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

Lord Kennedy of Southwark Excerpts

Thursday 1st February 2018 Lords Chamber

[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.

[Lord Beecham (Lab)]

My Lords, I endorse what other noble Lords have said, particularly my noble friend on the Front Bench. I do not dissent from anything that has been said—I certainly endorse his views about the frankly ridiculously low levels of penalty for failing to comply with the requirements, given the amount of rates that will necessarily be involved in so many cases. My question is about the system more generally. There is well known to be a huge backlog of appeals across the country. That is difficult for local councils to manage because dealing with these issues requires expenditure in its own terms. What are the Government doing to speed up the process of dealing with appeals? Will they make resources available to local authorities to do that? It is an injustice to the local community if these decisions are delayed and is actually not very good for businesses anyway, because they ought to be clear what the position is. Yet for many years delays have taken place and proceedings are very costly.

I ought to remind the House of my local government interests, as a local authority member and, like several Members of this House, an honorary vice-president of the Local Government Association.

--- Later in debate ---

The noble Lord, Lord Kennedy, also raised a valid point, particularly in the light of the £50 million or £250 million we just saw in relation to the previous set of regulations. The rather low level of the deterrent here was partly as a result of the consultation, but the point is well made and we will certainly keep it under review. We will look at it to make sure that it is acting as a deterrent. In relation to carelessness, it would perhaps not seem inappropriate but in relation to “knowingly”, we would want to make sure over time that it was appropriate. He referred to inflation not being taken account of here. I say two things to him: first, as he will be well aware, the level of inflation is rather low—I know he is supportive of that—but, secondly, it is general that there is no inflation element built into fines. The point is well made and perhaps when we review this, it may also need to be looked at.

[Lord Kennedy of Southwark]

I accept that inflation is low, which is good news for everybody, but I made that point because these charges are potentially very small. I think the cost of a parking ticket in London is about £120, just for parking in the wrong place. This provides for a £500 fine for a corporation that may, recklessly or knowingly, put in a submission and benefit by many thousands of pounds. I am glad that the Minister will look at it again; that is needed because that level is totally inadequate.

[Lord Bourne of Aberystwyth]

My Lords, I undertook to keep it under review rather than to look at it again, which is perhaps slightly different, but I thank the noble Lord for his intervention. The point is well made: parking meters are making a lot more money than a lot of individuals on an hourly or daily basis. We are aware of that.

If I may come back to the noble Baroness, Lady Pinnock, I missed the point she raised about the business rate revaluation. As she will know, at Budget 2017 the Government committed to increase the frequency of revaluation to every five years from the next revaluation, which is due in 2022. However, I understand her point.

Perhaps I could also mention at this juncture that we are looking to local authorities, which have the funds because we have made them available, to ensure that they pay out to public houses, where appropriate, and to businesses that secure a revaluation the money that is rightly theirs. I encourage local authorities to do that. The Government have got the money out of the door and are really looking to local authorities to ensure that they carry that forward.

I think I have dealt with the point about the backlog raised by the noble Lord, Lord Beecham. He also quite rightly made a point about the low penalty, which I have picked up, but if I have missed any points I will write to noble Lords. There were some particularly valid points from the noble Earl, Lord Lytton. I thank him for declaring his interest but that also means he is very expert in this field, which I am happy to acknowledge. With that, I commend these regulations to the House.