My Lords, the Bill gives this House the opportunity to support a measure widely requested by businesses. It will improve the business rates system by ensuring that rating assessments are more up to date and fairer. It is a Bill which will increase the frequency of business rates revaluations. A move to more frequent revaluations has been one of the most repeated requests from the business community, including from representative bodies such as the Federation of Small Businesses, the Confederation of British Industry and the British Retail Consortium.
Business rates are a tax on non-domestic property. They are paid not just on business premises but on local and central government buildings, hospitals, utility networks and even the very building we are in today—the Palace of Westminster—so although this Bill may seem small and technical it is in fact important to very many ratepayers and local authorities across the country. The tax base for business rates is the property’s rateable value which, in broad terms, is based on its annual rental value. Like all rateable values, the assessment of the Palace of Westminster can be seen on the current non-domestic rating list, which dates from 2017 and is available to view on the website of the Valuation Office Agency. Before noble Lords reach for their iPhones to look up that website, I can save them some time and effort: the rateable value of Parliament is currently £16.09 million.
Rateable values are currently based on the rental market values as at 1 April 2015, and the purpose of regular revaluations is to ensure that those values keep pace with the changes in the rental property market. The next revaluation was due to take place in 2022 but this Bill will bring it forward to 2021. As I have said, this has been requested by a wide range of business groups. Preparation for the revaluation is already under way and it will be based on the rental property market as at 1 April 2019.
It may be helpful to noble Lords if I explain how the revaluations work and why they are so important to businesses. Revaluation is a significant undertaking. The Valuation Office Agency has collected details of hundreds of thousands of rents to ensure that it has a good evidence base for the revaluation. It is now analysing that rental information and preparing valuations on more than 2 million properties. This is clearly a substantial exercise and one of the most important undertaken by the agency. This Bill will ensure that the results of its work will come into force one year early on 1 April 2021.
I shall give noble Lords an example. Take a shop on the high street. A shopkeeper will currently pay business rates based on the market value of rents in that high street as at 1 April 2015 and will have been paying that since 2017. Clearly, much has changed since 2015 and businesses rightly expect to see the information underpinning their bills updated accordingly. Over recent months, the Valuation Office Agency will have been collecting all the new rental evidence it can on that high street. This evidence will come from new leases and tenants moving into empty shops and from lease renewals and rent reviews on existing shops. The agency will have collected these rents on official returns and will now be analysing the results. Having regard to all this rental evidence, the valuation officer will then take a view—in line with certain statutory assumptions—of the market rental value of that high street as at 1 April 2019, which, as I have said, will be the valuation date for the 2021 revaluation.
This new assessment of market rental values will then be used to update all the shops on that high street, so the 2021 revaluation will therefore reflect the change in rents on that high street between 2015 and 2019. This exercise is repeated across all high streets, shopping centres, industrial estates, business parks and offices in order to give a full picture of the change in the relative value of non-domestic property across England and Wales. It is on this updated picture of rateable values that the new bills are based. I hope noble Lords will be able to see how important the revaluation and this Bill are to those businesses. More frequent revaluations will ensure that business rates bills are more up to date and more closely reflect the current rental value of the property and relative changes in rents.
However, in deciding whether to have more frequent revaluations, we need to strike a balance between the more up-to-date assessments that would flow from such a reform and the uncertainty that more regular changes to bills will create; and of course there is a cost to more frequent revaluations. The 2021 revaluation is expected to cost about £50 million over its duration. We believe that revaluations every three years strike the right balance, so this Bill will ensure that that happens after 2021.
Finally, the Bill will change the latest date by when draft rateable values can be published before the revaluation from the end of September to the end of the preceding December. Ratepayers have told us that they accept the trade-off that comes from increasing the frequency of revaluations and favour fairer, more up-to-date assessments. Shortening the period of the draft rating list is part of this trade-off and ensures that the time the list remains in draft continues to be proportionate to the shorter revaluation cycle. This change in the publication of the draft rating list will help pave the way for three-yearly revaluations. However, the Bill will still allow the valuation office to publish rateable values earlier than the end of December, so we will give ratepayers as much notice as possible of their draft rateable values and new rate bills within the new three-yearly cycle.
This Bill makes a step-change improvement to business rates. It is supported by the business community and is necessary to allow the Valuation Office Agency to complete the 2021 revaluation. Last, but no means least, I greatly look forward to the maiden speech from my noble friend Lord Randall of Uxbridge this afternoon. I beg to move.
