Non-Domestic Rating (Multipliers and Private Schools) Bill (changed to Non-Domestic Rating (Multipliers) Bill)

Caroline Nokes Excerpts

Consideration of Lords amendments
Tuesday 25th March 2025 Commons Chamber

[Jim McMahon]

We welcome scrutiny through amendments and the insight that the other place can provide, just as we welcomed scrutiny in the evidence sessions and Committee sittings; it adds value. We need to be honest: it is natural for Members to want to widen the scope of legislation during its passage, and to include more. In Government, we have to deal with the art of the possible, which means balancing a number of competing interests, not least the impact on taxpayers in the round. The Bill is targeted at those who need it the most—communities and local economies—and it is fully funded to ensure that it is sustainable. We cannot draw the legislation so wide that it does not stand the test of time and does not cover its own cost. That would not be responsible, and certainly would not be sustainable.

Lords amendment 14 would require the Government to implement the recommendations of the review. Given that we do not know what those recommendations would be, I trust the House will understand that we cannot accept an amendment to accept them blindly in advance.

Finally, Lords amendment 15 and consequential Lords amendments 17 to 19 would strike from the Bill the clause that removes charitable rate relief from private schools that are charities. We are unable to accept these Lords amendments. This Government made a manifesto commitment to raise school standards for every child, break down barriers to opportunity and ensure that every child has the best start in life, no matter where they come from or their financial background. Achieving our ambition involves meeting our commitment to removing the VAT and business rates charitable relief tax breaks for private schools; the approach and design of this policy has been carefully considered in the light of that. The measures are necessary in order to raise the revenue to deliver on the Government’s commitment to education and young people, and to improve the state sector, where—let us be clear—90% of children are educated. This Government are prepared to take the tough but necessary decisions to deliver on those bold commitments, so, as with all the other amendments brought here from the other place, I cannot accept these Lords amendments. I hope that the rest of the House follows suit.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Secretary of State.

[Kevin Hollinrake]

I thank the Minister for his explanation of the Lords amendments. We shall not agree, and I will explain why. I thank the Lords for their careful consideration of the Bill; in particular, I thank the noble Lord Jamieson and the noble Baroness Scott for their scrutiny and amendments.

The legislation comes at a critical time for businesses. The partial withdrawal of retail hospitality and leisure relief—a policy choice by this Government—is hitting businesses hard. The average pub is more than £5,000 worse off as a result of the Minister’s choices. That, together with the Government’s trash-talking of the economy, the £25 billion annual tax rise for businesses by means of the rise in employers’ national insurance, and the prospect of the job-destroying Employment Rights Bill, has led directly to a massive reduction in business confidence. According to the Institute of Directors, business confidence, which stood at a high of plus 5 in July last year, has collapsed to a covid-level low of minus 65.

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[Mark Sewards]

The Bill is designed specifically to revive our high streets. The hon. Gentleman will remember, because his party was in government at the time, that our high streets were struggling and suffocating, and it is incumbent on this new Government to revive them. That is why it is so important for us to pass the Bill today. [Interruption.] The hon. Gentleman mentioned manufacturing, and his hon. Friend the Member for Broadland and Fakenham (Jerome Mayhew) chirps from a sedentary position—[Interruption.] I mean “chunters”. I think it important to recognise that the Government are supporting manufacturing too. There are other mechanisms for doing that, but the Bill we are pursuing today, and passing today, is all about supporting our high streets, and I am very proud to support it.

Queen Street is in Morley, in the centre of my constituency. You are welcome to visit it any time, Madam Deputy Speaker. There is a lot on offer, almost of all of which comes directly from small businesses. The Lords amendments to which I have referred do not prioritise them; nor do they prioritise the smaller parades of shops in Farnley, Drighlington, Gildersome and Wortley, and they do nothing for the shops and businesses in Ardsley, Tingley, Robin Hood and Lofthouse. That is why I cannot support them. I back the businesses in Morley high street, along with all the other small businesses that I represent.

Lords amendments 15,17,18 and 19 would, in effect, reintroduce the tax break for private schools. We have had this argument about private schools at the general election, in the House, in Bill Committees and again today, but as a former maths teacher at a state school in Leeds, I am more than happy to cover old ground to reinforce my own argument. The proposed amendments seek to remove an integral part of the Bill that generates the revenue that we need to support our plans in government. I will make no apologies for supporting the 94% of children who attend state schools. We all—and I include everyone in the House—want children to have the best opportunities in life, with the highest-quality teaching and schools to match. It should be a basic function of the state to provide well-funded, excellent state school places for all students, whether their parents choose to take advantage of that or not.

On the Labour Benches, as we have proven over recent months, we are prepared to take the action necessary to ensure that all children can access through the state the education they deserve. The £70 million raised by the measure in the Bill, alongside the other revenue-raising measures we have taken in the Budget, will result and do result in a real-terms increase in per pupil funding for the 94% who attend our state schools. I am very proud to support that. We will never make any apologies for properly funding state schools by ending the tax breaks that were previously enjoyed by private institutions. That is why I will not be voting for the amendments.

To conclude, I am pleased to support the Bill in its current, unamended form. I will support our high streets. It will give confidence to small businesses and it will give state schools the funding they desperately need.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Munira Wilson (Twickenham) (LD)]

I, too, begin by putting on record my thanks to the noble Lords in the other place for all their work on the Bill, in particular those on the Liberal Democrat Benches: Baroness Pinnock, Lord Shipley and Lord Fox.

