HL Deb 29 June 1961 vol 232 cc1135-65

3.7 p.m.

Amendments reported (according to Order).


Valuation of advertising stations

".—(1) In valuing for rating purposes any right which constitutes a separate hereditament by virtue of section fifty-six of the Act of 1948 (rating of advertising stations), the rent at which the hereditament might be expected to be let shall be estimated on the footing that it would include a proper amount in respect of any structure for the time being available for use, for the purpose of exhibiting advertisements, by the occupier of the separate hereditament, notwithstanding that the structure was provided by him or was provided after the right was let out or reserved.

(2) Notwithstanding anything in the said section fifty-six the separate hereditament shall be treated as coming into existence at the earliest time at which either any structure is erected, after the right constituting the hereditament has been let out or reserved, for enabling the right to be exercised or any advertisement is exhibited in pursuance of the right, and not before; and for the purposes of subsection (2) of section forty-two of the Act of 1948 (cases in which alterations of valuation lists are not to be retrospective to beginning of rating period)—

  1. (a) the hereditament shall be treated as a newly erected or newly constructed hereditament coming into occupation at the said earliest time, and
  2. (b) the erection, dismantling or alteration, after that time, of any structure for enabling the right to be exercised shall, in relation to the hereditament, he treated as the making of structural alterations.

(3) In this section and section fifty-six of the Act of 1948 references to a structure include references to a hoarding, frame, post, wall or sign and accordingly in that section the words 'hoarding, frame, post, wall or' shall cease to have effect.

(4) This section shall have effect for the purposes of valuation lists coming into force at any time after the passing of this Act."

The noble Earl said: My Lords, I have put down this Amendment in discharge of the undertaking which I gave your Lordships at the Committee stage on June 19 to consider further the Amendment then moved by my noble friend Lord Milverton and the noble Lord, Lord Burden, and possibly to put down another Amendment with the same object in view. I then said that, in view of the consensus of opinion in your Lordships' House that afternoon, the Government were reinforced in their view that the objects of the Amendment proposed by my noble friend were desirable, but that the Government saw in it certain drafting difficulties.

The law on this matter relating to the rating of advertising stations and the decision of your Lordships' House sitting in its Judicial capacity, which led to this Amendment, were clearly explained in Committee, as I have said, by my noble friend, by the noble Lord, Lord Burden, and, indeed, also, by the noble and learned Lord, Lord Denning. In view of this, I feel that at this stage all that it is perhaps necessary for me to explain is how the present Amendment differs from that set down by my noble friend Lord Milverton, which your Lordships discussed last week. Apart from pure drafting points the new clause is materially different in the following respects.

First, the hereditament is to be treated as coming into existence either when any structure is erected after the right has been let out or an advertisement is exhibited in pursuance of the right, and not before. This, we feel, lends a little more precision to the date of the rate-ability which was defined in Lord Milverton's Amendment as "the date of exercise of the said right". What constituted exercise of the right would no doubt have been a matter of construction in each individual case, but it might have included, for example, the entry of electrical contractors to instal an electricity supply a considerable time before a structure was erected or an advertisement shown. Secondly, the new clause makes provision for variations in the value of the right and structure when any structure is erected, dismantled or altered. I think that is perfectly normal. Thirdly, the new clause is to have effect from April 1, 1963. instead of from the date of the passing of the Act.

There are two reasons for deferring the operation of the provision. The first is a purely practical one. It is that valuation officers are at present fully stretched on work for the general revaluation for 1963, and could not reasonably be expected to take on the additional work of valuing structures on the very considerable number of advertising stations throughout the country—I think there are about 53,000 of them. The second is that we wish to temper the effect of the change to the advertising industry. Advertising stations, with one or two other small classes of property, are, my Lords, the only hereditaments which are assessed at current—namely, 1955—rental values in the current valuation lists and yet enjoy no derating. In view of this, it would, we feel, be a little hard on them to increase their rating assessments during the currency of the present lists. Those are two reasons why we have put back the dates—the practical and the reason of equity.

For the reasons explained by noble Lords in Committee, the Government consider that it is reasonable to make these changes in the rating law, the first of which would subject to rating structures erected following the grant of an advertising right, and is thus to the disadvantage of the advertising industry; and the second of which defers the date on which the right becomes rateable, and is thus of advantage to the industry. I beg to move.

Amendment moved— After Clause 8, insert the said new clause — (Earl Jellicoe.)


My Lords, I hope I may be permitted to speak at this stage on this proposed new clause. I was not, unfortunately, able to be present when the Amendment was moved by Lord Milverton in the Committee stage; if I had been present I should have been a lone voice in protest, as I understand, from reading Hansard that there appeared to be general approval of what was then being done. The first point I want to make is to register a complaint that this Government Amendment was put down on Monday of this week. The advertising industry made a protest on the first Amendment—the former Amendment moved by Lord Milverton—and on Tuesday of this week the representatives of the industry sought an interview with the Minister to discuss this very radical change, I think a much more radical change than is made out by the noble Earl, Lord Jellicoe, and that interview was refused. I have always understood that in these cases, if a deputation seeks to discuss legislation with a Minister—and the advertising industry has a special committee for this purpose—they are allowed to do so. I wonder whether it would not be discourteous to refuse to discuss it.

I am afraid I have detected, in the Committee stage debate, a certain sense of pride, even jubilation, at the neat way in which a judgment given in this House is being set aside by the Government. I wonder how often that is common practice. In my view, this is one more instance of Government action in restraint of trade, one more attack on advertising, which is such a popular sport in both Houses of Parliament. Ever since advertising rights became available, assessments have been based on rental values as taken from the landlord, disregarding any structures erected which may be necessary for display of the actual advertisement. This was the practice under the 1948 Act. Section 56 of the Act specifies who is the rateable occupier, and this was confirmed by the House of Lords judgment. Rates for advertising rights already represent a larger part of the working expenses than those in most trade undertakings: thus, a shop commonly pays up to 4 per cent. of its turnover as rates, whereas rates on advertising rights may frequently be in excess of 20 per cent. This new clause will considerably increase the cost. The industry considers it to be wrong in principle, and undesirable from an amenity point of view, to relate an assessment to the cost of a structure. This would be a direct and substantial discouragement to the improvement of hoardings and displays by good workmanship and design.

