Previous Section Home Page

Mr. Olner: I accept that the Bill, which was roughly drafted, might present technical difficulties, but does the Minister agree in principle with its thrust?

Mrs. Browning: I will go into detail, and I refer the hon. Gentleman to the three-hour Adjournment debate recently, when my right hon. Friend the Minister made it clear that the Government attach importance to animal welfare. We will continue to take steps to ensure that welfare is improved- -particularly in Europe, to bring it


Column 661

up to the standards that already exist in our country. I want the hon. Gentleman to have as much information as possible about our reasons for being unable to support his Bill. I know that that will disappoint him, but it is the only honest thing to do.

Clause 1 would prohibit the export of live animals for slaughter but includes a repeal provision that the Minister of Agriculture, Fisheries and Food could use if he were satisfied that the Community rules envisaged in directive 91/628, article 13, covering such matters as journey limits, feeding and watering requirements, loading density standards and staging points were in place.

Clause 2 would prohibit the export of calves for any purpose from Great Britain to another country unless that country certified that it had rules on treatment of calves that were at least equivalent to our own. The House will be aware that this country has banned the raising of calves in veal crates.

It is important to repeat the legal advice given to the House, because it is relevant to this debate. We examined carefully the issues of live exports and of veal calf exports, particularly the legal dimension. We recently considered the best legal case that could be made in favour of measures banning the export of calves, or imposing selective restrictions aimed at calves. Selective restrictions of that sort might seek to ensure-- as does the Protection of Calves (Export) Bill of the hon. Member for Carlisle (Mr. Martlew)--that calves can be exported only if they are destined for production systems that would meet British requirements. Alternatively, they might, as this Bill would, seek more sweepingly to prohibit the export of calves to countries where calves could legally be reared in conditions that are illegal in the United Kingdom.

The conclusion that emerges from the legal advice that we have obtained is that such selective measures could not be justified in Community law. Hon. Members will rightly want to know the reasoning that underlies this argument. I shall set it out, just as my right hon. Friend the Minister did in his reply to my hon. Friend the Member for Thanet, North (Mr. Gale) and to the hon. Member for Great Grimsby (Mr. Mitchell) on 2 February. My right hon. Friend also wrote in some detail on 1 February to every hon. Member setting out the position in relation to current restrictions on calves. I know that the hon. Member for Nuneaton has received that correspondence. First, the directive on welfare standards for calves forms part of the Community legislation governing trade in calves, and its terms preclude member states from introducing export restrictions. Article 36 of the treaty can in some circumstances justify export restrictions, on the grounds of the protection of the health and life of animals, which includes animal welfare. Several hon. Members have referred to that, but article 36 is available to member states only where there is no Community legislation governing the particular area. It is not applicable in this case, given the directive on welfare standards for calves, so a total ban on all calf exports would not on any basis be justified under article 36 because it would be disproportionate.


Column 662

It is also highly probable that measures banning or restricting the export of calves would constitute an unacceptable interference with the operation of the common agricultural policy, as it relates to the market for beef and veal.

The hon. Member for Newham, North-West (Mr. Banks) said that he would be happy to pay compensation to hill farmers--

Mr. Tony Banks: Not on my own.

Mrs. Browning: It sounded generous, but no doubt the hon. Gentleman was speaking on behalf of a great many other people who might be prepared to pay. It is not, however, just a question of compensating people who can no longer export direct from their farms. Our legal advice is that there could be claims not only from the original farmer but from people right through the production chain, including transporters and businesses on the other side of the channel--in short, all the recipients in the chain of production. There is therefore no quick fix whereby a little extra money to help farmers will resolve all the possible financial implications for the taxpayers of this country, who would ultimately have to pay the bill following any legal challenge that found the Government of the United Kingdom to be at fault.

The aspects that I have already mentioned mean that a selective export restriction on calves destined for crates or for rearing in countries whose welfare conditions do not match ours would be extremely difficult to defend legally and would be at high risk of being struck down in court.

Mr. Tony Banks: The hon. Lady has told us about the legal advice given to her Department, but will she detach herself from that for a moment and tell us who would actually make a challenge? Have there been discussions with other EU Governments to find out whether they are sympathetic to our position, given the strength of public opinion in this country?

