HC Deb 31 July 1978 vol 955 cc212-20

12.7 a.m.

The Minister of State, Scottish Office (Mr. Gregor MacKenzie)

I beg to move, That the Valuation (Water Undertakings) (Scotland) (Adjustment) Order 1978, a copy of which was laid before this House on 24th July, be approved.

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

I think that it will be for the convenience of the House to discuss at the same time the following motions: That the draft British Aluminium Company Limited and Lochaber Power Company (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July be approved. That the draft British Gas Corporation (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved. That the draft British Railways Board (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved. That the draft Post Office Telecommunications Services (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved. That the draft Scottish Electricity Boards (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved.

Mr. MacKenzie

These six orders have much in common since they all relate to the formula valuation of undertakings in Scotland, and together they cover virtually all the undertakings which at present either make payments in lieu of rates or are valued, according to formula. The orders prescribe aggregate rateable values for the current year for the operational undertakings of the Gas Corporation in Scotland, of the British Railways Board in Scotland, of the Post Office telecommunications services in Scotland and of the Scottish electricity boards. The water undertakings order is of a different kind and I shall deal with it separately. The orders also prescribe formulae for the determination, by the assessor of public undertakings, of aggregate rateable values for subsequent years and for the apportionment of the aggregate values for any year among local authorities. Rates will then be levied in the normal way on the apportioned values. The remaining order provides the formula for the valuation by the local assessor of the British Aluminium Company's hydroelectric installation in Lochaber.

The undertakings concerned are among those which, because of their size and complexity, are not considered suitable for conventional valuation for rating. The electricity and railways boards do not pay rates at present, but make payments in lieu of rates under a statutory formula. The other undertakings are already subject to a statutory formula valuation but these are replaced under the relevant orders by revised formulae. The orders will have effect from the beginning of the current rating year—that is, 1st April 1978.

The orders prescribe the following aggregate values for the current year: South of Scotland Electricity Board, £21.6 million; North of Scotland Hydro-Electric Board, £5.3 million; Gas Corporation, £5.6 million; Railways Board, £1.97 million; Post Office, £2.44 million; British Aluminium, £461,000.

These amounts have been fixed after taking into account a number of considerations, including the level of rating on the corresponding undertakings in England and Wales, and they are considered to be fair and reasonable both to the undertakings and to the local authorities.

Rates payable for the current year on the prescribed values, after apportionment, will in total be more than 14 per cent above the payments made by the undertakings for 1977–78. While this increase will not of itself give rise to any early increase in the charges made by the undertakings, the level of rates will, of course, be a factor, along with other costs, in future reviews of charges.

The aggregate rateable value of each undertaking for years subsequent to 1978–79 will be determined for the assessor of public undertakings by increasing or reducing the previous year's aggregate by in most cases 25 per cent. of any change in the activity of the undertaking, in terms of the amount of electricity or gas supplied or generated, or of railway passengers and freight carried. In the case of the Post Office, the actual increase in value will be directly proportionate to the increase in the number of exchange connections.

Apportionment of the aggregate values of the electricity and gas undertakings among local authorities is usually in two parts. In each case part of the aggregate will be allocated to areas in which there are major assets such as generating stations or elements of the national gas transmission system; the remainder will be distributed, in the case of electricity and of the Post Office, in proportion to the rateable value of other property in each area and, in the case of gas, in proportion to the gas consumption in the area. The railway aggregate will be apportioned among areas in which receipts accrue to British Rail from passenger and freight traffic. Under the new arrangements some areas will derive relatively more income and others relatively less from the undertakings. However, these changes will be reflected in the distribution of the resource element of rate support grant. For the British Aluminium Company situated in two districts, apportionment offers no problems.

The remaining order, that for the water undertakings, can be explained fairly simply. It is made under the Local Government (Scotland) Act 1966, which by section 16 and schedule 2 provides in effect that the rateable value of water undertakings shall be a prescribed sum multiplied by the gallonage of water supplied per day. At the time of the 1971 revaluation the sum was £9.744. The order effectively increases this sum by a factor related to the effect of revaluation on rateable values generally in Scotland making it £31.21. This will maintain the relative position of water undertakings in scale of values, again with effect from 1st April this year.

These orders follow a review of the rating of the undertakings, carried out in co-operation with representatives of the undertakings and of the Convention of Scottish Local Authorities, which has been advised of the proposals in the orders. I commend the orders to the House.

12.12 a.m.

