If I can help, because I shared the confusion of my noble friend Lord Hodgson, I think what is meant in Amendment 52ZA by “the owners” is the majority owners, the shareholders, who must approach the minority investors. In the absence of the noble Lord, Lord Mendelsohn—if I can read his mind—that clearly makes sense but, of course, it is going to be extremely difficult where public companies go through a pre-pack, which does happen, for them to contact all the investors. In paragraph (b), where it says,

“any personnel advising on pre-pack proceedings”,

I am not sure whether that is meant to include accountancy firms, and whether personnel means internal or external. I have argued for many years that there should be much greater investigation into the role of accountancy firms in insolvency situations. They are often called in by the banks to investigate a company, but they have an incentive for their report to recommend an insolvency procedure because they are immediately subsequently appointed as the administrator, receiver or liquidator. I can see the economic argument for and benefit of that, but I have also seen instances where, frankly, the accountancy firm concerned has just pushed a perfectly good company into administration and extracted millions of pounds of fees—I do not exaggerate—through that insolvency procedure.

These amendments are welcome to the extent that they raise these questions. There is a particular problem with the interaction between current insolvency legislation and the current employment legislation, which leads to the sort of situation discussed earlier. There needs to be a much more holistic approach to both employment and insolvency law because people in such circumstances are often under extreme pressure of all sorts. It is difficult for them to clarify their legal position at extreme speed. We must try to find a way to assist people.

I particularly welcome and am interested in Amendment 52ZD, which seems to have its roots in Chapter 11. That is a proposal that merits further discussion and reflection, perhaps on another Bill at another time, but it is good to see it raised in a Bill that has the title “Enterprise”.

6.45 pm

Baroness Neville-Rolfe: My Lords, I welcome the spirit of these amendments, which intend to improve the functioning of insolvency. I am delighted to be able to confirm that today a number of industry reforms to pre-packs, recommended by Teresa Graham and her review, have been introduced. I am glad to hear support for those changes from my noble friend Lord Leigh of Hurley. Creditors will inevitably lose some money when a company fails, and this is unavoidable. However, in delivering these voluntary pre-pack reforms, creditor bodies and the insolvency industry have come together in a good way to support the reforms. I agree with my noble friend Lord Hodgson that creditors need confidence that the best deal is obtainable.

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Another cause for celebration is that from today a further reform introduces new guidance on marketing to ensure that creditors can be confident that they are receiving the best price for the sale of the insolvent business, but these changes need to be given time to take effect before yet further changes are considered. The Government will undertake a review once these have bedded in.

On small businesses, the redundancy payments scheme provides valuable assistance to employees when their employer enters insolvency. All employees can access the scheme. There has recently been consultation on collective redundancies and the outcomes for employees in an insolvency. The findings will be published in due course.

The existing law on the priority of payments to creditors in an insolvency seeks to ensure that there is a fair distribution of a company’s assets. Any change to give preference to the types of small business set out in the amendment would, of course, have to be at the expense of other creditors. Giving priority to such creditors would have wider consequences, such as increasing the cost of suppliers from other creditors, or higher costs of borrowing for businesses in general. The Government do not consider that an evidence-based and sufficient case has been made for changing the long-established order of priority in that respect.

On Amendment 52ZD, it is obviously important that, if a viable company is unable to pay its debts, it is given an opportunity to continue as a going concern. That is why the insolvency regime already provides for a moratorium. It is important that any extension of the existing moratoria offers appropriate safeguards and protections to creditors. Otherwise, there is a risk that businesses will find financing more difficult.

I am so sorry that the noble Lord, Lord Mendelsohn, is not here, because he has made a valuable point with his work on “debtor in possession”, elaborated in a helpful note that he sent me over the summer. I agree that viable businesses should allow sufficient time to develop a rescue plan, and I am therefore very pleased to be able to say today that, while we cannot accept an amendment to this Bill, the Government are already reviewing this area and we will announce our proposals in due course.

I hope that the noble Lord has found my explanations reassuring in this area, and on that basis feels able not to press his amendment.

Lord Stevenson of Balmacara: I cannot really call these probing amendments, because they were not really probing anything—they were really there to stick pins into people to get them to take a bit more interest in this area. But I think that my pins can now be removed. As has been said, the amendments are of interest and, where appropriate, they can be looked at again. I am delighted, and I am sure that my noble friend Lord Mendelsohn will be particularly pleased, that the ideas behind the proposal of a business debtor in possession can be given a bit more thought—and they certainly need it, since they were not meant to be finished in any form.

