§ Mr. PlaskittTo ask the Secretary of State for the Environment, Transport and the Regions what is the outcome of the consultation on the revaluation of non-domestic rates in April 2000. [100220]
§ Ms ArmstrongBusinesses have overwhelmingly supported the need for a transitional relief scheme to phase in changes in business rate bills, as proposed in our recent consultation paper. Following that consultation, I am pleased that we can announce today limits on the size of annual increases over all five years of the new rating list.
172WRate bills will fall for many properties, while others will see only modest increases. The transitional relief scheme will place maximum limits on any larger increases, with additional protection given to small properties.
The largest possible increase in bills for small non-domestic properties will be 5 per cent. in real terms in 2000–01, rising to 7.5 per cent. in each of the following four years. The threshold for these small properties will be increased to a rateable value of less than £12,000 (or £18,000 in London). The equivalent limits on bill increases for all larger properties will be 12.5 per cent. in real terms in 2000–01, 15 per cent. in 2001–02 and 17.5 per cent. in each of the following three years.
Small properties will also be given preferential treatment on the limits on the amount by which rate bills can fall in any year. Their bills will be allowed to decrease by up to 5 per cent. in real terms in the first two years, up to 10 per cent. in the third, 12.5 per cent. in the fourth and 25 per cent. in the last year. Decreases for all larger properties will be limited to 2.5 per cent. in real terms in the first two years, and 5 per cent. in the third, 7.5 per cent. in the fourth and 15 per cent. in the last year.
Revaluation does not mean that more money will be raised from the rates, since the rates multiplier (or poundage) will be reduced next year to take account of the increase in rateable value across the country. What it does mean is that the rate burden will be distributed more fairly, reflecting changes in the property market since 1995.
A number of responses to the consultation paper called on the Government to review the current system of business rate revaluation. We agree that such a review is needed. This will not be a fundamental review of the business rate, but it will look for ways of improving the approach to valuation in order to increase stability, certainty and simplicity in the system, including changes to the frequency of valuations. The details of the review will be announced in due course.