Non-Domestic Rating (Multipliers and Private Schools) Bill

Kevin Hollinrake Excerpts

2nd reading
Monday 25th November 2024 Commons Chamber

[James Murray]

I thank the hon. Lady for her intervention, but what will have a positive impact on state schools across the country is the extra funding that we announced in the Budget. If Opposition Members want to support extra funding for schools, they have to support some of the tough decisions to raise that revenue in the first place. They cannot have it both ways. I know the new Leader of the Opposition is very keen to oppose tax rises while claiming that she supports the investment, but she cannot have it both ways. If Opposition Members want to support extra funding for schools, the NHS and other public services, they have to have some responsibility and accept the decisions that we are taking, or propose some of their own.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will the Minister confirm the continuation of small business rates relief for the rest of this Parliament?

[James Murray]

I will come to business rates. The hon. Gentleman will have a chance to respond in full in just a moment. [Interruption.] I see that he is impatient to tell us how much he supports the Bill—or am I misreading the signs from across the Dispatch Box?

As I have said, this Bill will enable the introduction of new multipliers in the business rate system from 2026-27. The provisions in this Bill will enable the introduction of two lower tax rates, which may be applied only to qualifying retail, hospitality and leisure properties. The definition of “qualifying properties” will ultimately be set out in secondary legislation but, for the avoidance of doubt, it is our intention that the scope of these new tax rates will broadly follow that used for current retail, hospitality and leisure relief. These new rates will provide permanent tax cuts, offering certainty to businesses by ending the continued uncertainty of retail, hospitality and leisure relief, which has been rolled over annually since covid-19.

Our intention is for a lower rate that offers a tax cut for retail, hospitality and leisure properties that currently pay the standard multiplier, with a rateable value between £51,000 and £499,999. Another rate will offer a larger cut to the retail, hospitality and leisure properties currently paying the small business multiplier, which are those with a rateable value below £51,000.

We are clear, however, that any tax cut must be sustainably funded. For that reason, the Bill will also enable the introduction of higher multipliers, which can be applied only to the most valuable properties—those with a rateable value of £500,000 and above, which represents less than 1% of all properties in England. The rates for any new multipliers will be set in the 2025 autumn Budget in the light of the outcomes of the 2026 revaluation. The Government recognise, however, that it would be inappropriate to take unfettered powers that allowed the Government to change tax liabilities by unlimited amounts. For that reason, the Bill includes sensible guardrails to limit the use of those powers.

The guardrails determine that the two lower tax rates, when introduced, may not be set lower than 20p below the small business non-domestic rating multiplier, and that the higher tax rates, when introduced, may not be set higher than 10p above the non-domestic rating multiplier. Let me make it clear that those values are maximum parameters and do not represent the changes that we intend to implement. They are guardrails that offer sensible limits with proportionate flexibility. They ensure that the Government can respond to future revaluations as well as the changing economic and fiscal context. As I said, the exact rates for 2026-27 will be set out in next year’s Budget.

Alongside the provisions on multipliers, the Bill contains provisions relating to private schools that will raise around £140 million a year. There are more than 2,400 private schools in England, of which approximately half are charities and are able to benefit from business rates charitable relief. The Bill will remove the eligibility of private schools that are charities for that relief. The Bill provides a specific definition of a private school as

“a school…at which full-time education is provided for pupils of compulsory school age…where fees or other consideration are payable for that…education”

or

“an institution…which is wholly or mainly concerned with providing education suitable to the requirements of persons over compulsory school age but under 19…where the provision of full-time education…is wholly or mainly provision in respect of which fees or other consideration are payable”.

A number of right hon. and hon. Members have questioned how the Government’s plans will affect pupils with special educational needs and disabilities. My officials and I carefully considered the design of the policy, and the provisions in the Bill mean that private schools that are charities that wholly or mainly provide education for pupils with an education, health and care plan will remain eligible for charitable rate relief. To be clear, in answer to the earlier question from the hon. Member for Gosport (Dame Caroline Dinenage), “wholly or mainly” in business rates generally means 50% or more. The Government believe that will ensure that the majority of special educational needs schools will not be affected by the measure.

The measure will operate in addition to the existing business rates exemption for properties used by private schools wholly for the training or welfare of disabled people. That exemption, which we are retaining, means that those types of properties pay no business rates at all. Taken together, the existing and new provisions are intended to ensure that most private special educational needs schools will not be affected by the removal of charitable rate relief.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House observes that the Autumn Budget 2024 has cut central Government funding for retail, hospitality and leisure business rate relief in 2025-26, and that this Government funding will end completely in 2026-27; expresses concern that the Non-Domestic Rating (Multipliers and Private Schools) Bill represents a stealth increase in business rates on high streets and the hospitality sector, as well as on larger businesses, on top of the Government’s increases in National Insurance contributions; regrets the lack of a proper cumulative impact assessment on the effect on business; notes that the removal of charitable rate relief on independent schools, taken together with the imposition of VAT, will mean fewer children going to private schools and will therefore create extra pressure on state schools, will undermine aspiration and parental choice, and mean larger class sizes in state schools and increased costs for taxpayers; and therefore declines to give a Second Reading to the Non-Domestic Rating (Multipliers and Private Schools) Bill.”

