§ 5.15 p.m.
§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(The Earl of Monster.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD AILWYN in the Chair.]
§ Clause 1:
§ Rateable value of shops, offices, etc., for purposes of existing valuation lists
§ 1.—(1) Where the net annual value of a hereditament which is neither a dwelling-house nor a private garage or private storage premises is an amount ascertained by reference to its gross value as defined in section sixty-eight of the Rating and Valuation Act. 1925, and the rateable value of the hereditament would but for this section be equal to its net annual value, the rateable value of the hereditament shall be ascertained, for any rate period beginning after the thirty-first day of March, nineteen hundred and fifty-seven for which the valuation lists in 485 force at the commencement of this Act remain in force, by making from its net annual value the deduction mentioned in the next following subsection.
LORD LATHAM moved, in subsection (1), to omit all words from the first "is" down to and including "premises" and to substitute "consists of or includes a shop". The noble Lord said: The Government seem resolved to proceed with this Bill, Clause 1 of which contains a proposal which, in the view of those on this side of the Committee, is both inequitable and unjust. Before proceeding to deal with the Amendment, I should like to make one or two general comments. I confess that I was a little intrigued and somewhat mystified by the words which the noble Earl, Lord Munster, used in his speech of reply on the Second Reading of this Bill on March 5. The noble Lord said [OFFICIAL REPORT, Vol. 202 (No. 41), Col. 207]:
The shops and offices had been singled out, as we see it, for specially severe treatment.
By whom were they singled out? These properties were valued by independent valuers, by valuation officers of the Inland Revenue, so they were not "singled out," and they were not subjected, in my submission, to "specially severe treatment." When reading these words again, I formed the opinion that perhaps the noble Earl, speaking as he was on that occasion "off the cuff" and being, I judged, desperately in need of some argument in justification of Clause 1, used words which he did not intend, or the meaning of which did not represent his mind on this point. I think that it would he of interest to your Lordships if the noble Earl would indicate how it came about that, as he alleges, these properties had been "singled out…for specially severe treatment."
§ The purpose of this Amendment is to mitigate the mischief which will be done by the proposal in Clause 1. It is proposed to limit this rebate to shops, and to shops only. The total estimated rebate which will be given in the rateable value of properties as the Bill how stands is some £44 million. Of that, it is estimated that three-eighths is in respect of shops and five-eighths in respect of commercial and other buildings. So, if the Amendment were accepted by your Lordships, some £27½ million of rateable value will be prevented from being cast upon 486 the household ratepayer, and relief to the shopkeeper will be limited to £16½ million.
§ The small shopkeeper has been pleaded in aid by the supporters of this Bill. His alleged distresses in a time of booming consumer activity have been used as a kind of protective shield for a proposal to grant to commerce and business this relief of 20 per cent. in rateable value. The small shopkeeper is in gave danger of finding a place beside the widow and orphan in the idiom of the Conservative Party. Unhappily, it not possible or practicable to distinguish between the small shopkeeper—that, is to say, those who have shops in what I may call the narrow back streets—from the great chain, multiple and departmental stores, whose claim to this rebate is quite shadowy, if indeed it exists at all. But that being the case, the Amendment which I ant moving would, if passed, operate to grant a 20 per cent. derating to shops, but would leave unaltered the assessments on business and commercial premises.
§ It is our submission that no case can be made for any relief to offices and business and commercial premises. It is fanciful to suggest that the new assessments are in any way unjust or unfair. As I sought to indicate in ray speech on Second Reading, these assessments do no more than correct the under-assessments which have been enjoyed for over fifteen years. I do not think that any fair-minded business ratepayer would take any other view. He realises that this revaluation has been carried out on a perfectly fair and legal basis, and the assessments do no more than reflect the change in values, the change in costs and the change in the value of money. I think perhaps he congratulates himself that he has enjoyed this quite important and valuable benefit and advantage for the last fifteen years, and does not think it unreasonable that it should now come to an end. Apart from that, he will, as a household ratepayer, have to pay in one place or another, wherever he may reside, a proportion of the additional rate poundage which will result from this derating of business and commercial properties. All he will pay extra in rates, he will pay out of taxed income—he will get no income lax abatement from it; whereas up to 50 per cent.—more in certain cases—of what he will save as a business ratepayer 487 will inure to the benefit of the Inland Revenue and of the Exchequer. It is our view that this Bill is a bad Bill. This Amendment, as I have said, has for its purpose the mitigation of the mischief the Bill will do. I beg to move.
Page 1, line 6, leave out from beginning to (" is ") in line 7, and insert the said new words.—(Lord Latham.)
§ THE EARL OF MUNSTER
The noble Lord who moved this Amendment took me to task for some words that I used in replying to the debate on Second Reading. Perhaps I might remind the noble Lord and your Lordships of the statement made by my right honourable friend the Minister of Housing and Local Government in December of last year, in which he used these words:Nevertheless, sufficient information is now available to show beyond a doubt that the recent valuation has placed an unduly heavy share of the burden upon the occupiers of shops and other commercial property.I do not think the words I used on the last occasion were very dissimilar to those which my right honourable friend used in his statement of December 20 last.
