I beg to move, That the Bill be now read a Second time.
Before detailing the provisions of the Bill, it is important to set out something of the background. Events in this field have moved very quickly indeed in the past few months, and the Government have responded quickly and flexibly to meet exceptional circumstances by exceptional measures.
There are two main questions which have been asked over the past few weeks. First, why did we have to have a revaluation? In Scotland, the law clearly lays down that there should be regular revaluations every five years to ensure that properties continue to bear appropriate shares of the overall rating burden. No one has argued against that in principle. While we have a rating system, it is only just that the relative values on which the tax is levied should be kept in line with reality and reasonably up to date.
In August 1983 the Government confirmed in the White Paper on rating reform in Scotland, Cmnd. 9018, that there would be a full Scottish revaluation to take effect from April 1985. Again, that was approved by all parties and by the Convention of Scottish Local Authorities. Indeed, it would be fairly difficult for anyone to argue in favour of perpetuating indefinitely a set of old and increasingly out of date relative values. There was no further justification for postponement, and the time when the 1985 revaluation could have been postponed in an orderly manner came and went.
The second question with which I must deal is: why could special help not be given earlier and in one tranche instead of several?
I shall come to that point. The hon. Gentleman is very perspicacious in these matters.
It was in the autumn of last year that the results of the assessors' work over the preceding months first began to become available. By the time of the rate support grant announcement on 7 December I had been made aware of the very substantial shift of rateable value away from manufacturing industry and towards domestic property. This was not, as some have suggested, an arbitrary or a political judgment of the assessors. It reflects the fact that over a period of seven years, in which there has been substantial economic change, the heritable assets of Scottish industry have not risen in value in the same proportion as the homes of the Scottish people. It was not surprising, and the Government's reaction to it was to use both the instruments available to me to moderate the general effects of the shift.
In December, therefore, taking account of the benefits that revaluation would bring to this sector, I made an order adjusting the level of industrial derating down from 50 to 40 per cent., and at the same time announced that the level of domestic rate relief would be increased from the equivalent of a penny in the pound to 5p in the pound. Those decisions were taken on the basis of indications from the assessors of what the average effect of revaluation on the different sectors would be: that domestic subjects would lose, commerce would neither gain nor lose, and industry would by and large gain.
In mid-February the assessors were required by law to deliver the new valuation rolls to the local authorities for publication, and swiftly thereafter it became clear to us that there would be some very large increases involved for domestic ratepayers once the local authorities set their rate poundages. In the few weeks between the publication of the rolls and the last date for setting of rate poundages, we decided exceptionally to increase the domestic rate relief yet further, from 5p to 8p in the pound, at an extra cost of £38·5 million. This was announced early in March.
Up to this point, we had been concentrating on the effects of broad movements of rateable value in terms of the averages for the different sectors. It seemed that, with the action already taken, domestic, commercial and industrial ratepayers could now be expected to live with the results of the revaluation as we saw them in terms of those average sectoral figures. We must bear in mind that it is the precise purpose of having a revaluation to reflect changes in values both upwards and downwards. It never was the purpose to ensure that nobody had an increase and nobody had a reduction. That would merely perpetuate the unfairness which revaluation is designed to reduce.
However, by the time everyone had received his valuation notice and then his rate demand, it became very clear that, whatever the average might be, there were still very many ratepayers whose valuation increases were so steep as to lead to unacceptably large increases in their rate bills. Many of these were in the commercial sector where, as I have said, we were aware that the overall effect of the revaluation was neutral. It is, however, of little help to know that the average effect of something is neutral if its effect on one's own business is fatal.
During March and April the evidence built up that the sudden effect of the more extreme valuation changes that 1985 had brought would be damaging and unacceptable. The Government decided that a limit should be set. With the average revaluation multiplier for all property being 2·33 times, the limit was fixed at three times. We are in no doubt that there are many in Scotland who, even after the new rebates, will continue to face hefty rate increases this year, especially in areas where the local authorities have been less than responsible in their budgeting. The measure before the House today is not able to, not is it intended to, bring down all high rate bills. It is, I repeat, an exceptional measure intended to tackle selectively the exceptional hardship which would be suffered by those individuals and businesses facing extrememly high increases in the rates that they would have to pay.
I now deal with the Bill itself and what is in it. It is deliberately short. It creates two new statutory duties.
First, there is a duty on rating authorities to give rebates to those whose valuations have increased more than three times between the most up-to-date version of the "old" roll, which was valid on 31 March this year, and the new roll which came into force a day later. The essence of the Bill is that it applies to properties for which this comparison can be made. If the comparison is not possible, the property cannot benefit.
The exclusions—listed in clause 1(2)—are: properties which are already valued by a statutory formula approved by Parliament, properties which benefit from their valuations being already reduced by statutory derating, and local authorities' own properties.
Properties occupied by the Crown — hospitals, Government offices and the like — are technically not liable for local authority rates as such, and the Bill does not therefore need to exclude them. The usual procedure whereby the Treasury valuer arranges for payments in lieu of rates will operate, unaffected by the Bill.
The second new duty created by the Bill is laid upon me, to reimburse the rating authorities the amount of all the rebates that they pay. The amounts of such rebates granted to ratepayers, and liable for reimbursement by the Scottish Office, will not be relevant expenditure by the local authorities and will not count against their guidelines.
The Bill is an enabling measure. I intend immediately after its enactment to bring to this House an order which will contain all further necessary provisions for operating the scheme, including the ceiling of £10,000 on the rebate on any one property. This order is being discussed with COSLA, whose representatives have already made several useful contributions. In particular, they have argued that it would be preferable for the rating authorities in the first instance to calculate and grant rebates rather than for ratepayers to send in individual claims. Only if someone feels that he has been missed out will there be a claim procedure to fall back upon. I agree with COSLA that this would seem desirable. As well as making for more economical administration, it will be less trouble for qualifying ratepayers.
I might add that it would be helpful if ratepayers did not write to their assessor or rating authority about this scheme at present. The assessors have plenty to do, with the many appeals against valuations now being lodged, and the Scottish Office intends to make sure by giving suitable publicity to the fact that those who may qualify for the new rebate will not lose out through inadvertence. Meanwhile, if a ratepayer judges that, because he may qualify for rebate when the Bill is enacted, he will be better off not paying his 1985–86 rates by instalments, he may of course opt for that, but he then becomes liable to make a lump sum payment at the end of September of the whole of his year's rates, less any rebate which his authority should have calculated by then.
The Bill does not limit the laying of such an order to this year alone.
I have one slight anxiety about the possible use of clause 1 in future years. My right hon. Friend may not wish to deal with the matter now and it could perhaps be dealt with in the reply to the debate. It is a technical point. The clause obliges rating authorities to grant rebate. I am not clear whether that provision could be used by a Secretary of State in future to be selective about which rating authorities would be obliged to do so, or whether the provision would always apply to all rating authorities.
I take my hon. Friend's point. The important thing is that the Bill makes it possible in future years to lay an order which is similar, or slightly different if such should be deemed necessary. I am not sure—I shall make inquiries—whether, if the Bill were passed by the House, it would be in order for a future order to be selective in its application. I should have thought not, but I shall check and write to my hon. Friend, or my hon. Friend the Under-Secretary the Member for Edinburgh, South (Mr. Ancram) might be able to deal with it in replying to the debate.
The Secretary of State referred to the number of appeals received by the assessors. Will he say something about the psychological effect that the Bill might have? People might not now be disposed to appeal, and that could have long-term consequences. It could mean that money was being paid out under an order which would be unnecessary if an appeal were allowed.
The hon. Gentleman's main point is right. The point of appealing is not, principally, to alter the amount that a ratepayer pays this year. The object of appealing is to ensure that the basic valuation upon which the rate is based is correct and just. If ratepayers feel that their basic revaluations are too high or in some other ways defective, they should still appeal, irrespective of the aid to be provided this year under an order which I hope the House will approve later.
To follow up the point made by the hon. Member for Fife, North-East (Mr. Henderson) about whether an order might discriminate between one authority and another, the Secretary of State must surely intend that all rating authorities as specified in the Bill — "Regional and Islands Councils" — will be treated equally. I hope that he will therefore make it clear that, however the wording of the Bill might be construed, he intends to treat all rating authorities equally with regard to rebate.
I appreciate the hon. Gentleman's point. I shall check to ensure that this is correct, but the Bill discriminates between classes of ratepayer, not between authorities. I believe that that is the answer, but I shall ensure that it is correct. I hope that my hon. Friend the Under-Secretary will be able to let the House know about that.
Finally, I come to the figures in the explanatory and financial memorandum. There has been a good deal of public interest in the likely cost of the revaluation rebate scheme and I should therefore like to say a word or two about that. At the time, a few weeks ago, when evidence was coming in about the effects of certain steep valuation increases, and the Government were deciding that these were not acceptable, we did not have direct and confidential access to the data banks or the data handling facilities of the Scottish assessors, and had perforce to make estimates of the prevalence and the nature of such extreme valuations on the basis of quite a small sample. Nevertheless, once I had announced the threshold multiplier of three, the rating authorities were enabled to use their computers to begin calculations of rather more accurate figures by matching up the entries on the old and new roles. We have consulted the convention, and the figures that it has given us are not yet complete.
While it looks as if the total cost should indeed be contained within the £50 million figure attached to the Bill, and may be a bit less, it is not possible yet to be sure what it will amount to, and not at all certain that the lower estimate of £30 million which has been mentioned in the press would be enough to cover all the rebates.
Whatever the outturn figure, the Government take the view that it is surely right in principle that ratepayers in Scotland should not suffer through sudden and unexpected changes in the tax base raising their valuations to levels greater than three times last year's. That is, and always was, the purpose of the scheme that we are debating today.
While there will be a number of details in the Bill which hon. Members will wish to question and scrutinise today, I am grateful to the Opposition for their undertaking to facilitate the passage of the Bill through the House.
That seems to be the normal procedure. As the right hon. Gentleman knows, there are procedures to be followed between Royal Assent and the coming into effect of the Act. I do not believe that that will cause any great difficulty, but if the right hon. Gentleman feels that it will I should be glad to hear any points that he would like to make. He may have a sensible point to make.
As I said, I am grateful to the Opposition—
The right hon. Gentleman will be aware from having read the Bill that various things have to be done between those two points. For instance, there has to be an Order in Council. That is bound to take some lime. If the right hon. Gentleman had been listening, he would have heard me say that I would bring in the order as soon as I could after the Bill had been passed by the House. I hope that he will feel that that is satisfactory.
Is the Secretary of State aware that if the Bill comes into effect two months after the Royal Assent, and the order cannot be laid until the Bill comes into effect, that will take us into the middle of the summer recess? Surely he will not introduce such an order during the summer recess. As I understand it, the Bill requires an affirmative order, and that could not possibly come in until about October or November.
It is a statutory instrument that must be produced. I am sorry if I misled the right hon. Gentleman.
As there is plainly some anxiety about this matter, I shall lay out a clear schedule of the likely timing. I understand that this measure is generally supported, and I hope that with the agreement of the House we can get the legislation through reasonably quickly. There will then be no delay in putting forward the necessary further procedures so that local authorities, assessors, and ratepayers can be in no doubt of their position. I hope that that is helpful.
It will be welcome to ratepayers in Scotland to see that their real concerns are being acted upon generously and decisively by the Government, and that Parliament can act quickly and with general agreement when there is a clear need to do so.
Monday is not the best of days for the Second Reading of a Scottish Bill but I do not think that there will be too many complaints from Conservative Members. One feature of Scottish politics is that the Conservative party, which used to campaign with some elan and enthusiasm on rating, now finds the issue a deeply embarrassing one. It was clear that the Secretary of State did not have his heart in the job this afternoon. His arguments were cursory and simplistic.
The Bill provides a measure of relief for the hard-pressed Scottish ratepayer and that is why we are allowing it to go through on an expedited timetable. I was surprised when the right hon. Gentleman explained to my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) that a delay of two months is normal. We are using abnormal procedures to expedite the Bill's passage and to help the Government and for the right hon. Gentleman to plead that it is normal to have delay against that background is remarkably irrelevant.
If the Bill is to give anything to the ratepayer in Scotland, we shall give it a helping hand. However, the measure has been born out of a great deal of indecision and confusion. It is the product of a good deal of disordered panic in the Scottish Office, which over the past few months has become the mark of this Administration.
The Secretary of State took us through the history of the Bill. He seemed to suggest that there was almost a master plan. He implied that the necessity for the Bill had been seen months ago. It is usually the hon. Member for Edinburgh, South (Mr. Ancram), the Under-Secretary of State for Scotland, who comes up with that sort of earnest alibi, which he utters implausibly. The Secretary of State has rather disappeared from the Scottish political scene of late. However, both the right hon. Gentleman and the hon. Gentleman agree that the provisions in the Bill were all foreseen. That alibi is implausible. First, the domestic element was set at 5p. The Government admittedly produced £19 million and £31 million had to be produced by local authorities. The £31 million was clawed from the already reduced services provided by the authorities. The Government's attitude at that time was "Not a penny more".
The heat came on and suddenly and mysteriously £38·5 million was added to the domestic element. That sum was ripped out of the Scottish Office budget. Again the Government said, "Not a penny more". However, another £50 million has been found to save the Secretary of State from the wrath of his own supporters. The week at Perth must have been one of the most expensive weeks for the country and the Treasury for a long time. However, the result appeared to offer some help and much needed relief for the Scottish ratepayer. I suppose that we were all supposed to go home happy at the end of that little performance.
We have seen Ministers being driven from pillar to post. They thought at each step that they would get away with it but at each step the public's wrath mounted and each time Ministers had to produce something else because they had it lamentably and politically wrong. Once a Government lose control—there is a lack of confidence and grip in the Scottish Office—it is extremely difficult to re-establish any form of authority.
I did and I am proud of it. I think that it has the ring of truth for most people in Scotland, who are not impressed by what has been happening in the Scottish Office. For a long time the press machine of the Scottish Office was telling us that the Secretary of State had earned a glittering prize and that he had done so well that he should be promoted. However, his friends, with endless ingenuity, are now saying that the right hon. Gentleman must be moved because he is a liability. At least that has a kernel of hope for most of us.
As I have said, any help for the Scottish ratepayer is welcome but the help which the Government are providing is on the margin. There is no doubt that the scheme that the Secretary of State has introduced will result in many inequalities. There will be rough justice and much discontent when it is seen in operation.
I accept that the scheme is based upon rateable values and is designed to take the peaks out of the effect of revaluation, but the public think very much of what they have to pay at the end of the day. It is no doubt well known to the Secretary of State that some domestic properties which had a rateable value of £300 have had that valuation increased to £900. The threshold in Glasgow will be 39 per cent. and in Aberdeen it will be 19 per cent. A similar picture emerges for commercial property. An increase of 53 per cent. in Glasgow will not qualify for relief but in Aberdeen relief will be triggered by an increase of 37 per cent. I recognise that there may be a logic in the Government's argument but it turns on rateable value and has nothing to do with what people pay at the end of the day. It is the effect of the Bill that the public will judge. The examples that I have given can be extended to other areas, including Tweeddale. There will be problems and the right hon. Gentleman should address himself to them.
