Orders of the Day — Non-Domestic Rating Bill

– in the House of Commons at 4:19 pm on 12th January 1994.

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Order for Second Reading read.

Photo of David Curry David Curry , Skipton and Ripon 4:28 pm, 12th January 1994

I beg to move, That the Bill be now read a Second time. It does two things. It honours a pledge given by my right hon. and learned Friend the Chancellor of the Exchequer in his Budget speech on 30 November 1993 to provide yet further help for businesses next year under the transitional arrangements we introduced to phase in changes in rates bills following the 1990 revaluation. Similar help will be provided in Scotland by reducing rate bills, on average, broadly in proportion to the reduction in England.

Secondly, the Bill gives the Government greater flexibility to introduce, if necessary, further transitional arrangements following the 1995 revaluation. The House will be aware that this is the third time in the past two years that we have brought forward measures to help businesses that are facing rates increases as a result of the 1990 rating reforms. The previous measures were warmly welcomed by the House. I hope that this Bill, too, will be given a swift passage so that local authorities will be able to incorporate the changes when they send out their rate demands before the start of the financial year. Failure to do so could result in uncertainty for businesses and delays in bills or the need to re-bill, with the administrative costs which that would involve.

Many businesses are already benefiting from the introductioin of the uniform business rate. The occupiers of 1·25 million business properties that have no need of the transitional arrangements can plan ahead in the knowledge that the business rate poundage cannot rise above inflation. By announcing a poundage of 42·3p in the pound, the Government have guaranteed that their bills will rise by no more than 1·7 per cent. next year, enabling them to benefit from the current low rate of inflation.

For around 360,000 businesses, however, increases in bills will be greater than 1·7 per cent. next year. Those are the businesses which are still moving upwards towards their full new rate bills after the 1990 revaluation. It is inevitable that revaluations shift the burden of rating between businesses. That has to happen if rates are to continue fairly to reflect the relative prosperity of different types of businesses in different areas. Equally inevitably, adjustment to those changes can be painful. It was to cushion such changes and to ease the pain that the Government introduced transitional arrangements in 1990 and additional measures since then further to soften the impact.

The Non-Domestic Rating Act 1992 froze rate increases beyond the rate of inflation for 1992–93 and allowed businesses whose bills were being phased downwards following the 1990 reforms to see their remaining gains come through this year. That was an extremely generous package which benefited around 900,000 premises throughout the United Kingdom at a cost of around £1·25 billion over three years. The Non-Domestic Rating Act 1993 again held rate increases to the rate of inflation for 1993–94 at an additional cost of some £550 million.

Without any change to the arrangements for 1994–95, businesses that benefited from the two earlier measures would face increases of up to 20 per cent. on top of inflation next year. We do not think that businesses should be asked to face such large increases. However, it is necessary to make some progress towards full rate bills based on the 1990 revaluation. We simply cannot afford a further freeze for all properties. The Bill will, therefore, reduce the increases that businesses would otherwise be facing to 10 per cent. on top of inflation for larger properties and 7·5 per cent. for smaller properties. For smaller properties that are in part domestic and in part non-domestic—the composite hereditament—the Bill will continue the freeze on increases beyond the rate of inflation for a further year.

The measures will provide relief of some £90 million in forgone revenue for around 360,000 properties in England. A free-standing shop in, for example, Newcastle or York with a rates bill of £4,000 for 1993–94 would save about £305. An office with a rates bill of £10,000 in that year would save about £1,017.

Photo of Hugh Bayley Hugh Bayley , City of York

The Minister has mentioned my constituency, where many properties will face such enormous increases in their business tax when the uniform business rate is introduced that they will not reach anywhere near the revaluation level at the end of the five-year transitional period. What guarantee can the Minister give that those businesses will not face an enormous £2,000, £5,000, £10,000, or £20,000 increase, as some of them could if transitional relief is not run forward beyond the end of the current revaluation period and into the next?

Photo of David Curry David Curry , Skipton and Ripon

In 1995, there will be a revaluation based on the values of April 1993—the values of nearly a year ago. Because of the change in business fortunes, many properties may not reach even the rateable values anticipated in the 1990 revaluation; they will not have to complete a transition, because the new values will be lower than those fixed in 1990.

Photo of Hugh Bayley Hugh Bayley , City of York

That is certainly true of some businesses and properties, but for other properties the new revaluation level will be considerably higher than the existing uniform business rate, involving transitional relief rebates. Unless the transitional relief regime continues for some years, to ensure that the rate bills of businesses do not rise from, say, £20,000 to £40,000—unless the system continues in a form similar to that proposed by the Minister for the current year —some businesses will incur massive increases, not this year but next year.

Photo of David Curry David Curry , Skipton and Ripon

I look forward to receiving the hon. Gentleman's support in the Lobby tonight. The Bill will enable us to mitigate increases that might result from the 1995 revaluation, without necessarily requiring a self-financing system, so that those whose rates are going down need not meet the costs of those whose rates are rising. The purpose of the legislation is to give the Government the necessary power, without necessitating recourse to primary legislation, to enable them, by means of an affirmative resolution in both Houses, to introduce transitional measures financed by a contribution to the pool to compensate for any deficit in the amount that it would otherwise have received.

Photo of Hugh Bayley Hugh Bayley , City of York

The Bill would certainly give the Government the power to roll forward transitional relief. I am asking for a political commitment that they will use that power to protect businesses in my constituency—and, indeed, in the constituencies of other hon. Members.

Photo of David Curry David Curry , Skipton and Ripon

It is perfectly clear that the total business rate is hypothecated to local government finance. If we introduced measures that resulted in less money being available for the pool than would be available otherwise, local government would expect us to make good the shortfall. I, therefore, give the hon. Gentleman the commitment that we would do so.

Photo of David Curry David Curry , Skipton and Ripon

I was going to give the Opposition time to recover from a state of stunned shock, but I am happy to give way to the hon. Gentleman.

Photo of Keith Vaz Keith Vaz Shadow Spokesperson (Environment, Food and Rural Affairs)

Will the Minister answer a question that he failed to answer when I asked it during last night's debate on the money resolution for this Bill? Why has he thought it necessary to depart from the principle set out in previous Bills—and, in particular, from a statement made in the House on 13 May last year by his predecessor, now Secretary of State for Wales? During the Report stage of last year's Bill, the then Minister said that full compensation would be paid and that the Secretary of State would make up the entire amount missing from the pool.

Photo of David Curry David Curry , Skipton and Ripon

The House risks falling into a dangerous consensus. Under the current legislation, if we decide to mitigate, compensation must be provided within the system—unless we introduce measures to enable the Exchequer to finance the deficit. That is the commitment made last year by my right hon. Friend the Secretary of State for Wales, as he now is; and I am fulfilling it in this Bill.

We are looking ahead to the 1995 revaluation. After that, we may need to mitigate further. We want to have the power to do so in a way that enables the House to scrutinise our proposals fully. The measures will be introduced by means of an affirmative resolution.

There is a change. We are departing from existing powers that impose a system of self-financing. We can compensate the pool only by means of primary legislation, such as this Bill. We are moving to a system in which we seek powers to make regulation, to give us more flexibility. We do not yet know the nature of the scheme that we might introduce and it would be entirely wrong for us to bind ourselves, by means of a duty, to a scheme that we have not yet devised. The affirmative resolution procedure, however, will give the House a proper opportunity to debate the matter. I cannot understand why the hon. Member for Leicester, East (Mr. Vaz) has such a constitutional hang-up about the problem.

After that brief consensual interlude, I shall continue. The measures will provide relief for about 360,000 properties in England, to the tune of about £90 million. I quoted examples of offices in Newcastle and York. Some 180,000 shops and offices will benefit by over £50 million and 60,000 warehouses and factories will benefit by £7 million. About 120,000 other properties will also gain. Much of the relief—about £73 million—will benefit 236,000 businesses in London and the south of England, because that is where the impact of the 1990 revaluation was felt the heaviest, based as it was on 1988 values. The same principles will be adopted next time.

Businesses in Wales will save £5 million and in Scotland the rate bills of all 220,000 businesses will be reduced by £10 million overall under separate powers. The reduction will, on average, be broadly in proportion to the reduction in rate bills for businesses in England.

We believe that this additional relief will be welcomed by businesses in the run-up to the 1995 revaluation. However, that revaluation is likely to result in further shifts in rate bills to reflect the changing economic fortunes of businesses since the peak of the boom in 1988. We may need to introduce further transitional arrangements for 1995–96 onwards and our powers to make further transitional schemes are contained in the Local Government Finance Act 1988, which has just been the subject of my exchanges with the hon. Member for Leicester, East.

It is still too early to say how the revaluation is likely to pan out. Although the Valuation Office Agency has been collecting the necessary data, this will need careful analysis before final assessment of the rateable value can be determined. We do not expect to have firm indications of the effect of the revaluation before the spring. We shall then be able to look carefully at the overall pattern to see what form any further transitional arrangements might take. Once the proposals have been formulated, we would expect to consult on them by the early summer. We would certainly wish to give businesses a chance to comment on the proposals, and local authorities will need as much time as possible to prepare for the introduction of any new scheme once it has been finalised. We would expect to announce our conclusions in the autumn. Parliament will also have an opportunity to consider any new arrangements. The regulations giving effect to them require the approval of both Houses and must come into force by 1 January next year.

In some respects, we do not believe that our existing regulation powers are wide enough to do all that we might wish to ease the transition in 1995. The Bill will provide additional flexibility. In particular, our existing powers require the Secretary of State to devise transitional arrangements that are self financing. The Bill will remove that requirement and enable the Government to devise rules that would reduce the burden on businesses. It will enable us, should we wish, to ease the burden for those facing increases as a result of the 1995 revaluation without requiring the full cost to be borne by other ratepayers. We should be able to make up the difference by making an Exchequer contribution to the business rate pool.

The existing powers also require regulations governing each five-year transitional period to be made before the period starts. That would require the Government to take a view in advance on the extent to which they might be prepared to support the arrangements centrally each year. The Government would wish to have the flexibility to decide that afresh each year in the light of changing economic circumstances. The Bill will allow regulations to be made governing one year at a time.

The Bill will give us the powers to ensure that protection against rate increases under any transitional arrangements after 1995 is not lost if a property is subsequently altered to create a new property. In such cases, it will be necessary to derive notional rateable values for the new properties as if they were in existence at the time of the revaluation. The Bill will allow regulations to include provision for the valuation officer to certify such notional rateable values and for ratepayers to be given the opportunity to appeal if they disagree with the certified value.

We believe that, overall, the measure will provide further relief for many businesses and enable a smoother transition towards the new rate bills that businesses will face following the 1995 revaluation. I commend the Bill to the House.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment) 4:44 pm, 12th January 1994

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof this House declines to give a Second Reading to the Non-Domestic Rating Bill because it fails, in future years, to guarantee that any shortfall in the rating pool will be made up by the Secretary of State, fails to guarantee that the cost of transitional arrangements for non-domestic ratepayers will not be borne by council tax payers and fails to make the Secretary of State sufficiently accountable to Parliament. When the Government fall, as they surely will, it will be because of their continued abuse of power, their failure to respect the spirit of the rules and conventions of the House, their failure to distinguish between private partisan interest and their public role as trustees of the constitution and because of the contempt and arrogance which Government Members now display for all who disagree with them.

The House is being asked today to agree to every stage of the Bill without any justification. The fact that the Minister did not devote a single word to attempting to justify the abuse of power spoke volumes for the lack of justification for the procedure that has been adopted. I am sorry that the Minister should be a party to this abuse. Since he became a Minister he has built up a deserved reputation for being reasonable. On two occasions I have heard him say that he comes from the consensual wing of the Conservative party, if that is not an oxymoron. At a conference organised by the city council in the city represented by my hon. Friends the Members for Coventry, South-East (Mr. Cunningham) and for Coventry, North-East (Mr. Ainsworth) I heard the Minister open his remarks by saying that he believed in consensus and that he wanted to develop it. The use of that word used to be a hanging offence in the Conservative party, but he used it. Yet last night he showed contempt for the House. Our anger and astonishment at what he did was palpable when he refused to answer straightforward questions put during the short debate on the money resolution. Today he has offered no explanation for why the Bill should be forced through every stage in one day.

As the House knows from the excellent speech last night of my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), we are not opposed to the principle that businesses should receive a subsidy as a consequence of the continuation of the recession. We made that clear when similar but different Bills were debated last year and the year before. The Bills that were debated last year and the year before followed the normal and accepted procedure for non-emergency Bills. This is not the nationalisation of Rolls-Royce which, although it was introduced by the Conservative party, we accepted had to take place in a day. This Bill is not to deal with an emergency but to provide relief for businesses in respect of their business rates for the next financial year which starts on 1 April.

Last year and the year before, the Committee stages of those Bills were separated from the Second Reading by well over a week, which is the normal procedure. [Interruption.] That is correct and I will give the Minister the dates if he wants them. The House has developed that procedure regardless of whether a Bill is contentious. The Second Reading debate allows Members to think about and discuss the general principles involved. Detailed questions are asked of Ministers and there is time to reflect on the answers. There is also time to table amendments in the light of the debate on general principles and for them to be debated. If the Minister is wondering why the Opposition, who are a constructive Opposition, dealt with matters expeditiously last year and the year before, it is because Ministers sought to respect the conventions of the House and provided time for reflection. There is another reason. Both those Bills were introduced after the financial year had started. Ministers could have said, "We should not be in this position, but we are. It is an emergency. The financial year has already begun and rate bills are about to be sent out. We want to get this through immediately." They never said that. They took their time, as did the House and, as it happened, neither Bill received Royal Assent until midsummer.

This Bill was published in December, three and a half months before the end of the financial year. It is having its Second Reading two and a half months before the end of the financial year. We do not want any jiggery-pokery from the Government later, so I must make the point that even allowing for the suspension of the usual channels, given the narrow range of amendments tabled, their grouping and the normal time for discussion, there is no doubt that if there is a majority in favour of the Bill, it could become law by the end of February. That is the earliest that it will be needed by any treasurer. I hope that the Minister will take account of that fact. If he wants to offer an explanation that none of us had spotted as to why councils need such powers now when they know that they are likely to get them in any event before the end of February, I invite him to intervene. It is interesting that he fails to do so, just as he failed to offer the House an explanation during his speech—no wonder he is looking so uncomfortable.

The Bill differs in two important respects from the two previous Bills, as our reasoned amendment makes clear. Our amendment states that this House declines to give a Second Reading to the … Bill because it fails in future years, to guarantee that any shortfall in the rating pool will be made up by the Secretary of State, fails to guarantee that the cost of transitional arrangements for non-domestic ratepayers will not be borne by council tax payers and fails to make the Secretary of State sufficiently accountable to Parliament. The Bill is a masterpiece of obfuscation. I think that the Government have signed up to the "Clear English" campaign, but it is perfectly obvious that the parliamentary draftsmen have not paid their subscription. There has rarely been a less comprehensive Bill. Any member of the public picking it up would think that it was an examination paper for maths A-level rather than a Bill apparently designed to give relief on rates.

I shall read out clause 1(2) so that it becomes clear just how confused it is. It refers to sub-paragraph (2A) of that paragraph which, according to clause 1(1), is paragraph 5 of Schedule 7A to the 1988 Act. I know that my hon. Friends who are experts in these matters think of little else. Clause 1(2) continues: for the words from 'except that' to the end there shall be substituted the words 'except that for the financial years beginning in 1992 and 1993 X is 100 and for the financial year beginning in 1994 X is—

  1. (a) 110 if the hereditament falls within sub-paragraph (3) below, and
  2. (b) 107.5 if the hereditament falls within sub-paragraph (4) below."
It then gets worse. I am making a serious point. If the House passes legislation, it is important that it should be comprehensible. We know and the Minister knows what the legislation means, but a busy business man who is supposed to be relieved of the burden of government and who wants to know what it means will need A-level maths and will probably have to be a retired parliamentary draftsman as well.

Buried in clause 3(3)(a) is one of our principal objections to the Bill and the difference between this and previous Bills. It states that in paragraph 9(3A) of Schedule 8 to the 1988 Act (as set out in section 4(1) of the 1992 Act), for the words, 'shall also' there were substituted the words `may also'". One of our principal objections is that under the 1988 Act —now the 1990 Act—the Secretary of State is required to make up any shortfall in the business rate pool as a consequence of the introduction of a transitional scheme. Under the Bill, that requirement is turned into a discretion, as my hon. Friend the Member for York (Mr. Bayley) and others have said. That means, first, that there is no requirement on the Secretary of State to enter into a transitional scheme even if one is needed, which will place a burden on businesses facing very large increases—well above the rate of inflation—as a result of revaluation.

Secondly, where a transitional relief scheme is put in place, the cost of that scheme may not be borne by the Exchequer, as it should be, but will fall as cuts in the overall spending of local councils or will fall to be paid by the domestic ratepayers, or council tax payers, of the area. The domestic residents will be robbed by the Treasury and the Secretary of State in order for the costs of the transitional scheme to be made good.

Photo of David Curry David Curry , Skipton and Ripon

I repeat what I said to the hon. Member for York (Mr. Bayley), who asked for a political assurance. I said that we did not use the word "duty" because it would be daft to incur an obligation to compensate in respect of a scheme that we have not yet devised, but we accept that the product of business rates is hypothecated to finance local government, that local government will expect that any money that is forgone should be made up and that if we use the powers we shall top up the pool. Why do the Opposition seek to remove those powers?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

All that the Minister of State has to do is to accept one of our amendments and change "may" to "shall". He might want to discuss an amendment which states that if there is a scheme, the difference "shall" be made up.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

It is not ridiculous. The Minister has given half a confession—or coughed only half the job, to use a phrase employed by the Lancashire police. He has coughed the fact that the Government do not know the nature of the scheme to be introduced so he cannot firmly draft the legislation to take account of the undertaking that he has given to the House, which will appear in Hansard but which is not included in the Bill. He has not got a clue about the scheme that will be introduced in the future. It is probably fair to say that, given the way in which things are changing, there is no betting that he will be the Minister this time next year.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I shall allow the Minister to intervene in a moment.

It is almost certain that the Treasury has insisted on the change because it objects to the fact that it is being required to make good the shortfall under current legislation. I do not doubt the Minister's word, but, having spent 15 years listening to Ministers give their word in the House, I have to say that although he has given his word as an honourable Member there is a world of difference between a Minister giving his word and that word being translated into enforceable Acts. The difference is that Acts can be enforced while the word can be ignored, not by him but by his successor.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I shall give way to the Minister and then I shall make my final point.

Photo of David Curry David Curry , Skipton and Ripon

Will the hon. Gentleman agree with me on at least one point of logic? If there is no scheme, there is no shortfall, and if there is no shortfall there is nothing for which to compensate. I do not understand why he is making such a song and dance about whether we introduce the scheme. If we introduce the scheme and there is a shortfall, there will be compensation. If we do not, there is nothing for which to compensate, so I do not understand why the hon. Gentleman is disagreeing.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

That leads to the second substantive point in our reasoned amendment. We do not want the House to buy a pig in a poke. The House is being invited to provide the Secretary of State with powers to introduce a scheme of indeterminate character subject only to the affirmative resolution, which means an hour and a half of debate late at night during which the Minister need not reply to questions—as was the case last night. The Bill should include the undertaking that the Minister has given to the House to the effect that where there is a scheme, it is not a matter of discretion that the Treasury should pay.

I recall the School Teachers' Pay and Conditions (No. 2) Bill, which represented a modest U-turn by the Government just before the previous election. The Government abandoned a scheme which was the subject of the No. 1 Bill for a negotiated pay arrangement with teachers and substituted a pay review body. The Treasury was given the power to override the review body's recommendations and to give directions to it. Other review bodies were not subject to such a power. We asked the then Secretary of State, now the Chancellor of the Exchequer, why it was there. He said that it was just there because it was there and would never be used. Those were his undertakings, but it has been used recently, in the decision by the Government to impose a statutory pay policy on all public sector workers.

The Minister must therefore bear in mind our scepticism. If his words mean what they say, there is no reason on earth why the parliamentary draftsmen, with the skill that they have shown in the algebra that they have put into the Bill, cannot translate his words now into words on the face of the Bill. The Bill gives powers to the Secretary of State which are far too wide, as we say in our reasoned amendment.

The Bill also allows us to discuss the general principle of the non-domestic rating system and to review the operation of the scheme after its first three years. The law was changed in the 1988 Act and came into operation in April 1990 as part of the poll tax fiasco of that year. The decision to establish a uniform business rate is spelt out in the rantings of the former Prime Minister, now Lady Thatcher, which I have read—although I must tell my hon. Friends, in case they think that I have gone soft, that I have not purchased them, but merely borrowed them from the Library. [Interruption.] I wonder whether Conservative Members have read them. They may need a strong dose of carbolic soap afterwards, but it is none the less an interesting read.

Photo of David Curry David Curry , Skipton and Ripon

We are waiting for the film.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The decision to impose a national business rate was a result of a frenetic campaign by some sections of the Conservative party and some sections of business against the setting of a business rate by each authority.

Business rates increased, as did domestic rates, in the early 1980s. They increased faster than inflation, but they increased, not as a result of so-called overspending by local authorities, but as a direct result of cuts in revenue and rate support grant from 61 per cent. in 1978–79 to 46 per cent. in 1985–86. It was a simple matter of arithmetic that if services were to be kept at approximately their previous level, if one cut revenue support grant by that enormous amount—more than 25 per cent.—the effect, especially taking account of gearing, on domestic rates and business rates would be to increase them by an even greater proportion.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I am delighted, as ever, that the hon. Member for Lancaster wishes to intervene. No speech that I make would be complete without an intervention by her, and I give way.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

I wonder whether the hon. Gentleman, who has the misfortune to share our county council, can account for the fact—gearing or not —that spending by the Labour-controlled Lancashire county council increased by 186 per cent. after it became Labour-controlled initially. No amount of gearing could account for that.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

One reason why I am always delighted to give way to the hon. Lady, courteous though she is. is that it is an invariable truth that any question that she asks contains a major error of fact. If I were allowed to offer a wager across the Floor of the House that spending by Lancashire county council increased by 186 per cent. in, I guess, the first year or so of Labour taking control of the council in 1981, I would not just put a tenner on it. I think that the hon. Lady accepts the wager. If she means in a period of 15 years that—[Interruption.] I think that the hon. Lady is wrong. Lancashire county council has a good record and it was in no different position from any other authority confronted with a dramatic cut in revenue support grant.

The hon. Lady needs to remember that Labour was elected in 1981 because, as my hon. Friend the Member for Burnley (Mr. Pike) said from a sedentary position, we had terrible services in Lancashire. That is why, in every election since—1981, 1985, 1989 and 1993—when every time the hon. Lady has predicted that the Conservatives would sweep back into power in Lancashire, she has been proved wrong. People have faith in the services that Labour authorities provide, and quite correct, too.

Photo of David Winnick David Winnick , Walsall North

Does my hon. Friend agree that, whatever defects Lancashire county council may have—it seems to have very few—those defects cannot be compared with the malpractices which have been carried on by Westminster city council? Lancashire county council has not carried out the type of sleazy political work of that council in London and nor has it had a character like Lady Porter, who should be disqualified for ever from engaging in any form of public life. Should not Lancashire county council—and other local authorities in my hon. Friend's region as well as in mine—be congratulated on not having as members such notorious political characters as those who used to be, and some of whom perhaps remain, members of Westminster city council?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

One of the consequences, which I shall describe, of the profligacy, waste and sleaze in Westminster—as may emerge tomorrow if we ever see the district auditor's report—is that they have been a burden on business because it seems that Westminster city council has wasted millions of pounds of ratepayers' money. A s a consequence, the business rate has had to be much greater than it would otherwise have been and there have been fewer services.

The Conservative Government were responsible for that —there is no doubt about it, although I knew that amnesia is the first requirement of any Minister these days. There is no doubt about the fact that there was a major cut in the revenue support grant and that was why business rates increased. Despite that, the Government—

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

Does my hon. Friend agree that there is a further nonsense in the Government's approach in 1979? He is right that the Government's policy of cutting the rate support grant between 1979 and 1985 forced the increase in rates, including business rates, and the Government then brought in legislation to try to tackle that increase. Part of that sequence of legislation resulted in a council tax which the Government also found too high and, as a result, they had to legislate to increase central Government support to local authorities to bring the council tax down. The policy went full circle. In the meantime they destroyed many local services along the way.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

My hon. Friend is right. Under rates, despite what the Government say, average domestic rate bills in Labour-controlled areas were always lower than in Tory-controlled areas. It is still the case today, thanks to the excellent work of our Labour councils, that average council tax bills per household in Labour-controlled areas are £14 lower than they are in Conservative-controlled areas.

Despite the truths that I have spelt out, the Conservatives claimed—that was the so-called intellectual basis, the tissue of their policy proposal for going to a national business rate—that high business rates lost jobs. No Opposition Member—it is rather different on the Government Benches these days—wants taxation of any type to be a pound more than it should be. The Conservative party is, as we know, the party of high taxation, which breaks its tax promises, and Labour is the party of probity on tax, as on other matters. [HON. MEMBERS: "Hear, hear!"] The Government's claim then, however, that there was a link between rates and jobs, not only stank of hypocrisy but had no basis in fact.

In 1980, I asked the excellent statisticians in the House of Commons Library if they would do a regression analysis which sought to correlate increases or decreases in unemployment with business rate increases in each travel-to-work area. They found no such correlation. I presented that evidence, in the early 1980s, to the then Minister of State, the right hon. Member for Bristol, West (Mr. Waldegrave), now the Chancellor of the Duchy of Lancaster. After much humming and hawing, the Government decided to spend £50,000 of taxpayers' money to carry out a major study into the effect of business rates on the location of employment. Rather a similar story was attached to the publication of that report as to the publication of the Westminster district auditor's report. The Government believe in open government and it is something of an irony that the right hon. Member for Bristol, West should now be in charge of open government.

My hon. Friend the Member for Rossendale and Darwen (Ms Anderson) will remember all too well that, at the time, the then Minister of State did everything that he could to suppress the report. Why did he do that? Was an issue of national security at stake? Would the report expose an intelligence agent in Iraq, who might be exterminated, as we were led to believe was the reason for suppressing the Iraqgate affair? Were people's personal peccadilloes being revealed in that study on the effects of business rates on the location of businesses? I agree that those should not be revealed. The answer is none of those, but that the £50,000 study, paid for with taxpayers' money, had reached the wrong conclusion.

The statisticians had been asked to use their expertise and intellect and set up all kinds of mathematical models to establish whether there was a connection between rates and jobs. They did that and came up with exactly the wrong answer for the Government. Their answer confirmed the validity of the work carried out by Mr. Robert Clements, who is now head of the statistical section in the House of Commons Library. For ease of reference for the Minister, the report has been deposited in the Library and he has only to pop downstairs to get it. I have the introduction of the final report, which we had published only by getting hold of an illicit copy, publishing it ourselves and then embarrassing Ministers into making it public.

