§ 3.22 p.m.
§ Order of the Day for the Second Reading read.
§ THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF LAND AND NATURAL RESOURCES (LORD MITCHISON)
My Lords, I beg to move that this Bill be now read a second time. The Bill provides a measure of short-term relief for some 2 million families whose rate bill weighs too harshly on them. Its object is to reduce the regressive element in rates. It is to come into operation on April 1 in England and Wales—that is to say, in less than a month's time. In Scotland, it will come into operation a month or two later. As an urgent measure of relief it has had in another place a Second and a Third Reading without any Division, and, on the other hand, a full and detailed discussion, with Amendments, in Committee and on Report. I hope that in these circumstances your Lordships will feel able to give the Bill a Second Reading to-day, and during its subsequent stages to have regard to its urgency and the broad measure of agreement about it.
I must make it perfectly clear that this Bill does not represent any thoroughgoing or final attempt to deal with the difficult question of local government finance and its relation to the central Government. There have appeared recently two White Papers about local government finance: one, Cmnd. 2923, concerns England and Wales; the other, Cmnd. 2921, Scotland. Towards the end of the Paper about England and Wales the Government summarise their proposals for assistance from the Exchequer to local authorities. Their aim will be to keep the average increase in rate pound-ages more in line with the growth of the economy, for since the war the increase in social service expenditure has increased the total rates bill and, as the Allen Committee Report shows, the average rate payment of the domestic householder.
The White Paper ends with a paragraph which I will read to your Lordships. It is paragraph 20:These proposals are not presented as a long-term solution; they would be quite in-782adequate as such. Their purpose is to reduce the burden of rates and produce a fairer distribution of Exchequer assistance among local authorities, and so to strengthen the system of local government finance until there has been time to re-examine the whole position in the light of whatever conclusions emerge from the work of the Royal Commission on Local Government ".It is obvious from the reasons that led to the appointment of a Royal Commission that the whole question of the relations between local and central finance must depend on the findings of that Commission and on the decision of the Government of the day as regards those findings. Meanwhile, my right honourable friend the Minister of Housing and Local Government has appreciated with more vigour and depth than any of his predecessors the regressive character of rates and the hardship entailed by them on many householders of moderate means.
Accordingly, the Bill contains fundamentally two proposals by way of instant relief for some from that hardship. The first proposal is for domestic ratepayers to have the right to pay their rates by monthly instalments. This is set out in the first four clauses of the Bill. Clause 1 relates to England and Wales, Clause 2 to Scotland, and Clause 3 to the particular case of charities in effect paying the rates for their beneficiaries. Clause 4 contains a countervailing provision for a discount to be allowed to persons who would be entitled to relief but do not choose to pay by instalments under the Bill. That discount is at the discretion of rating authorities. Rates are inevitably a complicated matter, and the four clauses to which I have referred occupy the first nine and a half pages of the Bill as printed.
The next and the principal relief to be given by the Bill is in the form of rebates in respect of rates on dwellings. The rebates are related both to the total rate liability of the ratepayer and to his income. A domestic householder is entitled, in the words of Clause 5(1), to a rate rebate of an amount that represents:783 The average liability for rates is about £36, and on that figure the ratepayer would get a maximum rebate of £19. If he is a single man with an income of £8 a week, that is the appropriate limit and there will be no deduction from the maximum rebate. If, on the other hand, his income is £10 a week, the deduction will be 10s. a week or £26 in a year, so that he will get no rebate. A married man can have £10 a week income without any deduction from his rebate, and a married man with a child 30s. a week more without any reduction. These, of course, are only instances, and I have taken simple ones. In the Bill, "reckonable rates" are defined in Clause 6, and "reckonable income" in Clause 7. I must point out that throughout this part of the Bill the figures refer to six-monthly periods, so that any application will have to be made and considered for such a period and no longer. A longer period would involve rating authorities in too many inquiries about charges during it; but Clause 5(6) enables a rebate to be continued over a whole year in proper cases.
- "(a) two-thirds of the amount by which the applicant's reckonable rates determined in accordance with section 6 of this Act exceed £3 15s. Od., less
- (b) five shillings for every complete pound by which the applicant's reckonable income determined in accordance with section 7 of this Act exceeds the appropriate limit so determined ".
Clause 8 is a machinery clause dealing with the method of affording rebates. Clauses 9 and 10 are financial and provide for Exchequer grants to rating authorities to meet in each case three-quarters of the aggregate net amount of rebates in any year. Clause 10 relates to the effect of rebates on rate deficiency grants in England. There follows an interpretation clause, a financial provision in a not unusual form, and the usual final clause. I hope that your Lordships will not wish me at this stage to go into detail about the provisions I have summarised. I propose, of course, to listen carefully to any comments your Lordships have to make, either on the Bill as a whole or on details of it, and to do my best to answer them at the end of the debate, hoping thereby to anticipate to some extent, since the Bill is an urgent one, discussion at later stages.
But may I make two general comments before I sit down? The first is that this Bill bears some superficial resemblance to what is now the Rating (Interim Relief) Act 1964, which became law after about twelve years of Conservative Government and not long before the 1964 Election. That Act did not apply to 784 Scotland. It provided for grants to local authorities to enable them to help cases of hardship, and hardship was not defined. The amount of the grants was determined, according to the number of persons over 65 years of age in the area of the local authority, so that prosperous places to which many people had retired might do well out of it. Its Second Reading in your Lordships' House took under two hours, and further proceedings about half an hour in all.
