HL Deb 06 December 1977 vol 387 cc1486-511

3.59 p.m.


My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Lord McCloskey.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ALPORT in the Chair.]

Clause 1 [Amendment of Section 6 of Local Government (Scotland) Act, 1975]:

Lord McCLUSKEY moved Amendment No. 1: Page 2, line 25, leave out ("liability to be rated") and insert ("the levying or payment of rates").

The noble and learned Lord said: This is a drafting Amendment and I regret that it is necessary at all because the whole purpose of this Bill is to re-write Section 6 and make an improvement upon the Section 6 which is contained in the 1975 Act. I feel a sense of humility in coming forward first at this stage and asking your Lordships to accept a drafting Amendment, but I am afraid study has shown that it is necessary. The undertakings to which formula valuations may be applied by order, as I said at Second Reading, differ widely in character and in their demands on the public water supply. It is necessary that these differences should be provided for in any orders that may be made so that the introduction of formulae should not lead to anomalous affects in relation to domestic water rate. "Domestic water rate " is not itself defined in the 1975 Act. In Section 37 of that Act "rates" is not defined either, but Section 37 includes the following: ' Rate' includes a domestic water rate". There is, however, room for doubt as to whether the expression "liability to be rated" in the present draft of the Bill attracts this meaning of "rate" in the 1975 Act. Clearly, your Lordships will agree, a power by order to repeal or amend enactments must be clear beyond doubt, and the purpose of the Amendment is to make the power clear beyond doubt. It is hoped that this time we shall be successful. I beg to move.


I rise only to assure the noble and learned Lord, Lord McCluskey, that he need not apologise for the Government bringing forward an improving Amendment even at this early stage. Sometimes it is difficult for the Government in another place, where the atmosphere can be more politically charged, to come forward and admit that they have found something to change as early as this. But I speak again for this Bench, as I have on other Scottish Bills, in saying that we would always encourage the Government to come forward in your Lordships' House to make changes, even at this very early stage, and they certainly need not apologise if the changes are better drafted. This one does appear to be, and I would advise your Lordships to accept it.


May I ask the Minister a question? Certain of your Lordships may remember that, when the time came to rate the hydro works of the North of Scotland Hydro Electric Board, concern was expressed by certain of the Highland county councils that the rates leviable on works within their authority areas were shared among other authorities; particularly I think some of the Highland counties which had all the dams and the works had to share their rates with Aberdeen and Dundee. I wonder whether this Amendment to this Bill will alter this position?


I can deal with this question at the present time if the Committee wishes. The position is that the Bill will not alter the position of the North of Scotland Hydro Electric Board. The Board's rate-paying arrangements might be changed by order made under the powers provided, but there would, of course, be full consultation. So far as the Bill itself is concerned, no alteration is included. I am grateful to the noble Lord, Lord Campbell, for his remarks.

On Question, Amendment agreed to.

4.2 p.m.

Lord CAMPBELL of CROY moved Amendment No. 2: Page 2, line 37, leave out subection (6).

The noble Lord said: This was mentioned during the Second Reading of the Bill. I think it was my noble friend Lord Selkirk who pointed out that there was a retrospective element in subsection (6), and I have put down this probing Amendment to give the Government the opportunity to tell us why it should be necessary. I think the only reason that has been offered is that this has been done before; I am sure that that is the reason why it has come into this Bill. But Parliament dislikes retrospection in general, and I would ask the noble Lord to see whether this really is necessary on this occasion. I can quite understand that it may sometimes be convenient to have this element of retrospection going back to the beginning of the year, but is it essential? If it is simply here because it has been carried forward from earlier systems, I would ask the Government to have another look at it, because every time unnecessary retrospection goes into legislation it gives rise to complaints later on. If we can eliminate it I am sure your Lordships would agree. I beg to move.

The Earl of SELKIRK

My noble friend mentioned me as having referred to this at Second Reading. This has been imported into this Bill and did not exist previously under the 1975 Act. What went wrong? What difficulties have arisen on this? Rating valuations are not things which change rapidly, particularly in regard to the sort of public works which are mentioned here; so that rapid changes should not really be very necessary. Not only that, but there are already provisions in Clause 1 for doing a lot of things very much more quickly. For instance, subsection (8) of the new Section 6 appears to demand very rapid handling; I do not know why, but it does. Then there is the curious provision under subsection (1) of the new Section 6. I should like to say a word or two about that when we come to the Question, That the clause stand part of the Bill. This also seems to have the object of acting very quickly. If you have these provisions for acting very quickly, do you really need a retrospective clause? Is there some reason for it, or are we just doing it as a matter of habit? I think we are right to challenge this and to ask whether it is necessary. If it is not necessary I think we should drop it. Merely because this particular subsection has appeared in previous Acts is not really a very sound argument. I would ask the noble and learned Lord to say whether there is something which can justify procedure which is not very popular in Parliament and which most of us agree is wrong in principle.


I sense that if I were to say that the only reason is that it has been done before, however satisfying an answer that might be to a lawyer, or even perhaps to a Conservative, it would not satisfy the Committee. So I am happy to say that I can go a little further.

