British Railways Board (Payments) (Hansard, 25 March 1981)

§ The Under-Secretary of State for the Environment (Mr. Giles Shaw)
I beg to move, That the draft Transport Boards (Adjustment of Payments) Order 1981, which was laid before this House on 3 March, be approved. The order establishes, for the rating year 1981–82 and subsequent years, the "standard amount", which determines the contribution in lieu of rates to be paid by the British Railways Board. The proposal would result in a decrease in British Rail's "standard amount" of £ 1 million as compared with 1979–80. It represents a small increase over 1980–81, but that was a transitional year, for reasons that I shall explain shortly. There is a need for permanent revision of British Rail's contribution in lieu of rates as a result of the recent change of status of the National Freight Corporation. The order introduces that.
Instead of paying rates as such, on its operational property, British Rail pays an amount in lieu of rates, calculated in accordance with statutory provisions. The Secretary of State then distributes the money between rating authorities. BR's liability for any year depends on a prescribed "standard amount"—which this order would amend—and also on the average rate poundage set by local authorities in the previous year. This covers the railway network. In addition, British Rail pays rates, in the normal way, on non-operational property such as hotels, refreshment rooms and some offices.
Prior to 1980–81 the National Freight Corporation was required to make British Rail a "fair" contribution in relation to premises that it occupied for the purposes of handling rail-related traffic. The amount of the NFL's contribution was a matter for agreement between the two boards. This obligation was devised when almost all of the corporation's traffic was carried by rail at some point on its journey. In recent years, however, as hon. Members will appreciate, an increasing proportion of the corporation's traffic has been carried by road. Since premises used for road traffic have been assessed for rating purposes by normal methods, an additional burden—a sort of "double rating"—ensued for the NFC. The unfairness of this burden was recognised in 1980–81, when British Rail's "standard amount" was reduced for that year by £573,000 as compensation for the element of double rating that had taken place since 1 April 1978.
In addition, the 1980–81 reduction also took account of the intention to change the status of the NFC to a Companies Act company from an "appointed day. From that date, all NFC premises were to be rated by normal methods and the corporation, or its successor, would no longer be required to contribute towards British Rail's payment in lieu of rates. A reduction of £500,000 was agreed, in anticipation of the "appointed day" falling midway through the rating year, that is to say, on 1 October 1980. Taking account of these two elements, of £573,000 and £500,000, the Transport Boards (Adjustment of Payments) Order 1980, which the House agreed to last year, reduced British Rail's "standard amount" by £1,073,000.
During consultation with interested parties and in debates both in this House and in another place on the 1980 order, the Government made it clear that a further order would be necessary in 1981 to make a once-and-for-all adjustment to British Rail's liability.
1053 This would reduce the "standard amount" for British Rail by £1 million permanently from the 1979–80 level and, if necessary, would compensate for any discrepancy between the date of the NFC's becoming a Companies Act company and 1 October 1980.
The order before the House tonight is that order. It sets British Rail's "standard amount" for 1981–82 and subsequent years at £17,963,000, which is £1 million less than in 1979–80. Hon. Members will see that this figure is entirely in accordance with the proposals outlined last year, on which consultation took place prior to the making of the 1980 order. Both British Rail and the local authority associations were consulted about the proposals then, and recently they have been advised that this order was about to be introduced to complete the change.
Hon. Members will also note that no further adjustment has been necessary to take account of the actual date of the change of status of the NFC. This is because, as envisaged, the "appointed day" fell on 1 October 1980.
I commend the order to the House.

§ Mr. Ted Graham (Edmonton)
This should not take long, as there is no animus in the matter. Both the method and the changes have been agreed by the Opposition in both Houses whenever the matter has come forward.
Perhaps the Minister would confirm what I surmise. It is really a question of whose side one is on—that of the transport board, British Rail, or the local authority. The net outcome will be that the standard amount, which is more or less the rateable value, will be multiplied by the average rate levied by local authorities.
Last year the standard amount was £17,890,000, which was multiplied by the average rate. Let us assume that the average rate was 100p in the pound. This year there is a marginal increase in the standard amount, to £17,963,000. However, it is widely suggested that the average rate this year is likely to be not less than 10 per cent. higher, and could well be 20 per cent. higher. If that is the case, does it mean an increase of about £3,555,000 on top of the increased £17,963,000?
In other words, does it mean that the sum that British Rail will have to pay to the Government, which is then distributed to local authorities, will be greater because of increased inflation and rates for which the Government must take a large part of the blame? Although the formula is accepted and understood, the net effect in cash terms will be that British Rail will have to pay about £3½ million more this year than last year.

§ Mr. Giles Shaw
The hon. Gentleman is quite right. The British Rail formula is affected by the average of the rate poundage in any year. The position for the coming year is affected by what occurred last year. It is certainly true that because of the mechanics of the system, British Rail's contribution goes up each year in line with the rate of increase in the previous year's rate poundage. The current increases will have their impact on British Rail next year.