HC Deb 28 July 1982 vol 28 cc1192-9 11.41 pm
The Under-Secretary of State for Scotland (Mr. Allan Stewart)

I beg to move, That the Valuation (Postponement of Revaluation) (Scotland) Order 1982, a copy of which was laid before this House on 6th July, be approved. The House will be well aware of the history of the proposal to hold a partial revaluation next year, and I shall not dwell on that at too great a length at this late hour.

My right hon. Friend announced on 8 January that the Government intended that the rating revaluation to be held in Scotland in 1983 should apply to non-domestic property only. The Valuation (Scotland) Order which gave effect to this decision was considered in detail by a Committee of the House on 31 March. At that time, a number of hon. Members drew attention to a variety of technical problems which they saw arising as a result of holding a partial revaluation.

As I told the House on 17 May during consideration of an Opposition amendment to the Local Government and Planning (Scotland) Bill, when my right hon. Friend met representatives of the Convention of Scottish Local Authorities on 23 April, the convention made strong representations that it would be better to put revaluation back rather than hold a partial one. It felt strongly that however technically sound the conduct of a partial revaluation, its results might produce inequities in the rateable values of similar properties in different regions. Indeed, the hon. Member for Glasgow, Garscadden (Mr. Dewar) made similar points in our debate on 17 May.

In the light of these representations, my right hon. Friend reconsidered his decison to hold a partial revaluation, and on 18 June he announced that the Government intended to defer the revaluation for two years until 1985–86 and to revoke the order which prescribed a partial revaluation in 1983–84.

The Valuation (Postponement of Revaluation) (Scotland) Order 1982, which we are now considering, implements this decision. It is a very simple order, which does two things only: first, it prescribes 1985–86 as the next year of revaluation; and, secondly, it revokes the Valuation (Scotland) Order 1982.

Given the disquiet that certain hon. Members felt about the proposal to hold a partial revaluation, I am sure that the revocation of the Valuation (Scotland) Order will be welcomed in all parts of the House. Hon. Members will, however, recall that the concept of the partial revaluation was introduced to enable valuation rolls to be kept up to date while the Government considered the future of the domestic rating system. It is still important that valuation rolls should be kept up to date for as long as the rating system is with us, and so my right hon. Friend decided that revaluation should be postponed for only two years, thus allowing the next revaluation to proceed seven years after the previous one—the same period as occured between the revaluations of 1971 and 1978. Assessors will have had sufficient notice of the intention to proceed with a revaluation in 1985.

Our original intention was not to have a domestic revaluation while the future of the domestic rating system was being considered. Deferring revaluations achieves the same purpose in a different way. I hope—as my right hon. Friend said at Scottish Question Time this afternoon—that before long the Government will announce the results of their consideration of the responses to the Green Paper. We shall take them into account in planning the revaluation.

I trust that hon. Members agree that we should proceed now by postponing the revaluation for two years and abandoning the 1983 partial revaluation because of the criticisms that have been made of it by COSLA and hon. Members. I commend the order to the House.

11.46 pm
Mr. Donald Dewar (Glasgow, Garscadden)

I suspect that the Minister is glad that this order is being considered at a late hour, which gives a certain anonymity to the proceedings and provides a cloak for what is, despite all the special pleadings, a disordered retreat.

The Minister said in his opening remarks that he did not intend to dwell on the history. That is extremely wise, because it is a long and sad history of confusion and indecision and—on occasions—not a little obstinacy. It started wth the Local Government (Miscellaneous Provisions) (Scotland) Bill a couple of years ago. At that time, the Minister—not the present Minister, but the hon. Member for Edinburgh, Pentlands (Mr. Rifkind)—took power to postpone, if he thought that appropriate, or introduce only a partial revaluation. That was to be the paving provision for rating reform. It was to be a great leap forward, if not for the Scottish electorate, at least for Tory electoral prospects, because it was to be the flag-waving exercise of abolishing domestic rates.

After the Local Government (Miscellaneous Provisions) (Scotland) Bill was enacted, we had a long wait to see what would happen. I remember harrying the Minister's predecessor on numerous occasions about when he would decide whether the 1983 revaluation would go ahead. It was clear that time was running short. We were told originally that the decision would be taken in weeks rather than months. As the time ticked away, it became clear that the unfortunate assessors in Scotland would be left with an extremely difficult job, as the Minister was leaving his decision to such a late hour.

On 29 June 1981 I asked a parliamentary question, and I was told that the decision would be announced in due course. I asked another parliamentary question on 29 October 1981, when I was told, rather pompously, that the announcement would come before long. However, there was no firm news, until we had the inevitable planted question, and the announcement that there would not be a full revaluation in 1983, only a partial revaluation.

