HL Deb 12 February 1985 vol 460 cc164-7

British Gas Corporation (Rateable Values) (Scotland) Order 1985

Water Undertakings (Rateable Values) (Scotland) Order 1985

British Alcan Aluminium Limited and Lochaber Power Company (Rateable Values) (Scotland) Order 1985

British Railways Board (Rateable Values) (Scotland) Order 1985

British Waterways Board (Rateable Values) (Scotland) Order 1985

Glasgow Underground (Rateable Values) (Scotland) Order 1985

British Telecommunications plc (Rateable Values) (Scotland) Order 1985

6.52 p.m.

The Earl of Caithnessrose to move, That the eight draft orders laid before the House on 15th January be approved.

The noble Earl said: My Lords, with the leave of the House I should like to move the eight Motions standing in my name on the Order Paper en bloc. Although the orders before us today are fairly technical measures their purpose is comparatively straightforward. I hope it will be for the convenience of the House if I describe their main elements together.

Five of the orders before us relate to public utility undertakings with extended national networks. A sixth—that relating to telecommunications—also concerns a national network. In each case the relevant order deals with the valuation of the operational lands and heritages which, in common with nearly all other heritable property, are in principle subject to rating valuation but are not capable of satisfactory conventional valuation since the value of all parts of the network depends on the existence of the other parts. It makes only sense, therefore, to deal with these on a national basis. In most cases these undertakings have been subject to formula valuation already for many years, and these orders are only necessitated by this year's Scottish general revaluation. The two orders dealing with localised undertakings are required to ensure that these are treated in a similar manner to their nearest comparators which are national networks.

Formula valuation basically prescribes a cumulo rateable value and the manner of its annual adjustment and apportionment, and thereby produces rateable values for each undertaking in each district or islands area at the tone of the current valuation roll. These three stages are covered in detail in the orders. It follows that at a time of revaluation it is necessary to revise the formulae at least to provide a new cumulo rateable value at the tone of the new valuation roll. This is the primary reason for bringing these orders forward at this time. They provide new valuations according to the level of values which will be entered in the new valuation rolls to take effect from 1st April this year. The opportunity has also been taken to review the detail of the formulae that have operated since 1978, and make improvements where they have been found desirable.

We have had extensive consultations with the interested parties; namely, the bodies running the undertakings and the Convention of Scottish Local Authorities. With only a few exceptions they are content with our proposals.

We fixed the new cumulo rateable values at the tone of the new valuation rolls which come into effect in April, in consultation with the interested parties, primarily by reference to turnover. We established what we believe would have been a fair rateable value given current circumstances at the tone of the current 1978 valuation roll, and the resultant figures were then uprated to the new level of values by multiplying the resultant figures by a revaluation factor derived from the local assessors' formal estimates of the increase in value for all subjects which they value.

I shall deal with any matters that are raised, but perhaps I should say a word on the implementation of these orders. The two orders relating solely to localised undertakings entirely within one valuation area will be implemented by the relevant local assessors according to the same procedural requirements as for other subjects. Responsibility for the implementation of the other orders, which relate to national networks or, in the case of water undertakings, which mostly extend to more than one region, will lie with the Assessor of Public Undertakings for Scotland. I commend these orders to the House because I do not believe them to be controversial, and I beg to move.

Moved, That the eight draft orders laid before the House on 15th January he approved.—(The Earl of Caithness.)

Lord Ross of Marnock

My Lords, we are grateful to the noble Earl for the trouble he has taken with these orders. I will not ask him if he understood them all. In fact, to my knowledge there was only one Member of Parliament who was able to understand these public undertakings rateable value formulae. He retired and is now dead, so that leaves us in the Schleswig-Holstein situation that no one understands them at all.

To take the rating valuation order which is called the Water Undertakings (Rateable Values) (Scotland) Order 1985, I defy even the noble and learned Lord, Lord Denning, to understand, not the determination of the aggregate of rates but the apportionment of rateable value. That takes two pages and would take a university mathematician, after a lot of study, to go through. I am very sorry that the noble Earl was left with this.

The point is that these orders come because there has been a revaluation in Scotland. This is something that no one in England understands because there has not been a rating revaluation here for years and years. Some day they may have one. It is supposed to happen every five years.

Having had a revaluation, we then get a tone of assessment in the new roll. That gives us three new factors—residential valuations, commercial valuations and industrial valuations. What the Government mean by "tone" is the balance of one against the other. I should like an explanation here. It is probably unfair to ask a junior Minister to give an explanation, but why, under these new valuations, has the tone changed? Industry will pay less; commercial subjects will pay less; but residential subjects, who were to be freed by this Government from paying any rates, will pay more.

What I have said is a fact. I have not received my valuations yet. I am waiting for a chance to appeal when I get them. From all I hear, the tone is so changed that the balance has swung against residential ratepayers. Industry will pay less—so much so that the Government, I understand, are to reduce the statutory relief that industry receives in respect of its rates. Commerce will pay less, but those in residential accommodation will pay more. I am sorry if this is bad news for any noble Lord who has property in Scotland.

There will also be awful rows when the rates go up, not due to anything that has been done by local authorities but by the change in the revaluation procedures. This is only the first order. We have another seven to come. But we are taking them all together; and knowing the importance of the business coming afterwards and the impatience of those who are anxious to get to it, I will not delay your Lordships for very long.

However, how does it happen that in the determination of the aggregate rate we get a clear figure? Is that reflecting purely and simply the fact that they are not going to be so much rates as they would if they had all gone up on the same ratio, by the same multiplier, as in the last valuation roll? This is the reason for it. And of course I will not ask for an explanation of the determination, apart from the determination of the initial rateable values when there is a clear sum of money. That is fixed by juggling the figures to ensure that the public undertakings get the benefits that are going to the industrial undertakings generally. But of course it is going to leave residential ratepayers to pay more if we are going to be easier on these public undertakings: water, electricity, gas and so on. That is the only point that I wish to raise.

Lord Wilson of Langside

My Lords, I shall not delay your Lordships for more than one or two minutes. I want only to say that I share the fascination of the noble Lord, Lord Ross of Marnock, with these diverting formulae in accordance with which the aggregate amount of the rateable values are apportioned among the rating areas in Scotland. I wonder whether the noble Earl could say a further word or two about the nature and extent of the consultations which have taken place on these instruments. I gather from what he said that there were some reservations among tthe bodies. Can he tell us a a little more about that?

The Earl of Caithness

My Lords, the noble Lord, Lord Ross of Marnock, is much more experienced in the question of rateable values, lands and heritages than I am, and it would be foolish of me to cross swords with him at this particular time on such matters. When it comes to the tone of the list, my understanding is that the "tone" means the general average level of values in cash terms. It is not about the balance of the list. As to what the future holds for residential property, vis à viscommercial or industrial property, that is something we have to wait for and which we should know in the not too distant future.

The noble and learned Lord, Lord Wilson of Langside, asked me about consultation. Extensive consultations through officials were conducted with all the interested parties, prior to the Secretary of State finalising his proposals. All parties were formally consulted in December 1984 on the final proposals prior to these orders being laid before Parliament.

He also took me up on one point that I raised concerning the one order which was not unanimously agreed and that was in regard to electricity, where the two electricity boards in Scotland made a very strong case for a reduction in their rateable value, whereas in England it is considerably higher. We found that when one had to re-assess the rateable value as at the 1983–84 financial year, their case was not as strong as it would have been had it been argued today, because there have been substantial changes which have to be taken into account in rating.

On Question, Motion agreed to.