§ Again considered in Committee.
I was saying that the Clauses which I am advocating would remove the anomaly to which I referred and would provide for the separate rate-ability of the administrative offices of these three undertakings. The Clauses will take effect from 1st April, 1963, when the new valuation list comes into force. The first of the new Clauses deals with the gas boards. Until 1955 the law relating to gas undertakings came under the genral rating law and they were assessed on the annual rental value calculated on the basis of annual profit. [Interruption.] The new method of valuation—
The new method of valuation was provided for under the Rating and Valuation (Miscellaneous Provisions) Act, 1955, with the subsequent amendments in the Local Government Act, 1958. Arising from those Acts, dwelling houses and showrooms occupied by the gas boards were rated the same as ordinary commercial properties, but other properties belonging to the gas boards and comprising by far the vast majority of their properties are rated under special arrangement.
The present position is that the rateable value of the gas boards, not related to the actual properties occupied except for the houses and showrooms which they possess and the gas mains and 1527 premises directly concerned with the supply of gas to consumers and offices in which actual payments for gas are made, are rated in accordance with a formula which takes into account the gas manufactured or sold in an area. But if in a rating area a board occupies premises for purposes not directly concerned with the increase of the amount of gas manufactured in that area or the amount of gas supplied to the area, the local authority receives no payment by way of rates which can be specifically related to those properties.
The South-Eastern Gas Board has concentrated its offices in Croydon. The offices cover not only Croydon but other rating areas and the Croydon Corporation receives no extra payment at all by way of rates for those offices which would have been rateable at approximately £8,000 a year if ordinary ratepayers had been involved. The new proposal need not add an additional burden on the gas board because the first new Clause authorises the Minister to reduce the basic total of rateable values for a board by the rateable value of the offices which are being separately rated. If the power were exercised it would mean that basically there would be an apportionment between the rating areas in respect of gas supply and manufacture, but the rating authorities which had these administrative offices in them would benefit by the separate assessment of those offices.
The second new Clause deals with electricity boards. Until electricity was nationalised, all electricity industrial undertakings were valued on a profits basis, but the Local Government Act, 1948, laid down that at 1st April, 1948, payments to be made yearly by the British Electricity Authority would be of a fixed amount, subsequently adjusted annually and divided amongst the local authorities in proportion to the values of the respective areas. There were subsequent minor changes in the Local Government Act, 1958. The Electricity Act, 1957, made changes in the organisation of the industry. The Electricity Council was set up to co-ordinate the work of the boards and the Central Electricity Generating Board was set up to provide electricity in bulk to the area boards for distribution.
1528 The Local Government Act, 1958, introduced new rating provisions by which the premises occupied by the Electricity Council as showrooms were still assessed under the general rating law. The bulk of the boards' activities, and therefore the greater part of the premises which they occupy, are concerned with the generating and supply of electricity, and these premises had artificial values arrived at under very complicated provisions contained in the Second Schedule of the Local Government Act, 1958.
The present position of electricity undertakings is that premises occupied by the Electricity Council—dwelling houses and showrooms so occupied—are assessed under the present ordinary law but no other premises occupied by the electricity boards are so specifically rated, and the payments to the rating authorities by way of rates for generating stations are apportioned between the rating authorities. These apportionments make no allowance for the fact that the administrative offices of the electricity boards may tend to be concentrated in particular rating areas although their activities are often for the benefit of a much wider area.
We have concentrated in Croydon the Croydon and West Kent Sub-Area Headquarters of the South Eastern Electricity Board, and these headquarters cover towns far afield, such as Purley, Caterham, Coulsdon, Godstone, Sanderstead and Warlingham. In equity, therefore, Croydon authority should benefit by this concentration in the same way as if these offices had been occupied by ordinary ratepayers. Unfortunately, that is not the case.
The last new Clause is about the British Transport Commission. Before nationalisation all railways were rated under a general rating law on a profits basis, but each railway company was assessed as a whole and the valuations were undertaken by the railway assessment authority and not by the individual rating authority. After nationalisation the Local Government Act, 1948, provided that property occupied by the British Transport Commission was exempt from rates and, instead, payments for the benefit of the local authorities were to be made. I must stress that dwelling houses, hotels and places of public refreshment which were occupied by the Commission continued to be 1529 rated in the ordinary way, as did railway-owned property which the railways let out. It should be remembered that properties occupied in respect of road transport, sea transport and harbours still remained rateable.
