§ 7.31 p.m.
§ Baroness STEDMAN rose to move, That the Valuation Lists (Postponement) Order 1978, laid before the House on 9th May, be approved. The noble Baroness said: My Lords, I beg to move the Motion standing in my name on the Order Paper. This order, which provides for the postponement of the date on which new valuation lists shall take effect from 1st April 1980 to 1st April 1981, is made under the General Rate Act 1975. If it is approved, my right honourable friend the Secretary of State intends to follow it by laying a second order to postpone revaluation by a further year until 1982. For technical reasons, we cannot lay both orders at once, so we have to take two bites at the cherry in this way.
§ The existing valuation lists came into effect in 1973 and it was then expected that they would be replaced by new lists in 1978, in accordance with the statutory requirement in the 1967 Rate Act for quinquennial revaluations. Later, however, the revaluation planned for 1978 was postponed until 1980 so that work on revaluation would not have to start before the recommendations of the Layfield Committee were known. In the event, as noble Lords will be aware, the Layfield 104 Committee recommended that the rating system should be retained, but that in future domestic property should be assessed for rates on the basis of its capital valuation. There was widespread support for this proposal from local authorities, from professional bodies and from individuals concerned with rating. The Government in their Green Paper on local government finance, published last year, accepted the proposal and made it clear that we would wish to introduce the necessary legislation in the near future.
§ The Government remain committed to assessing domestic property by reference to its capital value. We believe this would be much the best basis of valuation for the future because there is so much more open market evidence of capital values than of rental values. We would thus be able to provide assessments of domestic property based on substantial evidence, and this would give us a better and a more consistent basis for levying rates. There might, of course, be a need for temporary or even permanent arrangements to mitigate the effects of the change; but, as I said, the change would require legislation, and it subsequently became clear that there would be no majority for such legislation in this Parliament. We regret that, but it is a fact of life with which we have to live.
§ Capital valuation legislation being ruled out for the time being, we had to consider what alternatives are open to us. We could have suggested deferring revaluation until legislation was available that would allow us to proceed with revaluation based on capital values. But the existing valuation lists are becoming more and more out-of-date and for this reason already contain anomalies both for domestic and non-domestic properties which will become increasingly serious as time passes. We do not think that this would be the right course. To take just a few examples, the current lists cannot fully reflect the effect of things that have happened since 1973, such as changing levels and patterns of trade, fluctuating demands for specialised buildings, varying fashions of lifestyle, the beneficial impact of major developments and so on. Many of these factors have a substantial impact on the relative values of different properties.
§ We also have to face the growing problem arising from the operation of 105 Section 21 of the Local Government Act 1974. Under that section, the installation of central heating and other minor structural improvements are not taken into account in assessments in between general revaluations. This is seen as being very unfair by many people who had improvements before 1973, and the longer revaluation is delayed the more complaints we can expect on this score. There is sufficient rental evidence for non-domestic properties, and it is increasingly necessary to review their assessments to reflect changes in this evidence and to take account of all the relevant factors.
§ The Layfield Committee emphasised in their report the need for regular and frequent revaluations, and we came to the conclusion that we could not let matters drift but must act to produce new valuation lists as quickly as possible on the existing rental basis. The Valuation Office have been asked to start work. With 22 million properties to be valued, their work on revaluation is likely to take four years, and will be completed by 1982. The order, and its successor to which I referred earlier, will accordingly prescribe 1st April 1982 as the date for the new lists to take effect.
§ I can well appreciate that there may be some who have doubts whether there is enough rental evidence available in the domestic sector to support a further rental revaluation. Indeed, the Government themselves expressed similar doubts in their Green Paper. The less evidence there is of open market rents, the greater the difficulties in preparing the new list, and for dwellings there must be a greater reliance on indirect evidence. Nevertheless, we are confident that we can produce a sustainable Valuation List which will be a major improvement on the present List, will remedy many of its anomalies, and will provide a firmer base for the rating system in the early 1980s. I beg to move.
§ Moved, That the Valuation Lists (Postponement) Order 1978, laid before the House on 9th May, be approved.— (Baroness Stedman.)
