§ Order for Second Reading read.
§ 4.14 p.m.
§ The Minister for Planning and Local Government (Mr. John Silkin)
I beg to move. That the Bill be now read a Second time.
The scope of the Bill is very narrow and, despite my natural good temper and moderation, I know that Mr. Speaker would rule me out of order if I were to go too far from the technical explanation of the Bill itself and how it had arisen. Its purpose is simply to postpone the 1978 revaluation. It does not attempt to deal with the wider issue of the rating system in general. This is being examined in detail by the Committee of Inquiry into Local Government Finance under Mr. Frank Layfield. We shall have to await that committee's report before we can take decisions about changes in the present system.
The Bill itself contains two clauses. Clause 1(1) inserts 1981 after 1973 in Section 68(1) of the General Rate Act 1967. This has the effect of postponing the 1978 revaluation and starting the statutory five-year cycle again from 1981.
Clause 1(2) gives the Secretary of State power by order to make further post-ponements one year at a time—1982 for 1981 and, later, 1983 for 1982. But this would be subject to the approval of both Houses of Parliament, and this is provided for in Clause 1(3). Clause 2 merely sets out the short title and provides that the Act extends only to England and Wales. My right hon. Friend the Secretary of State for Scotland is considering the position in Scotland.
Our modern rating system derives in the main from the Poor Relief Act of 1601, the purpose of which was stated in Section 1 of that Act to beTo raise weekly, or otherwise, by taxation of every inhabitant, parson, vicar and other, and every occupier of lands, houses, tythes impropriate or appropriations of tythes, coalmines or saleable underwoods in the said parish, in such competent sum and sums of money as they shall think fit".1261 The House will see that all the socio-economic groups of 1601 were represented.
During the ensuing centuries the statute was modified somewhat—not least by Rex v. Andover, 1777, in which Lord Mansfield said:It would make the Poor Laws very oppressive if a man is to be taxed to the extent of his whole personal estate and income—a view on local income tax which many people today might dispute.
Local income tax, together with every other source of local government finance, will no doubt again be considered by the Layfield Committee. It is because the Committee is making so wide-ranging an inquiry into local government finance, and because its recommendations will come reasonably at the end of next year, that this Bill is needed today.
The time required to enable the Lay-field Committee to report and for the appropriate consideration to be given to that report means that if the committee were to recommend a new way of financing local government, or indeed a new basis for valuation, this could not be put into effect by 1978. Indeed, work for the 1978 valuation in the normal way should be starting now. Although revaluations are supposed to occur every five years, they remind one of nothing so much as the traditional story of the painting of the Forth Bridge which, we are told, never ends.
In the present instance, apart from the normal difficulty of too few valuers examining too many rateable values, there is added an impossible time scale. We cannot reasonably expect Layfield to report until the very end of 1975. There must then be a proper period for consideration of that report, and a further period for legislation, should that be necessary. To set in motion the list preparations for a 1978 revaluation which may never be put into effect would be an irresponsible waste.
I must admit that I might have been a great deal more concerned at asking the House to approve this postponement if I were not aware of the history of previous revaluations. The provision for five-year regular revaluations first appeared in the Rating and Revaluation Act 1925. Between that date and 1948, 1262 for various reasons, there were only two revaluations instead of the four that one would have expected.
§ Mr. Silkin
That may account for part of the explanation. Following the Local Government Act of 1948, new valuation lists should have come into operation in 1952. But the then Conservative Government, under the hon. Gentleman's grandfather, after its election in 1951 postponed the revaluation until 1953 because of disagreements on the basis 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 revaluation due in 1968 until 1973, because ofa shortage of valuers and the increasing commitments of the valuation office".Therefore, I have a number of very respectable precedents for my action today.
§ Mr. Silkin
I think that I might need notice of that question. What I can say is that since 1925, regrettably—I do not expect the hon. Member for Daventry (Mr. Jones) to agree with me—we have had far too many Conservative Governments. Incidentally, I know that the House will accept from me that on this occasion it is only the existence of the Layfield inquiry and our intention to act upon it which has made this postponement necessary.
Nevertheless, I know that there are those in local authority circles who are not happy at the proposed postponement. I am sorry if there are also those who feel that we should have consulted the local authorities. I understand how sensitive local authorities can be on this point. Indeed, when I was shadowing my present Department in Opposition, my speeches alluded to lack of consultation so frequently that I never really 1263 felt I had got into my stride until I had made the point.
On this occasion we were well aware of the views of the local authorities and of the opposition many felt to revaluation. We felt, therefore, that what was required on this occasion was not so much consultation as reasonable notice of our decision, and this notice was accordingly given to them in September—two months ago.
As to the local authorities' arguments against postponement, I assure them that the Government's proposals on land and the obvious requirement for valuers which they would entail had nothing to do with this decision.
The White Paper on Land (Cmnd. 5730) certainly accepts in paragraph 36 that there is a shortage of skilled manpower. But, as the House will see from the Explanatory Memorandum of this Bill, postponing a revaluation will, alas, not produce a single additional professional valuer for the urgent and popular task of bringing development land into community ownership. It will not, as the Memorandum shows, result in any quantifiable staff saving, and will simply reduce for the time being the requirement for non-professional staff—a very different matter from supplying valuers to do another task.
A criticism more often heard is 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 1981 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 ratepayer has to pay, however, is not affected.
Having said that, I think that there is one criticism which has more substance in it. It is true that the postponement of revaluation causes anomalies as between one ratepayer and another. 1264 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 our predecessors passed—though I make no point on that—which provides that, from 1st April this year, the installation of central heating or an improvement to property that would result in a rateable value increase less than a prescribed limit 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. All this I concede.
§ Mr. Stephen Ross (Isle of Wight)
This anomaly about the installation of central heating is one of the matters which have been brought to my attention. As the right hon. Gentleman is postponing the revaluation, will he instruct valuation officers that people who have suffered as a result of putting in an installation prior to that time may have some reduction in their rate burden?
§ Mr. Silkin
That is an interesting point. However, I should not like to comment on it at the moment. I shall look at it to see what may be done. But the position remains this, I think. There is a degree of unfairness in that connection, and I accept it fully. It is an anomaly, but it is one in a whole balance. We must take the balance as a whole, and that is why I have made this point, conceding that it is difficult but at the same time having weighed it carefully.
§ Mr. Churchill
The right hon. Gentleman accepts that the postponement of this revaluation will cause injustice and give rise to anomalies as between different ratepayers, sometimes in the same local authority area and at other times in different areas. Therefore, will he go a little further in explaining the reason for the postponement? It is very difficult to understand. If it is not, as he says, that these valuers are required to operate the enormously burdensome proposals of the Government for the nationalisation of building land, why are not the Government able to reduce their valuation staff?
§ Mr. Silkin
I am afraid that the hon. Gentleman will have to wait for the land proposals. When they come, he will see why he is on a false point. It is a false point. I want to stick to this General Rate Bill and to try to explain why I believe it to be necessary to postpone this revaluation
The revaluation was postponed solely because, as I have already said, if it had not been, work should be starting on it now. Had we allowed it to proceed, it would have shown that we were not really in earnest in our setting up of the Layfield inquiry. On the contrary, it is our intention that the Layfield inquiry shall have the fullest possible scope, and that its recommendations shall be treated with the greatest consideration.
I started by saying that modern rating derives from the Statute of the first Elizabeth. It has had a good run and it is now time that the basis of our local government finance as a whole was examined in the light of the age in which we live. It is in that spirit that I commend this Bill to the House.
§ 4.27 p.m.
§ Mr. Hugh Rossi (Hornsey)
It seems to have become habit forming for Labour Governments to seek a postponement of rating revaluation as soon as they have come to office—
§ Mr. Rossi
One was announced by the Labour Government during their 1964–66 administration, and within weeks of the election of the 1966–70 administration the Local Government Act of 1966 was introduced to postpone rating revaluation from 1968 to 1973. Today, although there was not a word about it in the Labour Party's election manifesto and not a word about it in the Gracious Speech which we debated the whole of last week, we have a Bill on the second legislative day of this Parliament to postpone rating revaluation from 1978 to 1981.
§ Mr. Silkin
May I ask the hon. Gentleman this? Let us suppose that his party had won the election. They would not have dissolved the Layfield Committee, because they nominated people to serve on it. Would they not have had to postpone revaluation?
§ Mr. Rossi
We would have coupled it with other measures which would have meant the complete dismantling of the rating system for the domestic ratepayer. But revaluation would have had to continue, notwithstanding Layfield, because of industrial and commercial properties. There would have been no need to postpone it.
Each Labour Government postponement has had the effect of delaying revaluation until after the last possible date for the next succeeding General Election. That is the distinction between Labour's postponements and others which were brought about, for example, because of professional disagreements about the basis of valuation, which was one of the examples which the right hon. Gentleman gave just now as having occurred under a Conservative administration.
The House is entitled to ask whether this habit of postponing revaluations until after the last possible date for the next General Election is mere coincidence, "happenstance", or something far more premeditated. I ask this because no doubt each time rateable values are adjusted, for the majority of people they are adjusted upwards. Anxiety is caused because of the fear that this means an increase in the rate burden. What is often forgotten on those occasions is that the weight of the rate burden is determined by the total expenditure and financial commitment undertaken by local authorities and the extent to which the Government of the day are prepared to lighten that burden by Exchequer subsidy. The real effect of revaluation is to adjust the rate burden as equitably and as justly as possible between one ratepayer and the next as the properties they occupy become more or less valuable through changing circumstances.
In this connection—and this goes to the heart of the Bill—it is worth recalling the observations of the Allen Report on the impact of rates on households, Command 2582, of February 1965, at page 26. It said:Property values change: some types of dwellings in some districts become more sought-after than others. Rents change as fashions change and as incomes rise. If rates are to be based, as they are intended to be, on current rental values, rateable values need to be revised at regular and frequent intervals. Ideally all property should be revalued every year but for administrative reasons this is impracticable.1267 Now we have a proposal that will postpone revaluation for eight years. The last Labour effort in this area was to postpone it for 10 years.
In this regard it is instructive to refer to the debates which took place in this House when revaluation was last postponed in 1966. I quote from the late Richard Crossman, then Minister of Housing and Local Government, who said:it—that is the rateable value—remains at a fixed sum until a valuer comes along and reassesses one's property. If the quinquennial revaluation does not take place, then what justice there ever was between ratepayer and ratepayer will become progressively distorted as one property increases in value but pays no extra rates and another decreases in value but gets no automatic remission.Even if the valuation were always fair and intelligible, which it very often is not, rates are a tax which start getting out of date the very moment the valuation is over."—[OFFICIAL REPORT, 14th June, 1966; Vol. 729, c. 1265.]So we have the present Government distorting justice as between ratepayer and ratepayer for very little good reason that is discernible. In 1966 Richard Crossman gave as his reason for postponing the 1968 revaluation the "shortage of valuers", a matter to which the right hon. Gentleman has alluded. Richard Crossman went on to say, with characteristic honesty, that such shortage was intensified by the creation of the Land Commission.
Today we have no Land Commission. Instead we have equally objectionable proposals for the nationalisation of land, coupled with all that Land Commission Act jargon of "development value", "development tax" or "betterment levy", which will be hinged upon those concepts beloved of Socialists, "base values" and "current use values". I know that the right hon. Gentleman wishes to rise and possibly answer the question I am about to put to him—surely this must mean an expensive, unwieldy bureaucracy, created for the confiscation of private property? A very heavy workload must be thrown upon the valuers and the Inland Revenue. No wonder they have had to be released from rating revaluation. Or have I got the concept incorrect?
§ Mr. John Silkin
As usual, the hon. Gentleman has got the concept incorrect. I thought I had assured the House—as I have often said, one does not always 1268 listen to oneself and it is natural that other people should not either—that it was the Layfield inquiry and only that inquiry which caused this decision. I thought it was conceivable that the hon. Gentleman might make this rather false point and I took the precaution of finding out. Suppose there had been no White Paper on land, suppose there were no land proposals whatever, it would still have been necessary, because of the Layfield inquiry, to come to the House and ask for postponement. I hope the hon. Gentleman is satisfied.
