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My Lords, I beg to move the second Motion standing in the name of my noble friend Lord Whitty.
On 1st April 2000 there will be a general revaluation of all non-domestic property. These regulations will phase in the impact of the revaluation on individual ratepayers through a transitional relief scheme.
Under the Local Government Finance Act 1988 revaluations must be carried out every five years. The purpose is not to increase the amount of rates paid nationally but to adjust the individual bills in line with relative movements in the property market. This means that at revaluation many ratepayers benefit with their rate bills being reduced but others will see their bills increased.
The transitional relief scheme will give businesses, in particular small businesses, time to adjust to the effects of the revaluation by limiting the size of annual increases in rate bills for the five-year life of the new rating list. Next year a small property--that is, one with a rateable value of less than £12,000, or in Greater London less than £18,000--will at most be faced with an increase of 5 per cent in real terms. For large properties the maximum possible increase next year will be 12.5 per cent in real terms.
In later years larger maximum annual increases will be allowed in bills which are still less than the full bill based on new rateable values. For small properties the annual limits will be 7.5 per cent in real terms, but for larger properties they will rise to 15 per cent in the second year and thereafter will be 17.5 per cent a year in real terms. However, most properties will have either decreases in their bills or increases below these maximum levels.
The loss of rate revenue caused by phasing in increases will be made good by phasing in decreases of the bills for those who are benefiting from the revaluation. As their bills are falling they are best able to help meet the cost of the scheme. In the early years the reductions allowed will be less than in the later years, given that transitional relief costs most in the early years when the greater number of properties needing relief is present.
Next year the maximum reduction in the bill of a small property will be 5 per cent in real terms. For a large property it will be 2.5 per cent. But by 2004-05 any small property still having reductions in bills phased in will pay 25 per cent less in real terms than they were paying the year before. The equivalent figure for large properties will be 15 per cent.
I am pleased to say that this scheme has, in the words of the Financial Times, been praised by the business community as fair. As the Financial Times suggests, such praise is unusual in this area. We have consulted widely with the CBI and the chambers of commerce, which are satisfied that good consultation has taken place. I commend the regulations to the House.