It is a privilege to speak in this debate on behalf of His Majesty’s Opposition. The Conservative party has a proud record of supporting businesses on the high street. We cut business rates to support small businesses, including doubling small business rates relief from £6,000 up to £15,000, and almost trebling higher rate relief from £18,000 to £51,000. We increased the frequency of business rate revaluations, making our business rates system fairer for businesses and more responsive to local economic trends, helping businesses to invest, create jobs and grow.

The contrast with this business-bashing Labour Government could not be greater. They have brought forward a mass of new red tape for business by means of the Employment Rights Bill. I note that the Regulatory Policy Committee released its commentary today on the impact assessment, which it said is “not fit for purpose”. It says that the annual costs to businesses could be much higher than £5 billion, and the impact assessment has received a red rating.

The Government have also imposed huge new tax increases on businesses. The worst thing is that they were not even man enough to tell businesses that they were going to do it—quite the opposite—which is why, as much as the Minister says that businesses have confidence in his plans, the Institute of Directors has said that it has seen the biggest one-month fall in investment confidence in its history. The Confederation of British Industry said today that 50% of its members will reduce headcount, and two thirds are scaling back hiring. Is that the kind of growth that he imagined he would bring forward with his legislation?

Infamously, the Labour party promised in its manifesto not to raise national insurance. Next week, we will have the Second Reading of a Bill that reneges completely on that promise by raising employer’s national insurance contributions by £24 billion a year. Labour has also hit business through the family farms tax, and our best family businesses in other sectors by halving business property relief. I remind the Minister that family businesses employ 13.8 million people in this country and pay over £200 billion every year in taxes. The Government are killing the geese that lay the golden eggs.

In its manifesto, the Labour party promised to

“replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants”.

In a speech to the House on 12 May 2022, the Deputy Prime Minister said:

“We would scrap business rates to help our high streets flourish.”—[Official Report, 12 May 2022; Vol. 714, c. 300.]

The Treasury Minister himself also stated his party’s intention to “scrap business rates” to the House on 25 October 2023. The Bill before us breaks those promises because it does not “replace” or “scrap” the business rates system. Not only that, but as a result of the Bill and the measures in the Budget, business rates are actually going up, both for online companies and businesses on our local high streets—yet more broken promises from a Government of broken promises.

Maybe the Government do not realise exactly what they are doing, perhaps because members of their Cabinet have no experience of starting and running a business. Shamefully, there has been no consultation with businesses about the changes. True to form, the Government have not published a full regulatory impact assessment alongside the Bill on the changes to business rates multipliers. It is a discourtesy to the House and to our constituents for the Government to refuse to consult with businesses, consider the impact their policies will have or publish the information that would allow Members of the House to scrutinise the plans properly. Instead, they are using their majority to ram through the half-baked damaging measures in the Bill.

[Charlie Maynard (Witney) (LD)]

I find it more than ludicrous to hear the Tories lecturing Labour about red tape. What the Tories have served up to the country through Brexit and the damage they have done to our economy is a disaster. To hear them masquerading as—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Only interventions relevant to the speech in hand should be made. There is no need for that performance.

[Kevin Hollinrake]

I am grateful to the hon. Gentleman for his intervention. I remind him that it was not the Conservative party that voted to leave the European Union, but the people of this country. We respect democratic mandates.

I hope every Member on the Government Benches who walks through the Lobby to support the Bill tonight realises the price their constituents will pay for that decision. If the Government will not publish the likely consequences of the Bill, let me set out what I believe the consequences will be.

The Government claim to be cutting business rates relief for retail, hospitality and leisure businesses in England, but that is not the case. The business rates relief for retail, hospitality and leisure businesses that we introduced cuts 75% off bills, but that support is being reduced by the Labour Government. They are almost halving that relief to 40%, meaning that shops, restaurants, cafés, pubs, cinemas, music venues, gyms and hotels will all see their business rates rise.

[James Murray]

Was that 75% business rates relief for retail, hospitality and leisure businesses due to expire in April 2025?

[Kevin Hollinrake]

As the Minister knows, it had been renewed every year since 2021. The Conservative party supports businesses. When that 75% was passed on in England, the same moneys were provided to Scotland and Wales. What did Wales do? Only 40% relief was passed on, not 75%. That is the Welsh Government’s attitude to business. The Conservative party supports businesses, but the Labour party does not because it does not understand them.

