Lords Sitting of 31 May 1961

Preamble
Reassembling after the Whitsun Recess, the House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Leicester

ADVENTURE TRAINING IN THE ARMY
2.35 p.m.
LORD NATHAN: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government if they can give the following information on Adventure Training in the Army in 1961–62:

(a) In how many units of each arm have exercises taken place.

(b) How many such exercises have taken place in the United Kingdom.

(c) How many in overseas commands.

(d) Approximately how many officers and how many other ranks have taken part in the aggregate in this training.

(e) How many have taken part in expeditions, in contradistinction to exercises.]

EARL JELLICOE: My Lords, Adventure Training is given every encouragement by the Army Council and is a normal part of military training; every unit takes part in one form or another. It is also included in the syllabus in recruit-training units and boys' units, so that every boy takes part in at least one exercise of this kind during his training. I regret that, because Adventure Training in the Army is organised in commands and in units, the detailed information requested by the noble Lord is not available. Expedition training at public expense is more restricted, being confined to nine officers or other ranks from all three Services in any two-year period.

EXCHEQUER AID FOR SERVICES EXPEDITIONS
LORD NATHAN: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many soldiers, and of what rank, have taken part in exploring or mountaineering expeditions, such as the 1959 Joint Services Expedition in the Himalayas, and how much money has been contributed from the Exchequer for such purposes.]
EARL JELLICOE: My Lords, the only two Service-sponsored expeditions in recent years were those to Chitral in 1959 and to Annapurna in 1960. On the Chitral expedition, two majors, four captains, two subalterns and one sergeant took part, at an extra cost to the Exchequer of £1,970. On the Annapurna expedition, one lieutenant colonel, one major, one captain and one subaltern took part, at no extra cost to public funds.
LORD NATHAN: My Lords, should I be correct in assuming that the reason why no expenditure occurred out of public funds was that on this occasion, unlike previous occasions, the Treasury refused to find funds?
EARL JELLICOE: My Lords, I think that might be a reasonable surmise.

DANISH NAVAL VESSEL AND BRITISH TRAWLER
2.39 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, may I ask the noble Viscount the Leader of the House a Private Notice Question: Whether the Government are able to make a statement to-day, as in another place, with regard to the incident concerning the firing by a Danish naval vessel upon a British trawler?
THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM): My Lords, I was hoping that at a later stage my noble friend Lord Lansdowne would be repeating, or very closely repeating, an Answer which is to be given in another place.

BUSINESS OF THE HOUSE
LORD DOUGLAS OF BARLOCH: My Lords, with your Lordships' permission may I make a statement about the Motion which stands in my name on the Order Paper for to-morrow? A number of your Lordships have informed me that they would like to take part in the discussion, but that the day and the hour at which this is likely to come on make it impossible for them. I have therefore arranged to have the debate postponed until Thursday, June 15. I am afraid that I must tender your Lordships an apology. This Motion appeared upon the Order Paper only just before we adjourned for the Whitsun Recess, and probably it did not come to the notice of some of your Lordships until late. The fault is mine. If I have inconvenienced any Member of your Lordships' House, I should like to apologise to him.
BRITISH TRANSPORT COMMISSION BILL
Read 2a, and committed to a Select Committee.
LONDON COUNTY COUNCIL (MONEY) BILL
Read 2a, and committed to an Unopposed Bill Committee.

RATING AND VALUATION BILL
2.41 p.m.
Order of the Day for the Second Reading read.
EARL JELLICOE: My Lords, in moving the Second Reading of this Bill I would say that, while some quite interesting events are taking place on a neighbouring Down, I am surprised to see that quite a handful of your Lordships have come here to discuss the intoxicating subject of rating and valuation. Speaking personally, it being my duty—and I must confess it is a rather disturbing one—to introduce this Bill to-day, I only wish that all of your Lordships had joined the happy throng of punters. I make no apology, however, for detaining your Lordships for a short while in introducing this Bill today; for rates are pretty important. Last year they amounted to almost £700
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million. That sum represented nearly one half of the total finance available for local government in England and Wales. And, as your Lordships well know, local government lies at the root of the affairs of this country.
This Bill is designed in essence to improve the rating system in England and Wales. It does not, of course, concern Scotland, where, as your Lordships know, things are ordered, if not better, at least differently. Most of its provisions are due to take effect on April 1, 1963, when new valuation lists, postponed for two years by the Rating and Valuation Act, 1959, are due to come into force. In essence, the Bill seeks to facilitate and ease the introduction of these new lists.
As the Explanatory Memorandum makes clear, the Bill has four main purposes. Its first purpose is clear from its first clause. Parenthetically, I must confess that this is the only clause of the entire Bill which I have been able to take, as it were, in my stride. It is, for example, a distinctly less esoteric affair than subsection (5) of Clause 14, whose charms I would commend to the connoisseurs of legalese. The aim of Clause 1 is, quite simply, to bring to an end the de-rating of industry and freight-transport. As your Lordships will recall, industry was first de-rated in 1929, in an attempt to mitigate the effects on British industry of the world depression. For 30 years, until 1959, industry was derated by 75 per cent. In that year its relief was reduced to 50 per cent.; and, because that change took place, as it were, almost in isolation, industry's rates virtually doubled overnight.
Why do the Government feel that the time has now come to rate industry fairly and squarely at 100 per cent. of current values? The first reason is that the Government consider it to be in the general interest that we should move towards a situation where all the main classes of rateable property are rated fully at current rental values. The abolition of industry's privileged position is a move in this direction. The second reason is that, without this change, industry's share of rates would in fact be very considerably, and inequitably, reduced. At present, the householders' share of the total rates is about 47.5 per cent.; the share of commerce and

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miscellaneous ratepayers is some 41 per cent.; and the share of industry and freight-transport is only 11·5 per cent.
In the current lists houses are assessed at 1939 levels. Under the law as it stands, they will be valued in the 1963 lists, the new lists, at current, free-market values. Commercial and other properties, like offices and shops, are to-day assessed at 1955 values, but they enjoy 20 per cent. derating. Automatically, under existing law, they will be revalued at current values for the new lists, losing, too, their 20 per cent. derating. Industry and freight-transport will also automatically be valued for the new lists at current values, but, apart from this Bill, they would continue to enjoy 50 per cent. derating. Plainly, the substantial changes automatically due to take place under existing legislation would be bound to lead to very considerable changes in the shares of the rate burden falling on the different classes of rateable property, Nobody can forecast the precise result, but the indications are that apart from this Bill the share of the rates borne by industry would fall very substantially indeed—perhaps by as much as a half.
There are two further considerations. Fortunately, we live in the England of 1961, not that of 1929. Whatever the situation of particular industries may be, it is clear that industry as a whole is no longer depressed. Again, it must be remembered that industry, unlike your Lordships, pays its rates out of its gross, untaxed profits. For these reasons, therefore, I trust that your Lordships will agree that the decision embodied in Clause 1 of this Bill, to rate industry fully, is entirely justified.
I now turn to Clause 2—the householders' clause. Even given the re-rating of industry, the 1963 revaluation could cause a very sharp increase indeed in the householders' share. The reason for this, of course, is simple. For shops and offices, as for industry, the yardstick for valuation will shift only from the 1955 levels to current values; but for the householder it will shift from 1939 values to current ones. Like some others of your Lordships, I have just paid my rates. I did so, as always, a little reluctantly, and under some pressure from my secretary; but my reluctance would have been far greater if I had been paying rates assessed at current values. Anxious though they are to iron out inequalities and to
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move towards full rating at current values for all the main classes of ratepayers, the Government have nevertheless decided that to do so at one bound would be to give the householder a brutal shock, and they feel that the shock should be cushioned. That is why Clause 2 of the Bill gives my right honourable friend the power temporarily to derate houses by order. That order, of course, would be only temporary. Its writ would run for only five years from 1963. It would also be subject to Affirmative Resolution by both Houses of Parliament.
Nevertheless, some of your Lordships may wonder why my right honourable friend is seeking these sweeping discretionary powers, affecting as they do, either directly or indirectly, every single ratepayer in the country. Why, you may ask, does this Bill not itself provide for a definite percentage by which houses should be derated, so that everyone should know where he will stand in the future? There is no sinister reason for the proposed order. Whilst the Government believe that the increased burden on the householder could very well prove intolerable, neither they nor anyone else can at present tell what the final sums will look like. It will be only by the end of this year that the valuation officers who are now working on the new assessments will be able to discern even the approximate future pattern.
Your Lordships may then ask: why not leave all this open until the end of the year? The answer lies in a simple matter of timing. The new lists are due to come into force, as your Lordships know, on April 1, 1963. The law requires that they should be forwarded to local authorities by the end of December, 1962. But there are some 16 million entries in them, my Lords, and if the legal requirement to forward them by the end of December, 1962, is to be met, this means that their typing must begin by the spring of next year. That means that any derating in favour of householders will have to be decided upon and approved by Parliament in the first three months of next year. If any such derating were to be part of a Bill, this timetable would be quite out of the question.
As I think I have made clear, my right honourable friend has no preconceived ideas about what the percentage of de-rating should be. We shall have to see

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how the new values work out for each of the main categories of property, and how the incidence of the rate burden will be affected, both nationally and locally. It may be possible to avoid fixing different percentages of derating for different areas. Clearly, differentials of this sort, with the anomalies which they create at the boundaries of rating areas, should be avoided if possible; but this will have to be settled next year under subsection (2) of clause 2 of the Bill. I wish to repeat here the assurance given on this point by my right honourable friend in another place, that the Government would regard an overall increase in the householders' share of as much as one-third as intolerable. The implication, of course, is that, should the householders' share rise by as much as that, my right honourable friend would certainly exercise his powers to derate. This is not to say, however, that should it rise by less than one-third the Minister would not act.
The next major purpose of the Bill is served by Clauses 9 and 10. These clauses, with one or two modifications, carry out the recommendations of an expert Committee, appointed under the Chairmanship of Sir Fred Pritchard, to review the present treatment, for rating purposes, of charities and kindred bodies. I think it fair to say that there has been universal recognition of the value and thoroughness of the Pritchard Committee's work and of their Report.
May I briefly direct your Lordships' gazes backwards? To the layman like myself much of our rating system appears a trifle quixotic, and there are anomalies in it. But nowhere do the anomalies lie thicker on the ground than in our treatment of charities and kindred bodies. Broadly speaking, the picture over the last 100 years or so has been much as follows. Certain properties have been entirely exempt—for instance, churches and chapels, voluntary schools, and, under the Scientific Societies Act, 1843, societies for science, literature, and the fine arts. In addition, many other properties have been partially derated as a result of sympathetic undervaluation by the local rating authority. But the picture as a whole (I think it is fair to say this) has not been without its complications and conclusions.
In 1950, under the Local Government Act, 1948, the Inland Revenue became
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centrally responsible for valuation for rating. In the 1956 lists they were obliged to value charities and other kindred organisations at the current 1956 values. The new values could well have had disastrous consequences for many valuable organisations, but the Rating and Valuation (Miscellaneous Provisions) Act of 1955 contained a holding provision (Section 8) which restricted the 1956–57 rate payments of these bodies to the amounts they had paid for the last year before the 1956 revaluation, and gave them a proportionate reduction for subsequent years. These arrangements still apply as a result of the further holding provisions of the Rating and Valuation Act, 1959.
The Pritchard Committee's proposal was that property occupied by charities should have 50 per cent. relief as of right, and that local authorities should have discretion to reduce or to remit the remaining 50 per cent. The Committee proposed that kindred bodies should not have any mandatory relief, but that local authorities should have power to reduce or remit their rates over a far wider field than has existed hitherto. The Pritchard Committee found that some very curious anomalies had resulted from the Scientific Societies Act of the last century. Some societies which were exempt appeared to be less needy or less deserving of relief than others which had lost exemption or had failed to gain it. The Committee, in the upshot, thought that none of the societies had a better claim to relief than other charities, and therefore recommended that the Act of 1843 should be repealed.
In one respect only does Clause 9 depart from the substance of the Pritchard Committee's recommendations. Your Lordships will observe that subsection (2) of that clause, together with the First Schedule to this Bill, would debar from mandatory 50 per cent. rate relief the grant-aided universities and university institutions in England and Wales. The Pritchard Committee concluded, "on balance" (as they put it), that the exclusion of the universities from relief would not be justified. There are doubtless strong arguments for and against this view. However, the Government do not consider, again on balance, that it would be right to compel the local rating

