§ 7.7. p.m.
§ Lord KIRKHILL
My Lords, I beg to move that this Bill be now read a second time. Your Lordships may have noticed that in another place questions have been asked about the liability to local rates of offshore oilfields and installations and of the Forth and Tay Road Bridges. The Government have made clear their view that the two bridges should continue to be exempt from rates, and that oil installations which lie far out to sea ought not to be liable to local rates. The Bill now before your Lordships' House will allow implementation of the Government's intentions. Let us first consider offshore oil installations.
In Scotland—and the Bill is concerned only with Scotland—rating valuation is entrusted to locally appointed officials; lands valuation assessors. The assessor is under a duty to value and enter in his valuation roll the lands and heritages which lie within his area. The Local Government (Scotland) Act 1973 which set up the present local authorities defined their boundaries clearly, save in one important respect. Their seaward limits are not defined.
The practice of the assessor is to enter in the valuation roll any seaward subjects which he thinks may fall within his area. If the occupier appeals against the entry the issue will be decided, probably by the Lands Valuation Appeal Court in Edinburgh. The Forth Railway Bridge and certain coal measures off the Ayrshire coast were by this process held to be properly assessed, and quite recently the rateability of yacht moorings was likewise upheld. Two of our Scottish assessors have made assessments on certain oilfields, all lying many miles offshore on the Continental Shelf. The oil companies have challenged the assessors' actions and litigation is in train.
It may be asked why, if the assessors' entries are thought to be unfounded, the question may not be left to the courts. There are two main reasons for this. The first is that the Government are advised that the Continental Shelf is probably not within the area of any assessor, but that only a decision by the 1263 court, or legislation, can resolve the question. If the courts found that the entries were competent, the Government would have to introduce legislation to remedy the situation, because of the consequences of a large rate burden falling upon these installations in addition to corporation tax and petroleum revenue tax.
Since it is the Government's policy that taxation on offshore petroleum exploitation should accrue nationally and not locally, it seems preferable to move now to legislation rather than to await the outcome of complex and expensive litigation following which legislation might in any case prove to be necessary. The second reason is that a decision by the courts on the fields which have been assessed might not settle the position of other offshore subjects, so that the whole business might start again over some other field. This Bill would empower the Secretary of State for Scotland, subject to Parliamentary approval, to settle this issue and other comparable issues as they arise.
My Lords, I turn now to the Forth and Tay Road Bridges. Each bridge is administered by a joint board of the local authorities whose areas it links and in each case the local Act providing for such administration conferred on the bridge an exemption from rates. But when local government was reorganised, the Local Government (Scotland) Act 1973 swept away a number of local valuation and rating provisions, often antiquated, which would have brought unfairness and great administrative difficulties into the new rating areas. But this measure also swept away the rating exemption afforded to the bridges by local Acts. This Bill provides a means of restoring the exemption with effect from 16th May 1975; that is, the date from which rates are alleged to be chargeable. I put the matter thus because the assessments made on the bridges are under appeal and I must take care to say nothing to prejudge the issues raised by the appeals.
We have today these two types of property against which claims to rates have been mounted, claims which may or may not succeed, and tomorrow we may have others, as technology opens new ways of exploiting offshore resources. 1264 The assessors, who are independent under the law and not instruments of Government policy, may again seek to enter offshore subjects, so the Bill will confer on the Secretary of State for Scotland the power to specify by order, subject to Affirmative Resolution procedure, classes or descriptions of subjects which are not to appear in the valuation roll. The power extends to properties which are wholly or partly on, over or under the bed of the sea, by which is meant anywhere below low-water mark. The exemption may be conferred on a prescribed part of any generally described class of subject following consultation with affected interests.
