HL Deb 02 June 1981 vol 420 cc1116-24

3.10 p.m.

Report received.

Clause 1 [Power to change year of revaluation]:

Lord Ross of Marnock moved Amendment No. 1:

Page 1, line 14, at end insert— ("Provided that that different financial year is not more than two years later than that originally specified.").

The noble Lord said: My Lords, the mysterious words of the amendment mean that whereas the Government propose (as in Clause 1) to give power to the Secretary of State to delay for an unspecified time the usual quinquennial review of valuations in Scotland, I seek to limit the delay to two years. Your Lordships will remember that in Committee I suggested that the period should be one year. I think that the suggestion met with a certain amount of sympathy, and the one noble Lord on the other side of the Committee who showed any interest at all in the matter came to the conclusion that two years would probably be right, and on that basis I withdrew the amendment. It might well be that had there been a Division there would have been a narrow defeat.

The point is that people in Scotland are now probably more sensitive than ever before about the question of rating, and of course everyone agrees that the rating system is wrong. The party opposite is committed to doing something about it, and many people are concerned that while the Government are spending all this time on local government, they are bringing forward no proposals whatever for any change in the rating system. A part of the rating system is concerned with the valuation of property, be it domestic, commercial, or industrial property. Rates are rising higher and higher—an aspect of the matter that we shall be discussing in relation to a later part of the Bill. The fact is that rates are rising higher and higher. There are inequalities in the valuations between one type of property and another, and the longer that that situation continues before there is a revaluation, an opportunity to put it right, the greater is the injustice done.

There is no doubt that the power to be taken by the Government is purely and simply to delay the revaluation. This is not unusual in England, but in Scotland there has been a delay only once since the quinquennial revaluations were instituted, and that was subsequent to local government reform. We can well understand why that was necessary at the time. The 1973 Act, reforming local government, introduced by the party opposite, delayed the coming quinquennial review by two years. I think that it was delayed from 1976 until 1978.

Bearing in mind the suggestion of the noble Lord, Lord Drumalbyn, of a 2-year period, as well as past experience, including the Government's decision in respect of one quinquennial review which was delayed, I think it fair to propose a period of delay of not more than two years. That would still give the Secretary of State the power to delay, but his power would be limited. Taking into account the injustices that arise because of longer delays—and people in England will probably be well aware of this—I suggest that the delay should be limited to two years. I beg to move.

Lord Strathclyde

My Lords, I sympathise very much with the noble Lord in what he has said, in particular his reference to the enormous increase in rates all over Scotland. I have looked up what I have been required to pay year by year and I find that in 1978–79 I paid £261, using rough figures. For 1979–80 it was £290. For 1980–81 it was £390. For 1981–82 it is £542. Things are getting into a ridiculous state, and I strongly support what the noble Lord has said about a 2-year period being quite enough. I shall listen with great interest to what the noble Earl the Minister has to say in reply.

The Minister of State, Scottish Office (The Earl of Mansfield)

My Lords, as the noble Lord, Lord Ross of Marnock, has told the House, we examined this matter in Committee and I undertook to take it away and consider whether an amendment which would in effect fetter the jurisdiction, or the discretion, of the Secretary of State might be applicable. I also recall that a number of your Lordships expressed sympathy with the view that a restriction be placed on the power contained in Clause 1 to postpone rating revaluations.

As the noble Lord, Lord Ross, has quite correctly said, different powers have been chosen as between Scotland and England and Wales. In England and Wales no revaluation will be held at all until such date as the Secretary of State for the Environment chooses to specify. However, in Scotland the assumption remains that revaluations will take place at 5-yearly intervals, as prescribed by statute, unless the Secretary of State provides otherwise.

On past experience of postponed revaluations it might be argued that there is something to be said for a 2-year restriction, as proposed by the amendment. So far as I know, previous postponements have been for no more than two years at a time, but as I explained in Committee, the Government have under review the rating system, in particular the domestic rating system, and it is possible that the results of the review could be such as would justify a fairly lengthy postponement of revaluation. Clearly, the exact timing would depend on the circumstances, but it would be inappropriate for the Secretary of State to find himself requiring to postpone a revaluation for, say, three years, but unable to do so because of the effect of an amendment of this kind.

It might well be that circumstances would require only a 1-year or a 2-year postponement, but equally it could be that a longer postponement would be justified. The uncertainty over the future of the rating system is such that I suggest to the House that there is a very strong case for maximum flexibility. I would remind your Lordships that the possibility does not exist that revaluation would be postponed far into the future in some capricious way, or on the personal whim of a Secretary of State. Any order under Clause 1 must come before both Houses of Parliament for approval and that, I suggest, is a considerable deterrent to any misuse of the power. I can see no reason for a postponement to be sought unnecessarily, given that revaluations serve to adjust rate burdens and to provide a more up-to-date basis for distributing rate support grant.