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authorities to give 50 per cent. mandatory rate relief for the very extensive buildings of the grant-aided universities at the expense, as it would be bound to be, of the other ratepayers. In any event, the Chancellor of the Exchequer has given an assurance that any additional rates falling on the universities as a result will be taken into account in determining the amount of recurrent grants which they receive from the Exchequer. The Oxford and Cambridge Colleges, however, have not been excluded from relief, since they do not receive grants from the University Grants Committee.
The fourth main purpose behind this Bill, my Lords, is to introduce a new method of valuing statutory water undertakings. It is dealt with in Part II and in the Second and Third Schedules. This part of the Bill may strike some of your Lordships as a bit complicated. I must confess that I have found it so, and, if only for that reason, I feel that it might be unwise to paddle too deeply in these particular waters. Your Lordships may prefer to immerse yourselves more fully at the Committee stage, or, better still, not to get wet at all.
The background, briefly, to the proposed scheme is as follows. Public utility undertakings very rarely rent their premises, so there is in their case little direct evidence—indeed, I think none—of rental value. But with its faculty for making legislation work, your Lordships' House, in its Judicial capacity, very early defined and approved a special method of valuing them by reference to their "accounts, receipts, or profits". Since the undertakings were almost always monopolies, with any extortionate tendencies curbed by controls of one sort or another on the amounts of their charges, it is perhaps rather surprising that this basis of valuation should have worked as well as it did; and, indeed, as it still does in parts of the field of rating.
Its field of application has, in fact, itself contracted. The nationalised railways and canals, and the nationalised gas and electricity industries, have already been legislated out of it because it was thought that the method was impracticable in the circumstances of nationalisation. It. has long been the hope, shared by the water industry, that some simpler and less litigious method might be found for that industry. The Bill gives expres-
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sion to the solution proposed after a full examination of the problem by the Working Party on Rating and Valuation, in which representatives of the local authority associations were joined for this purpose by representatives of the British Waterworks Association. I should like to make it quite clear that it was not a completely agreed solution. Both sides had reservations, but there appears to have been general acquiescence in the broad structure of the scheme.
The scheme, with which I will not detain your Lordships for long, starts from values actually in the current valuation lists—your Lordships will find that particular provision tucked away rather obscurely in Paragraph 2 of the Second Schedule. There is an initial reduction for undertakings whose rateable values are more than 50 per cent. higher, in proportion to their output of water, than the average for the country. Perhaps I may here digress for a moment to point out that one of the most striking anomalies of the accounts method of assessment has been the widely different relationships between assessments and water output. New or expanding undertakings, with heavy post-war capital expenditure to finance, have tended to attract relatively high assessments, while long-established undertakings, with relatively small debts, have tended to attract low assessments. In short, among water undertakings, the burden has tended to fall where it could least easily be borne.
Once starting value is settled, although the provisions are complex, the broad principles are tolerably straight-forward. First, the total value of any such undertaking—what is called its cumulo-value: a term which I think is introduced into a British Statute for the first time, although I understand that this term of art has, in part, a Scottish parentage—remains unchanged throughout the life of each valuation list, which is normally five years, unless its water output increases or falls by more than 10 per cent. If the water output increases by more than 10 per cent., the cumulo-value is increased by the product of the increase in water output and the national average rateable value per unit of output. That is Clause 17 (2), and its long-term effect is to tend to bring all water assessments nearer to the national average in proportion to water output, which is something of which both sides

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and the Working Party were in favour. If output falls by more than 10 per cent., the cumulo-value is reduced proportionally—that comes in Clause 17 (3). Otherwise the cumulo-value is constant for the five-year period. When new lists come to be prepared, the cumulo-value for the old lists is adjusted, in precisely the same way, for changes in water output since the old lists were prepared—and this whether or not the change is as much as 10 per cent.
In addition, at each general revaluation, the cumulo-value has to be adjusted for changes in the net annual values of all the properties which are at that time to be revalued in the ordinary way. This ensures that the value attributable to the water undertaking's property broadly follows the movement in the general level of rental values. That is the substance of the water provisions of the Bill. There are special refinements which can, if necessary, be examined in Committee. But I should perhaps mention that the cumulo-value is to be apportioned among rating areas in precisely the same way as at present, a result desired by both the industry and the local authority associations.
These, then, my Lords, are the four main purposes behind this Bill. Most of its other clauses are of substantially less importance, but not always, as I am sure your Lordships are glad to note, of less complexity! With an eye to the clock and recalling that there are other stages of this Bill ahead of us, I feel that your Lordships would not wish me to review these subsidiary clauses in minute detail. As I see it, they fall into a number of groups. The first are those which would give my right honourable friend the power to introduce by order a formula method of valuing certain clearly defined types of property. The aim here would be neither to increase nor to decrease their rate burden, but rather to introduce simpler, surer and more convenient methods of valuation. Clauses 3 and 4 are of this nature. The second group of clauses pick up certain recommendations of expert bodies. Clause 5 gives effect to recommendations of the Ritson Committee on the rating of plant and machinery, whilst Clause 13 takes account of the findings of a study group of the Institute of Municipal Treasurers and Accountants.
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Another group of clauses seeks to remove what I think I may call obvious nonsenses, which the processes of time, or indeed, of the law, have disclosed. Clauses 7, 8 and 11, dealing, among other matters, with the assessment of certain burial grounds and the rating of parks, fall within this group. One clause, Clause 12, making superfluous the old rate book, is simply a matter of "keening un with the 20th century Joneses". The old rate book dates, I understand, from the Poor Relief Act of 1743. Since then, bookkeeping has become a rather more modern science, and this clause would, for example, permit a rating authority to use an electronic computer for maintaining its rate accounts and as a substitute for the good old rate book. Even in matters of rating, we must move with the times. Finally, a group of clauses—Clauses 6, 14 and 15, and indeed some paragraphs of the Fourth Schedule—are designed to aid both the ratepayer and the rating authority by improving certain rating and valuation procedures.
I do not suppose that this Bill is a particularly dramatic measure. I expect that it will not set the Thames on fire. Nevertheless, I believe that it to be an important Bill, which deserves the close attention of your Lordships' House. I also claim that it is a useful and necessary measure. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Earl Jellicoe.)
3.7 p.m.
LORD LATHAM: My Lords, I should first like most sincerely to congratulate the noble Earl on the admirable way in which he has submitted for Second Reading his first major measure. Notwithstanding the fact that rating and valuation is not a particularly scintillating subject, he succeeded in introducing this Bill, heavy with legal terms, with a lightness of phrase and with a sense of humour which I am sure has endeared him to your Lordships.
Whether we like it or not, rating and valuation affect everyone directly or indirectly, either as producer or consumer, or in the widest sense as a citizen. Like taxes, rates enter into the costs of almost everything which we consume or use. I was amused to hear the noble Earl's reference to the quixotic pattern of

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rating law and practice in this country. Of course, that quixotic pattern has been strenuously added to since 1951, for this is the eighth Bill dealing with rating and valuation introduced by the present Government. It is clear that the Minister of Housing and Local Government believes in serials, and this is the eighth instalment, with Orders in Council to flow from it in respect of relief to the residential ratepayer. I think it is not unfair to say that almost every successive measure has purported—and I stress the word "purported"—to correct the deficiencies of one or other of the previous measures.
This is an important Bill, and, as the noble Earl has said, it recognises that an unfair and, indeed, unjust burden would otherwise be cast upon householders when the 1963 valuation applies. The Bill purports to meet this consequence, but I submit that it does not. The Bill imposes no obligation upon the Minister. It seeks merely to give him power to act by order to cushion (I use the word of the noble Earl) the increase of rateable value at the whim and fancy of the Minister. Not that I can conjure up my erstwhile colleague on the London County Council in a whimsical mood: but there is no obligation upon him to submit an order. And whilst we note the near undertaking given by the noble Earl as to the Minister's intentions, in certain circumstances, if the increase exceeds some 33 per cent., the fact nevertheless remains, that there is nothing to compel the Minister to introduce an order; nor is there anything indicating the measure of relief which he will regard as being appropriate. In short, the thickness of the "cushion" (if there is any cushion) is to be left entirely to the Minister.
The proposal, as I read the Bill, is that such relief as may be granted will be granted only for a period of five years; and, of course, from an administrative point of view there may be something to be said for that. The Minister, moreover, is to have power to prescribe different reductions or reliefs for different areas, limited, it seems to me, to the county areas and the county borough areas, and not applying to any others. It is the case that the effect of the application of 1963 values to residential properties may be very different between different areas, especially if one area is mainly industrial and
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another is mainly residential. But this proposal to grant varied different measures of relief by reference to particular areas, and the (shall I say?) industrial and social development and character of the areas, is a fundamental departure from recent intentions and recent legislation.
As I understand it—and I do not think I am wrong in this respect—the object of transferring valuation from the rating authorities to the Valuation Department of the Inland Revenue was precisely in order that there might be a national level and a national pattern of valuation, which was not the case when the valuation was done by the rating authority. It is true that there were several Committees brought into existence to secure that the effects of the change should be not too pronounced. Nevertheless, rating by the rating authorities did lead to a number of glaring (and I use that word advisedly) inequalities as between one area and another. This was said to be corrected, and has been largely corrected, by the transfer of rating to the Inland Revenue. We are now going back, as it were, to a differential relief, if any relief be granted. I cannot think that this is a wise step to take.
The Times of November 19, 1960, said that this Bill promised to be one of the most controversial of the Session, and that surely has been the case. I think that perhaps this Bill holds almost a record for the number of days it was under consideration in Committee in another place. As the noble Earl has said, the cardinal feature is that as from April 1, 1963, dwellings at present rated on 1939 values will be rated on the then full current values. This cannot fail to lead to a drastic increase. The same issue of The Times expressed the view that the values were likely to be trebled. This increase, whether it be of that order or more or less, coupled with the increase of rents flowing from the operation of the Rent Act, 1957—of which some increase in values will in many cases be a reflection of the increase of rents—would, unless mitigated, as the noble Earl has indicated, cast an intolerable burden on the householder.
It is idle for the Minister of Housing and Local Government to say that assessments will not be influenced by the

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effects of whether the properties are controlled or not; for the whole level of rents has been raised by the operation of the Rent Acts, and the gathering measure of decontrol, which is coming about as every day passes. The Minister's former Parliamentary Secretary was much more correct and nearer the mark when he said, as he did in February, 1959, when the question of assessments and valuation was being discussed [OFFICIAL REPORT, Commons, Vol. 600, col. 872]:
"It is not even a matter of intelligent guesswork or intuition."—
that is to say, valuation.
"It has to be founded on actual market conditions and the rents which willing tenants are prepared to pay to willing landlords."
So the householder will face the double burden of higher rents, reflected in and leading to higher assessments; and in the result it is estimated that domestic property, which on April 1, 1959, represented 47·5 of the total rateable value in England and Wales, as from April 1, 1963, will represent 63 per cent., that is to say, an increase of 15·5 per cent.; while industrial and commercial properties (offices, cinemas and the like properties), which at present account for 52·5 per cent., will as from April 1, 1963, drop to 37 per cent.—that is to say, a reduction of 15·5 per cent. And this after the industrial and commercial properties all come in, as they will on that date, for a full 100 per cent. of rateable value.
All derating, as the noble Earl has said, except for agricultural properties and certain charities, will cease as from April 1, 1963. One is entitled to reflect with some sardonic humour that when on several occasions we on this side of the House sought to abolish the derating of industry altogether we were told with simulated gravity that it would do serious injury to industry, and especially to our export trade—which, of course, is normally prayed in aid when argument is otherwise feeble. Yet, lo and behold! as from April 1, 1963, all derating of industry is to go—and I think properly so—and we find the Minister himself adopting almost the language of our earlier submissions, even to the extent of saying, as we did at the time—and here I quote the Commons OFFICIAL REPORT, Vol. 631, col. 397:
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"… it is right to bear in mind that, on average, the rates paid by industry are estimated to be less than 1 per cent. of the total turnover, so even if they were increased by 50 per cent. … which they will not be, they would still remain a very small part of the total expenses of the average firm."
It goes on to say:
"Any increase in rates diminishes the firms' liability for tax."
That diminution, of course, including profits tax, can run to something like 531 per cent., whereas the householder will pay the increased rates out of taxed income; he gets no relief. And so it seams to me that a Daniel has come to judgment—indeed, quite a number of Daniels have come to judgment. There is not a word about the poor old export trade, no tears, at a time when, if you please, we are told that the need to increase exports was never more vital to the health of our economy. The Government have seen the light. Let us, out of charity, pass the sponge over their former tergiversations.
So we say that this Bill is unsatisfactory, in that it fails to achieve its alleged purpose, namely, to avoid an excessive burden of rates falling upon the householder for the benefit and relief of nonresidential properties, especially those of flourishing industry and commerce. Its principal defects and deficiencies are, I submit, that it is not mandatory—it is optional to the Minister. The relief which will be necessary should be prescribed by way of a specified percentage of increase of rateable value or rates that could either be on the basis of valuation or, it could be, on the basis of rates payable. It should not be left, we submit, to the decision of the Minister whether he promotes an, order or not or, if he decides to promote the order, whether the measure of relief should be within his sole determination. Really what is needed—and this was said on Second Reading in another place—is a thorough, exhaustive examination of the whole question of the financial relations between local authorities and the central Government, and the whole basis and pattern of the rating and valuation system and practice in this country.
So much for the main features and the real raison d'être of this Bill. As the noble Earl has said, there are a number of miscellaneous provisions which are valuable, in that they tidy up, in some small manner, some of the disordered

