rose to move, That the draft order laid before the House on
My Lords, before I start, perhaps I may make a housekeeping announcement. Peers with an interest in Northern Ireland may wish to know that tomorrow's meeting with the Secretary of State for Northern Ireland has been postponed until
I do not intend to belabour the point about the order. The review and reform of the rates was commenced by the Northern Ireland Executive in 2000. A decision was arrived at in December 2002, just after the Executive was suspended, to go for a capital value system. The order is therefore the culmination of four years of research and reform to see whether we can get a better system that is fit for purpose in Northern Ireland. It applies purely in the Northern Ireland context. That is all we are discussing tonight.
The provision has been arrived at after an enormous range of consultation on the order and the draft order, amounting to more than 32 weeks in all, and substantial debate in Northern Ireland itself. The present rating system in Northern Ireland, for noble Lords who are unaware of it, does not benefit from the experience in England of having had the poll tax—otherwise known as the community charge—forced on it or, indeed, the council tax. In other words, the local rating system in Northern Ireland is based on the rates system that we used to have in England prior to the poll tax. Indeed, the values currently used in Northern Ireland on which the rates are fixed are in many cases the rateable values from 1968.
In 1968, the majority of properties were probably rented; now, the majority of properties are owner-occupied. I think that the proportion is about 70 per cent plus. If all 720,000 properties in Northern Ireland had risen in value by the same percentage from 1968 to today, there would be no problem. Everyone's rates on the new system would be exactly the same as they are today. The purpose of the system is not to raise new revenue. I make that absolutely clear. It is not the function of the new system to raise new revenue. But the plain fact is that not all properties have risen in value by the same percentage. Some have gone up enormously; others have gone up by a very small amount. That means that, in today's Northern Ireland, many people are paying an unfair rate, based as it is on an old rateable value of the property. Others are clearly not paying a fair share.
I am not going to go through the minutiae of the system to be brought in. It is a system used elsewhere in the world; it has not been invented purely for Northern Ireland. It is not a brand new system. It is based on the capital values of properties—capital values can vary from market values—as of January 2005. Everyone was sent their assessment in the summer. There were about 14,000 complaints—about 2 per cent.
On behalf of the Government, I regret that this is not being done in the Assembly by the Executive, but we need to move the order because the new rating system—the new capital values—will be used to bring in the water charges. Without the water charges, Northern Ireland could lose an enormous amount of revenue that will flow from a different system. A fairer system means that most people in Northern Ireland will gain rather than lose. Sixty-eight per cent of the population will gain, pay the same or pay less than£1 a week extra. A pensioner couple living in a house worth £500,000 on the basic state pension will pay no rates, so it is not the case that this is unfair and penalises most people. We have made several concessions for young people in education and others.
My Lords, I notice that the Minister is using a different percentage figure from the one that he used in Grand Committee, where he said that55 per cent of people would gain under this. He will recall that the point was made to him in Grand Committee that if he considered the people who are legally obliged to pay rates—in other words, if he discounted those whose rates are paid for them by social security—a different figure might emerge. Has he looked into that, and can he tell us what the relevant figure is?
My Lords, I shall get a figure for that, but I am not using a different figure from that used in Grand Committee. The figure that I have just given is different, because I was making a different assessment. Fifty-five per cent of people gain or pay the same; in other words, they pay lower rates or pay the same. The figure that I have just used is 68 per cent of people, who will gain, pay the same or pay less than £1 extra. That is what I have just said, and it is completely consistent with what I said in Grand Committee. These are two separate assessments. I have now used a figure that also includes people who will pay less than £1 extra. Sixty-eight per cent will gain—that is, they will pay lower rates—will pay the same or will pay less than £1 a week extra. That gives a scale. One in five people in Northern Ireland pays no rates anyway. Under this system, more than one in five will pay no rates. The rebate system will be more generous than it is under the present system.
As I said, a pensioner couple living in a house worth £500,000 on the state pension will pay no rates. I also gave a figure in Grand Committee for a couple living in a house worth £500,000. That couple would have to have an income of £35,000 a year or £16,000 in savings before they were taken out of the rebate system. So it is not true that we have not considered the people on the margins who are asset-rich and income-poor. We have tried to devise a system that is fairer and more up to date. In other words, it is a system that people understand because houses are bought and sold every week. It is the same all over the country. I challenge any noble Lord to explain rateable values based on notional rental values to people today. My eyes would glaze over, let alone those of the person to whom I was talking. They would not understand what I was on about. People understand a capital value, however.