The noble Lord, as he has told your Lordships, seeks to limit the scope of Clause 1 of the Bill to hereditaments which consist entirely of, or include, a shop. The noble Lord believes that everything else should be excluded from, the relief which is given under Clause 1 of the Bill. I should like to take your Lordships back to July 11, 1955, when your Lordships were discussing the Second Reading of the Rating and Valuation Bill of that year. The noble Lord, Lord Silkin, speaking from the Opposition Front Bench, and no doubt speaking as the representative of the Opposition, on that occasion used these words [OFFICIAL REPORT, Vol. 193, col. 563]:Therefore, we may expect as one of the outcomes of this Bill a considerable reduction in the amount which the householder will pay and a heavy increase in the amount which will be assessable on business premises. I suppose all of us welcome any relief which we get from rates, but we have to consider what are going to be the effects on business premises, and they may well be very grave indeed.Then, later the noble Lord said (col. 564):It would have been of help if the noble Earl "—488 that is myself—could have given us some forecast of what he expects to be the outcome of these violent changes in assessment over the next few years. It would have been even better if he could have suggested some way of cushioning these violent changes, because they are most undesirable.It is clear that at that time the noble Lord, Lord Silkin, was not only in support of the proposal in Clause 1 of this Bill, but was one of the few who foretold that the increase of the burden on offices and other commercial properties would be unduly heavy. The former Minister of Housing and Local Government, in 1954, in a statement in another place, said that after the assessments had been fully drawn up he would consider whether an undue burden had been placed on any particular class of hereditament. Therefore, let me say to the noble Lord, Lord Latham, in passing, that I am surprised he should now move an Amendment which I feel certain would not have the support or the sympathy of the noble Lord, Lord Silkin.
The rateable value of these hereditaments which this Amendment seeks to exclude rose on an average about 120 per cent. upon revaluation, as compared with 126 per cent. for shops, and my right honourable friend and, indeed, the Government feel that there can be no justification whatever for excluding them from relief or for differentiating between them. Back in December, 1954, the Government stated that it was their intention to review the valuation of shops, offices and other commercial properties assessed on present-day values; and that, in effect, is what we have done. We are now implementing the pledge by Clause 1 of this Bill. Although the noble Lord did not say it in his remarks, to say that there are a large number of rich ratepayers who obtain relief is, therefore, quite contrary to the undertaking which was given by my right honourable friend.
The noble Lord, Lord Latham, knows as well as I do that rating has always distinguished between different types of property, and, so far as I am aware, it has never been the practice to differentiate between a poor and a rich ratepayer in assessment of similar properties. One and all must be treated the same, and that is what we have endeavoured to do under this clause of 489 the Bill. If we give relief to one shop, we must give it to the other. If we give relief to one premises, office buildings, or whatever it may be, we must also give it to the other. Therefore, I think it is wrong to try now to exclude front the purposes of the first clause of this Bill a number of premises of all sorts and kinds. The occupiers of such premises will undoubtedly achieve a great satisfaction from the clause, which will assist their finances—and in many ways their finances require assisting. At the same time, these occupiers will be satisfied that the pledge my right honourable friend gave in 1954, and again at a later date, has in fact been carried into effect and operation. I hope that on second thoughts the noble Lord will not divide the House on this Amendment, because it is one which I could not possibly accept.
§ 5.32 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
The noble Earl has, as always, addressed the Committee in very felicitious terms and put his case exceedingly well. I must say that these are the sort of Amendments about which it is always advisable for us to recall the Prayers we utter at the opening of each day's Parliament and to remember that we must put away all partial affections and the like. If I were to try to pursue what I consider my best interests, and the interests of those in business with whom I was brought up, I should be inclined to have a good word to say for the owners of offices. But if I put away partial affections and examine the case in more detail—say from the point of view of the local authorities, and from the point of view of the effect of the new assessments upon householders—then I take a different view.
The noble Earl has quoted my noble friend Lord Silkin, who, I am sure, will remember the passage in his speech which was quoted. He was not here to hear the citing of it. At that time, when the consideration of this matter was still in the formative stage, and as it was certainly likely to produce such wide—I think "violent" was the word used—fluctuations from the then standards of valuation, it was well to look at the matter with caution to see whether or not (and I quote the words of my noble friend) it might be necessary later to have 490 some cushioning effect upon these violent fluctuations. I would say that my noble friend was speaking as much for his Party on that point of view as for anyone else. That was a wise precaution he was taking, and consideration has been given to it.
Now we have the proposals of the Bill. This is a rethinking after the other Bill had passed through all its stages and had been applied all over the country. All the rating authorities had made their budgets. They dealt not only with general industry, but with shops, offices and houses. I have met householders who in some cases had their assessments under the original arrangement doubled, although there had been no change in their property whatsoever. They had to suffer heavy impositions. And now we have this Amending Bill which confines relief to the two classes, shops and offices. I am bound to say that I have a stronger feeling of sympathy with shopkeepers than with the owners of offices. That is not because I do not think that, in some cases, the increase in the valuation of shops was unjustified One reads of companies who are in ownership of a large number of shops and who have on more than one occasion written up the value of their premises in the balance sheet as the basis for a further manipulation of their capital and the distribution of profit. I should have thought that that particular class of shop would have some difficulty in objecting to revised assessment by the Sate and the local authorities of the valuation of these properties.
In regard to the ultimate effect of the re-rating of properties, I think the Government, in their second thoughts, in view of the general situation of the economy of the country, have done something right making some adjustment in the case of shops, because the rating of shops at a high figure would be likely to result in a general increase in prices of consumer goods. It is an expense which would have to be met, and, therefore, arguing from that point of view, the steep increase in the amount to be paid on shops upon the new graduations would probably increase the general cost of living.
