Local Government Finance Bill (HC Bill 142)

A

BILL

[AS AMENDED IN PUBLIC BILL COMMITTEE]

TO

Make provision about non-domestic rating in England; to amend Chapter 4ZA
of Part 1 of the Local Government Finance Act 1992; to confer power on the
Greater London Authority and certain local authorities in England to impose
levies on non-domestic ratepayers to raise money for expenditure on projects
expected to promote economic development; to confer power on certain local
authorities in England to impose a levy on persons with certain property
interests in a business improvement district to finance projects to be carried
out in the district; and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 Local government finance settlement: England

Local retention of non-domestic rates

1 Local retention of 100% of non-domestic rates

(1) 5The Local Government Finance Act 1988 (“the 1988 Act”) is amended as
follows.

(2) In Schedule 7B (local retention of non-domestic rates), omit Part 3 (which
provides for a proportion of the non-domestic rating income of a billing
authority in England to be paid to the Secretary of State).

(3) 10In Part 5 (grants), omit Chapter 2 (which provides for the payment of revenue
support grant in England).

(4) Schedule 1 contains—

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(a) further amendments of Schedule 7B to the 1988 Act, and

(b) consequential amendments.

2 Loss payments

(1) In Schedule 7B to the Local Government Finance Act 1988, after Part 8 insert—

5“Part 8A Loss payments
33A Regulations about loss payments

(1) The Secretary of State may by regulations make provision for the
making of loss payments to a relevant authority.

(2) 10A loss payment is—

(a) in the case of a billing authority, a payment made to the
authority by the Secretary of State in connection with a
reduction in the authority’s actual rating income for one or
more years (“relevant years”) that results from an alteration
15of the authority’s local non-domestic rating list under section
55;

(b) in the case of a major precepting authority, a payment made
to the authority by the Secretary of State in connection with a
reduction in a relevant billing authority’s actual rating
20income for one or more years (“relevant years”) that results
from an alteration of the relevant billing authority’s local
non-domestic rating list under section 55.

(3) The regulations may, in particular, make provision—

(a) for calculating whether a loss payment is to be made to a
25relevant authority and, if so, the amount of the loss payment;

(b) about the timing of such a calculation;

(c) about the notification of the results of such a calculation to the
relevant authority to whom it relates;

(d) about the time and manner in which a loss payment is to be
30made (including for payment by instalments).

(4) The provision that may be made by virtue of sub-paragraph (3)(a)
includes, in particular, provision for making calculations in relation
to a relevant authority by reference to—

(a) the total payable to the authority, or (in the case of a major
35precepting authority) a relevant billing authority, in respect
of a relevant year under sections 43 and 45, subject to such
adjustments as may be specified in the regulations;

(b) the rateable value for a relevant year of any hereditament in
the authority’s area or (in the case of a major precepting
40authority) a relevant billing authority’s area;

(c) such other factors as may be specified in the regulations
(including estimates of any of the amounts mentioned in
paragraph (a) or (b)).

(5) The regulations may, in particular, make provision for the amount of
45a loss payment to be adjusted by reference to changes affecting the

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calculation of that or any other loss payment but not taken into
account in that calculation.

(6) The regulations may, in particular, make provision—

(a) about the supply of information to the Secretary of State by a
5relevant authority in connection with the calculation of the
loss payment (if any) to be made to the authority;

(b) about the consequences of non-compliance with provision
under paragraph (a), including (in particular)—

(i) for the making by the Secretary of State of
10assumptions as to the information that would
otherwise have been supplied by the authority;

(ii) for the suspension of payments to the authority;

(c) for the certification of information supplied to the Secretary
of State by a relevant authority in connection with the
15calculation of the loss payment (if any) to be made to the
authority;

(d) about the consequences where certified information does not
match that supplied by the authority, including (in
particular) about the use of the certified information.

(7) 20The regulations may confer power on the Secretary of State to give
directions about the certification of information.

(8) In this paragraph “relevant billing authority”, in relation to a major
precepting authority, means a billing authority required to make
payments to the major precepting authority for a relevant year under
25regulations under paragraph 9.”

(2) In section 141 of that Act (payments to and from authorities)—

(a) in subsection (7), after “paragraph 33” insert “or 33A”;

(b) in subsection (8), after “paragraph 33” insert “or 33A”.