The Secretary of State has a better case on the commercial side than on the domestic. I reckon—I have been helped by COSLA—that the concessions in the Bill will amount to about 4 per cent. of the total bill for the commercial sector. There will not be a great deal of gratitude from anyone for that because many people will still face substantial increases. However, I accept that there is something of consequence in the Bill.
I understand that slightly more than 50,000 commercial properties will benefit following the Bill's enactment. That sounds pretty impressive but it must be put into perspective. I have no doubt that the Minister has been giving some thought to what has been happening. In Tayside, for example, about 12,700 commercial properties will benefit from this form of rate relief. That is the good news. The not so good news is that 8,000 of those properties are lock-up garages. Does that suggest to the right hon. Gentleman as it does to me that the scheme has produced an unintended consequence, or is it a piece of careful Conservative planning? If that example is projected throughout Scotland — I do not suppose that there is anything particularly unusual about Tayside—a picture emerges that is different from the one that might be expected.
The concession for the domestic ratepayer is extremely thin. There will be marginal assistance for a few but there will be nowt for the vast majority. There is an air of unreality about many of the arguments that have been advanced. For example, there was a pompous announce-ment by the Scotish Office in the text of a reply to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen). The impression was given that the Government were introducing an important concession by means of the £10,000 cut-off on individual properties in the domestic sector. Is there a property in Scotland that will benefit from that cut-off? If there is —perhaps the right hon. Gentleman is more expert than I am on stately homes—I have no doubt that we shall be told when the Under-Secretary of State replies. Perhaps there is a marquis or duke somewhere who will benefit from the concession. Who knows, there may be a more humble chatelaine who is saying his prayers and counting his blessings.
We have said consistently to the right hon. Gentleman that he might want to consider a cut-off, but we did not consider a cut-off of £10,000. Surely that concession has the air of a make-believe figure. There is little in the Government's concession for the owner-occupier at the bottom end of the market. I suspect that there is even less for the council house tenant.
There are houses in the Garscadden constituency that will benefit from the Government's scheme. There are some that will enjoy an advantage but not very many. I have taken some examples of houses in Knightswood. I do not claim that it is an enormously rich and sensitive sample but it is one that produces some interesting facts. It is a scatter of individual examples of rateable values that have increased by a factor of more than three. The greatest saving will be 6·6 per cent. on the new rates bill. The smallest saving in my constituency is 0·5 per cent. in the sample that I have considered. The greatest cash reduction will be £31·71 on a bill of £591. However, I have considered only a handful of properties and the majority of my constituents will get not a penny piece. The bleak reality is that many will face increases in their rate bills of 30 per cent. or 40 per cent. and will receive no help from the changes that are being introduced.
I am sorry to keep interrupting. The hon. Gentleman is an advocate of revaluation and, indeed, supported and pressed for it. What does he suggest should happen? He says that the Government are giving help to people with exceptionally high increases, and he supports revaluation, so what does he want?
I shall come to that, and the right hon. Gentleman will no doubt await my reply with interest.
I am establishing the simple point that large numbers of people who rightly feel hard pressed by the increases in their rates bills will not be assisted. We shall wish to ask many questions in Committee on Wednesday. I was delighted to notice in the Daily Express of 30 May, for example, a direct quote from the Secretary of State, which stated
Mr. Younger admitted that the figures for the original calculations were hurriedly produced.
'They were necessarily speculative,' he said. 'But the whole matter will be thrashed out in Parliament next week.
I look forward to the exciting Wednesday that we shall have. Today, I shall give the right hon. Gentleman a taste of some of the points that we shall raise on Wednesday, and which will be the subject of specific amendments.
The first relates to the take-up. I recognise that there is an element of error and that there may be some minor changes. I have examined the figures from COSLA, which were produced by running the new and old rules through all the major rating areas to extract the properties that are eligible for benefit. COSLA is confident that the pay-out will be, not £50 million, but £29·5 million or near to it. It will not do for the Secretary of State to say in a lordly way that the figure may be less than £50 million. Any reasonable calculation shows that it will be a hell of a lot less.
It is remarkable that COSLA was consulted about this rickety scheme for the first time only last week. A shortfall of £20 million is unacceptable. The Secretary of State is trying to buy peace, and if he does that he must pay the price for it. If £50 million is to be shaken from the piggy bank of the Chancellor of the Exchequer, it should be spent as was advertised at Perth. We shall want assurances that that money will be devoted to relieving the pressure on Scottish ratepayers.
I accept that there may be difficulties in simplistically dropping the multiplier, because if we reduce it by even a small amount we include an enormous slice of the total properties in any one sector. However, we shall certainly table an amendment to give the power to include other classes of ratepayer, and to vary the present rules. If that is impracticable, the right hon. Gentleman may consider whether he should put a further l½p on the domestic element, which would benefit every domestic ratepayer, and which would be covered by a figure short of £20 million, which it appears will become available.
I do not know how much weight there is there. The hon. Member for Strathkelvin and Bearsden (Mr. Hirst) has always struck me as being a slight figure in every sense of the word. 1 certainly welcome his help, for what it is worth. To be fair to the hon. Gentleman, he is right to say that it would be unacceptable to hon. Members if £20 million were returned to the Treasury as some sort of baksheesh for the mandarins there. It should be used for Scottish ratepayers, and on Wednesday we shall want the Secretary of State to deal with that issue.
Secondly, there is the question of the future of the assistance during the latter part of the quinquennium. Obviously, this is a rescue package designed for 1985–86, but what will happen in the second, third, fourth and fifth years when the revaluation is in operation? The right hon. Gentleman is a reluctant Samaritan in the first year, and there will be a great deal of disappointment and anger if he allows the victim to be sandbagged in the second year and leaves everyone to meet the full impact of revaluation. It is important that we move away from the present provisions which permit the continuation of the system in the latter part of the quinquennium, and that we receive guarantees from the Secretary of State.
I do not like raising unpleasant subjects, but recently there was an unpleasant incident in Scotland when the Chancellor of the Exchequer visited Perth. The Glasgow Herald of 11 May quoted the Chancellor as saying that
he… had bailed out Mr. George Younger… in his crisis with… 'exceptional extra funds'.The Guardian of 11 May stated that the Chancellor said:
'"No more money is likely for Scotland next year. I don't think he (Mr. Younger) will find me in the same compassionate, open-handed and generous mood next time'.
From that, it appears that we must help the Secretary of State in his fight against the Chancellor over what will happen in future years. I hope that Conservative Back Bench Members will support us in that fight. I cannot think of anything that would put their marginal seats in more jeopardy than, having mounted the rescue bid for the coming financial year, abandoning it in future. They should join us in tabling amendments, which will buttress the Secretary of State's efforts by placing on him a statutory duty to continue this system at some level during the remaining years. That would help the right hon. Gentleman greatly in his fight against the Chancellor. I genuinely hope that there will be all-party support for the amendments, and that Conservative Members will join us in the Lobby on Wednesday.
The third question relates to administrative expenses. The financial memorandum suggests that they will amount to £1 million. I do not know whether that is accurate, but the figure will be substantial. It will be necessary to identify the people who will be entitled to some form of rebate. In many cases it will be necessary to call in and adjust or issue new payment books for those who pay on a 10-instalment basis. Despite the strictures of the Secretary of State, there will be a great volume of work dealing with inquiries from disappointed and enraged people, who find that they are entitled to nothing. As the Secretary of State said, at least by implication, there will inevitably be a considerable delay in collecting rating revenue compared with a normal year, and, as a result, interest charges for local authorities will rise.
By operating the formula we have the power to reimburse the money given to the ratepayers. Perhaps the Secretary of State will tell us when that reimbursement will take place. It will not be satisfactory if local authorities must wait until the start of the next financial year. I hammer the point that there is power to reimburse, but no power to reimburse the expenses which, according to the explanatory memorandum, will fall entirely on local authorities. I am grateful to the Secretary of State for what I believe to be an assurance—I shall read what he said —that we shall not be in the black farce in which that will be counted against guidelines, and prayed in aid in evidence of excessive and unreasonable expenditure. We want a guarantee. It would be perfectly fair for administrative expenses to be refunded to local authorities. They should not be asked to foot the bill for the Secretary of State's incompetence.
We would normally discuss at length an enormous number of further points. I am glad that the Secretary of State has shifted his ground regarding whether there should be individual applications or whether the onus should be on local authorities. In his statement of 14 May he made it clear that he was thinking in terms of individual applications. I welcome the fact that he has written to COSLA on that point.
At present there is no appeal mechanism in the Bill, and presumably anyone with a grievance will have to go to judicial review, which means to the Court of Session. I suspect that effectively there can be no appeal. The right hon. Gentleman should also consider that point.
The whole thing is shot through with anomalies which will cause difficulties. The amount of money, while not very large, will cause irritation. For example, it will be somewhat anomalous if someone buys a house half way through the year without paying the rateable value in the previous year. In a row of houses under completion, there could well be cases—I can think of some in Glasgow— where one of them will have been occupied in time to get on to last year's roll and will qualify for assistance, while others with identical rateable values on the new roll will not qualify. That is bound to cause problems.
Difficulties could also arise over disabled persons' rating relief. If there is a variation in the discount on the rates payable during the previous year, it could well be that the payment has gone up by more than a factor of three whereas the rateable value has not. In such circumstances, will a person qualify for this relief? An enormous number of detailed points such as those can arise, and I have no doubt that the Parliamentary Under-Secretary will do his best to deal with them.
Is the hon. Gentleman saying that he envisages a situation in which the revaluation goes up by less than three times while the rate of payment increases by more than three times?
Yes, because of a change in the special discount allowed to disabled persons. I have quoted cases where that could happen. I concede that it is a marginal problem, but it could arise. I instance that as an example of the rough justice that could result from the Bill.
Many of my hon. Friends will want to take up general points during the debate, but I am sure that I speak for all of them when I say that we take very little satisfaction from what, on the whole, has been a sad and sorry tale. The whole thing began with the revaluation saga, and the Secretary of State is never blate in suggesting that I pressed for the revaluation to go ahead. Initially, revaluation was on; then it was partially on; then it was off. Ultimately, it proceeded with the maximum of confusion.
I certainly agree that there must be revaluation in a rating system, otherwise anomalies will grow. But we cannot have a rating system or revaluation when that is combined with ruthless and relentless cumulative cuts in the rate of central Government support—where there is a determined effort, as there has been over recent years, to shift the burden from the Treasury to the individual ratepayer.
The figure that we have used again and again is central to the argument. COSLA has calculated that had the percentage of rate support grant been held at its 1980–81 level in the intervening years since then, local authorities would have had another £1,000 million of central Government support. Revaluation has been the final insult. It has certainly been a tremendous blow to individual householders. But the real problem and complaint is that the amount of money to be paid has been rising, directly reflecting the policy of the Secretary of State. In that sense, he has been his own executioner.
Ministers have been ambushed, and realise that they are in mortal danger. That is why we have had a rout and scramble for safety over the last few months. Indeed, the difference a few weeks makes is extraordinary. On 5 March, in an article in The Scotsman, the Parliamentary Under-Secretary, the hon. Member for Edinburgh, South, said:
we had to accept that the routes"—
to rating reform—
which had been examined were unacceptable and that for the time being we would have to continue with the rating system".
He was asked specifically if he favoured changes in the rating system and whether he ruled them out. He replied:
I do not think you can rule out anything for ever".
Three weeks later his political master was sounding a retreat, and the hon. Gentleman was duly spinning on his heels and heading in exactly the opposite direction.
It is worth remembering the reason why that was done. Indeed, the right hon. Gentleman was engagingly frank about the matter. He said:
We have had one go at trying to reform rates and everyone was against the alternatives. This time we have to deliver. Not acting at all means there will be severe political consequences".
That was the great pilot's statement of principle. The Minister knew that the political ground under his feet was shifting and that he had to scramble to save not only his seat but those of his hon. Friends. We are now committed to we know not what. All we know is that a manifesto pledge will not be enough. We know from the right hon. Gentleman's speech at the Tory party conference that there will be a scheme by the end of this year, but I suspect that when that pledge was given Conservative Members, including the Secretary of State, did not have a clue about what they would do or how they would do it.
Perhaps the hon. Gentleman will use this opportunity to answer a question that I put to him previously. Does he and his party favour finding an alternative to the rating system, and, if so, will he clearly say so?
I am happy to state our position. We will look very hard at the alternatives — [Interruption.] Conservative Members laugh at responsibility. I suppose that they must, because they are strangers to it. I believe that there is a very strong case for local income tax because it meshes with our plans for a Scottish Assembly and the financing of it. We shall look carefully at that. However, we shall not go in for some hastily cobbled together solution based on expediency and political opportunism and, I suspect, a strong dash of fear, and which will not provide any real basis on which local democracy can flourish.
No, I shall not give way.
We want to see a sensible reform of the system, but we shall not adopt the silly course of promising something without knowing exactly what it should be. That has been a mark of recent months. We at least shall try to keep in touch with reality, responsiblity and our duty to local democracy and the system in Scotland.
The responsibility for the present problems lies squarely with the Secretary of State. The disarray and distress behind him is a mark of that. A few moments ago the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley) said that as a result of present incompetence in the Scottish Office she predicted that only four Scottish Conservative Members of Parliament would be left after the next election. The hurried and ill-prepared scheme which is now being talked about will reflect that calculation rather than any real basis of principle. This is all too obviously a deathbed repentance on the part of the Secretary of Sate, and deathbed repentances are seldom convincing. He and his hapless friends will not be saved, because he has not brought forward the kind of relief for the hard pressed ratepayers of Scotland that the crisis demands.
I am glad that the hon. Member for Glasgow, Garscadden (Mr. Dewar) said that he welcomed the Bill. He said that any help is welcome, and this measure will be very welcome to the large number of my constituents who are affected. The hon. Gentleman also referred to years two, three and four. The reform of the rating system may have gone through well within that time scale, and I for one very much hope that it has.
I welcome the Bill and regard it very much as a stage in the continuing process. After all, the Secretary of State increased to £88 million the domestic element of the rate support grant. That means relief of £40 on a value of £500, and more on higher values. I take as just one example shopkeepers in my own constituency. One lady selling clothes found that the rateable value of her shop went up from £650 to £2,800. A great many like her will benefit from the Bill. It is encouraging that relief will be at least 100 per cent. in respect of that part of the rates bill relating to total valuation that is more than three times the revaluation for this year.
The upper limit on total relief will relate to the property concerned to allow maximum help both for successful small businesses and for businesses in general throughout Scotland. That will be important to many people. I hope that my hon. Friend the Under-Secretary of State will do everything within his power to identify those concerned as soon as possible so as to make it certain that those who are entitled to claim are aware of their rights.
This morning I received a letter from the National Federation of the Self-Employed and Small Businesses, which raises a question about appeals that has already been touched on by the hon. Member for Garscadden. It says:
We also urge you to ensure that this relief will not act us a disincentive to the ratepayer exercising his right to appeal".
