§ Order for Second Reading read.
§ 3.55 p.m.
§ The Minister of Housing and Local Government and Minister for Welsh Affairs (Sir K. Joseph)
I beg to move, That the Bill be now read a Second time.
The House will be relieved that on this occasion I am presenting a very short Bill. This, as its Title proclaims, is strictly an interim Measure. It is intended to bring some relief to areas and individuals hard hit by revaluation during the time while the wider issues involved in the whole of rating are being considered. A revaluation which brought the assessment of house property in one jump from a 1939, or a pre-war, valuation up to current 1963 values inevitably meant big changes in assessments for individual householders. However, the House will remember that at the same time as this happened the Government legislated to remove the concession which throughout this period had been available to industry.
As a result of these simultaneous movements, householders, as a group, did not come out of revaluation badly. Householders' share of the total expenditure falling on rates and rate-deficiency grants combined is virtually the same as it was before revaluation. However, as HON. MEMBERS will be quick to tell me, averages can conceal a great deal of variation. Some individual householders have found themselves bearing a larger share of the local rate burden, while others have found themselves bearing a smaller share.
As a result of what must appear to be an apparently haphazard movement of the share of the burden, there has been added force to the widespread charge that the rating system is at present unfair. It is said, and said widely, that rates cause hardship to many people of limited means, and the fear that this hardship will increase grows as people become aware of the rising trend—the inevitably rising trend in view of the 1261 policies of both sides of the House—of local government expenditure. It is commonly feared that under the present system local government expenditure will bear increasingly hardly on those least able to bear the burden.
As a result of these fears, there have been a number of suggestions for giving local government new sources of revenue. There have been only too many suggestions to increase assistance from the taxpayer. There have been a number of proposals to transfer part of the costs of local government from the ratepayer to the Exchequer. All these suggestions and these fears are of prime importance to the citizen himself and to local and central government. In the light of the revaluations, the first step was clearly to find out the precise facts.
We know—and as part of the argument, but only as part, I must again refer to averages—that the average householder in England and Wales will be paying rather more than £30 a year this year, which is about 11s. 6d. a week, in rates. We know that at one extreme there are 13 rating areas where the average householder pays less than £13 a year, about 5s. a week, and at the other extreme there are four rating areas where the average householder pays more than £78 a year, just more than 30s. a week. All those four areas are in the County of London. We know very little about what lies behind the averages and still less about the means of those who are called upon to pay; the circumstances in which the people live who are called on to bear these rising burdens.
I wish to emphasise that, with the greatest good will in the world, it would have been absolutely impossible to have investigated before revaluation the effects of revaluation on all the 15 million householders involved. Not even a battery of computers could have tackled the large range of variables with which we were confronted. It was not known until the last days before the new rate call was made what the rate call in each area would be. That was only one of the variables. It was not known until that time what the precept made on district councils would be, and it was not known until a few months before what the new valuation assessment would be. Nor was it known 1262 until then what the general grant would be.
The combination of all these variables, and the compressed timetable which was necessarily involved, made it absolutely impossible to anticipate the results. We come to the position, therefore, that there have been a number of complaints, and that there is no doubt that there has been a degree of hardship in a number of cases; that we know the averages but that we do not know the facts behind those averages. As a result of all this, my right hon. Friend the Secretary of State for Scotland and I last May appointed a committee, under Professor Allen,to assess the impact of rates on householders in different income groups in different parts of Great Britain, with special regard to any circumstances likely to give rise to hardship.The object was to get at the facts. The Government also responded to the widespread wish that the method of sharing the rising cost of local government expenditure between the ratepayer and the taxpayer should be looked at afresh. The Government have decided, therefore, to put in hand next year a comprehensive review of the financial relationship between central and local government and of the rating system. This decision was announced by my right hon. Friend the Chief Secretary some months ago.
I see from the expression on the face of the hon. Member for Fulham (Mr. M. Stewart) that he is preparing to make yet another speech of the selective type in which he will, no doubt, pick out some of the suggestions that have been made by Hon. Members opposite in recent debates and taunt me and the Government with them. It is easy enough to pick some suggestions out of the battery of those that have been made and say that the Government are now adopting them. I would remind the House that in this case—and I do not want to make a polemical speech—the Government have had the courage to bring the basis of valuation up to date.
This has needed a considerable amount of determination and I am sure that the House will agree that this was the right thing to have done. However, it is the Government's desire to mitigate and cushion any resultant hardship and to reconsider the situation in the light 1263 of the facts which have emerged. AH that the Opposition have been able to do all along is to urge an inquiry while, at the same time, flinching from the idea of bringing valuation up to date.
§ Mr. J. T. Price (Westhoughton)
May I remind the right hon. Gentleman of our deliberations on the Rating and Valuation Bill? I was a member of the Standing Committee which considered that Measure upstairs for several months. I can assure the Minister that all the results that have now flowed forth were laid at the feet of the Government during our debates at that time. The Government were warned then of what would happen. In fact, the right hon. Gentleman who is now the Home Secretary, but who was then in charge of the Bill, promised to take special steps to meet hardship where there was an increase in rates of over 30 per cent. All this is on the record and the right hon. Gentleman can read it in the Official Report.
§ Colonel Sir Tufton Beamish (Lewes)
On a point of order. Is the hon. Member entitled to make a speech in the middle of a speech being made by my right hon. Friend, Mr. Speaker?
§ Mr. Speaker
I think that the hon. Member was coming to the point when the use of an intervention was being abused.
§ Sir K. Joseph
The hon. Member for Westhoughton (Mr. J. T. Price) voted against the Bill which has led to revaluation, because he and his hon. Friends did not have the courage to modernise this country in rates, as in anything else.
In the review which the Government are undertaking and which was announced by my right hon. Friend the Chief Secretary, the facts produced by the Allen Committee will be highly relevant, but in the view of the Government it would not be right to delay all action until these facts and the results of the review become available. In view of the hardship that has been caused in some cases by exceptional rate increases resulting from revaluation, we do not believe that it would be right to wait until this comprehensive review is completed. The review is bound to take time.
1264 The Allen Committee, which has shown the greatest energy has had to mount the necessary field survey and will need time to digest the results of its investigations. The Committee will not be reporting before the early summer at the earliest, and then time will be needed for the review to be completed, after which further time will be needed for legislation to be prepared—if legislation is thought to be necessary.
It must, therefore, be a considerable time before any general result will be achieved by the combination of the Allen Committee and the Government's review. Since the Government admit that there is hardship in some cases, a delay of action until the review has been completed would not be right. On the other hand, I hope that HON. MEMBERS will agree that since we have set up the Allen Committee to establish the facts of hardship, it would be folly for us now to try to define hardship itself. We must devise a Measure which will bring relief without prejudging the results of the Allen Committee and the review. That is why the Bill is an interim Measure only.
The Bill does two things. First, it provides for grants to rating authorities based on the proportion of persons over 65 years of age in the local population. Secondly, it empowers local authorities to remit, in cases of hardship, the exceptional increases in domestic rate bills caused by revaluation, and it provides extra grants to enable them to do so. Unfortunately, it is not possible for the Government to direct general grant to individuals who are in difficulty. We must reach this objective in two stages: first, do what we can to direct grant to those areas which are likely to contain the majority of people who find themselves in difficulty; and, secondly, leave it to the local authority to use its own discretion to help those who are suffering hardship.
§ Mr. John Morris (Aberavon)
Would the Minister not agree that having to make decisions in this matter is placing a very heavy burden on local authorities?
§ Sir K. Joseph
I shall come to that point.
In deciding on the grant, I have chosen a grant based in the proportion of old 1265 people, for it seems to the Government that the areas in which rating increases have been the severest have generally been those with a high proportion of elderly living in them. Such areas come readily to mind. They tend most frequently to be the seaside towns and other areas to which people have retired; areas in which there is not a great deal of industry to share the rising local government expenditure. This limits the number of areas from which the majority of complaints have been coming, but judging from my correspondence, it is in such areas that cases of hardship are most likely to arise.
§ Sir K. Joseph
HON. MEMBERS opposite must face the fact that they have been clamouring for the Government to do something to relieve hardship. All I am saying is that I must judge from my postbag where the hardship is. The object of the Bill is to deal, on an interim basis, with hardship.
§ Mr. Marcus Lipton (Brixton)
Can the Minister explain why all the hardship—in the South Coast areas and health resorts—has been taking place in areas which are represented by Tory HON. MEMBERS? Does this not seem odd?
§ Sir K. Joseph
The hon. Member is seeking to prejudge the Allen Committee's Report. We must wait for that Committee to define hardship. From the evidence reaching me I can say that the Bill will enable the local authorities concerned—and they will not be only in the areas of the South Coast or in pleasure resorts—to have discretionary powers to deal with hardship.
The form of grant chosen ensures that of the available money more will go to the areas with most old people. As regards relief for the individual, the Bill empowers rating authorities to remit in cases of hardship what I might call the extraordinary increase in rate bills due to revaluation. This is defined in the Bill as the difference between the 1962–63 rates—that is the rates in the last pre-revaluation year—increased by 25 per cent., with a minimum of £5 increase—and the rates in the next year, 1964–65, which is the next rating year after the passage of the Bill.
