Non-Domestic Rating (Multipliers and Private Schools) Bill

Nusrat Ghani Excerpts

Report stage
Wednesday 15th January 2025 Commons Chamber

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

With this it will be convenient to discuss the following:

New clause 2—Review of impact of new multipliers—

“(1) Within eighteen months of the day on which sections 1 to 4 of this Act are commenced, the Secretary of State must conduct a review of the impact of those sections.

(2) The review must consider—

(a) the impact of the introduction of the lower multiplier on qualifying retail, hospitality and leisure hereditaments,

(b) the impact of the introduction of higher multipliers in relation to a hereditament for which the value is £500,000 or more.

(3) The Secretary of State must, as soon as is reasonably practicable, publish the review and lay a copy of that review before Parliament.

(4) As part of the review the Secretary of State must consult with such parties as they see fit including—

(a) businesses,

(b) the Valuation Office Agency; and

(c) Billing Authorities.”

This new clause would require the Secretary of State, within 18 months of sections 1 to 4 of the Act being commenced, to review and consult on the impact of new multipliers.

New clause 3—Sections 1 to 4: impact assessment—

“(1) The Secretary of State must, within six months of this Act being passed, conduct an assessment of the expected impact of sections 1 to 4 of this Act on relevant businesses.

(2) The assessment must compare the amount of non-domestic rates expected to be paid by relevant businesses once sections 1 to 4 come into force with the amount paid in each financial year between 1 April 2020 and 31 March 2026.

(3) The assessment must consider how the impact is expected to differ depending on the number of hereditaments a business occupies.

(4) The Secretary of State must lay before Parliament a report setting out the findings of the assessment.

(5) In this section, a “relevant business” is a business occupying a qualifying retail, hospitality or leisure hereditament.”

This new clause would require the Secretary of State to examine the effect of the introduction of retail, hospitality and leisure multipliers on the amount of business rates paid by businesses occupying a single site compared with those occupying multiple sites.

Amendment 9, in clause 1, page 2, line 5, at end insert—

“(1A) Regulations under sub-paragraph (1)(a) must provide discretion for billing authorities with regard to the application of the higher multiplier.”

Amendment 1, in clause 3, page 3, line 29, after “hospitality” insert “, manufacturing”.

This amendment would add manufacturing businesses to the types of business that could qualify for use of the lower multiplier.

Amendment 2, page 3, line 33, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 3, page 4, line 9, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 4, page 4, line 13, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 5, page 4, line 31, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 6, page 4, line 35, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 7, in clause 5, page 5, line 37, leave out from ”persons” to end of line 38 and insert—

“who have special educational needs.

“(5A) In subsection (5) “special educational needs” has the same meaning as in section 20 (When a child or young person has special educational needs) of the Children and Families Act 2014.”

This amendment would mean that a school that is wholly or mainly concerned with providing education to persons with special educational needs would not be a private school for the purposes of the Act, and as a result would retain charitable relief from non-domestic rates.

Amendment 8, page 5, line 38, at end insert—

“, or

(b) has a religious character or other special character and there is no maintained school or academy of the same character within the specified distance from that school.

(5A) In sub-paragraph (5)(b)—

“religious character” has the meaning given under section 69 (Duty to secure provision of religious education) of the School Standards and Framework Act 1998,

“other special character” has the meaning as defined by the Secretary of State by regulation,

“specified distance” is the distance specified under section 445(5) (Offence: failure to secure regular attendance at school of registered pupil) of the Education Act 1996.

(5B) Regulations under this section are to be made by statutory instrument.

(5C) A statutory instrument containing regulations under this section may not be made unless a draft instrument has been laid before and approved by resolution of each House of Parliament.”

This amendment would provide that charitable rate relief would continue to apply to a school with a religious or other special character, if no maintained school or academy with the same character was within the statutory walking distances (as set in the Education Act 1996) from that school.

Amendment 10, in clause 6, page 6, line 22, leave out “2025” and insert “2026”.

[Vikki Slade]

Business rates reform is long overdue. It is frequently cited by my constituents as the biggest concern for their businesses’ survival and one of the most direct inhibitors to their growth.

I was contacted this week by a constituent from a local business in Three Legged Cross, right on the edge of my constituency. He has been running it for over 40 years, and the cliff edge created by the small business rate relief means that his rates bill will go from £2,800 to £8,500 per year. The only thing that will save this microbusiness is systemic change as proposed by the Lib Dems in our manifesto, not a tax based on an arbitrary valuation that bears no relationship to the activity taking place inside his building.

High streets are trying to redefine themselves, moving from the heart of goods purchasing to literal shop windows as they struggle to compete against online competitors that do not have their overheads. It would be wrong to think that the solution is to try to return to the perfect high street of the past, as if such a thing exists.

