Draft Northamptonshire (Structural Changes) Order 2019

Jim McMahon Excerpts

Monday 10th February 2020 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Gray.

None of this is new. We have been anticipating a conclusion and, in some ways, I welcome the fact that we are now beginning to get to the end. At least the local authorities that will be created there can begin to rebuild public services in their area. As time has gone by, without doubt public services in those areas have been affected.

We ought not to forget why we are here in the first place: the financial crisis that was created in Northamptonshire and led to commissioners going into the council. We are now at the end of the process, but it meant that spending on all but non-essential services stopped completely on two separate occasions. To help fund the gap, £17 million of capital was given, which effectively involved a fire sale of the assets owned by the county council. The reason for that was pretty self-evident. A lot of the neighbourhood services, regulatory services, public protection services and housing, which are delivered by the boroughs in metropolitan areas such as London, have been squeezed to help fund adult social care and children’s services. In a two-tier area, the county bears the pressure of adult social care and children’s services without the ability to squeeze the neighbourhood services that are being decimated elsewhere around the country.

There were particular problems in two-tier areas. The order will not resolve those structural problems, and neither will the fair funding review. The truth is that there is not enough money in the system to fund adult social care. That is relevant, because the funding base was why we have ended up with the reorganisation that we are now discussing and reaching a conclusion on. The fair funding review will mean that money is just being shifted around the system.

[The Chair]

Order. The hon. Gentleman must stick to the statutory instrument that we are currently considering.

[Jim McMahon]

The Government will need to be able to convince not just the Opposition, but the residents of the two new unitary authorities, that there is enough money in the system to fund services. What is the point of reorganisation if it does not deal with the crisis that led to it in the first place?

I make this call whenever we discuss reorganisation, particularly in two-tier areas where there is not entire agreement among the component local authorities. When a new authority is created, there is sometimes a danger that, in order to assert its own identity, it almost tries to erase the identity of all that went before it. We need to make it clear that the people who administer public services in an area do not make the identity of the place. It is important that the historical identities of local communities are respected through the reorganisation, and that councillors keep an eye on that throughout the transition period.

I place on the record for Hansard my thanks to Councillor Tom Beattie, the leader of Corby District Council, for the fantastic work that he has done. I hope that one day Labour will control those two unitary councils, but I think that we are some way away from that. Councillor Beattie’s sterling work in steering Corby District Council over a number of years has not gone unnoticed, and I place on the record that he is one of our best in local government.

It has been a very turbulent time for councillors, public officials and the people who work for the local authorities concerned. Although there is not entire agreement among local councils that this is the right move, it will at least settle the matter. Hopefully they can rebuild and move on.

Planning System: Gypsies and Travellers

Jim McMahon Excerpts

Wednesday 29th January 2020 Westminster Hall

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

I congratulate the hon. Member for Kettering (Mr Hollobone) on securing the debate. We may have had some idea about the nature of the debate. Unfortunately, when it comes to the Gypsy and Traveller community, the prejudices that we have heard are all too common, and they are as old as time itself. I would have expected, though, that in the Parliament that makes the laws of the land, the debate would be based far more on fact and evidence, and far less on anecdote and local constituency casework. I fully accept that there is always a need to provide balance in debates and to be honest about some of the pressures.

I congratulate my hon. Friends the Members for Hammersmith (Andy Slaughter), for Stretford and Urmston (Kate Green) and for Coventry South (Zarah Sultana) on their contributions to rebalance the nature of the debate. I felt that I was in a different debate when we talked about a community that expects special treatment, that takes out but does not want to pay in, and that is ruining our country. It could have been a debate on Amazon or Facebook, but it was not; it was a debate about people—human beings; members of our community who deserve respect and empathy.

What is it like to be a member of the travelling community, travelling around to secure work, providing for their family and living a lifestyle that they choose for themselves? Some people do not believe that the lifestyle is legitimate. We have heard before, “Why live in a caravan if you can live in bricks and mortar?” It is as if the way we choose to live our lives is the way that everybody ought to live their lives, because our way is perfect and others’ are de facto imperfect.

There are legitimate issues that we should be honest about and debate, but those issues come from injustice, not a community that is not willing to play its part. That is where we should start. Let us have the debate about educational attainment, but let us talk about how an education system should reflect a lifestyle that requires more flexible education that follows and supports the child throughout their educational life. Let us talk about housing and provision.

[Andrew Selous]

I am intrigued about how flexible education could follow a Traveller child around the country. Could the hon. Member expand a bit on how that might work?

[Jim McMahon]

We are not here to design an education system, but there could be a system similar to an education passport, in which the child’s curriculum follows them throughout the journeys they take around the country. That would at least be a start. Part of the issue is that education authorities do not talk to one another when children move from one school to another. The education experience that child might have had in one primary or secondary school is not necessarily carried on to the next. That is a big gap.

On land supply, when we talk about illegal sites, nobody supports breaches of planning law. The planning law is there for a reason, but we have to address the underlying causes. If I look at the terraced houses in Oldham and I see overcrowding, I do not blame the tenants; I look at housing supply and affordability. I see people being ripped off, paying massive amounts in private rent, but who want a decent social house that is affordable, safe and clean for their children. It is the same for the Traveller community. They want clean, safe and well-maintained sites, but all too often local authorities do not step up to their responsibilities. I say that as an advocate for local government and a standard bearer.

