Business Rates
Debate between Daisy Cooper and Dan Tomlinson(3 days, 19 hours ago)
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Daisy Cooper (St Albans) (LD)
If the Government are serious about saving the high street, then these measures can only be the start. Since the Government’s first Budget, we Liberal Democrats have been warning that high streets were at risk if the Government did not make the various changes that they have made over the past 18 months.
A number of questions arise from today’s statement. There are 11 pubs in my constituency, not all of which could be described as large, that have a rateable value of more than £100,000 because of the ridiculous valuation system, and they will still see their rates bills go up. There will be such pubs across the country, but is it correct that they will get only half of the percentage relief? Pubs can already have 50 temporary event notices a year, so extending that is simply a soundbite solution without a problem.
I am glad that the Government are looking at hotels, but what is the timeframe? The Samuel Ryder hotel in my constituency tells me that its bill is going up by 157% in the first year alone, and it will not be the only such hotel. Will the new formula for hotels be in place in April, or will they be left in limbo?
The statement still offers nothing for the rest of the retail, hospitality and leisure sectors—the restaurants, soft play centres and high street shops that made business, investment and hiring decisions based on the expectation of the full 20p discount. I welcome the announcement of a high street strategy, which we Liberal Democrats will engage constructively with, but will the Minister start now by heeding our calls to direct the Competition and Markets Authority to look at the energy market, which is blocking hospitality businesses and other sectors from getting the best energy deals? Will he also look at our fully funded proposal to slash VAT until April 2027, to give our high streets a boost?
Over the past few weeks and months, getting answers and data from the Government has been like getting blood from a stone. Just 90 minutes ago, I asked the Minister if he would tell us what he knew and when; he said he would, but he has not.
Finally, on the methodology for pubs, the use of fair maintainable trade—turnover—has long had its day, but may I urge the Minister to allow for parliamentary scrutiny? None of the current legislation relating to pubs or business rates allows for any scrutiny in this House or the other place. I asked the Government about the valuation methodology back in July 2024; it was one of my first written questions after the general election, but it has taken 18 months for the Government to listen. Will they please allow this House to scrutinise their plans so that we can get a long-term fix to save our pubs?
Dan Tomlinson
The 15% reduction will apply to all pubs. As the hon. Member knows, there are different caps for pubs depending on their size, but if bills had been frozen, no bill would have fallen next year. Instead, because we have decided to apply the 15% reduction, around 75% of pubs will see their bills either stay the same or fall. I acknowledge what she says about the very largest pubs, but we will still significantly reduce the increase that they would have expected this year. Their bills will then be frozen in full in years two and three of the period before the revaluation review—I am glad that the hon. Member is able to welcome that review. Its results will be implemented for future revaluations.
The hon. Member mentioned temporary event notices. We are trying to implement the recommendations of the licensing review, which was carried out in conjunction with pubs and other businesses in the sector, so although she may think that changes such as these do not touch the sides or make a difference, pubs themselves told us that—in addition to ensuring that we could support them in the right way fiscally—such changes would be welcome. I hope that pubs that are able to make use of them will do so.
The hon. Member also asked about the 20p multiplier. She is right that we legislated for a reduction of up to 20p, but we have to see these things in the balance. The decision to reduce the multiplier by 5p came with a £900 million price tag; reducing it by the full 20p would cost significantly more. Taken in the round, our package of support has a lower tax rate within the system—a lower multiplier—but also steps in with caps to support businesses if they are experiencing increases in their values or having to adjust to the slow unwinding of the pandemic relief.
The hon. Member asked about VAT. All I will say—she will expect this—is that when the Liberal Democrats had the chance in government, they put VAT up; now, they seem to be calling for it to go down.
Finally, on the question of what I knew and when, as the VOA set out, Ministers were provided with details of the increases in the valuations. However, at that time, we did not foresee—I did not foresee—that after the changes in the rateable values that were published at the Budget, pubs and their representative bodies would want to withdraw their support for the independently and previously agreed methodology. Given that and the Government’s judgment that there are issues, to which the hon. Member has referred, we thought it was right to pause, review the methodology and ensure that it is fit for the future for pubs and hotels.
Oral Answers to Questions
Debate between Daisy Cooper and Dan Tomlinson(3 days, 19 hours ago)
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Daisy Cooper (St Albans) (LD)
Thank you, Mr Speaker, and I wish you a speedy recovery.
We know that pubs have been badly hit by these business rates changes, but businesses right across retail, hospitality and leisure have made investment and hiring decisions based on the expectation raised by this Government that they would get a full 20p discount on their business rate multiplier. Those businesses—music venues, restaurants, soft play centres and hotels—are the high street shops that communities most love. Do Ministers accept that anything less than the full 20p discount for retail, hospitality and leisure will leave the three-to-five-year business plans of those high street businesses in total disarray?
