Birmingham City Council

Baroness Pinnock Excerpts

Tuesday 1st April 2025 Lords Chamber

[Lord Jamieson (Con)]

My Lords, until my right honourable friend the shadow Secretary of State tabled his Urgent Question yesterday, we had heard nothing from this Government on Birmingham City Council’s bin fiasco. Birmingham, the UK’s second city, the pride of industrial Britain, is now reduced to piles of rotting waste and rats. We are seeing scenes akin to those I remember as a child in the strike-plagued 1970s.

Almost every area is suffering from overflowing bins, with 17,000 tonnes of waste said to be clogging up pavements across the city. Depots have been blocked by picket lines, delaying contingency collection vehicles from reaching the streets and, all the while, uncollected waste is increasing at nearly 900 tonnes a day. The threat of a public health emergency hangs over the city, a threat that demands urgent and decisive action. What are the Government doing to address this terrible situation? For 20 long days, nothing. When the residents of Birmingham needed a solution, the Government stayed silent.

This is a problem of the council’s own making; for too long, waste services have been a problem in the city. My son was at Birmingham University eight years ago and the recycling waste was not collected on his street for several months despite numerous calls to the council, and it has got worse. The flawed deal with Unite back in 2017, which then led to legal action over pay, built the foundation on which Birmingham’s mountain of rubbish sits today. Despite the Labour-run council knowing about this since then, it has failed to address the issue. That is why Birmingham residents find themselves with piles of waste in the streets.

What are this Government going to do to address these failings? On these Benches we are calling for a COBRA-led response—a co-ordinated effort across local and national government, harnessing the experience of emergency services and public health officials, where every resource is summoned to resolve this nightmare. Will the Minister confirm what discussions the Government have had within the department to resolve this emergency?

On these Benches, we are calling on the Government to engage with the private sector service providers to help clear up the mess and save residents from a disruptive bin strike with no end in sight. We need action today. I urge Ministers to pick up the phone to those complicit in holding Birmingham hostage to end this strike and restore cleanliness to their streets.

Unite has called on central government to make hundreds of millions of pounds available to the council. If that something the Minister is considering? What is more, is a council tax increase of 7.8% a clear breach of the Prime Minister’s pledge to freeze council tax? Does asking the residents of Birmingham to pay more while getting less show that Birmingham council has failed?

Now that Birmingham has declared a major incident, leading to the availability of new mechanisms, can the Minister confirm that she will meet with the council to ensure that those mechanisms are considered? We understand that the declaration should mean that the council will increase the availability of street cleansing and fly-tipping removal, but can the Minister confirm how many additional vehicles will be deployed in the coming days and what the department is doing to ensure that bin lorries can safely enter and exit the council’s waste depots? It is shameful, and a national embarrassment, that one of our nation’s great cities finds itself in such a bleak situation.

[Baroness Pinnock (LD)]

My Lords, 17,000 tonnes of uncollected household waste creating mountainous heaps of stinking rubbish on the streets of Birmingham is simply unacceptable—particularly in terms of the public health hazard that is created. As a result, and after three weeks of a strike by bin workers, the city has declared a major incident. It is expected that this will allow the council to implement a contingency plan to clear the waste mountain from the streets. So my first question to the Minister is: how confident are the Government that the waste will be cleared before the Easter holidays? Given that this emergency action has been taken because of the growing public health risk, how sure are the Government that diseases caused by a combination of rotting rubbish and rats can be prevented? My third question is: what are the public health risks faced by residents living in those parts of Birmingham where the rubbish mountains are worst?

The very challenging financial strictures facing the city council are of course one cause of this dire situation. The apparent failure to tackle the long-standing equal pay claims from women employed by the council is another contributory factor. Equal pay claims have been a challenge for councils across the country. Some resolve the problem by outsourcing: others, including my own council, resolved the absolutely unfair pay systems over 20 years ago by working with unions to agree a single pay spine and settling women’s claims for lost pay. |If that was 20 years ago, can the Minister explain how it is that, in Birmingham, equal pay claims were allowed to fester for so long?

I raise the significance of equal pay as the council cites it as a fundamental reason for not being able to settle the current dispute. Can the Minister comment on whether Birmingham City Council has finally resolved historic equal pay claims and whether existing pay for all employees is on a fair footing?

It is of course right to acknowledge that Birmingham has had a reduction in its core funding of 40% or more, which has left the spending level per person 19% lower than 14 years ago. In more deprived areas, the loss per person is nearer to 26%, according to a report from the IFS. Clearly, the huge loss of funding has put the council into very difficult circumstances. Eleventh-hour additional funding from the previous Government helped forestall the financial collapse of the city council. As a consequence, very difficult decisions have had to be made. Can the Minister confirm that major change to support council finances is needed and will come?

Finally, it has to be asked whether Birmingham City Council is too large. It serves 1.2 million people, which makes it the largest local government authority in Europe—double the size of the next largest in this country. With just 101 councillors, each one serves over 12,000 people. Can the Minister explain how community representation can occur under these circumstances? The reason for the question is that the different needs and aspirations in a council of that size are hard to meet when elected representation is on that scale. It seems likely to have contributed to the problems now being faced. Does the Minister agree?

Birmingham is a great city. It needs the support of the Government and Opposition in aiding a recovery. I look forward to the questions asked being answered, either now or in writing.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

I thank both the noble Lord and the noble Baroness for their questions. I will elaborate on the Statement a little but, before I do, the tone taken by the noble Lord, Lord Jamieson, showed no acceptance of the 14 years of funding withdrawal from local government. That is at the heart of this problem.

I would like to update the House on the statutory intervention at Birmingham City Council, which was part of the reason for this Statement in the other place, and on issues affecting the waste service, following the Statement made by my honourable friend the Minister for Local Government and English Devolution in the other place yesterday. This Government were elected on a manifesto that pledged to fix the foundations of local government and we have set about doing that with some energy. The public rightly expect and deserve well-functioning local councils that provide the essential statutory services that residents rely on.

Local councils must be fit, they must be legal and they must be decent. Commissioners have been working with Birmingham City Council for the last 18 months to support the council in its recovery. Their latest report on that progress was published by the Government yesterday and lands at a point of acute difficulty for residents in Birmingham. As we know, the ongoing waste dispute is resulting in rubbish piling up in the streets, so I will also take this opportunity to give the latest update on the status of that dispute.

The council has taken important initial steps forward on its improvement journey and is working constructively with commissioners. It has made significant progress in addressing historic equal pay issues and fixing the foundations of its governance. The leader, Councillor Cotton, and his group are taking difficult decisions to get the council back on track. The commissioners have recognised that, and that his calm leadership through stormy waters is definitely moving the council forward. The new managing director, Joanne Roney CBE, has brought a steady hand and is beginning to make permanent senior appointments that will contribute to that much-needed stabilisation. The council has also achieved a breakthrough by achieving an agreement to settle the outstanding claims to end the ongoing equal pay saga. It has also set a reimplementation strategy for the Oracle system, which was part of the issue there.

That improvement is encouraging, but deep challenges remain. In the short term, commissioner oversight and close supervision will still be required to maintain the momentum that has started to build. There is a difficult road ahead on the key aspects of the best value regime—governance and culture, financial management and service delivery—because substantial risks threaten the journey to reform and recovery.

As we all know, there is a live industrial action in waste services involving one of the three unions recognised at the council. The Government will support the leader and his team at Birmingham, directly and through the commissioners, to move the council on from these historic issues. That includes an increase in core spending power of up to 9.8%, or £131 million, for 2025-26, including £39.3 million of new one-off recovery grant, illustrating the Government’s commitment to correcting the unfairness in the funding system; and an “in principle” agreement to the exceptional financial support, totalling £1.24 billion.

The noble Lord, Lord Jamieson, raised the issue of council tax, but actually it was his Government who signed off a 10% council tax increase in Birmingham last year. That was more than the council put up its council tax by this year.

Councils deliver more than 800 services and make a huge difference, but it is accepted that for many, the most visible and universal service is the collection and disposal of household waste. Many noble Lords know that the current industrial action in the city is causing misery and disruption to local residents. I am not going to make light of that; I know how difficult it is for them.

From the outset, we want to be clear that statutory intervention is led by commissioners and Ministers, who cannot legally intervene in the industrial action. The Minister for Local Government and English Devolution has been in regular contact with the leadership of the council throughout as it has sought to find a resolution which, importantly, maintains the reforms needed to build a sustainable council and which also returns waste collection to a normal functioning service. This is causing public health risks to the city’s most vulnerable and deprived and, as a result, yesterday Birmingham declared a major incident to give it the mechanisms to better manage the impact on residents. I support that decision, and this Government will back local leaders to bring the situation back under control in the weeks to come.

The Government will not hesitate to provide support in any way that Birmingham’s leaders need and, as Parliament would expect, a meeting with the leadership of the council, the commissioners and other key local partners is taking place to make sure that we are doing everything we can to protect public health. I spoke to Councillor Cotton myself this afternoon to ask him if there is anything further he wants us to do.

It is in the interests of all parties—and, most importantly, the people at the heart of this, the residents of Birmingham—that the industrial action is brought to a close in a meaningful and sustainable way as soon as possible, and we encourage all parties to redouble their efforts, get round the table and find that resolution. Councillor Cotton confirmed that live negotiations are ongoing; that work is still continuing. To do this, any deal to end industrial action must maintain value for money and ensure a fit-for-purpose waste service, without creating or storing up liabilities for the future. All parties recognise that Birmingham’s waste service has been in urgent need of modernisation for years. Any deal reached must not repeat the mistakes of the past.

Practices in the waste service have been the source of one of the largest equal pay crises in modern UK history, resulting in costs of over £1 billion. This situation simply cannot continue, and that is what needs resolving, and resolving urgently. Our Government will support the council in its journey to creating the sustainable, fair and reliable waste service that the residents of Birmingham deserve. We will support the council to resolve historic issues and to continue to establish the leadership, governance and culture that will transform the services and deliver good-quality public services for the people of Birmingham.

On the noble Lord’s specific questions and his comment about failing to address the issue, there have been consistent meetings and discussions with Birmingham throughout this situation to make sure that we give it any support it needs, but it is right that it should be Birmingham City Council’s decision to enable co-ordination between public sector partners on the ground in Birmingham. That is why it has declared this major incident—to ensure that public safety and health is restored. While the situation in Birmingham is clearly very serious and deteriorating, the declaration of a major incident is a well-established mechanism for ensuring that public sector partners can co-ordinate locally to deliver a resolution.

The noble Lord asked whether COBRA would be convened. COBRA is used for significant crises which require a collective government response, co-ordinated at the centre by the Cabinet Office. We are in regular contact with Birmingham City Council, and local leaders are confident at the moment that they can manage the situation. Should this change, we stand ready to respond to any ask for support.

The noble Lord asked how many bin lorries are active. He will be aware that one of the issues was the blocking, as part of the strike action, of bin lorries’ entrance to and exit from the depot. We are hoping that that can be resolved as the negotiations go forward. I cannot tell him off the top of my head exactly how many bin lorries are able to operate, but I shall come back to him in writing on that.

The noble Baroness asked how confident we are that waste will be cleared before Easter. We all want to see this situation resolved as quickly as possible. I hope that, with the good will of all parties, and given that they are still in negotiations with each other, we will be able to resolve this dispute sooner rather than later.

The noble Lord asked about sending in staff or giving extra money to help clear up the rubbish, and whether we would send in private contractors to do that job. As you all know, I am a firm believer in devolution and in letting local people sort the issues out locally. It is right that the response is led by the area’s key public sector partners. We are in regular contact with those local leaders, and negotiations are still open.

On the issues relating to public health, the director for public health at Birmingham City Council is part of the response, and the impact assessment of the strike is closely monitoring the situation on the ground and will continue to do so. The UK Health Security Agency met with the director for public health yesterday and will remain in close contact to ensure that all parties are well informed.

Issues were raised about equal pay, and of course, the noble Baroness is right to say that we needed to resolve those. They were entrenched and affected some of the female workers in Birmingham enormously. We have to give credit to Birmingham for working its way through what has been a very long and hard process. I have gone through one of these equal pay settlements myself. The trade unions have been involved in resolving most of the issues; this is that last part of that process, and the matter is still outstanding. As I say, we urge everyone concerned to get round the table and resolve this now.

I hope that that has answered all the questions. The noble Baroness asked about the size of the council. We are going through a process with all councils of discussing how we take things forward, but it is important that, at the moment, we leave the commissioners and local leadership in Birmingham to do the work they need to do to turn the council around. That work is progressing well; there is still a lot more to do but a lot has been done already, so I hope we will get to where we need to be.

The noble Baroness also referred, rightly, to funding cuts. Birmingham City Council received the sharpest cuts of any council in the country. Because it is the biggest council in the country, the ripple effect that we all felt in local government from the horrendous hollowing out under the last Government hit Birmingham like a tsunami, so I do not think the Benches opposite have much right to criticise what went on there.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Pinnock Excerpts

Consideration of Commons amendments and / or reasons
Tuesday 1st April 2025 Lords Chamber

However, this is a House of scrutiny and, given the financial deadlines associated with this Bill, I will not be pressing any further amendments. But I sincerely hope that, in 12 months’ time, our high streets will not have been hollowed out any further, although I am extremely concerned that this Bill will only worsen their decline and, as importantly, that children will be forced to leave independent schools, disrupting their education and putting more pressure on our state system.