The report went into detail about methodology. It said: Simple graphs and cross-tabulations reveal no relationship. Multiple regression, which enables a more sophisticated analysis of the data, confirms the importance of the structural and other factors, but provides no evidence that the location of manufacturing employment change is related to the level of or change in rates … Preliminary analyses also fail to reveal a relationship between rates and changing number of manufacturing businesses in each area. The report went on to say: The report therefore concludes … that with the exception of office employment in and around London"— the report found a saving in that regard— it is not possible to detect an influence of rates on the location of employment. The report then said that many more detailed studies were needed.

Interestingly, it is suggested in the body of the report that there might be a relation between higher rates and more jobs because higher rates supported higher public spending which, in turn, supported high local private employment.

Photo of Jim Cunningham Jim Cunningham , Coventry South East

My hon. Friend will recall that, back in the early 1980s, any surveys carried out could prove beyond a shadow of a doubt that 2 per cent. of business costs were rate costs. So the other 98 per cent. were other costs. I am sure that my hon. Friend will agree with that.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I agree with my hon. Friend and I congratulate him on his clairvoyance. He has not seen my speech in advance, but that was exactly the point that I was about to make. I was going to point out that, despite all the blather and bluster that we get from the hon. Member for Lancaster about the burden of business rates—we do not want business rates to be higher than they should be—we never heard a peep out of the Government about what they were doing about the much bigger burden on businesses, then and now, caused by employers' national insurance contributions.

In 1978, £3·3 billion was raised from the business rate and £6·1 billion from employers' national insurance contributions. In 1992, £13 billion was raised from rates and £22 billion—the figure is still rising—from employers' national insurance contributions. So if the few Conservative Members present to pay an interest in the level of business rates are seriously worried about the burden on business, they should campaign to reduce employers' national insurance contributions, rather than increase them.

Photo of Mr Michael Bates Mr Michael Bates , Langbaurgh

I am trying to follow carefully the point which the hon. Gentleman is making, but it is difficult to understand his assertion that there is no link between where businesses locate and the business rate charged in that area. If that were so, the programme of enterprise zones which allowed free rates for a period of five years and which has been so successful in rejuvenating many parts of the north-east would not have been so successful.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I understand the hon. Gentleman's perplexity because it was widely shared among Conservative Members. In the end, the penny dropped with most of them. I shall send the hon. Gentleman a copy of the study.

First, as the study shows, businesses move and relocate as a result of factors that are not related to the level of business rate. That is because, as my hon. Friend the Member for Coventry, South-East said, the business rate in relation to overall business costs is so low that it is unlikely to be a factor in location. The study made it absolutely clear that it was not a factor.

The hon. Gentleman also asked about enterprise zones. The reason why we hear so little about enterprise zones these days is that, as the study showed, they led to a transfer of jobs within a travel-to-work area, from areas where businesses were paying rates to areas where they were not paying rates. There was no increase in jobs, which is why the scheme has disappeared into oblivion.

Photo of Mr Bill Michie Mr Bill Michie , Sheffield, Heeley

In the so-called free enterprise zones, where rates may be free, the lease and ground rent charges went up to compensate for the saving that businesses made on their rates. So although the local authority did not receive the rates, some businesses were exploited through their leasing arrangements because they were paying no rates.

The studies carried out many years ago in Sheffield, which was a major manufacturing base, showed that when employers were asked why they could not be competitive and why there would be job losses—it was not just because of Europe, although that was a significant factor—showed that the energy costs far outstripped any rate rise during the period when the city council controlled the rates. It seems odd that we are still beefing on about that and that the Government are considering VAT on energy costs. They do not know what they are talking about.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

My hon. Friend is right and underlines the point that the enterprise scheme was one of the most expensive forms not of job creation but of job transfer ever invented. My hon. Friends the Members for Newcastle upon Tyne, North and for Burnley have just reminded me that, in many cases, the benefit from the rates holiday was taken not by the business located in that area but by the landlord, who increased the rent.

Photo of Mr Michael Bates Mr Michael Bates , Langbaurgh

The north-east has attracted some £3·5 billion worth of inward investment, creating or safeguarding some 35,000 jobs as a result of development corporations. Many of those businesses have been created in enterprise zones.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The north-east has done well and it is a testament to the brilliance of Labour-controlled authorities throughout the north-east. The areas of inward investment in the north-east are all in Labour-controlled areas. Inward investment has taken place in Derbyshire, which is another Labour-controlled area.

Photo of Mr Michael Bates Mr Michael Bates , Langbaurgh

Will the hon. Gentleman give way?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

No. I have already given way twice to the hon. Gentleman.

I remember it being said that Newcastle's rates and other rates in the north-east were too high. Of course, they are too high as a consequence of the Government's policies, but they did not affect business location or the attractiveness of the area to inward investment.

Photo of Jim Cunningham Jim Cunningham , Coventry South East

Will my hon. Friend take it from me that, although rates may be a factor, a more important factor for a company corning to a city is what is available in terms of Government grant, skills in the area, the location of the business, transport costs, and good public services to transport people to and from work? If the hon. Member for Langbaurgh (Mr. Bates) wants to check those facts, I am sure that he will find that most local authorities will confirm what I am saying.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I have already given way twice to the hon. Gentleman.

As Labour authorities score high on good public services, they create jobs while Tory authorities destroy them.

The Bill provides an opportunity to review the underlying principle of the business rate. I have already dealt with why the Conservatives went ahead with a national business rate. In doing so, they assaulted local democracy and, at the same time, halved the local tax base at a stroke. We objected to that, as did the local councils, but it was easy for the Conservatives to reject those complaints. Many in business and many Conservative Members, however, opposed the change.

In a letter written to the Local Government Chronicle in December 1991, Mr. Graham Mason, the director of company affairs of the Confederation of British Industry, said that its policy on business rates was set out in a document issued in 1987, but he noted our approach to reforming local government finance was not adopted by the Government. I am not arguing that the CBI was then fully in favour of the local business rate, but it was never in favour of the national non-domestic rating scheme.

The Institute of Directors is not affiliated to the Labour party, although these days anything could happen and usually does, but it has always been in favour of a local business rate. Interesting statements have also been made by individual business people. Mr. Stephen Boyd, the operations director of Courtaulds, has written: At least with the former system you could talk to those who made the decisions locally on the county or district council and have a good moan. Now the decision is based upon the Retail Price Index.Local businesses, whether part of multi national companies or local enterprises, are an essential part of the life of a community. They consume local services. They require local supplies. They also employ local people. there is precious little link between the quality of services received and the amount paid out … It seems to me that the gearing imposed by the current financial regime"—the gearing consequences of having a national business rate have been extremely severe— gives local authorities very little room for manoeuvre.Returning UBR to local decisions would bring the gearing factor back to two to one, a far more comfortable position. He argued that the system should be changed and that a business charter should set out local business rights. We would support and develop such an initiative.

Mr. Tony Saint, then director and general manager of British Aerospace at Hatfield, put forward a similar argument in the Local Government Chronicle in December 1991. He wrote that meetings between business and local government representatives had always been constructive and noted: Meetings were a strong influence on county council members when they were considering the level of local taxation to levy each year. The sharp break with the past as a result of the introduction of the uniform business rate has removed this long and steady relationship. No matter how many meetings we now have, nothing the county council does can influence the level of `local' tax that businesses are required to pay.

Photo of Mr Bill Michie Mr Bill Michie , Sheffield, Heeley

The Government keep telling the nation that we must keep state hands off the running of businesses. That is nonsense. Next year, the Government may take into consideration the recession and may appreciate that the business rate should be set accordingly, but as the business world has said, it is much easier to talk to the people who run the city or the county about problems. Flexibility was far greater under the old system. I hope that I will have the opportunity to speak later about the problems encountered in Sheffield because of the current system's inflexibility. Unfortunately, we will not have the time to discuss that problem in detail.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

My hon. Friend is right.

It is important to note that Mr. Tony Saint also said: In the past there was a proper consultative process in which my company felt a genuine involvement and through which we had an ability to influence the outcome of the level of the tax in a particular year. As a result of the imposition of the central tax, that involvement and influence have gone.

My hon. Friends will be interested to know that our policy is also supported by the Conservative flagship borough of Westminster city council. Councillor David Weeks, the leader of the council before he was fired, wrote this to the Local Government Chronicle in January 1992: At Westminster we fully support the call of the Institute of Directors for the return of business rates to council control. Since national non-domestic rates were introduced we have vigorously campaigned for the right of local authorities to be held accountable for the taxes paid by and the services provided to their local businesses. The argument we have made carries even more weight for the smaller businesses, which operate only within the boundaries of one local authority. If Westminster council was able to collect business rates from every premises used for business purposes, the rate base would be greater and those who pay business rates and council tax legitimately would face a smaller bill because they would not be subsidising those who avoided the business rate.

Many hon. Members have studies or offices in their private houses. Plenty of people run small businesses from their homes. Neither is separately rated. When anybody lets an office to someone else or runs a separate business from it, questions arise about whether it should be subject to the national non-domestic rate. That brings me to the hon. Member for Rutland and Melton (Mr. Duncan).

I wrote to the hon. Gentleman as one is required to do —and I always do so—to state clearly that I intended to raise this matter on the Floor of the House. Madam Speaker will be aware of that fact because I sent her a copy of the letter. I also left the hon. Gentleman a telephone message to that effect. I know for certain that he contacted one of my Front Bench colleagues and acknowledged that he had received my letter. I fully anticipated that he would be present today, because he would then be able to answer the questions raised relating to entirely legitimate matters of public interest. I am astonished that he is not here, because in all my years in the House I have never known an occasion when an hon. Gentleman about whom legitimate questions about his conduct of public business have been raised, and who has been given proper notice by an hon. Member that those questions would be put, has not come to the House to deal with them.

The hon. Gentleman's purchase of No. 17 Gayfere street involved a public subsidy from Westminster city council. That subsidy was paid for by council tax and business ratepayers in Westminster. The question is whether it was right for that subsidy to be passed on to the hon. Gentleman. In my view, that depends, critically, on the circumstances in which the hon. Gentleman made his deal with Mr. Ball-Wilson, the ostensible purchaser of No. 17. When the hon. Gentleman loaned that gentleman most of the purchase price, did he agree with him that, in return, as soon as the three years had elapsed—the restriction governing a sale—Mr. Ball-Wilson would sell the hon. Gentleman the property? That is an important question.

My second question concerns the business rating of No. 17 Gayfere street. That house is not the residence of the hon. Gentleman, but—

Photo of Mr Michael Bates Mr Michael Bates , Langbaurgh

On a point of order, Mr. Deputy Speaker. I seek your guidance because I do not detect that this matter relates to the business before the House.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

I am listening closely to the hon. Member for Blackburn (Mr. Straw) and I assure the hon. Gentleman that if any of his comments are out of order, I will rule them so.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I am grateful, Mr. Deputy Speaker.

I am raising serious questions about the business rate in Westminster. I quoted from the former leader of Westminster city council—his comments were made well in advance of any knowledge of Mr. Ball-Wilson or the purchase made by the hon. Member for Rutland and Melton—who expressed his support for our policy in favour of local councils having the right to determine the business rate. Anyone who avoided paying that business rate would increase the burden on legitimate business ratepayers in Westminster. That important issue is germane to the purpose of the Bill.

My second question to the hon. Member for Rutland and Melton concerns the business rating of No. 17 Gayfere street for national non-domestic rating purposes. I understand that that property was used as the headquarters for the leadership campaign of the Prime Minister. I understand from an article in the Evening Standard that it was also used by the author of a biography of the Prime Minister. I do not believe that that book has enjoyed enormous sales—perhaps there is some curse on the property. I am sorry that the hon. Gentleman has decided to duck and run and not to answer my questions, because I know that he is around.

The Daily Mirror claims that the hon. Member for Rutland and Melton worked for Mr. Marc Rich for six years, during which time Mr. Rich was a fugitive from justice in Switzerland. Did the hon. Gentleman do that work from No. 17 Gayfere street? This raises serious questions about whether the place is rated, whether it should be rated and whether, if it is not rated—it appears not to be, judging by the views of Westminster city council —Westminster ratepayers and the Exchequer have lost revenue as a result. The hon. Gentleman does not seem willing to answer these questions or even to come and listen to them and I am sure that Conservative Members are as astonished as I am that he has ducked out without explanation. But these questions will not go away until he provides a proper answer to them.

I now set out the Opposition's view on the national non-domestic rating system. We support the subsidy in the Bill because it is needed by business, but we do not believe in the principle of a national non-domestic rate. All our experience of the past three years confirms our view that the position that we took in 1988 was correct. Our view is the same as that of the Institute of Directors, of Conservatives in Westminster and of many in business. We believe that the Government should conduct a thorough review of the NNDR system with a view to establishing an improved system of business rates.

We do not say that the old system was perfect; indeed, it had its defects. Recently the Institute for Fiscal Studies conducted a major study of various alternatives to the system that should be looked at carefully.

When we come to government we will establish a local business rate. We will have safeguards to ensure that it cannot be increased any faster than increases in the domestic local tax. We will establish a charter, as proposed by the director of Courtaulds, and we shall consult widely on our proposals.

At the election the Prime Minister said that if electors voted Conservative on the Thursday, recovery would begin on the Friday. This Bill is proof that, despite that claim, the effect of the recession on businesses continues to be so great that the Exchequer subsidy of business rates is still needed. But the Bill provides no guarantee that all such subsidy will be paid in future years by the Treasury and it gives too much power to the Secretary of State.

Above all, the manner in which the Bill is being forced through the House is wholly unacceptable. It represents an abuse of power by a petulant, incompetent and contemptible Government, drawn from a party that has lost all moral authority to govern.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Halton 5:32 pm, 12th January 1994

My hon. Friend the Member for Blackburn (Mr. Straw) pointed out that this is a short Bill. It is also, probably inevitably, a technical Bill. I make no criticism of the Government for that, because it is a very important Bill for a large sector in this country.

First, the Bill affects councils. I speak as a vice-president, serving in a purely honorary capacity, of the Association of County Councils, which is clearly affected by the idea of a uniform business rate. The Bill probably affects district councils even more, because they are the unpaid tax gatherers, for the Government, of the UBR. That is not to say that they have any say in the matter —the proceeds do not come to them but go into a national pool. Nevertheless, they have to collect the money and incur the odium for doing so.

The Bill affects every domestic council tax payer because there are no guarantees in the Bill that any shortfall in the rating pool will be made good by the Government; nor are there any guarantees that the costs of the transitional arrangements will not have to be borne by the domestic council tax payer. The House heard with astonishment and delight the Minister of State giving a firm assurance about this to my hon. Friend the Member for York (Mr. Bayley), who extracted the assurance from him with the persistence of a true Yorkshire terrier. The Minister said that the Government would bear such costs. If so, why not include that in the Bill? It would be simple to do so. We have an amendment tailor made for the purpose: it changed the word "may" to the word "shall". If the Government accept the amendment, proceedings on the Bill—or at any rate on this point—can be kept short, no doubt to the delight of hon. Members.

To parody the words of the Chancellor of the Exchequer about an election in the midlands, I fear that some future Minister will come along and say that the Government are not bound by what a Minister of State said in response to an intervention on a wet and windy Wednesday. That is what we shall hear in 1995 or 1996. I plead with the Government to incorporate the amendment, if they mean what they say. The Minister is an honourable and respected figure, and I am sure that he means what he says, but I am not sure that the Government do. They have often backtracked on their words in this House. There was a time when such words were sacred and if Ministers said something in the House the Government would carry it out because they had given their word to the House of Commons, so I hope that council tax payers will be protected in the Bill.

The Bill will affect business and industry because they face another revaluation in 1995, albeit based on 1993 prices. All the expert advice suggests that that revaluation will mark a shift of the burden from London and the south-east to the rest of the country, especially to the north and the north-west—a reversal of what should happen. The burden will shift from retailing and office development to manufacturing industry, a ridiculous state of affairs in a country which depends so much on that industry. Despite that, the Bill says little about the revaluation and its effects.

Finally, the Bill affects this House. As my hon. Friend the Member for Blackburn said, it gives more and more powers, by regulation, to the Secretary of State, who can thereby avoid bringing primary legislation, on which all of us can have a say, to the House. I know that the Minister has said that the regulations will be debated here, some of them even under the affirmative procedure, but we all know what that means: the regulations are discussed late at night, when most hon. Members want to go home or have gone home, and the regulations are not amendable. We have to accept them all or throw them out.

This is not the sort of government that we expect. I deeply regret the fact that the Government, as they have done so often before, are taking more powers against local government—and by the back door, not by debate in the House but by regulation.

As my hon. Friend asked, why are the Government behaving in this way? They have offered us no explanation as to why they are forcing the measure through all its stages in a single day. We started the Session a fortnight late, on 18 November. Sessions usually start at the beginning of November. We had an extended Christmas holiday. Not much legislation is in the pipeline, as far as I can tell, to keep us going for the rest of the Session—so why adopt this arrogant approach, just as the Government did before Christmas when they shoved two other Bills through in one day? I do not know whether arrogance, incompetence or the Government's fear of Conservative Back Benchers is the reason, but the House will not put up with this: we have the right properly to debate legislation which will affect our constituents.

The Minister said that the House has accepted other such Bills. Possibly, but the national business rate has never been accepted by the main local government organisations—the Association of Metropolitan Authorities and the Association of County Councils. Both are opposed in principle to the whole idea of a national non-domestic business rate. It drastically reduces the independence of local authorities, which is what the Government want. In 1989–90, locally raised money formed 57 per cent. of local government finance. This year, it was 17 per cent. That is a mark of local government's dependence on central Government, and the concept is wrong. The national business rate goes further in the direction of centrally administered rather than locally administered funds.

Conservative Members generate many myths about local authorities. Thank God none has been generated in this debate, certainly not from the Minister, and Conservative Back Benchers have chosen not to speak. They say that local authorities are spendthrifts and that they hate and suppress business. That is nonsense. All councils—I speak on behalf not just of Labour-controlled councils but of those controlled by Liberal Democrats or Conservatives—co-operate with chambers of commerce. There may be exceptions to that, but I do not know of any. They also co-operate with local firms because it is in their interests and in the interests of business to do that.

There is co-operation on planning, on the environment and on services such as waste disposal and removal. There is a great deal of co-operation on roads and other communications, which are vital to businesses and which are, on the whole, controlled by county councils. Such dialogue is important. There is co-operation on education. At one time, I would have said that there was co-operation especially on higher and technical education but, alas, the functions in relation to those have been removed from local authorities. People from technical colleges can no longer see councillors to discuss schemes because the technical colleges are no longer controlled by county councils.

Local authorities, not the Government, are the best judges of the needs of counties and districts. A uniform business rate is a wedge between business and the council which it should not be. The business rate collected by councils goes into a national pool and the council itself does not benefit from it. As I have said, the 1995 revaluation will be traumatic for business no matter what the Minister says.

All the forecasts are that the burden of rates and the revaluation will shift from London and the south to the north, the north-west and the midlands. It will shift from retail to manufacturing and such a trend should not be allowed. I passionately believe in manufacturing industry. Service industries such as tourism play a vital role, but a nation depends on what it makes, and to put an additional burden on manufacturing at this time is a shift in the wrong direction.

We have tabled new clauses and amendments on matters about which the Bill is totally silent, but those matters should be addressed. The Bill says nothing about the utilities of gas, electricity, British Telecom or cable, which were formerly nationalised industries but are now profitable private businesses which can cause more trouble to a local authority than all the chemical industries put together: roads which have been dug up require reinstatement and traffic deployment schemes, but the firms that cause the problems are lightly treated under the rating system. In fairness not just to the domestic ratepayer but to businesses which have to bear the greater part of the burden of rates, the Bill should contain measures to deal with that or we should have a proper Committee stage to address those problems. I know that the rating of utilities is a complex matter but it could still be addressed.

The Bill gives the Secretary of State undue powers for which he is not accountable to the House. As I have said, even affirmative resolutions are not properly debatable because they are presented at a time when most hon. Members want to go home. They are not amendable and have to be accepted as a whole or not at all. Such crucial matters should be addressed by primary legislation and not by regulations.

The Government want to go back to basics. There are two age-old-basics: the basic right of democratically elected local councils to provide and be responsible for the needs of their areas, and the right of the House to question, amend or reject any Government measure. The Government want rule by regulation but there should be rule by democratic debate. The Government and the Leader of the House, who is in his place, should carefully consider those basic principles and not try to railroad the House without any reason whatever. There is ample time to pass the legislation long before 1 April, which is the start of the financial year. I do not think that any hon. Member likes that, and the House will not stand for it.

Photo of Mr David Rendel Mr David Rendel , Newbury 5:46 pm, 12th January 1994

It is interesting to note that you, Mr. Deputy Speaker, have not had an opportunity to call any Conservative Member. I am surprised that the Government cannot find a Back Bencher to support them, at least vocally. That reminds me of what happened last night, because at the end of the debate on the money resolution for the Bill the Minister was not prepared to answer the questions that had been raised. Some of us felt that that was not a great display of courage because some serious issues were raised. I hope that the Minister will answer some of those questions in the winding-up speech at the end of this debate.

Yesterday, I said that the origin of the problems of the national non-domestic rate was the lack of revaluation of business premises between 1973 and 1988. I should like the Minister to address that. Perhaps that was due to a lack of political courage by, first, the Labour Government and then the Conservative Government, who feared business reaction to the huge increase in business rates that would have been likely if revaluation had gone ahead. That lack of courage meant that when the revaluation finally took place on the introduction of the national non-domestic rate, there were large increases for some businesses, and the Government were forced to introduce a transitional scheme.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Is the hon. Gentleman aware that the flagship of the Conservative Government, the 1987 legislation on the poll tax, included that? It was debated at great length and one of the problems addressed was that transitional arrangements for the non-domestic rate would be overtaken by another transitional arrangement because of another revaluation. The situation in which the Government now find themselves was forecast during the debate on the poll tax legislation, and they are now trying to force legislation through the House.

Photo of Mr David Rendel Mr David Rendel , Newbury

The hon. Gentleman makes a valuable point, but what he says is not surprising, because it was clear even at that time that the revaluation would result in enormous changes to business rates and that some sort of transitional arrangement would be needed for a long time.

The transitional relief was expected to be, and, indeed, was to start with, self-financing in the sense that businesses which suffered big increases in rates were compensated by those that were likely to gain from a reduction. But the gains were not given to them straight away, and that meant that the original scheme was self-financing. However, shortly afterwards, we entered a recession and the Government faced a general election. Just before that general election, the Government decided to allow all the benefits for firms and businesses that were looking for a reduction in their rates to be given to those businesses.

That was clearly an electoral bribe and it has made necessary the increase in other funds to make up for that drop in rates coming in; that bribe has, therefore, caused the problems that we are facing today—the need to change the transitional relief year by year. The challenge that I gave to the Government last night—I would welcome an answer today, as they did not have the courage to answer last night—is: do they agree that the electoral bribe given in March 1992 is the main cause of the problems now?

I shall go a little further into how the need for huge transitional relief has arisen and point out that it has been necessary in some areas of the country, particularly the rather more prosperous south-east, which had the tremendous economic boom of the late 1980s, spurious though it has turned out to be. As a result of that boom, there were huge property value rises in the south-east.

In areas around my constituency, large rateable value increases have led to large increases in the NNDR payable. That has put the south-east and similar parts out of kilter with less prosperous parts, which did not perhaps gain such benefits as were gainable from that boom. We have found, of course, that the recession has had almost the opposite effect. Those parts of the country that benefited in the short term from the boom have been the same parts that have been hit—often worst—by the recession.

The areas where property values rose at the time of the revaluation of 1988 are often the same areas that will be revalued at a much lower rate under the property revaluation of 1 April 1993. That has led to a curious situation in which there had been huge increases in business rates, which have had to be reduced by transitional relief. But those increases may lead to reductions in the total amount payable once next year's revaluation—it was introduced on 1 April 1993, but the new business rates will become payable next year—comes into effect.

Those huge increases have led to a number of business bankruptcies in the meantime. It is my fear that if the increases are allowed to go ahead, even at the levels that are being contemplated over the next year, a number of businesses will become bankrupt during that year—businesses that would have found their rates reduced by the revaluation had they survived as long as the beginning of next year.

I therefore believe that it is foolish of the Government to go ahead with increases in rates charged this year for some of those firms which are likely to be, or could be, put out of business during the next 12 months, but which, if they could survive that period, might survive thereafter and become viable once more.

There is a good case to be made for saying that the amount of rates relief that has been allowed—or will be if the Bill is passed—is insufficient and will lead to a loss of businesses, which the Government could avoid if they chose to do so. If the Government chose to avoid that loss of business, that might be self-financing because the loss of businesses inevitably means that rates will be lost as well and the country's general level of prosperity will fall.

I shall now deal with the details of Labour's amendment, because I have certain sympathy with much of what Labour Members have talked about and much of their amendment in terms of the apparently illogical way that the Government were planning at first not necessarily to make up losses, but now, as promised, are to make them up.

However, it seems that we should on this occasion support the Government on Second Reading and not support the amendment, because although I have certain sympathy with some of what the Labour party has said today, the point that it is making is a rather technical one. I say that for the following reason. The amount that council tax payers will have to pay in any year depends on what comes back to them not only from the NNDR—the distributable amount—but from the revenue support grant.

It is open to the Government to make increases or decreases in the revenue support grant as they wish. Were they, for example, not to make up the full amount in the distributable amount as a result of changes to transitional arrangements, it would still be open to them to make up that amount by increases in the revenue support grant. Equally, if they chose to make up the whole amount lost in transitional arrangements, they could nevertheless reduce the revenue support grant. So the ultimate effect on the council tax payer is not in itself determined by the passing or otherwise of the Labour amendment.

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

Does the hon. Gentleman accept that, first, the total amount of money available in the revenue support grant to local authorities is likely already to have been announced by the Government by the time they announce their decision on whether they will make up any shortfall under the legislation, and, therefore, that there may be a direct impact on local authorities in total from the Secretary of State's decision in the future?

Secondly, if the money is made up from the revenue support grant rather than through a direct making up of the shortfall under the discretion available to the Secretary of State under the legislation, the impact on individual authorities will certainly be different, and, therefore, so will the impact on individual council tax payers in the services that they receive.

Photo of Mr David Rendel Mr David Rendel , Newbury

In practice, the Government will decide the level at which they will make up the distributable amount before they make any announcement on the revenue support grant, whether or not the decisions are announced in the appropriate order. Therefore, in practice it is still within the Government's capability to decide on the total final result for the individual council tax payer.

Photo of Jim Cunningham Jim Cunningham , Coventry South East

Does the hon. Gentleman accept that, looking at the record of the Government, in practice the local authorities are not compensated by the full amount and that that is one of the problems with the Bill?

Photo of Mr David Rendel Mr David Rendel , Newbury

I accept that. The problem is that the Labour amendment does not seem to overcome that difficulty, but I accept that the difficulty exists.

