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

Sureena Brackenridge Excerpts

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Mr Mark Sewards (Leeds South West and Morley) (Lab)]

Q Thank you, Mr Gerrard, for your answers so far; they have been really insightful. We have Co-op shops in my constituency; the Co-op in New Farnley is virtually the only shop in that community. It was an absolute lifeline throughout the pandemic, and it is still a lifeline today, given that there are not other shops. We have had some questions about consistency. Obviously, the aim of the Bill is to provide consistency for businesses—especially those in retail, hospitality and leisure—by providing lower multipliers. You have said how beneficial it will be for about 92% of your properties. Can you talk more broadly about the potential benefits for other retailers?

Paul Gerrard: Certainly. I will make a couple of points. The last time I looked, about 95% of retail was microbusinesses with fewer than 10 employees. From the data I have seen, 98% of retail stores have a rateable value below £500,000. So this helps 92% of the Co-op but, from what I have seen, it helps 98% of the broader retail sector.

In my experience and the Co-op’s experience, high streets and precincts are not made by one business, but you often get one business beginning to drive vibrancy in that place. If one business can make it work, you attract custom and those customers might want to buy other things, so you will get a ripple effect from that. I think this will help communities, because it will make it much more viable for those small stores—either independent traders, or small stores of national businesses like the Co-op—to be in communities. I think the ripple effect will be significant. As I said before, there is a commercial thing there, but, as you alluded to, there is a hugely important social and community perspective as well.

[Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)]

Q Thank you, Mr Gerrard. I am the Member of Parliament for cities and towns such as Wolverhampton and Willenhall, and we have a number of Co-ops and similar stores. I hear today that the Bill brings a welcome certainty and that the majority of Co-op stores will benefit from it. Co-ops and similar stores are important local employers and have been for generations within the community. I wonder whether you could share your thoughts on the impact of that.

Paul Gerrard: As I said before, local stores, of which the Co-op is an example, play a hugely important social role. They are also economic and commercial entities. We employ 55,000 people. The vast majority of my colleagues are either in stores—as in your constituency—or in our funeral care homes or our legal services business, so they are customer facing. What the Bill does is make our business model of small shops more viable, which means that we can continue to employ people.

It also means that we can continue to behave in line with our co-operative values and principles. As I said before, we have always paid the real living wage, with rates set by the Living Wage Foundation, and we have always sought to have a different kind of product in store, in terms of its ethical roots. The Bill will help us to continue to do all those things. On 21 December we will have done it for 180 years. The Bill will play a role in helping us, as will other measures that the Government have taken.

[Lewis Cocking (Broxbourne) (Con)]

Q Thank you for coming in today to give evidence. You have said that the Bill is going to make smaller stores more viable, and that it will affect your bigger stores. Can you give us a flavour of what that means for your business, and whether it will put you off doing bigger stores and make you concentrate on smaller stores? You have done analysis of where the Bill is beneficial to you, but have you done any wider analysis of what it means for the totality of the high street?

Paul Gerrard: In terms of broader analysis, we supply about 7,500 stores, including our own 2,500 stores. I would not term it deep analysis, but our impression from the conversations that we have is that the Bill will support those kind of shops—not just our own, but shops in local communities. The data I have seen that has been shared across the sector says that about 98% of stores have a rateable value below £500,000. If the limits are set at £500,000 and £51,000, it will significantly support those. The majority of that 98% have a rateable value below £51,000 as well. I cannot remember the first question, I am sorry.

--- Later in debate ---

[Harriet Cross]

Q I understand that James Lowman, the chief executive of the Association of Convenience Stores, has written to the Chancellor following the Budget, and he described how 2025 will be a bleak year for small convenience stores, as they face over £666 million of additional cost. Will the Bill’s changes to the multipliers of domestic rates make a dent in that? Overall, will your convenience stores benefit from the Budget or be disadvantaged by it? How do those two things fit together?

Edward Woodall: You are right that our estimation of the cost of the Budget was £666 million, and we wrote to the Treasury to set that out. As I said, I think the Bill provides more structure and permanency in the support for retail, hospitality and leisure relief. I cannot comment on how much it will do, because I do not yet know where the multipliers will be set, but I think there is an opportunity to make the investment environment for businesses better with this Bill. We are not just looking at one single relief; we are looking at it over a period of time and we have the opportunity to discuss how that multiplier is set. One way in which the Bill could facilitate that better is through the procedure for the setting of the lower multiplier, which is currently by negative resolution in the Bill documents. That might want to move to an affirmative resolution so that we can have a debate on whether it goes up or down in the future, so that we can have a closer discussion on those things.

