Non-Domestic Rating (Lists) (No. 2) Bill

Lord Kennedy of Southwark Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Monday 18th January 2021 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, first, I declare an interest as a vice-president of the Local Government Association. Secondly, I am very happy to support both Bills before us today, but I will want to explore options for improving both Bills in Committee.

On the public lavatories Bill, the noble Lord, Lord Greenhalgh, set out what the Bill will achieve: 100% mandatory business rate relief for public lavatories in England and Wales, whether publicly or privately owned. The closure of public toilets over many years is a matter of concern for the general population, particularly those with specific needs—they could be medical needs but not exclusively so. I agree with my noble friend Lady Andrews that this is a long-overdue Bill—of course, it was lost previously due to the general election of 2019. As my noble friend said, Covid-19 has exposed deficiencies in matters that previously we probably all took for granted. I am sure that we will want to deal with them in this Bill.

An increasing number of people are affected by the state of Britain’s public toilets. These include those with disabilities, carers, the infirm, the elderly or people with babies and young children. As I said earlier, people of all ages who are coping with a range of issues and/or medical conditions are not finding adequate provision when they are out and about.

With the closure of bars, cafés and public buildings during the Covid-19 pandemic, we have also seen a reduction in the number of places where people can ask to use the toilet. Although these closures may be only temporary, they have highlighted a real issue for delivery drivers and others who work long shifts on the road getting food to the shops and delivering other essential supplies. Multi-drop goods delivery has always been very hard work. Let us pay tribute to those drivers, who have been outstanding in delivering in these difficult times and ensuring that food is on the shelves. They are struggling to find places where they can go to the toilet when working long hours.

When we are through the worst of this pandemic, we should keep washing our hands with the same increased frequency as we have all been doing in recent months. It would keep us all safer and help prevent the spread of all sorts of infections in the future. We need to be conscious of the age profile of our population and the needs of its older members.

In the past, Britain has—and will do so again in the future—welcomed many millions of tourists to this wonderful country. It is something that we all want to increase and build on. However, it will place further pressure on our existing facilities. Sometimes, these facilities do not give the best impression; for example, when you visit a tourist area and find that facilities are non-existent or, if you find them, they are not in a particularly good condition and do not have a proper cleaning rota.

I am, however, pleased with the progress that has been made in making toilets free at all the mainline railway stations. London Bridge is a station that I use frequently. I have been impressed with the work that has been going on there to make the toilets safe to use during the pandemic. I have not been through Marylebone station recently—the noble Lord, Lord Bourne of Aberystwyth, mentioned it, as he did in our debate in 2019—but I hope that they have now taken away the charge there.

We should all be concerned about public health, hygiene and environmental standards in toilet facilities. I very much agree with the British Toilet Association, which has been mentioned many times in this debate, in its campaign to improve these essential facilities. Good access to toilets that the public can use is all about health and well-being, quality, social inclusion, privacy and public decency.

I agree with the noble Lord, Lord Wallace of Saltaire, in his comments on Bradford and Saltaire; I know the area fairly well, although not as well as him, and I thought the points he made were very valid.

Public toilets must comply with parts 1 and 4 of British Standard 6465, BS 8300, parts M and R of the building regulations and other requirements. It is all about keeping us safe and well.

The British Toilet Association has done some excellent work with the Changing Places consortium, mentioned by the noble Lord, Lord Greenhalgh, and others. The campaign is about the ability of the quarter of a million people in need of Changing Places toilets to get out and about and enjoy the day, which many of us have taken for granted in the past. It is important that, when we go out—when we move on from the pandemic—we can use toilets safely and in comfort. For many that will require a Changing Places toilet, with the adjustable bench, hoist and so on; we need to ensure people with profound disabilities can go out and use them with dignity.

I congratulate Tesco, which has just opened its 100th Changing Places toilet. The Tower of London also has its first Changing Places toilet, put in by Historic Royal Palaces. Again, many congratulations—it is probably the oldest public building in Britain with a Changing Places toilet.

We are in a lockdown, but that will come to an end. When life returns to something like we knew before, we need to ensure that we have legislation in place—possibly with amendments—to ensure that people can enjoy their time outside without any concerns or worries about adequate toilet facilities.

Why cannot any organisation that installs a Changing Places or other disabled toilet facility in its premises, which is available to the public, make use of some sort of business rate relief? Maybe it could be a double relief or revert to 100% relief? I very much agree with the noble Baroness, Lady Jones of Moulsecoomb, who asked why organisations that let people come in and use their toilets cannot have the benefit of some sort of relief. We will want to explore those issues in Committee and expand this Bill to make things better.

As I have said, this is a public health issue, which we might not have taken as much notice of before the pandemic. We need to take notice of it today. Will the Minister set out how this measure will increase the provision of facilities for women and user groups such as wheelchair users, the elderly and people with young children and families with medical conditions? The way in which this Bill is designed does not do that at this stage, but perhaps we can ensure in Committee that it does.

The noble Baroness, Lady Thomas of Winchester, made a powerful case for highlighting the needs of disabled people. What problem would there be in saying that, by investing in facilities for disabled people, young children and families could not actually attract extra relief?

The noble Baroness, Lady Randerson, made the very valid point about the issues facing women and men with children and the general problem we have seen, particularly during the pandemic, about the availability of toilets. I mentioned additional reliefs; that would be one way of encouraging provision for disabled people, for example. I intend to bring these issues back in Committee.

A number of noble Lords made points about lavatories in town halls, libraries and other public sites. Again, we should look at those in Committee.

