PARLIAMENTARY DEBATE
Non-Domestic Rating Bill - 25 October 2023 (Commons/Commons Chamber)
Debate Detail
Contributions from James Murray, are highlighted with a yellow border.
Consideration of Lords amendments
Sir Roger Gale
Mr Deputy Speaker
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendment 1. If Lords amendment 1 is agreed to, I will cause the customary entry waiving Commons financial privilege to be entered into the Journal.
Clause 13
Requirements for ratepayers etc to provide information
Clause 13
Requirements for ratepayers etc to provide information
Lee Rowley
The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities
I beg to move, That this House agrees with Lords amendment 1.
14:33:24
Mr Deputy Speaker
With this it will be convenient to discuss Lords amendments 2 and 3.
14:36:50
Lee Rowley
It is a pleasure to return this Bill to this place after its positive reception, both here initially and in the other place more recently. Reforming business rates was a manifesto commitment, and having concluded our review of rates, the Bill seeks to deliver a fairer and more effective business rates system.
The amendments that the Government invite the House to support today are minor and do not change the policy intentions of the Bill, which we have debated before in this place. Two amendments deal with the penalties regime for the new duty on ratepayers in clause 13—they are designed to ensure that the penalties system is fairer—and the third is a minor and technical amendment that removes some obsolete wording as a result of another part of the Bill. I will deal with each amendment briefly.
Lords amendment 1 concerns the civil penalties that the Valuation Office Agency can apply if ratepayers do not provide information under the duty. These include an additional daily penalty of £60, which may only be applied if a ratepayer persistently fails to meet their obligations following an initial penalty notice. The Government have listened to the views of the experts in the other place and agreed to create an additional safeguard for ratepayers by capping the financial value of penalties that can be imposed under this provision. Daily penalties will be capped at £1,800, equivalent to 30 days’ worth of penalties. This change will also bring the valuation duty in line with the separate duty to provide His Majesty’s Revenue and Customs with a taxpayer reference number, for which a cap on penalties is already in place.
Lords amendment 2 concerns the penalty for the criminal offence of knowingly or recklessly making a false statement, an offence that is subject to higher penalties than simply failing to comply. The Bill prescribes that for a higher penalty to be applied, the VOA must be satisfied beyond reasonable doubt that the ratepayer has made the false statement knowingly or recklessly. Having reflected, we have recognised that we need to apply the same burden of proof to the procedure on appeal. The amendment therefore provides that the valuation tribunal must remit a penalty unless it is satisfied beyond reasonable doubt that the ratepayer has knowingly or recklessly made a false statement. This provides additional protection for ratepayers.
Finally, Lords amendment 3 is a minor and technical change to the Local Government Finance Act 1988, as a consequential effect of the provisions in the Bill concerning business rates multipliers. This is simply a drafting correction to improve the clarity of the statute book, and the Government do not foresee any practical effect.
The Government invite the House to agree to three minor amendments that were unanimously supported in the other place. Lords amendments 1 and 2 refine and improve the compliance framework for the new information duty, and Lords amendment 3 is a minor consequential change to improve the clarity of the statute book. I commend them to the House.
The amendments that the Government invite the House to support today are minor and do not change the policy intentions of the Bill, which we have debated before in this place. Two amendments deal with the penalties regime for the new duty on ratepayers in clause 13—they are designed to ensure that the penalties system is fairer—and the third is a minor and technical amendment that removes some obsolete wording as a result of another part of the Bill. I will deal with each amendment briefly.
Lords amendment 1 concerns the civil penalties that the Valuation Office Agency can apply if ratepayers do not provide information under the duty. These include an additional daily penalty of £60, which may only be applied if a ratepayer persistently fails to meet their obligations following an initial penalty notice. The Government have listened to the views of the experts in the other place and agreed to create an additional safeguard for ratepayers by capping the financial value of penalties that can be imposed under this provision. Daily penalties will be capped at £1,800, equivalent to 30 days’ worth of penalties. This change will also bring the valuation duty in line with the separate duty to provide His Majesty’s Revenue and Customs with a taxpayer reference number, for which a cap on penalties is already in place.
Lords amendment 2 concerns the penalty for the criminal offence of knowingly or recklessly making a false statement, an offence that is subject to higher penalties than simply failing to comply. The Bill prescribes that for a higher penalty to be applied, the VOA must be satisfied beyond reasonable doubt that the ratepayer has made the false statement knowingly or recklessly. Having reflected, we have recognised that we need to apply the same burden of proof to the procedure on appeal. The amendment therefore provides that the valuation tribunal must remit a penalty unless it is satisfied beyond reasonable doubt that the ratepayer has knowingly or recklessly made a false statement. This provides additional protection for ratepayers.
