 Good morning, and welcome to the 16th meeting in 2022 of the Local Government Housing and Planning Committee. Annie Wells, Marie McNair and Mark Griffin will be joining us remotely today. I would ask all members and witnesses to ensure that their mobile phones are on silent and that all other notifications are turned off during the meeting. The first item on our agenda today is to consider the non-domestic rates coronavirus Scotland Bill at stage 2. We are joined for this item by the Minister for Public Finance, Planning and Community Wealth, who is accompanied by Scottish Government officials, Sandra Reid, who is the bill team leader, David Smith, a lawyer and Gavin Seller, who is the parliamentary council. I welcome all to the meeting. Members would refer to the marshaled list and groupings for stage 2 of the bill, which were circulated to members on Thursday. I call amendment 1, in the name of the minister, in a group of its own. Minister to move and speak to amendment 1. Thank you very much, convener, and good morning to the committee. The principal rule in this bill, broadly speaking, is that, in calculating the net annual value or rateable value in relation to any property in the 2017 valuation role, no account can be taken of any matter occurring on or after 2 April 2020 that is directly or indirectly attributable to coronavirus. This date is consistent with non-domestic rates policy regarding the definition of material change of circumstances and the circumstances when general economic factors can be regarded as relevant to a change in valuation. Amendment 1 adds a new subsection to section 1, which seeks to make clear, for the avoidance of any doubt, that in the application of the principal rule in the bill, 2 April 2020 is the effective date from which a determination cannot reflect any matter attributable to coronavirus in rateable value or net annual value. It clarifies that, in calculating the net annual value or rateable value of any lands and heritages, for the purposes of any entry in the valuation role, should a matter attributable to coronavirus first occur before 2 April 2020 and to continue to occur on or after that date, no account can be taken of that matter with effect from 2 April 2020 onwards. This amendment aims to strengthen the policy intention, and we have discussed it with assessors to ensure, from a technical perspective, that it does that. I hope that members will agree with the rationale that I have set out and that they will vote for amendment 1, and I move amendment 1 in my name. If any members have any comments or questions, I invite the minister to wind up. The question is that amendment 1 be agreed, are we all agreed? The question is that section 1 be agreed, are we all agreed? I call amendment 2 in the name of the minister, grouped with amendment 3, minister to move amendment 2 and speak to both amendments in the group. Broadly speaking, the aim of this bill is to ensure that, with effect from 2 April 2020, no matter attributable to coronavirus can be taken into account in a non-domestic property's net annual value or rateable value in the 2017 valuation role. Section 2 of the bill, as introduced, meant section 2 on E of the Local Government Scotland Act 1975, which places a legal duty on assessors to alter the valuation role in certain circumstances while the role is in force, which is up to 31 March 2023 for the 2017 role. It expands on these circumstances by adding the coming into force of this bill. As the committee are aware, we have extended the disposal date for appeals until 31 December 2023, so that appellants can make an informed position as to whether they wish to pursue an appeal or not when Parliament has finished considering the bill. Should any appeals continue to be pursued after the passage of the bill, it is possible that they may not be determined by 31 March 2023, given the time that it can take for complex appeals to be determined. This amendment removes section 2 and introduces a new provision altogether. This creates a new duty on the face of the bill, requiring the assessor to apply the rule in section 1 of the bill to the current valuation role 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 this obligation applies both while the current 2017 valuation role is still in force and thereafter. Our intention here 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 attributable to coronavirus, the assessor would be required to reverse that change with effect from 2 April 2020 in the 2017 valuation role. As explained, there is no change to the policy intention. Those amendments are intended to strengthen the policy intention, and we have discussed them with assessors to ensure, from a technical perspective, that they do that. I hope that the committee agrees that this new wording makes that intention clearer, whilst also recognising that any Covid-19 appeals that appellants will wish to pursue may not be resolved by 31 March 2023, particularly given the extended disposal deadline of 31 December 2023. Amendment 3 is consequential to amendment 2. It adds to section 3 of the bill a definition of the term assessor for the purposes of the bill and ensures that reference to this term in the bill are interpreted consistently with references to existing legislation. I hope that members will vote for those amendments and I move amendment 2. Do any members have questions or comments? I invite the minister to wind up. No further comments, convener. The question is that amendment 2 be agreed. Are we all agreed? I call amendment 3 in the name of the minister already debated with amendment 2 and invite the minister to formally move. I am a con. The question is that amendment 3 be agreed. Are we all agreed? The question is that section 3 be agreed. Are we all agreed? The question is that section 4, 5 and 6 be agreed. Are we all agreed? The question is that the long title be agreed. Are we all agreed? That ends stage 2 consideration of the bill. I thank the minister and his officials. Mr Arthur will remain at the table for our next item of business, but I now suspend the meeting to allow for a changeover of witnesses. The next item on our agenda for today is to take evidence on the non-domestic rates valuation notices Scotland regulations 2022 from Tom Arthur, Minister for Public Finance, Planning and Community Wealth. Mr Arthur is joined for this item by Scottish Government officials