Photo of Keith Vaz Keith Vaz Shadow Spokesperson (Environment, Food and Rural Affairs)

I am grateful for the hon. Gentleman's sympathy for the Opposition's amendment, but does he not accept, as was said by my hon. Friends earlier, that it would be much better if the commitment that the Minister gave to the House were put in the legislation? Therefore, does he not accept that it is much better to support the reasoned amendment, which calls for that commitment to be put in the legislation?

Photo of Mr David Rendel Mr David Rendel , Newbury

To a large extent, I have already given my reasons for thinking that it does not much matter whether that commitment is in the Bill or not. Therefore, my reason for opposing the reasoned amendment proposed by the Labour party is that, in practice, there is insufficient reason for voting against the Second Reading of the Bill when to do so might cause other problems. It is those other problems that I shall particularly put to Opposition Members who wish to see the amendment passed.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

I am grateful for the hon. Gentleman's indulgence, as I know that he has given way many times today. I understand the point that he is making, but surely he accepts that we are dealing with a Government who have shown stealth and guile in imposing taxation burdens on everybody in the country over a period and it would be a good thing to remove the opportunity for them to increase other people's taxation by stealth and guile through the mechanisms provided in the Bill. They may well do that. The Minister is saying that he accepts the principle of hypothecation and that all the product of the business rate will go to the pool, but he refuses to put that in the Bill. Surely, if that were in the Bill, we should at least achieve one thing—we should remove one bush behind which the Government could hide when imposing what will effectively be extra tax on ordinary people.

Photo of Mr David Rendel Mr David Rendel , Newbury

I have some sympathy with the hon. Gentleman's point, as I said in my remarks about Labour's amendment. However, I do not feel that passing the amendment will enable us to force the Government to play fair in the long term, because they are answering only one of the two parts of the problem, which are the NNDR and the revenue support grant. However, my sympathy is not strong enough to lead my party to refuse to support the Bill as a whole. I have now answered that point four times in a row.

As I was going on to say, further difficulties are liable to accrue if we do not give the Bill a Second Reading. I ask Labour Members to consider to what extent they feel that they could deal with the problem of the excessive rates in certain areas that are likely to lead to business failures later this year if the Bill or something like it is not passed. We should not forget that, once it receives Second Reading, it can be amended in Committee.

Furthermore, we must consider not only what would happen to those businesses facing excessive rate rises this year but what would happen after the revaluation has taken place and we see, perhaps in areas rather more relevant to Labour Members, excessive rises next year. The relative value of businesses in some of the more prosperous parts of the country may be reduced compared with the value of businesses in rather less prosperous parts of the community, which have not suffered to quite such a significant extent from the change in business values.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

The hon. Gentleman is raising a couple of points for the Labour party to answer. My hon. Friend the Member for Blackburn (Mr. Straw) told the House that we are not opposed to the principal objective of the Bill, but we believe that there should be more time to consider its proposals and that it needs some amendment. The amendment is not aimed at defeating the principle of the Bill. We believe that people outside the House should have the time to put their views on the Bill so that they can be taken into account. Some amendments, such as those that we have tabled today, should be debated and, we hope, agreed to so as to improve the Bill.

Photo of Mr David Rendel Mr David Rendel , Newbury

I thought from the previous four interventions that the Labour party was more distrustful of the Government than I am, but that intervention implies that I am more distrustful of the Government's intentions than is the Labour party. If we do not at least give the Bill a Second Reading, thereby giving us a chance to amend it, we may lose the whole thing. If that happened, there would be no guarantee that the Government would introduce another Bill. That would leave businesses facing enormous rate rises. Because my distrust of the Government's intentions is such that I do not believe that they would introduce another scheme for transitional relief, I would rather we had what is on offer in the Bill.

Photo of Keith Vaz Keith Vaz Shadow Spokesperson (Environment, Food and Rural Affairs)

I do not know what the hon. Gentleman's problem is. My hon. Friend the Member for Blackburn (Mr. Straw) made it clear that the Labour party supports the subsidies that have been given to businesses not just in this Bill but in other similar Bills in the past three years. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), when he led for the Opposition on this matter last year, made it clear then that we supported the subsidy. My hon. Friend the Member for Burnley (Mr. Pike) and earlier my hon. Friend the Member for Blackburn said that it is ridiculous that the Government are pushing this important Bill through in one day.

The hon. Member for Newbury (Mr. Rendel) was elected to the House in a spectacular fashion, and told the electors of Newbury that the Government should not be trusted. Perhaps he is now showing his true colours. He is more prepared to trust the Government than is the Labour party, which is proposing to scrutinise the Bill carefully and to consult local businesses. Surely he supports that aim.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. Interventions are supposed to be brief. Unfortunately, today some of them have not been and I hope that the House will take note that in this and other debates interventions should be short.

Photo of Mr David Rendel Mr David Rendel , Newbury

That intervention was making the same point as others and it would be wrong of me to repeat my answer to the previous intervention, which was probably adequate. I have made it quite clear that I do not share the Labour party's trust in the Government, and their belief that the Government will introduce a new Bill if this one falls. The problem with Labour's opposition to Second Reading is that the Government might not introduce another Bill. The Opposition are endangering businesses —I accept that they may not intend to do so and that in principle they are supporting the transitional arrangements —by trusting the Government to come back with a further Bill, and I do not have that trust.

The NNDR system as a whole is not a sensible way to tax businesses for local taxation purposes and we should be moving to the system of site value rating, which the Liberal Democrats have proposed for a long time. That would lead to an increased transfer of the burden of business rates away from struggling businesses and towards the developers out to make a quick buck. That is an excellent principle to work on, and the Government would be well advised to look at it.

Such a system would be particularly valuable to those parts of the country, including my constituency, that have seen huge pressures of over-development of green-field sites in the past 15 or 20 years. A number of brown-field sites have not been properly developed and could do with further development in place of that damaging pressure on green-field sites.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

Will the hon. Gentleman accept that if he pursues his policy of site valuation, that would effectively mean many small businesses in his constituency and other town centre areas paying excessively increased rates? Would not that be damaging, especially to the small business sector?

Photo of Mr David Rendel Mr David Rendel , Newbury

No, that would not be the outcome. If we can get some of the brown-field sites better developed, with higher rateable values, the rates on the town centre small businesses to which the hon. Gentleman referred would not be so high. I do not accept his point. Site value rating would put a lot of pressure on ensuring the most effective, efficient and productive use of every industrial and commercial site. That pressure is not being properly applied by the NNDR system, but the country could do with it for its greater economic benefit.

I should like to commend one part of the Government's NNDR system, as far as it goes. The Government would do well to develop it further in an effort to overcome some of the problems we have been discussing today. I refer to local authorities giving discretionary rate relief to certain vital businesses. I speak from some experience as a member of a local council who has often sat on panels deciding whether discretionary relief should be applied.

The problem is that the current system is very restrictive. It is extremely difficult for failing businesses to get an allowance for discretionary relief. The local authorities almost invariably know best which businesses in their areas should be getting discretionary relief and which should not. The trouble is that, although they may know that certain businesses deserve and would get real value from the system, they may well be unable to grant relief to those particular businesses because of the way in which the legislation has been drawn up.

The legislation does not appear particularly restrictive; the problem is that it has been left to case law to decide whether or not particular businesses fall within the remit. I give the example of a firm in my constituency which manufactured and then either hired or sold period costumes. The business was struggling to survive. The owners and directors of the business were drawing no salaries and, as a result, at the end of the year the company had made what was described in the accounts as a small profit, only because in effect there were no labour costs. As it was making a profit, it was deemed not to be suffering hardship.

One of the difficulties about the discretionary system is that, in order to be eligible for a discretionary award, a company has to be suffering hardship. That is an example of the way in which the scheme is unnecessarily restrictive and I would welcome any move from the Government to make it clear in the legislation that the scheme should be applied more freely and openly to a number of businesses which otherwise would go under as that business has.

Under case law, it is difficult for a business to obtain discretionary relief unless it is the only business of that kind in the area concerned. Another case in my constituency involved a copy shop which was providing valuable business services to a number of businesses in Newbury, but which was suffering difficult times because there are other copy shops in the area and competition was severe. As it was not the only copy shop in the area, it was unlikely to be eligible for relief. That seems absurd. The Government, who claim to be in favour of competition between businesses, surely should not be using discretionary relief in such a way that only one or two competing businesses may survive.

There is a clear case for making discretionary relief less restrictive so that it would be possible to retain both businesses in the town. They are both valuable small businesses in the town centre. It would be of great help for the scheme to apply to such businesses.

In summary, the Bill offers some valuable help to small businesses and others. It is a pity that the help offered is so small, particularly because of the circumstances of some businesses. Their rates may come down next year, but it may be too late to help them survive.

It is a pity that the Labour party has not recognised the importance of making sure that at least some help is given to business. To be fair to Labour Members, they have worked hard recently to make friends in business and I welcome that. There has been antagonism between Labour and the business sector for too long and I am glad that they are trying to do something about it. However, it is a pity that their attitude to the Bill does not necessarily fall in with that policy.

The Government could take further measures. They have the chance to provide further transitional relief, to consider site value rating and to make discretionary relief less restrictive. The Government are trying to help businesses. They could and should have done much more and I hope that they will consider that seriously.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East 6:15 pm, 12th January 1994

Anyone looking in on this place at the moment would be surprised at how we have been conducting business tonight and for quite some time. We are discussing the national non-domestic rates. It is an opportunity for hon. Members on both sides of the House to discuss business, the problems that businesses face and the burden caused by the rates in particular, yet we have not heard a single speech from the Conservative party, which pretends to be the party that represents business.

What is going on here tonight will surprise people, but when they see the manner and the time in which the legislation is being pushed through, they will be even more surprised. I get nothing but stares of disbelief when I explain to my constituents how we consider business in this place, the holidays we get and the working time in Parliament throughout the last Session and at the start of this Session, yet Bills were guillotined before Christmas.

We are discussing an important Bill, and the money resolution was pushed through last night without adequate discussion and before the main debate on the principle. It is thus quite clear that the Government have no intention of listening to any of the points raised by hon. Members about the legislation, as the financial arrangements for it have already been pushed through. It certainly leaves a lot to be desired. People talk in jargon about the democratic deficit, which has grown to such an extent that, if we are not careful, Britain shall have no credit because of the way in which the Government are running the country.

As my hon. Friend the Member for Blackburn (Mr. Straw) said earlier, it was not just the hon. Member for Rutland and Melton (Mr. Duncan) who was reluctant to come to the House today: most Conservative Members seem reluctant to debate such an important issue. People outside will not understand that. It will do no credit to the democratic process and the way in which the Government are running the country.

The way in which the Government propose to push the Bill through also leaves much to be desired for those who will be affected by it. We would have expected the Bill to provide opportunities for people to make representations and to be consulted about legislation that will be of some financial importance to themselves. That is the normal process of parliamentary scrutiny.

I am sure that businesses have made representations to the Government about the national non-domestic rate. I am sure that the CBI and the small business organisations have made representations to the Government. They have certainly made representations to the Opposition parties and to individual Opposition Members.

Organisations should be given time within the parliamentary process openly to make adequate representations to Parliament, not simply to make rushed representations to individual Members while the Government rush the Bill through before anyone understands it in detail. That is disgraceful. It is causing upset in this place and has resulted in scorn being poured on the way in which we conduct our business. It should be condemned in the strongest terms.

I speak as an ex-chairman of finance in Coventry city council, so I am fully aware of the problems that councils will face in collecting the national non-domestic rate on behalf of the Government. However, there is no need for the time scale that is imposed by the Bill.

Coventry city council's treasurer's department always took pride in doing its business efficiently and correctly. Its officers took a pride in their work which went beyond political pride. In particular, they took pride in being the first, or almost the first, to send out the bills. Certainly for them, there is no need for this legislation to be passed before the end of February. They will not have completed the decision-making process for the council tax, so there is no need for them to discuss the collection of business rates before the end of February.

Yet, despite the fact that Parliament has just enjoyed an extended holiday, this legislation is being forced through in our first week back as though we faced a major national disaster to which Parliament must respond. One would have thought that the Russians had invaded the Ukraine and were moving westward. There is no need for it, and it is a disgraceful way in which to conduct business.

The Opposition's main concern is the pledge by the Chancellor of the Exchequer that further help to business should not be at the expense of the domestic council tax payer. We need to know whether that pledge and the Minister's assurances tonight are worth anything at all.

As hon. Members have said, it is all very well for the Minister to come to the Dispatch Box and give an assurance that he sees the national non-domestic rate as a hypothecated tax, the product of which will go back into the rating pool and not be interfered with. But such an assurance is not worth a light, particularly given recent comments by other Ministers.

People in this place and elsewhere have said that pledges given before elections mean nothing and are of no value. They have been dismissed in the most cavalier of fashions. Reference has been made to things said on rainy nights, and so on. The assurance given from the Dispatch Box tonight is worth nothing. In a couple of years, a different Minister may be in post, so the assurance tonight is valueless.

If the Government want to curtail debate on the Bil, get the business through the House and earn some credit, they need only accept that that guarantee should be built into the legislation, by changing the word "may" back to "shall".

When we see a single word changed in that way, and given the Government's record, we are entitled to ask why. The Minister has said that effectively it does not mean anything, and that the Government intend to guarantee that all the money raised from the national non-domestic rate will go into the pool. If that is the case, why was the Bill drafted in this way? People are entitled to be highly suspicious about that, and to ask that it be reversed and that the guarantee be built into the legislation. A commitment from the Dispatch Box is not worth anything.

I disagreed with only one intervention by my hon. Friends during the speech of the hon. Member for Newbury (Mr. Rendel): that was when my hon. Friend the Member for Leicester, East (Mr. Vaz) said that he did not understand why the hon. Gentleman was saying what he was. At the end of those interventions, I understood only too well what the hon. Gentleman was doing. Like me, he is a relatively new Member, but he was doing what his hon. Friends on the Liberal Bench often do, and that is saying two different things. He attacked the Government for not giving business the necessary protection, while saying that the Labour party's amendment was good but that he could not support it because it was not good enough. He then went on to say that the Labour party was effectively leaving business open to higher bills, which he and everyone else knows is not the case.

We are seeing the classic ploy of the Liberal party. Liberal Members say two different things which are reported in two different parts of Hansard, so that they can tell the natural Labour supporter that they backed the Labour party in the House on the national non-domestic rate, and at the same time tell the natural Conservative voter that the Labour party cannot be trusted because of what it tried to do over this Bill.

I am sure that, over a period, the hon. Member for Newbury will become much better at that sort of thing and will be able to disguise it much more effectively. He will learn from his hon. Friends, and I am sure that we shall see many similar performances from him, getting better by the day. But let us make no mistake: he was using the old Liberal trick of saying one thing in one place and a different thing in another, so that he always has an appropriate quote to suit his purpose. We need have no doubts about what was going on there.

Photo of Mr David Rendel Mr David Rendel , Newbury

Will the hon. Gentleman accept that everything I said today concerned the Opposition's amendment and the Government's policies, and was not personal abuse?

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

I am sorry if the hon. Gentleman feels offended. I was congratulating rather than abusing him. I am sure that he was doing his best to toe his party line and to behave as other members of his party have behaved over a period. I would not have thought that that was an insult, but if the hon. Gentleman feels that I have insulted or slighted him, I assure him that that was not my intention. Whether I was insulting his party is another matter, which we would need to discuss outside the Chamber, where we could talk more freely.

Much has been said tonight about the connection between rates and jobs, and the need to protect businesses from excessive rates. My experience of regular discussions in Coventry suggests that the introduction of the national non-domestic rating system was most damaging, in that it broke the tradition of consultation between local authorities and business rate payers. Although such consultation survives in Coventry as elsewhere, it is not of the quality that previously obtained. That is true of both sides.

It is difficult to motivate business men and their representatives to spend time consulting, under a statutory system, on the level of spending that a local authority is about to set when it will not make a blind bit of difference to the bills that businesses will pay. As a consequence, although we enter into consultations in Coventry with many good people, others are totally out of touch with current legislation, and seem to think that the local authority still sets the district rate. The national system has effectively destroyed the incentive for the business community to consult properly with local government over the way that it conducts its affairs.

Equally, it is difficult for a councillor to persuade colleagues to spend time discussing with members of the business community who are not themselves liable to pay the business rate why the ruling group has decided to set local taxes at a particular level. Many councillors face a restriction on the amount of time that they are allowed off work, and say, "Why should I spend my valuable time consulting the business community over the level of a tax that is set nationally when I could be participating in determining council policy and decisions?"

Furthermore, nothing has replaced that traditional consultation. Most businesses could write a letter to the relevant Minister, although whether they would receive a reply is something else—but there is no effective opportunity for effective consultation at a national level.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Does my hon. Friend agree that, when the rate was set locally, business representatives could meet council officers and councillors to discuss the services that they would receive? That direct link meant that they could often persuade the council to respond positively on improvements to car parks, bus services and so on.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

My hon. Friend is right. In Coventry, as elsewhere, local chambers of commerce made a massive effort annually to ensure that they properly consulted their own members and made valuable representations to the council. They engaged with the council in a positive dialogue each year. Great efforts have been made to continue that process, but the dislocation of decision making mitigates against that dialogue. It has become far more difficult to motivate both sides to continue that debate—the quality of which, as a result of the break in the link, has deteriorated.

Government Members have repeatedly said that a prime reason for businesses relocating is the level of local tax, but that is not my experience. It may be a factor for businesses, but Coventry undertook substantial research into the reasons why companies relocate—and I am sure that other local authorities throughout the country in areas of mass unemployment have done the same.

In Coventry, it was found that the business rate level was a relatively minor element in the decision-making process. Companies were more concerned with finding a location that offered good access to their market; a good infrastructure, in terms of the road and rail network; and a decent environment for staff at all levels. That impacts on directors who want to live in the leafy hinterland of Warwickshire. It was important to company chairmen and directors that they could enjoy a high standard of living in Stratford-upon-Avon, while being able to drive into Coventry relatively quickly.

Companies also wanted a good environment for their employees, and they sought high-quality recruits. They therefore looked for high spending by the local authority on a good standard of education in the local work force, on whom relocating companies could draw. They did not consider only local tax levels—their decisions had a much more sophisticated basis.

On the principle of the NNDR, it has been said that the proportion of taxes raised locally has fallen drastically. The main reason is the transfer of the business rate to national level. The percentage accounted for by local taxes was once 57 per cent., but it is now 18 per cent. Any sort of decent accountability by local government cannot be achieved while local government raises such a small proportion of the money that it spends.

Under any acceptable system, we cannot increase the level of taxation raised at local level unless we increase the tax base. The Government have recognised that fact, and have run away from their own decisions on accountability: when it got too hot, they introduced the poll tax system.

One of the principles of that system was to increase accountability. However, before long, they were ensuring that VAT rose to an astronomical level to keep poll tax bills down, because they could not handle the heat from their own supporters and opposition of every description. Therefore, they effectively destroyed accountability at a local level by taking away the ability to raise a high proportion of tax. Decisions on the level of council services are now effectively taken at a national level.

Photo of Mr David Rendel Mr David Rendel , Newbury

Does the hon. Gentleman accept that one way in which local accountability could be quickly increased would be by a system of local income tax, so that local income taxes could be quickly raised, while national taxes could be quickly reduced? That would enable a larger proportion of taxation to be raised locally and would provide just the accountability that he seeks.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

As the hon. Gentleman may have expected, I have discussed the issue of local taxation with many people over a long period and, as somebody who has always earned a living on a pay-as-you-earn system and has paid income tax at the proper rate on the full amount of income, I have usually found that the debate has reached the conclusion that the income tax payer is the only person who pays all the taxes due from him. There are so many fiddles and ways around the taxation system for other people that it is unbelievable.

One of the emotional arguments against the rates was that it was the only tax that the rich ever had to pay in full, and that was why they were always so scathing about it. It is not wise to propose that we empty the basket of taxation available and load it on to the income tax payer, and that we should have not a property-based tax but an entire system of income-based tax. That is a crazy policy, which I would not support. However, I know that the hon. Member for Newbury does support that idea, and that it is the policy of his party.

Quality decisions on services are best taken at a local level. One cannot make good decisions at national level about all the matters that are currently dealt with by local government. More responsibility ought to be passed to local government to achieve that quality, rather than decisions being made at national level, which, in the case of Coventry, is 90 miles from where they will take effect.

We ought to see a big increase in decision-making at local level, yet, by the introduction of a national non-domestic rate system, we have destroyed local accountability and the ability of local government to take decisions about the level of service it wants to provide and for which it is accountable to its electorate.

The real problem with the national non-domestic rating system is that it deprives local government of the ability to raise taxes locally and pay for services. That ability should be returned in some way to a local level not only for domestic tax but for business tax also.

Photo of Hugh Bayley Hugh Bayley , City of York 6:44 pm, 12th January 1994

I make no apology for speaking in a wholly partisan fashion on behalf of the small businesses in my constituency, because in York the revaluation in 1990 hit harder than in any other district council in the country.

The average revaluation was a 15·5 times increase—higher than anywhere else. The combination of the 1990 revaluation and the introduction of the uniform business rate was a lethal cocktail which has sent the tax for York businesses spiralling into the stratosphere. The average increase in business rates in York is the ninth highest of all 367 local authorities.

What is so surprising is that York is alone at the top of the league of massive increases as a northern local authority. Above it are Windsor, Winchester, Kensington and Chelsea, Westminster and Wandsworth. From the top 100 local authorities that faced rises, only another four were in the north of England. Three of those four were in north Yorkshire: Selby, Scarborough and Harrogate. The fourth was South Lakeland.

Understandably, the increase provoked a wave of protest from businesses in my constituency. More than one third of all the businesses in York appealed against the revaluation and, four years later, all those appeals have still not been heard. It shows how inept and inappropriate the introduction of the UBR and the revaluation was in York. It shows what is wrong when a centralising Government claws the power into Whitehall to set local taxes and overrules generations of local decision making.

Local authorities know local businesses, they know who works for those businesses, they know who runs them and they know the local business conditions. They could set rates with the knowledge of what the local economy could and should take. Instead, we have a centralised, ever stronger state which lays down what businesses must pay, with no respect for their ability to do so or to the local variations in economic performance.

York was especially hard hit by the introduction of the UBR and revaluation, but it was not alone. The political cost of sending the taxes of many small businesses through the roof persuaded the Government to introduce their transitional relief scheme. That was intended to be a bridge over a maximum of five years to enable those businesses that had been clobbered most by the revaluation and the UBR to go through the five easy stages to catch up to the point at which the revaluation had placed them.

The trouble is that, in cities such as York, the five-year period is nowhere near long enough to enable businesses to catch up to where the district valuer, a central Government official, had said that the new revaluation would put businesses' taxes. Come 1995, when the next revaluation is due, many businesses in York will not have reached the level of taxes stipulated by the 1990 revaluation brought in by the Conservative Government.

In York, there are 3,867 non-domestic hereditaments. In year four of the five-year period, 2,071 are still receiving transitional relief. The rise in their taxes was so great that they have not caught up to the level of tax that the Government said they should have been paying four years ago. Half the total number of businesses still depend on the safety net.

In the first year of transitional relief, businesses in York received rebates worth £11 million; this year, the amount is still £6 million. If this were a taper—and if the target were to be met in five years—it would be down to the last £2 million, or even £1 million; but it is not. We are speaking of a botched tax; a blunt national instrument. Although it may have helped businesses in some parts of the country, it is basically a crude implement that did not respond to local needs.

In 1989–90—the last year of the old local tax system —a butcher in the centre of York paid £722 in rates. In the current year, that butcher will pay £23,550 in uniform business rate, without the benefit of transitional relief—which is just under £7,000: £6,957. That is one year away from the end of the taper. At the end of next year, the transitional relief will run out, and the Bill gives no guarantee that it will continue. As the company is over the £10,000 threshold, next year it will pay an increase equivalent to the inflation rate, plus 10 per cent.; but it will still be a long way from the target set in 1990—by some £5,000, or even more. Unless the transitional relief rolls forward, it will face a £5,000 increase in its business tax.

Someone who works in that butcher's shop could well be sacked: that is really the only flexible cost that small businesses retain. That is what the Bill will do—not just in one butcher's shop, but in dozens of small businesses in York. In 1989–90, an ironmonger's business paid £3,868 under the local rating system—the amount set by York city council, a Labour authority. Its current UBR bill is £59,100, and this year it will receive transitional relief of £18,700. At the end of the year, however, that relief will be swept away, because the Bill makes it discretionary whether the Government roll on transitional relief.

The Minister said that some businesses might receive a reduction following the new revaluation. They may, of course, but at present the revaluation hangs over the heads of small businesses like the sword of Damocles. They do not know whether the Government will kick them or help them; they do not know whether to invest, or to make staff redundant in preparation for yet another tax hike. They have already incurred tax increases well above the rate of inflation each year: as a result of being on transitional relief, their UBR increases have been the highest in terms of percentage.

That uncertainty will inevitably slow the pace of recovery. It will keep the recession going in York. At the last count, 70 shops were empty in York city centre. They are not all empty because of high business rates; rents have risen, and the recession has played its part. However, we are talking about what is now a national business tax. Rateable values are set by a national civil servant, the district valuer; the poundage is set by the Government in Whitehall. To increase that tax far above the rate of inflation will inevitably increase pressure on vulnerable businesses.

I hope that the Minister is right, and that some rateable values will fall in the 1995 revaluation. If that happens, it will show that some businesses have been grossly overtaxed in the past five years. If taxes are lowered, that is the only interpretation that can be applied. At the time of the last revaluation, people in York—certainly members of the Labour party—said, "You do not understand the local market and the local economy, and you are grossly overtaxing businesses, especially small businesses in York."

I suspect that, in most cases, the south-east of England will gain most from the new rateable value. Like York, the south-east had a large increase in the last revaluation. Unlike York, however—thankfully in some ways, from York's point of view—the south-east has been hit especially hard by the recession, and market values have therefore slumped more there than in the north. York has thus lost both ways: it received a southern-scale increase at the last revaluation, but is unlikely to be given a southern-scale decrease in the 1995 revaluation.

One of the reasons for that is the fact that business rate valuations depend on the assessed rental value of properties. Nearly every commercial lease is now based on upward-only rent reviews, which have penalised small businesses in my constituency to a huge extent during the recession.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

That is mirrored in my constituency—and, I imagine, in constituencies throughout the country. It is disappointing that not one Tory Back Bencher is present: there are two civil servants for every Tory in the House. That demonstrates the general attitude of Conservatives to this important debate.

Photo of Hugh Bayley Hugh Bayley , City of York

That is an interesting point. One of our reasons for giving the hon. Member for Newbury (Mr. Rendel) such a hard time is the fact that—apart from the Minister who opened the debate—he is the only non-Labour Member who has spoken so far. Obviously, we must attack the hon. Gentleman; we have no one else to attack.