May I now come to the Amendment itself? There is one significant addition to which the noble Earl, Lord Jellicoe, did not draw our attention. Subsection (3) of the new clause says: In this section and section fifty-six of the Act of 1948 references to a structure include references to a hoarding, frame, post, wall or sign and accordingly in that section the words hoarding, frame, post, wall or' shall cease to have effect. A "sign" could be interpreted to be a design on posters for advertisement. It opens the door to charging rates not only on the site of that structure, but also on what may appear on the structures. If your Lordships look at subsection (1) of the new clause, you will see there the words "in respect of any structure"; and if you include a "sign" with "structure", it seems to me that it does not make very good sense. The words would be in respect of any structure or sign for the time being available for use for the purpose of exhibiting advertisements", which means exhibiting advertisements on an existing advertisement. As I say, I do not think that makes very good sense. I should like to draw attention to some other words in the same subsection which refer to estimating the rent on the footing that it includes a proper amount in respect of a structure. Who is to decide this proper amount, and how is it to be based?

The advertising industry take a most serious view of this clause; it is most damaging to the industry, as, indeed, I am afraid it was meant to be. This I consider a new tax on advertising. We have already had one this year in the Budget. The manner in which this clause has been introduced, and the lack of common courtesy to the industry, is deplorable. However much animosity there may be toward this form of advertising, it ill becomes any Government to forget how much assistance has been rendered to the country by the industry in such campaigns as National Savings, and others, and none of us should forget the essential value to the economy of this and other forms of advertising.


My Lords, before saying anything on this Amendment, I should perhaps declare that I have an interest in advertising. I also wish to apologise to your Lordships for being unable to be present during the Committee stage of the Bill. I entirely agree with all that has been said by my noble friend Lord Luke. I understand that Her Majesty's Government, on this late stage of the Bill, are moving an Amendment to set aside the judgment of your Lordships' House, given on June 23, 1960, when it was held that the value of any advertising structure put up by any advertiser after the date of any agreement would not be included for rateable purposes. Under the present Act the advertising contractor is not liable to be rated on the actual structure itself.

Why should a further burden of rates be placed on the advertising contractor by this proposed new clause? And why was the Outdoor Advertising Council not consulted in the matter? Surely it would have been only common courtesy to do so. They asked for a deputation to be received by the Minister, but I understand that this request was refused. Is there pressure by the local authorities on Her Majesty's Government to amend the Bill in this fashion? Why was it not in the original draft of the Bill? I have little doubt, if this Amendment were agreed to, that it would have the effect of producing shoddy work by advertising contractors, which I am sure your Lordships would deplore. I strongly advise your Lordships to have nothing to do with this Amendment. Perhaps the Government will look at the matter before the Third Reading, and also see a deputation from the Outdoor Advertising Council.


My Lords, I very much hope that the Government will not give way, notwithstanding the somewhat energetic attack by the Advertising Association. Surely it is wrong for this House to correct a decision come to by the House in its judicial capacity? If the Legislature had not done that in the past, we should have had no progress whatsoever. After all, it is the function of Parliament to give expression to the will and to act in the interests of the people.

This Amendment is not imposing a new, unfair burden upon advertising. It is restoring a liability which advertising should have had in the past. I think that if the Government have been in any way a little remiss, it is that they propose to exempt advertisers from the operation of this fair and just obligation until 1963. If we have any complaint, it is a complaint against that element. Otherwise, we think that the Amendment is an honest, fair and proper one.


My Lords, as the original author of this Amendment, perhaps I might be allowed to say that, after listening to the rather impassioned speeches of the two noble Lords who now criticise the Government for bringing in this Amendment and accepting the principle, one would never have guessed that this is not introducing a new rule nor altering any of the foundations of rating law, but restoring to the advertising profession the rating principle which is elsewhere universally applicable. That was pointed out clearly by the noble and learned Lord, Lord Denning, when he spoke in favour of the Amendment. It is not for me to go into any intricate argument of law, but it seems to me that the argument that, as a result of this, we shall have shoddy advertising simply holds no water at all. Is the advertising profession so lacking in self-respect that it will take revenge for a law it dislikes by shoddy advertisements. It would be the first sufferer itself. Generally the quality of an advertisement is a tribute to the quality of the goods it advertises. I sincerely hope that the House will support the Amendment, which rests upon the normal idea that there should not be exceptions to the principles of rating law.


My Lords, I wonder whether I could first deal with what I might call the procedural difficulty which the noble Lord, Lord Luke, touched upon—that is, his strictures on the way in which this Amendment had been brought forward by the Government. First, may I say that my right honourable friend is in no way opposed to the advertising industry, nor did he intend any discourtesy to the advertising industry? What happened was that the Outdoor Advertising Council asked the Minister, at very short notice, to receive a deputation before the Amendment was discussed. My right honourable friend did not refuse to see them because he is a discourteous man; he refused to see them because he is a very busy man, and has a major piece of legislation in front of the House of Commons at this particular moment.

The other stricture on procedure was the surprise which the noble Lord expressed that the Government should have brought forward an Amendment because of what had been said on Committee stage in your Lordships' House. I find that a very curious argument. Surely it is a function of your Lordships' House and of the Government to listen to what is said on Committee stage, and indeed on any other stage. I submit that it is perfectly proper and reasonable for the Government, having seen the consensus of opinion on this matter on Committee stage, to give an undertaking that my right honourable friend would consider the matter and see if an Amendment could properly be submitted and, having given that undertaking, to do so. On these points of procedure, I think that there is nothing wrong and shoddy in the way the Government have acted.

On the basis of this, I had felt that I should not go over the whole of the arguments, since they were fully ventilated on Committee stage, in my noble friend's absence, but since they have been questioned, I fear—and I apologise for this—that I must again set out for your Lordships' convenience the substance of this problem. Section 56 of the Local Government Act, 1948, states: Where the right to use any land (including any hoarding, frame, post, wall or structure erected or to be erected on the land, and including also any wall or other part of a building) for the purpose of exhibiting advertisements is let out or reserved to any person other than the occupier of the land, or, when the land is not occupied for any other purpose, to any person other than the owner of the land, that right shall be deemed for rating purposes to be a separate hereditament in the occupation of the person for the time being entitled to the right, and shall be included in the valuation list as a separate hereditament … Some doubt arose about whether the value of any structure provided by a person entitled to the advertising right should be included in the value of the hereditament, and this is the difficulty of which we are seized now. The doubt was set at rest by a judgment of your Lordships' House in your Judicial capacity given in Imperial Tobacco Company (of Great Britain and Northern Ireland) Limited v. Pierson (Valuation Officer), and it was to that judgment that the noble and learned Lord, Lord Denning, referred in his speech on Committee stage.