3 Designation of areas by pools of authorities

(1) 30Part 9 of Schedule 7B to the Local Government Finance Act 1988 (pooling of
authorities) is amended as follows.

(2) After paragraph 38 insert—

“Designation of areas by pools of authorities

38A (1) The Secretary of State may by regulations—

(a) 35provide that any pool of authorities specified in the
regulations may designate one or more areas (a “designated
area”) in the pool area (see sub-paragraph (2));

(b) provide for the calculation in accordance with the
regulations, for each year for which the designation has
40effect, of the non-domestic rating income for the designated
area (see sub-paragraph (3));

(c) provide for the calculation of a proportion of the non-
domestic rating income for the designated area in accordance
with the regulations;

(d) 45provide for the non-domestic rating income for the
designated area, or that proportion of it, to be disregarded for

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the purposes of calculations under any of the following
provisions—

(i) paragraph 13 (determination of payments for a
relevant year);

(ii) 5paragraph 16 (calculations following amending
statement);

(iii) paragraph 26 (calculations of safety net payments);

(iv) regulations under paragraph 27A (safety net
reconciliation payments).

(2) 10In this paragraph the “pool area”, in relation to a pool of authorities
designated under paragraph 34, means the area consisting of the
areas of the authorities covered by the designation.

(3) Subject as follows, the non-domestic rating income for a designated
area for a year is the total amount which, if each of the authorities in
15the pool acted diligently, would be payable to any of those
authorities for the year under sections 43 and 45 in respect of the
hereditaments within the designated area.

(4) The regulations may provide for the non-domestic rating income for
a designated area, or any proportion calculated under sub-
20paragraph (1)(c), to be adjusted in accordance with the regulations
(and references in this paragraph to the non-domestic rating income
for a designated area, or any proportion of that income, include the
income or proportion as adjusted in accordance with this provision).

(5) The regulations may, in particular, provide for adjustments to that
25income or that proportion by reference to changes affecting a
calculation under regulations under this paragraph for an earlier
year but not taken into account in that calculation.

(6) The regulations may, in particular, make provision—

(a) as to the period for which the power of a pool of authorities
30to designate areas under the regulations has effect;

(b) about the designation of areas by pools of authorities under
the regulations, including (in particular)—

(i) any conditions that must be met before an area is
designated, and

(ii) 35the period for which any designation of an area has
effect;

(c) about the use of any amounts disregarded as mentioned in
sub-paragraph (1)(d);

(d) enabling a pool of authorities to—

(i) 40alter the boundaries of any area designated by it
under the regulations, or

(ii) reduce the period for which any designation made by
it under the regulations has effect;

(e) for and in connection with the revocation by a pool of
45authorities of any designation made by it under the
regulations, including (in particular) any conditions that
must be met before a designation is revoked;

(f) in connection with a pool of authorities ceasing to have
power to designate any areas under the regulations,

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including (in particular) provision for any designation made
by the pool to continue to have effect in accordance with
provision made by the regulations;

(g) in connection with any designation made by a pool of
5authorities under the regulations ceasing to have effect
(whether as a result of revocation or otherwise).

(7) The provision that may be made by virtue of sub-paragraph (6)(b)
includes, in particular, provision imposing restrictions on what areas
may be designated by a pool of authorities, including (in particular)
10by reference to—

(a) the sum of the rateable values of the hereditaments that
would fall within the designated area;

(b) the amount that would, if an area were designated under the
regulations by the pool, be the non-domestic rating income
15for the designated area for a year;

(c) such other factors as may be specified in the regulations.

(8) The regulations may, in particular, make provision—

(a) about the supply of information by a pool of authorities to the
Secretary of State in connection with the designation of any
20areas under the regulations, including (in particular)
information about—

(i) any amounts disregarded as mentioned in sub-
paragraph (1)(d),

(ii) any alteration of the boundaries of any area,

(iii) 25any reduction of the period for which any designation
of an area has effect, or

(iv) the revocation of any designation of an area;

(b) for the certification of information supplied by a pool of
authorities to the Secretary of State as mentioned in
30paragraph (a);

(c) about the consequences where certified information does not
match that supplied by the pool, including (in particular)
about the use of the certified information.

