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

Baroness Bowles of Berkhamsted Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 18th January 2021 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I declare my interest as set out in the register as an owner of a small commercial office building from which I ran my business for many years.

There is an inherent unfairness in a tax based on the nature of the property that it is necessary to occupy to conduct a particular type of business rather than based on profitability. Maybe they once marched in step, when retail margins were high and out-of-town and internet selling were not prevalent. Now retail pays 25% of the tax for 10% of gross added value to the economy, and it constitutes 42% of their taxes. These distinctions are broadening further with the expansion of office work from home and more online shopping. If commercial space dwindles, the remainder will inevitably be on the treadmill of ever higher rates to satisfy the tax need. The truth is that the tax base has to be broadened and based on commercial activity and profit. It should be based on known fact, not supposition. I hope the consultation will have that scope.

Why are we sticking with the general design of the present system? It is broken. It does not properly track rents, which are far from the stable or routinely upward rent reviews that were once the story. Added to that background is the ongoing effect of forced closures and staying at home, whether from legislation or from caution. Is that going to be taken into account? Like others, I welcome the rate holiday that has already been given. Will the Government consider further reliefs for the most affected businesses, both in terms of compensation for what they could not do and as a mechanism to aid recovery?

The Non-Domestic Rating (Lists) (No. 2) Bill postpones a review that had been brought forward, which will disappoint many who had been hoping for an earlier lowering of rateable values. Given that the Government are fixed on a delay, I still wonder about the base date for revaluation being April this year, which is likely still to be a time of uncertainty and flux, with relocations out of cities and working from home escalating, shop closures and growing numbers of empty properties of all kinds. How do those empty properties feed into the analysis? Surely their emptiness shows a lack of takers, so how is the market price found?

Unfortunately, delaying a review further would also cause disappointment, but why is it not possible to sample rents for the purpose of adjustment in the same way that a basket of products is monitored for the cost of living? That is a genuine question, as well as perhaps another consultation point. Will the next review be brought forward in sectors or areas where there have been significant changes since April 2021?

Turning to the Bill concerning the removal of rates for stand-alone public lavatories, again I confess to wondering how market rents for public lavatories are assessed, but the measure is welcome. “Stand-alone” means a building that is “wholly or mainly” a public lavatory, so does the Minister have any more guidance about what constitutes “mainly”? What about a combined public lavatory and bus stop? I have seen such an arrangement in car park and rides. Does “mainly” have to mean more than 50% of the footprint of the building, or is it related to purpose? An example given in the Explanatory Memorandum is that lavatories in a public library would not qualify, presumably because the facilities would be provided anyway, even though they also serve those nipping in in passing. What would be the situation if the lavatories were accessed through an independent entrance from the street?

More generally, should not more buildings serve the public need and the owners be recompensed? I can think of other buildings, such as old town halls, that rent out rooms that stay open for the public to access lavatories, even when there are no events. Should those types of facilities be given encouragement to stay open rather than being locked up, which is the usual trend?

I am glad that this Bill is before us, but I hope for more generosity in how it is applied.