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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 62. She has already anticipated me asking her to withdraw her Amendment 41, which is unnecessary to the correct functioning of Amendment 62, which we support. I hope that that will be welcomed by the Committee.
Baroness Valentine: I thank the Minister very much indeed. I beg leave to withdraw Amendment 41.
Amendment 43 had been withdrawn from the Marshalled List.
Clause 9 : Regulations about ballots
44A: Clause 9, page 6, line 5, at end insert—
“( ) Nothing in subsection (3) is to be taken as requiring a lower-tier authority to accept a delegation or to prevent it accepting a delegation on conditions including as to the cost of the exercise of the function.”
Baroness Hamwee: I shall raise a number of, I hope, short points. The first amendment in the group would amend Clause 9(5) to ensure that a levying authority could not delegate if the billing authority did not want to accept the delegation or to accept it only on certain terms; for instance, as to the cost of whatever the function is. I had in mind in particular protecting both the London boroughs and all the so-called “second-tier” authorities if the levying authority were to be able to impose a function in a way which the billing authorities found unacceptable. I may be told that it is implied that the delegation would have to be accepted. My amendment is to probe that and have it placed on the record. If I am told that it is not implied, I may want to come back to it.
Amendment 45 would require consultation about variations to extend to the billing authorities. It seems to me that the billing authorities as well as the rate
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I wondered whether to withdraw Amendment 57, but it will give the Minister an opportunity to confirm that the March date is a date normally applied for the national non-domestic rate. I tabled the amendment to probe the need to ensure adequate time for the billing authorities and to give the Minister an opportunity to explain how the supplementary rate fits in with the NNDR. I believe that under the current legislation the Secretary of State calculates the NNDR multiplier and the small business NNDR multiplier and serves a notice on the billing authorities, “as soon as is reasonably practical” after doing so. I am keen to have confirmation of what the statutory position is as well as what the practice is at present. Amendment 57 reflects my perhaps greater concern about the imposition of the BRS mid-year. It would require at least 30 days’ notice in order for all the administration to be put into place. Thirty days would not by any stretch of the imagination be a long period.
Amendment 64 would require regulations—this is a London point—to be published in draft within a month after the commencement of the Act and to be made not later than 30 September 2009. My noble friend spoke in the previous Committee sitting about the concern of the London boroughs, expressed to us through London Councils, about the burden on the boroughs. I make it clear that the 30 September date comes out of my head; it is my probing of this. I would not like the Government to think that they can relax because London Councils is only seeking 30 September; that is not the case. The consultation on the document to which reference has been made ends on 19 August. There is not a lot of time to put the new arrangements into place. The London boroughs will have to set up systems, and the systems are going to have to go live in a year when the boroughs have to contend with revaluation of non-domestic rates, a new transitional relief scheme and the deferral scheme for 2009-10 NNDR bills announced by the Treasury in April. It really is important that they are given every opportunity to put the arrangements into place, which argues for decisions that are as swift as possible. I beg to move.
Lord Bates: These are all sensible amendments and we are happy to support them. A couple of issues that they raise could perhaps be responded to. First, when will the regulations for Crossrail, which have been in the pipeline for some time, come out? Is there any indication of when they will be available? I ask that in the context of Amendment 64. Amendment 57 is particularly sensible in a time of economic uncertainty, and we support it. The extension of notice period also very much fits in with that. With that proviso, we are happy to give our support.
Baroness Andrews: A number of amendments in this group explore the relationship between the levying and billing authorities. That will clearly be a key element in the smooth running of any BRS project in two-tier areas.
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Amendment 44A raises an important issue about that relationship, which we quite appreciate. It provides that billing authorities need not accept a levying authority delegating to them the function of running a BRS ballot. It allows a billing authority which does accept the delegation of that function to impose conditions on that acceptance and to charge for running the ballot. First, I certainly agree with the spirit of the amendment and hope to show the noble Baroness that it is not strictly necessary.
