Consultation: Business rates revaluation 2023: the central rating list

October 2021


About the Local Government Association

The Local Government Association (LGA) is the national voice of local government. We are a politically-led, cross party membership organisation, representing councils from England and Wales.

Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.

We responded to last year’s Call for Evidence on the Business Rates Review. In our response to Tranche One we said that local government has strong interest in a reformed business rates system which commands confidence. An income which keeps up with demand is also important given the pressures on local government.

Property continues to provide a good basis for a local tax on business. Business rates is efficient to collect and has been relatively predictable and buoyant in recent years. However, the changing nature of business alongside the nature of demand pressures on councils means that we cannot look to business rates to form such a substantial part of local government funding in the future. Alternative means of funding councils will therefore be needed instead of or as well as a reformed business rates system. One example of this is a tax on online businesses.

We have recently responded to the consultation on more frequent revaluations and await next steps.

Our response, which has been signed off by Resources Board Lead Members, follows the sections of the present consultation.

The current principles of the central rating list

We note that the principles set out in the consultation are not new but were confirmed by the Government in 2019 as part of the consultation on further business rates retention (the consultation was published in December 2018). They are:

  • the nature and use of a property (for example networks)
  • its size and geographical spread (so that only larger networks should be included in the central list); and
  • the suitability or otherwise for assessment of the property on local non-domestic rating lists (for example where it would be difficult to assess which was the best local rating list for the property to be situated it might be fairer for it to go on the central list).

As we said in our response to the 2018 consultation, we agree that only ‘non-local’ properties should be on the central list and we therefore agree that the criteria as proposed are appropriate.

In our response to a previous consultation in 2017, we added that the Government should consider properties currently on the central list which might be split (for example Network Rail stations) and which could go on local lists. The current consultation does not suggest that the Government is taking this forward. We would repeat this suggestion.

Hereditaments suitable for moving to the central rating list for the 2023 revaluation

The consultation contains proposals covering telecoms networks, rail networks and the mobile telecom sector. We agree with these proposals in principle where they appear to be consistent with the principles set out above.

Interaction with the Business Rates Retention Scheme

We welcome the statement in the consultation that the Government will ensure that, as far as is practicable, retained business rates incomes are unaffected by any changes it makes by moving ratepayers from local lists to the central rating list at the 2023 revaluation. This can be done through adjusting top-ups and tariffs at the same time as the adjustment for the revaluation. This is important in order to avoid situations such as that a few years ago when one company proposed a merger of their hereditaments into one and affected councils stood to lose.

We also welcome the commitment from the Government to work with local government on the details of this adjustment and consult upon it ahead of the 2023/24 settlement. We look forward to taking part in these discussions.

However, although at the point of the transfer it would be revenue neutral as far as councils are concerned due to this adjustment, it would mean that councils would no longer benefit from business rates growth from hereditaments transferred to the central list.

Next steps

The consultation says that there will be further discussions with the individual ratepayers before final decisions are made on moving lists. It is essential for there to be engagement at the same time with each affected authority where hereditaments are to be moved from the local to the central list.

Other issues

We would like to take this opportunity to raise the issue of transparency as far as the Central List is concerned. It can be seen through the Main Non-Domestic Rating Account for 2020/21 that the contribution of the Central List to the Account is what would be expected on the basis of the rateable value and the multiplier. However, unlike local lists, where the national non-domestic rate income of councils is reported in detail to DLUHC and published in the form of the NNDR1 and NNDR3 returns, there is no detailed account of the central list in the public domain. We would propose that the Government provide more detail for the Central List at the same time as they publish the local list expenditure and outturn returns.

Contact

Mike Heiser

Email: mike.heiser@local.gov.uk