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Written Ministerial Statements
Wednesday 21 July 2004
DEPUTY PRIME MINISTER
Energy Performance of Buildings Directive
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope): I have today published two consultation documents. The first of these covers our proposals for amending the building regulations energy efficiency provisions (part L) and implementing the energy performance of buildings directive (EPBD). The second describes our proposals for amending the guidance in approved document F that supports part F—ventilation of the building regulations. Both consultation documents contain draft regulatory impact assessments.
Driving up the energy efficiency of our buildings is critical to our success in achieving the carbon emission reduction targets in the Energy White Paper and our energy efficiency action plan and will also contribute to our goals for developing more sustainable communities.
Raising performance standards and introducing requirements for efficiency in the use of boilers and air conditioning systems will not only make a difference in the drive to tackle climate change, they will also help to create warmer, healthier homes and more comfortable and productive workplaces.
The proposals for building energy performance certification requirements will enable prospective purchasers and tenants to be more aware of energy performance whenever buildings are constructed, sold or rented out.
Energy used in buildings is responsible for roughly half the UK's carbon dioxide emissions. Wasting energy costs money whereas measures such as loft insulation, boiler replacements and more effective controls often pay for themselves within a few years.
One of the cornerstones of saving energy is to make building structures more airtight to minimise heating or cooling energy losses due to air leaking through gaps in the structure. This is addressed in the amendments to part L. However, it is also essential to ensure there is sufficient controlled ventilation to maintain good indoor air quality to protect the health of the building occupants. This is one of the roles of part F, and is why approved document F has been revised in conjunction with part L.
The guidance on ventilation systems has been expanded to cover more options, and also changed from a prescriptive to a performance-based approach that should encourage innovation.
A new section in the proposed guidance deals with the design of smoking rooms in workplaces. The new edition of the approved document will also take into account the commitments made in the public health White Paper to be published later this year.
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The consultation documents will be sent to several hundred organisations that have an interest in the energy efficiency of buildings and/or ventilation. Paper copies have also been placed in the Libraries of both Houses and the text can be downloaded from the ODPM website.
The consultation period for both sets of proposals closes on Friday 22 October 2004. Following this my officials will work with the Building Regulations Advisory Committee to consider how the proposals might need to be modified to take account of the opinions expressed in the consultations, and (for part F) the commitments that may be made in the public health White Paper. I am aiming, however, to lay the legislation needed to implement the directive and amend the building regulations and approved documents by July next year, and to achieve our goal of bringing them into effect by the end of December 2005.
Local Government Finance Settlement 2005–06
The Minister for Local and Regional Government (Mr. Nick Raynsford): Together with representatives of local government and other Government Departments, the Office of the Deputy Prime Minister has reviewed the prospect for incorporating 2001 census data in the formula calculations used to distribute formula grant to local authorities. The Office of the Deputy Prime Minister has concluded that we should postpone the introduction of 2001 census data in the calculation of the local government finance settlement until the formula freeze is lifted, in 2006–07 at the earliest.
The 2001 White Paper "Strong Local Leadership—Quality Public Services", (CM5237), announced that the funding formula would be frozen for at least 2004–05 and 2005–06. Our aim is to provide local government with predictable and stable funding, so that they can plan their finances and their service provision from year to year.
It is clear that using 2001 census data to calculate the local government finance settlement will require formula changes, and will cause some large changes to the distribution of formula spending shares.
In deciding not to update the census data used in the funding formulae in 2005–06, we have balanced our aim of using the most up to date data to calculate local government grants against our commitment to the formula freeze and to stability and predictability in local government funding.
The Office of the Deputy Prime Minister will work with local government to produce options to include the 2001 census data in the funding formula once the present formula freeze is lifted.
Revaluation, Transitional Rates Relief and Small Business Rates Relief
The Minister for Local and Regional Government (Mr. Nick Raynsford):
This statement provides initial information about the impact of the business rates
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revaluation that will take effect from 1 April 2005, gives details of the proposed transitional relief scheme and sets out the Government's proposals for the small business rate relief scheme which also takes effect from 1 April 2005.
Table 1 below shows the overall effect of revaluation as a percentage change in rateable values and on rate bills.
Notes:
1. The regional figures are based on the data in local lists of properties for each relevant billing authority. The Central List includes various utilities and networks that are not specific to a billing authority area. Central List properties pay their rates direct to the Secretary of State and the revenue is added to the NNDR revenue pool.
2. The third column simply deals with the effect of revaluation. In addition to this the final liability will be uprated to take account of the annual inflation increase.
