HL Deb 06 July 1961 vol 232 cc1492-507

4.24 p.m.

Order of the Day for the Third Reading read.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (EARL JELLICOE)

My Lords, I beg to move that this Bill be now read a third time. As there are Amendments to be considered on Third Reading, I hope it will suit your Lordships' convenience if we now follow what is, I gather, the normal procedure in circumstances like this—namely, that the Motion for Third Reading should be taken formally, and after the Amendments are disposed of we can then proceed to a general discussion of the Bill on the Motion that this Bill do now pass.

Before we come to the Amendments, may I without further ado apologise to your Lordships for being the perpetrator of so full an Order Paper at this late stage of the proceedings on this Bill? In mitigation, I should like to make it clear that five of the seven Amendments on the Marshalled List, namely, Nos. 2 to 6, are made to resolve difficulties raised by the noble Lord, Lord Latham, at an earlier stage of the Bill; and these Amendments also have the merit of plunging your Lordships on this rather hot day into the cool, albeit rather murky, element of the rating of non-potable water. Moreover, the other two Amendments need not detain your Lordships long, I feel, since they are designed merely to put right drafting difficulties that the eagle eye of the Parliamentary draftsman has detected in a final perusal of this Bill. I beg to move.

Moved, That the Bill be now read 3a.— (Earl Jellicoe.)

LORD LATHAM

My Lords, I should like to express to the noble Earl, Lord Jellicoe, to his Minister and to the Department appreciation for the co-operative way in which they have met the difficulty as regards the ascertainment of the quantum to be reckoned in deciding the output for non-potable water. The view taken by the British Waterworks Association was that, as drafted, the Bill was unclear, and there were certain doubts. I understand that as a result of consultation between the representatives of the Water Association and the Ministry those doubts have been overcome and the drafting is now clear. In those circumstances, I have nothing to say in opposition to any of the Amendments appearing on the Marshalled List.

On Question, Bill read 3a, with the Amendments.

Clause 16 [Withholding of rates pending settlement of proposals]:

EARL JELLICOE

My Lords, this is a purely drafting Amendment. I beg to move.

Amendment moved— Page 14, line 4, leave out from ("person") to ("and") in line 5 and insert ("who in pursuance of section eleven of the Act of 1925 is rated or has undertaken to pay or collect the rates in respect of the hereditament)").— (Earl Jellicoe.)

On Question, Amendment agreed to.

Clause 21 [Ascertainment of average water supplies]:

EARL JELLICOE

My Lords, with the permission of the House I would propose that Amendments Nos. 2 to 6, the non-potable, undrinkable Amendments, should be taken together. Your Lordships have already heard from the noble Lord, Lord Latham, what the purpose of these Amendments is, and I do not think I need detain your Lordships long on them. I would merely make it clear that the British Waterworks Association have been consulted about this series of Amendments and I am glad to say they are quite content with them. By removing the scope of possible dispute about the potability of bulk supplies the Amendments should contribute to the simplicity of the process of determining rateable values, and this is one of the main purposes of the Water provisions of the Bill. I beg to move.

Amendments moved—

Page 20, line 29, leave out from ("undertakers") to ("show") in line 32 and insert ("supply non-potable water otherwise than in hulk, they shall, in certifying under subsection (3) of this section the amount of water supplied by them")

Page 20, line 33, leave out from ("water") to end of line 44 and insert ("supplied by them otherwise than in bulk, and the amount of water certified as supplied by them shall be treated as reduced by one half of the said amount of non-potable water")

Page 21, leave out lines 4 and 5.—(Earl Jellicoe.)

On Question, Amendments agreed to.

Second Schedule [Transitional Provisions as to Valuation of Statutory Water Undertakings]:

EARL JELLICOE

My Lords, I beg to move.

Amendments moved—

Page 30, line 30, leave out sub-paragraph (7) and insert— ("(7) If during the whole or any part of any such period as aforesaid the undertakers were giving a supply of non-potable water, otherwise than in bulk, the amount of water supplied over the period shall be treated as reduced by one half of the amount of non-potable water so supplied by them.")

