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Commons Chamber

Volume 223: debated on Tuesday 27 April 1993

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House Of Commons

Tuesday 27 April 1993

The House met at half-past Two o'clock

Prayers

[MADAM SPEAKER in the Chair]

Private Business

London Local Authorities Bill Lords

Order for Second Reading read.

To be read a Second time on Thursday 29 April.

Oral Answers To Questions

Employment

Labour Statistics

1.

To ask the Secretary of State for Employment what measures she is introducing to assist the long-term unemployed in the north of England.

New measures announced in the Budget will provide an extra 1010,000 opportunities nationally for the long-term unemployed. Learning for work, community action and an expanded business start-up scheme will be available for long-term unemployed people.

Is my hon. Friend aware that Tyneside training and enterprise council, which I understand has been chosen for a pilot scheme for one of four workstart programmes, yesterday launched its own workstart programme, Tyneskill support, aimed at people who have been out of work for more than two years? Does my hon. Friend agree that the advantage of workstart is that it confers a double benefit—first, for the people who are helped and, secondly, in that it helps to convince employers that people who have been out of work for more than two years still retain their skills and an enthusiasm for work and should not be written off as unemployable?

I entirely agree with my hon. Friend, who points out the amount of help that we give to people who are unemployed long term. Indeed, the United Kingdom has a good record compared with our European counterparts. The proportion of long-term unemployed people in the United Kingdom, at 28 per cent., is lower than in Italy, where it is 67 per cent., in Belgium, where it is 61 per cent., in Ireland, where it is 60 per cent., in Germany, where it is 45 per cent., and in the Netherlands, where it is 43 per cent. That shows that we dedicate help to the long-term unemployed.

Does the Minister's litany of assistance include encouraging people to go on the sick register instead of the unemployment register? Will he ask his right hon. Friend the Secretary of State to order the investigation that I have requested into the scandal going on in the Employment Service in my constituency?

It is rather sad that when we have seen unemployment falling for two months, the only people who complain about it, and continue to do so, are Labour Members. That is not surprising, in view of the way that they have relished it when unemployment has continued to rise.

May I say how much Tyneside will appreciate being chosen for one of the new schemes and how appropriate it is that an area of high unemployment, with an excellent basic record of industrial relations and skills, should have the opportunity to make itself available for inward and home-based investment as the recession ends? The news will be much welcomed in the community on Tyneside.

I am grateful to my hon. Friend. He is right to say that the scheme will have an important impact. We shall watch it closely to see what lessons we can learn from it.

Will the Minister confirm that there is a massive problem of long-term unemployment on Tyneside and that the scheme to which the hon. Member for Hexham (Mr. Atkinson) referred aims to create 400 jobs for the long-term unemployed by July, whereas there are 32,000 long-term unemployed people on Tyneside? Will the Minister agree to support some of the ideas advanced by the Labour party to bring Government Departments together in an office in the north to identify and promote employment opportunities in the region?

It would make a great difference if we started to receive some support from the Labour party for the many schemes that we try to offer long-term unemployed people. The Labour party is always lacking in enthusiasm. The hon. Lady rightly mentions the high unemployment in the northern region, but in July 1986 unemployment in that region stood at 220,000, whereas according to the latest figures it is now 166,000–25 per cent. lower. I should have thought that even the Opposition would welcome that.

Total Quality Management

2.

To ask the Secretary of State for Employment whether she will use the techniques of total quality management to measure the extent to which her Department is efficiently delivering the service which industry and commerce need.

Total quality management has a part to play in the Department's drive to improve services and to ensure value for money.

Will my hon. Friend ask a senior official in his Department to liaise closely with the European Foundation for Quality Management and to explore whether the excellent self-assessment model it has developed would benefit the public service?

Anything that improves quality management at a European level is to be welcomed. I will pass on my hon. Friend's helpful suggestion to officials in the Department.

Does the Minister accept that his Department's ability to deliver services efficiently depends at least in part on its reputation for honesty? That being so, can he explain to the House why he allowed Sir Robin Butler, the head of the civil service, to write to civil service unions on 16 March saying that the imposition of no-strike clauses on public sector workers was not even under consideration when, 18 days earlier on 26 February, the Secretary of State for Employment had written to the Secretary of State for Education saying that she intended to amend the Employment Bill to make industrial action by public sector workers unlawful? That letter was copied and sent to Sir Robin Butler.

Either Sir Robin Butler is so inefficient that he does not even read letters from the Secretary of State for Employment which are copied and sent to him or he is deliberately covering up for the Government by misleading civil service unions. Which is it? Did the Department know about that? If so, did it consent to it?

The trouble with the hon. Gentleman is that when he scrabbles around in dustbins reading bits of paper, he ends up misinformed. The position that the Cabinet Secretary set out—which is that the Government have not considered introducing, nor do they have any plans to introduce, legislation to prevent industrial action in the public sector—remains the case. The hon. Gentleman is at a disadvantage in that he has relied for his information on scraps of paper that were based on leaked information.

Does my hon. Friend agree that the training and enterprise council network is improving the quality and effectiveness of his Department's training programme? Does he agree that the job seekers charter is improving the service throughout the Employment Service? Both schemes are to be welcomed and encouraged, and show that his Department is doing a good job for people seeking jobs.

I agree with my hon. Friend. Since my right hon. Friend the Secretary of State took charge of the Department, the number of opportunities for the unemployed to obtain help in getting back to work or to obtain help with training has increased from around 1 million to 1,600,000. That dramatic record of achievement has been thanks to the efforts of the Employment Service, the training and enterprise councils and Ministers across the Government. I should have thought that that would be welcomed by everyone in the House.

Disabled People

3.

To ask the Secretary of State for Employment what progress is being made to reduce discrimination against disabled people in the context of employment; and if she will make a statement.

7.

To ask the Secretary of State for Employment what measures she is taking to promote employment opportunities for people with disabilities.

We aim to raise employers' awareness of the abilities of disabled people and to provide practical employment help and advice where necessary.

Does the Minister accept that, either deliberately or inadvertently, a significant number of employers discriminate against disabled people in terms of employment? Does he accept that the overwhelming majority of organisations working with and on behalf of disabled people want anti-discrimination legislation? What is the Department's latest thinking on how to make that a reality?

I know how much time the hon. Gentleman spends on this subject, especially in his role as vice-chairman of the all-party disablement group. I accept his point that we need to do even more to encourage employers to take on disabled people and to make use of their skills. Disabled people certainly find it harder to obtain work when unemployed, especially during a recession.

I am sure that we must look at ways to reduce discrimination and to encourage opportunities for disabled people. Although it is easy to look to legislation as the answer, the hon. Gentleman needs to address some of the difficulties that arise because of the legal complexities and the costs it would impose, which may not be to the advantage of disabled people. I am happy to continue the helpful discussion going on with the hon. Gentleman and others in the House on how some of the problems may be addressed.

Does my hon. Friend agree that the private sector has a much better record than the public sector in employing people with disabilities? Will he recruit more disabled people in the civil service? Will he expand the successful sheltered placements scheme? Is not privatisation in the best interests of everyone, not least the disabled?

The answers to my hon. Friend's questions are: I am not sure, yes, yes and yes.

Can the Minister say why, despite the fact that only 23 per cent. of employers adhere to the quota, there have been no prosecutions whatever under the Government? Is it not time that the Government reviewed the quota system with a view to enforcing it properly?

We are certainly examining the quota system. The hon. Gentleman will recognise that the 3 per cent. figure relates to registered disabled. The number of people who are registered as disabled is less than 3 per cent. of the work force and, therefore, it would be mathematically impossible for all employers to meet the quota. We take seriously employers who are not meeting their obligations. We try to ensure that they do so by persuasion. The policy of not having had prosecutions reflects the conduct of every Government in the past 40 years.

Does my hon. Friend agree that the end of the recession and the extremely welcome recovery in the labour market make it an especially appropriate moment to introduce legislation to prevent discrimination in employment against disabled people? Will he reflect that the fears that have been expressed about the cost implications of such legislation are invalidated by the immense contribution that disabled people could make to the economy and that experience shows that nothing less than anti-discrimination legislation would enable that contribution to be released?

I agree with my hon. Friend that enlisting the talents of disabled people is a key element in ensuring that we maximise the performance of our economy as well as meet the needs of individuals. I would want to discuss my hon. Friend's specific ideas for legislation and its form before jumping to the conclusion that he reached. I would point to some of the difficulties that have arisen in other countries as a result of perhaps not thinking the matter through as carefully as it should have been. I should be happy to meet my hon. Friend to discuss his ideas in detail.

Labour Statistics

4.

To ask the Secretary of State for Employment how many people were unemployed for 12 months and longer in May 1979 and at the latest available date.

The figures for January 1993 show a reduction of almost 10 per cent. in the number of people who have been unemployed for 12 months or more, compared with January 1983—the earliest date for which equivalent figures are available.

Is the Secretary of State aware that it is perfectly understandable that she has not given the figure for 1979, which is 366,700? I have just obtained that information from the Library. Is it not a fact that three times as many people have been unemployed for longer than one year than when the Labour Government left office? Is not the Secretary of State ashamed of the misery and heartbreak of so many of our fellow citizens who are long-term unemployed, many of whom work on the assumption that, even with the slow recovery which is taking place, they will never be able to work again? They are the victims of the Government's economic policies.

I would not want in any way to minimise the difficulty for people who suffer long-term unemployment. The simple fact is that the number of long-term unemployed people is almost a quarter—24 per cent.—lower than at its peak in 1986. It is obvious from the hon. Gentleman's supplementary question that, like so many of his colleagues, he would have liked, and perhaps he was expecting, a more gloomy reply. I shall add to his all-too-obvious discomfiture by inviting him to welcome the fact that in his constituency the reduction was 21 per cent.

Does my right hon. Friend agree that the only jobs provided by the Government are the jobs of those who are directly employed by the public service or the quangos and other organisations set up in the public service area and that the jobs that are provided in the economy come as a result of the Government creating low inflation, low interest rates and competitive prices, thanks to white Wednesday? Consequently, we can look forward to improvements in the United Kingdom because we are more competitive than any other country in Europe.

I would not want to build too much on the improvement in unemployment that we have seen for the past two months. Of course, my hon. Friend is absolutely right. It is not the Government who create jobs; it is business, industry and commerce. It ill behoves Opposition Members to pour scorn on the good economic news, which is good news for unemployed people.

Does the Secretary of State recall that throughout the past 14 years we have had repeated assurances from the Secretary of State for Employment, two Prime Ministers and others that all the dreadful unemployment statistics were nothing whatever to do with the Government? Now that Ministers claim that there is some marginal improvement in the unemployment statistics, will the Secretary of State take this opportunity to reaffirm to the House the Government philosophy that if there is any improvement it is nothing whatever to do with the Government?

What is absolutely certain is that only when Opposition Members express a commitment to keep Britain competitive, reject support for the national minimum wage and, in the case of the hon. Member for Holborn and St. Pancras (Mr. Dobson), support employers can their much vaunted and so-called support for unemployed people be taken seriously.

Does my right hon. Friend agree that of the 1 million long-term unemployed, probably half have no intention of working again and, therefore, can be termed layabouts? Do the long-term unemployment figures include the lot opposite? They have been unemployed for 14 years.

My hon. Friend's strictures on fraud among people who call themselves unemployed are well known. I understand his anxiety because any fraud within the unemployment or benefits system can only serve to make things worse for people who are genuinely unemployed. As for the present or prospective employment of Opposition Members, my hon. Friend has made his point.

Workstart

5.

To ask the Secretary of State for Employment what progress has been made in setting up the workstart pilot projects.

I have asked the Employment Service and the two training and enterprise councils in the pilot areas to submit plans by 7 May. I hope that the first employees to be taken on under the scheme will start work by June.

Does the Secretary of State realise how dissatisfied I am, as someone who advocated a workstart scheme and supports its principles, that long-term unemployed people in Northumberland—where there are many long-term unemployed—are excluded from the scheme both in my constituency and in the constituency of Hexham, which was mentioned earlier? At what stage will she decide whether to continue the scheme and whether to extend it?

I hope that the right hon. Gentleman welcomes the 2 per cent. fall in unemployment in his constituency last month. I also hope that he will welcome the fact that long-term unemployed people in his constituency and elsewhere will greatly benefit from the 1·6 million opportunities for long-term unemployed people that we now have on stream.

As for the pilots, the right hon. Gentleman will realise that a pilot is a pilot. If the pilot projects succeed, we shall certainly consider extending them.

Does my right hon. Friend agree that the return in confidence, the recovery and the workstart pilot scheme will give new opportunity, new hope and great help to the long-term unemployed in Britain?

I agree with my hon. Friend that the workstart pilots should be extremely useful. We will monitor them carefully to see what lessons can be learnt and, in particular, what special help, confidence and encouragement they can give to people who have been unemployed for a long time.

Does the Secretary of State nevertheless recognise that even though workstart is only a pilot scheme, people are worried that employers are being asked simply to give an undertaking that they will not make other people unemployed in order to take on people on workstart and, I assume, an undertaking that they will not simply dismiss people at the end of the scheme? In the same vein as the Secretary of State waxed eloquent about fraud among those who claim benefit, will she wax eloquent about fraud among employers who seek to abuse the system?

The hon. Gentleman raises an important point. The contracts with the participating firms will naturally stipulate that existing employees must not be displaced and that the workstart participants will be considered additional to normal recruitment. As he would expect, the scheme will be subject to close and careful monitoring.

Labour Statistics

6.

To ask the Secretary of State for Employment how many new jobs have been created in the Brigg and Cleethorpes constituency since January 1992.

The information is not available in the form my hon. Friend requested. However, I am sure he will welcome the news that two American firms, notably Kimberly-Clark and Paramount Packaging, have chosen to invest in his constituency, bringing 800 new jobs to the area.

Does my hon. Friend agree that the information he has just revealed suggests that the recovery in the United Kingdom is centred on my constituency? Is he aware that it is hoped that the Kimberly-Clark project will eventually employ more than 2,500 people once it is fully operational and that my right hon. Friend the President of the Board of Trade performed the topping-out ceremony at that factory just a few weeks ago? Is he further aware that a new power station was opened last week, which will employ 35 people, and that, in Cleethorpes, Allied Colloids announced that it will employ 90 people? Those jobs are in addition to those that my hon. Friend has just announced. Does he agree that the industrial recovery in the United Kingdom has begun in Brigg and Cleethorpes?

My hon. Friend tempts me, but if I agreed with him wholeheartedly about Brigg and Cleethorpes I am sure that my hon. Friend the Member for Basildon (Mr. Amess) would have something to say about that. My hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) has revealed that the changes we have made since 1979 to reform industrial relations have meant that a number of companies now find the United Kingdom the most attractive country in which to invest. Those changes have, of course, been opposed by the Labour party.

Voluntary Work

8.

To ask the Secretary of State for Employment what measures she is introducing to encourage voluntary work among the long-term unemployed in the west midlands.

