HC Deb 15 March 1978 vol 946 cc522-36

7.15 p.m.

Lord James Douglas-Hamilton (Edinburgh, West)

I beg to move Amendment No. 2, in page 2, line 16, at end insert— '3(A) An order under this section which provides for the matters described in subsection (3) above shall be accompanied by a report setting out the considerations which led the Secretary of State to make such provision'. This amendment is somewhat in the nature of a probing amendment and has been moved in order to avoid regional bias. After all, when an order is made under this section— applying to any lands and heritages or any class or description of such lands and heritages may provide for determining a ratable value or aggregate amount by the application of different methods of valuation; apportioning a ratable value or aggregate amount by the application of different manners of apportionment". —it could be that there might be regional bias in certain cases. Perhaps in certain circumstances this could be justified.

However, I cannot help believing that there could be no harm in the Secretary of State producing an accompanying report setting out the considerations that led him to make such a provision and giving his reasons for it. It seems eminently reasonable. After all, if the Secretary of State is acting unreasonably, this will come out. But if he is acting reasonably—as no doubt the Minister will claim—there would be no possible harm in his setting out his reasons.

Mr. McElhone

Section 6(3) of the 1975 Act as substituted by Clause 1 of the Bill allows the Secretary of State to use different methods of valuation and apportionment for different parts of the property of an undertaking in order to take account of local circumstances. The purpose of this flexibility is to ensure that the valuations are fair to the ratepayers of any particular area as well as to the undertaking. The hon. Member's amendment is designed to require the Secretary of State, when he makes use of this flexibility, to make a special report to Parliament when he seeks its approval to the order giving effect to this arrangement.

I can understand why the hon. Member has put down the amendment but I hope that I can convince him that he should not press it. It will be in the interests of all concerned and particularly of the local authorities and the ratepayers that this particular power to make flexible arrangements should be freely used.

When the draft order implementing such arrangements is brought to the House it will be necessary for the Secretary of State to explain to the House why and in what way he has used all the powers in the section. To pick out this particular power for a special report would imply that its use should be exceptional and this might inhibit Governments, of whatever colour, from using it. This would be a great pity because I am sure that there would be circumstances in which it would be the only way of getting a fair valuation and distribution of valuation. It will be of benefit to ratepayers generally.

As I have made clear, the Secretary of State will have to explain to the House why and in which way he has used the powers in question. He will do this on an affirmative order. This is a change from previous valuation legislation which has always been subject to a negative resolution. This is a step forward. Any hon. Member can question the Secretary of State about the way in which he arrived at his valuation.

That is as far as we can go to meeting the wishes of the electors in such matters. I hope that the hon. Member will take the assurances that I am giving because I do assure him that the Secretary of State will be answerable to the House.

Mr. Iain Sproat (Aberdeen, South)

The Minister is being uncharacteristically reticent with the House tonight. We have heard the feeble answer which he gave to my hon. Friend the Member for Ayr (Mr. Younger) and the hon. Member for West Stirlingshire (Mr. Canavan). I hope that he will be a little more forthcoming on this matter.

My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) has asked that a special report be made. The Minister says that the Secretary of State will come to the House and explain everything anyway. If that is so, why is he not prepared to make a special report? That is all that my hon. Friend is asking for. The Minister of State has nine advisers in the box who are costing the taxpayers and ratepayers £700. Surely they could draft a report to show the ratepayers that they are being treated fairly.

No doubt my hon. Friend will seek to divide the House on this matter if the Minister is not more forthcoming. I do hope that the Minister will guarantee that the Secretary of State will make such a report. It is little more of a requirement than a speech to the House, but it will make everything rather more open, public and reassuring to ratepayers.

Mr. McElhone

I do not know why the hon. Member for Aberdeen, South (Mr. Sproat) has committed political harikiri with another swingeing attack on civil servants. He is bringing down more odium on his own head at the next election. There are many Civil Service voters in his constituency and he is committing political suicide by attacking people in the Box who cannot answer back. Still, there is no reason why I should worry too much about that. It will certainly increase the number of Labour Members.

In previous legislation under Conservative Governments the House had a chance to use only the negative resolution procedure, which gave little or no opportunity to individual Members to question the Secretary of State. We are bending over backwards by introducing the affirmative resolution, to make the procedure as democratic as possible for the individual constituency Member to question the Secretary of State. That is as far as democracy allows the House to go, and it is a very pertinent way of doing things. At the same time it means that we are concerned that we should not be too bureaucratic in Government.