Page 31, line 12, leave out from ("aforesaid") to end of line 14 and insert— ("(c) to show separately (to the nearest hundred thousand gallons), in any such provisional estimate or certificate as aforesaid, any amount of non-potable water supplied by the undertakers otherwise than in bulk.") —(Earl Jellicoe.)

On Question, Amendments agreed to.

Fourth Schedule [Minor and Consequential Amendments]:

EARL JELLICOE

My Lords, this Amendment is purely drafting. I beg to move.

Amendment moved—

Page 35, line 27. at end insert— ("(4) Section sixty-six of the Act of 1948 (which places the owner of certain hereditaments in the same position as the occupier for the purposes of Part III of that Act) shall apply for the purposes of this paragraph as it applies for the purposes of that Part of that Act.")—(Earl Jellicoe.)

On Question, Amendment agreed to.

4.30 p.m.

EARL JELLICOE

My Lords, I beg to move that this Bill do now pass. During your thorough consideration of this Bill, your Lordships have had a fairly good canter over the whole field of rating and valuation. This is right and natural. Whilst the Bill itself is directed at the relatively narrow purpose of easing in the 1963 general revaluation, nearly every one of its provisions has long roots in time and complex ramifications running through our whole system of local taxation. Fortunately its four essential provisions are, at least in principle, simpler. Industrial derating and re-rating are subjects which are relatively simple to grasp, although it has not been easy to convince industry that, when it occurs at a general revaluation like that of 1963, the abolition of 50 per cent. derating does not mean an automatic doubling of rate liability. Part of the reason is that there will be a 22 years' movement of house assessments from 1939 rental values to those of 1961–62, whilst industrial assessments will move forward only by seven years.

But, of course, it is this saving feature for industry which creates the major problem for householders. Householders, almost alone of ratepayers, pay their rates out of taxed income, and they do not therefore have a sort of consequential cushion in tax relief when their rate bills go up. Having concluded that the increase in their liability in 1963 might well be more than it was reasonable to expect them to bear at one blow, and having no means of determining the size of the increase, the Government have sought power, in Clause 2 of the Bill, to derate houses for the period of the 1963 valuation lists.

Another main purpose of the Bill is to introduce a formula method of assessment for statutory water undertakings. This is the only subject the whole law on which—or at least on that part concerned with determining the full rateable value of the undertaking—appears in this Bill. I trust these water provisions have given as much pleasure to your Lordships as they have to me.

The fourth, and historically, perhaps, the most complex of the main subjects of the Bill, is the rating of charities and similar bodies. That we have been able to see our way through its maze, and perhaps leave the law a little less complicated and obscure than when we started, is due in large part first to the admirable spade-work undertaken by the Pritchard Committee, and, secondly, to the Government's determination, despite some pulling and prodding in this House as well as in another place, to keep it simple and have neither deserving non-charities singled out for mandatory relief, nor "undeserving" charities singled out for denial of that relief.

Although these are the main provisions of the Bill, there are others which are certainly not less contentious. Your Lordships have been responsible for adding two of these to the Bill. Over the first—Clause 6, which overrules the recent decision of the Court of Appeal in the Peachey case—some hard things have been said about the Government's alleged slowness to move and their alleged attempt to slip the provision in unnoticed by your Lordships or another place. I find it hard to believe that the critics really think so poorly of your Lordships' eyesight or, indeed, of the alertness of honourable Members of another place. Certainly Her Majesty's Government have no illusions on either score.

The second contentious provision added in this House is Clause 9, dealing with the rating of advertising stations, and here a main plank of the attack has been borrowed fom the Peachey critics, if I may so term them—that something has been done at a late stage in the Bill without sufficient time for its adequate consideration. As your Lordships will remember, the noble Lord, Lord Milverton, first raised this subject in his speech in the debate on Second Reading on May 31: he could not, I think, have given earlier notice. He followed this with an Amendment on the Order Paper on June 14, which your Lordships debated on June 19. In that discussion, no dissenting voice was heard, and I undertook that the remarks made would be considered and that a technically more acceptable Amendment might be put down by the Government at a later stage. The Amendment was in fact put down at the earliest opportunity after the Bill had been reprinted at the conclusion of the Committee stage. My Lords, if we were to accept the strictures of the advertising industry—against whom the Government certainly have no animus—it would mean that your Lordships would have to forswear all rights to make any material amendment in a Commons Bill. That doctrine is clearly absurd.

