§ LORD STRACHIE rose to ask His Majesty's Government whether houses erected by local authorities under the 350 Housing Act can be assessed for local rating, not by the overseers but by assessment committees in the first instance; and further, is it the case that the assessment committee of the Clutton Board of Guardians have assessed such houses at nine pounds a year, while the rent charged by the local authority for these houses is nineteen pounds ten shillings a year, the tenants having also to pay all local rates; and to move for Papers.
§ The noble Lord said: My Lords, I put this Notice on the Paper in order to obtain, if possible, from the Ministry of Health some declaration upon general principles. My reason for putting down specific details was merely to have something to go upon and to be able to ask the local authorities concerned what they were doing in the matter. I do not, however, wish to argue the matter from the narrow point of view of the action of one particular assessment-committee, but rather to discuss it as a question of principle, because I gather that if this particular action is approved we shall find others following the example. My attention was drawn to this matter from the fact that the overseers of a parish in which I happen to own some land, informed me that an intimation had been given to them by the assessment committee that they were not to rate these houses erected under the Government housing scheme at the actual rent, which is always the criterion and basis upon which houses are rated where there is bona fide letting. I am sure the noble Earl, with all his experience as a large landowner, will not disagree with the statement that it is the duty of the overseers to make an assessment to begin with, that the assessment then goes to the assessment committee, and that it is unusual for the assessment committee to intimate in the first place what the rating should be.
§ This particular case is very peculiar, because these houses, which belong to the local authority and were put up with the Government subsidy, are let at the rate of 7s. 6d. per week, the tenants paying all rates and taxes. In other words, they are let at £19 l0s. a year. But the overseers have acted upon an intimation from the assessment committee that they were to rate these houses at a gross value of £9 a year, and a rateable value of £7 a year. That seems to me to establish a most extraordinary precedent. It is saying that the rent is so excessive that it is impossible 351 for the tenants to pay rates upon it. It would look very bad indeed, it is argued, if the tenants had to pay 5s. or even more a week, instead of 2s. 6d. a week, in this area, where the rate happens to be from 14s. to 15s. in the£, although it is purely an agricultural district.
§ The point is this. What the local authority ought to have done, to my mind, was to put down the actual amount of the rent, and if it was found impossible for the tenants to pay rates on that basis, they should have said: "We will pay these rates ourselves and put the amount against the £19 10s. which we receive." I think the difficulty of this preferential rating arises in two ways. The assessment committee will say: "What does it matter to us what are the rates that we receive? When we put upon these houses this fictitious value of £7 a year, although we let them at £19 10s. a year, it does not matter to us, because we receive in rent what we lose in rates." That would be perfectly true if it stopped there, but we have to remember that by the extravagant system upon which these houses were put up under the Ministry of Health, they ought really to let at £76 a year, and it is reckoned that taking the whole country, there will be a deficit of about £56 on every house which will have to be made good by the Imperial Exchequer, with the exception of the amount that can be raised by a penny rate.
§ We all know that the bulk of the loss must fall upon the Government and the Ministry of Health, but when they are making out the accounts showing the extent of the loss, the Ministry of Health will naturally say that these houses are let at £19 10s. a year and therefore they must receive credit on that scale; and the local authority will lose what the Ministry of Health gain. If each house had been assessed at a fair rate, say £10 a year instead of 2s. 6d. a week, the rates would amount to something like double, or 5s. or 6s. per week. The consequence would be that the local authority would get double the amount of rates from their tenants, while the Government, on the other hand, would lose £9 10s. because they would be able to debit the local authority with only £10 a year instead of £19 10s. This system, therefore, is going to have the bad effect of increasing the local rates when the account is taken between the local authority and the Ministry of Health, though it may be argued that it is as broad 352 as it is long, because the rating authority will get back in one way what it loses in another.
§ I do not, however, want so much to deal with this small point as to raise the question of great public importance, whether in this country it is desirable to have different forms of rating. I am sure that the county rating committee will not be ready to recognise this fictitious rate of £9 for cottages which are let at £19 10s. The noble Earl knows that the county committee makes its own assessments, and they will say that it will not be fair to other ratepayers to give preferential rating to certain occupiers because they happen to be tenants of the local authority. Equally, we shall get the anomaly that, under Schedule A, the district council will not pay Income Tax on the rent of £9 a a year but will have to pay on the full amount of £19 10s. The Income Tax Commissioners will not agree to give preferential treatment to one taxpayer rather than another.
