HC Deb 19 July 1961 vol 644 cc1278-86

".—(1) In valuing for rating purposes any right which constitutes a separate hereditament by virtue of section fifty-six of the Act of 1948 (rating of advertising stations), the rent at which the hereditament might be expected to be let shall be estimated on the footing that it would include a proper amount in respect of any structure for the time being available for use, for the purpose of exhibiting advertisements, by the occupier of the separate hereditament, notwithstanding that the structure was provided by him or was provided after the right was let out or reserved.

(2) Notwithstanding anything in the said section fifty-six the separate hereditament shall be treated as coming into existence at the earliest time at which either any structure is erected, after the right constituting the hereditament has been let out or reserved, for enabling the right to be exercised or any advertisement is exhibited in pursuance of the right, and not before: and for the purposes of subsection (2) of section forty-two of the Act of 1948 (cases in which alterations of valuation lists are not to be retrospective to beginning of rating period)—

  1. (a) the hereditament shall be treated as a newly erected or newly constructed hereditament coming into occupation at the said earliest time, and
  2. (b) the erection, dismantling or alteration, after that time, of any structure for enabling the right to be exercised shall, in relation to the hereditament, be treated as the making of structural alterations.

(3) In this section and section fifty-six of the Act of 1948 references to a structure include references to a hoarding, frame, post, wall or sign and accordingly in that section the words' hoarding, frame, post, wall or' shall cease to have effect.

(4) This section shall have effect for the purposes of valuation lists coming into force at any time after the passing of this Act."

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

I beg to move, That this House doth agree with the Lords in the said Amendment.

Would it be possible, Mr. Deputy-Speaker, also to take the Lords Amendment in page 36, line 11, at end insert: In section fifty-six, the words 'hoarding, frame, post, wall or'".

Mr. Deputy-Speaker (Sir Gordon Touche)

If that would be convenient to the House.

Sir K. Joseph

Thank you, Mr. Deputy-Speaker.

In Section 56 of the Local Government Act, 1948, the right to use land for advertising purposes is deemed to be a separate hereditament distinct from the land on which the right is created, but the separate hereditament for rating purposes was held by the House of Lords recently to be a right let out, not the corporeal structure, which was created by erecting the advertising station in exercise of that right. It is plain from the judgment in the House of Lords that up to 1948 the structure itself was certainly deemed to be rated. The House of Lords decision does mean that from 1948 and at the present moment the structure is not taken into account.

This new Clause in its first subsection provides that a structure shall be taken into account when estimating the rateable value of the separate hereditament, Subsections (2) and (3) do something quite different, but still, of course, connected with advertising stations. They defer the rateability of the right to advertise till the right is actually exercised. At the moment, the right of advertising is rateable as soon as the right is itself created, even before it is exercised. Subsection (4) brings these new provisions into force from 1st April, 1963. The first two subsections are to some extent mutually compensating, that is to say, subsection (1) imposes an additional burden on the advertising industry, by restoring the position prior to 1948, while subsections (2) and (3) are to the advertising industry an advantage, by deferring the rateability till the right to advertise is exercised.

The House will wish to know to what extent the burden will probably afflict the advertising industry. Obviously, it is very difficult for me to judge this because each case will be considered on its merits. But in the case where the House of Lords came to the decision to which I have referred a rateable value of £150 was increased in the case of the Imperial Tobacco Company, which was the advertising concern, by £15. That is an increase of 10 per cent. I cannot possibly tell to what extent that is typical, but it gives a scale by which hon. Members can judge.

I am advised that valuation officers are most unlikely to include in their rateable value anything, for instance, for the light bulbs or the switch gear involved. Therefore, I feel that the figure is not likely to be very large.

Finally, perhaps I should say that since advertising stations are among those hereditaments that are at the moment not only valued on 1955 levels but are not benefiting by any derating, there is likely to be a shift in their favour in the share of the rate burden they bear when in 1963 other groups of ratepayers are moved on to current value over a longer period of years or lose some element of derating.

Mr. Mitchison

The Parliamentary Secretary will be sorry to hear that he has rather let me down over this. I had this point put to me by one of my hon. Friends while the Bill was still under consideration in this House. I was shown a letter from the Parliamentary Secretary saying that this was a very complicated matter and that the Government were not yet ready to legislate about it. Bearing in mind the advice so frequently given to us by the Minister and by the Parliamentary Secretary himself in the course of the Bill, that they expected to have a new Rating Bill every five years—a dreary prospect, I think—I said to my hon. Friend, "I think we had better let them see what conclusions they have arrived at." But I am bound to say that I did not expect them to wait till the Bill had left the House and then, suddenly, introduce this new Clause in another place. I see the hon. Gentleman is shaking his head very violently. I should hate to see it fall off. Will he tell me why this was done?

