VALUATION AND RATING (SCOTLAND) BILL

HC Deb 15 December 1955 vol 547 cc1402-515

Order for Second Reading read.

3.50 p.m.

The Secretary of State for Scotland (Mr. James Stuart)

I beg to move, That the Bill be now read a Second time.

This is, I think, the most important Bill in the field of Scottish local government since 1929, and in the field of valuation it is the most important Bill since the Act of 101 years ago—1854—on which the present Scottish system of valuation is based.

The Bill is based, for the main part, on the recommendations of a Committee which I set up, presided over by Lord Sorn, and whose Report was published in September, 1954. I should like to take this opportunity of thanking Lord Sorn and his colleagues for the knowledge, skill and energy with which they tackled a most important and difficult technical inquiry. The Committee was composed of men of varying background and political allegiance, and they reached not only clear-cut but—I would like to stress—unanimous conclusions in favour of fundamental reforms of the Scottish system of valuation.

In drafting the Bill, the Government's aim has been to adopt the recommendations of the Committee wherever possible. I will refer, as we come to them, to the three or four matters in which we do not follow the recommendations of Lord Sorn's Committee, and I will give the reasons. For the benefit of hon. Members, I may mention that the main one is dealt with in Clause 15 of the Bill, and I will refer to the others as we reach them. Clause 15 deals with the arrangements during the interim period while valuaions on the new principles are being worked out.

The Government are indebted to other bodies also for their help in connection with the preparatory work on the Bill. The provisions regarding the equalisation grants to be found in Part IV and the Sixth Schedule of the Bill are based on the Report of an investigating Committee presided over by my hon. Friend the Joint Parliamentary Secretary, who, I am sorry to say, is indisposed at present, but who, I am glad to say, is making a good recovery from his operation. This Committee included representatives—both councillors and officials—of the local authority associations. The part which deals with valuation and rating and gas works is based on the report of another working party which included representatives of the local authority associations and the Scottish Gas Board. These will be found in Part III and the Fourth and Fifth Schedules, and to those officials and the representatives of the Gas Board who carried out this very complicated inquiry and made this Report, I also wish to express my gratitude.

In the preparatory work of drafting, the Scottish Home Department have had the assistance of a working party containing both members and officials of local authorities appointed by the sasociations, and they gave valuable service to us in this work. I should like to take this opportunity of thanking all who, in these various ways, have contributed to what I frankly confess, was a laborious and complicated task. In expressing my thanks and those of the Government, I do not mean, of course, that the local authority associations are committed to agreeing to everything in the Bill. That, indeed, would be going too far. The discussion—I wish to be quite fair in everything I say—on the proposals now submitted to Parliament has been a very valuable and outstanding example of useful and fruitful co-operation between central and local government.

Our proposals regarding valuation and rating are explained in the White Paper which was presented to Parliament at the same time as the Bill, in October, 1955, Command Paper 9606, and those dealing with the equalisation grants are explained in the statutory Report also presented at that time, House of Commons Paper 109, dated 31st October, 1955. Hon. Members have had these before them for some time, and have, therefore, had time to study the implications of these proposals. In the main, the Bill deals with valuation, rating and equalisation grants, all of which are matters of very direct concern to all local authorities and to every ratepayer in Scotland.

I admit that in this Bill drastic changes are proposed in all of these, and it is my duty today to endeavour to explain to the House the grounds upon which these changes are based. What we aim at is a system which will provide machinery for raising local revenue without causing anomalies between one ratepayer and another. The valuations imposed on comparable properties should themselves be comparable, and, further, the incidence of rating should not be such as to discourage the development of industry or the building of houses or the repair of existing property.

Unfortunately, as the Sorn Committee found, the Scottish valuation and rating system gives rise to just this kind of anomaly and discouragement. This is not due to any inherent defect in our existing law, but because the system has become outmoded and out-of-date as a result of social and economic changes. I may, for example, mention four—new town development, provision of houses for key workers by factory managements, control of rents, and the great expansion of local government services. The object of the Bill is to provide a more equitable system. Similarly, it seeks to modify existing arrangements in regard to the equalisation grant in a manner better suited to Scottish needs and, indeed, so as to do better justice to Scottish needs, to which I shall refer shortly.

The most fundamental of the proposed rating changes will be found in Clause 16, which deals with the abolition of owners' rates. The Scotitsh system, under which part of the local rates is paid by the owner, dates back to the seventeenth century when, as we know, the range of local services was narrow, with the result that the burden was comparatively light. But the new local government services, in the present century—and especially in latter years—touch the life of the community at every point, and the cost to the ratepayer is onerous today, even after allowing for Government grants. Of this cost the owner at present meets one-half in the counties and a substantial part in the burghs. Last year, over Scotland as a whole, the average owners' rates amounted to 7s. 4d. For the landward areas the average was 9s. 2d.; in the cities it was 6s. 7d.; in the large burghs 7s. 7d., and in the small burghs, 6s. 10d.

These rate charges have to be met out of rent, and in a free market the owner adjusts his rent to reflect the varying burden of owners rates. But even in a free market the trend of rates cannot always be foreseen when a lease is negotiated. The true rent—that is to say, the net return on the property—is, therefore, obscured, not only by the charging of a gross rent which includes owners' rates, it is also uncertain, because the owner does not know from one year to another what his liability for rates is likely to be. Where there is no free market—as with controlled property—not only is there doubt and obscurity, but a diminishing sum is available to meet the cost of maintaining the property, because more and more of the owners' rates have to be deducted from the fixed rent.

There is no doubt that the result of this system of owners' rates has been to discourage the building of property to let in Scotland. I think that is admitted.

Mr. John Rankin (Glasgow, Govan)

That is a new one.

Mr. Stuart

No; that is not so. It has always been the great bar to the building of property to let. The hon. Member should read the Sorn Report.

In the case of controlled houses it has provided owners with a diminishing sum for repairs. After all, the question of house repairs is just as much in the tenants' interest as in anybody else's. This system in Scotland has other obvious disadvantages. If rates go up the owner will, naturally, wish to increase the rent if he can, but every increase in rent is rateable, and the system of rates upon rates at once arises. Actually, to recover an additional £1 of net rent the owner has to raise the gross rent by an amount which, after he has paid owners' rates on it, will leave him with that sum.

Hon. Members will find striking examples of the action of this system in the White Paper. The Sorn Committee points out that in an English new town, to secure a return of £1 from property, a rent of £1 plus the cost of repairs, insurance and management would have to be charged. In Scotland, it would be necessary, to get the same net return, to charge a rent of £5, which would include £3 for owners' rates. Representations were made to the Committee by a small burgh. They referred to the addition of £4 per house which housing authorities are required to make to the repairs fund under the Housing (Scotland) Act, 1952. It was pointed out that if the town council wished to recover this sum in full from a tenant it would be necessary for that tenant to pay an additional £10 a year in rent.

I suggest that a rating system of this kind, with high owners' rates, rent restrictions and other complicating factors, has obscured the true relationship of landlord and tenant. It has also confused the economics of local authority housing—the local authority being the owner or landlord. Our existing system has made it difficult, if not impossible, to make any fair comparison of the true levels of rent in different areas. It has also made impossible a comparison of the rating resources of local authorities in Scotland and in England. In fact, it has bedevilled the whole system of Exchequer grants in Scotland, which are related to our method of rating. In addition to that, it stands between us and the changes in the valuation system in relation to the rating of agricultural subjects which, on other grounds, the Sorn Committee thought to be desirable.

As a result of this the Committee decided unanimously to recommend the abolition of our system and it is recorded in the Committee's words in the White Paper that: There was a striking degree of unanimity among our witnesses that the abolition, or at least the limitation, of owners' rates is urgently necessary to assist the housing of the people, to stop the decay of existing houses and their abandonment in some cases by their owners, and to remove an obstacle to the attraction of industry and commerce to Scotland. The Report stated that the evidence summarised in it had left the Committee: in no doubt that owners' rates are now an unnecessary and harmful complication in the Scottish system of rating which disguises the finances of owners and occupiers of all classes of property and rating authorities alike, impedes the provision of housing and the growth of industry, and makes it impossible to introduce urgently necessary reforms in the valuation system. This unanimous conclusion has found a great deal of most striking support since the Committee's Report was published. It is endorsed by, among other bodies, the Convention of Royal Burghs and the Association of County Councils in Scotland. The Government felt that there was no doubt that they should accept it, and this acceptance is given effect to in Clause 16.

An essential part of the Sorn Committee's recommendations was that, upon the abolition of owners' rates, rents should be proportionately reduced, so that landlords and tenants should neither lose nor gain by this reform. Hon. Members will find this recommendation implemented in Clause 16 (2) and the Third Schedule.

The varying contingencies which arise under the Rent Restriction Acts necessitate somewhat complicated provisions to carry out the principle of the Committee's recommendation. The Government, however, accept the principle without qualification. If the Bill becomes law, it is the intention of the Government that the tenant should not lose and the owner should not benefit as a direct result of the passing of the Bill.

As the White Paper sets out, any future increase of a landlord's return on his property will depend not upon the passing of the Bill or upon any consequences that flow from the Bill, but on various other circumstances that can arise in any case and in the perfectly normal course of events; that is to say, the negotiation of a new lease, or a future alteration in the Rent Restriction Acts or, in the case of local authority houses, on the determination of new rents by the local authority. These are all events which might and could occur. [An HON. MEMBER: "And will occur."] I said they might. I do not go beyond that. I am dealing with the Bill before us now, and not with another which has not been printed.

I turn to the question of valuation. Today, the rateable value of property in Scotland other than, of course, derated subjects is, in general, the rent or rents at which the properties are let or at which the assessor estimates that they would be let. This basis of valuation has lasted for more than a hundred years and, as the Committee has said, there is much to be said for it under free market conditions. As things are at present, the system has been producing more and more unfairnesses between different categories of ratepayers.

The Committee felt, rightly I think, that any valuation system, to be fair, must ensure that occupiers of similar premises have similar valuations. It was satisfied that our present system does not achieve this result. It proposed that a new system of valuation be adopted, and Clause 6 gives effect to this proposal. The gross annual value will no longer be tied to the actual rent, where rent is passing. Instead, the assessor would be required to determine for all properties the fair rent at which they might reasonably be let.

In the case of dwelling-houses and commercial property, this fair rent would be the gross annual value. From this, as in England and Wales, deductions would be made reflecting the owner's liability for insurance, repairs, etc., in order to arrive at the net annual value and the rateable value. In the case of other property, the Sorn Committee proposed that the net annual value should be estimated direct by the assessor. The effect of such a system would be to base liability for local rates on what is impartially estimated to be the fair net return which the property would command in a free market.

In regard to agricultural valuations and rates, at present agricultural land and buildings are valued together and rates are levied on one-eighth of their joint value. This arrangement was made to avoid disturbing the conventional principle of valuing agricultural property as a whole. It was believed that the resulting rateable value of the unit would be roughly equivalent to the unreduced value of the farmhouse. The position in Scotland was meant, as a result, to be broadly similar to that in England, where farmhouses are valued in the ordinary way and agricultural land and other farm buildings are entirely derated.

The Committee found that the Scottish system had resulted in anomalies and had led to misunderstanding as to the purpose of agricultural derating. Accordingly, the Committee recommended that in Scotland, as in England, land should be entirely derated and houses valued in the ordinary way. This recommendation will be found in Clause 7.

The other main subject dealt with is the equalisation grant, which will be found in Part IV of the Bill. The purpose of the equalisation, as hon. Members will know because we had a discussion on this topic in 1954 when we went into it in detail, is to bring the rate resources of poorer authorities up to a national standard. The difficulty has been to decide what that standard should be in Scotland. In 1948, the English standard, which was the average rateable value per head of weighted population, was increased by 25 per cent. and applied to Scotland.

In the light of experience, this addition of 25 per cent., which had been regarded as a measure of the difference between us—a conventional measure—was thought to be unfair to Scotland. Following an investigation, the Local Government (Financial Provisions) Act, 1954, to which I have just referred, was adopted as an interim arrangement, under which the Scottish grant became eleven-eightieths of the English, the basis being the old Goschen formula. This formula of distribution has since been examined by a committee under my hon. Friend the Joint Parliamentary Secretary, to whom I have referred but who, unfortunately, cannot be with us today.

It is still impossible to determine the true relationship between English and Scottish rateable values. The committee agreed that the Scottish grant must continue to be fixed on some interim basis. The committee under my hon. Friend proposed a formula for determining the total Scottish grant which would leave Scotland with the same rating burden per head of population as England and Wales, outside London, if the expenditure per head of weighted population were also the same. The Government have adopted this proposal, which is given effect to in Clause 25 and the Sixth Schedule.

Clause 25 provides that this new formula shall operate from 16th May, 1956. The White Paper explains that if this formula had operated in 1953–54, the grant payable to Scottish local authorities would have been increased by £1½ million. Under this proposal, no authority will lose and many will gain considerably, in some cases by the equivalent of a 1s. rate or more.

The Committee recommends the introduction of this new formula as an interim arrangement only. Hon. Members will find in Clause 28 a provision that the whole of the existing enactments relating to the equalisation grant shall expire at the end of the sixth local financial year after the Bill becomes law. There must, however, be fresh legislation about this grant before that date. The Government contemplate that the new formula will have to be reviewed after a fair sample of the result of revaluation in Scotland is available, or in the light of the general examination of the financial relations between central and local Government, which is now being undertaken and which was announced in this House.

I should like to turn to the other provisions of the Bill, on which I have not yet touched. Part I deals with the machinery for determining rateable values, the main change proposed being in Clause 1. At present, the valuation areas are the cities, the large burghs and the counties, which include the small burghs for this purpose. The Sorn Committee recommended, and the Bill proposes, that in future the areas should be the cities and the counties inclusive of all burghs, large and small. The purpose of such a change is to ensure greater uniformity in the standards of rateable value and to ensure that each area is sufficient in size and/or population to justify the payment of properly qualified assessors with adequate staffs.

The effect will be to reduce the number of valuation areas from the present 55 to 35, a reduction of 20. I recognise that these changes will be unwelcome to the large burghs, but the arguments supporting them put forward by the Committee are very strong and appear to be convincing. At any rate, these are written into the Bill. Clauses 2 to 4 are corollaries to Clause 1.

Clause 5 places the duty of appointing valuation appeal committees on the sheriff principals instead of on the valuation authorities. The Sorn Committee made no criticism of the way in which the present committees are carrying out their work, but they felt that it would clearly demonstrate the impartiality of the committees if they were appointed by someone who, unlike the local authorities, had no interest in the results of the annual valuation.

Clauses 6 and 7 set out the new principles by which the assessor is to be guided in determining rateable values while Clauses 9 and 10 give guidance to the assessor as to how to give effect to these principles. It will, clearly, take some time to establish this new valuation machinery and it is proposed that the work of valuation on these new lines should begin on 16th May, 1957, and be spread over five years. The new roll will, therefore, come into force in the fifth year —1961–62. Thereafter, new rolls will come into force annually, and the assessors' duty will be to ensure that every property is revalued once in every five years.

I now come to the main point of difference between the recommendations of Lord Sorn's Committee and the Bill. A great deal of thought has been given to the best way of dealing with the period between the passing of the Bill and 1961–62, when the complete new valuation roll comes into force. The Committee recommended that on the passing of the Bill a new roll should be compiled by making arithmetical adjustments in the existing roll. Existing gross annual values would have been reduced by an amount representing the owners' rates, the average poundage for 1939 to 1940 being taken for houses and the average before abolition for other property, and by the percentage appropriate for the type of property involved under the new system. I know that this is complicated. New valuations would then have been made and brought into force year by year over the five-year period, roughly one-fifth being revalued annually. That was the Sorn proposal.

On consideration, we are proposing a different solution in the Bill. I wish I could say that it was very much simpler, but I am not suggesting that it is. The committee's scheme would have resulted in a roll prepared arithmetically, which might have differed considerably from the rolls to be prepared on the new principles. This would have led to two substantial changes in values and in rate poundages in five years. Further, in each of the first four years some property would have been valued and rated on the arithmetical basis and some on the new basis. Such a situation is unlikely to have proved satisfactory.

As a result of our consideration of these difficulties, the Bill proposes that the valuation roll for the year in which it becomes law should be frozen until 1961–62 except, of course, that new subjects, such as new buildings, should be added to it as they come into existence. Thus, there would be only one substantial change in value and rate poundage, and that would be in 1961x2013;62. Until that came about everyone would continue to pay rates on the same basis. They would, if all other factors remained constant, continue to bear the same rating liability as they do when the Bill comes into force.

The provision for dealing with this interim period in the manner in which I have endeavoured to describe will be found in Clause 15. Clauses 11 to 14 deal with minor changes in the mechanics of valuation and with appeals, but I think perhaps we could conveniently leave these to be considered during the further stages of the Bill, as I admit that I have rather a lot of ground to cover today.

I should like to turn, briefly, to Clause 8 in Part I and Clauses 21 and 22 in Part II, which deal with the exemption from liability to rates of the occupiers of certain subjects. Clause 8 follows the line already provided in the English Rating and Valuation (Miscellaneous Provisions) Act, 1955. It exempts such subjects as garages for invalid chairs and certain other structures provided for health and welfare services and relieves the local authorities from liability to pay rates on sewers. Clauses 21 to 22 provide for exemption from rates of churches and church halls and give local authorities a discretionary power to remit rates on charitable buildings.

Part II—Clauses 16 to 22—gives effect to the proposal to abolish owners' rates and to make consequential adjustments in rents. I have referred to this point at some length. In addition, Clauses 19 and 20 empower police authorities and the Commissioners of Northern Lighthouses to make payments in lieu of rates in respect of police stations and of houses occupied by lighthouse workers. Part III of the Bill deals with the new method of determining the rating liability of gas works.

The scheme put forward in Clauses 23 and 24 and in the Fourth and Fifth Schedules is in line with the report of the working party of officials, to which I referred earlier. I admit that these proposals are extremely complicated, but I am glad to be able to report that they have been accepted by the Scottish Gas Board and—subject to certain reservations—by the local authority associations. I hope, therefore, that the House will also agree to defer detailed consideration of these points until a later stage.

Part IV, which is Clauses 25 to 28 and the Sixth Schedule, gives effect to the new proposals for determining equalisation grants. I have already dealt with that and need not add to what I have said. Part V and the Seventh Schedule take up a considerable amount of print in the Bill, but are actually confined to a number of miscellaneous and consequential provisions, including the repeal of a certain number of enactments which this Bill supersedes. Here again, I do not think that the House would wish me to deal with details at this stage.

Before I conclude it may possibly be of help to hon. Members if, as briefly as I can. I give the principal proposals in the Bill and the time-table by which they will come into effect if the Bill is carried into law. First, the new equalisation grant formula is to operate as from 16th May, 1956—that is in Clause 25. Owners' rates are to be abolished and rents abated as from the commencement of the local financial year first beginning after the passing of the Bill. Therefore, I cannot give an exact date.

That subject is in Clause 16. The date should be 16th May, 1956, or 16th May, 1957, according to whether we make better progress in Committee with this Bill than I gather the Scottish Grand Committee made this morning on another Bill in which the hon. Member for South Ayrshire (Mr. Emrys Hughes) takes such an interest. I do not expect any assurances.

Valuations in force in the local financial year in which the Bill passes are to be frozen until 1961–62. That provision is to be found in Clause 15 and they will be the valuations for 1955–56 or 1956–57, again according to whether the Bill receives the Royal Assent before or after 16th May, 1956.

Fourthly, the newly-constituted valuation authorities and their assessors and other staffs are to assume their full functions on 16th May, 1957. A lot of preliminary work will no doubt be possible between the passing of the Bill and that date. Fifthly, valuations made on the new principles are to come into force in place of the frozen valuations in 1961–62.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Has the right hon. Gentleman finished?

Mr. Stuart

Practically. Has the right hon. Member had enough? I do not enjoy making speeches and this is quite a long one. I have noted the terms of the official Opposition Amendment on the Order Paper which, presumably, may be called. I do not think it is for me to comment on the Amendment in detail; indeed, if I know anything about the rules of this House, I would be out of order in doing so.

In view of the widespread view, which has been so often expressed, that our system of rating in Scotland requires amending, I regret that the Opposition should take a line which seeks to defeat the Bill. The Government have endeavoured to face the question and to produce a Bill aimed at improving our methods of valuation and rating in Scotland, complicated although it is. We have got the best advice we could and have made the best endeavours we could to make a start on carrying out this task. I suggest to the House that this is a matter which is of such importance to Scotland that it should not be ignored and that, certainly, this Bill should not be jettisoned.

The Sorn Committee was composed of members not confined to one party, but spread over a wide area of interests and great local knowledge of affairs in Scotland. Anyone who reads its Report must admit, I am sure, that here is a real problem to be faced. It is a highly technical and highly complicated one. The Sorn Committee, the local authorities who helped us, the officials who helped us, and the draftsmen of this Bill, had to face a very complicated and laborious task, for which I am grateful to them. I think hon. Members opposite should give very serious thought to this matter before they decide to try to throw the Bill overboard because, if they did so, they would set the clock back for years.

The Bill is based on the recommendations of an able and efficient Committee. These gentlemen were unanimous in their views. It is of vital importance to Scotland, as has been stressed over a period of years, that this problem should be handled. I hope that the House and the Standing Committee—when and if the Bill reaches Standing Committee—will consider it with great care. I am sure they will—[HON. MEMBERS: "Hear, hear."]—I am sure they will do so and will do it very fairly. The Local Government (Street Works) (Scotland) Bill was an agreed Measure; this is a Bill of great importance. I hope this will be treated as a serious matter, because it is. If it is delayed, obstructed, held up and killed it will set the clock back for years. We have here a matter which ought to be tackled. We are doing our best to tackle it. If we fail, all I can say is that when I am dead the word "Sorn" will be found written on my heart.

4.38 p.m.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof: this House declines to give a Second Reading to a Bill which fails to have regard to the one fundamental understanding on which the Sorn recommendations were made, that the system of rating should not be overloaded; which fails to deal with the derating provisions of the Local Government Act, 1929; which further restricts the narrow basis of local taxation by placing the whole burden on tenants and owner-occupiers; and which fails to deal comprehensively with the financial problems of local authorities in Scotland. The last thing we desire is that either the word "Sorn" or "torn" should be written on the heart of the Secretary of State. May I congratulate the right hon. Gentleman on overcoming his natural diffidence and reluctance to address this House at any length and on the efforts he has made today to explain this Bill?

I am sorry to say that even after the lengthy explanation he has given us it will be my duty to call attention to one or two things he has not explained. I think he will agree that will not be difficult with a Bill of this kind. Our reasoned Amendment makes clear that the Opposition are adopting not a negative but a positive point of view. Therefore, we ask the House to reject the Bill until the Government come forward with the complete picture.

As the Secretary of State has explained, the Bill has two major aspects, the abolition of owners' rates and a change in the method of valuation for rating. But these are only two aspects of a much bigger problem. Our purpose in asking the House to refuse a Second Reading to the Bill is to ensure that before we deal with these fundamental changes we shall know whether they are part of a comprehensive plan to deal with the problems of local government taxation. The Bill is a bit of a jig-saw puzzle, and before we put the pieces into place we are entitled to know what will be the complete picture when the Government's plan are eventually completed.

The Government should "come clean" about their proposals. We suspect that they are approaching the problem not so much with the object of clearing up the confusion which exists as with the object of using the existing anomalies in rating to cover a further invasion of the interests of tenants on behalf of their friends, the landlords and property owners. The Opposition have no wish to be any less just to property owners than the Government are, but will oppose the use of Parliament to set property owners free to do as they like or to include among the beneficiaries of legislation people who have been speculating in slums and squalor and the degradation of their fellow human beings.

We recognise that there are plenty of decent landlords who have been treating their property well and are entitled to consideration in respect of the Bill. However, in connection with this Bill and a recent Act, my hon. Friends and I suspect that the Government are rather tender to the wrong type of landlord and not to the decent landlord. The Government's progress so far gives us no cause to reject that suspicion about their intentions in the future, so far as they can be judged from the intimations of policy which have so far been made public.

