Finance Committee, 07 Dec 1999

Meeting date: Tuesday, December 7, 1999

Official Report 216KB pdf

---

Abolition of Feudal Tenure etc (Scotland) Bill

We will move on to consider the Abolition of Feudal Tenure etc (Scotland) Bill. The financial memorandum starts on page 36 of the explanatory notes.

Do committee members have any comments on this bill?

The financial memorandum for the previous bill was a useful piece of work, but the one for this bill is vaguer and less quantified; it gives little guidance on the conclusions on which we have to decide. Although I am very supportive of the bill, I am concerned about the area of compensation. If the legislation gives rise to any problems, we might find that the demand for and burden of compensation is much greater than we had expected. The contents and format of the bill need to be tight to protect the public purse. The committee has received no guidance on the possible scale of compensation demands, which makes it difficult to arrive at an informed judgment about the contents of the financial memorandum.

In fact, the financial memorandum contains no figures at all for projected costs.

On that point, paragraph 242 of the financial memorandum states:

"It would be a monumental task to search the property registers, the Register of Sasines and the Land Register of Scotland, in order to identify the total number of superiority interests in Scotland."

That is a fair comment, but it suggests that the issue at stake is large and unquantifiable, so we are not in much of a position to judge it.

John Swinney is correct that the financial memorandum has not drawn together total numbers, but the feeling that I get on reading paragraphs 237 and 238 is that the financial values involved are small. The final sentence of paragraph 238 talks about the ability to pay compensation by instalments when the total payment is more than £100. The financial values involved seem to be smallish—I suspect that that is why the Executive has been vaguer than it should have been in quantifying total numbers.

I think that that is right, but the question is whether we believe that some attempt should have been made to estimate the costs, as was done with the Adults with Incapacity (Scotland) Bill and the bill that we looked at before that.

The figures are vague. The second part of paragraph 242 says that it is

"impossible to anticipate the reaction of these superiors".

There will be a lot of legal searching, which will not be free; it will be done for residents of tenement blocks as well as for landlords who are going through their portfolios. We will end up with a large number of people making claims, possibly without having done their homework, on the basis that the cost of responding would fall to someone else.

That is relevant if we are to come to a view on the likely cost to the public purse, because in many cases local authorities and other public bodies will be heavily involved. They will definitely be fighting off a number of claims that may not be genuine, but that have a right to be opened up. That will almost certainly affect the budgets of those organisations, because they will have to deal with lots of little, expensive pieces of work. A provisional pot of money should have been provided. Perhaps the Minister for Finance has a value for that pot in his figures somewhere, but we have not got to it yet.

In addition, legal aid would be available to individuals—it is surprising that no mention is made of that in the memorandum.

My feeling is that the numbers involved will be small. At the moment, when property changes hands, the amount of feuduty that is redeemed is tiny. Landlords will not take legal advice to search through all the feuduties that they are owed. That would probably cost more than the amount of money that they would get. The bill may be working on the assumption that a large number of people will owe a large number of people small amounts of money. It would be different if there were one big landlord who had a lot of properties—for the system to be financially viable, one would need to have a lot of properties before doing the searches and the work that goes with them.

Paragraphs 243 states:

"In the case of superiors who have extensive superiority interests, this may involve fairly substantial administrative costs and possibly search fees".

Paragraph 244 states:

"Any of the costs set out above will apply to any superior".

That implies that the cost is not recoverable from the compensation. In other words, the memorandum is implying that, because of the cost, there will not be lots of vexatious searches. One gets the impression that the cost would put off virtually everyone.

The cost of the search could be more than the money that would be redeemed.

Exactly. Moreover, what can be redeemed is limited. That is fairly clear. My interpretation is that there may be hundreds of claims, but not thousands.

That is right, but the question is what the costs will be to the Scottish Administration and to local authorities. Do we want an attempt to be made to estimate the costs, or are we happy to leave the matter as it is?