Mr. Alexander Fletcher (Edinburgh, North)

I am grateful to the Minister for explaining some of the complications of the procedure. We are aware that it is not exactly a straightforward system of rating. It requires a certain amount of explanation. It reveals to a considerable extent the inadequacy of the rating system. It has been argued on other occasions that this is the only way in which public undertakings can be assessed for inclusion in the rating system.

I question that, however, because I believe that industrial undertakings in the private sector, which often involve buildings and services which are not dissimilar from the undertakings we are discussing, such as oil and chemical plants, appear to be capable of assessment and are included in the ordinary assessment valuations by local authorities. Indeed, there are sites throughout Scotland where such rather complex industrial operations are carried out and they are assessed for rating in the ordinary way. However, perhaps the complexity of these arrangements emphasises the need either for the abolition of the present rating system or for a fairer and more straightforward system of local taxation. However, these are not matters that we shall go into tonight.

I wish to put three questions to the Minister. The first concerns the operational undertakings of the South of Scotland Electricity Board, the North of Scotland Hydro-Electric Board, and the British Railways Board in Scotland that make annual payments in lieu of rates. The remaining undertakings are subject to the formula valuations. The Minister mentioned a 14 per cent. increase this year over the previous year. I wonder whether this is sufficient to take into account in all these orders the revaluation which came into effect on 1st April this year in Scotland which generally speaking imposed a heavier rates burden on commercial and industrial undertakings. Is that revaluation and the increased cost of rates to industry and commerce in Scotland reflected in these orders?

Second, during the passage of the Local Government (Scotland) Act 1978, which amended the Local Government (Scotland) Act 1975, we were particularly concerned about consultation with local authorities and other interested parties and organisations. Were full consultations carried out with regard to these orders, and has full agreement been reached with all the third parties involved in these rather separate assessments?

Finally, I ask the Minister about the review of formula which I understand was made in England and Wales and resulted in new and higher assessments for electricity, gas and railways in 1976 and 1977. In view of the obvious differences in the types of undertakings in Scotland, notably in electricity for which we have the virtually unique electricity board in the south of Scotland which generates and distributes electricity and the Hydro-Electric Board in the north of Scotland, is the Minister satisfied that the review in England and Wales was of any real value to Scotland, and should not a separate review have taken place in Scotland to enable us to make our own assessment of these undertakings?

If the right hon. Gentleman can reply to those questions, I shall be grateful.

12.16 a.m.

Mr. Hamish Gray (Ross and Cromarty)

I am glad to have an opportunity to say a few words even at this time of the night on the subject of these orders. I wish first to speak about the British Aluminium Company and the work which it has done in the Highlands. Although the relevant order does not specifically refer to its activities in Ross and Cromarty, it refers to its activities in other parts of the Highlands.

I wish the House to know of the work which the company has done and the benefit it has brought to the people in that area through the employment which it has provided. It is worthy of note that over the years, although it has had to suffer all the difficulties which every other development has faced in the Highlands of Scotland, British Aluminium has managed to survive and produce at the end of the day in my constituency in Invergordon a smelter which gives employment to no fewer than 1,000 people. This is much appreciated in the Highlands, and even those who, I think, had reservations about the company's activities in the early stages have now come to acknowledge the benefits which it has brought.

I wish now to say a word about the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board. Does the order include, for example, the fishings which are administered by the North of Scotland Hydro-Electric Board? In my constituency there are many fishings of great value at present administered by the board, to the great acceptance of everyone in that area. I should like to have it confirmed that the order covers that area.

As regards matters ancillary to fishing, I think it worthy of mention that the North of Scotland Hydro-Electric Board has accrued unto itself a certain admiration from the people living in the area because not only has it been able to provide employment at a time when employment has been very much needed but the social aspect of its work has been greatly appreciated. Perhaps the Minister would care to comment on some of the matters which I have mentioned in earlier debates with reference to the activities of the board, especially in regard to its relationship with the British Aluminium Company. Those of us who have lived and worked in the Highlands for many years see both the British Aluminium Company and the North of Scotland Hydro-Electric Board as integral parts of the prosperity which is now bringing a great deal of benefit to us. I should like the Minister to comment on the Government's attitude towards the pricing of electricity to industry which hopes to move into the area.

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

Order. We are dealing with five motions, but I am not certain that the matter to which the hon. Gentleman is referring is covered by any of them.

