Clause 13.—(VALUATION BY FORMULA OF CERTAIN LANDS AND HERITAGES.) (Hansard, 24 April 1963)

§ Mr. Leburn
I beg to move, in page 9, line 43, to leave out "and".

§ The Chairman
I think that it would be convenient to take at the same time the next Amendment, in line 46, at end insert: and (e) any lands and heritages occupied by persons carrying on (otherwise than under authority conferred by or under any public general enactment) an undertaking for the generation of electricity by water power.

§ Mr. Leburn
Yes, Sir William. The first is a drafting Amendment to introduce the second, which is the substantive Amendment.
The purpose is to add another category to the list of types of subject to which valuation by formula could be applied, namely, hydro-electric undertakings other than those carried on as public bodies under statute. Representations have been made to my right hon. Friend the Secretary of State by the Scottish Council that in the case of hydro-electric undertakings—other than those carried on by the North Board and the South Board—normal methods of valuation produce anomalies and burdensome results.
That is because of the high capital cost of the extensive and expensive dams, reservoirs and plants which a hydroelectric scheme requires. They inflate the value to such a level that the rates 328 form a much higher proportion of the value of the output than in the case of industry generally or of the Boards' hydro-electric schemes.
We consider that an adequate case has been made out at least to justify including private hydro-electric undertakings in the list of undertakings which under Clause 13 can be valued by means of a formula prescribed by the Secretary of State. This does not mean that a formula will necessarily be applied. A detailed case would have to be made out which would stand the test of discussion with the local authorities concerned, which, under the Clause, have a right to be consulted, and an Order embodying a formula produced after discussion and consultation would, of course, require the approval of the House of Commons.
We took the opportunity of discussing this proposal with the working party on local government finance, and I should tell the Committee that it was not exactly keen on this. In fact, it did not meet with its approval, because it felt that this might be a precedent which could be claimed by other industries. Nevertheless, all we are doing by this Amendment is to create an enabling power to be used only if a case for it can be substantiated. The effect of rate burden on an undertaking would, therefore, not in itself justify the adoption of a formula, nor the fact that public hydro-electric undertakings are valued by formula, and a case 329 would have to be shown in detail that high rate valuations were unreasonable.

§ Mr. W. Baxter
Does that mean that an application would then be made to the Secretary of State about the valuation of these undertakings? Is that not a contradiction in terms of the last Amendment, on which the hon. Gentleman said that the Secretary of State should not enter into the question of valuation?

§ Mr. Leburn
We are here dealing with the question whether a particular type of subject should be valued by formula.
I thought a good deal about the difficulties which the working party had about setting a precedent, but I do not think that this applies here, because there is something rather special about a hydroelectric project as opposed to any other form of industry. I think that on balance this is wise, and I commend the Amendment to the Committee.

§ Mr. McInnes
As the hon. Gentleman indicated, we are dealing here with subjects valued by formula. May I ask him whether he consulted the Advisory Council on Valuation on the matter?

§ Mr. Leburn
I do not think that we did.

§ Mr. McInnes
Why not on an important matter like this, as to how these subjects should be valued? That was the purpose for which the advisory body was set up under the 1956 Act—so that it should be consulted in matters of this kind.

§ Mr. Ross
The hon. Gentleman said that he is just adding one more set of subjects to the list, but he will admit that this is quite a change, because these are private installations, and, so far as I know, there are only two of them—or, rather, there will be two of them: there is only one at the moment, as far as I am aware, and that is the one at Kinlochleven; there will be another at Fort William when we get the pulp mill. Did the hon. Gentleman consult the local authorities concerned? Because it may be that the Inverness and Fort William councils may have something to say about this, rather than the County Councils Association. I am not saying that infallibly the hon. Gentleman should, having consulted them, always take their advice; but it strikes me as strange how quickly 330 this has come in, on representations made not by the people themselves, and after such a long time, because, after all, the Kinlochleven installation has been going quite a long time.
I do not think we necessarily raise any objection to this, because, after all, if an order is produced we shall have an opportunity of seeing it here. Nevertheless, the point made by my hon. Friend is quite relevant. We took the trouble to set up this Advisory Council. I know that the Under-Secretary may say that this refers to valuations and assessments of an entirely different kind, but these are the kind of people who certainly should be approached in a matter like this. I do not know how often it meets or whether it would be troublesome to call it for the purposes of giving advice of this kind. But I do not think that we can ignore its existence in a matter which, in the aggregate, may not be very much, but which to the local authorities directly concerned might mean quite a considerable amount. I hope that the Under-Secretary will bear that point in mind when he adds to the list.

§ Mr. Leburn
I am very conscious of this fact, and I feel that the right thing to do is to take this power, but before anything can happen all the local authorities concerned will be consulted; in fact, under subsection (4) they must be. I can give the same undertaking to the hon. Member for. Glasgow, Central (Mr. McInnes) that the Advisory Council would be consulted at that time too before there was any question of the Secretary of State bringing in an order to rate by formula.