As regards offices, I think there is far less of a case for the Government's new proposals in this Bill. I should like to 491 take this opportunity of saying a word of thanks to my noble friend, Lord Latham, for his extraordinarily clear speech on the Second Reading of this Bill. It was a great service, not only to his Party, but to the House, in helping us to understand what the effect upon the local authorities is likely to be. I must say that he is perfectly justified in what he said then. One sees from the newspapers, day after day, that these poor rating authorities have been charged with the duty of resettling their budgets after they had all been cast and planned. The general comment in the morning and evening newspapers, which cite a particular local authority, is "Rates up and up." The tendency is for the Press to direct attention to what looks like more new and extravagant expenditure by the local authorities, whereas what is happening is that the sums which are being saved by the office-owners, as well as by the shopkeepers, is being added to the general rate level in the area. I am sure the noble Earl will not challenge my general assessment when I say that, although there may be one or two cases where the increase is not much over 1s., in the great majority of cases the effect of the alteration of local authorities' budgets has been that the general rate upon householders, businesses and everybody concerned has gone up by from 1s. 6d. to more than 3s. in the £—a very steep rise. The general impression created in ratepayers' minds by the news as it appears in a good many of the national papers is that rates are going up and up because of some particular fault on the part of the local authority. That is quite unreasonable.
I come next to the point explained by my noble friend, Lord Latham, this afternoon, about the actual division of the two great sections dealt with in this Bill, the shops and the offices, in the amount received in revenue. We find that a very much larger proportion—I think the noble Lord said something like £27½ million out of £44 million of rating valuation—is attributable to offices and only about £16½ million is attributed to shops. I think the Opposition have, in fact, proposed a meritorious Amendment in the circumstances. Some owners of offices are pretty wealthy. Many office buildings are in the hands of the big investment trusts who are not unable to meet the kind of bill that the original 492 Act would have imposed upon them. A very great service can be done to the householders and to the general level of the rate levied upon other businesses and industries.
I hope, therefore, that the noble Earl will think again; or, if he is not prepared to think again this evening, that he will make further representations to the Minister responsible for recommending to the Government any final reconstruction of their views upon the matter. Speaking as an ordinary ratepayer I know that I shall have to pay considerably more as a result of this Bill than would otherwise have been the case, although, in the case of my local authority, I think that the increase in the rate this year will be something under 2s. in the £ rather than more; but that increase could easily be reduced to below 1s. in the £. I put that point before your Lordships because, in arguing the other case as between partial affections and no partial affections, it is just as well that we should all understand that, when we talk upon these matters, we probably have an interest in some way or another. But that, to me, is the smallest aspect of the case. I see that people in some of the suburban areas in the Greater London district have been reassessed on their houses up to double, and more, of their original valuations, although that, of course, does not apply to every single district. They could be greatly relieved in their current burdens if the Amendment moved by my noble friend were accepted.
§ 5.44 p.m.
§ LORD DERWENT
May I say a word on this Amendment? Knowing his connection with the London County Council for many years, I believe that the noble Lord, Lord Latham, perhaps quite naturally, is dealing rather with the big towns where the stores are big and the offices, in particular, are big, belonging to large firms. In the majority of towns in this country, most of the shops are comparatively small. There is the odd Woolworth's and so on, but the shops are comparatively small; and the offices are largely, though not entirely, occupied by small businesses and small professional men. In those towns, both professional men and small businesses are having the greatest difficulty in making ends meet. It is not a question of making an enormous profit. There is no doubt about it 493 that the new scale of rates for those people is desperately hard. In many cases—one cannot generalise in this case—the ordinary wage-earner who works for somebody else, particularly in towns where there is a shortage of labour, is far better off in these days than the people who own offices, and in many cases can afford to pay a higher rate in proportion to, say, the professional man. It varies throughout the country, but one is apt to talk of offices as if they were offices in the City of London and therefore able to afford to pay, or of shops as if they were like Selfridge's. That may be so in London, but in the small country towns big shops are very much in the minority. From what I know of my own locality, some of these occupiers with increased rates have had a desperately hard time to make any living at all.
§ 5.45 p.m.
§ THE EARL OF MUNSTER
Before the noble Lord, Lord Latham, replies, perhaps I may say one brief word in reply to the point made by the noble Viscount, Lord Alexander of Hillsborough. As I understood him, the noble Viscount said he thought that shops had been assessed at a fairly high figure, and that, because that might have the effect of increasing the cost of living, he supported the proposal in Clause 1 that shops should have the benefit of the reduction of one-fifth.
I want to remind the noble Viscount—I am sure he will remember this—that all these shop properties were assessed at current rental values, whilst houses were assessed at 1939 rental values. It was not the present Government which did this: it was the Government of the noble Viscount's Party, acting under the Local Government Act, 1,948. The mistake that was made then was obvious to the noble Viscount to-day, in that he supported the action that Her Majesty's Government had taken in giving some relief and remedy to shops all over the country. As regards the offices, the noble Viscount mentioned the fact that these wealthy offices could probably quite easily afford to pay the increase on rates that has fallen upon them due to large increases in their assessments. I am certain that the noble Viscount is correct there, but to suggest now that we should have a system of rating for wealthy offices separate from that used for not-so-wealthy offices is a new conception of rating which has never 494 been tried in this country, and never will be. As I said in the course of ray remarks in replying to the noble Lord, Lord Latham, the system of rating we follow here has been the same for different classes of property. To single out one class—in this case, offices—and to say that, because the noble Viscount has a rich office and I have a poor office, we should start to assess them on completely different bases from that or which they have been assessed hitherto is a proposition which I could not commend to the House on this occasion.
§ LORD LATHAM
I have a kindly feeling for the noble Earl because I feel that with his years of experience and service on the London County Council, his heart is not really in this proposal. He rested his earlier speech upon what had been said by my noble friend Lord Silkin, and what had been written by the former Minister of Housing and Local Government. The latter, the noble Earl stated, issued a letter in 1954 Lull another in 1955, in the latter of which I gather he referred to what he described as an undue burden arising from the revaluation. It is of the essence of our case chat those revaluations are fair, legal and properly based, representing current values, and that they did not, as an element in the general economy of the nation, and they do not now, cast an undue burden upon the occupiers of those premises. They cast an appropriate, corrected burden which ought to have beer, borne many years ago.
