

      Goodlad, Alastair

      Bowden, A (Brighton K'pto'n)

      Gorman, Mrs Teresa

      Bowden, Gerald (Dulwich)

      Gorst, John

      Bowis, John

      Gow, Ian

      Boyson, Rt Hon Dr Sir Rhodes

      Gower, Sir Raymond

      Braine, Rt Hon Sir Bernard

      Grant, Sir Anthony (CambsSW)

      Brazier, Julian

      Gregory, Conal

      Bright, Graham

      Griffiths, Sir Eldon (Bury St E')

      Brooke, Rt Hon Peter

      Griffiths, Peter (Portsmouth N)

      Brown, Michael (Brigg & Cl't's)

      Grist, Ian

      Browne, John (Winchester)

      Ground, Patrick

      Bruce, Ian (Dorset South)

      Grylls, Michael

      Buchanan-Smith, Rt Hon Alick

      Hamilton, Hon Archie (Epsom)

      Buck, Sir Antony

      Hampson, Dr Keith

      Burt, Alistair

      Hanley, Jeremy

      Butcher, John

      Hannam, John

      Butler, Chris

      Hargreaves, A. (B'ham H'll Gr')

      Butterfill, John

      Hargreaves, Ken (Hyndburn)

      Carlisle, John, (Luton N)

      Harris, David

      Carrington, Matthew

      Haselhurst, Alan

      Carttiss, Michael

      Hawkins, Christopher

      Cash, William

      Hayes, Jerry

      Channon, Rt Hon Paul

      Hayhoe, Rt Hon Sir Barney

      Chapman, Sydney

      Hayward, Robert

      Chope, Christopher

      Heathcoat-Amory, David

      Churchill, Mr

      Hicks, Robert (Cornwall SE)

      Clark, Sir W. (Croydon S)

      Higgins, Rt Hon Terence L.

      Clarke, Rt Hon K. (Rushcliffe)

      Hind, Kenneth

      Conway, Derek

      Hogg, Hon Douglas (Gr'th'm)

      Coombs, Anthony (Wyre F'rest)

      Hordern, Sir Peter

      Coombs, Simon (Swindon)

      Howard, Michael

      Couchman, James

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

      Cran, James

      Howarth, G. (Cannock & B'wd)

      Currie, Mrs Edwina

      Howell, Rt Hon David (G'dford)

      82

      Hughes, Robert G. (Harrow W)

      Neale, Gerrard

      Hunt, David (Wirral W)

      Needham, Richard

      Hunter, Andrew

      Nelson, Anthony

      Hurd, Rt Hon Douglas

      Neubert, Michael

      Irvine, Michael

      Newton, Rt Hon Tony

      Irving, Charles

      Nicholls, Patrick

      Jack, Michael

      Nicholson, Emma (Devon West)

      Jackson, Robert

      Paice, James

      Janman, Tim

      Patten, John (Oxford W)

      Jessel, Toby

      Rathbone, Tim

      Johnson Smith, Sir Geoffrey

      Rhodes James, Robert

      Jones, Gwilym (Cardiff N)

      Riddick, Graham

      Kellett-Bowman, Dame Elaine

      Ryder, Richard

      Key, Robert

      Sayeed, Jonathan

      King, Roger (B'ham N'thfield)

      Shaw, David (Dover)

      Kirkhope, Timothy

      Shaw, Sir Giles (Pudsey)

      Knapman, Roger

      Shepherd, Colin (Hereford)

      Knight, Greg (Derby North)

      Shepherd, Richard (Aldridge)

      Knight, Dame Jill (Edgbaston)

      Shersby, Michael

      Knox, David

      Sims, Roger

      Lamont, Rt Hon Norman

      Speller, Tony

      Lang, Ian

      Stanbrook, Ivor

      Latham, Michael

      Steen, Anthony

      Lawrence, Ivan

      Stern, Michael

      Lawson, Rt Hon Nigel

      Stevens, Lewis

      Lee, John (Pendle)

      Stewart, Andy (Sherwood)

      Lennox-Boyd, Hon Mark

      Stradling Thomas, Sir John

      Lester, Jim (Broxtowe)

      Summerson, Hugo

      Lightbown, David

      Taylor, Ian (Esher)

      Lilley, Peter

      Taylor, John M (Solihull)

      Lloyd, Sir Ian (Havant)

      Taylor, Teddy (S'end E)

      Lloyd, Peter (Fareham)

      Temple-Morris, Peter

      Lord, Michael

      Thompson, Patrick (Norwich N)

      Luce, Rt Hon Richard

      Thurnham, Peter

      Lyell, Sir Nicholas

      Tracey, Richard

      McCrindle, Robert

      Tredinnick, David

      Macfarlane, Sir Neil

      Trippier, David

      MacKay, Andrew (E Berkshire)

      Twinn, Dr Ian

      Maclean, David

      Waddington, Rt Hon David

      McLoughlin, Patrick

      Wakeham, Rt Hon John

      McNair-Wilson, M. (Newbury)

      Waldegrave, Hon William

      McNair-Wilson, P. (New Forest)

      Walden, George

      Major, Rt Hon John

      Walker, Bill (T'side North)

      Malins, Humfrey

      Waller, Gary

      Mans, Keith

      Walters, Dennis

      Maples, John

      Ward, John

      Marland, Paul

      Wardle, Charles (Bexhill)

      Marshall, John (Hendon S)

      Warren, Kenneth

      Marshall, Michael (Arundel)

      Watts, John

      Martin, David (Portsmouth S)

      Wells, Bowen

      Mates, Michael

      Whitney, Ray

      Maude, Hon Francis

      Widdecombe, Ann

      Maxwell-Hyslop, Robin

      Wiggin, Jerry

      Mayhew, Rt Hon Sir Patrick

      Wilshire, David

      Mellor, David

      Winterton, Mrs Ann

      Miller, Hal

      Winterton, Nicholas

      Mills, Iain

      Wolfson, Mark

      Miscampbell, Norman

      Wood, Timothy

      Mitchell, Andrew (Gedling)

      Woodcock, Mike

      Mitchell, David (Hants NW)

      Yeo, Tim

      Moate, Roger

      Young, Sir George (Acton)

      Montgomery, Sir Fergus

      Younger, Rt Hon George

      Morrison, Hon Sir Charles

      Morrison, Hon P (Chester)

      Tellers for the Ayes:

      Moss, Malcolm

      Mr. Stephen Dorrell and

      Moynihan, Hon Colin

      Mr. Kenneth Carlisle.

      Mudd, David

      NOES

      Abbott, Ms Diane

      Beith, A. J.

      Adams, Allen (Paisley N)

      Bell, Stuart

      Allen, Graham

      Benn, Rt Hon Tony

      Anderson, Donald

      Bennett, A. F. (D'nt'n & R'dish)

      Archer, Rt Hon Peter

      Bermingham, Gerald

      Ashton, Joe

      Bidwell, Sydney

      Banks, Tony (Newham NW)

      Blair, Tony

      Barnes, Harry (Derbyshire NE)

      Blunkett, David

      Barron, Kevin

      Boateng, Paul

      Battle, John

      Boyes, Roland

      Beckett, Margaret

      Bradley, Keith

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      Brown, Gordon (D'mline E)

      Leighton, Ron

      Brown, Nicholas (Newcastle E)

      Lestor, Joan (Eccles)

      Bruce, Malcolm (Gordon)

      Lewis, Terry

      Buchan, Norman

      Litherland, Robert

      Buckley, George J.

      Livingstone, Ken

      Caborn, Richard

      Lloyd, Tony (Stretford)

      Callaghan, Jim

      Lofthouse, Geoffrey

      Campbell, Menzies (Fife NE)

      Loyden, Eddie

      Campbell, Ron (Blyth Valley)

      McAllion, John

      Campbell-Savours, D. N.

      McAvoy, Thomas

      Canavan, Dennis

      Macdonald, Calum A.

      Clark, Dr David (S Shields)

      McFall, John

      Clarke, Tom (Monklands W)

      McKay, Allen (Barnsley West)

      Clay, Bob

      McKelvey, William

      Clwyd, Mrs Ann

      McLeish, Henry

      Cohen, Harry

      McNamara, Kevin

      Cook, Frank (Stockton N)

      McTaggart, Bob

      Cook, Robin (Livingston)

      McWilliam, John

      Corbett, Robin

      Madden, Max

      Corbyn, Jeremy

      Mahon, Mrs Alice

      Cousins, Jim

      Marek, Dr John

      Cryer, Bob

      Marshall, David (Shettleston)

      Cummings, John

      Martin, Michael J. (Springburn)

      Cunliffe, Lawrence

      Martlew, Eric

      Dalyell, Tam

      Maxton, John

      Darling, Alistair

      Meacher, Michael

      Davies, Rt Hon Denzil (Llanelli)

      Meale, Alan

      Davies, Ron (Caerphilly)

      Michie, Bill (Sheffield Heeley)

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

      Michie, Mrs Ray (Arg'l & Bute)

      Dewar, Donald

      Millan, Rt Hon Bruce

      Dixon, Don

      Mitchell, Austin (G't Grimsby)

      Dobson, Frank

      Moonie, Dr Lewis

      Doran, Frank

      Morgan, Rhodri

      Douglas, Dick

      Morley, Elliott

      Dunnachie, Jimmy

      Morris, Rt Hon A. (W'shawe)

      Eadie, Alexander

      Morris, Rt Hon J. (Aberavon)

      Eastham, Ken

      Mowlam, Marjorie

      Evans, John (St Helens N)

      Mullin, Chris

      Ewing, Harry (Falkirk E)

      Murphy, Paul

      Fatchett, Derek

      Nellist, Dave

      Fearn, Ronald

      Oakes, Rt Hon Gordon

      Field, Frank (Birkenhead)

      O'Brien, William

      Fisher, Mark

      Orme, Rt Hon Stanley

      Foot, Rt Hon Michael

      Patchett, Terry

      Foster, Derek

      Pendry, Tom

      Foulkes, George

      Pike, Peter L.

      Fyfe, Maria

      Powell, Ray (Ogmore)

      Galbraith, Sam

      Primarolo, Dawn

      Galloway, George

      Quin, Ms Joyce

      Garrett, John (Norwich South)

      Radice, Giles

      Garrett, Ted (Wallsend)

      Randall, Stuart

      George, Bruce

      Redmond, Martin

      Gilbert, Rt Hon Dr John

      Rees, Rt Hon Merlyn

      Gordon, Mildred

      Reid, Dr John

      Gould, Bryan

      Richardson, Jo

      Griffiths, Nigel (Edinburgh S)

      Roberts, Allan (Bootle)

      Griffiths, Win (Bridgend)

      Robertson, George

      Grocott, Bruce

      Rogers, Allan

      Harman, Ms Harriet

      Rooker, Jeff

      Hattersley, Rt Hon Roy

      Ross, Ernie (Dundee W)

      Haynes, Frank

      Rowlands, Ted

      Heffer, Eric S.

      Ruddock, Joan

      Hinchliffe, David

      Salmond, Alex

      Hogg, N. (C'nauld & Kilsyth)

      Sedgemore, Brian

      Holland, Stuart

      Sheerman, Barry

      Home Robertson, John

      Sheldon, Rt Hon Robert

      Howarth, George (Knowsley N)

      Shore, Rt Hon Peter

      Hoyle, Doug

      Short, Clare

      Hughes, John (Coventry NE)

      Skinner, Dennis

      Hughes, Robert (Aberdeen N)

      Smith, Andrew (Oxford E)

      Hughes, Roy (Newport E)

      Smith, C. (Isl'ton & F'bury)

      Hughes, Sean (Knowsley S)

      Smith, Rt Hon J. (Monk'ds E)

      Illsley, Eric

      Snape, Peter

      Ingram, Adam

      Soley, Clive

      John, Brynmor

      Spearing, Nigel

      Johnston, Sir Russell

      Stott, Roger

      Jones, Barry (Alyn & Deeside)

      Strang, Gavin

      Jones, Martyn (Clwyd S W)

      Straw, Jack

      Kennedy, Charles

      Taylor, Mrs Ann (Dewsbury)

      Kinnock, Rt Hon Neil

      Taylor, Matthew (Truro)

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      Turner, Dennis

      Williams, Rt Hon Alan

      Wall, Pat

      Williams, Alan W. (Carm'then)

      Walley, Joan

      Winnick, David

      Wardell, Gareth (Gower)

      Wise, Mrs Audrey

      Wareing, Robert N.

      Welsh, Andrew (Angus E)

      Tellers for the Noes:

      Welsh, Michael (Doncaster N)

      Mrs. Llin Golding and

      Wigley, Dafydd

      Mr. Alun Michael.

      Question accordingly agreed to.
      Clause 49 ordered to stand part of the Bill.

    Clause 31

      ABOLITION OF AGGREGATION OF INCOME
      Mr. Norman Lamont: I beg to move, That the clause stand part of the Bill.
      It may be for the convenience of the House if I deal with clause 98 at the same time.
      It must be rare for so short a clause as clause 31 to introduce such a fundamental change in the structure of our tax system. The clause repeals the rule deeming a married woman's income to belong to her husband for tax purposes, which has determined the tax treatment for married couples since 1805. The rule has become increasingly anachronistic as the role of married women in society has changed, and it is widely resented by wives who find that it denies them independence and privacy in their financial affairs. Making the husband responsible for tax on the couple's combined income forces the wife to disclose her income to him, including details of any investment that she may have and the amount of her savings income, however small. That situation is simply no longer acceptable.
      The correspondence received by the Inland Revenue shows that the present system is unacceptable. One lady recently wrote to an inspector of taxes saying:
      "I trust there will be no objection to your writing to me personally as I am now old enough to reply to my own letters."
      We have moved a long way from the days when the Inland Revenue never wrote to married women, and things have changed since the day when a tax officer concluded a letter to a husband announcing a meeting about the wife's tax affairs:
      "Please bring this letter and your wife with you."
      Another lady gave her opinion of the present state of affairs when she received a statement from the Inland Revenue by writing back:
      "I feel that all your letter would have needed was a penny black to add that final touch of Victoriana, don't you agree?"
      Speaking from memory, I believe that another lady wrote as follows:
      "My husband played no part in creating my savings though he is only too willing to spend them."
      There has been a strong feeling for a long time—reflected in the position taken by the various parties—that the present rule was unsatisfactory.
      The rule also imposes a tax penalty on marriage which can result in a married couple paying more tax than two single people in otherwise similar circumstances, just because they are married, and it can discourage a married woman from working if her husband is liable to higher rate tax. At present, a couple share a single basic rate band against their combined incomes and the wife does not have a full personal allowance of her own. Also, the wife's

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      earned income allowance cannot be set against any savings income that she may have, so this is taxed at her husband's rate from the first £1.
      The clause sweeps away this unfair and antiquated system and in so doing it recognises married women as taxpayers in their own right for the first time. From April 1990, a husband will no longer be responsible for his wife's tax affairs. They will each be taxed independently and take individual responsibility for returning their own income, when called upon to do so, and for paying their own tax. As a result, married women will be able to have complete privacy in their tax affairs. Tax offices will communicate with them directly about tax matters and all repayments of tax overpaid on their income will be made to them. The present separate assessment provisions will therefore be redundant.
      As individual taxpayers, the taxable incomes of husband and wife will be worked out separately. They will each have their own personal allowance, and any other reliefs for which they qualify in their own right, and their own basic rate band. The tax penalty on marriage and the disincentive to work will thus be removed and there will be no need for the present wife's earnings election arrangements. As a result, 1·6 million wives will have less tax to pay on their income than under the present system. Three quarters of them have incomes of less than £5,000 a year, and 700,000 of them are elderly.
      The elderly obtain a particular benefit from independent taxation because of the change in the taxation of national insurance pensions which elderly married women receive on the basis of their husband's contributions. These pensions are currently taxed at the husband's rate. Under independent taxation such a pension will be treated as the wife's income, and her personal allowanceage—related if she is 65 or over—will be available to set against it. That is a very significant change for thousands of elderly couples.
      Elderly married men also benefit because a pension of this kind, and any other income that their wives may have, will no longer be treated as the husband's income for the purpose of the income limit on age allowance. As a result, 130,000 more elderly married men will qualify for age allowance. More than 90 per cent. of elderly couples who pay tax at present will be better off, and 160,000 will be taken out of tax altogether.
      We believe that it is right that husband and wife should enjoy the benefits of independence and privacy which independent taxation will bring, and that the discrimination against marriage inherent in the present system should be abolished. But it would be wrong and unrealistic for the tax system to take no account of marriage. That is why we have provided in clause 32 for a married couple's allowance and retained the rule that transfers of assets between husband and wife are not chargeable either to capital gains tax or to inheritance tax. Our approach throughout has been to treat husband and wife as individuals rather than as a single unit in determining the liabilities on their separate incomes, while continuning to recognise the special nature of their relationship in a legal and social context.
      Independent taxation will be introduced in April 1990—the earliest practical date. Hon. Members may recall that other proposals that have come before the House, such as those for transferable allowances, could not be implemented until 1993, so it is a significant advance to be able to implement this reform from April 1990. In the
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      meantime, the Inland Revenue will be preparing for the change by setting up new tax records for married women, making changes to computer systems and training staff in the new procedures. It is all to easy to underestimate what is involved in all that. Taxpayers will need to take no immediate action and most will have to do nothing extra. During 1989, the Revenue will take the initiative in contacting taxpayers when information is needed to help set up the new system and launch it smoothly. Since the change will not take effect until 1990, taxpayers and their advisers will have time to familiarise themselves with the new legislation before it is implemented.
      The revenue cost of independent taxation is estimated at £500 million in 1990–91 and £1 billion the following year. The full-year Inland Revenue staff requirement to operate the new system once it is up and running will be of the order of 2,000 to 2,500. Those are substantial costs, but I make no apology for them because we believe that the policy is right in principle arid demands the commitment that we have demonstrated that we are prepared to make. The bulk of the revenue cost arises from treating married women fairly for the first time as independent taxpayers and would arise under any form of independent taxation.
      Clause 98 extends the principle of independent taxation to capital gains tax. April 1990 is the earliest possible date for introduction. Because of the aggregation of capital gains and income, it is impossible to bring forward the capital gains tax side by itself, and there might be some criticism from hon. Members if we did. But it is clearly right that, having had independent taxation on income, we should also have an independent allowance on capital gains, and if one accepts the principle of independent taxation for men and women, that principle should apply equally to capital gains tax.
      These are far-reaching proposals, and I commend them to the Committee.
      8 pm
      Mr. Nicholas Brown: I hope that it will be helpful if I say at the outset that the Opposition will not divide the Committee on clause 31, but we shall divide on clause 98.
      We do not wish to divide on clause 31 because it sets out the principle, not the detail and, as is fairly well-known, the Labour party is strongly committed to moving towards truly independent taxation. We favour creating a taxation system that treats married women as equals, not as dependants of their husbands. Married women are entitled, if they want it, to privacy in their financial affairs, and the resources that are available for redistribution through the taxation system should be distributed so that the poorest feel the benefit the most and first.
      How typical of this Government and this Budget that even on an issue where there is no difference in principle between the two sides of the House, they have managed to ensure that the wealthy will benefit disproportionately from the changes. The Minister said that the proposals will help pensioners. So they will, but they will especially help pensioner couples with an income between them of £21,000.
      One quarter of my electorate are over pensionable age, which is not untypical of many metropolitan constituencies. No doubt those who have incomes of £10,600 each will be grateful to the Government, but I did not meet many people with that sort of income during last week's

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      local government election campaign. The 90 per cent. of pensioners will gain little out of the proposal—the poorest 90 per cent.—said what they thought of the Government. Pensioners who I met asked about housing benefit, not about income tax. Even those who stood to gain from income tax cuts were well aware that they could lose 85 per cent. of that in housing benefit reductions.
      Disappointingly for the Government, no pensioner said to me on last week's election trail, "Mr. Brown, we have always been Labour but now that we have retired we thought that we would each take our £40,000 business expansion scheme tax relief through the Government's disaggregation proposals, so we feel obliged to vote Conservative." That was not being said on the doorsteps of Tyneside last week. Perhaps popular capitalism has not yet reached the streets of Walker, but it is much more likely that many people elsewhere, as well as in the north-east, do not have the money to take full advantage of the new opportunities. In Walker, that probably applies to Conservative voters, too—all 114 of them.
      It is an interesting reflection on the way that the Budget has been received in different parts of the country that in 1974 the Conservative party controlled Newcastle city council. Yet today, out of 78 councillors, the Conservatives have only six and do not have complete control of a single ward. The defeated former councillor who led the Conservative group before the election summed it up thus: "We've been massacred. They voted against the Government." I do not know whether the Minister agrees with that analysis. I see him smiling, but I promise not to take his smile as an endorsement of that view.
      The story is similar throughout the north-east. Those who have not benefited from the Budget are making their protests known. The reasons are straightforward. The main beneficiaries of the changes are the wealthy. About £77 million will go to 120,000 couples where the husband earns more than £30,000 per annum. What sort of targeting is that? How can it be fair to start tax reforms with concessions to the rich, leaving the poor?
      The proposals are especially advantageous to couples who derive income from investments, because there is scope for transfer of assets, making maximum use of the separate allowance which is worth about £75 a week to non-pensioner couples who are in a position to take advantage of it.
      The other principal objection to the Government's proposals is that the changes do not represent truly independent taxation. It does not matter how the Government try to dress up the issue for presentational purposes; the wife's position is still bound up with that of her husband. It is not just a question of nuance. As the Minister made clear, the intention of the proposals is that the married couple's allowance should go automatically to the husband. The wife will have no automatic right to any excess allowance. It will be for the husband to allocate. The transfer applies only if the husband gives written notice to say so. The Opposition will try to amend the Bill to remove that indefensible anomaly.
      Interestingly, when the European Communities Select Committee in the other place considered its response to the memorandum from the Commission to the Council of Ministers on income taxation and the treatment of men
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      and women, it concluded that the aim of equal treatment was best served by a system of fully independent taxation. It is not clear whether that is the Government's view, and today's proposals are the first step in that direction, or whether the Government will content themselves with the concessions that have been made to the better-off. The latter seems to be more in line with present Government policy.
      Clause 98 provides for separate taxation for husband and wife for capital gains purposes. The important, if obvious, point to make is that one must pay capital gains tax before one can benefit from the changes, and fewer than one in 100 taxpayers pays capital gains tax. I do not wish to trespass on tomorrow's debate, but in the context of disaggregation, it is clear that substantial sums will be gained by married couples who, from 1990, can each use their capital gains tax allowances of £5,000. The Government are not arranging the allowances so that the change is neutral in terms of the public purse. Although the beneficiaries are reasonably wealthy, even from a Conservative point of view, there should be—there would have been in the days of the old Conservative party—a case for neutrality.
      As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said in the debate on clause 49, such decisions represent public expenditure that should more properly be focused on the Health Service, public sector housing, the social security system and the issues that matter to the many rather than to the already advantaged few. The Government have followed a twisted and rather shabby road to arrive at their present proposals. Impelled by social changes, outside even this Government's control, the Chancellor produced his famous Green Paper in 1986, cautiously advocating a partially transferable allowance. I have always suspected that the real thinking behind it was that the Government believed that it might reduce unemployment.
      As it transpired, the Government made light of their Green Paper proposals in the 1987 general election campaign. They did not make light of the Labour party's proposals. They attacked the Labour party ruthlessly for supporting the principle for which the Minister is now trying to take credit. After the election, the Green Paper was put to one side and we were presented with something different—today's proposals.
      The failure to provide a structure that is genuinely independent and the shameless further advantages given to the wealthy few make the proposals unacceptable to the Opposition and to many people, especially women, outside the House.
      For those reasons, I urge the Committee to vote not against the principle in clause 31 but against the giveaway in clause 98.
      Miss Ann Widdecombe: It is often said that jewels come in small packages. In this short clause, we have a long-awaited jewel. Despite the comments of the hon. Member for Newcastle upon Tyne, East (Mr. Brown) about women outside the House and how they would view the proposals, women have been waiting for this for a long time and I have heard nothing but praise from outside the House and within it.
      This is not just an important financial measure for some couples; it is an important social measure. It is the correction of a social injustice that has been ignored by

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      Governments of all parties for far too long. I congratulate the Government on their courage in, despite the cost, finally putting right the injustice.
      Clause 31 gives dignity and independence to a wife. There is no reason why a wife's income should be regarded as her husband's property when it is many years since we have regarded the wife herself as the husband's property. Furthermore, it recognises the role of the married woman as a person in her own right and it is long overdue. However, it is also just for the married man. Why should he be responsible for his wife's taxation and, particularly, for paying tax on his wife's income when that may exceed his own in these happily liberated days?
      Mr. Nicholas Brown: I wholly agree with the tenor of the hon. Lady's speech, but why should the husband then be responsible for the allocation of the allowance?
      Miss Widdecombe: I do not intend to address clause 32, because I am dealing strictly with clause 31. I have considerable sympathy with what the hon. Gentleman has said and have expressed that sympathy outside the Chamber. However, I am prepared to accept, pending a further consideration of the matter, that, if making that difference will delay the process by several years, I should prefer that we went ahead. However, I join the hon. Gentleman in hoping that this will be just the first step and not the final step and I hope that I have put his mind at rest. I shall keep to clause 31 because we can thrash out clause 32 in Committee. Clause 31 is social justice for both the man and the wife.
      The hon. Gentleman made considerable play of the fact that the reforms benefit principally the better off. That may he so, but I need a great deal of convincing that the better-off woman is less entitled to her dignity and independence than the less well-off woman. Although the hon. Gentleman castigated the Government he did not come up with a system that would have allowed independent taxation for everybody and did not benefit the better off.
      Mr. Nicholas Brown: I hope that I made it clear that it would have been possible for the Government to adopt a position of fiscal neutrality in dealing with unearned income. I hope that I gave the House the impression that I would have endorsed that approach.
      Miss Widdecombe: Unearned income, whether it belongs to the wife or the husband, is still an independent source of income and should be treated in exactly the same way as we are now treating earned income. The hon. Gentleman mentioned targeting, whereby one can introduce independent taxation in such a way that one does not create some benefits for the better-off, while creating substantial benefits for the less well-off. I shall address that point later because it is crucial.
      8.15 pm
      Ms. Marjorie Mowlam: Will the hon. Lady give way?
      Miss Widdecombe: If the hon. Lady wishes to intervene on that point later, I shall be willing to give way to her then.
      The elderly will benefit substantially from the measures. It is all very well to say that only the well-off elderly will benefit from the measures, but we are encouraging the elderly to be independent. We want to see our pensioners
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      enjoy a reasonable standard of living. Surely it is not sensible to penalise them merely because they happen to be somewhat better off than other pensioners. If we introduce the measure and make incomes independent, it will benefit people across a wide range of incomes, but the largest benefit will be a social one.
      I wish to deal with a benefit that has perhaps not been discussed so much. Let us take the case of a part-time working wife with a high-earning husband. There may be some difference between myself and Opposition Members about what constitutes high earning, but let us assume that the husband will pay a higher rate of tax if he adds on his wife's part-time earnings than he might if he had only his own earnings to take into account.
      Under the present system of aggregation, even if the wife is earning only a modest part-time income, when it is aggregated with the husband's salary and taxed from £1 at the higher rate, the value to that couple of the wife's part-time income is severely reduced. In many cases, a husband and wife will conclude that it is simply not worth the wife's time to make the considerable effort to arrange to have the children looked after and to go out to work because the family will enjoy only a tiny proportion of what she receives.
      That acts as a social disincentive to the working wife to have some financial independence. She may not wish to go out to work full time, despite the social pressures to do so. She may not wish to stay at home and bring up the family full time. She may want some independence and some income to call her own, yet there is a positive disincentive under the aggregation system. The new measure will benefit a certain type of wife who can work only part time and earn a modest wage and may not be well qualified. Once again, the clause remedies a considerable social injustice.
      It is wrong that, as a society committed to the family, we should have tolerated for so long a situation that acts as a disincentive to marriage. However, one can well understand how two people, wishing to start a family, to take on responsibility for the expenses of that family, to provide that family with a home and to give their children the advantages that they want to give them, will say that, for financial reasons, it might be better not to marry. That decision is not taken just by very high earners. It is taken by those earning fairly modestly who reckon that, with an aggregation of incomes, perhaps in a couple of years' time, when their lot has improved, they will suddenly find themselves in the next tax bracket. The new proposal, together with the change in mortgage relief for unmarried couples, has acted as an incentive for marriage and is socially desirable.
      The capital gains tax provisions are logical steps to take, but I understand why Opposition Members do not like them. If we are accepting independent taxation and if we are treating a wife's income as completely separate from the income of her husband, with the husband's income being completely separate from his wife's, we must be logical and look beyond the narrow range of earned income. If we do not, we shall create an anomaly whereby a woman is a person in her own right while she is earning but if she has any other income that becomes the property of her husband.
      Any system of taxation that separates one set of income from another and allows only partial independence is perpetuating the injustices that women have suffered for

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      the past 180 years and which they would have continued to suffer but for the courage of my right hon. Friends the Chancellor and the Financial Secretary to the Treasury.
      On social grounds, never mind the cost to the Treasury, we have before us a long overdue measure. If it offers a financial benefit for the better-off, it benefits also the less well-off. It provides social justice straight across the scale. We have no ethos that states that individuals are less entitled to social justice as a reflection of their circumstances.
      Ms. Mowlam: The hon. Lady has talked about those who are financially better-off benefiting as opposed to the less well-off. As my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) said, we must consider tax changes in relation to national insurance contributions and benefit changes. If these factors are taken together, especially the benefit changes that are squeezing people with lower incomes, it is clear that many people are not benefiting. Many are faced with double jeopardy. That is why I disagreed with the hon. Lady's earlier comments.
      The hon. Lady has spoken about the needs of women in part-time employment. Will she support my campaign to ask the Chancellor of the Exchequer to consider tax relief for workplace nurseries? If the Government are serious about getting women back to work, it is clear that that would be a positive step forwards.
      Miss Widdecombe: The changes in benefit that the Government have introduced in a series of measures are geared to achieve the sort of targeting that the hon. Member for Newcastle upon Tyne, East said was desirable. That is gearing specifically to help those who are the least well off and who are least able to provide for themselves. The benefit changes, taken with the raising of benefit thresholds and the lowering of income tax rates, will certainly help those who are paying only the basic rate of tax. They will help also the many who have been taken out of the tax system. All these measures will benefit the less well off. I think that the Government have it right. I believe that their scale of social justice is right. It applies regardless of income.
      Ms. Mowlam rose—
      Miss Widdicombe: I shall respond to the second question raised by the hon. Member for Redcar (Ms. Mowlam) before she asks a third. I would not wish to do her the injustice of forgetting her second question. I regret that I cannot support the hon. Lady's campaign for tax relief on workplace nurseries. At first sight it might appear to be an entirely reasonable request. If an employer is providing a workplace nursery, he is providing a benefit. To grant tax relief on top of that is to introduce a double benefit.
      I do not wish to reduce child care by calling it a perk, but it is a benefit provided by an employer. Unlike a company car or a uniform, for example, it is a benefit that is solely for the employee's comfort while at work. Unless an employer cannot recruit without providing that benefit, he is not gaining a benefit. The benefit lies with the employee. I cannot see the justice, social or otherwise, of allowing women who have access to workplace nurseries to have the benefit of tax relief while their companions,
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      their sisters—other women—do not have access to that benefit and have to make their own arrangements through playgroups or whatever.
      Although I honour the principle behind the hon. Lady's campaign, I find it inconsistent with justice for all women. It would benefit some disproportionately while being completely out of kilter with the tax system, which provides that tax is paid on a benefit and relief is not gained on it. I cannot support the hon. Lady's argument. Am I right in understanding that she has a third question?
      Ms. Mowlam: I did not have a third question. I merely wish to give an example to contradict the first of the hon. Lady's arguments. There are specific examples in my constituency of pensioners who in 1990 will have their income tax reduced and who will lose housing benefit as a result. In the end, they will be worse off. There are concrete examples that contradict the claim that the system will work to the benefit of pensioners and people on benefit. The same will hold for many single parents with children. I can give examples of that at a later stage to prove that the hon. Lady's claims do not match reality.
      Secondly, I do not believe that the hon. Lady's argument holds on tax relief in terms of workplace nurseries. Tax relief could be extended to other nursery facilities. My campaign is merely a foot in the door. The reality is that many women who want to work take on low-paid work, including part-time jobs. It is not equal pay for equal value. My proposal would be one way of easing the conditions that now prevail.
      Miss Widdecombe: I am grateful to the hon. Lady for her third and fourth questions. I have no doubt that there will be a fifth and a sixth.
      The hon. Lady is right when she says that women take on jobs that are low paid and then have difficulty in making the necessary nursery provision. But there are women in low-paid jobs who do not have any sort of nursery provision made available to them. The logic of the hon. Lady's position will soon be that everyone who works must have some provision made for the care of his or her children. I do not want to denigrate those who work and have a child. It is a major part of women's liberation this century that we have come to realise that that is a reasonable thing to do.
      However, it is a decision of individual responsibility. The individual must decide. "Am I going to have a family? If I am, am I going to work? If I work, what will be the consequences? If I do not, what will the consequences be?" It is a matter of personal responsibility, and the state cannot pick up the tab for every individual's decision. If we are to encourage independence, independent decision-making and independent financial provision for women, they must have independent responsibility. They should not have a basic issue such as child care dealt with for them.
      The hon. Member for Redcar claims that some pensioners will be worse off in 1990. I, too, have received representations on that subject. Pensioners who will be most worse off are those who already have capital assets to the fairly substantial tune of £8,000, or assets in a property in which neither they nor a dependant relative live. In those circumstances it cannot be said that we are hitting the least well-off pensioners. However, we are very much off the point. I do not know what this has to do with clause 31, which is directed to independent taxation for women.

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      Clause 31 is not merely a financial measure. It is one of the greatest pieces of social justice that we have seen in legislation for the past two decades.
      Mr. Beith: The inclusion in the Finance Bill of the proposal for independent taxation for women is to be welcomed and is long overdue. I have criticised the Chancellor of the Exchequer for not taking the opportunities open to him in many areas because of considerable buoyant reveues, but he has taken the opportunity open to him in this area. However, I will argue that he might have acted slightly differently. It is right to place on record that he has done what women for many years believed should have been done.
      It is perhaps right to call the proposals for women's taxation "social justice". However, if Conservative Members, like the hon. Member for Maidstone (Miss Widdecombe), claim the term "social justice", they should apply it rather more fully in the rest of the Budget than they have done so far. In almost all other respects, the Budget denies the most basic principles of social justice.
      8.30 pm
      The present system of the taxation of married couples cannot be defended. Its most obvious fault, which clause 31 will correct, is that it treats a married woman's income as if it were her husband's. It treats her discriminately, as if she were an unequal partner in the marriage. That would be ended by clause 31, and so it should be.
      However, other problems arise from the present pratice involving women's taxation. The present married man's allowance is not only by its very title illustrative of a now challenged concept of equal partnership in marriage; it also represents a situation in which allowances go, in very large measure, to those who perhaps need them less than others. Primarily they go to two earner couples who represent less than one quarter of the population, but who receive 43 per cent. of the benefit of the allowances.
      The Government's chosen solution has been to preserve the married man's allowance, but to change its name to a married couple's allowance. They have revealed that by the obvious fact that the allowance will still reside with the man until he takes the step voluntarily to transfer it to the woman. The Government have chosen to preserve the married man's allowance under a different name. That has the effect not merely of reducing the independence that should be given to the woman, thereby negating one of the main effects of the clause, but of preserving a form of benefit that is not particularly well targeted.
      It is very difficult to argue that there should be a specific allowance for being a married couple. I believe that marriage is an excellent institution. I am strongly in favour of it and I have benefited greatly by being a party to it. However, I do not need specific tax allowances to induce me to join it. Conversely, I do not believe that the tax system should be rigged against marriage as it has been in a number of ways, not least in relation to mortgage tax relief, as the hon. Member for Maidstone explained.
      There is little argument in logic or principle for a married man's or a married couple's allowance as such. The alternative solution for independent taxation would have been the ultimate abolition of the married man's allowance—or married couple's allowance, as it is to be known—with transitional protection and having two single non-transferable allowances. That would release resources that could be targeted on those most in need
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      through cash benefit, particularly child benefit for those couples with children whose needs are greater. The Government should have taken that step.
      If the Government are suggesting that using transitional provisions to protect the existing beneficiaries and allowing the effects of inflation over the years to complete the change is somehow an inappropriate way of proceeding, I remind them that that is what they are doing with the breadwinner wives. One of the anomalies of the present system is that where the wife earns but the husband does not, the couple receive 2·6 personal allowances—the married man's allowance plus the wife's allowance. However, that is not true the other way round. If the husband earns, but the wife does not, they receive only 1·6 personal allowances. That is illogical and not consistent with independent and equal treatment of married men and women. Clearly, breadwinner wives will lose through the 1990 changes.
      Many wives are breadwinners because their husbands are unable to work, unemployed or disabled and there is obviously a case for transitional protection. The Government have granted that by effectively freezing the 2·6 personal allowances in cash terms until what is now the equivalent of that allowance becomes equal to the value of the married couple's allowance. The Government have built in a transitional protection of the kind that I have argued that they could introduce if they chose to abolish the married man's allowance. In other words, they have set a precedent for the procedure which I believe would be a better way to proceed towards independent taxation.
      If independent taxation means anything, it must mean independent taxation of investment income as well as what is called earned income. That is one of the reasons why the change is expensive. It means that wealthy couples with considerable assets will be able to rearrange their affairs so as to derive a very considerable benefit. That leads me to ask why the Government have not taken some steps to create a forestalling provision to discourage or prevent people from simply rearranging assets to maximise benefits and transferring benefits between partners to benefit from the position.
      The Government's answer is that it would he very complicated to make that provision. That is presumably why the official Opposition have not tabled an amendment to deal with the problem in that way. If it is not dealt with through the measures to prevent the transfer of investments from one partner to another, it appears that Labour Members are arguing about investment income—and certainly in relation to capital gains tax—and that they will have to vote against the whole proposal because of the benefit that it will confer on people who possess considerable assets. That is illogical. It is difficult to accept that, because some people will benefit a great deal, it is wrong to have independent taxation for investment income or capital gains tax.
      Mr. Nicholas Brown: I hope that the hon. Gentleman is not implying that that is the official Opposition's view. It is not.
      Mr. Beith: I distinguished between investment income and capital gains tax because what I have described appeared not to be the position in relation to investment income but appeared to be the case for capital gains tax

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      and therefore the reason why the official Opposition intend to vote against clause 98 involving the application of the same principle to capital gains tax.
      Mr. Brown: I am grateful to the hon. Gentleman for giving way because I do not want there to be any misunderstanding about the official Opposition's attitude. If we are to support the principle of disaggregation, it must apply to earned and unearned income. The point that I made in an intervention earlier is that, were that to apply to unearned income, it should be applied in a fiscally neutral way. If it is done in any other way, it is, in effect, an item of public expenditure. We contend that where money can be put back into tax concessions, it should go to the poorest rather than to those who are significantly wealthier than average citizens.
      Mr. Beith: That might be fiscally neutral but it is not neutral for the individuals concerned. It will mean treating parties to a marriage differently because they are married. It is a complete departure from the principle of independent taxation.
      I understand why the Labour party wants to make that qualification and I understand the anxiety with which Labour Members viewed the investment income aspect. However, I am not willing to be dragged along that road. I do not accept that the proposals should not be accepted because they cannot be done in a fiscally neutral way. None of this can be achieved on a fiscally neutral basis. We have all accepted that the mere introduction of independent taxation in any form, for earned as well as unearned income, is not fiscally neutral. It costs money. The Chancellor happens to be able to afford to do some of these things in this Budget.
      Obviously, Labour Members and Social and Liberal Democrats must judge this measure against others—for example, the way in which the Budget has piled benefits on the wealthy and penalties on those who are considerably disadvantaged. That makes this part of the Bill look particularly heavy and adds to the tilting of the Budget. The fact remains—[Interruption.] The hon. Member for Rhondda (Mr. Rogers) appears to want to make an intervention. I would have given way to him, because he appeared to be saying, sotto voce—although the hon. Gentleman's version of sotto voce would fill the Albert hall—that I was trying to have it both ways, to have the penny and the bun. He was suggesting that I was trying to take a neutral stance. Far from it. That is what the Labour party is trying to do. It is trying to say that it is in favour of independent taxation, but, because it will benefit some people in large measure, it will not apply the principle logically and fully.
      Mr. Dafydd Wigley: As to the hon. Gentleman's point about whether or not fiscal neutrality could be achieved, in the context of capital gains and the split that we now have proposed of £5,000 each for men and women, surely if that were reduced to £3,000 for each individual, in terms of the likely uptake it would have gone some way to meeting the hon. Gentleman's point. It would also have encouraged men to transfer resources to their wives if they were geared up to using in full their £6,000 relief.
      Mr. Beith: That could possibly be considered. I am not sure whether the hon. Gentleman is arguing for a general reduction in the disallowed portion, or again, for a particular discrimination against married people. I do not understand how one can argue that allowances should be less for people simply because they are married.
      I do not believe that marriage needs a large tax cushion; but I am against people being discriminated against because they are married and against people being invited to enter into a relationship other than marriage because that it is fiscally advantageous for them to do so. That is contrary to all the principles of independent taxation and public policy—which ought to be supportive of marriage. The Labour party is mistaken if it feels that it has to vote against such principles.
      If the introduction of any element of independent taxation was difficult because the revenue to the Government was so small, that might be a different matter, but that is not the situation. The Government could have introduced fully fledged independent taxation by the route that I suggested—targeting more help on people receiving child benefit. I hope and believe that I have the support of Labour Members at least in respect of that issue.
      The Government could have done many other things to make the Budget fairer, while still keeping within the revenue and resources available to them. The Opposition should not oppose the logical extension of independent taxation into the area of capital taxation. I shall argue later that there are other ways in which the capital taxation system could do more to distribute capital and achieve greater social justice. However, we should not attempt to do that by denying the principle of independent taxation.
      Mr. Andrew Mitchell: I am grateful for this opportunity to take part in the debate on clause 31, although I feel that I am in a sense guilty of tokenism before I even start, surrounded as I am—the only male Member on the Government Back Benches—by Tory ladies. Nevertheless, I shall press on.
      The Government's decision to end the system of taxation which has blatantly discriminated against married women must be widely welcomed by almost everyone. Indeed, as a relatively new Member of the House, I am astonished that this testimonial to the values and customs of a by gone age has lasted so long. Perhaps within the House it has increasingly been seen as an intolerable measure, because a larger number of the younger male Members are married to professional women who pursue careers which in the past have more usually been associated with men. Whatever the reason, the Government are to be congratulated, not only on making the necessary reform, but on creating the economic strength and success required to allow such costly reforms to be implemented. It is a reform that will cost about £1 billion.
      In preparing for the Committee stage of the Bill I found myself flicking through the Income Tax Act 1918, where-in I noticed that "an incapacitated person" means
      "any infant, married woman, lunatic, idiot or insane person."
      It is time our tax laws recognised that things have moved on and that the present archaic system has become a fiscal embarrassment.
      8.45 pm
      Some hon. Members have tonight criticised this reform on the grounds that it grants an extra tax advantage to be

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      enjoyed by all who are married, regardless of their income. I shall deal with that, but even if it were true—which it is not—I would still support the reform. It is right that society should recognise and support the institution of marriage through its financial and fiscal regulations. For far too long the dice have been loaded against those wishing to get married, and in favour of those wanting to cohabit. How often have we heard people getting married declare that they will be much worse off materially as a result, or making it clear that they "cannot afford" to get married? The Budget makes major progress in eradicating this injustice and supporting the structure of marriage itself.
      Ms. Mowlam: I am listening carefully to the hon. Gentleman's arguments on marriage and the Bill. Can he explain why, in the Committee on the poll tax Bill, he supported joint and several liability for cohabitees?
      Mr. Mitchell: The two are not anomalous, but it would probably he better, Mr. Walker, if I did not try your patience by going down that route and talking about the community charge.
      Dame Elaine Kellett-Bowman: Many of my constituents find it obnoxious that two unmarried people living together can enjoy double mortgage relief, but that a married couple cannot. Does my hon. Friend agree that that is wholly wrong?
      Mr. Mitchell: My hon. Friend has made an excellent point in her usual graceful and cogent manner.
      Under the new arrangements stemming from this clause, it is not only well-off married couples who will benefit. The Treasury calculates that 75 per cent. of the 1990–91 cost will go to basic rate taxpayers or indeed to those who pay no tax at all. That is an important statistic. In particular, the position of thousands of elderly people will significantly improve. Under the new arrangements, that portion of the state pension which a man receives because he is married will be treated as if it was his wife's income. This will have a wholly welcome effect on the level of tax paid by old folk. According to the Inland Revenue, 900,000 women aged over 65 will benefit, and more than 1·5 million married women of all ages will pay less tax.
      It is particularly interesting to note that of those 1·5 million women who will pay less tax, more than 1·2 million earn less than £5,000 per year.
      Under the proposals, many elderly married women will, for the first time, have an age-related personal allowance, and 160,000 elderly couples will be taken out of tax entirely. In addition, as I understand the effect of that change, since a wife's income will no longer be added to her husband's for the purpose of applying the income limit for age allowance, approximately 130,000 elderly men on modest incomes will qualify for age allowance under the new system. I shall be grateful for my right hon. Friend's assurance on that point.
      I am genuinely astonished that so little public attention has focused on the dramatic effect that this three-line clause will have on so many elderly and less well-off people. Quite apart from its effect on married women, 500,000 husbands will also pay less tax. It is clearly absolutely right also that those who are married and have savings should benefit from the provisions of the clause because of the independent taxation of investment income. If any Opposition Members believe that that will benefit
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      only the rich, they are mistaken. The provision will be of great benefit to elderly people in particular, many of whom will now gain from the change. The system has hitherto penalised very low savings levels.
      Because of the effects of Conservative policies of spreading ownership widely throughout society, and in particular of the right-to-buy provisions, we are becoming what one distinguished economic commentator writing in The Independent described as "a nation of inheritors." That is one principal reason, in my view, why it is no longer acceptable to separate taxation of earnings while treating all other income as though it belonged to a husband. Changes in the pattern of ownership and savings over the past few years have made that very clear.
      As a result of this clause a number of new things will happen after 1990–91. Husbands and wives will be taxed independently on all their income. Married women will become taxpayers in their own right, giving them the privacy to which they are entitled and which is long overdue. A significant benefit will accrue to elderly married couples in larger personal and married allowances for package payers aged between 65 and 79 or those aged 80 and over. For the first time, elderly married women will qualify for age allowance in their own right.
      Finally, the Government have given some modest but important support to the institution of marriage itself. This, too, will be widely welcomed, not only in this Committee, but in the country.
      Mr. Wigley: First, let me welcome the change that the Government have made in the marriage allowance. I have written about it to successive Chancellors, Chief Secretaries and other Treasury officials, because I have had the invidious task of doing my wife's accounts for several years. It is bad enough doing the accounts of a professional musician a year or two behind schedule and in Welsh, but doing it in a way that balances her interests and mine in a fair manner is particularly difficult. I am therefore glad to support the change—for all the wrong reasons.
      Mr. Morgan: Do not harp on about it.
      Mr. Wigley: I assure the hon. Gentleman that I shall not.
      I welcome the principle, and many of the details that accompany it. I realise that it is a far-reaching package. I cannot see, however, why the married man's allowance could not have been split 50:50, making it neutral initially, with any opting to be done from that base. The Minister shakes his head, but that would have been a practical starting point, which would have taken away some of the misgivings of those who in other respects welcome the change wholeheartedly, both here and outside the House. Nevertheless, perhaps it can be considered in the future. I also hope that the gamut of allowances will work in a neutral manner—socially neutral as well as neutral in their treatment of husbands and wives—to give us the most acceptable package.
      I intervened a moment ago to make a point about capital gains. My point was that the Government are accepting a drop from £6,000 to £5,000, albeit £5,000 for each couple. I should have thought that, unless the drop is to £3,000 or £3,500, an immediate adjustment—as was hinted by the hon. Member for Berwick-upon-Tweed (Mr. Beith)—must be undertaken in people's finances to minimise that. Such an adjustment would be expensive for

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      the Treasury, and the money given away—as Labour Front-Bench spokesman have suggested—could be used for other purposes.
      The Government have been open to criticism on other parts of the Budget, and I felt that this move was unnecessary. I welcome the principle, but a limited number of people will benefit from the shared capital gains. Many pensioners have saved capital sums because they have no pension from employment, and for them this is a significant but limited benefit. I do not see why there could not have been a bigger giveaway.
      I am not clear on one point, perhaps because I have not read enough of the detail of the Bill. We are told that the husband and wife will be assessed independently and be responsible for their own income tax. Am I to take it that there is to be a complete ending of joint and several liability for the payments? I am thinking particularly of circumstances in which one partner, or both, are self-employed, so that no pay-as-you-earn system is in operation. If one partner is not paying, the other may be taken to court. I should be more than happy to give way if the Minister wishes to intervene on that important point, but perhaps he would prefer to comment later. We must be clear on that matter if we are to have a workable package that is genuinely non-sexist.
      We also need provision to ensure that there is no likelihood of a man or woman being charged when he or she may not know the partner's financial position and be landed with the bill. This could be a minefield, and I should be grateful for some clarification.
      Miss Emma Nicholson: I welcome clause 31, and I particularly welcome the gradual acceptance of its importance by the Opposition. I noticed, and remarked on it at the time of the Budget, that neither Opposition spokesman—there could conceivably have been an invisible third party as well—even bothered to comment on this extraordinarily large change. That was very upsetting, and I am delighted that Opposition hon. Ladies must have done considerable work between then and now to ensure that today's warm welcome was spontaneous, even if rather late in the day.
      Mr. Chris Smith: Clearly, the hon. Lady either was not present in the House or has not read Hansard's account of the Budget debate on the Thursday evening. Speaking from the Opposition Front Bench, I gave a warm welcome to the principle of independent taxation, and spent a considerable time dealing in detail with the Government's proposals.
      Miss Nicholson: I take the hon. Gentleman's point. I was referring to the first speakers from the Opposition Front Bench, who in their immediate response to the Budget did not even bother to pick up that point. I picked it up, and I am glad that the hon. Gentleman responded. However, I found it very distressing.
      This is a remarkable and unique change. It will never happen again. It is extraordinary to think that married women in the United Kingdom have never really been treated fairly since the days of Julius Caesar. I say that not entirely jokingly. When Caesar wrote about what a grey and rainy island this was, he added that the British were an extraordinary race, because they treated their women in
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      law on the same level as men. Alack, alas! Roman law then took over, and women have not seen the light of day until the present Conservative Government.
      Mr. Wigley rose—
      Miss Nicholson: It is different in Wales.
      Mr. Wigley: The basis of that British law was the Welsh law which was coded by Hywel Dda. That gave equal status, and assets were distributed even-handedly. Some of us in Wales are looking to the day when we can reintroduce that system.
      Miss Nicholson: In that case, let me say how sorry I am that civis Romana sum!
      Hon. Members will recall the pre-eminence of city widows even in mediaeval days. They were the only women in the United Kingdom who were allowed to inherit and to deal. If unmarried, a woman was the belonging of her father; she did not exist in law. When she married, she was the belonging of her husband and certainly did not exist in economic law. If she did not marry and her father died, again she apparently did not exist in law. That explains why, in Chaucer's "Canterbury Tales" the Wife of Bath was such a popular lady; she had cash to play with. That is why, in Pepys's diaries, the city widows figure so largely in his dreams.
      I do not raise those points entirely jokingly. Hon. Members who are gentlemen will not realise the degradation of begging for money. It is a beastly thing to have to do. So many married women over so many generations have been reduced to having to ask their husbands for small sums of money for housekeeping. That is a most degrading and beastly thing for married women to have to do. Real freedom is economic freedom. Freedom is just a word unless one has the money to buy.
      9 pm
      Ms. Mowlam: As usual, I agree with some of the hon. Lady's points. However, her statements are based on the premise that equality has been reached under the present Government, and that the historical examples which she gave have now changed. She knows as well as I do that women do not have equality at work, in education, in the professions or in the Civil Service—as we heard this afternoon—or on the streets at night. We do not have equality, and we should get away from the sham and the facade that the hon. Lady is putting forward, as it clearly is not true.
      Miss Nicholson: I am grateful to the hon. Lady for her intervention. I am very aware of that problem and I shall move on to it in a moment.
      Mr. Allan Rogers: I wonder whether the hon. Lady's feelings about women extend to the unemployed in the same way.
      Miss Nicholson: May I remind the hon. Gentleman that a lot of women are unemployed? However, I do not think that clause 31 deals with unemployment. Although it is tempting to go down that path, I shall not allow myself to be tempted by the hon. Gentleman at the moment.
      May I remind hon. Gentlemen that, as hon. Ladies already know, the problems of identity for women are not yet over. It is not always easy for a woman to be recognised on the same level as a man in any walk of life. Indeed, last week I received a letter from the Prime Minister's Office

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      addressed to "Emma Nicholson Esq MP". The week before, when I was at Lancaster house, I asked an attendant where I could wait out of the rain while my husband parked the car. He replied, "I should wait for your husband over there if I were you, sir." I did not realise that entering the House of Commons gave one size 14 feet and made one grow a moustache. But I say most seriously that it is very difficult for women to be treated in a professional and proper manner, even in this hallowed place.
      I welcome most strongly the Minister's tremendous step forward for womankind in giving married women a genuine identity in fiscal matters. The women of the Conservative party have long been seeking that identity. As far back as 1979, a report from the Conservative women's national committee urged the incoming Government—we knew that we would win—to establish independent taxation for married women. It said that all the difficulties that I have mentioned and that have been stated by other right hon. and hon. Members were true, and urged the Government to do something about it.
      It was to the credit of the Conservative Government that despite all the talk from previous Labour Governments, and despite the tremendous Socialist ideal to favour married women as equals—I do not think that it is very good of them to favour married women as equals; the Labour party should treat married women as equals perhaps in organisations such as the Trades Union Congress which has very few women on its platform—the Conservative Government have taken up the challenge, and I cannot say how glad I am that they have done so.
      When I was Conservative party vice-chairman with special responsibility for women, I launched a survey in response to the Chancellor of the Exchequer's proposals in the previous Budget for the transferable personal allowance. My postbag was massive. Hundreds of letters poured in from women of all parties, saying how enormously unhappy they were with the present system and how much they wanted it changed. I sent out the survey to 50,000 women. It was published in The Sunday Times which considered the transformation of taxation for married women to be important. It was also published by an entirely different style of publication—Cosmopolitan, which appeals to much younger, single working women—and in a number of other papers, particular Conservative Newsline.
      There was a massive response—98 per cent. of all women questioned said that the tax system had to be changed, and 78 per cent. favoured personal transferable allowances which did not see the light of day because it was not possible to get a consensus among women in the United Kingdom. I was very sorry about that because I recognised the comments that my right hon. and hon. Friends made earlier on the importance of not discriminating against marriage. I believe that the state should be non-judgmental when it looks at the lives of its citizens, and that it should not be the Ayatollah Khomeini telling us that we should be swathed in black or living in any particular way. If the state is to be non-discriminatory, it should not discriminate against marriage. It is enormously unfair that in recent years the state has discriminated against married people.
      I favoured the personal transferable allowance, which would have helped the non-working married woman. Far be it from me to try to guide women back to the sink. Let us have freedom of choice to go out to work or to stay at
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      home, but real freedom is economic freedom. It is very difficult for the married, non-working woman to he truly free. The personal transferable allowance would have been of immense help. However, there is now the important principle, which I hope will soon be enshrined in law, that for tax purposes women are to be treated independently. It is a remarkable move forward. Nevertheless, I ask my right hon. Friend the Minister to consider most carefully the married person's allowance. I cannot accept that in perpetuity the married person's allowance should go as of right immediately to the man.
      The Chairman: Order. That matter is dealt with elsewhere in the Bill. I do not think that we ought to trespass on the responsibilities of another Committee.
      Miss Nicholson: I apologise, but this matter has been debated—
      The Chairman: Order. We are debating clauses 31 and 98. Personal allowances are covered by clause 32. That is not a matter for a Committee of the whole House.
      Miss Nicholson: The matter was discussed extensively by other hon. Members and that is why I have referred to it, but in view of your ruling, Mr. Walker, I shall not trespass on clause 32. However, I believe that it would be right and proper for my right hon. Friend the Minister to consider that point and, if I am allowed to trespass for a moment longer, to accept it in principle, even if it is too expensive now to put it right. The principle ought to be accepted that the married person's allowance should go to the highest earner.
      Once again, I thank the Government, Treasury Ministers and my right hon. Friend the Chancellor of the Exchequer for responding to the needs of women by at last giving them equal treatment.
      Ms. Joyce Quin: All hon. Members agree that there should be independent taxation. I support also the right of privacy in tax matters for women. However, the Opposition have two major criticisms of the Government's proposals. First, the proposals are half-baked. They do not provide true, independent taxation; they provide a mixture of independent and joint taxation. Secondly, these measures, like so many other Government measures, will help wealthy couples but they will provide limited help to families at the bottom end. of the income scale.
      The half-baked nature of the measures is referred to in the report on the Budget that was published by the Treasury and Civil Service Select Committee. One of the Committee's advisers described the reform as more cautious than had been expected and said:
      "It effectively retains the married allowance, thus favouring households of two married people over those of two single people. It provides for the married couple's allowance to be transferred from husband to wife, but favours the husband by awarding it to him in the first instance."
      The hon. Member for Maidstone (Miss Widdecombe) said that she hoped that the measure would be a step on the road towards full independent taxation, but in evidence to the Treasury and Civil Service Select Committee, the Chancellor of the Exchequer, answering a question that I put to him about whether 1990 was a staging post, said:
      "No, I see 1990 as a satisfactory solution to the problem."
      That seems to show that the partial nature of the reform is likely to be with us for some time.

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      Apparently, a full move to independent taxation was ruled out because it was considered too complicated and would have involved a large increase in staff dealing with taxation matters. Further, it was considered to be too expensive, although no details were given to the Treasury and Civil Service Select Committee about how much would be involved. Suspicion remained that the Government had gone only halfway because it would have cost too much to have a truly equitable system. Even if it was too expensive, I do not understand why the Government could not have given a long-term commitment to completely independent taxation. Perhaps the Minister will make such a commitment tonight.
      There is still a great deal of confusion about whether married people will be treated as individuals or as a household with their incomes being added together. Mortgage tax relief has been mentioned, but there are many other examples that show that confusion exists. Perhaps an independent commission is needed to sort out the position and to ensure that in future a completely coherent, logical approach is applied to the taxation of married couples and to the law relating to matrimonial property.
      In the short term, it does not appear that such a position will be reached. Regrettably, we now have a halfway house, which is not something that we favour in the long term.
      Miss Widdecombe: Despite the hon. Lady's comments about a halfway house on the equality of the taxation system between single and married households, does she agree that at a stroke the changes have provided a satisfactory solution to the problem of subordination of women within marriage? By taking on board earned as well as unearned income they ensured that financially there is no room for the subjugation of women within marriage.
      Ms. Quin: I agree that they were an important step but I do not think that they are a solution to the problem. I hope that the hon. Lady will try to persuade the Chancellor of the Exchequer to regard 1990 not as a solution but as a staging post.
      My second criticism is that the measures that the Government have taken on the taxation of married couples, allied to the other Budget measures, simply disproportionately help already wealthy couples, whereas those on low incomes will see little advantage.
      Whatever attitude is taken to the indexation of capital and investment income, it will benefit wealthier couples more than those at the bottom of the income scale. There is a great deal of worry that a Government who said that they wanted to tackle some of the tax breaks in the system will be encouraging wealthy couples to minimise tax liability by transferring assets between themselves. I do not know whether the Government are considering extra anti-avoidance measures to ensure that that does not happen, but if they are not they should be.
      I would have been happier about the steps that the Government are taking in the direction of independent taxation if they had been part of the Budget that sought to redress the growing gap between rich and poor—for example, if those measures had been allied to measures such as an increase in child benefit, which, given the revenues at the Government's disposal, could easily have
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      been done. Child benefit could have been doubled for the cost of the special allowance for married couples. Unfortunately, the reforms take place against a background of reduced housing benefit and the social security changes which have created great hardship. Moreover, maternity benefits were reduced last year. That affects families on low incomes in particular.
      A truly independent taxation regime can bring great benefits, but unless it is accompanied by measures that help couples and families on low incomes, the benefits of independent taxation will not be widely felt and its effects will be selective. We need additional measures to bring much-needed financial relief to families and couples who are the worst off in the land.
      9.15 pm
      Ms. Mowlam: I hope that it will be in order for me to pick up two points that were made earlier and which are important to this debate.
      The hon. Members for Maidstone (Miss Widdecombe), and for Torridge and Devon, West (Miss Nicholson) talked about independence for women. We were told that independence is related to economic freedom and that it is important for pensioners to be independent. I do not see how they can argue that line when television licences and electricity prices are going up. We cannot speak of independence for women or pensioners because their economic freedom is not taken into account. We are told that about 900,000 pensioners will benefit from the proposed changes, but there are 11 million pensioners. That means that 10 million will not benefit. Without some form of economic freedom, the only freedom that those people have is the freedom to sit in front of an electric fire with one bar on and to decide whether they can afford to watch telly tonight. That is not the independence to which hon. Members are referring.
      Conservative Members have accused us of not being logical. It is therefore incumbent on the Government, if they maintain that this is a reform and that it does not discriminate against the institution of marriage—that is fine, if it is non-discriminatory—to be logical about poll tax. If joint and several liability affects marriage and cohabitees, I should like it transferred to this Bill.
      The Minister referred often to "hon. Gentlemen", which seemed to be a psychological slip. He said that he is sweeping away anachronisms that date from 1805. I consider that to be an overstatement, to put it delicately. On Second Reading, I described the reform as a fraud and a sham, and I do not retract that statement in so far as it relates to the majority of women. This is a breakthrough—I accept what has been said, primarily by hon. Ladies, about that—but to go into hyperbole is to go too far.
      Miss Emma Nicholson: Does the hon. Lady agree that, with the coming computerisation of the income tax system, if we had not made the programming change now there would have been a major problem? This is therefore an honest breakthrough to identify women as tax units. If we do not do that, women will for ever be invisible to the system.
      Ms. Mowlam: It is not a question of satisfaction for computers and the tax system. Nor was that the commitment that the Chancellor led us to believe underlay his views when he introduced the change. If it was a case of making things easy for computers, those papers which

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      described the Chancellor as a feminist ought to withdraw and describe him instead as a technocrat, for his interest is in computers rather than women.
      My point is that this reform—which is a step forward—benefits some women but not the majority. In fact, the majority of women will see no change. They will notice no difference when the change is introduced in 1990. Let us look at the argument that has been advanced by Conservative Members as to why the change will be an advantage. They said it is an advantage for married women because it means they can make their own tax returns and get their own tax rebates on earned and unearned income. Therefore, it gives some legal independence and financial privacy.
      At first glance, I accept that as a plus for many women. When we debated that on Second Reading, the hon. Member for Torridge and Devon, West also accepted that that was a plus. However, we have to look at how the married couple's allowance will work. The husband will be able to transfer any part of the unused portion of the married couple's allowance to his wife. To do so will involve paperwork and exchange of information and take away the supposed privacy and independence that will have been given to women by the introduction of the reform. As my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) said, it can only be transferred to a woman in writing. Is that an indication of equality? Is that an indication of the sort of change in the position of women that we hoped for? It means that it is not an automatic right for women. That has to be borne in mind.
      Miss Nicholson: Will the hon. Lady admit that it is a significant step to give both the woman and man in marriage an individual personal allowance? I thank the hon. Lady for referring to my constituency correctly. It is often turned back to front. The clotted cream on the top of the cake is the oddity, the married person's allowance, which many of us would like to see handled in the same equal manner as the joint single person's allowances will now be handled. It is the establishment of the single person's allowance for the married woman that is the technical, practical and freedom breakthrough.
      Ms. Mowlam: To continue the hon. Lady's analogy, the clotted cream has seeped so far down that the married couple's allowance has made the whole thing a stodge—and so unrealistic that the position of women is not necessarily improved.
      I accept the hon. Lady's first statement, that it is a step in the right direction. However, because of the way in which the married couple's allowance will work, it takes that independence from women. For any unused portion to be transferred from the man to the woman, the woman will have to talk about her income. Therefore, all this talk about financial independence and privacy at last is not the case. It is not an automatic right and we must acknowledge that.
      Miss Nicholson: Does the hon. Lady agree that the privacy element is brought in by the independent taxation, particularly of savings and investments? Does she also agree that the cry that it is only the rich who will benefit totally disregards the many thousands of women who have small savings, which at the moment are taxed at their husband's income level? The aggregation of the married
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      people's income is the real abomination and setting those two things apart gives real privacy to many thousands of women.
      Ms. Mowlam: I accept part of what the hon. Lady has said. However, as I said before, it is not an automatic right. The husband can go ahead, plan his investments and take part in the BES shares that we heard about earlier. The wife cannot do that without some reference to the couple together. I am not willing to go as far as the hon. Lady in saying that it is a monumental change. I accept that it is a positive step in the right direction, but we should not kid ourselves that the hyperbole that we heard from the Minister is the reality.
      Miss Widdecombe: Can we please define the concept of automatic right?
      Ms. Mowlam: Yes.
      Miss Widdecombe: I thank the hon. Lady for her agreement. We all have rights. Women have a right to work. Some women may find that, because of their personal circumstances, they cannot exercise that right. We all have a right to vote. Some women may decide that they will not use that right or find, through slip-ups, that it has been taken from them. We all have a right to marry. Some women will not choose to exercise that option. We have a right to independent taxation. If we decide to exercise the transfer option and, in doing so, lose a little privacy, that does not affect the basic right to independent taxation if we choose to exercise it. Will the hon. Lady concede that this is a major piece of social legislation giving us basic rights?
      Ms. Mowlam: I wish that the hon. Lady would notice the distinction which I make. I acknowledge that this is a positive step forward. I have not denied that, either on Second Reading or in Committee. I am fighting this corner because I do not want the fantasy which we have heard from the Financial Secretary portrayed as reality. The hon. Lady says that distinguishing between independent taxation and the married couple's allowance does not change the reality, but it does change it because the allowance is given to the man.
      If the allowance were given to either partner, as the Equal Opportunities Commission asked, the EOC and I—and I am sure the Members for Torridge and Devon, West and for Maidstone—would be happier, but it was not. It is not an automatic right. It does not give equality. That cannot be ignored. I should like to continue this discussion, but I am afraid that you, Mr. Walker, will not allow it.
      The Chairman: Order. I think that we have heard far too much. I remind the Committee that we are dealing with clauses 31 and 98. Clause 98 deals entirely with capital gains tax. Clause 31 states:
      "Section 279 of the Taxes Act 1988 (which treats the income of a woman living with her husband as his income for income tax purposes) shall not have effect for the year 1990–91 or any subsequent year of assessment."
      I find it difficult to understand what that has to do with allowances. I draw the Committee's attention to the fact that these allowances are covered elsewhere in the Bill. They will be dealt with by another Committee, and this Committee should not trespass upon those considerations.
      Ms. Mowlam: Thank you for that guidance, Mr. Walker. I was merely responding to points raised by Conservative Members.
      I should like to take the exact point that you made, Mr. Walker, and refer to the nature of the married couple's allowance. As the hon. Member for Maidstone will have to acknowledge, this is another point that does not result in equality between men and women. The wife starts paying taxes above earnings of £2,600 while the man starts at earnings above £4,900. Because of the allowance, the amount that the man gets in his pay packet will vary between £7 a week and £41 a week, depending on his wage. Again, there is a clear differential which benefits the man. That is the effect of the clause. One cannot begin to argue that it treats men and women equally.
      I acknowledge that the clause benefits retired people, many of whom are women. As the hon. Member for Gedling (Mr. Mitchell) said, we are talking about 900,000 people. There are 11 million retired people. A small minority, knocking on 1 million, will benefit, but 10 million pensioners will not necessarily gain from this legislation, as my hon. Friend the Member for Newcastle upon Tyne, East pointed out.
      I am pleased that certain people with investments will benefit, and I do not want to penalise them. We should be clear that those who will benefit are not pensioners as a whole, but a small group. Many of those pensioners will be further penalised by the social security legislation. Unless we look at that jigsaw as a whole, we cannot see the total impact of the Bill.
      I shall draw my remarks to a close. As I said on Second Reading, this clause is a fraud and a sham. I acknowledge that it is a step forward.
      Miss Emma Nicholson: Does the hon. Lady agree that the principle of independent taxation is being established for the very first time in this Finance Bill?
      9.30 pm
      Ms. Mowlam: I shall be pleased when the principle manifests itself in reality. The hon. Member for Maidstone talked a great deal about principle—about independence and choice—but unless that principle is backed by economic independence and economic freedom it is meaningless. Let us agree the principle—it is easy and cheap to agree principles—but let us also ensure that the reality, the practice and the process accord with it. Under the Bill, that will not necessarily happen. If we are honest with each other, we must acknowledge that the provisions abolish the married man's allowance only to introduce it under another name.
      The hon. Member for Torridge and Devon, West asked me how the povisions will benefit some people more than others. Many Conservative Members have doubted that assertion. Let me give two examples to support my case. A couple with investments of £10,000 will save an additional £41 a week when the provision is introduced in 1990. A single mother, with two children under the age of 11, will lose £11·69 per week overall under the Bill. Her £1·23 tax cut will not make up for the loss of child benefit and housing benefit, despite increases in family credit. Overall, she will be worse off as a direct result of the changes. We must take both those examples into account if we are to understand the exact meaning of the Bill. I acknowledge
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      that the clause is a step in the right direction, but do not let us listen any more to Conservative Members' hyperbole.
      Mr. Morgan: We are discussing the abolition of disaggregation in clause 31 and the parallel provision for equality of treatment of men and women for capital gains purposes in clause 98. So far, two aspects of the matter have not been covered. First, we have not dealt with targeting. Secondly, we have not yet said that when Chancellors introduce provisions intended to benefit a major social group—in this case women—they should ask the members of that group what they regard as their priority.
      Last month the Government introduced social security and housing benefit changes, which caused them great difficulties. Those changes were based on the principle, enunciated several thousand times by Conservative Members, that they gave help where it was most needed. It was argued that if public expenditure was to be reorganised we should target assistance to those who needed it most, in circumstances where they needed it most. There is complete dissonance between that principle, enunciated in our debates on the social security and housing benefit changes, and the provision that we are debating.
      The Chancellor is attempting to make his mark. He wants to appear in the history books and make his mark in the footnotes. Perhaps it will be among the Chancellors whose political ambitions were terminated by the Brian Walden interview with the Prime Minister at the weekend. If he can do nothing else and rise no further in the political hierarchy, he wants it said of him that he introduced independent and equal taxation for women which had not been in operation since the time of Julius Caesar.
      How can the provision, which is completely untargeted, be squared with the housing benefit and social security changes that were introduced last month? We all know from our constituency surgeries and mailbags that independent and equal taxation is not one of women's main priorities. It may be one of the Chancellor's main priorities in his attempts to gain a place in the history books, but it is not what women want. Had women been asked, "What are your main priorities?", I am sure that they would have presented independent and equal taxation as a long-term aim—there is no question but that it is needed—but they would have argued that far more important things needed to be done if there was public money to be spent.
      Miss Emma Nicholson: The hon. Gentleman, because he is not a woman, perhaps fails to realise how deeply this issue has troubled married and unmarried women for so long, as the postbags of the Treasury and of people such as myself have shown.
      The Sunday Times reporter was appalled at what came out of the questionnaire that was printed. This has been one of the foremost priorities for women, because it is of crucial importance.
      Mr. Morgan: I am sure that the hon. Lady is correct in saying that women cannot abide injustice as between themselves and men. We all appreciate that very strongly. In considering what women would most want from this year's Budget, however, my surgery experience and my mailbag suggest that there is more concern about what has happened to widows' pensions, for example. A 42-year-old

