Business Rates (Rural Areas)

Marcus Jones Excerpts

Tuesday 8th September 2015 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

Thank you, Mr Hollobone, for calling me to speak. It is a pleasure to serve under your chairmanship.

I congratulate my hon. Friend the Member for Rossendale and Darwen (Jake Berry) on securing this debate on the important issue of business rates, and in particular on how business rate rules apply in rural areas. I assure him that during this debate I will not take off my shoes, and I hope that I will not end up in the doghouse as a result of my comments.

My hon. Friend referred to several rural businesses. The rural economy is significant, contributing around £120 billion to the English economy in 2013. Our commitment to supporting businesses, including rural firms, was reflected in the Budget, when the Chancellor repeated what we have always said; the best way to create jobs and raise living standards over the long term is to support businesses, to increase productivity by making them more competitive, and to prioritise investment in skills and infrastructure. Therefore, the Budget set out a plan to back business and support productivity by introducing another cut in the corporation tax rate, increasing the level of the annual investment allowance, raising the employment allowance, introducing high-quality apprenticeships and committing sustained investment to the strategic road network.

As for specific support for rural areas, between October 2012 and March 2015 the five pilot rural growth networks helped more than 3,200 businesses, gave advice to more than 1,000 individuals interested in starting a business, created 530 new businesses, and created and safeguarded more than 1,200 jobs. As part of the new £3.5 billion rural development programme, the Department for Environment, Food and Rural Affairs is also investing nearly £500 million to benefit rural businesses, people and communities.

Before I talk about the future of business rates and our review of them, I will set out the action that we have taken on those rates since the 2010 election. We have doubled small business rate relief for more than five years. We have also given local authorities powers to grant their own discounts entirely as they see fit, because they know their local areas best and can use those powers to support any rural business they choose, and where they provide relief we automatically fund 50% of the costs. We have also introduced the business rates retention scheme, which provides an incentive to authorities to encourage local growth. In addition, we have introduced more than 20 enterprise zones, and we have plans for more.

I turn now to the reviews that we are currently undertaking. Through our review of business rates administration, we have listened to businesses to find out the changes to business rates that they want to see. Therefore, we will ensure that from 2017 the business rates system properly reflects the structure of a modern economy, and provides clearer billing and better information-sharing. The Enterprise Bill will also introduce a faster and more efficient appeal system. In addition, in the 2014 autumn statement the Chancellor announced a wider review of business rates, and I assure my hon. Friend that in that review we will certainly take full account of the position of rural businesses and the other matters raised in this debate. We expect that review to report by the end of 2015.

I turn now to the specific issue of cash machines and business rates. Business rates are paid on non-domestic properties and are the means by which those businesses contribute towards the cost of local services. Cash machines are a non-domestic use of property and therefore are included in business rates. It is for the Valuation Office Agency to decide, based on the facts, whether an automated teller machine should be separately assessed for business rates. That is decided independently of Ministers, based on the facts of each case, and we do not intervene. However, where cash machines are assessed for rates, it is fair that the cash machine operators, which include banks and other financial organisations, pay rates alongside other sectors, such as retail and offices. The rules also ensure that the rates assessments of cash machines reflect the value of specific sites. Busy sites have a much higher rateable value than quiet sites, and this approach is based on actual market rents that are agreed and paid by the cash machine operators.

Furthermore, we have given local authorities the power to grant local discounts. We have urged them to support access to cash machines that are free to use through their local discount powers. Those powers can also be used, for example, to support cash machines on high streets or in rural locations, so they take into account the comments made by my hon. Friend. Where councils use those powers, we will automatically meet 50% of the cost. As I said earlier, we are currently conducting a review of business rates and we will certainly take into account the comments on business rates of my hon. Friend and those of other hon. Members who have contacted me on this issue.

[John Howell]

I wonder whether the Minister will allow me to give a plug for that review. I am conducting a review of businesses in my own constituency, and I know that they see business rates as just another tax. It would be extremely good for them to see something in return for paying their business rates—something that they have control over.

