§ Mr. Simon Burns (West Chelmsford)
I beg to move amendment No. 4, in page 1, line 9, leave out from `substituted' to end of line 20 and insert'"if the landlord undertook to execute prior to the start of the tenancy such repairs, if any, as the tenant might reasonably expect to be carried out to put the hereditament in a state to command that rent and the tenant undertook thereafter to bear the costs of repairs and insurance and to pay all usual rates and taxes".'.Throughout the Bill's passage, both on Second Reading and in Committee, there has been serious concern that it does not do what the Government seek to do. There is a widespread fear that the legislation is too complex and convoluted. [Interruption.]
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. I must call the House to order. The hon. Gentleman is moving an amendment.
§ Mr. Burns
By making the Bill too complex and convoluted, the Government may achieve the exact opposite of their aim. Far from stemming the threat of further litigation, the Bill may open the floodgates to more.
To be fair to the Minister for Local Government and Housing, I should note that she genuinely sought to allay those fears in Committee, saying that she thought that our fears would not come to pass. However, one problem with the Bill is that it is so technical that no one on either side of the House knows exactly what might happen. It is the clear duty of both the Government and the Opposition parties to try to minimise the problems that might, or might not, emerge from the Bill.
The amendment's purpose is to try to clarify the situation and to prevent litigation and confusion. I shall try to explain this highly complex subject briefly. Before the 1990 revaluation, everyone tended to agree that there was an obligation on a hypothetical landlord to take some responsibility for putting a property into repair. The relevant definition was contained in section 19(6)—[Interruption.]
§ Mr. Deputy Speaker
Order. There is still far too much noise in the Chamber, and that is unfair to the hon. Gentleman who is trying to speak to his amendment.
§ Mr. Burns
I am indebted to you, Mr. Deputy Speaker. The relevant definition is contained in section 19(6) of the General Rate Act 1967. Everybody understood that: there was an obligation upon landlords to put property into repair if it was not in repair. Whether or not it was reasonable for the hypothetical tenant to expect the repair 498 work to be done was a matter of fact and degree. In other words, the obligation to put property into repair was in statute. Whether or not it was reasonable for works to be deemed to have been done in any particular case was a matter of fact and degree to be determined by agreement or, in default of agreement, by the appropriate tribunal.
The Inland Revenue developed what is now known as the "economic test", which it adopted as a golden rule. It took the line that, if the cost of doing the work required to put the property into a full state of repair did not exceed the annual rent of the property in a full state of repair, the hypothetical landlord was to be deemed to have carried out the work concerned. The proposals in this legislation seem incredibly complicated and they go a great deal further than any intention declared by the Government hitherto.
The Local Government Finance Act 1988 shifted the assumed burden of repair in order to make the hypothetical tenancy closer to the standard full repairing and insuring lease found in the market. The burden of repair was shifted to the tenant, and it would seem that nobody thought to include in the provisions any obligation upon anyone to put the property into any particular state of repair. Hence the difficulties that have led to this Bill.
If the agenda is simply to try to end the problems caused by the Anston case and impose an obligation to put into repair upon a hypothetical landlord, I believe the formula in this amendment is the best one. Such an approach would have the effect that the Government have declared they are seeking in this legislation. Most importantly, it would go no further.
For those reasons, I hope that the Government will consider sympathetically if not the amendment—because it is wrongly or badly drafted or whatever—then at least the aims of our amendment.
§ The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Alan Meale)
The Bill, as drafted, requires an assumption to be made for valuation purposes. The assumption is that, on the relevant date, the property is in a state of reasonable repair, subject to the test that repairs are assumed to have been carried out only when a reasonable landlord would consider it economic to do so.
The amendment would substitute for this assumption a slightly different one: that, before the tenancy begins, the landlord would have carried out any repairs that a tenant might reasonably expect in order to put the property in a state to command an annual rent. The tenant would then—as the Bill already stipulates—be assumed to maintain the property during the tenancy.
As the hon. Member for West Chelmsford (Mr. Burns) pointed out correctly, this is a very technical Bill and my Department has examined it carefully. This amendment appears to be an attempt to achieve the main purpose of the Bill by using slightly different words. Even if that is the case, it may not do so exactly. The amendment puts the emphasis on the repairs that a tenant might reasonably expect to be carried out. That is not the same as the test applied before 1990 under the gross value basis of valuation, which was directed at what repairs a reasonable landlord would consider it economic to carry out himself.
In response to the queries of the hon. Member for West Chelmsford, it is our intention, as he rightly noted, to return the law to what it was understood to be before 1990. The Bill therefore adopts the test that existed before 1990 and not that set out in his amendment.
499 Perhaps more importantly, the amendment does not expressly address uneconomic repairs, which, under the Bill would be reflected in valuations in their actual state. It could be argued that it must be assumed as inherent in the concept of reasonableness that no one could reasonably expect repairs to be carried out at all if it is not economic to do so. However, that point has been argued as far as the Court of Appeal. In that light, we should not return to the matter being left open to argument. The hon. Member for West Chelmsford pointed out that that is one of the reasons why we have had to come here tonight. To leave it open could create cases under which uneconomic repairs are assumed, for rating purposes, to be repaired. I cannot accept an amendment that runs a risk of getting us into a similar dilemma to that which caused the need for the Bill. I ask the hon. Gentleman to withdraw the amendment.
