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The Government have addressed the issue in a manner that has improved the amendment, which we debated a while ago in this House, and I very much welcome what is now in the Bill. I add one caveat only, on an issue to which my hon. Friend the Minister referred: the need at some stage to consider extending the provision to cover those areas where there is not a BRS, but where BIDs exist. The principle of landowners contributing to BIDs has been an issue since BIDs were introduced in the early years of this century. We had a debate at the time, and some parties strongly advocated the adoption of the American system, whereby the property owner rather than the tenant pays the levy. I, as the then Minister, believed that creating the register of landowners would have caused substantial upheaval and set back the process, and could have resulted in many abortive costs arising in areas where the register had to be compiled despite there being no proposal for a BID.
Given those circumstances, it seems sensible to proceed on the basis of the existing rating system in this country, where the tenant pays the business rate but owners are encouraged to make voluntary contributions. Some have but others have not, and there is a natural worry about freeloading, whereby substantial property owners in a particular area get the benefit of improvements that a BID brings but do not contribute towards it. The issue still exists, and, although I fully understand my hon. Friend’s reasons why, within the remit of the Bill, it was not possible to extend the provision before us to other BID areas, the problem will need to be considered again. I hope that the Government will, in due course, find a suitable legislative vehicle to allow the same formulation to be applied more generally to all BIDs. With that one caveat, I greatly welcome the amendment. It has made an important improvement to the legislation, and it will enable BIDs to continue successfully in many areas where they have made a big impact and whose existence might otherwise be threatened by the introduction of BRS.
Dan Rogerson: It is a pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr. Raynsford). He has pursued the issue keenly throughout the Bill’s passage through both Houses, and there is an element of unfinished business in it for him, given that he presided over the introduction of BIDs and, along with many others, has been an advocate of them during our deliberations. He was keen to ensure that the proposed changes—the involvement of a BRS system, too—would have a positive rather than negative impact on BID areas, because there was a danger of conflict between the two systems.
The previous two contributors discussed anomalies and particular situations, and, as the right hon. Gentleman said, we are not quite there yet. It would have been good to tidy up the situation in which a BRS is not imposed, but, despite his attempts in Committee to do all sorts of things, such as amend the title of the Bill, which was necessary at the time, it has not quite been possible to resolve that particular situation.
I also note that the right hon. Gentleman was slightly more supportive of the work that their lordships put into this element of the Bill than he was of their work on the previous one, but I leave that to the House to decide. The House has obviously had the opportunity to vote again on the issue, but I merely note in passing how I think that they were right on the previous issue and right on this one.
I am pleased to see that the hon. Member for Bromley and Chislehurst (Robert Neill), in his usual friendly and positive way, seeks to contribute to resolving the issue before us, although it presents him with a slight challenge, given that he is technically approving the imposition of BRS in other parts of the country but his party has said that it does not do so. With that comment set aside, however, we can all support the fact that the provision presents a solution—albeit slightly inelegant—to a problem and takes us further forward. We will all be watching keenly to see how BID areas make progress and, I hope, do even more to benefit their local communities and the business communities within them.
Sarah McCarthy-Fry: I just want to respond quickly to the hon. Member for Bromley and Chislehurst (Robert Neill), who asked when we would consult on regulations. As I explained, these are complex issues but we hope to begin consultation in the autumn. I thank the hon. Gentleman and the hon. Member for North Cornwall (Dan Rogerson) for their support.
Lords amendment 7 agreed to , with Commons privileges waived.
Sarah McCarthy-Fry: I beg to move, That this House agrees with Lords amendment 8.
Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendment 9.
Sarah McCarthy-Fry:
These amendments were brought forward and accepted by the other place to exempt, in all circumstances, the Greater London authority’s proposed
BRS for the Crossrail project from the requirement for a ballot. The amendment originally accepted by the other place in its Grand Committee was tabled by Baroness Valentine. In response to the amendment, Baroness Andrews said, on behalf of the Government:
“I have listened to the repeated calls in your Lordships’ House and during the passage of the Bill in another place for an exemption for Crossrail. I certainly agree with the argument that it brings major benefits across the capital, commands wide support, and is already underpinned by an Act of Parliament. Therefore, with the agreement of the Committee, I would like to accept the noble Baroness’s Amendment”—[ Official Report, House of Lords, 18 May 2009; Vol. 710, c. GC532.]
