This is a complicated matter, and a good deal of time has been needed for its examination. I have now framed the general lines of a scheme, but before I can usefully introduce legislation I shall need to assure myself of the practicability of certain aspects of it and to obtain information from representatives of public utility undertakings on a variety of technical matters, on which my present information is incomplete. I propose, therefore, next to ask representatives of the principal public utility groups to meet my advisers and assist me in some of these matters, and I will introduce legislation as soon as practicable thereafter. As the House will no doubt wish to be apprised of the outline of the scheme I have in mind, I will, with the hon. Member's permission, circulate a short statement in the OFFICIAL REPORT. I need hardly say that the pending discussions will be entirely without prejudice to the right of the House to criticise and amend the proposals which I ultimately lay before it.
Under the War Damage Act separate schemes were provided for immovable and movable property, but in the case of public utility undertakings it is proposed that both classes of property should be included in a single scheme to be administered by the War Damage Commission. It was with this in view that the goods of public utility undertakings were exempted from compulsory insurance under Part II of the Act and the undertakers were advised to defer voluntary insurance.
Where, however, a structure or group of structures, or a movable asset, has been damaged beyond repair the war damage payment in the event of replacement will be the net outlay (after elimination of any outlay resulting from improvements), reduced in a proportion corresponding to the degree of depreciation or obsolescence of the old asset.
It may be that when an asset is damaged beyond repair, it will not be replaced by one of the same character or size, or, in the case of a structure, on the same site. In such a case it is proposed that the war damage payment shall be such sum, not exceeding the actual outlay, as the War Damage Commission may decide after paying regard to the principles mentioned in the last paragraph so far as they can be applied, and also to the service required to be performed by the undertaking.
The contributions payable under Part I of the Act on the basis of the Income Tax Schedule A or rating valuation cover war damage to immovable property only. Such a basis is inapplicable to a scheme which covers both movable and immovable property without differentiating between them. There is thus no existing valuation which could be used as a basis of contribution for such a scheme, and ad hoc valuation on a large scale would be impracticable in present conditions. It is accordingly proposed that the aggregate contributions of the members of each group of public utility undertakings should be 50 per cent. of the estimated aggregate war damage payments to the members of the group, and that the contributions should be payable in four annual instalments of which the first would be due on the 1st July, 1942 (such adjustments being made from time to time as may be necessary by reference too successive estimates of the aggregate payments). It is, however, proposed to provide that as soon as may be possible after the termination of the war the War Damage Commission shall, whether on their own initiative or at the instance of the parties, take into consideration the 50 per cent. rate and make a report whether, and if so to what extent, that rate should in their judgment be reduced as respects any or all groups of public utility undertakings, having regard to the relative amount of damage suffered and to all other relevant considerations.
These proposals, which apply to the first risk period ending on 31st August, 1941, have been framed primarily with reference to the main groups of public utility undertakings. It should not be assumed that they will necessarily be applied to every type of such undertaking covered by the statutory definition and it may be possible to restore one or two of the minor groups within that definition to the ordinary provisions of the War Damage Act.
It is intended in general that these other undertakings shall be dealt with on the basis of the War Damage Act except that where appropriate, provisions on the lines of the scheme for public utility undertakings will be applied. There will, however, be a number of cases where special provision will be necessary in applying Part I of the Act. On the contribution side, mines and certain similar undertakings may require special treatment in view of the fact that existing valuations represent in large measure the value of un-worked minerals beneath the surface which are not at risk.