HC Deb 11 November 1975 vol 899 cc1491-8

9.18 a.m.

Mr. Wyn Roberts (Conway)

After the excitement of the night, hon. Members may agree that it is a pleasant relief to turn to the subject of the problem of dwelling houses rated as boarding houses. There are premises in my constituency, and elsewhere in the United Kingdom, that are used solely as private dwelling houses, but they are valued and described for rating purposes as boarding houses. There are at least 50 such premises in Llandudno alone.

Some of these premises have no recent history of use as boarding houses. Nevertheless, they are valued and described as such in the valuation list, because in arriving at his valuation and description the valuation officer is required to envisage them as being vacant and to let. If, in his opinion, the premises would then command a rent commensurate with rents of boarding houses, they must be valued and described accordingly, irrespective of whether they are, in fact, occupied for that purpose.

The Minister of State, Treasury, the hon. Member for Llanelli (Mr. Davies), confirmed this view to me in a letter dated 15th September last. He wrote: I can understand the concern of your constituents at the situation which has apparently arisen but, as far as the Valuation Officer is concerned, there can be no suggestion that he has acted incorrectly. The concern of my constituents arises from the fact that they are unable to obtain domestic rate relief together with the facility for the payment of rates by instalments and to obtain rate rebates where appropriate. Their inability to obtain these things, particularly domestic rate relief, derives from the fact that the local rating authority, Aberconwy Council, takes the view that domestic rate relief should be available only on those premises described in the valuation list as private dwelling houses, which alone attract the domestic element of the rate support grant under the 1974 Regu lations and similar regulations made previously.

I have a great deal of sympathy with the council's view. At the same time, it is clear that, under Section 48 of the General Rate Act 1967, where a property is used exclusively as a private dwelling, as defined in the Act, the ratepayer is entitled to domestic rate relief. Section 48 provides: Every rating authority shall reduce the amount which, apart from this subsection, would be the amount of the rate levied by the authority for any year on any dwelling-house". "Dwelling-house" is clearly defined in Section 115(1) as a hereditament…used wholly for the purposes of a private dwelling or dwellings". It follows that it is not necessary for the hereditament to be described as a dwelling house in the valuation list for the local authority to give rate relief.

Furthermore, the Act requires that relief shall be given. It seems to me that the Aberconwy Council is in the wrong in not granting that relief. I should be glad if the Minister would confirm that that is the position under the 1967 Act.

Why should the local authority give rate relief on premises that do not attract the domestic element of the rate support grant, the distribution of which is by reference to the rateable value of dwelling houses as certified by the valuation officer? Of course, the valuation officer cannot include in his certificate properties used as private dwelling houses but described as boarding houses.

This results in the situation that, if an authority gives domestic rate relief, the relief cannot be recovered through the domestic element of the rate support grant, and the relief so granted by the authority is in fact being met by the remainder of the ratepayers of the district. Surely that was never the intention of Parliament, or of the Government who introduced the rate support grant in 1966. The intention was that domestic rate relief should come from Government funds.

Commenting on Aberconwy Council's practice of using the valuation list to decide which properties qualify for domestic rate relief, the Treasury Minister, in the letter of 15th September to which I have referred, describes it as "somewhat restrictive". He adds: The law is quite clear and the proper test is to consider the actual use of the property rather than the description of it in the valuation list. The law may indeed be clear—as clear as the braying of an ass often is—because it provides two different definitions of a dwelling house: one, in Sections 48 and 115 of the General Rate Act, to determine the entitlement of the ratepayer to relief and the other, in Statutory Instrument No. 428 and its predecessors, to determine the amount of the domestic element of the rate support grant payable to the local authority. The former definition includes dwelling houses valued and described as boarding houses, while the latter excludes them and confines itself to …dwelling houses in the area as certified by the valuation officer. No one would dispute the superiority of the Act over the statutory instrument in an area of conflict such as we have here, or the need for the two definitions to be brought into line in the interests of all concerned, and in particular in the interests of justice to the ratepayers, especially those paying boarding house rates without relief for their private dwelling houses. It would not be necessary to amend the rate support grant regulations to allow the valuation officer to certify these properties for rate support grant purposes. He could certify them on the basis of actual use and specifically for the purposes of the regulations.

