HC Deb 20 October 1966 vol 734 cc488-502
Mr. MacColl

I beg to move Amendment No. 9, in page 6, line 34, to leave out from 'amount' to the end of line 40 and to insert: 'which, apart from this subsection, would be the amount of the general rate levied by the authority for any year on any dwelling-house or mixed hereditament in their area by the following amount in the pound, that is to say—

  1. (a) in the case of a dwelling-house, the amount prescribed for that year in pursuance of paragraph 1 of Part III of Schedule 1 to this Act; and
  2. (b) in the case of a mixed hereditament, one-half (disregarding any halfpenny) of the amount so prescribed'.

Mr. Deputy Speaker

If it is for the convenience of the House, we can take at the same time the following Amendments:

Amendment No. 10, in page 6, line 38, leave out from 'Act' to end of line 40.

Amendment No. 11, in page 6, line 40, at end insert: (2) When; a hereditament is occupied for domestic and non-domestic purposes, then providing the rating authority is satisfied that the occupation and use of such a hereditament is primarily for domestic purposes the prescribed reduction shall apply in respect of that hereditament.

Amendment No. 12, in page 7, line 1, leave out from 'year' to end of line 2 and insert 'in respect of dwelling-houses and mixed heri-ditaments respectively is equal to the amount mentioned in paragraph (a) or, as the case may be, paragraph (b) of subsection (1) of this section'.

Amendment No. 13, in page 7, line 3, leave out 'a mixed hereditament' and insert 'primarily a dwelling-house'.

Amendment No. 14, in page 7, line 20, leave out from second 'rate' to end of line 28 and insert: (6) Any dispute in respect of a hereditament claimed to be occupied and used primarily as a dwelling-house should be referred by the rating authority to the local valuation panel for determination by a local valuation court.

Mr. MacColl

These Amendments deal with a series of point relating to the problem of mixed hereditaments. The House will know that in the case of mixed hereditaments, if more than half is a dwelling house, then for the purposes of the domestic element they are counted at half. In other words, if the relief on a domestic dwelling is 6d., on the mixed hereditament it would be 3d. There may be different rates in the £ in an area in respect of different hereditaments owing to differential rating, and that is taken into account.

7.45 p.m.

The second point arises out of what came to be known as the "odd halfpenny". The odd halfpennies may be disregarded. If there is a reduction of 5d. on a house, the mixed hereditament would have a reduction of 2d. Over the next year the figures would be 10d. and 5d. This is done to get over the difficulty of calculating the halfpennies. The hon. Member for the City of Chester (Mr. Temple) is so cynical about these matters that he might even wonder what happens to the odd halfpenny. He may wonder whether it goes into the pockets of the Treasury. I studied this point in some detail. It does not. It goes into the needs element, which is the residuary beneficiary of the grant. The effect is that the saving becomes part of the needs element.

Amendment No. 12, which is linked with Amendment No. 9, enables a rating authority making a rate for less than a year to apportion the reduction in rate poundage during the rate period in any way that it chooses, so long as the aggregate for the year gives the right result as between the two periods. The same discretion is given in respect of mixed hereditaments. The purpose is to make it possible to keep to the whole number and not become involved in calculating odd halfpennies.

Mr. Temple

In Committee hon. Members found the question of mixed hereditaments a rather unpalatable meal. I referred to them as mongrels, and I am glad that the Government probably agreed with me and therefore tidied up this mongrel and tried to make it into a bit of a thoroughbred. But there efforts have been singularly disappointing, except that they have decided to do away with the odd halfpenny and thereby not give the computers indigestion. I have a series of Amendments which will make the mixed hereditament into a genuine thoroughbred. I do not know why we are making so much difficulty for ourselves in the way that we are trying to deal with mixed hereditaments under the Government's proposals.

When local authorities were dealing with the question of whether a hereditament was used mainly for domestic purposes, or for shop purposes, or small office purposes, with the residents living in the shop on the corner, the Parliamentary Secretary urged them not be stingy. The object of my Amendments is simply this. If the primary use of a hereditament or dwelling is for a dwelling house, then the occupant will get the full domestic rate relief.

For many years rating authorities have had to establish the primary use of any building. Surely the Government wish to give full rate relief where the primary use is clearly domestic. In this context we are not discussing great office blocks, with a caretaker's flat at the top, or big blocks or works buildings where there happens to be a maintenance engineer's flat in some part of the building. In those two instances the primary use of the building would obviously be either industrial or commercial. But here we are discussing a situation in the context of the shop on the corner, and I would have thought it would be absolutely fair, recognising that the trade of such a shop fluctuates, that the rating authority should make a determination as to primary use and give full domestic relief to the dweller in the hereditament.

