Non-Domestic Rating (Multipliers and Private Schools) Bill

Commons Reasons

15:22:00

Motion A

Moved by

That this House do not insist on its Amendment 1B, to which the Commons have disagreed for their Reason 1C.

1C: Because the Lords Amendment interferes with the public revenue and affects the levy and application of local revenues, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

My Lords, in moving Motion A, I will also speak to Motions B to F. Motions A to D and Motion F ask noble Lords not to insist on their Amendments 1B, 2B, 7B, 8B and 15B to 15E. The other place disagreed to these amendments on the basis that they interfere with the public revenue and affect the levy and application of local revenues. The other place did not offer any further reason, trusting that this reason is sufficient. Amendments 1B, 2B, 7B and 8B seek to allow the Treasury to exclude healthcare and anchor stores from the higher multiplier through regulations. As set out in this House previously, these amendments are unnecessary as the powers they seek to create already exist in the Bill. The measures set out in Clauses 1 to 4 deliver on the Government’s commitment as set out at the Autumn Budget. Furthermore, they represent the first step of this Government’s work to transform the business rates system. It is essential that the Government are able to progress this work by taking this first step. Further reforms will come, as the Government have made clear, and further information on this will be set out in the coming months. We want to start our journey with the Bill. Therefore, I respectfully ask noble Lords not to insist on their amendments. Amendments 15B to 15E would move the decision to remove charitable rate relief from private schools from one being made by Parliament in the Bill to one that would be made by the Secretary of State through regulations, subject to the affirmative procedure. I have already stated the Government’s view that this is a matter for Parliament to decide, which is why we have invited Parliament to do so through the Bill. For these reasons I ask that noble Lords do not insist on these amendments. Motion E asks the noble Lord, Lord Thurlow, not to insist on his Amendment 13B. The other place disagreed to this amendment on the basis that the Government have already agreed to publish information about the new multipliers and further provision is not necessary. The first part of Amendment 13B is concerned with a review that would consider the impacts of Clauses 1 to 4 on properties with a rateable value close to £500,000. I understand that this is seeking to further understand the way that the multipliers in business rates operate and whether the thresholds within the system serve as a disincentive to invest. As previously set out in this House, the Government have already committed to looking at this question through the broader transforming business rates work, and therefore to stipulate this in legislation is not necessary. The second part of Amendment 13B seeks a review of the merits of a new use class within business rates and an associated multiplier for online fulfilment warehouses. As I have set out previously, this question has arisen over recent years and is something in which the Government have an interest. First, I should be clear to the House that the Government’s intention at this time is to have only one higher multiplier and for that to be applied to all properties with a rateable value at or above £500,000. However, I understand that the noble Lord’s amendment is more concerned with the ability to target online-focused warehouses. I assure the noble Lord and the House that the Bill already provides the Government with the ability to introduce additional higher multipliers in future if required. The noble Lord’s amendment explored how these online warehouses can be identified in business rates. We have looked at this again, and I remain sure that the best place to tackle this is through the digitalising business rates project. This project links together HMRC and VOA data from which we expect to be able to identify online businesses operating distribution warehouses separately from businesses that operate on the high street. I hope I can give the noble Lord some further reassurance on what we have found. The project will create opportunities to better target business rates policy in future by having access to more comprehensive data. Using this data, the Government could target particular types of businesses within the warehousing sector. I believe this is what the noble Lord is seeking to achieve. Such an approach will do that systematically, using the latest data and technology, and give us the best prospect of a solution that can be fully integrated into the business rates system. We are confident that this approach is preferable to one that looks to categorise how individual warehouses are being used on the ground, especially given that one warehouse used by one type of business may in practice be used in much the same way as another used by another type of business. Attempting to categorise warehouses by how they are used as opposed to who they are used by, without more accurate data on the businesses using them, risks capturing warehouses used by businesses that we are seeking to protect, creating a far higher burden on high street retailers. I am aware that the noble Lord feels that this is valuable, and I recognise that. I hope he can understand why the Government cannot accept the amendment. However, we are prepared to keep engaging with him on this matter, be that directly with him or with the three professional bodies he mentions in his amendment. On this basis, I respectfully ask the noble Lord not to insist on his amendment. I beg to move.

