Businesses: Business Rates

Lord McKenzie of Luton Excerpts

Monday 13th January 2014 Lords Chamber

[Baroness Stowell of Beeston]

My noble friend is right that the measures that we introduced were born out of listening to businesses, and measures have been introduced that support them to grow the economy without adding any extra burdens on other taxpayers. I make two points. Online retailers do, of course, still pay taxes, including business rates, on the properties that they use to facilitate their businesses. As to the business rate system itself, as my noble friend will know, my right honourable friend the Chancellor keeps all taxes under review. He is certainly looking at the administration of business rates and this review will take place later this year.

[Lord McKenzie of Luton (Lab)]

My Lords, we are in the era of the business rate retention scheme but there are emerging representations from councils, via the LGA, that currently the risks of the new system outweigh the rewards. This is partly to do with appeals but also business rates avoidance—exploiting the current relief and discount framework. What specifically are the Government doing to address these concerns about business rates avoidance?

[Baroness Stowell of Beeston]

The noble Lord will know that one of the changes that we have introduced is to allow local authorities to retain 50% of all the business rates that they raise. This is so that they can enjoy and benefit from business activity in their area. We have also changed the law so that local authorities are able to introduce their own discounts, and since April this year central government is funding 50% of those discounts. We think this is the right thing to do to make sure that there is the incentive there for new businesses and local authorities to receive the benefit from that activity.