1266 The amount remitted in any one year may not exceed the difference between these two figures, and there can be no remission unless there has been an increase of at least 25 per cent. over the two years. These limitations are intended, as I say, to isolate the extraordinary increases falling on individual householders due to revaluation.
The House will see that the Bill does not seek to define hardship, but leaves it to the local authorities to assess in the light of the resources and needs of the household concerned. I recognise that this may mean that householders in similar circumstances in different areas may fare differently, but until the Allen Committee has done its job it seems to me that it would be premature to seek to define hardship or the circumstances that give rise to it. I shall, however, try to give some guidance for the interim period in what I shall say in a moment.
Some will argue that relief from rates should be granted automatically—for instance, to old people; others, that relief should be linked with income—presumably with allowances for commitments of different sorts. These matters we shall have to study when the Allen Committee's Report is available; in the meantime, I am sure that we can rely on the sympathy and good sense of local authorities.
Doubts have been expressed about the ability of local authorities to decide when relief is justified—and here I come to the point put to me by the hon. Member for Aberavon (Mr. J. Morris). They will certainly have an invidious task, but it is one that their associations have accepted as inevitable in a Measure of this interim nature. Nor should it be supposed that local authorities are complete novices in this field. Rating authorities are also housing authorities and, as such, have a considerable experience in operating rent rebate schemes admittedly only for local authority houses.
I do not draw a complete analogy. True, in the operation of rent rebate schemes, they can rely on the regular contacts between rent collectors and local authority tenants, whereas in the consideration of rate rebates they will have to deal with a far wider section of society that local authority tenants alone. They will have to deal also with 1267 private tenants, owner-occupiers and private landlords—but the analogy still has some force.
I hope, at any rate, that in handling this discretion on rates that has been given them as an interim Measure, local authorities will adopt many of the practices followed by the most enlightened authorities in dealing with their rent rebate schemes. I am here particularly stressing that many authorities in dealing with rent rebates take great care to safeguard the anonymity of the applicant for a rent rebate. They deal with the application by using a code number instead of a name, so that the individual applying for rent rebate, in that case—or for a rate concession, in this case—can be sure that his or her privacy will be safeguarded. I commend that practice to the rating authorities.
Some people will have made a proposal for the reduction of their rating assessment and will not have had the result of their appeal, and it would be proper here to give them some advice. The Government's view is that nobody should be deterred from making an application for rate relief under the Bill because he has already made a proposal for reduction of assessment—the two are entirely separate. It is true that if a proposal has been made in the first six months of 1963–64, the ratepayer is ordinarily entitled to withhold half the difference between his 1962–63 rates and those for the current year, but this is only a temporary easement until the proposal is settled and, if no reduction results, the ratepayer may have substantial arrears to meet immediately.
The Bill assumes that rating authorities will grant relief despite an outstanding proposal, and Clauses 4(2) and 6(3) are included with precisely that point in mind. Thus, under Clause 4(2), a rating authority that has granted relief while a proposal is outstanding is required to review the relief if the proposal succeeds and, in adjusting rates for the reduction in rateable value, to take account of any change in the amount of relief. While, under Clause 6(3), provision is made to reduce by the amount of relief the amount of rates that can be temporarily withheld under the 1955 Act.
Hon. Members may feel that I should go a little further in guidance to local 1268 authorities on their use of discretion. I would add only this. People who benefit from National Assistance are already covered against increases in rates. I would expect, therefore, that most of those who receive remissions will be retired people, or other people on incomes that are above, but not so far above, the National Assistance level, and who cannot meet a steep increase in rates without denying themselves what have come to be regarded as necessities. There will be others who suffer hardship, although their means are not so restricted, because it takes time to adjust their pattern of spending to their means. I do not think that I can go further than that in advance of the Allen Committee's Report.
For the provisions of the Bill to affect next year's rates, it will be necessary for local authorities to take them into account when framing their budgets early in the coming year. If the House gives the Bill its Second Reading, I intend to invite local authorities to do this.
That is all I want to say by way of general introduction before turning to the Bill itself. To sum up, the purpose of the Bill is simply to give a measure of relief pending consideration of the Allen Report and of the outcome of next year's review. It is not a Bill to reform the rating system or to remodel the basis of local government finance.
I do not propose to dwell too long on the details of the Bill itself, because I know that, when he winds up the debate, my hon. Friend the Parliamentary Secretary will deal with questions raised in the debate, but I should like to draw attention to one or two salient points in the Clauses.
Clause 1 is, I think, simple to understand. It concentrates about £6 million on grants to rating areas with higher proportions of elderly people. This means that areas with well below the average number of elderly—that is, about 119 per 1,000—will get no grant, while those with the highest proportions will get some very useful help, though still modest in total. For example, on the 1961 figures, some of the retirement areas on the South Coast, where householders have been hard hit by revaluation and increases in expenditure since 1962–63, will get benefit 1269 amounting to over a 4d. rate, and between 30s. and 42s. a year for the average householder. Budleigh Salterton, Sidmouth, Bexhill and Worthing are four places that will benefit by that order of help.
On Clause 1, I would only draw attention to the last 13 words of subsection (2). The effect of those 13 words is that the grant paid to a rating area is retained there for the benefit of the local ratepayers, and no part is passed on through the precept to the county at large or any other precepting authority.
Clause 2 enables the rating authority to increase relief—
§ Mr. Charles Mapp (Oldham, East)
Before the Minister leaves Clause 1, will he tell the House why the Clause refers to people beyond the age of 65 rather than, as in so many other Bills, 65 and upwards?
§ Sir K. Joseph
The effect is exactly the same. It is over the age of 65. The hon. Gentleman may have a Committee point, but I do not think that he has any point of substance.
§ Sir K. Joseph
This is certainly not the intention. The hon. Member may have a good Committee point, but I think that he is wrong.
§ Mr. Michael Stewart (Fulham)
The right hon. Gentleman has mentioned some examples of authorities which will benefit. Could he confirm a report which has appeared in one of the papers that the City of London is one of the beneficiaries under Clause 1?
§ Sir K. Joseph
I have not the figures for all the authorities in mind. I have not seen that report and I cannot confirm it.
Clause 2 of the Bill enables a rating authority to grant relief to individual householders if two conditions are satisfied. The first is that between 1962–63 and 1964–65, the two years, the rates on the dwelling must have increased by more than one-quarter or by £5, if that is the greater. The one-quarter test will 1270 be the decisive one in the majority of cases. Anybody who paid £20 in rates in 1962–63, when the national average payment was £27 12s., will pass the £5 test if he passes the one-quarter test. I do not know how many dwellings will pass it. Indeed, nobody can know until the rate call for next year has been sent out and the rates have been made.
The other condition, that the rating authority must be satisfied that the increase in the level of rates since 1962–63 will cause hardship to the ratepayers, I have already referred to. There is little in the rest of the Clause that requires comment at this stage but I might perhaps draw attention to the two methods of affording relief under Clause 2(2).
In the cases covered by Clause 2(2,a) the residential occupier is a person who will be paying rates direct to the rating authority, and the obvious way of affording him relief is that provided by the Clause—the remission or refund of part of any rate or instalment of rate. The cases covered by paragraph (b) are those where the residential occupier pays rates indirectly, perhaps as part of an inclusive rent, or to the landlord as collector for the rating authority. The method to be used here is that of direct payments by the authority to the residential occupier. This is a method which I recognise at once will not necessarily commend itself to rating authorities. They will have no direct money dealings with the occupier and it will be relatively expensive administratively to arrange the payments under suitable safeguards.
On the other hand, there are considerations for adopting this relatively unorthodox course which in my view are compelling. First, in the case of controlled tenancies it would be necessary to amend the Rent Acts to ensure that any relief allowed through the landlord would reach the tenant. Secondly, in other cases where an inclusive rent is paid it might be impracticable to ensure that the relief got to and stayed with the residential occupier without a very complex series of Clauses. I suggest that the most direct and in the long run the simplest method is for the rating authority to make direct payments to the residential occupier in cases covered by Clause 2(2,b).
Clause 3 merely sets out the methods to be used in calculating rates for various 1271 years and rate periods for the purposes of Clause 2. Clause 4 contains provisions for varying or ending relief on a change of circumstances and for the adjustment of rate payments in that connection.
Clause 5 makes provision for Exchequer grants towards the cost of relief given under Clause 2. The rate of grant is to be 50 per cent. on the first 3 per cent. of gross rate income remitted, and 66⅔ per cent. on any amount in excess of 3 per cent. I would not like to give examples of the way that the Clause might work, because to do so it would be necessary to know the amount of relief likely to be granted by the authority chosen as an example, but from the various pointers which have reached me, and from correspondence and representations made from time to time by the rating authorities, I would expect that very few of them would reach the 3 per cent. limit.