Subsection (6), as your Lordships have been reminded, provides that an order under the new Section 6 may provide that it shall have effect as from the beginning of the year in which the order is made; that is to say, with effect from 1st April of the year, which runs from April to March. The Government's intention is that the treatment of formula-assessed subjects should not differ unnecessarily from that of property, which is valued for rating in the normal way. I am happy to see Lord Drumalbyn in his place, because this is a point which touches on something he raised at Second Reading, and I hope to come back to that more fully.

Normally valued property—that is to say, property valued according to orthodox methods—is dealt with by local assessors in accordance with what is now Section 2 of the 1975 Act. Your Lordships will see that subsection (2) of that section provides that entries in the valuation roll may have effect as from the beginning of the year in which they are made. I draw attention particularly to Section 2(1)(d) in the 1975 Act, where the assessor has power to alter the roll to give effect to an alteration in the value of any land or heritage which is due to a material change of circumstance. Then, in Section 2(2)(c), the alteration to the roll may be made to have effect as from the beginning of the year in which the alteration is made. Accordingly, as your Lordships will see, with the orthodox method of valuation the valuation can take effect from 1st April in the year of valuation, and the Government's intention is merely to have the same provision in effect for public utilities of the kind with which we are dealing here.

I think that the noble Earl, Lord Selkirk, suggested that this is not in the 1975 Act. For the orthodox valuation it is. Indeed, in Section 5(4) of the 1975 Act, he will find a precursor of the same kind of power in relation to public utilities. Accordingly, subsection (6) of the new Section 6, in Clause 1 of the present Bill, brings general formula powers into line with the normal provisions of the valuation Acts. Bearing in mind the requirements for consultation under what is now to be Section 6(4), there could well be the possibility of failure to make an order before the beginning of the year, namely 1st April, in any particular year. In some circumstances, such as a revaluation year when other properties were being rated on the basis of increased valuations, the delay in putting the order into effect could result in a substantial loss of revenue from certain undertakings which would be left paying rates on the old valuation. That could lead to injustice to other ratepayers. It is at this stage that I can pick up the point made by the noble Lord, Lord Drumalbyn, and I shall return to it when we discuss the Question, That the clause stand part. However, in fact, the private ratepayer—if I can call him the ratepayer who is assessed in the orthodox and usual way —falls in a revaluation year to pay a higher rate burden and, if the formula is applied after 1st April and cannot be backdated, it might mean that the public utility would pay a proportionately smaller rate during the period between 1st April and the date of making the order. That would be unfortunate and would lead to injustice to other ratepayers. Therefore, there are good reasons, in my submission, for allowing this new subsection to stand. I hope that, in the light of that explanation, the noble Lord, Lord Campbell of Croy, may feel able not to press his Amendment at this stage.


I should like to ask a question. Taking subsections (5)(b) and (6) together, would it not be possible for an order to be made of such a character as to back-date an assessment even though there are provisions in the Local Government (Scotland) Act 1975 which indicate that, where an entry is corrected in the roll, the new valuation is to come into operation either from the date on which the correction is made or from the beginning of the year in which the correction is made, whichever is the later? I am slightly concerned about the power to change, by order, an enactment in that respect. I do not know whether I am right about this, but perhaps the noble and learned Lord, Lord McCluskey, will look at the matter in case there is anything in it.


I think that the noble Lord, Lord Drumalbyn, has certainly drawn attention to an important point. Of course, the ultimate safeguard, if a Government sought to do what the noble Lord fears, would be that one trusts that neither House of Parliament would allow the order to proceed. I can state quite clearly that the intention is not to make formula valuation any different from orthodox valuation in this respect.

As the noble Lord has said, as regards orthodox valuation one looks at the later of the two dates—either the date of the change or the date of the beginning of the year. It is not the Government's intention to go back beyond the later of any two such dates. If the Government sought to do so, I hope that my words would be noted and quoted against the Minister when the order was being moved and that this House would not give effect to the order.


Before the noble and learned Lord, Lord McCluskey, leaves that point, I should like to draw attention to the fact that Section 5 of the 1975 Act makes similar provisions in regard to the valuation of public undertakings.


It has been made clear in this brief debate that there is always anxiety in your Lordships' Committee, as indeed there is in another place, when an element of retrospection arises. I have listened to what the noble and learned Lord has said. I must agree, of course, that our aim is to be fair to different categories of ratepayer—that is, not only to industry, commerce and the nationalised bodies, with whom we are dealing in the Bill, but to the domestic ratepayers because, in a particular local authority's area, all of them will be contributors to the rates. Indeed, one category may well feel aggrieved—and justifiably so—if a change in valuation to another category takes place later than its own, and it appears to be paying more of its share of the rates than it ought to be paying.

Every time we repeat a provision of this kind, we may be building this retrospective element into the legislation and into the system. That is what worries me and I think that, in this respect, I am speaking for all my noble friends who have taken part in the debate. I can see that one does not want to encourage delays in the reaching of assessments. If one could always guarantee that assessments were determined by the beginning of the financial year, 1st April, the problem would not arise.

