Draft Legal Services Act 2007 (Approved Regulator) Order 2023
(10 months, 4 weeks ago)
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The Parliamentary Under-Secretary of State for Justice (Mike Freer)
I beg to move,
That the Committee has considered the draft Legal Services Act 2007 (Approved Regulator) Order 2023.
It is a pleasure to serve under your chairmanship, Mr Sharma. Before I set out the effect of this instrument, I will explain the legislation that underpins it. The Legal Services Act 2007, which I will refer to as the LSA, established the Legal Services Board among other things. The LSA made provision for the Legal Services Board to oversee legal services regulators in England and Wales, which regulate persons carrying out reserved legal activities.
Schedule 4 to the Act designated a list of bodies as approved regulators for specific reserved legal activities including probate activities. The Legal Services Act 2007 (Approved Regulators) Order 2009 added the Association of Chartered Certified Accountants, which I will refer to as the ACCA, to this list for the regulation of probate activities. Although it was designated in 2009, the ACCA only started to authorise individuals and firms for probate activities in 2018. In 2019, the ACCA conducted a review of its regulatory activity and found that only 99 probate practitioners held the ACCA authorisation, and the ACCA considered it unlikely that its regulated population would grow.
The review also found that the arrangements that the ACCA would need to make to comply with the Legal Services Board’s internal governance rules of 2019 would be disproportionate to the size of the ACCA’s regulated population, and that there were several monetary costs to being an approved regulator. Specifically, those included: levies paid to the Legal Services Board and the legal ombudsman; staff resources to conduct regulation; costs associated with the regulatory framework; and the cost of complying with the Legal Services Board’s internal governance rules.
In 2019, the ACCA council approved a plan for the ACCA to withdraw from the legal services regulation market and provide a pathway for eligible members to continue practising probate by transferring to CILEx Regulation as CILEx-ACCA probate practitioners. In October 2021, the ACCA applied to the Legal Services Board under section 45 of the LSA to cancel its designation as an approved regulator. The LSB carefully assessed the application and required the ACCA to make a revision to confirm that all of the 99 ACCA-regulated probate practitioners had already ceased practising probate or had transferred to CILEx or another approved regulator. The LSB then approved the application in May 2022, and made the recommendation to the Lord Chancellor in July 2022 to make an order to cancel the ACCA’s designation as an approved regulator for probate activities. That is what this statutory instrument sets out to complete.
The ACCA has not accepted a new application for probate authorisation since 2021, and sent cessation letters to all 99 affected probate practitioners in January 2022. All those 99 practitioners have either ceased practising probate or already transferred to CILEx Regulation or another approved regulator. In conclusion, cancelling the ACCA’s designation as an approved regulator for probate activities is a necessary measure to formalise the ACCA’s voluntary and orderly withdrawal from the legal services regulation market. It ensures that the ACCA will no longer face regulatory or financial burdens associated with its designation and provides legal certainty about which entities are approved regulators for reserved legal activities.
Alex Cunningham (Stockton North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Sharma. I thank the Minister for outlining the measure before the Committee. I will not keep colleagues very long, as we do not oppose it.
We all know of the stress on our legal services and on those providing them; anything that can be done to make them better will have our support. A well-functioning legal services market is a key contributor to access to justice. A strong and competitive legal services market can lead to a reduction in the price of services and ensure greater access to justice for all, including the least well off.
The Minister outlined a measure to amend the Legal Services Act 2007—the legislative framework for regulating legal services in England and Wales. Under the 2007 Act, only individuals and businesses authorised by an approved regulator or those exempt from the requirement to be authorised are entitled to provide reserved legal activities. The six reserved legal activities are: the exercise of a right of audience; the conduct of litigation; reserved instrument activities; probate activities; notarial activities; and the administration of oaths. This order cancels the designation of the Association of Chartered Certified Accountants as an approved regulator under part 4 of the Act, “Regulation of Approved Regulators”. That means that it is no longer permitted to authorise and regulate persons in relation to probate activities. The Minister outlined its small workload in that regard.
