§ Mr. KynochTo ask the Secretary of State for Scotland if he will make a statement on business rates for 1995–96.
§ Mr. LangThe estimated outcome of the 1995 revaluation will allow the average non-domestic rate poundage in Scotland to be reduced from its present level. I therefore propose to prescribe for 1995–96 a single rate poundage applying throughout the country of 43.2p and, at the same time, to abolish industrial derating entirely.
The introduction of a unified business rate poundage of 43.2p for Scotland, at the same level as in England, represents the successful culmination of the progress that has been made in recent years towards harmonising poundages. In the years after 1995–96 we will maintain a unified business rate in Scotland and it will continue to be pegged at the same level as in England to ensure a level playing field for Scottish business. This harmonisation will continue through future revaluations, and maintaining it will not be a burden on the Scottish Office expenditure programmes.
Taking together the effects of the forthcoming revaluation with this decision on the level of the rate poundage, I estimate that there will be significant local and sectoral shifts in rate burdens. My Department's consultation paper, published last month, outlined proposals for transitional arrangements to phase in the effect of these shifts on rate bills. In the light of responses to that paper, and the package of support announced by the Chancellor of the Exchequer today, I now propose that no business will face year-on-year increases of more than 10 per cent., after allowing for inflation. For property with a new rateable value of less than £10,000, the maximum real increase will be 7.5 per cent., while for part-residential subjects with a rateable value of less than £10,000 the corresponding limit will be 5 per cent.
The Exchequer contribution, amounting to £72 million in 1995–96, will cover part of the cost of the scheme. The remaining element will be met by limiting real reductions in rates bills, in line with one of the options presented in the consultation paper. For 1995–96, the limits will be 10 per cent. for properties with a new rateable value below £10,000 and 5 per cent. for larger ones.
Other details of the transitional arrangements will be based on the proposals in the consultation paper. My officials intend to hold further detailed discussions with 687W the Convention of Scottish Local Authorities and the Scottish Assessors' Association in the light of responses to the paper. Once these consultative discussions are concluded, regulations giving effect to these proposals will be laid before Parliament.