Skip to main content

Clause 3—(Valuation Of Hereditaments Hitherto Valued By Reference To Profits, Etc)

Volume 640: debated on Wednesday 10 May 1961

The text on this page has been created from Hansard archive content, it may contain typographical errors.

3.31 p.m.

The Minister of Housing and Local Government and Minister for Welsh Affairs
(Mr. Henry Brooke)

I beg to move, in page 2, line 22, to leave out from "to" to the end of line 34 and to insert:

  • (a) any hereditament occupied by the National Coal Board,
  • (b) any other hereditament which consists of or includes a mine or quarry or the whole or part of which is occupied together with a mine or quarry in connection with its working, or the treatment, preparation, storage or removal of its minerals or products of its minerals or the removal of its refuse,
  • (c) any hereditament occupied by the persons carrying on, under authority conferred by or under any enactment, a dock or harbour undertaking, and
  • (d) any hereditament occupied by the persons carrying on an undertaking for the diffusion by wire of sound or television programmes.
  • Any reference in paragraph (b) of this subsection to a mine or quarry includes a reference to a well or bore-hole or a well and bore-hole combined, but except as aforesaid expressions used in Chat paragraph and the Mines and Quarries Act, 1954, have the same meanings in that paragraph as in that Act.
    (3) Any order under this section applying to any hereditament falling within any paragraph of the foregoing subsection, or any class or description of such hereditaments, may provide for determining rateable value by the application of different methods of valuation to different parts of the hereditament.
    This Amendment—if I can make my voice heard above the turmoil——

    This Amendment implements an undertaking which I gave in Standing Committee, as I think the hon. and learned Member for Kettering (Mr. Mitchison) will recollect. There was criticism of Clause 3 on the ground that the order-making powers were too wide. Fears were expressed that classes of undertakings of all kinds which are at present valued on the profits basis might find themselves brought within the scope of an order to change the basis of valuation to a formula. I explained that there was no intention of making orders quickly in respect of all sorts of categories, but there were certain types of undertakings which, the Government understood, were interested in pursuing the question of whether a formula basis could be arrived at which would be less difficult and less liable to give rise to hard litigation than the existing method.

    In Committee, I said that to meet this criticism—and my words, I think, were favourably received on both sides—I would move an Amendment at a later stage to narrow these powers to a certain number of categories of undertakings that might, within the next few years, desire to change over, after the necessary consultations, to a formula basis. That would still the fears of those who found themselves not on the list but were valued according to the profits method, and no harm would be done in any way because, quite clearly, so much work would be involved in arriving at a formula basis that there would be no likelihood of orders being made within the next few years except, at best, for a limited number of categories of undertakings. That is the purpose of the Amendment.

    Instead of giving a wide order-making power, it limits that order-making power to those classes of undertakings set out in categories (a), (b), (c) and (d). Category (a) relates to the National Coal Board. That was in the Bill originally, and I understand that the Board welcomes the opportunity of discussion to see whether suitable formula can be devised for at least some of its property.

    Here let me emphasise, what I said repeatedly in Standing Committee, that this Clause is not designed either to increase or diminish the overall liability to rates. That overall liability will be left substantially unchanged. The only question is whether a valuation can better be done by a formula than on the basis of the profits method. That applies throughout.

    Category (b) refers to mines and quarries. I have no idea whether a formula basis will be discoverable which will be satisfactory for any sections of the mining and quarrying industries, but I know that some sections of those industries are attracted by the idea of pursuing the possibility of working out a formula that might be acceptable. I have no preconceived ideas about that one way or the other. I know, however, that after the Bill was published I received several enquiries from mineral companies, wanting an assurance that they were within the scope of Clause 3. It seems, therefore, on that and other grounds, desirable to include them.

    Category (c) refers to dock and harbour undertakings. Again, that seems a suitable field for examination. Most of the public utilities are already valued on a formula basis—the railways, the gas industry, the electricity industry—and the Bill adds the water undertakings. So, at any rate, it is not unreasonable to include the docks and harbours as another category for which the change may or may not be made.

    Does what the right hon. Gentleman is now saying mean that when the Bill becomes an Act negotiations will be entered into with the various undertakings to negotiate a formula?

    It does not mean that necessarily. The fact is that a certain amount of work has been done, I understand, in some directions within the industries to see whether it would be practicable to work out a formula. The motive usually, in the first place, is that the profit basis has not been operating satisfactorily and has given rise to a great deal of dubiety and litigation with the result that uncertainty has been prolonged for years as to what should be the real valuation.

    No one wants uncertainty, neither the Inland Revenue, which is responsible for the valuations nor the industries which will have to pay, nor the local authorities which will be the recipients of the rates. Therefore, if it is possible to work out a formula that is generally accepted and which leaves the total valuation substantially unchanged that would seem to be a useful step in streamlining the somewhat complicated process of valuation.

    Category (d) is one which I do not think was mentioned at all in Committee, and relates to wireless and television rediffusion undertakings. In this case an association which claims to represent companies serving 95 per cent. of the relay subscribers has indicated that it would like to see whether a formula method of valuation which would be acceptable to the Inland Revenue could be worked out for relay services. Again, I do not prejudge that. I have no idea of the answer. If the present system is not working to the satisfaction of everyone, there seems to be no reason why, in that sphere, too, which is rather different from the ordinary industrial undertaking, further inquiries should not be made.

    It may be that the examinations and negotiations which might take place under these four headings will show that only certain parts of any class of hereditament are suitable for formula treatment. That is the reason for subsection (3) which, if possible, will enable an order to be made determining the rateable value by different methods for different parts of a hereditament. The simplest example of that which I can give is an undertaking which may own a cement works and a pit, it may be a chalk pit—[HON. MEMBERS: "Careful!"] This is entirely hypothetical.

    The formula method of assessment might apply to the pit, the actual extraction part of the property, and exclude the cement works which would then continue to be assessed by the present method. That, again, is one of the points which could be decided only in the course of consultations, but it would seem desirable to make a provision of that kind in the Bill now that we are considering this Clause.

    I want to make it clear that by asking the House to accept this Amendment I am not saying that any orders will actually be made. All that will be done is to take power to make orders if a general degree of agreement is arrived at that any one of these classes of undertaking could be more satisfactorily assessed on a formula basis. I should like to take this opportunity to express my gratitude to hon. Members from both sides of the House who served on the Standing Committee which considered the Bill. I hope that they will feel that the Government have made a genuine attempt to meet the criticisms expressed in the Committee and to bring forward a practical Amendment. I will willingly answer questions which hon. Members may wish to raise, but I shall not now trouble the House with a further explanation.

