Non-Domestic Rating (Lists) (No. 2) Bill

Lord Moynihan Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Thursday 4th February 2021 Grand Committee

[Lord Stunell (LD) [V]]

My Lords, I wish to speak to Amendment 5, in my name and that of my noble friend Lady Pinnock, but I also make clear that I support the intentions of both the other amendments in this group. My noble friend Lord Addington will speak to his Amendment 7 shortly. Amendment 2, just moved by the noble Lord, Lord Kennedy, sits four-square alongside our Amendment 5 and I am happy to add my support to the case that he has put forward.

I remind the Minister that the Government’s previous intention was to have the revaluation come into force this year. They had moved that forward from the original 2022 date because of the deteriorating situation of the high street retail sector and the very clear disconnect between outdated valuations and current purchase prices and letting rates. The most obviously outrageous example of that is, of course, the underpricing of out-of-town distribution centres and warehouses.

Covid-19 has changed the situation in two significant ways, the first of which the Government have responded to, but the other is the one I want to draw particular attention to and which Amendment 5 seeks to address. As it was unrealistic to carry out the necessary work on the ground to carry out valuations because of lockdown and infection control restrictions, the date of 1 April this year was set in place of 1 April last year.

That is one of the responses, but it does not take account of the other impact of Covid. There has been a huge acceleration in the existing trend of retail transferring from the high street to online. It is interesting, indeed compelling, that the Association of Convenience Stores, which has 35,000 local shops and forecourt sites in its membership, has reported that 42% of independent shops polled would have gone out of business already if it had not been for the Government’s business rate moratorium—that is the drastic impact on income for the physical retail sector. We can see from the business pages of any national newspaper that many high street names have closed down or downsized, or are being asset-stripped by hungry online operators buying up their brand. This is an acute crisis, but also a chronic one. Everyone understands that the online shoppers newly recruited by the pandemic have found that it is an easy way to buy and is perhaps better than trudging round in the rain. Nobody expects the retail business of the high street to return to its former levels.

On these Benches, we very much welcome the 100% business rate discount that the Chancellor has introduced. We believe that, in any case, it will need to be extended until there can be a return to what I might call peacetime trading. But those peacetime retailers cannot expect to return to the same volume of sales. Every one of them knows that their turnover will be down and their already dwindling profits will be even less in the post-Covid, peacetime marketplace. When the Chancellor’s scheme ends they will face what were already unreasonably high rating valuations still in full force. Many will be forced into closure. The shutters will come down across the country, leading to a spiralling reduction in footfall and undermining the viability of what remains.

I said at Second Reading that it would be good to see some joined-up thinking by the Government, with a seamless move from the Chancellor’s support scheme for retail running through to the new reduced level of business rates that will come with this measure, as far as the high street retail industry is concerned. I must say to the Minister that it is no good the cavalry coming over the hill two years later simply to count the dead. Either the cavalry must come sooner or the Chancellor must extend his scheme to fill the gap—or a properly planned bit of both. Otherwise there will be precious few retail business left to take advantage of the lower rates bills that we all expect this measure to offer. Hence our amendment: an impact assessment, as the Minister well knows, does not just look at the impact of doing what is proposed, but poses the important question, “What other ways have you looked at to achieve the same outcome?”

Such an impact assessment as we propose would show pretty clearly that delaying implementation of the new valuations to 2023, whatever the actual valuation date, will lead to far more businesses failing and far more damage to the high street than having a 2022 start date for the new system. It would show that extending the Chancellor’s scheme to bridge whatever gap remains would be excellent value for money, bringing a huge financial and community well-being dividend to put the high street back on its feet. It would also certainly show that any gradual phasing-in of the improvement beyond 2023—so that it was in some way cushioned and delayed the benefit to the retail sector—would be terminal. I suggest also, perhaps slightly with my tongue in my cheek, that it would set an interesting precedent, where two government departments look at a policy in the round and agree a sensible way of taking in each other’s washing rather than taking separate decisions—one on the 100% business rate discount and the other on the start date of the new valuations—in two different soundproof silos.

[Lord Moynihan (Con)]

My Lords, I will speak to Amendment 7, in my name and that of the noble Lord, Lord Addington. Before I move to the detail of our amendment, this Committee provides us with the opportunity to set out the critical importance of making the case for further government measures to support sport, recreation and an active lifestyle as we emerge from the Covid epidemic.

The Government are to be congratulated on the steps that they have taken: the £300 million sport winter survival package, which specifically should help the top-end spectator sports in England and provide important support to rugby union, horseracing, women’s football and the lower tiers of the national football league; and £100 million through the national recovery fund to support publicly owned leisure facilities impacted by Covid-19. However, this is nowhere near the £1.75 billion investment package to protect the world-class arts, culture and heritage sector, which was designed to help the showcase institutions as well as the small local arts and culture initiatives across the country.