The assessment that was made was necessarily a snapshot of the position in January 2005. Generally, people would have sold a house for less then than they could in November 2006. It is important to start the system a reasonable amount of time after the snapshot was taken in January 2005. In other words, it should be started by April 2007 so that the figures are reasonably realistic. Obviously one needs to revalue properties over time. In Northern Ireland, the Rate Collection Agency of the Department of the Environment knows much more about properties because of what it has been doing over the years than we do in England. The whole point is that what is happening in Northern Ireland is fit for Northern Ireland. It is not a test bed. The people of Northern Ireland are not being used as an experiment.
As I have said repeatedly, and notwithstanding the Lyons review and all the material that has been in the press in the past few days, it is a fairer system that takes account of the ability to pay. However, the ability to pay is not the prime factor in a dwelling that has been adapted because of the owner's disability. There will be a reduction in the valuation of their rates irrespective of their income. That valuation is therefore not related to that person's ability to pay. The concession for people whose dwelling has been adapted because of their disability may therefore have increased in value because various factors have been incorporated. That concession is made irrespective of their income. It does not matter whether they are poor, on a medium income, on a pension or whatever their income is; that concession is available. It is true that it is not related to the ability to pay. We wanted a scheme that was related as closely as possible to the ability to pay but that was also property-based. Property-based taxes are much easier to collect, as are people-based taxes, as we discovered when the unwise poll tax was instituted. In terms of value for money, you do not want to spend a lot of money collecting rates.
I fully accept—we can discuss this—that Northern Ireland's system for water charges is different from that in the rest of Great Britain. Water charges need to be up front and levied in a way in which more income comes into Northern Ireland to be spent in Northern Ireland and so that a borrowing capacity can be created that is not there under the current arrangements. I realise that the cost of living and incomes and earnings are somewhat lower in Northern Ireland than they are elsewhere in the United Kingdom, and that public expenditure per head is higher than anywhere else in the United Kingdom. Even now, a cap is possible—we have discussed this issue, and I will conclude on this point—so that no one in Northern Ireland would pay a rate that was greater than the highest rate in England.
As I have said, we need to introduce the new system because we will simply not be able to operate the present rating system from next April. I accept that that is not a fait accompli because it is subject to parliamentary approval. Given the time that we have taken over this, we freely admit that it would be incredibly difficult to operate the present rating system because the IT systems and all the procedures are in place to operate the new system. That is why the amendment tabled by the noble Lord, Lord Smith, is not really tenable or practical in the present circumstances. It would cause the utmost chaos in the collection of local government revenues in Northern Ireland next year.
On the other hand, the amendment in the name of the noble Lord, Lord Glentoran, is seductive in that I want to hear him make a robust case for it. I will think about it while he is speaking and make an assessment, because we are prepared to be flexible. The Ministers in charge of this day to day have already said so. We need the consent of Parliament to introduce this system in the absence of the Assembly, although we would much prefer it to be the Assembly. The Executive and the Assembly started this process. They have at least identified something that needed to be done. I am not blaming them for choosing capital values. They considered 12 options. They were disbanded in, I think, October 2002, and direct-rule Ministers decided the way to go in December 2002. The four years since have been spent planning in the most meticulous detail.
We are confident that the system will work. It is modern and fairer, and it creates more gainers than losers. That is very necessary when one is changing the tax system, although the gainers do not always thank you for it. The losers are easily identified, as they can be quite vociferous. As I said in Grand Committee, one cannot defend the present system, which asks people on low incomes living in low-value properties to pay a disproportionately higher share than a fairer system would ask them to pay, compared with those living in the high-value properties. The idea that there are no high-value properties in Northern Ireland can be dispelled by driving around Northern Ireland for a few hours. It is a fairer system designed for Northern Ireland and nowhere else. As I have said, there will be more gainers than losers, and it has the necessary concessions to make it work and to make it as closely based on the ability to pay as possible, bearing in mind that it is a property-based tax. I beg to move.
My Lords, as the noble Lord anticipated in his remarks, we on these Benches and he on the Government Benches will be ships passing in the night. I congratulate the Minister on his ministerial stamina: throughout today he has been very versatile in the various roles that he has performed, for which we are grateful. I have for long been critical of Northern Ireland orders because they are not amenable to amendment, and this of course is no exception. My noble friend Lady Harris of Richmond outlined many of our specific objections in Grand Committee, which I shall not repeat now. But none of those objections could be tabled as reasoned amendments to this order. Successive Ministers and Secretaries of State have recognised this very unsatisfactory character of such orders. They all richly wrung their hands in lamentation and cried crocodile tears, but still they persist with the practice.
