19:26 - The House divided: - Ayes: 215 / Noes: 298 - Question accordingly negatived.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)
I am grateful to the Opposition for using today to raise such an important matter for Members on both sides of the House, and I welcome this opportunity to debate it. In that spirit, let us start with where we can agree.
We absolutely agree that British businesses are hugely important to our high streets and communities across the United Kingdom. I have seen this in my first few weeks as the Minister for industry, speaking to and visiting businesses and business representatives up and down the country. I have seen it over my four years as a Member of Parliament, as all other Members will have done, discussing how small businesses can thrive and how, although high streets are changing, they remain the linchpin of our local communities. More broadly, I have seen it as the son of a sole trader who spent 40 years in business in his local community. To take the shadow Chancellor’s point about first jobs, I have also seen it as somebody who had a job on the high street in Chesterfield with an estate agent and who spent his dinner hours stocking a newsagent’s so that they could continue to trade.
Secondly, we can agree that we have been through an exceptionally difficult time. The pandemic impacted every single one of us at an extraordinary time of our lives, necessitating changes in the way we live, work and play. None of us had anticipated any of this prior to March 2020.
Mike Amesbury (Weaver Vale) (Lab)
Will the Minister give way?
Lee Rowley
If the hon. Gentleman does not mind, let us just work out where we agree before we start talking about where we might not do so.
We did all this together as a nation and as communities, because we knew how important it was to get our society through these dark times. We can also agree that businesses faced particularly acute challenges. The challenge of 2020 and early 2021 was unprecedented for businesses. They had to close for periods, they were unable to trade in some instances, they had to change the ways in which they did business very quickly and then they returned to work. I am sure that everyone in the House—I know that the shadow Chancellor shares this view—has been humbled, as I have been, by the resilience of workers and entrepreneurs to keep their businesses going. They are the ones who have been straining every sinew on construction sites, serving us in shops and delivering vital goods. They have demonstrated an incredible level of resolve that we have never seen in peacetime, ingenuity and flexibility that we have never dreamed of and resilience that should make us all proud.
More broadly, we can also agree that business taxation requires review. That is why the Chancellor announced a review of business rates; it is why we have consulted on numerous changes to the existing scheme, although this was not acknowledged by the Opposition; and it is why the Valuation Office Agency is undertaking the latest revaluation, which will take place in 2023.
Mike Amesbury
I am sure it has not escaped the Minister’s attention that the Government have been in power for 11 years. This is not only about the coronavirus emergency. Businesses in my community, in Manor Park and Runcorn Shopping City, are desperate to move forward. Business rates are a broken system. Stop the dither and delay and get on with it—not another review but solid reform based on income going through the door. That is fair.
Lee Rowley
We have seen the Government make many changes over the past decade that have improved business conditions in this country and allowed businesses to continue to progress, and we will continue to do that. I know that ministerial colleagues will come forward with proposals in due course.
On the motion before us and the shadow Chancellor’s speech, it would be churlish not to recognise the extraordinary amount of support that the Government have already provided to business. Even as someone who prefers to focus on outputs and achievements in our country, I accept that the past 18 months were necessarily about inputs and keeping businesses going until they could properly trade again. To do that, we offered hundreds of billions of pounds of support from the taxpayer to provide one of the world’s most generous and comprehensive economic responses to the pandemic.
We enabled 1.3 million employers across the UK to furlough up to 11.5 million jobs. There were 1.6 million Government-backed loans, representing more than £79 billion of support. We paid out almost £14 billion in support to around 5 million self-employed people. We cut VAT for the hospitality and tourism sector. We waived billions of pounds of business rates for long periods at the height of the pandemic. And we brought in a range of regulatory easements to help businesses.
Chris Evans (Islwyn) (Lab/Co-op)
I ask for the Minister’s advice. One of the most frustrating things about business rates is when a business asks for some flexibility and it is difficult to speak to the right person. A number of businesses in my constituency want some flexibility on their business rates. They go to the council, but the council only collects the tax. They go to the valuation office, which only does the valuation. There is no system to appeal against business rates at the moment. Will the Minister address that in his speech?
Lee Rowley
I understand the hon. Gentleman’s concerns, and I acknowledge the challenge. There is always a balance to be struck. This level of detail is perhaps slightly away from the motion, but I would be happy to discuss it separately.
We should not forget all the support that we have provided over such a sustained period, and we should not strip this debate of that context. Now our task is to make sure that businesses, large and small, have the opportunity, the talent and the ability to unleash their full potential, which is where I am afraid I will have to diverge again from the Opposition and their remarks today.
The extraordinary circumstances of the pandemic required an extraordinary response from the Government, and we delivered that extraordinary response, but it did not come without cost. Whether we like it or not, providing such a comprehensive and decisive economic response has dramatically increased public borrowing. Government debt has exceeded the size of the UK economy for the first time in more than 50 years. It was an appropriate and proportionate strategy, when we were faced with a real and immediate crisis, to support businesses and allow them to ready themselves for when the recovery came, but over the medium term it is clearly not sustainable to continue borrowing at these levels.
