Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting)

Deirdre Costigan Excerpts

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Ms Billington]

Q By how much?

Barnaby Lenon: I cannot answer that. We do not know, but I am quite confident that plenty of parents will have found it too difficult.

Simon Nathan: If you look at the number of pupils in independent schools over the last 10 years according to Department for Education data, on the face of it you could say, “Well, there’s 12,000 more,” but that is during a period when the overall school population went up by 800,000. The proportion of pupils educated in independent schools went down from 7% to 6.5%. There has been a proportionate decrease.

[Deirdre Costigan (Ealing Southall) (Lab)]

Q Thank you very much for your evidence. I am a former chair of the governing body of a state school, so this is a really interesting conversation. Mr Woodgate, you mentioned that private schools might need to look at redundancies to absorb the impact of the measure. I understand that the student-teacher ratio in private schools is double that in state schools. It is something like 8.5:1 versus 18:1 in state schools, so there are significantly more teaching staff in private schools. If there were to be redundancies, have you made any assessment of whether the impact would be similar to the impact on state schools?

David Woodgate: Pupil-teacher ratios are increasing anyway. Many schools are much beyond that. That is not a typical pupil-teacher ratio in one of our schools. Many are going up towards 20—the same kind of number that you are talking about in the state sector. Inevitably, if there are redundancies, there will be fewer teachers to go around and they will be teaching more pupils.

[Deirdre Costigan]

Q I was specifically asking for a comparison with the state sector. Do you think that redundancies will have a similar impact, a worse impact, or less of an impact in the private sector than in the state sector?

David Woodgate: Inevitably, if pupil-teacher numbers change, that will have a negative impact.

[Mr Sewards]

Q I understand that the Minister wanted to move on from this, but on your comments about aspirational parents, the simple fact is that all state school parents are aspirational, and in many cases they will never be in a financial position to send their kids to private school. I wanted to give you an opportunity to clarify that. Secondly, given that over 1,000 private schools closed between 2010 and 2024 without much media attention, how many private schools do you estimate will close as a result of the Bill?

David Woodgate: On your second point, we estimate that somewhere between 200 and 250 of our 1,300 schools are vulnerable to closure. They may look at mergers or other options—some might academise, for instance—but that is the kind of figure that we are looking at. I take your point about aspirational parents. We have to ensure that this does not impact on the bursary funding that is available for people from more disadvantaged backgrounds to get a place at one of our schools if they wish to go there. We have to ensure that, as far as possible, given these threats to our income, the funds available for bursaries are maintained.

--- Later in debate ---

[Patrick Spencer (Central Suffolk and North Ipswich) (Con)]

Q The premise of this policy change, as I understand it, is to rebalance fairness back towards local, community-based properties and businesses, which I am in favour of. But can you speak to the impact that the Bill will have on your institutional investors that invest in large warehouse space? What is the importance of that for the UK economy, in terms of supporting our distribution networks and the many businesses that provide goods to our doorstep? What impact will the change of policy have on those businesses?

Rachel Kelly: Our whole economy is interconnected. Those large logistics and distribution warehouses that you talk about will be servicing parts of our retail sector as well. I am sure there will be loads of impacts of this measure that are impossible to predict at this point, but ultimately, increasing the tax rate further makes investment in property harder, and it will make the occupation of property more expensive. Other than that, it is good that the whole economy is shouldering the burden of the higher tax rate, and we would not want that to be intensified further so that individual sectors are solely bearing that burden; I do not think that would be right or sustainable. Ultimately, the higher tax rate will make the tax system less competitive and the occupation of property more expensive.

[Deirdre Costigan]

Q You said at the outset, Rachel, that you wanted the tax system to be more responsive. Would you not agree that rebalancing the tax system in this way is being responsive to those empty shops on the high street, and to the feeling among small businesses and hospitality that it is the online distributors that are not playing on a level playing field and are getting away with being able to undercut them because the tax system currently does not work? The legislation will give us the responsiveness we need to level that up.

Rachel Kelly: Yes and no. Ultimately, if you take a step back, business rates are a tax on the occupation of property, and they are levied on the basis of the value of that property. If you occupy a more valuable property, you will pay more tax. The business rate system is working as the policy intended in that respect.