I was slightly trembling when the noble Lord, Lord Hodgson, said that he had a few questions that he

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wanted me to answer, because I am not the sort of person who can answer them, but I was lucky to have friends in the Room and did not get too far behind.

I thank noble Lords for the debate, which was meant genuinely to add something in the medium term. With that, I beg leave to withdraw the amendment.

Amendment 52ZA withdrawn.

Amendment 52ZBA, in substitution for Amendment 52ZB, not moved.

Amendment 52ZCA, in substitution for Amendment 52ZC, not moved.

Amendment 52ZD not moved.

Clause 20: Insurance contracts: implied term about payment of claims

Amendment 52A

Moved by The Earl of Kinnoull

52A: Clause 20, page 37, line 40, after “insurance” insert “except an excluded contract”

The Earl of Kinnoull (CB): In moving the amendment, I shall speak also to Amendment 52C. I declare my interests as in the register. I am seeking to carve out business that is placed today in London’s international insurance and reinsurance markets from the insurance-related clauses of the Bill—Clauses 20 and 21. In tabling the amendments, I have had a lot of help from the Lloyd’s Market Association, or LMA, and the International Underwriting Association of London, or IUA, which are the two market associations representing all the insurers involved in those markets in London. We have the LMA’s CEO and his legal director here today, watching. I also very much appreciate the help that I have had from the noble Lord, Lord Flight, who has been full of enthusiasm and interesting points. Finally, I thank the Minister, who saw us all in her room, armed as she was with a formidable team, which included people from the Treasury and the Law Commission. It was a very helpful discussion on a tricky area, where the businesses involved mean the Government and the country well. We promised to supply the Minister with some further evidence, which has started to appear at the LMA, and we hope to communicate that evidence to the Minister later in the week.

Late payment of valid claims by participants in the insurance markets is something that the vast majority of those markets strongly dislike. It is very irritating as an insurer trying to do a good job to see someone doing a bad job and making a business out of not paying their valid claims on time. The ombudsman and regulators have done quite a good job here in reducing the size of the problem over the years, and have certainly helped a lot in making the annualised impact benefit be assessed at £1 million, as it was in the impact assessment for the Bill. I am sure that it would have been a lot bigger in older years.

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The London market is peculiarly big. In November 2014, the Boston Consulting Group did an assessment of the market and thought that it had annualised gross written premiums of £60 billion; 48,000 people worked in it; and it represented 20% of the City’s GDP, about 8% of London’s GDP and approaching 2% of the UK’s GDP. I should say that of the £60 billion, about £8 billion is affected by the Bill.

International insurance is a highly competitive world. The London market is much the largest in the world, but we should be aware that other markets are constantly nipping at its heels. Business comes to London not just because of London’s 300-year record of paying claims on time and its infrastructure but because the capital is here. I want to concentrate on the reason that the capital is here. Most players active in the London market are active in at least one other market around the world, if not all of them. They can meet from time to time to decide where to deploy their capital. Obviously, they will try to deploy it in whichever market they think it will have the easiest ride and present them with the opportunity to make the best profits.

Insurance is just like any business, in that a percentage of claims give rise to disputes. Unamended, the Bill could, the LMA, the IUA and I feel, lead to an “unreasonable delay” cause of action being introduced as an extra part of many disputed claims, leading in turn to extra claims costs and a lot of aggravation for the insurers concerned—in other words, grit in the machinery. That would naturally be less attractive to capital. Many factors decide where you want to deploy your capital as an insurance group, but I put it to the Minister that one wants to try to ensure that we do not have grit in the London machine, because any redirection of capital elsewhere would be damaging to the London markets.

The amendments carve out two things. The first is reinsurance, where the only parties involved in the transactions are insurers. I very much hope that that is uncontroversial. The second thing is large risks. Large risks is a concept that we have tied to a European Union definition which is pretty well understood by the professional insurance market—certainly everyone in the London international markets would understand it. We thought that that was a reasonable starting point to discuss how to arrange a carve-out so that there was none of that grit in the London machinery.

