§ Mr. Mitchison
Does this Amendment mean that we have all been looking at Clause 9 and omitting to notice that the Act of 1929 was not mentioned? I hope that it does not have that meaning. We are all so well acquainted with Section 68 of that Act, that we may have missed a lot.
§ Mr. Bevins
I can acquit the hon. and learned Gentleman and his hon. Friends of any such lack of concentration in our proceedings. This Amendment is consequential on an Amendment, made in Committee, removing from subsection (1) an earlier reference to the Local Government Act, 1929, a reference which, without the Amendment, would not be in the Clause.
§ Amendment agreed to.
§ Mr. Graham Page (Crosby)
I beg to move, in page 10, line 14, at the end to insert:(2) Where before the nineteenth day of November, nineteen hundred and fifty-seven. such an industrial hereditament was demised or let on terms which provided for the payment of the rate (within the meaning of the Rating and Valuation Act, 1925) on that hereditament or on part thereof by the owner and there is no provision in the lease or contract in respect of such demise or letting or otherwise for the owner to demand an increase of rent in respect of such rate, the owner shall be entitled to receive from and shall be paid by the person liable to him for the payment of such rent an increased rent equal to the additional rate from time to time payable in respect of such hereditament or such part thereof by virtue of this section, and such increase shall for all purposes in connection with the recovery of rent be deemed to be part of the rent originally reserved or made payable on such demise or letting.(3) For the purpose of this section "owner" shall mean any person for the time being entitled to receive the rack rent of the industrial hereditament whether on his own account or as agent or trustee for any other person.Clause 9 relates to the partial rerating of industrial premises and freight transport hereditaments. In all the arguments 1323 supporting this partial rerating, it has been assumed that industry can afford to pay. It has been assumed simply that industry will pay, but a particular industrial concern may be a tenant and may not be the owner of the property which it is occupying. If it is a tenant, it may hold at an exclusive or inclusive rent. If it holds on an inclusive rent, the landlord pays the rates. The result of re-rating would be that the landlord would be paying the increased rates under Clause 9, the 25 per cent., and not the industry concerned.
That cannot be the intention of the Clause. My Amendment is intended to put that right, so that the landlord is allowed to be repaid by the tenant in the form of increased rent. The landlord might be called upon to pay something even in excess of the rent, if the property was let at an inclusive rent some time ago. The landlord should be entitled to recover that increased rate from the tenant.
This is not a new principle. In the 1929 Act, when industrial premises were derated, the exact opposite was applied; that is, when industrial premises were let at an inclusive rent the owner had to allow the tenant that amount of de-rating. I am now suggesting that, in all fairness, the landlord should be entitled to recover that amount from the tenant. It may be said that there cannot be many of these cases and that normally industrial premises are let at an exclusive rent, the tenant paying the rates. It was necessary to deal in 1929 with cases of inclusive rents, and I am sure there must be some inclusive rents paid by industrial tenants at the present time.
The hon. Member for Swansea, West (Mr. P. Morris) raised this question in Committee and drew our attention to the Treforest Trading Estate. I see the hon. Member in his place, and I hope that he will join me in my plea to the Minister to put this matter right.
I should like my right hon. Friend to say whether he accepts the principle and whether it would be fair, as it was thought fair to do it the other way round in 1929. If so, ought the Amendment to be rejected because one cannot put one's finger on any particular case other than that which the hon. Member for Swansea, West raised in Committee?
1324 There is no reason why the Ministry should have knowledge of all these cases. If my right hon. Friend says that the Ministry knows of no case to which this would apply, that does not mean that there are no cases.
It must be common knowledge that many industrial premises are let at an inclusive rent. Now that there is rerating, although we would be interfering in a way with a contractual relationship, it is justifiable to interfere with it to bring fairness, reasonableness and justice to the relationship between landlord and tenant as affected by this Clause.
§ 8.45 p.m.
§ Mr. Percy Morris (Swansea, West)
It is still true that adversity finds strange bedfellows. When this matter arose in Committee I was endeavouring to help people who really are ambassadors of the Government of the day in endeavouring to make a great success of trading estates. We referred to the difficulties which arose as a result of war when we encouraged people—who, in effect, were refugees—to set up new businesses, particularly in South Wales, and, to expedite matters, certain agreements were reached which were quite unusual insofar as they provided for a rent and rates inclusive arrangement.
As a result of recent developments in connection with rerating, it is possible that some tenants will be paying less in rent than their landlord has to pay in rates. If we are to keep these trading estates functioning and providing employment for people where it is needed most, I think it worth while for the right hon. Gentleman to make some arrangement. My difficulty is that I am unable to measure the problem throughout the country. The Minister may have far more information than is at our disposal. I hope I was not wrong in Committee and that the Minister would like to help if that is at all possible. A great deal of correspondence has passed between his Department and those immediately concerned. He undertook to talk to us about it on Report.
Now that the matter has been mentioned by the hon. Member for Crosby (Mr. Page), the terms of the Amendment are so explicit and the hon. Member has clarified it in every possible way, I need 1325 not detain the House, but I should like to learn from the Minister whether he has found ways and means of helping those who are helping him to maintain employment in South Wales.
§ Mr. Sparks
There is one side of this problem which seems most remarkable. Over a period of time there is usually some fluctuation in the incidence of the rate. If there is in existence such a lease as I presume my hon. Friend the Member for Swansea, West (Mr. P. Morris) knows of, it would seem that, unless the rate incidence has remained absolutely stable from the date of contract, any variation in the rate since that time must have been borne by the owner and not passed on to the tenant.
