My Lords, this group of amendments takes us to the heart of the Bill; namely, our commitment to modernise the business rates system through more frequent revaluations. Amendments 7 to 13, from the noble Baroness, Lady Pinnock, the noble Lords, Lord Shipley and Lord Thurlow, the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, are concerned with the frequency of revaluations. They provide for either the revaluation cycle to move to every two years or for the Government to adopt a two-year cycle by order. The Government fully understand the desire to keep business rates as accurate and responsive as possible. That is why the frequency of revaluations was a key part of our review.
Regular revaluations update rateable values, and so rates bills, to reflect changes in the property market. During the business rates review, we heard from businesses that they overwhelmingly favoured more frequent revaluations. Interestingly, a majority of respondents to the review supported a three-year revaluation cycle. The noble Earl, Lord Lytton, mentioned countries that had annual revaluations, but it is not straightforward or accurate to simply compare our revaluation cycles with places such as the Netherlands. Evidently, a single property tax there covers both residential and commercial properties, so it is a very different system from the one in this country. We also considered annual revaluations, but some stakeholders raised concerns about an annual cycle, such as the increased volatility of bills and potential impacts on valuation accuracy. We therefore concluded that we should move to a three-year cycle of revaluations, and the Bill provides for that, with the next one to take place on 1 April 2026.
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As I said at Second Reading, we can consider further increasing the frequency of revaluations in the future. We would need to—and always do—consult
with ratepayers and local government about whether they would like this. But I assure the noble Earl, Lord Lytton, and the noble Lord, Lord Thurlow, that we would also ask our other stakeholders, which they mentioned. We would need to ensure that more frequent revaluations could be delivered—the noble Lord, Lord Thurlow, is absolutely right: we want to make sure that the system works. Currently, we do not believe that this is possible without significant changes to how ratepayers engage with the VOA, including the VOA duty under Clause 13. So we would need to consider this once those reforms are all in place.
I understand concerns that, were we to decide to move to a two-yearly or even an annual cycle, we would require primary legislation. However, we do not think that this is a good reason to take a power in this case. The date of the revaluation is a very significant matter for all occupiers of business properties, and it has always been set by Parliament, not delegated into a power, going back to the General Rate Act 1967. Such a power would therefore be significant and unprecedented, and it would not be appropriate here. The Government have always shown that, when important changes to the rating system are needed, they will bring forward the necessary primary legislation. They have done that here, as they have with previous Bills in this and previous Parliaments. We will continue to do so in the future.
Amendment 14, tabled by the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, seeks assurances that we will end the practice of downward caps—the capping of reductions in bills to fund the transitional relief scheme. I thought I had given assurances on this at Second Reading, but I am happy to do so again. Our policy is clear: we are abolishing downward transition. That is now in Hansard. Business groups raised this with us as an issue of real concern, and, at the Autumn Statement last year, the Government announced that we would propose legislation to permanently remove the requirement for revenue neutrality from transitional relief, enabling us to permanently scrap downward transition.
The Bill does just that: we are removing the constraint that has required us to impose downward transition, and we are putting in place an Exchequer-funded scheme for the current revaluation. We will use that freedom to permanently deliver all future transitional relief schemes without using downward caps. The detail for the transitional arrangements is set out in regulations rather than in the Act, but those regulations are themselves subject to parliamentary scrutiny and approval. I hope I have given noble Lords some reassurance both that we can return to the question of more frequent revaluations and that we are now abolishing downward transition.