Speaking very generally again, I would expect that the authorities which do exceed the 3 per cent. limit will be for the most part those with a large proportion of elderly people. People living on fairly small fixed incomes just above the National Assistance level are likely to form a large proportion of those granted relief. The authorities containing the largest proportion of elderly people will be, by hypothesis, the very authorities which will receive the largest share of grant under Clause 1. In many cases, therefore, Clause 1 is likely at least to make good any local increase in rates to meet relief under Clause 2.
This effect is made all the more likely by the provisions of Clause 6(2), the practical effect of which is to secure that the net cost to the rating authority of relief granted under Clause 2, after allowing for grant under Clause 5, is shared between the rating area and the areas of any other authority for which the rating authority is levying a rate. To put it in a nutshell, a rating authority receives grant under Clause 1 and holds it entirely for itself without having to pass any of it on by way of precept to the precepting authority, whereas under Clause 6(2) the rating authority is able to share any burden that remains on its ratepayers, due to the difference between 1272 the total cost of remission under Clause 2 and grant under Clause 5, with all the other authorities who make a precept. I hope, therefore, that the net effect of both provisions will be to minimise the burden, if any, remaining on those ratepayers who do not get remission in areas where the amount of remission is relatively heavy.
Clause 6(1) has the effect of preventing relief under the Bill from affecting the rate-deficiency grant percentages. I think that it is right to do this, especially since the relief is intended only as an interim measure.
I do not think that other Clauses need explanation at this stage. I hope that I have said enough to explain the general purposes of this interim Measure, and the interim and transitional part which it plays in the process which the Government are now undertaking; first, by way of the Allen Committee, followed by a general review, bearing in mind the results of revaluation, of the division of the rising local authority expenditure between ratepayer and taxpayer. Although this is a modest and interim Measure I believe it to be a useful one and I commend it to the House.
§ 4.28 p.m.
§ Mr. Michael Stewart (Fulham)
We are all indebted to the Minister for his clear exposition of the Bill. He said that some of the later Clauses did not call for explanation at this stage. I agree with him about "this stage", but they will call for a good deal of explanation later. Indeed, some of them could be more briefly written if mathematical symbols could have been applied throughout. [Laughter.] This is seriously so, and if the Minister undertakes the exercise of writing the later Clauses in algebraic form he will find that they will take up much less space. We shall be examining these matters, no doubt with interest, in Committee later.
This is an interim Bill to relieve hardship, and the hardship springs from the combination of various causes. One is that mentioned by the Minister when he spoke of the inevitably rising trend of local expenditure. This is basically the real fact that we are struggling with—that the nation is demanding a wider range of local government services, that 1273 the people who do this service could not in justice be excluded from wage and salary increases which other people have, and that the total amount of money which a local authority must raise is bound to increase. This is a fact which has been known for some time.
It is the combination of this with the fact that the general trend of Government policy has not been to give local authorities added help from the Exchequer, in view of this inevitable trend to greater total expenditure by the local authorities, and added finally to revaluation—all these things have introduced the hardship.
The Minister was at some pains to point cut that the exact effects of revaluation alone would have been very difficult to predict in advance. I think that we may accept that. What we cannot accept is that the other factors which would lead to hardship were unpredictable. It was known when the Rating and Valuation Act, 1961, was introduced that we were in a period of steadily rising local expenditure. The view that there ought to be a greater measure of Exchequer grant to meet that expenditure had been frequently expressed on this side of the House and rejected on that. We are, therefore, entitled to point out that we did draw the attention of the Minister's predecessor to the danger that a situation of this kind was bound to develop.
What was the proper step to take? Surely, it was, certainly by the time the 1961 Act was introduced, if not earlier, to set up an inquiry into the relationship between central and local government finance. That was exactly what we asked for on the Second Reading of the Rating and Valuation Bill. The Government could have got our support to that Second Reading if they had been prepared to set up such an inquiry, but they were not so prepared. I mention this because the Minister reproached us with not being prepared to give unconditional support to the Second Reading of that Bill and because he spoke of the Government's "courage" in introducing the revaluation.
In the first place, the Minister will remember that it was not the 1961 Act which actually caused the revaluation; it was already predetermined by earlier legislation. In the second place, I do not 1274 greatly admire the use of the word "courage" in this connection. The courage shown by members of the party opposite in inflicting hardships on people poorer than themselves has been well known on a number of occasions, and it is not a particularly creditable characteristic. As far back as the Second Reading of the 1961 Act, therefore, we urged that an inquiry into the relationship between central and local government finance should be instituted.
To continue the story of the background to this Bill, during the passage of the 1961 Bill through Committee, the Government were repeatedly told that it would lead to hardship and inequity between individuals but the only powers and provisions taken in that Measure were to operate if, in a whole rating area, the extra amount which had to be raised as a result of revaluation as a whole exceeded a prescribed figure. It was fairly easy for the Government to demonstrate afterwards that that condition had never been fulfilled in any particular county. However, the fact that it had never been fulfilled in that way did not preclude the circumstance that individuals in many parts of the country had found the amount which they had to pay shooting up as a result of revaluation alone by more than the 30 per cent. which was talked about in 1961. But no steps were taken at the time to deal with that possibility of individual hardship, and this is why we are having to consider the situation again now.
I add by way of background that it was not only on the Second Reading of the 1961 Measure that we on this side drew attention to the need for an inquiry into the relationship between central and local government finance. We did it also in a Motion which we moved in the House on 25th February, 1960. Later, there was a Motion with which the hon. Member for Brentford and Chiswick (Mr. D. Smith) was concerned. This was debated for some time, and, when it became apparent that the Government were not prepared to accept it, Hon. Members opposite proceeded to talk it out so as to avoid the embarrassment of a decision one way or another.
From several quarters, therefore, it was made clear to the Government that, sooner or later, something would have 1275 to be done about the individual hardships arising not only from revaluation, but from the combination of revaluation and the fact that the relationship between central and local government finance was not satisfactory and called for review.
However, the Conservative Party retained its view that such an inquiry was not necessary. I quote from "Pocket Politics", issued by the Conservative Central Office in January this year:It is surely only sensible to wait and see how this works out before considering an inquiry into the whole rating system.For nine months, it waited and saw. By that time, a number of HON. MEMBERS opposite from seaside constituencies had helped them to see.
§ Mr. M. Stewart
Yes, from January to October, 1963, when the Chief Secretary made a pronouncement. Speaking at Blackpool, he said:I think it is clear that the time is now ripe for a searching review of the relations between general and local government expenditure…
§ Sir K. Joseph
The hon. Gentleman is not being precise here. The time for judging how things have gone was after the revaluation and the rate call. The only delay here is from about May to the time when my right hon. Friend spoke in October.
§ Mr. Stewart
The Minister has not followed what I was saying. The point at issue here is not only the effect of revaluation, but the combination of that with the rising level of local government expenditure as a whole and the unsatisfactory relationship between central and local government finance. That is what we were pointing out to him years ago and what the Chief Secretary said, in October, 1963, ought to be inquired into.
The Chief Secretary was not talking just about the effect of revaluation. He spoke ofa searching review of the relations between general and local government expenditure….We will also review the rating system itself…Once again, there is this gap of two or three years between the time when we say something ought to be done and the time when a member of the Govern- 1276 ment—sometimes using the very phrases, "relations between central and local government expenditure", and so on—at last admits that it must be done.
Now, of course, we have what is, to put it frankly, a makeshift as well as an interim piece of legislation. If one chose to be puritanical and austere about it, as I see the leading articles in The Times are—though its one constructive suggestion for handling the matter does not seem to be much sounder than anything in the Bill—one could say that there are several objectionable principles in the Bill. However, one has to set that against the fact that the hardship is real and apparent and can be remedied in time only by a somewhat makeshift Measure. Therefore, perhaps we ought not to be too severe in criticising some of the unhappy principles embodied in the Bill.
I quote in this context a remark made many years ago by the right hon. and learned Member for St. Marylebone (Mr. Hogg), in a debate on something done by the Labour Government. When he was asked whether he disapproved of what had been done, he replied in these words, "If a man jumps off a precipice, and bounces from cliff to cliff, it is idle to ask whether one approves or disapproves of his bouncing. He should not have thrown himself off the precipice in the first place." I am quoting from memory. If the right hon. and learned Gentleman cares to look the passage up, he will, I think, find that I have not misrepresented him.
Vicious as some of the principles of the Bill are, it is idle to ask now whether one approves or disapproves of them. The Government, in their usual manner, threw themselves off the precipice and are now bouncing. The cushions must be found. Here, such as they are, we have them, so we have to ask ourselves whether these are the best kinds of cushions which at short notice can be put together.
Let us look at what the Bill actually proposes. As the Minister told us, Clause 1 is simple and small. The total amount that will be handed out by the Government is about 1 per cent. of the total of central Government grants to local authorites. It is about £6½ million. Government grants to local authorities total one hundred times that figure, and 1277 the total expenditure of local authorities is more than £800 million. It is not a great deal, and, as the local associations have said, if it were spread evenly, every authority would get such a tiny bit that it would hardly say thank you for it. Indeed I do not know that anyone has said thank you very warmly.
