Non-Domestic Rating (Rates Retention, Levy and Safety Net and Levy Account: Basis of Distribution) (Amendment) Regulations 2020 - Motion to Approve

– in the House of Lords at 2:07 pm on 3rd November 2020.

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Lord Greenhalgh:

Moved by Lord Greenhalgh

That the draft Regulations laid before the House on 7 October be approved.

Photo of Lord Greenhalgh Lord Greenhalgh Minister of State (Housing, Communities and Local Government), The Minister of State, Home Department

My Lords, the business rates retention scheme, introduced in 2013-14, allows local government to keep 50% of the business rates it raises locally and, more importantly, 50% of the growth in those business rates, over and above the sums with which it is provided through the local government finance settlement. In 2019-20, this was estimated by authorities to be worth an additional £2.5 billion of funding.

The day-to-day operation of the business rates retention scheme is technically complex. I look forward to contributions from noble Lords on this matter. It is governed by a number of pieces of secondary legislation, setting out the technical rules that govern the flow of money between central government, billing authorities and major precepting authorities.

The regulations before the House today make a number of important technical amendments to those regulations to update the existing framework. This is vital to the continued smooth running of the business rates retention scheme and will ensure that everyone gets the funding they are supposed to get. These regulations make three sets of changes: they ensure the correct calculation of the income to be retained by authorities which have, or have had in the past, a higher level of retained business rates income; they make the necessary changes to the rates retention system following the most recent local government restructuring; and they adjust the calculation of retained rates income, against which we determine levy and safety net payments, to ensure that local authorities are not doubly compensated for giving business rates relief for telecommunications infrastructure.

I will now say a little more about each of these changes and the reasons for them. On the calculation of pilot authorities’ income/errors, as I said, the rates retention scheme is run according to a series of regulations, key to which are the Non-Domestic Rating (Rates Retention) Regulations 2013 and the Non-Domestic Rating (Levy and Safety Net) Regulations 2013. These set out the basis on which the system is run, including authorities’ shares of locally retained business rates income, safety net thresholds and levy rates.

Since 2017, some local authorities have been allowed to keep a higher proportion of business rates income. Authorities in five devolution deal areas retain 100% of their business rates income, and authorities chosen to be part of the business rates pilots in 2018-19 and 2019-20 retained 100% or 75% of their business rates income for the relevant year.

Regulations were put in place to effect those changes. However, a few minor omissions or errors were made in the framework for the 2019-20 pilots in the Non-Domestic Rating (Rates Retention and Levy and Safety Net) (Amendment) and (Levy Account: Basis of Distribution) Regulations 2019. These include the 75% pilots’ levy rates, apportionment of the collection fund surplus or deficit for one authority and uprating of the top-up and tariff payments for London, and 100% business rates retention authorities in 2019-20. These regulations put those right. For this reason, these regulations will be made available free of charge to any party who purchased the 2019 regulations. Further minor amendments are made by the regulations to provide the basis for uprating 100% business rates retention authorities’ top-up and tariff payments in 2020-21.

Turning now to the restructuring of local authorities, following the restructuring of Buckinghamshire County Council and its constituent district councils, Aylesbury Vale, Chiltern, South Bucks and Wycombe, into one unitary Buckinghamshire Council from 2020-21, amendments are required for the running of the rates retention system. Two minor changes are required to establish the requirements of the new authority under the rates retention system. These are, first, an adjustment to a figure which determines the cost of operating in the area and therefore the cost of collection of business rates for the authority, and, secondly, a new value for Buckinghamshire used to calculate the amount of compensation it will receive for small business rates relief.

In 2019, the Government set out in statute the basis of distribution on which any surplus on the levy account would be made; this occurs where levy payments exceed safety net payments in a year. The basis of distribution is based on local authorities’ relative need as defined by their settlement funding assessment, which is composed of baseline funding level and revenue support grant. A small amendment is made by these regulations to the basis of distribution to reflect a revised agreement on revenue support grant between two councils which restructured back in 2019-20. This revised split adjusts the allocation that the Bournemouth, Christchurch and Poole Council, and Dorset Council, would receive should the Government determine an amount of any surplus on the business rates levy account to be distributed in the future.