Too many authorities do not take responsibility. The nature of that presents in different ways, with a very different impact in a mainly urban area from in a rural area. Unfortunately, many urban authorities view the Traveller community as a problem that must be tolerated, rather than a legitimate community that should be supported. All too often the sites chosen as Traveller sites will be near the waste transfer site or the industrial estate, in the back of nowhere that we can ignore, hoping that the settled community does not kick up an objection. That is no way to treat people. What other community would we treat in that way?

We can call out bad behaviour. I get as frustrated as anybody else when a Traveller community comes in and commercial waste is left behind, but I can drive down a road in Oldham and see exactly the same from a tradesperson who does not want to pay the charges at the local tip, and who therefore leaves waste at the end of a lane or at the edge of a playing field. I do not say that the whole community of that person should be evicted as a result of the actions of an individual. That is where this debate goes wrong. We talk about anecdotes and the worst excesses of an individual member of a community, as if somehow that is the reputation of the whole. I might expect that on Facebook or an internet site, where people get angry and wind each other up, but I would not expect it in Parliament. We are here to make laws that are meant to be about rights, responsibility, balance and evidence.

Whatever we do, we need a proper joined-up strategy that covers health and wellbeing, housing, education, employment and the very real issue of the gap in life expectancy and the unacceptable levels of male suicide.

[Andrew Selous]

I tried to be as fair and balanced as I could in my contribution. If the hon. Member came to my constituency, he would meet many decent, tolerant constituents who would have harrowing tales to tell him about what they have experienced. That is not anecdote; it is fact, and it has gone on for well over a decade. That has to be reflected in this debate as well.

[Jim McMahon]

It is for the Government and local councils to be supportive and to facilitate good community relations. They do not do that when the planning, education and housing systems are stacked up to make the people we are talking about part of the problem, not the solution. The reason there are illegal encampments is that often not enough authorised sites are provided. Even so, 88% of the travelling community are on authorised sites, whether local authority or privately owned. We do not talk about that; we talk about the unauthorised ones, as if that is somehow representative of a whole community. It is not.

Those in positions of power and leadership have a responsibility to build bridges, not walls, and to bring people together. They must use the levers of government, whether about regulation, tax or spend, to make sure that we create a long-term solution. We will be having this debate in another 10 years. If the Government put in place even harsher laws, which the police will not even implement because they recognise the reality on the ground, that will not solve the problem at all. We need positive solutions, looking at communities as human beings and recognising that people have the right to live the life they ought to lead, whether as a Traveller or in a settled community.

Perhaps some cross-party support is needed. If the Government want to look at the issue from a human being’s perspective, I am sure that they will find useful participants in that conversation on this side of the House. If the Government do not want to do that, but instead build walls and further the division, they can expect very firm opposition.

[Sir George Howarth (in the Chair)]

Before I call the Minister, may I remind him that he should leave a little time for Mr Hollobone to make his final remarks?

Oral Answers to Questions

Jim McMahon Excerpts

Monday 13th January 2020 Commons Chamber

[Jake Berry]

The planning White Paper will come out after the conclusion of the debate on the Queen’s Speech, and, looking at how CPO works in our town centres and other parts of the country will be part of the consultation. On the specific issue that the hon. Gentleman raises, it would seem to me a crying shame if this issue could not be dealt with, as we head towards the rugby league world cup. If he would like to come to see me, I will certainly make it my job to do so.

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

Mr Speaker, it was a pleasure to see your journey down here with Patrick the cat and Boris the parrot a couple of days ago—a preening, repetitive, attention-seeking Boris; I am sure he will fit in quite well here.

Our high streets and town centres are in crisis, with more shops closing than opening. The Government keep falling way below what is needed to take real action that will make a difference. When will they take real action to address the fundamental weakness of our business taxation system to give our high streets and town centres a fighting chance? As a practical suggestion, why not look at enterprise-type zones for our town centres with incentives to make sure that they have a future?

[Jake Berry]

In terms of practical action, the £3.6 billion towns fund seems to be a good place to start. When we add to that the £13 billion that we are saving for businesses in business rates, we are certainly making some progress, but I will go away and look at the hon. Gentleman’s suggestion about high street enterprise zones.

Deaths of Homeless People

Jim McMahon Excerpts

Tuesday 1st October 2019 Commons Chamber

[Luke Hall]

I thank the hon. Gentleman for raising that question. Part of the rough sleeping strategy and rough sleeping initiative is about delivering both the 2,600 new bed spaces next year and the 750 staff to provide support in tackling the sort of issues he is talking about.

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

If every seat, aisle and step in this Chamber was full, we still could not fit in every person who has died in the streets in this country, and that is actively at the door of the Government. We have had the cuts to housing and support services, particularly drug and alcohol services, and those chickens are coming home to roost. This cannot be fixed with the Housing Minister changing every few months, and by coming and making excuses. We need proper action and proper funding, and the Government need to take responsibility for the impact of welfare reform.

[Luke Hall]

The hon. Gentleman should bear in mind the £1.2 billion that is going in to provide homelessness support through the rough sleeping strategy. He makes an extremely valid point; there is no shying away from a hugely difficult set of statistics, and we should all pause for thought. He paints a vivid image. It is right to point to the fact that we are continuing to invest in our health services, with £30 million made available from NHS England for rough sleeping over the next five years, and £2 million in health funding to test these community-based models of provision, but he is right: there is no shying away from and no complacency about the fact that this is an extremely difficult issue affecting our whole society. We will strain every sinew to make this happen.

