HL Deb 30 March 1983 vol 440 cc1584-91

4.30 p.m.

Lord Lyell

My Lords, I beg to move that the Valuation (Communal Accommodation) (Scotland) Order 1983, a copy of which was laid before the House on 7th March, be approved. The purpose of this short order is to apply the power provided in Section 5(2) of the Local Government and Planning (Scotland) Act 1982, enabling the Secretary of State to prescribe a method of ascertaining the rateable value of certain lands and heritages in Scotland. The lands and heritages described in the Act and covered by the order are those which are not used for profit-making purposes, which are wholly or mainly used as residential accommodation for persons living separately from any family and in which certain facilities are shared by those persons. The order itself specifies a limit. It will apply only to property where the total external area is not more than 300 square metres. The order provides that these lands and heritages are to be valued according to the provisions relating to the valuation of dwellinghouses in Section 6 of the Valuation and Rating (Scotland) Act 1956 as if they were, in all respects, dwellinghouses. It is also provided that valuation rolls shall be altered to give effect to the order, and for the order to come into operation at the beginning of the next local authority financial year, which is on 1st April 1983.

The powers now in Section 5 of the 1982 Act were introduced during consideration of the Bill by your Lordships' House in Committee. The problem of high valuation and, therefore, high rate burden on communal accommodation had been raised in representations to my right honourable friend the Secretary of State during consideration of the Bill in another place, and in your Lordships' House these points were raised by my noble friend Lady Elliot. The provisions in Section 5 were introduced as a result of the Government's consideration of the problem.

My noble friend Lord Mansfield explained, when moving the relevant amendment, that the Government had been aware for some time of the difficulties caused to charities, local authorities and housing associations by the valuation of communal accommodation for single people as commercial and not domestic property, regardless of its size. This means that those persons living in this type of property pay higher rates than are levied on comparable domestic property. My noble friend Lady Elliot, in the speech she made during consideration of the Bill in Committee, mentioned a number of examples, including flats run by the Edinburgh Youth Homes to provide accommodation for young people leaving children's homes. These were originally rated at £172, but when they were divided and lived in separately were valued by the assessor as a hostel and the rates increased to £467. Another example has been brought to our attention by the Scottish Association for Mental Health, which took on the tenancy of a block of postwar fiats in Edinburgh. These were occupied as permanent accommodation by ex-psychiatric patients and the rateable value was increased, following the adoption of a commercial basis of valuation, from £202 to £376 each.

Accommodation such as housing projects designed for single persons generally, with communal facilities, are usually valued as a hostel on a commercial basis, greatly increasing the rateable value and, as a result, a number of projects to provide accommodation for single homeless and for single people generally have been jeopardised. It was recognised, when the power of Section 5 were sought, that the problem of valuation of these properties on a commercial rather than domestic basis is not capable of a single of a simple solution. As I am sure those of your Lordships who have ventured into the subject will know, valuation law is extremely complex. In the short time available prior to introduction of the Section 5 powers in the Bill, it was not possible to consult widely enough to achieve agreement to the substantive changes to be made in primary legislation. It was for this reason that it was decided to seek a general power to enable the Secretary of State to tackle the problem as appropriate, by prescribing rating relief and/or methods of ascertaining values.

If I may detain your Lordships a little, the root of the problem lies in the fact that in Scotland dwellinghouses are entitled under statute to a favourable method of valuation which is not usually extended to other kinds of residential accommodation owned, for example, by charities or housing associations and let to persons often disadvantaged in some way, who would find it difficult to provide their own accommodation. Often, the rateable occupier is not an ordinary householder, and the accommodation is not assessed as a dwellinghouse and loses the considerable valuation benefit associated with this status, which may not be compensated for by other relief; for example, that which is available to charities. The accommodation concerned may be just as much the settled home of the occupants as is a dwellinghouse but the occupants are penalised in having to pay higher rates than householders who are often better off than they. The extent of the rating disadvantage will vary considerably from property to property, and the fairest way of providing the exact relief merited is by having the residential accommodation, often a flat, assessed as if it were a house.