My Lords, I declare my interest as a vice-president of the Local Government Association. The Bill not only fails to deliver on the Government’s manifesto but is far from the reform of the business rates system that was promised and will be a damaging blow to our high streets. We have debated the numerous issues present in the Bill a number of times, and I remain exceptionally concerned about the higher multiplier that will undoubtedly hit anchor stores in town centres; the impact of the blunt £500,000 threshold on businesses with values close to that margin, which will affect their decisions about investment; and the Government’s decision to place a tax on education. We have urged them time and again to rethink, but they remain unmoved by our arguments and, more importantly, by the views of people and businesses across the country. I hope that anchor stores will not leave the high street and that this will not result in the destruction of our town centres, but the Government are making it more difficult for those businesses with this blunt tool, which will hit larger stores with higher business taxes. The Government have rejected even our amendments that would have allowed the Secretary of State to exempt certain businesses if this proved to be damaging, but they are so confident in this increase to business rates that they do not need that power to reverse these decisions. Only time will tell whether that confidence was misguided.

15:30:00

A similar amendment was tabled to allow the Secretary of State to reverse the tax on education but, again, it was rejected. I understand that the Government will point to the figures that suggest that there has been no change to the number of pupils in independent schools, but these figures do not consider the lengths to which a parent will go to ensure that their child’s education is not disrupted.

The data will be more telling in a year’s time. We offered the Secretary of State a discretionary power to reverse this policy; they refused it. Despite the combined effect of this tax with the appalling imposition of VAT and the devasting rise in employers’ national insurance contributions, I hope that parental choice remains, and I hope that children do not have their educational years disrupted by this Government—but I am concerned about the likely impacts of this tax on some children’s education.

We remain concerned that this tax creates a two-tier charity system, whereby the Government are able to tax charities when they disagree with their purposes. This is a dangerous precedent to set, and the Government’s decision to continue down this route despite the number of concerns that have been raised is, at least, disappointing.

However, this is a House of scrutiny and, given the financial deadlines associated with this Bill, I will not be pressing any further amendments. But I sincerely hope that, in 12 months’ time, our high streets will not have been hollowed out any further, although I am extremely concerned that this Bill will only worsen their decline and, as importantly, that children will be forced to leave independent schools, disrupting their education and putting more pressure on our state system.

My Lords, last week there was a considerable majority of support in this House for an amendment tabled in my name, which enabled the Government, by regulation, to prevent the higher multiplier from being applied to NHS properties, mainly consisting of 290 of the major hospitals in England. I was surprised to hear the Minister say just now that there is sufficient leverage within the Bill to enable those changes to be made. I ask him now to write to me to explain how that will work. It is most disappointing that the Government felt unable to accept the amendment. However, it is clear that the Government have very challenging decisions to make. Nevertheless, given that reducing waiting times is a key priority, we on these Benches were hoping for—and indeed hopeful of—government support on this issue. We recognise at this stage that we can take the Bill no further and we will not press any further amendments. Finally, I want to give thanks to all those who have taken part in this interesting Bill, which attracts those of us who like to understand how business rates work, who benefits and who does not. We look forward to the digitalisation of the whole process, whereby changes could then be made. From these Benches, we thank all who have taken part, including the Whips’ Office, which has given me enormous support, as well as the Minister and his team for all the helpful conversations that we have had. They did not get anywhere but, nevertheless, I thank the Minister for always being willing to meet.

My Lords, it has been an interesting and lively debate through all its stages, covering the many aspects of the broad landscape of this Bill. I thank all who took part and supported my amendments from across the House right through to this final stage. I add my thanks to the Minister and his team, who have spent a good deal of time on a number of occasions, willing to engage with me to try to find compromise and a way through the complicated and difficult elements of the Bill, which have become quite technical and needed a deep dive. I feel a sense of real regret. The Government have missed a real opportunity to deal once and for all with the injustices heaped on the small high-street retailers, which continue to subsidise the rates paid by these mammoth non-high-street retail fulfilment centres: the internet operators exclusively—not the ones on the high street that have fulfilment centres but the ones that are not on the high street. It is tragic that this opportunity has been missed. It is a wrong that the Bill could have put right. The Minister’s proposals address aspects of this, but possibly not for many years to come. The digitisation process of non-domestic rates, which we have discussed, is in hand and planned for 2028, but I wonder whether, like many other government initiatives, it will take many years longer than expected. What a waste. It was not too difficult—an opportunity missed. It is not my desire to prolong the debate, notwithstanding the reasons cited for refusal in the other place, which left the door open. I think we have done enough, and HMG should not be frustrated in their manifesto items. I thank the Minister for his opportunity to continue a dialogue going forward, which I would like to engage in if I have not been put in front of the firing squad as a hereditary before that time comes. I will not press my amendment.

