Amendment made: In page 49, line 14, at beginning, insert:
Subject to the provisions of this Section." —[Mr. J. Edwards.]
§ Mr. J. Edwards
I beg to move, in page 49, line 23, at the end, to add:
This Amendment fulfils a promise given in Committee. It would enable the Minister by order—an order requiring the approval of both Houses—to vary the statutory deductions which have to be made in gross value in order to arrive at rateable value. These are at present set out in the Rating and Valuation Acts, 1925 and 1928. The original need of these deductions was to make allowance for the cost of repairs, but they have tended to be used as a means of reducing the rateable value of the smaller house as compared with the larger house. We hope that the formula laid down in the Bill for the valuation of small dwelling houses will produce equitable results and remove any need for the second device to be used. It was argued in Committee that the present deductions did not fairly take into account the present cost of repairs. I think that is debatable, because the statutory deductions range from 40 per cent. for the smaller houses to 16⅔ per cent. for the larger.
- "(2) The Minister may by order provide that, in the case of hereditaments of such classes as may be specified in the order, being
1217 bereditaments consisting of houses or buildings without land other than gardens, the deduction or maximum deduction to be made from the gross annual value for the purpose of arriving at the net annual value shall, instead of being ascertained by reference to Part I of the Second Schedule to the Rating and Valuation act, 1925, or by reference to the Third Schedule to the Valuation (Metropolis) Act, 1869, as the case may be, be such as may be specified in the order in relation to those classes respectively.
- (3) An order under the last preceding Subsection may be revoked or varied by a subsequent order of the Minister.
- (4) Before any order is made under Subsection (2) or Subsection (3) of this Section, a draft thereof shall be laid before each House of Parliament, and the order shall not be made until approved by resolution of each House."
It seems reasonable to say that the cost of repairs has not yet overtaken the substantial margin which the present deductions allow, taking into account other factors, in producing equitable rateable values for dwelling houses as compared with other property and of small dwelling houses as compared with larger. We agree that this balance will change from time to time, and it may be that at any time the cost of repairs will make it necessary to review these deductions. It may be necessary to deal with one class of house differently from another. If it became evident that the cost of repairs say for the older house were substantially greater than that for the newer house, it seems to my right hon. Friend that this 1218 would be a flexible method of dealing with the matter and would meet the views expressed in Committee if these powers were taken as now proposed in the Amendment, it being borne in mind that the changes that the Minister may propose to make at any time would be subject to affirmative resolutions of both Houses of Parliament.
§ Mr. O. Poole
I beg to move, as an Amendment to the proposed Amendment, after "such," to insert "greater deduction."
As the Parliamentary Secretary has said, the Minister listened with care to the arguments put forward not only from this side of the Committee but also by the hon. Member for Mile End (Mr. Piratin). The Amendment he has put down substantially covers the points raised then. I understand that the hon. Member for Thirsk and Malton (Mr. Turton) and the hon. Member for Hertford (Mr. Walker-Smith) will have some remarks to make about the Clause as a whole, and I, therefore, wish to confine myself to the Amendment in the name of myself and my right hon. and hon. Friends. The point of my Amendment is quite simple. While it is right that the Minister should have power to reduce by regulation the burdens on the ratepayers, we do not think that he should have the same power of increasing them. We think that the statutory deductions should represent the maximum burden, which cannot be increased, except by legislation. I hope that I have been able to make my point clear. The words in our Amendment would meet that point if they were accepted by the Committee.
§ Mr. Bevan
I am rather astonished by hon. Members opposite on this particular matter. I thought I had gone all the way to meet their wishes, because they will remember that when this was discussed in Committee, the view was expressed that the statutory allowance might not be sufficient to meet the increased cost of repairs. I was able to convince the Committee at the time—at least I hope I was—that the allowances were so generous that even a very considerable increase in the cost of repairs would not swallow them up. However, I conceded the point that we are here dealing with a situation which changes quite rapidly, and which might change 1219 even more than has occurred in the immediate past, and that a very much more flexible instrument was necessary to adjust the actual allowances to the prices and the cost of building materials, building labour, and repair costs in general.
