Fourth Standing Committee on Statutory Instruments, &c.


Thursday 4 March 1993


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The Committee consisted of the following Members:


Barnes, Mr Harry (Derbyshire, North-East)

Benton, Mr Joe (Bootle)

Betts, Mr Clive (Sheffield, Attercliffe)

Burden, Mr Richard (Birmingham, Northfield)

Coffey, Ms Ann (Stockport)

Denham, Mr John (Southampton, Itchen)

Goodson-Wickes, Dr Charle (Wimbledon)

Greenway, Mr John (Ryedale)

Harris, Mr David (St. Ives)

Hughes, Mr Robert G (Harrow West)

Hughes, Mr Simon (Southwark and Bermondsey)

Short, Ms Clare (Birmingham, Ladywood)

Squire, Mr Robin (Party Under-Secretary of State for the Environment)

Sumberg, Mr David (Bury, South)

Tredinnick, Mr David (Bosworth)

Viggers, Mr Peter (Gosport)

Waller, Mr Gary (Keighley)

Wilshire, Mr David (Spelthorne)

James, Mr R G (Committee Clerk)

3 Fourth Standing Committee on Statutory Instruments, &c. Thursday 4 March 1993

[SIR GILES SHAW in the Chair]

Draft Water Undertakers (Rateable Values) (Amendment) Order 1993

10.30 am

The Parliamentary Under-Secy of State for the Environment (Mr. Robin Squire): I beg to move, That the Committee has consider the draft Water Undertakers (Amendment) (Order) 1993. The draft order is made under the powers in Schedule 6 to the Local Government Finance Act 1988. Lest hon. Members think that I am to make a long speech, let me assure them that I shall not. "The Order affects the liability for non-domestic rates of water companies that merge under the Water Industry Act 1991 and whose property is assessed according to prescribed rules—sometimes known as formula rating. The order will apply immediately to two companies that have already merged. On 31 March last year, two statutory water companies merged to enjoy greater economies of scale. The Newcastle and Gateshead water company merged with its neighbour, the Sunderland and South Shields water company, under the new name, North East Water Plc. It may help if I remind the Committee about the prescription of rules for determining rateable values and their application to the water supply industry. In certain cases, assessment of non-domestic property by local valuation officers is impractical. Some property presents difficulty in valuation because it is unlike anything that would be built today, or it is buried underground. Other property is so extensive that the task of valuation would be enormous, so there are powers for the Secretary of State to prescribe special rules for assessing the property. Those powers were exercised in 1989 in respect of the rateable values of the water supply industry in the 1990 rating lists. For the statutory water companies, we prescribed rateable values set by reference to the levels of assessment in the rest of the water supply industry. In addition, we prescribed how changes of circumstances affecting the companies would be taken into account through a factor based on the amount of water they put into supply, and made provision similar to that for other ratepayers to allow a smooth transition from bills under the old, general rating system to those under national non-domestic rates. The order provides that, subject to two minor points that I will explain, statutory water companies that merge shall have their rateable values aggregated. Each water company 4 is a monopoly in its area, so it is fair and reasonable to regard the value of the parts of the property as unchanged in the event of a merger. The two small adjustments are, first, that the annual updating factor, is changed to ignore bulk transfers of water between the companies concerned before they merged. Secondly, any entitlement to transitional phasing is removed when a merger takes place. With one exception, none of the companies expected to merge remains subject to the transitional arrangements. The exception is the merger that has already taken place to form North East Water but, because the constituents of the new company were moving to lower bills under the new system, the removal of the phasing will have the effect of reducing their rates bill very slightly. We consulted the water industry and North East Water about the proposals in the order. The draft was agreed without amendment. I commend the order to the Committee.

10.33 am

Ms Clare Short (Birmingham, Ladywood): I shall not detain the Committee either. This is a minor instrument that basically is boring and tedious and there is no division between us about it. I will point out one anomaly. The interests of some water companies are being looked after through their rating, while the water supplied to domestic customers in future will be metered, with people paying according to consumption rather than in accordance with the value of their property. Many families on low incomes are having their water supply disconnected. Dysentery is spreading in my part of the country and, I understand, elsewhere, but it would be out of order to talk about that at length. Given that the order concerns a technical matter and that there is no difference between us, I add only that we are making provision for water companies to be treated fairly, by rates, while domestic consumers are treated grossly unfairly because of water metering. There is also the possibility of danger to their health.

Mr. Squire: The basis for future charging, which is outside the order, has not yet been determined nationwide although, as the hon. Lady rightly said, it is likely that in some areas it will be based on usage—although by no means on all usage. The hon. Lady will expect me to say that the Government regard as highly excessive her comments about highlighting worries reported elsewhere.

Qn put and agreed to.

Resolved, That the Committee has considered the draft Water Undertakers (Rateable Values) (Amendment) Order 1993.

Committee rose at twenty-five minutes to Eleven o'clock.



Shaw, Sir Giles, (CHAIRMAN)

Betts, Mr

Goodson-Wickes, Dr

Greenway, Mr John

Harris, Mr

Hughes, Mr Robert G.

Short, Ms

Squire, Mr Robin

Sumberg, Mr

Tredinnick, Mr

Waller, Mr