§ 6.28 p.m.
§ Order of the Day for the House to be again in Committee read.
§ Moved, That the House do now resolve itself into Committee:—(Viscount Hailsham.)
§ House in Committee accordingly.
§ [The EARL OF BUCKINGHAMSHIRE in the Chair.]
§ Clauses 6 to 8 agreed to.
§ Clause 9 [Reduction and remission of rates payable by charitable and other organizations]:
§ THE EARL OF LUCAN moved to leave out subsections (1) and (2). The noble Earl said: This Amendment, No. 12, with Amendment No. 14, is designed, as your Lordships will have realised, to abolish the feature in the Bill which imposes mandatory rate relief on local authorities in favour of charities to the extent of 50 per cent. We know that that Government accepted the recommendations of the Pritchard Committee, but the Committee went in great detail into this question of the rights and wrongs of rate relief for charities, whether grant or rate relief should be given, who should give it and so on, and they came down in the end, after arguing the case very carefully, in favour of local authorities being compelled to grant 50 per cent. rate relief to charities. I think one is entitled to argue in the contrary sense, and I would suggest that it is unsound in principle and bears unduly heavily on certain local authorities.
§ The question of assistance from public funds to charities is, I should say there is no doubt, in accordance with the wishes of the majority of the people in this country. I think it is not entirely obvious that that should be so. For instance, a charity raises money to carry out its operations and to maintain its headquarters organisation; it raises 563 money for its stationery and furniture and its staff salaries, and for its rent. It does not ask the landlord of its offices to let it off 50 per cent., of its rent. It pays for its lighting and heating; it does not ask the public utilities to give it special rates. It seems to me that there is no logical reason why the overheads of a charity should not include the rates which, after all, provide the charity with the services that we all expect from the rates. The cost of the police and the fire brigade, the sewers and the highway, are all paid for out of the rates, and I think it is a quite arguable case that the subsidy, which in effect rate relief is, is really unjustifiable. But I do not want to labour that point; it does not arise in the present case. As I say, I think it is in accordance with the general wish of the public that charities should receive some measure of subsidy.
§ Whether they receive the subsidy from national Exchequer funds or from local authority funds is another arguable case, but I submit that what is not arguable is that the authority that provides the money ought to be the authority that decides—in other words, Parliament should decide when it is income tax relief and raised from Exchequer funds, but when it is relief from rates surely it is a case for the elected local authority to say whether their ratepayers are to provide this subsidy to the charities that happen to have elected to have their headquarters, their establishments of one kind or another, within that rateable area. Like all other exemptions—we have heard it so often in regard to immunities and privileges—if one person is exempted all the rest bear a heavier burden; so it is a matter directly affecting the ratepayers of a local authority area.
§ I said that some boroughs bear a heavier burden than others. The Pritchard Report showed that under the 1955 Act, in England and Wales as a whole, the hereditaments relieved were 1.09 per cent. of the total. In the County of London they were 1.49 per cent.; in the borough in which I live, St. Marylebone, it is almost 3 per cent.—2.98 per cent. That was under the 1955 Act. That is statistical evidence of the fact that a great many national bodies, institutions and associations of all kinds, 564 from the Zoo to the Institute of Cardiology, are all located in that particular borough. I think there are two or three other London boroughs and the City of Westminster which are in much the same condition.
§ Another interesting figure is the relation that local charities bear to national or international charities in different sections in England and Wales. I will not detail the number of individual hereditaments, but the total rateable value represented by local charities in England and Wales is £2⅓ million, but wider charities just over £4 million. In the County of London local charities represent only £350,000, whereas the charities with the wider scope represent over £1 million; and in the borough of St. Marylebone there are only fourteen local societies with a rateable value of £1,355, whereas the national charities number 157 with a rateable value of £172,000. That is the simple point. I submit that the principle is sound, that any assistance given to charitable organisations should be of a voluntary nature, and that the ratepayers of an area should not be obliged to make enforced contributions to charities simply because an organisation happens to have established itself within the boundaries of the area whilst it serves the rest of the community far outside those boundaries. I think that is a sufficient explanation, and I beg to move.
Page 6, line 8, leave out subsections (1) and (2).—(The Earl of Lucan.)
§ VISCOUNT HAILSHAM
As the noble Earl has clearly explained, the object of these two Amendments is to dispense with mandatory relief and to leave charities and almshouses dependent upon the exercise of the rating authorities' discretion under subsection (4) of this section to reduce or remit their rates. I do not think anyone who has heard either the debate which we held on my Departmental responsibilities, in which the noble Lord, Lord Adrian, spoke from the Cross Benches some months ago, or the Second Reading of this Bill, when some noble Lords spoke in the same sense about the learned societies and the charities, would doubt that the proposal which the noble Earl makes is a controversial one, and I cannot pretend that the compromise between the various 565 points of view at which the Government has arrived, on the advice of the Pritchard Committee, is otherwise than a compromise. It has therefore no complete logic on its side. But there is a long and I think, on the whole, reasonable tradition in this country that societies of particular types should be relieved from rates.
Under the 1843 Act which we are repealing relief was total, and one answer which I would give to the noble Earl on his two cases, of the Borough of St. Marylebone and the City of Westminster, is that the societies to which he refers in those boroughs were, many of them, 1843 societies; so that in fact they are getting discretion over 50 per cent. of what they had no discretion over before. So this Bill is beneficial to them. Noble Lords will remember the extent to which the learned societies have complained, in no uncertain terms, that the additional burden on themselves imposed by the Bill—that is, even if they do not get the benefit of the further 50 per cent, of this relief—may well be a heavy one and leads them to ask for assistance before they can carry on their business.
I do not altogether agree that there is no logic in the tradition. It is true, of course, that rates are a property tax designed to be the main source of revenue for our local services, including education, which is one of the greatest. Charities include a great number of voluntary educational societies or institutions of one sort or another, but in the main they have this in common: that they are subscribed to by voluntary subscribers, past and present, out of funds which have already borne the ordinary burden of taxation, local and general, before the subscription is made. It is, in a sense, hard to ask subscribers to charitable organisations first of all to pay their own taxes and rates and then subscribe to these wholly admirable bodies which, in their turn, will have to pay rates and other taxes.
Of course, my Lords, this is up to a point a plea ad misericordiam. But there is a sense in which it is hard to ask voluntary subscribers to have to increase their subscriptions out of their taxed income, which has borne rates and taxes, in order to support local services. This would really, in a sense, be tearing the thing twice. Then, my Lords, there 566 is still the other point: that this bears more hardly on certain localities. It is of course true of the national societies. These tend to be congregated very largely in the Borough of St. Marylebone and in the City of Westminster. I recognise, therefore, that there is an additional burden.
The argument is that in the case of most societies they have usually a local appeal, more or less, and that therefore the burden of rates from which they are relieved is recompensed by the local advantage of the society's being resident in that area. That is up to a point true. But on the other hand the Boroughs of St. Marylobone and Westminster have certain advantages in rateable value from being the very centre of the British universe. The City of Westminster, in particular, gains great advantages in rateable value, to put it at its lowest, by being at the centre of the capital of the Commonwealth. I think, my Lords, that when one puts a hard case for the local authorities one has to recognise that there are swings and roundabouts, and that what we have done has a certain amount of sense behind it.
In providing in Clause 9 for mandatory relief for charities and almshouses, our Bill gives effect to the unanimous recommendations of the Pritchard Committee. It is as well to remind the House of the history underlying the deliberations of that Committee. In the 1955 Bill, as introduced originally, there was no provision for mandatory relief, but only provision giving the rating authorities discretion to reduce or remit rates of the charitable bodies. That is what the noble Earl is asking for now.
There was some justification at that time for such a provision, for previously bodies other than the 1843 bodies had had to rely on sympathetic undervaluation by the rating authorities, so that statutory discretionary powers were being offered in place of extra-statutory discretionary practice. Nevertheless, the provision received a uniformly unfavourable reception in another place. Mandatory relief had to be introduced there at the recommittal stage in deference to the wishes of the House of Commons after the provision relying entirely on local discretion had been criticised from all quarters.
567 That is the background against which the Pritchard Committee had to report. They referred again to this history after analysing the views of local authorities on charities, who needless to say took an exactly opposite point of view on this matter of whether any rate relief should be mandatory. Their report was as follows. They said:The fact that before 1956–57 the great majority of bodies within our terms of reference were entirely dependent upon sympathetic under-valuation by local authorities without statutory sanction is a cogent argument against any form of mandatory relief. But it was certainly no less cogent in 1955 before any measure of mandatory relief was introduced and when, as we have noted, Parliament was unwilling to leave rate relief for charities and kindred bodies entirely a matter for the discretion of local authorities.It is perhaps right to remind this House that the introduction of mandatory relief for charities by the Amendment which was made on recommittal in another place in 1955 gained support on all sides upon Second Reading of this Bill here.
