§ 6.34 p.m.
§ LORD SANDFORD
My Lords, I beg to move that the Docks and Harbours (Valuation) Order 1971 be approved. The purpose of this Order is to provide for all statutory clock and harbour undertakings, with a few exceptions to which I will refer later, to be assessed for rates by a formula related to gross receipts. Statutory docks and harbours are for the most part assessed on what is known as the profits method. This method has for some time been producing unsatisfactory results ill the case of many undertakings; in particular it tends to produce very low or even nil assessments for the older undertakings, and very high assessments for undertakings in which there has been recent heavy capital investment. The profits basis also produces unduly low assessments for port authorities which do not own the bed of the river or harbour, because their income, in the form of what are known as "tolls in gross" and river dues, does not count for the purposes of 731 the profits calculation for rating. It was because the profits basis was generally recognised to be unsatisfactory that Parliament gave power in the Rating and Valuation Act 1961 for provision to be made by order for the assessment of docks and harbours by formula. This power has since been consolidated in Section 35 of the General Rate Act 1967 under which the Order now before your Lordships' House has been made. Consultations about a formula for assessing all statutory docks and harbours have been proceeding for some considerable time under Governments of both Parties, and a wide measure of agreement in principle was eventually reached in 1969 to a formula whereby an undertaking's rateable value for any year would be a percentage of its gross receipts in the year.
The Order provides for the rateable values of docks and harbours covered by the formula to be 4 per cent. of gross receipts. This is the percentage which, we estimate, will produce roughly the same total rateable value as at present for the ports which now have positive assessments. The formula assessments of the ports now assessed at nil will provide some additional rateable value, but the main effect of the formula will be to redistribute roughly the present total of rateable values. In some cases the formula assessment will be very different from the existing one, and in order to ease the transition both for port authorities faced with large increases in their assessments, and for local authorities facing large losses of rateable value, Article 8 of the Order provides for these large changes to be phased in over a period of up to 5 years.
I mentioned earlier that the formula will not apply to all statutory dock or harbour undertakings. There are two classes of undertakings which are excepted. First, there are the very small ports with receipts of less than £1,500 per year. Most of these have nil assessments at present. Under the formula they might have assessments of up to £60, which is not very much. Many of them would be troublesome to deal with under the formula, and we have therefore decided to ignore them for the purpose of the formula. The second category is that of undertakers dealing wholly or mainly in goods belonging to them or to their 732 associated company. The formula would not operate satisfactorily in this sort of case because the harbour undertaking's receipts, if any, would be unlikely to be a proper reflection of its trade. Any assessments of these two classes of ports would be determined under the general rating law. My Lords, I beg to move.
§ Moved, That the Docks and Harbours (Valuation) Order 1971, be approved.—(Lord Sandford.)
§ 6.37 p.m.
§ LORD GARNSWORTHY
My Lords, again may I thank the noble Lord for the clear exposition he has given of this Order. This equally is a matter with which local government would have dealt. We on this side of the House certainly will not oppose the Order. Clearly there is need for remedying the present position where in some cases, by showing unprofitability, there could be no liability for rates. I think there was a case at Immingham, where the British Transport Docks Board won an appeal and established a position of no liability for rates at least for a period.
The noble Lord has explained how it comes about that 4 per cent. was decided on by the Government. I think it is no secret that the A.M.C. is dissatisfied with this figure and thinks that it should have been somewhere about 6 per cent. I ought to say that there is a hope that when local government finance is the subject of a Green Paper, there may be some further thought on this matter.
There is one point which I should like the Minister to clarify. Under the heading of "Interpretation" on the second page of the Order, in Section 3(2) receipts are so defined as to exclude charges for cargo handling but to include rents received, even though rented properties may be separately assessed. Under the formula set out, therefore, it would seem that such properties would be rated twice. I understand that, taking the undertakings as a whole, the rents received amount to only 3 to 4 per cent. and that it may be claimed that this figure is trivial in regard to the total. But not all installations enjoy rent income, and it would seem that in cases where they do the percentage of receipts accounted for by rents will be a great deal higher than 3 or 4 per cent. I wonder whether it is possible that some 733 further thought could be given to this matter and, if it is accepted that an injustice is being done under this heading, that at some future time the matter might be remedied.
§ LORD SANDFORD
My Lords, once again I should like to thank the noble Lord for his acceptance of this Order. If he asks me, as he does, to look into this question of rents again I will do so. But I can assure the noble Lord that the point he has raised was looked into most carefully. The anomaly was recognised, but no satisfactory way of isolating it from other forms of income was arrived at, and in the end it was decided to leave it as it is now. But I will certainly have a look at it again, and if I feel that I can enlarge on the point the noble Lord has raised—as I may well feel that I can—I will write to him and explain more fully why matters have been left as they have been left.
§ On Question, Motion agreed to.