Businesses face a stealth tax from Labour, with a £925 million rise in rates next year. That will add more than £5,000 to the business rates bill for the average pub, on top of £5,000 per year in extra costs for national insurance rises. It will also add more than £9,000 to the rates bill for the average restaurant, on top of the £12,000 national insurance increase, which means an additional £21,000 in total per annum for a typical business.

There will also be an increase of up to £2.7 billion in 2026 through higher business rates via the new multipliers, despite Labour’s manifesto promise not to increase the amount raised by the levy. These tax rises, as the CBI has said again today, will be passed on to workers through lower wages and to consumers through higher prices, making a mockery of Labour’s claim that it would not raise taxes for working people. The British Retail Consortium has warned the Government:

“The sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”

The Bill will replace retail, hospitality and leisure relief with a lower multiplier for businesses with a rateable value below £500,000. That will be funded by the new higher rate multiplier for premises with a rateable value of more than £500,000, as the Minister set out. Setting the threshold at that higher level is a blunt instrument. I can assure the Government that it will have consequences for businesses that are not big online retailers. It will hit large supermarkets, supermarket delivery, large department stores, football and cricket clubs, conference centres and airports. Some of those on whom the new charges will be levied pay tens or hundreds of millions of pounds in rates. At the maximum level, it will mean a 20% increase to their rates bill.

It is no wonder that the outgoing chief executive of John Lewis has criticised Labour’s lack of business rates reform and warned that, alongside the national insurance increase, this is a “two-handed grab” from businesses. The Cold Chain Federation has warned that the business rates changes and the NICs increases could lead to the cost of food and medicine going up. That might be a double whammy for consumers, as the National Farmers Union has warned that the cost of food will go up because of the family farm tax. The Labour Government do not seem to have thought that through. The Labour party used to say that the business rates system created uncertainty, but now KPMG has described the Government’s plan to change the business rates system, as set out in the Bill, as “creating uncertainty for businesses”.

The Bill is silent on the matter of small business rates relief, which is a lifeline for many businesses on our high streets. When the Minister for Local Government and English Devolution winds up the debate, will he confirm that the Government intend to retain small business rates relief for the rest of this Parliament? Business is listening, and it needs to know.

Let me address the sting in the tail of the Bill: Labour’s education tax. The shadow Education Secretary, my right hon. Friend the Member for Sevenoaks (Laura Trott), feels passionately, as do all Conservative Members, that the Government are making the wrong decision. This Bill is part of the Government’s education tax, because removing the charitable rate relief from private schools that are charities goes hand in glove with the utterly wrong-headed, anti-aspirational and counterproductive policy of charging VAT on private school fees.

[Chris Vince]

Will the shadow Minister tell us how many state schools there are in his constituency, and whether he will talk so passionately about them when he talks about the decisions that this Government are making to support state schools?

[Kevin Hollinrake]

The Bill is about raising rates on private schools, which is why I mention them, but I am very happy to talk in glowing terms about the state schools in my constituency, including the one that I attended as a boy and the ones that my children went to. I am for state schools, but I am also for independent education. Why is it either/or? Why would anyone ever tax education?

[Josh Fenton-Glynn (Calder Valley) (Lab)]

The Stop School Cuts campaign website estimates the combined school cuts since 2010 in Thirsk and Malton, the shadow Minister’s constituency, as more than £70,000. Will he point to where in the public record he has spoken out about that?

[Kevin Hollinrake]

I was part of the fairer funding formula for schools in my area, which had the worst-funded local authorities in the country. I reassure the hon. Gentleman that schools in my constituency improved under the stewardship of the Conservative Government. Surely that is the key metric, rather than just how much money is put in.

[Dr Luke Evans]

The impact of taxing private schools with VAT will be that thousands of pupils move out into the state system. That will take away funding. It is already having an impact, but no mitigation has been put in place. The Education Secretary said that 3,000 was not the correct number, but she would not give out the number of pupils who have moved. The Government know those numbers and they need to come clean, because the impact of those pupils moving will eat away at whatever the tax raises.

[Kevin Hollinrake]

My hon. Friend is absolutely right. I understand that 90,000 pupils will be transferring to the state sector as a result of these plans. We Conservatives hold firmly to the principle that education should not be taxed. The only other nation to have tried is Greece, which abandoned the policy within months because of the disastrous consequences.

The Independent Schools Council has said that some independent schools will close entirely and others will scale back the education they offer, causing significant upheaval and disruption to the lives of tens of thousands of children. As surely as night follows day, that will mean fewer children going to private schools and increased pressure on state schools.

I would be grateful if the Minister enlightened me about whether this policy complies with article 14 of the European convention on human rights. The legal issues memorandum considers the principle of non-discrimination regarding the difference in treatment between private schools and state schools, but not between private schools that are charities and other charities that will still qualify for charitable rates relief. I look forward to the Minister’s clarification.