Mrs. Browning: It is not just a matter of our being challenged in the court through the Commission if we were found to be infringing Community law. As I have just explained, companies and individuals who felt that they had lost financially because of the United Kingdom Government taking unilateral action that they were not in a position to defend legally could make financial claims against the Government and, ultimately, against the taxpayer. If Ministers deliberately contravene the legal advice that they are given--to the effect that a challenge would be most likely to be upheld in court--they knowingly put the United Kingdom taxpayer in an unfortunate position. There is a great precedent throughout all Government Departments that it would be extremely serious for a Minister, against legal advice, to take such action in the knowledge that ultimately the Department would be likely to fail in court.

It has been suggested that Ministers should tough it out and that legal advice would come from people thinking along the lines of Ministers anyway. Hon. Members will know of the constraints on Ministers in fully publishing legal advice. As I have said, legal advice was taken from more than one source.

Mr. Stephen: My hon. Friend will have noticed that neither the Leader of the Opposition nor the Opposition Front Bench spokesman on agriculture is in the Chamber.


Column 663

Has the Labour leadership challenged the legal advice that the Government have received, and is the Leader of the Opposition urging the Government to break European law?

Mrs. Browning: I can inform my hon. Friend that there seems to be a variation of opinion between Opposition Front-Bench agriculture spokesmen. The hon. Member for Edinburgh, East (Dr. Strang) said: "We do not accept that the Minister is necessarily correct in his interpretation of the legal position with regard to calves, although we certainly accept the position with regard to sheep."--[ Official Report , 22 February 1995; Vol. 255, c. 299.]

The hon. Member for Glanford and Scunthorpe (Mr. Morley), who is also an Opposition spokesman on agriculture, supports the Bill. Confusion reigns.

Mr. Tony Banks: There is no confusion.

Mrs. Browning: It is a matter that the hon. Gentleman should take up with his Front-Bench colleagues.

Mr. Banks: I do not want to score points. There is no confusion in the sense that the hon. Lady suggests. The point is that the issue is worth testing. I do not think that the legal case is watertight. That is all that I am saying. The Opposition no more have knowledge on the matter than, I suspect, the Government.

Mrs. Browning: The hon. Gentleman says that the case is not legally watertight, yet in his speech he admitted that he was not a lawyer. I, too, am not a lawyer. As a Minister, I must take advice on behalf of the Ministry from lawyers. When advice is received from more than one lawyer and it is consistent, we must draw the conclusion that it will hold up. I am sure that the hon. Gentleman knows that all Ministers take legal advice.

The same legal objections would apply to a prohibition on the export of live animals for slaughter given the existence of a directive on the welfare of animals in transit. I realise that many hon. Members will find the legal realities unwelcome. I understand the frustration of the hon. Member for Nuneaton. I have no doubt that it will be argued that if the case were worth going for, we should gamble on the result. I understand that the hon. Gentleman agrees with that. He is in a very different position from a Minister who takes legal advice.

Mr. Tony Banks: Make my hon. Friend a Minister.

Mrs. Browning: I invite the hon. Member for Nuneaton to cross the Floor. If he does so, we may consider the matter.

To gamble in the way that some hon. Members suggest could not possibly be defended as a responsible approach for the Government to adopt. I am sure that hon. Members recognise that.

Relating the legal advice more specifically to the Bill, it is evident that a ban on the export of calves to, say, France and the Netherlands would apply not only to calves destined to be reared under systems in countries that would be acceptable to the United Kingdom but to those destined for veal crates. I am sure that the House will be aware that countries such as the Netherlands have welfare-friendly systems and also rear calves in crates. When I have visited countries to discuss veal crates, it has been encouraging to note that their representatives are willing to consider what we are demanding and what the


Column 664

marketplace may ultimately demand in changing from the crate, which we abhor, to other more welfare-friendly systems.