I ask my hon. Friend to look at this matter bearing in mind expenses. For most appeals, costs are probably minimal. They start off with a letter, which the assessor may accept. In one case in my constituency, where a railway stop has just been established, the assessor has automatically accepted the appeal at no more expense to the appellant than a postage stamp. However, if appeals mean substantial expenses and having to go through a long detailed court case, it might become counter-productive for the person to go ahead with the appeal. I hope that, before the Bill is finally passed, some guidance will be given.
The federation has said that in one case an assessor increased the rate from £1,100 to £13,000. This means that rate relief can be claimed on £9,700 and as local rate poundage is 70p, relief will be £6,790. On the federation's advice, the person concerned was appealing, but in that case the assessor had already offered to reduce the valuation from £13,000 to £5,000.
The assessor may act reasonably in most cases, but I can give an example of him acting unreasonably. When Edinburgh airport established a new runway, the assessor refused to accept that there should be any difference in rateable value, although the new runway was pointing straight at the citizens concerned. They had to go through an expensive case, at the end of which the rateable value on their properties was reduced.
My hon. Friend has quoted an example of an assessor in Edinburgh reducing an assessment from £13,000 to £5,000—a cut of £8,000. Does my hon. Friend accept that this answers the case that we have been endeavouring to put forward, that assessors have merely been taking figures out of their heads and applying them to anybody's household, to such an extent that the increases are unacceptable to most people?
I cannot tell my hon. Friend about the exact circumstances as the case was put to me by the National Federation of the Self-Employed and Small Businesses. However, I think that in most cases the assessors tried to act professionally, although in some cases they were way out. I invite my hon. Friend the Under-Secretary of State to give some guidance about appeals if there is any danger that substantial expenses may be involved.
When the statement about this Bill was originally made, I flew straight up to attend a large meeting of ratepayers at which one of the assessors was speaking. He said that what we would be doing today represented a distortion of the system, and in a sense it is. However, that serves only to underline the need to reform the rating system generally. I was glad to see that, as part of the transitional arrangements, clause 1(6) makes it clear that the Secretary of State will be enabled to continue these arrangements next year, should the necessity arise. By then we shall know a great deal more about how successful in giving assistance this has been. We may need to modify the scheme depending on the representations that we have received from interested parties.
Recently, I tried to discover the difference in rateable value between properties north and south of the border. A few days ago, I received an interesting reply from my right hon. Friend the Prime Minister. She said:
It is in the nature of a system based on evidence of local rental values that the valuation of similar buildings will vary both within a locality and from one area of the country to another. The detailed legal basis for the valuation differs in Scotland and more importantly Scottish figures are now shown at the levels of 1985–86 revaluation while those for England and Wales are set in relation to the 1973–74 revaluation.
The significant part of the letter says:
On the domestic side, it may be reasonable to look at the average rate bill for a domestic property. The Scottish figure including the domestic water rate is £397 in the current year as against around £430 in England when water charges are included. Even with these figures there is the difficulty that the mix of properties may not be comparable as between houses and flats, urban and rural property, owner-occupied and local authority owned housing.
As there are far more local authority houses in Scotland, it is difficult to get a comparison, but I can say with certainty that in Edinburgh the rateable values for commercial, industrial and domestic properties have increased far more than in East Lothian, Midlothian and West Lothian.
I shall look up the facts and try to answer the hon. Gentleman's question. The same may apply in the countryside outside Aberdeen.
John Lewis, the large department store in Edinburgh, has compared the rates that it has to pay with the rates that John Lewis in Oxford street, London has to pay. It says that the rates paid per square foot in Edinburgh are 20 per cent. higher than those in Oxford street. The store fears that it may soon have to pay twice as much in Edinburgh as it does in Oxford street. In a letter to me, the managing director says:
I need scarcely point out that Oxford Street is perhaps the finest trading pitch in the world and that our branch there enjoys an island site with extensive frontages at shopping level, whereas in Edinburgh we are in an essentially secondary location with no exposure to the principal shopping thoroughfare.
My hon. Friend the Under-Secretary is bound to take into account the overspending of Edinburgh district council, which is 48·3 per cent. above the guidelines, which would increase the district rate by 79 per cent. I made inquiries as to what it had been spending on. More than £100,000 worth had been spent on propaganda.
Might not the trouble be with the original assessor? The hon. Gentleman will no doubt have received, as most of us have, a letter from the Football Association in Scotland, with a copy of an article by the chairman of the Celtic football club. In it, he claims that his club paid more in rates in one year than a leading English club paid in 25 years. Are not the assessors to blame for the enormous discrepancies rather than local councils?
That may be so in certain cases and I am making inquiries into that case. However, in the case of John Lewis in Edinburgh, the rise in rates has had much to do with the expenditure by the council.
I can give examples of the £100,000 that has been spent on propaganda. More than £10,000 was spent on a full page advertisement in the Edinburgh Evening News. Some £3,900 was spent on hand-painted banners and some £1,300 on the erection of the banners. One poster says, "Support Democracy". We all support democracy, but it is not necessary for us to spend more than £1,000 in doing so. Producing art work for posters cost £3,873, 48 sheet posters cost £4,810 and so on.
When the interests of those involved in the local economy are at stake I hope that my hon. Friend the Under-Secretary will take such expenditure into account because selective action may become a necessity if the local economy is to survive. The director-general of the Retail Consortium spoke about the Bill in a letter that arrived today.
I do not think that there is any connection between the two. If there is overspending of £100,000 on propaganda, that is not what the ratepayers want. There has also been £150,000 spent on a new women's committee. If one scrutinises the accounts carefully, which I have no doubt we shall do in a future debate, the position will become clearer, but I think that it is a pity that we should have to go over the same course as that followed by Lothian regional council a few years ago.
If the Labour party wants to indulge in propaganda, that is entirely legitimate in a democracy provided that it pays for it itself and does not expect the ratepayers to pay for it. For example, if Fife regional council wants to support striking miners, which bring disaster to the Fife economy, Labour party members should use their own money and not expect ratepayers to foot the bill.
I agree with my hon. Friend. The significance of this is felt by many shopkeepers, who will not benefit from this measure. For those who are affected by overspending of the sort that we have seen in Edinburgh, it must be taken into account.
However, a much more fundamental issue is the reform of the rating system, and I am glad that a review has been set up to find a fairer scheme than the existing rating system and a fairer and clearer way of distributing rate support grant. At the Perth conference, the Prime Minister said:
We have reached the stage where no amount of patching up the existing system can overcome its inherent unfairness.
There is a vital need to reform the system. In fact the director-general of the Retail Consortium said that there requires to be "a change of attitude by local and national governments, away from rates being regarded as a tax on the occupation of property to that of a reasonable payment for the value of services actually received and equitably allocated." I hope that the reform of the system will take place within the lifetime of this Parliament, finally and irrevocably in the interests of fairness and justice.
Like my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), I give a cautious welcome to the Bill. I put it no higher than saying that I am not opposed to it. It is born of the statement by the Secretary of State at his own party conference in Perth, although later he made a statement about it here as well. It reminded me of a Budget statement. I have listened to a great many Budget statements. They always seem good when they are first heard. But, after two or three weeks' reflection, doubts begin to emerge. That is my view of the Bill and of the statement by the Secretary of State at his party conference.
At first glance, it seemed that a great many people would be assisted and that all would be helpful. But now we begin to wonder about the extent to which the average commercial and domestic ratepayer will be assisted and, more to the point, which of our domestic and commercial ratepayers it will help. That does not come through clearly to me either in the Bill or in the speech of the Secretary of State today.
My third worry arises very much from what the Secretary of State said in his 16-minute speech because, only a few weeks ago, I was chided by the Parliamentary Under-Secretary of State for saying that I thought that the Government's proposal had been hastily conceived. I was extremely worried when the Secretary of State said that even now he did not have all the information from the various assessors, computers and all the paraphernalia available to him. That proved what many of us had been thinking—that the Secretary of State only a few days before his party conference plucked a figure and a formula out of the air. It was all far too hastily conceived, and that does not make for very good government.
Like my hon. Friend the Member for Garscadden and the hon. Member for Strathkelvin and Bearsden (Mr. Hirst), I hope that this £50 million will be spent fairly and squarely on domestic and commercial ratepayers. However, what is sometimes fogotten by many right hon. and hon. Members is that the £50 million will come not out of some fairy grotto beneath New St. Andrew's house, but out of taxpayers' pockets, and the taxpayers are entitled to a better report from the Secretary of State than they had in his 16-minute speech about how the Government's proposal will be administered. Certainly before I give the Bill unqualified approval, I want to hear a great deal more about how the money will be spent, because taxpayers are entitled to more information about it.
My main concern is with the domestic ratepayer. I have spoken to dozens of my constituents and, as yet, I have not found one who will benefit from this proposal. Not one will meet the requirement specifying a threefold increase in the valuation of his property. Most of them come very near three times—2·7, 2·8, 2·9—but not three times. That means that they will not benefit in the way that many of them had hoped. I must stress that these are not crummy houses. They are houses in the Burnside or Kirkhill areas of my constituency which the hon. Member for Moray (Mr. Pollock) knows well. They will not benefit, so I wonder who will benefit.
The people who give me great cause for concern are the young people who have been encouraged by this Government and others to buy their homes. They have bought three-roomed and four-roomed houses taking on huge mortgages, and they are now working on very tight budgets. Their valuations have been increased, but nothing like three times. They will still be asked to pay a great deal more in rates, and that will be very difficult for many of these young people. They are the people who concern me most of all because they will not get one penny piece.
Many of us want to hear from the Parliamentary Under-secretary of State who among the domestic ratepayers will benefit in any way. Apparently only those with large and comfortable houses will benefit. We did not hear a great deal from the Secretary of State about that. However, we are sure that the people who will be paying the extra money in the form of tax to raise this additional £50 million are those young people who are buying their homes on huge mortgages. It is they who will be asked to pay extra tax to help those who are a great deal better off than they are. That does not seem to be right. These young people are being asked to subsidise those who are better off than they are.
I shall not say much about the commercial sector, but I hope that in the weeks ahead the position will be made much clearer. From the correspondence that hon. Members have received from the National Federation of the Self-Employed and Small Businesses and the Retail Consortium it is clear that commercial ratepayers themselves are not sure how their problems will be sorted out. The Secretary of State was kind enough to concede some months ago that the problem was being dealt with in a piecemeal fashion, which cannot be good for the rating system in Scotland. It appears to many people that the rating system is turning into a shambles.
We do not know what will happen in the years ahead. Even the Secretary of State does not know. It appears that the only person who knows is the Chancellor of the Exchequer, judging by his comments at the Perth conference. However, most of us want to take a fundamental look at the rating system. Legislation such as this will not help Scottish ratepayers for ever more. We must examine the system fundamentally. I hope that the Government will iron out the anomalies in the systems in England and Scotland as Scottish people feel that they are being penalised. I should like there to be just one system for the whole of the United Kingdom. The Secretary of State has time to work something out with his Cabinet colleagues. I hope that they will come up with something better than this piecemeal approach.
We were told recently at Question Time that the Government are considering how to raise local government money, whether by income tax or some form of poll tax, which would be reprehensible. I hope that the matter will be given much more thought than has been put into the Bill. I do not favour change for the sake of change. There are deficiencies in the present system, but it is better than some of the hare-brained notions that have been put about recently. I am merely asking the Secretary of State to give the matter a good deal of thought and to devise a sensible system which applies to the whole of the United Kingdom and is fair to the ratepayers of Scotland.
I am grateful to you, Mr. Deputy Speaker, for calling me sufficiently early to enable me to host a dinner downstairs on behalf of a colleague who is not here today. I therefore apologise to the Front Benches and to the House if I am absent during the winding-up speeches.
We were led to believe that the Opposition would give this welcome measure constructive support. The support given by the hon. Member for Glasgow, Garscadden (Mr. Dewar) was somewhat half-hearted. The Opposition's new found enthusiasm for the cause of ratepayers seems a little synthetic when we consider what the hon. Gentleman's comrades are doing in Edinburgh and Stirling. Unlike him, I have no hesitation in welcoming this measure to help those who are worst affected by revaluation.
I congratulate my right hon. Friend on his success in getting money from the Treasury to provide relief. That success should be contrasted with his reception when he announced additional rate relief. The Opposition could only crib that it was a reallocation of the Scottish Office budget.
I am pleased that it has been possible to assist commercial and domestic ratepayers who were hardest hit by revaluation. It is preferable that domestic ratepayers be helped selectively as indiscriminate rate relief would not target relief on those whose rates bills are highest. I hope that my right hon. Friend will continue to take a firm line on local government spending. I have heard some councillors, who are not of my persuasion, suggesting that this is a safety net under ratepayers with the highest valuations and that they can continue to spend without conscience.
I spoke to the finance director of Strathclyde regional council last week to discover how many of my constituents will benefit as a result of the Bill. I am grateful to Mr. Paterson and his staff for digging out the information for me. In Bearsden, 421 commercial ratepayers, or nearly 30 per cent., will benefit. In Strathkelvin, 658 commercial ratepayers, or 27 per cent., will benefit. Those are the highest percentages in Strathclyde region, and they confirm that rateable values in my constituency are excessively high. I hope that ratepayers will avail themselves of their right of appeal to get justice.
The story is rather different for domestic ratepayers, 243–1·71 per cent.—of whom in Bearsden will benefit and 979–3·3 per cent.—of whom in Strathkelvin will benefit. I see that 36,000, or 12 per cent., of ratepayers in Glasgow will benefit. It is not fair for the right hon. Member for Glasgow, Rutherglen (Mr. MacKenzie) to tell the House that he knows nobody who will benefit. I cannot believe that some of those 36,000 people do not live in his constituency. I am sure that 12 per cent. of my constituents will be pleased to qualify.
Strathclyde regional council has advised me that £14·6 million will be available. I appreciate that my right hon. Friend is unable to announce the bill for Scotland, and I understand his difficulty in putting the scheme forward on the basis of insubstantial information. I am nevertheless glad that he was prepared to push for the scheme. However, it seems that there will be a shortfall which may be significant. I appreciate that eligibility should be set down in the Bill, but is the revaluation of three immutable? Could some other figure, which used up the money, be applied?
I stand by what I said to the Evening Times last week when I was asked for an instant reaction to the news. I have no fear about saying one thing in Scotland and quite another here. I congratulate my right hon. Friend on persuading the Treasury to come up with an extra £50 million.
It is worth repeating. I hope that it will be possible to ensure that the majority of the money is spent.
I am glad that the Bill provides for the scheme to be continued. Although it is unrealistic to expect my right hon. Friend to give commitments about spending in the future, he will have the undivided support of this side of the House if he can continue this form of relief until a replacement for rates is found. I am sure that my right hon. Friends on the Front Bench know that the burden that this year seems to be so intolerable to those who will qualify under the scheme will not be lightened next year.
There is one point upon which I should be grateful for clarification. I recognise the benefits of a simple Bill. I recognise also that certain categories will be exempted. However, I should be grateful if my hon. Friend the Under-Secretary of State for Scotland could deal with the position of the quarrying industry. I understand that quarrying is treated like any other normal industry.
