I beg to move, in page 7, line 32, at the end, to insert:
5. Legal rentcharge on a hereditament to be a proprietary interest therein.
6. Superiority and ground annual on a hereditament to be a proprietary interest therein.
This Amendment deals with a matter which was raised on the Committee Stage. It was suggested that rentcharges, which are common in Northern England and the North of Ireland, should be entitled in certain cases to participate in value payments. My right hon. Friend promised to consider the point. He has come to the conclusion that the matter should be dealt with; but it has proved somewhat complicated, and the Amendment which is on the Paper does not provide leally for the various points. After a very short statement, I will recommend a certain course to the House. It might be useful if I briefly stated the points which have arisen. The first is, should a rentcharge participate only in cases where its amount is greater than the annual value of the hereditament after the damage—should it be entitled to participate merely by saying, "We are not covered as many times over as we used to be," or should it be necessary for the annual value of the hereditament to have sunk below the rentcharge? The second point is, should the rentcharge be treated as a claim against the freehold, and not against the property as a whole, on the ground that the interest of a lessee ought not to be affected?
When these rentcharges first arise, there is a personal liability against the grantor. Should that be taken into account, and how should it be done? Another point arises when it is decided that the rentcharges have lost value owing to the damage. Should the share of the value payment then be taken in perma-ment reduction of the rentcharge, and should you arrive at the sum by taking into account the fact that buildings may arise and the rentcharge be fully covered in future? Lastly, what are you to do when it is a condition of the value payment that there should be rebuilding? Those are the difficulties. Like all difficulties, they can be surmounted. My right hon. Friend accepts the proposal in principle, and the matter is being gone into with the Commission and expert valuers, but, in view of the fact that we have not been able to get the thing in order; I beg to ask leave to withdraw the Amendment, so that we may deal with the matter comprehensively in another place.
I am grateful to my right hon. and learned Friend and to the Chancellor of the Exchequer for the sympathetic view they have taken on this matter, which I had the honour, along with other Members, to raise. Frankly, I was rather doubtful about the efficacy of the Amendment which the Attorney-General has moved to do all that was necessary, having regard to the very technical nature of this matter. However, I understand that the Government will bring in the appropriate Amendment in another place. It may be that, in the meantime, those who are responsible for Members of this House taking action will be able to help the Government draftsman in the matter. We take note of the observations the Attorney-General has made; and if we can submit any suggestions to him, no doubt they will be considered. We are, of course, agreeable to the Amendment being withdrawn, on the understanding which has been given.
I beg to move, in page 10, line 31, to leave out, "charge or lien for securing money or money's worth," and to insert "mortgage or floating charge."
This is really a clarifying Amendment. It is true that it occurred to us as being particularly necessary for clarifying purposes in the light of the fact that rent-charges were to be brought in, but the intention has always been that these words should cover only mortgage or floating charges. There might, however, be doubts in people's minds, and we desire to make it quite clear.
I beg to move, in page 11, line 34, to leave out "made," and to insert "executed."
There are one or two passages in the Bill in which reference is made to a will made on a certain date. A recent decision in the Courts, which is under appeal, might be regarded as throwing some doubt on whether the word "made" did, as we intended, refer to the date when the will was executed, and in order that no such doubt shall arise this and the following Amendment are proposed.
I beg to move, in page 12, line 39, to leave out from "damage," to "then," in line 40.
The hon. and gallant Gentleman the Member for New Forest (Major Mills) raised a question on Second Reading of which I would remind hon. Members. He asked whether powers would be taken to base contributions on some up-to-date assessment, and called attention to the fact that many properties have changed hands since 3rd September, 1939, which is the basic date for war damage contribution, and that Schedule A assessments have been altered in consequence, in some cases upwards, and in some cases downwards. The Attorney-General, in reply, said it would be quite wrong if the contribution went up and down according to the fluctuations of valuation during the war because they were capital contributions in respect of the property at risk during the war period. Now the effect of Subsection (2) of Section 30 of the Act is to raise the contribution where a higher Schedule A assessment is made by reason of an alteration in the condition of the land through improving it, or building upon it or, as far as may be seen from the wording of the Section, through any cause at all, which, I presume, covers, for example, the natural growth of trees and shrubs and the prolonged or repeated efforts of a gardener, or a house painter. Therefore, in spite of what the right hon. and learned Gentleman said about the evil of contributions going up and down during the war, here we have cases where they go up.