[Baroness Pinnock (LD)]

My Lords, last week there was a considerable majority of support in this House for an amendment tabled in my name, which enabled the Government, by regulation, to prevent the higher multiplier from being applied to NHS properties, mainly consisting of 290 of the major hospitals in England. I was surprised to hear the Minister say just now that there is sufficient leverage within the Bill to enable those changes to be made. I ask him now to write to me to explain how that will work.

It is most disappointing that the Government felt unable to accept the amendment. However, it is clear that the Government have very challenging decisions to make. Nevertheless, given that reducing waiting times is a key priority, we on these Benches were hoping for—and indeed hopeful of—government support on this issue. We recognise at this stage that we can take the Bill no further and we will not press any further amendments.

Finally, I want to give thanks to all those who have taken part in this interesting Bill, which attracts those of us who like to understand how business rates work, who benefits and who does not. We look forward to the digitalisation of the whole process, whereby changes could then be made. From these Benches, we thank all who have taken part, including the Whips’ Office, which has given me enormous support, as well as the Minister and his team for all the helpful conversations that we have had. They did not get anywhere but, nevertheless, I thank the Minister for always being willing to meet.

[Lord Thurlow (CB)]

My Lords, it has been an interesting and lively debate through all its stages, covering the many aspects of the broad landscape of this Bill. I thank all who took part and supported my amendments from across the House right through to this final stage. I add my thanks to the Minister and his team, who have spent a good deal of time on a number of occasions, willing to engage with me to try to find compromise and a way through the complicated and difficult elements of the Bill, which have become quite technical and needed a deep dive.

I feel a sense of real regret. The Government have missed a real opportunity to deal once and for all with the injustices heaped on the small high-street retailers, which continue to subsidise the rates paid by these mammoth non-high-street retail fulfilment centres: the internet operators exclusively—not the ones on the high street that have fulfilment centres but the ones that are not on the high street. It is tragic that this opportunity has been missed. It is a wrong that the Bill could have put right. The Minister’s proposals address aspects of this, but possibly not for many years to come. The digitisation process of non-domestic rates, which we have discussed, is in hand and planned for 2028, but I wonder whether, like many other government initiatives, it will take many years longer than expected. What a waste. It was not too difficult—an opportunity missed.

It is not my desire to prolong the debate, notwithstanding the reasons cited for refusal in the other place, which left the door open. I think we have done enough, and HMG should not be frustrated in their manifesto items. I thank the Minister for his opportunity to continue a dialogue going forward, which I would like to engage in if I have not been put in front of the firing squad as a hereditary before that time comes. I will not press my amendment.

Non-Domestic Rating (Multipliers and Private Schools) Bill)

Baroness Pinnock Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 26th March 2025 Lords Chamber

Moved by

[Baroness Pinnock]

At end insert “, and do propose Amendment 1B in lieu—

1B: Clause 1, page 2, line 6, at end insert—
“(1A) Regulations under sub-paragraph (1)(a) may specify that occupied hospitals, medical and dental schools, and any other healthcare settings as may be prescribed in the regulations are not subject to the higher multiplier.””

[Baroness Pinnock (LD)]

My Lords, as the Minister said, the higher rate or multiplier being introduced in this Bill is to apply to all properties with a rateable value of more than £500,000. This is a worthy attempt by the Government to have a fairer approach to business rates.

However, 290 hospitals are captured by this new banding. It means a considerable increase in their business rates—potentially, a 20% increase—for which government funding has not made provision, so hospitals will have less funding to drive down waiting lists, which is an aim that has all our support. I give just one example: University College Hospital here in London has a rateable value of nearly £12 million. With the new higher multiplier, its business rates will increase by over £1.2 million.

Amendment 1B, in lieu of Amendment 1, would provide the Government with the option, by regulations, to exclude hospitals from this higher banding. At this late stage, I urge the Minister to agree. None of us wants to see waiting lists not going down as fast as they could because of the Government’s reluctance to exclude hospitals—not from business rates, just from the higher multiplier.

I will speak very briefly to the other Motions. Motion B1 in the name of the noble Baroness, Lady Scott of Bybrook, is very important to the viability and vitality of our town and city centres. We on these Benches are minded to support the noble Baroness on this issue if she wishes to take it to a vote.

Motion N1 in the name of the noble Lord, Lord Thurlow, would provide the Government with a way forward to address cliff-edge issues when there are hard divides between different multiplier levels. This is of concern to businesses and, again, we will support the noble Lord if he intends to divide the House on this issue. I beg to move Motion A1.

[Baroness Scott of Bybrook (Con)]

My Lords, first, I declare my interest as a vice-president of the Local Government Association. This group of amendments addresses the ongoing issues with Clauses 1 to 4 that have been debated throughout the progress of the Bill. These clauses present two major problems. They do not reflect the Government’s previously stated ambition to reform the business rates system in order to protect the high street and ensure that online businesses pay their fair share. The higher multiplier will damage businesses on the high street and drive them out of town centres.

The Bill is an attempt by the Government to deliver on their manifesto commitment to reform the business rates system, but they have instead used a blunt instrument as a cut-off. That means that a number of businesses will be paying this higher multiplier, which they should not be doing. The Government will be hitting stores up and down the high street. Despite promises that reform will follow, the Bill leaves a number of important high street businesses paying higher rates, with no certainty at all as to when the situation will improve.

--- Later in debate ---

[Lord Khan of Burnley (Lab)]

My Lords, I thank all noble Lords who took part in this short debate. We heard concerns that the measures in the Bill for new multipliers do not deliver on the stated intention of the policy as announced at the Budget. I do not agree with that. At the Budget, the Government announced their intention to introduce two lower multipliers for qualifying retail, hospitality and leisure properties and, in particular, to end the uncertainty of annual RHL relief. RHL is a temporary stopgap measure that has been extended year on year since the pandemic, and it does not provide the certainty that businesses require. The Government, through this Bill, are taking steps to address that. It was also announced at the Budget that the permanent tax cut for RHL businesses needs to be sustainably funded. This is an appropriate and prudent approach. The challenging fiscal environment that the Government face requires this, but it goes without saying that any tax cut must be funded as part of sound financial management. To do this, the Government intend to introduce a higher multiplier for the most valuable properties, those with a rateable value of £500,000 and above. The higher multiplier will affect less than 1% of properties in England. This delivers on the policy set out at the Budget by the Chancellor. Furthermore, it represents the Government’s first step to delivering on their manifesto commitment to transform the business rates system to one that is fairer, protects the high street and is fit for the 21st century.

I have explained to noble Lords here today while the amendments tabled in lieu are not necessary. For these reasons and the other reasons I have already set out, I respectfully ask noble Lords not to press their Motions containing Amendments 1B, 2B, 7B, 8B, 13B and 14B.

[Baroness Pinnock (LD)]

I thank the Minister for his response, which gave me no hope that the Government are considering relieving hospitals of the higher multiplier. We agree with him that retail, hospitality and leisure businesses should benefit from the lower multiplier in the Bill, but it should not be at the expense of the NHS. There are other ways of doing it, and I am appalled that the Minister has not sought to find alternative sources of income. So because we on these Benches wish to make sure that our hospitals do not lose a penny more in business rates to the Government, I beg leave to test the opinion of the House.

--- Later in debate ---

Motion G1 (as an amendment to Motion G)

[Baroness Pinnock]

Moved by

At end insert “, and do propose Amendment 7B in lieu—

7B: Clause 1, page 2, line 6, at end insert—
“(1A) Regulations under sub-paragraph (1)(a) may specify that unoccupied hospitals, medical and dental schools, and any other healthcare settings as may be prescribed in the regulations are not subject to the higher multiplier.””

[Baroness Pinnock (LD)]

My Lord, this is a consequential amendment on Motion A1. Presumably, that one has passed.

Motion G1 agreed (as an amendment to Motion G).

--- Later in debate ---

[Lord Thurlow (CB)]

I want simply to add to these very moving and persuasive comments. It seems to me the most terrible act of self-harm to tax the schools again and again. It is not just VAT and the non-domestic rates but national insurance increases on staff and employees, and, in recent years, a compulsory increase to pension provision outside any private arrangements the schools may make. Those are four separate recent taxes. When is this bleeding going to stop?

[Baroness Pinnock (LD)]

My Lords, we on these Benches believe that there is a principle at stake of not regarding independent schools as charities. Education is not a profit-making business, although independent schools have to cover their costs—which, as I have sadly heard, Fulneck School has failed to do. We will support the noble Baroness, Lady Barran, if she wishes to test the opinion of the House.

[Lord Khan of Burnley (Lab)]

My Lords, I thank all noble Lords for their important contributions in this debate. The noble Baroness, Lady Barran, has stated her firm belief that no education should be taxed. She has also reminded this House of her view, shared by the noble Lord, Lord Mackinlay, that the Government are creating a two-tier charity system. The measure delivered through this Bill is a tough but necessary choice to ensure that the Government can deliver on their commitments and break down barriers to opportunity for all. Tough choices are difficult—the Government know this—but they are also necessary. This Government will take these tough decisions because of the financial climate out there.

Local Authorities (Changes to Years of Ordinary Elections) (England) Order 2025

Baroness Pinnock Excerpts

Monday 24th March 2025 Lords Chamber

[Baroness Jones of Moulsecoomb (GP)]

I was going to pause for a moment to see how many people flooded out; how nice it is to have your Lordships all here.

I thank the Minister for taking the time to discuss and explain the Government’s thinking on this decision to postpone some elections for at least a year. The promise to reorganise local government was in the Labour Party’s manifesto, but the method to be used was not, so this statutory instrument is not delivering a manifesto promise and therefore this House is well within its rights to vote against the proposition.

It is always a bad idea to cancel elections at the best of times, and this is clearly not the best of times; in fact, one could say it is the worst of times. We have more cuts to services at the moment than we have had for some time; they are already on their knees. We have council taxes going up again as people pay more for less. Local government is in a bit of a state, so I do not see the common sense in delaying elections and then starting them up or running them a year later with a plan to allow the current councils to devise the next move towards reorganisation. People have a right to vote—that is what being in a democracy means—and the timetable is set out and understood by the general public, so changing that seems a little unprincipled.

It is hard to think of anything less democratic than cancelling elections ahead of a significant change in local democracy; it is straight out of an authoritarian playbook. Creating a devolved mayoralty by cancelling county council elections just seems odd—in fact, nonsensical—and again is undemocratic at the very least. This rushed decision means that voters will not have the chance to have their say on new councillors for at least a year. That means that the councils that have delayed elections do not actually have a mandate to do the reorganisation that the Government are asking them to do. Voters should be able to decide which councillors will have the opportunity to plan for the new structure. Local political parties ought to put such plans into their manifestos for voters to see and vote for or against.

A lot of people who could potentially vote in May in the postponed elections will now be denied the chance to protest, complain and elect people who have a different vision of how their area should be run. I am told by a councillor in East Devon District Council that the council has already begun acting in line with the proposed reorganisation, despite no public consultation taking place due to an alleged lack of time, which is something that we have heard from the Government as well. Decisions have therefore been delegated to unelected officers and executives, raising clear concerns about democratic accountability and statutory obligations under the Localism Act 2011. In addition, the councillor admitted that neither councillors nor the electorate have a clear understanding of how this organisation will work or even what it will be, yet actions are being taken regardless. It seems that local authorities are already acting under the influence of centralised restructuring before it has even been democratically validated.

Is it really for the Secretary of State to select which elections can go ahead and which cannot? Does it not set a dangerous precedent to allow a Secretary of State to make these decisions? It is not a national emergency like Covid, when we understood why elections were postponed and which justified that decision. Do we accept that, for whatever good reason the Government think, the Secretary of State can disrupt the election cycle and delay elections to a convenient time? That is more than authoritarian, it is almost Trumpian—and I have to ask, is it legal? Earlier I consulted a member of the Bar, who is not in his seat. He said, “Oh, it depends”, which is probably what I should have expected. This fatal Motion would green-light the postponed elections to go ahead. But Labour have tabled this vote at the last possible moment on the last possible day so that the Government can now say to us, “It’s too late to go ahead”.

We are going to have mayoral elections next year, in 2026; I understand that the delayed elections will all be held then. Can the Minister reassure me that all delayed elections will be run next year? Then, in 2027, the new shadow principal authority will be elected. Again, this is quite fast. I understand that the Government promised this and therefore they need to move fast, but I am very concerned about the democratic processes here. Can the Minister confirm that this means that some councils and some councillors could be in post for three years beyond their original mandate?

There is also the problem of this being not about devolution at all but about making it easier for the Government to liaise with fewer stakeholders—that is, mayors. This is sucking power upwards and is not devolution at all. It is about the Government making life easier for themselves and giving local people less say in what happens in their local area.

Strategic planning decisions will be taken out of the hands of people who know the area and given to the mayor, who could take decisions against the interests of local residents. This is a reason not to rush into postponing elections. I am concerned about whether there has been an assessment of whether this arrangement will save money. Will it improve efficiency and support social cohesion? Will it give local people more access to knowledge and decision-making? If there is a report or an assessment, I am curious about who wrote it and when. I look forward to hearing the Minister’s answers, but clearly what is happening is not democratic. On that principle alone, I beg to move.

[Baroness Pinnock (LD)]

My Lords, I have relevant but not direct interests as a councillor and as a vice-president of the Local Government Association.

Elections are the bedrock of our democracy and should not—indeed, must not—be cancelled. Some 5.6 million people are being denied the right to vote this May in elections to seven county councils and two unitary councils. The critical question is, why have the Government agreed to such an anti-democratic measure? The Secretary of State’s justification is that the Government have what they are choosing to describe as an

“ambitious programme of local government reorganisation”

and devolution that will eventually see the demise of councils based on historic counties and the abolition of district councils. In their place will be unitary councils with a population of 500,000, making them much larger than any of the London boroughs. Some yet-to-be-agreed combination of councils will then elect a single person, a mayor, with considerable powers on, for instance, strategic planning—as we heard from the noble Baroness, Lady Jones—where the mayor will be able to allocate land for development without the agreement of residents.