We could not argue that the measure was proportionate, as we would have to under article 36. The legal problems with the Bill are conclusive enough in themselves, but I am afraid that there would be practical problems too. It is important to emphasise that, because it is not just, as Conservative Members have said, a case of our being trapped in some European directive, unable do anything about it. There are strong practical reasons why, even if the legislation were passed, the implementation of such a ban would cause difficulty. Under clause 2, states wishing to receive calves from the UK would need to interpret our domestic legislation and compare it with their own. The person--we are now getting down to the practical detail of what might happen--responsible for the declaration about the compatibility of another member state's law with ours would be outside our jurisdiction. Given the scepticism that has been expressed in other discussions about the ability of other states to enforce Community requirements, I am not sure that the Bill would necessarily bring any practical welfare benefits. We would have to rely on the authorities of the importing member state to ensure that calves were, in fact, raised in conditions corresponding to those that apply in the UK, and there would be nothing in the Bill to prevent exporters from sending calves to other member states where the practical realities of animal welfare might not correspond to the terms of their legislation.

Some right hon. or hon. Members might be thinking that an alternative approach to that adopted in the Bill might avoid those legal and practical pitfalls. That line of thought might lead us to something like the provisions of the Bill presented by the hon. Member for Carlisle, which would prohibit the export of calves where the exporter was not satisfied that the calves would be reared in their country of destination under a system that would comply with UK requirements. That approach would, perhaps, be slightly more defensible as meeting the test under article 36: measures must be proportionate to their purpose.

The measure would not, like the Bill before us today, prohibit the export of many calves destined for rearing systems acceptable to us, but the other substantial legal objections, which I have just explained, relating to the existence of Community standards for the welfare of calves and of a common agricultural policy market regime for beef and veal would remain. There would be serious practical problems. If it were shown that calves exported from Great Britain had ended up in a continental veal crate system, how would we establish that the exporter in the UK had committed the offence? The exporter would say that he had relied on assurances from his continental customer and that it was not his fault if the rearing system was not in accordance with those assurances or if the customer had taken the calves to premises that were unsatisfactory. We would face an insoluble problem in trying to monitor and control the movement of calves in the jurisdiction of another member state. The Government have repeated many times that, ultimately, if we really care about the standards and welfare of farm animals and animals in transit, whether they are calves or any other animal, it is vital to have European legislation that can be enforced throughout Europe, because the real problem, as hon. Members on


Column 665

both sides of the House have acknowledged, is not the difficulties of welfare standards in the UK or the good intentions of the vast majority of people who export from UK but ensuring high-standard, uniform enforcement throughout the EC.

Mr. Tony Banks: I am sure that the whole House would endorse those sentiments, but will the Minister tell the House what chance she has of getting that measure of agreement among our European Union partners? I spoke slowly so that she could finish her drink.

Mrs. Browning: I thank the hon. Gentleman for being welfare friendly. As I am rested and watered, I shall continue. I shall come to the matter that he raises in more detail, but perhaps I could give a more immediate response to the issue of veal crates.

The responses of other member states, most of which I have visited, have been quite encouraging. I include countries such as Italy, which has a huge commercial interest. However, I do not want to mislead the House. I do not suggest that there will be a quick fix or an immediate solution. Other member states wish to see the matter brought to a satisfactory conclusion and I am reasonably optimistic that there will be some movement.

The issue of live animals in transit is more difficult, but we are determined to try to secure an agreement. There has been some movement by other member states and, as the House knows, we have pressed on two issues that are the nub of the matter and cause the real difficulty--maximum journey times and resting periods compatible with welfare.

As the House will know, my right hon. Friend the Minister has had an opportunity to raise this matter in the Council and we hope that it will come before the Council again, certainly before the end of the French presidency. My right hon. Friend will continue to press and negotiate for an agreement on maximum journey time and a suitable period of rest. Perhaps I will deal with that later in more detail. I was speaking about the difficulties that arise when calves are exported to a purchaser in another European country and about how we would enforce and monitor such exports. We would face an insoluble problem in trying to monitor and control the movement of calves that were in the jurisdiction of another member state. I do not think that it would work. However we sought to reformulate the provision, we would face the same insoluble problem of policing in another member state.

I do not want to drag the House into too much detail, but I want to make it clear that we have given these issues detailed consideration. I have given the House the flavour of that consideration. I emphasise, above all, that the Government, much as we sympathise with the Bill's underlying aims, cannot support the making of legislation that carries a high risk of successful legal challenge and that will not work. That is the basis of the legal problem that faces us.