My second and last point is about money. The 1964 Act contemplated an Exchequer grant of the order of £6½ million in the first year. The amount actually spent on the grants I have mentioned has been rather under £6 million a year. This Bill, framed as I believe with greater precision, and with a fuller sense of Government responsibility in the matter, will entail for the benefit of the two million people concerned an expenditure of about £29 million a year including an Exchequer grant of three-quarters of that amount—say about £22 million. Notwithstanding the financial troubles from which we have only partly emerged, that seems to me a more appropriate figure to meet the mischief temporarily, and the way of granting it seems preferable to that in the 1964 Act. I beg to move.
§ Moved, that the Bill be now read 2ª.—(Lord Mitchison.)
§ 3.32 p.m.
VISCOUNT COLVILLE OF CULROSS
My Lords, I am sorry that the noble Lord, Lord Mitchison, should have fallen in the error of attempting to compare the measure which your Lordships are now considering with that which was before the House under the last Administration. I do not know whether his reference to the length of time your Lordships took in considering the last Bill which touched on this subject is an invitation for us to spend more time, or a suggestion that we should spend less time, on this one. At any rate, I can set the noble Lord's mind at rest in saying that, although I think noble Lords on this side of the House will have no hesitation in welcoming the principles that underly both Parts of this Bill, we certainly shall not go any way with the noble Lord in agreeing that this measure is a thoroughly satisfactory one, or one which we should not have liked, had that been possible, 785 to comb through thoroughly, in order to see whether it cannot be improved beyond the improvement made to it in another place.
The noble Lord himself said that the Bill is not thorough-going and final. As to finality, that is one matter; as to thorough-going, the Bill certainly is not that; because although, as I say, the principles are unexceptionable, the methods adopted to deal with them are, on the one hand, highly complicated and, on the other, I think, unsatisfactory. But the noble Lord is in a very fortunate position (I hope he will not think I am being disrespectful when I say this) in that he is able to come to this House to-day and outline the Bill by little more than the rubric down the side of the clauses; because, as he well knows, there will not be any opportunity to discuss the Bill at any great length to-morrow, when we have to have the Committee stage. There are points which I think ought to have been discussed, matters which ought to be put right, and certainly Amendments which I should have liked to move. But, speaking for myself, I think it is best to accept this Bill as being a makeshift one and, as the noble Lord said, an urgent one, and to draw attention to some—though by no means all—of its failings and deficiencies. I do not think we should achieve much in trying to amend it, because I think that one ought really to have started again.
It is, of course, appreciated—and always has been appreciated—that rates are of a regressive nature. I doubt whether the present Minister is the only one who is aware of this fact, and I very much doubt whether he need draw quite so much credit to himself in using the epithets he has used about the rating system being "vicious" and so on, when he himself has very little idea of what he would put in its place. I am glad that that noble Lord is able to tell us this afternoon that we are at least going to wait until the Royal Commission have reported before we launch blindfold into some system of local income tax and hazard ourselves among the uncharted barriers of that particularly complicated subject. I think this will be most welcome relief to many people in this country who are afraid of some blind, headlong rush into this extremely complicated reform. 786 If we are to stick to rates as we know them, then this Bill is only in part about them. There is no doubt whatever that the first four clauses refer to rates and justify the title of this Bill as a Rating Bill. Nobody would have anything but support for the idea that payment by instalments should be made possible, and that rates should be made payable in less than the enormous doses that are so often required, when once-yearly or twice-yearly payments are the only method allowed by the rating authority. It is clear that if the full machinery by which these instalments are going to be dealt with has to be spelt out, then the clauses I have referred to will be very complicated. And so they are.
I think I have only one comment, apart from that of complication, to make on this. I hope that, despite the circular which I know has gone out on this subject, the Government will do their best to enable those rating authorities who now work, or who would like to work, a voluntary scheme for rebate to go on with that form of rebate, rather than change over to the full vigour of the first Part of this Bill—because there are quite vigorous provisions. And, as it deals with matters of levy of distress and so on, it is bound to cause a certain amount of litigation, whereas the voluntary schemes, I should have thought, would have coped perfectly well, where in force. I trust that the fact that we have in the first Part of this Bill this scheme which can be envoked by any ratepayer if he so wishes will not mean that the perfectly good and workable voluntary schemes already introduced by rating authorities will have to be abandoned—with all the extra expense and trouble that that would involve at the town hall and the county district offices.
When we come to the second Part of this Bill, which begins with Clause 5, we have a very different matter; because I think it was stressed more or less throughout by Government spokesmen in another place that, although to the outward eye this was a reform relating to rates, it is, in fact, a matter of taxation, and is dealt with as such. I think that this is perhaps an echo of the somewhat schizophrenic approach of the present Government towards local government finance, in that when this Bill was introduced the right honourable gentleman 787 the Minister may have been hankering after a local income tax, whereas today he is prepared to be a little more patient. At any rate, a tax Bill this second Part of it is; and there can be no doubt about it.
This admission having been made so clearly, it is surprising that the social requirement which is proposed—and not opposed by this side of the House—should be made to fall not upon the Exchequer but to a considerable extent upon the local ratepayers. Because, my Lords, although it is true that three-quarters of the cost of the rebates will be repaid to the rating authorities by Central Government, nevertheless there is a sum of, I believe, something in the region of £7 million which is to be found by the rating authorities. And, of course, that is not going to be spread evenly over the country. In some areas there will be far greater numbers of people entitled to rebates under the terms of the Bill than in others. In addition to that actual sum required for rebates, there is estimated to be an amount of the nature of, perhaps, £2½ million or £3 million to be spent on administration alone to work out the unbelievably complicated provisions of the second Part of the Bill; and, I should think, to some extent the instalment system as well.