§ Mr. Rossi
I will deal with the point about the necessity of the Layfield inquiry in a moment. The right hon. Gentleman has neatly sidestepped the question about whether the proposals for land nationalisation and finding out "base values" and "current use values" and all the other wretched things so beloved of the right hon. Gentleman and his colleagues will throw an additional burden on the Inland Revenue. In parenthesis, I would point out that it is interesting to note that when rating revaluation was taken away from the local authorities and given to the Inland Revenue in 1948 by a Labour Government it was done, to quote what was being said at the time, "in the interests of greater efficiency".
No wonder local authorities are a little rueful at these persistent Labour Government postponements, again on the grounds of a shortage of staff in the Inland Revenue Department. [Interruption.] I thought the right hon. Gentleman made a reference to shortage of staff a moment or two ago. My hon. Friends confirm that that is what he said. The record can be seen tomorrow.
All of this will be done at the expense ofjustice…between ratepayer and ratepayer.At least Richard Crossman came clean with the House.
What we are being told today is that revaluation has to be postponed because it coincides with the work of the Layfield Committee of Inquiry into Local Government Finance. I believe that the Press statement issued on 9th September by the Secretary of State for the Environment announcing the postponement spoke about avoidingany risk of prejudicing the outcome of the wide-ranging review.1269 What could be interpreted as more of a prejudgment or pre-emption of the Lay-field Report than the postponement of revaluation? [Interruption.] The right hon. Gentleman says "No," but this is certainly the interpretation placed upon the postponement by the Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities. I must agree with them.
The right hon. Gentleman seems surprised. May I refer him to the correspondence files in his Department. On 10th September, the day after the Secretary of State issued his Press statement, these august bodies to whom I have referred wrote to the Permanent Secretary in the Department of the Environment saying:We wish to express the most profound dismay and anxiety over the total lack of prior consultation about the decision to postpone the quinquennial rating valuation, a matter clearly of great importance to local government. We would also express similar dismay and anxiety about the decision itself. In spite of what is said in the Department of the Environment letter of 9th September announcing the decision, it is clear that the abandonment of preparations for the next revaluation could turn out to be a serious prejudging or pre-empting of the Layfield Committee's Report, due by the end of 1975.So long as local government is required to raise its basic revenue by means of the rating system that system should be kept up to date and failure to do so will introduce inequity and distortion as between ratepayers and as between authorities whose resources are measured by rateable values.
§ Mr. John Silkin
I hate to keep on interrupting the hon. Gentleman, because it makes it appear to be a private war, which it is not, but can he explain how it could prejudice the Layfield inquiry?
§ Mr. Rossi
It is no good the right hon. Gentleman shaking his head, because those associations are not fools. They are extremely responsible bodies. They have all come to the conclusion that that is the only interpretation that they can put on the Government's decision to postpone revaluation. The right hon. Gentleman 1270 indicates that that is not the case, but surely, as the Minister in charge of a Department concerned with local government, he must take cognisance of and have due regard to the thoughts which he has obviously put into the minds of those associations. I put it no higher than that.
If I felt assured that the reason behind the postponement was that the Minister had decided upon the abolition of the rating system as far as it applies to domestic ratepayers, I should be less critical of him. It is clear that the rating system, with all its inequities and because of its regressive nature, accentuated at a time of high inflation, is at risk of losing consensus acceptance by the population and, as a result, could readily break down.
The troubles and protests of the current rating year will be nothing compared with those of next year when it is authoritatively forecast that rates will increase by another 50, 60 or even 100 per cent. in different parts of the country. That will assuredly happen if my information is correct that the Secretary of State for the Environment has given a brusque rejoinder to the pleas of local authorities for commensurate assistance of about £1,500 million. However, I cannot be too sanguine about the right hon. Gentleman's intentions either to give the necessary aid or drastically to reform the rating system—and here I give my own opinion and not that of the associations which I have quoted.
I cannot be too sanguine about his intention to reform the rating system so as to give relief to the ordinary ratepayer because at the Labour Party conference in Newcastle in February 1973 the Secretary of State for the Environment said:At a time of high taxation—and taxation should be higher under a Labour Government if we are to carry out our social programmes—we shall never find another source of as much money as accrues through the rating system".At least the ratepayers cannot complain that they were not warned; and many millions of them will live to rue their decision of 10th October.
One cannot but contrast the insensitive and autocratic attitude of the Secretary of State for the Environment towards the hardship of ratepayers with the words of his predecessor, Richard Crossman. As 1271 long ago as 5th May 1965, Richard Crossman said:…what we face now is a situation in respect of rates which is so serious that we must introduce reform and a radical change in the shortest possible time.A little later he said:No one can afford to tolerate rates going up at a compound interest of 8 per cent.…The system must be changed".Then he gave a solemn pledge:We shall reform the rates."—[OFFICIAL REPORT, 5th May, 1965; Vol. 711, c. 1492–3.]
§ Mr. Stephen Ross
I have never heard so much hypocrisy from the official Opposition on the question of rating since I became a Member. The last Conservative administration produced a Green Paper and then a White Paper. They dealt with the reform of local government before dealing with these matters. Why did not the Conservative Party do what the hon. Gentleman is now suggesting when it was in office?
§ Mr. Rossi
I accept that we produced a Green Paper, which showed that the question of rate reform was not easy, but we were not faced in those days with the inflationary situation which exists today, with the impact on ordinary ratepayers that has operated in the last year and currently. That is what has concentrated the mind wonderfully, and that is why we were determined, if returned to office, completely to recast the rating system in this Parliament. We started with a pledge of an immediate transfer of a rate burden of £500 million to the benefit of all ratepayers by the removal of the incidence of teachers' salaries and the cost of fire services and police services from the ratepayer to the taxpayer. That would immediately have dealt with a quarter of the total rate demand on current figures. That was our immediate intention.
We believed that the abolition of the domestic rating system should be done over the life of this Parliament. That was a firm pledge which we gave the country, and it is something which the present Government clearly do not intend to do if the quotation which I have given from the February 1973 speech of the Secretary of State for the Environment is to be relied upon, because he said that Socialism means higher rates and higher taxes, and the Government will not let go of the rating system because it pro- 1272 duces so much money. That is the difference between the two parties on this matter.
Richard Crossman spoke in 1965 about drastically reforming the rating system because rates were rising at 8 per cent. per annum compound. He gave a firm pledge, which has now gone completely overboard, to reform the rating system. Today, in some areas there is a prospective indication of ten times Richard Crossman's figure.
We are told by the right hon. Gentleman that he cannot prejudice the committee's report, on which he will not be able to act for at least two years. Instead of tackling energetically and with determination the real rating problem, instead of introducing measures to alleviate the hardship that is being suffered by domestic ratepayers and small businessmen throughout the country, we have to waste time upon this piece of tomfoolery before us today which, at best, is designed to facilitate the nationalisation of land and, at worst, to gerrymander the next General Election.
§ Mr. Rossi
The right hon. Gentleman well knows the arrangements that were made several days ago through the usual channels and the reasons why the House will not divide, but we reserve the right to deal with this matter in Committee, and it will be dealt with most rigorously.
I leave the right hon. Gentleman with this thought. He and his hon. Friends act on the principle that a week is a long time in politics, but they may well discover that the British public have a very long memory, and I rely upon that memory rather than on a vote in the House today.
§ 4.51 p.m.
§ Mr. Jim Marshall (Leicester, South)
I was fortunate enough to catch Mr. Deputy Speaker's eye last Tuesday, so that I have made my maiden speech, but I still crave the indulgence of the House in case on occasions my inexperience shows through.
I listened with interest and some sympathy to the views of the hon. Member for Hornsey (Mr. Rossi), but I utterly dissociate myself from his general politics. 1273 I have been active in local government for several years. Judging from the experience of local government and of the local government associations mentioned by the hon. Gentleman, the previous Tory administration tried the wit of county and city treasurers to the point of disbelief. We in local government did not know until the last minute how we would be able to finance local government in this financial year. Early in February this year, under the Tory administration, the arrangements for financing local government were altered at the eleventh hour. It was purely coincidental, but at about the same time as the previous General Election, at the end of March, a rate levy had to be introduced although local government did not know four or five weeks in advance what moneys were likely to be received from central Government. It is ridiculous for the hon. Gentleman to try to lay all the political blame for the difficulties which face local government on the present Labour Government.
It is naive for the Conservative Opposition to pretend to themselves, the ratepayers and the electorate at large that if they had been returned to power on 10th October they would in this financial year or in coming financial years transfer a burden of £1,000 million from the ratepayer to the general taxpayer. My arithmetic is not all that it should be, but on my calculation that would increase the standard rate of income tax by about 5p in the pound—I am advised that it is 7p in the pound.
§ Mr. Graham Page (Crosby)
I do not know where the hon. Gentleman got that 7p from. It would be 4½p.
§ Mr. Marshall
I said that my arithmetic left something to be desired. Be that as it may, it is naive for the Opposition to pretend that in our difficult economic situation they would have transferred that burden of £1,000 million from the local ratepayer to the income tax payer.
§ Mr. Timothy Sainsbury (Hove)
Is the hon. Gentleman suggesting that he prefers raising money from taxpayers and ratepayers by means which are not related to their ability to pay to raising money through progressive systems of taxation?
§ Mr. Marshall
I am not suggesting that. I am suggesting that the Conservative Party during the recent election was 1274 trying to bribe the electorate. I hope to deal with the point raised by the hon. Gentleman later in my speech.
My experience in local government has given me a deep belief in its ability to work for the common good. Local government is responsible for about 30 per cent. of total expenditure. Taking that level of expenditure into account and the services it provides, which play an important part in the general well being of the country, one would expect local government to be held in high public esteem. That is not so. The level of esteem is at an all-time low. That is deplorable, but many of the reasons for it are outside the control of local government.
The underlying reason is the level of inflation which we have experienced in the past 18 months to two years. The rating system is singularly ill-equiped to deal with such a level of inflation. That is why my right hon. Friend the Secretary of State for the Environment set up the Layfield Committee. We all know that its terms of reference are—to look at the financing of local government as a whole. It may or may not—and this is the justification for the claim which hon. Gentlemen opposite make—recommend changes in the rating system and the present valuation system. In my opinion, that is the sole reason for this General Rate Bill.
I contend, and will continue to contend, that that itself prejudges the committee of inquiry's conclusions, because the committee may well come to the conclusion that the rating system, or one similar to that now in operation, should continue and may recommend that the present valuation system should also continue. That is one of the many possibilities. The committee may also add a rider—which my right hon. Friends who are members of the Cabinet may not like—that that system should continue.
The only way to make the system credible again is for the Government to control the overall level of inflation. I have great faith in the Government's ability to do that. The policies outlined in the Gracious Speech last week will ensure that the present level of inflation is reduced to more manageable proportions in the coming few years. When that happens, and the level of inflation is reduced, the existing rating and valuation systems will be accepted as they 1275 were accepted by the general body of ratepayers until 18 months to two years ago. That is a real possibility.
If the committee of inquiry puts forward those proposals, we are storing up for the coming years further difficulties with which the local authorities are likely to be faced. Mention has been made of the difficulties which individual ratepayers and classes of ratepayers faced as a result of the 1956, 1963, and the 1973 revaluations. All of those revaluations, because of the delay between the implementation of one and the implementation of another, differentiated not only between individual ratepayers but between one class of ratepayer and another.
I well remember, being at the time the chairman of a finance committee in a large Midland city, the ill feeling which was aroused by the implementation of the 1973 revaluation. I remember my speech very well. I rose with a certain sense of smug complacency and self-satisfaction to announce a rate poundage which to the average ratepayer meant no overall rate increase. But that did not hide from me, or from the unfortunate ratepayers who had to pay, that the average level meant for some individual ratepayers increases of the order of 70 per cent. and more.
That is the kind of situation which arises not only from the non-implementation of valuation, but from delaying the actual preliminary work which must be done before the valuation list is obtained. That is the background to the situation against which the Bill must be considered.
I disagree with the Bill. I accept what my right hon. Friend said about revaluations. They do not increase the buoyancy of rates. My numeracy is not good, as the hon. Gentleman indicated, but at least I know that 50 is still 50 whether it is obtained by multiplying 20 by two and a half or 25 by two. That is the kind of argument that people have to resort to when trying to indicate that revaluations increase the buoyancy of local rates. They do not.
