§ Order for Second Reading read.
§ 3.52 p.m.
§ The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. R. Bevins)
I beg to move, That the Bill be now read a Second time.
As the House knows, my right hon. Friend the Minister of Housing and Local Government—[Interruption.]—
§ Mr. Bevins
—intends to make an announcement to the House at an early date on his proposals for local government finance as a whole. Those proposals will then have to be discussed with representatives of local authorities and we must allow reasonable time for consultation. It is, therefore, clear that those major proposals cannot come into force by April of this year, that is to say, in time for the next financial year in local government.
There are, however, three problems which can brook no delay. They cannot be allowed to continue into the next financial year without some solution. They are the subject of the Bill now before the House. The first problem is the direct result of assessing houses at 1939 values and other properties at current values. Many hon. and right hon. Gentlemen on both sides of the House are very well versed in this subject and will remember that as far back as 1948 it was decided, rightly or wrongly, that houses could not be assessed on current values, because, owing to rent control—one of the subjects which has recently crept into the news—there was no adequate evidence of true rental values on a post-war basis.
More recently, complaints have been made that this dual level of assessments—one for houses and one for other properties—would impose an unfair rate burden on the highly assessed occupiers of commercial premises. In December, 1954, my right hon. Friend the present Minister of Defence undertook that when the effects of revaluation could be clearly seen we should look at the position again to see whether any changes were needed. 622 It is now quite clear that, whatever the effect of outstanding appeals against assessments may be, the distribution of the total of the rateable values among the various classes of hereditaments will be very much the same, although not exactly, as that shown in the White Paper, "Distribution of Rateable Values between different classes of property in England and Wales," which was published in March of last year.
As hon. Members know, the largest increase of rateable values has fallen upon industry itself. [HON. MEMBERS: "No."] If hon. Members will permit me, they will realise that what I am saying is correct. The biggest increase in rateable values has fallen upon industry, I mean the full rateable values. Industry is, of course, already 75 per cent. derated. I think that that is what hon. Members have in mind. This is a simple statement of the fact that the largest increase in assessments fell upon industry. I added that industry is three-quarters derated. That is a fact and not a matter of argument. It would, however, because of derating, be manifestly wrong that industry's rate burden should be reduced still further. Indeed, the subject of industrial derating, as the House knows, is included in the present review of local government finance.
The next largest increase in assessments has fallen on shops, offices and certain miscellaneous properties. Here, the average percentage increase in assessment is about 125 per cent. That involves an increase of about one-third in their share of the total rateable values, that is to say, the average assessment for this class has gone up by 125 per cent, and its share of the total is now one-third higher than it was. As hon. Members know, there is no derating for this class of property and it will be conceded that ratepayers in this group have been required, as a result of legislation and what has flown from it, to delve much too deeply into their pockets.
That is recognised on both sides of the House. Certainly, a number of hon. Members opposite, as well as many of my hon. Friends, have made it clear that they do recognise it. It remains for me only to add that this discrimination against shops and commercial premises has its roots in the Local Government Act, 1948, which was sponsored by the right hon. Member for Ebbw Vale (Mr. Bevan) and supported by the party opposite—
§ Mr. G. Lindgren (Wellingborough)
We cannot allow the Parliamentary Secretary to get away with that. After all, it was the Rating and Valuation (Miscellaneous Provisions) Act, 1955, which created the problem, because that altered the basis of rating for domestic hereditaments and left the basis for shops as it was. If the basis had been left as it was under the 1948 Act, the two would have been in line.
§ Mr. Bevins
No. With all respect to the hon. Member, that is not the case. The fact is that the 1948 Act, introduced by the party opposite, provided for the assessment of houses on a pre-war basis. As it made no reference whatever to the basis for commercial premises and industry, it automatically followed that when revaluation took place that second group would be assessed on current values, as, in fact, they were. I do not think that there is much between us on this point.
As my right hon. Friend feels that the ratepayers of the class of which I have been speaking, shopkeepers and tenants of commercial premises, are being asked to pay too much, the Bill gives relief to the majority of properties of that class by reducing their rateable values by one-fifth. It is a temporary relief and will cease at the next revaluation when, as the law stands at present, houses are due to be assessed at current values.
No doubt shopkeepers and other beneficiaries coming under Clause 1 will regard this as an act of mercy; indeed, my right hon. Friend does not pretend that it constitutes any more than a rough measure of justice. Nothing short of a complete revaluation upon the basis of present-day values all round would be ideal and, as hon. Members know, the realisation of ideals is not always universally popular. I should add, however, that even after the changes made by the Bill and the revaluation of Crown properties have been taken into account the classes of property of which I am speaking will still be bearing about 13 per cent. more of the national rates than they did last year, and correspondingly, the share borne by householders will still be about 13 per cent. less than it was last year, after the 20 per cent. cut in certain groups of assessment has been give effect to.