Lord Silkin welcomed the provision while regretting that some method had not been devised to give the same kind of charities the same kind of relief throughout the country. The right reverend Prelate, the Lord Bishop of London, expressed the Church's appreciation of the relief given under the clause. Lord Brand on this side welcomed the clause, although he regretted that it laid down no permanent principle as I may say this Bill does. Lord Wise asked questions about the clause but showed no hostility towards it. Lord Tedder, from the Cross Benches, was concerned to be sure that the National Rifle Association, which is a charity, was covered by it. Similarly, in Committee on that Bill the efforts of noble Lords were directed towards improving, extending and clarifying the provisions, not reducing them.
The Committee then came to this conclusion which would seem to be correct in the circumstances. They said, and here again I quote:While the practice of sympathetically under-valuing charities seems to have been widespread when local authorities were responsible for rating valuation, it was not uniform, and it does not seem to have been based on any clear principles or to have been followed consistently. It has led to the different treatment of different charities in the same area, and of the same charity in different areas. We think that the time has come to introduce a 568 measure of uniformity and certainty into the rating reliefs enjoyed by bodies within our terms of reference. A satisfactory scheme should be simple and economical to administer and should not add materially to the rates borne by other classes of ratepayers. In our view the essential basis should be mandatory relief for the great majority of the classes or organisations which have in the past enjoyed some measure of relief.They explained this at some greater length. The Government have accepted these recommendations with only one or two modifications. We do not think that Parliament, or indeed opinion outside, would be at this stage willing to revert to complete local discretion in this field. Quite apart from that, it must be remembered that the treatment of bodies in this field covered by Clauses 9 and 10 is part of a single concept. For example, the acceptability of the repeal of the exemption for the scientific bodies, to which I have already referred, is dependent, in part at least, upon an assurance that almost all of them, being charities, will get the 50 per cent. mandatory relief under the provisions which these Amendments seek to repeal.
We feel that we were amply justified in following the Pritchard Committee in thinking that Parliament on both occasions in both Houses did prove itself unwilling to leave the rate relief entirely to local discretion. Whilst I see the force of what the noble Earl has said, I still feel that we are right to adhere to the views of the Pritchard Committee and that this has really expressed the genuine feeling of Parliament upon the matter.
§ THE EARL OF LUCAN
I am grateful to the noble Viscount for that explanation. I quite see the argument. I accept the fact that generally this principle has met with the approval of Parliament. I would only question the argument that bodies dependent upon voluntary subscriptions have money subscribed to them on which tax is paid twice over or which is already taxed. I wonder whether that is really so and whether that can be substantiated. Donations to charitable organisations are, anyhow, relieved of income tax. And are not some donations classed as business expenses? Of that I am not sure; but I would suggest that the idea that these enormous organisations depend on thousands of small donors may not be the whole truth nowadays. Though of that, again, I am not sure.
§ VISCOUNT HAILSHAM
The noble Earl is right in saying that under a covenant the tax is recoverable by the charity; but that is on the assumption (which was the point I was making) that the donor is making the donation out of his taxed income.
§ THE EARL OF LUCAN
But the tax is not paid at all because it is recovered by the charity; or so it seems to me. But I should not like to detain the Committee with an argument, and I would not press that. I think it is a pity that authorities are deprived of the exercise of any discretion or responsibility in this matter. I think it is one more small thing militating against the powers of local authorities, and we are always told that reduction of those powers makes service on local authorities so much less attractive nowadays. It should not be thought that charities by these means do not ask for assistance. They are given assistance by Parliament at the expense of the ratepayers' pockets and, frankly, I think it is a rather unsatisfactory situation. I do not want to pursue this matter. I should like leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 6.53 p.m.
§ THE EARL OF CRANBROOK moved, in subsection (4), after "authority" to insert, "or precepting authority". The noble Earl said: A first glance at subsection (4) of this clause would seem to indicate that a local authority which draws its income from rates has the power to exempt from rates a charity whose activities it thinks are beneficial to the people who live within its area. But, in fact, of course, owing to the curious history of local government in this country, and the two-tier or three-tier system which has grown up, it means nothing of the sort; because a rating authority is, in fact, the second tier in the three-tier system. The metropolitan boroughs of London and the county districts, the municipal boroughs, urban and rural districts in country areas, and they only, have the power to relieve from rates a charity which they think happens to be beneficial to the ratepayers in their own particular area. The London County Council and rural county councils are not rating authorities and have no such power.
§ We have the position that a small urban district such as one finds up and 570 down the country for about a couple of thousand population has the power to exempt from rates (and, I would remind your Lordships, not only from the district council rate but also from the county rate) some almshouses or a small local museum whose activities cover only the geographical area of that small urban district; and the county council, covering a very much larger area, cannot relieve from rates any charity the activities of which cover the area of the entire county and whose activities may be beneficial to the county area and, in a very small way, to the rating authority where it happens to be situated.
§ The noble Lord who has just been making a plea for a particular borough forgot, I think, the fact that should that borough derate a local charity, I, in Chelsea, would be supporting one of the charities in St. Marylebone—possibly the old people's home to which he himself will go when he is old and which will not be able to accept me owing to its Charter. It seems to me ridiculous that a very small local authority can exempt from rates while a very large local authority cannot. I put down this Amendment for the precepting authority, which I believe covers the county councils only, in the confident expectation that the noble Viscount who replies will see that this wider discretion for local authorities is necessary and that my Amendment, or possibly some modification which he will suggest, will be acceptable. I beg to move.
Page 6, line 45, after ("authority") insert ("or precepting authority").—(The Earl of Cranbrook.)
§ LORD LINDGREN
The noble Earl has been very persuasive in moving this Amendment. It is quite usual in this House to declare an interest. My interest in this matter is not by any means a financial one, but I am associated with local government and I am a member of a precepting authority. I am a member of the Hertfordshire County Council. I think that this Amendment would lead to a considerable amount of antagonism in local government. After all, though we are considered to be a local service, we have to be frank with ourselves and realise that there is a considerable amount of friction in various parts of the country as between the minor authority 571 and the major authority, the county council. It is not uncommon for the local authority, whether it be a rural district council, an urban district council, or a borough, to accuse the county council of being the "big brother" who treads very roughly over them and usurps their powers, ignores them, and so on.
We have to realise that the precepting authority decides what it is going to spend. It then asks the local authorities, who are the rating authorities, what their rateable value in their area is. After it has accumulated all the rateable values of all the local rating authorities within its area it then determines the rateable value over the county as a whole. It then decides, as precepting authority, what its rate is going to be for the local authority. The local authority then has to decide what it is going to collect from its own people. So it is, in fact, the rating authority which decides what is going to be collected within the borough, within the rural or urban district. One knows that within a county, though the county rate is consistent over the whole county, it has an effect as between rural districts and boroughs as to the amount of expenditure within those authorities. If one had the county coming back, after the local authority had assessed its own budget and its own rateable value for some particular organisation or organisations, about particular sections of the county rate, which is a major portion—generally two-thirds—of the rate levied by the local authority, I think it would cause a considerable amount of trouble. I think it might conflict slightly with what my noble friend said just now.
Had the noble Viscount anticipated my rapid promotion to the Front Bench this evening he would have been able to quote me as saying, in discussions in leading for the Opposition in the 1955 debate, that in fact it was unwise to have a variation or discrimination between one local authority and another on charitable organisations, and that one ought to have a general rule which goes throughout the whole country. But in this instance I think it is a far better method, where there is discretion, to leave it to the local rating authority, who are the rating authority for that particular area, rather than that there should be imposed upon them a decision by a precepting authority, which has no 572 responsibility for the collection of the rate.
§ LORD CAWLEY
I have been a member of a large urban district authority for several years, and I fully support the noble Lord, Lord Lindgren. It would cause the most tremendous trouble if a large urban district authority had the precepting authority exempting charities in their area.
§ 7.2 p.m.
§ VISCOUNT HAILSHAM
I should like to welcome the noble Lord, Lord Lindgren, to the Despatch Box of this House, and to say how glad I am to see him there. I am afraid that on this occasion I must agree with him and with my noble friend Lord Cawley against my noble friend Lord Cranbrook. The effect of the Amendment is to add to the list of rating authorities which, under the Bill, can give discretionary relief to charities, a precepting authority. I do not know whether such was the intention of my noble friend Lord Cranbrook in using the wide expression "precepting authority", but this would, in fact, have rather (to me, at any rate) unexpected results. Listening to his argument, I could not help thinking that what he really wanted to do was to add the county councils to the rating authorities; but, in fact, the expression "precepting authority" would include parish councils, river boards and even the Receiver of the Metropolitan Police District; and I doubt whether it is really his intention to add them in any event, whatever the general merits of his Amendment.
The Government's view is that, on the whole, it is right to leave discretionary relief in the hands of rating authorities. It is admittedly true, as my noble friend quite rightly urged, that any relief granted by a district council naturally has its effect, in turn, upon the county precept; but this, of course, does not, in fact, deprive the county council of money, because they then precept for a higher poundage. Rates in other districts may be affected, but there the effect is diminished by the spread. On the other hand, if one turned it the other way round and supposed that this Amendment were passed, and that a county council was free to give remission, it could, of course, bear extremely hardly 573 on a small district to be forcibly deprived of rate resources for district purposes.