At this juncture in the politics of Northern Ireland, there is no need to have recourse to such orders precisely because Ministers have assured us that devolution is about to be restored. Three weeks ago, the Secretary of State made a Statement in the other place, which was repeated by the Minister in this House, heralding the agreement at St Andrews as opening,
"the way to a new dawn for democracy in Northern Ireland".—[Hansard, Commons, 16/10/06; col. 587.]
We welcomed that Statement and congratulated the Government on the work that they had done to achieve such an accord.
The timetable for implementation, which was published along with the agreement, envisages that the Assembly will meet on
The noble Lord has pointed forcefully to the imperatives of administrative convenience. I can understand that, but I am arguing a principled, democratic argument. It is the wishes of the parties in Northern Ireland that the Assembly should deal with this issue—at least, most of them. I believe that other noble Lords will have received the same letters as I have from the political parties on this matter—and, incidentally, from hundreds of individuals—urging this House to reject the order today and allow Stormont to decide how rates reform should proceed.
"While it may be true that there is an argument for overhauling the rates system in Northern Ireland, I believe there is an equally strong argument that the matter be left to the elected and locally accountable Members of the Assembly itself. It would be my hope that the Assembly will be active again fairly soon".
Mr David Ford, leader of the Alliance Party, says:
"The Alliance Party strongly believes that such important legislation affecting every household in Northern Ireland should be determined by locally elected representatives".
Dr Alasdair McDonnell, SDLP MP, has said:
"If we were in the Assembly at this time we would not support this legislation".
For his part, Mr Gerry Adams, Sinn Fein, has said:
"It is my view that policy decisions on issues such as domestic rates should be taken by locally elected and accountable political representatives".
Finally, the DUP stated:
"Having a real opportunity to agree the arrangements for rating would also be seen as an added incentive to encourage the return of devolution".
It is therefore clear, at least on the face of it, that none of the political parties in the Assembly wants this legislation or wants Westminster to take this decision at this time. It would also be very good for the restored Assembly to deal with the tricky problems inherent in rating reform and local taxation. Assembly politicians should be responsible for any changes and held to account for them by the Northern Ireland electorate. They should not have the excuse that the new rating system was imposed by Westminster under direct rule.
As the Minister said, the reform of the rating system began in May 2000 when the then Minister for Finance and Personnel, Dr Sean Farren, launched a review of rating in Northern Ireland. We do not dispute that that was the right thing to do, but, after six years of consultation and proposals, we dispute the need to push this order through at this time. The process of rates reform was begun by the Northern Ireland Assembly. It should be concluded by the Northern Ireland Assembly. It should not be pushed through Westminster when there is a real chance that the politicians of Northern Ireland who have been elected to take decisions on issues such as this will be exercising power in the Assembly within a matter of months.
My second point is another objection to this order. Again, the Minister touched on this, and I have to ask whether it would not have been better to await the Lyons report on local government finance, which is shortly to be published. Its broad recommendations, presumably, will be as applicable to Northern Ireland as to England and Wales. At the very least, it would provide a useful yardstick by which to judge the changes proposed in this order.
The Minister has again denied that this will be used as a pilot for reforms in England and Wales. However, judging from my mail, there is a widely held suspicion that that is the case—in the same way that a previous government used Scotland as a pilot for the poll tax—which is another reason why I wish to press my amendment to this order. I beg to move.
Moved, as an amendment to the above Motion, to leave out all the words after "That" and insert, "this House declines to approve the draft Rates (Amendment) (Northern Ireland) Order 2006 until the Northern Ireland Assembly has taken a decision on the subject matter of this order".—(Lord Smithof Clifton.)
My Lords, this order brings to a conclusion the reform of the domestic rates in Northern Ireland on which the Government have embarked. It replaces the existing system with a new one—which is unique, but who knows for how long, in the United Kingdom—based on the capital value of a property. It is a tax on house prices, pure and simple. It is a modern-day window tax, in which government inspectors even take into account whether a house has double glazing.
As I said in Committee, we are not opposed to reform of rates in Northern Ireland, but we are completely opposed to this new system. As my party leader, David Cameron, wrote in the Belfast Telegraph two weeks ago, it is just "unjust". Many people in Northern Ireland, through no action of their own but simply as a result of the peace process, have seen the value of their property rocket in recent years. Parts of Northern Ireland now have the fastest-rising house prices anywhere in the UK. I am talking not just about south Belfast and North Down, but about Lisburn and Newry as well. Increases in property values have far outstripped the growth in incomes. As a result, many people who happen to live in a higher-value property area will literally be clobbered. People on fixed incomes—pensioners who might be asset-rich, but in cash terms, poor—single-person households and those just outside the benefits system will be hit especially hard.