Since the 1982 Act was passed, a committee of the Working Party on Local Government Finance in Scotland has carefully considered how the powers enacted in Section 5 might best be put into effect. They came to the view that the problem of high values and, consequently, high rate burdens was most pressing in respect of those properties most akin to dwelling-houses. They considered that, as the basis of the problem was valuation on a commercial rather than a domestic basis, provision should be made to ensure valuation in line with domestic property. The order therefore provides that premises within the terms laid down are to be valued as if they were, in all respects, dwelling-houses, notwithstanding that structural adaptations might have been made of a nature not normally found in a dwellinghouse; for example, additional washing, cooking or storage facilities.

The order is restricted to those lands and heritages with an external area not exceeding 300 square metres. We are advised that this will allow the order to be applied to properties up to and including those which are of a similar size to comparatively large houses, and for which there is sufficient evidence available to enable assessors to fix a valuation as if the property were a dwellinghouse. A review of the rate burden on larger premises, such as hostels, is in hand. When this is concluded, consideration will be given to whether and to what extent relief for these premises may be appropriate. Larger properties will require separate consideration mainly because they are unlike dwellinghouses in size and structure, and it is likely, therefore, that any measure which might be proposed would have to provide a solution for larger premises different from valuation as if they were dwellinghouses.

This order has the support of The Scottish Council for Single Homeless and other housing associations, to whom I should record our gratitude for bringing this problem to our notice, and for their willing and helpful co-operation in constructing the solution contained in the current order and in carrying out further studies. It is considered that the modification to the existing valuation system contained in the order will go a considerable way to removing a widely perceived unfair discrimination in the existing system against those in the community whose burden in life can well do with lightening, rather than being added to. It is also a matter of practical common sense that the rating system operates in as even-handed a manner as possible. The order is evidence of the compassion and sound practicality of this Government. For that reason, I commend it to your Lordships' House. My Lords, I beg to move.

Moved, That the order laid before the House on 7th March be approved.—(Lord Lyell.)

4.39 p.m.

Lord McCluskey

My Lords, with regard to the order itself, the House will be grateful to the noble Lord for explaining it. With regard to the last sentence of what he had just said, the House will see that the noble Lord took the opportunity to congratulate the Government, because he gets such few opportunities to display compassion. This extremely modest example of the Government's compassion is welcome like a good deed in a naughty world.

I should like to ask the Minister whether he would explain something to me. He has explained what the purpose of this order is. As I understand it, there has been a question in Scotland, as yet unresolved by the courts, as to whether, for example, a small convent—and I say "small" because I am thinking of the external measurement given in the order—would qualify as residential accommodation for persons living separately from any family and sharing facilities. I assume that the answer to that is, Yes; but perhaps the noble Lord, Lord Lyell, will be able to tell me.

There is one other anomaly to which I want to draw attention—and I have given the noble Lord notice of this question. It is bizarre that a Church of Scotland minister who lives in a manse in Scotland is deemed under valuation law to be living in a dwellinghouse; but a minister of any other religion—and in particular Roman Catholic priests who live in presbyteries—are not, in large parts of Scotland, deemed to be living in dwellinghouses, because the use of the house is said to be not that of a dwellinghouse. The result is that, at least in certain parts of Scotland, there has been a kind of religious discrimination, depending on whether or not one is a member of the Established Church.

I wonder whether the result of this order will be that when one looks in future at a presbytery lived in by a Roman Catholic priest, or at a house inhabited by a Salvation Army minister, if there is such a person, it will be regarded as residential accommodation for persons living separately from any family"; and, if so, whether it will be deemed to be a dwellinghouse? If the answer to that is that the order will apply to such accommodation, will it apply to such accommodation only if there are two priests living there, and thus sharing the accommodation? And will the house cease to be a dwellinghouse if the senior priest dies or the junior priest decamps, thus leaving the house occupied by only one person? Perhaps the noble Lord can clarify these matters so that those who read the proceedings of this House in order to understand what the effect of the order is will be able to understand how it will apply in this somewhat bizarre situation.