Column 666

Mr. Olner: We have been going down this path for two or three years, but the problem will not go away. There will continue to be protests about the conditions in which animals are being transported. I have a simple question for the Minister. If Denmark can ensure that its animal products are exported to the rest of Europe in packaged or in carcase form, why cannot we do the same with our excellent meat products?

Mrs. Browning: We are doing what we can. Several hon. Members have mentioned the Meat and Livestock Commission, whose marvellous efforts to try to get more trade on the hook rather than on the hoof I commend to the House. It has worked hard. For example, French cutters have come here to show how to cut carcases in the way that French supermarkets and housewives like so that more can be exported. We are certainly in favour of more value -added products in the United Kingdom, but Governments cannot strike deals in the marketplace. It is for the market to determine the proportions of the live and on-the-hook trade. We shall help by the sort of efforts that we have been making with the MLC and by promotions such as the veal seminar that I held only a fortnight ago at MAFF headquarters to try to promote welfare-friendly veal.

Ideally, I would like to see pink, welfare-friendly veal exported to Italy on the hook. That would certainly be advantageous but it must be determined by the marketplace. I hope that the hon. Member for Nuneaton appreciates that although matters cannot be turned around overnight, we are working hard to maximise value added on this side of the channel. I hope that we will be more successful at that in future but even if we are there is a need for live animals to be sent across the channel.

We hope that the stance that we have taken on veal crates will result in a ban on their use throughout the European Community. We are also working hard to raise the standard of welfare of animals in transit, and some progress has been made. For example, it is accepted among our European partners that there should be a licensing system, and that licences should be revoked if transporters do not stick to the rules. If that could be policed on an EC-wide basis, it would be a great move forward.

We are stuck on the question of the maximum journey times and rest periods. Many other matters that have been agreed are waiting to be endorsed once we get over the final hurdle. My right hon. Friend, officials in the Ministry and myself have worked hard during the past month on the matter. If the message going out today from this House was that we in the UK--

Mr. Deputy Speaker: Order.

It being half-past Two o'clock, the debate stood adjourned. Debate to be resumed upon Friday 31 March.


Column 667

Remaining Private Members' Bills

ENERGY-SAVING MATERIALS (RATE OF VALUE ADDED TAX) BILL Order read for resuming adjourned debate on Second Reading [ 20 January ].

Hon. Members: Object.

Debate further adjourned till Friday 31 March .

ANIMAL HEALTH (EUROPEAN LAW) BILL

Order for Second Reading read .

Hon. Members: Object.

Second Reading deferred till Friday 28 April .

PRISONERS (RETURN TO CUSTODY) BILL

Order for Second Reading read .

Hon. Members: Object.

Second Reading deferred till Friday 31 March .

LAND REGISTERS (SCOTLAND) BILL

Order for Second Reading read .

Hon. Members: Object.

Second Reading deferred till Friday 31 March .

NATURAL DISASTERS (SCOTLAND) BILL

Order for Second Reading read .

Hon. Members: Object.

Second Reading deferred till Friday 31 March .

CIVIL RIGHTS (DISABLED PERSONS) (SCOTLAND) BILL Order for Second Reading read .

Hon. Members: Object.

Second Reading deferred till Friday 31 March .

FINANCE BILL

Ordered,

That, notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions, more than one stage of the Finance Bill may be taken at any sitting of the House.-- [Mr. Wells.]

BUSINESS OF THE HOUSE

Ordered,

That, at the sitting on Wednesday 29th March, the Speaker shall put the Question on the Motion in the name of Mr. Tony Blair relating to the National Health Service (Charges for Drugs and Appliances) Amendment Regulations 1995 not later than one and a half hours after the commencement of proceedings thereon; the said Motion may be entered upon and proceeded with, though opposed, after Ten o'clock; and Standing Order No. 15 (Prayers against Statutory Instruments, &c. (negative procedure)) shall not apply.-- [Mr. Wells.]


Column 668

PROCEDURE

Ordered,

That Mr. Charles Hendry be discharged from the Select Committee on Procedure and Mr. David Martin be added to the Committee.-- [Mr. Wells.]

MEMBERS' INTERESTS

Ordered,

That Sir Anthony Durant be discharged from the Select Committee on Members' Interests and Mr. Iain Duncan Smith be added to the Committee.-- [Mr. Wells.]


