My Lords, again I thank the noble Lord, Lord McKenzie, for his support for what the Government are seeking to do. As a general point, I know—and I am sure the noble Lord will share my experience—that when we were looking at introducing the whole issue of business rates and the ability of local authorities to retain the 50% business rate, it was done irrespective of political affiliation. It has been campaigned for long and hard at a local authority level. I am glad that a broad level of support has been given.
The noble Lord raises some general points, particularly in relation to places that struggle to attract growth, which is indeed a driver for increasing the level of business rates. This system of tariffs and top-ups is intended to ensure a stable starting point. There may be some local authorities that fall from year to year below the 7.5%. For them there is additional funding available—for example, the efficiency support grant for those councils that face a loss of more than 8.8% in their spending power.
A few other aspects in this regard are index-linking tariffs and top-ups to RPI, which ensure that councils with low tax bases and high needs see a major part of their income uprated by RPI. Also, the concept of a safety net will ensure that public service provision does not suffer as a result of the local volatility mentioned in my opening remarks. A safety net threshold of 7.5% is the most generous level consulted upon. As the noble Lord acknowledged, this will guarantee local authorities a minimum of 92.5% of their business rates levy.
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There were a few other specific questions. The schedule of payments was agreed in our consultations with local government, and I will provide greater detail on that to the noble Lord in a written response.
The noble Lord, Lord McKenzie of Luton, mentioned the drop in income as a result of major regeneration. Councils will be eligible for a safety net if their income falls more than 7.5% and will continue to receive safety net payments until the regeneration leads to increases
in business rates. The noble Lord also stated that councils should not be left with the risk of funding the cost of mandatory reliefs. The Government considered reliefs carefully during their extensive consultation on the business rates retention scheme and we noted that respondents expressed concern at the idea of local government sharing half the cost of any increase in the cost of mandatory relief. However, such a split is in line with the general principle of the rates retention scheme. We have also confirmed that there will be no change to the reliefs that are available. The noble Lord asked about small sports clubs and so on, but there will be no change to reliefs that are available to small business, charities et cetera.
The noble Lord also asked a specific question about why we will not know how much the levy and safety net will be until outturn figures are available at the end of the year. He asked specifically about estimates. On the basis of provisional estimates, we think that the safety net payments may be in the region of £70 million and that levy payments will be in the region of £30 million.
I trust that I have covered the questions that the noble Lord raised. If not, I shall, of course, write to him. I thank him once again for his broad support of what we are seeking to do.