There would be other disadvantages. My noble friend's Amendment would apparently give the discretion both to the rating authority and to the precepting authority, and I do not feel that that would be tolerable. I feel that it would really be necessary to confine the discretion to one or the other. Otherwise, there would be the risk of duplication of relief, of inconsistent reliefs, and of one charitable body playing one of the two authorities off against the other. The discretion for county councils would, I am advised, play havoc with the estimation by the districts of rate product—a key stage in precepting, calculation of grants, and so on.
I should like to quote the words of the learned editor of Rating and Valuation Reporter when, in the issue of June 15, he wrote:Rating authorities are entrusted with the whole process of collecting and recovering rates, and any discretion given to them in discharging that responsibility may naturally affect the rate product and so the county rate. It would hardly be practicable to make the county council a party to such purely administrative rating matters as the rating of owners, agreements with owners, allowances granted for prompt payment, writing off of rates as irrecoverable, excusals on grounds of poverty and refunds under the new Bill. Yet all these affect the county council through the operation of the Rate Product Rules 1959 …. And it would be anomalous to make a special case of charities.That is the Government's view. The learned editor of that review suggests that the county council, while avoiding seeming to interfere in, or usurp, what is essentially a function of the rating authority, can in fact do much to influence the decision of the rating authority towards some worthy charity by letting them have all the information which the county council have about the body.
We feel also that there are other ways in which my noble friend's object can be achieved under existing provisions. For instance, any local authority has power, under Section 136 of the Local Government Act, 1948, to contribute toward the expenses of any body carrying on activities within its area for the purpose of giving advice, information or other assistance to persons resident in the area, or otherwise for the benefit of the area or of those persons. There are, of course, 574 limitations to this power. The Minister's consent is necessary, but that may be given both generally and specially; and a county council could not make a contribution to a body resident in its area but not active for the purposes of the area. However, this power goes a long way towards enabling a county council to give help to deserving bodies. Any contribution will fall wholly on the county precept, whereas rate remission would fall partly on the district rate; but it is no doubt preferable, in such a case, that the county should bear the impact.
Those are the reasons which have led the Government to feel that the right body here is the rating authority and not the precepting authority, whether in the more general connotation of the term or in the more limited sense of the county council. It is not really a question of what is the larger or the more important body: it is a question of what is the body charged with the rating problems I have enumerated.
§ THE EARL OF CRANBROOK
I must confess than I am disappointed with the reception of my Amendment, and am reminded of the saying, aliquid novo pro horrifico. All I have suggested is something new, and the innate conservatism and inclination of every Government Department to say "No" to anything new seems to me to be the only thing against it. As to the argument of the noble Lord, Lord Lindgren, if, as one expects, remission of rates is to be given for a period of years under subsection (5), the thing will become perfectly normal, and there will be no cause for the sort of squabbles which appear to occur in counties other than my own between the major and minor authorities. I may say that I have served on a district and a county council for 30 years and upwards, and we manage things very much better in my county than apparently they do in Hertfordshire or in the noble Lord's county, which I do not know.
I am sorry that the Government cannot accept this Amendment. Though a small one, it is quite an important one, because I feel sincerely that the larger authority can look at the larger charity with a more independent outlook than can the rural authorities. Though I am quite ready to withdraw my Amendment now, I would ask the noble Viscount if he will possibly consider this again and 575 possibly consult with the local authority organisations who I do not feel would be so frightened of something new as the noble Lords who have spoken here tonight seem to be. I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ 7.10 p.m.
THE EARL OF IDDESLEIGH moved, in subsection (9), after "a person" to insert
(b) a hereditament occupied for the purposes of a religious order,
The noble Lord said: At first sight, my Amendment would seem to be a wide one; for there are, of course, a very considerable number of convents in the country. But it is, in fact, a comparatively narrow Amendment, since most of the convents which do active work, such as nursing or teaching, or are engaged in other forms of social activity, already receive rate concessions as charities. But there are twelve Anglican communities and about 60 Roman Catholic communities to whom this does not apply, and who do not receive mandatory rate relief under the present Bill. They were mentioned by the right reverend Prelate, the Lord Bishop of Leicester, in what I thought was a very persuasive and excellent speech on Second Reading; and also mentioned, I thought sympathetically, by the noble Lord, Lord Latham, on that occasion. The right reverend Prelate told the House, as is indeed the case, that he was acting on behalf of the Churches Main Committee, an extremely valuable interdenominational body, who approve of the end which I am seeking to achieve by this Amendment. It is, in fact, an example of that Christian co-operation which we discussed a few weeks back.
§ The reason why these convents do not receive the concessions that are given to charities stems from a case that was brought and taken to your Lordships in your judicial capacity in 1949. That was the case of Gilmour v. Coats, in which it was argued, on behalf of these convents, that they were charities in so far as they promoted religion, a recognised charitable object. The House of Lords decided that that was not the case. I do not want, of course, to controvert the legal arguments of the learned Lords 576 who so decided. At the same time, I must remind your Lordships that, in your legislative capacity, your Lordships are in no way bound by decisions which have been reached in your Lordships' judicial capacity.
§ These convents, then, are not eligible for mandatory relief, but they do need relief very badly indeed. In past times they had two principal sources of income: one their endowments, which of course, for reasons which I need not discuss, have no longer the same value as in the past; and the other, the dowries (as they were called), sums of money brought in by young novices on entering the Order. Very few girls can now provide a dowry when they enter. These convents are, therefore, in a parlous economic position. It is true that, owing to the austerity of their life, their expenses are very low indeed. No butchers' bills for Carmelite nuns! But it is becoming increasingly a struggle for them to find the wherewithal to meet the very bare necessities of life. If it proves the case that, in modern economic conditions, such convents cannot continue to exist, I can only say that we shall lose a part of ourselves, a part of our history. A convent which I sometimes visit was founded by Henry V to pray for the men killed at the Battle of Agincourt. As I say, this is a part of our history. During the hard centuries they had to travel abroad; English girls followed them, by stealth sometimes, to that foreign land and maintained the English character of the community. There are many other communities which are similarly part of our history.
§ The needs, and I suppose the merits, of these bodies have been recognised in another place. An Amendment was moved and accepted which brings them within the sphere of optional rate relief from local authorities. I am most grateful for that concession. I do not want in any way to appear less grateful by pointing out that the amount of relief they will get under that provision is very doubtful. Some local authorities will, I trust and believe, take a broad view of the matter, and seeing the smallness of the rateable value of the buildings occupied by most of these communities, will grant them the exemption.
§ On the other hand, I must point out that many of the convents are in rural 577 districts where it is very difficult for the county council to give up any part of a rateable value open to them. Some of them are in districts of the United Kingdom were sectarian feelings run very high, and where they will have no chance whatever of obtaining relief from the local authorities. I suppose that others are in districts where the matter will become controversial; and I do not much welcome the thought of controversy over this matter in the council chamber. Therefore I am asking your Lordships to take the responsibility upon yourselves to settle the matter at national level. I am asking you to settle it in favour of these contemplative communities, and it is therefore my duty to persuade your Lordships that they are of value, and that they do, in fact, promote religion. At this late hour I will put my reasons as succinctly as I can, but there are five considerations which I feel bound to bring to your Lordships' attention.
§ The first of these is that the contemplative communities promote religion by example. The girls who enter them are, for the most part, girls of intelligence and good education. I know many very intelligent ones who have found this—to us, so strange and difficult—a vocation. These girls might have enjoyed great careers in this world; in any case, they would have had the opportunity of much happiness. But they give it up and take in exchange hardship, austerity, deprivation, obedience, poverty. Why? They do it for an ideal, an ideal which may or may not appeal to your Lordships as a good one, but which is recognised as a valid and high Christian ideal by the majority of Christians, alike in the East and in the West.
§ My second argument would be that religion is promoted by the prayer which these ladies offer continually. About that I would say very little, because it is not a subject on which it is easy to speak in this Committee, but I would say this. It is known to those who study the science of prayer—for it is a real science—that after a time a contemplative nun arrives at such a state of prayer that she can offer no prayers for herself: her sole petition is for the glory of God and the doing of His will. It is very difficult for me to believe that that does not promote religion.578
§ A more mundane point is that they provide services which the public may attend. If one goes, as I have often done, into the chapel of one of the enclosed Orders, one sees that while part of it is screened off as a choir for the use of the nuns, a substantial part is open to the public. The public can and do attend services there. In these chapels, Mass is said every day and the public attend. Sometimes it is said by a local priest brought in by the nuns, sometimes by a chaplain whom they maintain, to whom they give services and maintenance for saying Mass. In addition to the service of Mass, Benediction is held in the convent chapels almost every day and sometimes every day. That, too, is open to the public.
