§ Sir ROBERT GOWER
I beg to move, in page 1, line 19, to leave out the word "including," and to insert instead thereof the word "excluding."
This Amendment, if it be accepted by the House, will mean that deductions for repairs and other outgoings, in respect of flats and tenements, will be ascertained, not according to fixed rates contained in the Schedule of the Bill, but that they shall be arrived at according to the circumstances of each case. I sincerely trust that the House will not consider it presumptuous on my part if, in addressing it for the first time, I do so on a difficult matter connected with the law and practice of rating I have had some experience in this matter, and my reason for submitting this Amendment is that I think that if this Bill is allowed to pass in its present form it will involve, at least in a great many cases, the rateable value of fiats and tenements, particularly those occupied by workmen and middle-class families, being increased to an uneconomic and unjustifiable extent; and will add further to the financial burdens upon the occupiers. I know that is not the intention of this Bill, but I think that I shall have no difficulty in satisfying this House that the effect will be as stated by me. I will put my point as concisely as I can.
It is an accepted principle of the law of rating that rateable value shall represent the net annual value of the rated premises, and in order to arrive at the rateable value it is necessary to deduct from the gross value a sum which will represent reasonably and sufficiently the cost of repairs and other outgoings. In the case of what I may term ordinary dwelling houses it has been possible to apply certain flat rates—a maximum deduction which represents on the whole the 1038 cost of repairs and other outgoings. In the Bill it is provided that those deductions shall be in accordance with the scales laid down in the Schedule. By a footnote to the Schedule of the Act of 1869 it is distinctly provided that these maximum rates of deduction shall not apply to hereditaments and buildings let out for tenements, and it has been held by the House of Lords that the same principle applies to the fiats and tenements themselves. Why was that distinction made? It will save the time of the House if I do not use my own words, but read the words of an eminent King's counsel who is one of the recognized authorities on rating law, and the author of a text book on this subject. He says:The reason why fiats and tenements should thus have the expenses of repairs and insurance, and the other expenses necessary to maintain them in a state to command the rent, calculated according to the circumstances of each case, and not according to a fixed maximum, is a sound one, namely, that these expenses are incurred not only in the single flat or tenement which is the subject of rating, but throughout the whole building containing staircases, passages, lifts, and other parts, which are not let and are not separately rated, but are kept up by the landlord for the common use of the tenant of the flats or tenements. If each fiat were limited to a maximum deduction, as in the ease of a house, there would be, in many cases, no allowance made for the repairs, etc., of these parts, whereas buildings of every other class are allowed deductions for repairs, etc., which are intended to cover the repairs of the whole fabric, and which ought to be sufficient to do so.I carefully considered this Bill, and arrived at a certain conclusion as to what its effect should be. I hesitated, however, before advancing my own views in this House, until I had taken the opinions of three leading rating authorities on the subject. They were three eminent King's Counsel. Each of them was consulted separately and independently of the other, and their opinions coincided, and agreed with mine. In this Bill it is sought to set down a certain standard rate of maximum deductions, not only in regard to ordinary dwelling houses, but also in the case of flats and tenements. Let me again read the words of one of the counsel to whom I have referred. What he says is this:The Bill renders inoperative the footnote to the Third Schedule to the principal Act of 1869, and makes flats assessable in the same way as houses. It is clear"—1039 I lay emphasis on this—that in some cases, if not in all, the result would be the increase of the rateable value of flats and tenements. It is manifest that flats and tenements differ from houses in many ways, notably in the fact that the rents paid include such things as caretakers and their rooms, common staircase, lifts, porters, etc., etc., and vary in different cases, and it is difficult, if not impossible, to apply a flat-rate of deductions such as may be done in regard to ordinary dwelling-houses. The foot-note to the Third Schedule of the principal Act of 1869 was evidently inserted so as to allow every case of bile assessment of a flat to be dealt with according to its own circumstances.I do not propose to read the third opinion I obtained from counsel, except that part of it which says:The effect of this note is that flats and tenements which are treated as being houses let out in separate tenements, have, under the present law, no legal maximum of deduction, and each case is treated on its own merits … The effect of this Bill"—That is the Bill we are now discussing—is to do away with this existing exception, and flats and tenements will be adversely affected.That is the only interpretation we can logically place upon that part of the Bill. The House is entitled to assume that the rates of maximum deduction laid down in the Schedule of the Act that apply to the ordinary dwelling-houses are sufficient, and only sufficient, to provide for the repairs and outgoings. It is admitted on all sides that the cost of repairs and outgoings of flats and tenements considerably