My Lords, what is going to happen? It will mean that the rates will go up—there is no doubt about that. They will go up to the degree that a man earns £10 or less and, within the limit set by the Bill he will get a rebate. But this is not going to help the people just outside the rebate level, and as a result of the provisions of this Bill the rates will be put up more in some places than in others, but at a time when everybody is clamouring that they should be brought down. And they are being put up by something which has nothing to do with local government, nothing to do with the services provided in the rating authority's area; but by a matter of tax which on this occasion is being unloaded on to the inhabitants of the particular area concerned. This seems to me to be very questionable. It is a matter which ought to be thought of again, and certainly must never be lost sight of in the consideration of this Bill.
788 When we get down to the details, the noble Lord was, if I may say so, very wise to stick to simple examples. It is helpful that private enterprise has made available to your Lordships in the Printed Paper Office this afternoon, in the form of a rent-rebate table. the mathematical researches of the Rating and Valuation Association. I am sure that many treasurers of local authorities will be very glad to have this, because by the time you have worked through the provisions of Clauses 5, 6 and 7 you find that it is a matter that requires a very high degree of qualification in mathematics in order to deal with the problem at all. It is certainly beyond me. It is well known that lawyers are not capable of accurate arithmetic, and therefore I make no claim as to what would be the result in a borough treasurer's department, but I believe that this is a very complicated detail. Whether it is right or not, as I have said, I do not think that this House will have an opportunity really to discover. This we will forgo for a comparatively simple reason: I do not think the Government are expecting it to be accurately applied.
It may sound a very curious thing that the Government should put forward what is confessedly a tax Bill, or half a tax Bill, and then encourage those who are to administer it to deal with by means of rough justice. But this is, of course, what the treasurers are being invited to do by the Minister, who said in another place that the Billwill do rough justice; it will not do more. If the treasurers try to run it with the care and skill and fine distinctions and legal theology which may go into a tax system proper, the scheme will not work."—[OFFICIAL REPORT. Commons, Vol. 722 (No. 20), col. 53, 6/12/65.]If that is what the Minister says, it is perhaps just as well that your Lordships have not the task of trying to make it better, because it is clear that it cannot be accurately applied at all, and that is the Minister's own view.
So we have really only to comment on one other most extraordinary provision in the second part of this Bill. What has been invented is a new form of assessing income. We are not to use the form used for income tax purposes. We are not to use any of the "disregards" and the method of assessing used by the National Assistance Board. We are subject to the provisions, put in at a rather late stage as 789 a result of what was said in the Standing Committee in another place, in Clause 6; that is to say, in subsections (5) to (7). We are to use a completely arbitrary system of basing a rebate on all the income that a claimant may have, with the exception of any income he gets from a lodger, and subject to the provisions in Clause 6. This means, for instance, that whereas for all other purposes of tax, or of reclaiming tax, as I understand it, war pensions are disregarded as being part of income, that does not apply to this Bill. You will not get your rebate if a war pension puts your income just over the limit, and so we are asking the borough treasurers to apply a completely new system of assessing income, one never tried anywhere else, and the Government ae telling them to do it in a rough and ready way and without trying to go into any fine distinctions or technicalities.
If anything goes wrong, we have been told the remedy by the Parliamentary Secretary. Speaking at the sixth meeting of the Standing Committee on February 10 (at that time they were talking about the question of how to assess income) he said:"…it is difficult to know where to draw the line…If we find that the provisions of the Bill are still hitting people with low incomes, the best way of overcoming this would be by the general adjustment of the income limit rather than by picking out certain sources of income and eliminating them."—[OFFICIAL REPORT. Standing Committee D. col. 281; 10/2/66.]Of course, there is power to change the limits set out in Clause 7, and rather than try to get this tax administered with any degree of accuracy the Government would prefer to do it merely by altering the limits in Clause 7. This seems a novel method of dealing with tax. The other thing which Mr. MacColl said on that same day is, I think, equally interesting. He said:…the best way of approaching this is not to regard it as a complicated exercise in relief,—although it is a very complicated exercise in relief—in which one has finely graded sources of income and is allowed so much in the varying amounts of different kinds, but one takes the broadest view of what is the income coming into the home and by adjusting the minimum income, if necessary, one makes the system more flexible."—(col. 291.)790 My Lords, that is this Government's method of taxation. Therefore, in a very lukewarm way I commend this Bill to your Lordships; not because I dislike the principles—on the contrary, I think they are admirable—but because I think that this has been a rushed job. Perhaps urgency required it, but I should have thought that it could have been rather better worked out than it has been. So far as your Lordships are concerned it has, of course, turned into a very rushed job indeed. From this side we will help it on its way as best we can. As I said, I do not think that there is much point in trying to improve it any more. Let us accept it as the rough and ready—very rough and ready—measure that the Minister himself described it to be.
§ 3.50 p.m.
§ LORD WADE
My Lords, during the last twenty years there has been a steady flow of Bills dealing with various aspects of our rating system. Most of them have been complicated. Some have been intended to achieve greater uniformity of treatment of ratepayers. But, on the whole, they have led to greater complexity and the anomalies have increased rather than diminished. Every Bill has brought new problems in its train. I remember some years ago, when the burden of rates fell particularly harshly on shop-keepers, that there were a great many protests—I think most of them justified—and eventually there was some alteration in the law. More recently, as the result of revaluation, householders have been harshly affected, particularly in some parts of the country, and attempts have been made to alleviate the hardship. But throughout the whole period the overall rate burden has steadily increased. Householders with small incomes have suffered most severely. This was shown clearly in the report of the Allen Committee.
