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Mr. Michael J. Martin (Glasgow, Springburn) : I congratulate you, Mr. Deputy Speaker, on your appointment as Chairman of Ways and Means, the Minister on his appointment, and my hon. Friend the Member for Nuneaton (Mr. Olner) on his maiden speech, which I enjoyed greatly. It is good to have in our ranks another hon. Member with expertise in local government. I have no doubt that we shall hear him on many occasions in the future.
Any measure that can help businesses, particularly small ones, in England and Wales--I hope that there will be a similar Bill to assist Scotland--is beneficial. I have in my constituency many talented men and women who are self-employed and earning a decent living. They have been forced into self- employment because of redundancies, especially in the railway workshops and in other industries in Glasgow.
I have often asked people who have been made redundant, "Why do you not open a shop or some other business and employ people?" The response is often, "Having a shop means having a commitment to pay rates. It means that, whether the trade is good or bad, you know that, come Monday morning, you must find the money for the rates, apart from the other expenses." So I am glad that at least some help is being given to the business community.
I represent a Scottish constituency. I take on board, Mr. Deputy Speaker, your reference to the fact that this legislation covers England and Wales, but I must refer to
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the deep anxiety that exists in Scotland because the system there has meant that every five years there was a revaluation, and that led to a great gap. Examples have been given, for example, of football pitches in Glasgow and London and other major cities where a big difference exists in the rates.Non-domestic ratepayers north of the border are bound to feel aggrieved that compensation is being given to ratepayers south of the border because the Government failed to introduce a compulsory five-year revaluation. Had such a revaluation existed in England and Wales, this measure would not have been necessary. So Scottish taxpayers' money is having to be provided for non-domestic ratepayers south of the border. I take the view that what a friend gets is no loss, but others may not share that view.
For years, and particularly in the previous Parliament, some Tory backwoodsmen kept complaining about what they described as whingeing Scotsmen being subsidised. Indeed, even one of their Lordships in the other place complained about what he called over-subsidised, whingeing Scotsmen. We are tonight discussing an area about which complaints might legitimately come from north of the border, simply because the Government failed to get the revaluation completed on a regular basis. What a blow it would have been to shopkeepers and factory owners in the south if it had been completed on time. Reference has been made to so-called overspending local authorities. I think that I see the Minister nodding in assent over that. We must consider what is happening in areas where the recession is biting deep, as it is in my constituency. I do not accept that Strathclyde and Glasgow are overspenders. Indeed, if it were not for the local authorities, many more businesses would be going to the wall.
The Government have introduced compulsory tendering because the private sector is experiencing so much difficulty in the recession that it is moving into the public sector and obtaining local government contracts. Were it not for those local government contracts, many men and women would be out of a job.
I clearly recall that, when Margaret Thatcher came to power, a civil engineering company in my constituency was pleased. It went on record as saying that it would cut on town hall work, but within five years, the director of that company was in the House of Commons Lobby pleading for local government work to keep the company alive. If local government spending were cut by Government edict, savings would be made not by cutting the numbers of young girls working behind the counters in the city chambers and the licensing department and on the word processors and typewriters, but rather by cutting roads contracts. Roads maintenance and street lighting would go. The Labour party will not oppose the Bill, but if the Government constantly have a go at local authorities, they should not blame people who must pay the rates for having a go at local authorities. The Government must carry responsibility for those rates bills, because they have capped local authorities throughout the country. They should tell business men and women that local authorities are, on the whole, responsible. They are run by dedicated men and women who give their time voluntarily.
Those men and women are not like Members of Parliament. We complain of inadequate secretarial
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back-up, but they depend on their wives, sons and daughters to answer phones while they are out attending meetings. Their tea, supper and Sundays off are often interrupted because they have volunteered to serve on local government. Yet every time a Minister gets to his feet, he has a go at so-called overspending local authorities.Tory Governments have always been keen to talk about law and order. Indeed, a maiden speech earlier tonight discussed that subject. However, the Minister must know that, because of Government cuts, the morale in our police force is in a terrible state. In 1979, if I went to a senior police officer and told him of vandalism in a certain corner of my constituency, he would offer to have extra men sent in and some officers working overtime. Consumers benefit from that. Now, officers in my local authority and, I dare say, authorities in England and Wales, say that they cannot employ the manpower necessary to protect people.
