Levelling-up and Regeneration Bill

Baroness Scott of Bybrook Excerpts

Tuesday 4th July 2023 Lords Chamber

Moved by

[Baroness Scott of Bybrook]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 13, Schedule 1, Clauses 14 to 25, Schedule 2, Clauses 26 to 31, Schedule 3, Clauses 32 to 54, Schedule 4, Clauses 55 to 78, Schedule 5, Clause 129, Schedule 12, Clauses 130 to 157, Clauses 161 to 163, Schedule 14, Clauses 164 to 167, Schedule 15, Clauses 168 to 173, Schedule 16, Clause 174, Schedule 17, Clauses 175 to 191, Schedule 18, Clauses 192 to 196, Schedule 19, Clauses 197 to 217, Clauses 79 to 87, Schedule 6, Clauses 88 to 91, Schedule 7, Clauses 92 to 95, Schedule 8, Clauses 96 to 100, Schedule 9, Clauses 101 to 103, Schedule 10, Clauses 104 to 106, Schedule 11, Clauses 107 to 128, Clauses 158 and 159, Schedule 13, Clause 160, Clauses 218 and 219, Schedule 20, Clauses 220 to 235, Title.

Motion agreed.

Homelessness: Homewards Initiative

Baroness Scott of Bybrook Excerpts

Tuesday 4th July 2023 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

We welcome the Prince of Wales’s Homewards initiative and his interest and support in tackling homelessness. The Government have made the unprecedented commitment to end rough sleeping. In September 2022 we published our cross-government strategy, setting out how we were investing £2 billion over three years to tackle homelessness and rough sleeping.

[The Lord Bishop of Sheffield]

I thank the Minister for that helpful response. Sheffield is one of six places where the Homewards initiative is being piloted, and in South Yorkshire it seems to us that two things make this new venture distinctive and highly promising. The first is that funding is secure over the medium term, and the second is a partnership approach which encourages local agencies to co-produce solutions with built-in flexibility to allow for ongoing learning. Does the Minister think that this longer-term and partnership approach is one from which the Government might learn in their own support for homeless people?

[Baroness Scott of Bybrook (Con)]

The right reverend Prelate is right; Sheffield City Council has been allocated over £4 million through the rough sleeping initiatives, which will run from 2022 to 2025, to help end rough sleeping in the city. It has also been allocated £2.4 million through the rough sleeping accommodation programme, again until 2025. So these are not annual nor short-term amounts of money. The right reverend Prelate is right; these things cannot be done by government alone. We know that individual local authority areas have specific problems and that is why we are asking them to deal with these issues. I will also say that the third sector, in particular churches and community groups, are absolutely necessary in a city such as Sheffield.

[Lord Watts (Lab)]

During Covid, there was a massive reduction in the number of homeless people on the streets. Why does the Minister think that this has been reversed?

[Baroness Scott of Bybrook (Con)]

I think that over Covid, the issue was that people were frightened, scared and did not want to stay out. Since Covid, we have gone into a further economic downturn, particularly because of the dreadful war in Ukraine—

[Noble Lords]

Oh!

[Baroness Scott of Bybrook (Con)]

No; it has affected the economic stability of the whole world. We are working continually to try to get back to those Covid levels.

[Lord Young of Cookham (Con)]

My Lords, like the right reverend Prelate, I very much welcome the commitment of the Prince of Wales to help end homelessness, particularly as the numbers of those sleeping rough are beginning to creep up again, having been reduced to near zero during Covid. I particularly welcome the commitment to make Duchy of Cornwall land available for affordable homes. Is this not an example that could be followed by government departments and other public bodies that have surplus land available?

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[Baroness Scott of Bybrook (Con)]

My noble friend is absolutely right, and I welcome the Prince of Wales’s initiative. Maybe other larger landowners across this country could also look at those initiatives, as well as government. We have been working to release public land for new houses through the Public Land for Housing programme which ran from 2011 to 2020. By March 2020 over 60,000 homes had been brought on to the market on surplus government land. In October 2022 the Cabinet Office published the Government Property Strategy, which intends to drive efficiency in departments’ estates to look at surplus land that can be used for housing, particularly affordable housing.

[Baroness Taylor of Stevenage (Lab)]

My Lords, it is great that the Prince of Wales has turned the spotlight on this very important issue. Pilots are all well and good but is it not a damning indictment of this Government’s failure to tackle the housing crisis that between July and October last year, 1,210 homeless families spent longer than the six-week legal limit in hotels and bed and breakfast accommodation—the highest figure in six years? How will the Government respond to this growing crisis across the country and the impact it is having on children’s development?

[Baroness Scott of Bybrook (Con)]

We are responding by offering support through initiatives such as spending £500 million on rough sleeping initiatives between now and 2025. Under the ending rough sleeping for good initiatives, £2 billion is going to local authorities over three years to look at their issues. Your Lordships need to understand that the increasing numbers are only in 5% of local authorities in this country. We need to target and help those local authorities, both with support and with money, which is what we are doing.

[Baroness Thornhill (LD)]

My Lords, last year, 129,000 young people facing homelessness, aged between 16 and 24, tipped up at their local council asking for support—which is undoubtedly an underestimate. Currently, universal credit levels for young people living independently are more than a quarter lower than for those aged over 25. Can the Minister say by what logic we financially penalise young people, whose bills, including rent and essentials, cost exactly the same regardless of their age, and does she agree that this shortfall will make them even more susceptible to eviction and homelessness?

[Baroness Scott of Bybrook (Con)]

The noble Baroness is right, which is why, in the Government’s strategy Ending Rough Sleeping for Good, which was backed by £2 billion last year, we recognise the particular challenges facing young people with regard to homelessness. We have a single homelessness accommodation programme, which will have delivered nearly 2,500 homes by March 2025. There is also the £2.4 million for rough sleeping initiatives going towards youth services in local areas that have an issue with youth homelessness.

[Baroness Whitaker (Lab)]

My Lords, there is a very high proportion of hidden homelessness—hidden but none the less very real—among Gypsies and Travellers, who do not have enough authorised sites to camp on. What are the Government doing about encouraging local authorities to fulfil their obligations to assess the lack of sites and to act on that to provide enough?

[Baroness Scott of Bybrook (Con)]

I thank the noble Baroness for that—I know her passion for that particularly vulnerable community. Local authorities do have a responsibility to find those sites; we will continue to ensure that they do so. However, I will look at the latest figures and let the noble Baroness have them, and will let her know what we are doing extra to make sure that they are being delivered.

[Baroness Royall of Blaisdon (Lab)]

My Lords, in April, 8,000 Afghans were still living in hotels, 18 months after they were evacuated from Afghanistan. They have now been told that they have to leave that hotel accommodation and find private rented accommodation. If they are unable to find rented accommodation, will they be homeless, and if so, what are the Government going to do about them?

[Baroness Scott of Bybrook (Con)]

We have announced £35 million of new funding to enable local authorities to provide an increased amount of support for Afghan households and to move them from hotels into settled accommodation. At the same time, we have announced a local authority housing fund of £750 million, which will provide capital funding to councils in England to allow them to look at creative ways of getting more housing stock in, which will help the Ukrainian and Afghan arrivals. Together, therefore, we hope that we can get Afghanis into proper suitable accommodation as soon as we possibly can.

[Lord Berkeley (Lab)]

My Lords, this is a welcome initiative. Has the Minister suggested to the Prince of Wales that he should allocate some of his extensive landholding to help this initiative, and possibly a little of his £24 million-a-year income?

[Baroness Scott of Bybrook (Con)]

My Lords, I can assure the noble Lord that the Prince of Wales announced at the same time that he would undertake to make some of the Duchy of Cornwall land available for affordable housing.

Non-Domestic Rating Bill

Baroness Scott of Bybrook Excerpts

Committee stage
Monday 3rd July 2023 Grand Committee

[Baroness Pinnock (LD)]

My Lords, at the outset of the debate I remind the Committee that I have relevant interests as a councillor and as a vice-president of the Local Government Association.

This group of amendments is significant because it focuses our attention on energy efficiency and on how the business rates system could be adjusted to encourage more businesses to improve the energy efficiency of their premises. Amendment 1, in the name of the noble Lord, Lord Ravensdale, is important in that regard. As he said, an earlier Bill on non-domestic rating focused on relief for energy generation and storage, but not energy efficiency. Energy efficiency is the non-glamorous side of getting to net zero. It is about improving the general energy efficiency of buildings through loft and cavity wall insulation, putting in more efficient heating systems and so on.

I have a high regard for Amendment 1 for the reason that the noble Lord outlined, which is that the payback period for energy-efficiency improvements can be very long. Therefore, giving just one year’s relief is a drop in the ocean. If we want to encourage businesses to make these improvements and to invest in their property by improving their energy efficiency, there must be relief on business rates. This is a positive amendment and, if the noble Lord, Lord Ravensdale, wants to pursue it on Report, I am sure that we will give it positive consideration.

The other amendments in this group, in the name of the noble Earl, Lord Lytton, suggest five years of relief. That is another way forward. I think that we will have to debate five years of relief or unlimited relief. If we are really concerned about getting to net zero, there has to be a real incentive to do so.

I co-signed Amendment 5, in the name of the noble Baroness, Lady Hayman of Ullock, about heat networks because I thought that it was important in itself. The Government have a scheme—the heat network efficiency scheme—which gives grant funding to communal heat networks or district heating schemes. This amendment matches well with that. If the Government are giving with the one hand but taking with the other, that seems a negative approach to encouraging heat network schemes. That is why I very much support Amendment 5 in particular.

Maybe when we get to Report the amendment will not say “2050” but will be unlimited, matching the other amendments in this group, which are making a positive push towards getting businesses, via the relief through the business rates system, to become more energy efficient. These are all good, probing amendments. I know that the Minister is supportive of energy-efficiency schemes and moving towards net zero, so I look forward to her positive response to this group of amendments.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, I start by welcoming our new Deputy Chairman of Committees on his first outing today. I think that I am allowed to say that—anyway, I have said it.

These amendments from the noble Lord, Lord Ravensdale, the noble Earl, Lord Lytton, the noble and learned Lord, Lord Etherton, and the noble Baronesses, Lady Hayman and Lady Pinnock, concern the two new business rate reliefs introduced by the Bill: the new improvement relief and a relief for low-carbon heat networks.

First, on the improvement relief, during the review of business rates a key ask from ratepayers was support for those businesses looking to improve their property. Clause 1 delivers on that ask by introducing the improvement relief. The noble Earl, Lord Lytton, asked about the definitions of “improvement” and “relief”. These definitions are in the draft regulations, on which we are consulting. We will consider those matters following consultation.

Clause 1 will ensure that from 1 April 2024 no business will face higher business rates bills as a result of qualifying improvements it makes to a property it occupies, in the 12 months following those improvements. When a ratepayer makes improvements to the rateable part of their property, that is likely to increase its rateable value and, therefore, the rates bill. To deliver the relief, Clause 1 will ensure that, where that happens and the qualifying conditions for improvement relief have been met, that increase in the rateable value will be delayed for 12 months. Clause 3 does the same for the central rating list.

As is common for business rate reliefs, the detailed rules will be in regulations made under the powers in these clauses. My department has published those regulations in draft so that the House may see during the passage of the Bill how we intend to use these powers.

The amendments we are considering in relation to improvement relief, from the noble Lord, Lord Ravensdale, the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, seek to extend the period of relief from one year to five years and to allow unlimited relief for energy-efficiency improvements.

Of course, I understand the concerns we have heard and why some consider that the relief should be extended. It is a question we face when we come to consider and review all the reliefs in the business rates system. We recognise the importance of energy-efficiency improvements to properties. We have already ensured that eligible plant and machinery used in onsite renewable energy generation and storage, such as rooftop solar panels, wind turbines and battery storage, are exempt from business rates from 1 April 2022 until 31 March 2035. Onsite storage used with electric vehicle charging points is also exempt. We have done this using existing powers.

However, as with all tax breaks, we must balance the need for support with the need to fund the vital public services that those taxes support. In the case of improvement relief, we considered these matters at length during our review and, following extensive engagement with business groups, settled on a 12-month relief.

Under the current system, as one would expect for a tax based on the value of property, businesses may see an immediate increase in their rates bill for improvements they make to their property, where those improvements increase the value of the property, but they may see a lag in the return or income that flows from that investment.

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[Baroness Scott of Bybrook (Con)]

My Lords, I will continue. The 12-month relief will provide a breathing space for the investment to start to generate returns before business rates have to be paid. I know that some feel that 12 months is not long enough to incentivise the types of major refurbishment and improvement often made to properties by landlords and developers. However, as I explained to the House at Second Reading, this relief is designed to help occupiers make improvements to their existing premises rather than subsidising general commercial property development.

The noble Baroness, Lady Hayman of Ullock, asked what “occupied” meant. We already have a current discretionary heat network scheme that we have worked up with full guidance in partnership with the heat network sector and local government. That guidance is already published. Once the Bill receives Royal Assent, we intend to translate that guidance into regulations and to make those in good time to ensure a seamless transition between the current discretionary scheme and the new mandatory scheme. I suggest that noble Lords look now at the guidance as it will make it clear what will go forward. In the meantime, we will work with the heat network sector on the regulations in case they need any tweaking.

Nevertheless, as this is a new relief, it is right that the Government evaluate whether it is working and delivers value for money. Therefore, the Bill as currently drafted includes powers to extend the duration of the improvement relief and in 2028 the Government will review the scheme. That will be the appropriate time to consider whether to continue with the scheme and how effectively the relief is operating. As part of that review, we will consider whether 12 months remains the correct duration for the relief. We have, however, allowed for a longer period of relief for low-carbon heat networks, given the particular role that they play in reducing our dependence on natural gas. That relief runs until 2035. Amendment 5, from the noble Baronesses, Lady Hayman and Lady Pinnock, would extend that to 2050. As with improvement relief, we have to balance the need for support with maintaining the services funded from the tax, as I have said. The end date in the Bill aligns with our ambition to phase out new natural gas boilers by 2035. By that date, new low-carbon heat networks will no longer have to compete with natural gas alternatives. Under those circumstances, we hope that the relief will no longer be necessary and, therefore, 2035 will be the right time to end the relief. However, as with the improvement relief, we will keep this under review and the Bill includes powers for us to extend the 2035 date, if it is necessary at the time.

