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Finally, as regards Amendment 61C, if I have read Clause 24(7) correctly, the cancellation does not apply where a BRS has come to an end. Does that mean that if the Secretary of State cancels the BRS at a particular date, a rate payer who has failed to pay the BRS due before that date is able to avoid paying? I hope that is a clear question even if my introduction to the amendment was a little garbled. Clause 24(7) reads to me as though it might be possible to avoid enforcement simply because the BRS has ended. I beg to move.
Lord Bates: We do not have a particularly strong view on Amendments 58 and 61C. I am sure they are worthy, but we do not have a firm view on them. Amendment 61A seeks to ensure that the Secretary of State might give refunds or credits. Clearly, we wholly support that as it is consistent with our approach to the Bill. In many projects which have begun recently, the costs of raw materials such as steel fabrication and so on have declined dramatically, as have the costs of labour in certain parts of the country as people are eager to find work. It is important that, where a project comes in under budget thanks to good management, there is the flexibility to refund the money whence it came. We are very supportive of Amendment 61A.
Baroness Andrews: Amendment 58 would potentially allow the levying authority to determine when to stop collecting and enforcing a BRS for a project it had abandoned. The reason we do not think the amendment is appropriate is not because we do not think levying authorities would behave honourably but because it assumes circumstances where relationships and projects have collapsed and a fair degree of chaos obtains because things have not worked out as they were supposed to. Under those circumstances, it is important to avoid the potential for people to claim that the levying authority is acting in a prejudicial or unfair way. If things have gone that sour, those who are paying the supplement have to have confidence that the BRS will cease as soon as possible.
Perfectly pragmatically, we think that only a party outside the levying authority would have that degree of impartiality and would be seen to be acting impartially. If we left the decision with the levying authority, it would put it in a vulnerable position because, unless it decided to stop collecting the BRS the day the project was abandonedand I cannot see that that would happenit could be open to claims that it was acting dishonourably. That is why we have made provisions for a BRS to be collected and enforced beyond the abandonment of a project. It allows for the decision to be made in a way that would not leave the levying authority open to allegations of unfair play. That is why the Bill gives the Secretary of State the power to specify this in regulations.
Amendment 61A, on refunds, broadens the provisions in paragraph 3(1) of Schedule 2 to the Bill, which deals with refunds where a BRS has ended and the BRS revenue account is in credit. The amendment would allow the Secretary of State to make regulations governing refunds in general, including in cases where a BRS has not come to an end.
I absolutely understand that there needs to be clarity in terms of how refunds should be handled, including in cases of overpayment. The amendment is, however, covered by Clause 21, which already makes provision for the Secretary of State to make regulations governing refunds of BRS. Clause 21(2)(a) makes provision for the Secretary of State to make regulations in respect of refunds in those cases where a ratepayer has overpaid during the course of the BRS. That is achieved by reference to the Local Government Act 1988. The noble Baronesss precise question was whether this covers arrangements during the course of the BRS. I understand that it does. I hope that that will help.
Amendment 61C would allow a levying authority to continue collecting or recovering the BRS even if it had been cancelled by the Secretary of State. The Bill provides that the collection and recovery should cease if a BRS is cancelled by the Secretary of State. As we have just debated, the Secretary of State will intervene only as a last resortfor example, when the levying authority has used the supplement for a different purpose than was set out in the prospectus and has not met the requirements set out for variations in Clause 10.
I absolutely agree that it would not be right to ask local businesses to continue paying the BRS for a project that has gone so wrong. It is right that all attempts to collect the BRS in such circumstances should cease. As I remember it, that is the answer to the noble Baronesss question; in other words, yes. I hope that I have remembered the question correctly and that the answer is, indeed, yes. With that, I hope that the noble Baroness will withdraw her amendment.
Baroness Hamwee: I cannot quite remember how I framed the question. I am not sure whether I was expecting the answer yes or the answer no, for the classicists among us. I will have to go back and read that. My concern was essentially about evasion, so if the answer is yes it might be a bad one.