Another suggestion, and one favoured by the Association of District Councils, is that there should be an amendment of the rate support regulations to allow certification by the treasurer and the district auditor of the rateable values of any properties on which domestic rate relief was granted but which had been classified as dwelling houses by the valuation officer. I am told that the district auditor already certifies mixed hereditaments, so there can be no earthly reason why he should not certify dwelling houses valued and described as boarding houses.

I hope that the Minister will seriously consider these two proposals. I shall be surprised if he does not say that this is among the matters being considered by the Layfield Committee. He may dare to suggest that the final resolution of the problem should await its report and consequent Government action. Meanwhile, he may say that Aberconway Council should follow the practice of some other councils, which is to grant relief from rate revenue. But such an answer would not be satisfactory. The local authorities and their ratepayers are being hard done by while this situation, which is manifestly wrong, continues. There is no doubt that the Government are taking unfair advantage of them in giving them less by way of domestic rate support grant than they are required to give by way of domestic rate relief.

Some of my constituents in the predicament that I have described have been advised to apply to the valuation officer for reclassification of their premises as dwelling houses and the valuation officer will probably lodge an objection to their proposals. I understand that he has already done so in 30 cases. It is not for me to pre-empt the judgment of the valuation court, although I have my own opinion of the value of the advice that my constituents have received.

Others may consider taking the local authority to court for failing to pay domestic rate relief to them as required under Section 48 of the 1967 Act, or they may resist an application for a distress warrant for rates calculated at the full poundage, or they may appeal to a Crown court against the rate. It would not be proper for me to comment in advance on any such proceedings as may be contemplated. Some of the constituents involved are pensioners in their seventies and they find it difficult to understand why they should be involved in court proceedings of any kind. It frightens them. Their understanding of the law in this matter is justifiably imperfect and their financial resources are very limited. They depend on the Government, with all the legal advice available to them, to declare what and who is right or wrong. I shall expect the authorities to act on the advice of the Government.

I shall only mention one case, but it is typical. Mrs. Peggy Emery is aged 77 and lives on her pension at Ludlow House, Clifton Road, Llandudno. Her home has not been used as a boarding house for more than a decade. Her rates this year are £239. There is no domestic rate relief and no possibility of a rate rebate. Something must be done for her and others like her.

The Government must make a clear statement on two issues—that of domestic rate relief for those in private dwellings rated as boarding houses and on whether such relief, when granted, should not be recoverable by the local authority through the domestic element in the rate support grant.

9.31 a.m.

The Under-Secretary of State for Wales (Mr. Alec Jones)

Having gone through a rather lengthy night, I hope that hon. Members will bear with me while I try to explain the somewhat complex problem that we have had presented to us. I do not propose to suggest that we should wait for Layfield. That is the first and last time I shall mention that name.

The problem is in two parts. The first concerns the description and the rateable value of the property in the valuation list. In every town hall there is a valuation list giving details of property on which the local authority will levy a rate. Among other things, the valuation list will give a description of each property. It will also show a rateable value for the property. The question posed by the hon. Member for Conway (Mr. Roberts) is how a property can be described and valued as a boarding house when it is used for entirely different purposes.

Here we must go back to the basis of our present rating system. All property liable to be rated will be given a value based on its rental value in the open market. The task of compiling and maintaining the valuation list is the responsibility of the valuation officers of the Inland Revenue. When valuing property, they will both describe and value the property as if it were vacant and to let. This is a long-established principle which is supported by the courts.

Therefore, it does not matter for valuation purposes how a property is actually used. The question to be answered is what possible use or uses would govern the level of rent obtainable if the property were offered for letting in the open market. This is the decision which the valuation officer must take, based on his experience of the property market together with the facts of the particular case.

However, I would emphasise that each case is decided on its own circumstances, and if any ratepayer disagrees with the decision made by the valuation officer concerning his property, he may appeal to the local valuation court. The hon. Mem ber's constituents, about whom he is so understandably concerned, certainly have this avenue open to them. They may go to the local valuation court and say "I do not agree with the discription of my property given by the valuation officer; nor do I agree with the rateable value he has decided." The valuation panel will look at all the facts of the case again and, if it so decides, it may change both the description and the value of the property.

Let me also advise the hon. Member's constituents not to be put off by the word "court". I know this sometimes worries elderly people. One does not need to be represented at a local valuation court and no costs need be incurred. The proceedings are informal.