I entirely take the point of my noble friend Lord Strathclyde, and it is because people like him, indeed all of us, find ourselves in ever increasing difficulties, that the Government are considering with the greatest of care the whole system of rating, in particular domestic rating. But as I suggest, the situation shows that the maximum flexibility is desirable in this case, and it is for those reasons that I hope that the noble Lord, Lord Ross, will not press his amendment.

Lord Hughes

My Lords, I am quite certain that my noble friend Lord Ross will find that reply exceedingly disappointing. The Minister has reiterated that the Government have the rating system under continuing review. According to the figures quoted by my noble friend, the next revaluation, if there is no deferment, will not take place until 1983. So, given the two years which he has suggested as being the limit for deferment in his amendment, that means that the Government would have until 1985. Is the Minister seriously asking us to believe that the consideration, which presumably has been in their mind ever since they were elected two years ago, cannot be completed by 1985, assuming that electorally they are given the opportunity to carry on until then? It seems an extraordinary snail's pace at which to be considering this matter. It seems to me that the acceptance of this amendment, if it does not do anything else, at least should encourage the Government to put a little more speed into their consideration of the rating system. I therefore hope that my noble friend will not find it possible to withdraw this amendment.

Lord Ross of Marnock

My Lords, my noble friend Lord Hughes is quite right: I found the reply very unsatisfactory. I cannot understand this repetition of the word "flexibility", as though it has some special virtue of its own, bearing in mind that we are being reasonably flexible. We are giving the Government two years' delay; and remembering that the Government will probably have to make up their mind about it at least a year before the revaluation (because they must start some time earlier in order to get the job done in time for that particular year), they will need to start virtually next year, probably, although we have not had the information that they are going to delay for whatever period they make up their mind about. Bearing in mind that 1983 might be a difficult year, because it will probably be the year of a general election, and a general election means work for the electoral officer (who, in Scotland, is also the assessor) and his staff, there could be difficulties. They would need to know fairly soon whether or not the Government are going to delay.

It should also be borne in mind that if there is a delay of as much as two years it means that for two years longer there may be injustices as between one property-owner or industrialist and another. This covers everybody, even agriculture, because agriculture is de-rated in Scotland, but not the farmhouse, the domestic premises. In fact, I have discovered a new injustice. Lord Strathclyde tells me of the increase in his rates over the past two or three years. I am amazed at how little he pays, because I can tell him that I pay far more. This is the kind of thing that we shall come to—how you get information and what right you have to put it forward in relation to your rates.

The injustice could possibly be remedied, but can only be remedied at the time of revaluation. If you want your rates reduced between revaluations, there has to be some substantial change in respect of your own property. So it is a very important amendment from the point of view of property-owners but also from the point of view of tenants, because it is the occupier who pays the rates. I just cannot understand this feeling that the Government might like three, four or five years. I do not think it is fair to anybody. It is not logical to me.

The Government say, "Things are under review in respect of domestic rates". How long have they been under review? We have had Royal Commissions. In fact, in the case of the last one, I do not think the party opposite, as a party, gave evidence to it. We had the Layfield Commission. What has happened? Nothing. That is a few years ago; and there is no guarantee at all that we are on the point of making some great breakthrough in relation to the rating system. Valuation depends on the rating system, and of course valuation is where you get the inequities that arise.

No, I am afraid I cannot withdraw this amendment. I would ask your Lordships to give serious consideration to supporting this element of justice to Scotland.

3.26 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 72; Not-Contents, 86.

