Non-Domestic Rating
Bill
Consideration of Lords amendments
Mr Deputy Speaker ( )
I must draw the House’s attention to the fact that financial
privilege is engaged by Lords amendment 1. If Lords amendment 1
is agreed to, I will cause the customary entry waiving Commons
financial privilege to be entered into the Journal.
Clause 13
Requirements for ratepayers etc to provide information
2.33pm
The Parliamentary Under-Secretary of State for Levelling Up,
Housing and Communities ()
I beg to move, That this House agrees with Lords amendment 1.
Mr Deputy Speaker
With this it will be convenient to discuss Lords amendments 2 and
3.
It is a pleasure to return this Bill to this place after its
positive reception, both here initially and in the other place
more recently. Reforming business rates was a manifesto
commitment, and having concluded our review of rates, the Bill
seeks to deliver a fairer and more effective business rates
system.
The amendments that the Government invite the House to support
today are minor and do not change the policy intentions of the
Bill, which we have debated before in this place. Two amendments
deal with the penalties regime for the new duty on ratepayers in
clause 13—they are designed to ensure that the penalties system
is fairer—and the third is a minor and technical amendment that
removes some obsolete wording as a result of another part of the
Bill. I will deal with each amendment briefly.
Lords amendment 1 concerns the civil penalties that the Valuation
Office Agency can apply if ratepayers do not provide information
under the duty. These include an additional daily penalty of £60,
which may only be applied if a ratepayer persistently fails to
meet their obligations following an initial penalty notice. The
Government have listened to the views of the experts in the other
place and agreed to create an additional safeguard for ratepayers
by capping the financial value of penalties that can be imposed
under this provision. Daily penalties will be capped at £1,800,
equivalent to 30 days’ worth of penalties. This change will also
bring the valuation duty in line with the separate duty to
provide His Majesty’s Revenue and Customs with a taxpayer
reference number, for which a cap on penalties is already in
place.
Lords amendment 2 concerns the penalty for the criminal offence
of knowingly or recklessly making a false statement, an offence
that is subject to higher penalties than simply failing to
comply. The Bill prescribes that for a higher penalty to be
applied, the VOA must be satisfied beyond reasonable doubt that
the ratepayer has made the false statement knowingly or
recklessly. Having reflected, we have recognised that we need to
apply the same burden of proof to the procedure on appeal. The
amendment therefore provides that the valuation tribunal must
remit a penalty unless it is satisfied beyond reasonable doubt
that the ratepayer has knowingly or recklessly made a false
statement. This provides additional protection for
ratepayers.
Finally, Lords amendment 3 is a minor and technical change to the
Local Government Finance Act 1988, as a consequential effect of
the provisions in the Bill concerning business rates multipliers.
This is simply a drafting correction to improve the clarity of
the statute book, and the Government do not foresee any practical
effect.
The Government invite the House to agree to three minor
amendments that were unanimously supported in the other place.
Lords amendments 1 and 2 refine and improve the compliance
framework for the new information duty, and Lords amendment 3 is
a minor consequential change to improve the clarity of the
statute book. I commend them to the House.
Mr Deputy Speaker ( )
I call the Opposition Front Bencher.
(Ealing North) (Lab/Co-op)
I am pleased to respond to these three Lords amendments on behalf
of the Opposition. Clause 13 of the Bill introduces new duties on
ratepayers to provide information to the Valuation Office Agency
in order to support digitisation and a shorter revaluation cycle.
It also introduces penalties to promote compliance and
establishes an associated appeal system.
Through the Bill, ratepayers will initially face a penalty for
failing to comply with the new duties the Bill introduces. If,
having received that initial penalty, the ratepayer continues not
to comply for a further 30 days, they will be liable for an
additional penalty of £60 per day. As we heard from the Minister,
Lords amendment 1 caps the total charge arising from that
additional penalty at £1,800, equivalent to 30 days’ worth of
daily fines. As my hon. Friend the Member for Luton North () said on Second Reading, we are
aware of concerns relating to the new duty and the associated
penalties from those representing shops, and small shops in
particular. Although I doubt that all the concerns of those
representative organisations and their members have been
addressed by the Government, we realise that this limit on the
level of the penalty may help to protect ratepayers from much
larger charges while still supporting the Valuation Office
Agency’s move toward frequent revaluations, which we support. On
that basis, we will not be opposing its inclusion in the
Bill.
Through clause 13, the Bill also introduces a new criminal
penalty, which applies if a person makes a false statement while
purporting to comply with the new duties it introduces. The Bill
sets out that the Valuation Office Agency will decide whether an
offence has been committed, and its decision may be appealed to
the Valuation Tribunal for England. As originally drafted, the
Bill permits the tribunal to remit such a penalty when it is not
satisfied beyond reasonable doubt that the person had knowingly
or recklessly made a false statement. Lords amendment 2 would
require, rather than merely permit, the tribunal to remit the
penalty in such circumstances. We believe that the amendment is
sensible, so we will not be opposing its inclusion in the
Bill.