For the railway properties, the British Transport Commission paid each year a sum which is apportioned amongst the authorities in accordance with their various areas. The county borough received the whole of the amount so apportioned, but in the case of district councils they received one-third and two-thirds went to the county council. But these payments are in no way related to the actual value of the railway property occupied by the Commission in any area. As such, it can react very unfairly indeed on those local authorities with similar annual values, but having, in respect of their areas, totally dissimilar amounts of railway property.
Here again, I would instance to the Committee that in Croydon the British Transport Commission occupies fourteen railway stations, several goods yards, a marshalling yard, extensive engine sheds and other works, but the average annual payment which Croydon has received has been as low as £17,982. Over and above this, the Commission has now arranged tenancies of an extensive new office block which has just been built in the town for itself and also for a ticket agency, and under the present law the Croydon Corporation does not receive a single extra penny contribution to the rates from the Commission because of the occupation of these premises. If these modern offices were being occupied by ordinary ratepayers and not by this nationalised industry, we in Croydon would receive additional rates to the extent of £15,000 a year.
My new Clause enables the Minister to vary the amount of the payment made annually by the Commission for the benefit of all the authorities, and thus in this way offices in respect of which the Commission would, under my new Clause, have been liable, would be rated in the general way. I expect that the Minister may take the view that the Association of Municipal Corporations is not in direct support of this new Clause, 1530 but if that is so, I should like to make the point that I have seen a minute of 26th April, when this matter was discussed in response to a request made to it by the Croydon authority. In it, it stated:While recognising that there is a case for the separate rating of administrative offices of gas and electricity undertakings, we still do not feel that an Amendment of this Bill is warranted.Certainly, the Association recognises the case.
I conclude by saying that in these three instances which I have given of gas and electricity undertakings and the British Transport Commission, we in Croydon lose at present about £40,000 a year in rate contributions, and it does not matter how one thinks of that, it is the fact that that additional burden must be carried by all the other Croydon ratepayers, even our own domestic ratepayers. I think that an anomaly of this kind is extremely unfair, and that the Government should take the earliest opportunity to put the matter right.
One might foresee that officials may take the line that it is a tremendous task to rectify the matter, but, after all, there was a precedent for it, because it was done in regard to the showrooms. I feel that this matter should be tackled as quickly as possible. From our point of view, this is a problem which will not get any less, because blocks of offices are being put up in Croydon and are being let to organisations of this kind on 21-year leases, and, obviously, there can be additional occupation later on. The rates generally will continue to go up. No one can stop that, because of the additional demands being put on the town, and this will be an ever-increasing amount which will be lost to the Croydon authority, and, therefore, the burden will be carried more and more by the other ratepayers.
I beg of the Minister, when dealing with this matter, to realise that we in Croydon—and I am sure it applies to many other towns throughout the country—have a real case to submit to him, and we sincerely hope that this anomaly can be rectified at a very early date.
§ Mr. Gerald Nabarro (Kidderminster)
I rise to support my hon. Friend the Member for Croydon, North-West (Mr. F. Harris). I think I may claim that I initiated this argument six years ago in concert with my right hon. Friend the present Minister of Health shortly before he became Parliamentary Secretary to the Ministry of Housing and Local Government. It sprang from the fact that in Worcestershire a small local authority, the Stourport-on-Severn Urban District Council—small, not very rich and not very important in the national field, but important because it is in my constituency—discovered that an electricity showroom in High Street, Stourport, although notionally assessed to rates, did not yield any rating revenue to the local authority. As that showroom was selling substantial numbers of electrical appliances in competition with private enterprise shops in the area, all of which were required to pay rates, it seemed to be an inequitable burden placed on other commercial ratepayers that a nationalised industry shop should escape the rate burden altogether.
The present Minister of Health and I got this matter put right, but only within the narrow context of showrooms. All the arguments which apply to the showrooms of nationalised industries or similar establishments apply equally to administrative centres such as large blocks of offices. For example, within half a mile of the House of Commons is a huge administrative centre being erected for Shell. Will Shell pay rates to the local authority in whose area the new Shell building is situate? Of course it will. It will be rated there, but, if it were an electricity headquarters of a nationalised industry, the local authority in whose area that electricity headquarters or block of offices was situated would get no benefit at all from the rates. The rating valuation for the new administrative centre would be taken into the whole of the electricity hereditaments for England and Wales and then an apportionment would be made to the local authority in whose area the administrative headquarters was situated.