§ Mr. Paul Burstow (Sutton and Cheam)
I shall be brief. Hon. Members who saw me shuffling papers will note that only three sheets remain from the seven or eight that I had a little while ago.
This debate is appropriate for this time of night because it will assist hon. Members in getting off to sleep quickly. It is a dry, technical subject, but, for, some people, it is of great concern. The Bill introduces some uncertainty, which is why I support the amendment of the hon. Member for West Chelmsford (Mr. Burns).
The problem that this provision attempts to address is not real, but perceived. It arises out of a misreading of the Anston case in the Lands Tribunal last year. For some reason, the Government are holding to advice that is unsound and that leads them to believe that the judgment is about disrepair in the most general of forms rather than exceptional disrepair, which is what full reading of the case shows it to be about. In Committee, I asked for evidence of the Government's concern that the judgment would unleash a flood of appeals. We found from written answers that there was none. The Minister told us:the valuer cannot assume anything other than a reasonable state of repair. However, what is reasonable will depend on the real-world situation on the day by reference to which he makes his valuation."—[Official Report, Standing Committee A, 19 January 1999; c. 25.]Would that the Bill said that, but, unfortunately, it does not do what the Minister for Local Government and Housing said in Committee. I had hoped that by the time that we got to Report she would have tabled an amendment that put into law what she said in Committee. Sadly, that has not happened, and this amendment has been tabled to try to do what the Government should have done.
I urge the Minister to accept the concerns that are still being expressed by many outside this place who work in this profession and are concerned that the Bill removes an element of compromise and flexibility in the valuation system at the expense of businesses that could, as a result, be driven out of business by rates bill rises. I hope that he can give us further reassurance that the Bill will not have that effect, but from what we have heard and what the profession believes, the Bill is a mistake that the amendment would go some way to rectify.
§ Mr. Meale
Many of the fears and worries of the hon. Member for Sutton and Cheam (Mr. Burstow) will be 500 addressed by my hon. Friend the Minister for Local Government and Housing, when she addresses amendment No. 1, shortly. She has consulted a sufficient number of bodies outside this place to give a satisfactory answer.
As the hon. Member for West Chelmsford admitted, the amendment does not fundamentally change the effect of the Bill. It goes in a slightly different direction, changing the wording. I therefore hope that the assurances that I have given are sufficient for the hon. Gentleman to withdraw the amendment.
§ Mr. Burns
I am very grateful to the Minister. I listened very carefully to what he had to say. Although there is still confusion and some concern, it would not be appropriate at this stage to force a Division on this amendment. When the Bill leaves the House and goes to another place, there will be another opportunity to get to grips with the outstanding issues that are causing concern. For that reason, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Burstow
I beg to move amendment No. 1, in page 1, line 16, at end insert'provided that there shall be excepted from any deemed reinstatement occurring in the course of the exercise of this assumption any want of actual repair to a hereditament arising from any peril customarily insured against, Acts of God, civil commotion, war or terrorism, or arising from the rebuilding or substantial refurbishment thereof'.I speak with trepidation bearing in mind recent comments of the Under-Secretary of State for the Environment, Transport and the Regions on what the Minister will say.
The amendment will be familiar to hon. Members who served on the Standing Committee, and to the Minister particularly. It addresses an issue that I raised on Second Reading. The Bill, as drafted, precludes valuation officers being able to reflect in their evaluations the effect of natural disasters that result in temporary disrepair. The amendment provides a mechanism by which the practice may continue in respect of damage caused by acts of God, civil commotion, war or terrorism.
In Committee, the Minister graciously said that she would look at the matter further, and that she recognised the anxiety expressed in Committee and outside this place. She said that, if she thought it necessary, she would seek to table amendments. I therefore draw one of two conclusions. Either the Government find my amendment acceptable, or they are able to reassure those, along with myself, who have raised concerns. I look forward to the Minister's response—one way or the other.
§ Mr. Burns
The House will be relieved to know that I do not intend to speak for very long.
We had a full debate on this amendment in Committee, during which the hon. Member for Sutton and Cheam (Mr. Burstow), my hon. Friends and I expressed concern. Indeed, we remain concerned—hence the tabling of the amendment—about the issues that are thrown up by the Bill. Clearly, we are not in a position at this stage to know exactly how the Government will react to the amendment. As the hon. Gentleman said, I hope that, on reflection, and having had an opportunity to study the debate in 501 Committee and think again, the Government will be minded to accept it. Obviously, we are in the dark until the Minister speaks. The hon. Gentleman and I will listen very carefully to the Minister's comments before reaching a decision on how to progress further.
§ The Minister for Local Government and Housing (Ms Hilary Armstrong)
As we can see, the Bill has riveted the attention of the whole House and highlighted the serious consideration that Members have given to the important issue of how hereditaments are rated, the practices that are used and the assumptions that are made.
We have had full discussions and consultation with organisations that have expressed concern, as I promised in Committee. Officials met the representatives of the professional bodies on 2 February and the professions restated their concern that the Bill should define reasonable repair and accidental damage that should be excluded from rating assessments. They put forward a number of specific cases in which they feared the Bill might produce unfair consequences and treatment for ratepayers different from those under current legislation.
The professional bodies remain opposed to the Bill in principle because they do not think that it is necessary, but the Government are convinced that it is necessary, and the professions accept that our intention is not what they originally thought it was. They accept also that it would be counterproductive to try to include in the Bill all the different circumstances in which the assumption of a reasonable state of repair would or would not have effect. It would be almost impossible to produce a definitive list. We would have to regularly rewrite that list because it would not correspond with practical examples.
