Non-Domestic Rating (Multipliers and Private Schools) Bill

Debate between Lord Jamieson and Lord Khan of Burnley

Committee stage
Thursday 27th February 2025 Grand Committee

[Lord Khan of Burnley (Lab)]

I thank the noble Lord for making that point. He also talked about delays, which I will pick up in a later group when we talk about implementation; I have not forgotten about the important points he raises. On the point he just made, the Budget analysis takes into account the 2026 revaluation, so that point is covered by the Treasury in its work in the build-up to the Budget.

[Lord Jamieson (Con)]

I did not quite understand that point. The Minister is saying that the revaluation has already been taken into account in the figures that the Treasury is coming forward with. Does that mean he can share the revaluation with us?

[Lord Khan of Burnley (Lab)]

My Lords, let me clarify this for the noble Lord. As I said repeatedly on day one in Committee, the Treasury will publish an analysis when it sets its multipliers at the Budget, but the work that is going on in providing that analysis will consider all the issues, in particular the issue the noble Lord raised about the 2026 revaluation.

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[Lord Jamieson (Con)]

My Lords, Amendment 47 addresses the issue that, despite the Government’s claim that they would reform the business rates system, the Bill does not offer that. We heard concerns from several noble Lords on the previous day in Committee that this is not a Bill that will support the high street and level the playing field, as promised in the Labour manifesto. My concern is that businesses will face substantially higher costs. These proposals are supposed to support the high street, with a so-called Amazon tax, yet this is clearly not the case. It is a blunt instrument that will substantially increase taxes on all properties with a rateable value above £500,000. As such, it risks harming the very businesses it is purportedly designed to help, such as anchor stores and other retail, hospitality and leisure facilities fundamental to the high street.

There is a second concern that we have already raised: the cliff-edge nature of these proposals. I, like the noble Lord, Lord Fox, have done some very basic analysis of this. For example, a retail, hospitality or leisure business with a rateable value of just under £500,000 would today pay rates of around £175,000, assuming a 0.2 discount and a multiplier of 0.55, whereas if it were to make a small investment and tip over that threshold, it would pay £320,000. Like the noble Lord, Lord Fox, I allow for a little approximation in those numbers. There are plenty of examples of this. For instance, locally to me in Bedfordshire, Luton Hoo, which is currently looking at some investment, has a rateable value of £490,000. Will that investment go ahead, knowing the additional costs? Even more locally—as Members are aware, I am a councillor and I declare my interest as a councillor in Central Bedfordshire—near my own ward, a garden centre in Toddington faces the same issue. Again, I am aware that it is looking at some investments.

We have also touched on the impact of future revaluations. The Minister has been keen to point out that this will impact fewer than 1% of properties and only 3,100 retail outlets. He said that he wants to be clear and transparent, so can he tell us how many additional properties will be above the £500,000 threshold after the next revaluation? I note that the noble Lord, Lord Fox, refers specifically to the idea of a commercial landowner levy as a proposed tax reform to replace the business rates system. I support the sentiment of requiring government to consider genuine reform, rather than the lack of change that the Bill provides. I do not agree with the specific reform proposed by the noble Lord, but I acknowledge the need to adapt the system to ensure that online businesses that operate from out-of-town warehouses pay a fair, proportionate share of business rates. Given that the Bill has been brought forth, it seems reasonable to assume that the Government have delayed any plans they had to reform the system, which will damage businesses up and down the high street. They promised lower business rates but are reducing the relief offered to retail, hospitality and leisure businesses, sending an incoherent message to our high streets. I look forward to the Minister’s response.

[Lord Khan of Burnley (Lab)]

My Lords, Amendment 47 seeks to require the Chancellor to undertake a review of the measures in the Bill, once passed, on broader non-domestic rating policy and to set out what potential changes may be required and/or what alternative approaches to non-domestic rating have been considered. The Government are committed to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. The Government commenced that journey at the 2024 Budget, when we announced our intention to permanently—I say that again: permanently—introduce lower rates for qualifying retail, hospitality and leisure properties from 2026-27, as well as a higher rate on properties with rateable value of £500,000 and above to ensure that the permanent tax cut is sustainably funded.