Now that my hon. Friend the Member for Normanton (Mr. O'Brien) has set me off, I must tell the hon. Gentleman that Labour has no antipathy to business.

Unlike the hon. Gentleman, I speak not as a former district councillor, but as someone who has set up and built up a small business. I see no contradiction between doing that and being a socialist. The business was fully trade unionised, and was highly successful; it generated employment, and large rent rises were a potential problem for it.

As for the issue of upward-only rent reviews, if the Government wanted to reduce the burden on small businesses, they would legislate against clauses in commercial leases that provide only for such reviews, as they are being urged to do by many small businesses in the current Department of the Environment review. If they believed in market forces, they would do that.

Businesses are being forced to incur rent rises because their commercial leases include upward-only review clauses, while competing against new businesses with new leases at market rents involving considerably smaller costs. That prevents fair competition. People in the private sector want competition, but they want fair competition.

Many businesses in York are on a cliff edge. More than half are still receiving transitional relief. If that relief does not roll forward next year, they will face a problem. The Government must give a rock-solid commitment to rolling it forward; otherwise, they will simply roll forward the recession.

I welcome the Minister's commitment in his opening speech. I am sorry that he is not in his seat now, because I intend to chase him on that political commitment month after month and year after year to ensure that it is implemented for the benefit of small businesses in my and other constituencies. I intend to start now.

I should like the hon. Gentleman to firm up the commitment and say that, in future, the transitional relief that he said would be rolled forward will limit increases next year and in future years to no more than the limit that the Government are proposing in this legislation for the current year.

I want a commitment that large businesses in out-of-London constituencies such as mine—businesses with a rateable value of £10,000 or more—will pay no more than 10 per cent. above the rate of inflation each year as their contribution to the catching-up process; that smaller businesses—under the £10,000 threshold—will pay no more than 7·5 per cent.; and that mixed hereditaments which are part residential and part business will pay no increase greater than the rate of inflation. Will the Minister guarantee those figures?

Photo of Mike Hall Mike Hall , Warrington South

My hon. Friend may have noticed that the Chancellor of the Exchequer is in the Chamber. Perhaps he will intervene and guarantee that the money will be made available.

Photo of Hugh Bayley Hugh Bayley , City of York

I am more than happy to give way to the Chancellor if he wants to give that support to small businesses and economic recovery. However, like other Conservative Members, he seems a little tongue-tied today.

The Government say that transitional relief is needed this year because the recession is not yet over. The transitional relief scheme is structured so that the money goes to all businesses facing high increases in their business taxes, regardless of whether they can afford to pay. It means that some businesses, such as the large multiple chain stores with city centre shops, are laughing. They are getting a tax break when they do not need it, because they are making huge profits. At the same time, small local firms are going to the wall because they are not getting the relief from tax that they need to keep themselves in business and to keep employees in jobs.

Is that a wise or just way to spend £100 million of public money? When the Government are saying that they have to cut many of their programmes, including welfare, education and health because of the pressure on their budget, would it not make more sense to target the money that is available for transitional relief on providing help to companies that need it and not to contribute to the profits of companies that do not need it?

Would it not make more sense to put greater resources into supporting discretionary relief? It has the advantage of being agreed by the local authority so it is local and flexible. It is agreed by people who know the businesses concerned and have time to investigate the trading position of those businesses. It is clearly needed.

When it was introduced in 1990, only £23,000 was spent nationally on discretionary relief. By 1993, that had risen to £835,000. However, that is still less than 1 per cent. of what the Government are spending on their broad-brush approach to transitional relief.

On this point, I agree with the hon. Member for Newbury. He raised an important point. Transitional relief goes, in part, to small businesses such as those in my constituency that desperately need it because they are being clobbered by unfair tax rises, but it also goes to larger businesses which do not need the relief and to which it does not make the difference between trading and not trading or between keeping employees and casting them into unemployment.

If the Government modified the discretionary relief scheme so that they paid 100 per cent. of the discretionary relief instead of just the 75 per cent. that they pay now, that would provide an incentive to local authorities to look carefully at businesses and to award the relief where it was needed. At the moment, the 25 per cent. contribution has to be taken from hard-pressed council tax payers, and there is pressure on local authorities not to award it.

The Government may say that, if they paid all the money, there would be an incentive to local authorities to hand out the money willy-nilly. I do not think that that would be the case, because there is a tight statutory limitation on how discretionary relief may be used, but it underlines the fact that the uniform business rate is no longer a local business tax set by local authorities, contributing to local authority coffers and spent by local authorities on services for the local community. It is a national business tax, because the money comes to national Government.

If it was a local tax, there would be an incentive for local authorities not to give relief except in the most extreme circumstances, because it would mean that the spending power of their budget would be cut. That is not the case when it is a national tax. If the Government want to target the resources that they say it is so hard to find this year on the businesses that need it most, they should do more to improve the discretionary relief scheme.

I am asking simply for a firm commitment that the areas of the country that have been hardest hit by business rate rises will be protected by transitional relief on terms no less favourable than the Government are proposing this year in this Bill. I want a commitment that that will roll forward in future years. Also, I want a commitment that whatever money is available will be targeted on businesses in greatest hardship where jobs are at greatest risk.

Photo of Jim Cunningham Jim Cunningham , Coventry South East 7:06 pm, 12th January 1994

At the risk of being accused of attacking the hon. Member for Newbury (Mr. Rendel), which is not my intention, we must put him right on one or two issues. The Labour party has supported businesses since 1945 and probably earlier. I am sure that the hon. Member for Newbury will accept that from time to time it is right and proper that if a political party feels that it is necessary, it can and should criticise business and business performance. In my view, it seemed a strange logic to be criticising the Government at the same time as criticising the Labour party for tabling an amendment. I am sure that the hon. Member for Newbury knows what he meant when he did that and I would not want to try to read his mind.

Some of the Government's problems stem from the fact that their manifesto for the 1979 election said that by hook or by crook they would do something about the rating system in this country. By hook or by crook, they have got themselves on a hook. They have not yet come up with a formula that is acceptable to either the business community or ratepayers in general. That is the Government's dilemma.

I am worried about where the Government go from here. In two or three years the evidence will be mounting that the Government's efforts in controlling the business rate have created problems. One of the problems will be caused because they are creating an artificial platform for the business rate. Therefore, in two or three years business men will receive a hefty bill because the Government will be looking for ways of withdrawing transitional relief.

A charade has been imposed on local authorities year after year. I have had 20 years experience in local government. It is one thing to be a Minister for two or three years and have various theories about local government, but it is another to have 20 odd years experience of dealing with domestic ratepayers and the business community. In my experience in Coventry, local government representatives sat down with members of the business community to discuss the problem and, where possible, we adjusted our budgets to assist them. The adjustments took many forms, such as allowing the council to provide grants which it is probably not able to do under the present system. Year after year, business men go through the charade of explaining their problems to local councillors and asking for their assistance, but the councillors are powerless to do anything because the power rests with central Government.

As has been proved by the events of the past eight days, we now have government by regulation, not by debate or scrutiny in Parliament; government conducted on the whim of a Minister who may decide to invoke regulations or create new ones. That is one of the great dilemmas facing the country, not only in terms of local government but in terms of the way the country is run. The way in which the Government are rushing the Bill through the House is symptomatic of that dilemma. No one can scrutinise the legislation. In November most local authorities will have begun consulting the Government to ascertain the rate support level. In about March they will be fixing their budgets, but meanwhile they are going through their annual policy review process. The Government are defying all logic in rushing the Bill through the House without proper scrutiny.

We now have government by regulation, but let us consider another charade. Local councillors may believe that they are making representations to Ministers, but do the Government give anything or take any notice? No, they do not, because they resent local democracy, a subject which forms part of tonight's debate.

A contradiction highlighted by the debate is the fact that large companies such as British Gas and the electricity utilities are treated in exactly the same way as the small business community; there is no distinction between big and small in terms of Government assistance. That is because Government policies are ill thought out and ill conceived. In a couple of years, the Government will no doubt find themselves once again having to review how local government is financed.

I have outlined some of the dilemmas facing the Government and the House, but the problems started way back when the Tory party fought the 1979 general election on the basis that it would do something about local government finance. It ignored the warnings and the pitfalls that were pointed out in the Layfield commission's report. The Government seldom mention that report.

As I said in an intervention, the Government said that rate levies deterred businesses from setting up in various communities. I am sure that the Government have their own statistics, but their views do not stand up because, according to any survey, rates represented only 2 per cent. of business men's total costs. The Government have never been able to refute that. Coventry city council has lost well over 30 per cent. in terms of rate support relief over 12 years. That means that it has lost more than £200 million. As a consequence of such losses, authorities such as Coventry had to pass on the burden to the ratepayer. The Government did not like that and called the authorities profligate. Yet the Government believed that they themselves could introduce the poll tax and squander £18 billion in the process. They have never been held to account for that, but if any local authority squandered vast amounts of public money its councillors would be disqualified or at the very least subject to investigation.

For all those reasons, I shall support the amendment.

Photo of Roger Berry Roger Berry , Kingswood 7:14 pm, 12th January 1994

I have been sitting here wondering whether Conservative Members have gone on strike and withdrawn their labour. Are they trying to prevent this debate by the simple device of not participating in it? I suppose that the alternative is that the Prime Minister has set a competition to find who can best define "back to basics" on one side of A4 paper. Conservative Members probably do not realise that whoever performs best in the test has to face the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) on "Newsnight" at 10.30 pm tonight, which is something that no one would want to do on that particular issue.

I am not surprised that Conservatives are embarrassed by the Bill. It is a cause of embarrassment for a number of reasons. Everyone recalls that when the Government introduced the uniform business rate and made it national with effect from April 1990, and when they set up a transitional relief scheme to deal with that and the rating revaluation, they introduced a scheme that they said would operate for five years. It is significant that the Government had to abandon the original scheme because of the recession and their economic mismanagement and because they did not realise what was happening in the economy. The facts are clear.

The original intention was that the maximum increases in non-domestic rates in real terms in 1991 would continue throughout until 1995. As we know, however, the Government eventually woke up to the fact that the economy was in recession and, as it turned out, the recession cost businesses billions of pounds—far more than anything provided in transitional relief. The 1992 Budget therefore abandoned the original scheme and froze real-terms rate bills for 1992–93. Nevertheless, there were said to be green shoots of economic recovery all over the place and we were told that that year was a one-off, that it was the one year when there would be a change in the original scheme for transitional relief.

Unfortunately, the sightings of green shoots had been somewhat premature and the following year the Chancellor had to tell the House, "Oh dear, we have got a recession; we had better freeze the real-terms increase for 1993–94 as well." The Bill does not continue the freeze in non-domestic rates except in the case of small, mixed-use properties. The maximum increases are to be half of those originally intended. I am not sure whether that is good news, in that the Government are now apparently slightly more confident of economic recovery this year than last year, or whether it is bad news because they are less optimistic about recovery than they were three years ago.

Relief is to be provided to keep down the costs to businesss, which we all support, but if one reflects on the history of non-domestic rating since 1990, one cannot say other than that the Government had to abandon the original scheme simply because of economic mismanagement and because they did not understand what was happening in the economy.

The damaging effects of the recession on businesses have been so great that they have swamped the small amelioratioon brought about by successive Non-Domestic Rating Bills. Billions of pounds have been lost in sales during the recession. We have just come through the worst recession in any industrial country in 25 years and it is sheer fantasy to pretend that transitional relief schemes could compensate businessses for that. That may be one reason why this year, unlike others, we do not hear the usual chorus of Conservative Members jumping up and down and saying how wonderful their schemes of transitional relief and support for the business community are, and that theirs is the party of business. I suspect that they are not singing that song tonight because they realise that no one would fall for it. Not only have we experienced the worst recession in any industrial country in 25 years, but we have experienced the largest rates of business failures in the country since the war.

It is horrifying to contemplate the statistics. Business failures in the 1970s peaked at about 10,000 per annum. En the 1980s, they exceeded 21,000 each year. In 1992, they climbed to 63,000. There has not been a scale of business failures of that magnitude in this country in the post-war period. No wonder Conservative Members are reluctant tonight to speak in the Chamber about how they "understand the business community". They have put the business community through the worst recession in living memory.

We are now told that 1993 was slightly better than the year before. It is true. Last year, there were only 56,000 business failures, but there was a scale of business failure that in the 1980s, and certainly in the 1970s, would have been regarded as inconceivable. Today, as Dun and Bradstreet and others confirm, every week 1,000 businesses go bust.

In my region, the south-west, the latest recession has hammered our businesses even more severely than those in the rest of the country. That is probably why, for example, the availability of industrial floor space in Bristol is at its highest since the property slump of the mid-1970s. Even last year, 1993—not quite the unmitigated disaster of 1992—there were more than 7,000 business failures in the south-west. That figure is greater than the national figure for business failures throughout most of the 1970s. Last year, in the south-west region alone, businesses were going bust at a rate that was greater than that for the country as a whole thoughout most of the 1970s. That is the record of a Government who "understand business".

The most recent figures are also very grim for my region. In 1993, the number of business failures decreased by a mere 4 per cent. It was the smallest reduction in business failures of any region in the country, equalled only by the north-east. In those circumstances, it seems to me that if anyone, whether it be the Minister on his own or the Minister with perhaps one or two colleagues in support, were to present the Bill as evidence of the Government's concern for, and understanding of, business, they would have about as much credibility as the aforementioned "back to basics". The Government have destroyed more businesses, more jobs and, as a result, more families than any Government since the 1930s.

My third argument about the Bill was made by a number of my right hon. and hon. Friends, and will continue to be made. The Bill provides no guarantee that shortfalls in the business rate pool will be made up from central Government funds. Like my colleagues, I do not want to sound disrespectful and I certainly do not wish to imply that hon. Members are saying things in the Chamber that might subsequently necessarily turn out to be inaccurate. However, when a Minister comes to the Chamber and says, "Yes; it is not in the Bill, but do not worry; there is no question whatever of local government not being reimbursed for any shortfalls in the pool" and one has the assurance, "We have no plan, we have no intention of doing that", so soon after the imposition of VAT on fuel, when, of course, there was no plan and no intention to do that; so soon after an increase in national insurance contributions for employees, after a categorical assurance that that would not happen; and so soon after the biggest tax hike in British history after an election at which we were told that the Conservatives would reduce taxes, I think that the average person in the street might wonder how reliable some of those assurances are.

If the Government will make up any shortfalls in the business rate pool, why on earth cannot that be set down in the Bill? It is a matter of record that, since the Minister sat down, not a single Conservative Member has stood up to answer that question.

Given Government policy towards local councils during the past 13 or 14 years, it would be foolish for hon. Members simply to accept that bland assurance.

Obviously, we fear that those shortfalls that might occur will not be made up and that local councils will be confronted with the usual choice. As a result of Government decisions, they will either have to jack up the council tax or make further cuts in services.

The largest local authority that provides services for my constituents in Kingswood is Avon county council. I know that the Government have plans to abolish it, as they have for local councils in one or two other regions, but, given the cuts in the budget of that local authority as a result of Government expenditure capping, those questions need to be answered. Last year, Avon was forced by the Government to cut £37 million of services–7 per cent. of its budget. The party that thinks that "back to basics" is about improving education and about improving good neighbourliness was the party which forced my local council—like many others—to cut our children's opportunities in schools and to reduce day care and home care for the elderly.

This year, my council is likely to be confronted with another £18 million of cuts and Conservative councillors on Avon county council are saying that more education cuts should be implemented to meet that target.

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. I am most grateful to the hon. Gentleman. This is not a general political debate. He wove in one or two general points, which is perfectly fair, but I should be grateful if he would get back to the Bill.

Photo of Roger Berry Roger Berry , Kingswood

Given those difficult, not to say intolerable, circumstances in which my council and other councils find themselves, if there is any fear that the Government may not secure the business rate pool, resulting in a reduction in funds being redistributed via that mechanism to local councils, we should seek further assurances.

My final argument is on a subject that was mentioned by some of my hon. Friends—the control of the business rate. The Bill tackles a situation in which the Government have removed from local councils the power to set the business rate. That power was removed as part of a general attack on local councils and has to be viewed in that context, as part of a financial attack on local councils—an attack which has also taken the form of direct attacks on services and the abolition of some tiers of local government.

When we debate the financing of local councils, we must first be sure what we want local councils to do. If we want our local councils to be important participants in a pluralist democracy—as all parties used to believe—it is necessary not only to take the shackles off local councils, in the sense of allowing them to make democratic decisions properly and freely, but to ensure that they have the financial resources to finance their decisions.

As long as such a large proportion of the revenue that accrues to local councils is directly under central Government control, as is non-domestic rates income, local government will decline further. It is important that, along with the debates about future funding and transitional arrangements, those who support local government make it perfectly clear that non-domestic rates should not be under central Government control but under the control of locally elected, democratic councils.

For those reasons and many others, hon. Members should support the Labour amendment. I look forward to hearing contributions from Conservative Members and shall sit here interested to see whether they deal with any of the points raised this evening or whether they have gone on strike.

Photo of Mr Jamie Cann Mr Jamie Cann , Ipswich 7:30 pm, 12th January 1994

The national non-domestic rate was introduced in April 1990 along with its ugly sister, the poll tax. Both were essentially attempts by the Government to control the amount spent by local government. The national non-domestic rate has been with us ever since.

It is a bad tax because it is cumbersome to administer. Previously, local authority treasurers would set a rate, the treasurer would notify businesses, businesses would pay the rate, and that was that. Nowadays, councils do not set the rate. Instead, it is set by the Government and councils are then notified. Councils must then send out demands, collect the rates, and transmit them to London where they are shared out among all the councils. That is a cumbersome procedure and must cost the Government a lot of money.

That system of taxation seems unable to exist without transitional arrangements year after year. After all, the tax started in April 1990 and we are now in 1994 and still talking about transitional arrangements four years' hence. Can a tax be satisfactory or acceptable if it is never paid in full by everybody to whom it should be applied? The whole system seems to be fundamentally flawed.

That leads to terrific confusion because people cannot understand why a business down the road pays less tax just because the owner was in that property before they were in theirs. It seems to be fundamentally unfair. If it were ever unravelled so that everybody paid the correct amount, the rate might be more acceptable, but we seem unable to reach that position. Revaluations every five years will clearly carry that on. The confusion then leads to appeals and, as other hon. Members have pointed out, the appeals system is clogged up. People wait for years to have their appeals heard.

This is a thoroughly bad tax because it is difficult to administer, to make properly accountable and to justify as fair to everybody paying it. Nevertheless, that is not my main complaint about it. My main complaint is its impact on local democracy, particularly in towns and cities. Cities such as Birmingham, Manchester, Liverpool, Leeds and even my small town of Ipswich grew because of the virtuous circle. Local business people paid rates, which were used to develop the town's infrastructure. In Ipswich, a considerable amount of the town centre was built on land that had been drained by the local council. That was paid for out of rates, the town centre developed and the town grew. Ipswich prospered and the town's taxation base grew with it. If the town shrank, as Ipswich did during one period in the mid–1800s, so did the taxation base. Its buoyancy went with business.

The Government have severed that connection. The money received by the council bears no relation to the prosperity or otherwise of local business. That cannot be right. The virtuous cycle no longer exists, which means that, all too often, the public sector limps along falteringly behind business. Business grows—Ipswich boomed at the end of the 1980s—but what happens to public infrastructure?

As business grows, there is a need for more car parks, public transport schemes and pollution control. Many facilities need to be provided by local authorities. However, now when business grows, the taxation base of local authorities remains the same, rigidly controlled in Whitehall. A town's success is now penalised because it brings problems that public authorities do not have the wherewithal to solve. That is pernicious and cannot be right.

The Government should do what the Prime Minister said a few months ago that he would do—stop the warfare against local authorities, trust councils to get on with their business and free them so that they are locally accountable and flexible. I believe that an opportunity to do that will arise when unitary authorities are introduced, because then, for the first time for goodness knows how long, we shall have a system of local government in England that is the same from one end of the country to another. We shall have unitary authorities in the big metropolitan areas, London boroughs, rural areas and shire towns. The Government must free those unitary authorities, as they used to be free, to raise money from local business and the ordinary people of the town through council tax. That is what should be done for the future.

The introduction of a national non-domestic rate was justified by some because it controlled local authorities' demands on local business. It was argued that local businesses in some parts of the country were being unfairly penalised by having to pay more rates than those in other parts of the country and that that was wrong and needed to be controlled. Although there was some truth in that argument, we are now in a different position from five or six years ago. Now, no council leader would want to be responsible for a business man saying that his business might have to relocate. It would freeze his heart and, if it got into our vigorous and vibrant local press, would ensure that he was not leader of the local council for much longer.

Every council that I know of—I know of quite a few —works with local business as much as it can for the prosperity and future of the town. Many businesses cannot understand why their local authority does not receive the rates that they pay and why the rates cannot be spent on their town's infrastructure. Again, the virtuous cycle has been severed.

The future of local government is at a crux. If we continue as we are, within two or three years we shall simply have a system of local administration in the same way as the Department of Social Security is locally administered. Is that really what we want and is it what the Government set out to achieve in 1979 when they said in their manifesto that they wanted to free local government from central Government interference? We have gone a long way from that statement—a long way in the wrong direction. I hope that today we can at least start to reverse that foolishness.

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe 7:39 pm, 12th January 1994

The Bill is important because it deals with local authorities and the financial resources that they spend on extremely important public services. They have seen those resources reduced in real terms throughout the 1980s as a result of a series of Government measures. They are under pressure to continue to provide a good standard of basic services for their constituents. They are also under pressure to avoid the necessity of making people redundant at a time when many of their constituents are facing redundancy in the private sector.

The Bill is important for small businesses, especially when one considers the number which have gone to the wall in recent years, as my hon. Friend the Member for Kingswood (Dr. Berry) amply illustrated. For many small businesses, the recession has not come to an end. I know that many in my constituency are still under pressure. Even though there is the faint prospect of increased demand, small businesses are still saddled with the financial burdens imposed in the past three years. Many of them were able to keep going only by building up debts and those debts must still be serviced. Because of that pressure, they are concerned about the impact of business rates on them. They are anxious about the impact of the Bill on the next financial year and in the future.

The Bill is important to my constituents who still face the problem of an above-average unemployment rate. In the past few weeks they have seen job possibilities go as United Engineering Steels announced 500 redundancies and Sheffield Forgemasters, where many of my constituents work, announced a further 100 redundancies. My constituents are concerned about job prospects in the private and public sectors, especially since the public sector receives its funding from, among other sources, the business rate. They are also concerned about the services that they receive from their local authorities.

The Bill is far too important to my local authority, local businesses and my constituents to be rushed through in a day without proper parliamentary consideration. Presumably the Government have decided to rush the Bill through its various stages in one day because they, too, believe in its importance. I can only assume that that is the case, given that they have decided to give the Bill priority and to rush it through far quicker than Opposition Members believe appropriate to the proper exercise of the democratic functions of the House.

It is of great concern to me, my constituents and those of my hon. Friends who have participated in the debate that only one Conservative Member—the Minister—has so far managed to stay in the Chamber, despite the Bill's importance to the Government. I am aware that others have come and gone, but only one Conservative Back Bencher has contributed. I do not know how the Government square the importance that they obviously attach to the Bill, given that they are trying to rush it through in a single day, with the lack of importance that virtually all other Conservative Members seem to attach to it.

It appears that most Conservative Members are not interested in business, local authorities, the services they provide and the proper democratic function of the House. No doubt they will turn up in due course to troop through the Lobby to ensure that debate is restricted and the Bill is forced through. They are so uninterested in the Bill's importance to their constituents that, with the exception of the Minister, none of them has bothered to come to listen to the debate.

The Bill is important for the Government because it deals with revaluations, which have always been extremely important. The Government might like to have had the opportunity to think again about the revaluations that were made in Scotland in the 1980s. The panic that they caused in the Scottish business community spread into the Conservative party. That led to a further panic measure, despite all the advice contained in the Layfield report and the Green Paper on local government finance that the Government produced in the early 1980s, when the Government took steps to avoid subsequent revaluations of domestic rates in Scotland with the introduction of the poll tax. It was then introduced in England as well. Revaluations obviously have a particular place in the history of local government taxation and local government finance and it is important that we subject them to proper detailed scrutiny and adequate consideration.

I am not opposed to revaluations because as time goes by and circumstances change it is often necessary to consider how the burden of taxation should be spread between businesses. Revaluations do not determine the total size of the Government take to fund taxation, but they determine how much money different businesses should pay towards the agreed total. Revaluation take into account changed circumstances and it is important that it is thought out properly and subjected to detailed scrutiny.

I do not agree with the hon. Member for Newbury (Mr. Rendel) that we should have some form of site valuation instead of the current system of business rates. A site might be valued in terms of what could be expected from future development, which could prove extremely damaging to small businesses. A site might offer attractive alternative purposes and that might lead to an increase in its valuation. That increase would penalise small businesses on that site, already providing jobs for the local community, which did not want to move. I would caution the Liberal Democrats on that policy because they have not thought out its likely impact.

I accept that a gain from a particular site might be subject to taxation, and perhaps that will be the subject of a review of the tax law. Perhaps we should tax on planning gain so that the public sector can benefit. We should not, however, change the whole business rate system, as proposed by the hon. Member for Newbury, which could cause immense damage to small businesses.

Periodic revaluations are made as business circumstances change in order to determine what each business should pay towards the total business rate. We must have some system, however, that reflects the fact that those changes can be substantial. That is why transitional relief was introduced, but the Bill is now attempting to change that. That relief is appropriate, however, because although revaluations are part and parcel of a proper exercise, they tend to have a lumpy effect. They may be conducted once in five years, 10 years or 20 years, and they try to reflect in one go all the changes that may have occurred in that given time. That being so, it is not fair to expect small businesses to absorb, at one go, the impact of changes over a period. So transitional relief is a reasonable response to the problem.

Opposition Members have no objection to a system of transitional relief backing up a system of revaluation. We have no quarrel with the Government over that. The problem comes with deciding how the relief will be applied. The Government want to give themselves powers to determine by regulation the nature of the transitional relief. We know that Governments rather like handing out goodies to businesses, not taking them away. If Ministers can go round their constituencies pointing out how much extra taxation they have saved businesses, they can make themselves popular. If, on the other hand, they promise to limit the amount of reduction in a business's taxation following revaluation, they will not be so popular.

The temptation is always—the same applies to this Bill —for Ministers to seek to cap rises following revaluations but not to seek to limit reductions from which businesses will benefit following revaluations. Having set a certain poundage, if the Government limit revaluations upwards but do nothing about revaluations downwards, an asymmetry leading to a shortfall in the money to be raised from the business sector will result.

Here we come to the crux of our objections to the Government's proposals. If the Government are tempted to cap rate increases that businesses may suffer as a result of revaluations but take no action to limit downward movements, and if a shortfall results so that the money canot be passed on to local authorities, who will make up the shortfall? We have argued strongly that the provision in the Bill stating that Ministers "may" make up the shortfall is inadequate. We say that the Government must make it up, and we have tabled a simple amendment to that end. If the Government truly intend not to make the constituents of local authorities pay for any shortfall that is created, all that they have to do is to accept our simple amendment.