The “Can’t Wait” card is a very good initiative. It always annoys me to see places that have signs up telling you that “You’re not welcome—you can’t use the toilet”. We need the situation to be much friendlier and to recognise that some people cannot wait; they do need to use the toilets. I remember trying to find the public toilet in Stratford-upon-Avon in the summer of 2019. There were signs up pointing to it but I could not find the thing—it was literally impossible—so I went into the theatre and they let me use the toilet there. A place such as Stratford-upon-Avon relies on tourism. There were coaches of people and tourists everywhere, but it seemed that the council had got to the point where it relied on people going to use toilets in bars, restaurants and cafés. Many let them in, but I did not think that is right. If people are letting them in, why can they not have a benefit from providing that public service?

I also very much support the calls from the noble Lords, Lord Moynihan and Lord Addington, about support for local sports clubs. Thinking about where I live, a place such as the Francis Drake Bowls Club is that sort of organisation, as is Lewisham Borough Football Club, which plays on Ladywell Arena—I think the noble Lord, Lord Moynihan, will know it from his time as a Member of Parliament for that area. There is also Fisher Athletic football club. I must also mention Millwall Community Trust, which I am delighted to be a trustee of, and the work we are doing down at Surrey Docks stadium and the facilities next to the Den.

I support the Bill but, as I have outlined, I will table some amendments in Committee where we can improve it. The Bill is narrow in scope but very welcome. We will see if we can improve it, particularly to reflect on how life going forward after the lockdown may have things in it that we did not all focus on before.

Moving on to the Non-Domestic Rating (Lists) (No. 2) Bill, I am very supportive of the points made by the Local Government Association. As we have heard, this will move the revaluation date to 1 April 2023, based on property values on 1 April 2021. The legislation keeps the period between future valuations at five years although previous Bills, which were of course lost, sought to reduce it to three years. When the Minister responds to the debate, can he tell us whether that proposal has been dropped for good? The noble Baroness, Lady Thornhill, and others raised this in their contributions.

Closer working with the valuation office and local authorities is very much needed, as is reducing the backlog of appeals. As we have heard, according to the latest Valuation Tribunal for England statistics, there are 40,000 unresolved appeals from 2010—I repeat, 40,000. Councils are having to hold money to one side as these have not yet been determined, and this cannot carry on. I support the calls from the noble Baroness, Lady Thornhill, and others: this matter really must be dealt with sooner rather than later.

I support the call from the LGA to see reforms to ensure that appeals can be received no later than six months after a new rating list has come into force. The noble Lord, Lord Shipley, was right to say that we need root-and-branch reform of the business rate system. Our high streets are in crisis and we need a sustainable, long-term solution to the problem. We should make sure that companies all pay their fair share. I endorse my noble friend Lord Hain’s comments urging the Government to think big. My noble friend Lord Reid of Cardowan also drew the attention of the House to the wider issues that this welcome measure will address but which the Government do need to deal with.

Many noble Lords mentioned the contribution of the noble Lord, Lord Thurlow. He made that very valid point about high streets and ensuring that online businesses pay their fair share, as did the noble Baroness, Lady Jones of Moulsecoomb. The noble Lord, Lord Cormack, made some excellent points about support for the high street, small shops and towns such as Louth in Lincolnshire, which I know well. As I said earlier, tourism will once again be an important part of our economy. We have to have the shops for tourists, as well as local people, to visit. As I said, the big online businesses—the Amazons—have to pay their fair share, and the Government need to ensure that they do so.

Finally, my noble friend Lady Ritchie of Downpatrick made a point about the correlation between business rates and the prosperity of our towns—their revenue-creating potential. As my noble friend said, we need root and branch reform.

This has been an excellent debate. I am delighted that there were many more speakers than when the House looked at the public lavatories Bill in 2019. Noble Lords have made fantastic contributions—we are clearly going to have a very interesting Committee stage for both Bills. I look forward to the Minister’s response.

Non-Domestic Rating (Lists) (No. 2) Bill

Lord Kennedy of Southwark Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Thursday 4th February 2021 Grand Committee

Moved by

[Lord Kennedy of Southwark]

1: After Clause 1, insert the following new Clause—
“Statement on consultation with the Valuation Office Agency and local authorities
Within one month of the passing of this Act, the Secretary of State must publish a statement detailing how the Valuation Office Agency and local authorities were consulted in relation to the provisions of this Act prior to its passage.”Member’s explanatory statement
This new Clause would highlight the need for the Government to work closely with the Valuation Office Agency and local authorities by ensuring that the Government details how they worked with them in relation to the provisions of this Bill.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, as this is my first contribution, I draw the attention of the Committee to my relevant registered interests: as a vice-president of the Local Government Association, chair of the Heart of Medway Housing Association and a non-executive director of MHS Homes Ltd.

Amendment 1 would put on the face of the Bill a new clause requiring the Secretary of State to publish a Statement setting out

“how the Valuation Office Agency and local authorities were consulted in relation to the provisions of this Act prior to its passage.”

A property’s rateable value, which business rates are based on, has been assessed independently of Ministers by the Valuation Office Agency since 1990. The Bill will, among other things, make a change to when the Valuation Office Agency must publish draft rateable values. The noble Lord, Lord Greenhalgh, has told us previously that this is to support the smooth transition of the revaluation. The publication of these draft rateable values will be aligned with the timing of decisions relating to the multipliers and transitional arrangements.

This is only a probing amendment and I am hopeful that the noble Lord will be able to set out for the Grand Committee exactly how what is asked for in the amendment has been done. If the agency and local authorities have not been consulted, can he tell us why not, and why the Government think that that is an acceptable course of action?

