Non-Domestic Rating Bill

Earl of Courtown Excerpts

Report stage
Tuesday 19th September 2023 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

My Lords, I think the noble Lord, Lord Shipley, for his amendments and for his clear introduction to them. I also thank the noble Earl, Lord Lytton, for his contribution.

As we have heard, these amendments relate to rating agents, anti-avoidance, discretionary relief and viability rights, all of which are really important issues that we need to discuss. Amendment 4 would remove the ban that currently prevents relief being given to certain buildings. We know that the Local Government Association is very supportive of that amendment, because the current rules prevent councils from giving discretionary relief to their own hereditaments. As we have heard, both now and in Committee, this is particularly an issue with local authority markets. It became problematic particularly during Covid-19 because local authorities were unable to give those markets the business rates relief that other businesses were able to benefit from, which meant that many local authorities had to subsidise those rates in order for the markets to continue operating.

I am assuming that the ban is to prevent conflicts of interest; perhaps the Minister could confirm why it is in place. If that is the case, will the Minister consider whether there any added flexibility should brought into this prohibition so that, in times of particular need, councils can be flexible? If the Government are not going to accept the amendment, let us look at what else we could do to help.

Amendment 16 would start the process for accrediting ratings advisers. The reason I want to talk about this amendment in particular is that there seems to be an increasing number of reports of rogue agents claiming that they can help businesses. It seems to be a growing problem. There are concerns that the situation will be further exacerbated when the Government bring in annual returns and the duty to notify in their reforms, partly because that complicates the system.

Our concern is the impact of that on the smaller retail and hospitality businesses in market towns right across the country. They may not be seeing the reductions in their rates bills that they should be in the revaluation from 1 April, making them more vulnerable to approaches by rogue rating surveyors who promise that they will help them negotiate a new revaluation but do not deliver and disappear, leaving the businesses high and dry. That is our particular concern. So do the Government recognise that this is an increasing problem? If so, perhaps we should look at tackling it in the way in which the noble Lord, Lord Shipley, has proposed. We cannot allow this situation to continue and to get worse, because it will affect many small businesses that simply cannot afford it.

Amendment 17 exempts social infrastructure sites—such as bus shelters and telephone boxes—which have advertisements from paying business rates. I am not sure that the Minister will have this figure at his finger- tips, but it would be interesting to know how much is currently generated from this kind of advertising: what impact are we talking about?

Finally, Amendment 18 relates to anti-avoidance. I know that the Government have recently consulted on this, so it would be good to know exactly what action they are looking to take.

[The Earl of Courtown (Con)]

My Lords, I thank all noble Lords who have contributed to this relatively short and interesting debate on a wide-ranging subject. It is good that the noble Lord, Lord Shipley, has given us the opportunity to look into these matters a little further.

I will go through the amendments, but not necessarily in chronological order, so noble Lords will have to bear with me. I understand that the noble Lord, Lord Shipley, tabled Amendment 16 based on his concerns regarding the conduct and sharp practices of some rating advisers, as mentioned also by the noble Baroness, Lady Hayman of Ullock, and the noble Earl, Lord Lytton. I sympathise with and recognise the concerns behind this amendment and welcome the opportunity to discuss the work the Government are doing to address them.

I reiterate in the clearest terms that most rating agents are legitimate organisations registered with a professional body. Nevertheless, as my noble friend the Minister has said previously, we know that a minority of agents seek to take advantage of their clients through predatory practices and exploitative contracts, or by actively promoting rates-avoidance strategies. The Government have published a wide-ranging consultation, as mentioned by the noble Earl, Lord Lytton, on avoidance and evasion in the business rates system. The consultation includes a specific chapter on those rogue agents with whom this amendment is concerned and seeks views on how the Government could address any issues arising from their conduct. While there is no regulatory regime that covers all rating agents, a set of agent standards has been jointly published by the three professional bodies: the RICS, the Rating Surveyors’ Association and the Institute of Revenues, Rating and Valuation.

Recognising the importance of the professional bodies to the system, the Government will, as a matter of course, take the views of these organisations into account and will be engaging with them through the ongoing consultation process. The Government also provide advice on GOV.UK on how to find a reputable agent and the considerations that businesses should take into account when deciding to appoint an agent. Furthermore, the Valuation Office Agency is currently developing a standard for all rating agents, in alignment with existing HMRC agents’ standards.

The Government are keen to work collaboratively with rating agents to tackle poor practice. Our aim is to find a balanced solution that prevents sharp practice but does not impinge on the legitimate work of agents up and down the country.