In terms of making it fairer, the best thing you can do is value property more frequently. Retail rents have been falling for the last 10 or 15 years. In the decade from 2010 to 2020, rents came down 30%, but business rates did not for that sector. Rents are negotiable—rents do respond—but it is business rates that do not. If valuations had kept up with rents, retail would have been paying much less, much earlier, and other sectors that had been growing would have been paying more much more quickly. To my mind, the best way to introduce fairness into the system is to value properties more frequently.

[The Chair]

That is the end of this session.

--- Later in debate ---

[The Chair]

We have eight minutes left, five people still to speak, and a vote is due any second now.

[Deirdre Costigan]

Q Thank you, Minister. I know you are a former local government leader. I want to ask about local councils and what support there will be to ensure that they can administer the Bill and help to support rebalancing the high street in a way that I know all local authorities want.

Jim McMahon: Again, there is a wider context. It is about ending the cap-in-hand bidding process, through which the previous Government aligned councils, one by one, getting them to compete with each other for a very restricted pot of money to support local high street improvements. In the end, we must provide a fairer way of funding local councils, which has to be based on need. I will be careful again not to get ahead of next week’s provisional settlement, but measures will be very clear in there about the intent and the direction of travel. In the end, it is about making sure that councils have the resources they need to ensure that wherever a council is—outside of the bidding war that we saw previously—they have the resources to intervene on the high street.

Resource is part of that, but the powers are also important. The community right to buy, the asset register and having a proper period to be able to self-organise are part of that. The measure is about making sure that when businesses are open and they are operating, they are sustainable businesses because their tax burden from business rates is fair and equitable.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Deirdre Costigan Excerpts

Report stage
Wednesday 15th January 2025 Commons Chamber

[Deirdre Costigan (Ealing Southall) (Lab)]

Thank you for allowing me to take part in this debate, Madam Deputy Speaker. Having been a member of the Bill Committee—my first Bill Committee in this place—I appreciate being able to contribute on Report in the Chamber.

Southall town centre is well known the world over as a great place to shop for an Asian wedding, with stunning lehengas, saris and sherwani on sale all down the Broadway, King Street and South Road. During the election campaign, I vividly recall seeing two clothes shop workers eating their lunchtime rotis behind the counter. When I commented that business must be good, they both said no. They said that a few years ago, they would never have had time for lunch, and would have worked right up until closing as they were so busy. They told me that they were suffering from being undercut by online retailers because they were paying through the nose for business rates, facing blitz robberies with no police around to respond, and constantly having to chase bigger businesses for payments.

It is ironic that the previous Government have suddenly decided they back local businesses after 14 years of ignoring their pleas. In fact, the only businesses they supported were the rail companies that could not run the trains, the water companies that could not keep our water clean, and, of course, the private sector mates they handed out dodgy covid contracts to. Indeed, the former Prime Minister and former Member for Uxbridge and South Ruislip, Boris Johnson, reportedly used a four-letter word beginning with f when making it clear how little he cared about business.

In contrast, this Labour Government are backing local businesses. We are already ensuring that suppliers pay small businesses within 30 days, and we are cracking down on retail crime, too. The Bill will deliver on our promise to ensure a fairer system of business rates that will help brick and mortar shops like those in Southall to compete with online companies. Finally, we will have a permanently rebalanced system that will stop local shops being undercut and stop the slow death of our high streets and town centres.

New clauses 1 to 3 and amendment 9 are all things that are already happening. We are already publishing a review of these measures as part of next year’s Budget, and there is already discretion for local authorities to look at the higher multiplier rate. Amendments 1 to 6 would add manufacturing to the Bill, which would, in my belief, dilute its effect. We have already prioritised manufacturing as part of the Budget, investing £3 billion into aerospace, automotive and the life sciences industries. We make no apologies for using this Bill to prioritise town centres.

Amendments 7, 8 and 10 all seek to either dilute or delay the changes in the Bill. The Bill already exempts all private schools that are wholly or mainly focused on educating children with special educational needs—that is already in the Bill. We know, however, that 93% of children in this country go to state schools. Politics is about priorities. Just as we are prioritising town centres in the Bill, we are also prioritising those 93% of children. Unless the Conservatives think it is okay to have children in state schools taught maths and science by unqualified teachers, they need to say where they would get the money from otherwise.

