HC Deb 25 May 1973 vol 857 cc930-41

3.2 p.m.

Sir Bernard Braine (Essex, South-East)

There is surely one thing upon which we can all agree. No form of taxation is ever popular. As the younger Pitt remarked when Chancellor of the Exchequer: To tax and to please is no more given to man than to love and be wise. That being so, the British people will generally accept the burden of taxation, provided they are satisfied that it is fair and is seen to be fair.

It is ironic, therefore, that at a time when the Government have been endeavouring to bring our system of local rates and Exchequer support up to date and to cushion any adverse effect upon particular areas and particular groups of ratepayers—for example pensioners and others whose incomes are below a certain level so as to ensure a fair spread of the burden—ratepayers in South-East Essex are complaining bitterly of unfair increases in their rate bills.

For some weeks I have been receiving letters from constituents which reveal increases far above the level that the Government envisaged and well out of line with what is happening in neighbouring areas. These increases range from 30 per cent. to over 100 per cent. We had, of course, expected an above average increase in our rateable values. Although Parliament had laid down that revaluation should take place every five years, the Labour Government postponed the valuation due in 1968. The right hon. Member for Coventry, East (Mr. Crossman), candidly admitted on BBC 1 on 18th February that he had said at the time that this: is something we can well postpone. We can do nothing but lose votes on this and the rates will go up. Comment on that cynical observation is superfluous, but the result of that calculated piece of expediency was to ensure that the impact of the 1973 revaluation was bound to be proportionately greater in areas where, for one reason or another, rateable values had been traditionally lower than elsewhere. This has proved to be the case in South-East Essex.

What we had not expected—and what our people are not prepared to accept—are increases which are manifestly unfair in a time of Government-imposed income restraint. Reports reaching me suggest that there are wide discrepancies in rateable values of similar properties in my constituency and next door in Southend, where some rate bills have actually fallen. What is more, within my constituency itself there are wide discrepancies between similar properties in the same roads, although, of course, there could be explanations for this which are not immediately apparent. For example, in the Rochford rural district assessments are up less than three times in the town of Rochford but over four times in the neighbouring village of Paglesham.

Some assessments are totally inexpliable. For example, the rateable value of a wooden bungalow in Ashingdon providing a home for two old-age pensioners—a bungalow with no mains drainage which is two miles from the nearest bus service and four miles from the nearest shops—has risen from £42 to £190. As a consequence, the rate bill has increased from £28.30 last year to £55.60 this year. The rates have been doubled. How can such an increase be justified?

In the Benfleet urban district about 85 per cent. of all domestic properties are in private ownership. How could the rental value of those properties have been assessed fairly without a detailed examination of each? Where is the rental evidence for such a district? As a consequence, there is a widespread suspicion, which I share, that valuations there have been upgraded en bloc, and that may well have happened elsewhere in the constituency. Against that background, there is bound to be a huge volume of appeals.

Over Essex as a whole, domestic premises accounted for 52.5 per cent. of the total assessment on the old lists; they now constitute 56.9 per cent. The domestic multiplier for the county is 3.09 per cent., which is above the national average. In my constituency, however, where the capacity to meet increased rate bills is about the same as it is elsewhere in the county, the multipliers are well above the county average as well.

I know that my hon. Friend the Minister is concerned about the effect of the Maplin project on the population of South-East Essex. We have had many exchanges on the subject, and many more are to follow. In particular, he knows the dire effect that this project will have, especially upon my Foulness Island constituents. Many islanders have had their rate burden doubled, at a time when their whole future has been darkened by the Maplin project, yet there has been no improvement whatever in the scant amenities they enjoy. Incidentally, the landlord here is the Government. Something must be done about the situation in Foulness.

All this appears to be in direct contradiction to Government policy. My right hon. Friend the Prime Minister made it clear in his speech to the Association of Municipal Corporations at the Guildhall on 13th December last that there was no reason at all for supposing that there would be a wholesale increase in rates this year. Indeed, he said that the Government had made the largest-ever increase in the rate support grant, which meant that ratepayers would have to pay for a smaller share of the services which the local authorities provide. My right hon. Friend added that if rateable values went up by an average of two and a half times we must expect to see a comparable reduction in the level of poundage". Thus, there can be no doubt as to what was the Government's intention. It was to ensure that no undue burden was to be placed on ratepayers at a time when the counter-inflation policy called for income restraint.

