Business Rates
Geoffrey Clifton-Brown Excerpts(5 years, 1 month ago)
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Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am very grateful to you, Madam Deputy Speaker, and Mr Speaker for affording me this opportunity to have a long dilation on the subject of business rates. I am under no illusion: I do not think my popularity is why so many people are present. It is all to do with the popularity of and the worry about business rates and their effect on our high streets up and down the country. I am sure Members will have an infinite number of examples of how their high streets have been disadvantaged by the impact of business rates.
Bill Wiggin (North Herefordshire) (Con)
My hon. Friend has misled the House, although unwittingly. He is very popular; it is his natural humbleness and modesty that prevails upon us today. In Ledbury, which has one of the finest high streets in Christendom, there are only two shops that are part of the chains that can be seen on ordinary high streets, yet the shops in my constituency, like those everywhere else, are under tremendous pressure. More and more of them are becoming charity shops. Although none of us has anything against that, it is surely a sign of a deep unhealthiness in our high streets.
Sir Geoffrey Clifton-Brown
Ledbury comes second in Christendom after Cirencester, which is beaten by no high street town in this country. My hon. Friend is right, of course. The 80% rate relief that charitable shops get encourages a large number of them. I have a substantial number in Cirencester, although they are in the secondary streets, rather than the main square. I can perhaps beat Ledbury, in that I had only one major chain in my constituency. It was the House of Fraser, and it has recently gone bust, so as far as I know, I have no major high street chain in my constituency.
Sir Peter Bottomley (Worthing West) (Con)
However modest we may be about each other, it is the popularity of both the subject and of my hon. Friend that has drawn the crowd. In addition to shops, will he talk a bit about the rating imposition on automatic cash machines? Cash machines are needed in many places where the banks have gone, and if the rates go up on them, we will start losing them as well.
Sir Geoffrey Clifton-Brown
My hon. Friend reads my mind. A long way further in my speech, I have a little section on ATMs. ATMs and public loos get a good allowance under the rating system, so I will be talking about that.
Ms Nadine Dorries (Mid Bedfordshire) (Con)
I am sure that my hon. Friend remembers well that a long time ago—1997—I used to live in his constituency. In fact, we worked on his election campaign together. At the time, the Cotswolds constituency was booming with pubs and businesses. The high streets in Chipping Campden and other villages were doing incredibly well, but what we now see as a result in his constituency, which I had the pleasure of visiting recently, is that there has been a churn in businesses, because many of the small and medium-sized businesses, due to the high rates and high rents on the properties in his beautiful constituency, find it incredibly difficult to sustain the costs of both high rent and high business rates. This problem is found not just in his constituency but across the UK, due to the high rateable value of properties. Does he agree that we need complete reform of the business rating system?
Sir Geoffrey Clifton-Brown
I well remember meeting my hon. Friend for the first time in the Eight Bells pub in 1997, when we were both a little younger—[Interruption.] She says, in parentheses from a sedentary position, “better looking”—I was not going to say that in case I came within the bounds of the code, which I think might well touch on the sort of remark that I might make. Nevertheless, I wholly concur with her sedentary remark.
Craig Mackinlay (South Thanet) (Con)
I put on record that I have been trying to take action for a number of years to exempt public conveniences from business rates. Especially in respect of the towns in my constituency—Ramsgate, Broadstairs and Cliftonville are tourist areas—I have always said that public loos are often the first thing that people use and the last thing that they remember, and they should be thus exempted.
Sir Geoffrey Clifton-Brown
I am sure that the tourists in my constituency will be greatly relieved to hear what my hon. Friend has to say. In my constituency, which is very dependent on tourism, I have been having a big battle with the local council to keep public conveniences open, because it is really important. If someone comes for a day’s outing to the Cotswolds or goes to my hon. Friend’s constituency, they cannot last all day. They need somewhere to go, and I was delighted when the Government gave that sort of relief.
Sir Geoffrey Clifton-Brown
Oh my God, I have got competition. I will give way to the hon. Lady first.
Rachael Maskell
I am very grateful to the hon. Gentleman. We have debated business rates on numerous occasions, because York, which is known for its retail offer, currently has about 50 empty properties. Does he agree that the business rates system is broken and that we need to move forward to a turnover tax or a profit-related tax, thereby enabling a much fairer system to be in place?
Sir Geoffrey Clifton-Brown
I am particularly pleased to see the hon. Lady in the Chamber today, because she was one of the very few people who were present when I held my Adjournment debate on this subject on 8 October last year. If memory serves me—I am sure that she will correct me if I am wrong—I think that on that occasion, she told the House that there were 24 empty shops in York. If it has gone up to over 50 now, that demonstrates a deteriorating situation. If I have the figures right— she is smiling so perhaps she would like to give the House correct figures for last year compared with now, if she knows them, but if not, I have them here and I will look them up at some time during the speech—clearly business rates are having a deleterious effect on the high street. I will come to that in my speech.
Mr Jim Cunningham
The hon. Gentleman and I came into the House together, so we know each other quite well. To be frank, we have had many debates about rates in general terms, whether they were about the poll tax or business tax and so on, and quite frankly, it is about time—I agree with the hon. Member for Mid Bedfordshire (Ms Dorries)—that there was an inquiry to have a good look at the whole system of funding local government in this country. What is happening now is that a lot of local government expenditure, because of the reduction in Government grants to local authorities, has been shoved under business rates. As I said about 18 months ago, we cannot go on like this. Something has to give and we have to look at that properly.
Sir Geoffrey Clifton-Brown
I agree with the hon. Gentleman. He is quite right: we have known each other and been friends for a long time, and he has had a long interest in this subject. I will certainly come on to the subject of wholesale reform of the business rating system. Indeed, the British Hospitality Association, which I will refer to later, is calling for a royal commission to look into wholesale reform of the rates. Indeed, it was a manifesto commitment of my party, but the party seems to have gone cold on wholesale reform of the business rates system, for reasons to do with protecting the £30 billion of revenue it raises, as I will refer to in a moment.
Steve Brine (Winchester) (Con)
As the manifesto seems to be very popular this week, I will read from it. We said:
“we will also conduct a full review of the business rates system to make sure it is up to date for a world in which people increasingly shop online”.
The pretty market town of Alresford in my constituency has a chocolate box row of shops that includes a beautiful bookshop, but people increasingly tell me they use it to look, view and try, and then go online to buy the books. It is totally untrue that the Government have not done anything to help with businesses rates—we have supported those affected by the revaluation, introduced the discretionary rates scheme and said we will introduce more regular revaluations—and the very good Minister, who is in his place, has done a lot. That said, it is probably time to consider a more structural change away from just property—I understand why the Treasury likes property taxes—to a more transaction-based tax, which might help bookstores such as the one I referred to in Alresford.
Sir Geoffrey Clifton-Brown
I am grateful to my hon. Friend for that thoughtful intervention, and I want to reassure him and the Minister that I have not called this debate to criticise the Government. I called it to come up with some helpful and positive suggestions for how we might reform system, wholesale or otherwise, while bearing it in mind that we need to raise that £30 billion. Clearly, the Treasury cannot afford any reduction in that amount.
Sir Desmond Swayne (New Forest West) (Con)
Is the fundamental problem one of the taxation system or the nature of retail and our changing tastes? In my view, the rating system does not help—it sets high streets at a disadvantage—but fundamentally people have changed the way they shop, and retail has to respond with a better offer and experience.
Sir Geoffrey Clifton-Brown
I agree with my right hon. Friend, and I have a section in my speech about the changing circumstances of big online companies vis-à-vis the rating system.
Several hon. Members rose—
Sir Geoffrey Clifton-Brown
I will get a little further in my speech and then accept a few more interventions. If I can make some progress, hon. Members might see where I am coming from.
The Red Book says that the amount collected by the business rates in 2019 is about £30.9 billion, but even this simple proposition is clouded by how much the Government have to provide for a loss on appeals, which alters the uniform business rates multiplier to allow rates under legislation to rise by at least RPI every year. Whatever happens to appeals, rates or reliefs, the Minister and his Department have to make up that £30.9 billion elsewhere.
I come now to the kernel of what I want to say today, and this in part addresses the interventions from hon. Friends. The OECD revenue statistics database makes it perfectly clear that the UK tops the league of taxation on immovable property both as a percentage of taxation and as a percentage of GDP by some margin. The UK paid 9% of rateable taxation in 2016. Our nearest rival, France, paid 7%; Germany just 1%; and Luxembourg barely a quarter. This must be a major reason why manufacturing business is not as competitive as in our nearest European rivals.
To shore up this £30.9 billion of revenue, the Treasury has had to increase the complex array of reliefs and allowances to compensate for some of the most damaging consequences of the tax, so in every Budget more or less, one sees a new allowance or relief to mitigate some of the worst effects of the tax. As the hon. Member for York Central (Rachael Maskell) has already done, I refer the House to my previous debate on this subject on 9 October 2018, when, as reported at column 117, my right hon. Friend the Minister listed some of these many reliefs.