However, certain quarries have experienced an enormous increase in their valuations. I understand that quarries qualify for industrial derating, but, in view of the references which have been made to legislation, I should be grateful if my hon. Friend could let me know whether the quarrying industry will qualify for relief.
I strongly support the request of the hon. Member for Strathkelvin and Bearsden (Mr. Hirst). In my constituency, the rateable value of a quarry will rise 2·9 times—2·9 being a very significant figure — from £27,000 to £77,400. I hope that the Under-secretary of State for Scotland will answer the point made by his hon. Friend.
One of the interesting aspects when legislation comes before the House is that letters are sent to Members of Parliament. I expect that all Members have been bombarded with letters about the Bill from the Retail Consortium and the National Federation of the Self-Employed and Small Businesses, which, incidentally, were asking for a much smaller sum than is now on offer. One of the benefits of such letters is the constant reference by the retail sector to the damage that high rates do to businesses.
During the past week I have spoken to a number of small business men, one of whom recently opened a second shop which is facing a rates increase of 96 percent. That man will benefit from the legislation, and he is very pleased about that, but he will still be faced with a significant increase in his overheads. His comment to me was, "Well, Michael, we hoped to take on a school leaver this year, train her in the business and provide a job for another person. Unfortunately, because of the rates increase, that will probably not be possible." I took the opportunity to remind him that the lion's share of the rates increase will go to Strathclyde regional council, which is still spending £43 million in excess of Government guidelines.
Bearing in mind that comment, the Opposition seem to be showing synthetic concern for commercial ratepayers. Only a few months ago they wrote in their campaign briefing:
There isn't a single shred of evidence to show that rates force firms to lay off workers or deter new businesses from starting up.
I welcome the conversion of the Opposition, whether on the deathbed or not. I hope that when they return to Scotland and redraft their campaign briefing, they will be prepared to acknowledge that high rates harm the commercial and industrial health of this country.
Perhaps I ought to refer to the warped priorities of the Liberal spokesman. I am not surprised that the Scottish spokesman for the Liberal party has not had the guts to turn up today, nor that today its strength is only one eighth. Having accused the Secretary of State of adopting warped priorities in providing aid amounting to £40 million to commercial ratepayers, I am not surprised that he has stayed in his fastness of Gordon, albeit temporarily.
Even with this scheme, many of my constituents will still be paying the highest rates in the country. I echo their demand for reform. Although this measure is welcome, it represents a further tinkering with the system and is no substitute for the radical reform which all of us want. Scottish ratepayers should take note of what is said in the debate. They will clearly see that it is the Conservative party which shows real concern for ratepayers and, moreover, that the Conservative party is the only party with the political will to grasp the nettle and to introduce rating reform.
I have only a few points to make, simply because the Secretary of State appears in the Bill to be forking out instead of clawing back. Therefore, it would be wise to take the money and run. Prior to the announcement of the rates relief which we are discussing today, the Scottish Nationalist party stressed that any relief given must be new money from the Treasury. We are glad to note that this will happen, but we are concerned that the full £50 million allocation may not be used. It would be scandalous if it were not used. Even the £50 million of relief represents only about one and a half days of Scottish oil revenues. Compared with the money pouring into the Treasury from Scotland, and compared with the amounts being spent on fortress Falklands and Trident, £50 million is small beer. It is essential that that sum of money should not be reduced.
What will happen in subsequent years? We may assume that two or three years will elapse before a major reform is seriously discussed in Parliament. At the beginning of his speech the Secretary of State omitted to deal with a point which I subsequently put, while the right hon. Gentleman was absent, to his hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton), namely, the enormous discrepancies between the assessments in Scotland and England. I do not agree with the right hon. Member for Glasgow, Rutherglen (Mr. MacKenzie) that there should be uniform rating throughout the United Kingdom. The situation in the two countries is different. However, the case that I mentioned earlier showed that there was a difference of 25 times between the rating of the Celtic football ground and the football ground of a team in England. Therefore, the Secretary of State ought to take into account such enormous anomalies.
As the Government have promised that the rating system will be reformed, what plans have they made to take care of the position in Scotland during 1986–87? To help to spread the benefit that may be obtained through the rebates, the qualifying level should be set at a lower figure for the increase in the rateable value instead of the three times increase which is proposed in the Bill.
I suggest that a limit of £10,000 should be placed upon rebates. This would ensure that as many businesses as possible, in particular small businesses, would benefit from the rebate. I hope that those with large revaluations will appeal before applying for a rebate. If their appeal is successful, the rebate may not be needed. More money will then be left in the kitty for those who are faced with greatly increased rates bills.
The Bill will be enacted. Nobody shoots a one-legged Santa Claus. Today, however, the Secretary of State for Social Services said that the poorest people would be obliged to pay 20 per cent. towards their rates bills. This burden will have to be borne by those who are currently in receipt of rates relief. It shows the brazen effrontery of this Government. On the day that the Secretary of State for Scotland is giving away money with the one hand, his right hon. Friend the Secretary of State for Social Services is taking it back with the other. When looked at in these terms, one sees that Santa Claus does not have a leg to stand on.
First, I congratulate my right hon. Friend the Secretary of State on having obtained a huge sum which will benefit the ratepayers of Scotland, both commercial and domestic. It is not good for the right hon. Member for Western Isles (Mr. Stewart) to pooh-pooh such a sum of money as small, when comparatively huge sums of money are spent on transport for his constituents. Indeed, at least a quarter of that sum is spent on transport in his constituency, so a little modesty might suit him better.
The highest subsidies for transport in the United Kingdom are in London, where an enormous mass of rolling stock is needed to take in commuters in the morning and take them out again at night. Expenditure on transport in the Western Isles is peanuts compared with that.
The right hon. Member for Western Isles (Mr. Stewart) should have no cause for complaint. He should remember the integrated development programme, which is expressly suited to his constituency, and which injects massive sums into the Western Isles. It would be much better to spend that money in the Grampian region, and especially in my constituency of Banff and Buchan.
Yes, and if there is any left over, perhaps it could go towards transport in London.
We have seen some remarkable schizophrenia in the debate. As ever, the hon. Member for Glasgow, Garscadden (Mr. Dewar) made a fluent and cogent speech, but Socialists and Socialist authorities have always believed that the people who should be milked are those who own houses and shops and run businesses—
Yes, indeed, and I think I am right in saying that it was a Socialist Government who said that ancient monuments such as myself and the house in which I live should be derated to some extent. I am grateful for that. It is strange for the Opposition suddenly to be on the side of those whom they have always regarded as the milch cows for their extravagance. Fortunately, I represent a constituency that is not of Edinburgh airport, and since Edinburgh airport is not of the capital city I have few reasons to go there, but I am horrified by the extent to which it is being defiled to advertise the extravagance in which the gauleiters of the Supreme Soviet of Edinburgh indulge.
The system of rating taxation has never been fair, and it has always amazed me that the Conservative party should have tolerated it. It is a tax on everything which we believe the humblest, the poorest, the youngest and the oldest should be able to achieve and enjoy. The buying of a house probably represents the largest expenditure that most people will ever undertake.
I am following the hon. and learned Gentleman's speech with great care. He seems to be suggesting that only property owners pay rates, but that is untrue. Those who rent properties, whether from the private sector or from local authorities, also pay rates. That must be said repeatedly, because they get no credit for their contributions.
That is slightly inaccurate, because I understand that only 26 per cent. of those who pay rates do not receive some form of rate rebate.
Rates are a tax on the home, which is the centre of family life. As it is normal for an ordinary family or an ordinary human being to wish to associate themselves with the home, unless they must move home for employment reasons, or unless they become more prosperous, they will not normally wish to change their homes. Although their children may marry and move away, the family home is still fundamentally important. Therefore, rates are a tax on the most important heritable object with which we are associated. I should tell the hon. Member for Aberdeen, North (Mr. Hughes) that the more homes are merely hired from some wretched local authority, the less significant they are to the family. The greater the influence of the home and the family, the greater will be social cohesion and decency.
The tax does not take into account the ability of the occupant to pay. It is rendered on a property regardless of whether its inhabitants have a huge income or a petty one. That is unfair. It is especially offensive because domestic rating is a complete disincentive to improving one's property because one is punished for doing so. When one considers the GEAR scheme and the magnificent reconstruction of the tenements in Edinburgh and Glasgow, such as Georgie Dalry, Maryhill and Trongate, one sees that the improvement of property is a great social benefit. Therefore, it is extremely unfortunate to have a tax which is a disincentive to improvement.
My right hon. Friend the Secretay of State has frequently said that the revaluation is all the assessors' doing. I agree, but the bases upon which the assessors do it are extremely unfair, arbitrary and inequitable in practice. The assessors must try to be like Pontius Pilate —absolutely fair between Barabbas and Christ—but it does not alter the fact that, in practice, the assessors and their staffs do not visit similar houses. They do not know what the differences are. They cannot make an intelligent comparison between a newsagent in Auchterarder and a newsagent in Aberdeen or in Ayrshire. Therefore, all that has happened is that a system based on appalling inequities and contrary to all the principles of Scottish law has been demonstrated to be even more unfair by revaluation.
The myth about revaluation is that it is meant to make everything fair again. It is like saying that, in five years' time, the man who has made a million, the man who has made nothing and the man who has squandered a million will be equal.
The hon. and learned Gentleman should know that one guideline for revaluation which the assessors are supposed to follow is generally to ensure that the revaluations do not greatly change values in one part of Scotland as against another, except in exceptional circumstances—
It is true. The general understanding is that the assessors should ensure that valuations increase in broadly similar bands throughout the country, except where exceptional circumstances make it impossible.
I understand guidelines, and I have always been against them. I do not like the word "guidelines" and I shall give the hon. Member for Aberdeen, North an example of the effect of guidelines.
The Socialist council in Glasgow has closed down almost every business in Jamaica street. If the assessor goes there, he will say, "This looks like Bhopal after the explosion. We had better decrease the rating valuation." However, if he comes to Perth high street, or Auchterarder high street, or Blairgowrie high street, and sees that the businesses that have been driven out of Glasgow have opened up in those streets, he will say, "These look like prosperous places." When one council has been extravagant, the guidelines will penalise places where the councils have not been extravagant.
That is what happens because of the actions of the unneutral political masters of neutral assessors. Socialist councils take a sadistic view of properties and those who operate them and regard businessses as places to be looted.
May I divert the hon. and learned Gentleman — helpfully, I hope — from his somewhat ruminative look at the rating system?
It has become clear, and will become clearer, that there will be a considerable shortfall on the payout under the Bill.It may not be £20 million, as I have suggested, but it will be substantial. What is the hon. and learned Gentleman's attitude to that? Will he be happy if £20 million of the £50 million is merely handed back to the Treasury?
I have always admired the hon. Gentleman's prescience, and he has made a point which I was about to develop. My regard for his intelligence has had corroboration from his intervention.
Not only is the rating system unfair, but the Secretary of State's gallant attempts to make fair the unfairness of the revaluation will be even more unfair. Let us examine the microcosm of Braco, where the domestic rate increases throughout the village range between 25 and 40 per cent. in real terms. Not a single house will benefit under the Bill.
It is all very well to say that inflation is 5 or 6 per cent., but people facing large increases in their biggest annual bill cannot budget for or afford such extra sums. It is not the fault of the Secretary of State, but it is an unfairness which we must correct, because the people involved have bought their own homes and are doing the best for their families, but they are being punished.
Tourism is particularly important in Perthshire. Hotels and bed-and-breakfast establishments have to set their terms a year ahead. They cannot be altered because of a rating revaluation. A hotel in Comrie faces a rate increase from £7,900 to £10,000 a year—an extra £40 a week.
For those who are thirsty, let me give the example of a small company in my constituency that owns nine pubs. Prices in those pubs cannot be increased, because the Chancellor has already imposed increases of 2p a tot. To pay for those rate increases, the pubs will have to sell an extra 325,000 pints of beer, or 355,000 more whiskies. Even for the thirstiest—even for the right hon. Member for the Western Isles—that would be an awful lot of drinking. It is not a realistic burden to impose on people who are involved in tourism, which is one of our major industries.
No one is a prouder Scotsman or less a nationalist than I, but I have to say that another major unfairness is the difference between Scotland and England. For example, a six-bedroomed hotel in St. Andrews will pay £32,000 in rates, but a similar hotel in St. Albans will pay only £5,000. Those hotels are supposed to be competing for the same tourists.
The small businesses that have not quite qualified under the three factor will be hit hardest. If people's domestic rates go up, they can reduce the amount that they spend at the hairdressers or with the picture framer. The small businesses, which have already been hard hit, will be hit even harder because their customers will face bigger domestic rate bills. My picture framer has taken on a young man from the YOP scheme who is fully trained and an excellent employee. The increase in the picture framer's rates bill is exactly the same as the salary of that young man, whom he wishes to keep on. What does he have to do?
The admirable efforts of my right hon. Friend the Secretary of State will demonstrate, by the chaotic and unfair comparisons that will reflect like magnifying mirrors the idiocies of the system, a great unfairness. I urge my right hon. Friend to think carefully about whether, if there is a shortfall, the money could be used to help those who are having to pay an extra 25 to 40 per cent. on their principal annual bill. People who budget carefully cannot afford such increases and, of course, there is next year and the year after to come. I do not know whether there will be appeals under the new system, but I know that the cost of appealing to the revaluation appeal court is considerable.
Every time a defence has been made of this wretched revaluation, people have said, "The law of Scotland is different and we are proud to have a different law. It has compelled us to have a revaluation." I have an answer for the Secretary of State. Let us change the law on our own; let us not wait for objections from the Home Office, the Department of the Environment and the rest who are screaming for different systems because their empires are affected. Let us just have a new system in Scotland. Let us show them. After all, we have shown them how to deal with football hooliganism and a whole lot of other things recently.
Let us have a new rating system set out in the Queen's Speech for Scotland only, and if England thinks that it is a rotten system it need not follow us. Let us do what suits Scotland, because the penalty for the system that we have, the revaluation that we have done and the extravagance of the councils is that many businesses will go to the wall and many families will not be able to pay their principal bill. So let us tackle the problem ourselves. I congratulate the Secretary of State, but let him go further and do for Scotland what ought to be done for Scotland. Let England do what it wants in its own time.
While I agree with some of the conclusions reached by the hon. and learned Member for Perth and Kinross (Mr. Fairbairn), I do not agree with some of his reasoning. However, the time is ripe for the rating reform that he called for. I agree that there is no reason why Scotland should have to wait for England to catch up.
I welcome the legislation, although it does not contain everything that one would wish to see. None the less, it is generally to be welcomed. As might have been expected, there has been some self-congratulation on the Government Benches. It would be churlish not to acknowledge the success of the Scottish Office in prising a significant sum out of a Chancellor of the Exchequer who is not renowned for his open-handed generosity. Indeed, it is reassuring to know that if an argument is good enough, and if the Secretary of State fights his corner, new money can be found. I am sure that that message and particularly the fact that the Secretary of State fought his corner will have been noted by the teaching profession in Scotland.