Finally, Lords amendment 3 is a minor and technical change to the Local Government Finance Act 1988, as a consequential effect of the provisions in the Bill concerning business rates multipliers. This is simply a drafting correction to improve the clarity of the statute book, and the Government do not foresee any practical effect.
The Government invite the House to agree to three minor amendments that were unanimously supported in the other place. Lords amendments 1 and 2 refine and improve the compliance framework for the new information duty, and Lords amendment 3 is a minor consequential change to improve the clarity of the statute book. I commend them to the House.
Sir Roger Gale
Mr Deputy Speaker
I call the Opposition Front Bencher.
James Murray
Ealing North
I am pleased to respond to these three Lords amendments on behalf of the Opposition. Clause 13 of the Bill introduces new duties on ratepayers to provide information to the Valuation Office Agency in order to support digitisation and a shorter revaluation cycle. It also introduces penalties to promote compliance and establishes an associated appeal system.
Through the Bill, ratepayers will initially face a penalty for failing to comply with the new duties the Bill introduces. If, having received that initial penalty, the ratepayer continues not to comply for a further 30 days, they will be liable for an additional penalty of £60 per day. As we heard from the Minister, Lords amendment 1 caps the total charge arising from that additional penalty at £1,800, equivalent to 30 days’ worth of daily fines. As my hon. Friend the Member for Luton North (Sarah Owen) said on Second Reading, we are aware of concerns relating to the new duty and the associated penalties from those representing shops, and small shops in particular. Although I doubt that all the concerns of those representative organisations and their members have been addressed by the Government, we realise that this limit on the level of the penalty may help to protect ratepayers from much larger charges while still supporting the Valuation Office Agency’s move toward frequent revaluations, which we support. On that basis, we will not be opposing its inclusion in the Bill.
Through clause 13, the Bill also introduces a new criminal penalty, which applies if a person makes a false statement while purporting to comply with the new duties it introduces. The Bill sets out that the Valuation Office Agency will decide whether an offence has been committed, and its decision may be appealed to the Valuation Tribunal for England. As originally drafted, the Bill permits the tribunal to remit such a penalty when it is not satisfied beyond reasonable doubt that the person had knowingly or recklessly made a false statement. Lords amendment 2 would require, rather than merely permit, the tribunal to remit the penalty in such circumstances. We believe that the amendment is sensible, so we will not be opposing its inclusion in the Bill.
Finally, Lords amendment 3 makes a technical change to the Local Government Finance Act 1988, omitting section 140(2)(b) of that Act. That section, which refers to Ministers making separate estimates of rateable value for England and Wales, has become obsolete as a result of clause 15 of the Bill, which makes a separate provision about the calculation of multipliers for England. As this is essentially a drafting amendment, we will not be opposing it either.
I am tempted to talk at much greater length about Labour’s plans to scrap the current system of business rates, replacing it with a system of business property tax that rebalances the burden of business property taxation away from the high street and retail firms towards online tech giants. However, I realise that that may be out of scope and that time is tight, so I will simply confirm our intention not to oppose any of these three amendments.
Through the Bill, ratepayers will initially face a penalty for failing to comply with the new duties the Bill introduces. If, having received that initial penalty, the ratepayer continues not to comply for a further 30 days, they will be liable for an additional penalty of £60 per day. As we heard from the Minister, Lords amendment 1 caps the total charge arising from that additional penalty at £1,800, equivalent to 30 days’ worth of daily fines. As my hon. Friend the Member for Luton North (Sarah Owen) said on Second Reading, we are aware of concerns relating to the new duty and the associated penalties from those representing shops, and small shops in particular. Although I doubt that all the concerns of those representative organisations and their members have been addressed by the Government, we realise that this limit on the level of the penalty may help to protect ratepayers from much larger charges while still supporting the Valuation Office Agency’s move toward frequent revaluations, which we support. On that basis, we will not be opposing its inclusion in the Bill.
Through clause 13, the Bill also introduces a new criminal penalty, which applies if a person makes a false statement while purporting to comply with the new duties it introduces. The Bill sets out that the Valuation Office Agency will decide whether an offence has been committed, and its decision may be appealed to the Valuation Tribunal for England. As originally drafted, the Bill permits the tribunal to remit such a penalty when it is not satisfied beyond reasonable doubt that the person had knowingly or recklessly made a false statement. Lords amendment 2 would require, rather than merely permit, the tribunal to remit the penalty in such circumstances. We believe that the amendment is sensible, so we will not be opposing its inclusion in the Bill.