During our time in government, England became one of the top-performing countries for education in the western world, a legacy that this Government seem determined to trash. In short, this Bill may be short, but it is long on disastrous consequences. I implore Government Members to think about their local schools and their high street businesses that are about to be clobbered, and about the resulting job losses, higher prices and boarded-up shop fronts. I ask all Members to think about what is in their constituents’ best interests, do the right thing and vote against the Bill.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Kevin Hollinrake Excerpts

Report stage
Wednesday 15th January 2025 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank the Minister, and indeed my shadow Ministers, the other Opposition spokespeople and all parliamentarians who have helped with the passage of the Bill, as well as the Clerks and officials—not that I would like to see the Bill progress any further. Aristotle, in his book “Politics”, over 2,000 years ago—[Interruption.]

[Madam Deputy Speaker (Caroline Nokes)]

Order!

[Kevin Hollinrake]

Over 2,000 years ago, Aristotle talked about deviant government. Alongside tyranny, he placed democracy. He said the risk is that, sooner or later, a Government will come along who represent only their own interests and those of their supporters, and that that Government will pursue the politics of envy. Let us see who the Minister’s supporters are. They are not the 12.6 million pensioners in this country, if we judge by the winter fuel allowance; not the 89,500 farmers whose livelihoods will be damaged by the family farm tax; not the 5 million businesspeople who will be damaged by the changes to business property relief, who employ 14 million people and pay £200 billion a year in taxes; not those people who live in rural areas; and not the families of the 550,000 young people who are in private and independent education. According to the Institute for Fiscal Studies—this is not scaremongering —90,000 of them may go back into the state sector as a result of the Government’s choices.

The Government have the gall to say that the fact that business rates or VAT do not apply to school fees is a tax break. It is no more a tax break than there being no VAT on housing, children’s clothes or food. Those measures are there because we should encourage people to pursue education, particularly those who scrimp and save to send their children into private education.

What about businesses? Businesses are suffering on the back of the employer national insurance rise of £25 billion a year, and are worried about the future because of the withdrawal of business property relief and agricultural property relief. The reality is that this Bill means a cut in support for many of those whom the Minister said he seeks to protect—people who work in the retail, hospitality and leisure sectors. The 75% discount is down to 40%. That will mean a tangible difference for the average pub of £5,500 a year. That comes on top of the huge increases in employer national insurance. Some 250,000 businesses will be worse off to the tune of £925 million. That is the tax charge he is placing on those businesses he says he seeks to protect. If he is honest with them, those taxes will go up again in April 2026. That is the reality of the situation.

What promise did Labour make before the election? They said they would scrap business rates completely—another broken promise. In their manifesto, they said they would change the balance between high streets and the online giants. That is not what the Bill does. The Bill also taxes breweries, airports, football stadiums and bricks-and-mortar retailers such as John Lewis, Sainsbury’s and Morrisons. That is the reality behind the Government’s changes: not scrapping business rates, nothing on the online giants and big taxes on many businesses. This is the politics of envy. It is the tyranny of socialism, and that is why we will vote against the Bill.

Question put, That the Bill be now read the Third time.

Non-Domestic Rating (Multipliers and Private Schools) Bill (changed to Non-Domestic Rating (Multipliers) Bill)

Kevin Hollinrake Excerpts

Consideration of Lords amendments
Tuesday 25th March 2025 Commons Chamber

[Jim McMahon]

First, I am grateful to Members of both the Commons and the Lords who have so diligently scrutinised the Bill throughout its passage. Before I address the amendments tabled by the Lords, allow me to remind the House of why we introduced the Bill in the first place. This Government have committed to transforming the business rates system, and the Bill is a first step on that important journey. We want to achieve a sustainable system that is fit for the current economic landscape, and where business growth is supported and ratepayers pay their fair share. I thank the noble Lord Khan of Burnley for taking the Bill through the other place and for being so thorough in his approach. I also thank officers of the Ministry of Housing, Communities and Local Government and my private office for all their work on the Bill.

The Government oppose all the amendments before us today and I will provide further explanation as to why. At the Budget, the Government explained that we wanted to introduce new lower multipliers for qualifying retail, hospitality and leisure properties from April 2026 to address the uncertainty of the temporary, stopgap support provided by the annual RHL relief. Business rates represent a stable source of revenue for local government, meaning that this permanent tax cut must be sustainably funded. That is why the Government also announced our intention to introduce a higher multiplier for all properties with a rateable value at or above £500,000. This Bill makes provision to enable the introduction of those new multipliers, so this is the first step towards delivering on the Government’s manifesto commitment to transform the business rates system to one that is sustainable, protects the high street and is fit for the 21st century.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

On a point of detail, the Minister says the Bill is a “first step”, so will there be further reforms, following these reforms, to the rest of the business rates system to meet his manifesto commitment to replace the current business rates system completely?