exceed those that are incurred in the case of ordinary dwelling-houses. So that if this Bill is allowed to pass in its present form it necessarily follows that no deductions and no allowance can be made in respect of the additional repairs and outgoings to which I have referred. This matter was carefully considered in 1923 at the Conference of the Assessment and Valuation Authorities of the Administrative County of London, and a resolution dealing with this matter was passed. I will read that resolution to the House—I am quoting from the official publication of the London County Council. The resolution says:That in assessing fiats, maisonettes, and residential suites, chambers, offices, etc., let at inclusive rentals, it is desirable that no attempt should be made to lay down any standard rate of allowance, and that the values should be arrived at according to the merits and the circumstances of each case, the properties being regarded in all cases as 1040 coming within Clause 11 of the Third Schedule to the Valuation (Metropolis) Act, 1869.The effect of this Amendment, if carried, will be that the recommendation embodied in this Resolution will be given effect to and the existing law will prevail. I have mentioned the definite opinions of expert authorities I have consulted in this matter. I have read the resolution passed at the Valuation Conference. In addition to that, I have conferred with some of the leading flat owners in London. One of those flat owners has gone into this matter very carefully with a rating surveyor. The result of their deliberations is that they have come to the conclusion that if this Bill is carried in its present form, the rateable value of flats and tenements, at present assessed low, will be increased to a considerable extent and an increased rent will fall upon their tenants. I think what I have said has been sufficient to satisfy the House that it is at least possible, if this Bill is carried in its present form, a hardship will devolve upon the occupiers of flats and tenements. It has been suggested to me by an hon. Member who desires to see the Bill pass in its present form that my objection is more technical than real, because, it is alleged, it is the practice of rating authorities to make deductions in respect of what one might term abnormal repairs and allowances in the case of tenements and flats before the gross value is arrived at, and it is said that if that procedure be followed in the future, and the repairs to these flats and tenements are subject to the maximum deductions contained in the Schedule, they will be better off. I can only say it has been held by the High Court that not only can assessment committees not be compelled to make these deductions before arriving at the gross value, but that they are not entitled to do so.
I hope, having regard to what I have said, the House will be satisfied that there is at least a possibility, I put it no higher, that if the Bill passes in its present form the occupiers of flats will be prejudiced, and I venture to express the hope that my right hon. Friend will be able to see his way either to accept my Amendment or to agree to the insertion of some other Clause which will do away with the possibility to which I have referred. I thank the House very 1041 much indeed for the patient way in which it has listened to me on an extremely boring although important subject.
§ Mr. GATES
I beg to second the Amendment which has ben so ably moved by the hon. Member for Central Hackney (Sir R. Grower). He has said practically all that can be said in favour of the Amendment with such skill and so much knowledge of the subject that it leaves very little for me to say, except, I am sure, to express the feeling of the whole House in congratulating him on his maiden effort here. Having had long years of experience as chairman of an assessment committee, I feel there is a great deal to be said, not only from the point of view of the occupier, but also from the point of view of assessment committees in favour of the Amendment. Reference has been made to the Valuation (Metropolis) Act, 1869. As no doubt the House knows, Clauses 1 to 8 deal with certain classes of property and specify deductions from the gross to arrive at the rateable, and then there are Clauses 9, 10 and 11 dealing with railways, canals, docks and rateable hereditaments, not included in the foregoing classes, in which it, is stated that the deductions should be determined in each case according to the circumstances and the general principle of the law. At the end, there follows a footnote, to which my hon. Friend has referred, stating that:The maximum rate of deductions prescribed in this schedule shall not apply to houses or buildings let out in separate tenements, but the rate of deductions in such cases shall be determined as in Clauses 9, 10, and 11.This footnote has been the subject of a certain amount of litigation, and in the case of the Kensington Assessment Committee, of which I had the honour to be chairman at the time, it was held by the court of first instance and the Court of Appeal that the footnote applied to working-class tenements, the tenants of which got lower rents because the landlord got the benefit of the larger deductions which were allowed tinder the provisions of the footnote. Also, in another case, that of Consolidated London Properties and the Marylebone Assessment Committee, the footnote was deemed to aplly to middle-class dwellings. I submit that it is impossible to apply the flat rate mentioned in this Bill to properties like flats and houses let off in separate tene- 1042 ments. To arrive at the proper assessment many things have got to be considered—the services rendered by the landlord in the shape of lighting, heating, and carpets on the staircase, to say nothing of repairs and so on, which enable the rents charged to be obtained.