Amendment 4 would remove the legislative bar which prevents local authorities awarding discretionary rate relief to their own properties. I understand that the concerns of the noble Lord and the noble Baroness are primarily with the application of business rates to local authority-run markets. The Government fully recognise the contribution that markets make to the vibrancy and diversity of our communities. We are supporting local authority-run markets with access to the £2.6 billion towns deal programme and the £1 billion Future High Streets Fund. We have also made permanent the permitted development rights which enable markets to be held by local authorities for an unlimited number of days.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I will say very little, other than to echo what the noble Lord, Lord Shipley, has said. The noble Earl raised this issue in some detail in Committee, but we have not had the answers that he asked for. He is not satisfied that Clause 14 is necessary or designed to do what it wants to do. He has great experience in this area and we need to listen carefully to the concerns that he has raised. We very much support the fact that the noble Earl has brought this back to the House’s attention and look forward to the Minister’s response.

[The Earl of Courtown (Con)]

My Lords, I thank the noble Earl, Lord Lytton, for this short debate, which has been fascinating. He has quite rightly gone into some detail on this issue, and I hope I will be able to explain part of the thinking behind our inclusion of Clause 14 in the Bill. However, as the noble Lord, Lord Shipley, suggested, once I have read Hansard I will ensure that, if we do not feel we have not gone far enough in explaining our thinking, we will write to the noble Earl, making that available to all noble Lords and placing a copy in the Library.

Amendment 14 gives us the opportunity to consider the reasons behind Clause 14, and I believe the House will have found this debate useful. Where I trust we have agreement is on the role of revaluations, as they have been the main subject of debate on the Bill. Revaluations allow us to reflect in rateable values changes in economic factors, market conditions or the general level of rents for a property. These are familiar terms for describing a revaluation, not just because we have been using them throughout the Bill but because they appear in judgments when the courts have considered this matter.

Clause 14 will therefore ensure that changes in legislation, guidance and advice from public bodies are considered among the economic factors and market conditions for a property and should be reflected at a general revaluation. The noble Earl is concerned that the clause will go further into matters that should not be left until a revaluation and do not concern the general market for a property. However, our view is that the framework of legislation and guidance within which a property is used is in fact a central part of the economic factors and market conditions for that property.

As the noble Earl remarked, he kindly sent a list of examples to the department, and I shall deal with that point now. He raised a number of examples and considered how they should be treated under Clause 14. I hope noble Lords will understand that it is not possible to provide a case-by-case analysis during this debate on these examples, as each will depend on facts. Whether a particular event would result in a material change in circumstances, under the new law in the clause, would depend on whether it was attributable to the relevant factors listed in the clause.

The Government published a technical consultation in 2021 which explained how they intended the law of material changes of circumstances to operate. We also included a section on this in the Explanatory Notes to the Bill. The Valuation Office Agency will of course publish guidance on material changes to circumstances in its rating manual and, as always, it will work closely with professional bodies, with which the noble Earl is familiar, in ensuring that the rules are explained and understood. If, as has been suggested, we allow the matters listed in Clause 14 to be assessed between revaluations as a material change in circumstances, the impact on the rating system may be considerable. It would amount to the Valuation Office Agency conducting a non-stop real-time revaluation, revising large sections of the rating list as and when there were changes in the legislation, guidance or advice concerning how properties can be used.

Such an exercise would jeopardise our objective of moving to more frequent general revaluations.  It would also mean some ratepayers benefiting from a set of more favourable economic factors in their valuations than others.  The clause will ensure that all ratepayers are assessed against the same economic considerations at a set date—the valuation date for the revaluation—and that is updated for all only at the following revaluation. Clause 14 will therefore maintain the stability of the rating system, and it is not surprising that it is supported by the Local Government Association.

As my noble friend explained in Committee, there are safeguards in the clause. I shall not repeat them but, for example, the clause does not apply to changes in the physical state of the property, which will continue to be reflected as and when they occur.

This is not a step we have taken lightly; we consulted on our intentions in the technical consultation in the business rates review. It is a necessary step, to which I hope the House will agree.

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Moved by

[The Earl of Courtown]

20: The Schedule, page 55, line 30, at end insert—
“67A In section 140(2) of the Act (separate administration in England and Wales)—(a) omit the “, and” at the end of paragraph (a);(b) omit paragraph (b).”Member's explanatory statement
This amendment would omit section 140(2)(b) of the Local Government Finance Act 1988 which is no longer needed as a result of the provision being made by clause 15 of the Bill, which makes separate provision about the calculation of multipliers for England.