In that case, the appellant ratepayers claimed the right to fix and exhibit a flashing sign on a building for a rent of £150 a year—I think the sign said "Players Please". After they had erected it, the valuation officer made a proposal to increase the rateable value from £150 to £165, the extra fl5 representing the letting value of the structure. Your Lordships' House, in its Judicial capacity, held that the separate hereditament for rating purposes was the right that was let out, not the corporeal structure created by the erection of the advertising station under that right. Accordingly, your Lordships confirmed the rateable value at £150.

The noble and learned Lord, Lord Denning, explained to your Lordships on Committee stage on June 19 that he was concerned in that decision, to which he entered a dissenting opinion. He told your Lordships that, as he read the 1948 Act, the intention of Parliament was not to alter the amount of rates payable on advertising stations, but simply to make the advertising contractor liable rather than the occupier of the land or building on which the station was erected: but that a literal reading of the Act meant that the advertising was not rateable on the actual structure, and he thought it wrong. I can only read his words on that—and I think I am in order in quoting them. The noble and learned Lord said of your Lordships' decision [OFFICIAL REPORT, Vol. 232 (No. 94), col. 472]: In this case, it meant that the rating value was reduced by £15. I am sure that was quite undesigned by Parliament. Having listened to the balance of argument on the Committee stage, the Government decided to accept the principle that what should be rated is the right, together with any structure erected in the exercise of that right, which was the purpose of the Amendment of my noble friend Lord Milverton.

My noble friend Lord Luke indicated that this was going to impose a crushing burden on the advertising industry. really do not think that is the case, and I will try to explain why I take that view, I think that the advertising industry should take some reassurance from the Imperial Tobacco case. The amount at issue in that case for the structure was £15 of rateable value, 10 per cent. approximately of the value attached to the right itself. It is impossible to say haw far this proportion is typical, but I think it may be a fair sample. In any case, I understand that the valuation officer would certainly not ordinarily include in any valuation such things as light bulbs and electric switch gear, and individual valuations are perhaps unlikely for that reason to be very high.

There is another reason why I would suggest that the fears of the advertising industry are perhaps exaggerated in this respect. As I have already stated, advertising stations are among the relatively small number of hereditaments which are fully rated at current values in the valuation lists at present in force. Other things being equal, they are, therefore, likely to have a material reduction in their share of the rate burden in 1963 when industrial and commercial derating ceases and houses move, as your Lordships know from the Bill, from 1939 to current values. I would not claim that that in itself is justification for extending rating to the structures, but it does mean that the increase in rates which the industry fears may result from the Amendment may be wholly or partly offset by the effects of the revaluation. For these reasons, and because this Amendment was produced in deference to the wishes of your Lordships on the Committee stage, I would hope that my noble friend will not oppose the Amendment.


My Lords, before the noble Earl sits down, could he clarify the word "sign" which appears in subsection (3) of this proposed new clause? As it is at the moment, it might mean rates on the advertising material itself. This point was mentioned.


My Lords, my noble friend is quite right; I apologise. I think the fear in regard to this word arises possibly from a misunderstanding. It would not make sense if there were an advertisement on an advertisement. It means, and is intended to cover, the sort of advertising structure that is not comprised in the remainder of the description.

On Question, Amendment agreed to.

LORD BRABAZON OF TARA moved to leave out Clause 10. The noble Lord said: My Lords, I put this Amendment down in order to give an opportunity for the noble Viscount the Minister for Science and Leader of the House to say a kindly word relative to a hardship which has occurred in the Royal Institution. It is true to say that the Royal Institution is a scientific society, but it runs one of the most famous laboratories in the world—namely, the DavyFaraday—and I am pleading for a word of kindness and encouragement from him relative that particular section of the Institution. The noble Viscount replied in general terms as if I were desirous of excluding the scientific societies from the Bill. I should like to do that, but I see that it is impossible. However, the noble Viscount in his remarks, which did not deal very much with the point I raised, said this [OFFICIAL REPORT, Vol. 232 (No. 97), col. 763]: "I further said to the representatives of these bodies, which came to see me in a very powerful deputation, that we would examine any hardship which was placed upon them as the result of this Act in the context of their needs—hut not in the context of rate relief or of rate subsidy. That really means nothing at all, because the burden has been put upon the scientific societies is an increase in, the payment of rates. If you are going to live any relief to them, and it is not to be called relief of rates, it is difficult to see what is in the noble Viscount's mind. But if it is in his mind to give some help and call it something else, then all I can say is: A rose by any other name would smell as sweet". But the noble Viscount tried to justify the situation by saying that it will not happen for two or three years. In these great national societies you have to plan for more than just three years, and the inevitable is going to come.

I appreciate that my noble friend is in a difficult position. He is a sort of Dr. Jekyll and Mr. Hyde. As Mr. Hyde he has to look after the finance side and deal with the matter with the rigour of the Treasury; but, on the other hand, he is the Minister for Science, and although he may not be that for three years, I would not like him to leave this situation without one word of hope to reassure the Royal Institution that their laboratory—I do not say their Institution—will not be damnified by this Bill. It is a ridiculous situation that, while the State very wisely subsidises every other laboratory in England, the only one that is not subsidised, in spite of its remarkable work, should by this Bill be damnified. I should like to hear from the Minister for Science (speaking as such and not as Leader of the House) his blessing and hope that something might be done to encourage this great laboratory with the grants he envisages. I beg to move.

Amendment moved— Leave out Clause 10.—(Lord Brabazon of Tara.)


