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House of Commons Hansard
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23 March 2010
Volume 508
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To ask the Secretary of State for Communities and Local Government what the average change is in (a) business rate valuations and (b) business rates payable between 2009-10 and 2010-11 taking into account the rate poundage and transitional relief in each local authority area in England. [322346]

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[holding answer 15 March 2010]: I have placed a table containing the average change in (a) rateable value and (b) the national non-domestic rates bill after transitional relief in the Library of the House.

The data used to produce the average change in rateable value between 2009-10 and 2010-11 are consistent with the statistical release titled “Non-domestic rateable values: 2010 Local Ratings Lists—England and Wales” published on 18 December 2009. A copy of this statistical release is available at the following link:

http://www.voa.gov.uk/publications/statistical_releases/VOA_Statistics_Release_Final.pdf

No estimates of the average change in bills have been made, as these contain not only transitional relief but all other reliefs, some determined at the billing authorities’ discretion. Therefore it is not possible to estimate the likely bill of a hereditament.

For the purpose of modelling the 2010 Transitional Relief scheme, the Notional Chargeable Amount (NCA) was calculated. The NCA for a given year is the product of the rateable value and that year’s small business multiplier. The NCA is then compared to the previous year’s reference value increased by the caps. The minimum of these two values was used as a proxy for the bill after transition.

The data used for this modelling are consistent with the consultation document titled “The transitional arrangements for the non-domestic rating revaluation 2010 in England”. Details on the methodology and assumptions used can be found on page 49 of the consultation. The assumptions underlying this modelling include zero inflation, which does not reflect the latest information available, and adjustments for appeals. A copy of the consultation document is available at the following link:

http://www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010

Rateable values are only one part of the rates bill. The other is the ratings multiplier—which is applied to calculate final bills. To compensate for the higher property market at the time of revaluation we have reduced the multiplier by 15 per cent. taking it to its lowest level for 17 years—this is designed to ensure the Government do not collect an extra penny from revaluation and that each business pays its fair contribution by ensuring the share of the national rates bill paid by any one business reflects changes over time in the value of their property relative to others.

Over a million properties will see their business rate liabilities come down as a result of revaluation. The Government have put in place a £2 billion relief scheme to limit the impact on the minority with bill increases, which in 2010-11 will ensure no business property sees its rates bill increase by more than 11 per cent. as a result of the revaluation, with maximum increases capped at just 3.5 per cent. for small properties. That is on top of the wider support available to help ease business pressures including discounted rate bills for small businesses and deferring tax payments.

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To ask the Secretary of State for Communities and Local Government how many and what proportion of businesses in England will receive (a) an increase and (b) a reduction in their (i) business rate valuation and (ii) business rates payable taking account of the rate poundage and transitional relief as a result of the most recent revaluation. [322347]

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[holding answer 15 March 2010]: The information requested is as follows:

Table 1: Number and share of hereditaments in England whose rateable value will increase or decrease as a result of the 2010 revaluation

Number of hereditaments (thousand)

Proportion of all hereditaments (percentage)

Increase in RV

1,276

74

Decrease in RV

187

11

No change in RV

255

15

The data used to produce the number and proportion of hereditaments in England that will receive an increase or decrease in rateable value are consistent with the statistical release titled “Non-domestic rateable values: 2010 Local Ratings Lists—England and Wales” published on 18 December 2009.

A copy of this statistical release is available at the following link:

http://www.voa.gov.uk/publications/statistical_releases/VOA_Statistics_Release_Final.pdf

No estimates of the number and proportion of hereditaments in England that will receive an increase or decrease in bill have been made, as these contain not only transitional relief but all other reliefs, some determined at the billing authorities’ discretion. Therefore it is not possible to estimate the likely bill of a hereditament.

However, for the purpose of modelling the 2010 Transitional Relief scheme, my Department has estimated a proxy for rates bills in 2009-10 and 2010-11. The Notional Chargeable Amount (NCA) was calculated which for a given year is the product of the rateable value and that year’s small business multiplier. The NCA is then compared to the previous year’s reference value increased by the caps. The minimum of these two values was used as a proxy for the bill after transition. The result of these proxy calculations is shown in table 2.

Table 2: Number and share of hereditaments in England whose proxy bill, calculated by the Department before inflation and other reliefs but after transition, will increase or decrease as a result of the 2010 revaluation

Number of hereditaments (thousand)

Proportion of all hereditaments (percentage)

Increase in bill

677

40

Decrease in bill

1,028

60

The data used for this modelling are consistent with the consultation document titled “The transitional arrangements for the non-domestic rating revaluation 2010 in England”. Details on the methodology and assumptions used can be found on page 49 of the consultation. The assumptions underlying this modelling include zero inflation, which does not reflect the latest information available, and adjustments for appeals. A copy of the consultation document is available at the following link:

http://www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010

The total number of hereditaments on the draft list used for the modelling of proxy bills is lower than on the draft rating list from which the number of properties with increasing or decreasing rateable values was taken. This is because the modelling was initially undertaken when the VOA had not compiled the full rating list and explains the discrepancy between the total number of hereditaments included in table 1 and 2 above.

Rateable values are only one part of the rates bill. The other is the ratings multiplier—which is applied to calculate final bills. To compensate for the higher property market at the time of revaluation we have reduced the multiplier by 15 per cent. taking it to its lowest level for 17 years—this is designed to ensure the Government do not collect an extra penny from revaluation and that each business pays its fair contribution by ensuring the share of the national rates bill paid by any one business reflects changes over time in the value of their property relative to others.

Over a million properties will see their business rate liabilities come down as a result of revaluation. The Government have put in place a £2 billion relief scheme to limit the impact on the minority with bill increases, which in 2010-11 will ensure no business property sees its rates bill increase by more than 11 per cent. as a result of the revaluation, with maximum increases capped at just 3.5 per cent. for small properties. That is on top of the wider support available to help ease business pressures including discounted rate bills for small businesses and deferring tax payments.

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To ask the Secretary of State for Communities and Local Government pursuant to the answer of 9 December 2009, Official Report, column 399W, on non-domestic rates, what assumptions his Department made regarding (a) the number of appeals against rateable values, (b) the success rate of such appeals and (c) the resulting change in total rateable value from such appeals in each region in each year from 2009-10 to 2014-15. [323243]

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[holding answer 22 March 2010]: No assumptions were made about the number or success rate of appeals. However, for the purpose of modelling the 2010 Transitional Relief scheme, my Department has made an assumption about the total reduction in RV as a result of appeals.

The assumptions used for this modelling are detailed in the consultation document titled ‘The transitional arrangements for the non-domestic rating revaluation 2010 in England’. The methodology and assumptions can be found on page 49 of the consultation. A copy of the consultation document is available at the following link:

http://www.communities.gov.uk/publications/localgovernment/nndrrevaluation2010