The nine councils with cancelled elections were assessed by the Secretary of State to be more prepared than most in their reorganisation plans, and that therefore it

“would be an expensive and irresponsible waste of taxpayers’ money”

to hold elections

“to bodies that will not exist, and where we do not know what will replace them”.—[Official Report, Commons, 5/2/25; col. 767.]

However, in a meeting with the Minister it became clear that the reason for elections being cancelled is that the first step in consulting residents and interested parties had begun in February and would continue until April during the election period. This, rightly, was not acceptable. The option that does not seem to have been considered was to delay the elections until June. That has occurred in the recent past, on more than two occasions, and would both accommodate the need to consult and enable a new mandate to be given to decision-makers.

Furthermore, the cancelled elections will apparently take place in 2026, when it is expected that there will be elections for a new mayor and councillors to the county councils, which will still exist, and district councils. That is the advice we have been given. County councils and district councils will then make decisions on the geography of new unitary authorities. A new mandate from the electorate is therefore absolutely essential before those decisions are made, and not after—which is what will happen if these elections are cancelled.

Had we had elections, it would have had the benefit of alerting residents to the major changes being proposed, and getting their views direct to councillors. They would have been able to elect those they agree with and not elect those they do not agree with. That wide discussion is obviously not seen to be desirable by the existing council leadership—who called for the cancellation of the elections—and the Government.

It is on this particular aspect—the discussion element of this decision—that the Secondary Legislation Scrutiny Committee has raised concerns and drawn them to the attention of the House. The first of these concerns is about the extent and depth of the opposition to the cancellation of elections. The committee is highly critical of the Government for having failed to provide a response to the issues raised. Can the Minister provide a response—which should have been given to the concerns raised by the Secondary Legislation Scrutiny Committee—to the House before this vote is taken?

Surrey County Council is the exception to the situation I have described, because the reason for the cancellation of its elections is due to the dire financial state of some of its councils—one in particular has debts of more than £1 billion. The Government are enabling the county council, which is also in debt, to push through a reorganisation against the will of the districts. This is a democratic disgrace.

The Motion in the name of the noble Baroness, Lady Jones of Moulsecoomb, is deficient in its statement, in that it fails to mention the substantial purpose, which is the reorganisation and devolution plans of the Government. It is most unfortunate that the noble Baroness was unable to agree to a single Motion to Annul that had been the subject of a tentative agreement last week. If the noble Baroness puts her Motion to a vote, we on these Benches will abstain, in favour of voting for the stronger and more comprehensive Motion in my name.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Pinnock Excerpts

3rd reading
Monday 24th March 2025 Lords Chamber

[Baroness Barran (Con)]

My Lords, in concluding this Bill, I first thank my noble friends who have supported me, in particular, my noble friends Lady Scott of Bybrook and Lord Jamieson, in our work to protect high streets and independent schools. I also thank noble Lords from across the House, who have spoken in support of the many sectors that risk being negatively impacted by the Bill. In particular, I thank the noble Lord, Lord Fox, and the noble Baroness, Lady Pinnock, for their work on helping businesses up and down the high street. I thank the noble Lord, Lord Storey, for his support in protecting independent schools, and the noble Lord, Lord Thurlow, for his amendment that calls for the reform to the business rate system that the Government have failed to deliver through the Bill. I thank the Minister for the very constructive and positive way that he has engaged throughout the passage of the Bill.

On these Benches, we are pleased that a number of issues, on which the House has been united, have allowed us to encourage the Government to make changes to the Bill. Anchor stores, manufacturing businesses and healthcare hereditaments will likely face increased business rates through these proposed changes, especially with regard to the higher multiplier. I hope the other place will consider the sensible amendments that retain the current standard multiplier for these crucial sectors.

The amendment in the name of my noble friend Lord Jamieson is key in exploring the impact of the threshold of the higher multiplier. Its cliff-edge nature is particularly concerning, and despite the Government’s insistence that they want to focus on growth, this threshold will impact the decisions many businesses will take, and not in the direction that the Government seek.

The noble Lord, Lord Thurlow, is right to call on the Government to consider when they will pursue a reform of the business rate system, in line with their manifesto commitment, to ensure that online giants pay their fair share of business rates. As the Government have not delivered such reform, they should indeed commit to publishing a review of when they will do so.

As I said in relation to my amendments, I was pleased to see Clause 5 removed, given that it addresses directly the principle of taxing education and having a two-tier charity system. We on these Benches look forward very much to seeing the response in the other place to these very reasonable issues.

[Baroness Pinnock (LD)]

My Lords, I start by thanking the Minister and his civil servants in the Bill team for the very helpful discussions to aid detailed understanding of the Bill. The one issue that still irks me is that it was debated without an impact assessment. The convention now seems to be that this is the case, but I find it unacceptable that we have debated and agreed a Bill of this nature and with the implications that it has on many businesses. I believe it is unacceptable to do so without an impact assessment.

However, we on these Benches are delighted that the 290 hospitals which were destined to have the higher-rate multiplier applied will be excluded from that penalty. We hope that the other place will agree with the sanity of this proposal. The Minister said that the aim of the Bill was to protect the high street. It is not clear that that will be achieved by the Bill, and only time will tell, but I am sure the Minister will be pleased to know that I will be keeping a watchful brief on this issue and questioning him at regular intervals if the high street is not benefiting from these elements of the Bill.

Given that, I thank my noble friend Lord Fox, who did much of the work on the implications for business, and the ever knowledgeable and wise Elizabeth Plummer in our Whips’ Office, who was able to give me sound advice on the course of the Bill. With that, I thank the Minister and look forward to the consequences of the Bill.

[The Earl of Lytton (CB)]

For my part, I too add my thanks to the Minister for his willingness to engage at all times. As he now knows, business rates is a rather niche area of activity for your Lordships. I started my professional career just over 50 years ago in the Inland Revenue Valuation Office, so I have been tied to this problem for a long time. If I have come across as a bit of a business rates nerd, I apologise to the House.

The Minister mentioned Mr Nick Cooper, whom I have known a long time through several Administrations, and I think it was he who was astute enough to observe that this might, given that my time here may be limited as a retained hereditary Peer, this might be the last occasion on which I would have to bore your Lordships on a matter to do with business rates. So there is something positive for your Lordships to look forward to.

I thank the noble Baronesses, Lady Scott of Bybrook and Lady Pinnock, and the noble Lord, Lord Fox, and my colleague and noble friend Lord Thurlow, for their willingness to discuss matters of crucial importance.

I take the point made by the noble Baroness, Lady Barran, that the manifesto said one thing and this is not what we were led to expect. However, for all the talk and all the policy-making, and for all the manifestos, you do not get to alter economic reality, nor do you get to alter markets very much. Therefore, I suspect that the process of partial attrition which has gone on in the business sector, particularly over issues to do with high streets, will continue, so long as the root and branch reform that is so badly needed and which successive Administrations have promised is not delivered. It is tough when you are dealing with something that is cheap to collect, but we must understand the consequences of lack of fairness and lack of balance, and what this means for business decisions made here and where moving an operation abroad is an alternative.

Finally, I thank Jerry Schurder and Simon Green of Newmark surveyors, who have been an unfailing source of useful information on the background to current business rates. I am not a current practitioner, so I pay tribute to them and to others from the Rating Surveyors’ Association and the RICS, both of which I am a member of.

With that, I wish this Bill well. I am certain that it will reappear. I am not complacent that this is the last word on the matter, but we have given it our best shot in what is a rather difficult and complicated area. I wish it well and share the views of other noble Lords in hoping that the other place has regard to the rationale behind our efforts.

High-rise Buildings: Safety Remediation

Baroness Pinnock Excerpts

Monday 24th March 2025 Lords Chamber

[Baroness Taylor of Stevenage (Lab)]

The remediation action plan points to the action that we need to take to move this on more quickly. Developers have determined whether work is required on about 80% of buildings for which they have taken responsibility under the remediation contract. Both developers and the Government are committed to accelerating that progress, which is why we have the plan that we published on 2 December as a joint plan. Thirty-nine developers have signed up to that and we will be moving that forward. If they fail to hit those joint plan targets, further action will be taken.

[Baroness Pinnock (LD)]

My Lords, the Government have introduced a new and lower standard of remediation, PAS 9980. Insurers, however, are not convinced that this makes buildings fully safe. The Public Accounts Committee has brought it to our attention that insurance costs remain, in its word, “unaffordable”. What are the Government going to do to address the criticism of the Public Accounts Committee and ensure that insurance costs drop considerably, so that people can afford to remain in their homes?

[Baroness Taylor of Stevenage (Lab)]

The noble Baroness is quite right to raise the issue of insurance premiums. Work has been going on to reduce those premiums for leaseholders. We have seen improvements for leaseholders who previously found themselves unable to sell or remortgage their homes, but we remain vigilant and will continue to hold the 10 major lenders to account, following their commitment to lend on properties even if the remediation is not yet complete.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Pinnock Excerpts

Report stage
Tuesday 18th March 2025 Lords Chamber

Moved by

[Baroness Pinnock]

1: Clause 3, page 3, line 26, after “hereditament” insert “other than a qualifying healthcare hereditament”
Member’s explanatory statement
This amendment, together with Baroness Pinnock’s amendments to page 3, line 37, page 4, line 6, and page 4, line 17, would have the effect of retaining the standard multiplier for hospitals, medical and dental schools, or any other healthcare setting to be determined by regulations.

[Baroness Pinnock (LD)]

My Lords, I remind the House of my relevant local government interests, in particular that I am a councillor in Kirklees. At the outset, I wish to express my thanks to the Minister and his officials for their time in discussions on the details of the Bill. I had assurances at those meetings that the measures in the Bill are not designed to increase business rates revenue, although that ignores the consequence of the Bill that, for RHL—retail, hospitality and leisure—businesses, Covid relief disappears, and the difference is partly funded by those businesses. Importantly, the Minister also confirmed that local government funding in totality would not be affected and that, “as far as is practicable”, no individual council would find itself worse off as a result.

What is unfortunate, though, is that the Government have been unable to share the basic assessment that must have taken place to provide the assurances given. Thus there is no clarity about the impact of these changes on individual properties—hence Amendment 1 and consequential Amendments 9, 10 and 17 in my name and that of my noble friend Lord Fox, which seek to understand the impact of the changes on the NHS.

The useful information shared by the Minister from the Valuation Office Agency shows that 290 NHS hospitals will be caught by the new £500,000 threshold. Given that the standard multiplier is currently 0.546, or 54.6 pence, in the pound and the Bill enables the multiplier to increase to 0.646, or 64.6 pence, in the pound, for these higher-band properties, this will cost those hospitals dearly.

I warned the Minister that his failure to provide examples would mean that I did the calculations. For example, the Great Ormond Street Hospital for Children has a rateable value of £5.9 million, and its business rates costs will rise from £3.2 million to £3.8 million, an additional burden of £600,000 per year on business rates alone. The John Radcliffe Hospital in Oxford has a potential business rates increase from £3.4 million to £4.1 million. Going further north to my own county of Yorkshire, the Hull Royal Infirmary could see its bill rising from £1.8 million to £2.1 million. Those are typical figures for hospitals across the country. I do not believe that it is the Government’s intention to reduce hospitals’ ability to drive down waiting lists, yet that will be the impact of these changes and the consequent higher charges.

Amendment 1 seeks to exclude hospitals from the higher threshold multiplier to prevent a further burden of taxation falling on the NHS. The Minister will, I am sure, want to comment on the fact that, while NHS hospitals will see a huge rise in their rates, about one-third of private hospitals have charitable relief of 80% of their rates. He will no doubt say in his reply that it is not possible to allow exclusions to the Government’s scheme, but that just demonstrates that the whole business rates system is no longer fit for purpose, because the rateable values on which it depends are inevitably higher in cities and urban areas, while distribution warehouses benefit in rateable terms from being out of town. The whole system is topsy-turvy.

The Government’s express purpose was to tax those fulfilment warehouses more to help save our high streets—in their words. They failed to say that this will also clobber our NHS. That will not do. Hospitals must be excluded from the higher multiplier. I beg to move.

[Baroness Scott of Bybrook (Con)]

My Lords, first, I declare my interest as a vice-president of the Local Government Association. The amendments in the name of the noble Baroness, Lady Pinnock, seek to retain the standard multiplier for healthcare hereditaments. They address the unintended consequences of the Bill, as we have heard very strongly from the noble Baroness.

As mentioned in Committee, I understand the desire for a reformed business rate system and, indeed, if such a system were proposed, I would be more inclined to support it. But despite the Government’s manifesto commitment to level the playing field between the high street and the online giants, the Bill does not deliver on that. I understand that this is only the first step in the Government’s plans, as I am sure the Minister will point out, but it is not a step in the right direction.

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[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Lord Khan of Burnley) (Lab)]

My Lords, these amendments seek to remove healthcare hereditaments, including medical and dental schools, from the higher multiplier.

Throughout the passage of the Bill, the Government have explained the importance of taking a sector-agnostic approach with regard to the application of the higher multiplier. This is the fairest approach to ensure that the Government can sustainably fund the lower multipliers. In Committee I set out that of the 16,780 properties at or above the £500,000 threshold, based on the current rating list, only 350 are in the health sub-sector. Of these, 290 are NHS hospitals and only 30 are doctors’ surgeries or health centres. These numbers are rounded to the nearest 10.