My Lords, my noble friend says that he wants a kind word from me. I thought that I had given him a kind word. What I said in Committee was that the Government have only the greatest respect and regard for this Institution, both for its venerable past and for the distinguished scientific work which it has done and is still doing in the recent past and at present; and I went on to say [OFFICIAL REPORT, Vol.232 (No. 97), col. 761]: I would thoroughly agree with him that the work which it is doing in conjunction with the Medical Research Council on protein structure is of the greatest importance. I thought that was kind, and if it will comfort my noble friend, I will say it again. We have great respect for the work of the Royal Institution in the scientific field, particularly in its work on protein structure. But it was explained on Second Reading and on the Committee stage that, however distinguished scientific work might be, it could not be done at the compulsory expense of the local rates to an extent of more than 50 per cent.; and, indeed, I had to submit to some fairly stern criticism from my noble friend Lord Milverton and from the noble Earl, Lord Lucan, who said that it should not be given any mandatory relief at all. We have given 50 per cent. and there is, of course, the chance of up to another 50 per cent., at the discretion of the local authorities. I said what I thought had met with general approval from the learned societies, that we quite recognise that this removal of the 100 per cent. mandatory relief from rating uncovered a number of problems which would have to be examined sympathetically. But we cannot pick out institutions as being good or bad, and then help them by giving relief from rates. This is not the way in which we can conduct general legislation.

I am, of course, aware that much of the distinguished work of this body is done in a laboratory, and no doubt this body is, if not unique, at any rate rare in this respect; the Royal Society, for example, does much of its work through grants to laboratories occupied by others. It is open to the Royal Institution, even apart from this Bill—and the more open, presumably, after it has come into effect—to approach the Research Councils for grants in relation to the work which they propose to do. The work in protein structure was done in close consultation with the Medical Research Council, and other work could equally be done in close consultation with the D.S.I.R.; and these are grant-giving bodies for scientific work which requires Government help.

As I said, I think, on Second Reading, we are not prepared to deal with this in the context of rate relief. If a case for hardship can be made out then, in common with the other learned societies, they will be sympathetically considered in that context; or if, in fact, direct grants for the scientific work are required, and a case can be made out, then an application for grant should be discussed either with the Medical Research Council or with the Department of Scientific and Industrial Research, on the merits of the case. Having regard to the high scientific quality of the work, it is perfectly possible that such a grant would be given. But I must repeat that, in my view at least—and I think it is the view of those who discussed this matter—help for science ought not to be insisted on at the expense of the local rates to a greater extent than that which we have allowed by the 50 per cent. mandatory relief. It must be done in the context of grant and not of rate relief.


My Lords, I am very grateful to the Minister for Science for giving us a good character. I believe that when we go cap in hand (as we must, regretfully, as we have never been subsidised before) the pungent words the Minister has used in our praise to-day will have a great effect in getting a grant. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

3.44 p.m.

LORD DERWENT moved, after Clause 14 to insert the following new clause:

Effect on rent of owner's cessation of rate-ability

". In the event of an owner ceasing to be rated in respect of any hereditament which is subject to the Rent Act. 1957, or in the event of the termination of a voluntary arrangement by an owner to collect the rates of such a hereditament on behalf of the local authority, the owner may by an appropriate adjustment of the rent convert the rent for a rent inclusive of rates to a rent exclusive of rates without any consent of the tenant."

The noble Lord said: My Lords, this Amendment was put down in exactly the same terms on the Committee stage by my noble friend Lord Cawley, and after considerable argument he asked leave to withdraw the Amendment. Since that time, there has been an opportunity of examining in detail the arguments put forward against this Amendment on behalf of Her Majesty's Government by my noble friend Lord Jellicoe. It is my submission, with which I hope to persuade your Lordships to agree, that the arguments, but for two very small exceptions which concern drafting and with which I shall deal, just do not stand up. I shall have to explain to your Lordships again (I am afraid that some of your Lordships were not here on the previous occasion) what it is all about. It would probably be easier for two reasons if I described it in laymen's language and riot in legal language. First, I should be more comprehensible and, secondly, I could not describe it in legal language.

It is common practice for local authorities to use a landlord as an agent to collect their rates. That is what it comes to. It is done in one or two ways: either compulsorily, under the Rent Act, or by voluntary arrangement. When a local authority does this it pays the landlord a compounding allowance. This Amendment deals with cases where a local authority decides, as it is perfectly entitled to do, that it is no longer going, to pay for this rate collecting; it is no longer going to use the landlord as an agent to collect the rates, and it is going to rate the tenants direct. It would seem common sense and only fair that when this happens the landlord should go along to his tenants and say, "Look, I have got the sack as a collecting agent, so in future you will have to pay your rates direct to the local authority."

Counsel's opinion has been obtained, and it is quite impossible for the landlord to do this. He can go to his tenant and say, "I have got the sack, so please will you pay your rates direct." But if the tenant refuses, or even if he says nothing or does not answer the letter, the landlord has to go on at his own expense, in his own time, without any payment by the local authority, collecting those rates. That is the law and it was in effect agreed by my noble friend Lord Jellicoe that that was the law. The submission behind this new clause is that that is really very unfair, or could be unfair, if a tenant so refused or did not agree with the landlord; for not only would the landlord not be paid for collecting the rates but he might be put to considerable expense.

Now may I deal with the objections put forward by my noble friend the Parliamentary Secretary upon this Amendment? I will deal first of all with the two drafting Amendments. I have not attempted to redraft on this occasion. I agree that the redrafting should be done, but my noble friend said in his remarks that it was not a difficult thing to do. So what I am going to do to-day is to ask Her Majesty's Government or, failing Her Majesty's Government, the House, or both together, to accept the principle behind this Amendment. If your Lordships accept this Amendment it is clearly on the understanding that the redrafting—the redrafting and not the principle—could be dealt with on Third Reading.

I will not weary the House with the redrafting points, but I will say this to my noble friend on the Front Bench. As regards the two redrafting points raised for his consideration, it would be quite easy to amend on Third Reading when, I hope, this Amendment has been accepted, because the forms of notice could be prescribed by the Minister, and such forms could be drawn to show how the calculation was made. We could also have a subsection to the effect that the conversion of the rent should take effect on a date fourteen days after the service thereof upon the tenant. Those are the two redrafting points. I mention them now only for the Record, so that my noble friend can look at them before Third Reading.