[Mrs Brackenridge]

Q To follow on from the question of my hon. Friend the Member for Erewash about security, I have a couple of things to say. Will you confirm the estimated benefit of the proposed business rate relief to small stores? Recently in my constituency, I accompanied my local neighbourhood police team to visit several stores on estates and high streets, as well as in a retail park. One of the things that the stores said directly to me and to the local neighbourhood police teams was about the shocking increase in retail crime—theft and violence—linked to stores directly employing fewer security staff. Will you share your thoughts on the impacts—the benefits—that the savings could make?

[The Chair]

I will allow you a brief comment, Mr Woodall, but that is out of scope of the Bill.

Edward Woodall: I was trying to demonstrate earlier that where you put the multiplier depends on how much businesses have to invest as a result. If you are a store but just outside the small business rate relief and the multiplier is put down by 5p, you can save £1,000, or down by 20p and you save somewhere just over £3,000. There are options about the different things you can invest in. The lower that we are able to put the multiplier, the more opportunities there are to invest. One of the investment areas, and £1 billion of what our sector invested last year, is a defensive investment in CCTV to ensure that stores and colleagues are safe. Hopefully, that will help us in future.

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

Sureena Brackenridge Excerpts

Committee stage
Wednesday 11th December 2024 Public Bill Committees

[Jayne Kirkham]

Q What percentage are we talking about across the board—theatres, theme parks and so on, and hospitality? I think you said 7%, which is fairly low.

Kate Nicholls: If you look at hospitality venues, which would include nightclubs and the larger hotels—it would not include theme parks necessarily, but it would include campsites and holiday parks—you are looking at around 700 premises. Of those that pay business rates, that is around 1% of total businesses, but it accounts for 7% of employment and close to 11% of turnover, so they are quite big. They are a disproportionate proportion of our tourist infrastructure in terms of employment. In certain locations, they will be up to 20% of local employment, so it is quite significant.

My understanding is that the Bill could provide respite for them, because there is an opportunity to apply different rates of a super charge for different types of businesses. We can differentiate on business use above the £500,000 threshold. We urge the Government to do that, and will work with them as the Bill and the consultation go forward, to ensure that they take advantage of that, so that we do not treat a large distribution centre or fulfilment centre the same as a hotel or nightclub.

[Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)]

Q My constituency of Wolverhampton North East does not have a city centre, but we have lots of cafés, brilliant restaurants, microbreweries and pub chains. What benefits will the Bill provide to those small businesses?

Kate Nicholls: If the deduction is applied to the maximum, it will result in a significant reduction in bills for all small hospitality businesses in suburban, neighbourhood and community locations such as your constituency, not just those subject to a cap and getting up to £100,000. Every single hospitality business in your constituency below £500,000—forgive me; I did not double-check, but I do not think you have any over that—will benefit from a permanent reduction in their business rates bills, which will help to redress the balance of their overall tax burden.

Sacha Lord: I would say that this really is a substantial lifeline for all those businesses. My concern is the period between April and when this legislation comes into force.

[Mr Mark Sewards (Leeds South West and Morley) (Lab)]

Q I have a brief question for Kate Nicholls. You mentioned earlier that business rates always come up as a barrier to extra investment. Please can you talk more about that?

Kate Nicholls: I chair the Mayor of London’s tourism recovery taskforce, to get London tourism going, and as part of that we look at foreign direct investment and real estate coming in. More broadly, the top 20 restaurant, pub and hotel chains are all private-equity backed, and most of that is FDI. The subject of business rates always comes up. Every single time you talk about inward investment into the UK, into property-based businesses, and about whether they should come here or go to mainland Europe or America, business rates are an inhibiting factor.

--- Later in debate ---

[Mr Sewards]

Q I understand that the Minister wanted to move on from this, but on your comments about aspirational parents, the simple fact is that all state school parents are aspirational, and in many cases they will never be in a financial position to send their kids to private school. I wanted to give you an opportunity to clarify that. Secondly, given that over 1,000 private schools closed between 2010 and 2024 without much media attention, how many private schools do you estimate will close as a result of the Bill?

David Woodgate: On your second point, we estimate that somewhere between 200 and 250 of our 1,300 schools are vulnerable to closure. They may look at mergers or other options—some might academise, for instance—but that is the kind of figure that we are looking at. I take your point about aspirational parents. We have to ensure that this does not impact on the bursary funding that is available for people from more disadvantaged backgrounds to get a place at one of our schools if they wish to go there. We have to ensure that, as far as possible, given these threats to our income, the funds available for bursaries are maintained.

[Mrs Brackenridge]

Q Thank you for coming and sharing your views and experiences. Business rate relief is in the scope of the Bill. I am a former deputy headteacher who worked across state secondary schools. Private schools, I say, are businesses. I had to juggle reductions and constraints across the budget, with departments such as the science department struggling to ensure that children have the full, hands-on experience—

[The Chair]

Order. I hate to do this, but I have to. Thank you, gentlemen—you will vacate your seats, and we will move on to our ninth panel.

Examination of Witness

Rachel Kelly gave evidence.