(9) The Secretary of State must consult a pool of authorities before—

(a) 35specifying the pool in regulations under this paragraph;

(b) revoking any such regulations that specify the pool;

(c) amending any such regulations so as to vary—

(i) the period for which the pool has power to designate
areas under the regulations,

(ii) 40the period for which any designation made by the
pool has effect, or

(iii) the amount of income to be disregarded as mentioned
in sub-paragraph (1)(d) in relation to the pool.”

(3) In paragraph 34(1), for “and 37” substitute “, 37 and 38A”.

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Council tax increases

4 Determination of principles for determining whether council tax excessive

(1) In Part 1 of the Local Government Finance Act 1992 (council tax: England and
Wales), Chapter 4ZA (referendums relating to council tax increases in
5England) is amended as follows.

(2) In section 52ZB (duty to determine whether council tax excessive), for
subsection (7) substitute—

(7) A determination under this section for a financial year (“the relevant
year”) must be made by an authority—

(a) 10in a case where a report under section 52ZD below relating to
the relevant year and the authority is made in the financial year
immediately preceding the relevant year, as soon as is
reasonably practicable after—

(i) the report is made, and

(ii) 15the authority makes the relevant calculations for the
relevant year;

(b) in any other case, as soon as is reasonably practicable after the
authority makes the relevant calculations for the relevant year.

(8) “The relevant calculations” means—

(a) 20in the case of a billing authority, the calculation required by
section 31B(1) above;

(b) in the case of a major precepting authority other than the
Greater London Authority, the calculation required by section
42B(1) above;

(c) 25in the case of the Greater London Authority, the calculation
required by section 88(2) of the Greater London Authority Act
1999 and any additional calculations required by section 89(3)
of that Act;

(d) in the case of a local precepting authority, the calculations
30required by section 49A above.”

(3) In section 52ZC (determination of whether increase is excessive)—

(a) in subsection (4), for “the year under consideration” substitute “a
financial year”;

(b) in subsection (5)—

(i) 35after “categories” insert “for a financial year”, and

(ii) for “the year under consideration” substitute “the year”;

(c) in subsection (7), for “the year under consideration” substitute “a
financial year”.

(4) Section 52ZD (approval of principles) is amended as follows.

(5) 40For subsection (1) substitute—

(1) Any set of principles determined under section 52ZC above for a
financial year must be set out in a report made by the Secretary of State.

(1A) A report under this section—

(a) may set out principles for more than one financial year;

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(b) may set out different sets of principles for different financial
years.

(1B) Before making a report under this section setting out any principles, the
Secretary of State must consult such representatives of local
5government as the Secretary of State considers appropriate about the
principles.”

(6) In subsection (2), for the words before paragraph (a) substitute “If no report
setting out principles for a financial year is made before the beginning of the
year—”.

(7) 10In subsection (3), for “lay a report before the House of Commons before the
specified date” substitute “make a report before the beginning of that year”.

(8) After subsection (3) insert—

(3A) But nothing in subsection (3) prevents the Secretary of State from
subsequently determining a set of principles for the year in accordance
15with this section.

(3B) If before the beginning of a financial year the Secretary of State makes
a report under this section setting out a set of revised principles for the
year, the revised principles have effect for that year.

(3C) If before the beginning of a financial year the Secretary of State
20determines that the principles determined for the year are not to have
effect for the year—

(a) the Secretary of State must make a report before the beginning
of the year giving the Secretary of State’s reasons for the
determination, and

(b) 25subsection (2) has effect as if no report setting out principles for
the year had been made.

(3D) If, before the beginning of a financial year for which the Secretary of
State has determined categories of authority under section 52ZC(4)
above, the Secretary of State determines that a set of principles
30determined for a category of authority for that year is not to have effect
for the year—

(a) the Secretary of State must make a report before the beginning
of the year giving the Secretary of State’s reasons for the
determination, and

(b) 35as regards any authority falling within that category, the
authority’s relevant basic amount of council tax for the year is
not capable of being excessive for the purposes of this Chapter.

