§ Order for Second Reading read.
§ 10.0 p.m.
§ The Minister of Health (Mr. Elliot)
I beg to move, "That the Bill be now read a Second time."
The object of this Bill is to postpone the date of operation of the new valuation lists for London and the provinces. They are not due to come into force until April, 1941, and that date may seem to be a long time away, but the House will appreciate that the revaluation, particularly in London and the larger centres, is a heavy administrative undertaking and involves a number of statutory stages which would make the procedure in itself a long one. The preliminary work would normally have started in the autumn of last year. Even before the war representations were beginning to be made that the weight of A.R.P., civil defence and other emergency work was going to make it very difficult to undertake this work. These representations were, of course, renewed with much greater force as soon as war broke out, and, indeed, it was found that it would be administratively impracticable to undertake the work in the conditions which then obtained or have since obtained.
Furthermore, the instability of values under war conditions makes it, I think, at the present time, inappropriate for a general revaluation to last for five years, even although the administrative task was perfectly simple. So, after careful consideration, an answer was made in September to a Parliamentary Question by the hon. Member for Camberwell, North (Mr. Ammon) that it was the Government's intention to take steps to secure postponement. A circular was issued to local authorities informing them of this decision and exhorting them to maintain the necessary machinery for dealing with interim applications for the review of current assessments. As far as is known this advice has been followed. The preliminary work of revaluation has not been started, but assessment committees are sitting to consider proposals for amendments to the lists. We have taken steps to consult with bodies representing the London and provincial rating authorities, and also the Central Valuation 1093 Committee who have indicated that they are in favour of the course which we propose to take. The Bill makes provision for continuing the life of the existing valuation lists until a date to be fixed by Order in Council not later than the April next but one following the end of the war. The new lists would be brought into force at an earlier date if conditions permitted and revaluation was felt, after consultation with the authorities concerned, to be necessary. The latter part of Subsection (1) of Clause I makes necessary consequential provisions. In London amendments of the current valuation list are incorporated in the list itself in each of the first four years of the quinquennium by what is called a supplemental list. There is no provision for such a list being made in the last year of the quinquennium because the new valuation list itself is then being made. If, however, the life of the present lists is to be prolonged beyond the normal five years, it is necessary to provide for the making of a supplemental list each year until the last year of their life.
Such is a brief explanation of the provisions of this Bill, but I know that some of my hon. Friends desire to raise certain points connected with the present valuation list, the list which is to be prolonged if the Bill is accepted. It is generally agreed that this Bill should go through, but there are undoubtedly points which, particularly in London, are acutely felt, and on these I shall listen with interest to what hon. Members may say. We do not close our minds to the fact that many new problems are now arising, and we shall be most willing to give attention to any review of these which may be given by hon. Members in the present Debate.
§ 10.6 p.m.
§ Mr. Ede
The right hon. Gentleman has been commendably brief at this hour of the evening, and I only regret that there are so many points to raise that I shall not be able to be quite as brief. There are certain things we ought to know about the existing law as far as the provinces are concerned owing to the peculiar situation that reigns there. The problems of rating arising from the law in London and from the law in the provinces are so separate that we had better discuss them separately. With regard to the country outside London, the third valuation list has already been postponed 1094 once and the preparation of the list was delayed when war broke out. In June, 1937, the Central Valuation Committee issued a memorandum to the rating authorities urging them when preparing the new valuation list to adhere closely to the definition of "gross value" in the 1925 Act, particularly in connection with the assessment of dwelling houses.
When the historian has a chance of seeing the period between the two wars in perspective, he will say that one of the great social changes that occurred was the enormous growth in the number of small owner-occupiers. It has meant a great change, part of which we are feeling in the war with regard to the difficulties which serving soldiers have found in meeting their payments on the mortgages that have been granted. I have an extraordinary example of the way in which this affects particular parts of the country. I was handed by the chief public assistance officer for Surrey a list of over 100 names of men serving in the Forces, whose wives had applied for public assistance because the allowances paid, prior to the grant of the special allowances, were inadequate. This was so staggering a figure that I wrote to my own constituency to inquire of the chief public assistance officer whether he had at that stage had any similar applications. I had an answer to say that no relative of a man serving in the Forces had applied for public assistance. When I analysed the Surrey list it was evident that the reason for the large number in Surrey was that people in the suburban area of the county have been forced between the two wars to live in the owner-occupied houses and are paying in mortgage interest a figure that is out of all comparison with anything they would have expected to pay before the Great War as rent. I believe that certain hon. Gentlemen opposite think the increase in the owner-occupier class has been not altogether unbeneficial to the country. I want to insist that it has created a great social problem.