    May I, first, thank the Minister for complying with the wishes of hon. Members on both sides of the House who served on the Standing Committee? Our apprehensions about the Clause were partly as to its scope, that it might apply to any industry—it is to that point that this Amendment is directed—and partly to the generality of the powers. I doubt whether subsection (3) in the Amendment adds very much to the very wide words of subsection (1). However that may be—we may have to consider it in connection with the next Amendment—the scope is limited.

    On 31st January, during the Committee stage, the right hon. Gentleman mentioned the first three of the categories of hereditament to which this Clause is now to be limited. He did not mention the fourth hereditament, but he did say that there might be other cases and that he would make inquiries. This addition, presumably, is the result of those inquiries. I think it an addition which may raise some difficult problems as between one local authority and another and as to the proper substitution of a claim under this Clause for the ordinary profit basis.

    I call the attention of the right hon. Gentleman and of the House again to what he said on 31st January:
    "… it might be appropriate to proceed in this way, if there were general agreement between undertakings concerned and the local authorities …"
    That is the first point, and then:
    "… if it were understood that the new formula was designed not to make any material change upwards or downwards in the amount of rates payable but rather to produce a more satisfactory and simple method of arriving at assessments."—[OFFICIAL REPORT, Standing Committee D, 31st January, 1961, c. 208.]
    3.45 p.m.

    After what he has already said, I feel sure that the right hon. Gentleman will be able to confirm that those conditions for the use of the powers under this Clause will still apply, and particularly that they will apply in the category which has been added, which I call the rediffusion stations. To me, it seems most important that it should be done in a case where such wide powers are being taken. I feel sure that the House will note that any scheme made under this Clause, with the very wide power it gives to the right hon. Gentleman, even as it is now limited, must be subject to the affirmative Resolution of the House. Again, I thank the right hon. Gentleman for meeting the criticisms made in the Standing Committee which, I thought at the time, and, I still think, were well founded.

    I also wish to thank my right hon. Friend for putting down this Amendment to meet the doubts and criticisms which were felt and made by hon. Members on both sides of the Standing Committee. As one who used strong language in describing the Clause then, I am grateful to my right hon. Friend for meeting some of those criticisms.

    Originally, I was worried about the Clause for two reasons. One was the wide ambit of the Minister's powers under it and the other that I was afraid, even though there might be agreement between associations and the Inland Revenue or the rating authorities on some formula desirable for the rating of hereditaments which fell within their class, that nevertheless injustice might be done to individual owners of hereditaments inside the class. In other words, the class as a whole, represented by an association, might agree to something which would prove oppressive to individuals within the class.

    My right hon. Friend's Amendment has dealt with the objection about the very wide range of the Clause. He has not met the second objection, but, in fairness to him, I must say that he never pretended that he would be able to do so. Therefore, I am particularly glad that there is a further Amendment to line 40, which we are not now discussing but which, perhaps, I may mention, because it will help in that respect. I feel that my right hon. Friend has gone a long way to set at rest the anxieties which we felt during the Committee stage discussion.

    Having taken part in the debates in the Standing Committee, I appreciate the technical complexity of this matter. At the same time, I do not think that we should pass to the next stage of our proceedings without making some comment upon a matter of principle as distinct from the question of technical detail.

    The matter of principle is that we have become so tied up, or bogged down—hon. Members may choose their own metaphor—with all the machinery of valuation that we are rapidly reaching a stage where there cannot be real equality between different ratepayers. That is a matter of principle which ought to concern this House.

    One of the principles of good government is that when legislation requires the levying of taxes locally or nationally, there should be no doubt as to what has to be paid by the individual. We are reaching a situation, in my submission, in which we give certain alternative powers to a Minister to apply different formulae in different circumstances, and, in the end, this may produce inequality between different ratepayers.

    I am not concerned for the purpose of this argument with whether those ratepayers are individuals, corporations, or groups of people in nationalised or private industry. It ought to be said in this House that where we have a system of local taxation which is so obscure, so capable of refinement and adjustment as to produce no clear picture in the minds of those concerned as to the ultimate requirement, it is bad legislation. As I understand these procedures, a lot depends on the skill of the person appointed to negotiate the transactions. A particularly powerful or influential authority which could employ the best counsel or negotiator, and pay high fees for his services, would be at a great advantage compared with a humbler individual not so fortunately placed.

    I am not saying this in any unkind or unfair criticism of the Minister. He understands the point involved and has tried to do his best to meet it. I hope that serious note will be taken in this House, when we are embarking on legislation, that the further we get away from certainty on a tax the further we get away from the principle of good government. Naturally, I am not opposed to this Amendment. It is an attempt to meet a criticism advanced so powerfully in Committee by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), but I hope that what I have said will be noted by the Minister.

    The Minister will recollect that during the Committee stage I raised a number of points in connection with the china clay industry, which was very apprehensive about the effects which the Bill would have on the costs of its production. I wish to place very briefly on record that I feel sure my constituents will be grateful for this Amendment. It will go a long way to meet the points that they have in mind.

    I wish to join in thanking my right hon. Friend for this Amendment. I criticised the Clause very severely on Second Reading and in Committee. My right hon. Friend has made a genuine attempt to meet the views expressed at that time and to bring the Clause more into line with straightforward valuation practice. I am glad to see that the Amendment gives all the appearances of not reversing a decision of a court of appeal at some later date by an order.

    I think that the attempt which has been made has been good. The only reservations I might have are about the consultations likely to take place between such people as quarry owners in arriving at the formula method. This Amendment is not designed to increase or decrease substantially the valuation of a hereditament, and that puts a lot of fears at rest. The Clause should work effectively in future and do all that is required.

    I am grateful to hon. Members on both sides of the House for the way in which they have received the Amendment.

    I say straight away to the hon. Member for Westhoughton (Mr. J. T. Price) that if an order is made under this Clause its principal purpose will be to impart certainty into a field where there has been a degree of uncertainty which has been unacceptable to both sides. I am glad that my attempt to demarcate the field in which orders may be made appears to commend itself to the House generally. I certainly reinforce what I said in Committee, first, that it is not intended that the application of an order under this Clause to any class of undertaking should be regarded as either a privilege or a punishment.