We were all pleased when, in his Budget on 29 October last year, the Chancellor recognised that many small retail businesses were struggling to cope. I am sure that Members throughout the Chamber can give examples of businesses that are struggling to cope with the high fixed costs of business rates.
Alex Chalk
Nurseries in Cheltenham provide a vital public service for parents, enabling them to go to work, but they are marginal businesses, and it is very hard for them to make money. Circus Day Nursery has written to me saying that it is struggling with the impact of business rates, and that the Government’s great intentions to allow local dispensations to be provided by councils are not being pursued in practice. Has my hon. Friend any views on the impact of business rates on the viability of the local nurseries that are so vital to our communities?
Sir Geoffrey Clifton-Brown
I do have a view, as it happens. Later in my speech I shall be dealing with discretionary hardship relief from local authorities. Some of that could go towards my hon. Friend’s struggling nurseries, but the problem is that cash-strapped authorities are reluctant to give any discretionary reliefs at all. When we reach a point at which rates retention is one of the only sources of income for the small borough and district councils, they will be even less willing to provide hardship relief.
Several hon. Members rose—
Sir Geoffrey Clifton-Brown
My goodness! My golly! Actually, I think that my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) was first.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Before the hon. Member for Faversham and Mid Kent intervenes, I must make two points. First, I think it important for the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) to be allowed to finish responding to one intervention before being interrupted by another. Secondly, I know that it is very tempting to look at the Member who has intervened, but it is a good idea to face in this direction because of the microphones. Obviously, no one would want to miss a word of the debate.
Helen Whately (Faversham and Mid Kent) (Con)
The reason for my enthusiasm about intervening at that particular juncture was my wish to raise a point that is remarkably similar to—if not the same as—the point raised by my hon. Friend the Member for Cheltenham (Alex Chalk). A couple of weeks ago I visited a nursery in my constituency whose staff told me about exactly the same problem. Business rates are a huge challenge to its success as a business, but it provides a very important service for local parents—especially mums, but also dads. Regulations require them to have a certain amount of floor space, so they are hit pretty hard by business rates. I am keen to hear the section of my hon. Friend’s speech that deals with possible cases for extra support, and I hope that nurseries will be considered in that regard.
Sir Geoffrey Clifton-Brown
I do apologise, Madam Deputy Speaker, for not facing you. Of course I should like to face you all the time, but my hon. Friends have been tempting me in the other direction. I will try not to be tempted again.
My hon. Friend is absolutely right. The problem for nurseries is partly a business rates problem, but it is also connected with the pledge in our manifesto to grant free nursery spaces for an extra number of hours. That means employing extra staff, which the nurseries are finding hard to do. Nurseries—and I visit some in my constituency—are facing difficulties of all sorts. We must help them where we can. I am sure that my right hon. Friend the Minister has heard my hon. Friend’s intervention; perhaps he will say that we can help in some way.
Mr Jones
I thank my hon. Friend. I now cannot remember what I was going to say. [Laughter.]
My hon. Friend has identified the high street as an important aspect of business rates. In the last few years, the saviours of many high streets have been casual dining and high-quality bars and restaurants, and in many places the rateable values are so high—above £100,000 in many cases—that none of those businesses has benefited from the generous allowances and discretionary reliefs provided by the Government. Does my hon. Friend agree that we need to ensure that we do not kill the goose that laid the golden egg?
Sir Geoffrey Clifton-Brown
My hon. Friend has touched on another subject with which I shall be dealing later. He will know that the British Beer and Pub Association has made specific recommendations on pubs. Suffice it to say that in all our constituencies, the hospitality industry is one of the few very bright lights on the high street. The numerous restaurants, bed and breakfasts and hotels are the one thing that is keeping most of our high streets going.
I welcome very much my right hon. Friend the Chancellor’s statement in his Budget that small retailers in England with a rateable value below £51,000 will get a third discount on their bills. I know that that will have been a great deal of help to a lot of small businesses in this country, and a lot of small businesses in my constituency have told me how grateful they are for that relief. I congratulate the Treasury on that.
Robert Courts (Witney) (Con)
My hon. Friend has been very generous in giving way. I entirely commend the Government for the package of business rates relief that has been given, although I recognise, as he does, the pressures that high streets are under with the business rates system. I also would be interested in a thorough reform of that system. Does he agree that, in the meantime, there are many things that local authorities can be doing to drive footfall and to help the high street? I am thinking particularly of West Oxfordshire District Council —his neighbouring authority, of course. The two adjoining local authorities work closely together. They have a flagship policy of free car parking, which has done a great deal to drive footfall and to help the high streets, particularly of Witney and Chipping Norton, where we have a plethora of great independent shops. In many ways, those high streets are thriving. Does my hon. Friend agree that local authorities such as West Oxfordshire should be commended for that, and that we could see that practice spread throughout the country, which would help the high street?
Sir Geoffrey Clifton-Brown
I totally agree with my neighbour’s intervention. His towns are much the same as mine; they are small market towns with a lot of independent retailers. He is right that anything that our local district councils can do to encourage those local independent retailers is helpful. In Cirencester, for example, they have a scheme whereby parking is free after 3 o’clock —just the sort of time when perhaps the high street was beginning to slow down—to encourage more people to come in later in the afternoon to do their shopping. That is precisely the sort of intervention that a local authority can make to help struggling retailers in our constituencies.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
The hon. Gentleman is not without friends on the Opposition side of the House. He knows my constituency well because he pursues sporting interests in it, and his aunt and uncle—very nice people—are constituents of mine. He knows from his sporting interests that one must give the gillie a tip. If I may draw the hon. Gentleman’s attention to his future remarks about ATMs, the distance between ATMs militates against easy access. Where I come from, it is necessary to travel a very long way indeed to get to a cash machine. I would suggest that that is not at all good for the local businesses.
Sir Geoffrey Clifton-Brown
The hon. Gentleman has been a friend of mine for many years, and my family and his have been friends for even longer, so I do know his area very well indeed, especially his family town of Tain. It is a relatively recent phenomenon that the Valuation Office Agency has started rating ATMs. There is a particular quirk in the system: if an ATM is situated inside a bank or a post office, it is not rated, but if it is situated on the wall of the bank or post office, it is rated.
The hon. Gentleman and others—particularly in Scotland, because of the distances that they have to travel—have had numerous debates on bank closures, which may result in the removal of the one ATM in town. I am sure that a factor in the banks’ decision in closing those ATMs must be that they are now rated, whereas hitherto they were not. Perhaps my right hon. Friend the Chancellor might look at that, particularly for all market towns. Up and down my constituency, all my market towns have lost ATMs in the last few years, and in some of those market towns only the post office still has an ATM facility. Now even the post office in some of those market towns is coming under threat. That is becoming a real problem for my constituents—particularly constituents with businesses who need to withdraw cash.
Mr Marcus Jones
Many ATMs are in petrol station forecourts and convenience stores. Many of those places are situated in some of the most deprived communities, and as a result of the business rate levied on those machines, quite often they are put in those stores on the basis that people have to pay to withdraw their cash. People who withdraw £10 or £20 quite often end up paying £1.50 or £2.50 to get their money. Would it not be helpful if the business rates on ATMs could be looked at, so that, hopefully, more people could access their money without paying an exorbitant charge?
Sir Geoffrey Clifton-Brown
I entirely agree with my hon. Friend, and I am sure that my right hon. Friend the Minister will have heard the plea from those of us who represent rural areas, where the one or two ATMs in our market towns play a very significant part.
Bob Stewart (Beckenham) (Con)
Does my hon. Friend have any idea of the logic behind an ATM on the outside wall of a bank having to pay business rates when those that are inside do not? It beats me! Perhaps there is a reason, but I do not understand what it would be.
Sir Geoffrey Clifton-Brown
I understand that there are two reasons. The first is that the Valuation Office Agency can get away with saying that an ATM on the outside of the building is, in the jargon, a different hereditament from the main building on which it sits. The second argument that is given in the official explanation is that ATMs are often not run by the same company as the building on which they sit, and that as it is a different company, it can be rated as such. Those are the official explanations, but I am sure that my right hon. Friend the Minister, who is far more expert in these matters than I am, will be able to give us a better one.
Returning to the £51,000 and the question of discretionary relief as opposed to allowances, the Minister knows that this is the core of my speech. It was the core of my speech last October, and it is the core of my speech today. This £51,000 is still a discretionary relief. While the majority of local councils have now pledged to provide the resources for their local businesses to benefit from this change, there are some that, regrettably, have not been forthcoming with their support of this measure, either by delaying their decision to implement it or by putting systems in place that require businesses to apply for the relief, firmly putting the onus on businesses to take time out from their day job to claim back money that is rightfully theirs. That means that businesses in those areas are being disadvantaged.
Of course this still does not resolve the complexity, and I believe that simplicity is always the key. We all know that small businesses are under increasing and unfair pressure from out-of-town retail parks and online retailers, and I am sure that Members here tonight will have lots of examples of that. For example, for every £1 in business rates that our small high street operators are taxed, the big online and out-of-town retailers pay significantly less, averaging around 16p. We can immediately see the competitive disadvantage for high street retailers, compared with the large out-of-town retailers and big online organisations.
