Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill — House of Lords, 2018-06-19
Topic: Mixed Topics
Nicholas Bourne (Conservative, Centre-right): My Lords, I am most grateful to noble Lords who have spoken on this amendment and for that very considerate point from the noble Lord, Lord Kennedy, that he is trying to help the Government. I shall ensure that that is underlined when I get my copy of Hansard, and I appreciate his general approach on these issues I am grateful to noble Lords for raising this matter. The amendments before us would require a review of the impact of Clause 1. I agree with the point made many times by the noble Lord opposite; we probably have rather too many reviews, and this can sometimes get a little top-heavy. However, such a review would require compensation to be paid to local authorities for any refunds made to ratepayers as a result of Clause 1 To assist the Committee in considering this, I will explain a little about how Clause 1 will be implemented by the Valuation Office Agency. Before I do, I remind the Committee that, as the noble Earl quite correctly anticipated, the Government do not intend to compensate local government for the reductions in rateable value that will flow from the implementation of Clause 1. This is not because we cannot estimate or measure those impacts—although there are considerable challenges in doing that. We are not compensating local government in this instance because the revenue it might have received from the Supreme Court decision in Woolway v Mazars was unexpected. Indeed, all professional bodies involved with rating, including the Rating Surveyors’ Association, viewed the Supreme Court’s decision as a surprise and an aberration: indeed, neither party to the case was arguing for it. It came as a surprise to political parties, too The decision disturbed the settled practice of rating as understood by valuation officers and ratepayers alike for decades. Therefore, any additional income was indeed a windfall. The noble Earl seemed perhaps to suggest that, if there had not been a refund or reduction, there was still the prospect of some obligation to repay. That is not the case. If the money has not been expended, there can be no question of any repayment. We are merely returning this windfall to ratepayers—something that I think is widely welcomed. In some cases these ratepayers have also lost small business rate relief as a result of having their property split. We do not believe that it is fair for these hard-working small businesses to be hit by large backdated bills, and we do not believe that it would be right for local government to benefit from revenue accrued in this way The amendments would require a review of the impact of Clause 1 and compensation for any refunds under it. Put simply, the impact of Clause 1 is to return the law to what it was always understood to be before the decision of the Supreme Court. It follows that, taken together, the combined financial impact of the Supreme Court decision and Clause 1 will therefore be neutral. So, in looking at just the impact of Clause 1 we are, in fact, looking at only part of the picture For those businesses whose rateable values were not adjusted by the Valuation Office Agency following the Supreme Court decision in Woolway v Mazars, there will be no change. The only situation in which there will be a repayment of business rates as a result of Clause 1 is where the Valuation Office Agency has amended rateable values to reflect the Supreme Court decision. That will be reversed The Bill will also allow those rateable values to be changed so that they once again reflect the practice of the Valuation Office Agency before the court decision. The way in which this will be implemented in practice by the Valuation Office Agency will be different in respect of the previous 2010 rating list compared to the current 2017 rating list. I will go into that in a bit more detail in a minute. I will ask the Valuation Office, because it does seem reasonable, to publish information as a consequence of Clause 1. I will make sure that any information that is readily to hand is published, that noble Lords receive a copy and that we leave a copy in the Library—because that will not involve any unreasonable burden at all Since 1 April this year the Valuation Office Agency has been unable to amend the 2010 rating list, other than as a result of an outstanding appeal. These rules protect ratepayers against very long periods of backdating, but they mean that, in this instance, ratepayers would see the benefit of the Bill in respect of the 2010 rating list only if they still have an outstanding rating appeal. Therefore, we will, through regulations and existing powers, allow a new right of appeal on the 2010 rating list for those ratepayers affected by the Bill. I assure noble Lords that it will be possible for local authorities and the Valuation Office Agency to identify these new appeals made as a result of the Bill and see the resulting change in the rateable value on the 2010 rating list. As I say, I will endeavour to ensure that information on that is passed to noble Lords These new 2010 appeals will, in part, provide the information sought in this amendment. However, they will not provide a complete picture of the impact, as some ratepayers will choose to use existing 2010 appeals, some of which may also deal with other, unrelated changes to the property or valuation. Therefore, the resulting change in rateable value will not always be an accurate reflection of the impact of Clause 1 alone—it is not necessarily that straightforward. Nevertheless, local authorities will be able to identify the new appeals on the 2010 rating list and see the resulting change in rateable value, and we expect these new appeals will, in part, give a reasonable guide to the impact of Clause 1 on the 2010 rating list I fear that it will be much more difficult to track the impact of Clause 1 on the current 2017 rating list. The Valuation Office Agency will implement Clause 1 on the 2017 rating list in the normal course of its business. For example, it may apply the new rules in Clause 1 in the course of putting new properties into the rating list, when correcting rateable values or when reflecting improvements or demolitions to the property. It may do this following a request from a local authority, following a check made by the ratepayer or using its own notices to amend the rating list. Within these different types of cases and different reasons for altering the rating list, the Valuation Office Agency cannot statistically isolate those which are due to Clause 1 alone. To resolve this, the VOA would have to manually examine each change and each valuation and calculate how much was due to Clause 1. Bearing in mind comments made with some justification about the financial impact of some of this on the VOA, this is not something we would want to do: it would be extremely resource intensive. Since this is an organisation responsible for clearing a backlog of 2010 appeals—something it is doing—implementing a new check, challenge and appeal system and delivering a revaluation in 2021, I am sure noble Lords will agree that we should not add to its burden in this way I fully understand that local government and others want an accurate view of the impact of Clause 1. I share that desire and have explained to noble Lords why this is so difficult on the current 2017 list. I hope I have reassured the Committee that some information will be made available in respect of the new appeals on the 2010 rating list that will be allowed once the Bill receives Royal Assent. As I said, I will ask the Valuation Office Agency to publish that information With regard to the Government’s stance on compensation, this does not signal any departure from the normal approach to compensating local government for changes to business rates introduced through the Budget. In this year alone, we expect to compensate local government to the tune of £1.5 billion for changes to the business rates system announced in previous Autumn Statements and Budgets. I hope the Committee will recognise that the circumstances of the Mazars Supreme Court decision and Clause 1 are very different in respect of so-called compensation. With all this in mind, I hope the noble Earl will agree to withdraw his amendment.