HL Deb 13 December 1977 vol 387 cc2007-17

4.16 p.m.

Report received.

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

Lord CAMPBELL of CROY moved Amendment No. 1: Page 2, line 16, leave out ("carrying on undertakings").

The noble Lord said: My Lords, I beg to move Amendment No. 1, and I think it would be for the convenience of your Lordships' House if Amendment No. 3, also in my name, were discussed at the same time. I cannot refrain from mentioning Government Amendment No. 2, although I recognise that the Minister may wish to move that separately. I put down my Amendments Nos. 1 and 3 last week after the debate we had at the Committee stage, and I am delighted to see the Minister's Amendment which appeared yesterday because it clearly seeks to carry out the same purpose, but in a different way in a different part of the Bill.

Both Amendments bring into consultation the domestic ratepayers in Scotland. We probed this in Committee and found that the wording of the Bill (which was confirmed by the noble and learned Lord, Lord McCluskey) was restricted to industrial and commercial ratepayers and did not include domestic ratepayers. I pointed out that, in any local authority area, the question about how the rate burden is divided depends how the valuation is carried out, and the valuation of certain industrial undertakings (which could be very big) could have an effect on the level of the rate to be paid by the domestic ratepayers.

I put down these Amendments which would have the effect of bringing in the domestic ratepayers in Scotland for consultations under the subjects in question the consultations to be carried out by the Secretary of State for Scotland. I should like to thank and congratulate the noble and learned Lord, because his other Amendment completely meets another point when we come to the next Amendment. The two points which I put down last week as a result of the Committee stage are both going to be met by the two Government Amendments which were put down yesterday. As there was only a week between the Committee stage and the Report stage, I express appreciation to the noble and learned Lord. He must have worked effectively behind the scenes to make things happen so quickly; and as he is not a Minister in the Department concerned that effective work is all the more admirable. We had to pursue these questions rapidly a week ago because many of your Lordships at the time were waiting to take part in what was a long and important debate on otters, so we were dealing with the matter with great expedition.

Here we have Amendments which are to help the ratepayers in Scotland. I cannot refrain from saying that, in some areas, the domestic ratepayers might, with some justification, think that they were being treated as roughly as otters and perhaps some other wildlife that experience being harried or oppressed. The burden of rates on the domestic ratepayer in Scotland is much heavier than in equivalent areas in England and Wales. There are historical reasons for this. One is that there are many more local authority houses in proportion to the total number of houses in Scotland. Although the last Government and the present Government are sensibly allowing the rents to rise gradually since the rent rebate scheme was introduced in 1972, there is nevertheless, the fact of rates being much heavier in Scotland.

Another point which is particularly relevant to these Amendments is that industry in Scotland is de-rated. When the valuation is carried out, if the subject is classified as industrial—and a good deal in industrial areas is so classified—that halves the rate bill. To rub in the point about rates being so heavy in Scotland: on the whole, industry finds that the bill it is paying in Scotland is about the same as that for a similar factory or equipment South of the Border, even though it is paying only half in Scotland. Derating was introduced initially, and has been continued since, by various Governments, which included a decision which I had to take between 1970 and 1974, as an incentive for industrial development in Scotland, but its effect in practice now is that industry, although paying only a half, is in fact paying about the same amount as it would in England.

This is not, as some might think, simply a point of bringing in the Scottish ratepayer in some cases where there would be only marginal effects, because I must point out that the effect of the discovery of offshore oil means that in some fairly remote areas in Scotland the whole question of the valuation and rating of plant is having considerable effect upon the local finances. I must refer to the test cases that are going on in Scotland at present, in which some oil companies and associated offshore activities are being looked at in the courts as to whether they are industrial subjects or commercial or domestic subjects. Of course, if they succeed in representing that a pipeline, or some such item as that, is industrial, they will then pay half the rate that they would otherwise have to pay. It is clear that in some cases the effect is going to be in millions of pounds, and that will have an effect upon the amount that the local ratepayer will have to contribute, as well as the Government, in grants. So there is here a point which particularly affects some areas of Scotland which is of concern to the domestic ratepayer.