If the hon. Member for Aberdeen, South wants me to reduce the number of civil servants who come to this House and at the same time create more and more reports it will cause more and more concern for the Secretary of State of the day. It may be that by some mischance the hon. Member for Aberdeen, South himself will one day be Secretary of State for Scotland. I would not want to inhibit him, when he already has a heavy burden to carry, and make his job more difficult by creating voluminous reports that must be made to the House. If the Secretary of State comes to the House and explains his position in a clear and candid way that should be sufficient for anyone. Perhaps the hon. Member for Aberdeen, South will reflect on some of the things that he said about civil servants before it is too late.

Lord James Douglas-Hamilton

In the light of the Minister's answer I shall not press the amendment to a vote at this stage. However, if the Secretary of State abuses the power by showing an unreasonable regional bias, I shall seek to return to the matter at a later date. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Alexander Fletcher

I beg to move Amendment No. 3, in page 2, line 23, at end insert— '(4A) In making an order under this section the Secretary of State shall show that payments in lieu of rates to be made by certain public utilities and bodies and by certain undertakings shall increase or decrease in proportion to the general level of rates paid by industry in Scotland.' This amendment is rather similar to that which we have just discussed. Our object is to try to specify the information that might be available to the House when considering the order.

I advise the Minister that he does not have a full picture about the attitude on this Bench towards the Civil Service. I am the Member for Edinburgh, North and I have in my constituency St. Andrew's House and New St. Andrew's House. I do not presume to know how those civil servants vote any more than the Minister does, but I would not join in any criticism which he thought came from this side of the House. However I think that it was right for my hon. Friend the Member for Aberdeen, South (Mr. Sproat) to point out that the Minister seems to require an enormous amount of backing.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. We have been over this ground far too much. The question of the Box does not enter into the realms of the amendments that we are discussing in the House.

Mr. Fletcher

The object of this amendment, like the previous one, is to deal with the provision of information. I do not think that it is enough for the Minister to say that we can wait and see what the Secretary of State tells the House when he moves the order. There are very important aspects of it that could be just as easily laid before the House in a schedule or some other form of advice to Members in advance, giving the main facts and figures.

It is important to have some geographical understanding of how the weighting will affect the rates themselves. We think that it is desirable to have a comparison between the increase or decrease or the payment in lieu of rates made by public undertakings on the one hand, and the general level of rates paid by industry on the other.

We have had many references to the effect of this Bill on industry. The biggest effect is the cost of the rates themselves. Rates are a very big charge on industry. It is very important that people who are responsible in industry in Scotland should know what they are paying and what public undertakings are paying so that the comparison may be judged.

This formula arrangement is extremely complex. It does not follow that the results of the final sums paid in lieu of rates should be secret. They should be known well in advance so that they can be compared with the general level of rating with a view to trying to establish in advance, and provide this information, which is in the best interests of all concerned.

7.30 p.m.

Mr. Younger

It is desirable that the Minister accept this amendment and I hope that he will do so.

There has never been a time when public confidence in the rating system has been much lower than it now is. If it could be laid down that the rating levels of public utilities had to be demonstrated by the Secretary of State to bear a proper proportion to the general level of rates paid by industry, that would go some way to overcome the extreme concern felt by many people about the rating system and its effect on industrial and commercial property.

Hon. Members may know from earlier exchanges that one area that is particularly badly affected is the Kyle and Carrick District in my constituency. The rating revaluations in that district are having the most drastic effect on householders and on commercial and industrial premises. It appears from the most careful calculations we can make on the evidence available that the valuations placed on subjects in this area are being deliberately increased by a higher proportion than those in other areas in the regions. I am glad to see present the hon. Member for Argyll (Mr. MacCormick) because his area is most seriously affected.

I accept that the principles involved in assessing rateable values are objective, laid down in the rating and valuation legislation, and must be carried out by assessors in accordance with that legislation. However, I ask the Minister to give special consideration to the way in which this system works out on the ground.

If rateable value in the Strathclyde Region as a whole rises by about 3.1 times the previous figure, the ratepayer, be he industrial or commercial, will end up by paying about the same amount of rates as he pays now, but the average of rates regionally in terms of rate valuations communicated to me in my constituency in the past few weeks appears to be very much in excess of the 3.1 times increase, which is the norm for Strathclyde as a whole.

The effect of revaluation, assuming that Strathclyde Region as a whole asked the ratepayers for no more than the same amount of money as last year, will result in Kyle and Carrick District contributing over £1.5 million more to the general pool of rates in the region compared with the previous year. This is no small matter. It is equivalent to no less than 6½p in the pound on the new rateable values. This will be an extremely serious matter for many commercial and industrial premises.