Sir K. Joseph

With the permission of the House, I will answer the hon. and learned Gentleman. I think the facts were that the noble Lord, Lord Milverton, put down an amendment of this order but asked to withdraw it so that the Government could amend it slightly. But the initiative was with the noble Lord.

Mr. Mitchison

Had it not been for the Parliamentary Secretary's letter, the initiative would have been with a mere commoner and would have taken effect, as it were, in this House instead of in another place. I am simply telling the hon. Gentleman that what he is now doing is not altogether consistent with what was said at an earlier stage. This is all part of the Opposition's time-honoured privilege of teasing the Government. They must not take it in this case too desperately seriously.

I turn from that to the Clause itself. There are moments when one is tempted to think that there are principles in rating, but it is a temptation which should be stubbornly resisted. If there is any principle in rating, it is surely not to go and rate a right. That was what was done in the 1948 Act. The Government rated the right but not the structure. The Imperial Tobacco Company acquired a right and put up a whale of a structure. I understand that it said "Players Please" in very bright red letters hung out over Bradford. None of my hon. Friends from Bradford is here, but Bradford is not in all respects the most beautiful city in the country. Apparently, the Imperial Tobacco Company succeeded in making it almost worse.

5.15 p.m.

When someone tried to rate the company for this horror, it successfully said, "All that we can be rated on is the right to put it up and not what we do when we put it up." Now the Government are going to make the punishment fit the crime, as the old song goes. If anyone puts up a very large and conspicuous advertisement he may have to pay a small amount of rates as a sort of local government penalty for doing so. That is all to the good.

It is easy to look back at these things and to say that this Section of the 1948 Act was wrong in rating principle, if, I repeat, there is such a thing as rating principle, but this, I believe, is how the trouble has arisen. As far as we are concerned on this side of the House, I think we all feel that this is a correction of what was, using hindsight, rather a mistake in drafting or in the form of the Section and which resulted in the decision which is now intended not, I would say, to correct but to supersede.

Mr. Graham Page

I can assure the hon. and learned Member for Kettering (Mr. Mitchison) that what he claims as a privilege for the Opposition in teasing the Government is not an exclusive privilege. Here we have, once again, a case of a very important Clause being brought to us at a very late stage in the Bill, and, again, I register a mild protest about this. I register a rather stronger protest that this is yet another case in which the Legislature steps in as a court of appeal.

In the last new Clause which we were discussing we were upsetting a case in the courts. We are doing exactly the same again with this Clause. I am afraid that litigants will feel that if they have the valuation officer as the defendant it will be no good carrying on with the litigation at all because the Government will step in at the right moment, even between the court of first instance and the court of appeal, and settle the matter in favour of the valuation officer. That is what has been done in this case.

Mr. Mitchison

We are only following the precedent of Income Tax decisions.

Mr. Page

Indeed that is so, and that is why I am complaining about it. We are introducing into rating legislation a principle recognised in Income Tax legislation.

The practice of rating the rental value of the site without taking into account the structures provided by the tenant of the site has been a recognised form of valuation for many years now. It has been the practice adopted in the case of advertising sites, except that from 1956 the valuation officers have made an effort to change this, and the House of Lords, in the case to which my right hon. Friend referred, confirmed the form of practice and, in fact, said that the valuation officers were wrong. So my right hon. Friend comes to the House at this late stage to put the valuation officers right. My hon. Friend the Parliamentary Secretary led us to believe that no very great amount was involved in this. May I inform him and the House that already, without rating the structures on these sites, rates fall on average to around 20 per cent. of the earnings from the sites?

I am taking a very average figure. That is not, of course, comparable in any way with the rates payable by a shopkeeper compared with his turnover, which are something between 2 per cent. and 4 per cent. These structures on advertising sites are in no way comparable with, say, shop fronts. Everyone knows that improvements made to shop fronts, even by a tenant, may attract a greater amount of rates, but the structures on an advertising site are something more like the tools of trade of the poster site contractors rather than the structure on the land.

I notice that the new Clause goes a lot further than talking about structures. It includes for the first time the word "sign". It does not define what is meant by "sign", but I imagine that that could include something far more than permanent structures. My hon. Friend the Parliamentary Secretary gave as one example of an increase the case which was decided in the House of Lords. He said that if this Clause had then applied the increase would have been £15 on a £150 assessment. I have other figures and I was quoted one quite normal case in which the assessment is increased from £60 without the structure to £130 with the structure under the new Clause. I assure my hon. Friend that that was quite a simple structure.