§ There are many places in this country where the convent chapel provides certainly the most convenient, and sometimes the only, place in this land of scattered churches for the faithful to attend these services. While I am on this subject, let it not be forgotten that the atmosphere of these convent chapels is one of prayer and recollection. I could show your Lordships a convent chapel in London, where all through the day faithful men and women drop in to say their prayers. I suggest that in that respect there is a promotion of religion by these bodies.
§ I come to my fourth point, to the very definite and concrete contribution which the enclosed religious have made, and are still making, to the life of my Church, and, I have no doubt, in some degree, to the life of the Anglican Church, too. I will put it this way. If one goes into a Roman Catholic church it is exceedingly likely, almost certain, that one will see at least one or two statues. One of them represents a young Carmelite nun. St. Teresa of Lisieux was her name. After a short adult life, spent entirely in a Carmelite convent, she died in 1897 at the age of 24. She left behind her a few short manuscripts and a tradition. Millions of Catholics and some people in the Church of England, too, have been influenced by her spiritual teaching, by the memory of her. Scores of books have been written about her. She is by far the most popular Saint of modern times. I have heard from two sources that when French troops were having a difficult time in the 1914 war their morale was immensely encouraged by reminders of 579 the life of that young contemplative nun. Strange, but she contributed to the defence of Verdun.
§ The other statue which one will see in churches is called the Sacred Heart. For nearly three centuries devotion to the Sacred Heart has occupied a central place in Roman Catholic piety. That devotion was given to the world by an enclosed Benedictine nun, who saw a series of visions at the end of the seventeenth century. Nor has that influence ceased to-day. There are still remarkable personalities in the enclosed convents to whom the faithful in the living world look in trying to live their internal life—I know some of them, remarkable people—to whom one can go for advice, help and encouragement. In the 'thirties there was a remarkable Carmelite prioress on Notting Hill. She alleged that she saw a vision of Our Lady. Strange to think of the visionaries on Notting Hill! That lady had great influence on a number of people living in the world whom I know. There was the great Dame Lorenzia, abbess of the noted Abbey of Stanbrook. She was a great musicologist, an authority on mediæval plain chant, who corresponded with many learned and artistic people, including the late George Bernard Shaw.
§ I am not going to keep your Lordships much longer, but finally, I would mention a totally modern and highly unexpected way in which these convents have promoted religion. Your Lordships may have seen, a few years ago, a telecast from the inside of a Carmelite convent. It was a totally unprecedented exception. The cameras and commentators were admitted to the convent and described the life of the nuns; and the nuns spoke of their lives and told people what had made them enter. It was a deeply moving programme, which I have no doubt promoted religion as successfully as any religious telecast could do. This year, Independent Television followed suit and took their cameras into an Anglican enclosed convent at Oxford; and they made a broadcast which was also, I am told, exceedingly moving. My Lords, I have put my case before you because I think it is time that this subject was raised. I leave it in your Lordships' hands. I beg to move.580
Page 8, line 15, after ("a person") insert the said words.—(The Earl of Iddesleigh.)
My noble friend Lord Iddesleigh has made out a very moving case for his Amendment, and I must say I should have thought that from his five points—example, ideal, prayer, facilities for prayers by the laity, and teaching—he had abundantly proved that these bodies are what we should understand to be charitable. The unfortunate part is that, by some legal decision in the past, it was held that they are not charitable. I am drawing on my memory of the Charities Act which we passed last year, and, if I recollect aright, in that Act the criterion as to whether an object was charitable or not was to be the Inland Revenue's attitude to its exemption for tax and the like. Presumably, that attitude will follow the legal decision which my noble friend has mentioned.
In other countries, these bodies would undoubtedly be charitable. I remind your Lordships of the position in the East, in India for instance. The whole contemplative apparatus of Hinduism is supported entirely by voluntary contributions of the faithful who genuinely believe that, by their prayer and meditation, the whole nation gains. The hermit living in a cave in the Himalayas is held by the Hindus to be able to influence, for good or evil, the whole life in this world—and, for all we know, they may be perfectly right.
I would agree with my noble friend that it is particularly unfortunate if, through the permissive clause in this Bill, the rating or derating of these contemplative Orders should become a local authority battlefield. That is the last thing in the world we should want to happen at a time when the Christian Churches all over the world are trying, with some success, to draw slightly nearer to each other. So the fewer opportunities we can give for showing up our differences and past animosities, the better. I shall be interested to hear the answer of my noble Leader as to why these bodies are not charitable, because, in my opinion, by common sense they are charitable, and I hope my noble friend's Amendment will be accepted.
§ THE EARL OF LONGFORD
I had intended to make some little speech in 581 support of the Amendment of the noble Earl, Lord Iddesleigh, but after what he has said it would be impertinent and almost sacrilegious to try to develop any spiritual arguments, because I can hardly imagine anyone dealing with that fundamental side of things more effectively. I am glad that the noble Lord, Lord Hawke, was as convinced as I was. I therefore rise only formally to express my strong support for this Amendment. I appreciate that the Government are in some difficulty. As the noble Earl has said, we cannot, as a Legislature, be bound because at some particular moment in time the House of Lords, in a judicial capacity, took a certain view of the nature of charities. While that decision stands, it is the law of the land and there is no question of interfering with it or disputing it in any way.
But here we are, as a Legislature, trying to ask ourselves whether these particular bodies should make payments from which other bodies, more actively concerned in the world but of a same general type, in the sense that they are composed of monks and nuns and other such good people, are exempt. I do not think, after what the noble Earl has said, that most people who believe in prayer at all—and I know the noble Viscount believes in prayer very strongly, and I expect his colleagues do—and anyone who has any sort of confidence in prayer, could rate these people lower, as one may say, in the service they render, than some of those who will be exempt.
The only difficulty from the point of view of the Government, it would seem to me, is how to define these people once one passes away from a category laid down by the law. So far as I understand it, the Government would leave the decision to the local authority. Perhaps the noble Viscount will set me right, if I am mistaken, when he comes to speak. We all must feel with the noble Lord, Lord Hawke, and the noble Earl, that the local authority is singularly unqualified (I speak as an old City Councillor of Oxford, and even an Oxford City Councillor would be remarkably ill-qualified) to pronounce on the spiritual or social value that the service in a particular convent was rendering. It would be rather farcical to have an inquiry of that sort. I hope the noble Viscount can accept this Amendment, but if he cannot, I wonder whether 582 he can hold out any hope for some machinery, better than that of local authorities, where the great service which these people, in the eyes of most of us, render, could be better assessed than under the proposed arrangement.
§ VISCOUNT HAILSHAM
This is obviously a difficult Amendment to reply to, and I hope that in replying to it I shall neither give offence nor be thought to intend to. I must first of all deal with the strictly practical and legal aspects of the matter. As the Bill is drafted, charities rank for mandatory relief to the extent of 50 per cent. and discretionary relief from the local authority to the extent of a further 50 per cent., enabling a charity to be given 100 per cent. in all—50 per cent. mandatory at the behest of Parliament, and 50 per cent. discretionary if the local authority allow it.
Most convents are charities and places of worship under the provisions of subsection (7) which refers back to Section 7 of the Act of 1955. What we are considering, therefore, is not the ordinary religious Order of either the Roman Catholic Church or the Church of England or, for that matter, the Salvation Army, which also in many ways in law is approximated to the position of a religious Order. We are not discussing most of them. What we are discussing are the enclosed or contemplative Orders which in this country are more or less limited to the Roman Catholic Church and to certain parts of the Church of England. These are not charities. I say this as a matter of law, and without the smallest element of criticism or derogation from all that the noble Earl has said: they are not charities. I think it was always thought to be the law, but this was established by a decision in this House, in its judicial capacity, in 1949 in a case called Gilmour v. Coats. In that case, a contemplative Order was held not to be a charity by the House of Lords, which decided that the benefit to the public of intercessory prayer is not capable of legal proof. There, again, I say no word of criticism either of the decision or of what any of the three noble Lords who have spoken have said about intercessory prayer. The decision of the House of Lords was not that it was not effective but that its effect was not capable of legal proof.
§ THE EARL OF LONGFORD
I should like to ask a question of the noble Viscount on a matter of opinion. Is the value and work of a teaching order capable of legal proof?
§ VISCOUNT HAILSHAM
Teaching is a charity by another set of decisions, and I will come to a definition of charity in a moment; but a teaching order is quite clearly a charity because of the basic definition of charity.
If I may return to what I was saying, the noble Earl, Lord Iddesleigh, said something to-day about what constitutes a charity, and this takes us back to the rather curious Statute of Elizabeth I, which gave rise to an immense proliferation of Case Law as to what is and what is not a charity. It is one of the great curiosities of our legal system, to which I will return. I was saying that the decision in Gilmour v. Coats was that a contemplative Order is not a charity because the benefit to the public of intercessory prayer is not capable of legal proof, while the element of edification by example is too vague and intangible to satisfy the test of public benefit. That is the law as it has been decided judicially in this House.
