Business Rates Revaluation 2023: Consultation on the transitional arrangements

Our key point in responding to this consultation is that any transitional arrangements for 2023, whether part of the formal scheme or supplementary, should be announced no later than autumn 2022 when the draft list and provisional multiplier are announced. This is in order to make the process as smooth as possible for both ratepayers and billing authorities and allow time for any necessary software changes.


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This response has been agreed by Lead Members of the LGA Resources Board.

Introduction

  • We welcome the chance to respond to this consultation on the 2023 transitional arrangements. As the consultation says, the Government is required by law to introduce transitional arrangements, which they have previously at each revaluation, to support businesses to adjust to their new bills. The Government must also try to ensure, that, as far as practicable, the scheme is revenue neutral over its life.
  • The transitional relief scheme for the 2017 revaluation was announced in November 2016. However, in March 2017, the Government announced additional transitional arrangements worth £435 million, consisting of additional support for small businesses and a discretionary relief scheme of £300 million. The late announcement of these additional reliefs added to the administration difficulties for billing authorities.
  • Our key point in responding to this consultation is that any transitional arrangements for 2023, whether part of the formal scheme or supplementary, should be announced no later than autumn 2022 when the draft list and provisional multiplier are announced. This is in order to make the process as smooth as possible for both ratepayers and billing authorities and allow time for any necessary software changes.
  • We would also expect that, in common with previous schemes, that councils should be fully compensated for the impact of the revaluation and the transitional relief scheme and that any administrative costs for local government of either the main scheme or any supplementary schemes should be fully covered under the New Burdens doctrine.

Questions

Question 1

How do you believe the Government should strike the balance in the 2023 transitional arrangements between supporting ratepayers facing increases to their bills and allowing the effect of the revaluation to flow through into bills?

  • As we said in our response to the 2017 consultation, we see the need for a transition scheme to help businesses adjust to new bills. At that time we did not express a view on either of the schemes on which the Government consulted.
  • We note that on this occasion the Government is consulting on the principles of a scheme rather than on any specific scheme. We understand that there is a balance to be struck but do not have any particular views on how this should be achieved.

Question 2

What format of transitional relief do you think should be provided for the 2023 revaluation?

Question 3

Do you think that we should continue to provide assurances through transitional relief that bills will not rise by more than a set percentage due to the revaluation?

Question 4

Do you think we should provide different caps for different sizes of properties?

  • As stated above we do not have a view on the format of transitional relief. We can see the point of any scheme being simple. A scheme like that adopted in 2017 had the advantage that it was in a format familiar to ratepayers. However any scheme this time will have to take into account that the next revaluation is scheduled for 2026.
  • Some ratepayers may find it more difficult than others to adjust to new bills and caps could take account of that.

Question 5

What are you views on how we should fund transitional relief within the requirement for the Government to have regard to the object of securing (so far as practicable) that the scheme is revenue neutral over its life?

Question 6

Do you have any other views on the format of the transitional arrangements for the 2023 revaluation?

  • We do not have a view on how transitional relief should be funded. We note that the arrangements adopted in 2017 provided for higher caps on downward reductions for smaller businesses and relatively lower caps for reductions for medium sized and larger businesses, with the result that the latter took more time to reach their new bills.
  • We note that with the three-year revaluation the chances of those subject to downward caps not reaching their substantive rateable value during the currency of the list are higher, so that the alternative discussed, of a supplement on business rates, might be attractive, but it is up to the Government to take a view on this; we will not express a specific preference.
  • We would also expect that, in common with previous schemes, that councils should be fully compensated for the effect of revaluation and transitional relief and that any administrative costs for local government of either the main scheme or any supplementary schemes should be fully covered under the New Burdens doctrine.
  • Finally we would reiterate the point that any relief, whether the statutory transitional relief scheme or any reliefs as in 2017, should all be announced at the same time when the provisional draft list and the draft multiplier are announced.

Contact

Mike Heiser, Senior Policy Adviser

Email: mike.heiser@local.gov.uk