RAILWAYS (VALUATION FOR RATING) BILL. (Hansard, 4 July 1946)

§ LORD WALKDEN

My Lords, this Bill has become necessary owing to war circumstances, and as the main principles and proposals embodied in it are very simple, I do not propose to delay your Lordships by giving any description in detail of the various clauses. I would just remind your Lordships of the fact—no doubt many of you are already aware of it—that for the first hundred years of railway business in this country, the rating of the companies' hereditaments was done piecemeal by the parochial authorities throughout the kingdom. It was a troublesome business, causing a lot of dispute, a lot of detailed work, a lot of statistical research and a lot of litigation. In 1930, that is about 105 years after Stephenson started, the Government of the day decided to promote a Bill, that afterwards became an Act, to arrange for national valuation instead of parochial valuation. Two or three important bodies were set up to deal with that matter, and the whole process was modernized and simplified by the Act.

The Government set up the Railways Assessment Authority, a new body charged with the duty of dealing with 130 these railway assessments, and the Anglo-Scottish Joint Railway Assessment Authority to deal with matters arising from the fact that two of the great railway companies went over the Scottish border and did a good deal of business in Scotland, with the consequence that various points of Scottish law cropped up which needed separate consideration. These two bodies together started work as soon as they were established. They consist very largely of representatives of the local rating authorities, various county councils, and borough councils. The very strong associations that represent the local authorities assist in nominating the major part of the personnel for these new assessment authorities.

They set to work in a very business-like way. The Act provided that there should be valuations for rating purposes on a quinquennial basis, but to begin with, they took two years only—1928 and 1929. They made an ascertainment on that basis, and the rating charges for the ensuing five years were levied on a foundation established on the 1928 and 1929 figures. Certainly, there was some difficulty in getting the scheme running in practice, because there was a good deal of dispute concerning the way calculations had been made. I believe some of the quarrels which resulted had to be brought to your Lordships' House for consideration by the Law Lords. Whilst it was at first found that the calculations might be unduly favourable to the railway companies, it was recognized also that they might not be perfectly fair to the local authorities. The authorities, therefore, agreed to a revision of some of the methods of calculating assessments. After that they got on very much better up to the year 1939.

Then they came to the period when we had a great war. In such circumstances, of course, the Government had to take over the whole of the railways of the country. Some of your Lordships may perhaps recall that as far back as the Franco-Prussian war the lessons that were learned about the railways in wartime were so important that our own Government decided on an Act enabling the State to take over the railways at any time when there was a war. Of course, it was very necessary that that had to be done in this recent war. The war covered the valuation period 1940–1944 inclusive. This Bill is designed to deal with 131 the consequences of that fact, because the valuation made on the basis of that period will affect charges to be made on railway companies by the local authorities for the period 1945–1950—the current period. They have been working hitherto on the 1935–1940 findings, so what we want now is an assessment for the ensuing period. Part of the arrangement for arriving at the assessment is based on the net earnings of the railway companies, and of course those have been affected very greatly by war factors. Their average net earnings during the pre-war period, the period immediately before this war, amounted to about £38,000,000 a year. The Government eventually, after a previous trial of another agreement, agreed with the railway companies to give them a total sum of £43,000,000 a year as rental as against the £38,000,000 average. That was considered by the Government—the Coalition Government it was, I believe—quite a fair arrangement. But during the war railway traffic increased so enormously, both in passenger and in merchandise business, that the net revenues went up to £79,000,000 a year.

Obviously, to make rating arrangements on that high level would be very unfair to railway companies, because there will be quite a different level in the post-war quinquennium from the war period quinquennium. It has been roughly agreed that they shall be rated on the basis of the £43,000,000 Government rental. Some of the local authorities have not quite liked that. They thought that they ought to share more in the benefits of the £79,000,000 revenue. The £36,000,000 difference, however, was not due to the actions of any local authority, or to those of anyone but the National Government in fighting the war. The money was all provided by the taxpayers, whether it was for workers travelling about for war work or for the movement of goods and material during the war period.

This huge strain on the railways, which I am sure all your Lordships agree was borne magnificently by the companies and the men, brought in a total net revenue averaging £79,000,000 a year of which the companies took £43,000,000. Working upon that (the block lump sum which was apportioned out on an agreed percentage for different companies), the Railway Executive Committee and the 132 Government thought it quite unnecessary to keep any detailed records or to make any ascertainment as to the division of receipts between company and company. A lot of the traffic went over two lines—sometimes over three lines, as, for instance, traffic from the South Coast to Aberdeen. As a result of this, there is no information at all of the detailed earnings of the separate parts of various railways. Some of them may have had a lot more traffic than others because they happened to lie in the war working areas, as a large part of the Southern Railway did.

In effect, this Bill provides that future assessment arrangements can be made on the basis of the Government payment to the railway companies and we believe it will work out well in practice. Page 4 of this little Bill, the First Schedule, shows the figures on which the rateable value will be based. Of course, the rateable value is different from the total net earnings. The Schedule also shows the rating for distribution between the Scottish local authorities and the English local authorities respectively. The proposed new basis is intended to cover only the immediate period that is due for valuation now. This Bill has been promoted to make the work more expeditious and more satisfactory. Local authorities have been very helpful and very reasonable, although somewhat disappointed in not receiving more out of the arrangement.

The railway companies averaged a 12.7 per cent. improvement in their total net revenue under the Government arrangements, and on that basis the local authorities themselves will get an appreciable improvement on what they have had before—something like 14 per cent. That should be gratifying to them and, broadly speaking, the whole arrangement has been thrashed out amicably by all parties concerned. And I might qualify what I said about the disappointment of the local authorities by saying that they have agreed to this arrangement. As this is virtually an agreed Bill and one which met with no serious opposition in another place, I hope that your Lordships will agree to give it a Second Reading.