I do not deny for a moment that there is something of a hardship on the owner if he has to pay 50 per cent. of the net annual value as against 25 per cent., but is this a real remedy to the situation? With the quinquennial valuation lists coming—we have had one already and there is to be another in 1961, and we have been told that at the next quinquennial valuation rateable values will rise again—if this Amendment is accepted I do not think we shall have a complete solution to the problem.
§ Mr. Sparks
I quite agree. The amount involved may be greater in proportion, but who knows, the Government may step it up in two or three years' time to 75 per cent., or even 100 per cent. Then we shall have a repetition of the problem. Even so, when the quinquennial valuation comes in 1961, if we are to accept what hon. Gentlemen opposite say, the assessments will rise again, which will, in effect, mean that the rate burden on people will be further increased.
I should have thought that the best solution to this problem would have been to have had a fresh lease, in which the incidence of the rates on the property is carried by the tenant. I presume that that is what the hon. Gentleman wants. If a new lease is provided, one is covered 1326 for all time and we need not then have to come to the House again when the Minister has increased the contributions of industry to 75 per cent. and say, "Please do for us what you did on the previous Bill."
§ Mr. Morris
If my hon. Friend can persuade the Minister to accept this suggestion, we would be very happy indeed. It is an expedient we are looking for.
§ Mr. Bevins
We had quite a lengthy debate on this problem, which is not a big problem, during the Committee proceedings, and both my hon. Friend the Member for Crosby (Mr. Page) and the hon. Member for Swansea, West (Mr. P. Morris) gave their views at some length. Since the Committee proceedings, my right hon. Friend has had an opportunity of looking very carefully again into this matter, and I am bound to say that, for reasons which I shall give and which, I hope, will prove convincing to both my hon. Friend and the hon. Gentleman opposite, he does not feel able to accept the Amendment, or, indeed, the principle of the Amendment.
The hon. Member for Swansea, West told the Committee that this case refers to the Treforest Trading Estate, which is under the control of the Wales and Monmouthshire Industrial Estates Company. The problem is largely a pre-war and war-time one in its origin. The tenants were refugees from Europe, and at the time they settled in South Wales they were apprehensive about taking leases at inclusive rentals in case they were overwhelmed by very large rate increases. I think that the hon. Member for Swansea, West recognises that the estate company accepted the risk of increased rates, but said that it could not have foreseen the possibility of industrial rerating, either in part or in whole, at any future time.
My hon. Friend the Member for Crosby said today, as, indeed, he said in the Standing Committee, that lettings at inclusive rentals were not unusual, and it would be unfair not to provide for the converse of the provision in the Local Government Act which required a landlord of property let at an inclusive rental to remit to his tenants the benefits of derating. Notwithstanding what my hon. Friend said, these cases of inclusive rentals for industrial premises are, to the best of my knowledge, very few and far between. I believe they are very isolated.
1327 Since we had our debate in Standing Committee, which, as the House knows, was fairly well publicised, not a single additional case of this kind has been brought to the attention of my right hon. Friend. We have looked at the problem again and, although we conferred with my right hon. Friend the President of the Board of Trade, we have not been able to find another case of this description. We do not feel that it would be right to alter the law solely to meet one case, even if the merits of that case were beyond dispute, and I want to tell the House that the merits of this case are not beyond dispute. The fact is that the board of management of this estate company, when it first entered into these contracts, did not foresee that industrial derating might be changed, and now that the unforeseen has happened the proposal is that because the Board did not envisage this possibility——
§ Mr. Bevins
It is almost the same, I think. It is suggested that because the board did not envisage the possibility of this measure of derating, it should be indemnified against it at the expense of the tenants. I think that the House will see that in accepting the leases the tenants equally thought that they would be safeguarded against any increases in rates, from whatever cause. We are, therefore, being asked tonight to assist an undertaking, whose predecessors were prepared to accept a risk of rate increases, at the expense of tenants, whose concern was to safeguard themselves against increases from any quarter.
It is difficult in this one known case to make any substantial plea of hardship on behalf of the landlords. If there were a distinct element of hardship the proposition would perhaps be different. This company, for whom we have a great admiration for its work in South Wales, is not constituted for profit and the worst that is likely to happen if the company makes a loss is that it would partially default on its interest payments to the Exchequer. There will not be any hardship. In those circumstances, as this appears to be an isolated case, my right hon. Friend does not feel able to advise the House to accept the Amendment. I think this is essentially a case, as the 1328 hon. Member for Acton (Mr. Sparks) said, in which it might be appropriate for some renegotiation of terms to take place between the company and the tenants.
§ Amendment negatived.
§ Mr. H. Brooke
I beg to move, in page 10, line 29, at the end to insert:(3) Where, on or after the first day of April, nineteen hundred and fifty-nine, an alteration having effect for a period preceding that date falls to be made in a valuation list with respect to an industrial hereditament or freight-transport hereditament, the alteration, so far as concerns rateable value, shall be made so as to indicate the value ascertained in accordance with subsection (1) of this section; but as respects any such period for which the alteration has effect the valuation list shall be deemed to indicate a rateable value ascertained by reference to net annual value in like manner as if subsection (1) of this section had not passed.I trust that this Amendment will commend itself to the House, because it is intended solely to clear up what otherwise may be a small difficulty. It deals with the case where an alteration has to be made in a valuation list on or after 1st April, 1959, with respect to an industrial or freight-transport hereditament and yet the alteration has effect for a period prior to that date.
The House will appreciate the kind of case in which that might occur if the proposal were served before 1st April, 1959, but came to be settled on or after that date. In cases of that kind two different rateable values will be required, one ascertained with rating at 25 per cent. of the full value up to 1st April, 1959, and the second ascertained with rating at 50 per cent., from that date onwards. All that the Amendment does is to secure that those two different values can be used.
§ Amendment agreed to.