The impact assessment for the unamended clause is for a gross benefit of £1 million per annum. In this intensely competitive international market, international insurers find that they are being consistently marked by brokers and other insurers, so someone who does not pay his valid claims on time is very unlikely to be shown a lot of business in future. It is self-policing. It is for that reason that I submit that, of the £1 million gross benefit, not much would come from the international insurance markets. One would have nearly the same gross benefit even with the carve-outs.

I end by saying that my career has been in risk. I look at the upside and downside of things, try to assess probabilities and act accordingly. The upside here of the unamended Bill is some portion of the £1 million per annum annual benefit—I have tried to

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say that it is a small portion. The downside is needless damage to a £60 billion market that is of great benefit to the United Kingdom.

Lord Flight (Con): My Lords, I support the amendments of the noble Earl, Lord Kinnoull. I do not have any direct interest in Lloyd’s, but I endeavour to keep my eyes and ears open to things that come through Parliament which may be acutely damaging to our financial services industry and the City of London. As many noble Lords will know, I raised precisely the same point at Second Reading.

It is important also to note, as the noble Earl, Lord Kinnoull, pointed out, that the whole of the Lloyd’s industry is behind him on these points. The various trade bodies and organisational bodies, several of whom are here today, are as concerned as he and I—he more particularly—about the risks here. My understanding is that the Minister has taken on board pretty much the Lloyd’s reinsurance situation, which is covered by paragraph (b) of Amendment 52C, but certainly wants more evidence relating to Amendment 52C, which is the potential risk of damaging the large risks market. Amendment 52C spells out what the large risks market is and its definition under the 2009 EU directive.

7 pm

Although the definition of large markets goes down to £6 million or £7 million, which is not that large, it needs to be made clear that the business that occurs in the large markets is a small number of very large amounts of premium income. As the noble Earl has pointed out, this has increased substantially to £60 billion per annum, with at least £8 billion of that potentially directly affected by the Government’s proposals in the Bill. I was amazed to learn that this large premium income has grown to 21% of the City’s GDP and is up from 8% in 2013. This has been a really good business area for the UK.

The main point, which the noble Earl, Lord Kinnoull, made extremely politely, is that the Government would be mad to put at risk such a valuable area of business. It might not be affected by the provisions of this Bill but if it is I would not want to be the Minister who had pushed through the legislation that wrecked London’s large premium insurance business. What is the risk? The risk is that settlement gets bogged down with legal processes, that people can go to law if they want merely potentially to delay what they are going to have to pay and, instead of it being a well-oiled, smoothly operating market, it will get affected by legal hiccups. If that were to occur, the temptation is simply for the business to move elsewhere, a move potentially even to New York, where there are not such problems.

It is crucial that the industry produces the evidence for which the Government have asked but that the Government pay heed to what the whole of the Lloyd’s industry is saying. In essence, it is the same point raised at the time of the Insurance Bill in 2014. It is the point that the Law Commission warned on at the time and got a similar proposal taken out of the 2014 Bill. I was really rather surprised that we see it back here in this legislation and that the Government have not taken heed of what the Law Commission said, to which I referred at Second Reading.

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However, anyone who has any involvement in risk simply would not deem it appropriate to put at risk the loss of such an extremely good market for London over a point that is not causing trouble. There is no evidence of late-payment problems in the large insurance market. It is FCA-regulated and, unlike other areas, particularly large organisations late-paying small supplier organisations, that sort of point is completely irrelevant to this market. I hope that the Government will take heed of the arguments behind these amendments and potentially produce their own amendments on Report.

Baroness Noakes (Con): My Lords, I have not spoken before on this Bill and, indeed, I would not have spoken had I not seen the amendments tabled by the noble Earl, Lord Kinnoull. I was very happy to see Clause 20 in the Bill and I would not have spoken had it not been threatened in some way. I should explain that I was a member of the Special Public Bill Committee which considered the Insurance Bill which became the Insurance Act 2015. As noble Lords may be aware, that was a Law Commission Bill, which is handled under the special procedure in your Lordships’ House, which means that the Law Commission produces technical amendments to the law and they go through on the basis that they are uncontentious.

Clause 20 that we have before us appeared in the draft legislation which the Law Commission put forward, but when the Government tabled their Bill for consideration by the Special Public Bill Committee it did not include that clause. We examined that very carefully as part of the Insurance Bill Committee. I believe the Government deemed the clause was contentious because of lobbying by the Lloyd’s Market Association and the International Underwriting Association. At the final stage of the Special Public Bill Committee, I introduced an amendment in precisely the terms in Clause 20, which is not my cleverness in drafting but the drafting of the Law Commission in the original Bill. I should say that the Law Commission contacted me last week, and it remains of the view that this is an important change to the law which it fully stands behind.

