HC Deb 10 May 1971 vol 817 cc151-4

9.34 p.m.

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

I beg to move, That the Valuation (Mines and Quarries) (Scotland) Order, 1971, a copy of which was laid before this House on 23rd April, be approved. This Order is similar to one applying to England and Wales which was approved by the House on 29th March. It gives effect, in relation to valuation for rating in Scotland, to the changed view now taken of what a mineral royalty represents. Until recently these royalties were regarded as being wholly in the nature of a rent; and they were treated both for national taxation and local rating purposes wholly as income of the mineral owner. A royalty for the extraction of minerals is, however, partly a capital payment for the material removed as well as a rental payment for the occupation of the land. This was recognised in relation to income tax, surtax and corporation tax by the Finance Act, 1970, which provided that for those purposes mineral royalties should be treated as being half a rent and half a capital payment. The last Administration announced that they intended to make a similar adjustment of the basis of assessing mineral subjects to rates, and we have decided that this is a proper course to follow.

The House will be aware that, for rating purposes, the annual value of property is based upon the rent which it may be expected to command. In pursuance of that principle a mine or quarry has hitherto been valued largely by reference to the royalty paid, or which could be expected to be paid, for the extraction of minerals from it. Now that the royalty is to be regarded as having only a 50 per cent, rental component the Order brings this into effect, quite simply, in Article 4, which provides that in arriving at the annual rent or value of those mineral properties the element of value attributable to the right to win and work minerals is to be reduced by one-half. The element of value relating to buildings, plant and machinery will be unaffected by the Order. In common with the rest of industry in Scotland, mines and quarries will continue to be eligible for industrial derating, which will be effected by applying the derating percentage to the annual value arrived at in accordance with the Order.

The financial effects of the Order on local authorities will be small. If the Order had applied in the current year the overall reduction in the valuations of mineral properties would have been of the order of £300,000, or about 0.2 per cent, of the aggregate Scottish rateable value. Because of the compensatory effect of the resources element of rate support grant, the additional burden on other ratepayers will be widely spread. However, in order to make the transition gradual, the Order provides for a reduction limited to one-quarter of the royalty part of the annual value for the first year, 1971–72, increasing to one-half from 1972–73 onwards. On top of that, as I have said, 50 per cent, industrial derating will apply.

The Order was drafted after consultation with bodies representative of mining interests and the local authority associations. The local authorities deprecated the further erosion of the rating base which the Order represented but we told them that, standing the decision already reached about mineral royalties in relation to national taxation, the Government regarded themselves as committed to the Order.

I commend the Order to the House. It introduces an equitable principle of taxation, already approved by Parliament, into the field of rating, and although its effect on local government revenue will be small, and on individual authorities hardly discernible, it will do something useful for the mining industries in Scotland.

9.38 p.m.

Mr. George Lawson (Motherwell)

I have only a question. This Order relates to the rateable value of mines and quarries. The question in my mind, and, I am sure, in the minds of my hon. Friends, is, why just mines and quarries? Why not all those broad acres of land, so rich in Scotland? Why not? We have been arguing about the burden of rates and of different proportions of rates. I do not want to use strong language, but, really, it is a crying scandal that we have this little measure dealing with mines and quarries when there are all those acres crying out to be treated likewise. That they are not is a grave omission. Perhaps the Under-Secretary would like to take the Order back and have it amended, or else—although it would be a very poor second best—put in the Green Paper provisions about bringing into rateable value, on which so much depends, those broad acres not only of agricultural land but of much else besides, in order that they, too, may play a part in meeting the cost of the very expensive services which are regularly rendered to their owners or occupiers.

Mr. Younger

With the leave of the House, perhaps I might thank the hon. Member for Motherwell (Mr. Lawson) for his usual beguiling intervention, though he sought to draw me far beyond the bounds of rectitude in discussing an Order of this sort.

The Order deals with a problem of the mining industry, and it is not open to me to go further at this stage. No doubt the hon. Gentleman will expand his argument in forthcoming debates on the Green Paper.

Question put and agreed to.

Resolved, That the Valuation (Mines and Quarries) (Scotland) Order, 1971, a copy of which was laid before this House on 23rd April, be approved.

  1. CORPORATION TAX 120 words