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Rating (Caravans And Boats) Bill

Volume 268: debated on Tuesday 12 December 1995

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Order for Second Reading read.

8.1 pm

The Parliamentary Under-Secretary of State for the Environment
(Sir Paul Beresford)

I beg to move, That the Bill be now read a Second time.

The Rating (Caravans and Boats) Bill restores the law on the rating of caravans and boats to what we had always thought, and intended, it to be. It honours a commitment we gave in 1988 to the caravan industry that, for the purposes of local taxation, pitches for holiday caravans would be subject to non-domestic rates rather than community charge or, later, council tax.

We had thought that the Local Government Finance Act 1988, as amended, already had that effect, but a recent Lands Tribunal decision held this not to be so. In the view of that court, section 66(1) of the 1988 Act makes any caravan pitch domestic property even if the caravan is used as holiday accommodation; hence, caravans and their pitches would be liable for council tax. That case did not concern itself with moorings for boats, but the wording of the 1988 Act in respect of moorings is very close to that for caravans and their pitches. The Bill, therefore, deals with the situation for moorings as well.

If the Bill is not passed, valuation officers all over the country will have to change the list entries for more than 350,000 pitches occupied by caravans and moorings occupied by boats. They will have to be removed from the local rating lists, banded and placed in the valuation lists for council tax, at considerable cost to the taxpayer.

Local authorities would then have to refund, with interest, all the non-domestic rates payable on those caravans and boats back to 1 April 1990. Community charge registers have now closed, so no local tax would be recoverable for the financial years from 1990 to 1992-93 and local authorities, therefore, would incur considerable financial loss. Local authorities would then have to re-bill the 350,000 or so boat and caravan owners for council tax back to 1 April 1993, again at considerable cost.

Most of those caravan and boat owners would then face higher bills under council tax than they would have done under non-domestic rates. In some cases, those bills would be significantly higher. Therefore, the Bill restores the law to what we had thought was the status quo by amending the definition of domestic property for the purpose of rating. Pitches for caravans will be domestic property, and subject to council tax, only if the caravan is somebody's sole or main residence. It provides that moorings for boats will be domestic property only if the boat is someone's sole or main residence. If the caravan or the boat is not a sole or main residence, the pitch or mooring will be non-domestic and liable for non-domestic rates.

The Bill is concerned only with the definition of domestic and non-domestic property. It does not alter the law on the rateability of caravans or boats per se. As now, only those occupying their pitches or moorings with sufficient permanence will be held to be part of the property. Such caravans and boats will be assessed for council tax if they are domestic property as deed by the Bill. They will be assessed for non-domestic rates if they are not domestic property as defined by the Bill. Where a caravan or boat is not sufficiently permanent, the pitch or mooring alone will be assessed for council tax or non-domestic rates.

The Bill does not extend council tax to those parts of a caravan site or group of moorings which are there for the enjoyment of all users of the site. Only those appurtenances such as gardens or yards belonging to a pitch or mooring will be domestic property—as now.

The Bill also makes special provision for those ratepayers who appealed against their rateable value before the Lands Tribunal decision on 30 January this year. That is the date of the Lands Tribunal order. If they appealed on the ground that their property was domestic rather than non-domestic, and they did not withdraw their appeal before that date, they will have the fruits of their appeal. Nothing in this legislation will affect their position. If their appeals are successful, their caravans and boats will be subject to community charge or council tax. For all other holiday caravans the position will be as it was always intended to be; they will be subject to non-domestic rates. The Bill will have retrospective effect from 1 April 1990—the date of the introduction of the new rating system.

The Bill is a measure that will be welcomed by the caravan and boat industries and by the 350,000 or so occupiers of holiday caravans and boats who will remain liable for the lower rate of tax. I commend the Bill to the House.

8.6 pm

I shall be brief and not detain the House for long.

As the Minister made clear, the Bill simply clarifies the law in respect of caravan sites and moorings for boats after a recent Lands Tribunal decision. The Opposition do not disagree with the basic tenet of the legislation, but I should like to raise a couple of issues.

I have a large number of caravan sites in my constituency, so I speak with some experience as a result of consistent lobbying from caravan site owners and caravan owners. The north Pennine area is a particularly beautiful part of England, so there are many caravan sites there. Caravan owners have faced a particular problem because of last year's business rates revaluation. That revaluation particularly affected property or land in the north because the resulting rates were exceptionally high. The Labour party is anxious to re-examine those revaluations.

The introduction of the non-domestic rate was not greeted with great glee in the north because the amounts levied on businesses were greatly increased. That happened because the Government were trying to level out the amounts paid in the south in comparison with those in the north. Many in the north suffered as a result.

At the time of the revaluations I had considerable correspondence about the matter with the then Under-Secretary of State for the Environment, the hon. Member for West Hertfordshire (Mr. Jones). In one of those letters I spoke about the representations I had received from the British Holiday and Home Parks Association. It met Ministers of the Department of the Environment to discuss the rating of caravans, including the proposal that the rating of caravan parks should be changed so that caravans would be excluded from assessment. The Minister wrote that that would be

"a fundamental change, requiring primary legislation for which we certainly have no slot available at the moment. However, we have undertaken to look again at the issue".
It is no longer valid to say that no parliamentary time is available. When the Minister wrote the letter from which I have quoted the Government were not expecting to introduce the Bill. We now have the Bill and parliamentary time is available for it. The Government might like to explain why they have decided not to respond to exclusion from assessment. Perhaps that is something that we can discuss in Committee.