§ A further difficulty is going to arise. I notice that the Ministry of Health have accepted the Report of the Geddes Committee which says that the Government have made an awful mess with their housing policy (houses having been put up at extraordinary prices and in too great a hurry), and that there is going to be a heavy loss of something like £56 a year on every house. It is suggested that the best way is for the Ministry to cut their losses and sell for what they can get. I should like to know what is going to be the position in such a case as this. Naturally, when a man buys a house—and very often it will be the person living in the house at the moment—he will argue that the rates are very low and he can afford to give very much more than he would do if he were rated up to the hilt. What will happen when such houses are let by a private owner? You will get a very curious state of things. Are they to be sold with regard to this preferential rating, and when they are sold, are the rates to be put up? It will be very unfair to a poor man who buys and then finds that as it is no longer Government property, or local government property, he has to pay like any other individual. It will cause all sorts of difficulties, and, in some cases, a good deal of hardship.
§ I do not want to argue, however, on the particular point, because I am quite aware 353 that an aggrieved ratepayer can, if he is rich enough, go to Quarter Sessions and tight it out at the cost of some hundreds of pounds. He can say: "You have no right to assess my house at £19 10s. Although the rent of somebody else is £19 10s., you assess him at £19." I know that can be done, but I want to know whether the Government approve of the idea of preferential rating by local authorities of their own property, and whether the Government will not say that in their view the rating authorities ought to go on the old idea of assessment—that when there is a bona fide rent it should be the basis of rating. It is, in my opinion, very undesirable, and against public interest, that you should have preferential rating, and for that reason, if for no other reason, it seems to me that we should have some general declaration from the Government that it is undesirable that houses should be rated by local authorities, especially their own property, in such a manner that the actual rent is not the basis. I beg to move.
THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF HEALTH (THE EARL OF ONSLOW)My Lords, with regard to the first part of the Question of the noble Lord, I may say that it is the duty of the overseers to prepare supplementary valuation lists whenever property not included in the valuation lists in force becomes rateable, and, according to the information at the disposal of my right honourable friend, that was done in this case; but the clerk of the rural district council in question, in response to a request from the overseers, advised them as to the rateable value to be taken. I have copies of the correspondence and they are at the disposal of the noble Lord. As regards the latter part of the Question, to which the noble Lord devoted most of his remarks, the facts as stated in the Question appear to be correct, but I can express no opinion whatever as to whether the assessment has been made correctly or incorrectly. It is a matter which can only be decided by the Courts, as the noble Lord pointed out, and it is not one in which my Department has any power of interference.
My noble friend, in the course 'of his speech, discussed the general question of rating, and while expressing no opinion on the particular case mentioned in the Question, and on the distinct understanding that my right honourable friend's 354 Department has no power to give directions as to the assessment of properties, perhaps I may be permitted to offer a few observations, although I cannot follow the noble Lord far into the hypothetical questions which he put. I may say that my Department would view with disapproval any inequitable assessment, either of new or old houses. Certainly underassessment of new houses would be inequitable, because it would, in effect, increase the burden of expense which falls upon the other ratepayers, and it has never been advocated by my Department.
On the other hand, it is equally important that new houses should not be over-assessed as compared with existing similar houses, and it is notorious that many old houses are under-assessed. If, however, old houses are assessed on the basis of existing rents, and the rents of new houses have been properly fixed, this inequality should not happen, because the rent of the new houses, subject to some addition for superior amenities, should be the same as the rent of similar existing houses, and consequently the rating value should be similar. My noble friend has asked for Papers, and I am quite ready to put at his disposal all the correspondence that has passed on the subject. I have had copies typed and I shall be glad to give them to him. I hope that this will satisfy him, and that, in view of the expense, he will not press for them to be printed.
§ LORD STRACHIEI am much obliged to the noble Earl for his answer, and I ask leave to withdraw my Motion, because I am quite satisfied with the expression of opinion he has given upon the general question.
§ Motion for Papers, by leave, withdrawn.