Dan Tomlinson
We announced a 5p reduction in the multiplier on top of the 7p or thereabouts reduction that was taking place as a result of the revaluation more broadly. That is a £900 million transfer of underlying rates liability away from the smallest high street businesses towards the online giants and the largest properties. When the Liberal Democrats and the Conservatives had the chance, they kept the tax rates the same. We have introduced significant reform, and we started the work of that reform at the Budget. Of course we will continue our conversations in the months ahead.
Daisy Cooper
Businesses up and down the country know that the Government raised their expectations and then dashed them. This whole sorry saga has been an absolute shambles. The question remains: why were Ministers so blindsided, when the VOA has confirmed that it was providing data drops over a period of 12 months? Will Ministers use the opportunity in 90 minutes’ time to answer all the questions that Opposition MPs have asked and to explain what they knew and when?
Business Rates: Retail, Hospitality and Leisure
Debate between Daisy Cooper and Dan Tomlinson(1 week, 4 days ago)
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Daisy Cooper (St Albans) (LD)
These business rates changes will hammer high streets, and with the jobs tax on top, many businesses have already decided to shut up shop. Getting data out of the Government has been like getting blood from a stone; every question I am about to ask, I have asked before, but let me try again. Why did the Government set the expectation that they would reduce the business rates multiplier by the full 20p discount for retail, hospitality and leisure, and then not use the maximum power that they gave themselves to do that? Do they accept that lots of small businesses have made investment and hiring decisions based on the expectations that this Government set, and will they apologise to those businesses for raising their expectations and then dashing them? Can the Government finally tell us how many business premises have been brought into paying business rates for the first time?
Last Tuesday, we learned that that the Valuation Office Agency had sent the Treasury data drops regularly over the past 12 months. What did Ministers know, and when? The VOA also confirmed that it had told the Treasury that more than 5,000 pubs would see their business rates double, so how is it possible that Ministers did not know that this would happen? Finally, whatever the Government are considering, can they confirm that it will apply to all hospitality businesses and not just pubs, and will they consider our fully costed Liberal Democrat plan for an emergency VAT cut for hospitality?
Dan Tomlinson
On the point about 20p versus 5p, we legislated for a reduction in the multiplier of up to 20p for retail, hospitality and leisure businesses, but that did not set an expectation that we would go that far; it set the bounds within which the Government could choose to operate. As the first step in our significant reform to the business rates system, we chose to reduce the multiplier by 5p, which reduces the total taxes paid by RHL businesses by almost £1 billion and increases the tax take from the largest businesses by an equivalent amount.
The answers to many of the questions that hon. Members ask are very easy to find in the data published by the VOA. Detailed breakdowns of the change in the value of properties between the different revaluation periods are published on the Government’s website. I will not take—I will not say “lectures”—suggestions from Liberal Democrat Members on VAT, given that when they were in power, they and the Conservatives chose to whack up VAT, a decision that pushed up inflation and added to the cost of living for people up and down the country.
Clause 1
Debate between Daisy Cooper and Dan Tomlinson(2 weeks, 4 days ago)
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Daisy Cooper (St Albans) (LD)
I will speak to clauses 1 to 8 and schedules 1 and 2. Overall, the tax changes increase complexity, raise the tax burden on small businesses and savers, and raise the risk of serious unintended consequences on the property market. They all have the hallmarks of a Treasury tax grab without proper the consideration of the broader consequences.
When taken together, clauses 4 to 8 add more complexity, and concerns have been raised by the Chartered Institute of Taxation and the Association of Taxation Technicians, which highlighted that the new property rates add five new income tax rates. They are: the property basic rate of 22%; the property higher rate of 42%; the property additional rate of 47%; the property trust rate of 47%; and the savings trust rate of 47%. Rates will apply differently to investment returns and to savings. Basic and higher dividend rates have been changed, but additional dividend rates have not, and no explanation has been given as to the policy intent behind that. It would be helpful if the Minister could set that out on the record.
The long and short of it is that the Government say that they want to simplify tax, but their tax changes are making things more complicated. The Making Tax Digital forms will need to updated, and more individuals and small businesses will likely make more calls to His Majesty’s Revenue and Customs. Recent research by the House of Commons Library, commissioned by Liberal Democrats including my hon. Friend the Member for Maidenhead (Mr Reynolds), shows that HMRC failed to pick up one in five taxpayer calls over the last decade, with the tax service leaving the best part of a hundred million calls unanswered in the last 10 years. HMRC has failed to pick up 83 million calls from Brits in the last 10 years—6 million in just the last year. That is why we have been calling for a new HMRC hotline dedicated to supporting pensioners. It would help those who are among the likeliest to seek tax information over the phone while freeing up capacity for the tax service to deal with other queries—something that is imminent, given that the tax changes will result in more phone calls.
