§ The Minister of Housing and Local Government (Mr. Duncan Sandys)
With permission, Sir, I should like to make an interim statement on local government finance. The Government's review of local authority finance is now far advanced, and I shall be making a full statement after the Recess. Meanwhile, there are, among the problems examined, three which require immediate attention.
The first is the need to adjust the rate contributions from the State-owned gas, electricity and transport industries, so as to offset the loss of revenue which would otherwise be suffered by local authorities as a result of the recent revaluation.
The second problem arises from the fact that the present method of calculating Exchequer equalisation grant takes no account of the relief from rates given to charitable and educational bodies, under the Rating and Valuation Act of 1955. The result has been that certain areas, like Cambridgeshire, where the property occupied by these bodies forms an appreciable proportion of the total rateable value, have been losing substantial amounts of grant to which they would otherwise be entitled.
The third matter concerns the rating of commercial and certain other classes of property.
In December, 1954, I gave an assurance that, as soon as the effects of the revaluation could be fully measured, the Government would review the position and consider whether any changes were necessary.
It is still too soon to get a full and final picture. In any case, since there exists no present-day valuation of houses, it is impossible to say precisely what is a fair distribution of the rate burden between the various classes of property. Nevertheless, sufficient information is now available to show beyond doubt that the recent revaluation has placed an unduly heavy share of the burden upon the occupiers of shops and other commercial property.
In these circumstances, the Government do not feel that it would be equitable to leave the position as it is. They accord- 1472 ingly propose, that, in the current valuation lists, the rateable value of shops, offices and certain miscellaneous property should be reduced by 20 per cent.
A short Bill to deal with the three matters to which I have referred will be introduced tomorrow, and it is proposed that its provisions should take effect as from 1st April next.
§ Mr. Mitchison
Is the right hon. Gentleman aware that after effect has been given to the present proposals, industry will be derated by 75 per cent. and shops and so forth by 20 per cent., and that the result will be a heavier burden for local authorities, which will ultimately have to be borne by the domestic ratepayers, who have other troubles under the Rent Bill? Does the right hon. Gentleman not regard the rerating of industry as a matter quite as urgent as the one which he is now putting forward?
Secondly, is the right hon. Gentleman aware that the finances of local authorities sorely need strengthening and not weakening and that, notwithstanding the small concessions he mentioned at the beginning, they are already in grevious difficulties, having regard to the elimination of housing subsidies and the high and increasing rates of interest which they are having to pay on all their borrowings?
If I may give an instance, is the right hon. Gentleman aware that Bristol is now having to halve the number of council houses to be built, to stop altogether mortgages for private buyers, and to reduce, or stop, any improvement grants? Is the Minister not going to make any concession either in regard to housing subsidies or to the rates of interest on corporation borrowing?
§ Mr. Sandys
I will certainly study the statement made by the hon. and learned Gentleman. The major question he raised, that of the derating of industry, is one of the large issues which will be dealt with in the full statement that I have promised after the Christmas Recess.
§ Mr. Page
Is my right hon. Friend aware that many of us will be grateful that he has carried out his undertaking to review the position of the shopkeepers, and that the shopkeepers themselves will be grateful for the reduction of 20 per cent.? My right hon. Friend mentioned 1473 what was to happen to the rate contributions under the pooling schemes. May I ask him whether he has any plan for the proper rating of premises, showrooms, and so on, of the nationalised industries, which have caused us considerable concern as being perhaps unfairly rated?
§ Mr. Sandys
The Government recognise the need for various improvements in the methods of rating the nationalised industries, including the question of the separate rating of showrooms. Since, however, these changes could not reasonably be brought into effect between now and 1st April, they will not be included in this interim Measure, and I shall have more to say about them when I make my full statement after the Recess.
§ Mr. Gibson
May I ask the Minister whether, in view of the proposed reduction of 20 per cent. in the rateable values of shops and business premises, and also because of the fact that the local authorities will still need the same amount of money to run their affairs, he does not agree that this means that a larger share of the local rates will be borne by the householders? In view of that, does he not think it is time that the Government gave serious consideration to providing new sources of revenue for the local authorities, one of which, I suggest, might be a tax on local land values?
Will the Minister make sure that some provision can be made for meeting the difficulties of local authorities in the cost of running their affairs and for relieving the householder a little, instead of imposing on him, as the right hon. Gentleman has been doing recently?