Now we come to what appeared to be my noble friend's objections of substance, although in my view there is little or no substance in them. The first point he raised was that his advisers had said that they had no record of there being any difficulty about this. One of two things may have happened. Indeed, there may have been no difficulty because the tenant so far may not have realised that he could refuse. On the other hand, a great number of tenants may have objected, but the landlord, rather than quarrel with his tenants, has probably said, "I will go on collecting from you." So we do not know. But my noble friend agreed on Committee that it is perfectly possible that a tenant may decide to refuse to pay his rates direct to the local authority.

A remark was made by my noble friend which would appear at first sight to be a remark of substance, but it seems to show that he did not fully appreciate at the time the substance of this new clause or what it was intended to do. He said he thought it might cause unfairness to the tenant—and this was really the basis of his argument against the Amendment—when the lease could be changed from an inclusive to an exclusive rent (I am paraphrasing him but I think he will agree) at the landlord's discretion. This clause has nothing on earth to do with the landlord's discretion; the landlord does nothing about it; it is the local authority. The local authority has decided that, in future, instead of using the landlord as an agent it is going to rate the tenant direct. The landlord has no discretion in the matter; he cannot object to its being done by the local authority. It is purely a decision of the local authority.

Then, perhaps thinking that the arguments he had used were not as forceful as they might have been, he raised another hare. He said he thought it was more suitable to be put into a Rent Bill rather than a Rating Bill. This new clause deals with the collection of rates and compounding. If your Lordships will look at the Long Title of the Bill you will see that it there states that the Bill deals with the collection of rates, and there is a whole clause in the Bill which deals with compounding. What could be closer to the purposes of the Bill than that? And I think my noble friend was really perhaps not quite as frank as he might have been in suggesting a Rent Bill, because when are we going to have a Rent Bill? All we know is that Her Majesty's Government has promised there will be no further Rent Bill in this Parliament, and what might happen thereafter nobody knows; it might be in five or ten years. This is a matter which deals with rating, which is within the terms of the Long Title, and really there is no basis for an argument about putting this into a Rent Bill.

What appeared at first sight to be a much more forceful possible objection to this clause was put forward by the noble Lord, Lord Silkin, when he suggested that if this Amendment were passed it might lead to the breaking of a contract as between landlord and tenant. With some suitable diffidence as a layman, I am going to dispute that fact with a very learned lawyer, but I have taken advice, and I hope he will agree with me he may be mistaken. This new clause will really have effect with rent-restricted properties, and, as we all know, the rent of a rent-controlled property cannot be varied except as allowed by Statute. In any other form of contract as between landlord and tenant this new clause will in fact not be effective, because—this is what I have been advised—one could not alter the terms of that tenancy in those cases where alterations may be allowed; they may not be allowed under the contract except by giving due notice as laid down in the contract. So, in effect, this new clause would have no effect in any form of lease except in the case of rent restricted properties.

It seems to me self-evident that it may lead to the tenant being responsible for paying the rates direct to the local authority, when the local authority has taken away this arrangement with the landlord to collect them. I really cannot see anything against this Amendment and the arguments so far produced against it by my noble friend are of no value at all. It may be he has thought up some new arguments against it, but I shall be rather surprised if he has. I beg to move.

Amendment moved— After Clause 14 insert the said new clause. —(Lord Derwent.)

3.55 p.m.


My Lords, I do not propose to discuss the question of the general feasibility or otherwise of the acceptance by the Government of this Amendment, but I should like to deal briefly with the point which the noble Lord argued. May I, even though he is a layman, compliment him on the very persuasive way in which he put his case? I am going to accept the fact that there may be some loss involved to a landlord where he has been receiving benefit for collecting rates and the local authority decide that they will no longer pay that benefit. Nevertheless, he has entered into a bargain with his tenant for the tenant to pay an inclusive rent, and it seems to me quite wrong that the law should step in and say this bargain should be abrogated, even in the method which is intended to be laid down in the Amendment.

This is an arrangement which is convenient to both the landlord and the tenant. It is convenient for the tenant because instead of having to pay his rates quarterly he pays them weekly. We are dealing with small people who may find it difficult to accumulate the required amount of rates by the end of the quarter and pay them—or perhaps I should say, pay them in advance, because rates are payable in advance. Therefore, it is a great convenience for tenants to pay their rates with the rents weekly; and to take away that convenience, I will not say arbitrarily but suddenly, on very short notice, is wrong and seems to me to be a breach of the arrangement. This method is also convenient for the landlord, because if the tenant fails to pay the rates the liability falls on the landlord. It is therefore to his advantage that there should be no difficulty about these payments and that they should be collected by the landlord weekly with the rent.

I can see no merit in this Amendment except the fact that the landlord does not want to be troubled. I cannot sec what trouble it involves. He gets his rent which includes the rates and he pays it out at the end of the quarter. The mere fact that the local authority will no longer give him some bonus for collection of the rates does not seem to me in itself a justification for altering the arrangements between landlord and tenant and imposing hardship on the tenant.


My Lords, before the noble Lord continues, may I point out that in many cases the landlord does not collect personally; he has to have a rate collector to work for him and has to pay him 10 per cent. of what is collected.


Yes, it may be so, but I have no doubt that a shrewd landlord takes into account what is rent and what is rates and makes an arrangement with his agent in such a sway that he does not pay commission on collection of rates. But if it should be that the landlord derives no further benefit from the collection of rates, whereas hitherto he has been paid a bonus for collecting the rates that he could afford to pay the agent, I have no doubt that the landlord and tenant will be willing to adapt themselves to the changed circumstances. At any rate, every agent I know would be perfectly willing to get his commission on the rent alone and not to accept it on the rates from which the landlord gets no benefit. I was going to make only one small point. I never understood that the Government had pledged themselves—not that that always makes all the difference—not to introduce any legislation as regards rent. I thought they had committed themselves not to carry out any further measure of rent de-restriction; that is, the existing rent controls will remain and there will be no further decontrol during the present Parliament. That I understood was a commitment, but I did not think there was any further commitment that there would be no other Rent Bill. I hope the Government will stand firm on this matter and will not accept this Amendment, which could act to the great disadvantage and hardship of tenants.