At the Budget, the Government also published the Transforming Business Rates discussion paper, setting out priority areas for business rates reform and inviting stakeholders to have a conversation with the Government on this matter over the course of this Parliament. The areas of interest for further reform as set out in the paper include: incentivising investment and growth, considering the frequency of revaluations and ensuring that the system is transformed to make it fit for the modern 21st century economy. The paper also focuses on tackling avoidance and evasion; for example, through the Government’s intention to publish a consultation on adopting a general anti-avoidance rule for business rates in England.

I am delighted to say that those conversations with stakeholders on priority areas for reform have commenced and are ongoing. I thank all those stakeholders who have been in contact to offer their valuable insights and experience of non-domestic rating. Furthermore, on 17 February, the Government published the Business Rates: Forward Look policy note, which provides an update on key milestones for the Government’s overall business rates reform agenda. As set out in that note, we are reflecting on engagement undertaken so far and the views expressed as part of that process. It also sets out that we anticipate further stakeholder engagement on specific reform options ahead of the Autumn Budget, when final decisions will be set out.

I am aware that there is support from Liberal Democrat noble Lords and Members of Parliament for the replacement of business rates with a commercial landowner levy. What is important to the Government is that we have a tax that works. It is not the first time that this House has heard suggestions for a tax on land values or a levy on landowners: it was as common a debate in the last century as in this one. What all those debates show is great uncertainty and a lack of evidence of the benefits: any benefits to the high street would be far from certain. We are clear on the need for reform but, to minimise disruption for businesses, the Government will make improvements to the existing system over the course of this Parliament.

Before I conclude, let me address the points that the noble Lords, Lord Fox and Lord Jamieson, raised on investment. They will understand that I am unable to comment on specific examples of live non-domestic rating bills but, as part of the Transforming Business Rates discussion paper, we will look at the effectiveness of the improvement relief scheme, which helps businesses that invest in their property. I look forward to our engagement, post Committee, in more detailed conversations. For the reasons set out, I am unable to accept the amendment. I agree that the system is broken and we are trying to fix it. It cannot go on year after year on an ad hoc basis. We need certainty and sustainability so that people can have a clear and fair system. As we said in our manifesto, we will continue to support leisure, hospitality and retail, and those above £500,000 rateable value—fewer than 1% of properties—will contribute to make sure that our system is fair and balanced.

I hope I have provided reassurance as to the seriousness with which the Government are approaching our stated task of reforming the business rates system, and I ask the noble Lord to withdraw the amendment.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Debate between Lord Jamieson and Lord Khan of Burnley

Committee stage
Monday 24th February 2025 Grand Committee

[Lord Jamieson (Con)]

My Lords, I thank all noble Lords who contributed to our debate on this group of amendments, which deals with the role of billing authorities and the definition of hereditaments.

During the debate, I listened closely to the noble Lord, Lord Thurlow, whom I thank for his support in raising yet again the impact on anchor stores on the high street, which is quite fundamental. I fully support the sentiment of Amendment 32 in his name. It seems plainly obvious that we are closely aligned; I hope that we can work collaboratively before and during Report and that the Minister will both listen to this argument carefully and see what can be done to improve the Bill’s provisions on the definition of hereditaments.

I thank the noble Earl, Lord Lytton, for his support for discretion. The noble Baroness, Lady Pinnock, was concerned that it may mean somewhat less funding for councils in the north of England. That is absolutely not the intention; I would be delighted to look at this matter further and have a conversation outside this Room.

The Minister made a couple of points about certainty. All businesses like certainty but they also want equity. Our concern is about equity and what is reasonable and fair. I was slightly puzzled by what the Minister said—I would be grateful if we could have a conversation on it later—about this idea of “centrally set but locally implemented”. That does not feel like local discretion; it feels like local implementation. I would be keen if he could speak more on that point.

Finally, local authorities have the ability for some local discretion. However, my understanding is that that would be funded locally, which is not particularly desirable.

[Lord Khan of Burnley (Lab)]

I think the noble Lord is saying “Let’s have some conversations to follow this up”. As I have said to all here, I am happy to sit down with any noble Lord or noble Baroness to discuss any point, in particular post Committee, before we get to Report. I would absolutely welcome a conversation with the noble Lord.

[Lord Jamieson (Con)]

I thank the Minister.