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      widow bringing up a daughter has written to me to say that she will lose £56·80 per week when her daughter leaves full-time education this summer. This widow is in part-time work, but she simply does not know what she will do. The need to increase child benefit has already been stressed, as has the impact of poll tax on women through joint and several liability.
      Miss Nicholson: Without wishing to be discourteous, I suggest that the hon. Gentleman's constituents who are women do not ask him to do anything about women and tax because the Labour Government failed so significantly to do anything whatever about the problem.
      Mr. Morgan: In my closing remarks—I trust that the hon. Lady will be able to restrain herself and not intervene again—I wish to refer to the unequal treatment of people who have saved to provide for old age, compared with those who have small occupational pensions. The situation has been made far worse by the changes in housing benefit. It is women, particularly, who miss out on company pensions or small occupational pensions from the Post Office, British Rail or whatever, if they have a career break to bring up children and thus tend to depend on savings rather than on a pension. They are far worse off as a result of the Government's changes in housing benefit.
      Had women been asked in what ways they would like additional public expenditure to be made available to them, equality would have been put down as a long-term goal, but my correspondence and surgery experience suggest that they would have given far higher priority to other areas such as child benefit in terms of what should be achieved by this year's Budget. The Chancellor has made no attempt to consult women about what they actually want.
      Mr. Chris Smith: The Opposition have no quarrel with the principle of clause 31 and independent taxation for a man and his wife. We warmly welcome the principle of disaggregation. That is why I shall advise my right hon. and hon. Friends to accept clause 31. We have doubts about clause 98. They have been aired in the debate and I shall return to them later.
      As we stated in the election campaign, we believe that it is offensive that a wife should be regarded for taxation purposes effectively as a chattel of her husband and we warmly welcome the removal of that principle from our income tax system.
      The present system is not just offensive—it is a muddle and a mess, as the Institute for Fiscal Studies clearly identified when it said that the system was
      "a mess. It provides an incentive to some to marry and a deterrent to others. For some purposes it presumes that the wife is wholly dependent on her husband, while for other purposes it rests on a presumption that husband and wife form an economic unit."
      With a system that deals in such different ways with the same couple in the same marriage it is clearly a benefit to try to sort out the anomalies.
      The report from the Institute for Fiscal Studies also reveals some of the problems that the Government are setting for themselves and for married couples with their intended replacement of the present system. That is where our principal concern lies.
      My hon. Friend the Members for Gateshead, East (Ms. Quin) and for Redcar (Ms. Mowlam) said that we do not believe that the system after 1990 will give true independence to married women. It will not do that,
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      especially because of the institution of the married couple's allowance—the married man's allowance by another name—which will go in the first instance to the man; only on his decision and in limited circumstances will it be transferable to the woman. That is not true independence. It is certainly not true independence and economic freedom for women. That is our principal objection to the structure with which the Government wish to replace the present system.
      We wish that the Government had listened to the hon. Member for Torridge and Devon, West (Miss Nicholson) who, on 31 March, joined the Equal Opportunities Commission in seeking to allow husbands and wives to choose who should have the allowance. We agree entirely with that principle and we hope to pursue it in greater detail in Committee. We believe that the administrative difficulties that the Government say would attend such a principle can be overcome and are worth overcoming.
      The Opposition's second anxiety is that the Government's proposals will not replace a judgmental system with a non-judgmental system. The hon. Member for Torridge and Devon, West said that the Government are removing discrimination against marriage. To some extent they are, but they are replacing it with a system that will discriminate in favour of marriage. That is not non-judgmental. It may be something which the Government wish to enshrine as part of public policy. The Chancellor likes the idea of marriage—he has had two of them. We should be clear that the Government intend to create a system that will discriminate in favour of marriage.
      Our third principal objection to the proposals is that they will benefit primarily the better-off. The inclusion of unearned income within the allowance system and the principle of disaggregation will benefit people with large unearned incomes. Of course many pensioners will benefit, but, as some of my hon. Friends said, many more pensioners will not benefit at all. A group that will benefit is married couples who currently make the wife's earnings election. The disaggregation principle will be achieved without the loss of the married man's allowance, which is lost at present. People who elect for the wife's earnings system are overwhelmingly those in the high joint earnings bracket.
      Another group that will benefit especially is married couples where the wife has earned or unearned income in excess of the personal allowance and where aggregation of that income with the husband's income would push the couple into a higher rate band. Disaggregation would push them back into the lower rate band and they would benefit considerably from the Government's proposals.
      The principal beneficiaries of the Government's new scheme will be people on more than average incomes. A small group of women may lose under the Government's proposals and will require transitional protection. That group comprises wives who are the main breadwinners in the household. The example frequently quoted in this respect is that of an unemployed steelworker whose wife is a teacher. Those women may well lose as a result of the Government's proposals, unless transitional protection is afforded.
      9.45 pm
      One other anomaly will result. It has been little noticed, but it is worth referring to briefly. The Government's new system will almost certainly encourage the removal of a considerable amount of savings funds from building

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      society accounts. We should perhaps ask the Government whether the building society movement has been consulted about their proposals. When the husband is a basic rate taxpayer, there is at present no disadvantage in his non-working wife placing her savings in a building society account. However, when she can use her own tax allowance, it would be a waste to leave funds in an account from which tax is deducted at source.
      It would be prudent, therefore, in such circumstances, for the wife to remove her funds from the building society account and to opt for either National Savings or perhaps an offshore account paying gross interest. In those circumstances, building society accounts are likely to suffer and I hope that the Government have had discussions with the building society movement about the effect of the proposed changes.
      There are a number of problems with the Government's proposed scheme. We have no quarrel with their desire to scrap the present system. They could have gone much further. They could have done something sensible about child benefit and put it up to a decent level, as we have been arguing for many years. They could have tackled the absurd measure that treats the provision of workplace nursery places as a taxable benefit, as we have been arguing for over many years. Both those measures would have greatly benefited the position of women within the tax and benefit system.
      The Government have not taken that route. They have taken the route of disaggregation, but they have enshrined in it the continuing sexist principle that the married couple's allowance goes, in the first instance, to the man. Although we thoroughly endorse the principle, we note that the gains will be made primarily by people who are better off, especially under the provisions of clause 98.
      The hon. Member for Berwick-upon Tweed (Mr. Beith) said that the Labour party claims to be in favour of independent taxation, but that it is not in favour of independent taxation of capital gains. If the Government removed the £5,000 exemption allowance from capital gains tax, we would be entirely and immediately in favour of independent taxation of capital gains. However, because that £5,000 exemption allowance will remain for both the husband and the wife and because the inclusion of that additional allowance is not the best use of taxpayers' money, we shall vote against clause 98.
      We endorse the principle, but the Government's practice does not match up to their declared intentions. We urge the Government to go much further along the road to true independence.
      Mr. Norman Lamont: I am grateful to the hon. Member for Islington, South and Finsbury (Mr. Smith) for saying that the Labour party welcomes the principle of disaggregation. This has been an interesting debate, and even the hon. Member for Redcar (Ms. Mowlam) managed to describe the Government's proposals as a step forward. The fact that she said that was in itself a step forward. If the hon Lady will up her rhetoric in favour of the proposals, I shall downplay my rhetoric in favour of them. Perhaps we shall then find common ground.
      Ms. Mowlam: If the Minister reads the report of the Second Reading debate he will find that I made exactly the same statement on that occasion. I shall adjust my rhetoric
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      when he ups the degree of honesty that is to be found in the Budget proposals on what is actually happening to women.
      Mr. Lamont: That was not, as I recall, how the hon. Lady seemed to present her opinion at the time of the Budget statement debates. However, I welcome her position in any event.
      The hon. Member for Islington, South and Finsbury asked about the building societies and described the effect of receiving interest that is paid net of tax. We shall have time to discuss the issue fully with the building societies in the run up to 1990. We do not expect the flows that will occur as a result of these measures to be in any way large when compared with the flows that we see taking place all the time.
      The hon. Member for Caernarfon (Mr. Wigley) asked about joint and several liability in terms of taxation. He referred especially to a husband and wife working together in partnership. Where a husband and wife are in partnership, there will be a joint and several liability, but that is no different from the position of any two people who are in partnership. The arrangement will be no different from any other couple working together in that way.
      Mr. Wigley: I was talking about a husband and wife, one or other or both of whom may be self-employed—not necessarily in a partnership together—with incomes that lead to the payment of income tax. I wanted to know whether in those circumstances there would be joint and several liability.
      Mr. Lamont: If separately employed in different businesses, there is no joint and several liability. If a husband and wife are in a partnership, which I thought I heard the hon. Gentleman say, there will be a joint and several liability.
      Joint and several liability applies to the community charge because the safety net covering liability to pay the charge for poorer households is linked to the support that is provided by the social security system. That system must necessarily take into account a household's combined resources.
      Some hon. Members have suggested that the proposals do not affect a significant number. In fact, they do. Over 2 million will benefit, of whom 1·6 million will be married women. About 500,000 will be husbands.
      The hon. Member for Newcastle upon Tyne, East (Mr. Brown), from the Opposition Front Bench, said that the Labour party favoured independent taxation. I think that he sought to give the impression that the aspiration and the aim were very much the same as the Government's. There is one crucial difference, however, and that emerged during the general election when the Labour party tried to keep a little quiet about its intention to abolish the married man's allowance. We are now talking about the married couple's allowance.
      If the Labour party is in favour of getting rid of the married couple's allowance—a move that we are emphatically against—the cost will be about £7·16 per week to the basic rate taxpayer. It is the married couple's allowance that will keep 1 million people out of tax. About 12 million couples would lose if the proposals that appeared to be being advanced by the Labour party during the election were to be implemented.
      Mr. Nicholas Brown: I thought that I was measured and careful in what I said. It is rather naughty of the Minister to attribute remarks to me that I did not make.
      Mr. Lamont: The hon. Gentleman is quite right. He is always measured. I would never try to represent him otherwise. However, I received the impression that there is a desire to phase out the married couple's allowance, and I merely made clear the consequences.
      The hon. Member for Berwick-upon-Tweed (Mr. Beith) was not ambiguous about that in any way. He made an interesting speech and advocated that the married couple's allowance should be frozen in cash terms. He said that the same principle applying to the breadwinner wives should be applied to the married couple's allowance. With respect, I do not believe that the breadwinner wives' position is analogous. It is anomalous that two and a half times the single person's allowance should apply to breadwinner wives.
      We believe that although, as the hon. Member for Berwick-upon-Tweed said, there may be some special circumstances, there are many one-earner couples and we cannot make a case for such a couple receiving two and a half times a single person's allowance. We believe that the married couple's allowance, which has been a feature of the tax system in one form or another, should be preserved. Even if it was preserved in cash terms, what the hon. Member for Berwick-upon-Tweed advocated would involve a gradual reduction in real terms.
      Opposition Members tried to portray the measures as designed to benefit the wealthy. They seem to think that there is some way in which independent taxation can be introduced which will be of no benefit to the wealthy. An inevitable consequence of introducing independent taxation in any form is that it will involve some substantial gains for people with large incomes. However, Opposition Members should not misrepresent the fact that our changes will bring very substantial benefits to many people, and three quarters of the costs of independent taxation will go to basic rate taxpayers and non-taxpayers after the change. Some 1·2 million wives with an income under £5,000 a year will gain. Half the cost of independent taxation will go to the elderly, and 80 per cent, of elderly taxpayers will gain. All that amply shows that the reform is extremely beneficial to very many people.
      The hon. Member for Newcastle upon Tyne, East referred to introducing independent taxation in a fiscally neutral way. That makes no sense. There is no way in which we can introduce independent taxation on income on a fiscally neutral basis. If there is, the hon. Gentleman did not do much to enlighten the House about what he had in mind. He told us what he was going to do about capital gains tax, and I hope to show that it is complete and utter nonsense to have independent taxation for income and somehow to resile from that position for capital gains.
      Mr. Nicholas Brown: The Minister is being uncharacteristically unfair and he misrepresents what we said. All that we advocated was progressive taxation on unearned income. We advocated nothing more than that. In other words, there should be redistribution from the wealthy to the less wealthy.
      Mr. Lamont: I certainly did not want to misrepresent the hon. Gentleman. I am grateful to him for making his position clear. I assume that he means that the burden of the increasing progressive taxation will be spread over all
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      taxpayers, whether or not they are beneficiaries of independent taxation. I do not think that that is necessarily a very logical position to adopt.
      Several of my hon. Friends, notably my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson), referred to the married couple's allowance going to the man in the first place. the hon. Members for Gateshead, East (Ms. Quin) and for Redcar rehearsed those arguments. They know, of course, that the allowance can be transferred to the wife. They have also heard me say that the effect of our proposals will achieve the right results in 99 per cent. of cases. Only in a quarter of 1 per cent. of cases will we not achieve the right result.
      I make the point that with that one quarter of 1 per cent. one is talking about the better-off, and Opposition Members are advocating that I should give just a little bit more to the better-off. We have decided that that solution is not worth pursuing. Our solution will allow us to implement the proposals in 1990 and to advance the timetable, which would otherwise not have been feasible. I am not saying that a Government will not look at that matter again one day, but I emphasise that an enormous amount of work has been involved in getting the revenue and computer programmes ready to implement the measure by 1990. It is a tight timetable as it is.
      10 pm
      The hon. Member for Gateshead spoke of the possible risks of forestalling and of couples transferring assets between them. Perhaps that will happen to some extent, but it will be a consequence of independent taxation. I do not for one minute believe that we could introduce the concept of taxing transfers between husband and wife. If Opposition Members reflect on that point, they will come to the conclusion that it would be far too draconian to prevent husbands and wives from switching assets between them.
      One point that has not been mentioned in this debate, and which Opposition Members appear to have left totally out of account, is how we are to combine capital gains tax and income tax. The Opposition have not said that they are against taxing capital gains at income tax rates, so I presume that they are in favour. If they are, surely it follows logically that if capital is to be treated as income, capital gains also should be subject to a separate exemption for husband and wife. That seems to me to follow logically.
      It is said that capital gains tax should be revenue-neutral. But what precisely does that mean? It can only mean one of two things: either that the annual exemption on capital gains would be reduced for everyone, penalising capital gains tax payers who are not married—which would be a nonsense—or introducing a lower exemption for husbands and wives than for single people. The hon. Member for Berwick-upon-Tweed found that out when he was exploring the subject with the hon. Member for Caernarfon. Either way, that proposal makes not one jot of sense. I urge the Committee to support the clause.
      Question put and agreed to.
      Clause 31 ordered to stand part of the Bill.

    Clause 98

      MARRIED COUPLES
      Question put, That the clause stand part of the Bill:
      The Committee divided: Ayes 248, Noes 182.

      Division No. 292]

      [10.02 pm

      AYES

      Adley, Robert

      Evans, David (Welwyn Hatf'd)

      Aitken, Jonathan

      Fallon, Michael

      Alexander, Richard

      Favell, Tony

      Alison, Rt Hon Michael

      Fearn, Ronald

      Allason, Rupert

      Fenner, Dame Peggy

      Amess, David

      Field, Barry (Isle of Wight)

      Amos, Alan

      Forman, Nigel

      Arbuthnot, James

      Forsyth, Michael (Stirling)

      Arnold, Jacques (Gravesham)

      Forth, Eric

      Arnold, Tom (Hazel Grove)

      Fox, Sir Marcus

      Aspinwall, Jack

      Franks, Cecil

      Atkinson, David

      Freeman, Roger

      Baker, Nicholas (Dorset N)

      French, Douglas

      Baldry, Tony

      Fry, Peter

      Banks, Robert (Harrogate)

      Gardiner, George

      Batiste, Spencer

      Garel-Jones, Tristan

      Beaumont-Dark, Anthony

      Gill, Christopher

      Beith, A. J.

      Goodhart, Sir Philip

      Bellingham, Henry

      Goodlad, Alastair

      Bendall, Vivian

      Goodson-Wickes, Dr Charles

      Bennett, Nicholas (Pembroke)

      Gorman, Mrs Teresa

      Bevan, David Gilroy

      Gow, Ian

      Biffen, Rt Hon John

      Gower, Sir Raymond

      Biggs-Davison, Sir John

      Grant, Sir Anthony (CambsSW)

      Blackburn, Dr John G.

      Gregory, Conal

      Body, Sir Richard

      Griffiths, Sir Eldon (Bury St E')

      Bonsor, Sir Nicholas

      Griffiths, Peter (Portsmouth N)

      Boscawen, Hon Robert

      Grist, Ian

      Boswell, Tim

      Ground, Patrick

      Bottomley, Peter

      Grylls, Michael

      Bottomley, Mrs Virginia

      Hamilton, Hon Archie (Epsom)

      Bowden, Gerald (Dulwich)

      Hampson, Dr Keith

      Bowis, John

      Hanley, Jeremy

      Boyson, Rt Hon Dr Sir Rhodes

      Hannam, John

      Brazier, Julian

      Hargreaves, A. (B'ham H'll Gr')

      Bright, Graham

      Hargreaves, Ken (Hyndburn)

      Brittan, Rt Hon Leon

      Harris, David

      Brooke, Rt Hon Peter

      Haselhurst, Alan

      Brown, Michael (Brigg & Cl't's)

      Hawkins, Christopher

      Browne, John (Winchester)

      Hayes, Jerry

      Bruce, Ian (Dorset South)

      Hayhoe, Rt Hon Sir Barney

      Buchanan-Smith, Rt Hon Alick

      Hayward, Robert

      Buck, Sir Antony

      Heathcoat-Amory, David

      Burt, Alistair

      Hicks, Robert (Cornwall SE)

      Butler, Chris

      Higgins, Rt Hon Terence L.

      Butterfill, John

      Hind, Kenneth

      Campbell, Menzies (Fife NE)

      Hordern, Sir Peter

      Carlile, Alex (Mont'g)

      Howard, Michael

      Carlisle, John, (Luton N)

      Howarth, G. (Cannock & B'wd)

      Carlisle, Kenneth (Lincoln)

      Howell, Rt Hon David (G'dford)

      Carrington, Matthew

      Hughes, Robert G. (Harrow W)

      Carttiss, Michael

      Hunt, David (Wirral W)

      Cash, William

      Hunter, Andrew

      Channon, Rt Hon Paul

      Irvine, Michael

      Chapman, Sydney

      Irving, Charles

      Chope, Christopher

      Jack, Michael

      Churchill, Mr

      Janman, Tim

      Clark, Sir W. (Croydon S)

      Jessel, Toby

      Clarke, Rt Hon K. (Rushcliffe)

      Johnson Smith, Sir Geoffrey

      Coombs, Simon (Swindon)

      Jones, Gwilym (Cardiff N)

      Couchman, James

      Kellett-Bowman, Dame Elaine

      Cran, James

      Kennedy, Charles

      Currie, Mrs Edwina

      King, Roger (B'ham N'thfield)

      Curry, David

      Kirkhope, Timothy

      Davies, Q. (Stamf'd & Spald'g)

      Knapman, Roger

      Davis, David (Boothferry)

      Knight, Greg (Derby North)

      Day, Stephen

      Knight, Dame Jill (Edgbaston)

      Devlin, Tim

      Knowles, Michael

      Dickens, Geoffrey

      Knox, David

      Dicks, Terry

      Lamont, Rt Hon Norman

      Dorrell, Stephen

      Lang, Ian

      Douglas-Hamilton, Lord James

      Latham, Michael

      Dover, Den

      Lawrence, Ivan

      Dunn, Bob

      Lawson, Rt Hon Nigel

      Durant, Tony

      Lee, John (Pendle)

      Emery, Sir Peter

      Lester, Jim (Broxtowe)

      116

      Lilley, Peter

      Shaw, David (Dover)

      Livsey, Richard

      Shaw, Sir Giles (Pudsey)

      Lloyd, Sir Ian (Havant)

      Shephard, Mrs G. (Norfolk SW)

      Lloyd, Peter (Fareham)

      Shepherd, Colin (Hereford)

      Lord, Michael

      Sims, Roger

      Lyell, Sir Nicholas

      Speller, Tony

      McCrindle, Robert

      Stanbrook, Ivor

      Macfarlane, Sir Neil

      Steen, Anthony

      MacKay, Andrew (E Berkshire)

      Stern, Michael

      Maclean, David

      Stevens, Lewis

      McLoughlin, Patrick

      Stewart, Andy (Sherwood)

      McNair-Wilson, M. (Newbury)

      Stradling Thomas, Sir John

      McNair-Wilson, P. (New Forest)

      Summerson, Hugo

      Madel, David

      Taylor, Ian (Esher)

      Major, Rt Hon John

      Taylor, John M (Solihull)

      Malins, Humfrey

      Taylor, Matthew (Truro)

      Mans, Keith

      Taylor, Teddy (S'end E)

      Marland, Paul

      Temple-Morris, Peter

      Marshall, John (Hendon S)

      Thompson, Patrick (Norwich N)

      Martin, David (Portsmouth S)

      Thurnham, Peter

      Mates, Michael

      Tracey, Richard

      Maude, Hon Francis

      Tredinnick, David

      Maxwell-Hyslop, Robin

      Trippier, David

      Mayhew, Rt Hon Sir Patrick

      Twinn, Dr Ian

      Mellor, David

      Waddington, Rt Hon David

      Michie, Mrs Ray (Arg'l & Bute)

      Walden, George

      Miller, Hal

      Walker, Bill (T'side North)

      Mills, Iain

      Wallace, James

      Miscampbell, Norman

      Waller, Gary

      Mitchell, Andrew (Gedling)

      Ward, John

      Mitchell, David (Hants NW)

      Wardle, Charles (Bexhill)

      Moate, Roger

      Warren, Kenneth

      Montgomery, Sir Fergus

      Watts, John

      Morrison, Hon Sir Charles

      Wells, Bowen

      Morrison, Hon P (Chester)

      Whitney, Ray

      Moss, Malcolm

      Widdecombe, Ann

      Moynihan, Hon Colin

      Wiggin, Jerry

      Mudd, David

      Wilshire, David

      Neale, Gerrard

      Winterton, Mrs Ann

      Needham, Richard

      Winterton, Nicholas

      Neubert, Michael

      Wolfson, Mark

      Newton, Rt Hon Tony

      Wood, Timothy

      Nicholls, Patrick

      Woodcock, Mike

      Nicholson, Emma (Devon West)

      Yeo, Tim

      Paice, James

      Young, Sir George (Acton)

      Porter, David (Waveney)

      Younger, Rt Hon George

      Rathbone, Tim

      Riddick, Graham

      Tellers for the Ayes:

      Roe, Mrs Marion

      Mr. Mark Lennox-Boyd and

      Ryder, Richard

      Mr. David Lightbown.

      NOES

      Abbott, Ms Diane

      Campbell-Savours, D. N.

      Adams, Allen (Paisley N)

      Canavan, Dennis

      Allen, Graham

      Clark, Dr David (S Shields)

      Archer, Rt Hon Peter

      Clarke, Tom (Monklands W)

      Ashton, Joe

      Clay, Bob

      Banks, Tony (Newham NW)

      Clwyd, Mrs Ann

      Barnes, Harry (Derbyshire NE)

      Cohen, Harry

      Barron, Kevin

      Cook, Frank (Stockton N)

      Battle, John

      Cook, Robin (Livingston)

      Beckett, Margaret

      Corbett, Robin

      Bell, Stuart

      Cousins, Jim

      Benn, Rt Hon Tony

      Cryer, Bob

      Bennett, A. F. (D'nt'n & R'dish)

      Cummings, John

      Bermingham, Gerald

      Cunliffe, Lawrence

      Bidwell, Sydney

      Dalyell, Tam

      Blair, Tony

      Darling, Alistair

      Blunkett, David

      Davies, Rt Hon Denzil (Llanelli)

      Boateng, Paul

      Davies, Ron (Caerphilly)

      Boyes, Roland

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

      Bradley, Keith

      Dewar, Donald

      Bray, Dr Jeremy

      Dixon, Don

      Brown, Gordon (D'mline E)

      Dobson, Frank

      Brown, Nicholas (Newcastle E)

      Doran, Frank

      Buchan, Norman

      Douglas, Dick

      Buckley, George J.

      Dunnachie, Jimmy

      Caborn, Richard

      Eadie, Alexander

      Callaghan, Jim

      Ewing, Harry (Falkirk E)

      Campbell, Ron (Blyth Valley)

      Fatchett, Derek

      117

      Field, Frank (Birkenhead)

      Millan, Rt Hon Bruce

      Flynn, Paul

      Mitchell, Austin (G't Grimsby)

      Foot, Rt Hon Michael

      Moonie, Dr Lewis

      Foster, Derek

      Morgan, Rhodri

      Foulkes, George

      Morley, Elliott

      Fyfe, Maria

      Morris, Rt Hon J. (Aberavon)

      Galbraith, Sam

      Mowlam, Marjorie

      Galloway, George

      Mullin, Chris

      Garrett, John (Norwich South)

      Murphy, Paul

      Garrett, Ted (Wallsend)

      Nellist, Dave

      George, Bruce

      Oakes, Rt Hon Gordon

      Gilbert, Rt Hon Dr John

      O'Brien, William

      Golding, Mrs Llin

      Orme, Rt Hon Stanley

      Gordon, Mildred

      Patchett, Terry

      Griffiths, Nigel (Edinburgh S)

      Pendry, Tom

      Griffiths, Win (Bridgend)

      Pike, Peter L.

      Grocott, Bruce

      Powell, Ray (Ogmore)

      Harman, Ms Harriet

      Primarolo, Dawn

      Hattersley, Rt Hon Roy

      Quin, Ms Joyce

      Heffer, Eric S.

      Radice, Giles

      Hinchliffe, David

      Randall, Stuart

      Hogg, N. (C'nauld & Kilsyth)

      Redmond, Martin

      Holland, Stuart

      Rees, Rt Hon Merlyn

      Home Robertson, John

      Reid, Dr John

      Howarth, George (Knowsley N)

      Richardson, Jo

      Howell, Rt Hon D. (S'heath)

      Roberts, Allan (Bootle)

      Hoyle, Doug

      Robertson, George

      Hughes, John (Coventry NE)

      Rogers, Allan

      Hughes, Robert (Aberdeen N)

      Rooker, Jeff

      Hughes, Roy (Newport E)

      Ross, Ernie (Dundee W)

      Hughes, Sean (Knowsley S)

      Rowlands, Ted

      Illsley, Eric

      Ruddock, Joan

      Ingram, Adam

      Salmond, Alex

      John, Brynmor

      Sedgemore, Brian

      Jones, Barry (Alyn & Deeside)

      Sheerman, Barry

      Jones, Martyn (Clwyd S W)

      Sheldon, Rt Hon Robert

      Kinnock, Rt Hon Neil

      Shore, Rt Hon Peter

      Leighton, Ron

      Short, Clare

      Lestor, Joan (Eccles)

      Skinner, Dennis

      Lewis, Terry

      Smith, Andrew (Oxford E)

      Litherland, Robert

      Smith, C. (Isl'ton & F'bury)

      Lloyd, Tony (Stretford)

      Smith, Rt Hon J. (Monk'ds E)

      Lofthouse, Geoffrey

      Snape, Peter

      Loyden, Eddie

      Soley, Clive

      McAllion, John

      Spearing, Nigel

      McAvoy, Thomas

      Stott, Roger

      Macdonald, Calum A.

      Strang, Gavin

      McFall, John

      Straw, Jack

      McKay, Allen (Barnsley West)

      Taylor, Mrs Ann (Dewsbury)

      McKelvey, William

      Turner, Dennis

      McLeish, Henry

      Wall, Pat

      McNamara, Kevin

      Walley, Joan

      McTaggart, Bob

      Wardell, Gareth (Gower)

      McWilliam, John

      Wareing, Robert N.

      Madden, Max

      Welsh, Andrew (Angus E)

      Mahon, Mrs Alice

      Welsh, Michael (Doncaster N)

      Marek, Dr John

      Wigley, Dafydd

      Marshall, David (Shettleston)

      Williams, Rt Hon Alan

      Martin, Michael J. (Springburn)

      Williams, Alan W. (Carm'then)

      Martlew, Eric

      Winnick, David

      Maxton, John

      Wise, Mrs Audrey

      Meacher, Michael

      Meale, Alan

      Tellers for the Noes:

      Michael, Alun

      Mr. Frank Haynes and

      Michie, Bill (Sheffield Heeley)

      Mr. Ken Easth

      Question accordingly agreed to.
      Clause 98 ordered to stand part of the Bill.

    Clause 26

      CORPORATION TAX: SMALL COMPANIES
      Question proposed, That the clause stand part of the Bill.
      10.15 pm
      The Economic Secretary to the Treasury (Mr. Peter Lilley):Since 1979 we have introduced a large number of
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      measures to help small businesses. The Finance Bill introduces further measures. In particular, clause 26 reduces the rate of corporation tax on the profits of small companies from 27 to 25 per cent. Since we have been in office, the small companies rate of corporation tax has been cut by 17 percentage points from 42 to 25 per cent.
      This is the sixth successive year in which we have been able to keep the rate of tax to the small company in line with the basic rate of income tax. It is now the marginal tax rate for the vast majority of unincorporated businesses. Out of a total of 418 companies paying corporation tax in 1985–86, the last year for which we have comprehensive figures, no fewer than 392,000 companies paid tax at the small companies rate. A further 19,000 were in the transitional band, still paying below the full corporation tax rate. Only about 7,000 companies in the United Kingdom paid the full standard rate of corporation tax.
      The total number of companies in the low tax band has been increasing rapidly. Between 1982 and 1985–86 an additional 160,000 companies paid the small companies rate. The number of companies rising into the transitional and full tax zones has more than doubled, so more companies are paying more tax, but at lower rates. Above all, this reflects the return to profitability of British industry as well as an increase in the number of small businesses that have been started or expanded.
      As a result of the progressive reduction in the small companies tax rate and related changes, the regime for small businesses in this country is now one of the most favourable in the industrialised world. We have a lower rate of corporation tax than most countries, we have a more favourable rate for small companies than most countries, and we have a wider band to which that rate applies than almost any other country. In short, Britain is now as attractive a country in which to establish and expand a small company as any of our major competitors and there is every incentive for our small companies to grow larger. The clause reinforces that position, and I am pleased to put it before the Committee.
      Mr. Chris Smith: It might help if I said at the outset that we do not intend to divide on clause 26. We welcome its provisions, but there are a number of questions about it that ought to be answered.
      First and foremost, the clause enshrines the principle of progressivity. The Labour party has advocated and will continue to advocate a much more progressive income tax system. The same principle ought, in fairness and logic, to be applied to corporation tax. That principle is enshrined in the proposal that there should be a 25 per cent. rate for companies whose profits do not exceed £100,000 and also in the consequential adjustment to the marginal relief fraction.
      We also welcome the clause because we support and wish to encourage the growth and development of small businesses. The Chief Secretary told us in the Budget debate that the Government are doing far more for small businesses than have any previous Government. He told us that the number of small businesses is increasing at about 500 a week. That figure is more or less accurate. The number is 494 a week—a figure that is based on VAT-registered companies and VAT returns. It is worth pointing out that the equivalent increase for the the period 1974–79 was 417 a week. The Government have made a marginal improvement in the rate at which small

      119
      businesses have been established, but the record of previous Labour Governments stands reasonable comparison.
      The Government have taken a number of measures that doubtless they will claim encouraged the formation of small businesses, including provisions for a delay in the payment of tax by giving an average of several months' credit to small businesses. Those small businesses would probably nominate liability on the preceding year basis, which allows the offsetting of costs and expenses against tax. The Government would probably also claim to have helped small businesses through the self-employment schemes and national insurance changes. It is small wonder, therefore, that small businesses may have improved their position marginally over the lifetime of the Government.
      The greatest factor affecting small businesses is the level of interest rates. In that regard, the Government do not have such a good record. To the detriment of small businesses and, indeed, business as a whole, we still have one of the highest real rates of interest of the entire developed world. That is not something of which the Government should be proud, even if it is a matter by which the Prime Minister seems to place so much store when considering the exchange rate level and the Government's inflation policy.
      A further caveat should be entered. If we are placing so much importance on the development of small businesses, we should pay attention—the Government never seem to pay attention to this—to the increasing domination of our economy by large business and large-scale enterprise. The figures are startling. If we look at the number of firms in the United Kingdom representing the upper half of retail sales, we find that in 1950 there were 4,750. By 1961, the figure had fallen to 1,700. By 1971, it had fallen further to 930. According to 1985 figures, the figure now is 94. The concentration and centralisation of economic power which that represents is something about which the Government should be more concerned. It is fine to talk about promotion being available for small businesses but at the same time a blind eye is being turned to the agglomeration of an enormous amount of economic power into the hands of a small number of companies.
      The further change in the corporation tax rate for small businesses may encourage payments to be made to shareholder-directors in the form of dividends rather than a salary. If a privately owned small company makes a profit and distributes it as dividend to basic rate tax paying shareholders, it pays corporation tax at 25 per cent., against which the shareholder's personal income tax can be set.
      That results in a tax burden of 25 per cent. to the company and zero per cent. to the shareholders, giving a net tax rate of 25 per cent. If, however, the same profit is paid as salary to the directors, who, in small companies, are also likely to be the shareholders, the company has to pay 10·45 per cent. in national insurance and the employees have to pay 9 per cent. national insurance on top of their basic rate tax. The net tax burden in such circumstances is therefore 41 per cent. I think that we are entitled to ask whether it is right that we have a system which, because of how national insurance operates, encourages that device.
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      Broadly speaking, we favour the clause. We shall not divide the Committee but simply want the Government to be a little more honest and realistic about small businesses and the desire—theirs and ours—to encourage the enterprise that they represent. Moreover, the Government should cover the efforts of small businesses and the Opposition's attitude with less of a gloss than they sometimes apply.
      Mr. Graham Bright: I, too, sincerely welcome clause 26. Any reduction in the tax payable by small companies is desirable, to say the least, but I am worried lest we leave it there.
      Small companies usually try to expand. They often borrow heavily and are not flush with cash. It is irksome to make a profit and then have to pay out quite a lot of it in taxation. A company may be keen to expand or re-equip, especially in view of present challenges, such as preparing for 1992. It is important that our small firms are as well equipped and prepared for 1992 as are those in Germany or France. Moreover, they must face competition from engineering companies in South Korea and Taiwan.
      When companies want to retain cash for further development or research and development—I am not talking about those which milk profits to pay directors or use schemes such as the hon. Member for Islington, South and Finsbury (Mr. Smith) described—we should make it as easy as possible for them to put their profits back to work. That is always more difficult for small companies. They cannot be as fast on their feet as a large company with a chain of accountants looking for every possible way in which to delay or avoid paying taxes.
      We are talking here of corporation tax for small companies being in line with income tax. That is great, and I hope that we will keep it that way. It prevents any temptation to switch funds or to take them out of the company. There is a problem with the existing structure. I have argued for a graduated corporation tax. At the moment there is a marginal rate between £100,000 and £500,000. The effective rate for companies of this size is 37·5 per cent., which is 2·5 per cent. over the higher rate. I always think that that is a bit of a discouragement. It causes a company to think seriously about putting the brakes on at £100,000 and perhaps using all sorts of devious ways to stop paying that tax. I want to see a system that alleviates that.
      10.30 pm
      I do not want a system under which companies waste money. That always worries me. Sometimes an accountant says to a company, "You are going to make a profit, so it might be a good idea if you got rid of some money. Perhaps you ought to buy yourself a new Merc, refurbish the office or buy some equipment." Such spending does not occur because a company wants it to, but because it is a way of getting rid of some of the money. I do not like that, and I hope that we will look at that point. Let us make sure that we do not put things in the path of small businesses so that as they grow they design their business round the tax system. That is wrong. The tax sytem should be there to take money when people are making profits, but we should make it simpler. When we talk about a progressive tax, I hope that that is what we mean and that we will not have the clawback position that we have now.

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      We have put corporation tax in line with personal income tax, so what about providing an allowance for tiny companies? For personal income tax there is an allowance of £2,605. For a large company that does not mean anything. However, for small companies, we should have a band of profits that are tax-free at the lower end. It could be linked to the personal allowance, but it could be higher, at perhaps £5,000 or £10,000. I am suggesting that because we should try to encourage companies to put cash back into the business. We should encourage small businesses to do that regularly.
      As I said earlier, we are looking towards 1992 and we want to make sure that companies are equipped to face the position then. The most important thing they can do to equip themselves is to ensure that they have the most modern tools and machinery and that they invest money in research and development. Often a company starts well and gets its own share of the market, but if it does not plough money back into research and development, it loses that share of the market.
      I welcome the clause and I congratulate my hon. Friend the Minister on what he has introduced. However, I hope that he will look at the points that I have raised because they bother me as a small business man, and I know that they bother most of the small business men to whom I have spoken.
      Mr. Beith: The hon. Member for Luton, South (Mr. Bright) made some interesting suggestions. This is not the moment to go into the list of things that small businesses would like to see modified to make their lot easier. However, I should like to place on record the fact that we welcome the reduction in small business corporation tax.
      We suggested to the Chancellor that he might use the corporation tax device that was so successfully used by the right hon. and learned Member for Surrey, East (Sir G. Howe) when he was Chancellor, which was to carry out a phased reduction in corporation tax for large as well as small companies. That produced an incentive to
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      investment, which might have been a productive step to take in current circumstances. There are quite strong arguments for doing so. The present Chancellor has not done that, but he has at least given the corporation tax reductions for small businesses in this clause and we welcome them.
      Mr. Lilley: I do not intend to detain the Committee, but I should like to respond to a point raised by my hon. Friend the Member for Luton, South (Mr. Bright) to whom I pay tribute as a doughty defender of small businesses. He raised the question whether there should be a tax-free band for small businesses. There is a problem in that that would create a more favourable position for incorporated business than for unincorporated businesses. Also, it would presumably have to be available for all companies large and small, or we would have the problem of clawing it back, which would create a somewhat higher rate while it was being clawed back. My hon. Friend said that that happens under the present system, when we move from the rate for small companies to the standard rate. The clawback rate in that intermediate zone is significantly below the low rate that we used to have for small companies. Therefore, the position is not too serious and companies generally feel better off than they did.
      I am grateful to the hon. Member for Islington, South and Finsbury (Mr. Smith) for the fact that he does not propose to divide the Committee. I welcome the Committee's support for the cause of small businesses. I confess that I am slightly puzzled that the Labour party thinks that business men should pay a lower rate of tax than the ordinary man in the street, but that is for it to explain to the electorate.
      Question put and agreed to.
      Clause 26 ordered to stand part of the Bill.
      To report progress and ask leave to sit again.—[Mr. Peter Lloyd.]
      Committee report progress; to sit again tomorrow.

  PETITION

    Rating Reform
    10.37 pm
    Mrs. Maria Fyfe: I have the honour to present a petition on behalf of several constituents of Glasgow, Maryhill, including the Ruchill unemployed workers centre, Milton community council, Maryhill "B" tenants association, Cadder residents association, Woodside tenants association, Botany action group, Maryhill elderly forum, Lambhill community council and Lambhill senior citizens.
    The petition is addressed
    To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
    It states
    that the Abolition of Domestic Rates Etc. (Scotland) Act provides for the introduction in Scotland of the system of Community Charge or Poll Tax which will impose upon the people of Scotland a system of local taxation which will take no account of the ability of the citizens to afford such taxation and will cause hardship to many who are already poor. The Community Charge or Poll Tax will cause the redistribution of resources away from the poor areas into areas which are already prosperous. It will be expensive to operate and its collection will entail invasions of privacy and allocation to each adult Scot of an algorithm or personal computer identification number.
    Wherefore your petitioners humbly pray that your Honourable House repeal the Abolition of Domestic Rates Etc. (Scotland) Act and your petitioners, as in duty bound, will ever pray etc.
    I presented a similar petition some months ago. The people of Maryhill are no more in favour of the poll tax than they were then. Last Friday night the people living in Braid square in Woodside informed me that a poll tax canvasser was going about knocking on their doors at half-past 10 at night delivering the poll tax forms. She had a can of beer in her hand. I do not think that any hon. Member would attempt to justify such conduct, nor do I think that this behaviour was ever expected when the authorities embarked upon the distribution of the poll tax forms. I warn the House that this is the kind of thing that is likely to happen when poll tax canvassers are paid 40p per successful form completed and are largely recruited through their local jobcentre, which tells them that they must take on this occupation—
    Mr. Deputy Speaker (Sir Paul Dean): Order. I am sorry to interrupt the hon. Lady, but she is now arguing the case, which she must not do when presenting a petition.
    Mrs. Fyfe: In that case I shall conclude, Mr. Deputy Speaker, by presenting the petition, in the hope that the House will pay heed to my constituents' wishes.
    To lie upon the Table.

  Government Departments (Relocation)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]
  10.39 pm
  Mr. James Cran: I am pleased to have the opportunity of a short debate on the relocation of Government Departments and the dispersal of civil servants, not simply because I think that it is an important policy objective but because the Government share that view.
  In 1979 the Government made a commitment to relocate civil servants and Government Departments. They said that they would relocate 5,900 posts. I cannot criticise the Government in that regard because to date they are on course to meet that target. As I understand it, 5,500 posts have already been dispersed and the remainder of the process is in train.
  In addition, 6,000 posts have been dispersed on Departments' own initiative. It would be interesting to know how they exercise their initiative in this regard. That means that over the past nine years about 11,500—shortly to be 11,900—posts have been dispersed, out of a Civil Service consisting of more than 500,000 individuals. My question is whether the progress to date is satisfactory. I say that because, even though the target will have been achieved, it was an exceedingly modest one in the first place. Given that it was a modest target, perhaps it could have been achieved more quickly.
  It is said—especially by civil servants—that four fifths of the Civil Service is located outside Greater London. I have checked the facts, and that is absolutely true. However, as with all statistics, one needs to look behind the figures to find out exactly what they mean. While those statistics are factually correct, an analysis of the number of staff by economic planning region gives a wholly different picture. I considered non-industrial Civil Service staff in England, although I readily agree that I could have chosen the whole of the United Kingdom.
  I found that the south-east has the considerable total of 46·6 per cent. Dear old Yorkshire and Humberside—the House will understand why I call it that—has 7·2 per cent.; the west midlands has 7·1 per cent.; the north 7·4 per cent.; the east midlands 4·8 per cent., the north-west 12 south-west 11·3 per cent., while East Anglia comes up tail-end Charlie with about 3·2 per cent.
  Mr. Timothy Devlin: I am sorry to interrupt my hon. Friend in mid-flow. Is he not appalled that out of about 600,000 civil servants in the United Kingdom, only 33,600 are in the northern region? Does that not show a signal failure on the Government's part to sell the northern region, with all its strengths, to civil servants, who should be moving north and making a valuable contribution to the local economy?
  Mr. Cran: My hon. Friend makes his own point in his usual eloquent fashion, although he perhaps uses rather more extravagant language than I would use. I heard what he said, and there is no doubt that others did.
  Let us move on to consider industrial civil servants, again in England. I shall not go through the figures, but essentially they are no different from those for non-industrial civil servants. When one puts the two

  125
  together, one finds that the south-east of England is way ahead in its ability to attract and keep civil servants at the total of 46 per cent.
  I have not mentioned Scotland, Wales and Northern Ireland because in a sense those three countries prove the point. They have their own Departments of State, and Scotland has almost 10 per cent. of the total number of civil servants in the United Kingdom. What is good for Scotland, Wales and Northern Ireland might be good for some of the other regions apart from the south-east. The gist of my remarks, therefore, is that the south-east is doing well and the other regions are doing extremely badly.
  I am not one of that band of people who believe that we should disperse civil servants for the sake of doing so. If it is not cost-effective and does not increase or maintain efficiency, we should not do it, but there is no iron rule to suggest that if greater numbers of civil servants were distributed throughout the other regions either of those criteria could not be met. Indeed, cost-effectiveness can be measured. Inner London weighting cost the taxpayer the fairly substantial—some would say staggering—total of £675·5 million in the five years from 1983–84 to 1987–88. If I am correct in assuming that in the Government's view more civil servants could be dispersed, a considerable proportion of that sum could have been saved.
  In saying that, I pay tribute to the fact that this Government of all Governments have been extremely careful in their management of public expenditure. I believe that the same could be equally true in this area. In addition to inner London weighting, there are intermediate and outer London zone costs, London pay additions, inner London secretarial allowances and London allowances for lawyers, accountants and those whom we have all learnt to love—tax inspectors. In other words, a myriad costs of this kind have grown up in an extremely tight labour market. That is another reason why relocation policy should perhaps be more aggressively considered.
  There are other reasons. For some reason that is not entirely clear to me, it seems that in London civil servants work 41 hours per week whereas outside London they work 42 hours. Clearly, if more of them were outside London they would produce an extra hour's work each, which would again save taxpayers' money.
  Resignation rates are an important consideration for any employer, and in this context the Government are the employer. For reasons that we all understand, resignation rates are far higher in the south-east than in any other region. That, again, entails additional and, in my view, needless costs to the taxpayer.
  In addition to the manpower costs, there are office costs. It costs not far short of £300 million per annum in rent, rates and maintenance for all our buildings in Greater London. The Treasury guide to office rental values which has been laid in the Library shows that considerable savings could be made if offices were opened in other regions. To give the House the flavour of the situation, new office accommodation per square foot costs between £25 and £57 in City—my right hon. Friend the Minister will no doubt say that we do not have many offices there, and I take the point—£18·50 to £40 in the west end, in the London suburbs £7·50 to £17, in dear old Yorkshire and Humberside £4·75 to £7 and in the west midlands £3 to
  126
  £8·50. It does not take a chartered accountant to work out the savings that could be made if we had a more aggressive policy.
  That is the cost-effectiveness argument. What about the efficiency argument? Nothing in the Treasury guidelines suggests any major efficiency obstacles; quite the contrary. The hoary old arguments that we have all heard about bad communications between London and offices relocated to Hull, Humberside or Stockton are nonsense. The Government's communications network covers the entire nation and can be adapted in almost any way to meet new technology. The developments in information technology, including visual and document transmission, render the arguments about bad communications completely out of date.
  If I had longer, I could outline many other reasons why I believe that we should be more aggressive, but I shall canter quickly over three of them. The first is the contribution to regional economies. That significant reason has been accepted by the Government in the Treasury guidelines. An example is the move of the Manpower Services Commission to Sheffield. There is no evidence to show that that move was not extremely good, and there is plenty of evidence to show how it has affected the local economy.
  Secondly, the regions have a stake in the government of the United Kingdom. We must dispel the notion that London-based means London-biased, although we understand why it has occurred. The civil servants who are out in the regions tend not to be the policy-makers. Far from it. They tend to be mainly functional. The further away civil servants are from the south-east, not only are there fewer of them but they are less senior. As one who has spoken to and worked with more regional directors of more Departments than anyone, I can honestly say that most of them believe that being sent to a region is like being sent to Siberia. They always keep their houses in the south of England because they know that they will move back. The simple reason is that most of the Civil Service is here.
  The third point is the benefit to civil servants. This is an extremely difficult problem for the Government, but they are no different from other employers who must communicate with their work force. I hope that the Government will communicate aggressively with civil servants to show the advantage of relocation. My right hon. Friend the Minister is my Member of Parliament. When I was elected to the House, I had to buy a flat in Westminster, which cost twice as much as a four-bedroomed house in Yorkshire and Humberside. What a compelling reason for a civil servant to want to be relocated. But the facts must be presented to him.
  To give my right hon. Friend the opportunity to reply, I end by saying that I have some anxiety about our relocation policy and the modest achievements that we have had to date. I do not say that we made a promise and did not keep it, because we indubitably did. But the targets were too modest, and there was a propensity to relocate out of Greater London simply to overspill into the south-east and the regions adjacent to it. I am worried that no more central targets will be set. From the experience of all the jobs that I did before 1 came to the House, I know that unless targets are set from on high, it is easy to find reasons not to do what is required. I am worried about that, and, therefore, the passive nature of the policy requires further consideration.

  127
  I am assuaged in going a little further only by the fact that there will be annual surveys of progress by Government Departments—perhaps my right hon. Friend will tell us when those are due—and that annual efficiency gains will be sought from Government Departments. Perhaps that will act as a spur to relocation.
  We need greater progress. If the subject were debated on another occasion, hon. Members would agree that we should not return in another nine or 10 years to find that all we had done was to relocate 5,900 civil servants, plus the other 6,000. The other regions of the United Kingdom simply will not understand such lack of progress.
  10.55 pm
  The Paymaster General (Mr. Peter Brooke): I congratulate my hon. Friend the Member for Beverley (Mr. Cran) on his success in the ballot and on his choice of subject for our short debate.
  If I had not known before of my hon. Friend's considerable interest in matters of Civil Service location generally and, of course, of his constituency and regional interest in these issues, the large number of pointed parliamentary questions that he has asked me and others over recent months would have left me in no doubt of it.
  My hon. Friend's choice of subject gives me a timely opportunity to elaborate a little on the Government's policy on the location of Government work, to provide some further background on the new phase of that policy that I announced to the House in March, and to assure my hon. Friend of the Government's continuing commitment to relocation, wherever that is efficient and cost-effective.
  As my hon. Friend has rightly said, in 1979, we announced a programme for dispersing 5,900 Civil Service jobs out of London. As he acknowledges, that programme has been a success and is all but complete. Some 5,560 jobs have already been relocated as a consequence. The locations to which they have gone are widespread and include Sheffield, Glasgow, East Kilbride, Southend, Salisbury and Norwich. Planning is in hand for the small balance of 340 jobs remaining for dispersal under the 1979 programme.
  Over and above that centrally run dispersal programme, individual Departments have, at their own initiative, relocated a considerable number of jobs, or created new ones, out of London and the south-east. In all, those amount to well over 6,000. They include, for example, a new office with 150 posts created by Her Majesty's Land Registry in Hull, and increases in the number of Department of Health and Social Security jobs in North Fylde, Lytham St. Annes and Preston of almost 1,200. My hon. Friend and the House will also be aware of the recent decision to relocate the Patent Office to Newport, which should create at least 500 new jobs locally.
  In all, therefore, since 1979, some 12,000 Civil Service jobs have been located or created outside London and the south-east, about half through the centrally managed dispersal programme and half at the intitiative of individual Departments.
  That has contributed significantly to a substantial spread of Civil Service work and job opportunities throughout Britain, particularly when it is remembered that during this period the Civil Service has fallen significantly in size. The present picture is that about four
  128
  fifths of all civil servants already work outside greater London and more than three fifths work outside London and the south-east. My hon. Friend will be more aware than most that the Yorkshire and Humberside region was a major beneficiary of the Government's dispersal programme. The move of 1,760 Manpower Services Commission jobs from London to Sheffield accounts for almost one third of the total number of posts so far dispersed under this programme.
  The figures that I have just quoted are good, but before I come to our plans for the future I should like to say a word about the interesting figures that my hon. Friend gave for civil servants in the English regions. I am not sure that I could endorse the details he gave, but the overall picture he paints is, within its limits, a fair one. The south-east has a larger proportion of civil servants—industrial and non-industrial—than any other English region, or than Scotland, Wales or Northern Ireland. It also has a significantly larger population than any other region, and if one looks at the number of civil servants per thousand of population the picture is rather different. The northern region, to which my hon. Friend the Member for Stockton, South (Mr. Devlin) referred, has almost as many—and the south-west region has more—civil servants per head of population as London and the south-east, despite the fact that the south-east region includes the national capital and seat of Government.
  If my hon. Friend the Member for Beverley was seeking to create the impression that no other English region has the same or a higher proportion of civil servants as Scotland, Wales or Northern Ireland, I hope that he will allow me to correct him. At 1 April last year, the north-west region of England had 10 per cent. and the south-west region over 9 per cent. of the total non-industrial Civil Service—that is, civil servants in the United Kingdom as a whole—compared to just under 10 per cent. in Scotland, about 5 per cent. in Wales and just over 0·5per cent. in Northern Ireland.
  I assure my hon. Friend that the Government do not intend to rest on the progress already made. When, on 31 March, I informed the House in a written answer of the successful completion or near completion of the 1979 dispersal programme, I announced also a new phase in Government policy on the location of their work. I explained that, though no further central targets for relocation would be set, Departments would be reviewing the location of their work with a view, in suitable cases, to finding locations offering advantages in terms of recruitment and retention of staff, value for money and other considerations relevant to service delivery and management.
  After careful thought, we decided that it would not now be sensible to have a new version of the dispersal programme of 1979, which was centrally managed and had overall statistical targets, but that we would instead exploit the tide of individual departmental initiative for relocation that has been running strongly in the past few years and has, as I said, led to the actual or planned relocation of as many jobs as the formal dispersal programme itself.
  There are a number of reasons for this. First, it is consistent with the general trend in Civil Service management, which is to avoid central direction where possible and place the power to make decisions and the responsibility for making them with individual Departments acting within a clear framework of policy and with clearly defined incentives to take sensible

  129
  decisions. It seems to us that decisions taken in this way are likely to be better decisions than those taken in conformity with some massive central blueprint or master plan which would, very likely, be the product of a vast interdepartmental committee—probably meeting, incidentally, in the SW1 postal district.
  Secondly, it is consistent with the general change that has been taking place in the economy and in decision-making processes. Property is cheaper and staff are easier to find, outside the south-east. Sensible businesses are increasingly exploiting these advantages, and we want to build on the wish of individual Government Departments to do the same.
  My hon. Friend has some doubts that Departments will respond without central direction. But they have already shown that they are keen to do so. It is of the essence that I cannot forecast now exactly how many jobs will be relocated as a consequence of this new phase of our policy, but I am sure that all Departments will look seriously and sensibly at the options, and that if the trend of the past few years is any guide, a substantial number of jobs will be relocated, to the benefit of the efficiency of the Departments concerned, of their costs and the value for money that they give, and of the economic conditions in the receiving localities. I know that my ministerial colleagues are committed to this programme.
  My hon. Friend refers to the guidelines for Departments on the location of work. These guidelines emphasise the importance of thorough reviews based on the principles that I have mentioned. They also require Departments to give adequate weight to Government policy for the regeneration of regions and inner cities and provide in a good deal of detail examples of the kind of cost and labour supply advantages that relocation can bring. I might add that they also offer the prospect, in suitable cases, of some short-term help from the Treasury with the transitional costs of relocation. Those costs can be significant, and we are anxious that they should not be a disincentive to achieving the longer-term benefits.
  The new guidance takes account of the regional policy dimension in terms agreed with the regional and territorial Departments. It requires that
  "For all major possible relocations, i.e. those involving more than 100 people, the department should consider any site or sites suggested by the territorial or regional policy departments within assisted or urban programme areas and include at least the most favourable of these in their list of costed options, even if this does not provide the greatest overall saving the move must, however, generate a positive Net Present Value".
  The new guidelines have been firmly linked to running costs and to the public expenditure survey; first, because we considered that the policy might work better if the Treasury agreed to consider requests for help with transitional costs by additions to running costs limits; secondly because some expenditure benefits might be expected to be achieved if relocation were chosen; and, thirdly, because the Treasury would need to "keep the score" of the overall plans and achievements of Departments as the new policy progressed. In addition, Treasury expenditure divisions will ensure, within the context of the annual expenditure survey arrangements, that Departments produce worthwhile and relevant proposals on relocation in accordance with the guidelines.
  130
  It is clear that there are benefits in the longer term from sensible decisions on location and relocation. We have not done, retrospectively, a full cost-benefit analysis of the dispersal programme undertaken in 1979, but there is evidence that sensible decisions can lead to considerable savings. For example, a recent report submitted to my right hon. and learned Friend the Secretary of State for Scotland evaluates very positively the results of dispersing part of the Overseas Development Administration from central London to East Kilbride in 1981. I understand that my right hon. and learned Friend intends to publish the report in the near future. I am sure that my hon. Friend will read it with interest and encouragement, and I have already made arrangements to circulate it to Government Departments generally as an example of the benefits that can be achieved.
  As I am sure that the House will recognise, relocation is not the answer to every Civil Service problem; nor should it be seen as an automatic device for spreading employment opportunities. Some Civil Service work will have to remain in London arid the south-east. People who live in these areas need local services just as much as people living elsewhere—jobcentre clients, for example. Although modern communications, technology and good transport links now mean that much work can be done elsewhere, some Civil Service work will always have to be done in close proximity to Parliament, Ministers and the City.
  My hon. Friend mentioned the attitude of the Civil Service unions. It is of course important, in introducing policies of this kind, to consider the position of the staff who will be subject to the new arrangements. We have given an assurance to the Civil Service unions that, when jobs are relocated, every effort will be made to avoid the compulsory transfer of people in mobile grades and to find alternative jobs within reasonable travel distance for non-mobile grades. We have also confirmed, in the guidelines, the existing requirement on Departments to consult their own trade union sides when planning relocations; and, while there are issues which I have no doubt that the unions will wish to discuss further with the Treasury, I see no ground for pessimism.
  In sum, I am sure that this new phase of location policy will yield considerable benefits—to Departments, to the public that they serve, to the Exchequer and to the localities which receive new Civil Service jobs. I will at the earliest suitable opportunity—probably some time next year—give the House some account of the progress made and planned. I am sure that my hon. Friend, with his enthusiasm for the subject, will not be alone among hon. Members in following this progress with keen interest. He has done a service to that cause and process by his detailed and eloquent treatment of the matter tonight.
  To conclude on a personal note, as the local Member of Parliament for SW1 and adjacent places, I should say that 3 per cent. of the working population of the entire country comes to work in my constituency daily, leaving the rest of the House to look after the remaining 97 per cent. I am not jealous and I should be happy to see many of those people going to work elsewhere to the good of the rest of the economy.
  Question put and agreed to.
  Adjourned accordingly at nine minutes past Eleven o'clock.

DEFENCE

  Defence Estimates
  Sir Antony Buck
  To ask the Secretary of State for Defence when he intends to publish the "Statement on Defence Estimates 1988"; and if he will make a statement.

  Mr. Younger
  I intend to publish this year's Statement on the Defence Estimates on Tuesday 17 May.

  Transmitter Station (Glengarry Forest)
  Mr. Dalyell
  To ask the Secretary of State for Defence what assessment he has made of the environmental effects of the proposed ELF transmitter station at Glengarry forest.

  Mr. Sainsbury
  A full assessment of the environmental effects of the proposed trial ELF transmitter station at Glengarry forest will be made as part of the preparation of a notice of proposed development which, on present planning, is unlikely to be submitted to the Highland regional council before the autumn of this year.

  RAF Caerwent
  Mr. Flynn
  To ask the Secretary of State for Defence (1) if he will list details of ammunition carried through the Newport, West constituency from the Caerwent base to Newport docks during 1987 and planned for 1988;

  (2) if he will list the total tonnage of ammunition stored at and transported to and from RAF Caerwent in 1986 and 1987 and planned for 1988.

  Mr. Freeman
  No. It is not our practice to provide details of the storage of ammunition at particular sites or the movements of ammunition to and from these sites.

  Mr. Flynn
  To ask the Secretary of State for Defence if he will take steps in the interests of improved security to increase the proportion of ammunition moved from Caerwent by rail.

  Mr. Freeman
  I refer the hon. Member to the answer I gave him on 18 April 1988 at column 335.

  Mr. Flynn
  To ask the Secretary of State for Defence if he will list the financial savings made or planned at the Caerwent base as a result of substituting of civilian escorts for Ministry of Defence police, reductions in the complement of Ministry of Defence police and new contracts awarded to private transport contractors.

  Mr. Freeman
  I refer the hon. Member to the answer I gave him on 26 April 1988 at column 76. Competitive bids are sought for the transport contracts at RAF Caerwent and the costs involved are commercially confidential.

  Mr. Flynn
  To ask the Secretary of State for Defence if he will list the complement of Ministry of Defence police at RAF Caerwent for 1986, 1987 and 1988 and the planned future complement.
  2
  Mr. Freeman
  It is not our practice to provide information of the sort requested.

  Mr. Flynn
  To ask the Secretary of State for Defence what facilities are available at RAF Caerwent to breathalyse ammunition lorry drivers.

  Mr. Freeman
  There are no facilities available at RAF Caerwent to breathalyse ammunition lorry drivers.

  Ammunition (Newport Lorry Fire)
  Mr. Flynn
  To ask the Secretary of State for Defence what ammunition was being carried on the lorry that caught fire on the M4 in Newport on 30 January.

  Mr. Freeman
  It is not our practice to provide information of this sort.

  Submarines (Reactors and Radioactive Waste Disposal)
  Mr. Wallace
  To ask the Secretary of State for Defence what options his Department has considered for the disposal of reactors and radioactive waste material following the decommissioning of nuclear-powered submarines; and if he will make a statement.

  Mr. Sainsbury
  The options which have been considered for disposal of the reactor machinery are sea disposal of the entire submarine, land burial of the intact reactor compartment and cutting the reactor plant into small pieces for storage and eventual disposal in a deep site yet to be developed. No decisions have yet been taken about which option should be chosen. The safety and environmental implications of these options will, of course, form part of the Government's deliberations. Any other radioactive waste material will be disposed of in the normal way to Drigg, if suitable for shallow land disposal, or stored pending the development of a deep disposal facility. The spent uranium fuel will be sent to BNFL Sellafield for storage.

  Armed Forces (Allowances Review)
  Sir Geoffrey Pattie
  To ask the Secretary of State for Defence whether the review of armed forces allowances has yet been completed; and if he will make a statement.

  Mr. Younger
  We have carried out a comprehensive review of all armed forces allowances to ensure that they are up to date, cost effective, and appropriate to the requirements of service life. Most aspects of the review have now been completed, although some further work will be required on service in London, the conclusions on which will be announced by October 1988, and on certain aspects of service in overseas stations.

  The outcome provides significant improvements in measures to assist service men when they are relocated. These will encourage and support the individual service housing policies, which have been carefully reviewed. New disturbance allowances rates will benefit all married personnel. In addition, and in recognition of the increasing number of service house owners, new measures will greatly assist the service man who serves accompanied and who occupies his own accommodation. He will now receive compensation at a much higher level than hitherto for the costs of buying and selling which arise from service postings. Moreover, subject to evaluation of all the

  3
  changes over the next three years, I envisage a further substantial increase in the limit on reimbursement of legal and similar fees from April 1991.

  The new package also goes a long way to removing differences of treatment between married and single personnel and there will be significant improvements in the allowances for seagoers, including help to rejoin their families. At the same time, some existing benefits which are less appropriate to modern service conditions will be phased out. The simplification of certain allowances will produce some savings in administrative costs. Taken with the recently announced armed forces pay review award we believe that we shall have attractive arrangements for modern circumstances which will aid recruitment and retention, and meet, to a much greater extent, the aspirations of service men and their families.

  The new arrangements are as follows:

  Relocation. A package is being introduced to encourage mobility. For the house owner-occupier aged 30 or over—25 or over in the Royal Navy for allowances in this area—this will allow refunds of up to £2,500 to compensate for the expense of buying and selling a house on a new posting of more than 50 miles from his or her current residence. From 1 October 1988 refunds of tenancy agreement and repossession costs will be available to married and single personnel once in every 12 months period. This refund will be available to single personnel within the appropriate age limits.

  Rates of disturbance allowance will be increased very substantially and, in addition to being paid to married personnel, it will, for the first time, be paid also to single personnel aged 30 or over who reside in private accommodation. The new rates for married personnel will be:

  Move

  Officers £

  Other Ranks £

  Into private accommodation (first occupation)

  1,200

  900

  Into private accommodation (reoccupation)

  689

  517

  Into MQs (on posting)

  689

  517

  Into MQs (same duty station)

  310

  223

  Single personnel will be eligible for 75 per cent. of the married private accommodation rates. The child element of the allowance will be £95 for each eligible child.

  Assisted house purchase. The resettlement and 50 plus assisted house purchase scheme will cease to be available from 30 September 1994, although from 1 October 1988 the current rate of advance will be increased from £3,500 to £5,000. The Royal Navy long service advance of pay scheme will continue but the rate of advance will remain at £3,500.

  A contract scheme for removals, already in existence within the Army, will be introduced within the United Kingdom for all three services from 16 May 1988. Single personnel aged 30 or over will benefit from the scheme. Baggage scales for moves on posting overseas and within the United Kingdom will also be improved across the board. For example, for moves overseas, a married major will get a 41 per cent. increase; a married corporal and a single lance-corporal a 52 per cent. increase.

  Major changes will be made in home to duty travel reimbursement. Married quarter occupants will be exempt from a personal contribution, although claims for journeys of three miles or less will remain inadmissible.
  4
  For those in private accommodation the allowance will be phased out by 1 April 1991; meanwhile, the personal contribution will be increased from three to seven miles to reflect the average distance to work now travelled by civilians. Personnel posted to a new unit less than 50 miles from their home, and who are therefore ineligible for the relocation package, may be paid the cost of excess fares. The amount of excess fares will be based upon the difference in distance travelled between home and the new and old duty units respectively, less a personal contribution of seven miles per day. Single personnel aged 30 or over will be eligible for the first time for assistance under these new arrangements.

  Single personnel living-out at their duty station and who are subsequently sent on detached duty will have the period for which the accommodation charge is waived increased from 21 days to 12 months.

  Royal Navy and Royal Marines personnel will, in accordance with the RN's accommodation policy, be required to opt for family stability or family mobility. This choice, coupled with the nature of the actual draft—sea or shore—will define which allowances personnel will receive. A service man will be able to change his decision only on the issue of a new appointment or draft. For naval personnel already married, the decision will need to be made on the occasion of the next appointment or draft on or after 1 October 1988, or by 1 April 1989, whichever is the earlier.

