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Business Rate Supplements Bill

My Lords, this is an important pair of amendments and I want in my response to distinguish between two features of the debate. I shall come on to the question of the ports in a moment, but let us consider first the issue of principle. The amendments would prevent BRS from being levied retrospectively as a result of a change in the rating list. I am all too conscious that, if there is one word that threatens to dog Ministers in this noble House, it is "retrospection". I had the blissful experience of defending the concept during the banking legislation and the scars will stay with me for a considerable time, although the House was persuaded of the justifiable nature of retrospection in that legislation. However, I do not have the same inhibition with this Bill—very far from it. I understand why the amendments have been prompted by the difficulties in the ports, which I shall come on to. However, BRS builds on the non-domestic rating system. In particular, liability to BRS and the level of liability in respect of any given property will be based on the rating list entry for that property. Rating lists, as the whole House will be aware, can be changed by valuation officers to ensure accuracy and, with that, the accuracy of rates liability. Sometimes this can lead to backdated increases in rates liability. That is a fact of our rating system, so I am not prepared to have the amendment moved as if the Government were, at this stage, introducing an element of retrospection that no one had been aware of. After all, it is also the case that the other aspect is true—"retrospective" might mean that there is a reduced liability for rates, and refunds would be paid out in such a case. There is the possibility of backdated increases in rateable value causing higher BRS bills than businesses were anticipating, but we are faced with the practicalities involved in ascertaining the need for changes to a rating list and then establishing what change is required. Backdating is an essential part of the normal functioning of the system. Let us disabuse ourselves of the idea that there is anything exceptional about what the Bill proposes with regard to BRS. In introducing his amendments, the noble Lord, Lord Bates, has given an instance. It does not clarify the issue, though; rather, it clouds it. Not that I am saying that he does not have the right to introduce the concerns of the ports, nor am I going to resile from the fact that my noble friend confessed to an element of fault that had occurred with regard to that position. The port issue does not, however, affect the principle. It is only right that businesses will be asked to pay the BRS that is due on their property and to pay at the correct level, otherwise we are going to have businesses occupying properties of the same rateable value being liable for different bills. It would be unfair to those businesses that have been paying the correct supplement if others were paying a smaller bill due simply to an inaccuracy on the rating list and because they were not asked to pay the correct supplement. It is also worth reiterating that BRS bills, like rates bills, will go down as a result of a change to the rating list in certain circumstances. This is a normal function of the system. With regard to the ports, the Chancellor announced in the Pre-Budget Report that the Government will legislate to give businesses more time to pay in certain circumstances because we recognise the problems that port businesses face. Legislation has been passed so that businesses facing such bills in those circumstances will not be required to pay their backdated liability within the financial year at present but will be able to do so in equal interest-free instalments over eight years. I heard what the noble Earl, Lord Cathcart, said about the problems for businesses faced by this bill. However, if a business that had arrived at this position because of backdating had ensured, operating under legislation constructed to make this possible, that the liability should obtain over eight years, it would be a very odd judgment by a bank or by anyone else doing business with it that it was not a viable business because of this particular feature. Although the review of ports, and the subsequent separate assessment of a number of new properties within ports, highlighted the issue of the impact of backdated liability, the legislative changes implemented will apply to all ratepayers occupying properties that meet the criteria, including those in ports that meet the criteria, to benefit from a schedule of payments for backdated liability. The legislation is working. As at 8 May this year, local authorities have reported that 185 properties within the ports review had paid £30 million of backdated liabilities in full and that a further 88 business properties within ports had been granted a schedule of payments under the legislation to which I have referred. To conclude, the provisions in the Bill are entirely consistent with the national business rate system. They ensure that the liability to business rate supplements is fair to all. We had a particular problem with the ports, which the Government have addressed. That issue is not relevant to the principle obtaining on our business rating system in this country. This Bill is fully consistent with the ratings system that we operate. Accordingly, I hope that the noble Lord will feel able to withdraw his amendment.