§ Order for Second Reading read.
§ 4.1 p.m.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. W. F. Deedes)
I beg to move, That the Bill be read a Second time.
We are approaching the final stages of an important operation and this Bill is necessary to that approach. This is the fourth Measure on rating that the House has had before it in the last seven years and, though the course of events will be familiar to most hon. Members, perhaps I should say a word or two on that point.
The first was the Local Government Act, 1948, which was introduced by the right hon. Member for Ebbw Vale (Mr. Bevan) and laid the foundations of the present system. That transferred responsibility for revaluation from local authorities to the Inland Revenue. It also provided for the first post-war revaluation—the first for 20 years. I find, as a matter of interest, that it is exactly 20 years to this day when the valuation lists now current in London came into force. That is a measure of the distance between valuations.
That Measure envisaged revaluation in 1952, or 1953, but in the event that proved impracticable. The second Measure, introduced in 1952 by my right hon. Friend the Minister of Defence, postponed the event. The third Measure, also introduced by my right hon. Friend, amended certain provisions of the 1948 Act which had not proved workable in practice. I must confess that in reading such parts of those enactments as I felt necessary in preparation for this task I came to the conclusion that experts on rating are born, not made.
We have now reached this fourth Measure, the need for which was foreshadowed by my right hon. Friend the Minister of Defence just over a year ago. Giving notice of it, he said:I have just made an Order postponing the coming into force of the new list until 1st April, 1956. While the revaluation could be completed on an earlier date on the present basis, I considered it essential to simplify the statutory procedure for appeals and to provide 1191 for certain other improvements, such as a new method of rating gas boards before the lists are finally deposited. There is not sufficient time in the present Session for the legislation required.—[OFFICIAL REPORT, 11th March, 1954; Vol. 524, c. 188.]This Bill provides for certain things which our final preparations have shown to be necessary and to meet certain difficulties which were not anticipated seven years ago. It brings up-to-date and lubricates parts of the machinery which were designed in 1948 and which will shortly be brought into action.
I think we may regret, but we cannot fairly resent, the need for yet another Bill on this subject. We are approaching the culminating point of seven years' work. Just a year hence the new system of revaluation begins. Both sides of the House have contributed to this work, so have a host of public officials; and it may not be out of place for me to pay a brief tribute to the work of the officials of the Inland Revenue Department, who have been working for a number of years to meet this point.
Before proceeding to say what the Bill will do, perhaps I should say one or two things about what it will not do. It does not touch at all on the issue of re-rating. It does not deal with the question of equalisation grants. It does not alter the basis for valuing the main classes of property. Some of those matters may be very much in the minds of hon. Members and we may hear echoes of them in the course of this debate, but they are completely outside the scope of this Bill. I find that there is ample substance for my task in the provisions of the Bill alone.
There are three principal matters in the Bill with which I should deal first. They are: the procedure for the publication of the valuation lists; the method of rating gas boards; and certain exemptions from rates. For the gas boards, arrangements contained in the Bill were agreed between the local authority associations and the gas boards towards the end of 1953. The nationalisation of the gas industry necessitated a revised method of assessing premises. In effect, the new system takes the total rateable value of properties occupied by the gas boards in May, 1949. It applies to it annually a formula calculated from the number of therms sold by each board and then apportions the adjusted rateable value 1192 of the boards among the rating areas concerned. That will be retrospective to 1st April, 1952, and it will entail adjustments to the Exchequer Equalisation Grants and the rates paid by gas boards for the period 1952–53 to 1955–56.
The second major matter concerns the qualified exemption provided by the Bill to church and chapel halls. Perhaps I might say a word about the background of this matter. Churches and chapels are already exempt from rates. Church halls are legally rateable in practice—not uniform practice, I should add. They are given nominal, sympathetic assessment by rating authorities. Clearly, on the new basis whereby the Inland Revenue becomes responsible for a uniform standard, such informal arrangements could not continue. There is an obvious need for statutory exemption.
The Bill exempts halls used by religious organisations in connection with the church or chapel and provides for a limited assessment where they are let for profit to other bodies. We also thought it right to give local authorities the right to remit or to reduce rates on hereditaments occupied for charitable purposes and occupied by non-profit-making organisations whose objects are religious, educational, or philanthropic. I am aware that at this stage, and certainly at later stages, hon. Members will be concerned with the limits of these provisions. For instance, I know that some hon. Members are already concerned with the question of sports grounds and that they also have other matters in mind. I want to stress that we are aware of those feelings, but I do not want to prejudice discussion at a later stage by too wide generalisations now.
I now come to the third question which is the alteration of the procedure for the publication of draft valuation lists. I think it will be accepted that after 20 years many changes in assessment are inevitable. Under the 1948 Act, the draft lists would be open to public inspection for a period of three weeks in the autumn. That would tell the ratepayer the amount of his new assessment. But under that system, he would not have the figure which principally concerns him, namely, the rate which he would have to pay.
If the ratepayer judged the situation by the assessment, which in these circum 1193 stances would be the only figure available to him, there would be a strong likelihood of appeal, if only as a precautionary measure. Further, with a rise in the general level of assessments, there would be a strong likelihood of many appeals. Therein lay a serious danger—and I stress it—of clogging the machine in the initial stages. Quite obviously, a flood of appeals based on the assessment could have a serious effect upon the working of the machine at the early stage.
I stress that danger because it is a real one, and one which had to be met. It has been met by abolishing the draft list procedure. Rating authorities will receive their lists by the end of December, will calculate the 1d. rate product, and will make their preparations thereafter. But the list will be open to inspection only when it comes into force or when the first rates are made by reference to it. That will be approximately 1st April, or just before.
I should stress that the ratepayer loses nothing by this procedure. That is important. If he objects, he will not have to pay, until the assessment is finally settled, more than he was paying. If he secures a revision, that will be retrospective to 1st April. But, even with this precaution, we must anticipate a substantial number of objections when the final figure is known. We recognised that, and, therefore, it seemed essential that the statutory procedure should be as simple and as expeditious as possible.
I must say that I exercise great caution in claiming in any reform in this field that it may lead to simplification. That is a claim which has been made on earlier occasions in relation to rating Measures, and one which has not, perhaps, always been justified by events. However, it is fair to say that a considerable weight of administration is relieved by this procedure, particularly on the ratepayer himself.
The effect on the aggrieved ratepayer will be to provide that when he has made his proposal, and if it is not, as it were, settled out of court in his favour, he need take no further steps to get his case before the local valuation court. Under the new provisions, it will go forward automatically. If there is no agreement, the local valuation officer will forward the papers automatically.
1194 There is one other matter to which I think I should specifically refer. It is a little more complicated, relatively, but it bears upon the pool payment. Under Part V of the 1948 Act, the British Transport Commission makes each year a lump sum payment instead of paying rates on railway and canal properties. This is known as the "pool payment." Section 56 of the 1948 Act provides that where the advertising rights are let out, those rights are to be separately assessed. By "let out," I mean let to interests other than the railway interest. That is not yet in force, but it was intended that it should come into operation on revaluation.
It has become quite clear that there would here be involved the most considerable task for valuation officers in respect of the railways. They would have to assess a multitude of hoardings under the Commission's control which were used for displaying other people's advertisements. More than that, they would have to keep them under close review in case of alteration, and the results, in terms of revenue, would be relatively small. Therefore, the Bill provides, for the time being, that all British Transport Commission hoardings will continue to be covered by pool payments.
I should add that these pool payments cover not only the Transport Commission, but also the property of the British Electricity Authority. The local authorities and other parties concerned have requested that there should be a review of these payments. We propose, therefore, to carry out a general review of the provisions of Part V in the first year of the new valuation lists.
It can be done in the light of the general revaluation of property, and will include both transport and electricity provisions. Therefore, pending that, all questions on the mode of payment are in suspense. There will, of course, be consultation between the bodies concerned and the local authorities. The exact scope of this review will be determined a little later.
Finally, there is one other matter to which, for the convenience of the House, I think I should refer at this stage. A great many hon. Members will be aware of the anxiety expressed by certain trade organisations lest revaluation should throw an unfair burden upon them. In response to earlier representation made last year, my right hon. Friend made a 1195 statement to the House on 6th December last. Since the publication of this Bill, there have, as I have every reason to know, been further representations, of which many hon. Members will be aware.
It is apparent that the main source of anxiety is a misapprehension that the new procedure in this Bill for abolishing draft lists makes it impossible for my right hon. Friend to implement the undertaking which he gave at the end of his statement on 6th December. It is important, at this stage, to recall the exact words used by my right hon. Friend on that occasion. He said:As I have explained, there are many uncertain factors in the situation; and, consequently, we cannot yet be sure how the new basis of assessment will work out in practice. I can, however, give an assurance that, as soon as the effects of forthcoming revaluation can be fully measured, the Government will review the position and will consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 21.]Some people have taken this to mean that the effect of revaluation would be reviewed as soon as the draft lists were available, that is to say, in October, 1955, and that, presumably, any changes which it was thought desirable to make could be made between then and 1st April, 1956. I can only say that that timetable was never contemplated. All through it has been quite clear that it would be wholly impossible between October and December, when the lists have to go to the local authorities, to change the basis of valuation and then to prepare new valuation lists.
I wish to underline, therefore, that the new provisions relating to the valuation lists in no way invalidate the undertaking given by my right hon. Friend on 6th December. The promise which he made then stands.
§ Mr. W. T. Proctor (Eccles)
Is it not as clear as anything can possibly be that this basis will turn out to be very unfair to shop owners? Why should we delay putting that grievance right? Their properties will be valued on present-day values as against other properties valued on 1939 values, while the whole of the very large properties will be derated altogether.
§ Mr. Deedes
I want to be careful not to give an answer further to confuse a situation which has already become a 1196 little confused, but the answer, I can assure the hon. Member, is given most fully in the statement my right hon. Friend made. It is premature to make the assumption which the hon. Member made. I think that if he will refer to the statement of my right hon. Friend he will see that the answer is there given.
§ Mr. Victor Collins (Shoreditch and Finsbury)
Can the hon. Gentleman say, if not in precise terms, in broad terms, how it is proposed to implement this assurance if the Bill is passed and Clause 1 comes into effect? What are to be the means to be employed? Will they be legislative, or will they be regulations? In what way, if it is necessary to make changes, will they be made?
§ Mr. Deedes
Quite clearly, until we can see the effects of this revaluation, it would be most unwise to predict the form of the review or the course it might take, and I do not want to be led any farther into this matter at this stage. I have tried to underline the assurance of my right hon. Friend, and I do not want to go beyond that at this stage.
§ Mr. C. W. Gibson (Clapham)
The people who are objecting are raising the right of examination of the draft list. That is what they are worried about, because they anticipate that it will considerably increase their valuations. The general opinion is that that will be so. Though I do not agree that it will necessarily be harmful not to have the right of search, examination and appeal, is it not true that the objectors, who are, in the main, small shopkeepers and people of that class, are worried about the apparent denial of the right of appeal?
§ Mr. Deedes
The hon. Member is quite right. That was the point I was trying to meet in what I have just said. It is true that there is the fear that it will invalidate the statement made by my right hon. Friend, and I have tried to show that it will not.
I have tried not only to explain some of the main provisions of the Bill, but to give a little of the perspective of a long and difficult task which is now very nearly concluded.
§ Mr. George Chetwynd (Stockton-on-Tees)
There is grave anxiety expressed by water boards about the effect of Clause 4 (8). Could the hon. Gentleman give us some information about that?
§ Mr. Deedes
I will certainly say a word, if it would be convenient to the hon. Gentleman, on that point. It is quite true that there have been some apprehensions expressed about it by the interests concerned. The fact is, broadly speaking, that the use of the notional sinking fund had reached a point at which some action was considered to be essential, and the Bill provided an opportunity for taking that action.
Without this provision the undertakings would, perhaps, not suffer what they have said they fear they will suffer, but they might secure an unwarrantable reduction of assessments because of a fall in poundage. Their position has been compared with the position of the electricity and railway undertakings, and it has been feared that it would be unfavourable in relation to these two. I have already said that the pool payment system is to be reviewed. I would add only this, that the Association of Municipal Corporations, which have something at stake in this in relation to water, has supported this provision to relation to sinking funds.
I have no doubt that, inevitably, there are many points of detail on this and other matters with which hon. Gentlemen will be concerned. I think that it will probably be found that most of them will be best dealt with in Committee. The Bill is. admittedly, rather complex, but it is necessary for the completion of our work, and I hope that the House will accept it in that light and agree to give it a Second Reading.
§ 4.25 p.m.
§ Mr. G. Lindgren (Wellingborough)
As the Parliamentary Secretary has just indicated, in a Second Reading debate it is usual to keep to broad principles, and to leave matters of detail to the Committee on the Bill. I shall try to keep to broad principles, but, as the hon. Gentleman has also said, this is a complex Bill in which there are many provisions of detail, and, therefore, if we are to keep our debate within the scope of the Bill—and sometimes a debate on Second Reading of a Bill seems to stray outside the scope of that Bill—we must, inevitably, deal with some matters of detail which may be considered Committee points, though, of course, we shall not deal with them in so minute detail as we shall when the Bill is in Committee.
1198 Clause 1 deals with the abolition of Part III of the 1948 Act and, therefore, the abolition of the draft list. I must say, as one with some experience of local government, that the provision in that Clause is attractive. The ratepayer on the domestic hereditament is much more concerned with what he pays in pounds, shillings and pence than he is with the rateable value on a local authority's rate book, and if the rateable value is doubled he immediately calculates the increased rateable value at the existing rate poundage; then the balloon goes up and he puts in his appeal, but if he gets the rate demanded by the rate poundage of the valuation and finds that he is not going to pay more than a shilling or two more than he was, he just smiles and pays up.
§ Mr. Collins
If the ratepayer also happens to be the owner, and even if his rates are only a shilling more if the assessment is doubled, the doubling of the assessment under Schedule A will cause him to squeal.
§ Mr. Lindgren
Schedule A is for Income Tax purposes, but whether we are dealing with incomes or net rateable value we should be fair.
Whereas we are valuing domestic properties at 1939 values, which are unreal in relation to present day conditions—and I do not altogether envy the valuers taking into account 1939 values—the ordinary ratepayer is concerned with what he pays in rates, and if the ratepayer finds that he is not going to pay very much more, he will not appeal and, therefore, there is the possibility of a decrease in the number of appeals. That means that there will not be that clogging up of the machine to which the Parliamentary Secretary referred. The Parliamentary Secretary quite rightly said that, otherwise, it would have been clogged up.
Under the 1953 Act the basis of rating under the 1948 Act for domestic purposes is changed. Domestic premises were to be on the 1939 values, but shops and business premises were kept at current values. I think that the current value is much the better basis on which to work, but, taking these two things into account, the shopkeepers feel that they have a grievance, particularly, of course, as they have found out that industry has been derated. It has taken chambers of trade a long while to find that derating has been in progress in agriculture and industry. That, 1199 of course, creates a problem. In addition, it is not unfair for the shopkeeper to assume that, assessed on current rentable value, his rateable value will be increased considerably and, as there has been no revaluation since 1934, that is likely to be higher than the increased valuation of domestic properties.
We all know of the campaign on this subject which started last year. As a result of that campaign. the Minister made a statement in the House on 6th December and he also made a statement in very similar terms to the chambers of commerce when he met a deputation from them. I want to make the point to the Parliamentary Secretary and to the Minister that the Minister knew the provisions of the Bill when he made that statement to the House and to the deputation, but neither the deputation nor the House knew of these provisions at that time. I do not think, therefore. that the Minister can complain very much if the chambers of commerce, and perhaps some hon. Members, charge him with being a little slick in making a statement of which he knew the meaning at a time when he knew that other people thought it meant something else.
The chambers of commerce and the House were quite right in assuming that the review of valuations would take place when the draft lists were published. Shopkeepers were quite reasonable in assuming that, and in assuming that they would have an opportunity of objecting before the valuation became a fact and rates were payable on the basis of it. In those circumstances, I think that the chambers of commerce are justified in believing that they have a grievance.
The effect of this provision on local authority finances, particularly in the first year or two, is likely to be quite serious, because what is likely to happen is that the local authority, on receipt of the list from the valuation department will make arrangements for calculating its rate product and will levy its rate in the light of the product from the new valuation. One must bear in mind that it is not unusual in many towns for 25 per cent. of the rateable value to be represented by shops, business premises and industrial hereditaments.
While I think that it is true that, as a result of Clause 1, a large number of domestic ratepayers who, otherwise, 1200 would have appealed, will not appeal, because they will see the effect of rateable value on rate poundage, the chambers of commerce and shopkeepers will be more inclined to appeal. First, they will be more inclined to appeal because their rateable values are likely to be increased to a greater degree than the rateable values of domestic properties. Secondly, they will be more inclined to appeal because they will feel that they have a grievance about the fact that they have not had an opportunity to appeal on publication of the draft lists.
It is true, as the Parliamentary Secretary said, that if they appeal they will not be in any worse position from their own point of view, because they will only pay rates equivalent to the amount they paid in the previous year pending the result of the appeal, but the local authority will have levied a rate anticipating a larger income from a lower rate poundage but a higher rateable value. Therefore, if there are objections on a large scale and taking a long time to go to appeal, the local authority, pending the result of the appeal, will find its income greatly reduced and will be placed in a difficult position.
§ Squadron Leader A. E. Cooper (Ilford, South)
Surely that is not so. Is it not the fact that local authorities split their rates into two halves, so that if they levy a rate of 20s. in the £it is the invariable custom to levy 10s. in the £the first half of the year and 10s. in the £for the second half? Therefore, if the situation to which the hon. Member refers comes about, it will be quite easy in the second half of the financial year for the local authority to adjust the rate to take care of that situation.
§ Mr. Lindgren
Surely the hon. and gallant Member knows better than that. Surely he knows from his experience of local government in the Borough of Ilford that a yearly rate is made but is levied in two parts. It used to be done and in some cases it may still be done, but I know of no local authority which makes a half-yearly rate.
§ Squadron Leader Cooper
There is no legal obligation upon a local authority to levy all the rate in one year. It can do it by half-years if it wishes.
§ Mr. Lindgren
The local authorities do that. They levy half-yearly, but they make a yearly rate. It is for the ease and convenience of the ratepayer that the rate is split. It is equally true that the rate is payable on demand, but we know that very few rate assessments are paid on demand.
If, after a local authority had made the rate there was a large number of appeals it would mean that the appellants would be paying rates at the previous year's rate, pending that appeal, and, therefore, the local authority would suffer a considerable reduction in revenue. This is local government election year. I make no party point because what I am about to refer to happens with all types of local authorities. It is not unknown in a local government election year for local authorities to use existing balances to reduce the rates or maintain them at existing levels. This year throughout the country. there has been a raiding of balances and there is now less in the kitty than would have been otherwise. Therefore, the local authorities will not have a great deal to draw upon from their working balances.
My next point relates to Clause 4 (4) and the Second Schedule, and has some relationship to the point which was made by my hon. Friend the Member for Shore-ditch and Finsbury (Mr. Collins). As far as I can see, the allowances for which provision is made in the Second Schedule are re-enactments, but the revaluation will bring smaller properties, in particular, out of one category into another and will work very unfairly against the small property owner and the tenant of the small house.
Taking a house which now has a rateable value of £20, it is not unfair to assume that on 1939 valuation and increased assessment the rateable value will become £40. On a gross rateable value of £20 the net rateable value was £12, but when the gross rateable value goes up to £40 the net rateable value becomes £30. Therefore, while there is only a 100 per cent. increase in gross rateable value there is an increase of two and a half times in the net rateable value, from £12 to £30.
If one takes a larger type house of a present gross rateable value of £50, that gross value goes up to £100 but the net rateable value, which was £40 on the old 1202 gross of £50, becomes £80 on the new gross rateable value of £100. One sees. therefore, that in the case of the larger property the gross and the net rateable values go up in ratio, but in the case of the smaller types of property they go up out of ratio.
This will be quite serious in some ways from the point of view of local authorities because, on the average throughout the country—and this was certainly the case with the local authority with which I had close association for a long time—the vast majority of these properties were of £20 gross rateable value and £12 net rateable value. Taking 1939 values on the houses which I can think of at the moment under the control of that authority, I imagine they are most likely to go up £30 on the 1939 amount. That will mean they will go up 50 per cent. on the gross amount, but their net amount will become £22, so that on that they will have gone up nearly double. It is equally true that it shows only a reduction of £8 as between the gross and the net value, and, personally, I do not think that that is anywhere near sufficient to deal with the general cost of repairs.
Local authority housing, excluding the cost of interior decorations which most local authorities are not doing, is now costing from £12 to £15 a year. The reason we had a bigger difference between the gross and the net amounts under the old schedule, was that it was recognised that the smaller, mass produced, more cheaply constructed dwelling cost more to maintain than the better built and architecturally supervised house with a higher rateable valuation. The local authorities and the small property owner will be under a disadvantage under this Bill in the change in rateable values. When we come to the Committee stage, I am sure that many of my hon. Friends will want the Governments to look at the subject from that point of view.
My hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) raised the question of water undertakings under Clause 4 (8). Most hon. Members of the House have had representations made to them by the British Waterworks Association. As the Parliamentary Secretary said in reply to the interjection by my hon. Friend, there is a movement away from the allowance for the sinking fund.
1203 Taking the average cost of works for renewal and renewing over a period, it is likely to have a substantial effect upon local authorities. It means a fluctuating valuation, and where there is a fluctuating valuation in water undertakings there will be fluctuating water charges. This, of course, is unfair on the domestic consumer and it is even more unfair on the large-scale industrial consumer. It is not indicated in Clause 4 (8) over what period of time the average is to be taken. Is it to be taken every five years or 10 years or 15 years?
If, in fact, it is to be a longer period then I am ready to admit that there is something in the point made by the Parliamentary Secretary. Those of us in local government who have had association with water undertakings know that there can be a long period when the undertaking is trouble-free. Then, as in one's home, everything seems to go wrong at once; and bill after bill pours in. The old sinking fund scheme was a very sound financial method of dealing with such an emergency. To move to a short period of averages will be unfair to the water undertakings and most unfair to the consumers.
Far more than with the actual change, I am concerned with the method adopted and why. It has been apparent to the British Waterworks Association from their consultations with the Inland Revenue Department that its valuers have had instructions for a long time to adopt this new method when valuing. The Association, naturally, has been protesting against it as being outside the existing law, which has been in operation since 1836. If it has been in operation since that time that is no reason why it should not be changed in 1956. But it appears to have provided a period of stability over a long number of years.