Airedale, L. Leatherland, L.
Amherst, E. Lee of Newton, L.
Amulree, L. Listowel, E.
Bacon, B. Llewelyn-Davies of Hastoe, B. [Teller.]
Banks, L.
Beaumont of Whitley, L. Loudoun, C.
Birk, B. Lovell-Davis, L.
Bishopston, L. MacLeod of Fuinary, L.
Blease, L. Paget of Northampton, L
Blyton, L. Peart, L.
Brockway, L. Pitt of Hampstead, L.
Brooks of Tremorfa, L. Ponsonby of Shulbrede, L.
Chitnis, L. Porritt, L.
Clancarty, E. Ritchie-Calder, L.
Collison, L. Robbins, L.
Cooper of Stockton Heath, L. Rochester, L.
Darling of Hillsborough, L. Ross of Marnock, L.
David, B. [Teller.] Rugby, L.
Davies of Leek, L. St. Davids, V.
Donaldson of Kingsbridge, L. Sefton of Garston, L.
Elwyn-Jones, L. Stedman, B.
Evans of Claughton, L. Stewart of Alvechurch, B.
Gaitskell, B. Stone, L.
Gardiner, L. Strauss, L.
Glenamara, L. Taylor of Mansfield, L.
Goronwy-Roberts, L. Thurso, V.
Gosford, E. Underhill, L.
Hale, L. Vernon, L.
Halsbury, E. Wallace of Coslany, L.
Hampton, L. Wells-Pestell, L.
Hankey, L. Whaddon, L.
Hanworth, V. Wigoder, L.
Henderson, L. Wilson of Langside, L.
Houghton of Sowerby, L. Winstanley, L.
Hughes, L. Winterbottom, L.
John-Mackie. L. Wootton of Abinger, B.
Jenkins of Putney, L.
Adeane, L. Davidson, V.
Alexander of Tunis, E. de Clifford, L.
Ampthill, L. Denham, L. [Teller.]
Barnby, L. Drumalbyn, L.
Bellwin, L. Elgin and Kincardine, E.
Berkeley, B. Ellenborough, L.
Blake, L. Energlyn, L.
Boyd-Carpenter, L. Evans of Hungershall, L.
Bridgeman, V. Exeter, M.
Buccleuch and Queensberry, D. Falkland, V.
Ferrers, E.
Campbell of Croy, L. Foley, L.
Clifford of Chudleigh, L. Gage, V.
Cockfield, L. Gainford, L.
Cottesloe, L. Gibson-Watt, L.
Craigmyle, L. Gisborough, L.
Cullen of Ashbourne, L. Glenarthur, L.
Daventry, V. Glenkinglas, L.
Gridley, L. Mottistone, L.
Grimston of Westbury, L. Newall, L.
Hillingdon, L. Northchurch, B.
Hives, L. Nugent of Guildford, L.
Hylton-Foster, B. Onslow, E.
Kemsley, V. Penrhyn, L.
Kilmany, L. Portland, D.
Kinnaird, L. Romney, E.
Lauderdale, E. St. Aldwyn, E.
Lindsey of Abingdon, E. St. Germans, E.
Lloyd, L. Sandys, L. [Teller.]
Long, V. Savile, L.
Luke, L. Selkirk, E.
Lyell, L. Skelmersdale, L.
McFadzean, L. Sligo, M.
Mackay of Clashfern, L. Somers, L.
Macleod of Borve, B. Swinton, E.
Mancroft, L. Terrington, L.
Mansfield, E. Tranmire, L.
Margadale L. Trefgarne, L.
Mersey V. Vaux of Harrowden, L.
Mills, V. Vickers, B.
Milverton, L. Vivian, L.
Monk Bretton, L. Westbury, L.
Montagu of Beaulieu, L. Widgery, L.
Montgomery of Alamein, V.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 2 [Power to exclude certain lands and heritages from valuation or revaluation]:

3.33 p.m.

Lord Ross of Marnock moved Amendment No. 2: Page 2, leave out lines 41 and 42.

The noble Lord said: My Lords, in Clause 2 the Secretary of State takes a very wide power, in regard to any new valuation roll which is being made up, to introduce some new scheme which might apply to classes of lands and heritages as may be specified to be valued according to this new scheme. Then we get the new subsection (6A) which reads: … he may prescribe by order under this subsection (either or both)"— he is taking no chances— a method whereby the net annual value of the specified lands and heritages shall be adjusted for the purposes of ascertaining their rateable value; such a method as regards the unspecified lands and heritages; and the order may prescribe different such methods as regards different valuation areas".

As I read this, it means that within valuation areas (which, for all practical purposes, are the regions) you will have a different method of valuing property in Strathclyde, in the Borders, in the Highlands and Islands and in the Grampian areas; whereas at the moment it is fixed and laid down by the 1956 Act in relation to the terms on which the Government indicate that the assessor must work. He is tied by the fact that in relation to property somebody would be able or prepared to pay to rent a property and the assessor must visualise that all the property is available for him to pick from. He is allowed no subjective treatments of any kind. This is what makes us wonder at times as to how things turn out as they do. Here we have some new system that we know nothing about applying only to certain properties; and the new method of valuation which is going to prescribe in an order and the order may prescribe different methods as regards different valuation areas.

This could have been understood if different classes had had to be valued, but it relates to different valuation areas. So you could be valuing property in one way in the Grampian region around Aberdeen and the North and in a different way in the Tayside or in Strathclyde. I think it takes a bit of believing that this is even contemplated. We did not have the opportunity of getting a full reason for this on Committee. We were very rushed on Committee, although the Committee sat until late at night.

I wonder whether the noble Earl will be prepared to give an explanation of this now and to tell us what is the intention of the Government, and to justify the inclusion of this particular power to prescribe different methods in regard to different valuation areas. I know that it will not take him long, but I hope that he can give a more satisfactory explanation than his last one. I see that he has some special adviser by his side, but I feel that the noble Lord the Chief Whip will be hurrying him along rather than giving him satisfactory wording for the House. But the reason why I moved this amendment is that I really want to know. I am mystified as to how it will work and I want to know why it was introduced at all. I beg to move.

