All 2 Rishi Sunak contributions to the Non-Domestic Rating (Preparation for Digital Services) Act 2019

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Mon 13th May 2019
Non-Domestic Rating (Preparation for Digital Services) Bill
Commons Chamber

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Mon 20th May 2019
Non-Domestic Rating (Preparation for Digital Services) Bill
Commons Chamber

3rd reading: House of Commons & Committee: 1st sitting: House of Commons

Non-Domestic Rating (Preparation for Digital Services) Bill Debate

Full Debate: Read Full Debate
Department: Department for Levelling Up, Housing & Communities

Non-Domestic Rating (Preparation for Digital Services) Bill

Rishi Sunak Excerpts
2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Monday 13th May 2019

(4 years, 10 months ago)

Commons Chamber
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Rishi Sunak Portrait The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
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I beg to move, That the Bill be now read a Second time.

This Government are committed to ensuring that the tax system is fit for the 21st century, that it is designed around the needs of the taxpayer and that we minimise as far as possible the administrative burden for businesses paying their taxes. The Government are also clear that this system should reflect and take full advantage of modern technology, and use that to make the process as simple and efficient as possible for taxpayers.

This very narrow Bill will support those aims in the context of the administration of business rates. This extremely short and simple measure will simply allow us to start exploring future digital reform of the business rates system. The same clauses appeared in the 2017 Local Government Finance Bill and passed through Committee without Division. The hon. Member for Oldham West and Royton (Jim McMahon) was present during those debates, and I hope the clauses will receive the House’s support again today.

John Redwood Portrait John Redwood (Wokingham) (Con)
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Can the Minister give an idea of the cost involved and what sort of efficient and better system might emerge?

Rishi Sunak Portrait Rishi Sunak
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The measure is even narrower than that; it is simply a paving measure, which I will come on to, that enables that exploratory work to start so that future Ministers will be able to come to this House with firmer proposals, with costs attached, depending on the eventual design of the system that is ultimately decided to be appropriate after extensive consultation with the sector. If my right hon. Friend bears with me, I hope his question will be answered later. If not, I will be happy to have him intervene again.

In the lead-up to the 2016 Budget, the Government undertook a wide-ranging review of the business rates system, in response to public calls to reform. As well as seeking views on the business rates tax itself, the review invited specific feedback on the administration of the rates system, including how business rates are collected.

Responding to the review, business groups called for a number of changes to the way the system is run, including switching the annual indexation of the business rates multiplier to the consumer prices index, rather than the retail prices index; implementing more frequent valuations; and modernising the billing and collection of business rates. I am pleased to say that the Government have already begun reforming the system to implement those changes.

Ratepayers are already benefiting from the change to the annual indexation of business rates from RPI to CPI, which was brought forward by two years, to April 2018. That measure alone is worth almost £6 billion to businesses over the next five years. The Government have also committed to increase the frequency of business rate revaluations from every five years to every three. To ensure that businesses benefit from that change at the earliest point, the Government have further announced that the next revaluation will be brought forward from 2022 to 2021. That will ensure that, as requested, business rates bills more accurately reflect properties’ up-to-date rental value and any relative changes in rents.

The Bill will enable us to begin exploring how to modernise the billing and collection of rates. Businesses in this country are of course already banking, paying bills and making sales online. Our tax system needs to keep pace.

Jim Cunningham Portrait Mr Jim Cunningham (Coventry South) (Lab)
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Has the Minister seen press reports today that some major companies are calling for a 20% reduction in business rates? Does he have any comments to make about that?

Rishi Sunak Portrait Rishi Sunak
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It is important to remember that the Bill is much narrower in scope than the design of the business rates system and how individual businesses pay the bills they are given. My hon. Friend the Member for Rossendale and Darwen (Jake Berry), the high streets Minister, is looking forward to winding up the debate, and he will be able to give the House chapter and verse on every single initiative the Government have undertaken to support businesses on the high street. In sum, there has been £13 billion of relief since the 2016 Budget, and a third of all businesses no longer pay any rates at all.

Tim Farron Portrait Tim Farron (Westmorland and Lonsdale) (LD)
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I thank the Minister for giving way—he is being very generous. On that point, however valuable and commendable many of the proposals he mentions may be, does he not feel that this is somewhat like fiddling while Rome burns, or indeed many of our town centres burn? There have been calls for a reduction of around 25% in high street business rates, and that could be funded by making sure that the tech giants pay their fair share of corporation tax.

Rishi Sunak Portrait Rishi Sunak
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Madam Deputy Speaker, I am loth to get drawn on to topics that are much broader than the very narrow scope of this Bill. However, I am happy to reiterate that I do not think the £675 million high street fund my right hon. Friend the Secretary of State and my hon. Friend the high streets Minister introduced earlier this year is a case of fiddling while Rome burns. The Government are committed to the vibrancy of our high streets through various initiatives that will be outlined in my hon. Friend’s winding-up speech.