  As announced in the 1988 pay review, the Government have accepted the AFPRB recommendations that seagoers should receive longer service at sea bonus and that separation allowance for seagoers and hard lying money for surface ships should be abolished. Seagoing personnel will receive extra warrants whilst at sea, and warrant credits to use in their next shore appointment or draft.

  Army and RAF married personnel who opt to serve voluntarily unaccompanied on their next posting after 1 October 1988 will be required to pay for their accommodation in addition to the abated food charges. They will also lose their entitlement to separation allowance and separation warrants. Personnel on courses or attachments or postings of less than 12 months will be unaffected by these new regulations.

  New arrangements will replace the current United Kingdom leave travel entitlements to basic and separation warrants. There will he a general entitlement to two warrants. Single personnel aged below 25 years of age will retain four warrants per year, as will personnel serving in Northern Ireland. In the Royal Navy, retention of warrants will depend upon rank rather than age. Army/ RAF involuntarily separated personnel and Royal Navy personnel who opt for family stability rather than family mobility will be entitled to a total of 12. Each child at boarding school will be entitled to three journeys per year for school children's visits (SCVs) in the United Kingdom. There will be a parental contribution for the first 50 miles of all SCVs. Divorced or separated parents will be entitled to a total of eight warrants to enable them to visit their children. There will be additional shopping warrants for personnel in the Scottish outer isles. First class leave travel for senior officers will be abolished, and destinations will be restricted to nominated destinations in line with the intention that leave travel should be used only to preserve family ties.

  Boarding school allowances. Separate allowances will be introduced for preparatory and senior schools to reflect

  5
  the differing levels of fees paid. The higher rates for third and subsequent children will be abolished. The new arrangements provide for a minimum personal contribution of 10 per cent. of the fees in respect of any child. Parents of children already receiving boarding school allowance or entering boarding school during the remainder of 1988 will continue to receive the current allowance, appropriately uprated, if the amount is higher than their new entitlement, until that overtakes the current allowance, or until the end of the current stage of education.

  There will be a number of other changes including the widening of the criteria for payment of plain clothes grant and allowance to include more personnel who are required to wear plain clothes in the course of their duties with some increases in rates. A new telephone call system will be introduced for personnel serving in Northern Ireland, as will a new allowance to compensate for the excess cost of coal to heat married quarters there.

FOREIGN AND COMMONWEALTH AFFAIRS

  Energy Use
  Mr. Rowlands
  To ask the Secretary of State for Foreign and Commonwealth Affairs what are his Department's target reductions in energy usage for 1988–89; what is his Department's target reduction in electricity usage for lighting in 1988–89 and what investment his Department is planning to make in new energy efficient lighting equipment in 1988–89 to achieve those target reductions.

  Mr. Mellor
  The Foreign and Commonwealth Office has set a target of 5 per cent. for reductions in energy usage in 1988–89; electricity for lighting and power is not metered separately and it is not therefore possible to set and monitor separate targets for lighting usage.

  Most light fittings in Foreign and Commonwealth Office buildings (other than those which we expect to vacate in the near future) have been replaced in the last three to four years by energy efficient lighting equipment recommended by the Lighting Industry Federation and the PSA. We have no separate investment plans for lighting for 1988–89, but energy efficient lighting is being installed during the current refurbishment of the old public offices.

  EC Directives
  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement explaining the procedures under which directives are classified as stemming from particular clauses of the treaty of Rome, as amended by the Single European Act; and what means are available to member states if they consider that directives are being wrongly classified.

  Mrs. Chalker
  The great majority of legislation adopted by the Council requires a proposal from the Commission. It is for the Commission to propose the treaty article on which such measures are to be based. The Commission may amend its proposals during the course of discussion in the light of member states' views. The Council may amend any aspect of a Commission proposal, including the legal base, by unanimity. If a member state considers that the legal base of a measure once adopted is incorrect 6
  it may seek annulment of the measure by instituting proceedings in the European Court of Justice under article 173 of the EEC treaty.

  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list the directives which have been made by the various Councils of Ministers under article 100A; and on how many such directives Her Majesty's Government have objected to the use of this clause.

  Mrs. Chalker
  The following directives have been adopted under article 100A of the treaty. The Government accept the legal base of these directives:

  arrangements for summer time

  vehicle emissions (two directives)

  lawn-mower noise (two directives)

  information on technical norms

  liquid fertilisers

  toy safety

  Rain Forests
  Mr. Simon Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had, and plans to have, with the Malaysian Government regarding tropical rain forest management and the effects of forestry on the native tribal people; and if he will make a statement.

  Mr. Mellor
  My right hon. and learned Friend has had no direct discussions with the Malaysian Government on this matter. However both the federal Government and the relevant state governments are aware of concerns expressed about the environmental and social effects of commercial logging. I understand that the state Government of Sarawak has worked with the Malaysian branch of the World Wildlife Fund to prepare a conservation strategy for the state to help protect the forests and their inhabitants; and that enabling legislation has been passed so that it can be put into effect.

  The Malaysian branch of the World Wildlife Fund is moreover continuing to work with the state government in an advisory capacity on conservation in the environment. The British high commission in Kuala Lumpur has reported that both sides regard their cooperation as very useful. The federal Government, for their part, have recently sent a delegation to Europe, led by the Minister for Primary Industries, Dr. Lim Keng Yaik, to explain the management of Malaysian rain forests.

  Both we and the Malaysians are members of the International Tropical Timber Organisation, whose objectives balance conservation with trade expansion and diversification.

  Angola
  Mr. Hunter
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) if he will make a statement on the communiqué issued by representatives of the United States, South African, Angolan and Cuban Governments following their recently concluded meeting in London about the situation in Angola;

  (2) what assessment he has made of the implications for United Kingdom policy on the maintenance of stability in southern Africa of the non-involvement of UNITA in the recently concluded meeting in London about the situation in Angola; and if he will make a statement;
  7
  (3) what representations he made to the United States, South African, Angolan and Cuban Governments before or during the recently concluded meeting in London about the situation in Angola;

  (4) what assessment he has made of the implications for United Kingdom policy on the maintenance of stability in southern Africa of the South African Government's reaction to the recently concluded meeting in London about the situation in Angola;

  (5) what is Her Majesty's Government's policy on proposals to link the search for a solution in Angola with an internal settlement in Namibia;

  (6) what assessment he has made of the implications for United Kingdom policy on the maintenance of stability in southern Africa of the non-involvement of SWAPO in the recently concluded meeting in London about the situation in Angola; and if he will make a statement;

  (7) what is Her Majesty's Government's policy towards the revival at the recent London meeting of the 1978 United Nations' plan for a solution in Angola; and if he will make a statement;

  (8) what assessment he has made of the implications for United Kingdom policy on the maintenance of stability in southern Africa of the differing timetables for Cuban withdrawal from Angola envisaged by the South African and Cuban Governments;

  (9) what representations he proposes to make to the Governments of the United States, South Africa, Cuba and Angola before their next meeting about the situation in Angola.

  Mrs. Chalker
  We were not directly involved in the talks held in London on 3–4 May, and it is not for us to comment on the details of them. However, we are encouraged by the progress made and the agreement by all parties on a further meeting in Africa. My right hon. and learned Friend, my hon. Friend the Parliamentary Under-Secretary and senior officials held bilateral meetings with members of all delegations. We support the US-led process designed to secure the withdrawal of Cuban troops from Angola and the implementation of the UN plan for Namibian independence. Withdrawal of all foreign troops from Angola, together with implementation of UN Security Council resolution 435, would contribute substantially to the stability of the region. We encourage all those involved in the search for peace to continue their efforts.

  Mr. Hunter
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made, or proposes to make, to the Soviet Union following the recently concluded meeting in London about the situation in Angola.

  Mrs. Chalker
  We would expect the subject to arise in our regular contacts with the Soviet Union.

PRIME MINISTER

  Michael Tighe
  Mr. Dalyell
  To ask the Prime Minister what steps she has taken to satisfy herself of the existence and validity of the legal authority under which a bug was placed in the hay shed where Michael Tighe was killed; and if she will make a statement.

  The Prime Minister
  It is not the practice to comment on security matters.

OVERSEAS DEVELOPMENT

  Overseas Development (GDP)
  Dr. Thomas
  To ask the Secretary of State for Foreign and Commonwealth Affairs what information he has as to what proportion of gross domestic product each of the member countries of the European Community devotes to overseas development; and what is the average for the European Community Countries as a whole.

  Mr. Chris Patten
  Precise figures are only available for the eight European Community countries which belong to the OECD development assistance committee (DAC) and in respect to gross national product (GNP). According to the DAC chairman's 1987 report "Development Cooperation" the figures for 1986 are as follows:

  Net official development assistance (oda)

  As percentage of GNP

  Belgium

  0·49

  Denmark

  0·89

  France

  0·72

  Germany

  0·43

  Ireland

  0·28

  Italy

  0·40

  Netherlands

  1·01

  United Kingdom

  0·32

  The net official development assistance of these eight countries represents 0·51 per cent. of their combined GNP.

  Southern Africa (Aid)
  Mr. Anderson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what were the levels of United Kingdom aid to(a) Mozambique and (b) Angola in the last year.

  Mr. Chris Patten
  Figures for 1987 are still provisional, but gross British bilateral aid to Mozambique was about £23 million and to Angola about £250,000.

  Ethiopia
  Mr. Barry Field
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he has any current plans to visit Ethiopia.

  Mr. Chris Patten
  I have no current plans to make a further visit to Ehiopia. I had hoped to do so last month, but the Ethiopian Government told me that this would not be convenient at present. They expressed the hope, which I share, that I would be able to visit at a mutually convenient time in the future.

  Mozambique
  Mr. John Evans
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the effectiveness of Britain's aid allocation to Mozambique.

  Mr. Chris Patten
  Our aid programme is welcomed and highly regarded by the Government of Mozambique. Aid from Britain and other donors in support of the Government's economic reform programme has been a factor in Mozambique's estimated 4 per cent. growth in GDP in 1987 and in helping Mozambique to limit the worst effects of the emergency.

  Rain Forests
  Mr. Simon Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will give figures for(a) the amount of aid and (b) the percentage of total aid given by (i) the United Kingdom and (ii) the European Community to developing nations which was designated for tropical rain forest management programmes for each year for which figures are available since 1980; and if he will give projected figures for the same items for each of the next five years.

  Mr. Chris Patten
  The Overseas Development Administration's statistics do not show separate figures for aid expenditure on tropical rain forest management; nor are such figures available to us for European Community aid.

  British bilateral aid expenditure on all types of forestry since 1980 was as follows:

  As percentage of net bilateral aid programme

  £ thousands

  Percent

  1980

  3,328

  0·63

  1981

  3,792

  0·58

  1982

  4,845

  0·91

  1983

  4,491

  0·80

  1984

  6,224

  1·10

  1985

  6,849

  1·10

  1986

  14,921

  2·20

  Examples of current British aid commitments to projects concerned with rain forest management include the Korup national park (Cameroon), Maraca island (Brazil), forest reserve management (Sierra Leone), forest reserve inventory (Ghana) and tropical hardwood plantations and maintenance (Ivory Coast).

  Under the fifth European development fund, which started commitments in 1981, about £9 million had been committed by September 1987 for forestry projects. Under the sixth European development fund, on which commitments started in 1986, about £27 million has been committed to forestry projects to date.

  Likely expenditure in future years cannot be forecast, but I am ready to consider sympathetically sound new proposals.

HOME DEPARTMENT

  Summer Time
  Mr. Teddy Taylor
  To ask the Secretary of State for the Home Department (1) when Her Majesty's Government's representative at the European Council agreed to the directive providing for a common European Economic Community summer time to be introduced after 1990; whether any objections were lodged to its being classified under article 100A which provides for majority vote; and if he will make a statement;

  (2) pursuant to the speech by the Under-Secretary of State, the hon. Member for Grantham (Mr. Hogg), on 28 April, Official Report, column 617, whether he has given further consideration to the appropriate classification of the summer time directive as being based on article 100A; and if he will make a statement.

  Mr. Douglas Hogg
  No directive has been prepared as yet to cover any period after 1989. When the Commission 10
  proposes the next draft directive, we shall consider most carefully the treaty base proposed in the context of the directive's content.

  Prisoners (Escorts)
  Mr. Alex Carlile
  To ask the Secretary of State for the Home Department if he has any proposals for the introduction of a contracted-out system for the escort of prisoners to and from courts and whilst at courts; and if he will make a statement.

  Mr. Douglas Hogg
  In his statement to the House on 30 March, my right hon. Friend announced his intention to publish a Green Paper on private sector involvement In all aspects of the remand system. This includes court escorts and manning.

  Marches Banning Order (Leeds)
  Mr. Fatchett
  To ask the Secretary of State for the Home Department if he will call for a report from the chief constable of West Yorkshire on the implementation of the order banning marches in Leeds on 23 April; and if he will make a statement.

  Mr. Douglas Hogg
  Decisions on how to enforce a prohibition under the Public Order Act 1986 are operational matters for the chief officer of police. I understand from the chief constable of West Yorkshire that a number of assemblies, unaffected by the prohibition on processions, took place and that these were well ordered. The West Yorkshire police are investigating complaints that, as one of these assemblies dispersed, those leaving it formed into a procession.

  Firearms
  Mr. William Ross
  To ask the Secretary of State for the Home Department if he will place in the Library a copy of the extension of his Department's approval to the Drunmore shooting centre on 15 February for small and full bore rifles.

  Mr. Douglas Hogg
  I would refer the hon. Member to the reply to his earlier question on 31 March, at column 687.

  Mr. William Ross
  To ask the Secretary of State for the Home Department why his Department authorised the extension of approval for the Drunmore shooting centre on 15 February to cover small and full bore rifles.

  Mr. Douglas Hogg
  Approval was extended on the request of the club in question, against the criteria set out in the reply which I gave to a question from my right hon. Friend the Member for Woking (Mr. Onslow) on 15 January at column 446.

  Mr. William Ross
  To ask the Secretary of State for the Home Department which chief officer of police and of which force has been appointed to assist Mrs. Vickers of the Police Complaints Authority to investigate complaints about operational matters and the administration of the Firearms Act 1968 in relation to the firearms certificate granted and varied to the late Michael Ryan.

  Mr. Douglas Hogg
  The investigating officer is Mr. G. E. Hedges, assistant chief constable of the Thames Valley police.
  11
  Mr. William Ross
  To ask the Secretary of State for the Home Department if he will list the rights and entitlements which accrue to a firearms club which is approved by his Department under the terms of the Firearms Act 1968 as against a firearms club which is not approved for the use of small bore and full bore rifles and pistols and revolvers.

  Mr. Douglas Hogg
  Approved clubs are eligible to apply for a club firearm certificate at no cost. This enables members who do not hold their own firearm certificate to use firearms and ammunition belonging to the club when they are engaged as members in drill or target practice. Members of those clubs which are not approved must hold a personal firearm certificate which specifies the firearms and ammunition they are entitled to possess.

  Mr. William Ross
  To ask the Secretary of State for the Home Department what representations he has received, giving dates from(a) the chief constable of Thames Valley police and (b) the Thames Valley police authority, as a result of the inquest into deaths caused by the late Michael Ryan on 19 August 1987, seeking amendments to the Firearms Act 1968.

  Mr. Douglas Hogg
  None. The chief constable's observations on firearms legislation were included in his report to my right hon. Friend on the shootings.

  Mr. William Ross
  To ask the Secretary of State for the Home Department if he will call for a report from the chief constable of Thames Valley police as to what disciplinary action giving dates he(a) has taken or (b) proposes to take against police officers involved in (i) operational firearms matters and (ii) administration of the Firearms Act 1968 in relation to the grant of or variation to the firearms certificate of the late Michael Ryan.

  Mr. Douglas Hogg
  No decisions on disciplinary action can be taken until the investigation being carried out under the supervision of the Police Complaints Authority has been completed.

  Citizenship
  Mr. Madden
  To ask the Secretary of State for the Home Department how many applications for registration for British citizenship were received by his Department in envelopes date stamped after 31 December 1987; how many such applicants have been told that their applications have been refused and their fee refunded; how many such applicants have been told that their applications have been accepted; and how many such applicants are still to be informed whether their application has been accepted or rejected.

  Mr. Renton
  Information is not available in the form requested. Approximately 13,500 applications for naturalisation or registration were received in the period 1 January to 30 April 1988. Applications are generally processed in order of receipt and very few post-December applications will have been decided yet.

  Security Personnel
  Mr. Marlow
  To ask the Secretary of State for the Home Department whether security personnel from Arab countries are granted similar rights of access and operation into and within the United Kingdom as those from Israel; and if he will make a statement.
  12
  Mr. Hurd
  It has been the practice of successive Governments not to comment on security matters.

SCOTLAND

  Rating Reform
  Mr. Kirkwood
  To ask the Secretary of State for Scotland if he will publish in the Official Report the number of fully completed community charge registration forms returned in each region in Scotland, the percentage in each area that remain unreturned and the percentage in each area returned which seek a decision by the registration officer.

  Mr. Lang
  Information in this form is not available centrally. The detailed arrangements for making up the community charges register are for individual registration officers. My right hon. and learned Friend has every reason to believe that the registration process is going smoothly.

  Agriculture and Food Regulations
  Mr. Bill Walker
  To ask the Secretary of State for Scotland if he will make it his policy not to introduce regulations in relation to agriculture and food in advance of the European Community regulations on the same subjects.

  Mr. Michael Forsyth
  Our general policy is to avoid imposing regulations on our farmers which will place them at a disadvantage with their counterparts elsewhere in the Community but there are occasions, and the bans on the veal crate system and tooth grinding in sheep are recent examples, where practices are so unacceptable as to require us to take the lead.

  Mouth Bridge Inquiry
  Mr. Kirkwood
  To ask the Secretary of State for Scotland when he expects to announce the reporter's decision on the Mouth Bridge local inquiry.

  Lord James Douglas-Hamilton
  The report of the inquiry is expected to be submitted in the near future. When it is, my right hon. and learned Friend will consider it carefully and make a decision as soon as possible thereafter.

  Nursery Education
  Mr. Worthington
  To ask the Secretary of State for Scotland whether any assistance is given through rate support grant for the provision of nursery education.

  Mr. Lang
  Rate support grant is used in support of authorities' income generally. It is not attributed to particular services.

EDUCATION AND SCIENCE

  School Orchestras
  Dr. Michael Clark
  To ask the Secretary of State for Education and Science what steps he takes to encourage the formation of school orchestras.

  Mrs. Rumbold
  It is for each school to decide, in the light of its individual circumstances, whether it should form a school orchestra. However, the Government
  13
  acknowledge the desirability of participation in group music making for pupils of all ages and hope schools will provide opportunities for this where possible.

  Her Majesty's Inspectors
  Mr. Forth
  To ask the Secretary of State for Education and Science if he will publish in the Official Report (a) the number of schools inspected by Her Majesty's inspectors, in each year since 1983, (b) the number of these schools formally inspected and having reports issued upon them and (c) the number of Her Majesty's inspectors currently in post.

  Mr. Dunn
  In the academic year 1983–84 Her Majesty's inspectors visited some 3,600 primary and 3,400 secondary schools. The corresponding figures for 1984–85 are some 3,000 primary and 2,200 secondary schools, and for 1985–86 some 3,000 primary and 2,100 secondary schools. Formal inspections led to published reports as follows:

  Number

  1983

  224

  1984

  197

  1985

  158

  1986

  149

  1987

  246

  There are currently 474 HMI in post.

  Engineers and Scientists
  Mr. Frank Cook
  To ask the Secretary of State for Education and Science what information he has on the numbers of engineers and scientists employed by the Science and Engineering Research Council, the Cavendish laboratory, the Rutherford-Appleton laboratories and the United Kingdom Atomic Energy Authority for the period 1970 to 1988.

  Mr. Jackson
  Information on the Cavendish laboratory, which is a component part of the University of Cambridge, is not held centrally and the Government's relationship with the United Kingdom Atomic Energy Authority is the responsibility of my right hon. Friend the Secretary of State for Energy. The information requested on the Science and Engineering Research Council (SERC) and its Rutherford Appleton laboratory (RAL) is as follows:

  SERC total numbers1

  RAL2

  Year

  Engineers

  Scientists

  Engineers

  Scientists

  1970

  902

  397

  287·5

  347

  1971

  953

  404

  298·5

  339

  1972

  949

  545

  301·5

  337

  1973

  958

  549

  297·5

  330·5

  1974

  950

  559

  299

  330

  1975

  970

  558

  3395

  331·5

  1976

  972

  557

  368·5

  302

  1977

  848

  528

  361·5

  287

  1978

  791

  494

  378·5

  286·5

  1979

  809

  498

  411

  294–5

  1980

  881·5

  527

  4593

  4324·5

  1981

  856

  527

  592·5

  315

  1982

  862

  515

  606·5

  311

  1983

  895

  517

  633

  312

  1984

  882·5

  509·5

  614

  288

  1985

  854

  493

  615

  276

  1986

  835

  499

  634

  316

  1987

  864·5

  523

  636

  314

  1988

  856·5

  527

  14
  1 Figures for SERC as a whole as at 31 March each year.

  2 Figures for RAL as at 31 December each year.

  3 Increase in numbers of scientists due to the merger of the Atlas Computing Laboratory.

  4 Increase in numbers of scientists and engineers due to the transfer of Appleton Laboratory staff from Slough to Chilton.

  Public Bodies (Costs)
  Mr. Frank Cook
  To ask the Secretary of State for Education and Science what was the gross and net cost to public funds of the Science and Engineering Research Council, the Cavendish laboratory and the United Kingdom Atomic Energy Authority for the financial years 1979–80 to 1987–88.

  Mr. Jackson
  The following table shows the gross expenditure and the net cost to public funds of the Science and Engineering Research Council from 1979–80 to 1987–88:

  £ million

  Gross exp.

  Net cost to public funds

  1979–80

  181

  177

  1980–81

  208

  203

  1981–82

  225

  219

  1982–83

  244

  237

  1983–84

  264

  259

  1984–85

  290

  286

  1985–86

  317

  309

  1986–87

  337

  326

  1987–88

  386

  375

  Financial information on the Cavendish laboratory is not held centrally.

  Responsibility for the Government's relationship with the United Kingdom Atomic Energy Authority rests with my right hon. Friend the Secretary of State for Energy.

  Research and Development
  Mr. Frank Cook
  To ask the Secretary of State for Education and Science if he will list the 10 largest publicly funded research and development organisations for which he is responsible, by turnover and staffing.

  Mr. Jackson
  Grant-in-aid funding is provided through the Department for the following organisations engaged in research and development, including research in the humanities:

  Science and Engineering Research Council

  Medical Research Council

  Natural Environment Research Council

  Agricultural and Food Research Council

  Economic and Social Research Council

  The Royal Society

  The British Academy

  The Fellowship of Engineering

  The Department also funds research in universities through the block grants paid on the advice of the University Grants Committee. Information on research expenditure by university is not available.

  Some research is funded through the grants-in-aid paid to the Cranfield institute of technology and the Open University.

  Burnage High School, Manchester
  Mr. Straw
  To ask the Secretary of State for Education and Science if he will obtain a copy of the report of the
  15
  MacDonald inquiry into Burnage high school, Manchester, with a view to seeking an order from the House for the printing and publication thereof.

  Mr. Kenneth Baker
  The report was commissioned by the Manchester city council. I understand that it will be considered by the council's education committee on 17 May. I have asked for a copy of the report to be sent to me when it is published. When this is to hand I will arrange for a copy to be placed in the Library.

WALES

  Nursery Schooling (Clwyd)
  Mr. Barry Jones
  To ask the Secretary of State for Wales how much cash he has allocated to Clwyd local education authority for nursery schooling in each of the years since April 1979 in real terms; and if he will make a statement.

  Mr. Wyn Roberts
  Nursery schooling, like other aspects of local education authority spending, is funded from locally raised revenue supported by mainly unhypothecated Government grants, not from cash allocations by central Government.

  Opencast Mine, Ewloe
  Mr. Barry Jones
  To ask the Secretary of State for Wales when he expects to announce the result of the public inquiry into the Opencast Executive's application to mine at Cheapside, Ewlow, Deeside; and if he will make a statement.

  Mr. Grist
  Béfore the end of July.

  Datamagnetics
  Mr. Barry Jones
  To ask the Secretary of State for Wales (1) how much money the Welsh Development Agency has put into Datamagnetics; and in what financial categories and in which years;

  (2) how much money Her Majesty's Government has put into Datamagnetics; and in what categories and in which years;

  (3) how many jobs are in existence at Datamagnetics; what efforts he and his agencies are making to assist the company to stay in business as a sizeable employer; and if he will make a statement.

  Mr. Peter Walker
  The grants made and resources invested in Datamagnetics by the Government and the Welsh Development Agency are as follows:

  £ thousands

  1985–86

  1986–87

  1987–88

  Regional development grant

  71

  400

  212

  Regional selective assistance

  —

  732

  —

  Support for innovation

  —

  100

  66

  WDA equity

  500

  —

  222

  WDA factory improvements

  702

  —

  —

  WDA rent concessions

  138

  138

  —

  At present, employment at the company stands at 165.

  Prime responsibility for attempting to secure the company's future rests with the receiver who has said he is optimistic that it can be sold as a going concern. The Welsh Office and the WDA will also continue to assist in
  16
  whatever way they can. The agency has already drawn the opportunity presented by the business to the attention of a wide range of interests, including ones in the far east and the United States of America.

  Even if the company cannot be sold as a going concern the factory's excellent location and facilities provide a valuable base to attract another user and create alternative job opportunities.

CIVIL SERVICE

  Women (Senior Posts)
  Mr. Baldry
  To ask the Minister for the Civil Service what progress has been made in ensuring that women are represented at senior levels in the Civil Service.

  Mr. Luce
  We are committed to equality of opportunity for women in the Civil Service and good progress has been made. I recently placed a copy of the report "Equal Opportunities for Woman in the Civil Service" in the Library: this sets out the progress made and priorities for further action.

  Ethnic Minorities
  Rev. Martin Smyth
  To ask the Minister for the Civil Service if he will publish a table showing for each Department of the Civil Service and each grade within each Department the number of(a) members of ethnic minorities and (b) women in post, giving the total numbers of staff in each Department employed in each grade; and if he will make a statement.

  Mr. Luce
  [holding answer 7 March 1988]: I have today written to the hon. Member. Copies of the letter have been placed in the Libraries of Parliament.

ENVIRONMENT

  Inner London Education Authority
  Mr. Heddle
  To ask the Secretary of State for the Environment, further to his statement on 9 March,Official Report, column 325, if he will now use his powers under the Local Government, Planning and Land Act to direct the Inner London education authority to dispose of its land holdings.

  Mr. Waldegrave
  The following sites belonging to the ILEA are on the register of publicly owned vacant or underused land over one acre in size set up under the 1980 Act.

  Borough and Site

  Size (acres)

  Bexley—Camdale road playing field

  2·13

  Lewisham—Plassey road

  1·89

  Tower Hamlets—Pritchards road

  1·31

  Tower Hamlets—Bonner street

  1·05

  My right hon. Friend issued a notice on 3 March 1988 of his intention to direct ILEA to dispose of the Plassey road site. The authority have been asked to inform my Department what action is being taken to bring the other three sites back into positive use.

  Football Matches (Attendances)
  Mr. Soames
  To ask the Secretary of State for the Environment what information he has about the level of attendances at football matches on Sundays for the last four years.

  Mr. Moynihan
  Neither the Football League nor the Football Association holds separate information about the level of attendances at football matches played on Sundays.

  Rating Reform
  Mr. Boyes
  To ask the Secretary of State for the Environment what is his estimate of the level of community charge which will apply in the Houghton and Washington constituency(a) with safety nets, and (b) assuming 10 per cent. non-payment.

  Mr. Howard
  The level of community charge which will apply when the new system is introduced will depend in large part on the spending decisions of individual local authorities. On the basis of 1987–88 expenditure figures, I estimate the safety netted community charge for Sunderland at £200. Any shortfall in collection would have to be recovered locally and would increase community charges proportionately for those who pay.

  Mr. Paice
  To ask the Secretary of State for the Environment what would be the actual total contribution made from community charge payments and through central taxation by residents in the South Cambridgeshire district with the following circumstances:(a) a married couple with two young children and the husband only working with income of £7,500 per annum gross, (b) a married couple with two young children with a £30,000 mortgage where both are working with an income of £12,000 per annum gross, (c) as (b) with an income of £20,000 per annum gross and (d) as (b) with an income of £30,000 per annum gross.

  Mr. Howard
  The information required to make the estimates asked for is not available. Clearly the couple specified in case(d) will pay substantially more in income and direct taxes than the couple in case (a). Since half of local spending is met from national taxation, the former couple's total contribution—direct and indirect—to the cost of local services will be greater than in the case of the other family. Overall we estimate that the top 10 per cent. of households by income pay around 15 times as much as the lowest paid 10 per cent. of households towards the costs of local services.

  Conservation
  Mr. Heddle
  To ask the Secretary of State for the Environment if he will make a statement on his policy towards the preservation of the architectural heritage, listed buildings and conservation areas.

  Mr. Moynihan
  My right hon. Friend's policy is set out in detail in DoE circular 8/87, a copy of which is in the Library. In essence, it remains our resolve to preserve the architectural heritage, to which listed buildings and conservation areas make such an important contribution.

  Council Housing (London Docklands Development Corporation)
  Mr. Leighton
  To ask the Secretary of State for the Environment if he has any plans to introduce legislation to give London Docklands development corporation powers to refurbish council housing.

  Mr. Trippier
  No legislation is required. The LDDC has already carried out external refurbishment or environmental works on over 25 council estates and the corporation is considering what further contributions it might make.

  Cambridgeshire Structure Plan
  Mr. Moss
  To ask the Secretary of State for the Environment when he expects to receive the inspector's report on the Cambridgeshire structure plan.

  Mr. Waldegrave
  The panel that conducted the examination in public into the Cambridgeshire structure plan review has just submitted its report to the Secretary of State. It will be published when the Secretary of State has considered it and decided upon his proposed modifications.

  Nuclear Waste Dumping
  Mr. Moss
  To ask the Secretary of State for the Environment if he has had any representations from Nirex or other private companies regarding nuclear waste dumping in the areas of (i) the Fens of north Cambridgeshire and south Lincolnshire or (ii) the Wash; and if he has instigated in his Department any inquiries as to the feasibility of such dumping in the said areas.

  Mr. Moynihan
  My right hon. Friend has received no representations from Nirex or other private companies regarding the disposal of radioactive waste in the Fens or the Wash. Investigations into the feasibility of using any part of the country for a disposal facility are a matter for Nirex.

  Genetically Engineered Organisms (EC Regulations)
  Mr. Dalyell
  To ask the Secretary of State for the Environment if he will make a statement on his response to the EEC regulations for handling genetically engineered organisms in relation to laboratory tests on genetically modified micro-organisms and the release outdoors of modified organisms.

  Mr. Moynihan
  I understand that the European Commission will shortly be presenting to the Council of Ministers three proposed EC directives relating to work with genetically engineered organisms. Officials of relevant Government Departments have been involved in preliminary discussions on these proposals. Explanatory memoranda will be presented to Parliament to inform the House in the normal way once the directives are presented. The United Kingdom Government will thereafter be fully involved in discussions on the proposals.

  Departmental Expenditure
  Mr. Simon Hughes
  To ask the Secretary of State for the Environment if he will give figures for the expenditure of
  19
  his Department on (a) local environmental services, (b) water-related services and (c) total environmental services, excluding housing, for each year since 1974 for which figures are available.

  Mr. Ridley
  The figures are shown in the table. They cover only voted expenditure by my Department on environmental and water-related services which is currently shown on class X, Votes 1 and 2, of the Supply Estimates.

  The figures include grants towards local authorities' expenditure, grants-in-aid to statutory environmental

  Year

  Local environmental services £ million

  Water related services £ million

  Total environmental services £ million

  1974–75

  5·6

  7·2

  37·6

  1975–76

  9·6

  11·0

  44·1

  1976–77

  3·0

  14·6

  36·2

  1977–78

  11·9

  28·5

  44·7

  1978–79

  15·8

  34·9

  62·8

  1979–80

  29·7

  34·9

  76·3

  1980–81

  32·5

  40·0

  81·7

  1981–82

  21·2

  46·1

  69·2

  1982–83

  32·7

  53·6

  101·2

  1983–84

  20·3

  57·9

  96·5

  1984–85

  23·0

  55·9

  109·4

  1985–86

  14·4

  55·3

  118·3

  1986–87

  14·1

  62·6

  139·2

  Departmental Expenditure
  Mr. Simon Hughes
  To ask the Secretary of State for the Environment if he will give figures for the expenditure by his Department on(a) radioactive waste management,

  Year

  (a) Radioactive waste management £000

  (b) Air pollution £000

  (c) Total environmental protection1 £000

  1973–74

  —

  647

  21,067

  1974–75

  —

  861

  21,821

  1975–76

  —

  1,377

  22,943

  1976–77

  —

  1,164

  22,671

  1977–78

  —

  1,248

  23,655

  1978–79

  3,914

  1,578

  7,958

  1979–80

  5,113

  1,584

  8,810

  1980–81

  9,780

  1,841

  13,619

  1981–82

  8,833

  2,158

  13,681

  1982–83

  8,116

  1,714

  12,517

  1983–84

  8,805

  1,866

  12,974

  1984–85

  9,360

  1,874

  13,869

  1985–86

  11,725

  3,704

  17,978

  1986–87 (provisional)

  10,900

  4,500

  18,000

  1 Includes radioactive waste management and air pollution research; excludes water and countryside research.

  2 Figures before 1978–79 do not include any expenditure on research on radioactive waste management since it was not until then a DOE responsibility.

  Private Landlords
  Mr. Wallace
  To ask the Secretary of State for the Environment what representations he has received seeking legislation to require private landlords to disclose their identity and actual address to tenants; what response he has made; and if he will make a statement.
  20
  bodies, payments made under the former Community Land Act and subscriptions to international environmental organisations.

  The figures exclude expenditure by local authorities and described in the PEWP, table 10.1, as "local environmental services". They also exclude grants for the urban programme and derelict land clearance, expenditure on the built heritage and the costs of privatisation of the water industry which are borne on Votes 3, 4 and 9 respectively.

  The figures are derived from the Appropriation accounts for classes VIII and X for the years 1974–75 to 1986–87.

  (b) air pollution research and (c) total expenditure on environmental protection and research, for each year since 1974 for which figures are available.

  Mr. Ridley
  Expenditure on environmental protection research by the Department of the Environment was as follows:

  Mrs. Roe
  My Department has received complaints from time to time from tenants who did not know the name and address of their landlord. Under the Landlord and Tenant Act 1985 a landlord must supply this information if a tenant requests it either from the person to whom rent is paid or from the landlord's agent. Failure to do so is a criminal offence. Following the recommendations of the Nugee committee on the
  21
  management of privately owned blocks of flats, this provision was augmented in the Landlord and Tenant Act 1987 which, like the 1985 Act, extends to England and Wales. The 1987 Act provides that a landlord must state his name and address on any rent or service change demand and that service charges need not be paid until he has done so. The landlord must also give a name and address in England and Wales for the service or notices, and the tenants may withhold any rent or service charge until he has done so.

  Housing Corporation
  Mr. Simon Hughes
  To ask the Secretary of State for the Environment what extra resources he intends to provide in 1988–89 for the Housing Corporation to fund major repairs to housing association dwellings, which have now become empty and uninhabitable because the local authority is now unable to finance necessary major repairs; and how he intends these resources to be allocated.

  Mrs. Roe
  The Housing Corporation's approved development programme for 1988–89 represents an increase over earlier plans of some £50 million, to £737 million. Within this, the corporation expects to approve £45 million of new schemes for the major repair of housing association dwellings. They have been asked to concentrate these resources on bringing empty properties back into use in areas of shortage. In the past, where the property was originally developed with local authority money, the corporation provided funding for repairs only in exceptional cases. But they have now been authorised to fund repairs wherever the local authority is genuinely unable to do so itself on condition that the dwellings are then let to homeless people.

  Water Supplies (North West Water Authority)
  Mr. Terry Fields
  To ask the Secretary of State for the Environment if he will list, by quantity per gallon or litre, chemicals and other matter added to domestic water supplies by the North West water authority; what is the purpose of each additive listed; and if he will make a statement.

  Mr. Moynihan
  Like all water undertakers, North West water authority adds small quantities of several chemicals to water supplies. These vary according to the quality of the water being treated. I have asked the authority to reply to the hon. Member in more detail.

  Environmental Assessment (EC Directive)
  Mr. Wyn Griffiths
  To ask the Secretary of State for the Environment if he will take steps to reverse the provision of the European Community directive on environmental assessment 84/337/EEC which excludes from mandatory environmental assessment major projects such as port expansion, docks and estuarial barrages effected through private Bills.

  Mr. Waldegrave
  Article 1.5 of the directive provides:"This Directive shall not apply to projects the details of which are adopted by a specific act of national legislation, since the objectives of this Directive, including that of supplying information, are achieved through the legislative process".
  22
  Private Bill procedures are matters for Parliament and are at present under consideration by the Joint Committee on Private Bill Procedure.

  Housing Investment Programme (Coventry)
  Mr. Nellist
  To ask the Secretary of State for the Environment if he will list the housing investment programme allocation made in each year since 1974 to the city of Coventry, expressed in constant 1988 prices.

  Mrs. Roe
  I refer the hon. Member to my reply to the hon. Member for Copeland (Dr. Cunningham) on 21 April, at column 563. The present system of HIP allocations began in 1978–79. The table referred to in the answer has now been placed in the Library.

  Heysham Harbour (Port Manager)
  Mr. Heffer
  To ask the Secretary of State for the Environment if he will prosecute under the Merchant Shipping Acts the port manager of Heysham harbour for cutting the rope of the Tynwald with a chain saw on Saturday 30 April.

  Mr. Nicholls
  I have been asked to reply.

  No. The Merchant Shipping Act did not apply to the incident referred. On the information available neither the ship, its crew nor any person ashore were endangered by the action of the harbour master and there was no contravention of any legal requirement.

ENERGY

  Electricity (Privatisation)
  Mr. Ray Powell
  To ask the Secretary of State for Energy, what recent meetings he has had with the chairman of the Central Electricity Generating Board to discuss the privatisation of electricity.

  Mr. Parkinson
  I meet the chairman of the CEGB, Lord Marshall, regularly to discuss various matters relating to the privatisation of the electricity supply industry.

  Mr. Nicholas Bennett
  To ask the Secretary of State for Energy what interest has been shown by investors, both institutional and private. United Kingdom based and overseas, in investing in the privatisation of the electricity supply industry.

  Mr. Parkinson
  I am pleased to say that considerable interest is already being expressed in the privatisation of the electricity supply industry, and I am confident that the flotations will be a success.

  Mr. Prescott
  To ask the Secretary of State for Energy what discussions he has had with his financial advisers about the implications of recent stock exchange difficulties for privatisation of the Central Electricity Generating Board and the timetable for such privatisation; and if he will make a statement.

  Mr. Michael Spicer
  I have discussions with my advisers on a wide range of subjects connected with the privatisation of the electricity supply industry. The privatisation will have to take account, amongst other factors, of the condition of the market at the time of the sale, not of last autumn, and I am confident that there will be wide interest among institutional investors and members of the public.
  23
  Mr. David Nicholson
  To ask the Secretary of State for Energy what representations he has received on his proposals for protecting customer rights and standards of service when the electricity supply industry is privatised.

  Mr. Parkinson
  I have received representations from a range of interested parties welcoming the Government's proposals to give new rights to the consumer.

  Mr. Darling
  To ask the Secretary of State for Energy what representations he has received from interested parties in connection with the request that the electricity supply industry will be required to provide about one-fifth of the electricity from non-fossil sources following privatisation.

  Mr. Parkinson
  I have received a number of representations from a range of interested parties.

  Mr. Morgan
  To ask the Secretary of State for Energy what is his estimate of the likely increase in electricity prices in the period leading up to privatisation of the electricity supply industry.

  Mr. Parkinson
  Electricity prices are set by the industry in the light of the Government's financial target and the scope they have to make cost reductions. It is too early to say what the price rise will be next year and beyond.

  Mr. Win Griffiths
  To ask the Secretary of State for Energy what representations he has received concerning the regulation of the proposed private electricity supply companies

  Mr. Parkinson
  I have received representations on a wide range of subjects connected with the privatisation of the electricity supply industry.

  Electricity Generation
  Mr. Wood
  To ask the Secretary of State for Energy what representations he has received from the private sector regarding new opportunities in electricity generation.

  Mr. Parkinson
  Independent generators have welcomed the Government's proposals for electricity privatisation as set out in the White Paper and the new opportunities in electricity generation that this will bring.

  British Coal
  Mr. Barron
  To ask the Secretary of State for Energy if he has been informed by the chairman of British Coal of the future reorganisation of its administration.

  Mr. Parkinson
  Yes.

  Oil Supplies
  Mr. Stokes
  To ask the Secretary of State for Energy when he expects the current world surplus production of oil to end.

  Mr. Peter Morrison
  World oil production capacity currently exceeds demand by around 10 millions barrels per day. Most of the additional oil capacity is in OPEC. Known world reserves of oil and gas are still rising and the future is therefore unpredictable.

  Hinkley C Nuclear Power Station
  Mr. Ted Garrett
  To ask the Secretary of State for Energy what estimates he has made of the cost of electricity from the proposed Hinkley C nuclear power station.

  Mr. Michael Spicer
  This is a matter for the Central Electricity Generating Board.

  Coal Industry
  Mr. Michael Brown
  To ask the Secretary of State for Energy how much has been invested in the coal industry since April 1979.

  Mr. Summerson
  To ask the Secretary of State for Energy how much has been invested in the coal industry since April 1979.

  Mr. Michael Spicer
  I refer my hon. Friends to the answer given today to my hon. Friend the Member for Derby, North (Mr. Knight).

  Mr. Andy Stewart
  To ask the Secretary of State for Energy whether he will give the most recent figures for productivity in the coal industry.

  Mr. Michael Spicer
  For the week ended 23 April, deep mined output per man shift was 4·18 tonnes, a new record.

  Mr. Douglas
  To ask the Secretary of State for Energy if he will meet the chairman of British Coal to discuss reorganisation proposals in the light of manpower reductions in the Scottish coalfields.

  Mr. Parkinson
  I meet the chairman of British coal regularly to discuss all aspects of the coal industry.

  United Kingdom Continental Shelf
  Mr. Baldry
  To ask the Secretary of State for Energy what are the current levels of drilling activity on the United Kingdom continental shelf; and what was the comparable figure a year ago.

  Mr. Peter Morrison
  Ninety-four wells were started in the first quarter of 1988 and 47 wells were started in the same period of 1987. The number of wells drilled in the first quarter was one of the highest figures recorded and reflects the growing level of confidence amongst companies involved in the North sea.

  Coal Imports
  Mrs. Clwyd
  To ask the Secretary of State for Energy if he has discussed with the chairman of British Coal the level of expected imported coal.

  Mr. Michael Spicer
  My right hon. Friend and I have regular meetings with the chairman of British Coal to discuss all aspects of the coal industry.

  Domestic Gas Disconnections
  Mr. Simon Hughes
  To ask the Secretary of State for Energy what action his Department is taking to seek to ensure that British Gas implements the recommendations of the Gas Consumers Council document, "An Analysis of Gas Disconnections."

  Mr. Peter Morrison
  The Gas Consumers Council and the Director General of Gas Supply have both made representations to British Gas plc on the operation of the
  25
  code of practice on disconnections. I understand that these are being considered by British Gas, as required by condition 12 of its authorisation.

  Aerosols
  Mr. Allan Roberts
  To ask the Secretary of State for Energy if there are any plans to ban the use of aerosols from his Department's buildings; and if he will make a statement.

  Mr. Parkinson
  No, there are no such plans in my Department.

  Coal Mining (Subsidence)
  Mr. Woodcock
  To ask the Secretary of State for Energy whether his Department holds a copy of the British Coal subsidence manual.

  Mr. Michael Spicer
  No.

  Nuclear Waste Dumping
  Mr. Moss
  To ask the Secretary of State for Energy if he has been consulted by the Central Electricity Generating Board, or Nirex, or any other organisation regarding the feasibility of nuclear waste dumping in(a) the Fens area of north Cambridgeshire and south Lincolnshire or (b) the Wash.

  Mr. Michael Spicer
  No. As the discussion document "The Way Forward" explains, Nirex has identified a number of areas which might be suitable for a deep repository for low and intermediate level radioactive waste including the Fens area and the Wash. No decisions have yet been taken but Nirex hopes to make recommendations to Government by the end of the year.

  Wave Power
  Mr. Wallace
  To ask the Secretary of State for Energy what research and development projects into wave power are currently being funded by his Department.

  Mr. Michael Spicer
  My Department is currently funding:

  —The construction and monitoring of an experimental, shoreline, oscillating water-column device by Belfast university on the island of Islay;

  —A feasibility study of a modular offshore device by Lancaster university;

  —Assessments of shoreline and modular offshore devices by the energy technology support unit.

  Reports on these studies will be published in due course.

  Mr. Wallace
  To ask the Secretary of State for Energy what recent assessment his Department has made of the contribution of wave power to electricity generation in the United Kingdom; and if he will make a statement.

  Mr. Michael Spicer
  The last overall assessment of the contribution of wave power to electricity generation was published as ETSU report R30 "Prospects for the Exploitation of the Renewable Energy Technologies of the United Kingdom" and this information was updated in Energy Paper No. 54 "Energy Technologies for the United Kingdom: 1986 Appraisal of R, D & D". Copies of both reports are in the Library of the House. The energy 26
  technology support unit is currently conducting assessments of the potential for shoreline and modular offshore devices and a proposal is under consideration for a preliminary survey of possible sites for shoreline devices.

  British Coal (Housing Stock)
  Mr. Wallace
  To ask the Secretary of State for Energy whether he will take steps to require British Coal to oblige purchasers of its housing stock to disclose their identity and actual address to individual tenants; and if he will make a statement.

  Mr. Michael Spicer
  The statutes already provide that this information is made available to or is accessible to all tenants.

  North Sea Oil (Companies' Orders)
  Mr. McLeish
  To ask the Secretary of State for Energy if he will provide a breakdown for the financial years 1986–87 and 1987–88, and an estimate for the year 1987–89 for(a) the number of orders for North sea oil-related work that have been placed by oil companies, (b) a breakdown of these orders by the type of work involved and the cost, (c) the proportion of the orders by volume and cash amount that has gone to United Kingdom-based companies and the proprotion that has gone to overseas companies and (d) the country of origin for the orders that have been placed overseas.

  Mr. Peter Morrison
  Orders greater than £100,000 are reported by offshore oil operators by calendar year.

  The number of orders reported in 1986 and 1987 were 3,274 and 2,961. A breakdown of these orders into type of work, cost and overseas content is contained in the Department of Energy publication "Development of the Oil and Gas Resources of the United Kingdom", a copy of which is held in the House of Commons Library. The United Kingdom content of the value of orders placed in 1986 and 1987 was 82 per cent. of £2·23 billion and 87 per cent. of £1·87 billion. The proportion by volume of orders won by United Kingdom companies for these years is approximately 87 per cent. and 89 per cent. It is not possible to give the overseas element by individual country.

  A rise in the value of orders placed is expected in 1988 and again United Kingdom industry will be well placed to secure a major share of the work available.

  Petrol from Coal
  Dr. Michael Clark
  To ask the Secretary of State for Energy what support his Department is giving to research directed at obtaining petrol from coal and similar solid hydrocarbons.

  Mr. Peter Morrison
  My Department is contributing £3 million to British Coal's coal liquefaction pilot plant project at Point of Ayr colliery in north Wales. Support for British Coal's participation with Germany and Sweden in the International Energy Agency programme on pyrolysis of coal amounts to £0·7 million.

NORTHERN IRELAND

  Scheduled Offences
  Mr. Peter Robinson
  To ask the Secretary of State for Northern Ireland how many suspects have been
  27
  questioned at each of the Royal Ulster Constabulary holding centres in Northern Ireland in the last 12 months regarding scheduled offences under the emergency legislation.

  Mr. Stanley
  A total of 1,851 persons were arrested by the RUC and questioned about alleged terrorist-type offences during the period 1 April 1987 to 31 March 1988.

  Mr. Peter Robinson
  To ask the Secretary of State for Northern Ireland how many people have been charged with scheduled offences under the emergency legislation as a result of interviews held at each of the Royal Ulster Constabulary holding centres in Northern Ireland in the last 12 months.

  Mr. Stanley
  During the period 1 April 1987 to 31 March 1988, a total of 458 persons were charged with terrorist-type offences.

  Mr. Peter Robinson
  To ask the Secretary of State for Northern Ireland how many suspects interrogated about alleged scheduled offences under the emergency legislation at each of the Royal Ulster Constabulary holding centres in the last 12 months have refused to answer any questions at all during interrogation.

  Mr. Stanley
  It is not the practice to provide such information.

  Javelin Anti-aircraft Missiles (Chile)
  Mr. Foulkes
  To ask the Secretary of State for Northern Ireland what advice was sought by Short Brothers from his Department in connection with the possible sale of Javelin anti-aircraft missiles to Chile.

  Mr. Viggers
  It is not the Government's practice to comment on individual export matters.

  Teachers (Absence)
  Mr. Beggs
  To ask the Secretary of State for Northern Ireland if he will take steps to provide a supply or substitute teacher from the first day on which a teacher is absent to infant classes (P1-P3) for all primary schools.

  Dr. Mawhinney
  The position will be considered in a review of substitute provisions presently being carried out by the Department of Education for Northern Ireland.

  Mr. Beggs
  To ask the Secretary of State for Northern Ireland (1) what was the actual cost of first day cover for absence of teachers in Northern Ireland in each of the last three years in(a) primary schools and (b) post primary schools;

  (2) what was the cost of providing first day cover for absent teachers in schools with an average daily enrolment of less than 222 pupils in each of the last three years.

  Dr. Mawhinney
  This information is not readily available and could be obtained only at disproportionate cost.

  Mr. Beggs
  To ask the Secretary of State for Northern Ireland what was the cost of first day cover for approved planned absence of teachers from schools in Northern Ireland in each of the last three years in(a) primary schools and (b) post-primary schools.

  Dr. Mawhinney
  This information is not available in the form requested.

  Pupil-Teacher Ratio
  Mr. Beggs
  To ask the Secretary of State for Northern Ireland what is the present pupil-teacher ratio for(a) primary schools and (b) secondary schools in Northern Ireland.

  Dr. Mawhinney
  Available information relates to the 1986–87 school year and is as follows:

  Ratio

  Primary1

  23·4

  Secondary2

  14·9

  1 Includes nursery classes in primary schools and preparatory departments of grammar schools.

  2 Consists of secondary intermediate schools and secondary departments of grammar schools.

  University of Ulster
  Mr. Beggs
  To ask the Secretary of State for Northern Ireland how many four-year courses at the University of Ulster have been cut to three-year courses over the past five years.

  Dr. Mawhinney
  No such reductions have been made at the University of Ulster since it was formed in October 1984.

  Elections (Non-violence Oath)
  Mr. Beggs
  To ask the Secretary of State for Northern Ireland if he is yet in a position to say when he expects the legislation providing for a non-violence oath for local government elections in Northern Ireland to be introduced.

  Mr. Tom King
  The position remains as set out in my reply to the hon. Member for Belfast, South (Rev. Martin Smyth) on 28 March, at column 313.

NATIONAL FINANCE

  Public Expenditure
  Mr. Allen
  To ask the Chancellor of the Exchequer if he will bring forward proposals to enable Parliament to vote spending authority for all or parts of the half of public expenditure not currently so voted; and if he will make a statement.

  Mr. Major
  Parliament has authorised a number of types of public expenditure to be defrayed in ways other than annual voting of Supply. For example, payments from the national insurance fund are met from contributions and voted money on the authority of the Social Security Act 1975 and subsequent Acts. The United Kingdom's gross contribution to the European Community is paid as a standing service on the Consolidated Fund under the provisions of section 2(3) of the European Communities Act 1972. For nationalised industries Parliament periodically sets borrowing limits. Local authorities raise that part of their expenditure which is not funded by voted grants either through rates or through their own borrowing.

  VAT
  Mr. Barry Field
  To ask the Chancellor of the Exchequer what plans he has for changing local authorities liability to value added tax with regard to the practice and proposals of the EEC.

  Mr. Lilley
  The Government consider that the United Kingdom fully meets its European Community obligations in so far as the VAT liabilities of local authorities are concerned, and is aware of no specific proposals by the European Commission for legislation likely to require major changes in this area. However, if my hon. Friend has a particular point in mind perhaps he could write to me.

  Company Profitability
  Mr. Andrew Mitchell
  To ask the Chancellor of the Exchequer what is his latest estimate of the rise in company profitability in 1987.

  Mr. Major
  The profitability of non-North sea industrial and commercial companies is provisionally estimated to have risen by 1½ percentage points between 1986 and 1987, to 10½ per cent.—the highest level for about 20 years.

  Personal Incomes
  Mrs. Virginia Bottomley
  To ask the Chancellor of the Exchequer if he will make a statement on the current level of real personal disposable income in the United Kingdom.

  Mr. Nicholas Bennett
  To ask the Chancellor of the Exchequer if he will make a statement on the current level of real personal disposable income in the United Kingdom.

  Mr. Major
  Real personal disposable income in 1987 is estimated to have been 15 per cent. higher than in 1979. Further growth is expected this year.

  Balance of Payments
  Mr. Thurnham
  To ask the Chancellor of the Exchequer if he will make a statement about the current balance of payments position.

  Mr. Major
  At Budget time my right hon. Friend the Chancellor of the Exchequer forecast a current account deficit of £4 billion for 1988.

  Energy Use
  Mr. Rowlands
  To ask the Chancellor of the Exchequer what are his Department's target reductions in energy usage for 1988–89; what is his Department's target reduction in electricity usage for lighting in 1988–89; and what investment his Department is planning to make in new energy-efficient lighting equipment in 1988–89 to achieve those target reductions.

  Mr. Brooke
  A 4 per cent. saving has been assumed in the preparation of the Department's overall energy budget. No specific target has been set for the reduction of lighting costs.

  HMSO Publications
  Mr. Fisher
  To ask the Chancellor of the Exchequer how many of Her Majesty's Stationery Office publications are currently in print.
  30
  Mr. Brooke
  There are currently around 43,000 HMSO titles in print.

  Coinage
  Mr. Wheeler
  To ask the Chancellor of the Exchequer when he plans to introduce the new 5p and 10p coins announced on 17 December 1987.

  Mr. Lawson
  The new 5p coin will be issued in June 1990, and the new 10p coin will be issued in June 1992.

  Taxation Statistics
  Mr. Gordon Brown
  To ask the Chancellor of the Exchequer if he will give for 1988–89 the total reduction in income tax, inheritance tax and capital gains tax liability following the Budget that will accrue to the top(a) 0·1 per cent., (b) 1 per cent., (c) 5 per cent. and (d) 10 per cent. of taxpayers and to the bottom (i) 70 per cent., (ii) 60 per cent., (iii) 50 per cent., (iv) 25 per cent., (v) 10 per cent. and (vi) 5 per cent. of taxpayers.

  Mr. Norman Lamont
  [holding answer 21 April 1988]: I regret that information is not available to make reliable estimates in the detail requested for inheritance tax and capital gains tax. However, it is estimated that under the Budget proposals the reduction in capital gains tax on gains realised in 1988–89 by the top 5 per cent. of income tax payers will be rather less than £50 million.

  Estimates of the direct revenue costs in a full year of the income tax changes above indexation are given in the table. Reliable estimates cannot be made for the top 0·1 per cent. of taxpayers since the estimates are based on projections of the 1985–86 survey of personal income.

  Reductions in income tax liability compared with the indexed 1987–88 tax regime

  Range of quantiles1 of the income tax distribution

  Reduction in tax £ million

  Top:

  1 per cent.

  1,880

  5 per cent.

  2,690

  10 per cent.

  3,160

  Bottom2:

  70 per cent.

  1,730

  60 per cent.

  1,310

  50 per cent.

  960

  25 per cent.

  330

  10 per cent.

  100

  5 per cent.

  40

  All taxpayers

  6,050

  1 Based on the distribution of income tax under the proposed 1988–89 tax regime.

  2 Includes 240,000 single people and married couples taken out of tax by increases in allowances over indexation.

THE ARTS

  Museums and Galleries
  Mr. Robert G. Hughes
  To ask the Minister for the Arts what estimate he has of the proportion of artefacts held in museums and galleries currently on public display.

  Mr. Luce
  The proportion of artefacts in museums and galleries on public display varies from institution to
  31
  institution and with the nature of the collection. The National gallery and the Wallace collection, for example, have all of their collection on display. For museums with large reference collections, such as the British museum, the National History museum and the Victoria and Albert museum, only a proportion can be displayed at any one time.

  The Government are keen to improve public access to the treasures in our museums and galleries by wider use of the reserve collections and by loans to other institutions.

  All national museums and galleries arrange access by members of the public to items not on display and all aim to rotate items between the reserve collection and public display. A good deal of material is loaned out already under the terms of the Government indemnity scheme. I would like to see more and have asked the Museums and Galleries Commission to encourage this through its recently formed touring exhibition unit.

  English National Museums
  Mr. Campbell-Savours
  To ask the Minister for the Arts whether he has met the directors of the English national museums to discuss the resource implications of the National Audit Office report on English national museums.

  Mr. Terry Davis
  To ask the Minister for the Arts whether he has met the directors of the English national museums to discuss the resource implications of the National Audit Office report on English national museums.

  Mr. Luce
  I am meeting the director of each national museum and gallery that I sponsor to discuss the institutions corporate plan for the next five years, including the resource implications of their plans and priorities.

  Mr. Haynes
  To ask the Minister for the Arts whether he has met the trades unions concerned to discuss the staffing implications of the National Audit Office report on English national museums.

  Mr. Meale
  To ask the Minister for the Arts whether he has met the relevant trades unions to discuss the staffing implications of the National Audit Office report on English national museums.

  Mr. Luce
  I have no plans to do so. It is for the individual museums and galleries to discuss their priorities and development with their staffs in the context of their corporate plans.

  Victoria and Albert Museum
  Mrs. Clwyd
  To ask the Minister for the Arts whether he will provide additional resources for the Victoria and Albert museum national art library.

  Mr. Sedgemore
  To ask the Minister for the Arts whether he will provide additional resources so that the British museum, the Victoria and Albert museum and the Tate gallery can respond to the report of the National Audit Office on English national museums.

  Mr. Luce
  The allocations to the Victoria and Albert and other national museums and galleries are decided in the light of information provided by the institutions. It is 32
  for the Victoria and Albert trustees to indicate the needs of the national art library and the priority they attach to them.

  Natural History Museum
  Mr. Battle
  To ask the Minister for the Arts how many people have paid for admission to the Natural History museum in the past 12 months.

  Ms. Ruddock
  To ask the Minister for the Arts what have been the administrative costs of admission charges to the Natural History museum in 1987–88.

  Mr. Wareing
  To ask the Minister for the Arts what has been the income from admission charges for the Natural History museum in the past 12 months.

  Mr. Chris Smith
  To ask the Minister for the Arts how many staff were employed on administering admission charges at the Natural History museum in 1987–88.

  Ms. Primarolo
  To ask the Minister for the Arts what has been the income from admission charges at the Natural History museum in the past 12 months.

  Ms. Walley
  To ask the Minister for the Arts what were the costs of setting up admission charges at the Natural History museum in 1987–88.

  Mr. Vaz
  To ask the Minister for the Arts how many staff were employed in administering admission charges at the Natural History museum in 1987–88.

  Mr. Tony Banks
  To ask the Minister for the Arts how many people have paid for admission to the Natural History museum in the past 12 months.

  Mr. Luce
  I refer the hon. Members to my reply to the hon. Members for Eccles (Miss Lestor) and Houghton and Washington (Mr. Boyes) earlier today.

  Museums and Galleries
  Mr. Greg Knight
  To ask the Minister for the Arts how many museum and gallery corporate plans have so far been prepared in the current year.

  Mr. Luce
  All the national museums and galleries that I sponsor have prepared or are preparing corporate plans for the period up to March 1993. So far this year I have received plans from six of the institutions. I am discussing their plans with all of them.

  Touring Companies
  Mr. Patnick
  To ask the Minister for the Arts how he is encouraging touring companies involved in the performing arts in 1988–89.

  Mr. Luce
  I announced a three-year programme of expenditre for the Arts Council last November, which included funds to strengthen touring in Great Britain. I understand that the council will allocate an additional £1·5 million for this purpose in 1988–89.

  In addition, I warmly welcome the council's new touring initiative "Upstart". It represents a partnership between the public and private sectors which will enable productions to be taken first to the regions and then to London, bringing drama of the highest quality to the widest possible audience.

  Imperial War Museum
  Mrs. Virginia Bottomley
  To ask the Minister for the Arts what progress has been made in the redevelopment of the Imperial War museum.

  Mr. Luce
  On 30 March I performed the "topping out" ceremony to mark the formal completion of structural work on stage 1 of the redevelopment of the Imperial War museum's main building in Lambeth road. This £16·7 million building project, which is being financed by a partnership of arts programme funding, donations and the museum's earned income, will more than double public display space and will improve visitor facilities.

  The museum has ambitious and innovative plans for fitting out the new galleries and for redisplaying its collections, for which it is seeking sponsorship to supplement its public funding. I wish it every success.

  When the new galleries open in June 1989, we will have an exciting, modern museum, second to none in its field.

  Business Sponsorship
  Mr. Atkinson
  To ask the Minister for the Arts what is his current estimate of new business sponsorship of the Arts in 1988–89.

  Mr. Luce
  The level of business sponsorship has been steadily increasing, especially following the introduction of the business sponsorship incentive scheme in 1984. The estimate for 1988–89 is that the sponsorship figure will be over £30 million.

  Free Library Service
  Mr. Carrington
  To ask the Minister for the Arts what steps he proposes to take to protect the free basic library service.

  Mr. Luce
  The Government are committed to maintaining the free basic public library service to individuals. Broadly, this comprises reference services available to all, and the lending of books and other printed material to those who live, work or are in full-time education in a library authority's area.

  Byre Theatre, St. Andrews
  Mr. Menzies Campbell
  To ask the Minister for the Arts if he will pay a visit to the Byre theatre, St. Andrews.

  Mr. Luce
  I have no plans at the moment to visit the Byre theatre.

  Theatres
  Mr. Andrew Mitchell
  To ask the Minister for the Arts how many new theatres have been opened in the last three years.

  Mr. Luce
  The Office of Arts and Libraries does not maintain records on this subject. The available information indicates that six new theatres have been opened in the last three years, with a further theatre due to open at the end of the year. In addition, at least six theatres have reopened, and at least six more have been extensively refurbished.

  National Collections
  Mr. Heathcoat-Amory
  To ask the Minister for the Arts what further discussions he has had with the trustees of national collections about the display of items held in store.

  Mr. Luce
  I take every reasonable opportunity to encourage the national museums and galleries to ensure that as much of their collection as is practicable is on display, either in the institutions themselves or on loan to others.

TRANSPORT

  EC (Transport Ministers)
  Dr. Thomas
  To ask the Secretary of State for Transport when he last met his counterparts from the other European Community countries; and what matters were discussed.

  Mr. Channon
  On 25 April at an informal meeting for Transport Ministers. There was general discussion aimed at identifying transport issues likely to be significant during the 1990s.

  London Underground (Escalators)
  Mr. Leighton
  To ask the Secretary of State for Transport if he will issue a direction to London Regional Transport to install transparent skirting boards on escalators on the London underground.

  Mr. David Mitchell
  No. LRT has a statutory duty to have due regard to safety. It is for LRT to make proposals for specific measures which may be necessary in the light of the lessons learnt following the King's Cross fire and the findings of the formal investigation.

  Qualified Drivers (Retesting)
  Mr. David Porter
  To ask the Secretary of State for Transport what recent representations he has had on the periodic retesting of all qualified drivers; whether he now has any plans for such testing; and if he will make a statement.

  Mr. Peter Bottomley
  All newly qualified drivers are strongly encouraged to continue to develop their driving skills and, after gaining experience, to undertake a further driving test such as those organised by the Institute of Advanced Motorists and ROSPA.

  We are quite frequently asked to consider periodic retesting of all drivers. It is not considered that the considerable resources required to retest all drivers on a routine basis would be justified by a significant improvement in the number of road casualties.

  The recently published report of the road traffic law review contains a recommendation that there should be increased use of orders for retesting of those drivers guilty of offences showing serious deficiencies in their driving skills or attitudes. The Government are considering this report.

  Yelloway Motor Services
  Mrs. Dunwoody
  To ask the Secretary of State for Transport whether, in the light of the transcripts of the north-west traffic commissioner's hearing against Yelloway Motor Services plc, a copy of which has been sent to him, he remains satisfied that this company and its holding company are fit and proper to hold a public service vehicle licence; and if he will make a statement.

  Mr. David Mitchell
  The award of public service vehicle operator's licences is a matter for the trafic commissioner. The commissioner for the north-west traffic area decided, following an inquiry on 28 March, to renew the operator's licence for Yelloway Motor Services on condition that the number of vehicles was reduced to 30, no more than eight of which were double-deck vehicles. He also restricted the number of local services which it could operate to 18.

  Sandbank Road Crossing, Towyn
  Ms. Walley
  To ask the Secretary of State for Transport what steps he has taken to satisfy himself that the unprotected Sandbank road rail crossing at Towyn complies with the minimum safety standards for such crossings.

  Mr. David Mitchell
  The railway inspectorate has been consulted about the use of this crossing on a number of occasions. The level crossing was originally provided to connect lands on either side of the railway which were severed when the railway was built. Since the 1930s when the land was developed for holiday caravans and as an amusement park the use of the crossing has expanded and today it has during the holiday season a high pedestrian use. Despite the growth in use the crossing is considered to meet the minimum acceptable safety standard.

  The statutory requirement upon British Rail is to maintain gates normally closed across the road. In addition, special pedestrian gates have been provided and there are signs warning pedestrians to beware of trains. The Department has no powers to direct that changes should be made to the crossing, but it is understood that the possibility of providing a footbridge is being reconsidered by British Rail and the local authority.

SOCIAL SERVICES

  Personal Health Information
  Mr. Cohen
  To ask the Secretary of State for Social Services what progress he has made with the order which establishes a code of confidentiality in relation to personal health information; when he expects the consultation period concerning the wording of the order to be complete; what major points are hindering its finalisation; when he expects to announce the date when individuals can have access to their own health information; and whether he will make a statement.

  Mrs. Currie
  Confidentiality of personal health information is protected by professional codes of ethics. A code embracing the principles of these professional codes without displacing them was requested by an interprofessional working group of health care professional interests. The group has not yet been able to secure agreement on a code from the professions represented on the group who would be responsible for 36
  implementing it. Before a code could be introduced the Department would wish to consult with health authority management and other bodies with an interest. The code is about the protection against the disclosure of information to others. It does not concern access by individuals to their own information.

  Private Nursing Homes
  Rev. Martin Smyth
  To ask the Secretary of State for Social Services whether private nursing homes and residential homes for the elderly were required to provide occupational therapy as well as nursing care before being recognised; and if he will make a statement.

  Mrs. Currie
  A person registered under the Registered Homes Act 1984 in respect of a nursing home is required to make suitable arrangements for the daily activity of residents, according to their needs and capacities and occupational therapy services may be available from the local social services authority or the health authority.

  A person registered under the Act in respect of a residential care home also has to make such arrangements. Any nursing care required in residential care homes should be provided by the local community nursing service or under their supervision.

  Housing Benefit
  Mr. David Nicholson
  To ask the Secretary of State for Social Services when water charges were excluded from the scope of housing benefit; and why.

  Mr. Portillo
  Help with water charges was previously provided through the supplementary benefit scheme, in some cases paid by the local authority along with housing benefit under a special administrative arrangement. This separate provision for water rates ceased from 11 April this year as part of the simplification of the benefit system. However, when setting income support levels, account was taken of the overall amount spent in supplementary benefit on water charges.

  Supplementary benefit claimants who were entitled to help with water rates, however paid, will, where necessary, receive transitional protection which took account of the water rates element.

  Day Patients
  Mr. Tony Lloyd
  To ask the Secretary of State for Social Services what is the day-patient attendance rate for the over 65s in each north-west health authority and in Greater London.

  Mrs. Currie
  Information, including the age of patients admitted to a hospital bed for treatment as a day case and regular day admissions, will be available centrally for the first time later this year. For patients using NHS day care facilities, the specialty function classification will provide some indication of the age groups using the facility.

  Family Policy Studies Centre
  Mr. Frank Field
  To ask the Secretary of State for Social Services if, when the director of the Central Statistical Office places in the Library copies of the correspondence the Government have had with the Family Policy Studies Centre, the replies from the centre will be lodged at the same time.
  37
  Mr. Portillo
  Copies of all the relevant correspondence have, with the authors' agreement, been placed in the Library.