Amendment 6, in the names of the noble Baronesses, Lady Pinnock and Lady Thornhill, would insert a new clause into the Bill. I am very much in support of this new clause, as it would provide for an impact assessment of the timing of a rates revaluation. I am sure that we will get a full explanation of the amendment from the noble Baronesses.

There is of course a wider debate to be had about the whole question of business rates and their appropriateness as an element of local government funding. It is important to note that the Government have cut £15 billion from central government funding for local government in the last decade. The Covid-19 pandemic has had a catastrophic impact on local authority finances, with income falling and costs rising. The current lockdown, which is the right thing to do, will also have a serious impact. Here, the Government need to keep their promise to fully fund local authorities for the costs of the pandemic.

According to the Local Government Association, local councils in England will face a funding gap of more than £5 billion just to maintain services at current levels. But to respond to demand pressures and plug the existing funding gap, an additional £10 billion per year in funding will be needed by 2023-24. For those reasons and many others, which I am sure we will hear from the noble Baronesses, Lady Pinnock and Lady Thornhill, I support their amendment. I beg to move.

[Baroness Thornhill (LD) [V]]

My Lords, I, too, am a vice-president of the Local Government Association.

I wish to speak in favour of Amendment 6, which stands in my name and that of my noble friend Lady Pinnock, and to support Amendment 1 in the name of the noble Lord, Lord Kennedy of Southwark.

I am very aware that this is a narrowly focused Bill and that it has had broad support and been welcomed. However, it is significant that, despite that, several Members of your Lordships’ House have taken the opportunity to table amendments. I believe that that shows the depth of concern around the whole issue of business rates. The amount of interest shown in both this tightly drawn Bill and the Government’s consultation for their ongoing business rates review shows how important it is for the review to be both bold and radical.

It is also significant that all the amendments seek to hold the Government’s feet to the fire with regard to the various ongoing impacts of the Bill, be they on sports clubs, the high street or local government finance—hence, Amendment 6 stipulates a timeframe of six months. This is due to the fact that the instability and uncertainty provoked by the impact of Covid-19 are exacerbating issues that were already of significant concern—and we are not out of the woods yet.

Indeed, the amendment seeks to continue to draw your Lordships’ attention to the challenging situation regarding local council finances. The latest figures from the Local Government Association show that the financial impact of Covid-19 on local authorities is an estimated £9.7 billion for 2020-21, with a further £2.8 billion of lost income from council tax and business rates. However, it must be noted that these figures were reported before the lockdown and the spread of the new strain was known. This is a significantly different set of circumstances from when the 2020-21 funding package was last evaluated, and is part of the reason for continuing concern around council finances. I am sure it is appreciated by all noble Lords just how important business rates are to the individual finances of a local authority.

One reason for the amendment is to highlight the volatility of the tax base, which is so unpredictable at present. For example, the loss of office space to residential—a topic much discussed with the Minister in this House—is a trend that is likely to continue with inevitable loss of revenue. The Valuation Office Agency is currently negotiating appeals and challenges for offices, airports and factories under a material change of circumstances appeal, due to Covid-19. A rebate of up to 25% was mooted. The reduction in income could be substantial. If a rebate were forthcoming, would subsequent losses be repaid to local government in line with the recently announced tax income guarantee? Some 75% of losses will be guaranteed for 2020-21, but nothing has been said yet about 2021-22. Of course, local government must make up the other 25%.

The amount of money that councils have had to put aside for appeals is also significant, hence local government concerns around cutting down the window of time to appeal and getting the number of appeals reduced. The more certainty that we can add to the processes the better. To date, councils have had to divert £3 billion from services to appeals. A significant amount of money is also tied up in irrecoverable losses for both business rates and council tax. With debt recovery and enforcement activities understandably limited due to the pandemic, and with limits on activities and pressures on court time, councils’ ability to recover debts and secure income as they usually would, will be restricted. These are not usual times, and more businesses are likely to fail.

I use these points to illustrate one purpose of the amendment and the volatility of this important tax base. There is much instability in the system at present, which is being masked by the current, much-needed and much-valued reliefs offered to businesses from the Government. This could change significantly when the reliefs end; it could impact on local authority incomes, but we do not know when this will be. If the amendment is not accepted, could the Government at least agree to look closely at the impact once all reliefs have been suspended? This could provide vital evidence on which sectors are most impacted as well as on local councils’ finances.

Regarding Amendment 1, it was noted by several noble Lords at Second Reading that the VOA has been formally criticised as being cumbersome and difficult to deal with, and its valuations opaque and inconsistent. This is why I endorse what has been said by the noble Lord, Lord Kennedy of Southwark, and support his amendment and additional amendments tabled by my noble friends. In short, the amendment asks the Government how the pandemic that happening now will affect the revaluation in 2023, based on values at April 2021, which will not be looked at again until 2028.

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[The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)]

I have received no requests to speak after the Minister, so I call the noble Lord, Lord Kennedy of Southwark.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank all noble Lords for their contributions to this short debate. In particular, I thank the noble Lord, Lord Greenhalgh, for his full response on the issues raised by the two amendments. I will read the noble Lord’s response carefully before considering whether this is an amendment to which I will wish to return on Report.

The noble Baroness, Lady Thornhill, made a compelling case for her amendment and set out the difficult situation in which local authorities find themselves. We will come to amendments later on regarding appeals, but the noble Baroness highlighted the real problems that are faced today. The noble Lord, Lord Bourne of Aberystwyth, raised further important points and questions that, again, we may need to come back to on Report. However, at this point, I am happy to withdraw my amendment.

Amendment 1 withdrawn.

