RATING AND VALUATION BILL

HC Deb 30 November 1960 vol 631 cc393-530

Order for Second Reading read.

3.32 p.m.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke)

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

Few people, if asked what is the most scintillating subject that the House of Commons ever discusses, would suggest, in reply, a Rating and Valuation Bill. At the same time, rating and valuation concerns, for good or ill, every householder, most property owners—indeed, the country at large—and without an equitable and acceptable system of valuation for rating purposes it is hard to see how our democratic local government could be carried on.

It is true that I have heard of a parish council which scorned orthodoxy and replenished its financial resources not by levying a rate, but by resorting to Bingo, until the village constable warned it that Bingo was an illegal lottery. That, I understand, drove the council back to orthodoxy, but Parliament has since passed the Small Lotteries and Gaming Act and, for all I know, that parish council may have gone back to Bingo.

That expedient is hardly available for the average county or borough treasurer, so Parliament must study the intricacies of rating and valuation, and I believe that my first job in troubling the House with another Bill on the subject needs be to describe what will happen if we do not legislate, because it is that which will explain why the Government have come to the view that we cannot leave things as they are.

The present valuations for rating purposes came into force in April, 1956. Under the law as it stands, at the next revaluation, which is due to take effect on 1st April, 1963, householders will be rated on the full current value of their houses instead of on the 1939 values, as at present. The current values will, of course, be assessed, just as the 1939 values were, as though there were no rent control.

Some commentators on the Bill have suggested that the assessments will he affected because some rents are decontrolled whereas others are still controlled. That is not so. The artificial effects of control and decontrol on rents are completely ignored for the purposes of valuation. The Rent Act is irrelevant to this Bill, and changes made in the 1963 valuation will make no difference at all as to whether a house will continue to be under rent control.

Let me mention, too, at the outset—

Mr. J. T. Price (Westhoughton)

The Minister has made an important statement which should be challenged at once. He has said categorically that the 1957 Rent Act will make no difference to valuation. That is a point of view that is strongly disputed by many of us on this side because, obviously, rack rents available for property that has been artificially raised by the Rent Act will be a factor that will be taken into account by valuers when arriving at the new valuation.

Mr. Brooke

The hon. Gentleman may have the opportunity to make his speech later. Before he does so, however, I recommend him to study the state of the existing law.

The existing law is perfectly clear that what he has suggested will not happen, any more than it happened in the case of the present valuation based on 1939 values, when, of course, a certain amount of property was still under the pre-war control.

I was about to mention that the Bill is irrelevant also to Schedule A valuations. It would require new legislation, quite separate from a Rating and Valuation Bill, to alter those. Any questions about Schedule A should be addressed, as always, to my right hon. Friend the Chancellor of the Exchequer, and not to me.

Until the new valuations for rating have been completed, nobody can tell by how much the assessments on the 14 million houses throughout England and Wales—and, by the way, the Bill does not apply to Scotland—will, on average, exceed the present assessments that are based on 1939 values, but the fall in the value of money since 1939 makes it perfectly clear that the increase in valuations—which, of course, is not at all the same thing as an increase in rates payable—will be substantial. So much for house property, which at present accounts for about 47½ per cent. of the total rateable value of the whole country.

Next, we come to the commercial property. Shops, offices, hotels, and so forth, at present account for about 41 per cent. of the whole. All this property is now assessed on the values current when the present 1956 valuation lists were being prepared. As the House will remember, that was found to hit commercial property so unfairly hard that under the Rating and Valuation Act, 1957, Parliament determined that for the rest of the present valuation period—and that means from now up to 1963—shops, offices, hotels and commercial property generally should be rated at 80 per cent. instead of 100 per cent. of current values.

Under existing law, from 1963 onwards they will be rated on the basis of 100 per cent. of 1963 values. That means an automatic increase of a quarter, apart from any increase in their values from 1956 to 1963, but that, altogether, is likely to result in a far smaller increase in these commercial assessments than the increase in house assessments when they go from 1939 values to 1963 values.

Finally, there is the industrial property. Industrial property accounts at the moment for only about 11½ per cent. of the rateable value of the whole country. Industry up to 1929 paid rates on 100 per cent. of current values. From 1929 to 1959 it paid rates on 25 per cent. of current values, and since 1959 at 50 par cent.

If we left the law unchanged, if the Government did not bring in this Bill, that 50 per cent. would carry on indefinitely. Industry, after 1963, would be rated on 50 per cent. of 1963 values instead of 50 per cent. on 1956 values.

What all this amounts to is that, if Parliament does nothing at all, the total rateable value of industry from 1st April, 1963, will rise by a moderate amount—the increase in values since 1956. The rateable value of shops, offices and hotels will rise by considerably more, but both these increases will be easily outdistanced by the far greater increase in rateable values of houses that will be consequent on the change from 1939 to 1963 values.

Until about 16 million separate properties have been revalued, which will be some time in 1962, none of us can be sure exactly what the rise in the total rateable value for each of these three classes will be. I will attempt to give an estimate, but any estimate I give must have a great element of conjecture. There is no getting away from it.

If we leave the existing legislation to operate quite unchanged, I would judge that, because of the shifts I have described, the share of the total rate burden falling on industry would go down by nearly half; the share falling on shops, offices and hotels, would be reduced, but not by anything like half; and the share falling on householders would be greatly increased, perhaps by about one-third or more.

The Government do not think that sudden changes of this magnitude are defensible, more particularly as the occupiers of houses have to pay their rates out of net income whereas industrial and commercial ratepayers pay out of gross income and can charge their rates as a deduction from profits for tax purposes. That, then, is the first reason for the Bill.

There seems no ground in equity for the rate burden of industry in 1963 to be halved at the cost of the householder. The industrial depression and the heavy unemployment which were the original cause of the derating of industry in 1929 have now, thank God, disappeared from our land.

By Clause 1 of the Bill we propose to bring the derating of industry to an end. No one can say that that, taken by itself, would be a new burden on industry, because if we abolished industrial derating and left the existing law to operate unchanged on commercial and domestic property, the likelihood is that industry as a whole would be bearing very much the same share of the total rate burden as at present. Industry would carry much the same burden; householders would carry more, despite the full rating of industry; and commercial property less, which I would say, in passing, is in itself not unfair, because the commercial property was hard hit at the last valuation. But it is householders who can least stand this severe upward jolt in their share of the rate burden, if only because, as I mentioned just now, they get no tax relief on the rates they pay.

Therefore, as a precautionary measure, we are providing in Clause 2 of the Bill that, if need be, when it is definitely known how the new valuations are working out, the Government can take action by Order partially to derate houses in such a way as to soften the blow that might otherwise fall on them. It can hardly be before 1962 that we shall have the information, but it seems right, in this Bill, to make clear that a measure of derating of houses will probably be necessary.

Adopting the principle that it is important not to subject householders to too severe a jolt in 1963, we then have to take into account that the extent of the jolt may vary widely between one area and another; partly because house values have risen much more since 1939 in the most prosperous and sought-after parts of the country than in the least prosperous, and partly because householders will automatically come off better in almost wholly residential areas than in areas which are, let us say, half residential and half commercial or industrial.

Therefore, to apply the principle equitably, we may need the further power, which is contained in Clause 2 (2), to fix different percentages of derating of houses in different counties or county boroughs. I hope that these differences may turn out to be not so great as to necessitate using this power of discrimination, but I am sure that it is right to take it.

If we partly derate householders, that means, of course, that we shall be shifting part of the burden back on to industry and commerce. So far as one can judge, that is almost sure to leave shops, offices and hotels still bearing a lighter burden than at present. Industry, it is true, may have to pay somewhat more on average than its present share, though there is no question whatever of it having to pay double.

I am sorry if any additional burden has to be placed on industry at all, because, although we all know that most industries and most firms are prospering, there are always some firms and some industries that are not doing so well. At the same time, it is right to bear in mind that, on average, the rates paid by industry are estimated to be less than 1 per cent. of the total turnover, so even if they were increased by as much as 50 per cent. under the Bill, which they will not be, they would still remain a very small part of the total expenses of the average firm. And, as I said, any increase in rates diminishes the firm's tax liability.

The Government's intention, as the Bill makes clear, is to get back towards everybody paying rates on full current values in place of the unsatisfactory chaos of different bases. I can give the assurance to industrialists that this is our aim, and that the temporary derating of householders in the Bill is designed to last for the period 1963 to 1968 only, and that its sole purpose is to ease the transition from 1939 to 1963 house values.

If anyone asks me what will happen in 1968, I can only reply that if it is impossible, as it certainly is, to forecast the outcome of the 1963 revaluation three years ahead, it is completely impossible to forecast the circumstances eight years ahead. One step enough for me.

If, however, one effect of the Bill was to induce businessmen and industrialists to take a larger interest in local government, that, in my view, would be all to the good. Far and away the most expensive local government service is education. It is the education service which is outstandingly valuable to industry because our competitive power depends so largely on mental and technical ability. More businessmen ought to stand for election to local authorities, and they ought to encourage their staffs at all levels to do so. Few people know as well as I do, with twenty years in local government behind me, the difference in quality of present day local government that is caused by the comparative lack of the business element with up-to-date enlightened ideas and personal experience of efficient organisation.

I am advised that the Valuation Office, if it is to complete its general task of revaluation in time for 1963, must know, here and now, whether industry is to be rated at 50 per cent. or 100 per cent. That is why this Bill cannot be delayed. That is why we cannot follow what, at first sight, would have seemed the obvious course: to have waited to legislate until we have the information about house values which cannot be obtainable before 1962.

Mr. John Diamond (Gloucester)

Would the right hon. Gentleman explain that? I did not follow, and perhaps some other hon. Members did not follow, why it is necessary to delay this for the simple arithmetical job of dividing by two. That is all that happens.

Mr. Brooke

Neither the hon. Gentleman nor I are professional valuers, but I am advised by professional valuers that in valuing property they have to take account of the outgoings of that property. One of those outgoings is the amount of rates that have to be paid and, therefore, after valuing the property assuming 50 per cent. derating, we do not simply double the valuation we put on it if it is to be rated at 100 per cent. We have to take into account in arriving at our assessment the fact that heavier rates will be paid on it.

When we have that information about the 1962 values there will be then no time at all to lose, because whatever percentage of derating is decided upon has then to be applied to each of some 16 million separate properties, and the correct, adjusted figures have to be inserted in the valuation lists which need to be sent to every rating authority before the end of December, 1962.

There is another matter which must be dealt with before then, too. In conjunction with the new values of all types of property which are assessed to gross value, we must look afresh at the cost of repairs and maintenance. The statutory deductions for repairs were last altered as long ago as 1928, and they are almost bound to need further adjustment in the light of 1963 values. The statutory scales of deduction apply not only to houses, but virtually to all non-industrial buildings. However far one altered these scales of deduction, one could not avoid all need for the derating of house property; but, quite obviously, we must arrive at the new scales in relation to the current cost of repairs and maintenance before we decide about the extent of the derating to be applied to houses.

I might say that there is no necessity in this Bill to take fresh power to modify the scales of deduction, because that power already exists under the Act of 1955. The 1963 revaluation, combined with the provisions of the Bill, will continue the Government's policy, which I announced in 1957, of strengthening the basis of local government finance. It is right that I should say now, although it is not an immediate issue today, that when, in the second half of 1962, the Government come to determine the amounts of general grant for the year 1963 onwards, we shall wish to discuss with the local authority associations whether there is here an occasion for redressing the balance between grants and rates.

I am not asking the House today to endorse that principle. I am not asking local government to accept it. As I say, it is not an immediate issue. It does not arise now, but it would be wrong if I did not put it on record that the point is reserved for consideration in 1962.

We are not proposing any revaluation of agriculture. Agricultural land and buildings paid rates at 25 per cent. of full valuation up to 1929. Since 1929—thirty-one years ago—they have paid nothing. One practical consequence of that is that no valuations of agricultural property for rating purposes exist. The job of carrying out a complete valuation of agricultural property throughout England and Wales would be so tremendous, coming on top of all the other revaluation which has to be done from now onwards, that I am advised that, even if we legislated for it here and now, we could not be ready to start collecting rates from agriculture before 1968. So it could make no contribution to the primary purpose of the Bill, which is how to cushion the jolt for householders in 1963 from 1939 values.

Bearing in mind that agriculture is already a subsidised industry, and also that the total yield from the rating of agriculture would be a very small percentage addition to the total yield of the rates, which, last year, was £648 million, the Government cannot believe that it would be worth while at this time to set in motion the whole machinery of valuation of agriculture for rating. Between now and 1968 it would be pure expense, because the valuation would cost money, and until 1968 it would bring nothing in by way of rates.

There is a second strong reason for bringing in this Bill, and that is to establish, from 1st April, 1963, onwards an equitable basis for the rate treatment of charities. At present, there is no logic or guiding principle in it. In the old days, when local authorities were responsible for valuation, some, but not all, of them put a sympathetic assessment on some, but not necessarily all, of the charities in their area, and gave them a measure of rate relief that way.

When valuation was transferred to the central Government and the new 1956 lists were drawn up, obviously the Valuation Office of the Board of Inland Revenue could hardly exercise a discretion to make sympathetic concessions to certain charities; they had to value everything according to law. So what the 1955 Act did was to impose a kind of temporary standstill, enjoining that each property owned by a charity should retain for the time being the same proportion of rate relief as it happened to be enjoying in 1955, until Parliament had time to consider whether a fairer method than that could be found.

I should like once again to express my thanks to Sir Fred Pritchard and the other members of the Committee which I asked to investigate and report to me on this difficult problem—the Committee on the Rating of Charities and Kindred Bodies. It was a well-balanced committee, including people qualified to speak for the different points of view, and it is significant, I think, that they produced a unanimous Report. They had a hard task, and not only because they found the present rating position based on 1955 practice rather chaotic.

Naturally, many of those concerned with charitable bodies and organisations would like complete exemption from local rates. On the other hand, the representatives of local authorities point out, quite truly, that any remission of rates to a charity is the equivalent of a compulsory contribution from all the rest of the ratepayers to the funds of that charity.

Although there might well be a good argument for that in the case of some charitable organisations which are of general local benefit, it is a different matter to be compelled to contribute to all charities located in the area whether one approves of their objects or not and, indeed, whether or not the benefit of the charity accrues to the particular authority where its building is situated.

The Pritchard Committee, having heard all the arguments on both sides, gave a judgment of Solomon; it unanimously recommended that every organisation which qualified as a charity should be absolutely entitled to a 50 per cent. remission of rates, whether the benefits it conferred locally were great or small. The Committee also said that the local authority should have discretion to grant a further remission beyond the obligatory 50 per cent. remission, right up to complete exemption from rates, if it thought fit. In a situation in which it is clearly not possible to reconcile all the different points of view completely, the Government accept this unanimous recommendation. Clauses 8 and 9 are based upon the Pritchard findings throughout—with one exception, of which I will speak now.

The Pritchard Committee was clearly in some doubt about the position of the universities. The universities are undoubtedly charities. Indeed, the First Schedule to the Bill says so. But they are substantially financed by Exchequer grant through the university Grants Committee. Unlike other charities, many of them hold a considerable, if not a dominating, position in the towns and cities in which they are established, as well as being different from the ordinary charity in that they are largely Exchequer financed.

In all these circumstances, it does not seem to the Government that a sufficient case exists for obliging the local authority to give the universities on all their extensive buildings a 50 per cent. remission. Let me hasten to make it clear that the universities will in no way suffer thereby. My right hon. Friend the Chancellor of the Exchequer is ready to give assurance that any additional rates falling on them as a result will be taken into account in determining the amount of recurrent grants to be paid to them from the Exchequer. It is simply a question whether the money will come from the taxpayers or from the other ratepayers.

This applies to all universities and colleges which receive grant through the University Grants Committee; the First Schedule defines them, and it leaves room for future additions. It does not apply to the Oxford and Cambridge colleges, although it does apply to the University buildings in Oxford and Cambridge. The colleges will get the 50 per cent. mandatory relief, because they are charitable foundations and yet do not receive any grant whatever from the University Grants Committee. The Government believe that this is the fairest settlement of an intractable problem.

Mr. Roderic Bowen (Cardigan)

What is the position of such institutions as the National Library of Wales in this framework? It is grant-aided, but not through the University Grants Committee.

Mr. Brooke

To the best of my knowledge it qualifies as a charity, but I should not like to give an authoritative opinion without notice. The only establishments of university status which are excluded from the mandatory 50 per cent. remission are those listed in the First Schedule to the Bill, and that list does not include the National Library of Wales.

Mr. G. R. Mitchison (Kettering)

What relief are the colleges getting at present?

Mr. Brooke

The colleges are in the same position as all other charities, and it is not easy to lay down a definition because there is a standstill based on what each rating authority had chosen to do before the process of assessment was centralised. The 1956 lists were the first lists produced by the Valuation Office. They contain no element of sympathetic assessment and, consequently, the 1955 Act has frozen the position ever since, so that each body, whatever it may be, has continued to receive the same measure of rate relief as it had been receiving up to 1955.

Clause 9 deals with various related matters, including the Pritchard Committee's recommendation that the exemption of voluntary schools—which used to be called, technically, the non-provided schools—from rates should be ended. Again, let me be emphatic in saying that this will make no difference to the Churches which have built these schools, because the rates are an expense which will fall not on the Church concerned, but on the local education authority.

Clause 9 also deals with another of the Pritchard recommendations in that it repeals the total exemption from rates given by the Scientific Societies Act, of as long ago as 1843, to societies established for the purposes of science, literature or the fine arts exclusively. Litigation still goes on about the precise range of this 117 year-old exemption.

The Pritchard Committee, after going over the whole history and working of that old Act, was—I quote from its Report— not satisfied that any of the societies exempt, or contending for exemption, under the Act of 1843 has a better claim to relief in present circumstances than any other charities. In fact, there are only about 109 bodies which obtain exemption under the 1843 Act. Of these 109, the Pritchard Committee found that at least 96, and probably as many as 106, would qualify as charities.

The Government propose to follow the Pritchard Report on this difficult matter. The definition in the 1843 Act has proved so difficult to apply that I doubt whether anyone, except perhaps lawyers, would advocate retaining it unaltered. Instead, under the Bill, practically every organisation which now obtains benefit from the 1843 Act will in future, through being a charity, qualify automatically for 50 per cent. derating, and the local authority will have discretion to go further, up to complete exemption, if it thinks fit.

Hon. Members may have noticed from the Pritchard Report that this matter of the scientific societies concerns the City of Westminster much more than all the rest of the local authorities in the country put together.

Dr. Reginald Bennett (Gosport and Fareham)

The House welcomes the adoption of the Pritchard recommendations in this respect. Can my right hon. Friend tell us whether research associations come under the heading of charities for this purpose, or where they are in the Bill?

Mr. Brooke

I can only say that if any organisation, whether a research association or anything else, can satisfy the authority that it is a charity, then it will get the benefit of the 50 per cent. mandatory derating and possibly discretionary derating of the other 50 per cent., but it will turn entirely on whether the body establishes that it is a charity.

The remaining provisions of the Bill are mainly of a rather technical character, and possibly in a Second Reading debate the House does not wish me to go into them in excessive detail. Clauses 15 to 19, with the Second and Third Schedules, revise and, I hope, simplify the rating of water undertakings. I admit that they do not look simple, but I am assured that they are much simpler than those which they replace. I am advised that if we enact them they should create far less work for lawyers than the old system of assessing water undertakings by references to the accounts or receipts or profits. I am not preparing for myself a very favourable reply from the hon. and learned Member for Kettering (Mr. Mitchison), but I must be frank with the House. There is general agreement that the old system of assessment for water undertakings should be abandoned.

The new principle is that what is called the cumulo value of the undertakings Shall be adjusted from time to time for changes in the volume of water supplies and also for changes in the net annual value of all other properties at revaluations. Apart from any change or changes in water supply, therefore, the water industry's share of the total rate burden will not normally alter when revaluation takes place.

At this point, I should like, on behalf of the Government, to pay warm tribute to the representatives of the local authority associations, the London County Council and the British Waterworks Association who, at my request, joined officers of my Department in a working party which, for a considerable time, has been engaged in reviewing the whole field of rating and valuation. Policy decisions, of course, are for the Government, but on many of these highly technical matters covered in the rest of the Bill the working party gave me invaluable help in sorting out the issues. This would have been a much less good Bill without that working party's critical examination of shortcomings and anomalies in the present law. I should tell the House that the representatives of the water industry on the working party indicated that they accepted the general idea of the change which is embodied in Clauses 15 to 19, while they remain critical of one element in the new plan.

I turn to the other Clauses. Clause 3 will enable me by Order, subject to affirmative Resolution, to establish for other classes of property a different method of valuation from the profits method. We have done this for gas and electricity, we are doing it for water, and there may be a case for following suit in certain other industries and occupations, including the coal industry.

Let me make perfectly clear that it would be no part of the object to reduce or increase the total rate liability of those concerned, but simply and solely to sanction a better and simpler method of calculation, if one could be agreed upon beween the local authorities and the ratepayers concerned. I want to miss no opportunity of simplifying the valuation system, and I hope I have the support of the House in that. The same explanation applies, mutatis mutandis, to the proposal in Clause 4.

Clause 5 gives effect to two recommendations of the Ritson Committee on the Rating of Plant and Machinery. The Ritson Committee, at my request, went into that complex problem. The House may remember that effect was given to all the rest of its recommendations in the Plant and Machinery (Rating) Order, 1960, which is now in force. But these two outstanding recommendations could not be given effect in that Order because they required amendments of the law. In the light of the Ritson Report, I do not think that either proposal is controversial.

The remaining Clauses—6 and 7, 10 to 14, and 20 to 25—call for no special mention in a Second Reading debate which is concerned, first and foremost, with the main principles of the Bill. With the careful help of the working party, we are taking the opportunity to remove some of the curious anomalies and out-of-date features in the law, dating back to the nineteenth and even in some cases to the eighteenth century, like the eighteenth century obligation to maintain a rate book—an obligation which may in these days stand in the way of modern accounting method, because the name "rate book" can hardly be applied, without a long stretch of imagination, to a tray of punched cards. I know that there are those who believe that we should scrap the whole rating system and replace it with something better, though no one has yet managed to suggest what. As the Economist said last week: It is, after all, the best rating system we have and the Bill is designed to make it work better. I see from the Order Paper that there are some who would like to call a standstill and hold another full inquiry into the whole financial relationship between central and local government, even though we had one only four years ago. I am concerned with the fact that another revaluation has by law to be completed within the next two and a half years. Without shirking these wider questions or minimising their interest to students of public finance, my concern is to get this revaluation carried through in an orderly way, and put into effect with fairness to all concerned.

It is with that practical purpose that I commend this very carefully thought-out Bill to the House.

Mr. H. Rhodes (Ashton-under-Lyne)

May I ask the Minister to clear up one point? In answer to the hon. Member for Gosport and Fareham (Dr. Bennett), he said that, under Clause 8 (4, b), if the research associations convinced the local authorities that they were charitable organisations that would be acceptable. But there is an alternative. It goes on to say: or are otherwise concerned with philanthropy or the advancement of religion, education or social welfare or are concerned with science, literature or the fine arts; Would he not say that the research associations have a good case for presentation to the local authorities for the relief of rates?

Mr. Brooke

These are matters which the House may well want to pursue in Committee, if not on Second Reading, but the position is that industrial research assooiations such as those to which my hon. Friend referred are, generally, not technically charities. If they are charities, if they establish themselves as charities, they will qualify for relief. I do not think that at this stage I can be asked to say more than that.

Mr. Speaker

Before I call the hon. and learned Member for Kettering (Mr. Mitchison), may I say that the Amendment on the Order Paper in the name of the right bon. Gentleman the Leader of the Opposition and other hon. Members is selected.

4.18 p.m.

Mr. G. R. Mitchison (Kettering)

In those circumstances, Mr. Speaker, and with thanks to you, I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, having regard to recent increases in the rent of dwelling-houses and to the prospect of an inequitable burden on domestic ratepayers, declines to proceed further with the Bill until a full inquiry has been made into the financial relationship between central and local government under modern conditions.

Mr. Ronald Bell (Buckinghamshire, South)

On a point of order. Would you help us, Mr. Speaker, by indicating whether the moving of the Amendment at this stage will narrow the subsequent debate on Second Reading?

Mr. Speaker

No, in my opinion not at all.

Mr. Bell

I am much obliged.

Mr. Mitchison

I do not intend to base my quarrel—for it is a quarrel—with the Minister on any question about the rating of water undertakings. I have much more serious complaints than any that arise in that connection. Whenever I have to follow the right hon. Gentleman on matters of rating and valuation I have to remind him that The Times is not a Labour newspaper. On Saturday, 19th November, The Times had a leader headed, "Rates Up To Date". It seems to me to contain a great deal of wisdom and a number of points that the right hon. Gentleman has certainly not laboured to bring out in his speech.

I will read from this leader. It begins with fine words to the right hon. Gentleman. He will appreciate them. It says that he … has already had more than his fair share of unpopular Ministerial chores and in the Rating and Valuation Bill he has another one. I entirely agree. Yet the task of making valuation lists both up to date and equitable is immensely important and has already been postponed too long. I agree again. The right hon. Gentleman postponed it. In so far as the Bill is designed to accomplish this it is welcome, but admiration would be less grudging were the general effects clearer. Again, I agree. It is surprising that such a measure should be introduced apparently without the Government being able to say with some assurance what are the proportions which different classes of property are likely to pay. That, I believe, is the substantial point in this Bill. That there will be considerable variation is obvious. Rateable values of dwellings are likely to be about treble the 1939 values now still in use. Then the article goes on to deal with industries and shops, and comes to the conclusion that the contribution of domestic property will, after the Bill takes effect, and after the new lists come in, represent a considerably larger proportion of the whole. I entirely agree. I should have thought that this was a matter that so obviously arose that the right hon. Gentleman would have been able to give us a little more information than he has furnished us today.

I have been doing my best to help in the matter and I propose to trouble the House with some questions that involve a few figures. I will do it as simply as I possibly can. The effect of the Bill will be that all property, as I see it, at any rate without any significant exception, will be rated on present-day values. Industry will lose its 50 per cent. exemption. Shops and offices will lose their 20 per cent. exemption. To that extent all will be put on a fair footing.

The figures published at the end of Table C, in Appendix VIII, of the Ministry's Report for 1959 show the net annual values and the rateable values of industry and freight transport, on the one hand, of offices and shops, on the other, and of domestic hereditaments. They are a little difficult to follow and there may be minor points which do not really affect the broad conclusions. From those net annual values these deductions of 50 per cent. and 20 per cent., as I understand it, are made to arrive at the rateable values. Therefore, so far as those classes of properties are concerned, we have to substitute the net annual values for the rateable values in the table. I may be wrong, but, broadly, I think that must be right.

If we look at the net annual value in the case of industry—I include freight transport for this purpose—it is roughly double the rateable value, and correspondingly the figures in the case of shops and offices represent the 20 per cent. benefit. Let me take those figures and show what the figures are to be for those classes of property. We shall find that as a result of this Measure, and of the inclusion of the provision in favour of offices and shops, there will be an increase for those classes of property, taken all together, of about 44 per cent. Consequently, if domestic hereditaments are to bear the same share as industry, on the one hand, and shops and offices, on the other, there must be an increase on domestic property of 44 per cent. or thereabouts and not more.

The Times has said that there will be an increase of three times the present values. I do not think that that is very far out. I shall be discussing that in a minute. But I need not remind the House that an increase of 300 per cent. is about six times the increase that is to fall on industry, shops and offices taken together. It is a staggeringly higher burden. As the right hon. Gentleman properly explained to the House, one can add to that the fact that the householder carries the whole of that increase on his shoulders because it comes out of his net taxed income, whereas for the purpose of industry and of shops and offices, rates, and an increase of rates, are deductions before tax and, therefore, they fall in part on the Exchequer. It is not altogether surprising that the Exchequer does not like arrangements of that kind. I shall have to consider that point in a moment.

The fact is that it looks as if the ordinary householder is to carry an increase which is about six times that of industry and that of shops and offices, and is to carry it without the benefit of any tax deduction whatever. That is pretty stiff on the domestic householder. Even if it were only twice, it would be bad enough. I am simply taking the figures from this revolutionary source, the first leader in The Times on Saturday, 19th November.