[Jim McMahon]

I am not going to pre-empt any further decisions on this, other than to say that this represents an important and significant step forward. As a constituency MP, he, like me, will have heard from many small businesses—retailers, hospitality providers or leisure providers—who appreciated the support during covid, but were very clear that there was a cliff edge and that that support was coming to an end. The previous Government did not provide any certainty about what followed, so the Bill ends that uncertainty and hardwires in a permanent relief system to ensure those important businesses that are the foundation of our communities and our economy are supported through the tax system.

[Kevin Hollinrake]

The Minister has already said, as he has in previous speeches, that this is a “first step”, but now he says it is a “permanent” measure. I agree with him that business wants certainty, so it is important that businesses understand: is this now a permanent position that will not be changed, or a first step?

[Jim McMahon]

The answer is that it is both, as I will go on to explain in more detail. It is an important first step, and the relief that is provided, funded through the higher rate properties, will be hard-baked into the system, notwithstanding any future support that may well follow, which we are not pre-empting today.

Lords amendments 1, 6, 7 and 12 would remove qualifying healthcare hereditaments from the higher multiplier, and Lords amendments 2, 5, 8 and 11 would do the same in relating to anchor stores. Considering the challenging fiscal environment, it is vital that this permanent tax cut is funded sustainably. The Government have been clear that they will do that by applying the higher multiplier to all properties with a rateable value at or above £500,000. That accounts for less than 1% of all properties and is the fairest approach. The impact on healthcare properties is limited. As set out in the other place, of the 16,780 properties at or above the £500,000 threshold based on the current rating list and rounded to 10, only 350 are in the health sub-sector. Of those, 290 are NHS hospitals and only 30 are doctors’ surgeries or health centres.

At the autumn Budget, the Chancellor fixed the spending envelope for phase 2 of the spending review. The Government are considering the full range of departmental priorities and pressures as part of the spending review, and that includes any impact of the higher multiplier on public sector properties, such as schools and hospitals. I urge the House to disagree with those amendments.

We recognise the importance of anchor stores, and we are doing a great deal to support the high street in this Bill and elsewhere. While the largest anchor stores may be caught by the higher multiplier, they are often part of large retail chains that will have a number of properties with rateable values below £500,000. Those businesses will, therefore, benefit overall from the lower multipliers.

--- Later in debate ---

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Secretary of State.

[Kevin Hollinrake]

I thank the Minister for his explanation of the Lords amendments. We shall not agree, and I will explain why. I thank the Lords for their careful consideration of the Bill; in particular, I thank the noble Lord Jamieson and the noble Baroness Scott for their scrutiny and amendments.

The legislation comes at a critical time for businesses. The partial withdrawal of retail hospitality and leisure relief—a policy choice by this Government—is hitting businesses hard. The average pub is more than £5,000 worse off as a result of the Minister’s choices. That, together with the Government’s trash-talking of the economy, the £25 billion annual tax rise for businesses by means of the rise in employers’ national insurance, and the prospect of the job-destroying Employment Rights Bill, has led directly to a massive reduction in business confidence. According to the Institute of Directors, business confidence, which stood at a high of plus 5 in July last year, has collapsed to a covid-level low of minus 65.

[Suella Braverman]

My hon. Friend is making a very good speech. What is his advice to the many businesses in Fareham and Waterlooville who have told me—I have lost count of them—that they do not know whether they will survive the next few years, particularly because of the rise in national insurance contributions from employers, the Employment Rights Bill and the anti-business rhetoric? Hiring is down, prices are up and many businesses in Fareham and Waterlooville are beginning to wonder whether it is all worth it.

[Kevin Hollinrake]

My right hon. and learned Friend makes a very good point. These are difficult times. As she knows, I was in business for 30 years, and we go through some difficult times. Many people think that business is easy, but it is not, particularly at times like this, when confidence, including consumer confidence, has gone so low. It means that people are not coming through the door. My advice to businesses is to batten down the hatches and get through this where they can, but inevitably the consequence of these choices will be less employment, lower salary increases and higher prices in shops, public houses and other places. That is the consequence of the choices that this Government have made. The real-world effect of this historic drop in confidence is a 20-year high in business closures. Over 220,000 businesses closed their doors in the last three months of 2024.

When considering the Lords amendments, it is important to remember that the Labour party promised to abolish business rates—another broken promise. The Minister, for whom I have a great deal of time, talks about the art of the possible; what he is saying is that a promise that he and his colleagues made to the electorate in the run-up to the election has been broken. In its manifesto, Labour promised to

“replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants”.