When it was approached in this method the Inland Revenue Department adopted the view that it has often done before. It invited the Association to take a test case to the Land Tribunal. In effect, it said, "This is what we are doing and we ask you to make a test case of it." So a test case was taken, and it concerned the Birmingham water undertaking—a very fine undertaking, as I have reason to know because of my wartime association with it. Birmingham went to 1204 the tribunal on appeal, and that appeal is now under consideration. The case is still being heard so the decision has not yet been announced. That case was taken on the invitation of the Inland Revenue, yet we now find that legislation is presented in this House to legalise a practice which the Inland Revenue was advised or instructed to adopt without the authority of the law.
I do not want to use the words "sharp practice," but I think it is wrong to change the method when it is challenged, and particularly when the persons challenging it were invited to go to appeal. I hope the Minister will tell us why it has now been decided to bring in legislation while the appeal is being heard.
I want now to say a word about Clause 5, and the new arrangements in the case of gas board undertakings. All of us associated with local government will welcome that there has been a settlement after very long-drawn-out negotiations and discussions. But it is far from satisfactory. The Parliamentary Secretary said that it had been accepted by the local government associations. I can speak with the sanction of two of them, two important ones, the County Councils Association and the Urban District Councils Association. I am assured that the settlement was only made so that some progress could be made in negotiating, and so far as they are concerned they will continue to press for a quinquennial reconsideration of valuation.
I object to this because it is tied to 1949 values, which, because of the lack of valuation, really means 1934 values. I ask quite plainly why the gas boards, even though they are nationalised, should have their rateable value decided on 1949 values when domestic, business, shop, and industrial hereditaments have to face revaluation in the light of current values. I do not see why the boards should be isolated from the general effect of revaluation.
Equally, I agree with the local authorities that there should be this quinquennial revaluation. The first five years will be up in March, 1957, and then there will be opportunity then for this to be reviewed. The Minister recently made a statement in the House on the reorganisation of local government during the course of which he said that there would have to be a review of local government finances. This is the 1205 first Bill which has come before the House since the Minister made that statement, only a few days ago, and the effect of this provision for gas boards on the finances of local authorities is in a direction which local authorities do not want.
Let us assume that the rateable value throughout the country will be doubled as a result of revaluation. If that is so, we are entitled to assume also that the rate poundage will be reduced by one half because the two things must tie up.
§ Mr. Lindgren
The hon. and gallant Gentleman says that they never do. That is because increased responsibilities are constantly being placed upon local authorities without an adequate review of local government finance.
§ Mr. Douglas Houghton (Sowerby)
Does my hon. Friend think that local authorities will resist the obvious temptations of this situation?
§ Mr. Lindgren
I am tempted to reply as a Minister would do, by saying that I will not be drawn. However, as a good local authority man, I agree that there is a big temptation at the time of estimating and rate making to make the rate meet, what it is felt the local ratepayers will bear, by dealing with arrears of essential work when the necessary money is available.
One is entitled to assume that by doubling the rateable value the rate poundage is halved. If that is so, it means that under this arrangement for the gas boards they will be relieved of half their rates, and it will mean a loss in revenue to the local authorities of nearly £2 million. A review of financial arrangements which brings the finance of local authorities down by £2 million is not the kind of review that they will like.
The Parliamentary Secretary referred to the arrangements for the British Electricity Authority and for the railways under the British Transport Commission. As the hon. Gentleman rightly said, they are governed by Part V of the 1948 Act, under which all the rateable value is taken out of the rate book and there is a payment into a pool. Those standard payments are varied up or down according to the average level of rate poundage throughout the country.
1206 Again let us assume, as I did for the gas boards, that rateable value is doubled and rate poundage is reduced by a half'. Because of the fixed standard for the Electricity Authority and for the railways under the Transport Commission, this again means that both the B.T.C. and the B.E.A. will pay only half the rates. I know that is over-simplifying the matter, because, in the case of electricity there is a slight variation on units of electricity sold, but on the actual pool payments, which are based on 1948 value, these bodies will pay only half rates.
The B.E.A. and the B.T.C. pay into the pool £17½ million a year. If rate poundage is halved those two organisations will be saved nearly £9 million, and if we add that to the £2 million from the gas boards, local authorities will be £11 million down, which is serious from a local authority point of view.
I am an enthusiast for nationalisation. Equally, I am an enthusiast for local government, but I cannot see why the British Electricity Authority, British Railways and the gas boards should be excluded from the general provisions of revaluation and, as a result of a higher rate being placed upon other people, should have their rate reduced by one half. I admit that so far as the B.E.A. and the B.T.C. are concerned, this will not come into effect for a year because the rate is levied on the average rate poundage for the previous year, which means that for 1956 to 1957, at least, local authorities are covered.
It is true that under Section 14 of the 1948 Act there is a requirement that in the first year of the new valuation and in every fifth subsequent year there should be an investigation into the working of the Exchequer Equalisation Grant. In that investigation the amount paid under the arrangement in Part V must also be taken into account. I doubt, however, whether that wording is wide enough to include a revision of the global sums payable by the B.E.A. and by the B.T.C. That is one point we must look at in Committee because, on a basis of equity, it is obvious that those global sums should be revised.
Now I come to Clause 6 (3, b), which deals with places of religious worship to which the Parliamentary Secretary referred. I believe that the provisions in 1207 the Bill will lead to acrimonious discussion between local authorities and religious bodies. The proposal is that if the cost of providing heating and services for lettings is of a greater value than the income from the lettings, no gross value for rating purposes shall be ascribed to the hereditament. Now that is a big temptation even to a church, and obviously those concerned will try to make their costs such as to exceed their revenue.
I have had discussions about this kind of property over a number of years and my experience is that, because such premises are maintained by people in an honorary and voluntary capacity, detailed accounts are not kept. A local authority which was really doing its job properly under this Clause would require detailed accounts of lighting and heating as applied to such lettings, and without adequate bookkeeping on that basis there will be much discussion which could lead to considerable disagreement.
Clause 6 (4) gives power to remit or to reduce rates. I think that local authorities should have power of discretion as a general rule, but in this case it is unwise to allow them too much discretion. It means that on the basis of educational or philanthropic work the local authorities will be able either to remit or to reduce rates. This will mean, inevitably, that a national organisation operating under various local authorities will receive different treatment as between one local authority and another and I do not think that is good.
Interpretation also comes into the question. For instance, I can imagine my right hon. Friend the Member for Fulham, West (Dr. Summerskill) and myself disagreeing about the educational value of a boys' club where the emphasis is on boxing. As a local authority, my tendency would be to include it within education and to give it a little help, whereas other people might object. Equally this must be on a yearly basis, because rates can only be remitted or reduced on that basis. Again there may be a change in the complexion of a council, as had been happening in the last few days, and as a result there may be a different conception as to what is philanthropic and what is educational and of value to the area, with a cones- 1208 quent change in the treatment of an organisation.
I feel, therefore, that this is one case in which there ought to be a general rule laid down for guidance so that all kinds of organisations can know that they will receive fair treatment as between one area and another. In addition, these remissions are being made by local rating authorities. Although two-thirds of the rate is county rate, the county council, which is using the major portion of the rate, is to have no say in whether or not there shall be any remission.
In Clause 7 (1) we have the exemptions for structures housing invalid chairs. This is a question of principle. According to my reading of the Bill, the reason for the exemption of these structures is that they are owned by the Ministry of Health or the Ministry of Pensions. I put the question plainly and bluntly: is that the reason for exempting these structures from rates? Or is it because they house invalid chairs used by people who have been disabled?
If it is the first, as the Bill says, and they are exempt because they belong to the Ministry, then I see no reason whatever for which a property owned by a Ministry and tenanted by a third party should be exempt from rates. If, on the other hand, it is that the Government want to help the disabled, as they have been helped by the provision of the chair and the structure, then I would point out that we have already provided cash payments for petrol and cash payments for the taxation of the vehicle, and if we want to help the disabled person and not to place an additional burden upon him, they should make a grant towards the rates on the structure housing the invalid chair.
But if the remission is to be given for a Ministry-owned structure housing a chair used by a disabled person, why stop there? Why stop because the chair has been given by a Ministry? There are a number of others who have been disabled, who are physically handicapped and who have themselves provided chairs and the structures for them. Why not remission in those cases?
Some local authorities and welfare organisations provide chalets or garden shelters for people suffering from tuberculosis in order that they can sleep away 1209 from the rest of the family. Such buildings are rated. If we are to give relief for a structure housing an invalid chair, why not also give relief to those who are equally, and sometimes more severely, handicapped? They, too, have this additional structure—and at the same time have a reduced income—which is provided by a local authority or a welfare organisation. Frankly, I cannot see the difference in principle between the exemption of a structure for an invalid chair and the exemption of a chalet for a person suffering from tuberculosis.
The new valuation list will give effect to a previous Act which made arrangements for considerably increasing assessments throughout the country. In electricity and sometimes in water there are fixed charges which, for convenience, have been based upon rateable values. The 1948 Act and this Bill make arrangements for revaluation. I cannot see that there is any justification for the revaluation being used as an instrument to provide additional revenue for the British Electricity Authority or any water undertaking which might base its fixed charges on rateable value.
We have a duty to protect the ratepayer, and if we take one action which increases his rateable value, we must see that the instrument is not used by another body automatically to put up charges for water or electricity. We shall try in Committee, if it is within the rules of order, to introduce Amendments on that basis.
I would advise my colleagues to give the Bill a Second Reading, but we give notice to the Minister, in doing so, that we intend to put down a considerable number of Amendments in Committee and that this is not a Bill which is likely to go through the Committee stage on the nod.
§ 5.6 p.m.
§ Mr. Derek Walker-Smith (Hertford)
Probably in common with some of my hon. Friends, I find myself more in agreement with the hon. Member for Wellingborough (Mr. Lindgren) than sometimes has been the case. I can only suppose that this is an added moderation on his part, induced by the excellent results of the recent Hertfordshire County Council elections.
If I or any other hon. Member were to approach the problems of the amend 1210 ment of the law of rating within the Long Title of the Bill, it would be possible to make a very long speech indeed, but I intend to follow the excellent example of the Parliamentary Secretary and the hon. Member for Wellingborough and to confine myself to what is in the Bill. I will not seek to emulate the hon. Member in making a complete survey of the Bill, for I wish to confine myself to three aspects—firstly, the procedural aspect dealt with in Clauses 1 and 2 and in the First Schedule; secondly, a very brief comment on Clause 6, dealing with church halls and charitable institutions; and, thirdly, the provisions of Clause 4 (8), already referred to by the hon. Member for Wellingborough, and its impact upon the valuation of public utility undertakings.
On the first of these matters, subject to a comment which I will make in a moment, I am satisfied that the procedural provisions constitute a justified improvement in our valuation machinery. I have taken the practical approach of seeking to test the position in connection with this new procedure from the point of view of the ratepayer and with the aid of such knowledge as I have of these matters; and I have come to the conclusion that, although there may be some apparent disadvantages to the ratepayer in the modified system for the compilation of draft lists, as provided for in the Local Government Act, 1948, those disadvantages are in fact more apparent than real, particularly in view of the safeguard of Clause 1 (8).
But it is right to say—and this is the reservation to which I referred just now—that there is some psychological effect about this change; and the psychological effect on the ratepayer may arise from the distinction which apparently is drawn between the rights of the ratepayer, on the one hand, and those of the rating authority on the other hand. As the House appreciates, under the new provisions, whereas the rating authority gets the right of inspection of the list in December, the individual ratepayer does not get his right of inspection until the following April—and that, of course, is a discrepancy and an apparent discrimination. The House will appreciate that the local authorities' inspection is of the proposed assessments of individual hereditaments all that time in advance of 1211 the right of the individual concerned. In theory it is, of course, open to the rating authority to use that time and knowledge to prepare its course of action and its case well in advance of the individual ratepayer.
§ Mr. Sparks
I am sure the hon. Member will agree that that is not the only reason. There is a fundamental reason connected with the administration which necessitates that.
§ Mr. Walker-Smith
I am much obliged to the hon. Member for his characteristically helpful intervention, but I was not putting that as a reason but as a possible disadvantage, not in practice a very real disadvantage, but a disadvantage within what I call the psychological sphere.
I am moved by that consideration to wonder whether it is really necessary for the rating authority to have this prior right of inspection of all the individual proposals relating to the individual hereditaments in the list. The authority requires this prior inspection to enable it in the last quarter of the financial year to have that knowledge in order to make its rates. For that purpose it seems to me that the global figure resulting from the list is sufficient for that purpose. If its right of inspection would or could in practice be confined to the global figure, that would meet its purpose, but it would remove the danger of the individual ratepayer feeling that he was being discriminated against by prior disclosure to the rating authority of the valuation officer's proposal for his premises while it is denied to the ratepayer himself. I shall be grateful to my right hon. Friend if he will consider that point between now and Committee stage.
§ Mr. Gibson
The hon. Gentleman must agree that the rights of the ordinary ratepayer, whether shopkeeper or householder, have gone under the Bill, because he will not get an opportunity of looking at the draft list and preparing himself to appeal before the final list comes into operation. That right has completely gone under the Bill and is one which I am surprised to see the hon. Gentleman supporting.
§ Mr. Walker-Smith
The right of objecting to the draft list has obviously gone because the draft list itself has gone, but I had referred to that point—perhaps with some compression to save the time of the 1212 House—and I plainly said that from the tests I made, with such knowledge as I have of these matters, I do not feel there would be any material prejudice to the ratepayer in the preparation and presentation of his case, particularly having regard to the safeguards of Clause 1 (8).
I am grateful to the hon. Member for Clapham (Mr. Gibson) amongst other things for his reference to the shopkeepers. I feel that this psychological aspect, as I ventured to term it, is particularly important at present because of the position of the shopkeepers whose anxieties are well known to hon. Members and which meet with our general sympathy. There is a good deal of misapprehension, as the Parliamentary Secretary observed, on the part of shopkeepers about these matters. Not only does the Bill not affect their valuation position, although it affects their right of objection, as has just been said, but neither did the Valuation for Rating Act, 1953, affect the law of the valuation of shops.
For shopkeepers the basis of valuation is the same as it has always been, the basis of the hypothetical tenant. It is true that assessments are certain to go up. One reason is the improved rental of shop premises which in some way is due to the low assessments for shop premises.
§ Mr. Walker-Smith
I was so afraid that the hon. Gentleman, with his characteristic modesty, would not wish to make that point I was about to come to, but he has taken it from me.
Shop premises have not suffered any change in their basis of valuation, although I can well appreciate the factor which makes some of them feel that they have suffered a change. They are rather like a person who stands still and sees everybody else passing him on a moving staircase. He gets the impression that he is moving himself. They see agriculture and industry derated, but that is very ancient history. Dwelling-houses are anchored to the 1939 valuations under the 1953 Act and special provision is made for the nationalised public utility undertakings. That means that shops and office premises and so on are to some extent left at normal rating valuation and it is a pretty bleak and uncomfortable position.
§ Mr. M. Turner-Samuels (Gloucester)
Is not the shopkeepers' main complaint that they are not going to see the valuation list? The objections that have been dealt with by the hon. Gentleman are not really the objections of the shopkeepers at all.
§ Mr. Walker-Smith
I am not sure whether the hon. and learned Member has just come into the Chamber from the important matters which engage him, but I have just dealt with that point in answer to one of his hon. Friends and I shall be in trouble with you, Mr. Deputy-Speaker, for tedious repetition if I attempt to deal with that again.
The Parliamentary Secretary has referred to the Minister's undertaking of 6th December to review the position and consider whether changes are necessary when the effect of the revaluation can be fully measured. I listened with attention to what my hon. Friend said about the time-table. Presumably the Minister will be very busy during the period from next December to April when he has the benefit of seeing the effect of the valuation lists. He will be busy putting this review into practice.
Part of that consideration, one would have thought, would involve consultation with the chambers of trade and the chambers of commerce who are, so to speak, the trade unions of the shopkeepers in this matter. The difficulty which I foresee concerns what information they are to have of the system in order to make their constructive and useful contribution to the review which the Minister is to make. It seems to me that they must have the benefit of some of this information. Individual shopkeepers will not see the valuation lists, but there must be some machinery for putting chambers of trade and commerce into the picture so that they may have profitable and useful discussions with the Minister.
A specific possibility for the consideration of the Minister and the House, when what can be done for the shopkeepers is considered, is whether a simple and practical approach will not be to consider an amendment in favour of the statutory deductions at gross to rateable value under the Second Schedule of the Rating and Valuation Act, 1925. It does have the virtue of simplicity and could bring about some relief, if the House feels 1214 that a relief for the shopkeepers is required.
Shopkeepers are people who, often in small personal undertakings, give detailed study and individual attention to the needs of the community. That means that they have a special claim on the good will of hon. Members on this side of the House. I should like to say to shopkeepers that, so far as it may properly be within the framework of the national interest, they should have confidence that that claim will be honoured by a Conservative Minister and a Conservative House of Commons.
§ Mr. Walker-Smith
I started by paying a compliment to the hon. Gentleman. He must not do his best to forfeit his right to that compliment, because it is unusual to be able to pay it and I would be loath to have to withdraw it.
On Clause 6 I will be brief. I welcome very much the provisions of subsection (2) about church and chapel halls, and especially that it has been found possible to give a clear statutory exemption. Like the hon. Member for Wellingborough, I am not so happy about the purely discretionary basis of subsection (4), which deals with charitable institutions. It appears to be something of a paradox that, as we are moving towards centralisation of valuation in the interests of uniformity of treatment, we should apply to charitable institutions a method which might lead to local disparities of treatment for similar undertakings or even for branches of national institutions. That is a position which perhaps we may seek to improve in Committee.
I come to my third point about Clause 4 (8), a small provision, but one with a big effect on public utility undertakings. These undertakings are traditionally valued on what is called the rating profits basis, but we have now reached a position where probably the only public utility undertaking which is substantially effective, by reason of nationalisation and special procedures and so on, is the water industry.
I should explain to the House at this stage that I am the President of the Water Companies Association. I have no interest to declare in the technical 1215 sense, because it is an honorary position and not an office of trust. Therefore I have no financial interest to declare, but the House should know that I occupy that position and should take it into account in the observations I am about to make.
The hon. Member for Wellingborough explained a good deal of the effect of the Clause. The House will be aware—I shall be as non-technical as I can about this—that the basis of valuation as prescribed by Section 22 of the Rating and Valuation Act, 1925, is the hypothetical rent… if the tenant undertook to pay all usual tenant's rates and taxes … and to bear the cost of the repairs and insurance and the other expenses, if any, necessary to maintain the hereditament in a state to command that rent, and the annual rent as so estimated shall, for the purposes of this Part of the Act, be taken to be the net annual value …The traditional practice in valuing undertakings on the profits basis has been to deduct from the gross rates, among any other proper deductions, a sum equivalent to a renewal and sinking fund before ascertaining the net annual value.
Under the new provisions it will be permissible to deduct only expenditure actually incurred in replacement and renewal. The hon. Member for Wellingborough pointed out the practical difficulties which that change involves. The financial effect on the water industry would, in substance, be that in the place of an annual rate payment at present of £8,250,000 there would be an estimated annual rate payment of £13,800,000. It would require a reduction in rate poundage, on the estimate given to me, of about 50 per cent. to offset the disadvantage of this basis. I imagine that it is a most optimistic person who envisages a reduction in rate poundage of anything like that dimension.
I propose to summarise briefly the arguments against this change. First, there has been this long-established practice of over 100 years on the basis which it is now sought to depart from. It is true that the practice was started under rather a different formula from that of today—the old formula of the parochial assessments legislation of 1836, under which the hypothetical landlord bore the estimated cost of repairs, but it has been on the same basis in law ever since 1925.
1216 Therefore, there is 30 years' practice in the law as it stands. I ask the House to say that that is a length of practice which should not lightly be departed from.
The second main reason is the effect on the water industry itself which now pays 13.7 per cent. of its total annual revenues in rates as against a figure of only 1.8 per cent. for the gas industry, whose arrangements are being stabilised in the Bill. It is, therefore, likely to mean an increase in the cost of the provision of water if the Clause is not amended. Of course, water undertakings are either local authority undertakings or water companies with a statutorily controlled dividend. Therefore, it seems that there is a strong case to look at this provision very carefully before putting this added burden on the industry.
It is a complex issue. I have taken rather fewer minutes to summarise my argument than the same point has taken days before the Lands Tribunal in the test case of the Birmingham water undertaking, to which the hon. Member for Wellingborough referred. It is true, as he said, that there is a test case going on at the request of the Inland Revenue. I make no special point of that. It is obvious that when the Bill was brought forward that was the opportunity for the Inland Revenue to ask for the Clause to be put in, but, to the outsider, it looks rather like changing the rules in the middle of the game.
In fact, the case is not finished and the judgment is not available. One hopes that by Committee stage the judgment will be available—at any rate, the judgment of the Lands Tribunal, though I suppose that there might be a later judgment of the Court of Appeal. However, that would be something for hon. Members to consider in view of the difficulty of this matter. I hope that on this point the Government will take the view that rather more inquiry is necessary before one short subsection deviating from the practice of over 100 years and adding this heavy burden to the water industry is approved.
Those are the points which I wish to make and, subject to those specific comments, I welcome the Bill and look forward to further investigation and possible improvement at a later stage.
§ 5.29 p.m.
§ Mr. J. A. Sparks (Acton)
I do not propose to detain the House for very long, or to go into too great detail, because in Committee we shall have to go very much deeper into the proposals of the Bill than we can be expected to do on Second Reading. As the Parliamentary Secretary said, the Bill and all that it involves in rating and valuation is a complex Measure even for those of us who have been in local government for a good many years. It is not easy thoroughly and properly to understand it. It is significant that we now have the prospect of a new valuation list—the first for 20 years. In the local government world that is a very significant event, because during the whole of that period many anomalies have arisen in various parts of the country.
We all know that the basis of rateable value throughout the country is full of anomalies which we hope this new valuation list will help to iron out. Let me emphasise my point by saying that in parts of South Wales an ordinary prefabricated house is assessed for rates at £7 per year. In the London and Greater London areas precisely the same type of house is assessed at between £18 and £21. There can be no justification for such a wide margin of difference.
It is also known to those of us interested in local government problems that many areas are considerably under-assessed for rating purposes and that other areas are highly assessed. Because of that, we find the under-assessed areas receive advantages from the Exchequer Equalisation Grant which are not enjoyed by the higher-assessed areas. I am sure the right hon. Gentleman will agree that it is not the main purpose of the Exchequer Equalisation Grant to subsidise under-assessed areas at the expense of over-assessed areas.
