§ Motion made, and Question proposed, That this House do now adjourn.—[Colonel J. H. Harrison.]
§ 11.30 p.m.
§ Mr. G. R. Mitchison (Kettering)
Under the law as it is at present, property occupied by the Crown or its servants is exempt from rates. That is because the Crown was not expressly mentioned in the original Rating Act, sometimes called "The Statute of Elizabeth" and passed in 1601.
In 1874, however, the Treasury, by formal Minute from which I quote, adoptedthe principle that property occupied for the public serviceshould contribute to the local rates equally with the other property in the parishes in which it is situated,having regard to its character in each case.In 1896, a further Treasury Minute reaffirmed the principle of equal contribution, and made certain concessions in order to carry it fully into effect. The concessions included periodical re-valuation, punctual payment and a. contribution in respect of the Houses of Parliament.
Various anomalies have, I believe. arisen lately in the application, or purported application, of the principle of equal contribution, and there are two to which I wish to call attention this evening.
Contributions in respect of requisitioned property occupied by the fighting Services continue to be made on the basis of the rateable value at the date of requisition. This was all very well in time of war, but in many cases the requisition has continued ever since the end of the 1054 war; and what is the effect? The Financial Secretary, in answer to a Question on 4th November last, sought to justify the continuance of the rateable value at the time of requisition by saying that:This shields the local authority from loss of rates, but precludes profit attributable to the emergency."—[OFFICIAL REPORT, 4th November, 1954; Vol. 532, c. 576.]Profit, indeed. A local authority makes no profits, and nowadays is hard enough put to it to find rateable value to meet its needs; and did not the emergency—that one, at any rate, in all common sense—end some time ago? As to loss of rates, this practice is a very expensive form of insurance for a local authority. What happens is that year after year, in peace-time, the Treasury continues to make a contribution which is much less than the rates that would be paid on similar private property. That is a substantial departure from the principle stated in 1865 and 1874.
The most obvious case is an airfield on requisitioned agricultural land. The land exempt from rates at the date of requisition, and, under the practice of which I complain, continues to be so exempt, except of course as regards any rateable buildings which happened to be on it when requisitioned. The R.A.F. or the occupying American Air Force, no longer use the property as agricultural land. If an occupying landowner or farmer changed its use in this way, he would immediately become liable for rates.
Moreover, the Air Force put on it all the buildings—quite substantial ones—proper to an air station, and those buildings are not the subject of contributions. They may include, for instance, a N.A.A.F.I. canteen, or even shops run by private concessionaires, as appears to have been the case at Wethersfield, about which my hon. Friend the Member for Maldon (Mr. Driberg) asked a Question on 2nd March last year. Needless to say, those buildings, if they were put up by a private occupant, would pay rates, just as rates are paid on B.E.A. or B.O.A.C. buildings at Northolt.
In my own constituency, an aerodrome was constructed early in the war on requisitioned agricultural land at Grafton Underwood. After the war, the aerodrome ceased to be used as such and was used as a collection and recovery depot 1055 for R.A.F. vehicles. It was so used for several years, and many thousands of vehicles passed through it during that time. Since, however, the property has remained under requisition, no contribution in lieu of rates has ever been paid, except on five small houses which were there at the time of requisition, and of which four have since been demolished. Also, oddly enough, in respect of some sporting rights over the 520 acres involved.
In the same Kettering rural district, the same thing has happened with regard to 620 acres forming the Desborough R.A.F. station. These were held under requisition until 1949, and the land was then purchased; and because it has been purchased. a contribution has been paid since November, 1949, on an agreed rateable value of £690, which was subsequently increased because of buildings put up after the war. But, for most of the war, and until four years afterwards, no contribution was paid on land and buildings valued at £690, although the land was no longer used for agricultural purposes. That, to quote the Financial Secretary again, was by way of shielding the local authority from loss of rates and precluding profit attributable to the emergency, and of carrying out—or so the Financial Secretary thinks—the principle of equal contribution from Crown property and from private property.