My Lords, I think the foundation of the argument put forward by the noble Lord who moved this Amendment is not correct. The case for the Amendment appears to be based upon those instances in which the local authority has exercised its power under the existing law to require the owner of property to pay the rates in lieu of the tenant or occupier, and the local authority has come to a new resolution and has decided not to pursue that policy any further. If that happens and the landlord does not continue to pay the rates the local authority will collect them from the tenant. The fact that there was a bargain between the tenant and the landlord under which the landlord agreed with the tenant to pay the rates makes no difference whatsoever to the position. It is the occupier who is legally liable to pay the rates and if the owner does not choose to pay them the local authority will collect them from the occupier. What is the occupier's remedy? It is quite a simple one: he pays the rates and deducts them out of his next payment of rent. Therefore he recoups himself and does not pay twice.

The only inconvenience of that situation is that the rates are generally payable by a lump sum once a quarter and therefore they are probably more than a week's rent, if the occupier, as is usually the case where there is a compounding arrangement, is a weekly tenant. In that case the occupier is put to the disadvantage that he has either to go to the town hall and pay his rates by weekly instalments, which in those circumstances the local authority, in my experience, accepts, or else he has to save up the money and then he recoups himself only by suspending his payments of rent for a number of weeks. If there is a foundation for an Amendment, it lies in those facts of inconvenience, not in the general legal position, because the occupier has an undoubted right to deduct from the rent any payment of rates which he previously contracted to pay to the landlord and which the landlord has ceased to pay to the local authority.


My Lords, we have naturally thought this whole matter over carefully since this Amendment was ventilated last week. My noble friend who moved the Amendment so persuasively and lucidly this afternoon wondered whether I had thought up any new arguments. I think I should straight away set his mind at rest on that; I have not thought up any new arguments. I have not thought up any new arguments because I think the arguments which I put forward at the Committee stage were, broadly speaking, valid and they remain valid, but I should like briefly to rehearse those arguments for your Lordships now.

Before doing so, I would again say straight away that this is an area of possible difficulty which is recognised as such. In the first place, I would again make it clear that the Government feel that, quite apart from considerations of Parliamentary protocol, which I do not wish to labour, this Amendment is basically one which affects rent and not rating legislation. My noble friend queried that argument and I think he pointed out that the Title of the present Bill is: An Act to amend the law with respect to the valuation of property for the purposes of rates and with respect to the making and collection of rates". My noble friend's clause does not deal with the collection of rates. What it affects is the rent relationship between the landlord and the tenant. I would therefore again suggest to your Lordships that this is basically a matter which affects rent and not rating legislation.

As regards the question of whether there will be a possibility for an Amendment to be included along those lines in possible future rent legislation, I think that what the noble Lord, Lord Silkin, said was right: that the Government's pledge, if I understood the noble Lord correctly, was not to carry out any further decontrol of rent during the present Parliament. They did not say they would not necessarily introduce rent legislation. The fact that in the Government's view this Amendment really deals with the question of rent and not questions of rating has a practical effect. The noble Lord, Lord Derwent, as I have said, explained very lucidly the arguments in favour of his Amendment, and I am the first to agree that there may be anomalies here which may require looking into. But we only really heard from my noble friend the landlord's side of this particular argument. I would suggest that associations concerned with the protection of tenants would not necessarily be looking in a piece of rating legislation like this for a material change in rent law, and before rushing into the change proposed by my noble friend the Government would certainly wish to be more certain than they are at present that what is being proposed would not have an unfair repercussion on tenants.

The point I am making is reinforced by the fact that we feel, at least in one respect, that the proposal might hit the tenant, especially the poorer one, pretty hard. As I explained at the Committee stage, and as the noble Lord, Lord Silkin, explained this afternoon, almost all the tenants who would be affected by this Amendment at present pay their rates in weekly instalments to their landlords. The change from an inclusive to an exclusive basis for payment of rent might well cause hardship, since it would mean that at least some tenants might have to find six months' rates in advance instead of merely a week's. I suggest that we should be quite certain of our ground, certainly more than we are at present, before amending the law in this way and possibly putting extra burdens on some of the poorer and humbler tenants. This was not a point in my argument which I suggested for your Lordships' consideration last week and which in fact my noble friend dealt with to-day.

Again, there is the consideration of the contract between the tenant and the landlord, which a number of noble Lords have mentioned this afternoon. They have far greater expertise in this matter than I have, and I will therefore dwell only briefly on it, if only to attempt to answer a point which my noble friend made. The Amendment would enable the landlord to change one item of the contract in the landlord's favour without the tenant's consent. The occasion for this might be a unilateral decision by the landlord that he no longer wished to continue the agreement which he had entered into voluntarily, to collect the rates for the rating authority. It seems difficult to understand why a unilateral decision on the landlord's part voluntarily to terminate an agreement should have a compulsory and possibly harmful repercussion on a third party, in this case the tenant.

When I said "discretion" on which my noble friend took me up, I think I had two points in mind. The first is the wording of my noble friend's own Amendment. The question whether the landlord converts the rent from an inclusive to an exclusive rent would, under his own clause, be entirely at the landlord's discretion; and secondly, the question of the landlord's discretion is again brought up if the landlord uses his discretion voluntarily to terminate a voluntary compounding agreement which he has entered into with a rating authority. I think that in both those senses I was quite justified in using the word "discretion".

Finally, I must again say that although my noble friend touched on this point, we are still doubtful whether there is a real problem here. I certainly admit to your Lordships that there are theoretical anomalies in the present position; but I would again say that, so far as I am aware, there is little or no evidence that these anomalies have given rise to difficulties in practice. But even if they had, even if there were a practical problem here, I would suggest for the other reasons which I have given that to include my noble friend's Amendment in this particular Bill would not be the right way of tackling this problem. For those reasons I must again say to my noble friend that we have looked at this matter carefully and, having looked at it carefully in the light of the arguments which were advanced so persuasively on the Committee stage, and again in the light of the argument which he has advanced this afternoon, we still feel that your Lordships would not be right to accept the Amendment.


My Lords, I will deal first with this question of discretion. I read my Amendment in a different way from my noble friend, and in fact I think I have read it wrongly. It was not meant to convey what he says it does convey. I believe it does convey what he says it does.


I will take my noble friend's word for that.


That, of course, could be the subject of redrafting. But in view of all that has been said—the weight of opinion seems to be against me—I do not want to ask your Lordships to divide. I am sorry, but I still do not accept the arguments that, for this matter, a Rent Bill would be more suitable than a Rating Bill. But that is up to Her Majesty's Government when they introduce future legislation. I hope that when they introduce the next Rent Bill and it is found that the case that I have made to-day has caused a great deal of trouble they will not say to me, "This ought to be in a Rating Bill." It is quite possible, of course, that they will. The trouble has not yet arisen. I hope it will be watched most carefully by the Department. I observe that my noble friend is agreeing to that. It could cause a good deal of trouble; it has not yet, and, with luck, it may not. But with the assurance that the Department will watch the particular case carefully, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

LORD DERWENT moved, after Clause 14 to insert the following new clause:

Landlord's notice of change in rates

". Where by virtue of a direction by a rating authority under subsection (1) of section eleven of the Act of 1925 an owner is rated in respect of a hereditament, section three of the Rent Act. 1957 (which relates to adjustments of rent in cases where the rates of dwellings are borne by the landlord) and the Second Schedule to the said Act shall have effect as if, in any case where there is an increase in or reduction of the poundage of the rates for the basic rental period, notice of such increase or reduction tray he given to the tenant of that hereditament by the landlord thereof on any date not earlier than seven days after the date on which public notice of the rate is given pursuant to section six of the Act of 1925. and where notice of such increase or decrease is so given the rent limit shall be increased or decreased as from the date on which such notice is given by the landlord. being a date not earlier than the commencement of the said rating period."

The noble Lord said: My noble friend Lord Cawley was called away about two minutes ago, and I am left to move this Amendment. I only hope that I understand it. I think I do. My noble friend offers his apologies, but he had to leave rather hurriedly. This Amendment, not quite in its present form, was welcomed by my noble friend Lord Jellicoe, if not with open arms with some considerable sympathy, according to the remarks he made on the Committee stage. It has been redrafted, I hope to his satisfaction, to meet the drafting points that he himself raised at that time.

The point of the Amendment is this. Regretfully, usually not through their own fault, certain local authorities are most dilatory in sending out their demand notices. There have been cases of delays of over two months. Usually it is because of some staff difficulty, but not always. Under the law as it stands at present a landlord cannot ask for the rates from his tenant until he has received the demand notice, and it is laid down in law at present, that if the demand notice does not arrive for six weeks after the due date, he can recover from his tenant up to six weeks' rates. One of the objects of this Amendment is, in fact, to stop what would be in many cases considerable hardship to the tenant in having to "cough up"— I speak of the rather feckless type of tenant, the one who does nothing about it until he gets a demand notice—six weeks' rates in one.

The other thing is that in some cases the delay goes over six weeks. There have been cases of just over two months, so I am informed. In that case, it is equally unfair. The landlord can recover only the six weeks of arrears, and has to pay the fortnight, or whatever it may be, extra out of his own pocket. Obviously, that is wrong. Of course, in most cases, where the increase or decrease is only one of a penny, or something like that, it would not be very serious. But on an annual rating basis there could be quite a large variation in the rates, and the sum might be quite large.

The object of this Amendment is that as soon as the new poundage has been announced, instead of waiting for the demand notice from the local authorities, the landlord may notify to his tenant within seven days after the announcement of the poundage the amount of the rates that he will be collecting; he can go on collecting and then, when the demand notice comes, hand over the money. That seems fair to the tenant and also to the landlord. I say straight away that in most cases this Amendment would have no effect, because most local authorities, particularly the larger ones, such as the London boroughs, send out their demand notices rather more quickly than one sometimes would like them to come in. But there are cases where local authorities are most dilatory and there is considerable unfairness all round. It is to safeguard that point, and to protect the tenant from having to "cough up" six weeks' rates at once that this Amendment is moved. I beg to move.

Amendment moved— After Clause 14 insert the said new clause.—(Lord Derwent.)


My Lords, at the Committee stage I explained that on merits there was probably a good deal to be said for the Amendment which has to-day been moved by my noble friend Lord Derwent on behalf of my noble friend Lord Cawley. Her Majesty's Government remain of that opinion. We feel there is a good deal of merit in the change which this Amendment seeks to make. At the Committee stage my noble friend, Lord Derwent, suggested that if that was the case Her Majesty's Government should take up the Amendment and put it down, suitably redrafted, at the present stage. I should like to make clear to your Lordships why we have not accepted his invitation to do that.

There are two main reasons why we consider that this Amendment should not be included in the present Bill, and why we have not, therefore, ourselves redrafted it. First, the Government remain firmly of the opinion that this Amendment is foreign to the purposes of this Bill. It is designed to deal with what I should be the first to admit may be a defect in the Rent Act, 1957, rather than a defect in rating legislation. My noble friend may think I am just being "stuffy" about this and raising matters of protocol, but I would assure him that here again there is a practical reason for seeking to avoid bringing something which is really germane to rent under the umbrella of a rating Bill. We think that in substance the anomaly which my noble friend is seeking to remedy should be remedied; but there may be difficulties of which we are not aware. Here again, though perhaps we have heard both sides of the difficulty we have not had the benefit of the views of organisations like the Law Society, the Royal Institution of Chartered Surveyors and other bodies interested in the position of tenants, who might well have something useful to contribute and be able to point out a difficulty of which we are not aware at this stage.

There is also the difficulty to which I have referred—the practical difficulty, under the Amendment as it is drafted, that the landlord would be entitled to increase the rent immediately but would not be required to reduce it immediately, or at all, if the rates were to go down. The Amendment may have been redrafted but that point does not seem to have been changed, and although I must take my noble friend's 'assurance, having checked through the two sets of wording, I must say that they seem to be remarkably similar. In any case, however, if my noble friend will look at the wording he will see there is no requirement on the landlord to serve notice of decrease, and no remedy for the tenant if he fails to do so.

There is another slight vagueness in the wording right at the end of 'the Amendment: the said rating period". I am not at all clear to what precisely that refers. It may seem to your Lordships an easy matter to remedy what I have suggested are still drafting defects. I would assure my noble friend, however, that I have done my best to take such expert advice upon this as was open to me, and I am assured that redrafting would present difficulties of considerable complexity. Indeed, it is unlikely that in the time available before the final stage of this Bill in your Lordships' House, it would be possible to produce an Amendment reaching into all the

Derwent, L. [Teller.] Meston, L. Sinha, L.
Gosford. E. Moyne, L. Stonehaven, V. [Teller.]
Horsbrugh, B.

ramifications of legislation which, as I have explained, is foreign to this present Bill; for it would be necessary to reach into the Rent Act, although admittedly only one sector of it.

