GAS AND ELECTRICITY BOARDS (RATING AND VALUATION) (Hansard, 25 July 1962)

§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield)
I beg to move, That the Gas Boards (Rateable Values) Order, 1962, dated 20th July 1962, a copy of which was laid before this House on 23rd July, be approved. I should perhaps explain that an Order relating to Gas Boards was made on 9th July, but, unfortunately, a printing error was discovered and it had to be withdrawn. Hence the new Order laid on 20th July. I regret that the error was overlooked and hope that this late substitution of a new Order has not caused hon. Members any inconvenience. I sincerely apologise, particularly to the hon. Member for Fulham (Mr. M. Stewart), if that has been the case.
This Order and the following Order are made necessary by the general revaluation for rating purposes which takes effect next April. The basis of rating of the electricity and gas undertakings is somewhat involved, and I do not imagine that the House would wish me to go into great detail at this time of night. But the starting point is the basic totals of rateable values which were based on the total rateable values before nationalisation. There is a statutory formula by which the rateable values are adjusted annually on the basis of production and consumption. However, this only takes account of the sort of increase in rateable values which is equivalent to the increase which occurs in a factory when it is extended. It does not make any provision for the increase of rents taken into account by the quinquennial or other periodical reviews of the rating assessments of the country as a whole.
For other types of property, of course, these changes in rental levels are reflected in the new values determined by these reviews. Without an increase in their basic totals, the level of the rateable values for electricity and gas would progressively fall behind the rateable value of other property and would bear a steadily decreasing share of the rate burden throughout the country. These Orders have the effect in both cases of increasing the valuation by about 87.6 1684 per cent. This figure is taken because this is the expected rate of increase in the net annual values for the most comparable property, that is, the commercial class—shops, offices and the like.
The reason why houses have been excluded from the factor is that they are being raised from 1939 values to current values whereas gas and electricity were brought up to 1956 levels in 1957. Industry and freight-transport have been excluded because it is thought that the fact that they are to lose their 50 per cent. derating may result in a lot of appeals on the ground that this will reduce rental value. It is felt in the case of gas and electricity that it would be wise to tie them to something more certain than to industry, which may have a large number of appeals. If these resulted in reductions of rateable value it would be necessary to provide in the Orders, out of fairness to the industries, for a review of the rate of increase for electricity and gas.
I would add that consultations have taken place with the associations of local authorities, with the London County Council and with the Gas Council and the Electricity Council. I think it fair to claim that a broad measure of agreement has been reached. Perhaps not unnaturally the associations of local authorities have taken the view that the basic totals should be higher and the Gas and Electricity Councils have taken the view that they should be lower. But, broadly speaking, this is a compromise and I think that both sides are now reasonably reconciled to the Government's conclusion as to the basis on which the present adjustments are made.
Therefore, I commend the Orders to the House. The adjustment is calculated from the same range of property as is the adjustment in 1963 of water rateable values for which the House made specific statutory provision last year in the Rating and Valuation Act, 1961. I invite the House to approve the two Orders.

§ Mr. Michael Stewart (Fulham)
I am sure the House will be glad to accept the Government's apologies for the misprint in the first version of the Order concerning the gas industry, and I think that we may safely assume that few, if 1685 any, hon. Members were seriously inconvenienced by it. I think that we must also say that the result achieved in these Orders, the figure arrived at, is presumably a just figure.
It is an extremely complicated matter. To get this result, no doubt people have laboured very diligently and probably got very little thanks for it. One may well ask, "Is there much in this except transferring money from one public pocket to another?" If we charge the gas and electricity undertakings more rates than they really ought to be charged, that may result in the consumers of gas, and electricity having to pay more for gas and electricity than they would otherwise pay. On the other hand, the consumers pay less rates. The reason that it maters, of course, is that gas and electricity undertakings vary greatly from one local authority to another and if we did not get this matter right we might inflict a measurable injustice on certain local authorities.
I expect that hon. Members will have noted that they have not received in their post abundant representations either from the local authorities or from the gas or electricity undertakings either for or against these Orders. I think we may conclude from that silence that the compromise has produced at least an equality of dissatisfaction between the bodies concerned. So I do not think we need spend any great period of time in arguing about the actual amounts involved. We may conclude that the Orders embody a reasonable judgment as to what is fair.
But there is one question I want to raise. The hon. Gentleman pointed out that the actual amounts of the basic rateable value of the gas and electricity undertakings are being increased by 87.6 per cent., and that that is based on a calculation of what will happen to like properties as a result of revaluation. A calculation of that kind has a great many unknowns in it. How one can be so sure that that it is going to be 87.6 per cent. and not the crude approximate of seven-eights, I do not know. I do not see how one can possibly foretell that with a degree of certaintly. However, that is the figure which has been arrived at.
We were given in the White Paper on Revaluation for Rates a calculation 1686 about what would happen to various classes of ratepayers, and we were told that domestic ratepayers would find that their properties would be revalued at a figure four times their present value. Thus, if one had a house property which before revaluation was rated at £100, after revaluation it would be rated at £400.
We were further told that, despite that, the amount that the domestic ratepayer would actually have to pay to the local authority would be substantially the same. His assessment would be quadrupled, but the actual amount he would have to pay would remain the same. I think it follows, if this is so, that the total value of all rateable property surely must also be quadrupled. The domestic ratepayer's property is quadrupled in value, but his share of the total to be paid remains the same. That must mean, therefore, that all rateable property of all kinds, taken as a lump, will have their values quadrupled.
Rateable properties fall for this purpose into three groups: domestic, industrial, and the rest. Domestic is being quadrupled while the rest, of which these gas and electricity undertakings are part, is being almost doubled, at one-and-seven-eighths. It would seem to follow that the share of industry must go up considerably. It is a little difficult to reconcile this figure of 87.6 per cent. as an index for commercial, etc., properties with the figures earlier given in the White Paper. Therefore, it might be wise if, when we know a little more exactly what is going to happen, the Government publish a statement telling us what has happened, both in percentages and in figures, to domestic properties, industrial properties, and commercial properties. On the evidence which we have at the moment, it looks as if the share of the total rate burden which will fall on industry will be markedly increased. The domestic ratepayer is not to pay a larger share as a whole, and the kind of properties with which we are now concerned will pay a substantially lesser share. The increase in the industrial share would appear to be larger than anyone had previously predicted. I hope therefore that at a convenient time the Government will be able 1687 to give further and more precise information about how the rate burden is to be shared by the different classes of ratepayer.

§ Mr. Corfield
With the permission of the House, I will reply to the hon. Gentleman who is, I think, a little out with his arithmetic, although I should hate to become involved in an argument with him at this time of night. We are up against the problem that the four times factor came from the comparison in the White Paper of the gross value of houses in the 1934 lists and not their 1939 values. This complicates the issue in one sense. The industrial figure is complicated by industrial rerating so that there is not an exact parallel. The commercial figures are complicated by the loss of the 20 per cent. derating. I am advised that the expected increase in house assessments is 166 per cent., which is not quite as far from the figure we are discussing with regard to the Gas Board. I will see what can be done about a statement of what actually happens rather than a forecast. No doubt the hon. Gentleman is familiar with the table in the White Paper which forecasts that industry's share of rates will be up by about 43 per cent.