Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateWednesday 30th September 2020
(4 years, 1 month ago)
Commons ChamberNon-Domestic Rating (Lists) Act 2021 Read Hansard Text
This text is a record of ministerial contributions to a debate held as part of the Non-Domestic Rating (Lists) Act 2021 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister of State, Ministry of Housing, Communities and Local Government (Luke Hall)
I beg to move, That the Bill be now read a Second time.
This Bill delivers on an important Government commitment and addresses ratepayers’ concerns by setting in law the date of the next business rates revaluation at 1 April 2023. By doing so, we can ensure that future business rates bills will better reflect the exceptional impact of the coronavirus outbreak on the commercial property market.
Business rates bills are based on the rateable value of a property, which, broadly speaking, represents its annual rental value. Rateable values, in combination with the business rates multiplier and reliefs, determine rates liabilities and are assessed by the Valuation Office Agency independently of Ministers. Since the current system of business rates was introduced in 1990, the Government have had frequent revaluations of rateable values to ensure that they remain up to date. Those revaluations ensure that the amount paid in business rates is fairly distributed among all ratepayers, having regard to the value of the property they occupy.
At the revaluation, all rateable values are based on the rental property market at a set date called the valuation date. The valuation date is set prior to the revaluation taking effect, so that the Valuation Office Agency has time to prepare the valuations. For example, at the last revaluation in 2017, the valuation date was 1 April 2015, which means that current rateable values are based on the market at 1 April 2015.
The next revaluation was scheduled to take effect from 1 April 2021 and would have been based on rental values at 1 April 2019. That was decided in spring 2018 and was the right thing to do at the time, but given what we now know about the coronavirus outbreak and its potential to affect the rental property market, it would not be right to continue with the 2021 revaluation. Continuing to implement the next revaluation on this schedule would have created additional uncertainty for ratepayers at an already uncertain time. It would also have meant that the underlying basis for bills would not have reflected the impact of the outbreak on the commercial rental market.
The Government therefore took the exceptional step of postponing the implementation of the next revaluation in order to give certainty to ratepayers and ensure that the next revaluation reflects the changes to market conditions as a result of the pandemic. The Bill will therefore set the date for implementation of the next revaluation in England and Wales at 1 April 2023. The revaluation will be based on rents at 1 April 2021, a date that we have already set using existing powers in secondary legislation.
The Bill will also change the latest date by which the Valuation Office Agency must publish draft rateable values in the lead-up to the revaluation. That date will be changed from 30 September to 31 December in the preceding year, which will allow us to align the publication of the draft rateable values with decisions normally made at any autumn fiscal event on the multipliers and transitional arrangements for the revaluation.
Kevin Hollinrake (Thirsk and Malton) (Con)
I understand the reasons why we have postponed revaluations on a number of occasions since 2010. Does that not illustrate the changing nature of the commercial world and the need to move to a different system that is more responsive to the realities of trading on our high streets?
Luke Hall
I thank my hon. Friend for his point. We are currently undertaking a fundamental review of business rates, and as part of that exercise we are considering the frequency of future revaluations. When deciding whether to have more frequent revaluations, we need to strike the right balance between more up-to-date assessments, which would flow from such a reform, and the uncertainty it could create, with more regular changes to bills, while also taking into account the time it currently takes to process changes and the impact that any changes that might be required would have on the current system. I certainly understand, however, the point that he has continually made about annual revaluations and how that could further improve the system. I am sure that will be considered.
Sarah Olney (Richmond Park) (LD)
I have listened carefully to what the Minister has said about the revaluation moving from April 2021 to April 2023, but I wonder whether there is a danger that those properties that might have a substantial revaluation downwards will be paying over the odds on their rates for two further years, at what we all know is going to be an incredibly tough time. I am thinking in particular of retail businesses and a very challenging trading environment. Will he consider changing the date from April 2023 to later in 2021, particularly given the comments he has just made about the need for more regular revaluation?
Luke Hall
I thank the hon. Lady for her point. I know it is a matter in which she takes a personal interest and that she has raised it with Ministers. The point stands that we have to have a system that takes into account the impact of the pandemic and, as is the case with the current system, the time it takes the VOA to go through the process. We think that this is the measure required at this time.
We took the step to postpone the implementation of the next revaluation so as to give certainty to ratepayers and to ensure that the next revaluation reflects the changes in the market conditions as a result of the pandemic. The Bill will therefore set the implementation of the next revaluation date in England and Wales as 1 April 2023. On revaluation based on the rents of 1 April 2021, we have, of course, already set that out in secondary legislation.
Business rates is a devolved policy area, but with agreement from the Welsh Government the Bill does also apply to Wales. As in England, the next revaluation in Wales will be implemented on 1 April 2023, and the date of publication of Welsh draft rateable values will also be changed to 31 December. Entirely different legislation applies in Northern Ireland, which has only recently implemented a revaluation from 1 April 2020, and Scotland, where I understand the Scottish Government have also committed to implementing their next revaluation on 1 April 2023. There is, therefore, a good degree of agreement across the UK that the next business rates revaluation is moved, to better reflect the impact of the coronavirus. Notwithstanding some of the points raised, I hope that is accepted across this House.
As I have said, this is an exceptional step and the Government remain committed to frequent revaluations of business rates. The fundamental review of business rates will look at not just the frequency of revaluations but how they are done, and will report on those aspects of the business rates system in spring. However, this is a step that we can take now to improve business rates bills, and that is why we have brought this Bill forward so quickly.
Jim Shannon (Strangford) (DUP)
I thank the Minister for bringing forward the Bill. He has set out why it is essential—I and others in this House believe it is, too—in the current economic situation. We need to do all we can to support our businesses and see them through this so that we can reap the rewards in the years to come. When businesses are better off, they are able to help the local economy and pay their taxes to Her Majesty’s Revenue and Customs, national insurance and council pockets. Rather than seeing this as a bail-out, as some do, I see it as a very sensible investment for the future.
Luke Hall
I thank the hon. Gentleman for his point. He is right that the Bill’s provisions form only part of the support that we have provided to ratepayers as a result of the pandemic. We have already ensured that eligible businesses in the retail, hospitality and leisure sectors will pay no business rates at all in 2020-21. This is a relief worth £10 billion, which, when combined with the businesses receiving small business rate relief, means that more than half the ratepayers in England will pay no rates this year. This forms part of the business rates measures introduced in England since 2016, which, when taken together, will be worth more than £23 billion over the next five years. These include the doubling of small business rates relief, changes to the threshold, which mean that 700,000 small businesses—occupiers of a third of all properties—now pay no business rates at all, and switching the indexation of business rates from the retail price index to the consumer prices index. That switch alone will save businesses £6 billion over the next five years.
This Bill forms a critical part of the package of reforms and support that we are introducing to business rates, which will result in a property tax that better reflects coronavirus-related challenges in the commercial rental market and provide support to those who need it most, and which is simple and easy for businesses to administer. I commend it to the House.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Kelly Tolhurst)
I thank all hon. Members for their contributions to this debate, but also for the ideas and the clear passion that Members across the House have on this issue.
I want to pick up on just a few points, because I know time is short. While I have great respect for the hon. Member for Blackburn (Kate Hollern) from our previous dealings, this country has been facing one of the most significant pandemics, and the response from this Government in support of business has been significant. Over the next five years alone, there will be over £23 billion in support for businesses. We have taken steps quickly and in an agile way, and we have been able to protect those jobs, as our constituents quite rightly look to us to do.
I would like to touch on retail, which has been mentioned a lot today. Quite rightly, when people think of rates and when people think of our communities, they look at our town centres and our high streets. Of course, in my previous role, where retail was very much a focus, this issue was not lost on me. One of the things we need to recognise is that, during the pandemic, we were able to double the amount of retail relief. The Chancellor expanded this to 100%, enabling more retail, hospitality and leisure businesses to make use of those discounts.
We also need to recognise, as hon. Members have highlighted, the changing nature of our high streets. Of course, my Department has launched the £1 billion future high streets fund, particularly to work with local authorities to make sure we can take our high streets to the next phase. We are working with local authorities and communities to develop the thriving high streets that we sorely need.
The Bill may be narrow and technical in scope, but in practice it does deliver on an important Government tax commitment by setting in law the date of the next business rate revaluation on 1 April 2023. Business rates are a local tax, rather than a national tax, which is why this small Bill is necessary. However, for many businesses, this Bill is as important as a national tax measure. We hear from rate payers that the accuracy of rateable values is important to the fairness of the business rate system. Frequent valuations ensure that business rates bills are up to date, and accurately reflect rental values and relative changes in rents. That is why we remain committed to frequent revaluations and why we had previously decided to have the next revaluation in 2021. That revaluation would have been based on the rental market at 1 April 2019, before coronavirus. I trust hon. Members understand the exceptional circumstances in which we decided to no longer proceed with the 2021 revaluation, and I very much welcome the support that has been expressed from across the House.
I would like to pick up on a point made by the hon. Member for Westmorland and Lonsdale (Tim Farron). We recognise the issue he raises relating to holiday lets. We have consulted on possible changes to the criteria which could enable more holiday lets to be registered for business rates. We will set out a Government response once we have considered that in more detail.