§ Mr. J. T. Price (Westhoughton)
I do not think that the Minister should proceed 624 on the assumption that we are accepting these glib statements, because we are not. In many North of England boroughs house property built in the 'thirties has already had its assessment increased by about 80 per cent., while many of the shop properties, not rented by small shopkeepers but consisting of great chain stores, have appreciated in value over the years by as much as 500 per cent., as against the average 120 per cent. increase to which the Minister has referred. The argument seems to fall to pieces upon the facts as I understand them.
§ Mr. Bevins
I do not think that the argument falls to pieces. The fact is that it is quite clearly established that the general increase in assessment for the group of properties about which I have been speaking has risen by about 125 per cent. It is equally true that the changes in the assessments of private dwelling-houses as a whole have shown nothing like the same sort of movement. As the hon. Member says, there are obviously variations within houses as a class, one way or the other, but we are concerned at the moment only with the broad outline of the situation. In broad terms this reduction of 20 per cent, in rateable values is limited to properties other than domestic properties, for which, first, a gross value has to be found and which, secondly, are not derated.
I now turn to one of the several bones of contention in the Bill. Are we right to exclude from this reduction properties which are assessed direct to net annual value? Why should some properties be assessed in this way, and why have they been excluded from the benefit of Clause 1? In the main, the properties assessed direct to net annual value consist of public utilities and those hereditaments which do not consist primarily of buildings. They are a mixed bag, including such things as water undertakings, piers, racecourses, holiday camps, and crematoria. In these cases the net annual values themselves take account of the full current costs of repairs, maintenance and insurance, whereas the annual values of the other types of property are ascertained by deductions, in respect of repairs, from gross values.
The public utilities and some of the other undertakings are assessed upon the 625 basis of their accounts, and that automatically ensures that the rate charged after revaluation—as was the case with the rate charged before—is within their capacity to pay, because it is calculated by taking a proportion of the net income after charging working expenses. These constitute about half the total value of the group.
I confess that it is not very easy to generalise about the rest of these net annual value cases. I agree that some of them have had very substantial increases in assessment, although that in itself does not take us very far, especially if such increases were due to previous underassessment. It is the great advantage of the group of properties which are assessed to net annual value that, automatically, current costs of repair are taken fully into account in reaching their net figure. There may be some in respect of which repairs costs are not a material item, and I agree that these probably have a better case than the others for inclusion under Clause 1, but in temporary legislation of this kind, which must be drawn in fairly broad terms, it is not easy to include some while excluding others.
Finally, in connection with Clause 1, I would emphasise that the increases in respect of shops, commercial premises and other miscellaneous properties included in the Bill have been sharp, and indisputable, because there is a mass of evidence of current shop and office rents being paid at the level at which the rating assessments have in consequence been fixed.
§ Mr. J. A. Sparks (Acton)
Is the hon. Member now condemning the Commissioners of Inland Revenue for assessing this valuation? That is what he seems to be doing. It is their valuation.
§ Mr. Bevins
On the contrary, all I have been doing is to try to show what is the difference between those cases which are assessed, first, gross and then, by deduction, net, and the other group of cases which are assessed direct to net annual value. There is no criticism whatever of the Inland Revenue valuers, who have been working so hard upon this task in recent years.
The position of the miscellaneous group, in the class which are assessed direct to net annual value, is not quite the 626 same for, by their very nature, there is not the same evidence of comparable current rentals as proof of the soundness of the assessment. I do not know what will be the outcome of the many appeals which have been lodged in relation to this class of property, and it would be unwise to stake a claim for relief on the evidence of the assessments in the lists before the appeals have been determined.
What will be the effect of this concession upon the rate poundages for the coming year? I am under no illusion that many local authorities and many right hon. and hon. Gentlemen are very agitated about this question. Indeed, just before I came into the Chamber I was reading a report in my local newspaper which said that the leader of the Liverpool City Council had informed the Council yesterday that the provisions of the Rating and Valuation Bill now before Parliament would mean a loss of rate revenue of about £8 million to Liverpool. The fact that an extra nought was added to the figure of £800,000 makes it more interesting still, if more disquieting to the ratepayers of Liverpool.
We should not exaggerate the effects of Clause 1.
§ Mr. Arthur Moyle (Oldbury and Halesowen)
May I help the Minister to be a little more precise? I am speaking about Liverpool. In my constituency, Oldbury and Halesowen, the concession of which he speaks will mean an increase of about 10d. in the £.