This Bill, like the Rating (Interim Relief) Act 1964, to which the noble Viscount has referred, is intended to meet that kind of situation, but, like the Act of 1964, it is only a palliative; it does not go to the root of the problem. Nevertheless, this Bill will provide some relief, and I want to see it on the Statute Book —the sooner, the better. I think that it provides some improvement on the Act of 1964. In that Act, there was no definition of hardship and local authorities were left to decide as best they could how 791 to grant relief. Therefore, the benefits varied from one local authority to another. I remember forecasting this when that Bill was going through Parliament. It became clear that some attempt had to be made to provide a definition. So we have this Bill which, in the Minister's own words in another place, provides some "rough and ready justice"—but it is no more than rough and ready justice.
As your Lordships are aware, there are two objectives in the Bill. One is to grant ratepayers the right to pay their rates by instalments, and the second is to grant relief to those with small incomes. With regard to payment by instalments, I have one or two questions. It is still not clear to me what will happen where a voluntary system is already in operation. This is a point to which the noble Viscount has already referred. TheExplanatory Memorandum,in dealing with Clause 1, states that the Bill (I am not reading the whole passage)confers on rateable occupiers … the right to opt to pay their rates by monthly instalments…unless they already in effect pay rates by instalments as part of their rents.I assume that that has nothing to do with voluntary schemes for the payment of rates by instalments operated by certain local authorities, and that Clause 1 does not in any way deal with these schemes. I think that it would be helpful to know what exactly will happen in those local authority areas where there already are voluntary schemes. Will the ratepayers have to go through the procedures laid down in this Bill? Will the voluntary schemes be scrapped altogether? Or what is going to happen? There will be a good deal of work thrown on local authorities. Will the whole of the administrative cost be borne by them? I gather that the local authorities will have to bear that burden.
Thirdly, the Bill grants ratepayers the option to pay by instalment as of right. What about those who pay promptly? Clause 4 provides that local authorities may introduce a scheme for allowing a discount to those who pay promptly. But that is permissive. So far as payment by instalments—that is, deferred payments—is concerned, the provision is mandatory, but so far as a discount to those who pay promptly is concerned, the provision is not mandatory, as I 792 understand it. It is left to the local authorities to act as they wish. Should there not be the same provision for prompt payment as there is in regard to payment by instalments? I would be obliged if the noble Lord, Lord Mitchison, would deal with that point. If necessary, there would still be time to table an Amendment to-morrow.
Turning to rebates—that is to say, the granting of relief—I think that it is necessary to attempt some definition. Again, the burden of work will fall on the local authorities, and I should be interested to know what discussions have taken place with the representatives of the local authorities as to their ability to deal with this situation and how great a burden will fall on the staffs of local authorities. I think that it is important to point out that most of those who will benefit from this rate relief are not at present paying income tax. Therefore, they cannot turn up income tax returns for information, and the local authorities will not be able to refer to the Inland Revenue for confirmation where an application is made.
Like many of these Bills, this Bill introduces anomalies. As I understand it—and no doubt the noble Lord will correct me if I am wrong—a person entitled to assistance from the National Assistance Board will be able to choose between asking for help from the N.A.B. and receiving this rebate. It may be that the ratepayer will not wish to go to the N.A.B. and will prefer rate relief under this new Bill. But in the case of the N.A.B., the whole cost is borne by the Exchequer and in the case of relief under the Bill 25 per cent. is borne by the local authority. Therefore, the cost to the local authorities will depend on the choice made by ratepayers. That seems to me a little difficult to justify in principle.
These are some of the criticisms—I hope, constructive criticisms—which could be made of the Bill. I have two questions of immediate practical importance. The noble Lord, Lord Mitchison, has said that this Bill will come into effect on April 1. Is there going to be time to get this working by April 1? Is it possible for the ratepayers to know what their rights are and what they should do by the time they receive their rate demands which will be coming out in a few weeks time?—and I fear there are a 793 good many ratepayers in this country who will find the new demands rather a shock.
That leads to the other important practical question: will those whom this is intended to benefit understand the Bill and be made aware of their rights? One can imagine some old lady with a very modest income, perhaps living in a house where the rate assessment is rather high, asking for advice. It would be perfectly correct to tell her that it all depends on her reckonable income and reckonable rates; and the reckonable income, as set out in Clause 7, is the income in the relevant assessment period. But the kind of persons to whom this Bill, when it becomes an Act, is going to apply are not those who are conversant with expressions such as "the relevant assessment period". They probably do not pay income tax; they are not even aware of an assessment period for income tax purposes. They will have no information at hand to which they can turn; and it is most unlikely that they will employ an accountant. Nor will the local authority have information easily available with which to check the applications that are made. Therefore, this is not going to be a simple matter. Even when one has explained to the old lady—
§ LORD OGMORE: Or old gentleman.
§ LORD WADE
—or old gentleman, as my noble friend says, even when one has overcome that difficulty of the reckonable income there remains the problem of the reckonable rates, as set out in the Bill. One can imagine the confusion of this old lady or old gentleman, as the case may be, if he or she is referred to Clause 6 of the Bill. I will not trouble your Lordships with a long quotation, but I think if I read a short passage it will show how confusing it can be. This is how Clause 6 commences:In the case of a rebate application by such a person in respect of such a hereditament as is mentioned in paragraph (a) of section 5(3) of this Act, the applicant's reckonable rates shall, subject to the provisions of this section, be—I hope that the old lady or old gentleman will understand.
