In March, government announced its intention to restrict ratepayers' collective ability to seek rate reductions as a result of the crippling effects of COVID-19.
Three months later and government is edging closer to that aim. A bill that seeks to close down appeal rights retrospectively is meandering its way through the two Houses and builds on a statutory instrument made law in March which already achieves similar ends, albeit in a forward-looking way only. In very broad terms, should the bill become law, any reduction in rateable value that might have been warranted, but where that reduction is caused by any direct or indirect effect of COVID-19, will no longer be permitted.
Such action by the government is unprecedented. But, whether you agree with it or not, perhaps it is not that surprising.
However, regardless of the rights or wrongs, it's clear that this decision has left many ratepayers in financial distress. For, while government did take decisive action to protect many businesses at the height of the pandemic through a combination of reliefs and grants, many fell foul of the criteria and have had to continue to pay their rate liabilities at pre-pandemic levels without respite.
As a quid pro quo to the removal of appeal rights, government has announced the creation of a relief fund. This fund, which will total £1.5bn, will be distributed to billing authorities (BAs) who in turn will be tasked with using their own discretion in distributing to those businesses they consider are most in need.
All very well but, three months after this fund was first announced, we've yet to see any detail around the likely criteria and we lack certainty in terms of when the BAs will be allowed to distribute the funds. Government are currently messaging that they do not intend to switch the fund on until the appeal restriction bill has become law. And while that timescale is anyone's guess; if it maintains its current trajectory, it’s likely to take many more months. In the meantime, more businesses will likely go to the wall and the recent announcement to delay "Freedom Day" makes a bad situation worse.
And is £1.5bn enough? Probably not. Rough estimates produced when the appeal discussions between the VOA and the Rating Surveyors Association (RSA) were underway suggested that those appeals could give rise to liability savings of £5bn or more. At its current level and once it has divided between the billing authorities, the fund equates to a little over £4m per authority.
The RSA has raised three main concerns over the fund and has called on government to take them on board and to take immediate steps to address them:
- Timing – That the relief fund should be deployed without any further delay. The government’s current position to wait for the bill to reach Royal Assent is both unnecessary and inappropriate. Indeed any further delay will be prejudicial to struggling businesses.
- Quantum in aggregate and per business – That the fund will be insufficient to genuinely support business. We believe that, once divided between the billing authorities, it will be challenging for BAs to support enough ratepayers in aggregate, as well as provide individual ratepayers with access to sufficient relief to make a meaningful difference.
- Delivery – That the funds will not find their way to the businesses most in need. Government must ensure that any guidance to be issued alongside the relief fund is drafted such that Billing Authorities will be empowered to deliver the relief to those businesses most in need and that they are not encouraged to introduce generic policies that would risk excluding certain businesses based on certain characteristics that would otherwise be deserving of it.
Announcing a policy is one thing. But until the money is in the ratepayers' bank accounts, it's only words and words don't pay the bills.