This Government fully support the healthcare sector. Our great National Health Service, which has delivered universal healthcare for nearly 80 years, is something the Government are extremely proud of. We recognise that the NHS needs support and reform to ensure that it can continue to deliver world-class healthcare to all for the next 80 years and beyond. The noble Baroness may feel that I do not appreciate her point, but I assure her that I do. This Government want to create an environment in which the healthcare sector can thrive. As I have set out, the impact on this sector is limited and where it does apply, much falls to the public sector.

The noble Baroness will be aware that phase 2 of the spending review is currently under way, following the fixing of the spending envelope at the Autumn Budget. As part of setting departmental budgets at the spending review, the Government will consider the full range of priorities and pressures facing departments. This includes considering any impact of the higher multiplier.

I am sure noble Lords appreciate that I cannot pre-empt the outcome of the spending review, but I reassure them that the impact of the higher multiplier on the public sector is an active consideration. The immunity of the Crown from business rates was removed 25 years ago and since then all of the public sector has been on the same footing as business. The Government are not going to reverse this position, which was intended to drive fairness between the public and private sectors and the most efficient use of property in the public sector. For these reasons, I cannot accept the noble Baroness’s amendment and I respectfully ask her to withdraw it.

[Baroness Pinnock (LD)]

My Lords, I thank the Minister for his response, which, I am afraid, was much as predicted. I really do not know how a Labour Minister can say that the Government are agnostic about our NHS. You can be agnostic in approach, but surely not about the NHS. The Minister said that they are taking an agnostic approach to the sector, but that includes agreeing that our NHS will be clobbered by even higher rates bills than it has now, while some private hospitals have the 80% charitable relief. That will not create the level playing field that he talked about.

On these Benches, we are determined to support our NHS to enable it to push down waiting lists. Given that the Minister was unable to give me any hope that there will be a change of heart, I beg leave to test the opinion of the House.

--- Later in debate ---

The numbers themselves explain the unfairness of the current system. I am talking not about the £500,000 threshold that is being proposed but about the simple rates burden. All I seek is an inquiry; it would report in a year and would not be lost in the long grass.

[Baroness Pinnock (LD)]

My Lords, the noble Earl, Lord Lytton, is right to challenge the Government’s intentions in relation to saving our high street. The Government are in a quandary: retail, hospitality and leisure businesses have continued to benefit from Covid-related relief, which is currently at a rate of 75% but will fall to 40% from April and not exist in the following year. The challenge for the Government then will be to square the circle of the commitments made.

The slogan of saving the high street depends on ensuring that businesses at the heart of the high street are not priced out of financial viability by large changes in business rates—hence the Bill. However, the evidence from Wales and Scotland—which have and have used the right to alter the Covid rate relief in a previous year—is that the effect of the reduction in Covid relief was a rise in business closures above what would normally be anticipated.

As will be debated in the next group of amendments, large retail stores are an essential ingredient for a thriving shopping centre in a city, large town or retail park. It is already clear that retailers are moving more and more of their business online, partly in response to consumers but also as a consequence of the rising costs of bricks and mortar retailing—our high street that the Government intend to save. The high street will not be saved unless these larger stores are classified with all other RHL properties and charged the lower multiplier. A failure to do so simply underlines the Government’s inability to appreciate the rising taxation burden imposed on high street retailers.

Amendment 32 in the name of the noble Lord, Lord Thurlow, seeks to push the Government into wider reform of the system to fulfil the promises made about charging more to fulfilment warehouses—the Amazons of this world—to help level the playing field with traditional retailers. As the Minister knows, I have regularly provided evidence of the iniquity—I should have said inequity, but it is probably iniquity as well—of the business rating system, which has failed to be radically changed in the face of the online revolution. If the noble Lord, Lord Thurlow, wishes to test the opinion of the House on his proposals to push the Government into making deeper and lasting reform of the property taxation issue, we on these Benches will support him.

[Lord Jamieson (Con)]

My Lords, I declare my interest as a councillor in Central Bedfordshire. I will speak to the amendments in the names of the noble Earl, Lord Lytton, and the noble Lord, Lord Thurlow.

Amendments 2 and 11 are broad amendments that seek to retain the standard multiplier for all retail, hospitality and leisure hereditaments, rather than them facing higher business taxes. The noble Earl, Lord Lytton, is right to raise the issue of higher taxes on RHL businesses above the £500,000 threshold, as the Government’s stated policy intentions are not reflected in the reality of this Bill. We share similar concerns about the impact that this will have on high streets, which is why my noble friend Lady Scott of Bybrook has tabled an amendment to protect anchor stores and I have tabled an amendment on the cliff-edge effects of the £500,000 threshold.

Amendment 32 in the name of the noble Lord, Lord Thurlow, seeks to introduce a review of the introduction of a specific use class that targets businesses that operate solely out of fulfilment warehouses—the Amazon tax. The Bill does not deliver on the Government’s manifesto commitment to ensure that online giants are paying their fair share of business rates. Indeed, we expected this Amazon tax to be introduced through this Bill, and it is disappointing that the Government have not delivered anything close to such a reform in this legislation. As such, we will support the amendment from the noble Lord, Lord Thurlow, should he choose to press it.

--- Later in debate ---

[Baroness Pinnock (LD)]

Before the Minister sits down, at the beginning of his response to the amendment moved by the noble Earl, Lord Lytton, he said that there would be a permanent business rates cut for RHL businesses. Yet, the House of Commons Library briefing states that the British Property Federation said in written evidence to the Public Bill Committee that there would be an increase in total business rates liability of £2.6 billion. Can the Minister explain that?

[Lord Khan of Burnley (Lab)]

My Lords, yes, I can explain that, because we are talking in particular about the retail, hospitality and leisure sector. The point is very clear. We cannot have a system where every year businesses do not know what their business rates bill is going to be. Over the years—I accept that there has been Covid—we have not had a long-term approach to this. This is part of a wider reform of the whole business rates system. I am sure that the noble Baroness will understand that having a multiyear approach to this will provide more certainty and stability for businesses, which will know what their bills will be. The higher £500,000 threshold properties, which amount to 1%, are supporting the retail, hospitality and leisure sector, in particular, across the country.

--- Later in debate ---

It may well be that something will be done about this in the Spring Statement, but at the moment, in the absence of an industrial strategy, it is important that the Government maintain the capacity to opt to apply a lower multiplier for manufacturing industries. There was a recent report by Barclays Bank which concluded that the words “Made in Britain” were worth an additional £3.5 billion to UK exporters. I hope very much that the Minister may be able to reassure us that the Government are aware of the stresses on the manufacturing sector, that the drop in confidence that has occurred since the autumn needs to be reversed and that one way of doing that is to give the Government the power to keep open the option of applying a lower multiplier in business rates. That is the purpose of Amendment 4, and I hope we will hear some positive words from the Minister when he comes to reply.

[Baroness Pinnock (LD)]

My noble friend Lord Shipley has just made a powerful case for the disaggregation of manufacturing from the standard multiplier and for those businesses to benefit from the lower multiplier. The economic case is a strong one, as my noble friend has just said, and the Government’s go-for-growth strategy, especially in the context of world events, will fundamentally depend on British manufacturing. More encouragement needs to be provided to the sector to invest and to innovate, and a government decision to reduce the rate burden will be one such indicator that the Government are showing they are determined to support those businesses that produce the wealth on which our public services rely.

The noble Baroness, Lady Scott of Bybrook, has led this group with the case for the Government to take especial notice of so-called anchor stores, on which the viability, as she rightly argues, of our high street absolutely depends. I urge the Government to accept Amendment 4, in my name and that of my noble friend Lord Fox, to show that the importance of manufacturing will be recognised. If the Minister seeks to ignore that argument, then we on this side will test the opinion of the House.

[Lord Thurlow (CB)]

My Lords, I add my support to the important comments from the noble Baroness, Lady Scott of Bybrook. The importance of anchors cannot be overemphasised, particularly in smaller towns. We all know a shopping centre near where we live, and not a brick of development for that shopping centre would have been laid if it was not for a pre-let to an anchor.

It is important to explain that. They do not just create the footfall for the retailers generally—which of course they do—but they also catalyse the funding for the developer to build it. They are the anchor. They are the golden goose for the high street. Taxing them more simply risks losing them. The damage to society locally in losing them will be difficult to restore, and social cohesion will suffer. I strongly support the amendment from the noble Baroness, Lady Scott, and will support it if it goes to the vote.

--- Later in debate ---

Moved by

[Baroness Pinnock]

4: Clause 3, page 3, line 31, after “hospitality” insert “, manufacturing”
Member’s explanatory statement
This amendment seeks to include the manufacturing industry in the types of business that can qualify for the lower multiplier.

[Baroness Pinnock (LD)]

My Lords, manufacturing is at the heart of what this country does. We need to support it, and we can through the Bill by reducing the burden of business rates on those businesses. I therefore beg to test the opinion of the House.

--- Later in debate ---

[Lord Jamieson (Con)]

My Lords, in moving Amendment 5, which is in the name of my noble friend Lady Scott, I shall speak to Amendments 18 and 20, which are consequential. The amendments seek to introduce an increase in the threshold for the higher multiple, in line with the average aggregate increase in rateable values in the three years preceding the re-evaluation of the business rate multipliers. I am concerned that the Bill will introduce a stealth tax that will result in more and more businesses being subject to the higher multiple, if the higher multiple is fixed at £500,000 and does not increase with rateable values.

I listened to the points raised by the Minister in Committee and adjusted the amendment so that it considers the re-evaluation that will take place in 2029. Although the Minister claims that an alternative system will be introduced, this is uncertain. As such, it makes sense to introduce protection in the Bill.

Amendments 7, 15 and 19 seek to introduce into the Bill the definition provided for the RHL relief, which seems unnecessary given that the definition already exists in government guidance.

I look forward to the response from the Minister on the issues that have been raised. I beg to move.

[Baroness Pinnock (LD)]

My Lords, Amendment 7 and consequential Amendments 15, 19 and 22 probe the Government on the definition of retail, hospitality and leisure businesses. This is absolutely critical because those businesses currently receive 75% relief, which will fall to 40% in April, and the relief will be non-existent by April 2026. The Bill introduces the lower multiplier by way of reducing the impact of the removal of the Covid relief. It then becomes crucial for businesses to know which multiplier will apply to them.

The House of Commons Library’s detailed briefing stated that there is currently

“no definition in law of ‘retail, hospitality and leisure’ properties”.

It would be really helpful if the Minister confirmed that this essential definition will be determined in secondary legislation.

Throughout deliberations on the Bill, the Minister has repeated that RHL properties in the new regime are identical to those that received Covid relief. If that is so, surely the legal definition must already exist and can be shared in our debates on this group of amendments.

During the debate in the other place, Daisy Cooper MP wanted to know whether large RHL businesses that currently have a £110,000 cap on the Covid relief received will have that cap removed and benefit from the lower multiplier. If that is the case and they get the cap on their relief removed but also benefit from the lower multiplier, it will mean that smaller businesses end up subsidising the larger chain stores within this definition of RHL. Again, I feel sure that it is not the Government’s intention to let small shops subsidise larger ones. If that is not the case, can the Minister explain what is going on?

Can the Minister confirm that the new rating system being introduced in April 2026 will be fixed for three years, as he stated in earlier debates on the Bill, and that the small business relief will be uplifted in line with inflation? That is very important for small shops in villages and small towns. Currently, rateable values of less than £12,500 receive 100% business rates relief, and then a sliding scale exists. It is therefore critical that the rateable values are revised upwards to reflect property values. Otherwise, ever fewer businesses will qualify—fiscal drag for business rates. This is also the argument made by the noble Baroness, Lady Scott, in relation to the higher threshold being introduced. Failure to increase the £500,000 threshold results in pulling more businesses into the higher rate.

In the end, as we have heard from across the House this afternoon, tinkering with the system fails to address the fundamental problem that businesses are not what they were 100 or even 20 years ago, and property taxation must change to create a fairer, more equitable approach that does not penalise traditional businesses, which end up providing a larger portion of the tax take than is justified.

[Lord Khan of Burnley (Lab)]

My Lords, the amendments in this group touch on a few different areas in the Bill, so I will speak to each topic in turn.

Amendments 5, 18 and 20 in the name of the noble Baroness, Lady Scott of Bybrook, would require the £500,000 threshold for the higher multiplier to be increased at the 2029 revaluation in line with the average aggregate change in rateable value for the preceding three years. In Committee we similarly discussed whether the £500,000 threshold should be uprated over time. The amendments we considered in Committee would have uprated the threshold in line with annual inflation, and I explained—and I think the Committee recognised—why that was not appropriate.

Amendments 5, 18 and 20 are closer to the more appropriate considerations for changes to the threshold. As I said in Committee, the 2029 revaluation will be the next logical moment to consider whether the £500,000 threshold remains appropriate for the new higher multiplier, and at that time we will consider whether the threshold in the regulations continues to be appropriate. I can assure the noble Baroness, Lady Scott, that the total change in the rateable value at the 2029 revaluation will form part of those considerations. But it will not be, and should not be, the only consideration.

As well as the movement in all rateable values, we may want to look at the movement in rateable value for the cohort of properties near or above the threshold. We will need to consider in 2029 the level of continued support that we should provide to qualifying RHL and, in turn, the revenue needed from the higher multiplier to fund that support. That should form part of the considerations of the threshold on the higher multiplier.

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Moved by

[Baroness Pinnock]

6: Clause 3, page 3, line 35, after “hospitality” insert “, manufacturing”
Member's explanatory statement
This amendment seeks to include the manufacturing industry in the types of business that can qualify for the lower multiplier.