I could not follow the Minister's argument. He claimed that until he has brought in the transitional arrangements which the legislation empowers him to put in place he cannot agree to legislation stating that the Government will make up any shortfall that the arrangements may create. His argument that he cannot in this legislation prejudge what he will do later by regulation does not seem logical. We do not need to know exactly what the transitional arrangements will be before we are given a commitment in legislation that any shortfall resulting from those arrangements will be made up.

The only reason I can detect for the Minister's claim that such a commitment cannot be given in legislation now is that he may know of circumstances in which it may not be possible or convenient for the Government to deliver that commitment. He may give the House his word in all honour that he has no plans not to make up the shortfall once the legislation is passed, but unfortunately my constituents have heard Ministers say such things in the past, and then later to say that circumstances had unfortunately changed so that the original commitments could not be honoured. As my hon. Friend the Member for Blackburn (Mr. Straw) clearly said, the Minister giving the House these commitments tonight may not be the Minister in charge in two years' time when they are not honoured.

I must also tell the hon. Member for Newbury that he is displaying funny logic when he says that we should not vote against Second Reading on the ground that we should trust the Government to bring in another Bill later. My constituents cannot trust the Government because the Government have broken promises in the past, especially during the election, and they would sooner not trust the Government now. We should not allow the Government a Bill that relies on trust, or trust them to introduce another Bill in due course. The House may express the wish not to give the Bill a Second Reading because the Bill is inadequate; it does not give us a commitment that a Minister "shall" make good any future shortfall. It is therefore better to vote the Bill down and then argue the case for a different Bill. Even better, we might persuade the Government to accept our amendment, and then we can all have done with the problem.

I cannot return to my constituents and tell them that I voted for Second Reading because I trusted a future Conservative Secretary of State for the Environment. Such a remark would leave me in danger of deselection. No Labour Member can trust a Conservative Secretary of State for the Environment with local government finance after what the Minister's predecessors have done to local government finance and services since 1979. Any Labour Member who gave such trust would find it difficult to convince his supporters in the constituency that he had not temporarily taken leave of his senses.

What would happen if the Bill were passed and the shortfall not automatically made good but left to the judgment of a future Minister? What would be the consequences for local authorities and their constituents? Local authorities would face a choice. They raise almost all their own revenue, with the small exception of charges which, outside the statutory housing account, are fairly limited. If the business rate does not provide the resources and the Government do not increase the revenue support grant, the council tax will have to be put up to compensate.

Contrary to certain misunderstandings, the Government do not limit the amount of council tax: they cap relevant expenditure. If the business rate is reduced and the relevant expenditure is unchanged, the council tax can be increased to make up the difference. I do not agree with the hon. Member for Newbury, who said that the Government can fiddle the figures as they choose in order to make up any shortfall in the business rate—for instance, by altering accordingly the relevant amount of revenue support grant. We should be trying to render Government actions transparent and to limit their opportunities to switch between headings in a way that disadvantages local authorities.

This will be a difficult choice for local authorities to make, but I know what Ministers will say. If any Labour-controlled authority faced a reduction in business rate that resulted in a shortfall and then sought to increase the council tax, the Secretary of State would castigate that authority. We can easily imagine which authorities will head the list, according to their political unpopularity at the time—

Photo of Mike Hall Mike Hall , Warrington South

Wandsworth, Westminster—

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

Those names do not exactly spring to mind, although given how Westminster has spent public money in the past it may well spring to mind tomorrow when the report is produced. If as a result of the measure local authorities had to increase the council tax, I know what the Minister's reaction would be.

My hon. Friend the Member for Blackburn spoke about the understanding of business leaders of the current difficulties facing local government. Ministers do not address the enormous problem of gearing, which is central to local government accountability and democracy. When local government revenue is cut by 1 per cent., council tax has to rise by 5 per cent. That is because council tax accounts for less than 20 per cent. of local government revenue. The gearing factor is difficult to explain to constituents. Perhaps that is why Ministers do not bother to address it: they know that it is unpopular, but ultimately it is their responsibility.

The Government might decide to tamper with the capping rules, especially by way of the year on year expenditure increase, to try to constrain local government from passing on, by increases in council tax, any shortfall in the business rate. I would not put that past the Government. If local authorities decide, for reasons particular to their areas, that an increase in council tax to support a reduction in the business rate is inappropriate, they can reduce expenditure. But that would be a most appalling prospect for my authority.

It is easy for Sheffield to calculate the impact this year, under a transitional arrangement, of a shortfall of £90 million which is not made up by the Secretary of State. As Sheffield is approximately one hundredth of the country, it would lose about £900,000. That is, not a large sum compared with the reduction that my authority currently faces. A clear, concise and well argued report from the city treasurer points to a potential shortfall next year of between £30 million and £40 million in the authority's resources to deliver the current standard of services.

That report is not a political gesture to frighten constituents or to push the Government into a more favourable settlement of the rate support grant. It is not a case of doing away with luxuries in Sheffield, unless the Government think that nursery education, which is not statutory, is a luxury. Some Tory authorities such as the one in Gloucester have never provided that service even though they have had the rate support grant to pay for it. Such services, which the Government regard as luxuries, are threatened in my constituency.

A shortfall of £900,000 would add to a serious and desperate situation. I shall spell out in simple terms what it would mean for people in Sheffield. It would pay for about 90 home helps. That is one of the most important services provided by local authorities because it allows the elderly to be independent and to stay in their homes. I understood that that was what care in the community was all about, and home helps are a vital part of the process.

Such a shortfall could mean the closure of three or four primary schools, and that is on top of the review already undertaken by the council. The report of that was sent to the Secretary of State several months ago, but we are still waiting for an answer. The shortfall could mean the complete abolition of nursery education. It could close every library in my constituency and mean the end of refuse collection. Compared with the vast amount that the Government spend each year, £900,000 may not seem like much, but it can have a serious effect on a local authority. Of course, there will be no such effect if we trust the Secretary of State for the Environment, whoever he may be in two years if the Government are still around.

My constituents have good reason to tell me not to trust Ministers but to argue for guarantees to be written into the legislation so that people will not suffer further increases in council tax or reductions in expenditure. That could happen if Ministers find that plans which they have no reason to implement now may be necessary in the future.

All our debates on local government finance suffer from the process that went on during the 1980s when the Government's intention was to reduce local government expenditure. They thought they could do it initially by enforcing reductions in rate support grant and became rather upset when Labour authorities raised the rates to compensate and were returned with larger majorities. The Government thought that Labour authorities would have to cut expenditure or impose massive rate increases and be voted out of office. But in the end the Government got the blame and decided to introduce a panoply of measures on capping and on restricting the creation of local authority companies.

Ultimately, the Government decided to remove from local authorities the power to levy a business rate. When the business rate was centralised the Government realised that they would be criticised when revaluations raised it. They did not like that very much and sought to introduce transitional arrangements. However, the Government have a problem with transitional arrangements which work in only one direction because that creates a potential shortfall and, as my hon. Friend the Member for Blackburn said, the Treasury is not prepared to underwrite it permanently. That is the crux of the argument.

The Government have passed one piece of legislation after another and have not thought about the consequences. Their sole objective is to control local authorities because they do not agree with the principle of local democracy and accountability and the freedom to deliver services. If those services are wrong and the rates are too high, councillors will be voted out of office. In most of our debates on local government there is a fundamental difference on that issue.

On one issue after another the Government re-legislate and the matter has got out of hand as they try to keep local authorities under control. Authorities are innovative and often get around the legislation, forcing the Government to introduce further measures. It is sad that there cannot be a partnership between central and local government. The Government talk about that from time to time, but they are not prepared to put their ideas into practice. Some of my hon. Friends spoke about trusting Ministers, but the problem is that Ministers are not prepared to trust local government. Perhaps I should rephrase that by saying that they are not prepared to trust the people who elect councillors to make the right decisions.

We have heard a good deal about the impact of the measure on business. The hon. Member for Newbury spoke patronisingly about Labour's new-found partnership with business. We have not had much experience of Liberal local authorities entering into partnership with business because there are not many such authorities around.

However, while the Government have been talking about partnership with business at a national level and producing a massive list of 78 projects of partnership between the public and private sectors—but delivering very few of them—the reality is that in the 1980s those business ratepayers about whom we are talking in the Bill have been entering into partnerships with Labour-controlled local authorities up and down the country to regenerate their cities. That was going on in Sheffield. It was going on when the Government produced a policy document on inner city regeneration which did not mention local government or local authorities once.

The late Lord Ridley was Secretary of State at the time and was responsible for that. As hon. Members have frequently said in the debate, it is important that we look at the issue of business rates in that wider context and get that issue back on the agenda. The measure is fundamentally wrong because it continues to presume that business rates should be levied and determined by central Government, that they should not be levied at local level, that local government should not be entering into real partnerships with business in their community and that they should levy the business rate and have a meaningful dialogue and proper consultation with local businesses about that.

When I was leader of Sheffied council, we had regular meetings with local businesses. They started before I became leader and my hon. Friend the Member for Sheffield, Heeley (Mr. Michie), who is present, can remember those meetings, when businesses used to come in and talk to the council about their finances and the level of business rate for the coming year. That is proper.

I remember one business leader who, once the Government had introduced the changes to centralise business rates as part of their general programme of centralising things to do with local government, taking away local democracy, said, "What is the point in coming? One of the major reasons why we come to talk to you is about the services you provide, and we shall still come to talk about that, but also about the level of business rate."

We used to have a good turnout. Occasionally we had arguments. We certainly had one or two rows in the early 1980s about the level of business rates. But when the arguments came down to what impact the rates had, we had to accept, as was said earlier, that business rates on the manufacturing industry in Sheffield—there were some large firms in the steel and engineering industry there at that time, most of which are either small or non-existent firms now because of the problems of recession during the 1980s—were about 2 per cent. They were relatively small. Therefore, even a significant change of 10 per cent. did not really make any difference. It certainly did not lead to the massive job losses, redundancies and closures that hit Sheffield in the early 1980s.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Is it not a fact that the type of situation to which my hon. Friend is referring in Sheffield was the norm between most business communities and Labour authorities throughout the country, and was something that the Conservative party failed to recognise existed for the whole of the period back in the 1970s and 1980s, and that many businesses regret that the Conservative party introduced that legislation in 1988?

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

That is absolutely right. Those discussions, working relationships and the development of partnerships were largely instigated and created by Labour local authorities. It took central Government a long time to recognise that. They preferred to perpetuate the myths of hostility between Labour local authorities and local business.

The reality is that many local businesses, particularly manufacturing, have come to see that the Labour party cares and wants to respond to their problems, and that the Government no longer believe that manufacturing industry is important to the country. There is something crucial and important there and the penny is beginning to drop with many businesses that they have far more in common with our approach to the long-term development of our economy than with the short-termism and wrong thinking that the Government have gone in for with manufacturing industry.

That accountability is important. Those meetings are important. As my hon. Friend the Member for Burnley (Mr. Pike) has said, they are important for local authorities.

It is important to recognise that there is something wrong with current legislation, which will be continued by the Bill. Local authorities can gain from development of housing through current legislation because if there are more houses, there will be more people living in them and therefore more potential to pay council tax.

In south Yorkshire we have a policy throughout all local authorities to try to get small firms to grow. The south Yorkshire pension fund has been active in that regard and the pension authority there has a policy of allocating, over a period, 10 per cent. of its pension fund specifically for the purpose of trying to develop new firms and help small firms to grow. But if one has such a policy to attract new business to the area, to help small businesses to start up and grow into medium-sized firms, there is no return at all. The business rate goes off down to the centre.

What a ridiculous system. Local authorities are collecting all that money around the country. Then it goes back to the Treasury. Then, if we are lucky, and if we can trust the Secretary of State for the Environment, it all comes back to local authorities. It is not in any way distributed according to the success of that local authority in attracting business to its area, but is paid out purely on the basis of per capita allocation which, again, encourages local authorities to take measures perhaps to build houses and bring more population into their areas.

The issue of the centralisation of the business rate and the continuation of that centralisation, as contained in the Bill, reflects the attitude of the Government. They are not bothered about local authorities getting involved in the promotion and development of their local economy, in working with business to create a successful climate for business, in helping small businesses to grow. None of those things appears to be important to the Government —or, if they are, the measures that the Government have taken by centralising business rates have done nothing whatever to assist in that process.

I do not understand the Government's arguments against returning business rates to where, in my view, they properly belong—with the local authority, which can then legislate properly in its area, take account of local circumstances and get some benefit from being successful in developing an industrial and economic policy for its area where businesses grow and are created. I should have thought that the Government would want to encourage local authorities to do that, but there is no sign in their policy and no sign in the Bill that their intent will be carried through in the way the proposed legislation is drawn up.

In the early 1980s, when business rates appeared to pose such a problem for the Government, they eventually took steps to bring them in on a standard basis throughout the country. That was purely because of the arguments about the level of rates that local authorities were levying in response to the cuts in revenue support grant being made by central Government at that time.

I made the point earlier that we were being elected with bigger majorities where Labour was in control because we were defending local services from the reductions that central Government brought in. In fact, domestic rates were rising faster than business rates at that time, for the simple reason that we had domestic rate relief—the protection that was given at that time for domestic rates. But in the early 1980s, the Government froze that relief at a standard amount and therefore any increase that was levied on rates, because domestic rates were at a slightly lower level than business rates, posed a bigger percentage increase for domestic rates than business rates at that time. Therefore, it appeared that local authorities were simply transferring expenditure on to the business ratepayer. The Government knew that in most cases that ratepayer did not have a vote in local elections, so it was an easy way to raise money without democratic accountability. That was totally wrong, as business rates were linked to domestic rates and the percentage increases for all authorities because of domestic rate relief were higher in the domestic sector.

If central Government wanted to link business rate increases to council tax increases to ensure that the people who vote in local elections were also tied directly into any increases in expenditure that local authorities went in for, there is no reason why that should not be the case once again. I do not necessarily argue it, but if the Government are concerned about that, there is no reason why it could not be done.

As I have outlined at some length, it is important that the Government should think again about the essence of what they are proposing. It is clearly an important measure, although it might seem dry and technical. My hon. Friend the Member for Blackburn outlined some of the problems that any constituent might have in digesting, at first glance, some of the wording of the clauses and in understanding what they mean. Despite the convolutions, the Bill could have major consequences for all our constituents if the shortfall in any form of transitional relief were not made up. That would have an impact on our already hard-pressed local authorities, so that they would have to increase council tax further, or cut services further, with implications for jobs.

That important issue should make all of us stop and think twice about the measure. All that we need to remove all those fears and worries is a simple commitment—from the Secretary of State, the Minister for Local Government and Planning or the Under-Secretary of State—to change one word. Instead of saying that the Secretary of State "may" make up the shortfall if he chooses, we should have the word "shall". If that were done, we should have no worries about cuts in local authority expenditure or increases in council taxes resulting from the Bill. We would be safe and secure in the knowledge that small businesses were protected by transitional relief, which would be proper and right, without the impact on local authorities that many of us are worried about. Many of us are not prepared to trust this or any other Tory Secretary of State to deliver on that in the future.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South 8:21 pm, 12th January 1994

The important issue in the debate is trust. Members of Parliament are being asked whether the Government are to be trusted to do what they have said that they will do if there is a shortfall in the unified business rate pool. That issue is particularly important given the Government's record on local authority finance over the past 15 years.

With the exception of the Minister's speech, all speeches tonight have come from Opposition Members. While listening to them, I tried to think of one word that would sum up that record, given that they are asking us to trust them. The only description that I could come up with was lousy. On any criteria, their handling of local authority finance, including the unified business rate, has been not only abysmal but costly. If but a fraction of the resources that the Government have wasted in trying to prop up their discredited policies on local government finance had been available for investment in jobs and industry, unemploy-ment might be lower.

The Government's policies on local government finance have also been about centralisation. The unified business rate was a centralising measure. The Government, deliberately and unjustifiably, set out to pillory local government, saying that it was untrustworthy and inefficient. The history of local government over decades proves that that was a fallacy, but the Government succeeded in shifting the blame for the problems that they had created on to local government. The Government had to bring in a mechanism that put their prejudices into reality and hence was born the unified business rate.

The Minister of State, who has just come back into the Chamber, said that the Government wanted to build on the success of the unified business rate. I do not know where the Minister has been over the past few years. I know that some time ago he was in the European Parliament, because that was where we first met. The businesses in my constituency would not agree that the unified business rate has been a success. Their view is that it has been an unmitigated disaster. However, even I am prepared to concede a little glimmer of success to the Government in this abysmal saga. It is that they have made local businesses ask for the return of the old rating system. It has put local government in a good light because businesses realise that they were getting a good deal when authorities set and collected the business rate. It was only when the Government got their dirty fingers on the system that business rates rocketed.

I am advised that the Minister of State is due to visit Stoke-on-Trent shortly to address the local chamber of commerce. We welcome that and we look forward to seeing him there. He will have the opportunity to explain why he is telling the House, the country and the local business community that they can trust the Government to use their discretion, if there is a shortfall in the pool, to make a contribution to meet it. I shall be interested to see what sort of reaction he gets. He would be well advised not to place too much faith in a positive reaction from the businesses in my constituency. I guess that that would apply no matter which part of the country he visited with that message.

The record does not stack up. The Government have no justification for saying that they are trustworthy. Because of what has happened with the unified business rate, businesses in my constituency are openly saying to me and their councillors that they were duped. The Government said that they would give them a good deal and control their outgoings on the business rate, but the minute they got their hands on it, it rocketed upwards. Businesses were also told they should not trust local government because it was inefficient and would make a mess of it. Now, those businesses are asking for local authority control back, because they got a better deal, and knew to whom they should go.

Businesses are also asking authorities for discretionary relief, but there is less and less of that available as a result of the cuts in standard spending assessments and the cuts imposed by the Government on local authorities. When they go to the town hall, the treasurers, councillors and Members of Parliament say, "What can we do? It has nothing to do with us; it is those people in Whitehall. Some of you may have voted for them on the basis that, in terms of the uniform business rate, Whitehall knows best". In Whitehall they say, "We can decide what is best for you here. We may be 500 miles away; we may know nothing about your area; we may be completely ignorant about the problems of businesses in your area, but we know best". We are being asked to trust the Government on a record that simply does not allow any reasonable person to offer that trust.

The Minister of State will have an opportunity to explain to businesses in my area how they have benefited from the uniform business rate. I cannot wish him luck; that would be against my political beliefs. I am sure that he is a skilful person, but I can advise him that he is in for a rough ride. When the Minister comes to Stoke he may well say to local businesses, "Most of the increases in the uniform business rate that you have suffered were not really our fault at all. It was all because of that damned revaluation. It had not been done since 1973 and those Labourites never did it either".

We are told that 75 per cent. of the increase was due to revaluation. Let us accept that. Let us be generous to the Minister of State.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

I am prepared to give way, but I notice that my hon. Friend is not pressing the point.

Let us accept that 75 per cent. of the increase was due to revaluation. Any mathematician would say that, if 75 per cent. was due to revaluation, 25 per cent. must have been for some other reason. That other reason was the Government.

I have read Conservative manifestos over recent years, and I cannot remember any manifesto statement that said to businesses, "Do not worry, when we introduce the uniform business rate we will increase your business rates by 25 per cent. as a direct result of our actions". The Minister of State will have an opportunity to explain that, to the businesses in Stoke-on-Trent.

The Minister will also have an opportunity to explain something else. Why is it that, when we are debating a vital issue to every business in Britain, and, if I may be a bit parochial, certainly to the businesses in my constituency, we look across to the Government Benches and at times during this important debate there has not been a single Conservative Back Bencher in the Chamber. I am sure that the Minister of State will want to explain to the businesses in my constituency why there is no interest among Conservative Members in an issue that directly affects their future.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

May I point out to my hon. Friend that, while he is speaking, there are no Conservative Back Benchers whatsoever in the Chamber? A Minister connected with the Lord Chancellor's Department has just left, having rested en route through the Chamber, leaving only the Whip on the Front Bench and the Minister of State. That is the minimum number with which the Government can carry on business. There is clearly a massive dearth of interest in this vital topic.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

I am grateful to my hon. Friend for that intervention. It underlines the point that I was making. The Government may want to camouflage the fact that there is obviously no interest on the Government Benches in this important issue. I promise, and I am sure that it is a promise which all my hon. Friends will make, that we shall ensure that businesses in our areas are fully aware of the bankruptcy of interest in this important issue.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Is it possible that there are no Government Back Benchers in the Chamber because the Government Whips have persuaded them not to come in because they know that, if they made any comment in the debate today, they would not be able to defend their position at a later date, so it is better for them not to make a comment that they cannot defend outside the House?

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

My hon. Friend is absolutely right. That is particularly the case when we consider the comments made by my hon. Friend the Member for Blackburn about the hon. Member for Rutland and Melton (Mr. Duncan) earlier today. I could not agree with him more.

If we accept that 75 per cent. of the increase was due to revaluation, the remainder must have been due to other factors such as the economic madness that led to the property boom of the mid and late 1980s which was directly attributable to Government policies.

If the Government are foolish enough to think that, because they are basing the 1995–96 uniform business rate proposals on 1 April 1993 valuations, that will not create problems, they are in for a great shock.

It is inevitable that, in a system that tries to impose centrally, as this does, a uniform business rate, there will be massive swings throughout the country. The swing that occurred when it was first introduced was a result of the massive property boom, particularly in the south and the south-east. That led the Government directly to thinking, "Hang on a second. We cannot make the transitional arrangements self-financing. Too many of our voters will be affected by that, so we had better change it. We have to ensure that there are transitional arrangements. If there is any shortfall we will pick up the tab out of taxation because we do not want our traditional voters to be affected too badly".

All the evidence suggests that the next regional shift will be from the south and south-east to the midlands and the north. I hope that, as a relatively new member of the House, I avoid the accusation of being cynical, but I will risk that this evening by making the following comment: is it a coincidence that, when the effect of the uniform business rate was going to be detrimental to the south and the south-east, the Government changed from self-financing transitional arrangements to topping up the pool if it was necessary?

Now that the regional shift is in favour of the south and the south-east and detrimental to the north and the midlands, the Government seek to change the system to one of discretion. Is that coincidental or has it something to do with political calculations? I hope that even the present Government are not that cynical, but it is certainly a factor that we have to bear in mind when we consider the Government's record.

My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) was absolutely right to point out the possibility that, with the changes that are taking place, there is bound to be some shortfall in the pool because of the reduction in property values. Now the Government are seeking to change the obligation to a discretion that will allow them the opportunity to creep away from accountability. Who will they try to blame when council tax payers are faced with additional burdens because the transitional contribution to the pool is not there? They will obviously blame local authorities.

I have another message for the Government. They have got away with blaming local authorities for 15 years, but they will not get away with it again. That record is played out. Businesses know who is to blame for the costs and problems that they face and it is not the local authorities.

The massive regional swings in the uniform business rate are inevitable because it has no flexibility. It does not allow local areas, regions or local authorities to say what is best for their areas. It prevents them from saying, "We know what we are doing. We will put our proposals to our businesses and, if they do not like them, they will vote against us next time and tell us about it." A uniform business rate has no flexibility, so it is in the Government's interest to take this opportunity to look at the principles behind the uniform business rate which have so clearly failed.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

My hon. Friend makes a good point. That lack of flexibility is reflected in the legislation that we are asked to examine tonight. The Minister is asking for authority to introduce further regulations which will be placed before the House but which the House will not be able to amend. If the local authorities were responsible, there could be a debate, a proposal made or an amendment considered and voted on. However, we have to take the whole lot or nothing at all. Therefore, as my hon. Friend says, this is an extremely centralised and inflexible imposition.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

My hon. Friend makes the point in his usual direct way perhaps better than I could ever hope to, for which I am grateful.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

The Minister should have regard to the fact that the Government are now engaged in capping local authority expenditure and, if they apply a strict cap, as they suggest they will, and then expect local authorities to find the resources in 1994–95 to top up the pool, they are being grossly unfair.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

That is right. I am grateful to my hon. Friend for making that point. The Government cannot have it both ways. If they are determined to protect the council tax payers from any burden that may fall on them as a result of the Government's inability to top up the pool, or lack of commitment to doing so, they must make either a clear statement today that they "shall", not "may", do it and enshrine that in the legislation—in other words, maintain the obligation rather than changing it to a discretion—or ensure that local authorities are not penalised by the potential additional burden that will fall on council tax payers if the Government choose not to exercise the discretion that we are being asked to give them this evening based on the trust of the House and the country.

Photo of David Curry David Curry , Skipton and Ripon

I am grateful to the hon. Gentleman for allowing me to arrest him in the middle of such a theatrical moment. I wish to help him out in answering the question put by the hon. Member for Normanton (Mr. O'Brien), who was clearly overwhelmed by the hon. Gentleman's rhetoric. In 1994–95, the Bill provides for compensation in the top-up. There is no question of that being dependent on any hypothetical powers. That is in the Bill. The hon. Gentleman does not understand the Bill, but, in the light of his speech, that is not surprising.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

I am grateful to the Minister for that extension of his opening remarks which were confusing to many of us and remain so after that intervention. However, I am encouraged because I recall an intervention on another matter by the Minister in a previous incarnation when he said that my speech was lengthy and boring. It is now theatrical, so I seem to be making progress. That is more than I can say for the Government.

But, seriously, I know the Minister from contacts that I have had with him elsewhere. I have always found him to be an honourable man, so it pains me to have to question whether he is serious in his commitment to the Government's contribution to the pool when he is bringing forward legislation that changes, for the third time in three years, the basis of Government involvement.

First, the measure was self-financing. Then, when the Government faced electoral disaster, as well the Minister knows—I can tell by the smile on his face; all I need now is for his glasses to steam up and I shall know I am there —they changed it. They had to have an obligation written into legislation in order to help the people in the south and south-east who faced disaster. But now, because the burden seems to be shifting to the midlands and the north, we have the third change.

All that I ask from the Minister when he replies is to be clear on this issue, which is central to what we are talking about. If the Government have changed their colours three times in three years, is it any surprise that we question their sincerity now? If the Minister, as I think he said when he opened the debate, is fully committed to ensuring that the pool is topped up, and given his latest intervention, why in heaven's name does not he stand up and say, "Yes, I will accept at least that part of your amendment that puts back the obligation rather than making it a discretion"? Why, oh why?

We appear to agree on this. Therefore, knowing the Minister to be the honourable man that he is, why on the one hand does he say that that is his intention while on the other hand he wants to change the legislation from an obligation to a discretion? Then, speaking on behalf of the Government, he says, "Trust us."