- (a) the amount of the rates chargeable on that person in respect of that hereditament for the rebate period to which the application relates, less
- (b)the proportion of that amount which, by virtue of subsection (3) and apart from subsection (4) of this section, is or would be the reckonable rates in relation to that
794 rebate period of any person or persons entitled to apply for a rebate in respect of any part of that hereditament by virtue of paragraph (c) of the said section 5(3)."
The plea that I am making is that the benefits of this Bill should be made known in as clear and simple language as possible. Publicity about the Bill alone will not be enough. There will be a spate of publicity during the coming weeks about what the Government have done and what the Government have not done, and it may well reach saturation point. A number of Bills are reaching the Statute Book, and we have had recently a considerable number of White Papers. I understand that Mr. Grimond has suggested that the Government have perhaps decided to have a General Election because they have run out of paper. Be that as it may, with regard to this Bill I would plead for some small booklet in clear and simple language, which people can understand. It may be that this has already been decided upon, and, if so, I shall be delighted to hear it. I should like to know whose responsibility this will be. Will it be the responsibility of the Ministry or of the local authorities? But whosesoever the responsibility may be, I hope that it will be done. I wish these people to benefit from the Bill. It is a complicated Bill, and not entirely satisfactory, but it is at any rate, a temporary stop-gap measure. I hope it will help some of those people who are really worried about their rates. Therefore, subject to the reservations I have made, I support the Bill.
§ 4.5 p.m.
§ LORD AUCKLAND
My Lords, first I must declare a small interest, in that I am Vice-President of the National Union of Ratepayers' Associations. This is not a financial interest, and I have declared it before in your Lorships' House when I have spoken on rating Bills. I am not professionally connected with any profession akin to rating, so I do not speak with any direct knowledge of this subject. In giving this Bill a very tepid welcome, I must say that it falls far short of the promises which the Party opposite made in October, 1964, as to what they would do about rating and ratepayers. A great deal of criticism was made of the Rating (Interim Relief) Act, which 795 was admittedly a small measure; but this Bill seems to achieve very little.
Like other noble Lords, I welcome Clause 1. But one wonders just how much ratepayers who pay normally will gather from the provisions of the Bill. There are a few local authorities which have even managed to make a reduction of current rates; and the Leatherhead Urban District Council, where I live, is one of them. But these are very much in the minority, and, particularly with the high cost of education, this is becoming more and more difficult. The decision to impose 25 per cent. of the cost of the rebates on other ratepayers who do not benefit from this Bill rather goes against the pledge of the Government to reduce the overall burden of rates. Then there will be a substantial increase of staff in the treasurers' departments of local authorities to implement the provisions of this Bill. Surely, the Central Government, and not the ratepayers, should bear these costs. It seems to me that any benefits which this Bill confers will he swallowed up in the administrative costs which will result from the terms provided by this Bill.
I join with my noble friend Lord Colville of Culross in protesting against the shortage of time we have to discuss this Bill. I know that in another place they had a fairly long Committee stage, but there are still a number of points which were not covered. I know that there are valid reasons why this situation has occurred, but it seems to me to go very much against the grain of the promises which the Government made before they came to power. I hope that the electorate will bear this in mind. In the circumstances, there seems little else which I can say, except to give a welcome to the Bill, so far as it goes. But it does little to implement the recommendations of the Allen Committee which we on these Benches set up and which did much hard work. It is only to be hoped that very shortly a far more detailed provision will be worked out which will benefit all ratepayers.
§ 4.10 p.m.
§ LORD LEATHERLAND
My Lords, I think I am the next to speak, although my noble friend Lord Peddie's name appears on the list before mine; appar- 796 ently he is not here. I must in the first place declare an interest, in that I am a ratepayer and, like most ratepayers, I think my rates are higher than they ought to be. Before I go more deeply into that, I should like to say a word about the views which the noble Viscount, Lord Colville of Culross, has put before the House. It seemed to me that all through his speech he was willing to wound, but afraid to strike. The criticisms he made were of a detailed, rather pettifogging, kind, and he seemed hesitant to give credit to the Government for this bold measure of social reform which will put £29 million into the pockets of the most deserving class of the population.
He made some little play with the suggestion that the attitude of my right honourable friend the Minister to local government financial reform was schizophrenic. I am afraid I cannot say that about his Party. Their policy with regard to rating reform has been single-minded all the way through—No, No, No, every time they were asked to make any improvement. Then he criticised the Minister for not making war pensions one of the disregards. I seem to remember that time after time, when Budgets have been under discussion, Conservative Governments have been asked to disregard war pensions for the purpose of income tax, and time after time the answer was, No, it cannot, or ought not to, be done.
The noble Viscount said that the measure was a rough one. Well, I am quite sure that the 2 million old people, many of them on retirement pensions, who will benefit from this scheme will not regard it as a rough one at all. He said, quite legitimately, that it is unbelievably complicated, and that it will be a heavy task for the county and borough treasurers to tackle. That is so, but after a fairly long local government experience, I have found that municipal treasurers are very able people, and I have no doubt at all that they will be able to cope with this, as they have with even more complicated measures in the past. I have sat over the shoulder of my own county treasurer and seen him trying to unravel the complications thrust upon him by the noble Viscount's London Government Act. If he could tackle that, I am sure he can tackle this.
The Institute of Municipal Treasurers and Accountants have not been idle. 797 They have drawn up a number ofpro formaswhich they have distributed to treasurers throughout the country. Thosepro formasinclude simply worded leaflets for the general public: letters to send to them, giving further explanations; a draft form of assessment, which is quite simple to understand, and a ready reckoner showing every digit of income and what the appropriate rebate in rates would be. I have it here. It is very simple when reduced to the level at which the treasurer and his officers will have to make contact with the general ratepayer.