Indeed, the whole career of the Government has made us extremely suspicious of the assertion that they are approaching the matter in any judicial or balanced way. When the Government came into power, we were supposed to be in a financial crisis. The first thing the Government did was to bring in a Measure to hand the public houses in the new towns back to the brewers. What had that to do with the crisis? The next thing they did was to introduce legislation to hand back transport to the road hauliers. It was pointed out in an unbiased way by the Opposition that it would be a disaster to do so. No one brought forward any reasons why it should be done. Nevertheless, it was done. Now the Government have intimated that they are introducing a Measure to prevent any further damage being done.

The Government's next Measure was one to hand back the whole of the steel industry to the gambling of the Stock Exchange market. The only reason which can explain that action is that the great iron and steel magnates had been deprived of the opportunity of making capital appreciation profits by speculating in stocks and shares. There was no technical reason for the Goverment's action.

The Government have already brought difficulties to local authorities by continually raising interest rates and asking local authorities to transfer more and more money to the people who lend them money. No one has given us any justification for such people receiving more interest or any reason why local authorities should pay more interest. After all, the Government control all the activities of local authorities quite well without putting any extra cost burden on them. The Government must accept some responsibility for the intensification of the problems of local authorities. They have increased loan charges and forced local authorities into the open market, and now they tell us that they are going to do something about rent control

The Government have not "come clean" about rent control. Is the Secretary of State telling us that rent control is to be abolished? If so, what becomes of his claim that the Government are trying to maintain a balance between tenant and landlord in ensuring that the rent is reduced to the same extent as the rates are transferred to the tenant? Obviously, that becomes absolutely meaningless once rent control is abolished. How can we judge the Bill unless we know what the Government are going to do about that?

The rake's progress of the Government has been an inverted Robin Hood campaign, with the Government bent upon robbing the people to benefit the rich. Those who have read "Man and Superman" will remember that Jack Tanner was captured in the Spanish mountains by an outlaw who introduced himself by saying, "I am an outlaw. I live by robbing the rich." Jack Tanner replied, "I am a gentleman. I live by robbing the poor." The Conservative Government are living up to Jack Tanner's definition of a gentleman.

I hope that the Solicitor-General for Scotland will tell us exactly where we stand. Is the Bill a prelude to a big offen- sive against tenants of local authorities? The abolition of subsidies and the abolition of rent control are two fundamental matters which cannot be separated from the Bill. Is the purpose of the alteration of rates to remove anomalies, or is it to make it easier to raise rents when control ends? We know very well that if the rating system remained it would be very difficult for landlords to raise rents, even if control went. We should like to know what the purpose is. Is it to set the landlords free?

The Secretary of State mentioned the question, which was referred to in two Sorn Committee Reports and during the proceedings on a previous Measure, of the existing system being a discouragement to the building of houses to let by private enterprise. Are we to understand that the Government are setting out to upset the principles which were established between the wars, when it was recognised that the possibility of private enterprise building houses for the mass of the people as a speculative investment had gone for ever? During the proceedings on a recent Measure I quoted the remark of Lord Balfour that everybody had to recognise that that system was finished. Is this Humpty-Dumpty to be put back on the wall? Is that one of the objects of the Bill?

The Secretary of State said that the Bill was based on a Sorn Committee's Report. I want to make clear that anything I say today has no reflection on the work done by the Committee. The latest Sorn Committee and the previous one went into matters very carefully and did a good deal of work. The Committee was asked to answer a question. It set to work efficiently to answer it but, clearly, the kind of answer one gets from a committee depends upon the question put to it. In the case of the earlier Report in which we had a Departmental Committee commenting on owners' repairs the question which had been put to that Committee was the wrong question. It was asked to make comparisons between two dates which had no reference to the real matter in hand, and the question was quite out of order.

The Secretary of State for Scotland put a very narrow question to the Sorn Committee. My hon. Friend the Member for Hamilton (Mr. T. Fraser), in the Scottish Grand Committee, pointed out quite clearly at that time that the terms of reference were so narrow and restricted that the Sorn Committee could not give a proper answer to the question asked. The Committee should have been asked a question on a much wider scale on the relationship of local government finance to the Government themselves.

The Bill is claimed to be based on the Sorn Committee's Report, but, as our Amendment points out, the Sorn Committee placed a fundamental condition on its recommendations and it is because that fundamental condition has been ignored that the recommendations now fall to the ground. If the premise on which the recommendations are based is not observed, it cannot be said that the Secretary of State has based his Bill on the Report. The situation is very much like that of the economists of last century who blamed on the theories of Adam Smith and Malthus the ruthless exploitation of the people because they extracted from those theories only those parts which suited them and left out all the rest.

Since the Bill will result in restricting still further the basis of rateability, it means that, instead of being in accordance with the Sorn Report, it will be going directly contrary to it. If the Bill cannot be based on the Sorn Report the Secretary of State ought to tell us what is its basis. He has failed to do that today. Rumour has it that derating is to he abolished. The Secretary of State has not told us even that. Is it? Even if it is, that would not broaden the basis of rating in Scotland but merely alter the incidence. It would be interesting for the House, in approaching the Bill, to know whether industrial derating is to be abolished in Scotland. A step is being taken in the Bill in connection with agriculture, but what is to be done about industrial derating?

Our Amendment is constructive and is not a policy of negation. We have no intention of frustrating or obstructing any legislation which the House wishes to pass. It will certainly be examined in detail. The Secretary of State can have no justification for suspecting from anything that we have done in this or the last Parliament that we would in any way frustrate the will of the House or prevent legislation by means of any kind of fillibustering.

We recognise that a difficult problem exists, but that does not imply that the problem exists only for the landlords. Our objection is that only one section of the problem is being tackled and that, as a result of the Bill and other proposals which the Government are contemplating, the whole relationship of tenants, owners, owner-occupiers, local authorities and Government is to be drawn into a general meléee. Landlords are to be given carte blanche to raise rents at a time when tenants are wholly at their mercy because of the housing shortage.

The Secretary of State has not indicated how tenants are to be protected until that shortage is removed. The whole purpose of the Rent Restrictions Acts was to ensure that while conditions of free bargaining were not possible tenants should have some protection. Housing rentals are now to be drawn into a market in which the tenants' hands are tied and the landlords' hands are free.

The Government seem to assume that valuers should have some idea of a fair rental even in these conditions. I have discussed this matter with valuers. It is moonshine to think that any free market exists from which valuers can determine what a rent should be. Is there any guarantee that landlords, set free from restraint, will not extort rack rents from tenants much in excess of what is reasonable? Even after the last Act dealing with the subject was passed, I agree quite frankly that many landlords did not pursue the object of extracting high rack rents.

My hon. Friend the Member for Gorbals (Mrs. Cullen) has mentioned on a previous occasion that good landlords have acted in the most humanitarian fashion in trying to clean up the conditions in which people are compelled to live. Our complaint is that the worst landlords, those who should not be set free, are likely to take advantage of a Measure of this kind. The Secretary of State should assure us that they will be prevented from taking advantage of the poorest people in the community.

The Government are only tinkering with the problem. The real problem is how local government is to be financed and whether it is to be the partner or the agent of the central Government. The Amendment indicates that the Government have failed to make the Bill part of a comprehensive and well-considered plan to give local authorities a new deal and to establish intelligable relationships between them and the national Government and between both of them and the citizens.

We on this side of the House do not pretend that the problem is easy. It has been tackled by a Royal Commission in 1902 and by a Departmental Committee in 1922. Both the Commission and the Committee have pointed out that local government has two functions. On the one hand, it is carrying out as agent of the central Government certain fundamental national services. On the other hand, it is providing services for each community in a communal way, and each community has to provide for itself individually. The cost of too many of the national functions is being placed on local government, and on the present basis local authorities are expected to bear half, or at least some proportion, of the financial burden of carrying out these duties.

I recognise the fundamental principle that it is very wise to provide that if local government is spending some Government money it should spend some of its own at the same time, but the Government must look at the whole question of the proportion of grants given in respect of these national agency services as the best way of relieving local government of excess expenditure. The present dispute with the teachers is just a product of passing the buck from the national Government to local government, the argument which goes on about who is to pay, and the fact that if the two cannot agree the teachers are expected to pay.

Everybody knows that this was double-crossing in regard to a bargain made in 1925, and it is because the local authorities were so reluctant to take on any more responsibilities that they have refused to pay the 7 per cent. or to make the proper arrangements about teachers' superannuation. The only reason the Government have for saying that teachers can recover it by making another bargain over wages with the local authorities is that the Government will save ½.per cent. If the extra percentage is to be paid by the local authorities, the Government pay half, and so this trifling argument is throwing the entire teaching profession into a ferment for no real purpose.

In the first category of public services performed by local government are Civil Defence, the police, the prevention of disease, and education. In the second category are housing, water, transport, lighting, town planning, the care of children and old folks, streets, drainage, cleansing, baths, washhouses, parks, and welfare. If people were buying these things through private enterprise they would pay through the nose for them, and much more than they are paying the local authorities.

I am not suggesting that local authorities should not do their duty. Indeed, the party to which I belong has been defeated in one local government election after another on Tory promises of keeping down the rates. These promises were made by people who had no interest in local government, no interest in doing anything for the community. They were put up as the champions to keep down the rates. My City of Edinburgh is probably an outstanding example. For generations, the rates were kept down and, for example, the streets of Edinburgh were left with gaping holes. They are not all repaired yet. So it is no credit to a local authority if it keeps down the rates by avoiding its duty. I am not, therefore, justifying local authorities skimping on the roads.

The history of local government is interesting, because the developments in local government did not take place, I am sorry to say, because of Christian teaching, of making the souls of the merchants generous to their fellow men. Entirely the opposite was the case. It is a comment on those who criticise nationalisation and municipal government that all the great progress in local government took place because of the meanness of people who wanted to keep down the rates. For instance, Sir George Nicholls was the great hero who founded the workhouse in the nineteenth century—that place of terror which people would rather die than enter. He was a great saver of rates. He pointed out that to obtain a clear view of the English Poor Law—this applies to Scotland also— … it is necessary to see how … it has become engrafted on our institutions as a means of protecting life and property by affording needful relief to the destitute. That sounds charitable, but Bagehot, in "The Principles of Taxation," explains it more clearly: It may be considerably cheaper to fill empty stomachs to the point of ready obedience than to compel starving wretches to respect the roast beef of their more industrious neighbours. In other words, the cost of losing property was so great that it was cheaper to give people enough to eat to keep them quiet than to pay policemen or to engage soldiers to keep starving wretches in order.

In 1834 the Poor Law Commissioners wrote a letter to the then Home Secretary which gave impetus to the spending of money on hospitals for infectious diseases. It always strikes me as interesting that if people had merely appendicitis, or cancer, or a disease which would not affect anyone else, they were left to charity. The reason was that the rates would not be affected but, as the history of the time shows, infectious diseases affected the rates because, as the Commissioners pointed out, if the breadwinner died from an infectious disease, the mother and children were thrown on to the rates.

Therefore, two things were important. The first was to keep infectious diseases from spreading and the second was to keep down the rates. Hospitals were built to deal with such diseases, not through Christian charity, but because it kept down the rates. So people who claim credit for these developments should claim credit for the right reasons. Even the agitators for street lighting could make no headway until Queen Anne's carriage narrowly escaped being robbed in St. Paul's Churchyard. A few years afterwards, the City was lit.

My hon. Friends and myself do not want to encourage meanness in local authorities, and we would like to see them trying to make their cities beautiful and worthy of the citizens who live in them. Here, I would pay tribute to many places in Scotland, my own constituency among them, which have been beautified. It is a pleasure to see flowers growing at street corners instead of having to look at dumps of soil. It is a pleasure to see gardens where the people live, instead of having gardens behind high walls which can only be glimpsed through key-holes and gates. This happened in a country which can grow flowers everywhere. Labour local authorities in many parts of Scotland are now trying to grow in their villages flowers as beautiful as any in Southport and other places which make it commercially worth while. Indeed, the face of Scotland has changed since 1945. The idea of making cities beautiful has spread.

I should like to pay tribute to Sir Patrick Geddes, a citizen of Edinburgh, who tried to make gardens among the homes of people even in the Cowgate of Edinburgh. I am glad to say that this missionary effort is spreading over all Scotland. I also want to pay tribute to the local authorities who have devoted money to it, although there are still some people who think it is a waste to do so. I do not think it is a waste to bring beauty into the lives of people. They deserve it. We will support the right hon. Gentleman in eliminating the slums and in trying to make our country beautiful. It is part of our duty and one of the best things we can do for posterity.

Yet the local authorities must feel that they are being treated justly by the State. A system must be devised by which they can finance what they are doing without eternal argument with the Minister as to where they are to get the money. Local authorities are now faced with having to pay more for loans. I have never heard of anything so stupid. They must build houses, but first the Government increased the interest rates. Then the Government found that this was so complicated that they increased the subsidies. They had to do this to compensate the local authority for the extra interest. Then they increased the rates again, so in many cases the Government will have to give grants to meet the extra cost of building.

We are simple people. We want to know who gets the extra money which the local authorities are paying. Who is getting away with the "kitty"? If it is merely going back to the Government, what is the good of this circumlocution by which the Government switch the money around as a housewife switches an egg? If somebody is getting it, why? What justification is there for these people getting more money when the local authorities cannot get enough to pay the teachers their superannuation? These are things we want to know. The Government seem to be moving in mysterious ways. They hand out hundreds of millions of pounds to the fininaciers and skimp on those things which are necessary for our people.

The abolition of owners' rates is an important decision. I do not think anybody can justify the results of the present rating system, which produces some of the consequences that the Sorn Committee illustrated. There is no doubt that it is a tangle that it would be desirable to sort out. The Sorn Committee's description of it as "fantastic" is well justified. It is, however, an equally fantastic solution when the Government propose that the whole body of property owners should be relieved of any responsibility of payment for the benefits they receive. The owner who has property is protected by the police, and the fire brigade is available to protect his property.

Is there any reason why he should not pay something for this? What has it to do with rent? If a street is constructed in front of an owner's property, the capital value is raised and it can be sold at a higher price, yielding a substantial capital profit, on which no tax is paid. There are weaknesses in this change, which does not deal with the problem as it should. The Sorn Committee made its recommendation upon one fundamental understanding. That is, that the system is not overloaded and commented on the narrow basis of the present system. What are the Government going to do to broaden the basis of local rating? We are entitled to know the answer before we approve of the Bill, the difficulty of which is that it narrows the basis.

Have the Government given any thought to other methods of raising local government finance? There have been suggestions concerning local income tax, land values and poll tax. I have read the reports that deal with these methods, which are made to work in other countries. I can see great difficulties, but difficulties sometimes have to be overcome. The simplest way would be to use the principle of the equalisation grant, which catches all incomes according to the system of our Income Tax law. That is the best way of raising extra money without establishing new and expensive machinery.

I admit at once that we come up against another problem. If local government is to retain its independence, it must pay for that independence in some way and not be too dependent on the national Government. If too much money comes from the central Government, local authorities will feel that they have no independence and are merely rubber stamps.

If the Government accepted a greater responsibility for the things in which the local authority acts as agent, it would leave sufficient finance for local government to run all the domestic and communal services for which it is responsible and which it can very well provide. I do not see why this should not afford a complete solution to the problem. But as the Government are not prepared to do this, I suggest another way. If land values cannot be taxed, is there any reason why there should not be, say, an extra 10 per cent. tax on feu duties? Feu duties are simply money for dirt; they cannot be passed on.

People in Scotland do not like feu duties. The lawyers, perhaps, like them, but not the ordinary people. If there were an extra tax on feu duties, the basis would be a little broader than at present and there would be some money coming in. This would be a way of reaching the people who very often have their property protected although the feu does not necessarily cover the property.

The whole thing is linked with valuation. When we come to that aspect, we reach the less controversial parts of the Bill, our views about the details of which will be discussed at a later stage if we have one. That depends on what happens at the end of this debate.

For the moment, on behalf of my hon. Friends, I should like to say that we commend, in general, Part IV of the Bill. We have no intention of delaying it. If, as on a previous occasion, the Secretary of State would make a separate Bill for Part IV, we promise him that we will give it a speedy passage with no delay. That is a generous offer on behalf of Scotland.

We welcome the idea of getting a fairer valuation. Should occasion arise, we will discuss it in greater detail. There are, however, one or two points which might be cleared up today. Assuming that the assessor is appointed, as provided for in the Bill, it would appear that very largely he will be the creature of the Secretary of State. We are not sure exactly what is meant by Clause 9, which seems to be very wide in its powers. It states that the assessor shall in each year value or revalue, in accordance with any directions that may be given by the Secretary of State after consultation with the Advisory Council. … We are not sure whether that is in some way limited by the fact that it deals only with the six years or the first year, or what exactly are the limitations, if any, to these powers of the Secretary of State. If he has no powers, there does not seem to be any explanation for the new procedure in Clause 3, by which an advisory council is to be set up to advise the Secretary of State on a whole lot of items. If it gives the Secretary of State advice on them, how is he to make use of it? What is he to do about it?

The valuation committees are to employ the assessor. Will they be the assessor's boss, or is the Secretary of State his boss? What control will be exercised by the valuation committees and what control by the Secretary of State?

The Solicitor-General for Scotland (Mr. William Grant)

I think that the right hon. Gentleman means the valuation authorities.

Mr. Woodburn

Yes, and the Secretary of State. What controls will they exercise?

We would not agree, in general, with reflections on the good conduct of valuation appeal committees. So far as we can judge, most of them have acted conscientiously, and the Sorn Committee also commented on this fact. On the other hand, some of us have heard that appellants to these committees have felt that it was somewhat unfitting that the Treasurer of the City of Edinburgh should be sitting on the valuation appeal committee. He would seem to be a very interested party, and there appears to be a certain degree of justice in that comment. Clearly, an interested party to that extent should not participate. At any rate, so far as the council is con- cerned, our information is that the councillors have done a great, conscientious job. In general, although there may be particular cases, they have not used any kind of influence on the valuation by the assessors. My information from assessors is that, as far as they are concerned, the present system has worked well.

When we consider the appointment of the valuation appeal committees, we see no justification for the sheriff undertaking this work. He is in Edinburgh and busy in the courts and he has no intimate connection with the area where appointments are to be made. Any appointment made by him would depend largely on the advice he received from somebody locally. Our opinion is that the local authorities have a far better knowledge of the individuals in the area than has the sheriff.

I ask the Secretary of State whether he will carefully go into this and see whether there could not be some other method of appointing these appeal committees which would allow some assurance to the burghs, which are now being deprived of many of their functions, that they as well as the landward areas of the counties would be represented. We think that councillors should serve on these appeal committees and form a major part of them. A great deal has been taken away from councils under the Bill and it is a mistake to do that as exhaustively as is being done.

There have been criticisms that these are only amateur judges and that we should have technical people like architects and valuers and people of that kind. I will repeat what I have said before and what is a very good adage: that experts should be on tap, but not on top. Experts can give evidence, but on these committees we must have judgment. There is no reason why counsel should not appear before the committees, or why there should not be expert evidence on both sides, but experts are just as likely to be prejudiced as anybody else. We distrust expertise just as much as some people distrust councillors. The principal qualification should be a man's power of judgment, and not his expertise The councils should be consulted.

Many of these points will come up again, if the Bill proceeds. Today, however, we ask that it be sent back to the Government, so that they can play fair with tenants, local authorities and the House. To pass the Bill if the Government have no comprehensive plan is a dangerous upsetting of balances in the community. If they have a plan, let us have a White Paper which will show the shape of things to come. All we know now is that the landlords' rating is to go. The reluctance of the Government must be judged along with their record in the past and that record fills us with alarm and suspicion that there will not be a fair deal for the tenants and for those in the community who are most defenceless.

The House ought not to approve the Bill and we ask hon. Members to support us in our Amendment for its rejection until the Government put their cards on the table.

Mr. Deputy-Speaker (Sir Charles MacAndrew)

It might be for the convenience of the House if I point out that we have about three hours until the winding up speeches begin. To my knowledge there are seventeen hon. Members on the two sides who would like to speak. I have made a calculation that if each takes twelve minutes all will get in; but not if more time is taken.

5.24 p.m.

Major W. J. Anstruther-Gray (Berwick and East Lothian)

I shall endeavour to follow the example you have suggested, Mr. Deputy-Speaker, and restrict my speech to a few minutes only. In the course of his remarks, the right hon. Gentleman the Member for East Stirling-shire (Mr. Woodburn) talked about robbing the people to help the rich. He went further and saw fit to describe the Bill as an offensive against tenants.

It will be my endeavour in these few remarks to try to answer that charge, and I will answer it, if I may, not with words of mine, which would be regarded by hon. Gentlemen opposite as controversial, but with the words of the Sorn Committee's Report, which, the House will remember, was unanimous and on which the two sides of political opinion were represented. On page 11 of the Report, hon. Members will find these words: The evidence … left us in no doubt that owner's rates are now an unnecessary and harmful complication in the Scottish system of rating which disguises the finances of owners and occupiers of all classes of property and of rating authorities alike and impedes the provision of housing and the growth of industry. Their abolition, if accompanied by suitable reductions of the rents of let properties, should not, we are convinced, be regarded as a measure for the benefit of a particular class of persons, but as a necessary simplification of economic life which would assist all classes of the community. I submit that that is a complete reply to the right hon. Gentleman when he suggests that the Bill will be of great advantage to owners and of great disadvantage to tenants.

So that there shall be no disagreement on the position of either the Government supporters, or those who support the Sorn Committee's recommendations, let me refer to page 13 of the Report. At the beginning of paragraph 20, the Report says: It is an essential part of our proposals that the owner of let premises should, as exactly as may be possible, pass on what he saves to his tenant by way of reduction of rent. It seems that that is a correct basis on which to proceed, and that is the basis on which the Government are proceeding. During the Committee stage no doubt there will be many points on which we shall have grounds to differ, but not on that basic conception of what is the main purpose of the Bill.

I hope that the House will think further on this than mere party controversy, This is going to the root of the reason why Scottish housing has not in years gone by kept abreast with the pace of English housing. Furthermore, I am afraid that in the future, if we continue as we are, we may allow Scotland to miss opportunities of attracting industry and making fresh developments which all of us are so anxious to see. I return to those words which I have just read out: … impedes the provision of housing and the growth of industry. The Sorn Committee went further into that, and it is as well to see how the Sorn Committee couples that argument with this: It was pointed out that in recent years the growth of industry has depended, owing to the immobility of labour and the housing shortage, on a ready supply of houses for important workers in the locality chosen for new developments. It was represented to us that the unwillingness of builders to put up houses to let, owing to the incidence of owners' rates, was making it particularly difficult to attract vital new industries to Scotland. We are all equally anxious to attract vital new industries. A very representative committee has made a unanimous recommendation which points out one of the principal reasons why we are facing this difficulty of attracting new industries and keeping abreast of housing building. It would be less than worthy of us if we were not to attempt to follow, the Sorn Committee with a Bill and press on with getting it through the House and Committee stage.

On that point, may I ask my right hon. Friend the Secretary of State what his intentions are with regard to the Committee stage of the Bill? It is his intention to take it to the Scottish Grand Committee as at present constituted, or will my right hon. Friend, in view of past experience, take it to a reformed Scottish Standing Committee, because if it goes to the present Scottish Grand Committee, it seems to me that we are likely to spend many weeks and months before we get it through.

I suggest to my right hon. Friend that this is a particularly appropriate moment for the Government to consider whether the Scottish Standing Committee should not attempt a reform so that it will be better constituted to deal with highly controversial Measures of this sort; and that while dealing with those Measures, certain hon. Members representing Scottish constituencies may be allowed the opportunity of doing their work, not only in the Scottish Standing Committee, but in other Standing Committees which, as hon. Members know, have most important Bills before them, including the Teachers (Superannuation) Bill. I will leave that point, but I hope that my right hon. Friend will take note of what I have said in that regard.