I note what the Minister says about Amendment 58. I am still not sure that Amendment 61A, on the refunds, has got to the point that the noble Lord, Lord Bates, and I seek. The answer was framed in terms of overpayment. It is a pretty technical point, even though it might seem to be an entirely common-sense one to the ratepayers. In my mind, the BRS is not the same sort of animal as national non-domestic rates for this purpose. It deals with a particular project, which may speed up, slow down, or change a bit and so on. I can therefore see that there could be circumstances where a refund would be appropriate for BRS, but which would be completely inappropriatesimply nowhere near to applyingfor the NNDR. Again, it might be useful to discuss this after this stage. I beg leave to withdraw the amendment.
Baroness Hamwee: We are speeding up to finish this before the witching hour of 7.45 pm. Amendment 59 would provide for expenses incurred in preparation for collection or recovery of the BRS to be recovered under Clause 22. Amendment 60 would take out the subsection about the administrative expenses to be paid by the levying authority not exceeding the amount prescribed in regulations. On that second point, I would have thought it should be the actual amount that is borne by the levying authority.
Generally, I do not believe that the billing authorities should be out of pocket. That point has been made in particular by London Councils, and it applies more broadly. In London, there is a particular point, in that it will be the first area to have a BRS and it will play a pathfinder role. It will have set-up costs, software upgrades and so on, which will benefit those who follow after. Those additional costs incurred by the boroughs should be recognised and the costs repaid. London Councils made the quite proper points that these matters should be in the Bill and not in regulations, which are relatively easily changed, and that the recovery of costs is a point of principle. I beg to move.
Baroness Andrews: I hope that I can satisfy the noble Baroness on this point. Amendment 59 would enable billing authorities to be able to recover the costs that they incur in preparing for the collection and recovery of BRS. Amendment 60 would remove the power for the Secretary of State to set a cap on the amount to be paid by levying authorities.
We have issued the consultation paper with our proposals for secondary legislation that will be needed to enable BRS to be levied. The consultation paper covers the arrangements for the collection and
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It is right that billing authorities should be able to cover the legitimate costs that they incur in collecting and enforcing payment of BRS; we are agreed on that. But it is equally important that such costs should be proportionate to the amount of BRS collected. Those businesses that will be paying the supplement will accept that there are administrative overheads associated with any project; but those costs must be reasonable. Sums must not be diverted away from the project into collection costs. That is why we have framed the powers in Clause 22 in the way we have. It means that there is provision for reimbursing billing authorities their legitimate costs, which should reassure business.
The consultation document invites views on whether these costs should be a fixed percentage of the annual total amount of BRS to be collected, or whether this should be a fixed amount. A third option is whether this is something that should be agreed locally between the levying authority and the billing authority, subject to an upper limit to provide reassurance for business.
The three-month consultation period will give stakeholders the opportunity to express their views on these options or to come forward with alternative ways of addressing this issue or, indeed, any of the proposed arrangements for administering BRS. I reassure the noble Baroness that our intention, subject to the outcome of the consultation, is that a billing authority should be able to recover the reasonable costs incurred in preparing for, collecting and enforcing BRS. I hope, with that on the record and with the consultation period about to begin, that the noble Baroness can rest assured that a good solution will be found.
Baroness Hamwee: Of course, I tabled these amendments before the consultation document was published. This may not be a good, liberal attitude but, on an issue that would not be subject to consultation, the billing authority should not be stuck with costs that are essentially imposed upon it by the decisions of the levying authority. However, I will think about what the noble Baroness has said, and I beg leave to withdraw the amendment.
(1A) The requirements under section 7(1) or 10(7) to hold a ballot do not apply in relation to a BRS imposed by the Greater London Authority for the purpose of raising money for expenditure on a project where
(a) the project begins before the commencement of section 1; and
(b) the chargeable period of the BRS begins on or before 1st April 2011.
( ) For the avoidance of doubt it is hereby declared that Regulation 14(6) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2005 (which provides that the alterations made to correct inaccuracies in local rating lists shall have effect from the day on which alteration is made) shall apply to any lists affecting the liability to pay BRS; and where such an alteration affecting liability to pay BRS is made, it shall in no case have retrospective effect without error or default on the part of a ratepayer.