When the Exchequer Equalisation Grant was introduced, I think as a result of the 1948 Act, it was realised that efforts would have to be made to iron out the rating assessment anomalies existing throughout the country. This problem of valuation for rating was, as we know, transferred from the local county valuation committees to the Board of Inland Revenue. It is obvious that, by centralising valuation and producing the first valuation list for 20 years, there must of 1218 necessity be some calculations giving rise to anomalies.
The hon. Member for Hertford (Mr. Walker-Smith) mentioned water companies, and we know it is expected that under the new valuation list the assessments of crematoria will in some cases increase by 2,000 per cent. Anomalies will arise regarding sewage disposal works. We are proposing to exempt sewers from rating, but not sewage disposal works. In many parts of the country sewage disposal works have been assessed on a nominal basis between one authority and another. Perhaps the sewage from the area of one authority is dealt with in the area of a neighbouring authority, and both authorities have agreed on a notional assessment for rating purposes.
A case was brought to my attention where, in respect of such a sewage disposal works, a local authority pays a neighbouring authority £148 a year in rates. The sewage farm is situated in part of the area of the neighbouring authority where values are low and no nuisance is created. But I am informed that under the new valuation list that authority will have to pay £28,000 in rates, which seems to me a very substantial difference.
Problems are bound to arise from the change-over from local valuation to valuation by the Board of Inland Revenue, and when this Bill is discussed in Committee the right hon. Gentleman will have to pay some regard to them. I feel sure that he will be anxious—at least I hope that he will—to do what he considers right and fair.
The hon. Member for Hertford referred to the assessment of shops in the new list. I cannot see the validity of the point he made, that the principle of the draft valuation list should apply to the first valuation list that we have had for 20 years. I presume that after this list is established we shall again resort to what was—at any rate on paper—the principle of a quinquennial valuation list. I see no reason why the principle of the draft valuation list should not apply to subsequent lists, but to introduce it in this first list will, as the Parliamentary Secretary has said, completely congest the valuation courts. Inevitably there will be a considerable change in assessments throughout the country; and people who 1219 receive indications that their assessments have gone up will not know what they have to pay—they cannot know in December what rates they will have to pay on and from 1st April next year—
§ Mr. Walker-Smith
I think that the hon. Member is under a misapprehension. I did not argue in favour of keeping on the draft valuation list and the right to object thereto. I was on a different point. My point was: would it not be sufficient if at this stage the right of inspection by the rating authority were confined to the global sum in the list, and not extended to proposals regarding individual hereditaments? I am sorry if I did not make myself clear.
§ Mr. Sparks
There may be substance in that point, but when he refers to inspection by the local authority, I presume that the hon. Gentleman means the perusal of the valuation list?
§ Mr. Sparks
The hon. Member does not mean the inspection of the hereditament by the local authority?
§ Mr. Sparks
Local authorities are in some difficulty about that. They argue that, without the power to inspect the hereditament itself, they are not in a position to give a considered view about the valuations on the new list, and therefore, they are in a difficulty over the point which the hon. Gentleman has raised.
I see the validity of the point that a local authority should confine its interest to the global figure rather than to individual particulars, but we must not overlook that it is possible for the local authority to support any ratepayer on appeal against an assessment. It may be very useful therefore to the ratepayer that the local authority has that power of championing a local ratepayer in his appeal against an assessment. In cases like that, no doubt the ratepayer would be willing to help the local authority to get the information.
I think that the Minister is right to say that the new valuation list will be available to the ratepayer at the same time as he receives his rate demand. That is sensible. In the first place, no ratepayer will be denied the right of appeal 1220 against his assessment; no right of appeal is being taken away from any ratepayer. The arrangement is now being made that when he receives an indication of his new assessment the ratepayer will know at the same time what he is to pay in rates.
If he is to pay near enough the same as he paid in the previous year—which is what will happen in many cases—the ratepayer would not normally bother to appeal against any change in assessment. But if three months previously a rate-payer receives notice of his assessment and it shows a considerable jump, in the absence of knowing what rate he will pay from 1st April, obviously, for safety's sake, he would make an appeal against his assessment. The valuation courts would be considerably congested as a result.
I should like to draw to the attention of the House not Clause 4 but the Second Schedule which goes with it. It will be seen that the details of deductions from gross value more or less confirm the existing practice. Any shopkeeper whose assessment has increased will automatically have a larger statutory deduction as between gross and net values. The higher his assessment, the greater will be his statutory deduction.
Clause 4 (5), however, is rather peculiar. It statesIn the case of any class of hereditaments, the net annual value of which falls to be ascertained under paragraph (a) of subsection (1) of the said section twenty-two, the Minister may by order provide that, for the deductions specified in the said table, there shall be substituted deductions of such amounts, or of amounts to be calculated in such manner, as may be specified in the order:Is it the Minister's intention to vary the figures in the Second Schedule? If so, what cases has he in mind? The House is entitled to an explanation of subsection (5), because it appears that although the Minister is specifying deductions from gross value in the second Schedule, he is preparing to have them varied. We ought to know what the right hon. Gentleman has in mind in regard to subsection (5).
There is not much more that I can usefully add at this stage without going into too great and intricate details. Many of the problems will have to be thrashed out in Committee, but I feel that the Bill is worthy of the support of the House 1221 because it is an endeavour to create and facilitate the necessary machinery for the operation of the next valuation list. That in itself makes history in the local government world.
Everybody is looking forward to the new list as a means of removing many of the anomalies in rating and to bringing about a general uniform standard, so far as a general standard can be achieved throughout the country, whereby rates are levied on the basis of equity as between one ratepayer and another for the same services in whatever part of the country one lives. That is good in principle if it can be established. In addition, it would provide a sound basis, which the present system lacks, for the equitable distribution of the Exchequer Equalisation Grant.
It may well be that some authorities which are at present under-assessed may find that their rateable values go up. They might receive less from the Exchequer Equalisation Grant, while some of the higher assessed authorities may find to some extent a fall in their rateable values. To that extent, they might derive advantage in the distribution of the Exchequer Equalisation Grant.
The new arrangements will at least ensure that the Treasury contribution to local authorities is distributed fairly and equitably among the authorities who are entitled to receive it. In so far as the valuation list will achieve that purpose, I think that it will do the right thing and will help to clear up an enormous number of anomalies which have afflicted local government in this way for a good many years.
§ 5.47 p.m.
§ Mr. A. C. M. Spearman (Scarborough and Whitby)
My hon. Friend the Parliamentary Secretary told us that this was a very necessary Bill. Indeed, it has had considerable support from the other side of the House. Judging from my own experience, however, I cannot say that it has been enthusiastically received in business circles. I rather hope that my right hon. Friend the Minister may find it possible to adopt some of the excellent suggestions made by my hon. Friend the Member for Hertford (Mr. Walker-Smith), which might make the Bill more acceptable in business circles.
I represent a large number of boardinghouse keepers, many of them well known 1222 and their houses well liked by hon. Members on both sides of the House. As I understand it, a landlady in, say, London who perhaps lets two rooms all the year round, will have her house assessed on the 1939 rental basis, whereas a boardinghouse keeper who lets six or seven rooms for a small part—say, three or four months—of the year will have her house rated on current values, which, of course, are much higher.
It may well be that the landlady at the seaside resort, where the season is often very short, will draw less money from her six or seven rooms than the London landlady derives from her one or two rooms. In many cases there is really no profit at all in these boarding-houses. By "profit" I mean an amount in cash made over the course of the year which can be spent. It is simply that by working very hard indeed for two, three or four months boarding-house keepers are able to pay their rent and expenses and to live rather more cheaply for the rest of the year.
Whereas the Bill certainly will cause a good deal of hardship. or at any rate a burden, upon shopkeepers, it seems to me that it will be a good deal more oppressive upon boarding-houses. Let me give one example. Take the case of a small shop. The premises have nine rooms, of which the ground floor is used as sale rooms and the upper floor is used as a maisonette. I understand that the maisonette occupied by the owner of the shop is rated at the lower level, whereas the shop of course pays the higher level. In the case of a boarding-house of the same size, which has six or seven rooms let for three months in the year and the owner uses most of the house for three-quarters of the year, the landlord or landlady has to pay on the higher level for the whole house. That seems to me to be a considerable hardship, and I ask the Minister to consider whether something cannot be done in this respect so that the part of the small hotel or boarding-house which is lived in by the owner receives the same benefit as is given to the shopkeeper who lives in part of his premises.
There is one other very short point which I wish to make. I understand that hoteliers and boarding-house keepers will not know until April the amount of rates which they have to pay. If I am right, I should like to point out to the Minister that they have to prepare their 1223 prospectuses early in the year—long before April—for their lets in the summer. Consequently, if there is a very big increase in the burden of rates which they have to bear, there is no way of their recouping it during that year. In these circumstances, I ask whether before the further stages of the Bill the Minister cannot do something to ameliorate the conditions of hoteliers and boarding-house keepers.
§ 5.52 p.m.
§ Mr. W. T. Proctor (Eccles)
I shall not detain the House very long. My hon. Friend the Member for Wellingborough (Mr. Lindgren) predicted that as a result of the new valuation several great industries—I think he mentioned gas, water and transport—would have their contributions to the local rates cut by about one half. I am going to make a prediction that, despite everything that has been said, shopkeepers will have a very considerable increase in the amount of rates which they have to pay under the present legislation.
I want to deal with the effect of the pledge that has been given and to say a few words about it. The hon. Member for Hertford (Mr. Walker-Smith) suggested that the National Chamber of Trade should be given some information that would, in the ordinary course, but for this Bill, be given in the draft lists to every citizen, and that negotiations should take place, apparently quietly and secretly, with the Government on the basis of the information exchanged. It is rather extraordinary procedure to give to anyone information which is not available to the ordinary citizen.
The Minister, in his pledge, said:I can … give an assurance that, as soon as the effects of the forthcoming revaluation can be fully measured, the Government will review the position and will consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 21.The complaint of shopkeepers is that their premises are to be revalued on the basis of the present day valuation. This applies almost to their premises only. The suggestion which is made in the pledge is that the position will be reviewed, and consideration given "where any changes are necessary." But the position can only be reviewed when the facts are known.
When the pledge was made, it was assumed that the facts would be known 1224 when the draft lists were made, but now that the draft lists are not to be made the facts will not be known until the rates are levied. Under the present law, when the rates are levied there is nothing that this House can do to remedy the situation unless it brings in retrospective legislation—and Governments are very reluctant to do that.
Under the pledge those in business premises thought that when the draft lists were published there would be an opportunity, if the Government so desired, to do something quickly before the rates were levied. Under the present proposals, if the facts are not known until the rates are levied, and an unfair burden is imposed on the business community, it will not be possible to remedy this without retrospective legislation. I should like the Minister to consider that point.
§ Mr. Sparks
When my hon. Friend says that it will not be possible to rectify the position without legislation, I take it that he is asking that the shops should be assessed not on current values but on pre-war values, which would require legislation. But it is quite possible, as I understand the Bill, for an assessment to be adjusted by way of appeal.
§ Mr. Proctor
That is where I part company from my hon. Friend. My information is that under the law, and as it will be carried out by the Inland Revenue, a shop is valued on its present day value. The shopkeeper can appeal as many times as he likes to the valuation committee, but he will not get any redress at all. He will only get the law, and the law is against him.
The undertaking given by the Government is that if the law turns out to be harmful they will change it. That is the kernel of the whole position, and that is where the Government, in my view, are on the horns of a dilemma. They should be fair to all citizens. When we received a huge number of complaints—an absolute inundation—from all over the country we placed them in front of the Minister, and he came here and gave this pledge.
I regarded the pledge as of doubtful value when it was made, and in view of the fact, now revealed, that the information is not to be available until the rate is levied, I say that the pledge will be of no value at all unless the Govern- 1225 ment contemplate retrospective legislation. This is an important matter to people who are entitled to a fair consideration of their case. I stress the necessity for the Government giving very careful consideration to this matter. The honesty of their position is at stake. We do not want to have something suggested which will palm people off and give them a sense of security, only for them then to find that they have to pay just the same. That is not the kind of treatment that a citizen should have from the Government.
The whole of this legislation is unfair to vast sections of the community. I refer particularly to householders. When derating took place great industries were in a deplorable position after years of Tory rule. Prosperity was restored to them by five years of a Labour Administration and Labour planning, and they are in a different position today from what they were then.
In 1929, when derating took place, industries could argue that they were in a parlous condition. That was under the Tories. I say that the time has now arrived to reconsider this situation and to discontinue derating which is unfair to the householders throughout the whole country.
Great industries which are in a prosperous condition should be making a contribution to the local rates. The Government should review this whole matter. I am sure that hon. Members on this side of the House would give them every facility for doing so. We should balance this problem up, and deal fairly and justly with the complaints about the pledge and also deal with the derating position. I appeal to the Government to do what is right and just.
§ 6.0 p.m.
§ Sir Wavell Wakefield (St. Marylebone)
I am grateful to you, Mr. Speaker, for giving me an opportunity to draw attention to the anxiety which the great national sporting organisations feel about the effects upon the amateur sport clubs in membership with them of the new valuation lists which are due to come into force in April, 1956. I should disclose an interest in the matter, in that I am a member of the Executive Committee of the National Playing Fields Association, which, as some hon. Members may know, has for many years taken a very 1226 active interest in promoting and encouraging the construction of playing fields and drawing attention to the desirability of making the necessary provisions for the creation of fields upon which games can be played and recreations can take place.
It would be a great tragedy if the increasing number of playing fields which are now available for young people went out of use because of the increased amounts of money which may have to be paid as a result of the increased ratings of those fields. I have another personal interest in this matter, in that I am a member of the Rugby Union Committee, which has received many letters from clubs in membership with it expressing great anxiety about the possibility of their not being able to continue to operate if their grounds are rated as highly as they fear they may be.
I am also a member of the M.C.C. Lords Cricket Ground, which is the headquarters of the M.C.C., is in my constituency, and representations have been made to me by Mr. Aird, the Secretary. In his letter to me he writes of the great anxieties ofthe small non-profit making amateur sports clubs who might face extinction because of the additional financial burdens which it is feared may be imposed upon them.The reason for this anxiety is that, in the past, many local authorities were in the habit of putting low values upon the property of voluntary bodies whom they wished to help. They felt that playing fields run by local cricket, football, athletic and other clubs created a valuable local asset for young people. in many cases without any cost to the local authority; that essential recreation was provided in this way, and that these local organisations were deserving of help.
We all welcome the fact that Clause 6 (4) provides thatThe rating authority for a rating area shall have power to reduce or remit any ratein respect ofany club, society or organisation which is not established or conducted for profit and whose main objects are religious, educational or philanthropic …We welcome this provision if it means that these various amateur clubs will not have extra burdens imposed upon them.
The Ministry of Education is responsible for the administration of the Physical Training and Recreation Act, 1937, and where such grounds are used 1227 for physical recreation it might well be argued that the word" educational" in this subsection covers the situation. If that is so, I hope that it will be made abundantly clear. It may well be that during the Committee stage it will be desirable to insert appropriate words so that there can be no misunderstanding upon this point—if, in fact, it is the Government's intention to make quite sure that these clubs are not to suffer.
The anxieties and fears of these small clubs are crystallised in a letter written to the National Playing Fields Association by a cricket club. It is to that Association that many clubs and national associations refer for help in connection with their grounds, and in relation to legislation which may affect them or their grounds. The letter says:We are, however, very disturbed to learn that under the Local Government Act, 1948, as amended by the Valuation for Rating Act, 1953, rateable values will be raised as from April, 1956, and it seems probable that all clubs will be affected to a greater or lesser extent … In our case, local rates are likely to increase by at least £200 per annum, and it would be quite impossible for us to find this amount in addition to the heavy burden of meeting other outgoings.We must remember that the great majority of these clubs keep going by money derived from such things as whist drives and the 10s. and guinea subscriptions of their patrons.
I am not thinking of the great professional association football clubs or the big Rugby football clubs who have big gates—or the county cricket clubs. I am concerned about the thousands of amateur clubs who have very great fears about the effects of this Bill, and I hope that during this debate and during the Committee stage not only shall we be given an assurance in the matter, but that further steps will be taken to show that all these anxieties and fears are ill-founded.
§ 6.8 p.m.
§ Mr. C. W. Gibson (Clapham)
I regret that the Bill, which is called the Rating and Valuation (Miscellaneous Provisions) Bill, alters only a few miscellaneous provisions of our present rating system. We shall never solve local government problems until the whole of the financial arrangements of our local authorities are completely revolutionised. All the Bill does is to make quite sure that the present system—which imposes the heaviest bur 1228 dens upon those who are most progressive, work hardest, and do the most to improve their businesses or houses—is continued upon an ever-increasing scale.
As rateable values increase, as they are bound to do—because the enormous changes which have occurred in the last 20 years would, in any case, have led to an increase in most rateable values—it is inevitable that even if for the first year or two there is a drop in the poundage, there will be a higher net charge upon the most energetic and hard working people. Any local rating system which has that effect ought to be changed, but the House of Commons has so far refused to change it, and the Bill merely continues the old, bad system. What is even worse, it does not allow the ratepayers to look at the draft lists.
I listened very carefully to the Parliamentary Secretary's explanation of the Bill's effects, and the rather laboured defence of it by the hon. Member for Hertford (Mr. Walker-Smith). It is true that the ratepayer will have a chance of appealing, but not until the rate is levied. Then, if he appeals, the extra likely to be charged is stored up, and if he wins it is given back to him. If he fails, he goes on paying it.
That is not good enough, and is not in accordance with the traditional ideas of justice in local government that I expected from hon. Gentlemen opposite. I do not see why they cannot do what we proposed in our 1948 Act—continue the system of giving ratepayers an opportunity of looking at the draft lists and the right to appeal against them if they think they are treated unfairly. I know that it will create difficulties. I was a member of an assessment committee for a year or two and I know the work, worry and trouble caused to the officers and members of the committee; but, as has been often said, we have not only to be just but to be seen to be just.
When the valuations inevitably go up—not by a small amount, but by a very large amount because of the lapse of time since the last valuation lists were made—I should have thought it all the more important to preserve the right of examination of the draft lists and of appeal against them, as was proposed under the 1948 Act. That has gone, and, while I can understand the administrative reasons and appreciate the work 1229 which the Department might have—and will have—in dealing with appeals, the probability is that the Department will get a large number of appeals in any case. Anybody, such as a small shopkeeper or small business man, who finds his rateable value suddenly jump up to 60 per cent., 70 per cent., 80 per cent., or even 100 per cent., will not calmly accept it without having it justified in some way. There will be appeals.
The point made by my hon. Friend the Member for Wellingborough (Mr. Lindgren). who opened the debate for the Opposition, that the Bill will create financial troubles for local authorities, is fully justified, and, in spite of the fact that my hon. Friend the Member for Acton (Mr. Sparks) will support the Government, we hope that the Government will have second thoughts on this matter and will find a way in Committee to improve the situation. Otherwise, all the intelligent people who take an interest in these things in their own localities will have a justified grievance which they will undoubtedly express.
I can see one reason for not allowing people to see the valuation lists until next April. I did not think of this one myself, so it is not a piece of my peculiar wickedness. It does, at any rate, take the Government over the next General Election. It takes them over 26th May or over a General Election in October. The people on whom the Government depend for votes will not see what an enormous whack will be put upon them by this new valuation. We should maintain the right of the ratepayers to have the most complete opportunity of looking at the draft valuation lists when first made, and give them an opportunity of appealing before the rate is levied upon them.
§ Mr. Sparks
Does my hon. Friend think it will make any difference to the amount of rates the ratepayer will pay if he gets an opportunity of appealing against the draft valuation list as against the list proposed in the Bill? What advantage will the ratepayer gain in the amount of rates he will have to pay?
§ Mr. Gibson
The advantage is that he knows where he is and the assessment on which he has to pay his rates. Under the Bill, he will not know that until the rate is levied.
1230 I want to raise some other local government points. I was surprised that the Parliamentary Secretary said nothing about the effect of the Bill on local government finances. What is to happen to the education grant? At present, the local education authority receives a grant based upon a certain formula less the product of a 2s. 6d. rate. If rateable values go up, as I think they ought to, the product of a 2s. 6d. rate will be very considerably increased, particularly in a place like London. Experts at the London County Council advise me that, assuming that rateable values go up only by two-thirds, the saving on the Government education grant to local education authorities will be in the neighbourhood of £30 million. Present grant expenditure on education is about £45 million, taking the country as a whole.
In other words, the Bill will add another £30 million to the income of the local authorities and will reduce the grant paid by the State in respect of education. If that is what is intended we are entitled to have some answer from the Government on this point.
§ The Minister of Housing and Local Government (Mr. Duncan Sandys)
To what point in the Bill is the hon. Member addressing his remarks?
§ Mr. Gibson
I am addressing them to the general effect of the Bill on the finances of local authorities.
§ Mr. Gibson
The valuation lists will show increased valuations, which will increase the product of a 2s. 6d. rate and to that extent will reduce the Government grant.
§ Mr. Sandys
I am anxious to follow the hon. Gentleman's argument. In what way does he suggest the Bill will have the effect to which he is referring? Is he not referring to the 1948 Act?
§ Mr. Gibson
No. I am referring to the effects of revaluation. The increased valuations that will result—
§ Mr. Gibson
It is entirely concerned with valuation lists, which will increase the valuations on properties all over 1231 the country. Therefore, it will presumably increase the product of a 1d. rate in the £on rates.
In so far as it does that, it must affect Government grants to local authorities one factor in the calculation of which is the amount of the product of the rate in the £. The education formula provides that there shall be deducted from the State grant an amount equal to a 2s. 6d. rate in the £. The London County Council is concerned about it and, as I have said, their experts estimate, taking the country as a whole, that local authorities may lose an amount equal to £30 million.
§ Sir Ian Horobin (Oldham, East)
We have all tried to follow the hon. Gentleman's argument. Will he explain what provision in the Bill would alter one single figure in the valuation lists? His own 1948 Act did that.
§ Mr. Lindgren
Surely the Bill makes the implementation of the valuations of that Act possible. Without the Bill those values would not take effect. There was a revision of valuations by the Acts of 1948 and 1953. The Bill gives practical effect to those Acts. At the time, it was appreciated that it would have an effect upon the grant basis of many services, and it was stated when the 1948 Act was going through that there would have to be a revision. All that my hon. Friend is asking is whether the Minister will make a statement about the possible revision of the grants in the light of the new incidence of the increases in rateable values.
§ Mr. Gibson
I am very much obliged to my hon. Friend the Member for Wellingborough and I hope it is now clear both to the hon. Gentlemen opposite and the Minister.