The Prime Minister spelt this out very clearly in his Guildhall speech. He said: Revaluation provides no warrant for weakening in any way the policy of restraint when rates are fixed … revaluation does nothing to increase the total of expenditure … it would be totally unreasonable for revaluation to be used as an excuse for increasing the total of the demands made on the ratepayer. This will be extremely damaging to our efforts to restrain inflation ". He had said previously in his statement in the House, on the Government's inflation proposals last November, that the Government were consulting the local authorities in order to moderate the growth of local rates.

The White Paper, "The Programme for Controlling Inflation: The Second Stage" said in paragraph 22: The Government have … substantially increased the Exchequer contribution to the financing of local government expenditure through the rate support grant for 1973–74 with he aim of enabling local authorities to keep the average increase in rates down to a level consistent with the need to contain inflation.… The Government intend … to establish arrangements to monitor proposed increases in rates …". In the debate on the rating system on 12th February, my right hon. Friend the Minister for Local Government and Planning reiterated that the Government's aim was to keep the average rise in rates to a level compatible with the Government's prices and incomes policy. In his Budget Statement on 6th March, my right hon. Friend the Chancellor of the Exchequer was even more specific. He said: The Government are … to help those domestic ratepayers who face big increases in rates due to revaluation … by meeting half the cost above 10 per cent. of any increases in domestic rate bills … which are attributable solely to the effects of revaluation."—[OFFICIAL REPORT, 6th March 1973; Vol. 852, c. 268.] All these statements were reassuring. No doubt they were intended to show that the Government were concerned to be fair. I concede that probably over the country as a whole the arrangements they made have worked out fairly: but they have not worked out like that in South-East Essex.

May I remind my hon. Friend that this is a year of income restraint? Yet some of my constituents face rate rises which they can meet only with difficulty. Many people who do not qualify for rate rebate have incomes that are still comparatively low. Scores of them have told me that while they have had a wage increase in the past year of about £2 a week to offset inflation, all of it will now be swallowed up by increases in both rates and mortgage interest repayments.

I put the question bluntly in a letter that I sent last month to my right hon. Friend the Secretary of State: How can the Government justify a price increase of between 30 per cent. and 60 per cent. imposed on one section of the population while providing relief for others, and this at a time of income restriant? I have discovered since that some of my constituents face a price increase of 100 per cent. So far, my right hon. Friend has given me no answer. I am determined to get an answer. The question, therefore, is what can be done to put the matter right.

As a consequence of revaluation, Essex as a whole has lost all its resources grant, thus adding to the burden which our ratepayers have to meet. Not only has the county council lost resources grant of about £1.7 million; the county district councils have either lost completely or sustained a very severe reduction in their percentage share of that grant. The Rayleigh urban district, for example, has lost the whole of its grant.

Much of this was foreseen, and, after consultation with my local authorities, I warned the Government well in advance of the statement of my right hon. Friend the Secretary of State about support measures on 6th March last. That was in February. It is no comfort to me to say now on the Floor of the House that I was right.

I must mention another consequence of revaluation which is causing widespread local concern, namely that domestic water rates must automatically go up although householders will not use any more water.

It is true that adjustments to be made by the water authorities as a result of revaluation were considered in Circular No. 106/72 on water charges issued by the Department of the Environment. That circular pointed out that the same revenue can therefore be raised with lower poundages. It is possible, of course, to argue that all of us ought to pay more for water, which is becoming increasingly in short supply. But if in fact our rating assessments in South-East Essex have been increased by more than the facts justify, any increase in water rate will compound the inequities in our situation. Some action must be taken to deal with this facet of the problem.

Therefore, I ask my hon. Friend to give urgent consideration to certain suggestions. First, I ask him to accept that it is not reasonable for us to wait for the promised reform of local government finance. This will not help us in a year of income restraint. I suspect that it will not help us next year, either. It is true that our ratepayers can and no doubt will in large numbers withhold some rates by making mass appeals so that by their own efforts they can get some temporary relief, although ultimately they may have to meet their full liability. But the need is for action now.

Secondly, when the total effect of the special rate relief arrangements over the country as a whole has been ascertained —which should be soon—there should be immediate consideration as to how relief can be given to areas like mine, which are being heavily penalised under the existing arrangements. I ask my hon. Friend to say what arrangements there are for an early review of the situation.

Thirdly, since it has taken 10 years to cause the present imbalance, can consideration now be given to phasing the loss of rate support grant over a longer period than 12 months? That would enable local authorities, if the will exists and the necessary direction is given by the Government, to start making an adjustment this year which could bring some relief to the most heavily affected areas.

