Non-Domestic Rating Bill

Lee Rowley Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

It is a pleasure to close this short but constructive debate on the future of the business rates system. As we have heard, our consumer habits are changing faster than ever before and with that come challenges for high-street businesses. The Government have conducted a review of business rates, as promised, and now, through this Bill, we will continue to reform them to better meet the needs of our economy, while sustaining vital taxpayer subsidy for local government.

In the time available, I wish to address some of today’s contributions. I was grateful for the comments of my hon. Friend the Member for Hastings and Rye (Sally-Ann Hart), who raised the important issue of smaller businesses and those in the hospitality and retail sector. I know, as do many of us across the Chamber, that there have been challenges in the past few years. I have seen that in my constituency, as will every Member in their constituency. That is precisely why the combination of what the Government have outlined in the autumn statement and in this Bill seeks to support businesses that are smaller or in those sectors, along with a wider group of businesses from across the economy. We are talking about 75% relief for retail, hospitality and leisure businesses; the removal of downward caps so that there is immediate relief when business rates reduce; and more than £14 billion-worth of relief. I hope that that goes some way to assuaging her concern.

My hon. Friend also rightly raised the issue of annualised revaluations, as did my hon. Friend the Member for Waveney (Peter Aldous), the Opposition Front-Benchers and the hon. Member for North Shropshire (Helen Morgan). As the Financial Secretary to the Treasury, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins), outlined when opening the debate, we absolutely want to see more frequent revaluations. That is exactly why we have brought forward the proposals to move from a five-year revaluation cycle to a three-year one. We think that is a big step forward in making business rates more effective and closer to the businesses that pay them. We also recognise that this will take time and we need to do it in steps. As has been outlined by colleagues, we will continue to look at it and we hope we will be able to make further progress in the years ahead. The British Retail Consortium was mentioned in a number of speeches. Organisations such as the BRC have welcomed this approach, and I hope that Members from across the House will welcome the move to a three-year revaluation cycle.

Hon. Members have raised a point about data. It is always challenging to make the decision about where to request data and where to require it, and how to get the right balance between ensuring that the tax system is effective—we need data in order to make sure of that—and not creating an undue burden on businesses.

The purpose behind the collection of this data is to ensure both that we have the best information possible to make decisions in the future and that we balance proportionately the information that we collect to make sure that the tax is collected in the right way. I say to my hon. Friend the Member for Waveney that, with regard to the administrative questions, we are committed to a soft launch of the collection of this data. We will not activate the compliance regime until we are satisfied that it works, and we will be piloting it further with a range of users. We accept that we need to get this right, but the principles behind ensuring that we have the most up-to-date system, which requires data to achieve, are sound. It will be through the pilot and the review process, following the Bill hopefully becoming law, that we will be able to review the changes to make sure that they work for businesses in the best way possible.

Briefly, my hon. Friend the Member for Waveney also touched on clause 14, which recognises the particular challenge visible during covid. Of course everybody in this House will have hoped that highly unusual and atypical events such as covid could never happen, but because they have, it is incumbent on us all in this place to make sure that we have considered the situation should—hopefully it will never happen—such atypical events happen again in the future. We are trying through clause 14 to recognise that such things may happen, while hoping that they never will. I am grateful to my hon. Friend for his constructive comments. He says that the Bill is a step in the right direction, and we agree. I hope that my comments now have reassured him about those other steps that he is not yet sure about.

The hon. Member for North Shropshire made a number of important points about the burden of business rates, about ensuring that they are proportionate, and about the challenge of taxation in general. She is absolutely right to do so, but it would have made more sense had the Leader of the Liberal Democrats, the right hon. Member for Kingston and Surbiton (Ed Davey), not been out on the airwaves just a few days ago committing himself to spending more money, which the country does not have, and which taxes such as this have to pay for. There is a consistency problem with the Liberal Democrats. For those of us who are not in the Liberal Democrats, we recognise that consistency is something that they have never shown.

Finally, I welcome the fact that those on the Opposition Front Bench will not be opposing the Bill tonight. I also welcome their generally constructive comments, and I hope that I have been able to answer them, but—there is always a but with the Opposition Front Bench—the hon. Member for Luton North (Sarah Owen) suggested that we were waiting for a Labour Government to fix this issue. The question is what the fix would be, because we have put forward a plan that ensures relief for businesses up and down the land. Was she talking about the fix of 2021, when the right hon. Member for Leeds West (Rachel Reeves) was going to scrap business rates? Is it the fix a few days later, after 2021, when it was to significantly change business rates, but not to scrap them? Or is it the fix of 2022 when business rates were to be modernised but without any clarity as to how that would happen. The Labour party says what it needs to say, but it has no plan on issues such as this.