(3E) As soon as is reasonably practicable after making a report under this
section, the Secretary of State must—

(a) 40send a copy of the report to each billing authority and major
precepting authority, and

(b) publish the report in the way appearing to the Secretary of State
to be best calculated to bring it to the attention of those who may
be affected by it.”

(9) 45Omit subsection (4).

(10) The heading of section 52ZD becomes “Determination of principles”.

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(11) Section 52ZE (alternative notional amounts) is amended as follows.

(12) In subsection (3), omit paragraph (d).

(13) After subsection (3) insert—

(3A) Before making a report under this section in relation to any authority,
5the Secretary of State must consult that authority.

(3B) As soon as is reasonably practicable after making a report under this
section, the Secretary of State must send a copy of the report to every
authority to which it relates.”

(14) In subsection (4), for the words from “is approved” to the end substitute “(“the
10relevant ANA report”) is made on or before the relevant day.”

(15) After subsection (4) insert—

(4A) “The relevant day” means—

(a) in a case where a report under section 52ZD above setting out
any principles determined for the year under consideration for
15any authority to which the relevant ANA report relates is made
in the financial year immediately preceding the year under
consideration, the day on which the report under that section is
made;

(b) in any other case, the last day of the financial year immediately
20preceding the year under consideration.”

(16) In subsection (5), for “the report” substitute “the relevant ANA report”.

(17) In Schedule 6 to the Greater London Authority Act 1999 (procedure for
determining the Authority’s consolidated council tax requirement), in
paragraph 1(5), for “approved by the House of Commons for the financial
25year” substitute “set out for the financial year in a report made”.

Part 2 Non-domestic rating in England

Non-domestic rating multipliers

5 Power to specify indexation rate for non-domestic rating multipliers

(1) 30In Schedule 7 to the Local Government Finance Act 1988 (non-domestic rating:
multipliers), paragraph 5 is amended as follows.

(2) After sub-paragraph (2A) insert—

(2B) In relation to England—

  • B is a figure specified or described in (or calculated in a manner
    35specified in) regulations made by the Treasury for the
    purposes of this sub-paragraph, and

  • C is a figure so specified or described (or so calculated).”

(3) In sub-paragraph (3)—

(a) at the beginning insert “In relation to Wales,”;

(b) 40for “Treasury” substitute “Welsh Ministers”.

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(4) In sub-paragraph (4), at the beginning insert “In relation to Wales,”.

(5) In sub-paragraph (5)—

(a) after “C” insert “, in relation to Wales,”;

(b) for “Secretary of State calculates” substitute “Welsh Ministers
5calculate”.

(6) After sub-paragraph (11) insert—

(11A) The power to make regulations under sub-paragraph (2B) above
shall be exercisable by statutory instrument.

(11B) Regulations under sub-paragraph (2B) above in their application to
10a particular financial year (including regulations amending or
revoking such regulations) shall not be effective unless the
regulations are approved by resolution of the House of Commons
before the relevant day.

(11C) “The relevant day”, in relation to a financial year (“the relevant
15year”) means—

(a) in a case where a principles of allocation statement specifying
the principles of allocation for the relevant year under
paragraph 12 of Schedule 7B below is made in the preceding
financial year, the earlier of—

(i) 20the day on which the principles of allocation
statement is made, and

(ii) 31 December in that preceding financial year;

(b) in any other case, 31 December in the preceding financial
year.”

(7) 25Omit sub-paragraphs (13) and (14).

(8) In paragraph 6 of that Schedule—

(a) in sub-paragraph (2)—

(i) for “Secretary of State has” substitute “Welsh Ministers have”;

(ii) after “notice” insert “served by the Welsh Ministers”;

(iii) 30for “he has” substitute “they have”;

(b) after sub-paragraph (4B) insert—

(4C) A calculation made by the Secretary of State under this
paragraph is invalid if made at a time when regulations
under paragraph 5(2B) above which are effective in relation
35to the year have not come into force.”;

(c) in sub-paragraph (5), after “calculation” insert “made by the Welsh
Ministers”.

(9) In section 143 of that Act (orders and regulations), in subsection (9), after
“make” insert “regulations or”.

(10) 40In consequence of the repeal made by subsection (7), in Schedule 13 to the Local
Government Finance Act 1992, omit paragraph 84(1).