Finance (No. 2) Bill

Peter Aldous Excerpts

2nd reading
Wednesday 17th April 2024 Commons Chamber

[Peter Aldous (Waveney) (Con)]

I am interested in clause 19, which sets out how the energy security investment mechanism will operate: the energy profits levy will cease if the six-month average prices for both oil and gas fall below certain thresholds. That provision follows on from the Chancellor’s announcement in his spring Budget that the energy profits levy would be extended to 2029, though it would be disapplied when energy prices return to normal. My interest in the issue stems from my role as a constituency MP—activity in the North sea energy sector is vital to the local economy—and from chairing the British offshore oil and gas industry all-party parliamentary group. I have no particular issue with the mechanisms in clause 19, though I am worried that the current short-term approach to fiscal policy for the oil and gas sector undermines other Government objectives—in particular, the objective of enhancing the UK’s energy security, which would bring new, well-paid jobs to coastal communities such as Lowestoft, and the objective of delivering our net-zero targets.

I acknowledge that the Chancellor has an unenviable role and faces a significant dilemma. He is, in many respects, between a rock and a hard place. He needs to balance the books, and to support those families who continue to struggle with the cost of living crisis. It is thus understandable that he looks to energy companies to pay more as oil and gas prices have risen. They have been at very high levels; however, it should be pointed out that they have now fallen back to long-term averages. There is a significant risk that in pursuing such a course, he could imperil the inward investment that is needed to create long-term, sustainable jobs in coastal communities for those very people who are struggling to make ends meet.

The North sea has been the UK’s economic saviour for nearly 60 years. Some might say that we are nearing the end of that particular story. That is not the case. The North sea is transitioning from being a source of fossil fuels to the long-term home of renewables. That transition needs to take place as quickly as possible, but in a smooth and seamless way. It requires a stable and long-term fiscal policy, which I am afraid we do not have at present. The decision to extend the levy for a further year was unexpected by industry and presents a significant further challenge to investor confidence.

Energy companies are making investment decisions on projects that quite often have timescales of the order of 40 to 50 years. The fact that in the UK there have been four fiscal changes in the past two years deters investment and deflects it elsewhere. Such businesses are globally footloose, and they will go to countries where the fiscal regime is favourable and has a large degree of certainty about it. In the past, the UK has ticked that particular box, but we are not doing so at present. It should also be emphasised that, as well as operating worldwide, those businesses have interests in a wide variety of energy technologies—not just oil and gas, but the low-carbon businesses of today and tomorrow: offshore wind, hydrogen, and carbon capture, usage and storage. If they find the fiscal regime unfavourable for oil and gas, they will invariably not invest in those renewables, which are so vital for our future.

The initial feedback following last month’s Budget is that those concerns are well founded: investment decisions are being delayed and funds could well be diverted elsewhere. Offshore Energies UK, which provides the secretariat for the British offshore oil and gas industry APPG, has identified that £200 billion of investment that was awaiting the green light may not now happen. Cornwall Insight concludes that prolonging the levy

“could weaken investor confidence, at a time when the UK is seeking record levels of investment to deliver the transition to net zero.”

We are at risk of imperilling the next chapter of the North sea—an ongoing story that can not only deliver economic regeneration, but provide over the remainder of this decade 50 GW of offshore wind, 10 GW of hydrogen, and four carbon capture, usage and storage clusters, as well as supporting the home-grown oil and gas industry and helping us to meet our decommissioning commitments. In short, it could unleash an enormous amount of economic activity that can cascade right around the UK. To be fair to the Government, clause 19 does seek to address those concerns, but I urge them to map out a long-term strategy for offshore energy, building on the success of the 2021 North sea transition deal. They are now adopting a similar course in the nuclear sector. We need to get back to doing the same in the North sea.

It is appropriate to comment on the Opposition’s alternative proposal to extend the windfall tax. There is a real worry in the energy industry that that could exacerbate the worries that I have underlined. Offshore Energies UK has highlighted that those proposals could lead to the loss of 42,000 jobs and the wiping out of £26 billion-worth of economic activity. A concern that I hope the Opposition will allay is that they are looking at removing the capital and investment allowances that are vital to securing inward investment.

We are where we are, and I fear that some damage has been done. However, there is work to do to rebuild the UK’s reputation as a prime destination for investment in the energy sector, and we need to get on with that task without delay. The industry has noted the Government’s commitment to honour the sunset clause, and I urge the two Ministers on the Front Bench—my hon. Friends the Members for Mid Worcestershire (Nigel Huddleston) and for Grantham and Stamford (Gareth Davies)—to provide the further reassurances that are needed to reinforce that message, both this afternoon in their responses and as the Bill progresses through Parliament.

The importance of ongoing and meaningful dialogue between the Government and industry cannot be overemphasised. In the period from 2012, after the last windfall tax, up to 2021, when the North sea transition deal was agreed, that interaction was very much taking place. It has been lost over the past three very eventful years, but it needs to be restored as quickly as possible. If it is, we can still embark on a new golden era for the North sea: an era of home-grown energy transition, not an outsourced one; of reindustrialisation, not deindustrialisation; and of enhanced energy security and economic prosperity.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

Budget Resolutions

Peter Aldous Excerpts

Tuesday 12th March 2024 Commons Chamber

[Peter Aldous (Waveney) (Con)]

My right hon. Friend the Chancellor of the Exchequer is quite right to focus on improving the UK’s economic activity, where, as we have heard, we should be doing much better. We have a flexible labour market, and it is vital that we do not imperil it, but we also need a long-term strategy for investments in skills and infrastructure so that our economy can move into top gear, we can compete globally with the highest-performing economies, and we can bring prosperity to all corners of the United Kingdom.

There are measures in this Budget that are particularly welcome and which will help improve our economic performance. The 2p reduction in national insurance contributions and the increase in the child benefit threshold remove barriers to work. It is also vital that we secure investment for the businesses of tomorrow. The £1 billion for the renewable electricity auction allocation round 6, the £270 million combined Government and industry investment into research and development projects in the automotive and aerospace industries, and the £120 million for the green industries growth accelerator will all help to achieve this.

In almost every Budget, it is important to be wary of and to guard against unintended consequences, and there are two that I will briefly highlight from last Wednesday. First, I understand the rationale for extending the sunset clause on the energy profits levy, but there is real concern that this will deflect and deter investment for the industries of tomorrow: offshore wind, carbon capture, and hydrogen. These industries are vital to enhancing our energy security, bringing jobs to coastal communities and delivering our net zero targets, and I am concerned that, as the levy proposals stand, they could deter that vital investment. For my part, I shall be studying closely the provisions of the spring Finance Bill, and I would urge the Government to re-engage with industry at every opportunity.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

The hon. Member’s point about offshore renewables is very important. Does he agree that we must ensure, as a nation, that we construct those floating wind turbines in the UK rather than overseas?

[Peter Aldous]

Yes. If we look at the offshore wind sector deal that was signed in 2019, we can see progress in building local supply chains, but I share the hon. Gentleman’s doubt to a degree. There is still a lot more work to do, and on the manufacturing side of things I would agree with him that that could take longer than for other aspects of those local supply chains.

Secondly, I likewise acknowledge why the decision has been made to abolish the furnished letting concession. There are areas of the country where holiday lets are badly distorting the local property market, as we heard from my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken), who is no longer in her place. She made that point clearly, but there are many other areas of the country where holiday lets are not distorting the local property market. They are a vital part of those local economies, which are often in rural areas where there are limited other job-creating opportunities, and restrictions and limitations on the opportunity to diversify a business. Many such properties are also subject to planning conditions that prevent them from becoming available for full-time occupation on the open market. It is therefore important to be cognisant of the full impact of this proposal before proceeding. I see that the Financial Secretary to the Treasury, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) is listening. We need a full impact assessment of that proposal before it advances.

To remove the stubborn productivity gap, it is vital to invest in skills and infrastructure. With such initiatives as the local skills improvement plans and lifelong learning, the Government have rightly recognised the importance of providing people of all ages with the opportunity to acquire the skills that are needed for the many new and emerging industries that are coming forward. Further education colleges and trainers currently face obstacles in recruiting staff, recovering VAT and supporting those who need to catch up on their learning following covid. It is therefore disappointing that no measures to address these challenges were announced last week.