Emma Hardy
Actually, I was hoping to put to the Minister the same question that I put to my hon. Friend the Member for Leeds West (Rachel Reeves) on the issue of debt and debt advice.
The Money and Pensions Service is changing the system that it operates by moving towards having call centres rather than having as many face-to-face appointments for people who are struggling with debt. This has been an incredibly difficult year and people are finding themselves in higher levels of debt, so will the Minister comment on the support that is available to help people who are struggling right now? Will he be speaking to the Money and Pensions Service about its decision to move towards remote consultations rather than face-to-face consultations?
Lee Rowley
I am grateful to the hon. Lady for her contribution, and I know she has a clear interest in this. I fear it is going slightly away from the discussion we are having, but I am happy to have discussions with her separately. I know that my colleagues will continually communicate with and consult people in this important policy area.
As I was saying, whether we like it or not there has been a large change in public borrowing. When we were faced with the crisis, we took action. But as the pandemic starts to subside, it is vital that we make moves to return to a position of strong and sustainable finances. Ultimately—this is what the Labour party never wants to acknowledge, and it can state that it is unapologetically pro-business as much as it wishes—there can be no strength for businesses in a country where a Government have lost control of the public finances. The shadow Chancellor invited us to look at her speech at last week’s Labour party conference, which I did; she made much of the “everyday economy”. Businesses in the everyday economy will never be able to thrive long term on policies that have no regard to the macroeconomic situation or no clear way of being funded. Neither before nor in today’s debate has the Labour party provided any meaningful explanation of how it will pay for abolishing business rates.
Lee Rowley
I am sorry, but I am going to make progress.
Entrepreneurs who take difficult decisions and face challenges every day on how to make their businesses grow will never fully succeed in a country that refuses to acknowledge that similar national choices are ultimately required. Back during the pandemic, we were clear that support was necessary, but we were also clear that it would be temporary. Even so, we have helped and we continue to help businesses during this recovery period.
We have been open for business for months now but we continue to help businesses recover: business rates relief will continue well into 2022, which is even acknowledged in the motion, meaning that eligible businesses will not have paid rates at all for 15 months and will have had a significantly reduced rate for a further nine months; there has been more than £2 billion of discretionary business grant funding to local authorities, including a top-up of nearly half a billion pounds, which is open until March 2022; we have had the recovery loan scheme, which allows businesses in the UK to continue to benefit from Government-backed finance until the end of the year; we have our pay as you grow scheme, which gives bounce back loan borrowers the flexibility to tailor repayments; and we have the lower rate of VAT, the £600 million start-up loans fund, the super deduction and an extension of the commercial lease evictions moratorium.
Just as they do naturally, British businesses are getting back on their feet and doing what they do best. We know that this is a difficult time and has been an extraordinarily difficult time, but I pay tribute to businesses for being able to get going again. A strong growth story is being shown by the level of unemployment, which has fallen for six months in a row and is now below 5%— lower than the levels in France, America, Canada, Italy and Spain; one of the fastest recoveries of any major economy in the world; business confidence being up; and job vacancies growing for eight consecutive months and at a record high.
The Labour party will never admit this, but the UK is a great place to do business. We have some of the lowest corporation taxes in the G20, the kind of lean regulation that puts us in the global top 10 for the ease of doing business and a highly skilled workforce. Next year, my right hon. Friend the Secretary of State will publish an enterprise strategy, which will set out how we want to revive Britain’s spirit of enterprise and help more people start and scale a business.
Ben Lake (Ceredigion) (PC)
The Minister mentions the reduced rate of VAT, which has been welcomed by a number of businesses in my constituency. May I invite him to comment on whether the Government have considered an extension to that? Many businesses in my constituency have informed me that that reduced rate has allowed them to invest in not only their businesses, but their employees’ wages—I am sure that is something we can agree on.
Lee Rowley
The hon. Gentleman is tempting me to make policy in an Opposition day debate, but I will step back from that, given that it is well above my pay scale.
Let me come back to the point about the UK being a good place to do business. It is easy to see why the UK is consistently home to one of the largest and most resilient economies in the world. All of this underlines precisely why the UK has long been a great place to do business and will continue to be so. That is why we are seeing so much excitement from the rest of the world, with investors here right now at the global investment summit. That shows just how attracted companies are to the business-friendly environment that we have.
The Government’s track record shows that we have been there for small and bigger businesses since the start of the pandemic; that we are now here to support them through the recovery; and that we will continue to create the conditions that will allow them to grow, thrive and innovate in future, as part of a dynamic, flexible market economy that supports private enterprise, backs entrepreneurs and recognises the importance of wealth creators in local communities.
