Non-Domestic Rating (Rates Retention, Levy and Safety Net and Levy Account: Basis of Distribution) (Amendment) Regulations 2020 — House of Lords, 2020-11-03
Topic: Mixed Topics
Stephen Greenhalgh (Conservative, Centre-right): My Lords, the business rates retention scheme, introduced in 2013-14, allows local government to keep 50% of the business rates it raises locally and, more importantly, 50% of the growth in those business rates, over and above the sums with which it is provided through the local government finance settlement. In 2019-20, this was estimated by authorities to be worth an additional £2.5 billion of funding The day-to-day operation of the business rates retention scheme is technically complex. I look forward to contributions from noble Lords on this matter. It is governed by a number of pieces of secondary legislation, setting out the technical rules that govern the flow of money between central government, billing authorities and major precepting authorities The regulations before the House today make a number of important technical amendments to those regulations to update the existing framework. This is vital to the continued smooth running of the business rates retention scheme and will ensure that everyone gets the funding they are supposed to get. These regulations make three sets of changes: they ensure the correct calculation of the income to be retained by authorities which have, or have had in the past, a higher level of retained business rates income; they make the necessary changes to the rates retention system following the most recent local government restructuring; and they adjust the calculation of retained rates income, against which we determine levy and safety net payments, to ensure that local authorities are not doubly compensated for giving business rates relief for telecommunications infrastructure I will now say a little more about each of these changes and the reasons for them. On the calculation of pilot authorities’ income/errors, as I said, the rates retention scheme is run according to a series of regulations, key to which are the Non-Domestic Rating (Rates Retention) Regulations 2013 and the Non-Domestic Rating (Levy and Safety Net) Regulations 2013. These set out the basis on which the system is run, including authorities’ shares of locally retained business rates income, safety net thresholds and levy rates. Since 2017, some local authorities have been allowed to keep a higher proportion of business rates income. Authorities in five devolution deal areas retain 100% of their business rates income, and authorities chosen to be part of the business rates pilots in 2018-19 and 2019-20 retained 100% or 75% of their business rates income for the relevant year Regulations were put in place to effect those changes. However, a few minor omissions or errors were made in the framework for the 2019-20 pilots in the Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) and (Levy Account: Basis of Distribution) Regulations 2019. These include the 75% pilots’ levy rates, apportionment of the collection fund surplus or deficit for one authority and uprating of the top-up and tariff payments for London, and 100% business rates retention authorities in 2019-20. These regulations put those right. For this reason, these regulations will be made available free of charge to any party who purchased the 2019 regulations. Further minor amendments are made by the regulations to provide the basis for uprating 100% business rates retention authorities’ top-up and tariff payments in 2020-21 Turning now to the restructuring of local authorities, following the restructuring of Buckinghamshire County Council and its constituent district councils, Aylesbury Vale, Chiltern, South Bucks and Wycombe, into one unitary Buckinghamshire Council from 2020-21, amendments are required for the running of the rates retention system. Two minor changes are required to establish the requirements of the new authority under the rates retention system. These are, first, an adjustment to a figure which determines the cost of operating in the area and therefore the cost of collection of business rates for the authority, and, secondly, a new value for Buckinghamshire used to calculate the amount of compensation it will receive for small business rates relief In 2019, the Government set out in statute the basis of distribution on which any surplus on the levy account would be made; this occurs where levy payments exceed safety net payments in a year. The basis of distribution is based on local authorities’ relative need as defined by their settlement funding assessment, which is composed of baseline funding level and revenue support grant. A small amendment is made by these regulations to the basis of distribution to reflect a revised agreement on revenue support grant between two councils which restructured back in 2019-20. This revised split adjusts the allocation that the Bournemouth, Christchurch and Poole Council, and Dorset Council, would receive should the Government determine an amount of any surplus on the business rates levy account to be distributed in the future Turning now to adjustments to take into account telecoms relief, an amendment is made to the regulations concerning the calculation of retained rates income, against which levy and safety net payments for authorities are determined. In determining the amount of safety net payment an authority may require, or the amount of levy on growth it is required to pay in a year, the levy and safety net calculations take into account a Section 31 grant compensation for business rates reliefs received by an authority as the result of changes made by the Government. If we did not do this, local authorities could end up effectively being compensated twice for implementing these reliefs. These regulations make the required changes to ensure that any telecoms relief that an authority has awarded is taken into account in these calculations In conclusion, these regulations perform a range of minor, highly technical amendments to achieve the correct basis on which the rates retention system is run for 2019-20 and 2020-21. These regulations do not enact new policies, but rather ensure the fulfilment of the original policy intention as approved in prior years via the settlement or by the statutory instrument. I beg to move.