HC Deb 29 July 1963 vol 682 cc193-204

Motion made and Question proposed, That this House do now adjourn.—[Mr. Finlay.]

11.38 p.m.

Mr. F. M. Bennett (Torquay)

It is now approximately three months since, following Questions by me on the effect of increased rate assessments on seaside and other residential resorts, I gave notice that I wished to raise the matter on the Adjournment. Even though it is only through the accident of the Ballot, I am glad to find that on this occasion persistence has had a certain reward. Even though the matter comes up at the end of today's late sitting and almost at the end of the Session I am pleased to have this opportunity, because if the House is to adjourn shortly before the long Recess I want my right hon. Friend the Minister of Housing and Local Government to be aware, if he is not already, of the full extent of the shock caused throughout parts of the country by the raising of the rate assessments.

I do not intend to speak in any party sense, because many of those who have come to me with their rating problems belong to Opposition parties and I feel intense sympathy with them in the extent of the shock which they have had to endure. It is not surprising in these circumstances that my anxiety is shared by my hon. Friends the Members for Rye (Mr. Godman Irvine) and Folkestone and Hythe (Mr. Costain), my right hon. Friend the Member for Blackpool, South (Sir R. Robinson) and my hon. Friend the Member for East Grinstead (Mrs. Emmet) and others who may attempt to take part in the debate.

All of them emphasise that having heard so often that revaluation would not mean of itself a drastic increase in rates, because it was expected that if the local authority concerned needed approximately the same money then the rate poundage would decrease proportionately, the opposite has been found to happen. Our constituents have had rises and falls in the cost of living ever since the war, but the sudden impact of changes in their standard of living because of rate demands has meant in many cases not just a 10 per cent. increase but even double anymore of the amount of their spend able cash to be devoted to rates. This is something which if it had been done in connection with food or some other social servies would have caused a storm which no Government could have afforded to face. Those on small fixed incomes and others receiving wages which could not be tied to the cost of living have suddenly experienced a rise in the cost of living with no possibility of a reserve on which they could draw, a situation which they have found utterly intolerable. It is not surprising in those circumstances that some of my constituents and others have tended to confuse what I call the three main issues, and I propose to spend a short time on each of the three aspects as I see them.

The first is whether we have now reached a time when the whole question of rating in this country should be reconsidered—whether, in fact, the whole relationship of local to national finance and the burden that local finance has to bear compared with national finance, should be looked at again. There are those—I am not making any case tonight on this—who feel that the police and education should be wholly removed from the area of purely local finance. I am not saying now whether I believe that to be right or wrong, because I do not believe that by debating this matter in this House it can be easily settled. I should have thought that this was a matter calling for a Royal Commission in due course, because unless we are careful I can well imagine circumstances in which drastic remedies in this sphere might well produce more anomalies, discrepancies and unfairness than are experienced under the present system. Therefore, we ought to exercise great care. Nevertheless, this is a matter to which my right hon. Friend ought to give very serious attention from the point of view of the future of rating and the amount of finance that is raised respectively by local and national sources of revenue.

I turn to another aspect that I propose to discuss, namely, whether the valuations in a particular area are fair and logical. My right hon. Friend knows—and I notice his hon. Friend the Financial Secretary to the Treasury beside him—that in my own constituency, due to the endeavours of a number of my constituents and my own efforts, and thanks to the courtesy of my right hon. Friend in having received us, we have been able to show that in a very serious instance there has had to be ordered a total revaluation of a large class of residential property.

I was informed three or four days ago by the Ministry of Housing and Local Government that it frankly admits that in my constituency there has been, in a number of instances affecting not hundreds but probably thousands of householders, a serious error in the revaluation of residential properties, and a new valuation has been ordered. All I am saying is that this has happened in my constituency, and I am wondering whether the Government ought to rest satisfied. This fact has come to light not because of their own researches but because of the persistence of those whom I have the honour to represent who have carried on till they have secured a revaluation of a certain class of residential property within my constituency.

I am therefore asking my right hon. Friend and the Treasury whether they do not think that if there has been a mistake of this gravity in Torbay, there may be serious mistakes elsewhere and if it would not be well for my right hon. Friend to agree to look into all other similar areas where similar mistakes may have been made.