Therefore, I promised—I think with the universal support of the Committee—that I would take power on the Report stage or on Recommittal to make regulations to vary the allowances. We cannot take the power to vary them only one way; the idea is to try to adjust the allowances to the real situation whether the costs are greater or less. This is done by affirmative Resolution of the House of Commons, and a case has got to be made out for it. Therefore, it would be undesirable for the regulations only to work one way. I hope hon. Members opposite will not press this point, because we have gone a considerable way to meet them.
§ Amendment to the proposed Amendment negatived.
§ Mr. Derek Walker-Smith (Hertford)
I want to make one or two observations in regard to the proposed Amendment from perhaps a rather wider standpoint than those which it was proper for my hon. Friend the Member for Oswestry (Mr. O. Poole) to make in accordance with the more limited terms of his own Amendment. The Parliamentary Secretary referred to this Amendment being put on the Order Paper in accordance with a promise made in Standing Committee. As he will appreciate, the matter arose somewhat differently. It arose out of an Amendment proposed by the hon. Member for Mile End (Mr. Piratin), and it was another instance of that happy harmony that can sometimes exist between the Communists and the Conservatives in the domestic affairs of this country, because it is a fact that people who stand on the extreme Left often take a very Right-wing point of view on that very limited range of subjects of which they have any real knowledge. That was the origin of the matter in the Standing Committee.
The hon. Member for Mile End moved his Amendment, but, of course, it had nothing to do with giving the Minister this power of regulation and variation. In his Amendment the hon. Member for Mile End proposed certain definite and specific increases in the prescribed deductions for 1220 houses of a gross annual value up to £30 in the country as a whole and up to £40 in London. This proposal commended itself to the good sense of many Members of the Committee irrespective of party affiliations, because of the possibility of the increase of the rateable value of these houses by reason of this current legislation, and also by reason of the certainty that the cost of repairs is rising compared with 1928, which was the date when present rates were fixed.
The proposal put forward by the hon. Member for Mile End was that there should be specific and definite increases in the deductions allowed under the Second Schedule to the 1928 Act. The Minister has not done that. What he does in this Amendment is to take power by Ministerial order to vary at large the deductions prescribed in the Second Schedule to the 1928 Act. That is to say, by Ministerial order, after the approval of the House is conveyed in an affirmative Resolution, he is able to substitute a different set of figures, be it higher or lower, for the prescribed set of deductions in the Second Schedule. He can do that as often as he pleases. He can revoke and vary them without any other restraint upon him than the necessity of having an affirmative Resolution of the House. Those who have experience of these affairs will know how much precise, practical importance to place upon that restraint.
The consequence of this is that the Minister is, by his voluntary action, importing a degree of imprecision and uncertainty into the calculation of the rateable value. The whole tenor of the Minister's approach to the question of valuation in this Bill has been that the old method of valuation was too vague and too uncertain. He has made great fun of the idea of the hypothetical tenant element in the ascertainment of gross value, but what I suggest to the Committee is that under the existing law the gross value is ascertained, as the Committee knows, in accordance with Section 68 of the 1925 Act, and from that gross value there falls to be deducted the perfectly specific deductions prescribed in the Second Schedule to the 1928 Act. The Minister who has attacked uncertainty, proposes himself by this Amendment to introduce a new element of uncertainty, 1221 because, instead of having specific figures for deduction prescribed in the Bill, he has got this wide general power to substitute any figures which he may desire to add. In my view, that is certainly introducing a hypothetical and fugitive element into the ascertainment of rateable value which was not present before.
It is true that there may be a necessity to vary those figures, but the Minister will recollect that the variation of the statutory figures took place only three years after the 1925 Act had come into operation. The first set of figures was prescribed in the Second Schedule to the 1925 Act. The second set of figures was prescribed in the Second Schedule of the 1928 Act to take their place. The first set of figures, in other words, lasted three years and the second set has lasted since then. That being so, it does not seem to me to be a convincing reason why an appropriate set of figues should not be given statutory sanction now in order to be a clear guide to the business of the ascertainment of rateable value.
Instead of that, the Minister has deserted his general position in regard to this Bill, and is voluntarily importing this unnecessary and arbitrary method of arriving at deductions. As my hon. Friend the Member for Oswestry has pointed out, they may be larger or smaller than the deductions which are prescribed. I cannot think that this is a satisfactory way of meeting the very proper point that was brought out in the proceedings of the Standing Committee. There is a very strong case for increasing these deductions today, by reason of the increased cost of repairs. That could have been done more simply and with greater certainty, without giving the Minister this arbitrary and almost unbridled power of revocation and variation which it is proposed in the Amendment to give him.