However, I ask the noble and learned Lord, Lord McCluskey, to look again at the system in the light of what has been said in the Committee this afternoon, to see whether it is possible to get rid of this retrospective element not only for the category of ratepayers that we are considering in the Bill—the nationalised bodies and the public bodies—but for the other ratepayers as well. If there is a way of doing that either in this Bill, as a first step, or in general, I am sure that Parliament would thoroughly approve. In the meantime, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.17 p.m.

Lord CAMPBELL of CROY moved Amendment No. 3: Page 3, line 1, leave out subsection (8).

The noble Lord said: This Amendment would remove subsection (8) of Clause 1. The subsection provides for what is now called the "accelerated procedure" when hybrid orders appear before your Lordships' House. This completely new procedure was approved by your Lordships' House nearly three years ago in the Offshore Petroleum Development (Scotland) Bill. Briefly, the history was that because the Government foresaw great urgency being required in action under that Bill and the possibility of orders being laid by the Secretary of State for Scotland which might he hybrid, they put forward proposals in that Bill which would have given no time for the Private Bill procedure to come into operation. No committee would have been set up to look at the order and give the individuals concerned the right, which they have had under hybrid procedure, to come before Parliament and state their cases themselves. The individual has a precious privilege: where his interests appear to be affected, not in a category but in a way which appears to discriminate against those interests, he can come to Parliament himself with his legal advisers and plead his case. His case is heard by a committee on Private Bills. When the legislation is in the nature of an order, then a committee can still be established and the case heard.

The House of Lords did not accept the Government's proposal and a compromise proposal was reached. A large part was played by the noble and learned Viscount, Lord Dilhorne. The present formula was eventually agreed: it provides 28 days, instead of no time at all, in which the Private Bill procedure can be put into operation. It still does not give very much time. It means that any private interests, whether they be individuals or bodies, who feel that they are being discriminated against have to operate very quickly and, indeed, the procedure of your Lordships' House would have to operate very quickly in order that the committee should be set up, hear evidence and come to a conclusion. None the less, that was accepted, as was the 28-day period, in the interests of urgency. The Government made out a case of urgency of considerable national importance in connection with offshore oil nearly three years ago.

This formula has now been used at least three times since then, and I drew attention to it during the passage of another Scottish Bill and of the Industry Bill, with which I dealt from this Bench. On those occasions, the Government again represented that there was urgency in what they foresaw as the operations of the Bill. However, on this occasion, I am querying the need for urgency in the area of valuation in property of nationalised and other public bodies.

The procedure as set out in subsection (8) has been approved as an accelerated procedure to be used when there is great urgency, but it would be wrong for this procedure to become accepted in every case, because it allows only 28 days for the Private Bills procedure to be operated. Therefore, at this stage I would ask the noble and learned Lord, Lord McCluskey, to tell us why the accelerated procedure is needed in this Bill. I drew attention to the use of the accelerated procedure at Second Reading, pointing out that it had been approved but that we were interested in why it should be necessary in this Bill.

Where there are occasions when action has to be taken with great speed, it is understandable that, when a hybrid order appears, it would have to be dealt with within 28 days. However, unless the noble and learned Lord can explain to us something that is not clear in the Bill, I cannot see the reason for the urgency in this Bill. I beg to move.

The Earl of SELKIRK

I should like to support my noble friend. Unless there are good reasons, it would be a great pity if this subsection were to become common practice. In this clause the Government take some very high-handed powers. The answer which the noble and learned Lord, Lord McCluskey, is forced to give on each occasion is that those powers are justified only because an order is to be placed before Parliament, which can examine it and, if necessary, reject it.

I should like to revert to a point which I raised during the Second Reading debate about subsection (1), which seems to be very high-handed indeed. I thought that the noble and learned Lord had some sympathy with the point I made at Second Reading, but apparently he has none. Perhaps I may explain what I have in mind. Subsection (1) says: The Secretary of State may by order— (a) prescribe; … the rateable value …". That is the entire importation. Previously he prescribed—and I think the noble and learned Lord will see this in the Explanatory and Financial Memorandum—a valuation by formula or a method by which the valuation could be taken. As I read it, that means that, ex proprio motu—by his own idea—the Secretary of State can lay down what the valuation should be. Secretaries of State have many great qualities, but very few are qualified in the very mysterious realm of valuation. Valuation is a very difficult subject indeed, and there have been extremely few Secretaries of State who could speak with any authority on it. In addition, most of the subjects here are very peculiar ones—they are not normal subjects. Therefore, the valuation is difficult.

In the Bill, it is being made quite clear that the Secretary of State can himself lay down the valuation. That is my interpretation and, if I am wrong, I am sure that the noble and learned Lord will tell me. As I read it, that is what is in the Bill and is what is intended. I suggested at Second Reading that it was not necessary to have it but, as they have tabled no Amendment, I presume that the Government wish the Secretary of State to have the power of setting the valuation himself. The only answer to that is that the order must be placed before Parliament. We are now having an accelerated order before Parliament—a negative procedure—which under no circumstances should last more than 28 days. Is the accelerated order necessary when there is a safeguard in such extremely extensive powers taken by the Secretary of State? I do not think that it is necessary.

