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Earl Russell: My Lords, perhaps I may make a clarification which I should have made earlier. I was not intending to refer to cases of people who live close to a borough boundary; I was more concerned with long-distance migration.

Baroness Blackstone: My Lords, I am grateful to the noble Earl for clarifying what he meant. Our admissions

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framework ensures that LEAs consult with neighbouring education authorities about their admission arrangements where pupils may be travelling rather longer distances across LEA boundaries. That consultation will enable the LEAs to work together to ensure that admission arrangements work in the best interests of all parents in areas affected by substantial cross-border movement of pupils.

The noble Earl also asked about the Rotherham judgment. Paragraph A.28 on page 18 of the draft code provides guidance on that judgment. Sixth-form admissions are covered in paragraph A.41. I believe that the noble Baroness, Lady Blatch, referred to that.

The noble Baroness and the noble Earl asked about interviews. The code makes it absolutely clear that interviews should only be conducted under limited circumstances. Church schools may carry out interviews but only in order to assess religious or denominational commitment. Boarding schools may carry out interviews to assess the suitability of a child for a boarding place. We recognise that there is a difficult balance to be struck.

Earl Russell: My Lords, I am most grateful to the noble Baroness for giving way again. Can she explain what evidence the church schools can get on commitment from an interview that they could not get from a letter from the local vicar?

Baroness Blackstone: My Lords, church schools requested that they should continue to be able to interview parents about denominational commitment and this, after considerable thought, the Government conceded. Clearly, this is something we shall want to monitor to see how it works in practice. The Churches do not take quite the same position as the church schools and have suggested that it is perhaps possible to find other ways of determining that commitment. For the time being we have recognised that this is an issue about which church schools feel strongly and have therefore made the concession.

I have tried to answer all the questions. I may have failed to succeed, but at this late hour perhaps it makes more sense if I read what the noble Earl and the noble Baroness said, and if there is anything I have failed to pick up on, perhaps I can write to them.

Baroness Blatch: My Lords, I shall be grateful if the noble Baroness writes with clarification on a number of points because many of the answers leave even more questions in the air.

The code itself is very ambiguous. The noble Baroness says she has read it carefully. I have read it very carefully too. There are a number of areas where there is confusion in the way it is written between the admissions authority and the local education authority. The noble Baroness referred to LEAs being the main body. There are many schools which will be their own admissions authority and they are headed up by head teachers and their staff. They will need to understand the complexities of this code of practice and all the regulations with which it is cross-referenced, just as the LEAs will. Any school within an LEA needs to

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understand that too. The idea that schools remain blithely ignorant and only the LEA understands is unacceptable. It is the school that has face-to-face contact with a parent who is aggrieved for one reason or another and has to give them an explanation. So the idea that schools will not need to understand or bother their pretty little heads about the code, nor indeed the parents, I am afraid I simply do not accept.

The noble Baroness also said that the LEAs set the relevant area. I accept that too. When a school such as the Oratory and many other schools in London take from a London-wide area--from as far away as Islington as I mentioned earlier--is the noble Baroness actually saying that there is no requirement on that school, which will be its own admissions authority, to consult parents in the area from which it has traditionally taken children; that is, from places as distant as north London and the extremes of the southern London boundary? It would be helpful if the noble Baroness could deal with that matter in the letter.

The noble Baroness said that the draft paper for appeals will not be out until after Easter and will not be ready for presentation to Parliament until June. That is awfully late. It leaves a matter of a few weeks for the schools and the education authority to get to grips with a very sensitive area of activity; that is, the appeals system, which could well be a factor they will be dealing with in September.

The code of practice was meant to make things easier and clearer for parents. I am afraid that it does not. Many of the answers we have heard tonight will not help them either.

My final question concerns interviews. I return to the prep department of the Oratory. Is the noble Baroness officially saying that it is deemed to be a selective school and, under the paragraph to which the noble Baroness referred me at the end of Annex A, any degree of selection that was deemed to be in place at the time of the passing of the Act shall continue? In other words, it is selective and therefore can continue to be selective and interview for selection. It would be helpful to have clarification. I think it is deemed to be a secondary school and therefore the primary school paragraphs will not apply to it.