The noble Lord, Lord Wade—who usually leads me into temptation when he talks on rating matters, but he has not this day— said something of the same kind. He quoted a complicated clause, but then again the Institute of Municipal Treasurers and Accountants seem to have reduced this to quite a simple formula. They have prepared this leaflet which says, "If you pay rates for your home you may be entitled to claim a rebate". This leaflet answers some questions about the new arrangements. Question 2 is: How do I qualify? It tells them that if they are single or widows, they qualify if their income is £8 a week or less; and if they are married that they qualify if their income is £10 a week or less. The next question is: How much is the rebate? The amount of the rebate is explained. This document which has been drawn up and sent to all the treasurers in the country will make the task much more simple than if the treasurers merely had to try to interpret the very complicated clause which the noble Lord was good enough to read out to us.
I am one of those ratepayers who always pay their rates promptly and willingly. I realise that in return I get the benefit of a comprehensive range of public services which represent very good value for money. So I approach this debate with quite a clear conscience. While I am dealing with the subjective aspect of this matter, I think I must also clear my mind of the obvious fact that we are on the verge of a General Election. So I approach this matter quite objectively. Having approached it in that frame of mind, I find that the Bill is a good measure; one that will do an enormous amount of good to 2 million people, and I give it my wholehearted 798 support. It will be particularly welcome to the old-age pensioners and to the people who are on their kind of income. I know that this Government have already increased the incomes of old-age pensioners, and increased them very substantially indeed. The Government are now going to reduce the, outgoings of those old-age pensioners' households, with the result that millions of old people will find themselves with far more money in their pockets than they had eighteen months ago.
For twenty years I have been nagging for a comprehensive review of the whole local government financial system. I have felt that it contained injustices which ought to be abolished, and that probably the only way of doing that was to transfer some of the burden from the ratepayer to the taxpayer; but that is outside the scope of what we have to consider today. I have urged this year after year when introducing the budgets of the Essex County Council—a budget that has risen from £11,000,000 just after the war, to £56,000,000 now. I have done it in a paper I presented to the annual conference of the Rating and Valuation Association; I have done it in the local government Press from time to time. In the early 1950's, I felt that the investigation which was conducted by the Oxford University Institute of Statistics disclosed a set of circumstances which was indefensible. They pointed out that a person with an old-age pension paid 10 per cent. of his income in rates, whereas a person with £900 or more paid less than 2 per cent. of his income in rates. Those figures have more recently been brought up to date in the Allen Report, but that still tells the same kind of story. It tells us that, with an income of under £312, you pay 8 per cent. of your income in rates, and that if your income is over £1,500 you pay less than 2 per cent. of your income in rates.
Noble Lords on the other side did not have to wait for the Allen Report before they could take action of the kind which the Government are taking to-day. They had these excellent Institute of Statistics figures before them in the early 1950's, and could have taken action on the basis of them had they wished to do so. Nothing was done. I welcome the fact that this present Government mean to do something.
VISCOUNT COLVILLE OF CULROSS
My Lords, is the noble Lord suggesting that it was a waste of time to set up the Allen Committee?
§ LORD LEATHERLAND
No. But it was a waste of time for the previous Government not to do anything in carrying out their recommendations. We are doing it now. This Bill is an excellent first step, if viewed as a first step. It helps the people who are hit the hardest, and thereby fulfils the needs of that old cliché about getting our priorities right. But I do not suggest that that in itself is enough. This is just an emergency action to remedy an injustice which the Tories knew about, but which they allowed to continue. This plan to remit two-thirds of the rates over £7 10s. a year to the people who have incomes of under £ 10 a week is going to be a boon to two million people, and the plan to allow rates to be paid on a monthly basis is going to be a blessing to millions more, even though it is going to mean some extra work for the treasurers. However, I think the treasurers. with the assistance of their professional institute, will be able to take all that in their stride without too much trouble.
The complaint has been made by the noble Lord, Lord Wade, and the noble Lord, Lord Auckland, that the ratepayer has to find a quarter of the sum of this rebate, roughly £7¼ million, out of the £29 million that will go into the pockets of these poor old people. That is so, and one might regret it perhaps, but from time to time when listening to discussions on local government we hear people on the other side—noble Lords in this House and representatives of their Party outside—bewailing the fact that greater Government grants might lead to control being taken out of the hands of the locally elected councils. So while I have some sympathy, and indeed I think I should be entitled to have more sympathy than they have, we have to remember that the Exchequer is going to pay 75 per cent. of the cost of this rebate, and I seem to recollect that when the Tories introduced the Rating (Interim Relief) Act, which devoted its benefits not only to the poor but to the rich as well, they paid only 66⅔ per cent. from the Exchequer and made the ratepayers pay the other 33⅓ per cent. If it was right and proper to make the ratepayers find that amount, 800 how can the present proposal to make them find only 25 per cent. be criticised? My Lords, we cannot have a sliding scale of virtue.
I have said that this Bill was a first step. If it was the only step I should regard it as being inadequate, although I should still be thankful for it, but we already have evidence that Mr. Crossman—you know, they call him "Dick, the ratepayers' friend"—has other reliefs in view. He is going to reduce all rates for all ratepayers all round by 5d. in the pound next year, by a further 5d. in the pound the following year, making 10d. in the pound, and by a further 5d. in the pound the year after that, making 1s. 3d. in the pound. He is also going to make the owners of empty houses pay rates on those premises, and it is about time that was done. So while the ratepayers are enjoying the benefits of all these bounties, Mr. Crossman is trying to devise a comprehensive scheme for the reform and reorganisation of local government finance as a whole. If he is going to take two or three years to do that, I would remind noble Lords opposite that they had 13 years and all they could do was to see rates go up, and then, to make matters worse, they put up the rents of the householders, and on top of that they multiplied the assessments by three. I am not suggesting that was not scientifically and mathematically a desirable thing to do, but it did have the effect of camouflaging the increases in recent years, so that when we have a council imposing a rate increase of 9d. it is really 2s. 3d. on the old assessment.
