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The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope) : At the outset, may I say to my hon. Friend the Member for Thanet, North (Mr. Gale), how much I appreciate his kind remarks at the beginning of his speech. I shall certainly pass on his best wishes to my wife. When we knew that this important Adjournment debate was taking place today we agreed that we should make domestic arrangements so that I could be here to participate, and so it has turned out.
I also congratulate my hon. Friends on their welcome endorsement of the principles behind the new business rate and the generous recognition that, if businesses in general
Column 1248are to benefit from the certainty and stability which the new system will provide, increases for some businesses are inevitable. My hon. Friends both referred to the substantial help that the Government have given to facilitate the economic regeneration of north- east Kent and I am grateful for that. I am sure that there is no intention behind the changes in the rating system to jeopardise that economic regeneration.
It is right that the long-overdue redistribution of the rates burden between business sectors and areas should take place as soon as possible, but I assure my hon. Friends that the total amount which businesses will be expected to pay in 1990-91 will be essentially the same in real terms as that paid in 1989-90 across the country as a whole.
Nevertheless, I can understand my hon. Friends' concern that business ratepayers in north-east Kent should not suffer excessively as a result of the introduction of the new system, and I hope that I can reassure them on this point. There is no question of the new rateable values of properties in north-east Kent having been based, as they fear, on the rental values of property in other more prosperous parts of the country, or even of the county.
The law requires Inland Revenue revaluation officers to assess the rateable value of a property on the basis of the rent at which that property might reasonably be expected to be let from year to year. The valuation officer must look at the rental value of each property in the condition in which he finds it and, of course, at the location in which it is situated. A general principle does not, therefore, apply to the whole of the Canterbury district. Each property within each town in the district has to be examined by the valuation officer. It certainly does not mean that properties in one area can be assessed on rental values elsewhere. If that were to happen, valuation officers would not be doing their job properly, and ratepayers would have good grounds for appeal.
I shall give my hon. Friends one or two examples, which I hope will help to allay their concerns. As they would expect, prime shop rents in Margate and Ramsgate are between one third and one half of those in Canterbury. I can assure them that that is reflected in the rateable value assessments of the properties concerned. I remind my hon. Friends that there will also be gainers from the new system in north-east Kent. In Ramsgate, for example, the Duraplug factory's rate bill is set to fall from around £34,500 in 1989-90 to just under £24,750 before transition. The Argyle centre's rate bill will fall from around £19,750 in 1989-90 to about £12,354 before transition. My hon. Friends may be glad to have information about average rateable values in the new lists. In Ashford, the average rateable values in the new lists are £12,814. In Canterbury they are £16,583. In Thanet, they are much less than that--only £9,464. I hope that my hon. Friend's will concede that the differences in rental values are reflected in the new lists.
My hon. Friend the Member for Thanet, North referred to Ashford as the "hot spot" of the south-east. That was also true in 1973, when the previous Channel tunnel scheme was under construction. Ashford starts from a high base, going back to 1973. Since then, the major employer in that town, British Rail Engineering Limited, has closed. Ashford, therefore, has had its problems during that period.
Column 1249My hon. Friends are also particularly concerned about the plight of business ratepayers who, in their words, "live over the shop"--whether they be guest house proprietors or business people living over their shops in the high street. They will be required to pay both business rates and one or more personal community charges in respect of their occupation of the same property, but that is no different from the position of business ratepayers who do not live on the premises. They, too, will pay both rates and community charge. People living over the shop will have the same entitlement to both community charge transitional relief and protection under the business rates transitional arrangements as anyone else who runs a business and whose place of residence is elsewhere.
The valuation of such properties will reflect only the rental value of the business use. No value will be determined in respect of the part that is used as living accommodation. Phasing arrangements will apply to protect ratepayers from large increases. It is worth emphasising that the base point for calculating the transitional arrangements for the business rate will be only that part of the mixed hereditament on which business rates are paid at the moment. The total bill on a mixed hereditament will not be the base point ; it will be lower than that. The new base point will be only that element of the rates that is attributable to business use. Finally, I intend to deal briefly with the cessation of transitional protection when the occupier of a property changes and with the possibility of extending the transitional period. As for the continuation of protection when there is a change of occupier, I am afraid that I can offer my hon. Friends no prospect of any change that they seek. The purpose of the transitional arrangements is to protect existing occupiers. We want to get the transition over as quickly as possible, consistent with that objective, in order to allow the benefits of the new system to come through. The new occupiers do not need protection as they know what the liabilities are when they take on a property,
Column 1250and to allow new occupiers of existing property to continue to receive protection would be unfair to occupiers of property constructed after 1 April 1990 who will not be eligible for transition.
I can offer my hon. Friends better news about the extension of the transitional period. My hon. Friend the Member for Thanet, South (Mr. Aitken) referred to Mr. Pearce and his jeweller's shop and what he described as the "double whammy". We have not said that there will be no transitional arrangements beyond 1995.
The Government have powers under the Local Government Finance Act 1988 to introduce a further transitional scheme after 1994-95 to ensure that businesses which have not reached their new rate bills then are not faced with a substantial unphased increase, I understand that businesses would find it reassuring if we were to give a commitment now to use those powers and explain how we would use them. It is difficult to judge at this stage what sort of transitional scheme will be needed after the 1995 revaluation, because it is impossible to predict what will happen to rent levels over the next five years. Many businesses facing large rate increases now will find that market rents for the type of property that they occupy will fall relative to rents for other types of property, and that will come through in the 1995 revaluation. So some of the peaks that we are now experiencing may never be reached. That is why we thought it best to delay a decision on a further transitional period until nearer 1995. We are certainly cognisant of the problems of the double whammy and I hope that that will be some consolation to my hon. Friend's constituents.
My hon. Friend the Member for Thanet, South made some more detailed points about the system of valuation and appeals. I do not have time to deal with them now, but I shall certainly write to him and to my hon. Friend the Member for Thanet, North covering those points and some of the other matters that I have not had time to deal with today.
Question put and agreed to.
Adjourned accordingly at one minute past Three o'clock.
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