The Earl of Clancarty
To ask Her Majesty’s Government whether they plan to maintain the 80 per cent mandatory business rate relief for charitable bodies, including arts organisations and museums.
Viscount Younger of Leckie (Con)
My Lords, the Government are conducting a review of business rates in response to concerns that the system is in need of reform. The system should be fit for a 21st-century economy, and that is why the review, which will conclude at the Budget, is looking at all aspects of the system, including reliefs and exemptions. We recognise the important contributions that the arts and museums make to the culture of the UK, education and the economy.
The Earl of Clancarty (CB)
My Lords, I thank the Minister for that reply, but will he acknowledge that the loss of all, or even part, of what is in effect a well-established funding stream would significantly threaten the viability of many productive and highly respected arts bodies across the country, including art centres, independent museums, orchestras, and theatres large and small—from those of an international stature to the smallest local organisations—and that in the regions it would simply deepen what is already in some areas a calamitous situation for arts and cultural services?
Viscount Younger of Leckie
I note the noble Earl’s concerns but it may give him some comfort to know that the Government recognise the importance of the charitable sector and that the stringent management of costs in managing charities can make a critical difference to their viability. The Government also understand that arts and culture generates 0.4% of the UK’s GDP, as highlighted by the Centre for Economics and Business Research. Museums and galleries are a key motivator for encouraging tourism. We committed that from 2017 the business rate system would better reflect our modern economy by providing clearer billing, better information-sharing and a more efficient appeals system.
Baroness McIntosh of Hudnall (Lab)
My Lords, I declare my registered interests in charities, including membership of the board of the Royal Shakespeare Company, which is currently able to take advantage of tax relief on production costs, as indeed are all other performing arts companies. Is the Minister aware that the benefit of this very welcome and indeed enlightened tax reform will be entirely lost if mandatory business rate relief is withdrawn? Can he reassure the House that the Government are not proposing to give with one hand and take away with the other?
Viscount Younger of Leckie
I cannot prejudge for the noble Baroness the result of the review. However, when we launched it, we did say that we recognise that some sectors, such as charities, play an important part in the community and that the Government have no intention of increasing business rates for those deserving of relief.
Lord Cormack (Con)
My Lords, can we take comfort from the fact that in the Autumn Statement, which was extremely sensitive and very well received, the Chancellor said that cuts here were a false economy? Can we hope that that will be the prevailing philosophy?
Viscount Younger of Leckie
I hope that that will be the prevailing philosophy but I emphasise that it is a wide-ranging review that will include a robust analysis of the trends in the use of non-domestic property and property values covering a range of areas.
Baroness Janke (LD)
Is the Minister aware that many vulnerable communities depend on charitable organisations, particularly in the light of the public service cuts? Will he give an undertaking that before any such measures may be introduced, the impact on the most vulnerable communities will be assessed and taken into account?
Viscount Younger of Leckie
I feel sure that those views are already being taken into account, as will the views being expressed by the House today. The noble Baroness makes a good point.
Lord Berkeley of Knighton (CB)
My Lords, given the parlous state of many of these bodies, as we have heard, have the Government made a precise assessment—or will they—of exactly how much this relief helps these organisations and how they would be affected should it be cut?
Viscount Younger of Leckie
I have no doubt that the review will also cover that. However, it is pretty clear that the business rate relief does indeed help those very important charitable organisations. As the noble Earl, Lord Clancarty, mentioned, orchestras and other similar organisations rely on this business rate relief.
Lord Cashman (Lab)
My Lords, does the Minister agree that organisations including theatres, art centres, galleries and independent museums could be negatively affected by these changes? Therefore, will the Minister agree that a proportion of the business rate relief should be mandatory, considering the tight finances of these very important cultural organisations?
Viscount Younger of Leckie
I cannot answer the question directly but, again, I very much take note of the concerns that the noble Lord has raised. I am sure that the review, which is wide ranging and robust, will look at those aspects.
Lord Wigley (PC)
My Lords, will the Minister clarify the position of the review with regard to arts organisations based in Wales, Scotland and Northern Ireland? Given that the arts are a devolved matter, as are some responsibilities for business rating, will the review consider the circumstances in those three areas?
Viscount Younger of Leckie
The review will take account of those areas but, as the noble Lord made clear, there is devolved responsibility, particularly for business rate relief. I am thinking particularly of Scotland but I am sure that it is the same in Wales. There is of course contact with the Governments in Wales and Scotland on this matter, and this will be part of the review.
Lord Stevenson of Balmacara (Lab)
My Lords, the discussion so far has been about mandatory rate relief, which is about 80% of the rates bill met by the institutions we are talking about. However, a problem is also arising in the discretionary relief for the last 20%, which can be a very substantial amount of money in some areas. Will the Government explain what they propose to do, because over 20% of institutions reported recently that they have had cuts in that area?
Viscount Younger of Leckie
It is the same process. The review will cover six key areas, including considering the role of business rates within the wider tax system and their responsiveness to economic conditions.
Lord Howarth of Newport (Lab)
My Lords, will the Government in the course of this review take a coherent view of the funding needs of arts organisations and museums and ensure that they are not casualties of a broader-based reform that is not focused on their needs?
Viscount Younger of Leckie
As I said, the sector covering museums and arts organisations is very much already in the minds of those involved in the review.