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

While the Minister is in a frame of mind to respond to interventions, will my hon. Friend press him once more to rise and say at the Dispatch Box that he will guarantee that in future years the Government will continue to top up the pool? Will he press the Minister to guarantee that that topping-up procedure. will be carried out in future years?

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

I am grateful to my hon. Friend for that further intervention. It is a message that I and other hon. Members have tried to get across. If the Government are sincere in that commitment, why change the legislation?

Photo of Mr Peter Pike Mr Peter Pike , Burnley

My hon. Friend puts his finger on the crucial issue. Clause 3(3)(a) clearly changes the position from 1996, by substituting the compulsory "shall" to "may". The Government have not explained the reason for that change—which is of considerable concern because if the Government had commitment and honesty, they could completely delete that provision from the Bill.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

I am grateful for my hon. Friend's further intervention. I hope that the message has got across clearly and that the Government will make that commitment this evening to the business community in my constituency, which—in common with others the length and breadth of the land—suffered so badly as a result of the madness of the Government's economic policies and the uniform business rate. The Government tried to blame local authorities and they got away with that to some extent—but they will not do so in future. We want clear answers from the Government.

Another aspect of the uniform business rate which is central to Government philosophy is that it apparently makes sense to gather in money locally, using local authorities as a kind of unpaid tax collectors, and send it to Whitehall. The Whitehall mandarins will then get to grips with it on the basis that they know best, and will apply an obscure, convoluted formula before sending some of that money back. What a way to run a chip shop, as people would say in my constituency—and I have no criticism of chip shops.

The chippies in my constituency would tell the Minister what they think about the uniform business rate. When the Minister visits Stoke, he can talk to the chap who owns my local chippie. That will give him a feel of what real people think of a convoluted Whitehall system that applies an obscure mechanism and says, "We are sending some of the money back. Aren't we good?" That mechanism takes away flexibility, local accountability and the ability of local authorities to identify the needs of their areas. The fundamental logic of that system is that this country needs more Whitehall centralisation and less local government.

The uniform business rate is damaging and wasteful of resources, administration and the knowledge that people have of their own areas. Having been a Member of Parliament for what seems a long time but is in fact only 18 months or two years, I have listened to many Government speeches about choice and diversity. Why must choice and diversity be denied to local government? Why is it thought essential elsewhere, but that the only way to operate local services is to have them controlled directly from Whitehall? Where is the logic in that?

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Would my hon. Friend be concerned to know that there are more Conservative Back Benchers in the Strangers Gallery than there are in the Chamber listening to his speech?

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. Perhaps the hon. Gentleman has forgotten that the rule is that right hon. and hon. Members do not refer to anyone in the Gallery.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Are we allowed to refer to Government Members who are in the Bars and absent from this debate?

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

I am grateful for your ruling, Madam Deputy Speaker. I take it that you were not addressing me. Nevertheless, it is encouraging that Conservative Back Benchers are to be found somewhere in the precincts of Westminster.

Why do the Government base their policies on choice and diversity, but when it comes to local government demand a form of centralisation—based on the premise that Whitehall knows best—that would not be out of place in some totalitarian states? The country, rightly, does not accept that.

The comments made earlier by the hon. Member for Newbury (Mr. Rendel) were difficult to understand. On the one hand, he rightly criticised Government policies in respect of local government and the uniform business rate —but he said also that there is no point in supporting the amendment in the name of my right hon. and learned Friend because he distrusts the Government more than he thinks we distrust them. That does not make sense. If the hon. Gentleman supports the Government this evening and not the amendment in the name of my right hon. and learned Friend, he will be trusting the Government, Secretary of State and Minister to use their discretion in the way that they said.

I said earlier that this is a matter of trust. If the hon. Member for Newbury is prepared to trust—and I make no apology for using that word again—the Government to do anything that they say, he will have to justify that to his electorate, and I am pleased that I will not have to help him. The hon. Gentleman's statement was difficult to understand in that regard. I found it difficult to understand in another sense, too. Having said that he did not trust the Government, but, nevertheless, would not support the Labour amendment, he rightly referred to important areas that the Government's proposals do not address, which we need time to address. He talked of transitional relief. That is not addressed in the Government's proposals and will not be. There is no time to do so, because, once more, the Government are abusing the procedures of the House by rushing through an important measure and denying any reasonable consideration of the important points to which the hon. Member for Newbury referred. I urge the hon. Gentleman to reconsider his views, not because of anything that I or my hon. Friends have said, but because of what he said. If he were to reconsider it in that light, he would come to a different conclusion.

There is time for the Government to allow the House to consider such important issues, instead of trying to bulldoze the Bill through. After all, as my hon. Friend the Member for Blackburn said, the entire matter could be dealt with by the end of February. In my time in local government, I have witnessed occasions on which there has not been a settlement on the rate support grant until a week or so before we were due to set the rates. Sometimes, the settlement even came afterwards. So time, in that sense, is not as critical as it has been on other occasions.

The Government are trying to rush through a system that will operate up to 1995–96. It is not a short-term issue, but one that will be with us for some time—not as long as some Conservative Members think because I am convinced that there will be a change of Government before then. I am sure that the businesses that will be affected by the UBR will find it difficult to understand and will not accept that decisions on costs to their businesses, which will have such a profound effect, are being rushed through by the Government in such a way. What have the Government got to hide? Why are they apparently scared of open debate? Is not that what this House is about? If we add together the facts that the Conservative Benches are still empty and that the Government are rushing the Bill through, one is bound to be suspicious of their intentions in wanting to curtail the debate. They know that they are sitting on a time bomb and they have not got any answers to the problems with which that time bomb will confront them.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Does my hon. Friend agree that by rushing the Second Reading and other stages through so rapidly the Government are effectively preventing the consideration of two important sources of opinion that are directly affected by the Bill: the number of small businesses which will be affected—the Government claim to support small businesses and inaccurately claim that they have increased their number—and the collectors of taxes, the local authorities, which I am sure would be only too anxious to make representations about the progress of the Bill if the ordinary channels were available? Will my hon. Friend comment on that vital issue?

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

That is another important reason why the Government should, even at this late stage, reconsider their basic approach to such an important piece of legislation. My hon. Friend is absolutely right to raise that issue.

The Government's policy, based on centralisation the like of which the country has not seen for generations, is wasteful, damaging and unaccountable and is being forced through by what I can describe only as an abuse of the rights of the House. If that is what right hon. and hon. Members want, they should vote against our amendment and support the Government. If hon. Members believe that it is too important an issue to be bulldozed through on a wave of prejudice as the Government are doing today and believe that the issues demand, not just deserve, reasonable debate, for goodness sake let them vote for the amendment in the names of my right hon. and hon. Friends.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton 9:04 pm, 12th January 1994

My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) graphically described the pitfalls that will result if the Bill is enacted in its present form. As he said, the problems currently besetting businesses of all kinds—large, medium and small—are a consequence of the procedures involved in the Government's introduction of the UBR in 1990. At that time, the revaluation was based on a valuation made in 1988, when the value of properties was at its peak. That led to rates that people simply could not afford. They could not understand why the Government had introduced such a system at such a time.

Many businesses in my constituency, and throughout the Wakefield metropolitan district council area, appealed against their assessments, following legal advice. There were so many appeals that some have still to be heard. Many businesses are still reeling.

This is about the 60th local government Bill to be considered since the Conservatives came to power in 1979. Each of those Bills has reduced the influence, authority and democracy involved in local government, and the accountability of local authorities to their electorates and the business fraternity. I share the concern expressed by my hon. Friend the Member for Stoke-on-Trent, South about what the chambers of commerce are saying.

In the days before the UBR, there used to be dialogue between business organisations and local authorities about what services should be provided and what rates should be levied to provide those services, and there was general agreement between businesses and authorities. That was healthy, constructive and democratic. Under the present Government, all that has been taken away; the connection between businesses and local authorities has been reduced, because Conservative Members voted for the UBR. The majority of them are now not interested in the UBR's future; Opposition Members have noted the failure of Conservative Back Benchers to speak in today's debate.

I pointed out earlier that two civil servants were present for every Conservative Member. The Conservative Members who are absent tonight voted for the 60 local government Bills that have constituted no less than an attack on local government and an attempt to reduce its democracy. It is clear that the Conservative party has no interest in a debate that affects local businesses throughout the country.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Does my hon. Friend agree that when passing those 60 pieces of major primary legislation the indifference of Conservative Members was such that they allowed huge delegated powers to be passed to Ministers? For example, during 1992, 3,500 statutory instruments were issued by Ministers; many of them, although obviously not all, were concerned with local government. Far too many Conservative Back Benchers adopt a complacent attitude and are willing to hand over the control of local government virtually lock, stock and barrel to a handful of Ministers and their civil service advisers.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

It is right that my hon. Friend should draw attention to the fact that local government is now being administered by order through the Department of the Environment and the Secretary of State. Throughout the 60 pieces of legislation to which my hon. Friend referred there are references, particularly in connection with the unified business rate, to the fact that the Secretary of State "may" or "will be able" to issue an order. Every clause in those Bills gave additional powers to the Secretary of State for the Environment, reducing the authority of local councils to administer their services on behalf of local businesses and the community.

During the speech of my hon. Friend the Member for Stoke-on-Trent, South the Minister intervened and said that in 1994–95 there would be protection for businesses from any increase that may occur. He gave an assurance that any increase during that period would not affect the capping of local authority expenditure. Is the Minister prepared to give us a guarantee that that will continue for as long as this legislation applies? The Minister was quick to reassure us about the 1994–95 period, but will he tell us what will happen after that? That is what our amendment is about.

If the Minister believes that we are wrong—that is what he implied when he intervened on my hon. Friend the Member for Stoke-on-Trent, South—I am prepared to give way to him so that he can tell us how we have got it wrong. We are seeking a guarantee about what will happen. The Minister seems to be refusing my invitation to intervene. That suggests that he is not prepared to give us that assurance. Was he wrongly advising us when he said that there would be protection in the Bill for local authorities so that they would not have to top up the pool? He is not prepared to take up my challenge.

Photo of David Curry David Curry , Skipton and Ripon

As I have repeated twice already—I shall do so again for the hon. Gentleman—for the financial year that we are approaching the Bill makes provision for the deficit in the pool to be made up by a direct contribution from the Exchequer. For future years, the Bill would provide the Government with the power to make regulations which would mean that instead of having to find compensation for any shortfall from within the system, which is what happens now, we would be able to make contributions directly from the Exchequer.

I said earlier that we regard the business rates as hypothecated to local government finance, so if we implemented the regulations and if that action led to a shortfall compared to what would otherwise have gone in the pool, we should take measures to ensure that the shortfall was made up. I cannot be clearer than that. As the hon. Member for Clydesdale (Mr. Hood) has had his worry beads, or his prayer beads, out of his pocket three times, at least twice induced by the hon. Member for Stoke-on-Trent, South (Mr. Stevenson), I think it is about time that the Opposition got that point under their belt.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

The Minister is again shadow boxing. He is saying that if the Secretary of State does not want to make up the shortfall within the confines of local government finance it can be made up by the Exchequer. I want the Minister to say that it will not fall to local taxpayers to meet the shortfall and that any future shortfall will be met by the Chancellor of the Exchequer.

The Minister should stop trying to fumble his way around or fudge the issue as has happened so often in our debates on local government legislation. He is saying that the Secretary of State "may" make up the difference from local government funding or "may" make up the difference from the Exchequer. That is not an answer to the question. When the Minister returns to his seat, will he give us a straight yes or no? Will he tell us that the funding will come from the Exchequer and that local taxpayers will at no time be called on to make up the funding? Will the Minister respond to that particular point?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

The wide-ranging powers to which the Minister referred include the ability to produce regulations that may make different provisions for different areas. In addition, the Secretary of State has to deal with the issue of the aggregate income of the revenue only as far as is "reasonably practicable". The powers are very wide ranging and the mere fact that the Minister says that the Secretary of State has regulation-making powers does not impose on him a tightly restrictive duty but gives him great discretion.

My hon. Friend the Member for Normanton (Mr. O'Brien) will recall that the wide powers to which the Minister refers as though they placed on him a narrow obligation are not subject to amendment by the House.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

Again, my hon. Friend's contribution explains some of our fears that we shall lose the opportunity to raise with the Minister any anomalies or concerns about the unified business rate expressed to us by our constituents; all the power will rest with the Secretary of State. That is not what the House is about—the House should debate the issues that concern our constituents. I am asking for an assurance that at no time will any expense incurred in topping up the pool be borne by local council taxpayers, and that is the assurance sought in our amendment.

I said earlier that many authorities are now considering their budgets. In doing so, they are mindful of the fact that the Secretary of State for the Environment has warned them that if their expenditure exceeds a certain limit set by him, he will cap them. Many local authorities are considering the situation and they cannot afford to be left in doubt about what will happen in the succeeding year and the year after that. That is what the legislation is about. We want assurances that local authorities will not only be allowed to set their budgets annually, but can look forward to a level of expenditure that will allow them to plan for their services.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

Does not my hon. Friend find it strange that, on the one hand, the Government will cap a local authority in an attempt to control its expenditure which, in part, may emanate from decisions of that local authority, but, on the other hand, the Government seek to impose further expenditure on a local authority, which would form part of that capping total, by not making their full contribution to the pool?

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

That is the argument that we made earlier, when we tried to extract information and assurances from the Minister on the subject of the Government ensuring that any income required into the pool will be borne by the Chancellor of the Exchequer and not by the local council tax payers. We have not received that assurance tonight and, therefore, we must assume that it is the Government's intention to make the local council tax payers responsible for any shortfall in the pool for the distribution of the uniform business rate caused by the fact that the Government will not be levying a rate that will cover all the requirements to provide the services that local businesses—local shopkeepers, and so on—need to meet their business commitments.

I must also ask the Minister what consultations about the legislation took place with the local authority associations and the small business assocations. If there has been consultation, perhaps the Minister will advise us of the views that were expressed by the small business associations and the local authority associations. Those are the people at the coal face, as I would term it, when we discuss businesses and the uniform business rate.

When we were discussing the legislation in 1988, and when other local government Bills were discussed, I suggested that there should be a type of rate rebate for local businesses and small businesses which fall on hard times, similar to the rebate for the ordinary domestic ratepayer. Labour Members could see no reason why small businesses should be allowed to fail because they could not pay their rates. That has happened under the Conservative Government for years, but if some assistance from local authorities had been allowed, many of the small businesses that fell on hard times could have survived. Local government was asking for the power to help small businesses.

Because the Government created unemployment, people received redundancy pay. Baroness Thatcher, when she was Prime Minister, encouraged people to invest in small businesses. Those people invested all their savings or their redundancy pay in small business, only to be told later that, as a result of the recession, there would be no help for them. Many people lost their business and their home.

Families were broken up because the Government did not help those small businesses to survive a difficult period. Labour local authorities wanted to help those businesses over the difficult period, but the legalisation enacted by Conservatives who are absent from the Chamber tonight prevented them.

It should be placed on record that those who introduced legislation that crippled small businesses are not here to listen to, and participate in, a debate which we hoped would help to salvage many small businesses in the future. It is sad to relate that that apathy exists among Conservative Members.

In rural areas, the shortfall in help is even greater. The demise of small businesses in rural areas has been greater under this Government than under any other. Local post offices and stores have been driven out of rural areas because of the Government's policies, including the unified business rate. Any Conservative Member representing a rural constituency should have been here tonight to defend his community and help it to retain its businesses.

The Labour party is pleading with the Government either to support the communities that they profess to defend or to withdraw completely and allow a Labour Government to take over and follow through the promises that we have made to secure and defend small businesses throughout the community, particularly in rural areas.

The final clause in the Bill says that the measure applies only to England and Wales. As a Member with an interest in Northern Ireland, I know that the Bill will be imposed by order on businesses in Northern Ireland. We shall have to accept that the issue will not be debated and no amendments will be made. That is totally unfair and undemocratic, and does not help to sustain a good relationship between the regions of the United Kingdom. Tonight, we are discussing the unified business rate only for England and Wales. The Government have many issues to address with regard to statutory instruments on the provision of services in Northern Ireland. Everything in Northern Ireland is done by quangos and the Government are responsible for that.

If the Minister has any semblance of support for local government, he should give us the assurances that we seek tonight. Will he assure us that the shortfall in the pool will not be made up by local council tax payers but will be borne by the Chancellor of the Exchequer? Failing that, we shall have no alternative but to vote for the amendment.

Photo of Ken Purchase Ken Purchase , Wolverhampton North East 9:28 pm, 12th January 1994

My hon. Friend the Member for Burnley (Mr. Pike) suggested that the Conservative Benches may be empty because the Government do not want their supporters to open their mouths and put their feet in it. I think that that is a rather kind explanation.

Photo of Bill Olner Bill Olner , Nuneaton

He is a big softie.

Photo of Ken Purchase Ken Purchase , Wolverhampton North East

That is true. I have a rather different explanation, because I believe that Ministers do not want their rather naive and innocent Back-Bench colleagues to see what a "fine mess they have gotten us into, Stanley."

The origin of that fine mess is Mrs. Thatcher, as she then was, who stamped her feet in the mid-1970s and determined that her policy and that of her subsequent Government should be designed to do something about the rating system. Those who recall the arguments, the discussions and the frayed tempers will also recall the common saying, "We pay our taxes in sorrow and our rates in anger."

At that time, our rates fell through the letter box on to the mat with a resounding thump. Mrs. Thatcher decided there and then that something had to be done to protect those she felt she represented—the middle-class, property-owning democracy. It never occurred to her that that was a contradiction in terms, but we can let that pass.

It is sensible to remind ourselves of the original system that was so hated by the Conservatives, who have tried three times to make sense of it according to their own plans. That rating system had the perfect properties of all sensible taxes. First, it was cheap to administer; historically, less than 1 per cent. of the total take from the old rating system went on the administration and collection of the rates. Secondly, it was easy to collect, because it was based on property that did not move about from place to place, so the rates could be levied with certainty and collected with ease.

In my time in local government, the amounts written off under the rating system were extremely small. We used to talk about a few thousand pounds being written off about three years after a company had gone into liquidation or someone had absconded with the money. That represented a tiny proportion of the amount collected.

For all the criticisms of that system, it was broadly progressive. It was based upon the size of the property or the premises occupied, and that was a good indicator of wealth and ability to pay. Once rebates were introduced, the system became even more sensible, and progressive into the bargain.

The Governmen's failure to revalue the rates are borne out of disgraceful gerrymandering. They knew that the weight of that revaluation would undoubtedly fall on the Tory heartlands. They put if off year after year. In the early 1980s, Government decimated the industrial manufacturing base of the west midlands in particular. I do not mean that they reduced it to one tenth of its original size, but they certainly caused great damage.

As a consequence, the rateble value in the west midlands and in my borough of Wolverhampton was extremely high in comparison with that set in other parts of the country. Had a revaluation been made at a proper time and in a proper way, the west midlands, the north-west, Yorkshire and the north would have benefited.

As it was, those regions suffered from the changes brought about by Tory loony economic policy, which wiped out the value of properties and premises in those industrial heartlands. That revaluation would have moved the burden, as it properly should have been, to those regions in the south which were then still exceedingly prosperous. During that period, the west midlands moved from being the second wealthiest region in the United Kingdom to being the second poorest—second only to the poverty and deprivation of Northern Ireland.

This sort of financial gerrymandering was not confined to revaluation. The formula for the distribution of revenue support was changed from what had been a relatively scientific process, based on historical costs and unavoidable growth, to a wholly subjective formula that was intended to favour the counties and the Tory voters. While trying to give the appearance of being fair, rational and scientific, the formula became so convoluted that no computer installation in this country could handle it, and the job was carried out in Houston, Texas—such was the mess that the Conservatives got the country into by trying to change the way in which the tax fell.

It soon became obvious that this gerrymandering affected not only domestic ratepayers; in the inner cities it pulled down companies, so there were fewer and fewer jobs, people became poorer and poorer, and it was more and more difficult for companies to pay the rates.

We have often made the point that proper services are worth paying for. The rates used to form only a minor part of an industrialist's costs—certainly that was true under Labour Governments. No more than 2 or 3 per cent. of a company's raft of costs was dedicated to paying the rates. Of course, no industry wants to pay any additional costs that do not appear to work to its advantage immediately, but the services that companies used to receive in return, and the education that their workers received, made the costs seem well worth while.

Even 2 per cent., however, when no profits are being made, can begin to seem an impossible burden, and when that rises to 4 or 5 per cent., it becomes absolutely impossible for any company to bear. So industry's screams for mercy had to be answered in some way, and we saw the start of the cynically dishonest process of blaming local government. We were told that local government was putting up the rates.

The Government were not prepared straightforwardly to tell the people that their own gerrymandering of the revenue support grant formula had hit industry and commerce hard. Instead, they blamed local authorities, using the dreadful ploy to which we have now become accustomed. Nothing is ever the fault of this morally bankrupt Government—it is always someone else's fault.

Photo of Mr Derek Enright Mr Derek Enright , Hemsworth

Has my hon. Friend noticed that the scourge of local government, the hon. Member for Colne Valley (Mr. Riddick), has not been here throughout the debate, but will no doubt appear, like rain-sodden pulp, to file through the appropriate door?

Photo of Ken Purchase Ken Purchase , Wolverhampton North East

I dare not disagree with my hon. Friend's elegant point, which no doubt will bear examination at a later date.

It is perhaps interesting to consider whether we can actually trust the Government to be fair. We know that we cannot. The enterprise zones are an example. Sir Geoffrey Howe, now Lord Howe, had a splendid idea about enterprise zones which would not have to pay rates.

If the Government had bothered to read a few lines by Ricardo, that long-ago economist, they would have learnt about the nature of rent. As one set of costs fall, landlords inevitably increase the rent to make up the difference. That is what happened in the enterprise zones. When the Government ended the rates that enterprise zones had to pay, the rest of us had to meet the increase in rent, and there was no advantage to anyone.

How can we trust a Government who cynically use that system to prevent a proper input from the Treasury to make up the shortfall in the rate support grant? The Government are mealy-mouthed. Although my hon. Friend the Member for Wakefield (Mr. Hinchliffe) prods and pushes, how can we trust a Government whose record throughout the 1980s was to take from local government, which had to pay for initiatives out of whatever was left? We cannot trust them, and shall vote against Second Reading.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North 9:41 pm, 12th January 1994

In the six and a half years that I have been here, I cannot recall a major Second Reading debate in which not one Conservative, apart from the Minister, has been prepared to support the Bill. Conservative Members usually prattle on about how companies are under great strain from the burden of business rates. Where are those Members now? They are either so embarrassed at their thinking being proved wrong, or they have so little confidence in their Government that they are not prepared to be here to support them. It is probably a combination of the two.

This important Bill affects every business and the ability of every local authority to raise revenue and use it to provide the services that people want and need. We are extremely concerned about the procedure and the timetable adopted by the Government. They amount to no less than an assault on the democracy of the House. It is an outrage that the money resolution was taken yesterday before the principles of the Bill were discussed on Second Reading. That is the first time that that has happened since the poll tax debate in 1991.

It is also outrageous that the Bill may go into Committee immediately after Second Reading without any organisation in the land having had time to reflect on what has been said by the Opposition and to make representations and promote amendments.

Photo of David Curry David Curry , Skipton and Ripon

This "outrage" was announced before the Christmas recess. Will the hon. Gentleman explain why Opposition Members were on a one-line Whip, and 59 of them turned up to vote last night?

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

The hon. Gentleman's intervention is quite irrelevant. The issue is that the procedures of the House to enable democratic debate to take place have been negated by the Government. That is the real issue. It is presumptuous to believe that the House will go in a certain direction before the debate takes place. That amounts to a contempt of the House, and that point has been reinforced by many of my hon. Friends.

As my hon. Friend the Member for Blackburn (Mr. Straw) said, there is no argument from the Labour party on the general need to introduce a timetable to deal with business rates, because the previous procedure was costly and created instability among the business community. But there is no excuse for the Government to introduce their timetable on the Bill. They do not even have the support of local authorities.

I have a letter from Birmingham city council that makes it quite clear that it does not need to have the figures until the middle of February to calculate the appropriate rates. I do not need to bring forward the representations that Birmingham city council has made, because the Department of the Environment has made those representations in a letter of 30 November 1993 to the chief executive of local authorities around the country.

In it, the Department says that authorities will be required to calculate their provisional contribution in January on the assumption that the pre-Budget transitional limits will apply, and that it will not be possible to make calculations that anticipate the passage of the Bill in case it is delayed. The letter also says that regulations will be introduced once the Bill is enacted to enable authorities —this is the key phrase—to recalculate the amount of their contribution to take account of the changes.

Government officials themselves are accepting that there is no need to rush into regulations and legislation early in January, because local authorities have to make provisional estimates and then re-do them once they know the transitional arrangements that have been made.

The argument that the Government used last night, which they were again using when the Minister of State opened the debate—that it is necessary to expedite the introduction of changes in the business rates—is totally without foundation. That is why there is such anger among Labour Members and among all those organisations which would want to make representations on these important matters.

There are many things that I would want to say in relation to the Bill if I had more time, but we are pressed for time. I shall summarise the position of the Opposition. There are serious concerns not only about parliamentary democracy and the timetable but about economic circumstances. As my hon. Friend the Member for Kingswood (Dr. Berry) has said, the Government have been forced into introducing further transitional changes because the economy is not strong enough to take the impact of the revaluation.

That point has been made by many business organisations, ranging from the CBI, the Institute of Directors and many of the chambers of commerce to the TUC. There is clearly agreement in the country that the business community is suffering from the economic recession; that there are virtually as many businesses going bankrupt this year as there were in those dreadful years 1992–93; that there are major regional variations in the way that the economic recession impacts, and consequently on the way that there is a need for different treatment on rates; and that there are also a number of different solutions proposed.

We have serious concerns on the long-term movement in business rates. What will happen after 1992? Will the transitional relief continue? On what will it be based in 1995? We have serious concerns about the future structure. Will the Government introduce further transitional arrangements? If so, will they top up the rating pool so that local authorities will not suffer? If they do that, will they account for that in the calculation of their external financial limits?

Those are crucial questions. I believe that people who are affected by the proposed legislation, in making a judgment on whether the provisions for this year are appropriate, will want to know what is in store for future years, because it is impossible to make a sensible calculation without having that information before us.

We then have to ask whether the system is the right one in the first place. All the evidence that I have collected from a wide range of institutions, again including chambers of commerce, the Institute of Directors and, as my hon. Friend the Member for Blackburn (Mr. Straw) said, the ex-Tory leader of Westminster city council, shows that it is far better that those matters are determined at a local level. In that way, local businesses can have some influence on the rating provisions affecting them, and local authorities can be influenced by business organisations in their community.

Apart from that, there is a basic democratic issue at stake. Where decision making can be devolved to a local level to make it more sensitive to the needs of local people, that should happen. There is no need for the excessive centralisation incorporated into the Bill and many of the Government's other approaches to local government matters.

