Non-Domestic Rating (Lists) Bill (First sitting)

Stephen Morgan Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 25th June 2019 Public Bill Committees

[The Chair]

I think we cannot go there, given the timeframe. You were right to give a warning. Do you have another question that is in scope? Stephen Morgan, you have one.

[Stephen Morgan (Portsmouth South) (Lab)]

Q Do you have any concerns about the Bill as drafted? That question is for all panel members.

Annie Gascoyne: I will go first. I do not think we have any technical issues with the drafting of the Bill. One aspect of the Bill is that it effectively rolls over the current transitional arrangements from the last revaluation to the next.

One challenge with that is the point about fiscal neutrality; where to get upward transition, you must also have the downward transition. The challenge with that, of course, is that businesses that have seen their property value drop have had the asset base of their business affected and, effectively, their company value, and then they do not benefit from that. So, they are already in a difficult situation, where their asset base is reduced, and then you are saying that we need to keep the rates at the same level.

One challenge with the current Bill is that it requires those transitional arrangements to continue into the next revaluation cycle and those beyond that. That should be looked at to see whether it should continue. Those transitional arrangements were introduced because of the length of the last revaluation cycle and the fact that it spanned the recession. They were introduced for that reason and so we do need to ask whether they remain fit for purpose.

There is one point to make on the rates retention question. Although it is not directly about the impact on local authorities, there is one important point to note. Rates retention does mean that local authorities are less inclined because they have the option to give partially occupied relief. They are less inclined to do so because it obviously affects their income to pay for vital public services. A lot of businesses tell us that that does not really incentivise them, if they have got an empty building, to occupy or lease out part of it. There is an opportunity cost there in terms of economic potential.

Councillor Watts: The LGA is not opposed to the principle of the Bill. There are, though, a couple of points of detail on which we would welcome some further reflection. The first point is about resourcing the VOA. If you are going to do that, there has to be recognition that we need to resource the VOA effectively to do it.

Although we welcome proposals for businesses to inform the VOA more regularly about valuation changes to their properties that might inform more frequent valuations, we worry about the effectiveness of that without effectively having a duty on businesses to inform the VOA or without more powers for the VOA to ask for information about businesses, which is something we have called for previously.

We have a big concern that, if we are going to move the last date of the draft rating to 31 December from 30 September, once every three years, there are profound implications for the way in which local authorities set budgets for one year out of three. Local government was not consulted on that before it was announced, which is regrettable. Settlement timing has previously been based on the new rateable list and, if that is now not available until 31 December, that either pushes the state of the settlement into January, which would be incredibly problematic for local government, or the settlement is based on information not yet published, which is also less than ideal. That is something that needs to be resolved, though I am sure it is perfectly soluble.

We also think there are measures about business rates avoidance, looking at some of the successes of the new Welsh system, which has cut down on some sharp practice around empty property reliefs and a whole range of other stuff. There is an opportunity to look at that through this piece of legislation.

Adrian Blaylock: I agree completely with everything said there. The VOA needs to be resourced; we have already talked about that in the initial question. I have other concerns about moving the dates from the end of September to the end of December for the draft rating list. Local government have a return that must be submitted to central Government by 31 January. There are certain steps they have to take from receiving the draft rating list to be able to do that return. If we are not going to get it until, at best, early January, we are going to struggle for time to be able to do all the necessary work to get that return done.

I notice that it says in the regulations that it will be “by the end of”, so that is the latest date and it would be nice if it could be moved to earlier than the end of December.

[Stephen Morgan]

Q Councillor Watts, you mentioned consultation with the local government sector on the Bill. What would you like to have seen?

Councillor Watts: The specific concern we have is about the shift in the date. It would have been helpful, I think, for the Local Government Association, on behalf of its member authorities, to have been consulted on it before the principle was announced. There are those arguing for that and we understand why the Government are proposing it—you can see that it makes some sense for businesses and others—but it has significant implications for how councils set budget, which, as we all know, is way in advance of the end of the financial year. My authority has finished budget setting by the end of November, because you have to run your statutory consultations from 1 January onwards. Therefore, this is a very late date indeed, and we would welcome any further dialogue with the Ministry of Housing, Communities and Local Government about ensuring that the date works for local government budget- setting cycles.