Lord Bates: I am conscious of the time and the sheer joy that overcame the Committee as we heard the government Front Bench concede an amendment. That has been a rare treat and worth sitting through four hours for. We appreciate it.
I say at the start, in case people are getting a little agitated, that I do not intend to speak to the amendment for more than a couple of minutes or delay the Committee further. However, I want to raise an important point. The two amendments in this group would alter the legislation to say that, where an alteration is made due to an error which is not the fault of the ratepayer, there shall be no retrospective effect.
As the amendment is phrased, I can almost hear a collective sigh of, Well, of course there could be no instance where there was no fault; there would be no retrospective element to a business rates supplement. However, I am afraid that we have precedent in the taxes on ports which were levied retrospectively. In May 2006, the Valuation Office Agency undertook a revaluation of 55 statutory ports in England and Wales. It concluded in 2008 that there was a case for revaluation of those single businesses and then decided to backdate it to 2005. The effect was to fling many viable businesses into severe difficulty at this critical time. In fact, a number of them have been forced into insolvency. Technically, although they have longer to pay off the arrearsthey can do so over eight yearsthis has meant that the effect of those arrears must be held on their balance sheets.
The Treasury Select Committee has looked into this and has argued that there should be no retrospection on this particular tax. It was debated, as I am sure the Minister recalls, on the Floor of the House on 18 March. There, the Government were defeated by 77 votes to 69, if my memory serves me correctly. Therefore, there was a moral case for tackling this iniquitous tax, which is placing so many businesses in difficulty at present. The point of tabling the amendment at this stage is simply to say that it is unthinkable that there would be circumstances where the events suggested in the amendment would give rise to a charge on the taxpayer. Therefore, in the interests of consistency, the Government should extend the spirit of joy and generosity which has broken out here in the Moses Room to these needy businesses which have not been at fault but have been clobbered with this retrospective tax of £124 million. I beg to move.
Baroness Hamwee: The noble Lord and the Minister will not be surprised to hear that we support the amendment. It has just occurred to me that it is not logical that this amendment is allowed to be tabled when a more extensive amendment about BIDs outside BRS areas is not. I do not see the distinction, although I do not expect the Minister to respond to that.
Baroness Andrews: I am afraid that the joy will now be confined because, much as I would like to cave in completely and agree to the noble Lords amendment, I am afraid that I cannot do so. However, I know why he has raised the question of the ports. We had a long and, I believe, thorough and honourable debate on what had happened regarding ports, and I shall not reiterate any of that here. The noble Lord has put his views on the record and I completely respect that. We did what we could within the law, although I do not think that generously is a word that he would accept.
With this group of amendments we come up against the fact that BRS, as we have said throughout this debate, builds on the non-domestic rating system. In particular, liability to BRS, and the level of liability, will be based on the rating list entry for any given property. Rating lists can be changed by valuation
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However, the point is that, in the context of the practicalities involved in ascertaining the need for changes to a rating list and then establishing what change is required, backdating has been an essential and, frankly, a fair part of the normal functioning of the rating system. It ensures consistency and fairness between ratepayers, and it should carry through into the BRS system. I believe it is only right that we maintain this consistency; otherwise, businesses occupying properties of the same rateable values will be liable for different BRS bills. It would be unfair to businesses that had been paying the correct supplement if others had been paying smaller BRS bills.
Therefore, much as I would like to continue the spirit of co-operation, I am afraid that I cannot do so, but I appreciate that it is not inappropriate to end this Committee stage on an issue of substantial interest.
Lord Bates: I cannot say that I am grateful for that response, as obviously I am not. Perhaps I am more grateful that I was allowed to table the amendment, given the comment of the noble Baroness, Lady Hamwee, who is expert in these matters. I can say only that the points have been made and the comments are on the record, and we will hope that the authorities which were gracious and charitable enough to allow this amendment to be tabled in Committee might be so inclined when it comes back on Report. I beg leave to withdraw the amendment.
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