I am glad to see my right hon. Friend the Minister of Housing and Local Government nodding agreement. That is 1532 precisely the position, but my right hon. Friend is a member of the Cabinet and within collective responsibility and Conservative policy we have said over and over again that we are going to operate these nationalised industries as commercial organisations. Why should there be this invidious distinction between the manner in which Shell pays rates for administrative headquarters to the local authority in which the building is situated and—one law for that and one for municipal headquarters—a nationalised industry, the Central Electricity Generating Board, half a mile down the Thames, goes free? In our Conservative philosophy we do not recognise any difference in the operational arrangement of these industries. We say nationalised industries should be operated on the same commercial scale as privately-owned industries.
In the case of these administrative headquarters, it is singularly unjust. I quote from the Midlands, where I have greater knowledge than, for example, in Croydon. The Midlands Electricity Board has its headquarters at Mucklows Hill, now part of the Borough of Halesowen, slightly to the west of the City of Birmingham. At those headquarters are carried out all the administrative functions and arrangements for the whole Midlands Electricity Board and millions and millions of purchasers of electricity throughout the area. On that premise it is then argued that that large adminstrative headquarters pays a notional sum in rates to a pool and that from that pool is distributed the notional sum of money to all the local authorities in the area, but no local authority has any means at all of challenging whether the sum received from the pool is, in fact, correct or otherwise.
I claim, on the analogy of the Shell building on the Thames, that the rates for the Mucklows Hill headquarters of the Midlands Electricity Board should properly be paid to the Borough of Halesowen, this being the rating authority in whose area this administrative headquarters is situate.
Then there are these administrative offices in the sub-areas at Evesham, Worcester and Kidderminster. But again 1533 the rates are not paid by those administrative offices to the local authority. There is the same notional assessment, notional apportionment and notional distribution, and it is all exceedingly unjust.
There are three types of electricity hereditament. They are, respectively, generating stations—the largest and the most valuable hereditament in the industry—administrative centres such as electricity offices, and showrooms. We have dealt with showrooms. We seek in these new Clauses to deal with administrative offices. I hope that in due course we are going to deal—although it would be out of order for me to talk about them this evening—with power stations. There the spread of the revenue from rates over such a large area detrimentally affects in the most acute form small local authorities which happen circumstantially to have major electricity or other nationalised industrial hereditaments in the particular area of that authority.
My hon. Friend the Member for Croydon, North-West talked of his constituency in the County Borough of Croydon losing a revenue of £40,000 from the electricity authority in a single year. I do not wish to better his arguments in that way, but if he would care to carry out an examination of the loss of rating revenue in Stourport-on-Severn, which is only a fraction of the size of Croydon, he would find that the loss of rates is far more acute, due to the fact that in that local authority area there is a large and valuable electricity hereditament in the form of twin power stations, the rates of which, notionally applied, are spread on a national scale and only a tiny part of those rates goes—
§ The Chairman (Sir Gordon Touche)
Order. I hope the hon. Member realises that the subject of power stations does not arise on this Clause.
§ Mr. Nabarro
Yes, Sir Gordon; I said earlier that I recognised that it would be out of order to refer to electricity power stations. It was only a passing reference.
This matter has been raised by the hon. Member for Farnworth (Mr. Thornton) and by my hon. Friend the Member for Somerset, North (Mr. Leather), who has Portishead in his constituency, who experience exactly equal circumstances.
1534 My plea, therefore, to my right hon. Friend is that if it is the policy of the Government to conduct nationalised industries on a commercial basis—if that is our philosophy—it is surely just and reasonable that all hereditaments owned by the nationalised industries should pay rates on a scale, on a basis and in accord with principles accepted as applicable to private enterprise industries, and that there should not be this invidious distinction between the Shell building half a mile away from here paying rates on a commercial scale, and the Central Electricity Generating Board half a mile down the river paying rates through a national pool on an entirely different basis, and thereby yielding little or no financial benefit to that local authority in which this large administrative centre or block of offices is situate.
That is the case in principle. I hope that my right hon. Friend, if he does not reply tonight by accepting this Clause, will at least make appropriately sympathetic noises in my direction and give a promise that he will consider Amendments in another place.
§ Mr. Mitchison
I want to make two short comments. The first is that the rating of these offices of nationalised industries, which has been discussed before in conjunction with other legislation, is not a question of how much the total to be paid by these nationalised industries is, but who is to get the rateable value of these offices.