I come now to paragraph 10 of the First Schedule of the present Bill. Here it is recognised that where the condition of the land has altered otherwise than through war damage—and I make no complaint about the words "otherwise than through war damage" and—these are the words which I propose to leave out—"by the destruction or demolition of buildings or works or parts thereof," and a new and lower Schedule A assessment is made, that new assessment may form the basis of War Damage Contribution as from this year. So now we have cases also in which the contributions go down. They appear to be a class rather more restricted than the class in which contributions go up. The purpose of my Amendment is to remove that restriction and admit of a lower Schedule A assessment being obtained and hence a lower contribution charged when the condition of the property has deteriorated through any cause other than war damage. That would appear to be fair and equitable. I cannot see the justification for differentiating between properties which are improved through any cause and properties which deteriorate through any cause. I cannot see why if property owners always pay more for improvements they should only sometimes pay less for the reverse, and indeed, the reverse is very often beyond their control.
I will give the right hon. and learned Gentleman and the House one actual example, which, I believe, is typical of many. One out of a row of houses, exactly the same, except for the colour of the paint, was let for profit in 1939–40. The Schedule A assessment and the war damage contribution were doubled. Subsequently the letting terminates and the Schedule A assessment reverts to normal, that is, to the same as for each house in the row, but the War Damage Contribution remains at the doubled figure and it will continue to do so unless this House alters the Act, or unless the owner takes advantage of this Clause and notes the words which the Attorney-General used in explaining it. He said, on the Committee stage, that it was designed to cover cases in which the actual physical configuration of the structure had been altered by fire, demolition or some other cause since the outbreak of war. It must be very far from the intention of the House that householders in the sort of predicament which I have outlined should bring their minds to bear on what may be done under this provision to secure a reduction in contribution. I can foresee a whole series of most undignified actions being resorted to by frustrated and bewildered householders up and down the country. How much better it would be to obtain a new assessment and quietly and reasonably to proffer it, claiming an alteration in the condition of the property through natural depreciation, for example, in order to secure a reduction to an appropriate, normal and justifiable War Damage Contribution. I hope my right hon. Friend will give sympathetic consideration to this Amendment. I will ask leave to withdraw it, if he can suggest some more suitable means of righting this particular piece of injustice and removing the general anomaly which exists under the principal Act at present and as amended hitherto by this Bill.
I beg to second the Amendment.
I was not aware that it arose out of a remark I made on the Second Reading so I had no opportunity of discussing it with my Noble Friend, but it seems he has made out a good case for righting this injustice, because, if war damage assessment is to be increased when Schedule A assessment goes up, so it ought to be decreased when Schedule A assessment falls.
My recollection is not good enough to enable me to say whether my Noble Friend, who has been on military service, was able to attend all our Debates on the original Act. I do not think he was here but if he had been I think we would have realised that this is not an entirely new point. What we had to do when the Bill was first introduced and what, indeed, Parliament agreed to do, was to find some sort of basis on which contributions were to be raised, and we decided that the Schedule A valuation was a reasonable valuation to adopt. There were practical reasons for that. It was, of course, impossible in war-time to make a valuation of the whole country's assets. It would have taken up an enormous amount of time and trouble and would have meant that we should not have been able to get in contributions. So Parliament, under the original Act, agreed that contributions should be based on Schedule A. While accepting that as an essential part of the scheme it was, however, admitted—and always has been admitted—that there were bound to be all sorts of anomalies and inequalities. Parliament recognised that but said that rather than have no scheme at all they would accept this, in spite of some of the difficulties which were bound to emerge. I think my Noble Friend must bear that fact in mind because it has coloured all the discussions on this Bill and the principal Act since the scheme was introduced.
That being so, the only cases in which we have taken value payments on Schedule A 1939 values for contributory purposes have been those where there is alteration in structure. If my Noble Friend will reflect upon this he will see there is no unfairness in it, for the reason that where property is physically unchanged there is no real difficulty in accepting the Tightness of the 1939 Schedule A charge. After all, what happens if there is damage? If there is a cost-of-works payment, then payment is made according to what is the cost of the work. But if it is a question of a value payment under the Act, payment is calculated by reference in the general formula to the values as they were in March, 1939. That being so, it is reasonable that the contribution should also be levied on that basis and should not be altered. If you altered it as my Noble Friend suggests you would still get value payments on the 1939 values but that would hardly be a reasonable proposition. He instanced the case of a house in a row which might have been let, and then ceased to be let because the owner went to live in it with the result, as I understand it, that there was a change downwards in Schedule A valuation. It is true that, as far as that house is concerned, its letting value may have altered, but not its value by reference to the 1939 rates of compensation. We base the whole payment on compensation out of formulas arising from the 1939 figures.