If the reason really is to preclude profit attributable to the emergency, then what is it which justifies failing to pay on requisitioned land, and paying as soon as it is purchased? After all, the foundation for liability to rates is occupation, and not title. I could give other instances of airfields, but a similar question arises in towns. For instance, at Preston, a boys' home was requisitioned, substantial additional buildings were erected by way of offices and storage space, and the Treasury Valuer decided, in accordance with the practice of which I complain, that no additional contribution was payable for subsequent erections by a Service Department on requisitioned land. I understand that the Association of Municipal Corporations is now engaged in collecting evidence of other similar instances.
The second point I can deal with more shortly. As the Financial Secretary admitted on 4th November, deduc- 1056 tions are made from contributions because of services not provided by the local authority. I agree that, no doubt, the occupying Department often provides, say, water or sewerage facilities for an aerodrome, just as a private occupant who requires exceptional services, or who lives in a particularly remote place, may himself contribute towards some such provision by agreement with the local authority. But, the private occupant neither expects nor receives any corresponding deduction from the rates which he pays, and in rural areas water and sewerage are, since the 1944 Act, chargeable to the general rate. Can it be that the Treasury has overlooked that inconvenient piece of legislation? The Treasury never takes a nap as Homer did; but perhaps, like Nelson, it puts the telescope—the fiscal telescope—to a blind eye.
At any rate, on 4th November last, the Financial Secretary told me that the rates on any property, whether Crown or private property, depended in part on the extent of the services for which the local authority makes provision. No doubt the less that a local authority spends in its area, the lower the rate; but that is a very different matter from claiming a partial exemption from rates because a particular ratepayer does not get certain services or because he provides them himself. That is just the claim which the private ratepayer cannot make, but which the Government are making in respect of contributions supposed to be paid on the same principle as that applicable to the private ratepayer.
The long and the short of it is that the Treasury has been, quietly but firmly, whittling away the principle, which it accepted as long ago as 1874—and still purports to accept. One trouble is that the Treasury Valuer both represents the contributor and is the judge. There is no safeguard by way of an appeal. I hope that the Financial Secretary will accept that the whole business needs review in the light of what is happening. That, at any rate, is the opinion of all the local authority associations, who have made repeated representations about it.
Perhaps the simplest and best solution would be to remove altogether the Crown immunity from rating, but that, of course, I cannot urge in an Adjournment debate. The Central Valuation Committee itself, in a letter of 21st January, 1947, to the 1057 Minister of Health, while in effect suggesting such a removal, also stated that it had long been its view that the present arrangements for the rating of property in the occupation of the Crown were in many respects unfair and unsatisfactory to local authorities.
Last year, not for the first time, all the English local authority associations expressed their dissatisfaction. In a note to hon. Members in connection with the Atomic Energy Bill, they and the L.C.C. went so far as to say that the manner of assessing contributions in lieu of rates was completely arbitrary and frequently worked to the detriment of local authorities. They estimated the rateable value of Crown property in England and Wales in 1952 as over £14 million out of a total rateable value of about £341 million.
What I ask the Financial Secretary to do is to consult all these associations and authorities and, having consulted, to review the whole question and to do what is right and fair without too much regard to what was inserted or omitted in the Statute of Elizabeth.
The Royal Commission on Local Taxation, as long ago as 1901. when this was a much smaller question, thought it right as it said in its Final Report:… to note the significance of the concession by the Central Government of the principle that any exception which withdraws a portion of property from the rateable fund operates as a sensible deterrent to the other ratepayers, because it increases the common burden whatever may be the amount of the expenditure.That is still good common sense, and I hope that we may have an undertaking from the Financial Secretary to consult, to review and to do what is right and fair.
§ 11.43 p.m.
§ Mr. Robert Jenkins (Dulwich)
I wish to support what has been said by the hon. and learned Member for Kettering (Mr. Mitchison). The case he put is unanswerable. The real trouble is that the whole of the arrangement made for the payment of rates by the Crown is at the discretion of the Crown or of the Treasury. They are all ex-gratia payments made as of grace and favour. If the Crown does not want to pay, it cannot be sued. That puts a strong responsibility on the Treasury to see that local authorities get a fair deal.