Investment in infrastructure is vital if the east of England is to realise its full potential. It is therefore vital that funds are made available straightaway so that work on the Ely and Haughley junction rail improvement can begin without further delay. There were welcome announcements on this in the autumn statement, but there is local concern that the Government might be reverse ferreting on this issue. I hope that my concerns can be allayed.

This winter, the Norfolk and Suffolk coast has taken a battering that it has not seen for a very long time. In my constituency, in Lowestoft, Pakefield and Kessingland, this has undermined investment in the town centres, the ports and the tourism industry, including its vital leisure parks and caravan parks. Schemes have been prepared to protect these people and their property, and it is vital that they get under way as quickly as possible.

The Government are right to stick to the plan to halve inflation, to grow the economy and to reduce debt. As I have said, I believe that the Budget’s welcome initiatives will help to achieve those goals, but all around the UK, and particularly in East Anglia, we need to press ahead with strategic investment in both people and infrastructure—in flesh and blood and in concrete and steel.

Coastal Tourism and Hospitality: Fiscal Support

Peter Aldous Excerpts

Thursday 22nd February 2024 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve with you in the Chair, Mrs Cummins. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing the debate and thank the Backbench Business Committee for granting it. Tourism around the British coast remains a vital component part of the UK economy. That is perhaps overlooked at times, and it is right that we are holding this debate in advance of the spring Budget statement at the beginning of March. At the end of March we have the start of the season, with the Easter weekend.

I shall start as other colleagues have, by providing an advertorial for the tourism and hospitality industry in the Lowestoft and Waveney area. Some might find that a bit of a joke or tedious, but it serves a very important purpose. We are showcasing the enormous range of leisure and tourism opportunities available on the coast of all four nations, as well as the beauty and diversity of the coastline. There is something for everyone to savour, as well as many job opportunities.

I return to Lowestoft and Waveney. In Lowestoft, to the north at Corton and to the south at Pakefield and Kessingland, there are a wide variety of beaches, including the gloriously sandy South beach in Lowestoft. We have two piers—the Claremont pier, which the Llewellyn family are restoring to its former glory, and the South pier, which is let for a peppercorn by Associated British Ports to a community interest company, which I chair. To the north and south of Lowestoft we have two of the biggest visitor attractions in East Anglia, the Pleasurewood Hills theme park and Africa Alive, which is run by the Zoological Society of East Anglia.

All along the coast are a variety of holiday parks run by family businesses and larger national companies. We are also the gateway, at Oulton broad and Beccles, to the—often overlooked by our noisy neighbours in Norfolk—Suffolk broads, which are surrounded by a stunning landscape that the Suffolk Wildlife Trust plays an increasingly important role in restoring at Carlton marshes, Oulton marshes and, as announced last week, Worlingham marshes. Finally, Hoseasons, which takes the strain for many of us out of organising and arranging our holidays, has been based in Oulton broad and Lowestoft for nearly 80 years. I hope that I have painted a picture highlighting the importance of coastal tourism in the Waveney area.

Covid hit local businesses hard, although the support that the Government provided was a lifeline for many. The pandemic, as we are hearing, unfortunately has a long, bitter tail, and for many the 2023 summer season was worse than that of 2022. Looking forward to the forthcoming season, many businesses’ confidence is low. High energy costs continue to have an impact. The response to those challenges by many businesses and operators is to cut their opening hours, delay investment and reduce staff.

One business has highlighted to me the negative impact—described by hon. Members around the Chamber —of the national minimum wage. That business does not begrudge paying the increase to its staff, but that presents challenges that cascade right through the business and ultimately leads to higher charges to customers, at a time when their wallets are under enormous strain.

A holiday park operator has brought to my attention the delays in obtaining planning permission for an upgrade and extension to its facilities, not in the Waveney area but elsewhere on the East Anglia coast. An application that should have taken eight weeks took one and a half years.

Leisure businesses in coastal areas including those of Suffolk are not asking for handouts, but they rightly seek a level playing field. To achieve that, I should be grateful if my hon. Friend the Minister would consider the following fiscal measures—I am largely repeating others’ words, but in this place repetition plays a very important role indeed. First, as UKHospitality seeks, we must cap the increase to business rates for larger premises at 3%. Ultimately, we must have annual revaluations and drive the rate in the pound back down to the 30p to 35p level, which is what we had when business rates were introduced in the early ’90s. That said, in the short term, hospitality and leisure businesses, many of which are what I would describe as property-hungry but relatively low income-generating, should not have to pay onerously high business rates.

Secondly, to address the challenge of funding the increase in the national minimum wage, in his forthcoming Budget the Chancellor should cut to 10% the lower rate of employer national insurance contributions and increase the thresholds. The benefit of this policy, which in many ways is welcome, would thereby be shared not only with businesses, but with the Government. That is only equitable.

Thirdly, to ensure that planning applications of the type that I have mentioned are promptly dealt with and are not a brake on investment, the fair funding review of the local government funding settlement needs to be carried out as quickly as possible. That funding settlement is skewed against county and coastal councils.

I ask the Minister to act as a messenger—not Cupid, perhaps—to other Departments about other things that coastal businesses in coastal communities need not only to survive, but ultimately to thrive.

The first message is to the Department for Environment, Food and Rural Affairs. Along the Suffolk and Norfolk coast, we need urgent investment in coastal defences. Our glorious beaches are increasingly unsafe, and holiday park operators and other businesses will not invest in facilities if they are at increased risk of disappearing over a cliff or being washed away. There should also be national investment in the co-ordination and promotion of the King Charles III England coast path national trail.

The message to the Department for Culture, Media and Sport is that VisitBritain and VisitEngland should provide parity of support for coastal and rural economies with what is given to London and other core cities.

The message to the Department for Levelling Up, Housing and Communities is that we need to revive the coastal communities fund and separate the funding provided by the Crown Estate from the granting of licences for offshore wind farms. That money derives from our coastal waters. It should be used to address the many challenges that coastal communities face, rather than thinly dispersed across the whole country.

The final message goes back to DEFRA. Although progress is being made on improving the quality of bathing water around the coast, further pressure must be applied to the water companies to completely eliminate storm overflows as quickly as possible.

Coastal Britain is utterly unique. We must cherish it and ensure that the tourism and hospitality businesses operating there have every opportunity, first to survive and then to flourish and bring significant benefits to the people who live all around our coast.

Economic Growth

Peter Aldous Excerpts

Tuesday 14th November 2023 Commons Chamber

[Peter Aldous (Waveney) (Con)]

It is imperative that we secure high, sustained economic growth right across the UK. Some welcome policies are already being implemented and there are some good initiatives in the King’s Speech, although we face enormous challenges. The focus of my comments will be on coastal communities and on East Anglia.

I suggest that to deliver enduring economic growth, we need to address six issues. First, there is the cost of living crisis. Covid has a long and vicious tail, the cost of living crisis is still very much with us and this winter is likely to be very tough for many people. The household support grant has been successful and must continue, and other measures such as an increase in the local housing allowance must be given full consideration. Welfare reform must provide a clear and supported pathway for those who are some distance from the workplace.

Secondly, we must build more houses, particularly for social rent. The vehicles of delivery are primarily the housing associations, many of which are currently facing significant challenges, and Homes England. The recent announcement of funding to redevelop the former Sanyo site in Lowestoft is particularly welcome.

Thirdly, in coastal Britain, in places such as Lowestoft, there are exciting new jobs emerging in the renewables sector. Last week’s announcement of funding for local skills improvement plans, including for Norfolk and Suffolk, was welcome, but we need to ensure that trainers and colleges such as East Coast College in Lowestoft receive realistic revenue funding settlements. Progress has been made in recent years, but further education still receives a raw deal.

