HL Deb 31 March 1976 vol 369 cc1243-5

11.13 p.m.

Baroness STEDMAN rose to move, That the Docks and Harbours (Rateable Values) Order 1976, laid before the House on 16th March, be approved. The noble Baroness said: My Lords, the order before the House concerns the rating by formula of hereditaments occupied by statutory docks and harbours. The port industry is one of several public utilities which are rated by formula' and most of the formula) have been reviewed over the past two years. The order before us now is the result of the review undertaken of the formula relating to the docks and harbour industry.

It might help noble Lords if I briefly explain how the rateable value of the industry is arrived at under the present system. First, I should say that only premises on operational land are rated by formula. Offices, for example, not on operational land are valued and rated in accordance with normal rating practice. Under the present system, the rateable value of a dock or harbour undertaking in any year is 6 per cent. of the relevant receipts in that year up to a level equal to 6 per cent. of its relevant receipts in 1973–74, and 4 per cent. of any excess receipts over this level. Relevant receipts are the undertaking's total receipts less receipts from cargo handling, pilotage and from certain specified investments and rents.

When the current formula was reviewed the industry pointed out that it effectively meant that they were paying twice over for inflation. The relevant receipts of the industry have increased each year through inflation, although the actual amount of trade has in some years decreased. As rateable value is directly linked to receipts, it too has increased. But, in addition, rate poundages have increased to meet increased local authority costs which are also due to inflation. Thus the docks and harbour industry (alone among the formula rated industries) has been paying poundage on a rateable value, both of which have been increasing with inflation. My right honourable friend the Secretary of State accepted the industry's view that this was an unfair situation. In the order before your Lordships today we have taken steps to ensure that it will not recur by providing that in future the relevant receipts will be deflated to constant prices by reference to the Retail Price Index. We have also reduced the percentage of relevant receipts to 4¼ per cent. and we believe that these two factors together will ensure that the industry's rate burden will from 1976–77 onwards be at a reasonable level.

I shall now run briefly through the order and explain its main provisions. Article 3(2) provides that the order shall not apply to very small undertakings, or to certain specialist undertakings. Article 4 provides that the rateable value in 1976–77 shall be 4¼ per cent. of relevant receipts in 1975–76 and in subsequent years that it shall be 4¼ per cent. of relevant receipts in the previous year deflated to 1975 prices by reference to the Retail Price Index. Under the present system, the rateable value in any year is based on the relevant receipts for the same year. The order provides that in future rateable value in one year shall be based on receipts in the previous year. This is a minor change introduced to enable the rateable value to be fixed during the rating year in question instead of well after the end of the year as happens at present.

Article 5 outlines the machinery under which undertakings will have to notify their relevant receipts to the Inland Revenue and provides that undertakings may elect to declare receipts for the previous calendar year instead of for the previous rating year if they so wish. Article 8 provides that those undertakings which have already elected to do this may continue to do so without making a fresh election. My right honourable friend has consulted all those affected, and they have all expressed themselves as satisfied with the order. I therefore beg to move that this order be approved.

Moved, That the Docks and Harbours (Rateable Values) Order 1976, laid before the House on 16th March, be approved—(Baroness Stedman.)

11.18 p.m.

Lord SANDYS

My Lords, even at this late hour, when the House has had a full surfeit of debate, we should thank the noble Baroness, Lady Stedman, for making very clear the purpose of the order before us. There is only one question which I should like to ask Her Majesty's Government and it relates to Article 7. The means by which the new formula is to be arrived at appear in the previous six Articles, but Article 7 states that: No proposals shall be made for the alteration of the rateable value of a hereditament to which this Order applies. One knows well that the phraseology of orders is arcane and that terms of art are used which are not normally applicable in other forms. Nevertheless, we have been advised by the Renton Committee on the Preparation of Legislation that clarity is to be sought as far as humanly possible. I wonder whether the noble Baroness would explain whether this means that no proposal shall be made by the district valuer until such time as the Inland Revenue has given sanction.

Baroness STEDMAN

My Lords, that is my interpretation of Article 7. The only reference is in the explanatory notes on the back of the order, which state that: Articles 5 to 8 contain provisions for the calculation of and notification of rateable value by the Commissioners of Inland Revenue and supplemental and transitional provisions. My understanding is the same as that of the noble Lord opposite.

On Question, Motion agreed to.