Valuations are not matters of great speed; things do not change all that quickly. There may be considerable improvements, but they are not things that no one knows about. I find it very hard to understand why we want this accelerated procedure. If it is not really necessary, frankly, we should not have it; it would be much better to omit it. It is wrong that it should become a common procedure in any Bills of this sort.


My noble friend referred to negative procedure. I may have misunderstood it because I had understood from subsection (7) that it was, in fact, affirmative procedure, which, of course, is welcome. However, it is the time limit of 28 clays about which both my noble friend and I are concerned.

The Earl of SELKIRK

if I am wrong, I readily accept that correction.


I am indebted to the noble Lord, Lord Campbell of Croy, for making that clear. The expedited procedure, of course, relates only to a possible hybrid order. I would accept that one should not proceed with a subsection of this kind simply as a matter of form. As the noble Lord, Lord Campbell of Croy, said, it must be justified in each particular case.

First, let me make it plain that the Government accept that there may well be situations in which a private interest might feel able to allege a discriminatory effect from one of these orders. For example, the new Section 6(3)—I refer to it as Section 6(3) because Clause 1 is to be the new section—would allow the selective application of formula powers (for example, two units of an industry over a prescribed size or level of turnover), and the terms of such an order might be represented as giving an unfair advantage selectively within the industry. An obvious example is perhaps the docks industry.

The purpose of subsection (8) is precautionary in character. It is conceived that, although there should not be delay, there could be delay. If there were any substantial delay as a result of following up the normal procedures that would apply if one did not have subsection (8), that could, again, conceivably lead to prejudice to other ratepayers whose rate burden might be increased because the formula had not been brought into operation so as to increase the rate burden of the particular undertaking that was involved in the order. So the inclusion of the subsection here is designed to ensure that Parliamentary proceedings on an order should not be subject to undue delay, but at the same time it gives all the necessary protection to any private interest which may be the subject of a petition.

It is thought—but it is for the Committee to judge—that the 28 days allowed by subsection (8) is fully adequate, given that any identified interest will have been considered during the preliminary consultations which fall to take place under subsection (4) of the new Section 6. Again, I am entitled—and indeed, the noble Earl, Lord Selkirk, forsaw that I would be—to refer to the powers of this House, indeed of either House; but they are certainly real and as the noble Lord, Lord Campbell of Croy, pointed out, they are powers in relation to an Affirmative Resolution. Accordingly, I found my case upon them as being powers that would be invoked if, in fact, it was thought that the Government, seeking to introduce an order under the expedited procedure where there was hybridity, were riding roughshod over a private interest.

The other matter which the noble Earl, Lord Selkirk, mentioned was the wording of subsection (1). I think I confirmed last time that his understanding of the wording was exactly right, and the Secretary of State may, by order, prescribe the rateable value. This is certainly an advance on or, as he might see it, a retreat from the terms of the appropriate section in the 1975 Act, but it is certainly not without precedent in this field. Indeed, the new wording is something of an amalgam of the wording contained in the 1963 Act and the Post Office Act 1969. May I refer the Committee to Section 53 of the Post Office Act 1969. I read it short. It contains the following words in subsection (1): … the Secretary of State shall, after consultation … by order determine the aggregate amount of the rateable values of all lands and heritages occupied by the Post Office …". So there is a clear precedent for the wording which disturbed the noble Earl. The new subsection (1) really combines the wording from the previous Statutes.


May I ask whether the Secretary of State, in determining the rateable value in this way, will in fact be simply ordaining what the assessor has determined is to be the rate? In other words, he will consult the assessor or invite the assessor to make an assessment, and that shall be the rateable value. In passing, may I ask whether 28 days means 28 sitting days? What happens if Parliament is in recess by the end of the period of 28 days?


In relation to that I am afraid that I cannot offer an answer at the present time. Perhaps I could come back to that when we are discussing whether the clause shall stand part. The appropriate paragraph about it is contained in the Companion at page 151. In order to give a precise answer to the first point perhaps I could deal with that on the Question, whether the clause stand part? I do not want to give a misleading answer at this stage.

4.33 p.m.


The noble and learned Lord said that this subsection was included as a precautionary measure—that was the word he used—and to ensure that there was not undue delay. I suspected that that was the degree of urgency that might be expected in this subject of valuation. But I would ask the noble and learned Lord to look up, between now and the later stages of this Bill, the debates that took place upon the Bill that I mentioned. From memory it was about February/March 1975.

He will there see reflected the consternation that existed in various parts of the House, and concerning Members from all parts of the country who took part in the debates and not those simply concerned with Scotland, which eventually led to the change and caused these 28 days to be selected as a period when there was great urgency. If the noble and learned Lord, who was not a Member of your Lordships' House at that time and therefore would not remember it personally, would look up those debates he would see that the Government were putting forward a quite different situation of urgency. They were describing the offshore oil situation as one of great national importance and tremendous urgency, and there was no question of using such words as a "precautionary measure" in order to ensure undue delay.

The case the noble and learned Lord is putting is a quite different one, with the degree of urgency much less than when this compromise was devised and agreed upon in your Lordships' House for that Scottish Bill in 1975. The period of 28 days was agreed, by those who were discussing it both outside the Chamber and inside, to be a minimum period; a very short period indeed required for cases of great urgency. I would say now that I reserve the right to come back to this and perhaps suggest a change from 28 days to 56 days, or some other number of days, for the kind of urgency which the noble and learned Lord described, because it is very different from the urgency described when this form of words and the 28 days was first drafted and agreed.