In case it should be thought that the House has made only contentious changes, I should perhaps recall one or two that your Lordships have made which have been more welcomed. For example, there is the Government Amendment to ensure that old people's flatlets provided by housing authorities and housing associations are treated for rating purposes like all other private dwellings, and not as commercial undertakings. It gave me particular pleasure to move that Amendment. Then there was to-day's modification in the water provisions, made at the instance of the noble Lord, Lord Latham, to deal with the cloudy issue of not-potable water. There have also, of course, been the various drafting Amendments designed to improve and clarify the Bill without changing its substance—including one moved by my noble friend Lord Cawley.

I do not hesitate to claim that the Bill leaves your Lordships' House the better for its five weeks' stay here. If the Government have felt unable to recommend the acceptance of some of the Amendments discussed, neither they not your Lordships regret that they should have been debated. It is never a had thing—least of all when the subject has so many historical overtones that there may be natural resistance to change—to examine frankly the merits and demerits of particular courses of action.

I should like, in conclusion, to thank noble Lords, in particular the noble Lord, Lord Latham, and my noble friend, the Leader of the House, for the help which they have given in piloting this Bill, and, indeed, its pilot, through its various stages in your Lordships' House. I beg to move.

Moved, That the Bill do now pass.—(Earl Jellicoe.)

4.37 p.m.

LORD LATHAM

My Lords, we have now reached the final stage in the passage of this measure, and I feel bound to say that we regret the Bill is a "might-have-been". This Bill really might have been a comprehensive review of local government finance, the finance of local government itself, the financial relations between local government and central Government, and the basis of a new approach to the valuation of property subject to rates. Instead, we have a Bill which is the eighth since 1951, which continues, if I may use the phrase, the process of tinkering which has been followed ever since 1951 with regard to the finances of local government, without any satisfaction either to local government or, one judges, to central Government. Here was a signal opportunity when, for the first time since 1929, for the most past, except as regards agriculture, all industry and all heritable property, is brought within the scope of a national standard of valuation.

As I have said, it seems to me that that was the opportunity to look at the whole of the structure of local government finance and adjust it and amend it, so that it conformed to the altered conditions of modern life and electronic and—shall I say?—atomic activity. However, here we have this Bill, which was essential as regards offering some mitigation from the burden which would otherwise fall upon the householder, and as regards that provision one is in some small measure grateful. I am also grateful for the way in which the Minister met certain points made in regard to the assessment of water undertakings, but I regret very much that the Minister should have maintained what I consider to be, and those concerned and interested consider to be, almost inequitable provisions against water undertakings, in that they are assessed on a basis very different from the basis of assessment of gas and electricity. The one has the advantage of 20 per cent.: the water undertakings will, until 1969, have to carry the burden of 100 per cent.

There we are; this is, as I say, the eighth Bill to be put in the locker, I suppose. Nevertheless, I should like, without appearing as it were to be a member of a mutual admiration society, whose members are scratching one another's backs, to congratulate most sincerely the noble Earl, Lord Jellicoe, on the way in which he has conducted this important measure through your Lordships' House. I said so after his very admirable performance on Second Reading and since then, of course, he has received most well-deserved promotion. In dealing with the Amendments he has been co-operative, agreeable and pleasant. Moreover, he has, if I may say so, as one who has been associated with local government for well over 30 years, displayed a knowledge of the subject which does him admirable credit. In those circumstances we hope the Bill in administration will be less unsatisfactory than we think it is likely to be.

4.42 p.m.