    I cannot guarantee that it would leave the rateable value of every individual hereditament unchanged, but the formula would not be acceptable to the Government if it made any substantial upward or downward change in the rateable value of a class of undertakings. Furthermore, it is not the intention of the Government to use this Clause to impose a formula basis on to an unwilling class of undertakings. There would need to be general agreement that the formula method was worth trying. There again, I cannot guarantee that every single undertaking in the class would welcome the change any more than I can guarantee that every single one of the 1,400 rating authorities in England and Wales would welcome the change.

    The order-making power would be used only if there were general agreement between a class of undertakings, or the Coal Board, on the one hand, and local authority associations, on the other, that a formula method should be applied because, by common consent, the existing method was not working satisfactorily. In a moment, we shall come to a further Amendment which bears on the same point. I want to express my appreciation to the House for the way in which it has received this Amendment.

    Amendment agreed to.

    I beg to move, in page 2, line 40, at the end to insert:

    (4) In the year following the coming into force of the first valuation lists to come into force after the coming into operation of any order under this section the Minister shall, in consultation with such associations, local authorities and persons as aforesaid cause investigations to be made into the effect of the operation of the order; and the Minister shall cause to be laid before Parliament a report on any investigations made under this subsection and their result.
    This Amendment also fulfils a pledge I gave in Committee. The working of one of these formulae can be reviewed at any time without statutory provision. It was pressed in Committee that there should be written into the Bill a statutory requirement for review after a certain time when the new formula method had been well tried out and had settled down, when the transitional period was over and it would be appropriate to take a new look at it to see whether it was working well or not. That is what this Amendment provides. It will require an investigation to be made into the operation of the order. It will require the Minister of the day to lay before Parliament a report on the investigation and on its result.

    As to the date when the investigation takes place, it will be made during the year following the coming into force of the first valuation lists which take effect after the coming into operation of the new order. Let us assume that an order is made to come into effect on 1st April, 1963, when the new valuation lists take effect. In that case, this Amendment would provide that the review would be made during the year 1968–69. There would have been a full five-year period during which the transitional provisions would have run out and a new quinquennial valuation period would start in 1968. In the first year of that new valuation period the investigation would take place.

    If an order came into operation, not in 1963 but in 1964–65, it would still be reviewed in the year 1968–69. On the other hand, according to this Amendment, if the order did not come into operation during the currency of the next valuation lists—that is to say, did not come into operation before 1st April, 1968—the review would take place in the year 1973–74, presuming, of course, a revaluation every five years.

    It is desirable that there should be such a period before the statutory review takes place, but I repeat the important point that if, clearly, the new system is not working to the general satisfaction, a review can be put in hand at once. There is no need to wait for the year laid down for the statutory review.

    This is a safeguard for all concerned, and, in particular, for Parliament, that after a period there must be a statutory review, and a report on the investigation must be laid before Parliament. That is how Parliament will ensure that it does not lose sight of the matter. When Parliament has approved the order it can be certain that after the order has been working for a reasonable time, it will receive a report.

    4.0 p.m.

    This, too, is an Amendment resulting from the Committee proceedings. We had put down an Amendment going rather beyond this, in that it tied the Minister to the undertaking which he has just repeated not to allow schemes which would result in a substantial increase or decrease of the total rates paid by the industry and in that it provided for continued reviews at five-year intervals. I share the Minister's somewhat cynical view that Rating and Valuation Bills come more or less regularly at five-year intervals, and I therefore regard this Amendment as sufficient compliance with our request, coupled with what the right hon. Gentleman has just said. In the circumstances, I once more brace myself to thank him for meeting our criticisms.

    I, too welcome the Amendment and thank the Minister for it. It may well be, as the hon. and learned Member for Kettering (Mr. Mitchison) said, that its effect will be anticipated by the next Rating and Valuation Bill and that we shall never see its effect, but, in part, it meets the anxieties which I had that an individual inside a class might be unfairly dealt with by the procedure, and it will make sure that in due course we have a Parliamentary review to see how it is working.

    Amendment agreed to.

    I beg to move, in page 3, line 2, to leave out "relating" and to insert:

    "so far as that enactment relates".
    This Amendment, in its present form, can be regarded either as a drafting Amendment or as preliminary to the next Amendment. It seems desirable as a drafting Amendment, and I have moved it on those grounds.

    The Parliamentary Secretary to the Ministry of Housing and Local Government
    (Sir Keith Joseph)

    My right hon. Friend understands the purpose behind the Amendment as being to ensure that the power in the Clause is limited as the hon. and learned Member for Kettering (Mr. Mitchison) wishes. He is advised that the power is, in fact, limited in the way in which this Amendment would reinforce, but he is also advised that the addition of the words would not obscure that in any way and, therefore, at the risk of appearing to give way only with ill-grace, he advises the House that the Amendment is entirely acceptable.

    Amendment agreed to.

    I beg to move, in page 3, line 3, to leave out from "relates" to "and" in line 7.

    The Amendment raises a point of general importance. If hon. Members look at the subsection they will see that the effect of the Amendment would be to remove from the scope of the order power to deal with the existing law about proposals for alterations of valuation lists and appeals in connection with such lists and the withholding of rates—that is to say, with the whole appeal machinery which is at present part of the law of valuation and rating.

    The order would then be left such that it could "repeal or amend any enactment" and it could have
    "effect notwithstanding anything in any such enactment".
    I suggest to the Minister that he is becoming rather greedy. Those powers are already very sweeping. In the circumstances contemplated by the Clause, and having regard to the Amendments which have been accepted, we cannot demur to some change of that kind being within the scope of an order, but when it comes to removing repeal machinery we are on rather different ground. We had a short discussion on this in Committee on an Amendment which would probably not have carried out the purpose which we had in mind. We were told by the Parliamentary Secretary that it was a matter of arithmetical formula, that one ought not to be allowed to appeal because somebody had done the sum wrong and that there could be no other possible ground of appeal.

    Considering the very wide powers given by the Clause and the way in which it is intended to use them—to get agreements between the undertakings concerned as an industry, as it were, and between associations of local authorities—it seems to me that there ought to be room for more than that. It is impossible to say what form these schemes will take without seeing them. All one can say is that the Clause is wide enough to cover everything.

