Consultation outcome

Business rates revaluation 2023: the central rating list - summary of responses and government response

Updated 6 May 2022

Introduction

1. In August 2021 the government published a consultation document outlining their proposals for changes to the central rating list for the 2023 business rates revaluation. This publication summarises the responses to that consultation and sets out the government’s response.

Overview of responses

2. There were 29 responses to the consultation comprising:

• 12 from ratepayers
• 12 from local authorities, the Local Government Association and London Councils
• 3 from firms of chartered surveyors and other practitioners in business rates
• a response each from the Institute of Revenues, Rating and Valuation and the Rating Surveyors Association

3. During the consultation the Department also met with various ratepayers and their representatives to hear and discuss their views.

4. A summary of the responses and the government’s response is given below. A number of respondents also commented on the valuation approach they felt should be adopted for the mobile telecom sector for the 2023 and future revaluations. The assessment of rateable values is done independently of Ministers by the Valuation Office Agency and is outside of the scope of the consultation.

The current principles of the central rating list

5. In the consultation document, in Annex A, the government set out the criteria which it uses for deciding whether hereditaments should appear on the central rating list. There was general support for the continued use of these principles amongst those who commented. Some respondents stressed that the local listing of hereditaments should be the default position and that some local aspects of network properties (such as railway stations on Network Rail) should appear in local rating lists.

6. The government continues to believe that the criteria in Annex A of the consultation document remain appropriate and will, by their nature, ensure that hereditaments which are suitable for assessing to local rating lists will, where appropriate, remain local.

Hereditaments suitable for moving to the central rating list for the 2023 revaluation

7. In the consultation document the government said it was minded to move certain large telecom networks and the Channel Tunnel Rail Link (HS1) from local lists to central rating lists. All respondents who commented on the proposal were supportive of moving telecom networks noting that the networks concerned crossed many local authority areas and were not by their nature local. There was also support for moving HS1 for the same reason but also some concerns regarding the potential loss of revenue to London (the revenue implications for local government are discussed below). Having regard to these responses, the government will proceed to identify those networks which it will move to the central rating list for the 2023 revaluation.

8. As discussed in the consultation document, final decisions on whether to move individual networks will be made in consultation with the ratepayers concerned on a case by case basis. This may mean, for example, that a network which although large in terms of rateable value could still remain in a local list if it primarily falls within the area of one list. Furthermore, in order to ensure the contents of the central list remains proportionate, the government is minded for the 2023 revaluation not to move networks with a rateable value at the time of the consultation of less than £500,000^{[footnote 1]}.

The mobile telecom sector

9. The consultation document also considered how, for the 2023 revaluation, the rating system could accommodate the growth in “small cells” associated in part with the roll out of 5G in the mobile telecom sector. The government suggested that to accommodate the growth of small cells they would consider moving the mobile telecom sector to the central rating list.

10. The majority of respondents who commented on this opposed the proposal to move the mobile telecom sector to the central rating list. Those respondents (all of whom were ratepayers in the telecom sector) noted that the expected number of small cells over the next few years is likely to be considerably less than suggested in the consultation document and closer to the low thousands. They felt that such numbers of new rating assessments would be manageable within the existing local rating lists system and that the hereditaments concerned were local in nature. They felt, therefore, that the mobile telecom sector should continue to be assessed to local rating lists.

11. A minority of respondents (all from or representing local government) supported moving the mobile telecom sector to the central rating list in order to improve the administration of the system. However, they also noted that once on the central rating list local government would not benefit from any future growth in business rates revenue from the mobile telecom sector.

12. The government is grateful to respondents for the evidence provided during the consultation on the likely roll out of small cells over the next few years. Having regard to this evidence, the government agrees that for the 2023 revaluation the mobile telecom sector should continue to be assessed on local rating lists in the normal way. The government will continue to keep this matter under review and look again at the evidence ahead of the 2026 revaluation. In light of this, the government will also leave in place the “mast sharing regulations” for the 2023 revaluation^{[footnote 2]}.

Interaction with the Business Rates Retention Scheme

13. The consultation document promised that, as far as is practicable, retained business rates incomes would be unaffected by any changes it makes in regulation moving ratepayers from local lists to the central rating list at the 2023 revaluation. Respondents from local government and ratepayers welcomed this commitment. However, some were concerned that moves to the central list could result in a loss of revenue from sources outside of the Business Rates Retention scheme (such as from Business Rates Supplements (BRS) or Business Improvement Districts (BIDs)).

14. As noted in the consultation document, the government will work with local government on the adjustments needed to the rates retention scheme as a result of moves to the central rating list and also movement in rates income more generally at the 2023 revaluation. This will include a consultation with local government ahead of the 2023/24 local government finance settlement.

15. The government does not propose to compensate local government for the loss of any revenue from BRS or BIDs from networks moving to the central rating list. BRS and BIDs are levies intended to support local and infrastructure projects beneficial to those local areas and local businesses. Therefore, hereditaments which have been identified as part of this exercise as no longer suitable for the local list should not, in effect, present a continued source of funding local projects through BRS or BIDs.

1. An exception to this may be where a ratepayer has a local list network of more than £500,000 rateable value but also one or more other smaller network – in which case the government is minded to still move both (or more) networks. ↩

2. The Non-Domestic Rating (Telecommunications Apparatus) (England) Regulations 2000 (SI 2000 No. 2421). See paragraphs 14 to 17 of the consultation document. ↩