I hope I have given noble Lords the explanations and assurances that they were seeking and that the noble Lord is able to consider withdrawing his amendment.

[The Earl of Lytton (CB)]

The Minister mentioned regulations following Royal Assent and I am happy with that, but could she confirm that this will have a consultation process attached to it? She also referred to something that I interpreted as a post-legislative review. What is the framework for that in this instance?

[Baroness Scott of Bybrook (Con)]

On the regulations, we are consulting at the moment and that will be discussed afterwards. If noble Lords want to put anything in, I suggest they look on GOV.UK. I shall sit down so that the noble Earl can ask his second question because I did not quite pick it up.

[The Earl of Lytton (CB)]

It was about the post-legislative review and its framework, in so far as it would apply to the workings of the Bill once it gets Royal Assent.

[Baroness Scott of Bybrook (Con)]

As far as I know, we do not have a framework yet, but as soon as we have—I assume it will go out to some sort of consultation—I shall make sure that noble Lords are aware of when it is issued.

[Lord Ravensdale (CB)]

My Lords, the noble Earl, Lord Lytton, made a compelling argument for a general extension of improvement relief, as did the noble Baronesses, Lady Pinnock and Lady Hayman, for extending heat network relief. For me, this is all about joining the dots across the legislation, so that we have a coherent picture. As the Minister said, we already have a permanent exemption for renewable energy and storage. All these factors feed into our overall strategic targets, so we need a coherent picture across the legislation. The Minister rightly talked about fiscal responsibility and the need to bear it in mind.

The other side of the picture, to counter that, are all the benefits to increasing private investment—in the case of energy efficiency, lower bills—and the benefits from overall economic growth that would flow from that. I look forward to further discussions with the Minister leading up to Report, but for now I beg leave to withdraw my amendment.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady Pinnock, for introducing this group with Amendment 7, which seeks to change the Bill so that lists must be produced every two years instead of three. Today’s discussion has demonstrated that noble Lords think that this needs to be revisited and that perhaps three years is too long.

I am quite interested in Amendment 9 in the name of the noble Earl, Lord Lytton, which would allow SIs to be introduced to change it to one or two years. Bringing in flexibility to adopt a shorter cycle without that kind of prescription is a really interesting idea and approach. In principle, we would support that; my only concern is that the SI procedure has not exactly gone entirely smoothly in recent years. To get our full support to move in that direction, we would need to ensure that SIs are managed better than they have been recently.

The noble Baroness, Lady Pinnock, made some important points about the need for business confidence regarding valuations. That is incredibly important, particularly given the uncertainty resulting from inflation, various costs—of energy, for example—going through the roof, the challenges following the pandemic, the business rate holidays that have moved or not moved, and the differences resulting from where in the country you may be. None of that helps with certainty for businesses, particularly those that have retail in different parts of the country.

Another really good point was made about the fact that a small but perfect group is taking part in these discussions. Here we have noble Lords with real and practical experience and knowledge, which I hope will be helpful as we move through Committee.

The Chartered Institute of Taxation has agreed that moving initially to three-year revaluations would provide a balance between the administrative costs and the need for regular revaluation to reflect the economic conditions of business. But it also said that, given the rapidity of changes in business and shopping practices, the Government should consider a phased approach to achieving more frequent revaluations, and that this should remain under evaluation. Given the different amendments we have today and the discussions that we have had, will the Minister consider taking back to her department the introduction of a phased approach? I know that in the letter to noble Lords following Second Reading, she said that the Government will

“carefully consider the case for even greater frequency of revaluations once the new system changes have bedded in”.

That brings us to the point made by the noble Lord, Lord Thurlow, who suggested that waiting for that three-year cycle to bed in might be very helpful. He made the point that we need to listen to the experts and advisory groups and make sure that we get this right, because anything over two years goes out of date very quickly. The Labour Party position is that we should have more frequent valuations. We have talked about them being annual, but of course this has to be right, and it has to work for business.

Finally, on Amendment 14, tabled by the noble Earl, Lord Lytton, on the abolition of downward caps, it is concerning that the downward caps can prevent savings being passed on to businesses and could mean that they unnecessarily pay more in business rates. It is an important amendment, and I would be interested to hear what reassurances the Minister can give the noble Earl.

[Baroness Scott of Bybrook (Con)]

My Lords, this group of amendments takes us to the heart of the Bill; namely, our commitment to modernise the business rates system through more frequent revaluations. Amendments 7 to 13, from the noble Baroness, Lady Pinnock, the noble Lords, Lord Shipley and Lord Thurlow, the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, are concerned with the frequency of revaluations. They provide for either the revaluation cycle to move to every two years or for the Government to adopt a two-year cycle by order. The Government fully understand the desire to keep business rates as accurate and responsive as possible. That is why the frequency of revaluations was a key part of our review.

Regular revaluations update rateable values, and so rates bills, to reflect changes in the property market. During the business rates review, we heard from businesses that they overwhelmingly favoured more frequent revaluations. Interestingly, a majority of respondents to the review supported a three-year revaluation cycle. The noble Earl, Lord Lytton, mentioned countries that had annual revaluations, but it is not straightforward or accurate to simply compare our revaluation cycles with places such as the Netherlands. Evidently, a single property tax there covers both residential and commercial properties, so it is a very different system from the one in this country. We also considered annual revaluations, but some stakeholders raised concerns about an annual cycle, such as the increased volatility of bills and potential impacts on valuation accuracy. We therefore concluded that we should move to a three-year cycle of revaluations, and the Bill provides for that, with the next one to take place on 1 April 2026.

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[Baroness Pinnock (LD)]

I shall try to pick up from where I left off. I may or may not have heard the Minister aright so this is just to check. The very good Library briefing on the Bill references the Treasury review into business rates. I shall refer to the Library briefing, then the Minister can say whether or not I have misunderstood. It says:

“On the longer-term proposals, most respondents stated that … revaluations should happen more often”—


we agree with that. But then it says that

“the gap between when the revaluations were assessed and when they came into force should be shorter than the current two years”,

which was one of the points that I was trying to make.

I may have misheard the Minister—if I have, I apologise—but the point that the review was making was to say yes to a shorter gap than five years, and the Government have pitched on to three. At the same time, the assessment year should be shorter than the two years that it currently is—that is what I think the review was saying, and I was trying to say that part of the argument for reducing the gap between the assessment year and the revaluation year is to make it narrower.

[Baroness Scott of Bybrook (Con)]

The response was three years, because of the reasons that I put forward—but, yes, we have aspirations to squeeze that to two years. That is the issue that we are discussing, and it is absolutely right that we are trying to do that. It is where we would like to get to, but it will take the changes that we are making to the Valuation Office Agency to do that—and then there is the digital aspect, and things like that, which we have already talked about.

[Baroness Pinnock (LD)]

I beg leave to withdraw the amendment.

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[Baroness Hayman of Ullock (Lab)]

My Lords, as we have just heard, I have Amendment 28 in this group. I thank the noble Lord, Lord Shipley, for his support for my amendment. We tabled this because we are concerned that the VOA may not be sufficiently resourced, particularly as the Bill gives the agency additional responsibilities. The noble Lord, Lord Shipley, has clearly expressed many of the concerns behind the amendment.

I looked at some recent data about the number of staff employed by the agency. The latest figures that I could find showed that it has a full-time equivalent of 3,698 staff, which is not huge, to be honest, particularly as a large number of new responsibilities is being brought its way. The global property consultancy, Colliers International, has described the Government’s plan to reduce the number of VOA offices from 56 to 26 as “a shambles”, and said that it will be a

“nightmare for businesses wanting to appeal their business rates”.

That is another reason why I was concerned enough to table this amendment.

We also know that there have been problems with the VOA managing the number of appeals and the time taken for resolution. I very much support what the noble Lord, Lord Thurlow, said in his excellent introduction to this debate, about the importance of transparency. He also talked about the number of challenges—30%—resulting in reduction. Clearly, that is too high and needs to be addressed—and the VOA needs sufficient resources to be able to do so.

We also know that, often, the number of challenges and the time taken for resolution relate to the number of rogue agents, many of which want to make a fast buck out of this. That is why we support Amendment 34 in the name of the noble Lord, Lord Shipley, which looks to address this. Again, we had discussions about it at Second Reading. We support his amendment and that of the noble Baroness, Lady Pinnock, in this group. In the letter that the Minister sent to noble Lords after Second Reading, she acknowledged that rogue agents need to be looked at and that this would be part of a government consultation. I hope that the Government will take this seriously enough to consider action on this following the consultation, because it seems genuinely to be a problem.

We very much support what Amendments 15 and 17, in the name of the noble Lord, Lord Thurlow, are trying to do to increase transparency in the revaluation process. We hope that that transparency would also reduce the number of appeals, as the noble Lord so eloquently said. Amendment 16, tabled by the noble Earl, Lord Lytton, would also increase transparency, and we would be happy to support it. Clearly, increasing transparency is important, but we have to be careful that amendments we put down on transparency do not have the unintended consequence of adding to the valuation office’s workload without it having sufficient resources—this comes back full circle to what I said at the beginning.

There is also the risk of a major bottleneck in the system, through the new online portal. It would be good to have reassurances from the Minister about how that will be resourced and managed. It is human nature that a large proportion of ratepayers will put in requests for their rental evidence soon after the 1 April date, when the new rating system is published. It would be helpful if the Minister could give assurances that the VOA will be able to respond in time to allow ratepayers and their agents to construct and submit challenges by 30 September—the six-month deadline—because that six-month window for a challenge is a fundamental change to the rating system. We need greater clarity and certainty about exactly how that window will operate, particularly in relation to new tenants and the changes in the list that occur during and after the six-month window. Where is that flexibility?

The Bill states that a ratepayer must provide “annual confirmation” that they have, first, provided “all notifiable information required” or, secondly, that they are “not required to provide” any such notifiable information. Is this confirmation likely to be digital, to fit in with the online system? Will accessible formats be reduced, and will any mitigating circumstances be considered, if a person is unable to complete that confirmation?

As the noble Earl, Lord Lytton, described it, his Amendments 18 to 20 remove the requirements for the annual return. He talked about duplication and unnecessary returns, and it would be helpful if the Minister could provide clarification on that, because a number of changes to how this is done are coming in, and it is important that it works smoothly from the start.

[Baroness Scott of Bybrook (Con)]

My Lords, group 3 concerns information sharing between the Valuation Office Agency and ratepayers, the performance and capacity of the VOA, and the behaviour of some of our rating agents. Central to this part of the Bill is our commitment to move to more frequent revaluations, delivered by Clause 5. As we have discussed, sustainably delivering this important goal is contingent on increasing the timeliness and quality of the information received by the VOA.

To ensure that the VOA has that timely and complete flow of information, Clause 13 introduces a duty on ratepayers to provide notifiable information to the VOA and to confirm each year that they have met their obligations under that duty. In return, Clause 10 provides the means for ratepayers to access an analysis of evidence used to set the rateable value for their property, which should reduce the need for ratepayers to make a challenge. Ratepayers will be able to access guidance from the VOA, provide information on their property and request evidence on their own valuations, all through an online service. This will be the same online portal through which ratepayers will also be able to provide their taxpayer reference number to meet the other duty introduced by Clause 13.

The noble Earl, Lord Lytton, asked about information if you have more than one property. The VOA will seek to enable ratepayers with multiple properties to provide information about their properties at the same time every 30 days, to limit their administrative burden. We have listened to requests from stakeholders for this functionality, and we recognise that there is also a benefit for the VOA from receiving information in this way. We will work with businesses, agents and software suppliers to rebuild a robust and effective system for ratepayers. The deadline for notification of the underlying changes will remain at the now-increased 60 days, and the same deadline will apply to all, regardless of the means of notification.

I turn to Amendments 18 to 20. As I have set out, Clause 13 includes a requirement on the ratepayers to confirm once a year that they have provided the information required of them—this will be digitally, to respond to the noble Baroness, Lady Hayman—under the VOA duty. Amendments 18, 19 and 20 from the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, would remove that requirement. I shall explain why this part of the duty is necessary.

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[Baroness Pinnock (LD)]

I think that I have listened very carefully but, on the digitisation of business rates, which I support, did the Minister explain the arrangements that could be made for businesses in remote locations where there is little or no mobile signal and where broadband has yet to reach them, despite what I accept are the Government’s best intentions that that should be the case? I live in the upper Pennines region, where there are businesses and remote farming communities. So far, they do not have either. Ditto in the Yorkshire Dales; I know of businesses there with neither a mobile signal—one that works, anyway—or a broadband connection. What arrangements will be made for such businesses?

[Baroness Scott of Bybrook (Con)]

I am told that there will be a non-digital availability. I will get all the details for the noble Baroness and I will write a letter, which will also go to the Library.

[The Earl of Lytton (CB)]

I would like to tease out a little more information following the Minister’s response on Amendment 17. What happens, in effect, is that the evidence is part of an adjudication process. In my professional line of business, there are various stipulations about surveyors acting as expert witnesses and the way in which these things are to be handled. Amendment 17 is particularly important because, when one gets into a situation where there is an appeal pending, there is this little thing about equality of arms. If one party is able to use information that is held confidentially, to the exclusion of the other party, I do not think that equality—that transparency standard—is met. We are talking about what is ultimately something that leads to an appeal before the valuation tribunal.

Can the Minister say whether I have got it right that the VOA can have a protected category of evidence, as it were, that it is not prepared to share? This is something that has come up on my radar when looking at some of the blogs that have come out of the rating surveying world. It is a matter of fundamental importance in terms of the administration of any sort of justice system and adjudication, which is what this is. I would therefore like to pin down the Minister a little more on that point.