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features of our rating system. I should like to touch upon two of these. The first is the proposal to bring some sort of order into the exemptions granted to charities and kindred bodies. What a wealth of uncertainty can be found in that word "kindred", as the noble Earl said. I should like—and I am sure my noble friends behind me would wish to be associated with this—to pay my tribute to the Pritchard Committee and the excellent work which they did. They handled very skilfully, I thought, a most complex matter, which is honeycombed with the vagaries of the past. If I may say so, the Government on the whole were wise to adopt most of the Committee's recommendations, which go some distance to tidy up and secure some measure of uniformity where imprecision was to be found. It is a useful first step.
As I understand it, the situation will be that, as regards prescribed charities, there will be a mandatory remission of 50 per cent. and there will then be the possibility and the right of the local authority to grant a further x per cent. up to 100 per cent. if they so wish. As regards kindred bodies, there is no mandatory remission, but there is a discretionary power in local authorities to remit up to 50 per cent. I think it should be said that these remissions, desirable though they may be, and generous as authorities may feel who make them, mean a subsidy or a grant by the other ratepayers of the district to these charities and kindred societies. They fall indiscriminately upon certain local authorities where, quite fortuitously, the eligible charity or kindred body is located within their area, although in many cases the work, purposes and benefits which flow from the activities of these societies are of a national character and benefit the nation, and not only the locality in which the head office or the premises may be situated. I think my noble friend Lord Lucan may wish to have a word upon this aspect, and on the fact that in certain boroughs the burden of this mandatory relief will be not inconsiderable.
There is one other point I should like to make with regard to the operation of the remission provisions in connection with charities and the like—a point in which I think some noble Lords would be interested, including my noble friend Lord Longford. The point is that they
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would like some clarification and, if possible, assurance as to the position of the enclosed religious communities in regard to their entitlement to remission. I gather that their position is safeguarded by an Amendment made in another place to Clause 9 of the Bill, but I am sure noble Lords interested would be glad to have an assurance from the Minister who is to reply to the debate.
With regard to the water undertakings, as a member of the Metropolitan Water Board I have, of course, been interested in the steps which have been taken to place the assessment of the water undertakings on a more up-to-date basis. I cannot yet accept the arguments which have been put forward as to why water undertakings should be dealt with differently from those of electricity and gas. I agree that it is a step forward to move from the present method of assessment, which can be quite inequitable, but, as I have said. I do not think the case has been made for differentiating between water and electricity and gas. So far as my reading of the proceedings in the Committee in this connection are concerned, I understand that the ultimate residue of justification for this differentiation was that, whereas the electricity and gas undertakings have to buy their raw material, water undertakings do not. Now that may appear to be the case, but it is not, because as much expenditure is involved in recovering the raw water and in its storage and pumping as would represent and equal the cost of the water as a raw material. It is only when the raw water has been dealt with and has become pure, potable water that it can be regarded as the raw material of the undertaking. From my reading of the debate which took place in Committee in another place, that seemed to be, as it were, the residual argument in support of this discrimination between public service authorities.
There are, as the noble Lord has said, several other proposals in the Bill all designed to tidy up the framework of the valuation and rating. But I repeat that the main elements of the Bill do not provide for meeting satisfactorily the situation which will exist as regards the residential ratepayer as from the 1st April, 1963. These and other defects of the Bill were debated and threshed out

823
in another place in extenso, without, I must say, much reward. We on this side of the Chamber consider the Bill to be unsatisfactory; that it is really only another exercise—the eighth—in tinkering with the whole question of local government finance and local government rating. We nevertheless recognise that something must be done in order to avoid a situation which would be disastrous if the full weight of the 1963 valuations fell upon households; and therefore we shall not oppose the Second Reading.
3.32 p.m.
THE EARL OF HALSBURY: My Lords, addressing you upon a very technical matter, I shall confine my remarks to that small proportion of it which falls within my competence. I wish to speak of the effect which the new system—that is to say, this Bill—together with the fate of the Act of 1843 under the recommendations of the Pritchard Committee, will have on the learned societies. The transfer income involved in derating the latter is of negligible proportions compared to the tactical importance of doing so and providing in the future the equivalent of what has been customary in the past. What I have to say will, to some extent, be a repetition of what my noble friend Lord Adrian said last year. The effect of the new system will be to bury the old one. If and when your Lordships have seen fit to pass this Bill there will be many societies throughout the land who will paraphrase the words of the burial service: "The Lords have given; the Lords have taken away".
This Bill will have the effect of imposing burdens on societies which have not hitherto had to bear them while enfranchising those who hitherto have not had the benefit of derating. The effect of the older system was to effect a dichotomy between what I may call suppositious sheep and hypothetical goats. This distinction was not in any sense pejorative, as it was based not on the merit of any particular society's work but upon the terms of its charter or memorandum and articles of association. In emancipating the goats, the new system will place an unexpected burden upon the sheep. The effects on the scientific community of the new system can thus be very serious indeed. There is not only
824
the fact that societies—among the most distinguished of all being the Royal Society, the Linnean Society, the Royal Geographic Society and many others—who hitherto have been wholly derated will now have to bear 50 per cent. of their due proportion of the rates; there is also going to be a very large measure, apparently, of uncertainty as to how the future system will be construed. I hope that the noble and learned Viscount who is going to reply on behalf of the Government will be in a position to tell us whether the Government are prepared to give some positive assurance as opposed to an expression of hope with respect to what they intend to do for such learned societies.
The sort of difficulties we ran into under the old system were exemplified by an experience I had one day standing for an hour in the witness box at the Marylebone Court giving evidence on behalf of a society—whether learned or not was what the court had to determine—which was largely concerned with sociological research. Was an institute largely devoted to sociological research engaged on activities which were social under the terms of the 1843 Act? After a lengthy argument it was decided they were not and, possibly thinking discretion the better part of valour, we did not appeal.
On another occasion the Institute of Fuel, either better advised, or more courageous or having a better case than I instanced earlier—I do not know which—found itself challenged by the Borough Council of Marylebone, with the support of the Treasury, on de-rating. This it had enjoyed ever since its foundation in 1927. It lost its status in the Marylebone Court and appealed to the Lands Tribunal. The appeal was dismissed. It went on from there to the Court of Appeal, where it was dismissed by a majority of two to one. Finally, the Institute appealed to your Lordships' House. The appeal was allowed and their status was restored to them retrospectively, with costs. Think of all the waste of time of learned scientists who work on the voluntary councils of these societies and who become involved in fighting endless suits through the courts to determine whether they are to pay rates or not!

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I hope the new system, whatever it may be, will be something we can understand. I have no doubt that your Lordships, as I did when I was somewhat younger than I am now, used to play a game called "Russian Messages". The point of the game was the corruption of a message as it was handed from one recipient to another. The legislative equivalent of that is to tell Parliamentary draftsmen what you want, to pass that on to the Legislature, where it is amended, and finally hand it over to the courts for construction. Nobody ever seems to know exactly where they are in such a case. I do not think any of us know the solution to it, but I hope that what the Government finally introduce for the learned societies will be simple, understandable and practical.
What I should personally much prefer to see would be some definition of an exempt society as a scheduled exempt society, with the power to schedule in the hands of a Minister who would be advised by an advisory committee of representatives of scientific bodies; so that the scientific societies would be judged by their peers on a basis of what they were doing rather than by lawyers on a basis of what their memoranda and articles of association gave them power to do. Once every week the Royal Institution holds Friday evening discourses, following which tea is handed round to the members. One has to pay for one's tea, because it has been held that if the Institution gives its members a cup of tea the derating position under the old system would be prejudiced and the Institution might find itself liable to pay rates. Now if, for the future, we could have something which did not involve learned men having to sit round tables deciding whether their members might or might not have a free cup of tea, the whole scientific community would, I know, be deeply grateful.
On the question of why these societies should receive benefit, I should like to stress what has been said before: that they are voluntary bodies who are doing absolutely essential work. The Government have committed themselves over and over again, as it were, to a treaty of friendship with the world of science, and we are all grateful to the enlightened attitude of the noble and learned Viscount who represents the interests of science in this House as its Minister.
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But for the Government to spend more money on the scientific edifice and at the same time prejudice scientific societies would be, if I might put a material analogy to your Lordships, rather like extending a house at considerable cost and then helping to pay for it by ripping out all the telephone wires so that nobody inside it could communicate with anybody else. This is what the learned societies do: they are responsible for the lines of communication of the scientific community.
I do not know how many of your Lordships are familiar with what the proceedings of a scientific institution look like, but I trust I shall be in order in just thumbing over the pages of one monthly issue of the Journal of the Chemical Society. It is about 500 pages of close print, describing facts related to new discoveries in chemistry made and announced during the month. The volume for a year consists of about 5,000 pages of close print. It costs about £117,000 a year to produce. The whole of the editing is done voluntarily, and chemists throughout the world, in industries, working in practical research, or on whatever it may be, make use of these volumes. The Chemical Society is a body with an income of about £33,000 a year and out of that it maintains the administration which launches this Journal all over the world. The abstracting service is done by another body.
Here is the journal of the Operational Research Society. It is only a quarterly journal and is maintained by a small society whose total subscription income is little more than £2,000 a year. If that ceased publication because it became financially insolvent the scientific world would be the poorer for it. I most earnestly recommend to your Lordships that the fate of these learned societies which are responsible for the communications of the scientific world, all of which are done on a voluntary basis out of the subscriptions of their members, should be safeguarded by the attitude the Government take towards the new system.
I realise that I have discussed many matters which perhaps are on the borderline of what might be held to be in order, but the Pritchard Committee's findings were coupled to this Bill in another place, and the noble Earl who introduced the Bill referred to them, so

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I trust I have not been out of order in taking up a little time to tell your Lordships of some of the issues involved. We all very much admire the achievements of the noble and learned Viscount, Lord Hailsham, in his capacity as Minister for Science, but if he could produce once a month a volume as thick as the one in my hand, showing the things he had done as opposed to the things he hoped to do, he would deserve the gratitude of the nation, much as he enjoys our admiration for the grace and elegance with which he always addresses your Lordships' House. I would make a strong plea that he will at the earliest opportunity make a positive commitment on behalf of the Government to support the learned societies rather than an expression of hope as to what may happen some time before 1964.
3.45 p.m.
THE LORD BISHOP OF LEICESTER: My Lords, I am grateful for the opportunity to say a few words on the Second Reading of this Bill, not because I think it at all likely that I can throw any spiritual light on this rather mundane subject, but for the more practical reason that some of my friends on the so-called Churches Main Committee have taken unfair advantage of my presence here for the purpose of taking Prayers to ask me to voice some points they have very much in their minds. I would also apologise to the noble and learned Viscount for the fact that if our deliberations should go beyond 6 o'clock I shall not personally be here until the end.
THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM): If they do, I can assure the right reverend Prelate that I shall not be here to answer.
THE LORD BISHOP OF LEICESTER: That makes my absence easily excusable. There were just three points I wanted to mention. The first is to express the gratitude of the Churches to the Minister for including in the present form of the Bill, Clause 9 (9), which now makes it fully in order for parsonage houses of various kinds, whether or not they are technically charitable, to benefit from the statutory remission of one-half of the rates. It is no doubt thought that the amount of charity, both inside the
828
parsonage houses and emanating from them, is a valuable quantity, and that it would be unwise to make this remission dependent upon their fully charitable nature. But from the practical point of view it will be of great benefit to the Churches, including the Church of England, and it was felt desirable that the gratitude of the Churches to the Government for this point should be mentioned.
The second point is one that has already been mentioned in the House and may be mentioned later on in this debate, and that is the position of the contemplative Orders. It is clearly understood that by a judgment of this House in 1949, these Orders are not charities in the technical sense. It was found impossible in another place, I understand, to accept an Amendment which would have brought the so-called contemplative Orders under the benefit of the statutory remission. But an Amendment has been made in Clause 9 (4) (b) whereby the word "religious" has been used instead of the former phrase "for the advancement of religion", and it is understood that this will make it possible for rating authorities to allow, at their discretion, remission of rates up to a certain amount for religious houses which have been described as non-charitable in the technical sense. If that is the most that is possible, it is nevertheless something for which the Church of England will be grateful, as well as, I believe, the Roman Catholic Church. The Church of England possesses about a dozen of such contemplative communities, and if they should in the end receive this concession from the local authorities it is something that would be a great help to the communities, which in the nature of the case have very limited resources.
I do not think I should delay the House by an extended argument about these Orders, but I think it might be helpful to say one word about the justification, if any, for allowing some kind of consideration to them. The people who are inside them, whether they are men or women, are people who have felt that they could best serve God and their fellow men by a life consisting almost entirely of prayer. It would be quite unfair to expect the general body of the population to enter fully into what is in their minds, any more than it would be possible to expect the man in the

