Wind Energy: Effect of Local Government Rates (Hansard, 9 October 1986)

Lord Campbell of Croy
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale)
My Lords, we have received a number of representations from organisations active in the wind energy field expressing concern over the effect of rates on the viability of this new energy source and the apparently unfavourable comparison with rates levied on CEGB plant. We are currently awaiting the outcome of an appeal against a rating assessment on a wind turbine at Ilfracombe which should clarify whether the correct valuation procedures are being applied.

Lord Campbell of Croy
My Lords, I am grateful to my noble friend for that encouraging reply. Is he aware that following the Energy Act 1983 new generating machines have been operating most successfully using this new resource but that they have then been assessed for rates at unexpectedly penal levels? Will the Government give urgency to the examination of assessing a system which surely ought to be encouraged?

§ Lord Skelmersdale
Yes, my Lords, I agree that that should be encouraged, but I am not quite sure that the rating system is the way to do it. As with all methods of rating, the valuation officer in applying the so-called "contractors' test" is merely seeking to ascertain the rates on the basis of the rent which a hypothetical tenant would be prepared to pay for the property. I appreciate that new technologies and one-off projects have high capital costs which can result in a higher rateable value. But this matter is not inflexible and ultimately the valuation officer's assessment can be tested, as in the Ilfracombe case, by the local valuation board.

§ Viscount Hanworth
My Lords, surely no tenant in his senses would want to go to an area as windy and as bleak as those suitable for wind turbines.

§ Lord Skelmersdale
My Lords, all sorts of people live in windy areas. I do myself.

§ Lord Ironside
My Lords, can my noble friend say what rating formula is used in Scotland for private suppliers and public suppliers by comparison with that used now in England and Wales?

§ Lord Skelmersdale
My Lords, the only difference between Scotland and England and Wales is that in the formulation of the contractors' test the Scots have a written-down value of 90 per cent. and in England and Wales it is 95 per cent. There is very little difference indeed.

§ Lord John-Mackie
My Lords, what is the difference between a diesel-operated generator inside a shed and a wind tunnel? No diesel-operated generator inside a shed is rated.

§ Lord Skelmersdale
No, my Lords, but the shed itself may be rated.

§ Lord Airedale
My Lords, did we not waste our time on the Energy Act 1983, the Long Title of which includes the words, to facilitate the generation and supply of electricity by persons other than Electricity Boards", if these enterprising people are to be frustrated in the manner described by the noble Lord, Lord Campbell of Croy?

§ Lord Skelmersdale
My Lords, this is rather different. The special arrangements for the CEGB and the Scottish generating boards are there because those boards cover an area of more than one local authority. Therefore, the rates are different and special arrangements have to be made. At the moment, to the best of my knowledge, there is no wind-generated power fed 347 into the National Grid and therefore the wind-generating power plant must be rated as an entity in the local authority to which it would have to pay rates.

§ Lord Stoddart of Swindon
My Lords, the noble Lord is probably wrong in saying that there is no wind energy fed into the National Grid at the present time; but, be that as it may, I hope that he will agree that this is a very serious matter. Is he aware that the Department of Energy is giving priority to wind power as the prime alternative energy source? If the appeal case goes badly, will he have discussions with the Department of Energy to see whether this matter can be resolved in favour of the consideration and expansion of wind power?

§ Lord Skelmersdale
My Lords, yes, I am aware that the Department of Energy is giving priority to wind-generated electricity and I can assure the noble Lord that, whatever the outcome at Ilfracombe, my colleagues in both departments will discuss it.

Lord Campbell of Croy
My Lords, in examining this matter, will the Government bear in mind that although it is on only a small scale at present it is a system which is free from pollution and saves fossil fuels? As the noble Lord has mentioned Ilfracombe, is he aware that the cases which have come to my notice have all been in Scotland?

§ Lord Skelmersdale
My Lords, I am grateful to my noble friend; and, as I said, I will take up this particularly difficult matter to make sure that if it is unfair it will not continue to be unfair. However, I should point out that new technologies and one-off experimental projects, as I said to my noble friend earlier, have always been rated. Therefore it is quite logical that wind-generating turbines should also be rated.

§ Lord Mackie of Benshie
My Lords, is the noble Lord aware that although he said new technology should be encouraged by other means, there is nothing more infuriating and nothing that will hold back development more than high rating of new projects by pioneers?

§ Lord Skelmersdale
My lords, I do not want to get into a discussion at Question Time this afternoon, but that seems to be an admirable reason for disapplying the rates altogether.

§ Baroness David
My Lords, is the Minister aware that nobody is expecting these new industries not to be rated at all? I ask: would it not be more sensible for these new industries, trying something different, to be rated under the provisions of Section 34 of the General Rate Act 1967? Will he please consider that?

§ Lord Skelmersdale
My Lords, I shall look at that in my general consideration.