Local Government Finance Act 1998 (Non-Domestic Rating Multipliers) (England) Order 2017

Anneliese Dodds Excerpts

Monday 29th January 2018 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to see you in the Chair, Mr Austin. As always, it is good to sit across the Committee Room from the Minister—we have a lot of dealings with each other at the moment.

As the Minister explained, the order enables the Government to uprate the business rates multiplier by the consumer prices index, rather than by the retail prices index. Labour welcomes that change. In fact, we argued for it long before the 2017 Budget, and it has been a matter of some frustration that it has taken the Government so long to enact it. However, we are concerned that the change in and of itself does not tackle the other major problems with the business rates system, including the problems caused by the delayed revaluation that led to rates rising by up to 500% for half a million businesses and the average small shop seeing its rates bills increase by £3,663. That of course dwarfs the £1,200 saving that the Minister mentioned some firms will get because of the changes we are discussing. I appreciate that those rises should not occur again to the same extent, given the Government’s commitment to have a revaluation every three years instead, as the Minister mentioned. That commitment is not as positive as Labour’s commitment to yearly revaluations, but it is better than nothing. As of December last year, 200,000 appeals were still outstanding, and it would be helpful to know what that number is now.

In addition, it is all very well applying a different method of calculation for inflation to the hereditament, but I am deeply concerned that the Government are pushing ahead with changes to the Valuation Office Agency that are likely to reduce the reliability of calculations of the hereditament’s value in the first place. Valuation office staff already report having to make assessments using Google Earth, of all things, rather than building up strong contacts with local stakeholders and local experience, as used to be the case. The situation will surely be exacerbated if the Government go ahead with their planned 50% cut to valuation office staff numbers. Will the Minister explain to us now how he will ensure that the accuracy of valuations is maintained with such a swingeing cut to staff numbers?

Finally, those things are all occurring in a context where the Government appear to have no long-term vision of where business rates and local government finance are headed. Despite apparent disincentive effects arising from the parameters of the current system, new plant and machinery investment are still included within the hereditament. Furthermore, we still have no clear answers as to how any redistribution measure will work with 100% business rate retention. That was not really referred to by the Minister, but it is proceeding apace in pilot form without any indication of how base values might be calculated in future.

In that regard, it is worth quoting from the Key Cities Group. In response to the Government’s proposals around local government finance—to the extent that they exist— it said:

“There is clear evidence that the gap between affluent and poorer authorities is widening with authorities with relatively high needs and low resources being left behind. A prime example is Blackpool, the most deprived area in England which has seen reductions in its core funding from Revenue Support Grant, Business Rates and Council Tax of 12.4% between 2010/11 and 2016/17, equivalent to £126 per head of population—by contrast, Wokingham, an area with significantly less deprivation, has over the same period seen its core funding increase by 8.9% or £56 per head of population.”

I mention that because the Minister referred to the fact that the Government will compensate local authorities that might lose out from the calculation of the multiplier changing from RPI to CPI. Surely any compensation through that route will be dwarfed by the 40% cuts to local government that we have seen over the past few years.

While Labour Members support the order, we urge the Government to adopt our commitment to properly and thoroughly review local government finance. That is surely essential now more than ever as we find many local authorities struggling to deliver even statutory services, such as child protection.