My Lords, I thank my noble friend Lord Younger for his kind words and for introducing the Bill.
When I made my first contribution in the other place back in 1997 to a similarly packed Chamber, little did I suspect, or even dream, that I would have to go through a similar experience in this Chamber. I never cease to be in awe of this country and its democracy that has allowed a son of a retail furnisher and a school meals organiser to become a Member of this most historic and illustrious House. It is a privilege and an honour that is difficult to put into words.
Like so many newly appointed to this House, I have been struck by the kindness and friendship of noble Lords—including those adversaries from another place and another time—and not least the kindness and wisdom shown by my supporters, my noble friends Lady Fall and Lord Young of Cookham. I cannot think of a better mentor and guide than my noble friend.
For 12 of my 18 years in the other place I served as a Whip, both in opposition and as Government Deputy Chief Whip. One thing that I learned there was that trust and compromise can serve better than confrontation and artifice. I think, and hope, that I will be at home in this Chamber.
I had no hesitation in choosing my territorial title, as Uxbridge has been my lifetime home and somewhere that I am immensely proud of. If noble Lords will indulge me, I will relate two moments in history when Uxbridge was at the centre of this nation’s destiny.
The first is little known, perhaps because it was ultimately doomed to failure. In early 1645 there was a significant but abortive negotiation to try to end the first English Civil War. Parliament drew up 27 articles in November 1644 and presented them to Charles I at Oxford. Much input into these Propositions of Uxbridge—often referred to as the treaty of Uxbridge—was from a gentleman by the name of Archibald Johnston. The royalists stayed on one side of the high street, the parliamentarians on the other. Sadly, the negotiations failed and, to coin a phrase, the rest is history.
The other, perhaps more well known, connection that I would like to mention is the Battle of Britain. The No. 11 (Fighter) Group Operations Room, housed in what is now known as the Battle of Britain Bunker on the former site of RAF Uxbridge, was responsible for planning and co-ordinating the air defence of London and south-east England during the Second World War. As well as bearing the brunt of the Luftwaffe onslaught during the Battle of Britain, the operations room was responsible for controlling fighter operations in the south-east and over occupied Europe throughout the Second World War, including the Dunkirk evacuations and the Normandy landings. It is of course also a tribute to the airmen of many nations who played their part in the struggle for freedom, most notably the Poles and the Czechs.
If noble Lords find themselves in Uxbridge, I can commend a visit to the wonderful museum that has recently opened where the operations room is shown exactly as it was on 15 September 1940—the day on which Winston Churchill visited and witnessed the conduct of the most significant day of the Battle of Britain. It is also where the then Prime Minister said the immortal words:
“Never in the field of human conflict was so much owed by so many to so few”,
before repeating it here in Parliament some days later.
Noble Lords have been extremely indulgent with this first contribution of mine. I blame my loquaciousness on the fact that for more than a year my role as the environment adviser to Theresa May in No. 10 rendered me silent in this place, but the floodgates are now open. I will have a lot to say on the subject of the environment, as wildlife and conservation in particular have been passions of mine since my very earliest days. Some of what I say will be controversial. I also want to pay tribute to the former Prime Minister. I cannot think of anyone who is more of an embodiment of a life devoted to public service than Theresa May.
My spell in No. 10 also once again reinforced my opinion that the Civil Service has some of the most dedicated, hard-working and best brains in the UK. My co-conspirator in the environment office, Anouka Dhadda, fits all those descriptions.
The fact that we are debating anything today is a result of extraordinary circumstances, but it has allowed me to take part in your Lordships’ proceedings earlier than I thought would be the case. This Bill is a very apt one for me to speak on as it appears to be pretty uncontroversial if its passage through the other place is anything to go by. And so it should be, as allowing for more frequent rating valuations for business premises is something for which businesses and business organisations have been asking for a considerable time, and this will finally deliver previous commitments made by the Government. As a former businessman—in fact a hereditary retailer—I know exactly how difficult that sector is, and I hope that this will assist. There is no silver bullet for remedying our ailing high streets, but I hope that this is one step.
Noble Lords have been more than patient with me today. I conclude by saying that I still find it strange to have a title that makes me sound more like a pub in Uxbridge. However, I am also delighted that the family firm, Randalls of Uxbridge, which started in 1888 and ceased trading in 2015, lives on in this place in a different guise in my title. I think my forebears would be somewhat surprised.