The other day in my constituency, a terrible thing happened. A runaway car was running around a housing estate-- [Interruption.] The hon. Member for Tiverton (Mrs. Browning) laughs, but it was not funny. Once the young vandals had stolen the car, they pushed it down a flight of stairs in a main street and killed a young woman who was coming from her home.
Mrs. Angela Browning (Tiverton) : I have yet to make my maiden speech, and I had no intention of participating in this debate. The hon. Gentleman is mistaken, because I was not discussing his remarks but a quite different subject. He was wrong to suggest that I was laughing at what I believe to be a serious matter. Will he withdraw his accusation?
Mr. Martin : The hon. Lady should not be engaged in conversation in the Chamber but should be involved in the debate. I understood her to be engaged in the debate. I accept that she was not laughing, but, if she was involved in a discussion with her colleague, she should not be here. Earlier this evening, hon. Members were taking part in a debate while others were engaged in private conversation. I understood the hon. Lady to be laughing at a serious point. The so-called law and order party is not supporting the police because it is not supporting local authorities. Although some business people may say, "Three cheers, the Government will give us cheaper rates," because the Bill will provide some respite, the same shopkeepers and factory owners will go to their group leaders, the Lord Provost and lord mayors asking why their companies are being vandalised. They want to know why, when their vans go into housing estates, they are vandalised.
The answer will be that there is inadequate coverage for the police authorities. Although there will be cheaper rates for factories and shops, what will we do about the shopkeepers who sometimes come to us and say that things are so bad that they must stay the night in their shops to prevent them being broken into? What is the point of charging cheap rates when the party of law and order cannot protect the very people whom it claims to serve?
The Minister--there is a new broom in the Department--should meet the leaders of the local authorities. In Scotland, we have a convention of local authorities. I hope
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that the Secretary of State will meet the equivalent in England and Wales. Instead of trying to score points off one another, with the Government saying that the problems are all caused by Labour authorities and Labour authorities arguing that they are caused by the Government, why do not they get together and do something for consumers? Ultimately, the people who pay the rates, domestic and non- domestic, are entitled to the best possible service from local authorities and the Government.8.38 pm
Mr. Paul Murphy (Torfaen) : I congratulate my hon. Friend the Member for Nuneaton (Mr. Olner) on a first-class maiden speech. His remarks were generous, and his local government background will offer much to the House. As a former leader of the borough council at Nuneaton, he gave a good survey of local government in his area. The hon. Member for Cheltenham (Mr. Jones) referred, rightly and wisely, to the cuts in grant to Gloucestershire county council, which have a parallel with the point made by my hon. Friend the Member for Nuneaton about Warwickshire. The hon. Gentleman also referred to the fact that the former chairman of the Conservative party, Mr. Christopher Patten, owes his new job as governor of Hong Kong to the business rate. There is no doubt that he lost his seat on account of the devastating effect of the business rate on small traders and shopkeepers in the city of Bath.
Obviously, we welcome the Bill, so far as it goes, because it means that some of the excesses in the business rate in England and Wales will now be abolished. During the past three years, Opposition Members have said that some of the changes should have been effected immediately. I can clearly recall saying that people who are changing their business should be eligible for relief in the same way as those who have been in business in the same property for some time. The changes are to be welcomed. But I echo the argument of my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) that the transitional relief schemes within both the business rate and the poll tax have brought much uncertainty to the way in which local government finance is regarded in Wales and England.
The new Under-Secretary of State for the Environment will have to answer questions about the Principality of Wales. I intend to target most of my remarks on Wales. However, I am sure that he will meet the challenge, as he has done during the years that he and I have served on Standing Committees.
I understand that 30,000 business rate bills in Wales are likely to be frozen as a result of the legislation, 7,000 businesses are to have their reductions speeded up and 35 per cent. of business properties are to benefit. We welcome those improvements. However, as my hon. Friend the Member for Brightside said, we wonder where the money is coming from, as the shortfall in Wales is to be made up by Welsh Office grants--£25 million in this financial year, £22 million next year and £13 million the year after.
