Non-Domestic Rating (Designated Area) Regulations 2021

Lord Kirkhope of Harrogate Excerpts

Wednesday 24th February 2021 Lords Chamber

[Lord Kirkhope of Harrogate (Con) [V]]

My Lords, in most areas of government, when the political decisions for actions to be taken are made, the process boils down to one of money coming in and then that money being committed or spent centrally or locally. In some areas, the process becomes very complicated and can lead to high levels of dissatisfaction and disagreement. These regulations, which appear in principle—as my noble friend the Minister has said—to be very simple, in fact form part of the whole debate on the financing of local government, the very relationship between central and local government, and the way in which businesses large and small contribute to the cost of local and national services.

Business rates are controversial, and substantial reform is overdue. In the meantime, as a result of the current Covid crisis and the inability of many businesses to trade profitably if they can even continue at all, the extra burden of non-domestic rates has rightly been recognised in short-term relief for businesses in the hospitality, leisure and retail sectors with rateable values of less than £51,000. I hope that the Chancellor will have more to say and to offer on this subject in his Budget Statement.

We saw a number of changes in the way business rates were levied and spent in the Local Government Finance Act 2012, when normally 50% of monies could be retained by the local authority as opposed to being remitted to the Treasury. However, the Government are committed to a much wider reform of business rates. In its 2019 election manifesto, the Conservative Party promised to reduce business rates and to fundamentally review the whole basis of these charges. Since then, the Covid crisis has hit business hard, so a change in the basis of charging rates is urgently required. We have been promised a revaluation of rates from 2023, which luckily will be based on property values of April 2021, so it will reflect the impact of the present crisis. This is welcome, but in the meantime we are now extending a localisation of control of the rate income by this measure before us today.

This benefits Tees Valley Combined Authority and Redcar and Cleveland Borough Council. As my noble friend the Minister has indicated, it allows the retained monies to be used in the designated area where the need is greatest and where local economic growth is most required. That is a good thing. The establishment in certain parts of the country of mayoral combined authorities with specific spending powers and, in particular, the emphasis on local economic growth has clearly required new funding arrangements. Although these regulations are dealing only with any income arising from the growth of rate returns, in this one designated area, those sums will be totally at the disposal of local government. As this money will be shared 50/50 between the local authority and the mayoral combined authority in the area, I hope that the required memorandum of understanding between the two, which has been referred to, will be a really co-operative and positive statement and an encouragement for greater economic activity, and will allow the designated area to be confirmed in April, as suggested.

Memoranda of understanding are being ever more utilised as precursors for more solid agreements, as has been demonstrated in our recent UK trade initiatives. While always well intentioned, they do not always result in long-term satisfaction. Moving more of the monies received into the hands of local democracy is very important and it is, of course, not a substitute for thorough reform. We await that reform with great interest.

I am assuming that regulations similar to these will be put before us for other areas where a mayoral combined authority and local authorities are working together, and that this will include West Yorkshire, which moves to a new status soon. Can my noble friend the Minister confirm that this will indeed be the formula for all such combinations in the future as devolution proceeds? When the proposed revaluation is completed, will further changes be made to support business even more with the hope of economic enhancement, job creation and a lessening of the burdens on business as we emerge from the present crisis?