Non-Domestic Rating Bill

James Murray Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

As we have heard today, this Bill makes a number of changes to the system of business rates, with most of these changes arising from the Government’s business rates review, which was first announced in March 2020. My colleagues and I will not oppose the Bill today, as any support it offers to businesses is welcome. However, as we know, some business organisations are concerned that the Bill will increase the overall administrative burden on businesses, and I will address that point in a moment.

First, it is worth putting this package of measures in the context of Government promises on businesses rates in recent years. The review that led to many of these measures was first launched by the Prime Minister when he was Chancellor at the Budget of March 2020. He called this project a

“fundamental review…of the long-term future of business rates.”—[Official Report, 11 March 2020; Vol. 673, c. 281.]

When the final report was published alongside the autumn Budget of October 2021, however, the verdict was clear. As the British Retail Consortium concluded at the time, it

“falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto.”

The truth is that the changes before us, now more than three years in the making, miss the opportunity to begin replacing the current system of business rates with one that understands the needs of British businesses and that is fit for the modern day.

What is more, right now, we know that many smaller businesses, particularly those on high streets, that are already struggling after the pandemic and a difficult winter of high energy bills are worried about the impact of the current revaluation, which is why we called for an immediate cut in business rates for small firms this year by raising the threshold for small business rates relief in 2023-24. This would be funded by an increase in the rate of the digital services tax that is charged on the global revenues of global tech giants. We were disappointed that the Government failed to adopt our plans, although we welcome their having heeded our call to ensure that firms are immediately given any discount they are owed through the current revaluation, thanks to the Bill’s changes to transitional relief.

It is clear, however, that businesses need a Government who are ready to go further. In the Government’s own press release on the Bill, a quote from the British Retail Consortium’s chief executive makes it clear that

“the job is not done.”

That is, of course, right, and members of the Government may well accept that the job is not done but, after 13 years in power, how much longer can Conservative Members get away with the excuse that they have not yet got round to the urgent and fundamental reforms our country needs?

We know that fundamental reform is needed, which is why Labour has said that if we win the next general election, we will replace the business rates system with one that shifts the burden of tax away from the high street and on to online giants, that moves towards annual revaluations and that truly supports entrepreneurship. Businesses across the country want the Government to transform the system of business rates to meet the needs of the modern economy, which is what Labour will do in power.

There are measures in the Bill that we hope will give at least some support to struggling businesses. As I mentioned, we have been calling on the Government to remove downward caps on transitional relief, so we welcome the measures in the Bill to make that so. We are also glad to see the revaluation cycle being moved to every three years, rather than every five years, although we are concerned that the Government have kicked the prospect of annual revaluations far into the long grass.

The importance of annual revaluations was, again, made clear in the Government’s own press release on the Bill, in a quote from the chief executive of the British Property Federation, who made it clear that her organisation

“would like to see Government continuing to strive towards even more frequent revaluations in due course.”

We are therefore concerned that, in the final report of the business rates review, the Government said only that they will

“consider the case for…annual revaluations…in the longer-term.”

We do not have to read between the lines very hard to conclude that annual revaluations are off the table under this Government.

Furthermore, alongside the reservations that many businesses and their representative bodies hold about how the Government’s reforms do not go far enough, we know that others, such as the Shopkeepers’ Campaign, have raised important concerns that the Bill will increase the overall administrative burden on businesses. As we have heard, the Bill introduces a new legal duty on business rate payers to provide annual confirmation of the information held on their property and to inform the Valuation Office Agency of any changes made to the property within 60 days of the change or face a fine.

The new requirements will have an impact on business rate payers and on the billing authorities—indeed, the impacts are referred to in the information and impact note on the new duty, published by the Treasury and the VOA. I wish to press the Minister on two points in particular on the impact of the new duty. First, the note makes it clear that the average annual cost for each ratepayer will more than double as a result of the new duty and that in the first year the cost for each ratepayer of complying with the new system will be more than three times that of doing so under the current system. Will he confirm whether that is correct? The note goes on to accept that the 309 billing authorities in England with responsibility for business rates will be impacted by the measures too, but it says that the

“costs are yet to be quantified.”

Will the Minister confirm when the Government will publish the detail of what those costs are? I look forward to hearing his response to those points in his closing remarks.

As my hon. Friend the Member for Luton North (Sarah Owen), the shadow local government Minister, and I have made clear, we will not be opposing this Bill today. However, although any support for businesses that are struggling may be welcome, it is clear that promises of fundamental reform of the business rates system under this Government are gone. As businesses and their representative bodies have been making clear, even as we debate the Bill, much more needs to be done. Yet it is also clear that after 13 years of economic failure, and with a party now chronically divided by infighting, the Conservatives are incapable of delivering the reform that businesses need. Our country needs a new Government, who are ready to replace business rates with a system fit for the future, ready to work hand in hand with British businesses to succeed, and ready to get our economy growing in every part of the country, making everyone better off.