We announced at the Budget the introduction of 60,000 voluntary work opportunities through community action.

Will my right hon. Friend join me in welcoming the Budget announcement of an additional 60,000 places for the long-term unemployed? Does she agree that that welcome new intitiative should be supported on both sides of the House and not grumbled about by Opposition Members, who are in the rut of opposing everything and who fail to put forward any constructive proposals?

I hope that everyone will welcome the new programme. It will give unemployed people the opportunity to participate in a part-time work programme which will be supplemented each week by structured help with job search. That is a productive and useful way in which to help unemployed people and it deserves a welcome from the Opposition parties, although I doubt whether they will give it one.

The Secretary of State will know that many unemployed people want to do voluntary work because there are not other opportunities for them. It is an outrage, however, that there is a mass of work that needs doing in our country when we have 4 million people unemployed. When the Conservative party came to power, there were 1·2 million unemployed people. I do not know how the right hon. Lady has the cheek to stand here today and constantly insult the Labour party as though the Conservatives' record on unemployment was good. The high levels of unemployment are causing poverty and high bills for benefits and mean that production rates are too low. The Conservative Government have failed dramatically on this issue and the right hon. Lady should not boast.

I did say that the Opposition would not welcome this scheme and that turns out to be right. If the hon. Lady encouraged the Labour Front Bench to undertake credible economic policies, her remarks would carry much more credibility. I hope that she will at least accept that the Conservative party has introduced a vastly increased number of measures to help unemployed people and that those, combined with the vastly improved economic situation, mean that a great deal of help is available for unemployed people.

Although I welcome the Government's further measures for the long-term unemployed, does my right hon. Friend agree that the best scope for long-term jobs for unemployed people is provided by increased competitiveness in British industry? Will she pay tribute to the enormous efforts that have been made by British industry in the past 10 years, particularly in the past two years, to improve competitiveness? It has improved to such an extent that unit labour costs in this country have not gone up; that compares with the increase of 9 per cent. in Japan and 6 per cent. in Germany. Does my right hon. Friend agrees that that improvement in competitiveness will create jobs and that it is endangered by the social chapter of which the Opposition are so fond?

My hon. Friend is right when he speaks of the need to keep Britain competitive and to oppose the provisions of the social chapter, which would heap ever more burdens on the heads of employers. It is important for Opposition and Conservative Members to congratulate British business on its performance—exports are up; car production is up; manufacturing productivity is up. Everything is up except the spirits of Opposition Members.

However welcome the increase in voluntary placements, does the Secretary of State agree that we should be aiming at satisfactory paid employment for as many people as possible? Will she comment on a young couple—he has a first class honours degree in history—who have escaped long-term unemployment by obtaining menial jobs in a burger bar? When will the Government ensure that young graduates in this country are able to find the jobs for which they were trained and stop committing them to the burger economy?

That was clearly a much rehearsed question. However. I can assure the hon. and learned Gentleman that, despite his exhortations, the Government will not espouse the cause of a national minimum wage.

9.

To ask the Secretary of State for Employment what measures she is introducing to encourage voluntary work among the long-term unemployed in East Anglia.

In addition to the community action opportunities, I am making available further places on voluntary work projects in north Norfolk.

Does my right hon. Friend agree on the importance of upgrading the quality of management in the voluntary services? Will she join me in congratulating the Suffolk training and enterprise council on undertaking a number of initiatives to promote good management in the voluntary sector? It sponsored 13 managers from the voluntary services to enrol on a course to gain a certificate in business administration. Does she agree that by raising the standards of management in the voluntary sector we can help improve services, both for the long-term unemployed and for our communities at large?

I am very pleased to hear what my hon. Friend says about the work of the Suffolk TEC. No doubt both unemployed people and voluntary organisations stand to benefit from the new community action programme.

Pit Closures

10.

To ask the Secretary of State for Employment what is her estimate of job losses saved in consequence of the announcement of 25 March of the reprieve of 12 coal mines in respect of jobs (a) in the pits and (b) in related industry.

The number of jobs saved in the pits and related industries will depend on how much coal British Coal can sell and how successful it is at reducing costs and improving productivity.

While I welcome the reprieve of the 12 pits and the saving for the time being of 10,000 jobs, may I ask my hon. Friend to confirm that that will represent a saving of £400 million—one third of the £1·2 billion pledged in redundancy pay by my right hon. Friend the President of the Board of Trade in his statement on 13 October last year? Does my hon. Friend agree that that figure equates almost exactly to the figure of £300 million to £400 million in subsidy pledged by my right hon. Friend the President of the Board of Trade? Therefore, there will be no additional cost to the taxpayer.

My hon. Friend adequately explains the equations that result from the White Paper recently published by the Government and endorsed by the House. There are a number of related issues; we obviously need to discover the outcome, the growth in demand for coal and how that will help to protect jobs in British Coal.

Does the Minister agree that British Coal Enterprise has so far totally failed to replace the jobs that have already been lost? Will he undertake positively to examine what British Coal Enterprise is doing, evaluate the information and see how many jobs are lost after six months and how many after one year? British Coal Enterprise creates false jobs and false hopes.

I regret the false and negative way in which the hon. Gentleman approaches the issue. All our efforts to help specific areas fail to find favour with the Opposition, which is a great shame.

Does my hon. Friend accept that despite the cuts in British Coal brought about by falling orders for British coal, the coal mining industry in this country remains one of the largest in the world, a fact which should not be forgotten?

I am grateful to my hon. Friend for making that point. It is equally important to remember the great way in which British Coal has improved its productivity in the last few years, which will ensure that it sells more coal.

Is the Minister aware that it is a disgrace that miners' pension money should go towards policies that will result in the loss of jobs in the industry, not only in the north-east of England but throughout the country? When will he get off his backside and get something done to create work in those areas?

When it comes to getting off one's backside, I wonder what the hon. Gentleman was doing between 1964 and 1970, when 277 coal mines closed in Britain.

Does my hon. Friend agree that it is important to consider employment in all the energy-intensive industries and in the oil and gas industries? Does he further agree that all such employment would have been hit had we listened to the Labour party and done nothing about the coal industry?

I am grateful to my hon. Friend for making those points, which rightly sum up some of the questions that must be addressed by the President of the Board of Trade.

Labour Statistics

11.

To ask the Secretary of State for Employment what has been the change in the number of unemployed people in Greater London in the past three years.

In the Greater London area, seasonally adjusted claimant unemployment rose by 274,800 between March 1990 and March 1993.

Does the Minister recognise that in the past three years, the number of unemployed people in the London borough of Greenwich has doubled? Does he further recognise that unemployment is a corrosive force, particularly among the young, and that the unemployment level today is destructive of the social fabric? When will action be taken to bring down the level of unemployment at least to that which applied three years ago, and when will it be reduced to the level that existed in 1979?

The hon. Gentleman's constituency is famous for its observatory for looking into deep space. What an irony that the hon. Gentleman cannot see what is happening under his nose. Unemployment in London has fallen for the first time in three years, and he cannot even bring himself to recognise that fact.

Is the Minister aware that people in London welcome the fall in unemployment but remember in my constituency of Ealing the way in which we lost many jobs during the four years of the loony Labour left which had control there and which, at a stroke, increased local taxation by 65 to 100 per cent? That is how jobs are lost. Labour loses jobs. The Conservative party does not.

The way to create jobs in Britain is to ensure that we are competitive. That means controlling public expenditure and keeping taxation, including local taxation, down, and my hon. Friend is right to point out how Labour authorities have destroyed jobs the length and breadth of Britain.

The census shows that in greater London, 28 per cent. more people were out of work and looking for jobs than the figure produced by Department of Employment officials. Which figure was right?

When the figures were going up, the hon. Gentleman was happy to accept them. Only when they are going down does he cast doubt on them. [HON. MEMBERS: "Answer"] I will answer. The census figure for people not working includes people who are ill and people who are not working perhaps because they are going on holiday [Interruption.] The hon. Gentleman should not try to compare apples with pears, otherwise he ends up with results that are just bananas.

Is the Minister aware that the policies of the Government for employment creation in the Greater London area will have a positive effect and that the co-operation that his Department is encouraging between further education, the training and enterprise councils and private employers can only be for the good? Is he further aware that the hon. Member for Greenwich (Mr. Raynsford) would not recognise good news if it were staring him in the face?

My hon. Friend is right. The key to future employment in a competitive world market lies in improving our skills. I am grateful to my hon. Friend for welcoming the innovative measures that the Chancellor announced in his Budget to allow unemployed people to become involved in further education. Education and training are the key and the Government have done more to increase education and training opportunities than any other in Europe.

Employment Action

12.

To ask the Secretary of State for Employment how many previously unemployed people have been employed in the employment action programme in 1991–92.

Employment action ran for only six months in 1991–92. By March 1992, 19,300 people had started on the programme in England and Wales.

Does the Minister appreciate that the scheme has been a failure and that many people who have taken part in it feel cheated and demeaned by the experience? Only one third of places were taken up in the first year and there was a 15 per cent. shortfall in the second year. Is the Minister aware that in my constituency last year there was a 16 per cent. increase in unemployment and there have been a further 200 jobs losses this month? Why do not the Government stop trying to stir up manic optimism and realise that in my constituency and many others all that has taken place is a phantom recovery?

What has happened in the hon. Gentleman's constituency is that in July 1986 unemployment was 5,986 and in March 1993 unemployment was 4,530. For the sake of the Opposition, that is 24 per cent. lower than it was in 1986. Yet again, the Opposition condemn any kind of moves that we make to attempt to help those people who are unemployed. It is not surprising that no one believes what the Opposition say these days.

Workstart

13.

To ask the Secretary of State for Employment if she will make a statement on the workstart pilot scheme established for east Kent.

I have asked the employment Service for a detailed plan for the pilot scheme in east Kent by 7 May. I expect the first participants to be employed in June.

My right hon. Friend will understand that in north-east Kent we very much appreciate her Department's recognition of our real needs. We hope that this measure will be followed by other Government measures to enable us to compete on equal terms with northern France for inward investment. Does my right hon. Friend understand that my constituents and the businesses that I represent, together with those represented by my hon. Friends the Members for Thanet, South (Mr. Aitken) and for Canterbury (Mr. Brazier), are greatly looking forward to taking part in the scheme? Will she try to find time to visit it herself once it is up and running?

I can assure my hon. Friend that I shall attempt to visit at an early stage all the pilot areas where workstart is to take place.

Apprenticeships

14.

To ask the Secretary of State for Employment what recent discussions she has held with employers' organisations on measures to increase the number of young people undergoing apprenticeship training.

The Government, working with TECs and other employers' organisations, is progressively extending youth credits to all 16 and 17-year-olds not in full-time further education.

Does the Minister appreciate that Britain's future is tied up with education and training together with the rebuilding of our manufacturing base and, alongside that, we face ever more intense competition in international markets? Therefore, will he tell those reluctant employers who are not training sufficient numbers of their employees that they are, quite literally, failing the nation?

I agree with the hon. Gentleman and I shall certainly tell employers who are already doing more to do even more for training and to encourage apprenticeships. In return, I hope that the hon. Gentleman will tell those people in the Labour party and the trade unions who opposed youth training, employment training and every other Government training initiative, to change their minds and give us some support.

Is my hon. Friend aware that in Devon and Cornwall the Government guaranteed training place scheme for 16 and 17-year-olds is working extremely well, with almost every youngster who has applied for such a place being accommodated well within six weeks? Does he agree that the Devon and Cornwall TEC is operating extremely successfully—[Interruption.] Does he agree that the Devon and Cornwall TEC is doing a great job and should be congratulated?

I agree with my hon. Friend. It is because of the work that has been done by my right hon. Friend the Secretary of State that the youth training guarantee scheme is being delivered despite the difficulties that were caused by the recession. It would be a matter of considerable support for the TECs if the House would acknowledge their splendid work, including that which my hon. Friend has outlined today.

Does the Minister know that in many great manufacturing cities such as Leicester, there has been no decrease in unemployment? Over the years, there has been a vast increase among young people desperate for work. As apprenticeships have dropped—and we know why—surely the Government could do much more to help young people to get jobs at the end of their training.

As the hon. and learned Gentleman will know from his role as Chairman of the Select Committee, the youth training scheme has been remarkably successful in getting young people into jobs or ensuring that they get qualifications—indeed, it has helped some three quarters of them. It is particularly surprising that Opposition Members do not know that. I agree with the hon. Gentleman's point about apprenticeships. Training in the workplace is second to none and we should encourage apprenticeships. What a pity it is that the trade union movement did so much to destroy so many apprenticeships in Britain.

Prime Minister

Engagements

Q1.

To ask the Prime Minister if he will list his official engagements for Tuesday 27 April.

This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Now that there is optimism that the bulk of the Maxwell pension funding will be recovered over the next four years, is it not time to end once and for all the uncertainties felt by many of those lobbying us today? Will the Prime Minister authorise the availability of capital now, knowing full well that as funds are recovered most of that money will come back? Eighteen months is too long, for elderly people in particular, to suffer such anxiety. Will the Prime Minister end it now?

I think that the hon. Gentleman knows that over many months we have made a positive response to the Maxwell reservations. I believe that it was the right thing to do, not least setting up the Maxwell pensioners' trust, which has raised more than £6 million, and providing £2·5 million to ensure that pensions are paid. We continue to look sympathetically at the problem, but I have no fresh announcements to make today.

In the wake of the bomb in the City of London on Saturday, will my right hon. Friend confirm that the Government will bring forward the reinsurance scheme? Will he urge the Leader of the House to make time for legislation for that scheme as soon as possible?

The Government scheme for insurance against terrorist attacks has been providing cover since 1 January this year and the Government will fully honour their commitment under the scheme. It is, of course, a matter for individual businesses whether or not they choose to take out such cover, but everyone who has done so, or has alternative policies, will have been covered against damage caused by the Bishopsgate bomb. The Government scheme is one of reinsurance for the industry, so those who have suffered damage will need to make claims to their insurers in the usual way.

On my right hon. Friend's last point, legislation to provide for payments to be made to the insurance companies under the scheme will be brought before the House as soon as possible. I hope that it will be possible to attract support from all parts of the House for that measure.

Now that all six teacher and head teacher organisations have appealed to the Secretary of State for Education to suspend this year's testing and assessment arrangements under the national curriculum, will the Government for once listen to the considered professional judgment of the whole teaching profession and suspend this year's tests?

I think that the right hon. and learned Gentleman knows the importance that we put behind the principle of testing. He also knows—he will have heard the remarks of Sir Ron Dearing—that we need the experience of this year's tests to ensure that we are able to remove the unnecessary bureaucracy and make sure that the tests are right for the future. The implication of the right hon. and learned Gentleman's question is that he now accepts the principle of testing. I hope that is now so.