I have so far referred, in speaking of my second point, to classes of property, but, of course, there are also individual properties which may well have been wrongly assessed. I say again tonight, as I have said in my constituency and previously in the House, that I appreciate that in such cases there are tribunals which can deal with these questions, and I hope very much that members of the public who feel that their properties have been wrongly or unfairly assessed will take advantage of the constitutional machinery open to them to have the valuations checked. Obviously, the whole burden for doing it cannot lie on the Government or on the local authority. If people feel that they have been unfairly treated, it is up to them to take the matter up.

Mr. A. P. Costain (Folkestone and Hythe)

Has my hon. Friend's experience been the same as mine in this respect, that it is particularly the small bungalows which have been wrongly valued?

Mr. Bennett

I am grateful for that intervention. Although I have not the term "small bungalow" in the letter which has been sent to me, the reference is to separate residential properties about which there has been a mistake, freely admitted. I suggest to my hon. Friend that he might have another look to see whether the conditions to which I have referred apply in his constituency, in which case I should be willing to give him all the information which has been put at my disposal.

I repeat that the best course for those who feel themselves affronted by what they regard as unfair or discriminatory revaluations is to seek redress through the local tribunals, meanwhile taking advantage of the system which permits them to withhold up to half the increase in their rate payments for the current year. But, of course, one should add the warning that this may be only putting off the evil day, and, if the appeals are not upheld, those sums in rates will ultimately have to be paid.

This brings me to the third and, perhaps, most serious aspect. I propose to give my right hon. Friend the longest amount of time possible tonight so that he may give a very full reply. We are about to go away for the Summer Recess. Some of us have, time and again, pressed him to admit that some sort of interim relief must be given pending the result of the Allen Committee. I pay a tribute to my right hon. Friend at once for appointing this Committee to look particularly into cases of hardship, but, within the present system of rating, however much the valuations may be checked by the Treasury and however much individual appeals may be upheld or otherwise, there will still be instances; of people having to bear a quite crushing burden which they simply cannot tolerate with their present incomes, if the system permits of no relief.

My right hon. Friend has throughout been unfailingly sympathetic and courteous to me, but, with respect, it is no good saying that I must await the outcome of the work of the Allen Committee. I may be able to wait, but there are constituents of mine who simply cannot wait that long. When I said previously that there were constituents faced either with eviction or refusal to pay their rates, I was not exaggerating at all. Only last week, an old lady of over 80 came to see me. She is living on an income of £400 gross a year, but her net rate payments on the house in which she has lived for many years amount to no less than 25 per cent. of her total income. That is without rent, mortgage payments or anything else; it is just rates. It is no good saying to someone like that that she must go on National Assistance. Many of these people are above the National Assistance level, and, in this community of ours today, it cannot be said that someone living just above that level is living particularly richly. It is intolerable that we should tell people that they must use up their meagre savings in order to pay their rates. Nor should it be implied that they are living in houses which they ought not to have, when they have lived there for many years. These things have come as a great shock. I want my right hon. Friend to understand that.

Mr. Bryant Godman Irvine (Rye)

In a number of cases in my constituency people have, in fact, been unable to continue living in the houses where they have lived until now simply because of the rise in rates.

Mr. Bennett

Each intervention lends support to the case I am putting. My right hon. Friend must appreciate that this is the last opportunity we have to talk to him about this matter before the House adjourns for the Summer Recess. We shall certainly talk to him about it again in November if nothing is done. He must tell the House that, irrespective of when the Allen Committee reports, he will consider some form of interim relief, even retrospective in effect, to help those who really are faced, whether he likes to admit it or not, with the choice between eviction or refusing to pay their rates.

I have said that I want to give my right hon. Friend opportunity to reply because I hope he has something more positive to tell us tonight than he has previously been able to say. But I would, in conclusion, report to him that this is not in any way a party political matter. It affects thousands of people, and even though they may be thousands compared with the millions to whom the new rating system has brought no hardship, they are none the less important. It is no use saying that these are just a few seaside or other coastal reports. They are people, and they are suffering great hardship.

So I must ask my right hon. Friend now, irrespective of when the Committee may report, to announce some specific interim relief which will relieve the burden of great mental and other anxiety from shoulders which do not deserve the burden they now have to bear.

