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I move on to the issue of electoral fraud and shall deal with it as quickly as I can. It was raised by a number of noble Lords. I think we are slightly in danger of falling into a trap. Our political system is not corrupt; it is still the envy of the world. That is not to say that it does not have considerable problems, many of which have been raised today. The Joseph Rowntree Reform Trust report Purity of Elections in the UK: Causes for Concern made clear that,
and the Electoral Commission’s report gave details of prosecutions for electoral malpractice. There were 23 convictions for RPA offences between 2000 and 2006. Convictions do not necessarily occur in the same year as the offence. Published information shows that the number of convictions relating to RPA offences in that period peaked at 11 in 2001, and the number of convictions has since declined. Of course, I am not naive enough to argue that just because there have been no convictions, there have been no cases of fraud. Of course there have been, but we have to put this in perspective.
It is clear that postal voting has proved popular and has helped to boost turnout. In itself, that is a good thing. We have to take very seriously the risk of electoral fraud, and, as one or two noble Lords said, we have put in a range of measures to safeguard the security of postal voting. I could go through them, but I shall not.
Innocent mistakes were raised by the noble Lord, Lord Bates. I do not know whether this is the first time he has spoken from the Front Bench in a Second Reading debate, but I congratulate him on his speech. The noble Lord, Lord Henley, and my noble friend Lady Jones also mentioned them. We are considering a concession. We have undertaken to consider this proposal and will return to it in due course.
I turn to the issue of 55 months. I was surprised by the noble Lord, Lord Henley, on this. I understand that the noble Lord’s colleagues in another place welcomed the proposal that the Government made on 55 months. It is for this Parliament, which may go longer than 55 months. Who knows? It is possible that it may. Let me concede this: these provisions provide for 55 months. I accept that that is a relatively infrequent occurrence. In bringing forward the Bill, we have been clear from the outset that any changes to the regulation of party funding must command a consensus. There is a potential problem of unregulated spending occurring prior to dissolution, and it could still arise in future Parliaments. I regret that we have been unable to find a solution to tackle this that all parties can support. If this House can find a solution, the Government would be extremely grateful. We do not deny that there is a problem, and we are doing something to sort it out for the forthcoming election.
Lord Tyler: My Lords, is it not bad legislative practice simply to take account of present circumstances, which all noble Lords accept are exceptional, and legislate for them and not take account of general experience, which is that we do not go for five years? Surely, the Minister is not saying that we are going to
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Lord Bach: My Lords, I feel very much better for the noble Lord’s last comment and much relieved.
On the next issue, I pray in aid the noble Lord, Lord Neill of Bladen. His expertise on this is probably greater than that of any other noble Lord. There are matters on which he criticised the Bill. Although he says we should have done this sooner, he praised the Government on the move towards individual registration. He made the important point that this is a serious move towards individual registration and is bound to take some time if it is to be done properly because it affects voters all round this country. It took some time to become successful in Northern Ireland. There was a drop in registration when it was first brought in there. I ask noble Lords not to rush ahead of themselves in asking for some ridiculous timetable for this important step.
I was heard in some parts of the Chamber to say that we would start collecting personal identifiers from August 2010 to August 2015. What I meant to say, and what I think I said, was autumn 2010 and autumn 2015. I make that point if I was wrong.
As far as pilots for individual registration are concerned, the noble Lord, Lord Greaves, would like this to be a pilot case. He may recall better than most of us the provisions for the collection of personal identifiers from electors on a pilot basis that were brought forward in the Electoral Administration Bill 2006. Those provisions were removed and replaced with provisions for the universal collection of postal vote identifiers brought forward by my noble friend Lord Elder in response to a consensus around the House that we should get on with it.
Moving on to the commission itself, there were some issues around the fourth member with some political experience. Nominated commissioners—those with political experience—will not be party representatives just as they were not, I believe, on the noble Lord’s committee. We believe that it is right that there are four nominated commissioners—there was some support around the House for that—allowing the perspective of one smaller party to be heard. This was a recommendation from the CSPL. The noble Lord, Lord Goodhart, also had a view on this. The proposal that there should be some members of the commission with some political experience was supported by all parties during the Commons stages.
