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Baroness Hamwee: The thanks usually come at a later stage of the Bill, but I will add my thanks at this point as well. Of course I thank the noble Earl who has done a sterling job. He was well assisted by the professionals who, to put it colloquially, have "got stuck in there" and "kept stuck in there" and are to be congratulated. I congratulate also the Minister and her officials because it must be quite hard to be challenged in the way they have been. They have dealt with the matter in a dignified fashion.

My honourable friend the Member for Sutton and Cheam, Mr. Burstow, tabled a number of amendments in another place couched in almost exactly the same terms as several of the noble Earl's amendments. Therefore it will be no surprise to the Committee to hear that I support the thrust of these amendments. However, I should like to ask three short questions of very different types. The first, which arises from the first of his amendments, concerns the role of locality in assessments for rating purposes. I was not surprised to see this in the amendment because it seems to me it is part of the normal exercise of rating to take into account the question of locality. I merely ask about this matter because in the debate in another place on 11th January (at col. 66 of the Official Report) there seemed to be a suggestion on the part of the Minister that locality was not a matter to be taken into account.

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Secondly, as regards the status of the proposed practice note, the noble Earl, Lord Courtown, referred to a code of practice, as distinct perhaps from a practice note. I would have thought--although I do not know the technical details--that that was what the professionals drew up on the basis of the statute, statutory instruments and so on. I am, however, particularly concerned to know what status the practice note as issued by the Government has, as and when it is issued.

Finally--and I do not wish by any means to detract from the work that has been done by the professionals who have been involved--can the Minister assure the Committee that before the practice note is finalised the three professional organisations will be formally consulted? I think the main organisations are the RICS, the IRRV and the Rating Surveyors Association. Will they be formally consulted and will any comments that they may have be taken into account, at least so far as the Minister and her officials consider to be appropriate? I would like to feel that they have been formally consulted.

Baroness Farrington of Ribbleton: Amendment No. 1 would insert into the Bill an express requirement for the valuer to take account of the physical state or physical enjoyment of the hereditament and its locality and the mode, category and use of the hereditament.

I am sure that the noble Earl intends this amendment to be helpful in clarifying the meaning of the Bill. However, and sadly this may well become a recurring theme during our consideration of the Bill this afternoon, the amendment goes slightly further and could have the unintended effect of undermining price rating valuation practice. As the noble Earl will be aware, Schedule 6 to the Local Government Finance Act 1988 sets out the standard rule as to the way rating valuations are to be carried out. Paragraph 2(7) sets out the matters to be taken into account as they are made on the day by reference to which the valuation is to be made. This will either be the day on which the list must be compiled for the forthcoming revaluation--for example, this is 1st April 2000--or the material day for any alterations to the rating list which are made after that day.

These matters include, at paragraph 2(7)(a) and (b):

    "(a) matters affecting the physical state or physical enjoyment of the hereditament," and

    "(b) the mode or category of occupation of the hereditament". If that were as far as the amendment went, then it might not affect existing valuation practice. It would, however, be superfluous. There is no question of valuation officers not taking these matters into account and, in so far as the noble Earl is seeking that assurance, I am happy to give it.

The measure might have other unforeseen effects. It is not clear why it is thought that duplicating the existing provision would be helpful. On the contrary, it could lead to confusion and undermine what the Bill is seeking to achieve, which is, of course, to establish a very limited departure from the general principle that a hereditament is to be valued in its actual physical statement.

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However, the amendment would additionally require that the use of the hereditament should be taken into account. While the use of a property is, of course, a relevant consideration when ascertaining its rateable value, it is not entirely clear whether the amendment seeks to change existing practice by limiting consideration to actual use only.

At present valuations for non-domestic rating are carried out on the assumption that the hereditament could be used for a purpose within the same mode or category of use as the existing use to which the property is put. This approach, which within rebus sic stantibus permits limited consideration of alternative uses, is well established by case law. If the amendment were accepted, it could lead to a significant departure from present practice. This would create uncertainty and could therefore lead to litigation.