The Opposition are not opposed to the purpose of the Bill. We recognise that there is a need for transitional relief. We are not even arguing that there should be different transitional arrangements. We are arguing that all right hon. and hon. Members, including Ministers, should be prepared to listen to the representations that people might want to make before making a decision on how appropriate the proposals are.

This evening, the House can accept either the Bill or the reasoned amendment. The latter stands for giving local communities a chance, giving the business community a chance to make its views known, and giving democracy a chance both in the House and in the country.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment) 9:51 pm, 12th January 1994

The debate has been characterised by rather a lot of polished perturbation and some unpolished perturbation. Although it has taken all day, only four points have been raised—objection in principle to the non-domestic rates, concern about the procedures for dealing with the Bill, a continuous argument about the difference between duties and powers and the question why we should have the scheme anyway. Perhaps I should briefly look at each of those four points.

If hon. Members were ever concerned about why the business rates were introduced in the way that they were, it would be worth their while going back and reading some of the documents from the mid-1980s. I have refreshed my memory of what the Association of British Chambers of Commerce had to say in 1986, because it has been prayed in aid quite a lot this evening: A large majority of … Chambers support the principle of a UBR … The majority of Chambers would prefer to see a genuine national rate—i.e. a business rate. We have heard a good deal about the relationship between business rates under the old system and jobs. This document, which I commend to the Opposition, who have clearly forgotten it, gives a litany of chambers of commerce making representations about how high increases in rates were destroying jobs in their areas.

The hon. Member for Wolverhampton, North-East (Mr. Purchase), the last Opposition Back Bencher to speak, might be interested to know that, in 1986, the chief executive of the Wolverhampton chamber of commerce and industry said: Discussions … in Wolverhampton clearly indicate that the high level of rates in our area is a major deterrent to companies purchasing industrial and commercial property. Indeed, it has been a significant factor in preventing local economic revival. It is, for example, our firm belief that the level of Rates was responsible for one firm (who formerly employed over 600 people) moving out of the area. If anyone wants to be reminded of why we introduced the non-domestic business rate, he has only to look at the evidence that was there in 1986.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

The Minister has quoted the views of the Wolverhampton chamber of commerce in 1986. Will he tell us what its views are now? Have they changed? I bet they have not.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

I have no reason to believe that the views of either the Association of British Chambers of Commerce or the CBI have changed. Anybody who reads Hansard tomorrow will notice that at not one point have the Opposition prayed in aid representations or concerns from any chamber of commerce or the CBI as to how the business rate—

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

No. I have considerable ground to cover.

Then there was concern about the procedures for dealing with the Bill. I suspect that everyone on both sides of the House, you, Madam Speaker, and my auntie Flora in Aberdeen know that the concerns raised this evening are fairly synthetic. They owe far more to the fact that there has been a breakdown in the usual channels than to real concerns about the substance of the Bill. The smiles on the faces of Opposition Front-Bench Members are testament to that. They know that, in previous years, such Bills have been dealt with speedily.

As the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) acknowledged last night, last year and in previous years such matters have been dealt with almost on the basis of a sweetheart deal. This year, for the first time, we have had a long, protracted debate because the usual channels have broken down and Opposition Members want to make a fuss about it.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

No.

The truth is that billing authorities need to send out rate bills from late February. [Interruption.] I am not frit. Hon. Members have spoken at great length and they would complain if I did not respond to the points raised in the debate.

The NDR Bill changes will reduce rate bills for some ratepayers. Authorities will need to reprogramme their software so that bills for ratepayers in transition reflect the changes. Obviously, some authorities will be reluctant to do that until after the Bill receives Royal Assent.

The hon. Member for Newcastle upon Tyne, North banged on about provisional estimates. Provisional estimates are very different from the actual bills that local authorities will have to issue. Of course, local authorities need as much certainty as possible.

Photo of Bill Olner Bill Olner , Nuneaton

On a point of order, Madam Speaker. Is it not a fact that there is no limit on the debate, so there is no reason for the Minister not to give way to hon. Members who want to make a proper intervention?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

It is up to the Minister whether or not he gives way. The Minister has the floor.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

That was a spurious point of order, following a spurious debate.

Clearly, a delay would cause confusion and uncertainty for businesses. The Bill needs to be passed speedily so that local authorities can deal effectively with the delays.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

No.

The other point of substance which the Opposition sought to argue this evening—

Photo of George Howarth George Howarth Shadow Spokesperson (Environment, Food and Rural Affairs)

On a point of order, Madam Speaker. Will you confirm that there is no time limit on the debate?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

The House has first to pass the 10 o'clock motion.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

The third concern was about powers and duties. There is an important distinction between the character of the provisions we are seeking for 1994–95 and those for future years. For 1994–95, a specific scheme of relief has been drawn up in detail, and to ensure its implementation in time we must spell out all the detail on the face of the Bill, and we have done that. For years beyond that, we do not know yet whether transitional relief arrangements will be required.

My hon. Friend has made it clear on numerous occasions that, if local authorities' revenue needed to be made up and if there were a shortfall, it would be made up in a way that was not at the expense of council tax payers. I am not sure how many times, and in how many ways, we have to make that clear.

Photo of Tony Baldry Tony Baldry Parliamentary Under-Secretary (Department of Environment)

No.

Any reasonable hon. Member looking at Hansard tomorrow will recognise that the debate about hours and duties has been totally spurious. As the Opposition readily acknowledged, they are not opposed to the principle of the Bill; they have made it clear that they support the subsidy in the Bill; they are not opposed to the purposes of the Bill; and they know it to be a sensible Bill that will give much needed help to businesses. I commend it to the House, and suggest that, the sooner it is passed, the better it will be for every business in the land.

Question put, That the amendment be made:—

The House proceeded to a Division

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The Serjeant-at-Arms is to investigate a possible hold-up in the Aye Lobby.

The House having divided: Ayes 253, Noes 327.

Division No. 61][9.59 pm
AYES
Abbott, Ms DianeCanavan, Dennis
Adams, Mrs IreneCann, Jamie
Ainger, NickChisholm, Malcolm
Ainsworth, Robert (Cov'try NE)Clapham, Michael
Allen, GrahamClark, Dr David (South Shields)
Anderson, Donald (Swansea E)Clarke, Eric (Midlothian)
Anderson, Ms Janet (Ros'dale)Clarke, Tom (Monklands W)
Armstrong, HilaryClelland, David
Ashton, JoeClwyd, Mrs Ann
Austin-Walker, JohnCoffey, Ann
Banks, Tony (Newham NW)Cohen, Harry
Barnes, HarryConnarty, Michael
Barron, KevinCook, Robin (Livingston)
Battle, JohnCorbett, Robin
Bayley, HughCorbyn, Jeremy
Beckett, Rt Hon MargaretCorston, Ms Jean
Bell, StuartCousins, Jim
Benn, Rt Hon TonyCryer, Bob
Bennett, Andrew F.Cummings, John
Benton, JoeCunliffe, Lawrence
Bermingham, GeraldCunningham, Jim (Covy SE)
Berry, Dr. RogerDafis, Cynog
Betts, CliveDalyell, Tam
Blair, TonyDarling, Alistair
Blunkett, DavidDavidson, Ian
Boateng, PaulDavies, Bryan (Oldham C'tral)
Boyes, RolandDavies, Rt Hon Denzil (Llanelli)
Bradley, KeithDavies, Ron (Caerphilly)
Bray, Dr JeremyDavis, Terry (B'ham, H'dge H'I)
Brown, N. (N'c'tle upon Tyne E)Denham, John
Burden, RichardDewar, Donald
Byers, StephenDixon, Don
Caborn, RichardDobson, Frank
Callaghan, JimDonohoe, Brian H.
Campbell, Mrs Anne (C'bridge)Dowd, Jim
Campbell, Ronnie (Blyth V)Dunnachie, Jimmy
Dunwoody, Mrs GwynethMcMaster, Gordon
Eagle, Ms AngelaMcNamara, Kevin
Eastham, KenMcWilliam, John
Enright, DerekMadden, Max
Etherington, BillMahon, Alice
Evans, John (St Helens N)Mandelson, Peter
Fatchett, DerekMarek, Dr John
Faulds, AndrewMarshall, David (Shettleston)
Field, Frank (Birkenhead)Marshall, Jim (Leicester, S)
Fisher, MarkMartin, Michael J. (Springburn)
Flynn, PaulMartlew, Eric
Foster, Rt Hon DerekMaxton, John
Fraser, JohnMeacher, Michael
Fyfe, MariaMeale, Alan
Galloway, GeorgeMichael, Alun
Gapes, MikeMichie, Bill (Sheffield Heeley)
Garrett, JohnMilburn, Alan
George, BruceMiller, Andrew
Gerrard, NeilMitchell, Austin (Gt Grimsby)
Godman, Dr Norman A.Moonie, Dr Lewis
Godsiff, RogerMorgan, Rhodri
Golding, Mrs LlinMorley, Elliot
Graham, ThomasMorris, Estelle (B'ham Yardley)
Griffiths, Nigel (Edinburgh S)Morris, Rt Hon J. (Aberavon)
Griffiths, Win (Bridgend)Mowlam, Marjorie
Grocott, BruceMudie, George
Gunnell, JohnMullin, Chris
Hain, PeterMurphy, Paul
Hall, MikeOakes, Rt Hon Gordon
Hanson, DavidO'Brien, Michael (N W'kshire)
Hardy, PeterO'Brien, William (Normanton)
Harman, Ms HarrietO'Hara, Edward
Hattersley, Rt Hon RoyOlner, William
Henderson, DougO'Neill, Martin
Heppell, JohnOrme, Rt Hon Stanley
Hill, Keith (Streatham)Parry, Robert
Hinchliffe, DavidPatchett, Terry
Hoey, KatePendry, Tom
Hogg, Norman (Cumbemauld)Pickthall, Colin
Home Robertson, JohnPike, Peter L.
Hood, JimmyPope, Greg
Hoon, GeoffreyPowell, Ray (Ogmore)
Howarth, George (Knowsley N)Prentice, Ms Bridget (Lew'm E)
Howells, Dr. Kim (Pontypridd)Prentice, Gordon (Pendle)
Hoyle, DougPrescott, John
Hughes, Kevin (Doncaster N)Primarolo, Dawn
Hughes, Robert (Aberdeen N)Purchase, Ken
Hughes, Roy (Newport E)Quin, Ms Joyce
Hutton, JohnRadice, Giles
Ingram, AdamRandall, Stuart
Jackson, Glenda (H'stead)Raynsford, Nick
Jackson, Helen (Shef'ld, H)Redmond, Martin
Jamieson, DavidReid, Dr John
Janner, GrevilleRobertson, George (Hamilton)
Jones, Barry (Alyn and D'side)Robinson, Geoffrey (Co'try NW)
Jones, Ieuan Wyn (Ynys Môn)Roche, Mrs. Barbara
Jones, Jon Owen (Cardiff C)Rogers, Allan
Jones, Lynne (B'ham S O)Rooker, Jeff
Jones, Martyn (Clwyd, SW)Rooney, Terry
Jowell, TessaRoss, Ernie (Dundee W)
Kaufman, Rt Hon GeraldRowlands, Ted
Keen, AlanRuddock, Joan
Kennedy, Jane (Lpool Brdgn)Sedgemore, Brian
Khabra, Piara S.Sheerman, Barry
Kilfoyle, PeterSheldon, Rt Hon Robert
Leighton, RonShore, Rt Hon Peter
Lestor, Joan (Eccles)Simpson, Alan
Lewis, TerrySkinner, Dennis
Litherland, RobertSmith, Andrew (Oxford E)
Livingstone, KenSmith, C.(Isl'ton S & F'sbury)
Lloyd, Tony (Stretford)Smith, Rt Hon John (M'kl'ds E)
Llwyd, ElfynSmith, Llew (Blaenau Gwent)
McAllion, JohnSnape, Peter
McAvoy, ThomasSpearing, Nigel
McCartney, IanSpellar, John
Macdonald, CalumSquire, Rachel (Dunfermline W)
McFall, JohnSteinberg, Gerry
McKelvey, WilliamStevenson, George
Mackinlay, AndrewStott, Roger
McLeish, HenryStrang, Dr. Gavin
Straw, JackWilliams, Alan W (Carmarthen)
Taylor, Mrs Ann (Dewsbury)Wilson, Brian
Thompson, Jack (Wansbeck)Winnick, David
Tipping, PaddyWise, Audrey
Vaz, KeithWorthington, Tony
Walker, Rt Hon Sir HaroldWray, Jimmy
Walley, JoanWright, Dr Tony
Wardell, Gareth (Gower)Young, David (Bolton SE)
Wareing, Robert N
Watson, MikeTellers for the Ayes:
Wicks, MalcolmMr. Dennis Turner and
Wigley, DafyddMr. Eric Illsley.
Williams, Rt Hon Alan (Sw'n W)
NOES
Ainsworth, Peter (East Surrey)Conway, Derek
Aitken, JonathanCoombs, Anthony (Wyre For'st)
Alexander, RichardCoombs, Simon (Swindon)
Alison, Rt Hon Michael (Selby)Cope, Rt Hon Sir John
Allason, Rupert (Torbay)Couchman, James
Alton, DavidCran, James
Amess, DavidCurrie, Mrs Edwina (S D'by'ire)
Arbuthnot, JamesCurry, David (Skipton & Ripon)
Arnold, Jacques (Gravesham)Davies, Quentin (Stamford)
Arnold, Sir Thomas (Hazel Grv)Davis, David (Boothferry)
Aspinwall, JackDay, Stephen
Atkins, RobertDeva, Nirj Joseph
Atkinson, David (Bour'mouth E)Devlin, Tim
Atkinson, Peter (Hexham)Dickens, Geoffrey
Baker, Rt Hon K. (Mole Valley)Dicks, Terry
Baker, Nicholas (Dorset North)Dorrell, Stephen
Baldry, TonyDouglas-Hamilton, Lord James
Banks, Matthew (Southport)Dover, Den
Banks, Robert (Harrogate)Duncan, Alan
Bates, MichaelDuncan-Smith, Iain
Batiste, SpencerDunn, Bob
Beith, Rt Hon A. J.Durant, Sir Anthony
Bellingham, HenryDykes, Hugh
Bendall, VivianEggar, Tim
Beresford, Sir PaulElletson, Harold
Biffen, Rt Hon JohnEvans, David (Welwyn Hatfield)
Blackburn, Dr John G.Evans, Jonathan (Brecon)
Body, Sir RichardEvans, Nigel (Ribble Valley)
Bonsor, Sir NicholasEvans, Roger (Monmouth)
Booth, HartleyEvennett, David
Boswell, TimFaber, David
Bottomley, Peter (Eltham)Fabricant, Michael
Bottomley, Rt Hon VirginiaFenner, Dame Peggy
Bowden, AndrewField, Barry (Isle of Wight)
Bowis, JohnFishburn, Dudley
Boyson, Rt Hon Sir RhodesForman, Nigel
Brandreth, GylesForsyth, Michael (Stirling)
Brazier, JulianForth, Eric
Bright, GrahamFowler, Rt Hon Sir Norman
Brooke, Rt Hon PeterFox, Dr Liam (Woodspring)
Brown, M. (Brigg & Cl'thorpes)Fox, Sir Marcus (Shipley)
Browning, Mrs. AngelaFreeman, Rt Hon Roger
Bruce, Ian (S Dorset)French, Douglas
Bruce, Malcolm (Gordon)Fry, Sir Peter
Budgen, NicholasGale, Roger
Burns, SimonGallie, Phil
Burt, AlistairGardiner, Sir George
Butcher, JohnGarel-Jones, Rt Hon Tristan
Butler, PeterGarnier, Edward
Butterfill, JohnGill, Christopher
Campbell, Menzies (Fife NE)Gillan, Cheryl
Carlisle, John (Luton North)Goodlad, Rt Hon Alastair
Carlisle, Kenneth (Lincoln)Goodson-Wickes, Dr Charles
Carrington, MatthewGorman, Mrs Teresa
Carttiss, MichaelGorst, John
Cash, WilliamGrant, Sir A. (Cambs SW)
Channon, Rt Hon PaulGreenway, Harry (Ealing N)
Chapman, SydneyGreenway, John (Ryedale)
Churchill, MrGriffiths, Peter (Portsmouth, N)
Clappison, JamesGrylls, Sir Michael
Clark, Dr Michael (Rochford)Gummer, Rt Hon John Selwyn
Clifton-Brown, GeoffreyHague, William
Coe, SebastianHamilton, Rt Hon Sir Archie
Colvin, MichaelHamilton, Neil (Tatton)
Congdon, DavidHampson, Dr Keith
Hanley, JeremyMerchant, Piers
Hannam, Sir JohnMilligan, Stephen
Hargreaves, AndrewMills, Iain
Harris, DavidMitchell, Andrew (Gedling)
Haselhurst, AlanMitchell, Sir David (Hants NW)
Hawkins, NickMoate, Sir Roger
Hawksley, WarrenMonro, Sir Hector
Hayes, JerryMontgomery, Sir Fergus
Heald, OliverMoss, Malcolm
Hendry, CharlesNeedham, Richard
Heseltine, Rt Hon MichaelNelson, Anthony
Higgins, Rt Hon Sir Terence L.Neubert, Sir Michael
Hill, James (Southampton Test)Newton, Rt Hon Tony
Hogg, Rt Hon Douglas (G'tham)Nicholls, Patrick
Horam, JohnNicholson, David (Taunton)
Hordern, Rt Hon Sir PeterNicholson, Emma (Devon West)
Howard, Rt Hon MichaelNorris, Steve
Howarth, Alan (Strat'rd-on-A)Onslow, Rt Hon Sir Cranley
Howell, Rt Hon David (G'dford)Oppenheim, Phillip
Howell, Sir Ralph (N Norfolk)Ottaway, Richard
Hughes Robert G. (Harrow W)Page, Richard
Hughes, Simon (Southwark)Paice, James
Hunt, Rt Hon David (Wirral W)Patten, Rt Hon John
Hunt, Sir John (Ravensbourne)Pattie, Rt Hon Sir Geoffrey
Hunter, AndrewPawsey, James
Hurd, Rt Hon DouglasPeacock, Mrs Elizabeth
Jack, MichaelPorter, Barry (Wirral S)
Jackson, Robert (Wantage)Porter, David (Waveney)
Jenkin, BernardPortillo, Rt Hon Michael
Jessel, TobyPowell, William (Corby)
Johnson Smith, Sir GeoffreyRathbone, Tim
Johnston, Sir RussellRedwood, Rt Hon John
Jones, Gwilym (Cardiff N)Rendel, David
Jones, Nigel (Cheltenham)Renton, Rt Hon Tim
Jones, Robert B. (W Hertfdshr)Richards, Rod
Jopling, Rt Hon MichaelRiddick, Graham
Kellett-Bowman, Dame ElaineRifkind, Rt Hon. Malcolm
Kennedy, Charles (Ross, C&S)Robathan, Andrew
Key, RobertRoberts, Rt Hon Sir Wyn
Kilfedder, Sir JamesRobertson, Raymond (Ab'd'n S)
King, Rt Hon TomRobinson, Mark (Somerton)
Kirkhope, TimothyRoe, Mrs Marion (Broxbourne)
Kirkwood, ArchyRowe, Andrew (Mid Kent)
Knapman, RogerRumbold, Rt Hon Dame Angela
Knight, Mrs Angela (Ere wash)Ryder, Rt Hon Richard
Knight, Greg (Derby N)Sackville, Tom
Knight, Dame Jill (Bir'm E'st'n)Sainsbury, Rt Hon Tim
Knox, Sir DavidScott, Rt Hon Nicholas
Kynoch, George (Kincardine)Shaw, David (Dover)
Lait, Mrs JacquiShaw, Sir Giles (Pudsey)
Lang, Rt Hon IanShephard, Rt Hon Gillian
Lawrence, Sir IvanShepherd, Colin (Hereford)
Legg, BarryShepherd, Richard (Aldridge)
Leigh, EdwardShersby, Michael
Lennox-Boyd, MarkSims, Roger
Lester, Jim (Broxtowe)Skeet, Sir Trevor
Lidington, DavidSmith, Sir Dudley (Warwick)
Lilley, Rt Hon PeterSmith, Tim (Beaconsfield)
Lloyd, Rt Hon Peter (Fareham)Soames, Nicholas
Lord, MichaelSpeed, Sir Keith
Luff, PeterSpencer, Sir Derek
Lyell, Rt Hon Sir NicholasSpicer, Sir James (W Dorset)
Lynne, Ms LizSpicer, Michael (S Worcs)
MacGregor, Rt Hon JohnSpink, Dr Robert
MacKay, AndrewSpring, Richard
Maclean, DavidSproat, Iain
McLoughlin, PatrickSquire, Robin (Hornchurch)
McNair-Wilson, Sir PatrickStanley, Rt Hon Sir John
Maddock, Mrs DianaSteel, Rt Hon Sir David
Madel, Sir DavidSteen, Anthony
Maitland, Lady OlgaStephen, Michael
Malone, GeraldStern, Michael
Mans, KeithStewart, Allan
Marland, PaulStreeter, Gary
Marlow, TonySumberg, David
Marshall, John (Hendon S)Sweeney, Walter
Martin, David (Portsmouth S)Sykes, John
Mates, MichaelTapsell, Sir Peter
Mawhinney, Rt Hon Dr BrianTaylor, Ian (Esher)
Mayhew, Rt Hon Sir PatrickTaylor, John M. (Solihull)
Taylor, Matthew (Truro)Waterson, Nigel
Thomason, RoyWatts, John
Thompson, Sir Donald (C'er V)Wells, Bowen
Thompson, Patrick (Norwich N)Whitney, Ray
Thomton, Sir MalcolmWhittingdale, John
Thurnham, PeterWiddecombe, Ann
Townend, John (Bridlington)Wiggin, Sir Jerry
Townsend, Cyril D. (Bexl'yh'th)Wilkinson, John
Tracey, RichardWilletts, David
Tredinnick, DavidWilshire, David
Trend, MichaelWinterton, Mrs Ann (Congleton)
Trotter, NevilleWinterton, Nicholas (Macc'f'ld)
Twinn, Dr IanWolfson, Mark
Tyler, PaulWood, Timothy
Vaughan, Sir GerardYeo, Tim
Viggers, PeterYoung, Rt Hon Sir George
Waldegrave, Rt Hon William
Wallace, JamesTellers for the Noes:
Waller, GaryMr. David Lightbown and
Ward, JohnMr. Irvine Patnick.
Wardle, Charles (Bexhill)

Question accordingly negatived.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 325, Noes 138.