But it is not spread evenly, and the Minister has given various examples. Worthing will get about £80,000; Bourn mouth will receive £95,000; and one newspaper reports that a Northern industrial town, which it does not name, will get £500; and a London borough will get about £3,000. It would be amusing, but uncharitable, to make a full list and correlate it with a list of Conservative majorities at the last General Election, but the Minister has not laid any such paper before us. It may be that the authorities that will benefit most will not be those with the largest Conservative majorities, but those with a majority in the large but precarious range. It is, therefore, clear that it is most important to grant relief in an interim Bill as soon as possible.
We have soberly to ask what relation this has to individual hardship, because that is the only justification for a makeshift Measure of this sort. The relationship is a somewhat indirect and not altogether satisfactory one. It would be a great mistake to think that Clause 1 can be interpreted simply as providing help to elderly ratepayers, but such people, who may be quite hard hit, and who live in areas where there is not an exceptionally large number of people like themselves, will get no benefit at all, directly or indirectly, from Clause 1. It is the elderly ratepayer who lives in a locality where there is a high proportion of elderly people who might indirectly get some benefit by this Clause, and it is the fact that that kind of elderly ratepayer is more likely to be better off than ratepayers living in areas that will not benefit from the Clause. I do not think that that can be disputed.
We next have to notice that the benefit is given to the authority and forms part of its general revenue, and presumably, therefore, causes the amount that it has to raise on the rates to be so much less than it otherwise would be. That is the way in which the benefit is passed on to individuals, but which individuals? To every ratepayer in the 1278 borough, including not only the residential ratepayers but the commercial and industrial ones as well.
Do they need it? As far as I can see, that result occurs only because the Government have not thought out a way whereby they can channel this help more directly towards the elderly residential ratepayer. We are, in effect, here making what is a variation in the general grant formula. We are bringing in a new factor for assessing the total amount of grant to be paid by the central Government with only a loose and indirect relationship between the amount of grant and the individual hardship with which the Bill is supposed to deal.
There will be a number of individual elderly ratepayers to whom the passage, or non-passage, of this Clause will make no difference at all, however hard hit they may be, and there will be a number of ratepayers, elderly and non-elderly, residential, industrial, and commercial, who will get some benefit from this Clause, although frankly they do not need it, so it is a somewhat blunt instrument.
§ Mr. H. P. G. Channon (Southend, West)
Clause 2 is headed:Relief for residential occupiers of dwellings.Surely that means that it is the residential occupier who can get relief—and not industrial or commercial ratepayers?
§ Mr. Stewart
I was discussing Clause 1which gives grants to local authorities. The effect of it will be that the amount of rate which a local authority will have to levy will be so much less. The benefit will accrue to all ratepayers in the area, residential, industrial, and commercial. I am talking only of Clause 1, and pointing out that it is a somewhat blunt instrument.
§ Mrs. Evelyn Emmet (East Grinstead)
The weighting for children is equally a general grant for the county, and is spread over everybody. It is not possible to channel a special grant to a particular group of people.
§ Mr. Stewart
The weighting for children part of the general grant introduced in the 1958 Act was, at any rate, a carefully thought out Measure to try to bring in all the factors that one ought to consider to get a proper kind of 1279 general grant. This is a makeshift, interim Bill which is altering the general grant formula. That is, in effect, what Clause 1 is doing. I am pointing out that the relationship between that and helping elderly, hard-hit ratepayers is a very indirect and tenuous one indeed. Clause 1 is a blunt instrument. It may be the best instrument that could be thought up at short notice, but one cannot say more than that for it.
Now let us look at Clause 2 and the subsequent Clauses, which really expound and develop the theme of Clause 2. The principle here is, first, to make certain individuals eligible to claim partial remission of rates. If they are eligible under the Statute, they get the remission only if they satisfy the local authority that they are suffering hardship. I think that the Minister might have tried to tell us how many, and what sort of individuals will be eligible for benefit. We may get some areas in which the great majority of the ratepayers will be, within the terms of the Statute, eligible for benefit, or if they are not immediately so, they may be quite soon because, with the normal expansion of the amount of money which local authorities have to raise, it may not be long before they find themselves paying 25 per cent. more.
A real difficulty in the presentation of the Bill is that we have insufficient information on that extremely important fact, because that is a measure of the administrative task which local authorities will face in determining hardship. How many people will be eligible to claim hardship? I have seen it suggested that in some areas 80 per cent. of the ratepayers will be eligible to claim, and the local authority will have to weigh up which of them is suffering hardship.
There is then the question whether the definition of eligibility to claim in the Statute is the right one. Perhaps I might quote from an article by Mr. Ilersic in the Observer, which puts the point as well as I have seen it put. He said:For example, the young married couple with children buying a self-built house on a large mortgage, for whom a 20 per cent. rate increase may impose far more hardship that a 40 per cent. rise for the retired bank manager in his bungalow.1280 That may be true. The young couple may have their rates put up only 20 per cent., but it may mean greater hardship for them than to somebody in more favourable circumstances whose rates have gone up 40 per cent. Yet that young couple cannot claim relief, or even ask the local authority to consider whether they are a hardship case.
What is more—they will have to help pay for such remission as is given to the persons whom their local authority decides are hardship cases, because the Government will bear only half—or in some cases a little more than half—of the cost of the relief given to individuals who are hard-hit. The cost must come out of the pockets of their fellow ratepayers.
§ The Joint Parliamentary Secretary to The Ministry of Housing and Local Government (Mr. F. V. Corfield)
Taking into account Clause 1.
§ Mr. Stewart
Yes—taking into account Clause 1, if the local authority is one that benefits under that Clause. That makes it all the more important to see whether we have got right the definition of what makes one eligible to be considered as a hardship case. I hope that in Committee the Government will be prepared to consider this point very carefully.
§ Captain Walter Elliot (Carshalton)
The hon. Gentleman has implied that a young married couple would not be able to claim hardship, but I understood that my right hon. Friend, in referring briefly to the directive, specifically said that people could claim if they suffered hardship because it took time to adjust their pattern of spending to the new income situation. That is what I understood my right hon. Friend to say.
§ Mr. Stewart
I am not quite sure how one equates that with the wording of the Bill. It may be necessary to consider this matter again in Committee.
I have studied the Money Resolution in this connection, and as I understand it it would permit of Amendments which would make an alteration in the increase from 25 per cent. to some other figure. That is something that we could discuss in Committee.
§ Sir K. Joseph
I have no quarrel with what the hon. Gentleman is saying, but since his words may be read widely I hope that he will emphasise that the 25 per cent. and £5 are in the form of a two-year jump and not a one-year jump, and that they therefore let in a larger class.
§ Mr. Stewart
Yes, but we cannot be certain that this limit will not make eligible some people who do not need help while excluding some who do. We must consider the matter carefully in Committee, and I hope that by then we shall have a little more information in our hands. There are various agencies who can produce at least sample information on this sort of topic. I could pursue this point, but I must not take up too much time, since I know that many other Hon. Members will wish to speak.
I want to say a word on the question upon which most discussion has concentrated: is it right to make local authorities the judges of hardship? I understood the Minister to say that the local authority associations have accepted this idea or, at least, had agreed with the Bill. The Bill offers them money, and it would be difficult for local authority associations to say that they do not accept it. But I have a memorandum from the Urban District Councils Association and I am bound to say that it is not an enthusiastically worded document. Of course, it does not reject the Bill; no association of local authorities will reject it, when there are certain extra grants in it.
But the memorandum says, on the hardship question, that it is considered that the Minister ought,for the benefit and guidance of rating authorities, if the Bill is enacted, to publish what in his view constitutes hardship, what in general terms are the householders he wishes to see relieved and, again in general terms, what scale of relief he contemplates and how far it should go. It is not fair to the rating authorities to throw the whole onus on them.Before the debate is over it is desirable that we should hear whether the Minister will meet local authorities on that point.
What they are asking for is not to have their discretion removed; they are asking—in the fashionable phrase—for 1282 a "guiding light", and it is obvious from the last sentence that I have read out why they are asking for it. They do not want the whole odium of this invidious task to be thrown upon them. If they have to justify a refusal of relief in a particular case they will at least be able to say, "This is our judgment, and, what is more, this is the judgment that we have reached after taking into account what the Minister had to say about it."
Since local authorities are having this invidious task thrust upon them, partly because the Government had not the mental energy to study the question of central and local government finance three years ago, this request for a guiding light and for some share of the odium to be borne by the Government is a reasonable one, which I hope the Government will be prepared to meet.
I have said that this is a makeshift Bill, which we shall have to pass because we have to meet hardship, but I conclude with a word or two on what, in the long term, is required. First, we must make sure that we are having a real inquiry into local government finance—not only into the way in which the rating system works and the incidence of rates; not only into the question of the comparative shares of the Exchequer and the rates as sources of income for the local authorities, but also into the question whether other sources of local government revenue than rates can be found.