Turning now to adjustments to take into account telecoms relief, an amendment is made to the regulations concerning the calculation of retained rates income, against which levy and safety net payments for authorities are determined. In determining the amount of safety net payment an authority may require, or the amount of levy on growth it is required to pay in a year, the levy and safety net calculations take into account a Section 31 grant compensation for business rates reliefs received by an authority as the result of changes made by the Government. If we did not do this, local authorities could end up effectively being compensated twice for implementing these reliefs. These regulations make the required changes to ensure that any telecoms relief that an authority has awarded is taken into account in these calculations.

In conclusion, these regulations perform a range of minor, highly technical amendments to achieve the correct basis on which the rates retention system is run for 2019-20 and 2020-21. These regulations do not enact new policies, but rather ensure the fulfilment of the original policy intention as approved in prior years via the settlement or by the statutory instrument. I beg to move.

Photo of Lord Liddle Lord Liddle Labour 2:14 pm, 3rd November 2020

My Lords, I think the paper before us and the speech we have just heard must convince all Members that the non-domestic rates system is something of an enigma wrapped in a mystery, as Winston Churchill said about something else. There is no better person to talk about it than a Minister who actually understands local government, and that is a shared commitment I have. In my political life I have been on three different authorities: Oxford City, Lambeth and now Cumbria, which I declare as an interest.

I would like to use this opportunity to probe the Government’s intentions on their general policy on non-domestic rating. First of all, this is a muddle. Do the Government have plans for a long-term reform of non-domestic rates, and within what timescale? Economists argue seriously for switching to a system of land value taxation—is this something the Government might contemplate?

Secondly, there is the immediate question of business rates, which is the situation we are currently in with the Covid epidemic. We welcome, obviously, the relief given for the current financial year, but what will happen next year? Will we go back to what I think is a discredited system of complex formulae, a rate base we do not really understand and valuations which are often out of date? What will happen next year?

Thirdly, do the Government recognise—I do not think the public recognise this—that non-domestic rates are actually a very big tax? They are a very big tax indeed on business; I think it comes out at something like 1.7% of GDP. It is a very important part of the national tax base. When you look at other countries, our friends over the channel, France levies only 0.7% on business rates and Germany only 0.3%. When you look at the thriving small towns on the continent by contrast with the dead town centres that we have in so many of our cities, it is not surprising that the fact that we impose such high taxes on business through the rating system plays a part. This is a very big problem with the emergence of online competition, and this makes it a far bigger problem in the UK than it is in countries on the continent where business rates are less of a factor in costs.

Then there is the question of the Government’s general policy on local government finance. Is it the Government’s intention still to make local authorities more dependent on the income they raise, and gradually to phase out government grants to councils—which is what the Government said they were doing in the George Osborne era? Business rates retention was introduced as part of that philosophy of making authorities more dependent on their own tax base and less dependent on central government grants. The argument for that is that it incentivises growth policies, because you have an incentive for growth. The argument against is that if areas are poor, they will not get much richer through a policy that favours authorities with high economic growth rates. Is this approach of making authorities dependent on the money they raise locally consistent with this Government’s levelling-up agenda? That is a very big question. I favour a reform of government grants, a new equalisation formula and—I know the Government do not like this phrase—a form of fiscal federalism in England. The present system needs radical change.

Photo of Baroness Scott of Needham Market Baroness Scott of Needham Market Liberal Democrat 2:20 pm, 3rd November 2020

My Lords, we would all agree with the Minister when he described the SI as highly technical. It certainly is. It demonstrates just how convoluted local government finance in this country has become. It deeply troubles me from the point of view of transparency, because I would defy anyone to try to explain what is happening here. The context is that local government is facing a funding crisis of around £1.6 billion. The local government finance system was not fit for purpose before the pandemic and most certainly is not now. I agree with the remarks of the noble Lord, Lord Liddle, about the need for a root and branch reform of local government finance.

I have one substantive point and two questions for the Minister. A rule of law accessibility issue arises in relation to this SI. The Government’s Explanatory Memorandum and the Minister mentioned that the procedure for free issue is in effect a replacement; this instrument corrects errors from earlier one. As a long-standing member of the Joint Committee on Statutory Instruments, I applaud the Government’s use of the free issue procedure here. It is exactly what the JCSI said the Government should do.