The noble Earl referred once again to the valuation of houses. It is the case that it was a Labour Government which in 1948, by Act of Parliament, not as a single ad hoc action, but al a part of the general consideration of rating and valuation at the time in relation to the severe persistent housing shortage, determined that the assessment of houses should be on the 1939 basis, because, generally speaking, owing to controls, the rents receivable from those houses were 1939 rents. In my submission, therefore, both categories of property halve been valued on current values, and it is unfair and inequitable to grant to ore category of property, namely, shops, and especially now in relation to the Amendment, offices and commercial premises, a rebate of 20 per cent.
495 My noble friend Lord Silkin is here and will speak for himself, but I am sure he will permit me to make these comments upon the statement made by him which was read out by the noble Earl. It may well be that my noble friend Lord Silkin pointed out that certain adjustments would have to be considered as a result of the revaluations which were to take place. But, so far as I know, my noble friend Lord Silkin did not advocate as one of those adjustments the derating of another category of property, which it is proposed to do by this Bill. When he spoke of a "cushion", it may well be that he had in mind not a "cushion" to be provided at the expense of the local authorities, not a "cushion" to be provided by the household ratepayer, but one to be provided by grant, which in fact was done with industrial derating. When industrial derating first came in, there was a specific element of grant in respect of the estimated loss of rates as a result of the derating of industrial premises, and if the Government take the view that there is a case for mitigating the burdens of rates as a result of the new valuations, then the Government should make the local authorities a grant appropriate to such loss of rates by local authorities, as was done in 1929. There is an additional reason why the Government should do that, because, as regards business premises, they stand to get half, and in some cases more than half, the benefit of the reduction of rates flowing from the reduction by this 20 per cent. of the assessments on those properties. In those circumstances, I invite the Committee to support this Amendment which, in any event, if carried would largely mitigate the mischief that will otherwise be done by Clause 1 of this Bill.
§ On Question, Amendment negatived.
§ 5.55 p.m.
LORD BENNETT OF EDGBASTON moved, in subsection (1) after "Act, 1925," to insert:
or where the hereditament consists of sewage disposal works occupied by a joint sewerage authority,".
§ The noble Lord said: This is quite a different type of Amendment. The Bill gives relief to certain properties which it is felt are being unduly penalised by revaluation, and it has been submitted to us that sewage disposal works occupied 496 by joint sewerage authorities should be included among the hereditaments to which the provisions of Clause 1 are intended to apply. The local authorities who are interested in these joint sewerage authorities have approached us and have asked us to put down Amendments; so I am proposing in Clause 1, after the words "Act, 1925," to insert the words on the Marshalled List.
§ The noble Earl, Lord Munster, referred to the remarks made by the Minister in another place in introducing this Bill, the text of which was that some unduly heavy burden was being borne in certain directions. May I indicate to the Committee some of the unequal and unduly heavy burdens which are being borne by these joint sewerage authorities? I know most about the Birmingham area, of course. On April 1 the Birmingham Tame and Rea Joint Authority had their rateable value raised from £31,216 to £115,250—a rise of 269 per cent. I think that they come under the umbrella of the Minister's reference to an "unduly heavy burden". Their annual expenses in constructing, maintaining and operating their disposal works have increased from 8.5 to 20.2 per cent. That is just one example that has come to our knowledge. The Colne Valley Authority, though not such a large Authority, are, in proportion, even worse hit. Their rateable value has been put up from £9,500 to £42,000—an increase of 342 per cent.
§ The point I wish to emphasise is that if this Bill becomes law in its present form the disposal works of the sewerage authority will be one of the few classes of properties which are assessed on 1955 values and rated without any reduction whatever. We all know that agriculture is entirely derated, and that industry pays at the moment only 25 per cent.—although how long that situation will remain we do not know. Private houses are assessed at 1939 values and, as a result of this Bill, shops and offices, which are at present assessed at their 1955 value, will have their rateable values reduced by one-fifth. Therefore, one of the few classes which will pay the full rates on current values are these sewerage authorities.
§ On the Second Reading of the Bill in another place, the Parliamentary Secretary explained why properties assessed directly by reference to net annual values were excluded from Clause 1. These 497 properties include sewage disposal works, but they also include such things as water undertakings, piers, racecourses, holiday camps and crematoria. Some of these undertakings are assessed on the basis of their accounts, and accordingly the rate charged is calculated by reference to their net income. In such cases, the Amendment which I am proposing would not be applicable. Sewerage boards, however, are not in this category. I understand that they are assessed on their capital value. Moreover, they differ from piers, racecourses and holiday camps by reason of the fact that the sewerage authorities are non-profit-making bodies.
§ In the Committee stage of the Bill in another place on February 14, the Minister gave his reason for refusing to extend the scope of Clause 1 to holiday camps, piers and market halls, and though it was put forward that sewage disposal works were quite different, the Minister replied to the effect that Her Majesty's Government were not willing to extend the concession to "the whole gamut of properties assessed at net values." I have tried to show that the sewage works could be included without "going the whole hog" and including the whole gamut of which the Minister speaks, because they are quite a different class. Yet one is put off, as the Minister put off ray friend who raised this question in another place, with the story that one of these days there is to be a major local government Bill, and that then will be the time to include matters like this. I wonder how often I have heard that story told, and been put off with the suggestion that some day there is to be a massive Bill dealing with local government and that minor matters like this which are brought forward can always wait till then. I doubt whether I shall live to see that major Bill come forward, but when it dies, it will be a massive Bill and many other matters will be crowded out. I therefore think Her Majesty's Government might deal with milers which are brought forward and not put them into the "never-never" class of provisions which some day, if we live long enough, we shall see brought in.