Mr. Gray

I am grateful for your guidance, Mr. Deputy Speaker. I shall of course be guided by you, but I am sure that you will agree that when we are discussing such questions as the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board and the rates they will have to pay for the land or property which they occupy, what they ultimately aim to do must clearly be part of the discussion. I hope that you will bear with me if I develop my argument in the briefest possible way in order to keep within the rules of order.

Mr. Deputy Speaker

If the hon. Gentleman will be good enough to help me as to which of the orders he is talking about, and which part of that order, I shall be only too pleased to accommodate him.

Mr. Gray

The orders to which I am referring are the draft Statutory Instruments relating first to the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board and, secondly, to the British Aluminium Company. Those two orders are of specific interest to us. I am sure that the Minister will do his utmost to answer my questions.

I do not intend to detain the House for long, but I feel that where one has a specific constituency interest this is one of the few opportunities to raise such questions in the House. I am sure that you will agree, Mr. Deputy Speaker, that if one could keep within the rules of order one could go on for an hour and a half on these subjects. I have no intention of doing so, but I give the Secretary of State that preliminary warning.

I hope that the Minister of State will give a little more detail on exactly what the orders mean and how they apply to the points I have raised.

11.23 a.m.

Mr. Gregor MacKenzie

Much as we should all like to comment on the price of electricity and so on, and tempted as I may be to do that, you would certainly rule me out of order, Mr. Deputy Speaker.

I echo the comments of the hon. Member for Ross and Cromarty (Mr. Gray) about the work done by the North of Scotland Hydro-Electric Board in relation to employment in the Highlands. My right hon. Friend the Secretary of State and I have always said that we very much appreciate the board's work as we do the work of the Highlands and Islands Development Board. But although I should like to follow the hon. Gentleman into that argument, it does not fall within the orders. The hon. Gentleman also asked about the fishings. They are not included in the formula for valuation, as they are rated separately.

The hon. Member for Edinburgh, North (Mr. Fletcher) asked me a number of questions. He said that he was not satisfied that we yet had in Scotland the correct form of rating. We have discussed this subject for a long time. We have one thing in common, that neither of us likes paying rates, but I am not certain that that is a view the Government can take.

The hon. Gentleman asked me whether we were approaching the matter in the right way. It is very difficult to compare large public companies, monopolies, which have large plants and all manner of lines, pipelines and so on, with industrial interests. The working party did a useful job on this and we are indebted to it. The only sensible way of looking at this was to see what had happened in the review which took place in England and Wales concerning gas and electricity. In one case a figure slightly above percentage turnover was fixed while in the other case the figure was slightly below the percentage turnover. We looked at the issue and decided that the figure was somewhere around 3 per cent. This is reflected in the orders.

The hon. Member for Edinburgh, North also asked about the rate burden of the public utilities. One of his noble Friends raised this matter last year, asking whether there had been a declining contribution from them in Scotland. The share of the overall rate burden met by the electricity boards should rise this year from 1.91 per cent. to 2.25 per cent. while the gas industry contribution should rise from 0.45 per cent. to 0.48 per cent. The railways' share should rise from 0.10 per cent. to 0.18 per cent. Taking all of the orders tonight, the rise is from 4 per cent. to 4.5 per cent. Whether this will continue remains to be seen. I said in opening that the formulae we have laid down will reflect an increase. There could be a reduction but one hopes for an increase in railway traffic, in Post Office connections, in the amount of gas consumed and so on.

I was also asked about consultation. The only groups of people concerned about the formulae were those concerned with the undertakings and those in the local authorities. They have formed part of the working parties and their views are reflected in the orders being put forward tonight. There has been fairly full official consultation with them. I hope that the hon. Gentleman agrees.

Question put and agreed to.

Resolved, That the Valuation (Water Undertakings) (Scotland) (Adjustment) Order 1978, a copy of which was laid before this House on 24th July, be approved.

Resolved, That the draft British Aluminium Company Limited and Lochaber Power Company (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved.—[Mr. Gregor Mackenzie.]

Resolved. That the draft British Gas Corporation (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved.—[Mr. Gregor Mackenzie.]

Resolved, That the draft British Railways Board (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved.—[Mr. Gregor Mackenzie.]

Resolved, That the draft Post Office Telecommunications Services (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved.—[Mr. Gregor Mackenzie.]

Resolved, That the draft Scottish Electricity Boards (Rateable Values) (Scotland) Order 1978, which was laid before this House on 24th July, be approved.—[Mr. Gregor Mackenzie.]