Non-Domestic Rating (Multipliers and Private Schools) Bill

Charlie Maynard Excerpts

Monday 25th November 2024 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House observes that the Autumn Budget 2024 has cut central Government funding for retail, hospitality and leisure business rate relief in 2025-26, and that this Government funding will end completely in 2026-27; expresses concern that the Non-Domestic Rating (Multipliers and Private Schools) Bill represents a stealth increase in business rates on high streets and the hospitality sector, as well as on larger businesses, on top of the Government’s increases in National Insurance contributions; regrets the lack of a proper cumulative impact assessment on the effect on business; notes that the removal of charitable rate relief on independent schools, taken together with the imposition of VAT, will mean fewer children going to private schools and will therefore create extra pressure on state schools, will undermine aspiration and parental choice, and mean larger class sizes in state schools and increased costs for taxpayers; and therefore declines to give a Second Reading to the Non-Domestic Rating (Multipliers and Private Schools) Bill.”

It is a privilege to speak in this debate on behalf of His Majesty’s Opposition. The Conservative party has a proud record of supporting businesses on the high street. We cut business rates to support small businesses, including doubling small business rates relief from £6,000 up to £15,000, and almost trebling higher rate relief from £18,000 to £51,000. We increased the frequency of business rate revaluations, making our business rates system fairer for businesses and more responsive to local economic trends, helping businesses to invest, create jobs and grow.

The contrast with this business-bashing Labour Government could not be greater. They have brought forward a mass of new red tape for business by means of the Employment Rights Bill. I note that the Regulatory Policy Committee released its commentary today on the impact assessment, which it said is “not fit for purpose”. It says that the annual costs to businesses could be much higher than £5 billion, and the impact assessment has received a red rating.

The Government have also imposed huge new tax increases on businesses. The worst thing is that they were not even man enough to tell businesses that they were going to do it—quite the opposite—which is why, as much as the Minister says that businesses have confidence in his plans, the Institute of Directors has said that it has seen the biggest one-month fall in investment confidence in its history. The Confederation of British Industry said today that 50% of its members will reduce headcount, and two thirds are scaling back hiring. Is that the kind of growth that he imagined he would bring forward with his legislation?

Infamously, the Labour party promised in its manifesto not to raise national insurance. Next week, we will have the Second Reading of a Bill that reneges completely on that promise by raising employer’s national insurance contributions by £24 billion a year. Labour has also hit business through the family farms tax, and our best family businesses in other sectors by halving business property relief. I remind the Minister that family businesses employ 13.8 million people in this country and pay over £200 billion every year in taxes. The Government are killing the geese that lay the golden eggs.

In its manifesto, the Labour party promised to

“replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants”.

In a speech to the House on 12 May 2022, the Deputy Prime Minister said:

“We would scrap business rates to help our high streets flourish.”—[Official Report, 12 May 2022; Vol. 714, c. 300.]

The Treasury Minister himself also stated his party’s intention to “scrap business rates” to the House on 25 October 2023. The Bill before us breaks those promises because it does not “replace” or “scrap” the business rates system. Not only that, but as a result of the Bill and the measures in the Budget, business rates are actually going up, both for online companies and businesses on our local high streets—yet more broken promises from a Government of broken promises.

Maybe the Government do not realise exactly what they are doing, perhaps because members of their Cabinet have no experience of starting and running a business. Shamefully, there has been no consultation with businesses about the changes. True to form, the Government have not published a full regulatory impact assessment alongside the Bill on the changes to business rates multipliers. It is a discourtesy to the House and to our constituents for the Government to refuse to consult with businesses, consider the impact their policies will have or publish the information that would allow Members of the House to scrutinise the plans properly. Instead, they are using their majority to ram through the half-baked damaging measures in the Bill.

[Charlie Maynard (Witney) (LD)]

I find it more than ludicrous to hear the Tories lecturing Labour about red tape. What the Tories have served up to the country through Brexit and the damage they have done to our economy is a disaster. To hear them masquerading as—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Only interventions relevant to the speech in hand should be made. There is no need for that performance.

--- Later in debate ---

[Charlie Maynard (Witney) (LD)]

The Liberal Democrats would like to see a much more fundamental reform of business rates. Although there are promises of further steps, it is disappointing that our new Government, with such a large majority, are not being more ambitious now.

Our high streets will remain in deep trouble. The retail, hospitality and leisure sector will now have only 40% relief instead of 75%, but sectors such as manufacturing, which is having such a difficult time adjusting to a post-Brexit world, will get zero relief. National insurance contributions will be greatly increased, with taxes having to be paid before a business even makes a profit.

On top of that, we all know that our high streets—such as Witney’s beautiful high street, as seen in The Times today—are being eaten alive by online retail. We need to do much more to level the playing field between online and offline retail, but this adjustment is a very, very blunt instrument for doing so. We need to be much more precise about going after big tech and taxing it appropriately.

There are a few steps that we would like to see. A commercial landowner levy that taxes just the land value of commercial sites, not productive investment, has worked very effectively in Australia, Denmark and Estonia. A land value tax is much more effective at capturing the publicly created uplifts in land value, rather than leaving it to landowners to pocket them, sometimes with enormous gains. This is largely how our Victorian forebears built our railway network, and it is how countries around the world, ranging from Japan and Korea to much of northern Europe, fund new transport links—something that we want to do between Oxford and Witney.

Scrapping stamp duties on commercial land would make our market in land simpler and more efficient. Switching the tax to the owner rather than the tenant would spare 500,000 small and medium-sized enterprises the admin burden of property taxation and would save money and time in collecting the tax. Ending the exemptions on empty and derelict premises would incentivise action rather than inaction.

We very much hope that the new Government will follow through on their promises to take further substantial steps. After all, they have the votes.