    To take power to remove appeal powers without knowing what the schemes will be, and in the confident assurance that the Parliamentary Secretary said that they would be much the same as other schemes already on the Statute Book, is asking much too much of the House, and, I might add, much too much of the individual ratepayer. These appeal powers are exercised in some cases which would be unlikely to arise under schemes of this sort, but in others an appeal power is used to raise questions which border on matters of principle and certainly to raise points which are far more than a mere calculation of the sum, one way or the other.

    I can give no better instance than to mention, simply as an illustration, some of the difficulties which have arisen under the provisions dealing with the gas and electricity undertakings to which the Parliamentary Secretary referred as he indicated that there could be nothing left as the subject of appeal but arithmetic. In some of those cases—we had this here the other day—it has been found that as a matter of practice the statutory schemes they are statutory for they are in the Acts—worked out in such a way that certain undertakings, broadly speaking, the older undertakings in connection with electricity and gas, found themselves suffering a very considerable loss of value, and in this case profiting by a considerable loss of value, year by year.

    The local authorities concerned, where they have an undertaking of that kind in their area, have found that their rateable value has changed very sharply. It ultimately comes down on the other ratepayers in the area, particularly on the domestic ratepayers. Therefore, it is a matter of real public concern, though it arises in the form of a question limited to a value as between the undertaking, on the one hand, and the rating authority, on the other.

    No Minister should take power to remove appeal provisions, particularly when, in the nature of the case, he does not know exactly what kind of scheme will appear as a result of the very wide powers which have been taken in the Clause. If the scheme is such that there is nothing but arithmetic and no possibility of appeal, the worst that will happen is that the appeal powers will be rarely used and, when they are used, the decision will be very easily foreseen.

    What we are asked to do here is to agree to giving the Minister this power in a case where we do not know what the possible points of appeal are. It is abandoning the rights of other ratepayers, particularly domestic ratepayers. It is abandoning the rights of the appeal courts to look into matters of this kind. It is an excess of power in a case of this sort. I therefore hope that I shall have the support not only of my hon. Friends, but of hon. Members opposite who are concerned to see that rights of appeal are not lightly taken away.

    I do not know why the Minister went out of his way, in connection with a previous Amendment, to take a chalk pit as an illustration, when the one thing which the Amendment did not deal with was chalk pits. However, even people concerned with chalk pits may occasionally wish to appeal. It has happened. There are many other cases more within the ambit of the Clause than the case which the right hon. Gentleman, for a special reason chose last time. It is clear that the complicated provisions which will be necessary to deal with the four categories of hereditament here in question are likely, unless the scheme is remarkable and unusual, to present some doubts and, consequently, give rise to appeals. It is not a good thing to get rid of the ordinary processes of justice beforehand when it is not known whether they will be needed or to what extent they will be needed.

    The hon. and learned Member for Kettering (Mr. Mitchison) has rightly said that this touches upon an important matter. I do not want to skimp the answer to what he has said. This is consequential upon the power which the Clause, as amended gives to my right hon. Friend to establish by order, after consultation and on an affirmative Resolution, a formula method for limited classes of hereditaments.

    The essence of the formula method is that the art or science of valuation, which is based largely on expert opinion, is to a greater or lesser extent, sometimes wholly and sometimes in part, supplanted by a method which depends upon the application of arithmetic to certified facts. That is the essence of a changeover from the existing valuation method relating to profits or accounts to a formula method. Where the valuation depends upon expert opinion, it is absolutely right and proper that there should be an appeal procedure.

    The appeal procedure in rating involves, first, a proposal by any of the parties, to which objection can be taken, after which an appeal takes place. As the hon. and learned Member very fairly said, there can be, and indeed normally will be under a formula method, no dependence at all upon expert opinion. I shall deal with the objections the hon. and learned Gentleman raised, but if there is no dependence upon expert opinion the retention of an appeal procedure has a number of disadvantages.

    4.15 p.m.

    The hon. and learned Gentleman spoke as if the only disadvantage would be that some ratepayer or local authority would invoke the proposal and appeal procedure only to find at the end a court saying to him, "There is no point here. There is nothing to appeal about". That would be one of the consequences of retaining the appeal procedure in a formula context where there was nothing to appeal about, but there would be other consequences.

    I will enlarge upon the consequence which the hon. and learned Gentleman confesses. It would not be altogether fair to leave the citizen with what appears to him to be an appeal procedure of substance when, in fact, my right hon. Friend knows very well that in most formula methods—indeed, I go so far as to say in all formula methods to which the Clause will apply—the appeal procedure would be merely a facade, a charade, an illusion. The ratepayer who had based expectations upon it, and who might have gone to some considerable expense in relation to it, would rightly feel angry if he was allowed to spend his energy, hopes and money on what my right hon. Friend knew all along could do him no benefit.

    Apart from that, there are a number of other disadvantages. I am only enlarging upon the weakness which the hon. and learned Gentleman confessed. First, to retain the proposal and appeal procedure in a case where it is not needed involves the valuation officer in having to go through a number of formalities to get what is purely a calculated value into the valuation list. If his proposal to change the valuation list as a result of a calculation may be, because of the retention of the appeal procedure, objected to by the ratepayer or the local authority, the valuation officer will have to allow time for an objection to take place. Therefore, the whole procedure, which is meant under the proposals in the Bill—for instance, in that part of it dealing with water—to be smooth and regular, would be interrupted by an unnecessary appeal.

    I make only a small point about this, but there is also the consequential flood of paper which is bound to occur when an appeal procedure is retained when it is not necessary. The House should recognise that there are more consequences than the hon. and learned Gentleman recognised of retaining an appeal procedure when it is not needed.

    The Parliamentary Secretary has said that the appeal procedure is unnecessary where the formula applies. Does he claim that the formula method will, of its very essence, be infallible, and that there can be no injustice? If injustice arises, it is not much use telling me or any other hon. Member that people will still not feel angry about it. There must be some machinery for dealing with it.

    I was coming on to deal with that point next.

    I was about to say that the hon. and learned Gentleman rightly pointed out that there might be a mistake in the arithmetic. I suppose that even Chinese mathematicians make mistakes sometimes. There certainly might be a mistake. The procedure to ensure that the formula allows scope for correcting any arithmetical mistakes will be one of the subjects of consultation required by the Clause, which provides for consultation with ratepayers and local authorities, and will also be a part of the method which will be subject to the Affirmative Resolution of the House. It would be quite right for the House and all the people concerned to ensure that there is a provision for rectifying any arithmetical error. We have in the Bill the example of the application of a formula to the Statutory water undertakers as a category.

