Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2018

Baroness Donaghy Excerpts

Thursday 1st February 2018 Lords Chamber

[Baroness Pinnock (LD)]

My Lords, the noble Earl, Lord Lytton, has just made a forensic dissection of the process of business rate valuations and appeals, and I could not possibly add to that detail. However, I have some general points to share with noble Lords. I draw attention to my registered interests as a vice-president of the Local Government Association and an elected councillor in the borough of Kirklees.

It is totally acceptable for the Government to require accurate information for any appeal against business rates, but as the noble Earl, Lord Lytton, has drawn attention to, I am concerned about the use of the word “carelessly” in the regulations. What is the definition of the word and how will it be judged? I understand the use of “recklessly” and “knowingly”, but “carelessly” is not a word that is best used in regulations because I wonder how it will be defined.

The penalties being proposed seem to be appropriate and in line with penalties elsewhere in the system. However, the Government have a responsibility to review their actions in regard to the need to adhere to the timetable for rate reviews so that businesses are not subject to massive increases, as has happened with the latest review which was delayed by two years. It is totally unfair on businesses if the timetable is not kept up with and suddenly they find themselves facing significant increases in business rates.

Secondly, the Government must reconsider their approach to business rates. Ministers have rightly emphasised the importance of vibrant town centres, along with the changing nature of those centres, especially in smaller towns and villages where small businesses are likely to be paying a far greater proportion of their business income in rates than out-of-town concerns operating via online trade. This must be addressed in order to devise a more equitable business rate scheme between businesses serving their communities and gigantic out-of-town warehouses. I look forward to some positive news from the Minister on that score. It is not the first time that I have raised this issue and I shall keep on doing so until we make some progress.

My third point is to ask the Minister to explain the part that local authorities will play in this new regime. As he is aware, currently local authorities collect business rates and provide within their budgets for successful appeals via a grant from central government. The grant may or may not be sufficient to cover those appeals. From the local authority’s perspective, the existing regime for providing for successful appeals is not the most efficient that could be devised. Will the Minister consider producing a more effective and efficient regime that would suit businesses, the Valuation Office Agency and local authorities—and indeed the Government? All the money that is set aside for appeals is nominally from central government and in theory could be used more effectively in the provision of local services.

In general the approach is fair, but I look forward to the Minister’s responses to my questions.

[Baroness Donaghy (Lab)]

I have two very small questions. The first concerns the Explanatory Memorandum. Point 3.2 states:

“This entire instrument applies only to England”.


However, point 5.1 states:

“The extent of this instrument is England and Wales”.


Have I misunderstood the headings or is that a typo?

My question on guidance follows from the questions of the noble Earl, Lord Lytton, and concerns Paragraph 9.1. I would be grateful for some clarification. It states:

“The Department does not intend to issue formal guidance”.


That is fair enough, if it does not want to, but how will the department satisfy itself that the system is working? Will there be consultation with the VOA or will there be other mechanisms in the absence of formal guidance? It goes on:

“The VOA may issue internal guidance to their staff, in relation to the reforms to the business rates appeals system. As above”—


I am not quite sure what the phrase “as above” applies to—

“the VOA intends to provide specific guidance on the provision of information by ratepayers, and internal guidance on the application of penalties”.

I find that all a bit confusing, to be honest. Which is going to be transparent and available to the public, which is going to be an internal office one? I would be grateful for some clarification.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, as we have heard, the regulations before your Lordships’ House this afternoon provide for the imposition of financial penalties for giving false information in respect of a proposal and also provide for an appeal against the imposition or the amount of a financial penalty. I am happy to support these proposals, and in doing so draw the attention of the House to my relevant interests in the register, namely being a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association.

Many years ago, in the 1980s, I was a member of a rating appeals tribunal and I agree with the Explanatory Notes, which state in paragraph 7.3 that little supporting evidence was supplied, what came in came in late, and most appeals,

“did not result in either an appeal hearing or a change to the rating list”.

That was what used to go on in the appeals I used to attend—it was certainly my experience serving on a tribunal in London. Looking at the papers there seem to be only two levels of fine. I thought that the purpose of any fine is to provide an element of deterrent. I am not convinced that these levels actually do that: perhaps a sliding scale would have been better, or some link to a rateable value, as I think the noble Lord, Lord Bourne, made reference to. I do not think that any large corporation will be the least bit worried about a £500 fine.

Paragraphs 8.1 and 8.5 of the Explanatory Notes refer to the number of responses to various consultations. Will the noble Lord give the House some more information about the range of responses received, as the notes have only such phrases as “the majority of respondents recognised”, and “many businesses accepted”. A bit more clarity would be useful for us to understand the range of responses that the department actually received. I accept the point, as set out in paragraph 8.6, that,

“in line with other parts of the tax system, ratepayers have a responsibility to take reasonable care when providing information in relation to their tax affairs”,

but coming back to my earlier point, I am not sure a £500 fine helps in any way to focus the mind of a large company or corporation in that respect. I am sure that all companies do these things properly, but if one were to decide that it could gain some advantage by not doing so, it might risk taking a punt. The worst it could get would be a £500 fine but if it got away with it, it might gain many thousands of pounds in a reduced business rate bill. Will the noble Lord address that?

I assume, since there is nothing about it in the papers, that there is no link to inflation, so these figures will wither on the vine, as it were, until the regulations are brought back here in a few years to be uprated. So I am not convinced that the sanctions are strong enough. Having said that, I support them in principle and I look forward to the noble Lord’s response.