To listen to the hon. Member for Kidderminster (Mr. Nabarro) one would suppose that these industries, because they are nationalised, pay less rates. I do not believe that to be the case. This question, in the last resort, resolves itself into a dispute between those local authorities who happen to have these offices in their areas and those who have not. If that raises any question of Conservative principle, it is one which eludes me—but then, so does most of Conservative philosophy.
§ Mr. Nabarro
The hon. and learned Member misunderstands me—perhaps deliberately. I said—and he will not agree with this—that the philosophy of the Conservative Party is that nationalised industries should be conducted on a commercial basis. That is not his philosophy, but it is mine, and if they 1535 are to be conducted on that basis then they must pay the same rates as a commercial, private enterprise undertaking.
§ Mr. Mitchison
Of course, they are in the difficulty that they cannot get a subsidy like the Cunard Company. I do not know whether that raises any deep question of Conservative philosophy either, and the short point here has nothing whatever to do with what the hon. Member says it is connected with. I am not deliberately misrepresenting him. I am merely telling him to mend the error of his ways.
Apparently the hon. Member says that the total paid by these bodies is less than it should be, whereas there is no question whatever here of the total. There is a question as to which of the local authorities concerned shall get what part of the total, and that question lies between Croydon and some of the places with unpronounceable names which he mentioned—
§ Mr. Mitchison
—on the one hand and a number of local authorities on the other.
I hope that the Minister will be able to answer my second point. It seems to me that the very complicated legislation, in connection with railways on the one hand and the cost of electricity undertakings on the other, may need revision. I do not want to go into it in detail, but the hon. Member for Kidderminster, in the more sensible part of his speech—it was the part which was out of order—mentioned something about which, as he rightly said, my hon. Friend the Member for Farnworth (Mr. Thornton) was also concerned.
Since it is out of order, I had better not even say what it was, but I expect that the Minister will remember it, and I hope that he will be able to assure us that steps are being taken to look at this legislation as a whole, and that those steps will not be distracted by the irrelevancies of the hon. Member for Kidderminster, who looks simply at the rather small point about offices. I hope that the right hon. Gentleman will look at the general working of the scheme and, in particular—if I may mention it at 1536 the last moment—the older gas and electricity undertakings.
§ Mr. Brooke
I would not seek to compete with my hon. Friend the Member for Kidderminster (Mr. Nabarro) in the making of noises, but I hope that he and my hon. Friend the Member for Croydon, North-West (Mr. F. Harris) will forgive me if, at twenty minutes to eleven, I do not deliver my well-known three-hour lecture giving an historical account of the manner in which we arrive at the rateable values of the gas and electricity industries and the payments in lieu of rates made in respect of the railways and canals.
I listened with great interest to the speeches of both my hon. Friends, and I at once accept that there is a problem here. It is a difficult one, and, if I may say so with respect, it is rather more difficult than the speeches of my hon. Friends revealed. But there is no getting away from the fact that it would be hard to defend the present arrangements as perfect from every point of view.
The truth, as far as I know, is that the formulae methods of assessing the contributions of these nationalised industries to local expenses were adopted because the statutory provisions governing their trading made it virtually impossible to continue to assess the various undertakings by the profits method. The fact that there are special statutory provisions applying to these industries singles them out from the Shell Company or other great industrial undertakings. Moreover, their very extensiveness would have made apportionment of any total value an extremely difficult and contentious task.
This whole question was raised—I remember it well—while the Local Government Bill of 1958 was going through the House, and I should like to tell the Committee that it came up in the course of the deliberations of the working party which I set up before the Bill now before the Committee. At that stage, no endeavour was made to bring the nationalised boards into the Bill. That point was not reached because, in fact, the discussions in the working party did not go very far. I think I am at liberty to say that there was fairly general agreement that at that stage the matter should not be pursued further.
1537 We must bear in mind that it is only since April, 1959, that the present arrangements in respect of gas and electricity have been operating in just this form, and it seemed a bit early to have a review. The local authority associations were represented on that working party, and they could certainly have pursued the matter further had they so wished. Nobody from my Department deterred them in any way. But there appeared to be a general feeling that it was too early to go much further into the matter at that stage.
I would mention, if I can do so without getting out of order, that those short discussions in the working party threw up the fact that if one was going to examine specifically the case of administrative offices of nationalised undertakings then there were certain other classes of property of the undertakings which might be worthy of special consideration, such, for example, as railway engineering workshops.
The industries themselves were not brought into these discussions because it was known that they almost certainly regard the singling out of offices as a retrograde step, and as nobody wished to press the matter further there seemed to be no particular reason to invite them to join the discussions. Their case was certainly not prejudiced in that way.