The money for some of the transitional relief schemes that we have been told about during the past year or so seems to come from nowhere. We welcome the schemes and the money behind them, but I and other hon. Members, such as my hon. Friend the Member for
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Glasgow, Springburn (Mr. Martin), wonder why the money could not be found for other important services such as the police force. I echo the point made by my hon. Friend the Member for Springburn about law and order. The whole of south Wales, from the city of Swansea to the Wye valley, has been allowed only one extra policeman for this current year. I am sure that, if the £25 million could be found, the money for more policemen could be found.My hon. Friend the Member for Brightside referred to rebates. We believe that the business rate should relate to the ability of business people to pay it, as the individual's council tax or poll tax relates to his or her ability to pay it. That is why we argued at the general election, and still do, that rebates of up to 100 per cent., related to the profitability of businesses with an annual turnover below a specific level, would be welcome. The business rate as it stands is nothing more than a business tax. It is not a rate, as it bears no relation to how rates used to operate or the new council tax is to operate. The business rate is a national tax imposed on business people.
Earlier, we heard exchanges across the Floor of the House on the former business rate levied by local authorities. Of course, some local authorities will spend more than others--that is the ways of things--but if we accept that democracy must be genuine, and local, we must acknowledge that all the benefits of a local business rate in linking the local business community with the local community itself are valuable. Local authorities provide an educated work force, roads, infrastructure, firefighters, housing, environmental services and, particuarly in Wales, important developments in relation to local businesses and general economic development.
The business tax seems unrelated to the commercial activity of a given district. Some 20 or 30 years ago, the great Llanwern steelworks was placed in a rural parish in my constituency. It brought jobs and prosperity, but changed considerably the community's nature. It was right and proper that the lcoal authority should derive the benefit of the business rate from the enormous steelworks in a part of the world that was changed by its presence.
A local business tax or rate should be set, collected and used locally. I believe that that is the view of local government generally and of many business people in this country. However, in Wales, as in England, the current business rate distorts the local government finance system. Local authority associations, like many others, are deeply concerned about the different changes that local government finance in the business sector has experienced during the past few years. There is a credibility problem. Many people, both within and outside the business community, have lost confidence in the system of local government finance, whether the poll tax, council tax or business rate.
There is another problem : local authorities, strapped for cash, will encounter difficulties relating to the new change to be introduced by the Bill. The recession means that there are many cases of arrears in England and Wales which in turn burden local authorities with extra administrative costs. Only recently, the Local Government Chronicle said that the changes to be introduced by the Bill were unlikely to have an immediate effect due to the complexities of the computer software of local authorities. It is important that the Bill proceeds as speedily as possible, which is one reason why we are helping it on its way. However, it is also important that local authorities should be given every possible assistance, not just financial
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--although that is important. They should also be given advice on how their computers and software can cope with the changes. As my hon. Friend the Member for Brightside said, the Bill's worst consequence for the local government finance system will be on the so- called gearing effect. In Wales, every 1 per cent. increase in expense means an increase of about 9 per cent. in the poll tax or council tax. Only just over 11 per cent. of local authority income is determined by the local council. There may well be advantages, but I cannot see them.Due to the gearing effect, if a local authority is to have a genuine revenue-raising power, the national business rate--collected in Wales and distributed in Wales from Cardiff--together with the grant system, which is crazy anyway, will mean that local councils can do virtually nothing unless they increase local taxes dramatically. The gearing effect has distorted local government finance and effectively meant that local authorities no longer have a proper revenue-raising function. That has enormous implications for the future of local democracy in Wales and England.
I hope that, when the Bill is passed and the Government set themselves the task of administering the new council tax, they will look carefully at the joint impact of the business rate and the council tax on the proper revenue -raising functions of our local authorities. Without those functions, local democracy cannot function properly.
There is a special case in Wales, as it seems that British local government reform is on the horizon. We have been told, although not yet in the House, that the Secretary of State for Wales intends to reform local government in the Principality fairly soon, a White Paper will be with us in the autumn, and the county council elections in Wales scheduled for next year may even be postponed.