§ Mr. Bevins
Yes, that may very well be so, and I have no doubt that the hon. Member's hon. Friends could give examples far more blood-curdling than that. Rateable values and rate poundages are the swings and roundabouts of local government. [HON. MEMBERS: "Oh."] Oh, yes; lower rateable values mean higher rate poundages, and vice versa. Many estimates of increased poundages in this borough and that borough have been bandied about during the last few days. I do not say that they are all inaccurate, but I should be very rash to make any forecast of what is likely to be the precise effect of the Bill in terms of rates.
§ Mr. Bevins
I have spent a few years in local government and I should have thought that it was very difficult indeed for the leader of any large local authority, at the beginning of February, to estimate with any precision what would be the rate poundage at the end of March. [HON. MEMBERS: "No."] If hon. Gentlemen disagree, perhaps they will be good enough to listen to some of the uncertain factors in the circumstances.
For example, these cuts in the rateable value of shops and commercial premises fall unevenly throughout the country according to the nature of the town or city concerned. Obviously, these cuts will have an important reaction on the grant received by local authorities from the central Government; on the distribution of payments by the transport and electricity industries and also on the distribution of county expenses. As hon. Members know—
§ Mr. David Jones (The Hartlepools)
If the hon. Gentleman will not accept an estimate by a leader of a political party on a council, is he prepared to accept the evidence of the Treasurer of the County Borough of West Hartlepool, or the Town Clerk of Middlesbrough, or the Clerk to the Durham County Council?
§ Mr. Bevins
I do not think that we need to get very agitated about this. All I said was that it was difficult to make precise estimates of what rate pound-ages were likely to be two months before the event. I think the House will agree that that is so.
There are other factors which hon. Members cannot speak about with certainty. There are the results of further appeals which are outstanding and which have to be taken into account. There are also, of course, the revaluation of Crown property and the effects of Clauses 2 and 3 of the Bill; apart from the estimates for expenditure for the current year. All these factors have to be taken into account before the rate poundage can be fixed.
§ Mr. G. R. Mitchison (Kettering)
Are we to understand that the hon. Gentleman, with all the resources of his Ministry available to him, has made no estimate of the effect of these concessions 628 on the poundage charged by local authorities in the coming year?
§ Mr. Bevins
If the hon. and learned Gentleman will be a little patient, I think I shall answer his point.
I do not blame members of local councils or city treasurers if they want to make their estimates, but I am saying no more at this moment than that it is not possible for them to be precise in their estimates of rate poundage. I am trying to be fair, and I must tell the House that the furthest I can go is to say that the effect of Clause 1 as a whole is that the total rateable values throughout the country will fall by about 7 per cent. I think that the figure of 7 per cent. is the nearest figure, and is the average. The figure will be higher in one place and lower in another.
§ Mr. Mitchison
I am obliged to the hon. Gentleman. That figure was given in answer to a Question some days ago. It adds nothing to our knowledge. Has he not made an estimate of the effect on the poundage anywhere?
§ Mr. J. Paton
But the hon. Gentleman does not accept that. It is no use the hon. Gentleman making that point to us, because he has already told us that a local authority official cannot make a precise estimate.
§ Mr. Bevins
The hon. Gentleman must not corrupt what I said. I did not say anything of the kind. I said that it was not possible to make a precise estimate at this time. That is a quite unexceptional statement. I went on to say that the total drop in rateable value, so far as we could estimate, would be 7 per cent.
The second purpose of the Bill is rather more complicated. It is to adjust the amounts payable in lieu of rates by the nationalised transport, electricity and gas industries. During the debates on what is now the Rating and Valuation (Miscellaneous Provisions) Act, 1955, a promise was given that the special provisions governing the rate liabilities of those industries would be looked at again during the present financial year so as to take account of the effect of revaluation and various other proposals for changes 629 in the system. So far, this review, is incomplete, but there has been a preliminary examination and we hope very soon to start formal consultations with the local authorities and those nationalised industries as part of the general review of local government finance.
Clauses 2 and 3 of the Bill deal exclusively with the consequences of recent revaluation, for these are the really urgent issues on which action could not wait until the completion of the more general review. Perhaps I might turn for a moment to Clause 2. The Local Government Act, 1948, as many hon. Members will know, took the railway and canal properties of the British Transport Commission out of rating altogether and put in its place a system of payments to local authorities based upon what is called the standard amount. These payments are made to the Ministry of Housing and Local Government, and the Ministry, in turn, distributes them to rating areas in proportion to the rateable value of the area. In the counties two-thirds of the apportioned amount goes to the county councils and the remaining one-third to the county district councils.
In the case of the Transport Commission, the standard amount, about which I have spoken, was based on the aggregate amount of rates paid by the railway companies in 1947–48. The amount payable by the Commission in any year is that same standard amount increased or decreased in proportion to the change up or down in the national average rate poundage for the previous year—I emphasise that it is the previous year—as compared with that for 1947–48 and further adjusted to take account of changes in traffic carried by the railways.
