HC Deb 28 November 1950 vol 481 cc1113-22

Motion made, and Question proposed, "That this House do now adjourn."—(Mr. Royle.)

12.15 a.m.

Mr. J. R. Bevins (Liverpool, Toxteth)

I am very glad of the opportunity, even at this late hour, of raising the question of the re-assessment of dwelling-houses in England and Wales. I should like, first, to give the House a little of the background to what is now taking place throughout the country.

Hon. Members will remember that when the 1948 Local Government Act received its Second Reading in the House, the Minister of Health advanced three propositions. I am not discussing these tonight, but mention them merely for the purpose of giving the background. The first of these propositions was that the old system of block grants to local authorities should be replaced by equalisation grants, which should be paid on the basis of the need of local authorities. This need was to be determined by the difference between the national average weighted rateable value and the local weighted rateable value of particular localities.

The second proposition was that if weighted rateable value in the case of any one locality was to be a fair measure of need, then, obviously, the assessments of properties throughout the country must be uniform, partly for the sake of equity in the payment of grants, and partly for the sake of equity as between tenants of properties. The third proposition was that there should be a central valuation of all property throughout the country, to be undertaken by the Board of Inland Revenue. So, in short, there was to be a new basis of Government grants to local authorities, which relied for its equity on uniform assessments of property throughout the country.

In the case of private dwelling-houses it was, of course, recognised by the Minister that if we were to persist in the old basis of assessment, on the foundation of what a hypothetical tenant would pay for the rent of a house, then the assessments of many private dwelling-houses would rocket sky-high and it might even become impossible for large sections of the community to live in their houses.

It was therefore decided that as regards pre-1918 houses—those built before the First World War—the assessment should be based very largely on 1938 rents. As regards post-1918 houses—houses built after the First World War; this category includes both municipal houses and others which are within the range of the Rent Restriction Acts—it was decided that the Minister should issue statements in respect of the various rating authorities throughout the country, giving standards whereby the authorities should judge the hypothetical building costs of those properties in 1938. The idea of the Minister, of course, was that once the hypothetical 1938 building cost had been determined, a site value should then be added, and that a figure of something like 5 per cent. of the result should be taken, which would give the gross value for assessment purposes.

On these post-1918 houses, I should like to pass one or two observations. The Minister of Health was empowered by the Local Government Act to issue these statements after consulting with local authorities. My information is that these statements, in their draft form, were, in fact, referred to local authorities, who were given a period of about three weeks in which to pass on their observations to the Minister. There then followed a delay of 12 or 13 months, during which nobody quite seems to know what went on either at the Department or at the Board of Inland Revenue. There must have been a good deal of heart-searching and a good deal of misgiving as to what actually should have been done and that delay is, I think, rather significant.

This particular statement refers to the city which I have the honour to represent in part, the County Borough of Liverpool. The idea is that the Minister says to the Board of Inland Revenue, "Here are six alternative specifications for the post-1918 houses. We expect the valuers of the Board to decide into which specifications the house falls, to discover the area of the house and, by the table at the back, to assign the 1938 hypothetical building costs. As the journal, "Local Government Finance," says: The value to be given to variations from the specifications is presumably where the entertainment side of this procedure commences. How right they are, because if we check, for example, specification "B," which depends upon 17 different factors, we find: "Quarry tile or composition to solid floors. Deal boarded floors elsewhere." Then, in the next specification, we read: "Quarry tile or composition to solid floors. Deal boarded floors elsewhere," which is precisely the same. If we look under joinery fixtures the same descriptions apply to specifications "C" and "D." They are almost identical, with only one word of difference—and that is the case right throughout these specifications.

I recently put a Question to the Minister of Health in an endeavour to find out how he could possibly justify the widely different assessments of houses of the same area in the same locality, both of which had been built after 1918. On specification "B" it was put at £606 while on specification "F" it was £1,213. In his reply, the right hon. Gentleman said that the figures related to houses of widely different construction standards. That may be the case; there are differences in the standards of construction, but does the Parliamentary Secretary seriously intend to argue that in the case of two houses of exactly the same size, built in exactly the same area, those differences are so great as to justify, in one case, a hypothetical 1938 building cost of over £600 and, in the other, one of over £1,200?

The Minister says that those differences are to allow for differences in construction. I suggest that they do not allow for anything of the sort and that the only reason why the Minister of Health has permitted such latitude in the decision relating to these gross capital figures is because the heart of his statement is completely beyond the interpretation of the staffs of the Inland Revenue. He has had to allow that latitude for the simple reason that this is the most frightening and formidable document that has ever been issued from his Department.

