Non-Domestic Rating (Multipliers and Private Schools) Bill

Baroness Scott of Bybrook Excerpts

Committee stage
Thursday 27th February 2025 Grand Committee

Moved by

[Baroness Scott of Bybrook]

46: After Clause 4, insert the following new Clause—
“Review of impact on businesses, high streets and economic growth(1) The Secretary of State must review the impact of sections 1 to 4 of this Act on—(a) businesses,(b) high streets, and(c) economic growth.(2) The review must consider—(a) the impact on different types of business, including small businesses;(b) the impact on businesses operating mainly or solely on high streets;(c) whether the provisions have had a measurable impact on economic growth, and if so what that impact has been.(3) The Secretary of State must lay a report of the review before Parliament within six months of the day on which those sections take effect.”Member’s explanatory statement
This amendment would require the Secretary of State to review the impact of sections 1 to 4 of this Act within six months.

[Baroness Scott of Bybrook (Con)]

My Lords, in moving Amendment 46 I will also speak to my Amendments 53 and 54, which are all borne from the lack of detail in the Bill and the failure to publish an impact assessment for its first four clauses. The Government are asking us to agree to a Bill without clarity on the substance and the financial impact, and one which will make a real problem for businesses on the high street. They are asking us to support the Bill despite not providing any assessment of how it will impact on the high street and, while they promise to reduce business rates, the only thing that we know is certainly being reduced at this stage is the relief we offer to retail, leisure and hospitality businesses.

My Amendment 46 calls for a review of the impact of Clauses 1 to 4 on businesses, high streets and economic growth. There is no impact assessment published alongside the Bill that covers its first four clauses and no commitment to publish one when the multipliers have been decided. This is entirely unacceptable; it seems unlikely that the Government would pursue a Bill without clarity as to what impact it will have. In order to have an informed debate, we need to know what the Government think the material impact will be. If they are so certain that they are reducing the amount of tax that businesses pay through business rates, it would make sense to publish an impact assessment detailing how such an objective will be achieved.

My Amendment 53 is borne from the same concerns about the lack of information and asks for an annual report as to how much money is raised through the provisions in Clauses 1 to 4. Again, there is no detailed information to accompany the Bill and we are being asked to agree to a measure despite not knowing how it will impact on the very businesses it taxes. Amendment 54 seeks to include an annual report that breaks down the revenue from business rates by type of business, so that it is possible to evaluate how successful this arbitrary threshold is at placing further burdens on online giants, rather than on small and larger independent shops and pop-up businesses.

The Government have changed their tone in regard to business rates after an initial promise that they would reform the whole system to balance the scales between the high street businesses and online giants—the Bill does not deliver on that. I would be interested to see which businesses end up with a larger tax burden as a result of the Bill. I urge the Government to seriously consider these amendments.

[Lord Fox (LD)]

My Lords, as we have heard from the noble Baroness, Lady Scott, this group is about understanding the impact of the Bill. To help us focus on why this is important, my noble friend Lady Pinnock and I have produced our own notional one-dimensional impact assessment.

If a property had a rateable value of £100,000, before Covid it was paying close to £50,000 in rates. Then, when the pandemic came, if—and only if—it qualified for relief, that £50,000 would benefit from a 75% reduction. In this case, the business owner would have been paying only £12,500. Rolling forward, what do we find when the Covid relief is completely lifted? The rateable value has not changed; it is still £100,000. So, by our calculation, if—and only if—the full multiplier reduction is applied, that business will be paying £30,000 in non-domestic rates.

I am sure the Minister can spot where we are heading on this. Yes, the business will nominally have a reduction in its rates, but those are the rates it was paying before the Covid relief. In reality, it will have gone from paying £12,500 to £30,000; that is what will be hitting the business. I have two questions for the Minister. First, allowing for our slight approximations to make the maths easy, is this broadly correct and, if not, what is the actual analysis? Secondly, how on earth will this bring benefits and investment to the high street?

As the noble Baroness points out, it is right to talk about the impact assessment, both before the implementation of the Bill and once it has been implemented. The accelerated timeline for the Bill’s implementation has left insufficient time for stakeholder consultation, particularly regarding measures affecting distribution warehouses and out-of-town retail premises, as the noble Baroness just mentioned. Therefore, my noble friend Lady Pinnock and I have tabled a number of amendments to help probe different aspects of the impact the Bill will have. When we get to Report, we will hope to refine this—that is, if the Government have not put forward their own amendments, which I expect they will because this makes so much sense and is so important to the Bill.

Amendment 48 would require the Secretary of State to publish an impact assessment on Clauses 1 to 4 before they come into force—very similar to what we have just heard. Amendment 49 proposes a new clause that would require the Secretary of State to examine the effect of the introduction of the new multipliers on the amount of business rates paid by businesses occupying a single site, compared with those occupying multiple sites. This is because the relief system had a cap on it. That cap goes. The question is: does the multiplier applied across multiple sites mean that some large multisite organisations will bust the cap and benefit substantially at the expense of single-site retailers or not? Because there is no impact assessment, we have no idea. This will, essentially, help us to differentiate the effect between the size and scale of businesses.

Amendment 50 is intended to assess the cumulative impact on businesses of the changes in the Bill with the expected removal of the retail, hospitality and leisure relief—coming to the point I was just talking about. Amendment 52 proposes a new clause that would require the Secretary of State to examine the effect of the introduction of the leisure multipliers on the amount of business rates paid by businesses in different council areas. In other words, how will this affect the regional distribution? The Minister, as someone who comes from the north, will understand that there are significant differences between what happens in the north and the south-east of England. Coming from Herefordshire, I would say that there is exactly the same sort of difference there, if not even greater. Amendment 73 is consequential.

These, taken with the amendment from the noble Baroness, Lady Scott, are all about how we know what the Bill will actually do. The Government have made bold claims about the effect they assert it will cause on Britain’s high streets. On these Benches, it seems there is absolutely no way of supporting those claims because there is absolutely no data.

--- Later in debate ---

[Lord Khan of Burnley (Lab)]

My Lords, I say directly again that the 2026 revaluation has not yet been completed but, obviously, the Treasury is working on it. It is having conversations with all stakeholders, of course. In fact, it is probably also looking at forward planning on the whole future of business rates. As I said on our first day in Committee, this is the start of a huge strategic focus looking at business rates; this is the first part of it. I assure colleagues that, as soon as the multipliers are announced at the Budget, noble Lords will have an analysis—not an assessment, but an analysis.

[Baroness Scott of Bybrook (Con)]

My Lords, I thank the noble Lords, Lord Fox and Lord Thurlow, for their support on what I think is a really important part of the Bill. It is not about us knowing; it is about businesses knowing. We heard very strongly from the noble Lord, Lord Thurlow, about businesses, particularly those that are around the £500,000 and do not know now whether they are or are not, and the multipliers. They are trying to plan their businesses, hopefully for growth, if we hear what His Majesty’s Government want for them, but how can they do it when they do not know what the third-biggest chunk of their expenditure will be? We are trying to get the Minister to understand how very important that is to this sector.

I thank the Minister for his response but I still think, as can be heard from the questions, that we have a lot of concerns over the lack of clarity on this and, particularly, the full impact assessments. I am more than happy to work with the Minister and the Government to find a way around this, so that we can feel comfortable—not for us, as I have said, but so that businesses can fully assess the impact as soon as possible. For now, I beg leave to withdraw my amendment.

Amendment 46 withdrawn.