Business rates reform is long overdue and, while we welcome the proposal to permanently reduce business rates for retail, hospitality and leisure, in the meantime many businesses across my constituency, and indeed the country, are reeling as they see the impact of the reduction in rates relief in bills landing on their doormats. I have heard from a number of businesses just in the past few days. I am really concerned about pubs, restaurants and cafés in my constituency who are wondering how, with the national insurance rise and the reduction in rates relief, they will continue.

The Liberal Democrats would like to see a fundamental overhaul of the business rates system, not just the sticking-plaster solutions proposed in the Bill that tinker around the edges. As I said, lower business rates for retail, hospitality and leisure are a step in the right direction, but there are countless small businesses outside those sectors that need their tax burden reduced too, for example manufacturing businesses. We tabled amendments on Report to improve the Bill and to ensure it gave consideration to whether there should be provision for manufacturing facilities, which can be big and built on expensive land but sometimes produce relatively low-value goods. Lords amendment 4 sought to do the same, whereby manufacturing premises would also pay new lower business rates under the Bill. Without that, light engineering and printers, among other businesses in our town centres’ mixed economies, could be priced out.

A recent report by Barclays bank concluded that the words “made in Britain” were worth an additional £3.5 billion to UK exporters, so it is important that something is done to support the manufacturing sector. We have learnt the hard way in recent years, with the pandemic and wars, that we need to be much more self-sufficient as a country, yet there has been a big drop in confidence in the sector since autumn, with an increase in manufacturers’ costs and orders in general reported to be smaller in size. That comes on top of the additional Brexit red tape that those businesses have to contend with to export. Therefore, we support retaining this amendment in the Bill.

As I have said, we want fundamental reform of business rates so we can boost small businesses and our high streets. We tabled an amendment on Report to require a review of the impact of the Bill on businesses, high streets and economic growth, so we support retaining Lords amendment 13, which would require the Secretary of State to review the impact of the Bill on businesses whose rateable value is close to £500,000 and so will be caught by the new higher business rates.

Turning to our NHS, yet again we see the Government giving with one hand and taking with the other. As with national insurance contributions, so with the business rates changes: there are unintended but significant consequences for our health service. Lords amendment 1 sought to exclude hospitals and other healthcare settings from paying new higher business rates for properties with a rateable of £500,000 or more. Without the amendment, 290 local hospitals will be caught by the rates, an unacceptable new burden when the NHS is already struggling. As my noble Friend Baroness Pinnock pointed out in the other place, without the amendment the likes of Great Ormond Street hospital for children will have an additional burden of £600,000 per year on business rates alone, the John Radcliffe hospital in Oxford has a potential business rates increase from £3.4 million to £4.1 million, and the Hull Royal Infirmary could see its bill rising from £1.8 million to £2.1 million. Those are typical figures for hospitals across the country. I do not believe it is the Government’s intention to reduce hospitals’ abilities to drive down their waiting lists, yet that is exactly what the impact of these changes and the consequent higher charges will be, so we support the amendment.

The Bill also levies a tax on education by removing the business rates exemption for private schools that are charities, a measure that will be compounded by the Government’s move to levy VAT on private school fees and the increase to employers’ national insurance contributions. As I have said many times since the general election—and indeed before—the Liberal Democrats are opposed, in principle, to the taxation of education, as it is a public good. We strongly support and champion parents’ right to choose, on which both those tax measures are an assault.

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[Munira Wilson]

I thank the hon. Member for his intervention. Where we can make common cause is over the absolute mess in which the Conservatives left both our public services and our economy. I have no quibble in agreeing with him on that point. We Liberal Democrats set out a whole series of tax measures—actually we were the only party that was not afraid to put forward revenue-raising measures—but his Government are choosing not to accept any of them. They included taxing our big tech giants that are ruining the mental health of our children and young people—[Interruption.] Yes, in fact, they are planning to slash that tax altogether. We also suggested reversing the tax cuts that the Conservatives gave to the big banks, so that we can continue putting free school meals on the table for children, which, again, his Government are thinking of cutting. Then we suggested reforming capital gains tax—

[Madam Deputy Speaker (Caroline Nokes)]

Order. I remind the hon. Lady that we are in fact debating Lords amendment 1 and the Government motion to disagree.

[Munira Wilson]

I apologise, Madam Deputy Speaker. I was simply seeking to address the hon. Member’s point. I am coming in to land now.

Time and again we see Government policy at odds with their stated objectives. They want to tackle NHS waiting lists but then slap business rates on to large hospitals and put national insurance rises on to our GPs, hospices and social care providers. They claim to drive growth but then slap business rates on to much-needed manufacturing and put a cliff edge on small businesses in our town centres. They want to extend opportunity to all but then go after charitable independent schools that are serving their wider communities—not to mention punishing parents who dare to make that choice for their children.

Amid some good intentions, the Government have lost their way in parts of the Bill. I implore Ministers to genuinely consider the amendments before them in order to support our hospitals and allow businesses up and down our country to grow and flourish.

Question put, That this House disagrees with Lords amendment 1.

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A Division was called.

[Madam Deputy Speaker (Caroline Nokes)]

Division off.

Question agreed to.

Lords amendment 4 accordingly disagreed to.

Lords amendments 5 to 12 disagreed to.

After Clause 4

Review: threshold effect

Motion made, and Question put, That this House disagrees with Lords amendment 13.—(Jim McMahon.)