The Minister has asked where, in this Bill, there is anything new. Paragraph 2 of the Explanatory and Financial Memorandum begins:The Bill provides a new method for the rating of Gas Boards in England and Wales.I am not concerned with that. I am concerned with the fact that the Bill brings into operation new rating lists, the effect of which might be very heavy on the grants paid to local authorities for educational purposes. The estimate which I have made is that it might mean a 1232 loss to the education authorities of grants equal to £30 million a year, and I say that, if the largest education authority in the country thinks that that might be the effect on its finances, it is a matter which the Minister cannot ignore, and on which we are entitled to ask him to give us some information before we part with the Bill tonight.
Another point which I wish to make was to some extent referred to by the Parliamentary Secretary in introducing the Bill, and concerns the question of pool payment. I hope the Minister will give very careful consideration to the effect of the Bill on the finances of local government, because, unless an alteration is made in the existing formula, both railways and electricity undertakings will be paying less than some of us feel they ought to be paying to the local authorities for the services which the local authorities render to them. The undertaking given that there should be conferences with the authorities concerned meets the point to some extent, and I can only stress how important it is that those conversations should proceed as quickly as possible.
Finally, if the Government are anxious to do anything for the ratepayers, why have they not included in the Bill a Clause to get rid of the derating legislation? All the local authorities are in favour of such a step, and most of the local chambers of commerce in the country are also in favour of it. I cannot for the life of me understand why big business should still be allowed to get away with paying only 25 per cent. of its rates. During the period when the derating legislation was introduced, there might have been a plausible excuse, as we were then in a very bad slump, there was a large amount of unemployment, and a great many factories were in serious difficulties.
I was never very keen on the Bill, even in those days, but that situation disappeared many years ago, and it is almost time that big industry was compelled to pay its full share of local rates, as it did before the derating legislation came into operation. That would have the effect of considerably reducing the charge to the ordinary local ratepayer by several coppers in the £on the rate levied each year. It would also help the small shopkeeper very considerably, and I think it would bring some justice into local government finance.
§ 6.23 p.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
I do not know what period it was to which the hon. Member for Clapham (Mr. Gibson) was referring when he said that, in his opinion, derating was at that time justified.
§ Mr. Powell
I understood the hon. Gentleman to be referring to a period when our industries were in such a condition that he thought there was some justification for the derating legislation though he himself was opposed to it even then. I wonder whether that period included 1948, the year in which the Labour Government introduced a comprehensive Local Government Bill, in which it would have been most convenient and appropriate to include provision for the abolition of derating.
As my hon. Friend the Parliamentary Secretary observed in introducing the Bill, there are three major matters which it covers—the method of bringing into force the new valuation lists, the new system of rating for gas boards, and the new provisions for the rating of charitable land. I should like to say something on each of those topics.
I believe that the new provisions for bringing valuation lists into force will prove to be to the advantage both of the ratepayer and the rating authorities. Let me take, first, the case of the ratepayer. It has already been made clear several times in this debate that the ratepayer, as an individual, loses nothing whatever that he has at the moment in rights and opportunities by any-of the changes which this Bill makes. He can still make proposals in respect of his valuation, and he can still make objections to proposals, and no alteration in the rates which he has to pay can take effect until those proposals and objections have been disposed of.
§ Mr. Houghton
Would the hon. Gentleman say that classes and groups of ratepayers will have the same opportunities under this Bill as they would have if they could see draft valuation lists?
§ Mr. Powell
I am coming later to the question of modifying the law to deal with the rules of valuation for whole groups of hereditaments. At the moment I am concerned with the individual ratepayer objecting to, or making proposals 1234 about, the rating of his hereditament, and I say that he loses nothing at all. He can go through the same stages and has the same opportunities—in fact, there is a slight improvement in them under this Bill—and no alteration of the rates which he has to pay can be brought into force until his objections have been determined. I will go further than that, and say that not only is he in no worse position, but he is definitely benefited.
It is true that there is no logical connection between the valuation placed upon property and the rate poundage levied by the local authority for the area in which that property happens to be situated. There is no logical connection between the two things. But most ratepayers will, in fact, be guided in their opinion as to the fairness of their valuations, and in their decision whether to take steps to try to get them altered, by the effect of that valuation upon the sums which they actually have to pay.
At a time when lists 20 or more years old are being altered, when no one can foresee in any particular rating area the effect on the rate poundage of the new valuation lists, the individual ratepayer, confronted merely with the statement of the proposed valuation, would be completely in the dark as to what it meant to him. The result would be that immense numbers of ratepayers would initiate proposals and objections, who would not do so if they were fully informed of the real effect of the new valuation upon them before they have to come to that decision.
This Bill, therefore, will save large numbers of ratepayers a great deal of needless trouble and expense which they would otherwise have undertaken under a misapprehension as to the way in which they were going to he affected. So that I claim that by this Bill the ratepayer loses nothing and gains something.
I come now to the position of the rating authorities. The hon. Member for Wellingborough (Mr. Lindgren) showed that if, after the commencement of the rating year, there was a considerable number of undetermined proposals, objections and appeals, the revenue which the local authority collected might, in various cases, fall considerably short of the estimate which it had made upon the basis of the valuation list and the rate which it had made. I quite agree with 1235 him. But was he not overlooking the position which might arise were the Bill not passed?
No one disputes that if Clause 1 is not enacted there would be an immensely larger number of appeals against valuations than will, in fact, take place, and that this enormous number of appeals against the new valuation lists, as such, would entirely clog the machinery for dealing with them at the local valuation courts—and perhaps the county courts to which go appeals from the local valuation courts. The effect would inevitably be that a large number of decisions—of settlements—would still be outstanding when the rating year began on 1st April.
By Section 5 of the 1948 Act the Appellant already has immunity from having to pay more until his appeal is disposed of. I admit that it is a matter of opinion whether, were this Clause not enacted, more appeals would be outstanding in the new rating year than will then be outstanding under the provisions of this Clause.
§ Mr. F. Blackburn (Stalybridge and Hyde)
I think I am right in saying that, under the 1948 Act, 21 days were allowed for appeal, but under Clause 1 (8, c) of the Bill any appeal can be made within the year.
§ Mr. Blackburn
Clause 1 (8, c) says that. The authority would not know during the year where it stood.
§ Mr. Powell
My impression is that the period is increased from 21 days to 28 days. It runs, of course, from a different point of time, but there is no unlimited opportunity—
§ Mr. Powell
I will read it. It says:Where in the case of a hereditament … a proposal for the alteration of the list, so as to reduce the value so ascribed to the hereditament. is served on the valuation officer before the end of the year beginning with the date on which the list comes into force, then, until that proposal has been settled, the amount recoverable …I see the error into which the hon. Member has fallen. It is that, because the proposal can be served on the valuation officer before the end of the rating 1236 year there is, therefore, no limitation on the period during which that proposal can be served. In fact, the hon. Gentleman and I are referring to two completely different periods of time.
I agree that it is a matter of opinion whether more or fewer appeals will be outstanding in the earlier part of the rating year under this procedure or that which it supersedes, but it is arguable that not only the individual ratepayer but also the rating authority will stand to gain from the provisions of Clause 1.
As has several times been said this Bill will facilitate the coming into force of valuations made under the 1948 and 1953 Acts. A great part of the debate has turned upon the effect on a certain class of hereditament—namely, shops and business premises—of the special treatment of other classes of property—namely, residential property—which was introduced by the 1948 Act, and continued in a different form in the 1953 Act.
It is quite true that since 1948 shops and business premises have been the only types of hereditament that have been both fully valued and fully rated. To that extent they have borne an unequal share of the rate burden. The question is whether, for that reason, the House ought to decline to allow the new valuation lists to be brought into force, as is intended, next year.
I would first point out that, as in the case of other individual ratepayers, the ratepayers who are occupiers of shops and business premises lose no opportunities under this Bill of individual appeal and representation which they already possess. Further, their own position as a class cannot become clear until the entire valuation list is available and has been translated into terms of rate poundage.
When my right hon. Friend, in his statement of 6th December, referred to the time when the effects of the forthcoming revaluation could be fully measured, those words could not possibly refer to the date of publication of draft valuation lists since the draft valuation lists, in themselves, could give no full measure of the effect of revaluation. The effect of revaluation upon any particular class of property depends upon the balance of a valuation list as a whole.
1237 It was, therefore, only when the rate poundages based on the new lists had been fixed, that the effect upon any class of property of the 1948 and 1953 Acts together could be fully measured. There can be no question of this Bill—which does not alter the date of the fixing of the rate poundage—having any bearing upon the validity of the undertaking given by my right hon. Friend.
At present, it is a matter of mere conjecture as to how severe will be the effect upon this class of property of the new valuation lists. It will, of course, be greatest where that type of property is in a small minority in any particular rating area, because the larger the proportion of the valuation list which is represented by any class of property, the less any variation in the valuation of that type of property affects the rates paid by its occupiers. None of us can fully assess that until the new lists have been translated into terms of rate poundage.
I would say to the occupiers of these premises who are anxious about the result of the new lists coming into force that they would fare very much worse if those lists were not brought into force. A general reason is that only the coming into force of these new lists can be the prelude of a wider review of local government finance and rating altogether. A special reason is that unless the new lists were brought into force as soon as practicable it would be impossible and inequitable to prevent the rating authorities from rating these properties separately. Those properties would then stand in the current valuation lists at the new valuations, while all other properties stood in the list at the 1934 value. The occupiers would then be in a very much worse position than they will be after April, 1956. It is probably within the knowledge of many hon. Members that a number of rating authorities have, in fact, prepared valuations of shops and business premises in their areas for insertion in the present lists.
I do not, however, regard the position which the new 1956 lists will represent as in any way satisfactory or final. That is implicit in the 1953 Act itself. Many have failed to observe that the 1953 Act applies only to one valuation; that it is a temporary, transitional Measure. The first words of Section 2 of that Act read 1238For the purpose of making or altering the first valuation lists made after the passing of this Act. …So, in any case, Parliament, in the near future, has to make a new valuation Act which will determine the basis on which the subsequent valuation lists are to be drawn up. When that time conies, I believe the House will do right to revert as far as possible to a uniform basis of valuation on the hypothetical tenant for all types of property to which that basis can practicably be applied.
The essence of rating is fairness as between one ratepayer and another, and there cannot be fairness between one ratepayer and another when one property is valued at a historical value and another is valued at a modern value.
I will not detain the House with the familiar story of how we got into this position; but as times goes on and as housing and other development gets further away from the effects of war, it will be possible and, therefore, just to value all hereditaments for rating upon their current annual value, as was the original and traditional basis of rating. Granted that we are going to raise a tax graduated according to the annual value of property occupied, surely all property occupied ought as far as possible to be rated according to its current annual value at the same time.
I come now to the second of the three major matters with which the Bill deals, namely, the valuation for rating of gas boards. I believe that the system introduced by this Bill is superior to that which was applied in 1948 to the British Transport Commission and the British Electricity Authority in two respects, though in another respect I think it suffers from the same handicap, and that was the one to which the hon. Member for Wellingborough referred.
The system adopted under this Bill in relation to gas boards is that there will be an allocation not of rates paid, or of sums paid in lieu of rates, but of rateable value to the individual rating authorities throughout the country. That means that instead of the gas boards paying, as do the Electricity Authority and the Transport Commission, on the basis of the average rate poundage levied throughout the country, they will pay in accordance with the actual rate poundage payable in any particular area.
1239 Thus, one defect which at present exists in the distribution of the electricity and transport rate moneys will not apply to the payment of rates by the gas boards. They will be put virtually in the position of a ratepayer in each rating area, bearing the same burden as other ratepayers in that area. Thus, one defective feature of the 1948 Act does not attach to the procedure here proposed.
The other feature which was defective in the 1948 Act was, in my opinion, more serious. Rating authorities in whose area there were large transport hereditaments or large electricity-producing hereditaments found themselves faced, albeit over a period of transition, with a very big loss in rateable value, because no account was taken by the formula—and I am prepared to admit that. in the case of the railways, no account probably could have been taken by the formula—of the amount of property actually situated in each rating area.
Here, in this new formula for the gas boards, almost as much weight is attached to the amount of gas produced as to the amount of gas consumed in a particular rating authority's area. Therefore, those rating areas in which large gas plants are situated will not lose a great part of their rateable value, as those authorities in whose areas electricity plants are situated lost and have continued to lose under the 1948 dispensation. Those seem to me two points in favour of this gas board scheme as against those which we have been working since 1948 for transport and electricity.
But all these schemes for the pooling of rates suffer from one fundamental difficulty from which my hon. Friend has found no method, at any rate so far, of escape. The basic figure which one establishes, the datum line, inevitably becomes a historical figure which gets more and more out of date if the value of money changes. Undoubtedly, if the electrical and transport hereditaments had continued to be rated on a "profits basis," their valuations and what they were paying in rates would be higher today than they are under the 1948 Act. It is for that reason that I was particularly glad to hear my hon. Friend say that the quinquennial review under the 1948 Act will be extended in scope so as to include these arrangements for the global payment of rates by public utilities.
1240 Finally, there is this question of the rating of charitable lands. One admits that there has been a considerable gain, as compared with the Poor Rate Exemption Act, 1833, in that the complete exemption hitherto enjoyed by churches and chapels has been extended to the use, at any rate for religious and semi-religious purposes, of the halls attached to them.
But with that advantage I am afraid that we have got into a more serious disadvantage. It was obviously impossible to allow the Inland Revenue to apply the same discretionary under-valuation—or, indeed, I believe in some cases, virtual omission from the valuation lists—of charitable lands as had been previously practised by the old rating authorities. That was clearly impossible. So we find ourselves with Clause 6 (4), under which local authorities are given the option to remit part or the whole of rates in such cases.
You might think, Mr. Speaker, that there was very little difference between a rating authority having the discretion to under-value and a rating authority having the discretion to remit or reduce a rate. In reality there is a very great practical difference. It is quite a different matter for an authority presented with a hereditament valued at £1,200 to ignore it for rating purposes, instead of simply continuing what have often been traditional under-valuations carried forward by common consent from one valuation list to another.
I fear that as Clause 6 stands it will place both local authorities and charitable organisations in great embarrassment. Local authorities will have great difficulty in deciding between one case and another in exercising this new type of discretion, and charitable organisations will find themselves, in quite a new way, at the mercy of the rating authorities.
I hope that means may be found to remove this complete and unfettered discretion and to help rating authorities as well as charities before the Bill reaches the Statute Book. Clause 6 as it stands seems to me to be the one serious blemish upon a Bill which, otherwise, is both useful and necessary.
§ Mr. William Ross (Kilmarnock)
On a point of order. May we be informed whether the Secretary of State for Scotland has also joined the right hon. Member for 1241 Woodford (Sir W. Churchill), because hon. Members from Scotland have been waiting anxiously to find out what changes the Bill will bring to the law of Scotland. Are we to be told by the Secretary of State, or by one of his minions?
§ Mr. Speaker
That is not a point of order. I think I observed one of the Joint Under-Secretaries of State for Scotland here some time ago, but I cannot help the hon. Member in this.
§ 6.50 p.m.
§ Mr. Douglas Houghton (Sowerby)
The House has just listened with close attention to a speech by the hon. Member for Wolverhampton, South-West (Mr. Powell), who has once more shown his very thorough grasp of a complex subject. He is a dangerous man: he is a danger to friend and foe. He is a danger to his opponents because he frequently knows more about a subject than they do, and he is a dangerous rival to his right hon. and hon. Friends on the Front Bench who ought to know as much.
However, I will not follow the hon. Member back to the discussion we had in Committee upstairs on the Valuation for Rating Act, 1953. In his speech he brought out his devotion to the principle of universal valuation on current hypothetical values. We had a debate on that principle in Committee and on the Floor of the House. The hon. Member was then in opposition to his own Government and on that same occasion I was on their side. For reasons on which we need not now dwell, the House decided that it was not yet time to value for rating purposes the general run of dwelling-houses on current rental values. This new valuation list, therefore, must go on the basis decided by the House in 1948, as amended in the Valuation for Rating Act, 1953.
As the Parliamentary Secretary said in his opening speech, the Bill makes no change in the basis of valuation of the main groups of properties, whether business premises or private dwelling-houses. What it does is to alter the procedural arrangements in connection with the bringing into operation of the new valuation lists.
The Parliamentary Secretary said that his right hon. Friend the then Minister foreshadowed this change in procedure in a remark which he made about 12 months ago. It is true that he hinted at 1242 some change, but I think the House will agree that it was a very ambiguous statement and that it did not foreshadow in any particular what the change might be.
Indeed, I complain that the Minister has kept his intentions dark ever since. Since that ambiguous statement he has not said a word in public, as far as I know, about the possibility of legislation to make procedural changes. He certainly said nothing about it to the representatives of the National Chamber of Trade when they went to see him in November, and he said nothing whatever about it in a reply given in the House as recently as 16th March.
I will tell the House how careful the right hon. Gentleman has been to conceal his intentions about this procedural change. I gave notice of a written Question on 15th February, asking the Minister whether he couldnow say what will he the time-table for the deposit of the new valuation lists and subsequent procedure under … the Local Government Act. 1948.I got no reply to that Question for a month. In the meantime, I made inquiries about what had happened, and I was assured that the proposed reply was before the Minister for his consideration.
On 16th March, as reported in column 127 of the OFFICIAL REPORT, the Minister gave his reply, as follows:Under the Act of 1948, as amended by the New Valuation Lists (Postponement) Act. 1952, and the New Valuation Lists (Postponement) Order, 1954, the new valuation lists have to be transmitted to the rating authorities not later than the end of December next."—[OFFICIAL REPORT, 16th March, 1955; Vol. 538, c. 127.]That was the reply which the Minister gave on 16th March. Two days later he introduced the Bill. I do not think that is being as frank with the House as the Minister ought to be. Having regard to the advance statement made by his right hon. Friend a year earlier, there was no reason why he should not have said a little more about his intention for the information of the House. Certainly he ought not to have given this reply, to be followed two days later by the introduction of the Bill. I would not say that he was misleading the House, but at least he was not giving the House all the information to which I think it was entitled.
1243 The Bill proposes these quite important changes in procedure, which he did not disclose to the representatives of the National Chamber of Trade and of which the House was in ignorance until the Bill was introduced. However, we have the Bill before us and we must make the best of it, see what it proposes to do and, if possible, make it a better Bill in Committee.
These procedural changes are an attempt to fit a silencer to the machinery of the introduction of the new valuation lists. It can be said that the Minister is perhaps doing more than meet trouble half-way. He wants to get rid of trouble before it mounts in its intensity and its indignation and perhaps threatens the whole fabric of the new valuation lists.
There is no doubt whatever that when the new valuation lists come into operation they will substantially change the distribution of the rate burden. I said on the Third Reading of the Valuation for Rating Act on 9th July, 1953, that there were quite plainly substantial increases in valuations confronting those who occupied business premises, and that is why those representing business interests are so apprehensive about the possible effects of the new valuation lists and the possible increase in the rate burden upon their resources.
When I made a very firm forecast on Third Reading on 9th July, 1953, I was immediately challenged, "How do you know? Where do you get the information from? We know nothing. Have the Government ever made any pronouncement which gives that information?" Of course, I have to be careful, because I live in the world of valuation and move in and out of it, and I cannot help picking up information which sometimes I assume everybody else knows; and then when I make a statement, thinking that it is common knowledge, someone pops up and asks, "Where do you get that from?"
This time I have fortified myself not with official information but with professional information. I notice that in the "Manchester Guardian" recently a Mr. Stiles, a member of the valuation and rating committee of the Royal Institution of Chartered Surveyors, told the Drapers' Chamber of Trade in London what he thought would be the effect of 1244 the new valuation lists. After describing the different bases of valuation of dwelling houses, on the one hand, and business premises, on the other hand, he said that on that basis it was estimated generally that annual values of dwellings would increase by 40 to 50 per cent. and those of shops and factories would be trebled or even quadrupled. That is the opinion of a professional man to whose view on the matter we could give considerable weight.
He went further. He went on to make an estimate of the actual effect of the new valuation lists on the rate burden itself. On the assumption that the rating authorities would not demand more general income than they get at present, he said that the rate liability to shops would be increased by 60 per cent. and there would be a small reduction of up to 20 per cent. for occupiers of houses. He concluded:While everyone will save a little on their houses, their liability in respect of business premises will be increased by something like 50 to 100 per cent.That is why the National Chamber of Trade and other organisations of traders are apprehensive about the new valuation lists. They may be confronted next spring, quite suddenly, with a substantial addition to their rate charges. I concede at once that, being business men and women, they will be able to charge the additional rates against their taxable profits and to that extent the less Income Tax will mitigate the extra cost to the occupier of business premises. Even so, it may be serious in many cases.
I was not a little surprised when I saw that the National Chamber of Trade was sending out circulars and letters by the thousand to hon. Members of this House, and perhaps sending many more to the Minister. All I have to say about that campaign is that it was too late—much too late. They ascribed to the 1953 Act changes in the basis of valuation which it did not contain. They overlooked that this fundamental change in the basis of valuation between dwelling-houses and business premises went back to 1948 and all the 1953 Act did was to alter—but still on a pre-war basis of valuation—the precise valuation.
§ Mr. Charles Pannell (Leeds, West)
They even ignored the fact that the de-rating of industry went back to 1929.
§ Mr. Houghton
I am grateful to my hon. Friend; they were undoubtedly under several misapprehensions about the position. When they went to the Minister it is understood that he gave them a certain pledge. It is important to note that when the Parliamentary Secretary read the actual words of the assurances given he was reading the concluding lines of a long reply given by his right hon. Friend to the right hon. Member for Blackburn, West (Mr. Assheton), on 6th December. The Parliamentary Secretary read the words:I can, however, give an assurance that, as soon as the effects of the forthcoming revaluation can be fully measured the Government will review the position and will consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 21.]That is what the right hon. Gentleman told the House, but he had already spoken to the representatives of the National Chamber of Trade. Just recently, when the President of the National Chamber of Trade, Mr. J. Oliver Watkins, was speaking in Halifax, he referred to and, so to speak, quoted the nature of the pledge given by the Minister. He was complaining so recently as 25th March against this Bill, and he used a phrase which I hesitate to quote in this House. He said the Bill was, "a bit of double-crossing." Those are painful words from a friend; they would sound unkind from an enemy. He also said of the Minister:We feel he has let us down.I am assuming that Mr. J. Oliver Watkins was present at the interview with the Minister. If he was not present, as President of the National Chamber of Trade, he must surely have found out exactly what took place. He is reported to have said in the course of his speech:However, the Minister had felt that the Chamber was seeing the situation through rather dark glasses and it would not be as bad as members thought. He said that traders would not know what their new ratings would be until December this year, when the draft valuations would be published. If the chamber was of the same opinion after seeing the draft valuations, its representatives could see him again.That is a very different assurance from that which the Parliamentary Secretary quoted. I think the Minister ought to tell us, was that assurance given in those terms? If so, was the Minister not misleading the National Chamber of Trade 1246 by talking of draft valuation lists when he had in his pocket the print of this Bill? I think that should be answered.