Does the Prime Minister not understand that this increasingly bitter dispute is not about the principle of sensible testing but about the dogmatic insistence of an arrogant Secretary of State that his view must prevail against those of governors, teachers and parents? Why does not the Secretary of State recognise that which is recognised by everyone else—that he has lost the argument and that it is an insult to use £700,000 of taxpayers' money on futile propaganda?

I notice again that the right hon. and learned Gentleman did not indicate that he does not accept the principle. I assume that lie does accept the principle of testing. In view of his question, he may care to comment on the remark by the National Union of Teachers president, who said:

"We should annihilate tests in the national curriculum."
I hope that the right hon. and learned Gentleman will now condemn that particular comment. On his further point, I must tell him that I do not think it appropriate for teachers to take industrial action at the expense of those tests.

If the Prime Minister is so confident of parents' support, why does he not use that £700,000 to hold a ballot, to find out what parents really think? If the Government are sincere about parental choice, why not let the parents choose?

The right hon. and learned Gentleman knows as well as every other right hon. and hon. Member that two agendas are in play—that of the ordinary teacher who wants less bureaucracy, which we are considering and to which we shall respond, and that of the militants' opposition to any sort of testing or appraisal and to all our reforms. I note that the right hon. and learned Gentleman implies that he is favour of tests, but he does not have the courage to denounce the NUT and its comments about industrial action.

Will my right hon. Friend reconfirm the assurance that he gave the House unambiguously on 24 September last year, that if the Danes vote no in the second referendum it would be unacceptable for us and the rest of the Community to go ahead without Denmark, and that the Maastricht treaty could not go ahead?

Perhaps my hon. Friend has been misled by some of the reports that he may have seen this morning. The leader of the Progress party in Denmark, which my hon. Friend will know is the only Danish party opposed to the Maastricht treaty, said:

"There was nothing new in the Foreign Secretary's remarks, and they were manipulated by the press."
That was her comment, not mine. As to my hon. Friend's specific question, if he will study the transcript of the remarks made by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, a copy of which will be placed in the Library, he will find that my right hon. Friend made four straightforward points. First, we do not expect the Danes to vote no. Secondly, were they to do so the Maastricht treaty could not enter into force because it requires ratification by 12 member states. Thirdly, United Kingdom legislation to ratify the treaty could therefore not proceed. Finally, all 12 members of the European Community would need to hold urgent consultations about what to do next. Each of those points is self-evident. That was said by my right hon. Friend yesterday.

Q2.

To ask the Prime Minister if he will list his official engagements for Tuesday 27 April.

In the right hon. Gentleman's first speech as Prime Minister, he spoke of a commonsense view of life from a tolerant perspective. Now that the Scottish Conservative party has joined the massive opposition to water privatisation in Scotland, will the Prime Minister display that tolerance by recognising the genuine and universal concern felt in Scotland, where water is regarded as being for the benefit of all—not for the profit of a few? At next month's Tory conference, will the Prime Minister state that the public interest will best be served by increased investment in the present water and sewerage system? Regardless of whatever the Tories have brought to Scotland in the last 14 years, will the right hon. Gentleman confirm that we shall not witness the return of the Victorian cry of "Gardyloos!" to the streets of Edinburgh and Glasgow?

The future structure of water and sewerage services in Scotland is still under consideration. I am sure that the hon. Gentleman would not want me to go further while that matter remains under consideration.

Q3.

To ask the Prime Minister if he will list his official engagements for Tuesday 27 April.

Now that Britain is exporting television to Germany, lace to Brussels, cosmetics to the French and pizzas to Italy, as my right hon. Friend pointed out in Manchester last week, does he not think that all British companies now have the competitive edge to develop export markets everywhere?

My hon. Friend is entirely right to praise our exporters and to point to the opportunities for further exports. We also export more per head than Japan and now have an excellent opportunity to break into new markets and win back old ones. It was for that reason that my right hon. Friend the Chancellor increased the amount of Export Credits Guarantee Department cover both last autumn and in the recent Budget. Manufacturing matters; exporting matters. We seek to support them both.

Q4.

To ask the Prime Minister if he will list his official engagements for Tuesday 27 April.

Is the Prime Minister aware that very many people in London are extremely worried about the survival of the travelcard and concessionary fares after bus deregulation and rail franchising and that their fears are echoed today in the report by the Select Committee on Transport? Will the Prime Minister tell us what he intends to do to guarantee the future of the travelcard and concessionary fares schemes?

As the hon. Gentleman knows, we have to study the report of the Select Committee and then respond to it. That is what we will do.

Will my right hon. Friend join me in congratulating President Yeltsin on his outstanding personal victory at the weekend? Does he agree that, in supporting President Yeltsin, the Russian people have voted in favour of democracy built on market economics? Does this not represent by far the best chance for the future of Russia?

I have no doubt that my hon. Friend is right about the last point. I have sent my warm congratulations to President Yeltsin on the outcome of the referendum. The results are remarkable. They show that the Russian people maintain their personal trust in the President and, most important, that they wish him to carry his democratic reforms further. It is a remarkable result on the back of the sacrifices that have been made towards economic transformation. I believe that the Russian people are beginning to see the benefits of individual enterprise. Success for Russia is essential for its people and equally vital for the rest of the world.

Q5.

To ask the Prime Minister if he will list his official engagements for Tuesday 27 April.

Does the Prime Minister not find ironic that, as we celebrate the 50th anniversary of the battle of the Atlantic, we are losing the battle for our shipyards without even a fight? Given his Government's refusal to create a strategy for defence diversification, what action does the Prime Minister intend to take in response to the petition handed to him today by the save Cammel Laird community group, asking him to save the yard from closure in July?

As the hon. Lady knows, there is a problem for shipbuilding round the world as a result of the level of capacity and the level of demand. I understand the hon. Lady's concern about Cammel Laird and I know that it is shared by the hon. Member for Birkenhead (Mr. Field) and by my hon. Friend the Member for Wirral, South (Mr. Porter). The yard's future is primarily a commercial decision for Vickers Shipbuilding and Engineering Ltd. which is having to respond to that worldwide decline, which is not just a problem for the United Kingdom but one for the rest of Europe and for countries in other parts of the world. None the less, I will study with great care the letter from the Cammel Laird support group and reply in due course.

Will my right hon. Friend reassess the case for identity cards to see whether they can give significant support to the police in their fight against crime and terrorism?

That is a matter which from time to time we will need to review. It is one which has many difficulties. We have looked at it in the past and not found it a terribly attractive proposition. I know that a constituency is demanding it. It is not something which I would wish to rule out, but it is not on our immediate agenda.

Shetland

Q6.

To ask the Prime Minister whether he has any plans to pay an official visit to Shetland.

I have no plans to do so at present, but my right hon. and noble Friend the Earl of Caithness visited Shetland on 29 and 30 March.

I know that that reply will dismay my constituents. They will be dismayed to learn that, some 16 weeks after the Braer went aground, the Prime Minister has neither visited the area nor indicated any intention of doing so. [Interruption.]

I shall resist the temptation to ask what would have happened if a ship had gone aground on the white cliffs of Dover. [Interruption.]

If the Prime Minister came to see at first hand a community's remarkable, practical and vigorous response to the adversities that affected it on 5 January, he would be very impressed indeed. If, in the attempt to restore the economic fortunes of that community, it is necessary to embark on a marketing exercise to restore Shetland's good name for good-quality produce, will the Prime Minister repeat that the polluter should pay? If so, will he give the International Oil Pollution Compensation Fund a nudge in the right direction?

I can certainly say to the hon. Gentleman that the response of the people in the area was indeed remarkable. That was noted by my right hon. Friend the Secretary of State for Scotland, and by a number of my other right hon. Friends, all of whom visited the area in the period immediately following the tragedy.

What the hon. Gentleman neglected to mention was that an economic impact study is being mounted under the direction of Shetland Islands council, and with the participation of Shetland Enterprise and Highlands and Islands Enterprise. That will help to target resources where they are most needed, and I think that it is the right way in which to proceed for the present.

Fox Hunting (Abolition)

3.31 pm

I beg to move,

That leave be given to bring in a Bill to make the hunting of foxes with dogs illegal.

On a point of order, Madam Speaker. May I seek your guidance on the tabling of the motion in the name of the hon. Member for Newham, North-West (Mr. Banks)? It refers to the hunting of foxes with dogs. Given that anyone who knows anything about fox hunting knows that it takes place with hounds, is the motion in order? [Interruption.]

Order. That is a matter for dispute for the House. I want to hear what the hon. Member for Newham, North-West (Mr. Banks) has to say.

As a matter of fact, Madam Speaker, the hon. Member for Rutland and Melton (Mr. Duncan) is absolutely correct. As it appears on the Order Paper, the wording is wrong. The hon. Gentleman will soon find out, however, that I am begging to move that leave be given to bring in a Bill to make the hunting of foxes with hounds illegal.

I last attempted to make progress with such a measure on 18 July 1990. That, in turn, was the first time that a ban on fox hunting had been tried since the second world war. Since my effort in 1990, a private Member's Bill has been presented by my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara). It sought, among other things, to give wild animals the same protection against cruelty as domestic animals. It would have banned fox hunting, and a number of other disgusting so-called sports.

My hon. Friend's Bill was narrowly defeated on Second Reading, following—[Interruption.]

Order. I remind the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) that there is no vacancy in this job. He seems to have forgotten that it is just a year today since the House elected me.

My hon. Friend clearly has unrequited ambitions in that respect.

The Bill presented by my hon. Friend the Member for Kingston upon Hull, North was narrowly defeated on Second Reading, following what I must concede was a spectacular whipping exercise on the part of that cross between Sir John Falstaff and Bertie Wooster, the hon. Member for Crawley (Mr. Soames), who is sitting on the Government Front Bench.

I have detailed those various attempts to secure legislation as a clear indication that those of us on both sides of the House—[Interruption.]

Order. I am interested in hearing what the hon. Member for Newham, North-West (Mr. Banks) has to say. I hope that the House will come to order.

I am giving the background details of the attempts that have previously been made in the House to ban fox hunting as a way of showing that those who oppose the so-called sport will never let the matter drop until this anachronistic, barbarous sporting activity has been declared illegal.

A few weeks ago, the British Field Sports Society sent out a video to every Member of Parliament in what can only be described as a desperate attempt to vindicate its wretched activities. The video was introduced by Ludovic Kennedy, a man of great reputation who, I am afraid, sullied it by agreeing to front such an obviously fraudulent presentation. I trust that his fee matched the scale of the attempted deception. May I inform those who discarded the tape unseen, or used it to tape a showing of "Blind Date", that the film has been reported to the Metropolitan police on the grounds of possible offences under the Protection of Animals Act 1911, the Wildlife and Countryside Act 1981 and the Cinematograph Films (Animals) Act 1937.

The film shows a fox being seized by the stomach. It is then subsequently ripped to pieces, although the latter sequence has been edited out. Another shot is of a fox deliberately snared in order to demonstrate the cruelty of snaring. I certainly agree that snaring is cruel, but when the House considered a ban on snares, the Bill was blocked by Members of Parliament who support the British Field Sports Society. So to fraud they add hypocrisy.

It is difficult to understand how anyone can claim to derive pleasure from hunting another creature to death in the name of sport. I try to understand the psychology hut, for the life of me, I can find no point of contact whatsoever. For me, those who hunt foxes are no better, in the final analysis, than those perverts who bait badgers, course hares, hunt steers, stage dog fights and inflict mindless suffering on domestic pets and wildlife.

There seems to be a close correlation between those who take pleasure in hunting and hurting animals and those who inflict violence on other human beings. Those who ride to hounds would no doubt be outraged at such a linkage, but respect for life is indivisible. Anyone who derives pleasure from the pain and suffering experienced by a fox being hunted by a pack of hounds is on a continuum which, like it or not, ends up, in its most extreme form, with the hideous cruelties of a Bosnian massacre or a Nazi death camp.

There might be reasons for culling wild animals or controlling foxes, but to use such reasons to derive pleasure from killing them is pandering to a blood lust. To take any form of life dehumanises all of us. It lowers the threshold of our resistance to further and more objectionable forms of violence. In recent months, we have heard of appalling violence being inflicted by hired thugs on those seeking to protest against fox hunting, including the tragic deaths of two young men. Regrettably, fox hunting is still a legal activity, but protest against fox hunting is also legal, and the police have a duty to enable protest to take place without hunt-hired thugs assaulting protesters.

According to all public opinion polls, the great majority of people in this country—and, I dare say, all foxes—oppose fox hunting. It is not a town versus country argument, either. A clear majority of country dwellers also support abolition. Despite this weight of public opinion, the vile practice has survived and there is substantial, albeit declining, support for it in this House—and, no doubt, in the House of Peers.

The fact is that, although fox hunters are guilty of babarous behaviour, they are neither fools nor without political influence. Indeed, champions of the so-called sport are to be found at the very highest levels of influence and status in our society. I only hope that whoever encouraged the young princes to slaughter a few harmless rabbits recently does not go on to introduce them to the organised barbarity of fox hunting.

The fox hunters know that their days are numbered, and their arguments are becoming increasingly desperate. They say that people like me loathe the type of person who hunts. I readily confess that, in the main, they are not my favourite people, but who could loathe the hon. Member for Crawley (Mr. Soames), however much one might detest the colour of his socks on Friday or discreetly laugh at his Mr. Toad wardrobe? It is not a campaign against middle-class people—[Interruption.] Obviously, no one could deny the middle-class antecedents of the hon. Member for Crawley, but one often hears the argument that there are hunts up in the north-east that are based on the old mining collieries. I do not know whether hunts continue in those areas—if they do, perhaps they would prefer to hunt the President of the Board of Trade—but I condemn those hunts as much as I condemn those in the south and elsewhere.

The use of environmental and conservation arguments by the fox hunters makes me reach for my sick bag. It is no argument for fox hunting to say that foxes sometimes kill livestock and are pests. The fox is a carnivorous predator and scavanger, but far more lambs die of hypothermia, for example, than are ever taken by foxes, and those the fox takes are usually either dead or unlikely to survive.

However, the great majority of foxes live largely on beetles, frogs, rabbits, wild birds and carrion, and they are the most significant destroyers of rats and mice. They do not constitute a pest, but, if they did, there are more humane and efficient methods of controlling them other than having a bunch of yahoos on horseback, a pack of hounds and assembled motley villains charging over the rural landscape.

Of the estimated 300,000 foxes killed each year, fox hunting accounts for some 7,500 dog foxes, and cub hunting, which is especially despicable, for another 8,500. The final lie given to fox hunting as a method of pest control is that, in some parts of the country, foxes have been deliberately encouraged to provide a quarry for the hunt.

The hunting mob is running out of valid arguments and time. Only the Labour party is officially committed to banning fox hunting at the next general election. However, given the number of Tories in the House and the country and the number of Liberal Democrats, I hope that, one day soon, those two parties will also embrace the same policy of banning fox hunting. I ken we shall shortly welcome the day when we hear the last "tally-ho" and when John Peel will have to find something else to do with his horn in the morning.

Question put and agreed to.