In this connection I would mention that there is this new nationalised body, the British National Oil Corporation, the BNOC. I presume it is included in the nationalised bodies which are being dealt with in this Bill; but, as it is intended to be the operator in some oilfields still to be developed, it could well be that the BNOC, if it has not already got property of the kind to be assessed in Scotland, will in future have considerable property which could be rated at millions of pounds when it is engaged, in years ahead, as the operator for each consortium in certain fields in the North Sea.

Again I thank the noble and learned Lord for having put down his Amendment, which he has put in a different place. Some of my noble friends may see that I simply aimed to take out the words "carrying on undertakings", thereby widening the scope of the ratepayers, whereas the noble and learned Lord has put down an Amendment which would insert the words "person or association of persons" in that part of the subsection where the Secretary of State has discretion as to whether or not consultation should take place. I am perfectly happy to accept the Government's Amendment on this. I think it is right that the Secretary of State should have the discretion, because that would ensure that there were not frivolous attempts to claim consultation. As the noble and learned Lord confirmed at the Committee stage, he regarded the first part of the subsection as an obligation but the second part as being at the Secretary of State's discretion. Personally, I think that is right. If a ratepayers' association raise a point and the Secretary of State agrees they have something they ought to be consulted about, then the consultation takes place. So I would advise my noble friends to accept the Government Amendment in this matter, and then I would not need to press mine. I beg to move.

4.25 p.m.

The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

My Lords, first of all I should like to thank the noble Lord for what he has said about my part in this, but it is only right that I should acknowledge that the inspiration for it came, of course, from him. I shall congratulate him in connection with the later Amendment which we are going to deal with, but I do so here as well, for both his vigilance and his persistence. He is the real author of the changes which are proposed by the Government today.

Perhaps I should say one word about this matter. As the noble Lord pointed out at Committee stage, the division of the rate burden is potentially, anyway, a matter of concern to all ratepayers. It is for that reason that the Government have accepted the sense of the suggestion that he made, and which is indeed incorporated, or sought to be incorporated, in the Amendment we are discussing, the first Amendment. We think our wording is to be preferred because it achieves what I think the noble Lord sought; namely, it extends the scope of consultation to any person or association of persons whom the Secretary of State might think it desirable to consult.

Perhaps I should just add—and it would be appropriate to say this—that, as to the kind of bodies or associations which the Secretary of State might in fact desire to consult, the general principles which are likely to be applied here are these. First of all, he would look to see whether the body has some special, perhaps technical, knowledge of the matters involved; and, secondly, he would look to see whether it has an interest which is not already comprised in, and perhaps represented by, some other body already in the consultation—for example, COSLA, the Convention of Scottish Local Authorities. Subject to that, we are happy to accept the principle of what the noble Lord moved in Committee and is contained in his first Amendment, but in a moment or two, perhaps, I can formally move the second Amendment.

I do not want to follow the noble Lord in all the general observations that he made. It is not that I dramatically disagree with him at all, but I believe that over the years there is a close correspondence between domestic rate burdens, on average, North and South of the Border; and the resources element of the rate support grant broadly levels up the rateable values of areas which, in relation to population, are deficient in value.

Lord GRAY

My Lords, it is indeed pleasing to find that the advocacy of my noble friend Lord Campbell of Croy when he spoke on the Question, Whether Clause 1 shall stand part of the Bill? during our Committee stage has borne fruit. It was certainly a point which was well made then, and has been repeated today, that where the Secretary of State is granted discretion the original words in the second part of the subsection in question were patently somewhat too restrictive. It is pleasing to find that he will have this discretion more widely now in an area which is particularly sensitive in the way that my noble friend Lord Campbell of Croy has pointed out. It is only fair to acknowledge the reaction and action of the noble and learned Lord, Lord McCluskey, and it is pleasing to find that there has been such a rewarding meeting of minds between the two Front Benches.

Lord CAMPBELL of CROY

My Lords, I am grateful for the remarks which have been made by both noble Lords about Amendment No. 1 and its effect in producing Amendment No. 2. I think that your Lordships have done something to help Scottish domestic ratepayers, and I hope that this will mean that they will use their opportunities—and I am sure they will—responsibly when this Bill is on the Statute Book. I beg leave to withdraw Amendment No. 1.

Amendment, by leave, withdrawn.

Lord McCLUSKEY moved Amendment No. 2: Page 2, line 18, leave out from ("authority") to ("with") in line 19 and insert (",person or association of persons").