VISCOUNT RIDLEY

My Lords, I should like to take the opportunity at this stage of the Bill of repeating something I said on Second Reading and also on Committee stage. It is not because I think that if you say a thing three times it becomes true, but because I believe it is true and can, therefore, bear repetition. Noble Lords referred to the fact that at this stage the level of rating for all classes of ratepayers has become the same and I think that that in itself is a wise provision. I had occasion earlier to suggest that, that being so, there should be some alterations in the methods of assessment of various types of industrial properties, particularly having in mind those concerned with shipbuilding, steel-making and other basic industries, such as cement and bricks; the point there being that this was an inequitable system and based on no real logic.

For example, the fact that a building could be filled either with plant that is rateable or plant that is non-rateable, according to the type of industry and the type of plant, seems to me to make no sense at all. A Minister in another place 'has said that he would welcome suggestions from industry of various categories as to some amendment of this system so that it could be equalised. I should hardly think that possible, since all that could be done is to request reduction of the assessment on some type of plant and there would be nobody very willing or able to suggest what other type of plant should be assessed instead.

I go on from that to say that, while one welcomes this Bill as bringing the rating system more or less up to date, I should agree with the noble Lord who has just spoken that a new system is what is required. I can hardly think that a system which was evolved some hundreds of years ago for householders to pay the small local rates of the district is adequate for the large sums of money which are collected now from such different forms of occupiers and for such different purposes. One would think, certainly for industrial hereditaments, that rating should perhaps be based on ability to pay something on the obligations of the community which exists because of the presence of the industry, and possibly in the case of other things somehow related to the benefits received. I do not think that people engaged in industry would have any objection—certainly they should not have any objection—to paying the equivalent rates after earning of profits, in the same way that tax is paid.

An objection that I think could well be made against rating of industrial plant, particularly at this stage, is that it is the first cost of manufacture before anything is made or sold, and therefore must put up the cost of our industry in home production and, more important, in exports. It seems odd, too, although one cannot make too much of it, that at this stage when margins of profit in industry are greatly narrowing, the rates are to beat any rate this is what people believe—increased, whereas some years ago when many concerns were earning a good deal more money they were derided. That is perhaps only an accident of history.

I should myself think that instead of this Bill, we should have had, as the noble Lord, Lord Latham has said, a new Bill revising the system of rating, and in that connection one would have liked to see, replacing a rating system, something in the form of income tax or profits tax based on profits earned, probably having some relation to the numbers employed and perhaps also having some relation to the amount of the profits retained in the business for further development and to the amount of profits distributed.

One can, of course, see very great difficulties in assessment under such a system, but I believe that if it were to be brought in and if it could he worked out, it would, on the one hand, be much more equitable and, on the other hand, it would raise a larger sum from industry and commerce and in such a way that it would not be so harmful as the present system can be. Whether it is possible to have a locally assessed income tax for this purpose I very much doubt indeed. Would it be possible to work out a system whereby one assessment for tax, which would be a new, system of the 'whole of the taxation of industry, could be made, bearing all these factors in mind, and that either a proportion of this tax should be allocated by the central Government for the use of local authorities or they should draw from a fund, their drawing power, as it were, being based on rateable value, population, mileage of roads, number of children of school age and so on? Or would it be possible to have such a system whereby such payments could be put forward a year or so ahead and an appropriate rate of tax settled?

What I think is a very important improvement is that local authorities should have direct control over some part of their income—and, of course, it is rates over which they now have control. Until the recent central grant system was introduced they had been in the habit of receiving grants on a percentage basis from the Central Government and that is one of the things one wishes to avoid. One would hope, therefore, that some system of this sort could be thought out which would be of assistance in, giving local authorities freedom of action in making their own policies and in drawing their revenues; and that also in bringing out such a system the incidence of rates, both in industry and commerce, and, I think, on the individual, too, as a householder, might well be more properly and fairly distributed. I know that that goes far beyond what is covered 'by this Bill, but I hope that thought will be given to these problems in the next few years, because unless that is done there will be the feeling that the rating system is not working as it should. All the same, so far as it goes, one would welcome this Bill. I regret that the Government were unwilling to accept any of the Amendments I suggested. On the whole, however, I have no doubt that the Bill will make for some improvement.