Fourthly, in order to assist ratepayers in lower-rated properties, immediate consideration should be given to amending the Statutory Deductions Order 1962, which, for reasons beyond the comprehension of the treasurers of my four local authorities, remained unchanged this year.

I look forward to hearing what my hon. Friend has to say. In particular, I want an answer to the question how a price increase of 30 per cent. to 100 per cent. can possibly be justified for some citizens as against others in a year of income restraint for us all.

3.16 p.m.

The Under-Secretary of State for the Environment (Mr. Eldon Griffiths)

This is the seventh time that we have debated rates in this Session. I cannot recall a more eloquent statement of his constituents' problems than that which we have just heard from my hon. Friend the Member for Essex, South-East (Sir Bernard Braine). I fully appreciate his concern, and that of his constituents. He has been foremost in putting forward their grievances but he will know that my right hon. and learned Friend the Secretary of State and my right hon. Friend the Minister for Local Government and Development and myself are fully aware of the problems affecting South-East Essex. We are grateful to my hon. Friend—as I am sure his constituents are—for the forthright way in which he has deployed the very real concern and anxieties of his constituents.

I thank my hon. Friend for that service to his area and, indeed, to my Department. In replying I will start with a point of perspective; namely, that we have to be clear in our minds what rates are for. They are, of course, nothing mare or less than the means whereby local authorities are enabled to meet that part of their expenditure in their areas which is not covered by Government grant or other income. It is certainly common ground between us that the services which local government provides and for which the rates pay are essential services. They need to he maintained and, as possible, improved.

The Government believe, as I am sure my hon. Friend does, that flourishing and independent locally-elected authorities must have a large area of discretion to take decisions affecting their local electorate, subject to any overriding requirements of national policy, and, therefore, the prime responsibility for levying the rates and for fixing the poundage levied is clearly that of the local authorities. I stress, therefore, that much as my right hon. Friends and I sympathise with those facing increased rate bills—indeed, I am facing one myself—it is not for the Government to dictate to the local authorities the rates that they should levy.

The main responsibility is that of the local authorities—for South-East Essex as everywhere else. Nevertheless, I must accept that this year there is the particular factor over which local authorities have no control themselves and which has caused—other things being equal—rates to go up in some places, although down in others. This is the factor of revaluation, and I appreciate that South-East Essex is an area where, because of revaluation, rateable values are generally higher relative to the national average than they were before.

I make no apology for the Government's proceeding with revaluation. I believe that in principle revaluation is fair play. It had been made long overdue by the decision of the Labour Government to postpone the revaluation which had been due in 1968. Rates are a levy based upon rental values and for rates to be fair in their incidence those rental values need to be kept up to date, and that, in effect, is what revaluation does. It cannot be seriously argued that the relative values set in 1963 were not already well out of date by 1968, when there should have been a revaluation, and by 1972–73 in many parts of the country they were widely out of line. Fair play itself requires those values to be brought up to date.

Generally in these debates we tend to hear from those areas whose values have increased more than the national average, but my hon. Friend who is a fair-minded man, will accept that there are parts of the country from which we do not hear and where values have increased a good deal less than the average. They have nothing to complain about, and so we never hear from them. But it is only right for me to recall that revaluation brings benefits to those areas which, for five or even 10 years, have been paying rates that have been unfairly high. This is the redistributive fairness of revaluation.

There are repercussions on the rate support grant. One important factor in South-East Essex is that the rate support grant has been reduced because, broadly speaking, valuations in that area show that Essex has gone up in the world, is richer, is better off, and is, therefore, receiving from the national Government a smaller proportion of help in respect of its resources element. It is this effect of revaluation that has played a great part in putting up the rates of householders in South-East Essex.

Like revaluation itself, changes in the rate support grant are essentially fair, and that is the main purpose of that element of the grant. It takes money from those whose rates resources have risen, as in Essex, to give to those whose rate resources have fallen. For this reason more than any other the Government could not contemplate a redistribution of the resources element so as to give more to South-East Essex, for if that were to be done it would simply mean giving less to areas which need help rather more. So the Government's standpoint has been, and must remain, that revaluation itself and its indirect effects are fair and that the redistribution of the rate support grant is also fair.

That does not mean for a moment that the Government should simply stand idly by and watch the effects of these changes on areas and individuals. The Government have a duty to take some action to mitigate the most severe effects. What have we done?