  Supplementary Benefit
  Mr. Frank Field
  To ask the Secretary of State for Social Services what benefits his Department treats as being subsumed under the classification of supplementary benefit.

  Mr. Portillo
  Prior to the reforms, supplementary benefit comprised payments of supplementary pension or allowance, single payments when these were made and, where relevant, housing benefit supplement. Although technically supplementary benefit, housing benefit supplement was calculated and paid by local authorities as a top-up to housing benefit.

  Social Security Legislation (Effects)
  Ms. Ruddock
  To ask the Secretary of State for Social Services what assessment he has made of the effects of the new social security legislation in its first month of operation.

  Mr. Scott
  Final conclusions must await the outcome of the monitoring mentioned in my reply to the hon. Member for Derby, South (Mrs. Beckett) on 22 April, at column 602.

  Funerals
  Mr. Shersby
  To ask the Secretary of State for Social Services if he will make an estimate of the number of instances in which the total cost of a funeral has been paid from funds provided by social security offices since the abolition of the death grant in April 1987.

  Mr. Portillo
  A total of 18,295 full awards of funeral payments have been made in the period 6 April 1987 to 8 April 1988.

  Form AG1
  Ms. Richardson
  To ask the Secretary of State for Social Services how many pages in length is form AG1 which is required to be completed by patients wishing to obtain financial assistance with National Health Service prescriptions, dental treatment, and spectacles; how long he estimates that it would take an ably sighted person to complete it; how long it takes his Department's staff to scrutinise a form; how many staff are engaged in this operation; how much each form and explanatory notes costs to produce and print; and whether he has any plans to simplify form AG1.

  Mr. Portillo
  Form AG1 needs to be completed only by people applying for help with NHS charges and the cost of travel to hospital for treatment if they are not already automatically entitled to such help because they are receiving income support or family credit. The form covers a variety of possible situations, so that many claimants will need to fill in only a limited number of its parts. How many of the questions have to be answered and the length of time it will take to complete the form, will depend on the circumstances of each individual claimant. Similarly this will determine the length of time taken in scrutinising the forms in the Department.
  38
  Form AG1 is one of a series of new personal claim forms based on extensive research which showed that the key factor in how people deal with forms is how clear or complicated individual pages are, rather than the overall length of the form. It is designed to be as comprehensive as possible and to minimise the need for further inquiries which were often necessary with the old forms. Form AG1 also replaces a number of separate forms which previously had to be completed to claim help with individual NHS charges.

  A total of 315 staff are currently engaged on the assessment of claims on form AG1. The cost of each form, together with the accompanying explanatory notes and reply-paid envelope, is 15·1p.

  We have no plans at present to modify the form, but will be keeping it under review in the light of practical experience.

  Pension Age and Retirement
  Sir David Price
  To ask the Secretary of State for Social Services (1) when, pursuant to his answer to the hon. Member for Eastleigh on 24 November,Official Report, columns 181–82, he expects to conclude the study of the cost and economic implications of changes in pension age which started in 1986; and if he will publish the conclusions;

  (2) what progress is being made in bringing about the decade of retirement proposed in the Green Paper entitled "Reform of Social Security," Cm. 9518, of June 1985.

  Mr. Scott
  At present I have nothing further to add to my replies to my hon. Friend on 24 November at columns 181–82, except to emphasise that all the various options for change are being considered.

  Health Authorities (Disputes)
  Mr. Macdonald
  To ask the Secretary of State for Social Services (1) whether he has any plans to reform the procedures governing disputes between the British Medical Association and local health authorities; and if he will make a statement;

  (2) how many employment disputes are current between local health authorities and the British Medical Association; what has been the average time for settlement of such disputes over the past five years; and what is the average cost to the Health Service in locum salaries, ex gratia settlements and administrative costs of such disputes.

  Mr. Newton
  Procedures governing disputes between health authorities and recognised NHS staff organisations are a matter for each individual health authority. The General Whitley Council is responsible for general provisions relating to such procedures. I understand it has no plans at present to revise these provisions. However, the council is currently reviewing its agreement on procedures relating to individual employee grievances with a view to possible changes.

  The detailed information requested is not collected centrally.

  Autistic Children
  Mr. Barry Jones
  To ask the Secretary of State for Social Services what special measures he will take to assist
  39
  single parents of children who are autistic and mentally handicapped where such parents find themselves in a poverty trap under his Department's new regulations.

  Mr. Scott
  Under the reformed structure of income-related benefits introduced in April we have removed the anomaly whereby earning more can actually make a low-paid family in full-time work worse off because of benefit withdrawal. This removes one of the worst features of the poverty-trap.

  Mr. Barry Jones
  to ask the Secretary of State for Social Services (1) what is the annual estimated cost of caring for a nine-year-old autistic and mentally handicapped, hyperactive child in (a) a hospital and (b) a registered home;

  (2) What payments would be made weekly to foster parents who would care for a nine-year-old autistic, mentally handicapped, hyperactive child;

  (3) what payments a married woman would receive under income support when caring for her nine-year-old mentally handicapped, hyperactive, autistic child, assuming her husband earned £20,000 per annum; what back pay on income support she would be eligible for; and if he will make a statement.

  Mr. Scott
  The cost of caring for any handicapped person either in a hospital or residential care setting will vary according to his or her individual needs. Costs of care will be affected by such factors as treatment and support provided, day time occupation and leisure activities.

  A boarding-out allowance can be paid by a local authority in respect of a child in care placed with foster parents. In addition, if the appropriate eligibility criteria are satisfied a foster parent can qualify for attendance allowance and invalid care allowance, and receive mobility allowance on behalf of the child.

  It is unlikely that a woman in these circumstances would be entitled to supplementary benefit, and the question of back pay would not arise. However, if the hon. Member is referring to a specific case, and provides me with more details of it, I shall write to him.

  Pensioners
  Mr. Barry Jones
  to ask the Secretary of State for Social Services when he proposes to reply to the letter from the hon. Member for Alyn and Deeside dated 15 December 1987 regarding the British Pensioners and Trade Union Action Association—Wales Pensioners.

  Mr. Portillo
  My noble Friend wrote to the hon. Member on 5 May 1988.

  Waiting Lists
  Mr. Frank Field
  To ask the Secretary of State for Social Services if he will list the research studies referred to in paragraphs 5 and 8 of his Department's statistical bulletin of 2 June 1988 on hospital waiting lists and in the explanatory notes attached to the bulletin, indicating when those studies were carried out and the district health authorities examined by the researchers concerned.

  Mr. Newton
  The principal studies referred to are listed in the table and provide the information requested.

  1. Davidge, M., Harley, M., Vickerstaff, L., Yates, J. (1987). "The anatomy of large inpatient waiting lists", Lancet, 1, 794–6.

  40

  2. Donaldson, L., Maratos, J. I., Richardson, R. A. (1984). "Review of an orthopaedic in-patient waiting-list", Health Trends, 16, 14–15.

  3. Lee, A., Don, B., Goldacre, M. J. (1987). "Waiting list statistics. II: an estimate of inflation of waiting list length", British Medical Journal, 295, 1197–1998.

  4. Lourie, J. A. (1978). "Notes on an orthopaedic waiting-list", British Journal of Clinical Practice, 32, 224–5.

  5. Porter, K. M. (1985). "Orthopaedic audit—review of inpatient waiting lists", British Medical Journal, 291, 1216–1217.

  6. Yates, J. (1987).Why Are We Waiting?, Oxford 11–12.

  Mr. Robin Cook
  To ask the Secretary of State for Social Services (1) if he will give for each regional health authority, district health authority and special health authority, the number of qualified medical secretaries contracted from agencies;

  (2) how much has been paid by the National Health Service to agencies for contracting qualified medical secretaries for each regional health authority, district health authority, special health authority and for England as a whole in the last year for which figures are available.

  Mr. Newton
  I regret that this information is not held centrally.

  Social Security Reform
  Mr. Boswell
  To ask the Secretary of State for Social Services what is the first-year cost of transitional protection(a) under the social security changes implemented in April and (b) under the further modifications he announced on 27 April.

  Mr. Scott
  Estimates of the information requested are(a) rather more than £200 million and (b) about £100 million.

  Pathology Laboratories
  Mr. Nellist
  To ask the Secretary of State for Social Services if, pursuant to the reply to the hon. Member for Coventry, South-East on 3 May, he will place in the Library a copy of the report commissioned by the manpower planning advisory group on the staffing of pathology laboratories.

  Mr. Newton
  This report has not yet been published. A copy will be placed in the Library when the report is issued to health authorities and other interested parties.

  Day Centres (Disabled Workers)
  Mr. Alfred Morris
  To ask the Secretary of State for Social Services what consultation he has had with the local authority associations on the implications for local authorities of the social security changes effective from 11 April in regard to physically disabled people working in day centres; how many local authorities have had to abolish payments to disabled workers as an alternative to closing day centres down; and if he will make a statement.

  Mr. Scott
  Disabled people who receive income support and who are entitled to the disability premium are now entitled to a higher (£15) disregard if they work part time. Prior to 11 April they were entitled to a £4 disregard. Additionally, those whose earning capacity is reduced to 75 per cent. or less of what they could otherwise earn, may work an unlimited number of hours and remain entitled to benefit. We have not consulted local authorities on the
  41
  implications of these changes, which are entirely beneficial to the individual claimant. We are not aware of any local authority abolishing payments to disabled workers as a result of these changes.

  Doctors and Dentists (Merit Awards)
  Mrs. Virginia Bottomley
  To ask the Secretary of State for Social Services whether he plans to implement the recommendations on merit awards of the review body on doctors' and dentists' remuneration.

  Mr. Newton
  The report of the Review Body on Doctors' and Dentists' Remuneration suggests a number of changes to the distinction award system, and urges the health departments and the profession to consider whether the system can be improved in these or other ways. We are considering the implications of the recommendations which we will wish to discuss with the profession.

  Cosmetic Surgery
  Mr. Frank Field
  To ask the Secretary of State for Social Services what proportion of hospital and community health services expenditure was attributable to cosmetic surgery in each of the last five years.

  Mr. Newton
  I reget that this information is not held centrally.

  Withington Hospital (Detoxification Unit)
  Mr. Alfred Morris
  To ask the Secretary of State for Social Services if he will make a statement on the closure of the detoxification unit at Withington hospital, Manchester, and the proposed withdrawal of the inpatient facility at the hospital's alcoholism treatment unit.

  Mrs. Currie
  [holding answer 27 April 1988]Responsibility for the provision of patient services at Withington hospital, Manchester is a matter for South Manchester health authority in conjunction with the North Western regional health authority. I have made inquiries and I understand that discussions on the future of the unit are at a very early stage. No decisions will be made on major changes in the service for alcoholism unless and until it can be shown that adequate replacement services can be provided at alternative locations.

  "From Black to White"
  Mr. Wareing
  To ask the Secretary of State for Social Services (1) how many copies of the recent dental postgraduate medical video entitled "From Black to White" were made and distributed; at whom they were specifically targeted; and what was the nature of the final distribution;

  (2) what instructions he has given to dental reference officers in respect of the new treatment philosophy outlined in the dental video entitled "From Black to

  1980–81

  1986–87

  Change

  cash £ million

  percentage

  cash £ million

  percentage

  cash £ million

  percentage

  Total

  98·2

  147·3

  Medical Research Council

  92·9

  94·6

  137·6

  93·4

  +44·7

  +48

  NHS Locally Organised Research

  5·3

  5·4

  9·7

  6·6

  +4·4

  +83

  42
  White"; if his Department has issued any guidance in relation to the use of the dental probe in examinations as recommended in the video; and if he will make a statement;

  (3) what was the total cost of producing and distributing the dental postgraduate medical video entitled "From Black to White"; and if this cost will be met out of additional resources or out of existing allocations to postgraduate dental education.

  Mrs. Currie
  [holding answer 29 April 1988]The video "From Black to White" is the first in a series being produced by the British Postgraduate Medical Federation on behalf of the Department as a distance learning programme for the continuing postgraduate education of dentists. It is specifically targeted at those who do not regularly attend postgraduate training courses. Some 13,150 copies were made and are being distributed to practices providing treament under NHS general dental services in Great Britain at a cost of approximately £100,000.

  The programme is being funded through additional money specially allocated to help in implementing the report of the committee of inquiry into unnecessary dental treatment was concerned that dentists should be encouraged to adopt a preventive approach. Whilst, as the committee pointed out, criteria for clinical intervention are primarily a matter for the profession the Department is taking a number of initiatives, of which production of the new video series is one, to encourage dentists to undergo regular updating training.

  Dental reference officers are provided with suitable training to enable them to keep up to date with current clinical developments including minimal intervention techniques and methods of prevention. They have also been given guidance on the use of probes in dental examinations.

  Medical Research
  Ms. Harman
  To ask the Secretary of State for Social Services if he will give the latest available figures for(a) the comparative levels of spending on medical research and general medical and clinical services on the National Health Service, and (b) the percentage of spending on medical research by the Medical Research Council and the National Health Service and the percentage change in these figures since 1980–81.

  Mrs. Currie
  [holding answer 4 May 1988]: (a) In 1986–87, the latest year for which the figures are available, the total expenditure on medical research programmes funded by the Department of Health and Social Security, including the National Health Service locally organised research scheme amounted to £51·8 million. Total spending on general medical and clinical services in the same year amounted to £10,317·2 million.

  (b) The table shows the information available.
  43
  The Medical Research Council receives its grant-in-aid from the Department of Education and Science.

  Ms. Harman
  To ask the Secretary of State for Social Services if he will give the latest available figure for the number of individual research programmes and projects supported by the Medical Research Council and National Health Service; and what is the percentage change since 1980–81.

  Mrs. Currie
  [holding answer 4 May 1988]: In January 1987, the latest date for which an estimate is available, approximately 850 research projects were being supported under the NHS locally organised research scheme. A comparable figure is not available for 1980–81.

  I understand that information about the number of individual research programmes and projects supported by the Medical Research Council, which is funded by grant-in-aid from the Department of Education and Science, is included in the council's annual reports, copies of which are available in the Library.

TRADE AND INDUSTRY

  Enterprise Initiative
  Mr. McAllion
  To ask the Chancellor of the Duchy of Lancaster what is the number of enterprise initiative consultancies sponsored by his Department in the United Kingdom as a whole; and how many companies in the Tayside region will be eligible for such consultancy work.

  Mr. Kenneth Clarke
  From the launch of the enterprise initiative on 13 January to 22 April, we approved 1,649 applications for assisted consultancy following an initial business review by an enterprise counsellor.

  All private sector manufacturing and service firms, in the Tayside region as elsewhere, with under 500 employees (or which are members of groups with under 500 employees) are eligible for such consultancy projects.

  Electrical Safety Campaign
  Mr. Thurnham
  To ask the Chancellor of the Duchy of Lancaster if he will make a statement about the electrical safety campaign launched on 25 April.

  Mr. Butcher
  The electrical safety campaign launched on 25 April is aimed at reducing the numbers of people killed or seriously injured each year by electrocution or fires caused by electrical faults. The main focus of the campaign is to encourage people to install and use residual current devices (RCDs). These are potentially life-saving devices that operate by switching off the current almost immediately when they detect a fault. The campaign will run for 12 months and has started with the publication of a new consumer leaflet, the distribution of a promotional video, the opening of an RCD "helpline" and information bureau, and various other promotional techniques.

  Managed Workshops
  Mr. Bevan
  To ask the Chancellor of the Duchy of Lancaster what progress he has made on the introduction of managed workshops.

  Mr. Bowis
  To ask the Chancellor of the Duchy of Lancaster when he expects to announce the completion of the first managed workshop.
  44
  Mr. Kenneth Clarke
  We are inviting companies to "adopt" workshops in inner city areas by investing directly in the projects or by providing land, buildings or experienced managers to give business support on site. English Estates is looking for as much private sector involvement as possible and is currently investigating around a dozen projects in a variety of locations. The first project is expected to be ready for occupation early in 1989.

  Inner Cities
  Mr. Steen
  To ask the Chancellor of the Duchy of Lancaster what specific steps he is taking to encourage business expansion and increased employment in the inner cities.

  Mr. Alexander
  To ask the Chancellor of the Duchy of Lancaster what action he is taking to increase employment in the inner cities.

  Mr. Kenneth Clarke
  Britain's economic success is the key to encouraging business expansion and employment in inner cities. Government action to encourage enterprise and job opportunities in these areas covers a range of programmes and initiatives amounting to some £3,000 million in 1988–89. Specific measures to encourage business expansion include additional support for inner city small firms under the enterprise initiative, extra small firms offices, a major new programme run by English Estates to provide managed workshop space and regional enterprise grants to support innovation and investment for very small firms (under 25 employees) in development areas. Specific employment measures include more MSC and employment service staff working in local communities advising and helping residents, new information points to guide people on training and jobs, new measures to involve employers in training and training projects aimed at specific job opportunities promoted by inner city task forces in co-operation with organisations such as the Industrial Society.

  European Community (Ministerial Meetings)
  Dr. Thomas
  To ask the Chancellor of the Duchy of Lancaster when he next expects to meet his counterparts from other EEC states; and what matters he hopes to discuss.

  Mr. Kenneth Clarke
  My colleagues and I regularly meet our counterparts from other EC member states, in meetings of the Council of Ministers, in bilateral discussions, and in other international fora. At present I expect to attend the Industry Council planned for 27 May and 24 June, which is expected to discuss the future of the European Coal and Steel Community's steel production quota regime, and the Research Council on 29 June, which will discuss the Community's R and D policies. I also expect to meet Community colleagues at the EUREKA conference in Copenhagen on 15–16 June.

  Aerospace
  Mrs. Virginia Bottomley
  To ask the Chancellor of the Duchy of Lancaster what was the trade balance of the aerospace industry in(a) 1987 and (b)

  Mr. Atkins
  The positive trade balance of the aerospace industry rose from £1·9 billion in 1986 to £2·4 billion in 1987.

  Afcor Investments
  Mr. Campbell-Savours
  To ask the Chancellor of the Duchy of Lancaster whether he intends to prosecute the directors of Afcor Investments for employing unlicensed dealers in breach of the Prevention of Fraud (Investment) Act 1958.

  Mr. Maude
  My Department is considering the affairs of Afcor Investments Ltd. If the hon. Member has any information suggesting that dealers at Afcor were unlicensed he should supply it.

  VR Shipping
  Mr. Mullin
  To ask the Chancellor of the Duchy of Lancaster, pursuant to his answer of 3 May to the hon. Member for Sunderland, South, what procedures constitute the full standard investigations carried out into the credit worthiness of companies by the Export Credits Guarantee Department; and what collateral was provided by VR Shipping on its ferry contract.

  Mr. Kenneth Clarke
  The investigation by the ECGD into the creditworthiness of VR Shipping comprised the obtaining and analysis of information on the company's financial background and current standing. Collateral was provided by a mortgage on each ship and the provision of third party guarantees.

AGRICULTURE, FISHERIES AND FOOD

  Meat Processing Industry
  Mr. Teddy Taylor
  To ask the Minister of Agriculture, Fisheries and Food what steps are being taken by the EEC to ensure that the meat processing industry secures meat at prices competitive with imports; and if he will make a statement.

  Mr. Donald Thompson
  In January 1988 the Commission reintroduced sales of bone-in hindquarters from intervention for processing and reduced the price of forequarter meat by 10 per cent.

  In February the Commission gave the following undertaking to the Agriculture Council:
  "The Commission recognises the need to ensure that additional supplies of beef are available to the community meat processing industry on terms that enable Community production to be competitive with products from other sources. It will make additional quantities of meat available to processors from intervention stocks on terms which will take into account, as far as possible, the prices and other conditions which existed previously."

  As far as we are aware, the Commission's sales policy in respect of meat for the processing industry has not given rise to problems of competition, except as regards high meat content canned beef products. My officials have made representations to the Commission services urging them to honour the undertaking given to the Council by making meat available to this part of the processing sector

  1988

  1986

  ecus/l00kg

  £/100kg

  ecu/100kg

  £/100kg

  Young Bulls

  U2

  246·242

  174·97

  295·2

  187· 64

  46
  at prices which will enable it to compete with imports from third countries. We currently await the Commission's reaction.

  Food (Disposal and Destruction)
  Mr. Teddy Taylor
  To ask the Minister of Agriculture, Fisheries and Food what estimate he has made of the amount of cash to be used by Her Majesty's Government from their own resources on the disposal and destruction of food in the current year; and what were the comparable figures in each of the previous five years.

  Mr. MacGregor
  Expenditure in the United Kingdom on disposal and destruction of food1 is as follows:

  Year

  £ million

  1988–89

  702

  1987–88

  694

  1986–87

  867

  1985–86

  650

  1984–85

  725

  1983–84

  657

  Note 1Comprises export refunds (net of MCAs), subsidies for internal disposals, losses on sale out of intervention and depreciation of stocks.

  This expenditure is reimbursed from the Community budget to which the United Kingdom is a net contributor. The Exchequer therefore funds all the United Kingdom's disposal costs and a proportion of those in other member states.

  Beef
  Mr. Teddy Taylor
  To ask the Minister of Agriculture, Fisheries and Food what is the current total of beef in private and public intervention; and what were the comparable figures in mid-1986.

  Mr. Donald Thompson
  A note setting out the volume of public intervention stocks and stocks under aided private storage in the EC and the United Kingdom, which includes figures for beef, is deposited in the Library of the House and is updated on a monthly basis.

  Mr. Teddy Taylor
  To ask the Minister of Agriculture, Fisheries and Food what are the current common support levels for beef, expressed in £ sterling; and what were the comparable figures in mid-1986.

  Mr. Donald Thompson
  The following are the common price levels in ecus per 100kg at which forequarters are currently bought into intervention and the levels at which they were bought in mid-1986. The sterling equivalents appear in brackets, but do not represent common price levels since the representative (or green) rate used to convert ecus into sterling produces the support level obtained in the United Kingdom only. The actual sterling price paid in the United Kingdom is lower than those shown because a deduction is made proportionate to the value of the variable premium, currently £18·66 per 100kg and £16·69 per 100kg in 1986. The qualities shown are not all bought in each member state.
  47

  1988

  1986

  ecus/100kg

  £/100kg

  ecu/l00kg

  £/100kg

  U3

  242·860

  172·56

  292·8

  186·64

  R2

  243·490

  173·01

  283·2

  180·01

  R3

  240·002

  170·53

  280·0

  177·98

  O2

  225·713

  160·38

  264·8

  168·31

  O3

  222·283

  157·94

  160·8

  165·77

  Steers

  U2

  253·062

  179·81

  284·0

  180·52

  U3

  249·586

  177·34

  280·0

  177·98

  U4

  242·634

  172·40

  272·0

  172·89

  R2

  239·641

  170·28

  268·0

  170·35

  R3

  232·674

  165·33

  260·0

  165·26

  O3

  220·897

  156·96

  240·0

  162·72

  Radioactivity (Skipton)
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food if he will place in the Library the results of the surveys of deposition of radioactivity in the Skipton area of Yorkshire following the Chernobyl fallout.

  Mr. Donald Thompson
  [pursuant to his reply, 15 March 1988, c. 525]: The Institute of Terrestial Ecology has now completed its further study of radio-caesium deposition in north Yorkshire and copies of its report are being placed in the Library of the House today.

EMPLOYMENT

  YTS
  Mr. Paice
  To ask the Secretary of State for Employment, of those YTS managing agents who received provisional ATO status at the end of their first monitoring period,(a) how many were awarded full status after a further monitoring period, (b) how many withdrew application, (c) how many were rejected after a further monitoring period and (d) what other outcomes there were.

  Mr. Cope
  Of the 1,715 managing agents who had been awarded provisional ATO status after the first monitoring period (which ended on 31 July 1987), 1,353 had been awarded full status, 90 had withdrawn, and seven had been rejected, by 31 March 1988. Two hundred and sixty-five decisions are awaited, most of which will be taken by mid-May.

  Mr. Paice
  To ask the Secretary of State for Employment, of those YTS managing agents who applied for ATO status, how many, at the end of the first monitoring period,(a) received full status, (b) received provisional status, and (c) were rejected; and of those that were rejected at area manpower board level, how many were awarded provisional status on appeal to the youth training board.

  Mr. Cope
  Of the 3,184 YTS managing agents who applied for ATO status by 30 September 1986, 1,393 were awarded full status, 1,712 provisional status, and 14 were rejected, by 31 July 1987. In addition, 64 withdrew, and one decision is still outstanding.

  There is no right of appeal to the youth training board against rejection, but 12 rejected organisations requested the chairman of the MSC to review their cases. After
  48
  taking advice from a panel of area manpower board chairmen, the chairman decided to award provisional status in three cases.

  Mr. Paice
  To ask the Secretary of State for Employment how many YTS managing agents were under contract to the Manpower Services Commission on 1 April 1986; and, of these, how many applied for approved training organisation status.

  Mr. Cope
  Contracts between the Manpower Services Commission and managing agents are agreed locally. There is no central record of the number of such contracts at 1 April 1986. However, all managing agents with contracts to provide YTS from 1 April 1986 were required to become approved training organisations by 30 September 1986. The number of such applications was 3,184.

  Tourism (Grants)
  Mr. Warren
  To ask the Secretary of State for Employment what is the policy of Her Majesty's Government in relation to requiring those receiving grant under tourist board allocations to return the sums granted under certain circumstances; and if he will make a statement.

  Mr. Lee
  In assisting tourism projects under section 4 of the Development of Tourism Act 1969, the English tourist board has made increasing use of grants which are repayable if the project achieves minimum performance targets. I have asked the board to seek to increase further its use of repayable forms of assistance.

  The ETB may also reclaim assistance paid in cases where the offer conditions have been breached. In the 1987–88 financial year ETB agreed to seek reclaim of assistance totalling £263,000.

  Thorpe Hall, Peterborough
  Mr. Moss
  To ask the Secretary of State for Employment if he will make a statement on progress of the drystone wall being constucted under the community programme around Thorpe hall in Peterborough.

  Mr. Nicholls
  I understand that work on the drystone wall under construction at Thorpe hall is progressing satisfactorily, and it is expected that the wall will be completed in June this year.

  Blind and Deaf Persons
  Mr. Leighton
  To ask the Secretary of State for Employment what information he has as to the numbers of(a) blind and (b) deaf people in the working population.

  Mr. Lee
  The only information available which relates specifically to these categories of disability is for those who have chosen to register as disabled under the terms of the Disabled Persons (Employment) Act 1944. In April 1987 the register included 6,768 blind people and 15,541 deaf people.

  Docklands (Unemployment Characteristics)
  Mr. Leighton
  To ask the Secretary of State for Employment what are the characteristics of the unemployed in the urban development area of London docklands, including age, gender and previous employment.

  Mr. Lee
  The following information is in the Library. The tables show the number of male and female unemployed claimants, by age, in each of the London boroughs which cover the London docklands area, on the latest available date, 14 January 1988. Information on the nature of previous employment of unemployed claimants is unavailable.

  Unemployed claimants

  Males

  Females

  Local authority area—Newham

  Under 17 years

  95

  94

  17 years

  239

  190

  18 years

  309

  229

  19 years

  379

  277

  20 to 24 years

  2,068

  924

  25 to 29 years

  1,702

  541

  30 to 34 years

  1,261

  308

  35 to 39 years

  929

  220

  40 to 44 years

  766

  216

  45 to 49 years

  721

  288

  50 to 54 years

  802

  232

  55 to 59 years

  800

  238

  Over 60 years

  353

  6

  Total all ages

  10,424

  3,763

  Local authority area—Tower Hamlets

  Under 17 years

  67

  75

  17 years

  188

  152

  18 years

  204

  158

  19 years

  255

  159

  20 to 24 years

  1,576

  766

  25 to 29 years

  1,716

  445

  30 to 34 years

  1,398

  214

  35 to 39 years

  947

  146

  40 to 44 years

  796

  209

  45 to 49 years

  1,035

  226

  50 to 54 years

  1,196

  207

  55 to 59 years

  1,188

  233

  Over 60 years

  413

  18

  Total all ages

  10,979

  3,008

  Local authority area—Southwark

  Under 17 years

  100

  78

  17 years

  219

  148

  18 years

  271

  220

  19 years

  409

  265

  20 to 24 years

  2,820

  1,314

  25 to 29 years

  2,615

  787

  30 to 34 years

  1,736

  359

  35 to 39 years

  1,255

  302

  50

  Unemployed claimants

  Males

  Females

  40 to 44 years

  1,006

  334

  45 to 49 years

  914

  294

  50 to 54 years

  832

  295

  55 to 59 years

  896

  309

  Over 60 years

  400

  20

  Total all ages

  13,473

  4,725

  Docklands (Restart Interviews)
  Mr. Leighton
  To ask the Secretary of State for Employment what is the average length of a restart interview in the three London docklands boroughs.

  Mr. Lee
  Surveys have shown that the average length of a restart interview is about 30 minutes. Separate information is not available for specific areas. The length of a restart interview depends on the circumstances of the unemployed person.

  Black Employees
  Mr. Janner
  To ask the Secretary of State for Employment whether he will take steps to seek the remedy of inequality of treatment accorded to black employees, as recommended in the report of the Select Committee on Employment on discrimination in employment (HC. 1986–87.180.)

  Mr. Nicholls
  The Government's response to the recommendations of the Select Committee report is set out in the "First Special Report on Discrimination In Employment: Observations by the Government on the First Report of the Committee in Session 1986–87," which was published by the Committee on 16 December 1987.

  Mines and Quarries Act 1954
  Mr. Illsley
  To ask the Secretary of State for Employment whether he has any proposals to introduce legislation to amend the Mines and Quarries Act 1954; and if he will make a statement.

  Mr. Nicholls
  Last December my Department issued a consultative document entitled "Restrictions on Employment of Young People and the Removal of Sex Discrimination in Legislation", which put forward a number of proposals for amending, among other legislation, the Mines and Quarries Act 1954. The Government are giving careful consideration to the responses they have received. Also the Health and Safety Commission, in consultation with the employers and unions, is engaged in drawing up a comprehensive series of regulations and codes under the Health and Safety at Work etc. Act 1974 which is intended to replace the Mines and Quarries Act 1954 and associated legislation. The new legislation is designed to maintain and improve standards of health and safety and take account of technological developments.

  Benefits (Eligibility)
  Mr. McLeish
  To ask the Secretary of State for Employment if he will provide details for each region of the number of people referred to the benefit authorities because of doubts about their eligibility which have
  51
  stemmed from a request by them for a lowest weekly wage or salary, before stoppages, which is considered excessive or unrealistic.

  Mr. Lee
  The information requested is not available and could be obtained only at disproportionate cost.

  1986–87

  Employment service region

  June

  July

  August

  September

  October

  November

  December

  January

  February

  March

  London and South East

  8,126

  18,183

  21,676

  14,836

  29,361

  31,846

  25,906

  35,440

  42,812

  31,281

  South West

  1,667

  5,312

  4,862

  5,084

  8,281

  7,444

  4,261

  12,369

  9,438

  5,560

  West Midlands

  4,567

  17,061

  4,750

  12,960

  23,595

  21,742

  25,783

  14,357

  27,255

  18,162

  East Midlands

  3,155

  8,073

  6,325

  8,331

  13,810

  15,488

  7,851

  22,911

  17,457

  9,851

  Yorkshire and Humberside

  2,831

  10,626

  9,837

  11,065

  16,924

  15,003

  9,548

  23,539

  20,032

  15,523

  North West

  11,364

  22,752

  19,176

  20,498

  28,149

  26,573

  14,199

  34,968

  24,105

  14,807

  Northern

  6,177

  9,810

  3,298

  8,763

  12,985

  12,411

  6,730

  16,228

  11,099

  8,597

  Wales

  4,446

  6,536

  5,031

  5,722

  8,925

  8,273

  4,197

  13,690

  10,952

  7,508

  Scotland

  9,102

  12,034

  11,374

  11,714

  17,162

  16,482

  8,354

  24,663

  21,381

  15,298

  1987–88

  Employment service region

  April

  May

  June

  July

  August

  September

  October

  November

  December

  January

  February

  March

  London and South East

  18,715

  27,506

  34,765

  49,733

  40,793

  38,726

  56,187

  48,806

  37,538

  70,415

  43,861

  42,463

  South West

  4,637

  7,124

  9,354

  12,582

  11,419

  10,488

  14,810

  13,314

  9,978

  13,341

  11,611

  10,315

  West Midlands

  10,775

  18,026

  23,744

  30,108

  22,972

  20,857

  25,780

  21,503

  18,652

  24,472

  22,617

  20,367

  East Midlands

  8,958

  12,801

  20,803

  23,324

  17,681

  17,157

  23,212

  20,421

  14,062

  16,927

  16,701

  15,190

  Yorkshire and Humberside

  8,452

  12,510

  15,534

  23,552

  20,400

  19,877

  28,466

  26,257

  20,792

  23,408

  18,591

  16,675

  North West

  12,848

  22,596

  29,079

  39,357

  30,735

  27,512

  39,483

  32,416

  24,563

  33,387

  30,982

  29,956

  Northern

  6,683

  11,741

  13,774

  18,588

  14,478

  14,309

  19,549

  14,908

  11,656

  14,654

  13,145

  12,128

  Wales

  5,343

  8,617

  11,402

  15,107

  10,135

  10,085

  13,426

  12,103

  9,117

  12,526

  11,034

  11,165

  Scotland

  10,325

  21,461

  22,129

  28,189

  23,239

  23,151

  30,435

  26,796

  21,364

  25,749

  25,621

  22,763

  Mr. McLeish
  To ask the Secretary of State for Employment if he will provide details for each standard economic region of the average lowest weekly wage or salary, before stoppages, that unemployed people have said that they would be prepared to accept at restart interviews.

  Mr. Lee
  The information requested is not available.

  Mr. McLeish
  To ask the Secretary of State for Employment if, in the light of the Manpower Services Commission report No. 269/S, "An Evaluation of the Impact of Restart Follow-up Interviews on Counsellors and Clients," there are any plans to reorganise the work of restart interviewers in order to reduce the level of stress amongst staff.

  Mr. Lee
  The report did not conclude that restart counselling, of itself, was a stressful occupation but that some individuals had experienced stress.

  One of the recommendations of the report was that restart counselling staff should follow up some of their clients, this improving both the quality of the programme and job satisfaction. As I announced in the White Paper "Training for Employment", follow up is being incorporated into the programme on a national basis in 1988–89.

  Mr. McLeish
  To ask the Secretary of State for Employment what methods of monitoring are used to assess the level of stress amongst restart interviewers.

  Mr. Lee
  It is the responsibility of managers in the employment service to monitor the performance and well-being of their staff on a continuous basis.

  Restart Interviews
  Mr. McLeish
  To ask the Secretary of State for Employment how many restart interviews have taken place in each of the standard regions in each month between June 1986 and the most recent date for which information is available.

  Mr. Lee
  The information requested by employment service regions is shown in the table:

  Mr. McLeish
  To ask the Secretary of State for Employment if all restart offices use selective procedures in assessing who should be invited to a follow-up interview; and what are the criteria upon which selection is based.

  Mr. Lee
  In those offices where follow-up interviews are currently taking place, the decision which groups should be invited to interview is a matter for local management.

  However, a systematic basis for follow-up is currently being developed for implementation as part of the package of proposals announced in the White Paper "Training for Employment."

  Mr. McLeish
  To ask the Secretary of State for Employment what is the recommended length of time that restart counsellors are maintained as interviewers.

  Mr. Lee
  The length of time counselling staff stay in post is a matter to be decided between the individual and local management.

  Mr. McLeish
  To ask the Secretary of State for Employment what was the average number of interviews conducted by restart counsellors per day and per week in each of the standard economic regions for each month between June 1986 and the most recent date for which information is available.

  Mr. Lee
  The information is not available in the form requested. However, during 1987–88 an average of 45 interviews a week was carried out for each counselling post allocated to the programme. A detailed breakdown for the employment service regions is as follows:
  53

  Weekly average number of restart interviews per counselling post—1987–88

  April

  May

  June

  July

  August

  September

  October

  November

  December

  January

  February

  March

  Northern

  29

  39

  45

  49

  48

  47

  51

  49

  38

  38

  43

  40

  Yorkshire and Humberside

  26

  29

  36

  44

  48

  46

  53

  61

  48

  44

  43

  39

  East Midlands and Eastern

  31

  33

  54

  48

  46

  44

  48

  53

  36

  35

  43

  39

  London and South East

  27

  30

  38

  44

  45

  43

  49

  54

  41

  44

  48

  47

  South West

  24

  30

  39

  42

  46

  44

  49

  55

  42

  44

  48

  43

  Wales

  30

  36

  48

  51

  43

  43

  45

  51

  39

  42

  47

  47

  West Midlands

  28

  35

  46

  47

  45

  40

  40

  42

  36

  38

  44

  39

  North West

  25

  34

  43

  47

  46

  41

  47

  48

  36

  40

  46

  44

  Scotland

  28

  44

  45

  46

  47

  47

  49

  54

  43

  42

  52

  46

  Great Britain

  Total

  28

  34

  43

  46

  46

  44

  48

  52

  40

  41

  46

  43

  Benefit Claims (Fraud)
  Mr. Marlow
  To ask the Secretary of State for Employment how many claimants were found in the recent fraud investigations in the west midlands to have been making claims for benefit to which they were not entitled; what proportion this represents of the total number of benefit claimants in the west midlands; and what is the latest figure for the total number of claimants nationally.

  Mr. Lee
  In the two recent very successful fraud investigations in the west midlands, a total of 558 claimants withdrew their benefit claims following investigations by my Department. This represents 0·2 per cent. of the total number of people unemployed and claiming benefit in the west midlands region. The national total in March 1988 was 2,564,000.

  Labour Statistics
  Dr. Marek
  To ask the Secretary of State for Employment what estimate he has made of the total number of jobs lost by business as a result of competition from the enterprise allowance scheme: and if he will give any figures he has for the most recent period.

  Mr. Cope
  Reliable information on the number of jobs lost by business as a result of competition from the enterprise allowance scheme is extremely difficult to obtain and no figures are currently available. Work is continuing on how the displacement effect of increased competition from new businesses might be measured.

HOUSE OF COMMONS

  Staff Statistics
  Mr. Frank Cook
  To ask the hon. Member for Berwick-upon-Tweed, as representing the House of Commons Commission, what was the percentage of the House of Commons Commission employees registered as disabled on the payroll for each year since its inception.

  Mr. Beith
  The figures requested are as follows:

  Percentage

  1979–80

  0·9

  1980–81

  1·0

  1981–82

  1·0

  54

  Percentage

  1982–83

  1·0

  1983–84

  1·1

  1984–85

  1·0

  1985–86

  0·9

  1986–87

  0·8

  Mr. Frank Cook
  To ask the hon. Member for Berwick-upon-Tweed, as representing the House of Commons Commission, how many individuals officially registered as disabled have been engaged by the House of Commons Commission in each year since its inception.

  Mr. Beith
  The figures requested are as follows:

  Number of Newly Engaged Registered Disabled Individuals

  Number

  1979–80

  3

  1980–81

  1

  1981–82

  nil

  1982–83

  nil

  1983–84

  1

  1984–85

  nil

  1985–86

  1

  1986–87

  nil

  The Commission's policy on the employment of disabled persons is set out in the fourth annual report of the House of Commons Commission (1981–82).

  Mr. Frank Cook
  To ask the hon. Member for Berwick-upon-Tweed, as representing the House of Commons Commission, how many people were employed by the House of Commons Commission in each year since its inception.

  Mr. Beith
  The numbers of staff employed by the Commission at 1 October in each year since its inception (1978) are as follows:

  Year

  Numbers

  1979

  839

  1980

  868

  1981

  879

  1982

  893

  1983

  918

  1984

  917

  1985

  934

  1986

  964

  1987

  967·5

  Notes:

  1. The figures include part-time staff.

  55

  2. Staff-in-post figures are higher than figures for staff complement (stated in the Commission's reports) eg two half-time staff in post would equate to one post on the complement.

  Members' Staff
  Mr. Madden
  To ask the Lord President of the Council, pursuant to his reply of 28 April,Official Report, column 246, if he will list the names of all those persons currently
  56
  employed by right hon. and hon. Members on a permanent or temporary basis, showing by which right hon. or hon. Member they are employed, but omitting the information in relation to pass holders originally requested.

  Mr. Wakeham
  No. It is entirely a matter for right hon. and hon. Members to make their own arrangements as to whom they employ.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Gloucester.

Spectacles: European Court Judgment
Lord Rugby Lord Rugby asked Her Majesty's Government:
Whether they accept the ruling of the European Court of Justice on 23rd February (Case 353/85) that the provision of spectacles is not a medical service and that the United Kingdom is in breach of its treaty obligations by exempting the provision of spectacles from VAT.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, the United Kingdom has a treaty obligation to implement rulings from the European Court and, as my honourable friend the Economic Secretary to the Treasury made clear in another place, the Government will abide by the Court's decision. Time is needed, however, to study the judgment in detail and to consult interested trade bodies before firm decisions can be made about how to proceed.
Lord Rugby: My Lords, I thank my noble friend for that reply. Is he aware that there is now a very large section of the community who do not regard an eyesight | test as having any medical bearing whatsoever? Is he also aware that people wish to purchase their spectacles from other sources because they believe that in that way they can suit their eyesight very much better? Does my noble friend agree that that view is broadly in agreement with the findings of committees in the past that there is no relevant health requirement in the choosing of spectacles?
Lord Brabazon of Tara: My Lords, obviously the judgment of the European Court will have to be studied very carefully, as I said. As the noble Lord will be aware, the Government have deregulated opticians to some extent over the past few years. That has resulted in quite a substantial fall in prices.
Lord Molloy: My Lords, is the Minister not aware that British opticians and optical surgeons find this an appalling ruling? Should the Government not point out to the European Court that the provision of spectacles is a part of the great British National Health Service, and should they not challenge the European Court's exceedingly myopic decision?
Lord Brabazon of Tara: My Lords, the sixth directive was agreed by all member states in 1977 when a previous government were in power. Therefore we have to abide by the findings of the Court. As regards the National Health Service, the supply of spectacles which are free or covered by the voucher scheme will need to be looked at.
Lord Bruce of Donington: My Lords, is the noble Lord aware that an examination of the judgment in the case gives rise to certain anxieties? Will he take steps to ensure that Her Majesty's Government's pleadings in the case are made fully public, as distinct from the summary that appears in the judgment referred to? Is the Minister also aware that it has hitherto been generally accepted that Her Majesty in Parliament is alone responsible for the levying of taxation in the United Kingdom and that it was on that basis—which is well known—and on that understanding that this country joined the European Economic Community?
Lord Brabazon of Tara: My Lords, as concerns the request for the pleadings to be made public, I shall have to draw the attention of my right honourable friend to the noble Lord's remarks. As to whether Parliament is responsible in this case, we adopted the sixth directive in 1977 and therefore we have to abide by the rulings in this case.
Lord Monson: My Lords, now that the European Court has confirmed that the provision of spectacles is not a medical matter, as we all suspected, will Her Majesty's Government revoke the absurd ruling that one must produce a prescription before being able to buy a simple pair of reading glasses? Is the noble Lord aware that in advanced countries such as the United States and Canada one can walk into a chemist and buy an excellent pair of reading glasses such as mine for the equivalent of £8 or £9 without any prescription requirement whatsoever?
Lord Brabazon of Tara: My Lords, as I said, we shall have to give careful consideration to the findings of the Court and we shall have to consult the trading associations. I am aware of the noble Lord's interest in this matter, and we shall have to consider how next to proceed.
Lord Boyd-Carpenter: My Lords, will my noble friend confirm that whatever the decision of the European Court such a tax cannot be imposed without the consent of Parliament?
Lord Brabazon of Tara: My Lords, that is true. Legislation will be required to bring it in.
Lord Bruce-Gardyne: My Lords, can my noble friend confirm in the light of his reply to the noble Lord, Lord Monson, that legislation is to come before this House very shortly which will enable the Government to correct the nonsense of requiring people to obtain a preliminary prescription before they can buy reading glasses? Can he assure the House that there will be an amendment to that effect now that the Government have accepted the verdict of the European Court that this is not a medical provision?
Lord Brabazon of Tara: My Lords, I cannot give my noble friend that assurance at present. I shall bring his remarks to the attention of my right honourable friend the Secretary of State for Health, who no doubt will consider the matter.
Lord Elwyn-Jones: My Lords, were Her Majesty's Government represented at the hearing of this matter and did our representative oppose the proposal in the hearing before the Court?
Lord Brabazon of Tara: My Lords, I am not certain how the Court goes about such matters. Presumably as we were taken to court we must have been represented. We opposed the proposal; otherwise we should not be in the position that we are in now.
Lord Elwyn-Jones: My Lords, the Minister's assurance that we opposed the proposal will help us hereafter.
Lord Rugby: My Lords, does the noble Lord agree that previous committees of inquiry, including one commissioned by his own party in 1927 and another in 1949, believed that there was absolutely no medical consideration whatsoever in the sale of optical appliances? If that is the case, why is it part of the health service?
Lord Brabazon of Tara: My Lords, we are now straying from the Question, which concerns VAT on the sale of spectacles. However, I have taken on board the remarks made by the noble Lord.

Madagascar: Ambassador's Residence
2.42 p.m.
Lord Merrivale Lord Merrivale asked Her Majesty's Government:
Whether their current review of British diplomatic accommodation in Madagascar is considering taking up the offer of the London Missionary Society site near the Queen's Palace in Antananarivo.
The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper): My Lords, our embassy at Antananarivo is making enquiries about both the availability of suitable houses to purchase and of sites on which to build a new residence for the ambassador. The site owned by the London Missionary Society is one of the sites under consideration.
Lord Merrivale: My Lords, I thank the Minister for her reply. Is the Minister aware that in effect this is a Malagasy offer and does not come from the London Missionary Society, which is conscious of the strong historical links that exist between our two countries? Does she agree that this site would be very appropriate for a British ambassadorial residence, bearing in mind the very important part played by British missionaries in creating the close ties that now exist?
Baroness Hooper: My Lords, as my noble friend suggests, this may well be a very suitable site. However, as I have said, it is one of several sites that are now being considered. I believe that my right honourable friend the Minister of State has written to the chairman of the Anglo-Malagasy Society informing him that the Foreign Office at present has no plans to build on that site.
Lord Cledwyn of Penrhos: My Lords, is it the case, or can the House assume, that the reason Her Majesty's Government are looking for a new site is that the present accommodation is unsatisfactory? Can the Minister say whether this situation bears any relationship to our trade with Madagascar? Can she give some estimate of the present export and import position?
Baroness Hooper: My Lords, the second question asked by the noble Lord goes rather beyond the original Question on the Order Paper. If he cares to table a Question on that point I shall be most happy to try to answer it. Certainly there are some deficiencies in the present residence. Its lease is coming up for renewal. Foreign Office policy is to replace leased accommodation overseas with owned properties whenever it is cost-effective to do so and when the building has all the advantages required by security.
Lord Merrivale: My Lords, as I have been president of the Anglo-Malagasy Society for 27 years perhaps I may ask the Minister to convey to her right honourable friend the need for Mr. M. E. Cook of the Overseas Estate Department to look particularly at this site when he visits Madagascar later this year. Apart from that point, does she agree that in effect the residence is unsuitable, as is the embassy in the "Ny Havana" building?
Baroness Hooper: Certainly, my Lords, I shall make sure that when the Overseas Estate Department representative visits Madagascar later this year he is aware of my noble friend's thoughts on the matter. I can confirm that one of the problems about the present residence is the poorly arranged circulation between public and private areas of the house. There are also other features which render it perhaps not as suitable as it might be as an ambassadorial residence.

Concierge Schemes in Blocks of Flats
2.46 p.m.
Lord Gainford Lord Gainford asked Her Majesty's Government:
Whether the installation of concierges in some blocks of flats has proved to be successful in both economy and safety.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, the evidence available at this early stage of development strongly suggests that concierges can be effective in both increasing residents' sense of security and in reducing expenditure on maintenance and vandalism. The department's estate action unit published on 21st March a report entitled A better reception: The development of concierge schemes. This examines different approaches to concierge arrangements and lists nearly 40 local authorities in Great Britain which have introduced schemes. Copies of the report have been placed in the Library.
Lord Gainford: My Lords, I thank my noble friend the Minister for that encouraging reply. Does he have any evidence that concierges are able to prevent sub-letting of flats for illegal purposes?
The Earl of Caithness: My Lords, I have no direct evidence, but it is something that concierges could do. However, it is up to the landlord to enforce the rules.
Lord Mellish: My Lords, is the Minister aware that high rise blocks of flats have quite rightly come in for a great deal of criticism, some of it unfair because the majority of flats are in good structural condition? The problem is that there is no caretaking. There is appalling vandalism. Lifts are frequently out of order. People dread living in the flats. Unless someone takes this matter seriously and makes an effort to eliminate vandalism and install caretakers, the problem will become a running sore. Not to do so constitutes a disastrous financial policy.
The Earl of Caithness: My Lords, that is exactly the purpose of the estate action unit in the department. It will help local authorities to counter the problems mentioned by the noble Lord.
Viscount St. Davids: My Lords, the Minister will no doubt be aware of the paper that I have just been able to put on his desk concerning the scandalous state of affairs in Camden where flats have been let to prostitutes and drug users. In at least one block apparently the great majority of flats have been so let. Some flats have also been let to itinerant Irish people who have sub-let them at high prices for their own purposes. I am unable to limit this subject to two questions. Can the Minister give me a general answer on how these practices are to be stopped? How far does this situation relate to the question of the enormous numbers of homeless people in London? Moreover, since the centre of this activity appears to be a place called Grease Street, does it not appear to the Minister that a certain amount of greasing has been going on?
The Earl of Caithness: My Lords, if illegal activities have been taking place it is up to the local council or the landlord together with the police to take the necessary action.
Lord McIntosh of Haringey: My Lords, I remember very clearly the noble Lord, Lord Mellish, when he was Minister of Housing coming to the borough of Haringey and dragooning—not to say bullying—us into accepting more subsidies for building more highrise flats. Does the Minister accept that I am glad to see the conversion of the noble Lord to the case we then put of the dangers of some of these high rise flats?
The Earl of Caithness: My Lords, as I understood the question of the noble Lord, Lord Mellish, it was not that he was criticising high rise blocks of flats. He was criticising the lack of management; and that is where a concierge would have helped.
Lord Mellish: My Lords, is it right to put on record, as regards visiting Haringey, that I do not recall that situation? In any case, the first time that I heard of the noble Lord, Lord McIntosh, was when I came here.

Education: University Commission Submissions
2.51 p.m.
Lord Allen of Abbeydale Lord Allen of Abbeydale asked Her Majesty's Government:
What plans are being made to ensure that the Privy Council Office and the Department of Education and Science will be able to deal promptly with submissions by the University Commissioners provided for under the Education Reform Bill.
Baroness Hooper: My Lords, it is in the Government's interests to ensure that the commissioners' submissions are dealt with promptly. The Bill provides for the commissioners' submissions to be approved by Her Majesty in Council. Her Majesty will be advised in the normal way by the Privy Council. This will involve consideration of the commissioners' submission by officials in both the Privy Council Office and the Department of Education and Science, neither of which foresees any difficulty in the extra work being handled by existing staff.
Lord Allen of Abbeydale: My Lords, I thank the Minister for that reply about this rather puzzling arrangement. Can the Minister say whether it is proposed to revive the Universities Committee of the Privy Council for which provision was made in the earlier legislation affecting the Oxford and Cambridge colleges? Can she elaborate a little on what the officials in the Department of Education and Science will be expected to do, accepting that the Bill provides no role for the DES in this context, and that some of the findings of the commissioners will involve amending Acts of Parliament without Parliament even being told?
Baroness Hooper: My Lords, I do not believe that there is any intention to revive the universities committee to which the noble Lord refers. It is expected that the commissioners will be chaired by a senior retired judge and will include a specialist lawyer with knowledge of university law. Their supporting staff will include a lawyer. Their draft modifications should therefore require a minimum of consideration by officials. They will need to examine the statutes of about 160 institutions over a period of three years, or just over one a week. That should not be too onerous a task for the Department of Education and Science, or indeed for the Privy Council Office to handle.

Local Government Finance Bill
2.52 p.m.
The Earl of Caithness: My Lords, I beg to move that the Bill be now read a second time. This Bill is about accountability of local councils. Its central objective is the enhancement of accountability of councils to their electors. This is not a new objective. The search for greater accountability and effective local democratic control started in the 1970s under the previous Government and has continued throughout the 1980s under this one.

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Bringing home to local electors the true cost of local services and the cost of ever increasing demands for them, has been a continuing theme for this Government as we have tried to make the present system work. We have tried to put more of the responsibility for high spending on local ratepayers. The hope was that authorities would curb unrealistic ambitions rather than penalise their ratepayers. The failure of this mechanism led to rate-capping to protect the ratepayer directly.
I was especially glad to see that my noble friend Lord Jenkin of Roding has put his name down to speak today. His direct experience of these matters will enhance our debate. In 1984, my noble friend announced the establishment, within his department, of studies into the whole of the local finance system. This is what they found.
Broadly half the cost of local government services are met by government grant. Most is distributed in a way which is so complex that only a relative handful of experts can claim to understand it. The distribution of the grant can, and does, vary from year to year in ways which are both unpredictable and often unrelated to changes in local expenditure.
Grant is also distributed so as to reflect differences in rateable values between different parts of the country. The result is that ratepayers in different parts of the country pay radically different amounts for the same local services. Even though his or her local council spends more, a ratepayer in Carlisle last year paid £125 less in rates than a ratepayer in an equivalent house in Luton. The present grant arrangements have become incomprehensible, unsustainable and uncertain. They provide no basis for effective local accountability.
The studies also found that another quarter of local spending—more than half of all the money raised locally—is met by business ratepayers. They have no vote to determine the total cost of, or the nature of, the services provided. In some areas, as much as 80 per cent. of the money raised locally comes from local businesses.
Variations in non-domestic rates also distort the competitiveness of businesses. Business rate poundages vary by ratio of three to one from 354p in Manchester to 117p in Kensington. In 1987–88, a business in Manchester paid 50 per cent. more than the equivalent business in next door Trafford.
Where rate poundages are high, business will choose to locate elsewhere. Where rates are high, they take too big a share of the money available for business occupation costs. Investment returns are reduced and development does not take place. These are just the conditions which contribute to decline in some of our inner cities.
Business rates also vary unpredictably from year to year. This year the average rate increase for businesses has been twice the rate of inflation. But increases of more than seven times the rate of inflation have occurred in Humberside. Last year rate increases of more than 60 per cent. occurred in the London boroughs of Ealing and Waltham Forest. How can business plan for jobs and investment against a background of such uncertainty?
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My noble friend's survey also found that the final quarter of local spending comes from domestic ratepayers but the match between those that use, vote and pay for local services is very poor. In round figures there are 38 million electors in England and Wales—all of whom use local services—but only 19 million ratepayers, in some areas as few as one in four of the electorate, pay a full rate bill. And even they are prevented by the obscurity of the system from seeing the full cost of the services they use. Changes in grant from year to year can mean that spending goes up while rates go down and variations in rateable values mean that ratepayers have no simple way of comparing value for money in different areas.
Is it any wonder that the turnout in local elections is so low or that they are so dominated by national politics? We want to change all that. We want local elections to be about local issues. We want people to understand those issues and feel involved enough to want to vote.
Furthermore, there is the domestic rating system itself. There is a common but quite unfounded belief that domestic rates are related to ability to pay. In fact, they are monstrously unfair. It is a matter of simple fact that rates themselves, as a tax, bear far more heavily on the poor than the rich. Twenty-two years ago, the then Government produced a White Paper entitled "Local Government Finance England and Wales" (Cmnd. 2923), which set out "the problem" with domestic rates, saying:
"Those who pay most are by no means always those who can best afford to do so. Under modern conditions the value of a man's fixed property is no measure of his capacity to pay; housing is a necessity, and as with other necessities the poor spend proportionately more on it than the rich … Thus rates are regressive in their impact on those who pay them; yet at the same time many who could afford to pay something make no contribution at all".
Those observations were by the then Labour Government and are as true today as they were then. But it is not just the very poorest groups who find rates onerous. Some 40 per cent. of homes with above average rateable values are occupied by households with below average incomes.
I have spoken strongly because like all surveyors who have been involved with rating, I feel strongly that what I have described is a system which is unfair and can never deliver local accountability. It can and has produced local irresponsibility. But it cannot provide the system we need—and local government needs—for the future. The stark conclusion is that we now have a system to which, were we designing it today, your Lordships would not give a second thought let alone a Second Reading.
There is another practical reason why domestic property tax will inevitably be unfair. The fact is that a tax on property can be fair, in its own terms, only if values are kept up to date in the same way as income tax is applied to the latest estimate of income. But history shows that concern about the impact of a revaluation more often than not leads to its postponement. We are supposed to have had eight revaluations in this country since 1948, one every five years. In fact we have had three; in 1956, 1963 and 1973. On each occasion, one outcome of the revaluation was a renewed search for an alternative to the rating system. What is certain is that without

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this Bill a revaluation would now be inevitable and would lead to such concern with no gain in local accountability that the worries about the community charge would pale into insignificance.
That is why Conservative governments have been active in searching for alternatives. Any change carries with it the risk of unpopularity with those who see themselves as losers. Those concerns in part explain the inertia against change. But we cannot go on running away from that fact. The present system is unfair and increasingly unworkable. Now is the time to move to new and fairer arrangements. This Bill will give us that. The other alternatives we have considered will not. I can therefore commend the Bill to your Lordships. I turn now to the contents of the Bill itself.
Part I introduces the community charges and will be familiar to your Lordships from our consideration of the equivalent Scottish legislation. The key point about Part I is that it involves all 38 million electors and not just 19 million ratepayers in paying for local services. With limited exceptions, all adults will now have an interest in their local council's spending decisions and the value for money that they offer. I see from todays newspapers that this is described as "inherently unjust" by some leading churchmen who want the charge to be related to ability to pay. But around 9 million people on low incomes will in fact pay less than the full amount as a result of the rebate arrangements. Nearly half of these people will pay only the minimum 20 per cent. charge. All will pay something and will have a clear interest in the decisions of their local authorities. But what they pay will be related to their income.
The substance of Part I follows that of the Scottish legislation which is due to come into effect next April. In particular, all the improvements made to that legislation in this House have been carried forward into the current Bill.
Clause 2 establishes the central principle that the personal community charge is to be payable by all those over 18 living in an area, subject to the exemptions specified in Schedule 1 and to the right for those on low incomes to have their charge rebated—as provided for in Clause 133 and Schedule 13.
The principal exemptions are those approved by your Lordships' House for the Scottish legislation. They include those still at school, the severely mentally handicapped, prisoners, those living in long stay hospitals or care homes for the elderly. We have also promised to bring forward provisions exempting monks and nuns. We hope to do this at the Committee stage.
We have been under pressure from some quarters to extend this exemption to all clergy. Most churchmen recognise that clergymen would not wish to be treated differently from their parishoners. We understand, however, their concern about the extra cost which will fall on church funds as a result. We cannot avoid that, but it is a factor which we must bear in mind when considering the Church's capacity to maintain those buildings which are so much part of our national heritage and to contribute to other projects to which we and they attach priority, such as the programme for redundant churches, and in other ways.
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Clause 3 introduces a standard community charge which will be paid by the owners of second homes and unoccupied dwellings. We shall be bringing forward amendments to exclude caravans from these provisions.
Clause 4 introduces the third of the community charges—the collective community charge. This will be payable by landlords of designated properties where the turnover of occupancy would otherwise prevent effective collection. Landlords will be allowed to keep 5 per cent. of the income from these charges as a "handling" charge.
The remainder of Part I is concerned with establishing the liability for each of these charges, including the provisions for the establishment of the register, and providing for their enforcement. I expect that we shall be looking more closely at these during the Committee stages.
Parts II, V and VII can be considered together. Part II provides for the setting of the personal community charge and details the matters to be taken into account in arriving at that sum.
Part V deals with the financing of the precepting authorities. Essentially it provides for the continuation of present practices, except that precepts will now be expressed as an amount per adult rather than as an amount in the pound of rateable value. Part VII establishes a new system of funds to handle the transfers of money which will take place under the new arrangements. Arrangements in this part differ as between England and Wales to reflect the different circumstances of the two countries.
Part III is the next substantive set of provisions, and performs two functions. It provides for the continuation of the non-domestic rating system—broadly on the same basis as at present, but with two major differences. The first is that Clause 37 requires a new valuation list to be established on 1st April 1990 and each five years thereafter. This will be the first revaluation of non-domestic property to take place in England and Wales since 1973. The fact of this revaluation has been very widely welcomed as has the commitment to a return to regular revaluations for the future.
The second major change is that the rate poundage—now to be known as the multiplier—will in future be determined not by individual local authorities but in accordance with the provisions of the Bill. When fully in place, this will mean that all businesses will pay a uniform rate in the pound on their rateable value. The starting point for that will be determined by the Government, but thereafter there will be a maximum rate of increase for the rate poundage linked to the increase in the rate of inflation. There will, however, be a power for the Chancellor of the Exchequer to increase the rate in the pound by a lesser amount, in any year, subject to the approval of the other place. These matters are dealt with in Clause 48 and Schedule 7.
Clause 51 and Schedule 8 also provide for the proceeds of the non-domestic rate to be pooled centrally and for all the yield to be redistributed by the Secretary of State to all local authority areas in proportion to their adult population. This will be done separately in England and Wales.