Column 669

Business Rates (Leominster)

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Wells.]

2.32 pm

Mr. Peter Temple-Morris (Leominster): I very much welcome the chance to raise on behalf of my constituents the subject of business rates in Leominster. I should say at the outset that I welcome the presence on the Front Bench of my hon. Friend the Parliamentary Under-Secretary of State for the Environment, whom I last encountered in relation to domestic heating, when his contributions were most constructive. I trust that my hon. Friend will show the same spirit when he comes to reply to the present debate.

For the purposes of the debate--I shall try to make this point succinctly-- I accept the system of the uniform business rate as it is. I must, however, declare an interest in that I spoke against the introduction of the rate, I voted against it and I remain against it now. There are two grounds for my opposition to the uniform business rate as a system, although I accept it for the purpose of proceeding practically with the debate.

First, I believe in the freedom of local government to tax in any local system of taxation. The present system is neither fish nor fowl, neither local freedom nor an effective central Government grant. Secondly--this is relevant to the present situation--any tax should relate as far as possible to the ability of any person or concern to pay it.

That brings me to the relevant points of background. When we came to reform the business and domestic rating systems, there was considerable delay. It took us from 1979 to 1985 to decide what to do about local government taxation. You will remember, Mr. Deputy Speaker, that the cry of the time was "Abolish the rates." But when we tried to go beyond the abolition to decide what on earth we were going to do by way of a new system, there was considerable difference and discord within the Government, the party and the country. The result was that there was no revaluation of property, and in particular business property, from 1973 until the 1990 revaluation. At the same time the reform, post-1985, came as a breathless rush. Half the reform--indeed, the major part--which dealt with the domestic system, as represented by the community charge, was rapidly discredited and is no more. We still have the other half--business rates--for better or for worse.

That brings me to the 1990 revaluation. Because of some of the facts that I have already mentioned, that gave vent to very large rises. The delay was an obvious cause. Also, the new system produced a north to south drift. The position was exacerbated by the recession for my constituents and for many others in the south and west. That led to another element of the problem, although it is a more welcome element--the concession of transitional arrangements in the 1992 Budget and in the two 1993 Budgets. The result was that when we reached the 1995 revaluation, many businesses were still not making the full payment under the 1990 revaluation. It is self-evident in what I am saying that the system is perpetually struggling gallantly, but sometimes in vain, to catch up with itself.


Column 670

On the matter of the 1995 revaluation, I want to cite a few references--in note form--from the helpful letter that my hon. Friend the Minister with responsibility for local government sent to colleagues. He said that under the 1995 revaluation there was little change in the total rateable value for businesses in England. He said that the effect on individual properties could be significant. He also said that the rentals of shops and offices in London and the south had been more depressed by the recession than those elsewhere. He then said that all that meant a shift in the rates burden from the south to the north.

What about us? What about the rural west midlands? What about many other areas that do not get the great boom that is claimed for the south of England? I speak for many of my hon. Friends in the border counties, the rural counties of the west midlands and the border marches. My constituency covers about 800 square miles and has two and a half sets of traffic lights. There are a large number of small rural businesses and many shopkeepers and traders in a number of market towns. It is such people, among others, who represent the bedrock of support for the Government my hon. Friend the Minister and I serve.

I know that my hon. Friend and his Department are concerned about the increasing menace to the traditions of the small trader from out-of-town supermarkets and, indeed, the whole cult of mechanised, motorised shopping- -the large general stores, supermarkets, do-it-yourself stores, and so on. The result of all that is that many businesses, especially local shops, have gone out of business. Empty shops abound, as is all too frequently seen in our various market towns. The new shops that should usually replace them are not materialising. In many cases, would-be business men cannot afford to pay the full business rate that setting up a business would entail. What is more, they would find it difficult to compete with those who, ironically, are receiving the transitional relief that we have been good enough to grant them. That is seen as an unfair advantage, and the result is that when a shop closes it does not open again. That leads me to some examples of the 1995 revaluation in my constituency. I have been given complete district figures by South Herefordshire district council. Overall, the rateable value increased by 26 per cent. Perhaps even more serious, the rateable value for factories and small workshops in rural areas increased by 36 per cent. I have four district councils, in whole or in part, in my constituency. In the Leominster district council region, the position is about the same.