My Lords, it is an absolute honour to follow the noble Lord, Lord Randall of Uxbridge, and to congratulate him on an outstanding maiden speech. He speaks with very great authority on the retailing and modern worlds from his experience with the family firm. I regret having received the speakers’ list only when I came into the Chamber, so I have not had the opportunity to discover anything embarrassing about him that I can share with the House. However, like many of us, he has a wiki page, which tells me that he studied Serbo-Croatian. Of course, we know of his distinguished career as a Whip in the other place. He will therefore be not only familiar with the usual channels, but unsurprised at some of the stranger bits of double Dutch and jargon that inhabit the business rates world. I look forward to many more of his contributions.
Many years ago, I made my own maiden speech on what is colloquially known as the poll tax Bill. Noble Lords with long memories will remember its fate. I hope that this Bill fares a little better, although, unlike the noble Lord, Lord Randall, I am not at all convinced of its greater worth. I take this opportunity to congratulate the Minister on his appointment and his arrival into the hypothetical world of rating assumptions, in which only really the property and the bills are tangible and most of the rest is some sort of statutory assumption. That is worth bearing in mind. However, the economic outcomes are real enough. The noble Viscount should therefore be especially wary of the complexities and risks. I certainly look forward to working with him on this sector. At my stage of life I have no particular axe to grind, though. As a Local Government Association vice-president, I see all sides. Having a professional involvement of 44 years with this area of local government finance, here is my contribution to what I hope will be a bit of semi-honest brokerage from a ratepayer’s perspective.
A few years ago this Bill, which mainly increases the frequency of rating revaluations, would have been welcome. At this stage, though, my fear is that it is too little and almost certainly too late. We have a five-year revaluation cycle—or did, until it suited the Government of the day to defer the 2015 revaluation date. They argued that that gave certainty to ratepayers. Perversely, it did so, but at the expense of pegging their business rates to the historically high levels of the antecedent 2008 valuation date, which in turn informed the 2010 valuation list. More realistically, it guaranteed certainty of tax yield to the Treasury. Let us not kid ourselves, then, that this was anything particularly to do with benefiting businesses.
The resultant seven-year gap up to the 2017 valuation list meant significant adjustments, which in many cases would have created welcome reductions in rates burdens were it not for something called transitional relief. That operates to shield ratepayers from sharp increases in rates, but is financed by negating the benefits of reduced assessments for the others. It also protects the taxman from falling tax yields and is, I understand, reputed by some experts to have given him a large windfall. It is the extended revaluation gap in a time of rapid change, though, which amounts to the Government taking their eye off the ball.
There is also something called fiscal neutrality. I apologise for inflicting this jargon on noble Lords; it is a Treasury mantra that means that any changes to concessions, such as transitional and small business reliefs, have to be off-set—effectively funded—by higher charges to the remaining ratepayers. At the same time, it provides a safety net, if not a windfall, for the taxman, so it appears at the very least to be somewhat asymmetric as to effect.
Unlike rents, which ultimately have to follow market reality, the national rate yield is a fully protected upward-only construct. This has resulted in extraordinary increases in overall rates burdens on businesses over recent years—extraordinary by comparison with other applicable indices. As a result, there has been mounting pressure for reform of a property tax that is now the highest of any comparable impost anywhere in the EU or the OECD area.
The Minister will tell us, no doubt, that the industry has asked for these valuations. The noble Lord, Lord Randall, also referred to that. I believe that the British Retail Consortium has, indeed, asked for that, but I understand that everybody else has been asking for still more frequent revaluations plus a host of other reforms. I therefore do not feel that the justification for the Bill is entirely there. In any event, it only scratches at a fundamentally much deeper problem.
In effect, the system has been gamed to breaking point, not only by some unscrupulous consultants, but by HMRC and the Valuation Office Agency. Nobody in the business community now has much confidence in it, perceiving it as unjust, unfairly administered with an overly complex system of redress called “check, challenge, appeal”, or CCA, to use its acronym, which is consciously designed, it would appear, to impede fair rights of challenge and appeal.
