Non-Domestic Rating (Lists) (No. 2) Bill

Baroness Thornhill Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 18th January 2021 Lords Chamber

[Baroness Thornhill (LD) [V]]

I remind the House that I am a vice-president of the Local Government Association. As my noble friend Lord Shipley and others have so ably stated, we have few issues around the specifics of the Bill and the most pertinent points have already had a good airing during this excellent debate. Like many others speaking today, I believe that the time for tinkering with and tweaking the business rates system has long passed. I eagerly await the outcome of the review and urge the Government to be both bold and radical.

During my years as the elected Mayor of Watford, in any discussion with businesses in the town, business rates would crop up. I had a set patter about how we, the local authority, did not set business rates, nor did we get all the money into our coffers; we were merely the collector. Interestingly, that fact was always greeted with incredulity. The first complaint was that the rates were too high, of course, and the next that the system of exemptions and reliefs was too complicated; it is. Then, a matter of which I knew nothing at first was the long gap between valuations and the real problems that led to. They clearly felt that such valuations were out of kilter with local economic realities and should be more frequent. In previous iterations of the Bill, as was mentioned by the noble Lord, Lord Bourne, a period of three years was proposed, but it has now gone back to five years, while many groups press for annual valuations. Perhaps the Minister could explain the thinking behind that.

There is no doubt that the Bill, in kicking back the revaluation by a further year, will give businesses some stability, which has been broadly welcomed. But I fully agree with the noble Lord, Lord Naseby, on the AVD, and I too would like the Minister to explain the rationale for the next valuation to be based on April 2021 costs and rentals. That is surely too early for the full impact of the pandemic to hit, and yet it will not be implemented until April 2023. As my noble friend Lord Stunell said, businesses that get a valuation downwards have to pay more rates for a further two years, at an already difficult time.

If I really wanted to see sparks fly in the conversations I mentioned earlier, I only had to mention transitional relief schemes. This is but one of a number of examples in which the current web of reliefs hinders the system and, more importantly, contributes to further unfairness. It needs serious reform. There was also always “Don’t get me started on appeals,” usually with a look towards the heavens. Appeals have already been mentioned by several noble Lords, as well as the backlog of 50,000 cases for the 2010 and 2017 lists. Minister, is there a closing date for the appeals from the 2017 list yet? Within the forthcoming reforms, is there consideration for a much shorter window of time following a revaluation—say, six months—in which to appeal?

It has long been recognised that the Valuation Office Agency is not agile enough to keep up with and adapt to changes in demand within sectors, such as the shift towards online, which has been much mentioned this afternoon. The case could be made that delayed devaluations have, in fact, acted as a subsidy for online retail. While logistics space has massively increased as a result of this trend, it is not taxed anywhere near as heavily as retail shop space. Are the Government looking to address this particular unfairness in their upcoming reforms? The VOA has been criticised for being difficult to deal with and cumbersome, and its valuations as often opaque and inconsistent. Minister, will any consideration be given to local government being the responsible authority for valuations, working in genuine partnership with local experts who know their patch and can respond to change more quickly? This happens successfully in some other countries, often alongside annual revaluations. It can be done.

The principle behind the local retention of business rates is good but, unfortunately, in reality it has meant that local authorities are now competing with each other, not only to attract inward investment, but even to outbid each other in the now controversial commercial entrepreneurial investments. I feel that, particularly in a two-tier system, economic areas are just too small to be really effective and local enterprise partnerships lack the powers and finance to make a difference.

Combined authorities, however, are showing what can be done to drive improvement across larger economic areas. Minister, to encourage and incentivise councils to work together on economic development, which is surely needed, would the Government consider allowing areas that agree to work in this pooling system to keep 100% of their business rates? Finally, can the Minister at least hint at whether it is the Government’s intention, eventually, to transfer the powers and freedoms around businesses rates that are currently available to elected mayors in combined authorities to all local authorities?