§ 6.51 p.m.
§ Baroness BIRK rose to move, That the Gas Hereditaments (Rateable Values) Order 1976, laid before the House on 11th March, be approved. The noble Baroness said: My Lords, I am moving this order on behalf of my noble friend Lady Stedman, who unfortunately has been stricken down with the flu. The order before this House concerns the rating of property occupied by the British Gas Corporation. Premises occupied by the British Gas Corporation other than dwellings, shops, showrooms and offices not on operational land are at present rated by formula under Section 33 of and Schedule 6 to the General Rate Act 1967. These provide both for the calculation of the total rateable value of the industry and also for the distribution of that rateable value to rating areas. Quite a number of other public utilities are rated by formula, which is a convenient method of determining a rateable value where the ordinary methods of assessment would be difficult and cumbersome to apply. However, some of the formulae in use are old and during the past two years most of them have been reviewed. The order now before us is the result of the review of the gas industry formula.
§ As noble Lords will know, the whole nature of the gas industry has changed dramatically in recent years from manufacturing gas to storing and distributing natural gas. The current formula substantially undervalues the gas industry, partly because it gives undue weight to manufactured gas. After extensive consultation with the British Gas Corporation, the local authorities and the Valuation Office—the Government's professional advisers on rating and valuation matters—we have arrived at a total rateable 840 value for the gas industry of £60 million for 1976–77 compared with a rateable value of £30 million in 1975–6. The Government feel that this is a fair balance between their obligations to local authorities on the one hand and to the gas industry on the other.
§ Our sole aim in increasing the rateable value of the gas industry (and, indeed, that of any other public utility) is to bring the rates they pay into line with those paid by other industrial ratepayers. If the rateable value of the gas industry were allowed to remain artificially low, ratepayers would effectively be subsidising gas consumers. Noble Lords will agree that the fact that these are sometimes the same people does not detract from the unfairness of this situation. The purpose of the order before us today therefore is to provide a new basis for the rating of premises occupied by the British Gas Corporation in England and Wales (other than dwellings, shops, showrooms, and offices not on operational land) with effect from 1st April 1976. The position in Scotland will be reviewed later by my right honourable friend the Secretary of State for Scotland.
§ The order is fairly complicated and it might help noble Lords if I briefly run through its main provisions. Article 4 (i) of the order provides a method for the calculation of the total rateable value of the gas hereditaments for 1976–77. This works out at £60 million. This figure is adjusted in accordance with the formula set out in Article 4 (ii) for 1977–78 and subsequent years to reflect the expansion or contraction of the industry. This is measured in terms of the changes in the number of therms supplied per mile of trunk main.
§ The adjustment formula set out in Article 4 (ii) differs from the adjustment used in the current formula in two main ways. First, the current formula distinguishes between gas manufactured and gas purchased—that is to say, North Sea gas—by the Board. This distinction is abolished in the new adjustment formula. Secondly, in the new formula 25 per cent. of the increase in output per mile of trunk main is taken instead of 20 per cent. of the increased output over a standard number of therms as in the current formula. Noble Lords should not, however, assume that this higher percentage necessarily means a higher rate liability.841
§ These percentages are not comparable because they are not percentages of the same thing.
§ The method of distributing total rateable value to rating areas is set out in Article 5. Under the current formula the total is distributed to rating areas in proportion to the number of therms supplied in that area, plus nine-tenths of the number of therms manufactured or produced in that area. Natural gas terminals have separate rateable values which accrue to the rating areas in which they are located. The total rateable value of the industry is then reduced by the amount of the rateable value of these terminals and the rateable value apportioned to all rating areas is adjusted accordingly.
§ In the order before us today, however, the distribution has been amended to give a bigger share to those rating areas with large installations. Seventy-eight per cent. of the total rateable value is distributed to rating areas in proportion to the therms of gas consumed in those areas—and, incidentally, I am told that gas is consumed in every rating area in England and Wales. The remaining 22 per cent. is apportioned to those rating areas with large installations. These are identified in this order as trunk mains and large compressor stations. These two kinds of installations account for 93½ per cent. of the 22 per cent. Noble Lords may wonder what has happened to the remaining 6½ per cent. This is to be distributed to those rating areas having natural gas terminals or liquid natural gas storage systems. Provisions for determining the rateable value of such installations are set out in a separate order (the Natural Gas Terminals (Rateable Values) Order 1976) at present lying before the House.
§ This order repeals, amends and modifies provisions in Section 33 of and Schedule 6 to the General Rate Act 1967, as modified by the Gas Act 1972. My right honourable friend the Secretary of State has consulted all those who are affected. My Lords, I beg to move that this order be approved.
§ Moved, That the Gas Hereditaments (Rateable Values) Order 1976, laid before the House on 11th March, be approved.—(Baroness Birk.)842
§ Lord MOWBRAY and STOURTON
My Lords, first may I say how sorry I am that the noble Baroness, Lady Stedman, is unwell. I am sure that the whole House will be grateful to the noble Baroness, Lady Birk, for stepping at short notice into her shoes, and may I thank her very much for the way in which she has introduced this order. I can assure the noble Baroness that these rateable values are not simple, but the information which she gave to the House, that in the coming financial year the rateable value will be increased from £30 million to £60 million, was most useful.
The noble Baroness will be pleased to hear that I do not intend to go into the details of Articles 4 and 5, which I am sure would stymie cleverer mathematicians than either of us. I merely thank her again for having introduced the order.
§ On Question, Motion agreed to.