§ Mr. Sandys
In order to save the hon. Member trouble, I can tell him that I never mentioned draft valuation lists in any of these discussions. Such assurance as I gave is set out in the statement I gave to the House, which is contained in HANSARD and with which I think the hon. Member is familiar, but no other assurance apart from that.
§ Mr. Blackburn
Mr. Watkins is not the only one who misunderstood the Minister. I have a letter in my hand which states:The National Chamber of Trade was told by the Minister after a national protest week about this Bill last November that, after publication of the draft valuation lists, if the results confirmed our fear that an unjust burden had been placed on the shopkeeper, we could immediately go to see him knowing that he would give us a fair hearing.The letter states definitely, "draft valuation lists," which confirms what has been said by my hon. Friend the Member for Sowerby (Mr. Houghton).
§ Mr. Houghton
There is no doubt that the statement the Minister has been kind enough to make is very important indeed, because it corrects the misunderstanding which so obviously has been expressed in the statements made by representatives of the National Chamber of Trade. We must accept it from the right hon. Gentleman without question. We may regret that he did not make himself more plain, or we may deplore that the representatives of the National Chamber of Trade were not listening—or that, if they listened, they misunderstood. Anyhow, something has gone wrong somewhere. The only thing we must accept is that the Minister is not to blame. I think the National Chamber of Trade will probably be somewhat disturbed to read what the Minister has just said, although of course I must bear in mind that he has seen representatives of the National Chamber of Trade since then.
Only a day or two ago there was a Press notice which said that the Minister had seen representatives of the National Chamber of Trade again. That was referred to by the Parliamentary Secretary. The hon. Gentleman had so many interruptions at that moment that I was unable to put a point to him which, I hope, 1247 will be answered when the Minister replies. Were the representatives satisfied when they left the Minister the other day? They knew then the contents of this Bill. They sent telegrams to him. They sent telegrams to me and to other hon. Members, asking us to intervene. They said: "We have been double crossed, we have been let down, we rely on you to put the Minister straight." At the same time, they made a bee-line for the Minister themselves and got there first. He saw them. What satisfaction did they get? Was any reassurance given the other day? I do not know; I think we ought to be told.
From what I have said, there is no doubt that when the new valuation lists come out those who will be gravely concerned by the new lists will be those who occupy business premises. If the estimate of Mr. Stiles is to be relied upon, although the valuations of a large number of dwelling houses may go up somewhat, the actual rate burden will be slightly reduced. That, he said, is a rough estimate and I have nothing better or different to put in its place. So that the views will come mainly from the source where the apprehension now exists.
What the Minister is trying to do under these procedural rearrangements is to disclose at one and the same time the new valuation and the new rate poundage, so that nobody need squeal before he is hurt. That is really the purpose of the first main part of the Bill.
We must sympathise with any attempt to save citizens from needless concern or with any proposal to save them from worry and anxiety about the financial effect of the new rate burden, whether in the case of a shopkeeper or the occupier of a private dwelling. My complaint about the Bill is that it is so late as to look like a manoeuvre. It is so late that it appears to offer some doubt about the impact of the new valuation lists upon the public.
I believe that this new procedural arrangement should have been brought to this House much earlier if- the Minister intended to proceed with it. If the proposed change had been farther away from all this turmoil about the valuations of business premises and the few months only which must now elapse before practical work has to be done upon them, 1248 it would have been open to less misunderstanding.
I expect the Minister to say, "If you do not like these proposals, what else would you do? Would you leave things as they are? If so, how would you cope with the heavy administrative job of dealing with a very large number of appeals many of which might never have been made had the ratepayers known the full story?" The hon. Member for Wolverhampton, South-West said that so far as the individual ratepayer is concerned, the new procedure would safeguard his position absolutely and would in some matters be a better protection than the existing arrangements.
I agree with the hon. Member as regards the individual ratepayers, but it must be appreciated—this was the point of my intervention—that the new valuation lists will not affect all classes and groups of ratepayers alike. There will be a redistribution of the rate burden and some people will feel it most acutely. Therefore, I am sure the hon. Member will agree that the new procedure leaves no opportunity for groups of ratepayers who stand in the same relation to the new valuation lists to confer together, to take collective action and to make collective representations and bring their grievances, if they have any, before the Minister and before this House. There will be no time for that. The new lists will be in operation, the individuals will be safeguarded, they can all appeal and they will not be asked to pay any more in actual rates than in the previous year until their appeal is settled That is what we are told.
But what of the National Chamber of Trade? My hon. Friend the Member for Eccles (Mr. Proctor) put some pointed questions to the Minister. What will the Minister do if, when he has seen the effect of the new valuation lists, there is something to be done? What will the Minister do, and how will he do it? The right hon. Gentleman must know now what the effect of the new valuation lists will be upon shopkeepers. He can make a very close estimate indeed of it. He does not have to wait until the valuation lists are deposited with local authorities at the end of December before he can find out. He has a fountain of information on this matter at his elbow. He can learn all he wants to know about the new valuation lists and I should be very much mistaken if he does not know it already.
1249 What the Minister does not know is what the poundage rate will be when the new valuation lists come into operation. But he can now make an estimate of what the all-round effect will be of the new valuation lists upon total rateable values. I fully believe that the Minister could now give a fairly close appraisal of what the effect would be. At least, he knows what the National Chamber of Trade will regard as the consequences to its members which they would take to the Minister for redress. If their rate burden is higher than they think it reasonable for them to bear, they will ask the Minister to do something to lower it.
What will the Minister do? What can he promise them that he will do? I hope that he is not leading them up the garden. As my hon. Friend the Member for Eccles said, the Minister can change all this only by legislation. It would have to be retrospective legislation, and we might get into an awful tangle and mess before we finish if we tamper with these new valuation lists when they have come out.
I presume to criticise this and the Minister is entitled to ask what constructive suggestion I have to make. When we were on the benches opposite and we asked the Opposition of the day what they would do if they were in our place, they always took refuge behind the general form, "We have not all the facts and figures at our disposal which would enable us to make a wise pronouncement." They shuffled out of their responsibilities as an Opposition whenever they were challenged about what they would do.
This is what I would do. I would bring these lists out earlier under the existing procedure and introduce procedural changes in the Bill to do it. The lists can be produced almost at any time now. The changes in the basis of the valuation of certain specialised undertakings dealt with in the Bill would, I admit, have to be dealt with quite speedily in order that the complete lists would be available; but most of the valuations in these lists have been written there for months and months, so long, in fact, that a lot of them are already out of date. The Minister could have produced these lists earlier.
I will say this to the Minister. These lists should be produced on the day before the General Election. However early 1250 the General Election comes, I assure the right hon. Gentleman that these lists could be produced. After all, the citizens are entitled to know what sort of a rod is in pickle for them before they go to the polls and decide whether they shall reelect the present Government.
I have always said, with no malice whatever in my mind, that the Government would never let these new valuation lists see the light of day until after the General Election. I have always held that view and I hold it now. The Government do not intend these new valuation lists to appear before the General Election. They do not believe in having that packet of trouble on their plate along with many others when they go to the polls.
These lists could be brought forward. That would give more time for the consideration of appeals and the settlement of objections before the lists actually came into operation. "Ah," the right hon. Gentleman may say, "but what about the rate poundage? They will all have the wind up in July just as much as if they saw the lists in December or January or February." What the ratepayer wants is to know the rate poundage. Then he will have a better idea of things.
There is no reason at all why the local authorities should not forecast for the benefit of their ratepayers what the rate burden will be when the new valuation lists come into operation. The whole of the procedure could follow the more normal course, and then the National Chamber of Trade would have plenty of time to turn the heat on the Minister. That is what it intends to do, and he may as well make up his mind to it.
§ Mr. Houghton
No, and even if the right hon. Gentleman leaves it to the last available day the heat will become more unbearable as it is turned on more and more as time goes on. The right hon. Gentleman has a lot of trouble coming to him, and I am trying to get him out of it, although not once while I have been speaking has he given any sign of appreciation of that.
I think all this business could be done quite simply. Local authorities could make it their business, and should be required to make it their business, to inform their ratepayers what the likely effects will 1251 be. Local authorities will know the grand total, at any rate roughly, of the new rateable values within their respective areas, and they could and should provide the ratepayers with good estimates. That would be far better, and would give much greater assurance, than the right hon. Gentleman's proposed procedure. As the hon. Member for Hertford (Mr. Walker-Smith) so truly said, there is a good deal of psychology in all this. When a change such as this is to be made one has to introduce it with great care, with great understanding, and with great sympathy.
For the first time we are to have an impartial revaluation, one that has not been monkeyed about by local valuation and assessment committees, one that does not take account of the views of any committee or political party either in this House or locally. For the first time there is to be honesty and integrity in valuation for rating. That, of course, is the trouble. All this time we have been living a lie. The rating for valuation legislation has been a dead letter. Local authorities have done nothing to make it a live letter. So the years have gone by. Now we have this big change, which the new valuation lists will entail, with the redistribution of the rate burden, which many people will feel hardly.
The Minister may say that what I have suggested does not amount to very much, but what he suggests in this Bill is less satisfactory. My suggestion, if carried out, would remove the feeling of bitterness that still persists in the National Chamber of Trade, and I think that if the right hon. Gentleman were to adopt my suggestion he would find that he would appear, more than he is now appearing, to want to meet the crisis that is coming. As it is, the impression is that his Bill is a sort of bulldozer to stifle the cries of the victims of the new valuation lists. If he were to adopt my suggestion, he would be politically wiser, though heaven alone knows why I should want him to be that.
§ 7.24 p.m.
§ Sir Ian Horobin (Oldham, East)
Time is getting on, and I must resist the temptation to follow the hon. Member for Sowerby (Mr. Houghton)—[HON. MEMBERS: "Why?"]—and my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) into the debate we have carried on on previous occasions 1252 here on the Floor of the House and upstairs on matters of general rating policy, and particularly about our old friend the hypothetical tenant. I want to confine what I have to say at this stage, in view of the time, to one matter, one of the three main aspects of the Bill, namely, the method of rating of charitable hereditaments, which is the subject of Clause 6. I hope I shall have the attention of my right hon. Friend.
This is a matter which, as he knows to his cost, unlike the matters affecting the National Chamber of Trade, has not been left to a late date. At least two years ago, even before the 1953 Act, this matter was raised with the Ministry by me, as it has been ever since. My right hon. Friend must have found in the Ministry a file a foot thick of correspondence dealing with the troubles of charitable hereditaments arising—I think it is fair to say, unintentionally—from the Local Government Act, 1948, which was a Measure for which hon. and right hon. Gentlemen opposite were responsible.
Without going into the whole matter now, I shall say simply that the trouble arises from the fact that all these good works have enjoyed—I think we can say, for centuries—what almost corresponds to the customary rents in agriculture; a treatment which has had no legal basis except in a very narrow sense, a treatment which grew up and was accepted, but which is now to be swept away—inevitably swept away as the Parliamentary Secretary very rightly pointed out. It would tax the ingenuity of all concerned to say how we are to avoid the really disastrous effects of that.
I do not want to go now into much technical detail, because most of it will be considered in Committee, but as I shall have to be critical in what I am about to say I would at once, before going any further, thank my right hon. Friend very sincerely for drawing the Money Resolution sufficiently wide to enable reasonable Amendments to be moved and considered in Committee. It is often the practice of Governments of both colours, when they finally make up their minds about Bills, to draw Money Resolutions so narrowly that it is impossible to have useful discussions in Committee on those Bills. In this case, I think, we shall find—I may be disappointed—that reasonable Amendments will be able to be 1253 considered in Committee, and that expectation makes it less necessary for me now to deal with those detailed matters at great length.
I do not think that hon. Members of this House, still less most of the charities in the country, have any conception of what will hit them when these valuation lists come out. As the House knows, I have been associated with a number of different charities. For the best part of my life I have been a trustee for any number of playing fields, sports grounds, sailors' homes, boys' clubs—every kind of body of that sort up and down the country.
Informal discussions have been going on between the Inland Revenue and persons with responsibility for these charities, and those discussions have enabled us to get a fairly good idea of what the situation in some cases will be. I have two instances to give, but before I give them I would remind the House that, of course, all the bodies which have hitherto been under discussion in this debate as being likely to have their assessments put up have at least had some defence against the change in the value of money. I have great sympathy with the views of shopkeepers, but, after all, they have been able to increase the prices of their goods, and will, if necessary, be able to do so again.
Charitable hereditaments are in a very different position. All their subscriptions, donations, and income from endowments have steadily fallen in number or in value. There is not one of those charities that is not at its wits' end to know how to make ends meet, how to find even the money with which to pay people they must employ. This Bill may be the last straw, and I do make the most earnest appeal to my right hon. Friend to consider, as, I am sure, he will, the observations which are now being made and will be made in Committee.
For one thing, he cannot afford a mistake in this matter. If, in consequence of the Bill, anything goes wrong with the National Chamber of Trade, legislation can be introduced six months or a year afterwards to help put things right. In the case of the charities, however, there will not be any time for anything of the sort. If anything happens to them of the sort that seems only too likely as a con- 1254 sequence of this change which is hanging over them, the charities will not be there by the time there is any prospect of attempting to put right what has gone amiss.
I have chosen at random two quite different types of hereditaments. One is a type of charity which has a large building and the other is one which has a large open space. Although the hereditaments which I shall quote are in the areas of different local authorities the rates are nearly 30s. in the £in each case. In the first case, where there is a large building, the figure which is now on the rating list is £350 and we are advised to expect the new figure to go up to £1,500.
The other hereditament is an open space, one of the biggest private playing fields in the London area. It is used exclusively for working lads, and I cannot imagine any kind of charity which would have more general support in all parts of the House. Incidentally, as an illustration of another difficulty, right through the middle of the playing field there runs the boundary of the two rating authorities. What is done by one authority in exercise of discretion—a subject to which I shall come in a moment—can be completely neutralised by the exercise of discretion by the other authority.
In the case of the second hereditament, the figure now in the rating list is £60, but we are advised that the new figure will be £750. There is not a ghost of a chance of appeal against such a figure because, twice since the war, I have refused two offers of rent, one from a wealthy bank and the other from a big industrial undertaking, of £1,000 a year. Anybody who knows what charitable organisations of that kind are facing financially today will realise that an increase from £60 to £750 in the assessment, where rates are nearly 30s. in the £, puts such a charity completely out of action. That is the kind of danger which we are facing.
What does the Bill do? I admit at once that, as a result of efforts that have been made, the Bill is better than it was originally intended to be, but it does very little. The question of discretion has already been dealt with, but I should like to associate myself, not for the first time on these kinds of matters, though I seldom agree with him in other spheres, with the devastating criticism made by the hon.
1255 Member for Wellingborough (Mr. Lindgren). That was supported by my hon. Friend the Member for Wolverhampton, South-West and my hon. Friend the Member for Hertford (Mr. Walker-Smith).
The idea that we can rely in the new circumstances on a completely general discretion is thoroughly undesirable and, indeed, almost unworkable. I will not labour the points which the hon. Member for Wellingborough made so admirably, because I want to make different points, but I associate myself entirely with him. I am sorry that he is not in his place because I should have liked to have put one matter to him. If the hon. Member took the view that there should be no discretion at all—and I do not think that he did—I personally should not go so far. There are always marginal cases where definition is difficult.
An open space is either an open space or it is not, but there are other kinds of charitable hereditaments about which there might be legitimate differences of opinion. There, I would not go so far as to say that no discretion is desirable. I think that some provision should be made for that, and I think that the hon. Member for Wellingborough would agree with me, but I entirely agree with his objection that to rely entirely in totally new circumstances on discretion is unworkable and undesirable.
At a time when the whole problem is how to make workable a uniform national valuation, it is absurd to have a situation where hereditaments of exactly the same type, perhaps on opposite sides of the road, will be liable to rates in a totally different way according to the discretion of the local authorities. But there is another objection which the hon. Member for Wellingborough did not take up, but which I think more serious. It was touched upon by my hon. Friend the Member for Wolverhampton, South-West. It is that if we are left, except for a set of hereditaments related narrowly to churches, to rely purely on discretion where quite unpayable rates are liable to be imposed, the position of trustees of charitable trusts will become, in relation to local authorities, absolutely impossible.
I take as an illustration the case of playing fields. It is not unfair to say 1256 that most of my time as a trustee for playing fields has been occupied since the war in fighting off local authorities or statutory authorities. They want a strip of the playing field for straightening a corner of a road or for building a ladies' lavatory, or they want half the field for building a school, or the best part of it for the erection of an electricity pylon, and one has almost to sit up all night with a machine gun to keep them off. All the experience of local authorities which have built up areas in places like Suffolk does not seem to have impressed upon local authorities generally the importance of the few remaining open spaces.
I am not an anti-local government man. There are always excellent reasons why this or that open space will be the last one that the local authority will "pinch"—its very last territorial demand—but, unfortunately, the demand has to be resisted. If one is to be in the position in which, when all the negotiations are going on, the local authority has simply to do nothing to put one out of business, how can one hope to hold one's end up in the endless negotiations which, nowadays, are the lot of charitable trustees and other people who are facing authorities possessing compulsory powers?
I do not want to put the matter too high, or to impute evil motives to local authorities and statutory authorities, but that is true of anybody owning a valuable piece of open space round our towns, and a charity ought not to be placed in a position in which it will be practically impossible for it to preserve itself against these demands. General discretion as our main defence and not merely as a marginal defence is wrong. Clause 6 just will not do.
I do not wish to detain the House at this stage with proposals which we can put forward in Committee. I have mentioned open spaces as an illustration. I should have thought that a perfectly straightforward addition to the complete exemption class, after churches and church halls, would be the privately owned open spaces of charitable trusts. That class would cover a great many of the most valuable open spaces and I do not see why those open spaces should not be exempted altogether. I do not press that point particularly now, but merely mention it.
1257 This is a grave and urgent danger. No conceivable reduction in poundage can assist these particular hereditaments. They are all hereditaments which, one would have thought, we would be generally anxious to preserve in one way or another. There are perfectly good precedents in local Acts for partial exemptions. There is a pile of Acts at the Ministry relating to this country and Scotland providing various degrees of exemption, but at this stage of our procedure I do not want to tie myself to a complete or partial exemption or a change in the definition of the church hall class. All that I am putting to the House, and I hope that I shall have carried a substantial number of hon. Members from both sides with me, is that we are here faced with a very grave danger which certainly has not been met by the Clause as it is drafted.
This is a matter in which we cannot afford to make a mistake, because the hereditaments concerned have no means of tiding themselves over or passing on the increased charge to consumers. I earnestly ask the Minister that when the time comes to consider the Clause in Committee he should give very careful and sympathetic consideration to Amendments which, I hope, will receive support from both sides of the House.
§ 7.40 p.m.
§ Mr. E. G. Willis (Edinburgh, East)
I have no wish to follow the hon. Gentleman the Member for Oldham, East (Sir I. Horobin) into the details of Clause 6, although it is one of the Clauses which affects Scotland. I rise simply to make one or two observations in order to give the right hon. and gallant Gentleman the Joint Under-Secretary of State for Scotland an opportunity to tell us exactly how Scotland is affected by the Bill.
There is a growing practice in this House, and I am sorry about it, of putting all sorts of small changes affecting Scottish legislation into English Bills, and that makes it exceedingly difficult for those who have to administer the Bills in Scotland as well as to Members of Parliament who are trying to follow Scottish business in the House. It was a matter about which there was some debate last week, and this week again we find the same thing. We have protested before against the same action on the part of the Government.
1258 So far as I understand the Bill, its main provisions do not affect Scotland, but it does involve some of the recommendations which have been made by the Sorn Committee. I understand that is so in regard to Clauses 6 and 7, though I have not checked this. However, speaking from memory, I believe that they are recommendations by the Sorn Committee, and I would ask the Joint Under-Secretary whether this, in fact, is all that is to happen as a result of the sittings of the Sorn Committee? If not, perhaps he will tell us that it is likely that the Government will inform the House of their intentions concerning that Committee. After all, if the Government can introduce one or two minor changes in the system in Scotland, I think they might have time to consider some of the important recommendations of the Committee and indicate what it intends to do about them.
There are one or two detailed points which I wish to raise on Clause 6 itself. I was surprised not to see the Church of Scotland mentioned. I understand that it is covered by the Clause, but why mention the Church of England and the Church in Wales but not the Church of Scotland? That seems to me to be quite wrong.
§ Mr. Willis
That shows how difficult it is to follow this procedure when we are dealing with English Measures and also with the situation in Scotland.
Similarly, Clause 7 mentions the Minister of Pensions and National Insurance. I did not know that the Minister of Pensions was responsible for the provision in Scotland of invalid chairs and vehicles. We had some discussion in the House the other day about this matter of the functions of the Minister of Pensions and their transfer to the Secretary of State for Scotland. Yet when I look at subsection (7) I find that it says:This section shall apply to Scotland subject to the following modifications:—(a) for the reference to the Minister of Health there shall be substituted a reference to the Secretary of State.I notice, however, that in this Bill the Secretary of State is not given the position which we were recently told by the 1259 right hon. Gentleman the Member for Woodford (Sir W. Churchill) he now holds in Scotland in regard to these things. Perhaps we shall have a little illumination on that subject.
Then we ought to have some information concerning the effect on Scotland of Clause 5 (5). This, of course, deals with the new provision about the rating on English gas boards. In Clause 13 we are told that… subsection (5) of section five and the Fourth Schedule, in so far as they affect the calculation of the amount of any Exchequer Equalisation Grant payable under Part II of the Act of 1948, or under the Local Government (Financial Provisions) (Scotland) Act, 1954.will, of course, apply to Scotland. What effect will this have on the Exchequer Equalisation Grant in Scotland? Perhaps the right hon. and gallant Gentleman could tell us.
I think, too, that we ought to hear from him something about the effects of the main provisions on Scotland, because it seems to me that if these provisions come into force they will, as I understand from hon. Friends of mine representing English constituencies with large experience of these matters, affect the rateable value of England, and that will, in turn, effect the basis of the calculation on which the Exchequer Equalisation Grant for Scotland is determined. If that is not so, then, of course, we would be glad to hear from the right hon. Gentleman to that effect. I do not know whether he has got that.