On 19th December last year, almost exactly a year ago, the Parliamentary Secretary said, in effect, that it was encouraging false hopes to promise inquiries of that kind. I see from nods behind him, however, that some of his hon. Friends agree with me rather than with him on this matter. I warn him again—considering how many words have been [...]aten by the Government in the last few months—not to nail his colours too firmly to that mast, because for all he knows he may well be getting up at that Box to announce a revolution in respect of local government revenues before many weeks are past.
We want a real inquiry into all those aspects of the matter, but while the inquiry is [...]ending—and it will take time; it is a very complex subject—we must accept the fact that greater help from the taxpayer to the ratepayer is needed. It is important for the public 1283 to grasp this fact. We all know that public services must be paid for; they do not grow like wild flowers. But the whole point of having them paid for rather more through taxes and rather less through rates is that it is easier to make taxes a fair instrument than to make rates a fair instrument. When the total volume of expenditure grows the question of fairness becomes more important.
That is what has been happening with rates. Theoretically, there has always been something unfair about trying to assess a man's ability to contribute to local services by the value of the rateable property he occupies, but when the total amount to be raised was comparatively small that theoretical unfairness did not matter so much. For example, if we could raise the whole of the State's revenue by a poll tax of 1d. per head per year, the theoretical unfairness of such a method would not worry anybody. But in recent years the total of local authority expenditure has been growing, and the inherent unfairness of rating has, therefore, become less of a matter of theory and more of a matter of real and harsh practice.
That is why, until, as a result of an inquiry, we can really get the whole thing on a proper basis, the immediate remedy needed is that more expenditure should be borne through taxes and less through rates, and that the particular channel through which that could be done would be a return to the principle of a specific percentage grant, because in many cases what we are asking local authorities to do is to expand services—to expand the education service and to go ahead with the comparatively new job of comprehensive development.
To do that properly local authorities need specific education and planning grants. They also need help—I make no apology for mentioning this again—in respect of the burdens of interest rates and land prices. As long as the Government refuse to do anything about either of those, we shall have difficulty with the rates. But these things lie in the future and are larger matters. We have this Measure at the moment and I say to my hon. Friends that I believe we must approve it as a necessary crutch for those who have been hit by this chain of events. Let us hope 1284 that it will also be the crutch on which this Government will hobble into retirement.
§ 5.0 p.m.
§ Mr. Robert Allan (Paddington, South)
I do not want to follow the hon. Member for Fulham (Mr. M. Stewart) into a discussion on the last two wider points which he raised, because I wish to talk particularly about the problem facing central area boroughs as a result of revaluation. My right hon. Friend mentioned that there were four rating areas where the average rate payment had gone up, I think, by £78. I am relatively certain that the Borough of Paddington must be one of those rating authorities, together with its immediately neighbouring central London boroughs. I do not want to be too parochial, but if in support of my argument I quote a few figures from the Borough of Paddington, I think that they can be more or less exactly matched in St. Marylebone and Westminster and certainly they can be quite closely matched in a number of other central urban boroughs throughout the country.
The main general effect of revaluation on central boroughs in London has been that their new rateable value has been increased by considerably more than the rateable value of the County of London, as the hon. Member for Fulham will know well. This has meant that these boroughs have to pay a much higher proportion of the precept from the London County Council. Incidentally, they also get less back from the equalisation scheme. In terms of hard cash this means a burden of £250,000 on Paddington ratepayers. This burden, which is equivalent to an 8d. rate on the new valuation, or 1s. 6d. on the old valuation, is imposed on the ratepayers not for any new services which they are getting; not even to meet the additional cost of existing services. It is imposed simply by the act of revaluation itself.
Another general effect on the boroughs about which I am talking has been the higher proportion of the general rate which now falls on the domestic ratepayer. This has happened for a number of obvious reasons but mainly because there is not much industry in those areas. Although in the 1285 main I am giving Paddington as an example, I think that the same shift occurs elsewhere. Whereas before revaluation the domestic ratepayer bore 45 per cent. of the rates, now the proportion is 59 per cent. This swing on to the domestic ratepayer means that he has to find £713,000 more than before. This, together with the other consideration which I have mentioned, means that the increase in domestic rates per head of population in Paddington and St. Marylebone is no less than 55 per cent., in Westminster it is 52 per cent., and in other central areas it is about the same percentage. These are average figures and my right hon. Friend emphasised that he, too, was talking about average figures.
It is when one gets to particular cases that the real poignancy and hardship is seen. I am sure that we could all give many examples of extreme hardship caused to our constituents. But I do not wish to go into personal details. We all know that when we undertake any new housing commitments we think in terms of the total outgoings. If one is exceptionally prudent one may make allowances in one's mind for some slight and gradual increase in rate payments. But even the most excessively prudent person would not make an allowance for an increase of £2 or £3 a week which is certainly all too common in my constituency.
I am told, I think that probably it is quite true, that there will be about 20,000 ratepayers in Paddington who will be eligible to put in an application for relief in respect of hardship under the provisions of Clause 2 of the Bill. The hon. Member for Fulham was trying to discover the size of this problem. I am told by the Paddington borough treasurer that the figure may be something of this nature in Paddington. It will impose an almost impossible administrative task—as was pointed out by the hon. Member for Fulham—on any local authority. What is quite certain is that in Paddington there are 5,389 domestic ratepayers whose rateable values have gone up by more than five times and whose rate payments have gone up by a minimum of 86 per cent. This illustrates the magnitude of the problem with which we are confronted.
1286 In the face of this large problem the provisions in Clause 1 will provide only negligible relief in these central areas. So far as I can make out, in Paddington the relief, or the amount payable back in the rate fund—it is not an individual relief—will provide about £5,000, and that against an impost on the domestic ratepayers of over £700,000. So, obviously, in the boroughs to which I have been referring the main relief will be channelled through the machinery of Clause 2. Here again it is the size of the problem that matters, because it will be virtually impossible for any local authority to investigate all the claims of hardship which will be submitted. I think that my right hon. Friend must go a bit further than he went today, either in offering guidance or, better still, in defining hardship in relation to this Bill. There will have to be some definition of hardship to enable local authorities to give some blanket relief to specified categories of persons. It may be old people—or there may be other ways in which this can be done.
As was said by my right hon. Friend, it is the suddenness and the steepness of the increases which has caused not only a sense of injustice but also a real hardship as well. This could be mitigated in a number of ways which have already been canvassed. There might be some arrangement whereby increases were spread in steps over a period of years. Increases of over, say, 50 per cent. could be considered as hardship from the point of view of the provisions in this Bill. But even if we had some such blanket provision admitting relief automatically to categories of people, provided that it was applied for, the local authorities would still be overwhelmed by the administrative task involved in investigating those who apply under the provisions of Clause 2. As I am sure is the whole House, I am grateful to the Government for attempting to give some measure of relief, and for that reason I shall support the Bill. But I fear that its provisions will not be workable unless some of the suggestions which I have made are incorporated into the Bill at a later stage.
§ 5.10 p.m.
§ Mr. Arthur Skeffington (Hayes and Harlington)
I am sure we have all been interested in the particular problems of 1287 Paddington, which has created, in disputes about its valuation, new local sensations which have reached a dizzy level. This is the first time I can remember when a property company has challenged in the High Court the valuation officer's list. It will be extremely interesting to see what happens as a result of this novel development.
I begin by saying that, while no one wants to look a gift horse in the mouth, especially when it is worth about £6 million and particularly at this festive time of year, nevertheless I resent, as I hope HON. MEMBERS on both sides of the House resent, the fact that we have to waste more legislative time in considering still another partial rating Measure instead of getting down to a fundamental recasting of the rating system, as we could have done at any time in the last 10 years.
I am certain that if future historians of this place examine our proceedings they will be quite mystified by the number of rating Bills and the amount of legislative time Ministers and Hon. Members have had to give to this subject with apparently very little ultimate satisfaction to ratepayers or administrators. Most of the Measures with which we have had to deal have been designed to remove one anomaly and, when that has been accomplished, they have seemed to raise half a dozen others. The result has been that often we have been worse off than we were before, for in attempting to remove anomalies we have often masked the defects in the present valuation system.
I thought it bordering on impertinence for the Minister to talk about our lack of courage when in fact the 1953 and the 1960 Acts were both designed by the Conservative Government to defer the full effects of valuation. In the 1953 Act we not only put off valuation for one year, as we did in 1960, but put back valuation of residential properties 14 years, to 1939. It therefore seems that questions about courage in the matter of rating come very ill from HON. MEMBERS opposite.
The Government stand to be condemned on three specific charges. Over the last 10 years they have failed to take advice either from Hon. Members on this side of the House—which I can under- 1288 stand for they might find that distasteful—or from many experts outside. I can remember myself and others telling the then Minister in charge, the right hon. Member for Bromley (Mr. H. Macmillan) that the 1953 Act was asking valuers to attempt almost the impossible because they were somehow to put their minds back to before the war, to 1939, and to assume that the Rent Restriction Acts had had no effect, that there was no marked overcrowding or under-occupation of houses. If there were any benefits in the district in 1953 it was assumed that they had been there in 1939, and if there was any defect in 1953 it was not to be assumed for the purposes of valuation that it was there in 1939.