The Parliamentary Secretary is a modest man, and I am sure that neither he nor any of his advisers really understand what these statements were supposed to do. It was all very well for the Minister, in 1948, when he introduced the Local Government Act, to dwell on the beauties of uniformity in valuation, but he is discovering, in 1950, that there is an enormous difference between glib words about uniformity and transforming that uniformity into something that is of real practical value. Indeed, when the 1948 Act was debated in this Chamber the Minister said: … the valuation laws applying to cottage property are weird and wonderful… As far as one can gather, they can just as easily depend upon the emotions of the valuer as upon the property he is considering."—[OFFICIAL REPORT, 18th November, 1947; Vol. 444, c. 997–8.] No more appropriate words could be found for this monstrous administrative tangle for which the Minister of Health is himself responsible.

Can the Parliamentary Secretary explain not only how this is supposed to be interpreted, but how uniformity can be attempted either within areas or as between different rating areas? Will he also tell the House how many men are being used on this central valuation during the next three years, and will he give some idea of the cost? I estimate that no less than £10 million will be spent on this task during three or four years. The Minister, in answer to a further Question recently, went so far as to say that an effective start had been made in the re-valuation and re-assessment of dwelling-houses. That is not my information.

I am told that there is the most profound disquiet among officials of the Inland Revenue in many parts of the country as to the way in which they are being asked to administer this task. I should like to quote two statements which have been made recently, one by Mr. J. D. Trustram Eve who knows a little more about valuation and rating than any hon. Member now in the House. He said: I would repeal these provisions and when the valuation lists were complete under the 1925 Act definition of gross value I would examine them and, if any hardship were apparent, relieve it by some subvention or by a manipulation of the deductions from gross to rateable values. There have been a number of letters in the Press protesting about the way this administration is being put through. There was one in the "Sunday Times" two weeks ago from the Chairman of the Finance Committee of the Hornsey Borough Council, in which he said that the purpose was ostensibly to create uniformity throughout the country but added: That this objective will be achieved is the subject of considerable doubt in the minds of experts, and one is bound to wonder whether, in fact, more anomalies will he created than are likely to be remedied. My last point is this. If it is not to be possible to produce anything approaching a uniform valuation throughout the country, partly on the basis of this statement and partly on the basis of other administrative provisions, how can the Minister possibly justify the new system of equalisation grants? The very foundation of those grants is that there should be equality of assessment throughout the country. My submission is that equality of assessment is an impossibility under the present administrative arrangements and, therefore, the system of equalisation grants is bound to be as unfair in the future as it is today.

12.30 a.m.

Mr. Black (Wimbledon)

I should like to add a few words to what has been said already by my hon. Friend the Member for Toxteth (Mr. Bevins) about the difficulties arising out of the administrative arrangements which are the subject of this debate. This matter, in my own con- stituency, has been the subject of correspondence between the borough council and the Ministry because we have anticipated just the difficulties, which are now only too evident, to which my hon. Friend referred. I think that it is interesting to note that the very difficulties to which we are referring tonight were foreseen by many competent people at the time the Local Government Bill of 1948 was before the House, and I would like to remind the Parliamentary Secretary, and the House, of one or two things said at that time by competent bodies which are now being proved, in the event, to be only too correct.

In 1948 the "Municipal Review," which is, of course, the organ of the Association of Municipal Corporations, said: There seemed little ground for thinking that they (the Government's proposals) would present any advantage as a basis for greater equity and uniformity in valuation, as compared with the present method of valuation upon a comparable hypothetical rent from year to year. In fact, the proposals would have created a lack of uniformity to the detriment of the uniformity which had so far been reached. The other quotation is from the Council of the Incorporated Association of Rating and Valuation Officers—a professional body which has a greater wealth of experience of valuation problems than probably any other professional body in the country. This was their judgment: Having carefully considered examples of different types of dwelling-houses coming within this Clause (small, post-1918 dwelling-houses) the Council are of the opinion that it i3 practically impossible to operate the provisions which have been laid down whereby gross values are to be fixed by reference to specifications which have been passed by the Minister on the cost of constructing houses in 1938. In my own constituency, the borough treasurer of one of my boroughs, who, for some years, was the rating valuation officer to the borough council, worked out a number of examples on how the new arrangements would operate. I will content myself, in conclusion, with giving only one example to the House—not an extreme example, but a typical one from quite a number of average properties in my constituency. This relates to the case of a street in which half the houses were demolished during the war as a result of enemy action and rebuilt under cost-of-works payment. We now have half the road consisting of pre-1918 houses, and the other half consisting of better and more modern houses, only recently rebuilt, but otherwise very similar to the houses which stood on the site before. At present the pre-1918 house in that road is rated at £26 a year whereas a rebuilt house is rated at £28 a year—the slightly higher figure on the rebuilt house giving expression, of course, to the slightly greater value on account of the fact that the house is more modern.