It is not just those people who live in what we might think of in London as higher-value properties. People in fairly modest homes will also be hurt. It is no good the Minister claiming that more than half of homes in Ulster will see a decrease in the amount that they pay in rates when the new system will produce some quite exceptional increases. Let us take the retired teacher who bought his house 16 years ago for £58,000. It is now valued at £290,000 by contractors for the Valuation and Lands Agency. As a result he has just been informed that his rates bill will go up from around £1,000 to £2,000. That is over £700 more than the £1,300 in council tax that the Prime Minister pays on his £3.3 million house in Connaught Square. If he lived in Northern Ireland, the Prime Minister would now be facing a rates bill of around £22,000. Yet the Secretary of State boasted at this year's Labour Party Conference that he is introducing a fairer system of local taxation in Northern Ireland. I would be grateful if the Minister could tell the House where the fairness is in that—some peace dividend for decent, hardworking families in Northern Ireland.
To gather the information required to implement the new system involves huge erosions of liberty. Unprecedented powers are being given to the Government to compile data on family homes, literally to spy on people using aerial photographs and the like. I mention too the sinister Article 38 powers of entry and invasions of privacy for government inspectors to assess, with fines for those who simply want to keep the snoopers out. The new system is unjust and undemocratic. It is opposed overwhelmingly across the community in Northern Ireland. It is opposed by all the Northern Ireland political parties, and I have letters from them all, bar Sinn Fein. Yet the Government plough on regardless. Why is that? They do so because the same Government who put off the council tax revaluation in England because they feared an electoral backlash do not contest a single vote in Northern Ireland. So the Government think that they can get away with it. This is yet another example of the Government's double standards.
The reality is that if this system were not introduced this coming April, it would not affect the Northern Ireland budget by one halfpenny. We have been told time and again by Ministers that the reform is supposedly revenue-neutral, so it is hardly pressing. What is the hurry? We believe that local government finance should be left to the local people in Northern Ireland to decide, not imposed as an experiment by Labour Government Ministers.
There is no reason why this matter could not have awaited the restoration of an Assembly. At St Andrews the Government sought to use rates as part of the negotiations to restore devolution. Capping and extra help for pensioners is either right and should be introduced on its own merits, or it is not. It should not form part of an attempt to blackmail Unionists into sharing power with Sinn Fein. The Conservative Party believes that there should be a cap and extra help for poorer pensioners, irrespective of whether the parties sign up to St Andrews and devolution is restored. That is why I tabled the amendment on the Order Paper in my name. I have listened with care to what the Minister had to say and will listen to his response. If he meets the letter and spirit of my amendment, which would be a welcome change of heart on the part of the Government, it will go some way to minimising the impact of the legislation on large numbers of people.
My Lords, before my noble friend concludes his remarks, many of us feel it is pretty outrageous that the Government should be pushing through this order when they hope that in the very near future devolved government will be restored. In the light of what my noble friend has said and the way in which he has drawn attention to the injustices of the new system, we are puzzled by my noble friend's reluctance to advise us to vote against the order. In almost all he has said he has indicated that he is against it. Surely, given the conclusion reached by the Cunningham committee that the rejection of Northern Ireland Orders in Council might well be appropriate, this is a very good moment indeed for us in this House to reassert our right to reject orders. I want to know why we are not rejecting this order tonight.
My Lords, I am coming to that. My noble friend will have my answer shortly. Let me be clear: if the Government do what is asked in my amendment, it will in no way diminish our dislike of the new system. It remains rotten, unjust and undemocratic. That is not just our view, but that of the people across the community in Northern Ireland who face higher bills and who are to be used as guinea pigs for England. If these matters are not devolved to the Assembly, then when there is a Conservative Government, we will abolish the rights of snoopers to enter people's homes throughout the United Kingdom. And I give this pledge to the people of Northern Ireland: we will certainly review the system that Labour is imposing on them today.
This is a deplorable policy being used in what many of us find a distasteful way. But—and this is where I answer my noble friend—we are an unelected House and we cannot take it upon ourselves to assume the government of Northern Ireland if the other place has given its consent and we are told by the noble Lord, Lord Rooker, what a delicate stage this is in negotiations.
