Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Debate between Baroness Winterton of Doncaster and Luke Hall

2nd reading
Monday 28th June 2021 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

The reasoned amendment in the name of the Liberal Democrats has been selected.

[The Minister for Regional Growth and Local Government (Luke Hall)]

I beg to move, That the Bill be read a Second time.

The Bill contains two halves: first, a measure that changes the valuation assumptions that are applied when making business rate determinations in the light of covid-19; and secondly, a measure that will provide for the disqualification of unfit directors of dissolved companies. I will start with the first measure before moving on to the second.

The pandemic has presented significant challenges for businesses in all sectors. Our response has been of a similarly unprecedented scale, with more than £280 billion provided throughout the pandemic to protect millions of jobs and businesses. In this year’s Budget, the Chancellor announced an extra £65 billion of support for 2020-21 and 2021-22. The support we have provided for businesses included 100% business rate relief for all eligible retail, hospitality, leisure and military properties for 2020-21, at a cost of £10 billion. Combined with those eligible for small business rate relief, this means that more than half of ratepayers in England will have paid no rates in 2020-21.

At this year’s Budget, we confirmed a further three-month extension to the full 100% business rate relief for retail, hospitality and leisure businesses, followed by a further nine-month period of relief at 66% subject to the cash cap, at a further cost of £6 billion. That takes the total level of support provided to businesses by Government through relief from business rates since the start of the pandemic to over £16 billion.

That is an important context for the Bill, because as well as helping businesses through the pandemic, it is also important that we support local government with the critical role it has in supporting our communities. A vital part of that is the income that it receives from business rates, so while it is necessary to provide rates relief to businesses, it is important that we do so in a way that is targeted and that ensures that those who can still contribute continue to pay this tax.

With that in mind, clause 1 is concerned with how rateable values should be assessed during the pandemic. A business rates bill is calculated by multiplying the rateable value of the property by the multiplier, or the tax rate, and then applying the reliefs. The rateable value of a property is therefore, broadly speaking, its annual rental value at a set valuation date, which in the current rating list is 1 April 2015. All rateable values should therefore reflect annual rental values at 1 April 2015. This provides a consistent tax base for all businesses.

Of course, it is necessary to update the tax base, which is done at regular revaluations undertaken by the Valuation Office Agency. The next revaluation was originally scheduled for 1 April 2021, based on values at 1 April 2019, but last year we took the step of postponing it to 1 April 2023 to ensure that it better reflected the impact of the pandemic; Parliament approved that change by passing the Non-Domestic Rating (Lists) Act 2021. The Act received cross-party support, for which we were extremely grateful.

Outside those general revaluations, a ratepayer can still submit a challenge to the VOA on their property’s rateable value between revaluations for a number of reasons, such as to correct factual errors or reflect a material change in circumstances. If not satisfied with the outcome of the challenge, the ratepayer can appeal the VOA’s decision to the valuation tribunal. It has been an established principle of the business rates system that a material change in circumstances challenge can be made on the basis of a physical change to a property or its locality. For example, a successful MCC challenge could be made following the partial demolition of a property, or significant roadworks near a property that might affect its value.

However, following the pandemic, the VOA received high numbers of MCC challenges seeking a reduction in rateable value to reflect the impact of the pandemic. Of course, the MCC legislation, as first set out in the Local Government Finance Act 1988, was not designed with covid-19 in mind, and the MCC system has never been used in response to economy-wide impacts or shocks. It has therefore become necessary to clarify, as clause 1 does, the treatment of covid-19 in assessing rateable values.

We have been clear that relying on the MCC system to help businesses that need further support in the light of the pandemic is not the right mechanism. It would mean significant taxpayer support going to businesses with properties such as offices, many of which might be able to operate normally throughout the pandemic, at a time when we have provided significant support to those most affected.

For example, the workforce of a consultancy firm based in central London that was previously entirely office-based is likely to have been working largely from home since the start of the pandemic, but the business itself may have continued to operate throughout. Under the business rates appeal regime, it could have argued that its office space had undergone a material change of circumstances due to the reduced occupancy.

If that business’s appeal had been successful, it would have been awarded a business rates reduction, but it would not have been right for it to have a reduced tax liability on that basis, given that it had not actually suffered an economic impact. Relying on the MCC system to support businesses would also mean resolving disputes through the courts, which could take years and create additional uncertainty both for businesses and for local government, which relies on income from business rates to deliver vital local services.

The Bill will therefore ensure that the coronavirus and the restrictions put in place in response to it cannot be used as the basis for a successful MCC challenge or appeal. It will ensure that changes to the physical state of a property can continue to be reflected in rateable values as and when they occur, irrespective of whether they are a result of the coronavirus, but that the general impact of the pandemic on the property market will not be reflected until the next revaluation in 2023. Until then, all rateable values will continue to be based on the property market as at 1 April 2015. This approach is supported by the Public Accounts Committee, which has welcomed the financial certainty that such a measure gives to councils.