§ I believe the proposal which I have made has certain merits, because the sewerage boards can be distinguished from other organisations which are directly assessed on net values. For one thing, these boards are not assessed by 498 reference to annual accounts, and they are non-profit making bodies. I understand that there are some thirty joint sewerage authorities in England and Wales, though not all of then are affected by this Amendment. Not all of them own sewage works, and some of them are not joint bodies. Where a body owns its own sewage works, its rating authority makes the rates and they pay for themselves. This Amendment is therefore put forward to help those who feel that they have a case. There is nothing partisan or Party about it, and I hope that it may have the support of all who look at local government in the broad sense and will help local authorities in any way they can. I have much pleasure in moving this Amendment.
Page 1, line 9, after (" Act, 1925,") insert (" or where the hereditament consists of sewage disposal works occupied by a joint sewerage authority,").—(Lord Bennett of Edgbaston.)
§ LORD BURDEN
One can follow the noble Lord who has just spoken on the general case on behalf of joint sewerage authorities, but I suggest that the Amendment as it stands is too limited in scope. Secondly, I query in my own mind whether this is the Bill in which the remedy for the injustice should be sought. The Amendment applies to:sewage disposal works occupied by a joint sewerage authority ".As the noble Lord was speaking, it occurred to my mind that, for example, the northern outfall of the London County Council (I speak subject to correction by my noble friends Lord Listowel and Lord Silkin) is owned entirely by the London County Council, and I have, no knowledge of what the increased assessment of those works may be; but any increased assessment, as I understand the position, will be a windfall to the local authority of Barking. I believe the outfall is within the area of the Municipal Borough of Barking and the amount ultimately will be payable by the people living within the area of the London County Council. But again, if my memory is correct within the Borough of Barking there is a joint sewage works, that of Barking and Ilford, and again I expect they will have the benefits of the increased assessment—another windfall for that local authority.
499 I wonder whether, in the long run, it will bring them any benefit. I understand that, with this increased rateable value, the grants from the central Government will be correspondingly decreased; so, if one works it out, the subtle fact emerges that the ratepayers of London and Ilford and Barking will be shouldering responsibilities in relieving the Exchequer of payment of grants to their respective authorities. It seems to me that while, taking it broadly, the Party to which I have the honour to belong have always objected to derating, it was always understood, from the time it was introduced in 1929 by a distinguished honourable Member from the Birmingham area, whom noble Lords will remember, that it was to help the distressed industries. Its scope since then has been much wider. But while derating remains, any help to the sewerage authorities should be through derating rather than through a Bill of this kind. Even then, with due respect, I suggest the Amendment is a little too limited in scope.
§ LORD CROFT
I should like to say a few words on this Amendment. As your Lordships are aware, a number of non-industrial buildings are excluded from relief under Clause 1 of this Bill, owing to the fact that there is other land included with the buildings. Such are racecourses, commercial sports grounds, holiday camps and sewage disposal works. There is another group of hereditaments, such as advertisement hoardings, sporting rights and wireless relay stations, which in any event are not buildings, and there are public utility undertakings which are valued on their profits. All these hereditaments fail to qualify among those for which a gross value has to be ascertained, as specified by Section 22 of the Rating and Valuation Act, 1925, as amended by the Act of 1955. Your Lordships may ask why joint sewerage authorities should be singled out for attention by this Amendment. The answer is, I think, that they appear to be the most deserving of relief of all hereditaments which do not qualify for relief under Clause 1. Nearly all the other hereditaments which I have mentioned are, in effect, run as commercial propositions, whether or not they are run by local authorities. Seaside piers, for instance, are almost invariably owned by local authorities, though they may be 500 leased to commercial enterprises. These commercial concerns can set off their rates against profits assessable to tax. Nor is it easy to see why hospitals, for instance, or welfare homes or public baths should enjoy the relief afforded by Clause 1 and not sewage disposal authorities.
I would submit to your Lordships that this is another reason for supporting this Amendment. I would remind your Lordships that joint sewerage authorities are non-profit-making bodies and, unlike commercial undertakings, are unable to set off their rates against profits assessable to tax. I regard that as rather an important point in favour of this Amendment. As the Bill has remedied a very serious inequality in the case of shops, I hope that Her Majesty's Government will go one step further and accept this Amendment.
§ 6.12 p.m.
§ THE EARL OF MUNSTER
As my noble friend behind me said when introducing this Amendment, it is very different from the previous one which was introduced by Lord Latham. That, indeed, is true. It has this great difference: that it is a far more difficult Amendment to dispose of. As I think my noble friend Lord Bennett of Edgbaston pointed out clearly, the effect of his Amendment is to extend the class of hereditaments which are entitled to relief under Clause 1 to include the sewage disposal works of joint sewerage authorities. As the noble Lord and other noble Lords who have spoken on this Amendment well know, as the clause is drafted it excludes from relief all hereditaments the net annual values of which are ascertained direct instead of by deduction from gross values. These include sewage disposal works of all kinds. The argument was raised by my noble friend behind me in support of his Amendment that these particular sewage properties have suffered an even larger increase in rateable values than, on the average, have shops—or even office premises as a whole.
