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As I have said, we need to introduce the new system because we will simply not be able to operate the present rating system from next April. I accept that that is not a fait accompli because it is subject to

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parliamentary approval. Given the time that we have taken over this, we freely admit that it would be incredibly difficult to operate the present rating system because the IT systems and all the procedures are in place to operate the new system. That is why the amendment tabled by the noble Lord, Lord Smith, is not really tenable or practical in the present circumstances. It would cause the utmost chaos in the collection of local government revenues in Northern Ireland next year.

On the other hand, the amendment in the name of the noble Lord, Lord Glentoran, is seductive in that I want to hear him make a robust case for it. I will think about it while he is speaking and make an assessment, because we are prepared to be flexible. The Ministers in charge of this day to day have already said so. We need the consent of Parliament to introduce this system in the absence of the Assembly, although we would much prefer it to be the Assembly. The Executive and the Assembly started this process. They have at least identified something that needed to be done. I am not blaming them for choosing capital values. They considered 12 options. They were disbanded in, I think, October 2002, and direct-rule Ministers decided the way to go in December 2002. The four years since have been spent planning in the most meticulous detail.

We are confident that the system will work. It is modern and fairer, and it creates more gainers than losers. That is very necessary when one is changing the tax system, although the gainers do not always thank you for it. The losers are easily identified, as they can be quite vociferous. As I said in Grand Committee, one cannot defend the present system, which asks people on low incomes living in low-value properties to pay a disproportionately higher share than a fairer system would ask them to pay, compared with those living in the high-value properties. The idea that there are no high-value properties in Northern Ireland can be dispelled by driving around Northern Ireland for a few hours. It is a fairer system designed for Northern Ireland and nowhere else. As I have said, there will be more gainers than losers, and it has the necessary concessions to make it work and to make it as closely based on the ability to pay as possible, bearing in mind that it is a property-based tax. I beg to move.

Moved, That the draft order laid before the House on 9 October be approved.—(Lord Rooker.)

Lord Smith of Clifton rose to move, as an amendment to the Motion, to leave out all the words after “That” and insert, “this House declines to approve the draft Rates (Amendment) (Northern Ireland) Order 2006 until the Northern Ireland Assembly has taken a decision on the subject matter of this order”.

The noble Lord said: My Lords, as the noble Lord anticipated in his remarks, we on these Benches and he on the Government Benches will be ships passing in the night. I congratulate the Minister on his ministerial stamina: throughout today he has been very versatile in the various roles that he has performed, for which we are grateful. I have for long

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been critical of Northern Ireland orders because they are not amenable to amendment, and this of course is no exception. My noble friend Lady Harris of Richmond outlined many of our specific objections in Grand Committee, which I shall not repeat now. But none of those objections could be tabled as reasoned amendments to this order. Successive Ministers and Secretaries of State have recognised this very unsatisfactory character of such orders. They all richly wrung their hands in lamentation and cried crocodile tears, but still they persist with the practice.

At this juncture in the politics of Northern Ireland, there is no need to have recourse to such orders precisely because Ministers have assured us that devolution is about to be restored. Three weeks ago, the Secretary of State made a Statement in the other place, which was repeated by the Minister in this House, heralding the agreement at St Andrews as opening,

We welcomed that Statement and congratulated the Government on the work that they had done to achieve such an accord.

The timetable for implementation, which was published along with the agreement, envisages that the Assembly will meet on 24 November to nominate a First and Deputy First Minister, which is just over a fortnight away. Is this legislation so vital that it must be pushed through Parliament at this time? If the Government were to wait until after 24 November, we would know whether the Assembly will be restored, in which case would it not be better for the local politicians who are accountable to the people of Northern Ireland to introduce a rates system which they feel best suits the needs of Northern Ireland? Indeed, the parties have been asked to respond to the St Andrews agreement by 10 November, which is this Friday. I hope that by then there will be a clear indication of whether a First and Deputy First Minister will be nominated. However, can the Government say that this legislation must be pushed through today, before we have a clear indication on the prospects of devolution, when this entire process has been going on since May 2000?