I am not suggesting that the system itself is wrong. I am suggesting that the way in which the system works out for people in my area, in the area of Cuninghame district, and also, I believe, in the Argyll district, is not fair to those on the ground.

I shall not give examples of domestic rate valuations because that would not be in order. We are now discussing industrial rating values as affecting public utilities. But, in passing, I shall mention to the Minister the fact that there is great concern among domestic ratepayers, and I shall seek another opportunity as soon as I can to make their case for them.

If we look purely at the situation of non-domestic ratepayers, it will be seen that we have some incredible examples. I give only one because time prevents my going into too much detail. I must add that I have written to the Secretary of State about every case which I have had drawn to my attention. There is one example that should alert the Minister to the fact that things are going badly wrong in the revaluations. The example to which I refer is not a domestic but a commercial premises. These premises are in Ayr High Street and were revalued last year because there was an addition to the premises. In other words, they had to be revalued and a fresh rateable value had to be made. Therefore, the previous valuation must be relatively up to date and should have been completely up to date last year, only a year ago.

The valuation arrived at for those premises last year was £870. This year the new valuation is £7,550. This is an alarming figure. There is no difference in the premises since last year—not a brick has been added. It was revalued last year as I have said, and must have been correct then. This raises the amount paid by those commercial premises in Ayr High Street from a figure of £1,350 last year to £3,490 this year. Unless something odd has gone wrong with my interpretation of the rating and valuation legislation, there is no way in which that could be regarded as a lair representation of a change in value since a year ago.

I hope that the Minister will take it from me that there is the most extreme concern among all my constituents at the way in which revaluations are affecting our area. We do not believe that it is fair as against other areas. If there is a general policy of increasing valuations in Kyle and Carrick by more than the increase in other districts, all I can say is that this is not in tune with the rating and valuation legislation, as I understand it. We do not think there is any legitimate or sensible reason why this system should not be fair on everybody.

If the rating and valuation legislation were properly carried out on previous occasions, we must accept that at that time those valuations were reasonably fair and that the new valuations were carried out on the same criteria. I see no reason why one area should be singled out for a special policy involving the raising of valuations as a whole. That, however, is the effect of the figures I have given.

I do not expect the Minister to answer my questions off the cuff tonight, but I certainly hope that he will seriously examine the amendment. It will at least ensure that when the rating of public utilities comes to be considered in the course of revaluation, they will be made to move up pro rata with increases in industrial valuations. In my area there would be some consolation if public utilities were to have their valuations raised by the same amount because that would slightly ease the burden of other ratepayers in the area.

I hope that the Minister will carefully examine these points because the answer given to our representations by Lord Kirkhill was totally unsatisfactory because it fell back on existing rating and valuation law, which we accept. My case is that this area is being singled out for unfair treatment and is deliberately suffering increased valuations because somebody has decided that those valuations were not high enough. This is grossly unfair and the Minister must intervene to see that this practice is implemented fairly. If this is not done, the rating system in my area will fall into disrepute.

Mr. MacCormick

Until I heard the speech of the hon. Member for Ayr (Mr. Younger), I did not intend to intervene in this debate. However, in the light of his remarks I wish to add one or two things.

I had the privilege of speaking in the Second Reading debate on the Inner Urban Areas Bill and I also serve on the Standing Committee. The point I seek to make is that people in the rural areas should not be penalised. For example, those in the Strathclyde Region should not be hit in trying to make up for the lack of facilities in an inner urban area such as Glasgow. I am firmly convinced that if the current revaluation goes through, commercial and business expansion in rural areas such as Argyll will be actively inhibited.

Mr. Canavan

Will the hon. Gentleman not be fair and admit that his rural area has had certain advantages since it came under the Labour administration in Strathclyde, including travel card schemes for pensioners and the disabled and many other social benefits that it did not get under the Tory regime in Argyll?

Mr. MacCormick

There must be many areas in Strathclyde that have benefited equally from such advantages, or have turned down such advantages when offered, but one of the basic concepts of democracy is that there should be no taxation without representation and we in Argyll, with only five regional councillors, are not being allowed to say how the money should be raised and how it should be spent.

I am not satisfied that we should sit back and say that this situation is developing, but not do anything about it. As the hon. Member for Central Ayrshire (Mr. Lambie) said during Question Time, wages and salaries are pegged to a 10 per cent. increase while people in my constituency and many others in the Strathclyde region are faced with rate increases vastly in excess of 10 per cent.