The very fact that they are in no way obliged to pay rates should make the 1058 Treasury extremely careful in the matter. In 1949, the then Financial Secretary to the Treasury was pressed for the payment of rates on Territorial Army property at a time when the Territorial Army was expanding. In 1950, the Financial Secretary turned down the request, presumably acting on advice. In 1953, the Treasury said "Yes." Until then rates were not paid on Territorial Army property, such as drill halls, or on the houses occupied by the officials who administered the property. The Treasury gave way to that extent.
Only recently, legislation went through this House to permit private individuals to sue the Crown. I cannot see any reason why the Crown cannot pay rates just as private individuals pay them. The Association of Municipal Corporations has sent out a questionnaire to its constituent members to produce information, of which there is comparatively little today though there will be in a very short time, of cases throughout the country where this exemption applies. Those are cases where the Treasury, I say with great respect to the Financial Secretary, is being extremely difficult and a little tiresome.
I do not suppose there is anyone in this House who has more knowledge of the subject than has the Financial Secretary from his own experience. One of the great dangers facing local authorities today is the fact that they are unable to raise the rates they require without putting an extremely heavy burden on the ratepayers. There is no doubt that in the course of a few years, perhaps this year, there may be some Bill introduced by the Minister responsible to deal with the reform of local government. That rates are increasing in the way they are is having a disastrous effect upon local government finances, and mounting rates may bring about in the very near future a very dangerous situation. I know that my hon. Friend is aware of that.
In the event of his being generous—and this can be done by an administrative act by the Treasury—in dealing with local authorities and not being, if I may use the word, sticky, but paying his rates in precisely the same way as a private individual, he will still have the situation well in hand, because the officers who assess and value the hereditaments are his own officers of the Inland Revenue. 1059 The present system has gone back to the days of Queen Elizabeth. There has been a remarkable amount of give and take by the Treasury in the past, but the present system is both unsatisfactory and archaic. An assurance from the Financial Secretary tonight that he will have another look at this matter will give enormous satisfaction to local authorities and give them some sort of hope that the Treasury will look after their interests.
§ 11.48 p.m.
§ The Financial Secretary to the Treasury (Mr. Henry Brooke)
This seems to be one of the not unusual occasions when the Treasury is under fire from all quarters. I shall not be intimidated by that, and let me give an assurance that I regard this subject as having a higher importance than may be indicated by the sparseness of the attendance in the House or in the Public Gallery.
The Treasury has been described as tiresome and putting a fiscal telescope to a blind eye. I hope that I may show that there is not so much between us as might appear from the speeches that have been made. I want to say how grateful I am for their clarity and brevity in dealing with a technical subject.
Property occupied by the Crown or its servants for public services is exempt from rates, and that principle was established by a judgment of the House of Lords in 1865. As the hon. and learned Member for Kettering (Mr. Mitchison) said, administrative arrangements now exist by which the Treasury pays to local authorities ex gratia payments in lieu of rates. He referred to the Treasury Minutes of 1874 and 1896, copies of which I have here. The Treasury Minute of 1896 charms us in its reference to the Houses of Parliament mentioning the "peculiar character of the property", a phrase which some of us are inclined to repeat in other contexts.
The principles embodied in these Minutes are, first, that the valuations of properties in Crown occupation should be determined as far as possible in each case on the same principles as are applicable to the valuation of private property, and, secondly, that in view of the peculiar characteristics of properties in Crown occupation, the Government should retain in their hands the determination of their value, subject to the first of the principles 1060 that I mentioned. I would venture to say that this arrangement, though it has been attacked, has certain advantages.
So long as the principles to which I referred are seen by everyone to be preserved, I think it is fair to say that local authorities have no legitimate ground for complaint, but I grant at once that there must be a relationship of confidence, and I think the case that has been put to me from both sides of the House is that in certain small respects, at any rate, local authorities do not feel at present that they are being wholly fairly treated.
The present system which exists under the law has the further advantage of obviating disputes in the courts between the central Government and local authorities, and from the point of view of this House, which is important, it means that the Treasury in no way abdicates control of the expenditure of the taxpayers' money in this field. From 1874 to 1914, the system of payment continued, and then in 1914 war broke out and throughout the 1914–18 war we had this experience of substantial requisitioning.