My hon. Friend has referred to the views of assessment committees. He has quoted their actual resolution, which, I might say in passing, was moved and seconded by two members of my own assessment committee. It was originally suggested that chambers and offices should have a reduction of 30 per cent and residential suites and flats 35 per cent., but members attending the conference felt that to be inadequate at a time when repairs cost so much, and services generally are so much greater, and the resolution which has been quoted by my hon. Friend was framed and accepted by the conference. It is impossible, I submit, to apply the flat rate in this Bill to properties such as houses let in separate tenements. It would be unfair to the landlord and particularly unfair to the tenant, because having regard to the larger scale of deductions allowed under the footnote the tenants naturally have the benefit in the shape of decreased rents. I hope the Minister will see his way to fail in with the views of the assessment committees and prevent the tenants of flats being penalised, as they will be if the fiat rate in the Bill is adopted.
§ Colonel VAUGHAN-MORGAN
I rise to express my dissent from the Amendment which has been moved. I do so because I entirely disagree with the arguments which my hon. Friend the Member for Central Hackney (Sir R. Gower) has put forward, though I would venture to congratulate him on the very clear and well-informed manner in which he put his case to the. House, and I am sure I am only echoing the feelings and opinions of more experienced Members than myself in congratulating him very heartily on a most successful maiden effort. He pointed out that his object is to protect the tenants of certain working-class and middle-class flats and tenements. My object is identical. This Bill has hitherto had what might be called a rather easy passage, and now that it appears to be assailed, I am glad to see 1043 that it is also defended from benches which are usually occupied by Members of our party. Though our objects are identical, the means by which we seek to attain them differ. I am reminded of the old saying, "Where doctors disagree, who shall decide?" In the present case, we shall be fortunate in being able to refer the matter ultimately to the wise arbitrament of no less than the Minister of Health himself.
The point we have to bear in mind is that the Bill deals mainly with the terms under which gross assessment shall be converted into rateable. The point which my hon. Friend has made has reference to certain services which fall upon the owner of a building of flats or tenements, which differ from the liabilities commonly assumed by a householder as falling within the province of the allowances made in arriving at the difference between gross and rateable. He prepared the House for the argument which I put forward by attempting to refute it in advance, but the practice of assessment committees hardly supports his view. Certain services are rendered in the ease of flat or tenement-hail ding by the provision of porters, the maintenance of a lift, carpets on the stairs and so on, and by legal decisions the deductions in respect of these services have been strictly limited, but those deductions are made, where they are made, in accordance with the law, before the gross assessment is arrived at, and do not form part of the allowances which can be made in arriving at the rateable from the gross.
I venture to think my hon. Friend has rather confused the two classes of allowances. He has quoted to the House a number of eminent legal opinions. Like other Members who do not belong to that distinguished profession, I listen to legal opinions with a mixture of fascination and awe, but I realise that one is not bound to accept them unreservedly, especially if one differs on the exactness of a statement of the premises. It is scarcely necessary to say that the purpose of this Bill is to extend the allowances permitted under the Act of 1869, and a scale of allowances is laid down in the Schedule to this Bill to meet the needs, so far as repairs are concerned 1044 not only of houses of different sizes and rents but also of tenements and Hats, and to exclude tenements and flats of the type we have in mind from the provisions of this Bill is to preclude them from enjoying advantages which this Bill is at pains to provide. I think it may be assumed that, in practice, assessment authorities will apply the maximum rates of allowance, and if that be the case, under the provisions of this Bill, the rates of allowances permitted between gross and rateable will be largely in excess of anything which has hitherto obtained.
I appeal on behalf of the occupier of working-class and middle-class tenements that he should not be deprived of the advantages which this Bill would confer upon him. My hon. Friend made considerable play with the resolution of the Assessment and Valuation Conference of 1024. I am going to suggest to the House that the Conference, when they passed the resolution my hon. Friend has quoted, had not in mind so much the allowances between the gross and the rateable as the allowances between what is termed "inclusive rent" and "gross," and it is to that, I am informed on good authority, that the resolution refers. I can quote a case which seems to me to demonstrate the accuracy of what I have said. The hon. Member for North Kensington (Mr. Gates) alluded to the Consolidated Properties case. On the strength of that decision of the House of Lords, the right was accorded to flat owners to claim deductions based on the note to the eleventh section of the Third Schedule of the Act of 1869, which allowed them a more liberal rate of deduction than it would be possible under Clauses 1 to 5. Now, what happened? One of the properties included in the Consolidated Properties to which that case referred was known as the Osborne Mansions. The inclusive rental plus rate of that building was £946 before arriving at the gross which was settled by arbitration. At the appeal from the assessment authorities an allowance by arbitration of £107 was made. This is what happened in practice: £946 was reduced by £107 to £839, but £839 was not the rateable but the gross; and, further, in accordance with the arbitration which was carried out, the gross of £839 was reduced by a sum of £169 to the rateable of £670. I hope I have not 1045 misused the words "gross" and "rateable." The inclusive rent of £946 was by deduction of allowance for service. That was further reduced by deduction for repairs and other services by £169 to £670. To-day, if the same transaction were to be carried out on a gross increase of 40 per cent., the total allowance, instead of £169 as between gross and rateable, would be £352. I do not suggest that that difference is a gratuity: it is given for good reason; but I do point out that if the repairs in those days represented £169, I question very much whether the allowance for repairs to-day which would be granted would not be a good deal less than the £352 for which this Act provides.
