Second Standing Committee on Delegated Legislation
Monday 26 April 2004
[Mr. Eric Illsley in the Chair]
Draft Non-Domestic Rating (Chargeable Amounts) (Amendment) (England) Regulations 2004
4.30 pm
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope): I beg to move,
That the Committee has considered the Draft Non-Domestic Rating (Chargeable Amounts) (Amendment) (England) Regulations 2004.
The regulations amend the rules governing the operation of the transition schemes established to phase in the effect of the 1995 and 2000 revaluations. Under the Local Government Finance Act 1988, revaluations must be carried out every five years, with the rateable values of all properties being updated in line with changes in their market rental value.
The purpose of a revaluation is not to increase the amount of rates paid nationally. In fact, the legislation expressly prevents the Secretary of State from profiting from a revaluation. The purpose is to adjust individual bills in line with movements in the property market. That means that, at a revaluation, many ratepayers benefit, with their rate bill reduced, but others have their bill increased. The transition scheme that phases in the effects of the 2000 revaluation is estimated as having benefited more than 600,000 properties throughout England, some 40 per cent. of the total. To fund the phasing in of increases, other rate bills, which were decreasing as a result of the devaluation, had to have decreases phased in to avoid a loss in rate income for local government.
The regulations governing the 1995 and 2000 schemes are lengthy—nearly four dozen pages each. Therefore, they need to be kept under review to ensure that they continue to work fairly. It is as a result of discussions with representatives of the rating professionals and of the impact of new rating legislation that we have decided to amend some of the provisions in the regulations. The explanatory memorandum that has been provided with the draft regulations explains their purpose and effect.
First, there is a move to a standard one year in which rate payers can appeal against the value of a certificate issued by a valuation officer for the calculation of a transition bill. As mentioned in the memorandum, when a new property, such as a suite of offices, is created from the merger of adjoining offices on the first day of a new rating list, to calculate the transition bill for that new office suite it is necessary to have values for the old offices, on the assumption that they had survived until the first day of the new list. The valuation officer will certify the values. All ratepayers
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will be guaranteed a minimum time in which to lodge an appeal against the values certified. If, following the lodging of an appeal, the ratepayer and the valuation officer cannot agree on the value, the matter will be transferred to an independent valuation tribunal for a decision. The move to standardisation in the time allowed to lodge an appeal will not adversely affect any ratepayer. All those on whom it will impact will benefit from more time in which to lodge an appeal.
Secondly, under section 64 of the Local Government Act 2003, community amateur sports clubs, which are registered under the Finance Act 2002, are entitled to 80 per cent. mandatory rate relief. That is on a par with the rate relief that charities get. It reflects the fact that those clubs play a valuable and influential role in promoting the health and cohesion of their local communities. The amending regulations will ensure that the transition scheme will interact with the new rate relief for sports clubs in the same way it interacts with charity relief. First, the effects of transition on the rate bill will be taken account of, and then the resulting bill will be reduced by 80 per cent.
Finally, we will be holding a public consultation exercise this year on the transition scheme to accompany the 2005 revaluation. That new scheme will take full account of the experience gained in the working of the current and past schemes reflected in the new regulations.
With those words of introduction, I hope that the Committee will be able to support the regulations.
4.34 pm
Mr. Philip Hammond (Runnymede and Weybridge) (Con): I do not need to detain the Committee for long on this matter. The Minister answered my one substantive question in his closing remarks.
We support the move to a standardised 12-month appeal period. That seems a sensible position to take. After all, these are complex matters and sometimes people do not focus on or react to them as quickly as they should, especially small businesses that are often under a lot of pressure to do other things.
We are delighted to see the necessary amendment that will give effect to the provisions treating community sports clubs in the same way as charities. Many hon. Members from all parties have campaigned for that for a long time. At one stage, we thought everyone except the Chancellor thought it was a good idea, and I am delighted that eventually the Chancellor was also persuaded.
If my interpretation is correct, one other change, which the Minister did not mention, is effected by the regulations. It is found in regulation 6(b), where a new definition of ''material change of circumstances'' is inserted into the list in the 1999 regulations. Although the phrase ''material change of circumstances'' is used in the 1999 regulations, it is not defined. Presumably something has occurred that suggests it needs to be defined, and the definition has been inserted for that reason—I assume it is nothing more complex than that. It would be fascinating for the Committee to
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know what gave rise to the requirement for that definition in regulation 6(b). If the Minister would tell us, we would be very grateful.