To help allay the concerns of the professions, the Valuation Office agency has drafted a practice note on its approach to valuation following enactment of the Bill. That will deal with the treatment of the marginal cases that the professions are most concerned about and draw on existing case law in support of the approaches that they propose should be taken in respect of each one. The Valuation Office is consulting the professional bodies on the drafting of that practice note. I thought that it might be helpful to explain to hon. Members the negotiations that we have been conducting about the professions' concerns.
Amendment No. 1 reflects hon. Members' concern that any lack of repair arising, for example, from accidental damage, should be reflected in the valuation until that damage is repaired. I understand those concerns. I have repeatedly said that the Government and the Valuation Office have only one intention: to ensure that the assumption as to repair is that which was made in preparing rating valuations before the Lands Tribunal decision in Anston, and nothing more and nothing less.
The current position is that if a property is incapable of beneficial occupation or, in other words, it is unusable, it will be removed from the rating list and no rates will be payable. That is clear. If only part of the property is rendered incapable of beneficial occupation, it has generally been the practice of valuation officers to reduce the rateable value of the premises with effect for the period during which that part of the property cannot be used, to reflect that loss of beneficial use. That applies as much to disrepair occasioned by accidental damage as it does to all other types of disrepair.
502 I recognise the concerns of the professions and hon. Members that the Bill may affect that position, but I do not believe that it does so. I hope that hon. Members will accept that we have carefully considered the matter, and in discussions the Valuation Office has made it clear to the professions that it will continue to value properties affected in that manner in precisely the same way as before.
I believe, therefore, that the amendment is unnecessary. The Valuation Office has prepared a draft practice note which draws on existing case law and aims to set out how rateable values should be assessed in particular circumstances. I know that professional bodies are co-operating fully in the production of that practice note, to try to ensure that matters of concern are addressed. I believe that that offers a constructive way forward in an area of understandable concern.
That is the right way to proceed. The practice note will be clear to the Valuation Office and to the professions. Accordingly, I hope that the hon. Gentleman will withdraw his amendment. If not, I ask the House to join me in opposing it.
§ Mr. Burstow
I listened carefully to the Minister's comments, especially the extended references to the practice note that is being drafted in consultation with the various organisations that have an interest in the matter, such as the Institute of Revenues, Rating and Valuation and the Rating Surveyors Association. I know that other organisations have also been engaged in dialogue with representatives from the Department, to try to allay their concerns about the way in which the Bill, as drafted, will affect their activities and, more to the point, the way in which it will affect many businesses or hereditaments, as they are called for the purpose.
I am sure that those organisations welcome the Government's co-operative approach, but they question the need for the practice note and the Minister's comments. The need to elaborate in such detail begs the question whether the drafting of the Bill has caused the confusion that the practice note is intended to dispel. That is one of the reasons why I did not find the Minister's comments as persuasive as she might have hoped.
The statement by the Minister about acts of God, civil commotion and so on, which are dealt with in my amendment, relates to a serious concern which many of the professional bodies believe should be dealt with in the Bill. Only one professional body has withdrawn its objection and says that the practice note is sufficient. I have seen letters of representation from the other organisations, which hold to the view that the Bill as drafted does not give them confidence that they can give comfort to those who will lose out through the change in the system.
The Bill does not merely put the law back to where it was on the day that Judge Marder in his judgment at the Lands Tribunal allegedly changed it. The Bill moves the goalposts to disadvantage businesses seeking to secure a fair valuation of their property.
One of the points that has been made and that is germane to the amendment was that the Aniston case would unleash—
§ Mr. Burstow
The Minister has tried again, and I missed it again. [HON. MEMBERS: "Anston."] I am sure that Hansard will show that it is Anston. I may have misread it in the Official Report of the Committee proceedings, where such errors creep in a little too often. I am grateful to the Minister for that correction.
The judgment was alleged to have unleashed a process of perpetual revaluation. It was said that there would be a need continually to revalue properties to ascertain whether they were in a decent state of repair. If there was a chip in the paintwork or some other defect, a fresh valuation would be needed. That argument was nonsense from the outset. The profession had never believed that that would be the outcome and I doubt whether the Valuation Office genuinely believes that to be the product of the Anston case. The arguments for seeking to impose an unreasonable valuation on business premises made by the Valuation Office during that case boiled down more to administrative convenience and its own efficiency than to fairness.
This is about whether the Government should be allowed to stretch the term, "reasonable" to unreasonable lengths. That is effectively what they will do, to the disadvantage of many businesses. I hope that hon. Members will take the opportunity of supporting my important amendment, because I intend to divide the House on it. It will ensure that the current practice, on which the Minister has sought to give us assurances, is in the Bill. Practice notes can be rewritten; this Bill should state specifically that those matters will continue to operate as they do now.