Needless to say, in the Special Public Bill Committee—which is a version of Grand Committee, in effect—that was not pressed. I was then leaned on—noble Lords may be shocked at this—by the powers that be in my party organisation not to move the amendment again on Report. The Government then managed to schedule the business on a day when I was not able to be in the House, so that was an end to it, so the Insurance Bill went through without properly considering the issue. While the Lloyd’s Market Association and the IUA remain against the clause, others in the insurance industry are quite content for it to go through, and we were quite clear in the Special Public Bill Committee that the weight of opinion in the insurance industry, setting aside the two organisations that the noble Earl mentioned, was in favour of this amendment, even though the Association of British Insurers thought that there might be a possibility that it would lead to claims management company activity, which is one of the scourges of the financial services industry at the moment. While that might have an undesirable consequence, it was not a good reason not to legislate for something that was right.

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I find it difficult to understand why there could be an objection to a clause which just states,

“the insurer must pay any sums due … within a reasonable time”,

with reasonable time being well defined to cover what one would think would be a reasonable prospect of excuse for non-payment and therefore not imposing any particular amendment. The noble Earl’s amendment seeks to knock out reinsurance contracts—I rather take the view that they are between consenting adults and need not form part of this—and large risks. Large risks might sound as if they are huge things that are of no concern to small companies, but they are well within the ambit of many medium-sized companies in this country. One piece of the evidence that the Mactavish Group produced in the context of the Special Public Bill Committee and for the Treasury when it was considering what to do with this showed that in the previous four years 40% businesses with a turnover of more than £50 million had suffered strategically significant losses, that 45% of their claims were disputed and that the average time for resolution was three years. If you are a medium-sized company with a strategically significant claim which is being held up and takes a long time, it could be the difference between survival and business failure. It seems only right and proper that we should have within insurance law, fully in line with the Law Commission’s recommendations, an implied term of reasonableness of payment. I hope very much that the Minister will resist these amendments.

Baroness Hayter of Kentish Town (Lab): My Lords, like the noble Baroness, Lady Noakes, we were rather sorry to see these amendments tabled by the noble Earl, Lord Kinnoull, as we support Clauses 20 and 21, which help consumers and businesses facing delayed payment of insurance claims to get damages for resulting losses. We certainly do not want to see these provisions watered down. Indeed, as the noble Baroness, Lady Noakes, recalled, it was the Law Commission and the Scottish Law Commission which recommended that insurers should be under a legal obligation to pay valid claims within a reasonable time. I thought it was the Law Commission which drafted these clauses and I am delighted to be in the Room with the true author.

The Bill puts the current FOS practice, which is to award compensation for unfairly refusing or delaying insurance claims, on to a statutory footing. Importantly, it will provide small businesses with recourse to the courts to claim such damages. As we have heard, Amendments 52A and 52C would remove the insurance of large risks from the provisions of Clause 20. That would effectively exclude many SMEs and their risks from the very protections that the Government—in our view, quite rightly—are seeking to introduce.

As we have heard, it is not just the Opposition who resist these and indeed the later amendments, which bring insurance contracts into line with any other normal contract. Some 80% of those responding to the Law Commission’s consultation agreed that insurers should be under a legal obligation to pay valid claims within a reasonable time. Our understanding is that not a single member of the ABI was against the clause. Indeed, some were strongly supportive, pointing out

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that for their SME customers, a claim being paid in a few months can be the difference between survival and failure.

It is almost a legal fiction which means that the normal contract law—that is, if one party breaks a contract, the other can claim damages—does not apply to insurance law in England. It is time to change this. The Law Commission is clear that this is appropriate for the London market and it opposes the attempt in these amendments to exclude it. Any carve-out for “large risks”, as defined in Solvency II, would exclude many consumer and SME risks. I leave the Minister to take the Committee through the finer details of the Law Commission’s argument, should she feel it necessary. I would just add that in regard to excluding some forms of large risk, the Law Commission found that stakeholders were keen to see a single regime for all non-consumer contracts and did not support defining somewhat arbitrary boundaries, which add to transaction costs.