Non-Domestic Rating (Lists) Bill

Jim McMahon Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 22nd July 2019 Commons Chamber

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

The Bill came around very quickly from Second Reading to Committee and then to Third Reading, which just shows that, when Parliament decides to do something, it can do it. Perhaps that is because we are light on business and there is time to debate and discuss these issues. I know that this is a geek interest—I take pride in being a geek and in liking data, numbers and finance, and this is an important matter. We cannot achieve the Government’s ambitions if we do not have a solid financial foundation. Business rates, although boring for many people, are actually a very important part of that. I also wish to echo the thanks to the Clerks for supporting the passage of the Bill. As always, they acted with absolute professionalism and ensured its smooth passage.

The purpose of the Bill has already been outlined, which is that it creates a three-year cycle and brings forward the revaluation period by one year. None the less, issues were raised on Second Reading and in Committee. I am slightly fearful that the Minister will be whisked away to another Department very shortly, and that we will lose his consistency and thoughtfulness. It matters not only that we pass the legislation in this place, but that we manage the transitional arrangements and the impact that naturally follows. We need to see what transitional arrangements will be in place. We need to ensure not only that the valuation office has capacity and is encouraged to deal with the backlog of 60,000 appeals going back to 2010, but that it has the people to deal with a new revaluation in the appeals process that will come. We need to make sure that the transitional arrangements are there, so that those who are adversely affected are able to manage that transition.

As part of the wider review, we need to ensure that we are clocking the geographical shift in valuations that takes place with every revaluation, because if we are going to move to 50%, 75% or 100% retention, that will naturally have an impact on the financial stability of local authorities that are part of those schemes. If, after every revaluation, we see a transition to the values of London and the south-east, that will not help build the northern powerhouse, which is a shared ambition for everyone who cares about the whole of the UK benefiting from the country moving forward.

We also need a more fundamental review of local government finance. I really feel sorry for local government Ministers. It is not right that the Treasury often has a closed mind to their funding issues, that they are told to deal with the envelope of money that they have, and that they are always last in the queue, behind the NHS, the police service and other more pressing Departments. The truth is that, if we do not get this right, older people will not get the care they need, younger people will be put at risk, and, critically for democracy, people will question why they are paying more and more council tax for less and less of the neighbourhood services that everybody enjoys universally. We on the Labour Benches will be holding our own review.

I thank the Minister for his approach this Bill, and I look forward to scrutinising it through the transitional arrangements as we approach the revaluation.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Non-Domestic Rating (Lists) Bill (Second sitting)

Jim McMahon Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 25th June 2019 Public Bill Committees

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to serve under your chairmanship, Mr Gray. I hope not to detain the Committee for more than a few minutes.

I hope that by now the Committee is familiar with the three specific improvements the Bill will make to the business rates system: first, it will move the next revaluation in England and Wales to 1 April 2021; secondly, it will move the cycle for revaluations in England thereafter from every five years to every three years; and, thirdly, it will move the latest date by which draft rateable values must be prepared in England and Wales to the 31 December preceding the revaluation. I am glad to say that those substantive changes can all be found in clause 1.

To understand clause 1, we need first to consider the main primary legislation for business rates: the Local Government Finance Act 1988. Part III of the Act concerns business rates; it currently requires revaluations in England and Wales to take place every five years from 1 April 2017. Clause 1 is concerned entirely with amendments to that Act, and specifically to section 41(2A), which provides for revaluations of local rating lists in England

“on 1 April 2017 and on 1 April in every fifth year afterwards”;

to section 52(2A), which does the same for central rating lists in England; and to sections 54A(4)(b) and 54A(5)(b), which provide for revaluations of local and central rating lists in Wales on a date specified by the Welsh Government by order—1 April 2017—and

“on 1 April in every fifth year afterwards.”

That shows in black and white the delivery of our commitment to make the rating system more responsive to changes in the property market and fairer for ratepayers, and to ensure that businesses see those benefits as soon as possible.

Sections 41(5) and 52(5) of the 1988 Act set out the deadline by which draft rateable values must be provided before the revaluation. That is currently set at no later than 30 September. Clauses 1(3) and 1(6) of the Bill move the deadline to no later than 31 December. It is important to remember that that is only a deadline—it is the latest date by which draft rateable values must be prepared. The Welsh Government agree that the deadline for the draft list should be changed to 31 December. Sections 41(5) and 52(5) of the 1988 Act apply to both England and Wales, so the amendments made by clauses 1(3) and 1(6) will automatically change that date in both countries.

Clause 2 will make purely consequential amendments to primary and secondary legislation. The sections of the 1988 Act that concern the transitional arrangements made at the time of each revaluation, and the regulations made under those powers in England, reflect the existing five-year cycle of rating lists. Clause 2 will therefore amend those references to bring them in line with the new cycle of rating lists in England and Wales. It will make no other changes to the powers in those sections.

Clauses 3 and 4 are, I hope, self-explanatory. As is normal practice, the Bill will come into force two months after it is passed. It will give the valuation office the legal basis it needs to complete the valuation exercise for a revaluation in 2021. Since it has already started work on those valuations under the existing legislation and will continue that work over the coming months, there is no need to shorten the normal two-month commencement period.

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

This morning, though brief and focused, we heard from representatives of the Association of Convenience Stores, the Federation of Small Businesses, the British Retail Consortium, the Confederation of British Industry, the Local Government Association, and the Chartered Institute of Public Finance and Accountancy. We place on record our thanks for the time they took to give evidence to the Committee.