Moved by

[Lord Kennedy of Southwark]

2: After Clause 1, insert the following new Clause—
“Assessment of impact of timing of business rates revaluations on prosperity of towns and high streets
Within six months of the passing of this Act, the Secretary of State must publish an assessment of the impact of the timing of business rates revaluations on the prosperity of towns and high streets.”Member’s explanatory statement
This new Clause would create an assessment of the impact of timing of business rates revaluations on the prosperity of towns.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, Amendment 2 in my name seeks to place in the Bill a new clause that would require the Secretary of State to publish an assessment of the impact of the timing of business rates revaluations on the prosperity of towns and high streets. We need a root-and-branch reform of the business rates system to make it fairer and to help bricks-and-mortar retailers compete fairly with the online, out-of-town warehouse operations that are putting our much-loved high streets at risk.

Even before the Covid-19 pandemic, we saw a serious decline in footfall on our high streets, and we now have the tragic situation where, on average, one in 10 shops is standing empty. Something must be done to reverse this decline. My amendment seeks to focus minds on this pressing problem. I hope that the Government will take the opportunity to consider it carefully and to accept it.

Amendment 5, in the names of the noble Baroness, Lady Pinnock, and the noble Lord, Lord Stunell, is another that I am happy to support. It gives us an opportunity to examine whether the revaluation based on property values as on 1 April 2021 is right. There are some suggestions that property values will fall even further, and, if that is the case, we could be creating further problems for our hard-pressed high streets.

Amendment 7, in the names of the noble Lords, Lord Addington and Lord Moynihan, brings us back to an issue that both noble Lords spoke about at Second Reading. It proposes a new clause that would require the Secretary of State to publish an assessment of the impact of the changes in the timing of business rate revaluations on amateur sports. I fully support this amendment and cannot see any reason why the Government would want to resist it.

Some amateur sports clubs have charitable status and some have community amateur club status, which provide a level of tax advantage. Charitable status provides for 80% rates relief, with the ability of the local authority to offer a top-up. But many sports clubs are not charities and will not be able to secure this benefit, and I think that it is important to understand the effect of these changes on these organisations. I am sure that we will receive detailed explanations of the amendments later in the debate but, at this stage, I beg to move.

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I hope that, with these assurances, the noble Lord, Lord Kennedy, will be content to withdraw his amendment and the noble Lords, Lord Stunell and Lord Addington, my noble friend Lord Moynihan and the noble Baroness, Lady Pinnock, will agree not to move theirs.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank all noble Lords who spoke in this short debate.

I was not particularly convinced by the Minister’s response to my amendment. We are asking only for an assessment of the impact of the timing of the business rate revaluation on the prosperity of towns and the high street. I would have thought that the Government would have wanted to do this anyway, to arm themselves with some data, facts and information so that they make good, sound decisions that will have the right long-term effects. So we may come back to this amendment on Report.

I very much support the remarks of the noble Lord, Lord Stunell. I fear, though, looking at the Government and their record, that the soundproofed silos referred to by the noble Lord are firmly in place and contribute significantly to the issues and problems that the Government face. We often hear that departments do not talk to each other. The Government have a lot of issues here, many of which can be traced back to the way in which the Government operate on policy matters.

I also agree with the remarks of the noble Lords, Lord Moynihan and Lord Addington. I very much support the call for further support for community sport, particularly in our poorer communities. The call to exempt for ever community sports clubs is the right thing to do. We want to see everybody get active, fitter and healthier. Almost every night of the week, we see those adverts from the Government asking us all to be healthier, get fitter, walk more and do more sport, so that is absolutely the right thing to do.

If we support providers of community sport and improve our health as a nation, the savings to the NHS and the Exchequer will repay the relief many times over. In that sense, it is a no-brainer. As the noble Lord, Lord Addington, said, these clubs give us the activity levels that we all want to see—so, again, I very much support his amendment. Indeed, I hope that he and the noble Lord, Lord Moynihan, will bring their amendment back on Report. I assure them that, if they do not get the assurances that he wants from the Government then, we will happily support them if they want to divide the House at that stage. Perhaps we need to pass this amendment to give the Minister and the Chancellor of the Exchequer a little more encouragement to do the right thing. But at this stage I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Moved by

[Lord Kennedy of Southwark]

3: After Clause 1, insert the following new Clause—
“Assessment of the impact on appeal waiting lists
Within six months of the passing of this Act, the Secretary of State must publish an assessment of the impact of the Act on business rates appeal waiting lists.”Member’s explanatory statement
This new Clause would create an assessment of the impact on business rates appeal waiting lists.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, Amendment 3, to which the noble Baroness, Lady Bakewell of Hardington Mandeville, has added her name, raises the important issue of business rate appeal waiting lists.

As we heard at Second Reading, there are still 40,000 unresolved rating list appeals from 2010—11 years ago. As a result of this backlog, local authorities had to divert more than £3 billion from services to deal with the appeals risk from 2010 and 2017. This is an unacceptable situation; I am sure that the noble Lord, Lord Greenhalgh, would agree with me on that. Local authority finances are under extreme pressure, and this unacceptable situation is being made even worse.

The amendment would place a duty on the Secretary of State to conduct and then publish an assessment of the impact of the Act on business rate appeals. This is an opportunity for the Minister to explain the position of the Government and how they are working to deal with this backlog of appeals. I beg to move.

[Baroness Bakewell of Hardington Mandeville (LD) [V]]

My Lords, I draw the Committee’s attention to my interest as a vice-president of the LGA.

It is a pleasure to take part in this debate and speak to the amendment in the name of the noble Lord, Lord Kennedy of Southwark, to which I have added my name. I am familiar with rating appeal tribunals from my previous life when I sat on domestic rating appeals. Some had been waiting in the pipeline to be heard for a very long time. The noble Lord referred to these timelines.

