(Norfolk, South): I beg to move, That the Bill be now read a Second time. I am grateful to the House for the opportunity to present this important Bill. What I seek to do today is first to explain the reasons for and the background to the Bill, secondly to explain the provisions in the Bill, and thirdly to deal with possible objections.
I am using this opportunity of a place in the Ballot for Private Members' Bills not only to draw to the attention of the House a desperately serious problem affecting thousands of people but also—this is much more important—to put forward a constructive solution to that problem. I tell the Minister that I recognise, especially in view of the implications for public expenditure in the Bill to which I shall return later, that the Bill will need Government support if it is to have any chance of obtaining a Third Reading in this House and in another place. I shall therefore listen with interest to what the Minister has to say if he catches your eye, Mr. Deputy Speaker. I very much hope that he will not dash the hopes of thousands by making an unfavourable response.
I turn first to the reasons for the Bill and the problem it seeks to meet. No one in this House can be unaware of the general rates problem. We held many debates on the subject last Session and at some point, as a result of pressures, the Government came forward with proposals to ease the lot of the domestic ratepayer. In nearly all those debates the focus was on the domestic ratepayer. quite rightly, because it was the domestic ratepayer who was suffering most.
I gradually realised, as I looked into the problem more closely, that there was another group equally deserving of our sympathy whose voice was not being adequately heard. It is that group that I seek to help in this Bill. It is particularly the small businesses—I shall come later to my definition of "small businesses"—which get no relief from any Government measures and no specific relief from the total impact of the rise in rates generally. For that reason I decided that this group not only deserved but needed help if it was to continue to serve the community well. It was for that reason that I framed the Bill.
It is clear from the pleas for help and the messages of support which I have received that this problem runs deep throughout the country. I have had pleas for help and messages of support not only from shopkeepers and small business men but from many chambers of trade. It will be a great disappointment to them if the Government do not give a favourable response to the Bill.
I wish to focus on the problem which those people have faced in the past 18 months to two years. Let me deal first with the general overall rate increase for the business community. The Rating and Valuation Association has calculated that the average rise for non-domestic rate- payers last year was 55 per cent. compared with 35 per cent. for householders—and many householders have benefited from the measures introduced last July by the Chancellor of the Exchequer or from rate rebates. This 55 per cent. increase, fundamentally for businesses, compares with the previous annual average over many years of about 8 per cent. Therefore, in the past year businesses suddenly faced a truly catastrophic rise.
The National Chamber of Trade carried out a rating survey in 1974. It considered various local authority rating areas and compared the rates paid last year with those paid in 1972–73. I have taken what are admittedly some of the worst examples, but in the survey there are very few examples in which businesses faced a rates increase of less than 70 per cent.
In the North-West, businesses, including small businesses, faced increases in Wilmslow of 190 per cent. over two years and in Fleetwood of 157 per cent. In the North-East, in Hartlepools the increase was 182 per cent. and in Wakefield 159 per cent. In Wales, there was an increase of 182 per cent. in Conway. In the West Midlands, the increase in Red-ditch was 174 per cent. In the Eastern Counties, the increase in Halstead was 243 per cent. and in Sudbury 198 per cent.
My hon. Friend has given an increase of 55 per cent. for businesses overall. Was that a national average figure for one year or for two years? The large figures which he has just been quoting must be a shock to the whole House.
I am talking about the increase up to last year, 1974–75. I shall have something to say in a moment about the current year.
I wish to cite a few specific increases in the period between 1972–73 and 1974–75. I propose to quote not percentage increases but simple increases in the rates paid for small businesses. There was an increase for one shop in Sudbury from £157 to £866. In another there was a rise from £455 to £2,415.
In Cheshire, there was an increase in rates for a very small florist's shop with a total floor space of 17 ft. by 14 ft. from £352 in 1972–73 to £1,114 in 1974–7. For a village post office in the same county the rates for the comparable period have risen from £153 to £513. Coming close to home, my own home, in Norfolk, the rates for a small grocer's shop have risen from £65 to £229 between 1972–73 and 1974–75. For a small agricultural engineering workshop the rates have risen from £395 to £1,350. The rates of a small garage serving a rural community have risen from £330 to £858. For another garage they have risen from £118—this time in 1970—to £408 and the net income of the owner has fallen from £1,400 in 1970 to £1,000 now.
Perhaps the problem is best illustrated if I read two extracts from the many letters I have received. The first is from a shopkeeper in my constituency. It is the only shop in the village serving a rural community and the rates have risen from £49 to £116. The net income of the owner is now £570. She writes:
These figures include my Post Office salary"—
the shop is also a sub-post office:—
and the value of goods taken from the shop for personal use. …You will appreciate the fact that my overhead expenses are heavy and have to be subsidised to quite an extent from my husband's income. The additional burden of increased rates and the proposed extortionate national insurance contribution will create a financial situation which cannot possibly be met and the business will have to be closed. This will be very much to my regret and no doubt will cause con-
siderable difficulties to local pensioners who have come to rely on having a local Post Office and shop. These are the people whose Interests the present Government is supposed to have so much at heart".
Another person, not in my constituency, wrote to me as a result of the publicity given to my Bill, saying:
Although nearing the age of 57, my life has been divided in originally working for a national financial firm; then for several years in a department of the Civil Service and currently self-employed as a bakery agent for a home bakery. Of all these occupations the last few years have been the hardest and longest hours I have every worked, with inadequate reward relative to the hours worked. As a result. I am beginning to realise that having to cope with the impositions of central and local government it may well be that life is at an end
I am aware that businesses are able to offset rates against tax. That is a distinction between the business ratepayer and the domestic householder. It is important to understand, however, that there is a distinction between large and medium businesses and the very small businesses, such as those to which I have referred, in the effect of the impact of rates upon them. Many small businesses are finding that the fact that they can offset rates against tax is a very marginal benefit in view of the substantial increases in rates.
Many of the figures I have quoted are, in absolute terms, quite small, but in terms of their impact on the livelihoods of the people involved they are very great. They are in addition to the increase in national insurance contribution for people whose incomes are more than £1,600. They are in addition to the massive rise in costs and other expenses at a time when the increase in turnover of these people is not in line with their income and when frequently there is a squeeze on their margins. They are in addition to other administrative burdens which for a number of shops have been greatly added to by the Government's decision to introduce in the Budget a multi-rate value added tax.