I am grateful to the noble and learned Lord for having explained very frankly what the degree of urgency is and why the Government have seen fit to include this in this Bill, but I think that the period of 28 days is much too short for this kind of case. This period was agreed for great urgency in a different situation. I shall give the noble and learned Lord an opportunity to speak again, and I am not proposing to withdraw the Amendment immediately. I should like to point out that he has explained why this is in this Bill, but the formula being used was created in a quite different situation.


I have in fact looked at the Official Report proceedings of the previous debates. I acknowledge that the point that the noble Lord makes has force: that the situation described then in justifying the 28 days' period was rather different. But he would also agree with me that, in a sense, the point he raised in relation to new subsection (6) is not unconnected with this point. Perhaps I might take away for consideration what he has said today on both matters, and either introduce a change or, alternatively, try to improve the arguments to the satisfaction of the noble Lord at the Report stage.


I am grateful to the noble and learned Lord for what he has said, on both this Amendment and the previous one. I agree that there is a connection. He will have noted that when we were speaking of the previous debate, discussing that, I particularly said that one wanted to avoid delays because there could be unfairness as between ratepayers if there was a long argument about the assessment of one particular category of ratepayer, or one particular ratepayer, and then, as a result of a long argument and a lot of time being spent on it, that that ratepayer or category contributed less than their fair share than others to the areas' rates, because that would place a premium on causing delay. Of course that is what we wish to avoid in the interests of being fair as between all categories of ratepayers and all individual ratepayers.

I am grateful to the noble and learned Lord. This is a complicated matter. I think we have drawn enough attention to the main points on these two Amendments. I am grateful to him for saying he will look at both of them again, and I hope that he may be able to come up with an improved version at the next stage of the Bill. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 1, as amended, shall stand part of the Bill?

4.38 p.m.


I think that the noble and learned Lord obviously expects me to say something at this stage about the matter I raised on Second Reading; namely, concern that the public bodies referred to in Section 1 of the 1975 Act may not, in all cases, be paying the same contribution towards rates as they would if they were private bodies. In my days in another place I was made aware by local authorities that there was some misgiving about this, and possibly even resentment. One of the reasons was that we are here dealing with bodies in relation to whom the local authorities do not have the same planning powers as they have in relation to private housing, industry, and the like. It is all the more irksome if not having those planning powers they then feel, rightly or wrongly, that they are not getting the full contribution to their rates which they consider the case merits.

I have looked at the 1975 Act again, and in particular at Section 5, which deals with the valuation of public undertakings, and of course in theory this is perfectly straightforward. I do not intend to take up much time on this matter, but I should like to say, first, that it is difficult to get the necessary information. If I remember aright, in days gone by an annual return was made by local authorities which was published. It was a slim document dealing principally with domestic rating of all the local authorities in Scotland. I inquired about this, but it seems that it no longer exists. It may not have been published since the reorganisation of local government, but I do not know the position. The best information I was able to get was from the Scottish Abstract of Statistics. I got a copy of this document through the Library, though I do not know exactly where it came from.

I should like to refer to one or two of the figures in the document to illustrate what I have in mind. I should like to take the comparison between 1966–67 and 1974–75, which was the last year for which these statistics were published. I am aware that these statistics always seem to be published very much in arrears, and I would observe that they are at least two years or rather more in arrears at present. The total rates in 1966–67 were £144,243,000, and the provisional figure for 1974–75 was just under £300 million. The rates relating to railway and electricity undertakings were shown separately, though the rates for the other bodies mentioned in Schedule 1 to the 1975 Act are not shown separately. The figures for the railway and electricity undertakings were £4,381,000 in 1966–67, and £7,441,000 in 1974–75. It is immediately apparent that those figures have not gone up so much as in the case of the rates as a whole. I can quite see the reason so far as the railways are concerned.

If we look at capital expenditure on nationalised industries, as shown in the same statistics, we see that it went up between those two years from £115.3 million to £489 million; that is an index of 425, whereas the figures relating to railways and electricity went up from £66.8 million to £156.3 million; an index of 231. This does not seem to be reflected in the valuations. There may be very good reasons for this, but this is the only information I could get at, and it seems to give some colour to the belief I held that perhaps the nationalised industries are not making proportionately as large a contribution to rates as are private ratepayers; or, put another way, the nationalised industries are not making as large a contribution as they would make if they were not nationalised industries. I should like the noble and learned Lord to deal with this point as far as he can.

I should say that the total of rateable values for the authorities specified in Schedule 1 to the 1975 Act are not shown separately. The nearest I could get to that was a "miscellaneous" figure which is given, of £52.4 million for 1974–75, and I should like to inquire whether this figure includes the Schedule 1 bodies, or whether they are divided up between industrial and commercial undertakings.

4.45 p.m.