I have indicated, by drawing attention to the three previous post-war revaluations, that what those revaluations did was to shift the incidence of payment 1276 between individual ratepayers and between different classes of ratepayer. If for one reason or another there is delay, and I accept that my right hon. Friend's reasons are the true reasons, the differences are exacerbated between one ratepayer and another and one class of ratepayer and another.
If, for example on the quinquennial system, the 1963 revaluation had been followed in 1968 by another revaluation, the increases in rates that people faced in 1973 would not have been reduced in 1973 but would have been attained in two incremental stages rather than in one large jump from 1963 to 1973. If that had been done I am sure—I hope to convince my right hon. Friend of this—that that would have reduced a great deal of the ill feeling that it aroused in ratepayers at that time.
I accept that the Government's decision is prompted solely by the setting up of the Layfield inquiry. I believe that the situation we face today requires flexibility rather than inflexibility. One of my main criticims of the Bill is its inflexibility. Clause 1(1) prescribes a time period of three years for postponement, while, later, there is statutory provision for further postponement of one year, followed by another year.
I suggest to my right hon. Friend that, in the interests of flexibility in an uncertain situation, we should consider a reduction in the post-ponement period, let us say, from three to two years—or, better still, to one year. The best of all possible worlds would be to forget about postponement for a fixed period and to use the powers in Clause 1(2) dealing with postponement by statutory instrument rather than setting a fixed limit. If that method were followed—I hope to impress upon my right hon. Friend the virtue of my suggestion—that would provide sufficient flexibility for the Government to act according to the situation as it emerges following the Layfield Committee's report.
I return to the matter raised by the hon. Member for Hove (Mr. Sainsbury). I realise the difficulties that local ratepayers are likely to face over the next 12 months. I know, too, that my right hon. Friends are aware of the difficulties with which they are likely to be faced. 1277 I have sufficient faith in my right hon. Friends to know that they will protect the interests of the ordinary domestic ratepayer. I hope that in the coming months, when the overall level of local government expenditure is made known, we shall also be informed of the additional help to be given to the domestic ratepayer in the coming financial year.
I realise that the rating system is regressive. It was made less regressive when my hon. Friends introduced the rate relief system earlier this year. I do not pretend that the rating system is ideal, but it ensures to some degree the independence of local government from the interference of central government. I have informed the House of my activities in local government. I cherish the remaining freedom and independence that local government now has. I should not wish to be associated too strongly with any policy or any Bill which, in my opinion, reduced or tried to reduce that independence.
That is why I cannot say in all honesty that I welcome the Bill, because I feel that in the coming years it will tend to reduce even more the independence of local government from central Government and, perhaps more importantly in the eyes of the local ratepayers—if ratepayers they continue to be—will further discredit local government in general and local authorities in particular.
§ 5.12 p.m.
§ Mr. Arthur Jones (Daventry)
I very much welcome the opportunity of following in the debate the hon. Member for Leicester, South (Mr. Marshall) and of saying that he echoes the views that I know are prevalent on both sides of the House, particularly with regard to the postponement of the 1968 revaluation, and all that that implied, for the whole decade until 1973, which significantly affected rateable values.
I also agree with the hon. Gentleman entirely about the rigidity of the proposals in the Bill. I know that I speak for many Members on both sides when I say that many of us cherish the independence which the rating system has given to local government in the past. We view proposals such as those contained in the Bill as being contrary to many of the traditions of local government and the hopes that there are for its future.
1278 The Bill carries a grand title—General Rate Bill. It sounds a significant measure in a variety of respects. I always think that the title of a Bill should be explicit and that it should contain in its title some descriptive material. I wonder whether the Government Front Bench will consider perhaps "Rate Abandonment Bill" or "Rate Postponement Bill"—something which would give us an idea of the purpose behind the Bill.
When I told an hon. Lady that this afternoon we were discussing the General Rate Bill, she said, "That is a grand, fine title. What is it all about?" It was not a very rewarding exercise to tell her.
The Bill devalues the rating system. That is inevitable in the proposals. I was interested in the point that my hon. Friend the Member for Hornsey (Mr. Rossi) made in his criticism of the fact that the rating system this year has been under tremendous pressures, as we all recognise, nobody better than the Under-Secretary of State. But what will happen in subsequent years when the problems we shall face will be even more acute? I think that the rating system is being undermined by the proposals in the Bill.
We all know the work load on the Inland Revenue and the tremendous job that revaluation involves. It was taken as a central Government responsibility from local government in 1948, and I thought it would be an interesting exercise to see why and what reasons were given in those days for the shift in responsibility. The only worthwhile quotation to be found comes from the Second Reading of the Local Government Bill 1948, when the late Aneurin Bevan said:Moreover, it is not properly a local government task. It is a professional job."—[OFFICIAL REPORT, 18th November 1947; Vol. 444, c. 996.]Whether the concept of professionalism of local government has changed is bound to be questioned by that remark. Who is better able to know local values than local valuers? We have seen a transfer. We saw rating valuation nationalised in 1948 and it is right to say that subsequent Socialist administrations have abused the system.
There has been no revaluation for rating purposes during any period under a Socialist administration. There have been three post-war revaluations—in 1279 1956, 1963 and 1973. I recall the circumstances so well when the postponement in 1968 was announced by the late Richard Crossman. Subsequently he confessed in my hearing that it was a political decision—and a wise one at that. I wonder to what extent this decision is a reflection of that political content of the circumstances briefly referred to by my hon. Friend.
The whole rate support grant is dependent upon the calculations of rateable values and it is most unfortunate that we should not be able to retain what little buoyancy there is in the rating system, faced, as we are, with the rigidity for a further three-year period beyond 1978.
The Minister always presents a poor case better than most and is always acceptable in terms of communication, indeed, if not in content. He was more modest when he said that in the House one often does not listen to what one says. I thought that that was personal derogation which was quite unjustified, and certainly does less than justice to himself. It reminded me of the charwoman who, when asked what she thought about a certain problem, said, "How do I know what I think till I heard what I've said?" The right hon. Gentleman was almost on the verge of that relationship in what he said.
It is unfortunate for the rating system that the Government should think it necessary to have a postponement. I remember, during the Committee stage of the Local Government Bill, 1966, that there was considerable discussion on the question whether we ought to have a continuing revaluation—say, over a period of years, a rolling programme of revaluation. My hon. Friend the Member for St. Ives (Mr. Nott) spoke at length on that during the Committee proceedings and a substantial case was made for a rolling revaluation for rating purposes.
I notice that this point has been taken up by the Association of Council Councils, which says:With computers available to make quick revisions of valuation lists and accept continuous feed-in of data which will ensure an up-to-date approach to revaluation, there should be continuous revision of the valuation lists in lieu of quinquennial revaluation.1280 I still think that that requires consideration. It does not arise from our discussions today but it is important enough for our attention to be directed to it. It is academic now.
I do not see the justification for the postponement of revaluation on the grounds suggested by the right hon. Gentleman. A letter sent to the Department over the signatures of the Association of County Councils, the Association of District Councils, and the Association of Metropolitan Authorities, has been quoted. There is substantial evidence that the local authority associations are very critical of what is being proposed in the Bill. There is substance in their criticism, and it is not right to say, as the Government have said, that it would be wrong to pre-judge what the Layfield recommendations are likely to be. It is the other way round. The fact that the Government propose to postpone and delay the revaluation is an indication to the Layfield Committee of Government thinking. The two interpretations are there, and it is a question of which one is taken.
The proposals in the Bill are unnecessary and unfortunate because of the short-term devaluing effects they will have on the rating system.
§ 5.22 p.m.
§ Mr. Stephen Ross (Isle of Wight)
I shall not keep the House very long, because most of the relevant points have already been made.
On first hearing of the Government's intention to postpone the quinquennial valuations from 1978 to 1981 I and most of my colleagues thought it a sensible measure in view of the decision to set up the Layfield Committee to look into the future of the rating system. Moreover—and the hon. Member for Daventry (Mr. Jones) is in a similar profession to my own—as a chartered surveyor, I am aware that there is a shortage of qualified staff. I met a senior valuation officer the other day who was recalled to my own constituency. He was delighted to come back, for he was paid a handsome salary. I also suspect, as the hon. Member for Hornsey (Mr. Rossi) suspected, that one is thinking in terms of further likely burdens that will be put upon my profession, arising from the Government's land proposals and the possibility of a wealth tax.
1281 Incidentally, having read in today's Daily Telegraph that I lost my seat in the last election, I am delighted to know that I may get my job back in the Inland Revenue. But I should be worried if I were to go back to that job now because it would be a difficult task to perform. I have the greatest sympathy with valuation officers in their attempts to assess rateable values or capital values of any sort when there is an absence of transactions in the property market.
This is a further instrusion by central Government into local government affairs. As the hon. Member for Hornsey recalled, the reason the Inland Revenue was given the task of preparing and revising the valuation list way back in 1948 was to ensure, as he said, greater efficiency and also uniformity and regular up-dating. Now we are once more taking the easy way out and making another postponement.
The White Paper on The Future Shape of Local Government Finance, published by the Conservative Government in 1971, said in paragraph 4,As the White Paper on Local Government, in England said, 'A vigorous local democracy means that authorities must be given real functions—with powers of decision and the ability to take action without being subjected to excessive regulation by central government through financial or other controls'. Any review of financial arrangements must seek to preserve and strengthen the financial responsibility of local government and to minimise detailed intervention by central Departments.Those words must sound pretty hollow today to the metropolitan county and district councils who have written and made representations.
In the representations made by the Association of Metropolitan Authorities they make the very relevant point, which was not referred to earlier, about the need to keep records. I should like to quote from that, because I should like to have some assurances on this from the Minister when he winds up the debate. They say:there remains the issue of keeping alive valuation records held by the Inland Revenue so as to secure that if some form of rating is advocated by the Committee of Inquiry.…—that is, the Layfield Committee—and accepted by the Government, or indeed is accepted by the Government in the absence of any unanimity as to the Layfield Report",1282 —I imagine there is a strong risk of that being the case—there will then be a very serious problem of producing an up-to-date base for rating valuations.Later, they say, as we all know:At the present time the Inland Revenue receives full information on a confidential basis of all property transactions including the capital value of the transaction …".It is important that we have an assurance that this process will continue, as the Layfield Committee may well come out with some sort of recommendation based on capital values, so that the keeping of those records is vitally important.
May I also suggest—I am not trying to make a plug for my professional colleagues—that if there proves to be a severe shortage of professional expertise, some of this work could be farmed out to private practice, much of which is in the doldrums, where there are very good experts.
Of course, it is not beyond the bounds of possibility that the Layfield Committee will support the continuation of industrial and commercial rating, as the hon. Member for Hornsey indicated. I thought the hon. Member got a bit off the point in talking later about shop premises, as those are presumably commercial premises. The small shopkeepers, incidentally, have had a very rough deal and I hope that pressure will be put on the Chancellor of the Exchequer to extend to small shopkeepers some of the relief accorded to domestic ratepayers in relation to increases in the current financial year. Perhaps it could be to those having gross values of £1,000 or less, to guess at a figure. That would be a very great help to them.
I suspect that the Layfield Committee will come down in favour of the abolition of domestic rating, which I agree is in a complete mess. The Minister pointed out one of its contradictions when he referred to the point about central heating. It is also extremely difficult for valuers to assess rateable values when one has rent freezes and the proliferation of various Rent Acts. I always feel very sorry for domestic ratepayers appealing against their assessments in the valuation courts when perhaps the chairman of the court asks, "How much do you think you might let your house for if you let it tomorrow?" It is always a figure far 1283 in excess of the figure he is arguing against. There are a great many anomalies. It would therefore be prudent to continue to process such evidence as there is at present on industrial and commercial transactions to enable accurate assessments to be made when needed.
One of the worst effects of a postponement of this kind is the shock experience by ratepayers when the new assessments are published after a long period. There is also the tendency of local authorities to relax their vigil somewhat—having some false margins to play with, as they seem to feel.