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[Baroness Scott of Bybrook (Con)]

I think we made it very clear that the information that can be shared is the information that does not affect the data protection. Therefore, there will be information that cannot be shared because it will affect data protection. Because this is quite a legal issue, I will offer noble Lords a further, in-depth meeting, with lawyers there. If we are to get to the bottom of this, it is better to do that with a lawyer with us talking about the data protection law. Would the noble Earl be happy with that?

[The Earl of Lytton (CB)]

I thank the Minister; that would be very helpful.

[Baroness Scott of Bybrook (Con)]

We will be in touch.

[Lord Thurlow (CB)]

I thank all noble Lords who have taken part in this group. I thought that the reference made by the noble Earl, Lord Lytton, to a timely VOA response was particularly apt, and I was grateful for his support just now on Amendment 17 on confidentiality. I thank the Minister for the offer to follow up.

The comment from the noble Lord, Lord Shipley, that the amendments in this group are simple common sense was one of the most powerful pieces of oratory that I have heard this afternoon, and I hope that it materialises very soon. I admired his well-made comments about the rogue agents, and once again I thank the Minister for her comments in that regard, as to how the Government intend to protect the public. I thank the noble Baroness, Lady Hayman, for identifying a number of concerns over the VOA’s resourcing, which tie in directly.

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with the extent of the information required depending on the nature of the property. So, unless the use of the building is relatively restricted, and therefore its future use is apparent—a storage unit, for example—the intended use could span a number of different uses. So the question is what would the consequences be if the intended and actual use differed in relation to the terms of the penalties? I can see someone frowning—I hope I am being clear. Perhaps we can pick this up at a later date if I am not being completely clear about this. It is just in case there is a difference between what you say you will use it for and then, ultimately, what you do use it for.

[Baroness Scott of Bybrook (Con)]

Group 4 consists of Amendments 22 to 26, tabled by the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton. They are concerned with the application of penalties for non-compliance with the VOA duty. As we have said, we will not initiate the VOA duty until we are satisfied that all ratepayers can reasonably and efficiently comply. There will be a soft launch of the duty, during which time no penalties for non-compliance will be issued and the VOA will raise awareness and expand its engagement with sector bodies and businesses of all sizes. As was said, issuing penalties will be the last resort. The VOA and HMRC will ensure that the new online service is simple to use and will take multiple steps to encourage ratepayers to comply, through reminders and warnings, before issuing a penalty.

Amendment 22 seeks to prevent the imposition of penalties where ratepayers’ errors or omissions are the result of reasonable reliance on VOA guidance. However, it is already the case that the VOA is able to apply penalties only where the ratepayer could reasonably be expected to know that the information would assist the VOA. All ratepayers will need to do to ensure that they are complying is follow guided steps on GOV.UK. If the ratepayer follows this guidance, the VOA will not, under the existing provisions of the Bill, be able to apply penalties. Thus, we do not think that this amendment adds anything of substance to the position as it already stands. If a penalty is issued in error where a ratepayer has relied on VOA guidance, the Bill gives the VOA the power to remit it. Ratepayers will also be able to appeal any penalty applied, and this will be independently reviewed by the valuation tribunal.

Amendments 23 to 25 are designed to address the penalty tariffs applicable to instances where a ratepayer has either failed to notify the VOA or provided false information. I will briefly explain the Government’s approach here. The Bill sets out the maximum level of penalty which the VOA may apply depending on the nature of the failure to comply. Our intention, as set out in our response to the technical consultation, is for the VOA sometimes to levy lower penalties than are set out by the framework of the Bill. Penalties will be levied as a percentage of the change in the rateable value rather than the entire rateable value and, where penalties are issued for a failure to provide information, the minimum penalty will be reduced for those on lower rateable values.

The Bill also introduces an offence where a ratepayer has knowingly or recklessly made a false statement. In these cases, a ratepayer could be subject to criminal sanction. Alternatively, making a false statement will lead to a civil penalty, the amount of which is provided by new paragraph 5ZD. Where the civil penalty is applied, in practice the maximum penalty will be 3% of the change in the property’s rateable value plus a fixed penalty of £500. To address the amendment, the Bill rightly provides a more severe penalty for knowingly or recklessly providing false information.

The point has been made that there should be a cap on daily penalties following an initial instance of failure to provide information. This information can have a direct impact on tax liability, so it is crucial that the duty is underpinned by a fair and proportionate but robust compliance regime. However, I can provide the reassurance that, even after the initial 60-day deadline, ratepayers will receive a reminder, warning and final warning before a penalty is applied. Only after an additional 30 days would the first daily penalty of £60 be issued. Ratepayers will be able to request a review and appeal of any penalties imposed. The daily penalties will be stopped when the ratepayer provides the required information, so as soon as the ratepayer complies, the penalties are effectively capped.

Applying daily penalties in this way is not an uncommon feature of taxation penalty regimes. For example, Schedule 36 to the Finance Act 2008 deals with powers for HMRC to request information from taxpayers and imposes penalties for a failure to provide such information. It includes penalties of up to £60 per day for as long as the non-compliance continues, without an overall cap on liability.

Amendment 26 seeks to alter the burden of proof which the valuation tribunal should apply when deciding whether to uphold a penalty decision. Of course, when considering a higher penalty for a ratepayer who has provided false information, the VOA must in the first place be satisfied beyond reasonable doubt that the information was provided knowingly or recklessly. There is considerable protection for ratepayers already.

Nevertheless, I am grateful to the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, for raising questions about the appeals process. We will of course review the relevant text. I hope that, given that I have explained why the system of penalties is designed as it is, noble Lords will agree the amendments are not necessary.

[The Earl of Lytton (CB)]

My Lords, I thank the noble Baronesses, Lady Pinnock and Lady Hayman, for their contributions on this group of amendments. The noble Baroness, Lady Pinnock, referred to the necessary balance here, and I agree. The noble Baroness, Lady Hayman, queried whether the application of criminal charges is properly introduced here, whether the Valuation Office Agency is the right outfit to make that call and whether it will be given the necessary guidance and assistance to make consistent rulings in that respect.

It seems to me that the question is about the discretion of the VOA to do things—its ability to do or not do—as opposed to a legal duty. It seems to me that some sort of duty on the VOA is part and parcel of its overarching statutory duty to, for instance, maintain a correct valuation list. It also seems to me that those duties should mirror the obligations and penalties imposed on the ratepayer, otherwise it is a very asymmetric situation. That is, to some extent, what I was trying to deal with in Amendment 16.

The Minister has given various explanations of the Government’s position here. On Amendment 22 and the question of “reasonably be expected to know”, she said that this covers the guidance given and therefore the amendment does not add anything of substance and that there is a right of appeal. I think I will have to consider carefully what she said. With regard to Amendments 23 and 25, I felt that I had detected a series of typographical errors, but I understand the Minister to have said that they are not errors and that the Bill is deliberately worded that way. I am not sure that on a fair reading that is likely to be the case, so I hope they may be looked into at some stage or other.

On the cap or no cap, I have already pointed out that there is a degree of asymmetry between the approach that has been adopted in the Bill in this respect and what happens with failure to deal with the form of return. I appreciate that there is the “knowingly or recklessly” test, but we have a rather circular argument here because, if the VOA is again the sole arbiter of “knowingly or recklessly” and the thing then proceeds to a tribunal that says something different, I would hope that we could have got to a situation well before then where the ground rules were understood. Is the Minister saying that the wording of the Bill is in all respects what was intended and that there are no typographical errors in it as I had supposed? Will she please clarify that point?

[Baroness Scott of Bybrook (Con)]

No, there are no typographical errors in the Bill. I think the noble Earl asked that question earlier, and there were none.

Just to be clear on criminal offences and why they are necessary, there is already a criminal offence for providing false information in response to a request for information by the VOA. So we are not putting in a criminal offence—there is already one there as it stands now. It is interesting that criminal charges will be only for “knowingly or recklessly” giving false information. If it is just a false statement, for whatever reason, that would still be a civil penalty.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I will be very brief. The noble Earl, Lord Lytton, has laid out his concerns very clearly and in great detail. At the least, we need clarification. We have talked about the problems around licensing conditions; the hospitality sector in particular is very concerned about the implications of being stuck with a valuation for three years that, bluntly, may not be correct. It would be very helpful to hear what the Minister has to say and for her to give reassurances to the licensing sector that its circumstances will be taken into account.

[Baroness Scott of Bybrook (Con)]

My Lords, I am grateful to the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, for their amendment. I understand the concerns around this clause; I will take the opportunity to explain why we consider this measure to be necessary and to set out the limits of its application.

As we have heard throughout the passage of the Bill, more frequent revaluations and the measures we are introducing to support them are central to the reform of the business rates system. It is through those revaluations that the rating system is able to track and reflect changing economic circumstances. In property valuation terms, rateable values are updated at revaluations to reflect changes in economic factors, market conditions and changes in the general level of rents.

Of course, that does not mean that rateable values never change between revaluations. It would hardly be fair if, for example, a ratepayer demolished part of their property but this was not reflected until the next revaluation, or if a new property were built but escaped rates until the next revaluation. Therefore, some changes are reflected in rateable values as and when they happen. Examples include changes to the physical state of the property, the mode or category of occupation of the property or matters affecting the physical state of the locality. These matters, reflected as and when they occur, are called material changes of circumstances—MCCs.

The MCC system has been operating in this way for many years, but, during the coronavirus pandemic, we found that it was not working as intended. Large numbers of challenges were made, seeking reductions between revaluations for the effects of the pandemic, which by their nature were part of the general market conditions. Such general market matters should be considered at general revaluations.

Therefore, the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 clarified the law to ensure that coronavirus and the Government’s response to it were not an appropriate use of MCC provisions. Specifically, that Act ensured that anything done to comply with legislation, advice or guidance given by a public authority and attributable to coronavirus should not be an MCC, subject to some exclusions. The principle in that Act was approved by both Houses, and it received Royal Assent on 15 December 2021.

Clause 14 of the Bill merely takes that principle, clarified and accepted by this House in the 2021 Act in relation to coronavirus, and applies it more generally to all legislation, guidance and advice from public bodies. Changes in such matters are part of the economic factors and market conditions for a property and should be reflected at a general revaluation. This clause will protect the integrity of the rating system and ensure that more frequent revaluations can proceed smoothly. It will protect the system not just for central government but for local government, which relies on the revenue from business rates. The Local Government Association supports this clause and agrees that these matters should be reflected at general revaluations. But this does not mean that these matters are not reflected in rateable values; it just means that they are reflected only at the set date of each revaluation, along with all other economic and general market factors present at that date.

Furthermore, we have limited the scope of Clause 14 to three aspects of the MCC system to ensure that it operates fairly. This is to ensure that physical changes to the property or the state of the locality are still reflected. Therefore, Clause 14 will bite on only three types of MCCs. First, it will catch matters affecting the physical enjoyment of the property but not the physical state. This might include changes in how the property can be used following new legislation or guidance. Secondly, it will catch matters that are physically manifest in the locality but not matters affecting the physical state of the locality. This might include changes to traffic flows and bus or transport services. Thirdly, it will catch the use or occupation of other premises in the locality, which might include the change in use of a nearby property where, for example, the original use has been prohibited by new legislation.

Clause 14 will ensure that matters such as physical changes to a property or to the state of the locality continue to be immediately reflected in valuations, even if they are a result of new legislation or guidance. Clause 14 will also not bite on whether the property is non-domestic or domestic or whether it is exempt. Overall, Clause 14 will preserve a long-established principle by ensuring that matters that go more to the market conditions and general level of rents of a property belong in the general revaluation process. Of course, with more frequent revaluations, these factors will still be updated more often than ever before.

The clause will provide important stability and certainty to the rating list and, therefore, to the vital revenue for local government that flows from the list. Therefore, it would not be prudent to delay the introduction of the clause, as this amendment seeks. I know that the noble Earl will be disappointed that we are unable to agree to this, but I hope that I have set out the basis for taking this measure and also given him some assurances regarding its scope. I will look at Hansard tomorrow and will write to noble Lords with further explanations if I feel that they are required.

[The Earl of Lytton (CB)]

My Lords, I thank the noble Lord, Lord Shipley, and the noble Baroness, Lady Hayman, for their support in connection with this. Although I understand what the Minister says is the intention of Clause 14, having been taken through it in some detail by more than one expert, I am bound to say that I do not agree with her about the effect of the clause. There is a difference in understanding, and I wonder whether it could be dealt with by a further discussion—the Minister is nodding, which I am grateful for. It is very difficult if somebody reads this in one way and says, “This could cover a multitude of things that could be excluded”, and the Minister says, “Actually, it is not intended to do that and these are the safeguards that we have built in”.

All I can say at this juncture is that I will certainly return to this on Report. I hope that there can be a meaningful dialogue on this in the meantime. It would be wrong for me to go into a detailed unpicking of what the Minister said at this hour and given the other pressures on us. To that end, I beg leave to withdraw the amendment.

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[Lord Shipley (LD)]

My Lords, my name appears on two of the amendments in this group. Underlying the whole group is a major issue: the Treasury now sees business rates as a source of general income to government, but many small businesses see them as a contribution to local services. That has got out of balance.

I strongly support Amendment 36, in the name of the noble Lord, Lord Thurlow, who has just spoken. He talked about the impact of online shopping on small high street outlets and said that there was a public interest case to be made. Indeed, Amendment 29, moved by the noble Baroness, Lady Hayman of Ullock, probes the possibility of reducing the threshold for small business rate relief on high streets. A number of us raised that issue at Second Reading.

A number of issues are raised in this group. I have an amendment on the hospitality sector. It is not clear to me what reason there would be for not having a hospitality sector review, as I propose. It is about assessing the consistency of approach; we have spoken a lot about high streets, but this applies to the hospitality sector as well. There needs to be an assessment of whether there is a consistent approach for setting non-domestic rateable values between hospitality businesses occupying premises of similar size and trading style. I cite public houses, restaurants, live performance theatres and exhibition spaces as examples. This is the kind of thing that government should be doing anyway, but there is a huge policy issue now around what business rates are for and how we make sure that they are being fairly charged.

