the outlook for rating . by B A Williams , F.I.M.T.A , F.S.A.A , A.R.V.A . if we want to retain a value of land and buildings as the criterion by which local expenditure is apportioned amongst the local inhabitants , why should we not forget rental values and use , instead , capital values ? this is the highly interesting suggestion put forward in this article , supported by arguments based on the increasing difficulty and unreality of present methods and on advantages claimed for the alternative proposal . in 1601 the churchwardens and overseers of every parish were charged with the duty of setting the poor to work and of relieving those unable to work . to provide the wherewithal for the performance of this duty they were empowered to tax every inhabitant and occupier of lands . rental values . it was not until 1836 that the basis of assessment was defined by statute . the parochial assessments act of that year stated that all rates were to be based on the rent at which rateable hereditaments might reasonably be expected to let from year to year . this basis has continued to apply ever since , although some of the devices needed to achieve the desired end have amply justified the classification of the valuer &apos;s work as an art rather than as a science . thus we have the contractor &apos;s theory , the profits basis , and other tortuous methods which often appear to the uninitiated merely to provide a pseudo-scientific way of justifying valuations preconceived on more mundane bases . nevertheless the number of cases in which assessments could not be related reasonably directly to factual rental evidence has so far not been so great as to render the whole system suspect , although since the war it has been found necessary to resort to 1939 values in order to maintain this position . admittedly extensive rent control has severely limited the number of true rents available to the valuer , but the conception of the hypothetical tenant has enabled the limitations to be overcome . immediate problems . the time has now arrived when 1939 values can have no possible relevance to those of the 1960s . if we are to have another revaluation , the problem must be faced of determining up-to-date values for dwellings as well as for non-residential properties . especially is this so because over 86 per cent of the rateable properties in England and Wales are dwellings . the extent of the problem is shown by the figures disclosed on February 23 , 1959 , during the second reading of the rating and valuation bill which postponed the next revaluation until 1963 : - it was stated that , in order to undertake the work of revaluation with confidence , the inland revenue valuation office needed satisfactory rental evidence from a sample of 10 per cent of the total dwellings . that percentage , it was thought , might be achieved in time for 1963 . no doubt it will be in some areas and for some types of property , but the view would seem to be rather too sanguine so far as many areas are concerned - for example where there is a large proportion of relatively modern houses . whether this will prove to be the case is , however , only a matter of short-term interest . the important question is whether there will be sufficient rental evidence to enable any subsequent revaluations to be carried out . what are the prospects of this ? future problems . since 1939 practically no new houses have been built for letting except by public bodies and the continuing growth of the building society movement , hampered though it has been by limited available funds , indicates that owner-occupation is what most people prefer ( or are forced into ) . the February 1961 white paper on housing in England and Wales ( Cmd 1290 ) sums up the prospects when it says : - house purchase , stimulated by a higher average standard of living than this country has ever before enjoyed , and assisted financially by the house purchase and housing act of 1959 , is spreading rapidly , and the urge for home-ownership shows no sign of diminishing . the government &apos;s latest intention is to encourage the provision of more houses to let . the white paper says : - as an experiment the government propose to make arrangements under which money will be advanced to approved non-profit-making housing associations which are prepared to build houses to let at economic rents . they regard this as essentially a pump-priming operation and hope that it will serve to show the way to the investment of private capital once again in building houses to let . the first part of this idea will no doubt encourage non-profit-making enterprises to produce some houses to let , but the rents to be charged , as in the case of rents of local authority houses , are unlikely to provide an appropriate basis for rating assessments . if there is no profit motive on the part of the landlord such rents can not be expected to equal the figure at which the hypothetical landlord and tenant would &amp;hellip; come to terms &amp;hellip; as a result of the higgling of the market . ( Robinson case , 1937 . ) as a pump-priming operation the potential of the government &apos;s proposals is more uncertain . no doubt the relaxation of rent restrictions will to some extent encourage the building of houses to let although , for many reasons , the old idea of investing one &apos;s money in this sort of security is , and will probably remain , unfashionable . the present trend is towards owner-occupied dwellings , leaving only local authorities and non-profit-making associations to provide for those unable or unwilling to buy their own houses . if the trend continues the time must come when the remnant of privately let houses will be insufficient to provide a basis for ascertaining standards of rents such as are needed to assess rateable values which comply with the existing definition . it seems reasonable to suppose that the stage will soon be reached at which only flats and a minority of smaller houses will provide any acceptable rental evidence . even in the rents of these properties a scarcity element must be expected . whatever criticisms may be levelled against rating as the means of local taxation