Rebecca Pow (Taunton Deane) (Con)
My hon. Friend is making a powerful case. There is an area that has been left out of the discretionary discount, and I wonder whether he agrees that the Government ought to look again at the guidance on this. I am talking about grass-roots music venues. We have lots of them on our high streets. This was raised with me by the Creative Innovation Centre in Taunton. These are places where many of our young musicians find their feet; it is how Ed Sheeran started, for example. They also generate money for the local economy, and I believe that they ought to be classed with pubs when it comes to the discount because they also serve food and drink. I believe that a special case should be made for them. It would cost only £1 million over two years in money “lost” to the Treasury, but it would generate so much more for the economy if they could be included in these discretionary rates.
Sir Geoffrey Clifton-Brown
My hon. Friend has made yet another good case for a completely different class of business to have this relief. We can see the complexity of the rates system, and it is probably a good idea that we should have a royal commission to look into business rates in their entirety, as the British Beer and Pub Association and the British Hospitality Association are calling for, to see how they can be made to work better.
Rebecca Pow
I forgot to say that a lot of information about this arose as a result of the inquiry by the Select Committee on Digital, Culture, Media and Sport into the UK live music industry, as it was one of the things that was highlighted. It is stifling our young talent coming through the chain.
Sir Geoffrey Clifton-Brown
I am all for anything that encourages our young talent to come through the chain, as my hon. Friend puts it. One of the great strengths of this country, as I meant to say when I opened this debate, is the 5.7 small and medium-sized businesses in this country, especially the 0.5 million new businesses that have been formed in the past five years or so. They are all capitalists risking their capital, many of them with a mortgage on their house to support their business. They work hard, and they succeed, and hopefully those small businesses will become medium-sized or large businesses.
All Governments of all colours have always been tempted to impose more taxation and bureaucracy on those small and medium-sized businesses, because they are easy targets and they do not move. What we should be doing is the reverse—making it easier for them to exist and make profits.
Sarah Newton (Truro and Falmouth) (Con)
I am pleased that my hon. Friend was able to secure this debate. He is making a really powerful case on the importance of small businesses in our communities. Is it not interesting that there are no Opposition Members here at all, while Government Members, even as the House is about to adjourn, are standing up for small businesses? As Conservatives, we are the party for small businesses. I very much commend my hon. Friend’s recommendation that we look in the round at what we can do to simplify taxation on small businesses. That is really important, but as we do so, I have noticed something positive about business rate retention. Local authorities are now working far more constructively with small businesses, so that that income raised in that community flows to them. Local authorities have to be concerned about small businesses, whereas in the past, when they got cheques from central Government they were not so focused on them. In the new scheme, let us think about the link between local authority funding and small businesses.
Sir Geoffrey Clifton-Brown
My hon. Friend, along with most of my hon. Friends, if not every single Member who is in the Chamber, is passionate about defending small businesses. I can see that she is shortly going to make a speech to support her small businesses—perhaps very shortly; I cannot possibly foretell.
Bob Stewart
As a small factual correction, when my hon. Friend said “5.7 small and medium-sized businesses” he meant 5.7 million. That is a small point, and I know it was a slip of the lip.
Sir Geoffrey Clifton-Brown
Indeed it was a slip of a lip. The figure of 5.7 million small and medium-sized businesses is terrific, and shows the entrepreneurialism in this country, which is why our economy is doing so well and why we have such full employment at present.
Priti Patel (Witham) (Con)
I commend my hon. Friend on the debate, which is incredibly wide ranging. I should like to touch on wholesale reform of business rates. The Government have done an awful lot of good work to give discretionary rate relief and to support SMEs in constituencies and towns such as Witham. Does he not agree that wholesale rate reform could be the gateway or avenue to get local authorities in particular to invest in town centre development strategies that could help to grow the base of small business and achieve a much more sustainable local economy that meets local needs as well as helping entrepreneurs and small businesses in towns such as Witham and places across the Witham constituency, and the country, to continue to invest and develop?
Sir Geoffrey Clifton-Brown
I entirely agree with my right hon. Friend. We have to be far more innovative, as the world is changing. The digital world is foisting change on us, whether we like it or not, and our local councils and our local people have to be far more innovative and entrepreneurial. That is why I welcome the system that the Treasury has brought in, which will allow local authorities to keep a bigger proportion of the rates of new businesses, as opposed to existing businesses, to encourage them to do precisely the sort of scheme she mentions.
Ms Dorries
I am grateful to my hon. Friend for giving way to me a second time. He is incredibly generous.
On innovation, Flitwick high street in my constituency could not be more different from Chipping Campden high street in my hon. Friend’s constituency. Given the housing crisis and housing shortage, it may be that not all high streets can survive and that we need to do something innovative with them.
On a humorous note, my hon. Friend mentioned that we met in 1997 in the Eight Bells pub on Chipping Campden high street. For 21 years he laboured under the impression that I was trying to chat him up, and I had to disabuse him of that notion only recently.
Sir Geoffrey Clifton-Brown
I had better not comment on that publicly for fear it might lead me down the wrong business rates avenue.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
My hon. Friend has spoken about the high street and perhaps, in some respects, the high street may need to change from being entirely retail to a place where people can meet and be entertained. One issue limiting such change is that many small business premises on our high streets are owned by self-invested personal pension schemes. As such, they need to remain commercial property to remain in those pension schemes. Will my hon. Friend or the Minister comment on whether properties that change from commercial to residential, in line with a slightly shrinking high street, may be able to stay within those pension schemes for a period so that such change is not hampered by the SIPP rules?
Sir Geoffrey Clifton-Brown
My hon. Friend makes a very good point, and I am sure it has been heard by the Minister. I am being urged to hurry up as I have taken an awfully long time, so I will not take too many more interventions.
The rates on Amazon’s nine distribution centres have fallen by an average of 1.3% and ASOS has seen its bill fall by 0.8% because, although Amazon owns 20 million square feet of warehousing from which to supply customers, it does not have to occupy premium premises on the high street to get the footfall that a high street retailer needs. This provides those large businesses with an automatic advantage, making it easier for them to slash prices while maintaining a profitable margin. I have already demonstrated how they pay much lower business rates per square foot.
Although the Government have introduced a diverted profits tax and a new digital services tax, which will raise £400 million, I do not believe some of these very large digital platforms are actually paying the just amount of tax on their turnover in this country that a British business would pay.
I have previously mentioned that the British Independent Retailers Association has long advocated changing the current threshold or discretionary relief to an allowance—the difference being that one is discretionary and an allowance is automatic—which would cut red tape for both local and national Government. It could be applied at source, as opposed to being dependent on the local council, reducing the need for the £3.7 billion spend on mandatory and discretionary allowances and reducing the Government’s current compliance cost for processing small business rate relief claims. I have already explained the difficulties with different councils applying different criteria.
Paradoxically, unknown to me at the time of my debate on 8 October 2018, the Minister had answered my written question, 176219, the day before, in which he said:
“The Government is committed to considering the feasibility of replacing small business rate relief with a business rates allowance”.
So the Government had actually conceded the point for small businesses, once the local authority and HMRC systems are linked in line with our planned digitisation of business rates. I would be grateful if my right hon. Friend the Financial Secretary updated the House on where we have got on the matter.
Sir Geoffrey Clifton-Brown
I want to make a little more progress.
The Government want to make tax digital, citing that they will be
“transforming tax administration so that it is more effective, more efficient”.
Would it not be worth investigating how tax could become truly joined up by ensuring that an allowance would be applied automatically, maybe at the point at which the Valuation Office Agency makes a valuation of a property? If it comes up to £51,000, that would automatically trigger the allowance that a business would be able to get, and it would simply be deducted from its bill. What a great simplification of government that would be.
There is a precedent for this, of course. Income tax has a personal allowance for all but the top 5% of earners, and that is automated. I am advocating the same principle for rates. I believe that this policy could get cross-party support. After all, the Housing, Communities and Local Government Committee’s report, “High streets and town centres in 2030”, recommended
“that the complexity surrounding rate reliefs and the administrative burden they create for retailers should be addressed”
and simplified. All this needs is joined-up thinking and a plan of action to allow the Treasury to adapt the current operational systems for the benefit of businesses up and down the country.
Madam Deputy Speaker, I am grateful to you for allowing me to speak about this important subject at length. I hope that, as a result of my speech, we will see some action from the Government to ensure that business rates are reformed.
The Financial Secretary to the Treasury (Mel Stride)
We have had a very good debate on the extremely important matter of business rates. I will reiterate right at the start that this Government want to see taxes as low as possible. We have made a number of advances in that respect, as the House will know, in areas such as income tax and corporation tax. Equally, we want the burden of rates on businesses up and down the country to be as low as possible. For that reason, as several right hon. and hon. Members have highlighted, we doubled the small business rates relief, from £6,000 to £12,000 as a rateable value threshold, taking 655,000 businesses out of business rates altogether.