More broadly, the Federation of Small Businesses said:
“Hikes to dividend tax mean the Government continues to make investing in your own business one of the least tax-friendly things you can do with your money.”
Will the Minister listen to our small businesses, which are suffering under a mounting tax burden, not least from the Government’s business rates bombshell, and finally give them some respite?
With new clause 2, the Liberal Democrats call for a review of the impact of section 7 on rent prices. As many hon. Members have highlighted, the new clause would require the Chancellor of the Exchequer to lay before the House a proper assessment of the impact of the Bill’s tax changes on rent prices. Countless renters across the country will be worried that the higher property income tax will simply get passed on to them, making things even worse during the cost of living crisis. We cannot afford to ignore the unintended consequences of any tax policy.
The new clause would require the Government to update the House on some crucial details about the broader impacts of this measure. What proportion of the tax rise will get passed on to renters, according to the Treasury’s estimates? Which income groups are most likely to be affected by the tax rise? Which parts of the country will bear the brunt of it? I hope the Minister will agree that that information is essential.
Dan Tomlinson
I thank Members across the Committee, particularly those on the Labour Benches, for their contributions today. I believe that other things going on in the Palace today have drawn other Labour Members to Committee Rooms, but I am very glad that my hon. Friend the Member for Loughborough (Dr Sandher) chose to prioritise speaking in this important Finance (No. 2) Bill debate. I thank him for that.
I will respond to the points that have been raised in this all-too-brief debate on this group of important clauses. It is always a pleasure to stand at the Dispatch Box opposite the shadow Financial Secretary, the hon. Member for Grantham and Bourne (Gareth Davies). It was enjoyable to hear a history lesson rather than a selection of poetry or literary references, which I often get when I am opposite the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride). The shadow Financial Secretary noted correctly that income tax was originally introduced as a temporary measure. Running through my mind are the taxes introduced by the 2010-2024 Government that were initially announced as temporary but are still with us—but I will not comment on those, for reasons he may understand.
The shadow Financial Secretary mentioned my constituency, and I thank him for giving me a chance to talk about Chipping Barnet. He questioned what the tax rises are for. I can tell him that in the area that I know best NHS waiting lists are falling for the first time in a very long time, and the number of police officers is increasing after having been cut significantly. We are also opening breakfast clubs in primary schools. Those changes happening in my patch are happening across the country. That investment in our public services has been enabled by the tax changes that this Government have made. We are raising revenue in a sustainable and fair way in order to ensure that we can fund our public services and keep borrowing on a downward trajectory.
The shadow Financial Secretary raised the change landlord income tax—the two percentage point increase. I fully understand, as does he, that there are many reasons why people end up becoming landlords. We want to make sure that the taxation is fair and reasonable, which is why landlords do not pay national insurance in the way that their tenants do, and it is why we have taken steps to reduce—but not close in full—the gap in tax treatment, with the two percentage point increase. Landlords will still typically pay a lower rate of tax than their tenants, but the gap will be reduced following the measures set out today.
The shadow Financial Secretary, and other Members in interventions, mentioned the changes on dividend taxation. The main takeaway from the Office for Budget Responsibility is that it does not expect the changes to dividend taxation announced at the Budget a few short weeks ago to have a significant impact on business investment. Business investment is forecast to continue to grow over the course of the OBR’s five-year forecast horizon.
That is good news, because one thing that we know we need to do in this country is turn around the long-term weakness in investment—by both public and private sector—that has driven our long-term productivity and growth underperformance. That under-investment over the last 30 years is an issue that both major parties—and the Liberal Democrats for their time in the first five years of the coalition Government—should take responsibility for. I believe that in 24 of the last 30 years—that stat may now be one year out of date; I will have to update it for next time—the UK had the lowest rate of investment of any G7 economy. Until we can start to turn that around through higher public and private sector investment, our economy will not be able to fire on all cylinders, as this Government would like it to.
Let me turn to new clauses 2 and 12. New clause 2 would require the Government, within three months of the Act coming into force, to lay before the House of Commons an assessment of the impact of the implementation of section 7 of the Act on rent prices. New clause 12 seeks to require the Government, within six months of the Act coming into force, to publish an assessment of the impact of the changes introduced by sections 6, 7 and 8 on the private rental sector in England, Wales, Scotland and Northern Ireland.
As hon. Members will be aware, the Office for Budget Responsibility engages closely with the Treasury on the potential impacts of policy measures as part of standard Budget processes, and the OBR does not expect that the reform to property income will have a significant impact on rental prices in the forecast horizon. As I said, the economic literature points to rental prices being determined by the balance of supply and demand in the market, not just the cost facing landlords. The housing market proved to be more resilient than expected in 2025, and as interest rates fall further we hope that will reduce costs for landlords, too.