These increases also come on top of a declining income—and I have been through the books of many of these people. What particularly grieves them is that they face this declining income as a result of rising costs, and especially the rate burden, at a time when they see so many other members of the community achieving substantial increases in their net take-home pay—their real income—as a result of what has happened during the past year. They feel particularly bitter because they are no part of the social contract and they will be paying the penalty for the excesses of others purportedly within the social contract who have been moving outside it, as a result of the Budget which the Chancellor introduced earlier this week not only in terms of the problems of the multi-rate VAT which the Chancellor felt it necessary to impose but also in terms of the increased taxation on their own spending.
It is well to remind ourselves that a large number of the people about whom I am talking—certainly those of whom I have given examples—work very long hours, well beyond any that employees are called upon to work. They frequently work 60, 70 or 80 hours a week and they are beginning to wonder whether it is all worth while. It would be particularly sad if they had to give up their shops or occupations—I have been talking about shops but what I say applies equally to self-employed builders, plumbers and others with small business premises—and especially in relation to their importance to the community in rural areas.
I do not claim that the Bill would solve the problem—it certainly will not. For many people the increases in rates have been the straw to break their backs. The Bill would give relief to one part of their difficulties.
I come now to the point raised by the Minister in his question to me. So far, the figures I have quoted relate to last year. We do not know in many cases what will be the rate burden in the coming year. Incidentally, the increases are a combination of the massive increase in the rate poundage coupled sometimes with revaluation.
I have quoted only last year's figures, and throughout the country there will be many instances of equally large rises for the small business ratepayer, an even heavier burden, in the coming year.
I cannot verify the 16 per cent. for South Norfolk mentioned by the Minister. It surprises me because the increase for the average domestic ratepayer will he much more than that. I know that Norfolk County Council has gone to tremendous lengths this year to contain its expendi- ture. If the rise is anything like 16 per cent., it is a great tribute to that Conservative Council that it has been able to hold down the increase, but that will not be the case in other parts of the country. That is basically the reason for the Bill.
I come now to what the Bill seeks to do. I hope the Minister will agree that what I have striven to achieve is a neat and simple solution to the problem. Defying logic, perhaps I may take the second of the two proposals first because it is the simpler.
The effect of the second proposal, which is contained in Clause 2, is to make it mandatory on local authorities to grant to the small businesses defined in Clause 1 the right to pay their rates by instalments, in the same way as domestic householders make payment. That does not, of course, reduce the rate burden but it could have a substantial effect on the cash flow of a large number of small businesses. I hope that the Government will feel able to support this proposal. because the previous Labour Government, on 29th April 1974, sent to all local authorities a circular on the payment of rates by instalments.
That circular stressed the importance that the Government attached to domestic ratepayers being told of their statutory right to instalment facilities and also pointed out that rating authorities may at their discretion allow other classes of ratepayers to pay by instalments. The circular went on to say in relation to non-domestic ratepayers, "particularly those in business in a modest way":
They hope rating authorities will be willing to consider these and any similar cases sympathetically, and allow reasonable facilities to pay by instalments; the most convenient course might be to align the facilities given with those for domestic ratepayers. This is a matter of special importance in areas where rates have increased more than the average and where as a result hardship may occur to certain non domestic occupiers.
I concur with that, and I seek in the Bill to take that a little further and give all small businesses the opportunity to use this facility.
Prior to finally framing the Bill I asked a Question of the Department to find out how many authorities were not complying with that circular. I was told that the information was not available. So it is difficult for anyone to assess exactly what will be the impact of Clause 2, but it seems to me to be right compulsorily to extend this facility. That, briefly, is what Clause 2 sets out to do.
By far the most important part of the Bill is Clause 1, which contains the main proposal. I considered various alternative ways of giving relief to the small business and the small shopkeeper. I came down to three, and I shall deal briefly with the first two to show why I finally settled for the one in the Bill.
I sought first to try 10 confine the relief to those small business men, shopkeepers, traders and so on—the self-employed—who are in income difficulties at present because of increasing costs, including rates. I sought a way in which to confine the relief to the net income of the individual concerned. The advantage of that method is that it would have dealt with the main problem—the problem of low returns to the individual concerned—and it would not have spread indiscriminate relief but would have allowed local authorities to apply discretion in giving the relief to those who were suffering most.
The disadvantages were that for the small business man, the self-employed and so on, income figures are always a year out of date. Secondly, it would have been administratively complex to operate. I quickly learnt that local authorities dislike having to make discretionary decisions of the sort they would have to make if I dealt with the problem in that way. It would also have been difficult to calculate the cost, although I recognise that this is a problem we already face on the domestic side in relation to the cost of rent rebates. I came to the conclusion that that solution was not practical.
My second solution was to look at the General Rate Act 1967 to see whether anything could be done under Section 40 which applies to charities and enables local authorities to give relief up to 50 per cent. to charities. The advantages were that it would mean a bigger relief and would introduce an element of discretion. The disadvantages were that many local authorities dislike Section 40, particularly the discretionary element that is left to them and the way it has to be administered. It would have led to constant argument and the possibility that it would not have been operated effectively. It could possibly have been expensive.
I finally settled for the solution put forward in the Bill, which I think has enormous advantages. It is administratively simple and can be easily grafted on to the existing rating system. Although originally I wanted discretion, the advantages of a clear system overrode that. The solution deals with the problem of mixed hereditaments, which I was anxious to do, and it allows flexibility on costs. Its only disadvantage is that it may not give as much help as I should like, but in present circumstances that is perhaps inevitable.
Clause 1(4) introduces a new definition into the General Rating Act 1967;
After subsection (6) of the said section there shall be added the following subsection—
' (7) In this section "small business hereditament" means a hereditament (including a mixed hereditament)—
The purpise of the Bill is to enable the small business hereditament to get exactly the same rate relief as that which the domestic ratepayer now receives. This means that in the year from which the Bill would operate, if it became an Act, the small business hereditament would receive a relief of 18.5p in the pound, given that the domestic relief element were the same as it is at present.
The method that I have put forward could mean that there would be an additional impost on the rate support grant. Earlier this week I made a speech in which I urged on the Government the need to restrain public expenditure even more than they have done in the present Budget. It would be hypocritical of me to ask the Government to extend public expenditure through the Bill, but because of the system I have outlined I submit that it would not be necessary to do so.