The Earl of Mansfield

My Lords, this amendment was one of two linked amendments which were made in another place as a result of points which were made and accepted by honourable friends of the noble Lord, Lord Ross of Marnock. In fact, the words which the amendment seeks to delete from the Bill in lines 41 and 42 of page 2 are of a piece with the requirement in the new subsection (6B) that the method of adjustment must be such as to preserve the pre-existing ratio of rateable values in each valuation area. It was concluded in another place that this was the fairest way to proceed and that an all-Scotland adjustment would risk inequity for the ratepayers in areas where the ratio of rateable values was significantly different from the Scottish average.

I can illustrate it in this way: it is essential in the interests of equity to have it possible to prescribe different methods for different areas. I can illustrate the distortions which could arise because for instance the ratios between domestic and non-domestic rateable values for Scotland as a whole at the 1978 revaluation was 1:1.8; in Dumfries and Galloway it was 1:1.5, while in Shetland, because of the Sullom Voe development, it was 1:24. A degree of flexibility as between areas is essential. But I stress that there is a major safeguard in that the flexibility is only in the method and not in the result to be achieved by applying the method. It must be such as will preserve the existing ratio of rateable values.

That is a sufficient guarantee that there is no possibility of using a partial revaluation to alter the distribution of the rating burden as between classes of property, which is what the noble Lord, Lord Ross, was most concerned about. Any method used will be fair and reasonable. As an added safety factor, the noble Lord will be aware that before prescribing a method or methods the Secretary of State must consult the Scottish Valuation Advisory Council and the Convention of Scottish Local Authorities. I hope that the noble Lord will see that the provision in the clause does not have the sinister quality which he might think and I hope that he will withdraw his amendment.

Lord Ross of Marnock

My Lords, it is not a question of the sinister quality that I am concerned about. I am concerned about the actual facts as to how things will turn out. I am certainly glad to notice that there has to be consultation with the Scottish Valuation Advisory Council. Remember one of the duties of the Scottish Valuation Advisory Council when it was originally created in the 1956 Act was to try to get uniformity of valuation between property and property, not a ratio within an area.

As I was saying, it is to try to get uniformity between properties no matter where they be in Scotland. I remember an amendment being made to the Valuation Act which allowed anyone appealing against his valuation not just to cite a property within his own area or within his own neighbourhood but say someone in Ayr being able to cite what he regarded as a similar property in Aberdeen.

It is all very well for the noble Earl to, say, that this is to get the right ratio within the area between different classes of property. That is probably desirable from that point of view; but when he says that the result itself will not be out of harmony with the existing situation, I am afraid that I cannot believe him. In rating—although I am much more familiar in the actual practice of it in relation to rate support grant—what do you do there? You start at the end and work back to the formula. Here we are going to start from the method and work from the method and get a satisfactory result. I am perfectly sure that it is not going to be satisfactory between one area and another. Let us remember that aggregate assessment has a lot to do with the distribution formula when it comes to distributing rate support grant. This is why it is so important.

I do not care whether somebody in another place had ideas about this and honourable friends of mine in another place suggested that this should be done. I do not think that it is altogether wise. I certainly have not seen an adequate explanation as to how we are going to get fairness within the area and between the areas—far less between one occupier and another in respect of similar properties. When it comes to the allocation of rate support grant, there can easily be injustice. The Government themselves manipulate this in relation to fixing a formula between needs and resources. It used to be 1 to 4 and now it is 1 to 9.

The Government have all sorts of powers, but this is something that is going to last and recoil. I am not satisfied yet. If the Minister would like to have another go, I am prepared to be persuaded. If he will say he will have a look at this between now and the next stage of the Bill I shall gladly withdraw the amendment because I know he wants to beat a hasty retreat right now in relation to something that is happening near the Scottish Office.

The Earl of Mansfield

My Lords, with leave, I do not think that I can help the House further. This was something that was exhaustively considered in another place. We are not talking about different methods of valuation and revaluation but different methods of determining the ratio between a revalued and an un-revalued property. That I suggest is quite a different matter. There really is nothing more to look at. These provisions were put in in the interests of equity as a result of the points which were valid and acceptable and made by the noble Lord's friends. Who am I to say that they were talking nonsense?

Lord Ross of Marnock

You must not mix up friends with colleagues—

Several noble Lords


Earl Ferrers

My Lords, with respect to the noble Lord, this is Report stage and I think that the noble Lord has already spoken.

Lord Ross of Marnock

My Lords, I thought I was allowed to withdraw an amendment by speech. Since I am not allowed to withdraw it, I shall just sit still.

On Question, amendment negatived.