The noble Lord has pointed forcefully to the imperatives of administrative convenience. I can understand that, but I am arguing a principled, democratic argument. It is the wishes of the parties in Northern Ireland that the Assembly should deal with this issue—at least, most of them. I believe that other noble Lords will have received the same letters as I have from the political parties on this matter—and, incidentally, from hundreds of individuals—urging this House to reject the order today and allow Stormont to decide how rates reform should proceed.

Sir Reg Empey, leader of the Ulster Unionists, states:

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Mr David Ford, leader of the Alliance Party, says:

Dr Alasdair McDonnell, SDLP MP, has said:

For his part, Mr Gerry Adams, Sinn Fein, has said:

Finally, the DUP stated:

It is therefore clear, at least on the face of it, that none of the political parties in the Assembly wants this legislation or wants Westminster to take this decision at this time. It would also be very good for the restored Assembly to deal with the tricky problems inherent in rating reform and local taxation. Assembly politicians should be responsible for any changes and held to account for them by the Northern Ireland electorate. They should not have the excuse that the new rating system was imposed by Westminster under direct rule.

As the Minister said, the reform of the rating system began in May 2000 when the then Minister for Finance and Personnel, Dr Sean Farren, launched a review of rating in Northern Ireland. We do not dispute that that was the right thing to do, but, after six years of consultation and proposals, we dispute the need to push this order through at this time. The process of rates reform was begun by the Northern Ireland Assembly. It should be concluded by the Northern Ireland Assembly. It should not be pushed through Westminster when there is a real chance that the politicians of Northern Ireland who have been elected to take decisions on issues such as this will be exercising power in the Assembly within a matter of months.

My second point is another objection to this order. Again, the Minister touched on this, and I have to ask whether it would not have been better to await the Lyons report on local government finance, which is shortly to be published. Its broad recommendations, presumably, will be as applicable to Northern Ireland as to England and Wales. At the very least, it would provide a useful yardstick by which to judge the changes proposed in this order.

The Minister has again denied that this will be used as a pilot for reforms in England and Wales. However, judging from my mail, there is a widely held suspicion that that is the case—in the same way that a previous government used Scotland as a pilot for the poll tax—which is another reason why I wish to press my amendment to this order. I beg to move.

Moved, as an amendment to the above Motion, to leave out all the words after “That” and insert, “this House declines to approve the draft Rates (Amendment) (Northern Ireland) Order 2006 until the Northern Ireland Assembly has taken a decision on the subject matter of this order”.—(Lord Smith of Clifton.)

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Lord Glentoran: My Lords, this order brings to a conclusion the reform of the domestic rates in Northern Ireland on which the Government have embarked. It replaces the existing system with a new one—which is unique, but who knows for how long, in the United Kingdom—based on the capital value of a property. It is a tax on house prices, pure and simple. It is a modern-day window tax, in which government inspectors even take into account whether a house has double glazing.

As I said in Committee, we are not opposed to reform of rates in Northern Ireland, but we are completely opposed to this new system. As my party leader, David Cameron, wrote in the Belfast Telegraph two weeks ago, it is just “unjust”. Many people in Northern Ireland, through no action of their own but simply as a result of the peace process, have seen the value of their property rocket in recent years. Parts of Northern Ireland now have the fastest-rising house prices anywhere in the UK. I am talking not just about south Belfast and North Down, but about Lisburn and Newry as well. Increases in property values have far outstripped the growth in incomes. As a result, many people who happen to live in a higher-value property area will literally be clobbered. People on fixed incomes—pensioners who might be asset-rich, but in cash terms, poor—single-person households and those just outside the benefits system will be hit especially hard.

It is not just those people who live in what we might think of in London as higher-value properties. People in fairly modest homes will also be hurt. It is no good the Minister claiming that more than half of homes in Ulster will see a decrease in the amount that they pay in rates when the new system will produce some quite exceptional increases. Let us take the retired teacher who bought his house 16 years ago for £58,000. It is now valued at £290,000 by contractors for the Valuation and Lands Agency. As a result he has just been informed that his rates bill will go up from around £1,000 to £2,000. That is over £700 more than the £1,300 in council tax that the Prime Minister pays on his £3.3 million house in Connaught Square. If he lived in Northern Ireland, the Prime Minister would now be facing a rates bill of around £22,000. Yet the Secretary of State boasted at this year’s Labour Party Conference that he is introducing a fairer system of local taxation in Northern Ireland. I would be grateful if the Minister could tell the House where the fairness is in that—some peace dividend for decent, hardworking families in Northern Ireland.