I remember saying that this was a task, not for valuers, but for magicians. I can well remember the right hon. Gentleman's remark, because it was characteristic. He said:Ministers are but dim and transient phantoms who flit across the stage, and these men who are unhappy enough to have devoted their lives to valuing will have to carry out this work long after I have forgotten all about it."—[OFFICIAL REPORT, Standing Committee C: c. 2137.]This 1953 Act created much bitterness and anomaly which could have been avoided. The first charge against the Government then, which is proved up to the hilt, is that they failed to take the advice which was available not only in this House but from authoritative and knowledgeable experts outside.
Secondly, there is their failure in the past 10 years to have what they have now conceded—a full-scale inquiry. I am very glad that my hon. Friend the Member for Fulham (Mr. M. Stewart) referred to the words of the Parliamentary Secretary, because this shows that if an argument is repeated often enough in this place it will even cause that hon. Gentleman to change his mind. On 19th December, 1962, almost a year ago, this is what he said:I have been a critic of the rating system in the past…a very great number of people—eminent people—have given a very great deal of time to looking at the problem and have not been able to produce a really suitable alternative.He went on to say:On this sector of the problem, we must face up to the fact that promises of further inquiries are likely to hold out wholly false 1289 hopes of producing anything either new or more satisfactory than the system that we have at the moment."—[OFFICIAL REPORT, 19th December, 1962; Vol. 669, c. 1335.]If those words were true then, are they true now? If so, what is the point of having an inquiry?
§ Mr. Corfield
I should be delighted it I were proved wrong, but all I say is that I do not think there is an easy way of finding an alternative.
§ Mr. Skeffington
I hope that will be noted, because it is clear that we have not really convinced the Government of the need to look into the whole area of local government finance and we shall have to wait, as in so many matters, for a change of Government for that. On the face of it they seem to have changed their minds in the last 12 months. Thirdly, they stand condemned for not more actively considering alternative rating systems. The Royal Institute of Public Administration produced a detailed memorandum about a local income tax which at the rate of 3d. in the £ would in 1956 have produced £150 million and would produce much more now. This is the sort of alternative which should have been considered. The Association of Municipal Corporations has also had expert groups working on this problem.
It is quite shocking that in 10 years the Government have treated rating and local government finance as of no importance. All they have done has been to shift an ever-increasing financial burden on to the local authorities by the block grant legislation while at the same time the statutory obligations of local authorities have been increased by this Government.
The Bill has had a poor welcome practically everywhere and in the Press. I would not have bothered to quote the details of political criticism, but in view of the Minister's non-polemical speech about courage, I feel I have to do so. The Times said this on 10th December in an article which was headed "Panic Measure":It has…been impossible to avoid the conclusion that the Government's sudden change of mind about immediate rate relief, its decision to act before the facts on which action should be based have been investigated by the Allen Committee, was prompted by electoral calculations…it is ill-prepared, 1290 introduces at least one objectionable principle, and threatens to breed as much discontent as it is supposed to remove.This undoubtedly is true particularly when unfortunate authorities have to decide between one applicant and another on the grounds of hardship. This week The Times returns to the attack in an article headed "A Thoroughly Bad Principle". After suggesting that the Billwill present the House of Commons with a critical test of its legislative competenceit goes on to say:It is also a highly political Bill intended to placate a section of the community whose wrath has made itself felt. To the generous impulses aroused by the first of these characteristics of the Bill must be added the political calculations prompted by the second.This is pretty strong. It would be difficult to convince many of us and the public that the Bill is not unconnected with the political situation and the coming General Election.
Even the Sunday Times, on the 15th of this month, had some fun in trying to estimate how the hardship principle, the old-age principle, will be worked out. Mr. George Schwartz, with whose views I do not normally agree, had this to say about the over-65 principle:I envisage a scramble for us old 'uns. 'Are you over 65? Come and live in Sea-ville. Sunshine, glorious sands, municipal orchestra and rating relief'…Yesterday the Mayor and Corporation attended by the town band assembled at the main station to greet Mr. James Blogg, whose arrival has tipped the 10 per cent. scale of the over-65s.To have this kind of idea as a solemn basis for rating reform is asking us to swallow too much. Perhaps I may make a quotation from a more serious source, Mr. Ilersic, who has made a study of rating problems and who wrote in the Observer:It is a hasty and ill-conceived measure intended to relieve some part of the hardship caused by the revaluation and at the same time placate the frustrated rather than overburdened ratepayer…I have no constituency advantage from the Bill. I have no objection to relief being given where it can, but the Bill will make no difference whatever in my constituency or the constituencies of many of my hon. Friends. In my constituency only about 7 per cent. of the population are over 65. There, thanks to years and years of agitation from this 1291 side of the House, industrial premises have at last been re-rated 100 per cent., and my constituents are benefiting from that re-rating.
It is a great pity that on such an occasion as this we have not with us Mr. Sparks, who used to represent Acton in the House and who did so much to present the arguments for the 100 per cent. revaluation of industry. On one famous Friday he even managed to get a Bill through the House on the subject, and the then Parliamentary Secretary to the Ministry, the right hon. Member for Wolver Hampton, South-West (Mr. Powell), had to dragoon his followers to attend and kill it in Committee. Nevertheless, five years later we were able to get the Government to agree with our view. The tragedy is that we have all this waste of time and effort and all this hardship which could have been avoided if the Government had been more up to their job and acted sooner.
I should like the Parliamentary Secretary in his reply to tell us how the Ministry feel that revaluation has worked out. Will he explain some of the peculiar problems which have arisen, some of which were mentioned by the hon. Member for Paddington, South (Mr. R. Allan)? I am not making any attack upon the valuation officers; they have a very difficult job to do, they work long hours and they always have great devotion to the task entrusted to them, but the situation at Paignton makes one feel that there must be some special reason for what happened there. Only 100 out of 2,653 properties were correctly assessed and the error involved a miscalculation of about £56,000. Perhaps some statement has been made about this but if so, I have not seen it.
I hope that we shall be told what went wrong, because it may have happened not only at Paignton. Worthing, which will certainly benefit under the Bill, was about to bring a deputation to see the Parliamentary Secretary. I know that the hon. Gentleman spends much time seeing deputations and that he saw one this morning, but it is a fact that there is acute dissatisfaction at Worthing. A few years ago in my constituency 1,200 council houses were incorrectly valued because 1292 for some reason the valuation officers did not know that they had electric light. When this was discovered the property was revalued and the assessments were increased. I can understand such an error in a few properties or in one house, but it is rather extraordinary that a mistake should be made affecting 1,200 houses.
Quite apart, therefore, from the merits of the rating system, or its lack of merits, which is perhaps too complicated a subject to discuss in detail today in the Bill, I should like to know what the Ministry feels about the methods at present being used and the results achieved. We have had three or four examples made public, and there may be more. There is considerable dissatisfaction and concern about the kind of instruction given by the Inland Revenue to its valuers. I know that this is another Department, but the Minister obviously knows the instructions given to the valuation officers. What are the criteria which they must take into account in making valuations? Many people are very concerned about this situation.
The London County Council has considerable experience in the overall problem of rate revenue, because it looks at it from the view of the whole of the County of London. It takes the view that the new grants payable under Clause 1 will be spread too widely and too indiscriminately to achieve the desired objective. There are 1,400 local authorities, and I understand that some 1,200 are likely to claim some sort of relief and to benefit to some extent, though with widely differing benefits. A northern industrial town, where a Id. rate brings in £17,000, tells me that it will probably get £400, but Worthing will get, I think, about £80,000. I do not say that this is a Christmas gift to political supporters, but if the view of the London County Council is correct that the grant to be paid under Clause 1 could be paid under Clause 2, then the results would probably be more significant under that clause than if they are spread as thinly on the ground as is expected under Clause 1.
I suppose that on any calculation £6 million is worth while having, but the Government had a much simpler method of relieving ratepayers without all this 1293 ballyhoo and without the individual applications which will have to be made and the dissatisfaction which will arise, as The Times said, among those who will not benefit. The Government could have increased the general grant. A few evenings ago at about 10.50 p.m. we discussed the general grant regulations. In 1963–64, local authority expenditure will go up by £45 million, but the Government propose to pay only £25 million, leaving a gap of £20 million to be filled by local authorities. In 1964–65 the additional expenditure, it is calculated, will be £55 million and the Government propose to make grants of £30 million, which leaves a difference of £25 million. It would have been very easy for the Government to have secured this relief to ratepayers without all this work, and without the heartburning individual applications which will have to be made. They would have increased the general grant sum. H is a great pity that that was not done.
I only hope that the time will very soon come when, if the present Government are not prepared to revise the whole of this creaking rating system, which is slowly coming to its doom, they will be replaced by a Government who have the courage at long last to do so.
§ 5.28 p.m.
§ Mr. John M. Temple (City of Chester)
My right hon. Friend the Minister was quite right when he said that this is essentially a temporary or interim Measure. It has to be looked at in that light. I will, if I may, pick out some points made in previous speeches during the course of my remarks.