One of the problems that confronted the rating authorities and the Ministry of Health immediately prior to the war was the effect that a strict enforcement of the ordinary law of gross value would have had on that very large body of ratepayers, if the advice of the Central Valuation Committee had been carried out. As we know, a departmental committee was appointed to advise the Minister on the situ- 1095 ation that was created. It was appointed in July, 1938, with these terms of reference:to consider allegations which have been made that a strict application to certain classes of property of the existing law of valuation for rating purposes would cause undue hardship; and, if those allegations are found to be justified, to report what amendment of the law is desirable.That committee has reported. I understand that the report reached the Minister before the outbreak of the war. On 14th November last, the hon. Member for the Moss Side Division of Manchester (Mr. Rostron Duckworth) put a Question to the Minister, to which he received the following answer:The Departmental Committee have completed their report butting view of the projected postponement of the new valuation lists and other considerations arising out of the war, I do not think that publication of the report at the present time would serve a useful purpose."—[OFFICIAL REPORT, 14th November, 1939; col. 568, Vol. 353.]I am sure that the Minister would agree that the longer the preparation of the third valuation lists is postponed the more urgent will become this problem and the greater necessity there will be for the report to be published, for into be examined, and, I imagine, for some legislation to be passed, to deal with what would otherwise be the intolerable position in which thousands of people in the neighbourhood of London, and the suburbs of other large towns, would find themselves, if the ordinary law of gross value were applied to their property. I was hoping that the right hon. Gentleman would give us some indication tonight that he proposed in the not distant future to publish the report, and, before the authorities set about the task of compiling their third draft valuation lists, to promote legislation that would give them some guidance in dealing with the problem.
If the right hon. Gentleman and his Friends want to lose the 100 safe seats that they now have in the neighbourhood of London, I am sure that the one way in which they can do so is to continue the existing law and to apply it rigorously to those owner-occupiers. It would be the one thing that would persuade many people in suburban areas around London to fall in behind the hon. Member for West Fife (Mr. Gallacher). 1096 The right hon. Gentleman must know, from the statements which he has received from his hon. Friends in the neighbourhood of London, that this is one of the problems that, in famous words, "will brook no delay," once it is decided to go on with the third valuation lists. I speak with some hesitation on the position inside London, for the reason that I have given. I believe that the more one understands rating law outside London the less one is qualified to speak upon rating law inside London. I wish that some hon. and right hon. Gentlemen whom I know would apply the same rule in the reverse direction. I am sure that intimate knowledge of rating law inside London is not always the best qualification for speaking on rating law outside London.
It leaps to the eye that the problems that have arisen out of evacuation—I do not mean so much the official scheme as voluntary evacuation schemes which have been carried out by firms and householders—have created difficulties inside London (attributable, as I understand it, to the peculiar way in which the London list is altered once it has been compiled) for individual ratepayers, for certain boroughs, probably some more than others, and for the London County Council. These, as the war proceeds, may compel the Government to bring in some legislation which will enable this situation to be met. I do not think I can safely say more with regard to London than that this situation must be recognised and that it will be the duty of the Government before the position becomes intolerable to take such action as will enable the ratepayers and the local authorities to face the new situation in an atmosphere of reality.
I understand—I say this with great fear and trembling—that one of the things that govern the position inside London is that, if there is a general cause of alteration in values, that cannot be taken into account during an interim period, and certain people say it is difficult to dispute the proposition that the war is a general cause. It is certainly a rather all-pervading cause of most things at the moment. It is clear, however, that even the law affects different people in different degrees, and probably affects the value of property inside as large an area as the County of London in different places in different degrees, and must create for 1097 those responsible for the administration of the law, and those who have to live under it in London, very grave difficulties which call for urgent attention. Outside London, of course, there is the problem of the delay in getting further uniformity of assessment, which was the declared aim of the Rating and Valuation Act, 1925, and the task of the County Valuation Committees in respect of that work is, of course, now impeded and, with the owner-occupier problem bulking very largely in most of these areas, has been virtually brought to a standstill. It is very difficult to see how the wheels will ever be started again until some quite wide and sweeping legislation with regard to rating and valuation has been passed.
Outside London, as I understand it, there is not quite the same difficulty in dealing with the variations which are now taking place in the values of property. I speak as an ex-chairman of a county valuation committee who has had some experience of trying to promote uniformity and seeing that the work is done with reasonable expedition. I think that position, in spite of the war, and even if this Bill becomes law in its present form, was fairly accurately described by the Secretary of State for Air when he was Minister of Health. Speaking in the House on 18th March, 1938, he said:My only other observation is that the Bill limits the postponement"—that is, the first postponement of the Act of 1925—to the new lists to be made for revaluation, as was recommended by the Committee, and that it does not curtail or prohibit the making of amendments, under the current list, which enables amendment to be made at any time upon cause shown. I have heard suggestions made about local authorities, but I have no doubt that they will observe the spirit of this legislation to the full. There is certainly no danger of any wholesale revaluation being undertaken by these means, but it is important to preserve the right to make current amendments when it is clear that an assessment is not in conformity with the general level of assessments in the area. It would not be right as a result of this legislation either, on the one hand, to prevent a ratepayer from securing a just reduction of his liability if such is warranted during the period of the postponement or, on the other hand, to prevent the amendment of an assessment where it is clear that the particular ratepayer is not bearing his due share of the common burden."—[OFFICIAL REPORT, 1938; Vol. 333, col. 793.]1098 I understand that the present Bill in no way vitiates the statement then made by the Minister of Health.