[Baroness Scott of Bybrook (Con)]

My Lords, group 6 covers several amendments probing the Government’s support for high street businesses and the wider impact of the Bill. I am grateful for the useful discussions that I have had with noble Lords on what are, undoubtedly, significant issues.

Amendments 30 and 31, from the noble Baroness, Lady Pinnock, and the noble Lord, Lord Shipley, seek a review of the effect of business rates on the retail and hospitality sectors. I recognise that the conditions for businesses in town centres and high streets are concerning for many noble Lords. The Government take these concerns seriously and recognise the impact that increased competition from online businesses, changing consumer behaviour and Covid-19 has had on the fortunes of some high street businesses.

That is why the Government have taken decisive action to ensure that business rates are manageable for ratepayers on the high street. First, 720,000 properties, including many smaller retailers, pay no rates as a result of small business rates relief. Additional support has also been provided for those that do have rates bills: at the Autumn Statement, the Chancellor announced a package of business rates measures worth £13.6 billion. This included a general freeze of the multipliers for all properties, as well as increased support—from 50% to 75% relief—for retail, hospitality and leisure properties, which is worth over £2.1 billion. As we heard, the Government also scrapped downward caps and, as we move to more frequent revaluations through the Bill, we will see a business rates system that better reflects real market values, which was the leading ask of businesses in our review.

I understand that the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, tabled Amendment 26 to encourage the Government to more actively intervene in how different types of property used in the retail sector are valued. Valuation is, of course, conducted independently by the VOA. All properties subject to business rates are assessed to the same standard of rateable value, which is, broadly speaking, the annual rental value. Properties are valued by reference to the evidence on the level of rents, which is agreed by landlords and tenants for that specific property class. If, at the most recent revaluation, the evidence shows that those open market rental values have increased, rateable values will change with them. Nevertheless, in all cases, the method must result in the common standard of rateable values.

In our review of business rates, the Government sought views on many different ways in which the valuation system could be changed. However, there was strong majority support for retaining the existing basis of rateable value. Therefore, we do not support significant changes to the industry-recognised valuation methodology, as was suggested.

Social Housing (Regulation) Bill [HL]

Baroness Scott of Bybrook Excerpts

Consideration of Commons amendments
Tuesday 27th June 2023 Lords Chamber

Moved by

[Baroness Scott of Bybrook]

That this House do agree with the Commons in their Amendments 1 to 12.

1: Clause 4, page 3, line 40, leave out “follows” and insert “set out in subsections (2) to (6)”

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[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, with the leave of the House, as well as moving that this House do agree with the Commons in their Amendments 1 to 12, I will also speak to all the other Commons amendments.

I am pleased to bring the Bill back to the House and to see the progress that it has made since it left. This legislation seeks to drive the change that we know is so desperately needed in the social rented sector. It is vital that everyone learns from the mistakes that led to the Grenfell Tower tragedy, and the Bill will ensure that social housing tenants receive the protection and respect that they deserve. The Grenfell community’s tireless campaigning will leave a legacy of real change to social housing in this country.

The need to drive up the quality of social housing and rebalance the relationship between tenants and landlords was also thrown into sharp relief by the tragic death of Awaab Ishak. I know that Awaab’s father is watching today, and I know that I speak for all of us when I say that my thoughts remain with the Ishak family. I thank the family, along with Shelter and the Manchester Evening News, for their steadfast campaigning on Awaab’s law. This law will make a real difference to people’s lives, and I hope that it brings some degree of comfort to all those who knew and loved Awaab.

As I shall set out, the Government have listened carefully to the points raised, both in this House and in the other place, and tabled amendments in the other place to strengthen the legislation to its fullest extent. Commons Amendments 10, 11, 12, and 13 amend the clauses added by this House on competency and conduct standards and make provision for them to require that senior housing managers and senior housing executives have, or are working towards, appropriate level housing management qualifications.

We have also tabled a further amendment to the Bill to ensure that relevant managers employed by organisations which deliver housing management services on behalf of a registered provider are captured by the legislation, as was our original intention. I thank the noble Baroness, Lady Hayman of Ullock, for bringing the need for this amendment to my attention. This amendment will require registered providers to take steps to secure that relevant managers of these delegated services providers are qualified.

Our amendment also introduces implied terms into the contractual agreements between registered providers and delegated services providers and relevant sub-agreements, stipulating that their relevant managers should have, or be working towards, a specified qualification in housing management. This enables registered providers to take action against delegated services providers who are not compliant. These amendments, which have been welcomed by Grenfell United and Shelter, will drive up professional standards and the quality of housing services across the sector.

I turn to the amendments that we tabled in the other place on Awaab’s law. I am sure that I am not alone in saying that I was deeply shocked and saddened by the tragic death of Awaab Ishak. Commons Amendment 28 takes a power for the Secretary of State to set out requirements for landlords in secondary legislation to investigate and rectify hazards within a certain time. The amendment also inserts an implied covenant into tenancy agreements that landlords will comply with the requirements prescribed in regulations; this will impel landlords to deal with hazards such as damp and mould in a timely fashion, knowing that, if they fail to do so, they can face legal challenge from residents.

We have also introduced Amendments 14, 15, 17 and 29, which will ensure that the regulator sets standards for landlords to provide tenants with information about how to make complaints, and about their rights as tenants.

Commons Amendment 27 will give the ombudsman explicit statutory power to publish guidance on good practice, alongside the power to order landlords to complete a self-assessment if the ombudsman has received a relevant complaint about a landlord.

Amendments 1 and 2 repeal the provisions in the Housing and Regeneration Act 2008 which provide a specific power to enable the regulator to charge fees for inspections. Those fees will be recoverable under the regulator’s fee-charging powers under Section 117 of the Housing and Regeneration Act 2008, so the specific inspections power is now unnecessary.

Amendments 3 to 9 are technical amendments concerning moratorium procedures when the regulator is unable to locate any secured creditors.

Amendment 16 removes Clause 24 relating to energy demand, which was inserted into the Bill by this House. Although we are sympathetic to the aims of the clause, and we agree with the need to continue progress on making social homes warmer and more energy efficient, we do not believe it is appropriate to set consultation parameters without ministerial oversight. We recognise that the sector would benefit from clear standards to support energy efficiency improvements: that is why we announced that we will consult on standards for improving energy efficiency in the sector within six months of the Bill receiving Royal Assent. We remain committed to this, and officials have already begun work on this consultation. I am able to give noble Lords here today an indication of some of the areas for consultation. We will ask what the appropriate compliance date is for meeting an energy efficiency standard, what energy performance metric this should be measured against and what, if any, exemptions are appropriate.

Amendments 18 to 21 and 23 to 26 deliver technical changes that will ensure that, during a survey or emergency remedial action, any decision to leave equipment or materials on the premises takes into account the impact of that on tenants.

Amendment 22 amends requirements relating to the production and publication of an inspector’s report following the completion of an inspection. These amendments provide that the inspector must produce a summary of findings, as well as a report on any matters specified by the regulator. Amendment 31 was tabled to remove the Lords privilege amendment in Committee in the other place.

Amendments 32 to 51 deal with notices under Sections 104 to 108 of the Housing and Planning Act 2016. These amendments ensure that technical requirements relating to notices do not prevent the legislation working effectively, and help make provisions relating to insolvency easier for the regulator to operate.

Finally, Amendment 53 introduces a provision to clarify the relationship between the data protection legislation and Part 2 of the Housing and Regeneration Act 2008. I beg to move.

[Lord Best (CB)]

My Lords, I welcome the Commons additions to this important Bill. As a prelude, I thank the Minister for the earlier amendment she promised and delivered before the Bill left your Lordships’ House. This created the duty for the social housing regulator to carry out regular, routine inspections rather than just looking at the social landlord’s accounts and paperwork. This amendment had been earnestly requested by the Grenfell United group, which has campaigned tirelessly to improve key aspects of social housing regulation. If only the regulator’s team had made an inspection visit to the social landlord of Grenfell Tower and talked to residents, it would have been obvious that all was not well. The Minister has taken a close personal interest in the aftermath of the Grenfell tragedy, and I congratulate her on the amendment she brought forward which will now ensure routine inspections are a key part of the regulator’s future role.

I now welcome Commons Amendment 17, Awaab’s law, which will strengthen the role of the regulator in requiring social housing landlords to deal swiftly with problems of disrepair. Sadly, some housing associations and some councils have not been on top of these issues, with tragic consequences. There is a need now for some serious investment in the upgrading of outdated public housing, mostly from the 1960s and 1970s. As well as encouraging social landlords to listen more attentively to the matters raised by their residents, I hope we are moving to an extension of the ombudsman role, which will cut down the need for some of the sharp practices of the no-win, no-fee lawyers, who can exploit tenants’ predicaments. There is more to do here.

In particular, I greatly welcome the new Amendment 13B, which covers standards relating to competence and conduct. This amendment is of particular concern to the Grenfell United group and is intended to achieve greater professionalism of the social housing sector, requiring senior housing managers and executives to have or to work towards relevant qualifications. The noble Baroness, Lady Sanderson, raised these issues on behalf of Grenfell United when the Bill was in this House. We have had to wait until conclusions were reached in the other place to amend the Bill accordingly, but the wait has been worth while and I pay tribute to the noble Baroness.

These Commons amendments to Clause 21 will, over time, see the social housing sector properly “professionalised”. This approach was advocated for personnel managing privately rented and leasehold properties by the Government’s working group on the regulation of property agents, which I was pleased to chair. That badly needed change has yet to come about for the private rented sector, although the matter may be raised in the forthcoming Renters (Reform) Bill or the leasehold reform Bill. In the meantime, measures akin to those proposed for managers of privately rented homes will now be applied by this Bill to the management of the social housing sector. This enhancement of the skills of social housing personnel will greatly increase the role and responsibilities of the Chartered Institute of Housing, which is well able to play a vital role here.

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[Baroness Hayman of Ullock (Lab)]

My Lords, this is a really important Bill. I am pleased to see it reach this stage; we have supported it all the way through. It has been a pleasure to work on a Bill that I think is the kind of Bill we ought to be doing. It is short, it is focused and it has a Minister who listens. That has been extremely good to work with. I am really pleased to see the government amendments that have been put forward, in particular those around professionalisation. I also pay tribute to the noble Baroness, Lady Sanderson; her work during the passage of the Bill was exceptional and is, I am sure, one of the main reasons why we have these amendments before us today. On Awaab’s law, I join the Minister and other noble Lords in paying tribute to his family.

I am pleased that the Government have listened to the concerns raised by the arm’s-length management organisations and tenant management organisations, as well as the National Housing Federation, in bringing forward the amendments that dealt with the concerns there.

The noble Lord, Lord Best, welcomed the promised amendment on inspections that was so important to Grenfell United. We are absolutely delighted that the Minister has brought forward those amendments today. I want to thank Grenfell United, Shelter and the Ishak family for their work and support during the passage of this Bill; it has helped us to keep the important issues at the centre and as the focus of what we need to achieve.

I thank the noble Baroness, Lady Hayman, for pushing the energy efficiency amendments, which are really important. It is good that we did not lose sight of them during the Bill’s passage and that we have made some progress. I also thank the noble Baroness, Lady Pinnock, for bringing forward her amendment on that.

I thank the Minister and her officials for their time and their constructive approach to working with us, the Opposition, and other noble Lords during the Bill’s progress through the House. It has enabled us to make what was a good Bill a much better Bill—one that is more fit for purpose.

Finally, I thank my noble friend Lady Wilcox for her invaluable help and support. I am sure that we are now both looking to see the Bill go on to the statute book, so that we can raise our eyes up and look forward to the Renters (Reform) Bill.

[Baroness Scott of Bybrook (Con)]

My Lords, I am grateful to all noble Lords who have contributed and for the wide-reaching support for this important Bill. In particular, I thank my honourable friend the Member for Bishop Auckland for steering the Bill so ably through the other place. I also thank the department’s Bill team, all the policy and legal officials, and my private office team, who have worked hard over the past year to deliver this legislation through both Houses. I especially thank the House authorities, parliamentary staff, clerks and doorkeepers, and all noble Lords who have contributed to the evolution of this Bill.

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Moved by

[Baroness Scott of Bybrook]

That this House do disagree with the Commons in their Amendment 13 but do propose Amendment 13B in lieu—

13: Clause 21, page 17, line 29, at end insert—
“(3) Standards under subsection (1) may require registered providers to secure that their relevant managers—
(a) have a specified qualification in housing management or type of qualification in housing management, or (b) are working towards such a qualification or type of qualification. (4) A “relevant manager” means—
(a) a senior housing executive, or (b) a senior housing manager. (5) A qualification or type of qualification specified for a senior housing executive may only be— (a) a foundation degree, or
(b) a qualification or type of qualification regulated by the Office of Qualifications and Examinations Regulation which is of a level not exceeding level 5. (6) A qualification or type of qualification specified for a senior housing manager may only be a qualification or type of qualification regulated by the Office of Qualifications and Examinations Regulation which is of a level not exceeding level 4.
(7) Except as provided by subsections (3) to (6), standards under subsection (1) may not require registered providers to comply with rules about the qualifications to be required of relevant individuals.
(8) In this section, “senior housing executive” means a relevant individual who—
(a) is an employee or officer of the registered provider, (b) has responsibility (solely or jointly) for the day to day management of the provision of services in connection with the management of social housing provided by the provider, and (c) is part of the provider’s senior management. (9) For the purposes of this section, an individual is part of a registered provider’s senior management if the individual plays a significant role in—
(a) the making of decisions about how the whole or a substantial part of the activities of the provider which relate to social housing are to be managed or organised, or (b) the management or organisation of the whole or a substantial part of such activities. (10) In this section, “senior housing manager” means a relevant individual who— (a) is an employee of the registered provider, and
(b) is a senior housing and property manager for the registered provider. (11) For the purposes of subsection (10)(b), whether an individual is a senior housing and property manager is to be determined by reference to the description of the occupation of senior housing and property management published by the Institute for Apprenticeships and Technical Education under section ZA10(5) of the Apprenticeships, Skills, Children and Learning Act 2009.
(12) The references in subsections (5) and (6) to the level of a qualification are to the level assigned to a qualification by virtue of general conditions set and published by the Office of Qualifications and Examinations Regulation under section 134 of the Apprenticeships, Skills, Children and Learning Act 2009.
(13) For the purposes of this section, “employee” includes a person employed under a contract of apprenticeship.”