In front of us today is a Bill that improves and modernises our business rates and makes them more efficient and effective, on top of £14 billion of relief for all businessmen and women and all businesses across the country. It makes sure that those rates are as effective and efficient as they can be and that businesses in this country thrive in the future.

Question put and agreed to.

Bill accordingly read a Second time.

Non-Domestic Rating Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Non-Domestic Rating Bill:

Committal

(1) The Bill shall be committed to a Committee of the whole House.

Proceedings in Committee, on Consideration and on Third Reading

(2) Proceedings in Committee of the whole House shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement.

(3) Any proceedings on Consideration and proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion four hours after the commencement of proceedings in Committee of the whole House.

(4) Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee of the whole House, to any proceedings on Consideration or to proceedings on Third Reading.

Other proceedings

(5) Any other proceedings on the Bill may be programmed.—(Andrew Stephenson.)

Question agreed to.

Non-Domestic Rating Bill (Money)

King’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Non-Domestic Rating Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Andrew Stephenson.)

Question agreed to.

Non-Domestic Rating Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Non-Domestic Rating Bill, it is expedient to authorise:

(1) the payment of sums to the Secretary of State in respect of non-domestic rating,

(2) the payment of those and other sums into the Consolidated Fund.—(Andrew Stephenson.)

Question agreed to.

Non-Domestic Rating Bill

Lee Rowley Excerpts

Committee of the whole House
Monday 22nd May 2023 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

I rise to speak to amendments 1, 2, 3 and 20, as well as new clauses 1 and 2, tabled in my name. I note the excellent speech by the hon. Member for Waveney (Peter Aldous), who tabled amendments with very similar objectives to my own. This Bill is a disappointment to all businesses who are struggling through tough financial conditions. Not only are prices going up for every single purchase that they make, but many small businesses were forced to lock into gas and electricity contracts at astronomical rates last year and are no longer receiving any meaningful support with those energy costs. They may also be struggling with interest rate rises on their borrowings following the period of economic chaos caused by the Government last autumn.

This Government committed to reviewing the system of business rates fundamentally in their 2019 manifesto, but this Bill offers only peripheral changes to an outdated system that does not work for a modern economy. The Bill offers to change the timescale of revaluations from every five years to every three years. This is a welcome reduction, but Liberal Democrats believe that it does not go far enough. The reality for businesses is that a three-year gap between revaluations means that they will continue to pay rates that are far from reflective of the real economic conditions they are operating in. Amendments 1, 2 and 3 would require non-domestic rating lists to be compiled every year and make every year from now on a relevant period for transitional provision under the Local Government Finance Act 1988. Annual revaluations are possible. We only need to look to the Netherlands, where they have been taking place since 1995. There, rateable values are allowed to move with the local economy. This means the tax that businesses are required to pay better reflects the conditions that they face.

I also want to spend a little time on amendment 20, tabled in my name. It is estimated that as a result of the Bill as it stands, 700,000 small businesses who currently pay no business rates at all will need to submit annual reports to the Valuation Office Agency, even when there has been no change to the premises they occupy. These small businesses, like many in North Shropshire, are already plagued by seemingly endless monthly and quarterly Office for National Statistics returns, along with their ongoing tax and financial reporting requirements.

The Bill adds yet another administrative hoop for these businesses to jump through and threatens hefty penalties if forms are completed incorrectly. This piles unnecessary pressure on to small businesses and it will not raise any more tax for public services. These businesses already receive a notification to inform the VOA if there is a material change in their premises, so there is nothing to be gained from this element of the Bill. Amendment 20 attempts to deal with this problem by removing the requirement for annual reporting of no change for those businesses in receipt of small business rate relief. I urge the Minister to support amendment 20, which I intend to push to a vote, and to cut unnecessary red tape for the small businesses we desperately need to help, in order to drive economic growth and breathe new life into the high streets of our historic market towns.

I also wish to speak to new clause 1, tabled in my name. It seems very one-sided to impose punitive fines on businesses for failing to report updates to the VOA on time, without any reciprocal expectations of that agency. As I outlined on Second Reading, dealing with the VOA over changes to a premises can be a protracted affair, and all the time that that is going on, businesses face uncertainty about their rates liability and, critically, cannot plan their cash flow. New clause 1 would require the VOA to report to the Secretary of State on its performance in detail at least once a year. This report should correspond to targets to be set by the Secretary of State. The new clause also calls for the findings of these reports to be laid before Parliament. I have suggested targets, rather than legally binding levels of service, to reflect the fact that no two premises are the same and that updates can be complex and can be challenged, but those targets would at least set an expectation of performance and ensure some accountability for the VOA.