--- Later in debate ---

Moved by

[Baroness Pinnock]

9: Clause 3, page 3, line 37, at end insert—
“(9D) In sub-paragraph (9B), “qualifying healthcare hereditament” includes hospitals, medical and dental schools, and any other healthcare settings as may be prescribed by the Treasury in regulations.”;” Member's explanatory statement
This amendment, together with Baroness Pinnock’s amendments to page 3, line 26, page 4, line 6, and page 4, line 17 would have the effect of retaining the standard multiplier for hospitals, medical and dental schools, or any other healthcare setting to be determined by regulations.

--- Later in debate ---

Moved by

[Baroness Pinnock]

13: Clause 3, page 4, line 11, after “hospitality” insert “, manufacturing”
Member's explanatory statement
This amendment seeks to include the manufacturing industry in the types of business that can qualify for the lower multiplier.

--- Later in debate ---

Moved by

[Baroness Pinnock]

17: Clause 3, page 4, line 17, at end insert—
“(6C) In sub-paragraph (6A), “qualifying healthcare hereditament” includes hospitals, medical and dental schools, and any other healthcare settings as may be prescribed by the Treasury in regulations.”;” Member's explanatory statement
This amendment, together with Baroness Pinnock’s amendments to page 3, line 26, page 3, line 37, and page 4, line 6, would have the effect of retaining the standard multiplier for hospitals, medical and dental schools, or any other healthcare setting to be determined by regulations.

Plan for Neighbourhoods

Baroness Pinnock Excerpts

Monday 10th March 2025 Lords Chamber

[Baroness Scott of Bybrook (Con)]

My Lords, I begin by welcoming this Statement on the Government’s plans for neighbourhoods. While we echo the Government’s desire for the growth and renewal of our neighbourhoods and high streets, we must be clear that this builds on the work of and progress made by the previous Conservative Government. In fact, it seems apparent that this Statement is merely a rewrite of the scheme progressed under the previous Government. So does the Minister agree that on funding, allocation and time periods, this scheme is a rehash and an admission by the Government that levelling up was indeed working?

EU cohesion funds were subject to accountability to both the UK Government and local representatives. The previous Government’s levelling-up strategy aimed to address the very challenges highlighted in the Statement by mobilising a broad range of national resources. We understood that local leaders were seeking investment, and we acted on this by allocating a £2.6 billion fund to the regeneration of our communities, a £4.8 billion levelling-up fund to support vital assets like pubs and theatres, and a £1.5 billion long-term plan for tax reforms. That, if my maths is correct, is £8.9 billion, compared to the £1.5 billion over 10 years that this Government are suggesting.

We should acknowledge that the Government delivered this Statement while their own financial choices, made in the October Budget, are damaging local communities. This modest announcement is inconsequential when considered against the jobs tax, the increase in business rates in the hospitality and retail sectors, the changes to business property relief and the multi-million-pound funding gap that appeared in council budgets as a result of the October Budget. This is before we address the impact of the loss of the rural services grant and the community ownership fund, which sought to provide support to communities that need it most. Will the Minister confirm what assessment has been made of the impact of the Chancellor’s tax hikes on local economies, such as those His Majesty’s Government are about to fund?

We have reservations and concerns about the Statement made last week, so I look to the Minister to provide some clarity. First, I ask the Minister to confirm what measures will be in place to ensure appropriate oversight and accountability of the proposed neighbourhood boards. It is essential that the boards include democratically elected representatives of those communities. We are concerned about the role of trade union representation. Can the Minister confirm exactly what role those trade union representatives will play on these community boards? Local democracy is vital if these boards are to work effectively.

Next, what exactly is the purpose of these resources? Will these funds go primarily towards making up the shortcomings that the Budget created in other areas of government spending? Finally, I echo the worry expressed in the other place that the resources will not be allocated in a way that reflects the needs and particular circumstances of communities. By widening the criteria and choosing to use broad national statistics, the unique and local understanding of a community’s needs and risks are being overlooked. As the representatives of their areas, local authorities are in a unique position to be able to identify the specific requirements of their communities, and a bidding process allows them to present a plan to the Government. If the Government proceed with the process of allocation, as suggested, those who can do the most to regenerate our high streets and communities may lose out in favour of those who are able to meet the Government’s criteria. I look forward to receiving a clear but also a positive response from the Minister.

[Baroness Pinnock (LD)]

My Lords, I have relevant interests as a councillor in Kirklees, which includes Dewsbury, one of the towns on the list. I am also a vice-president of the Local Government Association.

I welcome investment in towns across the country that have higher than average levels of deprivation. I hope that the Minister will agree that the regeneration needed by so many towns reflects the many years of neglect by previous Governments in funding and supporting long-term regeneration programmes by local councils for their areas.

I have a number of questions for the Minister. First, as the noble Baroness, Lady Scott, asked, can he confirm that this programme is a continuation of the long-term plan for towns fund, which was introduced by the previous Government? As far as I can tell, the list of towns is precisely the same. Secondly, can the Minister provide detail on the selection criteria, given that, as the Statement says, the towns in the list were all in the bottom 20% of the index of multiple deprivation? Of course, the list does not include them all—it is not an inclusive list—so which towns, under those deprivation criteria, have been rejected and why? If the Minister does not have an answer to that question, which I accept is quite detailed, I would be happy for him to give me a written response.

It is positive that the Government have extended the list of potential uses of the funding, compared with its previous iteration. However, each town is to get £2 million a year for the next 10 years. Does the Minister agree with me that making a sea change in a town will require more than that level of funding? That is not to decry the funding, which will be helpful, but simply to note that this will not make a strategic and long-term difference for those towns as a whole. There will be improvements, given the money available, but that level of funding is inadequate for a major uplift.

I will give the Minister an example. Dewsbury in Kirklees is included in this list. The swimming pool and sports centre that served the town, and which were run by the local council, had to be closed due to RAAC. The council said that it will not rebuild or further provide either a sports centre or a swimming pool, so there will be no other provision of those facilities in that town of, say, 80,000 people, which suffers from considerable deprivation. Replacing them would be a major investment in the health and future of young people, yet the funding provided in this plan for neighbourhoods will not go anywhere near meeting that.

Can the funding available be used as match funding, or provision towards capital spending or revenue spending, for such long-term investment? The funding available is split 75% capital and 25% revenue. Is there flexibility within that? Perhaps the first five years could be capital funding, with revenue at the back end of the scheme. It would be worth knowing from the Minister whether there could be some flexibility there.

Finally, it is good that each town has to create a town board to make funding decisions and that those who serve on that board are committed to the town’s future. However, can the Minister explain the reasoning for excluding local councillors elected to represent the town in making those decisions? Can he say what accountability mechanism there will be for all the funding? Will there be annual reports to the House on the progress being made? Overall, the plan is good, but there is more to do.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Lord Khan of Burnley) (Lab)]

My Lords, I appreciate the support from both Front Benches.

I believe that I speak for us all when I say that promises made to the people of this country ought to be kept. We have a duty to mend the broken physical and social infrastructure of this country. That cannot begin without first turning our attention to rebuilding trust in our democracy. That is why, through the plan for neighbourhoods, the Government have made good on what these 75 places were promised by the previous Administration, but on which they had no idea as to how they would follow through. Now communities can breathe a sigh of relief, before once more rolling up their sleeves and getting on with the job at hand.

Through our three strategic objectives of creating thriving places, building stronger communities and empowering people to take back control, the decade-long plan for neighbourhoods will both drive down deprivation and kick-start growth. The Deputy Prime Minister’s foreword to the prospectus notes that

“deprivation … for too long has been tackled with sticking plaster politics”.

The need for a long-term, holistic, grass-roots programme could not be greater. That has been underscored by the points raised today.

Last week, the Minister for Local Growth announced the plan for neighbourhoods in the other place and first made the Statement we are discussing today. I thank him and his officials for their hard work, which has helped to ensure that we can make good on the promises made to these places, while launching a new programme aligned with the missions of this Government. Places will not be left in the dark at any level. We will shortly also publish further technical guidance, outlining details of the requirements of the neighbourhood boards’ governors, and launch the associated submission process, so that places can swiftly reconfirm their board arrangements and boundaries.

The Government’s plan for neighbourhoods marks a major step in delivering their wider plan for change, with a relentless focus on economic growth to raise living standards. Through the plan for neighbourhoods, the Government will work in partnership with residents, businesses and grass-roots campaigners, alongside local authorities, to deliver for local people.

If we are serious about rebalancing the economy, nowhere can be left behind. As the Deputy Prime Minister wrote in the programme’s foreword,

“everywhere has a role to play in our national prosperity”.

This is just the start—no more sticking plasters, no more short-term fixes. Through the plan for neighbourhoods and the wider plan for change, this Government will fulfil their promise of change and a decade of national renewal.

As to the specific points raised by the noble Baroness, Lady Scott of Byrook, this is a new programme that puts communities at the heart of making these changes. The money will be spent on a broadened set of interventions, and it has completely different objectives. The locations and funding remain the same, because we are delivering on what places have been previously promised. It is the repeated breaking of promises that undermines trust in our democracy. We have doubled the number of interventions that communities can spend the money on. We are focusing on three long-term aims: building thriving places, strengthening communities and empowering people to take back control, instead of sticking-plaster politics.

We are giving local people their say by strengthening our consultations. It is not misleading to claim that this is new money. The long-term plan for towns was an unfunded commitment for which the previous Administration had no plan as to how that promise would be delivered. Our plan for neighbourhoods programme delivers on the Chancellor’s confirmation of funding at the Budget. This Government are committed to making good on what places have previously been promised. It is the repeated breaking of promises that undermines trust in our democracy.

The noble Baroness talked about levelling up. Levelling up failed because it asked communities to beg for funding and then tried to micromanage how it was spent. This is about the transfer of power and investment, so that communities can drive change themselves. In particular, the noble Baroness talked about economic growth in relation to the issues that she raised about tax changes. I cannot talk about tax changes as they are outside my remit, but on the point that the noble Baroness, Lady Pinnock, raised, we want to make it clear that we are putting power in the hands of local people to address deprivation and regenerate their local area. We are unleashing the full potential of places that have for too long been overlooked.

Neighbourhood boards, bringing together residents, businesses and grass-roots people, will draw up and implement plans for how they will spend up to £20 million of funding, whether for repairing pavements and high streets, setting up community grocers, providing low-cost alternatives or for neighbourhood watches to keep people safe.

On accountability, the relevant local authority will act as the accountable body for the funds, with responsibility for ensuring that public funds are distributed fairly and effectively. A monitoring and evaluation strategy will be published in the summer. This will set out the framework for assurance and accountability expected from grant recipients.

On the noble Baroness’s point about match funding and potential borrowing from local authorities, yes, there is clearly the opportunity for neighbourhood boards to make that decision. But the point is clear: no more top-down approach; this is bottom up, with local authorities leading the way and local people deciding what they want most for their communities.

On the places that will get funding, all 75 towns across the UK that were originally selected to receive long-term plan for towns funding will receive the plan for neighbourhoods package. The long-term plan for towns programme was never fully funded. The money was supposed to come from the government reserve, which has been spent three times over. That is why we are making good on those commitments, giving each of the 75 places certainty that they will receive up to £20 million of funding and support over the next decade.

Non-Domestic Rating (Levy and Safety Net) (Amendment) Regulations 2025

Baroness Pinnock Excerpts

Monday 3rd March 2025 Grand Committee

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Lord Khan of Burnley) (Lab)]

My Lords, the Government are currently working to strengthen the local government finance system, a task that I am sure many noble Lords will agree is an essential course of action. However, as we do this, we must also enable councils to set budgets and provide essential services now by providing them with the financial certainty they need.

The business rates retention system is a cornerstone of the local government finance system, through which councils in England retain a fixed proportion of the business rates they raise locally. This enables them to benefit when business rates income increases in their local areas. Despite the system’s simple premise, the administrative arrangements that underpin it are unavoidably complex. This results from not just the arrangements between local councils and central government to operate the system but changes that have been implemented over time to honour the system’s original commitments.

As the Committee may remember, the rates retention system was set up, and is run, according to a suite of legislation, with the day-to-day arrangements covered by several sets of regulations. For the system to continue to run as it should, and so that councils pay or receive the correct amounts, the regulations that govern these arrangements must be regularly updated. The amendment regulations before the Committee this afternoon make updates that are needed this year and, while the changes they bring about may be technical, the reasons for making them are straightforward.

Today, we need to make changes only to the levy and safety net regulations. These regulations set out within the system a safety net that protects councils from decreases in business rates income below 92.5% of their need assessment funded through the rates retention system, and how this mechanism is partially paid for via a levy on the growth in their business rates income.

I will now explain the changes that the amendment regulations make and why we need to make them. Within the rates retention system, several councils benefit from what are known as enhanced rates retention arrangements, which, simply put, mean that they retain more than 50% of the growth in their business rates income. To prevent councils that run at the standard 50% level being disadvantaged by any additional safety net arrangements that enhanced retention councils may receive, levy and safety net calculations for all councils must be made at the standard 50% rates retention level. The amendment regulations will make sure this happens by substituting the figures of enhanced retention councils in the local government finance report with the figures those councils would have had if they were operating at the 50% rates retention level.

Secondly, each year we need to reflect in the rates retention system newly introduced measures that change business rates as a tax. Where changes amend the bills of businesses, such as reliefs, there is a consequential impact on the income that councils collect locally. This year, the only such change needed to the regulations for this purpose is to ensure that major precepting authorities—which for these purposes are primarily county councils and fire authorities—are not doubly compensated via the levy and safety net for business rates reliefs announced for 2025-26 which reduced their income.