Several hon. Members rose—
Lee Rowley
The first building block for doing that—Labour Members should listen, given that they are all so keen to intervene—is to ensure that we have a strong and sustainable economy, built on strong and sustainable public finances and with policies that are funded. By working together, we can then continue to ensure that Britain is the best place in the world to do business, both now and in future.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
I thank all hon. Members for their contributions. First, can we celebrate and commend the small businesses up and down the country that have been so hard-pressed during the pandemic, especially in the areas that we have heard about today—hospitality, retail, leisure, tourism and indeed travel?
Businesses have shown incredible resilience throughout the pandemic and it is right that we support them, as the Government have done with £352 billion-worth of immediate financial support through loans, grants, the furlough scheme and various reliefs. That leaves us, as free market Conservatives who do not believe in big interventions but who are the Government with probably the biggest intervention since the war, with 352 billion reasons to get the recovery right and build resilience into our economy.
All I have heard from Opposition Members for nearly three hours is re-diagnosis of the problems. We can all agree that business rates need reform: that is why the Chancellor launched the fundamental business rates review. It is not starting now; we are concluding it now. It is looking at the entire scope of the business rates system, from the multiplier and reliefs for plant and machinery to billing, the administration of the system and alternative taxes. All those matters are being looked at and the report will be coming in the autumn.
I have heard nothing from the Opposition as an actual response. One can say that everything is funded and costed, but saying that does not mean that it is actually there. We have heard pledges from the Opposition to scrap business rates; that is £26 billion, and we have heard nothing about how it will be paid for. We have heard about freezing business rates until the end of the financial year; that is another £6 billion. What are they going to do to pay for it?
We heard from my hon. Friend the Member for Bexhill and Battle (Huw Merriman), who talked about changing high streets, and from my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who proposed changes to VAT. He made a cogent argument, albeit a controversial one—at least he came up with a solution that he had costed and threw it into the mix. That is the difference between Government Members and the Opposition: we come up with solutions that businesses can understand and that we can debate and work through.
My hon. Friend the Member for Ipswich (Tom Hunt) was accused of talking down his area. Actually, he was talking about the issues that he is tackling and that he is bringing together and convening people to tackle, such as antisocial behaviour. He is doing things like that through the town deal that he is championing. He raised the future high streets fund, which is already bringing empty properties back into use—there is a lot of infrastructure going on and it is already delivering upgrades. He also talked about shopping parades. It is really important that we talk about retail parks and shopping parades as well as high streets: they are part of the ecosystem of our local economy.
Kevin Hollinrake
The shadow Chancellor did present a short-term solution: a sixfold increase in the digital services tax. Does my hon. Friend agree that when we implemented the digital services tax, Amazon added that 2% straight on to the prices of the merchants on its site? Does he accept that if there were an increase, it would be passed directly to consumers?
Paul Scully
My hon. Friend raises a really important point. We also heard about business rates being scrapped and replaced with a property tax—on a property that would presumably be owned by a business, and I guess we could use our rating system to work it out. Essentially, that is just semantics, not a systematic and effective way of replacing business rates. That is why the fundamental review is so important.
My hon. Friend the Member for Wantage (David Johnston) made a comparison to Chris Hemsworth and talked about the Great British Mead Company, which reminds me of the importance of the hospitality sector as part of the ecosystem of our local and night-time economy and indeed the high street. My hon. Friend the Member for Devizes (Danny Kruger) talked about opportunity and connectivity, which are at the heart of what we are doing to allow high streets to bounce back further.
All I have heard is negativity from the Opposition with no answer, but we are making sure that the 352 billion reasons to allow the economy to bounce back are as effective as possible. Our plan is working. Our unemployment rate is at less than 5% and falling, which is lower than France, America, Canada, Italy and Spain. We have one of the fastest recoveries of any major economy in the world, and GDP is growing. That shows that the Government’s approach is a success and that we have fostered the right environment for the economy to grow.
The Labour party will never admit this, but the UK is a great place to do business. We have the lowest corporate tax rates in the G20, and the kind of lean regulation that puts us in the global top ten for ease of doing business. Next year, my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy will publish an enterprise strategy which will explain how we want to revive Britain’s spirit of enterprise and help more people to start and scale up a business.
It is easy to see why the UK is consistently home to one of the largest and most resilient economies in the world. All this underlies the reason why it has long been a great place to do business, and why we are seeing so much excitement in the rest of the world about investing in the UK. People are queuing up to spend at the global investment summit that is being held today. In the last 10 months, we have already seen a flurry of spending in the UK: there is to be a gigafactory in Sunderland, Ford and Stellantis are churning out electric vehicles in the north-west, and GE Renewable Energy and others are creating an offshore wind hub in Teesside. Those projects constitute a huge vote of confidence in the UK as a place to do business as we recover from the pandemic.
We have been there for small businesses since the start of the pandemic, we are there for them now, and we will be there for them for as long as they need us. I want to ensure that as we move forward into this area of recovery, we build resilience into our economy as well. We will do that through the fundamental review of business rates and through our enterprise strategy, and by making sure that we stand behind our businesses.
Question put: