My Lords, I am grateful to noble Lords for the
opportunity to speak to the benefits of Clause 1 of the Bill, which has received broad support throughout its passage. I will shortly come to the particular concerns of the noble Lord, Lord Hunt of Kings Heath, and the noble Earl, Lord Lytton, as well as those of the noble Baroness, Lady Garden of Frognal, so ably put by the noble Baroness, Lady Pinnock. They eloquently set out their objections, wanting to promote a wider debate about the need for clarity around guidance and the urgency of this measure. I will endeavour to respond to those concerns.
Clause 1 provides that coronavirus and the Government’s response to it should not be considered a legitimate basis for a successful material change of circumstance appeal. There are many thousands of these appeals currently in the system; the passage of the Bill will ensure that they do not stand. It is important that we clarify through this legislative measure that the impact of coronavirus will be accounted for at the next revaluation, rather than becoming a legitimate ground for appeal between revaluations. Failing to do so would clog up the courts, undermine local government finances and cause the MCC legislation to be used in a way that was not intended when it was passed. As noble Lords will recall, the provision for MCCs was not intended to reflect market-wide economic effects, which are rightly considered at general revaluations, the next of which will be in 2023.
The Government have received widespread support from parliamentarians in both Houses for this measure. There has been general approval of Clause 1 as a necessary measure to remove a significant source of financial uncertainty from local government, as well as to ensure that the law relating to business rates appeals operates as intended. The noble Lords who tabled this amendment provided by way of explanation that they wish to prompt a wider discussion of the Government’s plans relating to the £1.5 billion of business rates relief that we have promised, on top of the £16 billion of relief already provided to businesses throughout the pandemic.
As the Government have made clear, the £1.5 billion is intended to enable local authorities to provide targeted support to the sectors most affected by the pandemic but which have not benefited from support linked to business rates. Within those sectors, the relief will enable councils to award relief to businesses that they consider the most affected by the pandemic, using their local knowledge and, obviously, having regard to the government guidance. I am confident that it will prove to be a far more effective and faster way of directing support to businesses impacted by the pandemic than the MCC challenge process. That is in part because councils use their local knowledge of their area and ratepayers will ultimately be responsible for decisions on the award of relief. It would not be right for Ministers here to say whether particular ratepayers or types of ratepayers will benefit from the £1.5 billion scheme.
Work is ongoing between my department, the Treasury, the Valuation Office Agency and local authorities to prepare guidance to support the relief process. The shape of the final guidance, and how in practice we will smoothly pass decisions on this relief scheme to
local authorities, will need to reflect various factors, including the existing framework of government support, information held by local authorities and their capacity to administer schemes quickly. We will continue to work on the relief fund and prepare the guidance for publication as soon as the Bill receives Royal Assent. We are of course mindful of local authorities’ need for an effective set of parameters within which they can design their local schemes. Local authorities should stand ready to develop and deliver their schemes as soon as they are able.
The noble Earl, Lord Lytton, wanted to know where the £1.5 billion figure came from. It is quite clear that local government made provision, as reported, of almost £1 billion for Covid MCC challenges for 2020-21. That was, in effect, being held in reserve rather than being spent on local public services. This measure enables that £1 billion that is currently provisioned to deal with challenges to go towards the effective delivery of local public services. Of course, it is a matter for local authorities themselves to determine. That certainly gives them the freedom to release that money that is currently tied up if we do not proceed with this piece of legislation.
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My noble friend Lord Cormack is calling for a delay: he is seeking to ensure that the business rates measures in the Bill will not come into force until six months after Royal Assent. I recognise that sometimes a pause in the coming into force of a Bill is useful in ensuring that its measures can be implemented effectively. However, the measure is one which retains the status quo. The Valuation Office Agency has not changed any rateable values as a result of the MCC appeals lodged on account of the pandemic. No ratepayer has seen, or will see, their business rates liability change as a result of Clause 1.
The objective of this measure, which is to ensure that successful MCC appeals cannot be made on the basis of coronavirus, providing certainty to local government and all parts of the business rates system, will be met at the point of enactment. Therefore, delaying the point of enactment will simply prolong the uncertainty for everyone. However, passing this measure with effect from Royal Assent will provide swift certainty for local government and ensure that these MCC cases do not need to trouble the Valuation Office Agency or the tribunal system, with all the unnecessary costs, uncertainty and operational challenges that that would present. I therefore urge my noble friend to not move his amendments.
My noble friend also raised the concerns of Heathrow and other airports, which have suffered, as we know, throughout the pandemic. I point out that airports have received support for their fixed costs during the last year from the Airport and Ground Operations Support Scheme. In his recent Budget, the Chancellor announced a further six months of support for airports, up to the equivalent of their business rates liabilities, for the first half of the 2021-22 financial year, subject to certain conditions and a cap per claimant of £4 million. So there have been measures designed to support airports. We need to recognise, however, that market-wide economic changes that affect property values, such as
the pandemic, can and should be considered only at revaluations, rather than in between them. The next revaluation, as I have said, is due in 2023 and will be based on the market as at 1 April 2021.
I hope I have addressed most of the points raised by noble Lords. I should also have declared my relevant commercial and residential property interests. I have received no relief for any interests that I hold but for completeness I declare those interests.