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7.34 pm

Mr. Tim Smith (Beaconsfield): It is extraordinary that the hon. Member for Newbury (Mr. Rendel) should be happy enough to tell us that his party wants to abolish the uniform business rate at a cost of £12,000 million, and also, in response to my intervention, that he wants to introduce site value taxation, but then to decide that he did not wish to discuss the matter. I am not surprised that he did not want to discuss it, as I have obtained a copy of a document published by the Liberal party in 1990 entitled the "Small Business Charter".

It may amuse the House to hear that the third paragraph of the document states:

"We plan to become Members of the Exchange Rate Mechanism of the European Monetary System."

I do not suppose that that is still their policy, but introducing land value taxation apparently is. The document continues:

"We propose Land Value Taxation with exemptions for agriculture and domestic properties. With these exemptions Land Value Taxation will be a fairer, more equitable tax, simpler to administrate and decentralist. It will specifically help small businesses because it removes the fear that improving land and property will increase rates."

That means that tax will be based initially on the land's full potential value, which is why no account will be taken of any improvements.

Mr. Rendel: On a point of order, Mr. Deputy Speaker. May I have your ruling on the relevance to the Bill of the views of the Liberal Democrats on site valuation?

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): So far, the speech of the Hon. Member for Beaconsfield (Mr. Smith) is quite in order.

Mr. Smith: I am most grateful, Mr. Deputy Speaker.

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I was about to say that the Liberal party's proposals will hit hardest the very properties mentioned in the Bill, which the Government are seeking to help. As my right hon. Friend the Secretary of State for the Environment said in an intervention on the speech of the hon. Member for Newbury, the Liberal Democrat proposals would have precisely that effect. I find it incredible that the hon. Gentleman mentioned those proposals but was then not prepared to defend them.

I believe that the uniform business rate has worked rather well in practice. Of course we would prefer not to have a £12,000 million tax on property, but if we must have a business property tax, it is far better to have one which allows businesses to be sure precisely what they will have to pay in the next year, as any increases are linked to increases in the retail price index. That situation is far better for businesses than the previous situation, in which there were arbitrary increases. I recall that about 10 or 11 years ago the business rate in Buckinghamshire increased by 31 per cent. in one year. Such a situation cannot happen again.

I was very surprised to learn that the Labour party proposes to abolish the uniform business rate and to return to the previous practice, whereby local councils set business rates.

Ms Armstrong: I will explain the position when I reply to the debate.

Mr. Smith: I hope so, because I have documents which suggest that the Labour party wants to do precisely that.

Ms Armstrong: The hon. Gentleman is getting rather excited. Perhaps he needs to examine some of the work done by the Minister, and some of the work done by the deregulation group which was headed by a former Minister, Francis Maude, who recommended that the uniform business rate had had its day and that it should go. Our policy is that the uniform business rate has had its day and that it should go, although we shall not return to exactly the same earlier methodology. We shall have a new methodology, but we believe that the uniform business rate should go.

Mr. Smith: That is not good enough. Businesses should be told. It is not good enough simply to say, "We shall abolish the uniform business rate." Businesses need certainty. The advantage of the present system is that they can budget with certainty for the following year.

A Labour party document entitled "Renewing Democracy, Rebuilding Communities" says that the party is

"committed to returning the business rate to local control".

Local control means a return to the position whereby it was possible for high-spending Labour councils to drive businesses that employ many people away from the most deprived areas. That is precisely what happened before, and I cannot believe that the hon. Lady wishes to return to that state of affairs. I hope that she will spell out Labour's proposals with rather more certainty, as I believe that the current system has worked quite well in practice. Of course there is no perfect system of business rates, but the current system has the advantage of certainty for businesses.

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I found the speech by the hon. Member for Holborn and St. Pancras (Mr. Dobson) rather reassuring. It was old Labour with an element of deja vu, based on the politics of envy, with attacks on wealthy people who happen to own sporting rights in the countryside.

