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

Michelle Welsh Excerpts

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Harriet Cross]

Q My question is very brief, and is relevant to what Mr Lenon said about margins being tight. Is there a figure for the average margin that one of your schools would expect? How might that be affected by the changes to the business rate relief?

David Woodgate: The benchmark is 10% net surplus on gross fees. We had many schools drop down to 5% to break even, and they are now going into deficit in order to meet the quadruple whammy—if I can put it that way.

[Michelle Welsh (Sherwood Forest) (Lab)]

Q I want to go back to something that Simon said about special educational needs in independent schools, and how in some cases SEN can be met only by independent schools. Can you give further clarification on that?

I spent a long time working with special educational needs in the state sector at every key stage, in both specialised and mainstream state schools. There was not a single case that I saw that was not able to be dealt with in a state school in one way or another. With the further investment this Government are talking about, I think that will change again. I would like some clarity, because if there are such cases, they should be taken up with the local authorities and Members of Parliament—it should not be the case.

Simon Nathan: I am happy to follow up with the Committee on that, because I do not have the specific cases in front of me, but I can obviously go and find that information. I do not think it is an issue on a national scale, but there will be local areas where the independent school is filling the need that perhaps cannot be wholly fulfilled otherwise. I am not saying that the expertise is not there in the state sector; I am saying that the capacity might not always be there.

[Ms Billington]

Q I notice that the fees of private schools in the Independent Schools Council have doubled in cash terms in the last 20 years. I would be interested in the explanation for that rise—the causes behind it—and the impact on both numbers and the composition of the pupils attending those schools.

Barnaby Lenon: I have been on a number of governing bodies, and have been a headteacher of schools where the fees went up quite significantly. It happened particularly in the period between 2003 and 2008, when the fees were driven by increases in state school teachers’ pay, in national insurance and in pension contributions. We did not suddenly all want to build new buildings; it was more or less forced upon us, but you are right that they were quite big increases, and the impact has been that fewer parents have been able to afford our schools.

--- Later in debate ---

[Martin Wrigley]

Q Reforming business rates is very welcome. We always like that—they are not a particularly good tax—but I fear the measure is making them more complicated.

Forgive me if it is a naive question, but I do not see anywhere in the Bill, other than it starting in April 2026, any commitment to forward notice of changes or the forward ability to see changes. One presumes they come once a year in the Budget, but I am not sure it is actually mandated that that is the case. Is there a mechanism in the Bill that prevents future Governments from changing these rates more frequently, or is there anything that we can put in it that gives local authorities sufficient time to implement such things?

You say that the provisional settlement is due next week. I say once again, as a former council leader, that that is very late. You are forgiven—it is the first year, so there are extenuating circumstances—but councils need time to set their budgets, set their systems and do all that. I am looking for lead times, implementation times and guarantees of multiple years’ rates for consistency.

Jim McMahon: That is precisely why we have phased the approach. The permanent relief will come in at 40% in 2026-27, but we have included a transition period. That will continue the £110,000 cap, but it will bring in the 40% relief. The relief will be out the door immediately, but it will give time for a number of things in the system to catch up, the revaluation being a very important part of that.

This is a part of the wider issue of local funding. There are measures in the Bill that will see additional business rate funding to councils, because some of that is retained business rates in the system. We are going a long way and, without getting ahead of next week’s provisional settlement, it is a good settlement. There is £4 billion to £5 billion of new, clean money going into local government for all the issues that you as a former council leader will know are the absolute pressure points: social care, children’s services and temporary accommodation. All those issues are being addressed through the Budget and the provisional settlement. Importantly, deprivation is being brought back as a key indicator of demand in driving many of those services in local communities.

We are going a long way towards that, and we are making sure that councils are given the certainty and capacity. We accept that the settlement this year is coming down to the wire, and it would have been nice to get it sooner, but getting it right is important. Our intention is, as we move further, to go to multi-year settlements so that councils have long-term stability and that certainty is built into the business rate system.

[Michelle Welsh]

Q Can the Minister set out the scheme that the Government are proposing to ensure that schools that principally deliver education for pupils with special educational needs will not face any additional burdens?

Jim McMahon: That is entirely the point, although perhaps it did not come out in the evidence sessions. A lot of the debate can be quite polarised—whether you are for or against private schools and the rest of it. When I was on the other side of the table, I was clear that I wanted to pull away from that and say, “Well, let’s just have a conversation based on the evidence.” What the evidence says is that there has been provision to ensure that those schools that are mainly or wholly for pupils with special educational needs will not be affected by these measures at all. Why? It is because we recognise that, within the wider school ecosystem, that provision is important in many communities and that many local authorities will support it. That is being provided in the Bill.

In the end, though, I would say that we need to rebuild mainstream provision. We all have constituents at their wits’ end because, after 14 years, mainstream provision has been allowed to erode to such a point that, in some places, it barely exists. We need to rebuild it, and the investment through the autumn statement begins that rebuilding work. It will take time. There is no button to press that resets 14 years in six months, but in terms of a statement of intent, £1 billion through the local government finance settlement for SEND provision is the start of that rebuilding process.

[Mr Sewards]

Q Queen Street in Morley is a fantastic high street, but it has a number of empty shops. I tried to acquire one of them when I was setting up my constituency office, but I was told, “No, no, no—they are about to be occupied.” Six months later, they are still not occupied. I promise it is not just that they did not want me; other people have approached them and had no luck. Please can the Minister shed some light on how we might use multipliers to get these properties occupied?

Jim McMahon: I definitely cannot guarantee that the landlord did not have a view about the tenants in that situation, but I think we all know of examples in which businesses have been frustrated when they have tried to get hold of the landlord of prime retail properties on the high street, sometimes in fantastic historical buildings. When they eventually get a response—if they get one at all—it is like the one my hon. Friend got: it does not bear truth, as the building is still empty six months down the line.

There is a wider issue here about the powers that the community has to take over assets and turn them into something for the public interest, not just distant investor interest. Measures in the Bill will go a long way to ensure that, when those premises are occupied, the occupant gets the support they need to be sustainable in the long term.