So much for the valuation problem. I cannot intervene in this, nor would it be right for me to do so. Parliament has provided an appeal system which will ensure that everyone is dealt with fairly and on the same basis.

The second part of the problem concerns the granting of domestic rate relief. All domestic ratepayers have their rate poundage reduced each year by a specified amount in the pound. This year the Government decided that in Wales domestic ratepayers would have their rates reduced by the very high figure of 36p in the pound. Perhaps our generosity here has made the hon. Member even more determined to pursue this matter.

Domestic rate relief is distributed by rating authorities under the terms of Sections 48 and 115 of the General Rate Act 1967. These provide, in effect, that the rating authority is to grant domestic relief in respect of any hereditament which is used wholly for the purposes of a private dwelling. Here I would emphasise that the decision to grant such relief is based on the actual use of the property. I must also emphasise that the decision lies with the rating authority. However, on the facts as presented to me by the hon. Member, I see no reason why the Aberconwy rating authority should not grant domestic rate relief for so long as the solely domestic use continues.

Why, then, does it not allow the relief? I understand that the council concerned has decided to allow such relief only on property described in the valuation list as a dwelling house. Therefore, if something is described as a boarding house or shop, but is now used only for domestic purposes, it will not get relief. There is certainly no need for that approach and it does not appear to me to square with the governing legislation.

I understand that the rating authority adopts this practice because it believes that any relief that it pays in respect of property which has a commercial description on the valuation list will not be recouped through the domestic element of the rate support grant. That may be so; I would not dispute that the way the domestic element of the grant is calculated can lead to this result.

The calculation is based on the total rateable value of all property which is described as a dwelling house in the valuation list. But an addition is made to the sum so calculated to allow for any relief granted to partly domestic property called mixed hereditaments. This addition might in some areas be sufficient to cover relief both to the mixed hereditaments and to property such as we are now considering, and in other areas I accept that it will not do so. The grant cannot be so finely tuned as to be dealt with pound for pound.

If this is a problem I shall certainly ask my right hon. and learned Friend the Secretary of State to consider whether any arrangement should be made to take account of relief in respect of property such as the boarding houses in question. The hon. Member's suggestions, and those from the association, will be included in my request to my right hon. and learned Friend. This, however, does not affect the issue of the liability of the rating authority to grant domestic rate relief on the basis laid down in the Act.

In our first attempts to deal with the problem we made inquiries which showed that no other authority in England or Wales was creating this sort of problem. We must therefore ask the Aberconwy rating authority to look again at its practice here and to consider whether it conforms to the criteria for entitlement to domestic relief in the provisions in the General Rate Act 1967 which I mentioned earlier. If it eventually comes to the conclusion that its current practice in this matter is not soundly based in law, it will, I know, hasten to put things right.

If, on the other hand, it comes to the opposite conclusion, it is not for me or my right hon. and learned Friend to interpret the law in its application to the circumstances here. I could only advise, first, that the simplest way out of the difficulty is for the hon. Member's constituents to appeal to the local valuation court against the description of this property in the valuation list. If they succeed in getting it altered to dwelling house, all is well.

Otherwise, I am afraid that they can question the decision only in the courts, and I accept the reluctance with which that step would be taken. This might most conveniently be done by their paying only the domestic rate poundage on their property and then arguing the legality of the council's decision by way of defence against legal action for recovery by the rating authority, thus putting the onus on the other side. However, I hope that the issue will be resolved without the necessity for litigation of that kind.

Like the hon. Member, I have confined my remarks to the issue of the description of the property and the question of domestic relief. But he also mentioned rate rebates, and, as I am sure he realises, exactly the same point arises on these benefits. The entitlement depends on residence in a hereditament which is a dwelling house within exactly the same statutory definition. I agree that, if their other circumstances qualify them for a rebate, people who use a hereditament described as a boarding house wholly as a private dwelling appear to be entitled to a rate rebate, and they should press their local authority to grant them one. I can assure the hon. Member that if a rebate were granted in these circumstances, there would be no question whatever of the Government's not paying the 90 per cent. rate rebate grant on it.

To sum up; there are certain remedies available to the hon. Gentleman's constituents. I appreciate some of the difficulties because of their age and reluctance to take those courses of action. I hope that, after what I have said, the local rating authority will at least look again at its procedures.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Ten o'clock a.m.