GENERAL RATE BILL (Hansard, 29 January 1970)

§ LORD KENNET
My Lords, this Bill is directed to the general revaluation of property for rates in 1973. It seeks to improve certain technical procedures involved in rating valuation in time for that general revaluation. It is an extremely technical bill, it is very limited in its incidence, and I do not believe it is of great interest to the majority of your Lordships. Probably the time for such major discussion as there may be of its principles—because, indeed, it has only two principles; it is a very short Bill— may be in the Committee stage. In introducing it, I propose to limit myself simply to telling the House what it is about. I see that not many noble Lords have signified their intention of speaking, but I will listen to what questions and observations are uppermost in the minds of your Lordships at this stage and then answer them to the best of my ability, leaving, as I say, the major part of our discussion to the Committee stage.
What the Bill is about is simply this. There is no clear right in law for valuation officers to look outside an extremely restricted circle of circumstances in taking evidence of the general state of rents before putting a valuation for rates on a given property. The Bill will put it beyond doubt that they may look more widely than they do at present. It will not affect the relative weight of evidence gathered from close to or from similar property, as opposed to evidence gathered from further away, or from dissimilar property—that will stay as it is—but it will protect the valuation from the risk of upset in the courts. When very good nearby evidence is not available and the valuation officers have been forced to take further away evidence, it will protect the whole valuation system from the risk of upset in the courts to which at present it is liable.
That is the general principle of the Bill. I believe it is going to make the 468 valuation process more expeditious. It is not going in any way to affect the justice of the process, and I commend the Bill to your Lordships as effecting a simple, commonsense, practical improvement in one of the necessary processes of our society. My Lords, I beg to move that the Bill be now read a second time.