We are making this change because major precepting authorities already receive compensation for their share of the loss of income due to the awarding of these reliefs via a grant from government. However, this does not show up in their retained rates income, which, resultantly, would appear too low in levy and safety net calculations. The amendment regulations quite simply add the value of the new business rates reliefs back to major precepting authorities’ retained rates income, therefore ensuring that the compensation they receive is accounted for and that a more accurate measure of each council’s income is fed into levy and safety net calculations.

The last change the amendment regulations make is to put right an erroneous figure, originally set out in the Non-Domestic Rating (Levy and Safety Net) (Amendment) Regulations 2022. This figure will be used as part of calculations to ascertain how much small business rates relief to add back to North Northamptonshire’s retained rates income, on which levy and safety net calculations will be made. I confirm that we are taking the first opportunity to rectify the error, having discovered it only recently.

We are yet to perform the relevant statutory end-of-year levy and safety net calculations required by the regulations based on certified—or audited—data, as we have not yet received this data. Once we have received it, we will make these calculations. Noble Lords will understand that in cases such as these, where the required data from councils is outstanding, we carry out interim calculations while the relevant councils are waiting for their accounts to be audited. This is sensible to ensure that councils do not lose out or end up needing to provide for future payments of levy.

For North Northamptonshire, the correction of this error will not affect its levy and safety net calculation or, therefore, its payments for 2021-22 or 2022-23. This is because no levy payment is due, and it is not eligible for any safety net in respect of those years—a situation that will not change as a result of the amendment of this figure. However, due to the increase in income in the local area that North Northamptonshire has seen following the 2023 revaluation, it became a tariff authority from 2023-24. This means that from 2023-24 it is due to start paying levy on its growth, which in turn also means that adjusting the figure will have a small impact on the amount of levy paid going forward. The amendment regulations make this change, correcting the figure from 67.4% to 67.8%. My officials have engaged with the council so that it is aware of this change.

In conclusion, these amendment regulations update the administration of the business rates retention scheme and are required to ensure that councils receive the amount of business rates income they are anticipating and on which they have budgeted. I hope that noble Lords will join me in supporting these regulations. I beg to move.

[Baroness Pinnock (LD)]

My Lords, I declare that I have relevant interests in local government, as recorded in the register. I hope the Minister has understood every bit of what he has read out, because it is very complicated—that is not meant as anything more than a statement—particularly as there are no examples in front of us as to what the impact of the changes will be.

This statutory instrument needs to be understood in relation to the Non-Domestic Rating (Multipliers and Private Schools) Bill, which has just completed its Committee stage. That Bill, if enacted without amendments, will change the norms for business rates income, on which local government absolutely depends for a significant part of its income. The changed multipliers that the Bill envisages will, obviously, also alter the amount that different businesses will pay in non-domestic rates. This, in turn, will alter the income that different local authorities will receive as part of the 50% business rates retention scheme.

That impact will affect local authorities in very different ways. Local authorities with many properties that exceed the £500,000 rateable value boundary set in the Bill will gain in income. These businesses are primarily in major cities and include, for example, office blocks, hotels and major premises of that sort. Local authorities that are more reliant for income from retail, hospitality and leisure businesses will see their income in the 50% retained element decrease.

During the passage of the non-domestic rating Bill, I sought—and was granted—an assurance that local authorities will not be penalised as a result of the changes. However, that is on the national, global level. This statutory instrument is, I guess, the attempt to deal with these changes so that individual local authorities do not lose income or, conversely, gain too much income. The key question is whether that can be achieved in full. Is it possible under the new system that is going to come into effect in a year, whereby the Covid relief will gradually slip away and the new multipliers implemented will change the balance of income from businesses across the country? I have been assured that the national figure of income will not change. Will individual local authorities have assurance from the Minister that they will not lose out as a consequence of the changes? I accept that this is a very complicated set of calculations, so it would be absolutely fine if the Minister would prefer to write to me.

As the Minister will know, 43% of local authorities are on the verge of issuing 114 notices, so in this instance every penny will count. That is why I am asking the question. The lack of hard examples in the Explanatory Memorandum and the Minister’s introduction makes it really difficult to judge the implications of this instrument, so any further evidence will be extremely helpful for folk like me to understand what is going on.

My other point is about the changes to the 100% retention authorities; I want to know how that is worked out and I think it needs a bit more explanation. If those with 100% retention are no longer going to be able to retain 100%, how is it going to be worked out? Those authorities will expect to retain 100%. Again, I understand if the answer needs to be in writing, because this is not obviously easy or straightforward.

Finally, the issue that these changes bring to the fore is the current inability of councils to raise local income—be that in a small tourist tax, as the Manchester combined authority is now doing, or by any other means. A bit more flexibility for local authorities in raising their own small amounts of additional income would be of enormous benefit to many councils as they struggle to make ends meet. It would be worth knowing why flexibility in raising income does not seem to be in the Government’s agenda, because it would help to stem the enormous downward pressure on local public services. I look forward to what the Minister has to say, and a written response if needed.

[Lord Jamieson (Con)]

My Lords, I mention my interests as a councillor in Central Bedfordshire. I thank the Minister for clearly outlining the essence of this SI. While these are technical adjustments that may sound reasonable on paper, it is useful to consider the wider impact of government actions in relation to the business rates system, particularly as it pertains to our small and medium-sized enterprises alongside larger businesses. As the noble Baroness, Lady Pinnock, mentioned, this is a very complex system, so when we make changes to it there tend to be unintended and uncertain changes. That is the whole reason we have this SI in the first place. I would like some assurance on that, which I will raise in a moment.

I turn to the regulations themselves. The primary change is to adjust how the levy and safety net payments are calculated for authorities that retain a greater share of business rates. The most notable change is ensuring that these authorities, sometimes referred to as 100% authorities, do not have to bear the brunt of additional payments that should, in fairness, be a central government responsibility.

--- Later in debate ---

[Lord Khan of Burnley (Lab)]

My Lords, I thank noble Lords for their very interesting contributions, their broad support for what the Government intend to do, and their interest in this subject. I will first summarise what we are trying to do here. We make several changes to the regulations each year, so what we are doing this year is not out of the pattern. We make these changes to ensure that we update the legislative framework that underpins the business rates retention system. This is to reflect policy announcements already made that affect the business rates retention system, such as the introduction of new reliefs or the modification of existing ones. These changes usually adjust council income or the values that underpin redistribution within the system. These changes are generally uncontroversial, meaning that they are put in place practically—the result of policy decisions already taken.

All current region-wide enhanced business rates retention arrangements, including those in place in authorities in Greater Manchester and the West Midlands, will continue for 2025-26. The current patchwork of business rates retention arrangements allows only certain areas to benefit from enhanced retention of growth in business rates. The Government will consider how a new model of business rates retention could be better and could more consistently support strategic authorities to drive growth, as part of the Government’s reform of funding for local government through a multiyear settlement from 2026-27.

I turn the points raised by the noble Baroness, Lady Pinnock. These are technical regulations providing for the current operation of the system. Next year, the Government will reset the amount of income by remeasuring how much income there is. This will take into account the changes in the multipliers and the revaluation in 2026—a point on which the noble Lord, Lord Jamieson, also touched.

Both noble Lords touched on the top-ups and tariffs for 100% authorities’ calculations at the 50% level. The tariffs and top-ups, including the levy and the safety net calculations for 100% retention authorities, are simply the tariffs or top-ups that each authority would have paid or received if it had been operating under the normal 50% retention arrangements. By using this proxy, we ensure that any safety net payment to an authority is the same as it would have been if it had not been a 100% retention authority. We then carry out a separate calculation for the amount that is due under the 100% arrangements. If this is greater than the safety net payment calculated under 50% rates retention, we pay them the difference via a grant. In his way, central government—not the rest of local government—picks up the cost of any increased risk under the 100% arrangements. This approach was agreed with the relevant areas when these arrangements were set up.

On the changes, I want to touch on what we are trying to do. We use a measure of council business rates income, called retained rates income, to calculate levy and safety net payments for a year. Retained rates income is based on an authority’s measurement of income in that system and includes the authority’s top-up or tariff for that particular year. If we simply used 100% top-up or tariff figures, it would mean that councils that retain 50% of the growth in their business rates might end up paying for the increased safety net arrangements—a point that I have made before. For the purpose of making the levy and safety net calculations, to ensure that that does not happen, we substitute the top-up and tariff figures of councils that have enhanced retention arrangements in place for 2025-26 for the figures that they would have if they were operating at 50% business rates retention.

On the related changes to tax measures, the Government support businesses in England by providing business rates reliefs and exemptions. This year, the discretionary business rates measures that we are adjusting in relation to the calculation of small business rates relief are also for rental, hospitality and leisure relief. This has been a point of discussion and debate across two days in Committee. As I said in Committee—I say it to the noble Baroness, Lady Pinnock, now—analysis on the impact of the policy will be done only when the rates are set by the Treasury at Budget. It would be remiss of me to try to give any assurances, particularly in terms of assessments and analysis of the impact, when—

[Baroness Pinnock (LD)]

I thank the Minister for seeking to respond to my question about whether any local authorities will lose as a consequence of these changes, alongside the other changes that were made in the non-domestic rates multiplier Bill. So far, the Minister has not said that the Government are not able to give an absolute assurance that local authorities will not lose. Is that right? Is that what I am hearing?

[Lord Khan of Burnley (Lab)]

No. As far as we understand it, we are moving towards a system where business rates are the first part of the overview, and changing the whole system includes the non-domestic rates multiplier Bill—the NDR business rates Bill—to which we have referred. We have that as part of a process to make sure that the system is sustainable and continues in a fair way. Of course, we are working to ensure that we support local authorities, as far as is possible. At this stage, we think that the system and the way in which it will work will provide sustainable and fair practice where we have put in higher multipliers for a rateable value of £500,000 and, elsewhere, where we have put in lower multipliers. In that way, we are working closely with local councils and we will continue to work with them to ensure that local authorities do not lose out as part of this process. We are watching this closely. However, we—not my department but the Treasury—will publish an impact analysis when the multipliers are set.

If anything, I have not picked up on the noble Baroness’s detailed and specific questions. We will write to her, as she has invited me to write to her; it would only be kind to write back if somebody wants a letter.

I thank noble Lords for their valuable contributions to the debate. In closing, while the changes made by the regulations are few and technical, they are important to make sure that the business rates retention system continues to operate correctly, so that authorities receive what they should. I hope that noble Lords join me in supporting them.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Pinnock Excerpts

Committee stage
Thursday 27th February 2025 Grand Committee

[Baroness Barran (Con)]

My Lords, as the Committee and the Minister know by now, we on these Benches are opposed to the whole of Clause 5, and I will start my remarks by making the case that it should not stand part of the Bill; rather, we urge the Government to think again and remove it.

First, as we debated at Second Reading, there is the point of principle. On what basis should the Government identify a single group of charities, with no concerns about the delivery of their charitable objects, for separate treatment in relation to business rates from their charitable peers? Sadly, the only plausible reason is that it reflects some ideology that does not respect the right of parents to choose the education for their child. I am not suggesting that the Minister sees it in that way, and I accept that the Government’s plan to tax education for the first time ever in this country’s history were in their manifesto, but I cannot find another logical basis for this choice.

Secondly, this picture is confirmed when we look at the amount of money that will be raised from this change. The Government project that only £70 million will be raised. Finally, it leaves the risk that in future legislation in this area, this or a future Government will carve out another group of charities that they believe no longer justify the business rates relief. This feels a wrong-headed choice, and I very much hope that the Minister will encourage his colleagues to review it and remove the clause.

I turn to Amendments 55, 56, 59 and 62. Amendment 55 is consequential and necessary to enable the later amendments. I have tabled it to exempt specific independent schools from this measure. Amendments 56 and 59 are probing amendments to understand what is meant by the term “or other consideration” in the context of fees payable for the provision of full-time education. I would be grateful if the Minister could give the Committee an example of where another consideration has been used in practice wholly or partly to replace fees.

Amendment 62 highlights the position of smaller independent schools, many of which charge significantly less than the independent school average of £27,642, which was the figure the Minister in the other place gave as the mean annual day fee as of January 2024. I appreciate that the Government are unlikely to agree with the fee level in my amendment, but it would be helpful for the Committee to hear whether there is a fee level below which this legislation would not apply. As the Minister knows, some faith schools in particular charge lower fees than the state school equivalent per pupil funding rate. Would the Government consider exempting schools that charge less than the per pupil funding rate from this tax.

As we have heard, Amendments 54A, 55A, 59A, 69C, 69D, 77 and 78 in the names of my noble friends Lord Lexden and Lord Black of Brentwood would replace the use of “private school” with “independent school”. I agree with my noble friends’ analysis of the importance of this and some of the factors that sit behind it. The term “private school” is much more informal, and in legislation it is more commonplace to use “independent school”. We support those amendments fully; I hope the Minister will give careful consideration to them.

[Baroness Pinnock (LD)]

My Lords, Clause 5 is an interesting add-on to the legislation as a whole, which is focused on non-domestic rates as applied to business premises. Here, we suddenly have one sector of businesses being pulled out for special treatment, which is curious to me. It becomes a very strange Bill with Clause 5 added to it. However, for Liberal Democrats, as I have probably said many times in the course of my public sector career, education is the single most important and best investment that any Government can make in our children, their future and the country’s future. The clause is important to us because it relates to education.