Division No. 62][10.19 pm
AYES
Ainsworth, Peter (East Surrey)Campbell, Menzies (Fife NE)
Aitken, JonathanCarlisle, John (Luton North)
Alexander, RichardCarlisle, Kenneth (Lincoln)
Alison, Rt Hon Michael (Selby)Carrington, Matthew
Allason, Rupert (Torbay)Carttiss, Michael
Alton, DavidCash, William
Amess, DavidChannon, Rt Hon Paul
Arbuthnot, JamesChapman, Sydney
Arnold, Jacques (Gravesham)Churchill, Mr
Arnold, Sir Thomas (Hazel Grv)Clappison, James
Aspinwall, JackClark, Dr Michael (Rockford)
Atkins, RobertClarke, Rt Hon Kenneth (Ruclif)
Atkinson, David (Bour'mouth E)Clifton-Brown, Geoffrey
Atkinson, Peter (Hexham)Coe, Sebastian
Baker, Rt Hon K. (Mole Valley)Colvin, Michael
Baker, Nicholas (Dorset North)Congdon, David
Baldry, TonyConway, Derek
Banks, Matthew (Southport)Coombs, Anthony (Wyre For'st)
Banks, Robert (Harrogate)Coombs, Simon (Swindon)
Bates, MichaelCope, Rt Hon Sir John
Batiste, SpencerCouchman, James
Beith, Rt Hon A. J.Cran, James
Bellingham, HenryCurrie, Mrs Edwina (S D'by'ire)
Bendall, VivianCurry, David (Skipton & Ripon)
Beresford, Sir PaulDavies, Quentin (Stamford)
Biffen, Rt Hon JohnDavis, David (Boothferry)
Blackburn, Dr John G.Day, Stephen
Body, Sir RichardDeva, Nirj Joseph
Bonsor, Sir NicholasDevlin, Tim
Booth, HartleyDickens, Geoffrey
Boswell, TimDicks, Terry
Bottomley, Peter (Eltham)Dorrell, Stephen
Bottomley, Rt Hon VirginiaDouglas-Hamilton, Lord James
Bowden, AndrewDover, Den
Bowis, JohnDuncan, Alan
Boyson, Rt Hon Sir RhodesDuncan-Smith, Iain
Brandreth, GylesDunn, Bob
Brazier, JulianDurant, Sir Anthony
Bright, GrahamEggar, Tim
Brooke, Rt Hon PeterElletson, Harold
Brown, M. (Brigg & Cl'thorpes)Evans, David (Welwyn Hatfield)
Browning, Mrs. AngelaEvans, Jonathan (Brecon)
Bruce, Ian (S Dorset)Evans, Nigel (Ribble Valley)
Bruce, Malcolm (Gordon)Evans, Roger (Monmouth)
Budgen, NicholasEvennett, David
Burns, SimonFaber, David
Burt, AlistairFabricant, Michael
Butcher, JohnFenner, Dame Peggy
Butler, PeterField, Barry (Isle of Wight)
Butterfill, JohnFishburn, Dudley
Forman, NigelLang, Rt Hon Ian
Forsyth, Michael (Stirling)Lawrence, Sir Ivan
Forth, EricLegg, Barry
Fowler, Rt Hon Sir NormanLeigh, Edward
Fox, Dr Liam (Woodspring)Lennox-Boyd, Mark
Fox, Sir Marcus (Shipley)Lester, Jim (Broxtowe)
Freeman, Rt Hon RogerLidington, David
French, DouglasLightbown, David
Fry, Sir PeterLilley, Rt Hon Peter
Gale, RogerLloyd, Rt Hon Peter (Fareham)
Gallie, PhilLord, Michael
Gardiner, Sir GeorgeLuff, Peter
Garel-Jones, Rt Hon TristanLyell, Rt Hon Sir Nicholas
Garnier, EdwardLynne, Ms Liz
Gill, ChristopherMacGregor, Rt Hon John
Gillan, CherylMaclean, David
Goodlad, Rt Hon AlastairMcLoughlin, Patrick
Goodson-Wickes, Dr CharlesMcNair-Wilson, Sir Patrick
Gorman, Mrs TeresaMaddock, Mrs Diana
Gorst, JohnMadel, Sir David
Grant, Sir A. (Cambs SW)Maitland, Lady Olga
Greenway, Harry (Ealing N)Malone, Gerald
Greenway, John (Ryedale)Mans, Keith
Griffiths, Peter (Portsmouth, N)Marland, Paul
Grylls, Sir MichaelMarlow, Tony
Gummer, Rt Hon John SelwynMarshall, John (Hendon S)
Hague, WilliamMartin, David (Portsmouth S)
Hamilton, Rt Hon Sir ArchieMates, Michael
Hamilton, Neil (Tatton)Mawhinney, Rt Hon Dr Brian
Hampson, Dr KeithMayhew, Rt Hon Sir Patrick
Hanley, JeremyMerchant, Piers
Hannam, Sir JohnMilligan, Stephen
Hargreaves, AndrewMills, Iain
Harris, DavidMitchell, Andrew (Gedling)
Haselhurst, AlanMitchell, Sir David (Hants NW)
Hawkins, NickMoate, Sir Roger
Hawksley, WarrenMonro, Sir Hector
Hayes, JerryMontgomery, Sir Fergus
Heald, OliverMoss, Malcolm
Hendry, CharlesNeedham, Richard
Heseltine, Rt Hon MichaelNelson, Anthony
Higgins, Rt Hon Sir Terence L.Neubert, Sir Michael
Hill, James (Southampton Test)Newton, Rt Hon Tony
Hogg, Rt Hon Douglas (G'tham)Nicholson, David (Taunton)
Horam, JohnNicholson, Emma (Devon West)
Hordern, Rt Hon Sir PeterNorris, Steve
Howard, Rt Hon MichaelOnslow, Rt Hon Sir Cranley
Howarth, Alan (Strat'rd-on-A)Oppenheim, Phillip
Howell, Rt Hon David (G'dford)Ottaway, Richard
Howell, Sir Ralph (N Norfolk)Page, Richard
Hughes Robert G. (Harrow W)Paice, James
Hughes, Simon (Southwark)Patnick, Irvine
Hunt, Rt Hon David (Wirral W)Patten, Rt Hon John
Hunt, Sir John (Ravensbourne)Pattie, Rt Hon Sir Geoffrey
Hunter, AndrewPawsey, James
Hurd, Rt Hon DouglasPeacock, Mrs Elizabeth
Jack, MichaelPorter, Barry (Wirral S)
Jackson, Robert (Wantage)Porter, David (Waveney)
Jenkin, BernardPortillo, Rt Hon Michael
Jessel, TobyPowell, William (Corby)
Johnson Smith, Sir GeoffreyRathbone, Tim
Johnston, Sir RussellRedwood, Rt Hon John
Jones, Gwilym (Cardiff N)Rendel, David
Jones, Nigel (Cheltenham)Renton, Rt Hon Tim
Jones, Robert B. (W Hertfdshr)Richards, Rod
Jopling, Rt Hon MichaelRiddick, Graham
Kellett-Bowman, Dame ElaineRifkind, Rt Hon. Malcolm
Kennedy, Charles (Ross, C&S)Robathan, Andrew
Key, RobertRoberts, Rt Hon Sir Wyn
Kilfedder, Sir JamesRobertson, Raymond (Ab'd'n S)
King, Rt Hon TomRobinson, Mark (Somerton)
Kirkhope, TimothyRoe, Mrs Marion (Broxbourne)
Kirkwood, ArchyRowe, Andrew (Mid Kent)
Knapman, RogerRumbold, Rt Hon Dame Angela
Knight, Mrs Angela (Ere wash)Ryder, Rt Hon Richard
Knight, Greg (Derby N)Sackville, Tom
Knight, Dame Jill (Bir'm E'st'n)Sainsbury, Rt Hon Tim
Knox, Sir DavidScott, Rt Hon Nicholas
Kynoch, George (Kincardine)Shaw, David (Dover)
Lait, Mrs JacquiShaw, Sir Giles (Pudsey)
Shephard, Rt Hon GillianThumham, Peter
Shepherd, Colin (Hereford)Townend, John (Bridlington)
Shepherd, Richard (Aldridge)Townsend, Cyril D. (Bexl'yh'th)
Shersby, MichaelTracey, Richard
Sims, RogerTredinnick, David
Skeet, Sir TrevorTrend, Michael
Smith, Sir Dudley (Warwick)Trotter, Neville
Smith, Tim (Beaconsfield)Twinn, Dr Ian
Soames, NicholasTyler, Paul
Speed, Sir KeithVaughan, Sir Gerard
Spencer, Sir DerekViggers, Peter
Spicer, Sir James (W Dorset)Waldegrave, Rt Hon William
Spicer, Michael (S Worcs)Wallace, James
Spink, Dr RobertWaller, Gary
Spring, RichardWard, John
Sproat, IainWardle, Charles (Bexhill)
Squire, Robin (Hornchurch)Waterson, Nigel
Stanley, Rt Hon Sir JohnWatts, John
Steel, Rt Hon Sir DavidWells, Bowen
Steen, AnthonyWhitney, Ray
Stephen, MichaelWhittingdale, John
Stern, MichaelWiddecombe, Ann
Stewart, AllanWiggin, Sir Jerry
Streeter, GaryWilkinson, John
Sumberg, DavidWilletts, David
Sweeney, WalterWilshire, David
Sykes, JohnWinterton, Mrs Ann (Congleton)
Tapsell, Sir PeterWinterton, Nicholas (Macc'f'ld)
Taylor, Ian (Esher)Wolfson, Mark
Taylor, John M. (Solihull)Yeo, Tim
Taylor, Matthew (Truro)Young, Rt Hon Sir George
Thomason, Roy
Thompson, Sir Donald (C'er V)Tellers for the Ayes:
Thompson, Patrick (Norwich N)Mr. Timothy Wood and
Thornton, Sir MalcolmMr. Andrew MacKay.
NOES
Adams, Mrs IreneDunwoody, Mrs Gwyneth
Ainger, NickEagle, Ms Angela
Ainsworth, Robert (Cov'try NE)Eastham, Ken
Anderson, Ms Janet (Ros'dale)Etherington, Bill
Ashton, JoeFaulds, Andrew
Austin-Walker, JohnField, Frank (Birkenhead)
Banks, Tony (Newham NW)Flynn, Paul
Barnes, HarryFraser, John
Bayley, HughGalloway, George
Benn, Rt Hon TonyGapes, Mike
Bennett, Andrew F.George, Bruce
Benton, JoeGerrard, Neil
Bermingham, GeraldGodman, Dr Norman A.
Berry, Dr. RogerGodsiff, Roger
Betts, CliveGolding, Mrs Llin
Boyes, RolandGraham, Thomas
Burden, RichardGunnell, John
Byers, StephenHain, Peter
Caborn, RichardHall, Mike
Callaghan, JimHanson, David
Campbell, Mrs Anne (C'bridge)Hardy, Peter
Campbell, Ronnie (Blyth V)Heppell, John
Canavan, DennisHill, Keith (Streatham)
Cann, JamieHogg, Norman (Cumbernauld)
Chisholm, MalcolmHome Robertson, John
Clapham, MichaelHood, Jimmy
Clarke, Eric (Midlothian)Hoon, Geoffrey
Clelland, DavidHughes, Kevin (Doncaster N)
Coffey, AnnHughes, Robert (Aberdeen N)
Cohen, HarryIllsley, Eric
Connarty, MichaelJackson, Glenda (H'stead)
Corbyn, JeremyJackson, Helen (Shef'ld, H)
Corston, Ms JeanJamieson, David
Cummings, JohnJanner, Greville
Cunliffe, LawrenceJones, Barry (Alyn and D'side)
Cunningham, Jim (Covy SE)Jones, Lynne (B'ham S O)
Dalyell, TamJones, Martyn (Clwyd, SW)
Davidson, IanJowell, Tessa
Davis, Terry (B'ham, H'dge H'l)Kennedy, Jane (Lpool Brdgn)
Denham, JohnKhabra, Piara S.
Donohoe, Brian H.Kilfoyle, Peter
Dowd, JimLewis, Terry
Dunnachie, JimmyLitherland, Robert
Livingstone, KenPrentice, Gordon (Pendle)
McAllion, JohnPurchase, Ken
McAvoy, ThomasRadice, Giles
Macdonald, CalumRedmond, Martin
McKelvey, WilliamRobinson, Geoffrey (Co'try NW)
Mackinlay, AndrewRooney, Terry
McWilliam, JohnRoss, Ernie (Dundee W)
Madden, MaxSedgemore, Brian
Mahon, AliceSheldon, Rt Hon Robert
Mandelson, PeterSimpson, Alan
Marshall, David (Shettleston)Smith, Llew (Blaenau Gwent)
Martin, Michael J. (Springburn)Spearing, Nigel
Maxton, JohnSquire, Rachel (Dunfermline W)
Michie, Bill (Sheffield Heeley)Steinberg, Gerry
Miller, AndrewStevenson, George
Mitchell, Austin (Gt Grimsby)Tipping, Paddy
Mudie, GeorgeWalker, Rt Hon Sir Harold
Mullin, ChrisWardell, Gareth (Gower)
Oakes, Rt Hon GordonWareing, Robert N
O'Hara, EdwardWatson, Mike
Olner, WilliamWicks, Malcolm
Orme, Rt Hon StanleyWinnick, David
Parry, RobertWise, Audrey
Patchett, TerryWray, Jimmy
Pickthall, ColinWright, Dr Tony
Pope, Greg
Prentice, Ms Bridget (Lew'm E)Tellers for the Noes:
Mr. Bob Cryer and
Mr. Dennis Skinner.

Question accordingly agreed to.

Motion made—[Mr. Andrew Mitchell]—and Question put forthwith, pursuant to Standing Order No. 61 (Committal of bills), That the Bill be committed to a Committee of the whole House:—

The House divided: Ayes 327, Noes 247.

Division No. 63][10.34 pm
AYES
Ainsworth, Peter (East Surrey)Brooke, Rt Hon Peter
Aitken, JonathanBrown, M. (Brigg & Cl'thorpes)
Alexander, RichardBrowning, Mrs. Angela
Alison, Rt Hon Michael (Selby)Bruce, Ian (S Dorset)
Allason, Rupert (Torbay)Bruce, Malcolm (Gordon)
Alton, DavidBudgen, Nicholas
Amess, DavidBurns, Simon
Arbuthnot, JamesBurt, Alistair
Arnold, Jacques (Gravesham)Butcher, John
Arnold, Sir Thomas (Hazel Grv)Butler, Peter
Aspinwall, JackButterfill, John
Atkins, RobertCampbell, Menzies (Fife NE)
Atkinson, David (Bour'mouth E)Carlisle, John (Luton North)
Atkinson, Peter (Hexham)Carlisle, Kenneth (Lincoln)
Baker, Rt Hon K. (Mole Valley)Carrington, Matthew
Baker, Nicholas (Dorset North)Cash, William
Baldry, TonyChannon, Rt Hon Paul
Banks, Matthew (Southport)Churchill, Mr
Banks, Robert (Harrogate)Clappison, James
Bates, MichaelClark, Dr Michael (Rochford)
Batiste, SpencerClarke, Rt Hon Kenneth (Ruclif)
Beith, Rt Hon A. J.Clifton-Brown, Geoffrey
Bellingham, HenryCoe, Sebastian
Bendall, VivianColvin, Michael
Beresford, Sir PaulCongdon, David
Biffen, Rt Hon JohnConway, Derek
Blackburn, Dr John G.Coombs, Anthony (Wyre For'st)
Body, Sir RichardCoombs, Simon (Swindon)
Bonsor, Sir NicholasCope, Rt Hon Sir John
Booth, HartleyCouchman, James
Boswell, TimCran, James
Bottomley, Peter (Eltham)Currie, Mrs Edwina (S D'by'ire)
Bottomley, Rt Hon VirginiaCurry, David (Skipton & Ripon)
Bowden, AndrewDavies, Quentin (Stamford)
Bowis, JohnDavis, David (Boothferry)
Boyson, Rt Hon Sir RhodesDay, Stephen
Brandreth, GylesDeva, Nirj Joseph
Brazier, JulianDevlin, Tim
Bright, GrahamDickens, Geoffrey
Dicks, TerryJessel, Toby
Dorrell, StephenJohnson Smith, Sir Geoffrey
Douglas-Hamilton, Lord JamesJohnston, Sir Russell
Dover, DenJones, Gwilym (Cardiff N)
Duncan, AlanJones, Nigel (Cheltenham)
Duncan-Smith, IainJones, Robert B. (W Hertfdshr)
Dunn, BobJopling, Rt Hon Michael
Durant, Sir AnthonyKellett-Bowman, Dame Elaine
Dykes, HughKennedy, Charles (Ross, C&S)
Eggar, TimKey, Robert
Elletson, HaroldKilfedder, Sir James
Evans, David (Welwyn Hatfield)King, Rt Hon Tom
Evans, Jonathan (Brecon)Kirkhope, Timothy
Evans, Nigel (Ribble Valley)Kirkwood, Archy
Evans, Roger (Monmouth)Knapman, Roger
Evennett, DavidKnight, Mrs Angela (Erewash)
Faber, DavidKnight, Greg (Derby N)
Fabricant, MichaelKnight, Dame Jill (Bir'm E'st'n)
Fenner, Dame PeggyKnox, Sir David
Field, Barry (Isle of Wight)Kynoch, George (Kincardine)
Fishburn, DudleyLait, Mrs Jacqui
Forman, NigelLang, Rt Hon Ian
Forsyth, Michael (Stirling)Lawrence, Sir Ivan
Forth, EricLegg, Barry
Fowler, Rt Hon Sir NormanLeigh, Edward
Fox, Dr Liam (Woodspring)Lennox-Boyd, Mark
Fox, Sir Marcus (Shipley)Lester, Jim (Broxtowe)
Freeman, Rt Hon RogerLidington, David
French, DouglasLightbown, David
Fry, Sir PeterLilley, Rt Hon Peter
Gale, RogerLloyd, Rt Hon Peter (Fareham)
Gallie, PhilLord, Michael
Gardiner, Sir GeorgeLuff, Peter
Garel-Jones, Rt Hon TristanLyell, Rt Hon Sir Nicholas
Gamier, EdwardLynne, Ms Liz
Gill, ChristopherMacGregor, Rt Hon John
Gillan, CherylMaclean, David
Goodlad, Rt Hon AlastairMcLoughlin, Patrick
Goodson-Wickes, Dr CharlesMcNair-Wilson, Sir Patrick
Gorman, Mrs TeresaMaddock, Mrs Diana
Gorst, JohnMadel, Sir David
Grant, Sir A. (Cambs SW)Maitland, Lady Olga
Greenway, Harry (Ealing N)Malone, Gerald
Greenway, John (Ryedale)Mans, Keith
Griffiths, Peter (Portsmouth, N)Marland, Paul
Grylls, Sir MichaelMarlow, Tony
Gummer, Rt Hon John SelwynMarshall, John (Hendon S)
Hague, WilliamMartin, David (Portsmouth S)
Hamilton, Rt Hon Sir ArchieMates, Michael
Hamilton, Neil (Tatton)Mawhinney, Rt Hon Dr Brian
Hampson, Dr KeithMayhew, Rt Hon Sir Patrick
Hanley, JeremyMerchant, Piers
Hannam, Sir JohnMilligan, Stephen
Hargreaves, AndrewMills, Iain
Harris, DavidMitchell, Andrew (Gedling)
Haselhurst, AlanMitchell, Sir David (Hants NW)
Hawkins, NickMoate, Sir Roger
Hawksley, WarrenMonro, Sir Hector
Hayes, JerryMontgomery, Sir Fergus
Heald, OliverMoss, Malcolm
Hendry, CharlesNeedham, Richard
Heseltine, Rt Hon MichaelNelson, Anthony
Higgins, Rt Hon Sir Terence L.Neubert, Sir Michael
Hill, James (Southampton Test)Newton, Rt Hon Tony
Hogg, Rt Hon Douglas (G'tham)Nicholls, Patrick
Horam, JohnNicholson, David (Taunton)
Hordem, Rt Hon Sir PeterNicholson, Emma (Devon West)
Howard, Rt Hon MichaelNorris, Steve
Howarth, Alan (Strat'rd-on-A)Onslow, Rt Hon Sir Cranley
Howell, Rt Hon David (G'dford)Oppenheim, Phillip
Howell, Sir Ralph (N Norfolk)Ottaway, Richard
Hughes Robert G. (Harrow W)Page, Richard
Hughes, Simon (Southwark)Paice, James
Hunt, Rt Hon David (Wirral W)Patnick, Irvine
Hunt, Sir John (Ravensbourne)Patten, Rt Hon John
Hunter, AndrewPattie, Rt Hon Sir Geoffrey
Hurd, Rt Hon DouglasPawsey, James
Jack, MichaelPeacock, Mrs Elizabeth
Jackson, Robert (Wantage)Porter, Barry (Wirral S)
Jenkin, BernardPorter, David (Waveney)
Portillo, Rt Hon MichaelSweeney, Walter
Powell, William (Corby)Sykes, John
Rathbone, TimTapsell, Sir Peter
Redwood, Rt Hon JohnTaylor, Ian (Esher)
Rendel, DavidTaylor, John M. (Solihull)
Renton, Rt Hon TimTaylor, Matthew (Truro)
Richards, RodThomason, Roy
Riddick, GrahamThompson, Sir Donald (C'er V)
Rifkind, Rt Hon. MalcolmThompson, Patrick (Norwich N)
Robathan, AndrewThomton, Sir Malcolm
Roberts, Rt Hon Sir WynThumham, Peter
Robertson, Raymond (Ab'd'n S)Townend, John (Bridlington)
Robinson, Mark (Somerton)Townsend, Cyril D. (Bexl'yh'th)
Roe, Mrs Marion (Broxbourne)Tracey, Richard
Rowe, Andrew (Mid Kent)Tredinnick, David
Rumbold, Rt Hon Dame AngelaTrend, Michael
Ryder, Rt Hon RichardTrotter, Neville
Sackville, TomTwinn, Dr Ian
Sainsbury, Rt Hon TimTyler, Paul
Scott, Rt Hon NicholasVaughan, Sir Gerard
Shaw, David (Dover)Viggers, Peter
Shaw, Sir Giles (Pudsey)Waldegrave, Rt Hon William
Shephard, Rt Hon GillianWallace, James
Shepherd, Colin (Hereford)Waller, Gary
Shepherd, Richard (Aldridge)Ward, John
Shersby, MichaelWardle, Charles (Bexhill)
Sims, RogerWaterson, Nigel
Skeet, Sir TrevorWatts, John
Smith, Sir Dudley (Warwick)Wells, Bowen
Smith, Tim (Beaconsfield)Whitney, Ray
Soames, NicholasWhittingdale, John
Speed, Sir KeithWiddecombe, Ann
Spencer, Sir DerekWiggin, Sir Jerry
Spicer, Sir James (W Dorset)Wilkinson, John
Spicer, Michael (S Worcs)Willetts, David
Spink, Dr RobertWilshire, David
Spring, RichardWinterton, Mrs Ann (Congleton)
Sproat, IainWinterton, Nicholas (Macc'f'ld)
Squire, Robin (Hornchurch)Wolfson, Mark
Stanley, Rt Hon Sir JohnWood, Timothy
Steel, Rt Hon Sir DavidYeo, Tim
Steen, AnthonyYoung, Rt Hon Sir George
Stephen, Michael
Stern, MichaelTellers for the Ayes:
Stewart, AllanMr. Sydney Chapman and
Streeter, GaryMr. Andrew MacKay.
Sumberg, David
NOES
Abbott, Ms DianeByers, Stephen
Adams, Mrs IreneCaborn, Richard
Ainger, NickCallaghan, Jim
Ainsworth, Robert (Cov'try NE)Campbell, Mrs Anne (C'bridge)
Allen, GrahamCampbell, Ronnie (Blyth V)
Anderson, Donald (Swansea E)Canavan, Dennis
Anderson, Ms Janet (Ros'dale)Cann, Jamie
Armstrong, HilaryChisholm, Malcolm
Ashton, JoeClapham, Michael
Austin-Walker, JohnClark, Dr David (South Shields)
Banks, Tony (Newham NW)Clarke, Eric (Midlothian)
Barnes, HarryClarke, Tom (Monklands W)
Barron, KevinClelland, David
Battle, JohnClwyd, Mrs Ann
Bayley, HughCoffey, Ann
Beckett, Rt Hon MargaretCohen, Harry
Bell, StuartConnarty, Michael
Benn, Rt Hon TonyCorbett, Robin
Bennett, Andrew F.Corbyn, Jeremy
Benton, JoeCorston, Ms Jean
Bermingham, GeraldCousins, Jim
Berry, Dr. RogerCryer, Bob
Betts, CliveCummings, John
Blair, TonyCunliffe, Lawrence
Blunkett, DavidCunningham, Jim (Covy SE)
Boateng, PaulDafis, Cynog
Boyes, RolandDalyell, Tam
Bradley, KeithDarling, Alistair
Bray, Dr JeremyDavidson, Ian
Brown, N. (N'c'tle upon Tyne E)Davies, Bryan (Oldham C'tral)
Burden, RichardDavies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)McAvoy, Thomas
Davis, Terry (B'ham, H'dge H'l)Macdonald, Calum
Denham, JohnMcFall, John
Dewar, DonaldMcKelvey, William
Dixon, DonMackinlay, Andrew
Dobson, FrankMcLeish, Henry
Donohoe, Brian H.McMaster, Gordon
Dowd, JimMcNamara, Kevin
Dunnachie, JimmyMcWilliam, John
Dunwoody, Mrs GwynethMadden, Max
Eagle, Ms AngelaMahon, Alice
Eastham, KenMendelson, Peter
Enright, DerekMarek, Dr John
Etherington, BillMarshall, David (Shettleston)
Evans, John (St Helens N)Marshall, Jim (Leicester, S)
Fatchett, DerekMartin, Michael J. (Springburn)
Faulds, AndrewMartlew, Eric
Field, Frank (Birkenhead)Maxton, John
Fisher, MarkMeacher, Michael
Flynn, PaulMeale, Alan
Foster, Rt Hon DerekMichael, Alun
Fraser, JohnMichie, Bill (Sheffield Heeley)
Fyfe, MariaMilburn, Alan
Galloway, GeorgeMiller, Andrew
Gapes, MikeMitchell, Austin (Gt Grimsby)
Garrett, JohnMoonie, Dr Lewis
George, BruceMorgan, Rhodri
Gerrard, NeilMorley, Elliot
Godman, Dr Norman A.Morris, Estelle (B'ham Yardley)
Godsiff, RogerMorris, Rt Hon J. (Aberavon)
Golding, Mrs LlinMowlam, Marjorie
Graham, ThomasMudie, George
Griffiths, Nigel (Edinburgh S)Mullin, Chris
Griffiths, Win (Bridgend)Murphy, Paul
Grocott, BruceOakes, Rt Hon Gordon
Gunnell, JohnO'Brien, Michael (N W'kshire)
Hain, PeterO'Brien, William (Normanton)
Hall, MikeO'Hara, Edward
Hanson, DavidOlner, William
Hardy, PeterO'Neill, Martin
Harman, Ms HarrietOrme, Rt Hon Stanley
Hattersley, Rt Hon RoyParry, Robert
Henderson, DougPatchett, Terry
Heppell, JohnPendry, Tom
Hill, Keith (Streatham)Pickthall, Colin
Hinchliffe, DavidPike, Peter L.
Hoey, KatePope, Greg
Hogg, Norman (Cumbernauld)Powell, Ray (Ogmore)
Home Robertson, JohnPrentice, Ms Bridget (Lew'm E)
Hood, JimmyPrentice, Gordon (Pendle)
Hoon, GeoffreyPrescott, John
Howarth, George (Knowsley N)Primarolo, Dawn
Howells, Dr. Kim (Pontypridd)Purchase, Ken
Hoyle, DougQuin, Ms Joyce
Hughes, Kevin (Doncaster N)Randall, Stuart
Hughes, Robert (Aberdeen N)Raynsford, Nick
Hughes, Roy (Newport E)Redmond, Martin
Hutton, JohnReid, Dr John
Ingram, AdamRobertson, George (Hamilton)
Jackson, Glenda (H'stead)Robinson, Geoffrey (Co'try NW)
Jackson, Helen (Shef'ld, H)Roche, Mrs. Barbara
Jamieson, DavidRogers, Allan
Jones, Barry (Alyn and D'side)Rooker, Jeff
Jones, Ieuan Wyn (Ynys MÔn)Rooney, Terry
Jones, Jon Owen (Cardiff C)Ross, Ernie (Dundee W)
Jones, Lynne (B'ham S O)Rowlands, Ted
Jones, Martyn (Clwyd, SW)Ruddock, Joan
Jowell, TessaSedgemore, Brian
Kaufman, Rt Hon GeraldSheerman, Barry
Keen, AlanSheldon, Rt Hon Robert
Kennedy, Jane (Lpool Brdgn)Shore, Rt Hon Peter
Khabra, Piara S.Simpson, Alan
Kilfoyle, PeterSkinner, Dennis
Lestor, Joan (Eccles)Smith, Andrew (Oxford E)
Lewis, TerrySmith, C. (Isl'ton S & F'sbury)
Litherland, RobertSmith, Rt Hon John (M'kl'ds E)
Livingstone, KenSmith, Llew (Blaenau Gwent)
Lloyd, Tony (Stretford)Snape, Peter
Llwyd, ElfynSpearing, Nigel
McAllion, JohnSpeller, John
Squire, Rachel (Dunfermline W)Wicks, Malcolm
Steinberg, GerryWigley, Dafydd
Stevenson, GeorgeWilliams, Rt Hon Alan (Sw'n W)
Stott, RogerWilliams, Alan W (Carmarthen)
Strang, Dr. GavinWilson, Brian
Straw, JackWinnick, David
Taylor, Mrs Ann (Dewsbury)Wise, Audrey
Thompson, Jack (Wansbeck)Worthington, Tony
Tipping, PaddyWray, Jimmy
Vaz, KeithWright, Dr Tony
Walker, Rt Hon Sir Harold
Walley, JoanTellers for the Noes:
Wardell, Gareth (Gower)Mr. Eric Insley and
Wareing, Robert NMr. Dennis Turner.
Watson, Mike

Question accordingly agreed to.

Bill committed to a Committee of the whole House.

Committee tomorrow.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

On a point of order, Mr. Deputy Speaker. One of the Government Whips has just failed to move the 10 o'clock motion. I have long thought that the Government Whips Office was incompetent, but tonight's action is confirmation of its utter inability to run the business of the House. [Interruption.]

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. [Interruption.] Order. I hope that this is a matter for me, not a statement from the Opposition Front Bench.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

Can you confirm that in your experience, Mr. Deputy Speaker, it is extraordinary, if not unheard of, for the Government to introduce a Bill that they claim is important and then for them to be unable to find a single supporter either to sit and listen to Ministers or to speak?

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

My experience is not a matter for a point of order.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

On a point of order, Mr. Deputy Speaker. Given that the Government had informed the House that they would go ahead with all the stages of the Bill tonight, but have now not moved the 10 o'clock motion, have you had any indication that the Leader of the House is prepared to make a statement from the Dispatch Box about the reasons for that turnabout and complete incompetence on the Government's part?