§ 7.18 p.m.
§ The Earl of Mansfield
My Lords, I beg to move that this Bill be now read a second time. This is a short 995 measure which I anticipate will be welcomed in all parts of the House. We are seeking through it to nullify the unintended consequences of a repeal made by the Local Government (Scotland) Act 1975. The Bill itself is a rather technical measure and perhaps I may proceed to its important consequences by way of its technical complexitites, over which I will try to pass quickly.
The Local Government (Scotland) Act 1975 repealed the four words "save as herein provided" from Section 42 of the Lands Valuation (Scotland) Act 1854. Section 42 is an important provision in Scottish valuation statutes because the principal definition of "lands and heritages" subject to valuation is enshrined in it. For our purposes today, Section 42 still defines "plant or machinery fixed or attached to lands or heritages", particularly in a building occupied by any trade, business or manufacturing process.
Now, the four words in question, "save as herein provided" constituted a barrier between the definition of plant that was always to be in valuation and that of plant that was never to be in valuation. The removal of the barrier in 1975 meant that the definition of plant always in valuation——plant for producing or transmitting first motive power or for heating or lighting such a building"——became coloured by the definition of plant that was never to be in valuation; that is, movable plant or, in the words of the Act.machines tools or appliances which are only so fixed that they can be removed from their place without necessitating the removal of any part of the building".A possible consequence of the 1975 repeal was therefore that some internal plant for the production or transmission of first motive power or for heating or lighting a building, plant that was movable, might be brought out of valuation.
The first indication of this effect of the 1975 Act came only in April of this year when the Lands Valuation Appeal Court found that certain Post Office generators in wireless stations in Orkney, being movable in terms of the 1854 Act, ought not to be in valuation. Scottish assessors were quick to appreciate that this decision could have a wide application and would, without intervention, ignite a whole series of appeals, as manufacturing companies sought to take plant out of valuation. Later on the decision would require assessors to carry out a survey of such plant all over the country in preparation for the revaluation planned for 1985. Our local authorities became concerned about the potential loss of rate income from all these appeals. Two regions prepared their own estimates for loss of valuation; their estimates agreed, and when we applied them to Scotland we estimated a loss of rateable value of the order of £31 million and a consequent loss of rate income amounting to almost £40 million.
The local authorities made representations to have the previous position restored as quickly as possible. In fact, they asked to have it done retrospectively to avoid the other appeals that might have been made for the period prior to the court's decision in April of this year and going back at least as far as the beginning of the present valuation roll in April 1978.
996 Noble Lords will see from Section 1(1) that the four words in question are deemed never to have been repealed. The provision will have effect for the whole of the current valuation period and so avoid the uncertainty, the abortive work for assessors' departments and the serious loss of rate income for local authorities that would otherwise have ensued.
Its retrospection is only one of the Bill's interesting features; there are two others. First, the electric motors taken out of valuation by the 1975 Act are protected against any consequence of restoring the four words; and, secondly, Section 1 (2) ensures that any successful appellant will enjoy the benefits of his court action up to the time the Bill is enacted. After its enactment he will be on the same footing as other ratepayers. Our primary aim has been to limit the spread of the damage through a series of appeals based on the April judgment. We have tried to do this without cancelling the judgment itself or removing its basis at the time.
Finally, let me say that the Convention of Scottish Local Authorities supports the Bill strongly in its present retrospective form; and the CBI, whose members will have to give up a prospective, if uncovenanted, advantage, has shown understanding and is not opposing the Bill. Accordingly, I commend this short but useful measure to the House. It has already had a fair wind and a speedy passage in another place. I beg to move.
§ Moved, That the Bill be now read a second time.—(The Earl of Mansfield.)
§ Lord Ross of Marnock
My Lords. I suppose I should come to the penitence stool, because I was Secretary of State when the 1975 Bill went through. Confession is always good for the soul—and probably even more good at Christmas. I commend it, therefore, to the Minister himself. There is no doubt at all about it: this machinery causes, potentially, a substantial loss to local authorities in Scotland in rateable revenue. It is because of the aspect of the removable plant and machinery for heating and lighting in buildings used for trade, business and manufacturing. The result of the dropping of that particular phrase meant that they were no longer subject to valuation.
Coming to the Bill, the Minister said that everyone would welcome it. I wonder how many people understood it. I have come across only one Scottish peer who took any interest in it, and he regrets that he is not here tonight. However, he asked me to draw attention to that wonderful sentence on page 1, which begins at line 5 and wanders right through to line 14. It does not end at line 14, by the way. There is not a single comma or anything else. I do not know whether the Minister was here last week, but I am sure he will be interested in a debate that we had on making the law understood. I think it was the noble and learned Lord, Lord Denning, who read us part of some DHSS legislative literature. I reckon that this one is even better, because here we have 10 lines, taking from line 5 to line 14, in which we cover a century and a quarter of valuation history.