My noble friend may ask why, if that is so, Her Majesty's Government have not already set this process of redrafting in action themselves. The answer is perfectly plain. It is because we have considered, and still consider, that this Bill is not the right vehicle for this particular Amendment, desirable though it may be on its own merits. Before sitting down may I repeat an assurance I gave your Lordships on the Committee stage, underlining the fact that on merits we feel this Amendment has considerable advantages. Bat I hope that my noble friend will not press it at this stage on his noble friend's behalf in view of the fact that it would certainly be the intention of Her Majesty's Government when an appropriate vehicle presents itself (that is, rent legislation) to see whether something on these lines can be introduced.


My Lords, I am sorry to say that I consider that a very weak case against this Amendment. I should like to deal, however, with one matter which I believe is all right in the new drafting—the question of the landlord notifying a decrease in rates. Under the present law the landlord is not under any specific obligation to serve notice of decrease. The position is controlled by virtue of the fact that he is in breach of the Rent Act if he charges more than twice the gross value plus rates; and the new clause makes no alteration in that respect. If Her Majesty's Government want to tighten that up then let them do the redrafting. If Her Majesty's Government do not like the Amendment as redrafted they can put the matter right on the next stage of the Bill; but I am going to ask your Lordships to accept this Amendment.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided: Contents, 7: Non-Contents, 52.

Abinger, L. Hawke, L. Mowbray and Stourton, L
Ailwyn, L. Howard of Glossop, L. Newall, L.
Albemarle, E. Jellicoe, E. Newton, L. [Teller.]
Alexander of Hillsborough, V. Kilmuir, V. (L. Chancellor.) Peddie, L.
Ampthill, L. Kinnaird, L. Perth, E.
Auckland, L. Lansdowne, M. Rennell, L.
Bathurst, E. Lindgren, L. St. Aldwyn, E. [Teller.]
Bethell, L. Lucan, E. St. Oswald, L.
Bossom, L. Luke, L. Spens, L.
Boston, L. MacAndrew, L. Templemore, L.
Buckinghamshire, E. McCorquodale of Newton, L. Waldegrave, E.
Conesford, L. Mancroft, L. Walston, L.
Digby, L. Margesson, V. Wigram, L.
Douglas of Barloch, L. Massereene and Ferrard, V. Williams, L.
Fortescue, E. Merrivale, L. Wise, L.
Goschen, V. Milverton, L. Woolton, E.
Hailsham, V. (L. President.) Morrison of Lambeth, L. Wootton of Abinger, B.
Hampton, L.

Resolved in the negative, and Amendment disagreed to accordingly:

First Schedule [Charities Excluded from Mandatory Relief]:

4.36 p.m.

VISCOUNT HAILSHAM moved to add to paragraph 2: with the exception of the following colleges of the University of Durham, that is to say, the College of the Venerable Bede, St. Chad's College and St. John's College".

The noble Viscount said: My Lords, this is an Amendment intended to meet a point made on Second Reading by the right reverend Prelate the Lord Bishop of Leicester, who expressed anxiety about the rating of two or three of the colleges of Durham University. Subsection (2) of Clause 10 of the Bill withholds mandatory rate relief from the charities listed in the First Schedule, including the colleges, institutes and schools of the universities of Durham, London and Wales. Your Lordships will recall that the Government's view was that rating authorities ought not to be compelled to give relief from half the rates to universities and colleges which received grants from the University Grants Committee. That is why they were excluded from relief. The Chancellor of the Exchequer has given an assurance that any additional rates falling on the universities as a result of their being denied rate relief will be taken into account in determining the recurrent grants from the Exchequer, and that is the general position about universities and colleges.

We then came to the compilation of the First Schedule. Our intention had been to list only those institutions which were grant-aided, either directly or indirectly, by the University Grants Committee, and it was for that reason that the colleges of Oxford and Cambridge, as distinct from the universities of Oxford and Cambridge, were omitted from the First Schedule. When we came to the Second Schedule, the right reverend Prelate drew attention to the fact that in Durham University there were some colleges which were independent of grants from the University Grants Committee. These are the three colleges which are now mentioned in the Amendment, and they have the attractive names of the College of the Venerable Bede, St. Chad's College and St. John's College. The last two are theological colleges which are completely independent financially. Bede's is a training college, part of the Durham division of the University, but again financially independent of it.

My Lords, these are clearly charities in the sense that other such bodies are charities. It was never part of our intention that such financially independent bodies should be deprived of rate relief to which other charities are entitled. The Amendment therefore excepts these three bodies specifically from the First Schedule, and leaves them, like other charities, eligible for mandatory rate relief. I am told there may be other colleges in the same position, but we have not been able to determine the facts conclusively in the time available. If there are any further colleges in the same position, subsection (3) of Clause 10 will take care of them, and the Minister has power, by Order, to allow for them. I beg to move.

Amendment moved— Page 25, line 8, at end insert the said words. —(Viscount Hailsham.)


My Lords, I was just wondering what is the status of St. David's College, Lampeter. Until recently St. David's College was in the position of the College of the Venerable Bede and these other colleges that are named in the Amendment. But I believe that just lately there has been some arrangement by which the University College of South Wales and Monmouthshire, which is a constituent college of the University of Wales, has entered into an agreement with St. David's College, Lampeter. As a result, I believe that it will be enabled to have relief or a grant from the University Grants Committee. If this is not so, then I take it—and I was glad to hear the last few words of the noble and learned Viscount—that the Minister will be able to deal with this matter by way of Order under Clause 10. As that is so, I personally have no objection whatsoever and do not wish in any way to amend the Amendment we are now discussing.


My Lords, if I might just answer that, the College of St. David is under consideration by the Minister, and he will be in a position to deal with it if it proves to be in the same class.

Fifth Schedule [Enactments Repealed]:


My Lords, I beg to move the last Amendment.

Amendment moved— Page 39, line 11, at end insert ("In section fifty-six, the words 'hoarding, frame, post, wall or'")—(Earl Jellicoe.)