Non-Domestic Rating (Preparation for Digital Services) Bill

Bill Wiggin Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Monday 13th May 2019 Commons Chamber

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

What a privilege it is to have this opportunity to close the debate today. I wish that it had been better attended, but it is great to have had a contribution from my right hon. Friend the Member for Wokingham (John Redwood) and some contributions from Labour Members. There was no one here from Change UK or TIG or whatever it is called; it obviously does not care about business rates.

In our debate today, it is important for us to stick rigidly to the scope of the Bill, which sets out how we will empower HMRC to look at digitisation and at how it can modernise and simplify the business rates system. Before the 2016 Budget, the Government held an extensive consultation and set out a commitment to enter on this process. It is a commitment that, following the passage of this Bill, HMRC will then, and only then, be able to progress the necessary design work.

Today’s Bill is an important step towards those reforms, and it will allow HMRC to start to explore some of the digital infrastructure that will link local authority business rates to digital tax accounts. This has been called for by businesses, and it is also being welcomed by them. Today’s Bill is simply the first important step, and it rightly paves the way for further discussions on how the process will proceed. All those discussions will require legislation, which will pass through the House and be subject to the usual scrutiny of the Opposition parties.

Turning to the impact of business rates on businesses, we have heard clarion calls in the press this morning and from the Opposition during this debate for looking into a more wholesale reform of business rates rather than simply digitising them, and it is impossible to have a debate about digitisation without giving cognisance to that point. Let us not forget, however, that we have committed to £13 billion-worth of savings to business over the next five years through the reforms that we have already made to business rates. We have switched the annual indexation from RPI to CPI, which will, over the lifetime of that commitment, save ratepayers and businesses up and down the country some £6 billion. That is £6 billion that will remain in all our local communities and economies for the constituents that we represent. We have also reformed small business rate relief, doubling it to £12,000 and making it automatic, meaning that 650,000 businesses now pay no business rates at all. We have responded to calls from businesses for more frequent revaluations, which will now happen every three years from 2020-21.

Turning to the points raised by my right hon. Friend the Member for Wokingham about business rates and revaluation, it is of course the case, thinking about cash flow and the impact that business rates may have on a business, that it is possible for business rates to go down if rent has gone down and other factors have reduced during the period since the previous revaluation. The last revaluation actually led to a majority of businesses seeing no change or a reduction in their business rates. Over time, that should happen more often with more frequent revaluations from 2021.

[Bill Wiggin (North Herefordshire) (Con)]

I am curious, based on the Minister’s research, about how often businesses ask for a revaluation.

[Jake Berry]

I thank my hon. Friend for that helpful intervention. From speaking to business groups—I regularly consult with the Government’s Future High Streets Forum, and the Department for Business, Energy and Industrial Strategy has the Retail Sector Council—it is clear that they seek more frequent revaluations because that stops bill shocks. I am sure that my hon. Friend knows about bill shocks from people who have visited his advice surgery, and he also runs his own business—[Interruption.] Although I do not think that farms have a big business rates bill, because they do not pay any business rates.

[Bill Wiggin]

However, I get continual complaints about business rates from the landlord at the Moody Cow pub, which is very near my home.

[Jake Berry]

I am sure that those at the Moody Cow will be delighted not just with more frequent revaluations, but with when they can move on to the digitalisation of business rates, which we are discussing today.

People who make the clarion calls for the abolition of, reduction in or some other change to business rates will accept that they are already a key source of funding for local authorities, funding essential services, such as adult social care and children’s services. I note that the hon. Member for City of Durham (Dr Blackman-Woods) did not take the opportunity in the wider context of this debate on business rates to elucidate the Labour party’s policies, but those who seek to reform business rates have an obligation to say how the revenue would be made up.

Many people who talk about business rates reform have at heart concerns about the health of our high streets, which was mentioned by the Opposition Front-Bench spokespeople and which should worry us all. The Government need to find a way of ensuring that high streets continue to thrive as shopping patterns and behaviours change. I cannot remember a period of more rapid change in how we choose to shop. High streets must clearly transition from bricks-led retail to a bricks-and-clicks online and offline model, with experiential leisure at its heart. High street retailers will be delighted that business rates were slashed by a third in the most recent Budget for retailers with a rateable value of under £51,000, and that formed part of our wider high street package.

Madam Deputy Speaker, I do not know whether you are a fan of “Sex and the City”, but Sarah Jessica Parker recently bemused her Instagram followers on a recent visit to London, when she praised Timpson not just for its key-cutting service, but for its extensive selection of umbrellas, labelling the branch in High Street Kensington tube station as her new favourite shop. Timpson is of course a fine retailer, which is why I was delighted that Sir John Timpson worked so closely with the Government on his report on the future of the high street, business rates and retail. Leading directly from his report, the Government created the £675 million future high streets fund to support high streets and enable them to pay their business rates. Although all those reforms have been welcomed, people will continue to call for a more fundamental review of business rates, and the Government will, of course, continue to keep that under review.

The hon. Member for Oldham West and Royton (Jim McMahon) raised a lot of specific questions about how the digitisation of business rates will work. I am sorry to disappoint him, but I am unable to answer any of those questions today because the purpose of the Bill is to give HMRC the statutory power, which it currently does not have, to go away and work up that system. How the system will work cannot become clear until we have empowered HMRC, both on Second Reading and in Committee, to start work on it. That is why it is so important that we agree Second Reading this evening, and it is why it is so welcome that the Opposition Front-Bench team support the Bill.

This important Bill is just the start of our cross-party work to ensure that we create a business rates system fit for the future. Many people who run businesses will now be used to making the majority of their transactions online, whether it be paying their VAT bill, paying their utility bills or making sales and buying stock. If we truly want to create a modern tax system that is supportive and friendly to business, we must all work to create an online taxation system, including for business rates, that small businesses and large businesses alike will find workable and useful in driving productivity and efficiency in their business. That is why I have the pleasure of commending the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Non-domestic Rating (Preparation for Digital Services) Bill (Programme)

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

That the following provisions shall apply to the Non-Domestic Rating (Preparation for Digital Services) 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.—(Rebecca Harris.)

Question agreed to.

Non-domestic Rating (Preparation for Digital Services) Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Non-Domestic Rating (Preparation for Digital Services) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Rebecca Harris.)

Question agreed to.