I am old enough to remember C&A being the place me and my friends browsed for the latest fashions, and there was a Blockbuster video store and pic ’n’ mix from Woolies. Where are they now? It is dangerous and self-defeating to be caught up in toxic nostalgia, trying to reclaim the past as some kind of perfect place. Parliament must enact legislation that supports the society of tomorrow and towns that will work for a technological and multicultural age—indeed, an age in which people can no longer afford the stuff that we used to buy on a Saturday afternoon, or are choosing, as I do now, to buy their stuff from second-hand stores.

The dangerous gap between the slashing of retail hospitality and leisure relief by almost half, and a regime that brings in as yet undefined new multipliers, brings real risk. Our new clause 1 would require a review of the impact of clauses 1 to 4 on businesses, on high streets and on the real prize of economic growth that the Government mention so often. There has been a lot of talk in recent months about decisions being made without clear impact assessments. As we move through a period of reform, enshrining such an assessment in law, rather than questioning later whether it has been done, would save us all a lot of trouble and demonstrate that the Government genuinely want to make improvements.

--- Later in debate ---

[Sarah Bool]

That may be the evidence that you have received in this instance, but I am giving the real-life proof. When I spoke to the headteacher about this, she said that the increase in national insurance on teacher costs, which are about 80% of outgoings, in combination with all the other things, has had a huge impact and the school will have to shut. It will be closing its doors at the end of July, which is a travesty.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. You said the word “you”, but I did not ask the question.

[Sarah Bool]

My apologies, Madam Deputy Speaker; I would not dare say that about you.

If the Government are intent on punishing my constituents’ aspiration for the future of their children, the least they could do is grant the concessions that the Conservatives are asking for in all our amendments, and specifically those in amendments 7 and 10. Amendment 7 would exempt private schools that wholly or partially provide education for children with special educational needs and disabilities who have not yet obtained an education, health and care plan, or whose needs are established but not so severe as to require one. SEND support in schools helps pupils with a level of need below that of an EHC plan. Restricting relief only to those settings that provide for the most severe needs is out of step with the rest of our education system. Many families, on not being successful in applying for an EHC plan, or indeed enduring huge waiting times for the local authority to put one in place, opt to send their children to a private school. We should not punish families who choose to do what is in the best interests of their children.

Amendment 10 would delay the introduction of this tax hike for a further year to allow schools to plan their finances accordingly. That is just plain common sense. It would mean fewer schools like Carrdus having to make the unenviable choice to close their doors.

--- Later in debate ---

[Mr Sewards]

I believe it is right to tax businesses. Private schools are businesses, and we are choosing to levy the tax on businesses. We are not choosing to levy the tax on state education, because as I was just setting out, it is imperative on us to make sure there is an excellent and well-funded place in state-funded education for all students, should parents choose to take advantage of it. It must be remembered that not all parents have the choice of private or state education. The reason why 94% of students are in state education is because that choice does not exist for most parents in this country. That is why we will take the necessary action to fund state schools properly.

I will make some progress because I can see that Madam Deputy Speaker would like me to—oh, she is being quite generous with her time. Thank you, Madam Deputy Speaker. In which case, I will take more interventions.

Some Members have raised concerns about whether the legislation adversely affects the private schools that are primarily concerned with teaching students with EHCPs. I am pleased to report that it does not. The Government have clearly set out that private schools that teach 50% or more students with EHCPs will continue to be exempt from business rates, which is exactly the right approach. There are therefore no concerns there.

Amendment 8 seeks exemptions for certain kinds of schools. We have talked a little bit about faith schools, and we talked about that a lot on Second Reading. I cannot support the amendment given that we are ending the tax breaks to support the 94% of students who attend state schools. If we dilute the measures in the Bill for that exception, it is easy to make an argument for the next exemption, the one after that and the one after that as well. Our guiding principle should be that every child is entitled to an excellent, properly funded state school place, as I think I have said repeatedly.

Amendment 9—the last one I will speak about—gives local authorities discretion over whether the higher multiplier will apply. As many hon. Members will know, local authorities already possess wide-reaching powers regarding discretionary rate relief. Given that the Bill does not affect those powers at all, I do not think the amendment is required.

To conclude, the measures in the Bill are vital to bring about the restoration of our high streets, support local businesses and give state schools the funding they desperately need. Those are the priorities of this Labour Government and my priorities too. If Conservative Members claim to represent the party of business again, if they ever hope to seize back the mantle of being the party of opportunity, I hope they put their money where their mouth is and join us in voting for this unamended Bill today.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I thought it very sensible for the hon. Member to clarify that it is young Arthur, not himself, who enjoys soft play. I call the final speaker, Chris Vince.

[Chris Vince (Harlow) (Lab/Co-op)]

As I have about two hours to give this speech, I want to start by going back to the summer of 1983—[Laughter.] I have just told everyone how old I am, have I not?