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street to realise how much his life depends on that monthly volume of 500 pages produced by the Chemical Society. There are some things it is impossible to expect everybody to enter into. If the ordinary man were asked his view of these things he would probably give many different answers according to his background, some appreciative, and some mystified, if not scornful.
But the point that is relevant to this House is that the Churches, certainly the Church of England and the Roman Catholic Church, to go no further, believe that what is being done in these houses is of value in the total work of religion and the advancement of religion in the country. Therefore, if it is possible for these concessions to be given they will be appreciated by the Churches and will, I think, be felt by many to be fair and reasonable, because, in the nature of the case, one could hardly have an activity that was less materially productive than a life of contemplation and prayer. It is really for the community as a whole—the general community of the nation—to say whether or not it is prepared to look at these activities with an eye of favour and compassion.
There is one last point that I venture to raise. This I do entirely on my own authority, and perhaps it may better be considered at a later stage. On page 23 of the Bill, under paragraph 2 of the First Schedule, among those charities which are excluded from mandatory relief are the colleges, institutes and schools of the universities of Durham, London and Wales. It so happens that in my former work, before I became a Bishop, I was closely involved in the life of one of these colleges in the University of Durham, and I happen to know that at least two, and I think three, colleges which are constituent colleges of the University of Durham are, from the financial point of view, entirely independent and do not draw on the grants of the University Grants Committee. It would therefore, on a first view, seem rather unfair if they were deprived of some concessions in rating because of benefits which in fact they do not receive. I hope, therefore, that at some point the position of the independent colleges, which are nevertheless constituent colleges of the University of Durham, will be considered.

DANISH FRIGATE AND BRITISH TRAWLER
3.52 p.m.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE MARQUESS OF LANSDOWNE): My Lords, it might be for the convenience of your Lordships if I were to make a statement on the trawler incident off the Faroes. The statement which I wish to make will be in the identical terms used by my right honourable friend the Lord Privy Seal in another place. This statement was to have been made in reply to a Question put by the noble Viscount the Leader of the Opposition, who unfortunately has been unable to wait. I promised to make the statement, in reply to his Question, in his absence. He has, of course, received a copy.
My Lords, according to preliminary reports which we have now received, a Danish frigate late at night on May 29 arrested the Aberdeen trawler "Red Crusader" for allegedly fishing within an area off the Faroe Islands from which British vessels are excluded under the Anglo-Danish Fisheries Agreement of 1959. A boarding party of one officer and one rating from the Danish frigate was placed on board the "Red Crusader" and her skipper was ordered to proceed to Thorshavn. After proceeding some distance towards Thorshavn the skipper headed his vessel towards Scotland and refused to obey orders from the Danish frigate to make for Thorshavn. The Danish vessel then fired blanks, followed by a warning shot across her bows and, later, solid shot. Her Majesty's Government understand that the trawler's radar scanner was damaged by small arms fire, that her bows were holed and that a pump was damaged. The trawler's officers and crew sustained no injuries.
On receipt of reports of the incident the Admiralty despatched two fishery protection vessels to investigate. They made contact with the "Red Crusader" and with the Danish frigate at 2.30 p.m., G.M.T., on May 30 and held a consultation with the Commander of the Danish frigate and the skipper of the "Red Crusader". The Danish boarding party were returned to the frigate. It is understood that the "Red Crusader" is at present heading for Aberdeen,

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where she is expected to arrive later this afternoon. The Danish Ambassador left an aide-memoire with the Foreign Office yesterday evening setting out the Danish Government's view of the incident. Her Majesty's Government will consider what further steps should be taken when they have received a full report of the incident after the "Red Crusader" arrivesat Aberdeen.
LORD LATHAM: My Lords, I am sure that the House is indebted to the noble Marquess for that statement, and will, of course, wish to suspend judgment or any further consideration until the result of the investigation which is now proceeding is known.

RATING AND VALUATION BILL
3.56 p.m.
Debate resumed.
VISCOUNT RIDLEY: My Lords, I wish to speak on this Bill with the intention of giving some views from people engaged in industry. I must at once declare my interest, particularly in one of the firms in the steel industry—that one, of course, being affected by this proposal as much as, if not more than, any other.
First, I should like to comment on what was said in another place during the passage of this Bill and also on what was said by the noble Earl who introduced the Bill. I have not his exact words, and I hope that I do not misquote him. I think he said that it was introduced to help industry during the depression. I have seen that stated fairly widely. I would ask your Lordships to allow me to quote shortly from what was said in 1928 by no less a person than Sir Winston Churchill, when Chancellor of the Exchequer. He said this:
"Our system of local rating is wholly inapplicable for modern industrial production. The practice of levying local taxes on the tools and plants of production is, in its nature and essence, economically unsound, and even vicious. The rates enter directly into the cost of production and affect our competing both at home and abroad. They vary in weight with every district and with the local politics of every district. They fall with progressive severity upon an industry in proportion as it uses bulky tools."
That was said in 1928, and it was followed through, as your Lordships will see, if
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you read the debate in 1929, when the Bill was introduced for the derating of industry.
You may say that 1928 is some time ago, and that a policy which was right then is not necessarily right now. I think one could equally retort that the policy of rating, as introduced, I think, in 1576, is hardly applicable to conditions as we know them now; yet it is to that policy which this Bill is, in effect, aiming to revert. As I have said, the view was expressed in 1928 that it was wrong to tax a man on the tools he used for his work. And that really is the complaint one has to make on behalf of industry. One could not object in principle to any class of ratepayer paying his fair share, so long as he paid on the same thing. If he pays on his buildings—which is the universal practice with every category of ratepayer—well and good. Let everybody pay on the same valuation. That is fair enough. But the point is that many kinds of industry do not pay only on their buildings: they pay also on the processing plants with which they manufacture whatever it may be they are producing. That is the really punishing thing about this Bill. The burden varies from industry to industry; and of course the instances will vary from locality to locality, according to the percentages which industrial assessments in valuation areas are of the whole, and according to how they relate to the other categories of hereditaments. I believe that to make any sense oat of this Bill at all it will be necessary to adjust the basis upon which industry is rated. Then, I think, it would be fair enough to say that derating should go.
I can quote your Lordships figures for one company with which I am concerned. Since 1950 the rates actually paid have gone up by ten times, whereas the plant employed has gone up, at most, by 50 per cent. and output has gone up by the same amount. During those ten years there has not been, I think, a fall in the value of money of something like five or six times; nor has there been an increase of five or six times in the value provided by the services for which the rates are paid. These increases are due to revaluations that have been made at different times and, in particular, to the partial abolition of derating in 1959. That step immediately doubled all the rates paid.

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Now we hear that the Minister, taking good care—very properly—of those who pay rates on their houses, feels worried at the idea that their rates should go up in total by more than one-third (I think that was the figure quoted), whereas a doubling of the rates of productive industry is not regarded as of any importance at all. I can tell your Lordships the kind of scale of the thing. The sort of rates that steelworks are paying now comes to something like 7s. a ton of finished steel; and if this derating results, as many fear it will, in a large increase, if not a doubling, of the rate paid, there will be an increase in costs.
May I digress for one moment? Your Lordships may think that 7s. or 14s. a ton is not very much. But within the background of the influence the Government are having on costs in one way or another, it is of significance. The Government approved, and it is believed encouraged, an increase in coal prices to industry last October which was of a significant amount. They propose in their new Budget to put a tax on oil and other fuels, even, it is believed, fuels made in this country. Industry has to pay, and I think here willingly does pay, the increase in pensions due to the graduated pension scheme. It is, however, an inevitable increase. And there is profits tax as well. Should not the Government at this moment do what they can to get costs down, rather than to put them up? We need nationally to export everything we can, and many firms not only realise the importance to the country of their doing that but also themselves want to sell more of their goods. Every time we have an increase in costs it becomes more difficult to sell things aboard.
Since the war, industry throughout this country has spent hundreds of millions on the construction of new plant in order to reduce costs, to be more efficient, to increase output and to be able to sell competitively. The returns from this investment on new plant are continually being whittled away by things such as increased rate demands and the other items I have mentioned. If this goes on too far there will come a time when people will be not so willing to invest in modern plant and equipment. I know that the Government say—as the noble Viscount who is to answer to-day may well say—that estimates show that, over
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the whole country, the actual amounts paid by the various categories of ratepayers will vary probably in such a way that industry as a whole will not pay any more. I have even seen it quoted somewhere that the charge will be less. I do not believe that the Government or anybody else can predict with any sort of accuracy what will happen as between different makers of industrial plant and, more particularly, what will happen in different areas. In an area, for example, where one big firm pays half, if not more, of the total rates—which is not uncommon—is it conceivable that such a firm would not, in fact, as a result of this Bill have some quite substantial increase in what it pays?
I know it is said that assessments go up and poundages go down, so that the ratepayer does not pay more in the long run; but in fact he does. I have already quoted the fact that the last partial abolition of derating resulted in an almost exact doubling of the amount paid. These are direct costs which are paid on the plant before you start to employ a man, before you pay any wages, before you buy any materials or make any materials or sell them, or make any profit. Should we not think of some more realistic and modern system of rating the industry which is the life-blood of this country? Would it not be more reasonable to have some total revision of the tax system so that firms would pay on the results of their turnover or sales; or, if you like, on their profits; or possibly in some way related to the number of people they employ?—though I hope not a payroll tax in the form foreshadowed in the recent Budget. It seems to me that some carefully thought out revision of taxation, both national and local, is the real answer to this problem. And then the central Government should feed the rating authorities, as indeed they do now, but this time with very substantial sums.
There is another respect in which one should remember that it is perhaps not entirely rational that industrial firms should pay rates in the way they do at present. Most of the rates services nowadays are for individuals, and there is nothing direct that a local authority can do out of the rates for son-le of the very big firms, or even for many of those of smaller size. Big firms have their

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own fire services and police inside the works; their own ambulances and arrangements for dealing with accidents. They provide, in many cases, housing for their men, and they spend very large sums on education, on apprentice training, on technical colleges, scholarships, university courses, and so on. As they incur those large sums on social expenditure, one would think it hardly reasonable that they should pay all over again.
I look at this matter from the point of view of local government, having been a member of a county council for many more years than I care to be reminded of. When I first went on to the local county council, local government was local, and expenditure was related to the rates and to the needs of the people who paid them. All through the years this situation has been changing. I well remember, long before the war, being very jealous of any suggestion of Government control, or interference of any sort, over whether we should repair some road, or build a school, or whatever it might be. But now that is done as a matter of course: it is accepted that everything is controlled and designed from the various Government Departments at the centre. I think it is a pity, and I believe that that system is really becoming out of date. Would it not be better—and I think we shall have to do it before long—to look forward to a recasting of the local government system? Let the local authorities do really local things, with really local rates. Then these difficult problems of who is to pay the large sums can be handled through taxation, and the expenditure which is national, or semi-national, can be carried out by or on behalf of the central Government. That is perhaps looking rather far ahead.
I believe, however, that on this Bill the Government ought to think again. First, they ought to consider what they are doing by adding these very large increases (I make the point again, if I may), not only to buildings occupied by industry, to which in principle one would not object, but also to the very plant which is essential to the manufacture of whatever it may be. That is what is so crippling and that is what is so unfair between one industry and another. Furthermore, the Minister,
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having the right objective of making everyone pay on a realistic and modern basis of rating, has now run away from that principle by saying that he is going to take the power to ease the incidence of rating on house occupiers from time to time for a period and in different places. Should he not also, then, take power to vary or relieve the incidence of rating on industrial groups or industries in some areas which are found to suffer more than they should by the passing of this Bill? Either one or other of those amendments is surely necessary to make this an equitable and a practicable arrangement. Indeed, if no amendments of that kind could be made, I for one should be very reluctant to support the Bill.
4.11 p.m.
LORD MILVERTON: My Lords, I rise to make a few comments on this Bill from the point of view, largely, of municipal authorities. The proposed ending of the derating of industrial and freight-transport hereditaments is welcomed, of course, by the representatives of local authorities, who for a long time have pressed for the abolition of all forms of derating. Their only regret on this score is that agricultural hereditaments are not included, nor are Crown-occupied hereditaments. I understand the Minister pointed out on the Second Reading of the Bill in another place that without an equitable system of valuation for rating it is hard to see how local government could be carried on. It is consequently, I suggest, absurd that any class of property should be given a privileged position resulting in a shift of burden to other classes of property. It is suggested that all property should be fully assessed to rates, since all property shares in the services provided by local government.
I have no observations to make on the policy involved in the proposal by the Minister to take power to reduce the rateable value of dwelling-houses, which comes into force on April 1, 1963. I understand that the Association of Municipal Corporations has obtained an assurance that it will be consulted by the Minister before he makes any Order of this kind, and the only observation I would make in this respect is that it is desirable that as early notice as possible should be given by the Minister to the