Of course it would be open to this House in its legislative capacity to alter the law as decided by the courts, including this House in its judicial capacity, but this, I must insist, is not what the House is being invited to do by this Amendment. It is not proposed to make a contemplative Order a charity in law and this Amendment would not have this effect. This Amendment would have the effect of saying that a body which is not a charity shall be treated as a charity for the purpose of rates, and to that I think there would be considerable objection. It is fair to pursue this question of charity a little further, because, as your Lordships are aware, we have dealt with it in this House in our legislative capacity a little more recently. A Committee on the Law and Practice Relating to Charitable Trusts, which we all know affectionately as the Nathan Committee, referred to the decision of Gilmour v. Coats in paragraph 129 of their Report. This deals with the status of contemplative and enclosed Orders from the point of view of legislation and the desirability of altering their status.
584 The Report observed that the representatives of the Roman Catholic hierarchy, and here I quote:Pointed out that the decision raised an important question of principle regarding religious trusts generally".They did not dispute that the decision was correct as the law stands, and agreed that in any charity there must be an element of public good. This was considered by the Nathan Committee, and the Committee did not accept the suggestion that contemplative communities should be put into the charitable field by extending the concept of trusts for the advancement of religion to coverthe advancement of religion by those means that religion believes and teaches are means by which it does advance it.In other words the test which was to be adopted for deciding what does advance religion is not necessarily that which religious teaching itself advances.
§ VISCOUNT HAILSHAM
That may well be in the way of the world and there is a great deal of irony about life.
In answer to my noble friend Lord Hawke, who wanted to know why it was not a charity, the answer was that a contemplative Order does not come within the definition of charity, as developed by Case Law, for the reason that I have given, and when Parliament came to consider the matter on the recommendations of the Nathan Committee as recently as last year it deliberately did not make an alteration in that law on This point. Therefore there is a very strong reason, I should have thought, for saying that this was a deliberate decision of Parliament with regard to the status of these Orders in this country, and it would be wrong to attach to them the peculiar advantages in full which attach alone to bodies which enjoy the status of charities within the legal sense, because that would really be to take one stand in one Act of Parliament and the very next year to take quite a different stand in another.
The position, therefore, is that the present Amendment seeks to extend to bodies which are admittedly not charities the mandatory relief which the Pritchard Committee recommended should be confined to charities. In making their recommendation, which the Government have 585 accepted, the Pritchard Committee recognised that their proposalmust exclude from relief other organisations which are clearly both in need and deserving",and, of course, that would cover this particular group of Orders; but it would also cover a number of other bodies. They recommended that these organisations should be eligible for relief at the discretion of the local authorities. In another place doubt was expressed whether the closed communities would be eligible even for relief at discretion, and it was at that stage that the Government thought that they should move an Amendment, which was accepted at Report stage, to remove that doubt.
This seems to me to cover the original position which I have to put forward. I am very anxious to say nothing whatever derogatory about the communities concerned, but I would really question whether the absence of controversy in this very delicate matter would be advanced by giving the relief which the noble Earl on the Cross Benches so sincerely and so movingly asked for. There is nothing so unpopular in this country as taxation relief; the privileged position free from taxation. I quite see the force of what the noble Earl has said about these Orders.
It would be an impertinence for me to question or even to discuss the spiritual value of what they do. It is a subject upon which many sincere people have held different views, and upon which my own views have not the slightest importance at all. No one who has read, for instance, the life of St. Teresa of Lisieux could doubt the beauty of that life or the profundity or purity of the teaching contained in it. But I do not think that is really the question when one comes down to such a mundane matter as relief from rates. No one could be more certain of the value of intercessory prayer than I am, but does that matter from the point of view of relief from rates? We are living in a world of ratepayers, many of whom do not believe in any kind of religion and more of whom do not practise it. In many parts of the country sectarian feelings are stronger than they are in your Lordships' House, yet it is within your Lordships' recent recollection that the debate on religion here gave rise to quite bitter 586 controversy at one short period, even in your Lordships' House.
§ VISCOUNT HAILSHAM
But still between two very striking personalities. I really wonder whether, this being so, we should not be wise to take the convinced opinion of Her Majesty's Government—that is, the compromise solution which we have arrived at—that local communities whose elected bodies on the whole favour a relief of this kind should be allowed to make it, but those where other opinions prevail should be free not to do so, if that is the true local opinion where the communities happen to have their being. It is, of course, a matter of opinion. As I say, I express no views whatever, because my views could not possibly interest the Committee, upon the spiritual value of these Orders. But it is my convinced opinion, bearing in mind the climate of feeling in this country in both directions, with which I suppose I am neither more nor less acquainted than other Members of your Lordships' House, that this is the right compromise and we should stick to it.
§ THE EARL OF IDDESLEIGH
In the circumstances, I have only to thank, as I do very warmly, the two noble Lords who have supported me and the other noble Lords who have heard me with such patience. In particular I would thank the noble and learned Viscount, the Leader of the House, for his very sympathetic treatment of the matter, and I would ask leave to withdraw my Amendment.
§ Amendment by leave withdrawn.
§ Clause 9 agreed to.
§ Clauses 10 and 11 agreed to.
§ 7.52 p.m.
§ LORD MILVERTON moved, after Clause 11 to insert the following new Clause:
Rating of Crown Property
. The Crown shall be liable to be rated in respect of any hereditament occupied by or on behalf of the Crown for public purposes; and accordingly any such hereditament shall be rated and shall be included in the valuation list in respect of any rate period beginning on or after the date on which the first valuation lists come into force after the passing of this Act.
§ The noble Lord said: In rising to move this Amendment I should like immediately to emphasise the fact that the important words in the Amendment are "for public purposes". This Amendment deals with hereditaments occupied by or on behalf of the Crown for public purposes. It has, I need hardly say, nothing to do with Royal residences or anything of that kind. The exemption of Crown property from legal liability for the payment of rates goes back to the year 1601, when a Statute of Elizabeth I, the Poor Relief Act, 1601, which created the liability for the payment of poor rates and paved the way for the rates which are now levied upon properties by rating authorities, omitted any reference to the Crown. Even if this omission was intentional, it was hardly significant in the year 1601, because, of course, at that time there were very few Government establishments and very little was lost by exclusion from rating. The position is, of course, vastly different to-day. One thinks of the multiplicity of Government offices, of courts of justice, police property, property used by the Armed Services, General Post Office property, property occupied by the Prison Commission, the Probation Service, Trinity House, and any properties requisitioned under compulsory powers for the service of the Crown. All such property escapes legal liability for rating because the Crown is not subject to rating law. This exemption continues to widen. Thus, in 1954 premises occupied by the Atomic Energy Authority became exempt from rating, under Section 6(1) of the Atomic Energy Authority Act, 1954.
§ It is the practice, I know, of the Treasury to pay contributions to rating authorities in respect of these properties in lieu of the rates which would be legally payable if the properties were rateable. For a long lime rating authorities, through their local associations, pointed out to the Treasury anomalies in the arrangements for such Treasury contributions, and until recently no contributions were paid, for instance, on Territorial Army property and on requisitioned property. Contributions which the rating authorities regarded as inadequate were made on Post Office property. But as a result of continual pressure over many years the Treasury have at length agreed to make fair contributions in these cases. 588 But the rating authorities are still not satisfied, and their reasons seem to me to be reasonable.
§ These contributions are ex-gratia payments and can be stopped or varied at the whim of the Treasury. No appeal lies to any tribunal as regards the Treasury's decision about how much should be paid. The valuations for the purposes of these contributions are made by the Treasury valuer, and if there is a dispute about the basis of his valuation there is no way in which it can be referred for decision to an impartial arbitrator. Compare this with the position regarding all other property in England and Wales which is subject to rating law. In those cases valuations are made by the Inland Revenue valuer and any interested authority can appeal to the Lands Tribunal.
§ It is submitted that there is no justification for this archaic exemption, which continues to widen. It is also submitted that machinery should be provided for the settlement of differences which arise over contributions now paid ex gratia on Crown property. The new clause accordingly seeks to make the Crown legally liable to be rated in respect of any property occupied by or on behalf of the Crown for public purposes. The words "for public purposes" are inserted because it is not desired to suggest for a moment that payment should be received in respect of Royal residences. The Amendment would not affect those, nor would it affect the "grace and favour" residences, although, in practice, contributions in lieu of rates are paid to rating authorities in respect of some of those residences. Its object is to apply the ordinary law on rating to the kinds of public premises which I have mentioned, whose use is in the public service. The Crown Proceedings Act, 1947, amended the law relating to the immunity of the Crown from proceedings in respect of breach of contract and injuries done by its servants. Until then the Crown had remained immune from liability for hundreds of years. It is submitted that this confers a precedent for the action proposed by this new clause in relation to legal liability to rates. I beg to move.
After Clause 11, insert the said new clause.—(Lord Milverton.)