However, this is about business rates. Some years ago, before the Government transferred the retention of business rates to local authorities, unitary and district councils were responsible for collecting business rates but had no say in setting them; nor were they able to retain the rates collected. If the local authority had no major facilities in its area that would attract business rates, this was straightforward. However, if there were major infrastructure projects—I use this term loosely—this caused huge problems as, for reasons best known to the Government, these facilities were expected to pay business rates despite not trading as businesses.

I can speak only from my experience of Somerset but feel certain that this situation will have been replicated across the whole country. Taunton Deane Borough Council and South Somerset District Council were lucky enough to have major infrastructure in their areas. In Taunton Deane, it was the MoD camp at Norton Fitzwarren and a large hospital at Musgrove Park, in addition to several superstores. In the case of South Somerset, it was the MoD Royal Naval Air Station at Yeovilton and Yeovil District Hospital, as well as superstores. The MoD bases and NHS facilities are of course funded from central government budgets in the first place. All these assets attracted business rates covering millions of pounds. The MoD, NHS hospitals and superstores appealed against their business rates—the latter were in a slightly different category as they were trading businesses and, hopefully, making a profit, but millions of pounds were at stake.

The Government informed local authorities that they could, if they wished, agree a lower figure with the appellant. However, any difference from the figure originally set and the lower figure agreed by the local authority would have to be made up to the Government from local householders’ council tax. Many of these pending appeals waited four, five, six or even seven years to be heard. As the noble Lord, Lord Kennedy of Southwark, has just said, we have now been waiting more than 10 years for the 2010 appeals. All this time, local authorities were wondering whether they would be faced with massive bills in unpaid business rates that the Government would be expecting to receive. When appeals were heard and were successful, this money was passported back to central government. However, there was also an expectation that any shortfall would be made up by local authorities, so it was a win/lose situation for local councils and their taxpayers.

We now have a situation where local authorities operate under a business rate retention scheme. However, with high street retail outlets and other town centre businesses under extreme pressure because of the Covid pandemic, huge numbers of appeals against business rate assessments are likely.

Household rates and housing benefit levels are set on a sub-regional basis by the valuation office. Our valuation office was based in Bournemouth; the price of a property in Bournemouth was vastly different from the value of one in South Somerset. Can the Minister say whether business rates are similarly set on a sub-regional level and whether the buoyancy of the local economy is considered?

Previously, our town centres have been made up of well-known retail high street clothing stores, yet these have all but disappeared. The brands are being snapped up by online businesses that buy the brand and stock but not the premises, as we have seen this week. My noble friend Lord Stunell has already referred to this. How are local authorities that now depend on business rates to balance their budgets to proceed with an increasing number of empty properties?

Many businesses will survive: insurance agents, estate agents, solicitors, food outlets and supermarkets. However, many supermarkets have long since withdrawn to retail business parks, where there is a significant turnover of retailers as each goes into administration. Mothercare, Staples and Homebase are examples; their premises are often left empty for a considerable time. It seems that now is the time for a radical rethink of just what the Government expect business rates to deliver and what type of business they propose to be classified as liable for business rates. This will now include large warehouse facilities servicing online purchases.

The exponential rise in online shopping has been the saviour of householders who have either been subject to lockdown or, prior to lockdown, isolating to protect themselves due to their underlying health conditions. From my office window, I have an excellent view of the C-grade road that serves the 12 houses in our area. The number of delivery vans going up and down has dramatically increased since Christmas. Whether it is with home deliveries from supermarkets or deliveries by DPD, Yodel or another, they are extremely busy and often call long after it has gone dark. Apart from the supermarkets, the vans are delivering goods that householders have ordered from online businesses. Surely now is the time for these businesses to play their part in the local economy and pay business rates; the noble Lord, Lord Bourne of Aberystwyth, referred to this.

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[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank all noble Lords for their contributions to the debate. I agree with all the remarks of the noble Baroness, Lady Bakewell of Hardington Mandeville. She is right when she calls for all online businesses that deliver goods bought online to pay their fair share of taxes.

The noble Lord, Lord Thurlow, made a compelling case for intervention to stop the rapid collapse and decline of businesses on our high streets. No one wants to see, in effect, an end to our high streets, but that is what we will face if the Government do not take urgent, effective action. I fail to see why they are not acting with more urgency on this. They have given no convincing reason or justification either today or previously when these matters have been discussed.

The point that the noble Lord, Lord Thurlow, made about offices is exactly the conversation that we are having at MHS Homes, where I am a non-executive director. We have a fantastic office in Chatham, where all the staff, except those working on the ground, were based, but we are now wondering what our operation will look like in the future. There is nothing unusual about that—many organisations and businesses are having exactly the same conversation about what to do.

I will look carefully at the response from the noble Lord, Lord Greenhalgh, but I may well decide to bring this issue back on Report. However, at this stage, I am happy to withdraw the amendment.

Amendment 3 withdrawn.

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[Lord Shipley (LD) [V]]

My Lords, I first remind the Committee that I am a vice-president of the Local Government Association.

The noble Lord, Lord Thurlow, has made some very salient points, notably that it is vital that urgent action is taken to help high street businesses by reducing their operating costs. I recall the noble Lord, Lord Thurlow, saying at Second Reading—and again today—that it would prove very hard to estimate rentable and hence rateable values for the traditional retail sector even with this deferral, because new lettings will for the time being be rare events.

When I spoke at Second Reading, I pointed out that retailers pay over a quarter of business rates in England and Wales. That is a very large amount of money, but it will now decline significantly as less is generated from high streets. There is, though, an immediate opportunity to even up business rate receipts by switching a greater burden from the high street to online businesses through the revaluation process itself, because we do not have a fair balance at the moment.