I was asked several specific questions. The noble Earl, Lord Courtown, asked whether I could add to the definition of "reasonable repair" and alongside that "accidental damage". It has been suggested to us that since we are planning to require valuers to assume a state of reasonable repair, we should define what the term means within the Bill and that we should define the circumstances in which any damage should be taken into account in the valuation. Noble Lords may think this would be innocuous, but we believe that it would be dangerous.

There is a body of case law which elucidates what is meant by a reasonable state of repair. I also believe that if we were to try to define what the term means in statute, we would run the significant risk of introducing unintended restriction and so lose the flexibility which valuers and the courts need in deciding what is reasonable in the particular circumstances of each case. Similar arguments apply to the treatment of damaged properties under the rating system.

A further question was put by the noble Earl, Lord Lytton, and I thank him for raising comments about the possibility of including the verbatim from Hansard. As I have said, I believe it is important that our intentions in bringing forward the Bill are as clear as possible. I am happy for my statement to the Committee today to be incorporated into the practice note and understand that the Valuation Office Agency will arrange for its inclusion in the next draft which, as I have indicated, will be placed in the Library of the House when it becomes available.

The status of the practice note was, I believe, raised by the noble Baroness, Lady Hamwee. There is no need for enhancing the status of the practice note. It expresses how valuation officers will, in fact, carry out their valuations, but it is important that we retain a degree of flexibility. Making it more formal would inhibit the development of practice in the future.

I have dealt with the point about reasonableness. There is no question of locality not being taken into account. It is an integral part of valuation practice and there is nothing in the Bill which will damage this.

I have sought to answer the points raised by noble Lords. Perhaps it would be helpful if I say at this stage that no-one is more grateful than I am for the assistance

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of noble Lords with a deep interest in the Bill and their advisers and the officials. Should there be any need for further clarification between the Committee and Report stages, I would be only too happy to do so by letter if that would be helpful.

I hope that what I have said explains to the noble Earl why I cannot accept an amendment which runs the risks outlined and, therefore, I trust he will feel able to withdraw the amendment.

4.15 p.m.

The Earl of Lytton: I have already spoken to all of these amendments in their generic terms because, of course, they are all linked. Therefore, I have not gone into some of the detail that the noble Baroness has gone into in telling me why it is that Amendment No. 1 is not a good amendment.

In light of what she has said, I am very sympathetic to that line of argument, I must admit. I was particularly glad that, in commenting on the amendment, she referred to the physical state and category of occupation and the fact that it would be unnecessary because the amendment would undermine, if anything, current rating practice.

I am not so sure about that but I was comforted by her point that there would be no question of valuation officers not taking these matters into account and therefore it was a duplication, which is something to which I was sympathetic. Also as to whether it would change the existing practice and therefore depart from the rebus sic stantibus rule is, again, perhaps open to doubt. I draw great comfort from the fact that, if we can deal with the large issues then, with a little luck and a fair wind, the small ones will fall into place. At this stage, I could not have asked for either a more cogent account of the Government's intentions or for a clearer explanation of the effects that the Minister thinks the Bill will have in practice. I repeat the words of my ancestor, George Gordon, Lord Byron, who said:

    "I deny nothing, but doubt everything". The noble Baroness will understand that I come from a long line of men with an extremely healthy suspicion of the motives of all official bodies and government organs.

The noble Earl, Lord Courtown, raised two points. One was on the subject of the word "reasonable", and the Minister replied that it was difficult to define "reasonable" in statute. I certainly had concerns about this from inception. I asked myself whether the term "a reasonable state of repair" was in fact the same as "the state of repair reasonably to be expected". I was told at our meeting with the Minister and her officials that the terms were more or less one and the same. I accept the gist of the Minister's answer that, for the purposes of this Bill at any rate, the effect is the same. In my broader professional experience, however, I can conceive of other circumstances where it might be different. However, I am happy to leave that for the purposes of this Bill for the moment.

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