837
rating authorities of any intention to make such an Order, because of the effect that such an Order must have upon the estimates of that local authority.
The Bill will enact the recommendations of the Pritchard Committee on the rating of charities and kindred bodies. Representatives of local authorities said in evidence before the Pritchard Committee that the Government should make good any loss to rating authorities arising from any legislation giving mandatory relief from rates to charities. Clause 9 of the Bill will give such mandatory relief to charitable and other organisations as are described in that clause, but no provision is made for the Government to reimburse any loss to the rating authorities. This clause will also empower rating authorities to give additional relief by way of reducing or remitting the payment of rates, not only by charities entitled to mandatory relief but by other organisations on the fringe of charity, if one may use that phrase. This last-named provision gives statutory foundation to a practice which had long been carried on by rating authorities before valuation functions were transferred to the Inland Revenue, and I understand that local authorities raise no objection at all to the enactment of this discretionary power. But if rating authorities are to be compulsorily deprived of rate income, then there remains the view that the Government should make good the loss. It is also considered that in some respects Clause 9 is too widely drawn. For example, voluntary approved schools occupied by the Home Office will apparently qualify for mandatory rate relief. These hereditaments are not occupied by charity, but by the Crown, and local authorities see no reason why Crown property should be relieved at the expense of local rates.
The remaining provisions in the Bill are, I understand, largely based upon the recommendations of a Working Party. These provisions are, welcomed, but it is regretted that the Minister has felt himself unable to accept all the recommendations of that Working Party, which would have brought about what they regard as much-needed improvements to rating and valuation law. Clauses 16 to 21 provide for the valuation of water undertakings. I am very
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conscious of the warning that was issued by the noble Earl who introduced the Second Reading of this Bill about the complication of the subject, and I do not proposed to enter into those complexities. I understand that the Association of Municipal Corporations, who have been consulted about this, accept the formula basis which has been worked out for the assessment of these undertakings. This they apparently feel is a reasonable compromise of the conflicting views expressed by water undertakings and rating authorities. The formula may not be, and obviously cannot be, completely satisfactory to everyone, but one hopes that it will not be disturbed because it is, after all, an acceptable compromise.
The remaining clauses of the Bill are welcome, but I should like to refer briefly to one or two points which may well have been included in the Bill. Although a property may stand empty, it continues to be necessary for the local authority to provide for the benefit of such property services such as police and fire. It is considered, therefore, that some payment by way of rates should be made, even though a property stands empty. Municipal authorities feel that the opportunity given by this Bill should be taken to clarify the law relating to the assessment to rates of premises let out in rooms. The law on this point has become confused as a result of recent cases in the courts. Efforts were made to secure an Amendment on this matter during the Report stage in another place, but the Government resisted that action—mainly, I understand, on administrative grounds. It is considered that the point should receive further thought when the time comes for your Lordships to consider it.
Another case has disclosed defects in the law relating to the rating of advertising stations. Here, again, it is felt that an Amendment might well be made, when the time comes, in this House. It is also suggested that Crown property should be brought into line with other property and fully assessed to rates. The Crown, my Lords, has been made subject to the law in other respects, and there seems to me no reason why its immunity from legal liability to rating should continue. Although payments in lieu of rates are made on an ex gratia basis, there is no right of appeal from the discretion

839
of the Treasury valuer; and the valuation of Crown property for the purpose of these payments by the Treasury valuer, instead of the Inland Revenue valuer, seems to be an anomaly. With these few comments, I support the Second Reading of the Bill.
4.21 p.m.
THE EARL OF CRANBROOK: My Lords, I too welcome this Bill in general, though I must confess, with some regret, that I think rates are about the worst form of taxation which the mind of man could devise. It is, of course, a relic of the day when real property was the only taxable property, and it has come down from the time of the Elizabethan Poor Law. But, in point of fact, it is a most remarkably inflexible form of taxation; and I would agree with my noble friend Lord Ridley, that we ought to do what a large number of foreign countries have done; that is, to devise some system of taxation which would be available to local authorities other than that of rating, which is the only method we have in this country. An imaginative Chancellor of the Exchequer can devise methods of extracting money, some painful, some less painful; but he has a flexibility which is not open to a local authority in this country, though there is available to local authorities in many countries abroad a flexibility which I should like to see in this country. I regret that Her Majesty's Government, when recasting the rating system, did not take the opportunity of trying to recast the whole system whereby local authorities can raise the necessary money for their services.
The noble Earl, Lord Halsbury, dealt with a matter of some very considerable importance—the effect which the disappearance of the Scientific Societies Act, 1843, will have on a large number of the major scientific societies. I know that the noble Viscount who is to reply is sympathetic. He realises the full implications of what is going to happen, and I hope that we shall hear from him of some method which the Government will devise for dealing with the disaster (I do not think I am using, too strong a word when I say that it would be a disaster) which would befall us if some of the ancient and more important scientific societies were to have to cut down on their
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publications or the provision of libraries. These societies are the working tools of scientists. They are the only method whereby scientific knowledge is made known, not only in this country but abroad, and the scientific reputation of this country depends very largely on the matter contained in the publications of our learned societies.
I am hopeful that we shall have an encouraging reply from the noble Viscount, because we in this country have a long tradition of happy co-operation, not only between Governments and the major scientific societies, but also as outlined in Clause 9 of the Bill, between Governments and local authorities and the various charitable organisations. That co-operation is extraordinarily valuable, and I am hopeful that some of the provisions of Clause 9 will help to encourage it. I should just like to draw your Lordships' attention to the exact wording of the provisions contained in Clause 9, subsection (4), whereby it is laid down that:
"a rating authority"
mark you! not a local authority—
"shall have power to reduce or remit the … rates …"
I know that is a practice of long standing, but in point of fact, as your Lordships are well aware, the rating authority is the second tier of authority in the local government hierarchy. In London it is the metropolitan borough; in rural areas, it is the county district—the urban or rural district, or the non-county borough.
Referring, as I did just now, to the close working which exists between the various local authorities and charitable bodies, I would point out that under this provision we are placed in the extraordinary position that a county council which is working in close co-operation with some body concerned with old people, the mentally distressed, or other people for whom, under the National Health Service Act, the county council is responsible, has no say as to whether or not one of these charitable bodies should have further remission of rates. That is left entirely to the rating authority, which does not deal with the charitable institution concerned at all, and has only secondhand information as to its value. From my own experience of serving on many local authorities of many sorts, I have found that

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the smaller ones, such as the metropolitan boroughs (if they will excuse me for saying so) and the county districts, are apt to take a somewhat parochial view of the advantages of charities in their own particular area, whereas the larger body looking over a larger area would take a different view. I think it important that the county councils as well as the rating authorities should have the power to remit rates. After all, if the rating authority remit rates, it also remits the county rate, and the county council is bound.
This, I think, is going to be particularly important so far as some of the scientific societies are concerned. A rating authority will probably remit the rates of a scientific society or charity concerned within its own immediate locality, but would have some hesitation (and I think justifiable hesitation), not knowing the work of the larger society or charity, in remitting its rates, as the members would think, at the expense of their ratepayers. A larger body can look at it from a wider point of view, and I hope—although I am afraid that I am talking possibly on a Committee stage point, instead of a Second Reading point—that the noble Earl will consider this point between now and the Committee stage and see if he can bring forward some Amendment to deal with it. In general, my Lords, as I say, I welcome this Bill; but there are these points which have been raised, and which I hope will receive sympathetic consideration from the Government.
4.29 p.m.
LORD ELLENBOROUGH: My Lords, I, too, should like to join in the congratulations to the noble Earl, Lord Jellicoe, for the able manner in which he moved the Second Reading of this Bill. I should also have liked to join noble Lords who have obviously mastered the Bill, in all its complicated detail. Whilst I am afraid I cannot go as far as that, I would at least join in congratulating the noble Earl, Lord Jellicoe. I do not propose to say more than a very few words this afternoon, but I should like to say something, because I have, for some years now, been quite closely associated with a body known as the National Union of Ratepayers' Associations, of which I have the honour to be President. This is an organisation which consists of numerous affiliated associations up and down the country.
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It is sometimes known as N.U.R.A. and though not to be confused with the N.U.R. I sometimes wish that at our conferences we might get the same number of people attending and the same militant spirit as no doubt the N.U.R. are able to do.
Rents and rates are always political dynamite to any Government, and I think that the Minister of Housing is to be congratulated on not being afraid to tackle the considerable feat of rationalisation and tidying up in this Bill. Whilst it will not make our rating system perfect—it is doubtful whether we shall ever reach perfection in such a complicated system as ours—at least the Bill makes an integrated approach on a broad pattern and achieves a definite improvement, in that it links our rating system to present-day values instead of to those of a bygone age. I feel that: from that more realistic basis in due course we shall be able to achieve further improvements.
Nevertheless, I think it would be quite wrong of me to give the impression, either on my own behalf or on behalf of ratepayers in general, that we should give the Bill an unqualified welcome. That certainly is not the case. There are parts of the Bill which we may approve, such as the full re-rating of industry, but ratepayers are concerned, and rightly so, not only as to their fate once this Bill becomes law, when they will be even more at the mercy of the local authorities, some of which have an avaricious appetite for spending, but also—and this is the 64,000-dollar question—as to what happens after 1968, when the temporary provisions expire. We are told that the householders' additional burden, at any rate in hard-pressed cases, is to be offset by special deductions to cushion the blow, or, as 4 have heard it put, to "temper the wind to the shorn lambs". There will indeed be many helpless lambs scattered about, not the least those people living on fixed incomes—old age pensioners and the like. It is people of that sort, many of whom I meet at the various ratepayers' meetings that I attend and many of whom are far from comfortably off, to wham an increase of £10, £15 or £30 in rates is going to constitute a real hardship. It would be a great help to people if the Government could give some assurance that, when the result of the revaluation is known, such percentage deductions as the Government

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have in mind will be used to ensure that no household ratepayer is called upon to pay any more rates than he does now, or at least more than a 5 or 10 per cent. increase for a period.
There is one point I am not at all clear about—that is, whether or not there will eventually be a power to vary the percentage of derating between districts in the same county. If one takes counties like Kent or Essex, which both have a large urban fringe around London and large rural areas besides, I should have thought that the rateable values of houses in built-up districts around London would be likely to increase to a far greater extent, in proportion, than in rural areas. Thus a percentage of derating which might be reasonable and fair to one part of the county might be quite out of line with another part.
I hope the Government will realise that all of us, no matter in what walk of life—professional people, business men, young married couples and pensioners—all want a period of stability. Soaring rents, higher rates for mortgages, mounting costs of repairs and the ever-present threat of rising rates are chronic headaches for householders. We know that if assessments are increased, the rate of poundage should proportionately be reduced. But we have "heard that one before" and, frankly, one wonders whether to believe it again. After the 1956 revaluation, when the assessments were greatly increased, the average rate of poundage fell to 15s. 8d. In less than four years, it has climbed back to over £1. Thus, on past form, by the time the temporary special reductions expire in 1968, the rate poundage will be back to what it already was. And what happens then? I do not know.
In the meantime, there is a great danger that some councils may exploit the revaluation to go on a spending spree. Some may reckon that, in the confusion caused by the new assessments, they will be able to jack up their budgets without attracting undue attention. Therefore I hope that the Government will strongly urge local authorities not to use the new valuation lists as an opportunity to demand a lot more in rates for indiscriminate expenditure on various projects because the rate poundage will be going down. But I fear that the temptation will be there. Of course,
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some increases in expenditure are inevitable, and no one wishes to see any really worthwhile project or necessary expansion of an essential service in any way held back; but I feel that there is a limit.
I would support the suggestion, which I believe was made during the Bill's passage in the House of Commons, that when the local authorities publish their new rating proposals in the 1963 valuation lists they should also show what the rate poundage would have been had it been based on the old valuation lists. Thus people would be able to see at a glance if their rates were in effect being increased by Is., or 2s. 6d. or whatever it may be. I feel that that would help to discourage unduly extravagant expenditure and act as some incentive for councillors to exercise a greater vigilance over what they spend. At the same time, it might lead to the ratepayers and electors in general taking a greater interest in the affairs of local government, which I think would undoubtedly be a very good thing, because, as I see it, until that happens the rates are bound to continue to rise more than necessary.
4.40 p.m.
LORD DOUGLAS OF BARLOCH: My Lords, it was certainly inevitable that there should be a Bill dealing with our rating and valuation system, because it could not have continued for ever that, in a plan of local taxation based upon the assumption that rates are related to the annual value of property, a very large section of them—namely, dwelling houses—should be rated upon the values prevalent in 1939, while the rest was rated upon values current to-day. That situation was bound to produce ever-increasing anomalies and inconsistencies. Therefore I welcome, in a sense, the proposal to bring all the valuations up to date. The long period which has elapsed, and the change in values which has since taken place, will mean, of course, that the values of houses will increase enormously as compared with 1939, and I am not surprised that the Minister and the Government have decided to take powers in order to soften the blow to householders until matters become more stabilised. However, the Bill still leaves our system of local taxation with many unfortunate features.
Several noble Lords have referred to the re-rating of industrial hereditaments.