That takes us back to the discussions that we had when we considered our first financial memorandum, which was similarly unclear. We could return to the comments that we made then. However, when estimates are not provided, I would like to see a table at the start of the memorandum setting out the costs. Even in the memorandum that sets out the cost, no sum figure is given.

It would be nice to see, for each line, what the estimated costs are. If there are no estimated costs, there should be an explanation of why that is the case, so that we are not left to assume, like Elaine Thomson and Rhoda Grant, that the figures are trivial. That is probably correct, but it would be nice to see it in black and white.

You are talking in terms of the general style of presentation.

Yes, because the presentation is not clear. We cannot comment on bills without placing on record our concerns. If this bill were to blow up into a major issue that placed an extra burden on the public purse, we would be culpable because we allowed it to proceed. When the costs are uncertain, we should be given a band within which the costs are expected to fall. Those suggestions may be helpful; other than that, I do not see what we can add to this issue.

I agree with Andrew Wilson. All the documents that we look at have the same problem—they do not have black and white estimates that are easily assimilated. I would love to have those at the beginning of each document, but I suspect that that would be difficult, if not impossible. This financial memorandum shows that one can make an intelligent, but not firm, estimate of the costs. To put a figure at the beginning of the bill would be misleading, because one may as well ask someone in the street to put a figure on the costs—that is how random the figure would be.

I am not sure that I agree with that.

I am overstating the case.

For effect, perhaps.

Possibly. A reasonable attempt has been made to assess the areas that might incur a cost, but it has not been possible for the Executive to provide a hard figure. It would be unreasonable of us to expect it to provide a hard figure.

We are talking about the provision of an estimate, as in the other two bills that we dealt with.

I agree with what Ken Macintosh said earlier about the burdens on local authorities. In this case, too, we must have some idea of the figures. We have lots of words, but we do not have a feel as to whether the figures involved are £1 million, £10 million or £40 million. We could have a lottery guess about the sums involved.

We all accept that we cannot have hard and fast, absolute, precise numbers—that is not what Andrew Wilson was asking for. However, some indication of the scale of the figures would give us an idea of the additional cost burdens arising from the legislation that we were allowing to proceed. That applies as much to the legal aid budget or to the cost to the Scottish Administration as it does to local authority budgets.

Andrew Wilson qualified his suggestion well by saying that an explanation should be given of why no estimates could be made. That would be helpful, not just in terms of our interpreting financial memorandums, but in terms of setting out basic estimates as guidance. We would have to take on board the fact that we could not hold the Scottish Executive to account by saying, "The cost is nearly double what you estimated," because it could say, "It was only an estimate." However, it would not be impractical to ask the Executive to produce such figures.

I do not think that anyone will ever know concrete figures for costs, but my understanding is—and someone from the legal profession may wish to back it up—that when properties change hands, the feuduty is redeemed. The bill allows that to be done for the next two years only; that will not amount to a lot of money.

This may be one of those occasions on which it is not realistic to provide figures, but the general point is worthy of consideration.

We have made general comments on the two bills that we have looked at this morning; presumably it will be reported that we felt that we were working in the dark, in one form or another. On Andrew Wilson's point, we need to say that, in future, the Finance Committee expects some sort of estimate and would prefer things to be laid out in a certain way. We could work that out among ourselves. We should finish the meeting with that, if it can be incorporated into the agenda. We cannot do much more with these bills.

Am I right in thinking that we are endorsing the financial memorandum for the Abolition of Feudal Tenure etc (Scotland) Bill, but that we will recommend that, for future bills, the costs to local authorities, the Scottish Administration and other bodies, as well as any other costs, be laid out section by section, and that the costs be totalled at the start of the memorandum? Is that the agreed position?

I have a question for Andrew Wilson. Are we asking for a tabular summary at the front of financial memorandums?

Yes. When it is not possible to provide such information, as may be the case, there must be an explanation of why not.

The information does not need to be in a table, but we should be given a summary of the costs and where the gaps are.

Are we agreed?

Members indicated agreement.