Like other Hon. Members on both sides of the House, I can welcome this Measure because it brings relief to ratepayers, and that is what has been asked for throughout the country. I estimate that the relief to ratepayers will be about £12 million—£6 million by direct grant under Clause 1 and approximately £6 million to local authorities so that they may relieve hardship. The other ratepayers in those local authority areas will in most circumstances have to find the other 50 per cent. of that relief.
My hon. Friend the Member for Paddington, South (Mr., R. Allan) was right to stress that this will be a considerable administrative task for local authorities. 1294 I am afraid that the administrative cost will be rather high, and in my speech I shall concentrate not on the details of the Bill, which, I hope, will be dealt with adequately in Committee, but on certain principles which are implicit in the Bill and in our rating system.
First, there is the question of hardship. Local authorities, as my right hon. Friend said, are in certain circumstances, dealing in their rebate schemes, etc., with the question of the hardship of their ratepayers who occupy council houses. The local authorities are now to be asked to carry out a very much more difficult task, to judge hardship right across the board, across the whole gamut of ratepayers who reside in their areas. I submit that the local authorities may well need such powers as the National Assistance Board and the Inland Revenue have in order to be able to require information about the incomes of householders. Otherwise, I fear that we may get inequalities and injustices emerging just because relevant information may be concealed from the local authorities.
Again, local authority members themselves who will have to frame regulations on these matters may well, and I would think many will, actually be candidates for relief under this Measure. Very significantly the Bill does not tie this hardship to old age. It says that hardship will be relieved if it can be proved, and gives certain criteria which have to be complied with in order that individuals may qualify for relief.
I am going to stick my neck out a little tonight on the question of a very broad definition of hardship. My right hon. Friend the Minister has given us a certain amount of rather limited guidance tonight. I feel, with other Hon. Members on both sides, that rather more clear guidance may be necessary from my right hon. Friend, but I will try to throw a little more light on this subject; I will endeavour to produce my own guiding light with regard to a definition of hardship.
My right hon. Friend said that, on average, each ratepayer throughout the country was paying 11s. 6d. a week. It will be known to Hon. Members that the average industrial wage today is between £16 and £17 a week, so that 1295 this average impost on the average industrial wage earner is approximately 3½ per cent. I would say that if the impost on any householder is double the average impost on the average industrial wage earner then he or she must be a candidate for hardship relief. I submit that if the impact of rates is 7 per cent., or 1s. 6d. a week, on the gross wage or income of the householder, then he or she must qualify to be considered as a candidate for hardship relief.
The hon. Member for Fulham (Mr. M. Stewart), who spoke first from the Opposition Front Bench, mentioned the natural increase of rate poundages. This is a significant factor, and I estimate that during 1963–64 and 1964–65, which period will govern this question of the 25 per cent. factor, the average increase in poundages throughout the country will be of the order of 15 or 20 per cent. Therefore, in the words of The Times, many candidates will approach "the threshold" of these conditions by reason of the increase of rate poundages over the course of these two years.
I now turn to some of the best news which my right hon. Friend gave tonight. This was when he said that my right hon. Friend the Chief Secretary to the Treasury was to undertake a general review of central and local government finance and a review of the rating system. That is excellent news, and I agree with my right hon. Friend when he said that up to this time there have really been too many variables in this situation for any expert committee to get down to a clear determination of the problem. However, I think that today we are in a position where the facts of revaluation and the various recastings of grants can be carefully weighed, and that, therefore, we are now in a position to get on with the job of a major review.
Time, however, is not on our side. There will be another major revaluation at the end of the quinquennium in 1968, but before that time, in 1966 and 1967, the valuers will have to get to work possibly on a new basis of assessing direct to net annual values all domestic hereditaments. Therefore, if they are to have the required information before them in 1966–67, masses of new legisla- 1296 tion—I warn my right hon. Friends on the Front Bench that this will be necessary—will be needed in the year 1965 in order to do a complete recasting of the rating system and of the relativity of grants to rates. Then the valuers and all concerned will be in a position to act in 1968 the hardship having been taken care of in the intervening period by this Bill.
All this will mean that the inquiry which has to be carried out in 1964 will be on a vast scale. The inquirers will have an immense field to cover, and I believe that they will only be able to do it if they divide themselves into teams. There will be a need for some central collating agency so that the information obtained can be studied, brought together, and a report produced at the end of 1964 and legislation brought forward in 1965. That inquiry, I think, should be into the equity of the present rating system—in all its aspects. Again, the inquiry should look at the main grant structure and possible alternative sources of locally raised revenue.
I regard this Bill as a temporary Measure in that respect and as an attempt to resolve hardship it is certainly welcome. Our task after the next election, when we return to these benches, must be to bring forward comprehensive legislation to deal with rating and the whole of local government finance.
§ 5.37 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
No one can suggest that this Measure has been received with a great deal of acclamation. I think that the best that can be said for it is what was said by The Times, when it remarked that as there were some very hard cases in which revaluation had fallen with unforeseen severity the Bill was assured of at least a qualified welcome. But, as my hon. Friend pointed out, that paper headed its editorial "Panic Measure" and described the Bill as prompted by electoral calculation, as ill-prepared and threatening to breed as much discontent as it is supposed to remove.
My hon. Friend referred to the observations made by Mr. George Schwartz in the Sunday Times when he poked what I thought was justifiable fun at the whole thing. Perhaps I may add that the Economist said that it was a 1297 rushed political manœuvre which might have been forgiven if it had been a good one.
Rating is a very dry-as-dust subject which, as a rule, raises little interest except among the experts, but the recent revaluation has certainly resulted in assessments of such harshness that many ratepayers have been roused to fury. I have no doubt that the recently elected Member for St. Marylebone (Mr. Hogg) suffered severely—and will in the future—from the ire of many such ratepayers. If I may introduce a personal note, I would tell Hon. Members that I live in a comparatively humble flat in Marylebone, and found my rateable value raised—I quote this as an example of many such cases in St. Marylebone—from £147 to £804 a year, nearly six times as much.
It is true that I managed to persuade the valuation officer to agree to reduce the assessment to £597—still more than four times the previous assessment—but there are still others, I know, adjacent to me, who have received this six-fold assessment, from £147 to £804.
§ Captain Elliot
I presume that the assessment was raised because of the revaluation, in which case the hon. and learned Gentleman would surely agree, in spite of what he has just said about the Bill being brought in for electoral considerations, that it is being brought in to relieve people who suffer hardship from that sort of revaluation.
§ Mr. Weitzman
The hon. Member must be aware that when we get the sort of thing that happened at Marylebone, with the threat that hangs over the Government, any panic measure will be brought in to secure some electoral advantage.
A local authority obviously has as its only source of income the money derived from the rates. It has been said again and again that the present system is archaic, unfair as between ratepayer and ratepayer, and cannot be justified on general or social grounds. In the debates on almost every rating Bill, someone has expressed the hope that one day a Government will have the courage to take the matter in hand. I am glad that the Minister has returned, because he used the words "courage on the part of the Government". What did the Government do?
1298 We have heard that the Government intend to set up a committee next year to study the whole matter of rating. I nearly said after 12 years of Tory rule. It will be 13 years if they remain in power, but, of course, we know that they will not. But just imagine the claim made by the Minister on behalf of the Government. Recognising that dissatisfaction and the necessity for some reform, which has been pressed again and again by many of my hon. Friends, the Government now promise that next year a committee will be set up to study the whole thing.
In fact what the Government did was to set up the Allen Committee, with strictly limited terms of reference, to investigate ways of relieving those suffering from real hardship. One might have thought that they could have seized that opportunity to set up a committee with terms of reference wide enough to consider the whole matter. They had not even the excuse of urgency. Without waiting for any report from that Committee, the Government now suddenly seek to deal with the immediate situation by this interim Measure.
What do the Government do in the Bill? I would emphasise at the outset that Clause 1 and 2 are not related. One does not depend upon the other. Under Clause 1 we get an Exchequer grant of £5 for each person over 65, but only where the local authority has in its population more than 10 per cent. over the age of 65. This is, of course, an additional subsidy to the authorities. Far be it from me to decry help given by the Exchequer to authorities in the form of subsidies or otherwise—I am all in favour. But I thought that the Government had constantly taken the view that it was a dreadful thing to talk of additional subsidies. Let us see what it means in effect. Bourn mouth, we are told—I do not know whether I have the correct figures—gets about £90,000; Wands worth, about £54,000; and Marylebone just under £20,000. That money goes to the authorities to increase their revenue and to do as they wish with it.
They are not restricted in any way as to how they spend that money. It will go to the relief of rates of everyone, whether rich or poor he will benefit to the extent that it affects the rate payable. I realise that it is presumably meant to provide additional money to help an 1299 authority in exercising its discretion in cases of hardship under Clause 2, but nowhere in the Bill does it say so. As I have said, the Clauses are not related.