Bill ordered to be brought in by Mr. Tony Banks, Mr. Jeremy Corbyn, Ms Dawn Primarolo, Mr. Andrew Bowden, Mr. Elliot Morley, Ms Diane Abbott, Mr. Kevin McNamara, Mrs. Alice Mahon, Mr. Alan Meale, Mrs. Anne Campbell, Mr. Simon Hughes and Mrs. Maria Fyfe.

Fox Hunting (Abolition)

Mr. Tony Banks accordingly presented a Bill to make the hunting of foxes with dogs illegal: And the same was read the First time; and ordered to be read a Second time upon Friday 7 May, and to be printed. [Bill 186.]

Orders Of The Day

Non-Domestic Rating (No 2) Bill

Order for Second Reading read.

3.42 pm

I beg to move, That the Bill be now read a Second time.

The Bill will freeze business rates in real terms for a further year. It honours the pledge given by my right hon. Friend the Chancellor of the Exchequer in his Budget speech on 16 March to protect businesses from the most serious consequences of the 1990 revaluation. A similar measure, which we introduced last year, was welcomed by the House, and I hope that the Bill will be equally well received.

Under the current law, business rates cannot rise each year by more than the rate of inflation if the property's valuation stays the same. The Government's success in tackling inflation means that the rises this year will be no more than 3·6 per cent. following increases of only 4·1 per cent. last year—and, of course, inflation is now lower again.

For 30 per cent. of the businesses, however, the 1990 revaluation implied larger annual increases last year and this year. Although the increases were being phased in gradually, some businesses would still have faced real-terms increases of up to 20 per cent.

Bearing in mind the effects of the recession, the Government decided last year not to add to the burden on businesses. The 1992 Act therefore froze all rates increases in real terms for 1992–93. Last year's measure was intended as a one-year respite. However, although the economy is now recovering, a full resumption of the transitional arrangements would be premature, so the Bill extends the freeze on transitional real increases for a further year.

About 250,000 shops and offices, mainly in the south of England, will benefit from the measure to the tune of more than £190 million. About 85,000 factories and warehouses, mainly in the north of England, will benefit from reductions worth more than £30 million. A further 165,000 properties will gain relief worth £120 million. Businesses in Wales will save about £9 million. The total savings for business will be £350 million this year and £225 million next year.

I am aware that the Bill does not cover Scotland, but can the Minister tell a good Scottish Member such as myself what the Scottish Office is doing by way of an equivalent to the Bill?

I am happy to oblige the hon. Gentleman. As he says, there are different arrangements in Scotland. Through regulations, a comparable reduction of 2·6 per cent. in rates bills overall—the English level—will be achieved in the 1993-94 rates poundages, at a cost of £32 million. Derating has not been adjusted in line with reduced poundages, so the ratepayers will get the full benefit. I hope that that satisfies the hon. Gentleman.

The benefits in England come on top of the benefits of last year's freeze, which was worth £1,250 million over the years of its impact on its rates hills.

Many of the businesses that fared worst as a result of the recession were those facing the largest increases following the 1990 revaluation. In the six months following that revaluation, 633,000 ratepayers appealed against their valuations. I want the backlog of appeals to be cleared, as I am sure the whole House does. Of the initial 633,000 appeals, more than 525,000 have now been settled, and I am told that valuation tribunals are well on target for clearing the remainder by the end of the current year. I am sure that the House will welcome that.

In 1995, a new revaluation, based on the property market at 1 April this year, will come into effect. Rental values in depressed sectors are likely to be significantly lower than they were at the time of the previous revaluation. If that is so, the rateable values concerned will fall. That means that, as I promised last year, some businesses still in transition may never have to face the full rates liabilities implied by their 1990 valuations. I am sure that that will be most welcome to many businesses, especially the small businesses that faced the largest increases.

I am grateful to my hon. Friend, and I am sure that many businesses in my constituency will welcome what he has said. However, does not what he has said reveal one of the difficulties of the present non-domestic rating system, in that what a business pays effectively depends on the general economic situation, and therefore on the value of the property in which it operates, rather than on anything to do with the nature of the business itself?

Not immediately, but at some time in the future, will my hon. Friend examine the basis of local taxation of businesses to find out whether there is a fairer way of assessing what they should pay for local services?

I am afraid that I cannot promise any immediate action along those lines. We are happy with the basis of property taxation for some element of businesses' tax bills. Of course, businesses also contribute to the national exchequer through VAT and through the income tax and national insurance that their employees contribute, which businesses originally pay in employee remuneration. We feel that there is a balance in the taxation affecting businesses, their employees and their turnover. That is Parliament's and the Government's chosen method of taxation to support local authority expenditure.

However, my hon. Friend has a good point when he says that problems were caused by the 1988 valuation. The main problem arose because that valuation took place at the peak of an extremely active property market, especially in the south, and especially for shop and office properties. We trust that the valuations based on 1993 values, which do not allot such extreme relative values as between different types of properties, will remedy that.

I hope that the results will be more acceptable across the country than the results were when they were based on the high values of certain properties in 1988. A further pause in increases this year should help to smooth any changes to bills resulting from the 1995 revaluation.

We believe that the Bill will provide another valuable fillip for many businesses, and will give a further boost to our economic recovery. My hon. Friend the Under-Secretary of State will be happy to deal with any issues that arise in the debate when he winds up. I have great pleasure in commending the Bill to the House.

4.9 pm

The Opposition support the general thrust of the Bill, and we shall not oppose Second Reading. However, we are concerned that businesses are becoming dependent on artificially held-back increases in rates.

Since the revaluation in 1988, which was implemented in 1990, businesses have, in addition to the original transitional limitations in 1990–91 and 1991–92, been protected by a further limitation in 1992–93. The Bill proposes another limitation in 1993–94. Businesses potentially face a large hike in business rates when the transitional arrangements expire and the next revaluation takes place in 1995.

The late Lord Ridley, who was Secretary of State for the Environment at the time, announced in 1989 the terms of the original transitional arrangements which were intended to be self-financing.

Does the hon. Gentleman agree that, in referring to the 1995 revaluation as potentially increasing the liability of the business rate payer, he is assuming a continuing increase in rental values, because the rates are based on rental values? In fact, most business rents have been stagnant over the past few years; consequently, the increase in valuation which is likely to take place in 1995 should be quite limited. The hon. Gentleman's point therefore has a limited validity.

I do not accept that. If I replied at this stage, I should have to do so at some length. I shall give the hon. Member a flavour of what I propose to say later. Whether businesses face a hike after the implementation of the 1993 revaluation in 1995 depends very much on what happens elsewhere.

It depends on whether the real level of local authority expenditure is maintained. It depends on whether the rate poundage, as originally outlined in the Local Government Finance Act 1988, is maintained in relation to inflation. It also depends on what happens to businesses that have already had their rates bills artificially held back—I support this—because of the recession over the past two or three years.

The answer to the hon. Gentleman's question is that it very much depends on what the Government do between now and 1995, and on whether the revaluations in 1995 are based on what people actually pay in rates or on what they would have paid if there had been no transitional arrangements. I shall develop that point at a little more length later. If more hon. Members had wished to catch your eye, Madam Speaker, I might have restrained myself a little on the matter. In the circumstances, it may help the hon. Gentleman and his colleagues to be a wee bit more appreciative of some of the difficulties that they may face in the near future.

I return to what the late Lord Ridley said. He believed that the original transitional scheme would be an incentive to many businesses to flourish in the late 1980s. I realise that he had no more access to the future than any of the rest of us had. He said:
"The Local Government Finance Act provides for a uniform business rate in England and in Wales and for a revaluation of non-domestic property … This will provide a welcome incentive for businesses to expand in the currently less economically buoyant areas."—[Official Report, 15 February 1989; Vol. 147, c. 315.]
It is clear that he did not anticipate the economic events of the post-1989 period. Indeed, he predicted the opposite of what has transpired: he argued that northern business would be helped by rate reductions that could stimulate the more depressed parts of the country. The late Lord Ridley did not foresee the depth and length of the recession that would sweep through the country at the time that the business rate was introduced.

The year 1990 was a bad one for the economy, with 28,935 businesses collapsing. In 1991, the position was even worse, with 47,777 business failures during the year —an increase of 65 per cent. on the previous year. The pace of collapse quickened in the last quarter of 1991: from 900 collapses a week to 995, or 199 business collapses each working day.

All parts of the country suffered. The south-east recorded 9,722 business failures that year—an increase of 68 per cent. The east midlands recorded 2,189 failures—an increase of 79 per cent.—and the south-west had 5,415 failures—an increase of 76 per cent.

The position grew even worse in 1992 as the recession deepened, with business failures reaching an all-time high. A total of 62,767 businesses failed—a 31 per cent. increase on the previous year. London and the south-east were the areas worst hit by the hurricane of collapsing business. The south-east recorded 14,000 business failures during 1992— a 46 per cent. increase. In 1992, 9,132 bankruptcies took place and liquidations increased by 20 per cent. to 5,000 plus.

The eastern region also recorded a dramatic increase in business failures—a 22 per cent. increase on the previous year. In London, there were 9,121 business failures in 1992–15 per cent. of the total for the country.

Despite all the self-congratulation from the Government Front Bench, 1993 has continued to be a disastrous year for business. In the first quarter, 15,444 businesses collapsed—a rate of almost 1,300 a week. A total of 5,297 limited company liquidations were recorded, and there were 10,000 individual insolvencies, compared to 9,200 in the same quarter last year.

Dun and Bradstreet pointed out that the latest overall figures represented a 4 per cent. increase in business failures on the same period last year. London and the south-east are still suffering the worst. But beyond this region, the record of failures has also worsened, despite the soothing words of Ministers on this matter. For example, in the west midlands, there was an increase of 5·5 per cent. in the number of business failures compared to last year. In the south-west, there was an increase of 9 per cent. compared with the same period last year. In my own region, the north-east, 1,176 business failures were recorded—an increase of 3 per cent.—but bankruptcies increased by 8 per cent.

Not only did the late Lord Ridley get wrong the level of aggregate demand in the economy: he and the Government completely failed to predict that the 1990–93 recession would hit the southern parts of the country worse than the north. Yet many areas in the south face the largest increases in business rate bills arising from the introduction of the national business rate in 1990.

The original transitional release scheme was therefore wholly inappropriate in the economic circumstances of the country. The limitations and reductions of rate bills in the north acted against northern-based companies holding on in the recession because they needed the full stimulus of any reductions. Even with the original limitations contained in the original transitional arrangement scheme, the increases in the south served to put great pressure on many companies which faced extremely serious problems and could ill afford even the limited increase.

I want to be fair to the Minister by saying that, during the Second Reading of the Bill on non-domestic rates which was before the House last year, he recognised that the Government had allowed the country to sink into a deep recession and that, as a consequence, the original transitional scheme was wholly inappropriate and therefore had to be modified. He told the House on 19 May:
"I know that the recession has created difficulties for many businesses and some of those that would have faced the largest increases this year have been particularly hard hit in the recession. The Government have therefore decided that their costs this year should not be worsened by any real increases in the business rates."—[Official Report, 19 May 1992; Vol. 208, c. 204]
The Minister's proposals to limit increases in rates to inflation will be welcomed by businesses throughout the country. Businesses look to that assistance to help them recover from the battering that they received from the recession. They also recognise that the net cost to the taxpayer will not be as has been suggested in the accompanying papers, for every business that is saved by the measure will continue to contribute rates and other taxes on which the Exchequer depends. The multiplier effect in local economies will help other companies.

The Minister's proposals might excite the ashes of John Maynard Keynes. However, to save the hon. Gentleman's blushes among his erstwhile friends and colleagues, I shall not press the point too far. I would hate to be responsible for any provocation that might compel the hon. Gentleman to renege on his conversion or to make his task of getting the Bill through another place more difficult, even if it receives the support of the House of Commons.

As the Minister knows all too well, some noble Lords and at least one right hon. and noble Lady in the other House currently delight in opposition to Maastricht but might re-focus to delight in opposition to the Non-Domestic Rating (No. 2) Bill. I am sure that the business community, the Government and the Opposition would not want to incite such opposition to the Bill.

Another worrying impact of the recession is the general and projected decline in business rate revenue. That partly addresses the point raised by the hon. Member for Bromsgrove (Mr. Thomason). The aggregate business rate revenue fell from £12·4 billion in 1991–92 to £12·3 billion in 1992–93. In 1993–94, according to the Government's figures, it will fall to 11·6 billion. Does the Minister agree that that has serious consequences for Government revenues in general?

Does the Minister acknowledge that, if local authority resources are to be maintained, one of several things must happen? The shortfall must be made up by central Government grant, by raising more revenue from council tax or by increasing the poundage beyond the rate of inflation to compensate for the impact of the narrower business tax base—that avenue might create additional problems—or the books will have to be squared by forcing a cut in local authority resources.

Does the Minister agree that there are, indeed, severe potential major problems ahead? Does he agree that, if there is to be stability in the business community, it is important that the Government state their future policy well in advance, so that business can plan accordingly?

In his statement on local authority finance to the House in November last year, the Secretary of State said that there would be no cuts in services if councils were run efficiently. The Minister and I discussed the matter at some length only a week last Friday in a debate in the House. There were arguments about whether services were cut by councils which were efficient or only by councils which were inefficient.

Setting aside that argument, I said in that debate, and I repeat today, that cuts were made by councils in many parts of the country, and severe cuts were made by some Conservative authorities. Even if the Minister has been unable to meet his stated policy this year, can he give us some assurances for the future?

Clause 2 makes similar arrangements to those last year, to ensure that the rates pool does not suffer from the decision to forgo the extra increases on properties suffering from the revaluations. So we have made our position clear. The rates pool will be compensated through that mechanism. But is the hon. Gentleman saying that it is Labour party policy not only to support that compensation but to urge higher real rates increases for businesses in order to allow higher local authority expenditure? That would be interesting, and the House should know.

It is always interesting to be questioned about Labour party policy. I do not intend to detain the House all afternoon, but I shall mention Labour party policy later, and I shall consider the local determination of rates—a method which, as I shall demonstrate, is supported by some Conservative Members.

The basic issue is what the Government's policy will be if cuts are made. Can the Minister assure the House that the Government will maintain the real level of local authority expenditure as a proportion of our gross domestic product? If so, will he assure the House that, if business rate revenue continues to fall, as the Government's own figures predict, the Government will increase their subventions to local authorities in one way or another to compensate for that shortfall?

If the Minister cannot give that assurance, is he prepared to commit himself to making that argument to the Chancellor, with a view to a relevant announcement in the joint Budget and expenditure statement in the autumn? Will he stress to the Chancellor the need to maintain the real level of local authority resources?

If there is a shortfall as a result of the existing way in which revenue is gained and as a result of a fall in business rate revenue because of the recession, will the Minister make proposals to allow the Government to compensate for any subsequent losses?