We would be adding a small new class of ratepayers to the domestic relief element. As the Secretary of State will have a long time between now and the drawing up of the next rate support grant formula he would have ample time to consult local authorities and to establish exactly how many new ratepayers would be involved under the Bill. Of course, it is open to him not to increase the amount to be allocated to the rate support grant formula next year but simply to say that a new small group will come in and that the load will be redistributed.
For example, let us consider a small village with 500 houses and two shops. In such a village the loss to the domestic ratepayer would be very small I am sure that he would be prepared to pay the price so as to give relief to the village shops and to ensure that they stayed in existence.
It is not intended that the Bill should be introduced until next year. I should like to have done something earlier to give relief this year, but as the rate support grant formula has already been fixed that is not possible. I believe that it is right, nevertheless, to specify 1st April 1976. That gives both the Government and local authorities plenty of time to work out the administrative arrangements.
Do I understand that the effect of Clause 1 is to give the Secretary of State complete discretion as to the rateable value up to which the concession will apply? Would it put into the hands of the Secretary of State complete power to say whether it should cost something or nothing? In those circum stances would it not be difficult for the Minister to oppose the Bill today?
I think that my hon. Friend is entirely right. It is for that reason that I hope that the clause as drafted will give the Secretary of State discretion. For those who feel that it might give the Secretary of State too much power, I was going to come on to the point that there will be various matters, if the Bill should go beyond Second Reading, to be discussed in Committee. It may well be that one of those matters would be whether some sort of guidance should be given as regards limits for maximum rateable values. I think that it is better to introduce the new system and to leave the limits to the Secretary of State's decision. That is one among many matters which could be considered in Committee. I have no doubt that there will be those who say—the Minister may be one of them—that it would be better to wait for the Layfield Committee's report. My response is that we know very well that the committee will not be reporting until later this year at the earliest. It will be three or four years before any of the committee's recommendations become operative. I do not believe that the people of whom I have been talking and who would benefit from the Bill can wait that long.
This is a simple change to the rating system which could be implemented without waitng for the Layfield Committee's report. It could be of great advantage to many small businesses. I hope that we shall not have the argument that L ayfield is the real stumbling block.
I have been talking today of very valuable groups within the community who not only feel friendless in terms of the present Government but who feel that the Government are positively hostile to them. Whether they are right or wrong, they feel that the Government are interested only in larger, organised groups. They feel that they are responsive only to militants. However, the groups to whom I have been referring are among the most deserving in the community. They value their independence and they are prepared to work long and arduous hours to earn their living. Further, they do not go running to others to help them out and they do not go on strike. They do not engage in restrictive practices. They are the backbone not only of the free enterprise system but of much of our community life. They are of real value to local communities.
I am bound to say that sometimes I wonder whether the Government want that sort of person, including the self employed, to be battered out of existence. That is exactly what has been happening to many of them over the past 12 months. By accepting the Bill the Minister could show those people that there is someone in the Government who understands their predicament. In doing so he would also earn the gratitude of my right hon. and hon. Friends.
I am grateful to have the opportunity to speak in this debate and to congratulate my hon. Friend the Member for Norfolk, South (Mr. MacGregor) on his Bill, of which I am a sponsor. I have pursued the question of rates fairly relentlessly since entering the House. I made my maiden speech on rates and I seem to be stuck with the subject for ever and a day. However, it is a vital topic.
This particular section of the community—I refer especially to corner shop keepers—is of particular interest to me. I feel strongly and passionately about their position in society. We should consider the importance to society of the small shopkeeper. Although country areas feel that small shopkeepers are particularly important to them, they also play an important part in urban areas. My constituency is an urban area but it is wide and scattered in the sense that there are small districts within communities. Each district has its small shopping precinct and the precincts are important to the community. No one wants to have to take a bus to go into town to buy a newspaper, to get his shoes mended or to buy some sweets or tobacco. Of prime concern is the local shop. It is the local shop about which I am most anxious.
In the past two or three years the shopkeeper has had to contend with a number of penalising factors. The Bill before us deals principally with rates, but I shall introduce one or two other matters that emphasise the problem that the small shopkeeper is up against. For instance, there is the stamp for the self-employed. an issue on which we have fought hard. That involves a rate of 8 per cent. appreciate that it is not a stamp but it is spoken of in that sense. That is a wicked thing to have to face and it is yet another nail in the coffin of the local shopkeeper.
Next, there has been the imposition of VAT on sweets. That was introduced by this Government. At one time children could buy a 1p or 2p sweet but such sweets are rapidly disappearing because the administration involved in offering that type of sweet on the counter is practically impossible. That has been another blow for the small local shop. The imposition of VAT on sweets was a mistake and it has had a serious effect on local shops. Further, we have had the introduction of varied rates of VAT. I admit that that does not concern many of the smaller shops but it concerns the chap who runs a small radio shop. for example. He will be affected by this new imposition. Then these shopkeepers have to contend with the increasing costs of electricity and gas. Both these are essential parts of a business, and they have gone up fantastically in price. That is another problem that they have to face.
As a society, we have not sufficiently recognised the position of the small shopkeeper when planning. Planning committees tend to give a prime position in a new arcade to a supermarket, putting it right at the front of the arcade. If more careful thought had been given to these matters and if the supermarket had been put at the end so that potential customers passed the small shop on the way in, this would have helped. However, there is always the tendency to give the big boys the best positions. The little man has to squeeze in and battle against those odds.
I have spoken to a number of shopkeepers in my constituency. I know of a constituent who used to run a little shop providing a useful service to the community in one part of my constituency. When he sat down and worked out how much money he ended up with, he found it would pay him more to drive a Reading bus. That is what he is doing now, and his shop is closed. He drives a bus because he takes home more money. He regrets this because he enjoyed working in his little business.
May I also urge that better instruction be given about the existing system of mixed hereditaments? There is a great deal of confusion about it. I received a letter only today from a shopkeeper who is completely confused about whether he can get the rate that he wants. More instruction should be going out from the Department. I have received a letter from the Under-Secretary about this very subject saying that there is a misunderstanding about the amount which can be claimed. I hope that note will be taken of this aspect of the matter and that people will be given the opportunity to be informed clearly about what they can claim. Indeed, I hope that we shall go even further as a result of this valuable little Bill.