§ Mr. Turton
While there is a great deal in what my hon. Friend has said, I think the Amendment is an improvement upon the Bill as it was previously drafted. The Minister may well consider, on future stages and in another place, whether to adopt the suggestions made by my hon. Friend. I rise to put two points. At an earlier stage the Minister gave an undertaking that between the Committee stage and the Report stage he would confer with the Chancellor of the Exchequer and with the Inland Revenue Department 1222 to see whether the time had not arrived for a general revision of the deduction for repairs in rateable value and in Schedule A assessments. I listened very carefully to what the Parliamentary Secretary said, but I found no reference to that pledge. No doubt the Minister will tell us later about his conversations, so far as it is possible for him to disclose them.
What alarmed me in the speech which we heard a moment or two ago from the Parliamentary Secretary was his statement that, in his considered view, the cost of repairs had not risen higher than the deduction. I should have thought it was clear to anybody in a position of responsibility, as he is, with access to the Treasury and the Inland Revenue Department, that the cost of repairs to cottage property is now very much higher than the statutory deduction. Repair and maintenance costs have gone up by 100 per cent. If the 1928 figure was generous, a rise of 100 per cent, can well make the present deduction insufficient. I hope that the Government will look at the matter in a sympathetic way. In small cottage property, the man concerned has to pay most of his rent for repairs and then he has an increased burden of rates. That is very unjust and unfair. There is no reason why he should be rated on a part of the rent that has actually gone in the repair of his dwellinghouse.
§ Mr. Turton
In certain classes of property it is true there is a hypothetical cost of erection, but the Minister must not forget that we are dealing with pre-1918 property, where the problem of repairs is insuperable, especially if the owner has not bothered to recondition the property, in view of the report of the Hobhouse Committee. That is a digression which I do not want to pursue now. I hope that the Minister will address himself, first to the conversations he has had with the Inland Revenue Department, and secondly to the evidence that the cost of repairs is now well over the statutory deduction.
§ Mr. Bevan
I must once more repeat my disappointment that the Amendment has not been received with more cordiality. When I made the suggestion in the Committee, it was received with 1223 general approval. I do not know whether the hon. Member for Hertford (Mr. Walker-Smith) was there. I do not think he was, on that occasion.
§ Mr. Walker-Smith
I was in the Committee. I did not express my approval of the Minister's promise because, even at that stage, it seemed to me that if it were to be done by regulation it might be unsatisfactory. I reserved to myself the right to study the Amendment and to express my opinions in the House.
§ Mr. Bevan
I always assume when dissent is not shown that assent is given. Approval was fairly general in the Committee. The hon. Member did not dissociate himself from the observation made by the hon. Member for Thirsk and Malton (Mr. Turton), who enthusiastically accepted the suggestion. If the hon. Member will look at the OFFICIAL REPORT he will see that the hon. Member for Thirsk and Malton at once jumped up and said that he thought it was a good proposition. I do not want to underline the fact that there is a difference of opinion between hon. Members opposite. I have not always found myself in full accord with Members of my own party. I do not think it is necessary to rub that in.
Hon. Members are making a little mistake about this matter. Leaving aside the pre-1918 houses, the houses built between the war years, except for the very large properties, are not to be rated any longer upon the basis of their rents. There is no connection between rateable value and the owner or the tenant or the rent. Rateable value will be based upon the cost of construction of local authority houses.
May I say, in passing, that here was the mistake that the advisers of hon. Gentlemen opposite made when they talked about valuation of a £2,200 house. It will not be 5 per cent. of that house. Assume that the house is in the general category of property to which I have referred. Their calculations were all out. I am not quite sure whether the allowances are logical. If we value a house in relation to the cost of construction or, in the case of the small, privately-owned dwelling, in relation to a hypothetical cost of constructing that house by the local authority in 1937 or 1224 1938, and if we have a 10 per cent. allowance, we would take that 10 per cent. gross in fixing the gross figure.