I cannot disclose the date on which the Minister's letter was written, because the date stamp is not clear. In other words, I do not know the date on which the letter was sent. As it was sent fairly recently, however, we might be informed of the Government's view. Caravan owners should be told that, I suspect, the Government do not wish to proceed. There is no lack of parliamentary time.

There is little of contention in the Bill. I am happy to say nothing more until the measure is considered in Committee.

8.11 pm

I do not propose to detain the House for long, but there are not many hon. Members in their places to be detained. As has been said, the Bill is only a clarification of existing law. I understand that it has been welcomed by local authorities as a sensible way of simplifying their current revenue-raising responsibilities.

I seek an assurance on canal boats. My assistant, Nick Rijke, has contacted the Minister's office today. I gather that the Minister's staff gave the assurance that the Bill was not intended to extract tax from the bulk of boat owners—those whose boats are not attached permanently to any one mooring and who are therefore not currently liable for council tax or non-domestic rates. I was concerned that in his opening remarks the Minister seemed to suggest that all moorings would be subject to non-domestic rates. I understand that every boat, as part of its registration, has to be attached in a sense to a mooring. That seems to suggest that there might still be a worry for those who own boats that are not attached permanently to any one mooring. As the Kennet and Avon canal runs the length of my constituency form east to west, some of my constituents are concerned as the owners and users of narrow-boats.

For those who use their narrow-boats for their leisure, any new tax liability would clearly be nonsensical. A canal boat that is not used as a residence is akin to a caravan parked in a driveway, albeit in this instance a watery one.

The private assurance of the Minister's office has been most helpful but, given the importance in law of what is said in the House, I ask for the Minister's confirmation that the Bill will not lead to a new tax liability for non-residential narrow-boat owners in terms of their moorings, permanent or otherwise.

The Bill will be welcomed by many of those who might have been worried that large council tax bills would otherwise have been generated by their permanent caravans and boats. They would never have had that worry were it not for the iniquities of the council tax. Band A is much too wide. It does not make allowances for park homes, boats or other forms of accommodation of a lower value than other homes, whose inhabitants may follow a different life style. The owners of such dwellings usually place a lower demand than others on the services of local authorities.

I have argued on several occasions in this place and elsewhere for a new and lower tax band. Before us is one of many examples of how it would lead to more sensible and more equitable local taxation. Given the upward pressure that has been placed on council tax levels by the Government's miserly Budget settlement, the fairness of the council tax will be of increasing concern to many people.

There are those who may be happy about the Bill because it reduces one of their taxes. But how can it be sensible that people who use caravans and boats for their own leisure should have to pay a tax that is designed for the business community? It is not sensible, but that is what we have been lumbered with because the Conservatives have been unable to produce a fair system of local personal taxation. I admit that the Labour party has been similarly unimaginative, but that is no excuse for Conservative Members. Being more imaginative than the Labour party should not be too much of a feat, even for Conservative Members.

8.15 pm

First, I declare an interest on behalf of my wife and me because we share the ownership of a static caravan in the north of Northumberland. That being so, I am on the receiving end of the Bill. I welcome the measure, however, because it will settle the concerns of many caravan owners. Over the past few months, if not before, many owners of static caravans—this may be true of boats as well, but I am not familiar with boats—have been in a quandary. Clarification for site owners has not been sufficient, because they, too, have not been properly informed. The Bill will benefit the consumer, the caravan owner, as it provides clarification.

My caravan is parked in the north of Northumberland. Other owners are generally young people with families who enjoy a leisure facility for their young children, including the accoutrements of a swimming pool, horse riding and golf. At the other end of the scale are elderly people. They probably retired with a small sum which they invested in a caravan so that they might enjoy a leisure facility. That is the general pattern on the rather large and attractive site where my caravan is parked.

The House will understand that the financial arrangements are crucial. Any changes in funding can be extremely important. Owners on the site where my caravan is sited faced increases in site charges as well as gas and electricity charges. There was uncertainty about whether they would pay council tax or non-domestic tax. Against that background, some of them decided to dispose of their leisure facility, something that they had cherished and enjoyed for many years.

The Bill is important for caravan owners and for tourism. Owners of smaller caravan parks who wish to lease or rent their caravans have faced uncertainty. They have been unsure about charges. They have wished, of course, to make a reasonable profit while providing reasonable facilities.

I would wish to see an expansion of opportunities for the caravan industry. At one time, I owned a touring caravan. What will be the arrangements for caravan sites where there is a tourist pitch facility? That is not clear in the Bill. Those sites do not have a caravan on them the whole year; they come and go, perhaps on a weekly or two-weekly basis, and that point is crucial to the site owner in terms of renting the pitches.

All the facilities in the leisure industry are important in my part of the world. That is why I wanted to participate in this short debate and clarify those points. I must tell the Minister that those on the receiving end—the caravan owners—have as much interest in the Bill as the caravan site owners.

8.19 pm

With the leave of the House, Madam Deputy Speaker. Some interesting points were raised in this short debate. I have considerable sympathy with the concerns of the hon. Member for Wansbeck (Mr. Thompson) about the various uncertainties.

The hon. Member for North-West Durham (Ms Armstrong) raised a point about the discussions that have taken place between the Valuation Office and the caravan industry. Agreement has now been reached—satisfaction has spread about—on the method of valuation for caravan parks, and that will solve the problem. Therefore, there is no need for legislation or any further action—fortunately.

The hon. Member for Wansbeck also spoke about pitches. Pitches, but not the caravans that use them, will be subject to local taxation. That also applies to canal boats and to boats that regularly move. A boat must be static, and that is usually defined as for about a year minimum, otherwise it is considered a chattel and taxation does not apply.

This is an issue that has general acceptance and, therefore, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).