Fourthly, investment in infrastructure right across the UK is vital—in Lowestoft, construction of the Gull Wing bridge is well advanced—and there now needs to be an emphasis on improving regional connectivity, whether road, rail or the digital highway. Around the UK, to encourage investment and to protect homes, coastal communities must be made secure from the more prevalent extreme weather conditions we are now experiencing. With an eye to the opportunities arising from offshore energy and sustainable fishing, there must be fiscal incentives to encourage investment in port infrastructure.

Fifthly, net zero must be seen as an opportunity to revitalise coastal communities all around the UK. I can understand, and I support, the rationale for the Offshore Petroleum Licensing Bill, but it must be part of a long-term strategy up to 2050 and beyond, to maximise private sector investment. Energy policy must be set in a 30-year, not a five-year, framework.

Sixthly and finally, we need to revitalise our towns, which for centuries have been hubs of economic activity all around the UK. Town deals, of which Lowestoft is a recipient, are welcome, as is the recently announced long-term plan for towns, but those initiatives can provide financial support for only a limited number of centres, and we need to put in place a growth framework for all towns that promotes their revitalisation and ensures they remain honeypots for setting up SMEs. That framework could include making it easier to set up banking hubs—at present, there is a very high bar to setting them up—and continuing the reform of business rates. We made a start in the Non-Domestic Rating Act 2023, which received Royal Assent last month, but it was only a timid move towards getting the business rates multiplier back down to between 30p and 35p in the pound. That is needed to ensure that businesses can plan with some certainty, rather than having to wait each year for the cliff edge of whether the Chancellor will extend business rates relief.

We should also consider the zero-rating of VAT for redevelopment in and around our town centres. Town centres across the UK have an awful lot of heritage that, properly realised and embraced, could help to promote them and get them back to being magnets and catalysts for economic growth.

Approved Mileage Allowance Payment Rate

Peter Aldous Excerpts

Monday 3rd July 2023 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve with you in the Chair, Mr Sharma. I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) for leading this e-petition debate. Petition 600966 calls for a review of the approved mileage allowance payment rate—the AMAP rate—which, as we have heard, has remained at the same level since 2012. The petitioners are supported in their campaign by the Community Transport Association and by my hon. Friend the Member for Harrow East (Bob Blackman), who has previously called for an urgent review to reflect the soaring cost of living increases.

When previous campaigns have been launched calling for a review of the AMAP rate, the Government have invariably responded by stating that the rate is not mandatory—that employers can set whatever level of mileage reimbursement they want. However, very few set a different rate, due to the tax liability implications for employers and volunteers. The rate is thus a standard to which the vast majority of businesses and charities adhere; it is regarded as best practice and avoids the complications of drivers having to pay income tax.

I acknowledge that the 5p per litre cut to petrol and diesel prices, announced in the 2022 spring statement and extended through to next year, has provided respite and support to drivers, but the current cost of living crisis has brought into clear focus the need for a review. If it is not carried out, I fear that there will be negative knock-on implications for services such as the NHS, social care and public transport, and that ultimately the Treasury will pick up the bill.

Many of my concerns revolve around community transport and the great work that is carried out in north-east Suffolk and south-east Norfolk by BACT, which provides community transport for people for whom other forms of public transport are not easily available. BACT has its own minibuses and wheelchair-accessible vehicles, but a significant proportion of its services are provided by its volunteer drivers using their own vehicles. The failure to review the AMAP rate is imperilling the crucial lifeline services provided by BACT and many other community transport providers.

I shall briefly set out what I believe is a compelling case for a review. First of all, it should be pointed out that the cost of motoring has increased significantly since 2011-12. The petition, as we have heard, highlights that inflation has increased overall prices by over 25% since 2011, and that of fuel by over 20% over the past five years. Since 2011, vehicle maintenance costs have risen by 38% and, as we have heard, the RAC Foundation’s cost of transport index has increased by 41%.

The third sector—that is, the voluntary sector—plays a vital role in local communities. We would not have gotten through covid without volunteers, and we need them even more now to get through the cost of living crisis. Many of those working for charities and organisations like BACT use their own cars, and it is only right that they are fairly recompensed for doing so. Currently they are not, and that disincentivises volunteers to offer their services. Community transport operators like BACT increasingly report challenges with driver recruitment and retention.

In many areas, including Suffolk and Norfolk, community transport operators have become a vital part of the public transport system. They are, in effect, the Heineken of the system—they go where commercial operators and the local transport authority either cannot or will not go—and heavy reliance has been placed on them to provide their services. Without their drivers, a system that I sense already operates on the brink would collapse altogether and many vulnerable people would be left isolated. Community transport operators like BACT provide a vital service to the NHS, driving people to hospital, GP surgeries, vaccination centres and dentists. The latter can be quite a trek, even assuming that an NHS dentist can be found. They also provide non-emergency transport to hospitals, and if they are not around to do that, that will be another cost that the NHS has to bear at a time when it can ill afford to do so.

A product of covid has been a dramatic increase in social isolation and loneliness. During the lockdowns, many vulnerable people were left marooned in their own homes, and it was almost always local volunteers who rallied round to ensure they were not alone and not forgotten. Post lockdown, many people have only tentatively come out of their homes, and for some their only lifeline to the outside world is provided by the volunteers who drive them for their weekly shop, without whom life would be very lonely.

It is important to acknowledge that the service provided by community transport operators like BACT is vital in rural areas, where for many people there is no alternative means of public transport. If the volunteer drivers throw in the towel because they are not being properly recompensed, another group of people will be left stranded, unable to access services that most of us take for granted.

Finally, I come to social care. The Government rightly recognise the importance and the need for an integrated and improved health and social care system that keeps people independent in their own homes. That will need a whole army of dedicated social care workers on the road, invariably in their own vehicles, to visit and support their clients. Unfortunately, they are not well paid, and the last thing they need is a mileage allowance that does not cover the cost of keeping an old vehicle roadworthy. Skimping and saving on the AMAP rate will result in recruitment becoming even more difficult in this vital sector.

The case for a fair, urgent and transparent review of the rate is compelling. I look forward to my hon. Friend the Minister’s reply, but I urge him to take the message back to my right hon. Friend the Chancellor of the Exchequer that he should instigate the review straightaway, with a view to announcing the outcome in the spring Budget.

--- Later in debate ---

[Gareth Davies]

That is a very reasonable question. I do not have the figures to hand, but am happy to provide them if we are able to. I also point out that employees paid expenses above the AMAP rate may be taxed on the difference, depending on their personal circumstances—if they earn in excess of the personal allowance, for example.

As my hon. Friends the Members for Carshalton and Wallington and for Waveney (Peter Aldous), as well as several others across the Chamber, have outlined, volunteers are an important part of our communities and perform incredibly important services for all of us. It is right that they be highlighted and recognised in the debate today. The Government recognise the outstanding contribution that all volunteers and the charities that employ them make to our communities, including my community of Grantham and Stamford.

I should reassure hon. Members that, unlike employees, volunteers can receive payments in excess of the AMAP rate and do not have to pay tax if they can provide evidence that they have not made a profit. If they provide the receipts and evidence of their travel, they do not have to pay tax above the AMAP rate, unlike employees. That provides volunteers and voluntary organisations with additional flexibility, given how important they are. And they are important to the Government—that is why, for example, at the spring Budget the Chancellor set out an additional £100 million support package for charities and community organisations in England. That will be targeted at voluntary, community and social enterprise organisations at most risk at this difficult time. We will be setting out more about the eligibility criteria in due course, and hon. Members may wish to monitor that carefully.

[Peter Aldous]

That was an interesting point, and I just need to digest what the Minister was saying. I think he was saying that volunteer drivers can claim extra tax relief provided that they can show that they are not making a profit. Does he have any figures showing how many are actually doing that? I suggest that the system is so complicated that very few take it up. It would be far simpler to increase the rate.

[Gareth Davies]

The point I would make is that volunteer organisations do not need to use AMAPs; all that is required are receipts and evidence of journeys. Volunteer organisations can set literally any rate as long as that evidence is shown. The AMAP is a simplified rate and applies to employees of private organisations and businesses, for example.