A levying authority simply could not force a billing authority to undertake ballot functions other than by agreement. In the consultation paper, which we publish this week, we are inviting views on whether levying authorities should have powers to delegate the function of running the ballot to one or more of the billing authorities in its area. If stakeholders feel that there should be some flexibility for levying authorities to decide how to run ballots, this would be agreed locally. A levying authority could not force a billing authority in practice, nor could it rely on Clause 9 to do it. In the consultation paper, we also address the issue of any costs that might be incurred by a billing authority in running a ballot for a levying authority. Our view is that this is something that levying authorities and billing authorities should be able to reach agreement on. This is clearly now a matter for consultation, and we will be interested to see how stakeholders respond to those issues. Clause 9 ensures that levying authorities have the power not to run the ballot themselves. However, it does not force billing authorities to undertake those functions.
Amendment 45 would require a levying authority to consult the billing authorities in its area if it wanted to change an existing BRS in a way that was not anticipated as a possibility in the prospectus. I agree with the noble Baroness that it is important that all those who will be affected by a variation in an existing BRS should be able to have their say about the proposed changes. Again, I reassure the noble Baroness that provision is already made for this. Clause 10(5) makes it clear that, when consulting on a proposed variation, Clause 6 applies in the same way as it does to a consultation on a new BRS. Therefore, the levying authorities are already required to consult lower-tier authorities in their area if they want to propose a variation to an existing BRS.
Amendments 57 and 57A are about the notice that a levying authority must give to the billing authorities in the area requiring them to commence billing. I assure the noble Baroness that she was right in what she said. Amendment 57 is concerned with BRSs that are to be billed for with effect from the beginning of a financial year. Currently, the levying authority will need to serve notice on billing authorities before 1 March if they want to levy the supplement from the start of the annual billing round on 1 April. That means requiring levying authorities to provide notice before 1 February, a month earlier. Amendment 57A, as I understand it, would require a levying authority to give a minimum of 30 days’ notice to billing authorities if they want their BRS to be first levied part-way through a financial year.
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I absolutely understand the concern that billing authorities must have adequate notice of a BRS. Obviously they need to ensure that they have time to make the necessary arrangements.
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The 1 March deadline for BRS, which will be billed from 1 April was, as the noble Baroness suggested, chosen for consistency with the upper tier authority’s timetable and that of the GLA to issue its council tax precepts for the forthcoming year and within the budget-setting process. The rationale is to ensure that the arrangements dovetail with the existing administrative arrangements as far as possible. In that way the administrative burden on levying and billing authorities should be minimised. It will also avoid potential confusion that would be caused by having different timetables for different preparations needed before the commencement of the financial year.
Obviously, if the amendment were accepted all the benefits of consistency would be lost and the BRS would be running to a different timetable. On top of that, the amendment could also cause problems in the short to medium-term. The GLA, which intends to levy a BRS from 1 April 2010 as part of the funding package for Crossrail, could well face difficulties in meeting the timetable proposed by the amendment. The timetable is particularly tight considering that before the levying authority can notify the billing authority it will have to have prepared a prospectus, completed the mandatory consultation and revised the proposals as necessary. To shorten it by just a month would put additional pressure on the timetable. That is unnecessary, given the longer-term considerations of marrying preparations needed for the start of the financial year.
The issue with a BRS that is to start part-way through a financial year is slightly different. For that we have not put in place a specific timetable for a notice that must be served for billing to commence. Again, it is consistent with the wider framework of the Bill, but we expect that billing mid-year for BRS will be the exception, not the norm. It is right that we allow for flexibility but it will lead to a greater administrative burden, not just for billing authorities but for business as well. Because of that the timetable has to be agreed between the levying authority and the billing authority. The approach of not prescribing a timetable fits in with our general policy of allowing as much discretion as possible, which is the right approach here.
Amendment 64 concerns the consultation arrangements on the regulations covering the collection and enforcement of BRS. It would require consultation on the draft regulations to start within one month of the commencement of the Act—assuming it reaches Royal Assent—and to be made no later than 30 September 2009. I understand why the noble Baroness has posited her argument and her concern that there should be adequate consultation on the arrangements for collecting and enforcing BRS. The final arrangements also need to be in place in good time to enable levying and billing authorities to complete the necessary preparations.