Equally, if self-congratulation is fair on Conservative Benches, Opposition parties, too, can take some of the credit for keeping up pressure on the Government to make some of the changes. It is only fair to say that my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) and other of my right hon. and hon. Friends, even before the full effect of revaluation on the commercial sector dawned upon the Government, were making representations. Those have been continued both in correspondence and on the Floor of the House.
I wish the Bill a fair wind and confirm that we shall co-operate in getting it on to the statute book. It is not the Opposition's role to be blindly uncritical of what the Government are doing. My first point of criticism is that to date we have not had a reassurance that the additional money will be forthcoming next year or in subsequent years of the present quinquennium. The rates that will be levied in forthcoming years will be based on the same rateable values that are causing concern and anxiety this year. The only idea as to future plans that we have had was given by the Chancellor of the Exchequer at the Scottish Conservative conference, in the passages that the hon. Member for Glasgow, Garscadden (Mr. Dewar) quoted. He hinted that he would be reverting to his more typical tight-fistedness. Without the reassurance that that sum will be repeated in future years, what is being offered to the ratepayers, particularly to the commercial ratepayers, is not so much a lifeline as a short stay of execution.
When I met several retailers in my constituency last month, what caused them considerable anxiety was not simply the size of the rate increases that they faced— some were about 600 or 700 per cent. — but the uncertainty about whether the Government would provide relief for them. They had business decisions to make. They had to decide whether to cut staff and what overheads could be cut or dispensed with. Some of them even had to consider whether they could continue trading at all. At that time such decisions could be made only tentatively. It might be fair to excuse the Government this year for some delay as they assess the situation, but if we are to treat our small business sector with proper respect we cannot impose the same uncertainty on it next year. The hon. and learned Member for Perth and Kinross made that point graphically in the examples that he gave.
Many small business men are operating on narrow margins. Their rates bill, particularly after revaluation, forms a large part of their annual expenditure. If small businesses are to exercise financial responsibility in budgeting and planning ahead, and if they are to show the enterprise that many of us would like to see, it is only fair that they should know at a relatively early stage where they stand vis-á-vis next year's rates bill. We should like reassurances from the Minister during the passage of the Bill. If that is not possible, I think that it would not be unfair to seek an announcement — a favourable announcement—before the summer recess, or, at least, early in the autumn.
My second point is about qualification for payment. There is no doubt that the across-the-board approach that has been adopted has administrative simplicity. No doubt some of the larger chain stores are adversely affected and feel the pinch of rate increases, but they are not affected in the same way or threatened as much as several of the smaller businesses. Larger chain stores with branches in many towns throughout Scotland could reap the benefit many times over, whereas small businesses that fail to qualify under the multiple of three would not receive any assistance.
While I agree that chain stores will have more resources, stores that have moved into country towns, which will be operating on much smaller margins, and which have had huge increases, must ask themselves whether they will stay there. Again, that has a big impact on local employment.
I take the hon. and learned Gentleman's point that in many smaller towns the introduction of those stores has been worthwhile, and their head office will have to consider the matter. However, many of the larger stores could qualify for assistance, and the viability of many such stores is not threatened, so there appears to be some rough justice. One might have to consider the cut-off point and whether it should be linked to the number of premises, and what the total amount should be that any firm throughout the length and breadth of Scotland could claim back as a rebate.
In introducing the Bill, the Secretary of State admitted that there would still be higher rate bills for several domestic and commercial ratepayers throughout Scotland. He said that the Bill would not necessarily help them. High rate bills will be faced by many who qualify for assistance, and particularly by those who just fail to qualify. I have a list of the revaluation and rate payment increases of many of the retail outlets in the Shetland part of my constituency. There are rateable value percentage increases of 300 per cent., 500 per cent., and 600 per cent. Many, indeed all of those outlets will qualify for assistance under the Bill, and I am sure that they will be grateful for it. Nevertheless they will still be paying a substantially higher amount in rates this year than last year. The same applies to the Orkney part of my constituency, where people face rate bills that are 30 per cent., 40 per cent., and 50 per cent. higher, which is many times the average rate of inflation.
The Secretary of State and other Conservative Members have tended to put the blame for increased rate bills, as opposed to what may be attributed to revaluation, on high-spending authorities. However, it is not many months since the Secretary of State, from the Dispatch Box, praised Orkney Islands council for having kept within guidelines. Yet commercial and domestic ratepayers in Orkney are also having to pay considerably higher rates this year. That cannot be attributed to a high-spending authority. It can be attributed in part to the reduction in central Government assistance and, in some cases in my constituency, to derating of external plant and equipment. This has resulted in a multi-million pound handback of money which would otherwise have been paid by the oil companies. The oil companies will not feel the pinch if they do not have that amount of money. I am sure that many ratepayers in my constituency would have benefited far more if that derating measure had never been taken, for the spurious reason that it would bring Scottish law into line with English law. It did not do that. Indeed, should one attempt to bring Scottish law into line with English law? The measure has had a serious impact on rating levels in Orkney and Shetland. Oil companies have benefited at the expense of smaller businesses and domestic ratepayers.
What happens if the Government do not use the £50 million that has been set aside for this purpose? I join with those who say that the balance should be applied to give relief to ratepayers and should not be handed back to the Treasury. Perhaps a sliding scale should be introduced for those who pay the highest increases. Perhaps there should be a sliding scale for those whose rate increases are between 2·5 and 3 times the previous level so that that important sector of the small business community is given some relief.
The exemptions in clause 1 mean that the whisky industry will not receive any advantage in the Bill. Conventional wisdom has it that the industrial sector has benefited from revaluation. Indeed, the cut in derating occurred in the light of that. Nevertheless, the whisky industry seems to be an exception to the rule. Revaluation generally has increased the amount of cash that is paid. The Scottish Whisky Association claims:
Revaluation has increased the amount of cash paid in respect of rates on distilleries and warehouses by an average of 36 per cent.
In my constituency, there has been one cash increase of 100 per cent. and an average increase of 82 per cent. The average increase in the Lowlands is 75 per cent. and on Speyside it is 41 per cent. These high additional sums must be found in an industry that cannot be said to be prospering.
The Chancellor made a specific point in his Budget statement of helping the industry by pegging the duty on whisky to the inflation rate. He recognised the industry's plight. Although that measure was welcome, it was not enough, especially after the abolition last year of stock relief. The increased rates are a further substantial blow. I have written to the Secretary of State about it. I know that the Under-Secretary of State will look into the matter. Has the hon. Gentleman been able to make any progress in providing assistance to this important industry which makes a valuable contribution to the Scottish economy?
The Bill underlines the extent to which radical reform of our rating system is needed. I welcome the fact that the Government have again put reform of the rating system on the agenda. It is no secret that my right hon. and hon. Friends favour a system of local income tax, especially one that is made more administratively easy with computerisation. In the past, we have heard pledges to reform the rating system. Today we have heard a more specific statement, that a proposal will be brought forward by the end of this year. I recall reading about Ministers making the same statement at the Dispatch Box about the road equivalent tariff. We were told that it was a complex matter involving many problems but that the Government would come forward with a solution at the end of the year. That statement was made in 1981 and 1982 and, eventually, in 1984 the Government told us that they had examined the problem and had decided to do nothing. Many of us fear that we are slipping into a similar pattern with rates. My right hon. and hon. Friends will continue to press the Government to ensure that, this time, they meet their commitment to undertake the much-needed and long overdue reform of the rating system.
I am happy to congratulate my right hon. Friend the Secretary of State for Scotland on the speed of his response to the most pressing problem for Scottish householders and small business men. The amount that my right hon. Friend has given during the past few months is no small beer. He began his measures when it was obvious that revaluation would affect ratepayers. He increased by £19 million the domestic element of rate support grant provision, increasing domestic rate relief from lp to 5p in the pound in post-revaluation terms. Subsequently, an additional £38·5 million was granted. We now have a total rebate of £50 million. I hope that the Government guarantee that amount.
The actions of the Secretary of State have finally convinced the Government that rating reform is necessary. I refute the challenge of the hon. Member for Glasgow, Garscadden (Mr. Dewar) that this is just a matter of expediency. It is a matter not of expediency but of commitment. The Government have always been committed to rating reform and assisting the ratepayer. If anyone should be thoroughly ashamed of expediency it is the Opposition, who talked earlier about devolution and the establishment of a Scottish assembly. They know that, during the 1970s, that was their expedient response to what was happening in the Scottish national camp at that time.
I hope that the firm stand taken by my right hon. Friend the Secretary of State means that many of the small businesses in my constituency will remain viable. Many shop doors have already closed. I hope that some, which were about to take that step, will remain open. It cannot be assumed, however, that this relief which is offered in part to commercial enterprises will serve to assist all these people. That worries me greatly because, although the proposals will have great merit, we must take account of the fact that those to whom the multiple factor of three does not apply will still pay much more than last year. There are some small businesses in villages in my constituency that cannot tolerate the excessive increases of the past year. It is less noticeable in the cities when premises change hands or shut down, but when shop premises in villages and small towns lie empty or are neglected because rates are too high there are deleterious effects on the spirit and fabric of life in those areas.
I am pleased that additional finances will be given to help householders. Although there was exhilaration at the press conferences because of the announcement of help to our commercial firms, some individuals were still reticent about the measures. Domestic ratepayers are still paying a great deal more than previously. The real problem occurs when rates are of more worry than markets. Even the choice of moving down market is closed to many because of the sheer costs of moving.
Another problem which I have encountered goes slightly beyond the terms of the Bill. I have discovered on travelling round my constituency that the arbitrariness of these increases in rateable values has been remarkable.
I want to explain how the assessor was completely out of touch with the accurate position for one of my constituents who had established a small market garden business. It will take two or three years to get the business going fully, and during that time he will receive subsidies. Surely that should explain to any assessor that agricultural premises are involved. But no, the assessor demanded that my constituent pay rates on his property being classed as a luxury bungalow. I do not know how many hon. Members know my constituency, but it includes a few areas with so-called luxury bungalows. The bungalow in question is in a conservation area, and meets the minimum standards required. It has three rooms—two bedrooms— and houses two adults and a child. That hardly constitutes a luxury bungalow. When my constituent challenged the valuation and told the assessor that a much larger house up the road had been given a lower valuation, the assessor uprated the valuation of the other house. That caused fearsome strife in the village.
Assessors do not appear to know the difference between a garage and a store. My constituent was angered when, having demonstrated that the shed next to his house was not a garage, he was told, "That is only because you do not choose to use it as a garage." That is ridiculous, because the shed is used to store his business equipment.
I am intrigued by the use of the term "luxury bungalow." I have experience of assessors talking about good and bad areas. Does my hon. Friend share my concern that there is a little too much subjectivity creeping into assessments because there is no rental evidence? I wonder what rental evidence there is for the sort of place that she has described.
I could not agree more with my hon. Friend that an element of subjectivity looms large in assessments. I hope that my right hon. Friend the Secretary of State will take that point on board.
I am disappointed that my right hon. Friend the Chancellor of the Exchequer is not here this evening. When he was at Perth, he took credit for the new money that had been made available. It would have been nice had we had the opportunity to thank him — and also to remind him that until there is a new rating system he must honour in full the commitment to the ratepayers embodied in this Bill.
Under the Bill, the Secretary of State can continue the scheme, and will no doubt wish to do so during the next few years of the quinquennium. I wish him all the best in determining the allocation of resources. I hope that the Treasury appreciates the seriousness of the position for ratepayers in Scotland. No doubt the dexterity demonstrated by my right hon. Friend will hold him in good stead. However, I admit to having the same concern as that expressed earlier by my hon. Friends about whether the full £50 million allocation will be used. I am not as scrupulous as my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst). I would use any surpluses for additional relief for commercial ratepayers.
I am worried that we are asking Scottish authorities to administer the cost of the rebate, which will amount to about £1 million. It is not a great deal of money, but a principle is involved. Perhaps the bulk of that financial burden will be placed on the more prudent authorities, some of which are Conservative controlled. I am aware of the deep division between local government and central Government about continuing financial restraints. However, I remind the House that only one third of the increase in rates concerns revaluation, while two thirds arises because of excess spending by local government. I want the rift to be healed so that we can obtain co-operation from local government in being accountable for its spending, and not simply using the prevailing conflict to be bloody-minded at the expense of the ratepayers.
I have more respect for local authorities than simply to regard them as purveyors of bins, bogs and burials— indeed, I have served on a local authority—but I wish that they would confine their activities to those for which they were established. I have a dossier of what I would term political abuses by local authorities amounting to many thousands of pounds. It upset me when the Opposition quibbled with my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) when he mentioned that. Since May 1984 the city of Edinburgh district council has made political use of council funds amounting to more than £70,000. That includes donating money for public meetings on behalf of the Chile Democratico. That may be legal, but there is something very wrong when most of the councillors were elected not to act as the next Secretary of State for Defence, but to ensure that bins were emptied and roads were repaired. It appears that the Labour candidates' selection process now throws up the type of councillor who believes that his mandate makes him responsible for national defence, foreign affairs, civil liberties, national if not global ecology and anything else one can name.
If we are to believe the constant call of the Left— that housing is in an awful state, that education is being decimated and that cuts in finance are causing hardship — it is reasonable to inquire how Labour councillors find the time to take on national tasks. It is difficult to explain to an electorate how they can attend the second international nuclear-free zone conference in Cordoba in Spain but not find the time to attend a tenants' association meeting. That is particularly hard as the Cordoba conference lasted only three days, but many of the Scottish Labour councillors stayed there for a week—no doubt at the ratepayers' expense.
I accept that there are differences of opinion about what should and should not be done by councillors, but if the hon. Lady is suggesting that certain councillors received expenses for staying in Spain longer than was necessary, I hope that she will name them and take to task the financial officers of the local authorities that sanctioned such expenditure.
I shall happily take on that task.
The new breed of Labour councillor — [HON. MEMBERS: "Name them."] As I said, I shall be happy to take on that task. I shall be in correspondence about that matter.
That is not good enough. The hon. Lady should be prepared to substantiate her charge with names, dates and local authorities, either in or outside the House. She should not make a general smear on councillors which goes far beyond the reasonable partisan politics of this House.
My hon. Friend will be aware that I have in the past done exactly what the hon. Member for Aberdeen, North (Mr. Hughes) has been asking for. I have reported to the local authority auditor the city of Dundee and its councillors. Had they not stopped doing what they were doing, they would have been prosecuted. They had been printing a news sheet and did not even—[Interruption.] The principle is the same, and the hon. Member for Falkirk, East (Mr. Ewing) knows it. He has friends serving on councils who do not always obey the law.
I should like now to continue with my own contribution.
The new breed of Labour councillor is quite prepared to spend ratepayers' money to further his own causes. That is sad, because many decent people in the old Labour party are now prepared to support some of the nonsense on which Labour councils are spending our money. It is obvious that local authorities are finding legal ways to fund organisations which support their own political viewpoint. In that way, those councillors enjoy benefits which are not available to their political opponents. That gives them a clear advantage in financial terms and also in regard to the scale and effort of any campaign. If little or no time is required to organise funds for a campaign, more time and effort can be devoted to the campaign proper. It seems to be only the Left that is abusing the system at present. However, if no action is taken, it is likely that before too long every party may start to make use of this new system of finance. That is why it is extremely important to alter the rating system to exclude those abuses.