As I said, we will not oppose the measure, but we would be interested to hear whether the Minister expects further measures to be introduced to reform the Legal Services Act. The merits of the Act are heavily debated by those inside Parliament and even more so by those outside. As legislators, we need to ensure that practices and services are kept up to date. We recently had Bar Council chairman Nick Vineall KC in front of the Justice Committee. He described the 2007 Act as “fit for purpose” but pointed out that there was originally supposed to be a triennial review of the Legal Services Board. That has not happened. Does the Minister plan to review the LSB any time soon?
We do not oppose the order but hope that everyone in the Committee will recognise that much needs to be done by working with the sector to drive not just improvement, but capacity.
Mike Freer
I am grateful for the support of colleagues and Opposition Members. I suggest that the comments of the hon. Member for Stockton North on a wider review of the LSB is a tad out of scope of the statutory instruments, but I am more than happy to have a conversation with him. Given the consensus on this draft statutory instrument, I commend it to the Committee.
Question put and agreed to.
Draft Misuse of Drugs Act 1971 (Amendment) Order 2024
(10 months, 4 weeks ago)
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The Minister for Crime, Policing and Fire (Chris Philp)
I beg to move,
That the Committee has considered the draft Misuse of Drugs Act 1971 (Amendment) Order 2024.
It is a pleasure, as always, to serve under your chairman-ship, Mr Hollobone.
This draft order, laid before Parliament on 27 November last year, proposes amendments to schedule 2 to the Misuse of Drugs Act 1971 to control or ban 15 substances as class A drugs, four substances as class B drugs, and one substance as a class C drug under the Act.
Members will have seen the ruinous effect of fentanyl and other synthetic opioids elsewhere in the world, particularly in the United States where they devastate lives and communities. As part of the Government’s continuing efforts to mitigate the threat of synthetic opioids in the UK, this legislation will control 15 additional synthetic opioids as class A drugs under the 1971 Act. This will include 14 nitazenes, some of which are even more potent than fentanyl, as class A drugs under the 1971 Act, following recommendations from the Advisory Council on the Misuse of Drugs in its report of 18 July 2022 and addenda of 19 December 2022 and 6 October 2023. I want to put on the record my thanks to Professor Owen Bowden-Jones, who chairs the ACMD, and all the members for the work that they have done in this area and in others.
Three of the synthetic opioids, isotonitazene, metoni-tazene and brorphine—I can see the shadow Minister smiling; I look forward to his pronunciations later—were controlled under schedule 1 to the United Nations Single Convention on Narcotic Drugs 1961, to which the UK is a signatory. Following this, the Government commissioned the ACMD for its advice on the appropriate classification and we are now following that advice.
The ACMD looked at some other substances as well. Cumyl-PeGaClone, a synthetic cannabinoid receptor agonist—SCRA—was added to schedule 2 to the United Nations convention on psychotropic substances in April 2021. That will be controlled as a class B drug under the Act. Many SCRAs are currently class B under a generic definition in the 1971 Act. However, owing to the structure of that particular substance, it falls outside that definition, which is why we are adding it here.
Also to be controlled as class B drugs under the 1971 Act by the order are three stimulants—diphenidine, ephenidine and methoxyphenidine. Again, this follows international control of diphenidine under schedule 2 to the UN convention that I have mentioned already. That happened in 2021, after which the Government commissioned the ACMD. In its report of 25 May last year the AMCD noted the involvement of those substances in a number of drug-related deaths worldwide and recommended that we control them, which we are now doing.
Finally, remimazolam, a benzodiazepine, will be controlled as a class C drug under the Misuse of Drugs Act. Remimazolam is the active ingredient in a product given marketing authorisation by the Medicines and Healthcare products Regulatory Agency, but the ACMD recommended in December 2022 that it should be controlled as a class C drug because of the potential harms that it can cause.
According to the ACMD’s advice, all of the substances are psychoactive and therefore may be subject to the offences under the Psychoactive Substances Act 2016, which contains various offences for the production, supply, possession with intent to supply, and import or export of a psychoactive substance. The control of those substances under the 1971 Act will make it an offence to possess them and imposes higher penalties and stronger enforcement provisions for the supply and production offences.