The noble and learned Lord said: My Lords, I need add nothing further but simply say that Amendment No. 2 is the one designed to achieve the purpose to which the noble Lord has spoken. I beg to move.

On Question, Amendment agreed to.

[Amendment No. 3 not moved.]

4.32 p.m.

Lord McCLUSKEY moved Amendment No. 4: Page 3, line 1, leave out subsection (8).

The noble and learned Lord said: My Lords, here, again, but perhaps even more so, we acknowledge the debt we owe to the noble Lord, Lord Campbell of Croy. At the Committee stage, the noble Lord moved a similar Amendment to the one which I am now moving, Amendment No. 4. The effect of this will be to take out of the new Section 6 the substituted subsection (8). I undertook to have a look at that matter and, at that time, the noble Lord had in mind that perhaps we might best meet this situation by substituting a longer period of 56 days for the period of 28 days provided for in the subsection. I found myself in sympathy with this proposal. I wanted to go further. I asked my officials why it could not be 90 days so as to place as small a restriction as may be upon the House; but it was plain that, if one took such a long period—and there is really no reason why one should not—the whole provision became of doubtful necessity and value. So, recognising, as we do, that subsection (6), which is not now sought to be removed, allows some degree of back-dating, we could abandon the proposed new subsection (8) altogether. I am happy to be able to do that and that is the purpose of this Amendment. In doing it, I acknowledge the debt to the noble Lord, Lord Campbell of Croy, for his vigilance and persistence.

In moving this Amendment I should say a word about the importance of the substituted subsection (6), which is not now being challenged. The noble Lord, Lord Campbell of Croy, asked me at Committee stage to consider the need for retrospective valuation generally and not just in relation to formula valuations. I think that I can say, having looked at this matter, that the underlying principle of the valuation Acts is that a valuation adjustment may be made with effect for the whole of the year in which the need for the adjustment comes to light. Section 2(2) of the 1975 Act provides for variations incorporating that basic principle. That provision, in effect, sets a limit to the extent of retrospection which may be allowed to a ratepayer when he makes a claim for reduction in his assessment and on the retrospection which may be imposed on him if the assessor considers that a property has been under-valued or not valued at all. Both in that section and elsewhere provision is made for retrospection.

That kind of provision goes back beyond 1975. For many years before that time, the assessor had power to make a supplementary roll in which he would enter newly-built properties or properties which, by error, he had omitted to enter in the main valuation roll. Such property would then be liable to be rated for the full year, even though the supplementary roll was made up towards the end of the year.

We consider that there are strong practical arguments for maintaining such back-dating. It would be impossible or, if possible, certainly highly uneconomic, for an assessor to maintain a day-to-day surveillance over his area in order to be sure of entering into the roll new properties as they came into existence and occupancy and to increase the valuation of those properties which had been improved or extended. If the assessor could make adjustments effective only from the time of his discovery of the need for them, some ratepayers would benefit at the expense of others and if a ratepayer should secure a reduction only from the date of his intimation to the assessor of the grounds of such reduction, then injustice could be done to the individual. That is the general principal and most people will be aware that, if their property has escaped valuation or if improvement or enlargement has taken place, that ought to be followed by increased valuation. The principle that adjustments, upward or downward, may be back-dated as a general maxim to the beginning of the current year is fair and should be maintained.

The power contained in this Bill to prescribe with effect from the beginning of the year during which the relevant order is made is thus consistent with the general principle of valuation and the need for it in relation to formula valuations is heightened by the surrender of the expedited hybrid procedure provisions which are now taken out by this Amendment. I beg to move.

Lord CAMPBELL of CROY

My Lords, I must commend this Amendment to the House because it is the same Amendment that I moved at the Committee stage a week ago and then withdrew after discussion. Amendment No. 5 in my name today was an attempt to go part of the way without taking out subsection (8) altogether. I am delighted that the Government have decided to take out the whole subsection. They are now going the whole way.

This is not simply a matter for a Scottish Bill. I must say a few words about it. It is a matter for United Kingdom legislation as a whole and a matter which has a history in this House. It is very much a House of Lords' question; because this expedited procedure in subsection (8) was first drafted and devised nearly three years ago in this House. There was a Bill, the Offshore Petroleum Development Bill, in passage through the House and at one stage, on 10th February 1975 your Lordships decided to vote out of that Bill a provision which the Government had put in which would have denied any rights to petition the House concerning private legislation where hybrid orders were brought under that Bill, because no time was allowed at all. Then the form of words in subsection (8) were brought in; and on 25th February your Lordships, who had been discussing this matter behind the scenes agreed this new procedure but only in circumstances of great urgency. The period of 28 days was allowed.