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In our consultation paper on Wednesday we set out our proposals on collection and enforcement, which will later be reflected in the regulations made under Clause 21. Consulting on the policy as opposed to the draft regulations provides us with greater flexibility to set out the various options and their respective pros and cons. Frankly, I think that that is the key to a better consultation, and certainly one on which the partners feel they have more influence. It is more effective than if we were simply presenting what would look like near finalised regulations. It is therefore an important opportunity for billing and levying authorities, business and other partners to consider the proposals in detail and to provide feedback before the regulations are laid before both Houses for consideration.
The noble Baroness said that the timetable was very tight and I agree that it is unnecessarily restrictive. The consultation will give billing and levying authorities a good indication as to how collection and enforcement arrangements might work, albeit subject to consultation. Obviously, we appreciate that levying authorities will want to have administrative arrangements at the earliest opportunity, but I cannot give noble Lords a definitive timetable for laying the regulations. Clearly we want them in place as soon as possible, and we shall do that in the autumn, which is as much as I can say at the moment. The noble Lord, Lord Bates, asked about the regulations for Crossrail, and I can tell him that we are currently aiming for mid-October. That is a more specific timetable because much more preparation has already gone into them. We aim to have the general set of regulations as soon as possible after the consultation period has finished in the autumn.
Lord Jenkin of Roding: Before the noble Baroness, Lady Hamwee, withdraws the amendment, while we may take some exception, as I did earlier, to the way this consultation paper has reached us, it is right to put on record that its late publication is causing considerable dismay to local authorities. I hope the noble Baroness understands that. The note that I have had this morning from London Councils—I repeat, I am one of its joint presidents—tells me that it is disappointed and frustrated that the DCLG consultation, as issued last week after much delay, is not the draft regulations. It had been led to expect that it was going to consult on the draft regulations, but it is only,
and, as such, is the policy relating to the regulations rather than the regulations themselves. The note goes on to say that while the document is welcome, it still is not a substitute for seeing the detail of the regulations.
The noble Baroness said that we shall not receive the full regulations until October; did she say that?
Baroness Andrews: In the autumn; early autumn.
Lord Jenkin of Roding: The early autumn; September or October. I insist on behalf of the London boroughs that they want to see these regulations as swiftly as possible.
On a minor point, we asked about these a week ago and were told that they would be published. I have not had a chance to read the documents. Indeed, while I was waiting for the hard copy, I ran off the 49 pages
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- “not allowing much time to assess how the scheme is proposed to work, or giving all the detail for the scheme”.
- “This level of detail is vital to the success of the first BRS that will be raised—that for the Crossrail scheme in London”.
There is considerable dissatisfaction with the way in which this matter has been handled. I hope the Minister is under no illusions about that.
Baroness Andrews: What I said in response to the amendment was sincerely felt. We have never said that we would publish the draft regulations, because we thought that publishing the policy would give London councils and all councils, in this three-month period of consultation, much more opportunity to decide for themselves what the regulations would contain and how it would work. I take the point that London Councils clearly wants to discuss detail, and I shall be happy to set up a meeting between its representatives and my officials. We can then talk about the consultation paper and how the consultation process might proceed. Would that be helpful?
Lord Jenkin of Roding: Again, as I have raised the point on the consultation paper, that is a very helpful suggestion and I will see that the officials in London Councils are aware of that and that they follow it up as swiftly as possible. They cannot administer this scheme within what the noble Baroness said was a very tight timetable unless they have enough information to make the detailed preparations. At the risk of quoting a hackneyed phrase, the devil is in the detail, and that they have not got yet. I welcome the suggestion of a consultation; I hope it will relieve some of their anxieties and perhaps help the Minister to produce a swifter scheme.
Baroness Hamwee: It is indeed a helpful suggestion, and I thank the Minister for that. On the timetable, of which we now have some bits of the jigsaw, it will clearly not be possible to meet 30 September because 40 days from 19 August takes us to about then. I have noticed that spring comes later in the House of Lords than in much of the rest of the world, as does autumn, which too often runs well into November.
I am grateful to the noble Lords who have spoken. On the other amendments, I was seeking the concurrence with the NNDR. I certainly do not want to complicate the process. I realise that if my amendment were to be included, I could cause a fit among the officers at the GLA for whom I have much respect. I have no wish to complicate their lives, because I know how difficult it is to fix meetings to make decisions.