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I think that, in principle, it is right that that should take place in order that they, too, should be rated upon current values in accordance with the general principle. It can be argued—and one noble Lord quoted what Sir Winston Churchill, with his usual eloquence and forcefulness, said in 1928 upon this subject: that it is unfair to rate the capital which has been invested in industrial equipment; that it is a handicap to industry and is inexpedient economically. I am prepared, in a sense, to accept that argument. It applies, however, not only to industrial hereditaments but also to dwelling houses, shops and other hereditaments which have capital expended upon them in order to adapt them as dwelling accommodation or for other purposes. All expenditure which is made upon improvements to land is, after all, an investment of capital; and if some such investments are to be exempted, then all should be.
It has been suggested that the time has arrived when we ought to consider the whole basis of our rating system; and it has been quite properly said that in other countries other arrangements have been made for dealing with this problem of local taxation. For my part, I think it is inevitable that in some way local rates must be related to property which is situated in the area of the local authority. I do not adhere to the view, for example, that a system of local taxation of incomes is a practicable proposition in this country, especially when we consider the figure to which surtax, even at present, goes on the highest incomes. It would be quite impracticable to tag on to them an additional income tax for the purpose of local authorities; indeed, the idea has so many technical and administrative difficulties, apart from the fundamental injustices which would arise out of it, that I cannot regard it as something that is possible to contemplate.
On the other hand, in other countries, and more particularly in the British Dominions, such as Australia and New Zealand, in parts of Canada and parts of the Republic of South Africa (as it now is), the position has been mitigated by reducing or relieving the taxation upon all the structures, whether buildings or otherwise, which are placed upon land, and relating the valuation to the value of the site itself. That seems to me to be a perfectly feasible and reason-
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able method of alleviating the inconsistencies and injustices of the present system of rating. Indeed, it is an extremely desirable measure to be taken at the present time, when it is quite clear that the price of land is increasing by leaps and bounds, and sites are fetching quite fantastic figures in the market, with the result that the building of houses and other outlay of capital upon improving land suffers an initial handicap in the price of the site which, in many cases, is quite insupportable. This is a subject which requires the most serious consideration if we are to have a system of local taxation which works equitably and beneficially. Therefore, although in principle I think that all hereditaments ought to be rated, there is in my view a case for reconsideration in this respect.
That brings me to the one class in which derating still prevails; that is, agricultural land. That, of course, is an idea which dates back to as long ago as 1896, and which, starting then, if I remember aright, at the more modest exemption of a quarter of the rateable value, has now come up to 100 per cent. of the rateable value; and, indeed, the rateable value of agricultural land has dropped out of the valuation lists completely, so that nobody now knows what it is. I cannot think that that is logical, defensible, or reasonable, any more than it is logical, defensible and reasonable to rate other properties at arbitrary fractions of their rateable value. I know it can be said that if agricultural land is rated this will be merely an element which will go into the calculation for the purpose of the price guarantees, so that, in the end, the taxpayer will pay for it. However, modifications take place even in that system. And there is no doubt that there is some agricultural land of extremely high value, because of its productivity or its situation, or both, which could well afford to make its contribution to local taxation. In county districts and rural districts, particularly, it is quite unfair that this large section of hereditaments should escape completely without making any contribution whatsoever towards local taxation, thereby increasing the contributions which other people have to pay.
I am sorry that the noble Earl who introduced the Bill did not explain to us the provisions with regard to the

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rating of water undertakings. I am sure that if he had devoted his mind to it he would have been quite capable of doing so. I hope that I am not alone in your Lordships' House in thinking that this matter deserves some explanation. So far as I understand it, at the present moment it appears to be a statistical exercise based upon averaging the results of water undertakings in a way which may be perfectly definite but which, on the other hand, appears to be somewhat arbitrary. I hope that at some stage or other some speaker from the Government Front Bench (perhaps the Minister for Science might be able to do it, because it seems to involve a problem in statistics) will explain to us in simple language what it really means.
The one other point to which I want to refer is the question of learned and scientific societies, for whom the noble Earl, Lord Halsbury, made a very eloquent and, indeed, persuasive plea. I suppose I ought not to oppose him in any way, as I happen to be a member of one of them. None the less, I do not feel that the right way of assisting these societies in their essential contribution to scientific research and scientific progress is to exempt them from local rates. I see a very clear case for exempting them from national taxation; because they are not, strictly speaking, bodies which are making a profit and which, therefore, should contribute to taxation on the basis of the profits they make. But when it comes to local rates, they do, after all, participate in the services which the local authorities render to occupiers or owners of property. As it happens, a very large number of these societies are situated in Westminster or adjoining parts of the West End of London, and I do not see a strictly logical reason why the ratepayers of Westminster should particularly be called upon to support these bodies. Although I think they should be supported in some method or other, I doubt whether this is the right method.
4.52 p.m.
LORD AUCKLAND: My Lords, not being a lawyer or estate agent, or having anything to do with property or local government, I am in the position of not having any professional knowledge of
848
this subject of rating and valuation. But this is a matter which, as the noble Earl, Lord Jellicoe, who so admirably introduced this debate, said, is of great importance to everybody, and it is a good thing that we are able to have this discussion this afternoon. Like my noble friend Lord Ellenborough, I am connected with the National Union of Ratepayers' Associations, of which I am Vice-President. I am also the owner of a freehold property, and being a person of relatively youthful years I have a great deal of concern for the future of the rating and valuation of these properties.
As my noble friend has said, the implications of this Bill may well go beyond 1968. In a subject such as rating, we cannot look too far into the future; but the price of land, as has recently been said, is very high, and the price of property continues to rise. Many young people to-day are buying houses on a mortgage of 20 or 30 years, and building society interest rises considerably, and falls rather less considerably and with greater rarity. Therefore, the business of the rating of owner-occupied property is extremely important.
I think we all welcome the re-rating of industry, although here again there must be certain qualifications. Perhaps in the Committee stage the whole business of the re-rating of industry can be discussed more elaborately. Recently a great many firms have been set up in areas where there is a great deal of unemployment, and many firms have gone to the new towns. Whilst I am sure that most people will give an unqualified welcome to the fact that industry will now be paying full rates, there will necessarily be some concern regarding those industries in the areas which I have mentioned. I do not need to declare any personal interest here but as the noble Viscount, Lord Ridley has rightly said—I believe I quote him aright—all this may have considerable implications upon our export trade.
I should like to try to clear up one point on the subject of charities. As I understand it, under this Bill the Minister can give 50 per cent. de-rating to charities and the other 50 per cent, can come from local authorities. Two points arise here, as I see it.
LORD LATHAM: My Lords, if I may say so, the first 50 per cent. will come from the local authorities, as well as the second.
EARL JELLICOE: The first 50 per cent, is mandatory. It is not the Minister giving it; it comes from the local authorities.
LORD AUCKLAND: I am grateful for that correction. I was going to suggest that local authorities should give the full relief if necessary, because I understand from reading the speech of the Minister of Housing on the Third Reading of the Bill in another place that the local authority can give discretionary relief to playing fields and sports clubs which are not being used for the making of profit—in other words, any voluntary organisation. That would, of course, be a great incentive to the Duke of Edinburgh's playing fields scheme, and would also be an incentive to get more young people to join sports clubs.
I think this is a very necessary Bill. There are anomalies in it, but in any kind of rating Bill there are bound to be certain anomalies. As the householder has been contributing something like 47½ per cent, of the rates hitherto, I think he is entitled to the relief which he is being given under this Bill. But there will be considerable concern in all quarters as to what happens in five years' time. Five years do not take long to pass. The population of this country is growing, and there is an even greater demand for houses. So, while giving this Bill an unqualified welcome, because it is an imaginative Bill and has been well presented both by the Housing Minister and by my noble friend in this House. I hope that on Committee stage we shall have sufficient time to look into the anomalies concerned.
4.59 p.m.
VISCOUNT COLVILLE OF CULROSS: My Lords, this Bill introduces two or three further classes of hereditament into the range of those which will now be rated on some sort of formula basis. Under Part II of the Bill, water undertakings will now be dealt with on a formula basis, on the profits basis, and another clause in the Bill will take account of the position of county and voluntary schools on a formula of the contractor's basis, on the basis of contractors' tests.
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However, I would congratulate Her Majesty's Government on the restriction that they have now placed on the range of Clause 3. As this clause was originally introduced in another place it left a very wide scope for the Minister to make regulations for the rating of various types of hereditament on the profits basis, but it has now, owing to a change of heart, been cut down to four specific types of hereditament. I am sure this is a good thing, since, while it might be all right for a type of hereditament the occupiers of which have entered into some sort of agreed formula with the Revenue to be dealt with by regulation, none the less valuation is an art, and it is a bad thing, I am sure, that any more varieties of hereditament than are strictly necessary should be dealt with by some formula and by regulations from a Ministry.
My noble friend Lord Milverton has pointed out some defects or omissions from this Bill. I would, however, draw to the attention of the House one other defect which it seems might well be considered on the Committee stage by a proposal to insert a new clause in the Bill. This is the topic which is often referred to as the tone of the list. Valuation for rating is based, broadly speaking, on rentals which the market throws up for each variety of hereditament, and it is invaluable that it should be so, because this is about the one firm foundation which one can find in the hypothetical world into which one enters when dealing with rating. None the less, since a case in 1932 which has the somewhat bizarre title of Ladies Hosiery & Underwear Limited v. West Middlesex Assessment Committee, the law has been quite clear: that the rental value upon which any assessment is to be based is the current rental value of the hereditament in the open market at the time at which the assessment falls to be made, at the time of the proposal or at the time when a new hereditament comes into rating for the first time.
This, in a time of rising prices, rising rentals on the open market and so on, and equally in a time of falling values, if such were to occur, can cause very great hardship, because what happens is this. When a new valuation list is made—for the sake of argument let us take the valuation list of 1956—all the

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basic valuation was done in 1954 and 1955 on the basis of the rental values which were current at that time. Those were then turned into the 1956 valuation list, and of course by that time market rentals had risen. Therefore, from that time onwards the valuations in the list did not truly represent the current market value of the hereditament, and of course this became increasingly apparent.
Therefore, there were three sets of circumstances in which injustice could occur. First of all, if anybody, upon seeing the valuation of his property in the 1956 list, entered an appeal against that valuation, when it came to be heard, perhaps some time late in 1956 or in 1957, his valuation would be based on 1956 or 1957 rentals in the open market, whereas of course all the other valuations in the list which had not been challenged remained on the 1954–55 levels. Again, if a new building came into rating at any time after 1956 it would, in strict law, be valued at the rental current in the market at the date upon which it came into rating, regardless of the fact that entirely similar buildings which had been in existence in 1954–55 were valued at the levels current in those years. Thirdly, if anybody has cause to change the value of his hereditament, if he added to it or if he changed the use to which it was put in any year after 1956, the same thing would apply. This is the strict law.
It has not always been so. In London, while derating in London was on a different system from that in the rest of the country, a method of rating was used by which a sort of standard figure was taken for one class of hereditament, and all those comparable to it were valued in the valuation list for rating at the same figure or, at any rate, on the same basis. It is not only an old practice in London; it also applied after 1950 when the Inland Revenue took over rating and the tone of the list was used extensively thereafter for a certain time.
In the Valuation and Rating (Scotland) Act, 1956, the same method appears again in Section 9, where it is enacted that in any year apart from the year in which the new valuation roll came into existence the valuation officer may make a change in the value of a hereditament, but if he does so it must
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be only on what is called "material change of circumstance", and this is expressly defined as not including rising rentals in the open market or any such rising value, but it is to be concerned simply with a change in the actual user of the hereditament. In order to support this further, I may say that I understand that in actual fact the Inland Revenue has been doing this very thing for some time in a large number of cases. They have not been taking account of current market rentals but have been valuing in fairness and equity on the same sort of basis as all the property in the valuation list—that is, on the value put on it in 1954 or 1955.
In 1959 the right honourable gentleman the Minister for Housing, speaking in another place on the Rating and Valuation Bill of that year, drew attention to this particular anomaly and difficulty. He was in the context talking about the undesirability of a rating authority's being able to make local revaluations by reference to current rental values and thereby put up the value in one particular locality or for one particular class of hereditament while all the others remained steady and undisturbed. This I think he rightly considered was unfair, and the power was removed by the 1959 Act. He said it was, for instance, indefensible that where there was a row of identical shops valued at £100 each and a new identical one was built, it should enter the list at £120 because that happened to be at that time the current rental value. It seems strange when so strong a hint was thrown out by the Minister in 1959 that some sort of measure to put into effect this recommendation should not be included in this Bill. I can only suppose there are some difficulties in its way of which I have not thought. If my noble and learned friend could give some indication when he comes to reply whether this would be a possibility or whether there are insurmountable difficulties which I have not thought of, I should be extremely grateful.
This is not a matter which affects merely a few. It might affect every single house in the country and every industrial hereditament, and that would be even more important, when this Bill becomes law. Of course, one of the selections of people who are affected are the shops, and I know that the Multiple Shops