Clause 1 applies in England. Business rates policy is fully devolved, so whether the same legislation is necessary in Wales, Scotland or Northern Ireland is a matter for their respective Governments, but we have been working closely with the devolved Administrations regarding the Bill. Although the law in Wales is similar to that in England, different legislation applies in Scotland and Northern Ireland. Of course, the impact of the coronavirus may have been different, so whether the devolved Administrations choose to follow the measures set out in clause 1 will depend on the individual circumstances and choices made in those countries.

We have also supported businesses. We have put £16 billion of support into business rates for the pandemic, and we have announced a relief worth an additional £1.5 billion for ratepayers impacted by the pandemic who have not been able to access business rate reliefs. These new reliefs will be administered by local authorities and will be distributed according to which sectors have suffered the most economically, rather than on the basis of temporary falls in property value. This will ensure that support is provided to businesses in England in the fastest and fairest way possible, and we will continue to work with and support councils and local government to enable ratepayers to apply for the new reliefs as soon as possible.

The second part of the Bill deals with the abuse of the process whereby companies are removed from the register and dissolved. The large majority of company directors are responsible, passionate about their businesses and diligent. They act as effective stewards of the companies to which they are appointed, and I pay tribute to the directors who make such a valuable contribution to our economy and who have fought so hard over the past year to ensure their company’s survival, preserving the jobs and livelihoods of so many within their business and beyond.

Unfortunately there are exceptions, and the business community and the wider public must be protected from those individuals who abuse the privilege of limited liability. Those directors who act recklessly, irresponsibly or even criminally should expect to have to answer for their conduct. That means expecting to have their conduct investigated and, if they had done wrong, facing the possibility of being disqualified from acting as a company director for up to 15 years, depending on the severity of their misconduct. Disqualification protects the public from the actions of those who have demonstrated they are unfit to hold the position of a director of a company, and acts as a deterrent to reckless or culpable behaviour.

Evidence to support disqualification action comes from the investigation of companies and the conduct of their directors. The Secretary of State for Business, Energy and Industrial Strategy may investigate live companies through the powers contained in the Companies Act 1985, and also the conduct of the directors of insolvent companies through similar powers in the Insolvency Act 1986 and the Company Directors Disqualification Act 1986. If such investigations reveal evidence that a director’s conduct has fallen below the standards expected of someone in their position, a period of disqualification can be sought, either through a court application or through an under- taking given by the person to the Secretary of State. A period of disqualification protects the business community and the wider public by preventing the person from acting in the promotion, formation or management of a limited company. Breach of a disqualification order is a criminal offence, and an extremely serious matter.

As things stand, though, there is a loophole in the disqualification regime that some irresponsible directors have been able to exploit. It concerns the situation where a company has been dissolved without entering insolvency proceedings. Dissolution should not be used as an alternative to insolvency proceedings, but there is evidence that some directors have been using the process both as a way of fraudulently dodging the payment of company debts and of avoiding insolvency proceedings and the scrutiny of their behaviour that comes with that.

Non-Domestic Rating (Public Lavatories) Bill

Debate between Baroness Winterton of Doncaster and Luke Hall

2nd reading & 2nd reading: House of Commons
Thursday 16th July 2020 Commons Chamber

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Luke Hall)]

May I start by thanking the Opposition Front-Bench team for the constructive tone with which they approached this important debate? This is a vital Bill and we have heard excellent contributions from Members from across the House about the importance of this issue. I completely agree with those who said that we should be talking about this issue more and not be afraid of talking about the importance of public toilets to people in our community. The Bill recognises that importance, and when the Minister of State, Ministry of Housing, Communities and Local Government, my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), opened this debate he made the point that when we emerge from the lockdown it is going to be more crucial than ever that people have access to appropriate toilet and hand washing facilities. Members from across the House will know from discussions with their own constituents that the provision of appropriate facilities is vital and can make a huge difference to people’s ability to leave their home to go out to see friends and family and to do shopping. That makes a huge difference to people’s quality of life and their mental health, which is a huge part of why this Bill is so important. We have been hugely grateful for the contributions today.

I thank my hon. Friend the Member for St Austell and Newquay (Steve Double) for his tireless work in championing this change. He talked powerfully about the fact that he has been campaigning for it for eight years since he was made the cabinet member at Cornwall Council and that he has taken this to Secretaries of State and Prime Ministers to secure agreement. It has taken his drive, and that of other hon. Members, to push this forward. I also thank him for the points he made about the importance of public toilets to rural and coastal communities, and the tourism industry—he is right to highlight that. Let me also take this opportunity to put on record my thanks to the town and parish councils in Cornwall that he mentioned, because of course we recognise the point he made about the significant costs placed on such councils. He also made an interesting and important point about what more we can do to make sure that money is reaching the right places in town and parish councils. That is exactly why my hon. Friend the Minister of State has made it clear in his communications that money should be being passed down to those councils to manage these important facilities. We are happy to keep speaking to my hon. Friend the Member for St Austell and Newquay as this Bill progresses to see what more can be done to make sure that money is getting to the right places. We have stressed the importance of that time and again, but he is right to raise it in the House again today.

