Lord McKenzie of Luton
Main Page: Lord McKenzie of Luton (Labour - Life peer)Growth and Infrastructure Bill
Lord McKenzie of Luton Excerpts“(11) This section shall not come into force until the Secretary of State has—
(a) published detailed up to date comparative estimates of the total numbers of those ratepayers who would be liable to pay more or less as the case may be if this section were or alternatively were not brought into force, and(b) consulted formally with those likely to be affected by the bringing into force of this section, after publishing the information required under paragraph (a).”
Lord McKenzie of Luton
My Lords, this amendment was retabled before we had the opportunity to meet representatives of the Valuation Office Agency. I thank the Minister for organising that meeting, representatives of the VOA who turned up and engaged with us, and other noble Lords who attended.
Frankly, however, the meeting did not move us much further forward except to the extent that it reinforced our concerns about the composition of the data relating to the revaluation deferral. When we debated this in Committee, the Minister was reassuring on the figures, saying:
“The agency believes that 800,000 ratepayers may face increases, compared to only 300,000 seeing reductions. The Valuation Office Agency provides pretty detailed and good valuations”.—[Official Report, 4/2/13; col. 124.]
One thing we know is that the information is not detailed. The VOA report and our meeting yesterday confirm that the analysis is “high level”, is based on limited rental data, was not a projection of the valuation on which a 2015 revaluation would be based—2013—and has not been subjected to the rigour of moderation and validation. Moreover, the categorisation “en bloc” of the “other” category of hereditaments as properties that would see a tax rise we consider to be flawed. This undermines the very basis of the claim that 800,000 ratepayers may face tax increases from a revaluation and only 300,000 a reduction.
We accept that, on the basis of the information available to the VOA, it may not have been possible to do a detailed disaggregation, but that is no excuse for making sweeping categorisations and drawing broad conclusions therefrom. The Government espouse the benefits of stability for business by deferral of the revaluation, but this would have had much greater credibility had it been supported by a prior, robust consultation. At least those who might have anticipated a business rate reduction could have had their voices heard.
Meetings with those affected once the decision has been taken are all very well, but they are no substitute for proper consultation. There is nowhere we can go with this amendment from where we are, but I am bound to say that it smacks of bad policy-making, no prior consultation and insufficient data to support the policy. It is a curious policy anyway that prays in aid of the Government’s own failure—the lack of growth in our economy and the upheaval that this is bringing to business—to justify this departure from what has been a consensus approach to this aspect of local government finance for more than 20 years. I beg to move.
The Earl of Lytton
My Lords, it is an invidious task to be rising at this hour to address this important issue. I, too, am very grateful to the Minister for having organised the meeting with officials from the Valuation Office Agency, some of whom I would even classify as old friends. As I said to her at the end of meeting, I was better informed but, I am afraid, none the wiser.
The Valuation Office Agency maintained that no more detailed breakdown of the figures was available and that it had disclosed everything that was at its disposal, and I have to accept that. However, I point out that it concludes that there are 817,000, which has been rounded down in popular parlance to 800,000, business hereditaments out of a total of 1.7 million nationally that are said to benefit from the deferral of the revaluation. We also learnt that 64.6% of that 817,000, or 528,000, are classified in a very broad and non-subdivided category of “other”: that is, “other” than the bulk classes of retail, office and industrial. The 528,000 represents 31% of the 1.7 million hereditaments nationally. The narrative goes that all the 528,000 would be gainers under the deferral.
Given the spread of gainers and losers in the far smaller bulk classes, the assertion that the whole 528,000 in that “other” class of non-bulk properties constitute gainers stretches credibility. In truth, and from what I know of the market, it is most unlikely to be correct. Moreover, if it is true that the Valuation Office Agency has no other more detailed breakdown of “other”, it is difficult to see how it could have reached a conclusion on the 817,000 beneficiaries. It is an untested, apparently untestable and unverified basis of valuation opinion.
My own view, for what it is worth, is that around 600,000 to 700,000 businesses will be losers under this proposal, but I can no more prove that than the Valuation Office Agency is able to convince me of the veracity of the figures, except that I have used the same figures that it has used. I think this House should be furnished—indeed, I believe Parliament is entitled to be better furnished—with information that is accurate in order to enable it to make an informed decision. We are told that that additional information cannot be provided without spending some £40 million on a revaluation, as I think the noble Baroness said during the previous stage of the Bill. That is not my understanding of the typical cost of an impact assessment on tax changes of a type that I used to get involved with when I was in the public sector. I do not think that consultation of the sort that the noble Lord, Lord McKenzie, has suggested could come anywhere near that sort of figure.
Lord McKenzie of Luton
My Lords, I start by thanking the noble Earl, Lord Lytton, and my noble friend Lord Smith for supporting the amendment and recognising that we have a shared frustration about the process that has been undertaken to deal with this deferral. I am not sure that it is a shared frustration, but we have a shared understanding of how that 530,000 “other” block was dealt with. We are each convinced that the way with which it was dealt does not justify the conclusion that was reached on the 800,000 and the 300,000. However, we recognise that we are not going to get any more of a detailed breakdown from where we are.
If we follow the line of certainty and how important it is to its logical conclusion, we would never change. We would never have a revaluation. The purpose of regular revaluations was to deal with the equity of the situation: that the burden should be shared fairly between businesses on an updated, regular revaluation. That was the whole purpose of it. My noble friend Lord Smith made a very telling point, which he has made previously, that the volatility that the Government are seeking to buy off by this deferral is in a sense being paid for by businesses that have done less well in recent times and that might have expected some reduction in their business rate assessment. That seems unfair to me.
My noble friend Lord Smith said that we may have been seen as the “awkward squad”. I confess to that and ask for another 200 offences to be taken into account. That is our job. Both the noble Earl, Lord Lytton, and my noble friend Lord Smith have concerns that the rhetoric and the analysis that are coming from this exercise do not altogether chime with what they see and understand on the ground, given their individual expertise and council leadership. Indeed, there are messages from some of the business community. The CBI is on record as suggesting that the benefits of this deferral have been overstated.
We are where we are on this. We are not going to change it from where we stand today. We will clearly monitor the situation.
On consultation, proper consultation is consulting in advance, before you take a decision, to get people’s reactions. I do not know—perhaps I can ask and the Minister can write to me—at what point the prospect of the deferred revaluation was first raised with ratepayer representatives. It would be helpful to know the starting point of that consultation. Having said all that, given the hour, I beg leave to withdraw the amendment.