HL Deb 26 June 1958 vol 210 cc298-304

3.30 p.m.

Order of the Day for the Second Reading read.


My Lords, this is a short and essential Bill. It is of national importance, though its background will be more familiar to those of your Lordships whose homes and property lie in the Eastern part of England. It is of national importance because a considerable part of the total productive area of this island has been at some time reclaimed from swamp or flood danger and remains protected from that danger by such works. The total area covered by internal drainage districts amounts at the present time to 3,187,958 acres. The whole agricultural and industrial potential of the country is in this way increased, though most of the territory affected in fact lies in the Eastern Counties.

This is a Private Member's Bill which has already passed through another place without dissent. I should say that when the sponsor invited me to pilot it through your Lordships' House I frankly confessed my inexperience in these procedures, as well as my lack of any instruction in the law. This did not seem to deter my honourable friend, however, from which I conclude that her confidence is based on the virtues of the Bill, rather than in my ability. Apart from this fact, I am particularly pleased to play my part in commending the Bill to your Lordships, since the importance of reclaiming and protecting land has long been recognised in this country, and as a Lincolnshire landowner myself I am closely aware of it.

If your Lordships will excuse a brief historic reference or two, I am eager to pass on my discovery that the first officially approved work of this nature was ordered in 1258 by King Henry III, when he issued a Commission of Sewers by letters patent to Henry de Bathe to cover part of Holland, in Lincolnshire. So, by coming exactly 700 years later, this small Bill marks in some form the seventh centenary. The granting of such commissions was systematised during the Middle Ages by successive Monarchs and the Commissioners of Sewers (as drainage works were then called) became important and respected officers of the Crown. In the closing years of the 15th Century a predecessor of my noble and learned friend on the Woolsack gave his name to perhaps the most famous of all these works. He was John Morton, Chancellor of King Henry VII in 1486, who built Morton's Dyke, running from Peterborough to Wisbech, twelve miles long, 40 feet wide and 4 feet deep. It became the pattern for such works during many centuries. Since your Lordships have so far shown what I take to be indulgence, perhaps I may dare to mention that a member of my own family made a somewhat smaller though lasting contribution of this kind at the beginning of the 18th century, in the shape of Sir Rowland's Drain, which runs from Appleby to the River Humber.

My Lords, the administering of these works was brought closer to the present system, which gives rise to this Bill, with the passing of the Land Drainage Act of 1861. That Act established in place of the old Commissioners, who were appointed by the Crown, drainage boards, elected by the ratepayers of the area over which they had jurisdiction. Subsequent legislation has kept this system broadly up to date, though, as I shall seek to show your Lordships, not completely up to date in at least one important respect. It is this anomaly which the present Bill seeks to rectify. To-day an internal drainage district covers, in the words of the Land Drainage Act of 1930, an area which will derive benefit or avoid danger as a result of drainage operations. This district, as explained, will normally be under the jurisdiction of an elected drainage board.

It will be clear to your Lordships that such works have to be constantly financed in regard to extensions, improvement and maintenance. The boards are authorised to levy rates for this purpose on all hereditaments in their district. Such rates, under Section 29 of the 1930 Act, are assessed on the annual value as determined for the purpose of Schedule A of the Income Tax Act. These annual values are used because, as your Lordships are aware, agricultural land is not liable for the general rates; but since drainage is principally of benefit to farmers it is clearly right that they should contribute to the cost.

This basis of assessment caused no sort of dispute or difficulty until lately, because it was taken to mean the annual value "as signed and allowed"; that is to say, as estimated for income tax purposes. But almost exactly two years ago a judgment was given in the Queen's Bench Division of the High Court, which defined this basis of assessment in such a way as to disable drainage boards from collecting their rates in certain circumstances, and affecting in fact the great majority of hereditaments in all drainage areas at any given time. As it was this case which brought forward the need for the present Bill, I shall ask your Lordships' permission while I briefly outline the arguments presented.

The British Petroleum Company have a large refinery, whose property lies partly in the district of the Kent River Board and partly in that of the Lower Medway Internal Drainage Board. In May of 1955 the company appealed against their Schedule A assessment, which had been raised to £1,140,000 from the £149,000 of the year before. The appeal has not yet been heard, and I understand that it may not be heard for some years to come. In the meantime, it has been ruled by the judgment in the High Court that, so long as this appeal is outstanding, no assessment of Schedule A tax can be quoted, since the sum is still the subject of an appeal. Consequently, the Boards concerned have no basis on which to assess and levy the rates, and are unable to do so, despite the fact that the refinery is protected by sea walls, reconstructed by one of the Boards at great cost after the floods of 1953, and maintained by them, and despite the fact that the refinery is obviously of great value, even if the assessment of £1,140,000 should be in the end reduced on appeal. What in fact the Court did by its decision two years ago was to disallow entirely the drainage rates which had been levied on the refinery for the year 1955–56 and for all subsequent years until the appeal was decided. The burden which this places on the two Boards and on other ratepayers in their districts is plain. The effect would have been even more serious last year were it not that the British Petroleum Company made voluntary contributions to the rate funds of the two Boards. But for the year 1957–58 and for the current year 1958–59 the Company have refused to make any contribution whatever in aid of the drainage rates of either district.