§ Mr. Ede
I hoped I had made it clear that in this matter I was dealing with the position outside London, and I hope that the right hon. Gentleman will be able to answer me on that point. After the outbreak of war, on 22nd September, 1939, the Assistant Secretary to the Ministry of Health circularised the local authorities with this statement:The Minister recommends that no further step should be taken at present towards the preparation of the new lists, but county valuation committees, assessment committees and rating authorities should endeavour as far as possible to maintain whatever organization may be necessary for dealing with any questions which may arise in relation to the lists now in force.I gather that at that time the legal advisers of the Ministry shared the view which I have just expressed. I think it is clear, therefore, that during the period of the war this cannot be the last piece of rating legislation that we shall see. Even allowing for two years after the end of the emergency, as is provided for in this Bill, it will probably be necessary during the war to have some machinery established by law that will enable the work of revaluation to be undertaken as soon as possible after the emergency has ended, if we have not been compelled by changed circumstances throughout the country, which none of us can foresee to-night, to undertake the work earlier.
I want to suggest to the right hon. Gentleman that the period of postponement we are now agreeing to ought not to be passed merely in idleness by those people who have to have regard to the framework of the law in this matter. I suggest that a good deal of the law with regard to rating and valuation has reached a highly hypothetical state in recent years. We all know that the basis is the hypothetical tenant who, I understand, is still garbed in the somewhat ample garments of the days of Queen Elizabeth, and really from 1601 down to to-day there has been no fundamental change in the theoretical basis of English rating valuation.
The result is that, at the moment, the most ridiculous anomalies abound. I suggest that this period of postponement 1099 ought to be used to examine some of those anomalies. I will take one, which is constantly before me. What hypothetical tenant would pay anything for the privilege of educating children in elementary schools at a net loss to himself of anything from £10 to £20 a year? Yet if a child is educated in a council school the most extraordinary arrangements have to be made, by county conferences, to agree on a basis for the different standards of council schools that have been provided since the Education Act of 1870, whereas if the child is educated in an elementary voluntary school the Ragged Schools Act says that the school shall not be assessed.
I suggest that another thing that calls for attention during this period of postponement is the rating of public utility undertakings, because where a local authority is not the owner of the undertaking, on occasion an effort is made to get a considerable amount of indirect rates out of the ratepayers, through the form of a very high assessment of the undertaking. For instance, of the cost of generating and distributing electricity in this country, 14 per cent. is rates—a proportion which I think it would be very difficult indeed to justify on any real basis of the hypothetical tenant. When the public utility undertaking happens to be a joint electricity authority, which is compelled to carry on without making a profit, it is very difficult to see what hypothetical tenant would pay rent for the privilege of supplying his neighbors with electricity without a profit, but with the risk of a loss. There may be such people. The hon. Member for South Corydon (Sir H. Williams) has an extensive acquaintance among the electricity undertakers of the country, but do not think he has found one who would be willing to carry on the business on those terms, and to pay a rent for it.
I apologies for the length of time I am taking, but the ramifications of this problem, as presented to-night, are so wide, and I do not want it to be said at some future date, "That point was not made by the hon. Member when he addressed the House on the Rating and Valuation (Postponement of Valuations) Bill; therefore, it is something which has arisen since." I promise the House that I will not deal with all the topics, tempting as they are, that will come up, but there 1100 is one thing that one is bound to say, especially from this side of the House. A fundamental wrong in our rating system is the fact that it depends so largely on the taxation of improvements. I see that even the lateness of the hour does not drive my hon. Friend the Member for Burslem (Mr. MacLaren) from his post; he may elaborate that point at greater length. I am quite sure that, for the reasons I have given, a basis that depends on the structure of 1601—[An Hon. Member: "1606."]—Really, if there is one thing that I thought Was sure of, it is the date of the first Poor Law Act. I know that it was passed during the reign of Queen Elizabeth, and she was gathered to her father in 1603. Although I may be wrong, I am quite sure the hon. Gentleman is wrong in the date that he has chosen. A system that is based on an England so remote in its social structure from our time as the England of 1601 calls aloud for consideration and for drastic reform.
My hon. Friends and I hope that, while we agree to this Measure and recognize that some interim legislation may have to be passed to deal with the problems that may become very acute in the changes that may be effected by the war, this period of postponement will be used by the Government for the consideration of the fundamental issues and difficulties that lie under and behind our present rating system.
§ 10.31 p.m.
§ Sir Herbert Williams
I listened with great interest to the speech of the hon. Member, whom I am sometimes inclined to call the hon. Member for Surrey, though he represents a Northern constituency. I am a little disappointed that we are not going to have the guidance to-night apparently of the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison), who in these matters is regarded as the leader of official thought in London on the opposite side of the House, in respect of these matters.
This Bill is in two parts. Sub-section (1) deals with the Metropolis, and Subsection (2) with England and Wales. The London system is such that the ordinary citizen cannot have a reassessment unless there has been a real structural change in his premises, whereas the citizen outside London can come along virtually at any 1101 time and ask that his premises should be reassessed because the whole of the circumstances affecting the premises have changed. The effect of the postponement is to deprive the citizens of England individually of their right to an individual reassessment. It would be intolerable at this moment when great stress is being imposed upon the staffs of borough councils to ask them to undertake a general re assessment in London, but the provincial postponement does not deprive the citizen of anything. It deprives the local authority of the power of assessment, but I understand that the individual citizen in my division of South Corydon, if he has a grievance—
§ Mr. Ede
I do not think that the local authority in the provinces are deprived of the right of submitting a proposal, if they so desire, in regard to individual properties. As I understand it—and I hope the hon. Gentleman will forgive me for interrupting him, because I want to make the point quite clear—both the ratepayer and the local authority in the provinces are in exactly the same position.