We shall not withdraw the amendment, and I urge hon. Members to join me in the Lobby to protect businesses from the unfair additional burden that the Bill will place on them.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 27, Noes 206.505
|Division No. 76]||[10.41 pm|
|Beggs, Roy||Keetch, Paul|
|Breed, Colin||Kirkwood, Archy|
|Bruce, Malcolm (Gordon)||Moore, Michael|
|Burnett, John||Oaten, Mark|
|Burns, Simon||Öpik, Lembit|
|Burstow, Paul||Rendel, David|
|Campbell, Menzies (NE Fife)||Ross, William (E Lond'y)|
|Davey, Edward (Kingston)||Russell, Bob (Colchester)|
|Donaldson, Jeffrey||Smith, Sir Robert (W Ab'd'ns)|
|Fearn, Ronnie||Tyler, Paul|
|Foster, Don (Bath)||Willis, Phil|
|George, Andrew (St Ives)|
|Gorrie, Donald||Tellers for the Ayes:|
|Harris, Dr Evan||Mr. Richard Allan and|
|Hughes, Simon (Southwark N)||Mr. David Heath.|
|Adams, Mrs Irene (Paisley N)||Barron, Kevin|
|Allen, Graham||Battle, John|
|Armstrong, Ms Hilary||Bayley, Hugh|
|Atkins, Charlotte||Beard, Nigel|
|Barnes, Harry||Benn, Rt Hon Tony|
|Bermingham, Gerald||Hoyle, Lindsay|
|Berry, Roger||Hughes, Ms Beverley (Stretford)|
|Best, Harold||Hughes, Kevin (Doncaster N)|
|Betts, Clive||Hurst, Alan|
|Blizzard, Bob||Hutton, John|
|Bradley, Keith (Withington)||Iddon, Dr Brian|
|Bradley, Peter (The Wrekin)||Illsley, Eric|
|Browne, Desmond||Jackson, Ms Glenda (Hampstead)|
|Buck, Ms Karen||Jackson, Helen (Hillsborough)|
|Burden, Richard||Jamieson, David|
|Burgon, Colin||Jenkins, Brian|
|Butler, Mrs Christine||Johnson, Miss Melanie (Welwyn Hatfield)|
|Cann, Jamie||Jones, Barry (Alyn & Deeside)|
|Caplin, Ivor||Jones, Dr Lynne (Selly Oak)|
|Casale, Roger||Kaufman, Rt Hon Gerald|
|Caton, Martin||Keeble, Ms Sally|
|Cawsey, Ian||Kemp, Fraser|
|Chapman, Ben (Wirral S)||Kennedy, Jane (Wavertree)|
|Clapham, Michael||Kidney, David|
|Clark, Rt Hon Dr David (S Shields)||Kilfoyle, Peter|
|Clarke, Eric (Midlothian)||King, Andy (Rugby & Kenilworth)|
|Clarke, Rt Hon Tom (Coatbridge)||Laxton, Bob|
|Clarke, Tony (Northampton S)||Lepper, David|
|Clelland, David||Levitt, Tom|
|Coaker, Vernon||Linton, Martin|
|Cohen, Harry||Love, Andrew|
|Coleman, Iain||McAllion, John|
|Connarty, Michael||McAvoy, Thomas|
|Cook, Frank (Stockton N)||McCabe, Steve|
|Corbyn, Jeremy||McCafferty, Ms Chris|
|Cranston, Ross||McDonnell, John|
|Crausby, David||McFall, John|
|Cryer, Mrs Ann (Keighley)||McGuire, Mrs Anne|
|Cryer, John (Hornchurch)||McIsaac, Shona|
|Cummings, John||Mackinlay, Andrew|
|Cunliffe, Lawrence||McNulty, Tony|
|Cunningham, Jim (Cov'try S)||MacShane, Denis|
|Curtis-Thomas, Mrs Claire||Mallaber, Judy|
|Dalyell, Tam||Marsden, Gordon (Blackpool S)|
|Davey, Valerie (Bristol W)||Marsden, Paul (Shrewsbury)|
|Davidson, Ian||Marshall, Jim (Leicester S)|
|Davies, Rt Hon Denzil (Llanelli)||Marshall-Andrews, Robert|
|Davies, Geraint (Croydon C)||Martlew, Eric|
|Dawson, Hilton||Maxton, John|
|Dean, Mrs Janet||Meacher, Rt Hon Michael|
|Dobson, Rt Hon Frank||Meale, Alan|
|Doran, Frank||Michie, Bill (Shef'ld Heeley)|
|Dowd, Jim||Mitchell, Austin|
|Drew, David||Moffatt, Laura|
|Eagle, Angela (Wallasey)||Moran, Ms Margaret|
|Edwards, Huw||Morgan, Ms Julie (Cardiff N)|
|Etherington, Bill||Morgan, Rhodri (Cardiff W)|
|Fisher, Mark||Morley, Elliot|
|Fitzsimons, Lorna||Morris, Ms Estelle (B'ham Yardley)|
|Flynn, Paul||Mountford, Kali|
|Foster, Rt Hon Derek||Mudie, George|
|Fyfe, Maria||Mullin, Chris|
|Gapes, Mike||Naysmith, Dr Doug|
|Gerrard, Neil||O'Brien, Mike (N Warks)|
|Gibson, Dr Ian||Olner, Bill|
|Gilroy, Mrs Linda||O'Neill, Martin|
|Godman, Dr Norman A||Pearson, Ian|
|Goggins, Paul||Pickthall, Colin|
|Golding, Mrs Llin||Pike, Peter L|
|Griffiths, Win (Bridgend)||Plaskitt, James|
|Hall, Mike (Weaver Vale)||Pope, Greg|
|Hall, Patrick (Bedford)||Pound, Stephen|
|Hanson, David||Prentice, Ms Bridget (Lewisham E)|
|Healey, John||Prentice, Gordon (Pendle)|
|Heppell, John||Prosser, Gwyn|
|Hesford, Stephen||Quin, Rt Hon Ms Joyce|
|Hinchliffe, David||Quinn, Lawrie|
|Hoey, Kate||Radice, Giles|
|Home Robertson, John||Rammell, Bill|
|Hopkins, Kelvin||Raynsford, Nick|
|Reid, Rt Hon Dr John (Hamilton N)||Taylor, David (NW Leics)|
|Rogers, Allan||Thomas, Gareth (Clwyd W)|
|Rooker, Jeff||Thomas, Gareth R (Harrow W)|
|Ross, Ernie (Dundee W)||Timms, Stephen|
|Rowlands, Ted||Tipping, Paddy|
|Ruddock, Joan||Todd, Mark|
|Salter, Martin||Touhig, Don|
|Savidge, Malcolm||Turner, Dr Desmond (Kemptown)|
|Sheerman, Barry||Turner, Dr George (NW Norfolk)|
|Shipley, Ms Debra||Twigg, Stephen (Enfield)|
|Simpson, Alan (Nottingham S)||Walley, Ms Joan|
|Skinner, Dennis||Wareing, Robert N|
|Smith, Miss Geraldine (Morecambe & Lunesdale)||Watts, David|
|Smith, John (Glamorgan)||Whitehead, Dr Alan|
|Soley, Clive||Wicks, Malcolm|
|Spellar, John||Williams, Alan W (E Carmarthen)|
|Steinberg, Gerry||Winnick, David|
|Stewart, Ian (Eccles)||Woolas, Phil|
|Stinchcombe, Paul||Wray, James|
|Stuart, Ms Gisela||Wright, Anthony D (Gt Yarmouth)|
