| Previous Section | Index | Home Page |
Ms Armstrong: I understand what the hon. Gentleman is saying, but I should not like hon. Members to go away with the impression that, currently or historically, properties have been assessed as he is implying. The Bill's main thrust is simply to enshrine what valuation officers have assumed in valuing properties. Valuers outside the Valuation Office may not see the matter in that light, but
I assure the hon. Gentleman that valuation officers have made those assumptions in their work. That is why the example that he is dealing with is painting an incorrect picture.
Mr. Burstow: I am grateful to the Minister for clarifying that point. It is probably an issue to which we shall wish to return, perhaps after tabling amendments to the Bill. The profession certainly feels that the principle and precedent are sufficiently unclear. The Lands Tribunal decision in the Anston case deals in some detail with how the judge in the case believed the system worked. Perhaps the Minister will say in his reply whether the Government and officials believe that the judge was misdirecting himself in that respect and was describing a system that did not match the actual system. I should certainly be interested to know whether it was felt that the judgment was defective in that sense. I have seen nothing in the Bill's explanatory notes or heard anything in the debate to show that there is such a belief.
If my contention holds--although I understand that the Minister does not accept it--it would have a significant impact on retail situations in more marginal retail locations. We therefore remain concerned about the Bill and its consequences. The logical conclusion of my argument is that the system, if it were made more uniform and easier to administer for the Valuation Office, could have the effect of hastening the run down of inner-city shopping parades.
Another consequence of the Bill as it is drafted is that the system would not be able to recognise the effect of natural disasters that result in temporary disrepair. Therefore, damage done by fire, flood, storm or some other natural disaster would not result in a lower rateable value. If the Bill had been law at the time of the floods in the constituency of my hon. Friend the Member for Hereford (Mr. Keetch), businesses in Ross-on-Wye would have received no relief through the rating system. I hope that the Minister will confirm when he winds up that the Government will give further consideration to that issue to give some comfort to those who fear the loss of such relief.
I understand that, since the announcement in a written answer in July 1998 that the Government intended to legislate, little consultation with the valuation profession or with business has been undertaken. Indeed, the first time that the Institute of Revenues, Rating and Valuation learned of the Government's intentions was when the Bill was published in November. On what is supposed to be a non-controversial, technical matter, it is surprising that the Government did not provide an opportunity for dialogue to avoid the concerns that are now being brought to the attention of hon. Members and aired in the House tonight.
The Bill contains flaws and it undermines important principles that underpin our rating system. As a consequence, it is not friendly to business. It will make the system less fair and less responsive. It allows for a significant dumbing down of the valuation system at the expense of business. The Bill will make the system simpler for valuation offices to administer by imposing an unreal uniformity on a system that is meant to reflect the operation of market forces. It may reduce the level of leakage resulting from valuation appeals and increase the level of certainty about business rate income. One can
understand that the Treasury might wish to have more certainty when forecasting the income from business rates, but that should not necessarily be the objective of a rating system that is meant to apply fairly to all businesses.
Mr. Adrian Sanders (Torbay):
Given the fact that hon. Members were outnumbered by the number of civil servants in the corner at the beginning of the debate, it is obvious that the Bill is anything but simple. It secures that the assumptions on which the 1990 and 1995 rating lists were compiled will continue to apply, and provides for subsequent rating lists to be compiled on the same basis. That seems reasonable enough and the Bill appears to be a minor, technical Bill, affecting the valuation of non-domestic properties for rating purposes only. It was published on 27 November, but was not in the Queen's Speech. It is only two pages long, it is non-contentious and it is unlikely to be opposed by the official Opposition. Indeed, one would not expect the official Opposition to oppose a Bill that merely corrects their legislation when in government.
The need for the Bill arose when a Lands Tribunal ruling, referred to earlier as the Benjamin v. Anston Properties case, apparently went against what was thought to be the rule that a property should be valued as though it were in reasonable repair. That is rightly to deter owners from constructive vandalism or neglect, which is a common phenomenon when an owner wants to redevelop a site and speed up the departure of existing tenants. Under that rule, a reduction in rateable value of a property and in rates payable on it is prevented, and the owner's neglect results in no reduced rate bill.
The Bill will be backdated to 1990, but not if a property's valuation list entry has been amended between then and 11 March 1998. With a full revaluation for the uniform business rate in progress and due to take effect in 2000, the impact on rates payable thereafter will be considerable. The biggest effect will be on blighted urban areas where benign neglect is most common.
The problem with the UBR is that rating properties on an annual rental value taxes enterprise. It hits small local firms much harder than large ones, because small businesses have more of their assets tied up in stock, turnover and wages, whereas big firms can afford to trade at a loss for long periods. The rating system is just one part of a casino economic system that benefits investors and speculators at the expense of enterprise and labour. While traders on the high street pay rates, landowners pay nothing. The community's wealth comes from the efforts of enterprising businesses, not from the risk-free ownership of land. By leaving a site empty, the owner cuts the footfall in all nearby businesses.
Who pays? Not the landowner. The chances are that he or she lives hundreds of miles away. Meanwhile, local businesses carry on paying high rates based on pre-slump values, leading to more business failures, more dereliction, and less footfall. It happens in even the most prosperous towns in Britain. Everybody except the landowners and banks suffers. The Government lose revenue, communities lose jobs, the least mobile residents lose accessible town centre shops, councils find it difficult to revive towns and have to cope with dereliction. The most enterprising people who make our towns live--the local businesses and traders--pay a rate that is an unfair burden that gets more unfair every year.
None of us likes waste, so why not tax it? We want more local jobs, enterprise and trade, so why tax the people who provide them? Why encourage land speculation? Why penalise those who improve their property? We are pledged to shift the burden of tax away from jobs and enterprise on to pollution and resource consumption. One aspect of that is site value rating as an alternative to the uniform business rate. Or in other words--tax what we disapprove of, not what we approve.
The Bill has two problems. The first is the escape clause whereby any repairs that a reasonable landlord would consider uneconomic are excluded from the definition of reasonable repair. In other words, if the neglect is great enough, the owner can get away with it. If the staircase or roof were removed, making the property unusable, no rates would be payable. Merely getting behind with the decorations or clearing the gutters would mean that the owner had to pay the same rates as a model owner. That cannot be fair.
Secondly, why should the tenant pay for the owner's faults? If an owner fails to maintain a property, assuming that it is not let on a repairing lease, the tenant would pay the higher bills that would result from the new basis for valuation. Perversely, the Bill could result in faster dereliction of properties and areas as businesses pay more rates on the good repair assumption while the owners do not have to do the repairs that were the basis of the valuations. It is almost a charter for bad landlords. I shall be interested in the Minister's response--and I have noticed that he has been handed various pieces of paper, which will probably make his life more difficult.
Mr. Sanders:
I shall give way briefly because I have almost concluded my remarks.
Ms Armstrong:
The hon. Gentleman's points are not legitimate in relation to the Bill. His objection that the tenant and not the landlord will have responsibility would have been made during the passage of the Local Government Finance Act 1988. We do not seek to change the basis of that Bill, so we cannot deal with that issue in this Bill.
| Next Section
| Index | Home Page |