Let us look at this another way round. I may say that for the calculation that I have made I have taken the figures that appear in the OFFICIAL REPORT this morning, in the Written Answers, in answer to a Question that I put to the right hon. Gentleman. There are some other figures which I shall use new, which were given in answer to a Question by my hon. Friend the Member for Feltham (Mr. Hunter). I am now going to look at the matter in another way.

Let us assume what The Times assumes—an increase of three times for householders. What is to be the result? We have included Crown property. It does not pay rates, but it pays a contribution in lieu of rates—a comparatively small amount. We find, in answer to the Question that I put, that industry and freight transport bear between 11 per cent. and 12 per cent., that dwellings bear 47½ per cent. and that another category, principally, but not wholly, composed of shops and offices, bears about 56½ per cent.

Let us take industry. If dwellings are to bear three times as much, industry's share is reduced from nearly 12 per cent. to under 10 per cent. Incidentally, the Crown's share is reduced from about 4½ per cent. to under 2 per cent. But the dwellings, which carried only 47½ per cent. of the total rate burden before, are to carry no less than 72½ per cent. That is a very sweeping change and when the right hon. Gentleman talks, as he did today, about softening the blow and making it a little bit easier, adding that he might have to do something and that he probably will—we shall have to consider in a moment what he proposes—he is concealing the severity of the blow which he proposes to inflict on ordinary householders.

This is a matter for which the present Government, and, in this particular case, he himself, are very largely responsible. The Rent Act may be irrelevant, strictly from the point of view of rating assessments, and no doubt it is. I have not forgotten the case of Roberts and the Poplar Assessment Committee, which has been law for a very long time, and we all know about it' We are not quite as ignorant as that, and we do not want a lawyer to tell us that, but that is not the point.

The point is that these assessments can only be made on property that is free of control and free of subsidy. I entirely agree with that, and, indeed, when the right hon. Gentleman came here in 1959 to ask for the postponement of these assessments, he gave as the reason that there was not enough "free market" property, as he called it, on which to found the lists. He now says that he has got enough, and in answer to my hon. Friend the Member for Feluham he gave the figures. There are now, so he says, about 2 million free houses left in the country. When I say "free houses", I mean houses let at rents without any element of subsidy or control. As the total is about 15 million, the right hon. Gentleman has got more than the 10 per cent. which be considered necessary.

But we have to see of what this comparatively small proportion, which he told us in 1959 was sufficient for the valuers, is actually composed. I take, first, the figures which he and his hon. Friend at that time, the present Postmaster-General, gave, and the description they gave of what was required for that purpose. I begin by taking the words of the present Postmaster-General, who was a little more forthcoming on this matter than his right hon. Friend, who is a very cautious man. What he said was: That is not a matter of the whims or fancies of the Valuation Office. I agree. It is not even a matter of intelligent guesswork or intuition. Again, I agree. It has to be founded on actual market conditions and the rents which willing tenants are prepared to pay to willing landlords."—[OFFICIAL REPORT, 23rd February, 1959; Vol. 600, c. 872.] I just ask anybody who knows what the effect of the Rent Act has been in London, and what the housing conditions in London are at present, to tell me what is meant by willing tenants and willing landlords. The tenants are willing enough to pay almost anything to get a house when they cannot find one in London or in other big towns. The same position necessarily prevails outside these towns, because those who cannot find houses in which to live in the middle have to go to the edge and look for them there. The shortage in London spreads like a ripple out to the borders and beyond.

The effect of the Rent Act, and at this moment the effect of the cessation of three-year agreements, which were put in as a palliative, is that rents are artificially put up because there are not enough houses. There are not enough houses because, while the right hon. Gentleman has succeeded in pushing up appreciably the number of houses which are owner-occupied, he has given only the slightest encouragement to public building. Actually, when we look at the houses let by private owners, and compare the position disclosed in the Answer to that Question with the position that existed at the end of 1956—and that appears in the tables in Command Paper 17 published by the Ministry at the time—we find that the number of houses let by private owners has decreased.

We know that all this is the result of what the right hon. Gentleman himself has done, and if he says he now has willing tenants and willing landlords—he has, in a sense, but they are tenants willing to pay artificial prices and some, at any rate, of the landlords are only too willing to to demand an artificial price—even if we do not push it to the extreme case, and I agree that some of the cases we have heard in the House must be extreme cases, nevertheless, the effect of the whole thing has been to push up the rents of houses directly as a result of the Government's legislation.

I hope that no hon. Member will tell me that this does not really matter, because a very large proportion of the people concerned will be owner-occupiers. The basis of rating is the hypothetical tenant—the year to year tenancy—and, whether the house is owner-occupied or not, it is on these 2 million so-called "free market houses" that the whole thing has to be founded.

The Minister says that he has enough. He has had technical opinion on that, and it may be right or wrong. I do not know, and I would not presume, on a question of that sort, to challenge him. Let us suppose that it is enough. It still remains the fact that these are a very small proportion of the houses, and like every other case at present, they have been very seriously affected indeed by the effects of Government legislation.

I take one more instance in the speech of the present Postmaster-General from which I have already quoted. The right hon. Gentleman pointed to the rents resulting at the end of the three-year leases as a good indication of value. Surely, anybody, particularly in London, who has seen what happens at the end of the three-year leases, knows perfectly well that there, at any rate, the resulting rent is an artificially high one. I say to the right hon. Gentleman, and he will no doubt hear it again, with cases and illustrations from my hon. Friends and those hon. Gentlemen opposite who are prepared to fact the facts, that what he is taking at present is the artificial state of affairs produced by his own legislation.

If it results, as it looks like resulting, in an increase of about three times the present valuation falling on domestic ratepayers, they will be called upon to pay an inordinately large share of rates all over the country and to carry a burden which they do not yet know about and which they will find a very grievous one.

I charged the right hon. Gentleman yesterday with hiding behind the local authorities whenever he could, and this is a case in point. I wonder whether all those who pay rent for their houses realise that they are paying on an extremely artificial hypothesis — this 1939 value and all the conditions attached to it. I do not believe that the majority of the people know it. I have been asked time and time again about rates by people who have no idea about them. What is it they say? They say that the council has put up the rates again; and so the right hon. Gentleman will have got away with it, sheltering behind the local authorities once more.

This is not the right way to treat people. Surely it is the business of this House and of the Government to consider particularly the domestic ratepayer. At the moment, not only is there the point about his having no tax relief, but in the case I have mentioned that he is the same man who has had to pay the rent increase which the Government have brought about. I am not going back on all our old disputes about the Rent Act. I thought that it was mistimed, wrong and that it would have a bad effect. I still think so. The point is that, for good or for ill, increased rents have been paid and had to be paid, as people had to have somewhere to live, and now, on top of the rent increase, the same person will have to pay a rate increase. I hope that he will understand well and truly that the Government, and not the local authorities, are responsible for this.

Mr. Brooke

It is important that the public should not get a misleading impression. The hon. and learned Gentleman seems to be suggesting that the rents of the relatively small sector of tenanted houses which are decontrolled will be conclusive evidence to the valuer of what the rent would be in a free market. That, of course, is not so. The valuer must take into account what the rent would be in a free market assuming that all the houses were decontrolled. Listening to the hon. and learned Gentleman, I sometimes felt that he was arguing that people would be better off if there was complete decontrol.

Mr. Mitchison

I hope that the right hon. Gentleman will not take it amiss if I say to him that no one is so deaf as he who does not wish to hear.

What I said to the right hon. Gentleman, and I repeat it for his benefit, is that when he and his then Parliamentary Secretary came before the House, in 1959, to urge the postponement of the valuation lists, their reason was that there was not a sufficient sample of free market houses. The right hon. Gentleman is now entitled to say that if a 10 per cent. sample is required—that was the figure the right hon. Gentleman gave at the time, and which he expected at this time to be available—and if the figures which he gave to my hon. Friend in answer to his Question are right, as, I have no doubt, they are, he now has his sample. It is a little better than 10 per cent.; it is two-fifteenths, I suppose, if one looks at it accurately. Those are the houses on which, and on which alone, the valuers can proceed.

If the insufficiency of those houses was the reason for postponement—I am sure that the right hon. Gentleman gave us the right answer then—he only confirms what would occur to me: that is, that one cannot take subsidised rents. The Parliamentary Secretary at the time gave the reason that one cannot take controlled rents because of decisions like Robertson v. Poplar Assessment Committee and the like. One must take the free market rents. There are very few free market rents.

What I am pointing out to the right hon. Gentleman is that he has queered the pitch. It is he who has made these rents excessively high. He is now putting on the ordinary domestic householder a burden which he did not clearly explain to the House, but which will be inordinate. The Government recognise this. All those passages about, "It may be necessary, it probably will be necessary, to soften the blow" and the rest mean that the Government know perfectly well that unless they do something about it the indignation which they create will be excessive. It might even bring the Government down. They are quite right in thinking that, unless they do something about it, the domestic householder will be very angry, and quite rightly so. I have given the reasons for it.

I now go on a little bit further to look at the right hon. Gentleman's patchwork remedy. What is happening about these people? We were told that the local authorities did not altogether like compulsory contributions towards exempted charities. What about the domestic ratepayer, who is made to pay a compulsory contribution towards the rates of local industry? That is the way that the domestic ratepayer will look at it, and he is entitled to look at it that way.

What is proposed? The Minister is to be given complete power to fix the rate—the percentage, as it were—of the real rateable value upon which rates will be paid. He can let off the domestic householder 100 per cent. if he wishes, if he gets away with Clause 2 of the Bill. The right hon. Gentleman can make it 50 per cent., 60 per cent., or anything he likes. He comes to this House to say, "I want these powers. I cannot tell you what the reduction, if any, will be, because we have not got the necessary information yet." Some things are highhanded even for a Tory Government. Some things are oppressive even to a London tenant. If this is not one of them, I do not know what is.

This is the most extraordinary excess of ministerial power that I have ever had to face—and the right hon. Gentleman has been pretty bad. His nearest effort was taking power to control all the houses in the country by Order. This is just as bad. He asks us, in effect, to trust him, to trust the benevolent Minister who is responsible for the Rent Act, to trust that dear friend of tenants all over the country to see that the domestic householder is not unduly oppressed.

That is a good deal for anybody to ask. The right hon. Gentleman will not think that I am speaking of him in any other than his political capacity when I say that it is altogether too much for a Minister who has acquired a reputation for being hard-hearted towards householders to ask Parliament for these powers. It ought not to be done.

Let us look at Clause 3 and what the Minister himself pointed out just now. He is taking a rather minor power to make sweeping alterations about hereditaments hitherto valued by reference to profits. Before he makes any Order, however, under Clause 3, he must consult associations of local authorities, persons carrying on undertakings and anybody whom he thinks he should consult. There is no provision of that sort in Clause 2 that would make the difference to the ordinary householder.

What is happening is that the right hon. Gentleman is hitting the ordinary domestic householder a hard blow. He is going to say, "I will stop beating you if I like and to the extent I like." That is the result of all this business. I could go on about it—

Mr. T. L. Iremonger (Ilford, North)

Am I not right in thinking that the Order which my right hon. Friend the Minister is being held up as making in such an arbitrary fashion will be subject to the approval of the House?

Mr. Mitchison

I hope that the Whips will be off when it is put before the House. I agree that there is that slender safeguard, but, unfortunately, by some mistake at the last General Election, the Government have a majority. There we are.

It would be fair at this point if the right hon. Gentleman got up and said, "This is all very well, but what do you say about it?" There are limits to what we can be asked to say, but there are some things we can say. I start from the assumption that hardship will be created for the domestic householder. Within the framework of the existing law, there are possible palliatives. One of them was indicated by the right hon. Gentleman today, and referred to by his right hon. Friend the Postmaster-General in the debate of 23rd February last year, at C. 875 of the OFFICIAL REPORT.

There are, of course, statutory deductions before one arrives at the amount on which rates are levied and those deductions are supposed to relate to repairs. They could be used in such a way as to relieve the small householder considerably. The fact that the small householder needs special attention has always been recognised in this kind of legislation and is reflected in the deductions themselves. They are graded deductions. I need not trouble the House with them. They were last fixed in 1955 and, as the right hon. Gentleman explained, they could be dealt with again.

It was with reference to those that the present Postmaster-General said: What is more, the statutory deductions, related as they are to repair costs, would no doubt have to be increased. That would be only right."—[OFFICIAL REPORT, 23rd February, 1959; Vol. 600, c. 875.] So far, I hope, I carry the right hon. Gentleman with me. If so, I wish that he had promised to do it and had told us that he was doing it. Whether I carry the right hon. Gentleman with me or not, however, I go beyond the Postmaster-General. I should like to see those deductions used to give appreciable relief of a progressive character; that is to say, primarily to the small householder.

Passing from that, I come to the subject of a full review. I shall not take up the time of the House about this. We are entitled to say that it really is time to look at the relations between central and local government in financial matters—and there are not only questions of rates. There are also questions of grants and the like. The last time that industry was made to pay more rates the Treasury deliberately took a bit of the proceeds. The Treasury said that it would lose something in taxes and so it wanted to get back what it would lose. I have the reference if anybody wants it, but there is no doubt about it.

What will happen this time? There was a nasty passage among quite a number of more plausible passages in the right hon. Gentleman's speech about the general grant. I have always thought that the general grant was wrong. If I may remind the right hon. Gentleman of what on one occasion he forgot, my party still thinks that the general grant is wrong. It is wrong in principle. Be that as it may, however, if one uses negotiations about the general grant to get for the Treasury some of the advantage which local authorities might have from these proposals as a whole, one seems to me to be misusing the general grant negotiations. I should much rather be assured by the right hon. Gentleman that this time the Treasury will not come in to take its whack out of the proceeds.

It is doubtful how this will affect the local authorities. Obviously, a mere rise in rateable value all over an area may simply mean a corresponding reduction of the rate poundage and no difference—I appreciate that. That is why this Measure is to some extent discriminatory and the people who will suffer from it most are those who live in an area where there is a substantial rate-paying industry and who will, therefore, be affected by the difference between the burden imposed on the domestic householder and the much lighter burden imposed on industry. They are the people who will suffer. Again, Bournemouth will get away with it rather better than the industrial centres which so many of my hon. Friends represent. It is a slightly party matter from that point of view.

I come now to something else, and this is my deep objection to this ministerial power. These lists are coming into force in 1963, that is to say, not long before the next General Election. Before the last General Election, the right hon. Gentleman assured us that the lists could not be prepared in time and that he would not face this unpleasant chore, as The Times describes it at the moment. I do not want to impute too much to the right hon. Gentleman. I do not say that he did not have that reason, but he would have found it very unpleasant to bring in this Measure with its effects just before a General Election.

If, in 1963, there was no cushion, the right hon. Gentleman might find it equally unpleasant to bring it into effect then, and yet the whole benefit of the cushion depends upon the point of view of a right hon. Gentleman who is necessarily and properly also a party politician. It is not right that rating Measures should contain provisions of that kind. They ought to deal with the matter without that excess of ministerial discretion, and for that reason.

On the greater part of the Bill, there are Committee points. I shall not deal with them now. I shall not talk about water undertakings. I shall not inquire from the right hon. Gentleman exactly why he has disregarded the conclusion of the Pritchard Committee about universities, why he has made the curious distinction between colleges and universities which have no colleges, and matters of that sort. All that we can do in Committee.

However, some review is clearly overdue. If we cannot make a proper logical rating system without something in the nature of this Bill, then there is something wrong with rating. If we cannot deal with grants to local authorities otherwise than by a general grant, and if we find that our only way of protecting, to use too favourable a word, the Treasury is by the adjustment of the general grant, then there is something wrong with the grant system. If we say that our object is to put everyone on the same logical footing of present values but that, none the less, we are not to rate agriculture, there is something wrong with the present system.

I am not saying that agriculture should be rated and I am not saying that any particular conclusion should be adopted in the matter. I simply say that the time has arrived to look into this matter and I am not in the least impressed by being told that the Government considered it a short time ago and, after a great deal of cogitation, brought out the general grant and little else.

This is an unsatisfactory Bill. It ought to be rejected in the interests of the domestic householder, particularly the small domestic householder. He is not being fairly treated. He is being left to the mercies of a Tory Government, and if that is the inevitable result of the present rating system, we had better look at it again.

4.57 p.m.

Sir Derek Walker-Smith (Hertfordshire, East)

If, in rising to make my first speech from these back benches for some time, I do not ask for the indulgence of the House, it is not due to any lack of proper diffidence. It is merely that I do not wish to give the customary undertaking, on this or on any other occasion, not to be controversial. I hope to be constructive and to avoid controversy so far as possible; but it would be very difficult indeed for anybody coming into the Chamber with the most pacific intentions to remain entirely uncontroversial after listening to the speech of the hon. and learned Member for Kettering (Mr. Mitchison).

As it happens, I have a fairly long connection with debates on this subject. Indeed, my recollection is that I wound up for the then Opposition in the Second Reading debate on what is now the Local Government Act, 1948. If my right hon. Friend the present Minister of Housing and Local Government had been in the House then, he would, of course, have done it much better, but, because of what was, fortunately, a temporary abberration on the part of the electorate, he was not a Member of that Parliament. I was, however, fortunate in having the advantage of the ingenious if somewhat idiosyncratic assistance of my right hon. Friend the present Minister of Health, who was then one of the "backroom boys" of the Conservative Party.

I support the Bill and I think that it is a good Bill in all the circumstances. In saying that, I do not suggest that it will necessarily make our rating system perfect. Indeed, anybody who lives closely to our rating system would doubt whether we would ever achieve actual perfection. But I do claim that it is proper and necessary to legislate now, and that legislation must follow an integrated pattern and not a piecemeal approach. In making an integrated approach on that broad pattern the Bill achieves a definite and appreciable improvement.

I do not say that it is wrong to suggest that there should be inquiry and review into these matters at some time; but we cannot postpone present action to future inquiry as the Opposition Amend- ment would have us do. What we have first to do is to try to achieve some basis of normalcy in our rating system as a basis for future inquiry, to see what further improvements we can achieve. Some action is imposed on the Government now, even if only because rating of our dwelling-houses at present is becoming linked to a date increasingly remote in the past, which of itself is a plain contradiction to what is one of the basic principles of rating law and valuation, that is to say, that things should be taken as they are—or on the principle of rebus sic stantibus, as it is called in the courts.

A variety of causes have contributed to the present admittedly unsatisfactory state of our rating system; but the present Government are to blame for none of those causes. They start with the under-assessment on the old prewar list which caused a postponement even in those days of the 1939 valuation. That was followed by the difficult position in post-war days—the absence of free market rents, an expansion of rent control, and the shortage of housing accommodation.

It is clear, as the hon. and learned Member admitted, that it has been the law ever since the case of the Poplar Assessment Committee v. Roberts, nearly forty years ago, to which he referred, that in valuation one has to disregard the incidence of rent restriction. Nevertheless, in the post-war years one had the complete absence of free market rents, which made valuation, in practice, very difficult.

A third cause and one which, quite naturally, the hon. and learned Member did not think fit to mention was the disruptive and unhelpful effect of the solution propounded by right hon. Gentlemen themselves, when they were in office, in Part IV of the Local Government Act, 1948. Their's was a hybrid scheme seeking to apply 1939 rents to some properties and a sort of notional 1938 cost of construction to others. Of course, it is true that rating proceeds on a basis of hypothesis, and Aneurin Bevan, in one of those gay phrases which he used to illumine the darker places of our Statute Book, said that the hypothetical tenant was often a very fugitive person. But the 1948 Act added fantasy to hypothesis and produced a completely unworkable solution. The result was that it aggravated the problems and postponed the time at which it was possible to get our rating system on to a normal basis. In due course it shared the fate of that other Labour panacea for postwar problems, the 100 per cent. development charge, and together they were decently interred without any mourning, even from the Labour Party.

However, the evil that men do lives after them; and the effects of the 1948 wrong approach to valuation meant that it was necessary for the present Government to introduce the 1953 Act to postpone revaluation and to proceed on a stop-gap measure. But nobody either then or since has ever considered that it would be proper to extend that stop-gap measure beyond the first valuation for which it was statutorily brought into being.

That being so, it is clear that decision and action of some sort are imposed on the Government at this time. The soft option of doing nothing and letting things slide is not open to them, even if my right hon. Friend were the sort of Minister who liked the soft option. The courses open to him and the Government were four. First, they could have renewed the 1953 Act provisions and continued the stop-gap basis. Secondly, they could have taken no action at all, thus allowing dwelling-houses to come into full contemporary valuation for the next list without any safeguarding provisions and without the financial set-off involved in rerating industry. Thirdly, as a variant of the second course, they could have taken no action relying on the desirability of review or inquiry, as suggested by the Opposition. Fourthly, they could take action as in the Bill.

Thus, if one applies Sherlock Holmes's principle—that one has to exclude the impossible and then that which remains, even if it is improbable, is the solution—the solution contained in the Bill is self-selective, because all the other solutions are inherently defective.

Mr. G. W. Reynolds (Islington, North)

Will the right hon. and learned Member explain the position a little further? What is the difference between the soft option of doing nothing and leaving things as they are and taking action by way of revaluation and then, if the incidence of the burden is changed in any way, and the Minister has said that it will be changed in only one way, making an Order to bring it back to what it was before and back to the position at which the soft option could have been taken?

Sir D. Walker-Smith

In the first place, one has to see haw the valuation will work out on a proper basis and to take powers to safeguard the position. Secondly, the hon. Member overlooks my point about the financial set-off involved in the other provisions for the rerating of industry, with which I will deal in a moment.

Mr. Mitchison

I do not often interrupt. I respect the right hon. and learned Member's view very much, but is there any reason why, within the framework of the Bill, the concession should not have been made to the domestic ratepayer?

Sir D. Walker-Smith

If the hon. and learned Member's question is whether there can be a concession made on a permanent basis so as to frustrate the intention of going on to a normal basis of valuation for all hereditaments, then the answer is, "No"; but if, on the other hand, his question is whether there can be, or should be, a temporary concession, then the answer is "Yes". There not only can be but is a concession, enshrined in Clause 2.

Mr. Mitchison

My trouble is that we do not know, if there is to be a concession, what it is to be. I said and meant a concession in the Bill and not a Ministerial discretion.

Sir D. Walker-Smith

I think that the hon. and learned Gentleman is trying to say that there should be written into the Bill something which would inevitably prevent dwelling-houses going on to a current rental value at some time. I think that it is right, although the machinery of Clause 2 may not be perfect, that, having got the valuation right, when one sees how it will work out, that abatement should be made by some form of procedure such as that in Clause 2.

One does not have to be a prophet to realise that it will be necessary to temper the wind to the owner-occupiers of dwelling-houses for some time at least. But it will be on the basis of making an approach to normalcy in these matters, because it would be wrong and unstatesmanlike to continue, in 1960, a measure introduced as a stop gap in 1953. After all, the whole of post-war valuation, town planning, war damage and compensation for compulsory acquisition, as well as rating, has been bedevilled by this habit of trying to link present conditions to past prices.

Mr. J. T. Price

Will the right hon. and learned Gentleman relate what he is saying to the fact that industry has been derated since 1929, but that its derating has been unjustified for the last ten or fifteen years? Why should we change one and not the other?

Sir D. Walker-Smith

It is true to say, after the happy experience of a decade of constructive Conservative Government, that industry is now not in a position where we would be justified in applying the derating provisions of the 1929 Act. But, merely because circumstances would not justify starting something, it does not necessarily mean that we ought to take away a concession which is already there. Though it is right to bring dwelling-houses back towards the basis of a contemporary valuation, it would be wrong to do so in isolation and without derating industry.

That is the justification for doing these two things in the same Bill. To have done either without the other would have diminished the justice and aggravated the financial consequences of the Measure. Rating today is so entangled with abnormalities and artificialities that it is only by a concerted thrust on a broad front that we can hope to achieve a useful result.

In the 1955 debates I described shops and offices as the last outpost of normalcy in rating, but I spoke too soon, because they were derated almost immediately afterwards and joined the ranks of the deviationists. Today, it varies, not between normal and abnormal in rating but merely between different degrees and types of deviation. Our rating system is a tesselated mosaic of abnormalities. That cannot be right. It is necessary, therefore, to try to deal with these things comprehensively in one Bill.

That is why I am pleased that my right hon. Friend is making a triple advance, and that in the next valuation we shall have dwelling-houses emerging from their 1939 Rip van Winkle phase, although with suitable safeguards, and factories, offices and shops rerated on present-day values. I think that to do this on a general pattern should reconcile us to any diffidence we might have about possible individual drawbacks to each part of that triple advance if looked at in isolation. I am bound to say that, in the purely industrial context, I should not have chosen the present time for the rerating of industry.

Mr. J. T. Price

Why?

Sir D. Walker-Smith

For one reason, when I was at the Board of Trade, I used sometimes to have to tell industrialists that their ingenious ideas to help the export trade were no good because they ran counter to our international obligations under G.A.T.T., and so on. Although we cannot make new concessions under G.A.T.T., we do not necessarily have to sacrifice those which we already have. In the purely industrial context we might well not have wished to do so.

Mr. Mitchison

Why pay for G.A.T.T. out of the rates?

Sir D. Walker-Smith

The hon. and learned Gentleman has either not been listening with his customary attention, or has not brought his customary acumen to bear. The point is perfectly sound, and it is a reason why, in a purely industrial context, I should not have chosen the present time for this operation. One might also have wished that our position concerning Europe was a little more finalised, because it is useful to keep these bargaining counters if we are going into negotiations. For those reasons, and, perhaps, others which I need not elaborate, if one could have isolated the industrial position, I might not have welcomed an initiative in rerating now.

But my whole case is that we must look at the general pattern. We must have change in these matters. With all the various types of hereditament, if I may be forgiven a poetic metaphor in this most unpoetic subject, it is like Words-worth's clouds—they "move together if they move at all". Whatever our misgivings might be on these individual point taken in isolation, it is right that the matter should be dealt with in the comprehensive form proposed in the Bill. We shall have to see how the Clause 2 procedure works out. I am sure that my right hon. Friend's intention is right and that some machinery has to be included for tempering the wind to occupiers of residential dwelling-houses.

Time does not permit me to make any further points, but I should like to make one short reference to the technical Part II of the Bill. I happen to be an honorary vice-president of the British Waterworks Association. That body welcomes the change from the profit basis to the basis of water output, with one or two reservations of which my right hon. Friend is aware. I should have liked, also, to refer to the matter of charities, which figure so largely in the Bill.

If I may be forgiven a personal parenthesis, it is a sad thing to me that the lifetime of Section 8 of the 1955 Act, which was notoriously prolific of litigation, has co-existed almost exactly with my absence from the Bar due to my sojourn on the Front Bench, which was considerably more protracted, though a good deal less spectacular, than that of my hon. Friend the Member for Tyne-mouth (Dame Irene Ward) the other day.

In conclusion, I believe this to be a proper and timely Measure. It does not exclude the possibilities of review and inquiry later at a proper time; but, whatever such an inquiry might bring, these improvements are right and necessary now. It is not possible usefully to institute an inquiry as to whether the present structure of our rating system serves our needs until we have given it an opportunity, which it has not yet had, to function on the intended basis. That is what we hope to get under the Bill. Under it, we should have by our next valuation two things, always desired but never previously co-existing—first, a pattern of normalcy in rating and, secondly, uniformity of valuation.

When we have those things it will be possible to institute a wider inquiry to see whether our traditional rating structure, functioning as it should, is in tune with our contemporary needs. However, that is for the future. For the present, I say that the Bill is necessary and that we should welcome it and congratulate the Minister on his conscientious initiative in bringing it before us today.

5.18 p.m.

Mr. G. A. Pargiter (Southall)

I must say at once that on any count this Bill cannot be regarded as a good Bill. Those of us who have been advocating the re-rating of industry for some time will welcome the part of the Bill dealing with it. I agree with the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) that perhaps it should have been done some time ago rather than at this stage, when industry is not in such a healthy state as it was when its last revaluation was brought into effect.