I apologise for that "mouthful." I know that it sounds complicated. Put simply, it amounts to this. The Commission pays more as a sum in rates or in lieu of rates if the rate poundages go up and also if the Commission is doing more business than it was, which I think fair. In the 1948 Act the standard amount was £1,810,000. In 1956–57, that is, the current financial year, the amount payable is £2¼ million and this increase is entirely due to the rise in the average rate poundage. It went up from 214d. in 1947 to 269d. in 1955. But this year, 1956–57, the average rate poundage has fallen to 188d., so the operation of the 1948 Act 630 as it stands would cut back the payment for next year to about £1½ million. On any view, that would be quite absurd, for had there been no revaluation of property at all, and had the rating authorities wanted to raise the same amount of money in rates, the liability of the Commission would have gone up to about £2½ million.
I think I should tell the House that there is a further complication in the case of the Transport Commission, that is, its financial position. If the railways were still assessed as they were in the old days, when the main railways were privately owned, this would very much have affected their assessment, and, obviously, in favour of the Commission. I agree that this is a most complicated and tangled story, but in these circumstances the Government, taking all in all, did not feel justified in imposing an increase in the rate burden of the Commission.
It has, however, been decided that the Commission's payment for next year should not be less than that this year. The Bill gives effect to this by altering the amount specified as the standard amount in the 1948 Act, so it will produce the payment of about £2¼ million in rates in 1957–58—that is, next year—which is, broadly speaking, the same as the payment for the current year.
I come now to the case of the electricity industry. I apologise for having to deal with these three industries separately, but the basis is rather different in all three cases. The 1948 Act dealt with electricity in a not altogether dissimilar fashion from that applied to the transport industry. With the increase in the average rate poundage and the number of units of electricity supplied, their payments have grown from the standard amount of £11¼ million, which was the estimated amount of rates paid by the electricity industry in 1947–48, to about £16¾ million in the present financial year. That is a big increase—from £11¼ million to £16¾ million between 1947 and 1956. But with the fall in the rate poundage from 269d., in 1955–56, to 188d. in 1956–57, the payment of £16¾ million for this year would fall to about £11¾ million next year.
Here the standard amount has been fixed so as to secure that the Central Electricity Authority will pay next year about the same amount as it would have paid had there been no revaluation. It 631 has been shown, unfortunately, however, that the estimate of the rates paid by the electricity industry in the last year before nationalisation was about £500,000 too much, chiefly because of arguments about assessments which had not at that point been properly determined, and the figure fixed as the standard amount by the 1948 Act was also too high by the same amount, that is, £500,000.
We have made an adjustment for this. Clause 2 substitutes a revised standard amount of £18,280,000 for the figure of £11¼ million which appeared in the 1948 Act, and in consequence of this the Central Electricity Authority will be liable to pay about £19 million in the coming financial year, that is, rather more than £2 million more than was paid by the industry this year.
Finally, I would say a word about the gas industry.
§ Mr. Eric Fletcher (Islington, East)
This is very complicated. Would the Minister make it clear that the figures he is giving are comparable as regards premises and that there has been no change as regards the total area of premises occupied by the electricity industry?
§ Mr. Bevins
I did not say that. The figures I am giving take account of the shape, expansion and growth of these industries as it has occurred in the last nine or ten years.
As to the gas industry, the gas hereditaments actually occupied by the gas boards were also taken out of rating by the Rating and Valuation (Miscellaneous Provisions) Act, 1955. But a gas board still pays rates direct to the rating authority. It is unlike the other two cases in that respect. Rates are paid direct to the rating authority in the area in which it manufactures or sells its product, and the rates are levied on a rateable value apportioned to the area in proportion to the amount of gas made or sold in the area during the penultimate year.
The total rateable value of a gas board is taken from its "basic total of rateable values." This was based on the aggregate of rateable values of gas properties in the area of the board just before nationalisation, and it is varied each year to take account of changes in the amount of gas sold by the gas board 632 in the penultimate year. The rateable value for all the 11 gas boards in England and Wales was just over £3 million. By 1955–56, this figure had grown through increased sales to £3,170,000 and the rates paid for that year were about £3½ million.
This year, 1956–57, the rateable values again went up to £3,206,000, but because the rate poundages had fallen the rate payments by the gas boards fell to about £2½ million. Therefore, Clause 3 of the Bill says that the basic totals of rateable values of the Boards shall be increased by 70 per cent. That is, approximately the average increase in rateable values for all properties affected by the revaluation. This has a very similar effect to that achieved by Clause 2 for electricity.