There is the reason why I contend that, if flats and tenements are excluded from this Bill, the occupiers of such flats will lose the advantage which they would have under this Bill. That is the reason why I oppose my Friend's Amendment. As I have said, I am not sure it is necessary to pursue this matter further, considering that our mutual object is the same; but I do contend that a case has been made on the facts for the retention of flats and tenements in the four corners of this Bill. If, on the other hand, there is any risk under any circumstances to the occupiers and tenants on account of the assessment authority not fully exercising their rights or the assessment authorities misinterpreting their duty—if there be any such risk as that, then let us consider some possible compromise. Therefore I appeal to the right hon. Gentleman the Minister of Health. I say here we have two classes of ideas, two schools of thought actuated by one desire, namely, to do the best for these people to whom we want to be fair all round. We appeal for guidance and assistance to the Minister of Health, and I hope he will provide some compromise, some via media, which will protect those we desire to protect even more effectively.
§ The MINISTER of HEALTH (Mr. Neville Chamberlain)
The House will see the dilemma in which I am placed. On the one hand, by accepting the, Amendment which has been moved so clearly and capably by my hon. Friend the Member for Central Hackney (Sir 1046 R. Gower), my hen. Friend the Member for East Fulham (Colonel Vaughan-Morgan) thinks that the tenants of working-class flats and tenements will be penalised as compared with the tenants of ordinary working-class houses On the other hand, if I leave the Bill as it stands, then my hon. Friend for Central Hackney brings weight of opinion to show that the same result will happen. The Bill is drafted with the intention that the occupants of these flats and tenements shall be in no worse position than the occupants of ordinary working-class houses. That is the intention of the Bill, and it is drafted by the request of the Westminster Conference of Assessment Authorities who, no doubt, took the view that it would carry out that purpose. But in this conflict of opinion as to what may happen in future, I am anxious to protect the position of the occupiers of these fiats and tenements, so that in no circumstances shall they be placed at a disadvantage as compared with their neighbours. I think I could, perhaps, meet the views of both my hon. Friends by an alternative Amendment which will come at a somewhat later stage in the Bill. I should propose to insert it after paragraph (b) of Sub-section (1) of the Bill, and the purpose of that Amendment would be to provide that if as a matter of fact it was found that the provision of the original Act of 1869 would have given a lower rateable value in the case. of these flats and tenements than would be given under the Bill as it stands, then the provisions of the 1869 Act would be substituted. I should move in Clause 1, page 2, line 36, at the end, to insertand (c), if in the case of any hereditament being a house or building let out in separate tenements, the rateable value which would be produced under this Act exceeds the rateable value which would have been produced under the provisions of the principal Act, the rateable value of the hereditament may be determined in accordance with those provisions.I think that Amendment will give the occupier the best of both points. If, on the other hand, the other view is found to be the correct one and he will be bettor off under the 1869 Act, then if that commends itself to my hon. Friend and he would be prepared to withdraw the Amendment he has down on the Paper I would then move this Amendment in its proper place.
§ Amendment, by leave, withdrawn.
§ Mr. SPEAKER
Then does the hon. and gallant Member for East Fulham (Colonel Vaughan-Morgan) propose to move in the meantime?
§ Colonel VAUGHAN-MORGAN
In view of what has fallen from the right hon. Gentleman, I shall be glad, with the permission of the House, to withdraw the two Amendments standing in my name.
Amendment made: In page 2, line 36, at the end insert
and (c), if in the case of any hereditament being a house or building let out in separate tenements the rateable value which would be produced under this Act exceeds the rateable value which would have been produced under the provisions of the principal Act, the rateable value of the hereditament may be determined in accordance with those provisions."—[Mr. N. Chamberlain.]
§ Bill read the Third time, and passed.