Non-Domestic Rating (Multipliers and Private Schools) Bill

Adam Thompson Excerpts

Report stage
Wednesday 15th January 2025 Commons Chamber

[Vikki Slade]

I completely agree with my hon. Friend. One problem is the same law of unintended consequences that we have seen with things like the national insurance increase—which, as we repeat over and over again, is impacting small businesses, hospices, doctors’ surgeries and things like that—when quite understandably, an attempt is made to raise funds from elsewhere.

I want to share the views of Anthony Woodhouse, the chair of Hall and Woodhouse brewery and pub chain, founded and based in Dorset but with a branch just across the way from this place—unfortunately, I am not able to be at its event in Portcullis House because of the timing of today’s debate. Anthony told me that the revaluing of property when a huge amount of money has just been invested to make it fit for a changing market, and before you have even had a chance to benefit from that market, is completely crazy and discourages business investment. As such, it is important that as we look to reform business rates, we examine that issue as well.

Despite our failure to do that, businesses such as Anthony’s are responding to the market. Pubs such as the Olive Branch in Wimborne and the Old Granary on Wareham quay are now places where muddy boots, children and dogs are welcome, and where they sell as many cups of coffee as pints of local beer. The high street needs to morph as businesses have—to be ready and willing to change—but while business rate reform rightly starts with the high street, it is important that it does not end there.

As such, I turn to our amendments 1 to 6, which would add manufacturing businesses to the lower multiplier. The UK has a rich history of manufacturing excellence, and Barclays’ “Made in Britain” report found that a product being made in Britain held an important influence over consumers’ decision to purchase it, with customers perceiving such products to be high quality, reliable and internationally respected. The “made in Britain” tag was found to be worth an addition £3.5 billion a year to our UK exporters, which is why we believe that the lower multiplier should also apply to manufacturing businesses. We need to give those businesses a shot in the arm to ensure they can compete on the world stage. The threats by incoming President Trump to put tariffs on UK products, our continued isolation from our neighbours through an inadequate Brexit deal, and the rapid growth of economies such as China and India represent a real threat to local manufacturing.

Poole Bay Holdings, based in my constituency, stands ready to produce its innovative Koolpak here in the UK. Anybody who has children will know the brand Koolpak—it is that ice pack that is not even ice—and that business has been modifying its equipment so that it can make the product here, in Dorset, to compete with China. It stands ready to drive up those sales. Recognition of such businesses through a lower multiplier, or at least the potential to include them in a lower multiplier if the market becomes more tricky, is the intent behind our amendments.

Turning to amendments 7 and 8, which stand in the name of the shadow Minister, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), the Liberal Democrats simply do not believe in the taxation of education. Alongside the changes to VAT, the removal of the special status for schools is really disappointing. Therefore, those amendments—which seek to recognise the value of schools for children whose needs are difficult to meet elsewhere, whether those are special educational needs and disabilities or whether people are choosing to educate in a faith school—seem reasonable.

In summary, this Bill is a fair start, and some businesses will feel it is better than the abyss that might otherwise have been. However, the Government could and should have taken different decisions to protect businesses that will face additional costs in just a few weeks’ time. We are often asked how we would pay for it; I welcome that discussion, as there were many proposals in our manifesto, from taxing big banks to asking gambling companies to pay their fair share. On behalf of the Liberal Democrats, I recognise that the Government have worked quickly to bring this Bill forward, but the risks of losing businesses en route to something better are just too great. We need proper reform, so that the businesses of the mid-21st century can weather the storms ahead.

[Adam Thompson (Erewash) (Lab)]

I am grateful for the opportunity to speak again on this Bill, having been part of the scrutiny process in Committee.

The Committee heard representations from a wide variety of experts in related fields, and I was heartened by the news that many experts felt that this Bill would have a positive impact on 98% of the retail stores that make up our communities. In particular, small convenience stores such as the local Co-op or the great British corner shop will see great benefits to their capacity to support staffing, security and other operational functions. Our incredible independent shopkeepers, such as those who populate the high streets of Ilkeston and Long Eaton in my constituency, will have more funds to take on additional staff, improve their security set-ups and gain long-term confidence in their ability to serve our community. These measures represent a simple, common-sense approach to rebalancing the scales in favour of local retailers and away from the online giants, and increasing taxes on the biggest players while relieving the burden on local retailers.