Be that as it may, there are some extraordinary things about the Bill. The Minister says, "We must have a proper valuation". He insists that that is what must be done. But what he says, in fact, is that if the valuation proves that it creates undue hardship on a section of the community he will take powers under the Bill to relieve that hardship, although temporarily. That is perhaps the key to the situation.

The Bill, if it becomes law, will become effective just before the next General Election. The last thing that hon. Members opposite want is that their very contented constituents should be suddenly upset by a new rating law which considerably increases the burden on them out of all proportion to the burden placed on others.

I do not need to repeat that the ordinary occupier pays his rates out of net income. It was always the case that there must be no reduction in the rating of commercial premises. I do not know why the Minister ran away from that. Of course, there was a scream from hon. Members opposite. The case there was only whether or not the burden should be transferred one way or the other. Equally, their rates rank, as in the case of industry, as a business expense. It is a fact that industry did not happen to be unduly worried, because again it is not part of its net profits; it is part of its business expenses, and the burden will fall comparatively lightly on it. That is the difference between industry and the householder.

I should like to know where the Minister is going by Clause 2, because he is to take power not only to abate the effect of full rating on dwelling-houses, but is to look at the separate areas and vary the effect according to the different areas. Where is he going if this is what is to happen? I thought that the intention of valuation was to see that there was equity throughout the country.

If the Minister is to say, "By Order, I am going to vary the effect of the equity of valuation," what is the merit of that? How will it work in practice? Does it mean that in areas of scarcity where values are very high, such as in London, the right hon. Gentleman will say, "I must vary the burden as between London and some other city or county"? In effect, that is what he will do. People will tell him that they do not like it, and, as a result, we shall have a variation.

Presumably, an Order will be presented saying that the percentage reduction in Middlesex may be 30 per cent. I use that figure fairly advisedly. In some other parts of the country the figure may be 20 per cent., while in another county it may, perhaps, be 10 per cent. Perhaps in a county which contains a county borough it may be 0 per cent. in the county and 10 per cent. in the county borough. That is the sort of pattern we must expect if the Minister intends to use this method to provide an equity in the burden—in other words, in a transfer of the burden as between one area and another.

Mr. Mark Woodnutt (Isle of Wight)

Is the hon. Gentleman suggesting that the Minister should delete Clause 2 and that the burden should be allowed to rest on the domestic ratepayers?

Mr. Pargiter

I am suggesting that the Minister and the party opposite should be quite honest about the matter. I am satisfied that the Clause is only in the Bill for the purpose of getting over the next General Election and that after that householders will be fully rated. I hope that I may be proved wrong in this, but that is my honest belief.

If the principle on which the Bill is founded is that rating must be based on the evidence now available—not on the hypothetical tenant who is presumed to be a willing tenant but, may be, on the basis of a very unwilling tenant who has to pay what the landlord demands so as to get shelter—I would regard it as being completely inequitable. The basis should be what the market figure would be if a tenant looking for a house had a choice, and, presumably, if the landlord equally had a choice.

The position now is that the landlord has the choice of tenant, but that the tenant has very little choice regarding the landlord. He has to take what comes, and he has to pay. If it is an uncontrolled market he has to pay what the market will bear, and in all the places where there is a shortage of houses he has to pay an artifically high rent. The Bill intends that those rents shall be regarded as a proper basis of valuation. If it is a proper basis of valuation, the Government ought to be honest enough to say, "Whatever the burden, and however we are to deal with the problem, we shall not depart from it".

The Bill appears to me to be the worst possible way of dealing with the matter. I hope that we may have more explanation of the differential figures and the principles which might be applied by the Minister as between one area and another are to be arrived at. I can see this leading to a considerable amount of trouble certainly from the local government end of it with which I am mainly concerned.

This system may equally of course, have an effect on the general grant. I do not think that we can take too much notice of what the general grant is yielding at the present time because it is obvious that when these measures come into effect there will be a considerable variation in the general grant formula. I would say that the variation will be so considerable that it will not bear much relation to the present general grant. A good deal will depend on whether local authorities are to be given the additional benefit of the rerating of industry.

The Government claim that they want local government to be more independent of the central Government. Instead of the Treasury coming in and taking the cream off the rerating of industry there might now be an opportunity of giving the whole of the benefits of the rerating to local authorities generally. It would have the effect of creating a degree of greater independence in local government, which the Government say they desire.

Perhaps one of the most significant factors is the complete omission of any reference to agriculture. It may be surprising to learn that the County Councils' Association is on record as being in favour of the rerating of farm buildings. The Association has not gone so far as to say that it is in favour of the rerating of agriculture generally. Perhaps that would be too much to expect. But it has said that there appears to be no logical reason why farm buildings should not be rerated. I should say that there are many good reasons why they should be rerated. After all, why should the stable for the hunters not pay rates? Why should not the garage for the Bentley, which happens to be a farm building, pay rates when the small householder with an Austin Seven has to pay rates on his garage?

Mr. Hugh Rees (Swansea, West)

A garage on a farm is rated together with the farmhouse. One has to show that it is an agricultural building before it is derated.

Mr. Pargiter

Provided that it is a part of the hereditaments of the farmhouse. Does the hon. Gentleman also say that the stable for the hunters is rateable?

Mr. Rees

If it is not a farm building, yes.

Mr. Pargiter

The fact is that they are farm buildings. I am told that it would be utterly impracticable to rerate farm buildings, because no one knows what the position with regard to them is at present. That, I understand, is the reason why they cannot be rerated. I say that we should rerate agriculture so that the whole question can be looked at. I understand that the last valuation list for agriculture was probably that of 1924. Maybe there is no time to do anything about the matter between now and when the new valuation list has to come into force, but if we agree in principle to a proper rating system, what is the case for completely derating agriculture?

The answer is, of course, that it would transfer the burden. The local authority will have a greater rate income. Therefore, to some extent it will be less dependent upon central Government funds, but the farmer would, quite naturally and even properly, receive an increase in the subsidy payment which is made to him because it would be part of the calculation of the subsidy grant. For my part, I cannot see why that should not take effect.

I see no reason why agriculture should not be rated. I see no reason why the towns and cities with rate incomes produced from industry and dwelling-houses should be different from the countryside, and the countryside equally needs improvement of its income for purely local government purposes from local sources. If we were to have proper rerating of agriculture, albeit the Treasury would pay out more in subsidy than before, but, from the point of view of right hon. Gentlemen and hon. Gentlemen opposite; that would be better, because the last thing they believe in is a hidden subsidy.

The Conservatives have always said that subsidies should be open and above board so that everyone knows precisely what it is the taxpayer is paying by way of subsidy. I thought that to be a cardinal principle with right hon. and hon. Gentlemen opposite. It is, until we come to the rating of agriculture. I have no doubt that when we come to this the Treasury will strongly resist it; and it may well be that it is because of that that the Minister has not included it in the Bill, because of the Treasury objection to the amount of subsidy that it would have to pay out.

I do not accept the argument that it is not possible to rerate farm buildings. I believe that, in spite of the difference in construction and values there, it ought to be easily possible to find some basis for the valuation of farm buildings. Houses sometimes have higher value in one place than another, but I should have thought that we could fairly have said that one type of farm building would have equal value no matter where it might be in the country. That could bring some measure of improvement of finances in the countryside, to the finances of county and county districts which have such large areas of farm land, especially having regard to the amount which those authorities have to spend even, for instance, on the upkeep of roads, many of which are of value to the farmers and not to other people besides farmers and those connected with farming.

It would at least help bring them into the general picture, and if it should mean an increase in subsidy that would be a matter for the Treasury to deal with.

Mr. Iremonger

I follow the hon. Gentleman's argument, but could he say what his solution then would be for horticulture, which is not in receipt of the subsidy and would have to pay a heavier rate?

Mr. Pargiter

If the principle is right that the occupation of any hereditament ought to be on the basis of its rental value, what a person is willing to pay in order to occupy the premises, either for his own occupation for shelter or for purposes of profit, whatever the rental may be, it is right and proper that horticulture should be rerated. There is no difference. If, however, the effect were such that the horticulturists became so impoverished as farmers had become, which made it necessary to give farming a subsidy. I have no doubt that the Government would be very sympathetic to the position of horticulturists in the same way.

But the argument ought not to be used that they should be exempt from rating because of that. The obvious thing is that they should be properly rated, and if, for international or national reasons, it is necessary to give them a subsidy that is a matter which should be done openly and above board. Certainly, we should avoid the question of the hidden subsidy.

I shall not detain the House any longer. I think that the Bill, in so far as it relates to dwelling-houses, is ill founded. I feel that we shall not have a basis of valuation which one might reasonably expect to exist as between a willing landlord and a willing tenant. I think that the Minister has recognised that he will have to temper the wind to the shorn lamb, as it were, by the rather specious method of an Order which will permit him to vary the effect of the valuations. In these circumstances, it seems to me that we are being asked to adopt a Bill of which the imponderables are so great that it ought not to receive a Second Reading.

5.25 p.m.

Mr. C. M. Woodhouse (Oxford)

Without seeking to challenge the expert knowledge of the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) who spoke first for the Opposition, I should, in contrast to him, like to begin by joining those who have mastered the Bill in all its details in congratulating the Minister on a notable feat of rationalising and tidying up. I should have liked to have joined them in having mastered the Bill in all its details, but I can at least join them in congratulating the Minister.

When I addressed this House some months ago on a quite different subject I was accused by the right hon. Gentleman who wound up for the Opposition of being an expert on that subject; and it was obvious, from the way he said that, that that was a very disagreeable thing to be. I am in no danger of suffering the same humiliation tonight, but I have at least given the Bill very careful study. I have grasped a good deal of it. I am fairly sure that I have understood the parts relating to charities and I have no doubt at all that I have understood the First Schedule, which is very simple and which contains, among other things, a reference to a well-known educational institution which is situated in my constituency.

The Minister said that, in his decision to exclude the universities and certain university institutions listed in the First Schedule from the relief of up to 50 per cent. offered to charities generally under Clause 8, he was making his only departure from the recommendations of the Pritchard Committee on the Rating of Charities and Kindred Bodies, and the reason for the exception, as he said, and as the Explanatory and Financial Memorandum explains, is that those are grant-aided from the Exchequer. With respect, this is not, in fact, the only departure which the Minister has made from the recommendations of the Pritchard Report. He made a second deviation in deciding to separate the Oxford and Cambridge colleges, on the one hand, from the universities and other university institutions, on the other, and to treat them differently on the ground that they are not directly—I emphasise "directly"—grant-aided.

The Pritchard Committee seriously considered whether to treat universities and colleges separately from other charities, but it never considered—or, if it did consider it, it dropped the idea and never mentioned it—whether to treat them separately from one another. On the contrary, it described the universities and university colleges as "a clearly defined class" round which it was easy to draw a dividing line. It did not contemplate drawing the line through the middle of this "clearly defined class", although it recognised, in its own words, that The Oxford and Cambridge colleges stand in a different relationship to the Exchequer from university institutions in general in that they receive no financial aid directly—and I emphasise the word "directly"—from the University Grants Committee.

The Minister, on the other hand, has chosen to draw that line through the middle which the Pritchard Committee refrained from drawing, and he has done it on the ground that the Oxford and Cambridge colleges do not, as the Universities of Oxford and Cambridge do, receive University Grants Committee funds. I wonder whether this is a valid distinction and whether it ought to be perpetuated. At any rate at Oxford, the finances of the university and colleges are interlocked, as a glance at their accounts will show.

The Pritchard Committee says that the colleges can benefit only indirectly in so far as their universities may make smaller demands on them for financial support because of the grants which the universities receive. Even an indirect benefit is still a benefit, but there is much more to it than that.

Most college fellows receive a salary from the university as well as from their college, though for quite different functions and with separate arrangements for superannuation and so on, but all as part of their profession as university teachers. Most undergraduates who are members of colleges receive grants either from the Ministry of Education or from a local education authority. The University of Oxford, at any rate, also makes grants to the colleges in respect of services and facilities provided by the colleges, such as chapels, libraries, lecture rooms, and so on. All these are things which the university is expected to provide and for which in general University Grants Committee funds are available.

On the other hand, the colleges also make a contribution to the university, as the Pritchard Committee has pointed out. And although the total contribution of all the colleges collectively—what in the terms of the Bill I suppose we would call their cumulo-value—falls short of the total of grants made in the opposite direction, in the case of some colleges their contribution to the university is greater than what they receive from the university. This goes to show that the finances of the university and the colleges are closely interlocked, so that the distinction that the Minister has embodied in the Bill is somewhat unreal.

Nor do I think that the differences between the colleges of Oxford and Cambridge and those of other universities is as great as the Bill makes it out to be, and indeed makes it likely to be in future. Oxford and Cambridge colleges certainly receive much less in the way of financial support from external sources than do the colleges of other universities, but they do receive some. They certainly have more autonomy in relation to the universities of which they form a part, though in my view the price they have to pay for it is too high. But the colleges of other universities also have some autonomy. From experience as a member of the governing bodies both of an Oxford college and of a school of the University of London, I should say that these are differences of degree and not of kind, and that they exist mainly or even solely because the Oxford and Cambridge colleges are older.

The chief argument for treating these particular colleges differently is the assumption that other universities and university colleges will be compensated for any increase of their rates by U.G.C. funds and the Oxford and Cambridge colleges will not. The Minister has told the House that that assumption is endorsed by the Treasury. Yet the Treasury, in its memorandum to the Pritchard Committee, took a rather more severe line when it told the Committee that A recommendation by the Committee that charities should be granted statutory relief from rates … would not be accepted as imposing any obligation on the Exchequer to make good the loss which the local authorities might suffer. I am glad that, in essence, the Treasury has been put in its place.

It seems that the universities will be luckier than the local authorities would have been. In other words, the Exchequer will agree to compensate the universities if they do have to pay rates, although it would not compensate the local education authorities if the universities did not have to pay rates. That, at any rate, is the inevitable logic of the distinction which the Minister has made in drafting the Bill.

It would also seem to me perfectly reasonable to accept that an increased burden on the universities should be met from the national Exchequer rather than from local funds, because they are performing a national service to the community as a whole, and, indeed, to the world as a whole, and not merely a local service to the area of the local authority in which they happen to be situated. Why, then, should not the same argument apply to the colleges? They are also performing a national service. It should not be impossible to find some way of meeting their increased burden also from national funds. At the same time, it could, incidentally, be made possible for the fees of the Oxford and Cambridge colleges to be brought more into line with those of other universities. They are at present much higher, because Oxford and Cambridge colleges have to recover out of fees much of the annual expenditure which at other universities is met from U.G.C. grants.

The possibility of a Government grant covering the whole or a part of the rate burden was, in fact, one of the proposals put forward by representatives of the colleges in their memorandum to the Pritchard Committee last year. In so far as they express preference at all between the possibilities, this one seemed, by implication, to have their preference. But even if a direct Government contribution is excluded, there is another possible recourse beside the one that the Minister has taken. The one method that the colleges have of recouping themselves for extra expenditure is by raising their fees. That would lead consequentially to increased grants to students, which would come either from national funds or from the funds of local education authorities.

Grants from local education authorities, of course, would be, in part, an additional burden on ratepayers, but it would be a burden widely distributed among those ratepayers whose communities would be benefiting from the education provided, and it would not fall merely on those in which the educational institution happened to be located. Whichever of the two sources the funds then came from, national or local, the principle would be satisfied that a widespread benefit should not be charged exclusively to the account of a limited section of the community, namely, the ratepayers of a single university town.

There is also another possibility which might perhaps almost be described as a probability. Both the universities and the colleges of Oxford and Cambridge have considered for some time that their valuation for rating purposes has in the past been made on an unjust basis. Three of the colleges brought a test case last year to the Lands Tribunal, which decided substantially in their favour. The effect of that decision, in brief, would be to reduce their valuation by about half. It would operate differently for different colleges, but in the case of those which brought the test case it would give nearly the same relief that they would get if they were derated as to 50 per cent. on their existing valuation.

The case is still subject to appeal so I will not comment on it further, except to draw attention to the remarks of the Pritchard Committee on this point in paragraph 112 of its Report: We were, however, informed by the Committee of Vice-Chancellors and Principals of the Universities of the United Kingdom that if the universities succeeded in the test cases they would hope for legislation to confirm the new basis of valuation and that if they failed they would ask for legislation to give them what they seek. The values having been so fixed, the universities would not ask for any discrimination in their favour in respect of their rate liability."— and, of course, they will not get it— The evidence on behalf of the Oxford and Cambridge colleges followed a similar line of reasoning, but—as alternatives"— and I emphasise the word "alternatives"— to a new basis of valuation—they would press for relief in other forms, including partial mandatory relief from rates. If the decision of the Lands Tribunal is eventually upheld, the effect of the present Bill would then be to give the colleges double relief.

They would gain both a substantial reduction of their valuation and a halving of their rate liability based on that valuation. They would, in fact, be getting both of two things, either of which they declared themselves willing to accept as alternatives. That seems to be going unnecessarily far when they would be content with only the single measure of relief.

Further, if the decision of the Lands Tribunal were upheld, it is not only the colleges, on their own showing, which would accept the situation without asking for more. I am perfectly sure that the Oxford City Council would accept ungrudgingly the new situation without further ado, because it would not be a case of Parliament establishing a new relief but a case of the courts rectifying an old injustice.

What I want to emphasise from this example is that there is no fundamental conflict of interest in this matter between the local authority and the colleges, unless the Minister introduces one by the way he operates the Bill when it becomes an Act. There need be no battle of town and gown. The colleges are well aware that they represent nearly 10 per cent. of the total rateable value of the city. They are well aware that they have received more than half of the total amount of reliefs given by the local authority under Section 8 of the 1955 Act.

They are also well aware that if the recommendations of the Pritchard Committee had been carried out without any other modifications there would have been a considerably larger increase of the general rate in Oxford than anywhere else in the country, as the figures in Appendix VI of the Pritchard Report show, though those figures, of course, have now been swallowed up and altered by the other provisions of the Bill.

It is because the colleges are aware of these things that they put forward the suggestion of a Government contribution as the proper remedy. That is also certainly the reason why when the Oxford City Council passed a resolution a year ago deploring the Pritchard Committee's proposals the resolution was seconded by a university representative on the council who is also the bursar of one of the colleges engaged in the test case brought before the Lands Tribunal; and the resolution was also supported by other university representatives on the Council.

So the upshot is that in certain circumstances there need be, and is, no fundamental disagreement between the colleges and the city about the rateability of the colleges. Those circumstances are not yet fully realised, but they could well be realised after the Bill has become law. They comprise at least the two following contingencies: that the decision of the Lands Tribunal in favour of the colleges may be finally upheld; and that a review of the financial relations between the university and the colleges, which I think I am not alone in regarding as necessary sooner or later, in any case, might lead to a more direct relation between the finances of the colleges and the Exchequer. I am well aware that the latter point is not one for my right hon. Friend the Minister, but I hope that he will convey it to the Chancellor of the Exchequer as the Minister responsible for grants to the universities.

I should, finally, like to draw the Minister's attention to the fact that under Clause 8 (3) he has the power to add any institution to the First Schedule, so far as I can see, at his absolute discretion, unrestricted by any formula about Government grants in aid, although such a formula is to be found in the Preamble but not in the Bill itself. I have outlined the circumstances in which that power of the Minister's might apply to the colleges of Oxford—I do not claim to speak for Cambridge, which might prefer to be left as the home of lost clauses and forgotten subsections—and I should be grateful if the Minister would tell us in what circumstances and by what criteria he would exercise this power in relation to the colleges and thus complete his tidying-up, instead of hardening and perpetuating an invidious and anomalous distinction.

5.52 p.m.

Mr. John Diamond (Gloucester)

The hon. Member for Oxford (Mr. Woodhouse) started with the intention of demonstrating that he was no expert on the matter on which he was about to address the Chamber. If I may dare to do so, I think I can speak for both sides of the Chamber when I say that he most honourably failed to achieve his purpose He struck me as being wholly expert in the limited area of the Bill which he has undertaken for such good constituency reasons, although sometimes be tried to put me off from my firm conviction that he had mastered his topic by seeming to read his notes fairly fully. I am sure that he did it only to mislead me.

I congratulate him upon having mastered the topic so thoroughly and having demonstrated on this topic, as on the others that we are about to discuss, the confused mind of the Government with regard to this issue. As he knows, it is completely at variance with the principle, as has been said by my hon. Friend the Member for Southall (Mr. Pargiter), adopted by the Government with regard to the rating of agriculture, where the Treasury grant is calculated with precisely the opposite result.

We look forward when the Bill goes to the Committee stage, to having a most interesting Amendment and discussion, leading who knows where or to which Division Lobby, on that very important topic. It is related to the other not unimportant issue upon which I should like to address the House for a few moments, namely, that of the Pritchard Committee's conclusions with regard to the rating of charities.

The Minister said that the Pritchard Committee found this a very difficult matter to decide, and its decision was likened to the judgment of Solomon. The Minister was as confused as the Pritchard Committee, because the baby in the case was not divided in twain and the judgment of Solomon was given merely to clarify thoughts and views on the topic. If the baby had been divided, it would have been with exactly the same disastrous results as if we adopt the Committee's conclusions on how to deal with this difficult problem.

The Pritchard Committee rightly says that there is a major principle involved here, and that is the principle pressed by local authority representatives—that any reduction in the rating assessment of a charity is, in effect, a compulsory increase in the contribution to be made by the other ratepayers in the area. Having considered that, the Committee gave its conclusions by saying, "We do not regard this principle as all-important, because we propose that, certainly as to half, the rating assessment shall be extinguished for charities." We cannot deal in half measures with principles. Either it is a good principle or it is a bad principle. The Committee decided, and I agree with it, that this is not an overbearing principle. It is something that one can, if one likes, take into account. Having considered it, one decides to reject it or to say "No. A charity is something quite different, and we should give a charity mandatory, compulsory relief, and make other people pay to that extent."

Having said that, the Committee should have followed out the logic of that conclusion and said, "This charity should get complete relief." I see no reason for this temporising and compromising with good principle and bad principle and saying, as the Pritchard Committee has done, that the charity should get full relief as to one half and that as to the other half it should be left to the local authority to see what should be done. That is not good in logic. It will work out thoroughly badly in practice. In practice, we shall have the unsatisfactory situation of a charity not knowing where it stands for any length of time and depending on the whim of certain councillors, how they feel about the particular charity, whether certain councillors are annoyed about something and want to raise the matter in committee, and, also, if the councillor concerned is the only person interested in the matter, he will no doubt have effect given to his whim.

We shall have the ridiculous situation which applies in my constituency at the moment and will continue to apply unless something different is done. One may have one rating authority, that in the city, taking a very kindly view towards charities, and another rating authority, that for the rural district, also sitting in the city, taking an entirely different view about comparable charities. The latter charity may be situated only a hundred yards from the other. We shall have charities deciding to go to particular places because it is believed that the councils there take a charitable view about charities. I cannot see why we should not use our grey matter about this. It is a difficult matter, but we should tackle it and come to a conclusion about what is fairest for all. Let us have a decision whether charities should or should not have relief from rates.

I would support any proposal that charities should have full relief. It is high time that we demonstrated not only that charities deserve it but that we believe in a kind of civilisation where we recognise this. It is very important from that point of view that we should demonstrate to the world that we are moving forward a little, and that we do not count our blessings entirely in terms of radio sets and washing machines, as the Prime Minister continually reminds us, but that there is a whole host of other objectives which are thoroughly worthwhile and which we ought to be prepared to put our hand in our pockets to a small extent to support. We should give them freedom from the rates which the neighbouring citizens in the area should be glad to pay.

I regret, therefore, that this provision has found its way into the Bill, but I repeat that that is not the major point of the Bill. I was interested in following what the hon. Member for Oxford said about the problems in his constituency. I regard the Bill as a bad one because it means nothing—which I think is the case—or, if it means something, then that something is bad.

We are running into a ridiculous situation where, as far as we know—and we do not know precisely, neither the Minister nor the House—the House of Commons is once more being asked to legislate in a way which will affect the pockets of possibly every citizen in the country without knowing what we are doing, or the effect that it will have. The Minister does not know the figures and the possible result, cannot put them before us, and will not delay the legislation until he can do so.

Let us assume for the moment the best figures that we can get—those given by my hon. and learned Friend the Member for Kettering (Mr. Mitchison)—and examine them. We shall have a situation in which the occupiers of houses will be asked to contribute vastly more, subject to certain conditions which I shall refer to later, than other rated bodies. My hon. and learned Friend suggested a figure of six times. This was on the basis of the rates of houses going up—

Mr. Ronald Bell

rose—

Mr. Diamond

I will give way in a moment. This was on the basis of the rates of houses going up by three times. I myself think they would go up by four times. If they go up four times, then they will go up not six times as they would be required in order to get level with the others, but eight times. Taking account of the fact that the others are getting tax, Surtax and Profits Tax relief, while the house-owners are not, and taking account of a total tax rate of 10s. in the £, this becomes sixteen times as much.

The effect of this Bill, as far as we know—and nobody can challenge the figures that we have had, so that whether they are right or wrong no man knows, and I can judge as well as the next man—is that householders are to be called upon, unless something else is done, to contribute by way of rates something line sixteen time more proportionately than the other classes of ratepayers are to be called upon to contribute.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph)

The hon. and learned Member for Kettering (Mr. Mitchison) used some figures which I shall later challenge, and the hon. Member for Gloucester (Mr. Diamond), because he has not heard them challenged, is following his hon. and learned Friend.

My right hon. Friend, with great caution, said that on the estimates that he could make, which the House can read again in HANSARD, the Government would not find it tolerable to allow the share of the householders in the burden of rates to go by as much as one-third without deeming it right to take some action under Clause 2. I hope that there will be no more talk of four times, eight times or sixteen times the present figure.

Mr. Diamond

There will be a lot more talk and it is going to start now. That is what we in this House are here for. The hon. Member may not like it, but he will probably have as good an opportunity as any other Member of catching your eye, Mr. Speaker, and presenting his arguments.

The figures given by my hon. and learned Friend simply demonstrated that, whereas other rated persons will have to pay half as much again, houseowners, instead of also being called upon to pay half as much again, would have to pay three times more—which is 300 per cent., being six times 50 per cent. The most currently accepted figure is four times, which is 400 per cent.—eight times 50 per cent. Having regard to the fact that there will be tax relief for the other ratepayers, that means sixteen times. Let us get the figures quite clear. It is only when we grasp their magnitude that we begin to realise how important is the section under which the Minister will have power to give relief.

Sir K. Joseph

I am grateful to the hon. Member for giving way again. The hon. and learned Member for Kettering's figures are invalidated by the fact that, in his careful calculations, he did not take account of the revaluation of industrial and commercial hereditaments from their 1955 to 1962 values. This involves a figure—I cannot say how much—but it certainly enables me to remind the House of what my right hon. Friend, with all the advice that he has been able to take, said, that the share of householders that the Government would find excessive as a jump would be of the order of one-third.

Mr. Diamond

I am grateful to the hon. Gentleman. I hope, however, that he will accept my assurance that he has as good a chance as anybody else of making a speech, and there is no reason why, as long as what I am saying is not inaccurate or challenged by anybody, I should not continue to say it.

I remind him of what his right hon. Friend said on this point. The hon. Gentleman alleges that my hon. and learned Friend was inaccurate in not taking into account the rise in the rateable value of industrial properties from 1956 to 1961. I listened with greater care than did the bon. Gentleman to his right hon. Friend's answer. He said that the rise has been moderate. HANSARD will bear me out. The word he used was "moderate". On shops the rise was "a good deal more" and on houses the rise was "very great indeed".

I am as entitled as any Member to suggest the figure of sixteen times, because none of us knows what we are talking about with any certainty. That is the real reason for the Amendment, and if hon. Members opposite do not like my argument, they should adopt the conclusion that I invite them to adopt, that this Bill ought not to be proceeded with until we have sufficient information to enable us to behave like intelligent adults.

That dire result might not be produced if the Minister gives relief under Clause 2. The Minister, through that provision, will have power to reduce the assessments. He may reduce these assessments on private house-owners in 1963 for a short period. I make no allegations about the proximity between 1963 and the next General Election.

Mr. J. T. Price

Why not?

