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Lord Brightman: My Lords, I had the privilege and pleasure of chairing the committee which originally considered the order which established the scheme. When I saw the Motion on the Order Paper I felt some alarm because I did not know whether the order was
Your Lordships cannot imagine the devastation which this area of Bristol presented when we first saw it on a bleak October day in 1988. There were abandoned factory sites and land so fouled by tar products that it could not safely be built upon. There was a railway line snaking over empty fields on which reposed abandoned railway trucks through which the bindweed grew profusely. There was a totally inadequate infrastructure to support any redevelopment. In the previous century Bristol was the second city in England after London. If this scheme has revived the fortunes of Bristol I for my part think that the greatest credit is due to the development corporation, to the local authority, to businesses which have migrated there and to all others concerned.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Williams, for saying that he supports the Government. He said that was a rare event but even rare events are greatly appreciated when they occur. Perhaps it will be the start of many. The noble Lord said that that did not represent a change of heart because he had various concerns about the measure. I knew that he would say something like that because it was incumbent upon him to do so as some members of his party are concerned about the Bristol Development Corporation. However, I consider that that body has done a wonderful job of work and has achieved all that I tried to explain to your Lordships. When it is wound up, the property which has been left--most of that is on the Quay Point project--will go to English Partnerships. The Bristol City Council will take on the planning matters on 18th December and the Secretary of State will assume responsibility for any remaining assets or liabilities on 19th December.
I was concerned that the noble and learned Lord, Lord Brightman, should have been worried when he saw the order on the Order Paper. I am quite delighted that I was able to remove his worries. I agree with the noble and learned Lord that the Bristol Development Corporation has achieved a great deal. That has not been easy for the corporation. It has turned a large area of derelict land into successful usable land. As I said, it has attracted private investment to the order of £3 for every £1 of government money. The result is that areas which were formerly derelict are now thriving and have modern houses and businesses. That has been a great success. The corporation's task has been completed and it falls to others to continue that task. I am grateful to the noble and learned Lord for his approval of this measure and for what the Bristol Development Corporation has done. I am also grateful to the noble Lord, Lord Williams, for his encouragement.
These regulations limit the increases, after inflation has been taken into account, of the rates which will be payable in 1996-97 by businesses whose rateable values increased substantially as a result of the 1995 revaluation of domestic property. The regulations amend the principal regulations which were introduced last December, and in which we provided for transitional arrangements in order to phase in the effects of the 1995 revaluation.
Although these may appear complicated regulations, I do not need to detain your Lordships too long, for the regulations are really quite straightforward. Last year's regulations limited the annual rates increases on property which had a rateable value of £10,000 or more--or £15,000 if the property was situated in Greater London--to 10 per cent. after allowing for inflation. For small businesses the increases were limited to 7.5 per cent. and for small properties consisting of both business and living accommodation the limit was 5 per cent. The changes, which were announced by my right honourable friend the Chancellor of the Exchequer in his recent Budget Statement, result in those limits being reduced by 2.5 percentage points in 1996-97.
That is all that the regulations do. And, as it is a decrease in the business rates which will have to be paid, I am sure that that will meet with the wholehearted approval of your Lordships. The extra cost of limiting the rise in business rates in this way will be £268 million over three years. The cost will be borne entirely by the Exchequer. There will be no reduction in the payments into the non-domestic rating pool, and there will be no reduction in the amount of money which will be paid out of the non-domestic rating pool distributed to local authorities.
The lower limits which are provided for in these regulations will benefit over 1 million businesses throughout the country by reducing the bills which they would otherwise have had to pay. I am sure that this will be widely welcomed by them, as I hope it will be by your Lordships. I commend the regulations to the House.
The only issue in relation to the uniform business rate is whether it should be nationalised or should revert to local authorities. That is a matter of principle which has nothing to do with this order, if I may criticise myself.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Williams. He said that there must be a touch of the Christmas spirit in this. Perhaps there is. I am glad that that makes him happy. However, I am a little disturbed that he looks forward to more controversial legislation after Christmas on which he can sharpen his intellectual knives.
I thought that the noble Lord would agree with the order, because it introduces a reduction in rates. I could not see how he could possibly disagree with it. I am glad that I was right in my premise and that the noble Lord welcomed the order.
The noble Lord said: My Lords, I beg to move that the Uncertificated Securities Regulations 1995 be approved. These regulations are necessary to allow computerised security settlement systems like CREST to operate.
The City of London is one of the three main financial centres of the world. It makes a substantial contribution to the UK economy and to exports. The equity market is an important part of the City, and the efficiency of the settlement system is an important part of the equity market.
