Chamber and committees

Those are important points, and I discussed those matters with Professor Sparks earlier this week. As it has scrutinised the matters in detail, the committee will be aware that there is consistency across the range of strategies. Fundamentally, we want to take a place-based approach that includes partnership working and collaboration. At the heart of the review of town centres, and the principle we have adopted, is that town centres are for everyone, but everyone has a role to play in making their towns and town centres a success.

Partnership working is apparent across the range of strategies, but—this came up during scrutiny of NPF4 and the draft NPF4—perhaps there is a need to be more explicit and to communicate more clearly where the links are to allow ease of use and so that stakeholders can have confidence and understanding that there is a joined-up approach. In my response to the Parliament’s scrutiny of the draft NPF4, I reflected on how we can make those links clearer through the delivery plan for NPF4. During my discussions with Professor Sparks and Scotland’s Towns Partnership we considered whether there are products, or lines of narrative in communications, that can be developed to make the links more explicit.

The points that the convener has made are important, and I am reflecting on them. It is implicit that there are connections between the strategies. The links between collaboration on a place-based approach and the importance of community wealth building are apparent in the retail strategy, draft NPF4, “Housing to 2040” and the town centre action plan 2. However, I take the point that perhaps there is a need to make the links more explicit and clearer, so I am determined to do that.

As I said, we will consider what we can do. One concern would be that, if we were to start factoring in information on rental agreements, leases and the cost of buildings, we would get into the territory of commercially sensitive information. That is particularly the case when we look at the other two methodologies of valuation: the receipts and expenditure method and the contractor’s basis method. That issue also touches on, for example, how rateable value is calculated for hotels, restaurants and pubs, because turnover is an input into that process.

We must consider these matters carefully. However, the Government is committed to providing as much information and transparency as possible, so that users of the non-domestic rates system have the greatest understanding of how RVs are calculated.

RV is derived from net annual value, which is derived from a reflection of what would be a property’s yearly rental income on the open market. Ultimately, the rental market will be determined by market forces. By dint of how the methodology works, the prevailing national and local economic conditions will feed into how that is considered and, consequently, the RV. Therefore, it is factored into the process.

That shows the importance of having revaluation on a three-yearly cycle, with a tone date of one year, to ensure that, when the revaluation comes into effect, it is as up to date as it possibly can be. That, of course, is a reform that we introduced ahead of schedule.

I touched on a number of aspects in my opening remarks. One is the need to ensure that we recognise commercial sensitivity issues, which is why there is a focus on the use of a comparative methodology as opposed to a receipts and expenditure or constructor’s basis method.

Another aspect that I touched on is the practicality of delivery, in recognition of assessors’ workloads. We have a revaluation from 1 April 2023 and a one-year tone date to which assessors are working. For the first time, assessors are being required to produce a draft valuation notice for 30 November this year.

Taking all that into account, and through engagement and in collaboration with assessors, we settled on the 32 property classes that are included in the draft order.

We have set out what we intend to do for the revaluation in 2023. The next revaluation is scheduled for 2026, so we will continue to look at ways in which we can expand the amount of information that is provided ahead of the 2026 revaluation. The Parliament will of course be fully notified of and included in that process.

I reiterate the point that, ultimately, this comes from the agreement that was reached with the Barclay implementation appeals sub-group, which considered a wide range of options. That goes back to the point about commercial sensitivity.

Another aspect is what the Institute of Revenues Rating and Valuation said in its response to the consultation, in which it recognised that addresses provide a sufficient level of information for ratepayers and professional representatives to do their own research.

The revaluation that is scheduled for 2023 has a tone date of April this year. We have a one-year tone date, so the tone date for the revaluation for April 2026 will be April 2025.

The time between the 2023 revaluation being completed and the start of the 2026 revaluation is the period during which there will be further consideration of how more information can be provided and what information that will be. We will try to strike a balance to deliver as much information across as many property classes as possible, while recognising commercial sensitivity and, importantly, assessor workload, as I mentioned.

Following the 2023 revaluation, we will continue to engage with assessors and consult them on how we can expand the amount of information that is provided ahead of the 2026 revaluation.