Mr. Diamond

There is no need to. Notwithstanding the desire of hon. Members, and particularly right hon. Gentlemen, opposite, as was shown in 1955 and again in 1959, to fight their elections in the most difficult and awkward times for themselves, and notwithstanding their desire for absolute purity in that respect, it might nevertheless be possible for them to agree with their Front Bench, with the Whips on, that there should be a reduction on the rates of private houses in 1963 and 1964, and then think about it again.

I am glad that the right hon. Gentleman the Member for Hertfordshire, East (Sir D. Walker-Smith) who made his first speech from the bench below the Gangway, made an appropriate answer to this. But I do not rely on this first reason for not accepting the Bill. The Minister is not here, but I hope that he will not think me personal if I say that even if he were to grow a beard I should not regard him as being the prototype of Father Christmas—except that 1963 is a politically relevant year. The Minister will have a fantastic discretion at some future date in some future political circumstances.

The alternative is to have some form of more permanent relief from rates. Householders are being asked to bear a wholly inequitable and excessive burden of rates, yet the principle of more permanent relief has been challenged from the benches opposite on the ground of purity, that we must have full responsibility for all under the rating law. I do not follow this. Hon. Members opposite did not follow it when it came to giving help to needy classes. When it came to help to industry in 1929 it was given. It is proposed to remove that in 1963, thirty-four years later. If it was good enough for industry for a third of a century, why cannot it not be good enough for private householders for a third of a century? Why should the limit of their period be at the discretion of the Minister?

Why should we not know the exact figures which the Minister and the Parliamentary Secretary told us would make the burden on the private householder excessive? Why have we in this House not the right to say that it shall not be left to whether the Minister feels disposed to do something at a particular time? Why cannot this House legislate to protect people whose protection is shown to be needed?

A further argument is that the Minister is in difficulty in introducing the Bill because it is premature. No one knows what effect all these figures will have. For him to introduce a Bill in these circumstances is little short of an insult to the intelligence of the House. I will remind hon. Members what they are being asked to do. Clause 1 is simple. Under Clause 2 they are asked to reduce the rates of private householders if the Minister by order so provides. The House is being asked to give the Minister complete discretion.

In Clause 3, dealing with the valuation of hereditaments, the first words are: The Minister may by order make provision … The House is being asked again to give the Minister complete discretion. Under Clause 4, dealing with valuation of county and voluntary schools, The Ministers may make regulations … Again, we are merely delegating power to the Minister. Under Clause 5 there are to be amendments as to plant and machinery, as to which there has been a Committee and a Report and the Government are in a position to legislate, but there again The Minister may by order provide … We are being asked to give the power to the Minister. I congratulate the Minister on Clause 7 in which a real step forward is being taken, for Section 15 of the Burial Act, 1855 is being removed. Here is a progressive Minister who really knows his own mind and has decided, after 105 years, to remove a Section of a particular Act. I want to be absolutely fair and to pay tribute to him for that.

We then come to Clause 8 in which subsection (3) deals with reductions in rates of charities and there again the provision is that The Minister may by order amend … We are again asked to give complete power to the Minister to decide. Clause 12 deals the rating of owners instead of occupiers If an order by the Minister so provides. I hope that hon. Members realise what we are being asked to do. We are being asked to give the Minister complete authority and discretion when he has made up his mind to do what he thinks ought to be done If he cannot make up his mind now—and he cannot because he does not know the facts and figures and what the effect of varying all the rates will be—why does he not postpone the decision until he does know? Why does he not come to us with a real proposal based on facts and knowledge and some slight experience of how it will act? We get no real answer, but he produces the most curious reason that he has been informed—I cannot believe he has been well-informed or authoritatively informed—that he must proceed to get the Bill through the House so that valuations can be completed in regard to industrial properties, which valuations are based on all the costs, including rating costs.

I can only say that he is very ill-advised on this. The rating of industrial properties very rarely has relation to profits, that is to say, to costs. As other hon. Members who have had experience will know, it is nearly always done by so much per square foot—

Mr. Farey-Jones (Watford)

indicated assent.

Mr. Diamond

The hon. Member opposite is agreeing with me. It is so much per square foot for a given type of hereditament. The only case I have come across in which it is based on profits, and therefore on costs, is a cinema where it is almost impossible to rate it in any other way. Therefore, there is the alternative as to what it is making in terms of money instead of the theoretical rent. I say that the Minister is ill-advised in this and, secondly, if he were fully advised, when we take into account the size of the matter we are talking about we realise that this is no possible justification for bringing in the Bill prematurely.

The right hon. Gentleman was much more coy two years ago when we asked for information, but now he has told us that the cost of full rating is less than 1 per cent.; in fact, it is ½ per cent. The cost of rerating as to 50 per cent. is, therefore, ¼ per cent. of the cost of production, or ¼ per cent. of turnover—there is very little difference. The Minister is trying to persuade us, although he has certainly failed so far as I am concerned, that we need an accuracy of one-quarter of 1 per cent. on an item which might vary by a quarter of 1 per cent. all told in costs before one can decide what the rateable value of certain premises is. It is utter nonsense, In the whole country there are no premises which could be valued so accurately as to enable one to say that it is wrong by one-quarter of 1 per cent. in valuation.

The Minister has given no reason why we should be asked to consider this Bill, but has given a variety of reasons why it is perfectly obvious that the Bill is premature. The effects it will have will probably be very damaging and we shall have left it utterly to the discretion of the Minister. We do not know what we are doing. In those circumstances, we should not support a Bill of this kind.

6.17 p.m.

Sir Samuel Storey (Stretford)

I rise to enter a protest against the proposal in this Bill to go back to the conception of rating of industry which existed before 1929. We are now told that the de-rating of industry in 1929 was a measure of assistance at a time of severe depression which is no longer justified in present conditions of employment.

That may be true as to the amount of the contribution of industry to local government revenues, but what a travesty it is of the reasons for derating put forward by my right hon. Friend the Member for Woodford (Sir W. Churchill) in 1928. My right hon. Friend then told the House that local rating, a sixteenth century con- ception, was wholly inapplicable to modern industrial production and that the practice of levying taxes on the tools of production was in its nature and essence economically unsound and vicious, for rates enter directly into the cost of production and affect the competitive power of industry abroad.

My right hon. Friend therefore proposed the derating of industry by 75 per cent., and it was hailed by our present Prime Minister as the most important, most comprehensive, most daring and most progressive proposal put forward by a Conservative Government in office. Yet today a Minister in this Government is proposing to go back to the economically unsound and vicious sixteenth century conception of rating the tools of industry. At a time when the competitive power of industry abroad was never more important, when the shadow of depression is on the far horizon of some of our exporting industries, the rerating of the tools of production seems folly. I hope, therefore, that before the Bill goes further the Government will think again and seek to find some sounder way by which industry may contribute to local government revenues.

I do not suggest that industry should not make a fair contribution to the cost of local government revenues. One per cent. of turnover may not be a heavy burden taken as an average, but I maintain that such contribution should come out of profits earned rather than out of a levy on the means of production. I go even further and say that some means should be found to give industry some voice in local government proportionate to the contribution it makes to local government revenues. My right hon. Friend said that he hoped rerating of industry would cause industry to take more interest in local government. He advocated that industry should put up candidates to fight for representation in local government, but what chance have such representatives of gaining election?

In the Borough of Stretford, which is the larger part of my constituency and in which there is one of the largest concentrations in the country of varied industries, that concentration is mainly centred in half of one ward. Its chances of representation on the council are, therefore, nil. Yet at present it provides about 33 per cent. of rate revenue. In the Urmston Urban District, which is the other part of my constituency, the position is similar, though I believe that there industry pays an even larger proportion of rate revenue, yet it has no say in the expenditure of local government revenues.

Mr. Woodnutt

Is it true to say that industry cannot have representation? Why should not the local industries put people up for election to the local council? That is precisely what we want on local authorities.

Sir S. Storey

If my hon. Friend had listened to what I said he would know that I pointed out that this great concentration of industry in my constituency is centred in half of one ward. The other half of the ward is not so likely to vote for industrial representatives as for someone whom it thinks would represent its particular interests.

I assure the Minister that in my constituency, particularly in Trafford Park, there is a very real desire among industrialists to take their part in local government, but they do not see how under the present system they can be enabled to do so. Even if the Bill does not increase the proportion of local government revenues provided by industry—and in spite of the simultaneous rating at full value of shops and offices and the rating of houses at current values, and because of Clause 2, of which I will say no more than that I do not like it, I believe the Bill will increase industry's share—means should be found to give industry an adequate say in local government expenditure.

I do not believe that in his heart of hearts the Minister is satisfied with the reasons given for the rerating of industry. To rerate is to adopt an easy method of covering up the need to rethink the problem of how industry should not only contribute its fair share to local government revenues but should also have its fair share in controlling local government expenditure. I therefore beg the Minister, even if it is too late to change the provisions of this Bill, to undertake to set up some form of inquiry that will find a means by which industry can, out of its profits and not out of a levy on production, make its contribution to local government revenues and play its part in their expenditure.

6.25 p.m.

Mr. Donald Wade (Huddersfield, West)

I find rating legislation almost as puzzling as that dealing with taxation at national level. Rating and valuation Bills are comparable with Finance Bills in another respect; it is very difficult to relate the provisions to any clear principle. That is certainly true of our rating legislation since the war.

Our rating system is very antiquated, dating back to the year 1601, and it is based on the calculation of an annual letting value of all occupied property. At one time this was more or less uniform, but since 1929 various exemptions have been introduced and the whole system has become bedevilled by these complicated exemptions or partial exemptions. I have some sympathy with the observations made by the hon. Member for Stretford (Sir S. Storey), but I find it very difficult to justify existing exemptions.

Broadly, there are four different categories—shops and offices, industrial premises, agricultural land and buildings, and dwelling houses, including flats. It is impossible to justify on any principle a system that treats those four categories differently for rating purposes. If there is any merit in this Bill it is that it brings us a step nearer some degree of uniformity.

Within the framework of the existing system there are some provisions that deserve support. One of them—and here I differ from the hon. Gentleman—is the abolition of the derating of industrial premises. I doubt whether it had much effect even in pre-war days, when it was introduced—and it was introduced in order to help the serious industrial recessions. It has not been justified in postwar years, and I have voted for its abolition on a number of occasions. It is mainly for that reason that I should find difficulty in voting against a Second Reading of a Bill which abolishes derating.

I am aware that the abolition of de-rating of industrial premises will not go very far to offset the substantially increased burden falling on the occupiers of dwelling-houses and flats, but we cannot go on indefinitely putting off the evil day. We have already put it off a long time, and the longer we do so the worse the shock for the householders. Many will receive a double blow; they have already suffered considerable increases in rent and they will now suffer a considerable increase in rates. I say that, recognising that the increase in rates is not directly related to the increase in rent on derestricted properties.

Even though we allow this Bill a Second Reading we must not be under any illusions. There is no attempt here to tackle the major problems in a radical way, and here I think that I am nearer to agreeing with the hon. Gentleman. Three major criticisms can be made of the Bill. First, there is no attempt to deal with the present out-of-date method of raising local revenue. Secondly, the existing system imposes a penalty on improvements whilst leaving unoccupied property and vacant land not liable to rates. Thirdly, the Bill does not alter the increasing burden on ratepayers.

It is an anomaly that development of property should be penalised, and when industrial premises become fully rated this will be all the more appreciated by industrial firms. Those who improve their factories and make the best possible use of the land on which the factories are built will find that their assessments will go up. That seems quite inconsistent with a policy of encouraging an expanding economy. Similarly, shopkeepers who improve their shops—by putting in larger shop fronts, for instance—will find that their assessments will go up.

Even dwelling-house assessments may go up as a consequence of improvements. For example, if one divides a large house into two flats, making it into two separate hereditaments, the assessment on that building will be greatly increased; it might be doubled. The rates on my own house were doubled when I divided it into two. Even there, however, there are anomalies. I am advised that so long as there is some access between one part of the building and another the rating will not go up to anything like the same extent.

If, between the two portions of a building that has been converted into separate flats, there is a door then, even though that door is locked throughout the whole year, the building will not be treated as two separate hereditaments and the prob- ability is that the total increase in the assessment on the whole building will not be nearly so great. I do not set myself up as an expert on how to avoid paying rates, but merely mention that as an example of the kind of anomalies that arise when the assessment is made on the theoretical letting value of the property.

On the other hand, vacant land is free from rate burden. There are many examples today of buildings kept empty or of land kept vacant deliberately in order to hold out for some high price resulting from the rise in site values. We all know that some fantastic prices have been paid. I can look at this with a somewhat objective view because in the Borough of Huddersfield, part of which I represent, the greater part of the freehold in the centre of the town is owned by the local authority. There is, therefore, little opportunity for individuals to make any exorbitant profits out of site values. In Huddersfield, the local authority benefits from the increased site value.

The time has come when the rating of site values should be carefully examined as an alternative method. It is not a new idea, cut we should look at it again, and we can take evidence from certain parts of the Commonwealth where it is already in operation. That would meet the point made so eloquently by the hon. Gentleman that we should not impose, as I put it, a penalty on the development of industry.

This Bill rearranges the incidence of the rate burden, but it does not stop the burden growing as a whole. It seems to be the intention of the Exchequer to put a greater burden on the rates. To speak bluntly, it seems that Government policy is to force up the rates. Householders will feel the effect of that policy most severely, hence the relief afforded under Cause 2. I am still rather puzzled by that Clause. It will be effective on an order of the Minister, and that order will be incapable of amendment in this House. It will have to be approved, it is true, but it will not be subject to amendment. Indeed, if one examines the Bill one finds a great deal of delegated legislation.

By Clause 2 (2) there may be different provisions for administrative counties and county boroughs. The Borough of Huddersfield has had some very unfortunate experiences under the operation of the old Exchequer Equalisation Grant and, more recently, under the block grant formula. If we are to have this kind of trouble all over again I must warn my county borough to start preparing for battle in 1963.

I do not look forward with any pleasure to the prospect of pressures from different county boroughs and administrative counties for special consideration. If one were to apply a similar procedure to our national taxation, with different standard rates of Income Tax in different parts of the country, a very curious situation would arise, and I can assure hon. Members that if there were a different rate of Income Tax for the people living in Harrogate from that demanded of the people in Huddersfield there would be a jolly old row—

Mr. Brooke

I again assure the hon. Member and the House that the Government have no desire to make a discriminatory order, but, as it is possible that the valuations may so work out as to threaten householders with a much more severe jolt in some areas than in others, the principle of softening householders against the jolt really demands that we should take power to employ discriminatory action if it is necessary. I trust that I shall not cause any private war between Huddersfield and Harrogate.

Mr. Wade

I look forward to the future hopefully, but I am a little alarmed at the use of the expression "the principle of softening householders."

Other anomalies may arise. The valuation officers are being given a very difficult task, and the general public probably do not realise just how difficult that task is. If one realises that it is quite impossible to visit every property being revalued, one must face the fact that there will be a good deal of guesswork, however carefully the valuations are made and however fair the valuation officers wish to be. When the Bill comes into effect in 1963, there will not only be many protests but many complaints, and a feeling of injustice as between the occupier of one property and another.

I presume that the ordinary procedure of appeals will apply; that where the occupier of a property feels that the assessment is unfair he will not be expected to be dealt with under Clause 2 (2) but rather under the ordinary procedure of appeals. Perhaps the Minister would clear up that point in due course.

There is one other point of detail which I will put on record, but I think that it can more properly be dealt with in Committee. I am referring to Charities. In Clause 8 there are new provisions relating to charities. Unfortunately, in the case of manses and parsonages it is not always clear whether they are, or are not, charities in the strict sense.

The Minister may have received a memorandum from the Churches Main Committee in which it points out that it will be difficult, or impossible in some cases, to show that the tenure falls strictly within the wording of Clause 8 (1). The memorandum says: The view of the Churches Main Committee is that the position of parsonages and manses should be cleared up once and for all in order to avoid— (i) invidious distinctions between denominations based on historical accidents or technical considerations— and (ii) unnecessary and expensive litigation or references to Counsel to establish a claim to rating remission. The memorandum concludes: The matter is one which affects, to a greater or lesser degree, many of the larger Churches and it is to be hoped that some means will be found to carry out the spirit of the Pritchard Report in a field where it is abundantly deserved. It is not my intention to damn the Bill with faint praise. That would not be the appropriate metaphor. There are some provisions which, within the framework of the existing system, deserve some commendation, though possibly faint, but the system which the Bill attempts to amend is, in my view, out of date, illogical and deserving of condemnation.

6.42 p.m.

Mr. Hugh Rees (Swansea, West)

I wish to take part in the debate primarily because, beyond the confines of this Chamber, I am a valuation surveyor dealing with rating matters. I have heard strange suggestions as to the reasons why, and the reasons why not, the Bill should be brought forward so far as valuation of industry is concerned, and also reasons why agricultural property cannot be brought in.

I am sorry that the hon. Member for Southall (Mr. Pargiter) is not in his place. He asked why agricultural property was not brought in because of the simplicity of valuation. If he had heard the hon. Member for Huddersfield, West (Mr. Wade) speaking when he suggested that the valuation officer would not be able to see all the hereditaments, he might have thought twice about the work that would be involved in going round all the farms. One must bear in mind that the units of occupation are not static. It would result in valuation per acre, and the list could well be out of date before it came into effect. The hon. Gentleman also missed the point that there has been a leading case from the Principality, Parry v. Anglesey Assessment Committee, which specifically deals with the point he mentioned of farm buildings and garages.

The hon. Member for Gloucester (Mr. Diamond) made an interesting point. He said that industry was not rated on profits and therefore there was no need for the valuation department to know whether the industry would receive de-rating or not before starting its valuation. He is right in saying that industry is not rated on profits. It is rated on the price per sq. ft., but I do not expect him as an accountant to know where price per sq. ft. conies from. The answer is that it comes from the industrialist who looks at a building and says, "That building is worth so much to me in rent and rates together. If I have derating and I am paying only half rates, then I can pay more in rent. If I am going to pay rates in full, I cannot pay so much in rent". Therefore, if the duty is to assess the rental value of the property, one must know what his outgoing will be. It is no good the Government, at the last minute in 1963, saying that they are going fully to rate industry When the valuation has been based on the assumption that industry is going to receive derating.

It is a valid point that the Government have brought forward the proposals now. If they were going to bring them forward before the next valuation list was published. If we may follow that, as I see the argument of the Opposition today, it is that the Government are asking the House to accept a Bill in which they cannot tell what figures are involved. Hon. Gentlemen then promptly criticise the Government and say that it is wrong to alter the basis of houses at a later date by bringing them forward on current values, but until one gets everything on to the same basic value, one cannot tell what proportion of the rate burden will result.

If we take industry, which is now de-rated to 50 per cent., and revalue it to the full, it does not necessarily mean that the resulting value will be twice the present value, because, as many hon. Members may know, part of industry can be a non-industrial hereditament and it has this 10 per cent. allowance, If one does not take the 10 per cent. allowance into account, but merely doubles up, one will find, assuming that values have not altered, that the net valuation at the end of a fully rated hereditament as distinct from the derated hereditament will not result in just double the figure. Therefore, it is important that the whole basis should be clarified. The net result is that until the revaluation has been completed nobody can tell exactly what the total valuation of the total hereditaments of this country will be.

Mr. Diamond

Why not wait until revaluation is completed and we know what we are talking about?

Mr. Rees

We cannot complete revaluation when the Bill tells us that we are going to derate industry, because one cannot get the net rental value which a hypothetical industrial tenant would be prepared to pay. The test is the hypothetical rent from year to year which the hypothetical tenant would be prepared to pay.

Mr. Mitchison

I quoted figures about this. Figures are available to enable us to separate the industrial and non-industrial parts of industrial hereditaments, and I think that the hon. Gentleman will find that the difference between the net value and the actual rateable value is the actual difference on present figures. There is, as regards industrial property—in fact as regards everything but domestic hereditaments—plenty of material for arriving at a pretty accurate figure of what the 50 per cent. and 20 per cent. changes will mean.

Mr. Rees

With respect, the hon. and learned Gentleman is wrong, because the 10 per cent. about which I have spoken is taken into account in the net annual value, and the part about which he is talking, the non-industrial section which appears in part II of the valuation list, column 8A, does not take into account the 10 per cent. That is something which is less the 10 per cent., so you cannot come back and say that.

The second thing you cannot say—

Mr. Mitchison

All I can say is that if the hon. Gentleman looks at the figures he will find that there is nothing in this point. I do not know if he has examined them. Put it either way. If there is a 10 per cent. difference, the substantial point is the same. You can tell pretty accurately what will happen to industry and to the shops. You have to make a guess, but what is abundantly clear is that the change as against a dwelling-house will be far heavier than as against the other types.

Mr. Rees

rose—

Mr. Speaker

Order. I appreciate the cut and thrust of debate, but hon. Members must address their observations to the Chair.

Mr. Rees

I apologise, Mr. Speaker. I am afraid that I am inexperienced in these matters.

The hon. and learned Gentleman suggested that I was incorrect on the point of industrial hereditaments. I cannot accept his point but time is short and I do not want to prevent other hon. Members from taking part in the debate. I will therefore leave that point and continue on the other part of my argument, that houses are on 1939 values, commercial properties are on current day values, and industry is on a derated basis, and consequently the present valuation list, introduced in 1956, is a list to which one cannot apply a mathematical multiplier and arrive at the figures that will result in 1963.

In consequence of that, it is important that my right hon. Friend should preserve the safety valve to give a derating to houses, and I am glad to see that it is a derating on the rates paid and that there is no monkeying about with the basis of valuation. If he alters the basis of valuation of houses, as some hon. Members opposite suggest, we shall find that when the next list is discussed in 1963 the House will be placed in exactly the same quandary, because the figures will not be on a uniform basis and we shall again be having the argument that we do not know what will happen. If the figures are based on current day values throughout and adjustments are made in the rates paid afterwards, then we shall have a list in which we have an accurate figure and we can assess what will happen in the future with a greater degree of accuracy than now.

The immediate point of importance is that the Bill deals with the basis of valuation rather than the basis of the collection of the rates, and the powers reserved by my right hon. Friend concerning houses are separate from the basis of valuation.

I am not happy about the wording of Clause 3 which, I think, is a little too wide. It gives the Minister power to determine a method of valuation rather than a method of collection of rates. There is probably a very good reason for it, and perhaps we could be given a better definition of and more information on the word "undertaking" which appears in subsection (2, b). The subsection speaks about … carrying on such an undertaking or to royalties which might be expected to be paid by such a person. If we could be told which hereditament is meant here, I think that it would be a great help. I can see untold litigation arising in years to come because very sweeping Orders could be made under the present terminology.

I am not at all happy about subsection (4). A point was made by the hon. Member for Huddersfield, West about the question of appeals. As I read the provisions of subsection (4), the Minister is in a position, if he sees a ratepayer succeeding in an appeal, to adjust the law by an Order. He is empowered to repeal an enactment in that subsection. I am not very happy about that, and I hope that the Parliamentary Secretary will tell us a little more about it. I think that it is most important, and I knew that it is causing very great concern to many rating surveyors.

I think that the only time in the past that anybody has tried to prescribe a method of valuation was in the 1874 Act relating to tin, lead and copper mines; in later Acts applying to gas and electricity undertakings, where there is no normal market value because of their monopoly restrictions; and in the 1930 Act applying to the railways, which went as far as to say that one must consider net receipts. In more recent history there was the 1948 Act, which referred to the method of valuation of dwelling-houses, and owing to its obviously unfair effect on two different classes of dwelling-houses it was repealed and we were brought back to 1939 levels of assessments for all houses on the old gross value basis.

May I speak for a moment on gross value? I am sorry that there is nothing in the Bill about assessing dwelling-houses and most hereditaments straight on net annual value.

Hon. Members opposite have spoken of the need to improve the situation concerning statutory reductions, which are based on out-of-date costs of repairs and maintenance. I agree with much said by the hon. and learned Member for Kettering (Mr. Mitchison). When we come to current day values we should come to current day costs of maintenance and repairs. However we adjust the figures, they will in no way attempt to bring house or residential assessments back to the similar figures in the list at the moment, having regard to the increases in rates. I suggest that if we could take the net annual value which is very often the basis on which houses are let at the moment, the tenant paying the complete rent and bearing very often the cost of repairs and maintenance, it would be a more satisfactory basis. This would also be a satisfactory basis for Clause 8, for the charitable institutions, such as scientific bodies, which will be hard hit by the change in Clause 8. If we used net annual value for the older buildings, such as old museums and old structures, for example, we could take into account the true cost of maintenance, repairs and detailed outgoings. We should then come back to a much more favourable valuation. I am quite sure that if consideration could be given in that direction we should go a long way towards solving the problem.

A glaring example is that if we have a kiosk assessed at a gross value of £500, we find that the statutory deductions for it are about £85. It may be a tiny structure in Piccadilly or somewhere of that sort, and the total cost of maintenance may not exceed £10, but the allowance each year will be £85. In the same way, a large house or museum in the suburbs, which may have a cost of maintenance of £200 to £300 a year, will get the same annual £85 statutory reduction. I suggest that if we go for a straight net annual value we shall get over that sort of problem.

My remaining points are mainly Committee points, but I should like to make one observation on Clause 5, concerning the word "and" between paragraphs (a) and (b). If we are to take away industrial derating, then, bearing in mind the Plant and Machinery Order, as I read the Clause it will make a burden for industry even greater. I think that if that word were to be changed to "or"—although I appreciate that it would completely alter the sense of the Clause—it would not give such a wide range of plant to be included. It would provide greater relief in that way. I hope that the Minister will consider that when we are in Committee.

Clause 14 deals with the refund of over-payments. Subsection (1, ii) states: If the amount paid was charged on the basis or in accordance with the practice generally prevailing at the time when the payment was demanded. This is where we are asking for the refund. Perhaps I should explain that the heading to the paragraph is Provided that no refund shall be made. May I put the position, under the Clause, where a property comes within the charity provisions, and where, in good faith, rates have been paid in full when demanded before. If it is afterwards proved that there is entitlement to a reduction, the local authority could say, I fear, "At that time it was not our practice to give this class of property a refund and therefore you will not get your refund for the previous year. It will start now." I think that is against the spirit of this refund Clause and perhaps the Minister would like to comment on that.

Much has been said about the burden that will fall on residential properties as a result of this Bill. I think that one has to face that fact when we debate whether or not the Minister should give the property holders any deduction of rates for residential properties.

What the House must concern itself with now is the importance of ensuring that the next valuation list is produced on an even, current day market value basis and that there is a sensible, proper valuation based on standard valuation practice and not on mathematical trickery. There must be a fair, straightforward valuation, and then the rate burden must be distributed afterwards as we see proper. But if we try to distribute the rate burden through valuation we shall perpetuate the troubles and worries which we have had over the last decades.

7.1 p.m.

Mr. J. T. Price (Westhoughton)

Unlike the hon. Member for Swansea, West (Mr. Rees), I do not regard this legislation as merely a piece of administrative tidying up. The worst possible reason which could be submitted to many of us on this side of the House for supporting any Measure is administrative convenience. We are all aware that people with administrative jobs to do, such as the social service Minister at the Box tonight, pay great attention to administrative convenience and to the technical arguments which are submitted to them by their Departments from time to time. I hope that the hon. Member for Swansea, West will forgive me if I do not follow him into some of the technicalities with which he is so familiar, but which I regard as of secondary importance.

The Minister introduced the Bill with his usual courtesy and bland assurance, and I suppose that he put the best case he could for it, but we are here, as hon. Members, to reflect as well as we may, with our limited abilities, the feelings, aspirations and anxieties of the people who sent us here—and these are reaching us in large measure from our constituents. I will restrict my remarks to my own experience, but I am receiving the most anxious letters from people of quite small means, living in owner-occupied houses in various parts of the constituency. Whilst they may be a little muddled about the ultimate out come of all this legislation, they are very anxious about the consequences of the 1963 revaluation.

I have explained to them, as well as I am able, that the legislation already exists for the carrying out of the 1963 revaluation on the basis of present-day values and that this Bill is in some way linked with it. But I have never been convinced by anything which the right hon. Gentleman has said, or anything said by those experts who claim to be well advised in this subject, that the rating system of the country as we know it is anything more than a piece of completely idiotic administrative folly which is not repeated by any other State in Europe.