Finally, to come back to this Bill, I think that the House should be grateful to the Government for having introduced it. As long as I have been taking an active interest in politics, and that is going back —one is getting quite grown-up—for about a quarter of a century, I have always heard mentioned as one of the bugbears in Scottish housing progress that we have had the millstone of this rating system tied round our necks. We have seen one Government after another of differing political complexion failing to tackle the problem. During the Coalition Government in 1945, it was seen fit to appoint the first Sorn Committee with limited terms of reference, but nothing came of it, in spite of six years of Labour rule, and it fell to my right hon. Friend in 1953 to re-appoint a fresh Sorn Committee to make recommendations.

Those recommendations have been made in clear and unanimous terms. With courage and industry my right hon. Friend has been frank in facing this awkward problem. He has introduced this Bill and I am grateful to him.

5.33 p.m.

Mr. David J. Pryde (Midlothian)

We on this side of the House have a strong case against this Measure, and I stand four-square behind what was said by my right hon. Friend the Member for East Stirlingshire (Mr. A. Woodburn) in his brilliant remarks when moving the Amendment.

The Secretary of State for Scotland tells us that this is the most important Measure since 1929, and at least one hon. and gallant Gentleman opposite will remember 1929—I remember it, although I was not in the House at the time. It is remarkable that at this time of the year we find Scottish law being knocked about so unjustifiably as it is. A year ago we found ourselves in the same position.

Regarding this Measure, my mind goes back to the debate in this House on the White Paper on National Service and the remarks of my right hon. Friend the Member for Ipswich (Mr. Stokes). My right hon. Friend described the drafting of that White Paper in no uncertain terms. I cannot use the same extravagant language now as he used then, but I make bold to say that whoever was responsible for the drafting of this Bill had the cunning of the fox and the subtlety of the serpent.

This is a most important Measure affecting the lives of our people in Scotland, and I am emphatically opposed to it. The reason is simple. It ignores the historic set-up of local government in Scotland, and at the same time it steamrollers the burghs. It filches away from them their hard-won democratic rights and places the Secretary of State in a dictatorial position. In fact, were this Measure placed on the Statute Book, I visualise that the people of Scotland would require again to present a Petition of Rights.

We have a White Paper about which the right hon. Gentleman certainly found some difficulty. He tells us that there is to be a new valuation basis. That basis is to be dictated by the right hon. Gentleman, and it completely ignores the cause of rating in Scotland. I challenge the right hon. Gentleman and the Government to describe what really is a fair rent and a fair market in housing in Scotland, because it does not exist. As the hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray) has said, the present state of affairs tends against the building of houses in Scotland. Between the two world wars there were more houses built in Scotland—many of them in my own constituency—under the Wheatley and the Greenwood Acts—two Labour Measures—than under the rest of the housing Acts put together. Private enterprise has been amply demonstrated to be incapable of providing housing for the people and the local authorities have had to do the job. I repeat that no such condition as a free market in housing exists in Scotland.

In my opinion, this Bill is just a conglomeration of mumbo-jumboism cloaking a dastardly attack on the standard of living of the Scottish people. All taxation, no matter from what angle it comes, filters back on to the class least able to resist it. This is one the Scottish people will suffer. We were told that there were two Sorn Committees; so the Tories were very persistent in their attempts to get owners' rates abolished.

Mr. J. Stuart

The first Sorn Committee was appointed by Mr. Tom Johnston and not by a Tory Government.

Mr. Pryde

I am not referring to the authors of the first Sorn Committee. I am saying that there were two Sorn Committees and the Tories demonstrated that they were very anxious to get owners' rates abolished, which is the principal object of the Bill. Once they are abolished, we are told, "You will be compensated, you will get it back from the Chancellor of the Exchequer." Who the heck ever got anything back from the Chancellor of the Exchequer? That is worse than trying to get blood out of a stone. The right hon. Gentleman is in that regard founding his hopes on sand. And why owners' rates? Why not abolish occupiers' rates? There are more working-class occupiers than owners.

The right hon. Gentleman referred to a Bill which was discussed this morning by a Standing Committee. There we were endeavouring to legislate for the few, and it is remarkable how some people desire to distort the law—especially in Scotland—in favour of themselves or their friends. Naturally, I have to speak for the mass of the people and not for one class. In this Bill we are not legislating for the minority but for the majority, but we are not legislating for their benefit but rather for the opposite. It was said in the Standing Committee this morning that we were trying to bring relief to a certain section of the community. Here we are trying to bring relief to a small section of the community, and we must take up an attitude against it.

Local authorities in Scotland will not accept Clauses 5, 9, 15 or 16 of this Bill. Time is short, and I have promised to restrict my remarks because there are so many hon. Gentlemen who wish to speak. It is not right that I should do all the talking. Other hon. Members get the same salary as I do and should be able to play their part.

5.40 p.m.

Sir Ian Clark Hutchison (Edinburgh, West)

I am afraid that I cannot follow up the rather picturesque language of the hon. Member for Midlothian (Mr. Pryde), who said that the Bill was drafted with the cunning of a fox and the subtlety of a serpent. I merely find it rather complicated and technical. Nevertheless, I feel that the general purpose of the Bill deserves our support, and it certainly will receive my support, because it is clear that the time is ripe for the reform of the valuation and rating system in Scotland.

I think everyone agrees that the procedure outlined in the Lands Valuation (Scotland) Act, 1854, is now out-moded. As mentioned earlier in the debate, this is not the first effort made to bring about reform in Scotland since the end of the war. We had the Report of the first Sorn Committee (Cmd. 6595), published in December, 1944. That Committee expressed concern with some of the effects of the law as it stands at present. The terms of remit did not enable the Committee to deal simply with the point of the abolition of owners' rates. Nevertheless, I would remind the House that the first Sorn Committee, in paragraphs 49 and 50 of its Report, did refer to this particular problem, and in paragraph 51 it said: Nevertheless we feel compelled to record our view that, if it were otherwise acceptable and could be effected, this measure would provide the solution to the rating difficulties which we have been considering. I think it is a pity that this finding was not followed up by legislation earlier on in the post-war years. If that had been done, a good many of the difficulties which we are going to experience now in dealing with this problem would not have arisen. I will refer to this again later.

It is at least satisfactory, as has been made clear, that the second Sorn Committee reported without reservation in favour of the abolition of owners' rates and the abating of rents in proportion (Cmd. 9244). I am glad that this recommendation has been incorporated in the Bill, in Clause 16 and the Third Schedule. I think that the reasons adduced for this change by the Sorn Committee and referred to in the White Paper are compelling and that unless this is done it will be impossible to reform the valuation system in Scotland.

I should like to say a word or two about the new system of valuing heritable property which is recommended by the Sorn Committee. Hon. Members interested in this will have noticed in paragraphs 43 and 81 of the Report that some of the witnesses suggested that if the Scottish basis of valuation was assimilated to that followed in England and Wales it would be easier to administer the Exchequer equalisation grant. I think that there is something in that argument, and also that it might achieve a greater degree of uniformity in valuation. On the other hand, though I think that there are attractions in the English system of centralised valuation by the Inland Revenue, I do not feel that these attractions justify us in departing from our traditional Scottish system of valuation by local assessors.

Moreover, I think that the recommendations made by the Sorn Committee about the qualifications and appointment of assessors and also the establishment of a new Central Advisory Committee, all of which are incorporated in the Bill, will enable us to establish a more efficient system of valuation than we have had hitherto. I would add that, as I am not much of a mathematician myself, I do not envy the assessors the job of calculating "fair rents" under the new system, although I like the idea that lies behind it.

The right hon. Member for East Stirlingshire (Mr. Woodburn) and the hon. Member for Midlothian referred to Clause 5 of the Bill which deals with the constitution of the Valuation Appeal Committees. I know that this is a matter which has aroused concern among many of the local authorities. I personally think that the Secretary of State is absolutely right in adopting the recommendation put forward by the Sorn Committee in paragraphs 89 and 92. I say that because I have good reason to know the views of many of my own constituents on this point.

It so happens that I have a letter from the city assessor in Edinburgh which confirms the point that practically all the private owner-occupied houses in the city which have been revalued since the end of the war are in my own constituency. In many cases there have been considerable increases in the assessments, and the Burgh Valuation Committee has been kept very busy. I will not weary the House with figures, but it may be of interest to hon. Members to know that there were originally no fewer than 1,670 appeals, all of which, I think, arose from my own constituency to the Burgh Appeal Committee this year. They were, in fact, reduced to about 167 cases actually heard covering 427 appeals, and that shows the magnitude of the problem.

Mr. J. C. Forman (Glasgow, Springburn)

Will the hon. Member relate those figures to the actual number of subjects assessed?

Sir I. Clark Hutchison

I can tell the hon. Member for Springburn (Mr. Forman) the districts which have been assessed. I cannot give the actual number, but the districts are Barnton, Cramond, Blackhall, Davidson's Mains, Clermiston, Silverknowes, Corbiehill, Easter Dry-law, Craigleith, and Blinkbonny. They have all been revalued, the whole lot of them in West Edinburgh, since the war. Incidentally, I would say in passing that the figures of the number of appeals which I have given make quite inaccurate the comment in the memorandum sent to us by the Association of County Councils. The hon. Member will find this on page 2: Only an infinitesimal number of valuations made by an assessor annually are appealed to the Valuation Appeal Committee. … There is considerable discontent among many of my constituents on the subject of appeals. They are distrustful—I will not put it higher than that, because I do not want to give offence in any quarter—of the existing valuation committees, and they welcome this change. I certainly hope that the Secretary of State will stand firm by the principle adopted in Clause 5.

Mr. William Ross (Kilmarnock)

Surely the hon. Member is going rather wide. Would he change the wording of his last sentence and say that they are distrustful of the valuation appeal committee in Edinburgh?

Sir I. Clark Hutchison

No. I do not want to give offence, and I would say that I do not think that the Edinburgh valuation committee is any better or worse than any other. I think that it performs its difficult task to the best of its ability. I merely say that some of my constituents are distrustful of it, and they have let me know that in no uncertain terms. I am merely reporting that as an expression of their views, as I think that I am fully entitled to do.

I want to come to two particular provisions in the Bill which I do not like. One is perhaps not a matter of fundamental importance, but the other is. It is most important. I feel strongly about it, and so do many of my constituents. First, the Bill in Clause 9 states the recommendations made in paragraph 97 of the Sorn Committee's Report that one-fifth of the valuation sites should be revalued within each quinquennial period. Frankly I prefer—as the Secretary of State knows from the correspondence that I had with him before the Bill was published but after the Sorn Report had been issued—the alternative scheme referred to in paragraph 98 of the Report.

The alternative scheme would allow for a complete revaluation being made during the whole five-year period, and the bringing into force of a completely new valuation roll once every five years. If this, were done we should avoid perpetuating the existing system of piecemeal revaluation which many people consider to be unfair and unsatisfactory. I hope that the Secretary of State will give further consideration to this matter. From correspondence I have had with him I know that he feels that it is a good arguable proposition.

Mr. Woodburn

As my Member of Parliament, will the hon. Gentleman raise the question whether this valuation will be retrospective? I must declare a vested interest in this matter.

Sir I. Clark Hutchison

I was just coming to that question. My final point is a very important one, which affects many of my constituents, including some most distinguished Members of the party opposite. At the moment I am not personally involved, because the assessor has not got around to me yet. No doubt he will do so in the course of the next year or two.

I refer to the proposal contained in paragraph 13 of the White Paper, and Clause 15 of the Bill, which is, briefly, to freeze all existing valuations at their present level until 1961 or 1962. I think that that is a very unfair proposal, which is bound to cause a lot of trouble and bitterness. It may be that the method advocated by the Sorn Committee for solving this problem is not entirely satisfactory, but I feel that the Government's proposal for a complete standstill for five or six years is not right.

The work of revaluation has been going on since about 1948, and has been of a rather haphazard nature. Some parts of Scotland, both town and country, have been revalued, whilst adjacent districts have been left untouched. That is certainly true of Edinburgh. It is purely a matter of luck, according to where a householder may be living, whether or not he suffers the penalty of having his assessment frozen at the present level for five years. As I mentioned in answer to a question put to me earlier by the hon. Member for Springburn practically all the owner-occupied houses in the western part of Edinburgh to the north of Corstorphine Hill have been revalued in the last three years, but so far as I know—and the city assessor appears to confirm it in correspondence which I have had with him—there has been no reassessment in respect of exactly similar types of houses in other parts of the city, north, east or south.

It is very unfair that a few thousand people living in the western districts of Edinburgh should be subjected to a heavy additional financial burden for five years while the rest of its citizens should be exempt from this imposition. I have no doubt that the same situation exists in other parts of the country, as I know, for example, is the case in Milngavie.

Mr. Cyril Bence (Dunbartonshire, East)

A frightful thing has happened in Milngavie and Bearsden, where piecemeal revaluation has led to public demonstrations, particularly at the proposed freezing of these new valuations. It is being said that "Bearsden has gone red."

Sir I. Clark Hutchison

The difficulty has risen in other parts of Scotland, and I knew about Milngavie. I suggest that all revaluations of assessments which have taken place since the end of the war should be scrapped, and that a datum line—either the 1939 or 1944–45 assessments—should be taken as the starting point for the new system of valuation. This course is advocated by the Association of Owner-Occupiers in Edinburgh, and also by various local ratepayers' associations who have been in communication with me. It is a reasonable proposition, and one which would be just and fair.

It is not right that a relatively small number of people in Edinburgh and other parts of Scotland should suffer the penalty of a financial burden of this sort for the next five years. I urge the Secretary of State and the Government to consider this matter very carefully, in order to see if they cannot adopt my suggestion, or some similar alternative, during the Committee stage, because there is great feeling upon this matter amongst the people who are affected.

5.57 p.m.

Mr. J. C. Forman (Glasgow, Springburn)

I support the Amendment so ably moved by my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn). This Bill gives the maximum amount of assistance to property owners and the minimum amount of assistance to owner-occupier and tenants of rented houses. The whole trend of Government policy is to increase the expenses of local authorities. Various burdens are likely to be imposed very soon. The first is the question of the rate of interest which will be charged to them. I should like to state the position which now faces my own authority. Just recently it tried to raise a loan of £5 million. The bulk of that money was left with the underwriters, and it is just possible that next time the authority goes into the money market, instead of having to pay about 5 per cent., it will have to pay 6 per cent., which in turn will place an added burden upon the ratepayers of Glasgow.

Glasgow also has to face the problem of the withdrawal of housing subsidies. The Secretary of State for Scotland has intimated that the subsidies will probably be withdrawn immediately upon the passing of this Measure. It is true that subsidies will continue for slum clearance and for overspill, but the burden of dealing with general needs will have to be borne by local authorities in full—and we have it on the authority of the Lord Provost of Glasgow that that city intends to continue building for general needs irrespective of what action the Government may take upon subsidies.

Glasgow is also faced with the problem arising from the statement made recently by the Secretary of State for Scotland, that he has now given permission for the new town of Cumbernauld to be proceeded with and has stated that he hopes to name the committee very soon. Because of its overspill problem, Glasgow is interested in Cumbernauld. The Secretary of State has imposed upon every tenant going from Glasgow to Cumbernauld a certain annual expenditure, which will mean that Glasgow will have to meet part of the expenditure of running the new town. The indications are that whilst the valuation is frozen the rates will increase year by year, and the occupiers will need to meet the whole of the increase instead of only part, as at present.

If it is the Government's view that a subsidy must still be given to industry, that subsidy should be given upon the same basis as other subsidies, and should come from the national Exchequer. If the Government feel that a subsidy of 75 per cent. relief in industrial derating should be given, it is entirely unfair that it should have to be found by the local authority. My own local authority loses £1¼ million per annum by industrial derating. Many organisations with which I am closely associated benefit from industrial derating, such as the Co-operative Federation in Scotland, but they take the view also that if the subsidy is to be given to industry it should come from national sources.

I cannot understand why the Government are departing from the present practice of valuation appeals courts. The assessor, while being appointed by the local authority, is not responsible to it. Certain conditions are laid down to him to which he must conform and, because of that, I believe that the present arrangement is quite good and should not be disturbed. The Sorn Committee agrees with me on this point.

What is the position in Glasgow? It has two committees that are not responsible to the corporation and over which the corporation has no control beyond appointing them. They are the committees for the licensing court and the valuation appeals court. The latter is appointed in such a way as to give reasonable service and come to fair decisions.

I have the returns for 1948, when the whole of Glasgow was revalued. The subjects on which we were entitled to rate were 358,000 out of which 5,000 appeals were lodged with the valuation appeals court. Of those appeals, 48 per cent. were settled out of court and of the remaining 52 per cent. only 2 per cent. actually put in an appearance at the court. That indicated to the valuation officials that there had been many frivolous objections to the valuation. The licensing court has worked very well, being appointed by the local authority. The valuation appeals court could work quite well if it were continued in its present form.

The freezing of valuations will hit big authorities. It hits my own authority. It is true that the assessor may revise certain valuations, but the scope of his activities is very limited, in my opinion too limited. Glasgow Corporation revises quite a number of valuations from year to year, such as those of the cinemas and the dog-racing tracks, but they will not be allowed to do that under the Bill. The freezing of the valuations will preclude their doing it. What the assessor may be allowed to do is much too narrowly defined.

Will the representative of the Government tell us the terms of reference of the Valuation Advisory Committee? Will the committee have very definite terms laid down? There is just the possibility that if it is not tied fairly tightly in its work it may become a policy-making committee and will interfere with the work of the assessors and of those who have to value property from time to time.

For the reasons I have given and for others which will be adduced by my hon. Friends if they catch your eye, Mr. Deputy-Speaker, we have an overwhelming case for the refusal of the Second Reading. Probably I am optimistic, but I think the case we are putting is a warning to the Government.

6.6 p.m.

Captain J. A. L. Duncan (South Angus)

I welcome the Bill and was delighted to listen to the Secretary of State describing it with such clarity and enthusiasm. There are many advantages in it. It is worth a lot once and for all to get rid of owners' rates, the iniquitious system of rates upon rates which was hindering industrial and housing expansion and confusing the relationships among local authorities, the Government, owners and tenants. Paragraph 16 of the Sorn Committee's Report says, on this subject: The evidence thus briefly summarised has left us in no doubt that owners' rates are now an unnecessary and harmful complication in the Scottish system of rating which disguises the finances of owners and occupiers of all classes of property and of rating authorities alike and impedes the provision of housing and the growth of industry. I express my gratitude on behalf of everybody in Scotland to the Secretary of State for Scotland for tackling this complicated problem with such courage.

The next advantage is that we are to have independent and qualified assessors, instead of the Board of Inland Revenue. In England they have the Inland Revenue. I am glad that we are to have assessors. The qualifications will be laid down by the Secretary of State and approved by this House, subject to Prayer and the negative procedure. I wish them luck in their efforts, because they are going to have a very difficult task in revising, on a quinquennial basis, the system of valuation on a fair and equitable basis at current values in a free market. We shall have to debate the point further in Committee, but it seems a very difficult thing for them to do. I am fortified, however, by the Sorn Committee's Report in believing that properly qualified people know how to do this, and can be trusted to do it.

The third advantage seems to be that it will once and for all settle the question of the rating of agriculture. This has been full of anomalies in the past, with the rating of agriculture based on one-eighth of the annual gross value of the farm. It will now be based on the net annual value of the farm house and the farm cottage. I think the public will generally regard this as fair. The house and cottage will be rated fully and the land, which forms the raw material of the farmer, will be derated entirely. Jute is derated in the same way. It is the raw material of the jute factory. Land is equally the raw material of the farm. I am glad that the right hon. Member for East Stirlingshire (Mr. Woodburn) does not oppose that provision.

The last advantage, to my mind, is that out of this Scotland gets another Ell million in the equalisation grant. I represent partly a county and partly a large burgh. Naturally, the burgh objects to losing its valuation functions, and I have a great deal of sympathy with it, because the Burgh of Arbroath has always valued its property fairly. It takes the view that it is kept in balance between the interests of the ratepayers and the interests of the councillors who have to face elections.

The authority would therefore like to leave large burghs as separate valuation authorities. Under Clause 2 there is provision for administrative schemes to be put forward by valuation authorities, and I should like to see that developed so that agreements could be reached, for instance between the County of Angus and the Burgh of Arbroath, which is a large burgh, so that there could be separate assessors. There might be a chief assessor in the county with a deputy assessor in Arbroath. There would not then be a feeling of frustration and a feeling that the burgh is losing a power which it ought to maintain.

These people also regret the method by which the Government are setting up valuation appeals committees. There is a good deal to be said for the idea that appeals committees should be as far away as possible from the local people who have made the original valuation. That is very clearly set out in the Sorn Report. It is necessary that the valuations should not only be fair but should appear to be fair to the outside public and to householders. They object also—and this is a curious point—to the exclusion of agricultural land from the roll. The county would like the roll to include all the agricultural holdings, even though they are all entered in the roll at nil valuations.

Angus is rather proud of its valuation roll. It is a Domesday Book, in a way, and the county hopes that the Government will consider giving permission to valuation authorities to retain the agricultural valuations in the roll, even though they have a nil figure attached to them.

Lastly, I should like to support in some ways the comment made by my hon. Friend the Member for Edinburgh, West (Sir I. Clark Hutchison) about the freezing of the roll. I am not a bit happy about the method by which the new valuation roll of 1961–62 will be arrived at. In this case the Government have departed from Sorn, and I am not certain that we shall not get a better system if we go back for the time being to the 1944–45 valuations, and, then, in 1960, try to work a provisional valuation, which would give a year for appeals to take place. This is the Sorn idea. After that the roll would appear and would be put into force for 1961–62.

I hope that the Government will bear these objections in mind and that in Committee, where a large number of points will be raised, my right hon. Friend will carefully consider all that we say.

6.15 p.m.

Mr. Thomas Steele (Dunbartonshire, West)

I am tempted to follow many of the remarks which were made by the hon. and gallant Member for South Angus (Captain Duncan). It is quite clear, however, from what has been said in the Second Reading speeches today, on both sides of the House, that, despite the view of the hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray), we shall be a long time in Committee because of the number of important points which hon. Members on all sides are bound to raise.

The hon. and gallant Member for South Angus said that one good thing had happened—the abolition of owners' rates. We can understand that. If he will carefully read our reasoned Amendment, he will see that it deals with the fact that the Bill narrows the basis on which rates will be levied, which is entirely opposite to the view expressed by the Secretary of State who said, in introducing the Bill, that we must have a system which would enable local authorities to raise revenue in a way which would place an equal burden on one citizen as against another.

The Bill does the opposite to that. I have no desire to go into that at present but rest my case on the admirable speech of my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn)—except to say this: under the present rating system, whether it is on the English system or not, we have many anomalies. If we consider the case of two tenants of separate houses, one of which is occupied by a couple and the other of which is occupied by a couple and four people who are earning, then a rating system under which the same burden is placed on those two tenants cannot be justified in any way.

We ought to consider the various alternatives which have been suggested so that, in view of the ever-increasing burdens which we place on the shoulders of local authorities and ratepayers, a more equitable method will be found.

I want to devote the time at my disposal to a point which has not yet been made concerning the valuation of gas works. The Sorn Committee said they were unable to deal with this matter at all because the evidence did not come forward in time. A working party was set up, but it had to work very quickly. The recommendations were put to the Convention of Royal Burghs, and local authorities never had a proper opportunity to examine the proposals.