During the 13 years the annual amount of rates collected went up from £316 million to £993 million—more than trebled—and whilst I must admit that part of that came from the re-rating of industrial hereditaments, the fact remains that the householders had their rates drastically increased during those 13 years and the Party opposite did nothing to ameliorate the burden, apart from just tickling around the periphery of the subject and giving some very small subsidies to hard-hit areas, like Bournemouth, which had £95,000 of the taxpayers' money, Torquay, which had £32,500, Worthing, which had £80,000, and the City Corporation of London, with its bread-lines, that got a dole from the 801 Exchequer towards its rates. The Conservative Government did nothing, while they were doing that, to tackle the underlying injustice and unfairness of the whole rating system. For 13 years they allowed these basic injustices to multiply, and although an injustice was bearable, perhaps, with rates at 6s. in the pound, as they went up to 8s., 9s., 10s., 11s., 12s., and so on in the pound, that burden was multiplied and became more intolerable. This was at a time when the country was not faced with a crisis, when it had the money to give help to these people. In fact, "We never had it so good" and successive Chancellors of the Exchequer were busy reducing the rates of surtax.
Noble Lords opposite had many opportunities to help the ratepayers if they had wished to do so, but the fact was that the flesh was unwilling and the spirit was weak. Back in 1957 I remember that my honourable friends in another place asked for a comprehensive inquiry into the whole local government financial system. The answer was that there was nothing the Government could do. In 1960 we suggested a further inquiry to reduce the burden on the ratepayers, and the Minister then said:I can see no case for a fresh inquiry into the financial relationships between central and local Government ",and a little later in that same year, when the Rating and Valuation Bill was before another place, a Labour Amendment was moved, calling for a comprehensive inquiry. The Conservatives defeated it, and the Liberals proudly marched into the Conservative Lobby to help defeat it.
In 1962, at the time of revaluation, we again demanded an inquiry to get to the root of this rating injustice. The Parliamentary Secretary then said, on behalf of the Conservatives:We must face up to the fact that promises of further inquiries are likely to hold out wholly false hopes of producing anything either new or more satisfactory than the system we have at present.Of course nobody then expected the Tories to hold out anything savouring of false hopes—there was not an Election in that year. Then we moved on to January, 1963. The Conservative Central Office put out a statement to this effect:It is surely only sensible to wait and see how this revaluation works out before con- 802 sidering an inquiry into the whole rating system.Then later that same year Sir Keith Joseph said:For the Government to set up an inquiry may unfairly raise hopes of some positive result. I do not think there is any prospect of any new solution being producedIf that inquiry had been set on foot in 1960, even if not in 1957, when we first asked for it, all the facts would have been available now on which to base our reforms, and Lord Wade's site rating proposals might very well have been considered along with the rest. Of course, in September, 1964, the Election was coming round and they altered their tune. After all those years in darkness they began to see the light, and in their Manifesto they said:We recognise that a reform of the rates is required ".It was rather peculiar that they had not recognised it at any time before during those 13 years when they had a chance, not merely of thinking about it and printing it in manifestos but actually of introducing legislation and performing the job. After the Election, when sides changed, they got more bold and more enterprising. They knew now, they told us, just how to lift this burden from the ratepayers. It was all very simple. That was after they had been shirking doing anything for 13 years themselves.
What they said in that policy statementPutting Britain Right Ahead, wasPart of the burden of rates should be transferred to the Exchequer and hardship arising from rates relieved by a system which would take account of the problems of people with low incomes, particularly old people.They knew of a system after all. They knew of that system for thirteen years when they were in office, but did they take action to put it into operation? Of course they did not. It was only after we came into office that they told us of the system, when we had been landed with the responsibility of bringing in this beneficent measure to-day. The only thing they could say before was that to have talks about the radical alteration of the rating system was only raising false hopes in the minds of the ratepayers. It reminds me of what the old sergeant major use to say: "Don't do as I do; do as I say". If it were not for the fact that a General Election is in the offing, I might be inclined to say,
§ "How could anyone trust a Party which acts like that? "
§ Finally, I think this is a good Bill. I think it takes the first step along the proper road. I know it is to be followed by even more far-reaching measures leading ultimately to radical and complete reorganisation of local government finance. I welcome it for its own intrinsic worth and for the reason that it will lead to great benefits for the most deserving group of ratepayers.
§ LORD LEATHERLAND
Part of this mathematical exercise is conducted on a six-monthly basis. It is therefore £3 15s. for six months, and £7 10s. for the year.
§ 4.33 p.m.
§ LORD MITCHISON
My Lords, I am glad that this Bill has had a general welcome in principle. I am not altogether surprised that speakers on the opposite Benches diligently sought to find fault with it—diligently, rather than successfully. Of course it is complicated, and we all felt extremely sorry for Lord Wade's old lady friend who could not understand Clause 6. But we do not really expect her to. If one tried to get legislation of this kind into a form which dear old ladies, who one hopes will benefit, could readily understand, I doubt whether it could be done without causing a great deal of trouble through anomalies in difficult cases.
