Non-Domestic Rating (Rates Retention) and (Levy and Safety Net) (Amendment) Regulations 2017 — House of Lords, 2017-03-20
Topic: Mixed Topics
George Young (Conservative, Centre-right): I am grateful to all noble Lords who have taken part in what has been on the whole a consensual debate and I shall try to answer the questions that have been raised. If I cannot, I will write. I did not think that we would get through this debate without Surrey being mentioned. The position is that Surrey County Council informed the Government that it wanted to become a 100% business rates retention pilot area, but was told that that would not be possible for 2017-18. We said that, subject to due process and meeting the necessary criteria, it could participate in the 2018-19 pilot scheme. We explained that other councils had also had discussions with the department about becoming 100% pilots. We went on to announce that all councils will be free to apply to participate in a 2018-19 pilot programme and that the Department for Communities and Local Government would publish more information shortly I agree entirely with what the noble Lord, Lord Beecham, said about the need for regular revaluations, both to minimise the turbulence each time you do it and to make sure that we have an up-to-date tax base for local government. We have already said that we are looking at the revaluation cycle with a view to reducing the time between revaluations. A number of noble Lords mentioned appeals. We are looking at changing the way in which appeals are dealt with under 100% rates retention so that individual authorities do not have to bear the risk of appeal losses. We are currently discussing the mechanics of doing this with the LGA and the sector with a view to removing some of the risks to their income from these appeals. Perhaps I can write on the backlog when I have the most up-to-date figures The noble Baroness, Lady Pinnock, asked what would happen if a local authority lost a substantial business rate payer in its area. When I introduced these regulations I mentioned that there was a safety net. There will continue to be one under 100% rates retention. We are discussing the detail of a new safety net with the LGA and the sector and will announce detailed proposals later in the year. The noble Baroness also made the valid point that not all local authorities will gain from 100% business rates retention. That is indeed the case. Redistribution and the timing between resets—in other words, how frequently we assess or reassess the needs of an authority—will be critical. Again, we are discussing the timing of this with the LGA, but we have indicated that we might reset the needs more frequently than under the 50% schemes. I hope that is of some reassurance to the noble Baroness We then heard about the anomalies in business rates between large rural businesses and small urban businesses. As noble Lords know, business rates reflect the rental value of the properties that businesses occupying them take. Businesses take decisions on location reflecting those differences. In recent years we have taken a number of steps to reduce the bills of small businesses, including some measures in the Budget and the permanent doubling of small business rate relief. Perhaps I could write about the question raised on the staff of the VOA who are needed to deal with appeals and the resources behind them The noble Lord, Lord Shipley, made the point that corporation tax has been going down whereas business rates have been going up. He drew attention to the imbalance. The only point I would make on that is that the rate of corporation tax is important to ensuring that this country remains competitive in an international world. The rate of corporation tax is a barometer of competitiveness in a way that business rates are not There was a valid point on Amazon. All businesses pay rates on the property they occupy, including Amazon. It is true that businesses that do not use high-value property or have a high internet profile will reduce their business rates bill, but of course business rates are not the only tax on those businesses. They will pay national insurance contributions on their employees and if they are making a profit they will pay corporation tax An issue was raised that is raised in every debate about local government about the Government putting more responsibility on local authorities without giving them the resources to discharge them. I remember making those points back in the 1960s when I was a local councillor. As part of the move towards 100% business rates retention we will give authorities some £12.5 billion of additional resources from which to fund the new responsibilities that they assume. To meet the perfectly valid point raised by a number of noble Lords, we are discussing the functions that will be devolved to local authorities with the LGA and with the local government sector. The new scheme will take account of imbalances through redistribution via tariffs and top-ups, and of the frequency with which, as I said a moment ago, we reassess the needs and reset the tariffs and the top-ups, in response to a point made by the noble Lord, Lord Kennedy We have stressed the importance we place on the fair funding review. We have been discussing the methodology of assessing needs with the LGA and with the sector. Again, we hope to publish further details in due course The noble Baroness, Lady Pinnock, raised the central list, which brings in about £2 billion per year. Perhaps I could write to her on the details of exactly where that money goes. The noble Lord, Lord Kennedy, raised a number of issues. As always happens when he winds up, I do not always have time to assess the in-flight information in time to respond to him, but he made valid points about hospitals, schools and a number of other issues. Perhaps I could write to him when I have assembled an up-to-date and authoritative response These regulations provide for changes to the day-to-day administration of the business rates retention system. The changes reflect decisions already made by Parliament in the Local Government Finance Report for 2017-18 about the percentage share of business rates that local authorities are to keep and the tariffs and top-ups that they are to pay or receive during the course of 2017-18. They deliver on the Government’s commitment to ensure that authorities are not financially disadvantaged as a result of the business rates revaluation that comes into force on 1 April. They also provide for the 100% business rates retention pilots in Greater Manchester, Liverpool City Region, Cornwall, the West Midlands and in the West of England, and, to a more limited extent, in London. They ensure that the agreements reached with those authorities can be implemented and that the Government can learn lessons from those pilots before 100% business rates retention is rolled out more generally in 2019-20. I commend them to the House.