§ The Under-Secretary of State for Northern Ireland (Mr. David Mitchell)
I beg to move,That the draft Rates Amendment (Northern Ireland) Order 1981, which was laid before this House on 17 December, be approved.The order, which is short and straightforward, tries to do two things—to permit of the valuation and rating as a single hereditament, in suitable cases, of caravan sites or portions of sites and, secondly, to enable the rating authority for Northern Ireland, in reckoning rate liability, to disregard minor valuation changes until the next rating year.
The permissive power sought in article 3 in relation to the valuation and rating of leisure caravans has become necessary because over a period of years patterns of occupancy have evolved so that many have achieved the status of hereditaments within rating law. In short, they have become a sort of weekend cottage. That has faced the valuation office with a statutory duty to initiate action for inclusion of such caravans in the valuation list. It will readily be seen, however, that the collection of rates from individual caravan owners, whose normal domicile could be dispersed throughout the length and breadth of Northern Ireland and beyond, would be troublesome to the ratepayers and extremely difficult to administer by the rating authority. For example, many caravans do not have letter boxes. The caravanners are not happy with the system.
A precisely similar situation arose in Great Britain about six or seven years ago and it was dealt with by the Rating (Caravan Sites) Act, which was enacted on 13 April 1976. That parallel legislation in Northern Ireland has not until now become necessary is a reflection of the fact that the developments in leisure caravanning that gave rise to the 1976 change in Great Britain have been slower to occur in the Province. Therefore, the present proposals represent the extension to Northern Ireland of provisions that have operated very satisfactorily in Great Britain since April 1976, and will have the effect of placing the Province on all fours in the matter with the rest of the United Kingdom.
I should make it clear that article 3 would not increase the liability for rates that would otherwise accrue in respect of any leisure caravan. In the past some people have escaped the net, but from April 1982 they will be drawn in.
The order essentially is concerned with the unit for assessment of rateable valuation and the locus of liability for rates. The criteria that determine rateability are exactly the same in Northern Ireland as in other parts of the United Kingdom and these criteria are unaffected by article 3.
The proposal in article 4 is designed to enable postponement of the rating effect of minor valuation changes that extend to Northern Ireland, with some modification—a change in the law brought into effect in England and Wales by section 21 of the Local Government Act 1974. It differs slightly from that Act because it takes account of experience of the operation of the legislation in this part of the Kingdom and seeks to avoid certain anomalies that have arisen in the operation of the law in England and Wales.
Under Northern Ireland law as it stands, changes in the net annual value of hereditaments are effective from the 854 date on which the changes take place. Thus, for example, if an extension to a dwelling valued at £30 is occupied on 1 July, for example, the increased rates are payable from that date. But a very significant amount of administrative effort is expended by the rating authority in establishing the effective dates of occupancy in such cases, at considerable cost to public funds, and it has been concluded that any temporary loss of revenue from postponement of the rate effect of minor changes will be more than offset by the savings.
Article 4 of the order therefore provides that an alteration in the net annual value of any hereditament, provided that such alteration does not exceed £30, or such other amount as may be specified by order, will not be taken into account in assessment of the rate liability until the following rating year. Thus, in the example that I referred to, the extension occupied on 1 July would not become liable for rates until the following 1 April.
The postponement applies to both increases and decreases. That is logical, since we are dealing with the savings of administrative costs and a valuation difference of £30. The limit is the same as it is in Great Britain.
The order was published as a proposal for consultation and contained a provision the effect of which would have been to discontinue the small discount allowed for prompt payment of domestic rates. I am pleased to be able to assure the House that this has been dropped in view of the virtually unanimous opposition from Northern Ireland representatives in Parliament, and from local authorities, many of which I have spoken to in my visits to the Province. Many people, including private householders have raised the subject with me. Because of that the Government have decided, without prejudice to any future decision, to drop the proposal from the order as laid and to give the matter further consideration in the light of the views and advice received.
The order is modest in length and its objectives are of no particular complexity. Its general objective is to bring Northern Ireland law closer to that of Great Britain. I commend the order to the House.
§ Mr. Clive Soley (Hammersmith, North)
The Opposition have no objection in principle to the order, but we wish to raise one or two points. Perhaps the Minister will be good enough to respond in due course.