I want to address the review period and the regularity of reviews, because they were mentioned by a number of colleagues. They make a fair point, but I would point out that by its very nature AMAP is a tax relief, as is mileage allowance relief. It is convention that they are reviewed at fiscal events, in line with most taxes we have, but it is also important for the work that we do with the Office for Budget Responsibility, so that it can score during the Budget process. That is why the reliefs are always reviewed. I assure hon. Members that there is a review at every fiscal event, and it is right that it is done at fiscal events and not in the middle of the fiscal events cycle.

A couple of Members mentioned self-employed individuals, so let me quickly address that issue. Self-employed individuals can choose to use simplified motoring expenses, which allows them to deduct a fixed rate per mile against their self-employed profits, and those rates mirror the AMAP rates. Self-employed individuals do not have to use the rates; they can instead choose to deduct capital allowances and actual costs. However, it is not possible to switch between the two options with the same car or van once a self-employed individual has chosen to use either the simplified mileage rate or the capital allowances and expenses. I hope that clarifies the position: they do have that choice.

Some hon. Members rightly talked about the cost of living situation in which we find ourselves. I want to directly address that now, because AMAPs are one part of our system to support employees across the country, but it is important to recognise the other measures that the Government are taking to support people at this very difficult time, and that is part of the review process when we look at AMAPs. I simply reiterate the point that many hon. Members have made today: in the spring Budget, the Chancellor announced continued support for both households and businesses by extending the temporary 5p fuel duty cut and cancelling the planned inflation rise for 2023-24. That represents a saving for all drivers across the country, amounting to £5 billion, which is about £100 per household.

In addition, at the spring Budget we went further by extending energy support, because we know that inflation has been a real problem for many households across the country. We kept the energy price guarantee at £2,500 for three months from April, saving households an additional £160 and bringing total Government support for energy bills to £1,500 for a typical household since October 2022.

Alongside that, we have gone even further and helped to support households by ending the premium paid by over 4 million households using prepayment meters across the United Kingdom. We have also introduced 30 hours of free childcare per week for working parents with children aged nine months to three years in England, alongside a substantial uplift in the hourly rate paid to providers and market reforms. That is in addition to the benefits uprating and support for vulnerable households across this country that we announced at the autumn statement, which included new cost of living payments for this year and next, helping more than 8 million UK households on eligible means-tested benefits, 8 million pensioner households and 6 million people across the country on disability benefits.

Taken together, we have provided £94 billion-worth of support to help households with higher bills, or an average of £3,300 per household, across 2022-23 and 2023-24. That is one of the largest packages of support in Europe, but as the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) pointed out, high inflation is the greatest immediate economic challenge that we face. That is why the Prime Minister has set it out as one of his top priorities, and it is why we in the Treasury have set out a clear plan to reduce inflation.

--- Later in debate ---

[Gareth Davies]

If a rate is provided that is above the AMAP rate, national insurance and income tax would be applied to that difference, depending on the personal circumstances of the individual—for example, depending on the overall amount of income tax they pay, or whether they are over the personal allowance amount. Voluntary organisations, which my hon. Friend spoke about, can offer any rate they want, as I pointed out to my hon. Friends the Members for Waveney, and for Carshalton and Wallington. So long as evidence is shown for the journeys, organisations do not have to use the AMAP rates. I hope that clarifies things.

In conclusion, it is ultimately for employers to determine the expenses paid in respect of motoring costs that employees incur with their private vehicles. The Government set AMAP and simplified expenses rates with the aim of creating administrative simplicity. Those rates will necessarily be more appropriate for some motorists than others. However, the Government have taken decisive steps to support households with the costs of living, which I have extensively set out. The Government will continue to keep AMAP and simplified expenses rates under review, as they do all taxes and allowances.

[Peter Aldous]

I have listened very carefully to my hon. Friend and I thank him for his response, but would he not agree that, over the past decade, there has been a societal change in the way that community transport has become a vital component of our public transport system, and in the way that health and social care is delivered? Health and care workers often go to people’s homes now, rather than those people coming to hospitals. That in itself warrants a fundamental review of the system.

[Gareth Davies]

My hon. Friend was just in the nick of time, but he makes a valid point. I will answer that in two parts. On care providers, the rate paid is a matter for the employer. It is entirely up to them, in the light of changes to how care is provided, to offer a rate that they deem appropriate; as I say, the NHS has offered a higher rate for those travelling fewer than 3,500 miles.

My hon. Friend made a broader point about the importance of community organisations, and mentioned community transportation. Those organisations are a vital part of our communities, particularly in constituencies like mine, in rural parts of the country. That is why this Government have got behind voluntary and community organisations. As I say, we recently announced another £100 million of support to specifically target charities and community organisations. That support will remain, just as it has for many years.

I am grateful for all the contributions and interventions from my hon. Friends, and from colleagues from across the House. This is an important debate to have, and I am pleased to have addressed the issue on behalf of the Government.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 20th June 2023 Commons Chamber

[Peter Aldous (Waveney) (Con)]

16. What steps he is taking to provide financial support to people on lower incomes.

[The Financial Secretary to the Treasury (Victoria Atkins)]

The Government recognise the challenges facing households as a result of the elevated cost of living, and we took further action in this year’s spring Budget to provide targeted support to protect the most vulnerable. That included the new cost of living payments this year, help with the cost of essentials through a further extension of the household support fund in England, and the uprating of benefits in line with inflation in April this year.

[Peter Aldous]

One of the best ways of supporting those on lower incomes is to remove the barriers that prevent them from acquiring the new skills that are necessary for better-paid jobs. Will my hon. Friend confirm that the Treasury is working closely with the Department for Education and the Department for Work and Pensions to ensure that the Lifelong Learning (Higher Education Fee Limits) Bill gets rid of those obstacles, and can she provide an update on the progress of the Barber review?

[Victoria Atkins]

I know that you like Ministers to answer briefly, Mr Speaker, so, if I may, I will answer my hon. Friend’s first question now and respond in writing to his question about the Barber review.

My right hon. Friend the Chancellor made employment one of the four Es in his drive for growth in the spring Budget, and we are working closely with the Department for Education to invest in exactly the way that my hon. Friend describes. That includes investment in free courses for jobs, which enable people to study high-value level 3 subjects and gain free qualifications, and employer-led skills bootcamps in high-growth areas—a phrase that I never thought I would find myself uttering—which, apparently, involve sectors such as digital, and are available to those who are either unemployed or in work and wanting to retrain.

Non-Domestic Rating Bill

Peter Aldous Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[Peter Aldous (Waveney) (Con)]

The Bill is welcome as it was a 2019 Conservative manifesto commitment to carry out a fundamental review of business rates, the final report for which was published alongside the 2021 autumn Budget.

I support the Bill generally, but I have two concerns. First, the Bill should be seen not as the endgame but as the start of the process to radically reform business rates. The ultimate objective should be to reduce the uniform business rate multiplier to something in the order of 30p in the pound; to carry out annual revaluations; to abolish the multitude of complicated reliefs; and to digitalise the Valuation Office Agency. If we do so, business rates will be reduced to an affordable level, the system will be put on a long-term and more easily understood footing and we shall be able to get on with so-called levelling up—removing barriers that impede regional growth. That will enable businesses to know where they stand and to make long-term investment decisions. The message I continually get from the Suffolk Chamber of Commerce, which carries out quarterly economic surveys, is that the No. 1 concern for businesses in Suffolk is always business rates.

My second worry is that the Bill will increase rather than ease the bureaucratic and administrative burden on businesses. I urge the Government to introduce amendments to prevent that. I shall set out my concerns in more detail later.

Before I came to this place, I was a chartered surveyor; I did not specialise in business rates, but I carried out appeals from time to time. Business rates are a tax with certain inherent advantages for the Treasury: they yield approximately £25 billion per annum, they are relatively easy to collect and they are difficult to avoid. However, if the system is not administered properly, they can have a significant negative impact on businesses generally, on specific sectors—we have heard about the challenges facing hospitality and retail—and on local economies.

Business rates are in effect a tax on existence rather than on profitability, so it is important that they be kept as low as possible. High business rates not only discourage occupation, but disincentivise investment in innovation, improvement and expansion—and if you will forgive a quick commercial interlude while I am on that subject, Madam Deputy Speaker, I must congratulate PCE Automation of Beccles, which has just received the King’s award for enterprise in recognition of excellence in innovation.