I commend to the House consideration of a closely argued submission made in March this year to the Treasury Select Committee in another place by Mr Jerry Schurder of Gerald Eve. He is an acknowledged expert in the business rates field. He outlines failings in all the main areas on which a tax properly and reliably rests. However, even if the Minister does not believe Mr Schurder, he cannot deny the evidence that businesses across the land are voting with their feet in responding to business rates burdens as a major consideration in their retailing, office and industrial space occupancy and decision-making, while investors hesitate to commit in the face of empty rates charges. When a taxation system causes behavioural changes on this scale, it is wise to consider carefully the underlying policy, which has certainly contributed to high street atrophy and business reticence. When anyone involved in upgrading their premises finds that they are in receipt of a higher rateable value, removing at a stroke much of the benefit of the improvement, it is also a retrograde system.
Business tax payers need confidence that they are being fairly treated. Here, I fear, they know that they are not. No Government can claim to be business friendly while presiding over unfair local business taxation. The results for retail streets, for visitor attraction to towns, for investment, pension scheme portfolios and so on are negative. However, I am afraid HMRC still does not get it and will shortly have to find radical and costly solutions that will not be fundable on the fiscal neutrality principle, as more and more people trade online or migrate to other methods of trading not involving high-value, high-priced premises. Business rates are not solely to blame, but they and their administration are now widely seen as a very significant factor.
To finish, and given the parameters I have outlined, along with the failure to keep to five-yearly revaluations previously and the subsequent attrition in Valuation Office Agency resources, can the Minister say how the proposal in the Bill will be implemented and funded? Will the additional costs of more frequent valuations ultimately have to be met by the ratepayers themselves? If so, how much more mismanagement should they be expected to fund? When it comes to billing authorities having 100% business rate retention, as we believe is the ultimate intention, what factor of reliability does he think will be a realistic measure of future rates yield? This clearly matters to local government finance officers. However, if the current system collapses through failure to rectify, modernise or resolve the deep mistrust now prevalent—I believe we are close to that situation—the consequential expense of replacing the system will be incalculable, along with a needless destruction of valuable taxation and valuation stock in trade. I refer, of course, to the information base on all properties that go into making up the valuation list.
I really cannot express much enthusiasm for this particular policy tick-box of a Bill, nor do I see it as tackling the real issues. However, given that there is an intention to do something—anything—it is at least welcome to that extent.
My Lords, it is always good to follow the noble Earl, Lord Lytton, on the subject of business rates because he has such considerable knowledge about how they work and what the consequences of any changes might be. Before I begin my comments, I draw the attention of the House to my interests as a vice-president of the Local Government Association and as an elected councillor on Kirklees Council. I welcome the Minister to his new role and look forward to our exchanges. I am sure they will be very positive and constructive.
The principle of the Bill, which is obviously to reduce the gap between revaluations of properties liable for non-domestic rates from five years to three, is one which we support. It is generally supported by the business community and, in essence, it should provide more certainty for businesses, as there should be less chance of wild fluctuations in valuations which are, after all, dependent on rental value, which is itself a reflection of the national and local economy at any one moment. However, such a change raises questions about implementation and wider concerns about the sustainability of the business rates regime.
The first question is one of practicality. Can the Minister confirm that additional funding will be made available to the Valuation Office Agency to ensure that revaluations can be fulfilled in the much reduced timescale? Obviously, he has also already referred to the current cost of £50 million, but clearly that has been over a longer timescale than the three years being proposed in this legislation.
Secondly, local government is now reliant on business rates income for basic service provision. Will the Minister confirm that any fall in the total national take from business rates will not lead to a reduction in funding from this revenue stream for local government? A briefing from the Local Government Association has drawn attention to the fact that more regular and accurate information is required from businesses so that the valuation office can provide more accurate revaluations. A consultation was apparently due last year but has not taken place. Can the Minister explain how more accurate information is to be supplied to the valuation office so that it can make judgments about revaluations in a timely manner?
Thirdly, we are concerned about the number of appeals that flow from any revaluation. Currently—as I am told in the Local Government Association briefing—there is a very large backlog of appeals, even from the 2010 revaluation, for which councils had to set aside more than £2.5 billion in case appeals were granted. That money is obviously set aside to cover those risks. That is a considerable amount of council funding to be set aside when councils are under such pressure for the provision of services.
