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

Harriet Cross Excerpts

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Vikki Slade (Mid Dorset and North Poole) (LD)]

Q I would like to touch on that further. The Bill will give the Treasury the power to apply those additional multipliers. Do you feel that should be a local decision? You have hit the nail on the head; the way business rates work can be impacted by a local situation, such as a retailer going out of business or there being very high rents. Do you think that the Bill gives local areas the ability to think about how they might need to apply different multipliers? Would you like to see more regional or local implications, rather than it all coming through the Treasury?

Gary Watson: I go back a long time in business rates; I was working in rating up until 1990 when it was very much the local authority that set the rate and collected the rate. That was one of the reasons why they went to a national non-domestic rate in 1990. I think the councils have a key role to play. That is why I am keen for the relief system to give local authorities an element of discretion so that they can direct reliefs to certain types of rate plan. That goes for not just the high street but the wider picture.

In terms of ensuring an element of consistency, it was interesting that when the reliefs were coming in during the pandemic, there were a lot of local authorities turning around and saying, “Can’t you just tell us what it is?” Then central Government were saying, “You wanted the discretions and now you want it controlled. You can’t have it both ways,” so I think it is a balance. It raises so much money: all the strengths of a property tax are there for both central Government and local government, and for the ratepayer as well. It is about getting that balance.

Controlling the central rate is right, but making sure that councils have an element of discretion, whether through variance in the multiplier or a particular relief, is something to be considered. But again you have to be careful, because local government is different in lots of different areas. There are different challenges in lots of local authorities, and you are sometimes trying to have a rating system that fits every part of the country. That is why you need that flexibility there.

[Harriet Cross (Gordon and Buchan) (Con)]

Q Good morning, Mr Watson. What impact do you see the changes to the multipliers having on the number of appeals that are coming through the business rate system? Do you think the appeals are more or less likely than at the moment to have a grounding or a basis? Will they clog up the system? What is your position on that?

Gary Watson: I do not see that particularly. The question of appeals is interesting. To pick up on one point on appeals, the thing that we are going to find, if we focus on retail and hospitality, is that at the moment if someone does not receive one of those reliefs from a local authority, the only way they can challenge it is by way of judicial review, which is a very high barrier to meet. What we are finding is that some councils will interpret it and give it, and some councils will interpret it and not give it.

What you will find once the Bill goes through is that those challenges will move from judicial review into the magistrates court. If a council chooses not to give a relief, the challenge would be against a liability order application. I think what you will find is that you will get more cases being challenged at a liability order hearing, because however you draft a provision that says, “These people will definitely get it, these people won’t, and these people are subject to whatever,” those challenges will move into a magistrates court.

You can argue about whether that is the right place to have those challenges. The institute’s view for a long time has been that having all disputes on business rate, whether it be liability, occupation or mandatory—these reliefs—in the magistrates court is probably not the best place for them. The best place for those is probably in the valuation tribunal where the valuation disputes for business rate goes. All the council tax disputes go to the tribunal, but business rate disputes do not.

The revaluation will obviously be the trigger for how many appeals come in, and my valuers have given me a heads up on the areas that will see big increases at the next revaluation. But when you are looking at appeals and you focus on the retail, hospitality and leisure, those challenges will come into the magistrates court. The weakness of that is also that the only way you can challenge it is to refuse to pay the rate to get a summons to go into court and argue to a magistrate. Case law is good because it builds the rating system, but I feel that that might be something to keep an eye on going forward.

I think that there will be a lot more appeals against the billing authority’s decision, whereas at the moment they are not challenged through judicial review, because it is a very high barrier to change. The ratepayer could turn around to say, “Well, that council is giving it to me, but that one is not—can you really go to judicial review?” and the challenge would probably be sensible. In my understanding, we have not seen any since those discretions came in.

--- Later in debate ---

[Adam Thompson]

Q Thank you again for coming in this morning, Mr Woodall—we really appreciate your time. I am very pleased to hear your overall assessment that, for the convenience stores that you represent, the Bill will be positive and benefit the vast majority of them. On the savings made and the tangible effect of this Bill, what will they mean for a shopkeeper in my constituency of Erewash for security implementation, staffing and operations?

Edward Woodall: I tried to give some examples earlier of how businesses might invest. I suppose the first question is: where are the multipliers set? I would encourage the Government to use the flexibility to enable the best possible investment. As the example identified, if you have the multiplier set at a lower rate, the business is starting to save thousands of pounds. That is an opportunity for them to think, “Right, I can update the CCTV system. I might be able to add some new security measures in store.” The Bill can facilitate that investment. I should also say that, with the overall pressures on retailers at the moment, the cumulative burden is very big. They also might have to use that money just to keep operating and managing the costs that go up as well. This Bill can facilitate investment, but the Government have to think about the overall investment environment for retailers, not just through the rates bill by itself.

[Harriet Cross]

Q I understand that James Lowman, the chief executive of the Association of Convenience Stores, has written to the Chancellor following the Budget, and he described how 2025 will be a bleak year for small convenience stores, as they face over £666 million of additional cost. Will the Bill’s changes to the multipliers of domestic rates make a dent in that? Overall, will your convenience stores benefit from the Budget or be disadvantaged by it? How do those two things fit together?

Edward Woodall: You are right that our estimation of the cost of the Budget was £666 million, and we wrote to the Treasury to set that out. As I said, I think the Bill provides more structure and permanency in the support for retail, hospitality and leisure relief. I cannot comment on how much it will do, because I do not yet know where the multipliers will be set, but I think there is an opportunity to make the investment environment for businesses better with this Bill. We are not just looking at one single relief; we are looking at it over a period of time and we have the opportunity to discuss how that multiplier is set. One way in which the Bill could facilitate that better is through the procedure for the setting of the lower multiplier, which is currently by negative resolution in the Bill documents. That might want to move to an affirmative resolution so that we can have a debate on whether it goes up or down in the future, so that we can have a closer discussion on those things.

[Mrs Brackenridge]

Q To follow on from the question of my hon. Friend the Member for Erewash about security, I have a couple of things to say. Will you confirm the estimated benefit of the proposed business rate relief to small stores? Recently in my constituency, I accompanied my local neighbourhood police team to visit several stores on estates and high streets, as well as in a retail park. One of the things that the stores said directly to me and to the local neighbourhood police teams was about the shocking increase in retail crime—theft and violence—linked to stores directly employing fewer security staff. Will you share your thoughts on the impacts—the benefits—that the savings could make?