At a time of high inflation, high utility costs and stubbornly high rents, business rates are a fixed cost that occupiers cannot escape. The Chancellor made some significant and welcome announcements in his autumn statement, including the revaluation that is now coming into effect, the reform of the transitional relief scheme and the freezing of the uniform business rates multiplier. The Bill provides the necessary legislative framework for some of those changes and for others that arise from the Government’s review, as well as making some minor legislative adjustments and correcting some anomalies. I shall not go through the Bill’s provisions in detail at this stage, but I repeat that I applaud the Chancellor for the undertakings that he made in November, which are much needed in these challenging times. As I say, however, the Bill must be seen as the start, not the conclusion, of the process of radical reform.

It is also necessary to guard against some unintended consequences. As drafted, the Bill will add to the regulatory burden on businesses at a time when we should be seeking to ease and reduce it. The new duty to notify set out in clause 13, which the VOA has justified as necessary to facilitate the move to a review every three years, will result in a mountain of paperwork for ratepayers. Businesses will now have to notify the VOA of any changes to their properties within 60 days, or find themselves facing punitive fines or even imprisonment. It is not right for us to expect businesses which are already facing an extraordinarily challenging regulatory environment to put up with that.

This obligation was formerly the VOA’s, but has now been transferred to the ratepayer. The VOA has no corresponding obligation, and is able to respond to requests for information at its leisure. Ideally, the duty to notify should be removed from the Bill in its entirety, but if the Government wish to impose this new duty, they must do so with the principle of reciprocation in mind. The VOA must have a corresponding duty to respond within 60 days, giving the ratepayers rebates on their business rates bills equivalent to the penalties imposed on them if there is a failure to respond within that time.

My second concern relates to clause 14, which proposes changes in the circumstances in which rateable values may be altered outside the regular cycle of revaluations. I am concerned about the consequences of this clause, and I believe that it should be removed. Let me explain the background. A “material change in circumstances” allows ratepayers recourse to pursue relief on their business rates bills when factors outside their control have an impact on their ability to do business and to operate. To my mind, that is logical natural justice, but the VOA seems to dislike the paperwork associated with these claims, as is evidenced by its mass rejection of 400,000 covid-related appeals. It appears that to prevent the repetition of such circumstances, it is now proposed to exempt any Government legislation as qualifying grounds for a challenge. In practice, this means that the Government would be able to act with impunity and enact policies that could hamper businesses without allowing them the legal recourse to challenge them. That is fundamentally unjust.

As I have mentioned, the move to three-yearly revaluations should not be the endgame, but should be a stepping stone towards annual revaluations. The advantage of that approach is that there would no longer be a need for the current complex system of reliefs; businesses would in effect be paying a tax that moved with the market, and that would lead to greater long-term certainty which would then encourage private sector investment. At first glance, annual revaluations might seem too complicated and challenging, but, as we have heard, such a system operates in the Netherlands, and there is no reason why we should not have it here.

It is regrettable that, for many businesses, discussions and negotiations with the VOA are conducted in accordance with the philosophy of “one rule for us and another for them”. The proposed duty to notify embeds this sentiment still further. It must be removed, and the system must become more transparent. The VOA’s processes are notoriously opaque, and leave many ratepayers scratching their heads when they receive their revaluation figures. As it stands, a business’s only recourse when it comes to understanding its rateable value is to go through the VOA’s complex “check, challenge and appeal” process, which many feel is deliberately designed to discourage people from—dare I say it—peering behind the curtain.

The Bill, as currently drafted, does provide the VOA with the power to give more information to ratepayers, but only at its discretion, if it considers it “reasonable to do so”. This provision is set out in clause 10, but it is vague and undefined, and some might say that it provides the VOA with the ability to reveal information to no one while appearing to be forthcoming. If clause 13 requires businesses to provide reams of information to the VOA, it is only right that it should reciprocate. Ratepayers must be given the option to understand the process that defines the tax that they will be paying for the next three years, and to reasonably expect an answer within 60 days of submitting their request, thereby mirroring the duty to notify.

My final concern relates to another unintended consequence of the duty to notify, as currently drafted in the Bill, which is the wave of predatory, unqualified and unscrupulous rating advisers that I fear it may spawn. The ramifications of financial advice, whether good or bad, can be huge for individuals and businesses. Most financial advisers in most settings require a licence to give advice from a sanctioning body. One therefore has to ask why this does not also apply to rating advisers.

[Helen Morgan]

The hon. Gentleman is making an excellent speech. On his point about advice, financial controllers are inundated daily by people cold calling them and offering to challenge their rates bills. They have no idea who they are, yet they take a cut of any saving that might be made. This indicates two things to me: first, that the system is not fit for purpose; and secondly, that the rating values are inadequate in the first place. Does he agree with me on those points?

[Peter Aldous]

I agree with the hon. Lady. This is a specialist area of valuation. When I was practising as a chartered surveyor, I quite often got called in because the client, the business owner, had gone down the line of paying money upfront to someone who had sent them a circular—they may have paid them £1,000 or £2,000—and that person had suddenly disappeared. I often got called in to try to sort out that type of situation.

At the current time, with the publication of the new rating list, thousands of businesses are being flooded by solicitations from charlatan rating advisers who are taking advantage of the confusion created by the complicated rating system. There is a significant risk that many businesses, particularly SMEs, will have neither the understanding nor the capacity to meet the duty to notify. They will increasingly fall prey to such bad advice, and this could have a devastating impact. The Government should therefore consider some sort of licensing to protect businesses from the scourge of cowboys looking to take advantage of the duty to notify.

Madam Deputy Speaker, you will be pleased to hear that I have now reached my conclusion. Taking into account that we have been awaiting legislation on the reform of business rates for the whole of the 13 years that I have been an MP, this legislation is indeed welcome. For too long we have been carrying out reviews and searching for holy grail solutions that involve the abolition of business rates, but my personal view is that those do not exist. As I have said, the Chancellor should be commended for the positive announcements he made in his autumn statement, some of which are included in this Bill. The Bill should be viewed as a step in the right direction. However, as currently drafted, it contains a number of false steps that are likely to have unintended consequences. It is also vital to recognise that this is not the end of the reform of business rates, but it is the end of the beginning. I am happy to support the Bill this afternoon, but it has defects that need to be addressed as it progresses through this and the other place, and I hope that the Government will take on board the concerns that I and my colleagues across the Chamber have highlighted.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

Energy

Peter Aldous Excerpts

Tuesday 7th March 2023 Commons Chamber

[Peter Aldous (Waveney) (Con)]

I was not planning to speak in this short debate, so I will be brief.

We have waited a long time for this statutory instrument. During that time, many very vulnerable people have been suffering. I acknowledge that, from the Government’s broad perspective, it is a challenge to get this legislation right, but my concern, which I hope my hon. Friend the Minister can allay, is that the punishment for landlords—I am thinking in particular of some rogue park home site owners—who do not pass on the money is, I sense, puny rather than punitive. They will just laugh at the punishment. I hope I am wrong, but I ask the Minister to take on board my concern.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 7th February 2023 Commons Chamber

[Sir David Evennett (Bexleyheath and Crayford) (Con)]

10. What fiscal steps he is taking with Cabinet colleagues to support businesses with energy costs.

[Peter Aldous (Waveney) (Con)]

11. What fiscal steps he is taking with Cabinet colleagues to support businesses with energy costs.

[Caroline Ansell (Eastbourne) (Con)]

20. What fiscal steps his Department is taking to support hospices with energy costs.

--- Later in debate ---

[James Cartlidge]

My right hon. Friend is right to highlight not only the generosity of the support but the issues facing specific sectors. The Treasury recognises that some businesses are highly exposed to both energy prices and international competition, which means that they are unable to pass on or absorb these higher costs. Following the review of the operation of the current energy bill relief scheme, we decided to target additional support beyond April this year at the most energy and trade-intensive sectors, which are primarily manufacturing businesses.