The scope of the Bill is narrow, and that was reflected in the discussion we had. However, some themes came out during that session that are worth repeating. Clause 1 brings forward the new ratings list by a year, to 2021—a move that we welcome and that was welcomed by all those who gave evidence earlier today. There were calls for annual reviews, but given the concerns about capacity in the Valuation Office Agency, evolution might be more advisable, which is why we support bringing the new list forward by one year.

One element that was queried by the Local Government Association was the change from six to three months’ notice to billing authorities of the new list, pushing the deadline from “not later than September” to December. That change will hit many local authorities, as they will be presenting—or, in many cases, would intend to have already presented—their budget proposals to council. That is important because, as employers, councils have to meet their statutory obligations to their employees for any changes that might follow, whether for redundancies or any structural changes within the organisation. It is important that councils can meet the January deadline for that, so the notice period is important. I therefore ask that the Minister meets representatives of the LGA as a matter of urgency to address their concerns and decide whether something can be done to minimise the impact of that change.

Clause 2 addresses transitional relief and brings it in line with the new list proposals. There was a broader discussion, which I do not intend to pad out here, about business rates and their impact on the retail sector, the viability of businesses and the future of high streets and town centres. We share the concerns about those issues and would welcome further discussions to create a business rates system that is not only fairer but helps British businesses and industry to thrive in future, rather than—as business rates do at the moment—simply acting as a tax to occupy or exist. There are growing calls for change, and I hope they are heard and acted on by the Government beyond the scope of this Bill.

[Rishi Sunak]

I thank the hon. Gentleman for his typically thoughtful comments and join him in thanking all the witnesses we were lucky to hear from this morning.

During this morning’s session, I was pleased that there was widespread support for the principle of the Bill, namely shortening the revaluation cycle to make business rates more responsive to economic conditions. It felt like all participants agreed that three years was the right place to end up, striking an appropriate balance between responsiveness on the one hand and providing some certainty and stability for ratepayers on the other.

I am pleased to tell the hon. Gentleman that my team is already in discussions with the LGA and will continue to be so. It is also in discussions with CIPFA, which participates in a technical working group on business rates and business rate reform to ensure that the process for local authorities submitting their NNDR1 forms by the end of January is not unduly impacted by the change. As in the past, we have been able to work constructively with local government and CIPFA to ensure all the processes that need to happen for revaluation work for the sector, ratepayers and everyone else involved.

To the hon. Gentleman’s last point, and without wanting to stretch the scope of the Bill, I understand what he says. I am glad he recognises the contribution of business to our economy and society—not least providing employment and the funds we need for our public services. We will always be keen to do what we can to support business. With regard to business rates, £13 billion of various reforms have already been enacted by the Government—most recently the retail relief scheme, which provides a third discount to retail high street stores on their business rates bill and has been warmly welcomed. The Government will continue to watch that issue closely.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Non-Domestic Rating (Lists) Bill (First sitting)

Jim McMahon Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 25th June 2019 Public Bill Committees

[The Chair]

Okay. I call Jim McMahon.

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

Q Thank you. Welcome, Dominic. It is good to see you. What impact do your members consider that the current business rates system is having on our high streets and town centres?

Dominic Curran: An extremely adverse impact. The business rates level has risen 50% since its inception in 1990. It has risen by 10p in the pound, from 40p to just over 50p, in the last decade alone, at a time when there is, as you well know, an enormous retail transformation happening on the high street. That prohibitive level of business rates is hindering our members’ ability to invest in their stores and in the retail experience for the future that we hear so much about and that our members want to be a part of.

[Jim McMahon]

Q Quite often when we hear about the decline of the high street and the pressures in town centres, it is framed as a challenge between the on-street and the online, when actually most of your members will trade in both ways. Do your members have a view on how best to balance the shift to a growing online presence with the cost of occupying high street locations?

Dominic Curran: Yes. We have put in a submission to the Treasury Committee, which, as you will know, is holding an inquiry on the impact of business rates at the moment. Fundamentally, we think the system is broken. It needs reform. Our overarching call is for a wide-ranging, fundamental reform of the entire suite of business taxation. The problem is that, in the past, there have been reviews just of the business rate system in isolation. Given its links to local government finance, and the wider impact of how different taxes affect the ways in which businesses operate—online and offline—we need a much more wide-ranging review.

That said, we recognise that that is quite a big, long-term ask, so we have called for some immediate reforms—most importantly and immediately, a freeze in the multiplier, and then a way of using the forecast increased revenue from corporation tax to offset business rates revenue, so that we can begin to, essentially, treat all business taxes with one coherent tax system, and use one element to help another element. An online tax, which is often prayed in aid, is not the best idea. If it is an online tax on goods, it would effectively be levied 100% on the retail sector. Retail pays 25% of business rates, so if you were to use the online tax to recycle the revenue from that to help retailers, they would essentially be paying 100% of the tax and getting 25% of the benefit.

[The Chair]

May I just interrupt for a moment? Questions and answers need to be within the scope of the Bill, which is specifically about the timing of bills and business rates, and we should try to constrain ourselves to that very narrow basis and avoid talking about wider issues. Was there a supplementary within scope, Mr McMahon?