My Lords, I am grateful to the noble Lord for giving way. Has he read the committee's conclusions on the point to which the noble Lord, Lord Waddington, has just referred? A very specific reference was made and was signed up to by all parties and Members of both Houses, that this House must have the right to say no in these particular circumstances. I wonder if the noble Lord has actually read that section of the Joint Committee report.
My Lords, I am coming to that too. My question here is: are we to come in and unilaterally alter the terms of negotiations between parties in which we have played no part? If we made an error of judgment, we could pay a high price indeed for what would be only the third time since the war that we had rejected an order in your Lordships' House. So on balance, and having discussed these matters with the noble Lord, Lord Rooker, whose faith we all so much respect, and in the hope that he is able to give assurances on the issues raised in my amendment which would address the worst unfairnesses in the system, I ask the House not to take the confrontational line proposed by the noble Lord, Lord Smith of Clifton. I respect the noble Lord, Lord Smith, greatly and I share the constitutional principle that he advances that repugnant policies should not be forced on the people of Northern Ireland without their consent by direct rule or by pressure of this kind. If Stormont does not reassemble, we cannot go on indefinitely in this way with the government of Northern Ireland. Orders which cannot be scrutinised are not the right way to change the lives of the citizens of any part of our country. However, there is a second constitutional principle; that is, that your Lordships' House, indeed neither House, normally votes against an order, however angry we may feel—and few feel it more than I. I do not think that this is the occasion to break such a precedent. The Joint Committee, under the chairmanship of the noble Lord, Lord Cunningham, has recently looked at these questions and said that both Houses have the constitutional right to vote down orders. It should be exercised with extraordinary restraint—I repeat, it should be exercised with extraordinary restraint. I agree with that. But I also agree wholeheartedly with a second recommendation of the Joint Committee; that is, that all Governments should take notice of issues raised by your Lordships' House in amendments that are tabled on orders.
I hope that the noble Lord, Lord Rooker, will take notice and give the assurances we seek on this. If he does, your Lordships' House will have gone some way to minimising the impact of the new system on people facing very high rates increases, and on some of the most vulnerable in society.
My Lords, I rise primarily to support the amendment proposed by the noble Lord, Lord Smith of Clifton. He read extracts from letters that a number of us have received from the various parties in Northern Ireland. They have come from five political parties in Northern Ireland and are very clear: four of them specifically request your Lordships to support the amendment of the noble Lord, Lord Smith of Clifton, because it is a fatal amendment and because they do not wish the order to be passed in this House tonight. I believe that the omission in the case of the fifth party is purely inadvertent because I am sure that it is equally opposed to the passing of this order. That is our position also.
I listened with great interest to the speech of the noble Lord, Lord Glentoran. He made a very strong case against the order. He gave very good examples of its impact, particularly his comparison with what the Prime Minister would be paying on his property were it to apply to him. The Fair Rates Campaign brought to our attention the case of a pensioner who now faces a bill of £14,000 per annum. These rates are penal. With the greatest respect, I say to the noble Lord, Lord Rooker, that it is no good bandying figures about gainers and losers when some people will be subject to absolutely penal rates.
The absence of a cap is utterly and totally indefensible. It is a simple matter of citizenship, fairness and equity when such caps exist elsewhere in the United Kingdom and we have a system brought in which, together with the rapid changes there have been in capital values in recent years, will have a hugely penal effect on some people. It will not have as much effect on me as it will on others. My house is not as grand as others and I might not be too badly off. I think I might face an increase of only around30 to 40 per cent—but that is nothing compared to what some noble Lords sitting not very far away from me are facing.
I was less than satisfied by the response of the noble Lord, Lord Rooker, to the question of what happens if one takes out of these figures those whose rates are paid for by others. The question was raised in Grand Committee and I thought that by the time the issue came here the Minister would have equivalent figures. I am sorry that we did not get them. Instead, we have a figure which rather gilds the lily. On his figures, as given in the Grand Committee, there are said to be 55 per cent gainers but he gets it up to 68 per cent by including those who are only losing a little. The ones who are losing a little are not gainers—a simple point—and the balance between advantage and disadvantage is very narrow. In any event, it is quite indefensible to bring this forward when it has such an unfair impact. As I said, the Northern Ireland parties have made their position clear: they do not want this order to pass.
The review started under the Northern Ireland Assembly when I was First Minister. I can assure the House that had the review been completed while I was First Minister this would not have happened; we would not have had it in this form. Yes, changes would have been made—and they might even have been made by reference to capital values—but the legislation would not have come forward in this form. Of that I am absolutely sure, just as I am absolutely sure that the review of public administration which I started would have come out with a very different result from that which occurred after we had direct rule and after the rats got at it. In case anyone should misinterpret that particular comment, I should say that I am not referring to anyone present.
