Earl of Lytton
Main Page: Earl of Lytton (Crossbench - Excepted Hereditary)Growth and Infrastructure Bill
Earl of Lytton Excerpts
The Earl of Lytton
“(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).”
The Earl of Lytton
My Lords, this is clearly not the time to go into great detail on a rather technical matter so I will be as brief as I can. I put down this amendment because I was dissatisfied with the explanations given by the department and dismayed somewhat at the claims made by Ministers.
Now, the noble Lords will realise that this amendment follows one moved in another place by the Member for Greenwich and Woolwich, Mr Nick Raynsford. I should probably declare some particular interest here in the sense that I am professionally involved with matters of rating. Of course, in a private capacity, I am both a landlord of commercial premises where rates are paid and, indeed, a commercial ratepayer myself in another capacity. I want to pay special tribute to the work done in connection with this and the whole question of the deferral of the rating revaluation by rating surveyors Gerald Eve. They have certainly been enormously helpful to me.
The fundamental point here is that businesses need to feel that they are being treated fairly in all this. I have mentioned before that, in my opinion, the rating system badly needs some attention. It has great unfairnesses and anomalies. The treatment of exemptions and relief needs looking at. The mounting number of appeals shows that there is a problem. Along with planning and compulsory purchase, this is another administrative system covered by the Bill that is under critical stress.
Frequent revaluations have long been known as necessary. For more than 20 years, we have had five-yearly revaluations. The Lyons report made it clear that where there are major shifts in values, more frequent revaluations might be necessary. If ever there was a seismic shift in property values, the time between 2008—the antecedent year for the 2010 year—and now was surely it.
It is hard to identify the precise reason for the decision to defer the revaluation. There does not appear to have been any consultation or compelling independent assessment, certainly not one that stood the test of hard scrutiny from the likes of surveyors Gerald Eve when they presented their evidence to the Public Bill Committee in another place. There does not appear to be any particular fiscal advantage because revaluations are tax neutral; the basket of values goes up and the non-domestic multiplier goes down, and vice versa. There does not appear to be any particular financial benefit to deferral.
Where was the quoted advantage? It was in the claim that 800,000 businesses would be better off. This simply was not correct. Even on a reworking of the Valuation Office Agency’s figures, one could not arrive at that figure; it just does not make sense. As I said, it was comprehensively demolished by the evidence submitted to the Public Bill Committee by Gerald Eve. The greater certainty claimed for the benefit of these businesses seemed to be the greater certainty of being saddled with, in many cases, an over-high base for the rating assessment.
Whatever the reasons, this has caused a considerable amount of dismay among many bodies associated with businesses, in particular the British Property Federation, the British Council of Shopping Centres and many others. Many of them have taken advice, and have in turn made representations, through rating surveyors. Today, two press releases were put out by a number of these bodies, many of them household names. They all know that the effect, based on the public statistics, will be that retailing in much of London and food superstores generally will gain by the process of deferral. However, almost everybody else will be a loser in all this. Of course, extending the revaluation from five years to seven, even on a one-off basis, will make the process of subsequent adjustment that much more difficult. It is in recognition of that that I tabled the amendment. One has to consider whether it is fair that this situation should be allowed to continue.
I noted in passing a comment that some of the Portas pilot towns in particular, about which we hear so much, are likely to suffer through this. The fact that they need the undivided attention of the likes of Mary Portas means that they have problems. Possibly there is something of a self-fulfilling prophecy here. However, one needs to recognise the message that is being sent to businesses. Perhaps because they do not have votes, they do not matter, and perhaps that is why the information fed back to me suggests that when the industry met Ministers and officials, the tone was entirely dismissive of the industry’s views.
The facts cannot be denied. Accounts abound of commercial ratepayers that are paying more in rates than in rent. Small business rate relief apart—which, of course, is financed by other ratepayers—the incidence of inflexibly high levels of rates stands in interesting comparison to the maligned upward-only commercial rent review. It is one of those areas where one simply cannot make progress, and something must be done about it.
Baroness Hanham
My Lords, I am not sure that a combative meeting, which I think that that would be, would be very valuable. Perhaps I may think about that and see whether it would be helpful; I am not certain that it would be.
The measure is designed to give businesses security, to enable them to know where they are and to help them through what is a very difficult time.
I was asked also about the capacity of the Valuation Office Agency. We believe that it does not make any difference; it is up to it. It will have to do the same estimates again in a couple of years.
We have discussed the impact of appeals on several previous occasions. I have already told noble Lords that headroom is created in the local government financial settlement to ensure that rating appeals are taken into account and that local authorities do not lose out as a result. I hope that, with those explanations, noble Lords will decide not to press their amendments.
The Earl of Lytton
My Lords, I thank the Minister for giving such a detailed reply at this time of night. I thank the noble Lords, Lord McKenzie of Luton and Lord Smith of Leigh, for their contributions and for filling in a lot of the detail that it was not possible to give in my introduction.
My meeting with the Minister’s officials was entirely satisfactory, save for the fact that it did not give me the answer that I thought I should have derived from it—but that is par for the course; one accepts that. I understand that the particular meeting to which I referred took place last Wednesday. The Minister—it was not the noble Baroness but one of her colleagues from another place—who had originally been destined to be there for half an hour or so, was there for two minutes and 40 seconds. Just one of the representative bodies got a question in and was more or less told, “Well, it’s a done deal and that’s it”. That seemed to be the end of the conversation, which was not really satisfactory for people coming along and explaining the situation from a business standpoint.
It does not give businesses any comfort to know that the report by Sir Michael Lyons is to be left on the scrapheap because it was commissioned by a previous Government who did not implement it. These things are done with much fine intellect and great skill is applied to them, and they should be taken at face value. I say from these Benches that if businesses are just going to be subjected to the idea of the thing being of no consequence because it is politically inconvenient or political point-scoring, that does not do anything for growth or infrastructure. It does not do anything for businesses or business confidence because all this politicking switches businesses off; they do not operate on that basis.
The Valuation Office Agency’s data were fine in their own terms, but it was how they were interpreted thereafter and the claims made for them that were not substantiated. It would have been better if they had never been prayed in aid at all. The Gerald Eve analysis of the figures—produced by the Valuation Office Agency, not by Gerald Eve; it was a reworking of the Valuation Office Agency’s own figures—has to this day not been challenged or countermanded in any sense. The political overlay is a matter of dismay to many businesses.
The cost of occupation is directly related to jobs. If we are all in this together, and somebody in the Treasury or wherever in the Government is saying, “Well, we’re not going to have this thing, because, in fact, we don’t want any sort of wobbles on the transition to the Local Government Finance Act arrangements and the business rates retention scheme and all that sort of thing”, that is fine, but it would be just as well if that were said outright and then we would all know where we were.
There does not appear to be any other reason for that. With the greatest respect to what the noble Baroness said, I do not believe that the figures add up in the way that she said. I do not believe that there are 800,000 gainers. I do not see that in the figures there. It is an allocation of a large proportion of “don’t knows”, and that is not the same thing at all. Obviously the noble Baroness is entirely dependent in these things on the information that is provided by her department but there is a great deal of concern about the information, what it means and what is being claimed of it. Different interpretations are being attached to things that should have a straightforward meaning to everybody. This is a problem that we need to address.