Consider the scale of this investment to help sport alongside the £2 billion announced to investment in cycling and walking, not by DCMS but the Department for Transport last May, since when—as recently as last weekend—the Sunday Times led on the front page with the impending loss of £110 million to professional sport if gambling logos are banned from sports shirts. Sport on television has provided a beacon of hope and escape for millions of people during the current Covid lockdown—a massive ray of respite amid the boredom and gloom of lockdown. In that context, there has been more coverage of the return to terrestrial television of the England-India test series starting in Chennai tomorrow than there has been of actual coverage of matches in many an overseas test series in the past.

The Government have responded well to the need of our elite sports men and women with safe and necessary exemptions from many of the Covid regulations. These exemptions will need to continue when the new travel quarantine regulations are announced shortly. The Six Nations depends on the exceptionally safe arrangements made for professional sport and the vital good sense of those involved to observe strictly the bubbles in place to protect them. Neither the French team—nor, for that matter, Andy Murray, when he resumes the ATP tour—should be required to spend two weeks in the Gatwick Holiday Inn when they arrive here.

Of course, even those who represent our country would not expect to be, nor should be, vaccinated before the vulnerable groups of all ages in society. I hope, however, that when that cohort is complete, consideration will be given to many of our Olympic and Paralympic athletes ahead of their vital international training, selection and competition schedules later this year.

That is the backdrop to today’s call to extend the business rate holiday granted to the retail, hospitality and leisure sector indefinitely, and the opportunity within six months of the passing of the Bill to publish an assessment of the impact of the timing of business rate revaluations on the viability and health of amateur sports and sporting activity. I hope to abolish them for that sector altogether.

The holiday has been invaluable to sports organisations that own their property, including national governing bodies, professional clubs and community clubs and organisations. However, the rates bill in the past has often been the anchor that dragged many sports clubs towards the rocks of administration and financial difficulties, and at this time we must focus on how we increase opportunities for everyone to follow an active lifestyle. Declining participation rates, a major drop-off in sport after school years, the loss of playing fields and the reduction in local authority spend in England—sport and recreation is a discretionary-line item spend in their accounts, rather than the compulsory priority that it should be—have collectively led to the absence of the much-hoped-for sports legacy from the 2012 Olympic and Paralympic Games. Obesity levels, boredom among the young and lack of opportunities for all pepper the landscape over the UK.

In contrast, I can only praise my noble friend the Minister’s commitment and support for sport in successive policy areas in his department. At Second Reading, he listened carefully to the representations made, as he did previously to my noble friend Lord Botham on this subject. He knows that the business rate holiday can directly benefit community sports clubs, with their sole objective of providing healthy and enjoyable recreational and sporting opportunities, ensuring that all ages re-emerge into the light stronger, fitter and more active in future years than suggested by the pattern of growing obesity and falling participation as a proportion of our growing population, which we saw in the years approaching the pandemic. That alone is one of the major reasons for the increasing call on the NHS in the 2010s. It was in danger of being overburdened before, let alone during, the pandemic.

Like me, the Minister knows that the country faces stubborn inequalities, that the activity gap is widening and that places and spaces, community sports clubs and leisure facilities are critical to providing opportunities for a more active nation to emerge from the epidemic—yet the hardest hit are in deprived communities. Such clubs proliferate in our poorer communities, not least in the East End of London, where life expectancy falls one year for every Underground station passed on the Jubilee line between Westminster and Stratford. Life expectancy is 10 years less there. That is why the Government need to support the Sport and Recreation Alliance, with its campaign to boost activity, from traditional or formal sport to the informal fun and enjoyment that many people can derive from outdoor recreation, movement, dance, and physical activity. Let us make sure that local clubs registered as community amateur sports clubs are exempt from business rates for ever.

My hope is that the case is considered to extend similar support to all sports clubs which provide community sport and recreational opportunities. In comparison to other sectors, business rate liability for the community sport sector remains unfairly high in relation to income. Community sport clubs often have limited financial resources, as they seek to increase membership subscriptions in ways that are affordable, thus enabling community participation without those subscriptions being extortionate.

The cohort of sport and recreational facilities in this country is ageing; too many are falling into disrepair. The costs to operate, repair and maintain are onerous. The result is that sport pays a disproportionate level of business rates, which in themselves are a brake on the key policy objective of making this nation healthier and more active. Sheffield Hallam University recently published a report on the social and economic value of community sport and physical activity in England, valuing it at £85.5 billion. The analysis valued physical and mental well-being at £9.5 billion, mental well-being itself as well as mental health at £42 billion, individual development at £282 million, and social and community development at £20 billion. That evidence makes a compelling case for investment in community sport and physical activity. One keyway in which that can be achieved is a major change in how my noble friend’s department and the Treasury approach a new system of support for exempting those clubs involved in community sport schemes from the business rate system.