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Non-domestic Rates (2004–05)

The Minister for Local Government, Regional Governance and Fire (Mr. Nick Raynsford): On Wednesday 19 November 2003, I presented the provisional local government finance settlement for 2004–05. Included in the announcement was the

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amount available of non-domestic rates in England for 2004–05 to be redistributed to local authorities. This statement details the calculation of the distributable amount and announces provisionally the non-domestic rate poundage (multiplier) for 2004–05 as 45.6 pence.

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The amount of non-domestic rates in England for 2004–05 to be redistributed to local authorities will be £15 billion.

The calculation of the distributable amount for 2004–05 is set out in the table below.

£ million

	2001–02 Outturn	2002–03 Outturn	2003–04 Provisional outturn	2004–05 Estimated contribution
1. Income from local lists
Multiplier (p)	43.0	43.7	44.4	45.6
Gross rate yield in respect of current year	16,952	17,195	17,200	17,400
(i) Reliefs
(a) Net Transitional Relief	-493	-182	-93	-110
(b) Empty or partly occupied properties	-1,049	-1,144	-1,147	-1,160
(c) Charitable	-583	-603	-616	-622
(d) Rural shops and post offices	-5	-6	-6	-7
(e) Community amateur sports clubs	-	-	-	-8
(f) Discretionary	-43	-42	-46	-49
Net rate yield in respect of current year after reliefs	14,778	15,219	15,292	15,444
(ii) Collection costs and other reductions to contributions
(a) Costs of collection	-84	-84	-84	-84
(b) Losses on collection	-95	-106	-120	-121
(c) City of London offset	-7	-7	-7	0
Total contribution in respect of current year	14,592	15,023	15,082	15,238
(iii) Prior year adjustments
(a) Interest on repayments	-70	-59	-42	-38
(b) Repayments	-270	-479	-472	-429
Net rate yield from local lists	14,252	14,484	14,568	14,771
2. Income from Central list
Net central list yield	1,049	1,044	1,045	1,050
3. Income from the former Crown list
Contributions in lieu of rates	12	8	9	9
Total yield	15,313	15,536	15,622	15,830
4. Exchequer Contributions
Exchequer contribution towards transitional relief	262	41	0	77
Total NNDR pool payments (= 1+2+3+4)	15,575	15,577	15,622	15,907
5. Adjustments
Surplus brought forward	-305	134	-915	-893
Combined total	15,270	15,711	14,707	15,014
Distributable amount	15,136	16,626	15,600	15,000
Surplus carried forward	134	-915	-893

The above calculation involves estimating several figures that are inherently difficult to forecast accurately, such as the gross rate yield and the prior year adjustments. The resulting figure of £15.014 billion has therefore been rounded to £15 billion exactly to avoid spurious accuracy.Notes:

For 2001–02 and 2002–03 the amounts shown are those recorded in the outturn (NNDR3) returns. For 2003–04 the amounts shown are the provisional outturn for the year based mainly upon authorities' provisional contributions to the non-domestic rating pool. For 2004–05 the estimates are based on:

1. Item 1: The gross calculated rate yield represents the total value of non-domestic hereditaments on local rating lists adjusted in relation to previous years outturn information regarding the gross rate yield times the multiplier.

2. Item 1(i)(a): The transitional decrease adjustment includes the estimated amount of rates that will not be recouped from local list ratepayers under the transitional arrangements made by regulations under section 58 of the Local Government Finance Act 1988 and the transitional relief scheme, announced by written PQ on 25 November 1999, Official Report, column 770W.

3. Item 1(i)(b): The empty property relief adjustments include voids and partially occupied hereditaments. The 2004–05 figure includes an allowance for the increase in the gross rate yield.

4. Item 1(i)(c): Charitable rate relief. The 2004–05 figure includes an allowance for the increase in the gross rate yield.

5. Item 1(i)(d): Rural Shops and Post Office relief. Figures include mandatory relief for general stores and post offices under the Local Government and Rating Act 1997. Figures for 2001–02 onwards includes mandatory relief for petrol filing stations and public houses under the Non-Domestic Rating (Public Houses and Petrol Filling Stations) (England) Order 2001 (SI 2001/1345) and mandatory relief for new enterprises on former agricultural premises under the Rating (Former Agricultural Premises and Rural Shops) Act 2001. The 2004–05 figure includes an allowance for the increase in the gross rate yield.

6. Item 1(i)(e): Community Amateur Sports Clubs (CASCs). Mandatory rate relief for sports clubs registered with the Inland Revenue as Community Amateur Sports Clubs under the Section 64 of the Local Government Act 2003. This provision comes into effect on 1 April 2004. Sports Clubs that have not registered will still be eligible for discretionary relief allowed to non-profit making bodies.