As I understand it, the Colne Valley Sewerage Board, to which my noble friend referred, suggested to the other boards in the country—I understand there are thirty in England and Wales—that representations should be made to my right honourable friend the Minister of Housing to indicate to him the increases 501 which have occurred in the assessments for joint sewerage authorities. Out of those thirty, only ten boards (including the Colne Valley Board) have done this. Out of the ten, only seven have quoted figures. It is true to say that in six of these cases there have certainly been very large increases in assessments.
My right honourable friend feels, however, that even if these six cases could be taken as typical of the thirty, it would be quite wrong to single out from the general class of all hereditaments which are assessed direct to net annual value small groups of properties for special treatment. There may be—indeed I have no doubt that, there are—other properties with just as strong cases as, or possibly even stronger cases than, the joint sewerage boards, and the information about increases in rateable values in these cases is not available at the moment in sufficient detail to make it possible to test claims group by group, even if that were desirable. I feel certain that even Lord Latham and Lord Silkin would deprecate testing these various groups individually to see whether it was desirable or not that they should have their assessments reduced. My right honourable friend feels that, in any event, it would be quite anomalous to rate a sewage disposal works which has been occupied by one kind of local authority—that is to say, a joint board—differently from a works occupied by another kind of local authority—say by a county borough council, in a place which may be, and will be, outside its own boundary.
Apart from the objection in principle which I have tried to explain to my noble friend, this Bill, as I think I stated on a previous occasion, has the very limited object of giving a measure of justice to a broad, general class of property which, I think all sides of the House recognise, has had too large a share of the burden thrust upon it by the revaluation. My right honourable friend thinks that it would not be desirable to extend the relief further by picking and choosing among farther claimants to it—in this case joint sewerage authorities. Let me add that is is certainly the intention of Her Majesty's Government to introduce a major Bill—I think I might even call it a massive Bill—on local government quite soon that will cover both reorganisation of local government and the finances of local government as well.
THE EARL OF LISTOWLL
May I interrupt the noble Earl for one moment? The statement which he has just made is extremely important because we are all waiting anxiously for this further legislation. Did the noble Earl mean, when he said "quite soon," that there would be legislation in the next Session of Parliament?
§ THE EARL OF MUNSTER
That is what my right honourable friend has said. He made a statement to that effect in another place.
§ THE EARL OF MUNSTER
Perhaps we had better wait and see. I cannot anticipate the Bill, though no doubt Scotland might have to wait a period of time to be covered as well. It is not for me to judge, it may be for my noble friend behind to judge, whether it will be appropriate on that occasion to bring forward the matter on which he has addressed your Lordships to-day—that is, whether there should be some alteration in the system of assessing the joint sewerage authorities. As I am advised at the moment by my right honourable friend, he would not be willing to accept this Amendment.
§ LORD BENNETT OF EDGBASTON
I am naturally disappointed, because I feel that Her Majesty's Government could have met this point and included the sewerage boards without sacrificing anything in the way of principle. It is cheering to, hear that this major Bill, as I have heard it called over the last ten years—and no doubt some of my noble friends on the other side have heard of it for a larger time—which some day is going to reform local government is at last being seriously considered and that some of the things which we have had to put up with will be included. In the circumstances, I am afraid that I cannot press the matter any further. Naturally, I will reserve the right to being the matter forward again at a later stage, if I can find any justifiable reason for doing so; but as the thing stands a: the moment, I ask your Lordships' permission to withdraw the Amendment.
§ Amendment, by leave, withdrawn.503
LORD BURDEN moved to add to the clause:
(7) As from the first day of April, nineteen hundred and fifty-seven, the provisions of subsection (7) of section one of the Act of 1955 shall cease to apply to a hereditament of which in accordance with subsection (1) of this section the rateable value is to be ascertained by making from its net annual value the deduction mentioned in subsection (2) of this section.
§ The noble Lord said: I need hardly say that as Clause 1 of the Bill reduces the rateable value of shops, offices, and other business premises, it will reduce the amount of rates that will be collected. It is common knowledge that a considerable number of appeals have been lodged against the assessments made under the 1955 Rating and Valuation (Miscellaneous Provisions) Act, which this Bill seeks to amend. Section 1 (7) of the 1955 Act provides that when an appeal has been lodged against an assessment made under the Act, the local authority can recover only the amount levied on the hereditament for the year previous to the new valuation list. The balance perforce remains outstanding until the appeal has been decided one way or the other. At the present moment many local authorities have large sums outstanding and it is understood that a considerable period is bound to elapse before all these appeals are finally settled.
§ Taking into account the concessions contained in Clause 1, concessions not shared by the ordinary householder—I am not arguing whether that is right or wrong at the moment—I submit that it is only fair that the new assessments (that will be, the previous assessments reduced either by one-fifth or one-seventh) should be paid in full when this Bill comes into operation. If an assessment after reduction is still considered by the occupier to be too heavy, then there is the ordinary machinery for appeal, which should be used. I submit that there is no justification for the withholding of the new assessment when it comes into force. I assure your Lordships that local authorities are greatly concerned at the effect which this withholding of payment is having on their financial position. Seeing that the Minister claims that the concessions in this clause would right what the Minister himself calls an injustice, it would be only just and right that the occupants of premises, having had an 504 injustice put right, should pay up, or, if they think that the assessment is still too high, should have recourse to the normal machinery which other ratepayers have to use. I beg to move the Amendment in the hope that the Minister will accept it.
Page 2, line 39, at end insert the said subsection.—(Lord Burden.)
