Levelling-up and Regeneration Bill

Debate between Lord Thurlow and Lord Stunell

Report stage
Wednesday 13th September 2023 Lords Chamber

[Lord Stunell (LD)]

My Lords, on this side we are sympathetic to the intent of the amendment from the noble Lord, Lord Carrington, although somewhat doubtful about the mechanism he has proposed. I think we all want people who are subject to compulsory purchase orders to be treated in a humane and certainly human rights-compliant way. We do not want to return to the days of Crichel Down and everything that emerged from that.

Nevertheless, I think the noble Lord, Lord Carrington, made it clear that he saw the fundamental problem being one of resources and a search for a less mechanistic way of enforcing compulsory purchase regulations. I would be interested to hear the Minister respond and, I hope, confirm that purchasing authorities will be given support to make sure that they take that process through speedily, particularly the payment of compensation, and in a timely fashion.

[Lord Thurlow (CB)]

My Lords, I declare my interests as a former chartered surveyor. The current CPO guidance attempts to deal fairly with owners who are caught up in the process of having land acquired under compulsory purchase, but it remains a blunt instrument. This amendment requires the Government to provide a duty of care, which is an excellent proposal. It is also appropriate, as we heard from the noble Earl, Lord Lytton, that compensation under CPO is paid on transfer, as it is when any citizen in this country buys or sells any of their private property. I see no reason at all why it should not also be the case under compulsory purchase. I support the amendment.

Levelling-up and Regeneration Bill

Debate between Lord Thurlow and Lord Stunell

Committee stage
Thursday 20th April 2023 Lords Chamber

[Lord Thurlow (CB)]

My Lords, before we conclude this group, I start by saying that I do not know how any Government with a social conscience could listen to our debate for the last couple of hours without feeling an urgent desire to scrap the right to buy.

I support Amendment 438 in the name of the noble Lord, Lord Best, concerning the sale of higher-value council residential properties. We must not forget that a lot of them are very old, they may have a lot of bedrooms, and they may be under-occupied, as we understand it, and very expensive to maintain—all good reasons for selling them. But we have a chronic shortage of housing. We all know that; we have heard it repeatedly today. If you geometrically increase that to the chronic shortage of social housing, or affordable housing, it is a crisis. The proceeds of all council residential property sales should be reinvested into social housing and affordable housing. They are not, as we have heard again and again. The failure to replace the units lost by the right to buy—the noble Lord, Lord Stunell, referred to it very eloquently—is a disgrace.

The private developers, who build large numbers of residential units for private sale are under an obligation to provide an allocation under the Section 106 agreements for affordable housing, but this is abused by developers—everyone in the industry knows that. The affordable housing obligation is subject to something called a financial viability appraisal. The bigger developers are frequently huge, multi-million-pound public companies; they have the resources, expertise and firepower to employ legal advisers at the highest and most expensive level to provide the financial viability assessment that suits their purposes. There is no possibility of local authorities being able to take on this challenge, partly because they would have to do it so frequently, and partly because they are short of funds in the first place and hardly able to challenge planning applications even on a private level from time to time. I am afraid that there is very little likelihood of the numbers of social or affordable housing being increased in the short-term. I conclude that—

[Lord Stunell (LD)]

I thank the noble Lord for giving way. Does he agree that a compounding factor is that the calculations of viability studies are kept secret and that, if they were more transparently available, some of the abuse that he quite rightly refers to would be reduced?

[Lord Thurlow (CB)]

I thank the noble Lord for his comment. I agree entirely with what he says. Without being able to challenge line-by-line a financial viability appraisal, it becomes an impossible task. A lot of the elements of financial appraisals are subjective, and value is therefore very much in the eye of the beholder. I absolutely agree with the noble Lord’s comment. However, until developers are required to provide sufficient social housing, together with the contribution from government sources, I unconditionally support the amendment tabled by the noble Lord, Lord Best.

Non-Domestic Rating (Lists) (No. 2) Bill

Debate between Lord Thurlow and Lord Stunell

Report stage & Lords Hansard
Monday 1st March 2021 Lords Chamber

[Lord Stunell (LD) [V]]

My Lords, I speak in support of Amendment 1, just moved by the noble Lord, Lord Kennedy. It is a real pleasure to follow him and his very measured and careful support for the need to tackle the issues on which I too will comment.

I am disappointed that the Government and the Minister have not thought fit to take on board the range of sensible improvements put to your Lordships’ House in Committee. A wide range of noble Lords spelled out the difficulties that an unamended Bill will impose, particularly on the hard-hit retail sector, where the devastation of Covid-19 lockdowns on top of a decade-long decline in high street sales has wiped out a long string of household names, as the noble Lord, Lord Kennedy, rightly rehearsed

The Chancellor’s emergency business rates relief has certainly been a life saver. The Association of Convenience Stores says that four out of 10 of its members would have gone out of business without that support in the past year. It is no wonder that many Conservative MPs are calling on the Chancellor to extend that scheme, and to provide some continuing support to the high street, at least until Covid restrictions are fully lifted. I hope he will do that but, as we discussed in Committee, that could all be in vain if those retailers are then left waiting for years for the revaluation, which this Bill will trigger, to come into effect. The big risk is that the cavalry will arrive too late—in time to count the dead, but too late to bring success to the high street.

