My Lords, I shall speak also to Amendment 2, which is in the same group. This follows what I thought was an interesting and useful discussion in Committee on the meaning of the words “wholly or mainly” when it came to defining whether a hereditament qualified for the zero rating under business rates as a public lavatory. In Committee I probed whether “mainly” was about the area it covered, perhaps the floor area, the value or the use. The Minister made it very clear that it was about the use; I have been reading what he said in Committee and that is very clear indeed. I will come back to that because Amendment 1 is the more important of these two amendments.
Amendment 2 is about the percentage use of the hereditament that qualifies for non-payment of any business rates. In Committee the Minister made it clear that the words “wholly or mainly” were put in because, he said, they are commonly used words in this kind of legislation, particularly in relation to charities. He referred to case law and to local authorities having some flexibility in whether they decide it is a public hereditament. He said:
“The use of ‘mainly’ means that an authority may, for example, look at the floor area of a building and see that less than 50% is being used directly as a public lavatory, but it may still feel that it
meets the criteria … because the remaining area is used as storage or for other matters of little consequence.”—[Official Report, 24/2/21; col. 852.]
The useful discussion that we had there again put the emphasis upon the use of the hereditament. The Minister went on to refer to the Local Government Finance Act 1988 and its reference to charities.
The interesting thing is that it is not entirely clear that 50% is absolutely clear and written into the legislation. The Minister kept saying that he did not want greater burdens to be put on local authorities and did not want them to spend more time on this, yet there seems to be some disagreement, in the context of business rates relating to use for charitable purposes, about whether the proportion of the use that is taking place has to be 50% or more. The Charity Tax Group says in its briefing:
“In order to benefit from the mandatory exemption from business rates it is important to understand the meaning of ‘wholly or mainly used for charitable purposes’. Case law suggests that ‘mainly’ probably means ‘more than half’; but there is a certain amount of ambiguity about this and the interpretation may vary from local authority to local authority”
which is unsatisfactory.
“It is sometimes argued that ‘mainly’ in fact means more than 75 per cent. Charities may have to try to negotiate this with their local authority.”
I am no expert on this area and I do not know how much of that goes on, but it seems sensible that if “mainly” means 50% or more that ought to be written into the Bill.
Amendment 1 would put into the legislation the exact words in the charitable legislation and the exact words that the Minister said in Committee referred to this legislation. I looked it up. Section 45A(2)(b) of the Local Government Finance Act 1988 reads, for charitable relief,
“it appears that when next in use the hereditament will be wholly or mainly used for charitable purposes.”
There is then another paragraph that refers to community amateur sports clubs that has the same wording.
I am therefore trying, in an attempt to be really helpful to the Government, which I always attempt to do in legislation because if we get good legislation it is clear what it means and it is workable, to put into the Bill the wording in the Local Government Finance Act, which in Committee the Minister said applied to this Bill, which is to say that it is not, as this Bill states at the moment
“consists wholly or mainly of”,
but
“is used wholly or mainly”
for public lavatory purposes.
This is a very sensible little amendment. The Government ought to say, “Yes, of course. It’s sensible. Let’s put it in.” I beg to move.