The principle that free correction should be given was set out in the committee’s special report in 2017-19. However, that report also made the point that the Government need to consider whether the free issue procedure is necessary and serves quite the same purpose, now that so few people buy written copies. Most people go online. Here I declare an interest as a non-executive board member of the National Archives, which fulfils the role of Queen’s Printer and runs legislation.gov.uk.

In the report, the committee invited the Government to consider allowing readers of hard copies to register for email or text alerts when a statutory instrument is replaced or corrected down the line. Perhaps the Minister could go back and ask the people in government responsible for that whether they have given any more thought to this matter. The free issue procedure is one part of a whole edifice for managing SIs within a legislative and procedural framework that has been based largely on paper and not what would happen if it were starting again today.

My two questions are these. First, the Explanatory Memorandum talks about a local government working group that focuses on business rate retention and reform. Can the Minister say more about that group, who is on it and how it operates, because I have not heard of it? Secondly, are we coming close to a date for Second Reading on the Non-Domestic Rating (Lists) (No.2) Bill, which received its first reading in March but seems to have disappeared?

It is almost 30 years since I was first elected a councillor. In 1991, as I was trudging the streets of Needham Market, one Ian Botham was on his final tour of Australia and New Zealand. Many paths lead to this House. I look forward to hearing him and wish him well.

Photo of Lord Botham Lord Botham Crossbench 2:24 pm, 3rd November 2020

My Lords, it is an honour to be here making my maiden speech. I was introduced early last month and since then have received an outstanding welcome and support from noble Lords across all Benches, the behind-the-scenes staff and, importantly for me, the digital team, without whom I would not be online speaking to you now.

My whole life has revolved around sport, football, golf and fishing, to name a few, and, as most will know, a bit of cricket. Sport has been more than a game to me. It has been my life and has given it structure and focus, and it has kept me both physically and mentally fit. My career has been well documented, so it is no secret that I am a passionate, strong-willed man who will fight for the causes close to my heart, be they sport, charity, the countryside, the world we are now living in with Covid and how we continue to live with this pandemic surrounding us.

Today, with time short, I will touch briefly on a couple of topics—sport and the community. As chairman of Durham County Cricket Club, I have followed the way in which this pandemic is affecting our sports grounds, which in turn is affecting countless people—those who work at the grounds, those who represent the grounds and those who support the grounds. The capacity of Durham County Cricket Club’s ground is 14,000. There are 3,000 paying members, with an average age of 60—an age that is now classed as vulnerable. The annual turnover is down by 35%, which has sadly led to job losses. We need to get these grounds open to spectators again in a controlled and safe manner. Durham’s members have donated their annual membership fees to the club. We need to start supporting them more and allowing them in.

On the subject of today’s debate, I urge the Government to provide 100% rate relief to community sports clubs. I am honoured to be the founding president of Blood Cancer UK, and I have been involved with the charity since I saw children with the disease in a hospital in Taunton back in the 1980s. Together with my supporters, we have raised many millions, which have contributed to life-saving research, meaning that many more children and young people now recover.

The House will know that we can defeat cancer and other diseases only through investing in research, and the UK has a very proud record in this regard. However, Covid has hit charities hard and, in the next financial year, Blood Cancer UK alone estimates that it will be able to fund 40% less research than it had hoped. Not only will the impact of this be felt now, but it threatens to slow the progress achieved in research. I hope very much to use my time in the House to continue supporting charities and the invaluable work that they do.

I am very much looking forward to contributing more in the House on the topics I have mentioned and on other matters close to my heart.

Photo of Lord Moynihan Lord Moynihan Conservative 2:27 pm, 3rd November 2020

I am privileged to follow the noble Lord, Lord Botham, and congratulate him on a powerful and impressive start to what I am sure will be a long career in this House. My task in acknowledging his service to sport and country will require the heavy roller, for he showed relentless courage, skill and determination at the wicket and has put those skills to good effect well beyond the boundary ropes. As one of the greatest cricketing all-rounders of all time, he showed loyalty to fellow players, not least when he left Somerset. It is to his credit as one of the all-time greats that the Richards-Botham trophy, named in honour of himself and Viv Richards, replaced the Wisden trophy for winners of the West Indies-England test series.