Finally, Lords amendment 3 makes a technical change to the Local
Government Finance Act 1988, omitting section 140(2)(b) of that
Act. That section, which refers to Ministers making separate
estimates of rateable value for England and Wales, has become
obsolete as a result of clause 15 of the Bill, which makes a
separate provision about the calculation of multipliers for
England. As this is essentially a drafting amendment, we will not
be opposing it either.
I am tempted to talk at much greater length about Labour’s plans
to scrap the current system of business rates, replacing it with
a system of business property tax that rebalances the burden of
business property taxation away from the high street and retail
firms towards online tech giants. However, I realise that that
may be out of scope and that time is tight, so I will simply
confirm our intention not to oppose any of these three
amendments.
(Waveney) (Con)
This Bill, unlike the Levelling-up and Regeneration Bill, on
which we considered a further round of Lords amendments
yesterday, has progressed through Parliament quickly. Second
Reading in this place took place on 24 April, and the Bill will
complete its passage today or tomorrow. It was a 2019
Conservative manifesto commitment to carry out a fundamental
review of the business rates system. This Bill is the start of
that process, but it does not mark its completion, and on its own
it cannot be described as fundamental.
The amendments before us are straightforward. Lords amendment 3
is a drafting correction to omit a requirement relating to Wales
that is now obsolete. Lords amendments 1 and 2 relate to the new
duty to notify. They cap the level of, and increase the burden of
proof required for, penalties that will be applied for not
complying with the obligation to give required information to the
Valuation Office Agency. They are to be welcomed, but as
highlighted on Report, this burden should have been much reduced
and there should be reciprocal penalties on the VOA.
As I have mentioned, this Bill must mark the beginning of the
reform of business rates, not the completion of the task.
Business rates remain a heavy and uncertain burden on many
businesses. They act as a brake on growth, disincentivise capital
investments and are a barrier to levelling up. Reform must be
more radical and must be carried out much more quickly.
I urge the Government to strive towards achieving the following
goals. First, the uniform business rate multiplier must be
reduced to an affordable level. The UBR currently sits at 51p in
the pound. At such a high level, it deters investment and
ultimately reduces the tax base. It should be reduced to the
order of 34p, the level at which it was first introduced in 1990.
Lowering the UBR would have the long-term effect of expanding the
tax base. A failure to do this will ultimately see the Government
increasing the UBR on an ever-shrinking tax base, and in doing
so, threatening a vital source of local government revenue.
Secondly, as important as they are to so many businesses, we
ultimately need to remove the myriad sticking plaster reliefs
that are invariably lobbied for and announced at every spring
Budget and autumn statement. They are an implicit admission that
the UBR is too high. The Government have been forced to offer
many of these reliefs as many businesses are unable to pay a UBR
of 51p. By removing these reliefs and reducing the UBR, the
Government would simplify the system and reduce the
administrative burden on both ratepayers and the VOA. Instead of
the annual cliff edges, as businesses lobby for and then
nervously wait for a relief to be extended, such a reform would
introduce an element of long-term certainty, which would
encourage investment.
Finally, while the Government have taken a welcome step in the
right direction by moving to three-year revaluations, they must
keep going towards the ultimate goal of annual valuations.
Shorter valuations are necessary to ensure that business rates
respond to the dynamic and increasingly volatile movements of the
market. It is vital that rateable values are assessed as
frequently as possible to ensure that ratepayers are paying a
fair amount.
My last point is to express regret at the curtailment in the
definition of a “material change of circumstances”. This is a
provision that gives ratepayers recourse to pursue a relief on
their business rates bills when circumstances outside their
control hinder their ability to run their businesses. Despite the
Government’s protestations, the Bill in effect disapplies many
common situations of material change that up to now have been
acknowledged as such and are even described in the VOA’s own
guidance.
In conclusion, this is the start of the reform of business rates,
but it is not the finish. There is some way to go before we reach
that Magnus Magnusson moment. I thank my hon. Friend the Minister
for listening to my concerns during the passage of this Bill, and
I am grateful to him for meeting me last month to discuss the
situation. I have subsequently written to my hon. Friend the
Financial Secretary to the Treasury setting out some ideas as to
how this reform process can be continued. I would be grateful if
he and she committed to completing the task of the fundamental
review of business rates that is so vital for businesses large
and small all around the UK.
2.45pm
I will not seek to detain the House for any more than a few
seconds. I express my gratitude to the shadow Minister, the hon.
Member for Ealing North (), for his constructive
comments and his willingness to support the amendments, as well
as for resisting the temptation to go over again some of the
things we have talked about in previous iterations of this
Bill.
I also thank my hon. Friend the Member for Waveney (), who has been involved since
the beginning. He has done the House a significant service in
both reviewing the Bill and offering his comments during its
passage. As he says, this is a significant change and one that I
think everybody accepts is a big leap forward, particularly on
the revaluation frequency moving from five to three years. While
we are on the subject of late 1990s game shows, although in his
view we have not yet finished this matter—I accept that we never
finish—we are grateful for his “Mastermind” qualities in looking
at this Bill over the past few months.
Lords amendment 1 agreed to.
Lords amendments 2 and 3 agreed to.