The gas industry, therefore, will pay about the same in rates in 1957–58 as if there had been no revaluation at all. Unlike the Central Electricity Authority, the gas boards have already enjoyed a reduction in their rate payments for the current year. It might, therefore, be logical to make the effect of Clause 3 retrospective to that year on that account; but since the legislation on which this year's payment was based is little more than a year old and, as the House knows, the industry has pegged its prices for the current year, the Government have not felt justified in imposing an additional liability on the boards for the current year.
I now turn to Clause 4, which—
§ Mr. Glenvil Hall (Colne Valley)
May we be told at this juncture whether the three bodies concerned have been consulted and agreed these figures?
§ Mr. Bevins
All three bodies have been consulted and long discussions have been in progress. I am not in a position to say that final agreement has been reached on the formula for the three industries at the moment, but my right hon. Friend is certainly very hopeful that it will be reached in the very near future.
§ Mr. Mitchison
Does that mean that the hon. Gentleman expects agreement to be reached before the Committee stage, next week?
§ Mr. D. Jones
Does the Minister's answer mean that the Government are trying to force the hands of these authorities to agree by getting Parliamentary sanction first?
§ Mr. Bevins
We never force the hands of anybody. What is provided in the Bill is, in our view, a perfectly reasonable provision and we have no reason to suppose that we shall not reach an amicable agreement with all parties concerned.
§ Mr. Bevins
In the last resort this is a matter for decision by the House of Commons and by Parliament.
If, for the third and last time, I may turn to Clause 4, may I say that its purpose is to deal with a relatively small anomaly in the distribution of the Exchequer equalisation grants as a result of Section 8 of the 1955 Act? This concerns the rating of properties occupied for charitable and similar purposes, almshouses and playing fields of certain kinds.
The result of Section 8 of the 1955 Act is that these properties may not pay rates on the whole of their rateable value and, while this has the effect of reducing the amount of rates obtained by the local authorities from these properties, and obviously the rates which these institutions and bodies have been paying to the local authorities, it has the further effect that it does not reduce the rateable values shown in the local authorities' lists.
As the equalisation grants depend on the rateable value per head, the local authorities have been getting no extra grants for loss of rate income due to Section 8. This operates in such a way that although the rate income of the local authority declines, the rateable values in the list are not affected. As equalisation grants depend upon rateable values they are liable to variation on that account only. In most areas this does not matter, because the loss of rate income is small, but it has the effect that in three specific counties, Cambridge, Cardigan and Caernarvon, the loss is serious. That is mainly because university college buildings account for a high proportion of the total rateable value.
In Cambridge, for example, the loss this year amounts to more than a rate of 2s. in the £.
§ Mr. Bevins
Because, as the hon. and learned Gentleman will appreciate if he reflects upon it, this is a simple calculation dealing with the effect of the increased rate poundage arising from the relief of rates to certain institutions and bodies. The other calculation is complicated by at least a dozen factors which I mentioned before. As a result of this provision, the grant payable to Cambridge County Council, according to the first estimate for 1957–58, will be increased by £190,500. There will be increases of £13,500 to Cardigan and £24,900 to Caernarvon.
§ Mr. Goronwy Roberts (Caernarvon)
Is the hon. Gentleman aware that the cost to the Caernarvon County Council of the University College of Bangor is £31,000 per annum? He mentioned a grant of £24,900; why cannot he make it up to the loss sustained by this not very wealthy county?
§ Mr. Bevins
I think that the figure I gave for Caernarvon, £24,900, is accurate, but I have a soft spot for Bangor, so I shall be very happy to look at the matter again.
§ Mr. Bevins
Clause 4 has been included because we did not think it would be reasonable to expect these three counties to bear the loss unaided for a further year. My right hon. Friend is considering a number of more important changes in the equalisation grant system. We must discuss these with the local authority associations before anything is done. Clause 4 will in no way affect the discussions.
I would like to apologise to the House—
§ Mr. S. O. Davies (Merthyr Tydvil)
The hon. Gentleman has been extremely good in giving way to interruptions on numerous occasions. He has referred to the local authority associations. Has he discussed the Bill with them? If so, what has been their reaction?
§ Mr. Bevins
Certain provisions of the Bill were discussed with the local authority associations. The House knows, or will be informed from what hon. Members may have read in the newspapers and by what has been said here this afternoon, that Clause 1 has not been discussed with the local authorities.
§ Mr. Bevins
This is a matter for Government decision, which was to relieve the burden on the shopkeepers.
§ Mr. Lindgren
Are we to understand from that last remark of the Parliamentary Secretary that local government has ceased to be a partnership between Her Majesty's Government and the local authorities, and that now it is a matter of Government decision and local authorities carrying out that decision without discussion?
§ Mr. Bevins
I am sure that the hon. Gentleman knows my right hon. Friend and myself well enough to be aware that that is not the case. There are circumstances, as the House well knows, when, reforms have to be put to this House and carried through, and where there is simply not the requisite time to discuss the matter with the local authorities.