Although many are caught under the PSA, the sanctions, including for possession, are now much stronger. Those who supply or produce a class A drug could face up to life imprisonment, an unlimited fine, or both. Meanwhile, those found in unlawful possession of a class A drug could face up to seven years in prison, an unlimited fine or both. Members of the Committee will see that the controls, under the 1971 Act, are much stronger.
One of the substances I have mentioned, remimazolam, has known medicinal value and has been given a marketing authorisation by the MHRA. It will therefore be placed in part 1 of schedule 4 to the Misuse of Drugs Regulations 2001 by a statutory instrument made under the negative procedure to make sure it can be used for legitimate medicinal purposes. The other 19 substances will be placed in schedule 1 to the 2001 regulations by that same negative SI owing to their lack of known medicinal value. Those substances, excluding remimazolam, will therefore be added to part 1 of schedule 1 to the Misuse of Drugs (Designation) (England, Wales and Scotland) Order 2015. Controlled drugs are designated when the Secretary of State believes it is in the public interest for production, supply and possession to be wholly unlawful or unlawful except for research or special purposes, or for medicinal use of the drug to be unlawful, except under specific licence.
The drugs we are scheduling today under the 1971 Act all have potential to cause enormous harm. We know that synthetic opioids are powerfully addictive. They are very potent; often far more than heroin, for example. We have seen the devastation synthetic opioids have caused in the USA and are determined to avoid the same thing happening here in the United Kingdom. Therefore, the measures we take today in the order are just part of the work the UK Government are doing to protect our citizens against the harm that synthetic opioids can cause. On that basis, I commend the order to the Committee.
The Chair
Alex Norris (Nottingham North) (Lab/Co-op)
Thank you, Mr Hollobone. I do not intend to detain the Committee until 4 pm—although colleagues are encouraging me, so who knows—but I have a few points I want to go through with the Minister.
I am grateful to the Minister for his explanation. I will start by saying that we support the changes. We all recognise the devastating impact mentioned by the Minister that synthetic opioids have had on communities in the United States. That epidemic has seen incidences of overdoses rise dramatically, lots of lives lost, families torn apart and entire communities riven with the problems associated with their use. It is good news that we have not experienced the crisis in that way, but sometimes we are just behind rather than having avoided such challenges, and so we need to be vigilant in acting where necessary to ensure that the law keeps pace with developments.
I associate myself with the Minister’s comments regarding the Advisory Council on the Misuse of Drugs and its fine work, both generally and in this regard. We are grateful for that work; it is helpful. However, might the Minister take the opportunity in summing up to say, beyond his conversations with the ACMD, what the Government’s views are of the picture of the development of new synthetic opioids and the prevalence of their use in the UK? We will have to monitor that. It is right to put them in their classifications, but there will still be an illicit market for them, and knowing what we can do about the intelligence would be of interest to the Committee.
I turn to an important point about drug treatment services. It is right that we have classifications for synthetic opioids, all of which, and particularly class A, have profound possible legal sanctions. It is right that those who manufacture, trade and profit from synthetic opioids face significant penalties because of the devastation they wreak. Can the Minister talk a little about drug treatment services and whether there will be a need to develop services in concert with those penalties to pick up need as a result of the development of the use of synthetic opioids? The Minister and I are currently engaged in the Criminal Justice Bill and we talked a little about drug treatment services last week or the week before—time merges into one on such Bills—and the figure for drug treatment services is still about half of what it was a decade ago while drug deaths have doubled. What assessment has the Department made of that?
On a final point, when this order was debated in the other place, the Government spokesperson referred to the Government’s drugs strategy and the increased availability of naloxone nasal spray, a life-saving heroin antidote. The Government have committed to updating legislation to enable greater access to take-home treatment for people who either are themselves or are close to someone at risk of possible death by overdose. I have tabled a new clause to the Criminal Justice Bill on this matter, which we will probably debate on Tuesday. It is based on the Home Affairs Committee’s recommendation that police officers in England and Wales carry naloxone. In Scotland, they already do. I believe the Government only partially accepted the recommendation. Given the recognition in this order of the importance of opioids and the risk of controlled substances, is it not now time to revisit that recommendation, to save lives and mitigate some of the harm that can be caused?
