My Lords, I do not know what it is about this clause but we always seem to reach it late at night—I am sure that we all wish we were somewhere else. I was the third musketeer who attended the meeting that the Minister kindly arranged and I echo noble Lords’ thanks to her for doing so, for the courtesy with which the meeting was held and for enabling us to talk to officials from the VOA. As the noble Earl said, we learnt a lot from that meeting, if not enough to change our minds.
I am sure the Minister thinks that we are the awkward squad, but we were trying to express our concern that the Government are pushing ahead with a policy on unfirm ground. What came through from the VOA officials was that the work that they had done to try to forecast valuations was pretty high level and they were not able to say what the precise impact would be. That was particularly the case with the “other” sector. They were unable to say precisely what might happen to the wide-ranging and different activities that are classified as “other”, so they chose—imprecisely, I thought—to push them all into being potential losers if revaluation takes place.
Included in the other categories is the category of pubs. I do not know what the situation is in areas where other noble Lords live, but if you took a drive in the area that I live in, you would see many pubs that have closed down or are offered for sale and so on. Because of the change in nature of drinking habits, pubs are not doing as well as they were. Clearly, if pubs were to be revalued at the moment, then surely they would actually gain from a revaluation, not lose.
The fundamental thing that I took away from the meeting was that the Government were really concerned with the concept of volatility and the belief that, if we do not change business rates valuation, as they should change in 2015, then people will continue to pay the same amount that they were paying and this will avoid volatility. However, if they do postpone the valuation, then in a sense we need to think that the volatility is bought at a particular cost. That cost, in a sense, is with the businesses which are least successful and which would have benefited from a revaluation; they are now subsidising those businesses which have been more successful. In other words, the retail sector of Wigan, which has not done very well, will be subsidising West End theatres. I do not think we can regard that as particularly fair.
I think that, as the noble Earl indicated and as I said in Committee, we need to recognise that the market does not simply stay still. If the Government want to change the cost of occupying premises, it is not simply to do with business rates; the rental value is reflected as well. Where business rates remain high, the pressure to reduce the rental value will be extreme. If we do come round to reinstating the revaluation in 2015, my view is that the volatility that the Government are so concerned about will be greater then because
the pressures on the retail sector and other sectors will have had two more years to run, and therefore the changes will be even greater than they would have been if we had introduced the revaluation this year. Therefore, we will be buying stability for now but we will actually have greater volatility in the future.
It is a serious thing to change what has been a 20-odd-year process that all parties agreed was the way business valuations should be changed. It is a bit of a hobbyhorse of mine but, once we stop doing a routine revaluation, then we need a courageous Government to bring it back. Council tax valuations are still based on those set in 1991 because no Government have had the courage to revalue. We keep putting it off. It is not just this Government; the last Government kept putting it off. We are now in a nonsensical situation. I do not want us to be in that situation with business rates because clearly there is a great logic related to the rental values from business premises. We must not do that, so if we do delay it for two years, we should not delay it any more.