Lord Lyell

My Lords, your Lordships will be very grateful for the detailed scrutiny of the noble and learned Lord, Lord McCluskey, and for the pertinent questions put by him. I would be less than fair to your Lordships, and certainly less than fair to the noble and learned Lord, if I were not to let your Lordships in on the secret that the noble and learned Lord gave me prior warning of his question, albeit a simple question. I hope that I shall provide some kind of answer. At the same time, the noble and learned Lord's question covers a fairly wide area and he may find my reply not entirely satisfactory.

Your Lordships will see that the lands and heritages to which the order before us this afternoon applies are those specified in Article 2 of the order. I understand that property within the category specified is required to be valued according to the provisions for ascertaining the value of dwellinghouses. This is prescribed in Section 6 of the Valuation and Rating (Scotland) Act 1956. Your Lordships will recall that in the course of my introductory comments I mentioned that this was a favourable method of valuation. This advantage arises mainly from the provision that in assessing the annual rent, which is the basis of all valuations, it shall be assumed in the case of a dwellinghouse, first, that all comparable accommodation in the locality is due shortly to become available, free from any statutory or other restrictions; secondly, that rents are unsubsidised; and, thirdly, that no marked excess or deficiency exists of accommodation relative to tenants.

The definition of "dwellinghouse" does not appear in the Act, but I am given to understand that lack of a precise definition of what is and what is not a dwellinghouse does not appear to have caused difficulty to assessors in applying the method of valuation appropriate to dwellinghouses prescribed in the 1956 Act. I understand that no representations have been made for a definition of "dwellinghouse" to be prescribed.

Finally, perhaps I may settle the question of convents or other houses occupied by religious persons for residential purposes, in reply to the noble and learned Lord. I understand that the order will cover these houses and convents, or buildings occupied for residential purposes, if the criteria of the order are satisfied; if the area of the building is within the size restriction. In the definition of the building, the noble and learned Lord mentioned a convent. The noble and learned Lord mentioned to me before we came to your Lordships the case of a convent separate from a church or other institution. I believe that if the area of the residential building was within the size restriction and if the building was used wholly or mainly for residential accommodation by these persons, the residents would certainly find themselves in all cases—be they priests, ministers, clergy, curates or nuns—living in residential accommodation for persons living separately from any family". That might cause some difficulty with the Church of Scotland minister—I would not know for certain—but Roman Catholic priests, nuns, and other religious orders, provided the building in which they are resident falls within the size restriction of 300 square metres, will find, as I understand it, that the order indeed covers convents and priests' houses of the type described by the noble and learned Lord, Lord McCluskey. I hope I have gone some way to answering the noble and learned Lord's question. Does he wish to intervene?

Lord McCluskey

My Lords, before the noble Lord, Lord Lyell, sits down, I entirely accept what he said about there being no definition of "dwellinghouse" because the Act does not use the phrase "dwellinghouse" but "occupied as a dwellinghouse". Therefore, attention is directed at the character of the relationship between the premises, on the one hand, and the persons who use them, on the other.

However, I wonder whether the noble Lord can deal with my last point? The order refers to shared accommodation and to "persons". Therefore, it envisages that premises to which the order will apply will be premises in which there are several persons. If one has premises of that kind occupied by two persons, and therefore the order applies, and then one of those persons dies or leaves and the same premises continue to be occupied in the same character by the survivor, will the premises then cease to be occupied as a dwellinghouse within the meaning of the order? If so, should not the Government think of that as being an extraordinary anomaly?

Lord Lyell

My Lords, as the representative of the Government this afternoon, I have indeed thought of that anomaly, but I have to say to the noble and learned Lord, Lord McCluskey, that I do not have an answer to the problem. I recognise that in the criteria I have quoted from Article 2 of the order they are classified as being "shared by those persons". But I will certainly obtain the information for which the noble and learned Lord has asked. I shall reply to him as succinctly, briefly and swiftly as possible. I am immensely grateful to the noble and learned Lord and to all other noble Lords for their forbearance this afternoon. This is a technical subject.