7. Item 1(i)(f): Discretionary relief granted to charities, non-profit making organisations and for other reasons including discretionary relief for village shops and post offices under the Local Government and Rating Act 1997. Figures for 2001–02 onwards include discretionary relief for petrol filing stations and public houses under the Non-Domestic Rating (Public Houses and Petrol Filling Stations) (England) Order 2001 (SI 2001/1345) and discretionary relief for new enterprises on former agricultural premises under the Rating (Former Agricultural Premises and Rural Shops) Act 2001. The 2004–05 figure includes an allowance for the increase in the gross rate yield.

8. Item 1(ii)(a) and (b): The allowances for the costs and losses incurred by authorities in collecting non-domestic rates from ratepayers.

9. Item 1(ii)(c): City Offset—the amount which the City of London will not be required to pay into the non-domestic rating pool. It is the amount which will be retained by the City to meet its own expenditure. In 2004–05, City offset is to be set to zero.

10. Item l(iii): net adjustment in respect of appeals and other amendments to the rating list affecting liability for previous years rates settled in that year: comprising repayments and associated interest payments.

11. Item 2: the rateable value of non-domestic hereditaments on the central rating list times the multiplier, less the net effect of transitional arrangements, and adjusted for appeals and other changes in respect of previous years.

12. Item 3: Almost all properties previously included in the Crown List are included in the local list figures at item 1.

13. Item 4: the contribution from central government to offset the amount of the Secretary of State's estimate of income foregone as a result of transitional arrangements established by regulations under section 58 of the Local Government Finance Act 1988 and the transitional relief scheme, announced by written PQ on 25 November 1999, Official Report, column 770W.

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Town and Country Planning (Use Classes Order)

The Minister for Housing and Planning (Keith Hill): In January 2002, the Government issued a consultation document on possible changes to the Town and Country Planning Use Classes Order. Responses were to be received by 24 April 2002. We received over 2000 responses, which the Office of the Deputy Prime Minister has since been considering.

'A' Use Class

The consultation document proposed amalgamating the A1 and A2 Use Classes. This would have resulted in a broad Use Class, comprising of shops and premises in the financial and professional services sector. However, response from a range of sectors in the marketplace expressed anxiety and further research suggested that this proposal may not prove beneficial for business growth and would on the whole do more harm than good. As a consequence, the Government will not be taking this proposal forward, the A1 and A2 Use Classes will remain separate.

However, the Government will be making a number of amendments to the A1 Use Class to bring it up to date and ensure that it reflects Government policy on town centres. These are:

Internet cafes will be classified as an A1 use;


Warehouse clubs will be taken out of the Use Classes Order, thus becoming sui generis;


Motor vehicle showrooms will no longer enjoy permitted development rights for a change-of-use to any A1 use.

There will be no other changes to the A1 or A2 Use Classes.

The current A3 Use Class includes cafes, restaurants, pubs, bars, and takeaways. The consultation revealed that there is widespread concern that such a broad classification, which allows change of use from restaurants to pubs without the need for planning permission, contributes to the increase in the number of licensed premises. On 4 March this year, the hon. Member for Harrow East, Mr McNulty made a statement to the House announcing the Government had considered these representations carefully and proposed to put pubs and bars into a separate class.

Although restaurants and cafes will retain their A3 classification, this class will be modified to omit the reference to the sale of hot food for consumption off the premises. Class A3 will therefore be restricted to restaurant or cafe type uses. A change of use to Al or A2 Use Classes will be permitted but all other changes of use will require planning permission. Pubs and bars will be classified under a new Use Class A4.

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Takeaways will be classified under a new Use Class A5 due to the high level of concern expressed during the consultation about the specific impacts on amenity caused by such businesses and their customers. Both A4 and A5 Use Classes will be permitted a change of use to A1, A2 or A3 classification. Any other proposed changes of use will require planning permission.

We do not propose to make any amendments to the current B Use Classes.

Neither do we propose to make changes to the current C Use Classes.

We propose to make one change to the current D Use Class, an additional Use Class D3: Late Night Leisure. Most existing late night uses are already covered by existing classes, however nightclubs do not have a clear classification within the current Use Classes Order, and the impact on amenity of nightclubs is distinct and different from other uses. We will, therefore introduce a new Use Class D3 will be the classification for nightclubs. Planning permission will be required for any change of use from or to a D3 classification.

A statutory instrument giving effect to these changes will be made in due course.

The order will be made under section 55(2)(f) of the Town & Country Planning Act 1990 and it is therefore not subject to the Parliamentary procedures set out in section 333 of the Act.

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