Valuation Not to Be Increased Because of Installation of Central Heating

Local Government Bill – in the House of Commons at 12:00 am on 22nd January 1974.

Alert me about debates like this

' No proposal may be made in the case of hereditament which is a dwellinghouse or mixed hereditament within the meaning of section 48 of the principal Act for an increase in the gross value by reason of the making of structural alterations on or after 1st April 1974 which are necessary only for the purpose of installing a system of providing heating in two or more rooms in the hereditament '.—[Mr. Denis Howell.]

Brought up, and read the First time.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

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

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

On a point of order, Mr. Deputy Speaker. Am I right in saying that we shall be debating another new clause and amendments with this?

Mr. Deputy Speaker:

Yes. We shall be taking the following: New Clause 15—Valuation lists not to be altered on account of structural alterations for purposes of fire protection

and Amendments No. 71, in Clause 20, page 21, line 30, at end insert: ' (aa) If and so far as such alterations are connected with the installation of sprinkler fire protection devices or any equipment or any alterations which are undertaken to reduce the fire risks of a building, or '. and No. 72, in page 21, line 30, at end insert: ' (aa) If a building is extended to provide for the garaging of a private vehicle, and such a structure is totally enclosed, where such a facility did not previously exist, or '.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

We must now turn our attention to the question of the installation of central heating and the effect of that on the rateable value of domestic residences. I have an understanding of the reason the Government put Clause 20 into this Bill.

The effect of that Clause is that any householder who makes a structural alteration to his house to provide for central heating on or after 1st April this year will not have its rateable value automatically increased on that account, but it will occur at the next general revaluation.

The Government have included Clause 20 because there is tremendous dissatisfaction among thousands of householders, who says, "We are going to spend part of our incomes on improving our houses by putting in central heating which is to the benefit of our families and in the interests of the country as a whole in a small but essential manner. What thanks do we get from the community for improving our houses by putting in central heating? The Inland Revenue say, ' Because you have improved your houses in this respect the rateable values will be increased and it will cost you more in local rates or taxes.'"

There has been considerable concern about this matter. Thankfully, many people are putting central heating into their houses to give themselves additional comfort. I suppose that logically they would argue, "Why should we be taxed when we spend our incomes on sensible things like installing central heating when, if we had frittered our incomes away in some other form, we would not be taxed upon it?" That is a reasonable attitude.

The Government have accepted that argument—I am with them ; I do not quarrel with them about it—until the next general revaluation. But that is grossly unfair to householders who have central heating in their houses and whose valuations have been increased.

In Clause 20 the Government are saying, "We do not want to impose an additional rating burden upon those who have installed and paid for central heating at this stage. We will do it later." But, by virtue of that clause, they are creating an extremely privileged position for those who go in for central heating as a new venture on or after 1st April this year. I do not think that in equity that can be defended or justified.

If it is wrong for householders who newly install central heating to suffer an additional tax burden by increasing their rateable values, it must be wrong for those who have already installed and paid for central heating. We seek to remedy that situation in the new clause.

I am not sure that we have got it right. The Minister appears to indicate some doubt about it. We thought that we had it right in this intricate matter, but on re-reading and with the benefit of further advice it would appear that we have not succeeded in achieving our aim. Nevertheless, the new clause provides the House with an opportunity to consider the principles involved.

There are different forms of central heating. It seems extraordinary—this is at the heart of the unfairness of the system—that if someone installs a gas hot-air system which requires a structural alteration in his house—I have such a system in my house—his rateable value is adjusted and increased. However, if he installs a form of central heating which requires only the addition of electric plugs in bedrooms into which a night storage heating system can be plugged, that does not bring him within the ambit of increased rateable value and taxation.

Not only is it unfair that central heating should be taken into account but it is doubly unfair for the people who are penalised because they have purchased one form of central heating as distinct from another. People should be encouraged to go in for central heating because it is in the country's interest that they should. It could probably be argued that many diseases such as asthma, bronchitis and so on would be reduced if central heating was more widespread. I have heard bronchitis described as a typically British disease, and many medical men think that the introduction of more central heating would be a service to health. Central heating should be totally removed from any calculation of the valuation of a house. It is only there because of the archaic valuation laws. They base the rateable value on the notional or hypothetical rent which a house could fetch if let on the open market and it is argued that if a house has central heating that rent will be higher.