The noble Lord, Lord Botham, understands the spotlight that sport can shine on life as a means of campaigning to fundraise for research into leukaemia. His 12 long-distance charity walks, the first being a 900-mile trek from John O’Groats to Land’s End, have given hope to countless children, their families and friends. When not working for others he turned his hand to commentating, where he has earned consistent respect for being impartial and objective—giving praise where praise is due and criticism where it is justified. That can come only from a deep knowledge and understanding of cricket and the lives behind the people who play it.

The noble Lord’s commitment as chairman of Durham County Cricket Club, his unabashed love of the countryside and his passion for trout and salmon fishing have all followed. He even found time to campaign for Brexit. Not surprisingly, he was chest high in the middle of a salmon river when I called to ask him to be an ambassador for the British Olympic team for London 2012. By example, he has shown us that sport knows no boundaries, shuns injustice and intolerance, and must be blind to colour, race or creed. Sport is a route to fulfilling dreams.

Today, he joins an exclusive team of four captains of England cricket and one West Indian cricketer whose skills led them to honour these red benches as Life Peers. It is clear from today’s speech that his time at the crease will in this House neither be wasted nor spent warming up. It is appropriate that the first of the famous four cricketers whom the noble Lord, Lord Botham, follows was Learie Constantine, a cricketing legend and the first black man to sit in the House of Lords. He made his maiden speech at the height of the Government’s negotiations with Europe for the UK to enter the European Economic Community, and in that speech he powerfully made the case for racial equality.

Today, the noble Lord, Lord Botham, has spoken with the same passion as that noble Lord did in this Chamber 50 years ago. He follows three further life Peers in Colin Cowdrey, David Sheppard and the redoubtable Rachael Heyhoe Flint, all of whom were close colleagues of mine, campaigning in the cause of sport. I anticipate that the determination of the noble Lord, Lord Botham, to use this place for change will exceed even theirs.

Turning to the regulations before the House—on a day when, for the first time in history, a Lords Select Committee to examine a national plan for sport has had a sitting— they touch one critical part of the package needed to save sport: rates. However, the financial damage caused to clubs by lack of gate receipts is unsustainable. Sport needs urgent support. We are talking about not just the clubs but the positive impact they make on the communities they serve and their supply chains, which means that when they suffer businesses in their local communities suffer. One of the most expensive outgoings for clubs that occupy facilities is business rates. The Government can step in right now, as the noble Lord, Lord Botham, said, to provide a full rates holiday rather than the current 80% plus 20% discretionary formula. Clubs are in desperate straits; government must intervene before they start to go under and the many community schemes, which are part of the infra- structure of this country, wither under Covid.

Due to Covid, we face a young population who are more obese, more unfit and more challenged by mental health problems than any in many generations. We have even made the error of prohibiting two-ball golf matches and singles lawn tennis for all ages. Now is the time to show our concern about the mental and physical well-being of the population. Sport, recreation and an active lifestyle are essential to build up resistance to the worst effects of Covid. Now is the time for government to listen and to act.

Photo of Baroness Morris of Bolton Baroness Morris of Bolton Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, the noble Lord, Lord Bhatia, is experiencing technical problems, so I now call the noble Lord, Lord Bourne of Aberystwyth.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth Conservative 2:32 pm, 3rd November 2020

My Lords, it is a pleasure to follow the noble Lord, Lord Moynihan, and it was a great privilege and pleasure to hear the maiden speech of the noble Lord, Lord Botham, centring as it did on issues of sport, community and charitable giving. I really look forward to hearing far more from him in future contributions to your Lordships’ House.

I thank my noble friend the Minister for presenting so clearly what are very much technical regulations, which I strongly support. I have no specific questions about them but some general questions regarding the context, which I hope my noble friend will be able to deal with. First, what is the proposed timescale for full business rate retention across the country? I assume that it is still 100% but it may be 75%. I am not absolutely certain but would be grateful if my noble friend is able to shed some light on it.

Secondly, where are we on the fair funding review? It is obviously important and sits alongside business rates retention. When is that likely to happen? We all understand about having some slippage because of the Covid crisis, but it would be good to have some general outline as to when we can expect it.