§ Mr. Willis
It is a very important matter, so I will repeat it.
I understand that the main provisions of this Bill, which apply to England, set up a new system of rating and the drawing up of new valuation lists. The effect of those provisions will be to alter the total rateable value in England. If they alter the total rateable value in England, then they will alter the basis upon which is made the calculation for the Exchequer Equalisation Grant in Scotland.
What will the effect be? Will it be of advantage to Scotland, or will it be a disadvantage, because we have already made several complaints that the amount we are receiving under the Exchequer 1260 Equalisation Grant is not sufficient? If this makes the position worse then I think we ought to be told so that we can make the necessary protests to the right quarters about it.
We ought to have some guidance on these matters from the Under-Secretary. I shall be very glad to hear what he has to say on the points that I have put.
§ Mr. A. C. Manuel (Central Ayrshire)
On a point of order. Would it be in order if, through you, Mr. Deputy-Speaker, we were to ask the Joint Under-Secretary of State for Scotland to reply to the points raised before the debate comes to an end?
§ 7.48 p.m.
§ Mr. Julian Ridsdale (Harwich)
When the Parliamentary Secretary said that those who understood valuation were born and not made, he almost stopped me from speaking in this debate, because I am not an expert on this subject but speak as a layman wishing to bring the views of my constituency to the notice of the Minister. I quite understand that the object of this Bill is to go ahead with the provision of realistic lists that would be fair and uniform all over the country. But, from a pyschological aspect, I wish it were still possible to have the draft lists, because the Minister's promise to review which he made on 6th December would not then seem to be so ambiguous, and those appealing would feel at least that they were not appealing against something that to them was in the nature of a fait accompli.
I make this point because this is the feeling among the small traders in my constituency who have written and spoken to me about the Bill. I am glad the Parliamentary Secretary has made clear that the promise to review still holds good in exactly the same way as before the draft valuation lists were proposed, and that small traders will not 1261 be faced with a fait accompli but will be given sympathetic consideration in their appeals.
I know that Clause 1 (8) gives the details of this scheme, but all the same I should like to hear the views of the Minister on this Clause. This promised review is especially important as far as my own constituency is concerned, because it contains a number of seaside resorts whose trade is seasonal. As this valuation is on a national basis, many small traders fear that insufficient attention will be paid by the Inland Revenue to the fact that trade in seaside resorts is seasonal, so I hope to hear from the Minister that special attention will be paid to this point.
I am sure that the Minister has been made aware of the anxiety of the water companies about Clause 4 (8), particularly by my hon. Friend the Member for Hertford (Mr. Walker-Smith). I do not wish to repeat his arguments, but I hope we shall hear that this Clause does not necessarily mean a large increase in rates to the water companies, which will be passed on to the ratepayer; for in the end it is the ratepayer who has to share the burden of this Clause, and I do not think it right to make one law for the gas industry and another law for the water industry.
Finally, I want to make one general point on rating, especially as it affects the small trader and the small property owner; that is to say that the finances of this section of the community are extended as far as they can be and they are not in a position to face further increases in rates. I welcome the fact that the Minister has said he will review the entire question of local government finance. However, I do advise him to tread warily as far as the small man is concerned. For in my view the reason behind some of the legitimate fears which have been expressed in this Bill, is that once again the small man will have to pay. It will go a long way to have an assurance from the Minister that that is not the case.
§ 7.52 p.m.
§ Mr. Arthur Skeffington (Hayes and Harlington)
This is a small and unambitious Measure, and those who outside the House who might have been looking for some grand new revolutionary 1262 principle in rating law will be disappointed. The opportunity to do something about rating was missed in 1953 when another piece of patching was introduced on the system. Part of the 1948 valuation was then repealed, and the then Minister went back to 1939 values for some types of property—not all together to 1939 values, because there were other factors to be considered, which I said then would make it extremely difficult for those who wished to contest the assessments.
It is a long time to go back to 1939, and many other factors have to be taken into account, such as ignoring the effect of the Rent Restriction Acts. The decision taken then was unfortunate, and I regretted it. At the time I thought the Minister treated the matter rather casually, because when doubts were put to him about those parts of the 1953 Act which affected certain residential property, and he was asked if he thought the system would work, he said:I was asked, 'Will it work?' and I said, 'It had jolly well better, because the valuers have made it, and it would be their fault if it did not.' … What I meant was that Ministers are but dim and transient phantoms who flit across the stage, and these men who are unhappy enough to have devoted their lives to valuing"—I do not know if he had in mind the hon. Gentleman the Member for Oldham, East (Sir I. Horobin)—will have to carry out this work long after I have forgotten all about it."—[OFFICIAL REPORT, Standing Committee C, 30th June, 1953; c. 2137.]That seemed to me a not particularly happy attitude, and I have no doubt that the Government realise now the volume of protests which will arise from the occupiers of both commercial and residential properties. That no doubt has been a strong reason for their suggestion to abolish the draft lists.
On this preliminary point I am certain that one day some Government will have to be courageous and take this matter in hand and get away from this archaic system of 1601 which is now so unfair as between one ratepayer and another. It is based upon principles which cannot be justified on general social grounds today. In its place we shall have to put something more realistic and equitable as between different types of ratepayers. As an example of the archaic nature of our present rating system and its confusion 1263 we must realise that in most parts of the country there has been no re-valuation for a quarter of a century. I would have thought that was a most dramatic piece of evidence of how unworkable is this system.
I suppose that proposals to abolish draft valuation lists are bound to be attractive to any Government, and it is true that the individual ratepayer, be he a resident or be he a shopkeeper, still has the opportunity to appeal against assessments. It is the case, however, that organisations who have certain interests to look after will no longer have the opportunity which they have always had in previous valuations, of looking at the draft lists and comparing one assessment with another and so making their objections on behalf of their members.
The point was so forcefully put by my right hon. Friend the Member for Sowerby (Mr. Houghton) that I need not develop it, but there is a great difference between the appeal allowed to the individual ratepayer when he gets his assessment the first time and to those bodies whose duty it is to look after their members. These interests are seriously jeopardised.
It has been argued that if there are no draft lists the numbers of appeals are likely to be less because, when the individual ratepayer actually finds out the amount he has to pay, he will probably find that it is not so much more compared with what he has been paying in the past, and therefore he is less likely to appeal. Though his assessment may be up: the poundage is likely to be down.
I do not myself feel optimistic about that argument for two reasons. First, most local authorities who are at all progressive and enterprising will have had so many schemes held up through lack of finance that they will be bound to mop up as much of this extra revenue as they can with political safety, and although the poundage will fall to some extent, I do not think it is likely to fall by anything as much as some people have suggested.
The second reason why I think it is an optimistic argument, certainly in the case of commercial properties, is based on what happened in Sheffield. Part of the shopping site in Sheffield has been revalued on current values. The Ministry know all about this—although I do not 1264 know whether the Minister did—because they tried to prevent this action being carried through by that local authority. However, the local authority has done it and current values for assessments are now in force for part of Sheffield for some of the commercial property. In six cases of shops of which I have personal information the amount of rates actually paid is doubled, even although the poundage has gone down. This is because the assessment is so very much higher. So for both those reasons I think the belief that there will be fewer appeals when the demands come in is not likely to be borne out in a large number of cases, and certainly not as far as commercial property is concerned.
There is one case where I think the fact that draft lists will no longer be available will create a great hardship, and I should be grateful if the Minister could give some consideration to it. Under Section 11 (1) of the Rating and Valuation Act, 1925, if a rating authority passes the requisite resolution it can in certain cases collect the amount of rates from the owner in lieu of the occupier. In that case, the rateable value must not exceed £13. As a matter of fact, the top limit is now £18 because of an amendment of the Local Government Act, 1948. As a result of the rise in valuation which must take place, what will happen is that a number of owners who have previously been paying rates will no longer be required to do so because they will be outside the limit authorised by the 1948 Act. Therefore, for the first time, a number of occupiers will find the rates levied directly on them, and they will know nothing about it until they get the rate demand. They will have no chance to see the draft lists because the lists are to be abolished.
If it is possible to raise the rateable value above £18—that may be desirable in many cases because of the increased valuation throughout the country—there will be a number of owners who will be paying the rates instead of the occupier for the first time, and they will have no opportunity of knowing anything about it until the rate demands are sent to them. Something ought to be done about this. It may be possible in Committee to move an Amendment to provide for some standstill arrangement for one year until negotiations have gone on between owners, occupiers and local authorities.
1265 There will certainly be two categories of people at a very serious disadvantage because the draft lists are not available, and I hope the Minister will give us some indication tonight of what he is proposing to do in that case.
I should also like to commend to the Minister the suggestion by my hon. Friend the Member for Acton (Mr. Sparks). Although there may be a case, on grounds of administrative convenience, for abolishing the draft lists of the valuation, I hope consideration will be given to restoring them in future valuations, because the arguments which have been brought forward tonight to justify the step will not exist in the future.
I hope also the Minister will give some indication of the rate burden which various types of property will carry in future. The Minister must have a fairly good estimate of what the rate burden on different classes of property will be. I am certain that the Inland Revenue and various other experts of his have worked it out fairly accurately. We know now that about £200 million or 60 per cent. of the rate revenue of the country comes from domestic occupiers and £68 million or 20 per cent. of the rate revenue from commercial properties. Many people have suggested that the domestic contribution will drop from 60 to 50 per cent. I am not opposed to that—I should be glad if that were the case—but we ought to have some indication of the new proportions. I am sure the Minister can tell us, and if he will do so it may in some cases help us to see the significance of other parts of the Bill and the real significance of not publishing draft lists.
My hon. Friend the Member for Clapham (Mr. Gibson) referred to two matters which are worrying local authorities. One was the calculation of the grant under the Education Act, 1944. The Minister asked whether the matter was covered by the Bill. I think my hon. Friend asked a legitimate question, because the Parliamentary Secretary, in introducing the Measure, said this Bill was the fourth instalment in altering the rating law since the end of the war. As a result of the Bill we shall for the first time know what the new valuations for the whole of the country amount to.
It has been suggested by many who are well qualified to speak that the rate- 1266 able value of England and Wales will rise by as much as two-thirds. If it reaches that level, it means that the product of a 2s. 6d. rate, which is deducted from the Government's grant for education, will yield not £45 million as it does at present but £70 million. If that is the case, it means that the Government grant, which is at present 60 per cent. of the local authority approved expenditure plus £6 per pupil, is likely to go down, and this will be at the very time when education expenditure is bound to increase. This is a legitimate point to be raised on this Measure as the Bill is the last of the series reshaping our rating law since the end of the war. It would be very serious if local education authorities were to receive £30 million less in education grants than they have been receiving.
A similar consideration arises with regard to payments in lieu of rates by transport and electricity undertakings. Assuming that there is an overall increase in valuation of two-thirds in England and Wales, there will be a reduction in poundage, and, consequently, there will be a reduction in contribution to local authorities. I suppose one answer may be "All these matters will be looked at when the review of Exchequer grants is made," but that may take a very long time, and it may be financially imperative that some interim help is given to local authorities by the Government. Those of us who are in touch with the matter know that local authority finance is already at the breakdown point and cannot be strained very much further. If there is a substantial reduction in grant either under the Education Act or in lieu of rates from the two undertakings that I have mentioned, the point of real collapse will be reached.
There is another point that I wish to put to the Minister, although it does not arise directly out of the Bill, but it must be considered in relation to it. I want to know whether there will be a similar revaluation of property for Income Tax purposes under Schedule A as is now taking place in connection with rateable values. This is very important; it will be realised how the two matters are tied up together.
With regard to Clause 6, everyone who has spoken has welcomed the general idea of giving charitable or religious organisations rate relief particularly where their 1267 premises perform a social service on behalf of the community. However, everyone except the Parliamentary Secretary has condemned the discretionary proposals for local authorities, and I hope the Minister will deal with the point.
I now come to a minor matter. I notice that the Poor Rate Exemption Act, 1833, is to be repealed, but not the Sunday and Ragged Schools (Exemption from Rating) Act, 1869. I should like to know why this is. I do not suppose that the House will be wildly enthusiastic over the fact that sewers and edifices for housing invalid chairs are to be exempt, but there is one interesting and common sense proposal in the Fifth Schedule which I should like, sympathetically, to commend to the House because its practical result will be important and helpful. Where two of the appointed members of a local valuation court turn up and not three, in future it will be possible to proceed if both parties agree. Many of us have had experience of sitting as members of or appearing before local valuation courts and finding the whole proceedings abortive if one member does not arrive. It is to be hoped that the two members who turn up will agree now, because if they do not there will have to be a rehearing. It is a small but useful practical contribution for making the machinery of the valuation work better.
I conclude, as I started, by hoping that the time will not be too far distant when we shall be able entirely to recast our rating system, when we shall see industrial properties pay their proper contribution, amongst many other things, and when there will be less sense of injustice and unfairness between one ratepayer and another which is undoubtedly the general feeling in the country at the present time.
§ 8.10 p.m.
The Joint Under-Secretary of State for Scotland (Commander T. D. Galbraith)
It might be for the convenience of the House if I intervene briefly to reply to the remarks made by the hon. Member for Edinburgh, East (Mr. Willis). I would have risen earlier, but one has to have a care not to rise too soon in case other hon Members want to participate in the debate. It is always a nice thing to judge what is the right time to intervene, and if I have misjudged on this occasion apologise to hon. Members opposite for 1268 not speaking earlier. I was asked a number of questions by the hon. Member for Edinburgh, East, the first of which was how Scotland was affected by the Bill. The hon. Member then proceeded to answer his own question. However, I would endeavour to confirm what he said.
It is quite correct that the recommendations in Clauses 6 and 8 were contained in the Report of the Sorn Committee. The Government thought that this was a convenient opportunity to put those recommendations into legal form. These two provisions relate to the relief from rates of churches and church halls and the rating of police stations. The House will know that under present Scottish law churches are generally exempt from rates. Except, however, in the case of the four Scottish cities and the burgh of Airdrie, there is no provision for relief for church halls. Hon. Members know that under modern conditions church halls are used for much church work on weekdays and other occasions. The new type of church being built in the new housing areas is partly a hall and partly a church. It is used for one purpose during the week and another purpose on Sunday.
§ Mr. Ross
Before the right hon. and gallant Gentleman leaves that point, he will know that for England and Wales the Churches are specified, the Church of England and the Church in Wales. But for Scotland there is merely the general statement, "places of public religious worship." Will he tell me how wide that goes? I do not want to elaborate the number of churches in Scotland.
Perhaps that is the reason it was put in that form. It quite clearly states "Places of public religious worship," and I do not think it can be defined wider than that. It includes all places of public religious worship, and I should have thought that the hon. Member for Kilmarnock (Mr. Ross) was perfectly capable of defining that for himself.
Clause 6 takes account of the change in the custom of using churches and church halls. The effect of the Clause is that the churches and halls and other buildings used for the purposes of religious organisations are exempted from rates, and if those places are let to 1269 other organisations the value on which rates are levied is restricted to the profit derived from the letting. The Clause also gives power to rating authorities to grant reliefs from rates, wholly or partly, on premises used for religious, charitable. educational and philanthropic purposes. The House will realise that that power is permissive, and it will be for each local authority to decide the merits of any application for relief which is made to it. There is no such provision in the general Scottish law, although some local authorities have powers under their local Acts to relieve certain charities of rates. I am sure that the House will agree that this is a desirable innovation.
If we had not been satisfied, it would not have been in the Bill. The hon. Gentleman should realise that.
I next refer to police property other than dwelling houses. Such property has been held by the courts to be exempt from rates, because it is deemed to be used for purposes of the Crown, but as it is not in the occupation of the Crown no contribution in lieu of rates is paid on it by the Government. Under Clause 8 police authorities are now empowered to make contributions in respect of premises they occupy and these contributions will rank for police grant. The House will know that that has been a question which local authorities have been pressing for a considerable time. The next question that was asked by the hon. Member for Edinburgh, East was why the Church of Scotland was not mentioned. That question has been answered in reply to a question by the hon. Member for Kilmarnock. Further than that, I was asked why the Minister of Pensions and National Insurance is included. Hon. Members know perfectly well—
The hon. Gentleman must allow me to tell him. He 1270 has only to read Clause 7 (1) where he will see that the Secretary of State for Scotland came into the picture only at 31st August, 1953. I really think that the hon. Gentleman should have been aware of that.
The next question I was asked by the hon. Member for Edinburgh, East was about the financial provisions. I refer him to Clause 10 which provides for payment out of monies provided by Parliament of any increase in the police grant as a result of the provisions of Clause 8 for the payment of contributions in lieu of rates on police stations, and of any increase in the Exchequer Equalisation Grant attributable to the Bill. Hon. Members will be glad to know that there is a possibility that the Exchequer Equalisation Grant may be increased, and that arises, of course, partly from the new rating reliefs contained in Clauses 6 and 7 and partly from the provisions for the rating of gas boards in England and Wales. This new arrangement for the payment of rates on gas undertakings is to be applied retrospectively as from 1st April, 1952. If as a result the totals of rateable value in county boroughs or counties in England and Wales are reduced, then English local authorities may become entitled to larger grants. Payments already made for 1952–53 and subsequent years may then have to be adjusted. If that happens, it will follow that additional grants will have to be paid in Scotland also for 1952–53 through the formula as it used to be contained in Part II of the Local Government Act, 1948, and for subsequent years through the Goschen Formula as provided in the Local Government (Financial Provisions) (Scotland) Act, 1954. That is the situation about the application of Clause 5 (5) to Scotland and its effect on Exchequer grants.
Those were the questions which the hon. Gentleman addressed to me. Other provisions which apply to Scotland are those relating to the housing of invalid chairs and other machines of that nature and also to sewers. These are quite useful provisions applicable to Scotland, and I hope that they will commend themselves to the House.
§ Mr. Malcolm MacPherson (Stirling and Falkirk Burghs)
Can the right hon. and gallant Gentleman answer one question? He must have been made aware of the 1271 volume of criticism in Scotland of the plan to exempt sewers but to leave water unexempted. Will he comment upon that?
I was dealing with what is in the Bill. It deals with sewers and not with water.
§ 8.20 p.m.
§ Mr. Victor Collins (Shoreditch and Finsbury)
It would be almost improper for me to intervene in the exchange of pleasantries between the Joint Under-Secretary of State for Scotland and my hon. Friends on this side of the House who represent Scottish constituencies, but I should like to agree with the last point made by my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) who asked why, if sewers are to be exempted in Scotland, water should not be. That is a distinct anomaly in the Bill.
It would be an unwarrantable reflection on hon. Members who have taken part in the debate for me to suggest that I could add anything new at this late stage on any major point in this small Bill, which has been fully discussed. However, there are some advantages in repetition and in introducing a matter from a new angle.
I should like to remind the Parliamentary Secretary that yesterday at Question Time I asked whether he could give an assurance that his right hon. Friend adhered to the promise that he had made that, if, when the full effects of revaluation were known, it was necessary to make any other changes, he would do so. He immediately, and very firmly, gave that assurance which, indeed, he repeated again today. However, it seems to me that people who are as experienced as members of the National Chamber of Trade—who have been on many deputations, who know how to value words, and especially how to weigh and value the words of Ministers—must have felt that when they got that assurance it meant that if there was an apparent injustice as a result of the Minister's proposals, it would be put right.
I have in my hand a letter not from the National Chamber of Trade but from the London Retail Meat Traders' Association. It is dated 22nd March, after the Bill had been published, and it repeats 1272 the assurance given by the Minister and adds:The proposals contained in this Bill will make it quite impossible for the Minister to comply with his above quoted assurance until after much damage has been done.That accords with my own view of the situation. I do not doubt that the Minister's assurance is genuine. I do not doubt his integrity in this matter. I feel, however, that we should have what I failed to get earlier in the debate when I intervened to ask the Parliamentary Secretary a question—a statement from the Minister tonight on exactly how he proposes to make such changes as may be found necessary to implement the assurance he has given.
If that statement is not made, then a difficult and unsatisfactory position will be created. This lends justification to the suggestion of my hon. Friend the Member for Sowerby (Mr. Houghton) that the Government dare not give an indication of what these revaluations will mean until after the General Election. I can well imagine that all the hon. Members opposite who have spoken would have made very different speeches if we had introduced a Bill of this kind and if a Minister from our party had given an assurance and had, so far, failed as lamentably to indicate how the assurance would be carried out.
There have been some general criticisms of the Bill. It is obvious that it does not even attempt to provide us with a rational and equitable rating system. It does not seek to redress the mass of anomalies which has arisen in decades of rating change and usage. In fact, it creates considerable and serious new anomalies as between the gas and water undertakings, and in many other ways. Whatever is said by the Minister, this Bill seriously impairs the effectiveness of the right of appeal, because ratepayers cannot appeal before the rate is levied on them. That is a very different situation from the one which we have at present.
There are one or two comparatively minor points which should be considered, and which I have not heard mentioned so far. One is about the heavy burden of work which will be placed on the rating authority, the local authority, by the new procedure. It will involve the production of new rate books with com 1273 pletely revised assessments and it will cause great administrative pressure. A longer period of time than the three months suggested should be allowed. The hon. Member for Sowerby made a suggestion about how that period could be lengthened. I hope that that will be considered.
I represent two small boroughs which, between them, have about 29,000 hereditaments. Imagine the task that there will be in the very short period of three months now that the old procedure of draft lists open to inspection is to be dispensed with. The ratepayer's first intimation will be simultaneous in effect with knowledge of both the new assessment and the new rate poundage.
It is obvious that that new procedure has been adopted because of the belief which in many cases may be justified, that although the assessment will increase the poundage will be less; and therefore, in effect, the amount that the ratepayer will have to pay will show very little actual financial change, and that, if the ratepayer knows the assessment and the poundage together, there will not be such a large number of appeals. I think that the Minister is seriously underestimating the possible number of objections. It is almost certain. Possible increases of 60 per cent. in rates have been quoted. There will unquestionably be appeals in those cases.
There are other cases. An ordinary householder who perhaps owns his house may not, because of lower poundage, actually have to pay more in rates, but if his assessment—his rateable value—goes up so also will his Schedule A assessment. There will be a large number of appeals on that basis. I do not think they have been allowed for, or thought of, and I have not heard them mentioned earlier today.