I may be out of order on Second Reading if I try to address to you, Mr. Speaker, any remarks of a general character on the rating system without suggesting something in its place. We are often taunted about that, but it is true that every responsible expert in Europe who has studied local government regards the British rating system as completely idiotic. For example, it places a penalty on improvements of all kinds, whether industrial or domestic, and it frustrates by all kinds of absurdities the proper application of the principles of equity to the citizens of this country. Before we enter upon a dubious procedure such as that which I submit is represented by the Bill, therefore, we ought to have a more thorough-going examination of the proper relationship between the collection of local rates and the collection of imperial taxation. That point is made in our Amendment.

If we cannot have that, let us consider what is likely to happen in 1963. I do not wish to be unfair to the Minister, but in reply to my intervention this afternoon he repudiated what I stated to be an axiomatic state of affairs—that the assessment of rateable value must have as one of its major considerations relationship with the rent which a property would fetch in the open market, the rack rent. That has always been one of the basic principles. I understand that the right hon. Gentleman does not agree with that statement.

If not, what will happen in 1963 when we have two houses in the same road, of the same size and accommodation, one of which has been let at a high uncontrolled rent and one which is occupied by an owner-occupier who is paying a mortgage to the building society? The valuation officer goes into one of the houses, which, on 1938 figures, has a rateable value of £30. That house is owner-occupied. The rent of the house next door has been allowed to rise very high—so high as to justify a much higher valuation. How is the valuation officer to deal with those two houses if he does not relate at least a large part of his consideration to what the house would fetch as rented property in the open market? This is where we shall run into the greatest trouble.

All hon. Members understand—in spite of what the hon. Member for Stretford (Sir S. Storey) said—that for years there has been agreement among all responsible people who studied municipal affairs that the case for industrial derating has become weaker and weaker as the years have gone by. There is no case at all for it today. But in introducing the Bill the Minister made some interesting admissions. He said that after 1963, when domestic hereditaments and house property had been brought up to present-day values, industrial rating might be reduced by a half, commercial rating might be reduced by an unknown amount and the rating on houses would probably rise by a third—as a result of revaluation.

I am aware that this is a mathematical argument which is only one segment of the case. I am aware that if everything were equal and a town or borough were composed entirely of house property, the result might be to make no change in the amount paid by ratepayers. Let us consider the situation in a purely residential place such as Bournemouth which, incidentally, stands to gain considerably in this kind of transaction by comparison with the industrial area which I represent. Let us assume that there will be 200 per cent. increase on the 1938 valuation figures for house property. Many people think that the figures will rise by at least 300 per cent. on 1938 values.

It may be said that a council need not put up the rates simply because valuations are increased 300 per cent.; it can reduce the rate poundage to one-third of the original figure and thus maintain the status quo. Does anybody seriously believe that this will happen? Does the Minister contend that there is anything in the rating history of this country to suggest that when rateable values have gone up, the rate poundage has been reduced by comparable amount? There is nothing of the kind.

In the 1957 valuation, when house property was placed on a 1938 basis as a matter of convenience, because of the tremendous political upheaval which would have been caused by a savage increase to present-day values, adjustments were also made for shops and commercial property on top of the 50 per cent. rerating of industrial premises. There was an adjustment to 1938 values which meant that many owner-occupied houses in our great cities and in the suburban areas of Manchester, London, Liverpool and Birmingham, for example, had their rateable values increased by 100 per cent. Even with that increase there was nothing at the time which suggested that there would be a comparable reduction in rates poundage. In most authorities where rateable values were increased by 100 per cent., there may have been 1s. or 2s. taken off the rate poundage for a year or two, but gradually, as people got used to it, the figure crept up to the full rate poundage again. This will happen again.

I do not want to make any rash prophecies or exaggerated comments, but it is in the nature of the administrative machine that if they see an opportunity of getting their hands on a much larger slice of income, they will apply it to purposes which they find convenient to them, subject to the authority of the elected representatives. The more money they get, the more they spend; that is as clumsy a way as I can find to put it. If we give carte blanche to a fantastic rise in the rateable value of house property, and if neither industry nor agriculture is to pay, then the burden will fall on the householder. We have to raise the local revenue, and if somebody is not paying rates, then somebody else has to pay them on his behalf.

The right hon. Gentleman said that it would take until 1968 to reach any basis of assessment or agricultural properties and that therefore we must leave them out of the picture for the time being. That is very nice for the farmers. I have plenty of farmers in my constituency. I do not want to be unfair to them, but I do not represent a purely agricultural part of the country; it is partly agricultural, partly industrial and partly residential—a bit of everything. It is a good catholic mixture of all sorts of people. I understand the political pressures on the Conservative Party by the farmers; the Conservative benches are full of great open agricultural spaces. But what is the use of telling me that we cannot apply the powers which the Government have in order to assess farm buildings?

Surely the Government assess farmers, landowners and occupiers of farm property for Income Tax. They have the machinery for that. We know of men who have made themselves a warm, sensible house by converting a farm building. Thousands of people have done so. Why should a man who makes a little palace in this way, and who goes to live in it, be allowed to have it accepted as a farm building, an essential part of the farm property, so that he does not have to pay rates on it?

Mr. Ronald Bell

The hon. Member is wrong about that. Rates are paid on all farm houses. It is only on outbuildings that people do not pay rates.

Mr. Price

I know that, but there are distinctions. I have been in farm houses where farmers have taunted me by saying, "My boy, you do not live in a farm house like this, which is relieved of some of the rates, do you?"

Mr. John Hall (Wycombe)

Will the hon. Member give an example of a farm house which has escaped rates? The House would be interested to know.

Mr. Price

I will not give examples here to be bandied about; it would not be in the public interest. Nor do I intend to be deflected by this argument, which is nothing but a red herring. The suggestion that farmers cannot be assessed because they live in remote places does not stand up to examination.

I appreciate what the Minister told us about derating in 1929, when the reasons for the steps then taken were justification for those steps. Those reasons may have been adequate thirty years ago, but conditions have changed since then. Ordinary householders, not only in rented properties but in small owner-occupied properties, will not be meek and mild when they are called upon to subsidise for much longer the sort of privileged sections of the community to whom I have referred.

The right hon. Gentleman said this afternoon that the estimated amount of rates collected in 1959 totalled about £658 million. That is a considerable sum. He told us also that 47½ per cent. of it was contributed by house properties, 41 per cent. by commercial properties and 11½ per cent. by industrial properties.

A far greater increase would take place in the category of flats and houses. We know, as a matter of mechanics, that that is likely to be the case. Although the Measure goes part way to provide for making up the balance between industry and domestic households, it may not be realised that when the final reckoning comes, while there may be a tremendous increase in the rate burden on householders, there can still be a reduction in the rate call on industry because of the different allocation and distribution of liability. It will vary from place to place. This is inequitable.

It may be competent in a legislative sense to give these wide powers to the Minister to make Orders at the appropriate time, but I am under no illusion about the fact that it would be bad legislation to give the Minister these wide powers. The Minister will not be the effective instrument of the State at the appropriate time. Suppose that when the colleagues of the hon. Member for Swansea, West (Mr. Rees), in the valuation departments, who are responsible for getting the new lists out, they believed that the lists were so terrible that they were almost afraid to let them go out until the Minister had had a look at them. Whatever he might decide about bringing in some kind of special cushion to ward off the electoral consequences to the Conservative Party, what a tremendous uproar there would be in the country if the country were faced with these lists on the eve of a General Election.

To do that, he has to consult the Prime Minister, the Chancellor of the Exchequer and the Cabinet. The merits of the situation would never be fairly tested. The Minister would be governed by the economic and political state of the country at the time that the change had to take place. This is corrupting the body politic, because there would not be arguments addressed to the merits of the situation. The matter would be decided according to the electoral convenience of the Government of the day.

The right hon. Gentleman, who sits on the Government Front Bench as inscrutable as the Grand Llama of Tibet, is an experienced politician. He knows that these operations are being timed accurately to coincide with the election dates. If there is an appeal to the country, I hope that somebody will be sufficiently interested in this Measure to take another look at Clause 2 which gives the Minister carte blanche to make a cushion if householders are likely to get it in the neck too hard.

Clause 2 (2) says: In this subsection the reference to a county includes a reference to the Isles of Scilly. I think it rather strange that the Scilly Isles should be introduced, because they are generally taken to be part of the County of Cornwall. [Interruption.] I stand corrected if that is not so, though it is not material to my argument whether or not they are part of the County of Cornwall. I am concerned that the whole British Isles should not be taken as the "Silly" Isles. I hope that the British public will appreciate that much of this business of rating and valuation is nothing more than the transference of the burden of local taxation in all manner of obscure ways from the Exchequer on to the shoulders of the local ratepayers. That is the political purpose behind this legislation.

I have spoken in a temperate and not in an ill-natured way. Nevertheless, I hope the British public will realise increasingly that they are being sold down the river by this kind of legislation, and that, coupling it with his reputation in connection with the Rent Act, the right hon. Gentleman will have to answer for something which goes even further to the disadvantage of the people who sent us here to represent them.

7.22 p.m.

Mr. John M. Temple (City of Chester)

The hon. Member for Westhoughton (Mr. J. T. Price) has made a big feature of this cushioning effect. Personally, I would not call it a cushion but a pin- cushion which my right hon. Friend proposes to introduce. In fact, whatever the effect on domestic ratepayers of the action which my right hon. Friend may take, it will stick into another section of the ratepaying community. I am perfectly satisfied that when my right hon. Friend comes to use this cushion he will have due regard to the other effects which the cushioning will have on other sections of ratepayers. Therefore, I have every confidence that it will be used with the greatest possible discretion.

It would be straining words to say that we should welcome another Rating and Valuation Bill. I think that the House generally recognises that the main provisions of the Bill were far from unexpected. I fully expected the rerating of industry up to 100 per cent. It is entirely logical when one is trying to get back to a basis of current market values. I support the speech of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) who made that point much more ably than I could.

I wish to deal with the Opposition Amendment. Very little has been heard about this. I think the central words of the Amendment are that an inquiry into the financial relationship between central and local government should be made. If we look back say to thirty years ago, the rate income in those days was largely found locally in fact to the extent of 66⅔ per cent. Today the wheel has gone full cycle and the central Government are giving subventions within the expenditure covered by the General Grant Order to the extent of 60 per cent. The rate income is contributing only 40 per cent. I strongly support the fact that local government should be local and responsible, and therefore it must have some substantial form of local revenue. In my view we should be very unwise if we were to reduce the proportion of money raised locally below 40 per cent. Personally, I am glad that my right hon. Friend has determined to rely on rate income as the method of locally raised revenues.

We heard the hon. Member for Huddersfield, West (Mr. Wade) refer to the taxation of site values, though he said very little about it. It was only a passing reference. I did not think that he appeared to have much confidence in the idea.

Mr. Wade

I should be delighted to give the hon. Member a lecture on the subject, but there are no doubt other hon. Members who wish to speak and I do not think they would want to hear the whole of the lecture today.

Mr. Temple

We have heard significantly little about other methods of raising local finance, other than through rates. I, for my part, am forced back to the conclusion once again that rates are the best method known in this country of raising local finance. If we were to venture into other fields we might well increase the expenditure because we should be duplicating the system of collecting the local finance.

I wish to make two main points on this Bill. One relates to a provision within the Bill itself and the other to a considerable omission. Both points are concerned directly with domestic ratepayers. My first point relates to Clause 2. I was glad that the hon. and learned Member for Kettering (Mr. Mitchison) asked a Question of my right hon. Friend and got the proportions of rateable value set out in the OFFICIAL REPORT in answer to his Question. My right hon. Friend replied that in 1960–61 domestic hereditaments were contributing 47½ per cent., shops and offices 28½ per cent. and industrial hereditaments 11½ per cent.

What I wish to know is whether we are to regard these proportions as sacrosanct. Are we trying to get back to them? I have seen a representation from the Federation of British Industries which fairly asks if power is to be taken to derate in any one sector, when the result of this revaluation becomes known, whether powers will be taken to derate in other sectors, as well. The ultimate result of this revaluation is a matter of conjecture. We may be able to estimate it in broad terms, but at the moment it is not known in detail. I should have thought that it would be fair to take power to derate for a limited period in sectors other than the domestic sector if we are to take that power at all. I for my part am rather loath to see those powers within Clause 2, although, as I have said, I appreciate that a slight cushioning may be necessary for a period. However, I hope the power which I recognise my right hon. Friend regards as a reserve power, whereby he may differentiate between counties and county boroughs all over the country, will not be proved necessary.

I regard the approach to this problem as being far better if we take it at 20 per cent. or 30 per cent. of the broad band of rateable value over the whole country. Then, having agreed the percentage which should be necessary to remit all over the country, I would then take steps to build back to rating to at 100 per cent. by stages.

Let me give the House an example of what I mean. Say that it should be found necessary, in order to mitigate the incidence of this revaluation on domestic householders, that there should be a general remission to the extent of 20 per cent. I suggest that over a period of say 10 years 2 per cent. per annum of that 20 per cent. should be deleted from the 20 per cent. In other words, at the end of a definite period that section of hereditaments which is covered by derating should be brought back by stages to 100 per cent.

This process is referred to by the Federation of British Industries as a tapering-off process. I believe that that is a sensible approach to this problem and that it would avoid the position which might arise, namely, that at the end of the five-year period there might once again be a steep rise in a certain section of the hereditaments which had enjoyed a remission. Under Clause 2 these would be the domestic hereditameats.

I said that I would cover one item concerning this Bill which I regard as having been omitted, and that is the question of septennial revaluations. On the Second Reading of the last Rating and Valuation Bill, on 23rd February of last year, I spoke about septennial revaluation. On the Committee stage, several of my hon. Friends and myself tabled an Amendment to bring about septennial revaluations as opposed to quinquennial revaluations. Unfortunately, on that occasion, the Chair did not select that Amendment, so that a debate was never held. On the 19th March subsequent to that happening, that very authoritative journal Rating and Income Tax, in a leading article, said, and I quote: There must be an optimum period for the operation of valuation lists, and it is almost certainly from five to seven years. I believe that on many counts a septennial revaluation would be all that is necessary at the present time, and we have a case in point today, because the last valuation was in 1956 and our next revaluation will become effective in 1963. In fact, it is a period of seven years.

I do not think that anybody could claim that quinquennial revaluations have had a long or satisfactory history. The earliest example of the principle was the Valuation (Metropolis) Act, 1869, which applied to London only. But the quinquennial principle has been effective as a general principle only since 1925, and since that period we have had a history of postponement. We had the Rating and Valuation (Postponement of Valuations) Act, 1938, the Rating and Valuation (Postponement of Valuations) Act, 1940, the new Valuation Lists (Postponement) Act, 1952, and the Rating and Valuation Act, 1959, which again was a postponement Measure, so that in fact we have very seldom had quinquennial revaluations taking place when they should have done.

I believe that on two powerful counts we should give very serious consideration at the present time as to whether we should not alter this whole system of valuations to a seven-year period. The counts upon which I put this forward are, first, on the ground of economy and, secondly, on the ground of convenience. On 5th March, 1959, I asked the then Chancellor of the Exchequer the cost of these revaluations. He said that he could not give the cost, but what he did give was the cost of running the Valuation Department and this was £6 million per annum. The figure of the number of valuations that will have to be undertaken—the total valuations in the country—has been given many times. Something between 15 million and 16 million valuations are to be made.

If we assume that each of these entries in the rate book will cost £1, that would give us a figure of £15 million for this revaluation. If this expenditure were spread over a period of seven years, as opposed to the period of five years, it would give a saving of £1 million per annum to my right hon. Friend the Chancellor of the Exchequer, and I do not think it would be any exaggeration to say that each entry in the rate book may well cost something well in excess of £1, and, to that extent, the saving might very well be much greater than £1 million per annum.

One hon. Member speaking from the other side of the House mentioned the question of appeals. It is significant that after the 1956 revaluation, there were 650,000 appeals against rating assessments. I do not think it would be difficult to imagine that the number of appeals against rating assessments after the 1963 revaluation will be very much in excess of 650,000. It may well be double that figure, and I think that it is correct to say that the Department has still not dealt with all the appeals which were outstanding as a result of the 1956 revaluation. Therefore, the Rating and Valuation Department itself may well be glad of this extra period which would be allowed, in order that we could deal with the massive number of appeals and get ready for the next revaluation.

On the score of convenience, I think that everyone in this House is aware that revaluations cast their shadows long before. In fact, forms have been arriving and householders today think of a revaluation which is to be effective in two and a half years' time. Equally, revaluations cast their shadows far behind them, because, as I have already said, certain appeals from the 1956 revaluation are still not settled today.

I think there is a misconception on the part of certain people in local government that revaluations create value. They do not. They alter rateable values, but do not create any more value to the community and there are provisions between revaluations whereby values can be adjusted.

For that reason, I believe that a septennial period would certainly not do any harm to local government and would be of great service to householders who would not have revaluation hanging over them all the time. I think it would be safe to say that I speak for the general body of ratepayers when I say that the less frequent the rerating, the better they would be pleased. I have just put forward two major suggestions. The first is that the tapering-off procedure should be considered in connection with Clause 2, and the other, outside the Bill at present, though I hope within the Long Title, is that septennial revaluations should have very serious consideration. These are points of detail and not of principle. With the principle of this Bill I am wholly satisfied, and I shall give my full support to my right hon. Friend the Minister.

7.37 p.m.

Mr. G. W. Reynolds (Islington, North)

I am attracted to the idea of a septennial revaluation, but I have grave doubts whether the savings in the cost to the Rating and Valuation Department of the Board of Inland Revenue, to which the hon. Member for the City of Chester (Mr. Temple) referred, would actually take place.

As I see it, revaluation is not a job that is done over the whole of the seven-year period. As the hon. Gentleman said, it casts shadows behind and before, but there is a definite period when the work has to be done, and I do not think that the savings will be so much as alone to justify a seven-year or septennial valuation. In fact, to avoid this spreadover of addition staff, the two separate valuation sections of the Board of Inland Revenue a year or two ago were merged together, so that staff could be switched from one job to another, because of the build-up of work on the valuation list.

But the main thing is that if one has to be continually doing valuation work of this nature, certain properties will have work done on them by valuation officers five or six years before the list is published, and if one looks at what has happened with the rents of industrial, commercial and residential properties in the last few years, one sees that many of them will be very much out-of-date by the time the list is published. The work as a whole has to be done in the two years prior to the publication of the valuation list.

I am not satisfied with the explanation we have had so far about the necessity for bringing in this Bill at this time. I welcome some of the minor proposals contained in the Bill, but, obviously, they are not the main reason for bringing it in. They are proposals which would have been tagged on to any valuation Bill which came out at this time, or next year or the year after. They are proposals which we have done without for a long time and we are glad to have them, but they are not the reason for the introduction of the Bill.

We have been told, and this is the only explanation which has been given by the Minister and by some hon. Gentlemen opposite who have spoken, that it is necessary to deal with the question whether or not the derating of industry is to be abolished before the valuation officers can get on with the job of revaluing. I think that my hon. Friend the Member for Gloucester (Mr. Diamond) dealt with that point, and I do not accept that that is by any means the reason for bringing in the Bill at this time. There are other reasons. One is, as we remember, that the Government are at present slowly, deliberately, and purposefully bringing things to a climax from the beginning of April of next year, when the London County Council elections take place, and the county council and local authority elections throughout the country come upon us in April and May of next year.

We have already had a statement from the Minister of Housing and Local Government that he is looking into problems of overspill and hopes to make a statement in the not-too-distant future. I may be wrong, but I would expect that statement to be made at about the end of March, or the beginning of April, when it would be headlined as new Government plans to solve the housing situation. The Government have also promised increased pension benefits at the beginning of April, just before the London County Council elections. It would not surprise me if hire purchase and similar restrictions were suddenly relaxed during March, just before the county council elections. I have no doubt whatever that the London Municipal Association and the Conservative and Unionist Central Office are now preparing leaflets for the local authority elections saying, in effect, that the Conservative Government are abolishing derating of industrial premises, which, it will be hoped, will obtain a few more votes in the local government elections in April and May next year. I see no other excuse for bringing in this piece of legislation at this time.

Mr. Rees

Can the hon. Member tell the House how one arrives at the hypothetical tenant's liability without knowing what his rate burden will be?

Mr. Reynolds

We have gone over this paint several times today, the main point being, as my hon. Friend the Member for Gloucester pointed out, that the difference between the retention and the abolition of derating is about one-quarter of 1 per cent. of the total cost of industrial production. I simply cannot accept that that will make any great difference to the amount of net rent that the occupier of industrial premises will be prepared to pay. I cannot accept this as being the main reason for making it necessary to bring the Bill forward at this time.

I am sorry that the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) is no longer in his place. Obviously, the right hon. and learned Gentleman has not got fully into the habit of speaking from the back benches. One almost imagined that he still had the cares of Ministerial office on his shoulders, judging by the way he today supported his colleagues on the Front Bench. The right hon. and learned Gentleman began by drawing attention to the fact that his successor at the Ministry of Health was only the "office boy" when he was himself an Opposition Front Bench speaker. That was not a particularly good way of referring to somebody who, at least, is still on the Government Front Bench, whereas the right hon. and learned Gentleman himself is not.

The right hon. and learned Gentleman then said that the Government had the choice of a soft option and of simply leaving things as they were or of bringing in a Bill of this nature. What puzzled me—I intervened accordingly when the right hon. and learned Gentleman was kind enough to give way—is that as far as I can see, when we consider the Bill and the action that the Minister may well take, the figures which he has given and the obvious decision that he does not wish to alter the existing burden of rates borne by residential occupiers, by the time we pass the Bill, by the time we abolish derating and by the time revaluation has taken place and the Minister has made such orders as he considers necessary for derating residential hereditaments, we shall probably find—this is the whole intention of Clause 2—that the residential ratepayer is paying just about the same proportion of rates as he pays now, that the industrial ratepayer continues to pay a similar proportion, and that the same will apply to the Crown and to occupiers of commercial and other hereditaments.

We are going all through this performance with the Bill, but the intention seems to be that when everything is finished in 1963, the status quo will, in effect, remain. I cannot see why we want to go through all this performance and try to make sure that when we finish, the burden of rating is spread in just the same way as it is now. Having suffered—I am prepared to admit that—from all the injustices and inequalities of the rating system since the war, we might as well allow those inequalities and difficulties to continue for a few more years while the opportunity is taken meanwhile of having a thorough look at the whole relationship between local and central government finance and at the possible alternative sources of revenue for local government, by means. I hope, of a Royal Commission or another body of similar status.

I know that four years ago, the Government published a White Paper setting out their views on this problem, but it was an extremely hole-in-the-corner affair. Nobody in the House knew who did the work behind that White Paper. We had no guarantee that anything at all was done and that somebody in the Ministry was not simply instructed to sit down and write the White Paper. We were told that committee work and that kind of thing was done, but we have never seen a great deal of the information that was considered by the people who advised the Minister on that occasion.

We know that at the same time as the Government were saying that nothing had to be altered, the Royal Institute of Public Administration said that there was a case for a small amount of local Income Tax, but we do not know—we have had no report—what detailed consideration, as distinct from the few paragraphs brushing it off in the White Paper, was given to that type of proposal in the review that was undertaken four years ago.

We have had suggestions today from the hon. Member for Huddersfield, West (Mr. Wade), who represents the Liberal Party, that the rating of site values should be considered. There have been suggestions from below the Gangway on the Government side that some sort of contribution by industry to local finance should be made on the basis of the profitability and earnings of industry. These suggestions are still being put around and they have been voiced in this debate today.

It behoves the Government to give an opportunity for these suggestions to be studied impartially by experts from local government, from the central Government, from the universities and from the political parties, so that we might then have a report which, although I tend to think that it would not recommend any major changes in the present system, would at least satisfy a large number of the people who are now most dissatisfied. They could be satisfied by such an investigation if it were open and above board, so that the current arguments against any alternative methods of local government financing would be published and would have the weight of considered opinion behind them. I hope, therefore, that the suggestion of the appointment of such a Commission will be accepted today, although I rather doubt it.

In the debate in the early part of last year on the Rating and Valuation Bill, hon. Members on the Government side were not interested in speaking, so we on this side had the Floor to ourselves. That Bill, of course, did not affect industry and I can only assume that because the present Bill concerns the rerating of industry hon. Members opposite are rather more interested in it than they were in the Bill twelve months ago, when Members on this side followed each other in speaking in the debate.

Mr. John Hall

The hon. Member has made a spirited suggestion, but has he heard anybody on this side who has criticised or in any way opposed the suggestion that industry should be fully rated?

Mr. Reynolds

The hon. Member may not have been present when one of his colleagues from the place next to him on the Front Bench below the Gangway protested strongly. It was, I believe, the hon. Member for Ilford, North (Mr. Iremonger), who strongly criticised the proposal in the Bill to rerate industry in full. I was saying that because the present Bill affects industry there seems to be a greater interest on it on the benches opposite than there was in last year's Bill. When discussing that Bill, we were told—

Mr. Temple

Is the hon. Member referring to the Second Reading of the Rating and Valuation Bill, 1959?

Mr. Reynolds

Yes.

Mr. Temple

If he is, I beg him to look at HANSARD, when he will see that both I and my hon. Friend the Member for Barry (Mr. Gower) spoke in the Second Reading debate.

Mr. Reynolds

That is true, but I followed my hon. Friend the Member for Hayes and Harlington (Mr. Skeffington) because nobody on the Government side wanted to speak. My hon. Friend the Member for Leeds, West (Mr. C. Pannell) had to call the attention of Mr. Speaker, under Standing Order No. 9, to the fact that there was no one present on the benches opposite. We had to get Members on the Government side running in from the Dining Room and elsewhere to make up a quorum.

We were told in that debate that it would not be possible to have revaluation by 1961, because only 2 per cent. of residential property was on a free market and we must wait until such time as the figure reached 10 per cent. and that, therefore, it would not be possible to have a new valuation list until 1963. It appears from the figures which my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has managed to extract from the replies given by the Minister yesterday that in only a little over twelve months, we appear to have risen from about 2 per cent. to something like 14 or 15 per cent. of residential property being let on a free market. To me, this is astounding. I cannot believe that both of these figures can be correct.

Each of those figures comes from the Minister of Housing and Local Government. Twelve months ago, he told us that the figure was 2 per cent. In answers to Questions yesterday, he told us that it had reached about 14 per cent. Almost as soon as we came back after the Recess, I asked the right hon. Gentleman what information he possessed as a result of surveys concerning the operation of the Rent Act, 1957. He informed me in reply that a survey had been undertaken for his Department by the Social Survey and that in due course it would be published. It may well that the Minister's information yesterday was obtained from that survey. Unfortunately, however, we have not had the opportunity yet of seeing it because, for some reason, it still has not been published, I understand that since the Question was asked, a great deal of work on it has been done to get it ready for publication. I hope that when, in due course, it is published, we shall see all of it and not merely an edited version.

We appear now, however, to have more than 10 per cent. of residential property operating on a free market. In replying to the debate tonight, can the Parliamentary Secretary give us an idea of the amount of change-over which has taken place in industrial and commercial hereditaments? Is there anything like a 10 per cent. movement on a free market as distinct from long-term leases entered into, perhaps, up to twenty years ago? This information might enable us to get a true valuation of commercial and industrial hereditaments.

In large parts of London, I do not think that we have the correct valuation of industrial and commercial hereditaments on the rate books. In the borough in which I live, Acton, where I have been chairman of the finance committee of the local authority for many years, we know for a fact that factory property—the borough has over 500 factories employing more than 20 people each—which in 1956 was given a value based on 3s. per sq. ft. was being let in the open market only two years later at 6s. per sq. ft. I hope that the Minister and the Rating and Valuation Department of the Board of Inland Revenue will make sure that they collect sufficient information so that when revaluing industrial hereditaments they can take into account, at least in the London area—and, I should have thought, in other large places, especially the larger towns—the terrific increase which has occurred in the rental value of industrial property over the last four years.

