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

Rishi Sunak Excerpts

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

[The Chair]

Thank you. Does anyone want to ask a question? No. Would the Minister like to kick us off?

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

I am happy to come in at the end. Perhaps the Opposition spokesperson would like to start.

[The Chair]

Okay. I call Jim McMahon.

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[The Chair]

Do any other Members want to ask a question within the scope of the Bill? No. I call the Minister.

[Rishi Sunak]

Q Thank you, Chair, and thank you to all the panel members for joining us today. I appreciate that there is a lot of interest in the broader topic of business rates, the structure of business rates taxation, the current plight of the high street, the rise in online shopping andEdward Woodall: Broadly, we are very supportive of the move to shorter revaluation periods. There is overall agreement that the principle of making revaluations shorter to make property costs more closely aligned with what they are today should be the overall ambition. We have come to a three-year window on the basis that it balances the capacity of the VOA to deliver a revaluation in that time period and that it shortens the current five years. It is worth reflecting that, at one point in 2016, properties were valued based on 2008 data. We want to try to avoid that in future. The principle is very positive in the context of an evolving economy and the evolving way that we use property, and we should try to look more closely at how quickly we can revalue these things.

Martin McTague: In principle, yes, we support the move to the three-year revaluation period. We see it as a compromise, because we know it will put a lot of pressure on the VOA. We are concerned that, if pressure is put on the VOA, it might start to transfer to billing authorities. The person who usually ends up getting the bill to pay is the small business at the foot of that process. We are very disappointed in the way that check, challenge, appeal is working and that it is, effectively, creating a system that lacks transparency. The ratepayer cannot see the basis on which they are rated, which means that when they try to challenge any of these things, the delay can be enormous. We think that the fundamentals of the process are still wrong, but the move to three years is a good one.

Dominic Curran: At the risk of having an outbreak of agreement, we also fully support a move to three-year valuations. Five years was too long; I know many call for annual revaluations. There is a spectrum of views among our membership, but we have settled on three years as the right balance, taking into account two factors. First is the balance of stability: for every three years, you know exactly what your rates bill is. Even if that is not perfect, at least you can work on that basis. Second is the capacity of the Valuation Office Agency; as Martin said, we are not convinced that it would necessarily have the resource or capacity to undertake yearly or two-yearly valuations. That is an important area of resource that should be looked at carefully by the Treasury in the upcoming spending review.

[Rishi Sunak]

Thank you.

[Jim McMahon]

Q To follow up on that point, when the revaluation is brought forward, that will not dispense with the appeals already in the system—they are still there and need to be administered—and it will just create the opportunity for further appeals. Have your members expressed any concern about the capacity in the valuation office? Do you have any concerns about what it might mean if no additional capacity is brought in and there is a more recent revaluation in 2021?

Martin McTague: I can certainly answer that. There is widespread concern about the lack of capacity in the VOA. It is bizarre that the solution seems to be that you impose a six-month cap on appeals. That is effectively saying, “It’s so difficult to get these appeals through the process that we are going to cap the time required to do it.” Yet the information is not available to the business rate payer to be able to challenge things easily. The point that you made at the beginning—that the VOA is fundamentally under-resourced to deal with this change—needs to be addressed quickly.

Edward Woodall: I agree with Martin. The feedback I get from my members is that there is a lack of capacity at the VOA to allow them to engage meaningfully in the process and talk to individuals. There is also a challenge, which we will probably come to, about the structure of the process it has developed—check, challenge, appeal—and people’s ability to interact with that, which is causing difficulties.

Dominic Curran: Absolutely. Our members are enormously frustrated with the VOA on a day-to-day basis. The appeal system is clogged up at best. It needs better resourcing. There certainly should not be a cap on appeals, in terms of the time length. But more frequent revaluations would, to an extent, reduce the need for appeals, because valuations would be less out of date, although they would probably still be somewhat out of date.

[Rishi Sunak]

Q A final quick question, Mr Curran. One of the things that the VOA has to do at the moment is to deal with appeals. You just made the point that more frequent revaluations ought to reduce the volume of appeals. Will you elaborate on that point, because, obviously, less appeal work would be an offset to the increased work of more frequent revaluations?

Dominic Curran: The argument is strongest if we were to move to a system of annual revaluations. With an annual revaluation, it almost would not be worth appealing a valuation that you thought was wrong, because it would change in a year’s time anyway. The other effect would be that the valuation probably would not be so wrong, because your annual changes would be on a much smoother line—looking at it on a graph—whereas if we revalue every seven years, as we have, you get quite a steep change. Obviously, somewhere between seven years and one year, the line gets smoother and smoother. It is a question of judgment which number we pick. Using that logic, three years should have fewer appeals than five or seven, but one year should have fewer than three. We will see how good the VOA is at dealing with three-yearly revaluations.

[Rishi Sunak]

Thank you.

[The Chair]

As there are no further questions from Members, I thank the panel for their evidence. Thank you so much for coming along.

We are running ahead of time, and the other panel has not arrived, so I propose that we suspend.

--- Later in debate ---

[The Chair]

Okay. We have time for more questions. I will ask the Minister if he has any questions, but if people suddenly, spontaneously, have questions, I will allow some more within the timeframe, if necessary.

[Rishi Sunak]

I am fine, thanks. Thank you for all coming, and thanks for your evidence and comments. Everything has been perfectly well answered.

[The Chair]

So you have no questions?

[Rishi Sunak]

No.

[Jim McMahon]

Q May I ask one question of Richard? Is the LGA making a specific request that the change of date from September to December be reviewed as part of this process?

Councillor Watts: We are, yes. In effect, our request is that we would welcome further conversations with the Government about getting a date. We understand the arguments for shifting it, because it is quite a long time and 30 September is quite early in the process. However, for one year out of three when that impacts on the potential local government announcement, we would like to understand more about how the Government would like to co-ordinate between this announcement in December and the local government spending announcement having to be earlier than it, because that is a change in precedent. We cannot push the local government spending announcement each year beyond 31 December—it is already too late where it is, given that local budget setting for any authority of size is effectively always concluded before the spending settlement on the basis of guesswork, then tweaked when the settlement is announced in the House.