HYDRO-ELECTRIC UNDERTAKINGS (VALUATION FOR RATING) (SCOTLAND) BILL. (Hansard, 5 June 1945)

LORD ALNESS

My Lords, I am moving the Second Reading of this Bill at the request of my noble friend the Secretary of State for Scotland, to whom I would like, if I may, to offer my congratulations, as others of your Lordships have done, upon his accession to high office in the State. The Bill to which I have the privilege of asking your Lordships to accord a Second Reading is a sequel to the Hydro-Electric Development (Scotland) Act which passed through your Lordships' House in the year 1943. The purpose of this measure is to effect a certain rating reform affecting hydro-electric undertakings in Scotland. As such it is a remedial measure.

When a remedial measure is proposed two questions arise, as I am afraid I have said before in your Lordships' House. The first is, is there a mischief to be remedied? and the second is, is the remedy proposed appropriate and 373 effective? May I say that, unless your Lordships are satisfied that an affirmative answer falls to be given to both those questions, I apprehend your Lordships will be slow to give a Second Reading to a remedial measure such as this. So, with your Lordships' permission, I would like to say a few words on each of these two questions. I hope to convince your Lordships that the answer to both is in the affirmative.

The first question is, is there a mischief requiring a remedy? The mischief or grievance can be expressed in one sentence. It is this: that in Scotland hydro-electric undertakings bear a very much heavier rating burden than do steam undertakings with a comparable output. The Cooper Committee, presided over by my right honourable friend the Lord Justice Clerk of Scotland, on whose report the principal Act to which I have referred is based, dealt with this matter, and pointed out that in valuing a steam undertaking in Scotland large sums which had been expended annually on coal and other fuel are de. ducted, whereas a hydro-electric under taking, which has no fuel costs, is prohibited from deducting from its valuation any pall: of its civil engineering charges, which correspond roughly to the fuel costs of a steam undertaking. This seems to my mind prima facie to constitute an inequitable and anomalous situation. That it is in fact inequitable l think I can document to your Lord ships beyond a peradventure or a doubt. The Cooper Committee condemned the disparity of treatment between a hydro-electric undertaking and a steam undertaking, and considered that the case for equal treatment of these two respective types of undertaking was unanswerable. They did not hesitate to stigmatize the existing system in Scotland as a blemish upon our valuation law. There are many anomalies in the rating law of Scotland, and there are those who think that it is time, if indeed it is not overdue, to introduce a comprehensive measure which should remedy these anomalies of which everybody knows and of which everybody complains.

But the then Secretary of State for Scotland, my noble friend's predecessor in office, foreseeing that to seek to carry through such a comprehensive measure as I have envisaged would involve much delay, being impressed 374 also by the condemnation of the present single anomaly by the Cooper Committee, and desiring to give these new hydro-electric undertakings in Scotland, so necessary to the economic wellbeing of the country, every chance of functioning successfully, appointed another Committee presided over by the then Dean of the Faculty of Advocates, now Lord Sorn, to investigate and report upon this particular anomaly. I do not detain your Lordships by reciting the personnel of the Committee. Suffice it to say that it was a strong and representative body and that after due deliberation this Committee reported in terms similar to those of the Cooper Committee— in other words, that this an anomaly which demanded a remedy, and that without delay.

I may also say that the Electricity Commissioners, who have had much experience of problems such as these, have for years shared that view, and have from time to time expressed it. Accordingly, I venture to think that, in order to demonstrate the existence of a grievance it is unnecessary for me to keep your Lordships any longer. I submit that I have done so from the Reports of two Committees, and from the opinion of the Electricity Commissioners— opinions which have been expressed in more than usually strong terms.

So I, accordingly, pass to the only other question which remains— namely, whether the remedy which this Bill suggests for the amendment, or rather for the removal, of this anomaly is an appropriate and adequate remedy. The Sorn Committee, to which I have referred, suggested three— I will not use the word "alternative" because it is inappropriate to three, but three separate schemes for the removal of the anomaly. I will call them (a), (b) and (c). I am not going to trouble your Lordships by referring to (a) and (b) because my right honourable friend the then Secretary of State, after having taken the best expert advice that was open to him, selected remedy (c), and that remedy is thus described. The description, I am afraid, is technical, and perhaps it sounds obscure, but this is how it is expressed: an adjustment of the valuation of the generating works in accordance with the proportion which £30 bears to the actual constructional cost per kilowatt installed. 375 That is the formula, and the then Secretary of State for Scotland, having received this report, at once, according to his agreeable wont, got into touch with all the local authorities in Scotland whose valuations, of course, would be disturbed by the adoption of this new formula. He found these authorities were all in favour of the third scheme to which I have referred— the one which the Secretary of State had selected. That being so, this being the selection of the Secretary of State, advised by the most expert persons with whom he conferred, and supported by the local authorities in Scotland, the scheme accordingly finds a place in this Bill.

I will only add that the Bill was subjected to a close scrutiny both in another place and in the Scottish Grand Committee. There was only one Division in the Scottish Grand Committee, and in another place there was none. Accordingly, I submit to your Lordships that I have demonstrated the existence of a grievance, that I have demonstrated the adequacy of the remedy proposed, and, moreover, that this remedy comes to your Lordships with quite impressive credentials, to which I have already referred.

In conclusion, it only remains for me to satisfy your Lordships that these views, which I have tried to express, find a place in the Bill now before your Lordships' House. I can do that by a very brief reference to the clauses of the measure. Clause 1 places on the Assessor of Public Undertakings in Scotland— obviously the right officer for the task— the duty of valuing the undertaking of the North of Scotland Hydro-Electric Board, and it also short-circuits the means by which his assistance can be invoked. Clause 2 and its subsections give effect to the valuation concession to which I have made reference. They provide that, in the case of new hydro-electric undertakings, the valuation concessions shall come into operation directly the generating station enters the valuation roll. In the case of existing undertakings, however, the concession will be postponed until new rateable values have been created by hydro-electric undertakings in the same area. Until the new values have been created, and are at least as great as the amount of the valuation concession to 376 which the existing undertakings would be entitled by the full application of the formula, the concession will be proportionately reduced. The purpose of this provision is to safeguard the limited rating resources of the areas in which the works are situated. By Clause 3 the technical question of determining the kilowatt capacity of plant to which the Bill applies is placed in the experienced hands of the Electricity Commissioners. Clause 4 provides for an investigation into the working of the derating provisions which the Bill contains not later than ten years from the date of the passing of the measure.

Clause 5 is important. It provides that undertakers other than the North of Scotland Hydro-Electric Board, who are given relief from local rates under the Bill, must apply that relief for the development of their distribution system or for the benefit of customers, in accordance with the regulations to be issued by the Electricity Commissioners. That important provision was recommended by the Sorn Committee, and is obviously just. The North of Scotland Hydro-Electric Board is excluded from the scope of this section for the simple reason that it is a non-profit-making undertaking, and that the Board is already under an obligation to use every advantage which it secures under the Bill for the benefit of its consumers. Clause 6 contains the citation of the Act.

Such, my Lords, is the Bill now before you. I submit that it fulfils the requirements to which I have referred, and without further parley I would invite your Lordships respectfully to give it a Second Reading.