The noble Baroness did not refer to the necessity for all schools to interview for suitability for entering into the sixth form and taking specific courses. It has been common practice throughout the country. I suspect it will be difficult to continue without it and it will be more pertinent in the context of the code for those schools which take sixth formers from outside their own school catchment area. That applies, of course, to many sixth forms because an increasing number of schools throughout the country over recent years have opted not to have a sixth form and therefore there have grown up sixth form colleges or a school with a sixth form that draws from a wider area. It would be helpful also to have some clarification of the processes of interviewing, selection and recruitment into what are ostensibly sixth form colleges but which, for the purposes of designation, are in fact schools.

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The noble Baroness did not refer to the one school in Hammersmith and Fulham which is well known to her department as having no legal basis. Perhaps she can say, first, what is the designation of that school and, secondly, how the code impacts on that school and that LEA.

I shall seek to withdraw my Motion, as is the convention, but I am extremely dissatisfied with the code. It was, I believe, dismissed lightly as not mattering to teachers and head teachers. I believe it will cause them great grief. We shall see that only when the code of practice is up and running. I beg leave to withdraw my Motion.

Motion, by leave, withdrawn.

Rating (Valuation) Bill

9.21 p.m.

Baroness Farrington of Ribbleton: My Lords, on behalf of my noble friend Lord Whitty, I beg to move that this Bill be now read a second time.

It is a short Bill which concerns the valuation of properties for national non-domestic rates. Its purpose is limited and concerns a matter of principle. I cannot however pretend that the subject matter is straightforward. That is reflected in the length of my opening speech, for which I apologise to the House.

The Bill is necessary following a decision of the Lands Tribunal in a rating valuation case in March 1998. I will refer to that case and its implications shortly. The Bill aims to overcome the effects of that decision by placing the law on rating valuations on a fair and equitable footing and ensuring parity of treatment between ratepayers. It makes explicit one of the key assumptions that underlie the valuations made for both the 1990 and 1995 rating lists. Just as importantly, it also clarifies the position with regard to future revaluations.

As noble Lords will be aware, annual rates bills are calculated by multiplying the rateable value by a figure--equivalent to a rate in the pound--set annually by the Government. It is therefore essential that these rateable values are assessed fairly. A full revaluation exercise is carried out every five years. Revaluations are carried out on the basis of a common valuation date; for example, the revaluation in 1995 was based on rental values on 1st April 1993. The 2000 revaluation is currently under way based on rental values on 1st April 1998.

As noble Lords will know, rateable values are the equivalent of a notional annual rent estimated for each rateable premises on the basis of a so-called "hypothetical tenancy". Until the introduction of national non-domestic rates in 1990, the basis on which this rent was estimated allowed for two different bases of valuation, depending on the type of property to be valued. The first (used for non-industrial property) was a valuation on the assumption that the landlord under the hypothetical tenancy would be responsible for keeping the property in repair. This was called valuation to "gross value" and deductions were made from the

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figure arrived at to reach the rateable value. It was established by case law that, when valuing to gross value, an assumption was made that the property was in a state of reasonable repair, disregarding any repairs which would be uneconomic to carry out. The majority of commercial properties were assessed on that basis.

The alternative basis of valuation was valuation to net annual value, where the tenant was deemed to be responsible for repairs. While there is no reported judgment which gives detailed consideration to the question whether the same assumption applies in net annual value cases, leading writers have given their opinion that there was nonetheless no necessary difference, and the same assumption had to be made; that is, that premises were to be deemed to be in a state of reasonable repair when estimating their annual value.

The rating hypothesis was altered in 1990 as a result of the Local Government Finance Act 1988 which was introduced by the previous government. Schedule 6 to the Act, which this Bill seeks to amend, requires the obligation for ongoing repairs to be assumed to be that of the tenant under the hypothetical tenancy, whereas under the previous system, as I have said, it was assumed to be the responsibility of the hypothetical landlord. This change reflected the general movement in the non-domestic property market towards leases where the tenant had such a repairing obligation. Thus it reflected the real world. It allowed valuers to use direct rental evidence obtained from leases without having to adjust that evidence to accord with the hypothesis, as happened prior to 1990.

However, it was not the then government's intention that the approach to valuation should change in respect of the assumption of a state of reasonable repair. Indeed, valuation officers continued to apply the primary assumption in valuing a property; namely, that it was in a state of reasonable repair.

