§ 7.54 p.m.
§ BARONESS YOUNG rose to move, That the Draft Valuation (Statutory Deductions) Order 1973, laid before the House on November 15, be approved. The noble Baroness said: My Lords, I beg to move that the Valuation (Statutory Deductions) Order 1973 be approved. This Order is laid under Section 19 of the General Rate Act: its purpose is to alter the scale of statutory deductions. As noble Lords will know, these are deductions made from the gross value of certain hereditaments in order to arrive at the rateable value. They are intended to represent the costs of maintenance, insurance and repairs and were last fixed in 1962. When preparation for the recent revaluation was in hand we examined the scale to see whether it should be amended also. It appeared at the time that no change of any substance was needed—the existing scale broadly covered the costs that it was supposed to represent: indeed, in some places it was over generous. But more recently new evidence has come to light and my right honourable friend has received representations from the Local Authority Associations, from his honourable friends in another place and from others asking that a change in the scale should be made.
§ In the light of new evidence my right honourable friend feels it is right to alter the scale with effect from April 1 next to bring up to date the deductions contained in the 1962 Order. The properties 1143 that are affected are those with gross values between £57 and £327; at a rough estimate there are approximately 10 million of them. The extra deductions proposed in the Order before your Lordships' House will reduce the rateable values of these properties by up to £9. This is a worthwhile saving and will, of course, be effective until the next revaluation. Not only will it bring a measure of relief to a large number of householders; it will also remove a minor injustice that has crept into the rating system: that is to say, if these deductions were not brought up to date, then these householders would have to shoulder an unfair proportion of the rate burden. My right honourable friend is anxious to remove this injustice and I am sure that the House will agree that this should be done.
§ I think at this point it might be helpful to the House if I said something about the nature of the arithmetic that underlies the scale. It appears from the table contained in the draft Order, which speaks of 16⅔ per cent. here and 20 per cent. there, that we are dealing with a precise science: the fact is, we are not. All these deductions are supposed to do is to cover in an average way, the cost of the elements that they represent. In some cases the scale will be over generous: in other cases it may be the reverse. This is because it is impossible to fix a scale which is right in every conceivable case. If we were to try we should end up with something like 16 million scales—one for each hereditament. I know that some noble Lords think that the deductions ought to have been greater. Unfortunately that is not possible. The scale is intended to represent the cost of repairs and so forth and that is what it does. To go further and make it more generous would be to go beyond the purpose for which the scale was intended.
§ Noble Lords will have noticed that Clause 16 of the Local Government Bill which had its Second Reading in another place on November 12 deals with statutory deductions, and it may be convenient if I draw these various threads together and say why this is so. When the scale of deductions is changed in the context of a revaluation the new deductions are reflected automatically in the values entered in the revised valuation 1144 lists. But lists are often changed at other times: properties are built or demolished: ratepayers appeal against their valuations and some are successful. When these things happen the Valuation Office of the Inland Revenue sends a direction to the rating authority instructing them to alter the value of the particular property. The procedure is therefore complicated: to implement the Order under current legislation the Valuation Office would have to make 10 million proposals (which could all be subject to appeal) and issue 10 million directions. This would take a very long time and it would be impossible to get all the lists altered by April of next year. It therefore seemed best to ask the local authorities and others who hold copies of the valuation list to make the alterations themselves, and a circular was issued, (No. 140/73), enlisting their co-operation. All Clause 16 in the Local Government Bill will do is to give statutory authority for the lists to be altered in this way and enable the Valuation Office to give a general direction. I shall not pretend that the benefit will be great when set against the very generous help my right honourable friend the Secretary of State for the Environment proposes to give to domestic ratepayers through the new rate rebate scheme and the increased domestic element of the rate support grant. Nevertheless it will be noticeable and it will be worth while. I commend this Order to your Lordships.
§ LORD JACQUES
My Lords, we welcome this statutory Order and I thank the noble Baroness for her explanation. However, I am still searching for the reasons for the changes. Am I right in thinking that the cost of maintenance has increased more sharply than the rise in gross annual values and therefore the statutory deduction has, for those reasons, become out of date? Is that the first reason? And is the second reason that it is thought that there were injustices in the list already and consequently they are being put right; therefore only some of the range need alteration and not the whole range? Finally, what about the poor ratepayers in the current year, where they have the new gross annual values but do not get the new rate of deduction?
§ BARONESS YOUNG
My Lords, I should like to thank the noble Lord, Lord Jacques, for his remarks. He asked why 1145 the change was needed and why it is being brought in at this particular moment. The reason is that when the revaluations were in hand in 1973 the statistical evidence which bore on these particular costs—that is, of maintenance and repairs and insurance—was examined and it appeared that no change in the existing scale was required. It was found to be over-generous when it was originally laid down. But more recently new information has become available which indicates that it would be desirable to change part of the scale. There seems to be evidence that this part of it had become unfair recently and that it no longer represented those particular costs adequately. Furthermore it was found that the part of the scale affected lay in the range between £57 gross value and £327 gross value. It is for this reason that the alteration is being made now, because we think it is putting right what would otherwise be an injustice to those particular ratepayers.
§ On Question, Motion agreed to.