|Wright, Dr Tony (Cannock)|
|Taylor, Rt Hon Mrs Ann (Dewsbury)||Tellers for the Noes:|
|Mr. Robert Ainsworth and|
|Taylor, Ms Dari (Stockton S)||Mr. Keith Hill.|
§ Question accordingly negatived.
§ Order for Third Reading read.—[Queen's consent, on behalf of the Crown, signified.]10.52 pm
§ Ms Armstrong
I beg to move, That the Bill be now read the Third time.
It became clear in Committee that the professional bodies representing the valuation profession, and Opposition Members, feared that the Bill went rather further than the Government had suggested. We have said that our intention in introducing the Bill was to restore the position on rating valuations to the one which existed before the Lands Tribunal decision in Benjamin v. Anston Properties.
As I said earlier, since the Bill went into Committee on 19 January my officials, together with officers from the Valuation Office, have met representatives of the professional bodies. We have sought to reassure them that the Bill only returns the assumption regarding the state of repair for valuation purposes to that which applied before 1990—which assumption the agency has applied to valuations since then.
I hope that we have now at least convinced the profession of our intentions. I believe that we have, but, for the benefit of the House, let me say a little about the background to the Bill, and why the Government felt compelled to act.
Until the introduction of national non-domestic rates in 1990, the rating hypothesis allowed for two different bases of valuation, depending on the type of property to be valued. The first was a valuation to gross value. It was established by case law that, in valuing to gross value, an assumption was made that the property was in a state of reasonable repair unless the cost of repairs would be uneconomic. The majority of commercial properties were assessed on that basis. The second basis of valuation was valuation to net annual value, which is equivalent to rateable value. While the situation with regard to the repair assumption was less clear in relation to valuations made direct to rateable value, leading authorities suggested that the same assumption regarding repair had to be made.
506 The rating hypothesis was changed in 1990 as a result of the Local Government Finance Act 1988, which was introduced by the last Government. Schedule 6, paragraph 2 of that Act, which the Bill seeks to amend, placed the obligation to repair on the hypothetical tenant where, under gross value, it had previously rested with the hypothetical landlord.
That change in basis reflected the general movement in the non-domestic property market towards leases where the tenant had a repairing obligation. It reflected the real-world position. It allowed valuers to use direct rental evidence obtained from leases without having to adjust that evidence to accord with the hypothesis, as happened before 1990. However, it was not the then Government's intention that the approach to valuation should change in respect of the repair assumption. Indeed, the Valuation Office continued to apply the assumption that, in most cases, properties are in a state of reasonable repair.
Then we had the decision by the Lands Tribunal in the case of Benjamin v. Anston Properties on 11 March 1998. That directly contradicted this view. The Lands Tribunal found instead that rating valuations should reflect the actual repair condition of the property on the valuation date. We therefore believe that the decision calls into question all valuations carried out by the Valuation Office for both the 1990 and 1995 rating lists. As hon. Members will appreciate, that would give serious problems to the prospect of rating. As we are entering a new valuation period, it is important that there should be clarity as to precisely what the law intends.
The Bill seeks to underpin the rating valuations that were made for both those lists by confirming the basis on which they were made. It also establishes firmly that property is in future to be valued on the assumption that it is in a state of reasonable repair.
So much for our intention. It was clear in Committee that hon. Members had concerns—raised by the professional bodies—that, in drafting the Bill, we had gone further than was intended. That is not our objective. Despite having listened, gone back and looked at the matter again and again following representations from the professions and hon. Members, I do not believe that that is what the Bill does.
As I said in Committee, I was entirely happy for consultation to take place with whoever wanted to have it, and that has happened. In essence, the professions were concerned that, in introducing the specific assumption of a state of reasonable repair to the rating hypothesis, we would affect some properties that currently benefit from a reduction in rateable value in particular circumstances.