§ LORD BURDEN
I should like to say a few words in support of this new clause moved so admirably by the noble Lord, Lord Milverton. As he has indicated, the local authorities are very interested in this Amendment, the object of which is to bring within the normal rating and valuation law properties occupied by the Crown for public purposes. It is unnecessary, in view of what the noble Lord, Lord Milverton, has said, to go into the matter in any further detail, but I would suggest that the case for this new clause is a simple one. In regard to property occupied for public purposes the Crown should no longer be above the law or able to contract out of the law. That is the simple case for this Amendment. As has been pointed out, until quite recently servants of the Crown or the Crown could not be proceeded against in the courts in respect of certain matters. That situation was dealt with not so long ago—I believe in 1947. It is perfectly true that the Treasury, in their own way, by their own methods, make contributions to local authorities, ex-gratia payments, in lieu of the normal rates. But I think I am correct in saying that no one knows how those contributions are arrived at—what yardstick, if any, is used; what principles are applied; and, if principles are applied, why is there no method of seeing whether those principles have been correctly applied? I am not accusing the Treasury of bad faith, but in this matter they are both judge and jury, and I think it is high time that property owned or occupied by the Crown for public purposes should no longer escape its legal liability. I hope that this Amendment will be accepted.
§ 8.3 p.m.
My noble friend and the noble Lord, Lord Burden, have clearly explained the purposes of this Amendment—namely, to make the Crown directly rateable with effect from April 1, 1963, in respect of hereditaments occupied by or on behalf of the Crown. I think that, without making too much ado about this, I should tell them straight away that the Amendment, perhaps not to their astonishment, is not acceptable to the Government. Since the noble Lord, Lord Burden, was the last speaker, perhaps I should make it quite clear that, so far as I know, this is in no way a Party point. If I am correctly informed, during consideration of 590 what is now the Local Government Act, 1948, it was suggested that the ordinary principles of rating should apply to property occupied by the Crown. As noble Lords opposite will recollect, if their memories stretch that far back, the then Parliamentary Secretary in the then Labour Government made it clear that the Bill was not intended to make any change in arrangements for Crown property. Be that as it may, I think that the campaign, in which my noble friend's Amendment constitutes the latest battle, was started over 100 years ago at least, when a Select Committee on Public Establishments recommended that all land and buildings should be assessed at local rates and pay rates accordingly. These recommendations were not accepted.
In a case which came to your Lordships' House in its judicial capacity in 1865 it was established in principle that the Crown, not being named in the Statute of Elizabeth, to which my noble friend referred, is not bound by it; and, furthermore, that property occupied by the Crown for its servants, for public purposes, is exempt from rates. Just to bring the picture up to date, it is my understanding that, from time to time since then, Bills to abolish all Crown exemption from rates have been introduced but all failed to reach the Statute Book. I think the last major attempt was when a clause was included in the Rating and Valuation Bill of 1925, but was rejected on Report stage.
I would claim, therefore, that the principle that Government property is not legally rateable is thus solidly and soundly grounded in custom and in tradition. But it is equally well established (I should like to dwell on this) that the Government should make ex-gratia contributions in lieu of rates. If I may read an extract from the relevant Treasury Minute of June 25, 1874, it stated:We adopt the principle that property occupied for the Public service should contribute to the local rates equally with the other property in the Parishes in which it is situated, having due regard to its character in each case.The noble Lord, Lord Burden, asked what was the principle used in determining how ex-gratia contributions should be made. That is the principle and it still obtains: that they should be equal to what similar property would be rated 591 at in the normal way. Thus two principles have clearly emerged: first, that the Crown should be exempt from rates and hence determine the value of its own hereditaments; and secondly, that the Crown will, however, in determining such values, ensure that the Crown property should voluntarily pay equally with other property.
I suggest to your Lordships that we should be careful about tampering with this principle, which has its roots deep in history and tradition and has a solid legal and constitutional basis. But I would also suggest that, apart from those reasons of tradition and history and constitutional law, there are practical reasons for not tampering with this. One of the main objections to the normal rating or property occupied by the Crown, for which noble Lords are asking, is that once such property was made subject to normal rates, there is no doubt that the local authority might be suspicious that the contributions in lieu have not been equal. I do not say these doubts are valid, but there would be a suspicion, and there is no doubt that many local authorities would "chance their arm" and try for higher assessments.
Your Lordships will note that the Amendment being moved is due to take effect before the 1963 lists. I shudder to think of the practical problems and the added burden which this Amendment would pile on the poor valuation officers. I am not saying—and I should like again to repeat this—that those proposals would succeed, because it is my clear understanding that the principle of equality is honoured. Moreover, many properties in Crown occupation are of a kind which, I suggest, it is unreasonable to value on a normal basis. In saying that, I grant that there are others which, other considerations apart, it would be reasonable so to rate.
Many premises of the first sort, especially those occupied by the Service Departments, carry out work of a highly classified nature, and it would certainly be embarrassing, to put it no higher, if they were exposed to the publicity inevitably entailed in the proceedings of a valuation court. I need not rehearse possible examples—they will occur to your Lordships. Again, during an emergency, in war time for example, the Crown occupies a lot of property on a 592 temporary basis. Successive Governments have held that local authorities are not entitled because of this to large and quite fortuitous increases in their rate income at the taxpayers' expense. Legal liability for rates as the noble Lords have asked for—rates on Crown property—could involve the Exchequer in heavy and, I should have thought, unjustifiable expense in cases like that; for example, buildings of a temporary nature but still standing erected on land requisitioned during the last war.
May I say also that I do not think the evidence, as I am aware of it, suggests that the present system does bear unfairly on local authorities. Even though contributions in lieu of rates are ex-gratia payments, and though it is the Treasury who on this principle finally determine the level of payment in any particular case, the procedure adopted by the Treasury valuer is to discuss with representatives of the local authorities concerned the basis of the contribution before payment is made. Thus there is prior discussion. Surely that system gives plenty of opportunity for the local authorities to put forward their views. I am informed that in practice the number of cases where full agreement on value is not reached in that early stage is very small indeed.
My noble friend and the noble Lord who is associated with this Amendment are, of course, aware that there has lately been quite a protracted correspondence about all this between the Treasury, the Financial Secretary, and the County Councils Association. In the course of that correspondence the Financial Secretary has once again confirmed that the Government propose to pay full and fair contributions, and he has also made it clear that he is personally very willing to look into any complaints from local authorities arising out of this. I would remind your Lordships, having read that correspondence, that the Association expressed their satisfaction at that assurance. I think it also only fair to add that the Financial Secretary made it clear that the Treasury are always ready to listen to representations about the rating of specific Crown properties.
Your Lordships may smile at that assurance because asking the Treasury for something is occasionally rather like getting blood out of a stone. But I do not think that assurance was a purely 593 platonic one. For example, as a result of representations of this nature, the Treasury, as your Lordships are probably aware, have recently agreed to pay contributions in respect of Territorial Army property. There was a case and a good case for not doing so, I think, but they have agreed to do so.
Again, as my noble friend Lord St. Oswald is aware, the Financial Secretary has also recently agreed to discussions between the Treasury valuer and the Association about the possibility of bringing certain Post Office properties, hitherto excluded, within the normal rating system. In the correspondence to which I have drawn your Lordships' attention, the Financial Secretary, however, made it quite clear that he could hold out no hope whatever that the Government were prepared to overturn the general principle that rates are not paid in respect of Crown properties. I hope that, in the light of the explanation I have given to the Committee, and possibly more particularly in the light of the last remark about a passage from that correspondence which I have also drawn to your Lordships' attention, this Amendment will not be pressed.
§ 8.16 p.m.
§ LORD LINDGREN
Even at this late hour I think we ought to detain the Committee just for a moment or two, in view of the noble Earl's reply. One must agree that this is not a Party political point. But it is a very sore local government point. The noble Earl says, quite correctly, that there has been a promise in correspondence that there will be full and fair contributions under this new Bill after it is passed. Equally, prior to this Bill there has been an undertaking that they would contribute equally with other ratepayers. But from a local authority point of view there has been no equal contribution. There ought to be some differentiation as between properties. Let us take one instance. The noble Earl quite rightly said that in 1948 the Labour Government did not make any move in this matter. But since 1948 there have been two very important factors. First, there has been a movement (I am not arguing the rights or wrongs of it, but merely stating the fact) of the contribution which the Exchequer pays towards local authority expenditure away from the Treasury and placing the 594 cost on to the ratepayer. There has equally been in this Bill, and in previous legislation too, an added burden placed upon the domestic hereditament as compared with commercial and industrial hereditaments; and that is not rectified even under this Bill. In addition to that there has been a tremendous increase in values.
Let us just take one case, which is a first-class case from a local authority's point of view: the Post Office. Here we have the Post Office established under this Government as a commercial undertaking, and the Government are altering the status and standing, the accountability and all the rest of it, and putting the Post Office on a full commercial basis. In most towns the Post Office is sited in the centre of the town, which of course is of public convenience to the residents of the area. It is sited on the most valuable of sites. But its contribution to the local rate fund is negligible compared with that of hereditaments on either side.