We also switched from the retail prices index to the consumer prices index for the uprating of the multiplier, further reducing the burden by £5 billion over the next five years. In 2016 we introduced £300 million for hard cases, which is there for local authorities to use at their discretion. We doubled the level of rural rate relief, from 50% to 100%, to help small communities where perhaps there is just one pub, post office or petrol station. A number of right hon. and hon. Members mentioned the discount of one third brought in at the last Budget.
I congratulate my hon. and gallant Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown) on securing the debate. He asked a number of sensible and relevant questions about the whole way we structure our business rates. He asked specifically about the allowance, which we have discussed previously. We are looking at that seriously, but it depends to a large degree on our getting in place the digital arrangements between local authorities so that we can transfer information on business premises owned by the same entity. That programme will be introduced by about 2024, but I am happy to have further discussions with him on the matter.
Sir Geoffrey Clifton-Brown
I truncated the last bit of my speech, but I was going to say that the existing IT platform is regarded by the professionals who have to work with it as being clunky and difficult to work. Does the re-design by 2024 that my right hon. Friend mentioned include an entirely new programme?
Mel Stride
I will have to come back to my hon. Friend with an answer to that specific technical question, but I will gladly do so.
Several Members rightly mentioned our high streets package. My right hon. Friend for New Forest West (Sir Desmond Swayne) made reference to the fact that it is not all about business rates; it is also about how we design and evolve our high streets to face the changing nature of retailing, which of course includes the rapid advance of online retailing.
Several Members mentioned the digital service tax that we are committed to bringing in by 2020, and we will do so unilaterally in the absence of a multilateral move on the behalf of other countries.
Draft Financial Regulators' Powers (Technical Standards Etc.) and Markets in Financial Instruments (Amendment) (Eu Exit) Regulations 2019
Geoffrey Clifton-Brown Excerpts(5 years, 2 months ago)
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Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I welcome the Minister to his place and I have one simple question that I am sure he will be able to answer: if there is a dispute over decisions made by UK regulators during the transitional period and the EU, will that be dealt with through the arbitration procedure?
Draft Import of and Trade in Animals and Animal products (Amendment etc.) (EU Exit) Regulations 2019
Draft Trade in Animals and Related Products (Amendment) (EU Exit) Regulations 2019
Geoffrey Clifton-Brown Excerpts(5 years, 2 months ago)
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David Rutley
I am delighted to hear that. The instrument includes amendments to nearly 50 pieces of EU legislation. Members of the Committee will be pleased to hear that I will not go through every regulation—[Hon. Members: “Go on.”] I will, but not today. Now, I will outline the most important aspects of the legislation.
The instrument makes technical amendments to ensure the continued operability of 14 EU instruments concerning imports of live animals or reproductive products; 17 concerning imports of animal products intended for human consumption; six that lay down protective measures against the introduction of particular diseases; two that cover the EU pet travel scheme; and seven that relate more generally to the import regime for animals and animal products. This instrument also contains minor technical amendments to references to fees in two domestic instruments.
The amendments ensure the continuation of veterinary controls and other import conditions that safeguard animal and public health. They allow for authorisation of businesses to continue and for the maintenance of health certification and transport requirements, and allow appropriate actions to be taken in cases of reported non-compliance or disease outbreaks in other countries. Furthermore, they provide for the continuation of the existing health and documentary requirements for the non-commercial movement of pets into the UK under the EU pet travel scheme.
In addition, the amendments transfer certain powers and functions from the European Commission to our respective UK Ministers. The amendments give Ministers the power to take appropriate action in relation to trade restrictions resulting from disease outbreak. Regulation 3 of and schedule 1 to the instrument provide the power for the appropriate UK Minister and Northern Ireland Department to draw up lists of third countries approved as having equivalent official disease controls for continuing trade with the UK in live animals and animal products.
The Trade in Animals and Related Products (Amendment) (EU Exit) Regulations 2019 make technical amendments to EU-derived domestic legislation. Importantly, this instrument amends our main English animal trade instrument—the Trade in Animals and Related Products Regulations 2011. That is key legislation for the import of these commodities into England. It establishes a system for trade in live animals and genetic material with other EU member states, and for imports of animals and animal products from outside the European Union.
The measure also amends two related instruments that regulate the non-commercial movement of pet animals into Great Britain: the Non-Commercial Movement of Pet Animals Order 2013, and the Rabies (Importation of Dogs, Cats and Other Mammals) Order 1974. The instrument will allow these laws to continue to work after EU exit, for instance, by removing redundant references to EU bodies, functions or legislation, and replacing them with domestic equivalents. It will also amend phrases that would no longer be correct, such as changing “legislation of the European Union” to “retained EU law”.
Taken together, the two instruments that we are considering ensure the continuation of appropriate certification, sufficient pre-notification of imports, checks of certain consignments, and isolation and vaccination facilities. That safeguards our current strong biosecurity standards for imports of animals and related products, and provides for the continuation of the existing legal framework around the movement of those trade commodities and pet animals.
These instruments have different territorial extent and application, and the devolved Administrations were closely engaged in their development. The first instrument applies to the whole of the UK; in the second instrument, part 2 applies to Great Britain and part 3 applies to England only. The devolved Administrations are tabling their own versions of the amendments in the second instrument, which relate to their own “mirror” legislation and are being laid as separate affirmative instruments.
As stated, these instruments make technical amendments to maintain the existing standards, and no impact is anticipated. As they do no more than is necessary to enable domestic legislation to be operable immediately after EU exit, there is no statutory requirement for public consultation. Formal consultation and impact assessments have not been performed, as these amendments will not introduce additional requirements or costs for stakeholders.
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am sorry to interrupt my hon. Friend, particularly as I wholly approve of these instruments, because they are a significant consolidating measure. He has said two or three times that the measures will have no financial impact on users. Would he therefore say what arrangements will be made for consultations on any fee increases?
David Rutley
As I said before, there will be no extra costs or fee increases.
Sir Geoffrey Clifton-Brown
I am grateful to my hon. Friend for that explanation, but paragraph 6.1 of the explanatory notes says:
“This instrument amends…forty-six directly applicable pieces of EU legislation…It also introduces amendments to the domestic powers to recover fees in relation to activity relating to imports of animals and animal products from the EU.”
That presages the prospect of fee increases, does it not?
David Rutley
With my hon. Friend’s permission, I will proceed with my speech and then, when I conclude, I will address that point in more detail.
As I was saying, the Department for Environment, Food and Rural Affairs has engaged with various major stakeholders, including the Food and Drink Federation, the International Meat Trade Association and the National Farmers Union, on the subject of these instruments, and those stakeholders raised no concerns with DEFRA’s approach.
In relation to the wider effect of leaving the EU on animal trade and pet travel more generally, DEFRA has of course made extensive engagement. In relation to the equine sector and pet travel, DEFRA has engaged with key stakeholders, who are also content with the proposed approach to equine movements and pet travel.
These instruments are required to ensure that the UK’s statute book continues to function correctly after EU exit. Each year, products of animal origin and live animals imported to the UK are valued at over £19.3 billion, of which 80%—about £15 billion—comes from trade with the EU. If these amendments are not made, there would be considerable disruption to the UK’s imports system, resulting in a threat to the UK’s biosecurity, and a lack of clarity for industry and non-commercial pet travel, which would be likely to lead to additional costs for importers and stakeholders.
Although the UK is under no legal obligation to adhere to EU rules for trade following EU exit, failure to do so could result in the UK being unable to trade in animals and their products with EU member states and third countries. The Government’s policy is therefore to maintain current standards, legislation and arrangements relating to such trade on the day the UK leaves the EU.
Regarding the EU’s pet travel scheme, the amendments are required to ensure that safe pet travel without quarantine can continue into the UK. Currently, 300,000 pet animals move into the UK each year, through the pet travel scheme. If these amendments were not made, EU pet passports for pet animals travelling from the EU would no longer be valid in the UK, which could cause travel disruption. The UK’s ongoing application to become a listed third country for the purposes of pet travel between the UK and EU member states also depends on maintaining EU minimum health standards.
In conclusion, the trade in animals and animal products that do not constitute a risk to human or animal health is of significant importance to the UK’s food security and economy. The technical amendments in these instruments are essential for the continuation of the UK’s current trade and import regime, and for minimum disruption to pet travel. They will also ensure that our strict biosecurity controls on animal trade are maintained at their current levels when we leave the European Union. I commend the statutory instruments to the Committee.
David Rutley
I thank hon. Members who have contributed to the debate. As I said, the draft regulations will ensure that the robust certification, pre-notification and biosecurity standards for imports of animals and related products set out in EU legislation will be maintained. That is an important point, and one not lost on Members who have spoken in the debate.
I am grateful to the hon. Member for Stroud. He showed his characteristically thorough approach, and I will try to answer his many questions briefly. First, however, I will respond to a concern expressed by my hon. Friend the Member for The Cotswolds about fee increases. Fees are set out in other domestic legislation, so would require parliamentary oversight and prior industry consultation before any amendment. That is not part of this legislation; it is separate. The amendments in regulations 4 and 5 are simply enabling powers to allow fees to be charged for imports from the EU in future.