My Lords, it may be assumed that upon the enactment of the Bill an order will be laid prescribing by general description public toll bridges administered by local authorities and offshore petroleum fields and pipelines to whatever extent may be considered proper. Thus the subects which have so far been assessed for rates—the bridges and the offshore petroleum installations—would be taken out of the valuation rolls. Once a class or type of property has been prescribed, no valuation will be competent thereafter. We would prefer to avoid a belated provision exempting any such new class. So the Bill provides that the assessor shall, subject to exceptions, assess no offshore subjects until he has duly notified the Secretary of State for Scotland and been advised that it is not intended to make an exemption order. Quite clearly there will be numerous classes of property which the assessor must be at liberty to deal with without going through the notification procedure. The Bill therefore empowers the Secretary of State to specify descriptions of property for which notice is not required.
Thus, my Lords, from the enactment of this Bill all subjects to which it applies will fall into one of three categories: first, subjects of a description which is exempt from valuation; secondly, subjects of a description which by direction of the Secretary of State for Scotland may be entered in the valuation roll just as they are at present; and, thirdly, subjects which, because they fall into neither of the first two categories, must be notified to the Secretary of State for Scotland before any assessment is made.
1265 There would be full consultation directed towards a comprehensive list of classes which will by order be exempt, and an equally comprehensive list of classes respecting which the notification procedure need not be applied. Then the process of notifications followed either by the Secretary of State for Scotland intimating that no order will be made or by the making of an order will be necessary only when the assessor intends to value some class of subject hitherto unknown—or, as is possible, something of a description which had been overlooked 'When the first order was made. As I said earlier, the Bill requires that any such order made be first laid in draft and approved by resolution of your Lordships' House and in another place. The Bill will have no effect whatever upon the boundaries of an assessor's authority, or on those of a local authority for any purpose. When the assessor is told by the Secretary of State for Scotland that no order will be made in respect of a certain subject, his powers and his duty to assess the subject will be unchanged. The courts will rule on any dispute in the normal way.
So this measure will implement the Government's policy—and I do not believe that policy has been seriously challenged—that revenues from the exploitation of our offshore resources should benefit the nation as a whole and it will retrieve a legislative oversight in 1973 which would otherwise adversely affect the finances of the Forth and Tay Road Bridges. And it will allow the quick and simple solution of any problems of a like nature which may arise henceforward. My Lords, I commend this measure to your Lordships' House accordingly.
§ Moved, That the Bill be now read 2ª.—(Lord Kirkhill.)
§ 7.17 p.m.
Lord CAMPBELL of CROY
My Lords, we are grateful to the noble Lord, Lord Kirkhill, for his explanation of what must necessarily be a complicated subject. I understand that the Government decided to introduce the Bill into your Lordships' House at this late stage in the session because it is required urgently to clarify the situation, since we are dealing with a relatively new industry, the offshore oil industry, and with the Continental Shelf where there was much less activity before 1266 1970 than there has been in the last five years. I will say straight away that I do not regard this as a controversial Bill and that we, for our part, will try to assist the Government to pass the legislation, while examining it in detail to make sure that it is in as perfect a form as we can get it.
We were aware that local authorities in Scotland had been contemplating the rigs and platforms in the North Sea and eyeing them with a view to the rates which might be coming in. The noble Lord has told us that even the oilfields themselves have been regarded as possible subjects of assessment for rating. Certainly I agree that when the Oil Taxation Bill was passing through this House neither we nor the Government took into account the possibility of the oilfields also having to pay local government rates. Your Lordships will recall that the Oil Taxation Act introduced the petroleum revenue tax which is levied on each individual oilfield, not on the profits of companies. The Act takes into account the 12½ per cent. royalties which have to be paid on oil, but certainly it does not take rating into account. May I say in passing that we in Parliament considerably changed the original version of the petroleum revenue tax. Even in its final version our criticism from this Bench was that it was kind to the prolific oilfields which are fairly easy to work but that it would bear hardly on other marginal oilfields which the consortia might well find were not worth developing; that is, it would not be economic to get out the oil.