It is not uncommon to find Woolworth's and the Post Office almost side by side; and you will not find Marks and Spencer's far away. But I ask the noble Earl to consult any local rating authority about the contributions received from the two organisations I have already quoted, Marks and Spencer's and Woolworth's, and the contribution of the Post Office which is in close proximity to them. Yet now the Post Office is to be a fully commercial undertaking, as compared with our old conception of the Post Office. If we may go away from it for one moment, we have a municipal enterprise in the Post Office. Goodness knows! how it has managed to remain so, but the whole Post Office system is a municipal system, and not a national system. Not only does it pay rates on the telephone system, wires and all the rest of it, but, of course, the Post Office as a Post Office does not pay.
In view of the change of circumstances, in which there is a gradual change-over in the way of placing a greater burden on the ratepayer as compared with the taxpayer, and in view of the fact that there is a greater burden now being placed upon domestic hereditaments as compared with commercial and industrial hereditaments, and of the increased values which arise, I think a revision of the whole matter ought to be undertaken. 595 It is perhaps unfair to expect the noble Lords who have urged the Amendment to press it at this stage, when the House is not as full as it ought to be if we are going to make a decision on a matter such as this; but I can assure the noble Earl that local authorities and the local authority associations are by no means satisfied; and if the "full and fair contribution" works out at no more—if they contribute equally, as has been the previous formula—then that dissatisfaction will in no way diminish.
§ LORD MILVERTON
I do not wish to detain the House at this late hour, but I should like to thank the noble Lord who has just sat down for his most devastating destruction of the noble Earl's defence of the Government's attitude in this matter. If there had been a reasonably full House, I should not have hesitated to take this matter to a Division, because I think it is a very important one. But as it is, one must accept for the moment, without agreeing with it, the attitude of the Government—which, I gather, is that, rather than pay the fair dues on these properties, they will pay a little "conscience money", which is what ex gratia payments amount to. I am quite unimpressed by all the talk about this custom being rooted in tradition and history. Are we never to take account of changing times, and are there not some bad customs in the light of modern circumstances? However, I must leave that alone. But I cannot let pass the reflection by the noble Earl upon local authorities, when he said that, had they the power of assessing these things, they would be tempted to over-assess them because they are Government property. I cannot allow that suggestion to pass. I think the local authorities are just as likely to do their duty properly as any other body.
I wonder if I may interpose here. I do not want to interrupt my noble friend, but I think he has slightly misinterpreted what I said in that respect. I said that, were this Amendment accepted and the basis changed, and were Crown property to become fully rateable in a normal way, then, local authorities, rightly or wrongly—my noble friend would think rightly, but I would differ from him on that—thinking that this property had not been 596 paying its equitable contribution, would put in a lot of proposals; not that they would be assessed improperly. That was not my contention.
§ LORD MILVERTON
I am sorry if I misunderstood the noble Earl, and I apologise for any misrepresentation of what he said. My last objection is to his analogy of what might happen in time of war. We all know that extraordinary things have to be done in time of war, and we also know that there are war-time measures. The situations are not comparable in this instance. However, I now beg leave of the House to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 12 agreed to.
§ 8.25 p.m.
§ LORD DERWENT moved, after Clause 12 to insert the following new clause:
§ Notice of proposal for alteration of valuation list
§ ". Where any proposal for the alteration of a valuation list is made by the tenant of a hereditament under the provisions of section forty of the Act of 1948, notice of such proposal shall be sent to the owner of the hereditament at the same time as it is served on the valuation officer."
§ The noble Lord said: This is a simple Amendment which I confidently expect will be accepted by Her Majesty's Government, because both the Amendment and Her Majesty's Government are full of common sense. I have tried to think of every possible objection to this Amendment. The objections, I think, are a pretty poor lot, but I intend to deal with them during my few remarks before they are raised by my noble friend.
§ This Amendment would ensure that the owner of a property knew of any application for an alteration in the valuation list. There have been a number of cases where considerable difficulties have been caused by the owner having no knowledge of the alteration in the valuation of his property. The Ministry have put forward the argument that this will lead to administrative difficulties, about which we have heard a great deal from the Government during this stage of the Bill. But there seems to to me to be no reason why the tenant should not be required to serve a copy on the landlord at the same time as he applies to the local authority for an alteration of valuation. Alternatively, 597 on the form which he has to fill in when he applies to the local authority there could be a place for the owner's name, and then the rating authority could notify the owner. There does not seem to be much administrative difficulty in that. It might be objected that the owner's name is not known in every case, but under the forms which are now being used in connection with the revaluation this information is called for. The owners' names were put on these forms which are now being used; so I think that argument is a poor one.
§ It may be said that it is the tenant who pays the rates and that it is of no particular concern to the landlord. But an assessment can have a considerable bearing on the value of a property, both under existing legislation—the Rent Restriction Acts, and so on—and, perhaps even more, under possible future legislation. There seems no difficulty in this, and it seems equitable. It is one of the things that has to happen under the Town and Country Planning Act. The tenant and the landlord both have to know all about it in that case, and there seems no reason why, when dealing with rating, the owner should not know as well as the tenant. I beg to move.
After Clause 12 insert the said new clause.—(Lord Derwent.)
I was glad but rather surprised to hear my noble friend's expression of confidence. I was not surprised to hear that my noble friend had confidence in the common sense of the Government, but I was a little surprised to hear that he had confidence in the reply which I was going to give him, bearing in mind my previous communications on this subject.
This, I think, is my noble friend's third Amendment, and so far he is two down. Therefore, I fear that I must exert myself more than usual in order to try to convince him that this Amendment is not a very satisfactory one. However, before saying anything in explanation, I should like to say straight away that when I first saw my noble friend's Amendment my first re- 598 action was one of agreement with him that it does seem somewhat anomalous that when a proposal is made there is not a clear understanding and a clear obligation for the owner of the property to be informed of the proposal. I must admit straight away to him that, when I first saw his Amendment, it did strike me as anomalous that that obligation and right did not exist at the present time. Having looked at the matter since, I should like to go over some of the reasons why we feel that the present situation, anomalous in theory though it may be, is probably, in practice, not unsatisfactory.
My noble friend said that there had been a number of cases where the fact that the owner did not have a right to be informed of a proposal had caused difficulty and hardship. I wish he had trotted out some of those cases, because one of the first things which I asked when acquainting myself with this subject was whether, in practice, this was giving rise to difficulty; and I was assured that that was not the case.
What are the real difficulties which the Amendment would entail? First, it would entail a number of purely practical difficulties. The first one in the way of ending this anomaly is mainly the one of keeping track of ownership. That is the one to which my noble friend referred. When requests of this kind have been looked at in the past, it has always been recognised that it would be virtually impossible for valuation officers to keep an accurate and dependable record of owners, and this is one of the main problems. A somewhat similar problem is the vast amount of paper which would fly about if my noble friend's Amendment were accepted.
I would remind him that, following the revaluation made for the 1956 list, one and a quarter million proposals were submitted. They were made predominantly by occupiers, who were very often tenants; and if my noble friend's Amendment for an extra piece of paper were accepted, it would in fact release a vast flood of additional paper. He has, however, referred to the possibility of including in the proposal form some slip, which could be torn off or detached, on which the owner's name would appear and which would be sent to the owner. That is a new suggestion, to me 599 at least, but it is certainly one which, without commitment, I should like to have looked at. It seems to me that just that kind of thing might meet some of this difficulty.
Apart from those two practical difficulties which I have mentioned, I should like to touch on one slightly technical difficulty, and one much more material difficulty. The technical difficulty is that my noble friend's Amendment, as it is drafted, does not put the task of informing the owner on the valuation officer, and only implicitly does it place that obligation on the tenant. In fact, the Amendment may be technically deficient in not saying by whom the owner is to be informed; but that is a rather technical point, and I should not wish to lean too heavily upon it. If one is to disregard that possible drafting point, it then needs to be considered whether it is really practicable and advisable to place this duty on the tenant. And here I come to a point of real substance, I would submit, and a point of quite considerable difficulty.
The tenant will normally know the owner's name and address, although there may well be complications in the case of sub-tenancies. Even so, it is difficult to see how the valuation officer, and, at a later stage, the valuation court, could ascertain whether the tenant had carried out his obligation to inform the owner. The Amendment could then produce an unnecessary atmosphere of uncertainty, and in the event of the service of the notice being challenged, the tenant might be in great difficulty in proving satisfactory service under Section 63 of the Act of 1948. It would, I think, invalidate all proceedings if the owner subsequently came forward, possibly after the case had gone through the Court of Appeal, or even to your Lordships, in your judicial capacity. That failure to prove delivery might well invalidate any proceedings. The duty which my noble friend's Amendment proposes to lay on the tenant might, in fact, rather than aid him, impose a heavy burden on him, and might, in the case of litigation, have a very serious effect on his interests. I think that is a point of real difficulty.
