Retail: Business Rates

Baroness Hanham Excerpts

Tuesday 12th February 2013 Lords Chamber

[Lord Naseby]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I should mention that a member of my family works in the retail trade.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)]

My Lords, our commitment to hold business rate rises to the annual retail prices index cap means that there has been no real-terms increase in business rates since 1990. We have provided and are continuing to provide considerable support on business rates, including temporarily doubling the level of small business rate relief for another year. We have also postponed the revaluation of business premises from 2015 to 2017.

[Lord Naseby]

My Lords, that is a half encouraging answer from my noble friend, but is she fully aware that over 3 million people are employed in the retail trade, and that, equally importantly, at least 1 million of them are young people aged under 25? The situation on the high street in the past 12 to 14 months has been dire. Against that background, surely the time has come for Her Majesty’s Government to review the business rates, as it affects retailers and, frankly, for just one year to freeze those business rates?

[Baroness Hanham]

My Lords, the Government are committed to doing all they can to support the high street and other businesses. As the noble Lord made clear, the employment opportunities there are dire at the moment and we want to boost them as much as we can. The high street is facing challenges such as the rise of internet shopping. That is why the Government are offering practical support such as the Portas-plus package, and, as I said, why they have doubled the small business rate relief. We have also given authorities powers to grant their own discounts, which can be used to support local businesses, including shops.

[Lord Peston]

My Lords, is not the reason why the high street is in such a mess the catastrophic failure of the Government’s economic policy? What is required for the high street to get going is what is required for the whole British economy to get going: first, that the Government stop blaming their predecessor—the economy was certainly in a better state then than it is now—and, secondly, that they engage in an expansionary rather than a contractionary fiscal policy.

[Baroness Hanham]

My Lords, the Government are dealing with the deficit left by the previous Government. I do not think the noble Lord would expect me not to get that crack in one way or another. Whoever and whatever, we have realised that the economic situation is not helping. The Question is about small businesses. We are doing all that we can to help small businesses and to encourage the development of shops and other businesses. We are also very well aware of the essential nature of boosting employment, and we are trying to do that by a number of means.

[Lord Cotter]

What are the Government doing about the situation, which has long applied, whereby small shops proportionately pay a large amount more than supermarkets do in business rates? In proportion, they pay an enormous amount more.

[Baroness Hanham]

My Lords, as the noble Lord knows, business rates are set on the basis of value. That is carried out by the valuation office. We are helping small businesses in every way that we can. I am sure that noble Lords would not discount the fact that many small businesses now are not paying any rates because they have 100% relief. They can also appeal to their local authorities for a further discount.

[Lord Anderson of Swansea]

My Lords, what is very striking about any small town in France is that there are a number of small businesses in the high street. Of course, the supermarkets are grouped outside. Has the Minister considered what lessons we might learn from the French experience?

[Baroness Hanham]

My Lords, business generates itself, and I agree very much with what the noble Lord has said about small individual businesses. In fact, a number of those are being generated at the moment. In all high streets, there are people who are setting off in entrepreneurial ways. I do not think that is something that the Government want to deal with, but we want to ensure that, where we can, we encourage small entrepreneurs to develop their own businesses.

[Lord Skelmersdale]

My Lords, my noble friend the Minister mentioned the competition with the high street from internet shopping. Would she accept that the most successful firms in the high street also have internet sales operations?

[Baroness Hanham]

My Lords, the internet shopping people do in fact contribute to the rates, as they have to pay for the premises they use to store their goods and where they have their offices. As for internet shopping, well, there it is; many people take advantage of it. I am not sure that the Government can do anything about that, or would want to.

[Lord Harris of Haringey]

My Lords, given the importance of London to the nation’s economy as a driver of economic growth, will the Government address the situation in which more than £2 billion that London businesses pay in business rates is redistributed across the rest of the country, rather than ploughed back into economic development in London?

[Baroness Hanham]

My Lords, I have a feeling of déjà vu about this question, which was asked when we were in opposition for exactly the same reasons. The noble Lord probably answered it. The distribution and the way the rates are set are not entirely a matter for the Government. I know that the mayor is making the representations that the noble Lord has made and which have been made for a number of years in both directions.

[Lord Phillips of Sudbury]

Does my noble friend the Minister agree with the very many who say that the greatest problem of our day is in fact the steady breakdown of community life? Does she accept that in that regard independent retailers and service providers in towns contribute a huge amount to the fabric and cohesion of their communities, which the socking great supermarkets do absolutely nothing for?

[Baroness Hanham]

My Lords, I am not going to deny that supermarkets have a major role to play, but I accept, as I did in response to a previous question, that small entrepreneurs and small businesses in the high streets add value not only to the community but to the economy. We do not need shops that are boarded up and shut; we want small businesses to move in. There are plenty of examples of that happening both in London and in the countryside. I think I am right in saying that over 90% of the country’s economy lies on the back of small businesses.