[Jim McMahon]

Q The revaluation period is being brought forward, which is a subject of the Bill. Revaluations obviously have a direct cash impact on the members that each of you represent. With the revaluation that will now take place in 2021, and the subsequent revaluations every three years, should there be scope to review the treatment of direct-to-consumer warehousing—for instance, the Amazon warehouse delivering direct to the end consumer—and the amount of business rates that they pay per square metre compared with the high street department store?

Dominic Curran: I think—

[The Chair]

Again, I do not mean to be difficult, but I am advised that consumer warehousing is not strictly within the scope of the Bill, which is on the timing. Do you want to make a comment within the scope of the Bill?

Dominic Curran: I would only say that I think that all business properties should be valued every three years, as the Bill suggests.

--- Later in debate ---

[Rishi Sunak]

Thank you.

[Jim McMahon]

Q To follow up on that point, when the revaluation is brought forward, that will not dispense with the appeals already in the system—they are still there and need to be administered—and it will just create the opportunity for further appeals. Have your members expressed any concern about the capacity in the valuation office? Do you have any concerns about what it might mean if no additional capacity is brought in and there is a more recent revaluation in 2021?

Martin McTague: I can certainly answer that. There is widespread concern about the lack of capacity in the VOA. It is bizarre that the solution seems to be that you impose a six-month cap on appeals. That is effectively saying, “It’s so difficult to get these appeals through the process that we are going to cap the time required to do it.” Yet the information is not available to the business rate payer to be able to challenge things easily. The point that you made at the beginning—that the VOA is fundamentally under-resourced to deal with this change—needs to be addressed quickly.

Edward Woodall: I agree with Martin. The feedback I get from my members is that there is a lack of capacity at the VOA to allow them to engage meaningfully in the process and talk to individuals. There is also a challenge, which we will probably come to, about the structure of the process it has developed—check, challenge, appeal—and people’s ability to interact with that, which is causing difficulties.

Dominic Curran: Absolutely. Our members are enormously frustrated with the VOA on a day-to-day basis. The appeal system is clogged up at best. It needs better resourcing. There certainly should not be a cap on appeals, in terms of the time length. But more frequent revaluations would, to an extent, reduce the need for appeals, because valuations would be less out of date, although they would probably still be somewhat out of date.

[Rishi Sunak]

Q A final quick question, Mr Curran. One of the things that the VOA has to do at the moment is to deal with appeals. You just made the point that more frequent revaluations ought to reduce the volume of appeals. Will you elaborate on that point, because, obviously, less appeal work would be an offset to the increased work of more frequent revaluations?

Dominic Curran: The argument is strongest if we were to move to a system of annual revaluations. With an annual revaluation, it almost would not be worth appealing a valuation that you thought was wrong, because it would change in a year’s time anyway. The other effect would be that the valuation probably would not be so wrong, because your annual changes would be on a much smoother line—looking at it on a graph—whereas if we revalue every seven years, as we have, you get quite a steep change. Obviously, somewhere between seven years and one year, the line gets smoother and smoother. It is a question of judgment which number we pick. Using that logic, three years should have fewer appeals than five or seven, but one year should have fewer than three. We will see how good the VOA is at dealing with three-yearly revaluations.

--- Later in debate ---

[The Chair]

Thank you. Who will be the first Member to ask a question? I call Jim McMahon.

[Jim McMahon]

Q Thank you, Chair. I thank the panel members for taking the time to come and give evidence. This is a question for each of you in your different guises. We heard in the previous evidence session that there is concern about the Valuation Office Agency’s capacity to deal with the revaluations and the appeals that may follow. Have you got any views on that?

Annie Gascoyne: I am happy to go first. It is an issue that the VOA has struggled with the number of appeals in the past. There would be a challenge with VOA capacity if we moved to annual revaluations, which is what businesses would like to see in the longer term, because it would mean that the revaluations were more in sync with the economic cycle and what businesses are able to pay. However, we think that the three-year revaluations are a good stopgap, and are something that the VOA should have the capacity to deal with. That said, there have been issues with the check, challenge, appeal system and the VOA’s IT systems, which were implemented too quickly without due thought to some of the more complex business relationships when it comes to property.

The VOA has some work to do to look at modernising its IT infrastructure, perhaps taking lessons learned from how making tax digital for VAT was implemented. We should see whether there are ways that the VOA can streamline the process so that, in the longer term, instead of three-yearly revaluations, which is what we are talking about today, we can move towards annual valuations, and potentially in the future self-assessment, which would simplify the process for everyone in the long term.

Councillor Watts: Thanks for the question, Jim. We have significant worries about the VOA’s capacity. Clearly, if we are going to give it more work, which this Bill does, it will need to be properly resourced. It is worth adding, even at this early stage, that this is not just about the VOA’s capacity to do extra work in the future. There is a very significant backlog of work stored up at the VOA and the appeals tribunal. It is a sad fact that there is more than £2.5 billion tied up in council reserves that could be spent on public services. That is currently being kept back to guard against the risk of appeals from the 2010 revaluation. Clearly, if that money is to be freed up to be used on public services, as we all want, we need to crack through the backlog of appeals rapidly, and we must recognise that more regular revaluations will lead to more work in the future. We think that more resource is needed at the VOA so it can get through what is already a pretty big mountain of work, and there will be more work if the Bill passes.