My third question relates to the devolved combined authorities, and Cornwall as well, which currently have 100% business rate retention. I fully understand that but it does not extend to all the combined authorities. Can my noble friend the Minister give an update as to whether Teesside, Cambridgeshire & Peterborough and South Yorkshire are likely to join in the 100% business rate retention scheme? Where are they at the moment and what is the prospect for other devolved authorities such as West Yorkshire, which may be in the pipeline? What is the position on them?

My last question for my noble friend relates to unitisation, which is referred to in the regulations. There obviously has to be some adjustment in relation to Buckinghamshire, which is in the pipeline. Dorset is similarly in the pipeline, as is Bournemouth, Christchurch and Poole. Can he say something about future unitisations and how those interact as well? Cumbria may be in the queue, but I am not sure whether other authorities are. With those questions, I am much in support of the regulations.

Photo of Lord Mann Lord Mann Non-affiliated 2:35 pm, 3rd November 2020

My Lords, I join in the warm welcome to the noble Lord, Lord Botham, and congratulate him on his maiden speech. I echo his call to the Minister about community amateur sports clubs. The crisis in finance for grass-roots sports and, in part, for professional gamers is emphasised by the decision of Hull Kingston Rovers rugby league club not to complete its fixtures this year, because of finance. This is before we even go into lockdown, never mind the potential to continue it. This demonstrates that they will not all survive. A government intervention could give them the breathing space that allows them to survive not necessarily the fixtures of a season, but as entities going forward. It would be a wise Minister who would spend time and effort considering that now, because this will be a long winter for all of us, not least for those sports clubs.

I congratulate the Minister. One might say his style was more Viv Richards than Geoff Boycott in making an opening stand in this debate with eloquence and detail. I have one question of substance. He is the expert on all things, but even this may defeat him, so I would be happy to have something in writing to put in the Library, if he would be so kind. How do the regulations impact power stations that close down? It is a rather bespoke issue for non-domestic rates, affecting around half a dozen district authorities across the country. The government decision to close down coal-powered stations—in my view rational but painful—means, in the complex way in which business rates are attributed to local authorities, some district councils may lose out, but cannot be certain by how much, because of the complexity of the rate spread and the formula. Could the Minister or his officials give this change a little attention to see whether it will have a negative or disproportionate impact any of those district councils?

Photo of Lord Shipley Lord Shipley Liberal Democrat 2:37 pm, 3rd November 2020

My Lords, I remind the House that I am a vice-president of the Local Government Association. I say at the outset, on behalf of these Benches, that I am happy to support this statutory instrument. The Minister made a very clear case for these regulations. I also congratulate the noble Lord, Lord Botham, on his maiden speech. We very much look forward to hearing his future contributions in this Chamber, particularly on matters related to sport and the work of the voluntary and charitable sectors.

The very title of this statutory instrument suggests complexity. I understand why it is needed, given changes to the structure of local government in several council areas across the south of England. But that complexity is hard for the public to understand, as was explained by the noble Baroness, Lady Scott of Needham Market. We can see from reading the SI that it is dependent on algebraic formulae and calculations that run to four decimal places. It has been suggested that only a handful of people understand the system of distribution. In one sense, it may not matter too much if the public have confidence in the outcomes, however they are calculated, but it becomes more difficult if the outcomes start to be challenged. Given the pressures on local authority budgets being caused by coronavirus, we may see that happen more frequently. The heart of the issue is the fair distribution of money, which is harder to guarantee in view of the coronavirus pandemic.

The noble Lord, Lord Liddle, talked about land value taxation; I agree with what he said. He also said that business rates are a very big tax, and they are. One problem, of course, is that if less money is raised through business rates, the pressure on council tax potentially rises, yet the pressure on people paying council tax cannot be allowed to worsen. I agree on the need for a new equalisation formula. I am very taken with the idea of fiscal federalism that the noble Lord, Lord Liddle, proposed for England. There is an argument for it; I hope that, when discussions take place on the long-term future of the business rates system, we will look at that more closely. As the noble Baroness, Lady Scott of Needham Market, said, the system is not fit for purpose.

