HC Deb 21 July 1971 vol 821 cc1612-8

10.51 p.m.

The Under-Secretary of State for Development, Scottish Office (Mr. George Younger)

I beg to move, That the Valuation (Water Undertakings) (Scotland) (Adjustment) Order 1971, a copy of which was laid before this House on 12th July, be approved.

Mr. Deputy-Speaker (Miss Harvie Anderson)

It would be convenient to take with this Order the Valuation (Scottish Gas Board) (Scotland) Order.

Mr. Younger

Yes, Mr. Deputy Speaker.

This is a year of general revaluation for rating in Scotland, and at a time when the valuations of all properties subject to normal valuation and rating are being reviewed it is right that the valuations of properties covered by special arrangements should also be reviewed. Special arrangements apply to the valuation of the Scottish Gas Board's operational undertaking and water undertakings. The purpose of the Orders is to bring the general effect of revaluation on other properties to bear on the Gas Board and water undertakings.

If the Orders were not approved the shares of local rating burdens met by the Board and water undertakings would be lowered ; and that would be unfair to other ratepayers. The Orders are brought forward now so that they can have effect on the rate payments to be made by the Board and water undertakings in the current year.

The statutory valuation arrangements for the Gas Board's operational premises are that the Board has a prescribed "basic rateable valuation" which is adjusted annually by the Assessor of Public Undertakings (Scotland) on account of changes in the amount of gas supplied as compared with 1961. The basic valuation as so adjusted is the Board's rateable valuation for the year. The Public Assessor is also responsible for the apportionment—by early September each year—of the rateable valuation among rating areas in which gas is supplied or manufactured by the Board.

Section 12 of the Local Government (Financial Provisions) (Scotland) Act, 1963, empowers the Secretary of State to vary the Board's basic rateable valuation, if by reason of any substantial change of circumstances it appears necessary for him to do so. He does this after consultation with the Gas Board, the Scottish Valuation Advisory Council and the local authority associations.

The current Scottish revaluation constitutes a sufficient change of circumstances to make necessary the new Order which increases the basic rateable valuation of the Board by 75 per cent.—that is, from £732,490, the amount last prescribed, to £1,281,860. This percentage increase approximates to the overall increase in other property valuations in 1971–72 following revaluation, according to estimates provided by the local assessors ; and its effect will be to leave the Gas Board in broadly the same position relative to other ratepayers in Scotland as it was in 1970–71. An exactly similar approach was adopted in reviewing the Gas Board's basic valuation on the occastion of the last revaluation in 1966.

Turning to the Water Valuation Order, the Local Government (Scotland) Act, 1966, introduced a new system of valuing water undertakings by reference to a prescribed "norm" or national average rateable value per thousand gallons of water. Under the new system the raleable value of an undertaking is arrived at broadly by multiplying this norm by the average daily output of water. Thus the rateable value of all undertakings is equated directly with output.

The present norm of £5.568 per thousand gallons was arrived at by dividing the aggregate rateable value of all water undertakings prior to the 1966 Act by the aggregate potential output of water and increasing the resultant factor by a percentage reflecting the general increase in rateable values in Scotland as a result of the 1966 revaluation.

The Water Valuation Order is on all fours with the Gas Board Order in applying the general revaluation increase of 75 per cent. of the existing norm, thereby increasing it to £9.744 for each year of the new valuation quinquennium.

The effect of the Order will be to maintain water undertakings collectively in approximately the same position relative to other ratepayers as before the revaluation.

10.56 p.m.

Dr. J. Dickson Mabon (Greenock)

I am determined to try to elicit the facts behind this.

The hon. Gentleman used the expression "relative to other classes of ratepayers" or "collectively disposed to other classes of ratepayers." He said this was on all fours with the Gas Board Order. How docs he know? In order to defend that statement the Minister should tell us the average increase in rateable values in the different classes of ratepayers in Scotland. He has not given us this increase. He has not told us the total percentage as presently expressed and he is basing his Order on the figures that are presently available.

The hon. Gentleman has not given us the present Scottish average or the domestic classification and he has not given us the commercial or industrial figures. He has left us high and dry in a position which even the hon. Member for Dumfries (Mr. Monro) with his great mathematical skill—and I say that sarcastically—would find difficult to to calculate.

How can the Under-Secretary assess the relative position as 75 per cent. in the case of water where it is raised from £5.568 to £9.744? We do not even have comparisons within the Gas Board Order. All we are told in paragraph 2 is that in subsequent Orders the figure will be £1,281,860.

I am taking three minutes to develop these arguments to try to give the Under-Secretary time to get the figures from the box for the breakdown of the Scottish average into its different classifications.

I am informed that the domestic proportion is 84 per cent. If that is so, it means that the domestic ratepayer is being asked to pay proportionately more in rates—in this case 9 per cent.—than the water undertaking, which is raised by 75 per cent. There may be a case for that. Perhaps there are difficulties in water finance that suggest that water undertakings should have this preference.

The Conservatives gave us a rough time on the Water (Scotland) Act, 1967, one of the great modernising instruments of legislation which the last Parliament passed under such a glorious Government. If they are saying that these undertakings should have a preference, it comes as a great surprise. Maybe the domestic figure is not 84 per cent. What is the increase for industry then? Will industry be content that this should be dealt with "fairly and justly" relative to other classes of taxpayer?

