Non-Domestic Rating Bill

Sarah Owen Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[Sarah Owen (Luton North) (Lab)]

There is no getting around it: this has been an incredibly tough time for businesses across the UK. There was the pandemic, of course, but before and after it, they have had this Government’s mismanagement of Brexit to contend with, the Government’s failure to manage rising energy costs, the highest inflation for a generation and the unforgivable mess of the Government’s mini-Budget in October.

With this Bill reaching its Second Reading still inadequate in many areas, business owners are concerned about what further challenges await them. While businesses have welcomed some elements of this legislation, it is clear across the board that supportive measures such as improvement relief are being delivered far too late. The most glaring omission from the Bill continues to be the lack of any substantial improvements to our outdated, dysfunctional business rates system. Labour is committed to scrapping business rates root and branch, but the Government continue to tinker around the edges, buying time with short-term measures, rather than addressing the depth of the problems they have caused.

The last thing businesses need is more short-term sticking-plaster fixes. Maybe they are waiting for a Labour Government in the next 18 months to come and fix it for good. Our proposed reforms to business rates are what small and medium-sized enterprises have spent years lobbying for. All of us will know a high street that was prosperous 15 years ago and is now in miserable decline, along with libraries, nurseries and leisure centres. The Tories’ commitment to austerity policies has led to the death of a devastating number of high street businesses. They sat by and watched business after business go bust and the hearts of our high streets gutted. Office for National Statistics figures show that, even at the height of the recession, business deaths under the last Labour Government never rose above 277,000. In stark contrast, this Tory Government oversaw a staggering peak of 331,000 business deaths in 2017—years before the pandemic, before the war and any other factors that they may try to draw on.

While the Tories tread water, Labour has a plan for British business. We will support entrepreneurs to turn their ideas into reality. We will ensure that bricks and mortar businesses stay on our high street by making their tax contributions proportionate. Labour will make online tech giants finally pay their fair share of tax—something the Conservatives have never had the will to do. By raising the digital services tax paid by the likes of Amazon, we will be able to raise the threshold for small business rates relief, helping more homegrown small and medium-sized businesses to thrive in our retail sector. Sadly, among other common-sense reforms suggested by Labour, the Tories have refused to provide short-term support through raising the threshold for small business rates relief this financial year. Our estimates suggest that raising the threshold to £25,000 would save our high streets more than £1 billion. Instead, SMEs will continue to wade through bills and fight for their survival. Corner shops and cash and carries are essential staples of our neighbourhood and many families rely on them to meet daily need.

Although some measures in the Bill have been welcomed by small shop owners, worry continues over the administrative burdens of meeting the new “duty to notify” requirements. The Association of Convenience Stores told me that, despite representations to Ministers, its concerns about clause 13 have not been addressed. Forcing ratepayers to submit taxpayer reference numbers to the Valuation Office Agency will create more work for all retailers, but have a particular impact on convenience store chains. Has the Minister considered the difficulties facing businesses in that situation: those that may need to spend more to safely report sensitive tax information for multiple sites? There are also valid fears that fines will be incurred through small businesses not knowing when or what to update the VOA with regarding changes to their premises. Can the Minister update me on what consultations the Government are conducting to bring clarity to that process?

The Shopkeepers’ Campaign rightly notes that the clause allowing fines for retailers to notify the VOA within 60 days represents a “stealth tax”. Surely Ministers do not intend to find new ways to make small businesses worse off. Can they please commit to reviewing that policy?

Many convenience stores are owned and frequented by first, second and third generation migrant communities and those on lower incomes. Have Ministers carried out an equality impact assessment of the unintended consequences that these costs will have on the owners and, therefore, their customers? I would be grateful to know whether any such assessment has also investigated regional differences in the impact of the Bill. Recent analysis by Savills estate agents found strong disparity between the new rateable value for city centre retail units and those in small towns. Surely the Government are not proposing yet more policy that will make a mockery of their central promise to level up.

The hospitality sector was at the sharp end of the pandemic restrictions and slow economic recovery. Most recently, it has suffered a severe workforce shortage due to post-Brexit limitations on migrant workers. UKHospitality has joined other business advocacy groups in questioning the new proposals regarding expanding the VOA’s remit and powers. What is the Minister’s response to businesses facing extensive administrative time and costs to provide the VOA with more information than it reasonably requires? We welcome the commitment to revaluate rates more frequently, but every three years is still not enough to keep up with the sudden changes that businesses can experience during economic turmoil. A Labour Government will introduce annual revaluations, delivering the up-to-date monitoring and support that businesses are crying out for.

As I have raised with the Minister before, there is still no explanation from the Government on how they will support local authorities that have the huge task of processing tens of thousands of new business rate forms. Local authorities, as we all know and appreciate, are already understaffed and under-resourced. I do not need to remind the Minister that councils still do not have a long-term sustainable funding model, so each year brings more financial insecurity than the last. With yet another new administrative responsibility dumped on their desks, how does the Minister expect councils to be able to afford the time and staffing to adjust? Have the Government conducted any sort of consultation with local authority leaders to assist with the burden?

