Business Rate Supplements Bill

I shall speak also to Amendment 66A. At Second Reading, I declared my interest as president of the Local Government Association and I raised the question of the limit on business rate supplements which local authorities would be permitted to levy. This limit is currently clearly specified in the Bill at 2p in the pound. This is half of the limit of 4p in the pound which was recommended by Sir Michael Lyons in his independent review of these matters in March 2007. The amendments accept the Bill’s 2p limit at this time, rather than pushing for the Lyons recommendation. All the LGA is seeking is a requirement on the Secretary of State to consult at five-yearly intervals on whether the limit is still appropriate, with the opportunity, if it is not appropriate, to change the limit. This would mean that primary legislation would not be needed if any change was desired. Local authorities work closely with their local businesses and understand and share concerns about placing excessive burdens on business during the current recession. The noble Lord, Lord Tope, noted that some people might fear that councils are sitting waiting to levy the maximum supplements as soon as they can. In reality, a recent survey by the Chief Economic Development Officers’ Society did not find a single local authority that is planning to use the power to apply an additional supplement during the recession. Amendment 48A specifically provides for consultation with local authorities and the business sector. If, following this consultation exercise, the Secretary of State concludes that the upper limit should be varied, then it could be changed by regulation. Changes in the limit would still require an affirmative resolution, so there are further safeguards. The amendment gives the power to vary the limit, which means it could be reduced as well as increased. I would not pretend that in sunnier economic times in the future local authorities might not seek to make the case for setting a higher limit that would provide extra revenues that could make a real difference; after all, the current limit restricts any extra revenue to a maximum of less than 5 per cent of the total business rate. But the Secretary of State could use the provision to reduce the limit, and I hope that provides comfort to any noble Lords who are nervous about these amendments. I beg to move.