Local Government Committee, 31 Oct 2000

Meeting date: Tuesday, October 31, 2000

Official Report 277KB pdf

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Train Operating Companies (Rateable Values) (Scotland) (No 2) Order 2000 (SSI 2000/draft)

Comrades, can I have your attention again, please? I extend a warm welcome to Angus MacKay, who is the new Minister for Finance and Local Government. I guess that he will be before us on many occasions. Is this your first appearance before a committee as the Minister for Finance and Local Government?

This is my first appearance at a committee meeting since the First Minister asked me to take up the post. My understanding is that I have to swear an oath tomorrow and that various other things have to happen before I become the minister properly.

We will perhaps be soft on you today, as you have not yet sworn your oath.

Can we rely on you to tell the truth, minister, if you have not yet taken the oath?

Always, as you would expect.

This section of the meeting is in two parts. We will deal first with a statutory instrument and then move on to stage 2 of the budget process. At the table with the minister is Ainslie McLaughlin, head of local government division 3, who has been appointed to the post that used to be held by Bill Howat. Bill was well known to the committee. Pete Hancock, who is head of business rates policy, and Paul Cackette from the office of the solicitor to the Scottish Executive are also at the table. I welcome you.

As you know, comrades, Angus MacKay may ask his officials to answer questions during this part of the proceedings.

What a cop-out.

That is normal practice, so we will have no comments from SNP members. That does not include Gil Paterson.

The instrument before us today is an affirmative instrument, the Train Operating Companies (Rateable Values) (Scotland) (No 2) Order 2000 (SSI 2000/draft). The order revokes a previous order—that was approved by the committee at its meeting on 7 March—in which, it is understood, there were some errors. That is why the order is shown as coming into force on April 1 2000. The report from the Subordinate Legislation Committee is included in members' papers for today's meeting. That committee does not consider that the attention of the Parliament should be drawn to the order.

The procedure is as follows—I will allow time for questions for clarification and explanation of the statutory instrument during which questions can be addressed to the minister, who can answer himself or ask his officials to answer on his behalf. At the end of that time, I shall announce that the time for questions is over and we shall start the debate.

The minister will then read his statement and move the motion formally. I shall then call on any members of the committee who wish to speak to indicate that they want to do so. Members must speak either for or against the motion. When all the members who want to speak have done so, I will put the question on the motion. Is that clear?

Members indicated agreement.

Do members want to ask any questions for clarification or explanation?

I add my fawning remarks on the minister's promotion. I am sure that we will work happily together.

The obvious questions are, what are the changes since we passed the first order in March and why are there changes? If I understand correctly, the total rateable value of railway premises in Scotland is £743,000. I find that hard to believe. I thought that the figure would be much higher than that. There must be a lot more behind this than I have seen so far.

Does the minister want an official to answer?

I think that that might be wise on this occasion, convener.

The valuations of the train operating companies have been set independently by the assessors, after discussion with the train operating companies.

The officials might confirm this, but the reason that Donald Gorrie might be surprised about the level of rateable values is that the order relates to train operating companies, but not to Railtrack plc, which is the biggest landowner in the railway industry. That might answer Donald Gorrie's question.

That is correct. There is a separate order for Railtrack, which has a considerably higher rateable value than the train operating companies.

Why is Railtrack not involved?

The order for Railtrack was made in March this year.

The order came before the Local Government Committee in March.

We passed an order in March in good faith. Did the railways provide the right information then? Why did we pass something in March that we have to re-pass in altered form in October?

On one of the introductory comments that was made by the convener on why there is a train operating companies No 1 order and a No 2 order, the second order is not because of an error in the first one. The orders relate to different financial years. The train operating companies order that was debated by the committee in March covered the period from 1 April 1999 to 31 March 2000. The order that is before the committee today deals with the period from 1 April 2000 to 31 March 2005. It is not correct to say that the second order is the result of an error in the first—they relate to different financial years.

Thank you. That is much clearer.

If there are no other questions of explanation or clarification, I ask the minister to speak to and move his motion.

Thank you very much, convener—it says in my script. [Laughter.]

Members who have been involved in the committee for longer than I have will recall that, on 7 March, the committee debated seven orders relating to the rating of the prescribed industries—we have touched on that already. On 20 June, two further orders were debated. Prescribed industries are those that do not lend themselves easily to conventional valuation. For the most part, they are utilities that were or are still in some form of public ownership.

The draft order that is before the committee today forms the last element of the package of statutory instruments that is needed to finalise revaluation 2000. An Executive note has been circulated to explain the policy objectives, financial effects and purpose of the order, which will help to enable agreement to be reached so that the rail operators concerned can plan ahead in the knowledge that their rates position is properly settled. I pause here, in case there are any questions that can be answered at this stage.