The provision whereby a ratepayer who makes a proposal against the assessment shall pay only the amount paid the previous year until the objection is determined will make the valuation list most unstable. The financial officers of the rating authority will find it very difficult accurately to estimate the probable rate income. It will be difficult, if not impossible to forecast. Whichever way one looks at it such an arrangement means bad finance. Because of the considerable period which could elapse under the pro 1274 cedural provision, what one might call the unstable ratepayer could use this provision to advantage. I think that rating authorities will find that considerable arrears, and possibly losses, will accrue.
It is obvious that when this Bill becomes an Act the valuation officer will have rather more extended powers than at present, and more time to take any action he deems necessary but, as I have pointed out, months can elapse before the determination of a proposal. Meanwhile, the rating authority can only collect the amount of rate which was payable in the preceding year. In boroughs such as I represent—Shoreditch and Finsbury—there is a considerable movement of commercial businesses. That could present a real problem in the collection of rates. Then, again, the admission as evidence of any written document might possibly prejudice a ratepayer if anything of an informal nature, and not as expressly provided by statute were submitted.
Several hon. Members have referred to the arrangements for gas undertakings. Those provisions will have a serious effect on the rating revenue of some authorities—those who are converting from gas to electric light. In some cases it may well mean that a very considerable rebate may have to be paid to gas undertakings in respect of this period between, I think, 1948 and 1955. I am informed that this may have considerable repercussions on the revenues of the boroughs I represent.
It is the application of Clause 6 of the Bill which has invited most comment. It has met with general approval in the House. Nevertheless, it has raised most doubts and questions in the minds of us all. It will be very difficult to amend and frame Clause 6 so as to meet not only the views that have been expressed by hon. Members but to remove, as far as possible, the doubts which will otherwise exist as to its application.
I think it was the hon. Member for St. Marylebone (Sir W. Wakefield) who put in a special plea for sports grounds, rugby grounds and the like, and for nonprofit making organisations. Most professional football clubs are non-profit making—at least, they do not make any profit, except in a particularly hectic season—but I do not imagine that the Clause will be drawn wide enough to 1275 include them. On the other hand, I hope that the Minister will indicate the kind of charitable organisation having religious or educational foundations that he has in mind.
For example, would it include the kind of boys' club with which many of us are familiar? Such a club probably has a religious foundation in that it at least sprang from its attachment to a church. It qualifies for grants from the Ministry of Education. It is inspected by that Ministry and has educational pursuits. It is entirely non-profit making but its principal activities are, perhaps, the sporting activities of the boys.
Would such organisations be exempt from rates under the provisions of this Clause? We should like to hear from the Minister about that. Will he say whether he is willing to consider in Committee how this Clause can be more carefully framed? It is unfair and, I think, unwise to place on local authorities the burden of decision or choice in this matter with a resultant variation as between one local authority and another. Indeed, we might get a variation of decision in the same local authority if its representation and political colour were to change. That would be most undesirable.
This is about the one good Clause in the Bill. It is one that I welcome most and which will help a number of very deserving causes, but unless it is made crystal clear how it is intended to be applied, and unless we bend our joint efforts to its improvement in Committee, it will lead to very considerable difficulty and controversy, and will cause a good deal of heart-burning and trouble to a number of well-meaning causes. I hope that the right hon. Gentleman will deal with those points and will say how the assurances which have been given will be implemented.
§ 8.37 p.m.
§ Mt. F. Blackburn (Stalybridge and Hyde)
I wish to deal briefly with Clauses 1 and 5. I think the Government have made a mistake in introducing a new system and in seeking to abolish the procedure which was laid down under the 1948 Act. The small shopkeepers and business people are suffering from a sense of injustice, and I do not think this is very healthy.
1276 We have not yet cleared up the question of the assurance given by the Minister. We have cleared it up to the extent that we are informed that one of his promises to the National Chamber of Trade was misunderstood by that body. The Minister said that he referred not to the draft valuation lists but to the valuations. I am not sure, however, that that makes a great deal of difference.
In this House on 6th December the Minister said:I can, however, give an assurance that, as soon as the effects of the forthcoming revaluation can be fully measured the Government will review the position and will consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 21.]I apologise for reading that statement again, as it has already been referred to, but it is necessary to do so because the hon. Member for Wolverhampton, South-West (Mr. Powell) has said that that statement could not have referred to any valuation list except the valuation list which comes into effect after 1st April, 1956. I think I am quoting the hon. Gentleman correctly.
§ Mr. Powell
What I actually said was that the effects could not be fully measured—in fact, those are the Minister's words—until the new rate had been made.
§ Mr. Blackburn
That is the point I am making. If we are going to delay until after the new rate has been levied and until after the valuation lists have been published, the position of the local authorities will be made still more difficult. They are going to be in enough difficulty as it is because of the appeals which will be made. Apparently they are also going to be threatened, "The Minister is going to review all this and he may upset the whole apple cart again."
The hon. Member for Wolverhampton, South-West said that by doing away with the draft valuation lists we should have fewer appeals. Are we quite sure that that is correct? The people who are to have increased valuations will also pay increased rates, whether the rate poundage goes down or not; because if some valuations go up and others remain stationary, those people whose valuations go up will pay higher rates, irrespective of what happens to the rate poundage. We shall 1277 then have exactly the same number of appeals, and local authorities will be in an extremely difficult position because they will not know how much they will collect in rates. Surely hon. Members opposite have had this point stressed to them by the treasurers of local authorities. Local authorities will be in difficulty during that year and, whatever happens to Clause 1, the Ministry ought to have another look at it.
I have one other point to make, and I will make it briefly because other hon. Members wish to speak. It concerns Clause 5 and the rating of gas boards. This has been referred to more than once, but no one has made the point which I want to make. I will not go into the complicated way in which the valuation is worked out on gas undertakings, but I think it is based upon two factors—first, manufacture and, second, distribution. That will work unfairly for some undertakings which have been manufacturers of gas in the past.
We know that the policy of the gas boards is to concentrate manufacture in fewer units, and some of these undertakings are now being used not for manufacturing purposes but for storage purposes. They will receive an allowance in the matter of distribution but no allowance for storage. Yet the gas undertaking covers as great an area as it did when it was manufacturing gas.
Would the Minister make some comment on this aspect in his reply? In view of the concentration of manufacture, I am sure that a number of smaller gas undertakings, which were manufacturers in the past, will be considerably the losers over their rates.
§ 8.43 p.m.
§ Mr. Charles Pannell (Leeds, West)
In view of a number of things which have been said about local authorities, particularly by my hon. Friend the Member for Sowerby (Mr. Houghton), I think the position of local authorities at the moment ought to be stated. In his peroration my hon. Friend said that we were to have a great new valuation list—one which the local authorities had not "monkeyed about with." He might at least have said "some local authorities."
Generally speaking this question of valuation is very difficult, and local 1278 authorities made great efforts in the past to deal with it. Let me give an example. The Parliamentary Secretary represents Ashford. For a time I was a member of the valuation committee of the county of Kent, and we had trouble with Ashford in respect of the valuation of prefabricated dwellings. The problem was to consider the case of the prefabricated dwelling house and to establish one level of assessment for it in the county of Kent. That took over 12 months. Indeed, local authorities have taken a great deal of trouble to get uniformity in valuation. Let us be quite clear about that.
This was not a question of local authorities doing something wrong or responding to pressure—certainly not in the post-war years or immediate pre-war years. It was a question of a national pattern of valuation which had grown up and which varied from place to place. My right hon. Friend the Member for Ebbw Vale (Mr. Bevan) considered the position of certain authorities in what, before the war, were known as depressed areas, and tried to make them into viable authorities which could meet their obligation and provide education for the children and all the other social amenities about which we are all agreed. Of course, in 1948 he had to introduce an equalisation system. The system had wide disparities. There was wide injustice as between one authority and another. In 1945, with the upsurge of rebuilding of the social services, grants-in-aid had to be provided.
If justice is to be done to authorities like the City of Leeds, which considers it is disadvantaged to the tune of £313,000 a year, of course we must have uniformity of assessment throughout the country. There is something rather foolish when Birmingham can get £1 million grant whereas Leeds gets nothing at all. Even in the county of Kent there is disparity between East Kent, Middle Kent and West Kent. There are seaside resorts and industrial areas and, under the present system, there is no justice between different parts of the county. When we start grumbling about shopkeepers and individual ratepayers we ought to bear in mind the broad, overall pattern of rating.
The hon. Member for Wolverhampton, South-West (Mr. Powell) spoke about equity between ratepayer and ratepayer, 1279 but he ought to remember another kind of equity. He ought to remember that the purpose of rating is to find sufficient funds to give to every man, woman and child in every county some sort of chance, in equity, from the public moneys available. Whether one is born in Westmorland or Westminster the services ought to be comparable and the grants to provide those services ought to be comparable. In effect, of course, we did not have that because everything had got out of gear. I do not think that was the fault of the local authority. It was rather a matter of history. Merthyr Tydvil, with its very low assessment, is a matter of the history of depression in the inter-war years.
I am glad that we are to have a system of assessment which is above reproach and about which my hon. Friend cannot say that it has been monkeyed about by the local authorities, but by which we shall have some sort of national yardstick. Equity between ratepayer and ratepayer was breached in 1929 when de-rating came in. Whatever arguments there may have been for derating then, there has been none since the war.
§ Mr. Pannell
No, I do not think there has been any argument for the derating of industry since the war.
§ Mr. Pannell
I think I should be out of order if I replied to that. My right hon. Friend the Member for Ebbw Vale thought he had slaughtered the hypothetical tenant by giving birth to a hypothetical builder.
§ Mr. Pannell
I must not be drawn into any argument. That system did not work at all. I think I made my position plain during the Committee stage of a previous Bill. Surely if we are considering equity of rating we must see that there is no justice when the borough of Burton-on-Trent pays the highest sewerage rate in the world because beer is brewed there. In effect, the brewing industry costs Burton an awful lot of money, an industry which pays dividends of 25 per cent. in good and bad years 1280 and enjoys derating. That sort of thing is not sensible today, and surely, as one of the major measures of reforming our rating system, we will have to consider the re-rating of industry.
I believe that at the present time local authorities lose £90 million a year because of derating. If one considers the amount that industry pays in Income Tax, which it pays under another system of rating, and if that sum were given as a grant by the Treasury, local authorities would still be £60 million out of pocket. I should say that this is the greatest festering sore among local authorities which are completely disadvantaged by it. We cannot consider the merits or justice of this thing merely in the concept of the Bill. There has been a need for a change of this kind since 1948 in order to give justice to places like Leeds and to bring the Exchequer Equalisation Grant to something like an equitable basis.
The Minister has been less than frank. He has replied to the National Chamber of Trade in terms of great ambiguity. I wonder what would have happened had a Labour Government introduced a Clause such as Clause 1. We would have heard a lot of talk from hon. Members opposite about the liberty of the subject and the rights of the individual. That theme is always the sacred cow of hon. Gentlemen on the benches opposite, even when those rights are exercised in an anti-social manner. One remembers, of course. the Lord and Black affair of the £100,000 and the remission of taxation. On that occasion the same sort of people on the benches opposite caused a terrible row about the rights of the individual.
I can understand all the reasons that the Government have given, but the promise which was implicit in previous legislation and was implicit in what hon. Members opposite thought the Minister had said—perhaps they heard too much or the Minister said too little—is forgotten, and ratepayers are to be denied the right to examine the draft valuation list.
This is a complex subject. The state of the House does not suggest that a great number of Members desire to discuss valuation. That, however, is not the main point. All sorts of people live by advising others on valuation and other matters. As my hon. Friend the Member 1281 for Sowerby (Mr. Houghton) said, the thing which should have been done was to ensure that people would know in good time. Whether they have been dealt with in equity is not determined by the amount of money that they will be paying on the rate call next April, but as to how they are assessed one with another.
We are arguing today that the rating system is unfair because the Exchequer Equalisation Grant has been founded on an inequitable system. If we follow an abstract system of justice, its result must depend upon how we complete it and how one shopkeeper stands in relation to another. In effect, the Minister has disagreed and has said that it is inconvenient that justice should be seen to be done. What he is saying is, "Let us therefore blanket it all out. Let them lay down an arrangement for so many pence in the £, as the case may be, and in the general confusion afterwards we will let them pay what they paid last year but we will have a dog fight as the months go by."
Any number of local authorities and ratepayers will think of all this as merely an electoral manœuvre. It is a manœuvre performed at the very time when an election is expected soon—perhaps, in October.
I am reinforced in that view by the chairman of a local finance committee. I went on a sentimental journey the other day to listen to him speak at a meeting of a rate making authority with which I have been associated. I have here a note of his speech. Even making allowances for the legitimate exaggerations in advocacy of chairmen of finance committees, I think this chairman fairly supports my view. This is what he said:The Bill proposes to take away the right of every ratepayer to know what the rateable value of his property is before the rate is made, and strikes a very severe blow at the very foundations of the rating system which has been built up over the past 350 years, and I undertake to follow this up with all the force at the disposal of the council to restore the right of the individual.He got applause for that, I can tell the House, for I was there. This is a Labour chairman of that finance committee, and he went on:A decision not to afford the public an opportunity to find out what their new assessments are to be will, of course, seriously delay the hearing and settlement of their objections"—1282 and so on. I have no doubt that that speech was symptomatic of a feeling all over the country, and I think it was well worth quoting what that chairman of a local finance committee thinks, because, no doubt, it is what most if not all other chairmen of other local finance committees think.
Certainly the local authorities feel that they have been double-crossed. It is not the right hon. Gentleman or his able Parliamentary Secretary who will carry the can. Nor will it be the last Minister of Housing and Local Government. I always said that he would not stay at that Ministry to do what is required to be done. I always knew he would go to some foreign field, although he may have gone by way of defence. I do not know whether the present Minister will stay at that Ministry, or whether he will be going. He may have gone by the morning, and nobody could care less. In any event, he will not carry the can; he will leave the local authorities holding the can.
It is unsatisfactory that our rating system should rest on three different assessment bases, derating, which I have already criticised and shall not labour here, the distributive trade, with the question of what is to happen to business undertakings and shops, and the assessment of houses on 30th June, 1939, values. It is extremely difficult for those of us who are or have been chairmen of rating committees to explain these things. Generally speaking, this is a contradiction in the law, which is not understood by the ordinary ratepayers. The law ought to be equitable, simple, and, as far as possible, uniform. So I hope that next year we shall move towards a system of valuation which will stimulate the greatest possible degree of confidence, and that the Exchequer Equalisation Grants will be levelled out. I hope that this Bill will be the precursor of a Measure which will make an overhaul of the financial structure of local government.
Local government is not the junior partner in government. It is an equal partner in government, carrying on great services, the great constructive services. Most of the proceeds of the Income Tax, for instance, go to pay for wars past and present, but the finances of local government are for great undertakings which have never harmed a living soul.
1283 [Interruption.] In spite of what the hon. Member for Oldham, East (Sir I. Horobin) said about wanting to sit up day and night with a machine gun to drive local authorities off playingfields and so on in the public interest, I say that broadly speaking the great resources of local government are devoted to constructive undertakings. Local government is the State in action, carrying on the collective will of a democracy. Local government now, as for a long time past, provides those services which make the difference between civilisation and barbarity. The finances of local government need and deserve the earnest attention of this House, and I hope that next year we shall have another and a better Bill to replace this patchwork Bill.
§ 9.0 p.m.
§ Mr. G. R. Mitchison (Kettering)
How very true those observations of my hon. Friend the Member for Leeds, West (Mr. Pannell) were. I think we all agree that a comprehensive Measure dealing with the finances of local government is badly needed, but what puzzles me is why we are having this Bill now, why it has in it the particular selection of things that it happens to have, and why it does not have quite a number of other things.
First, why are we having it now? I can see no particular reason why the provisions of most of the Clauses should be brought forward now instead of six months ago or six months ahead. The timing, I suppose, must depend upon the first Clause of the Bill which, of course, removes the draft valuation lists. Let us be quite clear about it. Every ratepayer had, from 1925 onwards and continued through the 1948 Act, two rights. One right was to object to the draft valuation list when it came out. The other, when the valuation list came out, was to put forward proposals to have it altered.
This moment has been chosen by the Government to remove the former and possibly the more important of those two rights. Certainly, in the circumstances of the moment it is a very important right. We were told—and this was fervently supported by the hon. Member for Wolverhampton, South-West (Mr. Powell) who always comes to the support of the Government Front Bench—that this curious process benefited the ratepayer because it would save his 1284 making a lot of useless and expensive appeals, and it would benefit the local authority for reasons which, quite frankly, I could not appreciate.
Let us take the case of the ratepayer. Is the Tory Party going to say in future, about appeals in administrative matters, that it is so certain that they will fail that it is helping the ratepayer, or the citizen in any capacity, to remove the opportunity from him of wasting his money? That has been said today, and that has been the only defence that I have heard, other than the defence that this was administratively necessary. If it is so administratively necessary, why have the Government taken so remarkably long to find that out? These valuations have been going on for a long time and I share the belief of a great many hon. Members that they are either complete or practically complete. I ask the Minister to tell the House if I am wrong in thinking so.
Is there any real reason why the results of these assessments should not appear quite soon and why, if time could have been saved in that way, an extension of time should not have been given, a longer time for appeals afterwards which would have enabled the lists to have come into force on the very date on which they were due to come into force? That is the first question.
The next question is in connection with a statement that was made in answer to a Question in the House and which, of course, is related to the campaign which was being carried on at the time by the National Chamber of Trade. I have the printed circular of the National Chamber of Trade which was sent out at the time, quoting that statement in full and dated three days later. Nobody can say that it was not a document of the most friendly character towards the Party opposite. It refers to a statement issued by the research department of the Conservative Party—things to which I have no access but which, no doubt, the National Chamber of Trade can examine without any difficulty.
It goes on to quote the Minister's statement, the unqualified assurance that… as soon as the effects of the forthcoming revaluation can be fully measured, the Government will review the position and will consider whether any changes are necessary.1285 That is a perfectly exact quotation. It goes on to say:After that, our next move, therefore, will be to circulate to all affiliated organisations a form of questionnaire designed to make available to us immediately the valuation lists are published full details of present and future valuations.I do not doubt that the right hon. Gentleman's purely verbal answer referred to valuation lists and not to draft valuation lists.
I am not at all surprised that there has been a bit of confusion. I do not believe that the National Chamber of Trade knows one from the other. Quite clearly, it is referring to the first publication of the valuation lists in the form of draft valuation lists. It intended to act on it. The National Chamber of Trade read the Minister's statement and understood it to mean that he would take account of the early results that it would collect from its own members, of the way in which valuation was working.
It was not a question of waiting until the rates were levelled. It was a question of seeing what these lists were like as a whole, and that was the call for immediate action. That was the conclusion to which the National Chamber of Trade came after the interview with the Minister, in which we are told that he treated its representatives very nicely indeed. They had an hour and a quarter's talk with the right hon. Gentleman. They say that their view was put to him and very full discussed. I do not know who had the better time in that, but there is no doubt that it was a full discussion and what they expected and wanted.
I want to put this to the right hon. Gentleman. I accept, as does everyone in the House, his statement that no word was said about draft valuations, but did he or did he not know at that time that that highly important safeguard was to be abolished and, if he did know, was it quite fair not to make that clear at the time to the National Chamber of Trade? Was that the right way of dealing with people who so zealously consulted the statement issued by the research department of the Conservative Party, whatever it was, and who, quite obviously, are keen and almost blind supporters of his? I do not like the look of it. No doubt the Minister will give us a complete explanation.
1286 I am not saying that he said anything to them that was untrue, but did he not think that it was right and proper that they should know that that operation was to take place, or was it the case that the Government had not made up their minds at that time to abolish the draft valuation lists? That is always a possibility. One just wonders in that case what is it that made them change their minds.
Let us look at the results of what the valuation lists are to be. We do not want the technical evidence, valuable and useful as it is, that my hon. Friend the Member for Sowerby (Mr. Houghton) quoted to us. We only need use our horse sense, and it is very rarely that we can use that in rating matters. If a whole lot of property is valued in 1934, then some of it is revalued on a 1939 basis and some more on today's basis, there will be considerable changes by 1939, but the changes on today's valuation will obviously be very much larger.
What will happen in this case is quite obvious. There will be changes with the houses, but changes that will be a great deal smaller than the changes in shops. Somebody described this as a revolutionary change. It is bound to be so. If we are going to go back to the valuation of 20 years ago and start revaluing on this sort of basis, it does not require any great technical knowledge to see that we shall considerably upset the whole shooting match.
As the hon. Member for Oldham, East (Sir I. Horobin) said, they do not know what is coming to them. The hon. Member quoted one or two cases about charities, but the same goes for other people. I should not say that this is what might be called electoral dynamite. It is more likely to be an electoral Chinese cracker which will pop all over the place, hitting here and there, and goodness knows where it will go. That is bound to be the effect of it, and I am all for it.
I thought that what the hon. Member for Oldham, East said about some of the assessments on his own charities, present and prospective, was a good illustration, but there are a great many more bad and inaccurate assessments than that all over the country. as we all know. Of course, these properties ought to be assessed rightly. Now we are told that 1287 they will be assessed all right, but that nobody ought to be allowed to complain until he sees what the rate poundage will be. That really shocks me. These assessments are supposed to be the answer to the question, putting it very broadly, of what the property is worth. We may not have got the question right, and that is our fault, but that is what it is supposed to be. The assessments are supposed to be factual.
If a man concludes that his property or group of property is over-assessed or under-assessed, surely the moment for him to say so is when the assessment is made and he should not have to wait until the rate poundage is ascertained. It is very like telling a man who is to have his head cut off that he must not examine the sword until he knows how hard it is to be used.
One must bear in mind the facts in these matters, and to the truth of the work of the evaluators, and must think of the rights of the citizen to object to the material facts. I see no reason for removing this right. I do not believe that the administrative difficulties are such that they cannot be removed. I have become very suspicious about what happened at the interview in December, 1954. I wonder how much the Minister himself knew at that time and how much he thought fit to say to the innocent shopkeepers, fervent Tories, who came to see him and told him everything in an hour and a quarter, poor man.
It is said, "Does it matter?" It does matter. Let us see what will happen. If these were a few small changes it would not matter very much, but they will be very considerable changes. The ratepayers do not know what is coming to them, to use the words of the hon. Member for Oldham, East again. When they find out, the local authorities will have been sitting on the lists from December to April. When they find out what is coming to them, in the form not of an assessment but of an actual rate demand, or, at any rate, the making of a rate, does anybody suppose for a minute that they are not going to appeal very nearly as much as they would have done anyway?