Going backwards, on the costs of delegation, I suppose that the possibility of refusing a delegation covers the point if the costs cannot be sorted out. I am grateful to the Minister for that. I beg leave to withdraw Amendment 44A.
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Amendments 45 to 47 not moved.
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Clause 12 : Rateable value condition
48: Clause 12, page 8, line 21, at end insert—
“( ) After the revaluation of rates in April 2010, the amount prescribed by regulations must increase by the same percentage as the percentage increase in the average rateable value for a hereditament in the 2010 Rating List compared to the 2005 Rating List.”
Lord Bates: This is a minor, probing amendment to test where the Government stand in relation to the £50,000 threshold for the business rate supplement. What is going to happen is that, as rateable values increase, as we hope they will, particularly as the country climbs out of recession, and as prices increase, more and more businesses will come within the reach of the £50,000 threshold. The Minister has made clear on a number of occasions that the desire is not to see small businesses unduly impacted by these measures and to see them exempted. Therefore, we want to know what position the Government are thinking of in relation to upgrading this threshold when it comes.
On a specific technical point, it would be good if the Minister would comment on the position of those businesses which have been exempt this year because they are under the £50,000 threshold. Next year, there is the revaluation. Does that mean that those businesses that are exempt this year will also be exempt next year? Clearly, businesses next year are going to be in for a very tough time when it comes to business rates. The 3 per cent deferral in the increase in the business rates, which was due to be levied on 6 April this year, has been moved to next year. There will be the revaluation itself, community infrastructure levies, congestion charging and workplace parking levies. A whole range of things are being talked about that will hit businesses just as they are potentially struggling to emerge from this very deep recession. I wonder whether the Minister, who has been in generous mood to the Committee this afternoon in giving way on a number of points, might like to extend that generosity to hard-pressed businesses by giving a positive response to this minor amendment. I beg to move.
Baroness Andrews: The noble Lord has sketched out the context in terms of the difficulties that businesses are facing, like the rest of the country. I was pleased,
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This is a useful amendment that enables me, I hope, to reassure the noble Lord. I will deal with the specific question on the threshold first, and then say a little about the amendment because it raises some interesting questions. I understand the noble Lord’s concerns that if the rateable values increase—on the basis of past revaluations, it is more likely that they will increase rather than decrease—then the threshold of £50,000 that was committed to in the White Paper will protect fewer businesses than we might expect based on current rateable values; that is, more businesses will find themselves over the threshold. They might technically find themselves brought within the scope of BRS on that basis.
I stress that levying authorities have the freedom to provide additional safeguards for business. The baseline is £50,000. If levying authorities are concerned about the impact on business on the basis of the next revaluation, they are sensible enough to know that the way to deal with that is to raise the threshold above £50,000. They can do that to exempt businesses that have come into the net as a result of revaluation. They will also be able to stagger the supplement—for example, setting the BRS so that premises with rateable values just above the threshold will attract a lower supplement than premises with rateable values that far exceed the threshold. They have the scope to do that within the 2 per cent. Within the terms and spirit of the partnership that they are trying to construct around BRS, there is scope for local authorities to be flexible and proportionate about what they are trying to do.
The amendment itself raises interesting questions. One reason that we cannot accept it is that tying the threshold increase into a national hike, as the amendment implies, does not deal with the serious variability that we get in our local communities and the need to protect those communities, particularly smaller businesses. Based on the 2007 figures, we know that more than 90 per cent of non-domestic properties will be exempt from BRS, and that in 2010 rateable values will change to reflect the movements there have been in the property markets since the last revaluation in 2005. There will be variation between regions and sectors: in some places properties will face an increase in their RV; others will see a fall. For rate payers who will face a significant rise in their rate bills on revaluation, we have the transitional relief scheme which staggers increases over a period of time.
We need to balance three key issues: the interests of business; the need to allow local areas to raise meaningful levels of revenue; and the need to allow flexibility so that local needs can be taken into account in any BRS. At the current time, the methodology set out in the Bill around the £50,000 threshold gives us that certainty. It also gives us the important local variability which will help the levying authorities do what is right for their areas.
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