I shall deal with the concept of reasonable repair itself. The Bill requires that assumption to be made subject to the economic test that previously applied. In doing so, it codifies the practical effects of previous cases, notwithstanding the fact that those were decided in the context of gross value.
Case law going back well before 1990, and the practice established as a result of that case law, means that what it is reasonable to expect in relation to the repair condition of any hereditament will depend on the age and type of the property, the locality in which it is situated and all the surrounding circumstances. That follows, necessarily, from the fundamental principle for valuation that such matters relating to the hereditament are to be taken as they stand.
507 In the light of that case law, I do not believe that it is necessary to import into the legislation a definition of reasonable repair. Indeed, I believe that, in seeking to do so, we would run the significant risk of introducing an unintended restriction and so lose the flexibility that valuers and the courts need in deciding what is reasonable in the particular circumstances of each case.
A further concern was how, following enactment of the Bill as drafted, the Valuation Office would treat properties that would previously have had rateable values reduced, often for short periods only, to take account—[Interruption.]
§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. There are far too many private conversations going on. Hon. Members must listen to the Minister. If they do not, they must hold their conversations somewhere else.
§ Ms Armstrong
Thank you, Mr. Deputy Speaker—although I understand why hon. Members might like to have private conversations during this summary. However, it is my job, so I have to proceed with the Summary.
A further concern was how the Valuation Office would treat properties that would previously have had rateable values reduced, often for short periods only, to take account of circumstances affecting the property; examples include a property that has been damaged by fire, or one that is undergoing substantial building work. I understand that concern, and have repeatedly said that the Government and the Valuation Office have only one intention—to ensure that the assumption on repair is that which was made in preparing rating valuations before the Lands Tribunal decision in Anston.
The current position is that if a property is incapable of beneficial occupations—if, in other words, it is unusable—it will be removed from the rating list and no rates will be payable. That is clear—certainly it is clear to the public, even if it is not yet clear to Opposition Members. I appreciate the concerns expressed by the professions and by Committee members that the Bill may affect the current position, but I do not believe that it will. As I said, I have examined the matter many times. In discussions, the Valuation Office has made it clear that it will continue to value properties affected in precisely the same way as before.
The Valuation Office shares the Government's concern that the Bill should take us back only to the position we believed we were in prior to the Anston decision. As I said, the agency is preparing a practice note on application of the Bill post-enactment, and it is sharing drafts of it with the professional bodies. I really do believe that that is an effective way to proceed. I have also given very clear reasons why it would be irresponsible to put in the Bill matters that should be in a practice note. Including them in the Bill would necessitate subsequent changes to primary legislation to deal with new or changed matters, which would not help in the evaluation process, in which evaluation officers operate by tight timetables.
I hope that my comments in this debate, and the Valuation Office's practice note, will serve to clarify our intentions in introducing the Bill. Although it is a small and technical Bill, we have the responsibility of 508 passing it—so that businesses that are currently facing revaluation will know that those revaluations are clearly in conformity with the expectations of the law, and so that they will know the basis on which their premises are valued.
Although we have a responsibility to ensure that there is such clarity, hon. Members have failed in this debate to convince me that such clarity exists. The longer the debate has continued, the more convinced I have become that the Bill is necessary. I commend it to the House.
§ 11.4 pm
§ Mr. Burstow
I appreciate that it is the time of night when hon. Members would rather be at home reading the Bill than listening to speeches about it. However, I shall be very brief.
I appreciate the lengths to which Ministers and their officials have gone, both before and after the Bill's Committee stage, in consulting and holding a dialogue with the professions. I should like to place on record the appreciation of those efforts that the professions have expressed to me. The dialogue has been important.
There is a genuine and honest difference of opinion as to the interpretation of the case, and of the Bill in future. I am grateful for the way the Minister has dealt with the matter, both tonight and earlier. There is however a need for clarity, and I do not believe that the Bill provides it.
I was concerned that the explanatory notes were longer than the Bill, and we must be cautious when that happens. It was for that reason that we hoped that some of the points in the explanatory notes would be in the Bill.
Shortly after the Committee, I received a letter from the Rating Surveyors Association—[HON. MEMBERS: "Oh!"] I knew that hon. Members would perk up at the reference to that body. It drew to my attention the words of Justice of Appeal Godfrey, which I thought I would share with the House:The world of rating appears to one unfamiliar with the arcana to be cloud-cuckoo land, a world of virtual unreality from which real cuckoos are excluded altogether, although it seems that permission to land will be granted to a cuckoo flying in the form of the real world if it can be demonstrated that, in the presence of cloud-cuckoo land, it is essential and not merely an accident.You will wonder, Mr. Deputy Speaker, why I read that out. Even I am wondering why. However, the Bill feels like cloud cuckoo land, with its hypothetical tenants and landlords. I have had to explore those issues for the first time, as Ministers have had to. However, the fact that the Minister has had to read into the record such a detailed statement about the Bill—and has had to give an undertaking about producing detailed practice notes—indicates that it is not straightforward.
The Bill would have benefited from amendments, but it has not been amended. However, the Government have done what they believe to be right and tried to correct the law. There is an honest disagreement about that, but the Government are proposing mechanisms that have given some comfort to the profession. For that reason, we do not intend to divide on Third Reading.