Then there are more fundamental questions about the sustainability of the existing business rating regime. There have been many questions and comments in your Lordships’ House over the last few years on the failure of the current system to demonstrate that it is, in principle, fair to businesses. I suggest that a fundamental and radical reform of business rates is needed. The noble Earl, Lord Lytton, also drew attention to that. The Government are allocating funding in a desperate attempt to revive declining town centres. However, at the same time they fail to appreciate that one of the biggest costs for small businesses, including independent retailers, is the business rates bill. Meanwhile, town centre businesses are competing with online businesses, which are able to operate from out-of-town warehouses and pay significantly less, pro rata, in business rates. The model is broken and must be reformed.
The Liberal Democrats have agreed a policy for such reform, which would scrap business rates altogether and replace them with what we have called a commercial landowner levy. The basic principle of this tax system is to tax the land, rather than the property and the investment in improvements that sometimes goes with it, as the current system does. It is estimated that businesses would receive a significant boost to profitability in this way, particularly in those areas of the country that are in desperate need of a funding boost to kickstart a revival in their fortunes.
The Government have occasionally hinted at the need for a more substantial reform of business rates. Can the Minister provide any indication of whether businesses may anticipate some policy statement to that effect from the Government? Will he also reflect on the challenge to the climate change emergency of favouring out-of-town warehouses, highly dependent on road transport, over more local shopping habits, and whether the latter should be encouraged rather than the former? With that array of questions, I look forward to the Minister’s responses.
My Lords, I welcome the noble Viscount to his new role and look forward to our future debates on a variety of matters.
I congratulate the noble Lord, Lord Randall of Uxbridge, on his excellent maiden speech. The noble Lord had a distinguished career in the House of Commons, and his contribution here will be very welcome on all sides of the House. He was the Government Deputy Chief Whip in the other place, and I am sure that his skills will be in much demand on the Government Benches. I agree with him that trust and compromise are welcome and much-needed qualities; they are often on display in this House, which is why this House works so well. I look forward to hearing him very many times in the future.
I refer the House to my relevant declaration of interest as a vice-president of the Local Government Association.
The Opposition support the Bill as far as it goes. We welcome the proposal to bring forward the revaluation by one year to 2021 and to hold revaluations every three years thereafter. The noble Earl, Lord Lytton, is an expert on these matters, and I look forward to the response of the noble Viscount to the very many points the noble Earl made. The Bill was of course promised back in 2017, and I am pleased that it is finally here.
There is, though, a serious problem: these proposals will not address the damage being done to our high streets. The noble Baroness, Lady Pinnock, made reference to the broken model of high streets and online businesses, and I very much agree with her comments. I am very supportive of the Save Our Shops campaign run by the trade union USDAW, which has real expertise in understanding how important our high streets are. Our high streets are in real trouble in many parts of England. We need proper, co-ordinated action: a proper industrial strategy for retail that deals with taxation in general, commercial rents and business rates. This is desperately needed so that we can ensure a level playing field for different types of retailers and deliver the framework to support local communities and the wider and local economy. When shops close and businesses move out, it destroys communities.
CAMRA, which I have been a member of for many years, has a campaign focused on saving the great British pub, and I fully support its campaign. Pubs currently pay 2.8% of the entire business rates bill but account for only 0.5% of the total business turnover, which is an overpayment by the sector of around £500 million. CAMRA is calling on the Government to conduct a full review of how the system works, and it has my full support in that. This review needs to look at how to address the current system, in which pubs are unfairly burdened. In addition to being local businesses, pubs provide a community service and often a community hub that needs to be both supported and protected. As I said at the start of my remarks, we support the Bill as far as it goes, but much more needs to be done.
Another issue I want to raise in this short debate is that of unresolved valuation appeals, of which 65,000 were lodged in 2010 and are still not resolved. This has led to local authorities diverting £2.5 billion to allow for the possibility of a successful appeal. This cannot be allowed to continue, and the Government must address this. Perhaps the noble Viscount can respond to that point when he responds to the debate shortly.
In conclusion, I wish the Bill a speedy passage. Maybe the noble Viscount can tell us what is going to happen with this Bill in the next few days—obviously I want to see it on the statute book—but we have a really serious problem here and this Bill does not yet attempt to address that. At some point, we need to do that quickly.