Indeed, the Bill is also an important measure; it is a measure that businesses have called for. Given the statutory nature of HMRC, it is impossible to move forward without this short piece of legislation. The reason for that is that businesses today receive separate business rates bills for each non-domestic property they occupy. Large businesses with property in different areas may receive bills from a number of local authorities responsible for issuing bills and collecting payment. It is worth bearing in mind that there are over 300 different billing authorities today, each with its own system of billing for business rates. While I pay tribute to the good work carried out by local authorities in administering business rates locally, the Government’s clear view is that reforming the system to more closely link with the wider management of business taxes led by HMRC could unlock long-term improvements to the current system.

Members will appreciate that implementing any reform of this scale takes significant time and that it is critical that the Government engage with businesses and local government in developing and designing any new digital system; indeed, the hon. Member for Oldham West and Royton brought that up in Committee during consideration of the previous Bill. I am pleased to tell him that the measure before us today will take many years to come to full fruition. The current intention announced by the Treasury is that any new design of the system will not come into force until after the next revaluation, in 2024. What we are doing today is therefore just a very small first step on a journey that requires an enormous amount of engagement and consultation.

The main measure in the Bill allows HMRC to expend resources on beginning to explore designs for a new digital service for business rates. That is necessary because HMRC’s current statutory functions do not include activity in connection with the administration of business rates. To be clear, the legislation we are considering simply permits HMRC to begin the necessary design and engagement work for a potential new digital service. It does not implement any reforms to the current system of business rates administration.

That is important because, as I have noted, the Government are clear on the need to engage with businesses and local government to seek views on any specific options for reform. For example, the local government sector will want to ensure that any changes are fully compatible with the local retention of business rates and with plans to increase rates retention in the future. Equally, business organisations such as the Federation of Small Businesses, the British Independent Retailers Association and the CBI will be keen to engage in future design work to ensure any reforms deliver benefits to businesses and minimise any burdens. Members should also be aware that any practical reforms to the system are likely to require further changes to legislation and, as such, there will be opportunity for full scrutiny of any proposals once the design work has concluded.

The Government’s efforts to improve digital tax services are already helping businesses seize the opportunities that digital technology offers. They are giving businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs. The Bill will support this by enabling HMRC simply to begin exploring potential options to link business rates with the administration of the wider tax system. It will also enable HMRC to undertake the necessary engagement with stakeholders to ensure any reforms work for business and for local government. While the Bill is just a small paving measure, it supports some potentially significant long-term improvements to the current system. I commend it to the House.

Eleanor Laing Portrait Madam Deputy Speaker (Dame Eleanor Laing)
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Before I call the Opposition spokesman, with the leave of the House, and most unusually, I am sure the House would like to join me in wishing the Associate Serjeant at Arms, who occupies the Serjeant at Arms’ Chair, a very happy birthday.

Non-Domestic Rating (Preparation for Digital Services) Bill Debate

Full Debate: Read Full Debate
Department: Department for Levelling Up, Housing & Communities

Non-Domestic Rating (Preparation for Digital Services) Bill

Rishi Sunak Excerpts
3rd reading: House of Commons & Committee: 1st sitting: House of Commons
Monday 20th May 2019

(4 years, 9 months ago)

Commons Chamber
Read Full debate Non-Domestic Rating (Preparation for Digital Services) Act 2019 Read Hansard Text Read Debate Ministerial Extracts
Rishi Sunak Portrait The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
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It is a pleasure to serve under your chairmanship, Dame Eleanor.

The Government have made significant reforms to the business rates system since our wide-ranging review in 2016. Responding to the needs of ratepayers, we are building a system fit for the 21st century. The tax system must keep pace with the way business operates today, and that means a modern, online system that makes it easier for businesses to manage their bills in one place.

Today’s measure is a small step towards that modern system for business rates. It will give Her Majesty’s Revenue and Customs the ability to carry out the early design work so that it can explore how a new system can be delivered. It does not implement or commit us to a particular approach, and the Government will work closely with local government and businesses when we come to develop detailed proposals. We need the Bill because HMRC’s statutory functions do not currently extend to the administration of business rates. As I have said, further primary legislation will be needed for HMRC to implement the outcomes of this work, so this House will have a further opportunity to look again at the project.

On the detail of the Bill’s clauses, HMRC’s functions are set out in primary legislation in the Commissioners for Revenue and Customs Act 2005. These functions relate to the collection and management of revenue, as set out in section 5 of the Act, and do not extend to the administration or payment of non-domestic rates. Clause 1 therefore provides HMRC with the ability to incur expenditure in connection with digital services to be provided by it for the purpose of facilitating the administration or payment of non-domestic rates in England. Subsections (2) and (3) define digital services and non-domestic rates respectively. Clause 2 sets out that the amendment will extend to England and Wales but apply only to England.

Jim McMahon Portrait Jim McMahon (Oldham West and Royton) (Lab/Co-op)
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It is a pleasure to serve under your chairmanship, Dame Eleanor.

When we debated the Bill’s Second Reading last week, we were careful not to stray too far from what is a very narrow Bill. The benefit to the Minister was that he was able fill a speech by reading out the Bill. I shall not speak just for the sake of it; I shall cut straight to the chase.

