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Commercial Rating

Volume 168: debated on Wednesday 28 February 1990

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To ask the Secretary of State for Scotland what representations he has received from those who offer a bed and breakfast service about the effects of the commercial rating of bed and breakfast premises.

I have had numerous representations mainly from those who run small bed and breakfast establishments in rural areas. As announced yesterday, I intend to bring forward regulations to ensure that small bed and breakfast establishments with six places or fewer, or open for fewer than 100 days per year, should be treated as domestic property and thus not liable for non-domestic rates. I am consulting interested parties on details of the scheme.

That answer surely illustrates that nothing concentrates the mind of Ministers more than a question on the Order Paper. I have been in correspondence with the right hon. and learned Gentleman about this since last August, with precious little result, pointing out yet another flaw in the poll tax legislation. It would be churlish of me not to welcome what the Secretary of State has suggested. Releasing from commercial rating bed and breakfast establishments with six beds or fewer will help tourism in rural areas, but will he reconsider the 100-day limit as it makes no sense in areas which provide a modest service all the year round?

I am grateful for the welcome that the right hon. Gentleman has given to what I announced. He has made representations on the matter, as did my hon. Friend the Member for Dumfries (Sir H. Monro) and other hon. Gentlemen on both sides.

Yes, hon. Members on both sides of the. House—hon. Gentlemen and Ladies. The limit of 100 days is intended to distinguish between bed and breakfast establishments that are run essentially as commercial businesses, where non-domestic rates should apply, and bed and breakfast activity that is marginal to the main purpose of the accommodation.

Will my right hon. and learned Friend. accept that in Pitlochry, and around the highlands of Perthshire and Angus, his decision on establishments with six beds will be welcome? He knows that there has been great concern because of the impact that the legislation could have had. It would have meant the withdrawal of a facility which is essential to the tourist industry in those areas.

I was very conscious of the problems for the tourist industry in rural areas. That is why we thought it appropriate to make the changes that I have announced. They will be welcomed by the tourist industry and by many tens of thousands of people of modest means who get some additional income through bed and breakfast establishments of the kind indicated.

I am tempted to wonder whether the Secretary of State is serious. How many bed and breakfast establishments does he know of in tourist areas in Scotland which operate for fewer than 100 nights per year? Will he be suggesting to them which nine months of the year they should close? Will he police them with inspectors? Will another aspect of the poll tax be to have inspectors going round to check that bed and breakfast businesses are open for fewer than 100 nights a year? The idea is ridiculous.

Does the Minister accept that the property tax on bed-and-breakfast establishments is another Tory roof tax, as is the standard community charge on second homes? Is not the vast increase in mortgage rates the most crippling roof tax of all? Is not it Scotland's singular misfortune under his rule to have a Tory poll tax and several Tory roof taxes?

The hon. Gentleman has not done his homework on the first part of his question, or he would know that a very large number of bed-and-breakfast establishments will be exempt from non-domestic rates within the 100-day cut-off period. On the latter part of his remarks, I can only suggest that if he is interested in the welfare of his constituents he should accept that under the Labour party's roof tax proposals not only owner-occupiers, but all council tenants will pay the roof tax. I note that the hon. Gentleman nods. He will appreciate that the council tenants who suffer most will be those living in property recently renovated by local authorities so that the market value of the properties has doubled overnight.

I know that the hon. Gentleman is nervous about the unanimously hostile reaction that the Labour party has received to its roof tax proposals. That is no doubt why it has decided to put off any comparable announcement south of the border. Perhaps the hon. Gentleman is considering using Scotland as a guinea pig for the roof tax.

The provision of bed and breakfast in tourist areas is extremely important as it provides quality accommodation at reasonable prices, as is true in my constituency of Sherwood where millions of people come to visit our famous forest. Does my right hon. Friend agree that Labour plans to end derating will bring immediate hardship to those providing bed-and-breakfast accommodation in agricultural areas?

It is a feature of the Labour party's rural policy that, when it published its Scottish rural policy document last week, it did not highlight the fact that it wishes to end the derating of agricultural land. As my hon. Friend rightly said, that would devastate not only the farming communities but those who depend on the agriculture industry for the well-being of Scotland's rural areas.