The effect beyond Kent and throughout the country is more far-reaching than may be seen at first sight. Each year a taxpayer has a right to appeal against his Schedule A assessment, even if it has remained unchanged from the previous year. If he appeals, there is no time set within which the appeal must be heard. When such an assessment is finally determined after appeal it provides the basis, under the 1930 Act, for drainage rating for the current year. But there is no power to make any adjustment retrospectively beyond that. At the start of the next fiscal year after the decision, the assessment again becomes subject to the right of appeal. The decision of the Court has thus brought to light a defect in the rating provisions of the Land Drainage Act, 1930, which leaves a drainage board with no legal basis for levying drainage rates on the great majority of hereditaments in its district. I do not wish to take your Lordships over the complicated legal paths which led to this decision, even if I could follow them myself. But I should like to quote Mr. Justice Donovan who, in giving judgment, said: Clearly some amending legislation is now required to deal with the new situation. The present Bill is designed to satisfy that need.

Clause 1 defines the annual value in the same way as the Court defined it—that is, the value according to Schedule A assessment, after a decision on appeal or after the time for appeal has expired. But it goes on to say that, if at the time the rate is levied, the annual value has not been determined in this sense, then the rate is to be based either on the annual value as estimated by the Commissioners of Income Tax, or on the annual value as last determined, whichever is the less. There is a further provision that if the annual value as finally determined, after payment, differs from that on which the drainage rate was based, that difference shall be made up, either through an additional payment by the ratepayer, or through a refund by the drainage board, whichever is called for.

The provision that the drainage board should take, as the annual value, the last determined value where it is less than the estimated value, has been put into the Bill for the ratepayers' benefit, to meet the sort of case where the property concerned has been developed, for instance by the building of a house, with a consequent increase of the Schedule A assessment. It seems fair that the ratepayer should pay only on the old assessment until the new one has become final. Arising out of this point there is one query that may tax your Lordships' minds, as it taxed mine. If it is argued that a ratepayer should not be asked to pay a sum which may in the end prove excessive, even though a refund by the board is provided for, I think your Lordships will find the answer incorporated in the terms of the Bill. It will be seen that where there are two differing values, the estimated value and the value last determined, the board are bound to take the lesser of the two. Only in very rare cases would there be any question of a refund by the board; in almost all cases the board would eventually collect the difference.

My Lords, I have tried to explain the general scope of this Bill, and I do not think you would wish me to elaborate on the other subsections, which are mainly machinery but on which, naturally, I will try to answer questions if any arise. I hope that I may be forgiven for having elaborated on its more remote background. I think the House will agree that drainage boards should have a firm basis of assessment, and that in seeking to give them this the Bill also takes into account the ratepayers' interests. In the meantime, I must pray that the qualities and purpose of the Bill will have made up, in your Lordships' judgment, for any clumsiness in its presentation. I beg to move.

Moved, That the Bill be now read 2a.—(Lord St. Oswald.)

3.43 p.m.


My Lords, I feel that in my capacity as President of the Association of Drainage Authorities, I ought to commend the Bill to your Lordships. The noble Lord, Lord St. Oswald, has stated the object of the Bill and the means whereby it is proposed to secure this object. I believe that I understand the provisions thoroughly, but, as with all rating measures, these are technical and I do not want to get involved in the technicalities. I should, however, be lacking in my duty if I did not stress how vitally important this Bill is to drainage authorities. As the mover has explained, they are at present deprived of any certain basis of assessment. I think the House will agree that it is essential that this be restored to them. The noble Lord, Lord St. Oswald, has said how vital land drainage is to agriculture. I think that this fact is well known to the House, and I do not propose to waste any time elaborating that aspect. I will only say that, as one who lives on the edge of the Fens and farms in the Fens, I am all too conscious of it.

3.44 p.m.


My Lords, from these Benches I personally should like to commend the Bill to your Lordships, and I would congratulate the noble Lord who moved the Bill on the most interesting way in which he spoke of drainage activities in the past and the explanation he was able to give in regard to Schedule A and rating assessments. There are many virtues in the Bill. It will overcome difficulties which have arisen in the last two or three years and with which I am conversant, and it will help the drainage authorities and the various boards to carry out their work more effectively and to adjust their finances accordingly. I hope, therefore, that the Bill will pass through your Lordships' House quickly and will become the law of the land.

3.45 p.m.


My Lords, my noble friend Lord St. Oswald, has explained very clearly why this Bill is necessary and what it seeks to achieve. I rise merely to explain the Government's attitude to the Bill. It is that we welcome it because it will remove an impediment to the proper functioning of river boards. Put shortly, owing to the High Court decision to which the noble Lord has referred some doubt has been cast on the powers of drainage boards to levy rates. I am sure that all your Lordships will admit that if these boards are to function effectively they must be able to levy their rates.

It is for this reason that the Government welcome this Bill and give it their wholehearted support. It only remains for me to commend the Bill to your Lordships.

On Question, Bill read 2a, and committed to a Committee of the Whole House.