§ Mr. Bevins
I think it is clear. It will be obvious to hon. Members that if Clause 1 and its effects are to be put into operation, as we want them to be, from the beginning of the next financial year in local government, from 31st March or 1st April, this Measure will have to become law fairly rapidly. Time is the essence of this business. It was largely because of the time factor that the local authorities were not consulted.
§ Mr. Mitchison
What I wanted to ask the hon. Gentleman was whether the circumstances which led to that decision included by-elections?
§ Mr. Bevins
I apologise for having detained the House for so long on a matter which is not very exciting. Before I sit down I would emphasise once more that 636 the Bill is an interim Measure and nothing more than that. My right hon. Friend will no doubt have something to say in the near future on the major issues involved in the reform of local Government finance.
§ 4.37 p.m.
§ Mr. G. R. Mitchison (Kettering)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House declines to proceed further with a Bill which contains no proposals consequent on a general review of local government finance, does not provide for the re-rating of industry and so imposes an unnecessary burden on domestic ratepayers and local authorities.This has been the hon. Gentleman's first speech as Parliamentary Secretary of a great Ministry. In those circumstances, I will not make the comment on it that I otherwise should have had to make.
As to the Bill, there are three Clauses at the end which are highly technical and which involve comparatively small sums of money; I mean small by comparison with the sums involved in Clause 1. As far as I am concerned, it will be better to discuss them in Committee though some of my hon. Friends may wish to raise points upon them. I know there are points which could be raised. There is, for instance, the point that arose on a previous rating Bill about the treatment of gas in some parts of South Wales, Port Talbot particularly. The matter very much concerns the constituency of my hon. Friend the Member for Aberavon (Mr. Cove). There are other points about universities and local authorities, one of which has been mentioned today.
I want to confine what I have to say to Clause 1. The three other Clauses involve, if I followed the hon. Gentleman's figures rightly, about £3½ million difference altogether in rateable value. Shall I say under £5 million? In Clause 1 we are dealing with very much larger figures than that. I begin by reminding the House that the 1948 Act provided in Section 14 for an exceedingly important matter. Before the end of this month the Minister is under a statutory obligation to complete his investigations into the working of the Exchequer grant system, having regard, among other things, to the payments of nationalised industries dealt with in subsequent Clauses of the Bill.
637 At that period we were a little more thoughtful of the rights of local authorities than some passages of the speech of the hon. Gentleman appeared to indicate the present Government are. We expressly provided that there should be consultations with associations. That statutory obligation is still there and it is to be completed by the end of next month, and by the end of next month—if I read the Statute rightly—or very shortly afterwards, a report of the result has to be laid before Parliament. In those circumstances, which I shall develop a little further in a moment, I suggest that the Bill, especially Clause 1, is out of time and that by now we ought to have had more than what is provided in that Clause.
It may be said that this is a particular review provided for imperatively in the 1948 Act, and why should there be a general review? The answer to that question is that this Government and predecessors of the right hon. Gentleman have chosen to enlarge the somewhat narrow review into a general review. They have given certain promises about its completion with which for the moment I must trouble the House. The change was made, I think, originally in two statements, one on 15th March, 1956, in Written Answers contained in column 72 of the OFFICIAL REPORT of that date, and again on the 8th May, 1956, reported in column 97 in Written Answers. I quote simply this:the effects of revaluation are being Studied by the Government together with other related aspects of local government finance ….Here comes the puff—This the most thorough review of kind since 1929, and naturally includes an examination of the issue of derating. This review …This is in may,1956—which was started, some months ago, is now already advanced. In fact, the Government expect to be ready with proposals for discussion with local authority associations by the autumn; …We are now told there are to be discussions after some Government statement later on from now, this autumn. The predecessor of the right hon. Gentleman said:and we hope to be able to make an announcement of our conclusions before the end of the year."—[OFFICIAL REPORT, 8th May, 1956; Vol. 552. c. 97.]638 That was in May, 1956. They had been examining the matter for some months, they were going to discuss it with local authority associations by the autumn and were going to have their conclusions ready and announced before the end of the year. The matter was again mentioned in the Gracious Speech, which said that the Government had been reviewing the finance of local government. I ask the House to note the words:including the incidence of the rate burden between different classes of property. Their conclusions …The conclusions of the Government—will, in due course, be announced to Parliament.What was contemplated in the Gracious Speech was what had been referred to before, a general review including de-rating and including the question ofthe incidence of the rate burden between different classes of property.It is perfectly clear that that general review foreshadowed in the Gracious Speech would have covered not only de-rating, but the kind of matter which is to be dealt with by Clause 1 of the Bill. It is not altogether surprising, in view of what had been said earlier, that on 11th December the predecessor of the right hon. Gentleman, when again asked by hon. Members when he was to make his statement, said that he hoped to make a general statement on local government finance quite soon. There have been many previous promises, but that at any rate was a tolerably definite one. We came back from the Recess on 22nd January and found a Government of the same complexion but of different personalities. The present Minister, on being asked the by now, somewhat hackneyed question of when this general review was to be made, had the Question put to him:… whether he is now in a position to make a full statement on local authority finance, Eating and valuation, with particular reference to industrial derating.The right hon. Gentleman answered:I am sure the House will allow me a little time to carry through my own study of these important matters."—[OFFICIAL REPORT, 22nd January, 1957; Vol. 563, c. 34.]I should very much like to know whether or not he has carried out that study. If he has not done so, why is Clause 1 in the Bill? If he has done so, why have we not a general review of the whole problem? That plea of a Minister new to his 639 office to be allowed a little time to form his own conclusions on matters which have been under investigation, as we have been told, for a very long time, was made when those matters ought to have been, and in fact had been, in discussion with local authorities and when all the material and probably the opinion of his predecessor was ready to hand for him to study.