4.51 p.m.

LORD CHORLEY

My Lords, I hope your Lordships will forgive me if I take up a little time in referring once more to the inequitable working of the system introduced by the 1958 Act in regard to the rating of electrical generating stations. I referred to this during the Second Reading debate and moved an Amendment at the Committee stage with a view to alleviating the position of those local authorities who are hit by this iniquity, particularly a number of urban district councils.

The noble Earl, in his reply, in which he indicated that Her Majesty's Government could not accept the Amendment, advanced a number of contentions which I thought I should like to study a little more carefully before attempting to reply to them; and I indicated that I hoped to take the matter up again at the Report stage. When I looked at what the noble Earl had said I felt even more dissatisfied than I had been when I was listening to him; but there seemed no particular chance of persuading him to give way, and I did not put down the Amendment again, intending however to take up some of the arguments which he had put forward. But I was then advised by those who know much more about procedural arrangements that it was not satisfactory at a Report stage to discuss matters of that kind except on the basis of an Amendment, and that I had better reserve my comments until the Third Reading—which explains why I want to put before your Lordships some rather technical argument at a stage when perhaps it is not altogether satisfactory that I should do so.

In the first place, for the purposes of the Record, I should like just to correct a mistake in the OFFICIAL REPORT (due, no doubt, to my own inadvertence at the time) which occurs in Vol. 232 (No. 97), column 749, where I referred to 25 per cent. instead of 50 per cent. The area boards in aggregate are, of course, allocated 50 per cent. of the cumulo instead of 25 per cent., as I appear to have stated; and a few lines later (at the top of the next column) the mistake is the other way round and the reference there to 50 per cent. should be 25 per cent. That is merely for the sake of the Record.

I agree that it is not unfair on the part of the noble Earl to make the point that the thinning out process affecting the unit of rateable value per installed kilowatt is built into the formula under the 1958 Act. But equally, I do not think anybody contemplated at the time that it would work out so drastically as it has done and would lead to such an unfair result, from the point of view of the local authorities in question. At 5 per cent. per annum if we have to wait until after the new lists come out before starting consideration of what changes can be made, it means—and I am sure the noble Earl will agree—that at the earliest we cannot get a revision until the financial year 1965–66. If the noble Earl can help me by indicating that it can be done before then, I am sure those for whom I am speaking will be exceedingly grateful to him.

If I am right about that, it means that the present formula will have to be running for a full six years. At a depreciation in the unit value of 5 per cent. each year it means that an electricity generating station which has remained static and in full production will have lost no less than 30 per cent. of its rateable value, and lost that, furthermore, at a time when those people without electricity generating stations will have been gathering, at present rates, an increment of over 3 per cent. per annum out of the moneys shared out for main distribution and for the Area Boards. Those with the physical hereditaments are getting less rateable value quite rapidly and those with the very small amount of physical apparatus—distribution lines, sub-stations, administrative offices and that type of thing—are gradually getting more.

The noble Earl referred to the review of the global sum for the electricity supply industry which will take place between now and the time the new list comes to pass; but if he will think of it he will agree that that is rather sidestepping the argument and it is not really relevant to the particular point I was putting forward to him. He also mentioned that that particular matter was not mentioned by the Working Party, and it certainly was not, because in 1958, when the result of the discussions of the Working Party were being put into the Act, everybody expected that that result would be reasonably fair and equitable. It is only during the period since the coming into force of the 1958 formula that it has been becoming evident that it has not been working out in the way it ought to have done.

The noble Earl's main point was that this could be put right only by taking something away from the large number of local authorities who share in the amount which is made available from the rating of the distribution side, and I agree there is a point there. But they would get more back, so to speak, than the areas without generating stations are losing. That is to say, what they are losing on the swings would be to some extent made up to them by what they would gain on the roundabouts; and I believe the general position undoubtedly would be that less inequity would be done by the adoption of this proposed Amendment than is in fact being done under the arrangements as they are working out at the present time.