Baroness Neville-Rolfe: My Lords, I thank the noble Earl, Lord Kinnoull, for his amendments and for taking the trouble to meet me and representatives from the London insurance market, and welcome my noble friend Lord Flight, who is an expert in this area. I am also very glad that my noble friend Lady Noakes is with us and thank her for her support for the late payment of insurance provisions; that nicely complements the discussions we have had on other days on late payment for small firms by big firms and retentions. The provisions are, as she says, intended to address a legal anomaly in the current law; that is, that insurers currently have no legal obligation to pay sums due within a reasonable time.

Where late payment does occur, however frequent or infrequent that may be in different parts of the market, it is appropriate that the policyholder should be able to recover any losses suffered as a result. That is why the Bill builds into every contract of insurance an obligation on insurers to pay sums due within a reasonable time. Breach of that obligation may give rise to damages for breach of contract on normal contractual principles.

With his Amendments 52A and 52C, the noble Earl seeks to restrict the types of contracts to which this obligation would apply, excluding reinsurance and certain “large risks”. The clauses in the Bill are the product of a long Law Commission project involving years of engagement with the insurance industry. Stakeholders argued strongly in favour of a single regime for all non-consumer insurance contracts, avoiding boundaries which, by their nature, are complex and arbitrary, and add to legal expense. If different rules applied to different types or sizes of business, insurers would have to identify which side of the boundary each prospective policyholder fell before entering into the policy. This would severely slow down and add expense to the placement process.

7.15 pm

The particular definition that the noble Earl tabled for “large risks”, based on the Solvency II definition, demonstrates the difficulty of defining boundaries.

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The definition is complex and has several different elements, but it would exclude all insurance contracts involving a policyholder with a net turnover of €12.8 million and more than 250 employees. This would exclude many medium-sized businesses, which, frankly, are precisely the target of the Bill.

As the late payment provisions currently appear in the Bill, they rectify a gap in the legal regime and encourage responsible payment, for the benefit of policyholders and the perception of the market. These arguments apply for all insurance contracts, including reinsurance, which are treated by the law in the same way as all other non-consumer insurance contracts.

As noble Lords would expect, I am very alert to any argument that there is a threat to the competitiveness of the UK and of London as a world-leading insurance hub. However, the provisions in the Bill are specifically designed to work for the London market, including reinsurance contracts, as well as for SME insurance contracts. We are not planning anything further.

The provisions are flexible so that parties can agree, under Clause 21, on an exclusion or limitation of liability for consequential losses. Such contractual limitations are common in many forms of commercial contract. Whether contracting out is appropriate in individual cases will be a matter for commercial negotiation between insurers and their customers and/or brokers. However, it is in the UK’s interest that the London market is seen to be a good place to contract and a place where customers are paid on time. The time has come to make these much-delayed provisions, as the noble Baroness, Lady Hayter, said.

I hope that noble Lords will recognise, on reflection, that the proposed carve-outs are neither necessary nor appropriate. The provisions have been carefully prepared. On this basis, I ask that the amendments be withdrawn.

The Earl of Kinnoull: I thank all noble Lords who have taken part in the debate and I thank the Minister in particular. As ever, she has put forward very beguiling logic. With her notable business career she must understand that industry associations with the reputation of those at the centre of the London insurance markets do not lightly make suggestions like this.

There was no intention in anything that we did to get at the basis of the Bill, which is to ensure that SMEs and consumers in Britain get a fair deal from valid insurers. We genuinely have a concern. I put to the Minister that the trouble with logic in a business context is that sometimes beguiling logic does not quite fit in the business world. I know that she will have many examples of that. We will put further proposals to her on the basis of the reinsurance carve-out, but we will need to regroup. I hope that she will read that and consider it again. On that basis, I am happy to withdraw the amendment.

Amendment 52A withdrawn.

Amendments 52B and 52C not moved.

Clause 20 agreed.

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Clause 21: Contracting out of the implied term about payment of claims

Amendments 52D and 52E not moved.

Clause 21 agreed.

Clause 22: Disclosure of HMRC information in connection with non-domestic rating

Amendment 52F

Moved by Lord Stevenson of Balmacara

52F: Clause 22, page 39, leave out lines 20 to 22 and insert—

“(1) An officer of the Valuation Office of Her Majesty’s Revenue and Customs may disclose Revenue and Customs information to—

(a) a qualifying person for a qualifying purpose;

(b) a ratepayer for a hereditament.