    I want, briefly, to draw the attention of hon. Members to Clause 16 (5) and Clause 17 (4), where a specific period of two months is given after the ratepaper has received the details of how the valuation officer arrives at his valuation based upon certified figures and before the next stage of the valuation process. It is a period of two months on every occasion which is given precisely for this informal communication on any errors which might be in the calculation. I think that that should be covered by the consultation procedure.

    A further valid comment was made by the hon. and learned Gentleman that while that was all true of, he says, some, and, I say, all, formulae, a certain formula might be suggested for one class of hereditament where it was not necessary to take away the appeal procedure. I agree that that might be so. In that case, presumably, during the consultation stage, my right hon. Friend would agree that the appeal procedure did not need to be modified. There is nothing here obliging him to modify the appeal procedure, but the fact is that the appeal procedure will normally fall to be modified as the direct result of the formula being consulted about and proposed. Again, I remind the House that the formula method proposed will be subject to the affirmative Resolution procedure.

    I think that that makes the case against accepting the Amendment. There is the other small and technical point that my right hon. Friend also proposes to have power, if necessary, to interfere with the right to withhold rates. That is true. The right to withhold rates is tied up with the right to make a proposal and the power to interfere with the withholding of rates would have validity only if a particular formula had retained something of the proposal procedure, but if the formula had retained part of the proposal procedure it might flow from that that there might be some need in some way to alter the right to withhold rates.

    I hope that I have persuaded the House that the formula procedure in itself will, in all foreseeable cases, make it unnecessary and, indeed, illusory to retain the appeal procedure, but there is nothing mandatory on my right hon. Friend to interfere with the appeal procedure in any particular formula method should that not be necessary. Finally, to retain the appeal procedure when in the vast bulk of, if not in all, cases it will not have any place at all, would, to some extent, be a fraud on the ratepayer.

    I must confess that I am much attracted to the Amendment and I ask my right hon. Friend to think about it again. I see the force, as I think the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) sees the force, of the argument that appeals will be more rare under a formula method procedure, and that if the formula is of a certain character the proceedings of appeal may not be very complicated; but I do not think that it is right that we should give an unfettered power to the Minister to alter the appeal procedure, even though that power is limited to the four categories mentioned in the Amendment.

    Those four categories are largely bodies of a semi-public nature, but not entirely public bodies, and in the case of mines and quarries they may not be public bodies at all. Even to the extent that they are public utility companies still it is desirable that there should be an appeal procedure in every case if a ratepayer wants to have recourse to it.

    It is raising a matter of principle to say that, because it is agreed to have a formula, the decision of the valuation officer must be final. That is what it will come to if the appeal procedure is abolished. I appreciate that there is a discretion, and that there is no need for the appeal procedure to be abolished in all cases. If my right hon. Friend were to think that one of these formulae was of a character where there might be differences of opinion, he need not abolish or even modify the appeal rights.

    My hon. Friend rightly pointed out that the matter would come before the House under the affirmative Resolution procedure. My difficulty about that is that we will have an agreed formula with some industry and it will be embodied in a draft order laid before the House. In the same order will be the provision modifying the right of appeal, so that we will have the one draft order embodying the formula and the modification of the right of appeal.

    The difficulty with which we are always faced with Statutory Instruments, whether there is a negative or affirmative procedure, is that they cannot be amended and have to be accepted or rejected in toto. Furthermore, as a matter of Parliamentary practice we all know from experience that these things come on rather late at night, when not many Members are present and when the Government Whip of the day always prevails—or very often.

    Those are practical considerations, but in dealing with modification of the appeal procedure it is relevant to point out that it will not be an order dealing only with the modification of the appeal procedure, about which there might be a great deal of fuss and which the Minister might be prevailed upon to withdraw, but a whole scheme with an agreed formula. The chances of that kind of order being withdrawn because there is a bit of a fuss in the Chamber are correspondingly greatly reduced.

    If we pass the Clause in its present form, we shall part with control over any modification of the appeal procedure. The Government are saying that in some of the formula cases it shall be open to the Government to decide that an aggrieved ratepayer must accept the decision of the valuation officer. That is a bad principle about which we should hesitate long before passing it into law.

    Of course, there are genuine inconveniences and paperwork and delays and there are appeals which are rather hopeless, but one has to balance one evil against the other and my instinctive approach is to say that, on balance, we should accept the evil of the unnecessary appeals and the delays and the paperwork rather than take this constitutionally doubtful step of putting this power in the Minister's hands.

    I appeal to my right hon. Friend, on this admittedly rather even balance of argument, to reconsider his decision and perhaps to accept the Amendment.

    The Parliamentary Secretary has not learned his lesson. I had to tell him in Committee that this was suave tyranny cloaked as reason, and that is exactly what it is; and let us have no doubt about it.

    First, let us consider the formula method. There is the profits method and the contractor's basis and all sorts of ways which have been suggested for dealing with what boils down to the difficulty about the hypothetical tenant. I told the Minister in Committee that there was a great deal of difficulty about assessing the monkey cage in the zoo on the basis of the hypothetical tenant. There has to be some other basis, as there has for the kind of basis contemplated in the Clause. To say that we are necessarily tied to what is called a formula basis, and that the only remaining question then is a matter of arithmetic, is going far beyond what the Clause provides.

    4.30 p.m.

    It is because the Clause gives the Minister the most comprehensive powers that it is scandalous to try to take away a right of appeal. What I said about arithmetical cases, and information of that sort, was that if there were cases where there was nothing left but an arithmetical question, a person who appealed, or who tried to appeal, would get short shrift. As the Parliamentary Secretary said, this would be encouraging the ratepayer to appeal when there was no protection for him. As the Parliamentary Secretary put it, all this would afford him would be a "mere facade".

    Since when has one party to a litigation, or even the judge, been able to tell someone who desires to put forward a case that he cannot possibly do so because the rights given to him are only a facade? Is it really the intention of the Government to bring forward a scheme of such a character, and that there is no possible question of an appeal on which any ratepayer can possibly succeed? Whatever the answer, that is what hon. Members are being told.