Various estimates have been given in this debate of the extent of the probable increase in the gross values of residential property, ranging from three to four or five times existing gross values. I should be surprised if, when revaluation takes place, industrial property, at least in the London area, does not have its existing net annual values at least doubled and in many cases trebled. Then, on top of any increase in the net annual value, we must make allowance for the fact that derating will presumably be abolished at the same time.

The same thing applies to commercial property. I know of large numbers of shops in the London area, some of which have been newly erected on local authority housing estates, which during the last twelve months have been given gross values of £90 to £100 but which have been let on competitive tender by the local authority at rents of between £400 and £500 a year. I hope that this will be taken into account when commercial property is revalued, because I am convinced, if we are to work on the rental value, that commercial and industrial property is consistently undervalued in many parts of the country.

I hope that when the new list is prepared for 1963, the full rental values will be taken into account. I hope that the Minister can assure us that valuation officers possess sufficient evidence of recent rents which have been asked and obtained for industrial and commercial property as well as for residential property. I have reason to believe that it has not been possible to obtain a great deal of the information about new rents for commercial property because, very often, the actual occupier pays a rent to somebody who has a sublease, who then pays a rent to another person with a sublease.

That person, in turn, pays a rent to somebody else who has a sublease and eventually it gets to the owner. Trying to unravel this tangle of who pays whom is not an easy job, but I hope that we can be given an assurance that the unravelling will take place before we have a revaluation in 1963.

Clause 2 is one of the main provisions of the Bill. I was rather surprised that we were told a little earlier by the right hon. and learned Member for Hertfordshire, East that the main result of the Bill will be to ensure the emergence of residential property at current values. Clause 2, if operated by the Minister, might well lead to more hereditaments being derated after 1963 that are now derated, yet we were told by the right hon. and learned Member for Hertfordshire, East that the Bill will mean the emergence of rates on residential property at current values.

That is not the only aspect of the matter. What I am concerned about is the possible effect, particularly if provision is made for percentage deductions in differing county and county borough areas, on some other aspects of local government finance. For example, there is a rate reduction factor in the general grant formula. That very complicated formula is worked out and at the end a rate reduction factor of 1s. in the £ is made.

Are we to have two counties next door to each other, or perhaps a county borough completely surrounded by a county, in one of which there is a higher percentage reduction in the rateable value of residential hereditaments under Clause 2, so that not only do the residents of the area with a higher percentage reduction benefit from that reduction, but they also benefit from the shilling rate deduction factor through the general grant calculation being lower than it otherwise would be? They will get a double benefit.

Although we can deal with this matter in more detail in Committee, I would like the Minister to say tonight whether that has been considered and what discussions he has had with the local authority associations about it. This provision can mean considerable differences in the general grant in one local authority area as compared with another.

A similar situation can arise because of the rate deficiency grant. A local authority may have a rather higher percentage deduction from residential hereditaments than a local authority next door to it. As a result, not only will the residential inhabitants of the first area secure benefit from that higher percentage deduction, but, because of the reduction in the product of a 1d. rate, the area will qualify for a rate deficiency grant which would not otherwise have been obtained. I know that the Minister has said that he hopes to make very little use of these powers, but the proposal to have different percentage deductions in different areas is what we are being asked to agree to, and we should be given more information about what consideration has been given to these problems.

These provisions may also affect the housing subsidies under the Housing Act, 1919, because the product of a 1d. rate enters into the calculations which are made under that legislation. Another problem may arise with coastal towns, because a percentage reduction over the whole county area that would be necessary to give reasonable benefit to the inhabitants of the rest of the county, could give a terrific benefit to the inhabitants of the coastal town itself.

One of my main concerns is whether we are to have revaluation in 1963. So far, I doubt it. I said before that the Bill is a smoke-screen to give publicity and political credit to the party opposite in the local authority elections next year. I have studied the staff figures for the Rating and Valuation Department of the Board of Inland Revenue, which is to be charged with the job of carrying out the revaluation in 1963. I have studied the figures of the staff for 1953–54, when the 1956 revaluation list was being made and when the staff was at the same stage as it now is with its work in connection with revaluation in 1963.

For the previous list, the Department had a total staff of 8,411. At present, 300 fewer are employed in the Department. However, that in itself is not the full picture, because in 1953–54 £1½ million was being spent by the Department on the employ of valuers under contract, and I understand that it was estimated that the work being undertaken by those valuers under contract to the Department was equivalent to the work of 1,300 full-time staff. Therefore, allowing for contracts with private valuers and the staff actually in the Department, or provided for in the Department, there are now 1,700 fewer people engaged on this type of work than there were when the 1956 valuation list was being made.

Can we have an assurance that it will be possible for the revaluation to be made by 1963? We know that Metropolitan boroughs have been visiting Somerset House in the last few months because of the backlog of work in bringing current lists into effect. I notice, and I hope to have some assurance on this, that the Estimates for the Rating and Valuation Department of the Board of Inland Revenue for the current year provide for about 1,150 additional valuation clerks, presumably to do much of the referencing work in connection with revaluation. Can the Minister tell us whether he is finding it possible to obtain those staff and whether they are actually being employed, or whether this is merely a figure in the Estimates which cannot actually be obtained?

There is also provision for 500 extra clerks and typists, presumably to undertake the preliminary work. Has it been possible to get those staff? I hope that we can have some information about the present staffing position of the Department which is to undertake this work. It would be of interest not only to the House, but to local authority officers throughout the country.

If we are to have revaluation in 1963, which I still doubt, I can see no way of dealing with the possible complications arising from the placing of an additional burden on the residential ratepayer other than that proposed in the Bill. In that respect, I have no great objection to Clause 2, which is one of the principal provisions of the Bill, but there are many technical arguments which will have to be considered in Committee before we finally approve the Bill.

I still feel that it would be better, having suffered the inequalities of the present system for so many years, to have continued to suffer them for a little longer in order to have the opportunity, through a Royal Commission or some other means, of providing a full, public and open investigation of local government finance and the possibilities of alternative sources of revenue.

8.2 p.m.

Mr. Ronald Bell (Buckinghamshire, South)

Listening to the hon. Member for Islington, North (Mr. Reynolds) is like being under a tin roof during a heavy shower—it is difficult to collect one's thoughts after all the noise of his speech.

Mr. Mitchison

But he did not get wet.

Mr. Bell

Those under the tin roof did not get wet, of course. At the end of it, I think that I can say that he has certainly succeeded in talking himself into believing in the arguments he put before the House, but I am afraid that he did not convince me.

He began by saying that the Bill was introduced in order to influence the L.C.C. elections next spring. Each Parliamentary Session begins in about November, which is the time when Bills are introduced, and in whichever Session of Parliament the Bill had been introduced, the hon. Member could have complained that it was introduced to influence the L.C.C. elections of the following spring. I think that he exaggerates the importance in the world of the L.C.C. elections.

Mr. Reynolds

I was careful to say LC.C. elections because they take place only once every three years.

Mr. Bell

That explains why the hon. Member only once or twice slipped into the phrase "county council elections", because I have no doubt that that is the point which he would have made in the two years in between times.

Mr. Reynolds

They are every three years as well.

Mr. Bell

But not every three years in the same places.

Mr. Reynolds

Yes, they are.

Mr. Bell

Well, to put the hon. Member completely on the spot, he would have said borough elections or rural district elections. People who live in boroughs and rural districts are all ratepayers. There is nothing special about the L.C.C. in this connection. Everybody who lives anywhere is a ratepayer and it is always possible to argue that a Bill of this sort is introduced to influence elections.

In fact, if there had been any careful calculation of timing of a Bill like this in respect of elections, one would have deferred revaluation not until 1963, but until 1961. The year 1963 is not a very happy year in which to have the new valuations coming into force. It is true that the hon. Member said that the upshot of the Bill would be a continuation of the status quo, but I think that he is alone in that belief.

If the hon. Member really thinks that the reassessment of dwelling-houses on the current rental value in 1963, with a possible derating by 20 per cent., will leave the same proportion of burden on residential ratepayers, then I wish that he would amplify what he was saying. My right hon. Friend said that increases of more than one-third in the burden falling upon dwelling-houses would be considered a matter for some intervention under Clause 2. By implication, it follows that increases of less than one-third will not be considered as calling for intervention of that kind.

Indeed, if the hon. Member thinks that the rerating of industry from 50 to 100 per cent. will not lead to any increase of burden on industry, then I find it impossible to follow his argument. Of course there will be an increase of burden on industry.

Mr. Reynolds

indicated dissent.

Mr. Bell

The hon. Member says that that will not be so, but if on the one hand we rerate industry from 50 to 100 per cent. and, on the other hand, derate dwelling-houses by 20 per cent., it is difficult to see how industry will finish up in the same position, even though dwelling-houses are being re-assessed on current rental values. I do not believe that anybody else in the country will agree with the hon. Member.

Still an the question of timing—because that is what the Opposition Amendment is about and I suppose that technically that is what we are debating—the hon. Member and many of his hon. Friends have asked why the Bill should be introduced now. They have asked why we should not first have an inquiry. They have been very coy about saying what should happen at the end of the inquiry. Are we to introduce a Bill later? Is that the idea?

If we do that and introduce a Bill in 1961 or 1962, I can imagine hon. Members opposite then saying, "Ah, this is to influence the General Election", and they will say that with more emphasis than has been the case with the introduction of the Bill in 1960. However, they have not committed themselves about that. They have asked for a delay and they have asked why there should be a hurry. The hon. and learned Member for Kettering (Mr. Mitchison) said that, so far as the valuation of industrial premises goes, there was no force in the argument and that we must not worry whether they were fully rated or not.

Mr. Mitchison

I have just been reading through my speech upstairs. I did not say that. What I omitted to say was haw much we welcomed the full rating of industry, which has been in our election programmes for the last two elections, and which the Government have at long last accepted.

Mr. Bell

I profoundly sympathise with the hon. and learned Member, who has been upstairs to read his speech, for taking this opportunity now to say all the things which he has realised he did not say when he was making his speech. What I think is so regrettable is that he cannot now cancel most of the things he did say.

To put the argument the other way round, other hon. Members opposite have said that the increase from 50 to 100 per cent. of rating of industry amounts to only one-quarter of 1 per cent. of industrial turnover. The hon. Member for Islington, North quoted my right hon. Friend. It seems to be the practice of all hon. Members opposite today to think of a figure and divide it by two, if it is in their favour to do so. What my right hon. Friend said was that the present rates being paid by industry on the basis of 50 per cent. derating amounted to 1 per cent. of industrial turnover. Prima facie, if we rerate industry fully it would cost another full 1 per cant. But I think that we all agree that some reduction would be made on that. In any case, it would be at least half and not one-quarter.

The real point is that the proportion it bears to industrial turnover is, like the flowers that bloom in the spring, nothing to do with it. As my hon. friend the Member for Swansea, West (Mr. Rees) said, industry is rated straightforwardly on a hypothetical tenant basis—what the hypothetical tenant would pay for the premises. The rent he pays for the premises is substantially influenced by the amount of rates he pays. There is no getting away from that. The increase of rates as a proportion of the net rent—that is the comparison—is not of the order of half of 1 per cent. It is a very substantial figure. That is what the hon. Member for Islington, North and his hon. Friends have not borne in mind.

Mr. Arthur Holt (Bolton, West)

If that is so, what was the point of derating industry before the war?

Mr. Bell

The hon. Gentleman has asked a very naïve question. The object was to relieve it of the burden of rates. I am not saying that this difference is so slight that it can be ignored. I am saying the opposite. It was the hon. Member for Islington, North who said that it was so trifling that it could be ignored. It is a substantial and important matter, and that is why it is necessary to know the position before working out the assessments for rating.

Do hon. Members really believe that in 1962 the Inland Revenue staffs should be told to pull out all the industrial assessments and recast them on the basis that the hypothetical tenant will have to pay about one and a half times or twice as much in rates as they had assumed he would have to pay? That is the effect of their argument.

Mr. Reynolds

Does the hon. Gentleman realise—

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)

Order. This is a Second Reading debate. Many hon. Members want to speak. We must not turn it into a Committee stage debate.

Mr. Bell

I am grateful to you, Mr. Deputy-Speaker. I did not want to refrain from giving way because I am replying to arguments which have been made. I want to confine my remarks to enable other hon. Members to take part in the debate.

The point quite simply is that if this is to be done at all it must be done in this Session of Parliament. Let us get that quite clear. If it is not done now, we cannot do it, as a matter of administrative common sense, until after the 1963 valuation. If we cannot do it until then, it must follow that residential property will be reassessed on current rental values without the offset of industrial rerating. Is that what the party opposite wants? Somehow I do not think that it is.

I now turn to the wording of the Opposition's Amendment. It states: That this House, having regard … to the prospect of an inequitable burden on domestic ratepayers, declines to proceed further with the Bill until a full inquiry has been made … The hon. and learned Member for Kettering devoted the greater part of his speech to this "inequitable burden" which was in prospect for domestic ratepayers. He had great sympathy for the contribution which they had made in past years to fill the gap left by industrial derating. This is a reversal of the true picture. Industry at present is derated by 50 per cent. but is assessed upon current annual value. Dwelling-houses are not derated but are assessed on 1939 rental value. We all know that the fall in the value of money is such that they will probably go up by about three times. As the general rise in the cost of living has been 170 per cent., it seems that they will increase by about 2¾ times. In other words, dwelling-houses are enjoying a derating of about 65 per cent. compared with the derating of industry of about 50 per cent.

What has happened with dwelling-houses is that the derating, now standing at about 65 per cent., has grown progressively to that figure from "0" in 1939. It is the domestic ratepayer who is profiting from the distortions of the rating system which are the aftermath of war. What the Bill proposes to do is to reverse that process gradually by giving a degree of derating which I fancy will be about 20 per cent. in the first revaluation after the Bill and then will go back to the full rental value. That is the scheme in the Bill. It is mitigating the return. Instead of saying, "Over a period of twenty-one years this has grown up, especially since 1959. We will put you back at one fell swoop", for everybody on full rating it will be said. "No, we will do it in two stages to make it more acceptable because we realise that people have taken on commitments and are used to a certain level of burdens".

All this makes good sense. Surely, the right thing is for the Government to come before the House now and say, "This is the plan. This is what appears to us to be equitable and we ask for the authority of Parliament now for its being done". If I have one criticism of the Bill it is that the figure is not written into Clause 2: rather than that, there is in Clause 1 the figure for industry. I am puzzled why we should not now expressly put a figure in Clause 2 so that the whole thing can be seen as a balanced and rounded-off operation.

I am a little worried about the rerating of industry. I say that, although I am not connected with industry, for the reasons already given by my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), who rightly pointed out that, once an advantage which an industry may enjoy in its costs over the industry of another country is given away by various commercial treaties into which we have entered or may enter, it is not possible to restore it. I am a little sorry that, having given to our industry this advantage since 1929, we should now give it away. I think that it is probably unwise to do that. It would have been better to achieve the balance by some other device. The same considerations apply in a way to industry and to charities.

I agree very much with the hon. Member for Westhoughton (Mr. J. T. Price) who said that our rating system was out of date and chaotic. It is an extraordinary system which dates from the times of the first Queen Elizabeth. It took its present shape when it was purely a poor rate. It was sensible that people should contribute to the relief of the poor according to the size of their house. The richest people gave most to what was, in effect, charity. Nowadays rates are primarily the payment for local services, and there is no sense in the method of assessing them upon the size of the premises occupied. An industry may pay enormous rates for no apparent reason. It may get very little advantage from local services and may even have to pay for the disposal of its domestic refuse.

Some hon. Members opposite suggested that agriculture should be fully rerated—not merely the farm outbuildings, such as the cowsheds and barns, although what advantage they get from the local authority services it is difficult to say, but even the land itself. I listened for some explanation of what services a field of turnips would get from the local authority. It was suggested that the grazing rent for fields should be taken as the net annual value and that the farmer should pay rates on that. That is carrying the old 1603 system of poor law to the most absurd consequences.

The hon. Member for Westhoughton was on the target when he said that this system strikes at the roots of improvement. If a man puts parquet flooring in his house up go his rates. I hope that one day we shall get rid of this absurd system.

I also want to point out its absurdity when applied to industrial hereditaments, to charitable societies, museums and things like that. It was pointed out in 1843, when the Scientific Societies Act was before the House, that these societies had enormous premises—museums and auditoriums—and had to pay rates on the whole of them as though they were ordinary private houses or industrial hereditaments, simply because a surveyor could work out a hypothetical rent.

I am glad that the Minister has decided to follow the Pritchard recommendation. I accept, as I must, that industrial rerating has to come, and 50 per cent. is not unreasonable. Nobody has referred to the transitional provisions in Clause 9, but I thank my right hon. Friend for them. They follow the Pritchard recommendations, and they are valuable and sensible.

In what I am about to say I must be a little careful, because this is a branch of the law in which I practise. I cannot exactly declare a financial interest, but naturally one is involved in some of these things directly. My right hon. Friend will observe that if a charitable society was not entitled on the day before this Bill comes into force to complete exemption under the Scientific Societies Act, it will not gain any benefit from these transitional provisions.

The Bill repeals Section 8 of the 1955 Act, which provides the existing transitional benefit. Will he bear in mind that under that Section—again, this is odd—these bodies which enjoyed complete exemption got no transitional relief? The odd reason is that the courts have held that nil—nothing—is not an amount.

Section 8 of the 1955 Act said that they should not pay for a time any more than the amount that they had been paying. If they had been paying nothing, they got no transitional benefit but must pay the full rates. That seems a little odd to some people. It is apparently held to be the law, however.

Again, these very same bodies—the ones which do not have just reduced rates but total exemption because of their special character and value to the community—are once more going to slip through the net if they happen to lose their exemption just before the appointed day. I mention this to my right hon. Friend, although this may be a Committee point, because it is not something which a private Member will find easy to correct by an Amendment of his own, and I want him to bear that in mind.

I repeat the regret that has been expressed by other hon. Members about the amount of discretion in the Bill. There are six separate Clauses which confer on the Minister power to make orders. I do not exaggerate in saying that every major enacting provision in the Bill is, with the exception of Clause 1, by discretionary order, and we do not know what is to happen. That, with respect to my right hon. Friend, is not what he described as clearing up and giving certainty to the law of rating. We could and should do something about that.

We are quite capable of laying down the law of rating in this Parliament. It has been so laid down in the past for many generations. I personally would be sorry to think that even things like shifting the liability for rates from occupier to owner should be left to the discretion of the Minister from time to time. People should know where they stand and what the law of rating is.

Again, of course, this can be dealt with in Committee in detail, but I hope that the Minister will give thought to what has been said on both sides of the House about this proliferation of order-making powers in the Bill, which is the only defect in a Measure which will otherwise be of benefit to the community.

8.26 p.m.

Mr. Arthur Skeffington (Hayes and Harlington)

I thought that the hon. Member for Buckinghamshire, South (Mr. Ronald Bell), when he left my hon. Friend the Member for Islington, North (Mr. Reynolds) alone, provided a number of convincing arguments showing why he ought to come into the Division Lobby with us to support our Amendment for an inquiry into the rating system.

We are dealing with a Bill in which, as he pointed out, far from bringing certainty, the whole of the discretionary powers are bound to bring in five or six fields very considerable uncertainty and, not only uncertainty, but anomalies, between one area and another. So I hope that in the logic of his concluding remarks the hon. Member will feel that we have already made out a case. I thought that his earlier criticisms towards my hon. Friend were more filling in than going on with the debate.

One of the consequences of having a system of raising revenue based both on complicated provisions and very ancient formulae results in our having continually in this Legislature to bring in amending Act after amending Act. One has only to think of rating and valuation problems since the war, let alone before the war, to realise the enormous amount of time that this House has had to give to a system which, as the hon. Member said, is so unsatisfactory in many respects. We had the Macmillan Act of 1953, the miscellaneous provisions, or Sandys, Act of 1955, the Rating and Valuation Act, 1959, which was a postponing Act, and now we have this Measure. If we look at every one of those Acts we find that it has partly dealt with an anomaly which arose out of a preceding Act and in itself has given rise to further anomalies.

The 1953 Act, the principal feature of which was to undo what were considered to be the far too complicated provisions of the 1948 Act, itself gave rise to the most extraordinary confusion. It was challenged at the time. I remember saying that it was impossible to ask valuers to try to assume what a hypothetical tenant would pay for a house in the conditions of 1939, assuming that all the amenities in the district were there and if every defect which existed in 1939 and was not present at the current time of valuation was ignored. In fact, it is a task for magicians, certainly not one for valuers. I remember challenging the then Minister of Housing and Local Government, the present Prime Minister, who said, in an airy-fairy way: Ministers are but dim and transcient phantoms … and that the valuers would have to carry out this work long after I have forgotten all about it."—[OFFICIAL REPORT, Standing Committee C, 30th June. 1953; c. 2137.] We have not forgotten that, nor have the unfortunate ratepayers. The 1955 Act, again, was a tinkering Act, some provisions of which have been tackled, or partly tackled, by this Measure. The 1959 Act shows how impossible it is to get valuations in time by putting off the date when the valuation list should come into operation to 1st April, 1963. The date, 1st April, seems the most appropriate one for the postponement. Altogether, we have had four postponement Measures in thirty years. The 1960 Bill, with which we are dealing, has already given rise to very considerable and widespread criticism. The Times makes a very obvious remark which underlines a great deal of what has been said here today. It said: It is surprising that such a measure should be introduced apparently without the Government being able to say with some assurance what are the proportions which different classes of property are likely to pay. That is a very simple and obvious point. It is not as if people had not been working on valuations for a great many years. When the Inland Revenue was taking over there may have been all sorts of reasons for delay but, if it is impossible for the Government to say what the present proposals are, or to bring the valuation list into effect now, all this points to the fact that the present system is basically very unsound. The Daily Telegraph makes the same point. It talks about the Bill and gives some praise to it. Everyone admits that there are some parts which we hope will be useful. The Daily Telegraph says: But it nevertheless retains its full share of complicated and disquietingly vague aspects. Other hon. Members have referred to what industry thinks about it. On the whole I think their fears are unjustified and exaggerated, but, certainly, owner-occupiers and many of the ordinary domestic payers of rates are really concerned. I notice that the Chairman of the National Federation of Owner- Occupiers called for a Royal Commission. He suggested that the Government should postpone valuation far another five years and institute forthwith a Royal Commission to find the fairest way of apportioning the demands of local finance committees.

It will be seen from the history of the subject, from the criticisms of the Bill, and the reactions of people who have to pay, particularly of the residential occupier, that the demand for further inquiries is not just something put forward by the Opposition as a political gesture. There is real feeling about the uncertainty and a real demand that, sooner or later, there should be a Royal Commission.

Slowly, but surely, local government finance is getting into an extremely dangerous condition. Everyone agrees that the local authorities ought to have more independent means of resources. That, I understand, was the promise made in a declaration made by the Conservative Party in 1955. That has not happened. If local government is to continue with some real freedom from Whitehall, something has to be done about its finances on a much bigger scale than has been indicated by the Government to date.

When one considers the system, and all that is implied, it really is astonishing, as the hon. Member for Buckinghamshire, South said, to imagine that a system which, in essence, goes back to 1601, can, somehow or other, provide the framework far raising the money local councils need. A system founded 360 years ago, which was devised in completely different conditions, must, in the very nature of things, be inadequate today. Because we have been afraid to do the thorough research that is required and bring in an alternative system, this has given rise to an extraordinary number of anomalies of all kinds.

I have referred to the valuation of dwelling-houses. The valuation of factories has another basis. It is based partly on rent and partly on size. Public houses pay on another basis and there is another basis for docks, quarries and mines and still another far transport and burial grounds. So one ands here a maximum degree of difference and uncertainty which ought to be sufficient reason, quite apart from all I have said, for believing that there should be a change. It ought not to be beyond the wit of man to devise a system which is a good system in the sense that it is reasonably uniform and reasonably certain. Quite clearly, that is not the case with rating law today.

The hon. Member for Buckinghamshire, South referred to his professional interest in this subject. There is no branch of the law which can give rise to more profitable litigation to those fortunate to practise in the law of rating. I think that it would be a good thing to take away that source of income. A friend of mine makes a substantial income from advising local authorities on the rating of sewers. This seems absurd. Some hon. Members may well remember the excitement there was here and in another place when it was proposed to rerate the Northern Outfall sewer. One could almost think that war had been declared between the various authorities concerned. All this must drive us to the logic of having an investigation and, in due course, providing a better system of rating.

Some ideas have been suggested, about the possibility of local Income Tax, assigned revenues and the possibility of levying a tax on the value of land. I very strongly favour that for a reason I have given earlier. It would bring to the community some considerable wealth which no one can pretend is due to the efforts of the individual who happens to own land. I am talking about large landowners in this connection. It would bring to the community some of this wealth which is the result of the community's own activities, but also, because hundreds of millions of pounds are involved, it would be a method of giving considerable financial independence to local authorities. I should have thought that that would commend itself to everyone who believes that good local government depends to a very considerable extent on authorities getting finance that does not come from the central Government.

That is one way of doing it. The other schemes, such things as local Income Tax and assigned revenues, are Ministry trifling in the amount they could raise, but a tax on site values would yield hundreds of millions of pounds. I know that the Simes Report dismissed that idea, but the conditions obtaining when that Report was in preparation have very largely changed as a result of the sweeping away of the development provisions of the 1948 Town and Country Planning Act—

Mr. Iremonger

The hon. Gentleman will appreciate that the same conclusion was reached by the Sorn Committee, which reported after the passage of the 1954 Act that abolished the development charge. Therefore, his argument does not hold water.

Mr. Skeffington

That is very challenged, and the Report was certainly not relevant to England and Wales.

The intervention of the hon. Member for Ilford, North (Mr. Iremonger) reminds me of another point. Apart from the other attractions I have mentioned—what seems to be economic justice and greater financial independence for the local authorities—with a system of taxing the land we would not penalise those who keep their properties in good condition, or extend them.

It always seems to me to be extraordinary that if one builds a garage, or adds a room to one's house, or keeps the place in good repair, one pays extra just because the house is larger or in better condition and would let for more money. On the other hand, the man who lets his house run down, or the slum landlord, actually pays less when revaluation takes place. Of all the various anomalies I have mentioned, that seems to me to be the most grotesque. I hope that the Government will look at alternative systems.

I very much welcome the proposals for industrial rerating. I only wish that my former hon. Friend, Mr. Joseph Sparks, who used to sit for Acton, had been here today. For very many years he advocated this step, and was regularly opposed by hon. Gentlemen opposite, particularly by the hon. Member for Buckinghamshire, South. He has now lived to see the Government totally accepting the abolition of industrial de-rating. He should have been here to listen to the Minister say that the actual cost to industry will be such a small proportion, even 1 per cent., when, time and time again—and I shall not weary the House now by giving the quotations—we have heard Ministers say that it was impossible to do this without bankrupting industry—

Sir K. Joseph

The hon. Gentleman will realise that, this time, other groups are also being revalued, which was not previously true.

Mr. Skeffington

The case for total industrial valuation has always been very strong. Whatever happens to shops or to domestic premises, one sees the complete reversal of the industrial rating situation.

As I pointed out in some of those earlier debates, it is quite ridiculous to suggest that an industry that can spend twenty or thirty times as much in its public relations work as it would have to pay if rated at 100 per cent. would find that a burden that it could not bear. Of course it can. My own authority, in Hayes, which has also pressed for industrial rerating, will be very pleased with this provision, provided, of course, that the whole revenue is available to local authorities and is not taken away in whale or in part by the Government as was done on the previous occasion. That is something they may fear. Total industrial valuation would mean the equivalent of a rate of from 2s. to 3s. in the £ in Hayes and Harlington.

Two points on Clausse 3 and 4 have not been generally referred to. Clause 3 would enable the Minister to prescribe by Order a special basis of valuation for certain defined hereditaments. Some local authorities take the view that this would introduce an arbitrary and inflexible method of assessment. Believing as I do in the virtues of uniformity as far as that is possible, I do not say that this would necessarily be wrong, but in a Bill like this, which is obviously still only a very partial rating Measure, it is probably not the best way of dealing with the situation.