§ LORD BROOKE OF CUMNOR
My Lords, I should like to thank the noble Lord, Lord Kennet, for the brevity of his speech in moving the Second Reading of this Bill. I do not demur in any way to the procedure which he suggests and has initiated, provided that he will not mind my making a slightly longer speech at this stage. He was perhaps a little too modest about the smallness of this Bill in suggesting that it might be of no great interest to your Lordships. I cannot help thinking that, if in three years' time some of your Lordships learnt that valuations of your houses were to be increased and were informed by your professional advisers that this was due to the General Rate Act 1970, your Lordships might think it would have been wiser to take a greater interest in the Bill at this time.
Unfortunately, the Government had to cancel the quinquennial valuation that was due in 1968, because they had over-loaded the Valuation Office with work. I was glad to detect the noble Lord speaking as though the 1973 revaluation was definitely going to take place. I hope he can make a categoric statement to that effect, because there have been rumours that perhaps once again the Government might postpone the quinquennial revaluation, which would be very unfair to local authorities.
As the noble Lord said, the object of this short Bill is to make the task of the valuation officers more manageable. He might have added that their difficulties in arriving at gross values for house property are aggravated because gross values are derived from letting values and by now about half of all the houses in England and Wales are owner-occupied. That is an excellent thing for the nation, but it is a bad thing for the valuers, because owner-occupied houses are not let and therefore their rental value is no more than notional. Then, of the other 469 half of all these houses, a large proportion are council houses and flats which are let at artificial rents; and another large portion are nowadays under some form of rent control. So the sector in which free market rents operate has become smaller and smaller. It is rather like Alice, who felt herself becoming smaller and smaller after she had drunk something and realised that unless she did something else in a hurry she might vanish away completely. So the Government have done something in a hurry and produced this Bill.
The valuation officers whose duty it is to carry out the comprehensive revaluation for rating every five years have a colossal task, as your Lordships will appreciate if you seek to envisage it. They face the task of estimating free market rents for every house and flat throughout England and Wales, not to mention a lot of caravans on permanent sites, too, which now are liable to rating. The noble Lord will correct me if I am wrong, but I gather that the Bill is designed to ease the task of the valuation officers in two ways. First of all, if there are not many rented houses in the neighbourhood but a lot of rented flats, they will be able, if this Bill goes through, to take the current market rents of the flats into account when trying to arrive at a notional rent for a house, or indeed vice versa if it happens to be the other way round in a particular area. I can see the theoretic case for this, but it is proper to ask in Parliament how it is going to work out in practice. In what kind of areas is it expected that flat rents or assessments can usefully be adduced in determining house assessments, or indeed vice versa?
Where there is a strong demand for flats to let but little demand for houses to let, to argue from flat rents could obviously produce an injustice to house owners. If the valuation officer were to deduce from the known rent of a flat that the gross value of that flat should be £400, and if he were then to find a house in the same road which was twice as large, could he, with the help of this new Bill, argue from that that the gross value of the house should be £800? That would surely be quite unfair, if there were a much stronger demand in that neighbourhood for flats to let than for houses to let—which might very well be 470 the case because, for example, the houses were thought by many people to be too large or too difficult to run. I cannot quite see how this new power given to the valuation officer is going to conduce to justice.
There is a strong feeling in some places, I know, that flats are over-assessed in comparison with houses, and that there-fore flat dwellers are carrying too big a share of the rates. I suspect that this provision in the Bill may be some kind of subtle concession to that feeling. But if the actual fact is that in a particular place flats are more popular than houses for renting, the feeling of the flat dwellers about the relation between their assessments and the house occupiers' assessments is not really justified, and it would not be an act of justice to make concessions to it. I should be grateful if the noble Lord, Lord Kennet, who expressed his willingness to speak at greater length if asked questions, would explain how the new power given to the valuation officers to compare flats with houses, or indeed with caravans, is expected by the Government to operate; and how it is expected to lead to greater justice in such a case.
The second way in which the Bill is intended to help the valuation officers is by empowering them to adduce evidence of rents and gross values from the areas covered by other local valuation panels, provided that they are contiguous areas. This is a thoroughly sensible provision to propose. Actually, in the Bill as originally introduced in another place the valuation officers could have presented evidence from Cornwall to justify assessments which they proposed for Northumberland. Though the Bill as introduced ran to only 30 lines— it was much shorter than this Bill—it was given a searching examination by the Opposition in a Standing Committee in another place for nearly five hours, with the remarkable result that at Report stage the Government, seeing that their original proposal here was indefensible, took out no fewer than 10 of the 30 lines of the original Bill and replaced them with this very much more reasonable proposal which we now have before us.
The point is that comparison with houses and flats in a neighbouring village or neighbouring town may be very useful, but it would be a travesty of justice to 471 expect the householder, or his professional advisers, to check up on evidence brought forward by the Valuation Office from houses hundreds of miles away, as would have been permissible if the Bill had not been amended.
The other major success of the Opposition in another place was in getting subsection (2) of Clause 1 inserted at the Report stage. If your Lordships will look at subsection (2) you will see that this is legislation by reference with a vengeance. I must say that these provisions look incomprehensible to the nonexpert, which includes me. But in a short Bill such as this I grant that legislation by reference is forgivable. I think that if your Lordships pursue your inquiries into subsection (3) of Section 83 of the General Rate Act, which is what subsection (2) of Clause 1 of this Bill refers back to, you will find that these lines do what the Government have said they do: they ensure that the occupier or ratepayer will be informed, at least 14 days in advance, of the facts which the valuation officer proposes to put in evidence when an appeal is coming before a local valuation panel.
My Lords, the substantial concessions made by the Government on Report stage in another place encourage me to think that your Lordships need not have great hesitation over giving the Bill a Second Reading, and that it will hardly be necessary to repeat here the prolonged examination to which this short Bill was subjected in Committee in another place.
Before I sit down I should like to ask the Government one more question. Can the noble Lord tell us what is the need for lines 9 to 14 on page 2 of the Bill? I am referring to the last few lines of subsection (1) of Clause 1. I have read carefully the debate in another place on an Amendment to omit this passage, and I must confess that the Government case as there stated leaves me unconvinced that these lines are necessary or that they improve the Bill. I should be grateful if the noble Lord would say something about them before we give the Bill a Second Reading.
My final word is that the Government present this Bill as an aid to the Valua- 472 tion Office in its huge task of tackling the 1973 revaluation. A far greater aid would be for the Government to abolish the Land Commission.