I believe that the local shopkeeper provides a vital service. We have also to remember that often it is an activity engaged in by people who have retired from other walks of life and who some time ago decided to run little corner shops. Their businesses may represent supplements to their pensions which are very important to their incomes, in return for which they provide an extremely valuable service.
I make a plea on behalf of the local shop, and I support the Bill. It is an easy solution, and it can be introduced in advance of the Layfield Report. We need not wait for that report. Here is a simple remedy which will help. The National Chamber of Trade has been pushing this matter for some time, without much success.
I congratulate my hon. Friend on introducing this Bill so that at least we can debate this subject, and it may be that we shall even get it through all its stages.
I make no apology for intervening in a debate on an English Bill. I am a Member of the United Kingdom House of Commons and frequently what is the law of England today. if it is good law, with any luck becomes the law of Scotland tomorrow—that is, when time can be found to debate it in this House, which is not always the case.
I am not altogether certain whether, as a matter of constitutional law, Clause 4(4) should not include a reference to Scotland after "Northern Ireland". However, my constitutional law may be a little rusty. Clearly, the Bill is designed to alter an English Act, and I join its sponsors in supporting it because it may be that it is a very important precedent for Scotland where there are twice as many self-employed people, possibly because it is more sparsely populated.
I add my voice in support of all these small businesses. They are vital to rural communities. In a very small community, if there is no shop, very soon people do not wish to live there. Then there is no school, there are no children, and there is no community. This has been the experience in my constituency and in many parts of England. It is very sad to see communities dying.
Small shopkeepers are one of the pillars of society which should be kept serviced. They have had a number of fiscal irritants. They have been made to turn themselves into self-employed tax collectors for the Government, often doing complex accounting which they did not have to do before the introduction of VAT. Already they have to employ staff to do the work of the Government in collecting PAYE. But in many businesses the introduction of VAT was resented bitterly because their owners had to become bookkeepers for the Government with no additional revenue available to them.
The multi-rate VAT is a matter of burning moment to small shopkeepers to whom I have spoken all over the United Kingdom. It is no accident that today all over Britain associations of self-employed people are coming into existence quite spontaneously. They are a group of people who have never been militant. They have been patient. They have served the community by working long hours and getting whatever incomes they could. Now they are getting together. I have been informing a number of such groups in my constituency, and I have been approached by an organisation in England asking for whatever information I could supply. My hon. Friend the Member for Argyll (Mr. MacCormick) has helped in the formation of such groups in Argyll. It has happened quite spontaneously, and there must be a reason. If people who have never felt the need to behave in this way start forming themselves into groups to
protect their interests, there must be something wrong in the way they have been treated.
The multi-rate VAT is a serious addition to an already serious financial imposition. It is obvious that if a small business of this kind has employees, wages have risen, as have costs. We know already about the long hours involved.
In the interests of preventing depopulation, we should consider these matters very seriously. It is said to cost about £10,000 to create a male job and that, the more artificial it is and the more rural the area, the more expensive it becomes. It is obvious that it would be cheaper to start where a community already exists by alleviating the position of those prepared to work there than to allow that community to decline and then ask ourselves what we should do to put jobs where all the jobs have gone.
If this Bill is passed into law, I hope that the Minister will use his discretion in the interests of small business men. I support the Bill and add that I hope that even slightly larger businesses will be considered in further legislation.
The problems of rate payers are very considerable at present. We know that the Government are waiting for the Layfield Report before they take any action to help. The difficulty is that many people are suffering considerable hardship. They cannot wait for the Layfield report. Therefore, I hope that the Minister will give us a firm indication when the Lay field Report is likely to be forthcoming. Even so, the report will be too late for many small businesses. Refence has already been made to the Reading shopkeeper who became a bus driver. Hundreds of small shopkeepers are now giving up their businesses. If the remainder have to wait much longer, it will be too late for them, too.
The pressure of rising rate demands has led to the introduction of domestic rating relief. That is proper. It is accepted on both sides of the House. However, we must consider the phenomenal rise in business hereditament rating. The average increase in the past has been about 8 per cent. per annum. However, during the past year the rise averaged 55 per cent. That is an astonishing change in the situation. It represents a phenomenal increase in cost which the business community must bear.
Perhaps there is some correlation between the ending of the business vote and rate increases. The business community is called upon to pay, but it has no vote with which to restrain those who are spending its money. The matter should be reconsidered.
I am proud to be one of the sponsors of this Bill. I should like to consider the position of small businesses rather than that of the business community. I am delighted to see that the Minister is present. He recently visited Basingstoke, which is in my constituency. The council was pleased to see him on that occasion. I hope that he took away with him a good impression of what was happening in Basingstoke.
The Minister listened attentively to the speeches of my hon. Friends. However, I am disappointed that none of his colleagues thought that the problems of small business rating were worthy of their consideration.
Since we are dealing mainly with shopkeepers, we must assess the contribution they make as well as the problems with which they are confronted. Their contribution is twofold. The small corner shop provides a convenient way of shopping. On large housing estates many people miss the small corner shop. People living in London are used to the small corner shop where they can buy cigarettes, sweets, newspapers and matches. If people have forgotten such items they do not have far to go to obtain them. The position of those living on housing estates is different, since they must go perhaps a quarter of a mile to the nearest shop. Small shops are of enormous convenience to the community. We should ensure that small shops continue. Small shopkeepers work long hours, which is again of convenience to the public. Small shops provide a service to the community, but they also make a contribution to the environment. They bring variety to a locality.
In the town centres we find the giant shops such as Fine Fare, Tesco and Sainsbury. That may be the limit of choice. There may be no friendly shopkeeper, especially those with a specialised range of goods such as ironmongery. Unless there is a variety of shops, the environment will be dull. People will find it depressing.
All the time small shops and small businesses are closing. There is a tendency to concentrate on larger businesses. The Minister is in a position to reverse that process. It is highly desirable that this group of people should continue in business, but they are faced with an horrendous rise in the level of rates. It is the last straw that breaks the camel's back.
On top of everything else, small businesses have had to face taxation increases and the complexity of complying with all the regulations which tie them down and control them. Then there is price control with which they have to cope—and that is far more effective in terms of the shopkeeper than the social contract has been in the case of the ordinary industrial worker. Furthermore, inflation has had a savage effect on small shopkeepers. If the shopkeeper this year has £5,000 worth of stock on his shelves, in a year's time as a result of inflation of 20 per cent., he will need to have £6,000-worth of stock on his shelves. Therefore, with the small amount of money at his disposal he will need to plough more money back into the business to keep the same variety and a similar number of lines on the shelves.