I should like to ask a question or two about the scope and policy. The noble Lord, Lord Kirkhill, indicated that the Secretary of State's present intention was to exempt the Forth and Tay road bridges, and I understood that this was one of the objects of the Bill, but when we come to other possible subjects I think there could be some difficulty about where the line is to be drawn. From what he said it seems that all the installations connected with the off shore oil industry are likely to be exempted from rates by the orders which the Secretary of State for Scotland would table. The noble Lord mentioned pipe-lines, and I think he mentioned rigs and platforms and the oilfields themselves, but what about terminals and jetties? What about platform construction?
1267 Last Wednesday, six days ago, I was at the inaugural ceremony concerning flooding the dock of the largest platform in the world at Kishorn in Wester Ross. That platform will move out into the loch considerably beyond the low-water line which is the important line so far as this Bill is concerned, and for about a year work will be continued to complete it where it is lying, a mile or two away from the coast. That is a construction job; that is nothing directly to do with the oil fields or winning the oil because eventually that platform, when completed, will be towed several hundred miles to an oilfield East of Shetland. Will that kind of platform construction and the various installations which are below the low-water mark also be exempted from rates, because they are connected with the oil industry although they are not, at that stage, more than a construction job being carried out by the building industry and the steel fabrication industry? Then there are other objects such as floating oil tanks. I think it would be helpful if the Minister could say whether it is the Secretary of State's intention to exempt in one of his first orders every kind of installational equipment which is connected with the off-shore oil industry.
Then, on policy, may I ask the noble Lord about other industries because, of course, there are jetties which are used by shipping and by fishing boats and for all I know some of these may already be the subject of rating where they extend beyond the low-water mark. I must also mention marine fish farming. I do not need to remind your Lordships that there has been considerable dismay, both in this House and in another place, that freshwater fish farms have not been exempted from rating although farming, agriculture, is so exempt. When we come to marine fish farming there are often cages below the low-water mark right out in sea lochs, containing many hundreds or thousands of salmon which are being fed and are growing. Are those cages and other installations connected with fish farming to be rated or are they to be exempted?
The Bill opens up a whole range of industrial and other subjects which might in future be categories which are to be exempted. So may I ask the Minister of State to tell us whether the Secretary of State is going to leave these matters for 1268 individual decision later? Is it his intention simply to exempt the Forth and Tay road bridges; to exempt (as I hope) everything connected with the off-shore oil industry and then to consider other categories or other individudual subjects as they arise?
Then I have another question, because accept what the Minister said: that the whole question of the Continental Shelf and its ownership and the control that a coastal State has over it, is changing. How far out will the Government in future expect the rating exemption or the rating to extend? At present our territorial waters extend for three miles. It is expected that the convention, when it is eventually agreed at the Law of the Sea Conference, will extend territorial waters to 12 miles. But from what the Minister said it sounded as though he was dealing with the whole Continental Shelf, and the Continental Shelf can extend even beyond the 200-mile economic zone, which again has been virtually agreed at the Law of the Sea Conference and is expected in a year or two to be ratified and put into effect by most, if not all, of the countries of the world.
So I entirely accept that legislation like this is needed because these changes are taking place, and when we have an economic zone of 200 miles which is internationally recognised the question of rating or exemption from rating may well arise in that area. Under the Geneva Convention by which the North Sea was divided up and allocated for mineral exploration, the seabed was not claimed, as I understand it, as part of the country. The arrangements by which frontiers were projected into the sea and median lines drawn and then drilling for oil and gas was to proceed in the North Sea, did not include claims for sovereignty over the seabed. It was simply the right to the substances lying in the seabed. Once Britain has a 200-mile economic zone presumably we shall have more control over installations and minerals in our part of the Continental Shelf.