At Second Reading, the Minister said the Government would report in the spring on its fundamental review of business rates. He said he was

“sure that the fundamental review will look at alternative taxes to capture the shift in our shopping habits.”—[Official Report, 18/1/21; col. 1069.]

I welcome that and hope it happens, and I draw his attention to the potential for an e-commerce levy on online businesses.

As we have heard, the move online of Arcadia brands and Debenhams in recent days represents what seems to be an irreversible trend—but that cannot be allowed to mean lower rents and rates for online businesses at the cost of the high street. This proposed new clause would require an assessment of the impact of any business rates revaluation on local high streets to be undertaken within six months, looking in particular at the ability of high street retail outlets to compete with the huge retail businesses that operate online.

The timing could fit well—if the Government wanted it to—with the fundamental review of business rates, and I hope that they will take the opportunity provided by the amendment. It would be strongly and warmly welcomed by high street retail businesses because, as the noble Lord, Lord Thurlow, said a moment ago, the matter has become very urgent.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, Amendment 4, moved by the noble Baroness, Lady Pinnock, seeks to insert a new clause into the Bill which, as we have heard, would require an impact assessment of the timing of rates revaluations on local high streets and, importantly, would look at the impact on their ability to compete with businesses that operate online.

We have a serious problem with our high streets. The problem was in many cases a crisis before the pandemic, as we have discussed today on previous amendments. We can all point to the closed and boarded-up shops in areas that we know. The pandemic has created an even more serious problem for high streets and has put many businesses at risk. We need action from the Government to deal with all the issues that are destroying our high streets and our shopping parades.

We will all have seen the news that Boohoo is purchasing Debenhams and that ASOS is purchasing Topshop, but they are purchasing the names and not continuing with their high street presence. Why they are doing that is the question we need to look at. Clearly, they have taken the view that they do not need, or that it is too expensive to operate, a high street presence. This is why urgent action is needed. The issue with online retailers needs to be addressed. It has been discussed in the other place. My honourable friend the Member for Manchester Central, Lucy Powell MP, has said:

“The pandemic has accelerated changes to the way we shop, yet the government continues to disadvantage bricks and mortar businesses against online companies … The support on offer for struggling business has been a series of sticking plasters. Unless the Government puts in place a long-term plan to help high street businesses survive this crisis and recover on the other side, we will see more well-loved high street names vanishing, and many more jobs lost.”


I could not agree more. I also agree with the noble Lord, Lord Thurlow, that we need vibrant, healthy town centres. As he said, the power to help the high street is in the hands of the Government. I hope the Minister will address that point.

[Lord Greenhalgh (Con)]

My Lords, I am grateful to the noble Baroness, Lady Pinnock, and the noble Lord, Lord Shipley, for a further opportunity to speak about our high streets. As I outlined when we debated the second group of amendments today, we will not know the impact of the revaluation on rates bills until later in 2022, so it would not be possible to produce now the report outlined in the amendment we are discussing. However, we can be sure that, once we publish draft rateable values alongside the multiplier and the transitional relief scheme later in 2022, ratepayers will be able to see precisely how revaluation will affect their rates bills.

The noble Baroness, Lady Pinnock, raised an important point about online businesses compared to those that operate on the high street. Businesses which sell mainly or wholly online do not avoid business rates. They may also operate shops—many high street retailers also sell online—and they will require significant warehouse and distribution facilities, often in high-value locations. Nevertheless, business rates are a tax on the use of property and the rates bill is based on the value of the property. It follows that business models that occupy less property and perhaps operate from less valuable locations will pay less in business rates.

Property taxes have several key advantages over other forms of business taxation: they are relatively efficient to collect, they provide a relatively stable source of revenue to local government that helps ensure the provision of essential public services, and they provide relative certainty for ratepayers from one year to the next. However, there is undoubtedly a click-and-collect revolution, as outlined by the noble Baroness, Lady Pinnock, and the noble Lord, Lord Kennedy. The Treasury’s fundamental review of business rates is considering alternatives taxes, including a potential online sales tax. The review will need to consider matters such as the economic impacts of such a tax and assess the concerns and risks that have been raised in the call for evidence.

Supporting the high street is a priority for us. In this year alone, no retailer on the high street is paying business rates. With the assurance that the matter of online business is being considered as part of the fundamental review and the updating of rateable values to better reflect the impact of the pandemic which will come from the 2023 revaluation, I hope that the noble Baroness, Lady Pinnock, and the noble Lord, Lord Shipley, can agree to withdraw their amendment.

Non-Domestic Rating (Lists) (No. 2) Bill

Lord Kennedy of Southwark Excerpts

Report stage & Lords Hansard
Monday 1st March 2021 Lords Chamber

Moved by

[Lord Kennedy of Southwark]

1: After Clause 1, insert the following new Clause—
“Annual Rates Revaluation Reporting
(1) Within three months of the passing of this Act, and every twelve months thereafter, the Secretary of State must publish a report on the timing of business rates revaluations and lay it before both Houses of Parliament.(2) Each report must contain an assessment of the impact of the timing of business rates revaluations on—(a) the prosperity of towns and high streets,(b) the prosperity of small businesses,(c) the ability of high street businesses to compete with online businesses,(d) local authority finances, and(e) business rates appeal waiting lists.(3) Each report must contain a statement detailing how the Valuation Office Agency and local authorities have been consulted in relation to the timing of business rates revaluations.(4) Each report must make a recommendation as to whether action from the Government needs to be taken to prevent adverse impacts arising from the timing of the rates revaluation.”