I also want to pick up on a point expressed by many hon. Members today about the fundamental review of rates. The Treasury has set out the scope and launched a call for evidence. It has been great to hear from hon. Members in this debate, including my hon. Friends the Members for Thirsk and Malton (Kevin Hollinrake), for Keighley (Robbie Moore) and for Ruislip, Northwood and Pinner (David Simmonds), the hon. Member for Richmond Park (Sarah Olney) and my hon. Friend the Member for Dudley North (Marco Longhi). I very much hope they participate fully in the call for evidence and feed in their ideas, so that the Treasury can evaluate them. The scope of the fundamental review includes reducing the overall burden, improving the current system, and considering more fundamental changes in the medium and long term. Hon. Members have rightly called for that. We do hear in our constituencies that the burden of that single bill is large for so many of our businesses.
These measures are particularly important for local authorities. My Department has held discussions with representatives from local government, including the Local Government Association. For local authorities, we intend to make any adjustments to the rates retention scheme that are necessary to ensure that locally retained income is, as far as practicable, unaffected by the revaluation. That will give local authorities the assurance they need regarding locally retained income and revaluations. We will also ensure that local authorities have what they need to issue the new bills in a timely manner.
The Bill sets the next revaluation in 2023, but ratepayers do not have to wait until then to benefit from the reforms we have made to the rating systems. They are benefiting now from the small business rates scheme, which has removed 700,000 small businesses from the rating, and from a £10 billion package targeted on the businesses most affected by the pandemic, which means that more than half of all ratepayers in England will pay no rates at all this year.
I thank colleagues for their contributions to the debate and look forward to the House supporting the Bill.
Question put and agreed to.
Bill accordingly read a Second time.
Non-Domestic Rating (Lists) (No. 2) Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Non-Domestic Rating (Lists) (No. 2) Bill:
Committal
(1) The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on Consideration and up to and including Third Reading
(2) Proceedings in Committee, any proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings in Committee of the whole House.
(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings in Committee of the whole House.
(4) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, to any proceedings on Consideration or to other proceedings up to and including Third Reading.
Other proceedings
(5) Any other proceedings on the Bill may be programmed.—(Eddie Hughes.)
Question agreed to.
Non-Domestic Rating (Lists) (No. 2) Bill (Ways and Means)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Non-Domestic Rating (Lists) (No. 2) Bill, it is expedient to authorise provision for, or in connection with, changing the dates on which non-domestic rating lists must be compiled.—(Eddie Hughes.)
Question agreed to.
Madam Deputy Speaker (Dame Eleanor Laing)
In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I shall now suspend the House for three minutes.
Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 20th October 2020
(4 years, 1 month ago)
Commons ChamberNon-Domestic Rating (Lists) Act 2021 Read Hansard Text
This text is a record of ministerial contributions to a debate held as part of the Non-Domestic Rating (Lists) Act 2021 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
Steve Reed
The hon. Gentleman makes an important point about the need for flexibility. The situation ahead is very unpredictable and uncertain, and we need the flexibility to support businesses and local economies, whatever circumstances we find ourselves in in a few weeks’ or months’ time.
On Second Reading, my hon. Friend the Member for Blackburn (Kate Hollern) asked the Minister a question that has not yet been answered, so I politely invite him to respond to it today. Given that the Valuation Office Agency has a backlog of 50,000 appeals, some dating back as far as 2010, will he share with the House what conversations he has had with the Treasury about how that backlog will be tackled? Because of the pending appeals, councils, which are responsible for collecting business rates on behalf of the Government, have had to divert more than £3 billion away from frontline services. That figure is very close to the in-year funding gap that is leading to cuts in frontline services across the country, as the second wave of infection rises and the economy slips into recession. What a difference that funding would make, if the Government would only make it available to local authorities and public services on the frontline.
Fixing the business rates system is essential if our high streets are to survive, but the Government must also recognise the key role that local government will play in driving local economic recovery. The Government’s broken promises on council funding will restrict town halls’ ability to support struggling local businesses. I am sure I do not need to remind the Minister just how important local authorities have been throughout the pandemic, and that is why it is so important that they are supported financially. Councils have lost £953 million from business rates income between March and July this year alone, according to the Local Government Association, and that accounts for more than a quarter of all income losses for councils over that period.
The Opposition welcome the measures in the Bill, but only as a first step in the much wider reform that is needed to create a level playing field for businesses and to support our high streets to recover.
The Minister for Regional Growth and Local Government (Luke Hall)
I thank the shadow spokesman, the hon. Member for Croydon North (Steve Reed), and my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) for their contributions.
We are now familiar with the two improvements that the Bill makes to the business rates system. It moves the date for implementation of the next revaluation in England and Wales to 1 April 2023, and it moves the latest date by which draft rateable values must be prepared in England and Wales to 31 December preceding the revaluation. Both changes can be found in clause 1. Clause 2 simply sets the extent and name of the legislation.
In order to understand clause 1, we first need to consider the main primary legislation for business rates, which is the Local Government Finance Act 1988. All of clause 1 is concerned with amendments to the 1988 Act. Part III of that Act concerns business rates, and it currently requires revaluations in England and Wales to take place every five years from 1 April 2017. Therefore, without amendment to the current law, it would require revaluation to take place in England and Wales on 1 April 2022. The Bill changes that date in a straightforward way by amending the 1988 Act to instead provide for the next revaluation in England and Wales to be on 1 April 2023. It does that both for local rating lists and for central rating lists held by my Department and the Welsh Government. Central lists contain large network properties, such as the electricity supply companies.
We can see the change in the Bill—clause 1(2)(a) adds the words “on 1 April 2023”; clause 1(3)(a) makes the change for England and clause 1(4) does so for Wales. The change to the timing of the draft rating list from no later than the 30 September to 31 December can be seen in equally simple terms in clause 1(2)(b) for local rating lists and clause 1(3)(b) for central rating lists.
That date is the deadline—the latest date by when draft rateable values must be prepared. The Bill will still allow the Valuation Office Agency to publish rateable values earlier than the end of December. We fully intend to give ratepayers as much notice as possible of their draft rateable values, the new multipliers and any transitional arrangements that might be included. Historically, these have been confirmed at the time of the autumn fiscal event, so ratepayers will continue to have several months to pay their bill.
My hon. Friend the Member for Ruislip, Northwood and Pinner raised a point about fiscal events and what might happen in different instances. It is worth putting on the record that it is required within law that the multipliers are produced as part of the local government finance settlement, but we are of course cognisant of the fact that a date in February would be too late. I restate our intention to make sure that they are provided earlier than that—in good time—if events transpire as my hon. Friend described.
Moving the date of the draft rating list also has implications for local government, which has a share in business rates income through the business rates retention scheme. On that point, I assure the Committee that my Department has held discussions with representatives of local government, including the Local Government Association. We intend to make any adjustments as are necessary to the rates retention scheme to ensure that locally retained income is, as far as practicable, unaffected by the revaluation. That will give councils the assurances they need over locally retained rates income. In the revaluation, we will also ensure that local government will have what it needs to issue the new bills in a timely way.
The hon. Member for Croydon North raised an important point about VOA appeals and was quite right to do so. It is worth saying that the new business rates appeals system introduced in 2017 is operating smoothly and ratepayers have been able to make appeals throughout this difficult period. The large volume of appeals under the previous list system showed why the system was in need of reform, with large numbers of speculative appeals clogging up the system and over 70% of appeals leading to no change. The VOA recently delivered some key improvements to the system, addressing specific concerns from stakeholders, including new features frequently requested by customers and agents to make the system easier to use.
The hon. Member for Croydon North is right to highlight that there are still some outstanding cases from 2010. The majority of those cases have been held up by litigation pending the outcome of a Supreme Court case concerning the rateability of ATMs. The Supreme Court issued a decision on the matter on 20 May this year, and the outstanding cases are now being settled. The VOA is engaging with stakeholders and has agreed a timetable to deal with these cases, and I will keep it under close review. He is right to raise that.
David Simmonds
Does my hon. Friend agree that, when it comes to the Valuation Office Agency, there is a need to recognise that some business rates appeals concern very significant amounts of money—so significant in some cases that they can imperil the financial viability of a local authority? We can cast our minds back to the circumstances of West Somerset District Council, with which I had some involvement in my time at the Local Government Association. The business rates appeal relating to the nuclear power station in that area, which was the main source of business rates for the local authority, was so big that local government reorganisation was the only solution to make the delivery of local government services in that area viable. In my area, Heathrow airport is the biggest single source of business rate payments, and changes in those payments can lead to significant in-year variations in business rates. Can he give me some assurance that his Department is focused on making clear to the VOA the importance of processing these appeals in a timely manner and giving sufficient scope for local authorities to manage the impact?
Luke Hall
I thank my hon. Friend for his intervention. He is entirely right to highlight some of the challenges, and I can give him that assurance. The fundamental review of business rates is considering a number of issues, including the frequency of future revaluations. He is right to make that important point.
I am afraid I cannot agree with the hon. Member for Croydon North about local government funding. We have had exchanges on that important point, and we have different views. The Prime Minister announced last week an extra £1 billion of funding for local government. I am aware of the need for certainty, and we plan to explain the distribution of that funding as quickly as we can. The £4.8 billion that has been provided to local government, including £3.7 billion of un-ring-fenced funding, has been a big support to councils, which are doing an incredible job up and down the country and delivering first-class public services in an extremely difficult and challenging environment.
David Simmonds
Does the Minister recognise that the complexity of local government finance is a huge part of addressing public concerns? A top-tier authority such as a London borough will have responsibility for a parking revenue account and a housing revenue account, and it will have business rates income and council tax income. Over and above that, it will expect to see regular income from fees and charges for services that it provides to the public on a traded basis. Although some of that is captured by the core spending power measure, which is usually used by his Department as the critical way to explain the financial position of local authorities specifically and the local government sector in general, does he agree that that could be improved, so that Members and our constituents could grasp in a little more detail the impact that these changes have in their town hall or civic centre?