Today’s amendment is in default of any response so far by the Government to these issues. It requires an annual audit of the heavy burdens borne by some, especially high street retailers, alongside the unearned tax holidays given to others, particularly distribution centres and the gigantic out-of-town warehouses of the online retailers. Those businesses are booming and occupy property that is virtually untaxed under the present regime, compared to the high street trader.

The amendment refers to the impact of the timing of rates revaluation, and that is what I want to focus on. I want the Minister to respond to this specific point when he winds up: does he acknowledge that unless the Chancellor’s rate relief scheme is extended, or the effective date of implementation of the revaluation in this Bill is brought forward, there will be a hiatus, when many small shops will face ruin? They will be forced to pay wholly disproportionate property taxes, which are now completely out of kilter with current rental and property values. If he does acknowledge the reality of the hiatus, will he undertake to work with the Treasury to bridge it? That could be by extending the existing scheme set out by the Chancellor, or by bringing forward the effective implementation date of this Bill, or both.

Further to that, it is noteworthy that the Non-Domestic Rating (Public Lavatories) Bill has a retrospective implementation date of 2020. I presume that that means that the Government accept the principle that the benefit of a reduction in rateable value can be backdated. If it can be done for public lavatories, surely it should be done for high street shops as well. If the antecedent valuation date is taken as 1 April this year, as set out in this Bill, surely it makes sense in the current circumstances to make that the date from which the payment amount is calculated. That would not be immediate cash in hand, of course, but it could be a vital, bankable credit for a struggling business and give retailers the incentive and the means to keep going through this crisis until the valuation is actually published. Will the Minister undertake to explore this with the Chancellor as one of the ways of closing the chasm between the end of the Treasury scheme and the coming into force of this Bill?

If the Government are serious in saying that we have to build back better, surely this is exactly the time for some joined-up thinking across government departments. Is this not exactly the simple bridging measure that would help stop the disruption of our high streets? We all know that thriving local communities everywhere need ready access to diverse public and commercial services that serve everyone, and that a healthy and diverse local retail sector is an essential part of that. This is not at all about keeping alive an outdated business model that is able to limp along only with tax cuts and subsidies; it is about putting right a taxation injustice that is now beyond dispute, so that high streets can do what they do best: provide local communities with a focal point for the things they need. I support Amendment 1 and I look forward very much to hearing that the Minister does too.

[Lord Thurlow (CB) [V]]

I thank the noble Lord, Lord Kennedy, for tabling Amendment 1, which I wish to speak to, and it is a pleasure to follow the noble Lord, Lord Stunell. I declare my interests as set out in the register. I am a non-domestic ratepayer in Scotland, although I know this Bill does not include affairs in Scotland.

The Bill is all about timing; it is not about fairness, fitness for purpose, the impact on business, sorting out the appeals system or any other aspect of what has become, I fear, a broken system. The Bill ignores the most critical timing issue, which is simply that of dealing with the appeals backlog—ratepayers paying the requested sum until an appeal is settled. In the current circumstances, that is critical. We cannot expect the Covid-related rates holiday to last for ever. We have seen a collapse in retail rental values over the past 12 months, and as both the noble Lords, Lord Kennedy and Lord Stunell, have pointed out, it was a crisis long before this. Some tenants are to pay double the appropriate rates bills. This amendment brings the plight of the high street retailer into high relief. The annual report it proposes would focus specifically on small businesses, as set out in subsection (2)(b). I am pleased that it also addresses the elephant on the table of all non-domestic rates discussions in the retail sector: the killer impact of the online assault on the high street, as we have heard from both the previous speakers.

Online retail is not a bad thing and it is clearly the future for a huge percentage of domestic spending. The bad thing is the Government’s inability—after years of notice, for online is not a new phenomenon—to recognise the twin neglects of taxing the profits of online and of fairness in the spread of rates between the high street and that sector. Subsection (2)(d) of the amendment requires that the report address the impact of the revaluation timing on local authority finances. Rates are a critical ingredient in local authority finance, but unfortunately the funding gap that the next revaluation will create will lead to a difficult political challenge: how to replace the fall in rates funding—another reason to delay the reform so desperately needed.

Subsection (2)(e) addresses the subject of waiting lists for appeals, which I mentioned earlier. This has become critical. Waiting list delays are themselves enough to put many out of business—a good example of shooting ourselves in the foot of local authority funding. The end result will be worse.