Can the Minister tell us whether this statutory instrument has local support? Have all the local authorities affected by the SI agreed to this, and were there any representations from them? Behind everything is the pending review of business rates, as has been raised by several speakers this afternoon. This is urgently needed given that the consultation closed, as we know, at the very end of October. As we have heard, there is no solution for 2021-22—and lockdown this month puts further pressure on the system in this financial year, never mind the next.

My view is that the Government should extend the system of business rates deferral—or holiday—through much of 2021. I think this is now unavoidable. Will the Minister confirm the Government’s thinking on this? The rising cost of local government will otherwise not be met; they certainly cannot be met by loading the extra cost on to council tax alone. The Minister said in his opening remarks that it is a technically complex system. He is right. He also said that he looked forward to our contributions—I think with respect to providing solutions. It is a very complicated area. My view is that it will be solved only through all-party discussion and agreement. I hope the Minister and the Government will think about that in the context of the publication next spring of proposals on the long-term future of the business rates system. With all of that said, we are very happy to support the proposals in this statutory instrument.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Opposition Whip (Lords), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Housing) 2:43 pm, 3rd November 2020

My Lords, I first draw the attention of the House to my relevant registered interest as a vice-president of the Local Government Association. Like others, I congratulate the noble Lord, Lord Botham, on his maiden speech. During the noble Lord’s cricketing career as an all-rounder, he looked to bowl many maiden overs. We get the chance to do that only once in this House, but there is of course the possibly of hitting a six and knocking it out of the ground many times. I have been a lifelong Surrey County Cricket Club supporter and spent many happy afternoons at the Oval. The noble Lord had a fabulous cricketing career and brought pleasure to millions through his huge success in the game. I wish him well for his time in this House.

The noble Lord mentioned how much sport achieves. I know how much Surrey County Cricket Club does locally, supporting cricket at Kennington Park and at the little Oval in Southwark Park. I very much support the noble Lord’s work. My other two sporting loves are Millwall Football Club and Dulwich Hamlet Football Club. Again, they provide much support for their local communities, and they need support as well for the work they do through their community trusts. We need to recognise that we must support our sports clubs to help them support our communities.

The regulations before the House are not controversial in any sense, and many wider issues have been raised. Even before the pandemic, this form of funding for local government had had its day. It is not going to work. We must find a way of funding local government and dealing with business rates. I hope that the Government will think about that. We also need the political parties to come together to think about how to fund local government in future. Of course, local government has a financial crisis on the back of the pandemic, as do other parts of our economy. Those are two important points.

There have been many questions raised around the House. I am sure the Minister will respond to them today or, if not, in a letter to us after the debate.

Photo of Lord Greenhalgh Lord Greenhalgh Minister of State (Housing, Communities and Local Government), The Minister of State, Home Department 2:45 pm, 3rd November 2020

My Lords, we have had a good innings on the regulations before us today. I thank noble Lords on all sides of the House for their contributions. I shall take this opportunity to provide some further detail on some of the points which have been raised.

The noble Lord, Lord Kennedy of Southwark, mentioned Millwall Football Club. As a Chelsea supporter, it pains me to say that they are some way down the league, but I pay tribute to Millwall and what they do. I saw that as deputy mayor for policing and crime, and I also saw what Charlton did in south-east London to deal with the scourge of knife crime. We must remember Millwall’s chant: “No one likes us, we don’t care.” That is not the case with the noble Lord, Lord Kennedy; we all love him.

I will take back the points made by the noble Baroness, Lady Scott, about responsibility for these issues. She asked a number of technical questions, on which I will write to her. The non-domestic revaluation Bill has gone through the Commons and we are waiting for Second Reading in this House, when time allows. The noble Baroness also asked about the working group which comprises the LGA, CIPFA and a range of local authorities. It has been in existence since 2013 and looks at the technical operation of the rates retention scheme. On behalf of the Government, I thank the working group for the work it is has done so that we can understand better how the rates retention scheme plays out locally.

The noble Lord, Lord Liddle, asked about the future of local government finance reforms. In May, we announced our intention to delay proposals to deliver the review of relative needs and resources—formerly the Fair Funding Review—in 2021-22. The decision was taken to allow the Government and councils to focus on meeting the immediate public health challenges posed by the pandemic. The approach to business rates retention in 2021-22 is under consideration and will be clarified at the spending review and provisional local government finance settlement.