§ Sir H. Williams
Perhaps I have been guilty of inadvertence, and I accept the hon. Gentleman's statement, and perhaps I rather over-stated the case. The postponement of the valuation in the provinces means that general re-assessment cannot take place, but the two parties to the contract, the local authority and the ratepayer, retain their individual rights in respect of the particular property. In London, on the other hand, the postponement means that neither the local authority nor the individual can correct what may be an injustice in respect of an individual property. What has happened in London? Like the hon. Gentleman opposite, I do not sit for a London constituency but I live and working the City of Westminster. Certain parts of Westminster to-day are almost distressed areas. Not very far away from here there is that so-called fashionable district of Eaton Square. I am told that only six houses out of 120 are occupied. That is true of Westminster, true, in a different way, of the City of London, true of Holborn and Kensington and of the constituency which is represented by my hon. and gallant Friend the Member for South Paddington (Vice-Admiral Taylor).
1102 There is a perfectly appalling situation prevailing in London to-day. This Bill, quite rightly, postpones the general revaluation, but it leaves untouched the situation in which many parts of London are placed to-day. I heard the other day from a Member of the House of some premises in, I believe, the City of London that were let for £4,000 and assessed on that basis. On account of the circumstances of the present time the tenant approached the landlord, who agreed to a most extraordinary change until the emergency has passed, namely, that the rent should be reduced to £400. But rates have to be paid on £4,000. Something will have to be done soon. I hope my hon. and gallant Friend the Member for South Paddington will take part in this Debate before it is finished because he represents a community in which there is a vast number of hotels and boarding-houses which, to-day, are almost derelict.
How some of these London boroughs are going to meet their precepts I do not know, because the London County Council does not collect rates; it demands them. It demands rates from 28 boroughs in London on, say, a valuation of £1,000,000, at 8s. in the £, and says, "We want a million eight shillings."
§ Sir H. Williams
The hon. Gentleman is not familiar with the London system. The London County Council system is based on the paper valuation of London, and they take this valuation and levy the rate based upon the paper valuation. It may be that in South Paddington 20 per cent. of the hereditaments are void, and the result is that the remaining 80 per cent. which are left have to find the money on the assumption that every house is occupied. I do not know what is going to happen. You may be forced into the situation where people will frankly refuse to pay rates, which is something we hate to contemplate, as this is a country of law abiding people. I have not seen any figures yet—none have been published—of the finances of London during the year which will begin 1st April—but the other day I saw a forecast for a town outside 1103 London where, at the moment, the rates are in the neighbourhood of us. in the pound. They expect on increase of 4s. in the pound. There is all this burden of part of the A.R.P. expenditure which will not be borne by the Government; increased expenditure; large numbers of empty houses, the product of rates has fallen substantially; and people are going to be faced with a most intolerable position. Therefore, while I will support this Bill without the slightest hesitation, I must say to my right hon. Friend that within measurable period of time, indeed, fairly soon, there must be a Bill presented to the House to deal with the intolerable situation which exists in London and further measures to reduce the burden of the ratepayers up and down the country. Otherwise, I cannot visualize what the result will be. Even if the theory of the hon. Member for Burslem (Mr. MacLaren) is correct—I do not think it is—it is not going to solve the problem of the burden suddenly thrown upon us by this emergency. While I hope that we may get to bed at a reasonable hour, I think that the few minutes which may be devoted to this Debate may be of the utmost importance, and I hope it will continue sufficiently long to enable the Minister to appreciate, as I think he does, that we are facing one of the most difficult problems in local finance that has ever been presented to a Minister of Health.
§ 10.41 p.m.
We have been told that the revaluation of property has to be postponed because of administrative difficulties. That may or may not be correct, but it does not in any way alter the fact that the revaluation of property should be carried out in the interests of justice. It is recognised, of course, that the value of property varies from time to time; that is the reason why we have a quinquennial valuation. That is due very shortly. In my constituency of South Paddington, the greatest single industry is that of hotels, apartment houses and lodging houses. The war has had a most disastrous effect upon the industry and as a direct result of the war the ratable value of property in South Paddington has been enormously reduced. But if the Bill is passed, as it will be, and nothing further is done, the ratepayers in Paddington will have to pay rates on an assessment which bears 1104 no relation whatever to the existing value of the property.
The reduction in the value of property has been brought about first of all by the crisis in 1938. There was a considerable exodus on that account. There was a loss on "empties" of 8 per cent. Since the war there has been a further exodus which has been brought about to a certain extent by people voluntarily leaving London because they thought that London was going to be bombed on the outbreak of war and that they would be far safer in the country. Also visitors are not coming to London as they did in the usual course of events. But also it is due very largely to the evacuation policy which has been carried out by the Government, and that bad example has unfortunately been copied by many business firms and business men. The closing of universities, the evacuation of hospitals, the elimination of examinations for the Civil Service, the petrol restrictions and other factors have all helped to bring about the condition of affairs which exists in my constituency at the present time. The hotel, lodging house and apartment house industry in Paddington is almost ruined. The normal population is some137,000, and the present population is 98,000. Unfortunately, the people who are chiefly hit by this tremendous exodus are those in the hotel, apartment house and lodging house industry. Because of this state of affairs, the revaluation of the property is urgently required, but if this Bill passes, and nothing else is done, the revaluation will note carried out, and the position will become intolerable.