We start in 1854; we pause in 1902; and then we have a deliberate look at the 1975 Act. Then we decide that changes have to be made—and what delightful 997 changes they are! The draftsmen ought to be commended on what they have said here. Having looked at the Act of 1975, they say in the Bill that the wordsare hereby revived and shall … be deemed for all purposes never to have been so repealed".This is changing history indeed.
Of course, it will be appreciated that there has been a court case and a decision, and we must not fall foul of the courts. Even the noble and learned Lord, Lord Denning, is inclined to say a word or two about Parliament taking action on this. So they cover the point about someone having received a favourable decision and getting the benefit of that until the Act is passed. Then they do not miss out what is going to happen thereafter. I think I am right in saying that the important provision is Clause 1(4), which again goes back to the 1975 Act—I think Section 2(1)(d), which gave the assessor power, on a material change of circumstance, not to wait until there is a revaluation but forthwith to alter the valuation roll. This is why the Minister can say, "You will get your benefit until this Act is passed and thereafter until the decision is made by the assessor".
Very considerable sums are involved. I do not wonder at the local authorities being concerned. Mind you, it would have been helpful to industry. It would not have been all that helpful to the Treasury, because if industry are being relieved of their valuation it means that the Treasury will not be relieved to the same extent. Remember that in Scotland manufacturing industry pay only 50 per cent. rates. They are still de-rating. It is a divided benefit for the Treasury; but there is no doubt at all of the very considerable benefit and the easing of a headache for local authorities, which are looking for everything that they can get.
Many people in Scotland were thrilled at the title of this Bill: Lands Valuation Amendment (Scotland) Bill. Take, for instance, the racecourses. They have been howling for years about the need to get a valuation amendment Bill because they think that they are unfairly judged in respect to how they are assessed. I happen to live in Ayr, and I know the racecourse very well. I know the problems that Mr. McHarg has with the finances of keeping that going. They have been howling for quite a long time about the burden of rates.
I do not know whether the Minister of State noticed it, but there was a very important gentleman representing Scottish football in the Palace of Westminster last week. He was Mr. Desmond White, the chairman of Celtic Football Club. He was speaking not only for Celtic but for many other clubs as well which feel very considerably the burden of rates on football grounds. They have been urged by the police and the Government—and instructed by the Government, of course—to improve the safety aspects of their football terraces. They do so, and then along comes the assessor and up goes the burden of their rates. They are appealing and they are hoping for a Lands Valuation Amendment (Scotland) Bill. I think it would have been fair, since on the one hand we are giving this £40 million that was in danger to the local authorities. The Government might have spared a 998 thought for some of these very important sports which are very hard-pressed in terms of rates. It can be done here by amendment.
Once again we have to express our appreciation of the efficiency of the draftsman in ensuring that all that is done in the Title of the Bill is to amend the definition expressed—an expression of the machinery, fixed or attached. Beyond that we cannot go and I would not dream of going, but I draw the point to the attention of those who are interested in valuation—and let us remember that we are, I trust, considering the future of the whole valuation system. At one time we were to have in Scotland in the next few years a revaluation covering only the non-domestic side. Now we are to have no revaluation at all, and so the Government make up their minds by leaps and bounds.
The reason why we are not having a revaluation is because the Government are seriously considering their manifesto commitments about wiping out domestic rates altogether. I do not think they have been able to simplify that to the extent of saying exactly how the burden is going to fall on industrial ratepayers and others concerned. It is not a simple thing, but they made the pledge, and of course it is simpler to make pledges than to carry them out. I think they are probably discovering that now, and they will be lucky if they have formulated their thoughts about future valuation and rates, be it in England, Scotland or Wales or anywhere else, before they get to writing their next manifesto. I hope they will be a little more careful in respect of that one.
