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6.12 pm

Mr. David Rendel (Newbury): Like other hon. Members, I welcome the Bill in principle. It has many good things in it. There are some things that we do not like so much and, unfortunately, many things have been left out that should be in it. I shall not take up too much time, because much of the detail will be better dealt with in Committee.

The flavour of the Bill demonstrates the Government's rather colonial attitude to local authorities and their visible anxiety about the extent to which they are prepared to let go and devolve power downwards. The Secretary of State several times said that he believes in subsidiarity and wishes that district and county councils would demonstrate a greater fervour for it in devolving their power down to parish, town and community councils. I, too, want that to happen but I also wish that our national authority would devolve more power to lower levels.

I shall take the Bill part by part and start, logically, with part I, which concerns non-domestic rates and the changes to relief, which are, on the whole, welcome. Rural and village shops provide an essential service and are not simply businesses. It is welcome that more rate

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relief is being provided. The speech by the hon. Member for Faversham (Sir R. Moate) could easily have been made from our Bench. Perhaps that is a sign of things to come, given what has happened over the past few months. I welcomed the emphasis that he gave to the need to get rid of the uniform business rate altogether in the longer term. It has penalised small shops and businesses and favoured larger ones.

No doubt the Government have seen great benefits in favouring the larger businesses that provide a large part of their party's money. That is not a good reason for supporting that method of taxing businesses. I hope that we will ultimately abolish the UBR. I wish that the hon. Member for Faversham was here so that I could tell him that the fact that the Government are making small changes around the edges suggests that they have no real intention of abolishing the UBR in the near future, if at all.

Mr. Tim Smith: If the hon. Gentleman's party is committed to abolishing the UBR at a cost of £12 billion a year, what proposals has it to raise the revenue?

Mr. Rendel: I am surprised that the hon. Gentleman has paid so little attention to the alternatives that he does not know that we propose to introduce site value rating.

Mr. Peter Luff (Worcester): Will the hon. Gentleman give way?

Mr. Rendel: No, I have dealt with the point.

One of the ways in which the Government are failing to treat subsidiarity with the respect that it deserves--

Mr. Gummer: I am sorry to trouble the hon. Gentleman, but is he really proposing that a small business performing an essential service on a site that happens to be expensive will be driven out of business, whereas a large one on a small site will be privileged? Surely he realises that site value rating would be a disaster for the countryside. He ought to know that.

It is the oldest trick in the book. The hon. Gentleman talks about site value rating, thinks that no one understands and hopes that he can get away with it. The only party in the known world that thinks that site value rating is a good idea, particularly in the countryside, is the Liberal party. I thought that it had given that up when it changed its name.

Mr. Rendel: It is clear from his comments that the Secretary of State himself does not understand site value rating. If he examined it in more detail, he would understand its benefits.

Mr. Luff: Explain them to us.

Mr. Rendel: We are here to discuss the Bill, not site value rating. If hon. Members do not know about it, they should examine it. Perhaps that is why they have not accepted it as their policy.

We should consider whether the scheme should be mandatory or discretionary, because there is some illogicality there. The Government propose that part of the scheme should be mandatory and part discretionary. If they really wanted subsidiarity and to devolve power,

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they could afford to say that the whole scheme should be discretionary, which would be better. For example, under a mandatory scheme, it would be difficult to decide which businesses should get the mandatory benefit.

What about a village with two shops where one is part general store, part post office, and the other only a general store? As I understand it, in such a village, the shop that was part post office would get the mandatory benefit because it was the only post office in the area, while the other shop would not. That creates unfairness. Of course, if it has any sense, the local authority may use its discretionary powers to help the second shop, but there does not seem to be any logic behind making one part mandatory and the other discretionary.

Perhaps it is simply that the Government are looking for a way of bribing some small business men in some of their more marginal rural constituencies, but it may also be that they are worried about whether local authorities would use the discretionary power as they think appropriate. As the Liberal Democrats are now the leading party in the local authorities of rural areas--across the south of England and elsewhere--I can assure the Government that we do see the value of using rating relief, and would certainly use it in the sort of cases that they are examining. We understand the value of helping village centres to thrive.

Mr. Barry Field (Isle of Wight): Despite what the hon. Gentleman says, does he accept that, in the nine years that I have been in the House, the Liberal Democrats have always controlled local government on the Isle of Wight, yet despite my many urgings to use the existing relief, they have never done so once?

Mr. Rendel: I cannot speak for the Isle of Wight, but I can tell the hon. Gentleman that many Liberal Democrat authorities use the relief. My authority in Newbury was one of the first to do so successfully.

There is also some difficulty in determining which communities will qualify for the rate relief. The difficulty is in deciding on the boundaries. Given the phrasing in the Bill, there will be a temptation for some local authorities to exclude certain surrounding areas so as to bring the population below the 3,000 threshold and ensure that the mandatory part of the relief is given. In that way they would hope to get more money out of the Government for their areas.

One can imagine considerable difficulties in calculating whether the threshold is met. While I am all in favour of the Government's plan to create a list of communities that meet the requirements--chopping and changing from year to year poses all sorts of difficulties for businesses trying to plan ahead--the Bill will still create certain definitional problems in this respect.

It is also important to specify in the Bill whether we are talking about communities that have only one shop and have only ever had one or communities that may have two shops, of which only one is currently functioning. The difficulties may arise if a second shop comes into being during a given year.

Another difficulty concerns how widely discretion is given to local authorities. I hope that the Minister will make the Government's real intentions somewhat clearer on that. The Bill allows a great deal of discretion to local authorities to give relief to local businesses of all sorts

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which are of benefit to the local community. If the Government intend to restrict the discretionary relief to shops, pubs, garages and post offices, the Bill will have to make that clear--because as it stands, it goes a lot wider. I want it to go wider, but I do not think that the Government really have that in mind.

I want to make two important points about the financing of the new relief. The discretionary power envisaged by the Government will be useless unless the additional financial burden on local authorities is taken into account in determining standard spending assessments and capping limits. If the Government do not give way on this point, they will in practice be asking local authorities to cut other vital services--schoolteachers, home helps or other social services--in order to pay for the discretionary rate relief being offered.

On 30 November last year, the Secretary of State made it clear that it was his intention to remove discretionary relief given on hardship grounds from the scope of capping. That was encouraging, but we need a clear commitment from the Secretary of State that this new relief will be exempted from capping in exactly the same way.

Mr. Gummer: Seventy-five per cent. of the discretionary relief will be paid by the central Exchequer--that is quite clear.

I have taken some trouble to check that I was right about site value rating. It means that the village shop would be taxed on the basis of what its site might be worth if it were not a village shop. So if it had a high value as something else, the village shop would be crushed by the rating burden. That is why the last known person to be enthusiastic about the system was the founder of the Social Credit Union.

Mr. Rendel: I do not know where the Secretary of State gets his information. The whole point about our system is that the site would be valued for the purpose for which it was intended, so a village shop would be valued as such. The right hon. Gentleman's point is therefore irrelevant.

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