I do not think local authorities will object to the new proposals about valuation, because it is clear, as the Sorn Committee says, that where local authorities have not had to renew their installations for many years they have been able to pay for the capital costs so that the valuation stands at nil at present. Therefore, there is a sense of rough justice in the proposals in the Bill dealing with valua- tion, but when we come to the apportionment of the amount to the local authorities, we find an entirely different story. I want to direct attention to the point made by the Sorn Committee when speaking of the basis of structural cost at the present time: Structural cost is proving unsatisfactory especially as it is in the larger cities and burghs that most of the new expenditure is being made and this is attracting value away from the other areas. I have been fortunate enough to secure a copy of a memorandum which deals with how the proposals would affect local authorities if the new system were brought into operation, which of course would be the English system. Looking with care at the figures I have before me, I find that the opposite effect entirely from that suggested in the Sorn Committee Report would be made. Taking the landward area of Scotland, the valuation of the local authorities for rating purposes on gas works would be reduced from £50,000 to £34,000 and the valuation for small burghs would be reduced from £84,000 to £61,000, whereas the valuation for large burghs would be increased from £247,000 to £286,000. That is a directly opposite effect from the one suggested in the Sorn Committee Report.

If we look a little more closely at the figures, we find that in taking the landward area and the small burghs in Aberdeen the valuation for gas works will be reduced from £4,000 to £2,400. In Angus, part of which is represented by the hon. and gallant Member who has just spoken, the valuation would be reduced from £4,300 to £3,000. In Lanarkshire the valuation would be reduced from £22,000 to £15,000. When we look at the large burghs, we find that in Aberdeen the valuation would be increased from £14,000 to £20,000, in Dundee from £17,000 to £19,000, in Edinburgh from £41,000 to £56,000, and in Glasgow from £68,000 to £95,000. So, in effect, these figures show quite clearly that the recommendations of the Sorn Committee will have an entirely opposite effect to that which the Committee thought desirable.

Turning to a large burgh in my constituency, I find that instead of having an increase in valuation by this proposal, the effect will be that the valuation of Dumbarton Burgh for gas works will be reduced from £19,000 to £10,000, which is a really remarkable loss. The position in Dumbarton is that a complete new gas works has been built. It has been built to feed the grid, so that other places will have the gas manufactured in Dumbarton. Because of the new gas works placed in the Burgh of Dumbarton an entirely new water supply has had to be brought in as the gas works made large demands on the water supply. The burgh is very much concerned about the cost of the new water supply. The proposals in the Bill mean that the valuation of the new gas works is to go down from £19,000 to £10,000, yet the local authority has to find a new water supply and the ratepayers of the burgh suffer because of that.

I am raising this matter now because, between now and Committee stage, I want hon. Members to realise the kind of thing which might pass without being considered. The Government will have time to look at this question and local authorities generally will be able to study it and understand the question of the apportionment of rates after valuation has been arrived at.

6.25 p.m.

Mr. J. R. H. Hutchison (Glasgow, Scotstoun)

May I start by congratulating my right hon. Friend on threading his way so skilfully through a complicated legislative thicket and only getting stuck on a very minor point, which in fact did not matter because it was a suggestion made by the Sorn Committee to which effect is not being given. May I also say that I hope the hon. Member for Dunbartonshire, West (Mr. Steele) will excuse me if I do not follow him into his Dumbarton gas troubles, as I have no doubt that the points which he raised will be considered in Committee.

I welcome the Bill on two grounds, first, because it exhibits once again that standard of courage and political honesty which the Government showed when they introduced the Budget. No one can pretend that we expect this Bill to be a popular Measure, but it will be a sad day for democracy in this country when the Government are not prepared to introduce a Measure they think will be for the benefit of the country because they believe it will be unpopular.

That is one reason why I welcome the Bill. The other reason is because it rights a situation which is both Gilbertian and pernicious. The Gilbertian side of it is easily seen and, I think, realised by all hon. Members. It is illustrated pithily in the Sorn Committee's Report when it states that a house which would give an economic rent in England at £122 a year would need to be let at £240 a year in Scotland to produce the same net return. There are many other instances, and hon. Members who have spoken in the debate have given illustrations on the same lines.

Mr. Hector Hughes (Aberdeen, North)

As the hon. Member is drawing an analogy between the Housing Repairs and Rents Bill and this Bill on the score of unpopularity, will he agree that the Housing Repairs and Rents Bill is a complete failure and that this Bill is also likely to be a complete failure?

Mr. Hutchison

No, I do not agree with any of those statements of the hon. and learned Member. I shall not pursue that matter further.

The part of the situation to which I have referred is recognised, I think, by everyone as being pure "Alice in Wonderland." It arises from the system which has grown familiar in Scotland of rates having to be paid on rates. That pernicious system has two main evil effects. The first is that private enterprise in Scotland has no security for the future. A person does not know what is going to happen to a house he has built—what rates owners will have to pay on it—or whether to build for an established market. In other words, he has to see from where someone is coming who will buy the house once it has been built. If one wants to see the magnitude of that evil in statistical terms, one has only to look at the relative figures of houses built by private enterprise in England and Scotland between 1933 and 1939. In England the annual average was 59,464 houses and in Scotland it was the mere pittance of 1,593. That was before the situation was as bad as it is now.

Mr. Bence

For sale?

Mr. Hutchison

For sale or to let—either. I think it is agreed on all sides that it would be to the advantage of the country that a reasonably high proportion of houses should, if they can, be built by private enterprise without a subsidy.

Mr. Bence

For sale?

Mr. Hutchison

To let.

Mr. Bence

This is important; it is being said too often. Is the hon. Member saying that if the rating system in Scotland were adapted to the English principle, we should gradually reach the stage of speculative building of houses to let for investment purposes? Let me assure him that in England and Wales from 1920 onwards the building of houses to let by speculative builders almost completely died.

Mr. Hutchison

I must refer the hon. Member to what the Sorn Committee said. The Committee indicated hopes that the building of houses to let would, at any rate, be made possible. Whether it will actually come about, I do not know.

Surely, it is to the advantage of the whole community that a high proportion of houses should be built by private enterprise, whether to let or for sale, if no subsidy is paid. The total housing subsidy paid to the City of Glasgow, for example, in 1954–55 amounted to £3,238,000. Hon. Members have only to multiply that figure to apply it to the whole of Scotland to show what a big drain this is upon the Treasury, and consequently upon the taxpayer. By the extent to which we can get the houses supplied by private enterprise, the taxpayer and the Treasury benefit.

The second damaging effect is that the owner of a rent-restricted house is simply not left with enough free money to be able to keep it in repair. Hon. Members opposite—at any rate, from Glasgow—are familiar with that situation and have recognised it for a long time. In a period of housing shortage, we see the tragedy of one house after another becoming unfit for human habitation because the owner of the house cannot keep it in repair.

The owners of these houses are not all rich, wealthy land owners. Quite a number of people who have a little money invested in one or two houses are suffering considerable hardship because of this situation. When we realise that the cost of repairing a house is six times as great today as in 1914 and yet the rent left under the Rent Restrictions Acts, plus the incidence of Scottish rates, leaves the owner with less rent to spend on the house than in 1914, we see the magnitude of the difficulty in which the owner is placed. And so we have the endless story of houses falling into disrepair and becoming uninhabitable.

I will not ocupy the time of the House in discussing valuation, although a number of Committee points of considerable interest arise on it, together with the question of the change-over at the end of five years to a new roll.

I should like to examine the reasons why hon. Members opposite have decided to oppose the Bill by their reasoned Amendment. Their first ground for opposition is that the Bill fails to provide against the system of rates being overloaded. My right hon. Friend the Secretary of State said in the House, on 24th November, that a review of the whole of local government finance and rating was currently being undertaken. The first answer to that assertion, therefore, is that the question is being examined and, no doubt, the result will come before the House.

The Sorn Committee also pointed out—and, I think, it has been recognised by hon. Members opposite—that this overloading of the rates arises largely from the proportion of national expenditure for national services which has been loaded partly on to the shoulders of local authorities. I refer to items such as education, health and police. In all these cases, the local authority is called upon to pay a contribution. During 1949–50, the residue towards these national services remaining to be paid by local authorities all over the country amounted to £30 million.

I have not noticed that hon. Members opposite have been backward in adding to these loads. Surely, in the period from 1945 onwards, they expanded them all. It is a quite new attitude of mind to say that what they were prepared to do when they were in Government, when they expanded the services for which the local authority was called upon to contribute, was all right then but is wrong now.

Mr. Thomas Fraser (Hamilton)

That is not what we say at all.

Mr. Hutchison

Then why was it done? When the Socialists were in power, why did their Government raise the burden on local authorities by expanding these national services and calling upon local authorities to pay an ever-increasing contribution?

What is the alternative plan? How do hon. Members opposite propose to deal with this situation? Their view, I understand, is that these houses should be municipalised; and that some six or seven million houses throughout Britain would be taken over by the municipal authorities at a cost of between £2,000 and £3,000 million.

Mr. Fraser

Who said that?

Mr. James H. Hoy (Leith)

That was in the hon. Gentleman's Election programme.

Mr. Hutchison

No, it was not. That was put out, as I understand it, in the official statement by the party opposite. Does the hon. Member deny that that proposal to municipalise houses forms part of the Socialist plan?

Mr. Fraser

I was denying the figure quoted by the hon. Member.

Mr. Hutchison

Perhaps my figures are not accurate—I do not know. When dealing with such astronomical sums, one can easily slip a little. I am interested to know that the hon. Member does not deny that it is part of his party's plan to tackle this question by municipalising a large proportion of the houses. On whose shoulders is to fall the cost of this municipalisation? Who is to pay, other than the municipalities? The local authorities would be loaded with yet more burdens, while hon. Members opposite complain that they are overloaded already. That argument, therefore, does not cut any ice.

Mr. Bence

The hon. Member forgets that local authorities would have the income as well as the burden.

Mr. Hutchison

The next part of the reasoned Amendment goes on to say that the party opposite opposes the Bill because it fails to deal with the derating provisions of the Local Government Act, 1929. Here, again, is a new-found anxiety. Looking back to the time of the 1929 Act, one finds that the late Mr. Arthur Greenwood, for example, on 18th March, 1930, used these words: The die is cast. I did not cast it myself although I was always in favour of it. It was an act done by my predecessor with the general approval of the public opinion in the country. Many other speeches were made by adherents of the benches opposite saying much the same thing.

If that does not impress hon. Members opposite, let me read what was said by the right hon. Member for Bishop Auckland (Mr. Dalton) on 21st May, 1953: I represent a constituency within a Development Area.… Under various statutes we have achieved reasonably full employment in the Development Areas, and although we have not yet sunk deeply into unemployment in those areas, yet there are many industries recently opened up there which are still precariously poised. Re-rating these people will quadruple the rates they pay; it will quadruple the rate burden on every industrialist we have coaxed into Development Areas in past years, and it is by no means clear that that might not result in serious unemployment."—[OFFICIAL REPORT, 21st May, 1953; Vol. 515, c. 2369.] Is that what the hon. Members opposite want? They say as much in their reasoned Amendment.

Then they go on to object to the Bill, because they say it …further restricts the narrow basis of local taxation by placing the whole burden on tenants and owner-occupiers … and they obviously are flirting with the idea of a local income tax or land tax. I suppose that an argument could be made out for it. At least it was argued before the Sorn Committee.

Mr. Steele

No, it was not.

Mr. Hutchison

The Committee reported against it. The hon. Member will see that that was so. It is quite unworkable.

Therefore, unless hon. Members opposite are going to make that a main plank in their platform, they will perpetuate the chaos which now exists. Unless something is done to alter the existing situation we shall have continued disrepair and failure to repair houses.

Hon. Members opposite state in the Amendment that the Bill: … fails to deal comprehensively with the financial problems of local authorities in Scotland. Once again they are off the target because, as my right hon. Friend has said, that very subject is being reviewed just now. Do hon. Members opposite realise that in refusing support for the Bill they are disowning their own representatives on the Sorn Committee? As my right hon. Friend said, there was a remarkable and praiseworthy degree of unanimity in what the Sorn Committee said.

Mr. Douglas Johnston (Paisley)

Surely the hon. Member is not suggesting that any member of the Sorn Committee, or indeed of any Committee set up by Her Majesty or by the Secretary of State, represents any political party whatsoever or represents anybody?

Mr. Hutchison

It is a completely new doctrine to say, when one has gentlemen well known to be adhering to and happening to be members of a political party, that it is out of order to presume that they are saying something which represents the views of those in the party to which they belong.

Mr. Fraser

Can the hon. Member then say whom Lord Sorn represented?

Mr. Hutchison

Obviously, a number of individuals are non-party. Probably Lord Sorn was a Conservative—I do not know—but that is not the point. There were representatives on the Committee who adhered to the principles of the party opposite and were members of the party. The party opposite are now prepared to throw overboard the opinions of those people. [HON. MEMBERS: "No."] Yes, by refusing the Sorn Report, which is the basis of this Measure.

The truth is that none of the reasons given in the Amendment are valid. The fact is that hon. Members opposite were determined to oppose the Bill. The effect of the words "property owner" on most hon. Members opposite, except, I think, the right hon. Member for East Stirling-shire (Mr. Woodburn) who is more reasonable, is that of a red rag to a bull. They have to charge. [HON. MEMBERS: "Nonsense."] They know that the Bill, or something like it, is needed, but their phobia about property owners and landlords is such that they have to oppose it.

I cannot understand why hon. Members opposite are more bitter against the property owner than they are against the proprietor of other public services. Why do they show more hostility against him than against a bus owner, for example? They would not deny to the owner of a bus the right to have some return on his money and to keep his vehicle in repair.

Mr. Fraser

This matter has been brought up for the last thirty or forty years.

Mr. Hutchison

The present Government are trying to put the matter right, so why oppose them?

The truth is that, ever since I have been alive, investment in private property has been an extremely poor investment. Hon. Members opposite are only displaying the hostility to which perhaps people were entitled a hundred years ago, but they must try to live in the twentieth century. As Adlai Stevenson said of the Republican Party in the U.S.A., they have to be carried kicking and screaming into the twentieth century. If hon. Members opposite were really anxious to repair the deplorable housing situation in Scotland, they would support the Bill. The rag-tag collection of reasons which they have brought forward in their Amendment to oppose the Bill is nothing but a facade, and I hope that they will drop it.

6.45 p.m.

Mr. James Carmichael (Glasgow, Bridgeton)

The speech of the hon. Member for Scotstoun (Mr. J. R. H. Hutchison) indicates that he is going back to the nineteenth century. We do not condemn the landlord as a human being, but the day of the landlord is finished. We are going into a new age. The hon. Member questions us about the municipalisation of housing. We do not require to argue that point today. During the last 40 years working class people have not been able to obtain a new let house other than from the municipality.

One of our problems today is the limit that was put on the terms of reference of the Sorn Committee. They were not wide enough. The hon. Member for Scotstoun said something about the taxation of land values. No evidence on that subject was put before the Sorn Committee. It has been my experience with all outside committees appointed by Ministers and responsible to the House of Commons that their terms of reference have been very limited, and the Sorn Committee was likewise limited in considering the question of rating.

The hon. Member for Scotstoun said something about political honesty and about the Budget. Any number of comments could be made from this side of the House about the dishonesty of the last political Budget, which was presented after the General Election was over. The same point arises in connection with this Bill. It is not a question of the contents of the Bill but of what is excluded from the Government's programme.

The only important point with which I want to deal today is the question of the abolition of owner's rates. The owner, for example, may pay £4 5s. now and the tenant will pay £4 5s. when the Bill becomes an Act, and will receive a corresponding reduction in his rent. The Secretary of State said that valuation would continue until 1961, and that the rent would be the same during the next five years. The right hon. Gentleman admitted quite clearly in the White Paper—Cmd. 9606—on valuation and rating in Scotland which was issued in October last that he intends to abolish the Rent Restriction Acts. The White Paper stated: Any future increase in the landlord's return on his property will depend on the negotiation of a new lease, on any future alteration in the Rent Restriction Acts …

Mr. Hutchison

It will interest the hon. Gentleman to know that the question of local income tax and of the rating of site values were considered by the Sorn Committee, and both are mentioned adversely on page 7 of the Report.

Mr. Carmichael

I did not deal with local income tax but I said that there was no evidence laid about the taxation of land values. I am dealing now with the Rent Restrictions Acts. If the Bill is passed in 1956, during the five years intervening until 1961 rating is bound to go up for the tenant if the Rent Restrictions Acts are abolished.

Mr. J. Stuart

May I interrupt the hon. Gentleman because I do not want to mislead him? What I said was that the Bill proposes that the valuation roll for the year in which the Bill becomes law will be frozen until 1961–62, with the exception of new subjects such as new buildings.

Mr. Carmichael

The Solicitor-General will be replying to the debate; and the White Paper states clearly that there is an intention to abolish those Acts. If they are abolished, factors can increase their rents. What happens to the increase in the rating?

Mr. Stuart

Frozen.

Mr. Carmichael

Does the landlord pay it? Already, according to this Bill, the landlord or the owner of the property will have no rates to pay and if the Rent Restrictions Acts are abolished and rates are increased, who pays the increase in those rates?

Another matter which disturbs me concerns municipal housing. The party opposite did not mention to the electors during the General Election that they intended to abolish the subsidy on houses. A four-apartment house in Scotland receives a Government grant of £42 5s. whereas a three-apartment house receives £39 15s. If that is abolished the rates will be increased. So far as I can gather, this is exclusively a landlords' Bill. The Secretary of State himself admitted in his speech that if rating were abolished for the owners of property speculative builders would again come into the market. Well, they do not come into the market unless they are going to make a profit out of house building.

On this side of the House we have admitted that housing is a serious social problem which can only be tackled by the national Government and by local authorities. Today it is outwith private speculation. If I gather aright, if this subsidy is abolished, house building by local authorities will be at a standstill.

Mr. Stuart

There is also the problem of slum clearance, on which we wish to concentrate.

Mr. Carmichael

I realise that there will be grants for slum clearance, but with all the other problems the possibility of slum clearance will be small.

In great cities such as Dundee, Glasgow and other places, the amount of house building will be reduced considerably. Therefore I say to the House that we have reached the stage when the party opposite have decided to make concessions to the landowners, and we will divide the House tonight on the Second Reading of the Bill and likewise during the Committee stage. The Government want to get the Bill through by 16th May, 1956, though the Secretary of State was cautious because he said finally that if he could not get it through by next year he might get it through by 1957. The Government have often said that they want to see a property-owning democracy but by this Bill there will be more people homeless than there will be more property owners.

6.56 p.m.

Mr. C. N. Thornton-Kemsley (North Angus and Mearns)

The hon. Member for Bridgeton (Mr. Carmichael) did not say how it was possible that more people would be homeless under this Bill than under a property-owning democracy. He began by saying that the day of the landlord is finished and that we are moving into a new age. In so far as that is true, we on these benches welcome it because we believe in a property-owning democracy. We want to encourage owner-occupation of houses.

Mr. Bence

The owner-occupier gets nothing out of this Bill.

Mr. Thornton-Kemsley

If the hon. Member for Dunbartonshire, East (Mr. Bence) will allow me, I will come to that point in a moment. I cannot deal with two points at once.

In the meantime we have to be realists and face conditions as they are. Whatever any hon. Member may say, it will be a long time before we can achieve the position in Scotland when Scots men and women in large numbers are not dependent on other people for the roof over their heads. Somehow we have to make it possible for landlords to maintain those roofs and to maintain properties in a fit state for people to live in. The hon. Member for Bridgeton said that this is exclusively a landlords' Bill. I deny that fact and, as I shall try to show, in some respects the landlord is worse off under it than he is under present conditions.

I welcome this Bill because it is one part of a combined operation, the object of which is to bring reality into the distorted economics of housing in Scotland. As I see the situation, it is a three-fold attack on the problem; first, by getting rating valuations and assessments on to a sound footing, which we are trying to do under the Bill; secondly, by reducing the nation's bill for housing subsidies and concentrating these on the provision of houses to meet the most urgent needs; and, thirdly, by making a substantial move towards the decontrol of rents.

The introduction of a new basis of valuations for rating and the alteration of the machinery of valuation should together end the present anomalies in assessments whereby identical properties have widely differing rating values. It is indefensible that this should be continued for longer than is necessary, and it is a good thing that we are tackling the problem in this way.

The Secretary of State pointed out that the most spectacular provision of the Bill is contained in Part II—the abolition of owners' rates. The system of levying rates on owners as well as occupiers has greatly harmed our Scottish economy. Speaker after speaker during the debate has referred to the fact that the Sorn Committee pointed out that it has frustrated the building of houses by private enterprise in Scotland, and has made it very difficult, because of the lack of houses built to let, for industries to be set up in Scotland.

I am led by the interjection of the hon. Member for Dunbartonshire, East and the speech of the hon. Member for Bridgeton to say that it ought to be unnecessary to emphasise the fact that the abolition of owners' rates will not put one penny piece more into the pockets of the landlord. All rates which are remitted in this way will be deducted from the rents payable by the tenants.

In fact, in some cases—I want to controvert the argument that this is a landlords' Bill—landlords will be worse off than at present because of an anomaly which cannot have been foreseen. The owners of house property in Scotland will have to pay more Schedule A tax than at present. This anomaly arises because the statutory allowance for repairs which is at present calculated on the rent, including the owners' rates, will in future be calculated on the reduced rent. As this will lessen owners' chances of keeping property in repair, we ought to look at the matter in Committee.

A number of hon. Members have spoken about the provisions of the Bill as they concern the freezing of rents. The Bill provides that until the first revision on the new basis is completed, which will be in 1961–62, all rating valuations are to be frozen at the present levels, subject to such alterations as may be necessary to bring new properties on to the list and to deal with material changes in circumstances in existing rated hereditaments

Chapter IV of the Sorn Report is devoted largely to the introduction of valuations on the new basis, which it estimates will take five years, an estimate which the Government have accepted and no one has disputed. The Sorn Committee proposed the immediate abolition of owners' rates and an arithmetical adjustment of the present valuations to the new principles of valuation during the first year of revaluation whilst, simultaneously, the valuation rolls would be revised over a period of five years, approximately one-fifth being revalued each year. As the Secretary of State pointed out, the Bill departs from that proposal, and alongside the frozen valuation, which will, of course, have to be corrected from time to time for new entries and alterations of a material character, there will be a draft valuation roll prepared on the new basis, which will be increased by about one-fifth annually until it is completed.

My doubt about the wisdom of this arises in that the entries on the new valuation roll will be published, and in certain cases it will be possible to appeal against them. My hon. Friend the Member for Edinburgh, West (Sir I. Clark Hutchison) and at least one other of my hon. Friends have pointed to the fact that the freezing of the rateable value of properties at the existing level will act very hardly in certain cases. My hon. Friend the Member for Edinburgh, West spoke about residential areas which have already been valued and given a higher valuation, and they will be unfairly assessed compared with contiguous areas which have not been revalued. These differing values will be frozen at the present level. It is a great deal more startling when one looks at the revaluation of commercial premises. Shops have been given enormously high values on present rents, and these values will be frozen for the next five years.

I cannot say that I like the provision. At the same time, I confess that I do not see an answer to the problem. We shall have to look at it very carefully. I do not like the idea of the perpetuation of anomalies in relation to individual dwelling-houses and flats and, particularly, commercial premises for the next five years. Neither do I like the idea of producing a fifth of the new valuation roll every year and letting people see it and appeal against it. It will mean that the valuers will have to lift their heads from the job of revaluing which they ought to be doing, in order to deal with the appeals which will come in, and that will not represent the wisest use of our limited pool of experts in rating valuation.

I am attracted by the idea of the County Councils' Association that in the first quinquennium draft rolls based on the new system of valuation should be prepared but should not be published for the first four years, so that during that period the assessors would have a reasonable chance of carrying through their immense task. No one should minimise the tremendous task of revaluation which has to be carried out on the new basis, and it is not an easy basis either. My hon. and gallant Friend the Member for South Angus (Captain Duncan) spoke about the difficulty of ascertaining market value. In the case of houses one has to assume that the number of houses is about equal to the number of people wanting houses, so one has to assume something which is not true before one makes the valuation.

During the four-year period the assessors would have a real chance to carry through the stupendous task of revaluation. I hope further attention will be given to this suggestion. If the scheme is to succeed—it is a very big operation and could easily fail—we must make sure that we shall make the most economical use possible of the limited number of skilled rating valuers at our disposal.