What lies behind this trio of new Clauses is, as I read them, the thought that there are certain properties which are for purposes outside the rating area. Of course, a great many of the properties of the nationalised boards would fulfil that description—railway lines, pylons and all sorts of things—but they could not be so easily valued for rating purposes.
This is property that falls into a category which, if it were not occupied by one of these nationalised undertakings, could be valued for rating purposes upon an ordinary basis. I well appreciate that my hon. Friend the Member for Croydon, North-West and the ratepayers of Croydon generally feel that Croydon has been particularly unlucky, in that it has certain buildings which it would not be difficult to assess for rating purposes, and on which the borough council would be able to draw full rates on the normal basis if they were not occupied by one of these bodies.
1538 10.45 p.m.
The fact remains that if we were to accept the idea that is inherent in these three new Clauses we would, in fairness, have to look at the effect it would have on the rest of the undertakings and upon their rateable value. The new Clauses make provision for the adjustment of rateable value of the rest of the undertaking, but whereas my hon. Friend the Member for Kidderminster mentioned certain cases—to which I must not refer specifically—in respect of which he said that the present arrangements detrimentally affected a certain rating area in the most acute form, I must advise him that if the new Clauses were accepted as they stand we would find ourselves detrimentally affecting a great many rating areas, particularly those which contained parts of the nationalised railway system, because although the total rateable value of the gas and electricity industries is fairly large, it is common knowledge that the British Transport Commission is not at present a highly profitable undertaking, and the total amount paid by way of rates by the Commission under the present formula is tiny compared with the great amount of property which the Commission occupies.
Under the terms of one of the new Clauses the full commercial rateable value of the administrative offices of the Commission would be taken out of that total valuation of the one undertaking, and surprisingly little would be left, and that would have to be spread over the whole railway system—
§ Mr. Nabarro
With great respect, my right hon. Friend has got my argument completely wrong. I do not want to increase or diminish in any way the rates paid by any one of these nationalised industries. All the new Clauses ask for is that the rates derived from an administrative centre or block of offices in a certain place shall go to the rating authority in whose area that administrative centre is situated. That does not raise or lower the total rates of the nationalised industry concerned.
§ Mr. Brooke
My hon. Friend has got the logic of my argument wrong. If I understand the new Clauses correctly, if we take X as the total rateable value of one of these nationalised undertakings and Y as the total rateable value, on an ordinary commercial basis, of the various administrative offices that would 1539 be caught by the new Clauses, they contemplate that the rateable value of the whole of the rest of the undertaking minus the administrative offices, would be X-Y. All I am saying is that although X-Y in the case of the gas and electricity industries would be quite a substantial sum, in the case of the British Transport Commission it would be surprisingly small, especially when spread out over all the other rating areas which would rightly claim a share in the matter.
These matters must be carefully considered. I am sure my hon. Friends appreciate that it would not be right to make a fundamental change like this late one evening, without the most exact study of all the results that would follow. I agree that it is a subject which at the right time should be pursued further, and I submit that the most appropriate time to look at it again would be when we know what the 1963 valuations are, after they have actually come into force. At the moment, it is just over two years since the 1958 Act took effect on gas and electricity. In 1963 we shall have the new valuations of gas and electricity in relation to the valuations of all the other properties of all kinds in the country, and we shall be able to look at it.
I suggest that at some suitable time after the 1963 valuations have come into effect two years hence an opportunity should be found to look into this and any other weaknesses, or alleged weaknesses, of the formulae.
§ Mr. Nabarro
That is not fair. This is a very important matter. I give not a fig that it is ten minutes to eleven. One of the purposes of the Bill is to end industrial derating within the forseeable future. Will the end of industrial derating apply equally to private enterprise industrial hereditaments as to the industrial hereditaments of nationalised industries? That has a vital bearing on the amount of revenue which local authorities will receive, and it is directly connected with the administrative centres and offices referred to in these proposed Clauses.
I am not going to wait until 1963 for that, because after 1963 there will have to be new legislation to bring nationalised industries on to a par with private enterprise, and that would be 1540 1965, in the lifetime of the next Parliament, if I am here at all.
§ Mr. Brooke
If my hon. Friend is not going to wait until then, I am afraid that he and I have to quarrel because I do not see my way to recommending Parliament to amend the present Bill to fulfil what he desires.