Although the Bill is about a fairer system of business rates that will help local businesses, many on the Opposition Benches have raised the issue of employer national insurance. Some 93% of businesses in Ealing Southall are microbusinesses. Most of those businesses will either pay less employer national insurance or the same as they currently pay. Some businesses will pay more national insurance, but that is because the previous Government ran up a massive £22 billion credit card bill making rash promises they did not even attempt to keep, while running public services into the ground. When the final demand letters started coming, they hid them in the back of a drawer and pretended everything was fine. Employer national insurance increases for some businesses will help us to pay for the triple lock on pensions, thousands of extra hip and knee operations, and more police on our streets. Again, unless the Conservatives think it is okay to reduce pensions in real terms, let waiting lists go up and up and give our streets over to criminals, they need to say where they would get the money from.

Before Christmas, I met the brewer Heineken at its pub the Star and Scorpion in west Ealing. Labour has already taken a penny off a pint in the Budget and our decision in the Bill to permanently lower business rates for retail and hospitality businesses will help to further protect local pubs like the Star and Scorpion. Without the Bill, the bars and restaurants of west Ealing and Hanwell would be facing a cliff edge in April, with big increases in their business rates as the sticking-plaster solution that the previous Government came up with ends. The Bill both extends temporary reductions in business rates for high street businesses and introduces a new permanent scheme that will level the playing field between the high street and the internet.

The one tax that the Opposition do not mention is the 10p crime tax: 10p added to every shopping basket due to the impact of shoplifting. The Tories did absolutely nothing about that, but this is a Tory tax that Labour is getting rid of. We are investing in neighbourhood policing, scrapping the Tory shoplifter charter that allowed thefts under £200 not to be investigated, and bringing in a new offence of assaulting a shopworker.

The Conservatives had 14 years to help out local businesses like those in Ealing Southall. Instead, they trashed our economy, destroyed public services and stifled business growth. The Labour Government are clearing up their mess. Through this Bill, we are ensuring fairer business rates for shops, restaurants and bars on Ealing Southall’s high streets.

[Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)]

I, too, served on the Public Bill Committee and would like to put on record my thanks to all the witnesses who attended and gave evidence.

The Bill shines a light on how politics is about choices. At the general election, we promised a Labour Government that would make different choices: choices rooted in fairness and a commitment to levelling the playing field. Today, the Bill is a powerful example of how we are going to deliver on that promise. This is a Bill about the politics of equity. It is about ensuring that everyone—from small business owners to schoolchildren in Wolverhampton North East—has a fairer chance to succeed. For too long, the scales have been tipped in favour of the largest corporations, online giants and private schools, while businesses and state schools have been left to shoulder an unfair burden. The Bill changes that. We are delivering a permanent reduction in business rates for the hard-working small businesses that are the backbone of Wolverhampton North East. My constituency does not include a city centre, but it does contain plenty of brilliant small businesses: fantastic cafés, restaurants, beauty and hair salons, a micropub, larger pub chains and family-run shops. These businesses are the heart of our community.

For years, high streets have been forced to compete unfairly with massive online retailers and retail parks, but the Bill will ensure that the largest online retailers, supermarket chains and distribution warehouses finally pay a fairer share. Small businesses in Wolverhampton and Willenhall will now see permanent lower business rates, freeing up resources to invest in their workforce, improve security and grow. As Paul Gerrard of the Co-op has pointed out, this reform will strengthen the viability of small shops, ensuring that they can continue to provide jobs, beef up security, and uphold their community-centred values. The Association of Convenience Stores has said that these changes will save small stores money that can be used directly to hire more staff, install new CCTV, and invest in the future.

The Bill is, however, not just about businesses; it is about fairness in education. Private school fees have risen by about 55% in real terms over the last 20 years, while state schools’ funding has largely flatlined. State schools and academies are paying business rates right now while private schools enjoy business rates tax breaks, and that is simply unfair. This is the reality. Almost 50% of private school students achieved top GCSE grades this summer, compared with just 20% in state schools. Sports facilities in state schools are crumbling, with fixtures cancelled owing to a lack of minibuses or drivers. Private schools have more swimming pools than all the state schools, further education colleges and higher education institutions put together. Just 35% of children from low-income families can swim 25 metres unaided, compared with 82% from affluent families.

The Bill removes those unfair tax breaks for private schools and reinvests every single penny directly in state schools. That funding will recruit more specialist teachers, provide breakfast clubs in primary schools, and give schools the resources that they need to unlock every child’s potential regardless of their family’s wealth. This is the politics of equity in action. I will continue to support strong, vibrant high streets, brilliant schools, and a fairer future for all.