However, the decision in the case of Benjamin v. Anston Properties given by the Lands Tribunal on 11th March 1998 was to the effect that this approach was wrong. The tribunal found instead that rating valuations should reflect the actual repair condition of the property on the valuation date. The decision in the Anston case would allow any ratepayer who considered it was to his advantage to challenge his valuation assessment in either or both of the 1990 and 1995 rating lists. The ratepayer would be able to cite the decision in Anston in support of an appeal on the grounds that the rateable value ascribed to his property in the rating list did not take account of the actual repair condition of the property. As a result, we believe that the decision potentially calls in to question a large proportion of the valuations carried out for both the 1990 and 1995 rating lists.

The Bill therefore seeks to underpin the rating valuations made for both of these 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 reasonable state of repair. This is clearly important not only to protect the integrity of the 1990 and 1995 rating lists but also to make the

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position absolutely clear in respect of the revaluation, already under way, which will take effect in new rating lists in April 2000.

In doing this, we are simply re-establishing the approach to valuation that was understood to exist before the rating hypothesis was changed in the 1988 Act. The Bill does this by making clear that it is to be assumed that the property is in a state of reasonable repair. However, there is an important and equitable exception to this assumption. The exception to the repair assumption applies where a reasonable landlord would consider the cost of carrying out those repairs to be uneconomic. This exception follows pre-1990 established case law. Our aim in introducing the Bill has been to treat disrepair since the 1990 revaluation in the same way as it was treated before 1990 under gross value; and in the same way as valuation officers have treated it in the valuations they have made since then. No more, and no less.

Having explained the provisions of the Bill, I should also record some of the representations that the Government have received about it. It has been clear since the Bill was introduced that the professional bodies representing rating surveyors--the Royal Institution of Chartered Surveyors, the Institute of Revenues, Rating and Valuation and the Rating Surveyors Association--had concerns that the Bill would go further than the Government had suggested. Officials from the Department of the Environment, Transport and the Regions and the Valuation Office Agency have met with representatives of these bodies. These representatives have made their main concerns quite plain. Officials have sought to reassure the wider profession that valuation practice will not be affected by this Bill.

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 that 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 that this would be innocuous, but I 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.

I also believe that it could be counter-productive to try to be too specific. As Mr. Charles Partridge, the Chairman of the Rating and Local Taxation Panel of the Royal Institution of Chartered Surveyors said in a letter of 8th February to the House of Commons standing committee, we could not hope in legislation to anticipate all the possible combinations of events which might need to be considered when valuing a property in disrepair. I agree with that view. It is far more sensible that we should rely on existing valuation practice, supported by the existing case law, which can, if necessary, be developed by the courts as and when

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difficult or marginal cases arise. The Valuation Office Agency is drawing these strands together in a practice note which it is discussing with the professional bodies.

To summarise, this short, technical Bill amends the Local Government Finance Act 1988 to ensure that property in England or Wales which is subject to non-domestic rating is valued consistently, on the assumption that it is in a state of reasonable repair. This assumption will apply whatever the actual condition of the property, except in relation to any repairs which it would be uneconomic for the landlord to carry out. The Bill ensures that rating valuations are made on a fair and consistent basis for all ratepayers and ensures the integrity of all valuations carried out under the Act of 1988.

Moved, That the Bill be now read a second time.--(Baroness Farrington of Ribbleton.)

9.32 p.m.

The Earl of Lytton: My Lords, I thank the noble Baroness for that introduction. As it happens, this is the third time this week that I have addressed the House. I call to mind the dictum of the late Al Capone. He said that once is happenstance, twice is coincidence and three times is enemy action.

I appreciate that it would normally have fallen to the noble Lord, Lord Whitty, to introduce this Bill. I wonder whether there is some reason that the noble Baroness finds herself in the front row of Pharaoh's army on this occasion. In speaking to this Bill I must declare a professional interest as a chartered surveyor, and one whose professional career included nearly seven years in the Inland Revenue Valuation Office where I dealt largely with rating. My current professional interest is so small it is hardly worth declaring. However, I differ on a number of the points made by the Minister. I wish to give a slightly more simplified explanation.