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Moved by

[Baroness Scott of Bybrook]

That this House do agree with the Commons in their Amendments 14 to 55.

14: Clause 22, page 17, line 36, at end insert “, including standards requiring information to be published”

Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023

Baroness Scott of Bybrook Excerpts

Monday 26th June 2023 Lords Chamber

Moved by

[Baroness Scott of Bybrook]

That the draft Regulations laid before the House on 25 April and 10 May be approved.

Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the first instrument by the Joint Committee on Statutory Instruments. Considered in Grand Committee on 20 June.

Motions agreed.

Holocaust Memorial

Baroness Scott of Bybrook Excerpts

Thursday 22nd June 2023 Lords Chamber

[Lord Lee of Trafford]

To ask His Majesty’s Government what plans they have to reconsider the decision to site the Holocaust Memorial in Victoria Tower Gardens.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, I will take a minute to send my thoughts to the family of Sir Ben Helfgott. Sir Ben was a Holocaust survivor and an Olympic weightlifting champion. He was also a tireless campaigner for Holocaust education and a huge supporter of the Holocaust memorial and learning centre. I send my thoughts to his family; may he rest in peace.

[Noble Lords]

Hear, hear.

[Baroness Scott of Bybrook (Con)]

The Government remain determined to build a Holocaust memorial in Victoria Tower Gardens so that the memory and lessons of the Holocaust remain prominent in British life. The Holocaust Memorial Bill currently before Parliament is intended to remove a statutory obstacle and enable progress towards construction. Victoria Tower Gardens is a site that is uniquely capable of meeting the Government’s aspirations for a national Holocaust memorial.

[Lord Lee of Trafford (LD)]

My Lords, it is very sad that a memorial to such an appalling crime against humanity should controversially be rammed through against the views of the Royal Parks, Westminster City Council, local residents and so many others. Apart from all the original and obvious objections to the Victoria Tower Gardens site, there are two new factors. First, we now face a major restoration project to the Victoria Tower itself. The scaffolding alone is going to take a year to erect. Imagine the scale of a chaotic construction site with that project, the proposed memorial and, of course, R&R to come.

Secondly, the unfortunate closure of the Jewish Museum London in Camden provides a great opportunity for a new combined museum and Holocaust memorial—a concept supported by Simon Schama, the former Archbishop of Canterbury, Rabbi Jonathan Romain and many others—on a much more appropriate site. So I implore the Government—

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[Lord Lee of Trafford (LD)]

I implore the Government to think again and preserve and protect our very precious green space.

[Baroness Scott of Bybrook (Con)]

My Lords, the memorial is a manifesto commitment which has cross-party support and has been endorsed by all living Prime Ministers. The Chief Rabbi, who sits on the UK Holocaust Memorial Foundation comittee, is fully behind the Government’s proposals, as are leading representatives of the Jewish community, other faith and community leaders, survivors, refugees and the wider public. Their voices were heard at the planning inquiry, emphasising the importance of the memorial and learning centre as a way of providing Holocaust victims and the remaining survivors the prominence in this city that they deserve.

[Baroness Deech (CB)]

My Lords—

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[Baroness Deech (CB)]

My Lords, I declare an interest as honorary president of the National Jewish Assembly. I support the noble Lord, Lord Lee, in drawing attention to the almost total lack of consultation on the memorial. All efforts to open dialogue and to have discussions and round tables have been met with silence, and sometimes abuse. Victoria Tower Gardens is a green enclave, and the dangers of digging down two storeys with piledrivers, which could cause unimaginable damage, have not been taken on board when there are decent alternative sites with as much dignity and more space. I speak for a number of Holocaust survivors in this.

[Baroness Scott of Bybrook (Con)]

I know how strongly the noble Baroness feels about this issue, and I respect everything she has to say. We have had meetings and we are willing to have more; she only has to get in touch with me. However, the planning inquiry in October 2022 enabled all interested parties to express their views on the proposed Holocaust memorial and learning centre, and a full list of witnesses is available in the planning inspector’s report on GOV.UK. Officials regularly meet organisations representing survivors of the Holocaust and Nazi persecution and those representing the survivors of subsequent genocides to discuss the latest developments, and we will continue to do so.

[Lord Pickles (Con)]

My Lords, I draw attention to my register of interests, particularly those relating to Holocaust remembrance. I join my noble friend in her tribute to Sir Ben Helfgott. He was, beside other things, a leading light in Holocaust remembrance and a strong advocate of the site in Victoria Tower Gardens. In fact, the last conversation I had with Ben was about his concerns that the Government and Opposition might not fulfil their promise. Does my noble friend agree with me that the announcement made by the Leader of the House in another place that there will be a Second Reading next Wednesday is very welcome? The time for talking is over; it is time for action.

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[Baroness Scott of Bybrook (Con)]

I agree with my noble friend. I look forward to the Second Reading and the Bill beginning to go through Parliament and, subsequently, to the building of this important monument.

[Baroness Hayman of Ullock (Lab)]

These Benches share the sentiments and the tribute made by the Minister to Sir Ben. If it is built in Victoria Tower Gardens, the memorial will clearly bring many new visitors to Westminster and to Parliament, which I think is a good thing. However, local residents will want to have a park that they can still be proud of and use for their own recreation. How will the Government ensure that the park is still available for local people to enjoy?

[Baroness Scott of Bybrook (Con)]

The design is sensitive to the heritage and the existing uses of Victoria Tower Gardens; I think it has been misunderstood. The design uses approximately 7.5% of the area of Victoria Tower Gardens, and this project will allow enhancements to be made to the remaining 92.5% of the park. In my opinion, that will help visitors to enjoy the park better, even if they are not attending the memorial.

[Lord Clement-Jones (LD)]

My Lords, I very much share the views of my noble friend Lord Lee and the noble Baroness, Lady Deech, on this out-of-scale proposal, especially in relation to the Buxton anti-slavery memorial. Throughout the process, the Government have refused to publish their assessment of any alternative sites, including some which appear to be eminently suitable, such as the Imperial War Museum—why? Will they do so during the consideration of the Bill?

[Baroness Scott of Bybrook (Con)]

My Lords, all that work was done many years ago, in the early days of this project. We believe that the development will not in any way compromise the Buxton memorial. The design of the Holocaust memorial means that the Buxton memorial will be kept in its current position, with its views preserved. In addition, new landscaping and seating will actually improve the setting of that memorial and the viewing experience from it. The Holocaust memorial will be no higher than the top of the Buxton memorial, and the memorial’s bronze fins will step down progressively to the east in visual deference to the Buxton memorial.

[Lord Austin of Dudley (Non-Afl)]

My Lords, there is no more appropriate location for a memorial that shows what can go wrong when politics is infected by extremism, racism and hatred than here in Westminster, at the centre of our politics. That is the whole point. We have heard all sorts of red herrings about this memorial. It will take up less than 10% of the area of the park, and it is at the opposite end of the park to the Palace of Westminster so will have no impact on the work that is to be done here. I take this opportunity to urge the Minister to do everything she possibly can to speed up progress so that Holocaust survivors like Sir Ben, who tragically will not get to see it completed, can be guests of honour at the opening.

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[Baroness Scott of Bybrook (Con)]

I thank the noble Lord for his support of this important project. As he said, Victoria Tower Gardens is the most fitting site in terms of the historical, emotional and political significance and its ability to offer the greatest potential impact and visibility for the project. The view of Parliament from the memorial will serve as a permanent reminder that political decisions have far-reaching consequences.

Domestic Abuse Refuge Spaces

Baroness Scott of Bybrook Excerpts

Wednesday 21st June 2023 Lords Chamber

[Baroness Thornton]

To ask His Majesty’s Government what assessment they have made of the availability of refuge spaces for domestic abuse survivors.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, under this Government, the number of bed spaces has risen. There were 4,344 refuge spaces across England in May 2022, which are the latest figures we have. We are committed to ensuring that victims have access to the support they need within domestic abuse safe accommodation, including refuges. Councils in England have a new duty to provide support within safe accommodation to victims under the Domestic Abuse Act 2021, and 36,545 victims received support within safe accommodation in the first year of this duty.

[Baroness Thornton (Lab)]

I thank the Minister for that Answer. As she will understand from her support of and commitment to this issue, it takes huge courage and great risk for a woman to flee domestic violence. Unfortunately, when they have no place to go, those courageous women are left to make a horrific decision between returning home and becoming homeless. I therefore ask the Minister whether the Government have any plans to increase support at a local level to provide the housing promised under the Domestic Abuse Act 2021, which she mentioned and which we all supported. The research that prompted this Question says that there are thousands of women who have to choose between those two brutal situations.

[Baroness Scott of Bybrook (Con)]

The noble Baroness brings up a really serious point. It is essential that the number of women who are turned away goes down. We have provided local authorities with funding and support to commission services to meet the needs of these victims. As I said, the number of refuge bed spaces is rising, but those are not the only safe spaces. In fact, only 46% of those supported were in refuges. Some 28% are in sanctuary schemes, in which places where they want to stay in the area they already live in are made safe for them. Some 13% are in safe dispersed accommodation, 5% in specialist accommodation, 1% in second-stage accommodation, and 7% in other safe accommodation. This is about not just refuges but looking after the individual, and giving the individual choice and support through what, as the noble Baroness says, are very difficult times.

[Baroness Eaton (Con)]

My Lords, we are all extremely distressed to hear of the increase in this dreadful crime of domestic abuse. I am pleased to hear from my noble friend of the work that is being done to care for these women, but is any work being done on the prevention and early intervention that might prevent so many people having to seek refuge?

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[Baroness Scott of Bybrook (Con)]

My noble friend brings up a really interesting point, and one that we need to do much more work on. Prioritising prevention is one of the four pillars of the tackling domestic abuse plan, and part of the tackling violence against women and girls strategy. The objective has to be to reduce the amount of domestic abuse, domestic homicide, and suicides connected to domestic abuse by stopping people from becoming perpetrators and victims in the first place. In the tackling violence against women and girls strategy, the Government have committed to invest £3 million to understand this issue better: what works to prevent violence against women and girls in the first place?

[Baroness Burt of Solihull (LD)]

My Lords, despite the incredible work that refuges do to keep abused women and children safe from their abusers, they face severe shortfalls in the funding that they need to do the job. Over half of referrals are turned away, mainly because of lack of space and capacity. There is a one-third shortfall in funding at the moment between the £189 million of projected need and the £127 million received from DLUHC. Will the Minister undertake to review funding for refuges? I appreciate that there are a lot of other alternatives. As I understand it, a report is coming out today on community funding and availability of services, but does she agree that every woman and child facing abuse should be able to flee to safety?

[Baroness Scott of Bybrook (Con)]

I certainly agree with the noble Baroness’s last point. Since 2021, my department has committed £507 million to local authorities for the delivery of new duties. This year, £127.3 million will cover the estimated cost of unmet need to support victims and their children in safe accommodation. There is an issue with the Women’s Aid estimate because it includes the costs of all other services, including funds that already exist, so there is a slight disconnect there. The Government have also put in place—this is quite important—support for charities that look after victims and do a lot of work. I thank them for all the work they do, particularly with specific groups of women who need extra support. The Government are supporting them, particularly through the cost of living crisis; for example, with their energy costs.

[Baroness Crawley (Lab)]

My Lords, can the Minister say what the government can do further in partnership with local authorities to assist those victims of violence who have no recourse to public funds or have insecure immigration status? As she will know, both those things can be used by perpetrators to coerce and control their victims.

[Baroness Scott of Bybrook (Con)]

In April 2021, the Home Office provided £1.4 million of support for a migrant victims scheme to provide the support that the noble Baroness talks about because they have no recourse to public funds. A pilot has been run by Southall Black Sisters and their delivery partners, providing a really good wraparound support service for migrant victims of domestic abuse; this has included offering them sustenance, helping them, counselling them and giving them legal advice. During the pilot, the scheme supported 425 migrant victims. We have allocated another £1.4 million this year to continue to fund this pilot; we are going to take on board the lessons learned by Southall Black Sisters.

[Lord Farmer (Con)]

My Lords, the Office for National Statistics has found that a third of domestic abuse victims are male, yet there are very few refuge spaces for men and children in London, the Home Counties and the east of England, although there are places elsewhere. I recently visited a men’s charity in Kent, where there are none at all. How will the Government encourage local authorities to bridge that gap?

[Baroness Scott of Bybrook (Con)]

My noble friend brings up an interesting issue. Yes, we talk more about women than men but there are men who are victims of domestic abuse. The problem is that the numbers are smaller so it is difficult to get a lot of refuges across the country. Under the safe accommodation support duty, tier 1 local authorities are required to assess the need for, and provide support for, all victims of domestic abuse, including male victims. The male victims’ organisation that keeps an eye on this is called ManKind and provides expert input into monitoring these duties as part of the domestic abuse safe accommodation national expert steering group, which is chaired by my colleague, Felicity Buchan. The voice of the man who is domestically abused is there at the centre; we ensure that they get the support they need.

[Baroness Walmsley (LD)]

My Lords, does the Minister agree with me that it is important to work upstream with schools to ensure that young men understand what a healthy sexual relationship is, and that young women know—and, indeed, have the confidence—not to accept the early stages of the wrong sort of relationship?

[Baroness Scott of Bybrook (Con)]

I agree with the noble Baroness. Following on from the answer that I gave my noble friend, this is exactly what we should be looking at when considering how to tackle violence against women and girls. That is where the investment into that research goes, and I am sure that some of the work that the noble Baroness talked about will be happening.

Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023

Baroness Scott of Bybrook Excerpts

Tuesday 20th June 2023 Grand Committee

Moved by

[Baroness Scott of Bybrook]

That the Grand Committee do consider the Building Safety (Responsible Actors Scheme and Prohibitions) Regulations 2023.

Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument by the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, these regulations establish a responsible actors scheme for developers under Sections 126 to 129 of the Building Safety Act 2022, focused on the remediation by developers of historic fire safety defects in residential buildings they have developed in England. Developers that are eligible for the scheme but choose not to join, and developers that join the scheme but then renege on their membership commitments, will be prohibited from carrying out major development or obtaining building control approvals.

Following the Grenfell Tower tragedy, it became evident that thousands of residential buildings over 11 metres had serious fire safety defects. This put resident safety at unacceptable risk while leaving many leaseholders facing potentially life-changing remediation costs. This scheme is one part of the Government’s wider response to the building safety issues that came to light following Grenfell. In addition to the scheme, we are protecting residents by investing £5.1 billion in remediating unsafe cladding on 18 metre-plus buildings; securing industry contributions to remediation through introducing a building safety levy; implementing statutory leaseholder protections against unfair costs of remediation; and creating new legal avenues for affected parties to recover remediation costs from those who caused the problem.

This scheme focuses on major private sector developers, which sit at the top of the supply chain and have overall responsibility for their developments. The Government engaged with major developers through a remediation pledge and then a legally binding developer remediation contract. I welcome the action taken by 48 developers that have signed the developer remediation contract; these include the top 10 private sector UK housebuilders. The scheme will create a level playing field whereby eligible developers that commit to remediate are not placed at a competitive disadvantage compared with those that do not.

The regulations set out three descriptions of persons who are eligible to join the scheme. Developers based anywhere may be eligible for the scheme, if they developed relevant buildings in England. First, major housebuilders are eligible where their principal business has been residential property development; they were responsible for the development or refurbishment of one or more 11 metre-plus residential buildings in England in the 30 years ending 4 April 2022; and they meet the profits condition set out in the regulations. Secondly, developers are eligible where they meet the profits condition and they were responsible for the development or refurbishment of at least two buildings that we know are defective because the buildings have been assessed as eligible for a relevant government remediation fund. Thirdly, there is a voluntary eligibility provision. This allows other persons to join, where they were responsible for the development or refurbishment of a building that would require remediation under the developer remediation contract.

The profits condition is focused on typical operating profits averaged across the three years from 2017 to 2019, which were not impacted by the Covid pandemic. Both the profits condition and other aspects of the eligibility provisions make appropriate provision for the complex company group structures used by some developers.

The regulations make clear that registered providers of social housing are not eligible for the scheme. They will not be invited or permitted to join.

The core conditions of membership of the scheme are for developers to commit to identifying and remediating life-critical fire safety defects in residential buildings over 11 metres in height that they developed or refurbished in England in the 30 years ending on 4 April 2022, and to reimburse taxpayers for government-funded remediation of such buildings. To demonstrate their commitment, an eligible developer must enter into a self-remediation contract: a contract containing the terms of the developer remediation contract published by the Secretary of State in March this year. The membership conditions require members to give effect to their remediation and reimbursement commitments in accordance with the contract’s terms.

I turn now to the application provisions. The Committee will be aware that the Joint Committee on Statutory Instruments has drawn attention to two technical aspects of the drafting of these regulations, including one relating to the scheme’s application provisions. I am grateful to the Joint Committee for its time, its valuable scrutiny and its report, which the Government have carefully considered. We have corresponded with the Joint Committee and provided a memorandum setting out our position, which is printed as an appendix to the Joint Committee’s report.

I welcome this opportunity to reaffirm our overall position on the issues raised, as explained in the memorandum. On the application provisions, we consider it to be clear in context that, where the Secretary of State identifies that a person is likely to be eligible for the scheme, they will be invited to join it, but the registered providers of social housing will not be invited to join, as they are not eligible under Regulation 6. In light of the Committee’s report, we will monitor implementation carefully and consider bringing forward amending regulations in the event that the regulations give rise to a misunderstanding in practice as to who is invited or able to join the scheme. The Government will also issue guidance on aspects of the scheme. However, the issue of developer remediation of unsafe buildings is urgent, and I seek the Committee’s approval of these regulations today.

The regulations set out the time period to join the scheme and give developers an opportunity to make representations if they believe that they are not eligible. They also set out how developers can join the scheme in other circumstances, including under the voluntary eligibility provisions.

Membership of the scheme may be revoked for breach of membership conditions or ended without fault where a member has substantially satisfied their obligations. Members will have the opportunity to make representations to the Secretary of State before their membership is revoked. Should an eligible developer decide not to join the scheme by the end of the application period, or should their membership be revoked for failure to comply with the scheme’s conditions, they will, in accordance with the regulations, be prohibited from carrying out major development or obtaining building control approvals.

At this point the developer, and known persons controlled by the developer, will be notified and then added to a published prohibitions list, which will be used by local authorities for enforcement. Only a person named on the prohibitions list will be subject to the prohibitions. The regulations also apply the prohibitions to persons controlled by the developer to make sure that developers cannot easily avoid the prohibitions by continuing their development business through other entities they control. Prohibited persons will be subject to a planning prohibition that prevents them carrying out major development in England, except where planning permission is received before these regulations come into effect. Development of land carried out by a prohibited developer in breach of a prohibition will constitute a breach of planning control.

The regulations include provision that developers notify the local planning authority about their status as a prohibited person, or when the prohibitions are lifted. The Joint Committee on Statutory Instruments has reported on the absence of a specific sanction for failure to give notice under these provisions. I would like to reassure the Committee that these regulations are effective without such a sanction. The primary mechanism for identifying prohibited persons will be the prohibitions list published by the Secretary of State, so local planning authorities will have access to all the information they need even if a developer fails to notify them. In addition, any developer that engages in development contrary to the prohibition will as a result be subject to sanctions through planning enforcement.

The regulations also establish a building control prohibition, which prevents prohibited persons gaining initial and final building control approval in respect of any building work that requires such approval. The prohibitions have limited exceptions. The purpose of these exceptions is to mitigate potential impact on innocent third parties such as off-plan buyers, the wider public and certain entities that are not in the building industry.

The building control prohibition is subject to exceptions that seek to protect innocent third-party purchasers of properties from a prohibited developer, including a specific exception to assist those whose deposits could be at risk if a prohibition came into effect after they had exchanged contracts. There are also exceptions to ensure that emergency repairs and other repairs to any occupied building that are necessary for the safety of residents can proceed.

Both prohibitions are subject to exceptions to exclude critical national infrastructure projects and to permit certain entities in developers’ corporate groups that are not in the building industry to have the prohibitions disapplied to them where this would not frustrate the purpose of the scheme.

I know the Committee will also be concerned about other industry actors, particularly construction products manufacturers. It is unacceptable that cladding and insulation manufacturers have not yet acknowledged their responsibility for the legacy of unsafe buildings. Most recently, the Secretary of State has written to three industry participants, Kingspan, Arconic and Saint-Gobain, and to their institutional shareholders, to make it clear that those manufacturers must contribute to the cost of remediation or may face severe consequences. The Government will consider all options to ensure that construction products manufacturers contribute their fair share.

These regulations launch an important scheme for developers to remediate unsafe buildings. Given the urgency of this issue, we are bringing forward these regulations for a scheme focused on larger developers at speed. We propose to extend the scheme over time to cover all developers that have built defective buildings over 11 metres and should be paying to fix them. I commend these draft regulations to the Committee.

[Lord Naseby (Con)]

My Lords, I very much welcome the way my noble friend has introduced these important regulations. My dear late father was an architect so I was brought up in that climate, and I do not think anybody in the industry disputes the fact that those responsible for developing unsafe buildings should remedy the defects at their own cost as quickly as possible. That bit seems to be agreed all round.

However, there are some aspects of the scheme that I hope my noble friend will take on board and that should probably result in some changes. The first is the presumption that anyone who has developed a building above 11 metres has to bear the burden of proof that their buildings are not unsafe. That is a pretty costly execution to be done, plus I wonder whether this self-examination is actually the right way forward. What ought to happen is that a regulator should be employed and report accordingly to the Secretary of State.

Secondly—and this is an important dimension—the regulations impose qualifying criteria for membership that appear to bear no rational relationship with the harm identified. Rather than specifying membership criteria by reference to the number of buildings above 11 metres developed, instead the criteria relate to profitability. The result is that a cowboy developer that has built countless buildings of 11 metres and over unprofitably appears to escape the criteria, but for the responsible developer that has built virtually no buildings above 11 metres, profitability is required to join the scheme, with all the obligations that entails.

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[Baroness Taylor of Stevenage (Lab)]

It is unfortunate that we are only now starting to make some progress on the essential remediation works that will allow leaseholders to sleep easily in their beds and begin to get their financial plans and aspirations back on track. I appreciate that some well-intentioned developers have done work in the meantime, but the regulatory framework supporting it is only now coming into play.

I pay tribute to the tireless campaigning groups, both those directly associated with Grenfell and others such as the Cladiators group in my area, driven by Sophie Bichener. I know the Minister is very familiar with Sophie’s case so I will not reiterate all the details, but the firebreaks referred to by the noble Baroness, Lady Pinnock, are a good example of non-cladding-related building fire safety jeopardy. Without these campaigns, we would almost certainly be no nearer having this leaseholder limbo resolved.

The fact that 48 developers have now signed up to the remediation contract is a significant step forward; there is no doubt about that. However, signing up is one thing and action is another. We hope that things will start to move much more quickly now. What steps is the department taking to ensure that developers move as quickly as possible on the remediation steps, and how will it monitor, challenge and enforce where appropriate?

We hope that the reports of full risk assessments by major developers to determine which defects need resolution and which do not are not simply a further device to delay essential works. Can the Minister tell us whether any deadlines are being set for all such risk assessments to be completed?

We would also like some reassurance about how leaseholders will be kept informed and updated on progress. Does this responsibility fall on the developers? If so, how will the department ensure that it has been carried out?

In his Statement on 14 March 2023, the Secretary of State rightly said:

“Those who are responsible must pay”.—[Official Report, Commons, 14/3/23; col. 727.]


While we welcome the fact that 48 builders have already signed up, it is extremely disappointing that some have still refused to do so. We are aware that the Secretary of State has rightly been very robust in his language in trying to bring builders that have not yet signed the contracts into line with those that have. We absolutely support this robust approach and hope that it is successful. If not, as the Secretary of State has clearly stated, such developers will be prohibited from further development. We have heard more about that this afternoon.

It would be helpful to know how such a ban will be enforced. The Minister has set out some further information relating to the enforcement process but it would be helpful to know how it will work. Is it to be done by the department or will it be a new burden on local government—as referred to by the noble Baroness, Lady Pinnock—and will that new burden be fully funded?

We welcome any action to address the building safety crisis, but the remediation contract and responsible actors scheme are still only a partial fix to the problem—in part, owing to the more limited scope of the definition of a relevant defect used in the remediation contract—compared to the Building Safety Act. Signing the contract will not obligate developers to fix all life-critical fire safety defects as defined by the Building Safety Act 2022. The Government acknowledge this in the Explanatory Memorandum, where they state:

“The developer self-remediation approach, and the RAS, is to be expanded over time to cover other developers who developed or refurbished defective 11m+ residential buildings and should pay to fix them”.


Is it intended to extend the contract in future to cover all life-critical fire safety defects? We also have a particular concern regarding the number of buildings covered by the contract. The department itself estimates that only 1,500 buildings will be remediated as a result of the contract, whereas credible estimates put the total number in need of remediation at around 10,000.

The Secondary Legislation Scrutiny Committee comments that

“between 6,220 and 8,890 mid-rise (11 to 18 metres) residential buildings required work to alleviate life-critical fire safety risks due to external wall systems”.

How does the Minister envisage this being resolved and what is the timescale? How many of the outstanding buildings beyond the 1,500 are the responsibility of those developers that have refused to sign the contract?

Meanwhile, ACM cladding remains on faulty high-rise buildings, with remediation not having even started on 22 of them. The building safety fund for remediation of non-ACM cladding and other fire safety defects on high-rise buildings is proceeding at a glacial pace, with just 37 buildings having completed remediation out of the 1,225 applications for funding. The building safety fund for non-ACM high-rise remediation was rated as red in the Infrastructure and Projects Authority annual report for 2022, falling from amber the year before, meaning, to quote the report:

“Successful delivery of the project appears to be unachievable. There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable. The project may need re-scoping and/or its overall viability reassessed”.


Many leaseholders in unsafe buildings waited patiently for years for building safety fund applications to be processed by the department, only to see them terminated. What guarantees are there that any building covered by the contract will not face additional delays to remediation work? Although we welcome the further action proposed in the regulations, some questions remain outstanding. How will leaseholders in buildings with defects outside the scope of the contract get them remediated?

With reference to developer obligations to identify, assess and remediate unsafe buildings, the contract stipulates that they must be carried out “as soon as reasonably practicable”. What assurances can be given to affected leaseholders of their ability to enforce this to ensure that developers are acting within a reasonable timeframe? What is the point of contact in the department and what powers will be used to support them? Why are buildings that are part of national infrastructure exempt? Surely, people working in or living close to such buildings should expect at least as great a level of protection, if not more.

I note the Minister’s comments about prohibited persons, but it is difficult to see how the use of new entities will not avoid those prohibitions and, without sanctions on that, where is the incentive not to do so? Can the Minister explain how new developers will be brought into the regulatory framework?

The Minister raised the critical issue of construction products. Will we receive further regulations on this? It seems they may be necessary. There was a Question today in your Lordships’ House on the manufacturers of construction products used in schools. Surely the manufacturers of construction products must be responsible for adequate safety testing of materials they produce.

I agree with the noble Baroness, Lady Pinnock, about work for remediation of buildings under 11 metres. What assessment has been done by the department of the extent of those issues in lower-rise buildings?

To reiterate, we welcome the additional regulations and encourage the Minister and the Secretary of State to be as robust as is necessary to bring these long-drawn-out issues to a stage of remediation and resolution. We hope that the department will use every power it has to deal with those who are not looking to do the right thing and live up to their responsibilities. The leaseholders in these buildings have been faced with a living nightmare. We owe it to them to get these issues resolved without any further delay.