The shopkeeper finds the Government taking more from him in tax and increased rates. The whole burden is becoming too great. He must face increased costs for his stock as well as increases in the charges for water, gas and electricity. He will also have to bear the new rate of vehicle excise duty. All this is in addition to the savage attack mounted on the self-employed by the Secretary of State for Social Services by the disproportionate increase in the national insurance contribution which the self-employed person must now pay. It is a grossly unfair situation and the self-employed obviously have been picked out for special treatment.
The Minister for Planning and Local Government, who is to reply to the debate, is in a happy position today. If he accepts the Bill, he will go away from the House in the knowledge that he has done something to offset the damage inflicted on the smaller business community by his governmental colleagues.
I turn to deal with the provisions of the Bill. Clause 1 is permissive. It extends domestic rate relief to enable the Minister to fix limits on rateable value. If he decides to fix the limit at, say, a nominal £1, he will have it within his power to prevent a burden being imposed. The Minister can decide the cost and how great the benefit will be as a result of Clause 1 Therefore I hope that he will not ask the House to reject the Bill.
Clause 2 is a most important provision relating to the right to pay rates by instalment. Traders find themselves desperately short of working capital. If they have to pay the whole rates in a single payment, it will be a considerable restraining influence on their ability to pay for the stock which they need for next month's supplies.
I should like to draw the Minister's attention to the considerable hardship felt by people who have to pay rates even though their shops are being closed. There is a certain overlap when people cannot afford to keep their shops in operation.
In urging the House to support the Bill, I emphasise that the Minister now has an opportunity to distinguish himself among his colleagues as one of the only two Ministers who have any understanding or appreciation of the difficulties facing small businesses and shopkeepers. I hope that he will not lose that opportunity.
I am grateful for this opportunity to contribute briefly to this important debate.
The Minister for Planning and Local Government, who is to reply to the debate, is an old friend and I wish to emphasise to him that I am desperately worried about the situation which faces a number of people running small businesses and shops. It is easily said that the nation is on its way to Communism. It is also easily said that we shall come to Communism, despite all the things which my Conservative colleagues have been saying. Of course, it may be said that Britain is on the last lap—that as Cambodia falls without a protest from the West, that as Vietnam is likely to fall almost without a protest from the West, so Britain will take into its heart the things of the Left and of Communism.
I have known the Minister for Planning and Local Government for a number of years. I have never been able to believe that he is this terrible man who is willing to put the British nation at risk. I have never been able to believe that he is the "right bastard"—if I may use those words, Mr. Deputy Speaker, with your kind permission—who would destroy the British nation. [Interruption.]I am in no way joking.
The hon. Member for Moray and Nairn (Mrs. Ewing) was kind enough to pray that certain things should be dune to help the small shopkeeper. I thought she did this with kindness and without any calculation for herself. She did this because she was trying to help the shopkeeper.
My hon. Friend the Member for Norfolk, South (Mr. MacGregor), who introduced the Bill, has tried to show the British people that he wants to help them. Nothing in what he said shows that he is out to destroy the basis of the things that the right hon. Gentleman desires. Nothing my hon. Friend said has suggested that he is a narrow-minded, poor, pathetic little man; he simply wants to help the people whom the Bill seeks to help and these people are not "anti" the State which we try to uphold.
Whatever may be the past affiliations which the right hon. Gentleman has espoused, and however much to the Left people may assume him to be, it is impossible for me to believe that he is "anti" the people of Britain. Yet that would be the case if he were to bring about a vote against the Bill. He would be proving to the British people that there is no future for the little man. How dare we ascribe such bad intentions to my friend of yore as to assume that he will not destroy the little business man?
No one will believe that I have any humility, because I speak as though I have none, but I would ask hon. Members to believe for a moment that I am a humble man, that I love people and that I have some faith in the future of Britain. Would the Minister please think about the future of these poor people? They are not different from his friends. Who says to me that my fondest and greatest supporters are basically different from mine own enemies in the political world? Will he not consider these people who are so grossly hard done by under Socialism and think again about the little man who provides so much?
I will wait until the Minister has finished his conversation. If the Under-Secretary of State for Trade wishes to interrupt me, I shall be delighted to listen to any question. Otherwise, I would ask him to shut up and to allow the Minister to make up his own mind without any suggestions. If he wishes to sit at the end of the Treasury Bench I will say not a word against him. I hold nothing against the Under-Secretary for putting in his oar. Perhaps he did not know that the hon Member for Yarmouth existed, since he has been so quiet for perhaps too many months in order to consider carefully the time when he might say something. I used to represent about 55,000 people. Now, as the Minister, for whom I have the fondest regard, knows, I represent more than 70,000.
I do not expect an answer today. To expect that would be madness.
I am most grateful to you, Mr. Deputy Speaker, for reminding me of the point. The hon. Lady will know that I have been here for a year or two. I was greatly enamoured of her contribution to today's debate, but I am even more enamoured of my friendship for the right hon. Gentleman who is to answer today's debate.
I conclude by inviting the right hon. Gentleman to take account of the poor way in which I have tried to put the point of view of people who have no way of answering—except for the poor way in which I have attempted to support the Bill.
I wholeheartedly support the Bill. I believe that my hon. Friend the Member for Norfolk South (Mr. MacGregor) has introduced this measure at a crucial time in the economic life of the people whom he is seeking to protect—small shopkeepers and small business men.
I have a vivid experience of the difficulties which these people are suffering. I gained this from a recent visit to one of the small towns in my constituency, East Molesley, where no fewer than 13 shops have had to close during the past year owing to the mounting difficulties that have been encountered by them. I have no reason to believe that the experience in East Molesley is any different from that in other towns and villages in my constituency or in the rest of the country, and we heard from the hon. Lady the Member for Moray and Nairn (Mrs. Ewing) about the situation in Scotland.
I believe that the Minister has a real problem on his shoulders. After talking to shopkeepers I was left in no doubt about the difficulties which they are facing. Many of them are having to sell branded goods on which recommended prices can be raised only by permission of the Price Commission. Even if there is an increase, it is seldom enough to enable them to cope with the margins which they need in order to deal with all the other increases in costs which they have to meet, such as heating, lighting, insurance and so on.