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Federation have had cases where, despite what the Minister said that the Inland Revenue do—he said that they take account of the tone of the list—there have been instances where current values have been used in order to put up the value not only of the shop but of its comparables, in contradiction to what has happened in other places. I think the time may have come when this matter may be considered again, and if my noble and learned friend could give me any encouragement I might put down an Amendment on the Committee stage when the point could be looked at again. I would add my welcome to the Bill and wish it a speedy Second Reading.
5.10 p.m.
LORD CHORLEY: My Lords. I wish to bring before your Lordships a rather narrow and technical point. We have had a most interesting discussion on some fundamental matters in relation to the problems of rating. Indeed, several noble Lords have challenged the whole system of rating as a method of raising money for local authority work. It would be tempting to follow them, particularly the interesting suggestions made by my noble friend Lord Douglas of Barloch. I resolutely put that on one side, and I turn to a particular problem which is giving a good deal of concern to some of the local authorities in the country whose financial situation is considerably damaged as the result of the present ineffective measures in relation to the rating of electricity undertakings and, more particularly, of the generative side of the industry.
The noble Viscount who has just resumed his seat has pointed out that in a number of ways this Bill is defective because it does not deal with matters which really cry out to be dealt with. Although I think it has not been referred to in this House, this is clearly one of them. It was raised in another place, when the Minister in charge of the Bill rather fobbed off the observations that were made, saying that there might be something to be said for them but that was not the time to deal with them and that the whole matter must be postponed until a later date. But, of course, during this time the financial position of the particular local authorities to which I am referring is continuing to deteriorate, and by 1963, or whenever it
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may be, some of them may well be in a rather parlous position. Moreover, there is no excuse for the Government's shirking this matter in the Bill because, again as the noble Viscount opposite said, it does in fact deal with at any rate one important formula of rating—that in regard to water undertakings; and, as the noble Viscount also pointed out, it does deal specifically in Clause 3 with a number of important industries. So there is no real excuse why the electrical industry should be left out in this way.
As I said a moment ago, this is a rather technical and complicated matter, and I hope, therefore, that your Lordships will forgive me if I stick rather closely to my brief in regard to it. Of course, the provisions in relation to the contributions of the electricity supply industry go back to 1948 when provision was made in the Local Government Act of that year. Broadly speaking these provisions were for distribution of a cumulo sum, for the whole of the country, among all the rating authorities on the basis of rateable value. The cumulo sum which was fixed by that Act and was of course obtained from the rating of the industry was variable according to two factors. The first of these was the increased productivity producing the higher cumulo—the cumulo, in fact, increased by one-fifth of the amount by which the units consumed increased; and that has been continued to the present time, if, for example, the consumption of electricity went up by 10 per cent. in any particular year, then the cumulo increased by 2 per cent. That was the first variable. The second variable was dependent upon the national average level of rates levied, and the comparison was that of a base figure fixed in respect of the first year in regard to which this system operated.
The system of the 1948 Act had one particularly grave defect which was righted up to a point, but only considerably later: that was the fact that it made no allocation at all in respect of generation—generating stations were left out of the picture altogether. It is true that an attempt was made to ameliorate that by certain transitional provisions which had decreasing effect as time went on; and eventually, ten years later, in the 1958 Local Government Act, an attempt was made to deal with this situation. Under this Act, provision is made for a separate

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allocation for generating stations. The provision for the firs: variable (that is the one-fifth growth factor to which I referred) remains. There is still a cumulo to be distributed. Half of the cumulo is allocated to the distribution activities of the Area Board and the other half is allocated to the Central Electricity Generating Board.
But it does not stop there. The share of the Generating Board is, in turn, split into two equal portions. The first of these is allocated to generating stations, and the second is allocated to main distribution. All rating authorities participate in this shareout, on the basis of their respective net annual values, of the half of the cumulo divided among the Area Boards and the shareout of the main distribution allocation of the Generating Board. The generating stations allocation, which is 25 per cent. of the whole cumulo of the Generating Board, is shared out among the local authorities—and it is here that it becomes apparent where the shoe pinches—who have generating stations in commission in their areas, and is shared out according to the installed capacity of the generating stations. In every case the calculations produce a figure which is then put into the rate book of the local authority, and the rates are paid on that figure according to the rate in the pound fixed by each rating authority. That is the reason why the second variable of the 1948 Act has disappeared.
Your Lordships will see that the national cumulo increased by the operation of the growth factor to the extent of one-fifth, so that the 25 per cent. of the cumulo allocated to generating stations increases likewise. If there could be an increase in consumption in electricity without increasing the installed generating capacity, that would, of course, tend to increase the amount of the assessment of electricity generating stations. In actual fact, however, the increase in consumption is very much of the same proportion as the increase in installed generating capacity; and as circumstances have obtained it could hardly be otherwise, because all this time generating capacity has been trying to keep pace with the increased demands for, and consumption of, electricity. This means that if consumption goes up by 50 per cent. and installed
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capacity goes up by the same amount, the proportion of the cumulo which is available for distribution to authorities with generating stations goes up by 12½ per cent., which means that 150 units of installed capacity are then reflected by 1121 money units of rateable value.
This is all rather complicated, but the result is that the amount of rateable value per kilowatt of installed capacity inevitably gets thinned out; and, of course, it is here that the shoe begins to pinch. In the case of new generating stations which are coming into being and which are increasing their output, the effect is not very noticeable; nor is it very noticeable in the case of generating stations which are being extended. But in the case of the electricity generating stations, the old static ones, which are not being extended, the effect is very apparent and is at present causing a diminution of rateable value at the rate of approximately 5 per cent. per annum. And—this is the point I made at the beginning—that is affecting very noticeably the financial position of quite a number of important local authorities.
So we have the position that a rateable hereditament being used in precisely the same way and to the same extent is gradually reducing in rateable value. I have here some figures which show that in the case of quite a number of urban districts this has resulted, during the two or three years that the 1958 Act has been in operation, in a falling off of sums amounting to £7,000 or £8,000. That, as your Lordships will appreciate, means a very substantial loss to an urban district council. On the other hand, the local authorities which rely on the rating of the distribution side of industry are left pretty equable and without this very noticeable decrease in their financial resources. It is this particular matter which it seems ought to have been handled in the Bill and which the Government, in effect, decided not to deal with at the present time, to the very great inconvenience, and indeed almost to the financial confusion, of the particular authorities concerned.
It is not for me at this stage to make proposals as to how this matter could be effectively handled; but in fact proposals have been put before the Minister which would at any rate provide during the few years between now and the next satisfactory occasion when the whole of

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this problem can be effectively looked at, what one might call a carrying-over piece of machinery. I hope that the noble Viscount who is to reply for the Government will be able to indicate that at the Committee stage the Government themselves will be prepared to put down some Amendment to satisfy these authorities and to produce a more equitable situation; or, at any rate, that he will be able to indicate that the Government are prepared to look favourably on any Amendment put down by one or other of your Lordships to deal with this situation. My Lords, I appreciate that this is a complicated and a rather difficult problem to explain, but I hope that I have been able to make it clear that there is here an inequitable situation and one which your Lordships will agree ought to be remedied.
5.24 p.m.
VISCOUNT HAILSHAM: My Lords, it is a curious fact that, this being the anniversary of the Battle of Jutland, my noble friend spends his day introducing the Rating and Valuation Bill; and, indeed, I could not help reflecting, when I saw the list of speakers, that the Service and legal Peerages in the hereditary element in your Lordships' House have, on the whole, given evidence of fairly vigorous breeding powers. I think I must remember in handling the reply to this debate that this is only the Second Reading of a Bill, and I think it is particularly difficult to remember that, in view of the fact that the Bill itself is very little more than a congeries of Committee points. Therefore no noble Lord who has taken part in the debate and who has put forward these interesting points of detail need feel at all. I think, that the points which he raised were out of place, although they are points in many cases which could be dealt with only in Committee, if I am to avoid a very long and detailed speech on a quite inordinate number of separate issues.
I felt a very great deal of sympathy with the noble Earl, Lord Cranbrook, and with the noble Lord, Lord Douglas of Barloch, when they started with some philosophical reflections about the rating system itself, because, of course, the genesis of this Bill lies there. We must have a source of local revenue if local government is to be free and independent as we desire it to be; and although various systems exist
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in various countries, the system of rates is very deeply rooted in this country, and in 1957 in the White Paper we decided that we should continue to look to rates in a strengthened form as a substantial source of local revenue. Rates, of course, are supplemented by such things as the general grant, which mitigate some of the defects, if they be defects, in the system; and, of course, there is also an equalisation of rates coming to the aid of particular areas. But, at bottom, we base our local revenue, which represents a large share of the local services, including education, which spends altogether something of the order of £1,000 million a year, upon rates; and rates are based upon the annual value of property.
This, of course, gives rise inevitably to difficult cases. There are the cases, to which my noble friend Lord Colville of Culross referred, where the annual value of property does not represent a real figure at all. The water undertakings are a very good example: a large lake in Wales or the Lake District, which may provide the water of a large town, hardly has an annual rental value of any importance, but, none the less, represents, as Lord Latham reminded us, a very considerable economic activity. It is precisely from that kind of situation, to which the noble Lord, Lord Latham, referred, and to which, in another form, Lord Chorley has just referred, that these difficult anomalies and formulæ of valuations have developed.
There is also the question of exemption, which has led to different solutions at different times, and which we are trying to handle, in relation to charities and similar bodies, in Clauses 9 and 10 of the Bill. All of that arises out of the fact that the raising of local revenue is dealt with in this particular way. It may be true that other countries have better ways of handling this situation, but on the whole we have agreed, with the noble Lord, Lord Douglas of Barloch, that local income tax is not a possibility here. He gave the reasons, or some of them, in, I thought, a convincing form; and although I know he tends to favour a system of rating of site values, as distinct from the rental value of promises—and I know that in the course of my reply I cannot do justice to that particular theory, which is a very respectable one and has its

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adherents in different parts of the Commonwealth—we have rather committed ourselves against that view for a considerable time.
This was not done without careful thought. The matter has been looked at and looked at again by various official and unofficial Committees; and it is thought that it does not yield a suitable system for this country. At all events, as the noble Lord, Lord Douglas of Barloch, recognised and rightly saw, this Bill has its genesis in the existing system, and in the need which emerges from the 1957 decision to strengthen it and to bring it up to date. On the whole, I think its general principles have stood the criticism of this Second Reading debate pretty well.
To begin with, I think it is obviously right (and I was grateful to the noble Lord, Lord Douglas of Barloch, for emphasising it) that there can be no justification for keeping to 1939 values if we are to retain the system at all. Nineteen thirty-nine is now a long time ago. The result of substituting values of the 1960's for the values of 1939 is bound to be a good deal of dislocation, and this inevitably brings in its train the kind of complaint to which the noble Lord, Lord Latham, referred. In the main I cannot believe that it is to be avoided. I naturally see the constitutional objections to the Minister's having a discretion to derate housing, and I would agree that this is not an attractive way of handling the situation. My noble friend Lord Jellicoe explained the reasons for it in his opening speech, however, and I do not think that anyone has successfully established that any other method is possible in the circumstances. If you return to a realistic system of valuation from an unrealistic system of valuation, and realise that the shock of the return may be too Great, I think it is inevitable, on the timetable which my noble friend gave in detail, that you should have derating provisions of this kind.
Nor, I think, in view of the criticism which was levelled at it by the noble Lord, Lord Latham, could we he expected to give (reasonable as it is to ask) an assurance as to what will happen after 1968, as my noble friend Lord Ellenborough and one other noble Lord
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(I think my noble friend Lord Auckland) asked.
LORD LATHAM: The noble Viscount will know, of course, that, as regards commercial properties, after a period of 22 years—namely, from 1934 to 1956—there could be no alteration. Nevertheless, the Minister dealt with it by an Act of Parliament and a definite percentage allowance, 20 per cent.
VISCOUNT HAILSHAM: But, as the noble Lord realises, the burden on commercial properties is somewhat different in character, owing to other taxation provisions with which it has to be allied in actual practice. I think it must be said that the burden on a householder of a large sudden change in the amount of rates has been fairly represented as onerous by my two noble friends who snake in this House on behalf of the National Union of Ratepayers' Associations. At any rate, this is the most just attitude that we can adopt, and also the most practical compromise that we can find.
Since the effect of increasing the 1939 valuations to current values would inevitably be to shift the burden heavily off industry and on to the shoulders of the householder, whilst I admire the devotion of my noble friend Lord Ridley to the continued cause of Sir Winston Churchill in 1928 of industrial derating, even on the limited scale that it now exists, I do not think the Government could really accept it. I think my noble friend Lord Ridley will recognise from the speeches of the noble Lord, Lord Milverton, who spoke from the point of view of local authorities, of my two noble friends who spoke for the householders, for the National Union of Ratepayers' Associaitons, and of the noble Lord, Lord Douglas of Barloch, who spoke from a position of general principle, that it is very difficult, on the whole, to justify industrial derating when one reflects upon the extent to which the existence of heavy industry in a locality actually generates the need for the local services for which payment has to be made—including the general education of the children, whose services will be employed by the industry at a later stage in their lives and whom they would be quite unable to employ in any form if they were not educated.