[Baroness Scott of Bybrook (Con)]

I thank the noble Lords who have contributed today. I open my remarks and answers to the questions asked by saying that the noble Baroness, Lady Pinnock, is absolutely right: six years ago, 72 people died; that is what we are talking about today and why this is such an important statutory instrument. To the noble Baroness, Lady Taylor of Stevenage, I say that this is secondary legislation to the Building Safety Act 2022; that is how it comes in today.

I move on to answering questions. A number were asked by all three noble Lords, so excuse me if I do not mention each name but I will try to remember them. First, the Government believe that it is fair and reasonable that developers that meet the prescribed eligibility criteria for the responsible actors scheme, including a profit threshold, should be asked to assess whether they have developed relevant buildings that require remediation, and remediate those buildings.

We believe it is appropriate that the Government create a level playing field with consequences for eligible developers that opt not to make these important commitments. The obligations under the scheme and contracts for developers with no buildings to remediate are very modest once they have done the necessary work to check and confirm that they have developed no buildings requiring remediation work. As I said in my speech, an eligible developer that substantially satisfies its obligations under the regulations and the self-remediation terms may be released from the scheme. I think that answers the question from the noble Baroness, Lady Pinnock. We are engaging with a number of developers about the developer remediation contract, and I hope they will respond positively to that engagement.

I move on to the issue of construction product manufacturers. I know that this is a concern of noble Lords and it is an important one. I reiterate that the Secretary of State made clear in a recent letter to the major institutional shareholders in the three companies most involved—Kingspan, Arconic and Saint-Gobain—that, if an appropriate financial package is not agreed, the focus of the department will be trained on them, and the consequences for the relevant construction product manufacturers are likely to be severe. We can do this only one stage at a time, but they are next in line. The Secretary of State made it clear that reputational, legal, commercial or further new tools could all be considered if these firms do not do the right thing.

My noble friend Lord Naseby asked: who says that these buildings are unsafe? The Government believe that it is fair and reasonable that the developers that meet the prescribed eligibility criteria for the RAS, including a profits threshold, should be asked to assess whether they have developed relevant buildings that require remediation. I do not think that is unreasonable.

My noble friend also asked why we were focused on profits. We have used the £10 million average operating profits threshold to make sure that the initial phase of the scheme captures larger, more profitable businesses and those that have developed the majority of the affected buildings.

My noble friend also asked about the application of prohibitions to group companies. An eligible non-member of the scheme will be prohibited along with the entities that they control, so it is not all group companies and an exception is available for entities controlled by an eligible non-member that is not in the building industry. Developers can have quite complex business relationships both here and abroad, and we need to capture those as well.

Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023

Baroness Scott of Bybrook Excerpts

Tuesday 20th June 2023 Grand Committee

Moved by

[Baroness Scott of Bybrook]

That the Grand Committee do consider the Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, these regulations will make technical but important changes to the language used in existing legislation, bringing it into line with the new terminology and processes introduced by the Building Safety Act 2022.

I will start by providing some context for these regulations. After the Grenfell Tower tragedy, the Government recognised the need for an overhaul of our building safety regime. In 2017 we appointed Dame Judith Hackitt to conduct an expert review of the current regime. Her review identified the need for significant cultural and regulatory change, including recommendations focused on the building control process.

Part of the Government’s response to these building control recommendations included the introduction of provisions in Section 33 of the Building Safety Act that repeal Section 16 of the Building Act 1984. The Government consulted on these provisions, and they were subject to pre-legislative scrutiny ahead of formal consideration of the Building Safety Act.

Section 16 made provision for the deposit of plans with local authorities before starting building work, as well as the passing or rejection of the plans. The information provided to building control was not always consistent, nor always sufficiently detailed for the work to be carried out.

Section 33 of the Building Safety Act, which has yet to be enacted, repeals Section 16 and provides instead for a new system of applications for building control approval. For higher-risk buildings, this means a more stringent system, with the building safety regulator the sole building control body. Applicants cannot proceed with work without explicit approval from the building safety regulator.

For non-higher-risk buildings, there is no significant change from the existing procedure. Local authorities and approved inspectors will remain responsible for supervising this work, and work can begin before approval is granted. Applicants do so at risk of having to uncover or change work and could face enforcement action. In addition, provisions in the Building Safety Act largely transfer procedures for appeals under the Building Act from the magistrates’ court to the specialist First-tier Tribunal.

The purpose of these regulations is to align the Highways Act 1980, the Clean Air Act 1993 and 13 local Acts with the terminology and processes that will be established when Section 33 of the Building Safety Act is enacted. Provisions in the Highways Act that relate to the payment of charges for street works when building control plans are deposited are amended to refer to new systems of applications for building control approval. Section 16 of the Clean Air Act is also amended. This section requires local authorities to check the height of proposed chimneys to ensure that they are tall enough to prevent smoke and particulates becoming prejudicial to health. It is amended to replace references to the deposit of plans with provisions that refer to applications for building control approval.

Similarly, 13 local Acts are also amended to replace definitions of the deposit of plans with provisions that instead refer to the new system of applications for building control approval. Further references to the deposit of plans in these acts are also updated to reflect the new terminology. Of the local Acts, 11 contain provisions relating to appeals to the magistrates’ courts. To align these Acts with the new procedure for appeals, the provisions are amended to direct appeals to the First-tier Tribunal. The instrument also contains a transitional provision providing that consequential amendments do not apply to plans for building work deposited before the date on which the regulations come into force.

I wish to reassure noble Lords that they will have the opportunity to scrutinise the specific requirements of the new system of applications for building control approval. These requirements were subject to consultation in 2022 and will be set out in a number of statutory instruments that amend the Building Regulations 2010 and provide for new building control procedures et cetera for higher-risk buildings. The Government will lay these instruments in the coming months.

The Government intend to bring both these consequential amendments regulations and the regulations that create the new building control system into force in the autumn. Without these consequential changes, the provisions of the Highways Act, the Clean Air Act and the 13 local Acts will cease to operate as they do now, as they will no longer have meaning once Section 33 of the Building Safety Act is brought into force. I hope that noble Lords will join me in supporting the draft regulations. I commend them to the Committee.

[Lord Stunell (LD)]

My Lords, I rise to comment on this statutory instrument and thank the Minister for the introduction she has given to it. It goes in partnership with Section 32, which is not yet in force. She has rightly drawn attention to the fact that it does not cover the question of the actual application process, which is going to be dealt with later. So it is rather a small cog in a very big machine to make sure that the system works effectively.

I do not propose to spend a lot of time commenting on the local building Acts, with which I once used to wrestle in a professional capacity. I am sure that rationalising those makes a great deal of sense, regardless of the building safety and high-rise issues driving this change.

I note the frequent references to the building safety regulator in what the Minister put to the Committee a few moments ago. I share her view that the regulator is an absolutely fundamental part of the new machinery and, clearly, will be pivotal to making sure that, ultimately, the machine moves and works. The Minister will know that I have already expressed my concern about proposed amendments that the Government have brought forward in the levelling-up Bill to potentially change who the regulator is, perhaps on a timescale that could very likely interact with the implementation of Section 32 and the bringing into force of a new application process. What consideration has the department given to the potential for this process and the very tightly drawn and carefully designed machinery, of which this is a small part, to continue to function—or, rather, begin to function—smoothly and without effort or distortion when the new system comes into play, as outlined in the levelling-up Bill amendments by the Government?

That is a matter that we will obviously return to at the Report stage of consideration of that Bill—I do not want to enter that debate now—but I hope the Minister will give us what reassurance she can that the machine of which this is a small cog is intended to continue working seamlessly in the event that the Government proceed with completely reshaping the building safety regulator sometime in the next two years.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I thank the Minister for setting out the proposals in these regulations. Although it could be considered a minor amendment dealing with just consequential matters, in view of the overall context of building safety and the fact that this is one of a number of steps we are seeing to ensure that the very serious issues that have arisen from the Grenfell Tower disaster and others are taken seriously and acted upon, we need to treat all these regulations with a degree of seriousness.

We were very pleased to learn that proposals for new building regulations were consulted on last year and that new regulations will come forward before the Summer Recess for enactment in the autumn. We look forward to hearing about the new process. As we are not able to amend these through the regulation process, I ask the Minister whether we will have the opportunity to see them in draft form before they come through to us.

Two aspects relating to building safety and building control that have emerged in recent years are, first, that the transfer to the private sector—the deregulation —of building control did not anticipate that there would be an impact on the quality or availability of the building control function. Neither did it anticipate the dilution of the independence of the building control function from the development industry.

Secondly, we hope that, as new regulations are developed, attention will be paid to the capacity, resources, recruitment and retention of the building control inspectors to ensure that they are sufficient to deal with what we hope will be tighter regulation for building safety in future.

We note the transfer of the appeals procedure to the First-tier Tribunal. Can we be reassured that the First-tier Tribunal will have sufficient resources to enable it to deal with those new duties? In view of the glacial pace of progress on building safety matters that leaseholders have had to endure, it would be unfortunate in the extreme if the level of appeals resulted in unacceptable backlogs and were not dealt with promptly. It will also be essential that matters such as stop notices are able to be progressed without delay. I hope the resources are there to deal with that.

[Baroness Scott of Bybrook (Con)]

I thank noble Lords for that and for their brevity; I think that was right, considering that these are quite technical matters. It is important that many of the things brought up by both noble Lords will be discussed further when we bring the building control SIs to the Committee later in the year. In particular, the question of whether building control remains as professional and regulated as currently is an important issue. That has to happen, and we will have that debate.

I was also interested in the capacity of tribunals; that is always important. We know that the magistrates’ courts are probably where a lot of things are being held up. I quite agree that the First-tier Tribunals must have the capacity to be able to deal with things in a timely manner.

As far as the building safety regulator and the LURB are concerned, I can assure the noble Lord that the Government will work to ensure that all these parts of building safety work together and that there is no black hole between one and the other. That will take some timings; I am sure that we will discuss that further before it happens. If the LURB goes through, there will be SIs to change the regulator and to ensure that everything works in a timely manner and nothing is lost in the meantime. I can assure noble Lords that we will work towards that end. To conclude—

[Baroness Taylor of Stevenage (Lab)]

Before the Minister moves on, it would be really helpful to understand the entire role of the building safety regulator. There has been a lot of heavy lifting as we have gone through the process of the LURB and the Building Safety Act, and it would be really helpful if the entire scope of the building safety regulator could be set out somewhere.

[Baroness Scott of Bybrook (Con)]

I am more than happy to write to the noble Baroness, and copy in the Library, about what we foresee that to be, although that concerns the LURB and not this instrument. I am happy to have a meeting on that, if necessary, before we go into that part of the LURB on Report.

As I said, these regulations will ensure that the Highways Act, the Clean Air Act and the 13 local Acts will continue to function as intended when the new system of applications for building control approval is brought into force. I hope the Committee will join me in supporting these regulations.

Motion agreed.

Non-Domestic Rating Bill

Baroness Scott of Bybrook Excerpts

2nd reading
Monday 19th June 2023 Lords Chamber

Moved by

[Baroness Scott of Bybrook]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, this Bill delivers important changes to the business rates system. Business rates are a key component of the way in which local services are funded and are set to raise almost £25 billion this year. However, in recent years, concerns have been raised about the fairness of the tax and its impact on a competitive business environment.

Taking on board these concerns, the Government committed to reviewing the business rates system. We completed this process in October 2021, following extensive engagement with businesses, councils and others. The conclusions were clear: like any tax, the business rates system has flaws but it also has significant advantages that are important to protect. These include the tax’s relative stability, how easy it is to collect, how hard it is to avoid and its clear links to the locations where its revenue is spent. The majority of respondents to our review supported the continuation of business rates and did not support the disruption of a major overhaul. Overwhelmingly, they favoured measures to modernise the tax—especially moving to more frequent revaluations, which I will turn to shortly.

At the conclusion of the review in 2021, the Government announced a £7 billion package of support for businesses over five years, alongside a package of reforms. Since then, the Valuation Office Agency has delivered a revaluation, completing valuations for around 2 million properties in England, which reflects changes in the property market since 2015. Revaluations are crucial to ensuring a fairer distribution of rates bills. This revaluation, for example, rebalanced the burden between online and physical retail: on average, bricks and mortar retailers saw decreases of around 20%.

We made sure that the revaluation was manageable for businesses by introducing a £13.6 billion package of business support, which included freezing the business rates multiplier at a cost of £9.3 billion over the next five years. The Government have therefore provided considerable support into the business rates system while balancing the needs of local communities, which rely on funding for local services. However, we remain focused on the need for longer-term reform.

Throughout our review, businesses expressed their desire to keep business rates as accurate and responsive as possible. The Bill therefore delivers a more frequent revaluation cycle for business rates, moving from five-yearly to three-yearly. Following the revaluation that took effect this April, the next will occur in April 2026 and every three years thereafter. This is a positive step for business as it will ensure that the tax is fairly distributed more frequently. It is a major reform of the system, responding to the calls of many stakeholders, and is deliverable in the short term.

However, I recognise that there have been calls for greater ambition. Let me be clear: we are prepared to explore how we can go further in future. In particular, we wish to reduce the gap between the date against which rateable values are assessed and when they come into force, which has been set at two years for the 2026 revaluation. We will also carefully consider the case for an annual revaluations cycle in the longer term. However, we must take these steps sequentially. To deliver a revaluation, the VOA must carry out 2 million valuations in the time available—a major endeavour. Moving to more frequent revaluations means that other changes are necessary to enable the Valuation Office Agency to compile more accurate valuations at greater speed.

We have heard repeatedly from businesses that getting these valuations right is vital to sustaining public confidence in the tax. We also heard concerns that moving to an annual cycle would increase the volatility of bills and potentially damage the accuracy of valuations. It is therefore right that we monitor the implementation of the first three-yearly revaluation cycle and the supporting reforms before taking further action.