May I put this to the Minister? Why is the hardship restricted to areas where there is more than 10 per cent. of the population over 65 years of age? Stoke Newington, according to the 1961 figures, has a population of 50,301 with 5,048 people over 65. It falls short by 182 of the necessary 10 per cent. and so it does not qualify under the Bill.
Are there no cases of hardship in Stoke Newington? What about a local authority with a large proportion of people with young children? Are there no cases of hardship among them? Is individual hardship something that depends upon living in a particular area? I put that to the Minister. No wonder it is said by the Press, quite correctly, that this differentiation will breed discontent. This contribution by the Exchequer hardly helps the elderly and it is quite illogical in principle.
Clause 2 gives to the rating authorities discretion to afford relief in 1964–65 and subsequent years where the rates for that year exceed the rates for 1962–63 by one quarter, or £5, whichever is the greater and the authority is satisfied that the increase causes hardship attributable to the increase since 31st March, 1963. It is to be noted that the relief is to be given for the year 1964–65. Why not 1963–64? Why is that year left out? The Minister looks surprised, but clearly a year is left out.
§ Sir K. Joseph
The whole purpose is to relieve from the exceptional results of revaluation. The year 1963–64 is a post-revaluation year. The comparison must be with the last year before revaluation.
§ Mr. Weitzman
If the Minister examines this again, he will see that there is a year of hardship which is not provided for in the Bill. Perhaps he will explain why that year is left out.
Reference has been made to the fact that there is no definition of "hardship". No guidance is given in the Bill. There is the limited guidance to which the Minister referred today, but I suggest that is no guidance whatever. The interpretation of "hardship" will 1300 obviously vary from place to place. It is not poverty. The word used is "hardship". If a wealthy man proved that there had been an increase in his rates which made things more difficult for him, could not that be a case of hardship?
§ Sir K. Joseph indicated dissent.
§ Mr. Weitzman
Why not? What does "hardship" mean? Surely it means that someone suffers in some way. It is a terrible thing to ask a local authority to define this in some way. Surely it was not beyond the capacity of the powers that be to put into the Clause some words to guide local authorities about the meaning of "hardship"?
Even more regrettable than this is the fact that the Government have shuffled off the possibility of electoral rancour by putting the task of defining "hardship" on to local authorities. As a result, there will be the means test, a detestable thing. The burden is put on to the local authority to inquire into the private affairs of an individual. This is done by a Tory Government who prate so often about their love for individual liberty. The Minister says that local authorities have some experience gained from granting rebates to their own tenants. This is a far different thing. Is it right to put this task on to the local authorities? Does it not mean a means test? Cannot the Minister imagine the resentment there will be among many authorities? It is wrong in principle.
I have spoken to a number of borough treasurers on the question of administration. A number of them have assured me that it will be extremely difficult, if not impossible, to work this from an administration point of view.
In central London, in particular, the rates of flats and houses have been raised to very high levels. Speculative builders, freed from restraint by this Government, have reaped a rich harvest in this area. The rents charged are used to justify raising the rates to very high levels. It is said, "If you pay that rent, even though it is with great difficulty and although you are compelled to do so, that is the rate at which the premises can be let in the open market. Therefore, you must pay high rates."
A grant under the Bill of £20,000 to Marylebone is a fleabite. Any relief 1301 Marylebone will get will mean that more money must be found to make up for such relief. That will have to be found to a large extent by other ratepayers. The Minister will remember that when 20 per cent. was taken off commercial properties in 1957 the result was that the general rate had to rise. The rates will now have to rise again. The vicious circle will continue.
It is all very well to talk about this being an interim Measure. Is it not time that we stopped tinkering with the problem? My hon. Friend the Member for Hayes and Harlington (Mr. Skeffington) quoted The Times. The Times said this, also:The job of valuation was taken away from local authorities and given to the Inland Revenue after the war in order to secure uniformity and certainty in the operation of the rating system. Those desirable features are now about to be discarded in a panic measure.Whether it is right that rating valuation should be dealt with by the Inland Revenue may be open to argument. What is absolutely clear is that, instead of the limited terms of reference of the Allen Committee, long before now a committee should have been appointed with wide terms of reference to look into the principles affecting rating and its administration. The Government should not have introduced a Measure which will create further anomalies, because that is what f believe will be the result of the Bill.
I can only express the hope that the Minister was serious when he talked about a committee being appointed next year. It is, indeed, time that was done. The appointment of such committee which will make an effort to put the law of rating upon an equitable basis and do justice between ratepayer and ratepayer is long overdue.
§ 5.53 p.m.
§ Mr. H. P. G. Channon (Southend, West)
I think that it was a little churlish of the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) to take such exception to the introduction of the Bill, because it appeared from the facts that he gave us that he is likely to be one of the beneficiaries of the Bill when it is enacted; but now that he has such an excellent representative in the House, if he has any grievances no doubt he will be able to take them up with him.
1302 A remarkable feature of the debate has been the very churlish welcome—one might almost say carping welcome—that the Bill has so far received from HON. MEMBERS opposite. I for one—I am sure that I speak for many of my hon. Friends—am delighted that the Bill has been introduced. [Interruption.] Indeed, it benefits my constituency, but it also benefits the constituencies of many other Hon. Members. It benefits a great many people, who have every reason to be grateful.
I have gained the impression from some of the criticisms made by HON. MEMBERS that they believe that the Bill is designed to be the final culmination of all rating problems and all rating legislation for the future. The hon. Member for Hayes and Harlington (Mr. Skeffington), the hon. and learned Member for Stoke Newington and Hackney, North, and the hon. Member for Fulham (Mr. M.Stewart) all talked about the Bill being a monstrous Bill which lays down the terrible principles. The Bill is meant to be only an interim Measure to deal with an interim problem. I assure HON. MEMBERS opposite that many of my hon. Friends will also continue to press for further legislation in the future to deal with this vital problem. To criticise the Bill as if it were the final culmination of rating policy is completely to misunderstand the purposes for which the Bill is introduced.
The Bill is an interim Bill designed to meet the situation until Professor Allen's Committee reports. I was astonished to hear Hon. Members demand that a very tight definition of "hardship" should be written into the Bill. The Allen Committee was set up by my right hon. Friend specifically to determine what "hardship" means in this context. It is unreasonable for Hon. Members to demand that, whilst a very high-powered committee is examining this problem, my right hon. Friend should introduce his own definition of "hardship" into the Bill.
After revaluation last year my right hon. Friend became perfectly clear that there are a large number of cases of hardship as a result of increased rates. Consequently, the Allen Committee was established to report upon hardship. Another committee has been set up by my right hon. Friend the Chief Secretary to review the whole rating system and 1303 to determine, in particular, the exact proportions which should in future be raised from the taxpayer and from the ratepayer. Everyone who knows anything about this subject knows full well that any committee set up to decide what should be the exact proportions to be borne by the ratepayer and the taxpayer is presented with a very complicated problem. It is unreasonable to expect that legislation should wait until either of these two Committees reports.
I am delighted that my right hon. Friend has in the meanwhile produced this temporary and interim Measure to relieve hardship which exists. I do not think that anyone can pretend that it follows from the introduction of a temporary and interim Measure that all the principles laid down in it will stand for all time. Of course not. The Government have had to design some method to deal with the temporary problem in a way which seems as equitable as possible.
I should have thought that it was common ground between Hon. Members on both sides that it is in those areas where there is very little industry that the householder is likely to bear an increased burden on revaluation. I cannot give the exact figures for my constituency, but I think that the result of revaluation in the Borough of Southend as a whole has been an increase of approximately 5 per cent. in the proportion the domestic householder has to pay. Southend will benefit by £55,000 or £56,000 from the Bill, owing to the very large number of old people living there. It is true that large numbers of old people live in a number of constituencies like Southend. This is precisely the situation which the Bill is designed to meet. The inevitable result of the present rating system is that it is such areas as Southend that suffer.
It is high time that something was done, not only in this interim Bill, but in the future, to sort out the whole rating system. That is why I welcome my right hon. Friend's determination to set up a fundamental review which, as my hon. Friend the Member for the City 1304 of Chester (Mr. Temple) pointed out, must work extremely fast if its recommendations are to be made in time for us to have adequate legislation before the next quinquennium arrives.
I do not think that anyone wishes to be faced with a similar problem in 1968, regardless of which party is in power. Of course, I think that the party which will then be in power will be the Conservative Party, but others may hold a different view. However, regardless of which party will be in power, it will have a difficult problem in 968 unless we can get the Committee to report quickly and we get legislation as soon as possible after the Committee reports.
Mr. James McColl (Widnes)
The hon. Gentleman appears to be scolding us because there is not a high-powered inquiry, but the whole burden of our case has been that a high-powered inquiry should have begun many years ago. That is why we voted against the 1961 Act. It is not our fault that we have not got an inquiry. If, when we on these benches come into power, we are faced with a chaotic situation in which it is impossible to adopt any policy about local government finance it will not be our fault.
§ Mr. Channon
I understand the hon. Gentleman's point. If I was scolding him, which I do not think I was, I was certainly not scolding him on that ground. I said that I thought it a little churlish to take exception to the Bill.