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

Jayne Kirkham Excerpts

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[The Chair]

If we speak closer to the mike, it will pick us up—the witness is not hearing.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Q I am going to try again. You are talking about the EHCP and saying that this might impact on some of the children and parents with EHCPs. The Bill sets out that private schools that are wholly or mainly concerned with the provision of education for children with EHCPs will retain their relief. So do you think there will be much impact on those children? Do you think that will mean they would have to move schools, given that the measure is in there?

Dr James: If they are retaining their relief, hopefully they should not have to. It would be very detrimental for people with children with certain types of SENs to have to move schools—not just to the state sector: move schools full stop.

[The Chair]

Any more questions for Dr James? No. In that case, we can move on to our next witnesses. Thank you, Dr James.

Examination of Witnesses

Kate Nicholls OBE, Steve Alton and Sacha Lord gave evidence.

--- Later in debate ---

[Jim McMahon]

It is almost the opposite, really. Given the context that has been outlined, this is the respite that the industry has been calling for. If we can keep to the scope of the Bill, and what it provides for, that would be helpful.

[Jayne Kirkham]

Q I have a quick question. I am glad you are here, Mr Lord, because we were talking about the super tax and the £500,000 limit. I am from Cornwall, so I completely understand what you said about large hotels. Will other parts of the leisure sector, such as theme parks, the night time economy, music venues and theatres, be impacted by the super-rate?

Sacha Lord: Nightclubs will certainly be impacted. Obviously, a nightclub is a much larger space than a pub, so sadly they will suffer under this legislation.

[Jayne Kirkham]

Q What percentage are we talking about across the board—theatres, theme parks and so on, and hospitality? I think you said 7%, which is fairly low.

Kate Nicholls: If you look at hospitality venues, which would include nightclubs and the larger hotels—it would not include theme parks necessarily, but it would include campsites and holiday parks—you are looking at around 700 premises. Of those that pay business rates, that is around 1% of total businesses, but it accounts for 7% of employment and close to 11% of turnover, so they are quite big. They are a disproportionate proportion of our tourist infrastructure in terms of employment. In certain locations, they will be up to 20% of local employment, so it is quite significant.

My understanding is that the Bill could provide respite for them, because there is an opportunity to apply different rates of a super charge for different types of businesses. We can differentiate on business use above the £500,000 threshold. We urge the Government to do that, and will work with them as the Bill and the consultation go forward, to ensure that they take advantage of that, so that we do not treat a large distribution centre or fulfilment centre the same as a hotel or nightclub.

[Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)]

Q My constituency of Wolverhampton North East does not have a city centre, but we have lots of cafés, brilliant restaurants, microbreweries and pub chains. What benefits will the Bill provide to those small businesses?

Kate Nicholls: If the deduction is applied to the maximum, it will result in a significant reduction in bills for all small hospitality businesses in suburban, neighbourhood and community locations such as your constituency, not just those subject to a cap and getting up to £100,000. Every single hospitality business in your constituency below £500,000—forgive me; I did not double-check, but I do not think you have any over that—will benefit from a permanent reduction in their business rates bills, which will help to redress the balance of their overall tax burden.

Sacha Lord: I would say that this really is a substantial lifeline for all those businesses. My concern is the period between April and when this legislation comes into force.

--- Later in debate ---

[Patrick Spencer]

Q Forgive me, Minister, but is this not a bit of a missed opportunity? The Committee has heard a lot of evidence today that, yes, the measures introduced in the Bill, specifically the ones around supporting local shops and our high streets, are probably very fair and reasonable, and that it is about time, but at the end of the day, business rates are not a progressive way to tax individuals and businesses. Taxing capital always allows for businesses that may seem asset-rich or that have asset liabilities to be taxed unfairly.

Why did the Government not go further in looking at alternatives, whether it be a sales tax or a land value tax? I am not a fan of land value taxes—they are another form of capital tax—but why did the Government not look at being more ambitious, instead of retaining a system that may be better in the future but still not ideal?

Jim McMahon: Which taxes are fair is always in the eye of the beholder. People have very different views about the fairness of different taxes in the system. In terms of property tax, I am here as the local tax Minister covering business rates and council tax. They are established taxes and they are understood. There are definitely views about whether they are up to date and fit for purpose, and whether they should be reformed, but however clunky the system is, very few people have an alternative that holds water, is fair, and produces the same level of income to support local public services.

There is always that balance to be struck. With business rates, you are getting a balance between the inherent value of a property, the rent that it can achieve, and the link to capital. We have heard that there are contradictions in some places where the economy is more suppressed, but it is not entirely intended to do that anyway; it is about reflecting the activity that takes place within a property as much as the bricks and mortar. On that basis, it is probably as good as you are going to get.

The question for the Government is how we build in a safety net for those uses that we want to maintain because they are positive for the local community and the economy, but that may be marginal commercially, which is exactly what the Bill is intended to do. But in a self-financing system, as the business rate system is, how do you then draw from other parts of the system in the fairest possible way? I think we have achieved that.

Why? Because a £500,000 rateable value is 1% of the business rate system, and it targets the warehouses and distribution centres for companies that are by and large doing well. Most retail, hospitality and leisure businesses on the high street, such as restaurants, fashion retailers and pubs, are saying, “We are only just keeping our head above water.” In a system that anybody would say is quite clunky, I think this Bill is as good as you will get for rebalancing it fairly, while being targeted enough to get the outcome that you want, which is thriving high streets and local communities who can begin to be proud of the places where they live because they are seeing activity, not windows boarded up and roller shutters pulled down.

[Jayne Kirkham]

Q This is just a point of clarification for me. It is probably really simple. On the larger rate, over £500,000, and the lower multiplier, one witness said that it could still apply to hospitality, retail and so on, so it could still be applied to big hotels and grassroots music venues even if they are over the level. Is that right?

Jim McMahon: At the moment, any property over £500,000 would be subject to the higher value. We are not looking at the moment at sectoral exemptions, but clearly we will take into account the evidence sessions and the discussions that will happen tomorrow. However, it would be fair to say that if you are a retailer with such a square footage that the value is over £500,000, you are likely to be a very big department store, a big out-of-town shed or a supermarket. The assumption in the system is that if you can afford to occupy and run a space of that size, there is room to pay additional business rates on that basis. In the end, it is about giving it to that ultimate use, which is the smaller retail, hospitality and leisure uses that are the backbone of many communities.

[Harriet Cross]

Q Going back to panel 7, we heard UKHospitality, the British Institute of Innkeeping and the night time economy adviser for Greater Manchester reflect on jobs and job losses due to changes. I appreciate that it is hard to establish at this stage whether those are because of national insurance or business rates, but either way business rates are a contributing factor. What analysis have the Government done as a background to the Bill to model the impact on jobs and job losses in the different sectors? What impact assessment has been done in relation to the different types of employment—full time, part time or seasonal? A lot of hospitality work helps people such as part-time working mothers because it comes at different times of day.

Jim McMahon: I think, within the scope of the Bill, which is very narrow, the impact is only a positive one. That is in the context of the temporary relief that was provided during the covid pandemic, which, being temporary, was coming to an end—the cliff edge was coming. There was absolutely no finance provided for it beyond the current year, so the question then is: what do Government do about it? We either grow even further the £22 billion funding gap that was here when we came into office—that is, we continue it—or we say that—