I have received a petition from the Leominster chamber of trade. The rateable values of many shops included in that petition have increased by 50 per cent. The approaches that I have had from Bromyard show that those values have increased by more than 50 per cent. in many cases. One business in the border and market town of Kington came to see me in a somewhat irate condition. Its rateable value is up by 73 per cent.

In the village of Shobdon in Leominster district, there is a prime example. In 1990, a business there was assessed at a rateable value of £44,000. It appealed, but there was then considerable delay until just before the 1995 revaluation, when the rateable value was reduced to £25,000. However, in 1995 it then went back up to more than £40, 000, and there will no doubt be another appeal. We could do without that kind of yo-yo situation.


Column 671

My hon. Friend the Minister will be aware of the examples that I have given of businesses and, in particular, of shops. We have a separate mode of assessment for public houses and garages, based on a turnover link. The increases are extraordinary, if not excruciating. They do not take account of those businesses' profits--only the turnover is taken into consideration. I have two specific examples, both involving beautiful inns where I hold my constituency surgeries. My hon. Friend will know how lovely the region is. The Government Whip on duty is already nodding his head, so I appreciate his enthusiasm for the cause of the Leominster constituency.

The rateable value of the Crown Inn, Woolhope in 1994-95 was £6,500, with £1,780, after transitional relief, payable by way of business rate. In 1995-96, that has gone up from £6,500 to £31,300. The full amount that will be payable is £13,521. Few businesses can afford such increases. In 1994-95, the Red Lion Inn in Stiffords Bridge, Cradley near the Worcestershire border had a rateable value £6,500. In 1995- 96, it went up to £27,250. The question I put to my hon. Friend is why --what is the justification for that? Can it be described as a fair system of taxation and the best way to encourage the survival of businesses?

I shall make six substantive points. First, I accept the system, as I have said, for better or for worse, but I urge that, in accepting it and in carrying it out, we should make it as fair as possible. Surely my hon. Friend would accept that criterion. Secondly, the system in my constituency and in the region is working unfairly--I hope I have said enough to demonstrate that.

Thirdly, the combination of the five-year revaluations, together with the recent recession and the prolongation of transitional relief, which is compounding that unfairness, are worsening the position. How do we get out of that position? What progress can be made? Fourthly, new shops and small businesses will not arrive in anything like the numbers needed to replace those that are going out of business. I stress their unfair competitive advantage vis-a-vis those who are on continuing transitional relief. Clearly, I would not deny that transitional relief, but anyone considering occupying an empty shop faces unfair competition and the situation, sadly, is getting worse.

My fifth point relates to the appeal procedure. I know that the Department is concerned that it has been very slow. There is an urgent need to expedite the process. Some businesses have not even caught up between revaluations. If we go on as we are, many of those who have to appeal again will still be awaiting the outcome of the previous revaluation or, as in the Shobdon example that I cited, will just have received it when that for the year 2000 comes due. Goodness knows what that will yield, based as it will be on the 1995 revaluation with which we are all desperately trying to catch up. My sixth point relates to the valuation procedure and the system itself. I appreciate that the 1995 revaluation is based on rental values in April 1993, which was the tail end of the recession. At that time, rental values were worse, if anything, but there are still to be increases. It is claimed that, by some miracle, London and the south does better for that very reason, but we, too, suffered from the recession but have to meet almost incredible increases. We now face revaluation in the year 2000, possibly without even having caught up.


Column 672

Last but not least, I wish to make a straightforward political point, and I am sure that my hon. Friend the Minister will appreciate why I do so. In these perhaps not easy political times, we are still hanging on--often narrowly--to the title "the party of small business". As I have said, in many respects, small businesses are the bedrock of our support. I say quite simply that we are letting them down and in too many instances we are kicking our long-standing supporters in the teeth. If we do not help them, we shall be held to electoral account.

2.46 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert B. Jones): My hon. Friend the Member for Leominster (Mr. Temple- Morris) has given me an opportunity to explain the background to the non- domestic rating revaluation which takes effect on 1 April. I must also explain to him who is responsible for what. Naturally, my hon. Friend is concerned for businesses in his area, but I hope that I can persuade him that the Government, too, have the interests of businesses at heart. That is why we introduced the national non-domestic rating system in 1990. My hon. Friend has in the past opposed the scheme, although I note that he has this afternoon confirmed his acceptance of it as it stands.