Therefore, I am very seriously concerned as to what in law will be the state of affairs if this Bill becomes an Act. Unfortunately, in London, the aggrieved ratepayer has no means of asking for an adjustment of his assessment unless he can establish a cause particular to his own property. He cannot bring forward "the war" or "the evacuation" as causes He must state a cause which is particular to his own property. That is a very wrong and very unjust state of affairs. We all know that the war actually is the cause, but no re-assessment in London can take place on the mere fact of the war or the evacuation. Already there has been a loss in income in the accounts of the borough of South Paddington for the first nine months of the present year of 16 per cent., and it is 1105 feared that by the end of the year they will be up to 20 per cent. The borough precept, as far as my constituency is concerned is £820,620, and already the borough is £288,000 in debt to the preempting authority. That debt cannot be met. If there is to be no revaluation, if the Government are not going to give some assistance to fill the gaps between the rates received and the amount due to the preempting authority quite apart from any revaluation, the loss on the current year and the loss on next year—because conditions do not show much sign of improving—and the extra expenditure on air-raid precautions mean that there, will have to be an additional 3s. 6d.on the rates.
At the present time, the people in the hotel, apartment house and lodging house industry cannot meet their obligations. They are doing their utmost to do so, but they cannot. Places which used to be full or nearly full are practically empty. The people are not there. If this Bill becomes law, and nothing else is done, the people in my constituency will have to pay, in addition to their own rates now, another 3s. 6d. It must be quite obvious that they cannot possibly do that. The result will be that more and more people will default, more and more houses will become empty, and the position will go from bad to worse. It is a vicious circle. The consequence will be ultimately that the borough of South Paddington, and possibly other boroughs in London, will become derelict areas. As a matter of fact, such an increase in the rates would in itself increasingly perpetuate the difficulty and defeat the very object for which it was levied. If this Measure is put into operation and nothing else is done, that will be the case. I hope sincerely that the matter will not rest with the passage of this Bill.
A question has been raised with regard to the difference between boroughs in London and boroughs outside London. Unlike boroughs outside London, in the London boroughs ratable value is determined on the whole of the property, whether occupied or not. The borough authorities themselves have no power to exact rates on empty property. Therefore the ratepayer, in addition to the rates on his own house, has to pay the rates levied on unoccupied property as well. That seems most unjust and unfair. There is no justification for it. The value of a 1106 property for purposes of assessment is "the sum which a hypothetical tenant would pay by way of rental, taking one year with another." That is the correct basis and on that basis it is obvious that the present ratable value of a great proportion of the houses in my constituency and many other constituencies is much below what it was when the last quinquennial valuation was taken. In common justice on that account, a revaluation should be taken as soon as possible. But if this Bill becomes law, there will be no revaluation and the ratepayers, in consequence, will be called on to pay rates on a totally false and unjust assessment. The result will be that more and more people will have to default, more and more houses will be empty, and the position will become impossible.
I am sure that if this Bill becomes law, it will not be carried out. It cannot be carried out. Reassessment will have to take place. The boroughs will be forced to reassess properties despite the law. That will bring the law into contempt, which is very undesirable. The worst thing in the world is to have a law which is not carried out. It is much better not to have the law. Therefore it is essential that, in addition to the postponement of this revaluation, other legislation should be passed as soon as possible to give local authorities statutory power to enable reassessments of property to take place. Its also most important that this question of cause should be dealt with on an equitable and proper basis and be universally applied. Everybody realizes that outside London the owner of property has not to give a particular cause. He can give a general cause and have his property reassessed. It is essential that the same practice should obtain in London. I am much opposed to the Second Reading of the Bill as it stands unless we can get an assurance from the Minister that very soon after the passing of the Bill, he will introduce further legislation giving local authorities statutory power to see that justice is done and that a reassessment of property is made.
§ 10.55 p.m.
§ Mr. MacLaren
I will not detain the House long because the speech to which we have just listened really conveyed much that was in my mind. I am making no excuse, however, for entering into the Debate because, as a matter of fact, I 1107 was the first Member of this House approached by people distressed in London for advice and guidance in the disturbance which had come upon them. I point that out because some people in this House may have been anticipating that if I entered into the Debate I might be entering upon an academic sphere of rating; but I am too old a bird. I would say, however, tithe hon. Member for South Corydon (Sir H. Williams) that when I listened to his wild indignation at the rating system breaking down, I could not help remembering that when the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) prepared astound system of rating he was the gentleman who got up and opposed it. There he has the rating system in front of him and he does not like it.
If this had not been a time of war, the problem which we are discussing tonight would have been one of the first magnitude, because throughout the length and breadth of the land this rating problem has become not only a menace to administrators and local authorities, but also to the ratepayers. I am not going to take advantage of the present situation to present difficulties to the Government because they have already enough on their heads without my creating any more. I am going to suggest one or two things, however, to the Government. When these people came first to the House I advised them to abide by the law and that if they could prove that the rental value had disappeared, the quinquennial valuation notwithstanding, they would be entitled to submit their case to their local authorities and seek revaluation.
