GENERAL RATE (PUBLIC UTILITIES) BILL [Lords] (Hansard, 23 February 1977)

§ The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)
I beg to move, That the Chairman do now report to the House that the Committee recommend that the General Rate (Public Utilities) Bill [Lords] ought to be read a Second time. This Bill fulfils promises made in reply to Questions in the House in August and October last year that legislation would be introduced as soon as possible to validate some formula rating orders which had inadvertently been allowed to lapse, and to correct a mistake which had been made in another order. The lapsed orders prescribed the formulae which should have applied to the National Coal Board, mines and quarries generally, and statutory docks and harbours. The order requiring correction is the one which prescribed a new formula for the gas industry from 1st April 1976.
This is a short Bill, but because it deals with complicated matters it is by 1600 no means simple. I shall attempt briefly to explain as simply as I can the main provisions of the Bill.
Clause 1 deals wth the lapsed orders. In common with many public utilities, the National Coal Board, mines and quarries and statutory docks and harbours are rated by formulae, since normal methods of valuation would be very difficult to apply. Such formulae are often determined under order-making powers to avoid having to come to Parliament with a Bill every time an amendment is needed. This is the case for the industries in question, and the order-making powers were contained in Section 35 of the General Rate Act 1967. Five orders were made either under this section or under the section in the Rating and Valuation Act 1961 which became Section 35 on the consolidation of rating law in the 1967 Act, and they are listed in the Explanatory and Financial Memorandum.
Section 35 of the 1967 Act was superseded by Section 19 of the Local Government Act 1974, and the 1974 Act quite 1601 properly repealed Section 35. The Act contained no saving for the orders already made under Sections 35, but it gave power to include savings of that kind in commencement orders bringing parts of the Act into operation. Unfortunately, the commencement order bringing the repeal of Section 35, among other provisions, into operation failed to make the necessary saving for the Section 35 orders. Those orders have thus been void since 1st April 1974, the date when the repeal of Section 35 came into operation.
This means that the property occupied by the NCB and other mines and quarries are now, and have been since 1974, rateable in accordance with the ordinary rating provisions of the General Rate Act 1967 and not, as was certainly intended, in accordance with the formulae prescribed in the lapsed orders. A new order for docks and harbours, made under Section 19 of the 1974 Act, came into effect on 1st April 1976. Thus, docks and harbours were rateable in accordance with ordinary rating provisions in 1974–75 and 1975–76 but are now rateable under the new order.
All interests affected have acted on the assumption that the orders have remained in force. To leave matters to be sorted out under the present law would cause a large number of amendments to valuation lists, involved negotiations, and probably litigation, to no good purpose.
Clause 1 of the Bill, therefore, provides that any order made under Section 35 shall not be affected by the repeal of that section by the Local Government Act 1974, and furthermore that all such orders shall be deemed to have been made under Section 19 of the 1974 Act.
Additionally, the clause provides for one of the revived orders—the Docks and Harbours Valuation Order 1971–to be revoked from 1st April 1976. This is because the order was superseded on that date by the Docks and Harbours (Valuation) Order 1976. The 1971 order was not revoked at that time because it was realised that it had already lapsed.
Clause 2 deals with the error made in the Gas Hereditament (Rateable Values) Order 1976. This order specifies a method for determining the rateable value of the British Gas Corporation from 1st April 1976 onwards. It does this by applying a formula to the earlier value specified in 1602 the General Rate Act 1967 but unfortunately, when the formula was devised, the fact that the 1967 value had been substantially increased by order in 1972 was overlooked.
Although the current order refers to the value specified in the 1967 Act, we are advised that this reference must be taken to mean the 1967 figure as amended by the 1972 order. This gives a rateable value of about £150 million instead of the intended £60 million. Although it is the £60 million which, as broken down in accordance with the prescribed formula, now appears in the valuation lists, the entries in the lists have not been calculated in the manner required by law and valuation officers could be compelled to insert the higher rateable values in the valuation lists. Thus, the British Gas Corporation could find itself being liable to pay two and a half times as much as Parliament clearly intended.
Clause 2 amends the order to specify the intended value of £60 million in place of the existing incorrect formula, and this amendment is retrospective to 1st April 1976. Additionally, we are taking the opportunity of ensuring that the enabling power, Section 19 of the Local Government Act 1974, allows a figure to be specified instead of a formula. This is dealt with in Clause 4. I am sure hon. Members will join me in greeting this latter provision with some relief, since it should result in at least some simplification of rating formulae that the House may have to consider in the future.
Clause 3 provides for the indemnification of rating authorities, valuation office officials and all other persons against any consequences incurred as a result of the errors rectified by Clauses 1 and 2. Valuation officers have been responsible for maintaining valuation lists in accordance with the orders in question, and rating authorities have been levying rates on those values. All those concerned in such activities have proceeded on the basis that the errors have not been made.
The net result of these measures will be to ensure that the rates on the industries concerned have been paid, and will be paid, in accordance with the provisions previously agreed by Parliament. The proposals will not injure the ratepayers concerned. They have acted on the assumption that these errors have 1603 not been made, and the intended rateable values have been accepted.
I apologise for the fact that this Bill is necessary. In mitigation, I can only say that the law for which my colleagues in the Department and I are responsible is vast and is constantly changing. That is not to suggest that we should take such matters lightly. Far from it. We shall continue in our attempts to ensure that such amending legislation is not found to be necessary. I hope that the brief and clear explanation which I have given will commend itself to the Committee.