If we are to have a system of unitary authorities in the Principality and if that system is to enjoy any consensus among those in Wales who understand and are involved in local government, there must be alongside it a change in the system of local government finance which means that the standard spending assessments are much more realistic. That in turn will mean that the business rate is related locally to how people raise it and how local authorities spend it.
Mr. Michael J. Martin : I was a councillor when reorganisation took place. Does my hon. Friend agree that the displacement of officials will entail a fantastic cost in terms of redundancies? Last time, and ludicrously, officials made redundant from one authority immediately applied for posts in a new authority. The Government talk about saving ratepayers money, but I fear that we are in for spending another fortune.
Mr. Murphy : I agree. I, too, was involved in the last local government reorganisation in 1974. Of course, it was extremely costly ; I rather suspect that the reforms in England have been postponed because of the enormous costs that they would involve. I should be interested to know how we can avoid them in Wales--I assume that they can be avoided somehow. We are told that the reforms will pay for themselves, but I confess that I have never known that happen yet. Whatever happens, the reforms will be upon us fairly soon, so it behoves the
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Welsh Office to examine local government finance at the same time as it examines the structure and functions of our new Welsh councils.We cannot keep having changes and reforms in local government : it must eventually settle down. The key word now must surely be stability in local government, and I hope that the Government will think again in the months and years ahead about the importance of returning the business rate to the local authority dimension and of ensuring that local democracy is both local and democratic. 8.51 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. Robin Squire) : If I am a little tardy in congratulating you, Mr. Deputy Speaker, that is because this is my first opportunity to do so. I hope that you will have many happy years in your new post. I also thank the hon. Member for Torfaen (Mr. Murphy) for his kind words. He referred to shared pleasures of serving on Standing Committees. I have a strange feeling that we will be returning to those shared pleasures on this and other measures as and when they arise.
I sincerely congratulate also the new hon. Member for Nuneaton (Mr. Olner) on what I thought was a first-class maiden speech, delivered with sincerity and conviction. He spoke generously about his predecessor, Lewis Stevens, who is remembered with affection in this House--I do not believe I am being controversial when I say that he is affectionately remembered by hon. Members on both sides of the Chamber.
The hon. Member for Nuneaton wisely highlighted the links in a community between work, housing and education. Perhaps, as a fellow paid-up member of the club of former leaders of councils, I may also welcome his contribution tonight and look forward to hearing from him again. When he mentioned SSAs, I realised that he will be welcomed into an even more exclusive club--those who wish to understand SSAs and to take part in debates on them. He will be welcome in the rarefied atmosphere surrounding such debates.
The Government are encouraged by the wide range of support for the Bill in tonight's debate, even though, perhaps predictably, some hon. Members' comments went just a fraction wider. The Bill is certainly good news for business. In a nutshell, it means that no business, whether in transition or not, will face a rate increase of more than 4.1 per cent. this year ; and 150,000 businesses will enjoy reductions of up to 27 per cent.
To those who argue, as did the hon. Member for Cheltenham (Mr. Jones), that we could or should go further, I can only reply that this is already an exceptionally generous package, worth more than £1.25 billion over the three years concerned.
Speaking of the hon. Member for Cheltenham, whose presence we welcome, he asked a couple of questions that I would like to answer straight away. First, he asked why we are proceeding with the Bill if the economy has turned around. The answer is that the Government believe in fulfilling their promises. This was promised in the Budget and we believe that it should be carried out. Realistically speaking, as I am sure the hon. Gentleman will concede,
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even with the economy turning round, the change will be gradual and many businesses will still face considerable pressures over the next couple of years, so we think it right that they should continue to receive the promised assistance.The hon. Member for Cheltenham also suggested that we consider back dating the relief for properties that will benefit from having been left empty during the transitional relief stage. That would be a major exercise, and we should have to unscramble every transaction between 5 April 1990 and 10 April 1992. That would not only be chaotic--it would be undesirable, and it would involve retrospective legislation. Many businesses entered into these purchases and sales taking account of the law as it stood, and we think that it would be unfair to change the underlying ground rules now, as I hope the hon. Gentleman will agree on further reflection.