§ Mr. Sandys
The effect of this remission for commercial property will be to reduce the total rateable value in England and Wales by about 7 per cent. When Crown property is revalued, which is going on at the moment, that figure should be about halved. The remaining 3 per cent. or 4 per cent. will be spread over all classes of property.
§ Mr. Lindgren
Can the Minister give us some information about the effect on the rate poundage? May I say, with great respect, that we are getting tired of what seem to us to be attempts to mislead the House? This will increase the rates of the domestic ratepayer by well over one-third.
§ Mr. Elliot
Can my right hon. Friend say what the position of Scotland is with respect to the forthcoming legislation?
§ Mr. Bellenger
Is it not a fact that the amount of rates in the £ has been fixed? If a reduction of 20 per cent. is made in the rateable value, will not the local authorities have less revenue, and will they, therefore, not have to make a supplementary rate to meet their current expenditure?
§ Mr. Sandys
No, Sir. The right hon. Gentleman has evidently not understood me. I said that these changes, if the House approves of the Bill, will take effect as from 1st April next. The rate poundages for next year have not yet been fixed.
§ Sir P. Spens
May I ask my right hon. Friend exactly what are the proposals for charitable and educational establishments? I gather that he is to assist charitable and educational establishments such as colleges and schools. Although I am more interested in those—not in Cambridgeshire, but elsewhere—I know that there are serious difficulties for both. Does it mean that the present enormous additional rate burden on colleges and schools will be mitigated by some form of grant or by some other scheme? Whatever it is, it will be more than gratefully received.
§ Mr. Sandys
The purpose of the proposed change is to help to make good to local authorities the losses on equalisation grant which they have suffered as a result of making remissions of rates to charitable organisations.
§ Mr. Wade
While welcoming the statement of the Minister as far as it goes, and noting that he recognises that an unduly heavy share of the burden of rates has fallen on the occupiers of shops and certain other properties, will he say whether any relief will be granted for the current year, in view of the fact that the unfairness of the burden has been admitted?
1475 Secondly, as the Minister referred to the fact that there was no present-day valuation of dwelling-houses, are we to assume that rerating will not be dealt with until there is a new valuation, in which case we should have to wait until the end of the quinquennial period?
§ Mr. Sandys
I did not follow the last part of the hon. Member's question. So far as the first part is concerned, I think that the question put by the right hon. Gentleman the Member for Bassetlaw (Mr. Bellenger) to some extent answered the hon. Member. It is not really practicable, when dealing with a redistribution of the rate burden as between various classes of property owners, to make any change operate retrospectively.
§ Mr. Wade
May I clarify my second question, Mr. Speaker? The Minister referred to the fact that there was no present-day valuation of dwelling-houses. May we have an assurance that the rerating of industry will be dealt with in his statement in the New Year, and will not be held up until there is a new valuation of dwelling-houses?
§ Mr. Sandys
I thought I had made it clear that the question of the derating of industry would be among the major points with which I propose to deal in my statement after the Recess.
§ Mr. Langford-Holt
The three plans which my right hon. Friend has mentioned conform, generally speaking, to the present pattern of local government finance. Do we understand that the inquiry which, as he has said, is now far advanced, will envisage a major departure from that present pattern? Are these interim measures, or will they form part of the pattern after that general inquiry has been completed?
§ Mr. Sandys
The Bill which I am to introduce tomorrow deals with three urgent matters within a limited field. I would not like to anticipate the statement which I shall make later on the broad issues of local government finance.
§ Mr. S. Silverman
Would the right hon. Gentleman bear in mind that while many of us appreciate the object of the change with regard to business premises—shops and offices, and so on—we cannot understand why the additional burden should be left to be borne by the 1476 householder? Could not the right hon. Gentleman, in the same operation, have added to the contribution made by industrial premises the amount by which he is relieving the shops and offices?
While I appreciate that the right hon. Gentleman will be dealing with the general problem of derating later, it is obvious that that will take some time, so why, in the meantime, should the additional burden be borne by people who are already being asked to bear more than they can reasonably bear?
§ Mr. Sandys
I have already explained that any reduction in the rates paid by commercial properties will, of course, be spread over the whole field, over all classes of property and not merely over householders, as was suggested by the hon. Gentleman. The Measure will not add to the financial burden on local authorities. It merely involves some ratification of a maldistribution of the rate burden.
§ Mr. Speaker
Order. I think that we had better wait to see the Bill when it is introduced, and we may then get some answers to these questions. There is yet another long statement to come. Mr. Birch.