The Government’s policy in this Bill, removing the current exemption for relief of business rates, combined with the introduction of VAT and the impact of employers’ national insurance increases, will undermine two important principles for Lib Dems. The first is that education should not be taxed. All education provided by an eligible body, including universities, music lessons and tutoring, is currently exempt from VAT, and VAT should not be imposed on these things—and, hence, neither should business rates. The exemption should not be removed from these schools. The second principle is that parents have a right to choose the education setting that they believe is the best for their children. We champion choice and believe nothing should get in the way of parents making those choices.

The best outcome of all would be that state-funded education was funded at the same level as that experienced by children in the private, or independent, sector. It is curious to me that the gamut of changes that the Government are making in relation to the costs imposed on the private, or independent, sector will not release sufficient funding to make a significant impact on children’s education in the state sector, so it is hard to understand what the Government are seeking to achieve.

It has been an interesting debate. Lots of points of definition have been raised, and I hope the Minister will be able to respond to the interesting points about the importance of having an accurate definition of the sector. I look forward to his response. But in summation: education is most important, and parents have the right to choose, as long as those choices do not have a negative impact on everybody else, which in this case they clearly do not.

[Lord Khan of Burnley (Lab)]

My Lords, Amendments 55 and 62 seek to carve out from the Bill all private schools that charge fees of less than £27,642 per year through exempting schools that meet this criteria from the definition of a private school. I am conscious that other amendments tabled by noble Lords seek to carve out other private schools from the Bill definition, and we will discuss these in more detail as part of today’s proceedings. However, it would be helpful for me to set out the purpose of Clause 5 for when the Committee decides whether to agree the clause. At the same time, I can elaborate further on the meaning of “or other consideration” as per Amendments 56 and 59, and the use of “private school” as opposed to “independent school” in response to the amendments in the name of the noble Lord, Lord Lexden.

The Government believe in parental choice but are also determined to fulfil the aspiration of every parent to get the best education for their child. The removal of business rates charitable relief, as set out in Clause 5, legislates for the Government’s commitment to secure additional funding to help deliver the Government’s commitment to education and young people, including the more than 90% of children who are educated in state schools.

Clause 5 removes the charitable rate relief from private schools by amending paragraph 2 of Schedule 4ZA and paragraph 2 of Schedule 4ZB to the Local Government Finance Act 1988 to exclude private schools from the rules in relation to the application of charitable rate relief. Amendments to the rules in relation to the application of charitable relief can be made only through primary legislation.

The Bill inserts new sub-paragraph (3) to paragraph 2 of Schedule 4ZA to remove charitable relief from occupied hereditaments wholly or mainly used for the purposes of carrying on a private school. Ancillary and support buildings, such as offices, will also lose their relief—for example, classrooms and sports fields that are wholly or mainly used for the purposes of a private school.

The rest of Clause 5(2) is concerned with the definition of a private school. To answer directly the points raised by the noble Lord, Lord Lexden, the terminology “private school” has been used because the term “independent school” includes state-funded academies, which are not in scope of this policy and therefore of the measures in the Bill. The term “private school” has been used to avoid uncertainty regarding which schools are in scope, and I am sure it is not the noble Lord’s intention to bring academies into scope of this Bill.

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[Baroness Pinnock (LD)]

My Lords, there are some very important and interesting issues in this group of amendments. The first is about the provision of foundation courses to enable young people to move into further education or training. It is important that the Minister has an answer to the questions of the noble Baroness, Lady Barran, that will put us at ease that they will not be penalised in this way. Often, young people who do foundation courses do so because they missed out earlier in their school careers, for many reasons that might be associated with their family or their own health issues. I do not think the Government would want to penalise those young people by putting at jeopardy those courses available to them.

The next issue, about nurseries, is interesting because different parts of a premises can be assessed separately by the non-domestic/business rate regime. I say to the noble Baroness, Lady Scott, that even in an Amazon building, the facilities for the employees will be rated at a separate value from the rest of the building. For instance, I have been looking—surprisingly—at the implications for large hospitals, which were raised in the debate on Monday. Different parts of the premises will be rated in different ways. If there is a clinic, that is one thing; the main hospital is another; the café is another; a shop is another. It is possible to assess rateable values, for business rate purposes, in the same premises in different ways, so it is possible to assess nursery sections of a private school separately from the rest of the school. Therefore, it is possible to exclude these from the proposals in Clause 5. I look forward to the Minister being able to confirm that that is the case and that nurseries can be readily and easily excluded from business rate applications, even if the Government insist on removing the charitable status from the rest of the premises.

[Lord Khan of Burnley (Lab)]

My Lords, Amendments 57, 58 and 68 from the noble Baronesses, Lady Barran and Lady Scott of Bybrook, concern early years provision and private further education institutions. The definition of a private school in the Bill includes institutions that wholly or mainly provide education suitable to persons over compulsory school age but under 19, where such full-time education is wholly or mainly provided for a fee or consideration. This brings private sixth forms into the scope of the Bill measure but excludes general FE colleges. The Bill also includes a specific carve-out for independent training and learning providers. Due to the mechanisms whereby the Government provide funding to these institutions, it was necessary to provide a carve-out in the legislation to ensure that these institutions did not inadvertently come into the scope of the measure.

The Government’s view is that all schools that offer full-time education to children of compulsory school age and/or to 16 to 19 year-olds for a charge should be within scope of the Bill measure. This is to ensure consistency and fairness in the Government’s treatment of private schools. The Bill measure includes stand-alone private sixth forms as well as those private sixth forms that operate as part of private schools that also cater for children of compulsory school age. Amendment 57 would remove entirely this part of the private school definition, the resulting impact of which would be that all private sixth forms would be out of scope and therefore retain charitable rate relief.

The noble Baroness indicated that through this amendment she is seeking to understand whether institutions providing foundation courses would be considered private schools. Foundation courses are a level 5 qualification and as such are classed as higher education. Foundation courses are in the main provided by higher education institutions such as universities. Institutions that are focused on the delivery of higher education are not within the scope of the Bill, and where they are charities they will continue to receive charitable relief. However, any private sixth forms that provide a few higher education courses, such as foundation courses, will still lose their relief if they are wholly or mainly concerned with providing education suitable to the requirements of persons over compulsory school age but under 19 years old. Given that business rates are a tax on property, the Government believe that this is a sensible line to draw for when the relief is removed.

Amendment 58 would amend the Bill definition of a private school. It would remove the “wholly or mainly” requirement in relation to the concern with providing full-time education suitable to the requirements of persons over compulsory school age but under 19 years old for a fee or consideration in such institutions. In business rates, “wholly or mainly” generally means over 50%. Therefore, under the Bill definition, institutions that are more than 50% concerned with providing education suitable to the requirements of persons over compulsory school age but under 19 years old, and where more than 50% of such full-time education is provided for a fee or consideration, will be within scope of the measure and will no longer qualify for charitable relief.

The inclusion of the “wholly or mainly” test in the further education definition has been drafted in recognition that there may be some state-funded institutions where a small minority of pupils pay a fee for the courses they attend. The Government understand that these circumstances are rare but may include international students undertaking further education courses where they do not qualify for a state-funded place.

The noble Baroness, Lady Barran, asked for examples of institutions that may be around 50%. Regarding these schools, which mainly provide education suitable for those over compulsory school age but under 19 years old, it will be for local authorities to implement this test. I do not think it would be right for us to say whether a particular school passes that test, but we do not expect many of them to be at the margins.

Without including “wholly or mainly” in respect of new sub-paragraph (4)(b)(i), the Bill could inadvertently capture state-funded colleges of further education, which is not the intention of the Government’s policy. Similarly, it could risk capturing fee-paying institutions that predominantly provide higher education courses if one pupil who meets the broader further education definition is present. As set out, it is not the Government’s intention to capture higher education institutions within the Bill’s definition.

I should explain that the impact of this amendment would mean that the presence of one fee-paying pupil within the age bracket as per the current definition may result in the institution being brought into scope of the Bill, resulting in it losing charitable relief. In contradiction to Amendment 57, Amendment 58 would mean that more institutions would be in scope of the Bill and so would lose their rates relief. But I understand the purpose of the amendment, which is to understand better the meaning of the words “wholly or mainly”, and I hope I have been able to clarify that for noble Lords.

Amendment 68 seeks to carve out from the Bill private schools that also provide early years provision. For clarity, private nurseries that are on their own hereditament are not within scope of the Bill definition, and where they are charities they will retain charitable relief. The Government have decided that where private schools that provide for pupils of compulsory school age also have nursery classes within the school, the presence of nursery-age children should not remove the whole school from the business rates measure. This approach best ensures consistency with the underlying policy intent.

It is for individual private schools to decide how they wish to meet additional costs as a result of the business rates measure. The allocation of costs in private schools that also provide early years provision on the same hereditament is a matter for those private schools. It is worth mentioning that government early education and childcare entitlements can be used for childcare in any approved childcare provider; this includes private school nurseries, although the numbers undertaking early years entitlement in private school nurseries are relatively small. Similarly, private school nurseries are also eligible to receive tax-free childcare funding as long as they are registered with Ofsted or an equivalent regulatory body.

Accepting these amendments would remove many private schools from the Bill’s measure. This would reduce the amount of revenue that could be raised and, consequently, may reduce the funding available to the Government to deliver on their commitments to young people and the state-funded education sector, where over 90% of pupils in England are educated. The outcome of the tax changes on private schools will have a significant impact on the Exchequer, enabling the Government to fulfil their commitments on investing in state education and young people. Together with the policy to apply VAT to private school fees, these policies are expected to raise around £1.8 billion a year by 2029-30.

I hope that this provides further clarification on the drafting of the definition, as well as on the Government’s position regarding the inclusion of private further education and private schools that also cater for nursery-age children alongside compulsory school-age children. For the reasons set out, I respectfully ask the noble Baroness, Lady Barran, to withdraw her amendment.

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Amendment 61 would amend the Bill so that it applies to schools that provide education for children with special educational needs and disabilities, rather than just children with education, health and care plans. All of us across the Committee are well aware of the difficulties associated with getting an education, health and care plan and, particular, that in some parts of the country the waiting list can be a number of years. As we debated at Second Reading, there are concerns that a number of pupils with special educational needs but without an education, health and care plan will now seek a plan and that this will add further burden and delay to the process of getting a plan as more people are incentivised to do so. Of course, this Bill, along with the decision to charge private schools VAT, punishes parents who choose to send their children to a private school rather than waiting for their EHCP to be granted. Of course, that is concerning. I hope the Minister can understand why the amendment seeks to address all SEND pupils rather than just those with an EHCP and why that is so important and that he will give careful consideration to my suggestions.

[Baroness Pinnock (LD)]

My Lords, Amendments 60 and 61 are important, focusing on children with special educational needs and disabilities. SEND provision is in crisis across the country, whichever sector of school children attend. The reason, as the noble Baroness, Lady Barran, has raised, is the huge delay in assessing children who may need an education, care and health plan, often because of the lack of educational psychologists. There are often very long delays getting what used to be called a statement of need but is now just an EHCP.

The consequences for schools in this sector is that they qualify only if their children have ECHPs, and because ECHPs are so difficult to access, many parents send their children to private school in desperation because their children’s needs are not being adequately met in the state sector. There is no criticism attached to that because there is huge pressure on the state sector. If you have a child with special needs then, if you are able, you look to where those needs are best met.

In the days before children with dyslexia were recognised, parents often took children with severe dyslexia out of the state sector and into one of the several independent schools set up around the country that had the expertise to help those children. I have a lot of sympathy with these amendments because we want all children to have their needs met, but schools helping young people with particular needs are in danger of having their relief removed because of the threshold in the Bill.

There is little recognition that children have special needs even without an EHCP, simply because of the huge backlog. The backlog exists because there is also a funding crisis within SEND. On all those issues, the Government really should think again, particularly on Amendment 61. I hope that the Minister will have some positive words in support of the amendments tabled by the noble Baroness, Lady Barran.

[Lord Khan of Burnley (Lab)]

My Lords, Amendments 60 and 61 are concerned with the carve-out within the Bill’s measures for private schools that wholly or mainly provide education to pupils with education, health and care plans. Amendment 60 seeks to remove the “wholly or mainly” requirement, the effect of which would be to carve out from the Bill’s measures private schools that provide full-time education to any number of persons for whom an education, health and care plan is maintained.

I understand from the accompanying explanatory statement that this amendment seeks to understand the definition of “wholly or mainly”. As I have said elsewhere on a previous group on business rates, wholly or mainly generally means more than 50%. In practice, the Government believe that this will ensure that most private special schools will not be affected by the measure. We expect any private special schools losing charitable rates relief to be the exception; they will potentially be in single figures. Private schools that benefit from the existing rates exemption for properties that are wholly used for the training or welfare of disabled people will continue to do so. This general exemption means that they pay no rates.

I am aware that some concerns have been raised—the noble Baroness has raised them in clear and categoric terms—in relation to the possibility that some mainstream private schools may be just under or over the 50% threshold for the EHCP carve-out within the Bill. In private schools, including private special schools, just 5.7% of pupils have an EHCP, with the majority of those pupils in private special schools. Therefore, we do not expect there to be many mainstream private schools near the 50% threshold.

To add to that point, if there are any marginal cases, the test in law is whether the institution is wholly or mainly concerned with providing education to ECHP pupils. While it will be for the local authority to decide, this wording should avoid the need for schools at the margin to jump in and out of entitlement for charitable relief following small movements in pupils.

The majority of private special school places are funded by local authorities. The 2024 school census shows that in more than 80% of the sector more than nine in 10 pupils have an EHCP plan that stipulates that the place is funded by the local authority.