We must steer away from blanket definitions issued centrally by the Treasury, which does not have the thorough oversight of local businesses in all parts of the UK. Local authorities have a particular understanding of the business landscape in their areas, so while the definition of hereditaments introduced by the Treasury may work in some places, it will not work everywhere or be appropriate to others. This can be avoided if local authorities are issued with a power to determine a hereditament or other type of property.

As the noble Lord, Lord Thurlow, rightly pointed out in his Amendment 32, local authorities already determine what constitutes a retail, hospitality and leisure relief property. We must therefore ask why the drafting of this legislation provides complete power to the Treasury to define a retail property or a hereditament. Would it not be more suitable for local authorities to define property types? I would argue that, with their first-hand local knowledge, local authorities are best placed to define terms in a way that reflects the realities and suits the needs of their local areas.

Unsurprisingly, many questions have been raised in the debate on this group of amendments, so I look forward to the Minister—I thank him for his willingness to engage with us—providing more clarity on the matters discussed. I hope we will engage positively on the amendments in the name of my noble friend Lady Scott. With that, I beg leave to withdraw the amendment.

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[Lord Jamieson (Con)]

I thank the noble Baroness, Lady Pinnock, for moving this amendment and outlining the unintended consequences of this Bill. The proposal to exempt healthcare from the higher multiplier is an issue that has sparked considerable debate in the wider community.

The amendments in this group propose two key changes: to exempt healthcare from the higher multiplier; and to expand the definition of healthcare to include hospitals and medical and dental schools. These changes seek to address the concern that critical services in the healthcare sector could be disproportionately affected by the Bill’s provisions. These amendments address very real concerns that services could be disproportionately affected through this legislation, revealing further unintended consequences of this Government’s Bill.

Amendment 6 is particularly important as it seeks to remove healthcare from the higher multiplier, directly responding to concerns raised by hospitals and other healthcare providers that are already under significant financial strain. Exempting healthcare from this additional tax burden could protect vital services, ensuring that they can continue delivering essential care without being further impacted by this Bill’s provisions. The National Pharmacy Association has warned that pharmacies across the country are at risk and may be forced to cut hours because of the Government’s triple whammy of increased business costs this April. It cannot be right that access to healthcare is threatened by the Government’s appalling tax policies. Will the Minister give the Committee a commitment today that the Government will change course on their tax policies if it is proven that access to healthcare will be reduced as a result of their policy?

Amendments 20 and 23 seek to clarify and broaden the definition of healthcare, ensuring that medical and dental schools are included in these protections. Given the importance of these institutions in training future healthcare professionals, it is worth considering whether their exclusion from such protections could affect the quality and sustainability of the healthcare workforce—particularly at a time when the sector is facing increasing demand. I would be grateful if the Minister took this opportunity to outline exactly how the Government will safeguard the future of our healthcare workforce in the light of these concerns.

Finally, Amendment 39 repeats the proposal to exempt healthcare from the higher multiplier, reinforcing the argument that this sector should not bear the weight of a tax system that may further stretch its already-limited resources.

I would like to touch on the cliff-edge nature of the £500,000 threshold; this has been mentioned in previous debates by the noble Earl, Lord Lytton, and my noble friend Lady Scott. A local health facility might want to add one consulting room. If that pushes it over the £500,000 threshold, it may no longer be affordable. We need to think carefully about the cliff-edge nature of this measure; I would be grateful if the Minister could provide some additional thought on it and come back to us.

In conclusion, these amendments ask important questions about the impact of this Bill on healthcare sectors. Although the Bill seeks reform, we must ensure that essential services are not disproportionately affected by the higher multiplier or excluded from necessary protections. The noble Baroness, Lady Pinnock, has brought forward a compelling case for the need to reconsider the treatment of healthcare in the Bill. I would be grateful if the Minister took this opportunity to clarify how the Government plan to address these concerns and ensure that vital healthcare services are not unduly burdened; I look forward to his response.

[Lord Khan of Burnley (Lab)]

My Lords, these amendments seek to change the Bill to remove healthcare hereditaments from the higher multiplier. In the previous debate on the amendments in group 4, just a few moments ago, I explained why the Government have taken a sector-agnostic approach to the higher multiplier and not excluded any sector or type of property. Of course, the same considerations apply here. This Government fully support the healthcare sector, but it would not be fair to exclude some and not others. To sustainably fund the lower multipliers, we must ensure that we can raise money from higher multipliers; the only fair way to do this is to apply it to all hereditaments at £500,000 and above.

