New Clause 5. — (Payments in Lieu of Rates by Electricity Boards.)

Local Government (Scotland) Bill – in the House of Commons at 12:00 am on 9th November 1966.

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(1) For the purpose of calculating the payments which are, under the provisions of Part V of the Local Government Act 1948, to be made year by year by the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board respectively for the benefit of local authorities in Scotland for the year 1967–68 and subsequent years, the standard amount referred to in sections 96 to 98 of that Act (which relate to payments by the South of Scotland Board) and the standard amount referred to in section 99 of that Act (which relates to payments by the Hydro-Electric Board) shall be such sums as may be respectively prescribed by order made by the Secretary of State. (2) The power to make an order under the foregoing subsection shall be exercisable by statutory instrument and any statutory instrument containing such an order shall not have effect unless approved by a resolution of the Commons House of Parliament.(3) As respects the year 1967–68 and subsequent years the said Act of 1948 shall have effect as follows—

  1. (a) section 96(2) shall be omitted;
  2. (b) proviso (b) to section 97(2) shall be amended by substituting for the words 'as defined by the last preceding section' the words 'as prescribed by order made under section (Payments in lieu of rates by Electricity Boards) of the Local Government (Scotland) Act 1966';
  3. (c) in proviso (d) to section 97(2) and in section 99(2)(c) for the reference to the year 1947–48 there shall be substituted a reference to the year 1966–67, and in sections 98(2) and 99(3)(a) for the reference to the calendar year 1947 there shall be substituted a reference to the calendar year 1966:
  4. (d) in section 98(6)(b), after the words 'North of Scotland District' there shall be inserted the words 'or by the United Kingdom Atomic Energy Authority';
  5. (e) in section 99(1). for the words from 'calculated' to the end of the subsection there shall be substituted the words 'prescribed by order made under section (Payments in lieu of rates by Electricity Boards) of the Local Government (Scotland) Act 1966';
  6. (f) in section 99(4)(c). after the words 'North of Scotland District' there shall be inserted the words 'or from the United Kingdom Atomic Energy Authority'; and
  7. (g) in section 145(2), in the definition of 'rate', the reference to Part V of the said Act of 1948 shall not include a reference to sections 96 to 99 of that Act.
(4) As respects the year 1967–68 and subsequent years, local water authorities shall have power to make charges by way of meter or otherwise in respect of water supplied to any such premises occupied by the South of Scotland Electricity Board or the North of Scotland Hydro-Electric Board as are described in section 17(2) of the Water (Scotland) Act 1949, and accordingly the said section 17(2) shall cease to apply to those premises.—[Mr. Ross.]

Brought up, and read the First time.

Photo of Mr William Ross Mr William Ross , Kilmarnock

I beg to move, That the Clause be read a Second time.

I hope that we are now moving into much quieter waters. The Clause has two main purposes. The first is to enable the standard amount, which is one of the main factors determining payments made by electricity boards in lieu of rates, to be increased by Order to take account of revaluation. Standard amounts can be regarded as analogous to rateable values and if they did not go up in proportion to other rateable values, electricity boards would naturally pay a much smaller proportion of the total rate bill than before. They themselves have accepted that increases in the standard amounts cannot be resisted for that reason.

The object of fixing new standard amounts by Order instead of by Statute, as was done after the 1961 revaluation in the 1962 legislation, is to give time for detailed discussion with the electricity boards and local authority associations and to prevent the need for a further statutory alteration at the next revaluation. By virtue of subsection (2), the Orders will be subject to an affirmative Resolution of the House of Commons.

The second purpose, covered by subsection (3,c), is to change the base year for electricity production from 1947 to 1966. Electricity production in the base year sets the pattern for calculation. Most people will agree that a year as far away as 1947 is clearly somewhat unfair, especially in the case of the North of Scotland Hydro Board which was producing very little electricity in that year. The updating of the base year to 1966 does not in any way reduce the electricity boards' payments, but merely moderates the yearly increase. The local authority associations agree that the updating is reasonable.

The other minor objections of the Clause are to take account of the electricity provided by the United Kingdom Atomic Energy Authority—subsections (3,d) and (3,f)—and to allow local water authorities to charge for water supply to electricity boards. I can assure the House that these arrangements are mutually acceptable to the local authority associations and to the electricity boards.

Mr. Edward M. Taylor:

The arguments put forward by the Secretary of State are extremely reasonable, so far as they go, but there are several aspects of this which cause us concern. For example the right hon. Gentleman suggested that in using his new power to vary the amount on which the payment is made, account is only going to be taken of the factor of revaluation. It is obvious that if changes are being made in the valuations of other properties then a similar change should be made in the rates paid by the nationalised industry.

I was rather alarmed to see that the right hon. Gentleman made no reference to the fact that account would also be taken of the new provision which we have just passed, that the commercial premises of all the electricity boards will now be paying rates quite separately, and this could be a very hefty sum.

If this is to be the case and account is only to be taken of the factor of revaluation, then the electricity boards in Scotland will be paying a much greater sum in rates in future years than they are at present, far more than could reasonably be taken into account by the increase which we have just had in local authority spending, although this year it fell by 16·5 per cent.

We need some clarification from the Secretary of State about whether he will take other factors into account as well as this simple factor of revaluation, because this could be a very considerable increase in totality.

Could the Secretary of State tell us just how much is involved in the increase over these commercial premises, because, again, this is an important factor? Apart from that, may we know whether the Secretary of State will also take into account the very valid views put forward in the annual report of the S.S.E.B., to which I have referred, in which it is suggested that under the calculation of the 1948 Act, as it has since been amended, it believes that it is paying an additional £750,000 in rates compared to other electricity authorities in England and Wales?

If we are to make a major change of this character, which will involve the electricity board carrying a much heavier percentage of rates then, either account should be taken of other factors, or it should be done in a gradual way.

From my reading of this Clause the Secretary of State has far more discretion and he can vary the Order quite considerably. I would like an assurance that he will take account of these factors. It is all very well talking about the interests of the local authorities, but at the end of the day if the S.S.E.B. and the North of Scotland Electricity Board have to pay considerably more, then the consumers will have to pay.

We know that very considerable concern was expressed by both sides of the House, in a debate a few days ago on electricity, about the present financial situation of the South of Scotland Electricity Board. Could we have an assurance from the Secretary of State that the factors that I have mentioned will be taken into account, apart from the question of revaluation? We think that these should be taken into account to some degree and we would also like to know whether these matters have been discussed with the electricity boards and their approval obtained.

We have no objection to the principle in the Clause, but we would like some clarification on the specific points to which I have referred.

Photo of Mr William Ross Mr William Ross , Kilmarnock

I can give the hon. Gentleman the assurance that all relevant factors will be taken into account. I am sorry to say that I cannot answer the question that he ought to have asked on another point, about the value of commercial premises. He did not get an answer then and he will not get one now. What I said then was that offices on operational ground would be additional to the standard amount. I can give an assurance that there would be a reduction in respect of that.

The hon. Gentleman mentioned in the annual report of the S.S.E.B. and suggested that £750,000 more would be paid by the Scottish boards than by the boards in the South. This is one of the things that is now possible under the new way that we are doing this. We will be able to vary the standard amount by Order without waiting for legislation. I can tell him that if the boards prove their case to me, and the Treasury, then it will be possible to make an adjustment.

Question put and agreed to.

Clause read a Second time, and added to the Bill.