The point is this. Suppose there is only one house out of a whole series of houses which are of exactly the same kind. In the present situation one out of, say, eight or 10 occupiers is paying an increased war damage contribution, merely because his house was let a year before.
I think if I develop the case my Noble Friend will see that there is something to be said for the other side. The point I was trying to make was that while there may be alteration in the letting value, the fact remains that if a value payment arose as a result of damage, that value payment would have reflected in it the March,1939, values and because of that, contributions are projected backwards to the 1939 Schedule A valuation. Although there is a change in letting value there is no change affecting the real value of the house. My Noble Friend says that in a row of houses there is a change in letting value because the lease of one has come to an end and the owner has occupied it. That is true, but it is only one instance of what this House and Parliament accepted in this rough and ready scheme. The alternative to accepting such a proposition is that you would have to go on revaluing the whole time and Parliament accepted the view that, if that were done, there would never be a scheme at all.
In one or two cases there may be hard luck, but my Noble Friend is in error in saying that there could be any upward revision during the war. He rather implied that the Government were getting the best of both worlds, because if there were an upward revision, we should get higher contributions under Schedule A. That is a misapprehension. There is no upward revision. There is downward revision, if there is a change of circumstances during the year, but there cannot be an upward revision unless it is done by a general revaluation. There has been no general revaluation during the war and there will not be one. Therefore, it is not right to say that we shall benefit by increased contributions as a result of revaluation. To that extent unfairness is not quite so extreme as he fears. If he asks, as I think he did, that contributions for a house let to a tenant in a row of houses should be the same as that for a house in which the owner lives, because the whole row is exactly the same, then of course we come back to the same position. It would involve reopening the contributory value of all the houses, and one would be led naturally on to the claim that the charge for similar houses let to tenants should be the same. In point of fact, similar houses are not necessarily let to tenants for the same rent, and, therefore, you come back to the point that we should require to have a complete reassessment. We have to remember that the Rent Restriction Act does bring its influence into the question of Schedule A valuation.
While one admits there are cases as between neighbour and neighbour where one person may be paying a higher contribution than another, the answer to that is we should have to have such a general revaluation that we could not proceed with the scheme at all. The scheme was brought in as a relief—a very welcome relief—to property-owners, and they accepted it On the basis that it was the best which could be done in a rough and ready way. I am prepared to admit there may be hard cases, or cases which appear to be hard, but on the other hand the fact that the payments are related to March, 1939, is not such a hardship as it would seem. If it is a hardship, I am afraid owners of property must tolerate it to the best of their ability, in view of the general advantages which flow to all property-owners, if their houses happen to be damaged. I, therefore, ask the House not to accept the Amendment.
The Minister has not quite grasped the whole of the situation. The House agreed to have valuation at a certain date. If additions are made, the Government say there will be increased contributions which no one can say is unfair. But where a building is not rendered uninhabitable by having, say, an annexe destroyed, it seems unfair that the owner should be called upon to contribute the full value. I am perfectly willing to give my right hon. and gallant Friend chapter and verse for a case in which the destruction was such that two floors of a building were rendered unusable and the rent of those two floors was £1,750 a year, and it seems unfair to say to the owner of that property that he shall pay the full amount of insurance in spite of the fact that he has lost this rent. I suggest that the owner of the property should be able to claim from the local authority a re-assessment of his property. It is not a question of a few pounds a year; it is a considerable sum which is involved, because the man had to pay not only last year and this year but for three more years or five years in all.
The Financial Secretary's answer was not quite watertight. I can follow the argument that, where the value payment is based upon the value in March, 1939, then, in a rough and ready scheme, it is only equitable to take the Schedule A basis of September, 1939. Mention was made by the Mover of the Amendment of up-revision. I gather from the reply that there is no upward revision of Schedule A assessments, on which War Damage Contribution can be based, but that all War Damage Contribution is based on the Schedule A assessment of September, 1939. Does the Financial Secretary mean that?