On the question of the transitional arrangements covering business rate increases, will the Minister give a commitment that there will be no sudden elimination of the limitation on increases? Does he accept that, if that were to happen, many companies, especially in the south, would face a sharp hike in their rates?

If the Minister accepts the case for a stable and predictable business rate, which is especially important to the small business community, is he prepared to say how the 1995 revaluation in the business rate will be approached? The small business community considers such stability to be crucial to its economy, and I hope that the Minister will accept the strength of its argument, which is frequently presented to politicians and others, and rightly so.

I hope that the Minister will recognise—if he does not, his officials certainly will—that, even if the transitional arrangements had been allowed to work through, about 160,000 businesses would still have had the increase in their rates deferred until the end of 1994–95. The Association of Metropolitan Authorities estimates that, following the two-year freeze in real increases, which the Labour party supports, about 350,000 businesses will not even pay full rates under the 1990 revaluation when the new 1995 revaluation comes into force. The London Chamber of Commerce and Industry has stressed that point, and noted:
"The Uniform Business Rate still presents enormous problems for London businesses, particularly when the new valuations are brought in."
Can the Minister tell us whether there will be transitional arrangements after 1995? Are the Government prepared to contribute additional funds to the national business rate pool to assist businesses that face sharp increases? If transitional arrangements are intended after 1995—this relates to what I said in answer to the hon. Member for Bromsgrove—will they be based on the actual rate payments made under the various schemes in 1994–95 or will they be made on the basis of what the bills would have been had the full effects of the 1990 revaluation worked through the system?

That also relates to the point that the Minister tempted me to discuss when he intervened, and what was said by his hon. Friend the Member for Devizes (Mr. Ancram), who is sitting to the rear and left of the Minister—perhaps that hon. Gentleman is to the left of the Minister in all senses: he certainly used to be when he was on the other side of the border.

Is the Minister prepared to review the system? Is he prepared to consider giving local councils full responsibility for setting the business rate? Over the past two or three years, it has sometimes been suggested that anyone making such a proposition must be off his head and would not receive the support of the business community. But that is not really what the business community believes. It recognises that there is considerable advantage in. the business rate being determined by local councils.

I do not want to detain the House for too long, but I have quotes from two representative business organisations. I do not necessarily concur with their views on other matters, but I think that they speak much sense on this issue. In its recent submission on local government affairs, the Institute of Directors said:
"We consider that on balance there is more to be gained than lost by reverting to non-domestic rates being determined by the individual local authorities".
In its submission on local authority policy, the London Chamber of Commerce and Industry states:
"The Chamber would like to see a return to local revenue raising and accountability for at least 50 per cent. of all local government expenditure. This could be done if both the council tax and business rate were controlled locally. The voice of business could then be heard, and in a real sense accountability could be reintroduced … Changes along those lines would ensure that locally raised rates were spent in the areas of need, and reflect the local economy … the Chamber strongly recommends that the Government includes a fundamental reassessment of the present arrangements as part of its overall view of local government finance."
It is not only Opposition Members who subscribe to the cause of determining rates at local level. Conservative Members who are closely associated with such organisations make the same submissions, and many in the business community have made it clear that they do not want to be determined by central Government, but want to allow reasonable local discretion.

Does the Minister agree that it is advantageous to allow local councils to make decisions, as they know more about their business community, and they know how much the business community can afford to pay in rates? It would be extremely stupid of them not to take that into account when setting the rates. It would be counter-productive in economic terms, as, if they made the rates too high, companies would run into difficulties, which would produce a lower net revenue. That would be a pointless exercise, and local government would be stupid to make such a mistake—indeed, it is not doing so.

Not long ago, the Minister was praising the way in which local government approached many issues. He has done so at political conferences, in press releases and elsewhere. Some of us have sometimes been tempted to question the authenticity of his apparent conversion to local government. Setting that aside, the Minister—and, indeed, the Prime Minister—have made the case for local government.

The Opposition support the measure, but would it not be wise to consider the longer term to discover whether there are better and more flexible ways of determining business rates, so that local communities and local business needs can be taken into account? The London Chamber of Commerce and Industry also referred to democracy. If local democracy is to mean anything, local people must have the ability and right to determine the level of services they want, and how much the business community should contribute to them.

It is clear that the Government are intent on pressing on with seemingly endless changes in the rules governing local authorities. It is no surprise to me that the business community is still subject to the unstable business rate levels caused by the Local Government Finance Act 1988. It is also clear that the House will face further requests to support further legislation to change the rules relating to the business rate.

I am clear that a return to the local determination of business rate is a more democratic policy and will, in the long term, reduce the involvement of the House in such matters. But until then, business will need assistance in shielding itself from severe hikes in business rates. If the Bill gives a measure of support, it has our general approval.

4.15 pm

I had not intended to participate in the debate until I heard the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) say that Opposition Members intended to support the Bill. I was immediately filled with suspicion, bearing in mind their long history of changing policies, but always opposing the present rating system for businesses. I was minded to intervene on hearing that change of tack emerging from the Opposition.

The hon. Member for Newcastle upon Tyne, North referred to the former Secretary of State for the Environment, Nicholas Ridley, and compared the differences between the rates charged in different parts of the country and the adjustments that would take place between north and south. Perhaps the hon. Gentleman forgot the horror that many business people felt when they saw their rates bills before the new legislation was introduced.

Perhaps the hon. Gentleman forgot, for example, that in Conservative-controlled Kensington and Chelsea, the rates for a business similar to one in Labour-controlled Sheffield would have been 117p instead of 347p in the pound. There was by no means a level playing field. A considerable additional burden was placed on businesses in a Labour-controlled authority such as Sheffield compared with businesses in Kensington and Chelsea and that situation could be replicated throughout the country. There was a wide variety of business rates.

The reason for that was the old valuation. The difference of two, three or even four times the amount of rates in the pound charged was related not to the ability of a business to make payments in relation to its turnover or profit. It followed that there was gross unfairness between businesses in different parts of the country as to what they were paying in local authority business rates and the amount that they were reasonably able to pay as a proportion of their gross profit. The issue had to be resolved.

Labour Members have said in the past that they wished to introduce a form of property tax and that they did not want the sort of measure that is now before the House. They said that their new property tax would be based on capital values and would be handed over for local government to determine levels of payment. For many years, as a former chairman of the Association of District Councils, I defended the role of local government and viewed with concern the removal of its right to determine business rates. But I concede that the change, made necessary by the wide discrepancies to which I referred, has been a success.

Under the old system, in many Labour-controlled authorities the majority of ratepayers were in receipt of benefits, which meant that they were cushioned from the charge, so the business proportion of the community bore a much heavier part of the rate charge. Would the Labour party advocate a return to that system?

The Liberals suggest that we could overcome the problem not by adopting the type of measure that is before the House, but by introducing site value taxation. How would that work? That question cannot adequately be answered because site value taxation is a totally unworkable proposition. For example, take a corner sweet shop and a large tower block adjacent to it, value the site of those two units, which per square foot might be identical, and charge a rate based on that site value. The little corner shop might be occupying an old building of limited capital value in total, whereas the office block might be a substantial and expensive block. But under the Liberal scheme they would both pay an identical amount of business rates on a square foot basis.

That is nonsense. It bears no relationship to ability to pay or to the use of the land and it often bears no relationship to the potential use of the land. The corner sweet shop may be occupied by a lessee who cannot redevelop the land and thereby release the capital values to justify the payment of a higher business rate.

It follows that there is no easy solution to the problem of business rates. There is no quick answer to the problem of how businesses should contribute, justly and equitably, to the costs of the local community. We need to find a fair and reasonable solution. The one before us is the best to date.

I am concerned that the Labour party's proposals will go back to the bad old days of greatly varying charges according to the accident of a local authority's political control. The hon. Member for Newcastle upon Tyne, North quoted with approbation various business organisations which had said that they wanted to participate in local government and saw the payment of locally based taxes as the answer. I question that because there is no connection between the charge and elections. There is no proper accountability if it is not electorally based.

A business man or woman may have business premises in one local authority, but be a council tax payer in a different authority, so the local authority in which his business is based will not be democratically accountable to him or her. The proposal to charge a business rate on their premises gives them no say or opportunity to participate in the decision making of the council of the authority in which their business premises are situated. That is a grave weakness of the Labour party's present position.

I welcome any proposition that will allow businesses to participate in local government. That must be a way ahead. But I am worried that democratic accountability may no longer be maintained through the ballot box. If the hon. Member for Newcastle upon Tyne, North was proposing that business people had some business vote and that councillors received their franchise by virtue of the business rate, that might be an argument to be listened to, if not in the end supported. But he has not pursued that to its proper conclusion.

I am therefore left with concern that some authorities that have clearly shown themselves to be anti-business would use any new proposal to weaken the economic strength of businesses within their community.

It is true that some in the Labour party have belatedly appreciated the importance of a thriving business community. Sadly, that is not always reflected on Labour benches in council chambers throughout the country. A movement away from the present system must therefore be undertaken with great care.

I started by describing the important link between the rate paid by businesses in different parts of the country. I mentioned in an earlier intervention that the 1995 revaluation was not a factor that should be taken into account in assessing to any great degree the levels of business rates. We had to assume that there would be no substantial difference between the 1990 and 1995 values put on properties owing to stagnant rent levels.

There is of course the question of how much the Government should properly contribute to local government expenses by virtue of the lower yield that that will produce from business premises. It would be of assistance to those in local government if, in replying to the debate, or, more appropriately, on some future occasion after consultation, my hon. Friend the Minister could let us know the Government's long-term views on creating a balance between the yield from the council tax, grant and the business rate in supporting local government services.

There is no doubt that the yield from the council tax is excessively small as a proportion of local government income. Therefore, the gearing can create distortions and the element of democratic accountability to which I referred earlier may be weakened when such a large part of the total local government income is generated by resources outside those determined by people elected to their council. However, those are wide issues and perhaps it would not be appropriate for me to spend long on them this afternoon, although there may be some who would prefer it if I did.

In joining colleagues in all parts of the House in supporting this measure, I hope that in future the Opposition will take a more realistic and fair approach to businesses and their relationship with local government. We commend the Government for once again protecting the interests of businesses this year at a time of critical importance to them. I trust that the measure will receive universal support.

4.26 pm

I, too, am glad to welcome the measure, but I am particularly glad to welcome the terms in which the Minister introduced it. Unlike some of the cuckoos of spring from whom we have heard so much in the past 24 hours, who have been bawling the fact the whole economy is now on the road to recovery, the Minister was frank enough to say that a full resumption of UBR increases would be premature. He made it quite clear that, as far as the universal business rate and its impact on businesses were concerned, recovery has not taken place, is not taking place and is not likely to take place in the near future. I welcome the more realistic, if slightly more pessimistic, way in which the Minister introduced the measure.

This is our annual occasion to take stock of where the uniform business rate has led us and I shall touch on three aspects, the first of which is accountability. That was mentioned by the hon. Member for Bromsgrove (Mr. Thomason), who was a notable leader of the Association of District Councils.

I recall a criticism of that body, the Association of County Councils and the Association of Metropolitan Authorities at the time of the introduction of the non-domestic rate, the uniform business rate and the poll tax in 1990 in the interests of accountability. It was claimed that the link to the electorate was destroyed because so much of the decision-making was centralised in London and so little was left to the council chambers of which the hon. Gentleman was such a spendid ornament. That argument must bring us to the test of how the average elector, an individual or from a business, actually influences the UBR for his or her area.

Next week there is to be an election in all the shire counties of England and Wales. Can the elector, by putting his cross against a particular candidate, influence the level of UBR?

Of course not. He cannot make any difference to the way in which that particular council approaches the problem of raising revenue from the business community. The only thing that he can do next week—the Government may regret this—is to demonstrate his contempt for that inelastic system by voting against the governing party. If the elector considers that the system is unfair or is being misused, that is the only way in which the elector can fight back.

The system was introduced because of the ludicrous antics of a small minority of loony left Labour councils. The idea was that businesses needed to be protected against a minority elected under the first-past-the-post system, which then abused their majority position.

The accident of political control mentioned by the hon. Member for Bromsgrove (Mr. Thomason) is entirely the product of low turnout and an inefficient, non-proportional election system, but to use the UBR and centralised control as a way of getting back at the vast majority of conscientious local authorities which are run by Conservatives, Liberal Democrats, or the saner parts of the Labour party—or a combination of them—seems an extraordinary way of using a sledgehammer to crack a particularly cracked nut.

Does the hon. Gentleman agree that a vote for his party is a vote for site value rating, which means slaughtering our high street greengrocers, bakers and butchers by forcing them out of business by inappropriately high levels of tax, because their sites would be more valuable for other uses? What does the hon. Gentleman have to say about that? Does he agree that our proposals are much better for the business community, which is why people will vote Conservative?

That is patent nonsense, as the Minister knows full well. I wish that it were possible next week to change the Government of the day, but we shall not be able to do that. I do not know whether there is an election in the Minister's area next week.

There will be in my own. As an elector, I shall have a clear choice between electing representatives of the three main parties. One party's candidate supports the status quo, as represented by the measure before us, but we have no way of amending, altering ameliorating or changing the application of that policy in our area. My party is prepared to fight for more local accountability —not just for businesses but for the whole community. I will not be drawn into the argument about site value taxation. The hon. Member for Bromsgrove—who has left the Chamber—knows full well that he was talking nonsense when he said it was impossible and impracticable. He denied not just the evidence of professional local authority valuers who have made sure that it would be possible to introduce the scheme, but the experience of many countries, including New Zealand and parts of the United States, which operate it most effectively. It is nonsense to suggest that the system would have the effect he claimed.

If the Liberal Democratic party is interested only in local issues, why does its manifesto for the county elections devote a great deal of time and energy to making the case for proportional representation and local income tax—which are clearly national issues that the hon. Gentleman's party is trying to influence? Why will not he come clean about the Liberal Democrats' proposals for small businesses which would be deeply damaging to many small firms that provide excellent services in the high streets of this country?

If I launched forth on a restatement of our manifesto, I would be called to order. We have made it clear on successive occasions in House and outside that the main basis for local authority funding at local level should be based on a local income tax.

We do not believe that the current system—be it the council tax, or the wholly discredited poll tax that the Minister and his colleagues foisted on the country on a minority vote—is appropriate. Our system would be much more appropriate. In addition, land value taxation is a much more effective system for identifying the benefit given to the individual, commercial ratepayer by the council services and planning consents given. If there is no outstanding planning consent giving an enhanced value to a particular property, it does not release that value and engage the land value taxation at a higher level. It is nonsense to suggest that the system would squeeze out small shopkeepers.

I also wish to refer to the anomalies in the present system. I am especially concerned with the holiday industry, having some responsibilities for the matter in the House and in my constituency. It is extraordinary that, since the introduction of the uniform business rate, the inflexibility of the system has meant that hotels and guest houses which have been pushed by the recession into reducing their months of opening find that there is no change in their rate burden. If an hotel in Newquay was operating on a 12-month basis in 1988, employing people and letting its rooms all the year round, but has now, as a result of the recession, had to cut back and close for perhaps eight months of the year, such is the absurdity and inflexibility of the UBR system that the hotelier still pays the rate for the full 12 months' opening.