Lord Wilson of Langside

My Lords, if the noble Lord, Lord Lyell, has finished with the interesting point raised by the noble and learned Lord, Lord McCluskey, and before he sits down, I do not wish to join in any argument about compassion but I shall look forward to discussing the matter on some future occasion. I could not raise any matter with the noble Lord, Lord Lyell, because I was unable to obtain a copy of the order until two o'clock this afternoon, and I have been in the Chamber since then. I was a little bothered by the Explanatory Note, which does not seem to explain anything. I appreciate that the Explanatory Note does not form part of the order, but it simply adds nothing at all. The Explanatory Notes to many of the orders we debated earlier did add something, particularly for the layman reading these matters for the first time, perhaps. Valuation and rating are difficult and complicated matters, and I submit for the noble Lord's consideration that he might suggest to the draftsman that the Explanatory Notes should do a little better than that.

My other point is that I was a little puzzled by what the noble Lord, Lord Lyell, said with regard to the total area, which I understand is not to exceed 300 square metres. I understood the Minister to say that that was the area of a normal house. I must say I could not understand that part. I am sure it is my own obtuseness. Perhaps the Minister would be good enough to explain again why the area of 300 square metres was chosen.

Lord Lyell

My Lords, I am very grateful to the noble and learned Lord, Lord Wilson of Langside, for his comments and for the interest that he has taken in the matter. I will endeavour to find out if there was a shortage of copies of the order so that he was unable to obtain one.

Lord Wilson of Langside

My Lords, I was not blaming anyone but myself. It was not available when I was last in the House. I am not complaining about not getting it; I was just explaining why I had not paid the Minister the courtesy, which Lord McCluskey had, of giving him notice of the points I was raising. That was all. I am not complaining.

Lord Lyell

My Lords, the noble and learned Lord asked me about the problem of the Explanatory Note. As the noble and learned Lord and, I am sure, all your Lordships, are aware from the tenor of my remarks, the order brings into effect Section 5, which was the result of an amendment whch was moved by my noble friend the Minister in response to my noble friend Lady Elliot: she raised this point of the young single homeless persons who were resident in various types of accommodation which had up till then been classified as hostels. The Government certainly believed that there was a problem. We hoped that Section 5 had gone some way to meeting this problem, and the order, we would hope, will bring Section 5 into full effect.

The noble and learned Lord asked me also about the size of 300 square metres. I was given to understand that an average three-bedroomed house is of the order, including the external walls, of 150 square metres. I would suggest to the noble and learned Lord and to your Lordships that it is reasonable to limit the prescription of a method of valuation appropriate to domestic properties to those properties which are akin to—this is probably a slightly legalistic phrase—normal dwelling houses not only in purpose but also in size. We are advised that the limit of 300 square metres will cover the properties in that category. The figure of 300 square metres will, of course, include premises up to dimensions similar to comparatively large houses—that is the point I made in my preliminary remarks—and in relation to which there is sufficient evidence available to enable the assessors, who are the ones who are going to have to use this limit of 300 square metres, to fix a valuation as if the property were a dwellinghouse.

I am afraid I am not able to give an example as to the area of 300 square metres. I ought to know the measurements of the Chamber of your Lordships' House; I think it is something like 140 feet by 80 feet by 80 feet, as far as I can recall. The thought of a number of single homeless persons having hostel-type accommodation on the Floor of your Lordships' House I would leave to the imagination of the noble and learned Lord, but I hope I have been able to go some way to satisfy him on this limit of 300 square metres mentioned in the order.

Lord Wilson of Langside

My Lords, I am most grateful to the noble Lord the Minister for his explanation, as for his explanation of the order. May I reassure him that when I referred to the subject of compassion I was trying to be light-hearted; I was not being serious at all. But I find absolutely fascinating the competing claims of the Labour and Conservative Parties to compassion, especially as I have known them both for a long time.

Lord Lyell

My Lords, I thought probably the compassion was being directed in my direction; at least I always understand that that is the case whenever I rise in your Lordships' House, whether it is needed or not. Certainly on this occasion I have been attempting to explain very abstruse items of legal proceedings and legal wording and drafting to both noble and learned Lords. I am immensely grateful for the compassion and tolerance with which your Lordships have listened to my remarks this afternoon. I hope, if I have missed anything, that I may get in touch with noble and learned Lords at a later stage after the Recess. Meanwhile, I commend the order to your Lordships.

On Question, Motion agreed to.