Turning to the question of appeals against valuations, the hon. Member for Springburn (Mr. Forman) said he was sure that the valuation appeals committees could work quite well if they were continued in their present form. I do not think that anybody denies that, and we must all feel a good deal of sympathy with the point of view of local authorities. No one can say that these committees have not worked well. They have worked well, but the fact remains, as the Sorn Report says, in paragraph 89—I will not read it, but commend it to hon. Members who have doubts about this—that in certain quarters there has been a feeling that because the county councils appoint the committees, the committees will be slightly biased towards supporting the county councils. The Sorn Committee brought evidence to the contrary.

I agree with the transfer of the initial appeal from local authority appeal committees to an independent committee appointed by the sheriff. I want to look further than that—and this is very important—to the appeal from the valuation appeal committee. As I understand it, the present situation will be continued, although there is nothing about that in the Bill. The present position is that there is an appeal to the Lands Valuation Appeal Court. There is a difficulty in the machinery there at which we should look, and the Bill gives us a chance to look at it. I mention it now, because it is rather more than a Committee point. Certainly we shall look at it in Committee, but one wants to give as much notice as possible.

At the moment the appeal to the Lands Valuation Appeal Court is not made by the appellant in person, but by a stated case, and because of the very tight timetable for the appeals, it is not always practicable to amass all the facts in time for an appeal before the appeals committee; and unless the facts have been brought before the appeals committee, they cannot be included in the stated case which is put to the Lands Valuation Appeal Court. I think that I am right in saying that on occasion the Lands Valuation Appeals Court has itself pointed to this difficulty. My right hon. and learned Friend the Lord Advocate will know whether I am right about this. It is his province and not mine, but I think that objection has been taken.

What should happen is that an appellant should be empowered to lead evidence, if he desires to do so, before the Lands Valuation Appeal Court, and I think that the court should have available a panel of experts, who would sit with it as assessors to advise it on the highly technical issues involved. If that were done, it would bring the appeal court into line with the Lands Tribunal, which operates successfully in England and Wales, and provide an appellate body with technical qualifications to establish principles and precedents for the guidance of the appeal committees.

The other points which I have to make are mainly Committee points, but there are four which I want briefly to mention, because they are important, and the Government should be given notice of what is proposed. The first, which has not been mentioned before, is that in Clause 1 (3) and Clause 1 (4) it is envisaged, in certain circumstances, that the Secretary of State could compel the combination of counties into one valuation area. The Sorn Report did not go as far as that. The Sorn Report recommended that such combination should take place where the authorities concerned considered it to be in the interests of economy and efficiency. No Government grant is involved in this and, provided the counties comply with the Bill's requirements as to the appointment of qualified assessors, the decision as to whether amalgamations are desirable or not should rest with them and not be forced on them by the Secretary of State.

The second point is about the expenses of the Scottish Valuation Advisory Council. I see that the expenses of the Advisory Council of fifteen members is estimated at £250 in the first year and probably less than that afterwards. It seems to me that we shall be a little parsimonious, and I cannot understand why the figure is so low.

My third point was brought up by my hon. and gallant Friend the Member for South Angus (Captain Duncan). I think there is a great deal to be said for the entry of agricultural lands and buildings on the new valuation roll. We have had them there in the past, and these valuation rolls are very much used by professional men and by assessors of taxes in connection with Schedule A assessments. They are very much used by district valuers and by private practitioners and perhaps by lawyers, and they have been of the greatest possible value. We are now no longer to have them.

I suppose it could be argued that it will be an economy, and that we are not having them for that reason, and that the counties would have to pay more if those entries were made on the valuation roll. Against that, there must be some revenue from the sale of valuation rolls, and there is a strong case for the entry of these hereditaments on the roll. If what is now proposed is on the ground of expense, then it makes me all the more keen that we should look at the Sorn recommendation that there should be a 50 per cent. grant towards the salaries of the valuation staff, because some sort of grant of that kind, which has not been adopted by the Government, so far as I can see, would be a very great help in this matter.

My final point, although there are many more Committee points which one could raise, is that I want the Government to look at the valuation of sawmills on agricultural estates. They are very much a part of the management of woodlands and ought not to be separately assessed for rating purposes. They ought to be assessed as part of the woodland, because one cannot have woodlands and manage them efficiently without having an estate sawmill.

There are other points which we shall want to look at in Committee. I welcome the Bill, and hope that we shall get it into Committee as soon as possible.

7.19 p.m.

Mr. Malcolm MacMillan (Western Isles)

We should be grateful to the hon. Member for North Angus and Mearns (Mr. Thornton-Kemsley) for confirming that the Opposition was right in treating this Bill in the wider context of Government policy. A previous speaker on that side of the House criticised us for going so widely, but we have now been completely vindicated. The hon. Member for North Angus rightly said that this was a combined Government policy operation, starting with a valuation clean-up and going on to the reduction and, possibly, the abolition in time, with certain exceptions, of Government subsidies for housing—and finally, rent decontrol.

He did not really put it the right way round. The operation did not start that way. It started by an increase in the rates of interest for the benefit of financiers at the expense of local authorities building houses for tenants who could not afford to buy them, and also at the expense of owner-occupiers forced to pay higher interest rates. We have possibly come to the "valuation cleanup." That remains to be seen. It is very doubtful and all very much in the air and still very complicated at the moment. I am glad the hon. Member for North Angus confirmed his Government's intention and cleared the air a little about their intentions on rent decontrol. We know already what is happening with regard to subsidies. Perhaps now he will look for a minute at the argument of the hon. Member for Scotstoun (Mr. J. R. H. Hutchison)—the hon. Member who only just represents Scotstoun and no more. He will see that the hon. Member's argument was that when we on this side of the House were in Government the burdens upon local authorities were increased year by year and that the rating system was grossly overloaded because of costly Socialist mis-government. But let me take a figure or two and let hon. Members come to their own conclusions.

If we look at the figures of the total rates levied in Scotland in 1939 at £22 million, and those in the total of 1951 at £32 million, we see that there was an increase of roughly 50 per cent. in thirteen years. But if one takes the years 1951–52, 1952–53 and 1953–54, we find that the increase was from £32 million to £52 million—which is an increase of £20 million in three years, compared with an increase of £10 million during the thirteen previous years, including the six years when a Labour Government were in office. These figures surely speak for themselves.

If we look again at the increase in the cost of serviced local authority houses, we see that the Labour Government are not the Government to blame in this case. Under the Labour Government a new fully serviced house was costing about £3,000 on an interest basis of 3 per cent. Today it is costing, not that, but about £4,400 with a 5 per cent. interest figure. If that is worked out a little more, it will be seen that the interest increase per house is round about £24 per year. And taking that figure of 30.000 houses—though the Scottish figure is now rapidly going down —it has been costing roughly £720,000 in increased interest charges alone since these interest increases were imposed by a Tory Government in the last three years. If we further work it out on the subsidised life of a house over sixty years, we shall find that 30,000 houses at £24 a year increased interest means an added burden on Scottish local authorities of round about £43 million, a very considerable sum.

On the other hand, when the hon. Member talks about burdens which were added by the Labour Government upon local authorities in Scotland, we should remind him that, indeed, the local authorities were relieved of the burden of the maintenance of their poor; that they were relieved of many burdens in connection with the Health Service and that by one Act after another the Labour Government relieved local authorities of the rating burden instead of adding burdens to them.

What was said by hon. Members opposite at that time—they could not say that we were adding anything to the burdens of local authorities—was that we were taking their powers from them. Now they seem to think that we have such short memories that they can reverse the order of criticism and get away with it. The hon. Member for Scotstoun was honest enough to say that his figures were probably wrong. I can only say that, complementary with that, he should have made a full confession and admitted that his facts were also wrong.

Indeed, the Government have been more fortunate in the Secretary of State's presentation of the Bill than the right hon. Gentleman has been in the support which he has received for it from his hon. Friends. The hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray) said it was a good Bill. He said that it was good because it was good for the landlords and that, therefore, it was good for the tenants; that he was grateful to the Government; and that we ought to withdraw our opposition. One hon. Member after another has assumed that, because to some extent the Bill would abolish the rating of rates and the collection of tenants' rates by the landlord— as tenant's agent, as one hon. Member put it—in the form of higher rents, it would solve the whole problem of the overloading of the rating and valuation system in Scotland and all the complexities of what is admittedly in some respects an outmoded system of rating.

But our difficulty—the difficulty of hon. Members opposite, the Secretary of State and of myself and my hon. Friends—is that we have not yet got the full facts on which to argue the full case. That is our trouble, and that is why part of the Amendment takes the form that it does. I agree that evidence was not laid by some of the bigger authorities in Scotland. Indeed, most of them who were asked to lay evidence failed to do so and perhaps they have less cause now to complain than if they had laid formal evidence and presented the various other sides of the case.

Mr. E. G. Willis (Edinburgh, East)

Is my hon. Friend aware that Edinburgh gave evidence and was emphatically against abolition?

Mr. MacMillan

That is true; but other even greater cities than Edniburgb did not give evidence. I think about nine out of ten local authorities who were asked to give evidence refused or failed to give evidence. In the Report there is the repeated comment that Lord Sorn regretted the lack of evidence and the absence of interest in his offer to take evidence from those local authorities. So perhaps they have lost the right to complain. On the other hand, on behalf of those people who were not given the right to give evidence, I wish to point out some of the effects of the agricultural parts of this Bill.

For example, for the first time, at any rate in our memory, the house of the crofter is to be taken separately from the croft of which it has hitherto been a part and is to be entered on the valuation role and fully rated at the owner-occupiers' rating. On the other hand, land is now to be derated one hundred per cent. I maintain that this Committee went completely beyond its terms of reference in considering this question at all. It was specifically instructed by the Secretary of State to exclude consideration of the de-rating of agricultural land and houses. But what did it do? It proceeded to discuss, consider and make revolutionary recommendations about the very things that it was told not to touch.

I should have thought that the pride and self-respect of the Secretary of State might have been injured—I am sure it can be done—and that the right hon. Gentleman would have told Lord Sorn and his friends where they got off. But not a bit of it. Instead of giving them a telling off, the right hon. Gentleman said, "That is a good idea. You did what I told you not to do and I will introduce legislation based upon your infringement of instructions." That is an extraordinary situation. If every Minister did that, I do not know what sort of legislation would be presented to this House.

Let us consider the case of those affected by the changes who were not invited or given an opportunity to present evidence and to give the other side of the case. Here is the extraordinary situation that arose. Having encroached on the broad question of derating in defiance of the Minister, the Committee left out of consideration altogether the possibility of bringing in new revenue from the great wealth of industrial concerns. It concentrated, instead, on the small crofters in the Outer Hebrides, at Cape Wrath and the Shetlands. That seems to me a miserable thing to have done in the circumstances. Perhaps it thought that it could get away with things more easily with the small man from the back of beyond, and it may have been encouraged in that view by those who give advice to the Secretary of State.

If the Committee was really concerned with assisting local authorities to tap the more extensive sources of untapped revenue—the great industrial concerns—why did it not go all out and say, "This is really worth many millions of pounds?" Was it afraid of the powerful opposition of these people, or are hon. Members opposite too personally interested to permit Lord Sorn and his Committee to go any distance along that road? Why on earth it should pick on the smallest and poorest and most geographically disadvantaged section of the community, and select them as the first victims of proposals, based on the infringement of their instructions from the Secretary of State and his terms of reference, is beyond me. I think that it is hitting below the belt. I will tell him this. The representatives of the crofters would certainly have given plenty of evidence, even if the Glasgow Corporation and other great bodies have not done it.

As soon as the Sorn Committee's Report came out, our own Western Isles Labour Party sat down, like the Scottish Grand Committee, although not for so long at any one session, for four or five afternoons, to consider the Committee's recommendations. They took the trouble, which some of the local authorities did not take, to prepare a long and carefully considered memorandum and to send it to the Secretary of State. I believe that they have had—if not a considered, courteous reply—an acknowledgement. In my constituency, 12,000 people protested by petition against the method and the way in which the situation had been handled, and protested against the proposals of the Sorn Committee.

Moreover, I do not know of any Islands, Highlands or local authority that has laid evidence and come out in support of this recommendation, even among the urban authorities. I think that they were right. I do not know what the position is of the other Islands and Highlands Tory Members in this House. I do not know what is the position of the hon. Member for Orkney and Shetland (Mr. Grimond), but I fancy that it may be the same as mine. It may be less difficult, perhaps, for Liberal Members on this Bill to practise a sort of easy virtue, not having responsibility or power—or the likelihood of it—than it is for Tory Members to do the same thing. I invite the hon. Gentleman to come in on the side of the crofters, who should have the opportunity of making their protest and having their case considered in the full light of the facts.

Mr. T. Fraser

May I ask whether, in these consultations which have since taken place, the crofters have been given no information as to the source from which the inspiration came for the Sorn Committee to go beyond the terms of reference, and whether they have any evidence to support the view that the terms of reference given publicly to the Committee were rather extended privately without the people affected being given the opportunity of submitting evidence?

Mr. MacMillan

My hon. Friend is completely correct in what he says. I have consulted individual members of the Island local authorities in my own area. They have said that they had no direct invitation, or knowledge of any invitation, given to them as members of a local authority, directly representing the crofters, to give evidence. Something may have been sent, I do not know, to or by the Association of County Councils. But whether the Association were authorised by individual local councils to add support to the rating of croft houses, I cannot say. Every Island local authority member that I have met has opposed the recommendation, and I have not found a representative of a rural or urban area which has been openly in favour of it. It may be that Highland hon. Members opposite will be able to speak for their crofter constituents on this point and perhaps add some light to the present darkness.

The Bill would provide a number of new sources of local revenue, but I would not be so sure that this is going to work out in a financial sense as well as some people think that it will. It has been the experience of some local authorities that to raise their rents and, thus their rating, only meant losing their equalisation grant correspondingly. It may well happen that while local authorities may intensify the rate raising from their own local subjects—and the crofter's house is a new subject—they will find that they are going to lose equalisation grants and that they are merely taking a little more out of their own local pockets and being denied what hitherto the Treasury has been putting into their pockets from outside the area.

I doubt whether there is any solid wisdom behind the support for croft house rating of those who gave evidence in secret to the Sorn Committee which they, no doubt, thought was wise and right at the time. I am afraid that on balance they will find themselves no better off financially, even in relief of county requisitions on the burghs. This is apart from the economic and social aspects, and taking the purely financial aspect of it.

Our position here has been made even more difficult because we are not given the source of evidence or told where this proposal comes from. We suddenly find it slapped into the middle of the Bill and thrown before the House without any opportunity for the crofters and others to give any evidence at all. I know that the argument is that some crofters are better off than others, but this is a separate question altogether from that, If there are people who are not bona fide crofters—a matter to which the Taylor Commission drew attention—someone should, perhaps, look into it. The Government should look into that and take the responsibility of deciding who are bona fide crofters and treat them accordingly. But that is not what has been done.

What has happened? We have this classically absurd proposition that we should destroy the sun in order to prevent the growth of weeds. That is as absurd now as it was in the century when it was first stated. It seems to me that to attack the whole crofting system, as this Bill personally does, by the imposition of this new rate burden, which Lord Sorn himself says may well be "the last straw that breaks the camel's back," is a most unwise thing from the point of view of Island development, halting the draining away of the population, and even the strategic considerations connected with the Islands. It is on the men of these Islands that the British Navy relies for a disproportionate muster of seamen for its fighting ships and minesweepers in wartime. These considerations should appeal particularly to the party opposite who have always regarded these areas as a recruiting ground in time of war, and as their own sporting, hunting and fishing areas in time of peace.

These people have had recognition in. legislation by this House time after time as living in an area which has distinct characteristics which place its population at an economic and, often, social disadvantage compared with the areas nearer the cities with the amenities and facilities of city life. People have to recognise the disabilities that go with distance and transport difficulties. If they simply think of the greatly higher cost of living in these outlying areas, after high freight charges have been paid before goods reach them at their homes and the transport costs they bear before their produce gets to the markets in the South and on the mainland, surely it is obviously suicidal, in an area where depopulation among the younger people is continuing at an alarming rate, to add new impositions which will kill any economic incentive which they still may have to remain in those areas.

Do not let hon. Members on either side of the House imagine that the crofter is a favoured person in respect of Government aid compared with any other person. He is not. As the hon. Member for Hamilton (Mr. T. Fraser) and I have said on the Floor of this House on more than one occasion, they get exactly the normal amount in subsidies and other assistance that is awarded to most prosperous big farmers on the most fertile land, near the markets and good and cheaper transport.

There is no question of principle involved either. Is there any question of principle in this arrangement which is proposed, namely, that we take a croft house and rate it 100 per cent., separately from the croft, and then proceed to derate the land itself 100 per cent.? Where is the question of principle involved in that?

There is none. We are trying on one hand to abolish on one subject what we are proposing to impose on the other. It is a matter of financial adjustment. It is ill-considered. It is based on no proper evidence and conceived secretly in the absence of any sort of opportunity for the people affected to lay evidence against it. I notice, too, that in this Bill a rather miserable thing is done. It is a miserable thing, but perhaps its very smallness may help me to highlight it. In the Taylor Commission's Report and the Crofters Bill, the old people who were persuaded to relinquish, or felt they could no longer continue, to work their croft, were to be given a feu charter of their homes, free of rates. It was meant to be a concession and an incentive at the same time, given in order that the croft land which they were renouncing could be added to neighbouring crofts, making more economic units for younger people coming along. Since it was a question of persuasion, and there was this rate-free incentive, it was agreed that it was a good thing so long as no pressure was brought to bear.

What has happened now? The Government, having agreed to this, and having legislated on those lines, have thrown the old crofters overboard at the behest of the Sorn Committee, and that concession is no longer available to the old people, who had thought that once the Government had put the matter into earlier legislation—only this year—they would keep their bargain. If they cannot trust the Government even in the little things, we cannot expect the crofters to trust them in the bigger ones.

It is a pity that the Secretary of State cannot become sufficiently big-hearted, in the next few weeks before we reach the Committee stage, to have second thoughts about this part of the Bill, in the cases which I have mentioned of those old people having a feu charter awarded to them as an incentive to give up their land to younger people. Let him reconsider, too, the bigger question of the entering of the croft house, for the first time, upon the valuation roll—under a Tory Government—while, at the same time, conceding 100 per cent. derating to the land, both of big farmers and small crofters. No distinction is made between these small and bigger people, any more than between the subsidies awarded to the big, the prosperous and well-placed farmers and the little chaps scraping along, on four or five frugal acres, without even a tractor, on the edge of the Atlantic.

I hope that the Secretary of State will rise to the appeal which I have made. I have tried to present it as fairly as possible, and I do not think that I have gone beyond the facts in any way. Indeed, there are so many more matters to discuss that it is just as well that we can raise them later on the Committee stage. I apologise to the House for the time I have taken, but nobody else has dealt with this aspect and I hope that the Secretary of State will reconsider this part of the Bill. The people affected by it have not been able to give evidence. We here are the first who have had the opportunity of giving evidence on their behalf. Before the Minister makes up his mind to leave this part of the Bill as it is, let him at least hear all the evidence and not close his mind.

7.47 p.m.

Mr. Douglas L. S. Nairn (Central Ayrshire)

I am quite sure that hon. Members on both sides of the House will have a great deal of understanding and sympathy for the hon. Member for the Western Isles (Mr. MacMillan). As he said, he represents the least populated and poorest constituency in the whole country. He has a problem to face which is even more difficult than that of the hon. Member for Orkney and Shetland (Mr. Grimond), who at least has a unit which is more economically workable. The hon. Member for the Western Isles has a greater problem because his constituency is split between two counties.

I can assure him that when we reach the Committee stage we shall try to help him wherever we can. He stated that he has had 12,000 protests. I do not place so much weight upon that fact, because protesting in his part of the world is like filling in football coupons or going to football matches in other parts. He will admit that, up to date, there have been occasions when the present system has not worked quite fairly—where some crofters have paid rates and others have paid none. During the Committee stage I am sure that my hon. Friends will listen with great sympathy to what he has to say. I shall do so, even at the risk of the hon. Member for South Ayrshire (Mr. Emrys Hughes) reminding me that I represent Central Ayrshire. I would point out that I have a very real and deep interest in the crofters and the people of the Highlands.

My hon. Friend the Member for Scotstoun (Mr. J. R. H. Hutchison) and my hon. Friend the Member for North Angus (Mr. Thornton-Kemsley) have largely covered the principles of the Bill, and I shall not go into a great amount of detail. All speakers have emphasised the great importance of the Bill. Some say that it is the most important Measure since 1929. In the long run, I think that it may be even more important in its beneficial effect upon Scotland than that Act. Its passage into law will bring about a fundamental change in the principle upon which valuation and rating in Scotland has been based ever since valuation and rating first existed.

Traditionally and normally I should have thought that it would have been hon. Members on this side of the House who would be inclined to say, "Be very careful. We must cherish and look after our old traditions and make no change," and hon. Members opposite who would say, "The sooner we get rid of this old-fashioned procedure the better." Today the boot seems to be on the other foot. From the Amendment moved by the Opposition it would appear that hon. Members opposite are determined to try to prolong, for as long as possible, a system of rates which is no longer working properly and which can be described only as old-fashioned and out of date.

I am all the more surprised to find them taking this attitude when it is realised that the benefits of the Bill will not be felt for six or seven years, and perhaps longer. Surely hon. Members opposite are not expecting that they will still be sitting upon those benches in six or seven years' time. If their hopes are fulfilled, they will be the people who will really reap the benefits of the Bill. I certainly hope that some hon. Members opposite will still be there, although I cannot say that about them all.

I do not think any hon. Member will deny that some action is urgently needed. Nobody will deny, either, that the Scottish rating system, however healthy and efficient it may have been in its youth, is at present suffering from a malignant disease, which, if it is not eradicated very soon, may spread throughout the whole body of the patient. In addition to that, it is a disease which can be dealt with only by a major operation. It is difficult to diagnose, and its symptoms are even more difficult to explain. They are very closely allied to inflation and to the spiral of rising costs. In fact, they are the inflationary action of rents upon rates and of rates upon rents. It is a spiral, in which rents are raised to cover rising rates, and then the rates are raised again because of the increased rents—and so ad infinitum. Unless the Bill is passed that problem will never be put right.

Mr. George Lawson (Motherwell)

If what the hon. Member says is accurate, will he explain why it is that rents in Scotland are generally assumed to be lower than they are in the rest of Britain?

Mr. Nairn

I shall refer to that point shortly. I am quite convinced that the last Secretary of State for Scotland must have seen this disease spreading, but he allowed it to continue to spread. The only reason that I can think of for his allowing it to do so was that he did not feel really capable of tackling the situation. If he had, he would have taken the surgeon's knife and set about the vital operation of cutting out the malignant growth.

Mr. T. Fraser

No doubt the hon. Member will appreciate that the landowner and the landlord have been cut out. Presumably they are the malignant growth to which the hon. Gentleman is referring.

Mr. Nairn

The hon. Gentleman knows perfectly well that the malignant growth to which I am referring is the system of rates on rent and rent on rates. At last we have a Secretary of State who has the courage of his convictions to do something about this thing, which everybody who deals with these matters has known was necessary for a very long time. Once this operation and the inevitable period of convalescence which must always follow a serious operation are over, I am sure that the country will really appreciate the outstanding courage and steady hand of the present Secretary of State.

Many Opposition hon. Members have tried to maintain that the Bill will benefit the landlord. It is difficult to give examples, except on paper, but as most hon. Members opposite have said that the Bill only benefits landlords I feel that I must try to do it.

Mr. Ross

Was the hon. Gentleman here when his hon. Friend the Member for North Angus (Mr. Thornton-Kemsley) was speaking? The first point he made was that the Bill would benefit the landlord.

Mr. Nairn

The illustration I will give is from the town of Kilwinning in Central Ayrshire where, in the year 1954–55, it was desired to increase the contribution to the repairs fund by £4 per head. If there had been one consolidated rent the town council could have raised the rent by £4 and the matter would have been finished with so far as the town council was concerned. The tenant would have had to pay a rate of 19s. 6d. on the £4 which is £3 18s. The increased outlay for the tenant would therefore have been £7 18s.