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Part III therefore achieves two major objectives of our reforms. It removes the distortion in competition arising from the wide variation in local rate poundages and it gives business certainty about the maximum increase in their rate bills.
We estimate that the effect of these proposals will be to reduce the rates bill of businesses in the North and Midlands by around £700 million every year. And we estimate that in the 57 inner city programme authorities alone the benefit to businesses will be of the order of £350 million. That is a considerable boost to employment prospects in some of the more hard pressed areas of the country.
I should indicate here, however, that we fully accept that changes of the magnitude I have just described cannot be absorbed by the market overnight. Clause 49 therefore makes provision for transitional arrangements to restrict the rate at which rate bills may increase during the period up to 1995. In another place, my right honourable friend the Secretary of State indicated that the Government will be further improving those provisions, particularly as they relate to small businesses.
A further benefit of Part III is that local authorities will no longer be able to pass on a substantial proportion of the cost of increased spending to the non-voting business sector.
Part IV provides for the continuation of domestic rating for a four-year period in nine inner London boroughs and the City of London, where overspending is currently highest.
Part VI replaces the present complex rate support grant arrangements with the much more simple revenue support grant provisions. Although it is a relatively short part, its rôle in the Bill is crucial. The present grant arrangements seek to ensure that differences in local authorities' costs and demand for services are met from the grant. This "needs equalisation" process will continue under the new grant system. But the other complexities will be swept away, leaving a grant allocation which will be more stable and comprehensible.
The intention is that the distribution of the grant should ensure that all local authorities, despite differences in their needs, are able to provide for a standard level of service by charging the same amount to their community charge payers. In 1987–88, we estimate that that would have been £178 a head.
A major difference between the new and the old grant arrangements will be that grant will not be related to expenditure. The amount of grant to which an authority is entitled will be settled before the start of the year and, except in very limited and specified circumstances, should then remain the same throughout the year.
Taken together with the provisions in Part III, these arrangements will ensure that all authorities can provide their necessary services for a standard price. Any provision above that level will be financed entirely from community charge payers on a pound-for-pound basis. That will give the clearest possible signal to charge payers.
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Part VI also includes in Clause 90 the provision for transitional grant arrangements—the safety net—to ensure that the changes take place at a pace which will allow local authorities to adjust their budgets and community charges. We intend to phase out the safety net over four years.
Part VIII of the Bill provides powers for the capping of community charges. This carries over from the 1984 Act provisions which have proved to be essential in reducing the burden of rates in some of the higher spending local authorities in England. We have felt it right to carry over these provisions in a modified form since we are making a radical departure, and it will take a number of years for the community charge to be fully operational. We hope that these provisions will never be needed. But in view of the quite extraordinary behaviour of a small minority of local authorities in recent years, we feel we must be able to respond should anything go badly wrong.
Finally, Part IX provides for a new role for the chief finance officer who will have to be a member of a recognised professional body and will have a duty to report to the council if he believes that any planned expenditure is unlawful in its widest sense. This is to give the council the opportunity to consider its position and the auditor an opportunity to consider issuing a stop notice.
The remainder of the Bill is concerned with technical and consequential provisions, including provisions relating to Scotland amending other legislation there. In so far as they are substantive, these amendments are generally designed to bring the law in Scotland into line with the policy in this Bill.
In another place, there was much debate about whether our proposals are fair. I have no doubt that they are. Eighty per cent. of single pensioners and 80 per cent. of single-parent families will pay less than with rates; on average, households with incomes up to £150 per week will pay less than with rates; and no low income household will pay more than a higher income one for the same local services, as many do now with rates even in the same local authority area. What is more, around 9 million chargepayers on the lowest incomes will be entitled to rebates which will ensure that—where it counts—what is paid is closely related to ability to pay. And for the first time, all those who use local services will pay something for them.
We make these proposals after a great deal of careful thought. We believe that they are much fairer than the present system. Some of your Lordships may have other proposals. We will certainly listen carefully to anything positive which is put forward. What this Bill seeks to achieve is a new basis for the contract between local government and its local electors in which those responsible for voting for services can see clearly the cost of those services and can balance explicitly the benefits of the services provided with their cost. With that clear link established, local government will be in a far stronger position to assert its right to decide the quantity and quality of services it provides. Without these reforms, the alternative is continuing and increasing central government involvement to protect those who are

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penalised by the unfairness of the domestic rating system and to safeguard the interests of businesses, particularly those in high spending areas. The choice is central versus local control.
The Government prefer local democracy on a basis of clear accountability. The Bill provides that and I beg to move.
Moved, That the Bill be now read a second time—(The Earl of Caithness.)
3.13 p.m.
Lord McIntosh of Haringey: My Lords, the House will be grateful to the Minister for the lucid and conscientious, though hardly enthusiastic, introduction which he has given to the Bill. I believe that we can start from one common point. It is common ground on all sides of the House that the effect of the Bill will be to make the poor poorer and the rich richer. The Government do not deny that. They seek to justify it but it is not denied by them.
I quote from remarks made by the Secretary of State at Third Reading of the Bill in another place. It was on 25th April 1988 and appears at col. 136 of the House of Commons Hansard. He said:
"it is in principle thoroughly undesirable, and costly and complicated in practice, to have a progressive element in the raising of revenue at the local level".
He put it more vividly in his local paper, the Wiltshire and Gloucestershire Standard, on 1st April 1988. He said:
"Why should a duke pay more than a dustman?"
I suspect that there are more dukes than dustmen in your Lordships' House. However, I suspect that dukes, like dustmen, will agree with most noble Lords that even if we come out better off as a result of the legislation, there is something profoundly unjust with the idea that a dustman should pay the same as a duke for the expenditure of local government. The effect will be that 1.2 million more people will come within the scope of the benefit system. If ever there was a move towards a more dependent society, the Bill is bringing that about.
The Government argue that that undesirable effect—and it is agreed almost unanimously to be undesirable—is justified for three reasons. The first is that of accountability, as spelt out by the noble Earl in some detail. The second is because of the attempt to make local authority taxation closer to a charge than a tax. The third is because the Government claim that there is a strong progressive element in income tax which pays for a large part of local authority expenditure. I should like to examine each of those claims in turn before turning to the many defects of the legislation.
The first is the question of accountability. The noble Earl said that 38 million people will be eligible to pay the tax. However, he admits that 9 million of those will receive either total or partial exemption or rebates. As regards the present situation, it is true that there are only 18 million ratepayers. However, they have 11 million spouses who, as we well know, recognise that they share the responsibility for the family's expenditure. At Second Reading in another place the right honourable Michael Heseltine made that very clear. I shall not quote him directly, but he
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said that families pay the rates, rent, telephone, electricity and so forth. They accept family responsibility for that expenditure.
The same is true of the rates. It is a fact people in the family other than those who sign the cheques or take the money to the borough treasurer's office are still paying rates. From opinion surveys we know that three-quarters of our adult population—that is 26 million people—believe that they pay rates. As regards responsibility and accountability, what matters is whether people believe that they pay rates and whether they recognise that it is partly their money which is going towards local authority expenditure. Therefore the accountability argument falls completely to the ground and ought not to be heard again.
Even if we accept the detail of that, the legislation before us will not achieve the desired objective of relating individual local authority expenditure to the individual payments which people are making. For example, the counties in England will be forced to precept on the districts rather than raise their poll tax separately. For some reason the situation is different in Wales. Therefore people will be able to see what the individual counties and districts are spending. However, they will not be able to see how much they are paying towards the expenditure of the county and district. For example, education is the largest item of expenditure, but the grant being paid by government does not go to the counties and so it does not go to those which are spending the most on education.
The second argument used by the Government is that somehow we are coming closer to local authority expenditure and local authority taxation being a charge for services rather than a tax in itself. I do not wish to become involved in the constitutional arguments of what is a tax. We should then raise interminable arguments about the rights and responsibilities of your Lordships' House and I am not qualified to intervene in them. I accept the situation that the Bill is in your Lordships' House, amendments will be accepted and I am duty bound to do my best to improve the Bill as we find it.
However, rates are a local tax and not a charge for services. There is no claim that they relate to the individual ratepayers' use of those services. If that were so parents would pay more for education, those who use the social services would pay more towards them and we should move towards a situation which some members of the Conservative Back-Benches in another place want to reach. It is that everything, including education, should be paid for directly. I do not believe that that is the opinion of most people in the country. Neither do I believe that it is the opinion of most noble Lords in this House.
The poll tax goes no further towards turning the raising of revenue into a charge for services rather than its being a tax. We have heard interminably about the difference between two next-door houses, one with four young children and one with five adults and how unfair it is that the five adults, who have far more capacity to pay, are to pay the same rates as people with young children. However, the family with young children is using far more of the services of the local authority than the five adults. If we were to take this rationally and literally, we should be

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going in the other direction from that proposed by the Bill.
The third argument used by the Government is that it does not matter that the poll tax does not reflect ability to pay because the national element in local authority finance—that is, that part which comes from the income tax—is, of its nature, progressive. I pass over the fact that since the Budget it is less progressive than it was up to the Budget. However, that is the argument used by the Government. Indeed the 1986 Green Paper, Paying for Local Government, stated at paragraph 3.11 that they are looking for:
"an approach to local government finance that rests on responsible local spending decisions and a reduction in central Government intervention."
I wish to make the point that the very nature of the shift imposed in this Bill is an increase, not a reduction, in central government intervention. The result of this Bill will be that, instead of 46 per cent. of local government expenditure coming from government grant, the figure will now be closer to 75 per cent. In addition to the huge change in responsibilty for the determination of the raising of local government finances and this huge shift to central government since the Report stage in another place, the Bill gives no fewer than 650 additional powers to the Secretary of State by order or in various delegated ways.
than giving people responsibility for their own future. Again, Mr. Ridley did not disguise that fact. He said:
"whatever level of Exchequer grant is chosen, the principle of accountability is still preserved, because extra spending above assessed need will always be paid by the community charge payer."—[Official Report, Commons, 25/4/88; col. 137.]
Mr. Howard, the Minister of State, said virtually the same thing at col. 149:
"We believe that a standard level of service should cost the same in every local authority area in the country. … We believe that any variations in local spending should be paid for by local communities that benefit from that spending".
That is all very well but the two significant phrases in what the Secretary of State and the Minister of State said are "a substantial level of service" and "assessed need". They are saying that the Government will determine the standard level of service and assess the need. They are saying that it is not up to local authorities to have any significant say in what is to be the level of service which they want to provide for their electors and the community. If anybody should doubt that, let us not forget—and we shall come to this in a few moments—that, even with all the claims which they make about accountability, the Government still propose to keep the poll tax capping powers which they introduced in the Rates Act 1984.
I see that the noble Lord, Lord Rippon, is in his place. I believe that he objected to some of the elements of the Rates Act 1984. When he considers that the capping is now to be introduced after the event, after the rate has been set and possibly after an election has been held, I hope he will find that that particular element is exceptionally objectionable.
Therefore, we have no serious argument from the Government which actually stands up against the claim which I make to your Lordships' House that
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there is no significant increase in accountability, that the taxation which we have under the form of the community charge or poll tax is no more related to the use of services than any of its predecessors and that we have a significant increase in central power as against local authority independence and determination. Sir Ian Gilmour understood this matter very well at Second Reading when he described—and again I paraphrase—the danger which he saw in government being made more powerful by the weakening of the intermediate institutions, because it is those institutions, like local authorities, which provide the buffer between the state and the individual and preserve individual freedom.
There are many matters in the Bill into which one would like to go in detail because, having started from a false premise, it gets itself deeper and deeper into difficulty as we look at the very complicated provisions. In the time available to me I can only race through them and I do so not in order to expound a point of view on every single aspect of the Bill but to indicate as best I can the lines along which we, on these Benches, will be looking for change.
Perhaps I may begin with the issue of exemptions and rebates. I recall that in 1381, which was the last time we had a poll tax in this country—and I shall not bore your Lordships further with the history of the matter which has been very widely and sometimes dramatically expounded—the exemptions were for beggars, the clergy and wives. At that time the poll tax was a matter of three groats, which I understand is the equivalent of about £100 in today's currency. The exemptions are now very much wider. They cover prisoners, visiting forces, international headquarters, those who are severely mentally handicapped from birth—and I am sure that there will be amendments in order to ensure that that is extended to the equally tragic cases of severe mental handicap which arises later in life—children, residents of residential care homes, hospital patients and students who will have to pay 20 per cent.
Very good cases are being made out by large numbers of organisations representing other people who they believe should be exempt. As I say, there is a case for extending the mental handicap exemption to those who became mentally handicapped after birth. There is a case for extending it to monks and nuns. There is certainly a case for extending it to the homeless who clearly have no means of support to enable them to pay the poll tax. There is a case for extending it, for example, to volunteers and those staying in short stay hostels.
The problem with exemptions, and particularly the exemptions already agreed, is that those concerned are not means-tested and that therefore the exemptions go to those who perhaps do not need them so much as to others more in need, because the people most at risk are those immediately above the poverty line. They do not benefit from the income supplement and housing benefits and will find themselves very heavily hit by this tax.
If we cannot achieve a system which generally reflects ability to pay, which is of course what we want out of this legislation, I believe that our approach should be to look for a rebate system rather

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than an exemption system and to look for a system which goes further in recognising the real difficulties in which some people would find themselves, particularly those most in need.
There are all sorts of other questions which arise; for example, those charities which need some sort of cushion against rapid increases. However, the problem with all of those—and I am sure that the Government will recognise this—is that every time the number of exemptions and rebates are increased, the government argument about accountability is reduced. That is why I believe that the thrust of our argument must be towards basic rebates for low income; in other words, we should move closer to a system which affects ability to pay. That is the way in which justice will be done rather than by tinkering with the Bill at the edges. If we have to, we shall take it case by case, but we hope to be able to do it more fundamentally than that.
The next problem is that this is not called the poll tax for nothing. My honourable friend John Cunningham described it as being a principle of:
"no representations without taxation".
I often wish that in this country we had a constitution which could incorporate the 24th Amendment of the United States constitution which states that the right of citizens of the United States to vote shall not be denied or abridged by reason of failure to pay any poll tax or other tax.
Mr. Justice William Douglas made that even clearer in 1966, when he said:
"Wealth or fee paying has no relation to voting qualifications; the right to vote is too precious, too fundamental, to be so burdened or conditioned".
It is clearly not, in the literal sense, a poll tax; it is not going to be a requirement that a citizen shall have paid the community charge in order to achieve a place on the electoral register. However, it cannot be denied that the single most common and readily-available source for the register of those who are liable to pay poll tax is the electoral register. All the evidence that we have from Scotland and from the fact that the electoral register is already incomplete is that the fear of being assessed for poll tax is going to drive perhaps millions, particularly of young people and those in ethnic minorities, off the register. In effect it is going to deny them the right to vote.
Lord Harmar-Nicholls: That is their decision.
Lord McIntosh of Haringey: My Lords, I accept that is not the intention of the Government although cynically, of course, it could be to their advantage. That is what will happen and that is the real risk we run with his legislation. I am interested that the noble Lord, Lord Harmar-Nicholls, says that that will be their decision and I gladly give way to him.
Lord Harmar-Nicholls: My Lords, if a citizen does not adhere to the law passed through Parliament in order to avoid paying his proper dues, that is his decision.
Lord McIntosh of Haringey: My Lords, I do not believe anyone was talking about breaking the law in the sense that some people in Scotland have been
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accused of doing so. People will find ways of avoiding being identified. That is what they will do and it will deprive them of the vote. The system which will be established in order to make sure that they do not—again, we already know this from Scotland—is that there will be not one register but probably three. There will be a main register which will be largely secret and maintained by local authorities. It will contain all manner of information; such as whether or not they answer the door and whether the television was on when the canvasser called. There will be an extract which will be published and sold. I am not clear why it is that it should be thought proper that such a register should be sold. It will contain names and addresses and probably dates of birth. The Scottish local authorities say that it will undoubtedly need some unique number of identification so that we shall be into the listing equivalent of identity cards.
There will be a list of changes which is kept for two years after a change takes place, including a death. There is plenty of opportunity for "Big Brother" to know more and more about our population and more and more about matters which people themselves do not wish to have known. People who live alone and who are elderly will, justifiably and understandably, be nervous at having information published about them and about the composition of their household which might make them vulnerable to attack.
The cost of collection will be horrific. It is admitted officially that it will be double the cost of the collection of the rates. It is 2.5 times the cost of collecting income tax; 27 times the cost of collecting oil taxes and 3.8 times the cost of collecting VAT. I pass over the question of Clause 137, though I simply remind the Government that in another place Mr. Chope said that the Government would announce their view in the light of their decision about the Widdicombe proposals. If that is not done in time for consideration by this House we shall certainly seek to table amendments which make them do so.
I listened carefully to what the Minister said about the business rate. The awful conclusion that I reached was that businesses seemed to be having some kind of unlucky dip. They will have a unified rate which will of itself apparently make those in presently low-rated areas worse off than those in high-rated areas who are better off. That is supposed to be cancelled out by the revaluation of business premises. We do not know how; the Government do not know how, but they are preparing for a further transitional period up to and including 1995. If that is so, then clearly the Government do not know either.
The noble Earl criticised the existing position relating to grants. Studying the Bill, all one can say is that the commitment of the Government to any new grant system is a perfect and absolute blank. It is a void in the Bill. It is left entirely to the Government to decide how they wish to impose the grant system. Earlier I referred to the fact that the Government do not believe their own propaganda when they insist upon still imposing a capping system even after having achieved accountability, or claiming to have achieved it.
We come back to the fundamental issue of this legislation and that is the ability to pay. The Odhams dictionary defines poll tax as,

839
"imposed in primitive communities where it appears impossible to ascertain individual capacity to bear the burden".
We are not a primitive community. It is an insult to this country to think that we need to have imposed upon us a system which is universally rejected by civilised countries in Europe. When the Government looked around the world for poll tax examples surviving into the 20th century, even the example that was found of Papua New Guinea did not actually work. This Bill introduces a new tax which, with all the unfairness of the rating system acknowledged, is conspicuously worse than what went before.
Noble Lords: No, no!
Noble Lords: Yes, yes!
Lord McIntosh of Haringey: My Lords, it is conspicuously more regressive, more unfair, and is perceived to be more regressive and more unfair than what went before. This was recognised by Mr. Heseltine, Mr. Heath and by large numbers of Conservative Back Benchers in another place who have no particular reputation for being rebels. They were concerned about it because they were concerned about the future of their party. If I were being cynical I would say that the best thing for us from these Benches is to let the Government have their Bill and let them get on with it, because it is going to bring with it the obloquy of a kind which I do not believe we have even yet begun to guess at.
In 1936 Churchill said:
"Dictators ride to and fro on tigers from which they dare not dismount".
No-one would describe the noble Lord, Lord Belstead, or the noble Earl, Lord Caithness, as being dictators, but I suspect that they have mounted a tiger from which they dare not dismount.
3.38 p.m.
Lord Jenkins of Hillhead: My Lords, we greatly look forward to the three maiden speeches being made today, all by those who have names honoured in this House and in history. The noble Earl, Lord Lytton, who is to follow me, has, I understand, very considerable expertise in this field as a valuer and surveyor. I look forward to his contribution and to the others.
It appears that there are two issues before us. First, is this a bad Bill? Secondly, has your Lordships' House any right to do anything about it? The first issue I intend to leave largely to my noble friend Lord Ross of Newport who will speak later, except for two matters. First the Bill has been remarkably successful in losing friends as it has gone along. Its parentage, on the one side, is Mrs. Thatcher's rash, shadow 1974 commitment to get rid of the rating system which was subsequently sat on by every Conservative spokesman and Minister who took a look at the consequences of a possible poll tax. On the other side, the parentage was the Scottish rating system which had become grotesquely distorted, far more so than the English. It was thought to be one reason for the collapse of the Scottish Conservative Party. Scotland was therefore treated as a guinea pig. The result of the
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experiment, as we saw last week, is that support for the Scottish Conservative Party has further collapsed.
The Bill therefore started upon a narrow basis of support and most of that has since been whittled away. The legislation is manifestly not popular among Conservative Members of Parliament, among Conservative local authorities for whose sustenance it is presumably designed, among independent experts or among the public at large. I do not regard any of these as individually decisive arguments against the merits of the Bill. Sometimes, no doubt, people do not know what is good for them, though that is dangerous democratic ground. And some of the best legislation has had to battle against initial unpopularity. Cumulatively, however, opposition from such a wide variety of sources becomes impressive—the more so when another factor is added.
I cannot discover any member of the present Cabinet, apart from the Prime Minister and the Secretary of State for the Environment himself, who is in favour of the legislation. I am experienced and sceptical enough to know that one must not always expect enthusiastic and positive support from other Ministers even when unanimity has apparently been achieved in the Cabinet. Amazing though it may seem in retrospect, my Budgets were not supported with equal enthusiasm by every one of my colleagues. However, the total stand off which this measure has brought forth is something I have never previously witnessed. The Bill has become one of the biggest inverted pyramids ever seen: the narrowest support at the base, the most complicated machinery and the widest opposition on top.
On the merits of the Bill, I confine myself to saying that it is socially unjust, geographically perverse and administratively cumbersome. The Government, who have produced this monstrosity, become increasingly shrill in their denunciations of any alternative. Mr. Mates was denounced for producing, it was said, a complicated scheme and treating unfairly that somewhat small minority whose incomes rose from £22,000 to £22,001 a year. That is rather like those who have built a vast new skyscraper complaining that to erect a warning light on top of it is a menace to aircraft. The truth is that no system of revenue raising— or for that matter any electoral system—is perfect. But some are a great deal worse than others. And the one proposed here is as bad as is easily imaginable.
I agree with the noble Lord, Lord McIntosh. The system is worse than what we have at present. We would prefer a local income tax to what we have now or what is proposed here. There are undoubtedly some problems with which we shall gladly endeavour to deal on a relevant amendment. But the idea Mr. Ridley appears to entertain that shooting off a lot of wild ammunition against a local income tax is a substitute for justifying his own proposals seems to me both odd and irresponsible. The Government must take responsibility for the anomalies and the unfairnesses of their own scheme and not hope to ride off them by shifting the debate on to somebody else's.
I turn to the second question of whether your Lordships' House has any right to improve this bad

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Bill. A couple of weeks ago I engaged in some correspondence in The Times with the noble and learned Lord, Lord Hailsham. When I wrote my letter it was some years since I had read his Dimbleby lecture on elective dictatorship. I had of course read it at the time, and indeed I believe once subsequently. I have some attachment to the series of Dimbleby lectures. However, two weeks ago I had it only vaguely at the back of my mind that the noble and learned Lord had made some remarks which sat a little ill with his subsequent attitude. I had little idea of the full splendour of his U-turn.
His 1976 thesis was that the elective dictatorship under which we had lived in theory had been made practical and intolerable by the bicameral system turning into one chamber control and by that one chamber becoming the tool of the executive.
"The executive [now] controls the legislature and not vice versa",
he proclaimed.
"More and more debate is becoming a ritual dance sometimes interspersed with catcalls".
But it is even worse than that. Not only did the Cabinet dominate the House of Commons, he argued. A relatively small group often dominated the Cabinet. And then, horror of horrors, the dictatorship had become,
"more and more liable to perpetuate itself through the adroit manipulation of the economy, and the firm use of dissolution operated with a careful eye to by-elections and public opinion polls".
Such a dictatorship, he said, could even be elected by a minority of the votes cast, but this did not prevent it imposing on the country,
"a series of unpopular measures, not related to current needs, using the whole powers of the elective dictatorship to carry them through".
And the House of Lords just stood aside and let them do it. Was all this justified by the doctrine of the mandate? Certainly not. The new "doctrines of mandate and manifesto" were "wholly unconstitutional". They were just a device for imposing on us,
"the impossible, the irrelevant and the inappropriate. It is idle to pretend"—
he summed up this part of his argument—
"that this system is rational, necessary, just, or even, to use an overworked and not a very illuminating word, 'democratic' ".
I wonder which of these developments excoriated by the noble and learned Lord in 1976—and I agreed with much of what he said—he now considers to have been corrected. It seems to me that in so far as there is change, all have accentuated themselves. The difference is the political complexion of the Government. It was that which made me suggest that the whirring of the noble and learned Lord's statemanship nonetheless allows him to alight quite frequently on a partisan branch.
The House should not feel inhibited from any significant role in relation to this Bill. The constitutional precedents are complicated and were probably best set out in an argument in The Times by Sir William Wade on 4th May. There are certainly relevant precedents for the privileges of the Commons being set aside in a case like this. In the last resort it becomes a matter of judgment, as is so often the case with constitutional matters. It cannot be denied that this measure was given a firm place in the
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1987 Conservative manifesto. That may have a varying degree of influence upon different ones among us, presumably nil in the case of the noble and learned Lord, Lord Hailsham. Set against that is the fact that the Government lost three-quarters of their Commons' majority on the issue and that with every day that goes by more and more of their normal supporters think they should at the very least be given a chance to think again.
The correct role for an unelected second chamber is never an easy one to determine. It is perhaps not a bad rule of thumb that it should act in such a way, as with enlightened self-interest, to enhance its own medium-term influence. Certainly, the extreme intransigence of 1906 to 1911 inevitably diminished that concept. However, complete acquiescence, against better judgment, could also have the same diminishing effect. I hazard a guess that if the Government were given an automatic immunity by this Chamber on the Bill, a new phase might begin and that the influence and interest which your Lordships' House has recently attracted might well begin to diminish.
3.50 p.m.
The Earl of Lytton: My Lords, it is some years since a Lytton addressed the House and many noble Lords have been kind enough to express fond memories of my father. I have the honour of being the first in the batting order foretold by the noble Lord, Lord Jenkins of Hillhead. I am aware of the great privilege of being able to address your Lordships' House. However, I shall try to avoid the example of my forebear, the poet Lord Byron, and to be less controversial. Nevertheless, I ask the indulgence of the House.
I believe that the Government deserve great credit for having grasped the nettle, so to speak, and compiled the Green Paper which foreshadowed the Bill. I think that that document very ably discusses the issues and the statistics. It differs from the earlier report of the Layfield Committee in its conclusion that there is a workable alternative to the domestic rating system and one which is worth the additional cost.
Many of your Lordships will know that I am a chartered surveyor with some knowledge of the rating system; however, I claim no detailed knowledge of the broader financial implications of the Bill. I plead no special case for the rating system in its present form. It has become abused, and a rental basis for the assessment of residential properties is now clearly an anachronism. However, I believe that the problem is not so much with the system itself, but with the fact that there has been no modernisation or revaluation since 1973.
On the community charge, I should like to limit my comments to a few points only. I have noted the criteria by which a local tax is to be judged: principles of fairness, accountability, paying for services used, and so on. I do not dispute the role of central government in the redistributive process; similarly, I do not question the fundamental wisdom of providing an adequate tax base. I also believe that no single tax can satisfy all those objectives. On fairness, I have to say that any local tax which bears no direct

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relationship to the ability to pay of the poorer members of society and is thus not seen to be fair, invites challenge—never mind that the wealthy can, and do, contribute a great deal more than the average, for so they should.
Local authorities should be accountable to those who fund them. Does it not therefore follow that they ought to be accountable not only to private residents but also to business ratepayers? Having said that, I do not see that the relationship between the quality of a council's services and administration and the vote of local electors is clear cut. Local election turnout is often low and in the past high spending councils have been returned to office.
Local government elections are often influenced by national issues and the satisfaction or otherwise with the performance of national government. That seems to me to be a question of attitude. Further, in spite of survey evidence, I cannot see that a flat rate of charge rather than property-based rates should change the situation, especially when so much of local authority funding comes from central government. If, in the end, councils want to spend more because determined individuals are elected into council posts, will abuses not occur in much the same way as before and thus attract much the same criticism?
As a local tax the community charge is expected to increase administrative costs. I cannot comment on the accuracy which can be attributed to the estimates, but from a practical standpoint is there not a substantial risk that evasion may become an administrative nightmare?
My greatest concern lies in the operation of Part III of the Bill, relating to non-domestic rating. The proposal is to abolish the whole of the General Rate Act 1967, and with it many tried and tested principles. However, much of the reality of the old system will remain, preserved on an ad hoc basis under the authority of the Secretary of State. Part III and the schedules contain many instances where the Secretary of State may make regulations by order which cover the content of rating lists, appeals procedures, alteration of lists and phasing provisions. He may decide matters of joint and several liability; govern valuation criteria; confer exemptions and determine the administrative machinery of collection. In short, he will be given extensive powers without the need for recourse to Parliament.
I am told that the financial effects of the Bill, in respect of commercial rating, are unknown. Everything depends on the commercial revaluation currently being undertaken and the results of this may not be known until the latter part of 1989. I have been unable to trace any official impact studies and the uncertainty has fuelled considerable speculation among businesses and their advisers. I have seen some of the comments made and the alternative proposals put forward by the CBI. All conclude that some business ratepayers in London and the South-East can expect to be most adversely affected.
The impact on small businesses is of special concern. My belief is that this situation stems partly from changes in the property market and business practice since the last revaluation in 1973, so much so that that I have grave doubts as to the operation of
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a single national rate, having regard to the economic differences between, say, the South-East of the country and the North-West. Those problems are tacitly recognised in the phasing provisions of the Bill. However, in the long run the burden of business rates in some locations may significantly increase as a proportion of the total costs of occupation; that is without any regard to the quality or extent of services provided by local authorities to local businesses.
More mobile companies can relocate to cheaper areas; others may be tied in to 25-year leases or to major investments in plant, to personnel and to long-term planning. For those companies there is no escape in either the short or the long term. I question the assertion that businesses simply pass on their costs to others as suggested in the Green Paper. In a competitive world, is this really consistent with the principles of profitability, reinvestment, employment and other factors arising from the incidence of overheads? I feel that that point is especially relevent to the advent of the single European market.
The Green Paper is dismissive of local accountability towards non-voting business ratepayers. While I accept that there are a few practical difficulties, I would question how many spendthrift authorities would have been so had there been a due proportion of business representation on their committees. If there is a current danger that the coffers of local businesses will be raided, surely this can be countered by fixing the proportion of total revenue that can lawfully be extracted from business occupiers.
As it stands Part III of the Bill produces some inequity and several technical anomalies. It removes any connection between local services to businesses and the amount paid. Surely this is at variance with the criteria by which a local tax falls to be judged? Does it not significantly erode the concept of fairness for a substantial sector of the community?
The Bill is highly complex and any attempt to concentrate on some parts only does less than justice to the debate. I shall listen with great interest to what other noble Lords say on matters of administration and funding, of which my knowledge is extremely limited. However, I recognise the need for reform, and my wish is to see that the Bill leaves your Lordships' House in better shape than that in which it arrived. I hope in that context that my comments will be seen as constructive. My Lords, I thank you.
4 p.m.
The Lord Bishop of Gloucester: My Lords, it is the wish of the House that I should begin by capping what the noble Earl, Lord Lytton, has just said. He spoke to us with an authority and expertise which if I may say so without impertinence, belie his years, and he combined them with conviction. That is surely a combination which we shall look forward to hearing many times in the future.
Consideration of the Bill will over the days and weeks ahead call for much political wisdom from those who in the House of course are well stocked with it. It will call for much experience of public policy-making and much knowledge of financial administration. If that is right, it may seem impertinent to offer an early contribution from these

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Benches, where of course those talents do not exist. However, the debate in another place and the widespread public discussion about the community charge in the country as a whole would seem to reveal sufficient disquiet, anxiety and interest on questions of principle and morality to justify an exploration of those topics.
It is widely granted that the present rating system is less than fair. It bears down hardly upon some and allows others to sit too lightly on their obligations to the local community. It may be because the system has been with us so long that we are blind to its defects. However, it may also be because the present system enshrined, in however imperfect a form, the principle which is most frequently cited as a criticism of the community charge. On the supposition that the more affluent one is the more property one is likely to own, it attempts to link local taxation with the ability to pay. Although I listened carefully to what the Minister said about the anomalies in the present system, I still believe that that principle lies, somewhat covered, beneath the surface.
Although there are many other problems connected with the community charge with a distinct moral dimension, ability to pay seems to be the main one. Without being remotely expert in taxation policy, and my untutored mind sees no moral difference in principle between taxing property and persons, I should nevertheless have thought that the onus of proof rests upon those who would maintain that ability to pay should not carry an additional responsibility to contribute to the wealth of the community. It seems such a natural conviction that the onus must lie upon those who would change it.
The immediate response of those who advocate the community charge is that ability to pay is already geared to taxation in the larger part of the tax system, notably in income tax; but if the principle is right there why is it not right here also?
There are other haunting questions—I use the word "questions" deliberately—connected with the Bill. If enacted, will it aggravate the apparently widening gap between the haves and the have nots? The arguments admittedly are hypothetical, and yet the anxiety that the net result of the charge might be a further redistribution of wealth in favour of the already affluent areas and a further impoverisation of the inner cities somehow will not go away. Can it be effectively blown away by the arguments that we shall hear from the Government Benches? I hope so. Will the new system allow, fairly and generously, for vulnerable and comparatively defenceless groups and individuals in our society? How will the pressures within families and local communities to secure the exemption of such people from the charge operate? Will the community charge be a significant factor in influencing a family to hospitalise sooner rather than later an aged relative, or to hasten the exodus of young people from the family so that they are no longer a charge upon the household?
Might the collective charge provisions effectively discourage good people from sponsoring and funding hostels for the homeless and the handicapped? Will the genuinely homeless—subject as I understand it to the charge as presently
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drafted—even if eligible for some rebate, have to be investigated by yet one more official when they fail to register or pay? Some will find the central register itself potentially sinister—a source, or perhaps a hunting ground, for computerised information, centrally stored, which might change the nature of our society in a direction, and more than we should wish. Then there is that delicate balance between central and local government, now a central issue for our nation. Those are the questions.
Beneath some of the things churchmen and churchwomen have said about the community charge there is above all, a deep questioning. I believe that that is the best interpretation of the events that took place in the General Synod of the Church of England in February when by great majorities it welcomed reform but called upon the Government in drafting their legislation to consider ability to pay; and in a following motion went so far as to describe the Bill as it is at the moment as inherently unjust. Some publicity has been given, I believe this day also, to statements by ecumenical Church leaders.
I dare say that many of us have received correspondence from groups such as the Church Action on Poverty or the London Churches Group. I can assure your Lordships that although the fears and anxieties may in the event prove to be exaggerated, they are not made by wide-eyed idealists out of touch with reality. Many of the people are working in the areas where the greatest anxieties and fears are to be found.
In one aspect at least I wish to endorse what the Minister said. I too believe that the great majority of the clergy, and indeed of their congregations, would not want some special exemption or rebate for the clergy themselves. I am sure that there will be appreciation of any recognition that the extra financial burden which that involves may somehow merit its reward.
When this Bill moves to its Committee and Report stages those of us who are concerned about these anxieties as to principle and ethics will be able to come out more in the open and to vote yes or no on specific matters. I hope very much that if it is not possible to change the Bill in principle, there will be some generous amendments offered by the Government themselves, not only because of the threat which it contains for some of the worst off in our community but in order perhaps to induce and symbolise a somewhat different spirit in the legislation than that which in a sense we seem to have at the moment.
Is it not possible that we can somehow change the general effect of a Bill, which seems harsh, unfeeling and threatening to those who are vulnerable, rather than have concessions, which seem—although I am sure it is not accurately expressed—to be grudgingly conceded inch by inch? Would we not all be better off if somehow we could appear to be glad to help people rather than grudging about it, happy to be generous and not having concessions somehow squeezed out of us? I believe that if some such spirit could be induced, the Bill and the country would be much better off.
4.12 p.m.
Lord Mancroft: My Lords, all the advice I received on the making of maiden speeches—and there was quite a lot of it—centres on the need to be non-controversial. Having examined the Local Government Finance Bill from every conceivable angle, I can hardly find a controversial clause in it. It seems to me a most logical step forward.
For many years people of all political persuasions have sought the abolition of the present rating system. It has long been held, quite rightly, to be both messy and very unfair. The difference between charges in neighbouring and similar areas is quite unreasonable. It seems most illogical to politician and voter alike. Similarly, the debate on the relationship between residential and commercial rates is never-ending. I am fortunate to live in Wandsworth, one of the most efficient boroughs in London, with one of the lowest rates. However, only 10 minutes walk from my front door lies the lunatic borough of Lambeth where local government has become a joke, and to the citizen of Lambeth a joke in very bad taste. There is an astronomical rate and appalling services, along with many services that the ratepaying voter, as opposed to the non-ratepaying voter, clearly does not want.
Our American cousins long ago pointed out the unfairness of taxation without representation and pointed it out very firmly. Contrary to what the noble Lord, Lord McIntosh of Haringey, said, I would suggest that the wheel has turned full circle and that representation without taxation is equally unfair. That is not to say that some of these services are not innovative and worthwhile schemes; they undoubtedly are. However, all too often local authorities have come up with ideas, both good and bad, without a thought to the cost, and have spent money that they simply do not have. The results are all too familiar: rapidly rising rates, public outcry, rate capping and ultimately the ludicrous business of central government taking local authorities to court like naughty children to curb their overspending. Is that the way to run a country?
Over the past 10 years the nation has begun to learn the wisdom of earning money before you spend it—a principle incidentally my bank manager repeatedly tries to drum into my head. It is a lesson long overdue in local government. By making everyone pay a fixed charge local authorities will immediately become more accountable. Nothing focuses the mind more than paying bills and when voters find their community charge rising unreasonably, councillors will find themselves out of office, with very good reason. That it may lead to the end of petty political posturing, whereby those who have been elected to hold local office think that they have the right to expound their views on national and international affairs at the expense of local issues, is a bonus we can look forward to with relish.
For too long in Britain we have allowed the principle that the state will provide to hold credence. Following the long overdue reforms to the social security system it is only logical to continue the ethic of self-responsibility into local government. Bluntly, those who use services must learn how much they cost.
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It would of course be brutal to drop into the deep end those who are only now learning to swim, and it is right that your Lordships should satisfy yourselves that adequate help is given to those who need it. I am not an expert, nor is it my job to detail precisely the level of help proposed. But when 13 million out of a total of 38 million voters will receive assistance of anything up to 80 per cent., I for one am satisfied that the Government have more than adequately cushioned the blow of this revolutionary measure.
It is on those grounds that the Bill stands up so well. It ends for ever a system universally disliked. It introduces a new system of refreshing simplicity, while protecting financially those who are not ready to take their rightful place within that system.
The past 10 years have witnessed the triumph of the individual's rights over the state. The poor man of Europe is learning to pay his way once more. He is out of the red in more ways than one, never, let us hope, to return there.
The accusation levelled against this Government again and again is that they are not a caring government. That they do not care to sell their policies is I am afraid true, as is amply demonstrated by the amount of opposition to this Bill, not least of all from these Benches. Had the Government taken more trouble to present their case with greater clarity, those who remained unconvinced would have seen their worries evaporate. The arrogance that comes from having so large a majority must not, however, be allowed to obscure what is fundamentally a very sound proposal.
Too often what is meant by a caring government is in fact a mollycoddling government, and I would suggest that the years before this Government took office are a perfect example of the hopelessness of that route. We have embarked on a revolution, and the support for that revolution was clearly shown in last year's general election results.
In short we have a system that urgently needs changing: we have a government with both the mandate and the courage to do it; and it ill behoves your Lordships to give this Bill anything but your wholehearted support.
4.16 p.m.
Baroness Lockwood: My Lords, I am delighted to follow the noble Lord, Lord Mancroft, and to have the opportunity on behalf of the House to congratulate him on his maiden speech. I should also like to offer my congratulations to the noble Earl, Lord Lytton, on his maiden speech. It is very difficult for Members of your Lordships' House to make a non-controversial contribution in the form of a maiden speech. I think I detected a little controversy in both of the maiden speeches this afternoon. Perhaps we can put that down to the dimension of youth which was certainly more visible from our two maiden speakers than on average in your Lordships' House. We look forward to hearing both of them in the future.
I should like to endorse what has been said about the regressive and unfair nature of the Bill before us today. To levy a personal charge on each individual above the age of 18, with few exceptions, is divisive.

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The noble Earl the Minister made much play of the fact that of the 38 million people who would be expected to pay the charge, some 9 million would receive some kind of relief. Nevertheless, even those 9 million will be expected to make a contribution without, in all circumstances, having the ability to pay.
I want to talk about the effects of the community charge on that element of the community that constitutes 51 per cent. of the population—that is, women. Although women are not a homogeneous entity, under this Bill they will generally be much more at risk than men. Moreover, there are a number of identifiable groups of women who will be particularly at risk. Women fall into two broad categories: those who work and have an income in their own right, and those who do not work and therefore do not have an income in their own right. Of the 49 per cent. of women who work, a substantial number are married; 61 per cent. of married women of working age are in a job or are economically active.
One might presume that these women could take care of themselves and pay their own community charge. Yet we have to note that their average hourly earnings are only 74 per cent. of men's average hourly earnings. Their gross take-home pay is a very much smaller proportion of the take-home pay of men, so they will have more difficulty in meeting their commitments. Moreover, many women, particularly married women, work part-time. Of the 4½ million part-time workers, 90 per cent. are women and their rates of pay and conditions of work are notoriously bad.
A progressive system such as income taxation, as the right reverend Prelate the Bishop of Gloucester has indicated, would take this into account. However, this regressive community charge treats everybody alike. That would perhaps be defensible if the social security system were also administered on the same principle of a personal basis and if it allowed low paid individuals in their own right to claim family income supplement. But it does not. In the case of married women on low pay, their financial position is incorporated into the total family financial position. Surely there should be unity between the two systems—either a family basis or a personal basis for both systems. But the Government cannot have it both ways, and, for the purpose of one Bill, base it on an individual and, for the purpose of another Bill, base it on the family. In the second category of nonworking wives, married women who, because of family commitments do not work and have no income in their own right, are in an even worse position of dependency than the working wife on low pay.
In these situations, the Government can only rely on the community charge being regarded as part of family expenditure, as at the present time with the rating system; and so it will be, I suggest, in those cases where relationships are happy and harmonious. But we cannot forget that of marriages currently being entered into about one in three breaks down. Marriage guidance counsellors and social workers indicate that financial problems are a major source of family friction. What happens in such a household when each partner gets a separate bill for the community charge and one partner has no money
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with which to pay it? This will certainly not help towards family unity. It could add to the already very difficult problem of domestic violence with which society has to deal. The women's aid groups are particularly concerned about this.
Women who have to leave home because of domestic violence will be subject to paying the charge, even for a very short period during which they may reside in a women's aid centre. A woman in such circumstances may have gone into the centre simply because she had no money or anywhere else to go; so apart from the futility of asking her to pay, there are also the administrative complications involved for the woman herself, for the women's aid centre and for the local authority.
There is also the deterrent to a woman from leaving a violent home, when she knows that she does not have the resources to meet her commitment. We may be subjecting more women and children to further violence in the home by deterring them from leaving. These are some of the issues to which I hope to return at Committee stage.
Two other groups likely to suffer are those women who are dependent on families for care. The majority of people in care are, first, older women and, secondly, those who care for them are also mainly women. The first group are likely to be elderly pensioners with little income other than the state pension. Such a person is already imposing additional burdens on the family. In the second group, the carers are likely to be the daughter or daughter-in-law or some other female member of the family who has had to give up a job in order to do the caring.
The financial implications for this household are obvious. These strains will be added to the strains that we know already exist in a household where there is an elderly or permanently disabled member. Here again, we see a conflict in government policy. The community charge will not encourage families to provide care within the community for the elderly or disabled. On the contrary, it will work against such a policy.
However, the Bill itself is not consistent. It aims to impose an individual and a personal responsibility for paying the charge; yet it breaches this principle, as I have already mentioned, in relation to married women with little or no income. It also breaches the principle by imposing joint liability where one spouse or partner fails to pay. If a husband or partner refuses to pay his wife's or partner's community charge, in the last resort he is legally responsible. If he fails to pay his own, then she is responsible. Even where a couple have separated, one partner may have to accept responsibility for the community charge debts incurred for the period during which they were living together. A woman who finds herself in such a situation is in the absolutely impossible position of trying to meet her own debts from little or no income, as well as being expected to meet her partner's debts.
The implications of this Bill are far-reaching and they will bear more severely on the different groups of women I have mentioned. It is not within our constitution, as a House of Lords, to reject the Bill outright, but as it proceeds through its various stages I hope that we can at least ameliorate some of its worst effects.
4.29 p.m.
Baroness Stedman: My Lords, from these Benches we should very much like to congratulate the two previous maiden speakers. We hope that we shall hear much more of them. We also offer our good wishes to the noble Earl, Lord Carnarvon, expecting that we shall have an equally competent contribution from him. We hope that we shall hear all three noble Lords regularly in your Lordships' House in the coming months.
It has always seemed to me to be important that any laws which are made are likely to be lasting and workable. Anything less is a futile exercise and a complete waste of parliamentary time. However, the proposals before us this afternoon in this Bill have not achieved even the minimum support from any of the Opposition parties. They have not achieved maximum support from the Government. It seems likely that any future Government might well have to tackle the unfairness of the community charge and do something about it. It is obvious that we all accept the need for some reform of the rating system, the fact that it needs to be revised and altered. But in our view whatever is put in its place must be based on ability to pay.
Over the past decade there has been a steady shifting of power towards the centre. I am sure that it is too much to hope that this Government might sit back and take a long look at local government and its functions in the hope of returning to some kind of rapport between central and local government regardless of political control. I believe that this Bill has so little support in another place and in the country that we in this House have a duty to try to make the charge fairer and to see that it is based on ability to pay. No doubt your Lordships will be spending many hours, even weeks, discussing some of these problems as time goes by.
I believe that the Government have demonstrably lost the argument in another place and they really should be asking themselves now whether what they are asking your Lordships to accept does replace the rating system with a fairer community charge. This charge will be expensive and complicated to administer. The public see what is happening in Scotland and they are perceiving it to be unfair. We believe that it weakens local government's accountability for their decisions on spending and on service levels. It is very complex and it is a flat rate for everybody.
We also believe that there should be a longer introduction period before the charge comes to England and Wales. That introduction period should be at least two or three years, so that a proper assessment can be made of the effects of the system in Scotland, thus enabling proposals to be modified before introducing the system completely across the United Kingdom.
This Bill is not just about the community charge. It aims to replace the domestic rates, although the last effects of domestic rates in some parts of the country will be with us until 1994 and 1995. The Bill turns the non-domestic rate—the business rate—into a national tax, the proceeds of which are supposedly to be used for local government; and it also imposes new
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duties on the treasurers of local authorities and sets up a new grant system.
We are all aware of the growing antagonism between local and national government. Until now local authorities have had at least some discretion over their priorities in spending. Successive governments have tried to influence or control local authority expenditure but penalties, tapers, multipliers and all the other devices that have been tried have not been all that successful. Rate capping has been with us since 1984, and from 1990 there is to be a new system of controls on capital expenditure.
I come from Cambridgeshire where, except possibly in my own city of Peterborough, we expect the non-domestic rate to rise faster than inflation as the revaluation is phased in. Another problem we have is that the basic information of needs on which the grant is based is calculated on out-of-date population figures. That creates special problems for fast-growing counties such as Cambridgeshire. Although we have the university city of Cambridge and the thriving new town of Peterborough within our county much of it is still very rural and there is considerable concern about the effect of the community charge on our village shops and post offices. Where the shopkeeper lives on the premises he will pay a business rate on his shop and the community charge for the occupants of his dwelling. This combined charge may prove to be just too much and more of our village shops and post offices may have to close.
The regeneration and the retention of small businesses in rural areas is very precarious, but when small businesses have to close because of high overheads, present and future employment is removed from that part of the area. In my own county rural businesses and shops have tended to pay lower rates than their urban counterparts because of lower rateable values and the generally lower rate poundages levied by the shire districts. But revaluation will alter all that and the national non-domestic rate is likely to be significantly higher than the current shire district rate poundages. If there is a substantial increase in the rates paid by rural businesses it will reduce their competitiveness relative to urban businesses. I should hope that in Committee we might discuss a possible rural service rebate to help in retaining some of these rural services.
This hope is strengthened by a resolution which I received from the Cambridgeshire Association of Local Councils which represents nearly 250 parish and town councils. It states:
"In view of the fact that many small businesses, for example village shops and post offices, occupy combined domestic and business premises and are working on small profit margins, this Association fears that many will be forced out of business by the proposed combined business rate and community charge leading to further impoverishment of the quality of life in rural areas. This Association accordingly urges the Government to bear this fact in mind and to introduce measures to ease the situation in these cases."
I should have thought that it had become increasingly obvious that the community charge is to be forced through against the people's belief that tax should be an assessment of what is fair. We accept the need for some reform in our rating system, but we should be doing more about integrating tax and benefits and abolishing the national insurance

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contribution which hits the low-paid workers especially hard. If this were done we could have a progressively banded community charge which is fair, reasonable and which takes account of the ability to pay. If the noble Lord, Lord Jenkins of Hillhead, comes back in Committee with provisions for a local income tax he will have the support of those of us on these Benches.
Turning to Part VIII of the Bill I believe the capping powers should be either withdrawn or significantly curtailed. I might be persuaded to accept some reserve powers to restrain spending—but not charges—in a national emergency or in the transitional period. But there is no justification for the retroactive capping as set out in Clause 104. Capping goes directly against local accountability. It is accountability to the centre and not to the local electors.
The Green Paper originally only referred to capping in the transitional years, thus inferring that after this short period pressure from the local electors would ensure that spending was at a reasonable level. But this Bill goes further than the Green Paper and capping appears to be seen as a permanent feature. If we are to have capping I believe it must be limited to the transitional years at the most. Something like 75 per cent. of local authority income will come by way of grant and business rate and will be outside local government control. If community charges are also capped that will take away nearly all the local authority discretion over its own spending decisions.
There are also difficulties about the collection. The counties will no longer be accountable to their electors. The grants and the non-domestic rates are to be paid into collection funds operated by district councils. The counties will then precept on this fund and there will be a single community charge for each area. As the noble Lord, Lord McIntosh of Haringey, said it will still be possible to compare gross expenditure by each authority, but the real test of what the individual has to pay will be hidden within a single community charge which will be influenced by varying movements in grant, by the non-domestic rates and in the balances held by the two authorities. This means, in my view, a substantial diminution of an authority's accountability to its electorate.
Why is this change proposed? Why cannot it be left as it has been for Wales in Clause 86 where the county is the receiving authority? Is the Minister likely to be persuaded that the cost of collecting the community charge should be borne by the collection fund? Can the interest receipts on the money accrue to the charging authority and not to the fund? If that were done it might just act as an incentive to efficient and prompt collection, and it ought to be available to offset the costs of collection.
Also, why have the Government not taken the opportunity to state the principles governing the rate support grant? We all accept that each authority has differing needs, and the present assessment has been, and is, extremely complex. We will need to look closely at Part VII of the Bill and try to make a more specific framework for assessing need and paying grant. Is it not possible to include in the Bill firm proposals for the operation of a new system of needs assessment? This has been a growing bone of
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contention between local authorities and the Government; so would it not be sensible to base future arrangements on clearly agreed and fixed principles contained in primary legislation?
The way in which billions of pounds of taxpayers' money is distributed each year should not be a matter for ministerial discretion. Proper account will have to be taken of future increases in pay and prices which are actually incurred by local government. And these will have to be fairly recognised in the indexation of grants and business rates. The Society of County Treasurers also believes that the proposed new powers for treasurers in Part IX are neither necessary nor desirable. The treasurers have both professional and common law responsibilities to their councils. They believe that the new powers will place an emphasis on the policing role at the expense of financial management.
The Bill introduces the concept of a uniform business rate to be set by government and to be collected by local authorities on behalf of government who will then redistribute it. We have heard the argument in this House many times that different rates in different areas have had an impact on the competitiveness of business. Yet in 1985 the Department of the Environment commissioned a Cambridge University study on the effects of business rates in the location of employment. The study concluded that there was no evidence that either the level of rates or increased rates affect the distribution of employment between local authority areas.
The Government have also argued from time to time that rates fall on those who have no vote with which to influence local spending decisions. That argument, like those about accountability to a poll tax, appears to question the whole idea of universal suffrage. Business has no say in the expenditure of national or local government, but at least since the Local Government, Planning and Land Act 1980 local authorities have had a statutory duty to consult business about the level of rates, and most authorities have begun to see that as a regular and useful point of contact with their business community. Under the uniform business rate, as with the community charge, there will be some who gain and others who lose. Various figures have been bandied around but the ones I have seen suggest that the business rates will rise quite dramatically in the South-West, the South-East, the West Midlands and London, although they may fall in the North.
The supposed accountability as applied to the 3·5 million people who are at present fully rebated in respect of their rates is nothing short of farcical. They will now have to pay 20 per cent. of the charge for which they will receive an additional payment from the DHSS based on the average, but not the actual, community charge they have to pay. The local authorities will have to recover that same 20 per cent. They will have to collect it in instalments, which will involve huge administrative costs to recover money paid out by government eventually to be returned to the public purse. I fail to see how such a convoluted system of dispensing and recovering moneys is going to aid accountability at all.
Also, a ratepayer can now pay not less than 10 instalments. A substantial number still pay half-yearly or annually. The proposal is that all

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community charge payers shall pay in 10 instalments unless they opt out; but the increase in receipts to be sent out is even greater than the increase in the number of accounts. Where council house tenants and others now pay a weekly inclusive rent and rates charge, in the case of a married couple and one other adult, instead of one receipt for rent and rates, there will be one receipt for rent and three receipts for community charge. Who will pay for the extra office accommodation, the computers, the accounting machines, the staff, postage and stationery that will be needed to carry all this out?
All the organisations and representative bodies which have commented on the proposals seem to have found them wanting. The business community has expressed its opposition following the failure of government to respond to their concern about the business rate and the effects of revaluation. Conservative councils have not been alone in protesting about the impact of the new tax on their residents. The voluntary organisations, from Age Concern right through to the Child Poverty Action Group, have attacked the injustice of a tax which hits the poor harder than the rich. The professional officers who have to administer the tax have pointed out how expensive it will be to collect and how difficult it will be to enforce. There was serious opposition to the Bill from the Government Benches in another place.
We would prefer to see a local income tax. I suspect that the Government are unlikely to accept that proposal. What we need now is a form of grand coalition, not only to oppose the poll tax legislation but to argue for a viable and lasting alternative which will restore local government to its rightful role of providing the services its electors want and which they are prepared to pay for.
4.48 p.m.
The Earl of Carnarvon: My Lords, I am very conscious of being nervous in addressing your Lordships' House for the first time. One hundred years ago this year my great grandfather was involved in the strong defence of quarter sessions and was in opposition to the introduction of county councils. His view did not prevail, and he was made one of the first aldermen of Hampshire County Council—and I was one of the last. I had the great honour of chairing the new county council and its policy and resources committee. It is a local authority with a budget of over £800 million a year.
My great grandfather prefaced his strong views by saying—and I am reading from Hansard of 31st July 1888—that he hoped his noble friend the Prime Minister would not think that he criticised the Bill "in an unfriendly spirit". Perhaps I should echo those words today.
It is with a quarter of a century's experience in local government that I should like humbly to congratulate the Government on being brave enough to grasp the nettle and tackle the problem of rate reform. Their main aim is to spread the burden of rates among the people who pay for the services they receive. However, I have some reservations about the unified business rate.
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Throughout the time I served in local government my local authority tried to improve the relationship with the business community and with both sides of industry. That effort was very successful and helped the county council to develop better infrastructure for its expanding towns. Industry was able to understand the problems faced by local authorities and to appreciate the close relationship which was built up. Local government values that close relationship and the discussions on policy which lead to budget decisions.
The services provided by local authorities have a direct impact on the business community. For example, in education local government needs to know the skills required so as to train young people for work in its area. There is a need for consultation and advice on roads and planning to help industry to operate efficiently. And business expansion means providing sufficient land for building and for leisure facilities. The police, fire and public protection committees exist to provide for business and industry as well as for the general public.
My experience in docklands was that the close relationship developed in Hampshire did not exist between the London boroughs and industry. For that reason, as chairman of the South-East Economic Planning Council, I proposed that there should be a new town corporation for docklands. That was not at all well received, but I am glad to see the great success story that docklands is today.
It seems to me a pity to alter the 50|50 ratio of local government finance to 75 per cent. exchequer and 25 per cent. locally controlled. I fear that a change of that nature will weaken the close ties with industry which will feel that central rather than local government is making the final decision.
Local government is badly in need of confidence and support from Parliament. It is vital to have a high standard of elected members working in local government, supported by high calibre and hard working local government officers. The more responsibility central government gives to local government the better it will perform its duties and maintain the very high standard that the public requires from it.
4.53 p.m.
Lord Jenkin of Roding: My Lords, I am sure the whole House will join with me in congratulating the noble Earl, Lord Carnarvon, on an outstanding maiden speech. He comes to this House with an already long and distinguished career not only in local government but also in other walks of life. I know that I can say we look forward to hearing him on many future occasions. I hope that he will give the House the benefit of his experienced advice on the provisions of the Bill.
The noble Earl was able to claim—I acknowledge his claim—that he was the progenitor of the London Docklands Development Corporation. He is quite right to be proud of its success. In a not dissimilar way, this Bill and this debate are of some significance to me. Noble Lords may recollect that after the 1983

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election when I became the Environment Secretary I inherited a manifesto paragraph which asserted:
"Domestic rates will remain the principal source of local government finance for the foreseeable future".
Yet only some 15 months later, in September 1984, I felt obliged to convince first the Prime Minister and then the Cabinet that we had to re-open the argument. After some hesitation they agreed. They hesitated because after all had they not spent many months—indeed many years—agonising over the alternatives only to decide that they had to stick with the rates? They agreed because they became convinced, as I had become convinced, that the existing system of local government finance could not survive much longer.
Successive Environment Secretaries over the years have tried all manner of splints and sticking plaster to try to keep the patient alive but he continued to become steadily more ill. My contribution to the process, referred to already in the debate, was rate capping—a crude but, I have to say as a Lambeth ratepayer, an effective measure which has curbed the extravagances of the most profligate councils. However, rate capping not only added layers of complexity to an already byzantine system of rate support grant; it also exposed the fundamental weakness in the whole system.
I had wrestled during the summer and autumn of 1983 with the rate support grant settlement for 1984–85 and I found the process profoundly disquieting. Do what we could, there seemed little rhyme or reason to justify the wildly different levels of grant and therefore of what were called "local contributions" that applied in different parts of the country. The endless deputations—some of them led by members of this House—the legal challenges, the fiercely acrimonious debates in another place, all tended to underline the doubts in my mind about the validity of the whole system. Then, in May 1984, we started the whole process again for the following year, and my doubts crystallised.
All through that period I had faced innumerable Conservative conferences—national, regional and local—at which the 1983 manifesto statement was simply rejected. The demand was for the end of domestic rates which continued to be seen as unfair, oppressive, illogical and wholly inappropriate in the closing years of the 20th century. They had survived only at the cost of ever increasing central interference, which the noble Earl has reminded us was strongly resented by those in local government, and manipulation. In short, I decided that the system had had its day. It was breaking down and there had to be reform.
I went to Chequers to persuade the Prime Minister one summer Sunday. She gave her assent that I should put in a paper. I told the Cabinet that we faced a choice either to continue to patch and mend, piling complexity upon confusion with ever increasing central control—which would be the inevitable consequence—or to re-open the search for a radical reform so as to restore to local communities (for that is what this is about) the local autonomy and local choice which a system of local government should give them. In short, doing nothing was no longer an option.
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It took three meetings of my Cabinet colleagues to convince them. In the end they were convinced and I was given authority to set up a series of studies jointly with Scottish and Welsh Ministers to come up with solutions. It is a matter of record that I announced the studies at the Conservative conference at Brighton in 1984. In so doing I headed off yet another resolution calling for the end of domestic rates.
My junior ministerial colleagues, Kenneth Baker and William Waldegrave, got to work with both official and, I have to add, valuable outside advice. They found a fundamental weakness in the system, which has been referred to by many speakers and by my noble friend on the Front Bench in particular: the real underlying cause of the incipient breakdown of the system was the growing lack of accountability of elected councillors to those who paid the rates. First, there is the huge mis-match between those who receive services, those who vote, and those who pay. There are 36 million voters, 18 million households and 12 million people who pay the full rates. Around 60 per cent. of the rates are paid not by voters but by the non-domestic ratepayers who have no vote and do not have to be listened to, though I concede, as some have said, that in some well managed councils they have been listened to; however, in other areas businesses have become the complaining milch-cow for extravagent councils.
Moreover the whole role of government has changed since rates were introduced. It is quite simply an anachronism to levy a tax on property to finance what are now overwhelmingly people-related and not property-related services. The present system dates from the time when only property owners had votes and it is a ludicrous way to pay for education, social services, libraries or recreation.
It is not as though the rates were fair. It has been a source of bitter complaint for decades that a single person, perhaps a widow, living nextdoor to a household which includes three or four earners, should pay the same rates. But the inequity goes much further than that. Because rateable values vary widely from one part of the country to another, different local authorities look to widely differing rate bases for their revenues, so that central government, intervening yet again, have to try to compensate for the inequalities through the rate support grant. I have to say that this process of resource equalisation is profoundly obscure and understood by very few, which itself blunts accountability. If people do not understand, how can they hold councillors accountable?
Of course it also gives rise to further unfairness because it means that all ratepayers, including the poor, in the areas that lose grant subsidise ratepayers in the areas that gain grant, however well-off those ratepayers indivdually may be. The redistribution is not a function of income. It is a function of rateable values, which may bear very little relationship to incomes. Over 40 per cent. of householders living in homes with above average rateable values have below average incomes; about 40 per cent. of those with above average incomes live in homes with below average rateable values.
The more out of date rateable values become, the more intolerable is the unfairness and the more disruptive is the subsequent revaluation. People have

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sometimes asked why one should not simply have a revaluation. If such a charge comes from the Benches opposite I have to reply that not once since the war have a Labour Government undertaken a revaluation. Every revaluation has had to be carried out by Conservative Ministers. Let us not hear that argument from those Benches.
On top of the levy there is the system that was intended to try to provide incentives to councils to be economical and to impose penalties on the extravagant. As every councillor knows—and certainly very many have told me with a bluntness which I found disconcerting—the amount of the rates that a council levies bears little relationship to the level of services that it provides, its efficiency or the degree of its extravagance.
For all those reasons in many areas accountability has become so blunted as to be almost extinct. The heart of any reform therefore had to be the restoration of accountability. The result is the Bill that is before your Lordships today.
Perhaps one central point must be made, and I direct my remarks in particular to the noble Lord, Lord McIntosh. Those who dislike the Bill or decry this or that feature owe it to their colleagues in this House to say what they would do instead. In the course of a 20-minute speech from the opposite Front Bench—and I make no complaint of its length—there was no linking of anything that the Labour Party would do to replace the rates. They said that, yes, rates were not popular—finish! But the House has heard nothing that would serve as an alternative.
Doing nothing is no longer an option. That is the message. I ask whether they want accountability or not. I have to say that clearly some of them do not. They are happy to scheme their schemes, safe in the knowledge that the present system effectively insulates them from those who pay full rates. That is not a matter of assertion; I have chapter and verse to prove it. During the time that I was at the department—and no doubt my noble friend Lord Bellwin will also remember these events—within the Labour Party there was an influential pressure group called the Labour Co-ordinating Committee. It was a body that led the fight against rate capping and tried to mastermind the co-called "Rates Revolt". It is hardly surprising that the Labour Co-ordinating Committee do not like the proposals in this Bill one little bit. They call the Bill a straightforward attempt to create the conditions for local taxpayers' revolts against councils' spending plans.
I should like to quote from a paper they published last January entitled Labour Councils in the Cold:
"Ordinary local people will foot the entire bill on any local spending above the government norm. When the local council wants to carry out a programme of service expansion, local people will no longer be cushioned by increased business rates and rate support grant. They will want to know that increased expenditure is well spent".
To that I say "Hear, hear". In other words, accountability is to be restored. All who cherish the diversity and diffusion of power which local government represents must applaud that restoration because without local accountability how can real local government survive?
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It has been said that the community charge is unfair, as it is unrelated to income. That is simply not true. There are 9 million people—one in four of all those who are entitled to vote—who will pay reduced charges, many as little as one-fifth of the basic charge; some will be exempt altogether. Of course it is right to debate the details of those charges and they will be debated; but in the face of those figures, how can anyone say that payment is unrelated to the ability to pay?
However, the matter does not stop there. The community charge will account for about one-quarter of local spending, the remaining three-quarters of which will come from the grant, the new single revenue support grant, and the proceeds of the new national non-domestic rate redistributed according to population. When one calculates where the full burden of local spending falls, it can be seen that the top 10 per cent. of households by income will pay around 15 times as much as the bottom 10 per cent. of households. I point out to the noble Lord, Lord McIntosh, that that calculation takes into account the tax cuts in the recent Budget. With 9 million people paying reduced charges and the rich contributing 15 times as much as the poor, I am bound to say that it does not sound to me like the tinder that will spark off the Peasants Revolt of 1990 and set them on the road to London!
I shall support the Bill with enthusiasm. Accountability by local councillors to those who foot the bills lies at the heart of a healthy, efficient and responsive local government.
5.9 p.m.
Lord Graham of Edmonton: My Lords, it gives me considerable pleasure to follow the noble Lord, Lord Jenkin, for whom I have a great respect in view of the positions that he has held and the service that he has rendered to local government. I should like to begin, as no doubt will most of your Lordships, by emphasising how this debate has been illuminated by three excellent maiden speakers. I enjoyed all three speeches but in particular the one by the noble Earl, Lord Carnarvon, who illustrated his remarks from his experience of local government. Those who have had experience in local government will have the edge on those who simply talk about it. While the latter may very well understand it, there is a difference between being a practitioner in local government and being an advocate for a point of view.
The Minister opened this debate by saying that it was about accountability. I accept that. He then illustrated his arguments with the example of the disparity between the rates that were paid in Carlisle and Luton. The other theme of accountability was that businesses which pay a proportion of the cost of local services are disproportionately represented in the forums that take the decisions.
Let me return to the disparity between Carlisle and Luton. Perhaps we may argue that they are two different places in 1988 with two different environments, totals of unemployment, totals of wage rates and levels of needs. We are then in some difficulty. Of course there are disparities between one part of the country and another. But in the future there will be no disparity. The poll tax—the community charge—will be exactly the same. If those

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who support this Government want uniformity, not equity, they they are setting about achieving it in the right way.
Let me answer the charge that local businessmen feel aggrieved that they have not been able to make an input into local decisions. I served on a local authority for a number of years. One would not have convinced the local bank manager, production manager, shopkeeper, insurance manager or the small businessmen that local business had no input into the decisions of the council for the London borough of Enfield. One would have had difficulty in persuading Councillor Alan Young—who was the leader for 18 years and recently left that post—who was employed in local industry, that he had no knowledge, or that the people to whom he spoke had no input. One would have had difficulty in persuading Councillor Lindsay, who succeeded him, or the new leader of the Conservatives—there were three leaders in two years—that they had no knowledge, or did not listen to or take account of local businessmen.
As the noble Baroness, Lady Stedman, said, it is to the credit of this Government that they have given greater consultation on rates to local businessmen than to any other group. Local councils listen to many groups, but before the rate is levelled local businessmen have their right to be consulted written into statute. It is a myth, therefore, that local businessmen are not consulted. The other myth that can be perpetuated is that the level of rates in one way or another is a major inhibiting factor in the decision whether businesses remain in a community or do not come to a community. Again the noble Baroness, Lady Stedman, was able to point to impeccable evidence: that of the study that the Department of the Environment commissioned, which stated that there was no evidence to that effect.
I am sure that we shall be told that it is not the role of your Lordships' House to alter a Bill of this kind. This is a Bill that started in the other place with 100 pages and left it with 150 pages. It is a Bill that was altered almost out of recognition, mainly by Government amendments in another place. I am absolutely certain that there is a raft of amendments that will be brought forward in this House by this Government and that the Bill will be altered. Therefore do not let us continue the argument that we are not entitled to consider changes.
When the noble Lord, Lord Jenkin, quite fairly told the House that he believes that this measure is better than the old system, he may very well be right. But I tell the noble Lord this. Without a three-line Whip in the other place the Government would not have got the Bill through in its present shape. There were many unhappy Members on the Government side who trooped into the Lobbies against what became known as "the Mates' amendment". To their credit a great many went into the Lobby with Mr. Michael Mates. Therefore do not let us run away with the argument that this is a popular alternative. Having decided two or three years ago that we must have an alternative, this is what the Government have come up with: any alternative. It is neither the best alternative nor an improvement on the present imperfect system. The Government will tell us that
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they are bringing this forward having listened to a great many people. They did not listen to their own Back-Benchers, the CBI or the associations that represent local government. To whom did they listen? They considered a store of their own prejudices.
We have heard the charge that some councils can be accused of profligate expenditure. An earlier speaker gave the illustration of Lambeth. One has the hypocrisy that Mrs. Currie, the Minister in another place, lambasted Lambeth Council because it failed to provide enough money to support. St. Thomas' Hospital. St. Thomas' Hospital is in Lambeth. Lambeth Council already spends £7 million more than is allocated to it in order to sustain the social services. On the one hand, one has Lambeth Council being lambasted because it is spending too much; on the other hand, it is lambasted by the Minister because it is not spending sufficient in that case.
One has to be realistic about the Government's plea that this is a Bill in which there are some gainers and some losers. There are some amazing illustrations. I come from the North-East. In the North-East, in County Durham, one has this situation. Referring to households that are gaining and losing, in Chester-le-Street there are 41 per cent. of gainers and 51 per cent. of losers; in Darlington the figures are 39 per cent. gainers and 60 per cent. losers; in Derwentside there are 28 per cent. gainers and 71 per cent. losers; in Easington the figure is 26 per cent. gainers. Every district in Durham has more losers than gainers. It is said that that is the luck of the draw; that is the rub; one has to accept it. However, one is talking about people who will have very real difficulty in carrying the additional burden.
Is the Minister prepared to say anything about the impact on student nurses? This is one of the most worrying aspects with which we have to deal. The impact on student nurses is very real. In the metropolitan area the community charge for a student nurse will be £4.44. That is 6 per cent. of a student nurse's income. In inner London the charge will be £11.10. That is 13 per cent. of a student nurse's income. In Camden the charge will be £15.4; that is 17 per cent. of a student nurse's income. Before we are told that there is some disparity between some student nurses and others, can the Minster persuade those who feel hard done by that this is a right and proper position?
With regard to greater London, I mention an interest. I am the president of the Association of London Authorities. Arising from this Bill will be serious detrimental impacts on the people of London, in particular on the black and ethnic minority, and young manual workers bearing in mind that young manual workers earn only 77 per cent. and non-manual women 87 per cent. of their male counterparts. We are not talking about large sums of money. These are people who take home less than £100 per week. There will be those who will be worse off, and one must consider the impact on a range of services that can be provided by the council.
Let me give another illustration. In Hammersmith and Fulham 74 per cent. of domestic ratepayers will be worse off and 24 per cent. will remain the same. In Islington 84 per cent. of households and 91 per cent. of residents will lose as a result of the poll tax

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compared with current rates. Over 50 per cent. of residents will lose more than £200 a year. That is in the face of the impact to come, never mind the need or the acknowledged disparities of the past. I respect very much what the noble Lord, Lord Jenkin, told us about the agony, the real dilemma, of dealing with an ongoing problem. His colleagues now in the Cabinet—if they were led to do so by himself, he has some responsibility—have produced a change which, whoever else it might benefit, will not benefit a large range of people whom I deeply respect.
Let us consider what the Chartered Institute of Public Finance and Accountancy has said, if indeed the Government ever listen. CIPFA says that the poll tax is:
"an expensive and complicated tax to administer … [is] seen as an unfair tax by many taxpayers; and … in conjunction with the other parts of the package [it will] weaken rather than strengthen local accountability for decisions".
Noble Lords opposite are telling us that in a local community 75 per cent. of the money that is spent is provided and over that sum the local council has no say. We should not be surprised if more and more councils in the future ask why they should listen to the businessman. Why should they listen to anyone? They have a say only over raising 25 per cent. We should consider the range of matters in which they are involved. These include the quality of education, the quality of the roads, the quality of environmental health and training. A local council provides many services for the benefit of local industry.
I wonder whether the Minister will have anything to say about the importance of keeping records and the right of access. My noble friend Lord McIntosh referred to the registers. My concern is about the major granters of credit, consumers of credit and credit bureaux. These are individuals who are out to protect those who, in 1988, may find themselves in credit difficulties. Can the Minister tell us whether there is any intention to inhibit the provision of that information, particularly to those involved in giving credit and in the credit industry?
In my view, as it unfolds the Bill will provide many difficulties, anomalies and great distresses to people outside this building. As the Bill proceeds, we on this side of the House will be doing nothing less than our duty if we seek to improve and revise it in the best interests of the people of this country.
Lord Wolfson: My Lords, before the noble Lord sits down, may I ask: has he not made one of the central points of the Bill, namely that high spending local councils will charge more to the ratepayers? They in turn will then wish to examine the policies of the councils.
Lord Graham of Edmonton: My Lords, the noble Lord is absolutely right. In our constitution we have a democracy which every four years provides local people with an opportunity to turn councils out. If one examines the latest illustration, which was only last Thursday in Cambridge—where lives the noble Baroness, Lady Blatch, who constantly gives us information from Cambridge—one discovers that there, where the poll tax was a big issue before the elections, Labour was not in overall control, but
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afterwards Labour was in overall control. I am very grateful to the noble Lord for providing me with the opportunity to make that observation.
5.25 p.m.
Lord Chelwood: My Lords, in 1970 I wrote my last, my eighth, election address. I was so bold as to say that this country was a nation in decline. Nobody commented and nobody criticised; perhaps nobody even read it. That is perfectly possible. However, since then we have had a revolution and we are on the up and up. Inflation has been brought to heel, income tax has been slashed, the unions have been reformed and home and share ownership are thriving. There is a thriving capitalist economy backing a far higher international standing. We have come out of our nosedive. It has been a miracle. There will be ample time too to tackle some of the deplorable side-effects, some of which were surely avoidable.
My criticism of the poll tax Bill is not related in my mind to any other government policies, past or present. I wanted to make that clear. I am told I am a rebel. I may look like one—I do not know. I certainly do not feel like one. It is not in my nature or my upbringing. The only time I can remember rebelling was when your Lordships supported me in preventing the killing, the shooting of the curlew and the redshank—and we won our game of ping-pong with another place—and they were indeed protected. But I cannot remember any other occasion.
I should like to make it clear that Colonel Mates, who moved the amendment in another place, is someone whom I had not had the pleasure of meeting until last week, nor Sir George Young. I say that lightheartedly, because accusations have been made that there is an eminence grise behind the whole matter. The last time, apart from a few brief words a couple years ago, that I met the right honourable Member for Henley was birdwatching in Tobago five years ago. So this is all my own work. It is a bit scary finding myself out front concerning the amendment. But I was comforted when I looked at my family calendar this morning to see these words:
"A good scare is worth more to a man than good advice".
I have had plenty of good advice and a pretty good scare.
I said a week or two ago—and The Times for some reason quoted me—that I thought that your Lordships' House provided a more accurate reflection of public opinion than another place does today. As I have only a life sentence in this noble House, and very proud of being here I am, my roots are along the corridor. The Government at the other end of this building were elected by a mere 42 per cent. of those who voted, which was the lowest proportion of the poll attracted by any Conservative Government since 1922. They lost three-quarters of their majority when they voted on the Mates amendment, leaving them representing little more than one-third of those who went to the polls in the last election. That is a quirk of our electoral system which I shall not question today. But it must surely be borne in mind when Parliament is deciding a matter which touches every household in the land.
Something that is widely agreed is that the tax base for rates—not the scale of course, because that would be impossible—should if humanly possible be a

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matter for broad accord between the Government and the Opposition if the system is to be stable and stand the test of time. To achieve that may be difficult. It may even be impossible, but a supreme effort surely should be made.
I wonder whether the fact that we do not have a built-in Conservative majority in this House is perhaps one of our strengths and the fact that we have so many Cross-Benchers. It is one reason perhaps for the high regard in which our opinions are held at home and abroad. If this is some sort of heresy, ascribe that to a little rising damp—the phrase used some time ago by my noble friend Lord Thorneycroft—though not, please, to dry rot, which has not yet set in me.
Perhaps our collective views weigh more heavily in the balance than our marginal powers that we are rightly reluctant to use and shall certainly not abuse. Were we to overstep the mark and get too big for our boots, as the noble Lord, Lord Beloff, stated in his Daily Telegraph article, Mr. Speaker is obliged by Standing Orders to rule an amendment out of order if it is "intolerable"—in the words of Erskine May—and therefore offends against Commons privilege. About that there is no doubt and I believe that it should be clearly understood.
I should like to turn to deal with two final main points. I must say something about the manifesto because I should like to put the record straight. Our last manifesto stated that we would replace rates with a fairer community charge. We then had the colossal Green Paper, Command Paper 9714, which is as white as a snowgoose, in which the Government proposed to phase the replacement of domestic rates with a new community charge. Then we had the child's guide to the same Green Paper. It is even more succinct in saying:
"Alone of the options, it satisfies all three of the main tests for a local tax."
That is the poll tax. However, I must not forget to mention the Layfield Report, which took two years to produce. Therein one will not find one word about a poll tax. No doubt the committee gave thought to the matter, but it does not rate a full stop.
A poll tax of any magnitude was dismissed in Command Paper 8449 of 1981, entitled Alternative to Domestic Rates. It stated that it would:
"almost certainly not be a practical proposition".
Incredibly that was republished in 1986 just after the publication of the fat Green Paper that I have shown to your Lordships. To go back for one moment, in July 1982 the Environment Committee in another place recommended that:
"a Poll Tax, even at a low level, should not be introduced".
That was stated in paragraph 40. A few months later the Government stated: in Command Paper 9008:
"The Government agree with the Environment Committee that this option should be rejected".
That takes one up to 1986 when, as my noble friend Lord Jenkin of Roding told us, furious thought was given to introducing a poll tax. However, the fact remains that for 12 years, from 1974 to 1986, the party was committed to introducing a tax which bore a direct relationship to people's ability to pay. It has been only in the past two years that there has been a sudden and complete somersault and we are asked to
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agree instead to a flat rate poll tax which is now apparently the answer to a maiden's prayer. There are other quotes which illustrate the same points.
I conclude that the Bill is virtually friendless. Root and branch it is regarded as being unfair and perhaps unworkable by the Association of Municipal Authorities, the Association of County Councils, by my own county council of East Sussex, by the National Union of Ratepayers, of which my noble friend Lord Ellenborough is president, by the Chartered Institute of Public Finance and Accountancy, by the Inland Revenue Staff Federation and perhaps one may say by Uncle Tom Cobbleigh and all. They all wish to reject it outright because they do not like its unfairness and the fact that it does not take proper account of people's ability to pay above and below the rebate level.
Among all the represented bodies that have written to me only the Association of District Councils is not opposed to the Bill in principle. That applies to my own local district council, the Wealden Council. However, it is thoroughly unhappy and wants a further tapering from 15 per cent. to 10 per cent., or even rebating up to average wages. I believe that the Government will be most reluctant to do that because it will drive a second coach and horses through accountability.
My noble friend Lord Jenkin of Roding asked what we, the party opposite and I would do instead. I would not do anything instead. I want the Government to do something instead. They have the whole of the Civil Service behind them and they have been studying this matter for years. For 12 years we believed in a poll tax which took account of people's ability to pay. There must be a Bill which my noble friend has tucked away in some pigeon hole, or perhaps he has taken it home with him covered in dust, which provides for exactly that. I want to see the Bill. One cannot believe in such matters for 12 years without producing a Bill. I suppose that one could, but it would be pretty dotty.
The Bill cocks a snook at public opinion. I believe that it has in-built inequities. It departs from centuries of precedent by taking too little account of ability to pay. It is complicated to such an extent that many people will not understand it. It is inconsistent with some of the Conservative principles on which I was brought up. I beg the Government to take it away, think about it and bring it back again.
5.36 p.m.
Lord Wyatt of Weeford: My Lords, the noble Lord, Lord Chelwood, said that the Bill has no friends. I believe that he is already finding that the Bill has friends in this House. Whatever may have been the moral victor in the argument in another place, it certainly will not be the victor here. Indeed I do not believe that it was a victor in the other place.
The community charge has not yet been born but already it is surrounded by myths. The noble Lord, Lord Jenkins of Hillhead, produced a new myth today. He said that we must not pass the Bill because even the Government do not support it; only the Prime Minister supports it. I do not know from where he obtained that piece of political gossip, but the noble Lord, Lord Jenkin, (without an "s") completely dispelled it with his account of his

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conversations and discussions with the Government during his time as the Minister responsible. He said that he convinced them that this was the only possible course. I do not know whether the noble Lord, Lord Jenkins, was trying to persuade the right honourable Peter Walker to rise to his feet and make a solemn declaration of loyalty, but I believe that even he is satisfied with it because Wales is doing rather well out of it.
A major myth is that the Government will fix the community charge. It has nothing whatever to do with the Government; it is the business of the local council. Inefficient and extravagant councils will inflict a community charge higher than will well-run and thrifty councils. If the community charge had been in full operation on figures published last June Labour-controlled Camden would have had to charge each adult £782 or reduce its spending. However, Birmingham council is also Labour-controlled. Its community charge would have been only £186. It is the difference between lunacy and sensible councils. Why cannot all councils be sensible as is the Labour council in Birmingham.
The services are basically the same in all council areas. Where they are not adjustments are made in grants from central government to deal with any necessary expenditure. On last June's figures a community charge of £178 per adult would have been sufficient to cover the same standard services everywhere when the community charge is in full operation. That is slightly less than Birmingham's £186 but there is not much difference. Many thrifty councils would need less; many profligate councils, run by the Napoleons of Notting Hill who love to spend other people's money, would need more. Taking all councils together, the average community charge would have been £224.
An essential provision of the new scheme is that one will receive a bill with the community charge and alongside what one has to pay will be shown what one would have had to pay had the council not charged more than was needed for the standard services. Those who live in inner London would have seen on their bill that £252 per annum of the community charge was attributable to overspending by the ILEA; that is apart from any other overspending by the local council. When the ILEA is abolished that £252, or much of it, has a chance of disappearing from the community charge bills of inner London, assuming that the new education authorities cut out waste—and I am sure that they will not be anything like as extravagant as ILEA. That is the beginning of real accountability in local government.
Until 1944, as the noble Lord, Lord Jenkin of Roding, said, only ratepayers had a vote in local elections. Now there are 35 or 36 million local electors; only 12 million pay full rates; 6 million receive rate rebates; and the remaining 17 million pay nothing. Therefore, they are not particularly interested in careful housekeeping by councils. However, they will now have an interest. Even the poorest person will have added to his or her social security payment 20 per cent. of the national average community charge; the other 80 per cent. will remain a rebate. Out of that increase to their social security
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payments, they must personally pay the balance of their community charge. In areas with a well-run council the whole 20 per cent. will not be needed. They can keep the change which will be a nice little bonus. However, in areas where there are badly-run councils 20 per cent. will not be enough and that will cause them to pay £1 or so a week more than they have received in actual cash to the council.
For the first time that arrangement has a fair hope of interesting people in what their councils spend and why. Noble Lords may believe that a £1 or £2 a week is meaningless but it is not. Many people on very low incomes watch every penny and will be extremely annoyed with councils which force them to pay over the 20 per cent. which they have received to top up their 80 per cent. rebate. That has nothing whatever to do with central government.
The next myth is that the community charge is not related to ability to pay. The charge is the most closely related to ability to pay than anything that could possibly be devised. As we have been told, 50 per cent. of council spending will come from the Government out of general taxation; over 25 per cent. will come from the new non-domestic rates; and less than a quarter will come from local residents. As the noble Lord, Lord Jenkin of Roding, said, that means that the top 10 per cent., even after the new 40 per cent. top rate of tax, will be paying 15 times as much for the same services as the 10 per cent. with the lowest incomes. They will be paying infinitely more than those whose rebates leave them paying nothing.
An amendment moved in another place that those on the 40 per cent. income tax rate should pay one and a half times as much by way of community charge would then have been absurdly unjust. £1 above a taxable income of £19,300 for couples would have led to a surcharge of 50 per cent. That could amount to £800 a year in areas with badly-run councils. That would have produced enough money only to reduce the standard community charge by £5 a head. That would not only have been unjust but almost pointless, except for indulging the spiteful and envious in their prejudices.
The proposal that those not paying income tax should only pay 50 per cent. would have been equally absurd. That would have meant sudden leaps when income tax started to be paid from 50 per cent. to the 100 per cent. standard charge. That would require an elaborate system of rebates to alleviate the consequent injustices. There is already such a scheme for those on lower incomes under the Government's plans; it covers 9 million people.
It is true that some people will pay more than they do under the present rating system, and so they should when they can afford it. Why should a couple living on retirement pensions pay the same as four working adults in a similar house next door? The four adults next door must have much more in their dustbins than the retired couple. Well over half of those earning up to £150 a week will gain from the new community charge and half the losers will lose less than £1 a week. The average couple with two children where the community charge is at the national average will not pay the full charge until their income reaches nearly average earnings; that is not onerous.

