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Business Rate Supplements Bill

My Lords, I am grateful to noble Lords for keeping their contributions brief because my response is somewhat lengthy, given the complexity of the issue and the importance of getting on the record exactly how the provisions on reliefs are intended to operate. I hope that the House will be tolerant of me. There are different strands to this issue and I will deal with them under three main headings. First, there is how Clause 13 is intended to work. Secondly, there is the intention behind Clause 15, entitled "BRS relief". Thirdly, I will deal with the issue of empty properties, which both noble Lords raised and the noble Lord, Lord Bates, emphasised. Clause 13 sets out the method for calculating the BRS liability for a ratepayer. The method varies depending on whether the ratepayer already receives one of the existing mandatory or discretionary reliefs from national non-domestic rates. In framing our proposals for BRS, we want to apply the same approach as currently operates in the non-domestic rating system. The effect of Clause 13 is that if a ratepayer receives relief on their rates bill, the same level of relief will be applied when assessing liability for BRS. I emphasise how Clause 13 works. For instance, charities that receive just the 80 per cent mandatory relief will therefore have an 80 per cent reduction in their BRS liability. Where a charity receives 80 per cent mandatory relief and a further 20 per cent top-up relief on its rates bill, it will be entitled to the full 100 per cent relief and will pay nothing. I realise that Clause 15 on BRS relief may have given rise to some confusion and I will attempt to explain how this clause differs from Clause 13. Clause 13 deals with reliefs under the existing non-domestic rating system. By contrast, Clause 15 covers reliefs specific to BRS. It enables levying authorities to reduce the impact of BRS, not by reference to any reliefs payable under the non-domestic rates system, but by setting out its rules for levying BRS. We make clear that those properties with a rateable value below £50,000 will not be liable for BRS. Clause 15 enables levying authorities to set the threshold for liability above £50,000—say at £65,000—so that properties with a rateable value below this would not be liable for BRS. It would be up to the discretion of the levying authority. Alternatively, levying authorities may wish to use Clause 15 to set a differential rate for properties with different rateable values. An example would be a levy of 0.5p for properties with a rateable value of between £50,001 and £70,000, a 1p levy for properties with a rateable value of between £70,001 and £85,000, and a 2p levy for properties with rateable values above that. That is the import of Clause 15. Finally, I turn to empty properties. The starting point is how the non-domestic rate system works in relation to empty properties. Owners of empty properties are liable for 100 per cent of business rates liability unless they are specifically exempted. The exemptions are set out in regulations made by the Secretary of State. These include, for example, listed buildings. In such cases, those ratepayers have no liability for non-domestic rates. Levying authorities can choose whether their BRS should apply to empty properties. If they choose to do so, the same rules apply to the application of BRS liability as to non-domestic rate liability. That means that empty properties that are exempt from liability for NDR will also not be liable for BRS. However, for empty properties liable to 100 per cent NDR, those of more than £50,000 rateable value will have 100 per cent liability for BRS. So, if a levying authority levies the maximum 2p BRS for occupied as well as empty properties, those empty properties with a rateable value of more than £50,000 will be subject to the same 2p levy. If a levying authority chooses to include empty properties in their BRS, any reliefs it may wish to apply—that is, the reliefs under Clause 15 —must apply equally to occupied and empty properties. For example, if a levying authority wishes to increase the threshold for BRS liability to £60,000, this would apply to occupied and empty properties. The levying authority could not apply different rules to empty properties. It could not, for example, set a threshold of £55,000 rateable value for occupied properties and set a different threshold of, for example, £60,000 for empty properties. That is not permissible. It would be worth spending a brief moment to explain the role of Clause 13(6). This prescribes the formula for calculating the daily chargeable amount for empty properties. But this subsection applies only where the Secretary of State or, in Wales, the Welsh Ministers, have made an order under Section 45(4A) of the Local Government Finance Act 1988, which reduces the liability to national non-domestic rates of the owners of empty properties to less than 100 per cent of the basic liability. If such an order had been made under that Act, reducing NDR liability for empty properties to, say, 50 per cent, I assure the House that liability for BRS would mirror this. Liability for BRS would also be at 50 per cent. However, no such order under the 1988 Act has ever been made, so the subsection has no effect at this stage. I am sure that the noble Baroness, Lady Hamwee, was all too well aware of that issue, but I put that on the record for those who know a little less about these issues than she does. I realise that I have gone much wider than the focus of the specific amendment, but the noble Baroness invited me to clarify the issue. I hope that that helps the House.