TRANSPORT BOARDS (ADJUSTMENT OF PAYMENTS) ORDER 1977

HL Deb 21 March 1977 vol 381 cc249-52

3.19 p.m.

Baroness STEDMAN rose to move, That the draft Transport Boards (Adjustment of Payments) Order 1977, laid before the House on 3rd March, be approved. The noble Baroness said: My Lords, the draft order before your Lordships concerns payments in lieu of ratesmade by the three transport boards; namely, British Rail, London Transport and British Waterways. In common with most other public utilities, the operational property of these boards is not subject to rates in the normal way. It has proved more convenient to provide for the calculation and payment of rates by means of a formula.

Section 32 of and Schedule 5 to the General Rate Act 1967 provide for a contribution in lieu of rates to be paid by each transport board to the Secretary of State, who then distributes this money to rating authorities. The total amount that each board has to pay varies from year to year and is determined by three factors. The first is a prescribed figure called the "standard amount"; the second, the average rate poundage in England and Wales in the preceding year; and third, the activity or traffic of the board in each year. The standard amounts are roughly analagous to rateable values and it is these figures that the draft order before your Lordships seeks to increase. The figures were last changed at the time of the general revaluation in 1973 but this was solely to take account of the drop in rate poundages that follows such a revaluation. The present change does not follow from a revaluation but from a general review of the working of all these formulae. This review, largely completed by the end of 1975, covered the transport boards and a number of other public utilities. Several orders introducing changes as a result of this review came before your Lordships' House last year.

An order changing the formula for the transport industries was also to have been made last year; it would have introduced a system for these boards similar to those which apply to the gas and electricity industries. A national rateable value would have been calculated for each board and this would then have been apportioned to individual rating areas according to the activity of each board in each area. The rating authorities would then have charged rates in the normal way on these apportioned rateable values. The order was to have been made under Section 19 of the Local Government Act 1974, but we were advised that the powers in that section were not adequate to make the changes proposed.

We have, therefore, now made orders— the one before your Lordships only in draft at this stage—within the scope of present powers to produce a similar effect to the proposals made following the review. As a result of the review, rateable values for each of the three boards were decided upon in the light of material submitted by the boards, the local authority associations and advice from the valuation office of the Inland Revenue. The figures are £20 million for British Rail, £7½ million for London Transport, and £220,000 for the Waterways Board. There are no existing rateable values with which these figures can be directly compared, but the present standard amounts are roughly equivalent to rateable values of £9.4 million for British Rail, £3.3 million for London Transport, and £200,000 for British Waterways.

The original standard amounts were set at a time when industry as a whole enjoyed a 75 per cent. derating. It is anomalous that the railways alone should continue to receive that derating, and the figures I have quoted earlier do not provide for it. But, on the other hand, we considered that the track and associated structures should not be rated, and the figures reflect an allowance for the de-rating of the track, and take into account other changes in the boards' properties since the original standard amounts were set. The draft order before your Lordships raises the standard amounts to levels which are calculated to produce a total contribution from each board in 1977–1978 equal to the rates that would have been paid if the proposed rateable values had been created. The actual contribution may be subject to slight variation because of recent changes in the boards' traffic, but the amounts payable will be about £14.4 million for British Rail, £2.5 million for London Transport, and £160,000 for the British Waterways Board.

Noble Lords may have seen that another order has been laid giving effect to the proposed changes in distributing the contribution. Rating authorities will now receive amounts that are proportional to the activity of each board in their area. That order does not require an Affirmative Resolution and is therefore not before us today. But these two orders, taken together, reproduce very closely the effect of the changes which were proposed following the review. We regard them, however, as interim measures only until our powers are adequate to lay down a suitable formula for rateable values. My right honourable friend has consulted each of the Transport Boards and the associations of the local authorities concerned. I beg to move that the draft order be approved.

Moved, That the draft Transport Boards (Adjustment of Payments) Order 1977, laid before the House on 3rd March, be approved.—(Baroness Stedman.)

3.25 p.m.

Lord MOWBRAY and STOURTON

My Lords, I am very grateful to the noble Baroness for introducing this order. Having said that, I am slightly aghast at the way in which her Department has left her to announce a major change under the innocent mask of a simple order. She has today announced that, under this simple order, railway track is to be totally derated. I must protest. Under this rating and valuation order, as we have it, there is nothing at all about this change and I think that, even though the noble Baroness has announced in her very explanatory commentary on the order that this is so, it is wrong that we on these Benches, those in other Parties and other interested persons on her own Benches should learn of such a fact only from the noble Baroness's explanation. The last valuation was done in 1967 and, on the face of it, anyone looking at the order would believe that it was framed on the same basis. Yet we have all the mileage of track removed from the valuation order. I feel that it is fair to protest that there should have seen a little more explanation before this was done. Parliament is accustomed to being "bounced", but we do not like being "bounced" too much.

Having said that, I thank the noble Baroness for explaining the factors involved. The basis of this is probably understandable. Roads are not valued for rates and the argument runs, Why should railways be? I am not arguing this point but merely that of more explanation—government by more honest means ahead of time. I had been going to ask this question because I thought that this change was coming up but, outside devious questioning, we should not have known this. I do not believe I can say very much more. This is a normal order. One is slightly appalled at the rateable values having to go up so much, but this is part of the price we all have to pay for inflation. Whether the Government of the noble Baroness is doing better than I should like to think my friends would be doing is, I suggest, highly problematical, but I nevertheless accept that, in the general context, the Government are doing what is necessary. Having made my protest about the secrecy of the order in covering the point to which I referred, we shall accept the order.

Baroness STEDMAN

My Lords, I am sorry that the noble Lord feels that we have been less than honest in the way in which we have presented the order. I thought I had explained that up to this point of time the railways were subject to 75 per cent, derating and he himself has offered the explanation for it, in that the railways are in competition with road haulage. Roads are not rated and it therefore seemed fair, in the light of the consultations that we had had, that railway track should also be derated. I hope the noble Lord will accept that this was done in all good faith. It has been done with the agreement of all those bodies we have consulted and I hope that, in spite of the noble Lord's minor protest, the House will accept the order.

On Question, Motion agreed to.