Luke Hall
My hon. Friend makes a fair point about the need for clarity of message about the spending power of councils, and I am happy to continue conversations with him about how we can look at that. We believe that core spending power remains the most accurate available method to discuss local government finance. That is why we use it when highlighting, for instance, the 4.4% real-terms increase in local government finance this year as part of the local government finance settlement. I thank him for that intervention. He is absolutely right to put that on the record.
We are trying to give councils the tools they need to ensure that they can implement this revaluation, cognisant of the need to provide clarity as part of a fiscal spending event. I restate the point that if that was not possible, we would follow our obligations.
David Simmonds
Will my hon. Friend give some consideration to updating the list, which was originally conceived in the days of Lord Pickles when he was Secretary of State at the Ministry? He sought to gather best practice from across the local government sector. While we recognise that the reduction in the cost of biscuits at meetings was not going to bridge any budget gaps, many in the sector—I pay particular tribute to Sir Ray Puddifoot, the leader of Hillingdon, who has just announced his retirement—are masters of the art of looking at different ways to maximise local authority income within the framework provided by the Ministry, to provide the greatest possible consistency and financial stability to their local authority.
Luke Hall
My hon. Friend makes a hugely important point, and it is probably one that could be looked at in the even wider context of sharing good practice by local authorities that are doing such an incredible job. That is why we have tried to ensure, in the support we have tried to give councils during the pandemic, that they have the tools and ability to share best practice. We also facilitate that through my Department and our Government, whether that is the Brexit delivery board, for instance, or any of the other vehicles that we use to share good practice.
I put on record my thanks and appreciation to council representatives, groups and the sector as a whole for their role in sharing and providing good practice. The Local Government Association does an incredible job of bringing that type of guidance and support together and ensuring that there are good forums for councils to meet and discuss a wide range of issues, including the one that my hon. Friend rightly highlights on council funding and finances.
We know that it has been a challenging time for councils throughout this pandemic, but that is why we have distributed the funding in the way that we have, working closely with the Department of Health and Social Care. We are cognisant of the pressures still faced by local authorities, which is why our income scheme, the infection control fund and others have been so important to supporting local authorities throughout this pandemic.
We believe that this is a small but important Bill. We are extremely grateful for the support of Members across the House. We believe it is a common-sense solution to the problem faced by councils. I take on board the wider points about business rates that Members have raised today, and I therefore highlight the wider review of business rates that is being conducted. I am always willing to take further representations about the importance of that review. This is a common-sense Bill, and I am grateful for the support of the House.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
Third Reading
Luke Hall
I beg to move, That the Bill be now read the Third time.
Although small, this Bill delivers on an important commitment that is vital for ensuring a fair outcome for ratepayers, and I am glad it has been accepted by all Members across the House. I am grateful for the contributions of Members both on Second Reading and in Committee. I would certainly like to put on record my thanks to them for their support of the Bill. I am grateful to the shadow Secretary of State, the hon. Member for Croydon North (Steve Reed), and to the hon. Member for Blackburn (Kate Hollern), who has done a lot of work on the Bill and will know it backwards by the end of its passage. Finally, I put on record my thanks to the Clerks and the excellent civil servants in the Ministry of Housing, Communities and Local Government for helping to steer this piece of legislation through the House. This is an important Bill that represents just one part of the Government support provided to business across this country, and I commend it to the House.
Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateMonday 18th January 2021
(3 years, 10 months ago)
Lords ChamberNon-Domestic Rating (Lists) Act 2021 Read Hansard Text
This text is a record of ministerial contributions to a debate held as part of the Non-Domestic Rating (Lists) Act 2021 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, with the leave of the House, I will speak to both Bills on the Order Paper. I declare my relevant interests in commercial and residential property, as set out in the register.
Both Bills both provide targeted relief for ratepayers and support the reform of the business rates system, delivering on this Government’s commitments. I am pleased that, with the agreement of noble Lords on the Benches opposite, I am able to bring both Bills to this House today in a joint session. I will first set out the purpose of the lists—or revaluation—Bill, before moving on to the Non-Domestic Rating (Public Lavatories) Bill. I look forward to hearing the views of this House on both.
I know that as we tentatively begin to consider what our local economies will look like on the other side of the pandemic, it is important to recognise the concerns about the current business rates system held by the ratepayers who make up our commercial areas and high streets. It is with this in mind that I move the Non-Domestic Rating (Lists) (No.2) Bill. The Bill delivers on the Government’s commitment to set in law the date of the next business rates revaluation at 1 April 2023. This will ensure that future rates bills will better reflect the exceptional impact of the pandemic on the commercial property market.
The basis of a property’s business rates bill is its rateable value, which broadly represents its annual rental value. This is assessed independently of Ministers by the Valuation Office Agency. The agency has carried out regular revaluations of rateable values since the introduction of business rates in their current form in 1990. These ensure that the responsibility of paying the rates, which fund important local services, is fairly distributed among all ratepayers.
At each revaluation, all rateable values are based on the rental property market at a set date. This is known as the valuation date. A revaluation is an extensive exercise requiring many months of collecting and analysing rents, then the preparation of 2 million valuations. To give the Valuation Office Agency time to prepare these valuations, the valuation date is set two years before the revaluation.
Prior to the pandemic, we had wanted the next revaluation to take effect from 1 April 2021 and reflect a valuation date of 1 April 2019, but the impact of the pandemic on the commercial property market since 2019 means it would now not be right to continue with the 2021 revaluation. I hope noble Lords will agree that we could not have a revaluation that resulted in bills which did not reflect the impact of the pandemic. The Non-Domestic Rating (Lists) (No.2) Bill therefore sets the date for the implementation of the next revaluation in England at Wales at 1 April 2023. This revaluation will be based on rents at 1 April 2021, a date which has already been set in secondary legislation.
The Bill will also make a change to when the Valuation Office Agency must publish draft rateable values to support the smooth transition of the revaluation. This date will change from no later than 30 September to no later than 31 December in the preceding year. Doing this will allow us to align the publication of these draft rateable values with the timing of decisions relating to the multipliers and transitional arrangements—decisions which are normally made at the autumn fiscal event. Ratepayers will still be given several months’ notice of their bills for the following April onwards.
While policy on business rates is a devolved area, the Welsh Government have agreed that the application of the Bill should include Wales. This means that, as in England, the next revaluation in Wales will be implemented on 1 April 2023 and the latest date for publication of Welsh draft rateable values will also be changed to 31 December. Entirely different legislation applied in Scotland, where the Scottish Government have also committed to implementing their next revaluation on 1 April 2023, and Northern Ireland, which has only recently implemented a revaluation on 1 April 2020. There is therefore recognition across this country that moving the date of the next business rates revaluation to better reflect the impact of the pandemic is the right thing to do. I hope that this agreement is also shared in this House.
As I have said, this is an exceptional step, taken in exceptional circumstances, and the Government remain committed to implementing more frequent business rates revaluations. The fundamental review of business rates will look at the frequency of revaluations alongside how they are carried out. It will report on these aspects of the business rates system in the spring. However, this is a step we can now take to provide greater fairness and certainty to ratepayers.
Turning to the Non-Domestic Rating (Public Lavatories) Bill, this Government recognise the importance of public lavatories. That is why at Budget 2020 the Government recommitted to introducing a business rates relief for public lavatories. This small but important Bill delivers on that commitment and responds to calls from local councils. It would ensure that eligible public lavatories receive a 100% reduction on their business rates. It will cut the operating costs of public lavatories, particularly in cases where rates bills are a significant proportion of their running costs, and help to keep these important facilities open. The relief will apply to eligible public lavatories run by the private and public sectors, including those operated by parish councils.
Even now, when we are minimising the use of our public spaces and of public transport, the availability of appropriate toilet facilities to those essential workers who continue to keep our country running, such as taxi and delivery drivers, is of particular importance. Given how vital these facilities are, it is understandable that there has been public concern around the potential reduction in the number of available lavatories. I know that the sentiments of these concerns have previously been reflected in the contributions of many noble Lords in this House. Removing the business rates on public lavatories will make it easier for them to remain open. Furthermore, to ensure this measure is implemented quickly and support provided as soon as it can be, I am pleased to say that, subject to Royal Assent, this Bill will apply retrospectively from April 2020. This means that, for eligible properties, the relief will be backdated to the start of the financial year.
I hope your Lordships will allow me the opportunity to pay tribute to councils, and to the National Association of Local Councils, for their support for this Bill. Let me also thank the private organisations and businesses which, through their launching of innovative local initiatives, have formed the vanguard in the campaign to extend the provision of public lavatories. In particular, I would highlight the community toilets scheme, which has now been adopted by local authorities across the country. This scheme allows the public, in less restricted times, to make use of toilets provided by local businesses and councils without making a purchase. I would also highlight the support that the British Toilet Association has given to this scheme through its “Use Our Loos” campaign and the launch of the Great British Public Toilet Map.
Of course, for people who cannot use standard accessible toilets, it is about not just the number of facilities available but ensuring that the right facilities are available. This is why the Government have delivered in providing more “Changing Places” lavatories to ensure that everyone in this country, including those with special lavatory requirements, can be confident in using our public spaces. At the Budget last year, the Chancellor announced £30 million to fund “Changing Places” toilets in existing buildings and accelerate the provision of these vital facilities. We will announce the details of this funding in due course. The ability of people to enjoy our public spaces, and to support our economy, should not be determined by their disability or personal circumstances. I am proud of the commitments that the Government have already made on this important issue. I hope that the measures included in the public lavatories Bill will help to give people the confidence to get out in our public spaces and support our high streets, once it is safe to do so.