During the debate on 10th February 1975, the noble Lord, Lord Henley, who first raised this matter and the noble and learned Viscount, Lord Dilhorne, made it clear that that Bill, in its original form, would have deprived this House of the power to remedy injustice and it would have deprived individuals—and particularly people in Scotland in that case and also in the case today—of the right to recourse to Parliament because, under the Private Bill procedure, if an order is found to be hybrid, then individuals have the right to come to Parliament themselves and put their case, having petitioned if they think they are being discriminated against. That right would have been completely removed.

In the circumstances of the Bill in February 1975, this new form of words was agreed giving 28 days; but, as was pointed out at that time, it would still have meant acting very quickly—and particularly so for people in Scotland, over 300 miles away—to get everything done within 28 days. It would have been a misfortune if it happened just before Christmas and they had to use the post to send urgent documents from Scotland to London. That was agreed by your Lordships' House but only for circumstances of national importance and great urgency, which the Government then convinced this House, applied in that Bill.

A week ago when we pointed out that the same subsection appeared in this Bill, the noble and learned Lord was frank enough to agree that there was little, if any, urgency in the present Bill. We also pointed out that in subsection (6) there was this element of retrospection so that the urgency was even less and it was quite unnecessary to have both provision for retrospection and, at the same time, only 28 days in which to carry out the hydrid order procedure. The House, and all concerned with safeguarding the traditional rights of the individuals, should be grateful to the noble and learned Lord, Lord McCluskey, who has looked into this matter in the space of a week and put down an Amendment which completely meets our point.

I hope your Lordships will forgive me for using these minutes to record that this is an important matter because the same subsection could have been reappearing in other Bills—United Kingdom legislation, not just Scottish legislation—when there was no real urgency and simply because it was there and it might be slipped in. It is very much a House of Lords point and has been in the past. We can conclude that we are agreed on both Front Benches, and in other parts of the House, that this formula which we devised in your Lordships' House in February 1975 is appropriate in circumstances of great urgency. But it should not be resorted to when there is little or no urgency, otherwise the rights and freedoms of the individual, which have been recognised for many years in Parliament, are likely to suffer. I advise your Lordships to accept Amendment No. 4 and I will not move Amendment No. 5.

Lord LLOYD of KILGERRAN

My Lords, in view of the kindly references made by the noble Lord to my noble colleague Lord Henley, may I say that we from these Benches support the Amendment. We are grateful to the noble and learned Lord for the cogent and lucid way in which he has explained and accepted it.

Lord CAMPBELL of CROY

My Lords, before the noble Lord sits down, I informed his noble friend yesterday that I was going to refer to this matter, as he had raised it in February 1975.

Lord LLOYD of KILGERRAN

My Lords, I am very grateful to the noble Lord for pointing out how unnecessary it was for me to intervene in this debate.

Lord McCLUSKEY

My Lords, may I exercise my right of reply very briefly indeed to say something, because this is the last opportunity to look at Clause 1. First, there were a number of points raised in Committee in connection with this clause and another clause by the noble Lord, Lord Drumalbyn. I do not propose to deal with those today but I will write to the noble Lord on each of the points. If he is not satisfied, he can let me know and we may be able to deal with the matter at Third Reading.

I should have mentioned at an earlier stage, on the subject of British National Oil Corporation, that bodies do not find themselves in the amended Schedule 1, to the 1975 Act, just by virtue of being nationalised undertakings. Some of them are not. What matters is whether or not orthodox methods of valuation are appropriate for the lands and heritages which they occupy. At the moment one would not say that the lands and heritages occupied by the British National Oil Corporation are not amenable to orthodox valuation. If one reaches the stage where these lands and heritages become no longer amenable to orthodox valuations, then of course consideration will have to be given to amending the Schedule so as to bring such lands and heritages within Schedule 1. At the moment one would not seek to deal with the BNOC in this Bill or in the 1975 Act.

On Question, Amendment agreed to.