I recognise that the right hon. Gentleman has had his hands and his letter bag remarkably full with matters concerning the Rent Bill, but that is not our fault. The terms of the Amendment call on the right hon. Gentleman now to produce not this half-baked effort in Clause 1, but a proper general review of local government finance. There must be some very remarkable reason if Clause 1, and Clause 1 only, comes forward now. The reasons given by the hon. Gentleman for it being imperative to bring forward Clause 1 now apply equally to the derating of industry and a general review of local government finance. If I die soon, as I dare say I shall. I hope it will be written on my tombstone, "He tried to make rates interesting." The word "tried" may be underlined, but one has to look at these matters as what after all they are—a very considerable burden on individuals and enterprises all over the country—and as something which has its human reactions.
I shall come back to the question of the shopkeepers because there is a great deal more than shopkeepers in this story. We shall be told that shopkeepers are to get something, but the factory round the corner is still paying rates on the footing of the concessions made at a time of national difficulty and national crisis very many years ago—particular concessions for a particular purpose to pull industry out of its difficulties. The ordinary domestic ratepayer will ask hon. Members opposite, as he will ask us on this side of the House, that simple, time-honoured question to which we ought always to keep our ears open: "Is it fair?" What is their answer going to be?
§ Mr. Frederic Harris (Croydon, North-West)
The hon. and learned Member will agree that the householder is already back to 1939 values?
§ Mr. Mitchison
I am much obliged to the hon. Member. I have not forgotten 640 that point and will deal with it in a moment, but he will realise that that is no answer whatever to the man who says, "It may or may not be right to make a concession to the shopkeepers"—as I say, there is a great deal more than shop-keepers in this—"but if you are going to do that, why do you continue to make a very particular and substantial concession to industry which was given in particular circumstances and which we all know is no longer required?" He will go a little bit further and say, "If you did that, if you treated industry fairly, as it ought to be treated, you would not come down on me." Is he not right?
We have had this question of the re-rating of industry several times before. It was discussed in Committee on the Floor of the House in connection with what is now the Rating and Valuation (Miscellaneous Provisions) Act, 1955, and there it is in column 555 onwards of the OFFICIAL REPORT. It was raised by an Amendment moved by my industrious, intelligent and eloquent colleague who sits for Acton (Mr. Sparks), and who interests himself particularly in these things. It was a remarkably good speech, and I do not mind saying so. But what was the answer? It was: "We cannot do it yet. We are going to have a general review of local government finance." That was June, 1955.
In March, 1956, up it came again, when the same hon. Friend brought forward a Private Member's Bill, on a merry Friday, about the re-rating of industry. We want only two lines to do it—to repeal the particular Section that gave this extraordinary concession. Again, what happened? The Government and the Government's supporters got out of it, not by any discussion on the merits, because they are going to do it anyhow; not that, but simply by saying, "We must wait until we have a general review of local government finance." If they can wait for that, why cannot they wait for this? That is the question that I want answered.
I said just now that if this were done, there would be no need for the concession in Clause 1 to come down on the domestic ratepayer, and I agree with the hon. Gentleman that this is quite a complicated figure. It does involve quite a number of questions, and therefore, I will pray in aid what his predecessor in office said 641 at the time. In column 760 of the OFFICIAL REPORT the Parliamentary Secretary to the Ministry at that time said that the result, by and large, would make a difference of one-sixth in the domestic rate burden.