The hon. Member for Torfaen asked me one or two questions which I will try to answer. If I do not, I promise to write to him with such residual queries as he may trace
I can confirm that just under 30,000 businesses will benefit under the so- called loser clauses alone. A further 6,800 businesses will benefit by having their gains accelerated. Altogether, about 35 per cent. of businesses in Wales will be affected, at a cost of about £1 million to the Exchequer.
The hon. Gentleman made a passing reference to rates being based on ability to pay. Before 1990, the basis of local business rates was broadly the same as for NNDR, in that they were based on rateable values. To the extent that businesses will not generally be prepared to pay more in rent than they can afford, market rents and hence rateable values are linked to overall business profitability. The Bill is certainly good news, targeting help on all businesses. If we simply aimed at small ones, we would not have been able to help some of those which face the largest increases under the 1990 reforms and the largest year-on-year changes under the transitional arrangements.
The decision to end transitional protection on a change of owner-occupier is designed to ensure that the occupiers of new buildings and the new occupiers of old buildings are treated the same. It also allows more money to flow to gainers within the total. I have already mentioned that in the Welsh context.
I should like to say a few words on transitional relief in the light of the earlier exchanges involving my hon. Friend the Member for Ryedale (Mr. Greenway) and the hon. Member for Sheffield, Brightside (Mr. Blunkett). If large increases in rates bills emerge from the 1995 revaluation, the Government will certainly consider using their powers to put in place a new transitional scheme after 1995. We have repeatedly given businesses that assurance, and I am happy to underline it again tonight.
We know that, despite the existing scheme, businesses have had problems coping in the recession. The Government have monitored the position, and have listened. We accept that the loss of transitional protection has put some brake on property changing hands ; the
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Chancellor's Budget announcement included an improvement in the transitional scheme, which will help businesses in difficulties with the recession and assist their return to profitability.Mr. Murphy : Can the Minister tell us how long the transitional period is likely to last? Is there a norm, or do transitional periods go on for ever?
Mr. Squire : I sense that the hon. Gentleman was being less than helpful in that intervention. The answer is, of course, that he cannot expect me to reply to his question from the Dispatch Box tonight--but I can tell him that the Government will examine the way in which businesses are affected from year to year, and will make decisions on that basis. I hope that he will agree that that is the only intelligent way in which to proceed. As I have said, the Government recognise the possibility of a further transitional scheme if we consider such a scheme justified.
Incidentally, that momentary pause for reflection was helpful, in that I realised that I had made a slip of the tongue. I can confirm that the cost of the Welsh proposals will be £25 million in 1992-93, not the £1 million that I inadvertently mentioned a moment ago. The Opposition parties sought to tempt us back to locally set rates. Conservative Members are not moved ; we are committed to protecting business rate payers. Only last week, and again tonight, my hon. Friend the Member for Fulham (Mr. Carrington) drew attention to the enormous rate rise--an increase of over 100 per cent. in local rate, and of 44 per cent. in the general rate--that the borough of Hammersmith and Fulham imposed on businesses in 1987. In 1989-90, poundages ranged from 122p in Kensington and Chelsea to 400p in Sheffield. I know that the hon. Member for Sheffield, Brightside (Mr. Blunkett) is more than aware of that figure. We cannot go back to that.
I noted with considerable interest, and qualified agreement, what the hon. Member for Brightside said in his speech. If what I have just described could be termed the 1970s mode of the Labour party--in those days, a number of its members were quite content for businesses to be soaked, and soaked very heavily--we have now clearly moved into 1990s mode. Now, the Labour party champions small businesses. How that will blend in with the championing of the Transport and General Workers Union and other union paymasters, time will show.
