TRANSPORT BOARDS (ADJUSTMENT OF PAYMENTS) ORDER 1973

HL Deb 11 December 1973 vol 347 cc1145-8

8.0 p.m.

BARONESS YOUNG rose to move, That the Draft Transport Boards (Adjustment of Payments) Order 1973, laid before the House on November 29, be approved. The noble Baroness said: My Lords, I think noble Lords may find it helpful if I say something about the background to this Order before describing what it does. When the railways and canals were nationalised provision was made in the Local Government Act 1948 exempting them from rates and providing for payments to be made in lieu of rates. These payments are made to my right honourable friend who distributes them to rating authorities in proportion to their rateable values. The amount of the payment is based on the rates payable by these undertakings immediately before nationalisation, adjusted to take account of a revaluation which was then due to come into effect. These basic rateable values, as I will call them, are known as "standard amounts" and are set out in Schedule 5 to the General Rate Act 1967. The figures are set out in paragraph 3 of the Order.

These standard amounts form the starting point in the calculation of the contributions that these industries should make. To arrive at the contribution the standard amount is adjusted in two ways. First. it is scaled up by a factor which represents the average rate for the preceding year divided by the average rate for 1947–48. This is to keep the payments made by these Boards in line with the burden that falls on other ratepayers. Secondly, it is adjusted to reflect changes in the activity of the industry. If the volume of traffic increases, the standard amount will be adjusted upwards, and conversely if traffic decreases. This is to reflect the fact that in a normal business if trade expands so usually will its rate liability increase. This adjustment is made to keep the contributions made by these Boards fair when compared with the contributions of other ratepayers. The figure that results from these adjustments is the sum that they will pay to my right honourable friend. This system works smoothly except when there has been a revaluation, as there was this year.

Following a revaluation, the rate in the pound falls. In 1972–73 it was, on average, 99p. This year, following the revaluation, it has dropped to 40p. If local authority expenditure did not go up, and if there were no inflation from one year to another, revaluation would have the effect on average of putting rateable values up and thus rates in the pound down, leaving the average rate payment much the same. However, if we merely used the new average rate for adjusting the standard amount then these Boards' rate payments would fall, and quite obviously that would not be fair. The purpose of this Order is to alter these standard amounts to restore the status quo. If it is helpful to noble Lords to think of it that way, it is like a revaluation. The Boards' standard amounts will be altered in a way similar to the rateable values of houses. The Order is therefore a mechanical consequence of revaluation and no more.

Noble Lords may wonder whether the time has not come for those curious formulae to be revised. I can only say now that my right honourable friend has announced that he intends to review the rating of all public utilities that have formulae of this sort. The Local Government Bill which will shortly come before your Lordships' House will provide, among its other provisions, that my right honourable friend can determine how the rateable value of these industries should be arrived at. What new formulae will be devised it is too early to say.

This may well be the last time that noble Lords have to interest themselves in arithmetic based on calculations made in 1948: but it is not contentious arithmetic, and in that spirit I commend the order to the House.

Moved, That the Draft Transport Boards (Adjustment of Payments) Order 1973, laid before the House on November 29, be approved.—(Baroness Young.)

8.7 p.m.

LORD GARNSWORTHY

My Lords, I am very grateful to the noble Baroness for the explanation she has given and the background information upon which this Order has been drawn up. I notice in the Explanatory Note reference to the British Railways Board, the London Transport Executive and the British Waterways Board. The opening paragraph of the Order reads: The Secretary of State…after consultation with such of the transport Boards and such associations of local authorities as appeared to him to be concerned and with the local authority with whom consultation appeared to him to be desirable… We are told there that there was consultation. I should like to ask whether the bodies named in the Explanatory Note agreed the figures to which the noble Baroness has referred in paragraph 3. As I note, they have gone up approximately two and a half times. This, I suppose it will be said, is roughly in line with the increases that have taken place in the rateable values of domestic properties. The figures certainly show a very considerable increase. For £3,522,000 there should be substituted the figure of £8,853,000 and so on. The noble Baroness referred to the fact that these figures reflected changes in the industries concerned. Certainly so far as the railways and the Transport Executive are concerned, the impression which I think most people have is that over the period these have been shrinking industries. I should like to ask, therefore, whether these figures really do reflect the decline that has occurred in regard to these bodies which are mentioned in the Explanatory Note. Although, as domestic ratepayers, we are grateful for any relief that we can get, and are very grateful for the contribution made in lieu of rates by these bodies, we do have a duty to inquire whether they really are fair.

BARONESS YOUNG

My Lords, I should like to thank the noble Lord, Lord Garnsworthy, for his general support for this Order. He asked me two questions, the first of which was about the consultations that have been carried out. These have, as the Order indicates, been carried out and they have had the general support of those concerned in them.

LORD GARNSWORTHY

My Lords, my question was whether these figures have been agreed. The noble Baroness is using the words "general support". I wonder whether she can tell me whether the bodies named have accepted these figures as being fair?

BARONESS YOUNG

My Lords, my understanding of this position is that all the bodies who have been consulted in this matter have agreed to the figures. The second point that the noble Lord asked was whether or not these new figures reflect the activities of the industry. I should like to say two things about that question. The "standard amounts" are figures that are comparable to the gross value of a house—that is the way I find it easiest to think of them myself. They are the figures on which the calculations are made. When the calculation is made of the amount of rates that the industry is to pay, and ultimately the amount of rates that they will pay is determined, it depends on two things: first, on the "standard amounts "—and there is this agreed formulae for it—and, secondly, on the amount of business that the industry is doing. As I said in my opening remarks, if the volume goes up, this amount could go up; or, conversely, it could go down. As this concerns specific figures which I do not have available to me, I will write to the noble Lord on this point. But I should like to assure him that the volume and nature of the business that these public authorities are conducting should be taken into account.

On Question, Motion agreed to.