The provisions of both Bills before this House today act only to supplement the extensive support that the Government have already provided to ratepayers since the start of the coronavirus pandemic. In response to it, we have ensured that eligible businesses in the retail, hospitality and leisure sectors will pay no business rates at all in 2020-21. This is a relief worth £10 billion which, when considered alongside small business rate relief, means that more than half of ratepayers in England are paying no rates at all this year. Both Bills before the House form part of the critical package of support for ratepayers and reform to the system that this Government have committed to delivering. I commend both Bills to the House.
Lord Greenhalgh (Con)
My Lords, I thank noble Lords for their contributions to today’s debate. I shall do my best to respond to the nearly 30 speeches that preceded this final one, in relation to both Bills, starting with the Non-Domestic Rating (Lists) (No. 2) Bill.
What we have heard today reflects what the Government have already been hearing from ratepayers: that frequent revaluations are of great importance to the fairness of the business rate system. It is therefore only in the face of exceptional circumstances that this Government have taken steps to postpone the implementation of the next revaluation. As I have said, we remain fully committed to frequent revaluations, and considerations of the timings of these form part of the Treasury’s ongoing fundamental review of business rates.
As I set out earlier, the Non-Domestic Rating (Lists) (No. 2) Bill will also change the date by which draft rateable values must be published, ahead of the revaluation, from 30 September to 31 December in the preceding year. I recognise that there are concerns that this change will reduce the notice that ratepayers have of their business rate bills for the following year. However, rateable values are only one of a number of factors needed to estimate a rates bill, alongside the new multiplier and details of any transitional arrangements. Historically, these have been confirmed at the time of the autumn fiscal event and, as such, the measures included in the Bill allow for the publication of draft rateable values to be made alongside these decisions.
Of course, moving the date of the draft rating list also has implications for local government, which has a share in business rates income through the business rates retention scheme. On this point, I assure the House that we intend to make any necessary adjustments within the business rates retention system to ensure that locally retained income is, as far as is practicable, unaffected by the revaluation. My department has held discussions with local government representatives and will continue to do so to ensure that the sector has what it needs in order to issue new bills in a timely manner.
I will now address some specific comments. I credit the noble Earl, Lord Lytton, who gave a tour d’horizon of local government finance reform, starting with the Layfield review, which took place over 40 years ago—I was still at primary school at the time—and moving on to the Lyons review. This helped explain the long history of local government finance and how the reform of business rates has been approached since their inception in 1990.
I assure my noble friend Lord Moynihan and the noble Lord, Lord Addington, that the fundamental review of business rates will look specifically at reliefs. They made strong points about community and grass-roots sports. The provision has not cost the Exchequer anything. We are not talking about a stade municipal, but they need support at this difficult time. The noble Lords made their points very eloquently. I will make sure that I take their case to the Treasury and do my best for them.
I also point out that the fundamental review of business rates has not shifted; it was always due to end in spring of this year. It will also look at alternative ways of taxation. A number of noble Lords raised the move to online sales and mentioned specific retailers that seem to be making a whole lot of money. I am sure that the fundamental review will look at alternative taxes to capture the shift in our shopping habits.
I will do my very best on some of the other points raised. My noble friend Lord Bourne and the noble Lords, Lord Shipley and Lord Reid of Cardowan, mentioned frequency. We need frequent valuations to ensure that business rates bills are up to date, but we recognise that doing a revaluation is quite an undertaking. Balance is important. We remain committed to frequent revaluations, but this is a hiccup in the road because of quite extraordinary events.
The noble Baroness, Lady Thornhill, and the noble Lord, Lord Stunell, mentioned transitional relief and, under the current business rates system, we are required by law to provide transitional arrangements after each revaluation. The next scheme to apply following the 2023 revaluation will be designed once revaluation data is available, so it has not yet been designed.
The noble Lord, Lord Stunell, and my noble friend Lord Naseby raised the specific issue of the antecedent valuation date, or the AVD. I think the noble Lord, Lord Stunell, mentioned it on behalf of the Association of Convenience Stores. We recognise that business groups such as the ACS have asked us to consider reducing the gap between the valuation date for the revaluation, the so-called AVD and the date that revaluation takes effect. This would ensure that rateable values follow the rental property market more closely. The revaluation is an extensive exercise, requiring assessment by the VOA of 2 million valuations and this takes time. We have to balance the need for up-to-date valuations against the need to prepare accurate valuations. This is all about ensuring that balance.
To respond to the noble Baroness, Lady Pinnock, 1 April 2021 has already been set by statutory instrument, which I believe was laid before Parliament on 6 August 2020. The noble Earl, Lord Lytton, mentioned the VOA’s difficulties in dealing with the appeals case load. I think the figure of 40,000 appeals was mentioned by the noble Lord, Lord Kennedy. The Treasury continues to provide the VOA with the resources required to successfully deliver the valuations and property advice needed to support taxation and benefits. The Treasury is working closely with the VOA and its sponsor department, HMRC, to understand the VOA’s resource requirements. Funding requirements to deliver the appeals case load and the next revaluation will be considered as part of those ongoing discussions.
I will make one point of clarification on the £10 billion of business rates relief mentioned. That is over half of business rate payers not paying any business rates at all. Will that fall on local government? Absolutely not. These costs fall on the Treasury and are not borne by local government at all. In fact, the new burdens doctrine means that the administration of reliefs is also captured and borne by the Treasury, so it will not affect local council finances in that regard.
The noble Baroness, Lady Thornhill, and the noble Lord, Lord Kennedy, asked about when the Valuation Office Agency can clear the appeals it has received because of Covid. We are aware that the Valuation Office Agency has received a large number of checks and challenges from rate payers who believe that their rateable value in the current rating list should be reduced to reflect the impact of the pandemic. I understand that the VOA is currently considering these cases, but no decisions have been taken yet.
A number of noble Lords raised fundamental reform. It is fair to say that that is not part of this narrow Bill, but there is no doubt that the fundamental review in spring could be a springboard to the reform mentioned by a number of noble Lords. Only time will tell, however, and I do not want to give a sense of direction until we have had the benefit of that review in the spring.
The second Bill before the House today may be small but it is also crucial to the local authorities and private organisations providing public lavatories up and down the country. I am aware of concerns that the Bill applies only to those public toilets that are separately assessed for business rates.
The Government’s policy aims have been clear: this Bill is focused on providing targeted support specifically in circumstances where there are unlikely to be other publicly available facilities and where removing the cost of business rates could help keep facilities open. That narrowness of scope is entirely designed to ensure that we stop seeing more closures of public facilities. Widening the relief to cover all public toilets would significantly increase the cost of the relief and be less likely to target resources efficiently.
Subject to Royal Assent, the Bill will provide a mandatory 100% relief on all separately assessed toilets, including accessible lavatories, whether publicly or privately run, effectively removing business rates altogether for these properties. In meeting the commitment made in the 2020 Budget, the relief will be applied retrospectively from 1 April 2020, ensuring that benefits apply as soon as possible. Local authorities will be responsible for implementing the relief and will be fully compensated in the usual way.
I will now comment on the specific points raised by noble Lords. I thank the noble Baroness, Lady Randerson, for her extraordinarily detailed history of public toilet provision; the noble Lord, Lord Kennedy, for the virtual tour of public toilets in our stations; and the noble Lord, Lord Wallace, for his hygiene history of Saltaire. Much could be gleaned from those contributions.
I point out to the noble Baroness, Lady Andrews, that I am not sure that the answer to this question is a national strategy authored in Whitehall, and I share some of the scepticism of the noble Lord, Lord Greaves, partly because there is such a difference in public toilet provision throughout the country. The answer lies closer to the town hall than to Whitehall—respectfully, that is my view on the matter, notwithstanding the importance of this as a public policy point.
Turning to the issues raised by the noble Baroness, Lady Thomas of Winchester, nobly backed up by the noble Lord, Lord Addington, it is incredibly important that we have fully accessible public toilets. It is something you expect in an advanced western democracy such as ours; it ensures the full participation of all members of our community, which is particularly important in our town centres, which thrive on footfall. We need to make sure that they are accessible to all. That is the basis on which the Changing Places funding was committed in the Budget. I will be able to provide noble Lords with more detail on how the £30 million has been committed—the details of this funding will be made available in due course. This is incredibly important.
The vibrancy of our town centres and high streets is a personal concern of mine. Anyone who spends any time travelling from Fulham, say—we could have said Southwark, but I will take the example of Fulham—to the central activities zone knows the huge impact that this pandemic has had not just on our town centres throughout the country, but particularly on this great global city. I note the points made by the noble Lords, Lord Hain and Lord Reid of Cardowan, the noble Baroness, Lady Bakewell, and others—and the point about high streets made by my noble friend Lord Naseby and others. It is incredibly important that we think about how our high streets and town centres throughout the country can bounce back once this wretched pandemic allows us to be a little freer to move and enjoy life as we once did.
The answer lies not just in business rates but in supporting our high streets. We have a high streets fund and we need to think about flexibility in planning permissions. There are a number of policy tweaks that, I am sure, will make a difference; it is not just about this Bill. However, the point made by noble Lords is incredibly important.
Finally, I have noted the many helpful points raised by my fellow Peers, and I anticipate a plethora of amendments to keep us busy at the next stage. As always, I appreciate the knowledge and expertise in this House, and I am sure that we can all agree that we welcome and support the aims of these Bills. I commend both Bills to the House.
Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateThursday 4th February 2021
(3 years, 9 months ago)
Grand CommitteeNon-Domestic Rating (Lists) Act 2021 Read Hansard Text Amendment Paper: HL Bill 146-I Marshalled list for Grand Committee - (1 Feb 2021)
This text is a record of ministerial contributions to a debate held as part of the Non-Domestic Rating (Lists) Act 2021 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
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Baroness Pinnock (LD) [V]
My Lords, I remind the Committee of my interests, as recorded in the register, as a member of Kirklees Council and a vice-chair of the Local Government Association.
The debate on these amendments has been a relatively short but, I trust, helpful for the Government. As we have heard from my noble friend Lady Thornhill, and the noble Lords, Lord Kennedy and Lord Bourne, to cover the cross-party contributions to this debate, there are significant concerns about the timing of the assessment—or the antecedent valuation date, to give it its official title—of new rateable values. Some have experienced enormous challenges over the last year, none of which are of their making. The challenges of the pandemic have brought large parts of the hospitality and retail sectors to their knees. Now is not the time to undertake an assessment of rental values, which is in large part the basis of the valuation.
Will the Minister agree to discuss with the department the possibility of a delay to the AVD? This concern is at the heart of the amendment in my name and that of my noble friend Lady Thornhill. A six-month review would establish whether it is practicable to assess new rental values that feed into the final valuation. A delay is preferable but, failing that, a review is essential as it would highlight the difficulties of doing this while a pandemic is rife. The concerns from those of us who have had extensive local government experience is that local authority finances will be adversely impacted. Of course, the Government have given assurances that any loss of income from business rates will be fully compensated—at the moment. However, they have not, as yet, given such a commitment for when the revaluation comes live in 2023. Will the Minister provide copper-bottomed assurance that no local authority will lose income from the revaluation, and that any necessary top-ups will be provided? I look forward to the Minister’s response to these questions, which will inform any amendments to be tabled at Report.
As we discussed at Second Reading, the Government have chosen a particularly inopportune time for the revaluation of business rates. The valuation day is set for April of this year, and I urge the Minister to consider delaying the date and accepting the proposal in both these amendments. I look forward to his reply.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, I first point out my residential and commercial property interests as set out in the register.
I am grateful to the noble Lord, Lord Kennedy, for raising the points highlighted by his proposed new clause. The business rates system is unusual among taxes because its implementation is split between the Valuation Office Agency, which is an agency of HMRC, and local authorities. Many noble Lords have, like myself, experience of working in local government and know and understand how important the relationship is between the VOA, local authorities and my department in running the business rates system.
As the Committee would expect, one of the issues raised in our discussions with local government has been how revaluations impact on local government funding, so I am grateful to the noble Baronesses, Lady Pinnock and Lady Thornhill, for tabling their amendment on that subject.
In relation to the provisions of this Bill, we have worked closely with the VOA to ensure that a revaluation in 2023 can be delivered on time. The antecedent valuation date of 1 April 2021 was set by a statutory instrument laid on 6 August last year, since when the VOA has been preparing for the revaluation. It has already started to collect the information it needs to value 2 million properties and is on target to complete the exercise to plan.
As I discussed at Second Reading, Clause 1 also moves back the latest date by when the draft rating list must be published before the revaluation to no later than the preceding 31 December. In practice, we expect this to be around the time of the autumn fiscal event, when the multiplier and the transitional relief scheme are also announced. That will mean that rating lists will come to local government a little later than previous revaluations, but we do not expect this to mean any delays in the process of billing or estimating business rates income.
Local government of course needs the multipliers and details of relief schemes before it can calculate liabilities, and it is only once that full package is confirmed that bills can be issued. That is the case whether we are in the year of a revaluation or not. Nevertheless, I can assure my noble friend Lord Bourne and the Committee that my officials meet representatives of local government regularly and will continue to discuss these matters with them to ensure the smooth delivery of business rates bills.
More generally, my department and the VOA are continuously looking at how we can improve consultation and closer working with local government. In recent years the VOA has introduced a data gateway under which it is able to share information about ratepayers with local authorities in order to support the billing process, and last year we made regulations empowering local authorities to provide the VOA with information on a quarterly basis about the properties that ratepayers occupy. This was introduced with the support of local government and will ensure that the VOA has up-to-date information ahead of 1 April 2021, which is the intended valuation date for the 2023 revaluation.
One specific matter we have discussed with local government is how to reflect in the local government finance system the changes in business rates income at revaluation—and I recognise that this is the matter on which the noble Baronesses, Lady Pinnock and Lady Thornhill, seek reassurance through their amendment. The purpose of the revaluation is to ensure that business rates bills reflect the up-to-date rental value of properties.
This of course means that some ratepayers will see increases and some will see reductions as a result of the revaluation, and it follows that the business rates income for individual local authorities will fluctuate in the same way. Some local authorities will see their business rates income rise at the revaluation and others will see it fall. Between revaluations, local authorities can increase their business rates income by supporting growth and investing in their area. Their share of this type of growth is retained by them through the rates retention scheme.
In contrast, the changes we see in local authority income levels at the revaluation come mainly from the trends and variations in the wider national economy and the commercial property market. These factors are largely outside the control of individual local authorities and the Government’s view is that such changes in business rates income levels at the revaluation should not feed through into local government budgets.
Therefore, our intention—as it was at the previous revaluation in 2017—is that we will, as far as is practicable, ensure that retained rates income for individual local authorities under the business rates retention scheme is unaffected by the 2023 revaluation. For the 2017 revaluation we achieved this by adjusting the tariffs and top-ups in the scheme to reflect the change in income at the revaluation. We consulted local government on the mechanics of these adjustments from as early as the preceding summer. This was a collaborative process and one which we intend to repeat for the 2023 revaluation. This process will give local authorities the budget assurances they need regarding revaluation. As such, the timing of the revaluation and how it affects the distribution of business rates income should not impact directly on local government finances.
I hope, therefore, that I have reassured the Committee on the degree to which my department and the VOA work closely together and in partnership with local government on business rates matters, and on the steps we will take to protect local government finances at the time of the revaluation. These working relationships are important, and we are indebted to those in local government who offer their time and expertise to support us in running and improving the rating system.
I hope that, with these assurances, the noble Lord, Lord Kennedy, and the noble Baronesses, Lady Pinnock and Lady Thornhill, will agree not to press their amendments.
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
I have received no requests to speak after the Minister, so I call the noble Lord, Lord Kennedy of Southwark.
Baroness Pinnock (LD) [V]
My Lords, this group of amendments relates to the impact of the timing of business rate revaluations on the retail sector and, hence, the future of our town and city centres. In the first group of amendments, we discussed the timing in general terms, but my colleagues and I ask the Government to fully consider the implications of a revaluation on business profitability and survival.
For many small businesses, business rates are a significant overhead, along with the rent for the property. As my noble friend Lord Stunell reminded us, the Government’s original intention was to have a revaluation assessment in 2019, but this was moved because of negative forces affecting retailers. That negative impact has not gone away, as he said. We support the relief provided by the Government as part of their Covid response, but these are very uncertain times. This Bill proposes to push back the date on which the multiplier is announced from the September to the December prior to the new valuations coming live—in this instance, it means an announcement in December 2022. This will give businesses just three months to analyse the implications for them of the new rates bill they will be paying from April 2023. The amendment in my name and that of my noble friend Lord Stunell would enable the Government to consider the consequences of the new valuation for particular business sectors and particular regions before the multiplier was determined. An impact assessment would have to consider all the angles of the proposal and would throw light on the effect of the revaluation. It is a positive amendment which would help the Government get to a fair outcome in the revaluation of business rates.
As the Minister will know, in 1990, when the system was created, the multiplier was 34.8%. In 2020, that had risen to 51.2% for large businesses and just under 50% for small businesses. The multiplier is a crucial factor in the final business rate bill. The consumer prices index is the relevant figure used for the multiplier. Does the Minister think it is now time to reconsider the level of the multiplier? I suspect that the answer to my question will be that we should wait for the business rate review that the Government constantly promise. That will give no comfort to businesses, who will know from this Bill that they are expected to pay business rates under this outmoded scheme for at least another five years. There is obviously an effect on the profitability of individual businesses, but there is also the cumulative effect on town and city centres. As the noble Lord, Lord Kennedy, reminded us, one in 10 shops currently lies empty.
The revaluation is just one of the uncertainties that businesses are having to grapple with. The town centre funds and high-street funds that the Government have announced are all well and good, but they just paper over the cracks while the main issues affecting business survival are largely ignored in policy definition and implementation.
My noble friend Lord Addington and the noble Lord, Lord Moynihan, have raised an issue close to their hearts: the effect of business rates on amateur sports clubs. Both were right to do so and made the case with knowledge, experience, and powerful arguments which we fully support. Every community will have an amateur sporting activity at its heart, one that provides enjoyment and an opportunity to develop skills and teamwork through physical activity. They are vital ingredients of a healthy community. I urge the Minister to take note of the arguments made and come to Report with a proposal for action to help amateur sports clubs. I look forward to his response on all the points made.
Lord Greenhalgh (Con)
My Lords, this group of amendments allows us to consider the impact of the 2023 revaluation on rates bills, the multiplier and, specifically, our high streets, town centres and amateur sports clubs. Understandably the Committee, businesses and all ratepayers would like to know how the 2023 revaluation will affect rates bills. However, it will be some time before we know that. The carrying out of a business rate revaluation is a significant exercise which requires the careful application of the considerable expertise within the Valuation Office Agency. The two-year gap between the date on which valuations will be based, 1 April this year, and the date on which the next revaluation will be implemented, 1 April 2023, is necessary to ensure accurate rateable values. For this reason, we will not know the result of the revaluation until much later, in 2022. The Government will not therefore be in a position to make an assessment of the next revaluation in respect of any specific sector or the rating list as a whole within six months of the Bill receiving Royal Assent, as is sought by some of these amendments.