On Report, the Government tabled further amendments to adjust the original one; essentially, they were technical amendments to bring the new provisions into line with the rest of the Bill and remove the scope for legal uncertainty. The amendments achieved the objective accepted at the Grand Committee. At the same time, the Government also took the opportunity to extend the exemption from the ballot requirement for the proposed Crossrail BRS to cover the additionality requirement in clause 3 of the Bill, rather than leaving that provision to be made later on in regulations, as the Government had indicated was their intention. Amendment 8 therefore exempts the GLA’s proposed BRS for Crossrail from the requirement for a ballot and the need to meet the additionality test in the Bill.
The Government’s amendments were unanimously supported by all sides in the other place. The amendments provide important protection to the progress of the Crossrail project and crystallise the position on ballots for the BRS that will make up an important element of the Crossrail funding package and enable the Government to clarify the position on additionality earlier than would have been the case had the exemption been set out in regulations. For all those reasons, I invite the House to agree to the amendments.
Robert Neill: This is one issue on which there was unanimity during our previous considerations; everybody wanted to make it clear that they supported Crossrail and the BRS as part of a settled package for the Crossrail funding mechanism. The amendments remove an ambiguity that none of us wants, so one need not say much more about the matter, save that we support the amendments.
Dan Rogerson: I echo the comments just made by the hon. Member for Bromley and Chislehurst (Robert Neill). During the passage of the Bill, different parties sought in different ways to propose amendments, to highlight the fact that we felt that Crossrail was a scheme of a particular nature and that it had had a great deal of attention in the past. The debate on ballots and so on should not apply to Crossrail in the same way, and the distinction is helpful. I remain sad, of course, that the House did not vote to retain the amendments in another place about ballots more generally, but I am happy to accept these amendments.
Lords amendment 8 agreed to , with Commons privileges waived.
Lord s amendments 9 and 10 agreed to, one with Commons privileges waived.
Sarah McCarthy-Fry: I beg to move, That this House disagrees with Lords amendment 11.
Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendment 12, and Government motion to disagree.
Sarah McCarthy-Fry: As right hon. and hon. Members are aware, Lords amendments 11 and 12 are intended to prevent the BRS from being levied retrospectively as a result of a change in the rating list.
Before I move on to the substance of the amendments and the background to them, I want to emphasise some key points about the Bill and what it provides for. The first BRS cannot be levied until 1 April 2010; nobody can have any liability for a BRS in respect of any day earlier than that; while we know that the Greater London authority intends to levy a BRS for the Crossrail project, as was discussed in the other place, other levying authorities do not have plans to levy a BRS but have welcomed the power to do so in the future; the £50,000 rateable value threshold for liability to a BRS in England will exclude most small businesses; while the Bill builds on the rating system, which I will come to, it does not change anything about the general rating system or have any affect on liability for non-domestic rates, whether before or after 1 April 2010; the BRS will be raised and retained locally, for projects which the levying authority, working in partnership with business, considers will promote the economic development of its area; and no BRS revenues will be coming to central Government, nor can they be used by the levying authority to support existing expenditure, as BRS can only be levied to support new, additional, spending.
The BRS builds on the non-domestic rating system. In particular, liability to BRS and the level of liability in respect of any given property will be based on the rating list entry for that property. Rating lists can be changed by valuation officers to ensure accuracy and, with that, the accuracy of rates liability. Sometimes this can lead to backdated increases in rates liability; sometimes it can lead to backdated decreases and, therefore, refunds. There is the possibility of backdated increases in rateable value causing higher BRS bills than businesses were anticipating, but the practicalities involved in ascertaining the need for changes to a rating list and then establishing what change is required mean that backdating is an essential part of the normal functioning of the system.
Right hon. and hon. Members know that, over recent months, the issue of backdated rates liability has been highlighted by the situation in a number of ports. However, the Bill relates to the BRS, and the amendments would not affect the situation in ports. As was emphasised by Lord Davies in another place, the issue of ports does not affect the principle. It would be unfair to those businesses that have been paying the correct BRS if others were paying a smaller bill simply because an inaccuracy on the rating list meant that they were not asked to pay the correct supplement. It is also worth reiterating that BRS bills, like rates bills, can go down as a result of a change to the rating list in certain circumstances; that is a normal function of the system.
Mr. Austin Mitchell (Great Grimsby) (Lab): This is the same standard argument that has been given to us during our lengthy discussions on the Bill—that there is no possibility of not giving retrospective assessment because everybody else would want it and it would break a fundamental principle. However, regulation 14(6) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2005 provides that where reassessment is the responsibility of the Valuation Office Agency, not the result of a mistake or a fiddle on the part of the hereditament owner, there is no need for a retrospective revaluation. If that principle had been adopted under the Bill, as it should have been, we could have avoided all this trouble. What my hon. Friend is saying is wrong in respect of assessments such as those in the ports, which were done as the responsibility of the VOA, not the hereditament owner.