I am indebted to Mr David Ford for my final point. He will be surprised by that phrase, but that is by the way. He makes the point that if the proposed changes are revenue-neutral, Her Majesty's Treasury should not object to a postponement. The reason for objecting to a postponement is the administrative difficulties, which leaves one with the mind-boggling suggestion that civil servants, for once, are unable to continue doing what they have been doing up until now. I have never encountered this situation before—it is truly remarkable—and I do not think it is a good enough reason for not allowing the democratic principle to apply.
That democratic principle is absolutely clear: the Minister is introducing this order without a single shred of democratic validity or authority for his proposal. The authority and democratic validity lies in the opposite direction, primarily with the amendment proposed by the noble Lord, Lord Smith of Clifton, which we will support.
I have spoken for much longer than I intended. Given the hour and the circumstances, the longer the debate goes on the fewer noble Lords there will be around to vote, so I will bring my remarks to a conclusion.
My Lords, I ask the Minister two simple questions. First, why is it not possible for these amendments to be considered and implemented—or not—after the decision has been made by the Assembly about itself? Secondly, if the Government nevertheless intend to go ahead and make this law, what will be the position of the Assembly if it wishes to reverse it? What are the two legal situations?
My Lords, I feel I should make a few remarks in case folk in this House run away with the idea that everyone is on an increase. I find myself in a difficult position in regard to rates because my rates will almost halve; I am one person who will benefit. But that does not take away from the fact that I think this is completely unfair. I could give instance after instance of people who bought houses when the Troubles broke out and moved to what they thought were safe areas. Today they are chic areas and prices are sky high. Those people are living on the same income—they have been pensioners for years—and are simply at their wits' end as to how they will meet the increase. In some cases the rates will double and treble. Like my colleagues from Northern Ireland, I have been inundated with people writing to me and asking me to vote against this.
I cannot see the problem with the two amendments. I support the amendment of the noble Lord, Lord Glentoran, because it suggests working with the local parties and capping, but I also support the amendment of the noble Lord, Lord Smith. Why not just leave the matter to the local parties? We are constantly being told by the Secretary of State that this is just over the cusp; that we are just about to get an agreement. I think it would be good if locally elected people came on board and considered the matter. If they say the system is fair, people can kick them instead of us.
My Lords, we have heard something about the figures and I am delighted to hear that the noble Baroness's rates have gone down. But mine have gone up four times—of course I declare an interest—and they are now about five times as big as the Prime Minister's. This is penalising some people. Of course I am one of them, but I am not the only one; I met someone at the airport today who has received an estimate of £9,000. This should bring it home that this will affect a number of people, some of whose incomes have not gone up and who do not have the money to sustain the increase.
My Lords, perhaps I may make a small contribution in regard to the report of the Joint Committee and not voting on orders. I believe that in years to come, if this order goes through, we will be looked upon as supine people who are looking after our own interests way beyond justice and mercy.
My Lords, I shall do my best to answer all the points. I think the justice and mercy comes from establishing a fairer system. No one has referred to those who are paying a disproportionate amount at the present time simply because we are working on 1968 valuations. That is the reality of what we have got at the moment.
Perhaps I may respond a little more formally by using my notes—I did not use any notes when I spoke before—so that I get it right. I have indicated that the process has reached a critical stage and any delay, no matter how short—we have left this as late as we could in this Session, although I fully agree that the order could go over—would mean that it would not be possible to have the mechanisms in place. This was not done on the back of an envelope; we are dealing with 720,000 dwellings. The IT systems required by the Rate Collection Agency and the appointment of members of the valuation tribunals are all needed to implement these reforms. If we were unable to introduce the new system we would soldier on with the old system somehow, under which many people are paying a much greater share than they should be.
My Lords, perhaps I might finish this part and then I will give way. This relates to another point that was raised about a delay in the legislation.
A delay in the legislation will impact on the water and sewage reforms. While I could make the case—it is clear for everyone to see—the purpose of this is not to raise more revenue from dwellings. It will be used to deal with the water and sewage reforms. They are planned to come into operation next April, based on these modern valuations, not on the 1968 rateable valuations. Any delay in the introduction of those charges will lead to a big loss of revenue in Northern Ireland and reduce public service provision. There is a knock-on effect. That is happening this year, by the way: the water charges were supposed to be introduced earlier than last year. The budget for this year had a £50 hit on it because the Treasury assumed that we were raising the money with the water charges. We were not because they were tied up with this.