There is no doubt that this has been welcomed mainly by the local authorities and accepted, if not welcomed, by the CBI. I do not think all their members appreciated what the possibility of advantage was going to be as a result of court rulings; but I think the Government have done the right thing in respect of this. I wonder why these words were dropped in 1975. I remember that a change was made in valuation referring to heating of homes, and that is one of the things which I am very much concerned about. If a person puts in the normal type of central heating in any house in Scotland he immediately finds that his valuation is put up by the assessor. But at one time we made a change in respect of space heaters that could be removed without any damage to the house. Whether it was the removal of that which led to the business of the change, I do not know. It may have been the judgment that the words just were not necessary and the law was clear as it was. Whatever the change was, with the decision of the courts and the danger of this loss of £31 million in rateable value and a possible £40 million in revenue, I am very glad indeed that the Government have given us this. Somebody must have been working in the Scottish Office. I am very glad to see that because in the Explanatory Memorandum it says:Precise quantification of such loss is not possible",so somebody has been working overtime in the Scottish Office on this and I am very glad to give full marks to them. I certainly do not oppose the Bill.
§ Lord Mancroft
My Lords, I apologise for intervening in this debate without having put down my name to speak. I am tempted to do so by the remarks with which the noble Lord, Lord Ross, opened his 999 speech. They concerned the debate that we had in the House a few days ago on the Motion by the noble Lord, Lord Renton, about the need for simplification of legislation, and the powerful speech made by the noble and learned Lord, Lord Denning. He read out a passage from, I think, the Criminal Justice Bill 1982 and gave it as a perfect example of legislative gobbledygook. I wish he were here today to look at Clause 1. It is a far more perfect example and it is a wonderful Christmas present that the Scottish draftsman has given us to send us on our way rejoicing on the penultimate day of Parliament. I hope it will go into all the encyclopaedias and all the anthologies of wholly unintelligible and incomprehensible Scottish—or English, as I was going to say. However, I do not want to be unkind to my noble friend Lord Mansfield. I should like to congratulate him very warmly on the careful way he explained this gobbledygook to your Lordships. When he first did it I was confused. I am still confused but, of course, now on a much higher plane.
§ The Earl of Mansfield
My Lords, I am mildly astonished that this two-clause Bill should have occupied the attention of the House for so long. When we were discussing the Electricity (Financial Provisions) (Scotland) Bill a few moments ago, the noble Lord, Lord Ross, was moved to say that in another place they had been fairly discursive in their consideration of the Bill. But, my goodness me! in a speech of eleven minutes on this particular Bill he fairly showed them how—even going so far as to talk about election manifestos. However, it all goes to show what a good "puff' can do.
So far as the drafting is concerned, I was in fact minded to be—I will not say rude to the noble Lord, Lord Ross, but to chide him gently for attacking the drafting. I was brought up short by the verbal Exocet fired by my noble friend Lord Mancroft because if he, as a member of the Bar, says that Clause 1 is unintelligible I, who had thought it really read quite nicely, am not moved to argue with him.
The point is that I do not think that a highly technical amending clause such as this, amending rate provisions, is ever going to be bedside reading for the great mass of the British public. In a previous existence, before coming into my present job in government, the insurance company for whom I worked tried very hard—I think successfully—to make their policies more intelligible to the sort of people who were going to read them. As I say, they have been relatively successful, but it is never easy to explain things in any legal document in a way which is comprehensible to people who may not have been terribly well educated and at the same time achieve legal finality and also—dare I say?—an absence of future litigation, which no insurance company wants. I think the same thing applies to what has been put into this Bill.
The other matter raised by the noble Lord, Lord Ross, was the rating of racecourses and football grounds. As he will know, we also have had representations from other organisations, for instance, those representing caravan sites. I think one has to remember that a number of factors contribute to the 1000 difference in rate burden between Scotland and England. We have relatively high Scottish rate poundages. We have different years for revaluation and we have different approaches to revaluation, which is not altogether surprising when you consider that in fact we have separate legal systems. As the noble Lord knows very well, we have had representations from Ayr Racecourse among others—and I must be careful because I own a racecourse myself. I can assure the noble Lord, therefore, that these representations are being considered by the Government. If we do decide—and I emphasise "if—that these subjects deserve relief, then, as the noble Lord knows, we shall have to take legislative action to try to do what we want in an effective and fair manner. I am very grateful that the Bill has apparently received approval from your Lordships, and I commend it to the House.
§ Lord Ross of Marnock
My Lords, I think I should apologise to the House for the absence of the noble Earl, Lord Selkirk, because he it was who was perplexed, worried and concerned about the clause, as was the noble Lord opposite who spoke so well.
§ On Question, Bill read a second time: Committee negatived.
§ Then, Standing Order No. 43 having been suspended (pursuant to Resolution of 16th December) Bill read a third time, and passed.
§ Lord Lyell
My Lords, I beg to move that this House be now adjourned during pleasure until five minutes past eight.
§ Moved accordingly, and, on Question, Motion agreed to.
§ [The sitting was suspended from 7.41 to 8.5 p.m.]