Anouk Berthier, non-domestic rates policy and Susan Robb, who is a solicitor from the Scottish Government. I welcome the minister and his officials to the meeting. Before I open up to questions from the committee, would Mr Arthur like to make a short opening statement? Certainly. Thank you, convener. Thank you also to the committee for the opportunity to give evidence on a second piece of NDR legislation today. The Scottish Government is keen to ensure that non-domestic property valuations are better understood by ratepayers. The draft instrument that we are considering today increases accountability in the non-domestic rates system ahead of the 2023 revaluation. The Barclay review of non-domestic rates called for assessors to provide more information to property owners and occupiers when making rateable value calculations. The Barclay Implementation Appeals subgroup, an expert group, set up to inform advice to Scottish ministers in respect of NDR reforms to the appeal systems, specifically recommended that assessors should provide alongside property valuations the addresses of properties, the rental evidence of which was used to inform the calculation of the basic rate applied to the property. It proposed that four categories of properties be covered in the first instance—standard shops, offices, warehouses and workshops—and that that would be expanded in future. We consulted on a draft instrument that sought to require that assessors provide this information in draft and final valuation notices in respect of revaluation. On the one hand, some responses called for the proposed information sharing requirements on the assessor to be expanded to more property types or to more valuation methodologies. On the other hand, some raised concern should these requirements be expanded over the potential provision to thub parties of confidential and commercially sensitive information such as trading accounts or lease details. We considered this and, as a result, this draft instrument now goes beyond the appeals subgroup's recommendation. It requires that for 32 categories of property valued using the comparative method and the basic valuation rate, the assessor must provide the addresses of comparable properties used to calculate the rate and state where the information can be accessed. Requiring that a list of addresses be produced, only where two or more properties were used in comparison for the valuation, will avoid the risk that commercially sensitive information can be worked out in directly. I believe that our response to the consultation demonstrates our commitment to greater accountability in the rate system, while ensuring that our reforms do not place an unrealistic burden on assessors. I hope that members will welcome this, given the points that were raised about assessor workload in its stage 1 report on the non-domestic rates coronavirus Scotland bill. We remain committed to greater accountability in the rate system and will explore how to expand on those information sharing requirements in advance of the 2026 revaluation. The instrument also contributes to modernising the NDR system by allowing for draft valuation notices to be sent electronically where that has been requested by the owner or occupier and it has been agreed in writing between the assessor and owner or occupier. I hope that members will support the draft instrument today. I now open up the session to questions from members, and I would like to begin. You touched on the specific 32 property classes a little bit in your opening statement for which additional information will need to be provided in respect of the valuation. Can the minister explain the rationale for the selection of these 32 property classes? Certainly. There are a number of aspects that I touched on in my opening remarks. One is the need to ensure that we recognise issues around commercial sensitivity. That is why there is a focus on the comparative methodology as opposed to the restriction expenditure or the constructor method. There is also the practicality of delivery and recognition of assessor's workload, which I also touched on. We have a revaluation from 1 April 2023. We have a one-year tone date that assessors are working to. We also have, for the first time, assessors who have been required to produce a draft valuation notice for 30 November of this year. Taking all of that into account and through engagement and collaboration with assessors, we settled on the 32 classes that are included in the draft order. I do not know if there is anything that you would want to add. I would like to bring in Marie McNair with question number two. Thank you, convener. Good morning, minister. I was wondering if you could provide further details on the Scottish Government's position on expanding the list of types of properties for which the additional information must be provided. As I said in my opening remarks, we are committed to greater accountability and transparency in the non-domestic rate system. I recognise that it is of great interest to members in this Parliament and to businesses across Scotland. Ahead of the revaluation in 2026, we will explore ways in which requirements can be expanded to allow for a greater share of properties to be on the valuation role. However, it was sensible, in the first instance, to focus on properties using the comparative method of valuation because there was aforementioned commercial sensitivities that we would come in to play with the other methods of valuation. Okay, thank you. I am now going to bring in Annie Wells with a question. Good, convener, and thanks minister. Just following on from Marie McNair's question, when might any expansion to the list of properties covered come into effect? Thank you. We have set out what we are intending to do for the revaluation for 2023. The next revaluation is scheduled for 2026, so we will continue to work and look at ways in which we can expand the amount of information provided ahead of that revaluation in 2026. Of course, Parliament will be fully notified and included in that process. Do you have an actual timeframe in mind? I know that you are saying 46, but is there any plans in the meantime? The revaluation is scheduled for 2023. We have had a tone date in April this year. We have a one-year tone date, so the next tone date will be April 2025. The revaluation will be from April 2026. What between the revaluation being completed