Sir Geoffrey Clifton-Brown
I am sorry, I do not want to cause the Minister any additional difficulties, but in the Cotswolds, which my neighbour, the hon. Member for Stroud, and I represent, we have a large sheep industry. Most of that sheepmeat, whether dead-weight or light-weight, goes to the continent. Currently, it is not subject to checks; in future, it will be subject to checks, and the farmers involved will have to pay the charges. That will have quite a severe impact on certain sectors of the economy. I would be grateful if my hon. Friend—if not now, some time—set out in detail the Government’s impact assessment of that.
David Rutley
I will gladly follow up on that. We are discussing the draft regulations, however, and the points that my hon. Friend has just made, good as they are, are outwith the narrow confines of the legislation—although we have discussed a lot today. Some of the checks that he is concerned about relate to what will happen in the EU, rather than in the UK. Nevertheless, I will give him the specifics and follow up on his points in detail, ensuring that they are fully considered.
Consultation and impact assessments were raised by the hon. Members for Stroud and for Motherwell and Wishaw. Again, notwithstanding the fact that there will be significant changes to how we deal with exports and to some extent imports—we are trying to have a friction-free approach to imports from the EU—those changes and impacts are outwith what we are discussing today. Yes, there have been impact assessments and consultations on other aspects, but the specific draft regulations—
Business Rates: Small Retail Businesses
Geoffrey Clifton-Brown Excerpts(5 years, 7 months ago)
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Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am privileged to follow the emotional and sensitive debate secured by my hon. Friend the Member for Eddisbury (Antoinette Sandbach). I sometimes wish the public could see more of such debates, where sensitive subjects are discussed so constructively on a completely apolitical, non-partisan basis. I congratulate my hon. Friend.
Madam Deputy Speaker, I am grateful to you and Mr Speaker for scheduling this important Adjournment debate on reforming the business rates system for small retail businesses. I am particularly grateful to the Paymaster General and Financial Secretary to the Treasury, my right hon. Friend the Member for Central Devon (Mel Stride) for being here to answer this debate at such a late hour, when I am sure he would much rather be at home with his family.
I am quite sure that right hon. and hon. Members from both sides of the House will agree with me when I say that protecting our country’s small businesses is of paramount importance. There are more than 5.7 million small and medium-sized enterprises in the UK, and we must recognise their importance to the local economies of all our constituencies in providing much-needed jobs for our constituents.
I have been working closely with the British Independent Retailers Association and with many businesses in my constituency to promote their business rates reform proposals. It is an eminently sensible idea for the so-called small business rate relief, which has a £12,000 threshold and has to be claimed, to be replaced by an allowance which would be automatic. That would benefit the huge majority of the small businesses that currently qualify for the small business rate relief. Retailers pay nearly a quarter of the collective rates bill, amounting to a staggering £7 billion a year. They pay far more than those in any other industry. The present system does not value business rates on the basis of business profitability. That unfortunately results in a system that fails to place the burden of taxation on the businesses that are most able to pay.
The national decline of the British high street is a worrying trend. More than 8,000 shops have closed over the last 18 months, and one in eight high-street shop units in England and Wales now stands empty. Large shopping centres away from town centres qualify for much lower rates than smaller retailers on our high streets, owing to their peripheral locations. That, of course, does not take into account the significantly higher turnover of retailers such as the “big four” supermarkets.
Rachael Maskell (York Central) (Lab/Co-op)
Will the hon. Gentleman give way?
Sir Geoffrey Clifton-Brown
My golly! I will give way to both hon. Members, but I will give way to the hon. Lady first.
Rachael Maskell
I am grateful to the hon. Gentleman, who is making an excellent speech. In York, there are 47 empty units in the centre of our city, partly because of high valuation rates. Offshore landlords are more concerned with their investments than the revenue from the rentals, so they keep pushing up the rents. Does the hon. Gentleman agree that the whole system needs to change if order is to be restored?
Sir Geoffrey Clifton-Brown
Yes. The whole thrust of my speech is that we shall ultimately need to reform the rates system, but it will take time. The Government have to be very careful to guard the huge amount of revenue that they gain from the rates in any change that they make. I am sure that my right hon. Friend the Financial Secretary will have something to say about my proposals in that respect.
I have a problem in the Cotswolds. The rents are very high, which influences the rateable value. It takes time to deal with that when there are a number of empty units, such as the ones in York that the hon. Lady mentioned. When the rents are lowered the rateable values follow, but the district valuers are, of course, reluctant to lower the rateable values, because they do not want to lose revenue. That problem is increasing, as I shall explain shortly. Offline businesses, IT businesses and so on, do not need premises as large as those required by some of the businesses in the hon. Lady’s constituency. For example, furniture shops, bed shops and cycle shops need large premises, which inevitably means large rateable values, but they do not necessarily have the turnover to match those rateable values. The ability to pay is not necessarily reflected in the rates that must be paid. However, I sympathise with the hon. Lady.
Jim Shannon
I thank the hon. Gentleman for raising this issue, which is a problem in my constituency as well as others. He referred to a national decline, and the evidence of that is very clear: planning portals in local areas show a downturn in the number of businesses applying for extensions and renovations. Does he agree that that is because businesses cannot expand because of costs, and does he agree that a review of business rates might just allow some companies to take the plunge, upgrade their businesses, sow into them and, hopefully, reap the benefits, rather than continually treading water—as they often do—just to keep afloat?
Sir Geoffrey Clifton-Brown
I entirely agree, and I will shortly demonstrate the way in which the current rates system is a disincentive for small businesses to expand. Surely what we should be doing, in the entire economy, is encouraging small businesses that will one day become medium-sized businesses, and will hopefully one day become large businesses, employing more people, selling more goods, and exporting more goods around the world. That is exactly what we want to see in a dynamic UK economy, particularly in the post-Brexit era. We need to look very carefully at the rates system, which is why I initiated this debate.
The hon. Member for York Central (Rachael Maskell) Lady was talking about the relationship between the ability to pay and the rates payable. I do not want to knock the banks as I have great regard for them, but I was shocked to hear that HSBC has six banks in London alone that qualify for small business rate relief. I am sure that HSBC would not have those banks open unless they were making a good profit. That is an excellent demonstration of how the rates payable are not related to the profits a business makes.
I am not for one second questioning the importance of competition in the marketplace, but to reverse the decline of our high streets we must ensure that competition is fair in every respect, and if the rates system is making it unfair, we should look at reforming it. There is a stark example in my constituency in the beautiful town of Stow-on-the-Wold. The large edge-of-town Tesco store is excellent; I go there myself to shop. It is only a five-minute walk from the town centre and pays business rates of £220 per square metre. However, a small independent delicatessen, with much higher costs because it occupies a listed building and which, no doubt, as the hon. Member for York Central says, will have to pay considerably more rent per square metre than the Tesco store would pay if it were not the owner of the store, has to pay £500 per square metre as opposed to £220 for the out-of-town supermarket. I cannot believe that that system is fair, and that, of course, is what is leading to a decline of some shops in our high street. It is therefore imperative that we support our small businesses through these measures.
However, sadly, the Federation of Small Businesses small business index for quarter 3 of 2018 showed that small business confidence has fallen into the negative for only the third time since 2013. Small retailers continue to report the lowest confidence level of any sector. That has to be a worrying trend for all of us.
Another concerning consequence of the current business rates system is the penalties that businesses face when expanding under current rules, which is the point made by the hon. Member for Strangford (Jim Shannon) made. The majority of small businesses growing from one premises to a second will lose the existing small business rate relief, which has a negative effect on business growth. This quirk in the rules means that a business can receive full relief if it has a single property with a rateable value of £12,000 or less, but a business with two properties each with a value of £3,000 would not receive any relief. That is clearly unfair and discourages businesses from expanding to more than one site.
I have another constituency example. The beautiful village of Guiting Power contains two pubs: The Hollow Bottom and The Farmers Arms. You might like to come and sample them, Madam Deputy Speaker, to see whether what I am saying is true. The Farmers Arms recently invested a significant amount of capital into the business and is now a very nice gastropub. However, The Hollow Bottom remained a traditional Cotswolds pub, much loved by many of my constituents. Unfortunately, even though The Farmers Arms and The Hollow Bottom started as the same size and as roughly similar businesses, because they are both in the same village only The Hollow Bottom now receives business rates relief because it is not possible for two pubs in the same village to receive the relief whatever the circumstances, and The Hollow Bottom is regarded as the smaller of the two pubs and is therefore the pub designated for relief. It would be helpful to understand why this inequality exists and how business rates could be reformed to promote, rather than penalise, investment.