The Government ought to think again about this matter. The amount of money at issue will be very small. This series of linked Amendments was suggested to me by no other authority than the Rating and Valuation Association. I urge the Parliamentary Secretary to accept this series of amendments, if only for one reason. Next week I shall be the guest at a dinner in Eastbourne at the Conference of the Rating and Valuation Association, and I should like to be able to go to that Conference and report to it that on its behalf and on behalf of the ratepayers I had scored a singular success.

This is a sensible arrangement. We have so many complexities in the Bill that we ought to agree to the easy option that I am putting before the House, I hope that the Parliamentary Secretary will jump to his feet and make my visit to Eastbourne a pleasurable one.

Mr. Michael Barnes (Brentford and Chiswick)

I should like to know what the present position is about the amount prescribed for any year in pursuance of paragraph 1 of Part III of Schedule 1, referred to in paragraph (a) of Amendment No. 9. This is an amount in the pound which in the opinion of the Minister corresponds to the amount of the domestic element". When we last debated this matter, in the Second Reading debate on 14th June of this year, we had not begun the wages and prices freeze. We were then told that the domestic element would be fixed in such a way that in the first year—1967–68—£30 million would be transferred from taxation, £60 million the following year and £90 million the year after. We were told that the effect would be to halve the annual increase in the rates, there being this built-in 10 per cent. increase in our rating system, which is one of the defects of the system, and that this would be an interim measure to carry us over a few years until, presumably, we had our new system of local government finance in the early 1970s.

It was doubtless very acceptable in June that this cushioning should operate—that the 10 per cent. increase should be cushioned in the rates so that it would become only a 5 per cent. increase, and that next March the ratepayers would be faced with only a 5 per cent. built-in increase instead of one of 10 per cent. But in the present economic circumstances this is no longer acceptable to ratepayers. Local authorities will obviously do what they can to hold their rates where they are, but the Government have a very important responsibility in this matter, and I should like to know what plans they have to give local authorities more help in this respect. This is a very difficult year, and ratepayers will definitely expect the rates to be held where they are.

I know that if the Government transfer extra money from taxation the money must still be found, but the more we transfer money for local authority expenditure from taxation the fairer is the burden, because of the inherent unfairness of the rating system. What are the Government going to be able to do in this matter, if anything?

Mr. MacColl

If I may first deal with my hon. Friend's point——

Mr. Temple

On a point of order. I thought that we were discussing an Amendment dealing with mixed hereditaments and not with the question of the transfer of money for local authority expenditure from taxation.

Mr. Barnes

This is part of the Amendment. That is my point. To ratepayers throughout the country this point is part of the Amendment under discussion.

The Deputy Chairman

The hon. Member is in order.

Mr. MacColl

The final effect of these proposals and the nature of the order which my hon. Friend will make will be clearer when we look at the whole Rate Support Order and when we get the figures of estimates. It will then be much easier for my hon. Friend to appreciate the effect of this expenditure upon the rates. The Bill merely outlines the form of these activities. We are leaving the filling in of details to the order.

Mr. Arthur Jones

Would it not be possible, in trying to deal with the question so rightly posed by the hon. Member for Brentford and Chiswick (Mr. Barnes), to take a hypothetical example? We shall all be able to see exactly what will happen when we get some figures. That is what we have said all along. But would it not be possible to take a hypothetical circumstance and try to deal with the question in that context?

Mr. MacColl

My hon. Friend's point was a valid one, and I was saying that it could be discussed with more precision at a later stage, when we have the orders. As for my taking a hypothetical example, at the moment I have enough to do with my existing commitments under the Bill, without endeavouring to make impromptu excursions into hypothetical examples.

I do not understand the use of the word "primarily" in the Amendment of the hon. Member for the City of Chester (Mr. Temple). That is one of the difficulties of appreciating the effect of his Amendment.

Mr. Temple

I did try to cut my speech short. The words "primary user "were given in the judgment of Lord Thankerton, in the case of Moon v L.C.C. in 1931. That was why I used those words.

Mr. MacColl

We have talked a lot about small shopkeepers, and it would lead to uncertainty as to how much they would receive in respect of the domestic element if they had to wait for the interpretation of Lord Thankerton's judg ment in the matter. At least people know what a half is. That is one of the advantages of the Bill. It is fairly precise at this point. The wisest thing would be to keep to the arrangement laid down in the Bill. It would be clearer, especially in cases where the shop use is a fairly substantial one and it is fairly clear which side of the 50 per cent. it falls. That is a much easier test than the test of its being "primarily" for domestic purposes.