In addition, they are faced with the increasing restrictions on credit and a tightening of trading terms by suppliers. There is also the fact that suppliers may go bankrupt, and this may put the retailer in an extremely difficult situation. Added to all that is the reduction of expenditure by customers and the fact that people are not buying goods to anything like the extent they were doing before. The small shopkeeper is caught between the nether and upper millstones of turnover falling and costs ever rising. I have been left in no doubt in my constituency of this growing problem, and I ask the right hon. Gentleman to recognise it.
Unkind people are saying—this was echoed by my hon. Friend the Member for Yarmouth (Mr. Fell)—that the Government have no interest in small independent people, but they are the backbone of our country and of the retail distribution system. I do not believe that it is possible that the Government can be
envisaging the economic elimination of this group of people.
I beg the Minister to make it absolutely clear that he intends to look after this important section of the community, which, unlike the trade unions, has no strong voice to speak for it, and that he will demonstrate that intention by deeds as well as words.
I try as hard as I can on every occasion to avoid striking a sour note, and certainly to avoid striking a personal note. It is therefore with some regret that I must point out that when the hon. Member for Basingstoke (Mr. Mitchell)—I am sorry he is not present—drew attention to the fact that not many of my hon. Friends were present, that is something that occurs in any Private Members' debate. It is bound to happen.
I hope that the House will not feel I am being a little too sour if I read out the names of some of the sponsors of the Bill—the hon. Members for Hornsey (Mr. Rossi), Cleveland and Whitby (Mr. Brit-tan), Birmingham, Hall Green (Mr. Eyre), Mid Oxon (Mr. Hurd), Gloucestershire, South (Mr. Cope), Melton (Mr. Latham), Braintree (Mr. Newton) and Tonbridge and Mailing (Mr. Stanley).
If the right hon. Gentleman is pointing out the difficulties that many hon. Members have in being here on a Friday, I entirely agree with him. All my hon. Friends to whom he has referred have explained to me why they could not be here. They all had long-standing engagements.
I am sure that the hon. Gentleman is right. I am glad to see the hon. Member for Basingstoke back again. No doubt he had the same dilemma as I had, of not being able to finish his lunch. This gives me no pleasure. I was pointing out that in a Private Members' debate it is not a good thing to draw attention to absences here and there. We all know that there are good and reasonable explanations.
Having got that out of the way, I congratulate the hon. Member for Norfolk. South (Mr. MacGregor) on a moderate and reasoned introduction of the Bill which was interesting to listen to and contained a great deal of matter that needed consideration and some answering. Hon. Members who have served on Committees with me or have heard me speak in the House know that I have never made a point about drafting irregularities in a Bill. Those are procedural matters that can all be tightened up. But I wonder why the hon. Gentleman, who spoke so eloquently to the Bill decided that it should not extend to Scotland, particularly in view of the interesting speech by the hon. Member for Moray and Nairn (Mr. Ewing). There must have been a reason, but I tried to find it and did not understand.
I am a Scot and am very sensitive to the interference of others in Scottish affairs. I believe that it would be right for hon. Members representing Scottish constituencies to deal with the matter, because the General Rate Act 1967 applies to England and Wales. I very much hope that if the Minister accepts the Bill it will be extended as a precedent to Scotland, as the hon. Member for Moray and Nairn (Mrs. Ewing) has said.
I am grateful for that intervention. It is all the pleasanter to know that I can hear the hon. Lady twice on the same subject in due course.
There is a point here. There are people who are being hit by rising rates. Over the past three or four years, as inflation has hit this country, a number of people, not just those in charge of small businesses but domestic ratepayers and those with large businesses, have faced considerable rate increases. I would be quite wrong to say that such and such a section of our fellow citizens did not deserve to be considered.
The hon. Member describes his Bill as empowering local rating authorities to give special relief to certain small businesses. The people he has in mind are very much in our minds, as is everybody else faced with the rating problem.
For example, Clause 2 deals with payment by instalments. I came to my present ministerial appointment in March of last year. One of the first things I did—did it entirely off my own bat and I hope that the hon. Gentleman will take this from me—was to ask whether we were encouraging local authorities to allow rates to be paid by instalments. As a result, on 29th April, only a matter of four or five weeks after first occupying this position, I issued a circular asking local authorities to be as sympathetic as they could about allowing business men, particularly small business men obviously, to pay their rates by instalments.
That does not echo what the hon. Member for Esher (Mr. Mather) said. He thought that my old hon. Friend and opponent the Member for Yarmouth (Mr. Fell) shared his view that I was standing coldly aloof from small business men. I do not think that the hon. Member for Yarmouth felt that. Certainly I do not.
That circular was a concrete example of exactly what should be done. If I am accused of neglecting small business men when I ordered that circular to be sent out and when I asked local authorities to help as much as they could, let me ask the hon. Member for Ashford (Mr. Speed) whether he can cite a single occasion when the Government of which he was a member sent a circular to local authorities asking them to allow business rates to be paid by instalments. I have checked and I have found that there was not one occasion.
It comes as a curious argument that a Government who, within five weeks of taking office, on inheriting the appalling situation in rating that was left by the Conservatives and being determined to do something about it, sent out a circular to local authorities asking them to do all they could to help should be attacked for lack of care by those who, when in office only a few months ago, did absolutely nothing about it. It is an extraordinary sort of behaviour.
I repeat that I strongly believe that as much opportunity as possible should be given to small business men to pay their rates by instalments. It was my own Government who in 1966—I speak from memory—introduced payment by instalments following the Allen Report of the previous year.
In April 1974 we issued a circular. I believe what I have said—I leave it to Conservative Members to decide whether they believe on every occasion exactly what they say—namely, that local authorities must, within obvious national constraints, be free, independent and able to make up their own minds. Often they will make mistakes and we have to watch as a Government or as ratepayers and voters while they make mistakes. There is a great deal in this business of allowing freedom and independence to local authorities.
At the same time we must guide. That is what the circular was about. When this circular on the payment of rates by instalments was issued, I did not want to force local authorities into compelling the non-domestic ratepayer to do something. The reason is obvious. Local authorities require a fairly predictable inflow of rates. If we delay that inflow in any way it has an effect upon them. We can see this in many local authorities at the moment. Complaints are being made because people are allowed to withhold their rates because they are challenging a valuation assessment. Many people think that this is wrong. There is a danger for local authorities and hence for all ratepayers when there is a lack of predictability of inflow. If there is such a dearth of cash, all ratepayers are bound to suffer.
