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Ms Armstrong: Anston.

24 Feb 1999 : Column 503

Mr. Burstow: I am corrected by the Minister from a sedentary position--the Aniston case--

Ms Armstrong: Anston.

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.

Division No. 76
[10.41 pm


Beggs, Roy
Breed, Colin
Bruce, Malcolm (Gordon)
Burnett, John
Burns, Simon
Burstow, Paul
Campbell, Menzies (NE Fife)
Davey, Edward (Kingston)
Donaldson, Jeffrey
Fearn, Ronnie
Foster, Don (Bath)
George, Andrew (St Ives)
Gorrie, Donald
Harris, Dr Evan
Hughes, Simon (Southwark N)
Keetch, Paul
Kirkwood, Archy
Moore, Michael
Oaten, Mark
Öpik, Lembit
Rendel, David
Ross, William (E Lond'y)
Russell, Bob (Colchester)
Sanders, Adrian
Smith, Sir Robert (W Ab'd'ns)
Tyler, Paul
Willis, Phil

Tellers for the Ayes:

Mr. Richard Allan and
Mr. David Heath.


Adams, Mrs Irene (Paisley N)
Allen, Graham
Armstrong, Ms Hilary
Atkins, Charlotte
Barnes, Harry
Barron, Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Benn, Rt Hon Tony
Bermingham, Gerald
Berry, Roger
Best, Harold
Betts, Clive
Blizzard, Bob
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Browne, Desmond
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Butler, Mrs Christine
Caborn, Richard
Cann, Jamie
Caplin, Ivor
Casale, Roger
Caton, Martin
Cawsey, Ian
Chapman, Ben (Wirral S)
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clarke, Eric (Midlothian)
Clarke, Rt Hon Tom (Coatbridge)
Clarke, Tony (Northampton S)
Clelland, David
Coaker, Vernon
Cohen, Harry
Coleman, Iain
Connarty, Michael
Cook, Frank (Stockton N)
Corbyn, Jeremy
Cranston, Ross
Crausby, David
Cryer, Mrs Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunliffe, Lawrence
Cunningham, Jim (Cov'try S)
Curtis-Thomas, Mrs Claire
Dalyell, Tam
Davey, Valerie (Bristol W)
Davidson, Ian
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Dawson, Hilton
Dean, Mrs Janet
Dobson, Rt Hon Frank
Doran, Frank
Dowd, Jim
Drew, David
Eagle, Angela (Wallasey)
Edwards, Huw
Etherington, Bill
Fisher, Mark
Fitzsimons, Lorna
Flynn, Paul
Foster, Rt Hon Derek
Fyfe, Maria
Gapes, Mike
Gerrard, Neil
Gibson, Dr Ian
Gilroy, Mrs Linda
Godman, Dr Norman A
Goggins, Paul
Golding, Mrs Llin
Griffiths, Win (Bridgend)
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hanson, David
Healey, John
Heppell, John
Hesford, Stephen
Hinchliffe, David
Hoey, Kate
Home Robertson, John
Hopkins, Kelvin
Hoyle, Lindsay
Hughes, Ms Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Hurst, Alan
Hutton, John
Iddon, Dr Brian
Illsley, Eric
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jamieson, David
Jenkins, Brian
Johnson, Miss Melanie
(Welwyn Hatfield)
Jones, Barry (Alyn & Deeside)
Jones, Dr Lynne (Selly Oak)
Kaufman, Rt Hon Gerald
Keeble, Ms Sally
Kemp, Fraser
Kennedy, Jane (Wavertree)
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Laxton, Bob
Lepper, David
Levitt, Tom
Linton, Martin
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McDonnell, John
McFall, John
McGuire, Mrs Anne
McIsaac, Shona
Mackinlay, Andrew
McNulty, Tony
MacShane, Denis
Mallaber, Judy
Marsden, Gordon (Blackpool S)
Marsden, Paul (Shrewsbury)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Maxton, John
Meacher, Rt Hon Michael
Meale, Alan
Michie, Bill (Shef'ld Heeley)
Mitchell, Austin
Moffatt, Laura
Moran, Ms Margaret
Morgan, Ms Julie (Cardiff N)
Morgan, Rhodri (Cardiff W)
Morley, Elliot
Morris, Ms Estelle (B'ham Yardley)
Mountford, Kali
Mudie, George
Mullin, Chris
Naysmith, Dr Doug
O'Brien, Mike (N Warks)
Olner, Bill
O'Neill, Martin
Pearson, Ian
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pope, Greg
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Prosser, Gwyn
Quin, Rt Hon Ms Joyce
Quinn, Lawrie
Radice, Giles
Rammell, Bill
Raynsford, Nick
Reid, Rt Hon Dr John (Hamilton N)
Rogers, Allan
Rooker, Jeff
Ross, Ernie (Dundee W)
Rowlands, Ted
Ruddock, Joan
Salter, Martin
Savidge, Malcolm
Sheerman, Barry
Shipley, Ms Debra
Simpson, Alan (Nottingham S)
Skinner, Dennis
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, John (Glamorgan)
Soley, Clive
Spellar, John
Steinberg, Gerry
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stuart, Ms Gisela
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann
Taylor, Ms Dari (Stockton S)
Taylor, David (NW Leics)
Thomas, Gareth (Clwyd W)
Thomas, Gareth R (Harrow W)
Timms, Stephen
Tipping, Paddy
Todd, Mark
Touhig, Don
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)
Twigg, Stephen (Enfield)
Walley, Ms Joan
Wareing, Robert N
Watts, David
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Alan W (E Carmarthen)
Winnick, David
Woolas, Phil
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)

Tellers for the Noes:

Mr. Robert Ainsworth and
Mr. Keith Hill.

Question accordingly negatived.

24 Feb 1999 : Column 505

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 Benjaminv. 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.

24 Feb 1999 : Column 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.

24 Feb 1999 : Column 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.]

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