[Peter Aldous]

Metal finishing is a vital component of many strategic industries, including defence, aerospace and energy. Although the process is extremely energy-intensive, businesses such as MP Eastern in Lowestoft do not currently qualify for the additional support that is available, and are therefore losing business to overseas competitors. In order to stop that, strengthen our own supply chain and enhance national security, will my hon. Friend review the support that is available to metal-finishing businesses?

[James Cartlidge]

My hon. Friend and county colleague is always championing his local businesses in the Chamber—[Interruption.] I am glad that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) agrees with me that my hon. Friend is a stalwart champion of his constituency businesses.

We have taken a consistent approach to identifying the most energy and trade-intensive sectors, with all sectors that meet agreed thresholds for energy and trade intensity eligible for ETII support. The firms eligible for the scheme are those operating within sectors that fall above the 80th percentile for energy intensity and the 60th percentile for trade intensity, and those operating within sectors that are eligible for the existing energy-intensive industries compensation exemption scheme. As ever, my hon. Friend is welcome to write to me about the specifics.

Business Rates and Levelling Up

Peter Aldous Excerpts

Tuesday 13th December 2022 Westminster Hall

[Peter Aldous (Waveney) (Con)]

I beg to move,

That this House has considered business rates and levelling up.

It is a pleasure to see you in the Chair, Mr Mundell. I am grateful to the Backbench Business Committee for granting this debate. It is extremely apt that the debate is taking place on the same day that the Levelling-up and Regeneration Bill returns to the House of Commons. If we can successfully reform business rates so that they are fair to businesses right across the country, that really will help to deliver meaningful levelling up.

At present, with businesses having to contend with a level of inflation not seen for a generation, soaring utility bills and stubbornly high rents, business rates are a fixed cost from which occupiers cannot escape. They are an impediment to regional growth, and their impact needs to be significantly reduced, with the system being put on a long-term, easily understood footing. In that way, businesses will know where they stand and can then make long-term investment decisions.

To be fair, all political parties have recognised the unfair and unjust nature of the current system and commitments have been made to both replacement and reform. From my perspective, I sense that the former—replacement—is the holy grail that is unachievable in the real world. To address the immediate threat that business rates pose to many businesses in different sectors and in different parts of the country, a wide variety of reliefs and exemptions have been introduced. Although welcome, they have made the system more complicated and difficult to comprehend.

Currently, the Labour party is committed to abolishing business rates and replacing them with a system fit for the 21st century. As I have said, I sense that it will be impossible for it to keep that promise, because, despite the drawbacks that business rates possess, they have inherent advantages for the Treasury: they yield approximately £25 billion per annum, are relatively easy to collect and are difficult to avoid. It is impossible to find an alternative system of taxation that has those advantages, and I believe that it is important to get on with reforming the current system.

Let me turn to the Government’s record. My right hon. Friend the Chancellor of the Exchequer made significant and largely welcome announcements in his autumn statement, which I shall detail later. However, I am mindful that we made commitments in the 2019 Conservative manifesto that we are yet to properly and fully implement. Those include carrying out a fundamental review of the system and reducing business rates in the long term for retail businesses, as well as extending the discounts to grassroots music venues, small cinemas, and pubs. Yes, we have provided a wide variety of short-term reliefs, but we have not yet provided the permanent fix that is so urgently needed.

It is appropriate to briefly describe business rates. They are a tax charged to most non-domestic properties, although there are some exceptions, such as small businesses with a rateable value of less than £12,000. They are calculated by multiplying the rateable value of the property by the uniform business rate multiplier. The rateable value is an assessment of the annual rent that the property would achieve if it were available to let on the open market at a specific, fixed valuation date. The UBR multiplier for 2022-23 is 51.2p in the pound, or 49.9p for small businesses.

Before I came to this place I was a chartered surveyor. Although I did not specialise in business rates, I did from time to time carry out business rates appeals. Invariably, that happened in situations with a lack of rental evidence on which to base an assessment of a property’s rateable value. As a result, it was difficult to agree a value, and there was the risk of a rateable value being imposed, which was abstract from reality and took no account of the ability of the business to pay and thus continue to exist and operate profitably. The Valuation Office Agency—the VOA—needs to be more transparent, open and collegiate in its dealings with businesses. I shall touch on that later.

As I have mentioned, the Chancellor made some significant announcements in his autumn statement, which included confirmation of a revaluation that will come into effect from April; the freezing of the uniform business rate multiplier; the reform of the transitional relief scheme; a supporting small business scheme; and a 75% retail, hospitality and leisure relief worth up to £110,000 per business. The revaluation is generally to be welcomed, although there are some notable exceptions, as it will on the whole bring down rates in economically depressed areas while raising rates in areas where rental values have risen.

The announcement that the downwards phasing of the transitional relief scheme for England is to abolished is good news, with upwards phasing being funded by the Treasury. The problem with transitional relief was that meaningful and full reductions in business rates, which businesses particularly in the retail sector desperately needed, took far too long to filter through. The measures will provide much needed support to help businesses get through the next few months, and they provide the foundation stone on which to now carry out the promised fundamental review.

Despite those measures, which in many respects can be likened to the application of yet more sticking plasters and, indeed, bandages, fundamental flaws remain to be addressed. Although the Government froze the UBR at 51p in the last two Budgets, it remains unsustainably high. In no other country in Europe do businesses pay half the rental value of premises in property taxes. Set at such a high level, business rates deter investment in retail, leisure and hospitality. It should be noted that the UBR was just 34p in the pound when it was first introduced in 1990.

The extension of business rates relief for retail premises from 50% to 75% in 2023-24 is welcome, even though it will help only smaller retailers because it applies to the first £110,000 of business rates paid. The Office for Budget Responsibility envisages that that relief will be removed from 1 April 2024, which would leave retailers with a massive tax hike at that point—in effect, a cliff edge. A tapering scheme will therefore need to be applied to overcome that particular problem.

In the recently published valuation list, which comes into effect next April, the valuation of retail premises fell by only 10% across the country in the six years from the last valuation date of April 2015. Without the Chancellor’s measures on downwards phasing to freeze the UBR, business rates would have had a massive levelling down impact on all retail, and on depressed regions in particular. That underlines the need for fundamental reform.

I shall move on to briefly highlight some of the inequities of the current system that need to be addressed. Business rates are a tax paid by businesses before a sale or a transaction has even been made. It is in effect a tax on existence rather than a tax based on success or failure. It therefore follows that it needs to be kept low so that it can be paid by all businesses. A high UBR discourages not only occupation, but investment in new accommodation and the physical expansion of existing premises. Ratepayers who have invested in improving their premises are penalised, as they then face higher bills. The system adversely affects physical retailers whose properties on high streets have significantly higher rateable values than the warehouses that serve online retailers. Similar challenges were faced by the hospitality sector.

While in theory, with the current UBR, business rates should represent 51% of the rental value of a property and hence one third of the cost of occupancy, retail has been struggling, and some landlords have agreed much lower rents to enable their tenants to stay in business. Rents are increasingly being linked to turnover, and are thus disconnected from the rental values that are used by the VOA to determine business rates bills. Therefore, many retail outlets will be paying business rates bills in excess of their actual rent, even after the revaluation takes effect. In the new list, rateable values for retail have gone down by 10% on average. That is surprisingly little, given that many shops were closed and paying no rent at all at the valuation date of 1 April 2021, when we were in the midst of a covid lockdown.

The valuation process that allocates properties their rateable value is not transparent, with the VOA not sharing the evidence that it uses to substantiate the basis of valuations. The only way for occupiers to assess that evidence is by challenging the valuation through the “check, challenge, appeal” process, which is lengthy and costly. There is therefore much concern that many challenges to the valuation process will be submitted over the coming months. The worry is that the VOA uses flimsy evidence when conducting property valuations. Those businesses that engage with the VOA through the appeals process, or by providing evidence leading up to the valuation, have more accurate valuations, while those that have not seen any reductions have not engaged with the VOA.

