|Previous Section||Back to Table of Contents||Lords Hansard Home Page|
Lord Rooker: My Lords, I suspect that, in dealing with the amendments in this way, I may not be able to answer all of the noble Baroness's questions. Some may impinge on others. For part of the reason, one need only look at Clause 64. It is probably the longest clause that I have ever seen; it runs to four pages. I realise why. That is not a criticism, but it is an incredibly long clause. Given the way that the amendments are split up in my speaking notes, I shall confine myself purely to the effects of subsections (3) and (4), which are, in a way, the subject of Amendments Nos. 56 and 57.
Since 1990, there has been a single rate poundage or multiplier for the whole of England and one for the whole of Wales. Clause 64 provides for two multipliers in future in England. There will be a small business non-domestic rating multiplier and a non-domestic rating multiplier. When a small business rate relief scheme is run under Clause 63, the non-domestic rating multiplier will be set at a higher level than the small business rating multiplier. The addition is equal to the estimate of the cost of small business relief. The addition to rate bills of those not receiving relief will be small. As we said in the White Paper, Strong Local LeadershipQuality Public Services, it will be less than 2.5 per cent.
Subsection (3), which Amendment No. 56 would knock out, inserts a new paragraph 3 into Schedule 7 to the Local Government Finance Act 1988. It explains how the small business non-domestic rating multiplier and the non-domestic rating multiplier are calculated for financial years in which the list is not compiled. Subsection (4) inserts a new paragraph 4 into Schedule 7 of the 1988 Act. It explains how the small business non-domestic rating multiplier and the non-domestic rating multiplier are calculated for financial years in which the list is compiledthat is, revaluation years. Amendment No. 56 would delete subsection (3), and Amendment No. 57 would do the same for subsection (4).
If the subsections are deleted, there will be no small business non-domestic multiplier. In other words, there will be no power to place a supplement on larger businesses to pay for the small business rate relief. Small business rate relief will fall to be paid for by the general taxpayer or by local authorities who, via the regulations dealing with contributions to the rates pools, may be forced to raise council tax to pay for it. The amendments would not modify Clause 64: they would wreck it and, along with it, Clause 63.
It would be impossible to fund the English rate relief scheme through a small supplement on the bills of other ratepayers. It would also be impossible to adjust the English and Welsh multiplierswhether up or downto offset the effects of a revaluation which had not been fully provided for when originally setting the multiplier at that revaluation. We believe that the small business rate relief scheme we devised for England strikes a fair balance between the interests of small businesses which will be receiving the relief and other ratepayers who will be funding it.
We have been researching the figures that the noble Baroness asked for, but have not been able to produce them in an intelligible form. Therefore, I shall write to the noble Baroness, who made a legitimate request. I regret that I have not got the figures. In respect of Amendments Nos. 56 and 57 and the effect of knocking out subsections (3) and (4), I hope that I have satisfied the noble Baroness about the purpose of those subsections and why they need to remain in the Bill.
Baroness Hanham: My Lords, I thank the Minister for his reply. On hearing the word "multiplier", my eyes glaze over. I have not understood any of the pages in the Bill containing "A plus B divided by 6 times
Lord Rooker: My Lords, this gets more complicated. Not knowing the average rateable values of various properties, I am not going to say anything off the top of my head. To be honest, we cannot provide the figures because we do not know how many properties will fall within the various thresholds following revaluation and how many of those properties might not be eligible because they are multiple properties. I refer, for example, to telephone masts.
We will be conducting research on the actual numbers that will be affected in April 2005. As soon as the figures are available for the valuation agency in this research we will be analysing the number of businesses that might be affected. We will also consider at that timethis is why it makes sensewhether the £8,000 threshold remains appropriate. In a sense, that is helpful because, not knowing what the distribution is after the revaluation, we cannot give the figures. Once we have done the research, it may determine whether the £8,000 figure is appropriate. If it is not, we will consider what to do about it.
Baroness Hanham: My Lords, I thank the Minister for that reply. I just want to ask a question out of ignorance. If it was decided that the £8,000 threshold was not appropriate at that stage, can that be amended by order to both Houses of Parliament without the Minister having to come back for new legislation? If it can be done that way, that seems to be not wholly unreasonable. I understand that the Minister is probably reading his notes and they do not always coincide with mine.
Lord Rooker: My Lords, that is true in a way. Sometimes I do not know the full purpose behind the amendment and therefore the noble Baroness asks questions. I cannot find the figure but I would be astonished if the £8,000 figure was not in an order. I would be absolutely astonished. Therefore, one would not need primary legislation to change it. I am told that it is done by order.
The noble Baroness said: My Lords, in moving Amendment No. 58, I shall speak also to Amendments Nos. 59 and 59A. We return to amendments which were moved in substantially the same form in Grand Committee, again by my noble friend Lord Caithness. We are returning to them because of the concern that has been raised that the Government's whole approach to these provisions is far too inflexible.
In short, the amendments would provide a process which would require the Secretary of State to abandon downward transition; to propose a scheme of transition of his choice for those facing increased rate bills; to ascertain the cost of such a scheme and then, in effect, to amortise the total cost of the scheme over the life of a rating list by way of an addition to the national non-domestic rate to be paid on all non-domestic properties, irrespective of whether they are in an upward or downward direction. The effect would be revenue-neutral over the period of a rating list and would give businesses a much clearer and more stable position from which to budget for these costs. I have taken all that from the letter sent to the Minister by my noble friend Lord Caithness. I am confident, therefore, that a reply will be forthcoming.
The amendments would also remove the unjustifiable current position of imposing downward transition. The whole question of rating revaluation on businesses has been fraught for years since revaluations can produce quite large changes in rates liability. Therefore transitional relief has been used to cushion ratepayers against the largest increases through staging changes in rates liability over a number of years in order to recoup some of the revenue lost due to this capping of increased bills. I recall the legislation that brought all this about. Not many understood it at the time and probably not many understand it now, but it is still with us and so we continue to have to deal with it.
A transitional penalty has been imposed on those whose bills should be falling and their reductions have also been capped and phased in. The Exchequer has previously made up the balance of revenue loss due to transitional relief. However, as I have already indicated, the Bill requires that future transitional schemes should be fully self-financing from within the rating system to avoid the need for Exchequer support. It is notable that this policy was criticised by the House of Commons Select Committee which scrutinised the draft Bill.
It seems morally indefensible to deny immediate reductions for those whose bills should be going down. It is often these businesses, whose relative property values have fallen, which are in the greatest need of reduced rate bills, yet they have been required to pay a premium to protect successful businesses from full
These proposals have already been criticised by the Government as being less intelligible to the business ratepayer and involving a subsidy from the general taxpayer. However, the amendments would provide for a five-year, self-financing scheme without Exchequer funding. We believe therefore that that criticism is unjustified and that they would minimise confusion. I beg to move.
Back to Table of Contents
Lords Hansard Home Page