11.51 p.m.

Mr. Michael Stewart (Fulham)

I entirely agree with the hon. Member for Torquay (Mr. F. M. Bennett) that this is in no sense a party matter. The names Torquay, Bournemouth and Southport suggest at first sound prosperous communities, and, of course, they contain a number of quite wealthy people, but that does not, therefore, preclude them from also containing a number of people of very limited means to whom this is a most serious problem.

We heard with alarm the references to major errors in valuation. I hope that the Minister will be able to reassure us that they are not widespread, or if they are, that they will be rectified. But we wait with particular interest to hear him tell us what, if anything, can be done immediately before legislation, before the Report of the Allen Committee. I believe that local authorities have a very slender reserve power of remitting rates in cases of hardship. How far that stretches to be helpful in meeting this problem is a matter we shall hope to hear about from the Minister.

11.52 p.m.

Captain John Litchfield (Chelsea)

I would support my hon. Friend the Member for Torquay (Mr. F. M. Bennett) briefly on one further point. My right hon. Friend is very well aware, of course, of the problem of rents in London, of scarcity rents. These high rents are reflected directly in the rates. It seems an indefensible principle that that should be so. There are many people living in London who are not yet affected to any very great extent by the steep rise in rents and who have security of tenure. They now find, however, that their property has been very highly assessed on the basis of the rent which it might command in the open market. That is a side which we simply must tackle because it is a principle which we ought not to accept.

11.53 p.m.

The Minister of Housing and Local Government (Sir Keith Joseph)

May I perhaps, Mr. Speaker, for the first, and possibly the last, time in my life in addressing you formally also recognise the fact that you in your representational capacity are very well aware of this problem, and I recognise also that, although in this Chamber at the moment there are five of my hon. Friends and the hon. Member for Fulham (Mr. M. Stewart), there are a very great number of hon. Members on both sides of the House who will read what we are saying with deep interest because of the impact of rates on their constituents.

The rôle of rates is, of course, well understood. We all value local government independence, and we all know that rates are the only means by which local government draws an independent source of money. We also know—I think we all realise—that in nearly every case rates represent very good value for money for those who pay them. A broad and increasing range of services is available to the ratepayer in return for his rate payment. I think we also know, when we stop to think about it, that even those people who do not pay rates because they are not householders, contribute, either by some payment towards the householder to help with the rates, or, being perhaps non-householders because they are single people, pay a much larger share of the taxes than families who, as householders, pay the rates.

Of course the payment of taxes is very important in this connection, because local authority services are not paid for entirely out of the rates. In fact, 52 per cent., nationally, of all local authority expenditure is met by the taxpayers and, of the remaining 48 per cent. about 24 per cent. is met by industrial and commercial ratepayers. The people far whom my hon. Friend the Member for Torquay (Mr. F. M. Bennett) has campaigned so vigorously and for whom he is speaking tonight—the householders—bear about 24 per cent., nationally, of the total cost of local government expenditure.

Of course, local government expenditure is rising each year and the rising rate call by local authorities, the counties, the boroughs and the districts, has to be met, partly by the taxpayer and partly by the ratepayer. Although the rate call for part of my hon. Friend's area has risen, the taxpayer has kept pace with the rise by continuing to bear at least 50 per cent. of the total charge.

The division of rates, how they are met by the individual ratepayer, is assessed according to rental value, which for this purpose we call rateable value. In a perfect world, this rateable value is reviewed, now by the Inland Revenue, every five years, but, because of the war, there was a gap between the assessment on domestic property. The effect of the sudden change in bringing domestic property up to 1963 values after being on pre-war rental values of 24 years ago has caused shock and dismay, and it is that which to some extent has made this debate important. Domestic property was revalued to bridge a 24 years' gap at the same time as industrial and commercial property was brought up to date after a seven-year gap, from 1956 to 1963, and a concession which had been available to industry and commerce was removed. To some extent, this offset the increased valuations on domestic property.