It has been almost five years since the abolition of locally set rates, and it would be easy to forget the regimes under which many businesses were forced to trade. I remind the House of those times. During the 1980s, under the system then supported by my hon. Friend, rates rose by, on average, 37 per cent. above inflation. That was because many councils--I should be the first to concede that this does not apply to all--chose to spend more, knowing that local businesses would pick up the bill.

We now have one poundage for England which cannot increase each year faster than the rate of inflation. I assure the House that businesses have not forgotten the old rates system. They value the commitment that the uniform business rate offers them. Now, if authorities want to spend, the cost falls where it should--on the council tax payer.

Rateable values in 1990 were based on the market for rented property in 1988--the first revaluation since 1973, as my hon. Friend said. Another commitment that we made then was to update rateable values every five years. That time has now come. The 1995 revaluation will come into force on 1 April, based on the market for rented property in 1993. The revaluation has been performed by local valuation officers--an independent role given to them by the House and one in which neither I nor any of my right hon. and hon. Friends can intervene.

Ratepayers have now been notified of their new rateable values and, as in 1990, there will be winners and losers. I know that some are surprised at the change in their value. These values are, however, determined by local valuation officers. They are highly experienced and have evidence of actual rents collected--indeed, from ratepayers themselves. But this evidence needs careful interpretation and other adjustments so that it represents fairly the rent that a hypothetical tenant would have been prepared to pay in a new letting in 1993. It is quite possible that, for example, these rents will, in some cases, have been granted alongside incentives, such as lump sum payments or a period when no rent is payable. That is


Column 673

why the valuation officer also collects details of these incentives so that headline rents can be adjusted accordingly.

Of course, valuation officers are always willing to examine new evidence of the rental market. If my hon. Friend's constituents have evidence that suggests that their rateable values are wrong, they should contact the valuation officer at once. Indeed, I understand that he would welcome such a discussion. This is the course of action being followed by my hon. Friend the Member for Hereford (Mr. Shepherd), who is well versed in the system that we are debating. From the beginning of next month, ratepayers will have the opportunity to make proposals to change their value. During the 1995 rating list, there will be no restrictions on when proposals can be made. In addition, we are introducing new procedures to ensure that disagreements will be passed to the valuation tribunal as appeals within three months, not six months as is the case at present. I know that some ratepayers experienced delays in settling appeals against the 1990 list. My hon. Friend referred to that this afternoon. The 1990 revaluation was the first for 17 years, so that is not surprising. We hope that the new procedures for making and settling appeals will speed the process for the next quinquennium. The Government are committed to helping businesses with their rates liability and to assisting them to adapt to potential increases. That is why we have introduced the transitional scheme. My latest information suggests that the scheme will limit increases in bills in both Leominster and Malvern Hills to, on average, 8 per cent. in real terms.

I shall remind the House of what the arrangements do. The transitional scheme will ensure that no business will face an increase of more than 10 per cent. plus inflation in 1995-96. For small businesses occupying property with a rateable value of less than £10,000--or less than £15,000 in London--increases will be limited to 7.5 per cent. plus inflation. Special rules also give further relief to small properties with both business and living accommodation. Their increases will be limited to 5 per cent. plus inflation. This will provide extra help to many sub-post offices and village shops, as well as many other small shops.

My hon. Friend is also concerned that new businesses will not be entitled to the relief. I assure him that this will not generally be the case. Transitional relief will continue on a property even if there is a change of ratepayer. New businesses moving into a property that has transitional relief will receive that benefit. However, property that did not appear in the rating list at 31 March 1995 will not get relief.

More than 4,000 ratepayers in the Leominster and Malvern Hills districts and 1.25 million in England will benefit from the scheme. Part of the cost of the transitional arrangements will be met by the Exchequer and part by limiting rate reductions. Further assistance would have been very expensive. The extra cost would have placed too great a burden on the national taxpayer or other ratepayers. The arrangements are complicated and some ratepayers--and some hon. Members--will not have fully understood the way in which they work. However, most of them will now have received their bills and will see


Next Section

  Home Page