The Minister rightly referred to our doubts about the technical difficulties that such an exercise would involve. In the Sixth Standing Committee on Statutory Instruments, &c. on 31 March 1982, we debated the Valuation (Scotland) Order 1982, which we are now repealing and which has had such a sad and transitory life. I said on that occasion: If I have a criticism of the way in which the order is being handled, and indeed, the way that the whole subject has been handled in recent months, it is that the Government have not faced up to the complexities and enormous difficulties behind the operation. It has been cobbled together". I went on to say that the Ministers have not come to grips with the problems which they are causing for both the system and themselves".—[Official Report, Sixth Standing Committee on Statutory Instruments, &c., 31 March 1982; c. 6.] Although the Minister refers to that criticism now as justification and predicts that we shall welcome the order tonight, he gave it short shrift then, as did the hon. Member for Pentlands, now the Under-Secretary of State for Foreign and Commonwealth Affairs.

We had those doubts and they were not entertained by Ministers. We were chided, the whole matter was shrugged off, and we were told that the technical difficulties could easily be overcome and that there was no need to panic. Now we find that we were right all along. Spurred on by COSLA's opposition, the Minister has had to come to the House and say that he is scuttling for cover, that it was all a mistake and that he never meant it anyway.

It is a pretty sad position and there are serious implications. First, there will be a break of seven years between revaluations. It is common ground that it is useful and proper to have revaluations on a regular basis and we in Scotland were proud that we had been able to keep to our five-year pattern fairly regularly. That is a point that I have heard Ministers make.

The Minister is entitled to say that there was a seven-year break between 1971 and 1978. However, that was because of a major local government reorganisation just at the point when the quinquennial review was due and it would have been impossible to have carried on in the normal way.

There is no prospect of such an upheaval at the moment. We have had to sacrifice a quinquennial review and push it back a couple of years merely because of the indecision of Ministers and a dramatic change of course that was forced upon them by their own misjudgment and miscalculation.

I shall not bother hon. Members with the large number of quotations from the Minister and his predecessors about the value of regular quinquennial reviews. However, if the Minister looks at the report of the local government and planning debate in the House on 17 May 1982, he will see that that is the point that he was making. He said: I entirely accept his general point about the advantages and desirability of regular revaluation."—[Official Report, 17 May 1982; Vol. 23, c. 79.] That is a theme about which we have heard a great deal. There has been a break in that regularity and we are entitled to complain about it.

To push the revaluation back by two years will considerably disadvantage the ordinary ratepayer in Scotland at the moment. The whole point of a revaluation is to provide the opportunity to adjust anomalies and distortions that have arisen during the four or five preceding years, possibly as a result of fluctuations in market prices and housing fashions.

People will now find that they are paying too much because the initial rent of their house has dropped or because of other changing circumstances. How will they get that put right if there is no revaluation? They will experience great difficulties. The postponement means that inflexibilities will be built into the system on a semi-permanent basis.

Mr. Allan Stewart

The hon. Gentleman will appreciate that his point applies only to industrial and commercial ratepayers, given that we are going back on a partial revaluation.

Mr. Dewar

Exactly. That was the basis of one of our attacks on the partial revaluation. Our view was that that was always a fraud. It was not just a matter of the technical difficulties. There was an expectation and a hope amongst Ministers that many householders would think that it would be to their advantage not to be revalued. However, 36.7 per cent. of rates come from domestic ratepayers. The figure would have remained the same anyway. The Minister is right to say that we believe that the partial revaluation was wrong. There was no way that the proportion could be varied. It was a clear condition that the ratio between the various sectors would remain the same.

The difficulties of individual ratepayers would have continued, because adjustments could not have been made within the domestic ratepayer section. In a way, the Minister is right to say that that will continue, but the situation is most unhappy. Things were not right the first time and the Government will leave the situation unsatisfactory by postponing the revaluation for a further two years. I hope that the Minister will tell us what will happen in 1985–86. Will he guarantee a full revaluation then, or will people still be waiting, if not with bated breath, with—on the part of those professionally involved—some irritation, for Ministers to decide again whether there is to be a partial revaluation in 1985–86. The Minister should make it clear now that there will be no more flirting with this halfway house and parboiled non-solution. He should tell us that there will be a proper revaluation in 1985–86. I have recently spoken to people in the assessors departments. They have already done an enormous amount of work in preparation for the partial revaluation next year. That work will now be wasted.

The Government talk about the productive use of local authority manpower—a theme to which most Tories, particularly bigoted Tories such as the hon. Member for Edinburgh, South (Mr. Ancram) normally warm—but there will be great concern about the fact that large amounts of ratepayers' money have been wasted on preparing for the partial revaluation that is being so ignominiously aborted by the order.

