§ 3.32 p.m.
§ Lord MELCHETT
My Lords, I beg to move that this Bill be now read a second time. As noble Lords are aware, revaluations of property for rating purposes should take place every five years. The last one came into effect on 1st April 1973, and so the next one should take place on 1st April 1978. The purpose of this Bill is to postpone the revaluation until 1980. The Bill also provides for my right honourable friend to make Orders delaying it further, one year at a time, if that proves necessary.
This is a short Bill and the reasons for postponement can be stated briefly. A Committee of Inquiry chaired by Mr. Frank Layfield, QC, is at present examining the whole question of local government finance. We expect the Committee to report at the end of this year. Then 224 my right honourable friend will consider the recommendations and consult with the local authorities and others. This means that he may put forward proposals for legislation during 1976, or possibly depending on the complexity of what is involved. All that time the Valuation Office would have been working on preparations for a revaluation in as these preparations take about three years. There are 17 million domestic properties to be revalued and 3 million others. To revalue these takes a long time and is a detailed and expensive job. We do not know what the Layfield Committee will recommend, but if a changed basis of valuation, or an entirely different way of financing local government, is the answer, much time and effort would have been wasted if we had proceeded from 1974 with the preparations for a 1978 revaluation.
In these circumstances, 1980 is the earliest possible date upon which a revaluation could come into effect. We intended, in the first place, to postpone the revaluation to 1981, but it might be just possible to bring the date forward by one year. To bring the date forward to 1979 would not be possible because it would mean preparations for the revaluation beginning before the Layfield Committee Report. There are a number of precedents for this postponement. In fact the history of revaluations is also a history of postponed revaluations. The provision for five-year regular revaluations first appeared in the Rating and Revaluation Act 1925. Between that date and 1948, there were only two revaluations instead of the four that one would have expected. One was delayed because of the war, and the other was postponed while the Fitzgerald Committee deliberated.
Following the Local Government Act of 1948, new valuation lists should have come into operation in 1952. But the then Conservative Government, after their election in 1951, postponed the revaluation until 1953 because of disagreements on the basis of assessment. In 1953, however, that Government changed their mind again and provided for a new valuation to operate from 1956. In 1959, the next Conservative Government again postponed revaluation—this time until 1963—because of the lack of rental evidence available in time. And in 1966 the Labour Government postponed the 225 revaluation due in 1968 until 1973, because ofa shortage of valuers and the increasing commitments of the Valuation Office".I hope, my Lords, that you will accept that on this occasion it is only the existence of the Layfield Inquiry, and our intention to give the fullest consideration to its recommendations, that makes this postponement necessary. I know there are those who are not happy with the postponement. The local authorities, in particular, feel that they should have been consulted beforehand. I can well understand these feelings. Very full consultations take place on a variety of subjects, and I think I can say that my right honourable friend can be proud of the close working relationship with the local authority associations that he and his predecessors have fostered over the years. Therefore, if we propose to postpone revaluation by a further year my right honourable friend the Secretary of State will certainly consult the local authority associations beforehand.
It has been said that by postponing revaluation we are eroding the rate base of rating authorities—in other words, that whereas extra rateable value would have accrued to them in 1978, this extra value will not now accrue until 1980 or later. I find this argument somewhat difficult to follow. Certainly rate base is increased when a new rateable value is created, but merely increasing the rateable value of existing property through revaluation does not affect the rate base. Postponement of revaluation has no effect on the taxing capacity of rating authorities. Presentationally, it may look better that the rate in the pound is lower; the amount that the ratepayers as a whole have to pay, however, is not affected.
Having said that, there is one criticism of postponement which has more substance in it. It is true that the postponement of revaluation causes anomalies as between one ratepayer and another. Since the rateable values are not up to date, postponement means that some ratepayers bear a greater share of the rate burden than perhaps they ought, while others bear less. A good example of this problem is illustrated by Section 21 of the Local Government Act 1974 which provides that, from 1st April this year, the installation of central heating or an improvement to property that would 226 result in a rateable value increase less than a prescribed limit (of £30 at present) shall be disregarded until the next revaluation. It is true that the effect of this is that those who enjoy the concession will enjoy it for longer because the revaluation is postponed, and therefore they will pay a lower share of the rate burden than is absolutely fair. I concede this, and I also concede that our present rating system has certain disadvantages. This is why a fundamental review was badly needed, why it is now being carried out, and why we hope that the Committee of Inquiry will be able to recommend a better system of local government finance. If we embarked on a revaluation now, it would be tantamount to saying that we had no confidence in the Layfield Committee, and it would, in all likelihood, turn out to be a complete waste of time and money. My Lords, I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a. —(Lord Melchett.)
§ 3.37 p.m.
§ Baroness YOUNG
My Lords, I should like to thank the noble Lord, Lord Melchett, for explaining this Bill to us. As he has said, it is a short Bill, one of only two clauses, and as such it has not attracted much attention in or outside this House. I regret to say that local government does not generally attract interest, although it is of vital importance to the life of everyone in this country. The issue in the Bill is important. It is, as the noble Lord, Lord Melchett, said, proposed to postpone revaluation from 1978, when it should have taken place, to 1980. Clause 2 makes provision for a further postponement each year at a time.