Would the right hon. Gentleman concede that in the situation he has described, when there is a desire for a predictable flow of cash, monthly instalments are more likely to be paid on time, thus producing that regular flow, whereas a six-monthly demand might well be delayed for as long as possible if a person does not have the money to meet it?
I can understand that if every ratepayer paid by instalments, if we made it a sort of PAYE, there would be greater predictability. This is not what the Bill asks for. It is merely suggested that it is something for which small business men may ask. It is not meant to be universal.
I was impressed by the expanded town represented by the hon. Member for Basingstoke. I was treated very well during my visit there. I was sorry that I did not see the hon. Member. I know the reasons. I missed him, if I may say so. Had we met and discussed the situation then, and had the question of the payment of rates by instalments arisen, I would have said then, as I say now. "That is all very well, but the difficulty is that the interest paid by the local authority becomes very much greater if rates are paid monthly." This is not something which costs nothing. It costs a great deal for ratepayers in a particular area and for the Government generally.
It is the fact that within a short time of becoming a Minister I had made certain that every local authority was aware that it should, where it could, give such concessions to the small business man. The previous Government, during an inflationary period of three years, did not do what I did within a few days of coming into office. I make the point to show that I care and that I did my best at that time.
The present Government, and perhaps the previous administration, have done what they could to help small business men. There has been a great leap forward under the present Government. but I am not making a tremendous party point about that. Since April last year it has been possible, for the first time. to obtain a rate rebate on the domestic part of a mixed hereditament. Part of this was planned under the Tory administration. It was certainly improved under the present administration. In addition the rate rebate provision was extended to apply to about 4 million out of 16 million ratepayers—a quarter of them. That is an enormous amount of assistance, and for the first time it applied to the shopkeeper. In addition, if more than 50 per cent. of a building represents domestic accommodation, it counts for the domestic element in the rate support grant. That is another respect in which the Government have done their best to help.
The ability to treat payment of rates as an expense against tax is a very important consideration and we must not underestimate it. The hon. Member for Norfolk, South, who made a good, moderate speech, might well be able to point to many instances of people who pay no or very little tax. But such instances must relate to very small shops, which I should like to see preserved. However, if they are not entitled to a rate rebate and if they are not earning enough profit to pay tax, one wonders whether the world has pushed them aside.
I live in a village and I know of small shops and shopkeepers. I realise what a great advantage they are and how nice it is to have them. I am merely putting a question to the hon. Gentleman. It seems strange that none of these people should be paying tax and, therefore, are not able to benefit.
However, I suppose that the main attack on the Bill, apart from one other matter to which I shall return, should be made on Clause 3, dealing with the financial provisions. The hon. Gentleman, because he wants his own way—and who is to blame him for that; we all want our own way was remarkably astute in dealing with this question. He knows perfectly well the difficulties of putting it across. He is a Scot and, therefore, hereditarily is very skilled in skating on extremely thin ice. He did it brilliantly today.
There are two difficulties in considering the matter from the hon. Gentleman's point of view. First, how can one defeat the public expenditure question? Hon. Members opposite rightly say that there should be a cut in public expenditure. That is part of their philosophy, and they believe that there should be such a cut particularly at this time. How can one say that there must be a cut in public expenditure and at the same time say "Let it go up to meet the problems of the small business men"? Across the ice goes the hon. Gentleman, who says "All you have to do is bring about a little redistribution in the general rate support grant."
Where do we redistribute from? Do we redistribute from the needs element, from the resources element, from the domestic element or perhaps from a mixture of all three? By doing that we would deprive other ratepayers, and in the next Session the hon. Gentleman would be back again with another Bill to try to help some other more deserving category.
The hon. Gentleman has shown that he is both skilful and lucky.
If there were to be a redistribution of the sort that the hon. Gentleman wants as the only alternative to increasing public expenditure—and I think I carry him with me on that—does it not occur to him that a mountain of consultations with the local authority associations would have to take place? He is being a little sharp if he thinks that such agree- ment would be reached at those consultations that we should be able to legislate by 1st April 1976.
I should like the hon. Gentleman to be extremely realistic about this. He is entitled to his propaganda exercise, and I hear him no ill will for that, but let him not pretend that legislative time can come at the snap of a finger. The Government's policy is to have the maximum amount of consultation with local authority associations, but if we were to suggest a proposal which impinged on all three elements that go into the rate support grant we should need to consult the local authorities.
Still skating dextrously over thin ice—if that is possible, perhaps on his hands—the hon. Gentleman asked me not to mention Layfield. But I have to mention Layfield. Layfield will be reporting, we hope, at the end of this year in advance of the commencing date of the Bill, which, as I tried to show the hon. Gentleman, cannot possibly be met.
If the hon. Gentleman is keen on helping the small business man, and this is not just a propaganda exercise, let him do what he can, as I have done, to persuade local authorities to allow payment by instalments where they can. Let him join me in that. Let him go back to the correspondents he mentioned and draw their attention to the generous rate rebate schemes, because I have the feeling that a large number of them do not know about the rate rebate schemes—and I have good evidence for saying that. Finally. let him work with us after Layfield has reported to see whether a whole new vista of local revenue can be opened up which we can consider together as a united House and a united country.
I congratulate my hon. Friend the Member for Norfolk, South (Mr. MacGregor) on introducing the Bill. I am co-sponsor of the Bill and am delighted in my official capacity as Opposition spokesman on local government to give it my support.
The Minister cannot have it both ways. He is arguing that the measures in the Bill that allow the rates to be paid by instalments would be unworkable, yet, 011 the other hand, in his circular he is urging local authorities to allow just that.
The hon. Member for Ashford (Mr. Speed) and I are old friends and would never want to misunderstand each other. I said that compulsion would destroy it. The great thing at the moment is that attention should be drawn to the facilities so that they may be used.
That is even more unworkable than compulsion.
I accept that consultations with local authorities are important, and certainly the Opposition do not wish to see a net increase in public expenditure, but this is a matter of robbing Peter of a minuscule amount to pay Paul something that will literally keep him alive.