That is not what the Bill does, so that is also a broken promise. The reason I challenged the Minister a couple of times during his remarks is that I do not understand how the Bill can be both a first step and a permanent change. That makes no sense, and if I were one of the business people for whose rude health we are all responsible, I would like to know exactly what the Government have planned beyond these changes. That is not clear.

I turn first to Lords amendment 14, which would require the Secretary of State to review

“the merits of a separate Use Class and associated multiplier for retail services provided by fulfilment warehouses that do not have a material presence on local high streets”—

in other words, online giants. It is worth noting that the rates regime proposed by this Bill will mean that only around 10% of businesses paying the higher rate will be the warehouses of online giants. In reality, shops, restaurants, cafés, pubs, cinemas, music venues, gyms and hotels will all see their business rates rise as a result of the higher multiplier. We would support a rates regime that would genuinely level the playing field between online retailers and the high street, but this Bill does not deliver that. We therefore support amendment 14’s requirement that the Secretary of State conduct a review on introducing a higher multiplier for fulfilment warehouses. Such a multiplier would mean that important anchor stores for high streets would not be punished.

That brings me to Lords amendments 1, 5, 8 and 11. We all know from our constituencies how important anchor stores, such as supermarkets and department stores, are for attracting footfall and supporting local economies. When people come into the town centre to use an anchor store, they might stop for lunch in a local café or pop into an independent business. Key anchor stores in the Secretary of State’s constituency will be hit by this Bill: Sainsbury’s in Ashton-under-Lyne has a rateable value of £1.24 million, while Marks and Spencer next door has a rateable value of £770,000. These decisions have real-world effects on companies that are not online giants.

We have seen the impact on our communities when anchor stores leave a town. For many anchor stores, being dragged into the higher multiplier by this Bill could be the straw that breaks the camel’s back; those shops have already been hit by the jobs tax, and will be tied up with even more red tape through the Employment Rights Bill. In fact, the British Retail Consortium has warned the Government that

“The sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”

That contrasts with my party’s proud record of supporting businesses, including small businesses, on the high street by cutting business rates, as well as providing billions of pounds of support throughout the pandemic.

While we are talking about high street businesses, can I once again push the Minister on a very important point—the retention of small business rate relief? Many businesses’ livelihoods depend on that relief, so will he say at the Dispatch Box that it will be continued? I have not had clarity, and clearly I will not get clarity today. Is that relief also on the chopping block, maybe at the Chancellor’s emergency Budget tomorrow? Let us see what that brings; we may get clearer answers then. Tomorrow’s last-gasp attempt to go for growth comes after GDP falling by 0.1% in January. That was largely attributed to a 1.1% fall in manufacturing output.

That brings me briefly to Lords amendments 3, 4, 9 and 10. They would make manufacturing hereditaments eligible for the lower multipliers when it comes to local ratings lists. That comes at a particularly important time for our manufacturing sector, which is a crucial part of our economy, whether we are talking about automotive manufacturing, aerospace manufacturing or precision engineering. As we boost capital defence expenditure, it is important that we have a strong and resilient manufacturing base that can supply our brave armed forces. I urge the Government to reflect carefully on the impact of the new rates system on manufacturing, and we will listen carefully to the Minister’s responses on this issue.

Turning to Lords amendments 1, 6, 7 and 12, given that the Government are raising taxes to invest in the NHS, it seems perverse for them to levy higher business rates on the hospitals and GP practices that provide the services that so many of our constituents rely on. It is just weeks since the Government shamefully voted to impose a jobs tax on hospices, pharmacies and GP practices—another double whammy. Labour is giving with one hand and taking with the other.

Before we get to the real sting in the tail of this Bill, I will speak briefly to Lords amendments 13 and 16. Like Members of the other House, we have concerns about the cliff edge that the Bill will create in the business rates system, which the Minister referred to. A business crossing the £500,000 threshold, even by £1, could see a near 20% increase in rates payable. For instance, a business with a hereditament of £495,000 invested in their property—just enough to push them over the threshold—would potentially see an increase in rates from around £175,000 to £325,000 as a result of this Bill. The legislation will stifle investment and growth even further.

Finally, Labour’s education tax—the spiteful and ideologically driven decision to remove the charitable rate relief from private schools that are charities—sits alongside the utterly wrong-headed policy of charging VAT on private school fees. Regardless of people’s views on private schools, it is the view of the Opposition that we should never tax education. We are already seeing the gates of independent schools being locked indefinitely. That pushes more children into state education, increases class sizes and puts more pressure on the public purse, and on councils trying to find placements for students with education, health and care plans. Lords amendment 17 would retain rates relief for private schools in England, sparing them part of a cumulative burden that would otherwise send many of them beyond the brink.

