Non-Domestic Rating (Preparation for Digital Services) Bill

Tim Farron Excerpts

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

[Rishi Sunak]

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 (Westmorland and Lonsdale) (LD)]

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]

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.