Amendment agreed to.

Further Amendment made: In page 7, line 1, leave out from 'year' to end of line 2 and insert: 'in respect of dwelling-houses and mixed hereditaments respectively is equal to the amount mentioned in paragraph (a) or, as the case may be, paragraph (b) of subsection (1) of this section'.—[Mr. MacColl.]

8.0 p.m.

Mr. MacColl

I beg to move Amendment No. 15, in page 7, line 23, after 'authority', to insert 'or is determined in pursuance of subsection (6) of this section'.

It would be for the convenience of the House, perhaps, to take with this Amendment Amendment No. 17, in page 7, line 28, at the end to insert: (6) The Minister may by regulations provide for the determination as respects any hereditament of any question as to the proportions mentioned in subsection (5) of this section in any case where the occupier or the person treated for the purposes of the regulations as the occupier of the hereditament is dissatisfied by the refusal of the rating authority to treat the hereditament as a mixed hereditament for the purposes of this section or the occupier, the person aforesaid or the rating authority considers that by reason of a change of circumstances a previous determination made in respect of the hereditament by virtue of this subsection should cease to have effect; and without prejudice to the generality of the power to make regulations conferred by the foregoing provisions of this subsection, the regulations may include provision—

  1. (a) applying for the purposes of a determination any of the provisions of Part III of the Local Government Act 1948, with such modifications, if any, as may be specified by the regulations;
  2. (b) for a determination to have effect with respect to such period, whether or not beginning before the time when an application for the determination was made, as may be provided by or under the regulations.
Amendment No. 15 is really the "lead-in" to the latter Amendment.

This is an important improvement in the Bill which, I think, will appeal to hon. Gentlemen opposite. We had a considerable argument in Committee about the need to have some form of appeal from the decision of the rating authority about whether or not something was a domestic or a mixed hereditament. At that stage, my right hon. Friend made an offer that it would be possible to get from the valuer a certificate as to whether or not the mixed hereditament was over or under the 50 per cent.

That was regarded, rather to my surprise, as being inadequate. I thought that we had gone a long way to meet hon. Gentlemen opposite on the point. However, my right hon. Friend has no desire to be a dog in the manger about this matter and we can now suggest that we put into the Bill a proposal for a right of appeal. What will happen at the moment is that the initial decision will still lie with the rating authority, but where the ratepayer is aggrieved by the authority's refusal to treat his property as a mixed hereditament, he can apply for a hearing to the valuation officer.

The intention, in the proposed Regulations, is to provide a right of appeal, and this, of course, is complicated. It seems best to do it by Regulation rather than to spell it out in a great deal of detail. The proposed procedure—this is an analogy to what is already done in other spheres of valuation—is that the issue of a certificate will be treated as a proposal and it will then be possible for the parties to agree. If they do not agree, the matter can be taken to the local valuation court and then, if necessary, to the Lands Tribunal. However, it is always possible, of course, for the two parties to reach agreement at a later stage. We are not excluding that.

I think that this will make the proposals very much more acceptable to the hon. Gentleman and, I hope, to the House. At no stage was the argument whether there should be an appeal or not. The argument was whether we had the resources of valuers and staff to do this effectively. We can now say that this is possible.

Mr. Temple

Clause 6 ame in for a good deal of criticism in Standing Com- mittee, particularly the fact that there would not be an appeal at that stage to what we regarded as the right adjudicating body, namely, the valuation court. I am glad that the Government's new proposals envisage making Regulations which include the provision that a determination will be made by the valuation court. I wish that these matters could be in the Bill rather than in Regulations, but I understand the difficulty.

It seems likely that we will have an inordinate number of Regulations as a result of this Measure and that a great deal of Parliamentary time will be taken up by the Regulations. Perhaps, later in our proceedings tonight, the Parliamentary Secretary may be able to say at what stage we may expect these Regulations to come before the House. He and the House will appreciate that the Bill comes into operation in April next year and local authorities will want to know where they stand, particularly over mixed hereditaments, as early as possible. We certainly approve of the Amendment.

Amendment agreed to.