Amendment 61 would result in the exemption of fee-paying schools from the measure if that fee-paying school wholly or mainly catered to pupils who have special educational needs as defined under the Children and Families Act 2014, and regardless of whether or not those pupils also have an EHCP. The Government are aware of the concerns raised with respect to pupils with special educational needs in private schools that may lose their charitable relief, because the school is not wholly or mainly concerned with providing full-time education to persons for whom an EHCP is maintained. The Government have carefully considered their approach to ensure that the impact on pupils with the most acute needs is minimised.

The Bill provides that schools that are charities and wholly or mainly concerned with providing full-time education for persons with an EHCP remain eligible for charitable rates relief. The Government recognise that where a private school has only a few pupils with EHCPs, it will lose its eligibility for charity relief. Mainstream schools throughout the private and public sector cater for pupils with special educational needs. Most children with EHCPs already have their needs met within mainstream state-funded schools. If an EHCP assessment concludes that a child can be supported only in a private school, the local authority funds the child’s place.

The noble Baroness, Lady Pinnock, touched upon the issue of the wider problem in terms of delay, which I will address. Local authorities aim to process all education, health and care plans and the respective applications in time for the start of the next school year, so that parents can make an informed decision as to which school they send their child to. In special cases, the local authority is able to pre-pay one term’s fees if the education, health and care plan is not complete but the outcome is foreseeable. Likewise, some private schools will forgo the first term’s fees for pupils who are expected to be granted an EHC plan in the future.

The Government are committed to improving inclusivity and expertise in mainstream state schools, restoring parents’ trust that their child will get the support that they need to flourish. Private schools can provide choice, high-quality education, economic benefit and public benefit through partnerships and means-tested bursaries, but most parents cannot choose private schools. We need to improve provision for the 93% of pupils at state schools, and that is rightly our focus. The Government are also committed to reforming England’s SEN provision to improve outcomes and return the system to financial sustainability. The Government will provide an uplift of around £1 billion in high-needs funding in the 2025-26 financial year.

Mainstream schools throughout the private and public sector, as I said before, cater for pupils with special educational needs. Amending the basis on which fee-paying schools are able to retain their charitable rates relief in the way that this amendment proposes would undermine the Government’s intention to remove tax breaks for private schools in order to raise funds to support the more than 90% of pupils who attend state-funded schools. As the Committee will know, the majority of children in England who have special educational needs—with or without an EHCP—have their needs met in the state-funded sector. The approach chosen in the Bill is targeted to ensure that the impact on pupils with the most acute needs is limited.

It is for the reasons cited that I cannot accept the noble Baroness’s amendments, but I hope that, with this further information, I have provided satisfactory explanation as to the Government’s approach and reassurance that the approach adopted ensures that the impact on those children with the most acute needs is minimised. I request that the noble Baroness withdraws her amendment.

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The Royal National Children’s SpringBoard Foundation, which my noble friend rightly saluted, works with local authorities and boarding schools to secure free places for looked-after children, who can benefit so significantly from boarding. I have paid tribute to the work of the foundation on a number of occasions and am glad to have this further opportunity to do so today. The foundation is very conscious that there is so much more to be done to increase the number of places so that need can be met more fully. Nothing could demonstrate more convincingly the case for charitable relief. The Government ought to support—not impede—the expansion of cost-effective, life-changing opportunities for looked-after children, so I repeat the question asked by my noble friend: why on earth are the Government judging that facilities that care for and support these young people are unworthy of charitable relief?

[Baroness Pinnock (LD)]

My Lords, I will speak to Amendments 66, 64 and 69B. Children in Armed Forces families have a very difficult time. My noble friend Lady Garden of Frognal’s husband was in the Royal Air Force for 30 years, I believe, and in that time they moved 24 times. By the time their children were nine, they were in their seventh school. That is why so many military families choose to find a boarding school as an option for their children, so that they can have continuity and consistency of education.

I cannot remember how many times I had to move during my school life; it was not seven by the time I was nine, but about five times. Each time you move, it is difficult to get into the system of a new school, make new friends and all the rest of it. There is a very strong argument for children of families in the military to have the exclusion argued for in Amendment 66. At a time when as a country we are thinking more about defence and security and, I guess, trying to encourage more young people to become part of the military in many different ways, they will think about what will happen to their families as they move so constantly. I urge the Minister to give special consideration to Amendment 66.

On Amendment 64, the noble Lord said that musical education has been neglected and allowed to decline. That is absolutely true, and we ought to give a bit of thought to how it has been allowed to decline and when. It is a cause of huge concern to me. I have a daughter who went from a state school to the Royal Academy, so I understand a bit about the importance of musical education. I urge the Government to give more attention to musical education in our state schools. What is particularly discouraging is the decline in opportunities for young people in state schools to learn a musical instrument. In the town where I live, they have declined considerably. In my view that is a tragedy, for the reasons that have been given.

Finally, on Amendment 69B, looked-after children ought to have a special place in our concerns. If there is a charity that I have not heard of that offers some young children who are looked after the opportunity for getting away from the place that has caused a lot of difficulty and trauma in their lives, I hope the Government will look at it sympathetically. I do not know enough about that—although I know quite a bit about children looked after within a local authority setting. But if there is a special opportunity for children who need to escape their surroundings to do so in this way, it ought to be given sympathetic consideration by the Government. I look forward to the Minister giving a good response to these pleas.

[Lord Thurlow (CB)]

I have not added my name to these amendments, but I feel strongly about them. This vital group, articulated so well by the noble Lord, Lord Black of Brentwood, is directly focused on those in need. I want to consider for a minute this group from a different point of view—the point of view, if you like, of the child. The noble Baroness, Lady Pinnock, gave the example of five schools by the age of seven—or seven by the age of five, I do not remember. I was one of those children. My parents were civil servants serving abroad, and they chose to keep me at home well into my teens, whereas most in similar positions were sent back to the UK to attend an independent school and be given the continuity of education that is required at home, wherever home may be.

The price I paid was 13 schools through the course of my education. Most of those were attempts to cram or correct for the next stage, because I was always turning up half way through a term, starting on a Wednesday in a class of 25 people—having never seen any of them before—after coming 3,000 miles. Then I was off again two years later, and there was a different syllabus—and a different language in one case. I ended up here in the UK knowing a great deal about Captain Cook, the South Pacific and the Māori but absolutely nothing about English history or any of the other normal curriculum subjects.

I spent my last few years at school on the back foot in a special independent school, trying to catch up. Had I not had that opportunity, I certainly would not be proud or competent enough to stand here today and address your Lordships. It taught me some self-confidence in the absence of any sort of academic success. University was out of the question. I give this example simply because it is terribly important that those serving abroad, whether in the Armed Forces or in the Civil Service, are given the opportunity to give their children an equal start.

I am very pleased that I had the alternative, because my parents wanted to keep us at home, wherever home was. It did not really do me any harm at the end of the day, but I got no GCSEs, O-levels or A-levels, other than the odd one—usually called something like technical drawing or one of these back-door opportunities. I mention this simply to drive home, perhaps, the importance of what is being discussed, raised by the noble Lords, Lord Lexden and Lord Black, and the noble Baroness, Lady Barran. Let us not destroy the opportunity for those young people.

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[Baroness Pinnock (LD)]

I have very little to say in response to the strong plea from the noble Lord, Lord Moynihan, to improve sporting facilities and physical education for all our children in all our schools. The case he makes is undeniable, but if we wish to fulfil the aims of the strong case that has been made, it points to improving facilities and access in every school.

The town of Dewsbury, where I live, will no longer have a swimming pool. It is one of the most deprived towns in the country. That would be where my focus lies. I accept the case made where there is a private school that has strong a sporting history and excellent facilities, but in the area in which I live, there is none. I totally agree with the noble Lord, but the answer is more focus from the Department for Education on increasing sporting facilities for all our children.

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Moved by

[Baroness Pinnock]

70: After Clause 5, insert the following new Clause—
“Section 5: impact assessmentThe Secretary of State must, within six months of this Act being passed, conduct an assessment of the expected impact of section 5 on state schools.”Member’s explanatory statement
This amendment is intended to probe potential knock-on consequences of the measures in section 5 of this Bill on state schools.

[Baroness Pinnock (LD)]

My Lords, Amendment 70 is in the names of my noble friends Lord Storey and Lord Shipley, neither of whom is able to be here. They estimated that this group of amendments, being very close to the end of Committee, would be debated in the Committee day allocated for next week.

The purpose of Amendment 70 is straightforward: it would require the Government to assess the impact of Clause 5 on state schools. It is reported that independent schools are already losing about 10,000 pupils, who are withdrawing from private education, and that is before the implementation of VAT, the decision on which was made earlier this year. If that is the case, the removal of that number of pupils will cost the state sector £92 million, because those young people will now have state-funded places in the state sector.

Two questions then arise. One concerns the additional cost, which is borne by the Government. The second concerns the fact that there are often clusters of private schools in certain locations. There is a clutch of private schools in Newcastle upon Tyne. There are two private schools in Bradford and two private schools in Wakefield—I am moving south. When you get to the south of England and London, there is obviously a large number of private schools. If children are withdrawn from them due to the rising fees, there will be an impact not just on the cost of their education but on finding appropriate school places in their localities. That is the first impact.

The second impact, which is of particular concern, is on children with special educational needs and disabilities. This measure will put pressure on the state sector, where, as we already know and as I said earlier, SEND is in crisis. It could be very difficult indeed for those young people to find places where there is the proper support to meet their needs. The additional funding and, in the case of young people with particular disabilities having to be accommodated in the state sector, the additional facilities needed to support them could unduly add another cost to the state sector. This is not being considered by an impact assessment on the provisions in this Bill; hence the need for an impact assessment, as set out by my noble friends, so that the Government can demonstrate that they have actually considered what the overall impact will be.

I look forward to hearing what the Minister has to say on that score and I beg to move.

[Lord Black of Brentwood (Con)]

My Lords, I support all the amendments in this group but I shall speak in particular to Amendment 72A in my name and that of my noble friend Lord Lexden. I refer to my earlier declaration of interests.

The Minister has been very emollient and courteous in batting off all our amendments today; I thank him for the way he has dealt with them. Although he and his colleagues throughout government like to bury their heads in the sand and pretend otherwise—as we have seen, I am afraid—the impact of their onslaught on independent education, of which the removal of business rates is just one strand, will have profound ramifications for not just the sector and the children educated in it but a wide range of public policy areas. This is a bit like that game of Jenga, which we have probably all played, where blocks of wood are taken out until a point comes where the removal of one of them causes the whole edifice to crumble. That is what is in danger of happening here, with the sustained attack on independent education in danger of causing policy failure in a wide range of other areas.

Consider quite how far-reaching are the consequences of this policy underpinned by Clause 5. It impacts on public health and the care of vulnerable children; on the future of music, drama and the arts in the UK, which we have talked about today; on military families and defence personnel; on state schools, whose class sizes will increase; on multiculturalism and respect for different faiths; on jobs, export and investment; on local communities, volunteer groups, charities and so on, which depend on partnership with independent schools; on sport, as we have heard so eloquently described; and on soft power and Britain’s standing abroad. As a result of this web of different aspects that will be affected and will impinge on so many different aspects of government policy, it is vital there is an impact assessment of the consequences of Clause 5 taken in conjunction with the Government’s other policy changes. That is what my Amendment 72A provides for.

Apart from everything else, Parliament has a continuing responsibility to scrutinise the Government’s actions in this area. That is what this House, in particular, is here for. To do that, we need not just the data provided by the industry’s own excellent associations but data from across government and a detailed assessment of its implications. Given the profound changes to policy that Clause 5 exemplifies, ripping up five decades of orthodoxy about parental choice, such an impact assessment is the very least we should expect to allow us to fulfil our responsibilities and make clear to the public what its consequences are.

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[Lord Khan of Burnley (Lab)]

My Lords, I take the point that the noble Lord had made very strongly and passionately. In relation to this particular aspect and in contrast to the earlier part of our discussion in Committee related to multipliers, this is not a tax-particular perspective, which is why an impact note for the Bill is available. Of course, we are speaking to stakeholders and will continue to do so to ensure that we take everything into account. We have taken everything in account while bringing this Bill forward.

[Baroness Pinnock (LD)]

I thank the Minister for his response. He made the case for Amendment 70 in the name of my noble friends, I think. When I moved the amendment, I cited the 10,000 children expected to move from the private sector to the state sector, and the Minister cited 3,100. That is a discrepancy. Why? It is because they are both estimates. The Minister’s estimates are based on the Government’s analysis of expectation, but so is the private school sector’s.

The second pair of estimates that were cited related to the cost to the state sector of young people moving to it from the private sector. The estimate by the private sector is £92 million a year, whereas I think I heard the Minister quote a figure of £20 million being the anticipated cost after a number of years. He is not shaking his head—maybe I did not hear that figure correctly. However, the point I am making is that, in both cases, there is a discrepancy because these are estimates, not actual figures.

[Lord Khan of Burnley (Lab)]

I just want to clarify the point that I was making: the additional revenue to support the transition to the state sector represents substantially much more revenue than the cost to support that transition.

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[Baroness Pinnock (LD)]

I accept the argument that was being made but the point I am making is not that point—that there is a net benefit to the Treasury, so the Government believe—but that both sets of figures were estimates that differed widely. This adds weight to the argument, which has been made in our debate on this group of amendments, around the need for an impact assessment following the implementation of the Bill. It is unfortunate that the Minister seems to be refusing to have one or suggesting that one is not needed.

With those points, I beg leave to withdraw Amendment 70.

Amendment 70 withdrawn.