--- Later in debate ---

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I draw the attention of the House to my relevant registered interests as a vice-president of the Local Government Association, chair of the Heart of Medway Housing Association and as non-executive director of MHS Homes Ltd.

Amendment 1 seeks to place a new clause in the Bill whose purpose is to require the Secretary of State to publish a report on the timing of business rate revaluations and to lay that report before the House. The report must address the issues I have laid out in proposed new paragraphs (a) to (e) of my amendment. Each point needs careful attention.

Our high streets were in crisis before the pandemic, and the position has been made even worse over the last year. Hardly a week goes by when we do not hear of struggling high streets and well-known businesses leaving the high street for good, or questions being raised as to their future viability. Sir John Timpson, chairman of the wonderful Timpson Group, addressed this very point this morning on Radio 4, reflecting on the work he did looking at our high streets for the Government before the pandemic. The Bill does not address that fact, but merely moves the date of the revaluation so that it better reflects the effects of the pandemic. While that is welcome, it falls a long way short, and the Government have missed an opportunity here to do more to save our high streets.

I do not think one can disagree with the points set out in my amendment. If the noble Lord is going to resist the amendment, can he set out what he and his department are doing to support the prosperity of our towns and high streets? That must go much further than the towns fund, or other small schemes with limited funding. What must happen is fundamental help for all our towns and high streets. Small shops and small businesses on our high streets deserve support as they will be a crucial to our economic revival, including the much loved British pub, which is at the heart of local communities. I also draw the attention of the House to my being vice-chair of the All-Party Parliamentary Beer Group. I very much support its work, and the part that pubs play in our community lives.

--- Later in debate ---

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank all noble Lords who have spoken in this debate. The noble Lord, Lord Stunell, rightly highlighted the support the Government have given, which is very welcome. I am very happy to acknowledge that. It has been vital to ensure that businesses have survived through this.

The fundamental question is the unfairness of the present system of business rates. If that is not sorted out, we are going to see the demise of the high street accelerate, and we have to address that at some point. I thank the noble Lord, Lord Thurlow, for his support. As he said, we must address the elephant in the room. As the noble Lord highlighted, it is the twin problem of taxing fairly online retailers—and I wish all online retailers success—to raise revenue from them and the amount of revenue raised from businesses on the high street so that they are taxed fairly as well. Getting that balance right is the issue and that can no longer be ignored.

I thank the noble Lord, Lord Thurlow, for indicating that he would support me if I divided the House. I am often very happy to divide the House, but I have decided that, this time, it is probably not the best thing to do, so I shall not do so—I know the Minister will be very disappointed by that.

The Government must reflect on this. Although it is disappointing that these proposals will not be taken forward, I think that the Government are going to have to do every single thing in my amendment. If they do not do that, they cannot arm themselves with the information they need to take decisions in future Bills and policy, and the crisis will become a complete nightmare on our high streets.

The noble Baroness, Lady Bakewell of Hardington Mandeville, also highlighted the unfairness between online and the high street, and she is right. The risk is that when we return to anything like a normal situation it will not be normal because it will have gone too far and people will not return in numbers to our high streets. I have always supported local shops where I live. I am looking forward to 12 April. I am desperate for a haircut, so I am looking forward to the 12th very much. I am going to my barber straightaway to get it done. It is vital that we support our high streets.

I am very happy to acknowledge the support the Government have given; I mentioned that earlier. It was very welcome and has kept many businesses afloat. It is just a shame that we are not going to address these issues here. I have said before that all the points I have raised will have to be addressed by government because we are going to have to look at the bigger, wider points about what we want from our high streets and how we raise revenue from our high streets and from online so that we can pay for the services we all want. At this stage, I beg leave to withdraw my amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I am very happy to support the noble Lord, Lord Addington, in his amendment. Both he and the noble Lord, Lord Moynihan, made a very powerful case when we were in Committee and they have made an equally powerful case today. I am very happy to support them.

As we heard from the noble Lord, Lord Moynihan, we want to be healthier; we have to get people doing more physical activity, because it will have great effects on their health. That is a good thing as people will live longer and have fewer problems with disease, and that will have a knock-on effect on our health service. That is the most important thing behind all this—getting people to be more active and healthier. The Government are currently running a major campaign, quite rightly, which you see on television, at bus stops and everywhere. I fully support that.

It is also important to ensure that local amateur clubs doing a variety of activities in their communities actually get people doing things. Where I live in south London, there is the Francis Drake Bowls Club—I often go past and see lots of people playing on the bowls green. There is also Lewisham Borough Football Club, an amateur club, and the athletics club that takes part on the track in Ladywell Fields. Those are the things that local people can do to become more active and physical, and if we can support them through the rating system, we should.

As the noble Lord, Lord Moynihan, said, all the amendment is asking for is a biennial report. The amendment is much more generous than I would have been as I wanted one every 12 months. If the Government accept this amendment, they will have to do everything that is in it anyway because they need to have good policy, and good policy needs facts and proper information.

I hope that the noble Lord will tear up his speaking notes to resist this and say, “I agree”. I look forward to hearing his response.

[Lord Greenhalgh (Con)]

My Lords, in my rush to respond to the noble Lord, Lord Kennedy, on the first amendment, I forgot to declare my relevant commercial and residential property interests as set out in the register, so I do so now.

I thank the noble Lord, Lord Addington, and my noble friend Lord Moynihan for their suggestion that I tear up my speaking notes and do what the amendment says. I will seek to reassure them that we have a real commitment to community and grass-roots sports. In that spirit I will refer to a number of things that the Government are doing. My family, friends and I all benefit from community sports and it is right that we do all we can to support community and grass-roots sport, as Members have highlighted.

