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

Lord Thurlow Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 26th March 2025 Lords Chamber

The amendment of the noble Lord, Lord Thurlow, calls on the Government to review both the £500,000 threshold and a specific use class for fulfilment warehouses. It is important that the Government follow through on their manifesto commitments, so I see no reason why they should not accept any amendment that calls on them to do so. If the noble Lord chooses to divide the House, we will support him, too.

[Lord Thurlow (CB)]

My Lords, I shall speak to Motion N1. We have already had reference to this, but I have noted the Commons’ objections to my amendment on Report, and I have revised it and wish simply to sketch the alterations. This revised amendment, therefore, is about reviews exclusively—first, a review of the £500,000 threshold of rateable value, which is the cliff edge that the noble Baroness, Lady Pinnock, referred to, and the impact it will have on businesses. This is a vital review because at present, it will be untenable for organisations that just exceed the £500,000 rateable value and will be compelled to pay a higher band of rates. The second review concerns how to address the appropriate tax rateable value on the big warehouse retailers—the internet retailers such as, but not exclusively, Amazon. Fairness between the high street and these big-box retailers is what we seek. We want to establish a new use class, purely for the benefit of business rates and no other reason, but without insisting upon implementation, which was in the previous amendment and rejected in the other place. The Government will then be able to apply the new rateable value to these big gorilla retailers at the flick of a switch at any time in the future, but they are not compelled to do so.

All sides of the House want fairness for the high street against these big retailers. Let us not duck it or leave it in the long grass. I am afraid I am not convinced by the comments of the Minister so I, in turn, wish to press my Motion at the appropriate time.

[Lord Jamieson (Con)]

My Lords, I declare my interest as a councillor in central Bedfordshire. I rise to speak in support of the noble Lord, Lord Thurlow, and his Motion N1. The noble Lord has been persistent in his efforts to get the Government to listen and bring forward a serious review of the case for a separate use class for retail fulfilment centres that are not on the high street. He is an excellent example of a Peer who brings his experience and expertise to your Lordships’ House. As a professional chartered surveyor, he has brought that expertise to bear during the debates on the Bill, and I am very grateful to him for that.

The Bill fails to deliver on the Government’s manifesto commitment to replace the business rates system and level up the playing field between the high street and the internet giants—a so-called Amazon tax. It fails on both counts. The reviews proposed in this amendment would provide the basis to achieve this. The new £500,000 threshold for the higher multiplier is a blunt tool that will impact many organisations that were never intended to be hit with higher business taxes. It does not deliver on the Government’s objective of targeting online giants. I have consistently made the point that a £500,000 threshold is a cliff edge that will create perverse incentives at the margins, disincentivising investment, particularly on the high street.

The noble Lord, Lord Thurlow, has gone further arguing forcefully that the Government must review the case for a separate use class for retail fulfilment centres that are not on the high street. I am grateful to him for including my concerns about the impact of the £500,000 threshold in his Motion N1, and I am pleased that my party will vote for it should he choose to test the opinion of the House.

[Lord Thurlow (CB)]

My Lords, I realise that I omitted to refer to Motion P1, which is in the same group. It is consequential on Motion N1 and will depend on the outcome of that Division.

[Lord Khan of Burnley (Lab)]

My Lords, I thank all noble Lords who took part in this short debate. We heard concerns that the measures in the Bill for new multipliers do not deliver on the stated intention of the policy as announced at the Budget. I do not agree with that. At the Budget, the Government announced their intention to introduce two lower multipliers for qualifying retail, hospitality and leisure properties and, in particular, to end the uncertainty of annual RHL relief. RHL is a temporary stopgap measure that has been extended year on year since the pandemic, and it does not provide the certainty that businesses require. The Government, through this Bill, are taking steps to address that. It was also announced at the Budget that the permanent tax cut for RHL businesses needs to be sustainably funded. This is an appropriate and prudent approach. The challenging fiscal environment that the Government face requires this, but it goes without saying that any tax cut must be funded as part of sound financial management. To do this, the Government intend to introduce a higher multiplier for the most valuable properties, those with a rateable value of £500,000 and above. The higher multiplier will affect less than 1% of properties in England. This delivers on the policy set out at the Budget by the Chancellor. Furthermore, it represents the Government’s first step to delivering on their manifesto commitment to transform the business rates system to one that is fairer, protects the high street and is fit for the 21st century.

I have explained to noble Lords here today while the amendments tabled in lieu are not necessary. For these reasons and the other reasons I have already set out, I respectfully ask noble Lords not to press their Motions containing Amendments 1B, 2B, 7B, 8B, 13B and 14B.

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Moved by

[Lord Thurlow]

At end insert “, and do propose Amendment 13B in lieu—

13B: After Clause 4, insert the following new Clause—
“Review: threshold effect
(1) The Secretary of State must undertake a review of how the provisions in this Act may affect businesses whose rateable value is close to £500,000.
(2) The review must consider the merits of a separate Use Class and associated multiplier for retail services provided by fulfilment warehouses that do not have a material presence on local high streets, to apply in England.
(3) Experts in the sector must be consulted to inform the review, including but not limited to—
(a) the Royal Institute of Chartered Surveyors;
(b) the Institute of Revenues, Rating and Valuation;
(c) the Rating Surveyors’ Association.
(4) The Secretary of State must lay the review under subsection (1) before Parliament within six months of the day on which this Act is passed.””

[Lord Thurlow (CB)]

My Lords, I wish to divide the House.

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[Lord Thurlow (CB)]

I want simply to add to these very moving and persuasive comments. It seems to me the most terrible act of self-harm to tax the schools again and again. It is not just VAT and the non-domestic rates but national insurance increases on staff and employees, and, in recent years, a compulsory increase to pension provision outside any private arrangements the schools may make. Those are four separate recent taxes. When is this bleeding going to stop?

[Baroness Pinnock (LD)]

My Lords, we on these Benches believe that there is a principle at stake of not regarding independent schools as charities. Education is not a profit-making business, although independent schools have to cover their costs—which, as I have sadly heard, Fulneck School has failed to do. We will support the noble Baroness, Lady Barran, if she wishes to test the opinion of the House.