What is the rise in industrial assessments in Scotland? Is it 75 per cent., as with water? Is the commercial figure 75 per cent.? If there is a difference between water and the others, may we have a short explanation why water has been given a penalty—that is, above the average—or a preferences—below the average—by the choice of the figure of 75 per cent.?

Then, of course, the Under-Secretary will greatly entertain us on the Gas Board Order. He will have to tell us what the figure is. We know the absolute figure, but not the relative figure, the percentage. I should like to know what the Gas Board percentage is in terms of increase over the quinquennial review in 1966 and how this compares with the other classes of ratepayer.

I will not necessarily rest content because I do not rise again and let the Order go through. No doubt we will debate this elsewhere. I give due notice that we will not permit the Government, even with the support of the local authority associations, to put through inequitable Orders, or allow them to muddle the inevitable judgment on the equitability of the quinquennial review which is now being put into operation.

There will be massive increases in rates of 10 or even 15 per cent. in Scotland. If that is so, for whatever reasons—I suspect that many of them lie in the Government's own cupboard and record—we must ensure that this is shared out equally between all the ratepayers, including all these great publicly-owned undertakings. I should like to know the reasons for these judgments, for that figure and for the 75 per cent. before we proceed.

11.2 p.m.

Mr. Younger

With the leave of the House, I shall do my best to provide the information which the hon. Member for Greenock (Dr. Dickson Mabon) seeks. First, the figure of 75 per cent. which we have applied for the increase to the general norm in both these cases is reached by taking into account the increases that at present appear likely on revaluation in the various categories of ratepayer throughout Scotland. It is too early yet to give absolutely final figures because these are naturally affected by the success or otherwise of appeals which will be going on all over the country against these assessments.

The hon. Gentleman also knows, of course, that the actual amount of revaluation is a matter entirely in the hands of the assessors and is not in the control of the Government. We are merely recording what, in the opinion of the assessors throughout Scotland, is the increase in rateable value under the Statutes under which they operate. The general figure of 75 per cent. that I mentioned could be taken as 78 per cent. on the present figures that we have but it has been rounded down to 75 per cent. to make some allowance for the probable success for a certain number of appeals. So the hon. Gentleman will perhaps agree that 75 per cent. is a fairly reasonable figure to take in that amount.

As for the individual figures, it appears so far—this is before any appeals have been heard or their effect has been shown—that the domestic ratepayer will have an increase of approximately 86 per cent. in this revaluation, the industrial ratepayer of about 67 per cent., the commercial ratepayer about 73 per cent. and the other miscellaneous categories which are not covered by any of these about 73 per cent. also.

The hon. Member for Greenock will know that these figures for rateable valuations bear no relation to what the firms or individuals will actually pay, for that is dependent on the rate per £ which is fixed by the various local authorities throughout Scotland. It is too early for me to give any indication what the average figure of rates actually paid is likely to be by the various classes of ratepayer because only a comparatively small number of local authorities have so far come to a decision on what their new rate poundage will be.

As I have said previously, the Secretary of State and the Government have pressed and are pressing local authorities throughout Scotland to bear in mind the need to keep any increases in their rate poundages down to the minimum this year in view of the increased rateable values and the general pressure on the cost of living, about which we all know.

All I can say on this point now is that, although it is too early to come to firm conclusions, it is our hope that the local authorities will manage—they will certainly get all our encouragement to do so—to keep increases down to not more than they were under the last revaluation, when the figure was about 19 per cent. in terms of actual rate poundage.

Dr. Dickson Mabon

Why has the figure of 75 per cent. been chosen? If, as the hon. Gentleman has confessed, the figure for the domestic ratepayer has been fixed at 86 per cent. and the others at 73 per cent. and 67 per cent., why has he chosen 75 per cent.? Why is the water board being asked to bear a less substantial share proportionately than the domestic ratepayer?

Mr. Younger

This is a simple mathematical calculation and involves striking a balance between them. I am not confessing that the domestic ratepayer has an 86 per cent. increase. I am merely reporting that this is the decision of the assessors throughout Scotland. As the hon. Gentleman knows, this has absolutely nothing to do with the Government. It is decided absolutely independently by the assessors, and I am sure he will confirm that he knows this to be the position.

Dr. Mabon

I appreciate the position as it exists under the 1956 Act, which was passed by hon. Gentlemen opposite against our protests. This position compares unfavourably with the position in England, which is assessed not by assessors, with all the disparities that occur under that system, but by the Inland Revenue. Is the hon. Gentleman aware that the Government have power, through the Scottish Valuation Advisory Committee, to seek to rectify these figures by reporting to that Committee that the Secretary of State is not satisfied? Is he further aware that by going forward with these Orders he is merely perpetuating an unsatisfactory situation? Will he take the opportunity of the Green Paper on local government finance to amend the Act from which these Orders flow?

Mr. Younger

The hon. Gentleman is a bit late in demanding a change in the whole process. After all, he had six years in which to make such a change.

Dr. Mabon

But only one review.

Mr. Younger

If the hon. Gentleman had wanted to make such a change, he could have put the Wheatley Commission on Local Government to considering finance in the first place, and we might have had the Green Paper long before now. However, I assure him that the Government intend to publish a Green Paper on local government finance before long, and then we can discuss this whole issue.

Question put and agreed to.

Resolved, That the Valuation (Water Undertakings) (Scotland) (Adjustment) Order 1971, a copy of which was laid before this House on 12th July, be approved.

Resolved, That the Valuation (Scottish Gas Board) (Scotland) Order 1971, a copy of which was laid before this House on 12th July, be approved.—[Mr. Younger.]