Business Rates: High Street Retailers

Tuesday 17th January 2017 Lords Chamber

Question

14:38

Asked by

[Lord Naseby]

To ask Her Majesty’s Government, further to the responses to their consultation on business rates revaluation, whether they have any proposals to reduce the impact on high street retailers.

[Lord Naseby (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a member of my family has a shop on a high street.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, business rates are based on valuations carried out independently by the Valuation Office Agency and it is right that Ministers do not intervene in that process. Nearly three-quarters of all businesses will see no change to, or a fall in, their rates bill from April thanks to the 2017 revaluation, with 600,000 businesses set to pay no business rates at all.

[Lord Naseby]

My Lords, I am grateful to my noble friend for giving me the position of Her Majesty’s Government’s Ministers. Nevertheless, the core of the high street is badly affected in many parts of our country. There was an article in the Times on Saturday about Southwold—not a huge place—where a local baker’s rates are going up from just over £4,000 to £14,000. Against that background, will my noble friend look at the possibility of revising the proposals where there is an increase of up to 15%? The rules at the moment suggest that there can be no appeal. Secondly, where there is a small, or any, reduction, can that reduction be paid in April and not phased in? Thirdly, when the upratings are done, can we move from RPI to CPI earlier than 2020? Finally—

[Noble Lords]

Too long!

[Lord Naseby]

Finally, my Lords, is it not time for a whole root-and-branch reappraisal of this form of business tax?

[Lord Bourne of Aberystwyth]

My Lords, as I have indicated, most businesses will see a fall in their business rates. Those subject to increases will find that of course they will be phased in over time, to take just one area which my noble friend touched upon. That will pay for those seeing a reduction, which will also be phased in over time, as is required by law under the Local Government Finance Act 1988.

[Lord Beecham (Lab)]

My Lords, given that local government will be increasingly dependent on business rates, instead of being funded through rate revenue support grant, what steps will the Government take to mitigate the effect of the differences of yield in business rates between authorities with high-yielding properties—for example, in London and elsewhere—as opposed to those with low rates in the north-east, for example, or in other parts of the country?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord is quite right that there needs to be a mechanism to correct that. He is probably aware that we have introduced a Local Government Finance Bill in the other place, where no doubt such matters will be discussed at greater length.

[Baroness Pinnock (LD)]

My Lords, does the Minister agree that major online retailers pay considerably lower business rates on their very large warehouses, which puts them at an unfair advantage compared with high-street retailers? What do the Government intend to do about it?

[Lord Bourne of Aberystwyth]

My Lords, I think the noble Baroness is aware—it is the essence of her question—that, of course, all businesses pay business rates. Larger businesses tend to pay larger business rates. We have focused our reliefs, and the transitional relief which I have just touched upon, on ensuring that smaller businesses have the type of relief that is needed—and much earlier.

[Lord Watts (Lab)]

Will this mean that the poor areas of Britain will get less or more money as a result to provide public services?

[Lord Bourne of Aberystwyth]

My Lords, as I indicated to the noble Lord, Lord Beecham, there will be a corrective mechanism. There needs to be because some areas are less wealthy, in terms of businesses, than others, and that is something that will be subject to discussion, not least as the Local Government Finance Bill goes through the other place and then comes to us.

[Earl Cathcart (Con)]

My Lords, given that some businesses, especially in London and the south-east, as my noble friend said, will see rate increases of more than three or four times, how will the new transitional relief arrangements work?

[Lord Bourne of Aberystwyth]

My Lords, my noble friend is absolutely right that there is, in essence, a scheme within the 1988 legislation that provides for relief for businesses that are experiencing increases. Most of them are in London and the south-east of England, but they are not limited to that area. That will phase in over a period. There are caps—I shall not go into all the technical details—but we are concentrating assistance on the small and medium-sized end of things, up to a rateable value of £100,000, to qualify for the small business relief. That has been doubled in the legislation, which will help businesses from April 2017.

[Lord Campbell-Savours (Lab)]

My Lords, with retailers all over the country complaining about the prospect of increased rates, what consultation took place with retail organisations prior to these decisions being taken?

[Lord Bourne of Aberystwyth]

My Lords, as I have indicated previously, this is carried out by the Valuation Office Agency. It is not something that Ministers have got involved in. It has been carried out in the normal way of revaluation in relation to the principles that apply in relation to the valuation of businesses. Ministers have put in place the relief scheme in order to help. I should say once again that over large parts of the country, certainly in all of the north and all of the south-west, for example, businesses have benefited disproportionately in terms of the revaluation. They have seen their rates bills go down.

[Lord Campbell-Savours]

My Lords, my question was about consultation. What retail organisations were consulted on what is about to happen?

[Lord Bourne of Aberystwyth]

My Lords, for example, the CBI has welcomed the proposals and the British Chambers of Commerce has said that it is essential that we have revaluations. It is not a question of consulting. We have put in place in relation to assisting businesses—the great mass of small and medium-sized businesses have benefited—a scheme that is entirely fair.

[Lord Harrison (Lab)]

Could the Minister write to my noble friend about what consultation actually took place?

[Lord Bourne of Aberystwyth]

My Lords, I am very happy to write to the noble Lord. I have indicated that no consultation has taken place on the scheme with business; I am very happy to confirm that. That is the way this has always been conducted under successive Governments. What is important is having something there in terms of transitional relief to assist businesses. Most businesses are benefiting from that.

[Lord West of Spithead (Lab)]

My Lords, can I say, as a simple sailor, that there must be something wrong? High streets around the country are full of charity shops, estate agents and the odd coffee shop. There must be something wrong with what is going on.

[Lord Bourne of Aberystwyth]

My Lords, I would certainly not call the noble Lord a simple sailor for one minute. It is true that many high streets are thriving; I visit many of them. In essence, what is important is that we seek to protect small and medium-sized businesses. We have been doing that, and that is the way forward.