Sir John Hayes (South Holland and The Deepings) (Con)
It is typical of the diligence of this Minister that he has brought this instrument to the House. He is right to do so, for he will know that it is vitally important, in the terms of the 1971 Act, that the regulatory body concerned has a dynamic function. Like all diligent Members of this House, I have a broad familiarity with the Act; he will have a more detailed one. It was always envisaged that the ACMD would have a dynamic role, and that becomes particularly important as drugs have been used for spiking and for various recreational purposes in a way that could not have been imagined back then in 1971, but was anticipated structurally, in that this body was set up to do exactly what the Minister has recommended today.
Knowing his diligence, I expect the Minister will have no trouble dealing with my single query and my one suggestion. My query is on enforcement. I note that he says that it will now be a criminal offence to possess these drugs, with serious consequences. Could he say a word about enforcement and how police forces will be well informed and equipped to update their understanding?
The suggestion is that following today he might let Committee Members know of the terms of reference that govern the ACMD in looking at these things, as I guess that we may well come back to a similar Committee of this kind in times to come as new substances become available, with the same malevolent effects.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to see you in the Chair, Mr Hollobone. I apologise for my tardiness—as colleagues explained, I inadvertently got stuck in a lift trying to get to Committee today and I missed the beginning of the Minister’s statement.
I am pretty sceptical about these orders adding more dangerous drugs to the already quite long list of dangerous drugs and about the effect that will have. Adding drugs to a list certainly does not prevent or deter people from taking them. The analysis of the risk at paragraph 79 in the impact assessment from the Home Office states:
“The analysis does not consider any deterrence effect in which indivduals stop misusing the controlled drugs as a result of the intervention. This is not included due to a lack of evidence on the likelihood of a deterrence following drug control both across all controlled drugs and the specific drugs controlled in this legislation.”
I would be interested to hear from the Minister why he thinks that adding these drugs to the list will stop people taking drugs. The very nature of drugs is that they are quite moreish, and people tend to keep taking them. That is the history of the Misuse of Drugs Act.
I also reinforce the findings of the Home Affairs Committee report, which asked the Government, among other things, to look again at the Misuse of Drugs Act, which is a very outdated and largely ineffective piece of legislation. I very much agree with that point.
The hon. Member for Nottingham North mentioned the significance of naloxone in tackling opioids and in reversing the effects of opioid overdoses. That has been used to great effect in Scotland. It is carried by the police, and I and my office staff have been trained in how to administer it, not just the nasal form but the injectable one. It is available in Scotland for people to have training on. The Scottish drugs agencies help to make sure that people can get that training in the community, which is really important, given that drug addiction and overdoses are, sadly, still too prevalent. I would encourage all Members to take up the opportunity if it is available to them, because it is important to be able to make that intervention and to save lives where we can. I will not oppose the order, but I certainly remain sceptical about the effect that it will actually have.
Chris Philp
Let me briefly respond to the points that have been made. I welcome the support for the order from both the shadow Minister and the SNP spokesperson, who have said that they will not oppose it. On the shadow Minister’s questions regarding the use of synthetic opioids, it is a real concern. We have seen what has happened in the USA. We have not seen widespread problems in the UK; we have seen some issues, but nothing like the scale in the US, and we would like to keep it that way. How will we do that? One way is through very careful monitoring—for example, by looking at post-mortem toxicology reports. Wastewater analysis is another way. We are also significantly increasing surveillance at the border to detect any attempts to import either synthetic opioids or their precursor chemicals.
My right hon. Friend the Member for South Holland and The Deepings asked about enforcement, and he is quite right to say that the law is only as good as the enforcement that accompanies it. We have had a number of conversations with the police to make sure that they are aware of the systemic threat that synthetic opioids pose, particularly nitazenes, including those being banned today. I specifically discussed this issue with Richard Lewis, who is the chief constable of Dyfed-Powys police and the National Police Chiefs’ Council lead on drugs, to make sure that he is fully appraised of the risk that synthetic opioids pose, particularly nitazenes. I can assure my right hon. Friend that I will continue to press the police to make sure that they enforce hard against these drugs.
We need to have a zero-tolerance approach to all forms of illegal drugs, and synthetic opioids are at the top of that list because of the harm they cause. I therefore respectfully disagree with the hon. Member for Glasgow Central on her suggestion that banning drugs has no effect or is a foolish undertaking. Where drugs are highly addictive, devastate lives and cause people to die, it is right that Parliament legislates to ban them. I am sure we will debate this issue at greater length at another time, but we have seen some American cities essentially decriminalise drugs and public drug consumption. They have then seen an explosion in drug consumption, particularly of synthetic opioids, but of other drugs as well. In fact, some of those same cities, which are very often run by extreme liberal administrations, have now begun to think again and look at reversing some of the liberalisation that they instituted because they have seen the effect it has had.
Alison Thewliss
On the point about synthetic opioids, many charities are concerned about the impact that the stymieing of the flow of drugs from Afghanistan may have on the development of synthetic opioids in Europe, because they do not need to be transported; they can be made right here. That is a risk factor should the supply of heroin into the UK be stopped as a result of the action taken in Afghanistan. What assessment has the Minister made of that risk?
Chris Philp
We have assessed the risk. We are aware of the new Taliban policy to ban opium production in Afghanistan and the consequent likely reduction in the heroin supply into western Europe and North America. It will take a while to filter through the supply chain—it will not have an immediate effect—but we are aware of the problem. The hon. Lady identifies one of the risks, which is why staying ahead of synthetic opioid importation through surveillance, border control and a zero-tolerance law enforcement approach is particularly important—more so than it would ordinarily be because of the substitution risk that she rightly refers to.
My right hon. Friend the Member for South Holland and The Deepings asked about the ACMD’s remit. The Home Office is able to commission the ACMD to look at various matters. Whenever a matter of concern arises, we commission ACMD to look at it, and monkey dust is an example of that. A number of colleagues, including my hon. Friends the Members for Stoke-on-Trent South (Jack Brereton) and for Newcastle-under-Lyme, raised that issue, and we commissioned the ACMD to take a look at it. We can take action whenever a new harmful illegal substance pops up.
The final question relates to treatment. Although members of the Committee will discern from my comments that I believe in having a strong—indeed, a zero-tolerance—approach to enforcement, treatment is also important. Naloxone should be used as routinely as possible because, as Members know, it combats the effect of opioid overdose. It is successful and effective at doing that, but treatment is also important for getting people off drugs. We have invested £532 million over three years in creating 55,000 extra treatment places, and we are tracking the uptake of those places. I am encouraging the police to refer addicted people into treatment in addition to prosecuting criminals, and I am encouraging the courts to do the same thing. A combination of strong enforcement and referrals to treatment can keep our society free from drugs, and today’s order is an important part, but only a part, of that fight.
Question put and agreed to.
Draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2023
(10 months, 4 weeks ago)
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The Financial Secretary to the Treasury (Nigel Huddleston)
I beg to move,
That the Committee has considered the draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2023.
It is an absolute pleasure to serve under your chairmanship this morning, Mrs Murray.
Business rates are a crucial element of the UK’s tax system. They raise over £20 billion per year, which goes to help local authorities fund our country’s vital local services. While business rates provide crucial revenue, over the past few years the Government have taken extensive action to hold the tax rates steady and target support towards those ratepayers who need it. At autumn statement 2023, the Government announced a package of cuts worth £4.3 billion over the next five years to support small businesses and the high street with local tax cuts, including freezing the small business multiplier for the fourth consecutive year and extending the retail, hospitality and leisure relief scheme at 75% for 2024-25.
It is essential that the business rates system runs smoothly, with continuity and stability. These regulations ensure exactly that: they are crucial to maintaining a healthy, stable system for the financial year 2024-25 and beyond. Their primary purpose is to maintain the threshold between the two business rates multipliers. There are two multipliers in the English business rates system—the higher, standard rate multiplier and the lower, small business multiplier. The threshold between the two has stood at a rateable value of £51,000 since 2017, but due to the passing of the Non-Domestic Rating Act 2023 these regulations are required to preserve it at the same level from 1 April 2024 onwards.
Kevin Foster (Torbay) (Con)
The Minister will know that, certainly in Torbay, things like the discount on tourism and retail are very much welcomed. But will he confirm that the effect of these regulations not being passed would be that thousands of small businesses across the country would end up paying more business rates?
Nigel Huddleston
My hon. Friend has embarrassed me, because he just summarised my eight pages of notes in one paragraph. He is absolutely correct. If we do not do this, hundreds of thousands of businesses across the country—those with a rateable value of between £15,000 and £51,000—would effectively have to pay far higher rates than they otherwise would, and that is the core purpose of the discussion today. I should probably sit down there, but I will carry on just a little bit for the edification of others who probably do not get the principles as keenly, enthusiastically and quickly as my hon. Friend.
The secondary purpose of the regulations is to extend the scope of the small business multiplier to include unoccupied properties, charities and properties on the central list—which I will explain in a moment—with a rateable value below £51,000 and which do not currently receive full rates relief. This will level the playing field for all types of properties, promoting consistency in the system; in other words, it is a simplification. Those properties that move to the small business multiplier for the first time will also receive a tax cut worth around £5 million in total per year.
Hon. Members may appreciate a very brief reminder of the business rates multiplier and what it is. The multiplier is the tax rate used to calculate business rates. The relevant multiplier is multiplied by the yearly rental value of a property, known as rateable value, to calculate its business rates bill before any reliefs are applied. As I have mentioned, there are two multipliers in operation—the small business multiplier and the standard multiplier. The legislative default is for both multipliers to rise by consumer price index inflation each year, but the Government took action at autumn statement 2023 to freeze the small business multiplier for the fourth consecutive year, protecting over 1 million ratepayers from an increase in bills.
The regulations must be made as a result of the passing of the Non-Domestic Rating Act 2023 in October.
Priti Patel (Witham) (Con)
Would my hon. Friend acknowledge that these regulations, and the overarching principle on business rates that he is leading, are helping to secure more jobs in our communities, particularly in constituencies like Witham, where small and medium-sized businesses are at the forefront, with a presence on the high streets, recruiting and employing people? That is, of course, vital to our economic health and wellbeing.
Nigel Huddleston
I thank my right hon. Friend for her comments. I know, and have experienced in many debates, what a champion she has been for small businesses, including in her constituency. She is absolutely right: we want to ensure that the tax level is appropriate but not overly burdensome. Some reliefs that we have given in retail, hospitality and leisure over the past years have been precisely to ensure that such businesses can operate on a level playing field, operate efficiently, and create jobs, economic activity and the all-important tax revenues that we need for a sustainable economy. At the heart of the matter is business success and jobs—my right hon. Friend is absolutely right—and that is what this Government are laser-focused on delivering.
The Non-Domestic Rating Act implemented important reforms to the business rates system, which were announced following the 2020 business rates review. The headline measure of the Act was more frequent revaluations. It also introduced a new improvement relief for those who raise the value of their properties through qualifying improvements and several other measures. Most relevant to this debate, the Act made a series of changes to the administration of the business rates multiplier to streamline and improve the system. One such change granted the Government the power to set the threshold for which properties pay which multiplier in secondary legislation; and as these new reforms will come into force from the 2024-25 financial year, the Government must bring forward these regulations in order to maintain the threshold for which properties pay which multiplier at its existing level: £51,000 rateable value.
If the regulations were not passed, the small business multiplier would instead only apply to businesses in receipt of small business rates relief, which would constitute a tax hike for hundreds of thousands of businesses whose properties have a rateable value of between £15,000 and £51,000—exactly the point made by my hon. Friend the Member for Torbay.
The regulations also widen the eligibility for the small business multiplier, including unoccupied properties, charities and central list properties within its scope for the first time. That brings those properties in line with occupied properties, maintaining consistency across the entire system. The proposal to bring unoccupied properties and charities within the small business multiplier was initially made in the technical consultation following the business rates review, and the Government committed to the change in the summary of responses to that document in March 2023. To promote consistency, we have decided to bring properties on the central list—the centrally managed list of properties that span multiple local authorities areas, including, for example, utilities pipelines—within the scope of the small business multiplier. There are a relatively small number of such properties, but we believe this point of consistency is important.
