Non-Domestic Rating (Lists) Bill (First sitting)

Melanie Onn Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 25th June 2019 Public Bill Committees

[Melanie Onn (Great Grimsby) (Lab)]

Q I am interested, Councillor Watts, in the comment you made in one of your earlier responses about the level of reserves that local authorities have had to retain, pending the outcome of appeals dating back—is it nine years?

Councillor Watts: To the 2010 revaluation, so from 2013 onwards.

[Melanie Onn]

Q That seems an extraordinarily long time for anyone to be waiting and holding finance that, as was rightly mentioned, should be being spent in local communities. Do you anticipate that the potential change from every five to every three years will improve that situation for local authorities, or make it harder for them?

On the financial position of local authorities and the level of reserves, are local authorities across the country fully prepared to deal with the potentially increased rate of appeals? The Minister has mentioned that he expects there to be fewer because the rates will be altered more regularly and there will not be such great changes.

Councillor Watts: We do not have a view on whether shifting the revaluations from five to three years will increase or reduce appeals—we will have to wait to see. What we need is some resourcing of the Valuation Office Agency and the valuation tribunal just to get through the very significant backlog from the 2010 revaluation. There is no structural fix to that; the Valuation Office Agency and the appeals tribunal just need to get through that backlog, quite a lot of which, it has to be said, is stuck in the courts at the moment. Therefore, it is not an easily soluble problem.

What we have not yet got, partially because it is early days in the check, challenge, appeal system, is any real sense of the number of appeals from the 2017 revaluation, and they could come through relatively late. That is one of the reasons we support a six-month deadline for businesses to lodge appeals, after the new valuations have been published, to give us some sense of the level of risk. But it could be that one of the impacts of the CCA system is that people are sitting on potential appeals, which will come through in due course, creating another layer of risk for businesses, and we will have to see about that.

As I understand it, the deadline for appeals on the 2017 revaluation has not yet been announced. We would hope that it was in line with the precedent, which would mean it would be the end of 2021, but we would welcome an early announcement on that to give us some sense of the scale of risk. It could well lead to more money having to be kept in reserves to manage a second or third round of risk around those appeals as well.

We would welcome the extra resources going in to clear the backlog. Whether more regular cycles lead to fewer appeals—I hope so, but we have no evidence to be able to comment on that either way.

[Melanie Onn]

Q Do you have any idea of how much is held nationally in reserves for this purpose? Did you mention that?

Councillor Watts: Yes, it is £2.5 billion.

Adrian Blaylock: It was £2.5 billion at the end of March 2017. If you look at the returns that local government is submitting to central Government in terms of their estimates, roughly £1 billion a year is being added to the appeals provision for loss for that particular year. Obviously, as appeals are heard and settled, some of that provision is released, but roughly £1 billion a year is set aside to settle appeals.

In answer to your question, do councils have enough reserves to pay for it? The way it works is that they will reduce their income from non-domestic rates; when they submit that return to central Government, they assume a level of loss and therefore that they will get less income. In effect, it creates its own provision—if that makes sense. That is where the reserve comes from.

[Graham P. Jones (Hyndburn) (Lab)]

Q Do you foresee any problems with the roll-out of the business rate retention scheme and this Bill? Do you think any anomalies or complexities will emerge from those two?

Adrian Blaylock: Nothing obvious occurs. There are a lot of unknowns about rates retention—we are talking about whether we carry on with a similar model to what we use now, just with the 75%, or whether we go for the alternative model, which was favoured in the December consultation—and what local government needs is certainty of funding, and understanding of when and how the money will come. So I do not think that the Bill particularly causes any issues, but it would be nice to get some early indication of where we are going with rates retention and how that will change.

Councillor Watts: I do not think there are any in-principle reasons why the Bill creates problems for business rates retention.

Annie Gascoyne: I agree.