RATING OF INDUSTRY (SCOTLAND) (Hansard, 7 December 1965)

§ The Secretary of State for Scotland (Mr. William Ross)

I beg to move, That the Rating of Industry (Scotland) Order 1965, dated 16th November, 1965, a copy of which was laid before this House on 18th November, be approved. The Local Government (Financial Provisions) (Scotland) Act, 1963, provided in Section 10 for full re-rating in Scotland at the time of the next revaluation—that is, next year, 1966. It also made special provision to allow the Secretary of State to postpone re-rating by Order if he thought it necessary. When the 1963 Act was going through Parliament the then Secretary of State, the right hon. Member for Argyll (Mr. Noble), made it clear that in his opinion re-rating should not be introduced in 1966 if, after revaluation, the imbalance between industrial valuation and the 289 valuation of other subjects was not substantially redressed—in other words, if the share of the rate burden borne by other classes of property did not increase somewhat and thereby prevent an undue burden falling on industry.

Before I could make a decision about whether derating of industry should be continued, I had to see the preliminary estimates made by the assessors of the total valuation of the various classes of property in the 1966 valuation, and I am grateful to the assessors for providing this factual information to me at a time when they were hard pressed with the work of revaluation. The provisional estimates for 1966 show that, in fact, the state of imbalance which led to the postponement of rerating in 1966 will not be redressed.

On the basis of the assessors' estimates, rerating would increase the industrial share of the rate burden from 12.6 per cent. to 20.8 per cent. or, in money terms, from £14 million to £23 million on the 1964–65 figures. The House will agree that this is indeed a staggering increase which would considerably affect the ability of Scottish industry to meet competition. While there is no absolute way of deciding what the fair share of any one class of property is, there are good reasons for saying that this would have given Scottish industry at this particular time an unduly large share of the rate burden.

But there is more to it than alleviating the absolute burden of rates. There is also the relative position of Scottish industry vis-à-vis industry in England and Wales, which we must always keep in mind. The share of the rate bill in England and Wales paid by industry is at present about 14.8 per cent. while, as I have said, Scottish industry's share if de-rating stopped now would be 20.8 per cent. Derating brings it down to 12 per cent. and, if account is taken of Scottish industry's structure, probably the proportionate burden on manufacturing industry would be about the same in both parts of the country. That is borne out by the investigations of the Scottish Council in relation to particular firms.

This relation between England and Wales is important because the liability of rates is a marginal but, nevertheless, significant factor in determining the loca- 290 tion of manufacturing industry. The two-thirds increase in the rate bill of Scottish industry would put Scottish industry at a serious disadvantage and greatly discourage the settlement of new industry in Scotland. Therefore, the growth of new enterprise would be slowed down, and we would not wish to do this at a time when we are seeing an expansion and an industrial leaping ahead in Scotland. The position of Scottish industry as compared with industry in England will, therefore, be safeguarded by this Order.

In considering whether it was right to make the Order, I also had to consider the other classes of property and how they would be affected by revaluation if industrial derating was continued. The most important point is that from the assessors' figures it seems likely that the main increase in valuation will be on commercial subjects as a whole—mainly shops and offices—where there has been considerable and buoyant expansion. As regards domestic ratepayers, the continuance of industrial derating would not lead to a further share of the rate burden, since the assessors' estimates of the 1966 revaluation show that even with derating the share of the rate burden borne by house property—both local authority property and private property—should decrease from 52.3 per cent. to 50.5 per cent.

The other interest which I had to consider was that of the local authorities. We had full consultation with the local authorities, and they were unanimous that derating would have to be continued for a further period. It is only fair to say that the local authorities impressed on the Government that as a result of this decision they looked to the Government for additional financial help. That is not surprising—it is a fairly natural reaction, but not new—but on this occasion we were able to point out that the Government would later in the Session produce further plans in relation to the rate burden and the relationship between central Government and local government in financial matters. In the long term any Measures which attract industry, so providing additional sources of rating revenue, are, of course, beneficial to local authorities.

To sum up, this Order is a measure to secure fair treatment for Scottish industry, 291 and to ensure that the efforts of Government and local authorities to assist industry in Scotland—which is so important if we are to be successful in reducing unemployment and in bringing new projects to Scotland—should not be harmed.