Non-Domestic Rating (Lists) (No. 2) Bill

Duncan Baker Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution & Ways and Means resolution: House of Commons
Wednesday 30th September 2020 Commons Chamber

[Duncan Baker (North Norfolk) (Con)]

This is a sensible Bill, given the pandemic, and one that I fully support. Basing revaluations on property values at 1 April 2021 rather than 1 April 2019 reflects far better the impact of covid-19 on property values and those businesses that pay business rates. I am pleased that the Government have listened, in order to end the uncertainty, and that the revaluation date for non-domestic rates will now not be until 1 April 2023. It is also right to say on record that the package of measures to help those businesses that pay business rates has probably been one of the best in the world, with almost £10 billion in rates relief throughout the pandemic. I know that many in my constituency, which has a particularly high number of leisure, hospitality and retail businesses, are extremely appreciative.

However, while the Bill might not attract the same level of interest as what is coming later today, I want to draw attention to what the Royal Institution of Chartered Surveyors has had to say about it. Since the last revaluation to date, RICS has called constantly for measures that offer improved certainty, consistency and stability. As has been echoed today, rather than tinkering around the edges, we should commit to a full reform of business rates.

That cuts to the crux of what I wish to talk about briefly—business rates and retailing in particular. Approximately £8 billion in business rates is collected by the Treasury from the high street, but in just months this pandemic has changed many of those businesses forever. Coupled with declining footfall in city centres especially, and the acceleration of shoppers buying online, we now have to think about the bigger picture—rather than just delaying a rates revaluation, reform is very much needed.

I welcome entirely the Chancellor’s efforts to increase the business rates retail discount to 100%, which we have seen. It has been a lifeline for so many, as I mentioned. What happens next, however, is really critical. Traditional business rates are an enormous burden to many who are already seeing footfall decline and much tougher trading conditions. For those on the high street in particular, the rates and rent burdens are often the largest fixed cost base for them to contend with, so we now need to think about new, innovative ways to help the high street. In my view, a fundamental overhaul of business rates is altogether part and parcel of what we need to see.

Business rates must be not just responsive to economic conditions, but fit for purpose in a retailing landscape that is structurally changing in an extremely fast manner. Simply, if our high streets continue to deteriorate at the current rate, businesses will cease to trade, with far-reaching adverse implications for, literally, millions of employers, employees and suppliers connected to and dependent on this sector.

High streets provide many more benefits than purely economic ones. They provide a community, and I think we all agree that in this pandemic community is one of the most robust things to come together. Many towns and cities are shaped by an identity stemming from the vibrancy of their high streets. That is why, as the high street changes, business rates as a blunt cost for occupying a unit need to adapt as well. If we get that right and we reduce the cost base of paying rates—at the moment, we take it for granted that rates are part and parcel of operating from a traditional bricks-and-mortar store—we will be able to put the high street on a more equal footing and to encourage high streets to adapt and flourish as technological shifts change.

Flexible rent schemes—why not even flexible rate schemes? —encouragement of pop-up shops to help vacant space before signing leases, and support for smaller retailers who perhaps started online but want a physical presence must all be ideas that we nurture, support and back. We must look at business rates reform and the success of the high street in tandem, bearing in mind a couple of facts before I end.

Last July, the proportion of shops that were empty reached over 10%, the highest level since January 2015. All the indications that we read show that high street footfall is declining at an accelerating rate from 2% year after year. More worryingly, post covid, many consumers have got used to shopping online. That is being exacerbated as people desert our high streets and in particular our city centres. Recent news showed that, pre-pandemic, £1 in every £5 was spent online; during the pandemic, that rose to £1 in every £3. I implore that we use this opportunity to look at business rates in conjunction with how we support our high streets into the future. Never before has reform needed to come far sooner than perhaps we all expected.