VALUATION AND RATING (EXEMPTED CLASSES) (SCOTLAND) ORDER 1977

HL Deb 21 June 1977 vol 384 cc639-43

7.56 p.m.

Lord KIRKHILL rose to move, That the draft Valuation and Rating (Exempted Classes) (Scotland) Order 1977, laid before the House on 24th May, be approved. The noble Lord said: My Lords, Section 1 of the Valuation and Rating (Exempted Classes) (Scotland) Act 1976 confers on the Secretary of State the power to prescribe that certain types of lands and heritages which lie wholly or partly on, over, or under the bed of the sea shall not be entered in the valuation roll. As I explained in your Lordships' House during the Second Reading of the Bill on 27th July 1976, the Government intended to use this power to exempt from local rates the Forth and Tay road bridges and offshore oilfields and installations. The lands and heritages to which this order applies are set out in the Schedule. Article 3 describes the extent of the exemption in each case, and Article 2 provides definitions of various terms.

Part I of the Schedule specifics for exemption from valuation any public road toll bridge lying wholly or partly over the bed of the sea. Article 2 in subsection (2) defines such a bridge as one occupied by a local authority, joint board, or joint committee of local authorities together with associated property other than a refreshment room or a dwelling-house which it would be inappropriate to exempt from valuation.

There are two public road toll bridges in Scotland within this definition; the Forth road bridge and the Tay road bridge. Until 1975 rating exemptions were afforded to these bridges by local Acts but these were withdrawn by the Local Government (Scotland) Act 1973. Since 1975 parts of both bridges have been entered on valuation rolls but no rates have yet been paid because the assessments are still under appeal.

Since repeal of the original exemption was inadvertent, and since the only means of meeting a rate burden on these public toll bridges would be to make a substantial increase in the tolls, my right honourable friend the Secretary of State proposes to restore the exemption by this order. The Erskine bridge is a similar structure but it is not affected by the order because it is Crown property and so already exempt from rates. Ex-gratia payments in lieu of rates on Crown property are normally made on the same basis as similar subjects, so that the exemption of the Forth and Tay road bridges would provide a continuing basis for the present practice under which no ex-gratia payment is made in respect of Erskine bridge.

Part II of the Schedule specifies for exemption under Article 3 any licensed area, any offshore installation, and any pipeline so far as it lies seaward of the low water mark of ordinary spring tides. Article 2 contains the relevant definitions. A primary reason for this proposed exemption is that the seaward limits of local authorities are not defined by Statute. Consequently, assessments have been made on the Forties, Auk, and Argyll oilfields lying many miles offshore. The oil companies have challenged these assessments and special cases have been brought before the Court of Session on the question of jurisdiction. It is however the Government's policy that taxation on offshore petroleum exploitation should accrue nationally and not locally. The order would ensure that the offshore subjects to which it refers are not burdened with rates in addition to royalties and national taxes, such as petroleum revenue tax.

The areas to be exempt are United Kingdom licensed areas; the offshore installations to be exempt are in-licensed areas; and the pipelines to be exempt are for the purpose of transporting petroleum won from a licensed area. An offshore installation does not include structures long held to be subject to rates, such as a harbour, pier, or jetty, nor any installation for handling petroleum already brought to land.

Buoys at or near the wellhead would qualify for exemption, but a buoy used for transporting oil already brought to land would not. The basic criterion affecting pipelines is that they cease to qualify when they transport petroleum beyond what may he described as the first substantial landfall or, in terms of the order, when the petroleum which it carries has already been brought to the mainland of Scotland or has been subject to storage, refinement or other treatment on land.

I should draw attention to Article 3(3), which is to the effect that relevant entries already in the valuation roll are to be deleted from 16th May 1975 or the date of entry, whichever is later. The Act provides for such retrospection where an order is made within nine months of the passing of the Act, so that the particular cases which I have prescribed may be dealt with. The Act also requires my right honourable friend the Secretary of State to consult local authorities and relevant associations and persons before making an order of this kind. I therefore wish to acknowledge the assistance and advice which the Government have received from the Convention of Scottish Local Authorities, the Scottish Assessors' Association, the United Kingdom Offshore Operators' Association as well as the local authorities and other bodies primarily concerned. I beg to move.