On the whole, requisitioning did not continue so long after that war as it has done in this case, and I think by the general revaluation which followed the 1925 Rating and Valuation Act, most of the difficulties regarding temporary buildings were cleared up. Then, with the onset of the second war, requisitioning broke out again, and I would like to quote to the House what was said by Sir Kingsley Wood on 21st May, 1942, on precisely the first of the two subjects which the hon. and learned Member mentioned. He said:It is recognised that it would be unfair that local authorities should suffer a diminution in rate income in consequence of the requisitioning of properties for war purposes, and it is the general practice in such cases to grant contributions in lieu of rates, based on the assessments existing at the time the property is requisitioned. On the other hand, the construction of temporary camps and other establishments for the accommodation and training of troops during the war emergency should not have the effect of augmenting the rate income of the local authorities for those areas in which the camps, etc., may happen to be situated, and no contributions in lieu of rates are, accordingly, granted in respect of such temporary structures." — [OFFICIAL REPORT, 21st May, 1942; Vol. 380, c. 398.]I think the hon. and learned Member will realise that I was basing one of my answers to him last autumn on the principles there laid down.
1061 The war ended nearly 10 years ago, and since then an attempt has been made to establish distinction of treatment between those buildings which have been erected on requisitioned land and those which stand on land that has been either purchased or leased by the Crown. In the latter case, no difficulty of the kind that has been stressed exists but, in the former case, I quite recognise that there is a grievance among some local authorities, especially those who have airfields in their areas, that they are receiving no contributions in lieu of rates, though there seem to be buildings upon those airfields much more solid than temporary war-time structures. It must be a matter of judgment, I think, whether one would agree that such buildings should be brought into the reckoning of contributions in lieu of rates.
I now want to refer to the hon. and learned Member's contentions, regarding the treatment of services such as scavenging and sewerage. The local authorities normally provide those services for the neighbourhood, but not normally on the scale necessary for a great service camp, if one is dumped in an agricultural area. It has therefore been the frequent practice of Service Departments to invite tenders from the local authority concerned, and also from other contractors, for such services as scavenging and sewerage, and, with a proper regard for the taxpayers' money, to accept the lowest tender.
Ever since 1874, it has been contrary to Treasury practice to agree to pay twice in a matter of this sort, and there would be a double payment if, in addition to the Crown paying for the service being carried out in the camp on a contractual basis, it were also to agree to pay rates as though the property were valued at a full valuation and the full level of local rates were charged upon it. The hon. and learned Member argues that this is contrary to the principles referred to in the 1874 Minute, because, as I think he rightly says, no private occupier would arbitrarily make similar adjustments to the rates which he pays.
1062 I think that we may get into difficult problems of valuation here, and it is a little late to do so. The proper valuation which ought to be put upon a property depends in part upon whether there is adequate sewerage and services of one kind or another, but, frankly, this is not the moment for us to get to grips upon those somewhat technical questions. I am anxious that there should be a relationship of confidence between the Crown and local authorities in these matters, and I therefore want to tell him that if any of the local authority associations would like to prepare a reasoned case on either or both of the matters to which the hon. and learned Gentleman referred, they will find the door of the Treasury ajar. I am not saying that they will find the coffers of the Treasury open, but the door will be open and they will not find the mind of the Treasury closed.
I am not prepared to agree that there has been anything wrong in Treasury practice in the past, and I am certainly not going to encourage any retrospective reopening of what has been done, but I shall be ready, if the associations wish to put up a case, to have it examined afresh, so far as the future is concerned, so as to make sure not only that justice is done but that it is seen to be done by all concerned. This is not an inappropriate time to do this, as the local authorities will, in a sense, be starting on a new era when the new valuation lists come into force next time.
I hope that local authorities throughout the country can trust me to be the sort of person who will try to be fair to them as well as to the Treasury interests that it is my duty to defend, and I very much hope that both the hon. and learned Member for Kettering and my hon. Friend the Member for Dulwich (Mr. Robert Jenkins) will feel that this is a happy ending to this debate.
§ Question put and agreed to.
§ Adjourned accordingly at one minute to Twelve o'clock.