What happens under the present system? The town council still wants its £4 and first of all would add £4 to the rent. Then it would have to add owner's rates at 8s. 8d, to the £4, and then add owner's rates on the figure arrived at by adding those two together. Finally, it would get to a figure for owners' rates of £3 0s. 8d. The town council would have to raise the rent by £7 0s. 8d. That is not the end. On top of the £7 0s. 8d. the occupier has to pay rates of 11s. 10d. in the £ which comes to £4 2s. 10d., a total outlay to the tenant of £11 3s. 6d. That is the result of having owners' rates and occupiers' rates. It is clear that the Bill is equally necessary to the tenants and to the landlords who are anxious to keep their houses in a good state of repair.

The existing system is rapidly breaking down. There can be no sound housing policy under it, no fair and equitable rents, and houses continue to fall into disrepair, whether the landlord is a local authority, a corporate body or a private individual. Those who will benefit most are the local authorities, because they will be able to keep their housing on a proper footing.

This operation has been delayed for far too long and it is bound to be far more painful today than it would have been 10 years ago. Every year that it is delayed will make the operation more difficult and more painful to the patient.

I hope that on reconsideration hon. Members opposite will co-operate with us as far as they can. We appreciate that they have many points to raise in Committee, but we hope that they will try to get the Bill through, because in the long run it will be of the utmost benefit to Scotland and Scottish industry.

7.55 p.m.

Mr. Thomas Hubbard (Kirkcaldy Burghs)

I was very interested indeed to follow the observations of the hon. Member for Central Ayrshire (Mr. Nairn). He has been wielding the knife for the last ten minutes but so far, like many unsuccessful midwives, he has produced nothing.

Mr. Walter Elliot (Glasgow, Kelvingrove)

I would like to know where the hon. Gentleman gets his experience if he thinks that midwives use knives.

Mr. Hubbard

I was not suggesting that midwives use knives, but that the hon. Member for Central Ayrshire was wielding a knife. If the right hon. Member for Kelvingrove (Mr. Elliot) will take his hand away from his ear he will hear a lot better.

Mr. Elliot

I have listened to every word that has been said. The hon. Member said my hon. Friend had been wielding a knife, and, like an unsuccessful midwife, he had produced nothing.

Mr. Hubbard

I did not say that the midwife was wielding a knife. I know that the right hon. Member for Kelvin-grove has practised medicine but perhaps he is not so knowledgeable as he pretends he is when he tries to be clever about words.

When the right hon. Gentleman interrupted, I was going on to say that the hon. Member for Central Ayrshire repeated something said by the hon. Member for North Angus (Mr. Thornton-Kemsley). Both suggested that the Bill would be of no benefit to property owners, but I noticed that the property owners welcomed the Bill. Indeed, at some part of our proceedings this afternoon. I saw the Secretary of the Scottish Property Owners' Association sitting in the public Gallery. There is something wrong somewhere. I have not received any protest from the property owners on this occasion asking me to oppose this Measure. We must accept that as some guidance.

Mr. J. Stuart

May I remind the hon. Gentleman that it is a public Gallery, and inform him that I got a letter from a constituent of mine asking for a ticket for that Gallery, in order to listen, not to me, but to the Solicitor-General for Scotland?

Mr. Hubbard

I have no objection to anybody sitting in the public Gallery. I am sure that anybody who was there when the Secretary of State was introducing the Bill was very charmed and enlightened, and considered that the journey was quite worth while. I am only suggesting that when this Measure is on the Statute Book the bodies most affected will be the local authorities. They have protested against the Bill. They have sent protests to every hon. Member, including hon. Gentlemen on the Government side of the House. Protests have come from the four cities, the counties and the large and small burghs, against some part of this Bill.

During the last few years I have noticed a tendency to introduce Measures in the House in spite of the views of the local authorities, and not after getting agreement with them. That is bad. I also noticed that when Government supporters were quoting paragraph 16 of the Sorn Committee's Report they have only quoted this part: The evidence thus briefly summarised has left us in no doubt that owners' rates are now an unnecessary and harmful complication in the Scottish system of rating which disguises the finances of owners and occupiers of all classes of property and of rating authorities alike and impedes the provision of housing and the growth of industry. That has been quoted several times, but no one has continued the quotation: Their abolition, if accompanied by suitable reduction in rents … would bring us no harm.

That is the one thing we are complaining about, that there is no possibility whatever, in view of the notice we have had, that there will be any reduction in rents. Therefore, the Sorn Committee, when it prepared this Report, did not have in its possession the information which we now have. One cannot read one part of a paragraph in a Report of a Committee and completely ignore the other part.

There is already legislation before the House about subsidies south of the Border. Notice has been given that rent restrictions are to be removed. The inevitable effect is bound to be increases in rents. Therefore, the deduction that no harm would be created by the abolition of owners' rates no longer stands, for the circumstances have completely changed. Therefore, the argument of hon. Members opposite is wrong.

I do not condemn the Sorn Committee. I know that its members did a hard job of work, but here we are concerned with two important points. First, the local authorities are in disagreement about the Measure. Secondly, the argument that the Bill would cause no harm by the abolition of owners' rates if there were no increases in rent no longer obtains Therefore, we are perfectly justified in, asking the House to vote against the Bill.

On what grounds did the local authorities object? Local authorities have always had to carry the burden. They feel that something ought to have been done about derating before this question was tackled at all. I know that the hon. Member for Central Ayrshire has a very close connection with Kirkcaldy, and with a great industry there. His family are landlords of that industry and great employers in Kirkcaldy and, as such, they do a great deal of good; but they benefit greatly under the Derating Act.

They are the main employers in Kirkcaldy. Last year I discovered that Kirkcaldy Town Council, which is one of the local authorities which has to operate under the terms of the Bill when it becomes an Act, lost £70,000 as a result of the Derating Act. The local authority and the ratepayers would have been very pleased indeed if the combined action mentioned by the hon. Member for North Angus had started at the right end, and if derating had been tackled, as we suggest in our reasoned Amendment.

I go further. In Burntisland, which is another part of my constituency, there is a very prosperous shipyard which earns a tremendous amount of money. The firm concerned builds many ships, and we thank it for that. It makes a great contribution, but it also enjoys the benefits of derating. The huge shipyard there is part of the Hall Russell Company. But in the matter of rates, I find that the tenants of four ordinary corporation houses pay more than is paid by that company.

Obviously the tenants of these houses must earn wages. When will hon. and right hon. Gentlemen opposite realise that the more difficult they make it, by transferring burdens to workers from any other body, then the more obvious it is that the workers will demand increases in wages to meet the added burden? Surely that must be obvious to everyone. If relief is to be given only to sections of the community, the other sections will protest.

I understand the reason the Bill to remove subsidies—which will curtail the house-building activities of local authorities—does not apply to Scotland; but I would point out that there is no indication that if the Bill now before us goes on to the Statute Book the landlords will build any more houses. In fact, if we accept what has been said by hon. Members opposite, they will not make anything from it, anyway. We are in that position now. There are to be no more subsidies for ordinary building and there is to be no opportunity for a young married couple to get a corporation house. Those with low incomes will be unable to afford the rents, and at the end of the day the whole economy of the country will be adversely affected.

One thing is certain. To maintain their health, people must have proper housing, and they must be able to afford the rents. If people have no accommodation and if their health is impaired, they cannot be engaged in industry and if that situation continues, this country will not be able to maintain its productivity. Neither shall we be able to maintain any form of economic stability. It is absolute nonsense for the Government to continue to introduce legislation which deals with only one section of the community.

Mr. Nairn indicated dissent.

Mr. Hubbard

The hon. Gentleman shakes his head, but it is quite true. If owners' rates are abolished, if the rent remains the same and the occupier receives a reduction equivalent to the amount by which the owners' rates have been transferred to the tenant, the occupier will be no worse off; but the Government have already given notice, by abolishing rent control, that rents will not be the same. They will be increased. They have already given notice in the English Measure that subsidies are to be discontinued.

The proposed method of appointing the assessors is causing some dissatisfaction. So far as the four cities are concerned there is to be no change in the present machinery but in the rest of Scotland only the county councils will appoint the assessors. It is not such a simple problem as is suggested. Take, for instance, Kirkcaldy and Dunfermline. There are, of course, many others. Perhaps we shall have the advantage of a contribution to the debate from my hon. Friend the Member for Coatbridge and Airdrie (Mrs. Mann).

In the County of Fife there are the two large burghs of Dunfermline and Kirkcaldy, with populations of 45,000 and 50,000 respectively. The great bulk of the population is in that area. There is a population of only 5,000 in Coupar, where the assessor is presumably to be. What point is there in transferring the assessor from the large burghs of Dunfermline and Kirkcaldy to Coupar? Would it not be a better arrangement to have a combination of two large burghs such as Dunfermline and Kirkcaldy, whose interests are industrial, rather than to intermingle them with these county areas in Scotland?

I think that, in the main, the assessors have done a good job so far, and that it is not necessary to change the personnel simply because the system of rating and valuation is to be changed. It would be far better that the men who are accustomed to doing the work should continue to do it, at least for a certain period until things have settled down.

There are sufficient objections to this Bill which call for serious consideration, and which justify the reasoned Amendment which was put down by my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) and myself, among others. The main objection is that whereas the Government always appear to be willing to consult property owners and land owners, they are reluctant to come to an agreement with the local authorities.

Whatever legislation this or any other Government pass cannot be put into operation without the assistance of local authorities. The Government ought to remember that, and in future try to carry the local authorities with them. They are the best people to decide about the Bill. We have to assume that the Government, as always, are representative not of the local authorities and of the ordinary people but of vested interests.

8.11 p.m.

Colonel Alan Gomme-Duncan (Perth and East Perthshire)

After listening to the hon. Member for Kirkcaldy Burghs (Mr. Hubbard), I feel that doom is upon us indeed. In fact, I do not think that things look like that; I do not think that the Bill increases the chance of doom at all. I think that the hon. Gentleman's prognostications on the results of the Housing Subsidies Bill are too gloomy, for the subsidy is not to be taken off existing houses.

Mr. Hubbard

I did not say that they were. I said that there were to be no subsidies for houses built in the future, either for slum clearance or in the Development Areas.

Colonel Gomme-Duncan

We cannot discuss in detail the Housing Subsidies Bill, but I think the hon. Gentleman will find it is not as terrible as he suggests.

I agree with him in one respect. I am rather disturbed about the effect of the proposals in the early part of the Bill in combining counties and large burghs for assessment purposes. That will need considering very carefully because, as he has pointed out in the case of Fife, which is a very good case to take, it is extremely difficult for people to get to the place where the assessment is done, and where the assessing officer is to be found, except at great trouble and expense.

Valuation affects everybody in the country in some way or another, and every citizen has the right to be able to get at the assessor, to talk the assessment over with him and, if necessary, make his protest. While in many cases it may be possible to effect a combination of authorities, as in the case of two neighbouring burghs with common interests, I do not think it ought to be laid down finally that, except for the four great cities, large burghs must automatically come under the county assessor. I hope that my hon. and learned Friend will have something to say on the point tonight, and that we can discuss it fully in Committee.

In the case of the City of Perth, which has its own assessor and its own problems and is a fairly large burgh, it would be a disadvantage to both the county and the city to combine them for assessment purposes. It is interesting to note that Perth City Council and the County Council of Perth are agreed in opposing this proposal.

It may be that county councils elsewhere have the opposite view, for circumstances differ in different areas. The assessor makes up the valuation roll, and we have to remember that he is the same person as the electoral register officer, so that if the areas are combined further problems will occur. This matter requires looking at very carefully.

I am not an expert in reading new Bills, and it takes me a long time to understand them, but it seems to me, on reading the Bill, that there is a Clause under which the Secretary of State can decide that certain combinations should be carried out between counties if that seems desirable. If he has power to order that they shall combine, he should have power to exempt authorities from a combination, if a good case can be made out for exempting them. If he has power in one direction he should have it in the other. It does not follow that he must use these powers, but it would comfort the local authorities, who say that they have no chance of representing their case, if he had the powers to exempt them if the case they made was strong enough. I hope that when my hon. and learned Friend replies, he will have something to say on the point.

8.17 p.m.

Mr. George Lawson (Motherwell)

I am happy to have the opportunity of following the hon. and gallant Member for Perth and East Perthshire (Colonel Gomme-Duncan), for he has put a point about which I feel concerned. If he could work out some Amendment along the lines he suggested to deal with the question of large burghs, I should be happy to put my name to it and to support it. I will come to that point shortly.

We have to remember that the Bill is based on the Sorn Committee's Report. We cannot discuss the Bill properly without having the Report in mind and its recommendations. I must confess that, in looking at the Report, I have found it a strangely illogical document. I find that it regularly appears to reach conclusions contrary to the evidence and the arguments which it itself presents. Perhaps I ought not to say this, but as a more forthright statement has been made, I will say it: I find myself wondering whether the conclusions had not been reached before the evidence was submitted at all.

The purpose of the Sorn Committee, under the terms of reference, was to study the whole basis of local government finance and how this finance is raised. It is raised through the medium of the rating system. Evidence was given showing how narrow and how unfair is the present system. The example given by my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) is given in the Report —that of the household where there is a couple paying the full rate while next door four or five persons, not householders but lodgers, are bringing in substantial incomes which are not bearing the full rates. In very many ways the Report gives examples of the unfairness and narrowness of the present basis, and yet it concludes with a solution which is to make it still more narrow and, in consequence, still more unfair.

In an admirable speech, my hon. Friend the Member for the Western Isles (Mr. Malcolm Macmillan) referred to agricultural derating. My understanding of the terms of reference was the same as his—that this was a subject expressly excluded. Indeed, the Committee says in the Report that it cannot deal with the subject. Whether it was considered or not, I am not sure; the Committee did not appear to consider any evidence. But it certainly reached very far-reaching conclusions, which is quite contradictory. Similarly, on the question of local appeal committees, the Report reaches a final conclusion on the evidence and its own argument: We see little room for improvement in the present committees. Yet it proposes to abolish the present committees. It is most astonishing. All the evidence except a few vague ideas about unfairness which some people think there might be and which is contradicted leads the Committee to the conclusion that there is little room for improvement in the present committees. Yet the Committee proposes their abolition. Following their abolition, the Committee proposes the substitution of something totally untried. It proposes the substitution of people from the local area, not experts, who might have very definite vested interests in the type of decisions they give. I find it strangely astonishing that all the arguments go in one direction but the conclusion is quite different.

There is something on the same lines in the point raised by my hon. Friend the Member for Kirkcaldy Burghs (Mr. Hubbard) and the hon. and gallant Member for Perth and East Perthshire about depriving a large burgh of the right to assess—the abolition of the large burgh as a rating authority. The Convention of Royal Burghs is very much opposed to this. I will quote a short statement from its protestation: Not only is the Convention not impressed by the reasons given by the Sorn Committee for proposing that valuation in future should be by county areas, but it would go further and stress that whatever the theoretical aspect of the matter, there has not in fact been put forward, either within the Sorn Report or otherwise, any sufficiently strong reason for removing valuation functions from the large burghs and certainly no substantial volume of evidence justifying such a departure has been given. Again we reach the same conclusion that the recommendation which is made is not, in fact, substantiated by the arguments in the Report nor supported by the evidence in the Report. It seems almost a conclusion taken out of the air.

We had in the Sorn Committee's Report an explanation, I think quite a substantial explanation, of the reasons for these vast differences which now exist in the valuation which has been placed on different properties in Scotland. They are listed and I think it will be quite easy to put forward the points very shortly. The Report says, for example, that the Committee is: … satisfied that the high standard of professional efficiency which distinguishes most Scottish assessors is … not to be found in every county and large burgh.… There is one very good explanation. A further explanation arises from the finding: No qualifications for appointment as an assessor are prescribed by statute or elsewhere. A man does not need to have any particular standards or particular skill. There is the third point that: … there is no accepted yardstick by which the staff which is required for efficient and regular valuation of an area can be determined. Then there is the final point in this connection that there really is a vested interest as far as many local authorities are concerned with keeping things as they are. On the operation of the Exchequer equalisation grant the Report says some authorities are tempted … to regard the appointment of a qualified assessor and efficient staff as a waste of money… since the revenue would be made up from the equalisation grant.… I submit that there is very adequate evidence, quite apart from the history and background, as to the wide differences in valuation existing today. That is part of the problem with which the Sorn Committee was dealing. It goes on to put forward recommendations with which it feels satisfied, if they were adopted, the problem would be effectively handled. In the first place, it calls for the appointment of full-time qualified assessors and staff and stress is laid on the word "qualified." Provision is made in the Bill for that. The Committee asks: … that the local authorities unable reasonably to support such appointments by themselves should combine.… Thirdly, it asks: That a central council, or board, including local authority representatives should be appointed by the Secretary of State to assist him … and that is included in the Bill. The final point, that these arrangements should be paid for as to 50 per cent. by the Exchequer, is not mentioned in the Bill. The Report says in the same paragraph in which the recommendations are listed: We think that if these recommendations are accepted no further action will be required to ensure that valuations are carried out on a uniform basis. That is quite conclusive, yet the Committee goes on to pull out of the hat a further recommendation that the large burghs should be abolished as rating or valuation authorities. There is no justification in what has been argued previously leading the Committee to that conclusion. The Committee tries to put forward one or two arguments which I will list shortly. It says: … areas must be big enough to provide sufficient work … large enough to pay for adequate staff. That is agreed and it is contained in Part I of the Bill. I accept that, but it does not follow that the areas must be the counties and cities. For example, a burgh such as Paisley has a population of more than 90,000. We have already been told that Arbroath, with a population of little more than 19,000, can support what the hon. and gallant Member for South Angus (Captain Duncan) regarded as a quite efficient valuation service. But a burgh of 90,000, or Greenock with getting on for 80,000, or Motherwell and Wishaw—a joint burgh—with 70,000, are in a different position. In fact of the 20 large burghs in Scotland 11 have populations of more than 40,000. On the other hand of the thirty-three counties which it is said should be the authorities, fourteen have populations of fewer than 40,000. In this sense we seem to be thinking simply in terms of area, but there is no substantial argument in the Sorn Report that the areas should be only the counties and cities. The points that the Committee had in mind could be covered by including those of the large burghs that wish to be valuation authorities.

As the hon. and gallant Member for Perth and East Perthshire pointed out, provision is made for the amalgamation of authorities. If that can be done, why should provision not be made similarly for certain of the burghs? It might be that Hamilton and Motherwell and Wishaw, or Greenock and Port Glasgow, might like to combine. Equally, as the hon. and gallant Member said, why should there not be power of exclusion or exemption if authorities are clearly capable of doing the job?

The Sorn Report contained the suggestion that the more ground an assessor can cover, the more adequate will be the evidence he is likely to find for purposes of assessment of fair rent and that the fewer the boundaries between valuation areas,…the fewer the complaints of lack of uniformity of valuation. If this led anywhere, logically it should lead to the conclusion that Glasgow should be the valuation authority for the Clyde Valley, Edinburgh the valuation authority for the Lothians, or Kirkcaldy, which is really the centre of Fife, the valuation authority for Fife. It might be taken even further and said that there should be only one valuation authority in Scotland.

Up to 1950, Motherwell and Wishaw—we always use the joint name; it is not just Motherwell—had their valuation done for them, so far as it was done at all, by the County of Lanark and they paid substantially for it; but they found that they were getting little or nothing done, and in 1950 they took over the job themselves and set up their own department. I am told by the assessor of the Motherwell and Wishaw office that between 1926 and 1950, no assessing at all was done.

When they set up their own department, they went ahead and did the job They claim to have been doing it very efficiently and substantially more cheaply than it was done—or was not done—by the county. I am told, for example, by the Town Chamberlain that had they still been operating with the county, as was the case to 1950, they would on the present estimate of cost be paying the county £4,792 for the job which was not being done; whereas at present they are paying £3,300, representing a clear saving of at least £1,492. They have a qualified assessor, a chartered surveyor, who is remunerated in accordance with the joint negotiating committee scale. There is no question of Motherwell and Wishaw doing the job on the cheap. They are doing it at less cost than would otherwise be the case and they are doing it efficiently.

No case whatever has been made out for the Government's proposals, which are very disturbing to large burghs. I urge the Solicitor-General, when he replies, to say that he will do something in the directions I have suggested. It would be too much to expect him to withdraw the Bill, but he can at least say that he will do something to meet this legitimate complaint of the large burghs.

8.33 p.m.

Mr. William Hannan (Glasgow, Maryhill)

I should like, first, to refer to some of the remarks made by some hon. Members opposite, although they are no longer present and seem to be more intent on the satisfaction of their inner needs. However, I am not finding fault with that. On the other hand, I do not want to be charged with making personal attacks in their absence. I shall be brief.

I ask the Solicitor-General to disregard some of the subtle suggestions made earlier in the debate, principally by the hon. and gallant Member for Berwick and East Lothian (Major Anstruther-Gray). He suggested that the Scottish Grand Committee should be gerrymandered in some way or other before the Bill is referred to it, but whatever action is taken in the Scottish Grand Committee, that will not prevent the Opposition from having the right to a full discussion of this extremely important Bill.

Another remark to which I wish to refer was dropped by the hon. and gallant Member for South Angus (Capt. Duncan) who simply confused two terms in the Bill. When he spoke of houses being sold on a free market he was confusing that term with the term "fair rent" in the Bill. When the hon. Member for Scotstoun (Mr. J. R. H. Hutchison) referred to the courage and honesty of the present Government, that was about the last straw. They certainly did not have the courage to announce before the General Election the policy which they are now pursuing, and they certainly have not had the honesty since the Election to carry out the policy which they then enunciated. It ill-befits these hon. Members to speak in golden terms about the Bill.

I believe that my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) and indeed the hon. Member for North Angus (Mr. Thornton-Kemsley) were perfectly right in saying that the Bill is only part of a combined operation. There are four prongs to it. I must ask the Solicitor-General for Scotland to have regard to the statement on housing made by the Minister of Housing and Local Government on 27th October. He then said that the statutory contribution which was being made by local authorities from the rates in respect of housing would be abolished, and that that was likely to give them an incentive to adopt realistic rent policies. I like that word "incentive." The fact is that the local authorities are being dragooned and forced into cutting their housing programmes because of the policy which the Government are pursuing.

The Minister said: The reduction in the rates of subsidy will tend to encourage local authorities to charge rents more in line with current wages and the present-day value of money "—['OFFICIAL REPORT, 27th October, 1955; Vol. 545, c. 381.] Here again the cuts which are being forced in the standards of the people are couched in language which says that the local authorities are being encouraged when in fact they are being dragooned.

The other weapon which the Government are using to force local authorities to cut down is the increase in interest rates. Thirdly, there is the policy of forcing them to go to the open market for loans instead of having to resort, as they formerly did, to the Public Works Loan Board. The truth is that the recent Budget was a smoke-screen for the policy which has since been announced.

The Bill appears to be the beginning of an overall plan for an attack on the standards of the people of Scotland. It certainly will be the fact, as regards the Bill, that the local authorities and tenants in Scotland will feel the brunt, not perhaps at the moment, but in the future, when in the ordinary course of things rates are increased. The tenants will then be the only people who will have to bear the burden.

The implementation of the policy of the Government depends, first, on this Bill. It is the first line of attack. I think that we have tended, in the debate, to forget the real purpose of the Sorn Report and of our discussion, which is that the system of valuation and rating is the only means that local authorities, at least in Scotland, have of raising the money to meet their expenditure.

Yet the Sorn Committee was deprived of the opportunity to discuss in full the relationship between Government, local authorities and tenants. Indeed, the Committee complains, in page 8, paragraph 9: Our terms of reference do not extend to considering how the financial burden of the expanded services required by modern social conditions should be divided between local authorities and the Exchequer and we refrain from attempting any recommendation on the subject. It is my contention that this debate should only be concerned with pages 6, 7 and 8 of that Report which deal with the basis of the future of local authority finance. No one will dispute that local authorities are in difficult circumstances, and the opinion is being expressed throughout Scotland that there could easily be a complete breakdown in the relationship between local authorities and the Government.

