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

Lord Naseby Excerpts

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

[Lord Naseby (Con) [V]]

My Lords, I wish to address the Non-Domestic Rating (Lists) (No. 2) Bill, and much of my comments will reflect the speeches of the noble Lords, Lord Stunell and Lord Thurlow. Although this is a short and, I suppose, on the surface relatively uncontroversial Bill, amending the date of the next revaluation for business rates to 1 April 2023, it presents a key opportunity to raise the Government's awareness of the need for a complete overhaul of the business rates system—and, in particular at this time, to save shops by giving them a lower and simpler cost base from which to operate in future.

The Minister will know that retail is a sector that generates about £20 billion in taxes and contributes about £7.5 billion in business rates each year, largely from the high streets and town centres, with further tax contributions made throughout the supply chain. The burden of business rates has risen extremely high in the past 30 years, up from an average of 35p in the pound of rateable value in 1990 to more than 51p, causing business failures, store closures and job losses. The problem for physical retail is accentuated by the rise of online retail and is most acute in the north and the Midlands, adding to the business pressures on those communities.

Frankly, in my judgment, the system is broken. From my past activities in the Commons—that is why I took 1990 as a reference point—and before that as leader of the London Borough of Islington, I believe that business rates have always been a challenge. Now we have a pressing need for a fair system of taxation for business. We need an urgent plan to keep rates at manageable levels to save jobs and retain the character of our shopping places, town centres and high streets. I have done some consultation with the industry, and there are three points it would have me make, which I now make—and agree with. First, we should reduce and fix the uniform business rate from the current 51p-plus rate back to somewhere near 30p, so that it more closely reflects physical retail’s share of sales in the 2020s. Secondly, we should introduce annual business rates revaluation from 2023, to ensure that business rates are fair and accurately reflect market conditions. Thirdly, we should abolish downwards transitional phasing to further support the recovery of the retail sector.

In the immediate term, the Government need urgently to commit to continuing the Covid-19 business rate holiday for retail. The industry itself has accepted that at the end of the current system, a 50% rate would seem appropriate. However, we now have a somewhat different situation because of a significant rise in Covid-19 cases, which has led to the current lockdown. We now see it as vital for the Government to sustain the current relief at 100% until the end of the pandemic to enable retailers and businesses to make the decisions needed now to ensure their survival and recovery next year.

I understand that the industry supports April 2023 as the next revaluation date, but has real concerns about the antecedent valuation date—the AVD—set for 1 April 2021. This would mean that the new rating assessments and rate bills in 2023 would be based on the state of the economy and property rental value at 1 April this year. Given the current lockdown and the prognosis for it to be lifted not before Easter, retail will not have recovered from the economic losses experienced by successive lockdowns for this now to be the appropriate date for revaluation.

Reliable market retail data, which is the basis of AVD, will not be available until at least April 2021 and maybe not until the following January. I therefore urge my Government to defer the AVD, which is specified in secondary legislation, so that it will not affect the primary legislation. I conclude by saying once again that this debate on this Bill provides a unique opportunity to highlight the need for fundamental business review.