My noble friend Lady Gould, who also has huge experience in this field, asked about candidate spending rules. The Electoral Commission said before the Public Bill Committee in the other place that it would aim to publish draft guidance on the Bill’s original proposals in January and then finalise its guidance as soon as possible after the Bill has completed its passage. However, I think it would say that that is an indicative timeframe rather than anything more precise.
I was asked why compliance officers are needed. The background to this is that there have been frequent complaints about the burden of compliance with the
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Compliance officers are intended to assist elected office holders with requests of compliance set down by the 2000 Act. However, they do not absolve office holders from responsibility for compliance themselves. I look forward to discussing compliance officers in Committee. Any holder of a relevant elective office—that obviously will be a Member of the other place, a Member of the other Parliaments and Assemblies in the UK, or a member of a local authority in London and elsewhere—will be able to appoint a compliance officer.
My noble friend Lord Clinton-Davis asked what discussions had taken place with the Electoral Commission and others concerning the Bill. We are in regular contact with the Electoral Commission at all levels and we are aware of its views on the Bill, much of which it supports, I am glad to say. It does not support everything in the Bill but we have an honest and open dialogue with it which we hope will continue to be constructive. We believe that the measures in the Bill concerning the Electoral Commission will assist it to do an even better job than it has so far done.
I thank all noble Lords for the part they have played in this Second Reading debate. I anticipate and look forward to the Committee stage.
Bill read a second time and committed to a Grand Committee.
Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009
Motion of Regret
7.32 pm
That this House regrets that the Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009 (SI 2009/204), laid before the House on 10 February, will not prevent several port companies from becoming insolvent.
Earl Attlee: My Lords, I want to make it clear that I am not opposing the principle of the order, which seeks to give more time for certain port occupiers to pay a backdated and retrospective non-domestic rates liability, in order to avoid an immediate collapse of many, certainly in normal times, healthy businesses. The problem is that many businesses will become balance-sheet insolvent as soon as they receive their rate demands. For this reason, some local authorities
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It may be helpful if I explain the background to the problem. In the beginning, at the time of the nationalisation of the ports, it was decided that it would be appropriate for the Secretary of State to prescribe the rateable value of the whole port. The local authorities raised a rate demand on the whole port based upon the prescribed rateable value. When the 55 statutory ports were privatised, prescription continued. The businesses within the port did not pay rates; they occupied premises within the port, under a licence, as part of a commercial contract with the port owner. The terms and conditions of those contracts would vary depending on the nature of the operation of the occupier. For example, it may have been a crane hire company, a stevedoring company, a storage company, a freight-forwarding company or any one of the numerous operations that take place within a port.
However, rates were not an issue as they were covered by the port owner. Quite properly, the Government decided to return all 55 statutory ports to what are termed “normal rating principles”; in other words, the same principle which every business in the United Kingdom works under. This was fine, but in 2000 the then junior Minister at the DETR, Beverley Hughes, had to prolong prescription until 2005, and there were good reasons for that. The Valuation Office Agency has a statutory duty to compile and maintain accurate rating lists, which for the port businesses had to come into force on 1 April 2005. The VOA obviously had to undertake this valuation of the ports before that point. Unfortunately, the VOA woke up to its obligations only in 2006, and while it may have informed the port operators and owners, the port businesses and occupiers were not informed in advance of any change in the system or any increase in rates.
We are not talking about one isolated firm being out of the loop; this affects many different businesses in many different ports. Businesses in ports are now receiving massive retrospective and totally unexpected rate demands. In many cases these are financially devastating. Of course, for some port businesses these increases are modest and they have been able to pay the rate demand without any serious difficulty. I have no doubt the Minister will draw your Lordships’ attention to this.