Delivering three-yearly revaluations on a sustainable basis will rely on the VOA having access to more timely and complete information. The Bill therefore introduces new obligations on ratepayers to provide the VOA with relevant information. This will bring business rates in line with other taxes, where self-declaration is absolutely the norm.

As part of our wider modernisation of the business rates system, the Bill also introduces a new requirement on ratepayers to provide a taxpayer reference number to His Majesty’s Revenue & Customs. This small extra step will connect the business rates information held locally by councils with HMRC tax data, delivering benefits such as better targeting of and improved compliance with rates relief schemes. Ratepayers will also be able to provide relevant information to the VOA, and their taxpayer reference number to HMRC, through a single straightforward online service on GOV.UK.

It is entirely right that we consider the potential burden on businesses of new administrative requirements. The Government have taken steps to minimise these burdens, have published estimates of the expected costs and will provide guidance for ratepayers.

I want to address some specific concerns about the VOA duty to notify that have been raised with me. First, on what information the Government are asking ratepayers to provide, the duty is not limited to information that the Valuation Office Agency needs to do its job and no more; it is also explicit on the face of the Bill that ratepayers will be expected to provide to the Valuation Office Agency only information that is within their “possession or control” and which they could reasonably be expected to know would assist the valuation office. The VOA will continue to make use of supplementary sources of evidence in order to minimise the burden on ratepayers.

Secondly, let me provide some reassurance about whether this will be complex for ratepayers. To comply with the duty, in practice a ratepayer will only have to visit GOV.UK, use the online service and answer all the questions asked of them. They will receive multiple reminders to support them in providing the right information.

Thirdly, to ensure that the VOA has the most complete set of information to deliver more frequent revaluations, it will be necessary for ratepayers to confirm each year that the information that the VOA holds on their property is correct. For ratepayers whose information is up to date, this step should take only a few minutes. For those who have not remembered to keep their information up to date, this stage will serve as a further reminder to rectify that.

Finally, we will continue to design the new processes in partnership with businesses and interested parties, and we will not activate the duty until we are satisfied that ratepayers can reasonably and efficiently comply. I thank those noble Lords who came to the drop-in sessions. That gave me the ability to answer those questions up front, although I am of course happy to pick up anything further in winding up.

As we move to more frequent revaluations, the Government have considered how to improve the support that we provide to businesses adapting to changing bills. At last year’s Autumn Statement, the Chancellor announced that he would permanently remove the requirement for revenue neutrality from transitional relief. That change is given effect by this Bill. This means that for the 2023 revaluation, there are no downward caps, which previously restricted falls in bills. Businesses have therefore seen the full benefit of falling bills immediately. As a result, the 300,000 properties with falls in rateable value at the revaluation have seen the full benefit of that reduction in their new business rates bill from April 2023. Going forward, we will use that freedom to permanently fund all future transitional relief schemes without recourse to downward caps. I am happy to give that commitment in the House.

It is also important that we protect the integrity of revaluations. Between revaluations, rateable values should change only for a material change in circumstances, or MCC. MCC challenges are designed for cases such as roadworks outside a shop causing access difficulties. This Bill will preserve that principle by providing that changes in legislation, advice or guidance by a public body are not a material change in circumstances. We consider that such matters are related to the general conditions of the market and so belong in the revaluation process.

Interestingly, the noble Earl, Lord Lytton, identified the scenario of a vaping ban as an example of how this measure could have unwarranted consequences. In fact, his example underlines why we need to clarify the law concerning MCCs. Without this clarity, over recent years the Valuation Office Agency has been forced to consider whether legislation changes such as smoking bans or the introduction of the congestion charge should affect rateable values. The result was uncertainty for the ratepayer and for local government.

In the future, we will have clarity in Clause 14, ensuring that changes in legislation such as that, which clearly concern the general economic conditions and level of rents, are reflected for all at the next revaluation. These revaluations will of course be happening more frequently under this Bill, and any physical consequences of new legislation on a property will continue to be reflected as and when they arise.

This Bill also introduces an important new relief to support businesses investing in their properties, responding to another key stakeholder ask during the review. Currently, our business rates are a tax on the value of the property, so businesses may see an immediate increase in their rates bill for any improvements that they make to their property. From 1 April 2024, this Bill will mean that no business will face higher business rates bills for 12 months as a result of qualifying improvements to a property that they occupy. The Bill prescribes powers for Ministers to set conditions for the availability of the relief, and the Government’s policy on this has been set out in our earlier technical consultation. My department has published draft regulations for consultation so that noble Lords may review how the Government intend to exercise these powers.

Finally, the Bill makes changes to the calculation of business rates multipliers—or tax rates. In recent years, government policy has been to uprate the lower multiplier each year by the consumer price index rather than the higher retail price index. The Bill ensures that the CPI is the default uprating for both multipliers, reducing the potential inflationary burden on businesses. The Bill also provides a power to uprate at a level lower than CPI, and to directly set which properties are subject to which multiplier, allowing the Treasury greater flexibility in the support it can provide.

In conclusion, this Bill modernises the business rates system by bringing valuations more in line with the property market, improving the data underpinning the system, removing barriers to investment and improving fairness. I look forward to hearing the contributions of noble Lords on this important subject. Many of your Lordships have called for reform of this tax for some time, and I am confident that this Bill delivers it. I beg to move.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

My Lords, it is a pleasure to close the debate, and it has been a pleasure to listen to such thoughtful contributions. The noble Baroness opposite is absolutely right: I have got a lot of questions. I am bound not to remember all of them, but I will write a letter afterwards to make sure that everything is set. I will also offer more meetings, if noble Lords would like them, before Committee.

It is right that we strive towards the best possible business rates system: one that balances the needs of the taxpayer with the importance of sustainable services in local communities. It has to be a balance. A lot has been said about business rates being too high, but, as we know, if business rates go down, so does the money that local authorities get. We need to get the balance right.

The Government’s review of business rates considered how to improve the tax from a range of angles, and this Bill makes a series of significant improvements which will have considerable benefits for those who pay the tax and those who rely on it. As I said, I am very grateful for the contributions that have been made. I will try to answer as many of the questions as I possibly can, with my many bits of paper.

The noble Lord, Lord Shipley, the noble and learned Lord, Lord Etherton, and many others have suggested that we adopt a short evaluation cycle of one or two years. As I set out in my opening speech, we are happy to consider this carefully in future, once the reforms in the Bill have been implemented. However, it is vital that we approach these changes sequentially to ensure that we can deliver more frequent revaluations and avoid destabilising the tax. If we go too fast, that is what might happen.

The noble Lord, Lord Shipley, asked whether we could increase the threshold in the small business rate relief scheme or otherwise reduce the multiplier. The Government’s generous small business rate relief scheme already sees over a third of properties pay no business rates at all, and that is worth £2.1 billion per year. Further increases in the threshold for the SBRR would be a broad-based and indiscriminate way to provide support, and would therefore be a poorly targeted type of relief. However, the noble Lord welcomed the considerable support we are providing to businesses under the existing schemes, and obviously we will keep them under review.

The noble Lord, Lord Shipley, the noble Earl, Lord Lytton, and the noble Baronesses, Lady Pinnock and Lady Thornhill, and others asked about the transparency and performance of the VOA. If there are any changes, it is important that it can take those changes, work with them and deliver. I assure noble Lords that the VOA will continue to publish targets for its timeliness under the new system and measure performance against them. Current targets cover timeliness on maintenance reports and the check stage of the appeals process. While the new targets will be informed by the development of the new system, the Government are very clear that these must be both ambitious and deliverable. The VOA must deliver on those targets.

The noble Lord, Lord Shipley, referred to the role of land values in the tax such as it is. The Government consider that the arguments in favour of a land value tax are not supported by the evidence. A land value tax would also inevitably increase the tax burden for properties on large pieces of land, such as golf courses or farms, whereas densely developed land, such as that of the Shard, would see lower bills. I understand that he indicated his support for the tax based on rates, which is how business rates work, and I welcome that observation from him.

The noble Earl, Lord Lytton, the noble and learned Lord, Lord Etherton, the noble Baroness, Lady Thornhill, and others asked how we have framed improvement relief and whether it will in fact provide the incentive for property investment—this is very important. The relief is designed to help occupiers make improvements to their existing premises, rather than subsidising general commercial property development. The Government consider that a 12-month relief will allow time for the benefits of the property investments to flow through into businesses. We will keep this under review; in particular, we will review this scheme in 2028.

The noble Earl, Lord Lytton, asked whether we had assessed the impacts of the new duties. We have carefully considered the impact of the duties on businesses and published two impact notes to outline the estimated costs of complying with the new duty. The VOA estimates the cost of the new information duty to be £35 per ratepayer each year. The current system costs ratepayers £15, so this is an increase of £20 each year. The HMRC duty for tax reference number is estimated to be about £2 for most businesses, and no more than £6 in those cases where finding a suitable tax reference number takes a bit longer.

The noble Earl, Lord Lytton, asked whether guidance will be available to help ratepayers comply with these duties. As I said, the Government will not formally activate the VOA duty until we are absolutely satisfied that ratepayers can reasonably and efficiently comply with it through the online service. Guidance and support will be offered to those engaged in the soft launch of the system. As is the purpose of the soft launch, the guidance will be developed as we learn from engagement with users.

The noble and learned Lord, Lord Etherton, raised concerns about those eligible for the 100% relief and whether they should be subject to these duties. Information collected by the VOA on a specific property is often used in the valuation of other comparable properties, many of which may not receive 100% relief. For instance, a small independently owned shop which pays no rates would have to pay business rates if it were occupied by a large chain, such as Co-op. It is important that we have all that information collected for all properties. However, as I said, we will not formally active the duty until we are absolutely satisfied that all ratepayers, including those getting 100% relief, can reasonably and efficiently comply with it.

The noble and learned Lord, Lord Etherton, the noble Baroness, Lady Thornhill, and others set out why the level of business rates is considered too high. As I said, business rates are an essential form of funding for local government, providing vital public services and supporting the Government’s levelling-up agenda. The Government have taken action to hold the tax rate steady over the last three years, protecting businesses from inflationary pressures at a cost of around £3 billion each year from 2023-24. Given the difficult fiscal position, it would not be responsible to cut the rate further, with a 1p cut costing approximately £600 million per year.

The noble Baroness, Lady Thornhill, asked whether the VOA would be able to cope with the reforms. The VOA has plans in place to enable the delivery of the reforms in the Bill; the Government have invested to make that change a reality, with £0.5 billion for the VOA as part of the spending review; this includes funding for important changes to upgrade IT infrastructure and digital capabilities.

The noble Lord, Lord Thurlow, spoke about the transparency of the VOA’s work. The Government committed in the 2020 business rates review to reforming the VOA’s processes to make them more transparent. The duty contained in the Bill is essential for the VOA to implement its offer of improving transparency, and we remain committed to that aim.

The noble Lord also raised important points about the danger of rogue agents, as did other noble Lords. I can assure him that we will be consulting on agent behaviour as part of the avoidance and evasion consultation. As he notes, the majority of agents are legitimate organisations that are typically registered with one of the main professional bodies that he mentioned and provide a valuable service to their clients. Nevertheless, some agents seek to take advantage of their clients or actively to promote rate mitigation strategies. The consultation will, therefore, seek to understand the nature and scale of these issues and identify potential actions that the Government can take to help address these practices. While I am on this subject, I wish the noble Lord a very good day tomorrow. I hope that he will feel much better after it.

I move on to important points raised by the noble Baroness, Lady Pinnock, and all other noble Lords. All brought up the issue that the Government have not addressed the imbalanced treatment of the high street and online businesses. We recognise the concerns that people have raised and we have taken significant steps to tackle this. The Government looked at the case for taxing businesses differently, through our review of business rates and through a separate consultation on an online sales tax. Our review made it clear that people were not supportive of penalising specific sectors or properties through business rates. The Government reviewed the feedback that they received from stakeholders over the online sales tax consultation period and announced at the Autumn Statement of 2022 their decision not to proceed with such a tax.

In summary, the evidence received suggested that an online sales tax would have been extremely complex to design and implement and would create undue administrative burdens for businesses. This includes challenges of defining the boundaries between what is online and what is instore retail, including the knotty issue of click and collect, which came up. Rather than penalising innovative online businesses, we have chosen to focus on supporting those high street businesses most in need, with an improved relief for retail, hospitality and leisure businesses, worth £2.1 billion this year, offering 75% off bills up to a cash cap. That is the way we have decided to do it.

The noble Baroness, Lady Pinnock, also brought up the issue of business rate consultation on avoidance. At the Spring Budget, the Chancellor announced that the Government would consult on business rate avoidance and evasion, and that the consultation will look at the three or six-month period of relief available for empty properties. Our concern is to ensure that landlords are not avoiding paying rates, which I hope gives some reassurance. The noble Baroness also asked about the Government reforming empty property rates. As I said, we will consult on business rates avoidance and evasion and look at that issue further. Our concern is to ensure at all times that landlords are not avoiding paying rates—that is the important part.

The noble Baronesses, Lady Pinnock and Lady Hayman of Ullock, brought up the issue of the cost to local authorities, as did the noble Baroness, Lady Thornhill. I am not sure about this, but I am pretty sure that local authorities will get new burdens, if there are new burdens—but I shall check exactly how that is going to happen and write it in my following letter.

That is as much as I have, but I shall look at Hansard tomorrow. I shall answer all the questions and put the answers that I have already given in writing as well. As I said, we can meet again if any noble Lords would like to before Committee. The changes that the Government are making to the business rates system will help businesses grow and prosper, and I thank noble Lords for their basic welcome of the Bill. The Bill reforms rates so that they more accurately reflect the property market—and we are also addressing the perception that tax is a barrier to investment. The changes in this Bill will lead to fairer and more accurate bills and a more adaptive system, capable of keeping up with the changing modern economy.

Bill read a second time.

Moved by

[Baroness Scott of Bybrook]

That the bill be committed to a Grand Committee, and that it be an instruction to the Grand Committee that they consider the bill in the following order: Clauses 1 to 17, Schedule, Clauses 18 to 20, Title.

Motion agreed.