Mr. McElhone

The speeches of the hon. Members for Ayr (Mr. Younger) and Argyll (Mr. MacCormick) have nothing to do with the Bill. They were referring to asessors' valuations, but the Bill deals with public utilities.

The purpose of the amendment is to ensure an explicit link between the level of rates paid by public utilities and industry in general. The effect is difficult to gauge because of a fundamental misconception of one of the purposes of the revised Section 6: when a formula valuation is prescribed, any existing provisions for payments in lieu of rates under Part V of the Local Government Act 1948 will be repealed. In practice, the amendment would therefore be of no effect.

The essential purpose of valuation, whether by formula or by orthodox methods, is to produce a scale of rateable values which will fairly and objectively spread the rates burden. If a property is extended or in part demolished, its value will increase or fall accordingly. The value of each property is ascertained separately and there is no reason for the improvement or extension of one property to have a direct bearing on the value of any other.

It would therefore be objectionable to create for formula subjects a direct link of this kind. One formula-valued undertaking may be in a period of rapid expansion and the imposition of a link with industry in general would bring about under-assessment. Another undertaking may be contracting and its value could not fairly be tied to the general run of industry.

What is needed is not the rigid and arbitrary link between formula subjects and others which the amendment is aimed at. It is far better to have the present scheme of Section 6, so that after full consultation the Secretary of State may lay a draft order before Parliament. The overall fairness of the proposed formula may then be a matter for debate in each House.

In order to try to be helpful to the hon. Members for Ayr and Argyll and to the public who may read our proceedings, may I point out that the law requires the assessors to value property, whether domestic or industrial, in their areas according to certain principles common to all areas and affords a right of appeal and complaint so that valuations may be challenged through the valuation appeal committees or the Lands Valuation Appeal Court. The hon. Member for Ayr knows of the independence of assessors in Scotland and the only way to get redress is to make an appeal to the Court or a committee if no alleviation is granted on a direct appeal to the assessor. This is provided for and the amendment would have no effect.

Mr. Younger

I appreciate that that is the correct procedure for dealing with individuals who feel that their assessment is wrong, but what is one supposed to do when a whole area is subjected to a deliberate increase of rateable values? That is not provided for in legislation.

Mr. McElhone

This has nothing to do with the Bill which deals with formula valuations for public utilities. I strayed a little earlier to point out that assessors deal independently with industrial, domestic and commercial valuations for areas and for individuals. Areas or individuals have the opportunity to appeal first to the assessor and then to the valuation appeal committee or the Lands Valuation Appeal Court. The methods have been clearly set out, but this has nothing to do with the Bill.

7.45 p.m.

Mr. Teddy Taylor

The Minister has not told the whole story and my hon. Friend the Member for Ayr (Mr. Younger) was correct in what he said. The Minister rightly pointed out that the amendment might be defective because we are proposing payments in lieu of rates while the Bill includes a new proposal for the Secretary of State to prescribe by order total rateable values for public utilities. But we have been trying throughout the Bill's progress to get an indication from the Secretary of State about how he proposes to exercise this power in relation to electricity boards, water boards, British Rail and so on.

How will the amounts levied under the new system be parcelled out among local authorities? The Minister is wrong to say that the points raised by the hon. Member for Argyll (Mr. MacCormick) and my hon. Friend the Member for Ayr have nothing to do with the Bill. They have a very great deal to do with it.

If the Secretary of State prescribes a substantial amount in rateable valuation of public utilities, it would reduce the rate burden of other ratepayers such as those in Argyll and Kyle and Carrick who have been so harshly dealt with in the new revaluation. Their burden would not be so harsh if a high total rateable valuation were prescribed for public utilities.

We have been trying to get even the slightest indication of what the Secretary of State will have in his mind when he makes such an order. Does he intend that public utilities will carry a greater or lesser burden than they carry under the system of payments in lieu? Does he intend that the public utilities should carry an increased burden compared with industry?

Certain parts of public utilities are covered not by the formula valuation but by specific valuation. An electricity board shop is assessed like any other shop, but power stations and railway stations are assessed under a different system. The Secretary of State will be laying an order for them. We are entitled to an indication whether the Secretary of State thinks that the total amount paid by public utilities will increase or decrease compared with valuations generally or with industrial valuations or commercial valuations. The Minister must give us some such indication.

When we debate the orders, we shall presumably learn of the Secretary of State's intentions, but we have had so many distortions in the new revaluations that the Minister has a duty to give us some information about how the Secretary of State proposes to carry out the task that he is giving himself in the Bill.