Sarah McCarthy-Fry: I appreciate the point that my hon. Friend is making. However, the special provision in regulation 14(6) does not apply where a property is missed off the list altogether on the day that it is compiled, as there is a difference between a ratepayer paying rates where the rateable value has been incorrectly assessed by the VOA and a ratepayer not paying rates on a property at all.
Mr. Mitchell: That surely cannot be true, because the principle of individual assessment began in 2005 when, the VOA tells us, it assessed the rateable value of each port operator on the advice that it got from the port owner. There was already a rating, and indeed the operators were paying rates through the cumulo rental system.
Sarah McCarthy-Fry: I have to beg to disagree with my hon. Friend, because the individual properties were not on the list on the relevant date in 2005. That is why regulation 14(6) does not apply.
Backdating rating assessments is not new but an established feature of the business rates system. It operated in the case of the list that we are considering not only from 2005 onwards but from 2000 and before.
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Shona McIsaac (Cleethorpes) (Lab): I apologise for intervening, but I have to be in Westminster Hall for an Adjournment debate shortly. Does my hon. Friend not appreciate that the crux of the argument, and the reason the move has caused so much anger in certain port areas, is that businesses had already paid their rates to the operators in the cumulo system? The problem is not that they have not paid. It is that they have already paid, and they are being asked to pay double taxation.
Sarah McCarthy-Fry: I thank my hon. Friend for her intervention. We are moving off business rate supplements slightly, but I shall respond to her point. In the cases that we have examined, it is difficult to prove contractually that that has been the case. If she knows of specific instances that she can show us, I invite her to do that so that we can examine them. However, the arrangement is a contractual obligation between the port operator and port businesses. It is difficult to disentangle the figures, and the only example that we have been given is very unclear.
Mr. Ian Cawsey (Brigg and Goole) (Lab): Will my hon. Friend give way on that point?
Mr. Deputy Speaker: Order. May I say to the hon. Gentleman that we are getting rather sidetracked away from the amendment that we are discussing? We now ought to come back to the amendment that the House is examining.
Sarah McCarthy-Fry: Thank you, Mr. Deputy Speaker.
On Lords amendments 11 and 12, I commend the quality of the debate in the other place. Forceful arguments were made as to why backdated rating list changes should not apply in relation to BRS liability. Lord Bates set out his view that the amendments
“are designed to provide an important guarantee to avoid retrospection in business rate supplements taxation”.—[ Official Report, House of Lords, 9 June 2009; Vol. 711, c. 550.]
He felt strongly about that matter. The noble Lords Tope, Williamson and Brooke and Earl Attlee and Earl Cathcart all spoke eloquently and persuasively in his support. However, I reiterate that the Bill relates to the BRS. For the reasons that I have already mentioned, which were set out by Lord Davies in another place, I do not agree with the principle of the guarantee described by Lord Bates.
It is right and fair that the system that applies to rating should apply to the BRS. Maintaining an accurate rating list necessarily involves an element of backdating, as properties must be valued when they are complete or nearly complete to ensure proper valuation. We cannot have a system in which a person avoids paying rates or the BRS for a time, whereas someone else in analogous circumstances cannot, because of the coincidence of when a valuation can be undertaken in practice. That would be unfair and irresponsible, so it is right that changes to rating lists take effect from the date of the event giving rise to the change. The provisions in the Bill were crafted to be entirely consistent with the national business rate system. That ensures that liability to business rate supplements will be fair to all.
Mr. Austin Mitchell: Will my hon. Friend give way?
Sarah McCarthy-Fry: One more time.
Mr. Mitchell: I am grateful. My hon. Friend says that it would be unfair if retrospective rates were not levied. To whom would it be unfair? A whole new class of businesses, the port operators, is being brought into the business rate separate assessment system. As my hon. Friend the Member for Cleethorpes (Shona McIsaac) has pointed out, they were already paying business rates through the cumulo system, and now they are going to be rateable under a different system. That should have been done in 2005, and the VOA says that it was. Why were the valuations reassessed in 2008 and made retrospective? To whom would not doing so be unfair?
Sarah McCarthy-Fry: I do not want to dwell on the specific issue of ports, and I am sure that there will be opportunities to debate it at other times. We are considering the principle of backdating in the business rating and valuation system, and the dates on which it comes into effect. The principle is that changes to rating lists take effect from the date of the event giving rise to the change. We therefore propose that the House reject Lords amendments 11 and 12 in order to reinstate the right and fair position of consistency with the business rate system generally.
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