Adrian Blaylock: I agree with my colleague from the LGA. He is right that the VOA is struggling with its capacity, in terms of the backlog of appeals from the 2010 list. I do not think we have yet seen the impact of the 2017 list and the switch to the check, challenge, appeal system. Moving to three-yearly revaluations will certainly have an impact on the VOA’s resources, which has an impact on local government because of the provisions it has to set aside for loss on appeals. It is really important that the VOA is resourced sufficiently under the new CCA system to deal with the revaluations and the appeals, or whatever we want to call them, coming out of the more frequent revaluation.

[Jim McMahon]

Q My next question is probably more for Richard and Adrian, in terms of your member authorities and your members. It is about the impact of rate retention. Are you confident that the floors and ceilings are sufficient to mitigate a potential shift in values away from many of your member areas? We know that the 2017 revaluation led to significant shifts away from many regions, towards London and the south-east in particular. In fact, only London saw an increase across all value types; many other areas saw declines. Do you have concerns about what that might mean for members who are part of rate retention pilots?

Adrian Blaylock: It depends where we go in terms of rates retention. The consultation that happened in December and the switch to the alternative model for rates retention give local authorities certainty, in terms of a guaranteed baseline funding level, regardless of what a revaluation does. If we go down that route, I do not think it will be an issue, but you are right that, if you look at the impact of any revaluation, there are winners and losers in the different regions across the country. It is important that there is a rebalance of funding across local government so that no single authority is overly adversely affected. The safety net built into the current rates retention system seems to be working adequately for 50% retention. It probably needs to be reviewed as part of the move to 75%, and ultimately—hopefully—100%. I guess that will have to be part of the consultations about how we move to that sort of system.

Councillor Watts: I agree with that. There is a wider point, which I will stray into only briefly because it is not precisely the topic of the Bill. The risk we face on business rates is that we represent a council area that has seen a very rapid rise in valuations, which has put enormous pressure on many of our small and medium-sized businesses, and we are seeing holes in our high street for the first time in a while as a result of rapid increases in rates and rents. There is a disparity between the amount being paid locally and the amount being received locally, which at some point stops adding up for people. There is a challenge relating to the wider business rates system. Some areas are seeing very rapid rises in the value of property. Most businesses do not own the property they operate from, and therefore do not feel the benefit of the rise in its capital value; they just get a high rent bill as well as a high rates bill.

[Jim McMahon]

I recognise from the outset that this is slightly expanding the scope, but I will try to be disciplined about it. Do your members have a view about the treatment of plant and machinery in the revaluation?

[The Chair]

I think we cannot go there, given the timeframe. You were right to give a warning. Do you have another question that is in scope? Stephen Morgan, you have one.

--- Later in debate ---

[Graham P. Jones (Hyndburn) (Lab)]

Q Do you foresee any problems with the roll-out of the business rate retention scheme and this Bill? Do you think any anomalies or complexities will emerge from those two?

Adrian Blaylock: Nothing obvious occurs. There are a lot of unknowns about rates retention—we are talking about whether we carry on with a similar model to what we use now, just with the 75%, or whether we go for the alternative model, which was favoured in the December consultation—and what local government needs is certainty of funding, and understanding of when and how the money will come. So I do not think that the Bill particularly causes any issues, but it would be nice to get some early indication of where we are going with rates retention and how that will change.

Councillor Watts: I do not think there are any in-principle reasons why the Bill creates problems for business rates retention.

Annie Gascoyne: I agree.

[Jim McMahon]

Q Is there a call from your members for a more fundamental review of business taxation, rather than the silo approach of the review of business rates?

Annie Gascoyne: You mean beyond business rates? We would see a fundamental reform of business rates as being high on our priority list—

[The Chair]

May I just intervene? Sorry to interrupt. To be in scope, a question has to be about timing, so do you want to rephrase that question to be about the timing of change? Otherwise it is not in scope.

[Jim McMahon]

The question has been answered. I need no further response.

--- Later in debate ---

[Rishi Sunak]

No.

[Jim McMahon]

Q May I ask one question of Richard? Is the LGA making a specific request that the change of date from September to December be reviewed as part of this process?

Councillor Watts: We are, yes. In effect, our request is that we would welcome further conversations with the Government about getting a date. We understand the arguments for shifting it, because it is quite a long time and 30 September is quite early in the process. However, for one year out of three when that impacts on the potential local government announcement, we would like to understand more about how the Government would like to co-ordinate between this announcement in December and the local government spending announcement having to be earlier than it, because that is a change in precedent. We cannot push the local government spending announcement each year beyond 31 December—it is already too late where it is, given that local budget setting for any authority of size is effectively always concluded before the spending settlement on the basis of guesswork, then tweaked when the settlement is announced in the House.

[The Chair]

As there are no further questions, I thank all members of the panel for their evidence. I invite the Government Whip to move the adjournment.

Ordered, That further consideration be now adjourned. —(Jeremy Quin.)

Non-Domestic Rating (Lists) Bill

Jim McMahon Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 17th June 2019 Commons Chamber

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

First, may I refer Members to my entry in the Register of Members’ Financial Interests? I am a vice-president of the Local Government Association. We are very supportive of more frequent revaluations. There are growing calls to make sure that that happens, not only to ensure their relevance but to remove any potential sharp cliff edges—the longer a revaluation is left, the more the valuations between regions drift.

The LGA, though, would like the Government to go further, and asks them specifically to reduce the significant backlog of appeals: there are a staggering 65,000 unresolved appeals from 2010 in the system. That is important because local councils have to have £2.5 billion in reserves, in case those appeals are successful and the risk is carried by council services. The LGA also asks for the appeal period to be capped at six months. Again, that would reduce the financial exposure for which local authorities would have to make provision through their reserves. The LGA believes that that would be more appropriate.