I am making what seems to me to be a practical and sensible offer, that is, that when we have got the 1963 valuations we can look at the whole picture, by working party or otherwise, to review the weaknesses and the alleged weaknesses. I was not suggesting that all the weaknesses were alleged weaknesses. I was saying that I recognised that there are some weaknesses, and I think it is likely that all the parties concerned, on either side, may seek to draw attention to other weaknesses they allege. I am suggesting that they could all go, as it were, into the pot together.
§ Mr. P. Williams
As I understand it, there will be a degree of derating which will continue to apply to the nationalised industries. This is rather out of keeping with the remarks made earlier about shipbuilding and the end of derating there. Surely these things do not tie up at the moment?
§ Mr. Brooke
I assure my hon. Friend that he has it wrong. It is not the case that the nationalised industries will get some uncovenanted benefit here. I am saying that when we have the 1963 valuation lists in force we can have a thorough up-to-date examination made on the current facts and figures of all these difficulties which have emerged, and further difficulties which may by then have emerged in the working of the formulae. It will be the individual local authorities, the local authority associations, the nationalised boards, and anybody else, who will have an opportunity at that stage to make their criticisms and their suggestions, and they can all be looked at together.
That, I think, is a practical way of approaching the matter. I confess, frankly, that I do not here and now see an easy way of finding a solution that will be fair to all concerned, but I am ready to accept that more work needs to be done on this, and I submit to the 1541 Committee that the appropriate time to do that will be after 1st April, 1963, when the new valuation lists are in force.
§ Mr. F. Harris
I am sure that my right hon. Friend will forgive me if I say that, unfortunately, he does not give me a great deal of comfort by what he has just said, certainly so far as the Croydon ratepayers are concerned. He obviously recognises that we have a really good case. What applies to Croydon must apply to many other towns. It may apply to Guildford at the present moment. This is a problem of only £40,000 at the moment in Croydon, but that is equal to 2d. in the £ in the Croydon rates which the ratepayers as a whole, notably the domestic ratepayers, have to meet.
The Minister kindly says "After 1963 we will have another look at the matter." But I cannot see what his difficulty, basically, is, because there was a precedent, surely, in Section 10 of the Local Government Act, 1958, which provided for showrooms occupied by gas boards to be rated separately. If the Minister recognises that Croydon and other towns are in this difficulty, why cannot we have a simple Measure to put the matter right, as I have suggested in the three Clauses?
In Croydon we are fast developing new office sites in a very big way. This is widely commented upon, certainly in the south of England. Unfortunately for us in some respects—in others, of course, we gain—along come the gas and electricity undertakings or the British Transport Commission and take large office blocks in these new buildings, and by their so doing we automatically lose some £40,00.
§ Mr. Harris
I agree; my hon. Friend no doubt has a better case in his own district, but at the moment I am concerned with the Croydon ratepayers. Believe me, they are very touchy on the point, and rightly so.
Contrary to what the Minister and the Parliamentary Secretary have said from time to time, I firmly believe that the rates will go on up and up. I cannot see that stopping. Therefore, this is a bigger problem than we all seem to want to face up to at the moment. This is a real tax. If we put Income Tax anomalies right, why should we not put right anomalies in the rating tax? This comes out of the pockets of everybody. At 1542 least twice a year, some 13 million people pay rates, and this is a very direct burden on them.
Surely the fair thing to do is to face up to the problem. The Minister—this applies to the officials in many ways—will not tackle the problem. Of course the A.M.C. is not fully on our side because so many other authorities might lose just a little in the adjustment. I can see that point; but why should Croydon subsidise all the other local authorities?
§ Mr. Harris
It is not fair, surely. If we are progressive enough to put up new buildings and offices in Croydon, why should we let them to the detriment of the Croydon ratepayers? Why should business houses pay their full whack of the rates when this situation is allowed to apply?
I appreciate that the Minister says "We will look at it", but I honestly ask him to bear in mind that many hon. Members do not take very much interest in rating because it is a very complicated subject and it is sometimes very difficult to put these arguments over. But it is quite unfair and unrealistic that we do not face up to the facts of the case. I ask my right hon. Friend to bear in mind that we in Croydon honestly feel very strongly about this, and I invite him to come to Croydon and talk to our ratepayers and find that out for himself.