Is any ratepayer prepared to believe that the poundage levied by any given local authority stays put? I have not yet 1288 met such a ratepayer. The poundage goes up one year, and sometimes, though very rarely, it comes down the following year. The ratepayer is not a fool. He knows that the amount of his assessment is the measure of, or one factor in, his liability.
Local authorities cannot tell where they are until the general run of the appeals and the general question of principle about them have been settled. I cannot imagine anything better calculated to introduce complete confusion into local authority finance than to abolish a right which was put in for the very purpose, from the point of view of local authorities, of avoiding just that confusion. The draft valuation list was introduced in July, 1925, very quietly in Committee upstairs by Sir Kingsley Wood. Nobody said much about it; it just crept in. It took the place of a preliminary statement which used to be the corresponding thing, and the preliminary statement disappeared because that had been connected with the Revenue officers and the Revenue officers were being dissociated by the 1925 Bill from some of their former functions. It so happened that on Second Reading the Lord Privy Seal quoted—if I may break the rules and speak in Latin for a moment—the well-known line:Naturam expellas furca, tamen usque recurret.If you kick the Inland Revenue out one way it is sure to come in another, and here it is now in the Central Valuation Office. It was not any good, and they might have known it, but the draft list did represent, as did the preliminary statement before, not only a real right to the ratepayer, but a method of getting things sufficiently tidied before it came to making and levying the rent to prevent the confusion of the finances of the local authority which this somewhat improvident withdrawal of the right will certainly cause.
I object, and I believe my right hon. and hon. Friends object, to this Clause as improvident, unnecessary and dictated, we strongly suspect, by political considerations which perhaps I had better do no more than hint at. The right hon. Gentleman knows as well as I do that there is an election in prospect and that we have to be careful of Chinese crackers at election times—better put them off until afterwards.
1289 As for the other Clauses in the Bill, there is one other matter which shocks me. It is the sinking funds provision, and occurs in Clause 5 (8). It alters the existing law, and if I may put it into Income Tax language, it seems to me to substitute the wear and tear basis for the renewal one, and I suspect that the Inland Revenue has had a word about this.
I hope the Minister will answer this question is there at this moment a case before the courts to determine this very point, and was that case brought at the suggestion of the Inland Revenue or of any other Government Department? I am sure the Minister will agree with me that if that were the case the introduction of this provision in a Statute at this moment requires particular justification which he will, no doubt, provide.
The important point about the gas boards is that this is obviously not in principle entirely novel. Indeed, it is far from that, being the application to a complicated and difficult state of affairs of a principle which has been applied in a good many other ways previously. Whatever may have been said to, or not said to, or accepted by the local authorities concerned, I should have thought it was the merest wisdom to provide that there was a regular review and an early one in this case, perhaps at the end of five years of the actual working of this Clause. I do not think it is a thing about which we can be sufficiently certain to dogmatise and meanwhile I note, again with a little suspicion, that the gas boards are getting away with the 1949 basis.
The year 1949 is like the earlier years of my own life—it is constantly getting more remote, and, of course, the more remote it gets, the greater the advantage that the gas boards get that way, and the less the advantage that the rating authority and the other ratepayers, including the domestic ratepayers, get in these matters. It is bad economics, bad politics and bad sense to give artificial advantages to bodies of this sort, however important, however essential, however national the services that they may be rendering, instead of trying to reach as equal a basis of assessment as possible when there are different subjects with which to deal.
Clause 6 has attracted a lot of fun. It has died from the Chinese torture called a thousand cuts. One does not put a 1290 knife into anybody, but just takes little bits of skin from one part of the body after another until the victim perishes. This Clause about the exemption of charitable hereditaments has had just that effect. I do not believe it right, on a Second Reading debate, to tie oneself, or to attempt to tie oneself, to an answer, but obviously it is most unsatisfactory that the rating authority should have this discretionary power.
I should have thought that it was almost equally unsatisfactory in dealing with this kind of property to make property, which is entitled to exemption from Schedule A Income Tax because it is charitable, dependent on discretion in rating. Although what is dealt with here is rather wider than that and some property may require a measure of discretion, some property should certainly be absolutely exempt and a very convenient line to take would be the charitable exemption under the Income Tax provisions.
Although I am no great upholder of Ministerial discretion in these matters, I should have thought that a single body, whether a Ministerial or advisory body, or something of that sort, was very much better to deal with this kind of matter than an individual local authority which might have half a playing field, as one hon. Member has just suggested.
Those are the main points in the Bill. The only Clause to which no one has objected is that dealing with police. For a change they have to pay rates in cases where they have not paid rates before and we can take it that that will meet with general approval. In conclusion, I would only say that the Minister's reason, given in answer to a Written Question on 6th December, for taking the action he proposes to take for getting on with the matter at all—he was talking about a postponement of revaluation—was:If fresh changes in the basis of valuation were now to be made, it would inevitably involve further delay. This would have the effect of prolonging the countless anomalies which exist under the present system and the blatant injustices which they cause."—[OFFICIAL REPORT, 6th December, 1954; Vol. 521, c. 20.]"Blatant injustices" are the right hon. Gentleman's own words. If, as I think is the case, there are perhaps not blatant injustices, but countless anomalies, this Measure is, on the one hand, insufficient 1291 and on the other unnecessary. It is insufficient in the few small things with which it tries to deal and unnecessary in removing provisions which would give the ratepayers some further safeguard against the injustices.
§ 9.25 p.m.
§ The Minister of Housing and Local Government (Mr. Duncan Sandys)
I say straight away that this Bill certainly does not inspire me any more than it inspires most hon. Members who have taken part in the debate. When I came to my present office I found the Bill already on the stocks. I can be quite frank with the House. My first inclination was to see whether I could put it quietly away. I looked at it very carefully and I came to the conclusion very reluctantly that there was nothing for it, that not only was it desirable but, in many respects, it was absolutely essential to make the existing legislation workable, and that if we shirked this further Measure to tie up the loose ends we should be in the most fearful difficulties when we introduced the new valuations.
The Acts of 1948 and 1953 left, as was inevitable, a lot of loose ends and a certain number of problems which had not been covered. For instance, they did not deal with the changed situation resulting from the nationalisation of the gas industry, although other nationalised industries, electricity and transport, were dealt with. They did not deal with the problem of preserving the position of charitable organisations. They did not deal with other interests, for example, the special position of the churches, the railway advertising stations and, as the hon. and learned Member for Kettering (Mr. Mitchison) mentioned—an uncontroversial aspect—the police, which nonetheless needed to be looked after.
All these points needed to be cleared up in one way or another. That is what we are trying to do in the Bill. It is a mopping-up process of all the odds and ends left over from the two previous Acts. I will not suggest that everything in the Bill is absolutely essential; what I claim is that quite a number of its provisions are absolutely essential. As hon. Members know, when we find ourselves committed to a Bill we usually take the opportunity to introduce a certain num- 1292 ber of other matters for which we should otherwise be unable to legislate, and usually one or two Scottish aspects are introduced here and there to complete the picture.
The point which I think has attracted most attention during the debate is the proposal for the change in the procedure for appeals, the draft valuation lists and everything connected with them. I will not claim that that is an absolutely essential change. I do not think it is, but I am sure that it is exceedingly desirable and that it will make the whole difference to the smooth running of the machine.
I was especially grateful to the hon. Member for Wellingborough (Mr. Lindgren) for the generous way in which he acknowledged the fact, which I believe to be very true, that the change which is being made in the publication of valuation lists and the abolition of the draft valuation lists is something which is desirable to prevent—to use his words—the choking of the administrative machine. I am sorry that the hon. and learned Member for Kettering did not follow the line taken on behalf of his party in the opening speech from the opposite side of the House, but we know that a certain latitude is permitted among Members of the party opposite. I hope that the hon. and learned Gentleman will not get into trouble as a result.
A good deal has been said about the position of shopkeepers. The hon. Member for Wellingborough—unlike the hon. Member for Clapham (Mr. Gibson) who claimed that it was this Bill—said that the 1953 Act had altered the basis of valuation of houses to the detriment of the occupiers of shops and commercial premises.
§ Mr. Lindgren
I said that the 1953 Act altered the basis of the 1948 Act for domestic properties, but left shop premises as they were under the 1948 Act.
§ Mr. Sandys
As I believe one hon. Member opposite said, it did its best to make the 1948 Act workable. In general terms it did not alter the basis of the 1948 Act. In the 1948 Act there was a dual arrangement for the valuation of houses according to whether they were built before or after 1919. There was one provision which, I think, was based on construction costs in 1938 or something like that. It proved to be totally unworkable.
1293 That had to be altered, but by and large the purpose of the 1953 Act, so far as it was concerned with this problem, was merely to tidy up and make workable the principles established in the 1948 Act.
I hope therefore that no one will try to saddle this side of the House with any of the consequences of the principles then laid down. We all recognise the difficulties of putting houses on a current cost basis at a time when there was an acute housing shortage, but from the speeches we have heard today I think there is general recognition that the sooner we can get all these things on a current basis the better.
Reference has been made to my relations with the National Chamber of Trade over the draft lists and whether I did or did not mislead that body, and also to the circulars that have been published. So much has been said about it that I should like to explain the position. The hon. and learned Member for Kettering referred to a circular, issued by the National Chamber of Trade. In my view, it is a very fair and reasonable statement but I would point out that the statement of what I said to the Chamber of Trade is the enclosure to this document printed on the same sheet, which is a reproduction of what I said here in the House. There is therefore no suggestion that there are two versions of what I said; that I said to the Chamber of Trade something different from what I said in the House. It has circularised its members with copies of the statement I made in the House.
§ Mr. Sandys
There has been a suggestion that I made a statement to the National Chamber of Trade which did not conform to the statement I made in the House, and on which it is alleged that I had in some way gone back.
The paragraph read by the hon. and learned Member for Kettering was from the circular. This is the circular of the Chamber of Trade and is not what I said:Our next move, therefore, will be to circulate to all affiliated organisations a form of questionnaire designed to make available to us, immediately the Valuation Lists are published"—Those are the words to which the hon. and learned Member drew attention:full details of present and future valuations …1294 That is a statement by the National Chamber of Trade to its organisations of its own intention and how it proposed to proceed. Incidentally, I would say that it does not mention draft valuation lists at all. I did not mention them myself, and it is therefore a little unfortunate that its later circular dated 19th March said:In our discussions with the Minister following our National Rating Protest Week in November last"—That is the conversation which was recorded in the earlier circular:we were told by Mr. Sandys himself that, after the publication of the draft valuation lists, if the results confirmed our fears that an unjust burden had been placed on the shopkeeper …and so on.
There was no mention even by them of draft valuation lists on the first occasion. Now they suggest that I gave some assurance about what would be done in relation to draft valuation lists. I am not making a complaint, because I am sure that there has been a perfectly genuine misunderstanding. What I do not understand is how this matter has arisen. The misunderstanding seems to be based upon an assumption which, considering the knowledge and experience of the National Chamber of Trade, I find it difficult to understand.
After all, the valuation lists, according to the previous procedure, would appear towards the end of October. There would be a period of 25 days in which objections could be lodged and the matter examined, which would bring one well into the middle of November. The lists would then have to be delivered to the local authorities by the end of December. To suggest that during that time we should not only decide whether there had been some grave injustice but also introduce the necessary legislation, and that the Inland Revenue would get down to work again and revise the valuation lists and then deliver them by 1st January, is quite outside the realms of possibility, as the hon. Member for Sowerby (Mr. Houghton) will, I am sure, agree.
That is how the misunderstanding seems to have arisen. There never was in my mind the thought that it was conceivable between now and the date when the first valuation lists come into effect on 1st April, that it would be possible first to ascertain what the full effects of 1295 the new valuations were, secondly to decide whether there was any serious injustice, thirdly to draft a Bill and get it through all its stages in this House, then for the Inland Revenue to revise all of the lists, and then for the local authorities to get out all their rate demands in time for them to come into operation on 1st April. It is obviously inconceivable and quite impossible.
Therefore, it never entered into my mind that the National Chamber of Trade were under the impression that any change of this kind, with all the necessary legislation involved, could possibly be carried through between the date of publication of the draft lists, and the coming into effect on 1st April.
§ Mr. Mitchison
May I assure the right hon. Gentleman that neither I nor anybody else in the House fails to accept his assurance that draft valuation lists were not mentioned? The point is that these people were going to act immediately the draft valuation lists appeared. They may have been right or they may have been wrong, but if it was the Government's intention to remove draft valuation lists, ought they not to have told them about it?
§ Mr. Sandys
It is a very well-established practice not to divulge to people outside the intentions of the Government with regard to legislation. It is not like local authorities with whom one has rather a special relationship. I think there would have been a fearful outcry, possibly even from the hon. and learned Gentleman, if anything like that had happened. He would have said that the Tories were getting together with their friends and concocting some fearful plot. I would have been too frightened to do that. In point of fact, if it had occurred to me I should perhaps have tried to say something which would prevent them from drawing any precise conclusions, but it certainly did not enter my head that they were assuming that.
§ Mr. Sparks
Could the right hon. Gentleman tell the House how he proposes to make good his promise? That is the important point.
§ Mr. Sandys
Let me go back to my promise. This is what I said in my statement: 1296As I have explained, there are many uncertain factors in the situation; and consequently, we cannot yet be sure how the new basis of assessment will work out in practice. I can, however, give an assurance that, as soon as the effects of the forthcoming revaluation can be fully measured the Government will review the position and will consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 21.]I gladly confirm that undertaking. That is what we will do, and we will waste no time in beginning to try to form an opinion about these things. But it is quite impossible to make changes, if changes prove to be necessary, between now and when the first valuation lists come into force.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), in a speech which drew well-deserved praise from the other side of the House, pointed out that the abolition of the draft lists does not deprive the ratepayer of any rights which he enjoys today. My hon. Friend said that the ratepayer is in fact better off than he is at the moment for the simple reason that, by synchronising the publication of the valuation lists with the fixing of the rate poundage by the local authority, we save the ratepayer a great deal of worry and possibly of expense. That expense might prove to be quite needless when he sees the two figures side by side.
The hon. Member for Clapham and, in a less direct way, the hon. and learned Member for Kettering, suggested that there was a connection between Clause 1 and the date of the next General Election. I would remind the House that my predecessor, the present Minister of Defence, referred to the necessity for this Bill, and in particular for an alteration in the procedure for appeal, over a year ago. All I can say is that if my right hon. Friend could predict with certainty the date of the next General Election 18 months in advance, he is a very fine political prophet.
§ Mr. Sandys
Yes, because the suggestion made by the hon. Member for Clapham was that the introduction of the Bill would prevent the publication—
§ Mr. Sandys
I pointed out that this was a date which had been assumed by 1297 the hon. Member for Clapham and the hon. and learned Member for Kettering. I am not as well informed as they are.
The necessity for the change, as already explained by the hon. Member for Wellingborough, is to prevent the choking of the machine. In amplification of that, I would draw attention to the fact that there have been two previous national revaluations—1929 and 1934—and in each case, but particularly in 1929, the number of objections was very great indeed. At that time the objections had to be lodged in October, at a time when the ratepayers did not know what was going to be the rate poundage six months later and did not know that there was to be—as it turned out—a very large reduction in the rate poundage, which to a very large extent offset the increase in the assessments. There is very little doubt that if they had known a very large number of those objections would not have been lodged.
The result of that flood of objections was that the administrative machine in many areas was very seriously overloaded. I find from the records it is said that an exceedingly heavy strain was placed on the staff. The Minister of Health at that time had to authorise special allowances for meals for staff and members of the committees working on the matter in order that they could work extra hours. That all emphasises the fact that there was very serious strain on the machine.
How much greater it would have been on this occasion when there has not been a revaluation for 20 years. There is no doubt that assessments in the majority of cases are going up very considerably. Equally, there is very little doubt that rate poundages are going down very considerably. I am not going into the question of how much, because I do not know, but obviously there is going to be a very big counter-balancing factor on either side. If we did not make this change a phenomenally large proportion of ratepayers, as a precaution, would put in objections which would completely choke the machine, with the result that the draft valuation lists—the only purpose of which is to save time—would cause a great deal of needless delay.
§ Mr. Sandys
My hon. Friend the Member for Hertford (Mr. Walker-Smith) said there was a discrepancy between the treatment accorded to the rating authority and the ratepayer, that is to say, the rating authority would be told about the new lists in January, whereas the ratepayer would only hear about them in April. My hon. Friend suggested that in order to rectify this the rating authority might be given a global figure. That is attractive, but it overlooks the fact that the local authority receives this information not just for its own gratification and information but in order that it may begin to get down to the business of writing out the rating demands and addressing them, which is a considerable job that takes a number of weeks. That is why it has always been reckoned that they should get the information in the early part of January at the latest.
My hon. Friend also referred to water undertakings and the question of sinking funds. Previously the deduction of sinking fund provisions sufficient to replace the asset has been allowed. That worked quite all right so long as the cost of building was reasonably stable, but, with the soaring building costs since the war, that arrangement has come to make complete nonsense. This is the sort of thing that has been happening—I will not mention the names of authorities—one undertaking proposed a reduction in its assessment from £185,000 to £110,000, another from £340,000 to £227,000, a third from £1,400,000 to £1,200,000.
If that arrangement were allowed to continue, whilst the rest of the assessments went up, the water undertakings' assessments would be going down. Clearly, in some way or other a new arrangement has to be made. The Bill does offer a fair and reasonable alternative. Instead of having sinking funds, which are notional sinking funds—the money is never in fact put into a sinking fund—the allowances will be made for actual expenditure on maintenance and renewals averaged over a period of years to give reasonable stability. The question of what the period should be is still left open and can be agreed with the undertakings concerned.
I come now to the question of charities and playing fields.
§ Mr. Sandys
I am sorry, I must go on. That issue was raised by a number of hon. Members, including my hon. Friend the Member for Oldham, East (Sir I. Horobin), the hon. Member for Wellingborough and my hon. Friends the Members for Wolverhampton, South-West and for St. Marylebone (Sir W. Wakefield), who has the Lords Cricket Ground in his constituency. Almost all those hon. Members objected to the complete discretion which the Bill gives to local authorities in regard to the exemption of charities from rates. Particular attention was drawn to the possibility of anomalies between different areas.
My hon. Friend the Member for Oldham, East said that in his constituency there was a football field, one half of which was in one area and the other half in another local authority area. He said that this would be inconsistent with the principle of central valuation. Of course, it is inconsistent with that principle, but it is an awkward problem to deal with. These charities have in the past been dealt with on a local basis, on the basis of local knowledge, and I do not quite see how the Inland Revenue could tackle the job without making fearful mistakes.
What we have been trying to do is to preserve the existing position. Of course, the existing position is full of anomalies all over the place. Whether it is right to find some other system, I do not know, but we have consulted the local authorities and we have consulted the National Council of Social Service, which represents a large section of the charitable organisations. I am not at all enthusiastic about this complete discretion which is being given, but frankly I do not see how we can operate it centrally.
The hon. Member for Wellingborough asked that some general rules should be established. I should be happy to consider any general rules which the hon. Member would like to suggest, but unless he has got down to the drafting of them I can tell him in advance that he would find it very difficult. If he has any ideas we would be glad to consider them, because I share very much the sentiments which have been expressed in this connection.
My hon. Friend the Member for Oldham, East, who has knowledge and experience of this question, made a 1300 powerful plea for more favourable treatment for charities and also for sports grounds and playing fields. I assure him that we will give most careful attention to any reasonable proposals which he or the organisations concerned care to bring forward during the Committee stage.
The hon. Member for Wellingborough spoke about church halls and said that he thought the arrangements which were proposed in the Bill would cause friction with the churches, particularly in regard with the letting revenue from church halls. I do not know about that. The scheme has been worked out with the Churches through the Churches' Main Committee. Perhaps the best way is to try out the scheme, and I think that it ought to work.
Next I come to the question of nationalised undertakings. The hon. Member for Wellingborough asked why they should be sheltered, and he said that the County Councils Association and the Urban District Councils Association did not like the scheme for gas boards. All I can say is that the scheme has been agreed with the local authority associations and with the gas boards and I have not found any difficulty. There was an earlier proposal by the local authority associations for some quinquennial arrangement. It was dropped later, however, and as far as I know the present proposal is an agreed one.
Transport and electricity are covered by the pool payments scheme. As my hon. Friend the Parliamentary Secretary announced today, these arrangements will be reviewed in the financial year 1956–57.
That review will obviously cover the question whether it is feasible to adopt current values as the basis. So far as gas is concerned, when the time comes for the review we can see whether gas should also be included in the review. That, I think, will meet many of the objections which have been made during the debate.
The hon. Member for Wellingborough asked why invalid chairs were being exempted. He asked whether it was because they were owned by the Crown, or whether it was to help the invalids. The answer is that it is to help the invalids. We do not feel it is a good thing to give with one hand and to take away with the other. I realise that there are chalets for tuberculous patients and blind persons and others, and I think that I 1301 shall meet the case by giving an assurance that we will in Committee consider the possibility of extending this arrangement to cover those other cases.
The hon. Member for Clapham said the Bill would bring in a new valuation which would affect the product of ld. rate and that the education grants would be adversely affected. I interrupted him to make the matter clear, but evidently I did not bring it home to him. This Bill does not alter the basis of valuation except in regard—
§ Mr. Sandys
I assumed that the hon. Member was talking about this Bill and not the Act of 1948, but it seems he must have been addressing himself to that. This Bill does not alter the basis of valuation except in regard to gas and some other minor points. If there should be any injustice or anomalies in the existing basis of valuation, the blame rests fairly and squarely with the 1948 Act.
Those are the points I have time to deal with. I have dealt with the more important ones which have been raised in the debate. There are no doubt others which will be raised in Committee. This is a Bill which contains many complicated and detailed provisions on which the main work will have to be done in Committee. If we have the same objective approach and co-operation in Committee as we have had from all parts of the House in the debate today, I have no doubt that we shall between us make this an even better Bill than it is at present. I am very glad to know that hon. Members are not going to oppose the Bill and that we may all look forward to working together upon it at its future stages.
§ Mr. Skeffington
Would the right hon. Gentleman deal with the question of the compounding arrangements? It is no use saying, as the hon. Member for Wolverhampton, South-West said, that these ratepayers are in a better position than they used to be, because a good 1302 many people will now receive rate demands who have never had them before. Surely that is a matter to which the right hon. Gentleman should give some consideration?
§ Mr. Sandys
I dealt with as many of the matters discussed as I could in the time available to me, and I cannot in the minute and a half left deal with that matter, but no doubt the hon. Member will have an opportunity of raising it again in Committee.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Committed to a Standing Committee, pursuant to Standing Order No. 38 (Committal of Bills).