It is to be hoped that the findings of the Widdicombe committee will strengthen the demand to ensure a fairer and more democratic system, and one which reflects the proper functions of local authorities. If local authorities behave themselves, we might just be able to manage with the system that we have; but as they have abused the system, changes are now urgent. Any money that we expend at the moment to help our hard-pressed ratepayers will be reimbursed suitably in the future when those changes are introduced and implemented.
I very much regret the fact that the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley) made such disgraceful allegations of illegality without one shred of evidence to back them up. It is no use the hon. Lady waving a news sheet which she has received from the Conservative Central Office.
If the hon. Lady has names of councillors who she believes have broken the law with regard to expenses, she has a duty to name them, either in this House or outside it, otherwise she is an accessory after the fact in breaching the law.
Whenever Conservative Members have an inadequate case, they use the grossest smears to cloud the issue. I thought much more highly of the hon. Member for Renfrew, West and Inverclyde before she made her speech. I hope that she will do me the courtesy of naming names, or withdrawing her general allegation.
The hon. Member makes a strange case. Socialist councillors went to Cordoba for a fatuous conference which had nothing whatever to do with local government. If a councillor can get to a place such as Cordoba at the expense of the ratepayers, it is not very expensive for him to have a holiday while he is there.
No. Several of my hon. Friends want to take part in the debate, so I must get on with my speech.
There has been a general welcome for the Bill, in so far as it helps commercial and domestic ratepayers, and I share that general welcome to some extent, especially as it is now clear from clause 1 that it is at least possible for the rebates to continue for more than one year if the Secretary of State thinks fit. The Secretary of State was pressed on that issue, very largely by the Opposition, and eventually the provision appeared in the Bill. Whether he will allow the rebates to continue after next year is another matter. I suppose that, even if it is for only one year, we should be grateful for small mercies, but there is one vital question that must be answered by the Secretary of State.
As the £50 million—whether it is used this year or not is not the point at this stage—is available as new money this year, is it committed for as long as the transitional system lasts, until we have a new rating system, or are we to revert next year to £20 million, £30 million or £40 million being removed from the health budget, the education budget, or some other budget to meet the demands of the rebate system? The Secretary of State must give a clear answer to that question. Unless we have a clear answer, he will be guilty of deception. He has our consent for the Bill to go through without challenge, on the basis that it is to last for a considerable time. I hope that he will put our minds at rest on that.
No, I must continue with my speech.
I am sorry that the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) is not here. He pontificated about the rating system and seemed to labour under the illusion that only house owners pay rates. When I challenged him on the point and told him that all householders were eligible to pay rates and were eligible for assessment, his reply was that most of them live in local authority houses and do not pay rates because they get a rebate. That showed that the hon. and learned Gentleman knows little or nothing about the system. All householders are eligible to pay rates. The fact that some of them do not pay full rates and that some of them pay no rates is a reflection of their circumstances.
It is interesting that in the statement by the Secretary of State for Social Services today he pointed out that 7 million householders receive some help with rate bills and that 3 million householders pay no rates. That simply reflects the poverty of people. The Secretary of State is to compound that poverty by saying that everyone now has to pay a minimum of 20 per cent. of his rates. Where is the compassion and the care that we hear so much about from the Government? They are making the poorest of all people—those who under their system cannot afford to pay any rates whatever—contribute at least 20 per cent. The contempt of Conservatives for local authority tenants is revealed by the way in which they speak about ratepayers as though ratepayers were only those who own their own property, and deny any rights whatever to those who are in rented property.
Before coming to the generalities of the Bill I have one or two technical points to make. I understood the Secretary of State to say that automatically local authorities will examine all ratepayers in their area and decide whether they are to get a rebate under the Bill, and that ratepayers will not have to make application for it. I wonder how that is to be done. It will be a major administrative task. I do not see how it can be done within the cost of £1 million that is mentioned in the Bill. It is grossly unfair that local authorities should be expected to meet the administrative cost.
The difficulty arises very largely because the balance as between one class of ratepayer and another has been disturbed. The Secretary of State comes to the Dispatch Box and blithely tells us that there has been a change in the relative gross annual values. The reason why the industrial ratepayers' gross annual value has gone down is that business is in such a parlous state. That is the state to which the Government have reduced industry in Scotland, and it is not able to pay the share of the rates that it used to pay.
The Secretary of State should re-examine the timing of the Bill. It does not come into effect until two months after it has been enacted. He cannot produce a statutory instrument until the Act has been brought into force. That means that we shall not see an order—an affirmative order according to the Bill — until the middle of the summer recess. The House has never been known to sit beyond that glorious day, 12 August, and therefore it will be September or October before we return to this matter. We shall be at the end of the financial year before the right hon. Gentleman tells the local authorities what the rebates will be and before they are paid. That is nonsense.
I reiterate what my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said. The Bill is supposed to deal with an abnormal situation and is to be passed at great speed. I therefore do not see why the Secretary of State should not bring the Bill into force at great speed.
If all the values had remained relative one to another, and if the proportion paid by industrial, commercial and domestic ratepayers had remained broadly in balance—I do not know how three different things can be balanced, but never mind—the rates paid by the different classes of ratepayer would have been much the same but for rate increases. I accept that.
The problem is that we have all been aware for a long time that the rating system provides rough justice. It is not fair. The system has been generally palatable because it has meant that rates have not been increasing enormously. The problems of the rating system have been accentuated by two factors. The first is the greater demand on and greater responsibilities of local government. I reject the idea that local government has somehow decided to spend as much money as it can just because it wants to spend more money. That is not true. Local authorities spend more money because they have greater responsibilities to meet.
The second reason why the problems have been compounded is the inexorable reduction of the central Government share of financial support.
I hope that we shall have a general debate about the future of the rating system, long before the Government are ready to produce a Green Paper. Whatever the faults of the rating system—I accept that it has many, and I could speak for an hour on its different faults—the one advantage it has is that local authorities are reasonably certain about their income. With local income tax, sales tax or some other such system, a local authority will not know what its income will be. It needs some certainty, and a least the present rating system provides that.
The certainty of income is diminished by the way in which the Secretary of State constantly revises his provision downwards. I saw the Secretary of State for Scotland on "Weekend World" a few weeks ago. It is not often that I pay compliments, but I am bound to say that he dealt with the difficult situation extremely well. He defended his case well. One of the most significant concessions that he made on that programme was that he accepted that there had to be an element of central Government support to provide for local authority services. At the heart of the argument about the rating system—-the provision for people and the amount of rates to be paid—is the size of that element. So long as central Government reduce their element of the provision, the more rates paid locally will have to increase. That is an obvious truism. That is the main reason why we have problems.
There must be a great deal more planning and thought than has gone into the Bill. Local government is there to provide a service. I do not defend abuses in local government or those who spend money illegally. I do not concede the case made by the hon. Member for Renfrew, West and Inverclyde and all the other hon. Members who go on about "political purposes". The actions are legal, but even if I were to concede that they may be inadvisable, which I do not, the amount of money involved is a small proportion of the gross amount of money paid by local authorities. That is not the problem.
The problem is that neither the Secretary of State nor any of his hon. Friends has ever said a decent word about local councils and the needs that they have to face. Instead of being constantly at loggerheads with local government, the Secretary of State should be in constant dialogue with it about providing for people's needs. The Government are not interested in ratepayers. They are interested only in one class of ratepayer. They are not interested in the services that ratepayers expect to receive — decent housing, education and other local services. All that the Government wish to do is to whine about the rates, but the objective of local government is to provide the best services available for those in need. I commend local government for that.
I wish that the Government would pay tribute to the many local councillors who give hours and hours of their unpaid time and in many cases sacrifice their careers merely to receive brickbats, and not commendations, from Conservative Members, who should be ashamed of their narrow-minded and bigoted attitude towards local government.
May I say to my right hon. Friend on behalf of 3,100 domestic ratepayers and 700 non-domestic ratepayers in my constituency who will benefit from the Bill, for this relief much thanks. Businesses in Callendar blazed the trail for an event which turned out to be happening in other parts of Scotland such as St. Andrews and elsewhere.
We must be clear tonight about what the Bill is about and what it is trying to achieve. It is not about reducing the excessive rate burden that ratepayers have to face. It is about protecting those people who have found themselves with a completely unexpected and sudden increase in their rates bill which they cannot meet. There is a clear distinction there. There are many people with large and intolerable rates bills whose rateable values will not have increased more than threefold.
Opposition Members have ritualistically asked about what will happen next year and whether my right hon. Friend the Chancellor of the Exchequer will be the bogy-man or whether my right hon. Friend the Secretary of State will be St. George, or perhaps St. Andrew, on his charger and win the extra £50 million. There is no reason why the scheme could not be continued next year and be funded from the overall rate support. I commend that to my right hon. Friend as a possible way of dealing with the problem.
May I also thank my right hon. Friend for having acted against Stirling district council? He has required it to rebate 3p to the ratepayers in my constituency because of its outrageous proposal to keep council house rents well below the Scottish average and to ask ratepayers to foot the bill. It is a matter of deep regret to me that members of the Labour party—I assume that the people who nan Stirling district council and Opposition Members who seem to have found sympathy for the ratepayer are in the same party—propose, if I am to believe what I read in the Stirling Observer, to obtain counsel's opinion and go to the courts, no doubt at vast expense to the ratepayers, to try to stop that 3p rate being returned to the people in whom Opposition Members have shown such great interest.
The other argument we have heard has been about the rate support grant and the fact that reductions in rate support grant are to blame for the problem. I hope that I shall be forgiven for being parochial and talking about my constituency, but the cuts in rate support grant in Stirling have occurred because of the financial irresponsibility of the district and regional councils. They have decided to spend vast sums. We have heard about trips to Spain but my lot seems to go on trips to eastern Europe. The Central region has spent £10,000 on a brochure to tell everyone what a marvellous job it has been doing over the past 10 years. Stirling district council is spending £100,000 a year on a scheme which is called "Stirling Future World". It is a world that is very much in the future and far removed from the real world. The authority has given more than £250,000 to miners in the region and more than £150,000 to those in the district.
My hon. Friend the Member for Fife, North-East (Mr. Henderson) reminds me in an aside that Fife has given £2 million to the miners. The authorities have made these donations despite the fact that they are overspent on their budgets and incurring penalties and loss of grant that amount to 85 per cent. for Stirling district council and 75 per cent. for the regional council.
There are those who argue that my right hon. Friend the Secretary of State for Scotland has been ungenerous. I remind them that he could have taken much more back in reduced rate support grant. He gave every local authority the opportunity to reduce its spending and thereby to get its full rate support grant entitlement. To be fair to the Central region, from being £3 million in excess of its budget it has managed to reduce that sum to about £900,000. Last year Stirling district council started off with £600,000 in the bank and at the end of the year was £600,000 in debt. Its rent subsidies and spending beyond its budget have led the council to seek a rate of 23p whereas it should be only 18·p, as Conservative Members have said. That rate could be set without cutting £10,000 a year on the women's committee and all the other items that are the symbols of the Left. The loss of rate support grant in my patch is due entirely to local government extravagance.
The hon. Member for Glasgow, Garscadden (Mr. Dewar) tried to explain that he was against the consequences of revaluation. He told us that he considered revaluation a good idea at the time but added that there has been too much chopping and changing and that he now wants to be certain of the current position. I am sorry that the hon. Member for Dundee, East (Mr. Wilson) is not in his place. I enjoyed reading the report of his recent speech, in the course of which he argued that Scotland would be disadvantaged if revaluation did not take place. He cited England as an example, and said that Scotland prides itself on quinquennial revaluations.
It is rather disingenuous always to seek to place on the front pages of newspapers examples of Scotland at a disadvantage when set against other parts of the United Kingdom and to fail to draw attention to examples of differences in Scottish law that do not suit popular opinion.
I hope that my right hon. Friend will recognise the injustice of the position that we now face. In the past only a tiny minority have been able successfully to appeal against the rateable value of their property. Thousands appeal and only hundreds are successful. The successful appellants tend to be those who employ expensive professionals, who know all the tricks. If an ordinary man cannot pay his rates bill, he has only the prospect of embarking on a long and arduous appeals procedure and the incurring of professional fees without any guarantee of success at the end of the day. As my hon. Friend the Member for Renfrew, West and Inverclyde (Mrs. McCurley) said, he will have the prospect of never having his neighbours speak to him again if his appeal is successful because the consequence of that will be an increase in their rates. The appeal process is a daunting task and is one upon which the majority are unwilling to embark, for understandable reasons.
Assessors are answerable to no one and those of us who have been involved in correspondence with them recently have had that fact underlined effectively. The rental evidence on which they supposedly make their judgments is non-existent, thanks to the Rent Acts, which we hope the Government will find time to deal with during the next Session. It is too often said, for example, that Falkirk is a bad area and Killearn is a good one and consequently rateable values in Killearn were increased accordingly. Why is it that council houses in my constituency have incurred an average increase of 2·57 times whereas the average increase in the private sector is 2·75? I hope that the assessor is not using the rental evidence that is produced by the fact that council house rents are depressed as a result of subsidies that are paid, in effect, by ratepayers in the private sector because their properties' rateable values have been increased.
How do we explain the extraordinary differences in rateable values throughout Scotland? A massive number of businesses and domestic ratepayers are benefiting in the Borders, for example, but other areas have benefited to a lesser extent. Are we to conclude that the assessor for the Borders made a terrible mistake last year or that the Borders region is booming and that there has been a sudden hike in rents? There is no evidence to support the second theory. Either the assessor got it very wrong this time or he got it very wrong last time. None of us can say what has happened because none of us can obtain the criteria on which the assessor acted in the first place.
Injustice is done to those in my constituency who have seen the rateable value of their property increase by more than 2·4 times. I was canvassing in Stirling on Saturday and in doing so I was knocking on doors of newish houses. Many of these houses were about 10 years old. I found that they had rate bills of £800, £900 or £1,000. When I told colleagues who represent constituencies south of the border about this, they were stunned. They thought that I was quoting exceptional examples. Such rate bills are intolerable and we must not fool ourselves into thinking that because we are dealing with the problem facing those who have been exceptionally hard hit we are dealing with the basic problem.
There are a number of specific issues within the compass of the Bill which worry me. These include the anomalies to which the hon. Member for Garscadden rightly drew our attention. I understand, for example, that if I erect a new sun lounge, conservatory or extension, it will be rated in the following financial year. If there are two houses that are identical in every respect, one of which has had its rateable value increased by three times and the other by three and a half times because of the sun lounge that was built in the previous year, the owner of the house with the sun lounge will qualify under the scheme and enjoy a 100 per cent. rebate whereas the owner of the other property will not. Such a result would be intolerable. I hope that provision will be made in the statutory instrument for real changes arising out of revaluation and that the measure will not restrict itself to additional building works, for example.