§ 11.7 pm
§ Mr. Burns
Although this clearly is not a party political matter, there is concern that although the Government are seeking to block a loophole that emerged 509 from a court case, they will not achieve that with the Bill. I share the concern of the hon. Member for Sutton and Cheam (Mr. Burstow) that the Government have not accepted any amendments. I am concerned that the ministerial statement and the draft practice notes will not be in the legislation, which could cause problems in future. The hon. Member for Sutton and Cheam said that he would not divide the House, but I am not convinced that the Bill will succeed. I am not prepared to support it on Third Reading.
§ Question put, That the Bill be now read the Third time:—
§ The House divided: Ayes 165, Noes 140.511
|Division No. 77]||[11.9 pm|
|Adams, Mrs Irene (Paisley N)||Godman, Dr Norman A|
|Allen, Graham||Goggins, Paul|
|Armstrong, Ms Hilary||Golding, Mrs Llin|
|Atkins, Charlotte||Griffiths, Win (Bridgend)|
|Barnes, Harry||Hall, Mike (Weaver Vale)|
|Barron, Kevin||Hall, Patrick (Bedford)|
|Battle, John||Hanson, David|
|Bayley, Hugh||Healey, John|
|Benn, Rt Hon Tony||Heppell, John|
|Berry, Roger||Hesford, Stephen|
|Best, Harold||Hinchliffe, David|
|Betts, Clive||Home Robertson, John|
|Blizzard, Bob||Hoyle, Lindsay|
|Bradley, Keith (Withington)||Hughes, Ms Beverley (Stretford)|
|Bradley, Peter (The Wrekin)||Hughes, Kevin (Doncaster N)|
|Browne, Desmond||Hurst, Alan|
|Burden, Richard||Iddon, Dr Brian|
|Butler, Mrs Christine||Illsley, Eric|
|Caplin, Ivor||Jackson, Ms Glenda (Hampstead)|
|Casale, Roger||Jackson, Helen (Hillsborough)|
|Caton, Martin||Jamieson, David|
|Chapman, Ben (Wirral S)||Jenkins, Brian|
|Clapham, Michael||Johnson, Miss Melanie (Welwyn Hatfield)|
|Clark, Rt Hon Dr David (S Shields)|
|Clarke, Rt Hon Tom (Coatbridge)||Jones, Barry (Alyn & Deeside)|
|Clarke, Tony (Northampton S)||Jones, Dr Lynne (Selly Oak)|
|Clelland, David||Kemp, Fraser|
|Coaker, Vernon||Kennedy, Jane (Wavertree)|
|Cohen, Harry||Kidney, David|
|Connarty, Michael||Kilfoyle, Peter|
|Cook, Frank (Stockton N)||King, Andy (Rugby & Kenilworth)|
|Corbyn, Jeremy||Laxton, Bob|
|Cranston, Ross||Lepper, David|
|Crausby, David||Levitt, Tom|
|Cryer, Mrs Ann (Keighley)||Love, Andrew|
|Cryer, John (Hornchurch)||McAllion, John|
|Cunliffe, Lawrence||McAvoy, Thomas|
|Cunningham, Jim (Cov'try S)||McCabe, Steve|
|Curtis-Thomas, Mrs Claire||McDonnell, John|
|Dalyell, Tam||McFall, John|
|Davey, Valerie (Bristol W)||McGuire, Mrs Anne|
|Davidson, Ian||McIsaac, Shona|
|Davies, Rt Hon Denzil (Llanelli)||MacShane, Denis|
|Davies, Geraint (Croydon C)||Mallaber, Judy|
|Dawson, Hilton||Marsden, Paul (Shrewsbury)|
|Dean, Mrs Janet||Marshall, Jim (Leicester S)|
|Doran, Frank||Marshall-Andrews, Robert|
|Dowd, Jim||Martlew, Eric|
|Drew, David||Maxton, John|
|Etherington, Bill||Meacher, Rt Hon Michael|
|Fisher, Mark||Meale, Alan|
|Fitzsimons, Lorna||Michie, Bill (Shef'ld Heeley)|
|Flynn, Paul||Mitchell, Austin|
|Foster, Rt Hon Derek||Moffatt, Laura|
|Gerrard, Neil||Moonie, Dr Lewis|
|Gibson, Dr Ian||Moran, Ms Margaret|
|Morgan, Ms Julie (Cardiff N)||Simpson, Alan (Nottingham S)|
|Morgan, Rhodri (Cardiff W)||Skinner, Dennis|
|Morley, Elliot||Smith, John (Glamorgan)|
|Mountford, Kali||Spellar, John|
|Mudie, George||Steinberg, Gerry|
|Mullin, Chris||Stewart, Ian (Eccles)|
|Olner, Bill||Stinchcombe, Paul|
|O'Neill, Martin||Sutcliffe, Gerry|
|Pearson, Ian||Taylor, Rt Hon Mrs Ann (Dewsbury)|
|Pickthall, Colin||Taylor, Ms Dari (Stockton S)|
|Pike, Peter L||Thomas, Gareth (Clwyd W)|
|Plaskitt, James||Tipping, Paddy|
|Pope, Greg||Touhig, Don|