§ Lord LYELL
My Lords, the House will be very grateful to the noble Baroness for explaining this short order. Certainly she has explained it with her usual charm. The House will be amazed to find me and not my noble friend Lady 106 Young speaking on the subject this evening. Alas! my noble friend had a previous engagement, and she has asked me to express her apologies for any discourtesy in not being in the House to make her reply to the noble Baroness.
For my part, I am most interested in the report. First it is pointed out in paragraph 2 on page 3 that the committee wish to draw attention to the unusual use of the powers conferred by the Statute. Then the report goes on to mention the two postponements of revaluation by means of the General Rate Act 1975, as was mentioned by the noble Baroness, and the two present orders.
Secondly, the House will be very interested, as I am, in the reply given by the Department in paragraphs 5 and 6 of the appendix to the report, especially the charming way in which "best intentions" are described as being "erroneous in law". I just wish that the two noble and learned Lords who have just been crossing swords over the number of judges that there should be in the land were here, for I am sure that they would find this point to be equally interesting.
I should like to turn to one or two more general points which the noble Baroness may not be able to answer tonight, but I hope that we shall reach an arrangement about that. First, may I ask the noble Baroness whether there are any precedents for this kind of procedure? I notice that the General Rate Act 1975 prescribed a revaluation for, I believe, 1st April 1978. I think I am correct in saying that in the past such revaluations have tended to take effect on a five-year cycle. May 1 ask the noble Baroness whether I am right in suggesting that the previous occasions when revaluation lists were published were 1973, 1968, 1963, and possibly 1958? It seems to be a five-year cycle. As has been mentioned by the noble Baroness, when there are distortions some rather weird consequences occur.
I am sure that both the noble Baroness and the House will appreciate that for most of us revaluations are in the nature of a visit to the dentist. Such visits tend to engender a feeling of guilt which is suddenly allied to a feeling of pleasure when the visit is, or can be, postponed, just as these revaluations can be postponed by the making of an order this 107 evening. These postponements, be they of dental visits or of revaluation orders, normally give rise to greater and more pressing need to visit the dentist or to revalue, and certainly on such occasions as we are discussing this evening they give rise to just as much annoyance and trouble to householders and other property owners as was so well explained by the noble Baroness. I think the noble Baroness referred to the change in the pattern of life so far as industry and domestic rating is concerned. The spread of the rateable values can alter and when we have distortions of what has appeared to be a fairly regular cycle one can find annoyance and anger, especially when the new Valuation Lists appear after seven years.
I am still a little mystified by the need for the postponement, but certainly the noble Baroness has done all in her power to explain the reasons. I hesitate to suggest that she has given us a multitude of reasons. I feel somewhat like the sylviculturist who is dazzled and cannot see the wood for the trees, but I have to admit that I have enjoyed the friendly language of the Committee's report, together with the charm of the Department's reply. Of course, the noble Baroness always keeps the House spellbound with her kind explanations, and indeed on occasions like this evening with her patience, on the Scotland Bill, the Wales Bill, or even on the problems of the instructional signs in the Highway Code, with which she and I are increasingly familiar. I believe that this evening she has been her usual self. Certainly I am still a little lost, as regards both the revaluation procedures and the ritual conversation between the Committee and the Department, but I am assured that such conversations are usual. I should like to thank the noble Baroness for the way in which she has explained the order. Any queries that may arise from my comments I am sure we can settle afterwards. I am grateful to the noble Baroness.
§ Baroness STEDMAN
My Lords, I am grateful to the noble Lord for the way in which he has received this order. As he has said, ritual conversations do go on between Committees and Departments and they make interesting reading. While we try to save the time of the House by doing it in one go, we are now advised 108 that we have to do it in two goes, and, given success before the end of this Session, we shall be back again for one other year in order to bring us up to the 1982 revaluation.
The noble Lord asked about postponements of revaluation. It takes about four years to undertake a revaluation, and, as he has said, provision was made for regular revaluations at five-yearly intervals. That procedure was first introduced in the Rating and Valuation Act 1925, but since then in actual fact there have been only five revaluations, so we seem to have slipped somewhat between 1925 and now. We had one in 1928–29; we had one in 1934; we did not have another one until 1956; we had one in 1963 and one in 1973; and, with a bit of luck and a good wind tonight, we shall have another one in 1982. So I am grateful for the way in which the noble Lord has received the Motion.
§ On Question, Motion agreed to.