(1A) Information disclosed under subsection (1)(b) may—

(a) be disclosed for the purpose of providing the ratepayer with all information used to assist determination of the valuation of any hereditament for which the ratepayer is responsible for the non-domestic rating liability, and may be retained and used for that purpose, and

(b) include information relating to hereditaments not owned by that ratepayer.”

Lord Stevenson of Balmacara: My Lords, I have been beguiling the Committee with the fact that I have had to act for several other proposers of amendments because sicknesses have left us a bit bereft. On this occasion, I can switch track slightly because here we are doing a decent thing in allowing some amendments on valuation to be debated on behalf of someone who cannot be present which I think he would certainly have tabled if he were here. We agree with them, so we have tabled them in our own right.

The noble Earl, Lord Lytton, has provided us with a brief which I will be drawing heavily on. However, as with the other amendments, I do not have the expertise to do justice to some of their individual elements. I suggest to the Committee that we take all the amendments that relate to valuation and the Valuation Office Agency together, which, if we do it cleverly and efficiently, will take us neatly to the witching hour of 7.30 pm, when we will be able to feel that we have done a good job. I will be imposing heavily on the good will of the civil servants briefing the Minister, but I hope that that will be sufficient. I am joined by the noble Lord, Lord Stoneham, who has put his name to one of the amendments.

The issue that unites all the amendments is that everybody involved in valuation agrees that the current arrangements for the business rates system, particularly the appeal system, are simply unsustainable. What is missing from the Bill is a balance between the need to remove ill-founded and speculative appeals with the need to preserve fair access to justice for those who feel that they have a case to argue.

At the heart of this, unifying all the amendments, is information, although I will speak specifically to the question of festivals, which arises in Amendment 52R. Therefore, most of my remarks will be about the generality of the VOA and how we may deal with it in future, but I will spend a few minutes on festivals.

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We have drawn on work done by the Federation of Small Businesses, which also feels strongly about this. I think there is an alliance out there on this issue, and I look forward to hearing the Minister’s response.

Amendment 52F and those which are grouped with it, Amendments 52H to 52K and 52N, relate to whether information currently withheld by the VOA should be made available to those who have a genuine interest. I will not say much more than that, because that seems to be a point of fairness rather than a point of law: those who are being rated and having rates applied to them should be able to know the basis of that and to make judgments with their professional advisers fully informed.

Amendment 52G moves us to the billing authority and makes provision for disclosure of information about issues relating to a business improvement district scheme, which is a slightly different point but involves the same issue, which is that there is unlikely to be any way to judge what the non-domestic rates yield would be in a bid if you do not have access to that information. Again, limited disclosure would be in the best interests of all concerned.

There is no provision for an ADR ombudsman or other suitable arrangement in the VOA system, and Amendments 52L and 52P suggest that that gap needs to be filled. We would be grateful if the Minister would take that into account. Because of the way in which the UK has implemented the ADR legislation, a range of options is open, and we are not producing one solution against another, but it is fairly clear that there should be an outlet to an external agency such as an ombudsman.

The question of appeals more generally is raised in Amendment 52Q, in which we are also joined by the noble Lord, Lord Stoneham. The proposal in the Bill is that there should be an upfront fee for any appeal. That seems an odd thing to require. The people who will likely be most affected are small businesses, particularly those who are struggling to get started. It does not seem in the best interests of enterprise to require fees to be paid upfront which will not necessarily be returned if an obvious injustice is being done and redress for justice denied is not being provided.

On the question of festivals, we have become aware of the fact that the VOA has begun to raise invoices and seek money from people who have used agricultural land and buildings for cultural events and festivals. One can understand that, when previously rarely used assets are being used for a different purpose, there is obviously a question of whether fair taxation is being applied. It would be hard to argue that using land that was not being used for anything else for a business activity would raise a rateable question.

I hope that the amendment will set off in the Minister’s mind the suggestion that there is something a bit bizarre about constantly asking farmers and others to develop new ways of raising income and then, when they find one in the readymade form of a festival ready to come in on the site, not only to require them to pay rates for it but also to have a retrospective element. That seems rather unfair. I hope that, if only on the question of equity, the Minister might consider favourably the suggestion made by the festivals group that there should be no backdating.