The noble Lord has raised a very important point to which he drew attention on Second Reading; namely, the difficulty of achieving, and being sure that one has achieved, a fair balance between, on the one hand, the rate burden of public undertakings, and on the other hand the rate burden upon the ratepayers at large. I have not followed the noble Lord through the figures he quoted today. I shall look at them in the Official Report. But I have certain other figures to bring to the attention of the Committee, following what the noble Lord said on Second Reading. First, I wish to refer to the suggestion made on Second Reading by the noble Lord in the following terms, as reported at column 787 of the Official Report for 22nd November last: … the amount of property held by public authorities must have increased quite considerably over the years, and probably more in relation to the totality than that of business premises". Unfortunately, that suggestion is very difficult to confirm or rebut because, as the noble Lord would acknowledge, the very fact that formula variation has been introduced for public utilities rules out any straightforward comparison. But formula valuation has been coming in for a period approaching 30 years, and when a formula is first introduced for a particular utility the value prescribed in the appropriate formula will almost always relate very closely to the immediately preceding historic values, which have been arrived at by the ordinary, orthodox valuation approach.

Thereafter a typical formula would provide for annual variations in the valuation arising from changes in the level of activity of the industry, so that a greater or lesser volume of production and consumption of, for example, gas or electricity would mean a greater or lesser rateable value in the following year. However, these annual valuation adjustments are not directly proportionate to changes in output, because the formulae usually aim to reflect changes in heritable property used by an undertaking, and by and large they aim to disregard changes in activity which may be ascribed to such factors as, for example, the more efficient use of existing property.

One starts from the historic, orthodox valuation, and one tries to up-date it. On top of this annual adjustment pattern there is superimposed the quinquennial order-making process whereby the aggregate rateable value of the utility is increased in order to maintain a fair relationship with the revised rateable value generally. At this stage it is unusual to go beyond a purely arithmetical exercise.

There are certain assumptions built into that, and one assumption is that the real net growth in the value of the all Scotland rateable value, as a result of domestic, commercial, and industrial properties increasing in number and improving in quality, is comparable with the real growth for the public utility. It may be that that is not entirely sound, and therefore one has to look with especial care at the particular formula. Indeed, that is precisely what is being done at present. The Government instituted the current review of all the available evidence bearing upon formula valuation levels, and indeed a similar review was proposed, as the noble Lord is aware, by the previous Administration. When the working parties have completed their work, it is to be hoped that the new formula which can be introduced—preferably, one hopes, with as much consent as may be obtained, and after all due and proper consultation—will be fair.

In relation to figures, perhaps I can conclude by offering some figures for the period from and including the year 1966–67. I am not quite sure what period of years the noble Lord had in mind when he spoke, but if one tries to go back beyond the year 1966–77 to any earlier period it is very difficult to compare like with like, because before that year formulae valuation did not apply to the full range of utilities to which it applied in that year and subsequently.


May I say to the noble and learned Lord that he is correct in his assumption that that is the base year so far as the figures in this abstract are concerned.


At least I am with the noble Lord in starting from the same base year, but it is not really meaningful to go back beyond that year. If one takes that year and some years since, one finds that the general pattern is that over each year since that time the proportion of the rate burden borne by these public utilities which are referred to in Schedule 1 varies round about 4½ per cent. of the total rate burden. If one takes three particular years and takes gas, electricity, railways, water and Post Office telecommunications—not all, I should say, of the Schedule 1 utilities, but perhaps the main ones—in 1966–67 they came to 4.43 per cent. of the total rate burden; in 1971–72 the figure had risen to 4.58 per cent.; but in 1977–78 the figure is 4.13, which shows a drop. Indeed, if one takes other figures and looks at public utility rates as a proportion of the aggregate Scottish non-domestic rate burden, then for the same three years one gets 8.33 per cent. in 1966–67, 8.95 per cent. in 1971–72 and 7.79 per cent. in 1977–78. It is not possible, I am afraid, to attribute the slight decline in the utilities' share of the rate burden to any one particular factor. Certainly there is no available quantification of the physical growth of rateable assets by class of ratepayer, other than perhaps the number of new houses in the domestic sector. But, of course, the utilities differ from other rateable subjects in that they are valued under the statutory formulae. As I have said, these formulae are currently being reviewed, and those concerned are certainly well aware of the need to try to achieve and maintain a fair level of rating as between the public utilities, on the one hand, and the other ratepayers; and it is to be hoped that that matter is one which Parliament itself will bear in mind when the orders are brought before each House for approval.

The Earl of SELKIRK

The noble and learned Lord referred constantly to a fair level of rating. Those words do not appear anywhere in this Bill. Should not something of this character be put in? I presume that subsection (4), which deals with consultations and so forth, is intended to produce a fair level as between the two types of rating, but should not Parliament use some words to say that that is the purpose? We are giving the Secretary of State complete authority to make decisions, with no appeal except possibly to Parliament, and nothing could be more unsuitable for discussion in Parliament than the relative figure of rating of, say, £X on a Y subject. I would have thought that even some suggestion that the purpose of subsection (4) was to be fair would not be wholly out of place.