§ THE EARL OF MUNSTER
I really marvel how well the noble Lord can explain this highly complicated matter with such completely effortless lucidity, and I only hope that my reply will be as lucid in explaining why I am unable to accept the Amendment. As the noble Lord said, Section 1 (7) of the 1955 Act enables ratepayers, after they have made their appeals for the reduction of their assessments, to avoid paying rates in excess of the amount which they paid in the year 1955–56 until their appeals are settled. The noble Lord's Amendment provides that the right which a ratepayer has under Section 1 (7) of the 1955 Act should not apply to properties which have had a reduction under Clause 1 of the Bill. I have been advised that since 1925, as every quinquennial valuation period comes round, all ratepayers have a right similar to that afforded under this section of the 1955 Act to withhold payment of their full rates pending the settlement of their appeals. I feel sure that the noble Lord will appreciate that I should be very reluctant to abolish this long-standing right for one particular class of property.
The noble Lord, Lord Burden, asked what the position was in regard to appeals. Up to January 31 of this year, there were 757,000 proposals for alteration of the valuation lists and up to that time 374,000 of these, just under 50 per cent., had been settled. To further strengthen my argument why we cannot accept this Amendment, I think my best course would be, if the noble Lord would be good enough to listen, to quote a letter which my right honourable friend the Minister of Housing and Local Government caused to be sent to the Manchester City Council, who brought this matter to his attention some time ago. The letter read as follows:I am directed by the Minister of Housing and Local Government to refer to your letter of 11th February and to say that he does not consider that the fact that a hereditament is 505 within the provisions of Clause 1 of the Bill constitutes sufficient justification for excluding it from the provisions of Section 1 (7) of the Rating and Valuation (Miscellaneous Provisions) Act, 1955. Even after the reductions made by the Bill are taken into account, the properties relieved will still bear on average a substantially larger share of the rate burden than before the revaluation, and the Minister would not think it equitable to deprive them of a right to which others bearing no larger a share than in 1955–56 would still be entitled.When an appeal relates to the assessment of a hereditament of the kind to which Clause 1 applies, the local valuation court are primarily concerned with determining the gross value. Furthermore, when the proposal giving rise to the appeal was served in the year 1956–57 (as it trust be if Section 1 (7) is to be invoked) the count will be concerned with the circumstances of 1956–57, and any reduction under the Bill for 1957–58 and subsequent years would clearly be additional to and entirely separate from any reductions made by the court for 1956–57. It therefore appears to the Minister that the Bill and the average reduction secured upon appeal is irrelevant to this issue. By reducing the total amount of rates chargeable in 1957–58 and subsequent years in respect of hereditaments within Clause 1, the Bill as drafted will of course automatically reduce the difference between the amount chargeable and the amount recoverable under Clause 1 (7).I have quoted that letter in full to the noble Lord because it seems to me to set out clearly the reasons why my right honourable friend cannot, in the circumstances, accept the Amendment which the noble Lord has moved.
§ LORD BURDEN
I readily admit that the statement the noble Earl has made on behalf of the Minister has some substance in it. But undoubtedly the fact is that large sums of money will continue to be outstanding, although I agree that some of the amount may be reduced as a result of consideration of the position. I take it that approximately one-half of the appeals have been dealt with and we have only up to March 31 of this year before a new assessment will come into operation. It is going to be cumulative, too, I take it. I warn the Minister that local authorities will be forced to raise mere money by getting what money they can from banks, or drawing upon reserves, which they will not like doing. It seems to me that the effect of the proposals in this Bill, as they stand, will add to the load on the long-suffering ratepayers, who somehow or other will have to raise the money to meet the deficiencies. However, in the circumstances, I agree that no useful purpose would be 506 served in pressing the Amendment, and I beg leave to withdraw it.
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.
§ Clauses 2 to 4 agreed to.
§ THE EARL OF MUNSTER moved, after Clause 4, to insert the following new clause:
§ Repeal of inoperative enactments
§ "5. Whereas in consequence of the passing of subsection (6) of section five of the Rating and Valuation (Miscellaneous Provisions) Act, 1955, the enactments mentioned in the Schedule to this Act have ceased to have effect to the extent specified in the third column of that Schedule; the said enactments are hereby repealed to the extent so specified."
§ The noble Earl said: This Amendment looks somewhat formidable, but I am advised that we want to include this new clause in the Bill merely for the purpose of tidying up the Statute Book. I beg to move.
After Clause 4, insert the said new clause.—(The Earl of Munster.)
§ On Question, Amendment agreed to.
§ 6.36 p.m.
§ LORD BURDEN moved, after Clause 4 to insert the following new clause:
Extension of s. 144 (2) (c) of Local Government Act, 1948
. In paragraph (c) of the proviso to subsection (2) of section one hundred and forty-four of the Local Government Act, 1948, after the words `made within' there shall be inserted the words a period of two year; from '.
§ The noble Lord said: Although this Amendment may appear a little technical, its purpose is quite simple. In accordance with the Seventh Schedule to the Rating and Valuation (Miscellaneous Provisions) Act, 1955, alteration in rateable value following appeals is taken into account by the Minister for the purpose of grant payments to local authorities under Sections 2 and 130 of the main Act of 1948; and those grants will be made for the year 1956–57.
§ I am informed—and what the noble Earl said in connection with the previous Amendment supports this—that there is little hope that the majority of appeals in connection with the larger properties—and I emphasise "larger properties" will be disposed of during the present financial year. It follows, therefore, that if this Bill is not amended the intention of the 1955 Act will be defeated: that 507 is, so far as taking the loss of rateable values into consideration when making the grants is concerned. A further important consequence will follow if this Bill is not amended. If the appeals are not settled before March 31, not only will there be that outstanding rateable value, but there will be a potential loss of revenue which will follow if there is any consideration given to the appeal. But the further loss will arise owing to the non-adjustment in the grants payable under Sections 2 and 100 of the 1948 Act.