[Daisy Cooper]

The hon. Member may have heard my earlier intervention. He is absolutely right, and I agree with him wholeheartedly, that we have to shift the burden away from small businesses on to big online retailers. However, that could be undermined if all we do is shift the burden on to the big chains. House of Commons Library research says that small independent businesses are going to end up subsidising the big chains. Does he share my concern that this could be an unintended consequence and that the Government must look at it?

[Adam Thompson]

I refer to Hansard for the discussions we had in Committee, but that did not come through in the evidence we heard. However, I respect the fact that the hon. Member has made that point, and I thank her for doing so.

As we heard from the hon. Member for Mid Dorset and North Poole (Vikki Slade), another sector to benefit significantly from these measures is our local pubs. The fine folk frequenting the Sawley Junction in Long Eaton or the Bulls Head in Breaston in my constituency can rest easy that their locals are in safe hands. More generally, the measures we are bringing forward will reduce the tax burden on the hospitality sector, which is considered by many to be overtaxed. I am very glad that the Government have been able to offer something positive to the sector, which has been broadly forgotten for many years.

Some of the Bill’s opponents have suggested that the removal of charitable relief from non-domestic rates for private schools will have a negative impact on the parents of privately educated children, so I was strongly heartened to hear from one of our experts during the scrutiny process in Committee. Professor Francis Greene, professor of work and education economics at the University College London institute of education, noted that this Bill will have a “marginal” effect on the education sector, and that the policy was fair and would generally not have a great deal of impact on the proportion of children in private schools, which has remained broadly constant over the past 20 years, despite a cash-terms doubling in fees.

[Damian Hinds (East Hampshire) (Con)]

Would the hon. Gentleman like to reflect on what he has just said, which is that the proportion of children going to private schools has stayed constant? Even the Government’s own analysis does not say that. It says that the number has stayed broadly constant, and in fact the proportion has come down.

[Adam Thompson]

If I am incorrect, I stand corrected. My understanding from speaking to the experts is that the proportion has remained broadly consistent, but my apologies if that is incorrect. I thank the right hon. Member for his intervention.

The Committee stage reaffirmed what many of us on the Government Benches already knew, which is that this Bill represents a common-sense modification of our tax policy that will support local small businesses. The Bill represents a core pillar of this Government’s goal to rebalance the scales away from large online giants in favour of local independents and towards the 94% of children educated in the state sector. I know that traders and families in Ilkeston, Long Eaton and the surrounding villages in my constituency will broadly benefit from these measures, and I am proud to support this Bill through its remaining stages unamended.

[Sarah Bool (South Northamptonshire) (Con)]

I intend to confine my remarks to two specific amendments—amendments 3 and 10, on private schools and special educational needs and disabilities—that would delay the introduction of this tax hike so schools have more time to plan financially.

Schools in my constituency have been punished by a series of tax rises since this Labour Government took office in July. By adding VAT to private school fees, and now by ending their charitable business rate relief status, Labour is attacking aspiration. These tax hikes will not hurt the wealthiest. It is the people who have scrimped and saved to send their children to a school of their choice who will be hit the worst. Labour seems to believe people should not have a choice over where they send their child to school, as is evident in their similarly misguided Children’s Wellbeing and Schools Bill, which is making its way through this place.

Schools will close because of this tax hike, and I know this because it is happening in my constituency of South Northamptonshire. Carrdus school, founded in 1957, survived the cold war, the winter of discontent, the global financial crisis and three Labour Governments, yet it could not withstand the tax onslaught from this Chancellor and it will close its doors at the end of the summer term. That will mean 120 pupils flooding back into the state system, which is already struggling with capacity issues, at a huge cost to the taxpayer.

--- Later in debate ---

[Adam Thompson]

Will the hon. Member reflect on my comments a few moments ago about how the expert suggested that the Bill would have a marginal, negligible impact on the education sector?