The argument, in case the Minister thinks that I have not heard it, goes thus. Because the hotelier is in theory sitting beside his telephone in January waiting for a booking to be made for July, August or September, it is suggested that the whole hotel is therefore in business and must still be rated at the full valuation set in 1988 and introduced in 1990. It will be obvious that in such circumstances the relationship to his ability to pay—his profitability, turnover or whatever may be the test—is absolutely nil. There is no connection whatever.

The hotelier's attempts to appeal against the system, based on experience in our area, seem doomed to failure. The only way in which some change may be made is if there is a material change of business. I know of a case in my constituency of someone who has had a tea room in the front room and, in days gone by, was able to operate it every week of the year has now decided that, because of the recession and the consequent reduction in the disposable income of visitors, the room will be used for domestic purposes during the winter months. There is then a possibility of some form of appeal. Otherwise, the inflexibility of the system is extraordinary.

Another anomaly has been brought to our attention by the Confederation of British Industry, usually very supportive of Government policy. It points out in its current brief that the setting of half rates on empty shops and offices in England and Wales is absurd. It says:
"The rationale behind this practice is flawed, going against the principle that rates are a tax on beneficial occupation. Moreover, in current market conditions its application is penal. Many businesses, in all sectors, are facing empty rates bills amounting to about £450 million in addition to other onerous costs of holding properties which they are trying to rent or sell, hitherto with little success."
Another cause for serious concern across all parties, as far as I know, is the arrangements for hardship relief. Last week the Federation of Small Businesses, whose policy chairman hails from Torquay in the south-west of England, pointed out that huge numbers of smaller businesses have been badly affected by the uniform business rates that they have been called upon to pay and that the response of local authorities has been exceedingly patchy, to say the least, because the system is not fully funded by the Exchequer, is not fully understood and, as a result, is not fully operational.

The Minister will agree, I think, that section 49, on hardship relief, is not being adequately used by local authorities largely because, in very constrained times, when all their resources are restricted, even the limited contribution that they must make—which they must get from their council tax payers or by some other means—is considerable. As hon. Members know,
"remission … on grounds of hardship should be the exception rather than the rule".
I quote from the Department's "Non-domestic Rates Discretionary Rate Relief- practice note on the subject. As hon. Members also know, not only must the individual ratepayer prove that he is suffering hardship; but if the uniform business rate were imposed in all its rigour, the wider community—council tax payers in the area—would also suffer hardship. The example often quoted is that of a post office which, if the uniform business rate were imposed to the full extent, would disappear—and perhaps the only shop would go with it—and the whole community around it would suffer. That is a valid case, and I will come back to it in a moment.

At present, the hardship restrictions are being so narrowly drawn that many local councils are not using them at all. I note that authorities of all political colours include both the best, at the top of the league, and the worst, at the bottom. This is not a party political point and I hope that the Minister will look sympathetically at how the hardship relief can be more effectively defined so that all parties in local government can use it to better effect.

The Minister referred to appeals. That is my next "A". The Department was able to give my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) some figures. It is a staggering fact that there are nearly half a million outstanding uniform business rate appeals. I was pleased to hear the Minister say in his introduction that he is determined to remove the backlog by the end of this financial year. I am sure that many hon. Members will want to hold him to that.

The appeals system is extraordinarily cumbersome and very narrowly defined. I do not know if I am alone in the House—I suspect that I am this evening—but, just before the general election, I fought an appeal, not on behalf of a constituent but on behalf of a postmistress who ran a tiny post office at Trekenner, which is in Lezant, just outside my constituency. The experience of that appeal is one that I will never forget. I have never been subjected to such an extraordinary surrealist exchange of non-information.

Let me illustrate it for the benefit of the House. The valuation officer produced a splendid tabulation of a number of comparative premises—post offices and shops from different parts of Cornwall—and it was on the basis of those calculations that he was proposing the entry in the rating list of some £300 for one room. The room had previously been the dining room of the postmistress and her husband. They had decided, in the interests of security, that it was no longer sufficient to use the dining room table and that, for obvious reasons, they should have some form of protection. They therefore decided to erect a screen and a counter, although the room still had in it the deep freeze, their records of dog and sheep breeding, and parish council minutes and other information. It was still, to all intents and purposes, part of the domestic premises.

Because there was a screen that could not be taken down at night, and therefore they could no longer have a dinner party there even if they wanted to, it was suggested by the valuation officers that that one room was effectively a business premise.

Our first argument that a post office which opened only for limited hours was hardly a business, but rather a social service, was kicked out by the tribunal—not because it was unsympathetic, but because of the inflexibility of the system. Our second argument was that, despite the position of the counter, the premises were still largely for domestic use and could be used for domestic purposes when the post office was not open. That, too, was thrown out.

I am shortening the long proceedings in the interests of brevity—I know that many Conservative Members wish to speak. The final session of the tribunal hearing was devoted to the actual figure to be applied to the premises and a schedule of different figures for similar premises was produced in evidence. I noticed in one column of the criteria to be used the magic initials "SPOT". I am not a professional valuer or an advocate—I am a mere politician —and I wondered whether I should draw attention to this form of description. I imagined that it meant "scientific and professional objective test", or some such.

I screwed up my courage and said to the chairman of the tribunal, "I do not understand what SPOT means. No doubt you and the other members of the tribunal fully understand." The chairman took counsel from his clerk, as was appropriate, and from other members, and they said, "Mr. Tyler, we have to confess that we do not know either." After a great deal of humming and ha-ing, the valuation officer admitted that SPOT meant that he had made it up on the spot. Nevertheless, I obtained a reduction.

The basis of the valuation and the inadequacy of the appeal system causing tremendous anxiety, confusion and anger in the business community. The fact that it is still taking so long to get a hearing and an answer—despite the Minister's assurances—makes the position worse.

To show that I am by no means parochial, I shall refer to an example from another part of the country, arid go from north Cornwall to Newbury. It is a random example, but it may be of interest to members of other parties.

Newbury was an area of considerable economic success, but small businesses in Berkshire are suffering, as in many other parts of the country, from the delayed reaction to the effects of the recession. As a result, registered unemployment has risen from 861 in February 1990 to 4,033 in February 1993. It is clear from the continuing business failures in the area that a large number of newly unemployed come from the small business sector. We cannot be sure of the exact numbers of small businessess that are now failing in the Newbury constituency, but the local chamber of commerce reports no let-up whatsoever in the recession in the past few weeks. Its monitoring suggests that 16 local firms went under in February this year, compared with an average of 10.5 in 1992.

Councils throughout the country have been trying to mitigate the worst effects of the uniform business rate and I am delighted to note that Newbury district council—which, like my own in north Cornwall, has a strong Liberal Democrat presence—has used the hardship relief to the full. But how much more could be done if it were more effective than it is at present?

We all look forward to the revaluation and the effect that it will have on the 1995 figures, but unless the three As— accountability, anomalies and the appeals system—are addressed, we may end up with just a revamp of the present system. Meanwhile, the lack of local flexibility, the lack of willingness to tackle the sort of anomalies I have described and the continued lack of realistic assessments in the valuation and appeals procedure are doing great damage to small businesses throughout the country.

4.48 pm

I have taken on board much of what hon. Members on both sides of the House have said about how the business man should be represented in local authorities. In the mid-1960s, there was a local government vote for business men. It seemed to work very well and I have no criticism of it. I fought a ward in which local business men voted. I was not elected. Nevertheless, they exercised their democratic right to pay rates and at the same time influence the local authority. That influenced the local authority in many ways, although it did not disregard local business men completely.

It is a totally different story now. My Labour-controlled local authority definitely disregards local business men. It has many schemes afoot. Behind closed doors, it formulates economic and planning policies without consulting the local business hierarchy. For years, the Southampton chamber of commerce has said that it would like more representation in the civic centre, but it just does not get it. However, there will come a day when business men rise up and say, "If we are expected to pay a considerable uniform business rate, we must have a voice in what is being planned by the local authority."

As we know, the introduction of the uniform business rate came as an extreme shock to the business community. It came in at a very high level. Business men were shaken to the core. It was introduced halfway through the recession, so it was impossible for them to find the additional money. I am pleased that the Chancellor of the Exchequer has listened to the pleas of various chambers of commerce, the Confederation of British Industry and other bodies such as the Institute of Directors, with the result that, for the second year running, the uniform business rate has not been increased.

That is very satisfactory for business men who run small businesses. I am not so concerned about the multinationals that can open or close factories at the stroke of a pen on paper, but I am very concerned about the man who runs the local greengrocery or newspaper business. To him, the uniform business rate is another heavy burden of taxation.

The Chancellor in his wisdom has relieved the burden on such businesses in England by £329 million. Taken together with the help in last year's Budget, nearly £1·8 billion has been provided to help to reduce the bills of business ratepayers. Much of the help, I am pleased to say, is going to businesses in the south of England, which has been hit particularly hard by the recession, for unemployment in the south is well over 10 per cent.

Under the Bill and the transitional arrangements, the bills of 530,000 properties will rise by no more than 3·5 per cent. in 1993–94. When the Government decided to grasp the nettle, they found that the bone of contention was that the old rating system was unreliable. Councils used the business rate to subsidise increased spending, at no political cost to themselves, and obscured from voters the true cost of local authority expenditure.

Business rates were also unfair. Neighbouring properties with equivalent rating valuations but in different authorities, found that their business rate bills were not the same. That led to the complete distortion of trading competition. Business rates increased dramatically year by year, often at short notice. Notice amounted to only a few weeks and the business rate bore no relationship to the services provided.

I hate to say this, but Labour councils that set high business rates drove businesses and jobs from areas that could not afford to lose them. I have figures for Labour-controlled councils, but we do not want to get involved in that debate, because in this one we ought to congratulate the Government on ensuring that the uniform business rate is to be held at a level that businesses can afford.

Businesses in England will, overall, pay £800 million less in 1993–94 than they would have paid if business rates had risen in line with council spending, as they did before the introduction of the uniform business rate. I hope that I have got that point over to the media. In 1990–91, savings amounting to £1 billion were made; in 1991–92 they amounted to £850 million. If business rates had risen in line with council spending—I must admit that my council is probably one of the worst councils to which to refer business bills since 1990 would have amounted to more than £2·5 billion extra. Business rates nationally rose by some 37·4 per cent., in real terms.

Market rents and rateable values are inextricably linked. No one can get away with saying, "I can pay a high uniform business rate and a low rent." It is amusing to note that the Southampton, Test Conservative association headquarters paid far less in rent than it did in uniform business rate. That was the position at the beginning, but the two are now beginning to square up.

As we have heard several times during the debate, local authorities have the power to reduce or remit rates when businesses face hardship but, dare I say it, some councils, or even individual councillors, have no great liking for business. They exploit the poor. They take money out of the pockets of those who earn and put it into their own. The very smell of business makes them adopt a very poor attitude towards it. We must ensure that local councils implement the hardship provisions to the full.

Today we have heard something about the policy of the Liberal Democrats. I do not know why, but there is an enormous burst of Liberal Democrat propaganda at the moment. I cannot understand it. The Liberal Democrats virtually go to sleep for four years between each general election, but they are wide awake again now. Site value rating was a nonsense. It was proved categorically, even to a Liberal Democrat council, that the Institute of Fiscal Studies and the Institute of Revenues, Rating and Valuation have explicitly rejected site value rating as unworkable and have warned that,
"as with rental revaluation, there may be little market information on site values in some areas."
If a tobacconist's shop has a rather large garden, one can say with certainty that its site value is not the same as that of a factory that has a rather large garden alongside.

The expansion of a business depends on the capital that the business can expend. A small business man cannot explain to his bank manager that, if he would only give him another £250,000, he could develop the land on the site, so the site value rating system is particularly unworkable and, after a short time, would be regarded as completely unfair.

I have had strong dialogue with my local chamber of commerce, which is very aware that the difference between profit and loss could be in the rating system itself. It is not possible for businesses always to make profits of several hundred per cent. or, indeed, anything like that amount. Many small businesses could be teetering on the edge of bankruptcy simply because of high uniform business rates.

We have made a good stab at solving the problem. The Chancellor has made an excellent effort to control it, and it must be controlled. Local authorities must use the hardship provisions available under their mandate and all councils, whether Labour, Liberal Democrat or Conservative, must appreciate the fact that chambers of commerce and business men should be involved in all dialogue about plans whether for the city centre or for the transportation infrastructure.

The proposals are excellent, and I shall have no hesitation in voting for them.

5.1 pm

This is an appropriate debate for today, as the headlines in so many newspapers are telling us that the recession is over. Indeed, the figures for sales, output, productivity and growth all point in that direction. Unemployment is also down, not only in my constituency of Erewash but in Newbury.

Has my hon. Friend had the opportunity to read the Newbury declaration of the right hon. Member for Yeovil (Mr. Ashdown) in which he states that the Liberal Democrats wish for honesty in politics, among other things? I am not sure whether the hon. Member for North Cornwall (Mr. Tyler) deliberately sought to mislead the House or whether he merely made a mistake. In his catalogue of gloom and doom, which was aimed not at the Chamber but down the road in Berkshire and Newbury, he quoted an unemployment figure of 4,033. It was typical of the Liberal Democrats because that was the figure for February. March's figures show a fall in unemployment of 77 to 3,956 in Newbury, which is a bit of good news that the hon. Gentleman was not prepared to share with the House.

My hon. Friend makes an excellent point, and I hope that the hon. Member for North Cornwall (Mr. Tyler) will withdraw his remark.

I am sorry that the hon. Lady has been so misled by the hon. Member for Chelmsford (Mr. Burns). The change from March 1990 to March 1993 is almost precisely the same figure as that to which he referred, so my argument stands. If the hon. Gentleman makes the comparison, he will see that I am right. There has been a substantial increase in the past three years. The figure may have marginally decreased over the past month but, as Ministers keep telling us, one month does not make a whole year.

The hon. Member for North Cornwall has made it clear that he does not welcome a fall in unemployment, whereas my colleagues look forward to further falls in Newbury, Erewash and elsewhere.

In the east midlands, companies, institutions and organisations—be it the Confederation of British Industry, the chambers of commerce or the businesses themselves—have quietly been saying for some time that the recession is over. In my constituency, lace manufacturers, car component and iron pipe manufacturers, and the retail and housing sectors are all improving. They now have fuller order books and they are anticipating continuing improvements in the economy.

I listened carefully to the speech by the hon. Member for North Cornwall and I was sorry that he did not elaborate on his party's site valuation proposals. My hon. Friend the Member for Southampton, Test (Mr. Hill) made it clear why the hon. Gentleman had kept quiet. It is very important to consider those valuation proposals carefully because, under the Liberal party's system of site value rating, smaller businesses could be charged the same rate for a one-storey shop as a multinational corporation will be charged for an office block. If the same rate is charged for an economically under-utilised site such as a garage as for an office block, which the Liberals propose, it will create a strong incentive to overdevelop land. That is not what I would wish to see, and I suggest that the Liberal Democrats re-examine their proposals more closely.

