Amendment 1

Part of Non-Domestic Rating (Lists) (No. 2) Bill - Report – in the House of Lords at 3:30 pm on 1st March 2021.

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Photo of Lord Greenhalgh Lord Greenhalgh Minister of State (Housing, Communities and Local Government), The Minister of State, Home Department 3:30 pm, 1st March 2021

My Lords, I am grateful to the noble Lord, Lord Kennedy, for tabling this amendment, which allows us to return to the important matter of how the revaluation will impact on various parts of our economy. I entirely understand that the House wants to consider the impact of the next revaluation on sectors such as the high street and small business. I point out to the noble Lord that the £1 billion future high streets fund is not insubstantial and forms part of the £3.6 billion towns fund. It is an important part of helping our high streets to bounce back. Also, as has been mentioned by noble Lords, there has been the business rates relief scheme throughout the Covid pandemic, which has cost in the region of £10 billion. It is for the Chancellor to signal how that will continue in his Budget later this week.

A number of noble Lords, including the noble Baroness, Lady Pinnock, referenced the shift over many years, even before the pandemic, towards online and away from place-based shopping on our high streets. It is a matter for the Chancellor, who is carrying out a fundamental review of business rates, to consider how to address that. The interim report is due on 23 March and the review will conclude in the autumn.

Businesses have been calling for frequent revaluations and we had planned for the next one to take effect this year. It would have been based on rental values as at 1 April 2019. In the difficult circumstances in which we now find ourselves, this was clearly unsatisfactory, as those new rateable values would not have shown the impact of the pandemic. Instead, the Bill will move the date on which the next revaluation takes effect back to 2023. This will allow us to use rental values as of 1 April 2021, which will better reflect the impact of the pandemic.

As we heard in Committee, some noble Lords are concerned that rental values and the market at 1 April 2021 will be too unstable to undertake the extensive and sometimes complex valuations needed to complete the revaluation. We heard calls to move the date by which rateable values are set to later this year, but I assure the House that the Valuation Office Agency is already working at full pace to contact thousands of businesses to collect evidence of the market, and then to understand and analyse this evidence. This exercise is going to plan.

Moving back the valuation date would take several months out of an already tight timetable and require the VOA to, once again, go back to the businesses and ask them for market evidence as of a new date. I am confident in the valuation exercise that is already under way, and the Government have no plans to change the valuation date.

The amendment brought forward by the noble Lord, Lord Kennedy, asks for a report on the impact of the revaluation to be published three months after the passing of the Act and every 12 months thereafter. In fact, the new valuations will not be completed until the autumn of 2022, and we will not know the multiplier and transitional relief scheme—the other vital parts of business rate bills—until the fiscal event of that autumn. So we will not know the impact of the revaluation on towns, high streets or small business within three months of the passing of this Act or, indeed, within 15 months. This Government—any Government—could not prepare such a report on that timetable.

However, when the revaluation is completed, and the multiplier and transitional relief set, businesses and stakeholders will not need a government report to tell them how the revaluation will impact upon them. Every individual rateable value will be published with the multiplier and transitional relief scheme, and those businesses will be able to see precisely how they will be impacted. These rateable values will remain public and, as is the case with the current 2017 rating list, the VOA will publish regular statistical analyses of the new rating list.

I understand that the House and businesses would like to know what is going to happen at the revaluation, but we must wait until the results of the VOA’s work—work done independently of Ministers, by experts, and based on evidence. The Bill will ensure that the revaluation will better reflect the impact of the pandemic. The revaluation will also reflect trends in the rental market over the last six years, resulting from economic shifts including the growth of online businesses. We may well see these trends reflected in the rental values of, for example, modern distribution warehouses and traditional high streets but, rather than speculate on these rental market shifts, we should wait for the VOA to complete its exercise and look at the actual results.

As with every revaluation, there will be winners and losers. Some ratepayers will see their rates bills fall and others will see theirs rise. I assure the House that, as with previous revaluations, we will introduce a transitional relief scheme to protect those facing large increases at the revaluation. As I have said, we intend to publish details of that scheme and how it will be funded at the time of the autumn 2022 fiscal event, so that ratepayers have plenty of time to plan for changes to their rates bills.

I should again like to reassure the House on how the revaluation will impact on the funding of local government, as raised by noble Lords. In Committee, I had the opportunity to explain in a little more detail how the revaluation could change the amount of business rates paid in individual local authority areas. As I set out then, we will make adjustments to the business rates retention scheme to ensure, as far as is practicable, that the business rates income retained by individual local authorities is unaffected by the revaluation. I am happy to give the House that assurance again today, and to confirm that we will continue to work closely with the VOA and local government on this and all matters related to business rates.

Finally, let me respond to the noble Lord, Lord Thurlow, and the noble Baroness, Lady Bakewell of Hardington Mandeville, on the appeals backlog. The Treasury continues to provide the VOA with the resources required to successfully deliver the valuations and property advice needed to support taxation and benefits. The Treasury works closely with the VOA and its sponsor department, HMRC, to understand the VOA’s resource requirements. The funding requirements to deliver the appeals case load and the next revaluation will be considered as part of those ongoing discussions. I hope that gives some confidence that there will be no issue around resources for the VOA to work through the backlog. On this basis, I hope that the noble Lord, Lord Kennedy, will withdraw his amendment.