It is not just education that is affected. Since the introduction of this Bill, we have learned that the Government will also levy business rates on nursery schools and sports facilities used by the general public if they are on the site of a private school. That regressive decision will jack up the cost of swimming lessons, and the costs for Sunday league clubs and cadet units. During our time in government, England became one of the top-performing countries for education in the western world. That is a record that this Government seem determined to trash. Years down the line, Government Members will regret having voted for this Bill as they walk down the high street, passing boarded-up shops, school gates locked shut and a local that called last orders for the final time years ago. I urge the Government to consider and agree to the amendments from the Lords to safeguard businesses, schools and communities across the country from more business-damaging and job-destroying tax hikes.

[Mark Sewards (Leeds South West and Morley) (Lab)]

The Bill is necessary to support our high streets. It strikes a fairer balance between small businesses and large, and I am pleased to have contributed during most stages of its progress. I rise to address some of the amendments put forward by the other place, which would reduce the effectiveness of the Bill.

Amendments 2, 5, 8 and 11 seek to exempt anchor stores from the higher multipliers, thus reducing the revenue raised by the Bill overall. By reducing that revenue, the amendments reduce the support available to smaller retail, hospitality and leisure businesses, when providing that support is the entire purpose of this legislation.

I also fear that the definition of an anchor store could create problems for our high streets and town centres. During the debate in the other place it was said that the Treasury could decide what constituted an anchor store, but it was also admitted that it would be a difficult term to define. It is not uncommon, and not untrue, to say that several shops in a high street can indeed lay claim to that title, and I foresee difficulties in this regard if the amendment is passed.

It is also true that anchor stores are often the largest stores in town, usually part of a big chain, supermarkets being an obvious example. The effect of this amendment would be to exempt those larger businesses from the higher multiplier, again reducing the support available to smaller businesses. The entire purpose of the Bill is to support our smaller retail, leisure and hospitality businesses, paid for by that higher multiplier on larger businesses. Unlike the Opposition, we like to ensure that our numbers add up.

[Kevin Hollinrake]

What would the hon. Gentleman say to businesses that are trying to make their numbers add up? In its manifesto and previously, the promise—the commitment—of the Labour party was to level the playing field between online giants and small businesses, but, as the hon. Gentleman can see, that is not what is happening here. Many different premises, including manufacturers and large bricks-and-mortar retailers, are being hit by these increases. What would the hon. Gentleman say to those businesses, given that while there is currently no sign of any increase in their rates, that is exactly what they will see as a result of the Bill?

[Mark Sewards]

The Bill is designed specifically to revive our high streets. The hon. Gentleman will remember, because his party was in government at the time, that our high streets were struggling and suffocating, and it is incumbent on this new Government to revive them. That is why it is so important for us to pass the Bill today. [Interruption.] The hon. Gentleman mentioned manufacturing, and his hon. Friend the Member for Broadland and Fakenham (Jerome Mayhew) chirps from a sedentary position—[Interruption.] I mean “chunters”. I think it important to recognise that the Government are supporting manufacturing too. There are other mechanisms for doing that, but the Bill we are pursuing today, and passing today, is all about supporting our high streets, and I am very proud to support it.

Queen Street is in Morley, in the centre of my constituency. You are welcome to visit it any time, Madam Deputy Speaker. There is a lot on offer, almost of all of which comes directly from small businesses. The Lords amendments to which I have referred do not prioritise them; nor do they prioritise the smaller parades of shops in Farnley, Drighlington, Gildersome and Wortley, and they do nothing for the shops and businesses in Ardsley, Tingley, Robin Hood and Lofthouse. That is why I cannot support them. I back the businesses in Morley high street, along with all the other small businesses that I represent.

Lords amendments 15,17,18 and 19 would, in effect, reintroduce the tax break for private schools. We have had this argument about private schools at the general election, in the House, in Bill Committees and again today, but as a former maths teacher at a state school in Leeds, I am more than happy to cover old ground to reinforce my own argument. The proposed amendments seek to remove an integral part of the Bill that generates the revenue that we need to support our plans in government. I will make no apologies for supporting the 94% of children who attend state schools. We all—and I include everyone in the House—want children to have the best opportunities in life, with the highest-quality teaching and schools to match. It should be a basic function of the state to provide well-funded, excellent state school places for all students, whether their parents choose to take advantage of that or not.

On the Labour Benches, as we have proven over recent months, we are prepared to take the action necessary to ensure that all children can access through the state the education they deserve. The £70 million raised by the measure in the Bill, alongside the other revenue-raising measures we have taken in the Budget, will result and do result in a real-terms increase in per pupil funding for the 94% who attend our state schools. I am very proud to support that. We will never make any apologies for properly funding state schools by ending the tax breaks that were previously enjoyed by private institutions. That is why I will not be voting for the amendments.

To conclude, I am pleased to support the Bill in its current, unamended form. I will support our high streets. It will give confidence to small businesses and it will give state schools the funding they desperately need.