I must refer also to the fundamental review—a story of delay. It is most disappointing, in that the most vulnerable ratepayers can hardly speak for themselves. This delay will be the death of many small, innovative and hardworking businesses, the very ones the Government claim to champion. Should the noble Lord, Lord Kennedy of Southwark, press for a Division on this amendment, I will certainly support it. But my greatest concern is that the valuation date for the revised NDR lists has been chosen at a point in the market cycle that provides no evidence. In my 40-odd years in this profession, I have seen highs and lows in the rental value market cycle, but I have never seen paralysis. Paralysis is what we now have in the rental market from which the rate levels are derived. It will probably lead, as I explained in Committee, to a huge mass of rating appeals. I ask the Minister to take these comments back to the Government, but I fear that it is too late.

Non-Domestic Rating (Lists) (No. 2) Bill

Debate between Lord Thurlow and Lord Stunell

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Thursday 4th February 2021 Grand Committee

[Lord Thurlow (CB) [V]]

My Lords, I thank the noble Lord, Lord Kennedy of Southwark, and the noble Baroness, Lady Bakewell of Hardington Mandeville, for tabling this amendment. I declare my interest as set out in the register. I also take the opportunity to thank the surveyors Gerald Eve for their time and assistance in preparing for this debate.

My concern is the rapid rate of the collapse of high-street businesses—not just the well-known brands that have been referred to but small family businesses, private enterprises and start-ups serving local markets while hoping to succeed, expand and grow. As the noble Lord, Lord Kennedy, commented, the system needs root and branch reform. These retailers’ rating assessments are currently based on pre-crisis levels of rental value, but those values have really collapsed. They were set at a time when there was a healthy economy, with low interest rates and constructive market tension in the leasing marketplace, arriving at competitive rents that were exactly what supply and demand required. That has been lost—which is to say, the values have collapsed as turnover has collapsed—and the rates applied and being paid today are much too high.

We have seen this collapse in values for several reasons; the rates payable by these businesses are the final straw. They can appeal, but there will be long waiting lists. We heard the noble Lord, Lord Kennedy, say that there were 40,000 still hanging over, some from 10 years ago. I am afraid, too, that hundreds, if not thousands, of small businesses will be forced to pay the published rates until appeals are heard, whenever that may be. They will of course have long gone and disappeared as businesses by then.

This is why I am absolutely certain that an impact assessment on appeal waiting lists arising from this Act is so important. I consider six months the absolute minimum period to attempt the impact assessment. It is unfortunate—the sooner the better—but I do not see how they can do it in less. The surveyors may be stretched to their limits to process the appeals.

The process involves a check, challenge, appeal programme, which puts the onus of setting rental value for rateable value purposes on the appellant. The only way to arrive at rental venue is to look at comparable properties and find the latest rental evidence from the marketplace, which is then applied. But there is virtually no evidence. The markets have been sliding, both for offices and retail, and we know that the rating assessments are now significantly in excess of what they should be.

I mentioned retail, but imagine the difficulty of estimating rental value for offices in two months’ time, when the date occurs. Many office buildings are empty or on a skeleton staff rotation. If they are more than a couple of floors tall, social distancing means that you cannot get into a lift. Businesses are, as we speak, considering their future office needs. Working from home, like so many of us are in this debate, means that less square footage is likely to be required. As I said, in the bottom of the trough of this rental crisis, experts will have great difficulty estimating rental values.

Will the Minister please impress on the Government the importance of urgency in addressing this rateable imbalance? Businesses are collapsing in all communities. I support the impact assessment on appeal waiting lists, but it is difficult not to imagine that the appeal process will struggle under the weight of appeals, and I urge the Government to prepare for that probability.

[Lord Stunell (LD) [V]]

My Lords, it is a privilege to speak after the noble Lord, Lord Thurlow, because he has more or less stolen my thunder, which means I can be really quite brief. He outlined very clearly a common thread in all the debates so far today: the absolute urgency of getting this problem fixed. We all know that it needs a longer-term fix, with a complete overhaul of the system, but, if we are to stay where we are with the current system unamended while we wait for that golden day of amazing reform, I fear that many businesses in the country will collapse and fail, not just in the high streets, but, as the noble Lord, Lord Thurlow, so elegantly and persuasively said, in the office sector and elsewhere. Something has to be done in the meantime—which, of course, was the burden of some of the earlier debates.

The point of the amendment and the impact review is to challenge the Government by saying that what they propose to do—or, perhaps more accurately, what they propose not to do—will leave many businesses in profound despair about how they will manage in the next 18 months or two years. It is obvious that many people will appeal. The number of appeals will be large, not small, and if we start with a backlog from the previous system, that will get worse still.

My noble friend Lady Bakewell asked the Minister some piercing questions that I hope he will respond to about the efforts being made to train panels and find the expert support needed to get the appeals in the system moving through at a proper level. What about the waiting times? Is the Minister, or indeed the VOA, setting a target to deal with this backlog to make sure that it does not pile up behind the new unfolding situation? The noble Lord, Lord Kennedy, has already pointed out the 40,000 appeals. I know that some of those are very specific to one or two topics, but that is not quite the point: one or two specific topics might crop up in this round of appeals and this revaluation that will cause similar problems.

So I strongly support the thrust of the amendment and I believe that we do need an impact assessment. We need some positive action from the Government and I look forward to hearing how the Minister proposes that that should happen.