Non-Domestic Rating (Multipliers and Private Schools) Bill

Vikki Slade Excerpts

Report stage
Wednesday 15th January 2025 Commons Chamber

[Vikki Slade (Mid Dorset and North Poole) (LD)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

With this it will be convenient to discuss the following:

New clause 2—Review of impact of new multipliers—

“(1) Within eighteen months of the day on which sections 1 to 4 of this Act are commenced, the Secretary of State must conduct a review of the impact of those sections.

(2) The review must consider—

(a) the impact of the introduction of the lower multiplier on qualifying retail, hospitality and leisure hereditaments,

(b) the impact of the introduction of higher multipliers in relation to a hereditament for which the value is £500,000 or more.

(3) The Secretary of State must, as soon as is reasonably practicable, publish the review and lay a copy of that review before Parliament.

(4) As part of the review the Secretary of State must consult with such parties as they see fit including—

(a) businesses,

(b) the Valuation Office Agency; and

(c) Billing Authorities.”

This new clause would require the Secretary of State, within 18 months of sections 1 to 4 of the Act being commenced, to review and consult on the impact of new multipliers.

New clause 3—Sections 1 to 4: impact assessment—

“(1) The Secretary of State must, within six months of this Act being passed, conduct an assessment of the expected impact of sections 1 to 4 of this Act on relevant businesses.

(2) The assessment must compare the amount of non-domestic rates expected to be paid by relevant businesses once sections 1 to 4 come into force with the amount paid in each financial year between 1 April 2020 and 31 March 2026.

(3) The assessment must consider how the impact is expected to differ depending on the number of hereditaments a business occupies.

(4) The Secretary of State must lay before Parliament a report setting out the findings of the assessment.

(5) In this section, a “relevant business” is a business occupying a qualifying retail, hospitality or leisure hereditament.”

This new clause would require the Secretary of State to examine the effect of the introduction of retail, hospitality and leisure multipliers on the amount of business rates paid by businesses occupying a single site compared with those occupying multiple sites.

Amendment 9, in clause 1, page 2, line 5, at end insert—

“(1A) Regulations under sub-paragraph (1)(a) must provide discretion for billing authorities with regard to the application of the higher multiplier.”

Amendment 1, in clause 3, page 3, line 29, after “hospitality” insert “, manufacturing”.

This amendment would add manufacturing businesses to the types of business that could qualify for use of the lower multiplier.

Amendment 2, page 3, line 33, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 3, page 4, line 9, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 4, page 4, line 13, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 5, page 4, line 31, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 6, page 4, line 35, after “hospitality” insert “, manufacturing”.

This amendment is consequential on Amendment 1.

Amendment 7, in clause 5, page 5, line 37, leave out from ”persons” to end of line 38 and insert—

“who have special educational needs.

“(5A) In subsection (5) “special educational needs” has the same meaning as in section 20 (When a child or young person has special educational needs) of the Children and Families Act 2014.”

This amendment would mean that a school that is wholly or mainly concerned with providing education to persons with special educational needs would not be a private school for the purposes of the Act, and as a result would retain charitable relief from non-domestic rates.

Amendment 8, page 5, line 38, at end insert—

“, or

(b) has a religious character or other special character and there is no maintained school or academy of the same character within the specified distance from that school.

(5A) In sub-paragraph (5)(b)—

“religious character” has the meaning given under section 69 (Duty to secure provision of religious education) of the School Standards and Framework Act 1998,

“other special character” has the meaning as defined by the Secretary of State by regulation,

“specified distance” is the distance specified under section 445(5) (Offence: failure to secure regular attendance at school of registered pupil) of the Education Act 1996.

(5B) Regulations under this section are to be made by statutory instrument.

(5C) A statutory instrument containing regulations under this section may not be made unless a draft instrument has been laid before and approved by resolution of each House of Parliament.”

This amendment would provide that charitable rate relief would continue to apply to a school with a religious or other special character, if no maintained school or academy with the same character was within the statutory walking distances (as set in the Education Act 1996) from that school.

Amendment 10, in clause 6, page 6, line 22, leave out “2025” and insert “2026”.

[Vikki Slade]

Business rates reform is long overdue. It is frequently cited by my constituents as the biggest concern for their businesses’ survival and one of the most direct inhibitors to their growth.