I accept completely that this is enabling legislation to allow Her Majesty’s Revenue and Customs to develop the framework and the product offer, but there are still many outstanding questions that the Government need to answer at this stage, because they are fundamental to the approach that is being taken. For instance, will local councils retain their primary role as billing authorities? Who will underwrite the non-collection losses for businesses that opt to use the new digital system? How frequent will HMRC’s payments to local authorities be?

To what extent will local government be involved in the co-design of the system? As was pointed out on Second Reading, there is a great deal of expertise in our councils when it comes to designing systems and processes and bridging systems across different software products, and I think we can tap into that expertise to ensure that the system is fit for purpose. I am sure that the Minister does not want his CV to bear the legacy of an inadequate IT system, a fate that has befallen many Ministers who have gone before him in various Departments.

We want those fundamental questions to be answered, ideally before work starts and money is spent—and that brings me to my next point: we still do not know how much money will be spent. Oddly, a money motion was tabled but did not proceed to a Division, and there was no explanation even of the ballpark figure: not even a rough estimate of how much the new system might cost. The cost must be weighed against the benefits to HMRC and businesses, and it must be established whether we are getting value for money for the investment.

I must be careful not to stray too far from the subject of the debate, but the Bill does not address the underlying chronic underfunding of local public services. The Minister really must deal with the issue of the £8 billion funding gap, to which we have referred very often in the House.

We do not intend to divide the Committee, but if the Minister is not able to answer those questions today, it would be useful if, at the very least, Ministers could respond in writing.

Rishi Sunak Portrait Rishi Sunak
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Let me deal briefly with the hon. Gentleman’s points. He asked some specific questions about the design of the system. As we established on Second Reading, I cannot give him the answers, not because I am trying to hide something but simply because I do not know them at this stage, and nor does anyone else. The Bill will enable HMRC to start its scoping work, and the questions that the hon. Gentleman rightly posed about the design, who will do what, and how intensive the work will be—or, indeed, how light-touch it might be—will be answered during subsequent analyses. Further primary legislation is likely to be required, so the House will have an opportunity to debate those changes.

On Second Reading, the hon. Gentleman raised an interesting point about the potential integration of the new challenge and appeal system with whatever new platform is designed. That point is worthy of consideration. Again, however, at this stage no one knows how much that would cost, how long it would take, or whether it would be a worthwhile addition to the plan of work. I hope the hon. Gentleman will forgive me: I am not being evasive, but we are beginning a process that will answer all those questions and others.

Similarly, I cannot give the hon. Gentleman a specific figure in relation to the budget, because we do not know what the overall system will look like. What I can say is that HMRC’s initial scoping work will be done within its existing resources and budgets, will not, in general, involve the use of consultants, and will hopefully lead to a proposal which, during the spending review, HMRC can decide whether to adopt, depending on the outcome of the review.

Of course local government and, indeed, business should be extensively engaged in the process. I know that HMRC is committed to that, and the hon. Gentleman would no doubt hold me and Treasury Ministers to account if it were not the case. Typically, Select Committees would take evidence from HMRC in hearings as the system was being designed and rolled out over subsequent years, and I have no reason to doubt that that would happen in this instance.

The last question the hon. Gentleman posed was specifically about the frequency of payments. I am pleased to be able to tell him that this was also brought up on Second Reading. Currently, businesses tend to have at least the opportunity to spread their business rates payment over 10 different instalments over the year. That right is prescribed in regulation—the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989—so that flexibility is already in place and is taken up by many businesses. If there was to be any change to that, it would require this place to pass new regulations, so I think the hon. Gentleman can rest assured on that point.

I hope that answers all the hon. Gentleman’s questions, and I ask Members to agree that, if we can take clauses 1 and 2 together, they stand part of the Bill.

Eleanor Laing Portrait The First Deputy Chairman of Ways and Means (Dame Eleanor Laing)
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In answer to the Minister’s implied question, I have not put clause 2 to the Committee yet, and therefore before I put the questions on clauses 1 and 2 I will immediately, for the sake of clarity, rule that we are debating clause 1 and clause 2 together; I had not said that before, but as both the Minister and the Opposition Front-Bench spokesman appear to have done so I will retrospectively allow it. Also, I will just ensure that no one else wishes to speak on either clause 1 or clause 2 before I put either of the Questions, and I see that that is indeed the case, so let us proceed.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Third Reading

Rishi Sunak Portrait Rishi Sunak
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I beg to move, That the Bill be now read the Third time.

This simple, narrow measure will take the first steps towards improving the tax system for businesses by developing a new digital system to administrate business rates. It is part of the Government’s commitment to make Britain the best place in the world to do business.

I would like briefly to thank right hon. and hon. Members in all parts of the House for their contributions during the extensive Second Reading and Committee stages of the Bill. Specifically, I am grateful to those who supported it on Second Reading, highlighting the importance of our efforts to support business and our high streets and of our consulting widely on the development of this new digital system. I am grateful to the Clerks of the House and to officials in both my Department and Her Majesty’s Revenue and Customs for their work on the Bill.

This simple Bill will allow HMRC to develop a new system for the administration of business rates; it has wide support, and I commend it to the House.