I should like to consider UBR from another angle. I represent an area that has made substantial gains as a consequence of the introduction of the uniform business rate. Companies in the midlands and the north were very highly rated for many years because of the way in which their local authorities chose to levy excessive rates on local businesses. Often, companies in the midlands and the north despaired of anything being done to prevent such excessive rates being levied, and when the late Lord Ridley introduced the uniform business rate, they welcomed the fact that it would enable them to expand in the historically more depressed parts of the country. Last year, there were accelerated gains for the gainers, and companies in my constituency and across the east midlands welcomed the changes.

I have a personal interest in these matters because of the many years I spent working in industry. I have a further interest because I come from the north and now represent a constituency there. It is not an exaggeration to say that, for many years, businesses in that area were badly affected by high rates or that companies were leaving and taking with them the jobs that they would otherwise have created.

My hon. Friend the Member for Bromsgrove (Mr. Thomason) gave some examples of the variations in rates between one authority and another. However, the problem was not only the rates themselves but the fear of what would happen next year. Local authorities would decide how much they wanted to spend and, once they had decided that, would levy a high rate, much of the burden of which would fall heavily on the business community. That meant that the business community was unable to plan ahead properly. Of course, the high-rated areas were Labour controlled, so the move to the uniform business rate was absolutely essential.

I was very worried by the proposal by the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) that the business rate should once again become the responsibility of local authorities. He presented his case in a moderate, reasonable and restrained manner, but many of his colleagues in local government are not reasonable or restrained individuals. Those people, whose actions penalised companies, cannot be allowed to regain control of the business rate and therefore over the economy of the local area.

The hon. Member for North Cornwall—[HON. MEMBERS "Where is he?"]—has sadly seen fit to leave the Chamber rather than listen to the debate on the rating system proposed by his party.

Does my hon. Friend accept that, given the importance of the Bill and the impact that it will have on businesses, it is rather strange that the Liberals seem to care so little that they cannot be bothered to be in the Chamber for the whole debate?

My hon. Friend makes a good point. The Liberals' absence shows the contempt with which they treat business.

The hon. Member for North Cornwall said that all local authorities should not be condemned because of the failings of a few. He has now returned to the Chamber, and I tell him that it was not just a few local authorities that failed. Too many failed their areas by levying too high a rate. In any event, what would the hon. Gentleman's proposals, or those of the Labour party, do for companies in areas where the local authorities continue to penalise companies in that way? They would leave companies to suffer the sort of interference and penalty through high rates, which would prevent businesses from expanding. It is essential that the business rate be kept independent of local authorities.

I shall examine briefly local authority expenditure in my area.

Is the hon. Lady saying that the Conservative councillors elected next week—if any are elected—are not to be trusted to decide the level of the business rate in their areas?

The hon. Gentleman has deliberately chosen to mislead the House by misrepresenting my argument. I shall return to the subject of local authority expenditure in my area.

If I may expand my argument for a moment, I shall give way later.

What exercises my constituents and other residents of the county is their concern for the way in which the county council spends money on education or; in some parts it fails to do so. They are also worried about the way in which the local police force has been hampered in the excellent job that it does by the county council's failure to give it the funds that it requires. That is what is happening now, and that is why business rates should not be put back into local authorities' hands.

There are many competent local authorities in this country but, sadly, there have been too many excesses and too much mismanagement.

Does my hon. Friend agree that the county council's policy of paying for nuclear-free zones is of no advantage to business men in Lancashire?

My hon. Friend makes an excellent point. We all know how well she speaks for Lancashire, how supportive she is of local people in that county, and how well she exposes the failings of Lancashire county council, as she has just done.

In an ideal world, everyone would have a say in local government and in how money raised locally should be spent. However, we all know that that is not the reality. In practice there are low turn-outs at election time and many areas have been held year after year in the grip of the same group of councillors. I do not believe that the House could seriously propose to leave business to its fate under local authorities, as the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) has suggested.

I do not think that there is any such thing as welcome taxation. Surely no one would put up his hand and ask to be taxed more heavily. But in local taxation as in national taxation, there has to be fairness, and there is fairness in the uniform business rate, which has been seen across the midlands and the north of England. If one talks to the business community and to business organisations, as my hon. Friends and I do, they tell us that their overheads must be kept down. They say that interest rates, too, must be kept down, and the Chancellor of the Exchequer has achieved that over the past few months. Business men also want their rates bills to be frozen, which is what the Bill proposes.

Does the hon. Lady agree that those same business men are the first to criticise, vocally and in the press, the standards of the children coming through our education system? Are they not the first to say that those standards should be improved? Yet the same business men who criticise the education system are those who tell the hon. Lady that although they want standards to rise, not only will they not contribute more, but they wish to contribute less.

The hon. Gentleman is correct to say that the business community criticises education standards; that is why it is so important that tests take place this summer in our schools for seven-year-olds such as my son and for 14-year-olds. I hope that the hon. Gentleman will support his business community and join my hon. Friends and myself in urging all the teaching unions to forget about the boycott and to get on with testing those children. However, we had the education debate last week, so I must return to business rates.

It is stability in the rating system that is so important to businesses. That gives them the opportunity to plan for their future. It is important to ensure that there are no big increases, and no big changes year after year in companies' business rates. The UBR and the changes proposed today make an important contribution in that respect.

5.16 pm

I am pleased to be able to say that the Opposition will support the Government on the Bill, and I am pleased, too, that The Parliamentary Under-Secretary of State for the Environment, the hon. Member for Hornchurch (Mr. Squire), is present, as he was a year ago almost to the day, when we dealt with the Non-Domestic Rating Act. I suppose that this is his annual foray into matters Welsh. I shall not go too deeply into such matters, but I shall make one or two general points about what has occurred in this interesting if short debate.

My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), and the hon. Members for Southampton, Test (Mr. Hill) and for North Cornwall (Mr. Tyler) all, rightly, referred to the recession and to the fact that small businesses—and, indeed, other business —had been seriously affected by it over the past few years. The newspapers this morning all say something along the lines of, "Recession is over—official".

However, in Wales there are still some 50,000 young people unemployed, we have lost 30,000 manufacturing jobs, unemployment costs us £1·2 billion and there are 17 claimants chasing every job, and businesses have gone under at an alarming rate—there were 2,425 business failures recorded during 1992, which represents an increase of 26 per cent. on the 1991 figure, and there were 1,728 bankruptcies, which represents a 38 per cent. increase. I fancy that, if the journalists came to Wales and wrote headlines saying that the recession was over, the idea would be seen to be nonsense.

None the less, we welcome the Bill, as we welcomed last year's Non-Domestic Rating Act, because it will ease the burden on small businesses. But we must ponder the amount of money that will be made available. For example, the Government can now find £9 million this year and £5 million next year to make up the shortfall to local authorities. That contrasts significantly with the statements and debates that took place in the Chamber some months ago when we debated the revenue support grant settlement for Welsh local authorities.

The counties and districts in Wales agree that that was the worst settlement ever. There have been cuts in education, in social services, in the police force and in all the services that are vital to the business community—and vital too, of course, for inward investment.

The hon. Member for Erewash (Mrs. Knight)—[Interruption.] The name of her constituency is as difficult to pronounce as the name of my own. The hon. Lady mentioned stability. Businesses in Wales are yearning for stability in the local government system, yet stability is the very thing that we have not had in local government finance. In 1988, the Under-Secretary of State and I served on the Committee that considered the poll tax during its three-month passage through the House. We agreed then on the issues—as, in a sense, we agree today.

There have been enormous changes to local government finance in just a few years. The hon. Member for Bromsgrove (Mr. Thomason) referred to changes that my party might want to introduce in local government financial institutions. When we consider the huge change that occurred as a result of the fiasco of the poll tax, any change that we might bring about would pale into insignificance. Billions of pounds were squandered on having first to prop up the poll tax and then to replace it altogether.

My fear is that the local government financial system in Wales, and in Britain generally, is becoming discredited. In Wales especially, but also in England, one aspect is the so-called "gearing" effect. It means that local councils can do virtually nothing unless they increase their local taxes dramatically. That has distorted local government finance, and has meant that local authorities no longer have a proper revenue-raising function. In Wales, a 1 per cent. increase in expenditure means an increase of about 9 per cent. in the council tax.

Yesterday, for the first time ever in the Principality, the Secretary of State for Wales announced his ideas about which local authorities should be capped. Only one authority out of 45 in Wales has been capped and it is the authority of the Minister of State, Welsh Office. It is an authority that is not controlled by any one political party. The decision has meant that the whole subject of capping has been discredited in Wales, as has the fact that the Secretary of State is having to take Gwent county council to court over its budget. The whole thing is a sorry mess, and the sooner we get some stability in local government finance, the better for businesses and the better for our communities.

In many parts of the country, business rate arrears are high. Local authorities find it increasingly difficult to collect business rates. There is an increasing gap between business rate payers and council tax payers. In Gwent, for example, business rates over the past three years have increased by 1·6 per cent., whereas local council tax payers have had to face a 53 per cent. increase.

The chief question, which has exercised the minds of hon. Members who have contributed to this short debate, concerns the nature of the business rate and what we want it to be. It is not a local business rate; it is a national business tax. It bears no relation to the way in which rates used to operate, or to the way in which the council tax operates.

I believe that there is a vital link between local businesses and the local community, and that the link has been broken by the new business rate. All local authorities provide for businesses an educated work force, roads and infrastructure. In Wales, local authorities play an especially important role in economic development and inward investment. All my experience in 15 years as a member of a local authority was that local authorities and the business community saw great advantages in that direct link.

Large multinational companies in my own constituency agreed tremendously with what the local authorities were doing. They were very much involved in local authority matters, including the sponsorship of council activities. The sooner the link between business people and local authorities disappears, the worse it will be for democracy.

The business rate is no longer related to commercial activity or to a particular district. There may be a great steelworks or a massive factory in an area. It may provide employment, but it may also disturb the area. The fact that the business rate is now collected centrally in Cardiff or in London means not only that there is no link between business and the community, but that there is no link between commercial activity and the business rate.

The business rate should relate to the ability of business people to pay it. There should be a system of rebates related to the profitability of businesses with an annual turnover below a specific level. We are firmly of the view—

I have listened carefully to the hon. Gentleman speaking up for businesses. The Labour party speaking up for the interests of business is about as convincing as Herod being in charge of a nursery.

All I can do is describe my experience over many years, since local government organisation, of the relationship between my local authority, whether the county council or the district council, and the businesses in the area. I believe that the relationship has been healthy. That experience may not be repeated throughout the length and breadth of the country, but local government and local democracy are all about diversity. The great harm that has come from having a uniform business rate is that individual local authorities cannot determine their rate locally; they cannot set it, and they cannot collect it.

I am not the only person who makes that point. Sir John Banham, for example, said recently that the present system
"reflects neither the ability to pay nor the level and quality of the local services businesses receive."
He has a role to play in local government reorganisation in the months ahead.

Does the hon. Gentleman agree that it was this Government who introduced a consultative procedure on local authority budgets with businesses, and that that procedure was opposed by many in the Labour party?

Opposition comes to different things in different ways. The Under-Secretary of State was a firm opponent of the poll tax when it was introduced in 1988. The Government saw the error of their ways and rightly appointed the hon. Gentleman to be a very good Minister. There are differences in view on all these matters across the country.

As I said, it is healthy for a diversity of views to be held on these matters by local authorities in England and in Wales. That is what local accountability and local democracy are all about. Businesses play a vital role in our communities, and that is why we support the Bill.

The Secretary of State for Wales acknowledges that belief, because he appoints many business people to quangos in the Principality. The White Paper on Welsh local government reform is the only indicator of how the Government intend to develop their ideas on the future shape of local government. They propose a system of unitary local authorities which will be responsible for raising their own revenue.

When the Secretary of State for Wales reforms local government, he has a golden opportunity to set an example to the rest of the country, and to have another look at the system of local government finance. I am not saying that the Government must change the council tax —they will not—but there are changes to be made. The simplification of the grant system would be something that hon. Members on both sides and members of local authorities throughout Britain would welcome.

There is a case for the business rate to be examined, as my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) said, and to be brought back into the local community. That opportunity should not be wasted. I urge the Secretary of State for Wales and the Government generally to rethink the whole question of local government finance when the reforms are introduced.

We support the Bill, but we recognise that it is a short-term expedient. It does not answer all the problems that face the country and local government in terms of how to finance local government, and it does not explain what the relationship between businesses and local authorities should be. I hope that the Government will address those matters in the months ahead.

5.29 pm

It is a great pleasure to follow the hon. Member for Torfaen (Mr. Murphy). As he said, we have followed each other for several years both in our previous role as Back Benchers and as "Box and Cox", or whatever the phrase is. It is nice to do so. He raised points to which I shall refer in my speech, as have other hon. Members.

I shall start by reminding the House that the Bill will provide a further £350 million boost to businesses this year on top of the £1·25 billion package that was introduced last year. We calculate that it will ease rate bills for some 400,000 small business premises and 100,000 larger ones.

As with the changes we made last year, local authorities will not suffer from the reduction in non-domestic rate income brought about by the Bill. The Government are committed to refunding the national pool to the extent of the estimated loss. We will also allow local authorities to net off their reasonable costs of re-billing from their national non-domestic rate payments.

We will need a short period—about a month—after enactment to introduce regulations governing the adjustment of rate bills that have already been issued and to enable local authorities to recalculate their contributions to the non-domestic rating pool. We will bring the Act into force in parallel with those regulations. Once in force, the Act will have retrospective effect to 1 April and authorities will be required to give refunds to ratepayers who have overpaid instalments in the meantime.

The debate was interesting, and I shall refer to some of the earlier speeches. The first Opposition speaker, the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), highlighted some of the sad realities of the recent recession. There is no division between Conservative Members and Labour Members on that. The recession has had a terrible impact on a number of businesses and on many individuals.

In the context of the Bill, let us not forget—as some of my hon. Friends rightly reminded the House—that before the uniform business rate, many businesses were being hammered year after year by Labour councils up and down the country. The figures are clear. Between 1979–80 and 1989–90—the last year of the old system—locally set non-domestic poundages rose by 37·4 per cent. more than inflation on a compound basis nationally. Some of my hon. Friends who spoke today were councillors in opposition and saw that at first hand. My hon. Friend the Member for Erewash (Mrs. Knight) immediately comes to mind.

By replacing locally set non-domestic rate poundages with uniform national poundages which cannot increase faster than inflation and by pooling and redistributing the proceeds of the business rate on a per capita basis, it is no longer possible for authorities to increase expenditure, knowing that businesses will meet much of the extra cost.