§ Mr. MacLaren
I am not disputing that. I am not dealing with this unique five years' valuation of London at all. That was the advice, and it was the only hope that I could see. People were coming to me from Paddington, from Kensington, and all over the place, and they were really distressed in some cases. What with rents high, and with the rates levied upon the premises, people were left bankrupt even to the extent of meeting the overhead charges. They could not possibly do it. When action was taken against them for rent by the landlord, the landlord in many cases, seeing that 1108 the rating authority was likely to spring on the tenants for rates, pursued a policy of having an order in court to terminate the lease—at least to get powers of possession. The lease terminated because the lease would fuse, as it were, into the possession.
Here we have the situation in London where the landlord is watching whether the rating authorities are going to act, and the rating authorities are waiting to see what the landlord is going to do. The poor tenants between them, bankrupt anyhow, not knowing what to do, are coming to the court and asking what they are going to do. It is an extremely difficult problem for the Government. I would suggest that, instead of saying that there shall be nothing done until after the war—because that is what this Bill means—the Government should fully face the situation and override this five-year arrangement in the London rating system and do something to make the law work. What could be more farcical than to compel people to pay a rate upon a rent which does not exist, while the law of rating clearly lays down that the rate shall follow the rent, and that the rental shall be that rent which could be secured for the premises from year to year? We have got into the ridiculous position in which there are premises in London that would not let for anything at all. I know the case of a woman who has a capital of over £3,000 with furniture, fitments and so on. Her rental is close on £1,200 a year and she has not a soul in the place now. Yet she will receive a rate on a rental which has entirely evaporated. This kind of thing is bringing the law into ridicule and there is no avoiding the issue by any device that I know.
There is only one responsibility on the Government—and I know they have plenty of others without this, but this is an inevitable one which they must face. It is to make the rate payable by the tenant approximate to some nominal rent, because that is what it will amount to in many cases in London. If that is not done, if some hope is not given that the Government will do something along those lines, it will cause the most distressing pessimism among those people who have invested their all, their life's savings in many cases, in their buildings. I would ask the Government not merely to express themselves within the four corners of the Bill, but to take the 1109 occasion of this Debate really to suggest that there will be immediately a review of the situation. It would not be so really pressing were it not that there are cases piling up against these people and summonses for rates. There are 30,000 in certain areas in London. It is that which is making it essential that the Government should say something that will give a ray of hope to these people. The five years hard-and-fast arrangement was a good practice in London when things were easy-going, but the present circumstances warrant an entire change in the valuation period, at least during the war. Something should be done to relieve these people from a veritable nightmare. The other night I met a man and a woman I did not know who told me they had been to some meeting where this question was discussed. They told me their place was near Earl's Court and that they had put their life's savings into a little hotel. They said they would hand over their building, their lease, and their property if anyone would pay the rates and the debts on the building. That case can be multiplied by hundreds. I ask the Government not passively to pass the Bill and to say, so far as the rating problem is concerned, that it is over until the war ends. That will not do. The tiling is too pressing and the tragedy is too terrible.
I could give the House case after case. The right hon. and learned Gentleman will know of the case which has recently passed through the courts, in which a man had put his whole life's savings into a little hotel business. He took his investments to the bank and offered them as security for further money for further investment in these premises. Just when he had launched the premises, the war came along, and every one of his tenants left him. He comes before the court, which orders possession to the landlord. He is away back, in the country, but in debt to the bank, having lost all.
This kind of thing is known to the Government. I plead with the Government; I do it with all sincerity. I could be tragical about the whole rating system, but I am not doing it. I plead with them to do something, and to do it speedily, because of the tragedy of which I know, of the people to whom I have spoken. These are the hardships of honest people, who entered into these enterprises—some of them foolishly, if 1110 you like—to make a little something of their lives. They see everything evaporating. Heaven knows, it is bad enough when you lose your all in the circumstances of the war, but it is something much more bitter when the law, in full operation, points you out as a person who is in debt because of the non-fulfilment of rating payments and other liabilities which you could not possibly meet.
I think it will be clear to the Government that I am not making political capital out of this question. I am appealing, in the names of all those people whom I have met and spoken to, and who are some of the most heartrending cases I have ever known, that the Government should do something before this Debate ends to give some promise and some hope to these people that this problem is not insoluble to the Government, and that something will be done to bring a little happiness into these lives, that have been shattered by misfortune.
§ 11.3 p.m.
§ Captain Sir William Brass
I should like to echo the very eloquent appeal that has been made to the Government, and to call attention to a slightly different aspect of the matter, relating to the City of London, about which I happen to know something. The position is that rents in the City of London are compounded. Consequently, when an office or a warehouse is let, rates are included. There are many big blocks of warehouse and office property of which the assessments were made in 1935. The value of the property has gone up very much since then, but the rates, which in 1935 were 11s. in the £, are now us. 6½d., including the water rate. Anybody who wants to take over offices or any of these warehouses goes to the landlord and says, "I am willing to pay a certain amount," which is much less than was being paid in 1935. The amount that is offered is probably that of the actual assessment of the particular hereditament. The result is that the landlord says, "I am not going to let this hereditament at that price. If I do, I shall have to pay 11s. 6£d. in the £ in rates, and then Income Tax on any profit. I have to pay all the overhead charges. The net result will be that, if I let it to you at £200, I shall have to pay in rates, taxes 1111 and expenses, £250, in order to get that £200 of rent."