Perhaps it might be convenient, before the noble and learned Lord replies, if I raise another point on the Question, Whether Clause 1 shall stand part?, which I wish to do, although I think the noble and learned Lord is ready to reply straightaway to my noble friend on the matter which he had foreshadowed at Second Reading. My point is simply this. Subsection (4) indicates that the Secretary of State can, as he thinks fit, consult with certain bodies and persons; and during our Second Reading debate the noble and learned Lord indicated as an example that he would on suitable occasions consult the assessors in Scotland. I should like to ask for this information because the wording of the clause appears to restrict the kind of body or person who can be consulted, because it speaks of " persons carrying on undertakings " or, in the singular, "person carrying on an undertaking". The words " carrying on undertakings " therefore appear to qualify the kind of body or person who can be consulted.

What I should therefore like to ask is whether a ratepayers' association would be the kind of body which the Secretary of State would consult, if he thought it was fitting to do so, under subsection (4). Because if the ratepayers' association consisted, as it very often does, of domestic ratepayers only, then I do not think that being a householder necessarily fulfils the condition of " carrying on an undertaking". Perhaps it does; I do not know. I have a feeling that some households could be an undertaking to carry on; but I do not think, under the definitions in legislation, this is intended. It looks as though subsection (4) is limited to consultations with industry and commerce; that is, consultation with bodies which are likely to be in the same kind of business or have the same kind of problems as the nationalised bodies with which we are dealing in this Bill. But the question of the division of the rate burden in the area of any local authority is a matter of concern to all ratepayers. The question of how much of the burden has to be borne by domestic ratepayers and how much by industrial and commercial ratepayers is of concern to all of them. So I would at this stage, in trying to find out more about the kind of persons to be consulted under subsection (4), ask the Minister whether he can tell us more and, in particular, whether a ratepayers' association which in fact consisted of domestic ratepayers and existed for the purpose of looking after the interests of domestic ratepayers, would be included. If the noble and learned Lord is not able at this short notice to give an answer now, I would quite understand because I should like to have a considered answer in due course.


I would first acknowledge that the word "fair" does not appear in relation to the fixing of the amount of rateable value in the new Section 6. I think that one has surely to accept, however, that, given the position of the Secretary of State, on the one hand, and the assessor of public undertakings, on the other, the need for consultation and the certainty of Parliamentary scrutiny, then these are the best guarantee and a sufficient guarantee of fairness in relation to a matter of this kind. In relation to the point which was raised by the noble Lord, Lord Drumalbyn, at an earlier stage, I am advised that the 28 days referred to in subsection (8) is 28 consecutive days from the laying of the order.

In relation to the point which the noble Lord, Lord Campbell of Croy, has just raised in reference to subsection (4), what subsection (4) does, of course, is to lay an obligation upon the Secretary of State to consult. The words are that he " shall consult " with certain associations of local authorities or of persons—that is to say, associations of persons—carrying on undertakings; and unless I am contradicted at a later stage, I would agree with the noble Lord that that does not apply to the private ratepayer. The obligation upon the Secretary of State to consult relates rather to associations of local authorities and associations of persons carrying on undertakings, and therefore I think his reading of it is entirely right, if I may respectfully say so. But of course, under subsection (4) the Secretary of State is not prevented from consulting others, and I think I made this point on Second Reading in reply to the noble Lord.

One cannot say that the private ratepayer or an association of ratepayers can compel the Secretary of State to consult with them. One would think that that might be an odd provision to put in a Bill; because although one might compel him to consult, one cannot readily compel him to do what he is consulted to do. I think that one can perhaps be satisfied that he is obliged to consult the associations who have the varying interests under their aegis and he is able to consult others, and others may wish to be consulted if they have an interest in the matter.


I am grateful to the noble and learned Lord for that. I did not read this subsection as imposing an obligation upon the Secretary of State because it ends with the words: … with whom consultation appears to him to be desirable". So he does, in fact, decide himself whether or not he needs to consult with anybody carrying on an undertaking. From what the noble and learned Lord has said, I think I put into his mind that I might put down Amendments at a later stage. Given the words … with whom consultation appears to him to be desirable", which means there is no obligation upon him to consult anybody if he does not think it is desirable, taking out the words, carrying on an undertaking might mean he could, at his own discretion have wider consultations; and that would mean that ratepayers of all kinds could be consulted and not just industrial and commercial ratepayers.


Before leaving that point, I would draw the noble Lord's attention to line 17. So far as the obligation to consult is concerned, the obligation rests on the Secretary of State, as I read the Bill, to consult with the associations of local authorities or of persons carrying on undertakings as appear to him to be concerned …". That is not just a question of his deciding what is desirable. He has to make a judgment as to who is concerned here and then the Statute says he is to consult with that person.

In relation to the second half, after the word "and" in line 17, with any local authority or person carrying on an undertaking with whom consultation appears to him to be desirable". then, of course, there is much greater discretion allowed to the Secretary of State because he first determines not who is concerned but with whom it is desirable to consult.


I hope it will not be thought presumptuous by noble Lords, and particularly the noble and learned Lord, that a Celt like me from another part of the United Kingdom should intervene in this matter. May I revert to the question raised by the noble Earl, Lord Selkirk, when he referred to this factor of fair rating. As I understand the noble and learned Lord, his answer to the noble Earl was: " You must leave these matters wholly in the hands of the Secretary of State together with the assessor". If I understand that aright, I am in some difficulty in understanding his answers to the noble Lord, Lord Campbell of Croy.