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Another aid to the poorest will be the new national non-domestic rates. That will shift £700 million a year from the better-off to the poorer regions. That means that in areas of high unemployment the business rate will be substantially less and more firms will be attracted to them. That will create more employment just where it is needed.
The ability to pay under the new system is covered upwards, downwards and sideways. It needs no more tinkering with. Everyone agrees that the old rates system was unfair and ineffective and did not produce genuine local democracy. Councils were not accountable in any real sense to their voters. The Labour Party suggests a combination of local income tax and a revaluation of domestic properties. We did not hear much of that from the noble Lord, Lord McIntosh of Haringey, because the proposition is completely untenable. A local income tax would create 402 chancellors of the exchequer and they would not all be as prudent as was the noble Lord, Lord Jenkins of Hillhead, when he was Chancellor of the Exchequer. They would have to be informed by the Inland Revenue of the income tax affairs of the ratepayers to make sure that there was no cheating. That is not a very pleasant thought, particularly in the light of the nature of some councils.
Local income tax would produce much wilder disparities than today's system. For example, on current spending in Camden local income tax of 26p in the pound would have to be added to the ordinary income tax. In neighbouring Barnet the council could manage with a local income tax of less than 6p in the pound. Those disparities would occur throughout the country causing sudden shifts in the population as people sought tax exile in a cheaper council area.
Revaluation would cause terrible hardships. A retired couple who live in a part of a council area where neighbouring houses had been gentrified would have a fearful shock, even if they had not improved their house since they paid perhaps £10,000 for it 30 years ago. On revaluation they could find that it is revalued at £250,000 to £500,000. Their rates would rise correspondingly and alarmingly. They would have to move and leave their friends and roots. I believe that that would be an extremely cruel situation.
I congratulate the Government and my noble friend Lord Jenkin of Roding on working out a scheme which is the fairest that can be devised.
Noble Lords: Oh! Oh!
Lord Wyatt of Weeford: My Lords, it certainly is. The opposition to it is mainly anecdotal. Examples are given where some people will be adversely affected. The majority who will be favourably affected are never mentioned nor is the desirability of trying to make local democracy work.
The beauty of the new arrangement is that for the first time everyone will realise that the council's job is basically to provide local services such as schools, meals-on-wheels, the police, roads and footpaths, street lighting, museums, art galleries, waste collection and so on. Local councils are not supposed to be the mini-governments that some have become, operating all kinds of fancy policies like nuclear-free
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zones or having their own expensive schemes to deal with the problems of race or non-heterosexuals.
The Government should mount an information campaign, and an essential feature of it should be that it is the local council which decides the level of the community charge and not the Government. Those who believe that their local community charge is too high, even after all the rebates, should use the ballot box to do something about extravagant and inefficient councils. The Government are not responsible for the excesses of Camden and Liverpool; the people of Camden and Liverpool are. I hope that your Lordships will pass this Bill mainly as it is and not be seduced by the irrational fears and inaccurate, emotional and alarmist arguments of those who oppose it. It is a great and badly needed reform. When it is working everyone will wonder what the fuss was all about and why it had not been done years ago.
5.51 p.m.
Viscount Watkinson: My Lords, after the Bill's passage through the other place it was not very surprising that the parties opposite in your Lordships' House should have what good clean political fun they could get out of it. I am quite happy to leave the rebuttal of their arguments to the noble Lord, Lord Wyatt, who has just sat down, and who better to do it than he?
I wish to put four points to your Lordships which I believe are not subject to argument by fair-minded people and which I hope noble Lords will bear in mind during the long course of this Bill through its Committee stage. Before I reach them I do not believe that it is improper to say that we have listened to three very distinguished maiden speeches today. I heard them with very great pleasure and I should like to congratulate the noble Lords very sincerely. I hope that we shall hear them again before long.
I turn now to my four points and the first is commitment. This is something of an answer to my noble friend Lord Chelwood. The Bill derives from the clearest manifesto commitment that I have ever seen in rather a long political life. What is said in that commitment is exactly what the Bill in front of us expresses, so let us be quite clear about that. The second point, which is glossed over by the opponents of the Bill, is that if we do not have this Bill we face an extremely painful alternative. Without the Bill there must be a revaluation of all domestic properties. Many dwellings would double or treble in value, resulting in the hardship and unfairness that must inevitably follow from that enormous rise in price. Incidentally, such an increase on the rateable base would be a spendthrift's charter for many local authorities. Again, and as my noble friend Lord Jenkin said, I believe the Government had no alternative but to go ahead with a fundamental revolution.
My third point relates to the question of graded charges. As other noble Lords have said, when the top 10 per cent. is paying 15 times more than the bottom 10 per cent., it is a fairly graded measure. It is certainly not unjust as the noble Lord, Lord McIntosh, maintained.
My fourth point is that it is of course a revolutionary change and it does not pretend to be

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anything else. It is a fundamental restructuring of the whole of local government expenditure. From that point of view I believe that it would be wrong of your Lordships' House to try to fudge the issue. The objection that I have to my noble friend Lord Chelwood's speech and to the points made by his supporters in the press and elsewhere is that they are trying to fudge the issue. They are trying to pretend that there is some easy way out of evading the Bill's main principle; namely, personal payment for personal service. If one starts blurring the basis of the Bill, one is in effect attempting to destroy it. I very much hope that we shall not confuse ourselves into issues like local income tax, capital value rating or a banding system, all of which would destroy the Bill, blur the issue and make it quite impossible to bring forward a measure which I believe solves a problem that from my personal knowledge has been around in the Cabinet for more years than I care to think about.
As my noble friend said in opening the debate—and again I believe this to be irrefutable—governments of all complexions over many years have accepted without any challenge that the rating system was outmoded, impossible of operation and progressively immoral in many ways in its application. My noble friend Lord Jenkin told us very clearly in a speech which deeply impressed me of a man who was clearly forced to take a very difficult decision which he knew would be unpopular because he felt it was right. That is not a bad principle to go on in government.
At last we have a Prime Minister and her colleagues who have had the courage to replace an outmoded, unfair system with one properly fitted to the situation that we now face. Individual payment for individual services for only a quarter of the total cost is not an unnatural burden. I strongly support the Bill and its broad concept.
There will be matters that we wish to discuss at Committee stage. For example, I believe that there is a need for much greater clarification as regards the universal business rate. However, these are details and they are not really important. They do not detract—I say this again—from the courage of this Administration in bringing forward a Bill which they knew would be difficult and open to a great deal of attack on largely specious grounds from, I regret to say, some of my old friends and colleagues who ought to know better as well as from Her Majesty's Opposition and all the rest.
I urge your Lordships not to nullify the main purpose of this Bill and to pay some tribute to the courage of the Government who have brought it in.
5.57 p.m.
Lord Wilson of Langside: My Lords, I was intrigued by one point in the noble Earl's introduction of the Bill when he understandably said, after describing the present rating system, that if we were starting again we certainly would not start with that. It occurred to me that if were to embark on radical reform of our constitutional arrangements it is very unlikely that anyone would come up with something as odd as your Lordships' House. I
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mention that just as matter for reflection in the context of these discussions.
I hope that the noble Viscount, Lord Watkinson, in listening to anything I have to say on this matter will not regard me as indulging in what I believe he called political gamesmanship. It will be nothing like that. I am much too old for that. At least for 20 years I do not believe I have been consciously guilty of it. Like everyone else, I may have been unconsciously guilty of it. In any event, some months ago I drafted a Bill for the repeal of the Abolition of Domestic Rates Etc. (Scotland) Act of last year. I did that not as a political gimmick but because I was seriously concerned, like most of the people in Scotland with whom I spoke, about the damage that the measure which is coming into operation there was causing to our social cohesion. I know that there are those who believe that society does not exist and do not regard social cohesion as very important. However, most of us on this side of the House and many on the other side see its importance to the continuance of social and political stability.
After discussion with my friends in the Social Democratic Party I launched the Bill in the Public Bill Office. The officials took it in and thought about it for a day or two. I was then told, as was the case, that it offended against the financial privileges of the other place. Therefore I thought it would be too much like a political gimmick to go on with it. However, I am bound to say that my picture of the damage to our social and national cohesion that will result from this measure has become a little blacker during that time. It is reflected, the pundits say, in the not insignificant increase in the vote for the Scottish National Party. The Government should be thinking about that.
In any event, like the noble Lord, Lord Chelwood, I find myself wishing that we had the power to send this measure back to another place, perhaps with a schoolmaster-like report saying, "Try again. You can surely do better. This will not do". However, we cannot do that. As a legislative Chamber, this House is the victim of its own history, and in the context of this Bill we are virtually powerless. That is a pity. The House has a funny old history. Only 10 years after the start of the century the argument was about whether we were the watchdog of the constitution or Mr. Balfour's poodle. Now, 10 years before the end of the century, we have to sit quiescent before Mrs. Thatcher's elective dictatorship. That is a great pity too. There it is; we have to live with it.
Of my many reasons for thinking the Bill should be sent back to the other place (if we had the power to do that) I propose to mention only two. The first is a general one. I appreciate the force of the speech of the noble Lord, Lord Jenkin of Roding, in support of the Bill. I shall deal with that just before I sit down. When I reflect on the background to the Bill, on the history of local government finance and on the immense scale of the problems which have accumulated under successive governments, culminating, if my recollection is correct, in the Layfield Report of 1976, I find it mind-boggling that the Government should plump for a poll tax as the solution to the domestic rates side of the problem.
After all, the history of the poll tax as an instrument of taxation is a pretty disreputable one. It

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is usually an instrument used by autocratic governments. That is significant as things are today. I am thinking not only of the Peasants Revolt in England in the 14th century, which was referred to so often in the other place when the Scottish Bill was under discussion. In a different context, the poll tax in the southern states of America was abolished only in 1966. It was conceived in Russia by Peter the Great. It was not abolished when the serfs were emancipated. Only later on in the 19th century did it finally go.
With my mind in this boggling state, I was curious about who had started it. I could not think who it was. The noble Lord, Lord Jenkin of Roding, has perhaps added to our knowledge of that. I wrote to my local Member of Parliament, Mr. Michael Forsyth, a junior Minister in the Scottish Office. He had spoken a great deal during the discussions on the Scottish measure. I asked him whether he could tell me why he had not said more about Layfield. In presenting his point of view to the House he had said nothing at all about it. In a courteous reply he said nothing about Layfield but told me that he was, if not the only author, one of the authors of the poll tax. He sent me a copy of a pamphlet published by Conservative Central Office entitled The case for a poll tax and hoped that I would be interested.
After reading it I wrote back and said that, while I had been very interested and thought he had made the case very effectively because it was well written, I judged that it was a bad case. I said that I had more respect for a politician who called a poll tax a poll tax that for one who called it a blooming community charge. I did not of course say "blooming". I thought it would be inappropriate to say "bloody" in your Lordships' House. I mention this apparently trivial matter because it seems to lend force to the view widely expressed in this House, particularly from the principal Opposition Front Bench, that the measure for Scotland was the product of panic at the time of the Scottish Conservative Party conference about the revaluation in Scotland, which was a startling affair.
That is my first reason for believing that the Government should be asked to look again at this issue. I come to my second objection. My answer to the powerful speech of the noble Lord, Lord Jenkin of Roding, is that his remarks are all very well if one looks at the Bill in isolation. If there were nothing else but the Bill for people to think about it may be that we would accept his approach. This Government have done a great deal of good. There was much in what the noble Lord, Lord Chelwood, said. I do not dispute that. But when one comes to look at their handling of this side of government business, it is rather shocking.
I see the Bill as the last of a series of straws, the first of which was the crisis in the National Health Service. Although one must not be rude about how they deal with such matters in the other place, I must confess that when it broke I could see, during the exchanges between Mr. Kinnock and the Prime Minister, the force of the Government's argument that they were throwing far more money at the problem than anyone else had ever done, including any of their predecessors. Furthermore, they said, "What was wrong with that?" Were they not a caring
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government by spending all that money in order to solve the problem?"
I pass on to the next straw, which was the Budget. There were all those magnificent handouts to top people. Of course I know that excessive, punitive taxation can be counter-productive. There is no doubt about that. However, that was not the end of the matter. We then had the reorganisation, the restructuring, of the social security system and the appalling mishandling of such restructuring by the Government in their presentation of it.
One could perhaps to some extent laugh off much of the aforementioned because we have suffered from incompetence in government for a long time. However, I think that this Bill is the last straw. It will gravely damage the social and national cohesion. For that reason I think that the Government ought to have thought more deeply before they committed the incredibly foolish political act of imposing the legislation on Scotland as a trial.
6.12 p.m.
Lord Pym: My Lords, the reform of local government finance is long overdue. A radical change has been necessary for a long time. I wish to make it clear that I am absolutely in favour of such a change. Further, I certainly pay tribute to the contribution made by my noble friend Lord Jenkin of Roding who spoke earlier in the debate. Of course there are many ways in which that reform can be carried out. Now we have to consider this particular solution.
It was always recognised that it would be extremely difficult to switch from a tax on property to a tax on people. That is why in the 1979 Parliament the Government came to the conclusion that they would not attempt to implement such a change. For such a big change to be successfully achieved two requirements are necessary: that the change itself is generally advantageous to the individual and the nation and that there is broad public consent for such change—by which I mean a genuine acceptance, rather than just a manifesto commitment.
The first point—the unfairness of the rating system—is not in dispute. Indeed, it is the most powerful reason for having a radical reform. There was a case for retaining an element of the rating system, but no more than that, in a reformed system of local government finance because it was cheap to collect; it could not be evaded; it had been established for a long time and people accepted it. However, we are long past that stage now and domestic rating will be abolished under the Bill.
Moreover, there is no dispute about central government providing something in the region of half of all local government expenditure. There is of course, and always will be, argument about the precise level of government support, but the general principle, with regard to the government providing half, is not in issue either within the confines of the Bill or outside it. The remaining half of local government expenditure will be provided by the business community and the community charge on the population in roughly equal proportions—that is about the state of the division as it now stands.
However, unlike today, the Bill enables the Government to set the unified business rate, which

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means a considerable diminution in the options available to local authorities in raising money and a substantial increase in the powers of central government. I know that there are plenty of examples where local authorities have abused their present powers by raising exorbitant sums through their rates on businesses, regardless of the consequences for employment or anything else. However, there are also many examples where local authorities have deliberately pursued low-rating policies to attract new businesses and create new jobs. That is very much in line with the Government's own policy. Unfortunately, that will no longer be possible under the Bill. Therefore there will be less accountability between local government and business. Furthermore, the consultations now taking place between local government and business, which are most valuable in many cases—indeed we had a good example from the noble Earl, Lord Carnarvon, in his admirable maiden speech—will be rendered pointless because local government will have no say in the unified business rate. I think that that is a pity.
I know that the Government are committed to the unified business rate, but it appears to be a contradiction to their self-chosen principle—a perfectly sensible one, if I may say so—of better accountability. So, as I have already said, there is a contradiction there. I must add—and this may seem to some people to be only a detail—that having represented a rural constituency for over 25 years with 135 villages I am concerned about certain aspects of the Bill on the rural community, especially the village shop, which will have to pay both the business rate and the community charge. It will be most difficult to persuade those people that such a proposal is fair. Therefore I hope that my noble friend on the Front Bench, when he comes to wind up, will have something constructive to say about the needs of the rural areas, the important relationship between business and local government, and how it can continue in a meaningful way under the provisions of the Bill.
The second point is the obtaining of a broad and genuine acceptance of the change. Here I should like to have seen a wide, public debate about the changes precede the Bill. Such a procedure was carried out in the case of the European Communities Act, with the establishment of the welfare state and also in many other instances. However, it has not happened in this case. I believe that that is one of the reasons for the controversy which has arisen in regard to the community charge. Yes, it was in the manifesto but it was not one of the issues uppermost in the minds of the electorate at the time of the election. The electorate was indeed aware of the pledge to abolish the rates which would be replaced with a fairer community charge; however, the electorate was not aware of the details or the implications involved, because it was not fully informed about them.
However, now that such details have been spelt out many people—the majority it seems—are of the opinion, at least thus far, that they are not fair. That is true even though the community charge has some good features. For example, a household where several members of a family are earning will contribute more in future than they do today. By
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definition, such a household has the ability to pay an increased contribution. No one can deny that that situation is fairer than the existing arrangement and that indeed such a household ought to pay more.
That brings one to the question of registration and the complexity of the task of maintaining an accurate and complete register of some 35 million people. I cannot find anyone who thinks that even 90 per cent. accuracy is likely to be achieved; the average is likely to be somewhat different than that and lower than 90 per cent. Therefore not everyone will contribute. That factor adds to the perception of unfairness, indeed the actual unfairness, which is perhaps the worst aspect of the system itself.
There are other types of household and a number of categories of people who will be adversely affected by the community charge. They are the people about whom we must worry. The ones I should like to mention are those who live on small fixed incomes; that is, those just above the line where an exemption, a rebate or assistance of some kind will be forthcoming. They are people who have almost always worked hard and skimped their own needs in order to save something for their old age. They are people who have stretched their resources to become home owners and thus independent—the very people whom this Government are rightly trying to encourage. Many of them will find their weekly budgets, which are in any case tight, completely upset. They are worrying about it already, as I think your Lordships' mailbags will be indicating just as is mine. How will they find the extra money? I acknowledge at once that the Government have introduced amendments to ease the hardship of a number of categories of people, but those on small fixed incomes, just above the line where support is available, will be hurt. We should help them. That is why I think that more consideration should be given to the ability to pay than has already been given.
My party has traditionally taken care of people in those circumstances, and in my view it is right that we should continue to do so. Those who served with me in another place will vividly recall the doughty champion of those who lived on small fixed incomes in the person of the late Dame Irene Ward. I am certain that she would have added her authority and weight to this cause. I think that she would have led a campaign to try to persuade the Government to think again.
As I say, there are advantages in the Bill. It will improve accountability, although not to the extent for which the Government hoped. My concerns about the Bill are: that the system will be complex and expensive to administer; that the community charge will be evaded to an uncomfortable extent; that the universal business rate severs, or at the very least weakens, the link between the business and local community; and that the community charge creates hardship for a number of people whose resources are already stretched. Those defects are of a fundamental nature and most of them are not capable of being corrected by amendments to the Bill; but the defect that can be altered, or at least ameliorated, is the one that affects those living on small fixed incomes, just above the line where help is available. It seems to me

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wholly proper for your Lordships to address that issue.
In expressing those views, I want to make it absolutely clear that I am in full support of all the Government's objectives over the whole political field and indeed of most of their methods for obtaining those objectives. But in a few areas of policy I believe that their objectives could be better achieved by other means; and in some areas of policy I do not believe that they have been radical enough. In the last Parliament I tried to urge my colleagues in government to prepare the way for a change of some kind in the National Health Service, which the improvement in medical technology makes inevitable, and, similarly, for a change, which in due course I am sure is inevitable, in the social security system.
In those cases, as with local Government finance, where major changes are to be made, it is vitally important to obtain the broad consent of the people. To achieve that in the case of this Bill will not be easy, but your Lordships can make a constructive and helpful contribution to the process if you decide to revise some of the details. If your Lordships can make the Bill more popular, Her Majesty's Government would be extremely grateful.
6.24 p.m.
Lord Jay: My Lords, I notice that those noble Lords who have supported the Bill this afternoon have spent a good deal more time pointing out imperfections in the existing rating system than in making a case for the Bill. It is of course one thing to point to the undoubted flaws in the present system; it is quite different to make a convincing case for the proposals now before the House.
If one looks, not at the past, but at the proposals, one sees that this is the most unfair and unjust tax introduced into this country for a great many years. If it is enacted, we shall have an overall tax system in which over many levels of income the poorer one is, the more heavily one will be taxed.
If one introduces a new charge of this kind, one should look at the position, in tax terms, from which one starts. It is of course a platitutde, but it is a platitude often ignored nowadays, that a tax fixed at an equal amount for everyone takes a higher proportion of the income the lower one's income is. That is why all indirect taxation tends to fall heavily, and often too heavily, on those with smaller incomes. As long ago as the 1920s, the famous Colwyn Committee on national debt and taxation produced a report that showed, taking indirect as well as direct taxation, that those on middle incomes were in total paying a much smaller percentage of their incomes than those at the bottom of the income scale. Many people in the middle income bracket were shocked, astonished and could hardly believe the figures when they were shown them. Since then of course we have had a huge increase in indirect taxation, notably from VAT, which was raised from 8 per cent. to 15 per cent. in 1979 by the present Government.
In addition, there was also introduced to this country in the 1970s a heavy and vicious form of taxation on food; the food import levies imposed on all consumers by the common agricultural policy. A tax on food is probably the most socially unjust of all
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taxes, because it falls on food, on which the people with the lowest incomes spend the highest proportion of their income. It is especially insidious in this case because the tax rates are hidden from the public. Present CAP import levies run from 60 per cent. to 100 per cent. in the case of grain, to 200 per cent. to 300 per cent. in the case of dairy products. Statisticians now agree that so far as that form of taxation goes, the total levy per head on the ordinary consumer in this country is about £3 per week which, as the noble Lord, Lord Wyatt, said just now, is not a negligible sum. That is where we start.
Recently the Colwyn Committee's calculations of the 1920s, rather appositely I think, have been brought up to date in a most illuminating report by the House of Commons Library Research Division called The Burden of Taxation 1978–1987, which was published last December. Those figures include all taxes, direct and indirect, local rates and national insurance contributions; but they omit the EC food taxes, so that they would not overstate the burden on the poorer taxpayer even if one omitted the insurance contributions as being not strictly a tax. They also omit this year's budget tax changes.
Those figures show, first, that the total of all taxes paid, as a percentage of all gross earnings of the British public, rose slightly between 1978–79 and 1987–1988. They also show that income tax, which we all agree is most suited to ability to pay, declined over those 10 years from being rather more than 50 per cent. of total revenue to being rather less. But in 1987–1988—that is the last financial year—all taxes paid by a single adult, receiving only 75 per cent. of average earnings, were 60 per cent. of his total earnings. At 100 per cent. of average earnings (that is, the ordinary earner in this country) they were 45 per cent. of total earnings; and for earners at 150 per cent. of average earnings, the tax taken was a little less, at 40 per cent., but nevertheless that was an astonishingly high proportion for people on modest incomes. In order to complete the picture is the case of a married couple with two children. Counting child benefit as negative taxation, the couple receiving only 75 per cent. of average earnings pay 45 per cent. of their total earnings in tax; those receiving 100 per cent. pay 40 per cent.
Therefore before the poll tax is imposed, as a result of looking at each item separately and not taking everything together, we have evolved a tax system which takes 40 per cent. or 45 per cent. of the incomes of the average earner in this country and an even higher proportion of the incomes below the average. Interestingly, in all these cases the total tax taken from these people is a higher proportion of their earnings than it was in 1978–79. We have arrived at this situation by piecemeal change, and taxes have been steadily falling more and more heavily on those with lower incomes. As a result, without counting in the 1988 Budget or the EC food taxes, we now have a tax system which falls more heavily on those earning less than the average earnings than on many of those above it. What is really required now is a lightening of the tax on the millons of people at low income levels.
Therefore to load on top of this the gross inequity of the poll tax, which will be a heavier tax at the lower end of the income scale, would be to give this country

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a more regressive system of taxation than exists in almost all countries in Western Europe at the present time.
I gave some general statistics earlier, but since the noble Lord, Lord Jenkin of Roding, said that the whole thing was based on ability to pay and was extremely fair and reasonable, I shall quote one other individual case. These figures were given to me by a retired high civil servant living in a comfortable country house on a comfortable pension. This civil servant pays £900 a year in rates which, under the new system advocated in this Bill, will fall to £250. In the cottage next door lives an agricultural labourer with a wife and one working son. They will find their rates bill rising from a negligible figure now to £750 a year. I do not quite see how that example, which must be repeated in a very large number of cases can be described as fair or as having anything to do with ability to pay.
As has been said, quite apart from the merits of the case, this Bill is acutely unpopular throughout the country and supported wholeheartedly by very few—even in the Party opposite, as we well know. In addition to all the other authorities we have heard today who have criticised this Bill from the chartered accountants to the churches, even The Economist and the Financial Times have condemned it out of hand. Indeed, The Economist says that it has "neither equity nor efficiency". Even Mr. Michael Heseltine described it as "expensive, inflective and unfair".
We have heard a good deal about the Conservative manifesto today. The 1974 manifesto—the year when all this started—called for a local tax based on "ability to pay". The 1987 manifesto called for a "fairer charge". But almost nobody really thinks that this is based on ability to pay or can possibly be called a fairer charge. It would be truer to say that it is based on ability not to pay. I believe therefore that it is certainly the duty of this House so to improve this Bill as to make the charge, in accordance with the Tory Party's own election manifesto, a fairer tax instead of a grossly unfair tax. I also believe that it will greatly enhance the respect felt for this House in the country if it makes substantial changes in the Bill.
6.35 p.m.
Lord Harris of High Cross: My Lords, I congratulate the noble Lord, Lord Jay, on using this occasion to advertise the burdens arising from the common agricultural policy. They are criticisms which I wholly share and it concerns policies in Europe far more deserving of the noble Lord's indignation than the Local Government Finance Bill with which we are concerned.
I am pleased to follow other speakers from the Cross-Benches in commending the Government strongly on their resolve over the community charge in the teeth of a great deal of powerfully orchestrated opposition. I share with my noble friend Lord Carnarvon misgivings over the unified business rate, but as for the rest, I am prepared to go along with the splendid speech we heard from the noble Lord, Lord Jenkin of Roding.
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The Labour Party is paid, and constitutionally charged, to oppose these measures, and sometimes it makes a rather poor job of it. On this occasion it has been greatly assisted by the extent of ignorance or misunderstanding extending even to the Tory Benches. We had a whiff of that from the noble Lord, Lord Chelwood.
I must tell your Lordships that until this weekend when I dug into the formidable mass of explanatory papers I had not appreciated the full beauty of the proposed arrangements. Unless I am wrong—and I shall resume my seat to be challenged—the notion is that by fixing the central grant to take care of varying local needs, the new tax offers the prospect of essential local services being adequately provided for a modest uniform tax or charge of, say, £4 a week from every adult citizen. The fact that Linda Bellos of Lambeth can knock £60 million off a budget of £200 million over the weekend suggests that there is a great deal of scope for economy and the reduction of the burden when this tax comes into operation.
I am not as sensitive as the Government about the description of the charge as a poll tax, but I am not paid, like Ministers, to argue that any tax is particularly fair, much less that it is desirable. I had pleasure in agreeing last week with a former Treasury Chief Secretary, the noble Lord, Lord Boyd-Carpenter, that all taxation is bad, though some forms of taxation are worse than others. The rates are especially bad because they are neither a dependable measure of ability to pay often very large sums per year, nor are they remotely related or intended to be related to the use made of local, largely personal, services.
Local income tax turns out to be even worse. Not only does it lack any pretence of a link with consumption or control of local services; far more seriously, it offers no prospect whatsoever of checking the wilful extravagance of councils at other people's expense. What the critics call a poll tax at least has some resemblance to an average charge towards the cost of local services. Why should not every adult individual pay something for the local police, fire brigade, transport, environmental and social services?
My objection to these arrangements is that the new tax remains far inferior to direct charging for many private, personal or commercial services which local authorities currently provide, often rather badly, on a free or subsidised basis. More than a dozen years ago, with my colleague Arthur Seldon, I gave evidence to the Layfield Committee on the scope for pricing in place of taxing to pay for local services which do not correspond to the economist's definition of public goods. The list of candidates for pricing was, and in my view remains, extensive, including libraries, swimming pools, refuse disposal, some forms of pollution, car parking, planning permissions, leisure and sports facilities. In our evidence we even proposed a charge towards schooling, with a voucher to top up low incomes. I cannot help reflecting, and inviting noble Lords to reflect, how much better at least some of these services would be provided if, like Marks and Spencer or even the dear old Co-op, councils had to rely for their revenue on attracting voluntary payment from satisfied customers.

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So the new tax is a long way from my ideal of directly charging, wherever possible, for local personal services. But I think that the most misguided objection from the critics is that it is not progressive. I should like briefly to try to explode this bogus principle for anyone whose mind is not wholly closed by the Animal Farm incantation, "regressive, bad; progressive, good; and re-distribution, best of all". The truth is that in every nation every tax regime is a mixed system.
Thus half the local spending that is financed and will be financed by central government comes from moneys partly raised by a progressive income tax, partly by proportional VAT and partly by regressive excise and other duties. Since when has anyone taken seriously this baloney that all taxation must be progressive? Another quarter of local spending will come from the uniform business rate, to which I take objection, leaving only one-quarter to be financed by the new charge, which even then, as we have heard, has a substantial element of progression built in where it counts, at the lower end.
When we come to redistribution, on which the noble Lord, Lord Jay, was rather eloquent, I believe that the argument fails again. Even if this partial charge were strictly uniform in its initial impact, the net incidence would have to take account of the additional benefits derived from some local services by poorer people. If all taxes were flat or proportional, as I would strongly prefer, there would still be plenty of scope for redistribution in the way that those tax revenues were spent on social and other benefits.
Turning from these dubious economic and social obfuscations, I commend the new charge on the far more weighty and wider grounds of politics and even of morality. The Government go on and on about improving accountability. I do not complain but prefer to emphasise the old-fashioned virtue of responsibility. The present system whereby a majority who do not pay can vote for increased spending and higher taxes on a minority who do pay has bred irresponsibility among both councillors and local electors. The danger runs far wider than the militants of Liverpool who bought power blatantly by distributing favours to organised lobbies of employees, council tenants, trade unions and assorted minority cranks.
I must tell the House that there is a growing academic literature which points to the danger of democratic government being swamped by the pervasive pressure of organised special interest groups. One symptom is the politicisation of national life, as governments are drawn deeper and wider into placating lobbies which seek to manipulate the democratic process to their own advantage. In a quite exceptional signed article in The Economist two weeks ago, Sir Karl Popper argued that the practical case for democracy was not that it gave good government. That, he thought, was too much to hope for. The real case for democracy was that it was a way of preventing bad rulers from doing too much harm.
That is precisely the rock on which this Bill is founded. The community charge is on this test a principled effort to bring responsibility back into local government by strengthening control by the electors. It will reinforce councillors who truly wish
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to do a good job serving the community by providing efficiently those services for which the majority are prepared to pay. I believe that it should see the end of ILEA schools, which are dominated by the NUT, costing 25 per cent. more per pupil than the first-class private schools.
The Government have a long way to go in making their case clear and plain to ordinary people. But I believe that just as the growing movement in most communities of the neighbourhood watch enables households to protect their property, this new tax will provide at least the prospect of giving citizens the information and incentive to protect the quality and the cost of local services.
6.45 p.m.
Lord Bellwin: My Lords, the problem of speaking in a debate where there is a long list of speakers is that the longer the debate goes on, the more speakers use up all the good points which one had carefully prepared and the more they use the statistics which one was going to quote. Today the problem for me is even greater because there have been so many distinguished speeches by those who support the same point of view as I do. How, can one put one's case in a way that is different? Yet I shall have to try.
The noble Lord, Lord Graham of Edmonton, said that the views of the practitioners in local government should have the edge. That is why, as one who can certainly claim to have had quite some service in that capacity, I hope that it is right and proper that I should stand up to be counted and that my views should at least be known.
Let there be no equivocation about it. I positively support the proposals in the Bill. I have spent well over 20 years looking into alternatives to the domestic rates. Pausing for a moment, I wonder how that compares with the time spent by my noble friend Lord Jenkin of Roding. It is all that time ago and even longer that everyone with whom I worked in local government was saying that there had to be a change. It was not just those of us on the Conservative side: it was all around. The inequities and unfairness were worsening and had become too great. I shall not quote again the case of the single person living in proximity to the many who are earning. To me that is a very obvious example. One could not go on justifying that kind of thing for ever.
Under the system as it is at present poor people living in areas of high rateable value subsidise rich people living in areas of low rateable value. There is not much fairness in that. My noble friend Lord Jenkin also said—it is so important that it is worthy of repetition—that 41 per cent. of households in homes with above average rateable values have below average incomes. Yet 40 per cent. of those with above average incomes live in homes with below average rateable values. There is not much fairness, not much equity or concern about the ability to pay in that.
I have to smile when I hear the criticisms on the subject of ability to pay. Where was the concern in the past for ability to pay when Livingstone was levying horrendous increases and precepts through the now happily defunct GLC, or when Left-wing authorities were punishing—that has to be the word—local people and local business by massive rate rises? Where were those who now express such concern

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over ability to pay? It did not seem to trouble people quite as much then; indeed the silence was often deafening. But now that the system is to affect nearly everybody suddenly the caring takes on a new dimension. I respectfully submit that that in itself is a major plus for this Bill.
Another major factor which caused us to look for alternatives to rates was what was happening to accountability. As both rates and social security payments kept rising so the numbers of those who paid for them became fewer. Thus we reached the stage where now in many authorities the percentage paying little or no rates is over half and in some cases up to 80 per cent. of the populace.
The more authorities increased the burden the fewer became the number who paid. No wonder the high rating and usually Left-wing authorities were re-elected to office. We used to be told again and again that that was the democratic process at work, but who would not vote for something that somebody else would have to pay for and for which he himself would never have to pay? So much for accountability!
As has been said earlier, even the Labour Party realised that the rating system was not right. Indeed it was the Labour Party which set up the Layfield Committee. Their solution was local income tax. Much has been said on that already today and I shall not take the time to talk about it other than to make a quick comment in a moment.
My noble friend Lord Chelwood referred to the 1981 Green Paper which set out the alternatives to rates. I was deeply involved with that and I remember it so well. The Green Paper did indeed turn away from a poll tax but not, as was said in another place, because it was unfair, but because at that time it was not seen how it could be put into practice.
At the later stages of the Bill we shall doubtless be talking about the valuation of properties, capital values, local income tax and other such matters; but the only thing that I wish to say tonight—the noble Lord, Lord Wyatt of Weeford, touched on this point—is that, all else apart, the great danger is that those measures would drive away from the cities the very people whom we are trying so hard now to attract. That I think will be brought out when we come to discuss those matters again.
For today, in what I hope will not be a long contribution, I wish to concentrate a few more remarks on the distortions about which we read and hear so much. It is no wonder that opinion polls indicate that the proposals are unpopular. That is precisely the reaction that we had with other like legislation. I remember so well that we were told when we were having the discussions on the abolition of the metropolitan councils, the GLC, rate capping and other such matters that such measures would be unpopular. We were told again and again that this or that organisation were against such measures.
That fact is that events proved in the end that those suggestions were wrong. Now most of those measures have gained general acceptance and people wonder what all the fuss was about. In fact some people ask whether the initials were GLC or some other sequence. They ask what they stand for.
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I gather that a letter was printed in a number of newspapers, although I only saw it last week in the Evening Standard, from a Professor Alice Coleman which was headed Poll tax scaremongers. It stated:
"Some people seem to be going out of their way to scare prospective poll tax payers unnecessarily. An average charge of £178 per year sounds a lot but if it is expressed as £3·42 per week it is far less threatening.
Furthermore, nine million people with below-average incomes will have most of it paid by the Government, leaving only 68 pence to find themselves. The best-run councils will need to charge even less: £2·58 per week, or 52 pence for those to be helped.
Of course, spendthrift councils will try to extract much more, but voters can make sure this never happens. There will be local government elections before the rates are abolished and people will be free to reject councillors who complain how heavy the charge will be in favour of those who see ways to make it less burdensome."
In all the consideration of the anxiety about the ability to pay this point is as significant as any. At the present time the very poorest groups—I address my remarks on this point especially to the right reverend Prelate the Bishop of Gloucester who was so concerned about them—those with incomes of up to £50 a week face rates now of 4.1 per cent. of net income. Yet the community charge for those people would amount to only 3.4 per cent. of net income or less than that. How can the poor be worse off under the new system?
Furthermore, it has already been expressed that 80 per cent., eight out of 10 single pensioner households, and 75 per cent. of other single adult households, will all be gainers under the community charge. Are not they the people about whose ability to pay we should be concerned? I remind your Lordships—nowhere have I seen reference to this, although I believe the noble Baroness, Lady Stedman, touched upon it—about the element of rates contained in council house rents today. The whole of that will no longer have to be paid by council tenants. The Government might be well advised to give greater publicity as to the sums that will be saved by those people.
I shall not talk about the national contribution by those at the highest end of the scales. I believe that that point has been very well made by those who have spoken before me. But I feel that, if nothing else, it illustrates the lack of necessity for banding levels or such things. The equity must be that those paying most should be those who are earning most. The case for the proposals in the Bill is overwhelming in that that is achieved.
When the charge is fully in place the gainers will amount to 53 per cent.—that is over half of all households in England. They will include households with net incomes of less than £150 per week. They will include the other categories of pensioners and others living alone. That takes in nine out of 10 one-person family households. If those gainers are not those in need, who is? If that is not all about equity then what is?
I have already illustrated the extent of those who will lose under the new system. I do not think that it helps the case to try to distort the number of people who will be worse off. It is certain that the true likely rate can only be calculated with accuracy as we get nearer to councils making their own decisions on what their spending will be. But the fact is that there will be another dimension in the dialogue. It is not just a case of what councils spend, but what they achieve for what they spend. All too often we hear the

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case argued that one authority is better or worse than another in relation to the amount it spends. The criteria should not only be what is spent but what is achieved for that money. That is all about efficiency.
In the recent Local Government Bill which has just been passed we heard given in this House many examples of the opportunities which existed in that regard. I believe that the Audit Commission for example said that £500 million could be saved out of three services alone if they were put out to tender. That is just a flavour of the opportunities that exist. I submit on that point that when the time comes and when the chips are down and each council has to make its decisions as regards what the community charge will be, each council will be entitled to take into account the opportunities for carrying out services more efficiently. If that is the case then the Bill will have achieved a great deal of what it sets out to do.
Once the Bill is on the Statute Book and comes into effect not just 20, 30 or 50 per cent. of the people will be paying charges and will want to know what their local authorities are providing, but just about everyone will be paying something and will want to know what they are getting for that money. That is what local accountability is all about.
What with the exemptions, the safety nets, the phasing in proposals and other safeguards the poorest households stand to be major gainers from the community charge. As this becomes more and more apparent as the debate goes on, I hope that so much greater will be the acceptance of it. Each and every time that there has been opposition to controversial and radical legislation, at the end of the day when it has gone through and the benefits have been seen for those who are on the receiving end, there is acceptance and approval of it. That is why I am delighted to support the Bill.
7 p.m.
Lord Houghton of Sowerby: My Lords, for some years now local rates and your Lordships' House have shared a common danger. I think we would both have been abolished years ago had there been any agreement on what should take our place. When rates go, we in this House will occupy a very exposed position in the dwindling collection of the national institutional antiquities. I think that should encourage us to apply our minds to our own reform.
I think the speech of the noble Lord, Lord Pym, was most impressive; it contained a good deal that the Government will have to think about. My noble friend Lord Jay produced what I could describe as "the statistician's brew", which contained some frightening ingredients in regard to the proportion of tax that rests upon those with smaller incomes. But I must remind my noble friend of our mutual colleague of many years ago, Hugh Dalton, who, with his cynical smile and booming voice, said that the great virtue of all indirect taxation is that it is purely optional, and if you do not like to pay the tax on a television set you can easily escape it; you do not buy a television set. His remedy for tax avoidance was; Don't buy goods that carry a tax you are not willing to pay. Of course his type of citizen would finish up living in a little shack in the woods, dressed in newspapers and every morning, in Britain's rainy
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conditions, he would go out wearing long trousers and he would return home in shorts.
What I wish to do is to utter the gypsy's warning, but before I get to the warning let me dispose of rates. Rates are done for, and it is not the slightest good thinking that we can keep them, revive them or use them in any modified form. I heard a suggestion—I think it was in the delightful maiden speech made by the noble Earl, Lord Lytton—about the adverse effect upon the reputation and the efficiency of the rating system of the absence of regular revaluations. But revaluations are virtually impossible, because the whole basis of assessment of land values has been distorted and disrupted by rent control, by famine prices and by the remarkable changes there have been in the value of land. Indeed, the last valuation was so long ago that I cannot remember when it was; but I know that when it took place there was no such thing as revaluation on current letting values. How could there be? There has been no free market in the letting values of domestic properties for years. There have been capital prices, and indeed capital values were thought of. The Labour Government thought of replacing rates by a levy on the capital cost of construction of a dwelling, leaving aside the value of the site; but they did not go on with that.
There have been various other thoughts about local taxation but there is no convincing alternative in the political field at the present moment which will enable us to grasps some straw in the wind and say, "We've got it: there is something which is different from the community charge and we can take that as the alternative to the rating system." I do not think such a thing at present exists.
Nevertheless, we have to face the fact that the dilemma to be resoved is: how can we run our central and local services with the present division of financial responsibility between local authorities and central government, without either overloading local authorities with a tax burden they cannot meet or the Government assuming responsibility for a proportion of local expenditure which many people would say robs them of a degree of independence?
This is the dilemma. Whatever we have, whether it is rates or anything else, I believe that the growing burden of expenditure on services which we now regard as applicable to local endeavour—education being the principal one—is getting so heavy that I do not think that the services can he borne on the present allocation of financial responsibility between central and local government. That dilemma will exist whatever system we adopt, because I do not think local government will be able to foot the proportion of the total bill which they would like to do and which the Government would wish them to do.
We start off with that, and I do not think there is any immediate escape from it. As regards an alternative to rating as a form of local taxation, if we are going to look at the community charge as the going thing at the present time, then I believe that my gypsy—the tax gatherer of yesteryear—will come forward and ask the Government: "Do you really know what you are doing?"
I would lay down certain conditions for this tax. I am not bothered about it being a flat rate tax. I think that probably in present circumstances there is little alternative to a flat rate tax for local government

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purposes. I will come on to the suggestion of a local income tax in a moment, but the first condition is that the total burden of the tax should be tolerable to all citizens without dilution of the principle by too many discounts and concessions. This means that the amount payable should be within the means of the people with average incomes—the working people—and those of similar economic status. It must be within their range to bear this community charge without discounts and without concessions, if it is to be tolerable to the community as a whole. That is the first condition.
The other condition is that it should be for services, and seen to be for services, which are supplied by local authorities to the generality of the public. I think that people's attitudes to taxation depend to some extent on how close the benefit is or how close they are to the expenditure of the money. If they can see the money being spent wisely or if the benefits are visible to them, they are prepared to bear a tax which hypothetically might be regarded as somewhat regressive.
I do not think we should underestimate the desire of the British people to pay for things; it is really innate in the whole history of the rise of the working class movement and of the participation of people in the affairs of the nation. The pure theory of taxation cannot always be applied to statistical examination anyway. I believe, for example, that if we had had a national health service levy at the time we had the Beveridge Plan the likelihood is that it would have been a flat rate. We are not against flat rates. We have flat rate benefits and flat rate contributions, and it just depends on what it is as to whether a flat rate is applicable or not.
The next point I come to—and this is where the gypsy's warning comes in—is whether the methods of payment will enable the tax to be levied without very serious problems of enforcement. On the whole ratepayers have felt under an obligation to pay their rates, although a number of them have been unconscious of paying their rates because they paid them along with their rent. They had not noticed the separate charge; the landlord had been responsible for accounting to the local authority for the money. On the whole ratepayers have had a sense of responsibility and did not want to be chased by the local authority or to appear in the local court for default for non-payment of rates. So I think that in most cases rates have been paid—probably above an equitable level—but they have been collected because people felt that they must fulfil their obligation.
Now we have a wider franchise. I think that it will be necessary to study the psychology of the new constituency of taxpayers. Let me remind your Lordships that there is nothing in our taxation system today to compare with the effort that will have to go behind collecting money from individuals without, as far as I can see, the assistance of pay-as-you-earn or other deductions which are presently the very basis of our taxation system. We no longer dig into the pockets of the taxpayer; we get the money before he sees it. The taxpayer pays his taxes out of money he never sees. However, under this system it will have to be dug out of his pocket. It will be a horrible prospect if we are to have local papers full of the proceedings
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of summary courts for recovery, arrestment of wages or restraints for recovery of the rates. That is a serious danger.
I cannot direct local authorities to any source of experience or expertise in debt collection on the scale that may be necessary in connection with the community charge. That is a very sobering thought. It means that the charge will have to be more than acceptable; it will have to have co-operation. I think that the tax gatherers in the local authorities will wonder whether there will be resistance. The local authorities do not want to be regarded with horror and loathing because they are the debt collectors of tomorrow. That is very serious danger.
I want to ask what the Government are thinking of doing about constructing schemes for deduction of the community charge at source. It has either to be done through local employers, or it could perhaps be done by hitching the community charge to the tax deduction scheme in particular areas where that was thought desirable. All I can say is that there must be schemes for deduction. Otherwise many people will prefer to go to court and obtain an arrestment of wages and an instalment scheme which they find acceptable and will be able to honour—and there is a danger if local authorities are going to be sticky about allowing payment by instalments. Even so, instalments have to be sent each time. How are they to be collected? I warn the Government that they have a very serious problem to resolve concerning the collection of the community charge and the difficulties of enforcement. That is really the end of the gypsy's warning.
I offer no views on the community charge in principle. On the whole tax gatherers do not look at principles; they do not think that there are any in taxation. They do not look at the morality of taxation because they do not think that there are any morals in it either. What they want to know is, is it workable? Can we do it? Can we make a success of it? Will there be any pleasure in it or will life be unhappy for us all when we see people coming into the office scowling and threatening us? It will be worse than the Department of Health and Social Security. Tax gatherers want to be liked. They cannot achieve that by offering to reduce taxes in the way that the DHSS can offer higher benefits.
The Government must keep the local authorities on the right side of the local community and take steps that are not yet in contemplation in order to do so. The gypsy's warning is there. The Government will see what happens with experience.
My final word to the Government is, you will have to put this over in a very big way, and you will have to take that wretched epithet "poll tax" out of the language. It is not a poll tax; poll taxes are coercive. Poll taxes are the alternative to slavery; they are to compel people who work in plantations and in the fields to pay the tax which is being levied upon them.
That brings me to the Prime Minister's counsel in this matter—if you cannot afford to pay, work harder and then you will.
7.16 p.m.
Lord Carr of Hadley: My Lords, the noble Lord, Lord Houghton of Sowerby, nearly always has something of interest to say that is a pleasure to hear.

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I certainly feel that his gypsy's warning needs to be taken seriously if not literally in every aspect.
I have for years wanted a government who would have the courage to tackle the problem of the unfair and ineffective system of domestic rates. So I genuinely congratulate this Government on having the courage to tackle it. I strongly support their objectives in doing so. However, I am afraid that I have to say that I also strongly object to some aspects of the methods they have chosen to try to achieve those objectives. As the 21st speaker in the debate I assure the House that I shall not dwell upon those in detail.
My first general criticism is one that has already been made by many noble Lords, namely, that the proposals will in a number of ways lead to a further increase in the centralisation of government power in England and Wales. I have for long believed that this country was over-centralised. I have particularly thought that it was the duty of Tory governments to decentralise because I feared that it was inevitable that Socialist governments would centralise. It hurts me particularly to see a Tory Government adopting the centralisation measures that they are, I fear, not only in this Bill but in some others as well.
In the end he who pays the piper calls the tune. To my mind, 70 per cent. or 80 per cent. is too high a proportion of local government income to come from central government. It is too high because of the power that it gives to central government and because that in turn discourages, as the noble Earl, Lord Carnarvon, said in his excellent, very short maiden speech, too many of the most able people from going into local government. That is of immense importance.
In all my work in recent years trying in various ways to tackle unemployment—originally just youth unemployment and then more generally—in many of our most difficult areas, including the inner cities, I have come to realise that one succeeds by building from the bottom up and not from the top down. If one is to build from the bottom up it is vital in every community to get the best, most constructive people involved, whether it be from local government or in other forms of local partnership.
Lord Jenkin of Roding: My Lords, will my noble friend kindly give way? I apologise for interrupting, because I have had my say, but does he not recognise that the essence of the scheme contained in the Bill is that every additional pound of expenditure which a local council incurs above the standard amount falls upon local voters? Therefore, accountability is 100 per cent. to the local voter and not through central government.
Lord Carr of Hadley: My Lords, I do not object at all to that interruption. In so far as it goes my noble friend is quite right, but that is not as far as it goes. There is still the fact that when 70 per cent. of one's income (or 80 per cent. as I believe it is in Wales) comes through central government, it introduces whole fields of responsibility over which one has too little control.
As I and other noble Lords see it, the cause of the disproportion arises from the introduction of the
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uniform business rate. I do not like it. Without going again through the arguments I shall simply call in aid the observations of my noble friend Lord Pym and the excellent maiden speeches of the noble Earls, Lord Lytton and Lord Carnarvon, and I shall not amplify them. I cannot help being cynical about central government. I cannot envisage any central government of the future who are in desperate need of revenue having any greater ability to listen and take into acount the views of the business world than councils do at the present time. At the moment if one is unfortunate enough to have one's business in an area controlled by a bad council one can at least move away to somewhere else, but if central government are the culprit, there is nowhere to go except to leave the country, which may not be practicable even if thought desirable.
As a vice-chairman of the English National Opera I have come across one side effect of the uniform business rate and the effect it has on local government's ability to look after its community. In practice it will make it impossible for the Westminster City Council to continue at least its present scale of grants to both the English National Opera and the London Festival Ballet, which was a task that it took on at the request of and by arrangement with the Government when the Greater London Council was abolished. This is not a matter to be pursued this evening. It may be pursued at a later date, but it is an example of how this measure reduces the scope of local government to work for its community as a whole.
The centralisation of which I complain does not simply occur in the balance of expenditure. There are also written into this Bill a great number of specific powers for Ministers to act. I must confess that I was appalled when I discovered that the power of rate capping is to be continued. I think it is wholly objectionable. I accept that it was right and necessary to introduce it as a temporary measure, the Government being faced, as they were, by the problems caused by some wholly irresponsible councils throughout the country. I should be prepared to accept that it might be necessary to maintain it for something like five or eight years during the transition period, but in this Bill I find it very difficult to accept as a permanent power without determination of the period for which it is to exist.
I want to move to my second criticism, which not surprisingly, concerns the inherent unfairness of a flat rate community charge. It cannot be denied that a flat rate charge or tax of any considerable sum is inherently unfair. As regards real hardship cases, I am delighted that the present system proposed by the Government, which offers rebates for those below a defined hardship line, takes care of that problem reasonably well. I welcome that move. The problem no longer worries me as much as I thought it might and indeed I believe that the proposed system is quite good. However the community charge will still cause severe financial stress to many of those who are some way above the line of defined hardship which qualifies them for rebates. Moreover it is seriously unfair among those who are above the present defined line of hardship.

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The Government's own figures indicate that the largest number of losers from the imposition of the community charge will be households of three or more adults; they also show that the largest number of gainers will be households of three people or more. A tax or charge, whatever one calls it, which bites so arbitrarily among different households of the same size has something seriously wrong with it and needs correction. I cannot help looking back to my old constituency for which I sat as Member in another place for 25 years. I can picture the rows of houses in roads at one end of that constituency which will be composed largely of losers and the smaller number of houses at the other end which will contain a lot of the gainers who will at the same time be receiving the reduction in the higher rate of income tax to 40 per cent.—a reduction of which I approve strongly. But if one considers the need to carry opinion with one and the perception of what is fair to the majority of people, then when those two benefits for those with higher incomes happen at the same time it is difficult for very many people to feel a sense of fairness.
I repeat that I strongly approve of reducing direct taxation to these reasonable levels and believe that it is a measure of immense benefit to this country for reasons which I believe it would be wrong to go into now. However I believe that in this Bill there is something wrong which should be put right.
How should we have proceeded? What should be done about this Bill? Perhaps I may refer to the detailed commitment published in the Conservative Party's manifesto for the general election in the autumn of 1974 in which it was said:
"we shall abolish the domestic rating system and replace it by taxes"—
not "tax" but "taxes"—
"more broadly based and related to people's ability to pay".
I believe that the relation of the charge to an ability to pay is sacred and I cannot deny it. But no one has concentrated very much on the point that at that time we did not propose a single new tax; we referred to "taxes" in the plural.
I was very much concerned with that proposal as I happened to be the Shadow Chancellor at the time. My right honourable friend the Prime Minister then happened to be the Shadow Environment Secretary and was also concerned with it. If my memory is correct, I believe that she first announced that commitment to the public in a broadcast. I think that it was the noble Earl, Lord Lytton, in his maiden speech who drew attention to the difficulty of managing with one tax. All taxes have unfairness in them. The more money one tries to raise from one tax the more apparent become the unfairnesses and the more they bite.
Why do we have to move from a tax wholly on property to a tax wholly on people? Surely we ought to have kept a tax on property, but raising very much less than it does at the moment, and a tax on people, though raising very much less from them than is proposed in this tax. Although I do not like it, I believe that if the community charge were set significantly lower, the effective unfairness, however arguable in theory, might well be acceptable. At the level presently proposed I do not think it is.
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At this stage I fear that it is not possible to think of introducing a new tax and certainly this House could not do it. Such a measure may have to wait for a future date and perhaps some future government, But if such an option is ruled out there are still three possibilities open to us.
First the size of the community charge might be made smaller. I have suggested how one can most effectively make it smaller; namely, by having more than one tax. One could however also make it smaller by transferring to central government some of the cost that is at present borne by local authorities. I do not all that much like such a proposal because of the low ratio of locally raised income that is already envisaged; but if the proposed 25 per cent. were to be reduced to 20 or even 15 per cent, I do not think I would quibble. One may have gone down too low already but if one has to bear that, at a pinch one could bear a little more. In the Conservative Party's manifesto for 1974 it was specifically mentioned that we would:
"transfer to central government in the medium term, the cost of teachers' salaries up to a specified number of teachers for each local education authority. Expenditure on police and the fire services will qualify for increased grants from the Exchequer."
I am not pressing for those particular measures but they are one way in which, by making the community charge smaller, one could reduce the bite of unfairness.
Another way would be to have the charge founded on and developed from what has been called the Mates amendment in another place. I do not want to go into that matter in detail. I do not believe that the proposals would work as drafted, but with determination they might be modified into something better.
Finally I want to raise another possibility. If it is easier for the Government to think in terms of giving rebates on a uniform charge than on varying the charge itself, we could surely raise the basic charge to a higher level than that which is proposed while at the same time raising the level of income at which rebates begin to be granted. In that way one would overcome the problem of an unfairness to the people whom my noble friend Lord Pym mentioned and the constituents whom I picture in my mind in my old constituency.
I feel most strongly that we must ask the Government again to consider modifying the impact of this present charge. I do not believe that it is fair. I am certain that it is not perceived to be fair by the public at large, including the great majority of those who vote Conservative, above all because it is seen not in isolation but as part of a package of taxation changes.
7.30 p.m.
Lord Flowers: My Lords, as Vice-Chancellor of the University of London, which has over 40,000 full-time students, I am naturally concerned at the impact on students' welfare, and therefore on their ability to study, of various government measures, including the recent changes in housing benefits. However, the proposed so-called poll tax causes me the greatest concern, partly because of the inequity that is likely to result and partly because of the complexity of the administrative arrangements that are now in prospect.