Finally, Lords amendment 3 makes a technical change to the Local Government Finance Act 1988, omitting section 140(2)(b) of that Act. That section, which refers to Ministers making separate estimates of rateable value for England and Wales, has become obsolete as a result of clause 15 of the Bill, which makes a separate provision about the calculation of multipliers for England. As this is essentially a drafting amendment, we will not be opposing it either.
I am tempted to talk at much greater length about Labour’s plans to scrap the current system of business rates, replacing it with a system of business property tax that rebalances the burden of business property taxation away from the high street and retail firms towards online tech giants. However, I realise that that may be out of scope and that time is tight, so I will simply confirm our intention not to oppose any of these three amendments.
Peter Aldous
Waveney
This Bill, unlike the Levelling-up and Regeneration Bill, on which we considered a further round of Lords amendments yesterday, has progressed through Parliament quickly. Second Reading in this place took place on 24 April, and the Bill will complete its passage today or tomorrow. It was a 2019 Conservative manifesto commitment to carry out a fundamental review of the business rates system. This Bill is the start of that process, but it does not mark its completion, and on its own it cannot be described as fundamental.
The amendments before us are straightforward. Lords amendment 3 is a drafting correction to omit a requirement relating to Wales that is now obsolete. Lords amendments 1 and 2 relate to the new duty to notify. They cap the level of, and increase the burden of proof required for, penalties that will be applied for not complying with the obligation to give required information to the Valuation Office Agency. They are to be welcomed, but as highlighted on Report, this burden should have been much reduced and there should be reciprocal penalties on the VOA.
As I have mentioned, this Bill must mark the beginning of the reform of business rates, not the completion of the task. Business rates remain a heavy and uncertain burden on many businesses. They act as a brake on growth, disincentivise capital investments and are a barrier to levelling up. Reform must be more radical and must be carried out much more quickly.
I urge the Government to strive towards achieving the following goals. First, the uniform business rate multiplier must be reduced to an affordable level. The UBR currently sits at 51p in the pound. At such a high level, it deters investment and ultimately reduces the tax base. It should be reduced to the order of 34p, the level at which it was first introduced in 1990. Lowering the UBR would have the long-term effect of expanding the tax base. A failure to do this will ultimately see the Government increasing the UBR on an ever-shrinking tax base, and in doing so, threatening a vital source of local government revenue.
Secondly, as important as they are to so many businesses, we ultimately need to remove the myriad sticking plaster reliefs that are invariably lobbied for and announced at every spring Budget and autumn statement. They are an implicit admission that the UBR is too high. The Government have been forced to offer many of these reliefs as many businesses are unable to pay a UBR of 51p. By removing these reliefs and reducing the UBR, the Government would simplify the system and reduce the administrative burden on both ratepayers and the VOA. Instead of the annual cliff edges, as businesses lobby for and then nervously wait for a relief to be extended, such a reform would introduce an element of long-term certainty, which would encourage investment.
Finally, while the Government have taken a welcome step in the right direction by moving to three-year revaluations, they must keep going towards the ultimate goal of annual valuations. Shorter valuations are necessary to ensure that business rates respond to the dynamic and increasingly volatile movements of the market. It is vital that rateable values are assessed as frequently as possible to ensure that ratepayers are paying a fair amount.
My last point is to express regret at the curtailment in the definition of a “material change of circumstances”. This is a provision that gives ratepayers recourse to pursue a relief on their business rates bills when circumstances outside their control hinder their ability to run their businesses. Despite the Government’s protestations, the Bill in effect disapplies many common situations of material change that up to now have been acknowledged as such and are even described in the VOA’s own guidance.
In conclusion, this is the start of the reform of business rates, but it is not the finish. There is some way to go before we reach that Magnus Magnusson moment. I thank my hon. Friend the Minister for listening to my concerns during the passage of this Bill, and I am grateful to him for meeting me last month to discuss the situation. I have subsequently written to my hon. Friend the Financial Secretary to the Treasury setting out some ideas as to how this reform process can be continued. I would be grateful if he and she committed to completing the task of the fundamental review of business rates that is so vital for businesses large and small all around the UK.
The amendments before us are straightforward. Lords amendment 3 is a drafting correction to omit a requirement relating to Wales that is now obsolete. Lords amendments 1 and 2 relate to the new duty to notify. They cap the level of, and increase the burden of proof required for, penalties that will be applied for not complying with the obligation to give required information to the Valuation Office Agency. They are to be welcomed, but as highlighted on Report, this burden should have been much reduced and there should be reciprocal penalties on the VOA.