By someone—

Probably Bristow Muldoon, judging by experience.

The time for clarification has passed, but if the minister will move the motion we can open the matter up for debate.

The draft order that is before the committee relates to the revaluation of non-domestic rates. Revaluation is required by statute to take place throughout Great Britain every five years. The 2000 revaluation has just been completed. As with previous orders, the draft order has been subject to detailed discussion and consultation with the relevant industry, as well as with a range of appropriate national bodies. In Scotland, those discussions took place between industry representatives, officials from the Scottish Executive and the Scottish assessors.

Rail representatives approached the discussions in a realistic way and, as a result of the process that was undertaken, valuation figures were arrived at that are acceptable to the industry. Similar discussions have taken place in England and Wales. Cross-border contact was maintained throughout the process with officials in the Department of the Environment, Transport and the Regions and VOA—an acronym that I do not understand. Perhaps one of my officials can tell me what it stands for.

It stands for the Valuation Office Agency.

As a result of that contact, harmonisation of valuation treatment and practice north and south of the border has been a key feature of the valuation. Wherever possible, the valuations reflect that.

On 7 March and 20 June, the committee approved orders that prescribe rateable values for the electricity, gas, water and docks and harbours industries. Orders that relate to the rail industry were also approved, although the committee was advised that a further order was on the way that would deal with the train operating companies. That order has arrived today.

On 7 March, the committee approved the Train Operating Companies (Rateable Values) (Scotland) Order 2000, which relates to the valuation of shops and other types of premises that are occupied by each company on Railtrack plc's operational land for 1999-2000. Since the previous revaluation of non-domestic rates in 1995, such retrospective orders have been prepared annually, to try to deal with rateable values for the train operating companies. Such orders were laid retrospectively to try to accommodate the changes that were taking place annually in and around the industry. That had the advantage of ensuring that the valuations were accurate, but it necessitated the preparation of orders every year instead of every five years.

In addition, the retrospective orders for the train operating companies have come to be regarded as something of an anomaly among the other orders for the prescribed industries, especially since the train operators now work in a more stable, post-privatisation environment. For those reasons, the Train Operating Companies (Rateable Values) (Scotland) (No 2) Order 2000 (SSI 2000/draft) is intended to cover—as has been discussed—the five-year period from 2000 to 2005. This will be the last such order that will be laid retrospectively. From now on, orders that provide for the rateable values of train operators will be properly in line with other orders that deal with the prescribed industries.

Does that raise any questions in anyone's mind? If not, I shall bash on.

I know that there has been a spirit of consultation and joint working throughout the revaluation. The development department and I hope that that can continue. The Executive has made it clear on many occasions that it is keen to learn from revaluation 2000 and that it is willing to consider changes that would improve the non-domestic rating system. The Scottish Valuation and Rating Council, which comprises business representatives and others who are active in the rating and valuation field, is currently undertaking a review of revaluation 2000 as well as examining more widely non-domestic rating practices and procedures. The SVRC will release the results of that work later in the autumn and I will take a keen interest in its findings. I commend the draft order to the committee.

I move,

That the Local Government Committee recommends that the draft Train Operating Companies (Rateable Values) (Scotland) (No 2) Order 2000 be approved.

Members should indicate whether they wish to speak. I remind members that they must speak for or against the motion—they must not ask questions.

I am not going to ask a question. I want to speak in favour of the motion, although I want to raise a caveat. The last time that we discussed such an order, I was puzzled that there was negotiation. It does not happen in all cases, but in some cases an organisation negotiates a rateable value with the Executive. Although the minister has said that he likes the idea of consultation and co-operation, I am not sure what mechanisms are in place should that consultation and co-operation break down.

No questions.

It was not a question, but an observation. I am in favour of the order, but I am concerned that there is no mechanism for reaching agreement should there be a breakdown in co-operation.

Should I attempt to respond to the observation, convener?

That is up to you.

I am advised that if co-operation were to break down, the bottom line would be that the matter would come before Parliament for a decision on the appropriate rating order. There seems to be an awful long way between intimate discussions and a matter going before Parliament. Clearly, a series of blanks would have to be filled in en route. It would be in the interests of the industry and the companies to reach an agreed solution that was acceptable to Government, rather than to put themselves in circumstances where a random decision could be made by a committee of the Parliament, separate from such discussions.

The question is, that motion SIM-1029, in the name of Angus MacKay, be agreed to.

Motion agreed to.

That the Local Government Committee recommends that the draft Train Operating Companies (Rateable Values) (Scotland) (No 2) Order 2000 be approved.