The hon. Gentleman proposed an entire new set of spending commitments. On housing, for example, he complained about the present position and said that more money should be spent on housing. When my right hon. Friend the Secretary of State suggested that, if we were to allow more of the surpluses from the sale of council houses to be spent, there might be a quid pro quo in terms of reducing the capital allocation, the hon. Gentleman disagreed, and insisted that more money should be spent on housing.

One can hardly think of a less attractive way of going about the matter. The surpluses are not necessarily located in areas with the highest housing need, yet the hon. Gentleman would not redirect those resources. It is self-evident that the surpluses are in precisely the wrong areas. They are probably in places, such as my constituency, which have the most attractive council property and the largest number of council house sales, but the need is elsewhere. What a crazy proposal it was. If we want to allocate more money to housing, we should do so through the Housing Corporation, which can determine the areas of greatest need.

The hon. Gentleman's attack on deregulation was as surprising as his proposals on housing. Bus services have been in decline for the past 50 years under both systems of support for bus services. The only advantage of bus deregulation is that at least we now have a clear idea where the subsidies are going. The subsidies are focused, and the taxpayer is getting better value for money. The hon. Gentleman's scheme certainly would not succeed. He would not be able to persuade bus operators to take on loss-making routes without provided bigger subsidies. The only way to increase rural bus services is by providing larger subsidies to operators. We need to find a more flexible solution. The post buses have been mentioned. I also welcome the provisions in the Bill to allow parish councils to get involved in rural transport, as they are best equipped and qualified to judge immediate local needs.

I particularly welcome two other elements in the Bill. The first relates to the power of parish councils. When I first became familiar with parish councils, I was a little doubtful of their value: I thought that they were just talking shops and did not perform any useful function. As I have got to know them better, however--because my entire constituency is parished--I have reached the conclusion that they are well placed to identify genuinely local concerns.

Parish councils are the local authorities nearest to the people they serve. They serve a useful purpose as a sounding board, and I welcome the fact that they will be allowed to carry out more functions if they choose to do so and wish to provide the finance. That will be most welcome in respect of transport and crime prevention. For example, they may want to provide closed-circuit television in a small shopping centre.

I was pleased to hear what my right hon. Friend said about planning, which is one of the biggest issues in my constituency. There is widespread misunderstanding of how the planning process works. Many people think that

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parish councils make planning decisions, as they often have planning committees which decide whether to support any particular proposal and pass on that view to the district council which makes the final decision. District councils should pay more attention to the views of parish councils on planning matters. Local views on planning decisions are extremely important. My right hon. Friend the Secretary of State told the House that district councils would be required not only to give their reasons for a planning decision, but to respond specifically to the arguments advanced by the parish council for or against a particular proposal. That is extremely important, as it means that they will engage in constructive debate and there will be more communication between the two tiers of local government. That is an extremely welcome provision.

I also welcome the help to be given to shops in villages. That highly targeted assistance represents £15 million out of a total unified business rate bill of £12,000 million, but it is focused on particular circumstances with which we are all familiar whereby village shops are close to non-viability and many have been lost.

There is a tendency to exaggerate both the extent to which the Government of the day are responsible for the problems that have been caused and the extent to which they can provide a solution. As my hon. Friend the Member for Hexham (Mr. Atkinson) said, by and large the problems have been created by success and increased prosperity in rural areas. I can identify two factors: the pattern of employment, which has changed hugely over the years, and the huge increase in car ownership. The fact that so many families now have a car is a welcome development. Cars bring people enormous individual freedom, but the car has changed the patterns of retailing and employment.

For example, until recently the school in Little Marlow, a village that will become part of my constituency after the next election, was threatened with closure. That school is now flourishing, not because it is attended by children from Little Marlow but because parents from High Wycombe drive to the village so that their children can take advantage of village education. That is marvellous. The fact that they have that choice has made the school viable. We are discussing the problems of success, not failure, brought about by the increase in car ownership.

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