[Mr Jones]

I thank my hon. Friend for that intervention and it is always good to get the views of businesses, both in Henley and across the country. I will certainly take into account what he has said and I will feed those comments into the ongoing review.

I turn now to the issue of stables and local taxation. Property is subject to either council tax or non-domestic rates, which are commonly known as business rates. The boundary between the two can certainly be complex, but broadly speaking stables are only likely to be included within the council tax band if they are sited within the domestic curtilage of a property and used for purposes on a domestic scale appropriate to that property. It is for the VOA to apply the legislation and case law to the facts of a particular case.

All ratepayers have the right of appeal to an independent tribunal. Of course, a stable property that is separately rated may be eligible for business rate relief, which I think is the case in the situation that my hon. Friend the Member for Rossendale and Darwen referred to. Where a stable is taken into account in a council tax assessment, that may well result in a council tax band increase. So it is not necessarily the case that someone will pay more when a stable or stable block is separately assessed.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I thank my hon. Friend the Minister for giving way on that point and I appreciate his comments about stabling with regard to non-domestic rates or council tax. Does he agree that the British Horse Society has made an excellent submission to the Treasury’s business rate review, which brilliantly highlights, first, just how complicated and grey an area stabling can be and, secondly, the many anomalies that exist for those who run equestrian premises as part of either an agricultural holding or a domestic property?

[Mr Jones]

I thank my hon. Friend for making that point. It is extremely important that organisations such as the one she mentioned bring forward their views and concerns during the review process. I will certainly take them into account, as I am sure my colleagues in the Treasury will, and I will also take into account the views put forward by my hon. Friend the Member for Rossendale and Darwen, who secured today’s debate.

I turn now to the matter of festivals. The VOA has a duty to maintain fair and accurate rating lists, and it is of course right that music festivals and other such events pay business rates, just like any other occupier of non-domestic property. However, I assure my hon. Friend that if there are no permanent physical adaptations to the land to facilitate festival use, and the duration of the festival is only a matter of a few days, it is unlikely to attract a rating assessment in its own right. Any assessment would be proportionate to the scale of the festival. Of course, if a ratepayer is unhappy with their assessment, they have a right of appeal to an independent tribunal.

The VOA is working with the Events Industry Forum to draw up guidance to help organisers better understand when rateability will arise. We will certainly take into account comments made by my hon. Friend and other hon. Members during the review process.

[Jake Berry]

Does my hon. Friend acknowledge that backdating the rate bill for five years for such events, and sometimes for stabling, is putting their viability at risk? Those involved in setting up events in 2010 or 2011, for example, had no possible way of knowing that they would be hit with a large historic bill that could make the future of those events unviable. Will my hon. Friend undertake to ensure that there is a conversation with organisers, in respect of historic bills charged to music festivals, to find out whether there is a fair or reasonable way of charging them that would enable them to stay in business? If they do not stay in business, we will be shooting the goose that lays the golden egg.

[Mr Jones]

I thank my hon. Friend for making that important point. He made certain points about the collection of taxation, but that is difficult to change retrospectively. Having said that, I am more than willing to make further inquiries and to respond to him in writing soon.

Picking up the other point made by my hon. Friend in relation to the VOA making unexpected changes, I reiterate that the VOA is there to interpret the law made in this House, and it does so; and it also works on the basis of case law. We can certainly consider that matter during the current review, which I have mentioned once or twice during this debate. However, it is important to say that we must have a mechanism for interpretation of laws made in this House, rather than have this House interpreting laws that we Members make. We need to bear that in mind.

In conclusion, we have taken significant action to support the rural economy, including through the business rates system. We will certainly take into account matters mentioned by my hon. Friend and other hon. Friends and colleagues during this debate. Once again, I thank my hon. Friend for securing this debate and giving me the opportunity to set out the Government’s position on these important issues.

Question put and agreed to.