9.Had the Government not presented the Bill when it did, we might have been able to further scrutinise the draft Bill with a view to identifying any possible problems in the implementation of a largely uncontroversial policy. As we note in our correspondence with the Minister, that policy appears to have been broadly welcomed, given it simply re-enables a practice of the VOA that has been stable and understood for over 50 years. Following our correspondence with the Minister in which we clarified the policy goals, we are satisfied with the overall objectives of the Bill.
10.However, in correspondence, we did raise a range of issues related to the potential financial effect on some local authorities, whether retrospective legislation was appropriate and whether it required additional express provision, and the drafting of the test for contiguity. These issues are more fully articulated in the correspondence which we have appended to this Report. We hope these will be of use both in informing the work of Members of both Houses as the Bill progresses and in ultimately contributing to better legislation.
11.We welcome the detailed and considered way in which the Minister has responded to our questions in correspondence, and while many of the issues and questions we raised were addressed in the responses provided, there are a number of outstanding issues which we elaborate on below.
12.Equally, had the Committee enjoyed the opportunity to assess the consultation responses before the Bill was presented, there may have been further questions we would have raised in the context of pre-legislative scrutiny which could have further improved the proposed legislation. This deepens our frustration that the potential benefits of pre-legislative scrutiny were not fully realised in this instance. Given we were only provided with these consultation responses after the Bill was presented, we have now simply published and reported these to the House separately alongside this report, again to assist Parliament as the Bill progresses through its various stages.
13.When announcing plans to legislate to reverse the effect of the Supreme Court judgment, the Government stated that “Local government will be fully compensated for the loss of income as a result of these measures.” Yet a range of local authorities responding to the Government’s consultation were concerned that the draft Bill would have a negative financial impact. Our brief analysis of the consultation responses suggests seven individual local authority respondents and the District Councils’ Network (representing 200 district councils) expressed concern over the cost to authorities, the latter specifically asking for funding to cover refunds. Despite this, and its previous commitment at the time of the Autumn Budget 2017, the Government told us in correspondence and in response to its consultation on the draft Bill that “no compensation will be payable to local government” because the Supreme Court judgment created an unexpected ‘windfall’—an interpretation we questioned in our correspondence—for some local authorities.
14.The Government made clear in its correspondence with us that it did not believe it was possible to isolate the effect of the draft Bill from “the many other changes that happen to properties on the rating list”. Despite assurance in the consultation paper that under the rates retention scheme “the overall impact on rates income will be nil” the Government did acknowledge that some local authorities may see an “overall financial consequence”, likely to be “small overall”. We do not find this sufficiently reassuring, and remain concerned that the Government has not taken sufficient steps to assess the potential financial effects on local authorities however large or small they may be.
15.In considering whether the Government is able to estimate the effect of the Bill’s provisions on local authorities in any way, and taking into account our requests for this to be calculated in the correspondence with the Minister, we observe that there will be a new route to allow ratepayers to seek adjustments to rateable values otherwise closed to challenge. While the value of adjustments may not reflect only the reinstatement of previous practice, as the Government has noted, the fact those adjustments are happening would. This is a financial effect that could be quantified in relation to local authorities.
17.There also remain questions beyond those already raised in our correspondence with the Minister. For example, we might have further considered whether it is appropriate to change the law retrospectively (especially where it may affect local government funding). In addition, we might have explored (though not dealt with in the draft Bill or the Bill) whether the intention is to allow ratepayers to have their premises revalued only to reverse the effects of Mazars, or whether any ratepayer seeking to reverse those effects will be unable to do so without triggering a potentially adverse revaluation on other grounds.
10 Autumn Budget 2017, HM Treasury, Paragraph 3.28
11 Correspondence from the Minister for Local Government to the Chair of the Housing, Communities and Local Government Committee, 19 February 2018, paragraph 4; and Business rates in multi-occupied properties: Consultation on reinstating the practice of the Valuation Office Agency prior to the decision of the Supreme Court in Woolway (VO) v Mazars  UKSC 53, Summary of Responses and Government Response, Ministry of Housing, Communities and Local Government Committee, paragraph 16
12 Business rates in multi-occupied properties: Consultation on reinstating the practice of the Valuation Office Agency prior to the decision of the Supreme Court in Woolway (VO) v Mazars  UKSC 53, Department for Communities and Local Government Committee, December 2017, paragraph 10
13 Correspondence from the Minister for Local Government to the Chair of the Housing, Communities and Local Government Committee, 19 February 2018, paragraph 7
14 Business rates in multi-occupied properties: Consultation on reinstating the practice of the Valuation Office Agency prior to the decision of the Supreme Court in Woolway (VO) v Mazars  UKSC 53, Department for Communities and Local Government Committee, December 2017, paragraph 39
Published: 18 April 2018