    At the end of the day, what does it all mean? The answer is that the Ministry is certain that it knows best, and that when there is a question about a scheme, agreed between the parties concerned, it is quite confident that no possible ground of appeal can remain, that the ordinary rights of appeal—because that is what they are in these rating cases—can and should be taken away.

    The Minister is not merely telling us that this will be of little use, because he cannot really say that until he knows what the schemes will be. He is not telling us that, in fact, they will only be used on quite minor matters. The Minister is saying that the kind of scheme is bound to be evolved in such a way that there can be no real ground for appeal.

    If that is the limitation which he desires to impose on the schemes, and if that is what the formula basis means, are we to have anything but a formula basis? Instead of taking the wide powers contained in this Clause, the Minister should have set out quite clearly what he means by a formula basis, and that should have been put in such a way as to prevent any other question arising. But a question will arise, not merely on the total assessed to the industry—say, the National Coal Board total—but the division of that total among the various undertakings and local authorities concerned.

    The right hon. Gentleman moved an Amendment a few minutes ago which raised a similar point in connection with even one undertaking—not a whole mass of undertakings under the wing, say, of the Coal Board. The Minister took power to have a different method of valuation in connection with one part of the undertaking; but what might be done in another part of the undertaking? I think that this is inherent in the Clause and that the Minister will agree that that is so.

    In that case, what will these two methods be? Are they both formulae? If one will be a formula, what will be the other? Where is the hypothetical tenant? Is he disappearing down the road of tyranny? We have forgotten about the poor man who is concerned. And the principles of rating—if such things exist—have gone completely by the board. What is being substituted for these principles, not only in this Clause, but in other parts of the Bill?

    All we can have is the Minister's judgment about this, that or the other. It is the Minister's judgment about what forms these schemes that we are being invited to accept as an excuse for abandoning the ordinary rights of the ratepayer. The party opposite should have some regard for the kind of principles which inspired the Franks Committee Report, and the liberty of the subject in these sort of matters. How hon. Gentlemen opposite can support the Minister in the Lobby in this matter I have no idea and, therefore, I hope that we can divide quickly.

    I remind the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) that the weak cases are normally said to be built on water. I think that I can most forcibly and easily reply to the hon. and learned Gentleman by drawing his attention to the water part of this Bill. Here, we have a precise example of what might happen under the formula.

    In the part of the Bill dealing with the formula to be applied to the rating valuations of hereditaments of statutory water undertakings, the appeal procedure is modified, but only for part of the formula. The valuation of statutory water undertakings hereditaments will depend, first, on their output of water—and this is defined in the Bill as the cumulo-value—and, secondly, on the apportionment of that value between the different rating authorities concerned.

    The cumulo-value is arrived at purely by applying mathematics to certified facts, the output of the undertakings, and to that extent—and only to that extent-is the appeal procedure modified. But the apportionment of cumulo-value between the areas does not depend only on mathematical calculations, but also, to some extent, on judgment, and in the apportionment part of the valuation procedure the appeal system is retained.

    This shows that the hon. and learned Gentleman's fears, even under the Bill, can be completely answered. The discretion that is possessed by the Minister in dealing with four classes of undertakings covered now, as amended by Clause 3, is instanced in how he has dealt with statutory water undertakings. My right hon. Friend has taken power to modify only the appeal procedure where the valuation proposed depends entirely on arithmetic.

    Does not the Minister realise, when making reference to water undertakings, that when the last assessment increase took place, tens of thousands of ordinary ratepayers could not understand why their assessments had been increased and why their water rate automatically went up?

    The hon. Member did not have the privilege of being with us for seventeen sittings of the Committee. He is confusing domestic ratepayers' water rates with the rates paid by the water undertakings themselves. They are two different levels of rates.

    I wish now to deal with the arguments adduced by my hon Friend the Member for Buckinghamshire, South (Mr. Ronald Bell).

    Before the Parliamentary Secretary leaves the points that I raised, does he realise that he is really Claiming Ministerial infallibility? The old cloak of oppression is worn, but it is still sufficient to hide the truth.

    The hon. and learned Gentleman, having failed with his main argument, has gone in for invective.

    My hon. Friend the Member for Buckinghamshire, South spoke of ratepayers under a formula method as using an appeal only rarely, or perhaps going to appeal with a hopeless case. That, if I may inform my hon. Friend, is not the point. The point is that if the valuation about which an appeal might be held is based purely on arithmetic, then there is nothing whatever to appeal about—except if the arithmetic is wrong.

    We are dealing with arithmetic based on certified fact; certified output in the case of a water undertaking. As I have instanced to the House in the water undertakings procedure, a period of two months is allowed for the correction of the arithmetic. It is not just that the appeal might be hopeless or rare. It is that there would be nothing to appeal about.

    I am sorry to have taken up so much time of the House, but I thought it only right to answer some of the points that have been raised.

    The hon. Member must ask for the leave of the House if he wishes to speak again.

    I did say "Before my hon. Friend sits down", Mr. Deputy-Speaker.

    If I may have the leave of the House, I should like to say that I appreciate some of the points which my hon. Friend has made, but I do not think that I have got hold of the wrong end of the stick at all. The point is that if the Amendment is not accepted the ratepayer will have no appeal. He may or may not agree that there is nothing but arithmetic at stake, but the fact that there is arithmetic at stake, and that there is an interval in which he can get into informal contact with the valuation officer and say, "The mathematics are bad", is no reason why he should be deprived of an appeal if he wants to change the mathematics.

    I can think of appeals under the private street works codes and under the National Insurance Acts where it is very difficult to see how the appellant can possibly succeed or say anything because there may be a rigid time limit which there is no power to extend. Certainly, that was the case earlier. But still the person had his appeal, because it was thought wrong that he should be bound by the decision of an administrative official and have no right to challenge it in the courts.

    That is the point here. The reference to Ministerial infallibility which the hon. and learned Member for Kettering (Mr. Mitchison) made is quite sound. Suppose that one of these formulae is not of a purely arithmetical kind, but incorporates an element of judgment and it is agreed that the formulae can vary in their nature. Suppose that my right hon. Friend or a successor in office were, in relation to a formula which was not purely arithmetical, to make a substantial change in the appeal rights of the ratepayer. That is quite possible. How are we to deal with that by means of an affirmative Resolution? That is the difficulty. It cannot be amended. Either the agreed formula plus the objectionable part about the appeal procedure goes through, or else it is totally rejected.

