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Non-Domestic Rates: York

Volume 508: debated on Tuesday 23 March 2010

To ask the Secretary of State for Communities and Local Government how much on average was paid in business rates in the City of York in 2009-10; and what estimate he has made of the likely average amount to be paid in 2010-11 taking account of transitional relief. (322381)

[holding answer 15 March 2010]: The figure derived from dividing the forecast net rate yield from the city of York's rating list in 2009-10 by the number of hereditaments on that local list as at 31 December 2008 is £14,600. Data are as reported to Communities and Local Government by the city of York on their 2009-10 National Non-Domestic Rates (NNDR) returns.

No estimates of the average bill in 2010-11 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 and any comparison with the average bill in 2009-10 will be flawed as it cannot take account of all of these reliefs.

However, for the purpose of modelling the 2010 Transitional Relief scheme, my Department has estimated a proxy for rates bills in 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 figure derived from dividing the total of all proxy bills for 2010-11 in the city of York by the number of hereditaments on the draft 2010 rating list used for the Department's 2010 transitional relief modelling is £16,300.

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 five-yearly business rates revaluations make sure each business pays its fair contribution and no more 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. The 2010 revaluation will not raise a single extra penny for Government.

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.

To ask the Secretary of State for Communities and Local Government how many businesses in the City of York were liable to pay business rates in 2009-10; how many such businesses will face (a) an increase and (b) a reduction in (i) their rateable value as a result of the business rates revaluation, (ii) the rates they pay in cash terms in 2010-11 taking into account the rate poundage and transitional relief and (iii) the rates they pay in 2010-11 taking into account the rate poundage and transitional relief and discounting the national average increase in business rates between 2009-10 and 2010-11. (322382)

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

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

Number of hereditaments1

Proportion of all hereditaments (percentage)

Increase in RV

5,200

86

Decrease in RV

300

6

No change in RV

500

8

1 Rounded to the nearest 100.

The data used to produce the number and proportion of hereditaments in the city of York 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 the city of York 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 as follows:

Table 2: Number and share of hereditaments in the city of York 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 hereditaments1

Proportion of all hereditaments (percentage)

Increase in bill

2,400

40

Decrease in bill

3,600

60

1 Rounded to the nearest 100.

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 national average change in proxy bills was a decrease of £20. After this average national change was discounted from each of the proxy bills produced by the model for hereditaments in the city of York the number of hereditaments seeing increases and decreases in their rates bill is shown in the following table:

Table 3: Number and share of hereditaments in the city of York 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 discounting the national average increase in business rates

Number of hereditaments1

Proportion of all hereditaments (percentage)

Increase in bill

2,600

43

Decrease in bill

3,400

57

1 Rounded to the nearest 100.

When calculating the business rates multiplier in a revaluation year, we are required by law to discount the effect of any increases in rateable value. As a result, we have reduced the multiplier by 15 per cent. in 2010-11—taking it to its lowest level for 17 years. This is designed to ensure the Government do not collect an extra penny from revaluation. The five-yearly business rates revaluations make sure each business pays its fair contribution and no more 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. 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.