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The situation may have changed, but that does not necessarily mean that those one-off festivals that have happened should suddenly be faced with very substantial Bills—we are talking about £50,000 or £60,000—when people have budgeted on the basis that there would be no such cost. In future, consideration should be given to some form of derogation for short-lived festivals of this type, when clearly there are economic benefits to the whole of the country and to the locality, and a good cultural effect that would be completely lost if the cost exceeded the income. We might be cutting off our noses to spite our faces. I would be grateful if the Minister could consider the amendment. I beg to move.

Lord Stoneham of Droxford (LD): The noble Lord, Lord Stevenson, has masterfully summarised the amendments. I put my name to Amendments 52F and 52P in the interests of trying to improve the processes. In the interest of brevity and trying to improve the timescale, I am happy to give my support formally.

Baroness Neville-Rolfe: I thank my noble friends for proposing these amendments with such swiftness and efficiency, and I shall try to do them justice. The noble Lord, Lord Stevenson, has done fantastic work today in covering so many areas that are usually addressed by others on the Front Bench. As always, I thank the noble Lord, Lord Stoneham, for his involvement.

I appreciate that there are concerns, which I share, that an effective business rates system should be based on businesses having a good understanding of their tax bill, underpinned by shared and transparent information. The amendments are about sharing information with the payer. Business rates are determined by taking account of a comparison with other properties. However, it follows from this that the Valuation Office Agency collects and holds commercially sensitive data. For example, it may hold information on the precise terms of rental agreements reached for a group of properties. The VOA has a legitimate duty to protect that information and the interests of the ratepayers who have provided it. That is in everybody’s interests, so we make no apology for having a rigorous system for handling and protecting sensitive information, an important general principle in life.

7.30 pm

We have taken the comments which have been made during the process of consultation and believe we have found a pragmatic solution. A consultation paper was published on Friday which sets out a system in which there are requirements and incentives for ratepayers and the Valuation Office Agency to engage early. Factual information will be established during the so-called check stage, with arguments and evidence being exchanged at the beginning of the second challenge stage, which is far earlier than happens now. This exchange of arguments and evidence is the point at which the Valuation Office Agency is able to provide information to address the ratepayer’s case. These reforms will make a significant difference to how soon ratepayers have access to the relevant information, and they will be able to take it into account when deciding whether to proceed to appeal stage. We look forward to receiving responses to the consultation.

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On providing information to business information districts, the subject of the next amendment, I am not aware that a shortfall in information has been raised directly with government by individual business improvement districts or by any of the BID representative bodies—there are about 200 BIDs and they include places such as the Plaza in Victoria Street—nor was it raised during a broad consultation earlier this year in which the Government sought views on strengthening the role of BIDs in local areas.

Amendment 52L would allow the Secretary of State to regulate to introduce a scheme for alternative dispute resolution for appeals. However, existing powers in the Act already provide for matters to be referred for arbitration. The new appeals system will provide full and structured opportunities for the parties to check and exchange information and arguments. It provides the opportunity for further discussion, where this is necessary to resolve the case, and a right of appeal where matters are still not agreed. These are the essential prerequisites for determining a dispute. The addition of more processes would complicate and slow down the system and could unhelpfully divert the resources of businesses and the Valuation Office Agency. This could potentially result in higher costs, including for business, when we want resource to be focused on speeding up this unacceptably slow system.

Amendment 52P would allow the Secretary of State to regulate the operation of some aspects of the appeals system. These matters are not always appropriately addressed by regulations. The performance of the Valuation Office Agency should be dealt with by a service level agreement, and we have proposed this approach in the consultation paper. Ensuring that all these uses are treated equally in rating is an important principle which maintains fairness across all ratepayers. However, while the Government do not intervene in individual rating valuations, I can assure noble Lords that if there are no permanent physical adaptations to the land to facilitate, for example, festival use, and the duration of the festival is only a matter of a few days, it is unlikely to attract a rating assessment in its own right, and any festival operator or land owner who is unsure of when they may incur a rates bill should contact the Valuation Office Agency to discuss their case and it will be happy to help. I also know that the Valuation Office Agency recognises the need for clarity and consistency in this sector and is working with the industry to draw up guidance to help event organisers. It hopes to have guidance ready in time for the festival season next year. Furthermore, we have given local authorities wide discretionary powers to grant rate relief in circumstances such as these, and where they do so central government picks up, as noble Lords probably know, half of the cost in foregone receipts.