The present paper-based system needs to be replaced to improve efficiency and reduce risk. The Stock Exchange sought to introduce a replacement system called Taurus which, as some noble Lords may remember, was abandoned in March 1993. The Bank of England then co-ordinated the responses of key City players in the setting up of the Securities Settlement Task Force, which decided on a new system called CREST. The CREST team has since been developing the system, and it is due to start testing in January and to start operating in July.
CREST will change the way in which title is transferred from one holder of securities to another. It will replace share certificates and stock transfer forms with authentic electronic instructions. However, CREST is a voluntary system. Only those who wish to use it need to give up their certificates. Detailed descriptions have been published by the CREST project team.
I turn next to the question of why the legislation needs to be altered. At present, under the Companies Act 1985 companies are obliged to issue share certificates to shareholders. They can only register the transfer of shares on receipt of a stock transfer form. It is therefore necessary to change the law to allow an electronic transfer system to work. Parliament foresaw that possibility when it passed Section 207 of the Companies Act 1989, which is an enabling provision. It allows such legislative changes to be introduced by regulations, which can thus take cognisance of advances in technology. That is the purpose of the regulations before us today.
Noble Lords will search in vain for a mention of the word CREST in the draft regulations. CREST is a good snappy name for the system under development. However, the Government believe that the legal structure must leave open the possibility of a competitor in the future. That is why the regulations use the rather dry formula of
The operator must apply for approval under the regulations against the criteria set out under Schedule 1. It is fair to say that there is little likelihood at present of another system seeking the same approval under the regulations.
The Government intend to delegate to the Securities and Investments Board the task of considering whether CREST meets these approval criteria. SIB has already had a role in recognising CREST as a recognised clearing house under the FSA. In addition, the SIB's role is to approve CREST under the regulations.
Perhaps I may say a word about costs. In accordance with the Government's commitment to private finance, CREST will be paid for by those who use it. Sixty-eight city firms have committed capital to the project. Some noble Lords may have received complaints about the cost of CREST and in particular the costs imposed by those firms providing network links, Swift and Syntegra. The Government have explored those concerns with those who have expressed them and with the network providers themselves. As a result of those discussions the Government expect CREST, the networks and the industry between them to achieve an acceptable balance of costs between large and small users.
Another concern has been the position of the retail investor. Many of those with small shareholdings trade infrequently, if at all. For them it will probably be appropriate to remain with certificated holdings. That will remain a viable option. There will also be the possibility of sponsored membership--a CREST special-- which will allow investors to keep their names on company registers and still benefit from the efficiencies of electronic settlement. I am pleased to tell the House that CREST borrowed the concept of sponsored membership from the Australian computerised system called CHESS, which I understand has been very successful.
It is now clear that CREST is expected to be introduced on time and to budget. That is a major achievement. The system will contribute to improving London's efficiency. The draft Uncertificated Securities Regulations make the minimum changes necessary to company law to allow electronic settlement. They have been the subject of extensive consultation, with positive and helpful results. All those busy with their own CREST preparations, including listed companies, will want to see what the final legislative framework looks like as soon as possible. The regulations have been the subject of an affirmative resolution in another place. I commend them to the House.
Lord Stewartby: My Lords, I thank the noble Lord for allowing me just to say a word. I am a member of the Securities and Investments Board. In that capacity I welcome the regulations. There has been close co-operation on the part of the parties involved in this process, including the Securities and Investments Board and my noble friend's department. I very much welcome the fact that the regulations are now before this House. I hope that they will be approved without difficulty.
I should like, however, to raise just one point with my noble friend. He referred to the role of the Securities and Investments Board, which has to approve CREST under the regulations, and continue to approve it. In public discussion of these issues it is sometimes difficult to differentiate between the responsibilities of the Government in the form of the Treasury, the Securities and Investments Board, and other regulatory bodies. I should find it helpful if the Minister could confirm that the Government's published public policy objectives remain the responsibility of the Government and not of the Securities and Investments Board. The Government have spelt out those public policy objectives as being the role of the retail investor; investor protection; competition; company and shareholder relationships; and London's standing as a financial centre.
I make only one other point, and in a personal capacity, not, as it were, wearing a SIB hat. There has been some anxiety expressed as to whether the CREST system will turn out to be a great blessing for the big institutions but cause problems for private and personal shareholders. I hope very much that, to the extent that it is able to do so, the Treasury will join in trying to persuade those who finalise the arrangements for costs that smaller shareholders and personal shareholders are not put at a cost disadvantage against the larger users.
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