§ Mr. Brooke
I am not for a moment questioning that the ratepayers of Croydon feel that they have a legitimate grievance. I am addressing myself to the three new Clauses that my hon. Friend has put on the Order Paper, and in the course of my remarks I had to add that if they were accepted—this is certainly so in the case of the third, relating to the British Transport Commission—all the other rating areas which had Transport Commission hereditaments within their boundaries would find themselves most unfairly treated by the operation of my hon. Friend's proposals. [Interruption.] Yes, most unfairly. I say that because they will be taking out of the total value of the undertaking certain large blocks and leaving in the remainder an unfairly small portion. Therefore, it is not possible to do justice by accepting any of 1543 the three proposed new Clauses, but, at what will be the most suitable time, this whole matter will be looked at afresh.
§ 11.0 p.m.
§ Mr. Harris
I am sorry to take up the time of the Committee, but my right hon. Friend now says, with respect, that everyone recognises the fairness of the case in these new Clauses and that the principle is accepted. Cannot they, therefore, be redrafted? Apparently they cannot and instead he turns to the Croydon ratepayers and says, in effect, "Well, after 1963, when the valuation lists come out again, we will have another look". How much longer have we to wait? I have been in this House for thirteen years, and it seems that we have got to wait twenty before there is even the prospect of anything being done.
So far as the British Transport Commission is concerned, am I not right in saying—and this partly answered the point which was made about shipping—that the Commission enjoys a considerable measure of derating? I say that because when the assessment was brought down from 75 to 50 per cent. for business premises the Commission, I am given to understand, was not so adjusted in its valuations; and that is the position still. Therefore, it enjoys a considerable measure of derating.
§ Mr. Nabarro
My hon. Friend is quoting something which is an echo. The most valuable of all these nationalised hereditaments are in the electricity industry; in the Croydon "A" and "B" power stations. They are largely derated still. They have not been adjusted since the time when private enterprise hereditaments were fully rated; but my hon. Friend should quote electricity and not the railways.
§ Mr. Harris
I am stressing the Transport Commission because I think it is a fact that it enjoys a measure of de-rating which is not in full accord with business generally, even taking into consideration the reduction from 75 to 50 per cent.
§ Mr. Brooke
The answer is that industrial derating never applied to the public utilities of gas and electricity. It did apply to the railways and the canals; it applied to freight transport.
§ Mr. Harris
Of course, but what I say is that when we reduced the amount from 75 to 50 per cent.—and I was a great advocate of this—it was not adjusted on the valuations of the Transport Commission properties. That is my point, and I say that it has a measure of comparison which is unfair to industry at present. I regret it, but I cannot withdraw these three new Clauses. I feel that the Minister recognises the problem to the full, but to put it on one side and then say, "Let Croydon worry about it in a few years' time while Croydon men and women have to take additional rates out of their pockets" is wrong. It would not be so if these premises were properly rated.
§ Mr. Mitchison
May I say that the Parliamentary Secretary let the working party cat out of the bag when he wrote to my hon. Friend the Member for Farnworth (Mr. Thornton) saying that there was to be a working party? My letter to the Minister was merely designed to give the animal a little more of a public airing than it would otherwise have had, and I am glad that that is going to happen. I think it is the right way of tackling this matter. I wish to defend the right hon. Gentleman against the upholders of Conservative principles, or, to quote the right hon. Gentleman's own words, alleged Conservative principles and against the weakness—
§ Mr. Mitchison
I entirely accept that. They are, of course, made of solid wood, and there is no room for weakness in them. They never change. They are always the same, whatever may happen to the world outside. There is, however, as I think even the right hon. Gentleman and his hon. Friends will agree, a certain difference of interpretation, and I therefore support respectfully the right hon. Gentleman in saying that it is no use trying to tackle this problem in bits and pieces. It is much better to tackle the whole thing sensibly and without recourse to alleged Conservative principles.
§ Mr. Frederick Gough (Horsham)
The hon. Member for Lincoln (Mr. de Freitas) spoke about filibustering a few minutes ago. I have no intention whatever of filibustering. My hon. Friend the Member for Croydon, North-West (Mr. F. Harris) has raised a serious doubt in my mind, and I should very much like my right hon. Friend to resolve it. I understand that, as the Bill now stands without the new Clauses proposed by my hon. Friend, if there is a large office building in Croydon or any other town and that building is occupied by the administrative staff of a nationalised industry, automatically the local authority does not receive rates in respect of it.
Crawley New Town is in my constituency. My right hon. Friend has, very rightly, been doing his best to encourage the erection and occupation of office buildings in that new town. Let us suppose that the Crawley Development Corporation or the local authority puts up a very large new office building in Crawley. If that building is leased to a nationalised industry, will the rates on that building go to the local authority or not? If they will not, that will not be a good inducement to bring office staff into the new town, which would be extremely desirable, as I think both sides of the Committee will accept. If I am right in my present understanding that the rates will not go to the local authority in such a case, then I shall add my voice to that of my hon. Friends the Member for Croydon, North-West and the Member for Kidderminster (Mr. Nabarro) and say that we should not wait until 1963.