Mr. Blunkett : I shall ignore that rather frivolous throwaway remark. Perhaps the Minister will reflect on where the poundage to which he has referred placed the city of Sheffield on the league table of rates paid by businesses. During the period he mentioned, Sheffield--the fourth largest city in Britain--ranked 61st on the league table. That bore no relation to the actual pence in
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the pound that had to be levied to raise the necessary revenue to sustain what Her Majesty's inspectorate described at the time as the best education system in Britain.Mr. Squire : Of course I cannot give the hon. Gentleman the details of the poundages from the Dispatch Box. I can say, however, that over the years I have heard successive Sheffield Members, referring to the old system, bemoan the high cost of Sheffield's rates. I pass that on for the hon. Gentleman's information and possible edification. We have always made it clear that, although set nationally, proceeds of national non-domestic rate would be distributed fully to local authorities. The approach in the Bill underlines that commitment. The NNDR pool will be fully recompensed for any reduction in rate yield that is due to the Bill. Local authorities will be allowed to net off reasonable costs of re-billing from NNDR payments. We shall look carefully at any evidence from authorities that NNDR payments in the first month of the year have not kept pace with the profile of payments to the Department set at the beginning of the year, and we shall consider adjustments if they prove necessary. Local authorities will be given plenty of time to prepare for re-billing after enactment by delay in the commencement of the Act by about one month. They will be required to give refunds back to 1 April--or, in the case of transferred property, 10 March--to those who have overpaid, and to adjust future instalments downwards. I am sure that the House will wish to see the Bill on the statute book as soon as possible, so that ratepayers can benefit from it. It gives significant help to all businesses, big and small, during the current financial year. It does so by restricting increases for all businesses, and by ensuring that those who benefited most from the 1990 reforms receive all that benefit during this year or the next. As my hon. Friend the Minister of State said when he moved Second Reading, no business this year will face a real-terms rise in its rate bills.
We believe that this is an important, targeted and necessary measure, and I urge the House to give it unanimous support tonight. Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.-- [Mr. Mackay.] Committee tomorrow.
NON-DOMESTIC RATING BILL [MONEY]
Queen's recommendation having been signified--
Resolved,
That, for the purposes of any Act resulting from the Non-Domestic Rating Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable out of money so provided under any other Act.-- [Mr. Squire.]
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Customs Duties
9.5 pm
The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh) : I beg to move
That the Customs Duties (ECSC) (Amendment No. 7) Order 1992 (S.I., 1992, No. 792), dated 16th March 1992, a copy of which was laid before this House on 16th March, in the last Session of Parliament, be approved.
The order implements a decision of the Governments of the European Coal and Steel Community meeting within the Council on 3 February 1992. The purpose of the decision, which is part of a package of economic measures agreed by the Community to bring an end to the conflict in the Yugoslav region, is to reinforce preferential tariff rates on imports of all ECSC categories of goods originating from Bosnia-Herzegovina, Croatia, Macedonia, Montenegro and Slovenia. Such imports were temporarily subject to normal rates of duty following the denunciation of the ECSC-Yugoslav agreement and implementation of Community decision 91 588. The order does not reintroduce preferences for goods originating in Serbia.
For most industrial products, the Community's external tariff can be amended by Council regulation, which is directly applicable in all member states. For legal reasons, however, changes in the tariff related to products covered by the ECSC have to be incorporated in United Kingdom law by means of a statutory instrument through the affirmative resolution procedure. Hence the need for the order. 9.6 pm
Ms. Joyce Quin (Gateshead, East) : I begin, Mr. Deputy Speaker, by congratulating you on your appointment. I hope that you have much enjoyment in presiding over our proceedings, whatever the subject and whatever the hour.
The subject with which we are dealing is similar to one that the Minister and I debated in Committee a few months ago when the (Amendment) (No. 6) order was considered. Against that background, perhaps I can take the opportunity to repeat some of the questions which I put to the Minister on that occasion, which I feel were not entirely answered.
We have not had a major debate on Yugoslavia, and I realise that it will not be possible to have one when considering an Order as narrow as the one that is before us. During the debate on the Gracious Speech, however, we dealt with foreign affairs. That provided hon. Members with an opportunity, quite properly, to voice their concerns about Yugoslavia.
I understand the procedure that relates to the Order, which the Minister clarified in his statement. When he replies, perhaps he will be able to say whether there is any way of speeding up the procedure or anything that would make it more effective in the face of the ever changing situation in Yugoslavia--or what, perhaps, more properly should be called the former Yugoslavia.