What are the implications for rating reform? The Minister may say that the order has little to do with rating reform. That would probably be a convenient posture for him to strike. However, whenever we made the complaints that have turned out to be so well justified about the technical difficulties or fundamental lack of logic in the Government's actions, we were told that they were essential and that they were all part of the package that would lead to domestic rating reform in the not too distant future.

I have always thought that Ministers were far too optimistic. The Green Paper contains very few flashes of inspiration. It canvasses the options that were largely rejected by the Layfield report and comes to the same depressing conclusions. It is impossible to envisage any rating reform before the 1990s. Indeed, if I remember rightly, that is explicitly stated in the Government's Green Paper. What exactly does this all mean? Does it mean that interest in rating reform is cooling? Alternatively, have Ministers gained a more realistic appreciation of the difficulties and possibilities of fast progress?

The former Under-Secretary of State for Scotland, now Under-Secretary of State for Foreign and Commonwealth Affairs, made a surprising comment in Committee. He said that there was no possibility of a domestic rating reform unless this partial revaluation was the paving process. He made that perfectly clear. He said that it would not be sensible to go ahead with the revaluation of domestic rates if the system was likely to be reformed in the near future. The hon. Gentleman then said that it was clear that we should have the revaluation. On 17 May the present Under-Secretary of State was very apologetic about the prospects for rating reform. In c. 79 of Hansard of 17 May the hon. Gentleman said that the election promise had been made before the 1974 election. He made it clear that there were other things, such as incentives and the reduction of direct taxation, that would take precedence over rating reform. He sounded so doubtful about the prospects for rating reform that the hon. Member for Edinburgh, South galloped to the rescue like a member of the light cavalry and asked whether his hon. Friend would give an assurance that his remarks do not in any way diminish the intention of the Conservative Party and the Government to find a way of reforming rates."—[Official Report, 17 May 1982; Vol. 24, c. 80.] He had got the message that the Under-Secretary of State had got cold feet and that a considerable lack of enthusiasm was beginning to show on that subject. The Minister hastened to assure him that he was still committed.

However, the commitment is technical. The decision to abandon partial revaluation, which has always been presented as an important part of the process, a staging post on the way to reform, underlines that point.

I believe that what has happened is that we have started out with a breezy promise from Ministers. The scheme of partial revaluation was dreamt up on the prayer and the hope that the Minister would be able to deliver on rating reform in the near future. He discovered that he had got the time scale wrong by about a decade, so he had to rethink the partial revaluation wheeze that he had introduced so blithely only a few months before.

The result is muddle, mismanagement, confusion and a considerable blow to the system. The Minister is safe. Of course, we did not like the partial revaluation. Therefore, it would be illogical to vote against the order that is killing it off. However, we are entitled to say that it has done nothing for our confidence in the Minister's competence or credibility. In the words that we use in my constituency, the whole sad story leads us to wonder whether the Conservative Front Bench could organise a menage.

12.2 am

Mr. Gordon Wilson (Dundee, East)

I was taken by the final words of the hon. Member for Glasgow, Garscadden (Mr. Dewar). I regret that I cannot summon up much enthusiasm for a long debate on the order at this time of night, particularly at this time of the parliamentary Session.

As the hon. Member for Garscadden said, the reason for the order is that the Government have mismanaged the whole affair. There are three other reasons why the Government became involved in this affair. The first is control of local government. If one has revaluation, there is certain confusion. It makes it much more difficult for the Scottish Office to be able to put the same curbs and controls on local government. We all know how dedicated it is to cutting the amount of money available to local government.

The second reason is that the election must be considered. When there is revaluation, there is the impact of what seems to be increases. Sometimes they are just inflationary. In some cases they are real; in other cases there is a decrease in the amount of money that individuals pay in rates. The third reason is that at the election the Government will still have on their manifesto the promise, infinitely delayed, of rating reform, which they will say will give more freedom to local government and at the same time reduce the amount of money that ratepayers will pay and allow more money to be available for services. They will be able to give the impression that the impossible will be done, depending on which of the three balls they can juggle and safely secure.

As the hon. Member for Garscadden said, it would be wrong to oppose the order. Partial revaluation was a monstrosity. It is right that the Government have reconsidered that matter. There is nothing wrong with revaluation. In fact, there is much to be gained from it. However, in many cases in England revaluation was suspected to be the cause of problems that arose. Changes in the market place affecting houses and commercial properties could not make their way through the system. That led to some people having to pay more rates than they should have and others to pay less.

I shall give one example. For commercial properties based on rental value, the list of rents is made known to the assessors. They take a mean figure from that and apply it to certain ranges of shops. If a new shopping centre opens in a district or city, as has occurred in Dundee, there may be a switch of shopping fashion from one part of the area to another. "To let" notices then begin to appear on the shops in the original area because trade has gone, but there is no change in the rating valuation, so the rating bill becomes heavier compared with the amount of trade.