What is the position when there is a change of use, from industrial to commercial, for example, that involves the 40 per cent. derating? If a factory becomes a warehouse and the owner loses the benefit of 40 per cent. derating, will that be regarded as a rating increase of more than three times? Surely that would be wrong. Worse still, what about the new housing estate with identical houses, some of which have been occupied prior to 1 April, and where rateable values have increased following that occupation by more than a factor of three? People who buy the identical house after 1 April will not get the rebate received by the neighbour who moved in prior to the new rule coming into effect. What is worse, assuming the scheme continues, when the person who benefits sells the house, the house will continue to be eligible for subsidy. Therefore, two people in identical houses will pay different rates because of the scheme. I hope that provision will be made to deal with that anomaly.
I am not a great champion of hunting, shooting and fishing, but I have those interests in my constituency. I understand that the present practice is for beats on rivers and shooting interests to be lumped in aggregate and rated as a whole. Can people who have found that the aggregate has increased by 2·9 times on six or seven stretches of a river say that on one stretch it increased five times and on another two times? What is the position of the assessor? Can those people ask for information on each individual beat, and would they qualify?
It is unusual for me to speak in defence of local government, but if we have this scheme, is it fair to ask local government to bear the administration and manpower costs? We cannot continue to tell local government to cut its cloth yet give it extra duties without making resources available. It is also unfair to the ratepayers who will not qualify for support because at the end of the day they will have to meet the bill for paying the extra allowance to more lucky neighbours and fellow citizens.
I ask the next question in the expectation of receiving an answer to it on Wednesday. Will my hon. Friend tell me what the effect has been of the Valuation (Deductions from the Gross Annual Value) (Scotland) Order 1984? I understand from the regional assessor that it has altered the tables so that the difference between the gross annual value and the net value has been reduced because the allowance for maintenance on higher rated property was reduced and the allowance for maintenance on lower rated properties increased. I am told that the net effect — I would be grateful for my hon. Friend's guidance on this—is that in villages in my constituency, such as Killearn, the effective amount knocked off the rates, in crude terms the rateable value, was reduced, which adds about £75 a year to their rates bill. Could we re-examine those tables, and offer some help?
My final point relates to the scheme. It is complicated, although I accept that it is as simple as is possible. It is vital that it is well publicised and that people understand what their rights are and what the effects of revaluation have been. My hon. Friend should counter some of the propaganda that has been funded at ratepayers' expense —the misleading attempt to blame overexpenditure and extravagance on revaluation — by setting the facts straight and explaining how the scheme will help ordinary domestic ratepayers. Far be it from me to incite my hon. Friend to indulge in political propaganda at taxpayers' expense. The Civil Service, unlike local government, has such high standards of professionalism that it would not allow him to get away with it, if he were so inclined, which I am sure he is not. Has my hon. Friend thought of delivering through every letterbox a leaflet explaining the scheme and its background? That would help those of us who seek to do that through correspondence.
The rating system has always been unjust, and the burden has now become intolerable. I have people who are now putting their houses on the market because they cannot pay their rates bill. We must regard the Bill as a palliative, and proceed urgently to get rid of the domestic rating system altogether and to tackle the problems facing commercial ratepayers. If we do that, we shall receive the widespread support of Scottish people, whether their local authority bills are higher or lower than at present. There is widespread recognition that the present system is unjust. In bringing the scheme into being, I hope that my hon. Friend will try to minimise the injustices and anomalies that we face.
Unlike the hon. Member for Stirling (Mr. Forsyth), I am here to speak not on behalf of my constituents who this year are facing massive rates increases and who will not benefit one iota from the Bill, but on behalf of the small number of my constituents who will benefit, and for them I am grateful to the Government.
This is the Government's second attempt this year to deal with the effects of revaluation. Had they taken my advice at the end of last year and halted the 1985 revaluation before it was announced, we would not be wasting the time of the House dealing with the £38·5 million given to domestic ratepayers or the £50 million that will be given through the Rating (Revaluation Rebates) (Scotland) Bill.
It was all very well for the Secretary of State for Scotland to ask the Labour Front Bench their opinion on revaluation. He should be fair and recognise that over a period of years voices have been raised in all parts of the House against this revaluation and the one in 1978. Those voices said that Scottish revaluation must be stopped so long as similar revaluations did not take place in England and Wales. The right hon. Gentleman has never listened to those voices. He has always gone ahead on advice from his civil servants — the same civil servants who gave similar advice to the previous Labour Administration and Labour Secretary of State for Scotland.
Given the uproar in Scotland over the effects of the 1985 revaluation, I hope that the political parties in Scotland will look realistically at the whole rating system and try to introduce a system that is fairer to everyone, be they domestic, commercial or industrial ratepayers.
The Bill will give £50 million—although earlier we were told it might be £30 million—to certain categories of domestic and commercial ratepayer. In areas such as mine large industrial complexes will experience great difficulty because of the increases they face in their rates bills, yet they will get no help from the Bill. We should not fall over backwards to congratulate the Government on the small amount of help that they have been forced to give because of opposition from Members of Parliament representing all areas of Scotland. The Government have been forced to do so because they were stupid in continuing with the 1985 revaluation.
One may sometimes think that one is a voice in the wilderness, and if one continues to shout about something like this, people often say, "He is speaking on his own behalf. He does not have the support of his party. He is a wee bit eccentric. If the Labout party says something, he might well say the opposite." However, the political eccentrics are sometimes correct. Tonight the Government have been forced to act because of pressure over the last five and a half years from people such as myself.
The hon. Gentleman had made great play about the Government's decision on this revaluation. However, he must accept that during a previous debate on rating and valuation in Scotland the hon. Member for Glasgow. Garscadden (Mr. Dewar) said:
To push the revaluation back by two years will considerably disadvantage the ordinary ratepayer.
He went on to say:
I hope that the Minister will tell us what will happen in 1985-86. Will he guarantee a full revaluation then?" — [Official Report, 28 July 1982; Vol. 28, c. 1194–95.]
Therefore, the Labour party wanted to ensure that there was a full revaluation in 1985-86. If the hon. Gentleman feels that it was only on the Conservative Benches that there was a desire for revaluation, he should remember the facts stated by the hon. Member for Garscadden.
The hon. Gentleman cannot have been listening to what I said, because I made that point. The hon. Gentleman has been trying to make that intervention since half past five, but no other hon. Member would let him in. I have given him the chance because, like me, he is an eccentric and he does not bow down whenever the whip is cracked.
The right hon. Member for Western Isles (Mr. Stewart), who unfortunately is not present, spoke about an article in a recent edition of the Glasgow Evening Times by Desmond White, the chairman of the Celtic football club. He outlined the serious problems facing the ratepayers of Scotland. He drew attention to the anomaly in the rating of football grounds in England and Scotland. The present rateable value of Ibrox park, the home of Glasgow Rangers, is £176,2:50, and Celtic park has a valuation of £120,750. However, the Manchester United ground, which includes a substantial restaurant, has a rateable value of only £37,000, and Arsenal has one of £30,500. I might be accused of distorting the picture by quoting only valuations, and it could be said that I should be quoting the amount of money that the clubs actually pay, but Mr. Desmond White points out that the Glasgow club paid almost £50,000 more in rates in 1984–85 than Manchester United, a club with approximately two and a half times Celtic's income.
My hon. Friend will remember that when we debated the Rating and Valuation (Amendment) (Scotland) Act, we received an assurance from the Minister that, by virtually abolishing the contractor's principle and allowing comparability with England when there was not sufficient local comparable property, the problem could be cured. Unless the Minister fails to live up to his advertisement, there is now no differential between English and Scottish grounds under the new valuation law.
I am glad that my hon. Friend has made that point.
Desmond White wrote a similar article in a Scottish newspaper at about the time we debated the Rating and Valuation (Amendment) (Scotland) Act. He again wrote to Scottish Members of Parliament on this subject. I replied that I thought that he and all the other football clubs in Scotland were being conned into accepting the assurance given by the Secretary of State for Scotland that the Act would deal with these anomalies. That Act has not dealt with the anomalies, and from the figures that I am quoting it is clear that the anomalies are greater than they have ever been because of the effects of the 1985 revaluation.
I am sure that the hon. Gentleman wants to be accurate in what he says. He will be aware that, as a result of revaluation, a number of Scottish football grounds, including Parkhead and Hampden, will pay less in rates this year than they did in 1984ß85. As for comparability, he will also be aware that the legislation provided that it could be done during the course of an appeal.
We are discussing the anomalies in valuations which have always existed between properties in Scotland and similar properties in England and Wales. We are not discussing whether they paid more last year or are paying more this year. Glasgow Celtic is paying £50,000 more this year than Manchester United is paying for much better facilities and on the basis of a greater income.
Desmond White makes the valid point that he is concerned not just about the anomalies between similar places in Scotland and in England; he is also dealing with what he considers to be the special case of Scotland. He says:
If the Government wished an immediate partial solution it could very well drop the requirement that the Scottish local authorities require to pay 44 per cent. of their total expenditure to a figure of 40 per cent. This would have the immediate effect of reducing the rate burden of everyone north of the border by approximately 10 per cent.
If the Government had tabled an order to increase the rate support grant in Scotland by 4 per cent., every ratepayer—not only those whom the hon. Member for Stirling was discussing earlier but thousands of my constituents who are ratepayers—would benefit to the tune of 10 per cent. I put it to the Government and their supporters that the problem has been accentuated by the 1985 revaluation. The real problem is the continuing reduction in the rate support grant to Scottish local authorities.
Between 1977 and 1981—the period of the last Labour Government running into the first two years of the present Conservative Administration — the amount of local government expenditure paid by the Government was 68·5 per cent. In the orders that we have debated—and, unfortunately, passed by a majority — this year the amount paid by the Government to Scottish local authorities has been reduced to 56·6 per cent. of relevant expenditure. That is where the real problem arises. Unless the Government increase the rate support grant to local authorities, we shall never deal fairly with Scotland's ratepayers.
I am disturbed that we are spending the time of the House, as we have on similar orders in the past, discussing this problem when the people whom I represent were telling me last weekend that we should be discussing unemployment in Scotland. The latest unemployment figures were published at the end of last week. In my constituency, every third man is now unemployed, and, of those who are unemployed, every second one has now been unemployed for more than a year and in many cases for more than two years. That is the problem that the House should be discussing, and it is the problem that my constituents would like the House, Scottish Members especially, to discuss instead of wasting our time tinkering with the effects of a system which should have been altered years ago.
All those hon. Members who have spoken so far have concluded their comments by saying what they thought was the real solution to the reform of the rating system. The only way in which to solve the problem of the rating system in Scotland quickly and fairly is to introduce a 100 per cent. Government grant. The days of the traditional idea of local democracy have gone. Local people can no longer pursue policies opposed to those of the Government. That is true to some extent even of Labour Governments. We cannot go back to the good old days before local government reorganisation. If we were to introduce a 100 per cent. Government grant for relevant local authority expenditure, we should have no more debates on the rating system in Scotland. Moreover, the people of Scotland would not have to face rates increases and we would be able to deal with the immediate problem of mass unemployment.
We all know that the hon. Member for Cunninghame, South (Mr. Lambie) has consistently opposed anything to do with the rating system. He is one of the few hon. Members— perhaps the only one—who did not think that we should go through with the 1985 revaluation. These matters are of considerable importance to unemployment. High rates hurt unemployment. That fact should never be lost sight of, and I hope that the hon. Gentleman will encourage his friends in local government to keep it in mind.
I welcome the Bill because it gives direct help to ratepayers who are most severely affected by the revaluation. It gives a full rebate to those whose valuation has been increased three times. That, combined with previous measures to give an eightfold increase in domestic rate relief, has gone a long way to reduce the effects of revaluation on ratepayers. The problem is that there are wide variations, even within districts, and to talk about averages is dangerous. However, as revaluation would affect domestic ratepayers more severely this year, the increase in relief has been of great help.
I am glad that my right hon. Friend has introduced a Bill to deal with wildly increased valuations, but many ratepayers — possibly most — will face substantially increased rates bills. The best thing about the Bill is that it highlights the fact that it is not revaluation but the spending policies of local authorities that determines the size of most ratepayers' bills. Rate increases in my constituency could have been within the rate of inflation if it had not been for the spending policies of local authorities, especially Fife regional council. The product of 10 years of Labour effort in Fife regional council is that the area has gone from being one of the lowest rated in Scotland to one of the highest.
What have the Liberals done to help to produce that result? They have not even voted for the last four budgets of Fife regional council. They were content literally to sit on their hands when these crucial votes were taken. The Liberals were prepared to allow a 20 per cent. rates increase to be imposed on Fife ratepayers, when on average the increase could have been only 2 per cent. if they had voted at the right time. The cost of spending beyond guidelines by Fife regional council is hitting our ratepayers to the tune of 8p in the pound—interestingly enough, exactly the same amount in the pound that was provided by my right hon. Friend to help domestic ratepayers who were affected by the results of revaluation.
Although the Liberals are far from perfect, I must congratulate north-east Fife district council, under its Liberal administration, on keeping its expenditure within guidelines. However, if one removes the effect of the rate support grant distribution formula, about which I should have had a few things to say to my hon. Friend the Under-secretary of State for Scotland if I had had more time, one sees that in one year the Liberal council in north-east Fife has increased the rates by twice as much as the Conservative council increased them in the previous four years. It does not, therefore, have a perfect record, either.
The Labour party has tried to suggest that it is the Government's policies which have caused the substantial rates increases. Local authority expenditure is still higher than it was in 1978–79. The measures taken by my right hon. Friend represent a tiny reduction in rate support grant distribution, but a substantial increase in the direct help that is given to ratepayers. This means that total central taxpayer support for local government is no less than it was last year. Most of it has gone towards providing direct help for hard-pressed ratepayers. Therefore, I warmly welcome the Bill. I very much look forward to the proposals for fundamental reform which we are told can be expected at the end of the year.
I have no doubt that the speech of the hon. Member for Fife, North-East (Mr. Henderson) will go down well in the East Fife Mail. However, the Bill has to be viewed in the context of the announcement by the Secretary of State for Social Services this afternoon: that many more Scottish people will have to pay rates because of the changes that are to be made in the housing benefits system.
When he introduced the Bill, the Secretary of State for Scotland outlined some of the problems which followed the 1985 revaluation because of the shifting of the rates burden among the various sectors. My hon. Friend the Member for Cunninghame, South (Mr. Lambie) is not so eccentric as he makes out. It was the first time that I have heard him admit that he might be eccentric. I knew that to be the case with the hon. Member for Banff and Buchan (Mr. McQuarrie), but my hon. Friend the Member for Cunninghame, South has his head screwed on the right way. He knows that because the Secretary of State for Scotland cut back on rate support grant during the last five or six years, many revaluation difficulties have been created with which the right hon. Gentleman is now faced. The right hon. Gentleman went too far over the last cut-back in rate support grant. That is why the revaluation exercise upon which he embarked has come back to him with a vengeance.
My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said that about £1 billion had been taken by central Government during the last five years from local authority services. There was a clear problem of hardship for many small businesses. We should remember the different categories in the commercial sector. We heard earlier about the tourist industry and the importance of hotels, and we have discussed the problems of shops, although less reference was made to offices. Many small businesses face real hardship as a result of the sudden upsurge in their fixed costs arising from the revaluation exercise, compounded by the reduction in rate support grant. Those problems were especially acute in the Borders and in Dumfries and Galloway, and many problems emerged in Central region, Strathclyde and Lothian.
