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Orders of the Day — Scottish Gas Board (Revaluation)

– in the House of Commons at 12:00 am on 11th August 1966.

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8.58 p.m.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

I beg to move, That the Valuation (Scottish Gas Board) (Scotland) Order, 1966, a copy of which was laid before this House on 20th July, be approved. Perhaps it would be for the convenience of the House if I said something about the necessity for the Order. As Scottish hon. Members, at least, will have noticed, this is the year of revaluation in Scotland. The purpose of the Order is to bring the effect of revaluation to bear on the Scottish Gas Board. If the Order were not approved, the effect of revaluation would be to lower the Board's rate payments relative to other ratepayers, which would obviously be unfair to ratepayers as a whole. The Order is brought forward now because it is required by September, so that it can have effect on the rate payments to be made by the Board in the current year.

The Scottish Gas Board is not valued for rating purposes in the normal way by the local assessor. Since 1963–64 the Board has had a basic rateable value of approximately £616,000, which was laid down by the Local Government (Financial Provisions) (Scotland) Act, 1963, in place of the valuations which had applied up to that time, and which were based on the revenue principle.

The Assessor of Public Undertakings is responsible, under the Valuation and Rating (Scotland) Act, 1956, for the annual adjustment of this basic value by reference to changes in the output of gas, and he is also responsible for the apportionment of the rateable value between the rating areas in which gas is manufactured or supplied. Section 12 of the 1963 Act also provides that if it appears to the Secretary of State that by reason of any substantial change of circumstances it is necessary for him to do so he may vary the basic rateable value. He does this after consultation with the Gas Board, the Scottish Valuation Advisory Council and the local authority associations.

The general revaluation which has just taken place in Scotland constitutes a sufficient change of circumstances to make necessary the Order which increases the basic rateable value from approximately £616,000 to £790,169. This figure is proportional to the average increase in total valuation, as brought out in the statutory estimates of the effect of revaluation, which the assessors have submitted to my right hon. Friend the Secretary of State for Scotland. The effect of the change in the basic valuation of the Scottish Gas Board will be to put it in broadly the same position relative to other ratepayers as it was in 1965–66.

I hope that with that short explanation the House will be willing to approve the Order.

9.2 p.m.

Photo of Mr Michael Noble Mr Michael Noble , Argyll

Earlier in the Session the temptation to talk for several hours on Scottish gas might have been difficult to resist, but at this time I do not believe that the House desires a very long discussion on this important topic. We agree with the Under-Secretary of State's argument that when everything else in Scotland is being revalued the Scottish Gas Board should suffer the same fate, because in these days revaluation always seems to be upwards.

I have one or two simple questions for the Under-Secretary of State. I think that the Secretary of State is right to take this action, but there was recently a 13 per cent. increase in the cost of gas in Scotland, and although this is the revaluation year in Scotland it is two years off in England. Will this mean that for industrialists coming to Scotland, who are already paying more for their gas, the cost will be even greater in Scotland, and therefore the attraction of Scotland will be less?

My second point, which is of some importance, is that, if I heard the Under-Secretary of State correctly, the increase in the valuation of the Gas Board's assets has been the average of the increase of the valuation in Scotland. Is this fair? The increases that have been drawn to my attention in commercial and industrial concerns, which is after all what the Gas Board is, have been enormously above the figure of about 25 to 30 per cent. which has been given here. Is it fair that the Gas Board should be treated in this respect very much more lightly than other commercial concerns, which is what seems to have happened? May we not be in danger of running into the same kind of problem as already exists in Glasgow, where industrial valuations have been greatly increased and industry is finding it difficult to pay the rates that are likely to be demanded. I know that appeals are pending, but I imagine that there will be no appeal from this valuation. Would it not be fairer that the Gas Board's increases should be related to industrial valuation and not an average between domestic and industrial valuation? If that were so, what would be the valuation?

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

The right hon. Gentleman's first point was whether this increase in valuation would increase the amount of rates which the Gas Board would have to pay and therefore, perhaps, involve an increase in the price of gas. The increase which the Board will have to pay will be only the average increase, not in rateable value, but in rates burden, which will be borne, by and large, by ratepayers in Scotland as a whole. The increase in basic valuation is exactly proportionate to the general increase in valuations over the whole of Scotland and therefore if the rate burden between the two years were the same there would be no increase in the burden on the Gas Board.

As we know, the rate burden between the two years is not the same. My point is that the increase in rates payable by the Gas Board will be, in terms of real rate burden as distinct from valuation, approximately the average borne by ratepayers in Scotland as a whole. It may not be exactly proportionate, because there is the need to split the basic rateable valuation between the different rateable authorities and therefore what the Board eventually pays is made up of individual rate burdens coming to a cumulative total. However, the general effect will be as I have stated it. By itself this will not affect the burden of the Gas Board in such a way that it would affect the price of gas.

Secondly, the right hon. Gentleman asked whether the sort of calculation made here is fair and whether the Gas Board should not be treated on the same basis in terms of increase of rateable value as industrial and commercial concerns. One could argue a number of different bases of valuation for the Gas Board. The thing on which virtually everyone agreed before the 1963 Act was that the revenue principle which determined Gas Board valuation was unsatisfactory, and it may even have been during the right hon. Gentleman's term at the Scottish Office that the change to the present system was made.

It was provided that when the basic valuation was to be altered in the way provided by this Order there should be this process of consultation. As I have said, the Order was subject to consultation with the Gas Board, the Scottish Valuation Advisory Council and the local authority associations. It is up to these bodies to make their representations to the Secretary of State about the way in which changes in the basic valuation should be made.

I do not think that one can compare the Gas Board with ordinary industrial and commercial concerns. It is because such a comparison would be unfair that we need special arrangements for the valuation of the Board. There is no hypothetical rent. None of the standards normally applied by assessors in determining rateable values can be applied in any real sense to the valuation of the Gas Board. We have the special arrangements and, on the whole, they work well in holding the burden between the Gas Board, the local authorities and the interests of ratepayers generally. The normal process has been gone through in this instance, and I therefore hope that the House will approve this Order.

Question put and agreed to.

ResolvedThat the Valuation (Scottish Gas Board) (Scotland) Order, 1966, a copy of which was laid before this House on 20th July, be approved.