That adds up to the ludicrous situation we now have and the best answer is to instruct the Inland Revenue totally to disregard central heating in determining the rateable value of domestic properties. We hope that is what our clause will achieve. We shall listen with interest to what the Minister says. However, whether the clause is properly drafted or not, the important thing is that we should carry the Government with us in our broad intentions. If the amendment is not quite right I hope that the Government will take it over and produce a form of wording which achieves what I am sure we all want.

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

The House will be grateful to the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) for raising these points in his speech. I have a great deal of sympathy for his clause. The hon. Member has already pointed out some of the anomalies, if not absurdities, of the existing rating system. Many hon. Members will agree with me that the rating system as it affects domestic hereditaments at least is illogical, unfair and out of date.

I was interested to hear my right hon. Friend's reply in the last debate when he seemed to suggest that he was not in favour of the existing rating system but that no adequate alternative had been found and that in any case this was not the time to put forward a radical alteration to the system when the structure of local government was being changed.

The clause standing in my name is self-explanatory. It seeks to provide that Where any building or structure is altered, adapted or extended for the purpose of reducing fire risk, the valuation of such a building or structure for rating purposes shall not be altered, in respect of such alterations, adaptations or extensions". I need not remind the House of the need to minimise fire risk in all types of buildings. I need hardly remind the House of the tremendous increase in the cost of damage to property and the increased number of fire outbreaks in the past few years. Amendment No. 71 relates new Clause 15 to domestic or mixed hereditaments. I need not explain that further, except to say that whereas hon. Members have spoken about central heating, for example, I have in mind fire sprinkler units and fire doors to minimise fire risks.

11.15 p.m.

Amendment No. 72 relates to the garaging of private vehicles. It is for an environmental reason that I ask that garages attached to domestic hereditaments should be excluded from rating valuation. It is a good thing for a person, when possible, to build a totally enclosed garage for the garaging of a private vehicle. We need only to look around council or private housing estates to see how the environment can be adversely affected by the rows of cars which are left on the roads or in the byways.

If we can improve the environmental scene by encouraging people to build garages where practicable, it is surely wrong to penalise those people by uprating the valuation of their properties. The Under-Secretary of State for the Environment, my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), mentioned what the Government have done in Clause 20 when speaking in Committee on the motion "That the Clause stand part of the Bill." He said that when minor alterations are effected to domestic or mixed hereditaments there will be no revaluation of the property, at least between valuations. My hon. Friend instanced specifically a garage. If under the proposed Bill somebody extends a house by building a garage on to it, his rating valuation will not increase until the next general valuation.

That is appreciated, but, with great respect, it is unfair that the property should be valued upwards at any time and in any case I make the plea to my hon. Friend the Under-Secretary of State for the Environment, the hon. Member for Hornsey (Mr. Rossi), who I very much welcome in his new capacity, that the Government should keep an open mind on this matter. As the hon. Member for Small Heath said, it is inequitable and it causes a lot of bitterness among millions of domestic ratepayers.

However precise the Bill may be from a legal or technical viewpoint, surely it is right that we should try to amend legislation in this House so as to make it to be seen to be fair to all the people. I believe these new clauses and amendments would help to do that.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I am sure that all hon. Members are fully aware of the tragic loss of life which has occurred in hotels from fire outbreaks in recent times. Hon. Members may not be so aware of the relatively high cost which can be incurred by adopting basic fire prevention provisions. Such provisions for an hotel may well consist of a second escape and, if it is a small hotel, such an escape is often taken over the roof, thereby increasing protection by providing an alternative route. Unfortunately the cost of such work tends to increase every year. I am sure that hon. Members would not wish to give any discouragement to hoteliers, and particularly small hoteliers, in carrying out this kind of work.

Many of the hotels affected are in scheduled premises or in conservation areas so that there should not be any question of the premises being rebuilt. In many cases, I know of a number in my constituency, the bulk of the accommodation in these residential hotels is taken up by retired persons, people who by reason of their age are most likely to be at risk in the event of a fire. If by carrying out the necessary fire precautions all that the owner gets is an increase on his rate bill we should be, most unhappily, discouraging owners from carrying out such necessary and desirable works.