Last month, I wrote to the Secretary of State asking for clarification about the amount of take-up under the scheme, because the evidence suggested that it would be nothing like the £50 million that has been allocated. The National Federation of the Self-Employed and Small Businesses, after conducting a survey of its members, reckoned that, of the £40 million for the commercial sector, the take-up might be about £22 million.
The self-employed, who represent about one tenth of the work force, have become a significant sector of the economy. The Secretary of State was right to recognise the special hardships that would be caused to many of the self-employed. It was in the context of those figures that my hon. Friend the Member for Garscadden assured the Under-Secretary of State for Scotland last month that there was no statutory machinery whereby the Government could assist people in this predicament. My hon. Friend had every right to expect that the Scottish Office would do its homework and get the figures right. I wonder whether the Secretary of State would have got such ecstatic applause at the Tory party conference in Perth—
My hon. friend points out that it was loyal applause. Indeed, my hon. Friend got the ecstatic applause on at least two occasions, when the Secretary of State said that the Opposition would help the Government with the passage of the legislation. I was about to suggest that the Secretary of State would have got a slow handclap if the delegates at Perth had known what we now know about the way in which it appears the scheme will operate.
Scotland has been allocated £50 million, and we wish to ensure that we get that £50 million for the benefit of Scottish ratepayers. I know that in Committee we shall have the support of the hon. Members for Banff and Buchan and for Strathkelvin and Bearsden (Mr. Hirst) and the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) in making a useful amendment by varying the threshold so that the whole £50 million is taken up.
Preliminary work in Dumfries and Galloway suggests that a change in material circumstances could be a factor in some properties going over the 300 per cent. threshold. This is where the appeals machinery comes in. Will there be a shortfall as a result of successful appeals? We shall have two problems of take-up. One will be caused by the 300 per cent. threshold and the other will be caused by the unquantifiable number of appeals.
The hon. Member for Stirling (Mr. Forsyth) must have held a constituency surgery on Friday, because he spelt out a number of anomalies in the new scheme. I can imagine a Maryhill ratepayer asking me, "How is it that the man next door will get relief because his valuation has gone up 320 per cent. and he had central heating put in last year, but my valuation has gone up 299 per cent. and I am getting nothing?" My answer will be, "Speak to the Secretary of State for Scotland."
The Secretary of State mentioned the cash flows of local authorities. I met representatives of COSLA recently and they were apprehensive about the delays that may result from people holding back until they see how the scheme works. Cash flow problems will inevitably lead to higher interest charges for local authorities. I am glad that the Secretary of State seems to be coming round to the idea that it would be administratively more convenient if, instead of shoals of letters being sent to rating authorities, those authorities identified the people who should qualify under the scheme. The Secretary of State expressed caution about a letter-writing campaign, but can he tell us how soon people will know when the scheme will come into operation? The scheme will depend on the statutory instrument that is to follow the primary legislation. Therefore, there will be a period of considerable uncertainty while people are expecting a benefit.
New St. Andrew's house will be relieved of the responsibility, but I suspect that the computers of quite a few rating authorities will get overheated while trying to identify who will benefit from the new system. I suspect that many people will be disappointed when they find out how much they are to get from the new system. We are talking only about the margin over 300 per cent., and some figures that I have seen suggest that there may be some relatively small rebates, particularly for domestic ratepayers.
I have a continuing curiosity as to which chairman of a Conservative party constituency organisation will benefit most from the scheme. After all, it is open-ended. We know that it is not Fordell castle. However, it will be interesting to see who benefits most from the scheme, on the domestic side.
I should like the Minister to clarify a point that the Secretary of State made about the guidelines. Am I right in thinking that the administrative costs of the scheme, as presently intended, will not affect local authority guidelines? It would be ironic if the Scottish Office, which has so bungled this £50 million relief scheme, yet is in charge of a £3·4 billion local authority budget in Scotland as a whole and exercises rate-capping powers over the 65 local authorities, created a situation which meant that some of them got into trouble in the operation of the small scheme and the administrative charges that are to be imposed on the local authorities.
The Opposition hope that the Government will come round to the idea of accepting the administrative costs for the scheme—in other words, reimbursing the rating authorities for the costs and the payments that will be made under the scheme. Moreover, I wonder whether we shall get a value-for-money scheme. It will be quite a costly exercise. Clearly, the less that is spent on its administration, the more that will be available to benefit ratepayers.
I notice from recent parliamentary answers that the Minister has given to me that the cost of rates collection in Scotland as a whole is only 1 per cent. of the total amount collected, which next year is estimated to be £1·6 billion. I wonder whether this scheme will cost just 1 per cent. of the £50 million. I suspect that it will be fairly costly. When does the Minister expect the regulations to be introduced under the scheme? Although we shall touch on these matters on Report on Wednesday, it is essential that we get some idea of when the regulations will come into force.
The Opposition wish to give the Bill a proper launch. We were a bit apprehensive over the past few weeks at some of the uncertain noises emerging from the Scottish Office about whether the scheme would capsize before it was properly afloat. On Wednesday, our aim will be to make it an improved measure. As my hon. Friend the Member for Garscadden has said, it is a rough justice scheme. It will generate a postbag full of anomalies and complaints. I hope that they will find their way to the Secretary of State.
I cannot but conclude that more Scottish ratepayers will be disappointed by the scheme and at their exclusion from it than will benefit from its introduction. The Secretary of State probably knows this, but he may expect little thanks from those who will be assisted, because the relief that they obtain under the scheme will probably be less then they bargained for much less than they were led to expect.
I hope that the Under-Secretary of State will spend a little time explaining the intricacies of the scheme in relation to commercial ratepayers. They rightly feel considerable consternation about how the scheme will operate. They would like to know why the threshold cannot be brought down below the 300 per cent. mark.
On 17 April this year during Question Time the hon. Member for Glasgow, Garscadden (Mr. Dewar) said:
In respect of the commercial ratepayer, the Minister"—
I believe that he was referring to me—
has managed to give the impression that the only factor stopping help for at least those hardest hit is the lack of any statutory machinery' for doing so." — [Official Report, 17 April 1985; Vol. 77, c. 255.]
I assure the hon. Gentleman that if he wishes to create that statutory machinery the Government will give that measure every facility and speed it through the House. The Bill provides that machinery and fulfils the commitment made by my right hon. Friend the Secretary of State to provide a mechanism to bring exceptional relief to commercial and domestic ratepayers, who, as my hon. Friend the Member for Fife, North-East (Mr. Henderson) rightly said, have been hardest hit by the effect of revaluation. The hon. Member for Glasgow, Maryhill (Mr. Craigen) says that those who have not been helped by it will be disappointed. I am sure that when the hon. Member for Garscadden was offering help to the hardest hit he appreciated that those people would be at the top of the scale.
My right hon. Friend the Secretary of State has outlined how the scheme will work. In a sense, the Bill gives us the power to grant relief to domestic and commercial ratepayers in the circumstances outlined. It defines the class of ratepayer who will be eligible for such relief and the trigger of that eligibility. To that extent it fulfils the wish of the hon. Member for Garscadden, and I look forward to his co-operation during the remaining stages of the legislation. The speeches of the hon. Members for Garscadden and Maryhill tended to give a slightly new meaning to the word "co-operation".
The hon. Gentleman is being a little less than gracious. If he wished a withdrawal of co-operation, we could happily have promised him several months of consideration in Committee. We have not done that.
I think that the hon. Gentleman is aware of what I mean. In terms of welcoming this machinery, some of the points that he raised were not as gracious as he might have liked them to be.
During the past few weeks the Opposition parties have been delighted to take advantage of what they have seen as a politically disruptive situation in Scotland. In political terms, I find it hard to criticise them for that. It is interesting to look at their record. I was interested to see tonight that the Liberals had decided to send forward not the hon. Member for Gordon (Mr. Bruce), who believes that any help to ratepayers is a warped priority, but an hon. Member who believes that helping ratepayers is a priority — the hon. Member for Orkney and Shetland (Mr. Wallace). It never ceases to amaze me how the Liberal party, with its small numbers, always seems to have a man for all seasons.
I believe that we were all delighted to hear the right hon. Member for Western Isles (Mr. Stewart) tell us that, as a Scottish nationalist, he wished the position in England to be identical to that in Scotland. We welcome his conversion to unionism, which we have long been pressing on him.
If the right hon. Gentleman reads the Official Report tomorrow, he will find that he called on the Government to ensure that the positions were similar. He neatly avoided the fact that, on 28 July 1982, the hon. Member for Dundee, East (Mr. Wilson) pronounced these exciting words:
There is nothing wrong with revaluation. In fact, there is much to be gained from it.
I have listened with interest to some of the criticisms that his party has made since then about revaluation. — [Interruption.] The hon. Member for Glasgow, Cathcart (Mr. Maxton) points out that the SDP is not represented tonight. I did not mention that because it happens with such regularity that it is not worth commenting upon.
I listened carefully to what the hon. Member for Garscadden said. He rightly pointed out that during the debate on 28 July 1982 he called for a full revaluation this year. He said:
The Minister should make it clear now that there will be no more flirting with this halfway house"—
that is, partial revaluation—
and parboiled non-solution. He should tell us that there will be a proper revaluation in 1985-86."—[Official Report, 28 July 1982; Vol. 28, c. 1195-97.]
The hon. Gentleman placed no qualification on that. He did not say that we had to provide mechanisms to bring relief to those who might be hardest hit by revaluation.
The hon. Gentleman may say that he did not expect the sort of multipliers that have occurred during revaluation. If that was the reason why he was so keen to have a full revaluation without any qualifications, I must tell him that that does not hold water. When his party was in government, it experienced revaluation in 1978–79. He may remember the multipliers on that occasion — the domestic multiplier was 2·8, the industrial multiplier was 4·2, the commercial multiplier 4·1, and the category described as others 4·9. Therefore, the overall revaluation average multiplier was 3·6.
What happened under the Labour Government to relieve the ratepayers' suffering because of the multipliers? Precisely nothing, other than that the domestic relief element of the rate support grant was reduced by 75 per cent. It is interesting to note the Labour party's new-found support for the ratepayers whom it was not prepared to help when it was in charge of revaluation in 1978.
The hon. Member for Garscadden will never concede that any of the rating effects this year have been due to overspending by councils. I wish to put a serious question to him. He spoke earlier about the effects of RSG reductions. He knows that both I and my right hon. Friend have spoken about the effect on rates of overspending throughout Scotland. There is one example that he cannot ignore, and that is the one mentioned by my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) about Edinburgh district council, which, by its own hand and by its spending decisions, has increased its rate poundage by almost 80 per cent. He knows full well the direct effect that that will have on ratepayers in Edinburgh, both domestic and commercial.
I hope that the hon. Gentleman will take this opportunity to tell the House whether he supports that council's spending decision, and whether the report in today's Glasgow Herald that the executive council of the Scottish Labour party has sent messages of support to the council is correct.
I can give my hon. Friend one good example of Edinburgh's rating policy. Jenners has a turnover which is 500 times less than that of Harrods, but has to pay to Edinburgh district council twice the rates,
I am grateful to my hon. and learned Friend. I am disappointed chat, once again, the hon. Member for Garscadden has failed to answer my question about rating reform.
A number of specific questions were asked by hon. Members, and I shall do my best to answer them.
My hon. Friend the Member for Fife, North-East, in an intervention during my right hon. Friend's speech, asked whether clause 2(2) could be used selectively in terms of the authorities to whom the rebate is paid on a future occasion. My answer is no. The subsection is drafted so that that cannot happen.
The hon. Member for Garscadden asked whether we would consider paying the rating authorities some of their reimbursement "up front", as I think he put it. The Bill provides for flexibility in our repayment, and I should like to consider what evidence would be acceptable for making some early payment to the rating authorities before an audited certified claim can be prepared.
The hon. Member asked about disabled persons' relief, and I think he appreciated that I was not altogether clear about it. I am still puzzled as to how it can arise. If the hon. Gentleman will write to me about it, I shall look into the matter.
My hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) asked about mines and quarries. [Interruption.] I shall deal later with what hon. Members call shortfall. Quarries are formula-valued and will not qualify for relief under the measure.
The hon. Member for Orkney and Shetland asked about the whisky industry. As he knows, whisky distilling is manufacturing and benefits from industrial derating. Thus again, under the Bill as drafted, the industry will not qualify for relief.
My hon. and learned Friend the Member for Perth and Kinross (Mr. Fairbairn), together with my hon. Friends the Members for Renfrew, West and Inverclyde (Mrs. McCurley) and Stirling (Mr. Forsyth), rightly pointed out that the lesson of the revaluation has been in underlining the anomalies and iniquities in the present system. Those have been highlighted by the revaluation, and that is precisely why the Government have been looking, for some years now, for a better way of financing local government.
I must say to the right hon. Member for Glasgow, Rutherglen (Mr. MacKenzie) that the suggestion that we are being panicked into a solution or are rushing to find one has to be judged against the vast amount of work that has been done in this regard in the last Parliament and since November last year. It remains our intention to produce in the near future proposals which we believe will be acceptable as a better and fairer system of financing local government.
My hon. Friend the Member for Renfrew, West and Inverclyde asked about the problems of market gardening. Market gardens other than the house are generally treated as agricultural subjects and therefore do not appear in the valuation roll. Obviously I cannot comment on a particular case, but if there is any doubt obviously the occupant should appeal in circumstances such as those mentioned.
The hon. Member for Aberdeen, North (Mr. Hughes) asked why there was to be a delay of two months before the measure was brought into force. The answer is that it is not needed before that. The order can be laid and debated immediately. If Royal Assent is given in June, we would have that order by the summer recess. That would be in plenty of time for the authorities to make payments of the rebate before the due time when the rate bills have to be paid.
My hon. Friend the Member for Stirling asked several questions, and I may have to write to him on some of them. With regard to fishing, if there is a separate entry in the new roll for a fishing beat which can be matched against a similar entry in the old roll, the property can possibly qualify, but if the beats have been amalgamated or divided between the two rolls there can be no comparison and thus no rebate.
With regard to change of use from industrial to commercial purposes, there has to be a comparison between lands and heritage before and after revaluation. If there is a difference of a kind to which my hon. Friend points, there will not be matching entries in the old and new rolls, and therefore there will be no rebate.
Several hon. Members asked about the amounts of money involved. The scheme was devised by looking for a multiplier which we believed would deal with the harshest cases arising from revaluation and the effects on rate bills. The figure that we chose, which is very much in line with the figures for domestic relief which I quoted for 1978–79, was a multiplier of three. It is not easy to calculate how much that will cost, as hon. Members have realised. I believe that we shall not know the full answer to that question until all those who are eligible have been paid.
The Bill fulfils the commitment that my right hon. Friend made to the House in his recent statement. It is good for Scottish ratepayers, and I call on the House to support it.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.
—[Mr. Peter Lloyd.]