Business Rates Reform

Question

15:08:00

Asked by

To ask His Majesty’s Government what assessment they have made of the potential impact of business rates reform on business improvement districts.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I refer the House to my registered interests, including that I run two business improvement districts.

My Lords, the Government are creating a fairer business rates system that protects high streets and supports investment. We do not anticipate that these business rates reforms will have any direct impact on business improvement districts.

I thank my noble friend the Minister for that reply. Business improvement districts—BIDs—are vital to local economies and high street regeneration, and rely heavily on the business rates system. Will my noble friend commit to consulting them directly through bodies such as Association of Town & City Management before making any future reforms? As government services move more fully online, will he back online voting for bid ballots in order to keep the process accessible, efficient and fit for the digital age?

I thank my noble friend for his question and pay tribute to his work and his expertise in this area. As he knows, business improvement districts play an important role in improving the local trading environment in our high streets and town centres, investing over £154 million each year in their local areas. On the consultation on future reforms, my honourable friend the Exchequer Secretary, together with Treasury officials, has engaged extensively with stakeholders to codesign a fairer, more modern business rates system. I know that the Association of Town & City Management, which my noble friend mentioned, has been an important part of that. Later this summer, we will publish an interim report that sets out a clear direction of travel, with further policy detail to follow in the Budget. As for online voting, in the English Devolution White Paper, the Government recognised the importance of ensuring high levels of turnout. My colleagues at MHCLG will come back with further proposals in due course.

My Lords, what assessment have the Government made of the impact of changing business rates here in London on the West End? High Streets UK has labelled the Bill a bit of a disaster and said it will be bad for growth, bad for investment and bad for jobs, and puts too much burden on Britain’s flagship high streets.

I am grateful to the noble Lord for his question. As he will know, the current business rates system, with temporary reliefs for retail, hospitality and leisure, creates a yearly cliff edge for the sector, disincentivises investment, creates uncertainty and places an undue burden on our high streets. Exactly because of and recognising that, to support our high streets, the Government announced at the Budget last October our intention to introduce permanently lower tax rates for retail, hospitality and leisure properties with a rateable value below £500,000 from 2026-27. The rates will be set at the Budget this autumn so that the Government can take account of the revaluation outcomes and the broader economic and fiscal context in their decision-making.

My Lords, can the Minister say which of the recommendations set out in the 2023 report on business improvement districts have been implemented? In particular, what consideration have the Government given to reinstating the BID loan fund? What plans are there to set up more property owner BIDs outside London, as the report recommended? Are there any plans to assist with the setting up of BIDs in regions in the north and east, where they are scarce?

I am grateful to the noble Lord for his question. On this Government’s proposals for improving BIDs, the English Devolution White Paper, which I mentioned, set out our intention to strengthen BIDs. We will come forward with further proposals to do so in due course.

My Lords, over the years I have run a number of small businesses. In England, any small business with a rateable value of £12,000 or less is entitled to a 100% rebate. Do the Government have any plan to increase that threshold from £12,000?

We have set out very clearly that we want to go further to modernise the system, over and above the tax cuts that I set out for small properties, exactly for the reasons my noble friend sets out. We have published a discussion paper setting out priority areas for reform that highlights further areas, including how to incentivise investment. Later this summer, we will publish an interim report setting out a clear direction of travel. We will then set out further policy detail in the Budget this autumn.

My Lords, could the Minister consider the position of ABIDs and perhaps, when the Government refuse a situation, provide some more incentives for ABIDs, so they act more like a local levy for seaside towns?

I am very happy to take that away and discuss it with my colleagues in MHCLG.

My Lords, we on these Benches broadly support BIDs and would not want to upset the good arrangements that exist. I welcome the Minister’s assurances on these issues, as far as they go, but could he undertake to come back to the House and inform us if developments suggest that their future is in doubt, given their importance right across the country?

Yes, absolutely, although I do not quite see why their future would be in doubt; as I said, we have set out our intention to strengthen them. We will bring forward proposals to do exactly that. I do not see that the wider business rates reform agenda we have set out would in any way impact the important work that they do.

My Lords, I, too, pay tribute to my noble friend Lord Pitkeathley for the work he does in support of business improvement districts, but I also pay tribute to business improvement districts themselves for the extraordinary work they do in improving the nature of, usually, town centres, but it might be different areas, and also in reducing crime and disorder in those areas. In the light of the Prime Minister’s foreword to the strategic defence review—I refer to my interest as chair of the National Preparedness Commission—in terms of the national initiative that he is talking about and the shared endeavour to improve our preparedness and resilience as a nation, does the Minister not see that there is a particular role for business improvement districts in ensuring that local areas are indeed resilient against all sorts of attacks and threats and that businesses themselves are making a contribution to that process?

I am grateful to my friend for his question. I will say honestly that I had not thought of it in that way before, but I can absolutely see the point that he is making. My noble friend started his question by talking about the important role that BIDs play. There are, as he knows, more than 340 BIDs now operating in the UK, which are cumulatively investing more than £154 million each year in their local areas. I think the type of initiative that he described is exactly the type of work that they, in some areas, do, and I am sure could do more widely. So I very much agree with the point that my friend makes.

My Lords, are the Government considering using business rates to encourage live music in pubs and clubs? That could have a massive effect on making, certainly pubs, more interested in providing music on weekends.

That is a very interesting proposal from my noble friend. As I say, we will set out an interim report later this summer, setting out a clear direction of travel, and let us see whether those ideas are included.

Following the question asked by the noble Lord, Lord Harris, does the Minister know or will he research what proportion of BID money is being spent on foot patrolling by the private security industry in areas where we thought the police were supposed to be doing it and where we are already paying for it separately?

I am very happy to follow the noble Lord’s suggestion and research that. I do not know the number off the top of my head, but in the spending review, we set out important new investment in the high street, particularly the security of the high street, because we know that, if we want people to go into their high streets and spend money and time there, they need to feel safe. Therefore, investment in crime reduction and deterrence in the way that the noble Lord sets out is important.