That method could easily give rise to an increase in the assessment on, say, the Royal Festival Hall. That is the sort of problem that local authorities will face. Places like that obviously cannot come into the charity category. On the other hand, they are not intended to be profit-making. They are cultural institutions, and I hope that this point will be examined by the Government.

Clause 4 enables the Minister of Education and the Minister of Housing and Local Government to give statutory sanction to a formula basis for assessing county and voluntary schools. It is true that a formula that is generally accepted can save a good deal of staff work, but it is clear from this Clause that the percentage would be prescribed by the Minister. The Joint Consultative Committee, which has proposed the formula, refrained from putting in a percentage as it felt that it was bound to give rise to considerable controversy. As that was the view of the technical subcommittee set up by the working party, I hope that on this, too, there will be second thoughts. Although the formula is a useful one, and saves time, if it is given statutory force one will get the sort of inflexibility which, in the present fluid state of rating, is unsatisfactory.

I join with those who have expressed fears about the very serious increase that domestic occupiers will have to pay, and I would point out that the reason for the increase in the rateable value of those hereditaments is the Rent Act. I am alarmed that no reliable estimate can be given of the rise in domestic valuation and, of course, I am uncertain how the discretionary powers will work.

I should have thought that if there was so much uncertainty about this, and as there will be need for some help for domestic houses because the rises are likely to be so stiff, those were good reasons for reconsidering this matter. For this reason, and the many others that I have given, I press strongly for an inquiry. I hope that it will not be long before we get rid of the present system, which is archaic, complicated, uncertain, and full of anomalies.

8.45 p.m.

Mr. James Allason (Hemel Hempstead)

We should look at this matter in the light of the knowledge that in future rates will increase tremendously. Local expenditure will also increase. It is bound to go up. Plans for education alone will bring tremendous burdens on our rates. I am not one of those who believe that we should transfer that burden to the Government. I am a firm believer in local government, and unless local government representatives are spending their own money they cannot be expected to be responsible and to deal with it properly. I feel that we are bound to keep this system whereby about half the local expenditure has to be raised locally.

One hopes that as this expenditure increases so the increasing prosperity of the country will enable people to afford a bit more in rates, but there are certain people who simply cannot afford more. I am thinking particularly of those on small fixed incomes. They have to face constantly increasing rates, and it is desperately difficult for them.

The householder is in a special position. It is difficult to single out those people on small fixed incomes, but it means that the householder is placed in a difficult position if rates go up. In 1955 the householder was paying just under 60 per cent. of all the rates in the country. As we have heard, it has now gone down to 47½ per cent. I would like to hope that that will be the general tendency, that the proportion of rates to be paid by householders will gradually go down.

I draw attention to the fact that we have a series of differentials. As my hon. Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) said, we have a derating of 100 per cent. for farming; 50 per cent. for industry; 20 per cent. for commercial premises, shops and offices, and for housing my hon. Friend gave the figure of 65 per cent. derating. Clearly, therefore, we cannot suddenly return to 100 per cent. rating for everybody. We have the different categories being derated, and now the Minister wants to bring back a certain amount of sanity, but I say, "Not too much sanity, and not too quickly."

There has been very little discussion about shops and offices. From the figures that I have given, they are the most highly rated category. They have obviously been carefully chosen by the Government as the sort of people who, more than anybody else, can pay rates without harming the economy and I think that a case can be made out that they are not making as direct a contribution both in actual square feet in shop or in office space to our export industries and to the trade of the country as the people working in the factories and the factories themselves.

By this system of suddenly coming up to 100 per cent. rating, the people who will gain are those in shops and offices, and no one has mentioned that. We have heard a lot about the people who will lose, and the people who will have to pay more, but these are the people who will have to pay less. Is it right that that should be the case? For houses the Minister has a fraction which he is prepared to apply and there is no need for us to worry too much that the householders will suddenly find themselves in a very unpleasant position. I hope that they will not.

Experience in the new town of Hemel Hempstead has been rather unfortunate as regards factory premises. People were induced to open factories in Hemel Hempstead very much on the basis of how much it would cost them. They took a keen interest in knowing exactly how much the rates would be. They were quoted very low rates. Then came the 1956 devaluation. A firm was employed by the Inland Revenue to do the valuations. Quite a favourable valuation was agreed, and those engaged in the industry were reasonably happy. But the Inland Revenue said, "We do not agree with what our agency decided", and put in a fresh proposal which would have put the rates sky high. Happily, those concerned managed to reach an agreed solution, although it was not very satisfactory to industry.

Industry in this new town is still very unhappy about the rates which it has to pay. It has had an increase from 75 per cent. derating to 50 per cent. and will now face yet another increase because shops and offices are to be left. I suggest, therefore, that as in the case of shops and offices when in 1957 the rates were reduced because it was found that the rates had risen a little too much, the Minister should give an undertaking that he will be prepared in the event of industry being a little overcharged as compared with shops and offices to bring in an amending Measure along the same lines.

I very much welcome the fact that a proportionate cut will be applied by the Minister for houses. I hope that I understood him to say that, and not that he would apply it only if the increase was very severe and over one-third. I was not quite clear whether he said that. I hope that if there is any increase he will be prepared to apply cuts. I am not happy about there being a different reduction for different areas because I think that it should be the same for the whole country. We had an undertaking that the Minister would use a differential cut only in very exceptional circumstances.

I ask the Parliamentary Secretary to look at Clause 14 which provides that if it were proved that the amount of entry on valuation was excessive there might be a reduction of rates. I should have thought that the best proof that the entry was excessive is that when one makes an appeal it is upheld by the valuation court or some other authority. At present, if one appeals against one's rating assessment, the date of the proposal is the effective date, but it seems that under Clause 14 one can put this back for six years. It would be a little hard on local authorities if one could go to them and say, "I have just proved that my valuation is excessive today, and, therefore, I want my rates repaid over the past six years; if a house is excessively rated today, it must have been excessively rated then." It may be that it is thought to be an act of justice.

I very much welcome the Bill because I believe it necessary to put valuations on firm market values. It is undesirable that people who are on a rateable value of £30 or £40 should believe that they are in no way derated. In fact, they are heavily derated now. The Bill will clear up that misconception. On the other hand, I hope that it does not mean that everyone must go on the full valuation at once and pay in proportion, but that we shall continue to have measures of derating in the different categories.

8.56 p.m.

Mr. Michael Stewart (Fulham)

All of us who have read the Bill realise that there is a great deal of uncertainty and obscurity about the position which will arise as a result of it. Those who heard the Minister today did not find that those uncertainties and obscurities were wholly resolved. We are asked to consider what will be the rating position in 1963 as a result partly of what is in the Bill and partly of what is in other Acts which have already been passed but which have not yet come fully into effect. To judge the Bill we must judge what the position will be in 1963 as the result of the Bill and of other Acts.

When we try to do that we find that a few things are certain, but no sooner have we mentioned one which is certain than many queries and uncertainties crop up around it. In the first place, it is certain that in 1963 the rateable values of all properties of whatever kind will be decidedly higher than they are today. For domestic properties that will be due to the fact that we shall be valuing them on the 1963 valuation and not on the 1939 valuation. For other properties it will be due to the fact that we shall be valuing them on 1963 and not 1956 values, but also to the fact that we shall be rating them fully instead of 80 per cent., as is at present the case with shops and other commercial property, or 50 per cent., as is the case with industry. We can be sure at least of this—that all rateable values, housing, commercial and industrial, will go up.

What is not clear is how much proportionately each of them will go up. It is a little like the position described in the Grand Inquisitor's song in "The Gondoliers", when it was clear beyond any doubt that one of the two brothers was king and the only uncertain question was which one. The fact that that was uncertain was clear beyond any possible doubt whatever". That is rather the situation in which we are in respect of the Bill, but there is at least one thing about which we can be certain. It is that whatever happens to the various rateable values, the householder's rateable value will go up by far the most.

My hon. and learned Friend the Member for Kettering (Mr. Mitchison) approached this by comparing the proportion by which rateable values of properties other than houses would go up with the proportion by which rateable values of house property would go up. He demonstrated that the rateable values of house property would go up by a percentage six times as great, if not more, than the percentage whereby the rateable values of other properties would go up. I do not think that that can be disputed; or, if it can be disputed, it will only be by substituting a higher figure for the six which he mentioned.

I want to look at the same problem in a slightly different way and to ask what is likely to happen in 1963 to the proportion of the total amount paid in rates which is paid by the various groups—householders, industry and commerce. For the purpose of that calculation I will assume at this stage in the argument, but only at this stage, that the total amount being raised in rates in 1963 will be the same as it is today. In fact, we know that that assumption is not correct, but if we want to compare the proportion of the burden borne by the householder, by industry and by commerce, it is useful to begin by making that assumption. Later we shall have to see what follows from the fact that that assumption is most unlikely to be fulfilled. For the moment, however, let us suppose that for some reason or other the total amount raised in rates in 1963 is the same as it is today; that the actual number of pounds collected by the local authorities is the same.

Of that sum, what proportions will be borne by the various groups of properties on which rate is charged? Once again, we can say with absolute certainty that house property will pay a substantially bigger proportion of that total than it is paying today. In the light of the calculations which I have tried to make, in the light of informed comment in the Press and in the light of certain very tentative remarks made by the Minister this afternoon, I reach the conclusion that the amount paid by industry will not be substantially different from that which is paid at present. If we assume that the total of rates raised is the same, then industry, by and large and over the country as a whole, will also be paying about the same; its proportion will not be greatly changed.

That leaves us with the result to which the hon. Member for Hemel Hempstead (Mr. Allason) drew our attention, that commercial properties will pay a smaller proportion of the total sum raised in rates. In view of that, we say to the Government most emphatically that they must resist any pressure applied to them by any of their hon. Friends to hesitate about the part of the Bill which rerates industry at 100 per cent. That is one of the few parts of the Bill to which we on this side of the House could give wholehearted and enthusiastic support.

We expected the speeches that we heard against that part of the Bill. I think the Minister knows quite well that he must resist those arguments. He seemed to be a little in two minds as to the effect of the Bill on industry At one moment, placating his hon. Friends, he was pointing out that probably it would not be much more, and anyhow it was a very small proportion of industry's total income. At another time he was expressing the hope that the possibly greater rate burden on industry would cause a larger number of businessmen to become members of local councils. I find that an interesting but not very attractive proposition. After all, I welcome public-spirited people in any walk of life who go on local councils intending to serve the community, and businessmen have exactly the same chance of doing that if they wish to do so as any other class in the community.

I would resent—if this was at all implied—the suggestion that has indeed been made in other quarters, that in recent years there has been a steady decline in the quality of people who serve on local authorities. I do not believe that to be true. But anyone who came on to a local authority solely because he was annoyed about the fact that he would have to pay higher rates, and chiefly concerned with reducing the rate burden on himself, would not be a very valuable member of a local authority.

I notice that the Minister coupled his plea for more businessmen on local authorities with a reference to the great importance of the education service, both as a part of local authority work and as an essential contribution to national prosperity. From my own experience of members of local authorities, I have not found that the businessmen members of local councils were the most determined champions of a progressive and expansionist education policy. If that is the particular aspect of local government in which the Minister is interested, he had bettor look elsewhere for its champions.

Still we do not know what the future may hold. Dread that this Bill might impose a heavier burden on industry might induce a number of people to leap forward into the service of local government, anxious to extend expenditure on education. That is a possibility, but it does not seem to me to be an immediately self-evident proposition.

I return now to the question of how much more the householder will pay. I think it is true to say that at the moment, if we take the country as a whole, not thinking of the very considerable differences which there are between one area and another, and if we look at the total of rates collected over the country as a whole, of every £1 collected in rates about 10s. comes from house property. The Minister mentioned a figure of 47½ per cent. My study of the Annual Report of the Ministry, which is not quite as clear as it might be on this question, suggests a slightly higher figure. But I think one can say that it is about true that of every £1 collected in rates over the country as a whole, the householder pays 10s. The rest comes from other sources.

If we try to calculate, in the light of this Bill, what the householder's position will be in 1963, I think he will be lucky if he finds himself paying less than 14s. out of every £1, instead of 10s. I think it would be difficult to dispute that. It can be represented as only a 40 per cent. increase, but while he is paying more it means that other groups of ratepayers are paying less. Of every £1 that has got to be found for essential public services, he has to find 4s. more and other types of ratepayer are to find 4s. less. This comes to many householders on top of increases in their rents for which the right hon. Gentleman is directly responsible and which, if I may say so, do not amuse them quite as much as they amuse him.

Mr. Woodnutt

I hope the hon. Gentleman will agree that in making these aspersions about the increase in the rates on domestic properties he is assuming that the Minister is not going to use the powers which he has in Clause 2?

Mr. Stewart

I hope that is right, because if this is what is going to happen after the Ministerial cushioning, the position will be even more terrifying than I had imagined. I am coming on to the effect of the cushioning in a moment. Not only will the householder have to bear this burden on top of rent increases, but it has become clear from the many interchanges on this point during the debate that there is a connection of cause and effect between the rent increases for which the Minister is responsible and the rateable values which householders will find placed on their properties in 1963. The exact nature of that connection is one about which one might argue a great deal, but that there is a connection of cause and effect cannot be disputed.

The Minister said—and the Parliamentary Secretary drew our attention to it particularly—that it was the intention of the Minister to use his powers under Clause 2 to see that the householder did not have to pay more than one-third more than he is already paying. That was the point of which the Parliamentary Secretary reminded us.

Sir K. Joseph

indicated dissent.

Mr. Stewart

That is what we understood him to say—that the householder's share would not be increased by more than one-third.

Sir K. Joseph

My right hon. Friend said that the Government would not find it tolerable to allow an increase in the share of the rates falling on the householders because of revaluation of the order of one-third.

Mr. Stewart

Yes. I am never quite sure what this phrase "of the order of" will mean when it comes to the point. Anyhow, I am quite right in thinking that the figure of one-third is one that has something to do with this argument. That would mean, on the calculations I have been making—and I hope I may be corrected if I am wrong about this—that whereas today, roughly, the householder is finding 10s. out of every £1 raised in rates, the Minister would be displeased if in 1963 he was having to find more than 13s. 4d. out of every pound. That is a one-third increase on 10s.

Mr. Brooke

As much as 13s. 4d.

Mr. Stewart

If the Minister finds that the householder is having to find as much as this, the Minister would be displeased, and might do something about it, and the householder would benefit from the act of generosity by the Minister for five years. After that, it would go up again. The Minister reminds me a little of the man who had decided to cut off a dog's tail, and in compassion decided that he would cut it off an inch at a time. This is what it comes down to. The householder at the moment is paying about 10s. out of every £1 raised in rates over the country as a whole. Without the cushioning of Clause 2, he might well find himself paying 14s. or more. The Minister tells him by way of consolation, "At any rate, to begin with, I will see that it does not go above 13s. 4d., and perhaps it will be less than that."

All these calculations, of course, are made and have to be made by taking the country as a whole. If we look at the position in one area and another, we might find that what is going to happen to the householder may be of much more benefit to him in some areas and of very much less benefit to him in others. He will have to pay more everywhere, because that is what the whole thing is about, but how much more will vary a good deal from one area to another.

With this in mind, the Minister proposes in Clause 2 the cushioning proposal; in essence a proposal that for the first five years after 1963 the thing shall not be quite so bad for householders as it would be if Clause 2 was not there. That is what it amounts to. We must say that some form of protecting the householder against the full impact of this Bill is essential. Whatever criticisms anyone on either side of the House might make of Clause 2, we shall all agree about that, but we are entitled to inquire whether this method of doing it by ministerial order is desirable on any grounds.

In the first place, this is to be an Order made, as my hon. and learned Friend the Member for Kettering pointed out, without any consultation with the local authority associations, or indeed with anyone at all, whereas in Clauses 3 and 4, on what are important but decidedly lesser matters, the Minister binds himself by Statute to the most full consultations with the persons concerned. I hope that the Parliamentary Secretary will be able to tell us in winding up that in Committee the Government may be willing to accept Amendments to Clause 2, requiring them to consult at least the local authority associations when the Minister uses his powers under Clause 2.

There are always some political objections that can be raised to giving Ministers wide powers by Order, but I must confess that I do not recollect any statute in which quite such wide powers over a financial matter were given to a Minister—a power by Ministerial Order not only to vary the rate of contribution to the public purse, but a power to show favour between one area and another. I am sure that the Minister cannot be really happy about that.

We may add to those political objections the cogent point made by my hon. Friend the Member for Gloucester (Mr. Diamond), who pointed out that for thirty years industry has sat on a cushion of derating at various levels. It has sat on a cushion provided by statute and kept there for nearly thirty years. All that the householder is offered is a cushion for not more than five years provided by Ministerial Order alone. Why could not that cushion be provided firmly by the statute instead of depending upon a Ministerial Order? Why is there this difference between the householder's treatment and the treatment that has been accorded to the industry during the whole period of derating?

The hon. Member for Hemel Hempstead said that we could not have this degree of absolute purity of rating everybody at full valuation immediately and that while he praised the idea of the pure virtue of rating everybody at full value, we must delay if for a time.

Mr. Allason

I wanted to see a little bit of derating. I agree with full valuation and then derating by categories.

Mr. Stewart

If I remember aright, the hon. Member wanted a little less virtue and a little more common sense. He can be sure of the support of this side of the House to that extent. In this respect, we all echo St. Augustine's prayer: "Lord make me chaste, but not yet."

Throughout the whole of this argument, I have assumed that the total raised in rates in 1963 will be the same as it is now and even on that assumption the householder will be fairly hard hit. We now have to realise, however, that that assumption will not be fulfilled and that the total raised in rates in 1963 will certainly be higher than if is today. This was a point cogently made by my hon. Friend the Member for Westhoughton (Mr. J. T. Price).

What the Government have done is, first, to provide a mechanism which ensures that whenever £1 is collected in rates, more shillings in that £1 are taken from the householder than before. Armed with that mechanism, the local authorities are to set to work and collect the rates. They will find by 1963 that the number of pounds they have to collect is substantially bigger and that the reason for that is that quite apart from any decisions which they have made, they are under the pressure of Government policies.

Government legislation from time to time inevitably puts increased burdens on local authorities. They are urged by the Ministry of Education to recruit more teachers. They have recently acquired obligations under the Mental Health Act. Some day, they might even be required to implement certain sections of the Crowther Report. All the time, the number of services required of them is bound to go up. They find, however, that they have to carry out those services by borrowing money and that the amount they have to pay for that has been steadily mounting during the last eight years as a result of Government policy.

We cannot say quite what interest rates will be in 1963, but the increased burden already put upon local authorities for obligations which they have to undertake means that there is little prospect of any decline in the total amount that must be raised by the rates between now and 1963. In addition, we have had brought out in this debate the way in which the working of the block grant system can be used to the disadvantage of local authorities.

The Minister need not have any doubt that we on this side are as opposed to the block grant conception as we were when it was first put before Parliament. We stressed particularly at that time one of the evils of the block grant, that as between the local council that is public-spirited and the one that wants to be skinflint, the block grant rewards the skinflint and penalises the public-spirited. Today, however, we have had the additional objection to the block grant that it is a weapon with which the Government can easily impose further burdens on the local authorities.

When the block grant was first introduced, for example, industry was par- tially rerated. The Government, however, did not allow the local authorities to get the whole advantage of that. They took a comfortable sum for the central Government. Will the Parliamentary Secretary tell us that this time, when the rating of industry is to be moved up from 50 to 100 per cent., the local authorities will be able to get the whole of the advantage, or when the relevant block grant period arrives will the Government say to them, "My friends, you are getting something out of the rerating of industry. You can spare a bit out of it for the Treasury"? That is what was done before. Is it to be done again? It appears from something the Minister said that he has already thought of that and intends to do it. He said that negotiations about the general grant could be used to redress the balance between central and local expenditure. Did that mean that, because local authorities will be able to rate industry at the full level, that will be used as an argument, as before, for making their general grant less than it otherwise would be? We should like to get that cleared up.

When the Bill is considered in the context of the general trend of Government policy, the increased volume of services which local authorities have to perform, the burden of interest rates and the manipulation of the block grant—so that what the Government appear to give to local authorities with one hand they subtract with the other—we are obliged to see this Measure as part of a strategy, which goes on all the time, a shift of the total cost of maintaining a civilised society away from taxes and towards rates, for that is what taxes and rates fundamentally are, the cost of maintaining a civilised society. It is a shift from a method of collection which is comparatively more fair to one which is comparatively less fair, and, on the whole, a shift of a burden from our richer to our poorer fellow citizens.

I conclude by taking up the words which I just used about paying for a civilised society, because that is really what the argument is about. I assert that as any community gets richer and its people's standards of what is needed for a healthy decent clean life rise, the total cost of the things it has to do collectively and pay for collectively is bound to rise, and probably not only the total cost but its proportion of the total national income is likely to rise.

That is certainly likely to be true of education, and as the community becomes more civilised, so it requires its young people to pursue full or part-time education longer; as it becomes a richer and more complicated community, so a more elaborate system of roads is required. People are entitled to ask for a better system of public and personal health and for better amenities in every respect.

All those things have to be paid for, and in paying for them both the Government and the local authorities have a part to play. But the Government dispose of means of raising money which are far more elastic and less unfair in their incidence than the means at the disposal of the local authorities. A rise in the total national wealth causes immediately a rise in certain very important parts of the Government's revenue, but it does not produce a rise in the yield of rates anything like so speedily or automatically.

What we are faced with, then, is a situation in which if we are to keep our society civilised and to make it nobler and worthier, we have to raise more public revenue centrally and locally, but the local authorities are saddled with a system of raising public revenue which cannot do that job properly. They cannot do it without creating these extremely complex problems which have been plaguing us today and which will go on plaguing subsequent legislatures.

It is for that reason, therefore, that we put in our Amendment a reference to the need for a proper inquiry into the relationship of central and local finance. The case for that was very well urged by my hon. Friend the Member for Hayes and Harlington (Mr. Skeffington), and we were very pleased to have the support of the hon. Member for Huddersfield, West (Mr. Wade) who spoke of certain matters which should be inquired into and ways of raising local government revenues.

There is one comparatively minor point. Why is it that the property which is occupied and put to some use bears rates, but the property which is empty goes scot free? I know all the reasons which can be recited for that. I merely remark that the Scots have managed to do it and have managed to make the empty property bear some share of its owner's responsibilities to society. We ought to consider that problem again.

We had noticed, too, the considerable rise in the values of land. The case for some kind of tax which would draw into the public purse some of the increased value grows stronger every day and every month. If a tax of that kind is instituted, it ought not to be beyond the wit of man so to arrange it that it provides local rather than Government revenue. Allied to that is a proposal for enabling local authorities to raise part of their revenue by a rate on site values. I am not myself one of those who believe that that would be the 100 per cent. answer, but it is one possible form of supplementing our present inelastic system, and there are many other expedients. It is surely not the case that we, almost alone among the countries of Europe, are unable to find anything more fair or more elastic than we now have.

I commend the Amendment to the House partly because of the uncertainties and obscurities which surround attempts to foretell the results of the Bill, partly because the one thing that is certain is that it will hit the householder who has been hit enough already by the present Government. I do so further because, if we take the Bill in the context of certain other pieces of Government legislation, we see it as a device to shift the cost of civilisation from a system which is more fair to one which is less fair, from the richer to the poorer. I do so finally because the debate has shown the need for a determined effort, such as has not yet been made, to discover a method of raising local revenues which will be both more just and more efficient than our present restricted and restrictive system.

9.30 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph)

There have been three remarkable features in today's debate. I am sure that all hon. Members would agree that the first has been the quality of the speeches. The second, and perhaps more remarkable, has been the extraordinary interest shown in this rather dry subject—so much interest that I am afraid that there has not been sufficient time to enable many of my hon. Friends and hon. Members opposite to catch your eye, Mr. Speaker. The third remarkable feature has been the lack of any effective, sustained, coherent or cogent attack on the Bill or on the Government. Nevertheless, there have been many points of substance with which I shall try to deal. I fear, however, that several of them were Committee points and I hope that hon. Members will acquit me of discourtesy if I do not deal with them today. My right hon. Friend will study with the greatest care all the suggestions and questions which have been raised in readiness for the Committee stage.

When I said that there had been no sustained and coherent attack on the Bill, there was one possible exception in my mind. Many hon. Members on both sides of the House have said that my right hon. Friend has claimed too much order-making power in the Bill. If it cannot be thoroughly justified, that is a serious charge. I should like to explain to the House, I hope satisfactorily, why the order-making powers of Clauses 2 and 12—that is, the order-making power associated with the derating of houses, should it prove necessary, in 1963 and the order-making power in Clause 12 connected with the compounding limits of rateable value—cannot be met now by legislation. I shall explain why we cannot hope to have sufficient information in time to suggest a decision to the House.

Clauses 3 and 4 contain order-making powers, but I suggest that the House would not thank my right hon. Friend if every year, or even more than once a year, he brought to Parliament an extremely technical Bill to change the method of valuation, although not the quantum or share of rates borne by a section of industry. For instance, the National Coal Board immediately comes to mind in connection with Clause 3, or, under Clause 4, the method of valuing schools. Neither of these order-making powers affects the amount of rates which will be collected from these bodies. It is simply that by agreement between all concerned—local authorities, the guardians of the ratepayers' interests, because they want the maximum rates, and the ratepayers—the present method seemed to have sufficient anomalies to justify seeking an alternative solution.

Clause 5 also contains an order-making power, but this is precedented in connection with the listing of plant which will or will not be exempted from the Third Schedule of the Rating and Valuation Act, 1925. The other order-making power is a very limited one. It is to end the compulsory use of rate books. I hope that I have acquitted my right hon. Friend of any excessive or avoidable use of order-making powers.

I should like to repeat what my right hon. Friend said in opening the debate. Unless legislation of the sort before the House today is passed, housing will irrevocably be valued at current values in 1963 without any help from the re-rating of industry and any power in the Government or my right hon. Friend to ease the transition for householders from 1939 to 1962 values. The Bill proposes full industrial rerating. It allows to go ahead the 20 per cent. rerating of commerce, shops and offices. It provides the essential power to ease the transition to householders.

Yet this is the Bill, containing all those elements, to which the Opposition seek to deny a Second Reading in the most vague series of speeches to which I have listened since I have been a Member of this House. The Government believe—and the whole House will support this—that rating should be on a coherent basis. If we do not have a coherent basis or principle behind rating, then there is bound to be a great deal of distortion, unfairness and anomalies.

My hon. Friend the Member for Hemel Hempstead (Mr. Allason) said that he was all for a principle but that he did not want it too quick. I hope he will find that this Bill meets his case. The principle which the Government wish to see behind rating is the principle of current value. I should like to say how extraordinarily cogent was the speech of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) when he said that at long last the country would have the chance to see rating in action on the consistent and uniform basis by which alone it may be judged. My hon. Friends the Members for Buckinghamshire, South (Mr. Ronald Bell), Swansea, West (Mr. Rees), and City of Chester (Mr. Temple) supported that view.

I stress what was said by the hon. Member for Fulham (Mr. M. Stewart), that the Bill in itself does not alter the total amount of rates paid. That depends on local authority programmes. As both he and my hon. Friend the Member for Hemel Hempstead said, it is probable that in the immediate future the impact of the education and health programmes will cause local authority rate demands to rise.

The hon. Member for Fulham made great play about the shares in the cost of these civilised environmental services borne by rates and taxes. The taxpayer is already bearing a very substantial share of these local services, and the General Grant Order published today shows that they are still bearing, for the ensuing year, a very substantial share.

My right hon. Friend gave notice, as was proper, that this House is the guardian of the taxpayer as well as of the ratepayer, and although the hon. Member for Fulham praised taxes as being fairer than rates—I do not know if that will be accepted as being selfevident—what is clear is that rates are the support of local Government independence. All of us want to make sure that local Government can be vigorous and independent on the basis of its own properly raised, and independently raised, finances. These are rates and not taxes.

I come now to some of the points raised in the debate. The first big subject is that of industrial rerating, which has been welcomed widely, though criticised formidably by some of my hon. Friends. As my right hon. Friend made plain, the main motive for the 1929 derating is no longer with us. There is general prosperity, though some industries and some parts of industry are not as prosperous as others.