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Table 2 shows the movement in rateable values as a result of the 2005 revaluation by economic region and key property types—offices, shops, warehouses and factories.
| Main Property Types | ||||||||
|---|---|---|---|---|---|---|---|---|
| Offices | Shops | Warehouses | Factories | |||||
| Region | RVChange | LiabilityAverage | RVChange | LiabilityAverage | RVChange | LiabilityAverage | RVChange | LiabilityAverage |
| East | 16% | -2.6% | 27% | 7.3% | 23% | 3.3% | 19% | 0.4% |
| East Midlands | 18% | -1.4% | 23% | 3.6% | 15% | -3.2% | 12% | -6.0% |
| London | 11% | -5.4% | 26% | 7.1% | 23% | 2.8% | 22% | 3.0% |
| North East | 24% | 2.2% | 24% | 4.8% | 13% | -4.8% | 13% | -5.6% |
| North West | 18% | -0.5% | 22% | 3.0% | 11% | -6.4% | 10% | -7.3% |
| South East | 8% | -9.0% | 29% | 8.4% | 29% | 8.8% | 23% | 3.4% |
| South West | 21% | 1.6% | 27% | 6.3% | 16% | -2.3% | 14% | -4.8% |
| West Midlands | 15% | -3.8% | 20% | 0.7% | 11% | -6.6% | 6% | -11% |
| Yorkshire and Humberside | 14% | -3.9% | 26% | 6.0% | 12% | -5.7% | 9% | -8.3% |
| England | 13% | -4.7% | 25% | 5.7% | 18% | -0.5% | 14% | -4.2% |
Notes:
1. "RV change" reflect the average percentage increase in rateable value from the 2000 rating lists to the 2005 rating lists.
2. "Liability average" is the average change in liability as a result of revaluation before reliefs are applied.
Although the tables show an overall national increase in rateable values, this does not mean an increase in the overall tax take, or that rate bills will necessarily rise by the same amount. The purpose of revaluations is to distribute tax in a more equitable way by updating the valuation of property, thereby making the tax base more current and relevant. The tables therefore also show the likely effect of revaluation on rates bills.
This information provides important indicators of national trends. However, it is not necessarily a good predictor of changes in an individual's rates bill since these will be affected by more local differences and by factors that are specific to the individual property. Nevertheless, in England as a whole, nearly 60 per cent. of properties will see a fall in their rateable values and therefore a fall in their rate liability.
The Valuation Office Agency is finalising the preparation of the draft rating lists that will be published on 1 October. These are being published three months earlier than usual and will contain more comprehensive information than ever before. This will enable ratepayers to plan ahead with much greater certainty and should also reduce the number of appeals.
The Local Government Act 2003 provides that the 2005 revaluation must be accompanied by a transition scheme to lessen the effects of sudden and significant rises in rates bills. The legislation provides that the scheme must be self-financing, so that the costs do not fall on other taxpayers. For revaluation 2005, we are proposing a four-year self-financing transitional scheme. The costs of phasing in increases will be met by phasing down the reductions in liability for others.
The scheme seeks to provide an appropriate balance between protecting those who experience larger increases in rates bills and allowing those who enjoy a fall in bills to experience the full benefit as quickly as possible. As a result we propose the caps for properties experiencing increases will be 12.5 per cent., 17.5 per cent., 20 per cent. and 25 per cent. for the four years and for small properties 5 per cent., 7.5 per cent., 10 per cent. and 20 per cent.
For large properties experiencing reductions in rate bills, these would be capped at the rates of 7 per cent., 10 per cent., 17.5 per cent. and 20 per cent. For small properties, the rates proposed are 17.5 per cent., 25 per cent, 45 per cent. and 50 per cent. These downward caps
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are significantly more generous than in any previous transitional scheme and mean that those liable to decreases in their rates bills will benefit more quickly than under earlier schemes. Also, the effect of the separate capping levels means that small businesses will only be required to make a very small contribution to the scheme.
Further details of the transitional scheme will be included in a consultation paper to be published shortly. The consultation will continue until October, by which time businesses will know their proposed rateable value from the valuation office agency draft rating lists. This will enable ratepayers to consider the effect of the proposed scheme alongside their proposed new rateable values before responding to the consultation.
I am also announcing our proposals for the new small business rate relief scheme. Government recognise that the current system of business rates places a disproportionate burden on small businesses. The small business rate relief scheme will address that.
Plans for a small business rate relief scheme were first announced in 2001 in the White Paper "Strong Local Leadership—Quality Public Services". The White Paper proposed that rate relief should be available at 50 per cent. for properties with a rateable value up to £3,000 with relief declining in percentage terms on a sliding scale until at £8,000 there would be no entitlement to relief. However, we undertook to review these thresholds before the scheme was implemented. The scheme that we will be consulting on next month is significantly more generous than the one originally envisaged, and proposes that the thresholds should be set at £5,000 and £10,000. We are also introducing a buffer zone so that business properties with rateable values between £10,000 and £15,000 will not have to contribute towards the relief.
The scheme will be funded through a supplement on the rates bills of larger businesses, in line with the requirement in the Local Government Act 2003, although we have made a commitment that this should not add more than 2.5 per cent. to bills. The proposed scheme would increase the overall supplement to no more than 0.67p. This equates to a 1.6 per cent. increase in rates bills.
We estimate that more than 400,000 small businesses stand to benefit from the proposed scheme.
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