Non-Domestic Rating (Multipliers and Private Schools) Bill

Kevin Hollinrake Excerpts

Consideration of Lords message
Monday 31st March 2025 Commons Chamber

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Secretary of State.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank their noble lordships for their diligent further consideration of the Non-Domestic Rating (Multipliers and Private Schools) Bill and for the new amendments they have passed to address their concerns with the legislation. These changes shine a spotlight on Labour’s muddled priorities, exposing an approach that punishes aspiration, squeezes business, and increases the cost of living for consumers and the cost of doing business.

This very week, we will see the new jobs tax introduced and business rate hikes. The Employment Rights Bill is coming down the line, which is of great concern to many private sector businesses, and consumers will consequently see higher prices and lower wages. Tomorrow, we will also see a hike in council tax, energy prices, water bills, broadband and the BBC licence fee.

I will address the four primary groups of amendments in turn. First, Lords amendments 1B and 7B tackle the proposal to levy a higher multiplier on medical, dental and other healthcare settings. The amendments would prudently protect all healthcare premises—occupied or vacant—from the higher multiplier, addressing a glaring flaw in Labour’s Bill. For too long, we have cautioned against their detachment from practical governance, but now it is undeniable: rather than targeting the untaxed profits of internet giants as pledged, they are heaping costs on to hospitals and GP surgeries. It is baffling that Labour’s so-called reform of the rating system would burden healthcare at all, let alone doing so while they plan to hike national insurance on jobs tomorrow to fund the NHS—only to claw it back today by taxing those same health services.

Just yesterday, the Government pledged to funnel more cash into the NHS by taxing jobs through national insurance hikes, yet today they turn around and tax the NHS itself via business rates. It is a fiscal farce—a two-faced assault on healthcare that undermines their own rhetoric. As Conservative Members have mentioned in recent debates, Labour’s obsession with revenue grabs over sensible relief is choking the sectors we need most.

[Robin Swann (South Antrim) (UUP)]

Does the shadow Secretary of State agree that there seems to be a disjointed approach, where the Health Secretary is asking for more healthcare in the community, whereas we will be asking anybody who moves from a central location into the community to pay these additional taxes and rates?

--- Later in debate ---

[Kevin Hollinrake]

The hon. Member is right; there is no logic to the Government’s approach. They are giving with one hand and taking with the other, and they are making the kinds of decisions he talks about ever more difficult.

Lords amendments 2B and 8B address the ratings regime for anchor stores on our beleaguered high streets. We echo the words of the John Lewis chief executive Nish Kankiwala, who warned that Labour’s Budget is a “two-handed grab” at retailers that piles on national insurance increases while refusing to reform business rates as it promised to do. Retailers face a £7 billion hit from these policies, with consumers braced for higher prices as a result.

These amendments exempt anchor stores—the vital engines of our town centres—from the higher multiplier. It is a lifeline that Labour seems determined to withhold. Unoccupied anchor stores would also escape this punishing rate, preventing empty shopfronts from becoming permanent scars on our highstreets. Setting the threshold for the higher multiplier at £500,000 is a blunt instrument, as the Minister concedes. I can assure the Government that this will have consequences for businesses that are not big tech giants. It will hit large supermarkets, supermarket delivery and large department stores, showing that the Labour Government have not thought it through.

Conservative Members have rightly decried Labour’s neglect of retail, and they are right. The Leader of the Opposition has rightly highlighted that Labour’s rates multiplier fiasco is killing off the high street while real reform is dodged. Businesses face a double whammy of higher taxes and no certainty thanks to a Government who are more interested in punishing aspiration than powering growth.

--- Later in debate ---

On the review of the £500,000 threshold, we have already said that there are provisions in the Bill to address that.

[Kevin Hollinrake]

The Minister says that the solution that he has alighted on meets his manifesto commitment, but his manifesto says,

“This new system will level the playing field between the high street and online giants”.

That is not what the provision does—not exclusively. He knows that it levies extra taxes, extra business rates, on high street stores, large department stores, supermarkets, football stadiums and many others. They are not online giants.

[Jim McMahon]

The rating system adequately reflects the scale of properties. Less than 1% of properties in the business rates system will use the higher multiplier. That will fund the tax break for those on the high street that will use the lower multipliers. In the evidence session —the hon. Gentleman was there—we heard retailers say, “Of course, that will have an impact on our distribution centres, but we have so many stores that are below the threshold.” That allows national retailers with multiple locations to benefit; in the round, they find themselves better off as a result of this policy. As for rebalancing the situation for online retailers and those on our high streets, that is exactly what this measure does. Big distribution centres will pay for that relief.

I once again thank hon. Members for their contributions, but for the reasons set out, I respectfully ask this House to disagree with the amendments before us.

Question put, That this House disagrees with Lords amendment 1B.

The House proceeded to a Division.