It is troubling that the current rates system in certain respects discourages, and even stifles, investment by penalising ratepayers who invest in their business, as I have just demonstrated with The Hollow Bottom pub. For example, if a business owner were to add an air conditioning unit or CCTV cameras to their business, their rates bill would increase. To tackle this, time-limited exemptions for new store developments should be provided. I am keen to understand from the Minister what steps the Government are taking in linking business rates more closely to a company’s turnover, not just its physical size. As I indicated to the hon. Member for York Central, I find the example of a large IT firm pertinent. Such a business requires, by turnover, much less space compared with a cycle shop, a furniture shop or a bed shop, which would inevitably have a lower turnover but require more space.
In the last revaluation announced by my right hon. Friend the Chancellor, the Government did offer some help to smaller businesses by doubling the threshold from £6,000 to £12,000, and I want to make it absolutely clear to my right hon. Friend the Minister that I am not carping about the reliefs that are currently available. Many of the small businesses in my constituency, and in those of other hon. Members, benefit from small business rate relief. However, this does not help the majority of my retailers, who are above that level. The average rateable value in this country is £34,000.
To provide further detail, the new allowance proposals that I support—as opposed to the relief that businesses have to claim—would be based on the same principles as the personal allowance currently applied to income tax. This is a pragmatic, pro-business solution that would simplify the tax system and significantly cut the burdensome tax levels that small retailers are facing. A simple allowance, ahead of a full review of the system, would see a reduction in rates for the majority of those small businesses that qualify for the relief and that are struggling with their tax. All those below this allowance—for example, £12,000—would be out of the system entirely, because they would not have to claim the allowance. This would cut down on the resources required to process these claims. Perhaps my right hon. Friend the Minister has a figure in mind for the Government’s current compliance cost for processing small business rate relief claims. That compliance cost affects not only the Government; in percentage terms, it is even more burdensome for the small businesses that have to claim the relief, because they often need to employ specialist professional practitioners to enable them to claim the tax satisfactorily and not have their claim disallowed.
An additional benefit of introducing such an allowance, as opposed to a threshold, would be the simplification of the relief system. In other words, there would no longer be any need for small business rates relief as there would be a standard application for all small qualifying businesses across the country. Furthermore, the small business relief system currently costs the Government £2.6 billion. Introducing such an allowance and erasing the £2.6 billion in rates relief—even though we would be redeploying it as an allowance—would result in businesses reducing their compliance costs. Perhaps the Minister can tell me what the compliance cost is for the Government. If not, perhaps he could ask his officials to look it up. We could then redeploy the money involved in that compliance cost—and in the bureaucracy involved in administering the system—and perhaps consider raising the £12,000 threshold and introducing the allowance that I would prefer, so that even more small businesses could benefit.
I, and I am sure all hon. Members, want to see this country’s small businesses thriving in post-Brexit Britain, and we should be encouraging small enterprises, not penalising them for wanting to expand and grow further. We should cherish the fact that 500,000 new businesses have been created under this Conservative Government in the past five years and under their predecessor coalition Government. That shows the strength of the British economy. That is why we have such full employment rates, and we need to keep it that way. We need to keep employing as many of our constituents as possible, particularly the youngsters, and to encourage them to consider forming their own businesses. As I have said, from small businesses come medium-sized and large businesses. This country has always been full of entrepreneurs. I have great optimism for the future, post-Brexit, but we need my right hon. Friend the Minister and his team in the Treasury to consider the fairness of the current rating system. I am grateful to you, Madam Deputy Speaker, for allowing me to say these few words tonight.
Mel Stride
The hon. Lady will probably be aware of the Chancellor’s speech at our recent party conference, in which he spoke quite strongly about the importance of a level playing field for online businesses that derive value in the United Kingdom and end up paying very little tax and about the international tax approach that we may look at taking unilaterally as a consequence. The most important thing overall is that the Government recognise that when it comes to high streets and the smaller retailers to which the hon. Lady refers, we should take measures to reduce the burden of rates, particularly among smaller businesses, in the way that I have described this evening. That makes bills fairer for everyone, as they more closely reflect the current rental values and relative changes in rents. To ensure that ratepayers benefit from this change at the earliest point, the spring statement 2018 included an announcement that the next revaluation would be brought forward by one year to 2021.
Before I address some of the specific points raised by my hon. Friend, it is worth highlighting that, at autumn budget 2017, we brought forward the planned switch in the indexation of business rates from RPI to CPI by two years. This switch is worth £2.3 billion over five years, and the move to CPI is worth £4.1 billion in total by 2023. So once more, the Government are making a significant investment to recognise the pressures that rates introduce.
My hon. Friend raised the specific issue—
Sir Geoffrey Clifton-Brown
Before my right hon. Friend goes on to the specific BIRA proposals, may I put to him something about the out-of-town retailers, particularly supermarkets? As I explained to the House, the rateable system is based on rents payable, which one would assume in a market would sort itself out. The problem with out-of-town supermarkets is that they have a monopoly on these sites and they manage artificially to keep the rents low, so their rates are unfair compared with the in-town shops, as I have already demonstrated with my Stow-on-the-Wold example. Something needs to be looked at. I do not know whether the issue could be looked at in a revaluation system or whether legislation is needed, but it is an issue particularly when the out-of-town supermarkets are competing with the small in-town businesses. For example, the owner of a card shop recently told me that the out-of-town supermarket started selling cards and immediately put him out of business.
Mel Stride
I thank my hon. Friend for his intervention. I know that the Valuation Office Agency is thorough in the way in which it conducts revaluations. It is an independent agency. However, I note the point that he has made, and if he would like to write to me or meet me to discuss it in the context of potential undervaluations, I am open to doing so.
The points that my hon. Friend made included the idea of an allowance instead of the threshold. I assume that he wanted to apply that allowance to all retail businesses, and of course that would come with some cost. It would mean providing further additional relief to some companies or businesses that do not currently receive it.
Sir Geoffrey Clifton-Brown
I hope that I chose my wording very carefully. I said that the allowance would be applied only to businesses that qualified for small business relief. It would be nonsense automatically to give the big businesses an allowance. That would cost the Treasury, and I want to make it clear that my proposals are revenue neutral.
Mel Stride
I thank my hon. Friend for clarifying that point, and I am sorry that I misunderstood. He asked what the costs of compliance were under the current system and suggested that, if we changed it, we might be able to absolve ourselves from those costs and pass the benefits on to these businesses. That is certainly something that I am happy to look at and discuss with him. The overarching point is that we had a fundamental review of business rates in 2015, and many of the issues that my hon. Friend has raised were carefully looked at.
My hon. Friend said that he recognised that change would take some time, and we are likely to be considering these matters over some reasonable period. He raised the issue of the confidence of small business retailers at the moment, and this is where I would broaden the debate’s scope a little by saying that it is not just bearing down on business rates that is the mission of this Government. We also provide the employment allowance and we are bringing down small business tax rates, with corporation tax having fallen from 28% in 2010 to 19% now and set to reduce further to 17% in time. A lot of small businesses, including retailers, will be benefiting from other measures such as fuel duty freezes. We have just announced that fuel duty will be frozen for yet another year—the ninth year in succession.
In conclusion, let me again thank my hon. Friend for this very important debate. He is focusing on one of the great challenges of our time for our high streets, which lie at the heart of our local communities. It behoves us all to do all we can to make sure they are live, whole and thriving.
Sir Geoffrey Clifton-Brown
I want to impress on the Minister that this problem is not going to go away. The decline of our high streets is getting worse. It is accelerating, so the Government cannot just sit back. With great respect, just providing allowances in the rating system to try to make this work means that the tax base is being eroded, because the allowances have to be provided. The Government need to look at this seriously to see how they can make the system work a little better, particularly in favour of small businesses.
Mel Stride
My hon. Friend is absolutely right; high streets face a variety of challenges, of which business rates is but one. One of the greatest challenges they face is the change in how we are now shopping, with just over 18% of all retail now going online; that presents a huge challenge and that number is likely to increase in time. That tells us that high streets will need to transition, reinvent themselves, change and come up with new ways to serve their local communities and drive traffic into our high streets. We recognise the importance of making sure that all those things are looked at through the planning system and the reviews we are carrying out at the moment and through the important work we have been carrying out to date. I see this debate as being very important in that regard. We will continue to keep this under review in terms of making sure we keep those cost pressures through the business rates system as low as they can be for our important high street retailers.
Question put and agreed to.
Summer Adjournment
Geoffrey Clifton-Brown Excerpts(5 years, 9 months ago)
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Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
Thank you, Madam Deputy Speaker, for allowing me to catch your eye in this important debate. I wish to raise four matters: the negative revenue support grant for Stroud District Council, the missing link on the A417, M4 and M5, the reasons for making the Cotswolds into a national park, and—this is the most important issue—the delays in the completion of a £400 million contract awarded to the Fire Service College at Moreton-in-Marsh in my constituency.
Stroud District Council sent a petition to the former Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bromsgrove (Sajid Javid). It explained that when it accepted the four-year revenue support grant settlement, it did so on the basis that business rates would remain the same, with 100% retention, and that the new homes bonus would also remain the same. It has subsequently been reduced. I suppose that the most worrying aspect of the negative revenue support grant is the fact that it affects 147 out of 200 district councils in England. Not only will councils not receive any of the grant next year, but some councils, such as Stroud, will have to pay money back to the Treasury.