I thank noble Lords for their contribution to this short debate. I shall deal with all the points they have raised in just a moment, but I start by paying tribute to the excellent maiden speech from my noble friend Lord Randall of Uxbridge. I am pleased to know that his voice can now, at last, be heard in this Chamber. I found the speech rather reflective, not just of the historical context of Uxbridge—it was interesting to hear of the role of air defences in the Battle of Britain—and more; my noble friend was also quite right that in this House there is more of a focus on compromise. Perhaps it is fair to say that there is a lot more courtesy in this House. He did not say “compared to the other place” but, given the climate at the moment, his point was well made.
I also thank all noble Lords for their kind words about my new appointment. It is not lost on me that I have big shoes to fill. My predecessor, my noble friend Lord Bourne, held the role for some time, so I have much to learn.
A good number of points were raised by the noble Baroness, Lady Pinnock, and the noble Earl, Lord Lytton. If they will forgive me, I will address their points towards the end of my remarks.
As I said in my opening speech, business rates are an important tax, providing a vital source of revenue to help local government pay for local services. We believe that in this country we offer a highly competitive basket of taxes, which ensures that public services are funded in a balanced and fair way. Of course, we also recognise that some businesses need help. Since the 2016 Budget we have announced reductions in business rates worth more than £13 billion coming up over the next five years.
For example, we have made 100% small business rate relief permanent and doubled the threshold for 100% relief from 2017. This means that 675,000 of the smallest businesses now pay no rates at all. For the high street, at Budget 2018 we announced the business rates retail discount, providing eligible retailers with a rateable value of less than £51,000 with a third off their bills for two years from April 2019. That is delivering help now worth an estimated £1 billion and is in addition to the Prime Minister’s plan to unite and level up cities, towns and coastal and rural areas across our country. In July, we announced a £3.6 billion towns fund to re-energise local economies so that everyone can share in a new era of prosperity.
I listened carefully to the remarks made by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Kennedy, about high streets, and they are absolutely right to raise the issue. The point should be made that we want to encourage people into high streets as well as out-of-town retail centres. The high streets are a focus at the moment and have a crucial role to play as we work to grow the economies of all parts of the country, so the fund I just mentioned includes an accelerated £1 billion future high streets fund. This will support local areas in England to renew and reshape town centres and high streets in a way that improves experience, drives growth and ensures future sustainability. I add one more thing, which is that it provides an excellent experience for those who want to come into the high street, and we have much more to say about that as we take the policy forward.
More than 300 local authorities bid for a share of the funding in round one. More than 100 places have now been successful in progressing to the next phase of developing, detailed business cases; 51 places were announced on 5 July and a further 50 on 26 August. Successful local authorities will each receive up to £150,000 revenue funding and support from officials.
In response to the noble Baroness, Lady Pinnock, who asked about the impact on local authorities of the rates retention scheme, I assure her that local authorities will be compensated for the revaluation. As was the case at the 2017 revaluation, we intend to make any adjustments as are necessary to the rates retention scheme to ensure that locally retained income is, as far as practicable, unaffected by the 2021 revaluation. However, to reassure her further, we will consult local government on how to make those revaluation adjustments to the rates retention scheme nearer the time. This is something we successfully achieved for the 2017 revaluation, and I am confident that that can be repeated for 2021.
We are aware of concern from local authorities that changing the date of the draft rating list from the end of the previous September will impact on their billing and budgeting process. The Bill provides only that the end of December preceding the revaluation is the latest date by which the draft list must be published. It may be that a sensible time to make the draft list available is at the time of the autumn Budget, alongside the confirmation of the multipliers and transitional relief. That is something that we will discuss with local government, and the Bill will allow us to do just that.
For local authorities, we intend to make any adjustments as are necessary to the rates retention scheme to ensure that locally retained income is, as far as practicable, unaffected by the 2021 revaluation. As I said, we will consult local government on that.
I recognise that this matter was raised in Committee on the Bill in the other place, and we are working with the Local Government Association and other local government representatives to ensure that the publication of the draft list fits with the local government budgeting process. My officials met the LGA in August to discuss this matter, and we continue to work with the sector. As was noted by Councillor Watts of the LGA when giving evidence to the Bill Committee in the other place, we are confident that this matter is perfectly soluble.