Finally, I should like an assurance from the Minister about the serious outstanding problems arising from the out-of-date assessments of the nationalised industries. These are referred to again in the letter from the various associations to the Permanent Secretary at the Department. There was one section not read out earlier. Perhaps I may read it. The third paragraph reads:There are very serious outstanding problems as to bringing up to date the rating assessments of the nationalised industries which have been promised for 1975".It asks what is the position on these.
I have made one or two inquiries, but I am not very well up on this matter. I cannot find out exactly what is the position, because various nationalised industries, as far as I am aware, are assessed on different bases. Perhaps we could have an answer to that during the windup speech.
§ 5.30 p.m.
§ Mr. David Weitzman (Hackney, North and Stoke Newington)
I had not intended to intervene in any way in this debate. I bow to the much superior knowledge of hon. Members who have taken part in giving expert opinion on the rating system. However, I listened carefully to the speech of my right hon. Friend the Minister for Planning and Local Government, followed by a torrent of words and simulated indignation on the part of the hon. Member for Hornsey (Mr. Rossi). I am sorry he is not present, because, listening to him, I could not understand what the row was all about and what he was so indignant about in criticising the speech of my right hon. Friend.
1284 The hon. Gentleman characterised the Labour Government—perhaps not directly but by implication—as, being a very wicked Government in daring to bring forward a measure of this kind. The implication behind it was that the Labour Government were doing this because it was connected in some way with a scheme for taking over development land. My right hon. Friend gave him the answer to that. Whether the hon. Gentleman accepted it, I do not know, but it seems to me that there is good reason for my right hon. Friend bringing forward this Bill in this way. Indeed, he stated specifically the reason for doing so.
I do not know what the fuss is all about. Questions have been raised whether the Layfield Committee, in the recommendations it eventually makes, will or will not come down in favour of the abolition of the rating system. We do not know. Perhaps it is a good guess that it may well do something about the rating system. But if it should come down in favour of abolishing the rating system, as at present, all the work done on revaluation would be wasted. Indeed, whatever recommendation the Layfield Committee makes, it surely would be stupid to allow the expense and the work to go forward in revaluation when one might have a recommendation which would make that work completely worthless.
The hon. Member for Hornsey, as I said, spoke by implication of the wicked Labour Government and the way we had postponed measures for revaluation over the years. I wonder why he neglected to mention what Conservative Governments have done in the past and how they have held over revaluations for various reasons.
Accepting what my right hon. Friend said, we have here a simple case. The Layfield Committee is having to consider the matter of rating, including revaluation, local government and the measures relating to it. My right hon. Friend, therefore, comes before the House and says, "Let us not waste time and expense on revaluation at a period when all that work may become quite unnecessary as a result of the recommendations of the Lay-field Committee."
I do not know why hon. Members opposite are so suspicious about this. It seems to me that my right hon. Friend 1285 has presented a perfectly good, sound simple case. Where the argument arises, I do not know. This is a simple, straightforward Bill which ought to receive the approval of the House.
§ 5.35 p.m.
§ Mr. Graham Page (Crosby)
Let me answer the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) at once. The reason for the opposition to this Bill is the suspension of the revaluation for as much as five years. If the Layfield Committee reports at an early stage and says that the rating system is to be maintained, there is no earthly reason to postpone the revaluation for five years. Revaluation can be accomplished in a matter of three years, from the start.
§ The Under-Secretary of State for the Environment (Mr. Gordon Oakes)
I hate to interrupt the right hon. Gentleman so early in his speech. The Bill proposes that the revaluation be in 1981, rather than 1978. Initially it would be for three years. I know that there is provision for extra years, but it is envisaged for three, not five, years.
§ Mr. Weitzman
What would the right hon. Gentleman's Government have done if they had been returned? My guess is that they would have done exactly the same thing.
§ Mr. Page
If the hon. and learned Gentleman will be patient for a moment, I will make my own speech, if I may. I answered his question at the beginning.
We are all painfully aware of the results of the previous revaluation. The increase in rental values and, therefore, rateable values of property after 10 years was so great that the public were shocked by the rise in their rateable values. If we still have a rating system in 1981—and I say that deliberately—I am sure there will be the same sort of shock to the public after a delay of so long between revaluations.
If the Bill were coupled with a Government assurance that household rates would be abolished, I should offer no opposition at all to the Bill, because we are merely saying to the valuers, "Do not 1286 start off with it; we are going to abolish this system". I should not object to that. The trouble is that the Bill is coupled with too many statements from the Government banches in praise of the rating system. Therefore, we must deal with the Bill on the basis that the present Government, at any rate, are thinking along the lines of retaining the rating system.
The Minister cannot blame us for being suspicious about the employment of valuers. Last time the revaluation was postponed because of a land grab and a tax. It was on the occasion of the Land Commission and the betterment levy. This time it comes just before the right hon. Gentleman introduces his Bill on land municipalisation.
§ Mr. John Silkin
The right hon. Gentleman and I know one another well enough to be perfectly frank. When the late Richard Crossman introduced the previous postponement, he gave the reason. He said that we would need valuers for this work. I can assure the right hon. Gentleman, and I hope he will take it from me—this is now the fourth time that I have said it—that it is Layfield inquiry, and that alone, that causes the postponement.
§ Mr. Page
If the right hon. Gentleman will pause to reflect for a moment, I was complaining that he has not been entirely frank with the House. During the Conservative Government, in which I had the honour to serve, we shifted valuers from the Inland Revenue to local authorities, and gave greater authority to the local authorities to employ their own valuers. There is a shift—if it has continued during the past nine months or so—from the Inland Revenue to local authorities.
The right hon. Gentleman's plan for land nationalisation is land municipalisation. I imagine that it will be the local authority valuers who will value the current use value, and so on. That is the reason—and I wish he had explained that to the House a little earlier—that he is saying, "This is not because of the employment of valuers; in fact we shall employ local authority valuers to do the valuations. The delay is only on the basis of Layfield."
§ Mr. Stephen Ross
I think the right hon. Gentleman will agree that there is a general shortage of valuers, and I 1287 should imagine that some of these municipal valuers will come out of the Inland Revenue.
§ Mr. Page
That was what I was saying. We have been shifting them from the Inland Revenue into local authorities. I am a little doubtful about what the Land Tribunal will do about this. I think that there will be more appeals if the local authority valuer is valuing on current use value than if the Inland Revenue are doing so. However, this is a subject we can come back to on the Land Bill when the right hon. Gentleman presents it.
It is, therefore, only Layfield. Hon. Members have already said how unfair a delay in revaluation can be as between one tenant and another, and we have proved on the recent occasion how unfair it can be between one local authority and another. As the House knows, the resources element in the rate support grant is distributed on the basis of the total rateable value of the rating authority. We set a standard rateable value below which the local authority receives its share of the resources element.
If the Bill is passed through the House and there is this further delay of three years in revaluation, there will be an imbalance between local authorities, as there was after 10 years. Is the right hon. Gentleman going to revise the rate support grant formula so far as the resources element is concerned, or to balance it with some juggling—if I may put it that way—with the domestic element, because this will need to be looked at very carefully? Once we get into 1978 to 1981, there will again be a grave imbalance between the towns.
Let us assume for a moment that a rating system will still be in operation in 1981. Upon what basis will property be valued? If the Government have their way and carry out the declarations that will be made on their behalf during the progress of the Housing Rents and Subsidies Bill, there will be no private property left. There will be only council property. That was the purport, as I understood it, of the Minister's statements. If there are to be only owner-occupiers and council tenants in future, how on earth do we find a rental market on which these valuers can work? The idea of 1288 valuation on a rental basis is getting more and more remote, and this applies particularly to residential property.
What about commercial property? If the right hon. Gentleman has his way with land municipalisation there will be no commercial property available for development. It will all be developed about 10 years hence, if at all. At any rate, there will be no market for the development of industrial and commercial property and, therefore, no market value. It is setting the valuers an impossible task for valuation, and that is why this Bill may be completely frustrating.
I come back to what I said at the beginning. I should have no objection if the Bill really were related to Layfield. I should relate it in this way: give Lay-field another year to report and then, if he still reports that there should be a rating system, allow three years on top of that for the process to be carried out. I do not think it needs longer than that. That means only one year's extension.
I hope that my Front Bench will fight the Bill on the basis that it should be just a year's extension of the revaluation and no more. That would be taking Layfield into account and carrying out exactly what the right hon. Gentleman has said he wants to do. I hope he will consider that and commend it to the House.
§ 5.45 p.m.
§ Mr. Bruce Grocott (Lichfield and Tamworth)
I am sure that during its history this House has had some strange suggestions made to it, and the one I have just heard—that an hon. Member would be happy to support a Bill which postponed the revaluation of property provided it also included a clause to abolish the rating system—is strange indeed. I see little point in postponing the revaluation of property if there is a subsection to abolish the rating system.
After listening to the hon. Member for Hornsey (Mr. Rossi), I am surprised at the extent to which a measure such as this—on the face of it an innocuous measure—is capable of raising blood pressure and temperature. I happen to believe that one of the reasons why the Opposition are getting so upset about this measure is that they can remember the effect in 1973 when revaluation was 1289 pushed through and continued, despite tremendous opposition from ratepayers. Let us make no mistake about it: the effect of the last revaluation was to shift the rate burden to domestic ratepayers and away from commercial and industrial property. That decision to carry on with the revaluation, coupled with the appalling Act to reform local government—from which no one knows how, why or what benefits are to be received—heralded the start of much of the feeling of domestic ratepayers today about the rate burden.
§ Mr. Douglas Hurd (Mid-Oxon)
One of the difficulties of the 1973 revaluation was precisely that it came 10 years after the previous one, and that it came after the last postponement by the previous Labour Government.
§ Mr. Grocott
Yes, and it came at a time when we all knew that local government reform was about to be undertaken. I remember only too well—at the time I was chairman of the local authority finance committee—the look of shock among my officials when they ushered me into their presence to explain to me the effect of revaluation on the domestic ratepayer. They were stunned by it. I also remember a meeting in Worcestershire of finance committee chairmen—hon. Members are aware that Worcestershire is many things, but it is not a hotbed of Socialism, and I was the only Labour member there—and their indignation and pleas to the Government.
I remind hon. Members that revaluation does not always have the effect of making matters fairer, as some people are suggesting, but often transfers the burden to the people least able to pay. It was often the smaller properties, the poorer properties, council houses, and so on, which had real problems after the last revaluation.
I hope that my view of the rating system will not be interpreted as meaning that the rating system should be retained for all time. Hon. Members have been fond of quoting the late Richard Crossman today. I remember his saying that the rating system was a relic of the first Elizabethan era that should never have been allowed to survive to the second. I happen to think that that is a fairly good description of the Conservative Party but it was used by 1290 Richard Crossman to describe the rating system, and I hope that we shall see a considerable reorganisation of local government finance.
But we must remember the effect of the last Act. There is, possibly, a certain amount of egg on the faces of the Opposition, as they will realise if they sit back and think of the origin of the present outcry among ratepayers. It dates back to their Government, to their activities and particularly to their Local Government Act.
§ 5.49 p.m.
§ Mr. Tony Durant (Reading, North)
I welcome the opportunity to make a few comments in this short debate. Most of the points have been made, so I shall cut my speech as much as possible.
I begin by commenting on what the hon. Member for Lichfield and Tamworth (Mr. Grocott) has said. He knocked his argument down by saying that when he had been ushered in to see his officials he had found them horror-struck by the sudden rise in rates. That was the effect of delaying the implementation of the earlier proposal. By citing that incident the hon. Gentleman knocked his own proposal on its head.
I share the slight suspicion of my right hon. Friend the Member for Crosby (Mr. Page) of this whole matter. We have had several reassurances from the Dispatch Box that there is no need to fear that the Bill is connected with any other measure. We are assured that it is related only to the Layfield Committee's report. One must accept that, but there is a lingering suspicion that that may not be the case.
Following what my right hon. Friend the Member for Crosby said about the rate support grant. I should like to make a plea that when the matter is discussed the Secretary of State should consider the district councils and not pass on any relief only to the county councils, because this particularly affects my constituency. I support very much the suggestion that a year's extension might have been a viable idea, but this will obviously not be accepted.
The hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) asked what all the fuss was about. Has he not been listening to 1291 what ratepayers throughout the country have been saying? There is a tremendous uproar about rates. This is another seemingly small measure which confuses and worries people. There is, therefore, a fuss and worry about rates. The public, councils and officials are worried about local government finance. That is why we are having this debate and why there is strength of feeling about it.
The hon. Member for the Isle of Wight (Mr. Ross) covered a great deal of what I intended to say. I am pleased to see that he has been re-elected since the statement in this morning's early newspapers. The hon. Gentleman is not here to be congratulated. I want to deal with the matter he raised concerning small shopkeepers. This is a matter of some urgency. In my constituency the number of shop closures is alarming, and we shall have vast tracts of the area without any small traders such as newsagents, cobblers or any other type of trader. This is a serious matter.
It is a pity that the Secretary of State has said that the Layfield Committee is the reason for the postponement. What happens if the Layfield Committee, in spite of everything, says that rates must continue? All that would happen is that we would then have a scramble to achieve another valuation. Why cannot the valuation go on while the Layfield Committee is meeting so that, if it says that rates must continue, we are in a position to have that revaluation? There is no doubt that a postponement would distort the problem of rates, as many hon. Members have said, and would make the whole rating position even worse.
I should like to pick up the point that has been made by a number of hon. Members about the Green Paper. I admit that I support those hon. Members in much of what they said. I was involved in a local reorganisation committee and received a copy of the famous Green Paper. That document was a farce because it put up ideas and merely knocked them down. It was a great pity that more was not done at that stage.
The hon. Member for Leicester, South (Mr. Marshall) talked about Conservative policy at the last election and said that all we would do was shift the burden on to the general taxpayer. I do not think he read it properly, because it 1292 stated that we would look at other ways, bearing in mind the report of the Lay-field Committee, to make the local rate system fairer and based on ability to pay. Everyone feels that the injustice is that the present system is not based on ability to pay.
The situation is very serious and we as Members of Parliament are all under pressure. Why cannot the committee report much earlier? I cannot see that it will take all this time. There is so much documentation and so much evidence that the committee simply has to sit down, make a few decisions and put those decisions to us. To take all this time to report is a lot of nonsense. If the chaps do not have sufficient time, let us get some people who have the time, because the matter is very serious and urgent.
I hope that the Layfield Committee will consider valuation as a basis. It has been mentioned already that the basis of valuation should also be considered by that committee if it decides to continue with general rating. I hope the committee will also look at the question of site valuation. I have mixed views on the matter. I am not necessarily a supporter of it merely because I have raised the subject, but I hope that it will be considered by the Layfield Committee.
Rates are still going up and up. We have heard about next year's problems in this respect. My own local authority speaks of the possibility of a 40 per cent. increase. This will mean an increase of 120 per cent. over a period of three years. It is a frightening thought for local ratepayers. There is no question but that there will be trouble on this front next year.
I shall, therefore, have to accept what the Minister said. He chided me once for not listening to the answer when I asked him a question. I have listened very carefully and absorbed what he said. I therefore take it at its face value that this is not sharp gerrymandering, because the official is to be used for some other purpose.
There was some confusion in the dialogue across the Table as to whether we were short of people. I draw the Minister's attention to the effect of the Bill on public service manpower, which is mentioned on the front. It states that 1293 there is a shortage, and that the valuation office isunable to recruit professional valuers to the level of its manpower requirement.In other words, there is anxiety about the professionals. Nevertheless I was not too clear about the friendly dialogue which took place, so I missed the outcome of it.
I shall, therefore, support the Bill in the sense that we shall not divide on it tonight, but I have grave anxieties, and I hope that the Minister will take note of this.
§ 5.55 p.m.
§ Mr. John Cartwright (Woolwich, East)
In company with my hon. Friend the Member for Leicester, South (Mr. Marshall) I have considerable reservations about the effect of the Bill, and some doubts about the practical problems which it raises. I speak on behalf of the metropolitan areas of the country. It is an indication of the importance of this issue for local government that it has succeeded in uniting the shire counties, the districts and the metropolitan areas as well. Not many issues bring those three parts of local government on to the same wavelength.
The first issue which concerns local government in this problem is the absence of consultation before the intentions of the Government were made known. When the local authority associations took this matter up with the Department they were told that this was an executive act of Government and, therefore, not something subject to consultation. But this was, after all, a basic and independent source of finance given by Parliament to local government and, therefore, an issue on which local government ought to have been consulted before decisions were taken. It seems a cavalier way in which to treat local government.
This is important because on both sides of local government there is a growing feeling that successive Ministers make a lot of fancy speeches about respecting the integrity of local government, safeguarding its rôle and believing in its importance, but these executive acts of Government are taken without any consultation with the local authorities concerned.
My right hon. Friend has indicated that the whole basis, reason and purpose of 1294 this Bill is that to continue with the revaluation would be to prejudge Lay-field. As a newcomer to the House, I find it a fairly novel doctrine that, whenever one sets up a Royal Commission or a high-powered committee of inquiry one has to stop all the ongoing commitments under existing legislation on the ground that to do otherwise might prejudice the results of the inquiry. I should have thought that a recipe for a rather chaotic situation. I join with other hon. Members who say that a better case could be made out for the decision to postpone the revaluation, prejudging what one expects from the Layfield Committee.
Unlike the hon. Member for Reading, North (Mr. Durant) I do not think that the Layfield Committee has an easy job. If I may declare my interest, for a few weeks earlier this year I was a member of that committee, before the electors of Woolwich, East called me to higher things. I think it has a difficult job to do in finding some means of financing local government so as to give local authorities a buoyant, rising, lively source of finance which, at the same time, is under local control and does not place a heavy burden on the domestic ratepayer. I do not think that it will be easy to reconcile those requirements.
Perhaps Layfield will eventually say that the rating system has to be scrapped, and some of us might be happy about that outcome. It might say that it should be reformed, or that the rating system should be retained in part and supplemented by other forms of local government finance. Layfield might come out in favour of a capital value based rating system. If a number of these possibilities come up, there will be a need for some up-to-date guide to property values.
I note the point which has been made by a number of hon. Members that there is a grave risk of a gap in information if the next revaluation does not come into force till 1981. There is a risk—my right hon. Friend fairly recognises this in his opening speech—of distortion and inequity, not just between one ratepayer and another but between one local authority and another. There is the growing impact of inflation. We are all aware of its impact on local authorities, labour-intensive concerns as they are. We know 1295 also that the rating system at the moment gives a fixed base for local government income. It is not a buoyant situation, and this has been argued in the past on behalf of local government as a case for more, not less, frequent revaluation. In circumstances such as the boom in property prices which we saw in the early 1970s, the situation can change rapidly.
That is why I share the view of the hon. Member for the Isle of Wight (Mr. Ross), that if the revaluation is postponed, at least we should maintain the information to which he referred, on property transactions, details of value and so on, so that there will be some basis of fact if we need it to put into a valuation system again very swiftly.
One point which has not yet been mentioned in the debate is the impact of the valuation system on the rate support grant. It is of fairly substantial importance to the allocation of the resources and the domestic elements in the rate support grant. The third report of the Department of the Environment Grants Working Party, referring to the London situation, states:Most members consider that London's exceptional rateable resources outweigh London's exceptional spending needs.I do not agree with that conclusion, but it indicates the extent to which rateable value is used in these decisions. I believe that rateable value is an unfair test of the resources of any local authority. If we are to operate on out-of-date rateable value statistics, it becomes an even less fair test of the allocation of resources under the rate support grant.
I recognise that my right hon. Friends face considerable difficulties in this matter. I think that we all recognise, with good reason, that rates are a very unpopular form of tax. I recognise that a revaluation is still more unpopular when the ratepayer suddenly sees the rateable value of his property soaring at a rapid rate. Indeed, we have not yet sorted out all the appeals from the last revaluation. I also recognise that the Layfield Committee presented a new situation to which the Government had to respond, but I honestly feel that my right hon. Friends could have dealt with the matter with rather less cavalier disregard for the views of local authority associations, with more understanding of the problems now facing local government, and with more con- 1296 sideration of the not very high state of morale which now exists in local government.
§ 6.2 p.m.
§ Mr. Douglas Hurd (Mid-Oxon)
I do not want to follow the hon. Member for Woolwich, East (Mr. Cartwright) on the point about consultation, which he emphasised, although he put forward a convincing argument.
In moving the Second Reading of the Bill the Minister for Planning and Local Government, in solemn terms, told us of the timetable set out by the Government for the Layfield Committee's work. I think that by now we all accept that that timetable is the justification and the reason for the Bill. However, what worries us most is the thought that the timetable and the Government's action on it is an inadequate response to the present crisis. It surprised me, as a new Member last February, that this should be so. Heaven knows, in the last Parliament we tried again and again, afternoon by afternoon and evening by evening, to ram home the point that something new and serious was happening in local government, but the response from Ministers was inadequate. They will live to recognise and regret that fact.
I am not now thinking of the Chancellor of the Exchequer's domestic rate relief. Now is not the time to discuss that. I am thinking of the Layfield Committee and its timetable. The Minister repeated today that the timetable asks this distinguished body to report at the end of next year. That means that we have at least two or perhaps three more years of the present rating system operating under the worst possible conditions. It would clearly be impossible, if the Government do not get the report till the end of next year, to bring in legislation before the summer of 1976. It would also clearly be impossible for that legislation to have any effect till the financial year 1977–78. Therefore, we would have at least two years—I suggest possibly three years—of the present system operating under impossible conditions. I hope the Government will note that, from my admittedly brief experience in this matter, I feel that the system will not survive for long.
Oxfordshire is far from the worst affected. It must be about in the middle. The 1297 figures that I am about to quote will be greater for other counties. Oxfordshire County Council set aside £6 million to cover inflation this year, but it expects to overspend by £2½ million. That is after making modest allowance for the Houghton Report on teachers' pay and for the manual workers' settlement, neither of which is yet known. Its committed growth on existing programmes is 4½ per cent. On top of that is the increase in population and whatever calculation is made for inflation next year. Adding these things together—that is what we are beginning to do in a very painful way—we find the certainty of cuts in local government services and another round next year of high rate increases. Already there are angry protest meetings about the cuts. If that process is repeated next year and the year after, and possibly the year after that, before anything that the Layfield Committee may recommend can have any effect, we shall move very quickly into an intolerable situation.
One difference between this coming year and the current year is that, whereas the Secretary of State managed to manoeuvre the figures so that the cities were to some extent protected in the current year—one had the impression from time to time that we were regarded as a lot of hayseeds and that these ructions in the far east were greatly exaggerated by the Liberal and Conservative parties—in this corning year London and the big cities will be affected in a major way. I think that that will affect the attendance at and speeches in this House from the Government side.
The basic reasons why the system is becoming unacceptable are simple. Whatever the theoretical arguments about the rating system, at a time of high inflation it rapidly becomes unacceptable because it does not provide local authorities with greater incomes as costs and salaries rise, it is not automatically buoyant, and it is not related to the ability of people to pay. Listening to ratepayers one gets the impression that they feel that the system as it operates now offends a basic sense of natural justice. That was the phrase used by the Secretary of State yesterday, and that was the phrase that was used in opposition to our Housing Finance Act.
Before we get into real trouble next year the Secretary of State ought to consider 1298 what kind of collision might conceivably occur between those who now represent ratepayers in numerous associations, local government and central Government. The situation is a good deal more serious than the debate so far has indicated. The Government ought at least to have some kind of emergency and contingency plans.
Would it not be possible—I put this forward as a serious suggestion—to say to the Layfield Committee "We still desperately need your advice. Because inflation is going so strong, the situation is now more urgent than we originally thought. The evidence is here. We have in the Department, in that curious palace in Marshall Street, piles of it assembled for the Green Paper prepared by the Conservative Government. It needs updating. However, the evidence and the choice are there. Will you look at it and let us have your views on the radical changes which are needed by the end of this year? Then we can produce legislation by 1975? "If that could be done I think that there would be a chance of rescuing the situation. If the Government do not do that, I feel that the Layfield Committee, before it reaches the end of its leisurely deliberations, may find that it is not examining an invalid but is conducting a post mortem on a corpse.