However, I can say that, once enacted, the Bill will ensure that business rate bills from 1 April 2023 will be based on rental values as of 1 April 2021. This means that the business rates due on properties based on our high streets and in our town centres or in the leisure sector will be up to date and better reflect the impact of the pandemic.
Certainly, an important part of rates bills when we reach the 2023 revaluation will be the level of the business rate multiplier. It may help the Committee if I explain more about the process of setting the multipliers for 2023-24. As with all years, we are required to finalise the multipliers as soon as reasonably practicable after the local government finance report has been approved, normally in February. For example, at the last revaluation in 2017, the multipliers were confirmed on 9 March. Therefore, we expect to finalise the multipliers for 2023-24 in late February or early March 2023. In contrast, the new rating lists will not be compiled until 1 April 2023. Therefore, it would not be possible to publish the assessment sought in the amendment proposed by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, before the multiplier was confirmed but after the list had been compiled.
Nevertheless, I appreciate of course that noble Lords and businesses will want to understand the impact of the revaluation as early as possible and before the multipliers are confirmed. In practice, we will announce provisional multipliers and the transitional relief scheme much earlier in the process, at the time of the autumn fiscal event.
It is our intention at the same time to publish the entire draft rating list. This means that, as well as being able to see the sectoral or regional impact of the revaluation, individual ratepayers, be they on the high street or in the sports sector, will be able to check their own rateable value and calculate their own rates bill. This will give an overall picture of the revaluation and allow ratepayers several months’ warning of their new rates bills.
I point out to the noble Baroness, Lady Pinnock, that the process of setting the multipliers is controlled largely by rules in legislation. We are required to make an adjustment to the multipliers for 2023-24 to offset the estimated change in total rateable value due to the revaluation after allowing for inflation and forecasted future appeals. It is that adjustment which drives the level of the multipliers in 2023-24.
We cannot by law set multipliers higher than that calculated from the adjustment. The Chancellor may by order set a lower multiplier, however. Noble Lords will understand that that is a fiscal matter decided by the Treasury as part of the normal Budget process, balancing the pressures on businesses with the need to fund vital local services, but I assure the Committee that the Government will have full regard to the impact of the revaluation before deciding whether to exercise that power and set a lower multiplier.
Our town and city centres are important hubs of our communities, and I am proud of the steps that the Government have taken to support this crucial part of our economy. While this Bill represents a postponing of the next revaluation, I know from the comments made at Second Reading that noble Lords appreciate that this is a step taken in the exceptional circumstances of the pandemic. However, as I have said, once we reach 2023, the new rateable values will better reflect the impact of the pandemic on rental values in locations such as the high street.
Lord Stunell (LD) [V]
My Lords, it is a privilege to speak after the noble Lord, Lord Thurlow, because he has more or less stolen my thunder, which means I can be really quite brief. He outlined very clearly a common thread in all the debates so far today: the absolute urgency of getting this problem fixed. We all know that it needs a longer-term fix, with a complete overhaul of the system, but, if we are to stay where we are with the current system unamended while we wait for that golden day of amazing reform, I fear that many businesses in the country will collapse and fail, not just in the high streets, but, as the noble Lord, Lord Thurlow, so elegantly and persuasively said, in the office sector and elsewhere. Something has to be done in the meantime—which, of course, was the burden of some of the earlier debates.
The point of the amendment and the impact review is to challenge the Government by saying that what they propose to do—or, perhaps more accurately, what they propose not to do—will leave many businesses in profound despair about how they will manage in the next 18 months or two years. It is obvious that many people will appeal. The number of appeals will be large, not small, and if we start with a backlog from the previous system, that will get worse still.
My noble friend Lady Bakewell asked the Minister some piercing questions that I hope he will respond to about the efforts being made to train panels and find the expert support needed to get the appeals in the system moving through at a proper level. What about the waiting times? Is the Minister, or indeed the VOA, setting a target to deal with this backlog to make sure that it does not pile up behind the new unfolding situation? The noble Lord, Lord Kennedy, has already pointed out the 40,000 appeals. I know that some of those are very specific to one or two topics, but that is not quite the point: one or two specific topics might crop up in this round of appeals and this revaluation that will cause similar problems.
So I strongly support the thrust of the amendment and I believe that we do need an impact assessment. We need some positive action from the Government and I look forward to hearing how the Minister proposes that that should happen.
Lord Greenhalgh (Con)
My Lords, this proposed new clause would require the Secretary of State to publish an assessment of the impact of the Act on the appeals waiting lists. The Government recognise the importance for businesses and local government of having an effective appeals system. The process we have put in place allows ratepayers to understand how their rateable values have been assessed and how to challenge those valuations where they feel that is necessary. Of course, changes to the revaluation cycle can impact on the appeals process, so I welcome the opportunity to consider this through the amendment.
I will first explain the system for appealing rateable values. The Government introduced the check, challenge, appeal system in 2017, known as CCA, because the previous system was failing. Over 1 million cases were received from ratepayers on the 2010 rating list. Many were submitted with little or no evidence and around 70% of Valuation Office Agency appeals resulted in no change. This delayed the VOA’s ability to deal effectively with well-founded cases.
The CCA system introduced a new “check” stage, at which ratepayers must first check and confirm the details of their property. This ensures that factual matters are resolved without any further action. At the next stage, “challenge”, the ratepayer must set out the basis of their case. This provides that only substantive cases progress into the system to be considered by the VOA. The final stage, “appeal”, allows the ratepayer access to the independent Valuation Tribunal, but only where they have exhausted discussions with the VOA. The amendment as drafted is concerned only with the last stage, “appeal”, but I trust that the Committee will want me to discuss more generally the CCA system.
By March 2020, the VOA’s CCA system had been showing modest volumes: around 158,000 checks and only 31,000 challenges. Of course, the pandemic has increased these numbers, and as of 31 December 2020 the VOA had registered over 440,000 checks and over 90,000 challenges. Of these, the VOA has resolved over 400,000 checks and 24,000 challenges.
Nevertheless, I know that some ratepayers and agents have concerns about how CCA operates. The Government acknowledge the issues ratepayers faced when CCA launched, particularly with the software and the use of the system. However, the VOA has improved, and continues to improve, its service for ratepayers. This includes changes to enable CCA users to submit multiple property claims, as well as improvements to the registration process to make it simpler and quicker to register.
In February last year my department published an interim review of the CCA system. Although we recognised that it was still too early to fully judge the system, the review concluded that the reforms were helping to reduce the number of speculative appeals and to improve engagement between ratepayers and the VOA.
I know that noble Lords are also concerned with a number of cases—around 50,000—that have been outstanding for longer from the 2010 rating list. In fact, the majority of the 2010 appeal backlog cases concern ATMs and were stayed pending the outcome of a Supreme Court case. So these cases did not impact on most businesses and the delay was largely outside the VOA’s control. The Supreme Court issued a decision on this matter on 20 May 2020 and I can assure noble Lords that these outstanding 2010 cases are now being settled quickly.
As the amendment we are considering highlights, the CCA process is, of course, affected by the frequency of revaluations. Looking specifically at the Bill’s provisions, to ensure that rateable values better reflect the impact of the pandemic, the Bill will move back the next revaluation to 2023. This of course will give the VOA and the Valuation Tribunal at least an extra year to clear cases on the 2017 rating list ahead of the next revaluation.
More generally, as I set out at Second Reading, the Government are undertaking a fundamental review of business rates. This includes a commitment to look at more frequent revaluations, and we would need an appeals system which supported that. The fundamental review will therefore also examine what reforms might be necessary to the CCA system to support more frequent revaluations.
The call for evidence on the review was published in July and asked respondents to provide proposals for changes to each stage of CCA to improve the system, while recognising ratepayers’ desire for a quicker resolution of cases and greater transparency. The Government are currently considering the responses to the call for evidence, and the review will conclude in spring 2021.
I hope that I have been able to reassure your Lordships about the importance that we place on delivering an effective, functioning appeals system that resolves cases in a timely manner. The proposed new clause raises important questions about appeals and the frequency of revaluations, which the Government are already fully considering as part of the fundamental review. I hope that, with those assurances, the noble Lord, Lord Kennedy, can agree to withdraw the amendment.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, Amendment 4, moved by the noble Baroness, Lady Pinnock, seeks to insert a new clause into the Bill which, as we have heard, would require an impact assessment of the timing of rates revaluations on local high streets and, importantly, would look at the impact on their ability to compete with businesses that operate online.
We have a serious problem with our high streets. The problem was in many cases a crisis before the pandemic, as we have discussed today on previous amendments. We can all point to the closed and boarded-up shops in areas that we know. The pandemic has created an even more serious problem for high streets and has put many businesses at risk. We need action from the Government to deal with all the issues that are destroying our high streets and our shopping parades.
We will all have seen the news that Boohoo is purchasing Debenhams and that ASOS is purchasing Topshop, but they are purchasing the names and not continuing with their high street presence. Why they are doing that is the question we need to look at. Clearly, they have taken the view that they do not need, or that it is too expensive to operate, a high street presence. This is why urgent action is needed. The issue with online retailers needs to be addressed. It has been discussed in the other place. My honourable friend the Member for Manchester Central, Lucy Powell MP, has said:
“The pandemic has accelerated changes to the way we shop, yet the government continues to disadvantage bricks and mortar businesses against online companies … The support on offer for struggling business has been a series of sticking plasters. Unless the Government puts in place a long-term plan to help high street businesses survive this crisis and recover on the other side, we will see more well-loved high street names vanishing, and many more jobs lost.”