All these structures are quite simple and it was recognised in the 1948 Act that the right thing to do was to exclude them from rateable value and to treat them merely as temporary structures, as a frame for the advertisements and not part of the land to be rated. It should be put on record that the new Clause will place a considerable burden on poster-site contractors and is likely to be a discouragement to the improvement of advertising sites.

Mr. Ronald Bell (Buckinghamshire, South)

I do not like to lose any opportunity on these occasions of disagreeing with my hon. Friend the Member for Crosby (Mr. Graham Page). I should like to do so now at the outset, because I do not think it is quite fair to describe this kind of amendment in the law as flouting a decision of the courts. The phrase is frequently used, but what we are doing is to make an amendment of the law based upon a decision of the courts already arrived at. We do not reverse or prejudice the position of the parties in the litigation itself. Any practitioner in the law, and my hon. Friend the Member for Crosby is one, will know that at the end the question is who will pay the costs. Nothing that we do now will affect the successful litigant's costs and, therefore, he is not really prejudiced.

My hon. Friend the Parliamentary Secretary said that the owner of the hereditaments here would not have enjoyed any amount of derating and would be assessed on more or less current rental values. If that is the case it is rather harsh. It is not presumably an industrial hereditament and does not enjoy 50 per cent. industrial derating. It is not a dwellinghouse and does not enjoy the advantage of being on pre-war rental values. It is not a commercial hereditament and does not enjoy the percentage of mitigation which we gave by a separate Act. In other words, these wretched owners of advertising sites seem to be in the unique position in rating law as the only people who pay an entirely undiminished rate on rental values.

Sir K. Joseph

No, this is the law as it is at the moment. The Bill does not alter it in any way. I was only comforting the advertising industry by saying that since this is so and other ratepayers will suffer a larger movement in 1963, these people's share of the rate burden in 1963 will tend to diminish.

Mr. Bell

I understand that, but it is rather left-handed comfort to these gentlemen, because what it comes to is that they pay an unfair share of the rates at the moment and will go on paying it until 1963 when at last they start to pay a fair share. My hon. Friend is saying in effect, "It is a beastly shame. It is most unfair, but it will stop being unfair in 1963."

On these occasions I also like to agree sometimes with my hon. Friend the Member for Crosby, and I agree with him now that there is great disadvantage in pushing these things through at the last stage of the Bill when we have to agree to Lords Amendments or disagree and have all the tiresome procedural consequences which follow on disagreement. I would wish that it were possible to draft Amendments at this stage to put these people in the position which in equity they should be in.

Lastly, this whole business of rating advertising sites is the final reductio ad absurdum of rating. To treat an advertising site as a hereditament and levy local rates on it is to illustrate in the most striking manner possible the basic absurdity, unreality and fallacy of our whole system of raising local rates.

Mr. F. P. Bishop (Harrow, Central)

I should like to ask my hon. Friend the Parliamentary Secretary a question, which I agree he has already partly answered. He has held out the prospect to the outdoor advertising industry of some jam tomorrow in the form of a probable reduction in its share of the rating liability when the new values come into force. The other half of the question, which I should like him to confirm so that the matter may be quite clear, is whether subsection (4) means that the new Clause involving rating the struc- ture as well as rating the right does not come into force until the new values come into effect in 1963.

Sir K. Joseph indicated assent

Mr. Bishop

I am glad to have that confirmation, because it means that the jam and the powder will come together and the powder will not have to be swallowed first.

Mr. Ede (South Shields)

The hon. Member should not be too sure.

Mr. Bishop

This is important, because I agree that this industry has been always rather harshly treated in legislation, and not only in the matter of rating. It is not in the public interest that it should be too severely treated in this matter particularly because, as my hon. Friend the Member for Crosby (Mr. Graham Page) has rightly said, if we put a severe burden by way of additional rates on the structure which an advertiser puts up it is a discouragement to putting up good and expensive structures and almost an incentive to putting up the sort of flimsy thing that it is in the public interest to discourage. I hope, therefore, that in the interests of the public as well as of the industry the powder which the industry will have to swallow in 1963 will be suitably and adequately covered by the jam which it can expect.

Mr. Ronald Bell

Has my hon. Friend observed the words relating to the valuation lists? As I understand, each year there is a new valuation list and, therefore, I am not sure that my hon. Friend is right about 1963.

Sir K. Joseph

My hon. Friend the Member for Harrow, Central (Mr. Bishop) is right in his assumption that subsection (4) will defer the effectiveness of the new Clause, in both its advantages and disadvantages, until 1963.

Question put and agreed to. [Special Entry.]