§ 6.9 p.m.
§ Mr. Frank Hatton (Manchester, Moss Side)
The Bill makes sense only if it is accepted that there is a need to get local government finance once and for all on a sound and sensible basis. If that is accepted, the postponement of revaluation is understandable.
Local government is going through one of its most difficult periods ever. It has been living through severe inflation. One of its gravest difficulties at present is coping with the reorganisation put into effect by the previous Conservative Government. Ratepayers are now finding themselves having to make considerably increased payments but at the same time they are being provided with reduced services because of the high costs of administration placed on local government by that reorganisation.
I want briefly to highlight one aspect of the situation. It is an aspect which troubles me greatly in relation to a postponement of revaluation. I speak of 1299 the difficulties that exist because of the formulae that are applied to the determination of rateable values of flats and houses, where we have a situation in which flats tend to be rated more highly than private houses because the notional rent is normally considered to be higher.
This is one of the severe anomalies of the present time. It arouses anger among ratepayers about the amount paid by one ratepayer as against another. This can be highlighted particularly in inner city areas, where there has been much in-filling by new housing developments of multi-storey flats and other types of flat development. Some of this development has been undertaken by bodies such as housing associations to assist those who have been unable to find housing through the housing lists of local authorities. They have found themselves with a severe rating assessment which has compared very unfavourably with that of those who live in adjacent houses. In my constituency I have an example of a housing association development in which two-bedroomed accommodation has a rateable value of £266 although adjacent to it are detached houses with a garage—much more desirable residences—with rateable values of £247 and £236.
I regret that the postponement that we are to suffer because of the Bill will mean that residents in accommodation of that kind will continue to feel that they are being punished because of the type of development in which they find themselves. Nevertheless I accept, as I have said, that if we are to have local government finance on a sound basis once and for all, a Bill of this kind, in view of the Layfield Committee's determination, ought to be accepted. There is an urgent need for the committee to report as speedily as possible. Indeed, I hope that the Government will do everything in their power to facilitate the committee's work.
§ 6.15 p.m.
§ Mr. Timothy Sainsbury (Hove)
It is unusual to have a debate in which so many hon. Members on both sides of the House have expressed reservations, in some cases very considerable reservations, about the Bill. I am glad to be able to follow up the remarks of the hon. Member for Manchester, Moss Side (Mr. Hatton), who has put forward some of 1300 the reservations, doubts and worries which we all share.
I have looked at the Bill to see whether we could find anything to commend in it. Happily, I am able to find at least two points. The first is its brevity and comprehension. Even those of us who are not possessed of special legal qualifications find it fairly comprehensible.
There is one other point that I find possibly good about the Bill. In this connection I should, perhaps, declare an interest of a kind since I was at one time a part-time member of what was known as the Business Team in the Civil Service Department. While I was so employed I wrote several reports, in one of which I touched upon what seemed to me to be an anomaly—which is known as the Rating of Government Property Department. It is a very small sub-department indeed.
It seems to me to be an anomaly in several ways. First, I do not think that it represents an efficient and effective deployment of what we have all agreed is a rather scarce resource—namely, professional valuers. Second, a long-standing subject of resentment by local authorities of all types is that they do not have Government property in their areas rated on the same basis as other property and rated by the people responsible for rating all other sorts of property. Perhaps the pause that the Bill unhappily gives us could be turned to good effect if that matter at least was looked at and if this long-standing anomaly could be put right.
Turning to the general subject, however, I believe that we must consider it against what is in effect an outcry about rates. It comes from all areas of the country and from occupants of all types of property. I recognise, as the hon. Member for Leicester, South (Mr. Marshall) said, that we are not looking at the Bill as though in some mysterious way revaluation would increase the buoyancy of the rating revenue. The argument is not about the buoyancy of the rate revenue. The argument surely ought to be about the acceptability of the method of raising this revenue and the equity between individuals and, indeed, between companies from whom that revenue is raised.
An important point that has not been touched on very much during the debate 1301 is that this matter affects companies and businesses just as much as it affects individuals. The plight of the small shopkeeper has been mentioned. I support what has been said by hon. Members who have mentioned that problem. But the whole of commerce and industry now has a greatly increased rate burden. It is becoming a major cost factor, for example, in retailing. The Minister has admitted that property values change. Perhaps it is true to say that in commerce and industry they change rather more rapidly and radically than they do in other areas.
I am sure that the Minister and his advisers will be familiar with the history of the excess allowance. That allowance used to be claimed by those operating large retail stores, on the argument, then felt to be generally acceptable, that the excess area over a normal-size retail unit was not worth the same amount pro rata as the standard-size unit with an ordinary amount of high street frontage. For a long time certain larger stores paid less rates pro rata than did the smaller ones. It now seems that we may be moving into a situation in which exactly the reverse will apply.
Therefore, if one postpones a revaluation for as long as is suggested by the Bill, the inequities are bound to increase. We must bear in mind that the values on which rates are now paid are not those of 1973 but are assessments made during the course of 1970, 1971 and 1972, which in many cases are subject to appeals, many of which are still outstanding. The balance of the rate burden between offices and shops, which had quite clearly got out of line between 1963 and 1973, is likely to get out of line again.
But perhaps quite rightly most of us who have contributed to the debate have been concerned about individuals. As my hon. Friend the Member for Reading, North (Mr. Durant) said, the problem is that rates are a tax that is levied without regard to the individual ratepayer's ability to pay that tax. Perhaps while the rate burden on any one individual was not substantial that did not matter too) much. Even though the amount was not substantial, the system could not be called particularly fair. The point has already been made by my hon. Friend the Member for Hornsey (Mr. Rossi) that it is the very rapid increase 1302 in the rate burden that has concentrated all our minds on the inequity of this taxation on individuals, and particularly on single-person households.
I have in my constituency no fewer than 12,000 single-person households and nearly every one of these can be held to be subject to an unfair burden by reason of the method of levying rates. Again, the longer the period between valuation, the more difficult it is to get the balance right between houses and flats. Changes in the environment of houses and flats will change their relative values. It is possible that people will quite correctly pay greater attention, and therefore attach greater value, to the ease of heating a property as the years go by, and this could have a significant effect on relative values. The longer the postponement, the greater the potential inequity.
Another aspect is that the unfortunate valuers, in short supply as we all know, have to deal with a large number of large-scale alterations and new buildings. The further they get away from the base date for the valuation, the more difficult it will be for them, for ratepayers and for their professional advisers to interpret what is known as the tone of the list and to try to scale down the current values to the original value from the time the rating list was first prepared.
There therefore exists inequity between firms and individual householders. There is potential inequity between householders as a group and commerce and industry as an organisation. It is continuing inflation, which even the most optimistic of speakers today has not expected to disappear overnight, the growth in the responsibilities of local government imposed on it by the central Government, and, therefore, the inevitable growth in the spending of local government that bring this matter to a state of increasing urgency. A tax which is unfair and which is getting higher and higher eventually becomes a tax which is unacceptable.
I support my hon. Friend the Member for Mid-Oxon (Mr. Hurd), who said that we need a much more urgent approach to this unacceptable situation, otherwise the ratepayers will no longer pay up, not only because the burden upon them is excessive but because it is raised in an unfair 1303 way. The Bill does nothing to ease that problem.
The Government's whole approach seems too little and too lazy. We need something altogether more urgent. We need immediate attention to the burdens on ratepayers, domestic ratepayers particularly, for the coming financial year. Surely we could have a speedier report from the Layfield Committee, particularly in view of all the work that has already been done. Why must we wait until the end of 1975 at the earliest? May we have more than just the Bill? It does not do much to help but it does not make the situation much worse. May we have immediate action? If we do not, there will be serious problems in the next rates season.
§ 6.24 p.m.
§ Mr. Ted Leadbitter (Hartlepool)
It is interesting to hear an hon. Member introducing a note of urgency in a matter which has taxed the House for many years. The hon. Member for Hove (Mr. Sainsbury) wants urgency injected into the matter. If he is sincere he could show that sincerity by contacting the Conservative Members of the Committee and asking them to make their contribution.
It is a matter of conjecture and not of certainty whether postponement of the revaluation will bring advantages or disadvantages, but the Second Reading of the Bill gives the House an opportunity to say something pertinent about its own responsibilities for the consequences of local government reorganisation. Once and for all we must stop tinkering about with local government and leaving local councillors to stew in their own juice, particularly when they have heaped upon them the ire and discontent of their constituents.
Local government has passed through a traumatic experience since the passing of the reorganisation legislation. The councillors have been malinged because the public, understandably, cannot see where the cause of the trouble originates. The right hon. Member for Crosby (Mr. Page), who did so much to pilot that legislation through the House, knows full well that he and his Government were warned repeatedly that there was no correlation between the size of local authori- 1304 ties and efficiency. One general guideline is that the larger the local authority the higher are the unit costs of servicing. I can remember putting before the right hon. Gentleman comparative figures in connection with my plea for Hartlepool and Cleveland against those of other authorities at county level.
Much of the general chaos in local government and many of the high costs and the difficulties which exist between the authorities and the people they represent originate in this House. In the past we have been too much involved with the presumption that all we have to do is pass legislation and then pass the buck to the local authority.
The Government have acted very quickly since they came to office last March. I hope that they will accept the concern which now exists as I have described it. They have set off in the right direction. On coming into office they gave immediate relief to some authorities. They introduced an improved rate rebate scheme and they set about organising the independent inquiry. They did other things to help, and my hon. Friend the Minister met many local authorities and travelled widely to assess for himself the position which had developed.
There are many calls from hon. Members for getting rid of the rating system, but just how sincere are they? Last November the right hon. Member for Crosby said that it would be irresponsible for rates to be put into the melting pot. That was only two months before publication of the White Paper on the rate support grant in January this year. The right hon. and learned Member for Hex-ham (Mr. Rippon) went further. He showed his complete faith in the correctness of the rating system by announcing that the money was simple to collect and the system was easy to administer and that therefore it was right. All this was swept aside at the election by the Conservative plea that we should get rid of the present system of rating.
I have got news for anyone who listens to that kind of talk. For years and years there have been study groups, working parties, and various responsible bodies in local authorities all intent on modifying or getting rid of the rating system. God knows how many White Papers there have been on local government financial 1305 structure, but they have all ended up with one basic conclusion—that the rating system has to stay.
Those of us with local government experience know that there must be an element of a rating system if we want to have freedom in local government. We cannot have a democratic situation in which people have the right to a close, personal contact with local government councillors and officials unless there is some financial responsibility at that level.
We on this side of the House are intent on reforming and reshaping, whereas any pretence from the Conservative Party that it wants to get rid of the rating system is in complete conflict with that party's other claim that it believes in freedom in local government. The Conservatives cannot have their cake and eat it.
§ Mr. Graham Page
There is greater responsibility by the local authority to its electors if all the electors pay for the finance for the local authority, and pay it at a rate settled by their local authority —in short, local income tax.
§ Mr. Leadbitter
The right hon. Gentleman may feel that he has a reasonable point, but he had all the opportunity to take action on that when he was in office, but he had to wait until he was out of office before trying to help, with his Bill for a national lottery. He came to the House with that Bill after he left office, not with his present suggestion.
I say to my colleagues on the Government Front Bench that I believe that they have started out quickly and pertinently to clear up the mess created by the Conservatives when in office. I ask my colleagues to go a little further and take on board total parliamentary and Government responsibility for this matter and to say to the general public that councillors are not responsible for the present situation.
It is the current thing to have a social contract. Let us, therefore, have a new contract with local government, and say that we shall tell the people exactly about the extent to which we are going to be responsible in the future. So as to aid the achievement of that situation we should arrange for local authorities to tell us much more about their capital works proposals, their servicing and costs. We 1306 can then have a new relationship in which we can get rid of all the grave anxiety now existing among electors and ratepayers, by making Parliament's views and conclusions fully known.
I hope that the Bill will be accepted upon the basis that was announced earlier in the House. I hope also that the House will be satisfied that, having time to deal with revaluation, we shall use that time to clear the decks and enable the public to understand where the troubles lie in local government.