I could not agree more. I also agree with the noble Lord, Lord Thurlow, that we need vibrant, healthy town centres. As he said, the power to help the high street is in the hands of the Government. I hope the Minister will address that point.
Lord Greenhalgh (Con)
My Lords, I am grateful to the noble Baroness, Lady Pinnock, and the noble Lord, Lord Shipley, for a further opportunity to speak about our high streets. As I outlined when we debated the second group of amendments today, we will not know the impact of the revaluation on rates bills until later in 2022, so it would not be possible to produce now the report outlined in the amendment we are discussing. However, we can be sure that, once we publish draft rateable values alongside the multiplier and the transitional relief scheme later in 2022, ratepayers will be able to see precisely how revaluation will affect their rates bills.
The noble Baroness, Lady Pinnock, raised an important point about online businesses compared to those that operate on the high street. Businesses which sell mainly or wholly online do not avoid business rates. They may also operate shops—many high street retailers also sell online—and they will require significant warehouse and distribution facilities, often in high-value locations. Nevertheless, business rates are a tax on the use of property and the rates bill is based on the value of the property. It follows that business models that occupy less property and perhaps operate from less valuable locations will pay less in business rates.
Property taxes have several key advantages over other forms of business taxation: they are relatively efficient to collect, they provide a relatively stable source of revenue to local government that helps ensure the provision of essential public services, and they provide relative certainty for ratepayers from one year to the next. However, there is undoubtedly a click-and-collect revolution, as outlined by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Kennedy. The Treasury’s fundamental review of business rates is considering alternatives taxes, including a potential online sales tax. The review will need to consider matters such as the economic impacts of such a tax and assess the concerns and risks that have been raised in the call for evidence.
Supporting the high street is a priority for us. In this year alone, no retailer on the high street is paying business rates. With the assurance that the matter of online business is being considered as part of the fundamental review and the updating of rateable values to better reflect the impact of the pandemic which will come from the 2023 revaluation, I hope that the noble Baroness, Lady Pinnock, and the noble Lord, Lord Shipley, can agree to withdraw their amendment.
Baroness Pinnock (LD) [V]
My Lords, I thank all noble Lords for their contribution to this short but very important debate. The noble Lord, Lord Thurlow, has stressed again the nigh impossibility of assessing rental values in the current climate. I hope the Minister will discuss with his department how rental values are to be assessed while the pandemic is rife.
My noble friend Lord Shipley reminded the Government of the potential of an online tax to create a level playing field for all retailers. I thank the noble Lord, Lord Kennedy, for his support. All noble Lords who have spoken have emphasised the urgency of responding to the situation facing our high street retailers. A revolutionary reform is needed. How much longer are online businesses to escape a fair assessment, compared with physical retailers? I am pleased that the Minister has just said that the Government are considering online taxes in the business rates reform, but I remind him that town centres cannot wait much longer. I beg leave to withdraw the amendment.
Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateMonday 1st March 2021
(3 years, 8 months ago)
Lords ChamberNon-Domestic Rating (Lists) Act 2021 Read Hansard Text Amendment Paper: HL Bill 146-R-I Marshalled list for Report - (24 Feb 2021)
This text is a record of ministerial contributions to a debate held as part of the Non-Domestic Rating (Lists) Act 2021 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
Baroness Pinnock (LD) [V]
My Lords, I draw the House’s attention to my relevant interests as vice-president of the Local Government Association and a member of Kirklees Council. The noble Lord, Lord Kennedy, has tabled a comprehensive amendment, which addresses issues of concern that were raised and debated in Committee. The Minister was unable to provide sufficient reassurances at that stage, hence today’s amendment, which has the support of the Liberal Democrats, as already clearly stated by my noble friends Lord Stunell and Lady Bakewell.
The Bill as it stands simply changes the date of the assessment of the revaluation to 1 April of this year and to delay the publication of the rateable values until 31 December in the year prior to its implementation. As was debated in Committee, these simple changes may have a profound effect on businesses, the prosperity of our high streets, local government finances and on the appeals waiting lists.
First, I will take the effect on local government finance. During Committee, the Minister sought to provide assurances about the financial impact on council income, and I thank him for that. However, there is a wider point of the double whammy on town centre businesses of the impact of Covid lockdowns and the competitive advantages enjoyed by online business. This is likely to mean that town centres will have several empty shops, which will undoubtedly have a knock-on effect on the remaining businesses.
The Government have some support for town centres, but much is limited and scattered around the country. It does not provide sustained help. Part of the answer lies with the radical reform of the whole business rate system. Will the Minister provide the House with a draft timetable for the introduction of a reformed approach, which, as several noble Lords have stated, has been promised for several years.
My noble friend Lady Bakewell has spoken from her experience of the impact of long appeal waiting lists on businesses and council services. As the Minister will know, councils have to set aside considerable sums for the refund of any possible successful appeal. Will he tell the House the total amount set aside by local authorities for this purpose? If he is not able to do so today, will he agree to set out the information in a letter to those taking part in today’s debate? Is the Minister able to consider an alternative to setting aside large sums for potential refunds that clearly make an impact on the day to day services—as described by my noble friend Lady Bakewell—that a council is able to provide?
The current system of business rating is failing, in that it considerably disadvantages those who have a physical presence as opposed to those purely providing an online retail offer. I am not opposed to online shopping but urge the Government to appreciate the value to communities of physical shopping. As the various lockdowns have shown us, there is an intrinsic value to individuals of physical shopping. One simple benefit is that of meeting another person, in the shop or serving at the till. For too many people living on their own, this may be the one chance in the day that they have to speak to someone.
There is also the benefit to communities as a whole. Local high streets provide a sense of belonging to a place. The importance of place-based services has shone through during the pandemic. Local shops and services are part of that sense of place and play a significant role in supporting well-being. We lose it at our peril.
That leads me to repeat the example I gave in Committee of a small shop in the town centre of Cleckheaton, which pays at the rate of £250 per square metre on its 30 square metres of shopping space. In contrast, a large online-only retailer, with an out-of-town warehouse occupying 40,000 square metres, also in Yorkshire, pays just £45 per square metre. If that online retailer were to pay at the same rate as the small town-centre shop, it would be paying a rates bill of £5 million. That would solve a lot of local government finance issues. The retail playing field is hugely skewed to the benefit of online retailers. The Government must act with urgency to address this imbalance and demonstrate that they really do support prosperous local high streets.
The further problem for the Government and Valuation Office Agency is the timing of the valuation assessment. My noble friend Lord Stunell said today that the changes that the Bill will bring may be too late to save more retailers from closing their high street shops. He suggested bringing forward the implementation date to put it in line with the proposals of Non-Domestic Rating (Public Lavatories) Bill, which was discussed last week.
The noble Lord, Lord Thurlow, drew attention in Committee and today to the timing of valuations, when so much of the high street has been closed for several months. Equally, it is not of benefit to town-centre retailers that the current valuation will be that on which their rates bills will be based for the next two challenging years. The Government should address this issue with urgency, but there is no evidence that they are doing so. I look forward to the Minister’s responses on a number of these issues and hope that they are more positive than those we received in Committee.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, I am grateful to the noble Lord, Lord Kennedy, for tabling this amendment, which allows us to return to the important matter of how the revaluation will impact on various parts of our economy. I entirely understand that the House wants to consider the impact of the next revaluation on sectors such as the high street and small business. I point out to the noble Lord that the £1 billion future high streets fund is not insubstantial and forms part of the £3.6 billion towns fund. It is an important part of helping our high streets to bounce back. Also, as has been mentioned by noble Lords, there has been the business rates relief scheme throughout the Covid pandemic, which has cost in the region of £10 billion. It is for the Chancellor to signal how that will continue in his Budget later this week.
A number of noble Lords, including the noble Baroness, Lady Pinnock, referenced the shift over many years, even before the pandemic, towards online and away from place-based shopping on our high streets. It is a matter for the Chancellor, who is carrying out a fundamental review of business rates, to consider how to address that. The interim report is due on 23 March and the review will conclude in the autumn.
Businesses have been calling for frequent revaluations and we had planned for the next one to take effect this year. It would have been based on rental values as at 1 April 2019. In the difficult circumstances in which we now find ourselves, this was clearly unsatisfactory, as those new rateable values would not have shown the impact of the pandemic. Instead, the Bill will move the date on which the next revaluation takes effect back to 2023. This will allow us to use rental values as of 1 April 2021, which will better reflect the impact of the pandemic.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I am very happy to support the noble Lord, Lord Addington, in his amendment. Both he and the noble Lord, Lord Moynihan, made a very powerful case when we were in Committee and they have made an equally powerful case today. I am very happy to support them.
As we heard from the noble Lord, Lord Moynihan, we want to be healthier; we have to get people doing more physical activity, because it will have great effects on their health. That is a good thing as people will live longer and have fewer problems with disease, and that will have a knock-on effect on our health service. That is the most important thing behind all this—getting people to be more active and healthier. The Government are currently running a major campaign, quite rightly, which you see on television, at bus stops and everywhere. I fully support that.
It is also important to ensure that local amateur clubs doing a variety of activities in their communities actually get people doing things. Where I live in south London, there is the Francis Drake Bowls Club—I often go past and see lots of people playing on the bowls green. There is also Lewisham Borough Football Club, an amateur club, and the athletics club that takes part on the track in Ladywell Fields. Those are the things that local people can do to become more active and physical, and if we can support them through the rating system, we should.