Local government is provided annually with £2,850 million from rates. I know only too well that it is a much criticised tax. Nevertheless, rates are there until they are abolished. Much of the criticism arises from anomalies of rates, in particular the fact that many people who make use of local government services do not pay rates at all. It is not part of our debate today to discuss the whole rating system, but, as the noble Lord, Lord Melchett, has said, this Bill adds to the anomalies of the rating system and to the sense of unfairness felt by the ratepayers. By postponing revaluation from 227 1978 until 1980 the Government will be deliberately causing further distortions in the rating system.
I accept entirely, as the noble Lord has said, that this Bill will not alter the total amount of rates paid or raised by local government. Nevertheless, the distortion means that rates as between one ratepayer and another will increase year by year and that a great many people will come to believe, quite rightly, that they have not been fairly assessed and that they have an unfair assessment in relation to others. I believe this fact to be indisputable. Furthermore, rates are not a buoyant tax. They were never meant for an era of rampant inflation such as we have at present. If they arc in any way to meet the present inflation, then there ought to be more and not fewer re-valuations. It has indeed been put to me that, with modern computer techniques, there is no reason at all why there should not be an annual revaluation. I understand that one particular anomaly, to which the noble Lord, Lord Melchett, has not referred at all, arises from the fact that there was to be a bringing up to date of the rating assessments of the nationalised industries, due in 1975, which will undoubtedly affect a number of authorities.
My Lords, I very much regret that the Government did not consult any of the local authority associations before introducing this measure. Indeed, it seems extraordinary that, despite all the Government's fine words about the independence of local government—and this is something about which I have no doubt we shall hear a great deal on Monday afternoon when we shall be talking about the Housing Rents and Subsidies Bill— the local authorities were not consulted at all on this occasion. Yet what could be more important to local government than finance? Though I listened very closely to what the noble Lord, Lord Melchett, had to say, I did not understand the reason why there was no consultation. However, I am glad to hear that, if there is to be a further postponement of revaluation, there will be consultation then. That leads me to ask whether the committee under Mr. Frank Layfield, QC, which is now reviewing the whole question of local government finance, has been consulted about this matter and, if it was consulted, what it 228 had to say, because it appears that some of its conclusions are being pre-empted by the Bill. After all, it is common knowledge that many people believe that the continuation of the rating system in one form or another is inevitable, and they have given evidence to this effect. Does this Bill mean that the Government have decided to ignore all this evidence and to act regardless of what the committee has to say?
My Lords, this is not a Bill that we shall oppose. Nevertheless, I think that it is a regrettable Bill, which I believe leaves great distress and worry in local government. It is a fact there has never been a rating revaluation under a Labour Government and I fear, as many people do, that the real reason behind the proposals in the Bill is that the Government want all the valuers for their proposed land nationalisation. More important, the fact is that it is an attempt—or so it appears—to pre-empt the findings of the Layfield Committee. It is unhelpful and unfair to local government, of which a great deal is being asked at the moment, and I believe it to be unfair to ratepayers.
§ 3.43 p.m.
§ Lord MELCHETT
My Lords, I should like to thank the noble Baroness for the fact that she does not intend to oppose the Bill. I thought that I made it quite clear that the only reason for the postponement was to await the outcome of the Layfield Committee's review. If we embarked on a revaluation now, it would be tantamount to saying to the Committee that, whatever it decided or recommended, revaluation on the present system would nevertheless take place. If we decide to accept some radically new recommendations of the Committee, a great deal of time, effort and money will have been wasted in the meantime on a revaluation which will never be used. It is for that reason that the Bill is necessary. It certainly has nothing to do with the White Paper on land. These fears are quite misplaced, as the Explanatory Memorandum to the Bill makes clear. The number of professional valuers who will be released is minimal and there is a great deal of other ongoing work to be done. The Valuation Office is already understaffed and these savings are, in a sense, notional and they will not release 229 any extra staff. In any event, the valuers who will be needed for the land proposals will be local authority valuers and not revenue valuers.
My Lords, on the question of local authority consultation, I think it is right to say that local authorities have not been consulted in the past when these postponements have taken place. Certainly one of the reasons why there has been no revaluation during a Labour Government is that there have not been enough Labour Governments. I do not think that it is to our discredit, and, as I have pointed out, there have been a great many postponements under both sides in the past.
Finally, my Lords, I should like to recommend the Bill to your Lordships' House. It is one that will save a great deal of time and effort on the part of valuers and people who already have far too much to do. I am grateful to the noble Baroness for the fact that she does not intend to oppose the Bill.
§ Baroness YOUNG
My Lords, before the noble Lord sits down, could he just answer my question about the committee under Mr. Layfield; was it consulted?
§ Lord MELCHETT
My Lords, if I may, I will write to the noble Baroness about that before the next stage of the Bill. I am afraid that at the moment I do not know the answer.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.