§ 6.33 p.m.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
My hon. Friend the Member for Hornsey (Mr. Rossi) and my right hon. Friend the Member for Crosby (Mr. Page) have put the case against the Bill very well.
My constituents are deeply worried already about the tremendous rate burden that they have to bear. They had been greatly looking forward to the return of a Conservative Government pledged to reduce the domestic rate burden immediately by one-quarter by removing from local government the cost of teachers' salaries and the costs of the fire and police services and then completely recasting the domestic rate system, thus making the burden much fairer as between one citizen and another.
Instead of such relief, my constituents are now getting this Bill sprung upon them at short notice. It was not mentioned at the time of the General Election or in the Queen's Speech. It is a Bill which will intensify the unfairness in the present rating and valuation system.
My hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) and I put forward a Private Member's Bill in the last Parliament to try to eliminate some of the factors in the valuation system which cause the greatest resentment among householders. Unfortunately, like many other Bills, it fell because of the General Election.
Now we have what I can only describe as this most miserable Bill. I have been extremely interested about how often hon. Members on the Government side have used the phrase "on the face of it" when speaking about the Bill. The trouble with the Bill is that we cannot take it at face value. Never before have I heard anyone 1307 whom I would normally regard as an intelligent Member put forward such an idiotic reason for not consulting local authority associations as did the Minister in opening the debate. If he had tried that argument on a trade union he would have had a riot on his hands, if not a lynching party.
There should have been proper consultations before the introduction of the Bill. Partly because of the lack of consultation, partly because of the haste and partly because of what has been properly referred to as political gerrymandering, the Bill will only increase the unfairness between one ratepayer and another. Some properties rise in value while some fall, but their valuations remain for two, three, four or even five years.
The Minister would have done much better had he used his not inconsiderable energy to reduce the burden of rates and to get rid of the injustice of charging householders for services which they do not receive by withdrawing the statutory instrument, introduced by the Secretary of State for the Environment in March, which obliges local authorities to levy rates for sewerage services on all properties regardless of whether they have those services.
I have in my constituency 3,000 properties which do not receive sewerage services. I urge the Minister yet again to get the occupiers of such properties exempted immediately from the rate charges for sewerage services.
I am totally opposed to the Bill. We shall do all in our power to get it mightily improved in Committee.
§ 6.36 p.m.
§ Mr. Ivan Lawrence (Burton)
I did not intend to join in the debate but I have been stung to do so by some of the remarks from the Government side of the House. The hon. Member for Lichfield and Tamworth (Mr. Grocott) said that it was an innocuous Bill, and the hon. and learned Member for Hackney, North and Stoke Newington (Mr. Weitzman) said he did not know what all the fuss was about. The general consensus on the Government benches has been feigned astonishment that we on this side of the House should take objection to the Bill.
1308 I believe that there are three causes for concern. It is right that I should put these matters to hon. Members on the Government side. First, this year's rate increases have been absolutely appalling in my constituency. There have been increases ranging from 40 per cent. to 100 per cent. Just how bad the position has become is illustrated in a letter I have received from a constituent. The letter states:You will have had many letters from this area commenting on the enormous increases in the rates demanded from 1st April 1974—my own are up from £61.92 per annum to £102.18, which makes the free French letters and 1 p off milk and bread not such a good bargain.I'm too old for the first item and too fat for the other two.The good humour of Burton people should not obscure their real anguish.
In my constituency the rate increases have caused widespread alarm. There are many reasons for these appalling increases. One reason arises from local government reorganisation which took place at the behest of the House before, I am happy to say, I became a Member of it.
Another reason is inflation, and we can all put forward various factors explaining that. A further reason is a reduction from 19p to 13p in the rate support grant in my area as a political measure by the Government when they took office in February, and yet another reason is some increase in expenditure by the Labour-controlled county council.
I put forward yet another reason—revaluation, which is what we are talking about today. Revaluation was delayed by up to 10 years by the last Labour Government. That so distorted the valuations of many houses in my constituency that whereas they would have been meeting rate increases of 60 or 70 per cent., in the end they had to meet rate increases of over 100 per cent.
Therefore, we do not regard the Bill as innocuous. We believe that we should make a fuss on it because it is extremely worrying to any hon. Member who is concerned about the distress caused to his constituents. That is my first cause for concern.
My second cause for concern relates to the Government's statements on whether the rate system is to remain with 1309 us. I wish to draw attention to some remarks by the Secretary of State for the Environment in February, when he said:At a time of high taxation, taxation should be higher under a Labour Government if we are to carry out our social programme. We shall never find another source of as much money as accrues through the rating system.That statement, coupled with the total failure of Labour to put into its manifesto any suggestion on the lines of the Conservative proposal to abolish the rating system, gives one cause to think that the Labour Government take the view that either the Layfield Committee is likely to report that the rating system should remain or the rating system will remain whatever Layfield and his committee say. That means that the distortions will continue. If that happens, it will cause even more distress to my constituents. That is my second reason for concern.
If the Government were to say that there should be no rating by the end of a Parliament, I see a reason for introducing the Bill at this stage. As things are, however, there certainly seems to be no reason for delaying the measure until 1981. We know that the Layfield Committee will be reporting in 18 months or so, but that by this Bill there will be no implementation of revaluation before 1981. My right hon. Friend the Member for Crosby (Mr. Page) said that there was no point in waiting until 1981 for revaluation because there would be no market for domestic rented accommodation or commercial property on which any revaluation could take place. I agree.
My third cause for concern relates to what the Minister for Planning and Local Government said about the reason for delay. He recalled the reason given by Mr. Richard Crossman for the last rating revaluation postponement, namely, shortage of valuers. I am a relatively new Member of the House and am inclined to accept what parliamentary figures say in the House of Commons. Therefore, when the Minister goes on to say that the reason for delay in rating matters was the existence of the Layfield Committee, again I tend to accept what he says.
But one's confidence in the reasons given for the delay by Socialist Cabinet Ministers is undermined when we know the reason given in a television interview on 18th February 1963 by Mr. Crossman. 1310 The reason had nothing to do with the shortage of valuers. Mr. Crossman said:I being a cynical politician said 'This is something we can well postpone. We can do nothing but lose votes on this and the rates will go up.'If that is what Mr. Crossman said when being frank, I must be forgiven when I hear yet another reason given for delay by a Minister in the House—especially since we know that the Bill is being introduced a short time after the election, during which Labour politicians no doubt assured their supporters that they would do something about the rates. They therefore proposed to postpone any reassessment which might increase the rates.
Those are my reasons for taking part in the debate. It is right that we should make a fuss about this so-called innocuous measure. It is our duty as an Opposition to speak out against such measures. It is a measure in which I can see no good and I believe that in the longer term it may do much harm.
§ 6.46 p.m.
§ Mr. Hal Miller (Bromsgrove and Redditch)
I apologise for not being present during the earlier speeches, and I am grateful for this opportunity to talk on the important topic of rates.
I begin by congratulating the right hon. Gentleman the Minister for Planning and Local Government. I well recall the assiduity with which he listened to an Adjournment debate which I was fortunate enough to initiate in the House concerning the financial situation which local authorities faced following the designation of new towns. That matter is still in the forefront of the minds of the Hereford and Worcester County Council. I hope that the Minister will be able to give us some hope that action will be taken to help us.
I shall not detain the House with a large number of general points and shall not try to make party political points. I wish to emphasise the fact that the burden on the domestic ratepayer—and we all know that those in council houses are also affected—has become insupportable. Yesterday officers and officials of my county council came to the House to see the six Members of Parliament for the Hereford and Worcester area to complain about rate increases. Next year 1311 the rate increase will be some 60 per cent. merely to maintain current services, quite apart from any growth. The prospect is appalling. They asked their Members of Parliament to obtain certain assurances about help in respect of rates. They want assurances over cuts in services.
We all understand that in a critical situation some services can no longer be maintained at levels we all wish to see. Cuts in services comprise one of the ways in which the man in the street will be given a true indication of the economic difficulties confronting the country.
The county council wanted the Government to give some direction as to which services should be considered for reductions so that there may be throughout the country some uniformity of treatment, although we appreciate that there will have to be variations in local services. We in the Hereford and Worcester area were fortunate in August in securing a visit by the Under-Secretary of State for the Environment. He then undertook to examine the elements of the formula of rate support grant since as a county we are put at a disadvantage. I shall not bore the House with the technical details, but we hope that some consideration has been given to this matter and that we shall soon hear the results.
It is a great disappointment that the Secretary of State for the Environment has not felt able to speed up rate support grant payments since a number of authorities have great difficulty in meeting their current bills. My child attends a village school and I know that the form mistress has to go round factories in the Black Country getting waste paper on a Saturday morning to provide material for the children to do their work. Therefore, I am well acqainted with the severity of the situation and I hope that the Government are also aware of the position. It is a serious matter and must affect the morale of professional people of all grades in trying to carry out their jobs.
In this postponement of revaluation there is no recognition of the severity of the situation. I mentioned this omission from the Gracious Speech in an earlier debate. Here, we are presented with a Bill which postpones the revalua- 1312 tion which is due in 1978, but that is already too far away to be of any benefit to ratepayers, and it is disappointing that the first measure on rating proposed by this Government postpones from 1978 to 1981 any hope that some alleviating action will be taken.
My reason for opposing this measure is that it affords neither revenue to the local authority nor relief to the ratepayer.
§ 6.50 p.m.
§ The Under-Secretary of State for the Environment (Mr. Gordon Oakes)
The hon. Member for Daventry (Mr. Jones) said earlier in the debate that it was pretentious to call this measure a General Rate Bill. He may be right. It is a very heavy title for an extremely short Bill. Throughout our proceedings today, I have been wondering whether the title had put off the Opposition from attending the debate because they were not sure whether they would be asked to debate the Bill or pay it.
Nevertheless, it has been an interesting debate, in the course of which the hon. Member for Hornsey (Mr. Rossi) castigated the Government severely for introducing the Bill and then promptly left the Chamber. We have not seen him since. What is more, throughout most of the debate there has been no Opposition Whip present and, with one right honourable exception—and that right hon. Gentleman's loyalty and devotion to local government as well as to his party is greatly admired on this side of the House—
§ Mr. Graham Page
The hon. Gentleman is wrong to say that there has been no Whip on the Opposition Front Bench. I am sitting here as a Whip.
§ Mr. Oakes
I wish that the right hon. Member for Crosby (Mr. Page) had resumed his rôle as Opposition spokesman on local government and environment matters. But it is hypocritical of the Opposition to castigate the Government for this measure, pretending that they are so interested in ratepayers and are concerned that the Bill will affect them adversely, when they do not bother to attend an important debate of this kind. I might point out that for most of the debate the Government benches have been well filled, whereas nearly all the Opposition benches have remained unoccupied.
§ Mrs. Kellett-Bowman
On a point of order, Mr. Deputy Speaker. Can it possibly be in order for a Minister to make such a misleading statement? A great many of my hon. Friends and I have been present during most of the debate, with only the odd minute or two out of the Chamber.
§ Mr. Norman St. John-Stevas (Chelmsford)
The Chamber will seem crowded in comparison with the number of hon. Members likely to be present for our next business concerning the National Theatre.
§ Mr. Oakes
We all know the reason, of course. Opposition Members have other matters on their mind which are taking place upstairs at the moment and which they regard as being more important than a postponement of rating revaluation.
Perhaps I might re-state the purpose of the Bill. As my right hon. Friend the Minister for Planning and Local Government said at the outset of the debate this measure merely postpones revaluation from 1978 to 1981, and it does so because the Government have set up the Layfield inquiry into rating. I stress to both sides of the House, because I know hon. Members are worried about delay resulting from the Layfield report, that we want that report as early as possible.
Layfield's terms of reference are to report as soon as possible but not later than the end of 1975. That committee is undertaking, on a completely independent basis, the examination of the whole of local government finance. It will report next year. I suggest that it would be stupid for any Government to set in motion the whole of revaluation at a time when we are very short of valuers in the Inland Revenue, with the result that they were put to work on something which might be totally outdated by the time that the Layfield Committee reported.