The substantive point that I wanted to ask the Minister concerned whether these regulations were it for now: do they represent the totality of the Government's regulation changes ahead of the next evaluation? If so, that would be very disappointing, given the extensive debate that took place on what became section 65 of the Local Government Act 2003. Many of the representations that have been made by outside bodies concern the operation of transitional relief. I take it from the Minister's closing remarks that there will be further regulations in that regard, and that the regulations are simply tidying-up amendments. It is not entirely clear why there was a need for a separate amending regulation to deal with the three points in question, if there are to be further regulations later. I would be most grateful if the Minister would confirm that it is the Government's intention to bring forward a further set of regulations to amend the transitional relief regime in due course.
We are talking about a devolved matter, but the regulations apply to England only. Indeed, they are the Non-Domestic Rating (Chargeable Amounts) (Amendment) England Regulations 2004. The regulations that are to be amended are not so limited in their titles, and I therefore assume that they apply to Wales also, if not Scotland. Although it is not his responsibility, will the Minister confirm whether he has any knowledge of the Welsh Assembly moving in precisely the same direction, to mirror the regulations in Wales?
4.38 pm
Richard Younger-Ross (Teignbridge) (LD): I shall be exceedingly brief, Mr. Illsley. I would like to thank the Minister for the clarification of the amendment relating to sports clubs. I know that all of us have had a stack of mail asking us to put pressure on the Chancellor for changes in that regard. It is welcome to see them now. At least we can see that Prudence will now be fit, as well as being prudent.
It is sad that we are still tinkering and constantly adjusting the system instead of having a total review of non-domestic rates to create a fairer, more equitable system. Will the Minister clarify one point? He said that 40 per cent. benefited from the change, meaning that 60 per cent. would not benefit. Will he clarify what he meant by that?
4.39 pm
John Mann (Bassetlaw) (Lab): May I say what a delight it is to serve on this Committee, Mr. Illsley?
I have two questions for the Minister. The first relates to the new definition of community amateur sports clubs—a change, which I, like other Members, wholeheartedly welcome. Under the definition, is there the possibility of such a clubs overlaying itself with a professional sports club through some sort of contractual agreement? I am thinking in particular of the possibility of a supporters trust taking hold of the ground of a football or rugby club and contracting for
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a professional or semi-professional side to play on that land. Would such a club meet the definition in the regulations, and would it accordingly obtain such relief?
Secondly, has consideration been given to a scourge of many of our small market towns, such as Worksop and Retford? Anyone walking down Worksop high street for the past 10 years will have seen a remarkably large choice of charity shops. That is partly because they are the only shops that can afford the rates, rather than their being those in which the local community wishes to shop. I believe that there are 23 such shops in the centre of Worksop. Has consideration been given to restricting the number of charity shops in any one particular town through rate relief?
4.42 pm
Phil Hope: I shall try to deal with the points in the order in which they were raised. I am pleased that the hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Teignbridge (Richard Younger-Ross) have welcomed the decisions that we have made in the regulations, which will provide relief for community amateur sports clubs, and the general policy that was announced by the Chancellor.
The hon. Member for Runnymede and Weybridge knows that such clubs could have benefited from rate relief of the kind under discussion if they had become charities. That decision was made some time ago but the take-up was not sufficient, so we decided to treat amateur sports clubs as registered charities and amend the regulations to bring those clubs within the same regulations as registered charities.
The definition of a ''material change of circumstances'' is included in regulation 6(b) because it had been unintentionally omitted. Its inclusion is merely a tidying-up provision; the definition has not changed in practice.
We do not propose to make any further amendments to the regulations before the schemes wind up when the new evaluations are introduced. That should reassure the hon. Member for Runnymede and Weybridge, although, as I mentioned in my opening remarks, the 2005 transition scheme will be completely new, taking into account the provisions of the Local Government Act 2003. We are currently modelling options for that scheme and discussing it with stakeholders.
The Scots have always had a separate scheme and, since 2000, so have the Welsh and the Welsh Assembly. The Welsh Assembly and Executive will decide the extent to which they amend their regulations because this is a devolved power. If the hon. Gentleman wishes to know the views of the Assembly, he might contact it directly for that detailed information.
The hon. Member for Teignbridge mentioned that, by amending the regulations, we were tinkering with the system. I hope he has not misunderstood the importance of the amendments, as they provide such benefits as one year within which to appeal and they accord amateur sports clubs the same status as registered charities. As for the wider review and amendment of local government finance, he knows
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that we are engaged in a major examination of the way in which local government is financed through the balance of funding review.
The official Opposition have made some interesting comments about the future of local government finance. For example, I believe that the hon. Member for North Essex (Mr. Jenkin) suggested a sales tax—or was it the parliamentary candidate for Harwich who suggested that local government might be funded through a local sales tax? However, I am drifting somewhat from the debate.
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