RATING AND VALUATION BILL (Hansard, 5 March 1957)

§ THE EARL OF MUNSTER

My Lords, I beg to move that this Bill be now read a second time. Noble Lords may well recall that my right honourable friend the former Minister of Housing and Local Government gage a pledge in December, 1954, that when the results of revaluation of all property could be fully measured he would consider whether any changes were necessary. The preliminary results of the revaluation were published last March, but even now the full picture is not really available. Nevertheless, my right honourable friend has sufficient information to show beyond any doubt whatever that the recent increases which have occurred in assessments have placed an unduly heavy burden upon the occupiers of shops and other commercial properties.

In these circumstances, Her Majesty's Government feel that it would not be equitable to leave matters as they stand, and accordingly this Bill seeks to remedy the position. Under the Bill the rateable value of shops and other commercial properties will be reduced by one-fifth, or, where a part of the hereditament is used as a private dwelling, by one-seventh. The reduction will take place from April 1 this year, and will last for the period of the existing valuation lists. The Bill also deals with two other matters. First, the contributions which are paid by the State-owned public utilities are to be adjusted secondly, the method of calculating the Exchequer equalisation grant is to be amended to take account of rating relief to charities.

Noble Lords will remember that dwelling-houses are to-day assessed at 1939 values, whilst all other properties are assessed at current values. The average increase in the assessments of houses is about 40 per cent., but a very 182 much bigger increase has fallen on shops, offices, and other miscellaneous properties. Their average increase is about 125 per cent., so I think that it will be conceded on all sides of the House that this group of ratepayers has been, saddled with an excessive burden. The alterations contemplated by the Bill are of a temporary nature and will cease at the next revaluation in 1961 when, as the law stands at present, dwelling-houses are due to be assessed at current values.

Let me turn to the Bill. Clause 1 makes the alteration to winch I have referred, but it cannot be made retrospective and will, therefore, operate from April 1 this year. Clause 2 deals with payments in lieu of rates which are made by the British Transport Commission and the Central Electricity Authority. Part V of the Local Government Act, 1948, took out of rating almost all the railway and canal properties which are owned by the British Transport Commission. The Act substituted a system of payments based on a standard amount. This standard amount was based upon the aggregate of rates which were paid by the railway companies in 1947–48, and, after certain adjustments, was fixed by the Act of 1948 at £1,810,000. The payment which is due in any one year is calculated by adjusting the standard amount by a very intricate and complicated formula, with which I need not weary the House, except to point out that the amount is proportionately related to the average rate poundage for the previous year.

As a result of the revaluation of all other properties, the average poundage for 1956–57 has shown an abnormal decrease, and in consequence the estimated payment by the British Transport Commission of about £2¼ million for 1956–57 would fall to £1½ million for 1957–58. Under this clause, the payment to be made by the British Transport Commission for next year will be almost the same as that for this year. This is achieved by an amendment of the standard amount in the 1948 Act.

The arrangements for payments in lieu of rates by the Central Electricity Authority, and the effect of revaluation on the amounts they should pay, are similar. In this case, the Authority will pay as much in 1957–58, subject to minor adjustments, as they would have done if there had been no revaluation. Their standard 183 amount will therefore be increased from £11¼ million under the 1948 Act, to £18,280,000. I do not think that the House would wish me to delve any deeper into this complicated scheme.

Clause 3 deals with the rating liability of Gas Boards. As your Lordships will be aware, the rateable values upon which Gas Boards are rated are calculated in accordance with a formula laid down in the Rating and Valuation Act, 1955. The Gas Boards differ from the other State-owned industries in that they pay their rates direct to the rating authority in the area where the Board manufactures or sells gas. I do not wish to weary the House with a large number of figures but to appreciate the purpose and intention of this clause, some figures are essential. Under the 1955 Act, the rates payable in 1955–56 by the Gas Boards were about £3½ million, but although in 1956–57 the rateable values of their properties increased slightly, the rates actually paid amounted to about £2½ million because of the abnormal fall in rate poundages to which I have already referred. This clause has the effect of increasing the Gas Boards' assessments by 70 per cent. from the year 1957 onwards. This increase is roughly equal to the average increase upon revaluation in the rateable values of properties assessed in the normal way. Here let me point out that the treatment accorded to the Gas Boards is equivalent to that accorded to the Central Electricity Authority.

I turn finally to Clause 4 of the Bill, which deals with the effect of the relief of charities on the Exchequer equalisation grant. The effect of Section 8 of the 1955 Act is that charitable bodies do not pay rates in full on the rateable value of their properties. Thus the local authority suffers a loss of rate income, although the rateable values in the valuation list are not reduced. Exchequer equalisation grants depend on the rateable value per head in such a way that the lower the rateable value per head the greater the grant which is received. Since the assessments on charitable bodies are not reduced under Section 8 of the 1955 Act, any local authority receiving an Exchequer equalisation grant gets no extra grant to compensate for the loss of rate income. This, I am advised, has had a serious effect in Cambridgeshire, 184 Cardiganshire and Caernarvonshire. Accordingly, Clause 4 of the Bill provides for the scaling down of rateable values, for the purpose of calculating the grants, in proportion to the reduction in the rates chargeable.

Those are all the points to which I think I need call the attention of your Lordships in this Bill. I have tried to deal with the more important clauses, and I commend the whole Bill to your Lordships. I beg to move that the Bill be now read a second time.