As the noble Lord, Lord Moynihan, said, all the amendment is asking for is a biennial report. The amendment is much more generous than I would have been as I wanted one every 12 months. If the Government accept this amendment, they will have to do everything that is in it anyway because they need to have good policy, and good policy needs facts and proper information.
I hope that the noble Lord will tear up his speaking notes to resist this and say, “I agree”. I look forward to hearing his response.
Lord Greenhalgh (Con)
My Lords, in my rush to respond to the noble Lord, Lord Kennedy, on the first amendment, I forgot to declare my relevant commercial and residential property interests as set out in the register, so I do so now.
I thank the noble Lord, Lord Addington, and my noble friend Lord Moynihan for their suggestion that I tear up my speaking notes and do what the amendment says. I will seek to reassure them that we have a real commitment to community and grass-roots sports. In that spirit I will refer to a number of things that the Government are doing. My family, friends and I all benefit from community sports and it is right that we do all we can to support community and grass-roots sport, as Members have highlighted.
As I explained in my response to the previous amendment, we will not know the effect of the revaluation on ratepayers for some time and certainly not within six months of the passing of this Bill. The same points apply to this amendment. However, I appreciate that the noble Lord and others want to understand how the revaluation will affect amateur sports clubs. It may therefore assist the noble Lord if I explain how these clubs are valued for business rates—I will try to make the incomprehensible comprehensible.
First, the Valuation Office Agency must, by law, value a property having regard to its current use. This means, for example, that when valuing the site of an amateur cricket club the valuation officer must have regard to its value to the cricket club and not its value to a developer. As you would expect, this important principle means that the rateable value of sports grounds is generally quite low.
The VOA publishes statistics on the rateable value of different categories of properties. The average rateable value in England of sports grounds is £12,000 but the value of many is much less than this and the median rateable value of sports grounds is only £6,000. That equates to a full annual rates bill of about £3,000, which for many will be reduced by the 80% mandatory rate relief. Under those circumstances, many sports clubs will find themselves with a rates bill of as little as £600 per year or £50 per month.
Of course, I appreciate that some clubs will find themselves paying more than this. Business rates reflect the specific circumstances of the property so some clubs, for example with more facilities than others, may find themselves paying more. We also heard in Committee that some clubs may be not eligible for the 80% mandatory relief for community amateur sports clubs. That is a matter specific to the individual clubs but I can understand that some will still have a particular interest in understanding whether their rates bill may change at the 2023 revaluation.
As I have said, we will not know the answer to that until much later in 2022, at the point when all clubs will be able to see their new rateable values. These valuations will be prepared over the next 18 months and, as with all properties, the VOA will first search for evidence of rents paid on sports grounds as a guide to value. As I have explained, to be good evidence these rents will have to reflect the value to the sports club. These rents should not reflect matters such as the development value where, for example, the club happens to be in a prosperous area. To the extent that the rental evidence, where available, shows that values have risen or fallen over the last six years, this will be reflected in rateable values at the 2023 revaluation.
The VOA expects to use rental evidence for most clubs but, whatever the valuation approach adopted for the property, the VOA is clear in its guidance that for non-commercial clubs valuers can also have regard to ability to pay before setting rateable values. The valuer should ask themselves if the rateable value represents the rent that clubs or organisations of the kind which occupy the type of sports ground concerned could reasonably be expected to pay. The VOA’s guidance specifically recognises that where income is generated from the occupation of these grounds, the costs of occupation will be barely covered despite voluntary assistance. Although I am unable to tell the noble Lord how amateur sports clubs will be impacted by the 2023 revaluation, I hope that this background to how they are valued is helpful.
The noble Lord, Lord Addington, has established to the House the vital importance of our community sports clubs. While the value of the 80% mandatory business rates relief to eligible community amateur sports clubs cannot be understated, I recognise the need for the Government to provide support beyond this, particularly throughout the duration of this pandemic. This Government’s commitment to sport is evidenced by the £220 million provided by Sport England to support community sports clubs and exercise centres since March 2020. In addition, the Government have put in place a £300 million sports winter survival package, which has been used to protect the immediate future of major spectator sports over the winter period, and a £100 million support fund for local authority leisure centres. In total, the Treasury estimates that around £1.5 billion of public money has gone into sports in the last year. I hope the House will agree that this constitutes a significant package of support that this Government have made available to sports clubs and exercise facilities of all sizes.
I hope that I have given the House some assurances about both the financial support that the Government are providing to our grass-roots sports sector, and the process and approach which will be taken over the coming months as amateur sports clubs are revalued by the VOA. We will continue to keep in mind the points on how we can support community sports at the grass-roots level. I appreciate the passion from both the noble Lord, Lord Addington, and my noble friend Lord Moynihan, but, reluctantly, I cannot tear up my speaking notes. Therefore, I hope that with these reassurances the noble Lord, Lord Addington, will agree to withdraw his amendment.
Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 9th March 2021
(3 years, 8 months ago)
Lords ChamberNon-Domestic Rating (Lists) Act 2021 Read Hansard Text Amendment Paper: HL Bill 146-R-I Marshalled list for Report - (24 Feb 2021)
This text is a record of ministerial contributions to a debate held as part of the Non-Domestic Rating (Lists) Act 2021 passage through Parliament.
In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.
This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, in moving this Motion, I express my thanks to noble Lords for their helpful insights and support throughout the proceedings. I especially thank the noble Baronesses, Lady Pinnock, Lady Bakewell and Lady Thornhill, and the noble Lords, Lord Kennedy, Lord Addington, Lord Shipley, Lord Stunell, Lord Moynihan, Lord Bourne and Lord Thurlow. I also thank the Local Government Association and the Valuation Office Agency for engaging with my officials during the passage of the Bill and, indeed, even before it was introduced in the other place.
Every revaluation requires the co-operation of all stakeholders involved in business rates. I thank the Rating Surveyors’ Association, the Royal Institution of Chartered Surveyors and the Institute of Revenues, Rating and Valuation. Their expertise and support have been, and will continue to be, a central part of the revaluation process. Finally, I thank my department’s Bill team—Nick Cooper, Rhys Tomlinson, Nick Pellegrini, Tom Adams and Lee Davies, as well as Sam Loxton in my own private office—for their support throughout this process. I beg to move.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
The Question is that this Bill do now pass. As many as are of that opinion shall say “content”.
I am sorry—I am being too quick this time. I call the noble Lord, Lord Kennedy.
Lord Thurlow (CB) [V]
My Lords, it is a privilege to be asked to make the concluding remarks from the Cross Benches as we complete the passage of this Bill. I congratulate the Minister on steering it through, notwithstanding unsuccessful attempts—certainly from me—to divert the debate down other routes and related avenues. However, it is fair to say that we have been debating this in something of a straitjacket; those of us interested in non-domestic rates had nowhere to turn, try as we might—indeed, try as we did—to draw the failings of the NDR system to the Minister’s attention. He was perfectly within his rights to wear his benign smile throughout—and a tremendous smile it is. Why a straitjacket? Because it is a two-clause Bill, strictly focused on timing alone, to which there were only two amendments; I am aware of the frustrations of at least one other Peer who wished to table one and was unable to do so within the scope of the straitjacket. I congratulate the noble Lords, Lord Kennedy and Lord Moynihan, on successfully navigating these restrictions and tabling their well-founded amendments, both of which I was happy to support.
There are important implications in changing the dates for compiling the lists to two years’ time; I do not disagree with the principle, but I am concerned that the valuation date for determining rateable value, as we have just heard from the noble Baroness, Lady Pinnock, is within weeks. Without rehearsing the valuable and revealing contributions at earlier stages, it would be unwise to ignore the fact that retail and office markets are in crisis. Retail values are in freefall and office values are in pandemic-related confusion as businesses reassess their space occupancy needs. How on earth can the Valuation Office Agency determine rental value in these conditions? I wish it well.
There will inevitably be dramatic reductions in rateable values and a corresponding fall in local authority revenues. Unless the rate poundage is increased, when rates paid could exceed rent, that would be a lightning rod to disaster and a knife to the heart of the small business retail sector in that retail economy. Will the Chancellor continue to support the sector, or could we expect those who do not pay enough to compensate for those who pay too much? I am afraid that, regrettably, the Amazons of this world that do not pay enough will not make up the shortfall.
To conclude, I say to the Minister that I see some light in this dark place I describe. At every stage of the debate in this House, we have had reference to the fundamental review already mentioned. This is the real opportunity to introduce fairness across the landscape of NDR—sadly delayed but vital and urgent. I very much look forward to its publication and the chance for us all to consider it in the shape of a new Bill, no doubt steered by the Minister and his generous smile. I hope, for the sake of the smaller business sector, that it does not arrive too late.
Lord Greenhalgh (Con)
My Lords, this has indeed been a very narrow Bill but a very broad discussion. I thank noble Lords for the many points that have been raised during its passage, particularly in considering how we can support our town centres, especially our high streets, that give such a high quality of life to the residents of our towns and cities.
I point out to the noble Baroness, Lady Pinnock, that we are very clear that we will ensure that we keep a close eye on the impact of timings as this exercise is carried out and that we intend to look at the future of business rates. However, that is predicated on the fundamental review of business rates taking place later this year. I also assure the noble Lord, Lord Thurlow, that, as far as is practical, local authorities’ finance will be protected via the business rates retention scheme and other measures to ensure that there should be no material impact on local authority finances.
A number of issues have been raised, and it has been an important Bill.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
A bit of a longer debate than I anticipated, but a worthy one none the less.