Caravanners, I suppose, like boat owners, are frequently in an anomalous position in relation to tenants of one type or another. Under the order, as the Minister has said, the district valuer will levy the rate on the site itself and the owner will then divide it up. The owner's responsibility appears to be confined largely to putting up a notice showing the overall rate and then arranging for collection and payment to the local authority.
The House should note that the caravan owner pays a fee for a licence that does not give him any security of tenure, so the site owner is already in a considerably more powerful position than the person who rents the site from him. To give the site owner the power to divide up and collect the rates without safeguards adds to that difference in the power relationship between the two.
Many site owners may use that power properly and responsibly, but the fact that the Monopolies and Mergers Commission is to investigate the supply of pitches for holiday caravans in Northern Ireland suggests that there is a problem. I gather that not the least aspect of that problem 855 is that the renting of a site may be linked with the sale and purchase of caravans. A person wishing to rent a site may be told that he must buy a caravan from the site owner or sell the caravan back to that person. I understand that the Monopolies and Mergers Commission will be investigating the supply of pitches and I hope that it will take these matters into consideration, but I note that it is not expected to report for at least another year.
Given that caravanners are now to pay rates, there is a strong case for people renting sites to have either security of tenure or some form of enforceable—I emphasise the word "enforceable"—code of practice. Perhaps the Minister can give an undertaking that, following anything that the Monopolies Commission may recommend in a year's time, he will come back to the House on this subject and that he is prepared to ensure that those renting caravan sites receive some degree of protection either through security of tenure or through a code of practice that is enforced. If people are to pay rates on the site, they should have some security.
One must also ask what rights the caravan owner obtains by paying rates. Is his rubbish collected? Is a water supply provided? Or is this solely a matter for the site owner? If it is a matter for the site owner only, what is the position if the person renting the site receives no services? If he is simply given a patch of ground on the site, with no water supply, no rubbish collection, no toilets, and so on, will he pay no rates or just a very low rate? That is a pertinent question for anyone considering renting a site.
Disputes might also occur between the site owner and the caravan owner. If it is left to the site owner to decide how the rates are to be divided up, many differences might occur. The size of caravan is important. Would a small van be rated the same as a large van? The provision of services is also relevant. One person's caravan may be close to all the services while another is on the other side of the field with little access to services. If both have to pay the same rate there may be a feeling of unfairness.
What will happen if such differences arise? So far as I can see, there is no provision of any kind to deal with them. It seems to be simply a matter of the caravan owner arguing his case with the site owner. That seems to leave the position wide open to potential abuse and possible conflict.
I also note that there is no possibility of rate rebates. I do not expect that to be an immense problem, but some people who own leisure caravans do not have high incomes. They may have bought the van many years ago and now be receiving a pension. If there is a high site value and the site owner imposes a high charge on those people, to whom can they appeal?
Will a person who sells a caravan halfway through the year pay the whole year's rate or will he get a rebate, with the new owner paying rates for the rest of the year? If the van is moved off a site will the site owner keep the rate money?
I do not expect the Minister to reply to all my questions tonight, but I ask him to give serious attention to the question of security of tenure or a code of conduct. That would be a way of checking some of the abuses that could develop. Obviously, I shall be interested to hear any answers that the hon. Gentleman can give.
There has been relatively little—I put the matter as cautiously as I can—consultation with the Northern Ireland Caravan Owners Association or, at least, its submissions do not seem to have been taken into account 856 in the legislation. The association voices the concern of not only the consumer, but the ratepayer and it deserves to be consulted carefully. I do not suggest that the association is the only representative of the consumer and the ratepayer, but it should have been listened to, particularly in regard to security of tenure and a code of conduct. I hope that the Minister will consider those matters in due course.
§ Mr. James Molyneaux (Antrim, South)
I thank the Minister and his noble Friend Lord Gowrie for responding to my letter of 30 September 1981 in which I expressed opposition to article 5 in the original draft order. My panty expressed the view that, although the practice of discounts for prompt payment of rates may be diminishing in Great Britain, it was inappropriate to abolish the discount provision at a time when interest rates for local authorities were well over 15 per cent. The Ministers have acted in the best interests of the Treasury, local authorities and individual ratepayers by withdrawing article 5.