In the case of the old valuations, where the valuations vary from category to category and from house to house on the basis of what the hypothetical tenant would pay, the valuations being indeterminate, it was necessary to have an allowance. If we have a figure or a category of property, 10 per cent. is irrelevant, but we should put in the 10 per cent. in order to create a figure which was appropriate. Fears are being expressed which are entirely unjustified. I agree with the hon. Member for Thirsk and Malton that that proportion does not apply to the pre-1918 house. There we have a valuation based upon rental. These houses are, in the main, rented dwellings.
I have discussed this matter. I have carried out my promise. The conversations cannot have been protracted or in great detail, but I am still assured that our general position was right and that there has been no such increase in the cost of repairs as to absorb the very generous statutory allowances which exist. The advantage of this procedure is that we can now make a much more detailed investigation, and if it is found that these allowances are not sufficient, the power to make an order enables us to adjust the Statute to the realities. The hon. Member for Hertford is a little apprehensive when he says that this introduces an element of unpredictability. We shall not change these allowances from month to month or from year to year.
§ 6.30 p.m.
§ Mr. Bevan
This House would not allow the Minister to do it. We could not change these allowances as frequently as that. The case would have to be made out, and if the case were made out, hon. Members opposite would be the first to demand an increase in the allowances. It would therefore depend upon the actual facts at that time, so there is no element of unpredictability, and insofar as it exists, for all practical importance it would exist only for the pre-1918 houses. I therefore hope that the Committee will allow me to have the Amendment, which 1225 is, after all, in discharge of a promise which I gave.
§ General Sir George Jeffreys (Petersfield)
I would assure the Minister, if he needs any such assurance, that there is no disagreement between hon. Gentlemen on this side of the Committee. We think that the Amendment is an undoubted improvement, and to that extent we welcome it, but we think it would have been a still greater improvement if the words proposed by the hon. Member for Oswestry (Mr. O. Poole) could have been included. We also feel that it may have been unnecessary to include those words because there is certainly no sign of any reduction in the cost of repairs and maintenance. The cost of building and construction goes up and up and the cost of repairs and maintenance goes up and up with it, and it is very unlikely that there will be a turn the other way within any foreseeable time. While in theory the Minister's Amendment allows for a reduction in the cost of repairs, that reduction is very unlikely to come into effect.
One other thing which I must say is that I agree with my hon. Friend the Member for Thirsk and Malton (Mr. Turton) as to the desirability of these allowances for repairs and maintenance being brought into line in respect of both rating and taxation valuations. One of the advantages of this Bill should be that in that way the valuations will be in the hands of the Inland Revenue. If they can only bring their valuation for taxation purposes into line with the valuation for rating, which they ought to do, it will very greatly improve the whole system of rating and taxation.
§ Lieut.-Colonel Elliot
I think we are not in any way at variance on the matter. If the Minister will look at the records of the Committee he will see that he suggested that the matter should be adjusted by regulation. That suggestion was received with guarded assent on my part and with a greater degree of enthusiasm by two hon. Members. The Minister rather justifies our criticism because In Committee, after giving an assurance, he said:I ask that I should not be thought to be pledging myself to an alteration of these figures."—[OFFICIAL REPORT, Standing Committee B, 29th January, 1948, C. 410.]He has just said that even after the consultations which he has had—for which 1226 we are grateful—with the Inland Revenue, in pursuance of his pledge at the time, he still thinks these allowances are considerably above what are necessary. That does not seem to agree with the experience which most of us have had in our own private lives, and that is the point at which we find ourselves still a little dubious. I do not say that we are looking the gift horse in the mouth but we are wondering whether a certain amount of teeth scaling and burnishing would be a good thing for it. The fact is that the cost of repairs to small property is quite out of scale with what it was some time ago.
When the Minister first takes power to do this and then hedges his point around as strongly as he has done both on the Committee stage and now, we are bound to say that it introduces, as the hon. Member for Hertford (Mr. Walker-Smith) said, an element of unpredictability into it. We hope that the Minister will, when scrutinising these figures, also—if I may use a phrase from another aspect of the law—empanel a jury of matrons to consider the matter. I am sure that the Minister will be told by any woman who has had to do with small running repairs and getting tradesmen's bills settled that the views of the Inland Revenue do not at all coincide with the experience of the ordinary man.
§ Proposed words there added.
§ Clause, as amended, ordered to stand part of the Bill.