We must consider the impact of revaluations with regard not only to the changing nature of demand—including for retail, office and other types of uses—but to the geographical shift away from our regions to London and the south-east, as shown by the most recent revaluation. The net take for the Treasury has to be broadly the same, and the revaluation reflects the increase in value in London and the reduction in the regions.

In the 2017 revaluation, it was only London that experienced an increase in all values across all sectors: retail was up by 26.2%, industry by 15.1%, office by 21.2%, and other uses by 25.7%. Every other region, bar the south-east, experienced a reduction in retail values, including by 1.2% in the west midlands and by 6.8% in the north-east. Although office values were more mixed, Yorkshire and the Humber experienced a decrease in value of 13.25%, followed by the north-east, which was down by 12.5%. A real shift is taking place away from our regions, primarily in the north, towards London and the south-east.

Let me paint what that picture means in pounds and pence, because that is what the Treasury cares about when it comes to business rates. The square mile of the City of London alone is now valued higher than the whole of Wales. Westminster City Council and Camden Council together are worth more than the whole of the north-west of England. Greater Manchester alone is valued higher than the whole of the north-east of England. We are seeing major shifts in values across the country, focusing not just on the capital but on the city bases away from our towns.

Why is that important? As more local authorities move towards business rate retention schemes, all with varying degrees of retention and because of that different degrees of exposure, there will be an impact on those with 100% retention in particular. Councils will be asking—following the next revaluation in 2021, should the Bill go through—what safety net will be in place to ensure that councils with perhaps weaker economic bases are not disadvantaged because they have opted into a business rate scheme. That is not because they have not been working hard to drive their local base—many have been doing that, which is why they went into the scheme in the first place—but because the nature of demand in those places has changed so much.

In Committee, when we have a bit of time to secure evidence to test some of these ideas out, I hope there will be a spirit of wanting to work together to try to make the system work. We have heard some pushing demands from Members who, quite rightly, recognise that council tax and business rates are both very important property taxes which also have limitations. It is important that both are sustainable and fair on the payers.

[Bob Blackman]

The hon. Gentleman provides an analysis, which I recognise, of the changes that took place during the previous revaluation. He also says that there is an opportunity for local authorities to grow their economic base. Has he done any economic analysis of how successful those areas of the country that have seen a greater fall in their valuations have been in attracting businesses, in particular where public services and Government Departments have been devolved to those areas, which can increase the economic basis of those local authorities?

[Jim McMahon]

We have done that analysis. We have spoken to local authorities that are part of the retention scheme and where they have managed to capture the uplift in growth of values. I should say, however, that in combined authority areas and city regions, where we take the locality in the round we are seeing a shift away from towns to cities. The cities are performing very well and we are seeing stability in the retail and office markets, but we are not seeing the same repeated in the neighbouring towns that can be only a mile or two up the road. In terms of net gain, a lot of them will have to bring forward their strategic plans to ensure they are developing enough big employment sites, because it will eventually come down to square footage as we see the nature of it shift.

Let us be honest: we are talking about an online sales tax. The Government have really resisted that. There are some legitimate reasons to be cautious, particularly in terms of EU legislation and what that might mean for a potential challenge, but the fact is that we have not addressed, even within the business rate regime, how completely unfair it is for the high street anchor store —John Lewis, Debenhams and so on—which brings in footfall into town centres and supports the other retailers. The Amazon big shed on the edge of the motorway pays a fraction of the business rates to occupy that space, when it is actually a more productive space direct to the consumer. There is a lot of room to go here, not just to rely on an internet sales tax, but to get around a table, work through the detail cross-party and really test what areas are not controversial. Most people who understand this recognise that the system has to catch up with the changing times. That offer has been on the table for a while and perhaps one day it will be taken up.

Oral Answers to Questions

Jim McMahon Excerpts

Monday 17th June 2019 Commons Chamber

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

I am not quite sure where the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) was, but a number of Tory leadership contenders were queuing up on last night’s TV debate to pledge their loyalty to adult social care and their desire to see it properly funded. Now that there is a queue of Conservatives who are finally waking up to the adult social care crisis facing this country, what assessment does the Minister make of the amount of money needed to plug the gap?

[Rishi Sunak]

We are doing that work with our colleagues in the Department of Health as we speak, to ensure an accurate reflection of the pressures as we go into the spending review. Those pressures are real; everyone acknowledges that there is an ageing demographic at the top end of social care, but working-age adults now account for half of the budget. It is right that we get the demographics right and that we go into the spending review with a robust case for the amount of funding that social care requires.

Non-Domestic Rating (Preparation for Digital Services) Bill

Jim McMahon Excerpts

3rd reading: House of Commons & Committee: 1st sitting: House of Commons
Monday 20th May 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

It is a pleasure to serve under your chairmanship, Dame Eleanor.

The Government have made significant reforms to the business rates system since our wide-ranging review in 2016. Responding to the needs of ratepayers, we are building a system fit for the 21st century. The tax system must keep pace with the way business operates today, and that means a modern, online system that makes it easier for businesses to manage their bills in one place.

Today’s measure is a small step towards that modern system for business rates. It will give Her Majesty’s Revenue and Customs the ability to carry out the early design work so that it can explore how a new system can be delivered. It does not implement or commit us to a particular approach, and the Government will work closely with local government and businesses when we come to develop detailed proposals. We need the Bill because HMRC’s statutory functions do not currently extend to the administration of business rates. As I have said, further primary legislation will be needed for HMRC to implement the outcomes of this work, so this House will have a further opportunity to look again at the project.