no better alternative has so far found general acceptance . if local government is to retain any semblance of autonomy ( and as a bulwark of democracy this must surely be necessary ) it must have its own independent source of locally based income . without exploring the wide realms of argument on this subject , it is probably fair to say that the majority of informed people would agree with Mrs Hicks who , in her public finance , said that in principle &amp;hellip; a tax on land and buildings ( which is by far the most common of all local taxes ) has much to commend it . unless in the future we are to rely on assessments of a purely arbitrary nature ( which will inevitably bring the system into even greater disrepute ) we must find some way out of the apparent impasse . a solution . an abortive attempt was made to meet the difficulty in the local government act , 1948 , when it was proposed to ascertain the rental values of most post-1918 houses by taking 5 per cent of the hypothetical 1938 cost of construction , plus 5 per cent of site costs . this proposal courted almost certain failure for two reasons : - ( 1 ) its arbitrary nature ; ( 2 ) the different treatment accorded to other classes of dwellings and properties . but why must we strive to ascertain some illusory rental value when , in the market , such rental value is rarely to be found ? if we want to retain a value of land and buildings as the criterion by which local expenditure is apportioned amongst the local inhabitants , why should we not forget rental values and use , instead , capital values ? these are obviously much more easily ascertainable because the sales market is so much more active than the lettings market . would it not be a relatively simple matter ( compared with the present dubious antics ) to arrive at the price at which a hereditament might reasonably be expected to sell with vacant possession in the open market if it were reasonably maintained and intended to be used for its present purposes ? not a site value tax . such a proposal should not be confused with the rating of site values , a subject which appears to have become entangled with other considerations . the suggestion now made need have no party political implications because it need not affect the incidence of local taxation as between occupiers and owners . unoccupied sites could be exempt , partially exempt or wholly chargeable - these are questions irrelevant to the main idea . the suggested capital values would be simpler to ascertain than site values because the question of apportioning an aggregate value between the site and the building would not arise . further , we are talking about the selling price , a factor understood by everybody , and not some notional apportionment of it . the authors of both the majority and the minority reports of the committee of inquiry into the rating of site values ( 1952 ) seem to have been obsessed by the idea of annual rental value , for both reports speak of the annual site value ( i.e the yearly rent which the site might be expected to yield if let at the valuation date upon a perpetual tenure ) . not a capital levy . although assessments would be based on capital values , the rate would not be a tax on capital because the liability would not be met out of capital . nor would it fall on , or be passed on to , the owner of the capital if he were not also the occupier , any more than do present rates . all that is suggested is that capital instead of annual values should be used as the measure of each ratepayer &apos;s contribution . advantages . a minor advantage of such a basis of assessment would be a psychological one - the rate in the pound payable , instead of being the frightening figure of over 20 s in the &amp;pound; , would be reduced to a few pence in the &amp;pound; . another advantage would be that the contractor &apos;s test , the profits basis and the other hypotheses now forced on valuers would cease to be needed . from a ratepayer &apos;s point of view , he would have some solid facts more readily available to enable him to contest an assessment . he could get a fair idea of the worth of his house by looking in the estate agents &apos; windows . where can he possibly obtain any convincing data about his rental value now ? although some shift in the burden between the occupiers of different types of property may result , this would be no greater , and conceiveably it would be smaller , than that to be faced in bringing rent-based values up to date . ratepayers would certainly be able to understand their assessments more clearly than those based on mythical rents and , as a result , would be better able to appreciate the soundness of those assessments . some change must come . hand-to-mouth methods of making the present system rumble along can not be perpetuated . the surprising thing is that successive governments have been content to manipulate an impossible system for so long . it is seriously suggested that the method proposed might provide the solution . London &apos;s pure water . bacterial analysis has shown that during the year 1960 the water for which the metropolitan water board was responsible was virtually free from escherichia coli , the chief indication of faecal pollution . a report by the water examination committee of the board states that 99.97 per cent of the samples passing into the distribution system during the year were free from this organism . these are the best results ever achieved by the board . during nine of the twelve months , moreover , the water supplied by the board was of 100 per cent purity so far as this test was concerned . illuminated signs . manufacturers critical of planning authorities &apos; approach . an attractively illustrated brochure entitled pageant or penumbra ? recently published by the electrical sign manufacturers &apos; association invites planning authorities to exercise more flexibility of attitude towards the design and siting of illuminated signs when dealing with planning applications , and states that the association &apos;s members are ready to respond whole-heartedly to a lead for greater originality and a more venturesome spirit . 