Rating and Valuation

Anneliese Dodds Excerpts

Tuesday 4th February 2020 Commons Chamber

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I am grateful to the Minister for his explanation of the order, and broadly supportive of its contents. It does, however, raise some significant questions about the Government’s continued use of the retail price index as against the consumer prices index, and about their approach to business rate reform and local government funding more widely.

Members will be aware that there has been continued argument about the use of RPI as an inflation indicator, as against CPI and CPIH. RPI was de-designated as a national statistic back in 2013, yet it is still often used in areas such as the regulation of train fares, student loan debt, and many occupational pension schemes. CPI has been adopted in this case, but we have no clear explanation why the use of RPI continues in other areas. The Royal Statistical Society has been highly critical of that approach.

After many years of confusion, the Chancellor has now agreed not to cease the production of RPI statistics, but to slowly align them with CPIH, thus ending the situation of, as The Financial Times put it,

“the Office for National Statistics and UK Statistics Authority publishing a key economy measure every month which they accept is wrong, but doing nothing to improve it.”

That is what has been happening over the past few years. I therefore find it quite revealing that, rather than amending the Local Government Finance Act 1988 through primary legislation to make that change permanent, the Government choose to make it yet again, year on year, through secondary legislation. Is this use of orders, rather than primary legislation to designate the relevant inflation measure, to retain flexibility for the Government, or for some other unexplained reason? Either way, it creates a potentially unstable environment for businesses and local authorities, perhaps up to 2025 or beyond.

We have seen no uprating in the existing thresholds at which discounts on business rates apply. I accept that the retail discount has increased from one third to 50%, and been extended to some additional categories of economic operator. I am probing, through parliamentary questions, what proportion of rateable businesses are actually covered, given the low thresholds at which those discounts apply, especially in areas of high property costs.

The Conservative manifesto said that the Government would go further and fundamentally review the business rate system, so it was disappointing that the Minister said—twice—that this would happen “in due course”. Will he please tell us once when that review will at least begin, and what its scope will be? According to the British Retail Consortium, 2019 was the worst year for retail in 25 years. We need some urgency from the Government in dealing with this issue. We also need to deal with the impact of the business rate system on preventing the investment that is required to ensure environmentally friendly business and manufacturing.

Finally, we need to put rating in the context of the overall local government funding settlement. It was disappointing that the Minister did not talk about that at all, but merely about compensation for this measure in the settlement. All Labour Members realise that the Government are suggesting a real-terms cut to local government. Even worse, the alleged increase they are putting into local government is predicated on all councils increasing council tax by the full amount, which they blatantly will not do—smoke and mirrors yet again. We have seen a concerning trend where funding from local authorities in less affluent areas is stripped back at a far faster rate than it is in more affluent areas. The Government’s laughably named fair funding approach would see almost three-quarters of the so-called red wall seats losing out even further. There is great concern among those in local government that reforms to business rates could make this even worse, with 77% of councils saying that they lack confidence in 100% business rate retention.

I hope the Minister will address these concerns, outline a timetable for the review of business rates, indicate whether that review will include considerations of local government, and, above all, let us know whether we will see an end to the current uncertainties around CPI adoption.

[Madam Deputy Speaker (Dame Rosie Winterton)]

It is with great pleasure that I call Paula Barker to make her maiden speech.