I agree with my hon. Friend the Member for Motherwell (Mr. Lawson) that there appears to be a contradiction between the statements in the Report and in the conclusions, particularly in the reference to the narrow field over which rates can be levied and then in the ultimate admission that the Committee can only recommend this method, and then only on one fundamental condition, namely, that the system will not be overloaded. What will happen? This Bill removes liability from the owners, confining the burden to the tenants and the owner-occupiers. Former Commissions have considered this matter—for instance the Royal Commission on Local Taxation in 1902, the Dunedin Committee of 1922, and the previous Sorn Committee of 1944—and none of those came forward with the solution which is vitally necessary for the problem that we are discussing today.

Two broad alternatives become apparent from all the debates and Reports. Either the area from which local authorities can obtain their resources must be widened or, their source of revenue having been narrowed, they must be relieved of some of the more national responsibilities which have been placed upon them. The Report refers to such services as police, fire and education as being today, and to an increasing degree in the future, more in the nature of national problems. The burden of these services ought to be taken from local authorities.

I wish to repeat some very important figures to which reference was made by my hon. Friend the Member for the Western Isles (Mr. Malcolm MacMillan). The Scottish Home Department return of rates for April, 1955, indicates that the total of rates collected by local authorities increased from £25 million in 1945 to £30½ million in 1950, an increase of £6½ million, but between 1951 and 1955 the total rose from £32 million to £49 million, an increase of £17 million. That demonstrates what is happening as a result of the Government's policy of imposing upon local authorities burdens under which they are groaning and about which they are beginning to complain very strongly.

I do not want to abuse the tacit agreement made earlier in the debate, but I should like to conclude with a brief reference to what is really a Committee point but about which I wish to express some pleasure. I refer to Clause 31, under which empty houses will not enjoy the general exemption from payment of rates given to owners. There are almost 2,000 empty houses in Glasgow. It is an insult when between 80,000 and 90,000 people are on the Glasgow housing waiting list that 2,000 houses should be standing empty simply because their owners wish to sell them. They are rat-ridden, rack-rented houses. A day or two ago the Government had to admit that people who had been forced into buying them should receive some compensation. My hon. Friends and I will watch this provision very carefully. The wording of the Clause is still not too clear. It seems that the Government are, as usual, doing what they can to safeguard the property interests of their friends.

The Bill is bad for local authorities. It does not settle the problem of the relationship between local government and national Government, and that will have to be dealt with again. I am glad that the Opposition have moved a reasoned Amendment to the Bill.

8.48 p.m.

Mr. E. G. Willis (Edinburgh, East)

I am amazed at the contradictions in the Report. I am amazed at the introduction to paragraph 9: We have received evidence of widespread concern that rates at their present level are not only burdensome to individual ratepayers, but are also injurious to the community in many areas.… Later in the paragraph the Committee says that, having drawn attention to the serious problem of increasing rate pound-ages, it can pursue it no further. The Committee then makes a series of recommendations, upon which the Bill is based, ignoring this fundamental fact in our present Scottish local government situation.

The really serious situation is the ever-increasing rate pound-ages which local authorities have to levy, and that is what we ought to be considering. The Gov- ernment ought to have included in the Bill provisions to abolish industrial de-rating. There is no excuse at all at present why industrial derating should not be abolished. Industrial derating in Scotland represents £2 of rateable value per head of the population. If industrial de-rating were abolished, the rates in Edinburgh could be reduced by 8d. In Musselburgh, another part of my constituency, rates could be reduced by 2s. 3d. By that one single act, the Government could do more to assist the local authorities than will be done by the whole of the Bill, including the Exchequer equalisation grant improvements. That is why I think that the Government are tackling this matter not with a sense of urgency, nor a degree of reality, but from an outmoded point of view.

I would like to have seen the Sorn Committee examining other forms of taxation. This year the International Union of Local Authorities produced an excellent report, covering local government taxation methods in dozens of different counties, in which one can see dozens of different forms of local taxation in operation. The significant thing about that report is that there is a growing tendency to try to distribute the burden of taxation more equitably and to widen the base of taxation.

Something has been said about local income tax. The hon. Member who said that has obviously not seen that report. Had he done so, he would have read that in a number of countries that is actually being worked and that in Norway, for instance, 95 per cent. of local government taxation is raised through a local income tax. In Sweden, and even in a number of towns in the United States of America, that is the method of raising local revenue. The report goes on to say that in the United States of America the practice is becoming increasingly widespread.

Mr. J. R. H. Hutchison

The hon. Member should give the reference.

Mr. Willis

It is "Local Government Finance and its Importance for Local Autonomy," a publication by the International Union of Local Authorities prepared for the Rome Congress of 1955 It is in the Library.

I want to say a few words about the Sorn Committee's Report and what it says about local income tax. The Sorn Committee dismisses the idea of local income tax on the basis of the Dunedin Committee's Report about it. The Dunedin Committee of 1922 made a number of objections to local income tax and Sir Henry Keith's scheme. But they are out of date with the growth of P.A.Y.E. The interesting thing about the Dunedin Committee is that it said that it was not really in a position to examine nor pass judgment on the proposal.

In 1922 the Dunedin Committee suggested to the Government of the day that they should set up a committee of experts to inquire into local income tax. That is thirty-three years ago, and we have still not had such a committee of experts. I suggest that when the Government are trying to do something about local taxation they should at least have carried out the recommendation of the Dunedin Committee and appointed a committee of experts to inquire into that proposal.

So much for what the Sorn Committee said about local income tax. It is obvious that the Committee did not examine it and simply accepted what some other committee had said and did not even read correctly what that committee had said.

Captain Duncan

It was the unanimous report of a committee on which there was a Labour Member.

Mr. Willis

I am not responsible for what every individual Labour Member says, no more than members of the Labour Party are responsible for what I say.

I suggest that the Government should examine some of the additional forms of raising revenue by local authorities. It is an urgent problem. One hon. Member said that we were suffering from a disease. The real disease is our increasing rate poundage. One of our criticisms of the Bill, in fact the burden of our Amendment, is that the Bill does not cure that disease—apart from the part dealing with the Exchequer equalisation grant. It does not make a single contribution to the solution of that very serious problem.

The Sorn Committee goes on to make recommendations, and we have heard a lot about the various reasons for them. One was the effect of the present rating system on housing. There are no owners' rates in England, but between the wars the majority of working-class houses in England had to be built by the local authorities. They were not built by private enterprise—[Horn. MEMBERS: "0h."] No, they were not. There were no owners' rates. We have heard about the effects on industry. The Scottish Trades Union Congress made special representations to the Secretary of State saying that, in the experience of the Congress, there was no evidence at all that this had affected industrial development in Scotland. Surely, the Scottish Trades Union Congress knows something about this.

What are the facts about industry? They are that, as the Balfour Committee pointed out in 1927, the rates on industry accounted for only .5 per cent. of industrial expenses; and today, with derating, it accounts for less than 1 per cent., because the rates have not increased so much as other commodities which industry has to buy. But, they say, "We cannot attract industry because we cannot get new houses." Surely the Scottish Press this week told us how in one of the Border towns and West Lothian special arrangements are being made. In fact, local authorities today are preparing to build houses in advance in order to attract industry to their localities which is a rebuttal of the arguments advanced by hon. Members opposite.

Then we hear all about the complications of local Government finance produced by the present system. We hear continually the argument about rates upon rates. If we do not pay rates upon rates we still have to provide exactly the same amount of local government taxation. The fact is that if we did not pay rates upon rates we should pay a higher rate poundage on a lower assessment; the rental would be lower but the rate poundage would be higher. That is proved by the fact that we are to put into operation proposals which will not alter what the occupier has to pay for the next five years. Even when owners' rates are abolished, the occupier has to pay exactly the same as before.

I could advance this argument, but have not the time. However, let hon. Gentleman calculate it for themselves. We have the figures for new towns and other sums, in the Report. The trouble with these sums is that they are not carried far enough. They are not carried to the point of how much would have to be paid in additional tax if the owners' rates were abolished in order to produce exactly the same overall total amount.

I understand that Glasgow is against this Bill. That is the largest local authority in the country. Edinburgh produced a memorandum to the Sorn Committee in which it stated—and hon. Gentlemen opposite should be interested in this, particularly the Lord Advocate: Having regard to the nature of local government services it must be concluded that owners of property do derive benefit from these services. Their properties receive protection from the police, which at the moment is an occupier only charge, and from the fire brigade. Roads, footpaths, sewer and water mains are connected with the ownership of property. These considerations lead Edinburgh Corporation to the view that there is a good case for owners' rates and consequently the Corporation does not support the view that owners' rates be bolished. Owners' rates should continue. This is the only large authority I know which presented evidence to the Sorn Committee, and it is not a Socialist authority. It did not want owners' rates to be increased. It thought that they should be frozen, but the point is that it did not advocate this wholesale change in our system which the Government proposes.

In conclusion, I say that this Bill is bad and unjustifiable because it makes fundamental changes and destroys the principle that owners should pay the rates, and in exchange for this fundamental change we do not get one iota of contribution to the main problem of local government, which is the raising of sufficient money to conduct its affairs.

9.0 p.m.

Mr. Douglas Johnston (Paisley)

It is perhaps too much to expect that the Government should follow a consistent policy for more than a few days. Indeed, it seems from the announcement made by the Home Secretary today, from the Bill introduced by the Minister of Transport and Civil Aviation, and from the announcement made by the Minister of Agriculture, Fisheries and Food that about one week is the limit of any Government policy. It is quite certain that the policy announced in the first days of the month will be reversed by the tenth day. It is a fundamental principle of Government—at least I have always understood so—that whatever was said by Members of the Government they all should say the same at the same time. Of course, that is not so between the Secretary of State and the Chancellor of the Exchequer, because the Chancellor announced only a few days ago that he was examining ways and means of extending the field of taxation, and today the Secretary of State has commended to the House a Bill the purpose of which is to reduce the field of taxation.

There may be some fundamental difference between the field of local government taxation and the field of national taxation which escapes me, but it may be that the Solicitor-General for Scotland, who I understand is to reply to this debate tonight, and whom we welcome, will explain the difference between these two principles. That is not, of course, the only preliminary objection. There is a second preliminary objection, and that is this. We are, if we adopt the proposals outlined in the Bill, trying to assimilate our system of local government taxation to that which is suspect, if not already discredited, in England. It is so much discredited or suspect—I do not mind which word is used—that the Minister of Housing and Local Government announced in the House yesterday that the whole question of local government finance is undergoing a review at the present time.

What is the point—and ask the Solicitor-General for Scotland to note this question—of introducing a Bill which is going to make fundamental changes in the rating system of Scotland and assimilate it to that of England, when at the same time that system is being re-examined in England? It seems to me that the Secretary of State for Scotland has not been in touch recently with either the Chancellor of the Exchequer or the Minister of Housing and Local Government.

The third preliminary point which gives me some difficulty is the question of de-rating. I understand—and the House, I think, has been informed by the Secretary of State himself—that the whole question of derating is being examined by the Government at the moment, and that at some time—no specified time—an announcement will be made. This Bill amends the derating Acts, and I suggest that it is rather absurd to go forward with a Bill amending the derating Acts when we do not know what the Government's intentions are about the main derating Acts. I suggest that we are rather like Hamlet standing on the battlements at Elsinore, waiting and wondering whether the ghost of the King—derating—will ever appear.

Mr. Hoy

Or the Secretary of State.

Mr. Johnston

It would be rather absurd to go to the trouble of considering Amendments to the derating Acts and then suddenly to discover that they were to be abolished.

There are three reasons why we should not proceed with the Bill at the moment. The fundamental reason for the rejection of the Bill is that the Bill, so far from helping local authorities to fulfil their present functions, makes it more difficult for them to do so. If the Bill is passed, I believe that within ten years local government as we know it will disappear. I say that because an increasing burden is being put upon local authorities. It is not only a financial burden, but increasing tasks are being given to them and a higher standard of fulfilment of those tasks is being required of them.

The matter is put quite neatly in the preface to the latest book on local government, and is in the following terms: With the extension of the public demand for better education, better health facilities, better planning of our towns and countryside, there has been an inevitable and alarming increase in the cost of local government, with a consequent desire on the part of every local authority to get financial help from the national exchequer to meet the burden on the rates. Power follows the purse and there is much danger lest the real power of local government should pass from the Town Hall to Whitehall. For "Whitehall" we can substitute "St. Andrew's House." I am sure that everyone, especially on the Government side—

Mr. Hamilton

The Secretary of State has just come in.

Mr. Patrick Maitland (Lanark)

Will the hon. and learned Gentleman say from what source he is quoting?

Mr. Johnston

I am quite willing to give way, but I did not hear the hon. Gentleman's question.

Mr. Maitland

I was asking what is the source from which the hon. and learned Gentleman is quoting.

Mr. Johnston

The source is the preface to a history of local government—and the writer is Lord Woolton.

Mr. Maitland

I suspected that. I wanted to make sure that the hon. and learned Member had got the right book.

Mr. Johnston

There is this real danger, and it is one of which every member of every local authority is conscious. I am sure that the Secretary of State is also conscious of it. Local authorities are not able to do the tasks which they are set. I am sure that some member of a local authority complains to the Secretary of State, weekly if not daily, that there has been a grave interference by his Department with the work of that local authority. It is a very unfair complaint, but it does arise. That interference does take place, and it will continue to take place because so much of the finance of local authorities is provided by the central Government. Those who pay the piper call the tune.

With the increasing costs imposed upon local government, partly by the nature of local government and partly by the action of the present Government, costs will so increase that local authorities will come increasingly under the domination of the Central Government. I fear, if the Bill passes, that in ten years' time local persons will tell us that they are no longer willing to enter into local government because they have no power to do what they are called upon to do.

How are we to get out of the difficulty of the increasing cost of local government? The Bill is not the way to do it, because it does not remove any of the costs but puts the burden upon a narrower basis. It places the whole burden upon the occupier of property. That means that the local authority is limited in its rating power to what the person in the lowest income group can bear. That is in the nature of the thing. The Solicitor-General for Scotland shakes his head. Let me explain.

The rate poundage is based upon the rental of the house which a person occupies and is not graduated like Income Tax or Surtax. The difference between one house and another in a city like Edinburgh is not more than four times. I doubt if we should find a house in Edinburgh valued at much less than £25 or many rented at more than £100. That means that rates have to be adjusted to the lowest wage-earner. I do not mean the old-age pensioner, who has special provision made for him to avoid rates. That is the limitation on rates, and it destroyed the old taxes such as the Poll Tax, because they were limited to what the lowest taxed person could bear.

What will be the effect? Local government will be seriously prejudiced and will ultimately, I think, disappear as we know it. I am not alone in thinking that. As my hon. Friend the Member for Edinburgh, East (Mr. Willis) said, the question of local government finance is giving great concern not only in England but throughout the world. Not only has there been the publication to which my hon. Friend referred, but an examination is taking place at the moment by the Institute of Municipal Treasurers and Accountants in England. The same sort of examination is going on by the Royal Institute of Public Administration. I am informed that both those societies are examining methods of broadening the basis of raising local revenue.

There are various ways of doing it. I am not suggesting that I can do more in a short speech than suggest one or two ways. One which I would like to see examined seriously is the question of local income tax. The Sorn Committee did not get down to examining it and it cannot be examined, as the Dunedin Committee pointed out, by any committee like the Dunedin Committee or the Sorn Committee. In paragraph 58 of its Report the Dunedin Committee said, in effect, that if we wanted the question examined—it realised that there were difficulties—we must remit it to the Board of Inland Revenue and tell it to produce a scheme. The Government would then have to consider whether the scheme was practicable.

I suggest that since this examination of local government finance is going on in England at the moment, the Secretary of State should join in it, too, if he has not already done so, and look, not as the Sorn Committee has done at the question of local government finance in a narrow way, but look at it broadly and try to see what is going to happen to local government finance in ten years' time if he does not broaden its basis.

Having show that the burden of our complaint is that this does nothing to help the local authority in solving its problems, let me deal with what the Secretary of State says that the Bill does. I understand the right hon. Gentleman to say that he thinks that the Bill does something to assist the housing of the people. That is the phrase which I have noted. I noticed that the right hon. Gentleman did not go as far as the hon. Member for Scotstoun (Mr. J. R. H. Hutchison) who, as I understood it, suggested that if owners' rates were abolished there would be a great increase, indeed an upsurge, in speculative building to let.

Mr. J. R. H. Hutchison

That is more than I said. I said that the Sorn Committee suggested that that would be possible.

Mr. Johnston

The hon. Gentleman must get things right. He should read the Sorn Committee's Report a little more carefully, because the Committee said nothing of the kind. What it said was that if owners' rates were abolished it would remove one of the impediments to the building of houses to let, which is not, of course, what the hon. Gentleman said.

The real objection to the building of houses to let by speculative builders does not arise from the existence of owners' rates. It makes very little difference to the real objection, which is that it is no longer profitable. I wonder if the right hon. Gentleman has consulted any builders and ascertained from them whether, if owners' rates were abolished, they would build houses to let. Has he?

Mr. J. Stuart

As I understand it, the point is that in England they are being built.

Mr. Hamilton

Not for renting.

Mr. Stuart

For both. Let me take the point as I see it, which is that in Scotland the builder or whoever puts up the houses and owns them does not know what his future liability for rating is going to be. Therefore—

Mr. Ross

He will not know.

Mr. Stuart

Yes, he would know.

Mr. Ross

No.

Mr. Stuart

As I do not know who is supposed to be speaking in this debate, I will sit down.

Mr. Johnston

I am much obliged to the right hon. Gentleman. I understand his answer is that, firstly, they made no inquiry from builders in Scotland to ascertain whether if owners' rates were abolished they would build in Scotland, and, secondly, that he has ascertained that houses are now being built to let in England. I agree. I saw in the Sunday Times or the Observer last Sunday an advertisement for a number of flats to let—I think two- or three-room fiats—in the West End of London at a rent of from £600 to £700 per annum, plus rates. Is that the type of letting to which the right hon. Gentleman refers? If not, can he tell me if any houses have been built to let in England since the war at rents of less than £30 to £50 per annum?

Mr. Stuart

I do not want to interrupt the hon. Gentleman, but the simple answer is that the more houses that are built the less is the shortage of houses.

Mr. Johnston

I accept that the answer is, "No." There is an impression abroad that the abolition of owners' rates will result in increased house building. The right hon. Gentleman has now told us that he has no evidence that that is so. Let us examine the position.

Mr. J. R. H. Hutchison rose—

Mr. Johnston

I cannot give way to the hon. Gentleman again.

Mr. Hutchison

The hon. and learned Gentleman quoted me and I must, in fairness, be allowed to reply. This is what the Sorn Committee says: Many of our witnesses endorsed the Committee's conclusion that the incidence of owners' rates was an important factor in the striking contrast between the number of houses built by private enterprise to let in Scotland and England and Wales in the years before the war, and we have received a strong consensus of evidence that the liability to owners' rates and the impossibility of predicting how they may rise is still one of the factors hindering the building of houses to let.

Mr. Johnston

It is one of the factors, but there are so many others that the removal of that factor will not induce people to build houses to let.

Let us look at the difficulties. I have no strong contacts with the building industry, but I have made one or two inquiries and, if I am wrong in my examination, the Secretary of State or the Solicitor-General will doubtless correct me. The first difficulty is that there is not available among the private builders in Scotland sufficient finance to finance any large building programme. These are mostly small men, few of whom are in a position to put down money to build houses. It should be remembered that they have to put down all of it; they cannot now go to the banks or the insurance companies or the building societies, because none of those will lend money for speculative house building.

Let us look at the economics of it even if the matter of finance were overcome. One can now get 5 per cent. on local government loans and industrials will give one even more. Any builder who invests money in building to let at less than 8 to 10 per cent. is a foolish man, as I am sure hon. Members on both sides will agree.

A house costs about £1,600 to build, leaving out altogether the cost of land and roads and everything else. At 8 per cent., that is £128 a year. If we add repairs, taking no more than the Income Tax allowance, that is £12 and add to that £10 for management, it gives £150 a year. If we add the other necessary ingredients of insurance, feu duties, road charges and so on, we get no less than £175 a year on interest charges alone. If we add the average rates throughout Scotland, we get about £225. Does anyone think there is a substantial market in Scotland for rented premises at £225 a year—between £4 and £5 a week? I suggest that hon. Members opposite who think that speculative building will ever return to Scotland are living in a dream world.

I have no objection to landlords. Like most people in this country, some are good, some bad and some indifferent. At one time they fulfilled a useful economic task. They were able to fulfil it for various reasons which do not now exist. There was an interest by speculators in building in Scotland between 1870 and 1914. Then Labour was cheap, materials were cheap and, most important, money was cheap. At that time 2½ per cent. Consols. stood at about 100 and we were on the Gold Standard. Those conditions do not exist now and are never likely to exist again. That was what made speculative building possible and why it is now quite impossible.

The other reason, as I understand it, why this Bill is being introduced is that a greater sum will be made available to keep existing houses in repair. That is the note I took of the speech of the Secretary of State. I have some difficulty in understanding that, because I understood when the Housing Repairs and Rents Bill was introduced last year from what the Secretary of State then said that no landlord was in a position to carry out any repairs because he had no money. I have some difficulty in understanding how the landlord is to get some money from this Bill, because I understood the Secretary of State to say that the Bill confers no benefit whatever on any landlord. In those circumstances, how can the landlord have any more money to do any more repairs?

Mr. J. Stuart

Perhaps the hon. and learned Member would look five or six years forward.

Mr. Johnston

I will accept that invitation and will tell the right hon. Gentleman what I think will happen in five or six years time. The Rent Acts will have been repealed. I think there will be security of tenure, but any landlord will be entitled to ask what he likes. He will be paying no rates whatsoever. The economic rent—by that I mean the maximum possible rent—will be asked by most landlords of most tenants. That, of course, will give the landlord an ample sum to pay for any repairs which are required, but will there be a compulsitor on the landlord to do any repairs? Can the Secretary of State tell me if there will be any compulsitor to carry out repairs in the five or six years ahead which he envisaged?

Hon. Members

Answer.

Mr. Stuart

Well, it exists today.

Mr. Johnston

The right hon. Gentleman says that it exists today. Let me look at the repairs as they exist today. Surely we have only to look around the slums of our great cities in Scotland to see how wholly inadequate are the provisions which require a landlord to keep property in repair today. I had really expected something rather better than that from the right hon. Gentleman; it really is not worthy of him.

I have been led aside from some of the things I wanted to say, and have perhaps dealt with one or two things with which I did not think I would deal, by the interventions of the Secretary of State, but I wish to make one or two remarks before I give way to the Solicitor-General who has the anxious task of making his maiden speech.

The Government really must face the problems of this Bill. They must not accept the property owners' federation as being quite the last word on local government in Scotland. There are other authorities. I think even the right hon. Gentleman must have been somewhat embarrassed by the enthusiastic way in which the National Federation of Property Owners and Factors received this Bill. I wonder whether he noticed it. It was in these terms and it is, I understand, a Press statement—it is certainly reported so in the Scotsman. This is the opening sentence: The federation welcomed the introduction of the Valuation and Rating (Scotland) Bill, and expressed the view that history would record the finding that the abolition of owners' rates will have been the most important piece of legislation presented to Parliament since the Union of the Crowns in 1707. Does the right hon. Gentleman agree with that or does he, perhaps, think, with me, that it is somewhat lacking in perspective and certainly out of date?

I suggest that for the reasons I have given and for the reasons which have been more fully given by hon. and right hon. Friends of mine, this is not a Bill which can be accepted by the House, and I suggest that we should reject it when the time comes.

9.31 p.m.

