Non-Domestic Rating (Nursery Grounds) Bill

Jim McMahon Excerpts

2nd reading: House of Commons
Tuesday 5th June 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

The Opposition welcome the provisions in the Bill. Broadly, we welcome the Government proactively seeking to iron out anomalies across the business rates system, bringing clarity to business, the Valuation Office Agency and local authorities. We agree with the principle that land and buildings associated with the operation of plant nurseries should not be liable for business rate payments, which is why we support both clauses in the Bill.

I should say, however, that the spirit with which the Government have approached this matter is not necessarily reflected in the state of our town and city centres. We recognise that support is being given to small businesses through small business rate relief, but many town centre locations are just above the threshold and do not qualify for any relief. The Minister, like me, will be a regular visitor to town and city centre businesses. He must hear first-hand, as I do, that many businesses on the high street find it a struggle to make ends meet, particularly when their online competitors have a distinct advantage with lower overheads. They can avoid the impact of town and city centre business rates, because they can operate in cheaper locations elsewhere. I think that all of us are pleased that digital taxation is being considered, but without a real and direct strategy to deal with the decline of our town centres and high streets, I am afraid that it will all be for nothing.

Returning to the Bill, since 1929 there has been a history of exempting such premises from paying non-domestic rates. The 2015 court ruling changed matters and it is good that the Government have responded, but let us be honest. It has taken three years for the judgment to work its way to becoming Government policy and to work its way through Parliament to be debated here today. Although it is correct that payments and refunds will be backdated, the point was made earlier on that compensation is not being paid and interest payments are not being made to businesses either.

From the Opposition’s perspective, it would be helpful to understand what the Government have in mind to iron out these types of anomalies across the system. We had the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill a month or two ago and we have this Bill today. If any others are in the forward plan, it would be helpful to see them, because they could well be wrapped up into a single Bill, which would save a lot of time on the Floor of the House and in Committee. These Bills are genuinely not controversial or divisive. They will not be divided on in Committee, provided that they are about dealing with the impact of court decisions that were never Parliament’s original intention.

We welcome the fact that the policy is being applied retrospectively. It will mean that businesses will not be at any direct financial disadvantage and will get back the money that they paid in business rates. However, we need to see what the Bill means for local authorities. The Government have been clear in this and previous Bills that when they are rectifying the decision of the court, their view is that the local authority involved effectively had a windfall for a short period. I just do not believe that is the case at all. Any money that is taken out of a local authority’s base budget, particularly when that local authority is part of a business rates retention pilot, will be a net loss with regard to the money that it has to spend on public services in its area.

While I acknowledge what the Minister said, I am not sure that “a handful” is a number. The Government do not know the number—[Interruption.] Let us say five then—no more than five. However, a very worrying precedent is being set whereby the Government can bring legislation through the House that has a direct impact on the funding of public services by local authorities and choose not to reimburse local authorities for the money that has been taken away. While we accept that only a handful of businesses have been affected in respect of this Bill, a Bill could come tomorrow that affects hundreds of local authorities and thousands of businesses, involving many millions of pounds, but the Government take the same approach and stance. It is not fair, proper or in the interests of good governance for us to make decisions without knowing their full impact. If we are to receive another Bill of this nature, I ask again that the Government come forward with a proper impact assessment by local authority so that we know exactly what impact it will have, including the financial impact, both for those that are not part of a retention pilot scheme and those that are part of the regular scheme.

We look forward to finding reasons to talk at length about the Bill in Committee, as well as to finding other reasons to talk about it at length on Third Reading when it comes back. I implore the Minister, however, to look at his forward plan to see what elements can be brought together to save time on the Floor of the House.