Can the noble Lord tell us what will be the principles governing the allocation of subjects which are not exempted? How will it be decided within which local authority's area a subject will fall? For example, if there is some installation connected with—he mentioned yachts, 1269 but shall we say with vessels, and not connected with the oil industry, and it is some miles from the shore, there will presumably have to be a system by which the boundaries between local authorities are projected into the sea in order to decide in whose area the subjects lie; and there could well be disputes between local authorities on that matter. It could be done under the system between the countries bordering the North Sea by which the North Sea was divided up for the purposes of oil exploration. There is a formula and we could apply that. Alternatively, for dividing Scots law from English law in 1968 we simply drew a line eastwards from the Border. There will have to be some system if we are to settle disputes between local authorities as more and more activity takes place off our shores and on our Continental Shelf.
I was glad to see the Affirmative Resolution procedures covered in the Bill, because it is right that both Houses of Parliament should have the opportunity of considering the list of subjects which are to be exempted and deciding whether or not the categories are appropriate.
I would end by raising one other separate valuation subject. If the noble Lord, Lord Kirkhill, was here at Question Time today he will have heard me raising a matter which has been considered by the courts, which is the question of the assessment of wheelchair housing and other housing for the severely disabled, when houses have had to be adapted, in order that people can live in them who are in wheelchairs or are otherwise severely disabled. The position is that both in Scotland and in England cases came up earlier this year. The Appeal Court decided in favour of the disabled persons. But your Lordships' House, in its Judicial capacity, interpreted the law in the other sense, and in so doing, the noble and learned Lords concerned criticised the wording of the English Act—it was Section 45 of the General Rating Act—as being ambiguous and labyrinthine. Everyone has agreed, I think, that further legislation is needed.
My Lords, on 10th May in the other place, Mr. Barnett, the Minister concerned, said that the Government were examining the present legislation carefully in the light of the judgment which I have mentioned, 1270 and the criticism made of the ambiguity of Section 45. That, of course, applies to England and Wales. There has been a similar case in Scotland. I hope the Minister might be able to take the opportunity of this valuation Bill, a Scottish valuation Bill, going through Parliament to add a very short amending clause which would put right something that certainly needs to be put right in our valuation law in Scotland as regards the disabled; that is, not only making it clear so there is no difficulty of interpretation but also setting it quite definitely in favour of the severely disabled person.
My Lords, it is far cheaper for the Government and the taxpayer to encourage severely disabled people to live in their own homes than it is to keep them in hospitals or institutions. In hospitals, they are occupying valuable beds. Apart from that, of course, it is the best therapy and the best thing for the disabled themselves if they can be as independent as possible, living in the community rather than simply being in hospital or in an institution. So the change in the law, the amending legislation which would be short and non-controversial, far from adding to public expenditure would have the opposite effect. It would help to reduce public expenditure. I can give this assurance to the noble Lord; that is, if such a clause were added to this Bill, there would be no accusations from this side of the House of "tacking".
I understand that the later stages of this Bill will be taken in October, probably when we return, so there is plenty of time for the Government to continue their examination, which the noble Baroness who replied to me today said they had under review at the moment, of the legislation and the amending legislation that is needed. I hope that the Government will be able by October and the Committee stage of this Bill to produce an amending clause of the kind I have mentioned on this other subject. This is a miscellaneous Bill dealing with a great number of subjects, and I think it would be in place. If the noble Lord can use this Valuation and Rating Bill for that purpose, it will be greatly welcomed. I recognise the need for this, and we will otherwise do what we can to facilitate the passage of the Bill.
§ 7.33 p.m.
§ Lord KIRKHILL
My Lords, I must confess at the outset that I was not present at Question Time earlier today, so that I was not privy to the discussions and deliberations which took place at that time. But I will certainly read Hansard tomorrow and make myself aware of the point which the noble Lord, Lord Campbell of Croy, raises with me. He might forgive me if I do not stray into the esoteric law of the line and area and extent of delineation of the Continental Shelf, a subject which I know is of particular interest to the noble Lord, and a subject on which I know he has considerable expertise and on which he has expressed, both in your Lordships' House and elsewhere, definite, clearly constructed and well thought out views. Rather, I would attempt to confine my remarks to replying to a number of specific points which the noble Lord, Lord Campbell of Croy, raises with me, as these relate to what, as he himself says, is a somewhat complicated Bill.