7.30 pm

To gather the information required to implement the new system involves huge erosions of liberty. Unprecedented powers are being given to the Government to compile data on family homes, literally to spy on people using aerial photographs and the like. I mention too the sinister Article 38 powers of entry and invasions of privacy for government inspectors to assess, with fines for those who simply want to keep the snoopers out. The new system is unjust and undemocratic. It is opposed overwhelmingly across the community in Northern Ireland. It is opposed by all the Northern Ireland political parties, and I have letters from them

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all, bar Sinn Fein. Yet the Government plough on regardless. Why is that? They do so because the same Government who put off the council tax revaluation in England because they feared an electoral backlash do not contest a single vote in Northern Ireland. So the Government think that they can get away with it. This is yet another example of the Government’s double standards.

The reality is that if this system were not introduced this coming April, it would not affect the Northern Ireland budget by one halfpenny. We have been told time and again by Ministers that the reform is supposedly revenue-neutral, so it is hardly pressing. What is the hurry? We believe that local government finance should be left to the local people in Northern Ireland to decide, not imposed as an experiment by Labour Government Ministers.

There is no reason why this matter could not have awaited the restoration of an Assembly. At St Andrews the Government sought to use rates as part of the negotiations to restore devolution. Capping and extra help for pensioners is either right and should be introduced on its own merits, or it is not. It should not form part of an attempt to blackmail Unionists into sharing power with Sinn Fein. The Conservative Party believes that there should be a cap and extra help for poorer pensioners, irrespective of whether the parties sign up to St Andrews and devolution is restored. That is why I tabled the amendment on the Order Paper in my name. I have listened with care to what the Minister had to say and will listen to his response. If he meets the letter and spirit of my amendment, which would be a welcome change of heart on the part of the Government, it will go some way to minimising the impact of the legislation on large numbers of people.

Lord Waddington: My Lords, before my noble friend concludes his remarks, many of us feel it is pretty outrageous that the Government should be pushing through this order when they hope that in the very near future devolved government will be restored. In the light of what my noble friend has said and the way in which he has drawn attention to the injustices of the new system, we are puzzled by my noble friend’s reluctance to advise us to vote against the order. In almost all he has said he has indicated that he is against it. Surely, given the conclusion reached by the Cunningham committee that the rejection of Northern Ireland Orders in Council might well be appropriate, this is a very good moment indeed for us in this House to reassert our right to reject orders. I want to know why we are not rejecting this order tonight.

Lord Glentoran: My Lords, I am coming to that. My noble friend will have my answer shortly. Let me be clear: if the Government do what is asked in my amendment, it will in no way diminish our dislike of the new system. It remains rotten, unjust and undemocratic. That is not just our view, but that of the people across the community in Northern Ireland who face higher bills and who are to be used as guinea pigs for England. If these matters are not devolved to the Assembly, then when there is a Conservative

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Government, we will abolish the rights of snoopers to enter people’s homes throughout the United Kingdom. And I give this pledge to the people of Northern Ireland: we will certainly review the system that Labour is imposing on them today.

This is a deplorable policy being used in what many of us find a distasteful way. But—and this is where I answer my noble friend—we are an unelected House and we cannot take it upon ourselves to assume the government of Northern Ireland if the other place has given its consent and we are told by the noble Lord, Lord Rooker, what a delicate stage this is in negotiations.

Lord Tyler: My Lords, I am grateful to the noble Lord for giving way. Has he read the committee’s conclusions on the point to which the noble Lord, Lord Waddington, has just referred? A very specific reference was made and was signed up to by all parties and Members of both Houses, that this House must have the right to say no in these particular circumstances. I wonder if the noble Lord has actually read that section of the Joint Committee report.