With respect to the exemptions proposed in Amendment 52R and 52M, we are currently conducting a review of business rates and as part of that we are examining the rating of plant and machinery and the role of reliefs and exemptions. The review will conclude by the end of the year, and I can assure noble Lords we will take account of points made in today’s debate. I am sorry that the debate has been cut short but I hope I have been able to persuade noble Lords that the

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Bill is in good shape, that the consultation document issued on Friday gives additional and vital detail, and that the noble Lord will agree to withdraw the amendment.

Lord Stevenson of Balmacara: I am very grateful to the Minister who I think sent a message of cheer to the association that looks after festivals. I am sure that it is delighted. Landowners, some of whom may be present, may also be very pleased at the result. That is a very good response to that issue. I am sure that there are other things touched on in the Minister’s response that we will want to look at but, again, that is a measure of progress and I am sure we can make a way forward on that. I beg leave to withdraw the amendment.

Amendment 52F withdrawn.

Amendments 52G to 52K not moved.

Debate on whether Clause 22 should stand part of the Bill.

Lord Hunt of Wirral (Con): My Lords, in declaring my interests as set out in the register, I welcome the opportunity to discuss the circumstances in which HMRC may disclose information. Although Clause 22 is drafted specifically to deal with the disclosure of information in connection with non-domestic rating, there are other circumstances in which disclosure by HMRC to certain other bodies is not only necessary but desirable.

The Employers’ Liability Tracing Office is one such example. ELTO was established in 2010 to assist injured people in finding the employers’ liability insurer which covered their employer at the relevant time. Since April 2011, it has been a regulatory requirement for EL insurers to provide details of all EL policies issued, as well as some historic data. ELTO’s aim is to create a comprehensive database of insured employers and the compulsory cover provided to them. The drive behind the creation of ELTO was to build a historic record of past insurance, particularly for victims of diseases with a long latency period, such as those caused by asbestos exposure.

However, the main long-term purpose of ELTO is to create a comprehensive and easily searchable database of current policies, which can avoid problems many years into the future. In order to make the database accurate, so that in 30 years’ time a person injured by past exposure to substances at the hands of their employer can trace the right insurance cover which should meet that claim, the database needs to find what IT people know as the “unique identifier”, which confirms beyond doubt that the right company has been identified.

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In the case of employers, that unique piece of information is provided by the employer registration number used by HMRC. The ERN is the number now used in the Pay As You Earn system to identify individual employers. Armed with the ERNs, the database would become truly fit for purpose. ELTO has been pressing HMRC for disclosure of ERN data, but HMRC claims that the law prevents it doing so. Assuming for the moment that HMRC may be right—it rarely pays to argue with the taxman—there is a simple solution, and Clause 22 shows us the way. Where the law is an obstacle to better working, it can be amended. That is, after all, the main purpose of this Bill.

I am therefore considering whether a short amendment to the Bill could resolve this problem. I would welcome a further discussion if the Minister and her hard-working team ever have time to do so to see how best we could proceed. The ELTO database has been introduced precisely because people suffering genuine injury in the future as a result of their employer’s negligence will need easy access to details of the insurance policy that will meet that claim.

Finally, speaking as president of the All-Party Parliamentary Group on Occupational Safety and Health, I would like noble Lords to know that the all-party group is very supportive of the need to make the database accessible, accurate and searchable.

Baroness Neville-Rolfe: My Lords, I am grateful to my noble friend for raising the issue of data sharing between HMRC and the Employers’ Liability Tracing Office. HMRC has already specifically amended its processes to provide employer reference numbers and employment histories when requested by individual applicants. Further, I believe any amendment to allow data sharing between HMRC and the Employers’ Liability Tracing Office would be outside the scope of this Bill.

I understand that, as well as the normal concerns about taxpayers’ confidentiality, HMRC is concerned that disclosing all employer reference numbers would raise issues regarding proportionality and, of course, in today’s circumstances, the potential for fraud. Therefore, I do not think the Bill is the best place to bring forward such a widespread change, but I would be happy to meet my noble friend to understand more about the issue. However, I believe that Clause 22 should stand part of the Bill.

Clause 22 agreed.

Amendments 52L to 52Q not moved.

Clause 23 agreed.

Committee adjourned at 7.42 pm.