The Government have taken a number of actions. We won the agreement of the local authority associations that there should not ordinarily be, taking the country as a whole, a rate increase nationally beyond the figure agreed within the incomes policy, and I believe that the great majority of authorities have conscientiously sought to achieve that, although by no means all. Secondly, we have made the largest ever increase in Government help to local authorities, so that we are now providing 60 per cent. of all their relevant expenditure at a cost to the Exchequer of some £3,000 million, which means that for the first time nationally only 40 per cent. of the relevant expenditure in local authority areas is provided by the ratepayer, the smallest proportion ever. We have increased by a half the domestic relief element. The figure now stands at 6p as opposed to 4p, which is a useful addition.

Under the incomes legislation we have conducted a rate monitoring exercise which has produced a reduction in local authority expenditure of just over £13 million. We have had good co-operation from many Essex local authorities. For example, Rayleigh Urban District Council was invited by my Department to cut its rate proposals by £30,000. It agreed. Rochford Rural District Council was invited to cut back its proposals by £80,000. It managed to reduce them by £60,000. The other two authorities were merely invited in general terms to review their expenditure.

The county council was also asked to review its proposals but was unable to make any reduction. I would like to say that I am most grateful to the urban district of Rayleigh and the rural district of Rochford for their help. Local ratepayers will feel the benefit. I am sure that the authorities have been impressed by my hon. Friend's efforts on behalf of his constituents when they came to consider reducing their expenditure.

All of this is useful but the main thing which the Government have done is to produce the special scheme to mitigate hardship to individual ratepayers who find their rate call increased solely as a result of revaluation, in some cases by a substantial figure.

Sir Bernard Braine

There is also the effect of the withdrawal of the rate support grant.

Mr. Griffiths

Indeed, but the net effect of this scheme is that all increases over 10 per cent. due solely to the effects of revaluation in all its forms are payable by the Government.

My hon. Friend mentioned one or two specific points with which I must deal. He mentioned a number of properties which appeared to be identical and were in the same locality but had different rateable values. Without further information I cannot agree that this means that someone has got his values wrong. There may well be circumstances not readily apparent which account for the difference. Parliament has provided legal redress where there are such mistakes as my hon. Friend has in mind. If necessary, an aggrieved ratepayer can take his case to the local valuation court.

My hon. Friend also complained that the reply he received from my right hon. and learned Friend did not deal with his points. I will try to deal with his bull point later. I am sorry if he felt that my right hon. and learned Friend's letter was not responsive but I ought to remind him about the opportunities which exist to help those on relatively low incomes who find it difficult to meet the increases.

There is the rate rebate scheme. Where the income is within the limits which determine entitlement the ratepayer has only to pay one third of any increase in his rate bill. Thus, a married man with two children who in the second half of last year earned up to £22 a week would have to pay only £3.75 in the present half-yearly rate period plus one third of the rates in excess of that amount. I would be happy to look at any particular case which my hon. Friend may care to raise.

My hon. Friend made a further important point, and he, his constituents and local authorities throughout the country may be interested in my reply. He raised the question of the statutory deductions from gross values. I accept that my hon. Friend may have a point and I hope he will be pleased to learn that the Department is currently discussing this matter with the local authority associations. It is still a little early to say what the results will be but I give him the assurance that if it seems that some adjustments to the scale may be justified we shall certainly consider this most sympathetically and quickly. That is of importance particularly to those at the lower end of the scale.

I am looking into the water question. I am not aware that the Essex water authority has substantially increased its overall expenditure, but I shall look into the matter and write to my hon. Friend.

My hon. Friend and I have discussed Maplin many times and, as he said, we shall no doubt return to the subject. Essex has in prospect the injection of substantial Government expenditure, thereby raising substantially the rate resources of the county and various districts. I very much hope that local ratepayers will see some benefit from that to offset some of the disadvantages which my hon. Friend may feel arise from this subject.

About 800,000 householders in England and Wales now receive a rent rebate, and more than four-fifths of them are retired. The higher limits that have been set here will not in themselves enable someone getting the maximum rebate to get a higher proportion of rebate, but they will mean that in most circumstances people will get more money.

I recognise, as my hon. Friend said, that revaluation at a time of an incomes policy has caused problems, but I hope he will agree that that is not a good reason for postponing or running away from revaluation as our predecessors did. I think that it was right and fair to revalue. It was right, however, also to bring in a scheme to mitigate the more severe effects in the manner that I have described.

I can only say to my hon. Friend that he has effectively deployed the concern of large numbers of his constituents. I believe that when the full effects of the Government's special help have been seen fewer people will have quite such grounds to complain as seems the case now.