The result is that that property is left unlet and, when it is left unlet, the rates are not collected on it and the landlord instead of paying at the rate of 11s. 6½d. in the £, pays half the poor rate, which is 1s. 2d., and the result of that is that the amount of revenue to the rating authority is enormously diminished. Directly that happens obviously the poundage of the rates has to go up and, as it goes up, more and more property gets into exactly the same position, and consequently you go round in a vicious circle and, instead of being able to let the property as it comes into the market empty, the landlord refuses to let it because he is not going to make a loss by letting it and paying all the rates. That is a very serious position because, the longer it goes on, the more the vicious circle continues and the rating authorities gradually increase the poundage the whole time. It does not apply in the country, because you can have individual cases brought up, but in London, once you have the valuation fixed, it has to remain constant, and if the Bill is passed in its present form and it is postponed until the emergency is over, and afterwards for another period of two years, it is a very serious matter indeed, and the result will be that more and more property will become unlet, rates will go on bounding up all the time, and the unfortunate people my hon. Friend was talking about who have to pay the rates themselves and the landlords are going to be hit more and more by the increase in the poundage. I appeal most sincerely to my right hon. Friend to see whether it cannot be arranged that London shall be treated in the future in the same way as the country outside.
§ 11.16 p.m.
§ Sir Harold Webbe
I want to thank the hon. Member for Burslem (Mr. MacLaren) for the moving and vivid picture that he has painted of the position in London to-day. I believe that picture is very little exaggerated and with what he has said I find myself entirely in agreement, though in my belief, generally speaking, landlords have not behaved in the unreasonable manner the hon. Member suggested they had.
§ Mr. MacLaren
If I gave that impression, I did not mean to convey it, be- 1112 cause in many cases in my experience landlords preferred even to reduce rents.
§ Sir H. Webbe
I apologies if I misunderstood the hon. Member's point. I shall not follow the hon. Member for South Shields (Mr. Ede) in the interesting picture that he painted of local government and its relation to the ratepayers, nor shall I intervene in the difference of opinion between the hon. Member and my hon. Friend the Member for South Corydon (Sir H. Williams) though, if I took their point of view aright, I should be inclined to vote for my hon. Friend. Nor shall I incur the hon. Member's displeasure by talking about rating outside London. But I should like to say a few words about the position in London itself. I rise to support the Second reading of the Bill. I regard it as a most regrettable necessity. It is, I think, clearly a necessity, because the administrative task of undertaking a complete revaluation in to-day's conditions is one that we could not possibly contemplate. It is highly regrettable because it postpones indefinitely the remedying of serious injustices and inequalities which are inevitable in consequence of the peculiar rating procedure under which London works. Those problems and those inequalities which in normal times are created by the quinquennial assessment have become much more acute as the result of the war. The garage proprietor finds that the rationing of petrol has removed his livelihood, and he clearly has a case to plead for re-assessment. The task of the rating authority, endeavoring to do justice and at the same time properly to administer the law and to determine what is and what is not a "cause," is by no means an enviable one. The hon. and gallant Gentleman the Member for South Paddington (Vice-Admiral Taylor) has told us that in his constituency nothing arising out of the war is being accepted as a "cause" for the purpose of appealing against assessments.
No; my hon. Friend has misunderstood me. I did not say that in Paddington nothing was being accepted.
§ Sir H. Webbe
Certainly in many boroughs circumstances arising out of the war are being accepted, and I think in justice may be accepted, as causes. But I hope the Attorney-General will be able 1113 to assure us that the Government are alive to this grave difficulty, and will take whatever steps are necessary and possible to ensure that "cause" shall be liberally and uniformly interpreted throughout the boroughs of London. There's another reason why the Bill must be passed. The present time, when values are so completely disturbed by abnormal circumstances, is no time at which to fix values for a period of five years. But this Bill is concerned only with machinery, and our real difficulties in London are not difficulties of machinery but of fact. Just as the effect of the war has fallen very unevenly on individuals, so it has fallen unevenly on districts. Evacuation has removed tens of thousands of ratepayers from some of the wealthier districts of London for the duration of the war, and, in some cases, for ever. Shopkeepers and restaurateurs find that their clients have gone. Lodging-house keepers find their rooms empty. As a result, thousands of ratepayers of London, who hitherto have never failed to meet any civil obligation, find themselves haled to the courts as rates defaulters. Cumulatively, the effect is that the ratable capacity of London has been substantially reduced.
However you play with assessments and with "rates in the pound," we are faced with the fact that the potential rate income of London has been considerably reduced below the pre-war figure. At the same time, the expenditure which Statutes make obligatory on the local authorities remains the same, or, indeed, has been increased. Therefore, there is an inevitable gap between the ratable capacity and the expenditure which the authorities must incur. I am aware that that gap can be reduced, just as it may, with the progress of the war, be increased. It is possible for local authorities to economies. In the absence of the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison), I feel it would be unfair to particularize as to which authorities might take the lead in that matter, but any economy which is possible will not, in my submission, begin to fill the very serious gap which now exists. It is not the occasion to discuss ways and means of filling that gap, but I hope that we can have some assurance that the Government are very seriously considering this problem, and that they will take some steps to meet the difficulties.