The petition sent to my right hon. Friend reads as follows:
“Stroud District Council strongly objects to Central Government introducing a new stealth tax on local households by demanding the payment of £549,000 from Stroud District to the Treasury in 2019/20… It is a complete reversal of financial support and is a worrying precedent which seriously threatens the Council’s ability to continue providing essential local and facilities; especially if this payment turns out to be the thin end of a stealth tax wedge which will see ever larger…payments of money siphoned off from local households to Central Government… Council therefore determines to lobby Central Government, through the District’s two Members of Parliament…for removal of the so-called Negative Revenue Support Grant of £549,000”.
There will be a review later in the summer, and I strongly urge my right hon. Friend the new Secretary of State for Housing, Communities and Local Government to conduct that review in a way that is more favourable to one of the two district councils that I represent.
The second subject that I wish to raise is the missing link on the A419-A417, about which I have campaigned for some 15 years. It is a highly dangerous stretch of road on which, sadly, there have been far too many accidents and far too many fatalities in recent years. It is a very busy road that links the M4 to the M5. Finally, after a lot of campaigning, we had a public consultation earlier this year in which two routes were published. Option 30 was chosen, and it is very important that the Secretary of State lives up to his promise of announcing a preferred route at the beginning of next year, so that we can get on to the development consent order process and get diggers into the ground and start work on this important road in the very early 2020s.
Alex Chalk (Cheltenham) (Con)
I thank my hon. Friend for raising such an important point about the A417. Does he agree that the death of a young soldier in May on this treacherous piece of road underscores the importance of delivering that vital project, which is crucial for safety, air quality and the economy of Gloucestershire?
Sir Geoffrey Clifton-Brown
The death of that young man was tragic, and I feel very sorry for his parents and his family. Unfortunately, this is just one of a number of fatalities, as my hon. Friend, who has worked with me very hard on this project, knows only too well. That is why it is imperative that this road scheme goes ahead, and he and I will shortly hold a meeting with the Treasury to make sure we get enough money for it.
The third subject I wish to raise is why the Cotswolds should be designated as a national park. Already 80% of my constituency is designated as an area of outstanding natural beauty. It is, as many Members will know, an important natural landscape and built environment, and I want to make sure that it continues to be protected so that our children and grandchildren can continue to enjoy this very special place. To that end, the chairman and chief executive and I visited the chief planner of the South Downs national park to see how well it operated, and we were impressed. We were also impressed by the number of similarities between our area and the SDNP—it covers 15 local authorities, and a national trail goes right through the middle—and that it seems to work very well in planning terms. There is a high standard of planning in the SDNP; it has very few call-ins, and when it does have appeals, it seems to win most of them because of the professionalism of its planning team. We could learn a lot from that, and the Cotswolds will get increased resources to pay for a lot of that if we are designated as a national park.
The defence fire and rescue contract was recently awarded, and announced publicly, to the Fire Service College in Moreton-in-Marsh. This contract is worth about £400 million over 12 years to the college. It will secure vital jobs in a part of my constituency where jobs are desperately needed—the north of my constituency, which is a very rural part—and my constituents and the FSC employees were looking forward to running this contract, but it seems to have run into some delay. That is most regrettable, and I call on the Ministry of Defence to resolve whatever difficulties there are—I am not entirely sure what they are—as quickly as possible, because that would provide certainty for the workforce. This contract is much needed in my constituency.
I have had discussions with my hon. Friend the Member for South Thanet (Craig Mackinlay), whose constituency contains Manston airfield where this activity is currently based, and he is very happy and wants to see this contract resolved as quickly as possible, because Manston airfield can then be used for an aviation freight hub opportunity and for further houses, which are desperately needed in his constituency.
I therefore call on the MOD to resolve the problems and to keep me, as the constituency Member of Parliament, informed. I should add that I have received superb help from the all-party group on fire safety and rescue. My hon. Friend the Member for Southend West (Sir David Amess) is present, and I thank him for his support over many years and months. The group’s members have visited the college in Moreton-in-Marsh and seen for themselves the world-renowned excellence of this institution, and it will be made even better and the entire country will benefit if we can get this contract there and it can start selling its services to the rest of the world by proving, through this defence fire and rescue contract, that it is superb at what it does.
Finance (No. 2) Bill
Geoffrey Clifton-Brown ExcerptsMonday 11th December 2017
(6 years, 5 months ago)
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Robert Courts
The hon. Gentleman makes a very, very good point. As chairman of the all-party group for small and micro business, that is something that is very close to my heart and the hearts of those for whom I endeavour to speak in Parliament. That matter has been a concern. I know that the hon. Gentleman has campaigned on it, as have I and many others. The simplification of the VAT regime and the ability to pay online will streamline the tax process for small businesses. I am grateful to the Government for the action that they have taken in ensuring that that burden is not too onerous.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I thank my hon. Friend and neighbour for giving way. Is he aware that since 2010 we have raised £160 billion from tackling tax evasion, yet the shadow Chancellor says that he will raise even more from tackling tax evasion. Does that not show that he is living in fantasy land?
Robert Courts
My hon. Friend is absolutely right. This is a Government who are cracking down on and taking serious, practical and effective measures against tax evasion. What we hear from the Opposition are measures that will drive businesses and investment abroad. They will not invest in the businesses that we need to help grow the economy and grow jobs. What we see from the Government is effective management of the economy, and what we see from the Opposition is, as my hon. Friend quite rightly said, fantasy. The irony is that their measures will destroy jobs, destroy the economy, destroy productivity and destroy the tax revenues on which our public services depend. The policies from the Opposition will mean less, not more, for the public services.
Budget Resolutions
Geoffrey Clifton-Brown Excerpts(6 years, 5 months ago)
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Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am pleased to follow the hon. Member for Wallasey (Ms Eagle), but her speech shows that the Labour party has learnt nothing about how to run a successful modern economy. The Chancellor referred in his speech to the Labour party increasing our national debt by £500 billion. The easiest thing in the world is to spend more and borrow more, which is precisely the situation the Labour party left us in back in 2010, which is why we have had to have austerity Budgets over the past few years.
Indeed, I recently went to a lunch and met a director of one of our major banks—[Interruption.] Opposition Members ought to listen to this. He said, “Our focus of attention has changed from Brexit. We will cope with whatever politicians throw at us with Brexit, but our focus of attention has changed to political risk: the risk of a Labour Government ruining the economy.”
In contrast, what we saw today was a prudent Budget from my right hon. Friend the Chancellor. As my right hon. Friend the Member for Wokingham (John Redwood) has said, it was a fiscal loosening Budget, but at the same time we have been able to stabilise our national debt and put more money into our public services, particularly the NHS and education, and into infrastructure, and we have been able to deal with some of the tax evasion. I serve on the Public Accounts Committee, so I was particularly pleased to see that its recommendations on VAT fraud have been taken up. I pay tribute to my hon. Friends the Members for Dover (Charlie Elphicke) and for Daventry (Chris Heaton-Harris) for their hard work on that.
The recent Government White Paper on housing said that the UK needs to build 250,000 new houses a year. It certainly does, because if one asks the teachers or nurses in the Cotswolds where they live, nine times out of 10 they will say that they do not live in the Cotswolds, and that also applies in other areas of high house prices. Anything that can be done to stabilise the housing market and produce more housing for lower-paid people must be a good thing.
Sir Desmond Swayne
In my parliamentary division, the difficulty is that private builders will not address that proportion of the market where the need is greatest: the bottom and the mid-market. Equally, such is the increase in supply that is required to drive down the price, it is questionable as to whether it would be in the interests of independent builders to secure such a reduction in price. The greatest increase in the market was achieved through public sector building; does my hon. Friend see that as a possibility?
Geoffrey Clifton-Brown
The need to build more houses is about providing houses for those who cannot afford to buy and get on the housing ladder. There are lots of ways to do that in the affordable housing sector, such as affordable rent-to-buy, staircasing and many other methods. That is what we need to pay attention to. I shall say something about the planning system in a moment.
The structure of house ownership has changed in the past 10 years, in which the number of under-45s who own their own homes has dropped by a million. That is something we need to address, so I find it extraordinary that Labour Members should be carping about the welcome announcement by my right hon. Friend the Chancellor of the stamp duty exemption for first-time buyers for homes under £300,000, with a £500,000 limit in London. They carp about it as if it is somehow going to increase the market for first-time buyers, but the cut in stamp duty is likely to way exceed any consequential increase in house prices, so we should welcome it.
We should also welcome the measures the Government are introducing to build more houses, particularly the use of new town development corporations, which were used successfully by the Conservative Government in the 1980s to create whole new towns such as Milton Keynes. The legislation is still on the statute book. The corporations are partnerships formed among the Government, local authorities, the private sector and the social housing sector to build more houses. They worked in the 1980s and we should use them again, and we should make sure that new town development corporations are able to access more land.