Mr. MacColl

I beg to move Amendment No. 16, in page 7, line 28, at the end to insert: '(any part of the hereditament used for the letting of rooms singly for residential purposes, whether by way of a tenancy or licence and either with or without board or other services or facilities, or used as sites for movable dwellings within the meaning of section 269 of the Public Health Act 1936 being treated as used for purposes other than those of a private dwelling or private dwellings)'. This Amendment is to remove doubt about the treatment of caravan sites and what, in the discussions in Committee, we called "bed-sitters"—rooms let singly as mixed hereditaments. The intention at that time was that the caravan and site, if assessed and rated separately, under the recent decisions in this matter would rank for the full benefits of the domestic element. If, on the other hand, the caravans were part of a caravan park, that park would be regarded as a commercial undertaking and would not get its relief as a mixed hereditament. The same applies to single rooms let as "bedsitters".

It is not proposed, however, to exclude all such hereditaments from qualifying for relief, because there may be some marginal cases which are rather difficult to treat precisely. Therefore, the Amendment provides for the caravan sites and the rooms to be treated as being used for purposes other than those of a private dwelling when it has been decided whether more than half the rateable value is attributable to the parts used for the purposes of the private dwelling.

There is nothing new in this: it is what we discussed in the fourth sitting of the Committee. I think that it clarifies the position.

Mr. Temple

The Parliamentary Secretary has claimed that the Amendment clarifies the position. Unfortunately, I have to inform him that I believe that it makes the position rather worse. I have had a great deal to do with caravans over many years and I know that anything to do with the rating of mobile dwellings presents enormous difficulties. Let us be clear what the position will be if the Amendment is accepted.

As I understand it, the Parliamentary Secretary said that where a residential caravan is individually assessed, its occupant will be able to get domestic rate relief, but that where a similar type of occupant—in other words, a resident in a residential caravan—is on a site which is rated as a site, then the individual occupant, although he is occupying his caravan for domestic purposes, will not be able to get the domestic rate relief.

Last summer, I had conversations with a very large caravan site operator. He explained to me some of the difficulties of rating individual caravans. He said that rating authorities much preferred to have a global assessment on the site, as they were then able to collect those rates from the site operator. If the Amendment is accepted, of course, there will be great pressure for all residential caravans and, indeed, all caravans used for domestic purposes, to have individual assessments, because then those caravans will be able to obtain domestic rate relief.

The Parliamentary Secretary will have a chance to tidy this up in another place, so I will mention the problems of collecting rates from individually assessed caravans. For one thing, caravans can move, and frequently do. Though possibly in the context of this discussion one may think of caravans which one has known on site for many months or years, there are many residential caravans which move frequently. Caravan dwellers by their nature are people who like to change their caravans. I know of caravan dwellers who change their caravans annually. They probably move to a bigger and better van, thereby attracting a larger assessment. It will be almost impossible for the local rating authority to keep track of all these individual assessments on caravans. The Parliamentary Secretary said that the object of the Amendment was to clarify the position. In my submission, it may well do the reverse. I make this very genuine case from my own personal experience and knowledge of this subject.

I turn to another aspect of this far from simple subject—and that is the dwelling-house with two, three, four or five residential caravans in the garden. That dwelling-house will be only a dwelling-house, because the owner of the site will live in that house. If the value of his house is more than half the value of the whole site, he will be able to claim domestic rate relief. He will be able to claim domestic rate relief in respect of his house, which is assessed at one with five vans on that site. I do not believe that these circumstances have been taken into account. If I am right, then all the occupants of the five vans, although they are not individually assessed, will, because they are part of this one domestic hereditament, be able to claim domestic rate relief. I am bringing these very practical difficulties to the Government's notice.

The question of rating mobile dwellings is extremely difficult, but the Government have launched themselves further into these difficult waters and I very much hope they will pay regard to what I have said and possibly have consultations with the industry at a very early date, thereby helping the rating authorities to overcome what I believe will be greater difficulties as a result of the acceptance of the Amendment, which I recommend to my hon. Friends.

Mr. Lubbock

I had not intended to intervene in the debate, but the hon. Member for the City of Chester (Mr. Temple) raised a number of important points to which we would like answers before we leave the Amendment. I have been concerned with caravans for some time, and I have always thought that if caravans could be individually rated it would be to the advantage of the occupant, particularly since we have had the Rating (Interim Relief) Act, because those occupants could make application for the benefit of that Act which they could not make while the site was rated as one.

The Parliamentary Secretary worried me because he seemed to imply that the recent court decision which provided for the individual rating of caravans would not be followed in all authorities. He was explaining the difference between two types of site, one of which would be treated as a series of domestic hereditaments and the other treated as a mixed hereditament as a whole; and in the latter case the occupants would not be entitled to relief under this Act or the Rating (Interim Relief) Act.