We welcome the provision in article 4 for changes in valuations not exceeding £30. As the changes would mostly be upwards, I am sure that the deferment will be welcomed. They are to be delayed until the beginning of the rating year following that in which the changes take place. That will make for much tidier administration and is a sensible improvement.
The main part of what is left in the order concerns the valuation and rating of caravans. Like the hon. Member for Hammersmith, North (Mr. Soley), I hope that the rates will be modest. It would be a mistake to imagine that caravanners are well-off people who can afford a second home. For many, a caravan is a modest luxury and, in many cases, an alternative to the type of holiday that owners would like to take if they could afford it.
May we take it that there is no change in the position of the other two categories? Presumably, permanent residential caravans will continue to be separately rated, and caravans used for touring and not permanently sited on any pitch will presumably continue to be exempt from rating, as they are in the rest of the United Kingdom.
There has been some confusion about the proposed method of assessment. Paragraph 3 of the explanatory document starts fairly clearly, but in the second line complicates matters by the phrasetaking full account of the assessments attributable to individual caravanners".Do those words mean that the valuation officer will have regard to the standard, type and amenities of individual caravans and then total his sums to arrive at the valuation for the whole site?
Paragraph 3 goes on to state thatthe site operator would then be responsible to the rating authority for payment of rate on the entirety of the site".I understand that to mean that the site owner will collect and pay rates for the whole site. Does it also mean that the site operator will subdivide the total rate? Can he be prevented from, say, quartering the site before apportioning the rate on individual caravans? There could be a vast difference in the numbers of pitches in each quarter, with dramatic variations in the rate demanded from caravan owners. If the operator strikes an average, will it be the average for the whole site?
In fairness to site operators, it must be admitted that the order places them in difficulty. A site owner will be the 857 allocator as well as the rate collector. There would appear to be no way of appealing against his allocation. Admittedly, each caravan owner has the right to apply to be valued and rated separately, but there is more than a suggestion that he may end up paying more than the average for the site. I doubt whether that will be regarded as satisfactory.
The question that then arises—it featured prominently in our debates in 1976 when the Great Britain legislation passed through the House—is: will there be a flat rate irrespective of the size of caravans? Will account be taken of those connected to mains water supplies? Incidentally, connection can cost up to £176. Will caravans parked on a pitch with a sewerage system be rated at a higher level?
When will payment be due? Can a site operator force occupiers to pay as soon as the demand is received, having been broken down and furnished by him to the occupiers as a secondary or delegated rate demand?
If an operator wishes to get rid of an occupier, will he be able to use the significant power given to him under the terms of the order as a powerful lever? If so, what safeguards can be devised and provided?
I understand that any instalment scheme would have to be worked out between the operator and the occupiers. Would it be possible for an operator to demand and obtain immediate payment from occupiers and then to use the instalment plan to make his payments to the Department of Finance?
I notice from the note dated 26 October 1981 that a site operator would have no entitlement to discount. Has the payment of rates on caravans been altered by the dropping of article 5 from the original draft order? If so, will a site operator benefit from the discount arrangement? More importantly, will a site operator pass on such benefit to caravan occupiers?
I support the plea made by the hon. Member for Hammersmith, North (Mr. Soley) that, in return for this significant imposition of rates on caravan owners, the Government should seriously consider providing security of tenure and an effective code of practice.
I note that the order follows closely the Rating (Caravan Sites) Act 1976. That legislation was made necessary because certain decisions of the Court of Appeal in 1966 threw the then legislation into something approaching chaos. In 1976, English Members put many of the questions we are discussing. Can the Minister say how the 1976 Act is working out in practice?
We need to be assured that we are not enacting legislation which is proving defective and unworkable in the rest of the United Kingdom.
§ Mr. David Mitchell
We have had a short but probing debate on the order and, as I said at the outset, it has become clear that the order's objects are modest and its general purpose uncomplicated. The main effect of the provision will be to bring Northern Ireland law, on these matters, into closer alignment with that of Great Britain and confer benefits on Northern Ireland ratepayers which they do not presently enjoy.