§ My Amendment seeks to ensure that the intentions of the 1955 Act, seeing that, through no one's fault, those intentions have not been carried out during the present financial year, shall be carried into effect by extending the provisions of that Act, so far as this particular point is concerned, for one further year. I feel sure that it is not the desire or the intention of the Minister to evade the promise (or call it what you will) given to local authorities in the 1955 Act because of the inability of those concerned to get the appeals settled before March 31, 1957. I am attributing, no blame to anybody in that connection; it is due to circumstances over which no one had any control. But without these adjustments the grants will be paid on an artificially enhanced rateable value, for which the local authorities have no responsibility, because the valuations were carried out by the Inland Revenue Department in accordance with previous legislation. I would respectfully submit that this Amendment is fair and just to local authorities. I trust that I shall have better fortune with this than with the previous Amendment, and that the noble Earl will be able to accept it. I beg to move.
After Clause 4, insert the said new clause.—(Lord Burden.)
§ 6.40 p.m.
§ THE EARL OF MUNSTER
As the noble Lord has rightly said, this is an extremely technical subject. I have been informed that Section 144 of the Local Government Act, 1948, provides that, subject to certain provisos, a reference to the rateable value of an area for a year is to be construed for the purposes of that Act as the total of rateable values shown in the valuation list on the first 508 date of the year. This figure is required to be ascertained for the purposes of the Exchequer equalisation grant, the London equalisation scheme and the distribution by the Department of payments under Part V of the Act by the British Transport Commission and the Central Electricity Authority. Proviso (c) of the subsection, which was inserted, as the noble Lord rightly said, by the Valuation Act, 1955, provides for certain alterations made in the new list in its first year, as the result of the settlement of appeals, to be taken into account in computing the total as though the alteration had actually been made when the list came into force.
The Amendment which the noble Lord has moved would provide for such alterations made within the first two years of a new list to be taken into account. The noble Lord has contended that this is quite reasonable, because it is now clear that a substantial proportion of the proposals which were made in the first year—that is, in 1956–57—of the new list will not have been disposed of by the end of that year. I told the noble Lord just now that up to the end of January, 757,000 proposals had been made, of which 374,000 have now been settled.
§ THE EARL OF MUNSTER
There are just over 50 per cent. outstanding—that is true. It was never expected that all, or even the great bulk of, the proposals which had been submitted would be settled in the first year of the new lists. Section 144 (2) of the 1948 Act in its original form—that is to say, not amended by the 1955 Act—was so drafted in order that the final settlement of grants should not be unduly delayed. Proviso (c), which was added by the Act of 1955, was a limited departure from the original provision to meet the special circumstances of a revaluation, and my right honourable friend does not think that it should be extended now in the way in which the noble Lord proposes in his Amendment. There is one further difficulty which I am loth to invoke, because it is not the custom to do so in this House; but, as I understand it, if the noble Lord's Amendment were accepted, there is the chance that it might be out of order as being outside the0 scope of the 509 Financial Resolution. I mention that only in passing, because I think that the noble Lord has an important point. But for the reasons which I have mentioned, I hope he will not press this Amendment.
§ LORD BURDEN
I am conscious of that last point, and I am sure that no one would allow a relatively new Member of your Lordships' House to transgress in that direction. But this is a complicated matter, and the local authorities feel That, with the provision in the 1955 Act coming to an end, and these outstanding proposals not being put into operation—or, as I would put it, round the other way if the noble Lord will agree—there will be some substantial reduction in the net amount arising from the consideration of these proposals by the appeals committees. As the Amendment contained in the 1955 Act stands, those redactions would be taken into account in grants made to local authorities, but that will not be done unless this clause is extended. Bearing in mind the complicated character of the Amendment, and also the financial arrangements, and bearing in mind the other complication which the noble Earl mentioned, would it be possible for these to be considered by the noble Earl and his right honourable friend with the offices concerned and with representatives of the local authorities? I am asking that because, owing to the exigencies of time, if you like, in another place, a similar Amendment was put down but was not called. Taking all those circumstances into account, I am quite willing to withdraw my Amendment to-clay, if those discussions can take place. In fact, I plead with the Minister to agree to those discussions taking place in order, if possible, to get an agreed solution and arrangement between the Minister and the representatives of the local authorities.
§ THE EARL OF MUNSTER
I am quite willing and happy to convey to my right honourable friend the views which the noble Lord has expressed, but I could not, of course, say definitely, here and now, that he will be prepared to meet the local authorities on this particular question before the time that this Bill must become an Act of Parliament which, if it is going to have any value, must be the last day of this month. But I will certainly convey the noble Lord's views to, my right honourable friend.
§ Amendment, by leave, withdrawn.
§ Clauses 5 and 6 agreed to.
§ THE EARL OF MUNSTER
This Amendment consequential on Amendment. No. 3 which stood in my name. I beg to move.
§ Amendment moved—
§ After Claus 6, insert the following Schedule—
§ ENACTMENTS REPEALED
|Session and Chapter||Short Title||Extent of Repeal|
|32 & 33 Vict. c. 67.||The Valuation (Metropolis) Act, 1869.||In section four the definition of "gross value".|
|1 & 2 Eliz. 2. c. 42.||The Valuation for Rating Act, 1953.||In section two, in subsection (1) the words from "or in section four "to" 'the Act of 1869 ')".|
|In section four, in subjection (2) the words "or the Act of 1869, as the case may be".|
|In section five, in subsection (2) the words "or the Act of 1869, as the case may be".|
|In section six, in subsection (3) the words "or in section four of the Act of 1869". ")|
§ On Question, Amendment agreed to.
§ House resumed.