My Lords, this is one of the worst examples of democracy in Northern Ireland. Why did the Government proceed with the mechanisms for this new system of collecting local rates without parliamentary approval and come up with the excuse that we cannot vote against it because we have gone so far?
My Lords, this is not the first order. Other parts of the parliamentary process have been applied to this; it has not been done furtively. I did not make the case; the noble Lord, Lord Glentoran, reminded us that the House of Commons approved the order. The idea that we are proceeding without parliamentary approval is nonsense. There has been more than one order associated with this change to get the process up and running and enable the figures to be produced, for a start. We approved an order in the summer that was tied in with this; it was made abundantly clear then that the next order would be the final piece of the jigsaw. So this is not out on its own, but there is a knock-on effect on water charges.
I should like to put these figures on the record just so that there is no misunderstanding. The average level of household taxation in the UK in 2006-07—the total household charge, which is the property charge and the water direct charge—is £1,350 in England; in Wales it is £1,126; in Scotland it is £1,253; and in Northern Ireland it is £668. There is a substantial difference; it is also shown if one takes out the water charge, which in England, Wales and Scotland averages £290.
The delay in the timing is important. Parliament has not been presented with a fait accompli, and this is not the first piece of the jigsaw. I hope that that point is accepted.
The noble Lord, Lord Trimble, asked a question that he had asked in Committee. Like most of these matters, it is not straightforward. Let me give the figures relating to housing benefit. At present, 25 per cent of households—about 180,000—receive help with their rates. Twenty per cent of households receive full support—that is, 100 per cent. About 40,000 households will benefit from the rate relief scheme implied in the order. The rate relief scheme and the housing benefit will benefit about 185,000 households.
One problem is that we do not know—in a way, we cannot—the proportion of winners or losers who are on benefits. That information is not available. We can work out the information with regard to houses because we have the figures for house valuations, but it is not correct to state that all or most of the winners will be on benefits. They will not be, as I indicated in the example I gave.
There is something else I need to remind the House about, particularly those noble Lords who have declared their interest properly and will be paying more. There is a transitional relief which is not means-tested. It is a three-year process, which means that people will not pay more than a third of the increase in each of the years. The average award will be £178. Some 100,000 people will benefit from the transitional relief in 2007-08. It is not something we are doing willy-nilly.
The point about the Lyons inquiry was seductive. Everyone is waiting for the report. Sir Michael Lyons is reviewing the system of local government and local government finance in England. We have reviewed it in Northern Ireland. I fully admit that it was without a democratic mandate, although it started off with one. The options were disclosed and put in for debate by the democratic mandate before the Assembly was suspended. But Northern Ireland has reviewed its system of local government and local government finance. The system in Northern Ireland is pre-poll tax. There is bound to be unfairness in a system that uses 1968 valuations, so Lyons is not relevant to the situation in Northern Ireland.
The noble Lord, Lord Glentoran, called this a modern window tax. I think that is a bit unfair. There has been no erosion of civil liberty. The powers of entry were never used. No one has had the inside of their house checked to see how good the decoration is. That is why there is a difference between capital value and market value. We have assumed that every property is in an average state of repair.
The point is that it was not necessary, my Lords. We have assumed that the houses are in an average state of repair. Someone who buys a house in poor internal repair would, chances are, pay less for it than if it was in good repair. That is the norm. It is not a question of taxing people on a pretty property. There has been no need for entry into people's houses.
I fully accept the point about the convention's report. Published last Friday, it was an enormous tribute to the Members of both Houses and all parties who served on it. That will stand the test of time more than many of the other reports that discuss the relationship between the two Houses.
I fully accept what the noble Lord, Lord Trimble, says. There is no democracy, there is direct rule—I cannot argue with that. But we have consistently said that, while Northern Ireland politicians refuse to take up their responsibility as elected representatives, we will not slow the pace of reform. Indeed, we said that we would speed up reform over the whole gamut of life in Northern Ireland.
In response to the noble Baroness, Lady Park, as soon as the Assembly is back, it is completely in charge. If everything goes according to plan, the Assembly will come back on
I say to the noble Lord whose rates will go up by about 40 per cent that he will not pay 40 per cent extra the first year because he will benefit from the transitional allowance. I have answered the question of the noble Baroness, Lady O'Cathain, about the Joint Committee.