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These are general themes in this debate which I should like to illustrate from my experience. At present the position is simple. Rightly or wrongly, most students have no direct involvement with rates. For the minority living in college accommodation, the rates payable on that property are accounted for by a separate grant which in effect goes directly from the University Grants Committee to the local authority. However, if they are living in rented accommodation students are entitled to full rate rebate under a well established scheme.
If this Bill is enacted, some students may be liable for the full amount of the poll tax for their college area, probably up to £800. That seems to be the Government's intention with respect to postgraduate students and any student receiving company or other sponsorship. At a time when the Government are trying to inculcate enterprise values into academic life and trying to increase the amount of training and research work undertaken and funded by industry, the proposals on poll tax appear exquisitely designed to frustrate those very desirable objectives.
One may ask: what of undergraduate students? How will they pay for their residual 20 per cent. of the poll tax for the area? In some cases that may be £40; in others £160. We know the Government's answer to that: we must wait for the outcome of the Walden-Jackson review of student support. They have said it many times before. It is generally assumed that there will be some addition to the modest student grant to compensate for the new poll tax burden. But perhaps we should not so assume. There is so far no sign that there will be any increase in the student grant in Scotland to compensate for the poll tax payments there.
Even if the student grant is increased, however, it is most unlikely that each student will be compensated for the liability for his or her specific area. That would be administratively far too complex. It is more likely that the Government would opt for a flat rate addition which would leave most students as net losers. That would be entirely consonant with the present strategy of cutting the cost of student support by attrition—a benefit removed here, a new charge not fully reimbursed there. In this way the value of the student grant has decreased in real terms by about 20 per cent. since 1979.
However, the reason why the poll tax would be inequitable for students is that they would then have to find a varying amount of, say, £35 in Durham, £45 in Bristol, perhaps £70 in Haringey, even up to £160 in Westminster or Camden, from a flat rate grant settled nationally. That is a significant change from the present position, where rates have no impact on students, who, by and large, are but fleeting users of local services.
Again, at a time when the Government have stated their intention to increase access to higher education, it seems that they are doing all they can to frustrate their own policies. Perhaps it is simply that the Department of the Environment and the Department of Education and Science do not discuss their various policies together.
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My second point concerns the administrative arrangements for poll tax as they affect universities, polytechnics, colleges and students. It appears that every college will have to designate a certification officer. In most cases, a new and costly administrator will have to be employed to issue every student at the college with proof of student status: in effect, a student identity card.
Of course the college should be expected to behave as any other landlord in respect of students in college accommodation. However, the Bill goes much further than that. The certification officer must supply the local authority responsible for poll tax collection with a list of names and addresses of all the full-time students registered at the college and resident in that local authority's area. One sees that matters are beginning to get complicated. The local authority will then demand the poll tax from the students, I presume in full, and students will be able to commute the payment to 20 per cent. on production of the identity card. Otherwise there would be no need for the identity card. I predict that this system will be inefficient and expensive. Students often move. They often share space on a fellow student's floor. In any case, we do not always know where they live. In vacations they tend to live elsewhere or to travel. If one finally finds their front door and knocks on it, they are often not in. I predict that before too long the Government will be considering having colleges as tax collection authorities with grant cheques being paid to colleges, colleges deducting poll tax contributions and handing on the residue to the student—rather like PAYE, which makes the employer a tax gatherer.
Quite simply, when I contemplate some of the details of this apparently simple measure I conclude that it is as yet the product of too little thought and less understanding of the real world. I hope that we may return to it in Committee.
7.37 p.m.
Lord Mountevans: My Lords, we are only half way through the list. I therefore should like to concentrate on one element of the Bill—Clause 32—rather than get involved in a long general discussion of the Bill's merits. While doing so, I must put on record that I am inclined towards those who have addressed themselves to the banded option.
When the metropolitan counties were abolished, the view was wisely taken, not only by Government but also at local level, that provision of certain services still required a county-wide view. Hence, police, fire services, the Civil Service and passenger transport authorities (PTAs) remained in place. Their function was to provide a county-wide service; a wider area service. Their composition was of members nominated by the relevant districts. Their funding was by means of precepts levied on those districts.
As recently as 22nd January last, while the Bill was in another place, this status quo seemed likely to remain. Indirectly elected though they were, and with their precepting ability limited annually by the Department of Transport, the PTAs were doing a good job not only in terms of a changing legal

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framework, but by making the most of their inherited assets and looking to investment in the future.
However, on 22nd January last the Minister wrote to the PTAs suggesting that their precepting ability should be replaced by an ability to bill the district councils directly. Past history and past performance were to be sacrificed to that strange device, accountability. The extent to which a nominated councillor—one nominated by the council to which he as been elected to serve—is less accountable than one directly elected bemuses me utterly. But the Government have the bit between their teeth. The amendment moved in another place on 20th April last, just two months between the initiation of the consultation procedure and the legislative change, deprived the passenger transport authorities of their ability to precept.
It seems to me that a number of things were notable about the proceedings. First, I wonder why what is, to those concerned, a major piece of transport legislation—those concerned are not only the Government but all of us who pay towards the provision of metropolitan public transport or who use it—was conceived so rapidly and why it finds itself as a substantial piece of transport legislation in an environment department Bill. Accountability hardly seems to be the right note, so something more political must have been the root cause.
Secondly, we are talking about several hundred million pounds' worth of precept—but precept that is to a considerable extent regulated by the Government. Less than two months elapsed, as I have said before, between the Government's invitation to comment on 22nd January and the Government putting forward an amendment.
Lastly, it is rather disappointing that when the Minister of State moved the amendment he did not introduce it by justifying it. Instead he sat back and awaited the attack which in due course came from both sides of another place. I have a great deal of admiration for Mr. Mitchell. He gives up a great deal of his non-parliamentary time to visiting the transport industry. He uses his working time too but I know that on many occasions he has given up his weekends when he could be resting, nursing his constituency or whatever. But he has forgone that to visit the transport industry. I wonder why he found himself unable to be aggressive and dynamic in introducing the amendment. I wonder whether he wished not to be held, as the saying is, accountable for a damaging piece of legislation relating to transport but packaged in another department's Bill.
If we do not reverse the abolition of the PTAs' right to precept, a number of consequences will flow from our inertia. Two seem particularly important to me as a hardened, dedicated and committed user of public transport. It will become impossible for the authorities to fulfil their statutory obligation to provide forward plans to the Department of Transport as they cannot be certain that they will have either the funds to match the service level or the investment levels which will be required in the future. If, when directly billed, a district council challenges provisions on grounds of perceived benefits to its
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area, who is to be the arbiter? What will the ground rules be?
Neither point is clear, but neither is even stated. The one thing that is clear is that subsidised public transport requires planning. That was recognised not only by Members on this side of the House but by the Government in another place on a number of occasions. It requires planning if it is to be efficient and economic. I support the Government in their wish to see that subsidised public transport should be economic. Even private business plans ahead, but whoever or whatever one may be, one will have the utmost difficulty in preparing meaningful forward plans without knowing that the funds are available or knowing the rules governing the collection of those funds.
Direct billing may also encourage district councils to secede from the relevant PTAs. To date no council has exercised that right. That is hardly surprising because one notices that in Stockport, which has a Conservative MP but a hung council, in the elections last Thursday the Conservative Party ran on the platform that it would give serious consideration to secession if it won control of the district council. It seems to me that the voters decided that that was not desirable and that that may help to explain why the Conservatives did not win control of Stockport District Council last Thursday.
The power to secede is there and district councils may feel that the policies adopted by the PTA, or the funding required to execute the policies, conflict with the district council's policies and its means. Again the Minister is the arbiter, but one has no knowledge of the factors which he will consider when reaching his judgment. I hope that country-wide consideration will be of prime importance, because I believe that that is a cornerstone of transport, but I fear that accountability will have the last word.
If a district council seceded, there would be greater accountability. I am increasingly inclined to put that word in inverted commas. There would also be greater expense, as the district would inevitably have to set up its own transport administration. Does that really square with the value-for-money aims that to an extent underlie the Bill and with which I have a certain sympathy? I do not believe it does.
There are many other aspects to direct billing, such as the effects on concessionary fares, on integration of timetables and on the provision of that central information service which is essential to any metropolitan transport network or indeed to any transport network, especially if we want value for money. But these are elements which a district might deem to be irrelevant. On a wide area basis it will inevitably tend to look only to its own narrow interests. But wide areas—we agreed before we abolished the metropolitan county councils—require certain services which are better provided on a wide basis. As the metropolitan counties have been abolished I fear that I cannot use the words "county basis".
This holds true of the police, with whom most of the public—indeed, most of us—I assume have relatively little contact. It is true of the fire service, whch I am sure most district electors, even non-electors and non-voters, would hope never to have to call into use. No, I believe that in the metropolitan

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areas passenger transport is the most visible and the most used of the public services. I repeat that it is wrong that it should be singled out for negative treatment in terms of the abolition of the ability to precept. Why leave that ability with the fire service? Why leave it with the police authorities? Why, indeed, leave it with civil defence?
The present system of authority and precept has, I feel, that level of accountability which the public wants. In emphasising that fact, I urge the Government to think again.
7.48 p.m.
Lord Ellenborough: My Lords, I was one of the few English speakers from this side of the House who spoke on the Second Reading of the Bill for the abolition of domestic rates in Scotland just over a year ago. I did so with a sense of some foreboding. I recall saying that I had considerable misgivings about the legislation on grounds of fairness and practicability, although I congratulated the Government on their courage in tackling at long last the problem of getting rid of our domestic rates.
In the aftermath of the electoral disaster suffered by the Conservative Party in Scotland at the general election, and the not very good results last week, I should have thought that the Government might be inclined to reflect on the consequences of the legislation as it stands for England. In England the argument and its implications are only just beginning to be understood, even by Back-Benchers in Parliament, as a leaked ministerial minute indicated a short while ago. But in Scotland it has been a real live issue for a couple of years and it was certainly a contributory factor to the loss of seats there.
I suggest that it would be in the longer-term interests of Her Majesty's Government to try to devise a tax, or to amend their present proposals relating people's ability to pay, while there is still time to do so. That would avoid endless rancour and friction in the future.
The temptation will be to do nothing. There is no electoral test in the offing and the hope is that once the legislation is safely enacted the problem will fade away. So it may for a year or so. However, in 1990—the worst possible time because of the run-up to the next general election—the consequences of the poll tax in England could explode in the Government's face.
The Government have worked out a complicated statistic which has been quoted by several noble Lords. It is that under the community charge the top 10 per cent. of households will pay 15 times more towards the cost of local services than will the bottom 10 per cent. If I was a canvasser trying to put across that statistic I believe that I would need an actuary to help me.
It will be more easily understood that income tax payers and higher income tax payers will pay exactly the same amount of income tax under the community-charge system as they now pay under the rating system, assuming that their income remains static and that there are no changes in income tax. But, although contributions through the tax system
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will be the same, the overall percentage contributed by the better off—that is in both income tax and community charge together—will be less because their contributions paid locally will have decreased. Generally the community charge paid by the better off will be less than they now pay in rates.
In a fairly average outer-London borough which I know, there are roads in one part where married couples live in houses with an average rateable value of approximately £1,000 and they are currently paying an annual rates bill of £1,760. As a result of the introduction of the community charge, estimated to be £262 on the basis of the current year's expenditure, in that borough those couples will benefit to the extent of £1,236 per annum. In other parts of the same borough there are married couples living in houses with rateable values of 170 and they pay an annual rates bill of just over £300. Such people will have to pay £225 per annum more than they pay in rates. I invite noble Lords to visit the people who will pay £200 more and quote the statistic about the top 10 per cent.
I cannot understand how this widespread discrepancy can be justified or put across to people. I fear that we shall lose the support of many people who have come over to the Government in the past two or three general elections. There may be young married or retired couples just above the social security net in receipt of relatively slender incomes. They may have recently bought a house—perhaps a council house—and will now find their local tax by way of a poll tax is a significantly higher proportion of their income.
What can or should the Government do which is more in keeping with the famous pledge, made by the Prime Minister, and which has been quoted this afternoon, in October 1974 when she was Shadow Environment Secretary, and the more recent reference made in the last general election manifesto to replace rates with a fairer community charge? My right honourable friend the Secretary of State in another place has repeatedly said that he is prepared to consider anything. Somehow nothing else but his scheme will work and everything else is fatally flawed which, at the moment, is a favourite ministerial expression. I thought that only four years ago the proposal of a poll tax set out in the White Paper was rejected by the Government because it was fatally flawed. The difficulty is that some people still believe that this poll tax is fatally flawed.
My noble friend Lord Chelwood said that it was up to the Government to decide on an option, and so it is. However, perhaps the Government need help. There are some people who advocate the transfer of part or all of the costs of education to central government on the grounds that education has become a national responsibility as has defence. The advantage is that that would lessen the impact of a community charge but it would weaken accountability. Nevertheless, it is an option.
In previous debates I ventured to suggest that a form of local income tax with appropriate safeguards may be the best way in which to proceed. Certainly the National Union of Ratepayers' Association of which I am president, is in favour of such a scheme. I have little doubt that eventually that will come

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about and that it will be introduced by a Conservative government; just as it is a Conservative government which are at long last abolishing the rates and which deserve all credit for that.
Local income tax was advocated by the Layfield Committee as the only feasible source of income as an alternative to rates. Other countries operate such a scheme and have been known to survive. An increasing number of professional bodies are in favour of it, as are most local authority associations. The lack of accountability argument is wearing rather thin because surely there will be many more income tax payers once married women are separately assessed. Approximately only 75 per cent. of the public will be paying the community charge in full, allowing for rebates, and it is pretty doubtful that those people receiving rebates will be greatly aware of accountability. I believe that the figures for those people paying income tax a year ago were just below 60 per cent. Allowing for married women, I do not know what the figure will be, but I suspect that it will be approximately 70 per cent., which is much the same. It would be necessary for a local authority to levy only a single percentage rate of tax on net income. As a safeguard there will need to be a strict upper limit with a maximum amount payable by an individual perhaps relating to the approximate level at which the higher rate of tax begins to operate. In that way the better off in places such as Camden will not be unduly penalised.
Speaking entirely for myself, I am a great believer in politics being the art of the possible. Even though opinion polls and other indicators may point towards the public moving nearer some form of local income tax, the fact remains that at present the Government are most reluctant to move far that way. It is feared that such a policy will conflict with their overal fiscal strategy. I do not understand why because I believe that local income tax could be quite separate from national income tax. But there it is.
In the light of all the circumstances and of all the options open, and in the context of the legislation before us, I suggest that the Government may be wise to look again and at the least devise some form of banded community charge on the lines of the three fixed-payment proposals similar to the amendment so ably moved in another place by my honourable friend the Member for Hampshire East and which was so narrowly defeated. It has come to be called the "Mates amendment" and it was supported by almost 40 Conservative MPs of all strands of opinion in the party, including a number of Right of centre Members. I have always considered myself to be—slightly at any rate—Right of centre of the Conservative Party. There were many others who would have liked to support the amendment.
From the Government's point of view, it had a great advantage of keeping in the poll tax system (although at only half the standard rate) those above the social security net but who were not yet payers of income tax. I believe that its defects have been greatly exaggerated and as the mover of the amendment pointed out, the Government had conceded that such a tax could work and was practicable. It could be improved upon, finely tuned and made more
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sophisticated if the political will were there. Above all, it would take the sting out of this legislation which, as it stands at present, levies the same rate for all, rich and poor, and simply does not fulfil the manifesto which promised fairer rates. The Government have several options and I fear that to do nothing could prove disastrous.
8.1 p.m.
Earl Russell: My Lords, the task of ringing the House dinner bell seems to have fallen to me and I believe that there is a certain appropriateness about that because in these days when a Conservative Government use the word "revolution" with approval to describe their programme the mantle of Edmund Burke may well be said to have descended on this side of the House.
It also seems to have fallen to me to take my seat in this House in exciting times. Therefore, I should like to preface my remarks by saying something uncontroversial, because I should like to prove that I can. Should this Bill become law, I shall pay any charge that it may impose. I shall complete any forms involved to the best of my ability, though having listened with care to the noble Lord, Lord Swann, last week, I cannot say more than that. Any efforts that I shall make to remove this charge will be devoted solely to its repeal by the authority which imposed it. That, however uncontroversial in this House, is sadly necessary in the world outside. I believe that those words give me my title to oppose this Bill.
In offering this Bill I believe that the Government have perhaps confused two principles of taxation: one is the principle of progressing redistributive taxation associated, for example, with the name of Sir Stafford Cripps. That is a legitimate matter of party disagreement. People speaking from this side of the House may have strong views about what the Chancellor of the Exchequer has done in another place. However, it is an altogether different matter when we look at the basic principles of graduation of taxes, and to me that is not a party matter; that is a basic British principle of fair play.
When I first heard that this Government were contemplating a flat rate tax in place of rates I felt a shock as if I had gone to Lords—not to the House of Lords—to watch a test match and had seen a bowler throwing baseball pitches. I do not mean using the sort of questionable action which over the past 20 years we have learnt to associate with certain bowlers who I shall not abuse parliamentary privilege by naming; I mean baseball pitches. If I were an American opposing such a Bill in the United States, I would say that it was unconstitutional and, moreover, I should be quite right to do so. Speaking in this country, I cannot say more than that this proposal is not cricket.
Naturally as a historian, I have asked myself how far this sense of shock was justified; it seems to me that it is. I speak with care because I have a Question tabled for Written Answer asking on what occasions Parliament has approved a flat rate tax since 1265. That Question has been tabled for 13 days. Your Lordships may draw your own conclusions from the absence of an Answer.

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It is possible that I may have overlooked something and that the numerous colleagues that I have consulted may also have overlooked something, but so far as I can see, the principle of graduation is not a recent principle but goes back behind the origins of Parliament. It goes back to the very beginning of direct taxation itself; it goes back behind the limit of legal memory, to the coronation of Richard I; back to the danegeld, whch is the first direct tax of which we have anything approaching a record.
So far as I am aware there are just two exceptions: the poll taxes imposed in rapid succession in 1378 and 1380. With your Lordships' leave I should like to quote from the volume on the 14th century of the Oxford History of England:
"in 1380, beyond a vague stipulation that the rich ought to help the poor, no provision was made for grading. …. The result was gross unfairness in the incidence of the tax. In villages where there was a resident man of means, his poorer neighbours were dependent on his generosity; in others, … the poorest labourer might find himself compelled to pay 2s. for himself and his wife. Most objectionable of all was the conduct of the collectors. A poll tax, being based on something in the nature of a census, necessitated inquiries into personal circumstances which could hardly fail to provoke resentment; and the officials were not delicate in their methods. The result was evasion on a large scale. If we were to take the poll tax returns as our evidence we should have to deduce a fall of one-third in the adult population between 1377 and 1381".
There is perhaps some proof of the view that those who do not know history are compelled to repeat it. With the leave of the House, I should like to explain what is meant in this case by the officials not being delicate in their methods. Before the House calls me to order, I should like to say that I am quoting a monastic chronicler. The age exemption for children in practice worked on the principle that girls were exempt if they were virgin. A certain John Legge, Serjeant at Law, insisted on discovering this by physical examination conducted in public. When the peasants revolted the next year, Serjeant Legge was executed on Tower Hill. Your Lordships will now understand why I felt the need to preface my remarks by saying that should this Bill become law I will pay the tax.
I am not saying that a convention can never be broken. Someone who inherits his title to sit in your Lordships' House from the man who drafted the first Reform Bill could not say that. I am saying that if one breaks a convention one must, as the lawyers have it, "show cause". My strongest reservations come when I look at the poverty of the causes which the Government have shown. First, they say it is not a tax. I shall come back to that but the last major financial levy that was excused on those grounds by Ministers of the Crown was ship money; the precedent is not encouraging.
They then say that it only applies to 25 per cent. of the payment and they say that a certain number of people will receive a rebate. Both of those are the proverbial maid's baby excuse, it is a very little one. It is the excuse offered by those who know that their offspring is illegitimate.
They also tell us that it is to deal with profligate local authorities. I know about profligate local authorities; I am a resident of the London Borough of Brent. I am bound to obey Brent Council for the same reasons as I am bound to obey Her Majesty's
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Government. There are times when one task seems as difficult as the other; there is also a natural remedy against the local authority.
Last Thursday there was a by-election in one of the safest Labour wards in Brent and my party won it. It seems that there is something important here: it is the right of a local authority to be profligate; as it is the right of the Government to be mean. We live in a plural society and the argument put forward recently by the noble and learned Lord the Lord Chancellor about delegating power to the people in practice becomes an argument for an assault on all the plural centres of power with which the Government have to do business.
I have asked myself which was the last government that threatened both the autonomy of local government and academic tenure at the same time. The answer I have come up with is the ruler whose departure we intend to celebrate by a Loyal Address later this summer.
The argument that this is not a tax is one with which I must grapple. Ministers describe it as a service charge, which is why they believe they are entitled to use the precedents of the vehicle excise duty and the TV licence. I hope noble Lords opposite will correct me if I have got it wrong because I have tried to understand. I believe the picture they have is of the electors of a particular borough contracting for a specific package of services with a specific price tag when they vote. It is a pretty picture and I can understand its attraction. The trouble is that it does not work. First and foremost, it is because the electors of Brent, unlike the council, are not a corporation. They cannot enter into a free market contract. Also, there is no direct relationship between the payment and the consumption of the service. This is not only the proverbial point made by the Hampstead alderman in the old days; "Do you mean to say our ratepayers are paying rates to provide public conveniences for people from other boroughs?" It is also the fact that not every local taxpayer consumes every service. One cannot have a contractual free market relationship until that is changed.
If the Government are really insisting on a service charge paid by the consumer they must make homelessness a charge on the homeless; chronic sickness a charge on the chronic sick and meals-on-wheels a charge on the old and, as I believe it has been suggested tonight, refuse collection in proportion to the volume of dustbins. Members of the Palace of Westminster will have to pay extra. That will not work. We have to say to noble Lords opposite,
"There are more things in heaven and earth, my Lords
Than are dreamt of in your philosophy".
On 30th April the noble and learned Lord, Lord Hailsham, said on television that all our politics are a matter of convention. No-one who has so recently enjoyed your Lordships' courtesy to maiden speakers can fail to be aware of the importance of convention. The question is, who is breaking convention? I think of the doctrine that used to be recognised in the divorce courts in the old days of the matrimonial offence, that of constructive desertion—behaviour such as to cause a spouse to desert. The legal locus classicus is a case where a woman petitioned for divorce for her husband's desertion and the court

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upheld the husband's counter petition of constructive desertion because she kept 52 cats.
Is it a bigger breach of convention for this House, just once in a blue moon, to exercise its right or to break a political convention that all taxes are graduated which has been, so far as I know, inviolably accepted for the past 608 years? I leave the point for your Lordships' consideration.
8.15 p.m.
Lord Rippon of Hexham: My Lords, I fear that the noble Earl, Lord Russell, is rather easily shocked. I do not know why he should be surprised at going to a cricket match these days. He could see someone throwing something, whether it is verbal abuse or a ball, probably at the umpire. I have a feeling that in this regard the Government are in the position of the umpire who, at the time of the appeal, cannot be popular both with the batsman and the bowler. I cannot conceive of any circumstances in which a measure involving the restructuring of local government finance could be received with wild enthusiasm. It will only be really popular among those who pay less. That is the test of fairness. The Government must be sure that more people pay less, and then it may be all right.
Lord McIntosh of Haringey: My Lords, perhaps the noble Lord will allow me to intervene. Does he believe that there is a single Member of this House who will pay more?
Lord Rippon of Hexham: My Lords, I have no idea; nor, I suspect, has the noble Lord. We do know that reform of the rating system has been the subject of discussion and dissension for more years than he or I can remember. It perhaps goes back to the report of the Royal Commission on the Poor Law in 1834. It found that the Poor Law was raising 14 shillings per head of the population and said that the nation looked on,
"in a kind of paralysis at the inordinate growth of moral abuses, of industrial disaster, and ruinous expenditure".
That led to the Act of 1836, government grants and exemptions from which all the present problems flow.
I believe that the noble Lord and I can recall making speeches on local government financial reform in all kinds of places and on all sorts of occasions. I made one at the AMC conference at Torquay in 1948. I remember saying that the government should bear in mind the words of George Canning, that those who resist improvement because it is innovation will find themselves facing innovation which is not improvement. I used much the same speech and the same quotation in my maiden speech in 1955 in another place on the Rating and Valuation (Miscellaneous Provisions) Bill.
I can repeat that today, but with a difference. I believe that we have now reached the point when we have to bite the bullet. As many noble Lords have already indicated, the rating system might well have survived intact if we had been prepared to keep it in good order; if we had been prepared to have regular revaluations and if perhaps we had been willing to switch from rental to capital values a good time ago.
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I am sure that the noble Lord, Lord Underhill, will respond to the reference which my noble friend Lord Jenkin of Roding made about the failure of successive Labour Governments ever to have a single revaluation. Perhaps he may redress the balance by indicating what proposals the Labour Party can bring forward.
I have not been uncritical of Government measures in the past, as the noble Lord, Lord McIntosh, indicated. I was fascinated by the description given by my noble friend Lord Jenkin of Roding of the discussions that went on in the Cabinet. What he said convinces me that I was not as wet, not as rebellious nor perhaps as wrong as was indicated at the time.
I have not been uncritical of government measures in the past, as the noble Lord, Lord McIntosh, did not have to make a U-turn but a simple change of direction. As the successor of Winston Churchill in his old constituency of Wanstead and Woodford, my noble friend may remember how the great man responded when somebody said he was inconsistent. "Not at all", he said, "my thoughts are a continuous and harmonious process". I am glad to say that, quite evidently, that process has been beneficial for my noble friend.
What we have done over the years, as he indicated in his admirable speech, is to clear the system to become increasingly discredited. To make matters worse, we have attempted to buttress it with an Exchequer grant system which, as he said, has become increasingly complex, erratic and incomprehensible as we have staggered, as he set out, from expedient to expedient with no clear philosophy and no sense of direction. Of course, having been involved in these matters myself, I accept my share of responsibility for what happened in my time. However, I recall saying that if we had fed into a computer all the information that had come into Whitehall and asked it what the rate support grant should be, the answer would have come back, "First sacrifice a goat".
I must declare an interest. It is not a pecuniary interest, except in the sense which the noble Lord, Lord McIntosh, has suggested, but an interest in that I am president of the Association of District Councils. I share the anxieties which it and noble Lords have expressed about the Bill. I also share the view that, whatever opinion we have of the doctrine of the mandate as defined by the noble and learned Lord, Lord Hailsham, we have a duty to try to ensure that a manifesto commitment is translated into law in the most workable and efficient way. The approach of the Association of District Councils, which has been a moderate one, is that we must work towards achieving a system that is workable, reasonably efficient and best serves the interests of local government within the Government's overall objectives.
There have been so many Green Papers and White Papers on local government finance that it is impossible to recall them all. However, I was interested in the reference of the noble Earl, Lord Caithness, in his opening remarks, to the White Paper on local government finance brought forward by the Labour Government in February 1966— Cmnd. 2923—which pointed out not only that rates

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were regressive, albeit mitigated by the rebate system, but moreover that they secured no direct or adequate contribution from people who were not householders, particularly affluent young persons. So this problem has been recognised for some time. Indeed, since that 1966 White Paper almost every conceivable alternative means of raising local revenue has been considered with no consensus in favour of any of them.
Rates are regressive, but they are easy to collect and more difficult to evade. Consequently, my own first reaction to the concept of a community charge was that it would be about as popular as the window tax and just as easy to evade. Certainly the community charge is regressive, but so are many other taxes. It is not true to say that there are no other flat rate taxes. What about licence fees, vehicle excise duties, the tax on petrol and VAT? The community charge will be more costly to collect and easier to evade than rates but, as has been suggested, it can, like the rates burden, be mitigated by rebates and exemptions. The case for the community charge rests on one argument alone, and I think it is a strong one. It will make local councils accountable to more voters in a situation in which we have moved too far towards representation without taxation.
I listened with great interest to the speech of my noble friend Lord Ellenborough who raised many points of detail which will have to be considered in Committee. However, of one thing I am certain. It would be quite wrong to have a banded community charge. All the concerns that have been expressed about the cost of collection and the difficulties of administration would be redoubled if a banded rate were to be substituted for a flat rate. Here again the Association of District Councils has argued, I think correctly, that this would be unwise. A banded charge will cost more to administer because, operating as a crude form of local income tax but without its merits, it will be necessary to collect information on income. The process of determining an individual's liability to pay a rate could extend beyond the end of the year for which tax is due. Self-employed people sometimes take quite a time to negotiate with the Inland Revenue what their rate of tax should be. It would, as the Government have argued, also introduce pernicious tax traps, as individuals moved up from one band to another.
I listened with great interest to the excellent maiden speech of the noble Earl, Lord Lytton. Having been for a long time in favour of some measure of derating for industrial and commercial premises for the reason that we have been shifting the burden for too long to too great an extent from the voter to the non-voter, I still have grave doubts, as he has, about the concept of a uniform business rate as it now stands. Apart from the practical considerations, it will tend to separate business from involvement in local affairs. Similarly, local authorities would feel no direct accountability to their own business communities. I am inclined in any event to be suspicious of sources of revenue which depend upon national assessment, collection and distribution.
I follow the noble Lord, Lord McIntosh, in repeating also, as he invited me to do, my doubts about rate capping. In what we are proclaiming to be a major reform of local government finance, I do not
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like the idea of continuing in any form what my noble friend Lord Jenkin of Roding admitted was the expedient of rate capping.
Many other practical matters, some of which have been raised this afternoon, are best considered in Committee. Whatever happens, I do not believe that the Bill will be the last word on the subject of local government finance. I doubt very much whether the community charge by itself will be a sufficient base for local government revenue. We shall still have the problem of local government being dependent on central government for its money if it has only local revenue to raise a quarter of expenditure. We may have to consider again combining it, as the Government themselves originally thought might be necessary, with some other source of local revenue, whether a property tax on a new valuation (perhaps on capital values) or, as has been suggested, by new sources of revenue from charges and so on.
What really concerns me, however—this is common in the discussions we have these days on local government—is that we still have no clear philosophy about the relationship between central and local government. I and many noble Lords on both sides of the House have always regarded directly elected local government as one of the twin pillars of our constitution. Those of the radical Right like myself, who have hitherto and very properly regarded Professor F. A. Hayek's great work The Road to Serfdom as the cornerstone of their political philosophy, should remember his declaration:
"Nowhere has democracy worked well without a great measure of local self-government".
By that he meant responsible local self-government. He came from a Europe which understood that one found dictatorship ultimately, and perhaps even at the beginning, on the destruction of local and regional government.
Local government does not mean merely local administration. It means local responsibility for local administration—the right to decide locally upon the administration of the law in that locality. No one suggests that local autonomy can be absolute. There has to be guidance and assistance from central government. Indeed a partnership between central and local government is essential. However, it must be a real partnership, and not a relationship of master and servant, or a nominal consultation of the kind which many people in local government feel, rightly or wrongly, is all they have at present.
Therefore I say only this in conclusion. It is my firm belief that if, in the long run, the policies contained in the Bill are to have any chance of real success, then central government must learn anew to work with, not against, local government.
8.30 p.m.
Baroness Fisher of Rednal: I think the debate which has taken place this afternoon and this evening has been most interesting; interesting primarily because we have had such a large contribution from ex-members of Her Majesty's Government, and the different points of view which have been expressed by them are proving most useful. They were both interesting and useful because in the main they were

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part and parcel of the general type of local government finance as we knew it before the advent of the Bill. I think it will be most interesting to see when amendments are tabled in Committee how the discussions will develop at that stage.
All noble Lords who have spoken thus far from all sides of the House have based their main opposition to the poll tax on the fact that it is a flat-rate charge and therefore hits those in the lower-income bracket harder than those with higher incomes. The noble Lord, Lord Rippon, made the point that it is important to see that one does not hit the lower income bracket any harder.
I should like to give some figures from the Birmingham area. The Birmingham City Council has carried out a great deal of work regarding the collection figures and how the charge will affect individuals and householders. It has broken those figures down into parliamentary constituencies as well as wards. If one breaks down the figures in that way, one sees how the gainers are the people who are living in what we call the more desirable parts of the city and the losers in perhaps the not so desirable areas. Therefore there will be an effect on those who represent such people, whether they are Members of Parliament or local councillors, and on the party of which they are members.
In Sutton Coldfield—which many noble Lords will know is a very desirable place and which was brought into the borough of Birmingham much against its will—the number of households which are gainers will be the highest in all the Birmingham constituencies. The gains per household will average £221 and a few pence. Conversely, the biggest losers will be in Small Heath. Everyone knows the Small Heath constituency represented by my right honourable friend the former sports Minister. Households there will be the losers in the sum of £113. Again, if one looks at adults, as opposed to households, in terms of adults Sutton Coldfield will have gainers of £108 each as against £56·23 losers in Small Heath.
However, if one looks at wards in the city one observes two most interesting points. Sutton Four Oaks, which is held by the leader of the Tories in Birmingham, will have household gains of £348 per year. The leader of the Labour Party in Birmingham represents Sparkbrook. Households there will be the losers by £153 per year. Again, if one looks at adults in the same two wards, in Sutton Four Oaks they will receive £169 as the gainers and in Sparkbrook they will lose £75.
That example shows clearly the great differences which will arise in many parts of the country. However, it is interesting to recognise that those large areas such as Birmingham took note of the poll tax quite seriously in the recent elections. When parliamentarians talk about people not understanding the poll tax, I think it was quite evident from events of last week in those elections, in what are called the large cities, that that is not so.
I was most surprised in this afternoon's debate that noble Lords on this side of the House gave examples of losers. I was hoping that some noble Lords—although perhaps this will follow after me, as I am only just over the half-way line would show
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examples of how they feel and whether they have a twinge of conscience in regard to the people that they employ. I am thinking here especially of directors. I think there must be many directors who sit in your Lordships' House. It may be that the director will pay the same amount as the junior clerk whom he employs—of course, it might not be a twinge of conscience in that perhaps he never sees the junior clerk.
I am also thinking that there may be some noble Lords who live in highly desirable places, which people sometimes visit to see their gardens or furnishings. Of course, that is all very nice. However, I ask this: do the benefits of the poll tax apply to those people? I should have liked to have heard some noble Lords say, "Well, you know I am very concerned because I have half a dozen tied cottages; I have the gamekeeper in one and the woodman in the other. Their cottages are tied and they live there because it is part and parcel of their employment. I think it is pretty awful. I shall have to pay that poll tax for them." That means to say that, if the workers are living in a tied cottage entirely free of charge, the employer will pay the poll tax not only for the man but also for the woman. Otherwise employers must increase the wages if the people they employ are not to be much worse off. I should have liked to hear certain noble Lords express the promptings of conscience on this aspect.
However, it may be that the employer will be able to put the community charge that he pays for his workers on his claim form for tax purposes as a business expense arising from the fact that he has to employ those people. Should that happen, of course, the expense will go on to the employee's tax form as a taxable perk. I do not know the answer to that point, but perhaps noble Lords will be able to assist me. Nevertheless there are people who are living in a tied cottage who must be seriously considered.
Last night when I was thinking what I would say in the debate today I wondered whether I had woken up from a dream when it came to my mind that perhaps local authorities would have to go around and collect the poll tax from homeless people. I am sorry that my noble friend Lord Stallard is not here at present because he knows "cardboard city" in London very well indeed. Is it proposed that the local authorities will knock on the outside of the cardboard box and ask people when they will start to pay the poll tax? If that is so, and they are included—we understand that they are, according to the Bill—will those people who are living in the "grace and favour" apartments pay poll tax? We know that there are many people who are privileged in that way, not only in the Palace of Westminster but also in historic buildings such as the one which was recently burnt down—I think it was Hampton Court. Will they have to pay the poll tax?—because if the cardboard box people have to, I am sure that your Lordships will agree that they should. I am talking about fairness, which is why I mentioned those two categories.
As a magistrate, I am interested in how the local authority will decide which people are living together as a man and wife when determining joint and several liabilities. It is easy to do that with a married man and his wife; it is much more difficult with what is called a common law man and wife. We often have cases

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before the domestic court where it is not just one common law man and wife; there may be two men with a common law wife. I do not know how the local authority will work that out. I understand—I stand to be corrected—that the liability will cease on the day a couple separates, whether it is a common law or a married couple.
I can hardly think that on the day one's husband walks out, or the woman decides to walk out on him, one of them will pick up the telephone and say to the local authority, "I have left the property at 666 Barrier Road and you can forget about me paying any more there". That is the last thing people do when they are separating from each other. Most of them, especially the women, will be more interested in getting down to the social security office to find out how much they will have to live on once the husband has left them and in going to the local authority to ensure that they keep the house. Those will be their prime considerations. They will not be notifying someone that somebody has left the property.
We are also looking at unfair taxes. Other noble Lords have spoken about the tax on community care. It is a paradox for us to be charging carers in the community who are putting care in the community into operation. They are taking the people out of mental hospitals and preventing elderly people going into old people's homes. It is unfair—in the main it is women who are doing the caring—that they should have to pay a community charge when, if they allowed their elderly relatives to go into homes, they would not have to pay.
DHSS benefit levels are another concern to me. It seems unfair that the compensation level will be based on a national average. That means that if one lives in an area where the charge is higher than the national average one will not be fairly dealt with.
I turn to one of the main points that I wish to point out. Local authorities will be faced with considerable expense in collecting the poll tax. I understand that at present 43,000 rate bills are sent out in Birmingham each year. Under the poll tax, 1,020,000 bills will have to be sent out. Obviously the more bills sent out the more evasion there will be pro rata, and the more staff will have to be employed to deal with that 140 per cent. increase in bills. Birmingham has worked out that it will need an additional 350 staff. The cost of collection will more than double the present cost. I do not wish to repeat what other noble Lords have said. The poll tax is not about accountability; it is about a further cutting back of local authorities, of the services they provide and of their independence. I finish by saying:
"Hear all and then let justice hold the scales".
8.45 p.m.
Lord Bruce-Gardyne: My Lords, I am afraid that I shall have to disappoint the noble Baroness because unfortunately I do not employ a gamekeeper and my garden is not as yet open to the public. I work hard on my lawn every weekend. When it has reached an acceptable level, I shall ensure that she is sent an invitation to the opening when it occurs, which might be some years hence.
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I must confess that I suffer a little from what I believe the French call nostalgic de la boue. I have some nostalgic sadness about the passing of the rates. I sometimes thought that they were a rather over-maligned tax. However, I listened with great interest to the powerful speech of my noble friend Lord Jenkin of Roding. He demonstrated pretty conclusively the mess that we had got into with the rating system. The most important point is the one which the noble Baroness rather dismissed—the issue of accountability—and I do not agree with her over that.
As my noble friend Lord Mancroft in his splendid maiden speech said, paying bills concentrates the mind. If your Lordships look back at what has happened with public expenditure generally—I am talking about central government public expenditure—over the past 10 years, I submit that
one of the reasons why we contrived to call a halt to its dangerous profligacy and irresponsible growth that marked the 1960s and the 1970s was the gradually dawning realisation in the other place, of which I was then a Member, that the technique of seeking to draw in votes through public expenditure by the transfer of resources from a small minority of probably captive Tory voters at the one end and spending it on the large majority of voters who might be persuaded by the benefits that they enjoyed from sharply rising public expenditure had run its course merely because the transfer no longer exists, and what we are perceived to be doing is trying to bribe the electorate with its own money.
That is true, has become increasingly true and has been perceived to be the case with central government. It has not been true in the case of local government for all the reasons which many of my noble friends and the noble Lord, Lord Wyatt, pointed out during the debate. In practice, in the case of local government, unlike central government, those who were receiving the services were not also receiving the bills. On accountability, I am sure that this change, with all the criticisms that have been made about it on both sides of your Lordships' House, must represent a move towards greater responsibility in local government.
I share some of the criticisms that have been voiced, notably again in admirable maiden speeches by the noble Earls, Lord Lytton and Lord Carnarvon, and several other noble Lords, including my noble friend Lord Rippon, about the business rate. One cannot but agree that to some extent it cuts across the concept of local accountability and goes in the opposite direction. On the other hand, it is reasonable to acknowledge, as several of my noble friends have pointed out, that the measure of accountability which local firms can achieve with local government representatives under the present system is, to put it mildly, somewhat limited. Nevertheless, I share some of those worries.
I should like to plunge briefly and with some trepidation into the vexed area of constitutionality. I have not only listened with great care to the comments of a number of noble Lords who have spoken on the role of your Lordship's House in these matters this afternoon, but I have read with great interest the contributions in the public prints by my

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noble and learned friend Lord Hailsham, the noble Lord, Lord Jenkins, and my noble friend Lord St. John of Fawsley. On the question of your Lordships' involvement in issues of taxation, whether local or national, in the light of the somewhat conflicting advice we have been given by these great authorities I am tempted to recall the response of the idle divinity student who found in his exam that he was asked to list the major and the minor prophets respectively and simply wrote, "Who am I to differentiate between such great and good men?".
I must say that I feel rather like that on the issue of your Lordships' involvement in the taxation aspects of this Bill. However, I admit that I wonder about the manifesto commitment about which there has also been a fair amount of discussion today. My noble friend Lord Carr, I think, referred to it as just a manifesto commitment. I am rather inclined to agree with those who sometimes argue, as Charlotte Corday said of liberty, that great crimes are committed in the name of manifesto commitments. I accept that. I do not think there is anything necessarily beautiful or perfectionist about them. I agree with my noble friend Lord Rippon that it is part of the constitutional duty of this Chamber to put manifesto commitments into legislation effectively and efficiently. I apologise if I have not given his precise words, but I think that was the sense of what he was saying.
On the other hand, I wonder a bit about the suggestion of the noble Lord, Lord Jenkins, who advised that our attitude on this should be to ensure that your Lordships' House extended its influence in the medium term. I wonder about the stance of the main Opposition party in this connection. I can well understand that a number of noble Lords—for instance my noble friend Lord Chelwood and presumably the noble Lord, Lord Jenkins, himself would like to see the extension of your Lordships' influence in this context. However it seems to me that that might cause some minor qualms for the main Opposition party. I am glad to see that the noble Lord, Lord McIntosh, is nodding his head. I feel that while manifesto commitments are not by any means holy writ, if they are to be effectively demolished or changed out of recognition, it is a task which is more suitably performed by the elected House than by the non-elected House.
Lord McIntosh of Haringey: My Lords, nodding one's head is not an adequate response to the noble Lord. Certainly we on these Benches would not seek to extend in the medium term, or in any term, the powers of this Chamber against the powers of the legislative Chamber. But I do not think that he can go on from that to say that we feel that this particular manifesto commitment, and all the different ways in which it has been put before the electorate at different times, and with the qualifications about the ability to pay made on various occasions by the Conservative Party, deserves a great deal of respect from us.
Lord Bruce-Gardyne: My Lords, I shall study what the noble Lord has said with great interest in Hansard tomorrow. It seemed to me that it was a somewhat devious approach to the issue. This was, as he knows
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very well, a clear and specific manifesto commitment in the last manifesto of the elected Government. It is not for me to say, but if the noble Lord and his friends decide to assist in substantially demolishing the enactment of that commitment, they may conceivably have installed a rod in pickle for their own backs if the moment should ever come at which they are in a position to take the reins of power themselves.
I should like to pass on very quickly to the gypsy's warning of the noble Lord, Lord Houghton, about the problems of the collection of the tax. I have a gut feeling that there may be some problems in that respect. I would only say to your Lordships that it is worth recalling that similar comments were made about VAT when it was first introduced, which on the whole has proved in practice to be an efficient revenue raiser. The difficulties of collection have been nothing like as great as were expected. Nevertheless, I would take some notice of the gypsy's warning.
In conclusion I should like to murmur a tiny word of encouragement or caution—I am not sure how one should put it—to my noble friends. My noble friend Lord Carr, rather to my surprise, having made some stringent comments about the scale of transfer of the burden of expenditure from local to central government, 70 per cent. to 80 per cent., then suggested that there might be a case in due course also for shifting the cost of services such as education to central government. It seems to me that that would be a most unwise way to proceed and is in total contradiction to what my noble friend was himself calling for.
I hope that whatever else we do during the passage of this legislation, my noble friends will resist any temptation to try (if I may put it very crudely) to buy off criticism and opposition by pledges to transfer services from local to central government or indeed to raise the proportion of finance which is coming in the future from the rate support grant. Either of these steps would lead to a far greater erosion of the principle on which this Bill is based—the principle of local accountability. Those are not ways in which we should proceed.
8.58 p.m.
Lord Moran: My Lords, I should like briefly to make two points, one a point of detail and one more general. I start with the point of detail. In his notable speech the noble Viscount, Lord Watkinson, described the proposed arrangements as personal payment for personal services. The noble Lord, Lord Pym, called it a switch from a tax on property to a tax on people. The noble Lord, Lord Houghton of Sowerby, for his part said that rates were done for.
The truth is that some rates are going to survive. The Bill, in what has been described as a distortion of the reform, proposes the continuation of rates based on property in respect of country cottages, empty property and hereditaments. These hereditaments are listed in Clause 54 of the Bill. They are a rather curious collection—coal mines, the right of fowling, killing rabbits or fishing, when severed from the occupation of the land. It is about fishery rates that I want to say a brief word. These are often quite substantial and, unlike domestic rates, no services are received for them. They just go into the general pot.

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We now have a unique opportunity which may never recur. The Government are bringing in legislation abolishing most rates and they will shortly bring in legislation which, among other things, will establish a National Rivers Authority which will be badly in need of proper funding and will be responsible for matters like the control of pollution, which are very important to fishery owners.
Can the Government not take this opportunity to arrange for fishery rates to be paid henceforward to the NRA by taking them out of Clause 54 and including them in the future Bill? It is the course of obvious common sense and such a move will be warmly welcomed, as I believe the noble Earl, Lord Caithness, may be aware, by all those interested in freshwater fisheries. I urge the Government to consider this seriously.
My second point is a more general one. I think that the Government are right about the unsatisfactory nature of rates. At first I was attracted by the idea of local income tax; it works elsewhere. But, given the politically extreme and bizarre policies of some of our local councils, I am persuaded that it probably would not work in this country without driving people out of high-spending areas and creating something of a refugee problem. So, not very happily, I accept the principle of a community charge.
However, if we are going to make a radical change, I think we ought to get it right once and for all. Every time any of us receives a rate demand, it brings it vividly home how much of local government expenditure is determined nationally. First and foremost this means education and I do not think that any noble Lord will need reminding of the fact that education policy is determined by the Government and Parliament. Coupled with that is teachers' pay and then there are the police, fire services and civil defence.
Would it not be better for matters decided nationally to be paid for nationally out of taxes paid to the Inland Revenue and for matters determined locally to be paid for locally, as was very tentatively suggested by two noble Lords, Lord Carr of Hadley and Lord Ellenborough? This would have two great advantages: first, that payment for these expensive items, especially education, would vary with the ability to pay; secondly, that the community charge would be far more modest and consequently far more acceptable. This might, I suggest, be the answer to the plea of the noble Lord, Lord Pym, that a way should be found to make the community charge more popular. It would fit in with the statement of the noble Earl, Lord Caithness, that "We want local elections to be about local issues". It would certainly, in my view, be much more logical and sensible. So I commend it to the Government.
9.3 p.m.
Lord Beloff: My Lords, I wish to return to a point which has been raised by my noble friend Lord Bruce-Gardyne, which concerns the responsibilities of the House in relation to legislation of this kind. I have to take issue with the noble Lord, Lord Jenkins of Hillhead, but I told him that I proposed to do so. Although he is not in his place, I intend to make the remarks I have in mind.
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I think that too much has been made of whether or not this is a manifesto commitment. I do not regard party manifestos as part of the constitution. We have had them for, I suppose, a little more than a century and a half, but in a Constitution which is as old as ours this is a relatively recent development. The important thing to me is that if the House, is to exercise its revising power—and it has no other serious reason for existence—it should do so within limits which are set by conventions of the Constitution which were until very recently, I think, generally accepted. The most important of these is that taxation, the imposing of charges and burdens upon the people, is a matter for their elected representatives, and for their elected representatives alone.
I think that the noble Lord, Lord Jenkins of Hillhead, somewhat exaggerated the extent to which Sir William Wade accepted the possibility of the House of Lords departing from that precedent. He pointed out the strength of the precedents—and I am not referring merely to the famous events of 1910–11—against the House of Lords participating in the imposition of taxes. I think that I could summarise the position of Sir William Wade in a limerick, and perhaps at this time in the evening a certain frivolity may be permitted in your Lordships' House:
"The Master of Gonville and Caius
Is frequently found on his knees.
He prays that the peers
Will pay heed to his fears
And not think they can do as they please."
They cannot and should not.
My noble friend Lord Bruce-Gardyne has referred to the position of the official Opposition with its well-known views about the House of Lords. He has been answered, I think informatively, by the noble Lord, Lord McIntosh. However, I was very surprised at the pronouncements of the noble Lord, Lord Jenkins of Hillhead, because his party—whatever it comes to be called in the end—claims to be the current embodiment of the great tradition of Liberalism. Speaking as a former Gladstone Professor, perhaps I may refer him to the recorded views of Mr. Gladstone on this subject. Noble Lords will remember that in 1860 the House of Lords took upon itself the task of refusing the Government's Bill repealing the paper duties—the taxes on knowledge, as they were commonly called at the time. This was described by Mr. Gladstone as a:
"gigantic innovation on the Constitution".
That is to say that as early as 1860 an attempt to frustrate the House of Commons in dealing with a matter of taxation was already regarded as a gigantic innovation. Mr. Gladstone described it as the House of Lords favouring:
"the establishment of a reviewing power over the House of Commons in its most vital function long declared exclusively its own and of a divided responsibility in fixing the revenue and charge of the country".
His final entry on the subject ran:
"I see no way of ultimate hope or safety except in some plan of action founded on the principle that the Lords are not to tax the people without their consent".
That principle, as I said, was already regarded as something in existence and I am surprised that anyone should advocate that we depart from it now.

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Clearly this does not relate to the whole of the Bill before us. It was declared and enshrined in the Parliament Act that matters purely of a local concern and local taxation are not subject to these restrictions. But noble Lords opposite and I fear the population at large refer to this provision not as a local charge but as a poll tax. If they agree that it is a tax then I cannot see how they can believe that the House of Lords would be right to interfere with the level at any rate at which it is levied.
This I think means that we are perfectly right in looking, for instance, at the administrative problems which are raised. They are important but they can be exaggerated. The noble Lord, Lord McIntosh of Haringey, felt that the register might be used by burglars to discover the number of adult inhabitants in a house which they might wish to plunder. My acquaintance among burglars is not very great, but it seems to me that if they wished to find out how many adults there were in a particular house or property they could do so from studying the electoral register as it stands.
However, there are real problems in administration and it would be perfectly proper for your Lordships' House, with its wealth of experience particularly in local government, to examine those points. What I think should be excluded and, if we intervene, what I think would be rightly resented by the House of Commons would be anything comparable to what has come to be called the "Mates amendment" or anything like it. The effect of any amendment of that kind would inevitably be the socially desirable one of lessening the burden on the more hard-up, but it would have the effect of imposing higher rates of tax upon others than the House of Commons, in settling for a uniform tax, had agreed. Therefore I believe myself that anything of that order which affected the distribution of the burden would violate the constitutional conventions which it is our duty as well as the duty of another place to uphold.
The noble Lord, Lord Chelwood, who indicated that he is the great protagonist of this kind of thinking in your Lordships' House, referred to a remark of mine about the House getting too big for its boots. In his absence I have to say that I did not write that in the Daily Telegraph but in The Times. I was sacked from the Daily Telegraph by its new editor presumably on the ground that I am a Conservative.
However that may be, I think that there is a little danger here. I have been very impressed by the number of people who write in the public prints or write to us individually saying that it is our duty and our business to affect a major issue of policy in this way. I am sure that one effect of television which none of us thought of at the time has been to give people an exaggerated opinion of our constitutional powers and I think that it would be very bad for this House if we allowed that exaggerated opinion to be held by your Lordships as well.
9.14 p.m.
Viscount Hanworth: My Lords, with this list of speakers it would be difficult to raise many matters
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which have not already been covered. My primary object, therefore, in a brief speech is to reinforce some of the points which have already been made against the poll tax. The Government's faulty argument in favour of the new tax is that everyone should pay for what they get from the local authority; but of course they do not all get the same benefits. For example, education expenditure applies only to younger persons, and if one does not own a car much of the expenditure on roads is irrelevant.
The poll tax does not take into account the general principle of most taxation: that those who are better off should pay more. That is a principle which applies even to VAT, because the rich buy more expensive products and services. Most certainly, those in large and expensive houses should pay more, as they do at present.
For these reasons, I do not think the present property tax is as unsatisfactory, at least in principle, as the Government would like us to think. Somehow the case of the old lady living in a large house with a high rental is often the only argument which some government supporters seem able to produce. It is of course a fairly isolated case, and some old ladies living alone in smaller accommodation are going to be worse off with the poll tax. Most certainly, in these times of housing shortage hanging on to an unnecessarily large house is not the national interest or really in that of the incumbent.
Once again the Government have decided what to do without looking at the results in detail: nor have they looked on the undesirable side effects. Once again they are not frank and do not tell us, or at least they do not emphasise, the fact that a major reason for their policy is that it makes control of local government expenditure so very much easier. All this is cloaked by talk about "accountability" and the importance of the local population being involved in decision-making, presumably through their duly elected representatives. Largely, in practice this is simply eyewash.
Having said all this against the poll tax, I am in principle not wholly opposed to it, if it formed only part of how local government funds were raised. If your Lordships refer to Annex K on the penultimate page of the Government's Green Paper on this subject, Cmnd. 9714, you will see there is a list of how other countries provide local funds. By far the majority use two and sometimes three types of taxation, mostly based on income and profits and on property, taken together in varying proportions. None of the 23 countries listed apparently has a poll tax.
It is only too easy to give practical objections to the Government's proposals and their unfortunate side effects. I am sure others will do so and, for example, cover the expected rises in house prices consequent upon this legislation. I will therefore mention just one. We have the cost of collecting the tax, which will be double that of the present system. This would certainly pay for an up-to-date neutral assessment of many properties. Much more importantly, tax evasion will often result in splitting up families, giving us a roving element in the population. Greater bureaucracy and snooping will be inevitable consequences.

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I would remark that although a change to local taxation was included in the Government's manifesto, the 60 per cent. of the electorate who did not bring them into power and probably even many who did, were not specifically in favour of a poll tax measure. They certainly did not give the Government a blank cheque to do as they liked.
It may be that we can bring forward an amendment, as was done in the other place. That seems to be a matter for debate. I would suggest that at this stage there are two practical alternatives. The first is to put forward an amendment to relate the poll tax to a level of income tax, as was proposed in the other place. That has some obvious objections, but if it were agreed in principle the Government could propose some other measure more acceptable to themselves on the same lines. A second alternative would be to keep an element of the existing property tax. The additional cost of having two methods for obtaining local funds would, in my view, be acceptable provided that it gave a fairer system. As I have said, other countries do just that.
The Government's Green Paper is a very well written document, but it bases its analysis and conclusions on principles which in practical terms do not have the weight ascribed to them. Once again I see a spectre of a divided nation with the hates and envies it produces. This Government have done nothing to bring the nation together. In that respect this legislation is divisive even if it has some merits.
9.20 p.m.
Viscount Massereene and Ferrard: My Lords, I do not agree with the noble Lord who has just sat down. I support the Bill.
One or two noble Lords have mentioned the saying that came from America—"No taxation without representation". In relation to local government we shall now have representation and taxation. I am all for that, provided the ability to pay, and how that is decided, is quite fair. I think that everyone will agree that the present system of rating—which we have had I suppose for almost all my life, or a large part of it—is very unfair, especially as regards domestic rating.
I do not know why everybody calls this a poll tax. It is a community charge, and I think that it ought to be so called. The poll tax takes us back many hundreds of years— to the 14th century. We do not want to go back as far as that. In my opinion the proposed community charge will be no hardship. We want to avoid hardship, and it will be no hardship if we can find the correct method of deciding whether certain people have the ability to pay.
The gross amount paid out last year by local government was £45,000 million. That is a very big sum. So far as I remember, before the war the whole Budget was no more than that. That money was spent on providing services for 35 million adult electors. Of those 35 million electors there were 20 million who did not pay anything towards the services. To be accurate, there were 3 million of that number who paid but then received a refund, so the actual number is 20 million electors who did not pay towards those services.
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As one or two noble Lords have also mentioned, all the Government are trying to do is to see that the community charge is a personal payment for local services. I feel that once the electors have this extra responsibility they will take more interest in local government and in electing their councillors. It is not that I want to decry the efforts of any councillors in local government, but the electorate should be very careful about whom they elect. As we all know, the turnout at local elections is in general extremely poor compared with that for general elections. I believe that it has never been higher than 40 or 42 per cent., which is not very cheering news for democracy.
I hope that my remarks will not annoy any noble Lord on the opposite Bench but I should like to consider those 20 million people who pay nothing towards the wonderful local services that they receive. As regards the issue of ability to pay, I understand that there are now over 30 million private cars in use in Great Britain. How many of those 20 million people own a car, I wonder? Surely people who run a car—and use it fairly regularly, as otherwise there would not be much point in owning it—have the ability to pay the community charge.
One difficulty is that one cannot yet know how much the community charge will be. Obviously, in different areas it will vary just as rates do at present. In some areas it may be that the charge will not come to more than £3 or £4 per week, which is a little less than the cost of a couple of gallons of petrol per week. I imagine that most people can afford such a sum. I realise that this may not be a new line of discussion and I do not wish to repeat the arguments of other noble Lords.
The variation that occurs over different areas applies to our present rating system. There are some areas in which the average householder pays £400 a year but perhaps receives services to the value of £650 a year, while in another area an average rate bill of £130 may bring with it local services much greater in value. The whole system seems unfair. It will of course take time, but I believe that the community charge will be fairer to all the population provided that an ability to pay is taken into consideration and approved. It may be difficult.
The collection of the community charge may also prove difficult. The Inland Revenue has always had its own way about the collection of revenue, which has been made very easy since in many cases, if not in every case, much of the work is done by employers. The employer deducts his employees' tax liabilities and works out how much is due and then hands it over to the Inland Revenue. That can mean a great expense for an employer if he has only a few people in his workforce. I should have thought that if someone is able to exercise his right to vote responsibly, he would be responsible enough to be able to deliver his tax to the Inland Revenue. The Inland Revenue on the other hand does not agree.
The cost of collection will be very great. That is certainly a drawback. Although I have lived in cities and towns a great deal, I come from a rural background. In rural areas, some shopkeepers and such people may be badly hit. Not only will they have to

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pay the community charge but also the business charge. Something will have to be done about that. It will take three or four years for the position to settle. However, I support the Government because the domestic rating system that we have has been a nightmare.
People do not understand the situation. The media have been bad about this: they have frightened
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people. The national taxpayer—the Government—will pay for 50 per cent. of the expenses of local authorities; the community charge will pay for only 25 per cent. There will be various rebates. The remaining quarter will come from businesses. I consider that the provisions will be a success when people become used to them. I apologise for having spoken at some length. However, I support the Government.
9.32 p.m.
Lord Hayter: My Lords, I find myself in a curious position. Apart from a reference by the noble Baroness, Lady Fisher of Rednal, I seem to be the only person to say a few words on this Bill in relation to the voluntary organisations. Many noble Lords will have much experience of the valuable work performed by the non-statutory and non-profit-making bodies. There are over half a million such organisations in Britain today. Over 150,000 of them are registered charities. Over half the population performs some kind of voluntary work over the year. From Age Concern to the World Wildlife Fund important work is done every day. However, in spite of the range and support for such work, this Bill does little to take account of these activities.
In the year that the national representative body for voluntary organisations, the National Council for Voluntary Organisations, celebrates its 60th birthday, many of the provisions in this Bill threaten its work. We shall discuss these in more detail at later stages of the Bill, but I feel it worth while to put on record some of the major concerns at this stage. They fall into two broad categories: concerns for the clients of voluntary organisations; and concerns for the future work of the voluntary organisations. The link throughout is the reliance of the voluntary organisations, the charities and the people with whom they work, on the funding, structure and resources of local government. We all know that from past experience.
Let me, first, address the issue that caused such a stir in the other place and to which many noble Lords have referred today: the failure of the community charge to take account of the ability to pay above the rebate level; and the inadequate nature of the compensation element for those on income support. It has one obvious implication for voluntary organisations. The work of the advice centres is likely to be very much increased by any further strain placed on family finances. The advice centres must be supported by the Government.
Disabled people do not want exemption from community life, but MENCAP, RADAR and the Spastics Society frequently point out that disabled people are disproportionately concentrated at the lower end of the income scale. In this light the burden of a flat rate charge will fall disproportionately on the disabled. The remedy lies in the provision of protection for them, not by virtue of their disability, but as a consequence of their financial circumstances. The extension of the rebate to allow for a full 100 per cent. rebate of the community charge would allow the poorest disabled people to emerge unscathed from the introduction of this new system.
A further group with whom voluntary organisations and charities work is the homeless, living rough in parks or under bridges. The Bill places a duty on local authorities to seek them out and exact community charges from them. Your Lordships will appreciate the prospect of squads of local authority employees demanding payments in the dead of night from residents of park benches. It is quite impractical, not to say faintly ludicrous: which is a polite way of saying that it is damn silly.
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My concern though is not primarily for the impracticability of the scheme, but rather with the effect on individual homeless people. Very few, if any, of them will be in a position to pay any bills at all. I hope that the Government will not rely on disobedience of the law or lack of enforcement to protect the homeless from community charge bills, but instead will come forward with their own amendment to correct this anomalous situation.
I should now like to alert your Lordships to some rather more direct effects of the proposals as they stand on the voluntary organisations and charities. Let me first shed light on the position of volunteers, with whom many of your Lordships work through links with various charities. These volunteers work in what look to me to be two definable situations: either on an individual basis with, for instance, a disabled person, helping them to live a full life in the community, or in a residence with other volunteers where groups of children, elderly or disabled people come for short periods of respite care. These volunteers are generally young people keen to perform some form of community service. They do not have access to social security benefits, but are often paid a little pocket money, say, £12 or £16 a week. Under the community charge system they will face bills for the full local charge, which they will obviously be unable to pay. It will therefore fall on the charities and voluntary organisations which organise the scheme to pay those bills. A noble Lord who is not here tonight was telling me that it will cost a comparatively small trust with which he is concerned an extra £6,000 a year. Such an imposition is surely not the intention of the Bill. I hope that the Government will bring forward amendments to correct the error.
A second worry concerns the operation of the collective community charge as it applies to landlords such as the Salvation Army, providing temporary shelter for homeless people on a short-term basis. The Bill quite rightly accepts that it will not be feasible to charge a personal community charge to residents of such hostels, moving as they do on a regular, say, weekly basis. Unfortunately the system proposed in its place is not much less onerous and complicated because charities and voluntary organisations are bearing the brunt of these difficulties. Groups running the hostels will be faced with a choice of demanding payment from their residents, being ready to refuse entry should payment not be forthcoming, or paying the individual charges themselves and thereby directing valuable resources away from service provision.
The collective charge was devised to spare local authorities the administrative nightmare of collecting individual charges from short-stay residents. However in sparing local authorities the Government have substituted a moral and financial nightmare on the hardpressed voluntary organisations and charities. This is surely not a fair trade off.
The third issue of major concern to the whole charitable world concerns the rate bills which charities pay on offices, more particularly on high street shops. Although the Government promised to continue current arrangements whereby rate relief of 50 per cent. is granted on a mandatory basis with a further 50 per cent. granted at the discretion of the

923
local authority, the effect of rates revaluation will be to increase dramatically the absolute costs faced by charities. As an indication of the difficulties many organisations may face, I hear that a sample of charity shops run by Help the Aged indicates that absolute-cost increases of 100 per cent. and very much higher can be expected. In those circumstances it would not be an exaggeration to talk of charity shops being driven off our high streets unless suitable changes are made to the legislation. In case some noble Lords are not familiar with such charities, I should like to point out that the charity shop is one of the main forms of obtaining money.
I had intended to apologise to the House for covering such a large variety of concerns but I do not believe that I should. However, I consider that the breadth of coverage of outstanding concerns indicates the failure of the Bill to recognise that the charitable and voluntary sector world is dependent on the decisions which your Lordships will make in respect of the Bill. In almost every area, including charitable rate relief, where although the Government have promised an amendment none has been forthcoming, it appears that the difficulties posed for voluntary organisations and their clients may have been overlooked. That is a charitable way of saying so. I hope that by addressing some of the issues—and there are others that I have not mentioned—I have jogged the Government's collective memory. Without some response in the form of amendments tabled at later stages I fear that the Bill will place unwelcome burdens on the most disadvantaged in society and, at the same time, hinder a burgeoning and important sphere of local initiative and activity.
As regards the people, I ask the Government to think of the many thousands of volunteers and recipients of help from charities and voluntary organisations. Dare I point out that almost all are voters? They do not seek favouritism; they seek fairness.
As regards the voluntary organisations, the same is true. The Government have quite rightly extolled the virtues of private philanthropy and private charity, but if they showed an equal amount of public philanthropy and public charity they would gain enormously in general respect and esteem.
9.43 p.m.
Lord Sandford: My Lords, I have been involved in these issues twice in my Parliamentary career: first, between 1970 and 1973 as a Minister in the Department of the Environment, and second from 1980 to 1986 as President of the ADC, before I was succeeded there by my noble friend Lord Rippon. I do not wish to introduce any fresh subjects at this late stage. I should just like to stress a few points that have already been made.
In 1970 the reform of local government finance and indeed of local government as a whole was already badly overdue. That point was first mentioned in the debate by the noble Earl, Lord Lytton. Nothing could be done about finance at that time because, having inherited the Redcliff-Maud Report, we were engaged in reforming the structure and functions of
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local government. However, in 1974 it was possible to take action. As Shadow spokesman for the Environment at that time, my right honourable friend the Prime Minister committed my party to the reform of the domestic rates. The Labour Party, which was then in office, appointed the Layfield Committee.
We all listened to what was said by the noble Lords, Lord McIntosh and Lord Jenkins of Hillhead, who, as Home Secretary at that time, was a member of the Labour Cabinet, to give us an account of why the Labour Party, having appointed the Layfield Committee then did nothing further about reform. Labour had three more years in office. Perhaps the noble Lord, Lord Underhill, will enlighten the House about that when he winds up the debate. So far as I can recall, the Secretary of State, Mr. Crosland, made a famous speech about "the party being over", but I do not recall what he did to stop it going on. Anyway, I congratulate Her Majesty's Government on having at last grasped the nettle of reform, albeit 14 years after the commitment to do so was first entered into.
I believe that the failure to grasp this nettle until now has been the source of almost all of the ills which have beset local government. I mention three of them. The lack of accountability, which has been fully expounded by my noble friend Lord Jenkin of Roding, has opened local government to the most dreadful abuses by extremists such as the militant tendency but more serious and pervasive has been the general apathy, evidenced at local government elections, which also results from that lack of accountability.
The failure has also led to the growing interference by central government in local government affairs, again fully expounded by my noble friend earlier. I recall criticising at the time in your Lordships' House one piece of legislation after another and criticising it to the point of rebellion, not that those pieces of legislation were not necessary but because in my view it was so much more important to come to terms with the need to reform local government finance.
The worst effect of the failure to reform is that mentioned by the noble Earl, Lord Carnarvon, in his maiden speech; that is, the increasing difficulty of recruiting and retaining good men as councillors in local government while this flawed financial system continues. I look forward more than anything else to seeing a change in that sphere.
We have heard much about fairness and unfairness and far too much of it as though the present system had something to commend it on the score of fairness. The present system is grossly unfair and this system is far better. It is impossible to devise any system of charge or taxation which is entirely fair but one in which 9 million people are cushioned so that the least well off have only to contribute 20 per cent. of one-quarter, that is to say, one-twentieth, of the total cost of the services provided for them by their local council cannot be too bad.
Finally, there is the question of alternatives. The White Paper entitled Paying for Local Government was published some two years ago. It was entirely possible then, and had been entirely possible for many years before that, for any of the parties opposite, any of the local government associations to

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come up with their proposals and for CIPFA—the Chartered Institute of Public Finance and Accountancy—to come up with its proposals for reform. Not one of those has produced, sustained and developed any alternative to what is before us.
I am very glad to support this legislation wholeheartedly. I believe, as does the noble Lord, Lord Wyatt, that in 10 or possibly even five years' time, we shall be asking ourselves how on earth we could have gone on as long as we did with such a bad system, and what on earth all the fuss was about when we came to change it.
9.48 p.m.
Lord Hatch of Lusby: My Lords, a great deal has been heard in the House this afternoon about the gross overspending of local councils run by the Labour Party. I wonder whether your Lordships realise that the record increase in expenditure by an inner London education authority took place between 1967 and 1970. Among the members of that authority were Jeffrey Archer, Christopher Chataway, John. Selwyn Gummer, Timothy Raison, Lord Howe and so on. No prizes are offered for guessing who was in charge of that authority during those years of record increased expenditure.
I wish to spend all the time I have at Second Reading on the principle that lies behind the Bill. We have heard again that there is a mandate for this Government that gives validity to the Bill; that they have a mandate because the Bill was forecast in the Conservative Party manifesto at the election last year. These are the relevant words from the manifesto:
"To abolish the unfair domestic rating system and replace it with a fairer community charge".
What is this Government's conception of what is fair? I take a random selection of the dictionary's definition of the word. We can use the words "just", "equitable", "equal" and "even-handed". Do the Government consider it to be fair to charge a person earning £100 a week the same as a person earning £1,000 a week? If so, I suggest that that is nothing less than semantic sophistry. To any ordinary person the word "fair" means fair according to one's means.
The noble Lord, Lord Sandford, said a moment ago that no alternatives have been offered. It is not our responsibility as an Opposition to offer alternatives. In this debate it is our responsibility to ask whether the Bill that the Government are putting forward is fair or unfair. However, I suggest to the noble Lord that members of his party in another place put forward an alternative which they as Conservatives considered to be fair. That alternative was in very sharp contrast to the principles that lie at the heart of this Bill.
Secondly, the manifesto refers to a community charge and not a poll tax. Let us take the words of the Government at their face value and argue on those grounds. This is to be a community charge and it is to put the services offered by local authorities into the market place. The charge is not going to be a fair charge but a charge as it is understood by the market place. For one moment I should like to examine what in practice this means. I refer your Lordships to an important study made in relation to this Bill at Bristol University by the School for Advanced Urban Studies, in this case led by Glen Bramley and Julian
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Le Grand. They carried out a survey for the Cheshire County Council and these are some of their findings.
The Cheshire County Council spends £40 million per year on sixth form and further education and that is the largest single item in its budget. On an examination of whose children attend sixth form and further education classes it is seen that the professional and managerial households gain three-and-a-half times as much benefit as the households of semi-skilled or unskilled manual workers. Is that the kind of fair charge for services that will lead to an equitable society? Is that fair? Does it come within the Government's definition of fairness?
The second item in the budget of Cheshire County Council is roads. Twenty-nine million pounds a year is spent on roads. But those in the top social class use their cars on the roads three times as much as those in the bottom social class. Twenty-nine million pounds is spent on roads for the use of those who own cars. How much is spent on subsidising public transport and the bus system? The answer is £6 million, compared with £29 million.
The report goes on to refer to the use of libraries, museums and country parks. All of those are used many more times by households of the professional and managerial classes than by the manual workers. In total the researchers estimate that the top social group receives nearly twice as much as the bottom social group even when the benefits claimed by the lower social group are taken into account. At present—perhaps it is a coincidence—the rating system in Cheshire roughly represents this different use of the amenities provided by the county council.
I am not defending the rating system, but at the moment it roughly reflects the payment for those community services. However, when the community charge replaces the rates there will be a gross distortion in the payment for services. This is not surprising. A couple of weeks ago during the Second Reading debate on the Education Reform Bill I said that that Bill represented one element in a coordinated campaign designed to alter the cultural base of British society. This is another element. In each case, whether it is the Education Reform Bill, this year's Budget, the changes in social security or the so-called community charge, the basic principle is that the poor are now subsidising the rich. Each Bill increases the contribution of the poor towards the rich. What is more, because most of those with small incomes are either young or old, it is also the case that the community charge will bear most heavily on the young and the old who will subsidise those who are wealthy and middle-aged. Is that the way to create one nation? I suggest that it is divisive, unjust and is destroying the fabric of our society.
Viscount Massereene and Ferrard: My Lords, before the noble Lord sits down I must point out to him that the top 10 per cent. of the income bracket pay 16 times more towards the social services than the bottom 10 per cent. Therefore what he is saying, with all due respect, is, I am afraid, nonsense.
Lord Hatch of Lusby: My Lords, if the noble Viscount will look again at the figures, he will see that during the lifetime of this Government the gap between the top 10 per cent. and the bottom 10 per cent. of the population has widened considerably.
10 p.m.
Baroness Carnegy of Lour: My Lords, the noble Lord, Lord Hatch, has made a speech which is consistent with the points of view which he has so often expressed in this House. We have listened to him with great interest but I think perhaps he has forgotten that local government will not be financed solely through the community charge: 50 per cent. of it will be paid for by the taxpayer and a further 25 per cent. through the business rate. I think that slightly alters the balance of the argument that he put forward.
I should like to remind your Lordships that last year we spent many hours in this House considering the Scottish equivalent of this Bill. We improved that legislation in many ways. We looked especially carefully at the community charge and I must say to the noble Lord, Lord Hatch, that we looked most carefully at at least one alternative that was proposed at the time. Nevertheless, in the end we agreed with another place that the best and fairest way was indeed the imposition of the community charge. That decision is now the law of the land; the register is being compiled and the Act is in the process of being implemented.
At the time of the passage of the Scottish Bill the position was unsatisfactory, in that the new social security arrangements had not been formulated. Therefore the Government could not tell us precisely how the rebates would operate or what people on lower incomes would in fact be expected to pay. Incidentally, I should say to the right reverend Prelate the Bishop of Gloucester that I suspect that that was the position when the General Synod of the Church of England, of which he spoke, passed its motion roundly condemning the whole package. Of course it had not seen the present figures either. Members could not, and did not, know what would actually be the effect of the Bill on individual people. As regards that aspect of the Bill, the Synod was also voting in the dark. Since that time matters have been greatly clarified. I am even more convinced today than I was a year ago that the Bill's proposals, taken as a whole, will indeed achieve electoral accountability and, at the same time, be closely linked with the ability to pay at all levels of income.
I believe the gipsy's warning is quite right: the community charge will be comparatively expensive and clumsy to collect. It will take a few years for people to become accustomed to this new social obligation. Indeed, few people who have previously paid nothing will welcome the obligation to pay something and misleading figures are at present alarming such people about what they will in fact have to pay. However, once the system is under way I believe that people will accept the package as a fair and sensible one and that the cost of collection will prove to be well worth the time, trouble and money expended.
If what the people in Scotland, or at any rate in my part of Scotland, are saying is anything to go by—we have just had our district council elections so the public's reaction to this and other issues is known—it appears that much of the anxiety about the community charge arises from considerable misunderstanding of how it will operate, plus
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misrepresentation of just what individuals will have to pay and how they will pay it. For example, council tenants currently pay rent and rates together. Many of them are under the impression that they will have to go on paying all that with the community charge on top. Of course their rates will disappear, but that is not properly appreciated.
Likewise, people are told that almost everyone will have to pay at least 20 per cent. of the community charge, even the poorest whose only income is income support. What is not made clear—I do not believe that the noble Lord, Lord McIntosh, made it clear either—is that people on the lowest incomes will receive 20 per cent. of the average charge added to their benefit. They will be able to contribute like everyone else and be no worse off.
In Committee we shall need to ascertain whether the grants which are students' sole income will be treated in the same way. I am anxious to hear what the Government have to tell us about that matter. Despite the fears that some people have expressed, my experience, borne out on the doorstep at election time, is that many parents with two or three children living at home and working, or even living at home and unemployed, are not unsympathetic to the idea of young people having to pay the charge. Young people themselves are also beginning to see the point. A young man who lives at home near me and works for a local builder was discussing the community charge the other day. He asked me what it would be paid for. I said that among other things it would pay for the roads. "You mean the people who repair the roads", quoth he. "I'll fairly grudge £200 if they carry on like those lads up the hill this morning. Did you see them—two shovelling and two watching?". He was seeing the point.
It is interesting to note that the people who are expressing the most worry around where we live are those who are better off. I believe that my noble friend Lord Chelwood reflected that point in his speech. To their great credit, they feel that they have an obligation to seek a system which reflects ability to pay. Once they see how the various aspect of the Bill come together as a whole, they are very much happier. When they see that 9 million people will have their community charge taken down by rebate from 100 per cent. to nothing, according to income; when they see that 19 million people will be paying the full charge plus, according to their tax level, part of the 50 per cent. support grant which will go to local authorities from central Government; and when they see that in addition if they are shareholders, small business owners or people whose salaries are related to profit, they will be paying their share of the 25 per cent. of local government spending through the business rate, the better off ask, "Why has no one explained that before?"
Alas, many people, for whatever reason, fail to clarify those points. Perhaps my noble friend Lord Pym was suggesting that the Government are not explaining properly.
Certainly in our area the registration officer, who is required to ask someone in each household five simple questions, has sent out a complicated and ambiguous form without any attempt at clarity, and with the kind of notes that even the Inland Revenue