In the days when I started to deal with rating, non-industrial, commercial properties were, as the noble Baroness has said, valued to gross value, which was the rent reasonably to be expected from a hypothetical tenant, if that hypothetical landlord carried out all the repairs to maintain the property sufficiently to command that rent. The actual parties were disregarded. Normal running repairs and maintenance were also disregarded, but major disrepair, damage, functional and economic obsolescence were, however, taken into account. In the event of significant damage, substantial reconstruction, total destruction or other serious impact on the property assessments were often reduced, perhaps to a nominal £1. All this on the assumption that after a certain point the landlord would reduce the rent rather than carry out the repairs. The precedents are set and well established.

After the 1988 legislation, of course, gross value disappeared, as the noble Baroness said, and all properties were assessed directly to rateable value. The repair assumption changed from what the landlord could be expected to do and the rent he might reasonably anticipate to what the tenant would consider appropriate by way of repair, and thus his bid to a landlord. This moved matters much closer to the real world of

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commercial full repairing and insuring leases and was, I think, broadly welcomed. In each case the tenancy was assumed to run from year to year and any indications for rental values had to bear that timescale in mind. That happened both before and after the 1988 legislation.

While the landlord and the tenant were effectively hypothetical, the property to be valued is always undeniably real. It is to be valued as it stands; or to use the Latin doctrine rebus sic stantibus. It was never the rule--I was in post to administer it--that substantial repair was to be ignored. So I must take issue with the noble Baroness on some of her introductory remarks on this point.

All was fine until the case of Benjamin v. Anston Properties Limited which, as the noble Baroness said, came before the Lands Tribunal last year. This concerned an office building in Brighton with a substantial level of disrepair and where the remedial costs were materially greater than the estimated annual rental. It is worth noting what the Lands Tribunal president, Judge Marder QC, said. He described counsel for the valuation officer's proposition that the semi- derelict office building should be valued as if it were in good condition as,

    "extending the meaning of the word 'reasonably' to an unreasonable degree".

Following the plentiful and long-established case law, the Lands Tribunal--I think not surprisingly to the profession--found for the ratepayer. The valuation officer appealed but, presumably because of this Bill, withdrew it, finding a government with a large majority ready to take on the matter with perhaps less potential exposure to costs and greater certainty of outcome. I leave it to others as to whether it is proper to use parliamentary time in such circumstances.

Unfortunately the wording of the Bill makes the totality of its intentions unclear. I for one cannot understand it and I am supposed to know about these things. For the first time it splits the personality making the rental bid from the one making the assessment of cost benefit with regard to repairs. I see this as a departure from the 1990 position in which the test was what, on a dispassionate assessment, it was reasonable for the landlord to carry out, not what the landlord himself considered economically worthwhile, as the Bill suggests.

Not surprisingly, the professionals in this field started asking questions about the intentions behind the Bill. My impression is that the professionals are far from satisfied with what remains now in the Bill despite the discussions that they have had. But what is surprising is that the Government seem to have been unable to provide answers. All that they will say is that the Bill adopts the test which existed before 1990. But, of course, as I have demonstrated, it does no such thing.

Indeed, the Anston case was thought by most practitioners to have followed scrupulously the established precedents and that it made no new law. The fact that the Valuation Office agency has persuaded the Government to follow the legislative route makes it pretty clear to me that what is intended is in fact a departure from the established position. So there is a

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dichotomy between what the Government claim they are doing and what the rather novel wording of Clause 1 may actually achieve.

The key to all this is to be found in the Second Reading debate in another place, when the Minister for Local Government and Housing said it was an assumption that,

    "other than in extreme cases ... the property is, and remains, in a state of reasonable repair".--[Official Report, Commons, 11/1/99; col. 58.]
That is a factually incorrect statement of precedent and practice; and the statement has not been totally withdrawn.

Amendments were proposed in another place, first, in an attempt to clarify the wording so that it indeed goes no further than the traditional understanding of the repairing obligation; and secondly, to place on the face of the Bill an affirmation that where a property is in material disrepair, that will, as hitherto, continue to be taken into account. The Government have consistently rejected such amendments. Their responses have simply skirted round the issues and give little confidence.

Having given several conflicting explanations, at Third Reading in another place, the Minister seemed to acknowledge the lack of clarity. She announced (at col. 501 of Hansard) that the Valuation Office agency had drafted a practice note on the approach to valuation to be adopted, as mentioned by the noble Baroness.