I can assure the hon. Member for Antrim, South (Mr. Molyneaux), who leads for the Official Unionist Party, 858 that the law in that respect is operating perfectly satisfactorily on the mainland and, therefore, we are content in seeking to follow it.
The hon. Member for Antrim, South was pleased with many aspects of the order and particularly welcomed the delay in implementing the £30 rateable value changes. I am glad that that and the dropping of the discount proposal have met with his approval.
We have tried to make our consultations genuine in these matters and to take account of what the hon. Gentleman and other hon. Members said, as well as the views of elected industrial councillors.
I was particularly asked whether the touring caravans continued to be exempt and I can assure the hon. Member for Antrim, South that they do. I was then asked whether the sites were all considered individually by the valuation office in arriving at the totality for whole site. I can give that assurance; it operates in that way. I was then asked about the protection for the occupier if the site operator shares out the amount assessed on him in a disproportionate way. The hon. Member for Antrim, South talked of quartering the site with different proportions of caravans on the quarters.
Since every occupier has the right to seek to have a separate valuation for his site and, indeed, to pay his rates individually if he so wishes, there is an absolute safeguard against the site operator behaving in an unscrupulous manner or, by chance, inadvertently treating an occupier unfairly.
The hon. Member for Antrim, South probed for more assurance about that. He particularly asked me whether there would be a flat-rate assessment regardless of a caravan's size. For example, a site might contain 100 caravans, 20 or 30 of them four-berth or 40 or 50 six-berths adn some two-berth. That factor is considered by the valuation officer when he makes his valuation because he is valuing on the normal basis of what a caravan would let for.
The hon. Gentleman asked me whether there would be higher rateable values for caravans with sewerage and mains water facilities. The answer is, "Yes, of course". That is one of the factors to be taken into account in assessing rateable value. The hon. Gentleman is right in suggesting that the operator acts in the course of fulfilment of the order as a subsidiary rate collector. That is for the convenience of the Government and individual caravaners, who may often leave their caravans for considerable periods at the site without being in occupation, who may not have letterboxes and who often have great difficulty in being able to receive individually posted rate demands at the sites of the caravans, as opposed to demands being sent by operators to their homes together with rent demands.
I was asked whether an operator can demand payment immediately and then pay by instalments. Yes, he can. Before the hon. Member for Antrim, South says that that is unfair, may I say that those who will operate the system will no doubt assure the hon. Gentleman that any operator who was paid immediately he demanded payment would be a surprised man? That certainly applies to some occupants.
Can a discount be obtained by the operator? Yes, it can. Whether he passes on the discount is a matter between him and his tenant. For the reason that I have given I doubt whether he would receive the money in full.
859 The hon. Member for Antrim, South, together with the hon. Member for Hammersmith, North (Mr. Soley), referred to the Monopolies and Mergers Commission's report and a desire for a code of practice. The hon. Member for Hammersmith, North fairly referred to the powerful position in which site owners find themselves, the need for some safeguards, and the strong case, as he saw it, for an enforceable code of practice or security of tenure. We must await the commission's report, but that will not be relevant to the order. I can give him the assurance that he implied he would like, and that is that we shall consult the caravaners' representatives in considering the results of the report.
I have been asked about rates payable for local government services. Rates are not to be seen as payments for services, as they are a tax. The absence of services will be taken into account in the assessment of the net annual value. Some sites are, of course, better than others, and I have been asked about rights of appeal. It is important that built into the order is the right of the individual to seek his own assessment. He has a statutory right to be assessed separately and to pay separately, but he does not have a statutory right to say, "If I were to seek to use my statutory right, what would it cost me?"
I can give the House the assurance that by administrative action we shall make it possible for any individual tenant who fears that the site operator has been unfair in his distribution of the burden to ascertain what it would cost if he paid direct. In most instances it should be very slightly more profitable for him to pay through the site operator rather than individually. If he finds that it is cheaper for him to pay individually, he should take up that right.
I believe that I have covered the issues that have been raised in this short but probing debate on what we intend to do and how we intend to operate the order. I commend the order to the House. In its administration I shall take into account the issues that have been raised so cogently by hon. Members.
§ Question put and agreed to.
That the draft Rates Amendment (Northern Ireland) Order 1981, which was laid before this House on 17 December, be approved.