Non-Domestic Rating (Lists) (No.2) Bill: Committee Stage, House of Lords, 4 February 2021

We welcome closer working between the VOA and local authorities. This must be accompanied by measures to significantly reduce the backlog of appeals. The VOA and councils must receive additional funding to implement these changes.


Key messages

  • The Non-Domestic Rating (Lists) (No.2) Bill sets the date of the next Business Rates revaluation undertaken by the Valuation Office Agency (VOA) as 1 April 2023. This revaluation will be based on property values as of 1 April 2021 so that, in the Government’s view, it better reflects the impact of COVID-19.
  • The legislation keeps the time period between future revaluations as five years. Previous Bills would have reduced this to three years, but the Government has chosen not to legislate on this as it is one of the matters under consideration as part of the Business Rates Review.
  • We welcome closer working between the VOA and local authorities. This must be accompanied by measures to significantly reduce the backlog of appeals. The VOA and councils must receive additional funding to implement these changes.
  • According to the latest Valuation Tribunal statistics there are still 40,000 unsolved 2010 rating list appeals. Councils have had to divert over £3 billion from services to deal with appeals risk from both the 2010 and 2017 lists. Most of the 2010 appeals relate to ATMs and are only now being dealt with following a Supreme Court decision, so the amount held in provisions is expected to go down.
  • We would like to see reforms to ensure that appeals can be received no later than six months after a new ratings list comes into force. This system applies in Scotland. The check, challenge and appeal system means that only a small number of appeals relating to the 2017 list have yet been received. It is important that the Government makes clear its proposals for when the closing date for 2017 list appeals will be.
  • The Bill also proposes reducing the publication deadlines for new business rates lists from six to three months before the list comes into force. This could impact billing authorities’ ability to prepare and implement the new rates, and the timing of any transitional relief schemes.
  • We understand that it is the Government’s intention to publish the draft list, the draft multiplier and the transitional relief scheme at the same time as the Autumn Budget in 2022. Any delay in this would be likely to cause issues for councils and software providers. Councils would welcome reassurance from the Government that in this event the Government would publish the information through alternative means such as a written statement.

Amendment statements

VOA

A new clause tabled by Lord Kennedy of Southwark (Labour) would highlight the  need for the Government to work closely with the Valuation Office Agency and local authorities by ensuring that the Government details how they worked with them in relation to the provisions of this Bill.

LGA view:

  • Joint working between the VOA and local authorities is vital. In the 2023 revaluation, local authorities will be under a duty to supply names and addresses of ratepayers to the VOA so that the VOA can obtain rental and leasehold information from them.  We support this amendment and any further joint working.

Impact assessment of rates revaluations

A new clause tabled by Lord Kennedy of Southwark (Labour) would require the Secretary of State to publish an assessment of the impact of the timing of business rates revaluations on the prosperity of towns and high streets within six months of the passing of the Act.

LGA view:

  • Information on how business rates revaluations affect the High Street is vital. We understand that the revaluation was delayed from 2021 in order to take into account the effect of the COVID-19 pandemic on rental values, but it will be vital for the Government to monitor the impact of using April 2021 values.

Impact assessment of appeal waiting lists

A new clause tabled by Lord Kennedy of Southwark (Labour) and Baroness Bakewell of Hardington Mandeville (Liberal Democrat) would require the Secretary of State to publish an assessment of the impact of the Act on business rates appeal waiting list

LGA view:

Impact of ability to compete with online business

A new clause tabled from Baroness Pinnock (Liberal Democrat) and Lord Shipley (Liberal Democrat) would require an impact assessment of the timing of rates revaluations on local high streets, particularly looking at the impact on their ability to compete with businesses that operate online.

LGA view:

  • We have expressed concern about the impact of online businesses in our submission to the Business Rates review where we call for the Government to examine an e-commerce levy on the line recommended by WPI Economics for the LGA.

Impact of rates revaluations before multipliers are announced

A new clause tabled by Baroness Pinnock (Liberal Democrat) and Lord Stunell (Liberal Democrat) would require an impact assessment of the timing of the rates revaluation on businesses before the multipliers are announced.

LGA view:

  • Currently the law requires that business rates revenues do not rise or fall in real terms as a direct result of the revaluation. In turn, this determines the setting of the multiplier after a revaluation. Local authority finances would be affected by any decision to set the multiplier at a lower level. 

Impact of rates revaluations on local authority finances

A new clause tabled by Baroness Pinnock (Liberal Democrat) and Baroness Thornhill (Liberal Democrat) would require an impact assessment of the timing of the rates revaluation on local authority finances.

LGA view:

  • Currently the requirement for the multiplier to be set at a level so that business rates revenues do not rise or fall in real terms as a direct result of the revaluation means that a revaluation in itself does not affect local authority finances. For the 2017 revaluation, the Government recalculated the business rates retentions top-ups and tariffs so that the revaluation would have a net nil effect. We would expect the same procedure to be followed for the 2023 revaluation. If the Government were to legislate in the future to drop this requirement, then we would expect an assessment of the effect of any revaluation on local authority finances.

Contact

Laura Johnson, Public Affairs Support Officer

laura.johnson@local.gov.uk