The hon. Member for Bristol West (Thangam Debbonaire), a west of England neighbour of mine, rightly gave a passionate speech about this issue. I have lived in Bristol, and I know we are both aware of the issues associated with the occasional lack of availability, so she is right to address them in the way she has. She made important points about the additional cleaning and covid pressures that can come with running these sorts of public facilities. She asked a number of questions which I hope to address throughout my remarks. She asked whether there was something we could do during the passage of this Bill to check her calculations and work with her to make sure we are bringing forward appropriate information to inform the debate. My colleagues will be happy to work with her to make that happen and look at that throughout the Bill’s passage. We are happy to work with her on that issue.

My hon. Friend the Member for High Peak (Robert Largan) rightly and powerfully talked about the importance of toilets and public facilities needing to be available for all. A number of Members talked about the importance of making sure that toilets are available for all, including those with special access requirements. It is important to note that the Bill will help with that. The 100% relief applies equally to all facilities, including accessible facilities. But of course we want to go further to support increased provision, in particular Changing Places toilets that are fully accessible for those with the most significant needs who may need assistance to use the toilet. Following our consultation last year, we have committed to change building regulations guidance to mandate the provision of Changing Places toilets in new public buildings. We expect that this provision will come into effect in early 2021.

Additionally, at Budget this year, we confirmed that we would be launching a £30 million Changing Places fund, and would be working closely with the Changing Places Consortium, stakeholders and Members of this House to help to accelerate the provision of accessible facilities in existing buildings. My ministerial colleague mentioned the important £2 million investment from the Department for Transport in its inclusive transport strategy and the £2 million made available by the Department of Health and Social Care in order to install over 100 Changing Places toilets in NHS hospitals throughout England. These measures will make a real difference in maintaining the dignity of people with special access requirements when they are away from home.

We also heard points made about the safe reopening of toilets as we come out of lockdown. That is of the utmost importance as we ensure that access to public toilets can happen in a safe way. It is for councils to decide to reopen their facilities as we come out of lockdown, but we have been strongly encouraging them to open public lavatories wherever possible, as has been noted a number of times in the debate. We wrote to local authorities to encourage them to do that. We thank them for their work in making sure that public lavatories can now open in a safe and timely way. We are sincerely grateful for all their work to help to make that happen.

The Opposition asked what extra support is going to be available for public lavatories during covid. I would put on record the extra £3.7 billion that we have supported councils with over the past few months as they deal with a very difficult set of circumstances—reduced income and increasing costs—throughout the course of this pandemic. That was on top of a good local government finance settlement this year, with a 4.4% real-terms rise in core spending power—another £2.9 billion.

The Opposition also highlighted a concern about toilets in other public buildings. They are right to raise that issue. We want to be clear that the relief will apply to properties that are wholly or mainly used as public toilets. In general, it will not apply to toilets within shopping centres, for instance, as was highlighted, or public libraries. We have wanted to target the relief to best support the provision of public lavatories. In particular, we want to support facilities that exist where there are unlikely to be other publicly available toilets or where removing the additional costs of business rates could make a real difference to their ability to stay open. Of course, we are happy to work with the Opposition throughout the course of the Bill’s passage.

This Bill will benefit the public and reduce costs for councils and others that are seeking to ensure facilities can stay open. It has wide-ranging support in this House, and we look forward to working with colleagues as it progresses. I want to put on record my thanks to the businesses, charities and local authorities who have been so important in the management of these facilities. The Bill will support the provision of facilities for those individuals for whom access to toilets is particularly important, whether for health reasons or because of the nature of their work. It complements our wider efforts around the provision of more Changing Places toilets. We are very grateful for all the thoughtful contributions from Members across the House as we look to deliver this vital change for our local authorities. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Non-domestic rating (Public Lavatories) Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Non-Domestic Rating (Public Lavatories) Bill:

Committal

(1) The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee of the whole House, on Consideration and up to and including Third Reading

(2) Proceedings in Committee of the whole House, any proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of proceedings in Committee of the whole House.

(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings in Committee of the whole House.

(4) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, to any proceedings on Consideration or to other proceedings up to and including Third Reading.

Other proceedings

(5) Any other proceedings on the Bill may be programmed.—(David T. C. Davies.)

Question agreed to.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I suspend the House for two minutes.