I have two suggestions as to how we should alter the planning system. First, we need to alter the material-start system so that when builders get planning permission it is in all cases for only three years. Secondly, they should always have to build out a site in its entirety for services. That would stop house builders from sitting on land—land banking—for an unacceptable period and put an end to the practice of house builders using a vacant site as a bargaining tool to gain planning permission on other sites. Those would be important improvements.
The hon. Member for Wallasey touched on the Brexit divorce bill—the biggest liability this country faces for the next few years. It has been rumoured that we are going to pay £38 billion, which of course includes our obligations for things such as outstanding budget contributions, financial programmes, agriculture, overseas aid, pensions liabilities and decommissioning liabilities. Nevertheless, as my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) so rightly said, in a negotiation for a second-hand car, one does not go in and pay an excessive price; the clever negotiator pays the right price—the minimum price that they can get away with. That is what we ought to do with the EU. To put it into perspective, is not just about that £38 billion; it is about our promise of two years of payments after we leave, which is an additional £8 billion a year or £16 billion in total. That takes us up to some £54 billion, which is more than our entire transport budget and almost as much as our entire defence budget. That is what we have to think about with regard to those very large figures.
In 1945 the USA loaned us £2.2 billion—£87 billion in today’s money—as war reparations, and it took us more than 50 years to pay it off. I hope at the very least that we will do two things with this payment, if we actually agree it with the EU. First, it should be paid over a significant number of years. Secondly, it should be linked to our ability to earn money from it—that is, through a trade deal and other deals, which will help us earn and pay it off.
Technology is really important if this country is to remain competitive with our foreign competitors and our productivity is to increase. Thankfully, this country has experienced huge growth in digital innovation. However, we have a shortfall of about 40,000 people with the necessary skills in science, technology, engineering and maths to meet the demands of our economy. My hon. Friend the Minister for Universities, Science, Research and Innovation is present. I am delighted to learn that maths is now the most popular subject in our schools, and I am delighted with the extra money to encourage even more children to take maths at A-level. I am glad that the Chancellor announced that our national infrastructure fund will rise from £23 billion to £33 billion, and I am delighted that the main R and D tax credit to enable our firms to invest in even more infrastructure will be maintained. The Chancellor said that a new high-tech company emerges every hour, which is an amazing figure, and that he wants to cut it to every half an hour.
On education, I was pleased to learn earlier this year, having led a long campaign, that primary and secondary school funding will be maintained so that every child in this country gets a budget that increases in real terms every year, and that the secondary school budget would move up to £4,800 per pupil by 2020, which will begin to eliminate the gap between the lowest funded authorities, such as mine in the f40, and the highest funded authorities such as those in the middle of London. Our commitment to spending the extra £1.3 billion that we announced in our election manifesto has given the Cotswold School £450,000 more than it would have got under the old proposals. That is a welcome boost.
The Chancellor had a very welcome announcement for small businesses. There are 5.5 million small businesses in this country and, as he made clear, they are the engine of jobs and growth, so we need to make sure that they prosper. I welcome the fact that, contrary to the leaks about the Budget—thank goodness that leaks are often wrong—we are not going to reduce the VAT threshold, because that would not only introduce more bureaucracy for small businesses, but bring them within the making business digital threshold, which would, at a stroke, introduce even more bureaucracy for them.
Tom Brake (Carshalton and Wallington) (LD)
Does the hon. Gentleman agree that one of the biggest generators of bureaucracy for small businesses, particularly those that import and export, will be new customs arrangements if those are introduced?
Geoffrey Clifton-Brown
The PAC has done a lot of work on customs and I am hopeful about new IT and the introduction of the customs declaration service to replace the existing IT service. Customs will experience a huge increase in the number of VAT declarations when we leave the EU, and it has a really difficult job policing goods that are wrongly coming into this country. Customs needs to take that into account.
I have almost come to the end of my speech. On bureaucracy for small businesses, it is essential that we try to keep it down and help them wherever possible. I am particularly pleased, as I am sure are businesses in the Cotswolds, that the small business rate relief will be maintained. Rates can be a real burden for small businesses with premises on which they pay high rents and high rates, particularly in an area such as the Cotswolds. Those that have managed to be taken out of the rates ambit altogether will be very glad to hear that they will not be brought back into it in the coming year, which is what they had feared. Residents and businesses in the large rural area of the Cotswolds will be particularly glad to see the freeze on fuel duty for yet another year; that will help them. Incidentally, I am sure that individuals in the Cotswolds—and, indeed, the entire country—will be really pleased to see the freeze on wine, spirits and cider. I am sure that that will be particularly welcome.
To sum up, this has been a prudent Budget—nothing more than I would expect from my right hon. Friend the Chancellor, who is doing a great job for this country with his economic stewardship. I am sure that our economy will go from strength to strength, that our education will get better, that there will be more high-tech IT jobs and that there will continue to be a record number of jobs and of apprenticeships.
If the Labour party had anything to cheer about, it would surely be that we are employing a record number of people in this country. I would have thought that it would be particularly pleased at the Chancellor’s announcement that poverty is reducing in this country and that child poverty has reduced by more than 1 million in the past 10 years. [Interruption.] That is what the Chancellor said; I am only repeating it. I know that the Opposition would not like the figures to be correct, but the fact is that they describe what is happening.
Draft Banking Act 2009 (Service Providers to Payment Systems) Order 2017
Geoffrey Clifton-Brown Excerpts(6 years, 5 months ago)
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Stephen Barclay
If I may first turn to the question posed by my hon. Friend the Member for Windsor about how many service providers would be designated. We do not intend to set a specific number, as this is about the Treasury’s ability to react to risk where that is perceived. It is a question of what is seen as proportionate from an oversight perspective, with regards to the services that those providers pay to those critical infrastructure systems.
On the question asked by the hon. Member for Stalybridge and Hyde about transparency and how we will specify a service provider, a number of factors will be taken into consideration, including the systemic importance of the payment service to which the service provider is providing services; the service provider’s criticality to that payments service; and the extent to which another provider could be substituted in due course. On the issue of transparency, the decision will be taken in consultation with, and on the basis of representations from, the Bank, the payment systems regulator, the PRA and the FCA.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
I thank the Minister for giving way and I apologise for being late. This small business commissioner will employ fewer than 50 staff. Will that organisation really be capable of taking on the big multinationals that are likely to be the main miscreants in late payments to small businesses?
Stephen Barclay
This is about having oversight to set requirements on what information is needed, and being able to react to risk in a quick and proportionate way. This is a piece of enabling legislation that will allow the Bank to ask those questions of service providers rather than simply rely, as is currently the case, on the payment systems themselves to manage that risk. That is why this is a proportionate response. The order simply switches on a provision that is already in the existing legislation, but it allows the Bank to give force to it. The Banking Act already enables that; the issue is what it does once it is switched on. The order gives the Bank that power, facilitated by the Treasury.
Coming back to the point raised by the hon. Member for Stalybridge and Hyde about transparency, the decision will be taken in consultation with the relevant regulators, including the PRA and FCA, and following representations from the payments systems operators themselves. That reflects our proportionate approach.
In conclusion, the order will enable the Bank of England to oversee service providers to specify payment systems. In some cases those services are critical to the smooth running of our payment systems. The order will support the Bank’s supervision of systemically important payment systems and promote the robustness and resilience of the UK’s financial system.
I hope that the Committee has found this morning’s sitting informative and that it will join me in supporting the order.
Question put and agreed to.
Oral Answers to Questions
Geoffrey Clifton-Brown Excerpts(6 years, 6 months ago)
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Mel Stride
As the hon. and learned Lady will know, when the Scottish Government decided to restructure their police and fire services, they went into that decision with their eyes wide open—they knew what the VAT consequences would be—so it is down to the SNP to ask those questions of itself.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Andrew Jones
I will take the matter up with my right hon. Friend the Secretary of State for Transport and get back to my hon. Friend.
Oral Answers to Questions
Geoffrey Clifton-Brown Excerpts(7 years, 2 months ago)
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Mr Hammond
I think the last thing small businesses need is any help from the Labour party. From what I have seen of Labour’s plans, that would be the final straw for most of them.
As we have said, we recognise that some small businesses are facing very substantial percentage increases, even where the actual amounts might not be very large, and that that can be difficult for businesses to absorb. We have committed to coming forward with a proposal that will address those who are hardest hit by that phenomenon.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
In Stow-on-the-Wold in my constituency, the actual business rates payable by Tesco, which is five minutes’ walk from the centre, is £220 per square metre, whereas a delicatessen in the centre of the town will pay £500 per square metre. Does not my right hon. Friend think that the system of rating valuation needs to be re-examined?
Mr Hammond
The rating system is what it is; it reflects the rental value of properties. I readily acknowledge that in an economy that is changing shape rapidly, where the digital economy plays a much larger role and where some of the biggest businesses are not based on bricks and mortar, there are some very significant challenges for us, which we need to look at. In the short and medium term, business rates play a vital role in providing revenue to the Exchequer—and from 2020, of course, they will be used wholly to support local authorities.