    That seems to me to be the serious difficulty about this kind of Statutory Instrument procedure. It is unavoidable in many cases, but do we have to entrust to it questions of the right of appeal of the subject in these matters? Let us leave the right of appeal as it is, and if the formula is basically arithmetical very little recourse will be had to it, but I think there is a constitutional ground of objection to leaving it to the Minister to abrogate or modify the right of appeal.

    It may be that my right hon. Friend does not feel that he can accept this Amendment today. There is another place to which this Bill will go, where the matter could be looked at again. I ask him to regard this as a matter of principle of considerable importance which he should consider again and

    Division No. 166.]


    [4.43 p.m.

    Allason, JamesGoodhart, PhilipMore, Jasper (Ludlow)
    Arbuthnot, JohnGoodhew, VictorMorgan, William
    Atkins, HumphreyGough, FrederickMott-Radclyffe, Sir Charles
    Barlow, Sir JohnGower, RaymondNicholson, Sir Godfrey
    Barter, JohnGrant, Rt. Hon. WilliamNoble, Michael
    Batsford, BrianGrimston, Sir RobertOrr, Capt. L. P. S.
    Bennett, F. M. (Torquay)Grosvenor, Lt.-Col. R. G.Orr-Ewing, C. Ian
    Bingham, R. M.Gurden, HaroldOsborn, John (Hallam)
    Birch, Rt. Hon. NigelHall, John (Wycombe)Page, John (Harrow, West)
    Bishop, F. P.Hamilton, Michael (Wellingborough)Page, Graham (Crosby)
    Black, Sir CyrilHarris, Frederic (Croydon, N.W.)Pannell, Norman (Kirkdale)
    Bossom, CliveHarrison, Brian (Maldon)Partridge, E.
    Bourne-Arton, A.Harvey, John (Walthamstow, E.)Pearson, Frank (Clitheroe)
    Boyd-Carpenter, Rt. Hon. JohnHastings, StephenPeel, John
    Boyle, Sir EdwardHay, JohnPickthorn, Sir Kenneth
    Brewis, JohnHeald, Rt. Hon. Sir LionelPike, Miss Mervyn
    Bromley-Davenport, Lt.-Col. Sir WalterHeath, Rt. Hon. EdwardPitt, Miss Edith
    Brooke, Rt. Hon. HenryHendry, ForbesPott, Percivall
    Brown, Alan (Tottenham)Hiley, JosephPrice, David (Eastleigh)
    Buck, AntonyHill, J. E. B. (S. Norfolk)Prior-Palmer, Brig. Sir Otho
    Bullard, DenysHinchingbrooke, ViscountProudfoot, Wilfred
    Burden, F. A.Holland, PhilipPym, Francis
    Butcher, Sir HerbertHornby, R. P.Quennell, Miss J. M.
    Butler, Rt. Hn. R. A. (Saffron Walden)Hornsby-Smith, Rt. Hon. PatriciaRamsden, James
    Campbell, Sir David (Belfast, S)Hughes-Young, MichaelRawlinson, Peter
    Campbell, Gordon (Moray & Nairn)Hurd, Sir AnthonyRedmayne, Rt. Hon. Martin
    Carr, Compton (Barons Court)Hutchison, Michael ClarkRees, Hugh
    Carr, Robert (Mitcham)Iremonger, T. L.Renton, David
    Cary, Sir RobertIrvine, Bryant Godman (Rye)Ridley, Hon. Nicholas
    Channon, H. P. G.Jackson, JohnRidsdale, Julian
    Chataway, ChristopherJames, DavidRobertson, Sir David
    Chichester-Clark, R.Jenkins, Robert (Dulwich)Ropner Col. Sir Leonard
    Clark, Henry (Antrim, N.)Jennings, J. C.Russell, Ronald
    Clark, William (Nottingham, S.)Johnson, Dr. Donald (Carlisle)Sandys, Rt. Hon. Duncan
    Clarke, Brig. Terence (Portsmth, W.)Johnson Smith, GeoffreyScott-Hopkins, James
    Cleaver, LeonardJoseph, Sir KeithSeymour, Leslie
    Cooke, RobertKerans, Cdr. J. S.Sharples, Richard
    Cordeaux, Lt.-Col. J. K.Kerby, Capt. HenryShaw, M.
    Cordle, JohnKershaw, AnthonySmith, Dudley (Br'ntf'rd & Chiswick)
    Corfield, F. V.Kimball, MarcusSmithers, Peter
    Costain, A. P.Kirk, PeterStanley, Hon. Richard
    Couison, J. M.Langford-Holt, J.Stodart, J. A.
    Craddook, Sir BeresfordLeavey, J. A.Stoddart-Scott, Col. Sir Malcolm
    Crosthwaite-Eyre, Col. O. E.Legge-Bourke, Sir HarryStorey, Sir Samuel
    Cunningham, KnoxLewis, Kenneth (Rutland)Studholme, Sir Henry
    Dalkeith, Earl ofLindsay, MartinSumner, Donald (Orpington)
    Dance, JamesLloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Taylor, Sir Charles (Eastbourne)
    d'Avigdor-Goldsmid, Sir HenryLongden, GilbertTemple, John M.
    de Ferranti, BasilLoveys, Walter H.Thomas, Leslie (Canterbury)
    Digby, Simon WingfieldLucas-Tooth, Sir HughThornton-Kemsley, Sir Colin
    Doughty, CharlesMcAdden, StephenTiley, Arthur (Bradford, W.)
    Drayson, C. B.McLaren, MartinTilney, John (Wavertree)
    Duncan, Sir JamesMcLaughlin, Mrs. PatriciaTurner, Colin
    Eden, JohnMaclean, Sir Fitzroy (Bute & N. Ayrs.)Turton, Rt. Hon. R. H.
    Elliott, R. W. (Nwcstle-upon-Tyne, N.)McLean, Neil (Inverness)Tweedsmuir, Lady
    Emery, PeterMcMaster, Stanley R.van Straubenzee, W. R.
    Emmet, Hon. Mrs. EvelynMacmillan, Maurice (Halifax)Vosper, Rt. Hon. Dennis
    Errington, Sir EricMacpherson, Niall (Dumfries)Wakefield, Edward (Derbyshire, W.)
    Farey-Jones, F. W.Maddan, MartinWakefield, Sir Wavell (St. M'lebone)
    Farr, JohnMaitland, Sir JohnWalder, David
    Fell, AnthonyMarkham, Major Sir FrankWalker, Peter
    Finlay, GraemeMarlowe, AnthonyWard, Dame Irene
    Fisher, NigelMarshall, DouglasWatts, James
    Fraser, Hn. Hugh (Stafford & Stone)Matthews, Cordon (Meriden)Webster, David
    Freeth, DenzilMawby, RayWells, John (Maidstone)
    Galbraith, Hon. T. G. D.Maxwell-Hyslop, R. J.Whitelaw, William
    Gammans, LadyMaydon, Lt.-Cmdr. S. L. C.Williams, Dudley (Exeter)
    Gardner, EdwardMills, StrattonWilliams, Paul (Sunderland, S.)
    Glyn, Dr. Allan (Clapham)Moore, Sir Thomas (Ayr)Wills, Sir Gerald (Bridgwater)