I was under the impression that following the recent decision of the court the officers of the Inland Revenue in all those areas would extend this provision so that individual rating of all caravans would come under this system sooner or later. But the speeches of both the Parliamentary Secretary and the hon. Member for the City of Chester gave the impression that this was unlikely to happen.

8.15 p.m.

The hon. Member for the City of Chester raised some difficulties which he said stood in the way of individual rating, such as the fact that caravans move frequently from their sites and that the owners of caravans tend to change them fairly frequently. If I may say so to him with great respect, in modern sites this is happening less and less. The more expensive caravans are now becoming the norm, with various facilities in them, such as running water and fixed heating which were not available a few years ago when people tended to use the same sort of caravan as a dwelling house as they used for touring. What the hon. Member said probably still is applicable to the holiday sites, but I think that it is less and less applicable to the permament residential site, for the manufacturing industry is trying to encourage people to think of the caravan as a much longer-term dwelling than has been the case hitherto. In fact, they talk of caravans lasting as long as 30 years.

When I went to the Caravan Exhibition last year the manufacturers were saying quite confidently that although this had not been the impression which the caravan industry gave to the public in past years, they very much hoped that caravans would be thought of in future as semi-permanent dwellings, that people would not change them so frequently and that they would be far less likely than hitherto to move from one site to another. It is interesting to talk to some of the site operators and to find out the proportion of old people who now find the caravan the most convenient form of residence. These practical difficulties which may have stood in the way of individual rating in the past no longer apply.

I want to ask the Parliamentary Secretary to deal with one point in particular. Why has this definition been chosen in the Amendment: used as sites for moveable dwellings within the meaning of Section 269 of the Public Health Act, 1936"? There is probably something obvious which I have missed, but I thought that the Caravan Sites and Control of Development Act, 1960, would have provided a suitable definition for this purpose. I only just realised when the hon. Member for City of Chester began his speech that caravans were involved in this Amendment. That is probably my fault for not having read the Notice Paper carefully, but other people may well have fallen into the same trap. If the Parliamentary Secretary can give us the assurance for which I asked about the extension of individual rating, then I am sure that this is very good Amendment which should be accepted.

Mr. MacColl

I said in Committee that we had been rebuked for our alleged disrespect of the rule of law and were regarded as a party inclined to regard decisions of the court as matters which we could disregard. As I said, this was very far from the truth, and in this matter we are following the rule of law very carefully.

The Court of Appeal has addressed itself precisely to this point—when is a caravan a residence for separate rating and when is it not? We do not think it right to interfere with that decision. Of course that decision will be carried out, and local authorities may well feel that they want to take steps to see that in particular cases proposals are made. That is a matter for the law. The law has made a ruling on this subject, and we do not want to interfere.

What we say is that once a decision has been taken to rate the caravan separately, then it ranks as residential and it is entitled to relief on the domestic element and will be entitled in appropriate circumstances to relief under the Rating (Interim Relief) Act. That is logical. The hon. Member for City of Chester (Mr. Temple) said that this would be embarrassing for the site owners.

Mr. Temple

For the local authorities.

Mr. MacColl

I thought that this would be more convenient for the local authority. They are now accepted as residential hereditaments and are to be rated as such, which is reasonable.

If there are any points worrying people on this issue I assure the House that we will give consideration to them before the Bill is passed. If any improvements in the Measure can be made, people have only to suggest them and they will receive our consideration. However, we feel at present that this is a reasonable and sensible arrangement.

The hon. Member for Chester asked why we were using Section 269 of the 1936 Act rather than the later Act. I do not have copies of the two Acts with me to compare the two definitions, but I will inquire and write to the hon. Gentleman.

Amendment agreed to.

Further Amendment made: In line 28, at end insert: (6) The Minister may by regulations provide for the determination as respects any hereditament of any question as to the proportions mentioned in subsection (5) of this section in any case where the occupier or the person treated for the purposes of the regulations as the occupier of the hereditament is dissatisfied by the refusal of the rating authority to treat the hereditament as a mixed hereditament for the purposes of this section or the occupier, the person aforesaid or the rating authority considers that by reason of a change of circumstances a previous determination made in respect of the hereditament by virtue of this subsection should cease to have effect; and without prejudice to the generality of the power to make regulations conferred by the foregoing provisions of this subsection, the regulations may include provision—

  1. (a) applying for the purposes of a determination any of the provisions of Part III of the Local Government Act 1948, with such modifications, if any, as may be specified by the regulations;
  2. (b) for a determination to have effect with respect to such period, whether or not beginning before the time when an application for the determination was made, as may be provided by or under the regulations.—[Mr. MacColl.]