Moved, That the draft Valuation and Rating (Exempted Classes) (Scotland) Order 1977, laid before the House on 24th May, be approved.—(Lord Kirkhill.)

8.2 p.m.

Lord CAMPBELL of CROY

My Lords, this is the first of the orders under the 1976 Act, which we considered as a Bill during the course of last year, and that Act was to govern rating beyond the low water mark in Scotland. This first order contains very much what we were given to expect from our discussions last year; that is to say, it deals with the Forth and Tay road bridges and subjects connected with the offshore oil industry. It is a matter of some interest that the Government have not attempted to define an oilfield; oilfields have already been assessed by assessors in two of the regional councils, but the Government are taking any licensed area as the subject to be exempted from rating, and I think that is sensible. When we have had petroleum Bills before this House and have asked for a definition of a commercial oilfield the Government have made it clear that it is exceedingly difficult to define; so any licensed area—that is early days so far as the oil industry is concerned—is exempted from rating.

The effect of this order, as I see it, is the Government making it absolutely clear—I do not think they could make it clearer—to local authorities, "Hands off the new offshore oil industry". That was certainly the Government's clear intention when the Oil Taxation Bill, which became the Act of 1975, was before us. We on these Benches assumed that the oilfields and operations connected with them on the British Continental Shelf would not be subjected to rates, local taxation and the petroleum revenue tax which the Government were bringing in, and we also took into account the other taxes which applied to oil companies, such as corporation tax and the petroleum revenue tax. Thus, this order should make it absolutely clear that no rates are to be levied on offshore oil operations, anyway where Scotland is concerned.

I have a query about timing. Three oilfields have been assessed and there are special test cases now before the court. According to Press reports, the Court of Session in Edinburgh was last Thursday, the 16th, starting to deal with the Grampion Regional Council's assessor's assessment of the Forties Field. There are also the Auk and Argyll fields, which have been assessed by Fife Regional Council, and the net annual value of these three oilfields has been put at about £24 million, not a figure to be sneezed at. When do the Government expect this order to become effective? When it is effective it should surely make it clear what the position is and these cases should be concluded without much delay; but at the moment there is a blank in the date in the order, so it is of some interest in relation to these cases when the Government expect the order to come into effect.

We must also look into the recent past because the noble Lord just reminded us that the order is not effective before 16th May 1975; it is that date or a later date which applies. Can the noble Lord tell us whether any assessors in Scotland included any subjects related to the offshore oil industry in valuations before May 1975? If they did, that might still be the cause of legal arguments after this order has gone through. I hope the order will clarify the position and that the noble Lord will be able to answer these questions.

In view of a later debate which we will have tonight I must, on this point, say that I hope the Scottish Office and Scottish Office Ministers will make use of the 1976 Act to clarify the rating position of subjects connected with fish farming below the low water level. The Act is an instrument which can help get us out of the ambiguous situation in which, for example, cages in salt water well below the low water mark containing salmon for fish farms are in a highly equivocal position; people, even owners, do not know what their status is and whether they are rateable. In welcoming this first order, which is very much what we expected, I would point out to the Scottish Office that under the Act they have the opportunity of bringing in other orders connected with other subjects which would help to clarify the position of activities below the low water mark.

8.8 p.m.

Lord KIRKHILL

My Lords, with the leave of the House, I will reply to the comments of the noble Lord, Lord Campbell of Croy. I wish to say at the outset how much I personally welcome the generous terms in which he gave his overall assent to the Bill. Specifically, he posed three questions. I can say, first, that we hope that the order will be effective in August of this year. Secondly, I can advise him that there have been no subjects related to offshore oil installations part of an assessor's valuation prior to 16th May 1975. Thirdly, of more general interest, he will be pleased to know that, meantime, there are discussions between the Department of Agriculture in Scotland, the Ministry of Agriculture in England and numerous fish farming interests about some of the very problems he has posed tonight. The outcome of those discussions will, of course, in the future be the subject of ministerial deliberation, but Lord Campbell has my assurance that I shall certainly keep him informed.

On Question, Motion agreed to.