We will not be voting against the Bill today. We know some improvements have been made and we will work towards further improvements in the next stages. What will not change between this version of the Bill and the next is that Labour remains the party of business. We are committed to ensuring that every business, every entrepreneur, every high street, every worker and every customer gets what they need from government to live well and see our economy thrive in return.

Non-Domestic Rating Bill

Sarah Owen Excerpts

Committee of the whole House
Monday 22nd May 2023 Commons Chamber

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I call the shadow Minister.

[Sarah Owen (Luton North) (Lab)]

As I stated on Second Reading, the Opposition support the measures in the Bill overall because it is crucial that local authorities and businesses have clarity as soon as possible so that they can prepare for what is to come. We have worked constructively to improve the legislation before it gets to them, but the Bill is still lacking in areas that small businesses are crying out for help with.

On Second Reading, I raised the matter of the pressures that small businesses, particularly small chains such as convenience stores, will be under as a result of the intensified reporting requirements. Although it is certainly important to increase accountability for businesses submitting their finances, stakeholder groups such as the Association of Convenience Stores and the Shopkeepers’ Campaign have drawn attention to the stifling impact that the new requirements could have on their businesses. Some small and medium-sized enterprises may resort to outsourcing their account reporting, risking another financial hit in return. We have yet to see the Government addressing those concerns or considering any alternatives.

--- Later in debate ---

[Sarah Owen]

Throughout the condensed debate on this Bill, it has become clear that, although well meant, this was a missed opportunity to do better—to do more for businesses across the country. Yet again, the Government have managed to miss the point, despite multiple people, even from their own Benches, trying to guide this legislation into a better place.

A step in the right direction could and should have been a leap. This was a chance to provide businesses with more than short-term sticking plaster fixes. Instead, we see small businesses worrying over the administrative burden of meeting the new duty to notify requirements and questioning what hefty punishments will be handed down for any genuine errors. The hon. Member for Waveney (Peter Aldous) quite rightly pointed out that they include even imprisonment.

The Federation of Small Businesses, the shopkeepers, the corner shops, the Association of Convenience Stores—the backbone of many of our urban and rural communities —have all voiced their concerns. Those concerns have been echoed by Members from all parts of the House, but have sadly fallen on the deaf ears of this Government.

However, there has been some agreement in these debates—that the current outdated, dysfunctional business rates system is not fit for purpose. The only difference is that the Government continue to tinker around the edges while Labour would scrap it root and branch. That is what small and medium-sized enterprises have spent years lobbying for.

Labour has a plan for British business. We will support entrepreneurs to turn their ideas into reality. We will ensure that bricks and mortar businesses stay on our high street by making their tax contributions proportionate. Labour will make online tech giants finally pay their fair share of tax—something that Conservative Ministers have had neither the will nor the ability to do. By raising the digital services tax paid by the likes of Amazon, we will be able to raise the threshold for small business rates relief, helping more home-grown small and medium-sized businesses to thrive in our retail sector.

Among the common-sense reforms that we put forward was to provide short-term support by raising the threshold for small business rates relief this financial year. As I have said previously, raising the threshold to £25,000 would save our high streets more than £1 billion. This support is not only what small local businesses need, but what our high streets and towns are crying out for.

I know that Small Business Saturday takes place just once a year nationally, but it is something I do in Luton North nearly every Saturday. I meet entrepreneurs, small businesses, innovators and creators in my town who are doing amazing things in our community, with our community and for the good of our community. Every Small Business Saturday shout-out that I do is to celebrate them and their contribution to our local economy. I know the very real difference it would make to them and to every small business across the country if we raised the threshold of business rates relief to £25,000 now, and ultimately if we did away with the outdated and unfair current business rates system altogether.

I genuinely hope that that the small steps in the right direction made today can be built on and improved in the future by a Government of whatever political stripe—hopefully a red one. We must stem the decline of our high streets and tip the tax balance between digital and physical businesses. We cannot continue to see high street shops boarding up their windows while online giants get away without paying their fair share.

Lastly, I thank every hon. Member who has spoken, including the Minister, I thank the Clerks and I thank the stakeholders, who have briefed well and lobbied fairly on behalf of their members’ interests.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Strikes (Minimum Service Levels) Bill (Programme) (No. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Strikes (Minimum Service Levels) Bill for the purpose of supplementing the Order of 16 January 2023 (Strikes (Minimum Service Levels) Bill: Programme):

(1) Proceedings on Consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement.

(2) The Lords Amendments shall be considered in the following order: 1, 2, 4, 5, 6, 7, 3.

Subsequent stages

(3) Any further Message from the Lords may be considered forthwith without any Question being put.

(4) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mike Wood.)

Question agreed to.