As I have mentioned, this Bill must mark the beginning of the reform of business rates, not the completion of the task. Business rates remain a heavy and uncertain burden on many businesses. They act as a brake on growth, disincentivise capital investments and are a barrier to levelling up. Reform must be more radical and must be carried out much more quickly.
I urge the Government to strive towards achieving the following goals. First, the uniform business rate multiplier must be reduced to an affordable level. The UBR currently sits at 51p in the pound. At such a high level, it deters investment and ultimately reduces the tax base. It should be reduced to the order of 34p, the level at which it was first introduced in 1990. Lowering the UBR would have the long-term effect of expanding the tax base. A failure to do this will ultimately see the Government increasing the UBR on an ever-shrinking tax base, and in doing so, threatening a vital source of local government revenue.
Secondly, as important as they are to so many businesses, we ultimately need to remove the myriad sticking plaster reliefs that are invariably lobbied for and announced at every spring Budget and autumn statement. They are an implicit admission that the UBR is too high. The Government have been forced to offer many of these reliefs as many businesses are unable to pay a UBR of 51p. By removing these reliefs and reducing the UBR, the Government would simplify the system and reduce the administrative burden on both ratepayers and the VOA. Instead of the annual cliff edges, as businesses lobby for and then nervously wait for a relief to be extended, such a reform would introduce an element of long-term certainty, which would encourage investment.
Finally, while the Government have taken a welcome step in the right direction by moving to three-year revaluations, they must keep going towards the ultimate goal of annual valuations. Shorter valuations are necessary to ensure that business rates respond to the dynamic and increasingly volatile movements of the market. It is vital that rateable values are assessed as frequently as possible to ensure that ratepayers are paying a fair amount.
My last point is to express regret at the curtailment in the definition of a “material change of circumstances”. This is a provision that gives ratepayers recourse to pursue a relief on their business rates bills when circumstances outside their control hinder their ability to run their businesses. Despite the Government’s protestations, the Bill in effect disapplies many common situations of material change that up to now have been acknowledged as such and are even described in the VOA’s own guidance.
In conclusion, this is the start of the reform of business rates, but it is not the finish. There is some way to go before we reach that Magnus Magnusson moment. I thank my hon. Friend the Minister for listening to my concerns during the passage of this Bill, and I am grateful to him for meeting me last month to discuss the situation. I have subsequently written to my hon. Friend the Financial Secretary to the Treasury setting out some ideas as to how this reform process can be continued. I would be grateful if he and she committed to completing the task of the fundamental review of business rates that is so vital for businesses large and small all around the UK.
14:46:06
Lee Rowley
I will not seek to detain the House for any more than a few seconds. I express my gratitude to the shadow Minister, the hon. Member for Ealing North (James Murray), for his constructive comments and his willingness to support the amendments, as well as for resisting the temptation to go over again some of the things we have talked about in previous iterations of this Bill.
I also thank my hon. Friend the Member for Waveney (Peter Aldous), who has been involved since the beginning. He has done the House a significant service in both reviewing the Bill and offering his comments during its passage. As he says, this is a significant change and one that I think everybody accepts is a big leap forward, particularly on the revaluation frequency moving from five to three years. While we are on the subject of late 1990s game shows, although in his view we have not yet finished this matter—I accept that we never finish—we are grateful for his “Mastermind” qualities in looking at this Bill over the past few months.
Lords amendment 1 agreed to.
Lords amendments 2 and 3 agreed to.
Economic Activity of Public Bodies (Overseas Matters) Bill (Programme) (No. 2)
Ordered,
That the Order of 3 July 2023 (Economic Activity of Public Bodies (Overseas Matters) Bill Programme) be varied as follows:
(1) Paragraphs (4) and (5) of the Order shall be omitted.
(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.
(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Julie Marson.)
I also thank my hon. Friend the Member for Waveney (Peter Aldous), who has been involved since the beginning. He has done the House a significant service in both reviewing the Bill and offering his comments during its passage. As he says, this is a significant change and one that I think everybody accepts is a big leap forward, particularly on the revaluation frequency moving from five to three years. While we are on the subject of late 1990s game shows, although in his view we have not yet finished this matter—I accept that we never finish—we are grateful for his “Mastermind” qualities in looking at this Bill over the past few months.
Lords amendment 1 agreed to.
Lords amendments 2 and 3 agreed to.
Economic Activity of Public Bodies (Overseas Matters) Bill (Programme) (No. 2)
Ordered,
That the Order of 3 July 2023 (Economic Activity of Public Bodies (Overseas Matters) Bill Programme) be varied as follows:
(1) Paragraphs (4) and (5) of the Order shall be omitted.
(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on the Motion for this Order.
(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Julie Marson.)
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