I was contacted this week by a constituent from a local business in Three Legged Cross, right on the edge of my constituency. He has been running it for over 40 years, and the cliff edge created by the small business rate relief means that his rates bill will go from £2,800 to £8,500 per year. The only thing that will save this microbusiness is systemic change as proposed by the Lib Dems in our manifesto, not a tax based on an arbitrary valuation that bears no relationship to the activity taking place inside his building.

High streets are trying to redefine themselves, moving from the heart of goods purchasing to literal shop windows as they struggle to compete against online competitors that do not have their overheads. It would be wrong to think that the solution is to try to return to the perfect high street of the past, as if such a thing exists.

I am old enough to remember C&A being the place me and my friends browsed for the latest fashions, and there was a Blockbuster video store and pic ’n’ mix from Woolies. Where are they now? It is dangerous and self-defeating to be caught up in toxic nostalgia, trying to reclaim the past as some kind of perfect place. Parliament must enact legislation that supports the society of tomorrow and towns that will work for a technological and multicultural age—indeed, an age in which people can no longer afford the stuff that we used to buy on a Saturday afternoon, or are choosing, as I do now, to buy their stuff from second-hand stores.

The dangerous gap between the slashing of retail hospitality and leisure relief by almost half, and a regime that brings in as yet undefined new multipliers, brings real risk. Our new clause 1 would require a review of the impact of clauses 1 to 4 on businesses, on high streets and on the real prize of economic growth that the Government mention so often. There has been a lot of talk in recent months about decisions being made without clear impact assessments. As we move through a period of reform, enshrining such an assessment in law, rather than questioning later whether it has been done, would save us all a lot of trouble and demonstrate that the Government genuinely want to make improvements.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

One issue that the hon. Lady has not yet mentioned is the impact of the Employment Rights Bill, which will create further red tape for our high street businesses when it comes into play. Do the Liberal Democrats think that the Government should consider that? Changing taxes and rates is one thing, but creating red tape at the very same time, constraining business growth, is another.

--- Later in debate ---

[Vikki Slade]

I agree that this is a difficult time for small businesses, with so many things changing at the same time—not least the increasing national insurance rates.

To return to the role of the high street, the most successful high streets are moving quickly to reinvent themselves. Since my election, I have been trying to find a high street location for my constituency office. I had decided to base myself in the historic market town of Wimborne, where my mum lived and my children went to school. It is the fastest-growing community in Mid Dorset and North Poole—Ministers have heard me talk about its housing problems many times—and it has great bus routes. I thought it would be a great place to find a small unit easily.

I was wrong, however. The strength of the sense of place, the innovation of its businesses and the hard work of its business improvement district and its town council are such that when a business closes down, others are waiting to move in. I have finally found my new home, which will open by the end of the month when we have fitted it out, but the experience proved what I already knew: the high street can survive, but only when the business community is prepared to give people what they want. Retailers such as Tickles and Co. trade alongside the hospice shop, and old businesses such as Bartletts, which has for 120 years sold smart clothes for all seasons, are able to sustain themselves despite changes in the market.

The Lib Dems welcome the proposal to permanently reduce business rates for retail, hospitality and leisure, and we acknowledge that the financial situation the Government were left by the previous Government makes the 75% discount difficult to maintain, but any discount is worthless if businesses that are trying to stabilise following the covid pandemic, the energy crisis and the shift to online cashless purchasing do not even make it through the next year. As I have said before, that is not the reform that business needs. The Minister has already said that this is just phase 1, but we are incredibly frustrated that he has not taken the opportunity to take things further.

New clause 3, in the name of my hon. Friend the Member for St Albans (Daisy Cooper), focuses our proposals further on the retail, hospitality and leisure sector, and raises valid points about the risk to individual businesses compared with those that have multiple branches. There must be an assessment of that risk alongside a broader impact assessment.

[Daisy Cooper (St Albans) (LD)]

My hon. Friend is giving an impassioned speech about the importance of business rates reform. Does she agree that there is a risk of unintended consequences in what the Government are proposing? At the moment, the 75% relief is capped at £110,000, but when the relief goes to zero in two years’ time, that cap will not exist. House of Commons Library research shows that the net effect could be that small businesses end up being 80% worse off, while big chains such as Starbucks could be 40% better off. Although it is important that we get a review of the impact of business rates, it is also important that we get the differential assessment set out in new clause 3.