When we discussed these matters in Committee, several hon. Members referred to the different parts of Yugoslavia and spoke of how we should respond to the emerging republics. Only a few months ago, through the order on ECSC customs duties, we were proceeding on the basis that the whole of Yugoslavia still existed, even though it was clear that different relations with different republics
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were emerging on the part of the members of the European Community. It worries me that in such a rapidly changing situation some of the measures with which we are dealing through the procedures can quickly become out of date.The order tackles the problem of trade with the different republics in the former Yugoslavia, and no longer with Yugoslavia as a single unit, but I am not sure that it actually deals with those different republics in an entirely acceptable way. It exempts all the republics from ECSC customs duties, except Serbia. However, I understand that Serbia and Montenegro are operating as one unit, even though Montenegro is exempted under the order. Perhaps the Minister could comment on that, because it appears to be rather strange. We know that the different republics in the former Yugoslavia have evoked different responses among EC member states. Whereas many of us feel that Slovenia has done a great deal to commend itself to the European Community, there are doubts about some of the developments in Croatia--for example, many people have expressed concern about human rights there.
It is not a simple matter to deal with the different republics, so I wonder whether the Minister could enlarge on his brief statement and say what sort of discussion of these matters has taken place in the European forum and what was the attitude of the British Government to including all the republics except Serbia in the order.
Perhaps the Minister could also say a little about how the measures affect the different countries of the European Community. I know that, on the wider issue of sanctions, Greece, for example, is concerned that it might be more detrimentally affected than the various republics in the former Yugoslavia. I put that point to the Minister when we previously discussed this matter in Committee, but he did not respond. Will he now give us some details on that?
I imagine that the order is of only minor relevance to this country, but as the Minister did not say anything about that aspect, perhaps he could confirm it. Could he also tell us whether he has found it necessary to hold discussions with industry about imposing the duties on steel for Serbia, but removing them for the other republics? What was the practical effect of introducing the previous order that we discussed in Committee? Did it make any major difference to the steel trade between the different republics of Yugoslavia and the different countries of the EC? The Minister has given us no details on that. I assume that we are dealing with modest measures that are probably insignificant within the overall trading position between the republics of the former Yugoslavia and EC countries. However, I should be grateful if the Minister could give us some feedback on how that overall trading relationship is now viewed within the EC. While I certainly sympathise with the attitude that the EC is taking towards Serbia in particular, I think that all of us believe that it is important to support all the groups in all the republics that are opposed to the war, which are seeking to preserve or to reopen the channels of dialogue and trying to achieve some sort of solidarity between the various national and ethnic groupings. I should like the Minister to deal with that matter when he replies.
Although the order is of minor importance in the overall relationship with Yugoslavia, it allows us to raise various questions--some of which I have tried to raise tonight, to which I hope the Minister will respond. The overall sanctions relating to Yugoslavia are adopted by regulation in the European Community and are
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immediately binding on all the member states, so they have not given rise to debate in this House. The different procedure that applies to the ECSC allows us to raise some of these issues tonight, and I hope that the Minister will respond.9.14 pm
Mr. Leigh : I am grateful to the hon. Member for Gateshead, East (Ms. Quin). She is right to ask those questions. It is also right that the House should be given the opportunity to debate the tragic events in Yugoslavia. I do not intend to deal in detail with those tragic events, because the scope of the order is narrow. All I would say is that Government will continue their twin-track policy in Yugoslavia. They will give all aid, comfort and support to my noble Friend Lord Carrington in his sterling efforts on behalf of the people in that region and will also encourage the different sides in the dispute in Croatia and Bosnia to come together.