Of course, I welcome the very generous welcome of the Bill give by the noble Lord, and I confirm to your Lordships that certainly the Tay and Forth Road Bridges will be exempt, as will those oil installations, as I indicated in my earlier remarks. But the noble Lord has really asked of me how the expected course of events might move following enactment of the Bill. If I can be of some help to him in this regard, it might be appropriate for me to comment at this stage.
As I understand it, at this stage in our deliberations at least, the Secretary of State for Scotland will make an order under Clause 1 exempting from valuation and rating general descriptions of subjects. We have already mentioned the Tay and Forth Road Bridges and the oil installations which will dispose of existing valuation roll entries in respect of the two toll bridges and the oil installations. And thereafter no further subjects falling within the general descriptions, for example, any other offshore oil installations, may be entered in the valuation roll.
Clause 2(1) will prevent the assessor from making any valuation roll entry in respect of any subjects lying wholly or in part below low watermark until such time as he has notified to the Secretary of State for Scotland his intention to do so 1272 and has received intimation from the Secretary of State that the Secretary of State does not intend to make an order which would exempt the subject in question. There is an alternative possibility that an exempting order may be made. It is at this point that one immediately thinks of wave power, perhaps, or the new geological resources which are becoming more apparent, the whole new range of technology and, indeed, as the noble Lord, Lord Campbell of Croy, has mentioned, the construction platforms. It is at this point that we think of these things. As I understand the Bill, Clause 2(1) would give this cover to the Secretary of State to make his decision as the assessor intimates to him the assessor's intention.
Then, of course, there is the great bulk of coastal subjects which I mentioned earlier, which must remain liable, as they are at the moment. Clause 2(2) provides a means of dispensing with the assessor's duty to give notice before making a valuation roll entry. The subsection allows the Secretary of State to dispense with notices under subsection (1) in respect of such classes of subjects as he may direct. Thus—and here I touch on a point which the noble Lord, Lord Campbell of Croy, mentioned—for example, a direction could dispense with the need for notice of intention to assess any harbour, a pier or a jetty, or any bridge, or moorings, or a fish hatchery. The noble Lord also mentioned very explicitly the question of fish farming. I can advise the noble Lord that the Government have no present intention of exempting fish farms. Their rateability in Scotland recently has been confirmed by the courts, and any case for exemption would have to show why local taxation should not continue to be levied.
I am sensitive to the very interesting question which the noble Lord, Lord Campbell of Croy, posed to me on the question of house construction and renovation as they apply to the disabled. Of course, I am aware of the distinction between the English and Scottish positions. But I am bound to say to the noble Lord that it is probably outwith the scope of this Bill. However, I will at least undertake to read with great interest the remarks he made earlier this evening.
I was also asked by the noble Lord whether I could give some indication of 1273 definition of the seaward limits, as I understood him, of local authority jurisdiction. I have already indicated that I do not think I can comment adequately about the subtlety of the law as it applies to the Continental Shelf area. But as it applies seaward in terms of the limits of local authority jurisdiction I am advised there would be considerable advantages in a clear definition of boundaries, the very point the noble Lord has made, for all local government functions, and there are of course already very broad areas in other directions, as he knows. But it is very doubtful whether a single definition could be applied to all those functions. A great deal of consultation would be needed to clarify all the requirements, and I am advised it is not a task that could be undertaken quickly. As matters stand, it seems to me we have an immediate difficulty to which we must provide an immediate solution, and this Bill is an attempt in that direction.
Of course, I will return, with noble Lords, to discussing the matter at the next stage in October. Meantime, I would thank your Lordships for the welcome accorded to the Bill, and I will undertake to read very carefully all that has been said in a constructive way regarding the Government's latest measure before your Lordships this evening.
§ On Question, Bill read 2ª, and committed to a Committee of the Whole House.