I realise that I will not satisfy everybody; it is just not possible. However, even when people have argued against me, nobody has had what I would call the political courage to stand up and say, "I want what is quite clearly an unfair system to carry on". It is unfair, because it is based on 1968 valuations. It does not matter what has happened in the past couple of years or the past 10 years, the distortions are enormous. We are saying to people, "I think you should pay a bigger share of local rates than others, based on valuations which are nearly 40 years old". We have to be serious about this. You cannot make the case for paying rates based on a system that is40 years old. That is why no one does so. I see that a noble Lord is prepared to stand up and try. I congratulate him.
My Lords, perhaps I may respectfully suggest to the Minister that he stops misleading the House. He is setting up a straw man which he then knocks down. I made it clear that we would have had change. In fact, we started change; I started it. We knew that there had to be change. However, it is perfectly open to us to say that this is not the end result that we want.
My Lords, it is perfectly open to the noble Lord to say that, but if a hole in the budget results from it, it is incumbent on him to say what he would do. One cannot simply say, "No, we don't like this" when I have informed the House that the budget depends on it. We have to raise the money somehow—the money has to be raised. I have given the figures for England, Scotland, Wales and Northern Ireland. I have set out the consequences of not proceeding with the water charge. It would leave a massive hole in the budget which would have to be found from the block.
My Lords, it is budget neutral for the property rates—I have made that clear. It is not designed to raise money. The water charges are a quite separate issue.
I conclude because I shall convince some noble Lords but not others. I realise the force of the arguments of the noble Lord, Lord Glentoran. He said that the order is not democratic and that it is unfair. He made a case, as a case can be made—it is a political judgment—but after four years of research, six years after the start of the process, and 32 weeks at least of various consultations, we have a difficulty. The noble Lord will say that if a Conservative Government return, they will do certain things. That is their choice; that is where the power lies. If the Assembly is in existence, it is wholly within its power to change the system if it so wishes. As I said to the noble Baroness, it will be in charge.
However, we want to ameliorate the system where we can at the edges, so that there is perceived to be less unfairness in what is proposed. I have said that we want a fairer system. The noble Lord's amendment proposes the setting of a valuation cap. I suppose that we may call it the prime ministerial figure. I did not use that phrase; I am only quoting what has been said in this House—I would not dream of making a comparison between the Prime Minister's properties, although others have. In the spirit of not wanting my Prime Minister to be challenged in that way, we recognise that there is a seductive argument for setting a cap. I have said that pensioners near the margin will benefit, because we have raised the housing benefit limits—we would be prepared to look even beyond that. Money—it is a modest amount—can be found to meet the pensioners' situation. I am therefore prepared to recommend to my noble friends that we accept entirely the noble Lord's amendment and attach it to the government Motion. Therefore, the Motion would contain not only my words—one normally says, "Believe the Minister because it is in Hansard". If we put the Motion as amended to the House, it will become part of the parliamentary process and that will be the Motion which the House agrees. It calls quite specifically for a cap. It states that we have to work with the political parties in Northern Ireland and find more money for pensioners at the margin. On that basis, I commend my Motion, with the amendment of the noble Lord, Lord Glentoran, attached to it word for word, to the House.
My Lords, I recognise a pincer movement when I see one in this new, unholy alliance between the two Front Benches. I am grateful to noble Lords from all sections of the House who have supported my Motion. I complimented the noble Lord, Lord Rooker, on his robust ministerial energy. He has maintained that energy physically, but, mentally, he has been flagging. There was a series of non-sequiturs and misrepresentations in what he said, and I suggest that he has a good rest.
I take exception to his saying that I did not stand up and say that the changes should not happen. That is what my amendment is about: they should not happen. His claim that I have been going on for so many years is grist to my mill. What is another year? He used the argument of the imperatives of administrative convenience—the arguments of raison d'état. If the noble Lord, Lord Glentoran, is gullible enough to believe that the state will be so magnanimous when he comes to incorporate his suggestions, he may well find himself disabused.
There was the noble Lord, Lord Glentoran, on his bobsleigh, racing for the final line. Then, as I knew, because he was under instructions, he pulled the race. All the arguments that he made supported my Motion. His skid at the end when he crashed is unbelievable. For that reason, I shall test the mood of the House.
rose to move, as an amendment to the Motion in the name of the Lord Rooker, at end to insert "but this House calls upon Her Majesty's Government to work closely with the political parties in Northern Ireland; and, in the event of a system as envisaged under this order being introduced, to set a valuation cap at £500,000 and to take action to help lower income pensioner households".
Moved accordingly, and, on Question, amendment agreed to.
On Question, Motion, as amended, agreed to.
My Lords, I beg to move that the House do now adjourn during pleasure to await receipt of a message from the Commons until a time to be given on the Annunciators.