Broadly speaking, the aim of the bill is to ensure that, with effect from 2 April 2020, no matter that is attributable to coronavirus can be taken into account in a non-domestic property’s net annual value or rateable value in the 2017 valuation roll.

Section 2 will amend section 2(1)(e) of the Local Government (Scotland) Act 1975, which places a legal duty on assessors to alter the valuation roll in certain circumstances while the roll is in force. The 2017 roll is in force until 31 March 2023. Section 2 will expand those circumstances by adding “the coming into force” of the bill.

As the committee will be aware, we have extended the disposal date for appeals until 31 December 2023 so that appellants can make an informed decision as to whether they wish to pursue an appeal once Parliament has finished considering the bill. Should any appeals continue to be pursued after the passage of the bill, it is possible that they might not be determined by 31 March 2023, given the time that it can take for complex appeals to be resolved.

Amendment 2 will remove section 2 and introduce an altogether new provision that creates a new duty requiring the assessor to apply the rule in section 1 to the current valuation roll and to make any resulting change to the net annual value or rateable value of any lands and heritages. The new provision also makes it clear that that obligation applies both while the current 2017 valuation roll is still in force and thereafter.

Our intention is to make it very clear that, should appeals continue to be pursued after the bill is passed, and should any values be reduced with effect from any period prior to 2 April 2020 as a result of a matter that is attributable to coronavirus, the assessor would be required to reverse that change with effect from 2 April 2020 in the 2017 valuation roll. As I have explained, there is no change to the policy intention. Instead, the amendments are intended to strengthen it, and we have discussed them with assessors to ensure that, from a technical perspective, they will do so. I hope that the committee agrees that the new wording makes that intention clearer, while also recognising that any Covid-19 appeals that appellants wish to pursue might not be resolved by 31 March 2023, particularly given the extended disposal deadline of 31 December 2023.

Amendment 3, which is consequential on amendment 2, will add to section 3 a definition of the term “assessor” for the purposes of the bill and ensure that references to that term in the bill are interpreted consistently and with reference to existing legislation. I hope that members will support both amendments.

I move amendment 2.

Amendment 2 agreed to.

Section 2, as amended, agreed to.

Section 3—Interpretation

Amendment 3 moved—[Tom Arthur]—and agreed to.

Section 3, as amended, agreed to.

Sections 4 to 6 agreed to.

Long title agreed to.

As you would expect, I will caveat my answer by recognising the independence of assessors. The question is apropos of the legislation that we were considering earlier. General economic and market conditions are best considered at revaluation. The reforms that we have implemented in which we have moved from a five-year revaluation cycle to a three-year cycle, and from a two-year tone date to a one-year date, mean that valuations will be more reflective of prevailing market conditions. However, in the legislative context in which we operate, it is of course for individual assessors to determine the RV for properties, and there is a well-established process for appeals to be raised by individual ratepayers who wish to do so.

Broadly speaking, the bill’s principal rule is that, in the calculation of the net annual value or rateable value in relation to any property in the 2017 valuation roll, no account can be taken of any matter occurring on or after 2 April 2020 that is directly or indirectly attributable to coronavirus. That date is consistent with non-domestic rates policy regarding the definition of “material change of circumstances”, and the circumstances in which general economic factors can be regarded as being relevant to a change in valuation.

Amendment 1 will add a new subsection to section 1 to make it clear, for the avoidance of doubt, that in the application of the bill’s principal rule, 2 April 2020 is the effective date from which a determination cannot reflect any matter that is attributable to coronavirus in rateable value or net annual value. It clarifies that, in the calculation of the net annual value or rateable value of any lands and heritages for the purposes of an entry in the valuation roll, should a matter that is attributable to coronavirus first occur before 2 April 2020 and continue to occur on or after that date, no account can be taken of that matter, with effect from 2 April 2020 onwards. Amendment 1 aims to strengthen the policy intention, and we have discussed it with assessors to ensure, from a technical perspective, that it will do so.

I hope that members will agree with the rationale that I have set out and will agree to amendment 1.

Amendment 1 moved—[Tom Arthur]—and agreed to.

Section 1, as amended, agreed to.

Section 2—Alteration of valuation roll