The trouble about rating legislation is that rates are paid in so many ways, some directly, some indirectly, as in the case of the charities which get a specific mention here; sometimes in respect of part of a heraditament, and so on and so forth; or sharing a house—there are all kinds of complications. I agree that it makes one almost ill to read some of the stuff that emerges about this, but I always feel like Bruce Bairnsfathers' man with this: "If you know a better 'ole, go to it". It is very difficult to re-draft it into simple English.
§ LORD MITCHISON
Something has been done already, and we are going to do some more. There has been one circular about this Bill. But again it is still difficult to explain only by way of circulars. What we have to do is to rely on the local authorities to do this, just as, in practice, they have to do over quite a number of other things in seeing that people get their rights. They are elected bodies and they do, in fact, act in this way. There has been full discussion with the Municipal Treasurers' Institute, as I think appeared from the speech of my noble friend Lord Leatherland. That is the right way to get this matter over. It would perhaps be almost frivolous to say that it is almost as difficult as expecting people to understand some Finance Bills. One has to rely on whatever means are open, including circulars, such as the one already issued and the one that is going to be issued; and particularly on the officers and members of local authorities, to see that people get their rights. I think this system works, too.
To deal with another point mentioned by the noble Lord, Lord Wade, Clause 4 is a discretionary clause. What appears to have happened below is that there was considerable pressure from the Opposition for an even more discretionary clause. I have not traced the form in which it was, but (if I may put it this way) this was accepted by all the Parties as the right balance. It is very much a balance on the discretionary side between the alternatives; a very tight mandate or a very wide discretion. It is not altogether unlimited. Perhaps the noble Lord will excuse my going further into it if I assure him that this matter was carefully considered, and I think, if I may venture a judgment of my own on it, that it is a matter that may properly be left to local authorities. The effect of this concession will vary so much in different places, and it is up to them to see whether it is worth their while to make these allowances. That is what it comes to. I quite see the point, but I think this is the right solution.
I turn to one other matter, and this is a broad and general one. This is not really a taxing Bill. You can call it that—people often use language loosely—but in fact it is a Bill to alleviate or limit the regressive character of rates. I take 805 it that when rates, or anything else, are said to have a regressive character, what one means is that poor people who are carrying their burden are carrying more than their share, and it follows that better-off people are carrying less than their share—because we are not discussing the total amount of rate burden but its distribution between different groups of people. This is a problem which occupied a great deal of the time, and a great deal of the Report, of the Allen Committee; and broadly speaking, their conclusion was that on occupiers with incomes of under £10 a week the burden was very heavy. It was on that conclusion, and on the facts detailed in support of it by the Allen Committee, that we founded the limiting provisions of income to which I referred as part of reckonable income under the Bill. We have paid a great deal of attention to the Allen Report over this matter. And I repeat, this is not a Bill to increase or reduce the total rate burden; it is a Bill to shift some of the rate burden from the quarter which is suffering most to those who can better afford to carry it. That is a measure of social justice—a measure of social justice between ratepayers. It is no more than that at present.
Of course it is not a wide-scale rating reform. I hope that I made it clear that this Bill was not put forward as anything of the sort. I read what was said in the relevant White Paper about this matter. What is now entailed is, first of all, a very thorough examination of the whole relationship between central and local finance; and l hope it is no secret to say that this has been going on for some time already. It is a very complicated and difficult problem, and it has led also to the setting up of a Royal Commission to consider local government as a whole, which is an equally broad, perhaps even broader, question. It is, of course, good electioneering (I hope the noble Lord will not think I am being frivolous) to say to the Government, "You have not carried out your promises," but there are better places to say it than on this Bill.
That is for two reasons. The first is that his own Party acted far worse in the 1964 Act. When it came into force it was really not a good or sufficient piece of legislation. Secondly, what has hap- 806 pened is very clear. As we have gone along we have found this problem one that needed deeper and more thorough examination than we or anybody else thought necessary when we first looked at it. Your Lordships had another good case the other day. You will remember the West Midlands Order that came before your Lordships, and what it was all about. Remember the procedure that it had to go through. Remember the fact that it was divided against by this House. I hope no one is going to tell me that local government and its machinery does not need a pretty thorough looking at. The same applies to financial relations, too.
Therefore, I welcome the fact that we are going further. I would not for the world be even faintly rude to the noble Lord for teasing me by saying, "You have not kept your promises." I think we are carrying them out. But I would not put forward this Bill as more than it really is, an attempt to shift a particular burden from one group of people to another. We have done quite well in helping the local authorities about this matter. After all, as my noble friend Lord Leatherland pointed out, we have done better than the Opposition did, I think, in matters of percentages. But, be that as it may, the Exchequer, which in these not too easy times is not easy to get any money from, is contributing £22 million out of £29 million. I do not think that the ratepayers who have to carry the extra £7 million are an oppressed group. I think they are doing very well out of it and I think we might consider that point of view in what is, I repeat, a measure to redress in part the regressive character of this rate burden.
There were one or two other questions asked of me, and I will look through what has been said in the course of the debate and try to answer them. I do not know whether there were any broad questions that any noble Lord would particularly like me to try to answer now, but we have a good deal of other business. This is a measure which represents a good deal of common agreement for what I believe is a good purpose. In answer to the noble Viscount, Lord Colville of Culross, I would say that the reference to the time taken by the 1963 Bill was not, I hope, too provocative, but it was, quite frankly, a hint that, 807 everything being as it is, we might see whether we could deal fairly shortly with the matter. Your Lordships have been kind to me, to the Government and to yourselves in taking this measure in that spirit. I do not know whether I am in order in thanking your Lordships for doing so, but I should like to do just that.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.