Thank you, Madam Deputy Speaker, for the opportunity to speak in this debate. I also thank the Minister for all his work on the Bill. I genuinely want to thank all Members from across the House too for their contributions in Committee. I thought the way in which the Bill was discussed in Committee and the contributions from both sides were well thought out and, as I have mentioned before, respectful—I say that in advance of any interventions. I also want to thank all the people who came forward to provide evidence to the Committee.

I am honoured to rise to speak on Report on behalf of my constituency of Harlow. First—I promise I will not take two hours—I think everybody in the Chamber will forgive me for taking the opportunity to thank and praise the hard-working teachers and school support staff across my constituency for the hard work they do day in, day out to support young people.

I had a wonderful opportunity to visit Mark Hall academy in my constituency last week and saw the incredible work that its staff are doing to provide an inclusive atmosphere. I particularly welcomed the fact that the school was about not just exam results, but what I describe as the hidden curriculum—how young people grow and develop. The school also focuses on the importance of debating skills, which may be of particular interest to the right hon. Member for East Hampshire (Damian Hinds)—I am only joking. I thought that perhaps he and I could go together and learn a thing or two. [Interruption.] I set myself up for that. The school also recognises the importance of critical thinking. As I say, it was a fantastic visit, which was capped by an opportunity to meet the young carers in the school. As many Members will know, young carers are a hugely important issue for me.

I will briefly address private schools, as they have been mentioned a number of times. As I said on Second Reading, private schools affected by this policy can choose to absorb some of the cost if they so wish, and that is their prerogative. Members across the House may disagree with this, but, ultimately, the fundamental issue here is fairness and equality.

--- Later in debate ---

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It appears that the attraction of business rates has not been sufficient to draw as many speakers to the Chamber as some debates, but I am none the less grateful to all Members for their contributions to today’s debate.

Just a few months ago, we exposed a £2.4 billion black hole in the local government budget: £3.7 billion of additional spending was announced, with only £1.3 billion of funding to pay for it. Over the weeks since the Budget, we have seen pensioners, businesses of all sizes and types, schools, landlords and tenants all facing additional costs to begin to backfill the consequences of those political choices. With the Bill before the House tonight, those tax hikes are heading for the business rates bill of companies and organisations, large and small, on high streets the length and breadth of the country.

We should not pretend that this is an essential step. Our councils are acknowledged as the most efficient part of the public sector. They responded magnificently to the consequences of the financial crash in the late 2000s, with rising resident satisfaction against a backdrop of increasingly challenged budgets, but the decisions made by this new Government, in particular loading an additional £1.66 billion of national insurance costs on to local authorities, with less than a third of that covered by the promised additional funding, has consequences in our town halls. The Bill begins to make a small step towards bridging that colossal gap, but the Government need to own these political choices. The consequences of the Bill for our businesses and schools are stark.

First, let me address the changes in the multiplier, and in particular the consequences for larger premises. Under the changes to the business rate system introduced by the Government overall, increased costs loaded on to larger premises will provide the source for any reductions for smaller businesses, unlike under the previous Government, when it was covered from general grants. As a result, these businesses, often small and medium-sized enterprises—important employers and vital sources of growth for our economy—will face higher bills.

Such businesses have been characterised by the Government as warehouses, often owned by online giants, but when we look at the detail from the Government’s own data, we see firms such as Banner, which supplies the offices of Members of Parliament with all kinds of stationery products, Tygavac Advanced Materials Ltd, and Zetex Semiconductors plc, which is an American-owned business that trades on the London stock exchange, producing products that are vital for our security and growth. Those are just examples of businesses in the Minister’s own constituency that will be hit by the changes. Scapa Group Ltd, a major healthcare provider in the constituency of the Secretary of State, will also face significantly higher bills.

We have heard Members wax lyrical about how much they value the opportunities for growth in this country, and how they value in particular different types of community assets, but 28 of the data centres that the Prime Minister speaks of as being vital to the AI agenda will be hit by the Bill, and 16 of the breweries that have supposedly benefited from a penny off the pint, including Fuller’s, Bulmers, John Smith’s and Greene King, all face significant increases in their bills. Eight zoos and safari parks, including Colchester, Bristol and Chester zoos, face significantly increased business rates bills, and 48 stadiums across the country, including Wimbledon, Twickenham and both the Manchester stadiums, all expect to see big rises as a consequence. All Labour Members who love to champion their local pub and talk about taking a penny off the pint need to remember that the consequence of the Bill is to put business rates up by, on average, £5,500 a year per pub. The list is available from Government data. It is very clear that this will be a difficult Bill for retail, hospitality and leisure to swallow, after a period of direct and specific support from the previous Government.

This change does not come from a Government that came to office saying that this was their intention or plan; it comes from a Government whose Chancellor—Rachel from accounts—went so far as to promise in 2021 that she would abolish business rates. Business owners and workers who thought they were voting for a Labour Government that would come in and abolish business rates are facing significant increases today.