Business Rate Supplements Bill

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, for example, that we were able to deal with the potential 5 per cent increase on business rates. Businesses will be able to pay a 2 per cent annual increase in 2009-10 and the remaining 3 per cent over the following two years. That will help to smooth out rates payments. 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.