    about which he might think it appropriate to give some assurance to the House this afternoon.

    Question put, That the words proposed to be left out stand part of the Bill:—

    The House divided: Ayes 213, Noes 154.

    Wilson, Geoffrey (Truro)Wood, Rt. Hon. RichardTELLERS FOR THE AYES:
    Wise, A. R.Woodnutt, MarkColonel J. H. Harrison and
    Wolrige-Gordon PatrickWorsley, MarcusMr. Gibson-Watt.


    Ainsley, WilliamHamilton, William (West Fife)Popplewell, Ernest
    Allaun, Frank (Salford, E.)Hannan, WilliamPrentice, R. E.
    Allen, Scholefield (Crewe)Hart, Mrs. JudithPrice, J. T. (Westhoughton)
    Bacon, Miss AliceHayman, F. H.Probert, Arthur
    Bence, Cyril (Dunbartonshire, E.)Healey, DenisProctor, W. T.
    Benson, Sir GeorgeHerbison, Miss MargaretRankin, John
    Blackburn, F.Hill, J. (Midlothian)Redhead, E. C.
    Boardman, H.Holman, PercyReid, William
    Bowden, Herbert W. (Leics, S. W.)Holt, ArthurRhodes, H.
    Bowen, Roderic (Cardigan)Houghton, DouglasRoberts, Albert (Normanton)
    Brockway, A. FennerHowell, Denis (B'ham, Small Heath)Robertson, John (Paisley)
    Broughton, Dr. A. D. D.Hughes, Cledwyn (Anglesey)Robinson, Kenneth (St. Pancras, N.)
    Brown, Rt. Hon. George (Belper)Hunter, A. E.Ross, William
    Brown, Thomas (Ince)Hynd, John (Attercliffe)Royle, Charles (Salford, West)
    Butler, Herbert (Hackney, C.)Irving, Sydney (Dartford)Shinwell, Rt. Hon. E.
    Callaghan, JamesJeger, GeorgeSilverman, Sydney (Nelson)
    Castle, Mrs. BarbaraJenkins, Roy (Stechford)Skeffington, Arthur
    Chapman, DonaldJones, Dan (Burnley)Slater, Joseph (Sedgefield)
    Collick, PercyJones, J. Idwal (Wrexham)Small, William
    Craddock, George (Bradford, S.)Kelley, RichardSmith, Ellis (Stoke, S)
    Crosland, AnthonyKenyon, CliffordSoskice, Rt. Hon. Sir Frank
    Cullen, Mrs. AliceKey, Rt. Hon. C. W.Spriggs, Leslie
    Darling, GeorgeLee, Frederick (Newton)Steele, Thomas
    Davies, Harold (Leek)Lee, Miss Jennie (Cannock)Stewart, Michael (Fulham)
    Davies, Ifor (Gower)Lever, L. M. (Ardwick)Stonehouse, John
    Deer, GeorgeMcCann, JohnStones, William
    de Freitas, GeoffreyMacColl, JamesStrauss, Rt. Hn. G. R. (Vauxhall)
    Diamond, JohnMcInnes, JamesStross, Dr. Barnett (Stoke-on-Trent, C.)
    Ede, Rt. Hon. C.McKay, John (Wallsend)Swain, Thomas
    Edwards, Rt. Hon. Ness (Caerphilly)McLeavy, FrankSylvester, George
    Edwards, Robert (Bilston)MacMillan, Malcolm (Western Isles)Taylor, Bernard (Mansfield)
    Edwards, Walter (Stepney)Manuel, A. C.Taylor, John (West Lothian)
    Evans, AlbertMarquand, Rt. Hon. H. A.Thompson, Dr. Alan (Dunfermline)
    Fernyhough, E.Marsh, RichardThomson, G. M. (Dundee, E.)
    Finch, HaroldMendelson, J. J.Thornton, Ernest
    Fitch, AlanMillan, BruceThorpe, Jeremy
    Fletcher, EricMitchison, G. R.Tomney, Frank
    Foot, Michael (Ebbw Vale)Monslow, WalterWade, Donald
    Forman, J. C.Morris, JohnWarbey, William
    Fraser, Thomas (Hamilton)Moyle, ArthurWatkins, Tudor
    Gaitskell, Rt. Hon. HughNeal, HaroldWeitzman, David
    Galpern, Sir MyerOliver, G. H.Wells, Percy (Faversham)
    George, Lady Megan Lloyd (Crmrthn)Oram, A. E.Wells, William (Walsall, N.)
    Ginsburg, DavidOswald, ThomasWilkins, W. A.
    Gooch, E. G.Owen, WillWilley, Frederick
    Gordon Walker, Rt. Hon. P. CPannell, Charles (Leeds, West)Williams, Ll. (Abertillery)
    Gourlay, HarryPargiter, G. A.Williams, W. R. (Openshaw)
    Greenwood, AnthonyParker, JohnWillis, E. G. (Edinburgh, E.)
    Griffiths, Rt. Hon. James (Llanelly)Pavitt, LaurenceWoof, Robert
    Griffiths, W. (Exchange)Pearson, Arthur (Pontypridd)Zilliacus, K.
    Grimond, JPeart, Frederick
    Hall, Rt. Hn. Glenvil (Colne Valley)Pentland, NormanTELLERS FOR THE NOES:
    Mr. Rogers and Mr. Lawson.