The VOA has outlawed 400,000 applications made by businesses in mitigation of rates bills on the basis of covid-19. Its view is that covid did not constitute what is known as a “material change in circumstances”, which can lead to a reassessment of a rateable value. That decision has been justified by the VOA on the basis of the allocation of the £1.5 billion covid relief fund, the distribution of which was devolved to local government. While some local authorities have been quick to distribute that relief, others have been slow. The lack of a uniform distribution mechanism has meant that receiving the relief payments is dependent on where the occupant is based, and a postcode lottery has, in effect, been created.

In the autumn statement, the Chancellor froze the UBR at 51p for one year only—that is, for 2023-24. As mentioned previously, the OBR’s figures indicate that the UBR will be index-linked thereafter. That means that as matters stand at present, business rates for retail premises will rise from April 2024. The Government have extended their 75% rate discount for shops paying up to £110,000 in rates until 2024. Likewise, unless the Government extend the relief, occupiers will again face a cliff edge when the scheme expires.

The Government will soon be bringing forward a non-domestic rating Bill. It is important that the contents of that Bill are fully debated, and that the opportunity is taken to ensure that it is a vehicle for delivering the fundamental reform of business rates that was promised in 2019. The Bill will include provisions such as the duty to notify of any change to a property; changes to the frequency of revaluation; and the removal of the need for transitional relief to be fiscally neutral. Alongside the duty to notify, there should also come a corresponding duty on the part of the VOA to share with occupiers the evidence it uses to assess rateable values.

Due to the complexity of the business rates system and the burden on ratepayers, occupiers quite understandably often seek advice from rating experts on how best to approach the whole process. Unlike with other professions, rating advisers do not need a licence to practice, resulting in some operators giving bad advice and cheating people out of their money. We need to find a way to outlaw such conduct.

Currently, property owners do not have to pay business rates on empty buildings for three months. After that period ends, most businesses have to pay business rates in full, although there are some exceptions. The outcome of the 2020-21 review was that the Government committed to an empty property relief consultation in 2022, but that has yet to take place. It is important that the relief is extended—it is probably best to extend it to 12 months—because rates will then be paid exclusively by revenue-generating businesses.

It is appropriate to highlight the particular challenges faced by the hospitality sector, which is a vital component part of many local economies all around the UK, including in the Waveney constituency that I represent. With a fair business rates system, the sector can play a key role in levelling up.

Looking at the revaluation list in the Waveney area, businesses that have invested and that are vital engines of local economic growth are being heavily penalised for their ambition and success. By way of example, the rateable value for the Kessingland Beach holiday park is due to rise from £291,450 to £388,500; for the Harbour Inn in Lowestoft, it will rise from £23,500 to £45,000; and for the Commodore in Oulton Broad, it will rise from £67,500 to £79,000.

The current system sees the hospitality sector overpay nationally by £2.4 billion a year relative to its turnover; in other words, it overpays by 300%. In the short term, the differential rates between large and small businesses should be removed and the eligibility rules for reliefs based on rateable value should be abolished. In the longer term, a significantly reduced UBR multiplier should be introduced.

To address the variety of problems that I have outlined, root-and-branch reform is urgently required. Business rates would be fairer and better if the system was simplified, the tax base broadened by removing the myriad complicated reliefs, annual valuations proposed, a one-year antecedent valuation date set, and fast appeals and greater evidence-sharing between occupiers and the VOA introduced.

Such reform could be achieved by making the following changes. First, the UBR could be reduced by 30%. By way of example, reducing the UBR from 51p to 34p, which was the rate in 1990, would reduce unsustainably high levels of business rates on retail and hospitality premises, and level the playing field for so many businesses. A lower UBR would also reduce the barriers to entry, expansion and innovation, thereby encouraging growth and broadening the tax base. In effect, this would plug the gaps in revenue that the Treasury might fear would result from a lower UBR.

Secondly, the Government have correctly moved from five-yearly to three-yearly valuations. That represents a step in the right direction, but yearly valuations would be far more equitable. By implementing yearly valuations, business rates would accurately reflect the dynamic movements of the market and allow occupiers to benefit immediately from changes to rateable values. The increased incidence of events such as the covid pandemic and the war in Ukraine further emphasise the need for a system that is able quickly to react to rapidly changing economic conditions.

Thirdly, we need to look at the abolition of the system of complicated reliefs. Instead of the fundamental review that was promised, the Government have continued to apply sticking plasters to the system to ensure its continued functioning. That has culminated in a system of complicated reliefs that can be difficult to navigate. The business rates system comprises 12 reliefs. Those would be rendered unnecessary with the lowering of the UBR, which would mean a business benefiting from paying lower rates immediately instead of negotiating and navigating the VOA system of reliefs.

Fourthly, many of the problems I have detailed could be fixed by making the VOA more efficient. Its systems, which are predominantly paper based, are not fit for the 21st century. Digitisation would enable the VOA to make its collection systems more efficient and it could take a big step towards systems efficiencies such as annual valuations. The Government recently published a consultation to that effect, entitled the digitalising business consultation. However, unfortunately, it largely missed a point because instead of consulting on the measures that would reduce the administrative burdens on businesses and ratepayers, the Government are trying to increase those burdens by requiring more information so as more effectively to target reliefs.

I sense that I have spoken for far too long, and you will be pleased to hear, Mr Mundell, that I am nearing my conclusion. High business rates hold back economic growth, are a barrier to levelling up and are an added burden that many businesses simply cannot afford at present. To be fair, the Government have listened, and they are aware of the problem. The response has been the introduction of short-term reliefs, which are welcome, but they complicate the system further in the longer term.

We need to stop searching for that elusive holy grail and stop kicking the can down the road. Instead, we need to introduce pragmatic measures that can be delivered quickly, and we need to honour the commitment to a fundamental review. I therefore urge the Treasury to introduce those initiatives—in the spring Budget, I would suggest—and in the first instance I look forward to hearing the response from my hon. Friend the Minister.

--- Later in debate ---

[Victoria Atkins]

Of course. I am always delighted to hear from the hon. Gentleman. He will appreciate that there are many other factors; for example, click and collect was a stumbling block for many in the consultation. I look forward to his future correspondence.

The support package that we have introduced means that the revaluation will go some way to addressing the imbalance between online and offline retailers. On average, large distribution warehouses will see an increase in bills of about 27%, and bricks and mortar retailers will see decreases of about 20%. We recognise that business rates payers may feel uncertain about the upcoming revaluation, given other pressures the country is facing that are driven by global challenges.

Rising prices around the world, made worse by Russia’s illegal invasion of Ukraine, have hit businesses hard. In the autumn statement we announced the steps that we will take next year to provide support through these difficult times. We will deliver a business rates support package worth £13.6 billion over the next five years. That will protect businesses from facing large bill increases because of high inflation and rateable value increases following the revaluation.

My hon. Friend the Member for Waveney urged the Treasury to cut the UBR to the 1990 level of 35p, showing the trade-offs that the Government must make. Doing so would cost £9 billion a year, which would be a significant potential loss to the public revenue. We have thus taken the steps we have through the support package to protect ratepayers from high inflation, and we are instead freezing the tax rate for three consecutive years at a cost of £14.5 billion.

My hon. Friend the Member for Torbay (Kevin Foster) described the vibrant hospitality sector in his constituency. We are extending and increasing the retail, hospitality and leisure relief scheme from 50% to 75%, up to a cash cap of £110,000 per business. Pubs and the holiday parks he referenced are included.

[Peter Aldous]

I am conscious that I will have the opportunity to respond at the end of the debate, but I want to pick up now on one specific point that the Minister has mentioned. She said that the Treasury had carried out an assessment and if we were to go back to the UBR of just over 30p from when this system was introduced in 1990, that would cost an extra £9 billion. Did that assessment take into account a situation in which we had annual revaluations as well? If we had annual revaluations, that sort of margin would be much lower and we would fairly redistribute the burden of business rates across the UK.

[Victoria Atkins]

I will come back to that point, and particularly the detail on annual revaluations, because I think there is some sympathy with my hon. Friend’s point of view.