On the detail of the Bill’s clauses, HMRC’s functions are set out in primary legislation in the Commissioners for Revenue and Customs Act 2005. These functions relate to the collection and management of revenue, as set out in section 5 of the Act, and do not extend to the administration or payment of non-domestic rates. Clause 1 therefore provides HMRC with the ability to incur expenditure in connection with digital services to be provided by it for the purpose of facilitating the administration or payment of non-domestic rates in England. Subsections (2) and (3) define digital services and non-domestic rates respectively. Clause 2 sets out that the amendment will extend to England and Wales but apply only to England.

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

It is a pleasure to serve under your chairmanship, Dame Eleanor.

When we debated the Bill’s Second Reading last week, we were careful not to stray too far from what is a very narrow Bill. The benefit to the Minister was that he was able fill a speech by reading out the Bill. I shall not speak just for the sake of it; I shall cut straight to the chase.

I accept completely that this is enabling legislation to allow Her Majesty’s Revenue and Customs to develop the framework and the product offer, but there are still many outstanding questions that the Government need to answer at this stage, because they are fundamental to the approach that is being taken. For instance, will local councils retain their primary role as billing authorities? Who will underwrite the non-collection losses for businesses that opt to use the new digital system? How frequent will HMRC’s payments to local authorities be?

To what extent will local government be involved in the co-design of the system? As was pointed out on Second Reading, there is a great deal of expertise in our councils when it comes to designing systems and processes and bridging systems across different software products, and I think we can tap into that expertise to ensure that the system is fit for purpose. I am sure that the Minister does not want his CV to bear the legacy of an inadequate IT system, a fate that has befallen many Ministers who have gone before him in various Departments.

We want those fundamental questions to be answered, ideally before work starts and money is spent—and that brings me to my next point: we still do not know how much money will be spent. Oddly, a money motion was tabled but did not proceed to a Division, and there was no explanation even of the ballpark figure: not even a rough estimate of how much the new system might cost. The cost must be weighed against the benefits to HMRC and businesses, and it must be established whether we are getting value for money for the investment.

I must be careful not to stray too far from the subject of the debate, but the Bill does not address the underlying chronic underfunding of local public services. The Minister really must deal with the issue of the £8 billion funding gap, to which we have referred very often in the House.

We do not intend to divide the Committee, but if the Minister is not able to answer those questions today, it would be useful if, at the very least, Ministers could respond in writing.

[Rishi Sunak]

Let me deal briefly with the hon. Gentleman’s points. He asked some specific questions about the design of the system. As we established on Second Reading, I cannot give him the answers, not because I am trying to hide something but simply because I do not know them at this stage, and nor does anyone else. The Bill will enable HMRC to start its scoping work, and the questions that the hon. Gentleman rightly posed about the design, who will do what, and how intensive the work will be—or, indeed, how light-touch it might be—will be answered during subsequent analyses. Further primary legislation is likely to be required, so the House will have an opportunity to debate those changes.

On Second Reading, the hon. Gentleman raised an interesting point about the potential integration of the new challenge and appeal system with whatever new platform is designed. That point is worthy of consideration. Again, however, at this stage no one knows how much that would cost, how long it would take, or whether it would be a worthwhile addition to the plan of work. I hope the hon. Gentleman will forgive me: I am not being evasive, but we are beginning a process that will answer all those questions and others.

Similarly, I cannot give the hon. Gentleman a specific figure in relation to the budget, because we do not know what the overall system will look like. What I can say is that HMRC’s initial scoping work will be done within its existing resources and budgets, will not, in general, involve the use of consultants, and will hopefully lead to a proposal which, during the spending review, HMRC can decide whether to adopt, depending on the outcome of the review.

Of course local government and, indeed, business should be extensively engaged in the process. I know that HMRC is committed to that, and the hon. Gentleman would no doubt hold me and Treasury Ministers to account if it were not the case. Typically, Select Committees would take evidence from HMRC in hearings as the system was being designed and rolled out over subsequent years, and I have no reason to doubt that that would happen in this instance.

The last question the hon. Gentleman posed was specifically about the frequency of payments. I am pleased to be able to tell him that this was also brought up on Second Reading. Currently, businesses tend to have at least the opportunity to spread their business rates payment over 10 different instalments over the year. That right is prescribed in regulation—the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989—so that flexibility is already in place and is taken up by many businesses. If there was to be any change to that, it would require this place to pass new regulations, so I think the hon. Gentleman can rest assured on that point.

I hope that answers all the hon. Gentleman’s questions, and I ask Members to agree that, if we can take clauses 1 and 2 together, they stand part of the Bill.

--- Later in debate ---

[Jim McMahon]

I do not intend to talk at length, but I do wish to say that when people look at Parliament and the division that Brexit causes, they believe that our politics is in crisis. Although I know that the topic the Bill addresses is not interesting for many people and I doubt that many people will be watching, it has demonstrated that we can work across parties, and indeed that is how Parliament generally works, although it is not often seen. I accept that this is a technical matter and is not as controversial as Brexit, which I will leave for others. I thank the Minister for reaching out very early in this process, and I wish the Bill success in the other place.

Question put and agreed to.

Bill accordingly read the Third time and passed.