Transport Boards (Adjustment of Payments) Order 1981 (Hansard, 26 March 1981)

§ The Earl of Avon

My Lords, on behalf of my noble friend Lord Bellwin, I beg to move that the draft Transport Boards (Adjustment of Payments) Order 1981, laid before the House on 3rd March, be considered. This order establishes, for the rating year 1981–82 and subsequent years, the "standard amount" which determines the contribution in lieu of rates to be paid by the British Railways Board. It would result in a decrease in British Rail's "standard amount" of £1 million as compared with 1979–80, but would represent a small increase over 1980–81, which for reasons which I shall explain was a transitional year. Permanent revision of British Rail's contribution in lieu of rates as a result of the recent change of status of the National Freight Corporation is required, and this order introduces it.

Before I explain the purpose and effect of the order in detail, it may help if I say something about the background. Instead of paying rates, as such, on their operational property, British Rail pay an amount in lieu of rates, calculated in accordance with statutory provisions. The Secretary of State for the Environment then distributes the money between rating authorities. British Rail's liability for any year depends on a prescribed "standard amount"—which this order would amend—and also on the average rate poundage set by local authorities in the previous year. This covers the railway network. In addition, British Rail pay rates in the normal way on non-operational property, such as hotels, refreshment rooms and some offices.

Before 1980–81, the National Freight Corporation was required to make to British Rail a "fair" contribution in relation to premises which it occupied for the purposes of handling rail-related traffic. The amount of the NFC's contribution was a matter for agreement between the two boards, and was originally fixed when almost all of the corporation's traffic was carried by rail at some point on its journey. In recent years, however, an increasing proportion of the corporation's traffic was carried by road. Under rating law, road transport depots are assessed and rated by normal methods: this is what happened to much of the NFC's property with the result that an additional burden—a sort of "double rating"—ensued. That this burden was unfair was recognised in 1980–81, when British Rail's "standard amount" was reduced for that year by £573,000 as compensation for the element of double rating of NFC property, which had taken place since 1st April 1978.

1295 The 1980–81 reduction also took account of the intended change of status of the NFC to a Companies Act company from an "appointed day". From that date, all NFC premises were to be rated by normal methods and the corporation (or its successor) would no longer be required to contribute towards British Rail's payment in lieu of rates. On the assumption that the "appointed day" would fall midway through the rating year, that is to say 1st October 1980, a reduction of £500,000 was agreed. Taking account of these two elements (of £573,000 and £500,000) the Transport Boards (Adjustment of Payments) Order 1980, which the House agreed to last year, reduced British Rail's "standard amount" by £1,073,000—from £18,963,000 to £17,890,000.

During the making of the 1980 order the Government made it clear that a further order would be necessary in 1981 to make a once-and-for-all adjustment to British Rail's liability. This would reduce the "standard amount" for British Rail by £1 million permanently from the 1979–80 level and, if necessary, compensate for any discrepancy between the actual date of the NFC's becoming a Companies Act company and the anticipated date of 1st October 1980. Noble Lords will also note that no further adjustment has been necessary to take account of the actual date of the change of status of the NEC. This is because, as envisaged, the "appointed day" did fall on 1st October 1980.

The order before the House is the further order. It sets British Rail's "standard amount" for 1981–82 and subsequent years at £17,963,000, which is £1 million less than in 1979–80 (the last year before the transitional adjustment of 1980–81). Noble Lords will see that this figure is entirely in accordance with the proposals outlined last year, on which consultation took place prior to the making of the 1980 order. Both British Rail and the local authority associations were consulted on proposals then, and recently have been advised that this order was about to be introduced in order to complete the change.

To sum up, I should like to make these few points. There is nothing new in this order; it is the statutory instrument discussed and promised last year to round off a two-stage adjustment. The order reduces British Rails' "standard amount" by £1 million, and its rate bill by slightly more, to reflect the fact that the newly established National Freight Company Limited now pays rates through the normal system. Last year's order brought in a transitional arrangement, which partly gave compensation for an earlier period and which, therefore, for a single year only, made a reduction slightly greater than would be required permanently. This order increases the standard amount slightly as the transition comes to an end, but it established a permanent reduction of £1 million off the amount that existed until two years ago. The order has been accepted by both British Rail and the local authority associations. I beg to move that this order be now approved.