Non-Domestic Rating (Rates Retention, Levy and Safety Net and Levy Account: Basis of Distribution) (Amendment) Regulations 2020

Turning now to the restructuring of local authorities, following the restructuring of Buckinghamshire County Council and its constituent district councils, Aylesbury Vale, Chiltern, South Bucks and Wycombe, into one unitary Buckinghamshire Council from 2020-21, amendments are required for the running of the rates retention system. Two minor changes are required to establish the requirements of the new authority under the rates retention system. These are, first, an adjustment to a figure which determines the cost of operating in the area and therefore the cost of collection of business rates for the authority, and, secondly, a new value for Buckinghamshire used to calculate the amount of compensation it will receive for small business rates relief.

In 2019, the Government set out in statute the basis of distribution on which any surplus on the levy account would be made; this occurs where levy payments exceed safety net payments in a year. The basis of distribution is based on local authorities’ relative need as defined by their settlement funding assessment, which is composed of baseline funding level and revenue support grant. A small amendment is made by these regulations to the basis of distribution to reflect a revised agreement on revenue support grant between two councils which restructured back in 2019-20. This revised split adjusts the allocation that the Bournemouth, Christchurch and Poole Council, and Dorset Council, would receive should the Government determine an amount of any surplus on the business rates levy account to be distributed in the future.

Turning now to adjustments to take into account telecoms relief, an amendment is made to the regulations concerning the calculation of retained rates income, against which levy and safety net payments for authorities are determined. In determining the amount of safety net payment an authority may require, or the amount of levy on growth it is required to pay in a year, the levy and safety net calculations take into account a Section 31 grant compensation for business rates reliefs received by an authority as the result of changes made by the Government. If we did not do this, local authorities could end up effectively being compensated twice for implementing these reliefs. These regulations make the required changes to ensure that any telecoms relief that an authority has awarded is taken into account in these calculations.

In conclusion, these regulations perform a range of minor, highly technical amendments to achieve the correct basis on which the rates retention system is run for 2019-20 and 2020-21. These regulations do not enact new policies, but rather ensure the fulfilment of the original policy intention as approved in prior years via the settlement or by the statutory instrument. I beg to move.

Then there is the question of the Government’s general policy on local government finance. Is it the Government’s intention still to make local authorities more dependent on the income they raise, and gradually to phase out government grants to councils—which is what the Government said they were doing in the George Osborne era? Business rates retention was introduced as part of that philosophy of making authorities more dependent on their own tax base and less dependent on central government grants. The argument for that is that it incentivises growth policies, because you have an incentive for growth. The argument against is that if areas are poor, they will not get much richer through a policy that favours authorities with high economic growth rates. Is this approach of making authorities dependent on the money they raise locally consistent with this Government’s levelling-up agenda? That is a very big question. I favour a reform of government grants, a new equalisation formula and—I know the Government do not like this phrase—a form of fiscal federalism in England. The present system needs radical change.

My two questions are these. First, the Explanatory Memorandum talks about a local government working group that focuses on business rate retention and reform. Can the Minister say more about that group, who is on it and how it operates, because I have not heard of it? Secondly, are we coming close to a date for Second Reading on the Non-Domestic Rating (Lists) (No.2) Bill, which received its first reading in March but seems to have disappeared?

It is almost 30 years since I was first elected a councillor. In 1991, as I was trudging the streets of Needham Market, one Ian Botham was on his final tour of Australia and New Zealand. Many paths lead to this House. I look forward to hearing him and wish him well.

The House will know that we can defeat cancer and other diseases only through investing in research, and the UK has a very proud record in this regard. However, Covid has hit charities hard and, in the next financial year, Blood Cancer UK alone estimates that it will be able to fund 40% less research than it had hoped. Not only will the impact of this be felt now, but it threatens to slow the progress achieved in research. I hope very much to use my time in the House to continue supporting charities and the invaluable work that they do.

I am very much looking forward to contributing more in the House on the topics I have mentioned and on other matters close to my heart.

Today, the noble Lord, Lord Botham, has spoken with the same passion as that noble Lord did in this Chamber 50 years ago. He follows three further life Peers in Colin Cowdrey, David Sheppard and the redoubtable Rachael Heyhoe Flint, all of whom were close colleagues of mine, campaigning in the cause of sport. I anticipate that the determination of the noble Lord, Lord Botham, to use this place for change will exceed even theirs.

Turning to the regulations before the House—on a day when, for the first time in history, a Lords Select Committee to examine a national plan for sport has had a sitting— they touch one critical part of the package needed to save sport: rates. However, the financial damage caused to clubs by lack of gate receipts is unsustainable. Sport needs urgent support. We are talking about not just the clubs but the positive impact they make on the communities they serve and their supply chains, which means that when they suffer businesses in their local communities suffer. One of the most expensive outgoings for clubs that occupy facilities is business rates. The Government can step in right now, as the noble Lord, Lord Botham, said, to provide a full rates holiday rather than the current 80% plus 20% discretionary formula. Clubs are in desperate straits; government must intervene before they start to go under and the many community schemes, which are part of the infra- structure of this country, wither under Covid.

Due to Covid, we face a young population who are more obese, more unfit and more challenged by mental health problems than any in many generations. We have even made the error of prohibiting two-ball golf matches and singles lawn tennis for all ages. Now is the time to show our concern about the mental and physical well-being of the population. Sport, recreation and an active lifestyle are essential to build up resistance to the worst effects of Covid. Now is the time for government to listen and to act.

Can the Minister tell us whether this statutory instrument has local support? Have all the local authorities affected by the SI agreed to this, and were there any representations from them? Behind everything is the pending review of business rates, as has been raised by several speakers this afternoon. This is urgently needed given that the consultation closed, as we know, at the very end of October. As we have heard, there is no solution for 2021-22—and lockdown this month puts further pressure on the system in this financial year, never mind the next.

My view is that the Government should extend the system of business rates deferral—or holiday—through much of 2021. I think this is now unavoidable. Will the Minister confirm the Government’s thinking on this? The rising cost of local government will otherwise not be met; they certainly cannot be met by loading the extra cost on to council tax alone. The Minister said in his opening remarks that it is a technically complex system. He is right. He also said that he looked forward to our contributions—I think with respect to providing solutions. It is a very complicated area. My view is that it will be solved only through all-party discussion and agreement. I hope the Minister and the Government will think about that in the context of the publication next spring of proposals on the long-term future of the business rates system. With all of that said, we are very happy to support the proposals in this statutory instrument.