As I said in the debate on the previous group, it is important to look at the facts. The Valuation Office Agency’s statistics show that, of the 16,780 properties caught by the £500,000 threshold, based on the current rating list, only 350 are in the health subsector. Of these, 290 are NHS hospitals and only 30 are doctors’ surgeries or health centres. These numbers are rounded to the nearest 10 and we do not have separate data on medical or dental schools. The impact on this sector is therefore limited and, where it applies, much of it falls on the NHS. The Autumn Budget fixed the spending envelope for phase 2 of the spending review, which will deliver new mission-led, technology-enabled and reform-driven budgets for departments. We will consider the full range of priorities and pressures facing departments in the round, including any impact of the higher multiplier, when setting these budgets.

On the questions about the Bill creating more cliff edges in the system, the new higher-rate multiplier will apply to properties above £500,000, which will fund and support the high street in a sustainable way. However, the discussion paper published at the Autumn Budget highlights that some stakeholders have argued that cliff edges in the system may disincentivise expansion. It committed to explore options for reform. The Government have recently completed an initial stage of engagement to understand stakeholder views and areas of interest for reform, and we are open to receiving written representations in response to the priority areas for reform. That is open until 31 March 2025.

On the specific question about examples of properties that the noble Baroness mentioned, it would be inappropriate for me to discuss the rate bills of specific ratepayers, especially as one of them is a domestic property. To conclude, set in the context of these facts and assurances of how we will approach the issue in the spending review, I hope the noble Baroness is able to withdraw her amendment.

Community Engagement Principles and Extremism Definition

Debate between Lord Jamieson and Lord Khan of Burnley

Wednesday 22nd January 2025 Lords Chamber

[Lord Jamieson (Con)]

My Lords, does the Minister agree that, in addition to reviewing the definition of extremist organisations and the community engagement strategy, we should also review the wider communication policy regarding acts of extreme violence and terror to maintain an open dialogue with the general public and prevent the spread of misinformation?

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

My Lords, let me first of all say that national security will always come first for this Government, and we will always treat the threat of extremism with the seriousness that it requires. The noble Lord makes an interesting point. I confirm to the House that the Government take the threat of extremism very seriously and will continue to work with partners to tackle extremism in all parts and forms. That is why the Home Secretary commissioned a rapid review of extremism in 2024. The Government will set out their approach to countering extremism in due course and will update Parliament accordingly. I am sure that many of the issues that the noble Lord raised will be part of that review.

Older People’s Housing Taskforce

Debate between Lord Jamieson and Lord Khan of Burnley

Monday 16th December 2024 Lords Chamber

[Lord Khan of Burnley (Lab)]

My noble friend makes a very important point. I will take it away with me and discuss it with Minister Pennycook. It will also be a cross-departmental discussion with the Department for Transport to ensure that the particular issues that my noble friend raises are addressed and thought of when moving forward so that we can make not only the house accessible within, but the route to the house.

[Lord Jamieson (Con)]

My Lords, I declare my interest as set out in the register, particularly that I was a member of the Older People’s Housing Taskforce. It is widely acknowledged that supported accommodation can significantly benefit the health and well-being of older people. That has the additional benefit of saving social care and the health service considerable costs. In addition, if it is placed in urban areas, it can support town centre regeneration.

However, due to the additional facilities, the building costs of supported accommodation are substantially higher than those of mainstream accommodation. In recognition of this, one of the task force’s recommendations to help to deliver supported accommodation was that it should not be subject to demands as heavy as the affordable housing and Section 106 planning obligations of mainstream housing. Will the Minister confirm that the Government will support this?

[Lord Khan of Burnley (Lab)]

The Government will publish a housing strategy that will set out a long-term vision for the housing market that works for communities, building 1.5 million high-quality homes and the biggest increase in affordable housing in a generation. Supported housing plays a vital role in delivering better life outcomes, improved well-being and health, as the noble Lord mentioned, and greater independence for many vulnerable people, including older, disabled and homeless people.

We recognise the challenges local authorities are facing as demand increases for critical services. We have listened to voices across local government and have announced £4 billion in additional funding for local government services at the Budget, including £1.3 billion, which will go through the settlement.