The same thing occurs, although less frequently and substantially, on housing estates. Over a period, some may increase in terms of amenity value and the amount of rent that they could theoretically command on the market, while others go down. In those circumstances, the object of devaluation is to achieve some equity in the system.

Here I take issue with the Government in their proposal to postpone revaluation. They may well have stumbled into this for the reasons suggested by the hon. Member for Garscadden. In reality, a seven-year delay becomes a nine-year or 10-year delay, because the body of rental evidence built up by the assessors is based on two to three years of the quinquennium. In the last year or so before revaluation they take their base value and put it through the system and apply it to different properties, but the evidencial base is necessarily historic. If revaluation is postponed, a delay of none or 10 years will be built in and many disparities will arise.

I very much regret that the Government have seen fit to postpone revaluation in Scotland. I believe that it is wrong in principle. We all know that valuation for rating is a regressive system. No doubt that is why all political parties are desperately looking for some reasonably fair substitute that will work and will not be too complex or too administratively expensive. A regressive system is made far more imperfect, however, if it is not updated to take account of the changes in property values that occur from time to time.

If the justification for partial or complete suspension of revaluation was that it would lead to reform of the rating system, it might be bearable, but many of us suspect that the way is not so sweet or so smooth as the Government originally envisaged in the run-up to the last general election. Certainly their promises seem to have become progressively weaker. It is now three-and-a-half years since the last election, and we have so far reached the Green Paper stage. The Government now propose to take evidence on that.

There will then have to be a White Paper, Government commitments, and so on, so if we are lucky we may see something before the next general election—or we may not. Successive Governments have tried to find a replacement for the rating system, but it seems to be far more difficult than they imagine. If a fair system were to be achieved, I should not cavil too much at the unfairness that is now to be imposed on ratepayers in the commercial, industrial and domestic sectors through suspension of revaluation.

To sum up, it is clear that the Government have been driven to this. They have wandered entirely off course in their plans for reform of the rating system and have ended up with an inadequate situation in which certain injustices will be perpetuated and fresh injustices will be caused as a result of this breach of the quinquennial revaluation, on which Scotland has prided itself for so many years.

Mr. Allan Stewart

First, I emphasise that postponement achieves the objective of not having a revaluation before decisions are taken on alternatives to domestic rates. My right hon. Friend and I have spelt out the Government's position.

The hon. Members for Glasgow, Garscadden (Mr. Dewar) and for Dundee, East (Mr. Wilson) referred to the effects of delay. The hon. Member for Dundee, East talked about the rating system in some detail. I accept the desirability of regular revaluation. I do not think that anyone disputes the desirability of that principle. However, the delay between the last revaluation and the next one will be seven years. There was precisely the same period between the last revaluation and the one before that, which was 1971 to 1978. It is not an unreasonable position.

The order provides for a full revaluation in 1985–86. The hon. Member for Garscadden asked me to forecast exactly what will happen. We are talking about a period beyond the next general election, but I can confirm that it is our intention to go ahead with the full revaluation in 1985–86. That cannot be changed without a new order being passed by the House.

There is no relationship between the Government's decision and their commitment to reform of the domestic rating system. Nor is there any relationship to expenditure control mechanisms, which are separate from revaluations. It would have been possible for the Govenment to go ahead with the partial revaluation that was proposed. There were technical problems, but they were not insuperable. However, in the light of the representations from the convention, it seemed that on balance it made more sense to delay matters and to have a general revaluation in 1985–86. The lesson to be learnt is that my right hon. Friend the Secretary of State pays careful attention to the representations of the convention. I attended the meeting of the convention with my right hon. Friend and there is no doubt about the strength of feeling of COSLA. We considered the representations and the order implements my right hon. Friend's decision to accept the recommendations of the convention on this issue.

Mr. John Heddle (Lichfield and Tamworth)

My hon. Friend will be aware that within the English dimension of rating reform certain aspects of compensation are based upon gross and rateable values. He will know also that well maintained allowances are based—when, for example, a house is declared unfit—upon rateable assessment. In the event of the order being passed by the House and the postponement of the revaluation, will he confirm that orders will be brought before the House to protect property owners and those with interests in land, tenants especially, and that any assessment for well maintained payments will be based on an updated assessment rather than on a historic assessment?

Mr. Stewart

My hon. Friend's expertise in these matters is well known, but I must stress that there is no change for the domestic ratepayer in the decision that the House is being asked to take tonight. I am glad to be able to confirm also that I have no responsibility for the rating system south of the border.

Question put and agreed to.

Resolved, That the Valuation (Postponement of Revaluation) (Scotland) Order 1982, a copy of which was laid before this House on 6th July, be approved.