§ Mr. Tony Durant
We greet this Bill with some reservations, though we recognise that it is necessary to honour what was said in the House. I must, however, comment that it illustrates the way in which we prepare our legislation. We do not always get it right when we ought to get it right, and this is something of which the House should take more recognation. We should not find it necessary to come back and do this sort of thing. We have heard the words "overlooked" and "forgotten" and other similar words, and I do not think that this is satisfactory.
There is no doubt that it is a complicated Bill which is difficult to understand by anybody's standards. The formula requires tremendous mathematical ability and imagination to understand it. It is also arbitrary in that it settled, without much option, a complex formula. it illustrates again the difficulties of the whole rating system.
The Minister has told us that the public utilities have continued to be rated as though this Bill was in existence. I hope that that is so, and I shall be grateful for his assurance on that. I am asking this question only out of concern that local authorities may suddenly lose more money. If I can be assured that that will not happen, I shall be grateful.
The Bill shows once again that we should not have postponed the revaluation, which was put off by the Government recently. It was put to the House that a revalation should be commenced, but it was then put off. This was a mistake because it makes continual difficulties for valuation officers, who have less and less evidence 1604 on which to settle the valuation of anything. This is one of the great difficulties for valuation officers, and I think it a pity that we did not do the revaluation which has been put off.
Layfield in his report expresses strong views about rating public utilities, and I shall make two small quotations: Local authority associations have suggested that the current arrangements are unsatisfactory in rating public utilities, and that they would prefer some form of independent arbitration. I think that that should be considered when the Government look at the Lay-field Report and make their own rating proposals.
There may be an argument for reverting to a more commercial type of rating for public utilities. There is a danger with the present rating system that public utilities will hold on to properties and land because they receive rather favourable treatment in rating. If, however, they were commercially rated they would look at their sites more carefully in order to save money and might decide to get rid of them. To release more land and property from public utilities, might be a good thing. This is something at which we can look when we debate the Layfield proposals.
There is no doubt that there is an urgency about the whole rating question. A Bill like this highlights the urgency of debating the Layfield Report and making concrete proposals on rating and whatever re-rating system the Government propose.
The public have had enough of the present rating system. The Opposition have had strong views on the matter. We have urged the Government to have the report discussed as early as possible. I know that the inquiry is proceeding at the moment, but it is time that we had a debate in the House on the Layfield Report, to be followed by concrete proposals, so that the public may know what is to happen.
Otherwise, in general terms, we accept the Bill. It is necessary. We must have it to ensure that the system works properly. The Opposition have no intention of dividing on the matter.

§ Mr. Armstrong
I am grateful for the comments of the hon. Member for Reading, North (Mr. Durant). I confirm that we, and valuation officers themselves, have acted as though the orders were in force. There will be no cost to rating authorities or to ratepayers. I give that assurance readily.
It is true that revaluation was postponed because of consideration at Lay-field. All I can say is that the Layfield Report is under consideration. We all have, of course, criticisms of the rating system, but the trouble comes when we have to suggest alternatives. That is when the argument begins. The truth 1606 is that there are no easy options for raising the money necessary for our public services. I take the point raised by the hon. Gentleman opposite about the rating of public bodies, but this Bill is necessary in order to rectify the matters which I raised in my opening speech. I hope that the Bill can now be accepted for Second Reading.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:
Butler, Mrs. Joyce (Chairman)	Dean, Mr. Joseph
Armstrong, Mr.	Durant, Mr.
Clegg, Mr.	Gould, Mr.
Cowans, Mr.	James, Mr. David
Crowther, Mr.	Taylor, Mrs. Ann