The Solicitor-General for Scotland (Mr. William Grant)

Before I deal with the merits of the Bill and the various arguments which have been presented during the debate, I feel it right to make what is in a sense a personal statement, for this is the first—I hope, not the last—occasion on which I have spoken in this House. As this is a controversial Bill and I am speaking at this stage of the evening, when I cannot help being controversial, it is right that I should say that I make no claim, and cannot claim, the normal indulgence which hon. and right hon. Members so rightly accord to a maiden speech. My purpose in saying that is not to invite trouble—I do not normally invite trouble—but it would be wrong if hon. Members felt that they had to suffer me in, at any rate, complete silence.

We have had an illuminating and stimulating debate, and one must always be grateful for anything which casts light and illumination on the rather dark territory in which the law of valuation and rating lies. I assure hon. Members that we are grateful for the many helpful suggestions and criticisms which have been made during the debate. As usual, all have been helpful but some have been rather more helpful than others.

I was glad to have rather cheering encouragement from the hon. and learned Member for Paisley (Mr. D. Johnston), who, looking forward five or six years, gave a description of how landlords would fare at that time which clearly indicates that, despite any changes on the Front Bench opposite, there is still no expectation that there will be a Labour Government in power at that stage. His description was on the basis of what would happen in regard to rating, rents and valuation at that time in the future.

The Bill is based to the extent of 95 per cent. on the unanimous recommendations of the Sorn Committee, to whom the hon. Member for Motherwell (Mr. Lawson—perhaps I should say Motherwell and Wishaw, as he so carefully pointed out—was rather unfair. He seemed to suggest that the Committee had reached its conclusions before the evidence was led. In view of the Members who served on that Committee, their varied backgrounds and their undoubted ability in their various spheres, I think that that was a rather unfair comment to make.

I believe that if that Report is read as a whole it will be found that it justifies the measures which are being put forward in the Bill. I quite agree that we cannot take refuge in the recommendations of a Committee, however unanimous it may be. I agree that we have to examine the Bill with care, and no doubt with no great brevity, at a later stage. We on this side of the House would welcome that, because we want to get the rating and valuation position in Scotland straight. This is the first major valuation Bill since 1854, and when we are making a change we want to make it after careful and mature consideration. I say that in all sincerity. I hope that we are going to get the matter straight.

There are two fundamental parts of the Bill. These are, first, the abolition of owners' rates, and, secondly, valuation on the basis of fair rent. These really are the matters of vital principle in the Bill. The rest of it is to a large extent the machinery to carry out the system which we shall have when these changes are made. I should make it quite clear at this stage that to remove either of these major provisions from the Bill would be to wreck the Bill and take the whole essence out of it. Certainly nothing that I have heard in the debate about owners' rates has changed my view that the Sorn Committee was absolutely right in recommending their abolition. Indeed, I would go further and say that it is still perfectly clear that without the abolition of owners' rates we cannot carry through the various reforms proposed in the Bill, particularly that in regard to valuation on fair rent.

We have heard very little about the question of fair rent, and I will deal with it in a moment. I have been in the Chamber for most of the debate but I do not think that anybody has seriously attacked the provision that valuation should be based on a fair rent and not on a rent which may vary from house to house, even when the houses are completely comparable.

As the Sorn Committee pointed out, if one is going to reform the rating system so as to value on fair rent, the necessary condition of doing that is the abolition of owners' rates. I ask hon. Members to realise that if they reject the abolition of owners' rates they must automatically reject with it the other proposal in the Bill that valuations in the future should be based on fair rent. It is only by basing valuations on fair rent that we can get rid of the anomalies between comparable houses which we have in Scotland.

Mr. William Hamilton (Fife, West)

Is it not a fact that the freezing of the valuation rolls for the next five years perpetuates that position in new towns where higher rents are paid for comparable properties?

Mr. Grant

I would not say that five years represented perpetuity, but I will deal with that point later. It is a point which affects property not only in new towns but in parts of Edinburgh and Milngavie and various other places where rents have been increased in recent years. I agree that on the basis of the Bill there are bound to be hard cases during the next five years.

The main attack on what is in the Bill has been on the abolition of owners' rates. On what is not in the Bill the main attack has been one on the Government for not dealing in one Bill with all the various aspects of local government finance, with derating, with overloading and so on. There is a four-legged Amendment, which limps a little on each leg but, at the end of the day, the attack is really a twofold one, namely, on the abolition of owners' rates in the Bill and alleged failure to deal with local government finance in the broadest sense.

I wish to say a few words on local government finance. If we attempted in this Bill to deal with the entire aspect of local government finance, not only should we hold up much-needed reforms in the law of valuation and rating but we should be taking a rather larger dose at one time than is good for us. In effect we should have the kind of undigested legislation which, if I may say so, we had between 1945 and 1951, and from which we are still suffering.

Mr. Woodburn

The hon. and learned Gentleman will excuse my interrupting but I would not like him to waste time on something which was not suggested. What we suggested was that we ought to have had the picture of what would happen eventually, of which the conditions created by this Bill will form a part. We did not suggest that it should all be in one Bill.

Mr. Grant

I am sorry if I misunderstood the right hon. Gentleman, but the Amendment seemed to read as if it were suggested that these various matters should have been included in the Bill. However. I will proceed on the basis that what is wanted is a picture of what the Government are prepared to do.

The position of local government finance is that it is now under review. As the right hon. Gentleman will remember, on 25th October the Minister of Housing and Local Government referred to a previous announcement which he had made in this House, that the Government had decided to undertake a full review of local government finances. He added at the time: All aspects of local government finance will come within the purview of this examina- tion, including, of course, the question of the derating of industry."—[OFFICIAL REPORT. 25th October, 1955; Vol. 545, c. 7.] Also my hon. Friend the Joint Under-Secretary of State for Scotland, who unfortunately cannot be with us tonight, told the House, on 1st November, that this review of local government finance would cover Scotland as well as England and Wales, and that talks would take place in due course with the local authority associations.

This review is in its initial stages. Departmental discussions are going on about derating and all the other aspects of local government finance. I do not want hon. Gentlemen opposite to think that we are sitting back doing nothing. We agree that there are most serious problems in local government finance. We all appreciate the increasing burden on the rates. We appreciate, as the hon. and learned Member for Paisley said, that if this rise in rates goes on we shall reach a stage where local government will break down.

That is why, as an interim measure, we have in the Bill one non-controversial provision, that providing for an increased equalisation grant. It is stated to be a six-year measure at the most. It is clear that there will have to be a complete review of all aspects of local government finance. Surely when that is going on it is undesirable to hold up reforms dealing with injustices which are already apparent and for which we think we know the cure. We know there are anomalies in the rating and valuation system. Why should we delay reform merely because we are still discussing other aspects of local government finance?

The Bill is really designed to deal with the machinery of valuation and rating. It deals with the allocation of the burden as between various ratepayers and does not affect in any way consideration of derating or alterations in local government finance at a later stage, because on the new basis one can build any new superstructure in which derating is abolished or local government finance altered. We are trying to get the decks clear and the machinery going so that when the time comes, and we have decided what is the right and proper thing to do, we can deal with the problem. Inevitably, however, that must take some time.

Mr. D. Johnston

I am obliged to the hon. and learned Gentleman for giving way. He has been most interesting. Can he tell me whether those who are examining local government finance are considering alternative ways of raising revenue for local government purposes?

Mr. Grant

I do not know whether they have got to that stage, nor can I give any guarantees to the hon. and learned Member that they will do so. However, they are considering all aspects, and if they deem that subject relevant, no doubt they will consider it. I can give no guarantee. I will be frank about it and say that I do not know what particular aspects of taxation they will consider, but I can assure the hon. and learned Member that they will make a very broad review of the whole situation. [HON. MEMBERS: "How long will it take?"] We shall be as quick as we can.

With regard to derating, we must remember that the questions of the proper basis of local government finance and of derating affect the United Kingdom as a whole. It would be to the detriment of Scotland if derating were abolished in Scotland while it remained in force in England. The reason is simple. We want to attract industry to Scotland and keep it in Scotland, but we should not attract new industry to Scotland if it could have the benefit of derating in England whereas it would be rated on the 100 per cent. basis in Scotland. Derating must be part of a United Kingdom review and cannot be dealt with separately in a Scottish Bill.

I now pass to the rather vexed question of owners' rates. I believe this is not really such a controversial question as some hon. Members seem to think it is. My hon. Friend the Member for Scotstoun (Mr. J. R. H. Hutchison) suggested that, whenever the word "owners" was mentioned in this House, it gave rise to a howl—I cannot remember what sort of howl, but it was something not very complimentary—from hon. Members opposite. He said it was like a red rag to a bull. If I might put it another way without being discourteous, perhaps it is like a blue rag to a red bull.

Mr. Willis

There are very good historical reasons for it.

Mr. Grant

We are not entirely living in the past. The Bill is an attempt to put things in a modern setting. If the hon. Member says that the past was unfortunate, he must speak for himself.

The right hon. Member for East Stirlingshire (Mr. Woodburn) agreed, and we must all agree, that the matter of owners' rates is a tangle, and the question is how we are to put it right. Before I deal with that aspect, may I remind hon. Members of what I said before? Unless we get owners' rates abolished, we cannot have valuation based on fair rent. I shall not go into that in detail, because it would take too long, but it is clear from the Sorn Report.

I do not want to quote the Sorn Report, but I would cross swords again with the hon. Member for Motherwell, who suggested that the Sorn Report, in its conclusions, did not really follow the evidence which the Committee had received. Anybody who reads paragraphs 15 and 16 of the Sorn Report dealing with owners' rates would agree that they ought to be abolished. The Report speaks of a striking degree of unanimity in the evidence and the unnecessary and harmful complications to which owners' rates led.

The hon. Member for Edinburgh, East (Mr. Willis) suggested that the lack of building by private enterprise in Scotland between the wars was entirely unconnected with the fact that we had owners' rates in Scotland and no owners' rates in England.

Mr. Willis

I asked whether the lack of owners' rates in England had produced a larger number of privately built houses to let for workers in England.

Mr. Grant

I think it did. It depends on what the hon. Member means by workers. We are all workers. I have been working very hard today, as hard as has the hon. Member.

There is no doubt, from paragraphs in the Sorn Report—I shall not read them because they have been read many times —that the lack of private enterprise building in Scotland between the wars—whether hon. Members like private enterprise building or not—resulted in there being a much worse housing situation there by 1939 than in England. There is no doubt about that: speculative builders or not, private enterprise can do the job, on occasion.

Let us look at the position from the tenants' and local authorities' point of view. That has not been sufficiently stressed, except in the wrong way. At the moment, in order to get a net increase in rent, a local authority has to make a very much bigger gross increase than the net increase which it desires.

I do not want to go into detailed figures, but let me take a couple of simple examples. Let me take owners' rates at 6s. 8d. in the £, which is a pretty low figure in Scotland, but which is easy to work out, because it is a third of a £. If the local authority wishes to have a net increase of £4 a year in order to cover its outlays as a landlord, it has to make a gross increase of £6. It pays to itself as a local authority owners' rates on the £6 and the tenant pays occupiers' rates on the £6. In England a similar local authority could have got the increase merely by putting up the rent by £4.

Similarly if owners' rates at 10s. are taken, a not unknown figure, in order to get a £4 net increase, the local authority has to put up the rent by £8, that is to say, the tenant is paying occupiers' rates on double the increase which would otherwise be necessary, and which would be necessary under the English system.

Mr. Lawson

I asked why, if that is how the system works, rents in Scotland are generally taken to be lower than in England and Wales.

Mr. Grant

They are lower. That is merely because a Scottish local authority charges a rent which bears even less relation to the economic rent than those charged by local authorities in England. That is the simple answer.

I pass on to deal with a few other points. The first is with regard to the freezing period. I agree that we departed from the Sorn Committee recommendations. As I said, I agree that when the axe is brought down there are bound to be hard cases, particularly among those people whose valuations have been increased in the last few years. The trouble is that wherever the axe is brought down there are hard cases. We are prepared to consider anything which will remedy that hardship, but there are practical difficulties.

Once we begin jobbing backwards, it is difficult to tell whether the assessment has been increased merely on revaluation or because there have been structural alterations or because it is a new house. If we begin to go back several years the whole rateable value of the town or county is upset, and pound-ages have to be increased. I agree with the hon. Member for Edinburgh, West (Sir I. Clark Hutchison) that there are hard cases, and I should be happy if we could get a formula to meet that point.

I have an open mind about the matter of valuation appeal committees. I wish to see committees which are independent and are thought to be independent. There is no doubt that there is considerable distrust at the moment, not only among ratepayers, but members of the legal profession, who appear before them. The Sorn Committee found that that was unjustified and it may well be so. I make no accusation of any sort against those committees which do a very difficult job very well.

Mr. Pryde rose—

Mr. Grant

I am sorry, but I cannot give way.

We must try to get committees which not only do justice but which command the respect of the public. I do not know whether we have found the right solution, but, at any rate, we must get independent committees.

The other matter affecting local authorities is the transfer of large burghs to the counties. On that I would say that we have to achieve a certain amount of uniformity in valuation throughout Scotland. I believe that by such a transfer that may be achieved and that, also, we shall make much better use of the valuation staff. We are cutting down to the extent of about twenty valuation authorities, and that will enable us to concentrate the best of the available staff. We may be able to improve the provisions regarding valuation committees, I do not know; but we must get uniformity in valuation, otherwise the anomalies which have persisted so far will continue.

I am sorry that I have not had time to deal with all the points which have been raised by hon. Members. I commend the Bill to the House, and I will deal with any other points at a later stage if need be, but not tonight. I suggest to hon. Members that the Amendment, if not misbegotten, is at least misconceived.

Mr. Elliot

One seldom has the opportunity of congratulating a Minister on his maiden speech. I trust we shall frequently hear from my hon. and learned Friend, and I congratulate him on the success of his maiden speech.

Mr. Emrys Hughes (South Ayrshire)

rose—

The Parliamentary Secretary to the Treasury (Mr. P. G. T. Buchan-Hepburn) rose in his place and claimed to move, That the Question be now put.

Question put accordingly, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 171, Noes 120.

Division No. 85.]	AYES	[10.0 p.m.
Agnew, Cmdr. P. G.	Hall, John (Wycombe)	Oakshott, H. D.
Aitken, w. T.	Harris, Reader (Heston)	O'Neill, Hn. Phelim (Co. Antrim, N.)
Alport, C. J. M.	Harvey, Air Cdre, A. V. (Macclesfd)	Orr, Capt. L, P. S.
Anstruther-Gray, Major W. J.	Harvey, John (Walthamstow, E.)	Page, R. G.
Arbuthnot, John	Heald, Rt. Hon. Sir Lionel	Pannell, N. A. (Kirkdale)
Armstrong, C. W.	Heath, Edward	Partridge, E.
Ashton, H.	Hill, John (S. Norfolk)	Pickthorn, K. W. M.
Atkins, H. E.	Hirst, Geoffrey	Pilkington, Capt. R. A.
Baldock, Lt.-Cmdr. J. M.	Holland-Martin, C. J.	Pitt, Miss E. M.
Baldwin, A. E.	Howard, John (Test)	Pott, H. P.
Balniel, Lord	Hudson, Sir Austin (Lewisham, N.)	Powell, J. Enoch
Barber, Anthony	Hughes Hallett, Vice-Admiral J.	Price, David (Eastleigh)
Barter, John	Hughes-Young, M. H. C.	Raikes, Sir Victor
Bidgood, J. C.	Hulbert, Sir Norman	Ramsden, J. E.
Biggs-Davison, J. A.	Hurd, A. R.	Rawlinson, Peter
Bishop, F. P.	Hutchison, Sir Ian Clark (E'b'gh, W.)	Redmayne, M.
Body, R. F.	Hutchison, James (Scotstoun)	Remnant, Hon. P.
Braine, B. R.	Iremonger, T. L.	Ridsdale, J. E.
Brooke, Rt. Hon. Henry	Irvine, Bryant Godman (Rye)	Robertson, Sir David
Brooman-White, R. C.	Jennings, J. C. (Burton)	Roper, Sir Harold
Bryan, P.	Johnson, Dr. Donald (Carlisle)	Ropner, Col. Sir Leonard
Buchan-Hepburn, Rt. Hon. P. C. T.	Johnson, Eric (Blackley)	Russell, R. S.
Campbell, Sir David	Jones, A. (Hall Green)	Sharples, R. C.
Cary, Sir Robert	Keegan, D.	Shepherd, William
Channon, H.	Kerby, Capt. H. B.	Smithers, Peter (Winchester)
Chichester-Clark, R.	Kerr, H. W.	Stanley, Capt. Hon. Richard
Clarke, Brig. Terence (Portsmth, W.)	Kirk, P. M.	Steward, Harold (Stockport, S.)
Cooper, Sqn. Ldr. Albert	Lagden, G. w.	Steward, Sir William (Woolwich, W.)
Cordeaux, Lt.-Col. J. K.	Lambert, Hon. G.	Storey, S.
Corfield, Capt. F. V.	Leavey, J, A.	Stuart, Rt. Hon. James (Moray)
Craddock, Beresford (Spelthorne)	Leburn, W. G.	Summers, G. S. (Aylesbury)
Crookshank, Capt. Rt. Hn. H. F. C.	Legge-Bourke, Maj. E. A. H.	Sumner, W. D. M. (Orpington)
Crosthwaite-Eyre, Col. O. E.	Legh, Hon. Peter (Petersfield)	Thomas, Rt. Hn. J. P. L. (Hereford)
Crowder, Sir John (Finchley)	Lindsay, Hon. James (Devon, N.)
Cunningham, Knox	Linstead, sir H. N.	Thomas, Leslie (Canterbury)
Dance, J, C. G.	Lloyd, Maj. Sir Guy (Renfrew, E.)	Thomas, P. J. M. (Conway)
Davidson, Viscountess	Longden, Gilbert	Thompson, Lt.-Cdr. R. (Croydon, S.)
Deedes, W. F.	Lucas, Sir Jocelyn (Portsmouth, S.)	Thornton-Kemsley, C. N.
Dodds-Parker, A. D.	Lucas-Tooth, Sir Hugh	Tilney, John (Wavertree)
Donaldson, Cmdr. C. E. McA.	Mackie, J. H. (Galloway)	Touche, sir Gordon
Duncan, Capt. J. A. L.	Maclay, Rt. Hon. John	Turton, Rt. Hon. R. H.
Eden, J. B. (Bournemouth, West)	McLean, Neil (Inverness)	Tweedsmuir, Lady
Elliot, Rt. Hon. W. E.	Macleod, Rt. Hn. Iain (Enfield, W.)	Vane, W. M. P.
Emmet, Hon. Mrs. Evelyn	MacLeod, John (Ross & Cromarty)	Vickers, Miss J. H.
Fisher, Nigel	Macpherson, Niall (Dumfries)	Vosper, D. F.
Freeth, D. K.	Maddan, Martin	Wakefield, Sir Wavell (St. M'lebone)
Garner-Evans, E. H.	Maitland, Hon. Patrick (Lanark)	Walker-Smith, D. C.
Glover, D. Godber, J. B.	Manningham-Buller, Rt. Hn. Sir R.	Ward, Dame Irene (Tynemouth)
		Webbe, sir H
Gomme-Dunean, Col. A.	Marlowe, A. A. H.	Whitelaw, W. S. I. (Penrith & Border)
Gower, H. R.	Marples, A. E.	Williams, Paul (Sunderland, S.)
Graham, Sir Fergus	Marshall, Douglas	Williams R. Dudley (Exeter)
Grant, W. (Woodside)	Mathew, R.	Wills, G. (Bridgwater)
Grant-Ferris, Wg Cdr. R. (Nantwich)	Maude, Angus	Wilson, Geoffrey (Truro)
Gresham Cooke, R.	Mawby, R. L.	Woollam, John Victor
Grimston, Hon. John (St. Albans)	Milligan, Rt. Hon. W. R.
Grimston, Sir Robert (Westbury)	Nabarro, G. D, N.	TELLERS FOR THE AYES:
Grosvenor, Lt.-Col. R. G.	Nairn, D. L. S.	Mr. Studholme and
Gurden, Harold	Neave, Airey	Mr. T. G. D. Galbraith
NOES
Ainsley, J. W.	Hall, Rt. Hn. Glenvil (Colne Valley)	Owen, W. J.
Allaun, Frank (Salford, E.)	Hamilton, W. W.	Palmer, A. M. F.
Allen, Arthur (Bosworth)	Hannan, W.	Pargiter, G. A.
Bacon, Min Alice	Hastings, S.	Parker, J.
Balfour, A.	Herbison, Miss M,	Peart, T. F.
Ballenger, Rt. Hon. F. J.	Hobson, C. R.	Price, J. T. (Westhoughton)
Bence, C. R. (Dunbartonshire, E.)	Holman, P.	Proctor, W. T,
Benson, G,	Houghton, Douglas	Pryde, D. J.
Beswick, F.	Hoy. J. H.	Pursey, Cmdr. H.
Blackburn, F.	Hubbard, T. F.	Rankin, John
Blyton, W. R.	Hughes, Emrys (S. Ayrshire)	Reeves, J.
Bowden, H. w. (Leicester, S.W.)	Hughes, Hector (Aberdeen, N.)	Raid, William
Boyd, T. C	Hunter, A. E.	Robens, Rt. Hon. A.
Brockway, A. F.	Hynd, J. B. (Attercliffe)	Roberts, Goronwy (Caernarvon)
Broughton, Dr. A. D. D.	Janner, B.	Ross, William
Brown, Rt. Hon. George (Belper)	Jay, Rt. Hon. D. P. T.	Royle, C.
Burton, Miss F. E.	Johnston, Douglas (Paisley)	Silverman, Julius (Aston)
Butler, Herbert (Hackney, C.)	Jones, David (The Hartlepools)	Simmons, C. J. (Brierley Hill)
Carmichael, J.	Jones, Elwyn (W. Ham, S.)	Skeffington, A. M.
Champion, A. J.	Key, Rt. Hon. C. W.	Smith, Ellis (Stoke, S.)
Collick, P. H. (Birkenhead)	King, Dr. H. M.	Sorensen, R. W.
Collins, V. J. (Shoreditch & Finsbury)	Lawson, G. M.	Sparks, J. A.
Corbet, Mrs. Freda	Lee, Frederick (Newton)	Steele, T.
Craddock, George (Bradford, S.)	Lindgren, G. S.	Stewart, Michael (Fulham)
Cronin, J. D.	Lipton, Lt.-Col. M.	Strachey, Rt. Hon. J.
Cullen, Mrs. A.	Mabon, Dr. J. D.	Summerskill, Rt. Hon. E.
Deer, G.	MacColl, J. E.	Thomson, George (Dundee, E.)
Ede. Rt. Hon. J. C.	McGovern, J.	Thornton, E.
Edelman, M.	McKay, John (Wallsend)	Timmons, J.
Edwards, w. J. (Stepney)	McLeavy, Frank	Ungoed-Thomas, Sir Lynn
Fernyhough, E.	MacMillan, M. K. (Western Isles)	Warbey, W. N.
Forman, J. C.	MacPherson, Malcolm (Stirling)	Weitzman, D.
Fraser, Thomas (Hamilton)	Mallalieu, E. L. (Brigg)	Wells, Percy (Faversham)
Gaitskell, Rt. Hon. H. T. N.	Mann, Mrs. Jean	Wells, William (Walsall, N.)
Gibson, C. W.	Messer, Sir F.	Wheeldon, W. E.
Gooch, E. G.	Mitchison, G. R.	Wilkins, W. A.
Gordon Walker, Rt. Hon. P. C.	Moody, A. S.	Williams, W, R. (Openshaw)
Grey, C. F.	Morris, Percy (Swansea, W.)	Willis, Eustace (Edinburgh, E.)
Griffiths, David (Rother Valley)	Noel-Baker, Francis (Swindon)	Woodburn, Rt. Hon. A.
Griffiths, Rt. Hon. James (Llanelly)	Oram, A. E.
Grimond, J.	Orbach, M.	TELLERS FOR THE NOES:
		Mr. J. Taylor and Mr. Short.

Question put and agreed to.

Bill accordingly read a Second time.