It seems that the right hon. Gentleman has not appreciated the seriousness of the crisis that many small shopkeepers face. My hon. Friend the Member for Norfolk, South and others of my hon. Friends have given the figures. It is no answer to say that Layfield will report. The right hon. Gentleman cannot commit his Government in advance to accept any recommendations from Layfield any more than I can commit my party. The right hon. Gentleman knows that it will take time to introduce legislation after Layfield has reported. There will have to be consultations with a wide range of people.
The fact is that small businesses are faced with extra burdens such as social security demands and multi-rate VAT. Their life was made more difficult when VAT was reduced from 10 per cent. to 8 per cent. They will now have to bear the increased cost of the vehicle excise licence. For many small shopkeepers, and especially those who run shops in rural areas, the increased cost of the vehicle excise licence together with the increased price of petrol will have alarming consequences on cash flow and profits.
I am sorry that the right hon. Gentle. man does not seem to realise the critical nature of the situation. I live next door to a small shop. It serves the small community in which I live. I can assure the right hon. Gentleman that small shopkeepers are working 60, 70 and 80 hours a week. They are often working those hours for fairly negligible returns. Their income is often being subsidised by police or fire service pensions. Such people are looking to the Bill to give them a small measure of help.
I know that my hon. Friend the Member for Norfolk, South will agree that this is an interim measure. If Layfield, or whatever follows from the Layfield Report, can solve the problem I shall be the first to cheer. In such circumstances I would offer my full co-operation. As my hon. Friend has said, the Bill has ample time to go through both Houses before 1st April 1976.
From my travels round the country and my talks with councillors of all political persuasions it is clear to me that councils now realise the critical nature of the situation. It is not merely the shopkeepers who put forward that view.
If the situation is as critical as the hon. Gentleman suggests, he should realise that the Bill does not include Scotland and that it would not begin to bite until April next year.
That is exactly the point I am making. The right hon. Gentleman knows that the Layfield Committee's report will not have any of its recommendations implemented before 1978, 1979 or 1980. By that time the problem will have become self-solving because I believe that many small shopkeepers and factory owners will say "Enough is enough". I implore the Minister to realise that this is not a propaganda exercise. This is a real and genuine attempt to assist the small shopkeeper.
I have discussed this matter with my hon. Friend and we have tried to find a solution that is workable. My hon. Friend has outlined all sorts of different ways in which the same result could be achieved. I think that in the Bill he has hit upon a procedure that could be implemented by local authorities. I do not know of any local authority association that would say that the Bill was totally impossible in terms of implementation and that it was necessary to wait another four or five years for the Layfield Committee's recommendations to be implemented.
It is extremely unhelpful of the right hon. Gentleman to give such a thin reply. It is only two days since he and I had an exchange in the House. Of course, we are old friends. I remind him of what he said on that occasion. He said that he was sympathetic as regards the introduction of legislation to enable local authorities to act as estate agents, to undertake the legal side of house purchase and to provide a wide range of community services such as funeral arrangements and taxi services. The right hon. Gentleman said that he sympathised with those general objectives. He said that on Wednesday, and yet he is denying small business men in particular the help that in many cases would keep them going. Against that he has said that it might be a good idea in future for local authorities to run many additional services themselves. That might well involve running them at a considerable loss.
The Minister's reply was very disappointing. I can assure him that he has not heard the last of this matter.
I am grateful for this opportunity to intervene for a few moments. I was here for the earlier part of the debate, and I wish to support what my hon. Friend the Member for Norfolk, South (Mr. MacGregor) said in moving the Second Reading. I made a special point of coming back to hear the Minister's reply, and I have to agree with my hon. Friend the Member for Ashford (Mr. Speed) that it was most disappointing. After all, the Minister of State told the House that everyone must share the burden. We understand that. The question is whether the burden is fair. Manifestly, it is not.
The National Chamber of Trade, which has done a first-class job in working out the differences in rate increases, has pointed to the vast anomalies which exist between one part of the country and another. My hon. Friend the Member for Norfolk, South highlighted in a nonpartisan way how these affect many constituencies, including those of many Government supporters.
I find it totally indefensible for the Minister to get up in his bland style and to skirt round the subject. If he had recognised the existence of the problem, he could have achieved some kind of rapport with the Opposition. He must understand that, in the light of the Budget, people like my boatbuilders in Littlehampton are facing a 25 per cent. increase in VAT which represents yet another body blow and that they cannot reconcile all these body blows coming so thick and fast with a Government who are clearly unwilling to recognise the problems which exist.
It is in that sense that I hope that in the closing minutes of this debate some all-party support will emerge for the idea that action must be taken at least to recognise the existence of the problem and to get down to tackling it. My hon. Friend the Member for Norfolk, South has tried. I hope that we shall continue to do so.
I think that there should be one voice from the Government benches which recognises the existence of the problem. Like many other hon. Members, I have had representations from businesses of all kinds, both small and large, and not only the corner shops but many others too. The hon. Member for Arundel (Mr. Marshall) spoke of boatbuilders. I have a number in my constituency, and they have raised their problems with me. Then there are those concerned with repair work. I have in mind, for example, small repair shops dealing with electrical goods. There are very many businesses of this type on which we all rely. They will be hit severely by the 25 per cent. rate of VAT.
These are matters which we shall be raising in the process of the forthcoming Finance Bill. We seem to have continuous Finance Bills nowadays. But it would be wrong for us to let slip through, even on Second Reading, a Bill which brings up a host of quite important matters, to some of which my right hon. Friend very properly referred. There is both the question of definition and the question of the task that a measure of this kind would impose upon local authorities to pick and choose the businesses which should get the type of relief suggested in the Bill. I suggest that such a task would be quite intolerable, if not impossible.
Apart from that, there is the major question of the Layfield inquiry. A great many representations have been made to it from all parts of this House, by our political parties and by a wide range of bodies all over the country, notably the local authorities themselves. It is ridiculous to suggest that we should pass a measure of this kind even on Second Reading. I do not mean by that that it would prejudice the workings of the Layfield Committee, but it would interrupt them and suggest that we had no confidence in the proposals that it was about to make.
In any event, the Layfield Committee has not been denied the opportunity to examine the position of small businesses. It is quite entitled to do that, and we assume that it will make some recommendations on the subject.
Therefore, I think that it would be unreal if we took the action proposed by the hon. Member for Norfolk, South, and—