As I explained in my response to the previous amendment, we will not know the effect of the revaluation on ratepayers for some time and certainly not within six months of the passing of this Bill. The same points apply to this amendment. However, I appreciate that the noble Lord and others want to understand how the revaluation will affect amateur sports clubs. It may therefore assist the noble Lord if I explain how these clubs are valued for business rates—I will try to make the incomprehensible comprehensible.



First, the Valuation Office Agency must, by law, value a property having regard to its current use. This means, for example, that when valuing the site of an amateur cricket club the valuation officer must have regard to its value to the cricket club and not its value to a developer. As you would expect, this important principle means that the rateable value of sports grounds is generally quite low.

The VOA publishes statistics on the rateable value of different categories of properties. The average rateable value in England of sports grounds is £12,000 but the value of many is much less than this and the median rateable value of sports grounds is only £6,000. That equates to a full annual rates bill of about £3,000, which for many will be reduced by the 80% mandatory rate relief. Under those circumstances, many sports clubs will find themselves with a rates bill of as little as £600 per year or £50 per month.

Of course, I appreciate that some clubs will find themselves paying more than this. Business rates reflect the specific circumstances of the property so some clubs, for example with more facilities than others, may find themselves paying more. We also heard in Committee that some clubs may be not eligible for the 80% mandatory relief for community amateur sports clubs. That is a matter specific to the individual clubs but I can understand that some will still have a particular interest in understanding whether their rates bill may change at the 2023 revaluation.

As I have said, we will not know the answer to that until much later in 2022, at the point when all clubs will be able to see their new rateable values. These valuations will be prepared over the next 18 months and, as with all properties, the VOA will first search for evidence of rents paid on sports grounds as a guide to value. As I have explained, to be good evidence these rents will have to reflect the value to the sports club. These rents should not reflect matters such as the development value where, for example, the club happens to be in a prosperous area. To the extent that the rental evidence, where available, shows that values have risen or fallen over the last six years, this will be reflected in rateable values at the 2023 revaluation.

The VOA expects to use rental evidence for most clubs but, whatever the valuation approach adopted for the property, the VOA is clear in its guidance that for non-commercial clubs valuers can also have regard to ability to pay before setting rateable values. The valuer should ask themselves if the rateable value represents the rent that clubs or organisations of the kind which occupy the type of sports ground concerned could reasonably be expected to pay. The VOA’s guidance specifically recognises that where income is generated from the occupation of these grounds, the costs of occupation will be barely covered despite voluntary assistance. Although I am unable to tell the noble Lord how amateur sports clubs will be impacted by the 2023 revaluation, I hope that this background to how they are valued is helpful.

The noble Lord, Lord Addington, has established to the House the vital importance of our community sports clubs. While the value of the 80% mandatory business rates relief to eligible community amateur sports clubs cannot be understated, I recognise the need for the Government to provide support beyond this, particularly throughout the duration of this pandemic. This Government’s commitment to sport is evidenced by the £220 million provided by Sport England to support community sports clubs and exercise centres since March 2020. In addition, the Government have put in place a £300 million sports winter survival package, which has been used to protect the immediate future of major spectator sports over the winter period, and a £100 million support fund for local authority leisure centres. In total, the Treasury estimates that around £1.5 billion of public money has gone into sports in the last year. I hope the House will agree that this constitutes a significant package of support that this Government have made available to sports clubs and exercise facilities of all sizes.

I hope that I have given the House some assurances about both the financial support that the Government are providing to our grass-roots sports sector, and the process and approach which will be taken over the coming months as amateur sports clubs are revalued by the VOA. We will continue to keep in mind the points on how we can support community sports at the grass-roots level. I appreciate the passion from both the noble Lord, Lord Addington, and my noble friend Lord Moynihan, but, reluctantly, I cannot tear up my speaking notes. Therefore, I hope that with these reassurances the noble Lord, Lord Addington, will agree to withdraw his amendment.

Non-Domestic Rating (Lists) (No. 2) Bill

Lord Kennedy of Southwark Excerpts

3rd reading
Tuesday 9th March 2021 Lords Chamber

[The Deputy Speaker (Lord Duncan of Springbank) (Con)]

The Question is that this Bill do now pass. As many as are of that opinion shall say “content”.

I am sorry—I am being too quick this time. I call the noble Lord, Lord Kennedy.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I thank the noble Lord, Lord Greenhalgh, for his engagement on the Bill. As always, he was very generous with his time and I have enjoyed working with him. Also, through him, I thank all the officials in his department. Again, they were generous with their time and open in engaging with me.

This is a very small, one-clause Bill, but it raises very important issues and the debates we had were much wider than the one clause itself. We all love our high streets. We love the pubs, cafés and shops we go to and I hope the Minister will take away all the issues we raised in the discussion of the Bill and look at them because, yes, it is great that we can have online deliveries, but getting a box to your front door is not quite the same as going out on a Saturday morning to your favourite café and reading the paper, meeting your friends at the shops and so forth. We have to protect our high streets and all the shops that we all love.

I know that the noble Lord agrees with me on those matters, but we need to make sure that, in the period ahead, we are looking at ways to support our high streets. Yes, they have to evolve, but, equally, we have to make sure that they are still there, delivering for our communities. Our communities thrive only when we can meet each other, and being on a high street and visiting your favourite café or pub to meet your friends is the way it works. However, on that basis, I thank the noble Lord and his officials again for their engagement on the Bill.

[The Deputy Speaker (Lord Duncan of Springbank) (Con)]

I call the noble Baroness, Lady Pinnock. I am back on form now.