My Lords, I am rather surprised by the amendment and the tone with which it has been introduced by noble Lords. The reasons for introducing the postponements were quite clear; we are in the middle of one of the most difficult economic situations we have ever had and businesses are suffering from that as well. Therefore, what we can do to help is not to make major changes at this time. I remind noble Lords that the Michael Lyons review was carried out under the previous Government, who decided not to implement any of it, so I do not think we need Michael Lyons quoted to us at the moment.
As noble Lords have said, Clause 25 postpones the 2015 revaluation of business rates. The clause amends some of the most important parts of the business rates legislation so it may be useful if I say a bit about those provisions first.
10.15 pm
As noble Lords have said, business rates bills are found from the rateable value for the property, which is assessed by the Valuation Office Agency, and the multiplier, which is set by the Government. Rental values are set out on a rating list and are updated every five years at a general revaluation. Local rating lists are held by local authorities and contain all rating assessments in their areas. The central rating list is held by the Secretary of State and contains network
properties such as the National Grid. For both types of rating lists, since 1990 rateable values have been updated every five years to reflect changes in the property market, as noble Lords have said. That requirement to revalue every five years is contained in Sections 41 and 52 of the Local Government Finance Act 1988, which this clause amends.
We have had many debates on this over the past few weeks. As we have said, revaluations do not raise any extra revenue. Therefore, postponing the revaluation will have no impact on the total revenue raised from business rates—I think everybody understands that—but revaluations redistribute the total rates burden so that some ratepayers see increases in bills and some see reductions. We recognise that regular revaluations are an important part of the rating system but certainty for business is also important. Of course, if the revaluation is delayed, the current situation pertains.
The Valuation Office Agency’s best estimates of revaluation in 2015, which have been published in full, suggest there will be sharp changes in bills in 2015. The agency believes that 800,000 ratepayers may face increases, compared to only 300,000 seeing reductions. The Valuation Office Agency provides pretty detailed and good valuations, so I think it can be relied upon to produce these sorts of figures. Some sectors such as petrol stations, hotels and pubs would see very significant increases.
Postponing the revaluation for two years to 2017 will give businesses extra certainty to concentrate on delivering growth and maintaining their own business requirements, but we remain committed to regular revaluations so we will also ensure that the five-yearly cycle is reinstated after 2017.
We have provided for both these commitments in Clause 25. It inserts a new subsection (2A) into both Section 41 of the 1988 Act, which deals with local lists, and Section 52, which deals with the central list. The new subsection (2A) removes the requirement for a list to be compiled on 1 April 2015 and then sets a new five-yearly cycle to run from 1 April 2017. Clause 25 also contains consequential provisions to ensure that the current local and central rating lists remain valid until 2017, and that they continue to be maintained as usual throughout that time. This reform will support local economic growth by removing doubt about future rate bills and giving stability for businesses to plan and invest. I hope that noble Lords will agree that this clause should stand part of the Bill.
Amendment 81CD would require the Secretary of State to publish updated estimates of the effects of the 2015 revaluation and to consult formally with those affected before this clause is brought into force. The best available estimate of the number of ratepayers affected by this clause has already been published in full. As I have explained and the noble Lord, Lord Smith, has pointed out, the Valuation Office Agency has produced initial estimates of the 2015 revaluation, which it published on 12 November. Its work suggests that 800,000 premises would have seen a real-terms increase in their rates, compared to only 300,000 seeing a reduction. The Valuation Office Agency’s report remains the only analysis we have seen that looks
across all sectors and areas of the country. It is the only credible analysis of the impacts of a revaluation in 2015.
The noble Lord has asked in his amendment that we publish detailed up-to-date analysis. I understand the wish to know as much as possible about what would have happened to business rates bills in 2015, but the fact of the matter is that the only way to accurately provide such information would be to prepare the valuations. That would cost about £43 million of taxpayers’ money, which does not seem a particularly useful way of spending it.
The Valuation Office Agency’s analysis covers all sectors and locations. It has been published in full and is available. We know from that analysis that some sectors would have faced big increases: petrol stations would have seen an increase of 28%; the self-catering industry, such as caravan parks, 29%; hotels, 6%; theatres, 25%; and pubs, 11%. Retail overall would have seen a tax rise of 1% above inflation at the 2015 revaluation, with food retail and convenience stores facing significant tax increases. Shops in some regions would have seen much greater tax increases.
I know there have been concerns—as referred to by the noble Lord, Lord Smith—that 530,000 of the 800,000 losers at the 2015 revaluation fell within a single category of “other” in the Valuation Office Agency’s report. However, the fact is that the Valuation Office Agency has looked at some of the larger categories of property within the classes, and their evidence and professional judgment support the figure of 800,000 losers.
The amendment would also ensure that we consult those affected before the postponed revaluation. We recognise the importance of consultation with business rates payers. Both the Government and the Valuation Office Agency hold regular forums to discuss business rates, and in recent weeks the Department for Communities and Local Government held several meetings with representatives of those affected by the postponement. I do not know whether it is those meetings which are reported by the noble Earl, Lord Lytton, to have been dismissive, but I find that quite surprising. The meetings have included the British Retail Consortium, Energy UK, the Association of Convenience Stores, the British Council of Shopping Centres, the Federation of Small Businesses, the TaxPayers’ Alliance, and the Retail Motor Industry Federation. There are more planned during the passage of the Bill, and the Standing Committee in the other place received evidence from some groups.
The reason for what we are doing is to give priority to businesses and give them extra certainty now, before the revaluation process starts to raise doubts about future rate bills. That is a revaluation as a statutory exercise. We need to take primary legislation to stop it, quickly, for 2015. That is why we have moved to include the measures in this Bill. By placing the date of the next revaluation in the Bill, as well as the requirement for five-yearly revaluations thereafter, we have also shown our commitment to keeping rateable values up to date. I hope that I have reassured noble Lords that we have spoken about this clause to representatives of rate payers, and will continue to do so.