It is accepted that rates are a relatively small factor in cost and can be set against taxation. My hon. Friend the Member for Stretford (Sir S. Storey) was unfair enough to pray in aid against me the formidable artillery of my right hon. Friend the Member for Woodford (Sir W. Churchill) and my right hon. Friend the Prime Minister.

We must recognise two things. Firstly, industry has never been more dependent than it is now for export markets on the education and health services provided by the local authorities. Secondly, I hope that I can reconcile him and my hon. Friends the Member for Buckinghamshire, South and the Member for Hemel Hempstead, who spoke in his support, to the fact that, because of the rerating or revaluation of the other main contributors to rates, the burden of industry will not significantly rise.

As my right hon. Friend made plain, if there were no rerating of industry while the other groups were revalued or rerated respectively, the burden of industry might drop by as much as half. At a time when householders are facing this awkward transition from prewar to post-war values, no one would wish that at the same time industry should have its burden cut by half. It is quite true, and I must recognise this, that if my right hon. Friend used Clause 2 in some areas, or all areas, to derate to some extent householders, there would temporarily, for the transitional period from 1963 to 1968, be a limited extra burden on industry.

My right hon. Friend was critcised very heavily for Clause 2 and for seeking derating power by order rather than by a figure inserted in the Bill now. I would remind the House that any such order would have to be the subject of affirmative Resolution, so it must be in front of the House. I must assure the House that my right hon. Friend would certainly not seek this way of doing things if there was any effective alternative. The hon. Member for Southall (Mr. Pargiter) and the hon. Member for Gloucester (Mr. Diamond) went so far as to suggest that derating would itself be revoked after the next General Election. I call attention to Clause 23 (2) which prevents this effectively by requiring new legislation if that particular derating were to be changed. There is, of course, an alternative to making the derating power by order. That is to defer the whole 1963 revaluation, and I hope to deal with that big point later.

I explain at this stage that my right hon. Friend is faced with an inexorable timetable. I explain it backward from the date of April, 1963. By that date rating authorities need to know the rateable values in their areas. That means that the rateable value of 16 million hereditaments—I am sorry to use the word, but it covers all the rateable property which the Bill covers—have to be calculated, typed, checked and in the hands of the rating authorities by December, 1962. During 1962 the new scale of deductions which my right hon. Friend will be introducing under order-making powers in a previous Act and any derating decided under Clause 2 have to be applied to the majority of those 16 million hereditaments, in fact some 13¾ million of them plus a million or so shops, by early 1962, only fifteen months from now. The Government and this House will have to have approved the scale of deductions and any derating to take effect under Clause 2.

During 1961, in the next twelve months, the valuers have to value all those 16 million hereditaments on 1962 values so that we may all have the information we need, but they cannot start valuing industrial hereditaments without knowing whether or not there is to be industrial rerating because the impact of rates has same effect on the rent value on which values are based. I wish to thank my hon. Friend the Member for Swansea, West for a most cogent exposition of this necessity.

I think this timetable shows that the timing of this Bill is absolutely inevitable. Arguments that we should wait for more information, having decided on industrial rerating, are no more than arguments for deferring the 1963 revaluation. This attitude of deferring anything which is awkward is absolutley typical of the attitude of the Opposition today—if there is anything unpopular, postpone it: if there is anything which comes from prewar or might cause unpopularity, freeze it. Transitional stages are not the laws of the Medes and Persians. Whatever the ill-effect and distortions and anomalies of the current situation, the attitude of the Opposition is, put it off. My hon. Friend the Member for Buckinghamshire, South asked why we should not put a figure in Clause 2, but, having explained the timetable, I point out that we shall not know the figure until the revaluation is carried out.

Mr. Mitchison

May I express one hope to the hon. Gentleman? I hope that he is going to let us know how much larger the share of the domestic householder will be in the total rate burden and how many times the assessment is likely to be multiplied.

Sir K. Joseph

I have much to get through. I should like to have spent a lot of time on the Pritchard Committee's Report and on the scientific societies, but I must deal with the formidable speech made by my hon. Friend the Member for Oxford (Mr. Woodhouse). The situation is that the Oxford and Cambridge colleges are not mainly supported by the U.G.C. and are not such notable contributors nationally to local rates as the universities themselves. It is true that they are disputing their rate burden at the moment and in representations since the Pritchard Committee's Report the colleges have made clear that they regard the question of value as an entirely separate issue from that of rate relief. In general, the Government view the Oxford and Cambridge colleges as closer to educational establishments than grant-aided universities, but I assure my hon. Friend, without giving him any assurance whatever—[Interruption.]—without giving him any commitment whatever, that we shall study the point he made before we reach the Committee stage.

Now I come to the principal confusion of the Opposition. That is on the connection between rents and rates. Hon. Members opposite have consistently said that artificially high rents must lead to a distortion in rates, but surely by now, after all the debates we have had and after all the trouncing they have had in the newspapers, they must recognise that sooner or later rents are going to adjust themselves to the changed conditions since 1939. We have not the unemployment of 1939. We have great prosperity, with earnings, wages and prices adjusted to modern conditions. Surely it must be recognised that what are called by the Opposition "artificial rents" are normal—I am not talking of the few exorbitant cases with which my right hon. Friend is so effectively dealing—are the sort of normal rents which alone will produce the new housing to rescue the people in the dilapidated houses which will remain dilapidated while pre-war rents alone are charged.

My right hon. Friend has asserted, the hon. and learned Member for Kettering (Mr. Mitchison) has agreed, that the effects of control and of decontrol are ignored for the purpose of valuation. Over the country as a whole, householders now bear 47½ per cent. of the rate burden. They will cease to be valued on 1939 values and will bear their appropriate share—derated, if necessary, under Clause 2—from 1963. Shops and offices, which have borne a very heavy burden since 1955, now bear 41 per cent. of the burden and will lose their 20 per cent. derating on full revaluation at 1962 values. Industry now bears 11½ per cent. of the burden. It will lose its 50 per cent. derating and be revalued, and during the transitional stage, my right hon. Friend has powers under Clause 2.

In any particular area, the actual results of all these movements depend on the mix of property, as the hon. Member for Fulham readily acknowledges, and on the relative movements of values. This cannot be predicted, but I know that The Times and the hon. and learned Gentleman have both suggested that rateable values of houses might treble.

Even if this were true, and I want to take it as an assumption—not that we have any idea that it is necessarily true but one has to have an assumption in order to answer that question—it will, of course, be substantially, though not wholly, offset by the re-rating of industry, the lesser rerating of shops, offices and hotels, and the revalution of both those large groups from 1955 to 1962 prices. Even on this assumption of a treble increase, the resulting share of householders as a class, without taking into account the revaluation from 1955 to 1962, which we cannot yet judge, would not rise by more than about 40 per cent. That, of course, does not take into account the revaluation of industry and the revaluation of shops and offices.

In any case, the trebling of the rateable value of houses is not my right hon. Friend's information. It is, at best, a guess. It may well be right or wrong, but it is certainly not the informed advice given to the Government. We cannot now predict whether, and how much, derating will be necessary or justified, but in a year or fifteen months' time, when the decision has to be taken, we shall have information from the valuers, and shall know the current state of earnings in industry—

Mr. Diamond

rose—

Sir K. Joseph

I am sorry, I cannot give way.

Before we put a recommendation to Parliament for the amount, if any, of derating, we can also take into account the implications of the scales of deduction which my right hon. Friend is considering, but here I come to a repetition of my right hon. Friend's assurance. He said that under a certain set of assumptions, and those assumptions can be consulted in HANSARD tomorrow, the share falling on householders—and I repeat that this was on a certain set of assumptions—will be greatly increased; by perhaps one-third or more. He went on to say that the Government do not think that sudden changes of this magnitude are defensible. That is the justification both for Clause 2 and for the whole of the Bill against which the Opposition propose to divide.

On the other hand, it would not be right for me to give an assurance that absolutely no increase would fall on householders at all. Hon. Members opposite have made great play of their call for an inquiry, but they have been very tentative about that. It is very laudable and right that they should be so tentative when they have so few ideas to put forward on the subject. Even the hon. Member for Huddersfield, West (Mr. Wade) made, for one whom I have always thought of as a passionate, enthusiastic and well-informed advocate of site valuation, a very hesitant and tentative speech.

Apart from the suggestion about site values, very few alternative ideas have ben produced in this debate by hon. Members opposite, and site value has been rejected by Committees and Commissions four times in this century. There are all sorts of difficulties in that idea. Difficulties about land, and difficulties caused by the control that planning already puts on land, are never dealt with by the protagonists of this alternative.

As for the suggestion made by the hon. Member for Fulham to rate empty properties, surely even he must realise that this could produce only a minute fraction of the contribution necessary. He quoted Scotland as an example, without knowing, or remembering, that the Scots are departing rapidly from that system by taking powers to rate only those sites that have been empty for a long time.

I do not want to ignore suggestions that consideration should be given to alternative systems of rating, but my right hon. and learned Friend the Member for Hertfordshire, East was right when he said that we should give the present rating system a chance before we judge it. Surely those who so easily advocate some alternative system, having never even taken the trouble to work it out in detail, must have the imagination to realise that any alternative system would probably have as many anomalies, or more, as that which they have so freely criticised today.

There are many features which, for lack of time, I have had to omit. I should have liked to have been able to explain how we have gone beyond the Pritchard Report and the Wolfenden Report on Sport. They recommended giving discretion to local authorities to remit rates on charities. The 50 per cent. for charities will remain, but local authorities will be able now to remit altogether, or partially, the rates of all sorts of bodies on the fringe of charity and in the sphere of recreation; not only athletic but mental recreation as well.

I wish that I had time to deal with the Ritson Report on plant and machinery, and I must apologise to the House for sparing hon. Members an outline of the details of the water Clauses in the Bill.

I conclude by making two points. First, the Bill is another plank in the Government's programme of vitalising and invigorating local authority finance. No one can deny that to restore the uniform valuation on current values of all the main sources of rates can only enhance the independent resources of local government. Secondly, there are a number of smaller features in the Bill which show how much importance we attach to the modern techniques which local authorities should use to compete with their problems. For instance, I should have liked to discuss how the abolition of rate books, that centuries old phrase, will enable modern techniques to be used by local authorities.

There is no time for all this, and I come to the final question before the House. The Bill puts rating on a proper, equitable basis. It ends the state of transition frozen before the war by which the system has been distorted, but also it means that, like all transitions, the ending of it creates its own difficulties. By the Bill there will be current valuations for all the main sources of rateable value, subject only to my right hon. Friend's power to ease the impact on householders for a limited transitional period.

Everyone grumbles about rates and people, not only in this Chamber, casually or seriously, are apt to mention alternative systems which they are sure would be much better, but the fact is that no one has yet brought forward any convincing evidence of a generally preferable way of financing local authority services. They pray in aid tax, and the fact that the taxpayer already makes a huge contribution to local authority services, forgetting that would make local authorities lose their independence, which I would have thought hon. Members on both sides were united on wanting to foster.

The debate has preduced no convincing alternative system. There is no reason to think that if there was the inquiry which has been asked for that would produce an alternative which would be just round the corner. But 1963 is around the corner. If the Bill is not passed, householders will bear the full impact of current valuations without the relief given by industrial rerating. If the Bill is not passed, my right hon. Friend will not have the power to ease the end of the standstill period for householders.

As usual, the Opposition are taking a cowardly and negative attitude. They are hiding behind an inquiry. The Opposition are posing as a lifesaver, having thrown away the life belts. That is why I ask hon. Members to support this logical, coherent, and yet humane Measure, and to give it a Second Reading by a substantial majority.

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

The House divided: Ayes 298, Noes 216.

Division No. 18.]	AYES	[9.59 p.m.
Agnew, Sir Peter	Erroll, Rt. Hon. F. J.	Linstead, Sir Hugh
Aitken, W. T.	Farey-Jones, F. W.	Litchfield, Capt. John
Allan, Robert (Paddington, S.)	Farr, John	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Allason, James	Finlay, Graeme	Longbottom, Charles
Alport, Rt Hon. C. J. M.	Fisher, Nigel	Longden, Gilbert
Atkins, Humphrey	Fletcher-Cooke, Charles	Loveys, Walter H.
Balniel, Lord	Foster, John	Low, Rt. Hon. Sir Toby
Barlow, Sir John	Fraser, Ian (Plymouth, Sutton)	Lucas, Sir Jocelyn (Portsmouth, S.)
Barter, John	Freeth, Denzil	Lucas-Tooth, Sir Hugh
Batsford, Brian	Galbraith, Hon. T. G. D.	MacArthur, Ian
Baxter, Sir Beverley (Southgate)	Gammans, Lady	McLaughlin, Mrs. Patricia
Beamish, Col. Tufton	Gardner, Edward	Maclean, Sir Fitzroy (Bute & N. Ayrs.)
Bell, Ronald (S. Bucks.)	George, J. C. (Pollok)	Macleod, Rt. Hn. Iain (Enfield, W.)
Bennett, F. M. (Torquay)	Gibson-Watt, David	MacLeod, John (Ross & Cromarty)
Bennett, Dr. Reginald (Gos & Fhm)	Glover, Sir Douglas	McMaster, Stanley R.
Berkeley, Humphry	Glyn, Dr. Alan (Clapham)	Macmillan, Rt. Hn. Harold (Bromley)
Bevins, Rt. Hon. Reginald (Toxteth)	Glyn, Sir Richard (Dorset, N.)	Maddan, Martin
Bidgood, John C.	Gough, Frederick	Maginnis, John E.
Biggs-Davison, John	Gower, Raymond	Manningham-Buller, Rt. Hn. Sir R.
Birch, Rt. Hon. Nigel	Grant-Ferris, Wg Cdr. R. (Nantwich)	Markham, Major Sir Frank
Bishop, F. P.	Green, Alan	Marshall, Douglas
Black, Sir Cyril	Gresham Cooke, R.	Marten, Neil
Bossom, Clive	Grimond, J.	Matthews, Gordon (Meriden)
Bowen, Roderic (Cardigan)	Grimston, Sir Robert	Mawby, Ray
Box, Donald	Gurden, Harold	Maxwell-Hyslop, R. J.
Boyd-Carpenter, Rt. Hon. John	Hall, John (Wycombe)	Maydon, Lt.-Cmdr. S. L. C.
Braine, Bernard	Hamilton, Michael (Wellingborough)	Mills, Stratton
Brewis, John	Hare, Rt. Hon. John	Molson, Rt. Hon. Hugh
Bromley-Davenport, Lt.-Col. W. H.	Harris, Frederic (Croydon, N. W.)	Montgomery, Fergus
Brooke, Rt. Hon. Henry	Harris, Reader (Heston)	More, Jasper (Ludlow)
Brooman-White, R.	Harrison, Brian (Maldon)	Morgan, William
Browne, Percy (Torrington)	Harvey, Sir Arthur Vere (Macclesf'd)	Morrison, John
Bullard, Denys	Hastings, Stephen	Mott-Radclyffe, Sir Charles
Bullus, Wing Commander Eric	Hay, John	Neave, Airey
Burden, F. A.	Henderson, John (Cathcart)	Nicholls, Sir Harmar
Butcher, Sir Herbert	Henderson-Stewart, Sir James	Nicholson, Sir Godfrey
Butler, Rt. Hn. R. A. (Saffron Walden)	Hendry, Forbes	Noble, Michael
Campbell, Sir David (Belfast, S.)	Hicks Beach, Maj. W.	Nugent, Sir Richard
Campbell, Gordon (Moray & Nairn)	Hiley, Joseph	Oakshott, Sir Hendrie
Carr, Compton (Barons Court)	Hill, J. E. B. (S. Norfolk)	Orr, Capt. L. P. s.
Cary, Sir Robert	Hirst, Geoffrey	Orr-Ewing, C. Ian
Channon, H. P. G.	Hobson, John	Osborn, John (Hallam)
Chataway, Christopher	Holland, Philip	Osborne, Cyril (Louth)
Clark, Henry (Antrim, N.)	Hollingworth, John	Page, John (Harrow, West)
Clarke, Brig, Terence (Portsmth, W.)	Holt, Arthur	Pannell, Norman (Kirkdale)
Cleaver, Leonard	Hopkins, Alan	Partridge, E.
Cole, Norman	Hornby, R. P.	Pearson, Frank (Clitheroe)
Collard, Richard	Hornsby-Smith, Rt. Hon. Patricia	Peel, John
Cooke, Robert	Howard, Gerald (Cambridgeshire)	Percival, Ian
Cooper, A. E.	Howard, Hon. G. R. (St. Ives)	Peyton, John
Cooper-Key, Sir Neill	Hughes-Young, Michael	Pickthorn, Sir Kenneth
Cordle, John	Hulbert, Sir Norman	Pike, Miss Mervyn
Corfield, F. V.	Hurd, Sir Anthony	Pitman, I. J.
Costain, A. P.	Hutchison, Michael Clark	Pitt, Miss Edith
Coulson, J. M.	Iremonger, T. L.	Pott, Percivall
Courtney, Cdr. Anthony	Irvine, Bryant Godman (Rye)	Powell, Rt. Hon. J. Enoch
Critchley, Julian	Jackson, John	Price, H. A. (Lewisham, W.)
Crosthwaite-Eyre, Col. O. E.	Jenkins, Robert (Dulwich)	Prior, J. M. L.
Crowder, F. P.	Johnson, Dr. Donald (Carlisle)	Prior-Palmer, Brig. Sir Otho
Cunningham, Knox	Johnson, Eric (Blackley)	Profumo, Rt. Hon. John
Curran, Charles	Johnson Smith, Geoffrey	Proudfoot, Wilfred
Currle, G. B. H.	Jones, Rt. Hn. Aubrey (Hall Green)	Quennell, Miss J. M.
Dalkeith, Earl of	Joseph, Sir Keith	Ramsden, James
Dance, James	Kaberry, Sir Donald	Rawlinson, Peter
d'Avigdor-Goldsmid, Sir Henry	Kerans, Cdr. J. S.	Redmayne, Rt. Hon. Martin
Deedes, W. F.	Kerby, Capt. Henry	Rees, Hugh
de Ferranti, Basil	Kerr, Sir Hamitton	Rees-Davies, W. R.
Digby, Simon Wingfield	Kimball, Marcus	Renton, David
Donaldson, Cmdr. C. E. M.	Kitson, Timothy	Ridley, Hon. Nicholas
Doughty, Charles	Lambton, Viscount	Ridsdale, Julian
Drayson, G. B.	Lancaster, Col. C. G.	Rippon, Geoffrey
du Cann, Edward	Langford-Holt, J.	Roberts, Sir Peter (Heeley)
Duncan, Sir James	Leather, E. H. C.	Robinson, Sir Roland (Blackpool, S.)
Duthie, Sir William	Leavey, J. A.	Robson Brown, Sir William
Eccles, Rt. Hon. Sir David	Leburn, Gilmour	Roots, William
Elliot, Capt. Walter (Carshalton)	Legge-Bourke, Sir Harry	Ropner, Col. Sir Leonard
Emery, Peter	Lewis, Kenneth (Rutland)	Royle, Anthony (Richmond, Surrey)
Emmet, Hon. Mrs. Evelyn	Lilley, F. J. P.	Sandys, Rt. Hon. Duncan
Errington, Sir Eric	Lindsay, Martin	Scott-Hopkins, James
Seymour, Leslie	Temple, John M.	Ward, Dame Irene (Tynemouth)
Sharples, Richard	Thatcher, Mrs. Margaret	Watkinson, Rt. Hon. Harold
Shaw, M.	Thomas, Leslie (Canterbury)	Watts, James
Shepherd, William	Thomas, Peter (Conway)	Webster, David
Simon, Sir Jocelyn	Thompson, Kenneth (Walton)	Wells, John (Maidstone)
Skeet, T. H. H.	Thompson, Richard (Croydon, S.)	Whitelaw, William
Smyth, Brig. Sir John (Norwood)	Thorneycroft, Rt. Hon. Peter	Williams, Dudley (Exeter)
Soames, Rt. Hon. Christopher	Thornton-Kemsley, Sir Colin	Williams, Paul (Sunderland, S.)
Spearman, Sir Alexander	Thorpe, Jeremy	Wills, Sir Gerald (Bridgwater)
Stanley, Hon. Richard	Tiley, Arthur (Bradford, W.)	Wilson, Geoffrey (Truro)
Stevens, Geoffrey	Tilney, John (Wavertree)	Wolrige-Gordon, Patrick
Steward, Harold (Stockport, S.)	Turner, Colin	Wood, Rt. Hon. Richard
Stodart, J. A.	Turton, Rt. Hon. R. H.	Woodhouse, C. M.
Stoddart-Scott, Col. Sir Malcolm	van Straubenzee, W. R.	Woodnutt, Mark
Storey, Sir Samuel	Vane, W. M. F.	Woollam, John
Studholme, Sir Henry	Vaughan-Morgan, Sir John	Worsley, Marcus
Summers, Sir Spencer (Aylesbury)	Vickers, Miss Joan	Yates, William (The Wrekin)
Talbot, John E.	Vosper, Rt. Hon. Dennis
Tapsell, Peter	Wade, Donald	TELLERS FOR THE AYES:
Taylor, Sir Charles (Eastbourne)	Wakefield, Edward (Derbyshire, W.)	Colonel J. H. Harrison and
Taylor, W. J. (Bradford, N.)	Wakefield, Sir Wavell (St. M'lebone)	Mr. Bryan.
Teeling, William	Walker-Smith, Rt. Hon. Sir Derek
NOES
Abse, Leo	Forman, J. c.	MacPherson, Malcolm (Stirling)
Ainsley, William	Fraser, Thomas (Hamilton)	Mallalieu, E. L. (Brigg)
Allaun, Frank (Salford, E.)	Gaitskell, Rt. Hon. Hugh	Mallalieu, J. P. W. (Huddersfield, E.)
Awbery, Stan	Galpern, Sir Myer	Manuel, A. C.
Bacon, Miss Alice	George, Lady Megan Lloyd	Mapp, Charles
Baird, John	Ginsburg, David	Marsh, Richard
Baxter, William (Stirlingshire, W.)	Gooch, E. G.	Mason, Roy
Beaney, Alan	Gordon Walker, Rt. Hon. P. C.	Mayhew, Christopher
Bellenger, Rt. Hon. F. J.	Gourlay, Harry	Mendelson, J. J.
Bence, Cyril (Dunbartonshire, E.)	Greenwood, Anthony	Millan, Bruce
Benson, Sir George	Grey, Charles	Milne, E. J.
Blackburn, F.	Griffiths, David (Rother Valley)	Mitchison, G. R.
Blyton, William	Griffiths, Rt. Hon. James (Llanelly)	Monslow, Walter
Boardman, H.	Griffiths, W. (Exchange)	Moody, A. s.
Bowden, Herbert W. (Leics, S. W.)	Hall, Rt. Hon. Clenvil (Colne Valley)	Morris, John
Bowles, Frank	Hamilton, William (West Fife)	Mort, D. L.
Boyden, James	Hannan, William	Moyle, Arthur
Braddock, Mrs. E. M.	Hayman, F. H.	Neal, Harold
Brockway, A. Fenner	Healey, Denis	Noel-Baker, Francis (Swindon)
Broughton, Dr. A. D. D.	Hill, J. (Midlothian)	Oliver, G. H.
Brown, Alan (Tottenham)	Hilton, A. V.	Oram, A. E.
Brown, Thomas (Ince)	Houghton, Douglas	Oswald, Thomas
Butler, Herbert (Hackney, C.)	Howell, Charles A.	Owen, Will
Butler, Mrs. Joyce (Wood Green)	Hoy, James H.	Padley, W. E.
Callaghan, James	Hughes, Cledwyn (Anglesey)	Paget, R. T.
Castle, Mrs. Barbara	Hughes, Emrys (S. Ayrshire)	Pannell, Charles (Leeds, W.)
Chetwynd, George	Hughes, Hector (Aberdeen, N.)	Pargiter, G. A.
Cliffe, Michael	Hunter, A. E.	Parker, John (Dagenham)
Collick, Percy	Irvine, A. J. (Edge Hill)	Parkin, B. T. (Paddington, N.)
Corbet, Mrs. Freda	Irving, Sydney (Dartford)	Pavitt, Laurence
Craddock, George (Bradford, S.)	Janner, Barnett	Pearson, Arthur (Pontypridd)
Cronin, John	Jay, Rt. Hon. Douglas	Peart, Frederick
Crosland, Anthony	Jeger, George	Pentland, Norman
Crossman, R. H. S.	Jenkins, Roy (Stechford)	Plumtner, Sir Leslie
Cullen, Mrs. Alice	Johnson, Carol (Lewisham, S.)	Prentice, R. E.
Darling, George	Johnston, Douglas (Paisley)	Price, J. T. (Westhoughton)
Davies, G. Elfed (Rhondda, E.)	Jones, Rt. Hn. A. Creech (Wakefield)	Probert, Arthur
Davies, Harold (Leek)	Jones, Dan (Burnley)	Proctor, W. T.
Davies, Ifor (Gower)	Jones, Jack (Rotherham)	Pursey, Cmdr. Harry
Davies, S. O. (Merthyr)	Jones, J. Idwal (Wrexham)	Randall, Harry
Deer, George	Jones, T. W. (Merioneth)	Rankin, John
de Freitas, Geoffrey	Kelley, Richard	Reid, William
Delargy, Hugh	Kenyon, Clifford	Rhodes, H.
Dempsey, James	Key, Rt. Hon. C. W.	Roberts, Goronwy (Caernarvon)
Diamond, John	Lawson, George	Robinson, Kenneth (St. Paneras, N.)
Dodds, Norman	Ledger, Ron	Ross, William
Donnelly, Desmond	Lee, Frederick (Newton)	Shinwell, Rt. Hon. E.
Driberg, Tom	Lee, Miss Jennie (Cannock)	Short, Edward
Dugdale, Rt. Hon. John	Lever, Harold (Cheetham)	Silverman, Julius (Aston)
Edelman, Maurice	Lever, L. M. (Ardwick)	Skeffington, Arthur
Edwards, Rt. Hon. Ness (Caerphilly)	Lewis, Arthur (West Ham, N.)	Slater, Mrs. Harriet (Stoke, N.)
Edwards, Robert (Bilston)	Lipton, Marcus	Slater, Joseph (Sedgefield)
Edwards, Walter (Stepney)	Loughlin, Charles	Small, William
Evans, Albert	Mabon, Dr. J. Dickson	Smith, Ellis (Stoke, S.)
Fernyhough, E.	MacColl, James	Snow, Julian
Finch, Harold	McInnes, James	Sorensen, R. W.
Fitch, Alan	McKay, John (Wallsend)	Soskice, Rt. Hon. Sir Frank
Fletcher, Eric	Mackie, John	Spriggs, Leslie
Foot, Dingle (Ipswich)	McLeavy, Frank	Steele, Thomas
Foot, Michael (Ebbw Vale)	MacMillan. Malcolm (Western Isles)	Stewart, Michael (Fulham)

Stonehouse, John	Thompson, Dr. Alan (Dunfermline)	Wigg, George
Stones, William	Thomson, G. M. (Dundee, E.)	Wilcock, Group Capt. C. A. B.
Strachey, Rt. Hon. John	Thornton, Ernest	Willey, Frederick
Strauss, Rt. Hn. G. R. (Vauxhall)	Timmons, John	Williams, D. J. (Neath)
Stross, Dr. Barnett (Stoke-on-Trent, C.)	Tomney, Frank	Williams, W. R. (Openshaw)
Summerskill, Dr. Rt. Hon. Edith	Wainwright, Edwin	Willis, E. G. (Edinburgh, E.)
Swain, Thomas	Warbey, William	Winterbottom, R. E.
Swingler, Stephen	Watkins, Tudor	Woodburn, Rt. Hon. A.
Sylvester, George	Weltzman, David	Yates, Victor (Ladywood)
Symonds, J. B.	Wells, Percy (Faversham)	Zilliacus, K.
Taylor, Bernard (Mansfield)	Wells, William (Walsall, N.)
Thomas, George (Cardiff, W.)	White, Mrs. Eirene	TELLERS FOR THE NOES:
Thomas, Iorwerth (Rhondda, W.)	Whitlock, William	Mr. Rogers and Mr. Redhead

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills.)