Are not the Secretary of State and the assessor in a position to decide what is fair rating, to use the words of the noble and learned Lord? Will both of them be in a position to consult various bodies in Scotland to decide what the noble and learned Lord referred to as fair rating?


While the noble and learned Lord is considering that, may I say that I am grateful for his interpretation. I am glad to think that there is a degree of obligation on the Secretary of State in the words: … as appear to him to be concerned", because he takes the decision as to whether they are concerned or not; whereas there is no degree of obligation in the words: with whom consultation appears to him to be desirable". I think that this clause is open to some improvement, in as much as the words could be changed to indicate that ratepayers of all kinds, and categories of ratepayers in an area, could be included and it should not be restricted necessarily to commercial and industrial ratepayers. I put that in the mind of the noble and learned Lord so that he may perhaps think about it before the next stage.


Rather than offer another off-the-cuff opinion in the presence of the noble Lord, Lord Lloyd of Kilgerran, perhaps I can return to this matter later.


Before leaving this matter, may I thank the noble and learned Lord for having prepared to answer the points he expected me to raise. He has gone a long way to satisfy me. There is an inherent difficulty in this because when comparing one factory with another there is comparability, but when comparing the railways with the Post Office and the Electricity Board, there is no comparability and it is inherently difficult to reach a fair figure. This is the nub of the question. It is worth exploring.

Clause 1, as amended, agreed to.

Clause 2 [Lands and heritages to which section 6 of Local Government (Scotland) Act 1975 applies.]:

5.5 p.m.

Lord CAMPBELL of CROY moved Amendment No. 4: Page 6, leave out lines 9 to 11.

The noble Lord said: I am glad to be able to tell noble Lords who are waiting for the next debate on wildlife that I shall be very short in moving this Amendment and that I have no other Amendments on the Marshalled List.

I beg to move Amendment No. 4. It is simply a probing Amendment and the object is to discover, first, why it should be necessary in this Bill to have definitions of the two Scottish Electricity Boards. The Secretary of State for Scotland is the Minister for Electricity, among many other things in Scotland, and I should have thought that the two boards would have been defined elsewhere. Furthermore, is this a definition that is the substantive definition in this valuation legislation?

The second point is whether there is any property north of the Border belonging to the Central Electricity Generating Board, that is to say the board that generates electricity for England and Wales? If there is not now, might there not be some in the future? One of the characteristics—and, I think, a praiseworthy one—of our electricity boards in Britain is that they work very closely together and, depending upon conditions and the methods of production, and the cheapest methods of production, at peak hours, and other times, electricity gets pumped to and fro across the Border. They work very closely together.

I should be surprised if there was some property north of the Border, in future if not now, which did not belong to either of these two boards but did, none the less, belong to the CEGB or perhaps some other board based south of the Border and dealing with electricity. I gave the Scottish Office last week notice that I was going to raise this. I hope that the noble and learned Lord got notice himself. That is the purpose of the Amendment.


I am indebted to the noble Lord for having given notice of that point. Perhaps I may deal with it now. The Central Electricity Generating Board does not carry out operations in Scotland. There are, of course, some operational links between the South of Scotland Electricity Board, and the CEGB and the area boards in the north of England. Power exchanged across the Border is taken into account in formula provisions; but the CEGB is understood to have no property in Scotland other than an office in Glasgow; and rates are payable on this office in the usual way, just as they would be if a formula were in operation. Such an office would be excluded from formula by the substituted paragraph 4(1)(c). I hope that deals with that point.

In relation to the first point which the noble Lord made, I think that this is no different from anything else done in Clause 2. As I explained at Second Reading, the paragraphs which are to be replaced define the various premises by reference to existing statutory provisions which presently either provide for the valuation of premises by formula or for the making of contributions in lieu of rates in respect of such premises. If, as a result of making an order, it becomes necessary to repeal or amend some of the existing legislation, the existing definitions for these purposes of, for example, the boards, might be affected. Therefore, it is thought that, rather than have that danger which would have to be looked at in the making of every order, it is better to define the boards for these purposes in this, I hope, definitive Statute, and then the matter can be left. That is the answer and I hope that the noble Lord will accept it and not press the Amendment.


I am grateful to the noble and learned Lord for replying. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 2 shall stand part of the Bill?

5.11 p.m.


May I raise a short point regarding page 5, line 33, where the word " sale " is used? We are here dealing with something that has given trouble, regarding shops, rooms or other places occupied and used by the Gas Corporation, in one case, and the Electricity Board, in the other case, wholly or mainly for the sale, display or demonstration of apparatus or accessories for use by consumers of gas or electricity, as the case may be. Could the noble and learned Lord consider the word sale " to see whether that is sufficiently comprehensive? I would have thought that a good deal of hire goes on. I do not know what the state of hire purchase is. There does not seem to be a definition.


I will look at this word which follows the words " wholly or mainly for". I think that is the answer, but I will be happy to consider it.

Clause 2 agreed to.

Remaining clauses and Schedule agreed to.

House resumed: Bill reported with an Amendment.