Lord Glentoran: My Lords, I am coming to that too. My question here is: are we to come in and unilaterally alter the terms of negotiations between parties in which we have played no part? If we made an error of judgment, we could pay a high price indeed for what would be only the third time since the war that we had rejected an order in your Lordships’ House. So on balance, and having discussed these matters with the noble Lord, Lord Rooker, whose faith we all so much respect, and in the hope that he is able to give assurances on the issues raised in my amendment which would address the worst unfairnesses in the system, I ask the House not to take the confrontational line proposed by the noble Lord, Lord Smith of Clifton. I respect the noble Lord, Lord Smith, greatly and I share the constitutional principle that he advances that repugnant policies should not be forced on the people of Northern Ireland without their consent by direct rule or by pressure of this kind. If Stormont does not reassemble, we cannot go on indefinitely in this way with the government of Northern Ireland. Orders which cannot be scrutinised are not the right way to change the lives of the citizens of any part of our country. However, there is a second constitutional principle; that is, that your Lordships’ House, indeed neither House, normally votes against an order, however angry we may feel—and few feel it more than I. I do not think that this is the occasion to break such a precedent. The Joint Committee, under the chairmanship of the noble Lord, Lord Cunningham, has recently looked at these questions and said that both Houses have the constitutional right to vote down orders. It should be exercised with extraordinary restraint—I repeat, it should be exercised with extraordinary restraint. I agree with that. But I also agree wholeheartedly with a second recommendation of the Joint Committee; that is, that all Governments should take notice of issues raised by your Lordships’ House in amendments that are tabled on orders.

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I hope that the noble Lord, Lord Rooker, will take notice and give the assurances we seek on this. If he does, your Lordships’ House will have gone some way to minimising the impact of the new system on people facing very high rates increases, and on some of the most vulnerable in society.

Lord Trimble: My Lords, I rise primarily to support the amendment proposed by the noble Lord, Lord Smith of Clifton. He read extracts from letters that a number of us have received from the various parties in Northern Ireland. They have come from five political parties in Northern Ireland and are very clear: four of them specifically request your Lordships to support the amendment of the noble Lord, Lord Smith of Clifton, because it is a fatal amendment and because they do not wish the order to be passed in this House tonight. I believe that the omission in the case of the fifth party is purely inadvertent because I am sure that it is equally opposed to the passing of this order. That is our position also.

I listened with great interest to the speech of the noble Lord, Lord Glentoran. He made a very strong case against the order. He gave very good examples of its impact, particularly his comparison with what the Prime Minister would be paying on his property were it to apply to him. The Fair Rates Campaign brought to our attention the case of a pensioner who now faces a bill of £14,000 per annum. These rates are penal. With the greatest respect, I say to the noble Lord, Lord Rooker, that it is no good bandying figures about gainers and losers when some people will be subject to absolutely penal rates.

The absence of a cap is utterly and totally indefensible. It is a simple matter of citizenship, fairness and equity when such caps exist elsewhere in the United Kingdom and we have a system brought in which, together with the rapid changes there have been in capital values in recent years, will have a hugely penal effect on some people. It will not have as much effect on me as it will on others. My house is not as grand as others and I might not be too badly off. I think I might face an increase of only around 30 to 40 per cent—but that is nothing compared to what some noble Lords sitting not very far away from me are facing.

I was less than satisfied by the response of the noble Lord, Lord Rooker, to the question of what happens if one takes out of these figures those whose rates are paid for by others. The question was raised in Grand Committee and I thought that by the time the issue came here the Minister would have equivalent figures. I am sorry that we did not get them. Instead, we have a figure which rather gilds the lily. On his figures, as given in the Grand Committee, there are said to be 55 per cent gainers but he gets it up to 68 per cent by including those who are only losing a little. The ones who are losing a little are not gainers—a simple point—and the balance between advantage and disadvantage is very narrow. In any event, it is quite indefensible to bring this forward when it has such an unfair impact. As I said, the Northern Ireland parties have made their position clear: they do not want this order to pass.

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The review started under the Northern Ireland Assembly when I was First Minister. I can assure the House that had the review been completed while I was First Minister this would not have happened; we would not have had it in this form. Yes, changes would have been made—and they might even have been made by reference to capital values—but the legislation would not have come forward in this form. Of that I am absolutely sure, just as I am absolutely sure that the review of public administration which I started would have come out with a very different result from that which occurred after we had direct rule and after the rats got at it. In case anyone should misinterpret that particular comment, I should say that I am not referring to anyone present.

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