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My Lords, the effect of what is now proposed, if I may to some extent reassure my noble friend, is not to increase the burden on industry, but to keep it approximately where it is. Of course, in anything as complicated as rating one can give absolutely no assurance in individual cases, such as that no individual industrial undertaking will be rated more highly. But my right honourable friend has said in another place that the general effect of the abolition in this Bill of the remaining slice of industrial derating, coupled with the effects of revaluation, and quite apart from the provisions for the temporary derating of householders, will be to keep the burden on the industrial class of ratepayers approximately where it is. I do not think, therefore, that he has made out a case for industry.
I should like only to say this to him further. I recognise, of course, that the fact that processing plant is rated is, at any rate in theory, and to some extent in practice, liable to the objection that he made. That is quite clearly right. My right honourable friend in another place has said that, if industry could come forward with proposals which would lighten the burden, or make more equitable the share of the burden as between different sections of industry, he would look at such proposals with great interest and in a friendly manner, although at the present time he would not be able to give effect to them before 1963. But that, I am afraid, is all I can say to assist my noble friend Lord Ridley, although I recognise the importance of industry and the importance of its being competitive in the export trade. I am sure that, on reflection, he will see that the idea that industry could hope to shift the burden substantially on to the householder—which would be the result of giving effect to what my noble friend suggests—is not really a reasonable option for the Government to undertake at the present time.
As regards agriculture, the noble Lord, Lord Douglas of Barloch, wished it to take a share of the burden in respect of agricultural land. I realise the force, in principle, of what he says, but I would ask him to reflect upon these two considerations in practice. As my right honourable friend has said in another place, it would be quite impossible, even if we began now, to re-rate agricultural land effectively before 1968, and it is
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therefore, to some extent, a slightly academic problem. One must also look, I think, at the fact that in actual practice agriculture is in receipt of Exchequer subsidies of £258 million, or something of that order, year by year. There is something a little unreal about then saying, "At the end of another seven years we will put local rates upon agriculture", in the certain knowledge that an immediate negotiation would take place to shift the burden back again to some other form of public expenditure. This I quite see to be a logical state of reasoning, but it seems to me to carry the matter little further in practice.
LORD LATHAM: In the result, the noble Viscount will admit, local rates subsidise agriculture.
VISCOUNT HAILSHAM: That is one way of putting the fact that they are derated, but I should prefer to say that they will continue to be derated. As the noble Lord knows, agricultural buildings do pay a proportion of their rates; but I was talking about agricultural land, which is free from rates and has been, to a very large extent, since 1875. So the burden is one which has been borne relatively cheerfully for a considerable period of time.
LORD LATHAM: It has not been wholly exempt since that date.
VISCOUNT HAILSHAM: I said to a large extent; three-quarters since 1875, and the remaining quarter since 1928, or some such time.
LORD DOUGLAS OF BARLOCH: One-quarter since 1896.
VISCOUNT HAILSHAM: At any rate, so much for agriculture. I now come to an important issue which was raised by my noble friend who sits on the Cross Benches, Lord Halsbury, and which really explains, in some way, why I am replying to this debate—because I can assure the House that rating has not been a subject which I have studied in any, thing like the detail that noble Lords who have taken part in the debate have, until comparatively recently, and I should have been happy to leave the whole debate in my noble friend's hands had it not been for the fact that the question of the learned and scientific societies has been raised both by my noble friend who sits on the Cross

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Benches and, in an earlier debate which we had in your Lordships' House, by the noble Lord, Lord Adrian.
I think, on the whole, that there is a prospect—I cannot give very many positive assurances to-day—of fairly general agreement between the Government and the learned societies about the way in which this thing should be tackled. It is open to question, of course, whether the noble Lord, Lord Milverton, is not right in saying that nobody should get any exemptions at all. The noble Lord, Lord Douglas of Barloch, said that he did not see that a rate subsidy (as the noble Lord, Lord Latham, would call it) was quite the right way of helping science, although he was as much in favour of scientific and learned activity as anybody else. I myself think there is some substance in that. What we have done—I only repeat what noble Lords already know in order to found the argument which follows upon it—is to accept the recommendation of the Pritchard Committee, which gives a mandatory relief up to the extent of 50 per cent.
This did not meet with the approval of some local authorities, particularly Westminster and St. Marylebone, which house nearly all the national societies of a learned kind; but, none the less, it seemed to us to be the best compromise between the conflicting interests which we could devise, and had the additional merit of being in accordance with the recommendations of the Committee. In addition to the mandatory relief, we give the power of 50 per cent. discretionary relief to the local authority. I recognise that it may be relatively difficult for some local authorities to give discretionary relief to national societies, but I hope, none the less, that national societies will feel it is their duty to make as good a case as they can for discretionary relief under that head. The burden is not felt at once; it will begin to be felt in 1964, and I think I am right in saying that its full impact will not be felt until 1968, which gives us a good deal of time to consider the situation.
When the noble Lord, Lord Adrian, raised this question some months ago, I made it my business to look into the question very thoroughly, and I hope very sympathetically. I corresponded
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and consulted with my colleagues, and I received a deputation of great distinction, which included my noble friend Lord Cranbrook, I think Lord Adrian, and others, on behalf of the learned societies, and we began to see some light in the matter as a result of our talk. I do not think it would be right to deal with this question within the scope of the present Bill, beyond the 50 per cent. mandatory relief. I do not think it is the right way, beyond that, to help the learned and scientific societies either to continue the anomalies of the extraordinarily outdated Act of 1843, which no one would really justify at the present day, or by asking the City of Westminster and the Borough of St. Marylebone to undertake what is fundamentally a national burden.
It was then suggested (I think in another place, but it may have been suggested to me personally) that they should receive instead the kind of treatment that a university, and particularly the universities of Oxford and Cambridge, receives under the Bill, whereby the Government, in effect, pay the rates of the body. I was at first quite attracted by that. The trouble about that is that the learned societies are not universities, or anything like them. They do not generate the need for local expenditure which local universities in fact generate. That makes it intolerable for a local authority to have to bear the whole burden of rate relief in respect of them. It would, I think, be difficult to argue, despite their great national importance, that they are the only bodies of national importance whose private activities perform a public service. I do not think one could stop at rate relief there, if one started giving an Exchequer deficiency grant in respect of the rates of learned societies.
Having said all that, I recognise that there is a problem. It is a problem which has been uncovered by, but not caused by, the passage of this Bill through Parliament, and it is a problem which must be dealt with in one way or another. I recognise to the full the justice of what my noble friend Lord Halsbury has said about the value of the work of these bodies. I recognise that many of them are absolutely essential to the working of science, that they produce publications of national and international reputation, and that some of

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them, as my noble friend Lord Cranbrook reminded us, maintain libraries which are indispensable to the pursuit of their particular subject. The same can be said, incidentally, of the learned bodies which are not scientific, such as the British Academy, and bodies of that type.
I recognise, of course, that the imposition of a burden of rates upon a society of this kind, which is largely supported out of the private pockets of nat particularly wealthy people—since, unfortunately, in this world, the learned are not always very good at making money; at least, not as good as some of those who are less learned—will be one which they have to face. What I told the deputation, and I think it was repeated by my right honourable friend in another place, is that we recognise all that and are prepared to consider ways in which we can help in negotiating with them. My own thought is that it cannot be dealt with by rate relief in any form, and that, if it is dealt with at all, it will have to be dealt with by grants in some form. I would rather accept Lord Halsbury's idea that it is not altogether desirable to define the value of a society by Act of Parliament, because societies which may have similar objects could have different values, and it would be invidious, I think, to schedule societies to an Act.
On the whole, I think one would have to consider using the Royal Societies* and the British Academy as vehicles for this kind of negotiation, and if they were prepared to act we should be glad to hear from them, as and when the situation develops. We shall always be open to consideration, and I would ask my noble friend to convey that to those for whom he speaks, and I trust he feels we are going as far as we possibly can at this date. I should also hope that they will on suitable occasions make such case as they can for the discretionary relief.
My Lords, a very great number of other very valuable points about this Bill have been made, and I think that I must be somewhat selective in answering them all. Both the noble Lord, Lord Latham, and the right reverend Prelate raised the question of contemplative Orders. The best I can say for them is that an Amendment to Clause 9 (4) in another place was designed to cover them. It
*See Vol. 232 Column 759
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gives them discretionary local relief, but nothing more. That was as far as we thought that we could go. I have answered my noble friend Lord Ridley as far as I can by saying that, in so far as the burden as between different sections of industry is considered unjust, my right honourable friend will be glad to listen to suggestions.
My noble friend Lord Ellenborough suggested that the Minister should fix different percentages for derating in different districts within a county. Under the present Clause 2 (2), the Minister may fix different percentages only for different counties. I am afraid that my right honourable friend thinks that it would present an insurmountable task, if he had to deal with 1,500 different areas instead of the 143 proposed by the existing provision. Remembering that every difference between areas would create new anomalies at the boundary of each area, and that the more areas with different percentages the more anomalies we should create, we felt that, although this was an attractive suggestion, it was not one which we could properly accept.
I have already referred to the valuable speeches of the noble Lord, Lord Douglas of Barloch, and of my noble friends Lord Ellenborough and Lord Auckland. My noble friend Lord Colville of Culross spoke rather about my head. I am afraid, when he spoke of the tone of the list, but I have ascertained what I can as to the answer I can give. By removing water undertakings from the scene, and by dealing with the question of assessment by reference to the accounts, the Government have begun to clear the way to an eventual statutory definition. My noble friend's remarks will certainly be examined sympathetically, but this is not an issue which can be rushed. The problem which he sketched was one of the main reasons for setting up the Working Party on Rating and Valuation. They themselves concluded that it would not be practicable to provide a solution by way of a suitable statutory definition while so many hereditaments are assessed by the accounts method. They also concluded that there was little difficulty to be anticipated if revaluation were carried out regularly at five-yearly intervals. It certainly would reduce the degree of anomaly, to which my noble friend drew attention. As I have said, my noble

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friend's remarks will be examined sympathetically and perhaps, if he puts down an Amendment on Committee stage, we can have another discussion about it.
The noble Lord, Lord Chorley, also caught me off my guard to some extent with the point about the valuation of electricity undertakings. The system which at present operates is the product of the Local Government Act, 1958, and the scheme has had effect only from April 1, 1959. My right honourable friend said in the House of Commons that after 1963, when the scheme has had a reasonable trial, opportunity will no doubt be found for a complete review of the formula. But there is no easy solution to the kind of anomaly which the noble Lord suggests. Nobody has yet suggested that the total rateable value is inadequate. I think that the authorities for which the noble Lord spoke ought not to overlook the fact that they are precisely the authorities which gained substantially from the introduction of a new system in 1959. Previously—that is, between 1948 and
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1959—they had no rateable value in respect of generating stations. Therefore I do not think that it is unreasonable, in the circumstances, if we ask them to accept what my right honourable friend has said.
My Lords, I am only too conscious that there have been many other valuable points raised in the course of the debate, and I hope that we shall resume the discussion of some of them on the Committee stage. I feel that on the whole the Bill has had a valuable welcome. I should like, in particular, to thank the noble Lord, Lord Latham, for his generous remarks about my noble friend Lord Jellicoe, and to say how much I have relied upon his assistance in making the last speech in the debate.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

HOLY TRINITY BROMPTON BILL
Returned from the Commons with the Amendment agreed to.