Lastly, I wish to draw attention to new clause 2. I think there is general agreement on both sides of the Committee that we want to see our high streets and market towns thrive. This is especially true in places such as the five historic towns in my North Shropshire constituency, where the local high street is not just a practical place to go to but a social lifeline for many residents. Those high street shops are in competition with online retailers whose warehouse premises have a much lower rateable value per metre squared, putting the high street at a disadvantage. This was confirmed in the Treasury Committee’s “Impact of business rates on business” report in 2019.

Disappointingly, however, the Bill does not take this discrepancy into consideration. Instead, the Government will continue to drain physical retailers through rates that do not reflect the challenges they are already facing, leaving many at a tipping point and struggling to compete on an unfair playing field. New clause 2 would require a review of the impact of non-domestic rateable values on competition in different parts of the retail sector, so that Members could understand the true scale of the issue and inform policy accordingly. This review should be commissioned within six weeks after the date this Act is passed. Overall, I urge Ministers to support these amendments and new clauses in order to improve the Bill, which is just not ambitious enough in fundamentally reforming an out-of-date tax system.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I am grateful to all colleagues across the Committee for their contributions today. I think all of us spoke on the Bill’s Second Reading, and we have rehearsed the arguments on a number of these points already. It is important to reiterate from the Government Front Bench that this Bill delivers significant reforms for the business rate system. It increases the frequency of revaluations, which I think has been generally welcomed across the Committee today. It also modernises the administration of the tax and it provides new reliefs to support things such as property improvements. Taken along with the nearly £14 billion-worth of taxpayer subsidy for businesses this year, it helps to manage the tax burden amid the ongoing pressures that the hon. Member for North Shropshire (Helen Morgan) mentioned.

I will now turn to the contributions that hon. Members and hon. Friends have made today. My hon. Friend the Member for Waveney (Peter Aldous) made an incredibly constructive set of comments, and I completely understand the sentiments behind many of the amendments he has tabled. He set a challenge at the outset of his speech, saying that he is looking to move towards annual valuations, the removal of complications and the adoption of digitalisation. We are making progress in two of those three areas, which I hope is not bad, and he has indicated that, overall, this is a step in the right direction. We are moving from five-yearly valuations—in reality, they have happened every seven or eight years in some instances in recent years, for good reason—to three-yearly valuations. We are moving towards the collection of further digital data, and we are continuing to support businesses, where we can, through the reliefs we have put in place.

--- Later in debate ---

[Helen Morgan]

rose—

[Lee Rowley]

The hon. Lady is going to tell me exactly where she would find several hundred billion pounds to fill her black hole.

[Helen Morgan]

Amendment 20 is about cutting red tape for small businesses. Does the Minister agree that he is talking about policy objectives that are not relevant to the Bill?

[Lee Rowley]

That tells us everything we need to know about the Liberal Democrats. They want to talk about only this Bill, ignoring every other policy. They look one way when talking to one part of the country, and the other way when talking to the other part of the country. That shows the Liberal Democrats’ lack of seriousness in understanding how taxation actually works, in understanding how to run a modern, dynamic market economy and in understanding how we need to pay our way to make sure our economy is successful in the long term. It is for those reasons that we oppose amendment 20.

[Peter Aldous]

The points I made were genuine. I think this Bill needs to be changed, and I hope the Government will have an open mind in considering whether to do so in the other place. We may well review this situation again.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clauses 2 to 12 ordered to stand part of the Bill.

Clause 13

Requirements for ratepayers etc to provide information

Amendment proposed: 20, on page 23, line 35, at end insert—

“4LA Paragraphs 4K and 4L do not apply if P is eligible for small business rate relief (for example, because the rateable value of the hereditament for which P is or would be a ratepayer is less than £15,000).”—(Helen Morgan.)

This amendment would exempt businesses in receipt of Small Business Rate Relief Exemption from annual reporting if there is no change to report.

Question put, That the amendment be made.

--- Later in debate ---

[Lee Rowley]

I beg to move, That the Bill be now read the Third time.

It has been a pleasure to support the progress of this Bill through the House. I do not seek to detain the House for long, but let me say briefly that the Bill offers some of the most substantial reform to the business rates system since its inception in 1990 and meets our commitment to reform and reduce the burden of the tax on business. By moving to more frequent revaluations from 2026, we are delivering on a key ask of business. We have been up-front with the House and with businesses that meeting this commitment is a major ask, which is why we have made some changes to the way ratepayers interact with the Valuation Office Agency. That principle was accepted by respondents to the review that predated this legislation.

