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Lord Monkswell: I apologise to the noble Lord for intervening. The noble Lord has been going on about the terrific advantages that accrued to Scottish business from the uniform business rate as a result of the actions of the previous Conservative government. However, he has not told the Committee the reason why business and domestic rates went up. I hope that this intervention saves my noble friend on the Front Bench from having to correct the historical record. It was the cut in the revenue support grant to pay for cuts in the income tax of the Conservatives' rich friends that forced local authorities to push up the domestic and business rates in order to continue to provide the services that local people required.

3.45 p.m.

Lord Mackay of Ardbrecknish: I thank the noble Lord, Lord Monkswell, for that intervention. I shall draw it to the attention of Scottish business. But I suggest--perhaps quite wrongly--that he speaks for his party when he makes that suggestion. Anyone who knows about Scotland--clearly, the noble Lord does not--is aware that for example in the City of Glasgow, the Labour council took delight in setting high rates. It pretty well frightened business out of the city and into the surrounding areas. That stopped because it no longer had control of the business rate, but it continued to do it for individuals. Council taxpayers in Glasgow pay the highest council tax anywhere in Scotland. That takes some going; competition is pretty fierce among Labour local authorities. That is the reality of the matter.

Outside Glasgow there are other councils. One of them, which has just passed out of Conservative control--the Labour Party has not had sufficient time to damage the residents yet--charges significantly lower rates. It has attracted the establishment of many businesses outside the city. More importantly, a good many Glasgow businessmen have gone to live outside the city boundaries. I have not done that but frankly there is a considerable financial temptation to which many businessmen whose companies make their living in the centre of Glasgow have succumbed. That is a fact, and I am delighted that the intervention of the noble Lord gives me this opportunity to explain it.

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I return to the UBR and the problems that may be faced under the Scottish parliament. As we shall see when we come to discuss those parts of the Bill that relate to extra taxation, the maximum that is likely to be raised by the three pence in the pound is about £450 million. That is a lot of money but in comparison with the Scottish block of £14 billion, it is not hugely significant. If in future anything happened to the Barnett formula or anything of that nature, the Scottish parliament might find that the extra £450 million was insufficient. Therefore, it would look for other ways to raise money. As the parliament would have control over all government finance including the business rate it is possible that control of the uniform business rate could be used to increase the amount available to the Scottish parliament and Scottish executive to spend at their own hand. It is conceivable that in an attempt to raise additional expenditure, control over local business rates will be handed back to councils, those councils being allowed to set the local business rate with all the problems that that may cause. In so doing the advantage to the Scottish parliament is that it can reduce the amount of grants that it gives to local authorities which they will have to make up by increasing both the business and the domestic rate. The parliament may increase its income or have more income to hand from the block grant by this means.

The parliament may also keep the UBR but increase it in Scotland above and beyond that which local authorities need. While it may be a nice sleight of hand by presenting to the local authorities what it takes in by way of UBR, equally by sleight of hand it may reduce the amount of the other grant that it gives so that it retains a little more of the money which it can then spend on whatever is its favourite projects. Either way the business community in Scotland will be back to the position in which it found itself before we started out on the uniform business rate. It would face an increasing burden. My amendment seeks to make clear on the face of the Bill beyond any ministerial assurances that that cannot happen.

The second part of the amendment refers to local sales or tourist tax. This arises because of a suggestion by a very senior Labour councillor who I believe has been allowed onto the list for the Scottish parliament. I am not very sure because I do not closely follow the internal machinations of the Labour Party. Councillor Keith Geddes, who is Leader of Edinburgh City Council and who was the Labour Party's candidate for Tweeddale, Ettrick and Lauderdale at the previous general election, suggested that the parliament could raise money by a tourist tax. He made that suggestion in January and has repeated it recently. He went further and said that he would levy £2 per night per tourist. It would mean that if, say, a family of four had a fortnight's holiday in Scotland--this should interest the noble Lord, Lord Gordon of Strathblane, as chairman of the Scottish Tourist Board--it would have to find an extra £112. That may discourage people from coming to Scotland. I suspect that this year they have been discouraged because of the value of sterling which makes it less attractive to people from abroad to holiday in Scotland. It makes it more attractive for people in

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England to holiday abroad rather than in Scotland. In addition, the weather this summer has not been all that good. I blame the Government for that but that is another matter. I have not tabled an amendment to deal with that.

A tourist tax in Scotland would be a distinct disadvantage to the Scottish tourist industry. I do not want to labour the point. I believe that Councillor Geddes was flying a kite of his own. In case he is not, I have tabled this part of the amendment. Without wanting to labour the importance of tourism to Scotland, I should like to record that for many areas it is a vitally important industry. It brings in lots of money to the Scottish economy, especially to the parts of Scotland where there are not many ways in which local people can generate wealth.

The tourist industry was not very fussed by the idea. Mr. Peter Taylor of the British Hospitality Association said that obviously the tax would have to be passed on to the customer and would thus make Scotland less competitive and create a spiral effect. This is an important industry which generates about £2 billion a year for the Scottish economy. Therefore, I have thought it right to try to provide some protection for that industry in case the idea promoted by Councillor Geddes becomes contagious and spreads to other members of his party who have a leading role in the Scottish parliament. That is why the local business rate and any other local sales or tourist tax is addressed in this amendment. I beg to move.

Lord Hughes of Woodside: In the noble Lord's introductory remarks he spoke about a novel constitutional principle; namely, that those from the Back Benches spoke for their party and should be chastised for that, whereas the noble Lord in speaking from the Opposition Front Bench was wholly innocent of any party politics in this matter. I take his comment with a pinch of salt.

As to the uniform business rate, the view of business and commerce in Scotland is not 100 per cent. in favour of the UBR. I recall the discussions that I had with representatives of Aberdeen Chamber of Commerce when an elected Member of the other place. They presented a shopping list of projects that they wanted Aberdeen City Council to undertake: better roads and services and many other things. I asked how it would be paid for. They took refuge in the usual response that the Government would have to make the money available. Since it was a Conservative government, at the time we all agreed that there was not much prospect of it.

One of the problems was that in supplying services and reacting to local demands, needs and desires local councillors were hemmed in by restrictions on what they could spend, limits on capital spending, limits on how much money they could raise through the uniform business rate and so forth. I was solemnly told by the representatives of the chamber of commerce--and I have no reason to believe that it put up a bunch of mavericks to see us; they were speaking generally for the Aberdeen Chamber of Commerce--that if local

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services were to be improved it would be quite happy to trade off local decision-making against the uniform business rate.

The uniform business rate has not been of untrammelled benefit throughout Scotland. Its effectiveness and efficiency have been as variable as the local determination of business rates. It was very variable. The cost of the business rates to individual businesses was a very small proportion of any company's turnover and expenses.

I am against the amendment. The Scottish parliament should have the right to decide whether there should be a uniform business rate. I do not think that there should be, but I am not going to be there--and I have no desire to be there--to influence it one way or the other. It should have the right to decide.

Above all, if we are to see real change as a result of devolution, we need to give local government more power and responsibility. The only way that we can do that is to allow them to raise as much of their own revenue as they possibly can. They will have to answer to the electorate. If the electorate does not like what they do they will soon chuck them out. I am in favour of the maximum devolution, the maximum decentralisation of power. To retain in Westminster the uniform business rate goes totally against the grain. I hope that the noble Lord will not press this to a Division.

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