I turn to another question raised by the noble Baroness, Lady Pinnock. She asked about scrapping business rates and explained the Liberal Democrat policy. I just say that the Government concluded a fundamental review of the business rates at Budget 2016 and decided to retain business rates as a property tax. Respondents to the review agreed that property-based taxes were easy to collect, difficult to avoid, relatively stable and clearly linked with local authority spending. Some respondents suggested alternative tax bases. However, there was no consensus, as respondents were clear that other taxes, such as a land value tax, have their own issues, including agreement on how land should be valued, and would not address the perceived unfairness between high street and online retail. I should not expect the noble Baroness to agree with that, but that is based on real evidence that we produced.
The noble Baroness also asked about resources for the Valuation Office Agency. I reassure her and the noble Lord, Lord Kennedy, that we believe that good progress has been made, particularly in clearing outstanding appeals, which were mentioned, going back to the 2010 list. At 30 June, there were around 62,000 outstanding appeals from the 2010 list. The majority of these—more than 50,000—are waiting for the resolution of litigation. We understand that the VOA is on track to clear the 2010 appeals within its control by the end of September 2019. I believe that good progress has been made. While I do not have completely up-to-date figures to hand, I understand that the VOA is expecting to have cleared the remaining appeals today—the end of the month. If for any reason situations arise where this does not occur, I have been assured that a timetable will be agreed with the ratepayer or their agent for the resolution of their case. I recognise the seriousness of this matter, but I hope that noble Lords are reassured that we are on the case and have the evidence to support that.
The noble Earl, Lord Lytton, raised a number of questions. He started by saying that this is too little, too late. He might not be surprised to hear that I do not agree with him. However, I shall address his question. The first was about whether the 2021 revaluation will be revenue neutral and how the multiplier will be adjusted. We will adjust the multiplier from 2021 to 2022 to offset the estimated change in total rateable value due to the valuation after allowing for inflation and forecast future appeals. He will know that we are required by law to do that. He further asked whether we plan to move to more frequent revaluations. To be fair to him, I understand how annual revaluations would further improve the rating system. It is something we will certainly consider in future, but in deciding whether to have revaluations more frequently than three years, rather than five years, we will need to strike a balance between the more up-to-date assessments which would flow from such a reform and the uncertainty that it would create by more regular changes to bills, and we will need to take the cost into consideration.
The noble Earl also asked about the revaluation process and the unacceptable burden on businesses. As I said earlier, and as he will know, revaluation is an important part of the business rates system that ensures that bills are more closely aligned with relative market values. The majority of businesses saw no change or a fall in their business rates liability following the 2017 revaluation. A £3.6 billion transitional relief scheme is providing support for the minority of businesses facing an increase in their bills. An additional £435 million of support to businesses was announced at the 2017 Spring Budget. I hope that reassures him that it is not the problem he thinks it might be.
The noble Earl also said that the CCA system was criticised at the Commons Treasury Select Committee. The numbers show that the system is operational and customers are using the service to make checks and challenges. The VOA published its road map in 2018, which set out the IT improvements that it will make to the system as it continues to deliver against that plan. The VOA has delivered some key improvements to the system, addressing specific concerns from stakeholders, including adding frequently requested features, such as an application programming interface—a so-called API—on check and streamlining the registration process to make the system easier to use. As of 31 March 2019, the VOA has registered more than 100,000 checks and more than 17,000 challenges under the new “check, challenge, appeal” system.
Towards the end of his remarks, the noble Earl asked how the revaluation will be delivered. I fully understand concerns regarding funding for the Valuation Office Agency, some of which I addressed earlier. Rating valuation is a specialised field, but we are confident that it can secure the staff it needs to discharge its statutory duty now and in the future. We are keeping a very close eye on it. I confirm that the agency is currently on track with preparations and resourcing for delivering the 2021 revaluation. The agency is also actively working to train and recruit staff to ensure that it can continue to fulfil its statutory duties. To this end the agency is continuing to develop and train its workforce for the future, including a targeted rolling recruitment campaign for chartered surveyors and those studying for accredited surveying qualifications.
I am ever grateful to all noble Lords this afternoon, for their many helpful points and questions raised. Your Lordships have that expertise and knowledge in the field of local government, and it is my first experience of that. Noble Lords’ expertise in the field of business rates valuation is less well known but equally appreciated. I am delighted that we have the noble Earl, Lord Lytton, here to keep us up to the mark—put it that way.
The Bill looks small and technical but, in fact, has widespread application in improving the business rate system for over 2 million ratepayers. It underpins the £50 million revaluation project currently being delivered by the Valuation Office Agency.
Bill read a second time and committed to Committee of the Whole House.