Our approach has been to listen and to take appropriate action. I have already mentioned the evidence-based approach that we adopted in that review and the close dialogue that we foster with our partners in business and local government. We are also taking action to reform transitional relief, which was the No. 1 one ask from stakeholders on business rates ahead of the 2023 revaluation. That is a major commitment, a major step to supporting fairness and a major improvement in the credibility of our business rates system.

Finally, we are happy to have agreed to the Welsh Government’s request for various measures to be extended to Wales, and also to be supporting Northern Ireland with a data sharing measure.

I conclude by expressing my thanks to all Members for their contributions on Second Reading and in today’s debates. Although we have not agreed on everything, this has been a useful and constructive session. I am grateful to the Clerks of the House for supporting the smooth running of the Bill and to all of the teams across the Department and those in the Treasury, His Majesty’s Revenue and Customs and the Valuation Office Agency for their help in preparing the Bill. I look forward to watching the Bill’s progress in the other place, and I commend it to the House.

Non-Domestic Rating Bill

Lee Rowley Excerpts

Consideration of Lords amendments
Wednesday 25th October 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I beg to move, That this House agrees with Lords amendment 1.

[Mr Deputy Speaker]

With this it will be convenient to discuss Lords amendments 2 and 3.

[Lee Rowley]

It is a pleasure to return this Bill to this place after its positive reception, both here initially and in the other place more recently. Reforming business rates was a manifesto commitment, and having concluded our review of rates, the Bill seeks to deliver a fairer and more effective business rates system.

The amendments that the Government invite the House to support today are minor and do not change the policy intentions of the Bill, which we have debated before in this place. Two amendments deal with the penalties regime for the new duty on ratepayers in clause 13—they are designed to ensure that the penalties system is fairer—and the third is a minor and technical amendment that removes some obsolete wording as a result of another part of the Bill. I will deal with each amendment briefly.

Lords amendment 1 concerns the civil penalties that the Valuation Office Agency can apply if ratepayers do not provide information under the duty. These include an additional daily penalty of £60, which may only be applied if a ratepayer persistently fails to meet their obligations following an initial penalty notice. The Government have listened to the views of the experts in the other place and agreed to create an additional safeguard for ratepayers by capping the financial value of penalties that can be imposed under this provision. Daily penalties will be capped at £1,800, equivalent to 30 days’ worth of penalties. This change will also bring the valuation duty in line with the separate duty to provide His Majesty’s Revenue and Customs with a taxpayer reference number, for which a cap on penalties is already in place.

Lords amendment 2 concerns the penalty for the criminal offence of knowingly or recklessly making a false statement, an offence that is subject to higher penalties than simply failing to comply. The Bill prescribes that for a higher penalty to be applied, the VOA must be satisfied beyond reasonable doubt that the ratepayer has made the false statement knowingly or recklessly. Having reflected, we have recognised that we need to apply the same burden of proof to the procedure on appeal. The amendment therefore provides that the valuation tribunal must remit a penalty unless it is satisfied beyond reasonable doubt that the ratepayer has knowingly or recklessly made a false statement. This provides additional protection for ratepayers.

Finally, Lords amendment 3 is a minor and technical change to the Local Government Finance Act 1988, as a consequential effect of the provisions in the Bill concerning business rates multipliers. This is simply a drafting correction to improve the clarity of the statute book, and the Government do not foresee any practical effect.

The Government invite the House to agree to three minor amendments that were unanimously supported in the other place. Lords amendments 1 and 2 refine and improve the compliance framework for the new information duty, and Lords amendment 3 is a minor consequential change to improve the clarity of the statute book. I commend them to the House.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the Opposition Front Bencher.

--- Later in debate ---

[Lee Rowley]

I will not seek to detain the House for any more than a few seconds. I express my gratitude to the shadow Minister, the hon. Member for Ealing North (James Murray), for his constructive comments and his willingness to support the amendments, as well as for resisting the temptation to go over again some of the things we have talked about in previous iterations of this Bill.

I also thank my hon. Friend the Member for Waveney (Peter Aldous), who has been involved since the beginning. He has done the House a significant service in both reviewing the Bill and offering his comments during its passage. As he says, this is a significant change and one that I think everybody accepts is a big leap forward, particularly on the revaluation frequency moving from five to three years. While we are on the subject of late 1990s game shows, although in his view we have not yet finished this matter—I accept that we never finish—we are grateful for his “Mastermind” qualities in looking at this Bill over the past few months.

Lords amendment 1 agreed to.

Lords amendments 2 and 3 agreed to.

Economic Activity of Public Bodies (Overseas Matters) Bill (Programme) (No. 2)

Ordered,

That the Order of 3 July 2023 (Economic Activity of Public Bodies (Overseas Matters) Bill Programme) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.

(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Julie Marson.)