The retail, hospitality and leisure relief scheme is the largest business rates one-year relief we have provided in 30 years, so I encourage colleagues to ensure that their local businesses know that the Conservative Government are delivering for those businesses. It will support about 230,000 properties—not just on high streets, but beyond high streets, as my hon. Friend the Member for Torbay emphasised. Therefore, although I understand the point made by my hon. Friend the Member for Waveney regarding the temporary nature of these interventions, permanent changes have been announced and will provide support for affected businesses.

We will deliver on a key ask by trade bodies such as the CBI, the Federation of Small Businesses and the British Retail Consortium by permanently removing downward caps from transitional relief, which previously restricted falls in bills. Removing those caps permanently means ratepayers seeing decreases in their rateable value will experience a full drop in their bills next year.

Taken together, the revaluation and the support package have updated bills to reflect market conditions. Those facing bill increases will see them phased in through transitional relief, and the small businesses that make up our high streets will be protected through targeted support. The multiplier freeze will protect all ratepayers against double-digit inflation.

Colleagues were keen to emphasise the important role that pubs play in our communities. As a proud Member of Parliament for many excellent pubs in my constituency, I understand their concerns. It might help colleagues if I lay out the forms of help that pubs will receive through the support package. As a result of the package of support, pubs’ bills have fallen by about 30%. All pubs will benefit from the multiplier freeze, and pubs with falling rateable values will benefit from the removal of the downward cap that I just described. They will also be eligible for the 75% retail, hospitality and leisure discount. Of course, small pubs that have a rateable value of below £12,000 pay no rates at all.

Would my hon. Friend the Member for St Ives (Derek Thomas) be kind enough to write to me about his dry dock example? That business will receive some form of help through the overall package.

Let me turn to business rates reforms. We understand and listen to the concerns of those running businesses, and keep the operation of all tax policy under review. In the 2021 autumn Budget, we announced the outcome of the business rates review, and will shortly bring forward legislation to deliver those reforms. A core element of that package is more frequent revaluations, moving to revaluations every three years instead of every five; my hon. Friend the Member for Waveney is smiling at me. That represents significant reform, and will ensure that the system is more responsive to changing market conditions.

To enable those reforms, we are also introducing some administrative measures, including a new information duty on ratepayers to ensure the VOA has sufficient data to accurately update rateable values every three years, and to help reduce the number of appeals and the time taken to resolve them. The changes will also unlock opportunities for further improvements to the system in future, such as even more frequent revaluations. We understand the merits of annual revaluations, but we need the change to three years to settle in a little bit, because even moving to three years represents significant operational complexity, but we very much understand the wish for annual revaluations.

My hon. Friend the Member for Waveney mentioned the wish for increased transparency by the VOA, which I understand. I sympathise with the issues that ratepayers are facing through the “check, challenge, appeal” process. The Government are keen to address those issues by delivering on the commitments made in the business rates review. Accordingly, there is already a plan in place that is providing ratepayers with better access to improved information about how valuations are carried out. I urge my hon. Friend to pass to me any information he or others may have about the unscrupulous agents he described; I am most concerned about that, and will be very interested in that information, because I am looking at the role of agents across all aspects of tax policy. A lot of agents provide a very good service to their customers, but we must weed out those who are unscrupulous or even worse.

In the longer term, we expect ratepayers to be able to access fuller analysis of the evidence used to set the rateable value of a property, which I hope will in turn restore confidence in that system. We keep all business rates reliefs under review, as the system of reliefs plays a vital role in ensuring the overall sustainability and fairness of tax. The Government ensure that reliefs are as easy as possible for ratepayers to navigate, with several being automatically applied by local authorities, such as transitional relief, supporting small business relief, and empty property relief. Comprehensive guidance on reliefs is available on gov.uk.

Through the review—which I encourage the hon. Member for Ealing North (James Murray) to read; perhaps he has not realised that we have done it—we have committed to several measures to modernise and digitalise the business rates system, including further investment in the Valuation Office Agency to enable it to upgrade its IT infrastructure and digital capabilities. The review recommitted to the digitalising business rates reform programme, which will match business rates data with central HMRC tax data to provide a better oversight of the rates system, more precise targeting of reliefs, and more effective compliance.

At the very beginning of the autumn statement, the Chancellor told the House that he had three key priorities:

“stability, growth and public services.”—[Official Report, 17 November 2022; Vol. 722, c. 844.]

We understand that the issue of business rates cuts across all three of those priorities because of the impact it has on our high streets and the money it raises for our vital public services.

As ever, this is about balance. We acted at the autumn statement to support business and we will deliver on the reforms announced at the 2021 business rates review through upcoming legislation. We will continue to listen to the arguments, but we will also continue to make the decisions we think are in the interests of the country as a whole. I thank hon. Members for their contributions and look forward to engaging with them all to ensure that this continues to be a system that serves us all.

[Peter Aldous]

This debate has been short on quantity of colleagues but long on quality; once we get through a lot of the rhetoric, perhaps there is not much between us all. There is, though, a need for urgency to move forward and carry out that fundamental reform, and the Chancellor set the foundation stone for that last month.

The hon. Member for Ealing North (James Murray) is the odd one out here because, luckily for him, global warming and climate change mean that he is the only one of us who does not—yet—represent a coastal community. When it comes to levelling up, the dramatic impact of high business rates on coastal communities is quite noticeable. Our town centres—whether in Lowestoft, Torbay, St Ives or Strangford—are an important component part of attracting people and visitors, whether for a week’s holiday or just a day out. If they are hollowed out, there ain’t much to see.

In Lowestoft, there are exciting plans for regenerating the town centre. We are just about beginning to see that happening, but there is a danger that that reincarnation could be strangled at birth by high business rates. That is why we need the reform. Hotels, caravan parks, pubs and restaurants are vital to coastal economies. There is evidence that people who come in and invest in those businesses are being penalised for their investment under the current system. This debate has shown that we need to focus on the impact of high business rates on levelling up, particularly in coastal communities.

My hon. Friend the Member for St Ives (Derek Thomas) disagreed about the need to replace business rates. He outlined the need for a digital tax and to look at the VAT thresholds. I largely agree with my hon. Friend the Minister; it would probably be impossible to get rid of business rates. Reading between the lines of what the Opposition say—although it is probably not for me to do that—I sense that if they form the next Government, they will reach the same conclusion. We can probably get the sort of reforms that I want now in place much quicker, without having to wait until 2024 or beyond.

I would say to my hon. Friend the Member for St Ives that we should trial digital taxes and looking at the thresholds, but I do not think that is the holy grail to the full replacement of business rates. We need the fundamental reform that I have outlined, with a lower UBR multiplier coupled with annual valuations, which would produce the more dynamic and fairer system that we require.

The reliefs that we have talked about are welcome, but they make the system incredibly complicated. If a form of business taxation is simplified, the businesses and entrepreneurs that are investing can see a way towards making long-term investments, rather than saying, “Hang on! That particular relief is only around for a couple of years for certain. Do I need to be going ahead with this?” Providing that certainty is very important.

An ex-surveying colleague has texted me, using words to the effect of, “Don’t you realise the valuation coming up in April will be a bloodbath?” Those were his particular words. I suspect many people and businesses will get pleasant surprises; it might be a case of Christmas coming early for them. Others will fall off their chairs in shock and think, “What on earth are we going to do to address this?” The Government need to reach out and support those parties, and do all they can to assist them.

We touched on unscrupulous so-called surveyors. There are some very good and highly professional people out there who are involved in business rates, but, as I have said, this issue is an incredibly complicated part of the property surveying world, so there is a small number of national and regional experts. That leaves a vacuum for the unscrupulous to fill, and fliers tend to appear from businesses from all over the place—not local ones—saying, “Come on. I can help you with this. Hand over a thousand quid and I will sort it.” When I was in practice, one very often got called in when a business had responded to such circulars and the person had taken the money up front and disappeared. We need to work together closely to sort that out.

In conclusion, I sense that we could be at the beginning of a journey to reforming business rates sensibly. On 17 November the Chancellor took a major step, but it is a journey that we can complete in a much shorter timescale than has been envisaged. I hope that my hon. Friend the Minister will set out the stepping stones on that journey sooner rather than later, both in the upcoming Bill and the spring Budget.

Question put and agreed to.

Resolved,

That this House has considered business rates and levelling up.