I accept that the Opposition are honest. They are people of integrity. I say that especially of the right hon. Member for 1314 Finchley (Mrs. Thatcher). I accept that if they had been in Government they would have done what they promised, namely, during the lifetime of this Parliament to abolish domestic rating. Had that happened, whichever Conservative Minister survived the volcanic convulsions going on in the Conservative Party at the moment would have appeared at this Dispatch Box to introduce this same Bill—
§ Mr. Nicholas Winterton (Macclesfield)
Although I accept what the hon. Gentleman says about the exceptional financial difficulties facing local government, will he indicate to us that his Government are prepared to announce additional financial aid for local government to enable it to get through the next year or so before the Layfield Committee reports? That is what we want to hear. Does the hon. Gentleman wish to see ratepayers taking action of the kind that the miners took and that the farmers are taking at present? I hope not. Is the hon. Gentleman prepared in the not-too-distant future to put real proposals before us showing that the Government are prepared to assist local government through the next two or three years?
§ Mr. Oakes
If I were to attempt to do that, I should be ruled out of order immediately. But I can assure the hon. Gentleman that within weeks there will be an increase order, which is fully debatable on an affirmative resolution of the House, and subsequently the Rate Support Grant Order for 1975–76. What is more, I can undertake that that will come this year. It will not come in February, as it did from the previous Government earlier this year, when we were fighting an election.
I am afraid that I am wandering away from the purpose of the Bill and getting out of order. I shall return to the matters with which I want to deal in winding up the debate.
The hon. Member for Hornsey attacked the Government on a number of counts. 1315 Throughout his speech, he implied that in any event the Layfield Committee would propose no substantial change to the rating structure. That theme went right through the hon. Gentleman's speech. He was not expecting any changes from the Layfield Report. Therefore, he insisted that it was foolish for the Government to put off this revaluation.
I was amazed to hear the hon. Member for Hornsey make such an implicit assumption. He attacked the measure. He said that it was not our desire to save the time of valuers. He said that it was a habit of Labour Governments to introduce measures of this kind because they feared the electoral consequences of revaluation. If the hon. Gentleman were present, I should thank him for the confidence which undoubtedly he has in a Government who have a majority of only two or three, because his implicit assumption is that we are likely to remain in office for a period of four if not five years. If that assumption were correct it would be 1979 before the election came—after the effect of the 1978 revaluation.
The other assumption made by the hon. Gentleman—I saw it in a leader in The Times and it has been suggested by other hon. Gentlemen, again with the honourable exception of the right hon. Member for Crosby—is that this measure is necessary only because of our proposals to bring land into community ownership. I only wish—I know this wish is shared by my right hon. Friend—that the valuers who do this work for the Inland Revenue were the type of valuers that are available to do that, because we are keen on bringing this measure forward. But as the right hon. Member for Crosby clearly and honestly said, they are not—unless they leave the Inland Revenue service and enter local government service. It will be local government valuers who will be doing the revaluation, not Inland Revenue valuers.
On the face of the Bill, we accept that there is at present a shortage of valuers, and there has been for decades. Therefore, even if this revaluation does not take place, valuers in the Inland Revenue service at the moment are doing a tremendous job with, for example, the enormous backlog of appeals against rating 1316 assessments. That is filling up their time. It is not that they are being switched away from their present work to work on bringing land into community ownership. There is no connection between the two, as my right hon. Friend told the House at least three times. I was delighted that the right hon. Member for Crosby, knowing the difference between local government valuation services and the Inland Revenue valuation service, endorsed that point.
I was interested in the right hon. Gentleman's timetable. If the Government were genuine, and it was Layfield causing the delay, he wondered whether it could not be a shorter period. If he were satisfied, on the three-year period, that we were saving valuers' time in order to see how Layfield came out, he said, he would look at this measure with more support and confidence than at present.
If the right hon. Gentleman works out the timetable, he will see that that is almost precisely what the Government are doing. Let us assume pessimistically—one must be fair and assume pessimistically on these matters—that Layfield will not report until the end of next year because of the enormity of the task before it. I sincerely hope that it reports much earlier, but one must, in government, expect the longest period. With Royal Commissions or with any commission of inquiry it is usually safe to do that. Let us assume that that is the case. That report must be considered not only by the Government, not only by the House, but at great length by local government. That will take about a year. The hon. Gentleman was quite right when he said that legislation would be unlikely to be brought forward until the end of 1976, and probably not until 1977.
All that time people will have been working, because this revaluation should start now for 1978. There will be busy people, where there are few of them, busily working, and possibly working at something of no avail to them. That is what we are seeking to avoid in the Bill.
§ Mr. Graham Page
This is the whole crux of this debate. Speaker after Opposition speaker has stressed the urgency. Cannot we get the Layfield Report earlier? Cannot the local authority associations be ready to consider it quickly 1317 and cut down the period the hon. Gentleman mentions to a year instead of three years?
§ Mr. Oakes
On the timetable that I have given, even if the committee reported before the end of next year, I think we might say a year. There might be a two-year delay for the revaluation rather than a three—year delay. I give the right hon. Gentleman that point. The Government have cautiously asked for a three-year period rather than a two-year period. I will concede the year, but I believe that we are wise to allow for a three-year period.
I know—hon. Gentlemen opposite and my hon. Friend the Member for Leicester, South (Mr. Marshall) clearly made this point—that there are criticisms of the Bill. There are matters in the Bill that, frankly, the Government regret. However, on balance, rather than waste the valuers' time, it is important that we put back the revaluation. One reason, referred to by my hon. Friend, is that when revaluation is postponed the effects on such things as central heating, and so on, mean that certain people are paying less as their house has not been revalued and the rest of us are marginally paying more. But the Government considered that that price was well worth paying, in view of the tremendous amount of work involved for the Inland Revenue over a four-year period when revaluation takes place.
My hon. Friend the Member for Leicester, South was right. The longer revaluation is delayed, the greater the jump for the individual in the amount of rates he has to pay. That is another consideration to be borne in mind. Again, we seek to avoid that and it is one of the reasons why we have laid down a three-year and not a five-year period. We did not want to skip a revaluation. We wanted a new Act to make the period three rather than five years.
My hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) aptly expressed the purpose and reason for the Bill. He got it right in one—it is to save manpower. I suggest that it is, too, an earnest of the Government's good faith in our intention to listen closely to what Layfield says. We shall not pursue 1318 our own path as though Layfield did not exist.
If we were not postponing revaluation, some Opposition hon. Members would say, at Question Time or in debate, "Despite the fact that you have a committee of inquiry looking into the rating system you are clearly going to do nothing about it because the valuers are scurrying about the country now, getting ready for the 1978 revaluation ".That is the accusation that would be made. They would say that we were wasting the valuers' time. We should be wasting the valuers' time if we were not to postpone the revaluation in the special circumstances that apply today.
The hon. Member for the Isle of Wight (Mr. Ross) asked me two questions. He wants an assurance that the records of valuation will be kept. I suggest that that goes without saying. I accept the hon. Gentleman's point, and I take his reason for making it. I shall pass on that suggestion because, whatever Layfield may decide, those records would be invaluable for the structure and basis of whatever form a new system might take if Layfield were to suggest a system other than the present one—as indeed it might.
The hon. Gentleman asked as well for an assurance that the out-of-date assessments on nationalised industries would be considered, possibly in the revaluation. I may be wrong, but I believe that, technically, nationalised industry and Crown property do not normally come within the orbit of revaluation. I agree with the hon. Gentleman, however, that the basis of Crown rating and of the way we assess nationalised industry should be examined in detail by the Layfield Committee, because it may find a better system in those sectors. I have sat on the Opposition benches and raised those issues in respect of our present rating system, and I therefore give the hon. Gentleman those assurances.
The hon. Gentleman mentioned, rightly, the degree of hypocrisy that has come throughout the year from the Tory Front Bench on the whole question of rating. On Second Reading of the Local Government Bill on 12th November 1973—almost exactly a year ago—the Conservative Government had before them from the Labour Opposition a reasoned amendment asking for a Royal Commission on 1319 rating. On looking through my speech on the winding up of that debate I am astonished at how prophetic I was about the outcry there would be about rates this year.
The right hon. Member for Crosby said that it would be foolish and a retreat to set up some other form of inquiry in view of the fact that the Conservatives had had a Green Paper and a White Paper, and that therefore the present form and state of the rating system was to remain.
What a sea change we have seen since February of this year in the attitude of right hon. and hon. Gentlemen. I should say to the hon. Member for the Isle of Wight that the one Liberal who was present at the debate came into our Lobby with us on that occasion, so I hope we may have his support on this Bill today.
My hon. Friend the Member for Woolwich, East (Mr. Cartwright) said that the Government had treated local authorities in a rather cavalier way in not having had consultations about this before the Bill was introduced. Neither my right hon. Friend the Secretary of State for the Environment nor any of my hon. Friends intended to treat local government in a cavalier way. On looking back on similar public measures one sees that such consultation has not beeen the rule. Never in the past has consultation taken place about whether a Bill should be introduced to put back revaluation. Nevertheless, we do not want to hurt the feelings of local authorities.
On balance, I regret that more consultation did not take place with local authorities at that time, but that is not to espouse the argument of the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman), who said that this was never mentioned during the course of the election or in the Queen's Speech. My right hon. Friend the Secretary of State for the Environment issued a Press notice that this measure would be introduced in September this year, long before the election, and he notified the associations at that time. It is not true to say that we have suddenly pulled this rabbit out of the hat since the Queen's Speech last week and had not mentioned previously that we should bring a measure of this kind before the House.
The hon. Member for Mid-Oxon (Mr. Hurd) wondered whether it would be pos- 1320 sible to ask the Layfield Committee to speed things up. Although the hon. Gentleman would not be bitterly opposed to the Bill going through, he hopes, as I do, that the report from the Layfield Committee will come before the end of 1975. I repeat that I hope that it comes before the end of 1975, but the task we have given that committee is very big.
The Government are prepared to listen to the reasoned arguments of experts of all political persuasions, and of academics and people in local government, sitting for the first time, as far as I know, at an independent level looking at the whole system of local government finance. We have set up that inquiry, and we are prepared to listen to its findings. The Bill evidences our intention. We did not indulge in the sort of sweeping statement that we heard—probably only because of the election—all through the election period that all domestic rating would be abolished during the lifetime of the next Parliament, regardless of the inquiry, on which Conservatives sit, regardless of what the committee thought, and with no evidence being given to the House or the country about what system would be put in its place.
§ Mr. Hurd
Is it not a fair point that this has all been inquired into fairly recently? The hon. Gentleman's files must be heavy with evidence. Local authorities and local authority associations were lavishly consulted only two or three years ago. Surely that evidence is available to the Layfield Committee. It did not start from scratch.
Is the hon. Gentleman aware that what he has said this evening has deepened my gloom about the timetable? He now says: Layfield by the end of 1975; 1976, consultation with people who have already been consulted; 1977, legislation. What does he see as the earliest year in which changes proposed by Layfield can he effected? Does he think that the present system will survive until then?
§ Mr. Oakes
I can only say to the House that we must be realistic. The committee is looking at an involved and complex subject, with new authorities, not the old authorities which were consulted previously, and with the explosive inflation that we have had in the rating system and local government finance. I 1321 endorse the hon. Gentleman's call for speed. I hope that the Committee will report earlier, but I cannot give the House an indication of what timetable an outside independent body will have in reporting back to the House, except to say that its mandate from the Secretary of State is to report before the end of 1975—which, given the circumstances, was the longest possible time we could allow it. I remind the hon. Gentleman that, often, committees not given a deadline date sit for years, not months, in considering such a complex question.
My hon. Friend the Member for Hartlepool (Mr. Leadbitter) outlined clearly what the Labour Government have done to help the ratepayer—direct financial help in July as well as an inquiry into the rating system. The Opposition, therefore, cannot accuse us of being iron-hearted towards the suffering ratepayers.
We are hoping that the inquiry will find a better system of local government finance. We say that it would be foolish, indeed, for any Government to use the scarce resources of valuers to engage now and for the next few years on a full revaluation of rating property, regardless of the fact that the Layfield Committee is sitting and may well recommend an entirely different system of local government finance. If further assurance be needed, I again assure the House that that is the reason, the true reason, the only reason for the Bill coming before the House today. I ask the House to accept our good faith and to give the Bill a Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).