My hon. Friend pressed me about errors in valuation. The presence here this evening of my hon. Friend the Financial Secretary to the Treasury testifies to his recognition of the importance of the subject. In the Paignton district there has been an error of valuation by the Inland Revenue affecting about 2,500 properties. This was pointed out as a result of constant discussion between my hon. Friend, my hon. Friend the Financial Secretary and myself. I have it from my hon. Friend the Financial Secretary that, despite the many inquiries made of him by hon. Members, this is the only case where a substantial error has been detected by the Inland Revenue Being recognised, it will be rectified. For the individual who feels that the rental for his property is wrong, there is recourse to the process of appeal.

I feel that the nation as a whole may have confused two issues in all this rating affair. It may have confused the effect of revaluation—where generally what the Government told the people has proven to be right, namely that broadly and nationally and on average the share of the domestic ratepayer has not changed, or scarcely at all—with the combined effect of the changing share, though it averages out at practically nothing at all, and the rising rate call which has been the general experience up and down the country as local authority services have increased. In many areas which are popular to live in and which are relatively sufficiently prosperous not to justify the receipt of rate deficiency grant and where there is no industry, there is a tendency for the rise in the rates to have been such as to cause considerable worry to a number of inhabitants. That may well be the case in a number of seaside resorts, although not all.

The effect on the individual householder has varied. Even after revaluation, most householders are still paying something less than 12s. 6d. a week in rates. This is not a sizeable amount, bearing in mind the average earnings of most householders today. In fact, quite a substantial proportion of householders are now paying less rates after revaluation than they were before, because of the effect of industry coming in and relieving the domestic ratepayer. But it is true that a number of householders are facing a substantial rise, and some of them a very sharp rise indeed.

I must explain that the implications for 14½ million householders could not have been foreseen in detail before the revaluation was complete. The inter-action of so many variables would have defeated a battery of computers. There is the inter-action of the local rate; the county rate—that is to say, the precept; the individual valuation of the individual property; the variation in the share of the householder, industry, and commerce in the area; and finally the effect on all these of the changing general grant and possibly rate deficiency grant. Here are such a complex of variables that it would have been impossible to forecast the effect of these on each of the 14½ million householders.

But we now have the facts, and we must deal with them to ascertain where there is hardship so that we can do something about it if necessary. Where there is proved to be hardship, but the individual ratepayer has an income small enough to qualify for National Assistance, I think the House will agree that there is no grave concern, because National Assistance will in all normal circumstances look after the increase of rates for those people.

Our principal concern is for those who come above National Assistance, who will have to be very careful with their expenditure, and particularly those who live on fixed incomes. It is to those on fixed incomes particularly that the shock of a sudden rise in rates may cause damage, because of the defeat of the expectations on which they have drawn up their budgets, and this we realise. But in many cases for five, six, seven, or eight years, prior to revaluation many householders paid rates which increased very slightly over that time. Taken over that period, it may well be that the rise has not on average, been beyond their capacity to pay.

Be that as it may, I recognise that the defeat of expectations is very much part of the dismay of which my hon. Friend spoke. But I ask him to bear in mind that a sense of outrage is not necessarily the same as objective hardship, and what the Government must do is to try to narrow the impact of rates so as to identify where there is, and if there is, hardship, and then decide whether anything should be done, and if so what should be done about it.

It is for that reason that the Allen Committee was appointed. I hoped that it would give the Government its report on the impact of rates on individual households and groups of households before the end of this year, but with the best will in the world it is unable to meet that schedule. We shall get its report next year. In the mean while the Government have undertaken to consider whether any interim steps need to be taken prior to the receipt of the report. That is the undertaking I have already given the House. I have emphasised that nothing the Government could do would relieve this year's rate burden. All that has been undertaken is that the Government will consider, prior to the receipt of the Allen Report, whether any interim steps need to be taken in the light of any hardship of which the Government are aware.

Mr. F. M. Bennett

Can my right hon. Friend give any indication when the result of this consideration will be made known to the House?

Sir K. Joseph

I can only put that in the negative form. It will not be before late autumn that the result of the Government's consideration could be made known.

I think that I have covered the main points put by my hon. Friend. I congratulate him on the perspicacity with which he has fought for the interests of his constituents, and I hope that I have been able to meet the points that he raised.

Question put and agreed to.

Adjourned accordingly at five minutes past Twelve o'clock