and the next revaluation will be the period in which the list can come into a further consideration of how more information can be provided and what additional information can be provided. That can be considered in that period. As I say, we are trying to strike a balance to deliver as much information as possible across as many classes, but we are having to recognise the issues that I mentioned around commercial sensitivity and, importantly, assessor workload. We will, following this revaluation, continue to engage with assessors and consult them on how we can further expand the amount of information provided ahead of the revaluation in 2026. Thank you, minister. Thank you, convener. Okay, thank you. I am now going to bring in Paul McClellan. Thank you. Morning, minister. Morning, panel. Minister, you can touch on this in the opening statement. Some stakeholders commented that address information itself is insufficient and that further details such as rent values should be provided. I don't know if there's anything else you want to add to that at all. I would really just reiterate the point that I made that this was ultimately from where I was agreement reached with the Barclay Implementation Appeals subgroup, and he did consider a wide range of options. Clearly, it comes back to that point around commercial sensitivity. Another point that we noticed is what the IWRV said in response to the consultation, where we recognised it by providing addresses that provide a sufficient level of information for ratepayers and, indeed, professional representatives to do their own research. Thanks, and a question from Miles Briggs. Thank you, convener. It was further to the previous question with regards to expanding that information and whether or not that is something that the Government is looking into to go beyond just address being provided to assessors. Again, we will consider what we can do. I can understand that one of the concerns would be that we start to factor in information that could be on rental agreements, lease, cost of building, when we get into the territory of commercial sensitive information, and that's particularly acute when we look at the other two methodologies, receipts and expenditure and constructive methods. It also touches on, for example, the issue of hotels, restaurants and pubs in a way in which the IWRV is calculated as well because turnover is put into that process. We have to consider those matters very carefully, but what I'm committed to and the Government is committed to is to ensure that we can provide as much information and as much transparency as possible so that users of the non-domestic rate system have the greatest understanding of how the RVs are calculated. I want to ask you a question on the wider issues that apply here. It's about the criteria that the assessors use to set rateable values and you've explained quite clearly that they'll provide a set of equivalent or adjacent addresses upon which the assessment was based. Is the current economic circumstances ever a factor in the equation? You can imagine a scenario where adjacent shops are perhaps shut, so why should a rateable value go up if adjacent properties are closed and why does that represent market value rather than the assessment of the practical circumstances that are evident in a local economy? I'll obviously, as you'd expect, caveat my answer by recognising the independence of assessors. It's apropo of the legislation that we were considering earlier on. General economic conditions and general market conditions are best considered at a revaluation and the reforms that we have implemented from moving from a five-year cycle to a three-year cycle from a two-year to a one-year to a one-year mean that valuations will be more reflective of market conditions at prevailing at that time. It is, of course, for individual assessors in the legislative context in which we operate to determine the RVs for properties in a well-established process for appeals to be raised by individual ratepayers should they wish to. Is it part of the criteria—I don't know who sets the criteria that they use—but is that part of their consideration or should it be? Can you imagine the situation in which rateable values just go up and up and up? Perhaps a lot of shops in all of our high streets remain closed, so it doesn't seem to make sense that the RV would increase if local economic circumstances point us in a different direction. The point that I would make is that RVs derive from net annual value and that is derived from the reflection of what would be the rental income for a property in the open market in Canada a year. That rental value is ultimately going to be determined by market forces in itself, so that will—that prevailing economic conditions nationally and within a locality will ultimately, just by the way the methodology works, feed into how net would have been considered and consequently the RV. That is factored into the process and that's where the importance of revaluation and the importance of having revaluation in a three-yearly cycle now with that tone date of one year to ensure that when the revaluation comes into effect it is up to date as it possibly can be and that is of course a reform that we brought forward ahead of schedule. I thank the minister and his officials for their evidence today and we now turn to agenda item 3, which is consideration of the motion on the instrument. I invite the minister to move motion S6M-04283 that the local government housing and planning committee recommends that the non-domestic rates valuations notices Scotland regulations 2022 be approved. Moved. Thank you. Do members have any further questions? The question is that motion S6M-04283 in the name of Tom Arthur be approved. Are we all agreed? We're all agreed. Thank you. The committee will publish a report setting out its recommendation on the instrument in coming days. The final item on our agenda for today is consideration of the local government pension scheme Scotland miscellaneous amendments regulation 2022. There's no requirement for the committee to make any recommendations on negative instruments. Do any members have any comments on the instrument? No comments. Is the committee agreed that we do not wish to make any recommendations in relation to the instrument? We agreed. Thank you. As that was the last item on our agenda today, I now close the meeting.