The revaluation has meant changes. By and large, industry will pay a great deal more, and this could have a severe effect on jobs in Scotland. Commerce will have to pay a bit more, and this will create difficulties for shops in our cities. In particular, the revaluation has meant that people in Argyll and Kyle and Carrick will carry a larger total burden.

It is difficult to justify this, and the Minister has not tried. He rightly says that this is not a matter that we can debate here. It can be resolved only in valuation appeal committees or in the Lands Appeal Court. But it is difficult to understand how the case can be argued for a district under the existing system as opposed to individuals or streets.

The Minister must give us some idea of his intentions. As we are going to determine a total rateable value, the amount fixed will affect every other ratepayer in Scotland—domestic, industrial and commercial. While we accept that our amendment may be defective drafting, we have tried to get some idea of the principles under which the Minister intends to operate. Can he give us that now or do we have to wait for the order?

Mr. McElhone

At the risk of being repetitive, I will try to help the Opposition on this complicated matter. The hon. Member for Glasgow, Cathcart (Mr. Taylor) asked in Committee whether the Government intended that the proportion of rates borne by the public utilities should be increased, decreased or left at the present figure of 4 per cent. of Scotland's total rateable value. He is on the same point now. The Government have none of those intentions. People are misunderstanding the Bill and the genuine concern about an assessor's valuation does not have an effect on the Bill.

The purpose of Clauses 1 to 3 and the various valuation provisions of successive Governments is to ensure that the public utilities bear their fair and proper share of the rate burden in relation to such factors as their revenue-earning capacity and capital investment in land, buildings and plant. It has been recognised by Parliament in a series of Acts over 20 years that it is not possible to achieve this by the normal process of a valuation by the local assessor.

The assets of these undertakings consist of a whole network of services covering all of Scotland. It is a practical impossibility to achieve a fair valuation on the normal basis. This is the reason for the formula valuation under which the Secretary of State undertakes to hold consultations. We consult the Convention of Scottish Local Authorities and other bodies that my right hon. Friend thinks appropriate. That was on the basis of an amendment accepted by the Government which was moved by Lord Campbell of Croy, a former Secretary of State for Scotland. All that Clause 1 does is make this system more flexible, so that the result is fairer to individual authorities.

The hon. Member for Cathcart also mentioned the budget speech of the treasurer of Kilmarnock and Loudoun district. The treasurer was making a proper technical distinction between moneys that his council receives as a contribution in lieu of rates payable by the South of Scotland Electricity Board and British Railways under the provisions of Part V of the Local Government Act 1948 and the rates proper which would be payable if formula valuations were introduced for electricity and railways as Section 6 allows.

Working parties on the whole question of formula valuation are sitting at present and will be reporting very soon. The improved powers conferred by Clause 1 may then allow the making of an order to apply formula valuation to electricity and railway undertakings.

Contributions in lieu of rates will then cease and those undertakings will pay rates on the basis of those formula valuations which will have to be approved by the House. The treasurer was right in his description of what will happen, but the important thing that he did not say is that it has not happened yet.

There is one point that I must qualify, A treasurer often has to make assumptions—even guesses—about future income or expenditure, and I understand that for budgeting purposes the Kilmarnock and Loudoun treasurer might assume that the change to formula valuation will not greatly affect his council's income. One must make these assumptions when working on changing from the payment in lieu of rates system to the formula valuation, but all that I want to get across is that I understand the genuine concern—I say this as a constituency member—about assessors' valuations, but that the assessor is independent. The hon. Member for Ayr (Mr. Younger) will recognise that, as a former Minister.

Therefore, if there is disagreement about an assessor's valuations one can seek redress through the valuation appeal courts but not through this Bill.

Mr. Alexander Fletcher

I would try finally to press the Minister on this point. He has not answered the question of my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) about which form the order will take. If we knew that, we might have some idea of how far to press the amendment. The Minister is making heavy weather of a simple question.

We understand both the difference between assessors and the formula system and the fact that the expression in the amendment "payment in lieu of rates" is incorrect and that it should be "payment as a result of the formula calculation" or words to that effect.

We know that at present an assessor's valuations compare domestic rates with industrial rates on a year-to-year basis. What we are asking for is similar comparisons for public undertakings. If the Minister had replied to my hon. Friend's simple and important point, we should have saved a lot of time.

Mr. McElhone

The order will specify the way in which the valuations fall and will be available before it is debated.

Amendment negatived.

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