Looking to the future and in determining the next steps, we will need to consider the impact the pandemic has had on demand for public services across local government and its access to resources. As the local government finance system moves into a more stable position, we will set out the timetable for our proposed way forward.

The noble Lords, Lord Liddle and Lord Shipley, raised the need for a fundamental review of business rates. At Budget 2020, the Government committed to a fundamental review of those rates. The Treasury is currently carrying out that review, which will look at all aspects of business rates as a tax. The Government have said that they will consider carefully the link between the fundamental review of business rates and the future of business rate retention. We will engage with the sector—local councils—very carefully as part of that review. Of course, we have launched an unprecedented support package for businesses, and business rates income has changed drastically in response to Covid-19. We will provide an update on the fundamental review as and when we can.

The noble Baroness, Lady Scott, asked for an explanation of what I believe the noble Lord, Lord Shipley, described as one of the most complicated systems, involving algebraic formulae and decimals to four decimal places. I certainly do not understand the mathematics, but it is quite straightforward conceptually. Fifty per cent of the business rates collected are retained by councils. Where there are two tiers, the upper tier retains 20%—in London, that would be the GLA—and 30% is retained by the boroughs. Then, there is an element of redistribution, but also a safety net so that a council bears only the first 7.5% of losses and 82.5%—the rest of the losses—are protected by the central pot.

Does that make it infernally complex? There needs to be a debate about local government reform. Do we go down the path of setting areas free so that local leaders can drive and grow their tax bases? Then we would not see the resource equalisation that we have today. Do we go for a halfway house? That is a debate that will have its time. I have my views, and I hope noble Lords will have the opportunity to express their opinions. It is a legitimate debate about the future conceptually of local government finance.

I have put on my Middlesex tie. I got one cap for Middlesex as a schoolboy. It was not for cricket; it was for rugby. I know that the son of the noble Lord, Lord Botham, was an exceptionally good rugby player, and the noble Lord himself played centre forward for Scunthorpe as well as being a brilliant cricketer for England. We must remember that his moment of greatness happened at Headingly in 1981. I remember it so well. He took, I believe, six wickets in the first innings when we looked like we were going to lose. By the second innings the nation thought we had lost the Ashes to the Australians who, I am sure noble Lords will agree, deserve a good beating from time to time. The noble Lord stepped in and that moment of greatness was when he started smashing the ball across the park. I believe one shot went into the confectionary stall and out again. I had the commentary of Richie Benaud ringing in my ears. That moment of greatness changed the course of the match. I think the odds on an England victory were 500:1 at the time and some Australian players had even put a bet on. I think that is probably illegal today.

The true greatness was also the captain, a Middlesex man. I am sure noble Lords will agree that the captain, Mike Brearley, knew when to play the noble Lord, Lord Botham, and when to make the best of his talent as a swashbuckler. That swashbuckling talent is now heard about at Select Committees. Officials will say to you, “I will be Boycott so that you can be Botham”. But they will also say, “You must keep your feet on the ground, Minister”.

Chandru Dissanayeke is a senior official in one of my departments, MHCLG. He is Sri Lankan by birth. His uncle played for the Sri Lankan team. Now, this is apocryphal, so I will have to get the noble Lord, Lord Botham, to confirm or deny this. Apparently, the noble Lord said to Sunil Gavaskar, “To get a letter to me in my county of Somerset you just have to put ‘Botham, Somerset’”. Sunil Gavaskar turned to him and said: “To get a letter to me you just have to put ‘Gavaskar, India’ and it will reach me’”. That gives you an idea that fame is sometimes fleeting.

I was hoping that the noble Lord, Lord Botham, would be here today. It is a pity that he has not been able to be here today in person. I hope that when events allow we can have a drink together in the Pugin Room. It would be a lifelong dream for me, and I am sure noble Lords will see his contributions for many years.

My noble friend Lord Bourne asked so many questions. I have them all written down here. I will put a letter in writing in the Library. There are a lot of technical points and I think it is better to get a full response in writing. It has been an incredible debate, with the combination of the brilliance of the noble Lord, Lord Botham, and the eloquence of so many noble Lords.

Motion agreed.

Sitting suspended.