This is a classic case of delegating what should be clear in primary legislation to a non-statutory document which could readily be revised. The fear is that instead of taking the actual state of repair into account, this may be part of a move to an assumed or deemed state of repair. The effect that that could have on run-down areas awaiting redevelopment readily brings to mind the scandals that I well remember of rooms being removed from industrial buildings in the West Midlands to avoid rating liability under the 1974 surcharge provisions. Part of the reason why there is such close scrutiny of the valuation effects of the state of repair is that there is no longer a general exemption from paying rates on empty commercial property. In the context of a property tax, it must make for the grossest form of inequity and injustice if the real world value of the property in its actual state is set aside in favour of some administratively convenient assumption.

At the small business end of the scale, would a property such as the lemonade factory in Malton flooded by the River Derwent in the past day or two benefit from a substantially reduced assessment in future? Or is it the Government's intention that it should be deemed to have been repaired? We should be told what the effects will be for serious damage which will ultimately be repaired.

I gave the Minister prior notice of my intention to raise two points that are fundamentally at issue. First, there should be a clear, unequivocal and unambiguous statement as to the precise intentions and the effect on valuation for rating purposes of the repairs issue--and that should be on the face of the Bill. Secondly, there should be an explanation of the status, if any, of the practice note and the reasons behind its creation. This is

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not a question of attempting to define "reasonable", but of retaining a body of existing case law which is already well-established.

As it stands, the Bill cannot be allowed to become law without amendment. Its wording is unclear; its intentions are opaque; and, in adopting a practice note to explain its shortcomings, it incorporates an improper procedure which could circumvent necessary parliamentary scrutiny. I hope that the Delegated Powers and Deregulation Committee will look very carefully at this matter. Will the Minister be kind enough to place a copy of the practice note in the Library?

I do not accept that there will be a flood of appeals arising out of the Anston case. Where is the evidence?

While I do not believe that the Bill should ever have come before Parliament, I shall seek to amend it constructively, to give it the clarity that has always been the hallmark of its legislative parentage. Meanwhile, I look forward to the Minister's reply.

9.43 p.m.

Baroness Miller of Chilthorne Domer: My Lords, I speak on behalf of my noble friend Lady Hamwee, who is unable to be present. I cannot bring her expertise to the Bill. I am grateful to the noble Lord for saying that he does not understand a great deal of the Bill's content. I struggled hard with it--particularly when I arrived at at least three assumptions in one section and a large number of hypothetical points. It seems somewhat to ignore the real world.

My main worry is that in the real world those who will suffer most from this legislation will be on the margins of towns, where regeneration should and could be taking place. The Bill does not take any account of repairs which will be undertaken but which for some reason the landlord, though in best faith, is unable to undertake at the time. Such properties will not be readily bought with a view to repairing them, as this approach to valuation will make them more uneconomic. The Bill also fails to differentiate between a landlord who has chosen to let his building fall into disrepair and one who has done so other than by choice.

The noble Earl, Lord Lytton, chose the real life example of flooding, something that affects us in Somerset. I can imagine one of our Somerset towns in bad need of regeneration and under frequent threat of flooding. People would not touch commercial properties there with a barge pole if this Bill came into force. I should be grateful for an explanation of exactly how, in the non-hypothetical, non-assumption world of difficult-to-let properties and difficult-to-regenerate towns this Bill can possibly bring any benefit.

9.45 p.m.

The Earl of Courtown: My Lords, I thank the Minister for her description of the Bill. We should all be aware of what the noble Earl, Lord Lytton, said, with his great experience in such matters from his time in the Valuation Office. There were also important points made by the noble Baroness, Lady Miller.

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As other noble Lords have said, the Bill arises from the case of Benjamin v. Anston Properties Limited, where the matter arose of whether the valuer should take into account the state of repair of the property. The noble Earl, Lord Lytton, mentioned the words of the president of the Lands Tribunal and I shall not go over it again. However, I feel that the Bill could create further confusion and litigation.

Many in the profession were surprised that neither the Court of Appeal nor the House of Lords had been asked to give its opinion and were also surprised at the haste of legislating without consultation. Can the Minister tell me why that was the case, particularly with a subject so complex and with so many experts available both in the Valuation Office and in the private sector?

In the Bill we also come across the word "reasonable" in two areas: "reasonable repair" and "reasonable landlord". That introduces a subjective measure into the valuation process. Surely some definition is required. I cannot see why the Minister said that it would be dangerous. I understand that the practice notes will have guidance on the matter but, as the noble Earl said, they will have no standing in law.

