Non-Domestic Rating (Lists) (No. 2) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateMonday 18th January 2021
(3 years, 11 months ago)
Lords ChamberNon-Domestic Rating (Lists) Act 2021 View all Non-Domestic Rating (Lists) Act 2021 Debates Read Hansard Text
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.