One should remember that in a sense the local authorities which are gaining from the rating of the distribution side of electricity are not providing very much in return for what they are getting, as compared with the local authorities in which these big generating stations are situated, who have to provide a considerable amount of local services for the purpose of assisting the generating stations to get on effectively with their work. In these circumstances I should have thought the inequity of the situation demanded that their claims should receive rather more sympathetic consideration from Her Majesty's Government than the noble Earl was able to give me.

It seems to me altogether wrong—and I can assure the noble Earl that it seems still more wrong to those important urban district councils who are losing all this money, and are to lose more and more—that this matter should be left in this unsatisfactory state. If the noble Earl can give me, in some way, some kind of assurance that something can be done to alleviate the situation in the interim, I shall be very grateful to him.

4.59 p.m.

EARL JELLICOE

My Lords, the three noble Lords who have just spoken have not referred with total kindness to this Bill. I do not consider their statements really to be altogether fair. However, I do not wish, and I suspect your Lordships would not wish me, at this very late stage of this Bill, to make a second Second Reading speech, or indeed a second Third Reading one; or to run over once again the arguments which we have gone over pretty thoroughly in connection with this Bill at the Committee and other stages. But perhaps I could—in answer to the three noble Lords who have spoken—with brevity, but I hope, not therefore with discourtesy, say just a few words.

The noble Lord, Lord Latham, regretted that the opportunity had not been taken in this Bill to review the Whole structure of local government finance. That was what I understood him to say. But I would remind the noble Lord that a comprehensive review of local government finance was, in fact, undertaken by the Government in 1956 and 1957, and effect was given to their conclusions by the Local Government Act, 1958, the changes taking effect from April 1, 1959—that is to say, only two years ago. I think the Government would think it too early to mount a further comprehensive review within two years of effect being given to the provisions of the Local Government Act.

LORD LATHAM

My Lords, I am sure the noble Earl will not mind me reminding him, if he does not know, that what he calls a review of local government finance was nothing of the kind. It was merely a proposal to put certain services, including education, on the block grant.

EARL JELLICOE

My Lords, I do not wish again, at this thirteenth hour, to get into an argument on that matter, and I hope the noble Lord will excuse me if I do not accept his invitation to do so. As regards Lord Ridley's remarks, I would assure him that what he has said will be very carefully considered by my right honourable friend. But, as he himself hinted, I had the impression that his remarks went a little wide of the present Bill, and I therefore hope that he is not expecting a detailed answer from me at this moment.

Finally, as regards what the noble and learned Lord, Lord Chorley, has just said about the electricity provisions, here again I feel that at this moment it would be wrong for me to make Committee stage points. However, I would just say this—it is almost a repetition of what I said at the Committee stage. The Government are open to persuasion that the solution proposed by the noble Lord may be the right one, but they consider that it would be quite wrong to impose it at the wish of those who would gain by it without hearing and fully considering the views of those who would lose by it, and also the views of the industry itself.

I would remind noble Lords that the formula the noble Lord is seeking to amend was an agreed one, settled after long negotiation, and ought not to be altered in this one respect only without full and proper consultation. It came into force only two years ago, on April 1, 1959. My honourable friend, however, has said, and I am only repeating again what I said at the Committee stage, that there will be a full review after the 1963 valuation lists have come into force, of the formula for the nationalised electricity, gas and transport industries. The Government feel, and they continue to feel even after what the noble Lord has just said, that this issue should he reserved for consideration then, together with the various other problems which are likely to need settlement and adjustment in these fields.

As regards the date for that review, I am not quite certain about this, and I should like, if I may, to write to the noble Lord about it, rather than possibly give him incorrect information about the date when this particular thing could be looked at. I think it only remains for me in conclusion to thank noble Lords, if not for their kindness towards the Bill, at least, and very sincerely, for their kindness towards me.

On Question, Bill passed, and returned to the Commons.