[Vikki Slade]

I completely agree with my hon. Friend. One problem is the same law of unintended consequences that we have seen with things like the national insurance increase—which, as we repeat over and over again, is impacting small businesses, hospices, doctors’ surgeries and things like that—when quite understandably, an attempt is made to raise funds from elsewhere.

I want to share the views of Anthony Woodhouse, the chair of Hall and Woodhouse brewery and pub chain, founded and based in Dorset but with a branch just across the way from this place—unfortunately, I am not able to be at its event in Portcullis House because of the timing of today’s debate. Anthony told me that the revaluing of property when a huge amount of money has just been invested to make it fit for a changing market, and before you have even had a chance to benefit from that market, is completely crazy and discourages business investment. As such, it is important that as we look to reform business rates, we examine that issue as well.

Despite our failure to do that, businesses such as Anthony’s are responding to the market. Pubs such as the Olive Branch in Wimborne and the Old Granary on Wareham quay are now places where muddy boots, children and dogs are welcome, and where they sell as many cups of coffee as pints of local beer. The high street needs to morph as businesses have—to be ready and willing to change—but while business rate reform rightly starts with the high street, it is important that it does not end there.

As such, I turn to our amendments 1 to 6, which would add manufacturing businesses to the lower multiplier. The UK has a rich history of manufacturing excellence, and Barclays’ “Made in Britain” report found that a product being made in Britain held an important influence over consumers’ decision to purchase it, with customers perceiving such products to be high quality, reliable and internationally respected. The “made in Britain” tag was found to be worth an addition £3.5 billion a year to our UK exporters, which is why we believe that the lower multiplier should also apply to manufacturing businesses. We need to give those businesses a shot in the arm to ensure they can compete on the world stage. The threats by incoming President Trump to put tariffs on UK products, our continued isolation from our neighbours through an inadequate Brexit deal, and the rapid growth of economies such as China and India represent a real threat to local manufacturing.

Poole Bay Holdings, based in my constituency, stands ready to produce its innovative Koolpak here in the UK. Anybody who has children will know the brand Koolpak—it is that ice pack that is not even ice—and that business has been modifying its equipment so that it can make the product here, in Dorset, to compete with China. It stands ready to drive up those sales. Recognition of such businesses through a lower multiplier, or at least the potential to include them in a lower multiplier if the market becomes more tricky, is the intent behind our amendments.

Turning to amendments 7 and 8, which stand in the name of the shadow Minister, the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), the Liberal Democrats simply do not believe in the taxation of education. Alongside the changes to VAT, the removal of the special status for schools is really disappointing. Therefore, those amendments—which seek to recognise the value of schools for children whose needs are difficult to meet elsewhere, whether those are special educational needs and disabilities or whether people are choosing to educate in a faith school—seem reasonable.

In summary, this Bill is a fair start, and some businesses will feel it is better than the abyss that might otherwise have been. However, the Government could and should have taken different decisions to protect businesses that will face additional costs in just a few weeks’ time. We are often asked how we would pay for it; I welcome that discussion, as there were many proposals in our manifesto, from taxing big banks to asking gambling companies to pay their fair share. On behalf of the Liberal Democrats, I recognise that the Government have worked quickly to bring this Bill forward, but the risks of losing businesses en route to something better are just too great. We need proper reform, so that the businesses of the mid-21st century can weather the storms ahead.

[Adam Thompson (Erewash) (Lab)]

I am grateful for the opportunity to speak again on this Bill, having been part of the scrutiny process in Committee.

The Committee heard representations from a wide variety of experts in related fields, and I was heartened by the news that many experts felt that this Bill would have a positive impact on 98% of the retail stores that make up our communities. In particular, small convenience stores such as the local Co-op or the great British corner shop will see great benefits to their capacity to support staffing, security and other operational functions. Our incredible independent shopkeepers, such as those who populate the high streets of Ilkeston and Long Eaton in my constituency, will have more funds to take on additional staff, improve their security set-ups and gain long-term confidence in their ability to serve our community. These measures represent a simple, common-sense approach to rebalancing the scales in favour of local retailers and away from the online giants, and increasing taxes on the biggest players while relieving the burden on local retailers.