HC Deb 07 March 1972 vol 832 cc1215-8
5. Mr. Frank Allaun

asked the Chancellor of the Exchequer if he will give an assurance that the increased rents for council and private landlords' tenants under his Housing Finance Bill will not also bring about higher rating valuations.

The Chief Secretary to the Treasury (Mr. Maurice Macmillan)

I can assure the hon. Member that the rents to be determined under the Housing Finance Bill will not of themselves affect current rating valuations or those in the new lists to be deposited at the end of this year.

Mr. Allaun

I thank the right hon. Gentleman for that assurance. I now ask him to give an assurance that this will not raise rateable values when the next revaluation takes place in five years. Is it not clear that a rise in rents will mean a similar rise in rateable values?

Mr. Macmillan

As the House knows, valuation for rating purposes is calculated on open market rents. In so far as fair rents are open market rents, less the scarcity value, the rateable value would already have taken account of that. Admittedly it is a difficult thing for valuation officers to do. Therefore, the only change that is likely in the 1978 valuation is if moving to fair rents discloses evidence which shows that the previous valuation has not been on a strict open market basis.

Mr. Eadie

Does the right hon. Gentleman realise that he is a bit out of date with his answer? Is he aware that experts in this sphere have already predicted that at the end of the quinquennial review there will be increases in rateable value because assessors will have no option but to take the rent expected in the open market for a private house against the rent expected for a council house? Indeed, does he agree that his policy will mean increased rates not so much for council tenants as for private tenants?

Mr. Macmillan

The valuation for rating purposes will continue in 1978, as now, to reflect the open market rents of the preceding years. If the evidence of those years indicates that open market rents are going up, the valuation will go up; but this will not in any sense be a direct consequence of the Housing Finance Bill.

Mr. Joel Barnett

Will the right hon. Gentleman now give a straight answer to my hon. Friend the Member for Salford, East (Mr. Frank Allaun)? Is it not a fact that rates will go up in direct proportion to the way that rents will go up under the Bill.

Mr. Macmillan

I will not give an answer as a statement of fact about anything which may happen in future. Right hon. and hon. Gentlemen opposite got into difficulties and got the country into difficulties by assuming that they could make that kind of forecast. In 1978 the rateable value will be assessed, as now, on the open market rent obtainable for the housing concerned. In cases where the movement of fair rents shows that the comparison of one property with another has been altered there will be a consequential alteration in the rateable value.

Mr. James Hill

Would my hon. Friend not confirm that in 1978 there will still be generous rent and rate rebates for the council tenant, and that in the private sector there will be equally generous rate rebates?

Mr. Macmillan

My hon. Friend is quite right. There is no reason, unless some Government reverse it, why the rate rebate scheme should not be equally or indeed more generous. The rent rebate scheme is being extended by the Housing Finance Bill to the private sector for the first time, and rent rebates will naturally continue.

Mr. Allaun

On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I will raise the matter on the Adjournment as early as possible.