I shall willingly give way to the hon. Gentleman when I have finished this point. Although he has just come in, we would not like to disappoint him. If the uniform business rate had not been introduced, businesses would have paid £842 million more in 1992–93 and £797 million more in 1993–94.

I shall simply make this point. It is the height of cheek and hypocrisy for Conservative Members and the Minister to blame Labour local authorities for increasing rates during the period to which he referred, when in fact it is a direct result of the Government's failure properly to fund local government. The Minister should tell us how much was lost to local government in rate support grant settlement over that period. Every year, your Government cut support for local government. When Labour and Conservative local authorities had to increase rates, it was a direct result of your Government's policy.

Order. It is the hon. Member's Government, not "your" Government or my Government.

Indeed, I am referring to the Minister's Government. How can the Minister use such cheek to imply that it was Labour local authorities' fault that rates increased during the period he quoted, when he knows that it was a direct result of his Government's failure properly to fund local government?

The hon. Gentleman was entertaining but not factually correct. I recommend that he go to the Library. He will find that the amount of support for local government during much of the period to which I referred increased rather than decreased. To help him a little more, I suggest that, if he looks under S for Sheffield, he will find a prime suspect in the area to which I was referring.

I refer the Minister to his figures about the savings to business as a result of the introduction of the business rate. Does he accept that those figures must be put in the context of a subsidy from central Government and taxpayers generally? During the debate on the Non-Domestic Rating Bill on 2 June 1992, the Minister for Local Government and Inner Cities made it clear that the cost to the central Exchequer of protecting the business community from the introduction of the national business rate was £1,250 million, which is almost greater than the figure that the Under-Secretary of State claimed was saved by the business community. What has happened is that, generally, the taxpayer has subsidised the business community. I do not necessarily disagree with that, but the figures must be put in that context.

That is an interesting interpretation. I think other hon. Members will agree that there is a significant difference between the amount of Exchequer support which we are debating now, and which we debated on an almost identical Bill last year—the hon. Gentleman quoted the correct figure—and the tendency, until recently, for a number of local authorities to let rip as far as the private sector was concerned. That is the context in which I am speaking.

Before I leave that aspect of the debate I shall refer to the democratic argument. I note that Labour Members want to revert to such a system and suggested that in some way it would bring greater accountability. Frankly, I do not accept that. My hon. Friend the Member for Southampton, Test (Mr. Hill) has said that there is no such thing as a business vote—nor is there any intention of introducing one. In the absence of such a vote, the concept of accountability as I understand it would be sadly lacking if such a proposal were entertained.

It is important to understand the point that we made earlier about the gearing effect. Having taken control of the business rate away from local authorities, the amount of money that is left for local authorities to control is limited. That distorts the local government finance system.

It is an arithmetical fact that there is a gearing effect in England, Wales and Scotland—I cannot deny that. That does not, in itself, deny the advantages which the concept of the uniform business rate has brought to businesses in general.

I was referring to the speech of the hon. Member for Newcastle upon Tyne, North. I welcome his welcome for the measure, which was echoed by hon. Members on both sides of the House. He rightly said that the measure would be welcomed by businesses across the country. He then tried to get me to estimate the national non-domestic rate for 1994–95. His tongue might have been slightly in his cheek at the time. He knows that it is unrealistic to estimate that rate at present. Obviously, we must continue to be guided by the state of the economy and the impact of residual increases on big and small businesses. The hon. Gentleman will know that, under legislation previously passed, the maximum will be limited to the inflation rate, rather than the impact of past revaluation.

It is a little early to say what transitional arrangements may be needed to phase in the results of the 1995 revaluation. We have always said that we will examine the outcome of the revaluation before deciding whether transitional relief will be needed. By April 1995, many businesses will not have reached their full bills under the 1990 rating list, as the hon. Gentleman said. That is one factor that we will need to take into account, although many businesses may well find that their post-1995 bills are much reduced, reflecting relative changes in business rates between the valuations.

I can reassure the hon. Gentleman on his specific point. If any business which faces an increase under the 1990 revaluation does not reach its full payment, any increases under the 1995 revaluation will be by comparison with the amount paid in 1994–95 rather than the amount that would have been paid if protection had not been available.

The hon. Member for North Cornwall (Mr. Tyler) referred to the fall in business rate revenue. The distributable amount of business rates has fallen since 1991–92. That is, indeed, partly the result of the recession, which has led to an increase in empty property relief. A second factor which is equally important is the effect of rating appeals. Increasing numbers of appeals are now being decided, as my hon. Friend the Minister for Local Government and Inner Cities said.

Repayment of rates following appeals may relate to the whole period from 1 April 1990, but the entire cost falls in the year in which the repayment is made. Therefore, the yield of business rates is likely to rise again once the peak of appeals has passed. Any changes in business rate yield will, of course, be compensated for by revenue support grant pound for pound within the published plans for external finance.

My hon. Friend the Member for Bromsgrove (Mr. Thomason) spoke with all the experience of a former senior local authority councillor. I assure my hon. Friend that, notwithstanding his nervousness at the appearance of support from the Opposition Front Bench, he is right to support the Bill. He pointed out how much impact the measure would have and how welcome it would be to business ratepayers in general.

My hon. Friend was the first hon. Member in the debate to highlight the failings of site value rating, which subsequently became almost a separate debate in itself. I wish to put on record just some of the reasons why site value rating would be a poor system and a poor substitute for the current system which is the subject of the Bill.

Site value rating would be a tax on a small number of owners rather than on many occupiers. It would be a hidden tax on the latter through rents. We would need a register of beneficial owners. Site value rating would involve indentifying the development potential of each and every parcel of land. It would require detailed evidence of land sales and prices in each area. It would be unfair to owners if existing convenants and contractual arrangements meant that land could not realise its development potential.

Perhaps as importantly, if site value rating was limited to where planning or zoning permission had been obtained, any competitor, other developer or business could apply for planning permission on someone else's site. The consequence could be to drive the business out. That seems a strange way to encourage business. I urge the Liberal party to rethink.

I am grateful to the Minister and his colleagues for paying so much attention to my party's policies. That is a new experience for me. I wish to pursue the Minister's last point because I know something about planning. Is he aware that it is now widely regarded as unacceptable for someone who has no interest in land to be in a position to make a planning application for it? If that is the Minister's main objection, as it seems to be, does he accept that there is in any case considerable anxiety about that feature of the planning system?

I listed several reasons why site value rating was inadequate. On the hon. Gentleman's specific point, he will be aware that it is likely that more than one person will have an interest in any site, land or property. It could be a tenant, the landlord or a putative purchaser. A range of people could have an interest. The hon. Gentleman described the existing law. I was simply interpreting his remarks. It was not clear whether in the event of a Liberal Democrat Government being elected—the House should not hold its breath—site value rating would be introduced.

I am grateful to the hon. Member for North Cornwall for welcoming the measure, in company with the other hon. Members who spoke. However, it was a bit rich, virtually in his first minute and the day after quarterly GDP figures were announced showing an increase for the first time in three years, for the hon. Gentleman to suggest that my hon. Friend the Minister had denied a recovery. It is simply untrue. My hon. Friend not only highlighted it, but put it in context, as a re-reading of Hansard will show.

It is possible that the recovery is badly timed for the Liberal Democrats whether in the context of the county council elections or that of the Newbury by-election. However, the hon. Gentleman will understand if I say that the vast majority of people welcome the recovery notwithstanding any difficulties that it may give the hon. Gentleman.

The hon. Gentleman said that it was interesting that, out of all the figures for Newbury, we mentioned the figures for only one month. But the figures have fallen for two months and Newbury's rate of unemployment at 7·1 per cent. is well below both the Great Britain and EC averages. I shall be delighted if the hon. Gentleman's speech is widely circulated in Newbury in the next two weeks. It will not add one vote to the Liberal Democrats' likely haul.

Of course we all welcome any reductions in unemployment, even if they are only in one or two months. I wish that we had a dramatic reduction in unemployment in my constituency, but sadly that is not the case. In my speech—I am sure that the Minister was paying careful attention—I compared the position of small businesses before the introduction of the uniform business rate in 1990 with now. That is why I picked 1990 and 1993. I made a comparison over a three-year period. I know that the Minister is an honourable, honest and fair-minded man. He will accept that over a three-year period there has been a substantial increase in business rates, whether one takes February, March or any other month.

I am not sure whether I should continue with my modest, up-beat comments based on fact or look backwards to what has happened in the past three years. I judge that on balance most people prefer to look forward rather than back, so I shall keep going with my speech.

The hon. Member for North Cornwall made some comments about tourism. Seasonality of use is taken into account in rates assessments. If a holiday resort is open for only a limited period in the year, that will be reflected in rents and hence in rateable values. Any change in economic circumstances such as a shorter summer season is taken into account at revaluation. Any change made within the life of an existing list would cause a loss of revenue from rates which would have to be made up elsewhere in the tax system. That would be unfair.

The hon. Member for North Cornwall correctly pointed out that several local authorities under all forms of political control had been rather slow in applying section 49 and providing hardship relief. I underline from the Dispatch Box that hardship relief is available where there is genuine hardship. I was not sure whether the hon. Gentleman suggested that because the take-up had been low, the Government should centralise hardship relief. I hope that he was not suggesting that. If he was, it runs counter to the actions of the Government in devolving decision making to local authorities. It also runs against what his party normally stands for.

I am grateful to the Minister for giving way yet again. As he seems to be so interested in my speech, I hope that he will forgive me for interrupting. The point that I made was clear. If the Government were prepared, within the criteria, to fund hardship relief 100 per cent., clearly local authorities would feel a great deal less inhibited in providing the hardship relief which he and I agree should be available.

The whole point of the system—I know that the hon. Gentleman knows this—is that it gives local authorities discretion to determine hardship. If we provided 100 per cent. support, we would do precisely what I thought that the hon. Gentleman would not support and take the decision into central Government. Hardship is better determined by a local authority. I join the hon. Gentleman in urging its wider use by local authorities.

My hon. Friends the Members for Test and for Erewash made strong speeches, drawing on their experience of small business and local government. They correctly spelt out the gain that businesses will make under the measure.

The hon. Member for Torfaen spoke, as I expected him to do, about the gearing effect and the relationship especially in Wales between central and local government support for local government expenditure. He will know that prior to setting the levels of total standard spending and aggregate external finance for 1993–94, the Secretary of State for Wales took account of the view expressed by Welsh local authority associations that the proportion of revenue raised locally in Wales should be increased. The lower level of increase in the additional aggregate external finance of 1·7 per cent., relevant to that of the total standard spending, means that Welsh local authorities are able, on average, to raise about 10 per cent. of their income from the council tax, which represents an increase of more than 1 per cent. on the figure for 1992–93.

The hon. Gentleman also raised the spectre of further reform of local government finance. I beg the hon. Gentleman as a Minister and as an individual, although I am not allowed to hold a separate view, to ignore that siren call. The hon. Gentleman and I have sat on many Committees and we know perhaps better than other hon. Members just how difficult it is to reform that system. I believe that the system now in place for the collection of local business and personal taxation will last and will be welcomed by the overwhelming majority of people.

The overall effect of the Bill is that no business will end up paying more rates in real terms this year than it did last. The Bill is important and worth while. It is well targeted on those businesses that have borne much of the brunt of the recession and I urge the House to support it.

Question put and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

Non-Domestic Rating (No 2) Bill Money

Queen's recommendation having been signified—

5.51 pm

I beg to move,

That, for the purposes of any Act resulting from the Non-Domestic Rating (No. 2) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums so payable out of money so provided under any other Act.
It gives me great pleasure to move the resolution so that the money is available to provide the relief that business is seeking—the relief that the House seems to favour.

The Bill has two main financial consequences. The big one is the reduction in the amount of money to the rates pool, which the Bill will make good. The second is that there will be some additional expenditure to local authorities in implementing the Bill, and we are proposing to allow authorities to set that expenditure against the pool to adjust the rates bills. I hope that the House will welcome those two features, which are reflected in clauses 2 and 3.

The cost of making good the shortfall for the pool in England is estimated to be £340 million in 1993–94 and £220 million in 1994–95. That is on top of the substantial relief that was made available last year as a result of a similar Bill to which my hon. Friend the Parliamentary Under-Secretary of State for the Environment has already referred. In Wales, which has separate pooling arrangements, the cost will be £9 million in 1993–94 and £5 million in 1994–95.

The money issues were given prominence on Second Reading. It is interesting that the Liberal party in particular favours a different approach to the financing of local government—one which would be deeply damaging to many businesses. The hon. Member for North Cornwall (Mr. Tyler) seemed to be particularly interested in Newbury and in Berkshire. He failed to tell the House, or the people of Newbury, however, about the impact of his proposals upon the butchers, the greengrocers and; the grocers of that town.

Yes, my hon. Friend is correct. It would put such businesses under intense pressure. We are glad that Liberal policies are not threats but spectres, or their effects would be considerably more serious.

We can always tell when there is a by-election, county council election or even a general election in the offing, because it is then, in spring time, that we begin to see the first "Focuses". They come out of the woodwork after a year of absence and a year of neglect and appear in Newbury or wherever else containing all sorts of claims about how the Liberals have done everything that has, in fact, been done by the Conservative party for the good of local people.

The Liberals claim the credit, but they do not do the work, as is evident from the "Focus" publications. I am sure that another "Focus" will be issued to say that the Liberals were behind the money resolution, which is so instrumental in helping local business.

Site value rating should be condemned by all men, and women of good will and by all sensible parties in the House, because it would be extremely damaging. It is symptomatic of the Liberal party that it usually supports the Labour party in local government. Recently, I believe that the Liberals have encouraged the Labour party to withdraw candidates from the county elections in Berkshire. Obviously, they have struck some kind of deal.

When we hear about Liberal party policies, they seem to be Labour policies in fiscal drag. They are dressed up in a new kind of style, with local income tax and site value rating on top of the other imposts that the Labour party would like to impose. As always, it is the Liberals who want other people's money. They may well vote for the money resolution today, but, secretly, they would like to impose far more taxes and to waste far more money.

As my hon. Friend the Under-Secretary has already said, it is a curious paradox, some might say that it was a two-faced approach, that the Liberal party reveal. It claims that it wants much more devolution and local autonomy, but as soon as any measure offers such autonomy to Liberal councils, the Liberal party will not use its local discretion and gets its spokesman to come to the House to say that the Government must order councils to exercise such autonomy.

The Minister's claims are erroneous, as is his interpretation of his colleague's remarks. The Under-Secretary said that parties of all colours in government in local councils throughout the country have used the hardship relief. In my speech on Second Reading, I was able to quote the impeccable record of Newbury district council and North Cornwall district council on their use of the hardship relief. The Under-Secretary was right to acknowledge that.

Why is the Minister trying to stir things up? He said that election time was when "Focus" appeared, but that is not the case in my part of the country. It appears throughout the year. We always know when the Government are expecting a defeat at the hands of the electorate, however, because they attack us.

Order. We are actually debating the money resolution.