I shall do my best to answer the questions that the hon. Lady put to me. If I fail to do so, I shall be happy to write to her. She asked whether my Department had been in contact with United Kingdom importers and exporters. Our exporters face a difficult situation in Yugoslavia. They will need to reassure themselves that their customers have funds to pay for goods or services provided. That will not be easy. Many companies in the former republics have been badly hit by the present conflict, while others have money in banks outside those republics and can fund purchases with that money. Another problem is transportation of goods to the customer. The whole House will appreciate that our exporters face severe problems. My Department is ready to assist in every way that it possibly can. The hon. Lady asked me about the impact of European Community sanctions on trade with Yugoslavia. That is difficult to quantify. The main impact on trade has been the current conflict in the former republics. That has led to the value of United Kingdom trade declining by 37.5 per cent. in the first four months of 1992, compared with the same period last year. I am afraid that I do not have figures with me relating to the value of trade lost by other European Community members, but I shall be delighted to write to her with that information.
The hon. Lady also asked me about who is to blame in this sad dispute. In our view, no side in Bosnia is without blame. The United Nations Security Council resolution 752 of 15 May calls for the withdrawal of units of the federal army and elements of the Croatian army from Bosnia. Serbs, through the federal army and irregulars, are the major aggressors.
The hon. Lady asked me why, in the light of recent developments, Montenegro is included in the list of republics benefiting from the reintroduction of preferential access. I am sure that she will appreciate that this is a sensitive issue, upon which I should not like to dwell. However, at the time that the decision was taken Montenegro was deemed to be making a positive contribution towards the peace conference. The hon. Lady will recognise that that decision was taken by the European Community's Council of Ministers in December 1991.
That leads me to the first point made by the hon. Member for Gateshead, East. She said that there is a rapidly developing situation and she was asking whether
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our procedures are sufficiently flexible to deal with it. We are in a difficult position, since we are committed to moving together as a Community. If one were talking about normal trade--for example, textiles--it would be possible to take a decision simply on the basis of the Council of Ministers decision. That is not possible when it comes to matters that relate to the European Coal and Steel Community. The hon. Lady will recognise that that is a much older agreement, dating back to the 1950s.The House may find it useful if I state the exact legal position. Section 5(3) and schedule 2(4) of the European Communities Act, as amended by section 19 and schedule 2 of the Customs and Excise Duties (General Reliefs) Act 1979, require that, where an order imposes or increases any customs duty, the affirmative resolution procedure has to be used unless the duty is imposed pursuant to a Community obligation. If this order were being made pursuant to a Community obligation, the negative resolution procedure could be followed, but as, instead, the order is made pursuant to a decision of the Governments of the member states, it cannot be followed.
I apologise for that somewhat legalistic language. In layman's terms, it means that, under the European Communities Act, we must use the affirmative procedure. The Council makes a decision which comes into force and, within 28 days, the House must approve it by affirmative resolution. If the House did not approve the course of action, the order would lapse.
Such matters can usually be dealt with far more simply in Committee, but, as the debate is taking place so soon after the general election, the appropriate Committee has not been constituted. It is a rather complex legal point
Ms. Quin : Given that the situation in what was formerly Yugoslavia is changing, is a series of meetings envisaged, within the purview of the European Coal and Steel Community, to monitor what is happening to custom duties and possibly to change the arrangements again if it is felt appropriate to do so?
Mr. Leigh : That is a fair point and I shall certainly take it on board. The House recognises that matters are moving quickly. Ministers and those who advise them will keep a close eye on the situation and, if it changes--for instance, if it becomes clear that there is a change in attitude by the Serbian Government--the Government will want to come back to the House, presumably having consulted other members in the Community, to see whether any change is appropriate. For the time being, however, we think that the order represents the best response.
The order is part of a package of measures designed to put pressure on those whom we consider to be the principal aggressors--the Serbians. We think that ours is a balanced approach. I should add that we have also recalled our ambassador to Belgrade, who is now in London. We are determined to do all that we can to help to alleviate the tragedy in Yugoslavia. The order is part of the twin-track policy to which I referred earlier.
I hope that the House will approve the order and will want once again to pay tribute to the tireless efforts of my noble Friend Lord Carrington.
Question put and agreed to.
Resolved,
That the Customs Duties (ECSC) (Amendment No. 7) Order 1992 (S.I., 1992, No. 792) dated 16th March 1992, a copy of which was laid before this House on 16th March in the last Session of Parliament, be approved.
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