Business Rate Supplements Bill

My Lords, as the noble Lord, Lord Bates, said, this is a repeat amendment, but I am happy to use the opportunity provided by the noble Baroness to place the matter clearly on the record. The amendment is about the cost of setting up the business rate supplement, with particular reference to London, although it has a wider application. In developing our proposal for business rate supplements, we have been mindful of the fact that certain costs could initially fall on billing authorities. We fully appreciate that those authorities do not want to be out of pocket as a result. We have addressed the issue in Clause 22, which gives the Secretary of State the power to authorise billing authorities to use a prescribed proportion of BRS revenues to meet its collection and enforcement expenses where the levying authority levies its BRS from the beginning of the financial year. This is what we expect to happen in most cases where the BRS is levied, but we recognise that that might not always be the case and it is possible that a levying authority may not be ready to levy the BRS from the start of the financial year and it might not want to wait for nearly a whole year to elapse before being able to start collecting the supplement. Therefore, the Bill enables BRS to be levied part way through a financial year. Where that happens, those costs can not be recovered from BRS revenues. Instead, they must be met by the levying authority. Clause 22 gives the Secretary of State a power to make regulations prescribing the proportion of BRS revenues that may be retained by billing authorities when the supplement is collected as part of the normal billing round. Where costs have to be met by the levying authority, the Secretary of State may cap the amount that the levying authority is required to reimburse the billing authority. I am conscious that this is a probing amendment seeking clarification on a point that will be of the utmost importance to local billing authorities. The noble Baroness, Lady Hamwee, is seeking clarification that Clause 22 will enable billing authorities to recover the costs that they will incur in preparing for BRS, as distinct from the costs they will incur in collecting BRS when it is up and running. I am happy to put it on record that it is, indeed, our intention that billing authorities should be able to recover their set-up costs. Let me take a moment to explain how we are addressing this specific issue. Much of the detailed arrangements for BRS will be dealt with in secondary legislation. We recently published a consultation paper with our proposals for secondary legislation. It covers the arrangements for ballots as well as for the collection and enforcement of BRS. The consultation paper also includes a section on the costs of collection and recovery of BRS, referred to in the Bill as "administrative expenses". The consultation paper acknowledges that these expenses will cover set-up costs. There are a number of different approaches to calculating costs of collection and the consultation paper discusses three possible options. It invites views from stakeholders on these options, but billing authorities should not be constrained by them. If billing authorities or others with an interest in this issue think that there is a better way of dealing with costs of collection, the consultation gives them the opportunity to let us have their views. Views are invited on whether administrative expenses should be a fixed percentage of the annual total amount of BRS to be collected by the billing authority or whether this should be a fixed amount. A third possible approach is that costs should be agreed locally between the levying authority and the billing authority, subject to an upper limit to provide reassurance for business. We are inviting views on what is an important issue for billing authorities. We will need to decide on the best way forward in the light of the responses to the consultation paper. However, subject to that consultation, it is our intention that billing authorities should be able to recover their reasonable costs incurred in preparing for collecting and enforcing BRS. I hope that this response clarifies the issue for noble Baroness, Lady Hamwee, and that she will feel able to withdraw her amendment.