Finally, I should like to come back to a point to which my noble friend alluded, and that is that in this country 600 liability for rates rests firmly on the occupiers of rateable property. Except in the case where there is compounding, either compulsory or voluntary, when the owner's interest is already safeguarded by the Act of 1948, the rate liability is not the business or the responsibility of the owner. That, I think, is the position. It may be that a proposal by a tenant to reduce the assessment of property would bring it, if it were successful, within the scope of compulsory compounding, and a hypothetical landlord would wish to avoid that eventuality. However, it seems to me an impossibility. But the object of the whole rating exercise must surely be to secure a correct assessment, and not to keep the tenant's rate liability at too high a level solely to enable the landlord to avoid having to collect and pay the rates. It is twisting the purpose of rating to use it for subsidiary or extraneous purposes.
I do not know whether my noble friend had in mind—he may have had—the possibility that the valuation list will be used for other purposes extraneous to rating. I would remind him of the importance of gross value in the Rent Act of 1957 in determining the new limits of controlled rents, and of rateable value in determining whether the house was to be freed from rent control. That may very well have left in some quarters the uneasy feeling that here is something in which owners of property have a direct financial interest from the point of view of their rate assessment. That may be one of the things which has been troubling him. Since rent control is governed by the rateable value as at November 7, 1956, I do not think that particular worry should now be troubling him. Even if it is, I would come back to the point that the purpose of rating valuation is to ensure that every ratepayer bears his proper share of the rate burden. It is surely wrong to make the rating system subservient to extraneous purposes.
Although my noble friend tends to dismiss them, there are difficult practical problems involved in his Amendment. There is a possible technical difficulty in drafting, but I grant that is one which could perhaps be overcome. It would involve (although I do not wish to dwell on it) the release of a great flood of paper. There is a possibility, which I 601 have undertaken to look into, of a detachable slip, which might serve to overcome that. Because of these various difficulties and because of the importance of safeguarding the principle that rating is for rating's purpose and not for any extraneous purpose, I would suggest that this Amendment should be allowed to lapse, with the assurance I have given my noble friend of looking into this particular expedient.
§ LORD DERWENT
I thank my noble friend for going into this matter in such detail. I am glad to say that the tracing of ownership is now being done satisfactorily on the new forms that are being used for revaluation. The solution of the bulk of paper is to be found in the tear-off slip. I readily agree that the Amendment might have to be redrafted and I will have another look at that. My noble friend says that the Rating Act is not for extraneous purposes, but where a Rating Act affects a matter that comes under a different Act, that must be taken into account. It is no good saying that this is a rating Act and we cannot consider how the Rent Restriction Acts are affected by it, if at all, because that is one of the things we must control. We cannot say in new legislation that we must ignore previous legislation.
My noble friend has satisfactorily proved to me that if I want to redraft this Amendment and bring it up on the next stage I must put the duty of notifying the landlord firmly on the rating authority and not on the tenant. I thought that he made an extremely good case for that and I will look into a future Amendment on that line. I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 13:
§ Rating of owners
§ (2) The allowance which may be made under paragraph (a) of subsection (1) of the said section eleven to owners rated under that subsection shall not exceed ten per cent. of the amount payable in respect of rates, and accordingly section one hundred and twenty-two of the Act of 1948 (which enables the rating authority to increase the said allowance to fifteen per cent.) shall cease to have effect.602
§ LORD CAWLEY
This Amendment and the next, which I am moving on behalf of my noble friend Lord Broughshane, deal with proposals to amend Section 11 of the Rating Act, 1935. Section 11 (1) provides that in some cases landlords may be made compulsory rate collectors on behalf of the local authority and that local authorities should pay by way of fee to the landlord a sum up to 15 per cent. of the rates for the service he does in collecting them. I am informed that at the present moment the scale of charge for collecting rates is 10 per cent. This subsection reduces it from 15 per cent. to 10 per cent. and I entirely agree with that, but it also provides that the local authority may pay considerably less than that. If they were to take 2 per cent., then there would be only 8 per cent. to the landlord. The Amendment is to secure that the local authorities pay 10 per cent. neither more nor less.
Page 11, line 3, leave out ("not exceed") and insert ("be").—(Lord Cawley.)
At this increasingly late hour, I do not think that I should detain your Lordships too long in reply. My information is that the Amendment as drafted would not have the effect my noble friend suggests it would have. It is a slightly involved argument to prove that, taking one into the realm of higher legal semantics, and I do not propose to take your Lordships there, because the Amendment proposed by my noble friend on behalf of his noble friend is perfectly satisfactory to the Government. I am told that the Government draftsmen, having thought the matter over carefully, prefer my noble friend's way of achieving an object which they jointly share. Therefore, I am glad to be able to advise your Lordships to accept my noble friend's Amendment.
§ LORD CAWLEY
This Amendment deals with voluntary compounding arrangements. Section 11 (2) of the Act of 1955 provides that a landlord may make a voluntary arrangement with a local authority that he will pay the rates chargeable in respect of a hereditament 603 whether it is occupied or not, and goes on to say:… the authority may agree, where the owner so undertakes … to make him an allowance not exceeding in the case of an undertaking under paragraph (a) fifteen per cent.",Your Lordships will see that this is an inducement to get rates whether a house is occupied or not. The amount which is provided in the present Bill is only 10 per cent., which is the equivalent to the scale of charge for the collection of rents now and all inducement to take advantage of Section 11 (2) (a) has disappeared. In my submission, if the Government had wanted to nullify the effect of the section, they have succeeded in doing so and it would be better to repeal it. Nobody is going to take a hazard with no particular incentive.
There is another point to which I have drawn my noble friend's attention—that is, that subsection (4) is at present defective, because by an oversight the words on lines 13 and 14 should read… a rating authority to make an allowance not exceeding 15 per cent. to owners …That is in fact what Section 11(2) of the 1925 Act provides. I beg to move.
Page 11, line 12, leave out subsection (4).—(Lord Cawley.)
Again I will try to be as brief as possible in reply. Dealing with my noble friend's first point, could I ask him a question? Is he referring to the part of the clause in brackets?
I am advised that in legislation, or in a Bill, the parts in brackets are purely illustrative and do not have statutory force. Therefore they will not be harmful. However, I am also advised that if my noble friend would like to clear up this small drafting point and put down an Amendment along these lines at the Report stage, there would be no difficulty in dealing with that particular aspect of it. But I do not think it is in any way harmful. I will not go into the argument for that, unless my noble friend wishes.
604 On the substantive point, however, I cannot advise your Lordships to accept this Amendment. May I refer briefly to an important study carried out recently by a group from the Institute of Municipal Treasurers and Accountants? Their Report, Rating—Compounding Allowances and Discounts, was published by the Institute a couple of years ago. In it the group observed:The evidence is conclusive that the use of Section 11 (2) of the Act of 1925 is steadily losing favour and rating authorities are one by one ceasing to rate owners by agreement.They also observed that the general tendency is to reduce the allowance made below the maximum permissible. According to the statistics of Rate Collection, published biennially by the same Institute, nearly 60 per cent. of the rating authorities practising compounding by agreement in 1958–59 under paragraph (a) of Section 22 (1) were paying the maximum allowance, but in fact only 10 per cent. of all rating authorities were using this particular provision. It is therefore a very quickly shrinking field.
Since the arrangements under Section 11 (2) are voluntary, the effects of cutting the allowance rate are potentially more significant to rating authorities, who might possibly want to use a higher allowance to tempt owners into compounding by agreement, as my noble friend suggested. There is that danger, but in fact the evidence is that they are all the time exercising this particular right less and less. Quite apart from the evidence of the study group, the Working Party who gave birth to this particular Bill agreed that the allowance should be reduced to 10 per cent., as is provided in the Bill as drafted, as a corollary to the ending of the discretion to allow up to 15 per cent. for compulsory compounding. I understand that the associations of local authorities have in no way demurred at that suggestion.
The payment of a larger allowance than is necessary is unfair to the other ratepayers in the rating area who must contribute a larger share of the total rate in consequence. In the case of a county district, it is also unfair to other ratepayers in the county, since the allowance 605 under this provision is treated as a "loss on collection"—I think that is the technical term—in computing the product of a penny rate, and thus depresses the amount contributed by that district towards general county expenses. It could easily reduce the rate deficiency grants payable to other authorities through its marginal effect on the national average product of a penny rate per head of population whilst—and this is much more important—increasing the grant to the particular authority. At any rate, it is a shrinking field. The responsible bodies who have looked at this advocate this change, and because the present practice has harmful effects I suggest that the Committee should not accept this Amendment.
§ LORD CAWLEY
We have been told that the Report suggests that this subsection in the Rating Act, 1925, is no longer of much use to anyone. It strikes me as a curious way of putting it completely out of action, rather than repealing it. But I do not think it is a very important matter, and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 13, as amended, agreed to.
§ Moved, That the House do now resume.—(Viscount Hailsham.)
§ On Question Motion agreed to, and House resumed accordingly.