§ LORD PARGITER
My Lords, in my view the noble Lord has said something which is very important in relation to the general question of valuation. He has highlighted—which I think we all accept— the difficulties which are now encountered in seeking a proper basis for valuation, based upon a willing landlord and a willing tenant. If the landlord is willing the tenant usually is not; whereas if the tenant is willing the landlord is not, and the valuation officer has to find something in between them in order to provide a valuation. The extension of the area over which a valuation officer may operate may be helpful. Having regard to the tremendous importance of Government grants in relation to the rate support grant, and so on, it is highly important that we should have a much more even valuation over the whole of the country than we have at the present time. The intention behind taking away valuation from the rating authorities and giving it to the Inland Revenue was that there would be a proper valuation over the whole of the country. I do not think that this has yet been achieved, and I doubt whether it ever will be achieved; but what is becoming increasingly evident is that if rating is to be the main basis on which local authority revenues are to be raised, before long a more scientific approach must be found to the general question of how all properties, and certainly domestic properties, ought to be valued.
There are alternative ways other than the reference as between a willing land-lord and a willing tenant, and I hope that before long the Government will give general attention to the problem in order to see whether or not a more efficient technical system may be provided, or that we may have a better rating system than we have at the present time. Otherwise I believe that this Bill, so far as it goes, will be helpful inasmuch as it will widen the area that the valuation officer may use and will tend to reduce a little the un-evenness between one area and another. To that extent it will perform a useful purpose.

§ LORD KENNET
My Lords, first let me say that the Government most definitely intend to proceed to the 1973 revaluation, and indeed the preparatory work for that has already begun. The noble Lord, Lord Brooke of Cumnor, asked two main questions. First, there was the question of comparing flats and houses. If the Bill becomes law, it is unlikely that flat rents will in fact be used as the only basis for valuing houses. But even if they were, proper adjustments would be made with the objective of determining the true level of the value of the houses relative to the flats.
The need to consider flat rents at all when valuing houses arises principally in areas where there are flat rents but no willing arrangement house rents and the former are the only direct indication of local dwelling rental values. Nevertheless, in such circumstances naturally the valuation officer will first use his powers under the Bill to search for house rents over a wider area; and, having formulated a basis for these, he will try to judge a basis for the area in question without house rents, having regard to any difference in the type of locality, house and general amenities. He will then examine the flat rents and consider these in relation to other flat rents over the wider area. Having done that he will compare the proposed revaluation assessment of the flats with those he has in mind for the houses. The flat rents are in essence a useful guide to dwelling values in a locality having no house rents, or only one or two house rents which are really not valid as an indication. Of course, they are not the final answer, and naturally I do not need to repeat that nothing in this Bill binds the valuation officer to take the flat rents into account if he can reach a fair assessment without doing so, because he has sufficient local evidence of house rents. I hope that meets the first point raised by the noble Lord.

§ LORD BROOKE OF CUMNOR
My Lords, I should like to thank the noble Lord for answering my question so clearly and so fully. In the light of what he has said, may I take it that it will be quite open to an occupier who wishes to appeal, to make one of the grounds of his appeal that in fact in that area the strong demand is for houses to let rather than for flats to let—or it might be flats to let rather than houses to let—and that he 474 could ask the valuation officer and the panel to take into account a consideration of that sort?

§ LORD KENNET
Yes, my Lords, that is certainly so. The owner can continue to contest a valuation on all the grounds formerly open to him, with the exception of those specified in the Bill. He can no longer protest that the valuation officer has taken into account evidence from outside his own district, or evidence of another type of property within his district. That is the only change.
The second point raised by the noble Lord was about the need, in effect, to protect the Valuation Office from challenge, and specifically on the point to protect it from challenge to the list if the valuation officer has used only the kind of evidence made relevant and admissible by this Bill. This is not, of course, the same thing as validating the assessments, whatever they are. As I have just explained, the ratepayer can still dispute them.
The provision contained in lines 9 to 14 on page 2 of the Bill is designed to prevent argument that the assessment is not merely wrong, but that it is so wrong as, seen with other assessments, to involve the proposition that the valuation list has been improperly compiled because the valuation officer has failed in his duty. From what we know about recent case law, the Government conclude that the limitations imposed by establishing case law are such as to necessitate this protection, and that is the reason why it is included in the Bill.