§ Mr. Nabarro
The working party is to take until 1963. Then we shall have to have legislation in the House to change the position. My right hon. Friend will not deny that there must be new legislation. We know the speed with which the Ministry of Housing and Local Government works in rating matters. It would take two years after 1963. That will take us into the lifetime of the next Parliament. My right hon. Friend might not be there. I might not be there.
§ Mr. Gough
I am sorry, Sir Gordon, but I have begun to lose my train of thought. I regard the point as extremely important. If my understanding of the law at the moment is correct, perhaps my words will be heard in Crawley and other new towns so that, when we do have new large office buildings erected, which I hope we shall, they will be occupied by private enterprise and not by nationalised industries.
§ Mr. Nabarro
My argument was somewhat prejudiced, Sir Gordon, by your gentle reminder that I was making an intervention in the speech of my hon. Friend the Member for Horsham (Mr. Gough). I apologise for the length of my intervention. I want to add to what I said in the course of that intervention. It is undeniably the fact, as the hon. and learned Member for Kettering (Mr. Mitchison) said, that his hon. Friend the Member for Farnworth (Mr. Thornton) has written to the Minister concerning the whole of this complex problem of the rating of nationalised industry hereditaments—
§ Mr. Nabarro
I am not giving way for the moment, until I have finished my sentence—and the working party covers in its inquiries all forms of nationalised industry hereditaments, including the offices and administrative centres of the electricity boards referred to in the second of the three new Clauses.
§ Mr. Mitchison
I am obliged to the hon. Member for giving way. He so often gets his facts wrong. Farnworth is not Farnborough.
§ Mr. Nabarro
I did not say Farnborough. I had a long conversation with the hon. Member for Farnworth yesterday on this topic and he explained to me that he could not be here today to argue his own case. The analogy 1547 between Kearsley, in his constituency in Lancashire, Stourport-on-Severn, in my constituency in Worcestershire, and Croydon, my hon. Friend's constituency, is perfectly clear.
What I want to say to my right hon. Friend the Minister of Housing and Local Government is that the inquiries of the working party will certainly last until the date he indicated, 1963. Then, we must have new legislation if the present position of the rating of nationalised industry hereditaments is to be amended. That takes us at least four years ahead. The question I want to ask my right hon. Friend is whether his case in response to these new Clauses is that we should all wait four years for these gross injustices to be remedied. Is it, or is it not, the correct interpretation that we should wait another four years at least before they are put right? If that is the position, my hon. Friends and myself should register our disapproval this evening of my right hon. Friend's rejoinder to our representations by appropriate action.
§ Mr. Hugh Rees (Swansea, West)
I have sympathy with the Clauses, but the reasons for which they have been put forward have been a complete smokescreen. This is a Rating and Valuation Bill. My hon. Friend the Member for Kidderminster (Mr. Nabarro) keeps on talking about derating. What he fails to realise is that a nationalised or public utility undertaking is valued on the effective capital value of the parts of it. If my hon. Friend the Member for Croydon, North-West (Mr. F. Harris) starts severing it, as he proposes to do with these Clauses, he will get little bits and pieces which are quite incapable of valuation, because their only value appertains so long as they are part of an integrated unit. That is the reason why a public utility undertaking has to be valued on a cumulo basis.
The statement of my right hon. Friend the Minister that he will set up a working party to look into this whole matter is a great step forward.
§ Mr. F. Harris
My hon. Friend said that I put down the new Clauses as a smokescreen for what I intended. He has no ground for making that comment. It is most unfair and is not true.
§ Mr. Harris
That is quite untrue. If my hon. Friend will be kind enough to read HANSARD when it is printed, he will find what I said. If that is my hon. Friend's view, why was the showrooms anomaly put right in the 1958 Act, to which I have referred? How can it be a smokescreen if, when new buildings are put up in Croydon, the Transport Commission and the gas and electricity undertakings take them on and we lose £40,000 in rates? How can there be a smokescreen about that? It is just nonsense to talk like that, and I do not take back for one single moment anything I said.
§ Question, That the Clause be read a Second time, put and negatived.
§ Bill reported, without Amendment; as amended (in the Standing Committee) considered.