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

Debate between Patrick Spencer and Jayne Kirkham

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Patrick Spencer]

Q Forgive me, Minister, but is this not a bit of a missed opportunity? The Committee has heard a lot of evidence today that, yes, the measures introduced in the Bill, specifically the ones around supporting local shops and our high streets, are probably very fair and reasonable, and that it is about time, but at the end of the day, business rates are not a progressive way to tax individuals and businesses. Taxing capital always allows for businesses that may seem asset-rich or that have asset liabilities to be taxed unfairly.

Why did the Government not go further in looking at alternatives, whether it be a sales tax or a land value tax? I am not a fan of land value taxes—they are another form of capital tax—but why did the Government not look at being more ambitious, instead of retaining a system that may be better in the future but still not ideal?

Jim McMahon: Which taxes are fair is always in the eye of the beholder. People have very different views about the fairness of different taxes in the system. In terms of property tax, I am here as the local tax Minister covering business rates and council tax. They are established taxes and they are understood. There are definitely views about whether they are up to date and fit for purpose, and whether they should be reformed, but however clunky the system is, very few people have an alternative that holds water, is fair, and produces the same level of income to support local public services.

There is always that balance to be struck. With business rates, you are getting a balance between the inherent value of a property, the rent that it can achieve, and the link to capital. We have heard that there are contradictions in some places where the economy is more suppressed, but it is not entirely intended to do that anyway; it is about reflecting the activity that takes place within a property as much as the bricks and mortar. On that basis, it is probably as good as you are going to get.

The question for the Government is how we build in a safety net for those uses that we want to maintain because they are positive for the local community and the economy, but that may be marginal commercially, which is exactly what the Bill is intended to do. But in a self-financing system, as the business rate system is, how do you then draw from other parts of the system in the fairest possible way? I think we have achieved that.

Why? Because a £500,000 rateable value is 1% of the business rate system, and it targets the warehouses and distribution centres for companies that are by and large doing well. Most retail, hospitality and leisure businesses on the high street, such as restaurants, fashion retailers and pubs, are saying, “We are only just keeping our head above water.” In a system that anybody would say is quite clunky, I think this Bill is as good as you will get for rebalancing it fairly, while being targeted enough to get the outcome that you want, which is thriving high streets and local communities who can begin to be proud of the places where they live because they are seeing activity, not windows boarded up and roller shutters pulled down.

[Jayne Kirkham]

Q This is just a point of clarification for me. It is probably really simple. On the larger rate, over £500,000, and the lower multiplier, one witness said that it could still apply to hospitality, retail and so on, so it could still be applied to big hotels and grassroots music venues even if they are over the level. Is that right?

Jim McMahon: At the moment, any property over £500,000 would be subject to the higher value. We are not looking at the moment at sectoral exemptions, but clearly we will take into account the evidence sessions and the discussions that will happen tomorrow. However, it would be fair to say that if you are a retailer with such a square footage that the value is over £500,000, you are likely to be a very big department store, a big out-of-town shed or a supermarket. The assumption in the system is that if you can afford to occupy and run a space of that size, there is room to pay additional business rates on that basis. In the end, it is about giving it to that ultimate use, which is the smaller retail, hospitality and leisure uses that are the backbone of many communities.

Rural Affairs

Debate between Patrick Spencer and Jayne Kirkham

Monday 11th November 2024 Commons Chamber

[Patrick Spencer]

Let me take a moment—Members throughout the House have an opportunity to watch—to address that exact case. The Labour party wants to tackle big landowners like James Dyson and the Grosvenor Group; I have two points. First, take for a moment the incredible work done by Dyson Farming on food technology, which is increasing the productivity of our land and the standard of food production on his farms. Think of what the Grosvenor Group has done in the moorlands and peatlands of the north-west—it is a protector of our environment and has supported our natural environment and increased the ecosystem.

Secondly, do the Government think for a moment that either of those two people are going to go to bed worried about the IHT change? No, they are not. They will dodge it, much like many of the well-heeled business people always do with taxes. The people who will bear the brunt of the Labour party’s tax policies are small farms—family farms—that do not have a huge amount of capital. When we try to tax and demand liquidity from an illiquid source, we force people to fire sale their capital. It will not work. We have to understand the economics.

The risks are real. In Needham Market, Hopkins Homes built the St George estate at the base of a hill in an old disused quarry close to sea level, and right next to an area considered at high risk of flooding.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Patrick Spencer]

I will not, because I do not have long.

In Framlingham, developments either side of Station road have increased the risk of surface flow in an area that is, again, at high risk of flooding. All these places were hugely impacted by Storm Babet, and I believe the impact was made exponentially worse by huge housing developments cluttering our countryside. Between 2001 and 2021, Framlingham’s population increased by 1,200, which is nearly 50%. The population in Debenham increased by 16%. Great Blakenham has more than doubled in size. If we continue to use the Suffolk countryside to solve our housing crisis, the consequences will be disastrous.