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has discarded. It certainly confounded me. I could not even take it to bits and put together the envelope in which one returns it, which is part of the form. I can only suppose that it is confusing others.
Despite lack of information, confusing information and misinformation, I believe that the community charge will be accepted. It will work providing your Lordships do not weaken the accountability element too much. There are plenty of details of the Bill that need to be looked at, but I believe that the broad strategy is right and I support it.
Lord Hatch of Lusby: Before the noble Baroness sits down, she has given one or two anecdotes suggesting that the people in her area support the community charge as it is about to be applied to Scotland. Would the noble Baroness not agree that the disaster which beset the Conservative Party in the local elections last week in Scotland was some reflection of the opinion which Scottish people have of the community charge?
Baroness Carnegy of Lour: It is very difficult to tell. It was not a disaster for the Conservative Party. The vote went up slightly. The great increase was in the vote of the Scottish National Party, and that has to do with the very sort of talk which I have just been describing. There is no question about that.
10.13 p.m.
Lord Monson: My Lords, I realise that I am in a minority in this Chamber tonight, but to my mind it is the greatest of pities that the Government were not prepared to wait and see whether the extensive curbs which they have already and rightly imposed upon local government profligacy, where it exists, actually do the trick, before hastening to abolish the rating system and substituting the community charge in its place.
As the noted political commentator and former adviser at No. 10, Mr. Ferdinand Mount, wrote 17 days ago,
"For every virtue the community charge can claim, there is a matching defect".
One important defect is that it will be extremely expensive to collect, as even the most fervent apologists for the community charge readily concede, and as the noble Baroness who has just resumed her seat has pointed out. Not only will it be excessively expensive to collect, but there will be massive evasions, as I think the noble Lord, Lord Pym, suggested. There will be evasion not least in those London boroughs which have a large shifting transient population and where expensive properties are bought by shadowy individuals from overseas as bolt-holes and are then kept empty for most of the year.
The most criticised feature of this tax is its non-progressive nature. There is nothing intrinsically wrong with the flat rate system of funding local government, provided that—and this is the important point—the personal tax system taken as a whole incorporates a reasonable degree of progression. By the tax system as a whole I mean income tax, rates, national insurance contributions,
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VAT, excise duties, tax on petrol, capital gains tax, inheritance tax, and so on.
Unfortunately this Bill is being debated at a time when the tax system taken as a whole is probably less progressive than it has been for 70 years or more. If nobody paid more than 5 per cent. or 10 per cent. of their income overall in direct plus indirect taxes, this absence of progression in local government funding would not matter. However, alas, nowadays almost everybody pays a much higher proportion than that.
In order to illustrate what I mean about the current minimal degree of progression, perhaps I may point out that a man or woman earning £105 a week pays income tax-cum-national insurance at a marginal rate of 34 per cent. A man earning no less than 249 times as much, in other words £26,135 per week, pays tax at a marginal rate of just 40 per cent. The £26,135 a week equates to £1,359,000 per year, which happens to be what the chairman of the Burton Group earned in the year to 29th August 1987, and this excludes his investment income.
Given his low marginal tax rate since 5th April this year, many people who are not in any way vindictive or envious will think it not unreasonable that he should pay a higher community charge than someone on average earnings or below: unless the average charge is pitched at such a level that it costs about the same as an annual road fund licence, in which case I believe that the absence of progression would be acceptable. This would incidentally meet the condition made by the noble Lord, Lord Houghton of Sowerby.
There are, I suspect, three ways in which the modestly paid can be protected from a sharp increase in their annual fiscal burden as a result of the introduction of this tax. By "modestly paid" I mean those earning below the national average but above the level where they would be entitled to a rebate. Let me say at once that I fully endorse the proposal that virtually everybody should pay at least 20 per cent., while pointing out to the noble Earl, Lord Caithness, that since 1986 the 20 per cent. minimum is already provided for under the existing rating system.
The first way of protecting the modestly paid is by some more subtle and finely tuned variation of what we all know as the "Mates amendment". The snag here would seem to be that it would surely make the tax even more expensive to collect than it is already—I think that is the point made by the noble Lord, Lord Rippon—to say nothing of making cheating more likely.
The second possibility is by introducing some proposal on the lines of that made by the noble Lord, Lord Carr of Hadley, which, if I understood him correctly, entailed raising the standard rate of poll tax but granting wider and more extensive rebates to those on below average pay.
The third way is that proposed by the honourable Member for Kensington, Sir Brandon Rhys Williams, who, as it happens, used to be my MP many years ago, before the boundary changes. This way would involve transferring education, the police, the fire services and civil defence to central government which, for a number of reasons which I have no time to go into now, is an extremely logical

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thing to do. I am glad that my noble friend Lord Moran seemed to support this idea.
How could such a transfer be paid for? Obviously some compensating adjustment would have to be made elsewhere in the taxation system. Writing in The Times earlier this year, the distinguished economist, Professor Sir Alan Peacock, who is, let it be noted, neither a Socialist nor even Left of centre, suggested the reintroduction of Schedule A tax. Undoubtedly there would be a certain logic in this, not only because property ownership has become so profitable in recent years, but because much local government expenditure relates to property rather than to individuals. I think that the noble Lord, Lord Jenkin of Roding, asserted that most services are people-related rather than property-related, if I remember what he said correctly. That is largely so, but not entirely. For instance, the large five or six-bedroomed house lived in by the proverbial old lady on her own, to which the noble Lord, Lord Bellwin, referred, is just as likely to catch fire or be burgled, and perhaps more so, than a house of similar size lived in by four or five adults.
However, I think we must concede that Schedule A is politically a non-starter, although I thought I detected a hint from the noble Lord, Lord Rippon, that he was not entirely averse to some form of tax on property, even if not in the form of Schedule A. But before we leave the question of property taxes and subsidies let us return again to the chairman of the Burton group, whom I have absolutely no wish to pillory—apart from anything else I have a number of shares in his company! However, his financial situation serves as a very good illustration. One has no idea whether or not his house is mortgaged, but if it is he, like all other higher rate taxpayers, will be receiving an additional subsidy of £8·50 per week at current interest rates over and above the subsidy available to standard rate taxpayers. This subsidy is effectively being paid for by people on much lower incomes.
So one way of paying for the transfer of certain expenditure from local to central government would be to limit mortgage interest relief to the standard rate of tax. If this change raises insufficient revenue, then consideration could be given to abolishing the upper earnings limit for employees' national insurance contributions. This would incidentally remove the absurd anomaly whereby the effective marginal rate of tax falls from 34 to 25 per cent. on incomes of over approximately £16,000 per annum.
But of course such matters cannot really be decided in detail by this House. The important thing is to demonstrate that the impact of the poll tax should and could be made to bear much less harshly upon people of modest means than is envisaged by the Bill as it stands. If we succeed in such amendments we shall not only be helping the lower paid but, whether they acknowledge it or not, we shall also be helping the Government and the Conservative Party by preventing the alienation of tens of thousands, perhaps hundreds of thousands, of their recently acquired supporters.
10.21 p.m.
Lord Harmar-Nicholls: My Lords, with the possible exception of the noble Lord, Lord Hatch of Lusby, this Second Reading debate has been delightfully free of viciousness and spleen. It has been constructive and noble Lords have expressed views which are quite out of keeping with the fire and brimstone which the media said would be glowing in this House when we debated this Bill. Let us hope that that continues. I see no reason why it should not.
One of the conventions of this House which used to be adhered to very meticulously but which is not adhered to quite so meticulously today is that if a point has been made by a speaker it is not repeated by others. It was taken for granted that it was on the record, that it would be taken into account by the Government of the day and that would be it. We do not keep quite as rigorously to that convention now. In another place of course it is quite different. If someone makes a good point, everybody repeats it in the hope that their local newspaper will print it as their idea in the first place. But there is no need for that in this House and I hope that we can keep to what was the old convention.
On the basis of everything having been said, those who have followed the debate on the Bill in another place will have to recognise that during the past eight hours that we have been debating it nothing new has been said that was not said in another place and answered very effectively. At the end of that debate the other place showed as a House that it thought that the Bill met the problems that it was intended to meet.
I do not want to enter into the constitutional argument as expounded by my noble and learned friend Lord Hailsham or the noble Lord, Lord Jenkins of Hillhead, who think differently about it. However, what we can and ought to accept is that this Bill, whether or not it comes within the constitutional understanding, is and ought to be looked upon as a House of Commons Bill. The subject matter is a House of Commons matter. It may not have been dubbed as a money Bill by Mr. Speaker and so under the Constitution it cannot be ruled out: we accept that. It is not a money Bill in that literal sense, but it is a Bill which is so near to being a money Bill—the raising and spending of taxes—that we must keep that in mind when we are putting our points of view in this House.
We have nobody to answer to, but the people in the other place have. If they do the right thing and it is recognised as being the right thing they are the only ones who can benefit in parliamentary or electoral terms. It has nothing to do with us. If it is a mistake and if the forebodings which have come from various quarters turn out to be true, they are the ones who will suffer as a consequence of the grievous mistake. That is as good a reason as any I can think of for them to see that they are not rushed into this, that they do nothing without recognising the consequences that may follow and that they recognise in attempting to change this system of rate collection that in the sense of electoral popularity or unpopularity they are taking great risks.

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The one factor that we all ought to recognise is the high standards involved in their taking that risk. I have spent 38 years as a Member of the other place and of your Lordships' House, and I have never seen a Bill on which there was such unanimity on the need to achieve something. The Socialist White Paper in 1966 made it quite clear that the existing system was unfair; it was wrong and ought to be dealt with. The party opposite did nothing about it. I do not blame it for that: I understand it. It is not an easy problem to tackle. It is automatically an unpopular move. The people who will benefit from what you do will take it for granted, but those who may be at the other end of the scale will find it rather more painful and may make a noise and rightly so.
But in this Bill we have an answer. Let us hope it is the right answer; I think it is. There is recognition on all sides that without any shadow of doubt what was going on in the past was wrong. That ought to be taken into account. The Benches opposite have not been able to suggest any alternative. They merely accepted the situation, for whatever reasons, possibly because to see this matter through its various stages towards the statute book was unpopular, possibly because it was too difficult or possibly because they did not have, as they thought, a sufficient majority. This House ought to take that very clearly into account.
Whether or not the change was forecast in the manifesto is a strong or a weak argument depending on how you view it. The last election that I fought was the 18th and I doubt whether many have had to go through that hoop on more occasions. But I have never seen the purpose of a Bill made more clear. It was in the manifesto and it was the subject of innumerable debates and forecasts.
What this Government did before the election was something I have never seen done before. The intention was not only put in the manifesto, but they set up a prototype of what they thought would happen so that people would have a model on which to form a view. Not only did the architects submit the plans but also a model, because not everybody can understand plans. I have never known that to be done before on this scale, and so there is no question about the Government not having a mandate. They did that and they fought and won the election with quite a substantial majority. What is the point if having obtained that majority one does not give effect to what one said one wanted to do? This Government obtained their majority and they are carrying out the promises and undertakings that they gave in asking for it. The other place has to recognise that this is its Bill. The Members there are the only people who can be made responsible by the people who will be affected by it.
I am a great admirer of your Lordships' House. I believe that in carrying out its normal remit it is far superior to any other government or semi-government organisation. I am in a position to have a view on that. I am told that I am the only person in the United Kingdom to have sat as head of a local authority, to have sat for 25 years in the House of Commons, for 14 years in your Lordships' House and for five years in the European Parliament. Having seen the way that those institutions work I
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believe that the way that this House normally carries out its remit is superior to any of them. Our general impartiality and the quality of those taking part in our debates have put us in a position which makes this House quite unique. But on this occasion—and there may well be other occasions—we in this House ought to recognise that it is what the other place wants that ought to stand.
Having said that, I hope that if new points are raised or second thoughts have arisen in the interim between the Bill leaving the other place and our debates they can be incorporated or amendments tabled. Perhaps when he comes to reply my noble friend will be able to indicate that they will. I hope that we can have an understanding, as we have in the past. We have to have sufficient faith that the government of the day, whatever their party, want to arrive at the best conclusion for the people they represent. At the end of the day, in the other place in particular, one is given power of attorney to act for the ordinary citizen. In doing so one must act as if one were acting for oneself.
Therefore I hope that the atmosphere which I think I have detected during the past eight hours in this Second Reading debate will be continued at Committee stage. Perhaps I have to look particularly at the Opposition Benches when I say that because they have a contribution to make. They now want to preserve this House. That was not always their view, but now I think that we can take it that they recognise the value of a second Chamber pretty much as it is now constituted. That being so I hope that when we reach the Committee and Report stages we shall not merely have a repeat of precisely the amendments which were tabled and answered in the other place and have them pushed to a vote. By all means let them produce the arguments, but to push them to a vote would reflect a perversity which in the present circumstances would not be good. There is a grave risk—and this can sound like an exaggeration—if we are not careful of creating a division between the other place and your Lordships' House.
I have noticed a trend which bothers me very much. I noticed it particularly in the European Parliament. People are now elected to the European Parliament. While there I discovered that even colleagues of mine who were sitting on the same benches in that Parliament said, "We have a mandate and because we have a mandate we are the ones who ought to decide European policies. We ought to do that, not Westminster. We are the elected European Members".
There have been far too many examples in local government of councillors saying, "We have a mandate. We are the ones who ought to make these decisions. Westminster cannot know as much as we do". That is why, for example, although Westminster decided that it was right to sell council houses, so many councils said, "We ought to make this policy decision"; and we know how they tried to frustrate the sale of council houses by removing the recognised mandate or claiming that they had a stronger one than the other place.
The House of Commons is and should be the powerhouse of our parliamentary democracy. It is

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the only one. I do not think that we ought to add a claim to have the authority to frustrate something for which the other place has a clear mandate. Nobody else has been able to produce anything like an alternative, and I believe the Bill ought to be given a chance.
Perhaps I may say to my noble friend that although I should like to be proved wrong, I am certain that neither this Government nor another will get an alternative to the rates right the first time. We shall try hard—mainly at the Committee stage, as was done in the other place—but we will not find the perfect answer but an answer that will eventually become the basis of a system to replace one which has existed for so long. The legislation will have to be amended once or twice, like everything else that is concerned with social conditions. I am under no illusions about that. But we are breaking the log jam with this Bill. There is every reason to believe that the Bill is as nearly right as we can achieve at this stage. Because of all the abilities that are to be found in your Lordships' House, and all those vital interests that have been set out in the speeches that have been made today, I hope that we can show ourselves to be partners in bringing about this achievement, in the recognition that on this occasion, if never before, we really are the junior partners.
10.37 p.m.
Lord Cocks of Hartcliffe: My Lords, I am glad that my noble friend Lord Ponsonby is on the Front Bench. Had he not been, I should have felt obliged to draw to his attention the remarks of the noble Lord, Lord Harmar-Nicholls, because so detailed was the advice on how the Opposition should conduct itself, that I felt he might well on reflection consider co-opting him as an unofficial member of his Whip's Office.
I am accustomed to batting low down in the order, and others will testify as to whether this is a reflection of my ability or my innate modesty, but when one goes in at No. 40 there is not a great deal fresh left to say. I shall therefore not weary your Lordships for very long.
It was in 1946 that in company with my father I attended by first public meeting in a local election. We went along to a meeting in Bristol organised by the Citizen Party. I shall not dwell on the Citizen Party; your Lordships will understand when I say that once the Citizen Party ceased to put up candidates in Bristol, the Conservative Party candidates appeared. The whole object of that meeting concerned the rates and the diabolical increases imposed by the Labour council which was then in office. I do not think that the anomalies of the system have been in dispute throughout the course of this debate.
The only general points that I should like to make are to endorse the remarks of the noble Lord, Lord Hayter, about voluntary organisations and to reinforce the point made by my noble friend Lady Fisher about people who care for elderly and disabled relatives. It seems to me that people who fulfil their family obligations and look after relatives who are sick or disabled or for various reasons care for them
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in their own homes and do not consign them to the social services or the health service, should be encouraged and not be subjected to a further financial impost or burden for undertaking such responsibilities. I hope that the Government—who have nailed to their mast over the years the idea that they support the family—will very seriously consider at a later stage whether or not some concession may be made on this point.
The noble Lord, Lord Carr, struck a chord in my mind. He pictured his old constituency and the various roads and streets. He thought of the impost of this tax on the various localities. This point was also pursued by my noble friend Lady Fisher. She gave some examples from Birmingham where the local authority had made a study.
In the city of Bristol, the city council at a meeting on 19th April passed this resolution, from which I quote briefly:
"This Council notes with alarm the findings of the Labour Group Study 'The Effects of the Poll Tax in Bristol' … believes that positive support should be shown for reform which is related to ability to pay, such as a local Income Tax".
The study was quite an elaborate one. The contents ranged from the financial effects in Bristol, rebates, exemptions and evasions, civil liberties and local democracy, administrative nightmares, and uniform business rate.
I shall quote briefly from only one section of this document because I do not wish to weary the House. The only section which can be regarded as entirely objective and free from political influence is that on the financial effects in Bristol. This was prepared by the city treasurer and his department at the request of the local authority. They studied the financial effect in the following way. They analysed a random sample of 3,117 properties and compared the actual gross liability of domestic ratepayers of 1987–88 with their estimated gross poll tax liability for the same year. Two figures were taken. One was a figure of £237 per adult, at the bottom end of the range of estimates. This was selected because it was the level suggested for Bristol recently by the Department of the Environment in a publication to illustrate the effect of the poll tax. Another estimate was made by the city treasurer of a figure of £293 per adult which he felt was a more realistic one because of the effects of such factors as under-registration, the cost of collection and other items.
The analysis was done on the basis of electoral wards, size of household, housing tenure, the rateable value, and the rateable value and household size. Bearing all these factors in mind, the following results were obtained. On the basis of the figure of £237 it was found that 52 per cent. of households in the city would be worse off. Of the 34 wards in the city, there are 20 in which more than 50 per cent. of the households would lose, and three in which 70 per cent. of the households would lose. However, on the higher figure of £293 per adult, it was found that the number of households worse off was very much greater. Of the 34 wards, 29 would be worse off.
It is instructive to look at those 29 wards. Twenty of them are wards in which 70 per cent. of the households would be worse off. On examining the wards in my former constituency of eight wards, all

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eight would be included in that list. In some nine wards 50 per cent. to 69 per cent. of the households would be worse off. In only five of the remaining wards would more than 50 per cent. of the households gain. In only two of the five wards, Stoke Bishop and Westbury-on-Trym, are there more big gainers than losers.
I have mentioned Stoke Bishop and Westbury-on-Trym. I should like to refer to a debate in your Lordships' House on 24th February of this year which was introduced by my noble friend Lord Cledwyn on opportunity and income and social disparities. In the course of that debate I drew attention to the fact that in the city of Bristol there is a microcosm of the disparities we now see between different parts of the country. On the southern side of the city, in what is a relatively prosperous city, there are very grave disparities and deprivation. In that speech, too, I mentioned Stoke Bishop and Westbury-on-Trym. I mentioned them in the context of an example I gave to the House of direct grant school free places being taken up when that system was in operation in Bristol. There were 92 primary schools feeding the system and yet, out of the hundreds of places awarded, 56 per cent. of them went to only five primary schools. Among those primary schools were Stoke Bishop and Westbury-on-Trym.
What the Government are in danger of doing is to make worse the disparities in society. I do not know that they are doing that deliberately. In fact I am sure it is something which probably had not occurred to them, but again I urge them to reconsider the Bill, because it will make worse these disparities, and that cannot be good for the social fabric and wellbeing of our country.
My final point is this. I have spoken before about my old constituency and how it has never had any facilities offered to it. But with all this talk about the gypsy's warning, I was reminded today of one facility which was offered to my constituency in my time as a Member of Parliament. Very strenuous efforts were made by the local authority to put a gypsy site in my constituency along Airport Way. Fortunately, at a public inquiry I and others of my colleagues and constituents were able to defeat that scheme. But apart from that we have had the thin end of the wedge in Bristol South for such a long time.
I urge the Government to think again and to find some way in which this apparent compounding of the incidence of deprivation and hardship in some areas, especially inner city areas, can be alleviated, because a tax will be accepted if it is felt to be fair. People know that services have to be paid for, but if a tax is thought to be basically unjust then the Government will have very great difficulties.
10.48 p.m.
Lord Teviot: My Lords, at this very late hour I shall be even more brief and come to the point with which I have great concern. By and large I am now more in favour of the Bill at this stage of the Second Reading than I was at the beginning. To develop my theme I shall fall into the trap of being repetitive.
My deep concern is entirely with another aspect of the Bill. When it had its Third Reading in another
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place the Government introduced an amendment which, on the face of it, had nothing to do with the main elements in the Bill. The aim of the amendment was to take away the right from one of the metropolitan county joint authorities, the passenger transport authorities, to charge a precept on their constituent districts. Instead they will have to send an account to the individual districts with which the councils could agree or disagree. If they disagree, they may consider seceding from the passenger transport authority.
In introducing the amendment, Ministers argued that it would increase the accountability of the authorities and their members. I completely fail to see the logic of this. If it is such a good idea it should also apply to other joint authorities responsible for the police and fire departments. The Government argue that police and fire authorities are accountable locally because the Home Office controls much of their expenditure. I must confess that I also fail to understand the logic of that. In any event by using the Rates Act, the Department of Transport has the means to control PTA expenditure if it wishes to do so. PTA members are appointed by the constituent district council under the Local Government Act and are already accountable.
This proposal has been universally recognised by the PTA, its passenger transport executive, many transport operators and the district councils to be unnecessary, potentially harmful and bereft of benefits. Above all the proposals will introduce into PTA and PTE financing of public transport another element of uncertainty which they can well do without. They have done an excellent job coping with bus deregulation and it is unreasonable to impose further complications.
It is important to note that almost all those consulted by the Department of Transport were against the proposals. They have many other drawbacks. On 20th April my noble friend Lord Brabazon gave the House an assurance that the conurbation-wide decisions on public transport were not at risk. However, despite that assurance I am far from convinced. Regardless of whether a district council applies to secede from the passenger transport authority, which is the only point at which my noble friend and his colleagues will become involved, the whole approach is likely to result in decisions being more parochial and less strategic.
The proposal for billing instead of precepting has another serious disadvantage. It will be difficult to make it work in practice. Perhaps noble Lords can imagine the time and resources involved in the six areas getting between five and 10 separate district councils to agree on expenditure proposals which will affect the extent to which they may be penalised for over-spending. If such a provision were eventually applied in London, 32 boroughs would be involved.
Finally, the bill for public transport will be hidden within the community charge instead of being separately identified as it now is. That runs counter to one of the most important benefits of the community charge. It is that it should be easier to make comparisons between areas. Indeed, it will shroud accountability.

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I shall not dwell on the issues but return to them in Committee when the House has had the opportunity to consider the Bill in detail. As I stated earlier, I do not oppose the Bill in principle but, in view of my concern about its effects on public transport, I shall listen with interest to all the arguments from all sides of the House and I shall reserve judgment.
10.53 p.m.
Lord Strathclyde: My Lords, it is always a little intimidating to speak at the end of such a long debate and after so many eloquent and experienced speakers. Noble Lords will be pleased to hear that I shall not take a long time because there is little new to say, and I shall limit myself to talking about the community charge.
I believe in consistency and because I spoke to support the legislation to abolish domestic rates in Scotland it seems sensible to support this Bill. I am just as convinced now as I was then that community charge will rescue us all from the corruption into which local government has fallen. The game played between the ratepayer and the non-ratepayer and umpired by local authorities will be no more because everyone, apart from the poorest, will pay the same.
At a stroke councils will be obliged to run their areas in the most prudent way possible because any profligate spending will be as hurtful to their supporters as to anyone else. Any abuses of local power should be virtually obliterated. Can any noble Lord believe that a situation such as that which occurred in Liverpool in the earlier part of the decade could have happened under community charge? The disgraceful excess of spending by the Labour council, which knowing that there were never enough ratepayers to oust it from office used literally to bribe its supporters to keep it in power, will never happen under community charge. So many ratepayers left the city of Liverpool that the council was able to argue that the city was sinking into poverty and that there were no private ratepayers to pay the bills. Of course there were not; they had all been chased out and businesses had closed due to the high rates bill. That was the so-called fairness of the rating system.
In 1984 I fought a European election on Merseyside. While canvassing, I was approached by a man who said that he would not vote Conservative until the Prime Minister kept her promise to reform the rates. This is the answer to that promise. I believe that this is the most far-reaching and radical legislation ever attempted by this Government.
This Bill will bring power back to those who deserve it and should have it, back to local voters and away from the power blocks that have maintained the parasitical shackles of local government for so long. At last this ridiculous tax on property will be laid to rest and the business of effective, responsible local government can recommence. I support the Second Reading of this Bill.
10.56 p.m.
Lord Ross of Newport: My Lords, from the comments made in this debate it appears to me that too many noble Lords reside either in Lambeth or Camden. The exception is my noble friend Lord
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Russell, who lives in Brent. Constant comments on local government overspending make me very sad. I must say to the noble Lord, Lord Strathclyde, that I resent the word "corruption".
The Director General of the CBI was formerly chairman of the Audit Commission. When the commission was set up he was appointed by a former Secretary of State, Michael Heseltine, to oversee local government expenditure. Some three years ago Mr. Banham was asked to make a presentation to Cabinet: the gist of it was that in nearly every case local government has kept its financial affairs in far better order than had departments of state.
When the same presentation was made to my party—and I am sure it was also made to the Labour Party, because it was offered to us—I particularly asked whether this point had been made clear to the Prime Minister. I was assured that it had been. There are some 450 local authorities in England and Wales. Probably over 430 of them have continuously tried to keep their expenditure down to levels requested by central government, despite many calls on their services imposed by legislation emanating from the Palace of Westminster.
When I was the leader of our council I can remember that I tried to stop the appointment of a historian to preserve our records. As the leader I went to the sub-committee and said that we could not afford it, whereupon the county librarian stood up and read a speech from the Secretary of State, Michael Heseltine, imploring us to take on this additional post and saying that he would fund it for one year and it would then be up to local government. That is another example of local government suddenly finding itself having to meet extra expenditure imposed by central government.
Contrary to the views of the noble Lord, Lord Sandford, fewer and fewer worthy citizens will want to serve on their local council. At present there are few enough and there will be fewer in the future. Very few businessmen stand for election to their council; they cannot be bothered. That is yet another nail in the coffin of local authority autonomy. The noble Lord, Lord Carr, made the point better than I that to reduce the power of local authority discretion to 25 per cent. of its income is far too low a figure. It should be over 50 per cent. and preferably higher than that.
The turnout in local government elections has also been mentioned by many contributors. I fought three local government elections and never experienced a turnout of less than 65 per cent. It may be that I was seen as the enemy and they wanted to be rid of me, but the average was over 40 per cent., which compares quite favourably with presidential elections in the USA. I do not believe that the introduction of the poll tax will make any difference to local government voting levels; in fact, they will probably go down. Of course, proportional representation is the answer, but I shall not pursue that argument this evening.
When I was in opposition I attended meetings of county council associations and urban district council associations. Conservative spokesman continuously promised to delegate more authority for local determination. In fact, what they have done

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ever since they have been in office is to take more and more central control. One day—I pray it will be soon—we shall come to appreciate in this House the damage that has been done in recent years to relations between central and local government. I trust that we shall do something positive to restore pride to our great provincial cities and rural counties.
Local government reorganisation in 1974 started the rot and the slide has been rapid since then. I was unexpectedly elected to the other place at the end of February 1974. By 1981 I had decided that there was nothing that I could do in that place to help my constituency over its economic problems. I returned and stood for the county council and was elected. I led the county council for two years and they are two years in which I take some pride. I was able to do something about the unemployment situation when we had a major closure. I spent money for the county council and, with other entrepreneurs, we took over a derelict shipyard and we restored employment. I do not believe that any local authority could do that today. That is why I feel so strongly about the continuing decline in local authority autonomy. In the meantime, unless this House, and in particular the government supporters, is prepared to do what it knows in its heart it really ought to do and to emasculate this Bill, we shall be faced with a bureaucratic nightmare and widespread evasion. The evidence for that is already to be found in Scotland. The authorities of Lothian and Strathclyde have taken on hundreds of extra full-time and part-time staff to ensure that they can collect the 25 per cent. of their income.
We heard from the noble Lord, Lord Jenkin of Roding. I believe that it was he who rate-capped the one and only Conservative council to be ratecapped—Portsmouth. Yet I understand that there is general agreement that Portsmouth City Council has done a very good job in once more getting Portsmouth off the ground. Today Portsmouth is a city which is beginning to thrive. A few years back it was run down and a very poor relation to its neighbour, Southampton. The change was brought about by the local authority mixing with local businessmen and getting things moving. The council had to spend money, and it was rate-capped in the process. Even in Sheffield, which is a heavy-spending authority, we know from what we have seen on television and heard elsewhere that businessmen and the city council have been getting together for the benefit of Sheffield. I suggest that this Bill will stop all that.
As we have heard continuously in this debate, the so-called community charge will bear hardest on those least able to bear the burden. Moreover, the situation is even worse when the actual payment for services received is compared with the present rating system. The evidence of Cheshire County Council was given earlier. Families with incomes of £500 or more will pay only about half as much under a poll tax system as they have done under the rates system. That is the Government's own forecast.
Students, including nurses, the homeless, charitable organisations and those on low incomes face horrendous increases in house prices and rents.
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Rents will rise substantially when the Housing Bill goes through. We were told today that house prices are likely to rise by another 15 per cent. when the rates are removed. Everyone will pay more and some will pay very much more. It is time this House understood the problems facing the younger generation who have not been able to buy a council house on the cheap, who are setting up a family and perhaps earning £10,000 a year. How on earth are they going to buy a property these days? if they are to face increasing expenditure with the community charge I feel desperate for them.
Ireland did away with domestic rates some 10 years ago and now it bitterly regrets having done so. The latest proposition is to bring back a property-based tax. Self-assessed income tax seems to work well enough in Canada, Sweden and other states. It was certainly recommended by Layfield for serious consideration but the report seems to have been totally disregarded by government.
I remember vividly the late Graham Page, who was a Minister in the Department of the Environment in the early 1970s, continuously bringing in Ten Minute Rule Bills in the other place to replace domestic rating by a local income tax. No doubt he had access to statistics and support from the department at that time. I take ill the kind of criticism that comes from the present Secretary of State.
While domestic rating based on rents may well be flawed, it would be much better left alone if the only alternative really is the poll tax, particularly at a time when, strange to relate, the present rating system would make more sense with a move to free up the rented sector when evidence of actual rents paid will become more readily available. I agree with the Government's attempts to bring back more rented accommodation.
The maiden speech of the noble Earl, Lord Lytton, should be studied in Hansard and taken to heart for he has had experience in rating in both the public sector—through the Inland Revenue—and the private sector. Like the noble Earl, Lord Caithness, and I, he is a chartered surveyor, but he, who is in practice as I am, will certainly be busy next year when the valuation lists of commercial and industrial sectors are published. Some small businessmen will have a terrible shock. I am practising at the moment and I am staggered by the rents now being paid for high street shops by people who I know cannot possibly afford to pay them.
I am also staggered by the key money being paid to get into rented accommodation. Here too the whole pattern of centralising the distribution of the uniform business rate is open to a great deal of criticism. On this point I believe that the House should take action. This has been expressed by a number of speakers, notably the noble Earl, Lord Carnarvon, who was a very progressive leader of Hampshire County Council, with which the Isle of Wight has had very good relations. We have had our police on the cheap for a number of years and have not charged too much for it. We regard Hampshire as a progressive county. The noble Lord, Lord Rippon, referred to the same thing.

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Yet again, far too much in the Bill is being left to regulations, presumably by affirmative resolution in a one-and-a-half hour debate in the other place, probably very late at night. As the noble Earl, Lord Lytton, pointed out, the Bill as presently drafted replaces the General Rate Act 1967 and thereby wipes out centuries of case law in commercial and industrial property. Do the Government really mean this to happen? What about the arts? If we are to have a centralised system, it is true that places like Westminster, which are generous to the arts—and to opera in particular, as the noble Lord, Lord Carr, pointed out—will not have that ability to subsidise English National Opera and others. Will the Minister comment on that tonight?
There are problems over appeals and over the rating of empty property where no provision is made to bring us into line with Scotland. There is not even a six months' discretion. What about the rating of statutory bodies, including those about to be privatised? What about the hardship cases, where I gather some concession may be made? Surely most of those matters could be left to the local authorities. The rights of landlords when proposals to amend the list are made by tenants and time limits where a change of occupation occurs appear to be in some jeopardy. I want to know about the composition of the new tribunals. Who will sit on them? What will be the qualifications of those people? It is a matter of some concern. Will there be a further appeal to the Lands Tribunal? I have looked through the Bill and I cannot find that.
There is the effect of the rate on new properties occupied after the coming into force of the new list and which may miss altogether the transitional relief. These are matters for our serious attention in Committee and at the Report stage, but the House should know of the great apprehension in the business community, particularly as it affects smaller businesses and small shopkeepers of whom I claim to be one. One glaring omission is the absence of any provision to bring into rating land ripe for development but left idle by its owners while its value soars and which at the same time totally blights the whole neighbourhood. As Chancellor of the Exchequer, the noble Lord, Lord Barber, did something about that in the 1973 Finance Bill but unfortunately it was thrown aside. We talk about formulae, but what would be the formula for redistributing the uniform business rate? We do not know about that. However, we know that the present rate of RAWP grant formula is badly flawed. For example, one of the councils which has been criticised for a 42 per cent. rate increase this year is Gillingham. A year ago that same council had an absolute bonanza. It had so much money that it did not know what to do with it and therefore imposed no rate increase. So I do accept that the present rate of RAWP grant formula is badly flawed and should like to know how the formula will be devised when we redistribute uniform business rate.
In conclusion I should like to quote a few press comments on the Bill which have appeared over the last few months. The Observer said:
"Mrs. Thatcher has lost the poll tax argument".
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The Financial Times said:
"It is a tax that lacks support";
and even the Sunday Times said:
"Poll tax should not pass".
Mr. Maurice Stonefrost who is a former GLC financial controller, writing in the Independent, explained why the poll tax will not work. It is a very good article. I take the point made by the noble Lord, Lord Carr, because he took a line rather similar to that of Mr. Stonefrost and I therefore suggest that his article might be studied. I do not say that it is the right answer but what he said was:
"The Government's objective over the long run—and this should be what really matters—leads more logically to a local taxation system based on both domestic rates and a local community charge on adults—but tempered by a test of ability to pay. This discipline on the local electorate would reduce dependence on central government grants".
I think that was indeed the point being made by the noble Lord and in my view he got it right.
We had Sir John Hoskyns, also writing in the Independent, explaining why rate reform would be bad for business. Nevertheless, the Government plough on. Even at this late hour they should think again and we in this House should assist them to do so. I suggest that we ask the Minister to go back and give further consideration to the Layfield Report.
Why governments set up committees of inquiry, appointing many able people to sit on them—the noble Viscount, Lord Ridley, was one of them—and then totally ignore their findings is quite beyond me. Further, to say that the Labour Party should have implemented the change is also crazy, because the report was undertaken in 1976 and that was the time when we went into the Lib-Lab Pact and an economic crisis. Therefore I do not think that anyone can blame it for the fact that it was not implemented at that time.
Why, when we have instructed people who really know the subject and when we have people who take the trouble to give evidence which results in various recommendations, do we totally ignore those findings?
11.5 p.m.
Lord Underhill: My Lords, one matter upon which I think most people will generally be in agreement is that outside Parliament this Bill has few responsible friends. The noble Lord, Lord Wyatt of Weeford, said that most of the opposition was emotional and alarmist. However, when one looks at the list of responsible organisations which are opposed to the Bill's principles, frankly such remarks, with all due respect to the noble Lord, are just nonsense.
Indeed, we heard today from the president of the National Union of Ratepayers' Associations, the noble Lord, Lord Ellenborough. He echoed the opposition of that organisation to the principle contained in the Bill. We have heard from various noble Lords about the history of the change in the system. In 1981 we had the Green Paper Alternatives to Domestic Rates. That document not only rejected the principle of the poll tax but in paragraph 2.9 it said:

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"Any local tax … must be capable of being collected reasonably cost-effectively. It must not impose an unacceptable burden of administration".
Few people accept that that will be the position with the poll tax or community charge, call it what you will. Even the Secretary of State on Second Reading in the other place on 16th December said that it would probably cost twice as much to administer as rates.
I ask noble Lords to take a look at the Explanatory and Financial Memorandum to the Bill which concerns its financial effects:
"Local authorities will be responsible for the establishment and operation of the community charges system. It is estimated that the total additional cost to local authorities in a full year will be in the range of £160 million to £200 million".
And there will be another £70 million to £90 million in 1989–90 in setting up the register and the general system for collection.
The Bill does not fulfil even the requirements that the December 1981 Green Paper laid down. The same Green Paper said that there would be difficulties over evasion:
"Evasion and mobility would also present difficulties if a separate poll tax roll were to be compiled".
It would be extremely useful if noble Lords would read some of the 14 schedules to the Bill, which include the various administrative measures that must be followed, including attachment of earnings. Provisions for the attachment of earnings are laid down in the Bill.
Two years passed, and we had the White Paper in August 1983, which as noble Lords have already said, condemned the principle of a poll tax. We heard from the noble Lord, Lord Jenkin of Roding, the history, as he saw it—he took part in it—which led to the January 1986 Green Paper Paying for local government. Ministers have admitted that there was general objection to that Green Paper, but, as with most other consultations that the Government have followed, they took no notice. Time after time, I, as president of the Association of Metropolitan Authorities, have had to refer to the consultations with local authority associations. We were ignored time and time again. The word "consultation" means, "We tell you what we are going to do", not, "We will listen and find out what is the best thing to do".
I was pleased that the noble and learned Lord, Lord Wilson of Langside, gave the history of the events in Scotland. It reminded me of what I have described as the devastating speech of my noble friend Lord Ross of Marnock. We regret that circumstances prevent him from being here this evening, and we send him all our best wishes. I remember his devastating speech on the Abolition of Domestic Rates Etc. (Scotland) Bill. He described how it was an uproar at the Conservative conference and nothing else which led to the community charge Bill for Scotland. It has not done the Conservatives a lot of good in the parliamentary elections or in last Thursday's district elections.
I sat through practically all the debates of the various stages of the Scottish Bill because we knew that it was a try-on before the Government introduced a Bill to cover England and Wales.
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Scotland has obviously not liked the Abolition of Domestic Rates Etc. (Scotland) Bill. This Bill shows all the signs of being hastily cobbled together. As problems arose on the abolition Bill so the Government tried to find answers to deal with them. We have had Local Government Bill after Local Government Bill since 1974. all of which, we were told, would settle the problems of local government finance. They did nothing of the kind. We are now faced with another Bill which will attempt to solve them.
The Bill is somewhat of a shambles. My noble friend Lord McIntosh referred to the fact that there are no fewer than 649 places in the Bill where matters have been left for orders or ministerial decisions. That figure was also quoted by the Labour spokesman for the environment in the other place. His points were not answered when he asked why there were so many places in the Bill where decisions still had to be made.
The noble Lord, Lord Harmar-Nicholls, said that there had been debates on the Bill and that all points had been answered. The points about why there are 649 places in the Bill where decisions on the nature of the orders and regulations are required have yet to be answered.
Surely, after today's debate there will be general agreement that, while most people accept that there was some degree of unfairness in the system of rates, one of the basic criticisms of this Bill is its appalling unfairness. The noble Lord, Lord Strathclyde, said that everyone but the very poor will pay the same. Will they? Surely we have heard of enough instances to the contrary today? As anyone will see from reading Hansard for the other place, constituency member after constituency member has drawn attention to the hardship and the disparity that will occur amongst their constituents.
I frankly admit that I have just looked at the figures. I think that myself and my wife are going to gain £200 as a result of the poll tax. I recall that my noble friend Lord Ross of Marnock challenged the Government Benches in this way: "How many of you will get up and say what you are going to gain by the Scottish Bill?" No-one got up to say.
Even Annex C of the 1981 Green Paper states in paragraph 22:
"A poll tax is assumed to be levied on all adults in the household irrespective of income."
It then says:
"Replacing rates by a poll tax will mean that higher-income households gain more or lose less (in pounds per week) than the lower-income households of the same type."
That was said by this Government in the Annex to the 1981 Green Paper.
Of course there will be gainers and losers, the figures concerning which depend on whether one refers to individuals or couples or households. The CBI have pointed out that the poll tax will lead to a 40 per cent. increase in taxation in households in deprived areas and a 34 per cent. cut in the prosperous areas. I do not think that the CBI would wish to be described as emotional and alarmist in making those comments.

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There are obvious inequalities in the proposals in the Bill. I shall not go into many of the details that have been mentioned. When noble Lords read the Official Report of these proceedings they will see the instances given, and nobody can say that they are equal in application. Terrible disparities will occur between people with much wealth and households with less wealth. The worst problem will involve those who are just above the poverty line who will not be entitled to the various grants. They will be the ones who will suffer most.
I was very pleased that the noble Lord, Lord Hayter, and my noble friend Lord McIntosh stressed the concerns and worries of the voluntary bodies about the disabled and those who are caring for and helping these people. I hope that when we come to Committee stage the Government will look very carefully at the problems put forward by the voluntary organisations and that they will do something about them.
We have heard a great deal about an increase in accountability. The 1983 White Paper in paragraph 2.15 said:
"The Government recognise that rates are far from being an ideal or popular tax. But they do have advantages. They are highly perceptible to ratepayers and they promote accountability. They are well understood".
A massive turn round has occurred since that was written in 1983.
Can the Minister explain why people living in larger houses, with substantially larger incomes, are somehow to be made more accountable by paying less? Those in houses and having smaller incomes must pay more so as to become more accountable. That is a riddle which I cannot understand. Perhaps the Minister will attempt to answer it.
Another justification to which noble Lords have referred and which is advanced by the Government is that out of the 35 million registered electors, only 18 million are ratepayers and 3½ million of those are fully rebated. My noble friend Lady Lockwood pointed out that this ignores the fact that spouses are affected by the size of the rate bill. The up-to-date figures given to me are that 19½ million households receive rate demands; 12 million of them involve spouses. I argue that some 31 million people contribute in some way to the rates. My wife and I went together to vote before I came here on Thursday last. My wife would be very upset if she were told that she had no accountability. We have a joint bank account and she knows exactly what I pay in rates. It is nonsense to suggest that the only people who are responsible are those to whom the rates bill is sent. This excludes such people as grandparents and others over 18 who make contributions to household expenses.
Some people, listening to noble Lords, would imagine that families are not families at all. I have three children and eight grandsons. Those over 18 have contributed to the household expenses, and that includes rates. Therefore it is nonsense to suggest that the only people who are accountable are those who are actually on the list as ratepayers. In addition, of course, non-working women will be liable. I think I am right in saying that they cannot get housing
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benefit in any way. Under the Bill, we have the point which was brought out very significantly again by my noble friend Lady Fisher about spouses being made jointly and severally liable with their partners for the payment of the community charge. I hope that the Government will take careful note of what she said on that point.
Then we have the problem of compiling the community charge registers. I have already referred to the additional charges and the additional costs which are mentioned in the financial memorandum to the Bill. First, some 3 million eligible adults are not included in the registers of electors, despite the fact that there is a penalty for failure to register. The annual turnover of about 15 per cent. is a common feature of most electoral registers. We know that some 3½ million people change their addresses each year. The costs and the administrative effort to build up this separate community charge register will be fantastic. Problems are already arising. Local authorities will do their best, they always do. As we already know, local authority officers are busy working on this problem. My noble friend Lady Fisher mentioned the figures for extra staff and extra accommodation which have already been worked out for Birmingham. We read in reports of other local authorities having to do the same in order to cope with the additional responsibilities arising from the community charge.
The Government say in addition that the Bill proposes a simpler grant system. I again suggest that noble Lords should read all the relevant clauses. I am sure they will. What are the details for the determination of the new revenue support grant? Where are the criteria laid down in the Bill? I can see nothing. I think we need to have some information about that.
Various noble Lords have pointed out that under the Bill there will be unprecedented central government control over three-quarters of the local authority finance; that is with the introduction of the national business property tax. The community charge will be an authority's only independent source of income. Initially it will be about 25 per cent. Again I reminded myself of what the Green Paper of 1986 said:
"The main role of local government is to provide services in a way which properly reflects differences in local circumstances and local choice".
How can one do that unless one enables the local authority to incur what expense it considers desirable to carry out that section in the Green Paper and to levy also what will in this case be the community charge in order to pay for it?
I also ask noble Lords to look very carefully at the Financial Memorandum to the Bill. In Part VIII they will see that there is power there for the Secretary of State to:
"designate precepting and charging authorities where he considers the amounts calculated … to be excessive or to be an excessive increase on the previous year".
He may specify the maximum sum to be allowed with consequential reductions to the relevant community charge.
I believe that the noble Lord, Lord Wyatt of Weeford, said that there was nothing in the Bill

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whereby the Secretary of State would interfere with the community charge. Noble Lords should look at Clause 108, because this states that power will be given to force local authorities to reduce the level of the community charge and also power to intervene after the budget has been set. The Secretary of State can force a reduction part way through the year. Frankly this is a fantastic way to carry on local government finance.
I shall say a few words on the non-domestic rate. Again the noble Baroness, Lady Stedman, referred to the study which looked at the period from 1974 to 1981 carried out by the Department of the Environment. The Green Paper in 1986 to which reference has been made stated in paragraph 2.9:
"Hard evidence of the effects of rates on business is scarce. A recent study commissioned by the Department of the Environment concluded that…rates could not be shown to have had a significant overall influence on manufacturing employment".
In paragraph 2.10 it continued:
"How far business rate increases do affect the location and viability of businesses in particular areas must therefore still to a large degree be a matter of conjecture".
That is stated in the Government's Green Paper of 1986.
We all know that there again will be gainers. There will be businesses which will gain, but the local authorities know that there will be areas which will suffer by the drop in their income. There will be other areas where businesses will not gain. We have had the position of the small businesses outlined to us in a communication which many noble Lords will have received and which has been mentioned by a number. It mentions the problems that will face local authorities.
I am glad that my noble friend Lord Mountevans—I may call him my noble friend because we engage so much on transport matters—raised the question of the change, which very few people have noticed, in the passenger transport authorities where they are changed from precepting authorities to billing authorities. That was supported by the noble Lord, Lord Teviot. I shall not go into details now but I referred to this matter during the debate on transport problems. No one can understand why these amendments were left so late and brought in on Report in another place. No one can understand why the question of accountability does not arise because the members of the PTA are elected members appointed by their district councils to serve on the PTA. But we shall have more to say on this in Committee.
My last words have been echoed by one or two noble Lords. I wish particularly to follow up what the noble Lord, Lord Ross of Newport, said in his closing remarks. The Bill is an indication of the sorry state into which the relationship between local government and central government has fallen under this Government since 1979. We have referred to this time and time again. If there is one issue on which there needs to be consensus, surely it is local government financing. We should not be in a situation where the responsible local authority associations are in complete opposition to government proposals on the financing of local government.
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We are dealing with the Bill. At the right stage we will deal with Labour Party policy; but I remind your Lordships that when we were debating the 1984 Rates Bill, on Second Reading, the Opposition proposed an amendment that a complete survey should be carried out of the whole of local authority financing. That was rejected by a substantial vote by government supporters. That is what is required. The noble Earl, Lord Caithness, I believe, said that the issue was whether there should be control by central government or local government. He may have wondered why Members on this side of the House cheered that remark. That is the real issue here. Will there be proper local government or will there be central domination on the various points contained in this Bill?
11.36 p.m.
The Lord Privy Seal (Lord Belstead): My Lords, I should like to congratulate the three noble Lords who made three maiden speeches today. The noble Earl, Lord Carnarvon, among his many interests, has been closely involved in county council work and spoke with experience and indeed with some feeling about the importance of local government. I am sure the whole House is delighted that we now have his added expertise on this Bill from the Cross-Benches.
The noble Earl, Lord Lytton, I believe includes do-it-yourself repairs among his interests in the reference books. I hope we are not going to need any running repairs on this Bill as it goes through your Lordships' House, but I am glad that the noble Earl has spoken for the first time in the House today. In fact, he is very well qualified to take part in today's debate, and he spoke with considerable authority, on which I congratulate him, on Part III of the Bill.
All of us on these Benches were delighted to see the name of Mancroft on today's speakers' list. In his speech the noble Lord has maintained the standards for incisive debating which were set by his father in this House and I should like to congratulate my noble friend on a very entertaining maiden speech. I express the hope that all three noble Lords will be heard frequently in future in your Lordships' House.
It was interesting that all three noble Lords, in making their maiden speeches, agreed that the present arrangements to pay for local services really cannot continue. I am not entirely sure, from the speech of the noble Lord, Lord Underhill, that he agreed with that but I think there was a pretty general agreement in your Lordships' House today that there is discontent with the rating system. It has been going on for some 20 years or more, and there really is a national consensus now that change is inescapable. Indeed if anyone either inside your Lordships' House or outside it did not agree that this is so, then the very powerful speech of my noble friend Lord Jenkin of Roding was a conclusive argument that, in his own words,
"to do nothing is no longer an option".
But what should replace the present arrangements? I must say I was surprised that we heard no answer of any kind to that question from the Front Bench opposite. Perhaps it is not entirely surprising—as always, I thoroughly enjoyed the speeches of the noble Lords, Lord McIntosh and Lord

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Underhill—that they did not mention their own party's policy, because the fact is that if one looks back to, say, a year ago the Labour Party have got no further than chopping and changing views about whether they are in favour of a local income tax or capital value rates, or indeed whether they have a policy at all. I must say that I thought the saga was actually going to come to an end when I noticed in the newspapers that the right honourable gentleman who is the Deputy Leader of the Labour Party had made a speech last month announcing firmly that the Labour Party was now committed to both capital value rates and local income tax. With customary courtesy, my right honourable friend the Secretary of State immediately picked up his pen and wrote a letter to the right honourable gentleman asking for more details so that the effects of the policy could be exemplified. Sadly, my right honourable friend so far has had no reply.
I have to say for myself from this side of the House that I should be surprised if the general public would see capital values as an improvement on the present rating system. Surely any capital value system would either lead to great turbulence, both regional and local, in rate bills as values changed to reflect market values or, more likely, would bring great unfairness because the great upheaval associated with revaluation would in practice prevent such revaluations ever taking place at all.
Another main alternative has been a local income tax, about which the noble Lord, Lord Ross of Newport, in particular spoke. It is true that the Social and Liberal Democrats and their forebears have been consistent in supporting that proposal. Again I submit that the idea is unlikely to gain much popular support. That is what it would need, because to operate such a system effectively would as I understand it require a recasting of the national tax arrangements to an end-year self-assessment basis.
I do not see much popular support for a tax which undoubtedly would produce some very much bigger bills than the community charge. That is because, contrary to what my noble friend Lord Ellenborough thought, although at present there are some 15 million income taxpayers in this country, even after separate tax of married women is brought into effect there will be no more than some 20 million income taxpayers. So only just over half the adults in this country will be taxpayers. Under local income tax there would therefore still be a major part of the electorate voting for local services knowing that they would pay nothing towards the costs—hardly the way to achieve local accountability.
I was interested that the noble Lord, Lord Wyatt of Weeford, pointed out that in addition to all those points there would be some extraordinary local differences in the levying of local income tax among local authority areas. He said that it would almost certainly lead to local brain-drains from some authority areas, leaving an increasingly polarised society behind.
The noble Lord, Lord Jenkins of Hillhead, criticised the Bill which we are introducing on social, geographic and administrative grounds. However, I
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have to say to the noble Lord that I think that on none of those grounds does local income tax even begin to stand up to examination.
Many of your Lordships have spoken today in one way or another about the need to assess ability to pay. The noble Baroness, Lady Stedman, and my noble friend Lord Ellenborough both spoke in favour of a banded community charge. But a major stumbling block to banded charges are the earnings traps between the bands.
As my noble friend Lord Watkinson said, there is no easy way out of the problems posed by the outmoded system of rates in this country. The truth is that there is no short cut to linking the community charge to income. The only way to achieve that would be through a local income tax. The noble Baroness, Lady Stedman, said that that is what she would support. With respect, I do not think that many of the payers of such a tax would thank her for that.
It is for those reasons that there is very great difficulty with the criticism levelled by a number of noble Lords that the flat rate community charge does not of itself take account of ability to pay. However, the Government are providing through the Bill for the better-off to pay more, indeed, much more, than people who are poorer. Of course to achieve that, one has to look at the total funding of local services and the system of rebates which will be in operation.
I should like to say firmly from this side of the House that I have not the slightest doubt that the arrangements that we are proposing in this Bill are both necessary and fair. They are necessary for the reasons of accountability about which my noble friend Lord Strathclyde spoke so clearly and briefly at the end of the debate. They are fair in that those who argue that they are not, invariably seem to base their arguments on a substantial misconception, which is the belief that everyone will be paying the same amount toward the provision of local services. That is simply not so. Those on the very lowest incomes will pay only 20 per cent. of the community charge for their area and the level of their income support—the successor to supplementary benefit—will be increased to reflect the cost of an average community charge.
For those on low incomes but above the income support level, about which noble Lords have spoken with a considerable concern that I quite understand, there will be rebates which are tapered so that the amount of the community charge to be paid will increase gradually as income rises. It will only be when income rises to a sufficiently high level that all entitlement to rebates will cease.
My noble friends Lord Pym and Lord Carr of Hadley expressed the concern that the level is not high enough, but 9 million people will be eligible for rebates and 5 million of them will be above the income support level. It was as a result of my right honourable friend's recent announcement in another place that the number of rebate recipients increased by 1 million, many of whom will be on small, fixed incomes, as indeed will be many of the 4 million who will now get a larger rebate as a result of my right honourable friend's announcement. No doubt we shall debate rebates again, but for the moment

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perhaps I may just express the hope that noble Lords will accept that in devising and refining the rebate system we have tried to take very careful account of the needs of people on small fixed incomes.
So what is certain about this continuing debate about an ability to pay is that everyone will certainly not be paying the same for local services. But there is an additional factor. I mentioned the importance of looking at the total funding of local services, as did many of your Lordships. A quarter of the money needed for local services will come from the community charge; a further quarter will come from the business rate; but half of the cost of providing for local services will come from Exchequer grants, which are funded through central taxation to which the rich pay, quite properly, more than the poor. So it is possible to calculate that through national and local contributions the top 10 per cent. of households by income will pay around 15 times more toward the cost of local services than do the bottom 10 per cent. of households by income—and quite right too.
Perhaps I may just try to answer as many questions as possible in the time left to me. Following on immediately from what I have just said, the noble Lord, Lord McIntosh, said roundly at the beginning of his speech that the community charge will make the rich richer and the poor poorer. With respect, that is not the case. Many of the poorest households will be better off under the new system. In fact the top 10 per cent. of households by income will pay relatively more compared with the bottom 10 per cent. than under the present rating system. I ask noble Lords, and indeed my noble friend Lord Chelwood who spoke feelingly on this subject, to reflect on that point in particular.
My noble friend Lord Ellenborough and the noble Lord, Lord Cocks of Hartcliffe, talked about gainers and losers, and the noble Lord opposite spoke about how the evidence seemed to be coming out so far as concerned his former constituency. My noble friend Lord Ellenborough was one of those who quoted the government statistic that the top 10 per cent. of earners would pay around 15 times as much toward the cost of local services than the bottom 10 per cent., but he then complained that the figure included the contribution from national taxes. Perhaps I may offer to my noble friend another statistic which he may find more persuasive because it relates to the community charge alone: with rates alone the top 10 per cent. of earning households today pay five times as much as the bottom 10 per cent. With the community charge tha ratio will be six times. That hardly squares with a system which will be more unfair to the lower paid.
The right reverend Prelate the Bishop of Gloucester argued that on the assumption that the present rating system is based on ability to pay, the onus should be on those advocating a flat rate payment to explain the justification for such a change. Perhaps I may make three quick comments. First, the right reverend Prelate's view is based on a not altogether correct premise. It is not true that the richer one is the more one pays in rates. I quote a familiar example. A widow may continue to live in a house which she bought many years before when her husband was alive and working, and may find herself still in the house and paying far more than several
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wage earners next door. Secondly, the community charge, as I have explained, is not a flat rate charge for the 9 million people on the lowest incomes. Thirdly, the fact that some taxes are progressive, as they must be, does not logically mean that all taxes need to be so.
On this argument, no government would be allowed to have any flat rate duties or charges. Surely what is crucial in this case is the total effect of the community charge on people combined with national taxation, which in this case has the effect of the higher income households, quite rightly, paying relatively more compared with the poorer households than even under the present rating system.
Both the right reverend Prelate and the noble Lord, Lord Cocks, spoke of the problem of elderly relatives, suggesting that the community charge might be the cause of people putting their elderly relatives into homes rather than ensuring that they were cared for in the community. With respect, I doubt whether this would be the effect. For elderly people on low incomes, the community charge will be paid at only 20 per cent., and then that 20 per cent. will be reflected on average in an increase in the income support level. Therefore there ought to be very little in it between the elderly person staying at home, and somebody on full rebate in a nursing home who is exempt.
The noble Baroness, Lady Lockwood, also spoke about old people being cared for by families. She mentioned the case of an old person depending on the state retirement pension who is cared for by his or her family. What the noble Baroness did not say is that a person dependent on the state pension would be entitled to the rebate of 80 per cent. and then there is the 20 per cent. which is taken into account as well when uprating the income support system. It is the same point again, and I am giving much the same answer to the noble Baroness.
The noble Lord, Lord Graham of Edmonton, asked whether the Government propose to limit the supply of community charge information, in particular for credit purposes. The noble Lord will know that the Bill confers on the Secretary of State the power to provide for the sale of an extract from the community charges register. That extract will consist of a list of names and addresses. My right honourable friend has made it clear that he has not yet decided whether or how the power governing the sale of the extract should be exercised. Before doing so he will consider carefully the representations that have been made both for and against the sale of the extract. I am sure that he will give full weight to the views which were expressed today by the noble Lord.
The noble Lord, Lord Houghton of Sowerby, spoke about the deduction of community charge at source. Perhaps I may simply make two comments. We do not believe that a general system would be justified. We believe that it is important for people to be given the responsibility for paying the charge out of their own pockets because this will bring home to everyone the costs and the benefits of local spending. On the other hand, if people refuse to pay, local authorities will have a range of methods for enforcement, including distraint of goods—as they

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have at the moment with the rating system—and also the new proviso concerning attachment of earnings and direct deduction from social security benefits.
Finally, perhaps I may say a very brief word about business rates. The noble Lord, Lord Underhill, in his speech quoted from the 1986 Green Paper about business rates. Unfortunately the noble Lord left out a passage. Paragraph 2.10, to which the noble Lord, referred, continues:
"'Employers' organisations, both in the private and public sector, report that their members have been influenced by rates in making decisions on employment".
That is absolutely basic to Part III of the Bill.
The noble Earl, Lord Lytton, in his very impressive maiden contribution, was most concerned about the business rating proposals. He was particularly concerned by the extent to which the new rating system will be dependent on secondary legislation. I think that is a matter of balance. Not everything can appear in primary legislation. If it did the system would soon become far too inflexible. We think we have the balance right. I am sure we shall be able to return to this matter soon. Arising from the noble Earl's remarks, may I also give an assurance that statutory consultation between businesses and their local authorities we intend to be written into the Bill, if your Lordships agree, as the Bill goes through the House. That, contrary to what the noble Lord, Lord Ross of Newport, said, will mean that, as in the example that the noble Lord gave of Sheffield, where apparently the local businessmen and the authority are planning well ahead together, that will be underpinned, if your Lordships agree, by a provision which will go on the face of the statute.
The noble Baroness, Lady Stedman, raised a large number of issues about Part III which will put us on notice for the matters she will wish to pursue. But she, together with my noble friends Lord Pym and Lord Massereene and Ferrard, revived the problem of rural shops and post offices. I recognise the concern of my noble friends and of the noble Baroness, but it is perhaps to some extent exaggerated. We do not, of course, know what the outcome of the revaluation will be, but there is no basis on which to expect that rateable values of village shops will increase by more than the average. If that is the case, then there is no reason to expect any increases in rate bills. Indeed, where the value of a shop is affected by deteriorating economic circumstances there will be no reason why the value and the rate bill should not decline. Finally in this connection, I should say that where part of the shop property is occupied as a domestic property that part will be excluded from the rating assessment. So I believe that that part of the arrangement will be fair also.
The noble Lord, Lord Moran, made the suggestion that we should remove liability for fishing rates under the national non-domestic rate and pass the benefit to an old friend of mine, the new National Rivers Authority. Fishing and other sporting rights have been rated for many years and we had not intended to make any change. However, the argument that the noble Lord makes is an interesting one and I shall ensure that it is considered by my right honourable friend.
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Finally, I should say one general word about Part III—
Lord Mountevans: My Lords, I am grateful to the noble Lord for giving way. I have listened to much of the debate this evening and I think the noble Lord has answered almost all the questions put to him, but he has not answered mine. May I ask him possibly to shuffle through his papers, or perhaps say that he will write to me?
Lord Belstead: My Lords, I apologise to the noble Lord. Among a large sheaf of papers I have a spendid answer to both the noble Lord and to my noble friend Lord Teviot. If the noble Lord will forgive me for just one moment—
Lord Mountevans: My Lords, I shall be happy with a written answer.
Lord Belstead: My Lords, I apologise to the noble Lord and to my noble friend, because this is an important point. We are particularly concerned about the proposals to require passenger transport authorities to raise their funds by making a levy rather than a precept on their member district councils. I assure both my noble friend and the noble Lord opposite that all we are proposing is recognition of the fact that the PTAs are effectively a joint venture by the individual boroughs. The precepting arrangements would allow them to continue to distance themselves from the PTAs. The levy arrangements will ensure that the boroughs become clearly accountable for their share of the costs of the PTAs, and we hope that that will make them more accountable for the decisions of their representatives on the PTAs.
I know that behind many of the remarks which have been made today noble Lords may have had the thought no one can be entirely sure exactly what will be the effect on business rates after revaluation. Before the House goes into Committee in two weeks' time, I should like to remind noble Lords that there will be generous transitional arrangements in the form of ceilings on the rate increases that any business can face in any one year. Although there is no evidence that small businesses will face larger increases, we accept that they may be less able to absorb any increases. Therefore we are taking power in this House to set a lower ceiling on maximum percentage increases in a year for small businesses. I hope that noble Lords will agree to that power.
I was particularly interested to note that two former Secretaries of State for the Environment, my noble friends Lord Jenkin and Lord Rippon, put their finger on the issue of the need for accountability as being the most compelling argument for reform. Both noble Lords, and the two former environment Ministers who have also spoken in the debate, agree that the Bill is necessary. I believe that today there is substantial agreement that the rating system must be replaced. I believe that that will be achieved effectively and fairly by the Bill before the House. I now ask your Lordships to agree that it should be read a second time.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Farm Land and Rural Development Bill
Returned from the Commons agreed to with a Privilege Amendment; amendment considered and agreed to.
House adjourned at two minutes past midnight.

  PEERS' SECRETARIAL ALLOWANCE
  PEERS' SECRETARIAL ALLOWANCE
  RATES: STATISTICS
  RATES: STATISTICS
  REGENT'S PARK DIORAMA
  REGENT'S PARK DIORAMA
  NORTHERN IRELAND: SOCIAL FUND LOAN REPAYMENTS
  NORTHERN IRELAND: SOCIAL FUND LOAN REPAYMENTS
  DEBT REPAYMENTS: SUBTRACTION FROM BENEFIT
  DEBT REPAYMENTS: SUBTRACTION FROM BENEFIT
  CHILD ABUSE PREVENTION
  CHILD ABUSE PREVENTION
  CANCER TREATMENT FACILITIES, WEST MIDLANDS
  CANCER TREATMENT FACILITIES, WEST MIDLANDS
  RETIREMENT PENSION PAYMENT DATES
  RETIREMENT PENSION PAYMENT DATES
  GRANT TO LOCAL AUTHORITIES: STATISTICS
  GRANT TO LOCAL AUTHORITIES: STATISTICS
  ZOO LICENSING
  ZOO LICENSING
  APHOX
  APHOX
  STATEMENT ON THE DEFENCE ESTIMATES 1988
  STATEMENT ON THE DEFENCE ESTIMATES 1988