Let me give a few examples to illustrate the magnitude of the problem. I have been informed that for each of the past four years TTS (Shipping) Limited has paid corporation tax, national insurance contributions and PAYE of between £425,000 and £860,000 a year. In 2007 its retained profit was less than £40,000 and it believes it has a backdated liability for rates of more than £1 million. If your Lordships should uncharitably think that TTS is a small firm which would benefit from improved information acquisition, how about DFDS Tor Line plc, which has a backdated rates demand of £9.9 million and an increased annual liability of £3 million. The MD of DFDS Tor Line has written
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All these businesses will have had proper plans and a proper cash-flow forecast. They had commercial arrangements with the port owners and their own customers and they thought they knew what their cost of operation was. Without the SI, these retrospective rate demands will have to be paid almost immediately. The effect of the SI to which my Motion refers is to give the companies concerned up to eight years to pay the rate demand. This demonstrates that a very serious problem exists, otherwise why would the Minister have done it? I am not opposing the order, because it will solve the problem for a few, but for many it will only prolong the agony in that on their balance sheet their liability will exceed their assets.
However, if directors of affected businesses reasonably believe that they can trade through the problem, it might be legal to continue trading. Expensive legal advice will have to be taken—and often—because presumably every time they have a setback it will increase their liability on the balance sheet, and being balance-sheet insolvent will mean banking covenants may be breached; it will be even harder to raise finance, which is extremely difficult in any case; and if finance can be raised, it will be very dear. For many, the financial strain will be too much and the business will collapse, with the attendant loss of employment.
Your Lordships will have noticed that the SI experienced a rough passage through this House’s Merits Committee. I will not rehearse the committee’s concerns in detail, but it was extremely disappointed about the amount of information accompanying the order and, therefore, the ability of Parliament to properly consider the regulations. There was also concern about European state aid rules being breached, but I shall not weary your Lordships with that argument.
The situation I have described is serious. The regulations do not solve the problem; the solution is to revert to the old system of prescription and the original rating lists. It is important to understand that it is not as if the ports, and the businesses within them, were exempt from rates; it was just a different system. I am sure that the Minister will not tell us that no rating system was in place prior to 2005, and I hope that she will not suggest that I am proposing to write off the debt; I am not. I am suggesting reverting to the original system. Ministers constantly say that these retrospective rates are due under the law, which is quite right, but the law implemented by the Government is having completely unintended consequences that arise not from ministerial failings but, frankly, from incompetence at the VOA. Ministers need to go for primary legislation, delay implementing normal rating principles until April next year, and continue to use the old rating lists.
I fully appreciate the difficulties that the DCLG and transport Ministers find themselves in. Even in normal times, it is not easy to find a slot for primary legislation. It will be even more difficult now; my
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If an ordinary business takes on new or altered business premises inland and is subject to the normal rating principles, any competent surveyor can indicate, reasonably accurately, what their rateable value will be, and hence the rates to be paid. An allowance for those rates can be made in the company’s business plan and cash-flow forecasts. If the local authority, for any reason, delays or omits to issue a rate demand, the business will not be able to organise a party. The estimated rates will have to be shown on the balance sheet as an accrual, and provision will have to be made in the cash-flow forecast. The ports, however, are different. The commercial arrangements between the port owners and port businesses were predicated upon the pre-2005 rating arrangements, so, for those businesses, rates were not an issue. They simply did not need to be considered by a port business, as long as the port was operating under the prescribed rather than normal rating rules.
The Minister will say that to write off debt would be unfair to other ratepayers. First, I have already explained that I am not proposing a write-off. Secondly, to which other ratepayers would it be unfair, since there was always a rating system for the ports? Finally, the favourite phrase at the moment is “in the current economic circumstances”. These circumstances are not good; shipping is already badly affected, as the ports will be. We cannot save every business, but let us avoid making it unnecessarily difficult for those companies to survive our current economic problems. I beg to move.
7.45 pm
Lord Berkeley: My Lords, I support the noble Earl, Lord Attlee. I have no interest in ports, apart from being a harbour commissioner in the port of Fowey in Cornwall, which is not significantly affected by this, but from going around the country talking to people in ports I hear the concern that they have about these regulations. I shall not repeat all the excellent examples that the noble Earl, Lord Attlee, gave the House, but I have heard them too.