What this instrument does therefore is very simple: the regulations continue and extend Government policy, setting the threshold for which all property types pay the small business rates multiplier at below £51,000, unless they are subject to full relief. Properties of £51,000 or above will be subject to the standard multiplier. In short, the regulations will largely maintain the status quo for the vast majority of ratepayers. The £51,000 threshold will remain where it has been for the past six years. The regulations will ensure continuity under the legislative reforms made by the Non-Domestic Rating Act 2023, and I therefore commend them to the Committee.
James Murray (Ealing North) (Lab/Co-op)
It is a pleasure to serve on this Committee with you in the Chair, Mrs Murray. I welcome the opportunity to address the draft regulations on behalf of the Opposition.
As we know, business rates are determined according to the formulas defined in the Local Government Finance Act 1988. The rates are calculated as the product of the property’s rateable value, as determined by the independent Valuation Office Agency, and the relevant multiplier. As we heard from the Minister, this statutory instrument continues the existing policy under which the majority of occupied properties with a rateable value below £51,000 pay rates calculated by reference to the small business multiplier, and extends it by making charities and unoccupied properties eligible for the small business multiplier too.
Specifically, as the Minister set out, the statutory instrument seeks to do three things: first, to maintain the threshold for the small business multiplier to be applied at below £51,000 of rateable value, which, as the Minister notes, has been Government policy since 2017; secondly, to give effect to the announcement that charities and unoccupied properties will be eligible for the small business multiplier; and thirdly, to implement the Government’s decision to extend the small business multiplier to central list properties below the £51,000 rateable value threshold, of which we understand there are seven.
We will not oppose this statutory instrument. However, I would be grateful if, when the Minister responds, he could provide further detail about his and the Government’s understanding of what constitutes an unoccupied property. As he will know, the Government consulted on business rates avoidance and evasion in July last year. In the consultation document, the Government made it clear that Ministers were concerned about potential abuse of empty property relief by owners who use a brief period of apparent occupation to reset their property’s eligibility for that relief. The consultation document that I am referring to made clear that,
“There is no statutory definition of what constitutes ‘occupation’ of a property, and minimal occupation possibly of no material benefit to the occupier, except as a method to avoid paying rates, may be sufficient to allow ratepayers access to a further rate-free period.”
As there is no statutory definition of what constitutes occupation of a property, I would be grateful if the Minister could explain to the Committee what definition the Government are using to identify unoccupied properties for the purposes of this SI.
I would also be grateful if the Minister would confirm when the Government intend to set out their response to the business rates avoidance and evasion consultation, and when they plan to bring forward any actions they intend to take to combat avoidance and evasion in the business rates system.
Nigel Huddleston
I thank the shadow Minister and others for their participation. As I said, the Government are committed to ensuring that the business rates system is fair, equitable and as streamlined as possible, and the regulations have been drafted with that in mind. As is usual practice, further guidance will be provided with regard to the policy’s roll-out.
We are well aware of the issues of avoidance and evasion across multiple tax systems; the hon. Member for Ealing North will know that that is an important matter that the Government consider. The inclusion of unoccupied properties is to try to create a level playing field. Nobody wants to see unoccupied properties on high streets or elsewhere, and the intention is to try to ensure that they are not empty for any longer than needed. The definition of an unoccupied property is established in case law, and there is a degree of local authority discretion to decide—but, as I said, further guidance will be forthcoming. The shadow Minister also asked about the response to the consultation; we will be responding in due course.
Ultimately, the regulations promote consistency and stability in the business rates system—important tenets of any tax system. Through them, the Government will continue to protect about 90% of properties by placing them on the small business multiplier, which is now open to a greater range of property types than ever before. The regulations are crucial in ensuring the smooth, consistent operation of the business rates system for the financial year 2024-25 and beyond, and I commend them to the Committee.
Question put and agreed to.