Having read Hansard in the other place, it appears to me that three options have been put forward by Her Majesty's Government: first, to restore the law to what it was before; secondly, to return it to what the Valuation Office thought it was before Anston; or, thirdly, to try to get the law back to what it was before the 1990 revaluation. Which option are Her Majesty's Government taking? Can the Minister tell me what was wrong with the decision in Anston?

Another area that has raised concern is the question of temporary disrepair due to some physical problem, mentioned by the noble Earl and the noble Baroness, for example, from fire or some other natural disaster. It does not appear from the Bill, notwithstanding what the Minister said, that this has been taken into account. The only option available would be to take the property out of rating, which may not be desirable. For example, a fire may destroy only a small part of a factory but could still render the entire building unusable.

There is concern for the plight of the small ratepayer in secondary or tertiary locations, perhaps in starter units, where the state of repair would not necessarily be reasonable. But for that type of property it would actually be a reasonable state of repair. It may be that this is how the Valuation Office will interpret the legislation, but there is nothing in the Bill to give the ratepayers this reassurance.

Many interesting points have been raised in the debate and I am sure that there are a number of issues that we will debate in greater detail during the Committee stage. I wish to underline to the Minister that these are not political issues that we are debating but areas of concern that must be put right to enable the Bill to work properly and also to enable the property professions to interpret the legislation. What the industry needs is legislation that gives certainty, simplicity and consistency. It is to be hoped that before this Bill finishes its passage through this House we shall have achieved that aim.

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9.49 p.m.

Baroness Farrington of Ribbleton: My Lords, as I said to the House at the beginning of our debate, the Rating (Valuation) Bill is a short Bill that encompasses a simple principle. That principle is that in valuing a property for rating purposes the property is assumed to be in a state of reasonable repair. This assumption will apply whatever the actual condition of the property, except in relation to any repairs which would be uneconomic. As has become clear this evening, while the principle is simple the background to this Bill and rating valuations in general is far from that. Noble Lords have assisted me very much in making that point.

The Bill puts the law on rating valuations back to that on which the officers of the Valuation Office agency have prepared all valuations for both the 1990 and 1995 lists, and on the basis of which work on the 2000 revaluation has already begun. 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. The precedents are well-established. If we tried to redefine the term "reasonable repair" on the face of the Bill we would run the significant risk of introducing an 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.

Reference was made by the noble Earl, Lord Lytton, and others to the position following the judgment in Anston. I am not qualified to say what valuers believed or did not believe the 1988 Act to mean, but the issue does not seem as clear cut as they now make out. Certainly, the Valuation Office agency took a contrary view. The leading textbook on rating Ryde on Rating and the Council Tax also clearly took the view that properties should be valued on a common repair assumption.

While it is interesting to debate who thought what and when, it is ultimately irrelevant. What matters is that valuation officers, who have the statutory duty to compile and maintain an accurate rating list, have actually carried out valuations for both the 1990 and 1995 rating lists on the general assumption that a property is in a state of reasonable repair. It is the integrity of those valuations and those being undertaken for the 2000 rating list that this Bill seeks to defend.

It would have been open to the Valuation Office agency to appeal against the Lands Tribunal decision in Benjamin v. Anston or pursue another case to appeal on that point. However, we saw no merit in the delay that would be necessary if the point were to be pursued through the higher courts. The practical business of enabling the current revaluation to proceed on a clearly established footing, as well as underpinning the existing lists, is of the utmost importance. That is why we brought forward this Bill. Were the Bill not enacted the rating system would be unfair as between individual ratepayers.

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The value of non-domestic property on which the annual rate liability is based is, unless there is a material change of circumstances, assessed only once every five years. Fairness dictates that at that time two identical properties in the same location should be given the same rateable value and, hence, should have the same rates liability over the following five years. But two buildings--identical in every other respect--may, on the day on which they are assessed for rates, be in different states of repair. Indeed, it is almost certain that they will be. Most commercial property is let on the basis that the occupier will maintain the property in a reasonable condition. And as noble Lords know from their own property, all buildings need repairing simply to maintain their condition.

Yet, as will be equally clear to noble Lords, the timing of those repairs and the speed with which those works are done depends on the individual decisions of the person occupying the property. It is likely, therefore--indeed, almost certain--that two identical properties in good repair on the day on which they were let to different tenants will be in more or less different states of repair on any later date, including the common date every five years on which the properties have their rateable values assessed for rating purposes.