Mr. A. Bean
The hon. Member will realise, of course, that circumstances beyond the control of local authorities have affected some authorities, and sent their rates up to 32s., 34s. or 35s. in the pound. We did not hear the hon. Member coming to their rescue at the time.
§ Sir H. Webbe
At the time those matters were discussed, I was not in the House, to come to the rescue of those authorities.
§ Sir H. Webbe
But two blacks do not make a white, and it is a fact that in London there is grave difficulty in securing the money which is necessary for the essential public services. In regard to those areas to which the hon. Member has just referred, a considerable measure of assistance, in one form or another, has already been given by the Government. I do not want to stress the point; I merely beg the Government to consider this, not as a problem of the distant future, but as one of immediate urgency, which must be tackled if we are not to be faced with serious difficulty, if not breakdown, in connection with the local services of London.
§ 11.24 p.m.
I sympathies with the points made in a number of the speeches, but, representing an area where the rate poundage, despite the assistance given, has for some time been from 32s. to 35s., I am obliged to point out that some authorities have been visited by circumstances beyond their control, and that individual householders and property owners generally have suffered enormous hardship for many years, and have pleaded in vain to the House of Commons.
§ 11.25 p.m.
§ The Attorney-General (Sir Donald Somerville)
I think it is the fact that every speaker to-night is agreed that this Bill is wise and inevitable, and that it would be quite impracticable for the local authorities in London and elsewhere to undertake at this time the business of the Quinquennial Valuation. The speeches to which we have listened to-night have been on the lines which my right hon. Friend anticipated, and have been directed to bringing before the House 1115 various urgent problems which have arisen in connection with rating owing to war conditions, not by way of arguing against the Bill but by way of pointing out these problems and their urgency.
I do not think that those who have spoken need any assurance from me that my right hon. Friend and the Government realise the great hardships which have been caused to many people and the importance of the problems that have been raised and I should also like to pay some tribute to the speech made by the hon. Gentleman the Member for Burslem (Mr. MacLaren), who, as we would expect, showed great sympathy and humanity to those with whom he came in contact. He also showed great self-control in keeping his hobby-horse in the stable, and—I would also like to pay tribute to this—while realizing these hardships, he also realised, from the point of view of the Government, that the problem was a very difficult one.
Although I do not wish to detain the House, I want to do justice to the points which have been raised. There was one main point which emerged from nearly every speech. Both hon. Gentlemen opposite and London Members dealt with the question of rigidity in London, as compared with the provinces, of individual interim revaluations. Everybody recognizes the distinction which exists between London and the provinces, and the greater rigidity in London. I would point out also, in connection with that, what I think is cognate. There's also greater rigidity in London in the matter of rate remission. The local authorities in London, unlike the provinces, can only remit rates after a proceeding before a justice. That, I think, is peculiar to London. In both London and the country generally a remission can only be granted on the ground of poverty. Questions on both these points have been raised and brought to the attention of the Government, particularly with regard to business premises, and, using the phrase, "business premises," I include hotels and apartment houses, and fiats in cases where a person lets them as a business, and premises used for professional purposes.
It has been suggested, as far as this class of premises is concerned, that there ought to be a more satisfactory procedure for remission in London. It has 1116 been suggested that both in London and in the provinces, it might be desirable to extend the ground of remission so as not only to confine it to poverty but also to circumstances arising out of the war, such as have been detailed to-night. I can assure the House that both these suggestions are being carefully examined. I think remission is very important in this case because it is a more flexible power of remission which arrives at the same result as a more flexible form of interim revaluation. So far as cause is concerned it is no doubt very desirable that there should be uniformity by the London boroughs. It is a matter which I hope the Standing Joint Committee will continue to consider.
We have not had the advantage of hearing the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) to-night. He no doubt has his own ideas on these matters and occupies an important position in regard to them.
One should point out, however, that any alteration either by law or administration of the existing construction is a thing which affects all the London boroughs. It is a matter which they have to consider together, and if they can arrive at a unanimous and agreed conclusion so much the better. It is very desirable that all boroughs through the Standing Joint Committee should direct attention to the problem and see whether they can agree on some common representation, or some representation which they can make to my right hon. Friend.
That point, I think, ran through most of the speeches which were made to-night. The hon. Gentleman the Member for South Shields (Mr. Ede) cast a glance at the general rating system as a whole, but the House will not want me, at this late hour, to go into that general question. The hon. and gallant Member for Clitheroe (Sir W. Brass) dealt with cases which arise, not only in the City, but in business premises elsewhere, where it is desirable that the person liable for the rates should make an extensive remission of rent. It is points of this sort which we have in mind, and we are trying to see whether there are any practicable methods to meet them. I have not referred individually to every speech but I think I have dealt fairly with the matter in general. Before I sit down I want to assure the House that although the prob- 1117 lems are difficult, and there may not be a legislative solution to them all, we are alive to them and are doing our best to see whether any solution which is practicable can be found to meet the present position.
§ The Attorney-General
I cannot give a date. The evidence has been taken and consideration is being given to the matter almost daily. I hope it will be soon. I do not think twill be next week, but I can say that we realise it is desirable that a derision should be come to as soon as possible.
§ Question, "That the Bill be now read a Second time," put, and agreed to.
§ Bill read a Second time.
§ Bill committed to a Committee of the Whole House for Tuesday next.—[Mr. fames Stuart.]