Yes, Sir; if there is no physical alteration. If there is physical alteration to a building, there can be an upward revaluation, but, if there is not, it cannot be done, except by general revaluation.
Let us take a case in which reconstruction took place before the Ministry of Works and Buildings imposed their limitation about doing repairs without their licence. Suppose it took place after the war broke out. If there is physical reconstruction, immediately there is reassessment of the property. My right hon. and gallant Friend says that in those circumstances the War Damage Commission want a bigger contribution based on the re-assessment of that reconstructed property. He also says, reverting to the War Damage Act, 1941, that the owner of such reconstructed property will not get a valuation payment, if his premises are demolished, on the reconstruction value, even though he is paying War Damage Contribution on a revised assessment. Let us consider what that means. The War Damage Commission want the best of both worlds. They want higher War Damage Contribution based on the higher Schedule A assessment, but they are not prepared to pay more than the March, 1939, value of the property.
What ever the merits of this Amendment may be—and I am not altogether in sympathy with the purposes of the Mover—this imposes a hardship on many owners of property. I agree, where we have a rough and ready method such as this, we must accept its implications. It will be very difficult, as was suggested, to pay contributions on the capital value of property—some hon. Members suggested on a former occasion taking fire insurance values as a basis. I suggest the Government ought to consider the point I have brought to the notice of my right hon. and gallant Friend, namely, that if the Amendment cannot be accepted, a higher rate of contribution should not be demanded merely because there happens to be a re-assessment when physical reconstruction has taken place. As to a general re-assessment, I would remind my right hon. and gallant Friend that under Section 21 of the Finance Act, 1930, the income and out-goings of properties are taken into account by Inspectors of Taxes and Income Tax is reduced according to the net profit shown. My right hon. and gallant Friend is not quite aright when he says there is no re-assessment, because re-assessment, although it is not called by that name, is taking place all the time by the Inland Revenue Department. My-purpose is to draw attention to the fact that owners of property who may have had their assessment altered after September, 1939, will have to pay higher rates of contribution, although they will not receive higher rates of compensation.
I beg to move, in page 13, line 32, at the end, to insert:
(3) In the application of this paragraph to Scotland, for the, references to the Housing Act, 1936, and to orders confirmed by the Minister of Health there shall be respectively substituted references to the Housing (Scotland) Act, 1930, and to orders confirmed by the Secretary of State:
Provided that for references to Section twenty-eight and to Sub-section (3) of Section thirty-six of the first mentioned Act there shall be respectively substituted references to Section sixty-one and Sub-section (2) of Section seventeen of the Housing (Scotland) Act, 1935.
(4) In the application of this paragraph to Northern Ireland for the references to the Housing Act, 1936, and the Minister of Health there shall be substituted respectively references to Part II of the Planning and Housing Act (Northern Ireland), 1931, and to the Ministry of Home Affairs for Northern Ireland, and the references to a compulsory purchase order shall not apply.
All these paragraphs granting relief from contribution in the case of condemned properties make the necessary adaptions in Scotland and Northern Ireland.
I beg to move in page 18, line 13, at the end, to insert:
22. Power of Commissioners of Crown Lands to apply capital for dealing with war damage.
This Amendment dealing with the powers of the Commissioners of Crown Lands is due to the fact that the Commissioners are not at present entitled to meet any expenses of repair to, or replacement of, buildings under their charge out of capital money. The Amendment enables them to do that with the consent of the Treasury.
I beg to move, in page 19, line 5, to leave out from "tenancy," to the end of line 9, and to insert:
granted for a term limited to expire, or subject to a right of the landlord to determine the tenancy, on, or at a time or within a period expiring not later than seven years after, any such occasion as the following, that is to say, the termination of any war in which His Majesty may be engaged or of hostilities in any such war or of the emergency mentioned in the Emergency Powers (Defence) Act, 1939, or any other Act of the present Parliament, the occurrence of any event likely to occur on or in connection with such termination, or any similar occasion in whatsoever words described.
We desire to make it clear that tenancies which will end with the duration of the war should be treated as short tenancies. We got it wrong the first time because we found that some people were making tenancies for the duration of the war and 99 years afterwards. Under our original definition that became a short tenancy. We think we have got it right now.