Let us take that. We have been told that the average rates are 15s. 8d. in the £, and, of course, I quite agree that these figures are approximate. They are bound to be, but that is an authoritative statement, and it looks, at first sight at any rate, as if the result of derating industry would be at least 2.7d. in the £ to the advantage of the domestic ratepayer. I tried to get the poundage figure out of the hon. Gentleman, but he said that it could not be done, and that there were good and sufficient reasons why it could not be done. What cared he whether city treasurers and accountants, people who had spent their lives in this kind of thing, had made estimates? He was not going to quote them certainly, he was not going to rely on them. He made no attempt to tell us what effect it would have on rates in the country at large.
Like many other hon. Members, I received the other day a document which, I am bound to say, reminded me of one of those treaties which one finds in the archives of the Foreign Office, because it represented an agreement between great and semi-sovereign powers. It was signed by so-and-so on behalf of the County Councils' Association, by so-and-so on behalf of the Association of Municipal Corporations, by so-and-so on behalf of the Urban District Councils' Association and by so-and-so on behalf of the Rural District Councils' Association. It takes quite a lot to make all these people agree, but here it was, and they appended at the end the figures of the approximate increases. I agree they are approximate, because one cannot be dead certain about these things.
The approximate increase in rates for 1957–58 which would result from the de-rating provisions of the Bill would range from 9d. to 2s. ld. If we take as instances one or two of the largest boroughs in the country, places where, after all, the rates are a matter of very considerable sums of money and of very considerable importance to the inhabitants, what do we find? We find, for instance, Birmingham, which alphabetically is first in this list, though the list is not complete, with 642 a figure of 1s. 7d. If we go a little way down the list, we find that Leeds is not in it, but I have had the figure from Leeds, which is 1s. 10d. In Manchester, it is 2s., and here is a case where it is 2s. Id. I wonder where hon. Members think it comes from. It is Skegness, the place that is so bracing, and it is 2s. 1d.
§ Commander J. W. Maitland (Horn-castle)
Does the hon. and learned Gentleman know that that 2s. 1d. is in itself a measure of the very heavy burden which the shopping district in Skegness has had to bear?
§ Mr. Mitchison
I do not think it is, or that it purports to be that. What it purports to be is the increase in the rate poundage which will result from Clause 1 of the Bill. If the hon. and gallant Gentleman who sits for those parts likes to give the reason to his domestic ratepayers when they ask him why their rates have gone up, it is that his own Government introduced Clause 1 in this Bill, instead of making a general review of local government finance which is long overdue, instead of rerating industry, also long overdue—but they are going to do that anyhow.
§ Commander Maitland
May I tell the hon. and learned Gentleman why the rates have gone up in my part of the world? It was because the Government which the hon. and learned Gentleman supported re-arranged the equalisation grant before they had a revaluation. That is the reason why the rates have gone up in my part of the world.
§ Mr. Mitchison
I really think that the hon. and gallant Gentleman should take a tip from me. When one is discussing a document, it is better to read it first.
§ Mr. Mitchison
I am glad to hear that the hon. and gallant Gentleman has done so. Let him go away and look at it again, when he will find that what it referred to was one thing—the effect that Clause I will have on the rate poundage in Skegness. Now, vitally important though Skegness is, we must for the moment proceed to some more general considerations. Perhaps it was my fault. Obviously, it was, as I can see from the hon. and gallant Gentleman that it is a very bracing place. So much for that.
643 I ask the House for one moment to compare these two figures. It is perfectly clear on any showing that the re-rating of industry would have more than carried the charge that is to be put on the domestic ratepayers, or on the rates generally, by Clause 1 of the Bill. Let us see what this charge is, and, first of all, let us try to see for whose benefit it is. When it has been discussed previously, and it has been discussed before, hon. Members opposite, and I am bound to say one or two of my hon. Friends also, have gone forward behind what I may call a screen of small shopkeepers. I quite recognise that small shopkeepers, like Many other people in the world, have their difficulties, but they will not be the main people who will get any benefit out of this business. I asked the right hon. Gentleman some Questions a very short time ago, and I got from him some of the actual facts. I appear to have mislaid my papers again.
§ Mr. A. E. Cooper (Ilford, South)
Will not the hon. and learned Gentleman agree that the Table in front of him appears to be in a stage of organised chaos?
§ Mr. Mitchison
I am grateful to the hon. Member for his interruption. My only doubt is whether at the moment it is well organised.
We have had reference made to Cmd. 9718, which dealt with the distribution of rateable values between different classes of property in England and Wales. It referred to three categories. One category was "domestic", and we have been talking about domestic rateable values. Another category was "shops". We find from the explanation at the beginning that shops are not just shops but include, for instance, banks in shopping areas, cafes, and so on. Then there is the category "miscellaneous", referred to in his speech by the hon. Gentleman. Out of the concession only three-eighths will go to the shops, and five-eighths will go to the miscellaneous group. Consequently, shops will get considerably less than half the total sum involved. The total sum involved, as a result of another Answer given to me, proves to be £219 million rateable value—