My Lords, I will say a few words about independent schools. Throughout, the Government’s position has been in essence that we have to take away—they say—some of the resources of 7% of our country’s schools to enable 93% to make improvements. State schools will gain little or nothing from Labour’s tax raid, which will simply harm independent schools. Throughout our debates, I have tried to provide a voice for small independent schools, as president of the Independent Schools Association, whose 720 members are, for the most part, cherished small local schools. As I have said several times, 40% of independent schools have under 100 pupils. Their future is now in jeopardy, thanks to this Government. Ministers will be held to account here in Parliament and in the country at large for the damage their policies will do to these schools, which contribute so richly to our communities in spheres such as special needs, music, the arts and sport, as I and a number of noble friends have shown in these debates. Labour’s discriminatory tax burdens threaten their very survival.

My Lords, I thank all noble Lords who took part in this short debate, as well as all those who have dedicated their time and efforts to scrutinising this Bill. I am especially thankful to the noble Baronesses, Lady Barran, Lady Pinnock and Lady Scott of Bybrook, the noble Lords, Lord Fox, Lord Jamieson, Lord Thurlow, Lord Moynihan, Lord Lexden, Lord Black of Brentwood, Lord Storey and Lord Shipley, and the noble Earl, Lord Lytton. The time and consideration noble Lords have given to this Bill are greatly appreciated and, while I acknowledge that it is not always possible to see eye to eye, I hope they understand the appreciation I have for their efforts and expertise. I am grateful to the noble Baronesses, Lady Barran, Lady Pinnock and Lady Scott, and the noble Lord, Lord Thurlow, for their agreement not to insist on these amendments. Through the Bill, we are beginning to deliver on our ambition to transform the business rates system. In taking our first vital step on that path, we are ensuring a sustainable, funded, permanent tax cut for retail, hospitality and leisure properties that will be provided from April 2026. Furthermore, the Government are delivering on their commitment to break down barriers to opportunity by removing the business rates charitable relief from private schools, to help raise vital revenue to support the delivery of the Government’s commitments to education and young people. I am aware that the noble Baroness does not agree with the Government on this matter, but I hope she understands our position, and that it is vital that we take the tough but necessary decisions to ensure that the same opportunities are afforded to all children, regardless of where they come from or their financial background. The noble Baroness, Lady Pinnock, invited me to write a letter on a question. I am going to reject that invitation because I have the answer for her now. She asked specifically about the powers to exclude classes of properties from the higher multiplier if we wanted to in future. We have the powers in Clause 3. Specifically, the powers referred to in that clause allow us to exclude classes of hereditaments from the higher multiplier. I thank the noble Lord, Lord Thurlow, for his remarks. I am aware that he is concerned about the timetable for the digitalising business rates project. The solution to that problem lies in the linking of business and property data, and in the project itself. I look forward to engaging with the noble Lord, along with officials. Once again, I thank him and all noble Lords for not insisting on their amendments.

Motion A agreed.

Motion B

Moved by

That this House do not insist on its Amendment 2B, to which the Commons have disagreed for their Reason 2C.

2C: Because the Lords Amendment interferes with the public revenue and affects the levy and application of local revenues, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion C

Moved by

That this House do not insist on its Amendment 7B, to which the Commons have disagreed for their Reason 7C.

7C: Because the Lords Amendment interferes with the public revenue and affects the levy and application of local revenues, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion D

Moved by

That this House do not insist on its Amendment 8B, to which the Commons have disagreed for their Reason 8C.

8C: Because the Lords Amendment interferes with the public revenue and affects the levy and application of local revenues, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motion E

Moved by

That this House do not insist on its Amendment 13B, to which the Commons have disagreed for their Reason 13C.

13C: Because the government has already agreed to publish information about the new multipliers and further provision is not necessary.

Motion F

Moved by

That this House do not insist on its Amendments 15B, 15C, 15D and 15E, to which the Commons have disagreed for their Reason 15F.

15F: Because the Lords Amendment interferes with the public revenue and affects the levy and application of local revenues, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Motions B to F agreed.