Oral Answers to Questions

Debate between James Murray and Andrew George

Tuesday 8th April 2025 Commons Chamber

[Andrew George (St Ives) (LD)]

3. What assessment she has made of the potential impact of her tax policies on investment in second homes.

[The Exchequer Secretary to the Treasury (James Murray)]

While short-term lets and second homes can benefit the tourist economy, we recognise that they can impact the availability and affordability of main homes in some communities. That is why we have enabled councils to charge a premium of up to 100% on the council tax bills of second homes, increased the higher rates of stamp duty land tax on the purchase of second homes and abolished the furnished holiday lets tax regime.

[Andrew George]

I am grateful to the Minister for that response, but I believe we can go further, because this is not about the politics of envy but about the politics of social justice. In Cornwall, it cannot be right that through the small business rate relief system, over £500 million of taxpayers’ money has gone into the pockets of holiday homeowners in the last 10 years. Many of those homeowners have flipped their second homes into the small business rating system to take advantage of that loophole. Will the Minister meet me so that we can find a more equitable way of spending public money that goes into first homes rather than second homes?

[James Murray]

I thank the hon. Gentleman for his remarks. I agree with him about the importance of taking the right action to tackle second homes. I understand he had a meeting with the Minister for Housing and Planning last week, and I would be happy to follow up any items that arose from that. Our plan to build more homes includes 4,500 new homes in every year in Cornwall, and I hope he will support those building plans too.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Debate between James Murray and Andrew George

2nd reading
Monday 25th November 2024 Commons Chamber

[James Murray]

Let me remind the hon. Gentleman that, around the difficult decision that we had to take on employer national insurance contributions, we provided explicit protection for small businesses by more than doubling the employment allowance from £5,000 to £10,500, which will benefit hundreds of thousands of small businesses across the country. I suggest that he talks to businesses in his constituency about that.

We are not shying away from the fact that difficult decisions were taken in the Budget, but he might also consult the plans that were left in operation by the previous Government in July. If we had pursued those plans, and if we had not taken any action on business rates, the retail, hospitality and leisure relief would have ended entirely next April. The cliff edge looming next April would have seen it go down to zero. We have extended it, despite the tough fiscal circumstances, for another year at 40%. That is a reasonable way forward while we put in place these permanent reforms.

As I mentioned, the measures in the Bill to level the playing field for high streets are the beginning of our efforts to transform the system of business rates. Our ambition to go further is set out in the paper published alongside the Budget, “Transforming business rates”. That paper sets out the Government’s priority areas for further reform to support investment and make the system fairer. It invites businesses and industry representatives to work with us on designing the best possible system for the future.

I am grateful to all those businesses and representative bodies that I have spoken with in the last few weeks for their engagement already. We will consider what more the Government should do to incentivise investment and growth, including by looking at the efficacy of improvement relief and empty property relief, the impact of losing small business rate relief on expanding businesses, and the cliff edges within the current system.

[Andrew George (St Ives) (LD)]

If the Minister is looking for other methods by which public finances could be effectively deployed, will he look carefully at the last decade, during which small business rate relief has been used by second home owners to flip their properties to business rating and pay nothing at all? In Cornwall alone, that has resulted in over £500 million of taxpayers’ money being paid out to wealthy second home owners through covid aid and the small business rate relief. Will he look at how wealthy people have been incentivised to use that method to their advantage? Will he ensure that we have a much fairer system that puts first homes before second homes?

[James Murray]

The hon. Gentleman raises a crucial point about ensuring that the tax system is fair and that it supports the behaviour that we seek to incentivise.

That leads me neatly to my next point. As part of the discussion paper on transforming business rates, we have committed to consulting on adopting a general anti-avoidance rule for business rates in England. Although that might not necessarily address the exact problem the hon. Gentleman highlights, it speaks to the general issue of avoidance in relation to business rates.

We will also look at how the burden adjusts with the economic cycle, and we will assess the merit of a further increase in the frequency of re-evaluations. I look forward to working closely with businesses and representative organisations to deliver a business rates system that is fit for the 21st century, and that work begins today with the powers in this Bill to deliver our permanent tax cut for high streets.

As I said earlier, the tough decisions that the Chancellor set out in the Budget to deliver economic stability and fix the public finances enable us to give businesses the confidence they need to invest, and to get public services back on their feet. One public service that is crucial to breaking down barriers to opportunity is the education system, which is why the Government have prioritised ensuring that every child has access to the high-quality education that they deserve.