Photo of Mr Robert Adley Mr Robert Adley , Bristol North East

I support what my hon. Friend the Member for Hove (Mr. Sainsbury) has said. I declare an interest in a large hotel company, not affected in any way by the Fire Precautions Act, and confirm what my hon. Friend has said—and what was said most eloquently by his predecessor the late Mr. Martin Maddan—that the passage of that Act has placed and is placing severe burdens upon hotel owners, particularly owners of small hotels and boarding houses. I hope that the Government will take note of the points made.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

The hon. Member for Birmingham, Small Heath (Mr. Denis Howell) and my hon. Friends the Members for Hove (Mr. Sainsbury) and Bristol, North-East (Mr. Adley) have spoken persuasively on this matter and it is difficult not to have sympathy with the points they have made. It is therefore with some regret that I have to advise the House that I shall be asking my hon. and right hon. Friends to resist the new Clause and the amendments. This is principally because the new clauses do not carry the matter much beyond the stage reached in Clause 20. The hon. Member for Small Heath has referred to Clause 20, the intention of which is to stop the irritation which now exists when someone carries out structural alterations to their property—be it to install central heating or to build a small garage—and then finds the district valuer coming along with a proposal to increase the rateable value.

Clause 20 is meant to stop that happening between valuations. When the revaluation occurs the district valuer has to carry out his duty and value the property as it is. The criteria is: what is the notional rental value of that property? That criteria is of value in as much as it differentiates between the owner of one property and another, determining the amount of rates one occupier shall pay upon the amenities and facilities he is enjoying. For example, a house with two bedrooms is worth less than a house with three. The person with a larger house has a higher rateable value. By the same criteria the house with central heating is worth more than a house which does not have it.

In so far as one has to have means of determining how this form of tax shall be related to the value of the property the district valuer has to take into account the various amenities that one house has against another when determining rateable values. It is being suggested by the hon. Member for Small Heath that we should breach that. He says that specifically for central heating.

The moment that it is done for one thing, where does one draw the line? Is there any reason why one should not say that, having allowed it for central heating, it should not be done for the installation of a bathroom, or for the installation of an inside toilet where previously the toilet was outside, or for building an additonal bedroom or a garage, as my hon. Friend the Member for Birmingham, Handsworth (Mr. Sydney Chapman) said? That is the consideration that has to be borne in mind, and for that reason, with the rating system as it is, it is difficult, if not impossible, to accept a breach of a principle that can be continued in all directions without limit once that is accepted.

The new clauses do not do what the hon. Member for Small Heath said they do. First, new Clause 8 says that "No proposal may be made". Unfortunately for the hon. Gentleman, the term "proposal" is a term of art relating to an alteration to a valuation list in between general valuations. All that the hon. Gentleman is saying is what Clause 20 says, namely, that for the future the installation of central heating cannot bring about an alteration in the valuation in between general valuations.

If, however, one were to take the hon. Gentleman's proposition to its logical conclusion, one would find difficulty in seeing why he should have in the new clause the words "after 1st April 1974", because if the hon. Gentleman is arguing that central heating should be disregarded altogether at a general valuation, why should those who have carried out all these alterations at some time in the past be penalised because of a given date? The hon. Gentleman is repeating the words of Clause 20 and is merely positing what that clause says. The new clause carries the House not one whit further. It is superfluous, and for that reason I must invite the House to reject it.

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

I have followed my hon. Friend's argument closely. Does he, on reflection, think that there may be a difference between my new clause and that tabled by the hon. Member for Birmingham, Small Heath (Mr. Denis Howell), in that I am talking about adaptations or devices to reduce fire risks, and that is very different from the amenities of a building?

Secondly, would my hon. Friend care to deal with my argument, which I put sincerly, about the environmental point of view of a garage? My hon. Friend is not saying, is he, that a house is revalued upwards if it has more trees in the garden than another property nearby? Surely there is an environmental difference that is worthy of consideration.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

I was about to come to new Clause 15 and the amendments. That clause suffers from the same defect as new Clause 8, in that it uses the words "valuation…shall not be altered". That can only mean a proposal, because no alteration is taking place by revaluation. A new exercise is taking place ; in other words, the valuation of the property at that date. When my hon. Friend speaks of alterations, what he is speaking of is the period in between valuations, and Clause 20 already deals with that specific situation.

Photo of Mr Robert Adley Mr Robert Adley , Bristol North East

With regard to new Clause 15, can my hon. Friend confirm that it is not his impression that any work that is required to be done under the Fire Precautions Act and to meet fire risks in accordance with that clause can add to the value of the property if it is an old converted house?

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

It could conceivably make it more attractive from a rental point of view, and the moment it does that the question of valuation for rating purposes immediately arises.

On the question of fire and structural alterations, I think that if my hon. Friends refer to Clause 20 they will see that subsection (1)(b) speaks of structural alterations within a limit to be prescribed by order under that subsection. It is intended that the limit be £30. In other words, structural alterations which do not increase the rateable value of the property by more than £30 will escape under Clause 20 between the valuation periods. This, it is felt, should cover——

11.30 p.m.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I am sorry to interrupt my hon. Friend, but I assure him that it is not possible to provide one fire door for £30. That is totally inadequate. To enclose the staircase of, say, the average four-storey converted residence which is not a residential hotel is likely to cost a minimum of £200–£300.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

Perhaps I did not make myself clear. I was not referring to the cost of works carried out. I was speaking of the effect that that work had on the rateable value. I am talking only of rateable value, of the order of a £30 increase. It could be that several thousand pounds worth of work is carried out before there is an increase of as much as £30 in the rateable value. This provision will cover both fire precautions—sprinklers—and garages. A double garage might take it outside £30—one cannot say—but the Government's intention is very much to cover the points made by my hon. Friends.

There is one outstanding point. My hon. Friend the Member for Hands-worth in his new Clause 15 has gone beyond the intention of the Bill, which was to restrict these benefits to dwelling-houses. My hon. Friend wants to extend them to commercial premises. I doubt very much whether his proposal would be much of an incentive to a commercial firm. It would want to install fire safety to preserve its building and its stock, and a small adjustment in rateable value is hardly of significance in that kind of thing.

For these reasons, I invite the House to reject the new clauses and the amendments.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

I should like first to congratulate the hon. Member for Hornsey (Mr. Rossi) on making what I think has been his maiden speech since his elevation to the position of Under-Secretary of State for the Environment.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

That is very kind of the hon. Member, but might I say that I was caught on the Consolidated Fund Bill and was here at about 8 a.m. making my first speech in my present office. But there was hardly anyone here to hear me.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

I am sorry that I was not able to offer the hon. Gentleman my congratulations on that occasion but I do so now. I am delighted to know that a period of service in the Whips' Office obviously does not dim the eloquence of Members who suffer that fate. We are glad to have had such a clear and helpful exposition from the hon. Gentleman.

I must tell the hon. Gentleman, however, that as he went through the reasons one by one why my new clause and that of the hon. Member for Birmingham, Handsworth (Mr. Sydney Chapman) should be rejected, all he did was to prove to the House the complete absurdity of our present rating system. Therefore, his eloquence in that sense will perhaps take us a step nearer the determination of both sides at some time to deal adequately with the matter and put it right. I accept, however, from the hon. Gentleman that, as long as the existing ridiculous system is with us, basing rateable values on the notional lettable value of houses, these anomalies will continue to plague the country and annoy ratepayers generally.

The hon. Gentleman is quite right in saying that the effect of our new clause would have been to remove liability for increased rateable value for all who install rateable value on and after 1st April by leaving the anomaly for those who have already installed rateable value. That is exactly the anomaly I was seeking to remove. Having thus been assured by the hon. Gentleman that the clause would not achieve all that I would have wished to achieve, and having, I hope, initiated a very helpful debate, I beg to ask leave to withdraw the motion.

Motion and clause, by leave withdrawn.

Further consideration of the Bill, as amended, adjourned.—[Mr. Graham Page.]

Bill, as amended (in the Standing Committee), to be further considered tomorrow.