Dan Tomlinson
It is so wonderful to see so many Members on the Opposition Benches wishing to intervene. They were much less forthcoming in my previous closing remarks. I have given way to one Conservative, so I will give way to a Liberal Democrat.
Daisy Cooper
The Minister will have heard a number of colleagues asking for more detail about how the pension provisions will affect pensioners. The Minister has just said that further information is to come. Will he please give us an indication of the date when we can expect that guidance to be published, so that he can then come back and clarify some points?
Dan Tomlinson
That information will be forthcoming in due course.
In conclusion, I hope that Members will see how the amendments that have been tabled are not necessary. We have set out the impact of our tax changes in numerous tax impact and information notes, which Members can read online at their leisure. This Government and I will not let Opposition Members who repeatedly voted to freeze thresholds until 2028 when they were in government to rewrite history. This Labour Government reject the Conservatives’ austerity measures, which got our country and public services into this sorry state. We inherited a mess at the 2024 general election, and the measures we are considering now, and those elsewhere in the Finance Bill, enable us to rebuild our public finances, to fund our public services for the long term and to get borrowing over the course of this Parliament to continue to fall. I therefore, urge the Committee to reject new clauses 3 to 5 and 13 to 15 and to support the inclusion of clauses 9, 10 and 69.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Clause 10
Basic rate limit and personal allowance for tax years 2028-29 to 2030-31
Question put, That the clause stand part of the Bill.
Agricultural Property Relief and Business Property Relief
Debate between Daisy Cooper and Dan Tomlinson(3 weeks, 4 days ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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This information is provided by Parallel Parliament and does not comprise part of the offical record
Daisy Cooper (St Albans) (LD)
Happy new year to you, Mr Speaker, and to House staff and all Members in the Chamber. This policy was a disaster from the get-go. It came with no warning, no consultation and no clue. The Liberal Democrats were the first party to point out the damage it would do to family farms. We have repeatedly and clearly highlighted that it would fail to tackle the loopholes exploited by private equity companies but hammer the family farm, damaging our food security in the process. The changes are welcome, but they do not touch the sides, and they are a clear admission by the Government that they have got it badly wrong.
There is now only one sensible course of action left: to scrap the policy in its entirety. Will the Government now do that? If not, the Liberal Democrats will table amendments to the Finance Bill to bring this measure down. Will the Government allow a free vote so that those on their own Benches who want to vote against the measure are free to do so?
Dan Tomlinson
I am always interested in reading Liberal Democrat amendments, even though none of them will ever get passed in this House—not least on this measure, where we have got to the right position. The changes that will be in the Finance Bill will raise about £300 million. It is a legitimate position for the Liberal Democrats to say they do not wish to raise that revenue and that instead they would borrow more money or cut public spending on services like our NHS. That is not our position. We think that this is a fair and proportionate reform.
Oral Answers to Questions
Debate between Daisy Cooper and Dan Tomlinson(2 months, 3 weeks ago)
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Daisy Cooper (St Albans) (LD)
On Friday I sat with farmers and their families in Brecon and Radnor, and they are desperate. If they are 65 or over, they have no time to plan for the family farm tax, they cannot get insurance, and they will be put in an impossible position if the Government go ahead with the tax unamended. The CenTax report sets out options that could extend extra protection for family farms while rightly raising funds from people who are currently exploiting the tax loopholes in APR. Those farmers asked me to put a question to the Chancellor. They asked, “Can the Chancellor please say precisely which parts of the CenTax report the Government disagree with, and why?”
Dan Tomlinson
I have already answered the question about the CenTax proposals, but it is clear from its analysis that the number of estates that would pay more inheritance tax would be more than double the number contained in the proposals that the Government have put on the table. I understand that changes in inheritance tax are always difficult, but last year the Government had to make the decision to raise more revenue to ensure that we could fund our public services adequately, and this change raises half a billion pounds in a fair way.
Oral Answers to Questions
Debate between Daisy Cooper and Dan Tomlinson(4 months, 3 weeks ago)
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Daisy Cooper (St Albans) (LD)
The jobs tax has hit small businesses the hardest, with statistics from the Office for National Statistics showing that vacancies among small businesses alone have dropped by 18%. This proves that the jobs tax is not only crushing growth but crushing opportunity, especially in hospitality. Have Treasury Ministers commissioned their officials to look at any of the fairer revenue raisers that we Liberal Democrats have put forward—such as taxes on the banks, the tech companies or the gambling companies—in order that the Treasury could scrap the jobs tax at the next Budget?
Dan Tomlinson
When the Liberal Democrats were last in government, they made the decision to whack up VAT on businesses, whereas this Government are doing all we can to reform business rates so that retail, hospitality and leisure industries can get the support that they need from the business rates system. The national insurance changes that were made last year protect the smallest businesses, with many seeing lower business rates or not seeing increases.