That being so, if rateable values were based on the actual repair condition of the property on a single, arbitrarily chosen date, the two properties would not have identical rates bills. They would have different rates bills over that five year period unless the rateable value was adjusted to reflect changes in the repair condition of the property.

In bringing the Bill before the House, we are simply seeking to re-establish the approach to valuation that was understood to exist before the rating hypothesis was changed in the 1988 Act. Our aim in introducing the Bill has been to treat disrepair since 1990 in the same way as it was treated before 1990 under the gross value system of rating valuation and in the same way as valuation officers have treated it in the valuations they have made since then. No more and no less. Existing valuations will therefore not be affected.

The noble Earl, Lord Lytton, referred to his entering the fray as, perhaps, enemy action. Far from viewing his contribution as enemy action, I found his questions interesting and instructive. I will refer in conclusion to the issues to which I may not have given an adequate reply.

I am concerned that the noble Earl remains unclear about the purpose of the Bill. The purpose of the Bill is straightforward and specific. It is to reverse the decision in the Anston Properties case and secure that the valuations contained in past, present and future rating lists are not subject to challenge on the basis of the analysis of the Lands Tribunal in that decision. In other words, it is to underpin the basis of the existing rating lists and those which are now being compiled to take effect next year; and to enact expressly in legislation what was merely assumed by those promoting the Bill to be the law at the time when the Local Government Finance Act 1988 was passed.

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The provisions of the Bill will therefore apply for the purposes of new rating lists which will take effect on 1st April 2000, and retrospectively for those of the 1990 and 1995 lists. In most cases, this will have no effect on the rate payable on property entered in the 1990 and 1995 lists, although ratepayers who challenged their valuations before the decision in Anston are safeguarded by the Bill.

The noble Earl asked whether it would be possible to place in the Library a copy of the practice note. The answer is yes. He is right to say that, of itself, the VOA's practice note has no force in law. I hope that I have not suggested otherwise. It will be what it says it is; a practice note. It is not intended to be a substitute for legislation, but to do a different job altogether; to set out how the VOA proposes that its valuation officers will translate the legislation into practice.

Legislation cannot and should not spell out everything, particularly the detail of how it is proposed to be implemented. That is all the more true in a field such as non-domestic rating in which the law as a whole is a vast iceberg of which the legislation is only the tip and there is a great deal of case law below the water-line.

Nor will the practice note be the product of the VOA's fancy or produced in a vacuum. It will deal with the valuation of properties and in particular will address the treatment of the types of cases about which the professions are most concerned. It will draw on existing case law in support of the approaches it proposes should be taken in respect of each one, approaches which will restate the ways in which those properties are treated now. It would be almost impossible to draft legislation which will deal adequately with every approach, as I am sure the noble Earl would agree. The note offers a sensible way forward and the VOA is at present consulting the professional bodies on content. As I have explained, the Government's intention is to reverse the effect of the decision in the Anston Properties case.

The noble Earl, Lord Lytton, and the noble Baroness, Lady Miller, referred to, for example, the effect of a flood. If a severe storm or any other external force renders a property incapable of beneficial use, the rating assessment is removed from the rating list until such time as the necessary works have been carried out to enable the property to be used again. The Bill will not affect that position. If a property is flooded for a short time during exceptionally heavy rain, for example, it is unlikely the damage will be sufficient to affect its rating assessment.

We believe that the Bill will place the law on rating valuations on a fair and equitable footing and make clear the assumptions which underlie those valuations. It is a necessary and worthwhile measure consistent with good administration and, above all, it will ensure fair treatment and a fair tax assessment for all ratepayers.

I thank noble Lords who have taken part in the debate. In particular, I apologise to the noble Earl, Lord Courtown, for not having the opportunity to reply to some of the detailed points which he raised. I shall make certain that Hansard is read very carefully to ensure that we write on any points which have been

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raised. Further, I am only too happy to offer a meeting with officials with all of your Lordships who have taken part in this Second Reading debate before we reach Committee stage. As the noble Earl said, this is not a party political issue. Anything which can be done to ensure that we understand fully the position from which we each speak will no doubt be helpful. I look forward to having the opportunity to discuss issues and I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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