My worry is that these businesses, which have sometimes been operating in the ports for many years, are in strong competition with each other and with other ports and, as the noble Earl said, they have had no means of assessing what their future rate demands would be because the Valuation Office Agency had not got around to telling them. They have ended up not being able to charge their customers or make provisions, as they do not know how much to charge, but they receive these massive bills three or four years later.
I agree with the noble Earl; I am not suggesting that the rates should be written off, or anything else, but can my noble friend explain why the Government have
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- “consider the proposal to maintain the rateable values of premises in statutory docks and harbours at the levels published in the April 2005 rating lists until the new rating list is published in 2010”.
That seems perfectly reasonable; they will still have to pay rates, but at least it will be on the basis that they understood before. This issue happened on the railways five or 10 years ago; I think that has been resolved now, but I agree with the noble Earl about the increased rate demands faced by these companies. Companies will be going into liquidation. They may have eight years to pay, but if they cannot pay anyway it does not help matters much.
We are in a situation of severe economic problems. We have a Department for Business, Enterprise and Regulatory Reform that is trying to help companies survive and prosper. I would hope that this matter could be resolved by some good joined-up government between my noble friend’s department, the Department for Business, Enterprise and Regulatory Reform, and the Treasury. I fear that enough companies will be going into liquidation without those poor people operating at the ports joining them—and it is not just the port companies but the ports themselves. Associated British Ports tells me that its demand has gone up really dramatically because of this revaluation, by 100 per cent to £7 million a year. Now, it is a big company, but I hope that my noble friend will agree that a 100 per cent increase, backdated again, is difficult for companies to suffer. I look forward to what she will say, but at the moment my inclination is to join the noble Earl if he puts the Question to the House.
Lord Greenway: My Lords, I support the Motion of regret moved by the noble Earl, Lord Attlee. Both noble Lords who have spoken covered how this situation arose, but it is unfortunate that the Government did not take a leaf out of Scotland’s book. There, they saw the problem arising, instituted proper consultation and did something about it. This problem could easily have been got around and, as the noble Earl said, it was only due to the inefficiency of the Valuation Office Agency, which did not complete its statutory obligation to produce new rating valuations by April 2005.
The noble Earl mentioned a number of companies which have been affected. I can add three to that list, in Tilbury, which have already gone bankrupt. Another company on Merseyside, which has a turnover—not profit—of £1.8 million has received a rating bill for £1 million. Some of these companies simply cannot exist under this, despite what the Government are trying to do about it. One might almost say that it is too little, too late.
Our ports industry is one of the best in the world; it is certainly the largest in Europe. It handles something approaching 600 million tonnes of cargo a year and facilitates the transit of some 30 million passengers. It is big business. It employs large numbers of people who work not only in the ports but in the ancillary businesses connected with them. DFDS Tor Line, which was mentioned, has been considering whether it
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This is a matter of great regret; it should not have happened. The noble Earl, Lord Attlee, is quite right to bring forward this Motion, and I support it.
Lord Sterling of Plaistow: My Lords, I want to add a somewhat different dimension to the debate. First, I am totally against anything retrospective in principle, but where the ports are concerned, on a more positive note, I should like to paint a picture of what is happening out there at the moment. We are heavily involved in the trade routes of this country. To declare my interest, I ran P&O for 22 years. We had probably the largest fleet by far in Europe and also controlled many of the ports worldwide, so I am speaking with that experience behind me. I am still life president of P&O and also chairman of Swan Hellenic ships.
I suggest to the Government that this is a great opportunity. The great shipping companies can choose anywhere to land their goods. If you take the far eastern trade, you have the choice of going to our ports, or to Le Havre, Zeebrugge, Rotterdam, Antwerp, Bremen, Hamburg, and so on. But at the moment, the weakness in sterling, which in a strange way might be a strength, gives us an opportunity to offer a service which will entice many of these companies to bring their ships to our ports.
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