|Pound, Stephen||Turner, Dr Desmond (Kemptown)|
|Powell, Sir Raymond||Twigg, Stephen (Enfield)|
|Prentice, Ms Bridget (Lewisham E)||Wareing, Robert N|
|Prentice, Gordon (Pendle)||White, Brian|
|Prosser, Gwyn||Whitehead, Dr Alan|
|Quinn, Lawrie||Williams, Alan W (E Carmarthen)|
|Rammell, Bill||Winnick, David|
|Raynsford, Nick||Woolas, Phil|
|Rogers, Allan||Wray, James|
|Ross, Ernie (Dundee W)||Wright, Anthony D (Gt Yarmouth)|
|Ruddock, Joan||Wright, Dr Tony (Cannock)|
|Savidge, Malcolm||Tellers for the Ayes:|
|Sheerman, Barry||Mr. Robert Ainsworth and|
|Shipley, Ms Debra||Mr. Keith Hill.|
|Ainsworth, Peter (E Surrey)||Forth, Rt Hon Eric|
|Amess, David||Fowler, Rt Hon Sir Norman|
|Ancram, Rt Hon Michael||Fox, Dr Liam|
|Arbuthnot, Rt Hon James||Fraser, Christopher|
|Atkinson, David (Bour'mth E)||Gale, Roger|
|Atkinson, Peter (Hexham)||Garnier, Edward|
|Baldry, Tony||Gibb, Nick|
|Beggs, Roy||Gill, Christopher|
|Bercow, John||Gillan, Mrs Cheryl|
|Beresford, Sir Paul||Goodlad, Rt Hon Sir Alastair|
|Blunt, Crispin||Gorman, Mrs Teresa|
|Body, Sir Richard||Gray, James|
|Boswell, Tim||Green, Damian|
|Bottomley, Peter (Worthing W)||Greenway, John|
|Bottomley, Rt Hon Mrs Virginia||Grieve, Dominic|
|Brady, Graham||Gummer, Rt Hon John|
|Brazier, Julian||Hague, Rt Hon William|
|Brooke, Rt Hon Peter||Hamilton, Rt Hon Sir Archie|
|Browning, Mrs Angela||Hammond, Philip|
|Bruce, Ian (S Dorset)||Hawkins, Nick|
|Burns, Simon||Hayes, John|
|Butterfill, John||Heald, Oliver|
|Cash, William||Heath, Rt Hon Sir Edward|
|Chope, Christopher||Heathcoat-Amory, Rt Hon David|
|Clappison, James||Horam, John|
|Clarke, Rt Hon Kenneth (Rushcliffe)||Howarth, Gerald (Aldershot)|
|Clifton-Brown, Geoffrey||Jack, Rt Hon Michael|
|Collins, Tim||Jackson, Robert (Wantage)|
|Colvin, Michael||Jenkin, Bernard|
|Cormack, Sir Patrick||Johnson Smith,|
|Cran, James||Rt Hon Sir Geoffrey|
|Curry, Rt Hon David||Key, Robert|
|Davies, Quentin (Grantham)||Kirkbride, Miss Julie|
|Davis, Rt Hon David (Haltemprice)||Laing, Mrs Eleanor|
|Day, Stephen||Lait, Mrs Jacqui|
|Donaldson, Jeffrey||Lansley, Andrew|
|Dorrell, Rt Hon Stephen||Leigh, Edward|
|Duncan, Alan||Letwin, Oliver|
|Duncan Smith, Iain||Lewis, Dr Julian (New Forest E)|
|Evans, Nigel||Lidington, David|
|Faber, David||Lilley, Rt Hon Peter|
|Fabricant, Michael||Lloyd, Rt Hon Sir Peter (Fareham)|
|Flight, Howard||Loughton, Tim|
|Luff, Peter||Shephard, Rt Hon Mrs Gillian|
|Lyell, Rt Hon Sir Nicholas||Simpson, Keith (Mid-Norfolk)|
|McIntosh, Miss Anne||Soames, Nicholas|
|MacKay, Rt Hon Andrew||Spicer, Sir Michael|
|Maclean, Rt Hon David||Spring, Richard|
|McLoughlin, Patrick||Steen, Anthony|
|Major, Rt Hon John||Swayne, Desmond|
|Malins, Humfrey||Tapsell, Sir Peter|
|Maples, John||Taylor, Ian (Esher & Walton)|
|Maude, Rt Hon Francis||Taylor, John M (Solihull)|
|Mawhinney, Rt Hon Sir Brian||Townend, John|
|May, Mrs Theresa||Tredinnick, David|
|Moss, Malcolm||Trend, Michael|
|Nicholls, Patrick||Tyrie, Andrew|
|Norman, Archie||Walter, Robert|
|Ottaway, Richard||Waterson, Nigel|
|Page, Richard||Whitney, Sir Raymond|
|Paice, James||Whittingdale, John|
|Paterson, Owen||Willetts, David|
|Pickles, Eric||Wilshire, David|
|Prior, David||Winterton, Mrs Ann (Congleton)|
|Randall, John||Winterton, Nicholas (Macclesfield)|
|Redwood, Rt Hon John||Woodward, Shaun|
|Robertson, Laurence (Tewk'b'ry)||Yeo, Tim|
|Roe, Mrs Marion (Broxbourne)||Young, Rt Hon Sir George|
|Ross, William (E Lond'y)|
|Ruffley, David||Tellers for the Noes:|
|St Aubyn, Nick||Sir David Madel and|
|Sayeed, Jonathan||Mrs. Caroline Spelman.|
§ Question accordingly agreed to.
§ Bill read the Third time, and passed.