Under the new administrative arrangements, so we are advised by the former rating and valuation officer, the rateable value of the pre-1918 house will go up to £48 compared with £26 at present, whereas the rateable value of the recently built house will be £22 compared with £26 at present. The old pre-1918 house will be likely to have a rateable value of £48, whereas the better, more modern, recently rebuilt house in the same road, will have a rateable value of less than half that. There is, I think, an overwhelming case for asking the Ministry to give some indication of what their intentions are, in view of the chaotic condition into which the operation of the new administrative arrangements will bring the rating system.

12.36 a.m.

The Parliamentary Secretary to the Ministry of Health (Mr. Blenkinsop)

The hon. Member has not left me time to say much about the Government's intentions. We are operating the provisions of the Act, and we cannot discuss, on an adjournment Motion, any question of review of that Act. Let me deal with some of the points the hon. Member for Toxteth (Mr. Bevins) raised with reference to opportunities for consultation with local authorities. They were given not three weeks but six weeks in which to indicate their views, and in several cases, including that of the City of Liverpool, discussions were entered into on the basis of certain suggestions they put forward; and, in the light of their recommendations, certain reductions were made. It is clear that, in fact, local authorities were given an opportunity of putting their point of view, and when they did so there was reasonable give and take.

I understand that the great mass of local authorities accepted the proposals we put to them. It is true that it is our desire to secure a uniform basis for assessment throughout the country, but we do not expect to secure—and I do not think the hon. Member was really mixing these two things up—a uniform valuation as such, in the sense that we do not expect to impose a "one value house" throughout the country. What we are attempting to achieve is a fairer way of getting at the actual value, and although the hon. Member made several points about the valuations in the different sections of the statements we have published, I think it was a little unfair to pick out one or two examples where the specification is not varied between specifications "A," "B," and "C."

If one took a fairer example, the comparison between the extreme specifications "B" and "F" of a house of 1,600 sq. ft., one would find a very considerable variation in the quality and type of materials used, which fully justifies the difference in values attached to these two specifications. In quality and construction specification "B" is "fair"; "F" is "excellent." Consider this: walls in specification "B"—facing bricks 65s. per 1,000, in specification "F," 125s. per 1,000; the roof, asbestos slates in one case and hand made clay tiles in the other; fireplaces, £14 in one case and £58 in the other; central heating—none in one and six radiators in the other.

There is thus full justification for the difference in valuation, but hon. Members must not make the mistake of imagining that we are expecting the valuers to classify every house within one of the six specifications. These are merely the initial guide to the valuer, after which he must make any necessary variation. In very many cases, indeed, there will be no house to fit into one specification alone: some houses might do that, but many would not. Therefore, it would be the duty of the valuer to make variations to fit the actual case of the house that he is valuing. That is surely not an impossible task for the valuer, who, in the past, has not had any such basis upon which to work.

Mr. Bevins

I understand that if, for example, there is a possibility of one dwelling-house falling in one of three alternative specifications the valuers have, in fact, had instructions how they shall act in putting them into one or other of those specifications. If not, what are they supposed to do?

Mr. Blenkinsop

All I am saying is that the valuers are not expected to put houses into only one of the six categories. They have got to have regard to the values of the different specifications, tabled here, in assessing a particular house that may, as the hon. Member says, fit into three, or, in some cases more, specification tables. That is not an impossible task for valuers. In the past, we have had some 1,500 rating authorities in the country, all with their different bases of assessment on which to work. Now we have got down to some 27 different sets of figures—that is to say, the same type of statement that has been prepared for Liverpool is now applicable, no doubt, to many other authorities as well. Throughout the country we have got something much nearer to a stable and equitable basis on which assessments can be made. That is a real advance.

Comment has also been made about the factual basis upon which the figures have been prepared. In fact, the 1937–38 construction costs are. in most cases, the local authority costs, which are known, and it is upon those known figures that these tables have been prepared. There are, clearly, variations between the cost of one specification and another and there has been no attempt to put uniform values upon all houses. It has been argued that instead of issuing a statement with six separate specifications we should have issued a statement with fewer. Four was the number suggested. If that had been done the number of variations that would have been required on the part of the valuer himself would have been very much greater.

There is one further point I want to make. The relation between the values attached to different specifications is now the same in all rating areas. That is a further step towards securing effective basic standards throughout the country. We are satisfied that there has been full opportunity for the local authorities to discuss this.

The Question having been proposed after Ten o'Clock and the debate having continued for half an hour. Mr. DEPUTY-SPEAK ER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at Fifteen Minutes to One o'Clock.