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Non-Domestic Rating (Preparation for Digital Services) Bill

Volume 660: debated on Monday 20 May 2019

Considered in Committee

[Dame Eleanor Laing in the Chair]

Clause 1

Provision of digital etc services by HMRC: preparatory expenditure

Question proposed, That the clause stand part of the Bill.

It is a pleasure to serve under your chairmanship, Dame Eleanor.

The Government have made significant reforms to the business rates system since our wide-ranging review in 2016. Responding to the needs of ratepayers, we are building a system fit for the 21st century. The tax system must keep pace with the way business operates today, and that means a modern, online system that makes it easier for businesses to manage their bills in one place.

Today’s measure is a small step towards that modern system for business rates. It will give Her Majesty’s Revenue and Customs the ability to carry out the early design work so that it can explore how a new system can be delivered. It does not implement or commit us to a particular approach, and the Government will work closely with local government and businesses when we come to develop detailed proposals. We need the Bill because HMRC’s statutory functions do not currently extend to the administration of business rates. As I have said, further primary legislation will be needed for HMRC to implement the outcomes of this work, so this House will have a further opportunity to look again at the project.

On the detail of the Bill’s clauses, HMRC’s functions are set out in primary legislation in the Commissioners for Revenue and Customs Act 2005. These functions relate to the collection and management of revenue, as set out in section 5 of the Act, and do not extend to the administration or payment of non-domestic rates. Clause 1 therefore provides HMRC with the ability to incur expenditure in connection with digital services to be provided by it for the purpose of facilitating the administration or payment of non-domestic rates in England. Subsections (2) and (3) define digital services and non-domestic rates respectively. Clause 2 sets out that the amendment will extend to England and Wales but apply only to England.

It is a pleasure to serve under your chairmanship, Dame Eleanor.

When we debated the Bill’s Second Reading last week, we were careful not to stray too far from what is a very narrow Bill. The benefit to the Minister was that he was able fill a speech by reading out the Bill. I shall not speak just for the sake of it; I shall cut straight to the chase.

I accept completely that this is enabling legislation to allow Her Majesty’s Revenue and Customs to develop the framework and the product offer, but there are still many outstanding questions that the Government need to answer at this stage, because they are fundamental to the approach that is being taken. For instance, will local councils retain their primary role as billing authorities? Who will underwrite the non-collection losses for businesses that opt to use the new digital system? How frequent will HMRC’s payments to local authorities be?

To what extent will local government be involved in the co-design of the system? As was pointed out on Second Reading, there is a great deal of expertise in our councils when it comes to designing systems and processes and bridging systems across different software products, and I think we can tap into that expertise to ensure that the system is fit for purpose. I am sure that the Minister does not want his CV to bear the legacy of an inadequate IT system, a fate that has befallen many Ministers who have gone before him in various Departments.

We want those fundamental questions to be answered, ideally before work starts and money is spent—and that brings me to my next point: we still do not know how much money will be spent. Oddly, a money motion was tabled but did not proceed to a Division, and there was no explanation even of the ballpark figure: not even a rough estimate of how much the new system might cost. The cost must be weighed against the benefits to HMRC and businesses, and it must be established whether we are getting value for money for the investment.

I must be careful not to stray too far from the subject of the debate, but the Bill does not address the underlying chronic underfunding of local public services. The Minister really must deal with the issue of the £8 billion funding gap, to which we have referred very often in the House.

We do not intend to divide the Committee, but if the Minister is not able to answer those questions today, it would be useful if, at the very least, Ministers could respond in writing.

Let me deal briefly with the hon. Gentleman’s points. He asked some specific questions about the design of the system. As we established on Second Reading, I cannot give him the answers, not because I am trying to hide something but simply because I do not know them at this stage, and nor does anyone else. The Bill will enable HMRC to start its scoping work, and the questions that the hon. Gentleman rightly posed about the design, who will do what, and how intensive the work will be—or, indeed, how light-touch it might be—will be answered during subsequent analyses. Further primary legislation is likely to be required, so the House will have an opportunity to debate those changes.

On Second Reading, the hon. Gentleman raised an interesting point about the potential integration of the new challenge and appeal system with whatever new platform is designed. That point is worthy of consideration. Again, however, at this stage no one knows how much that would cost, how long it would take, or whether it would be a worthwhile addition to the plan of work. I hope the hon. Gentleman will forgive me: I am not being evasive, but we are beginning a process that will answer all those questions and others.

Similarly, I cannot give the hon. Gentleman a specific figure in relation to the budget, because we do not know what the overall system will look like. What I can say is that HMRC’s initial scoping work will be done within its existing resources and budgets, will not, in general, involve the use of consultants, and will hopefully lead to a proposal which, during the spending review, HMRC can decide whether to adopt, depending on the outcome of the review.

Of course local government and, indeed, business should be extensively engaged in the process. I know that HMRC is committed to that, and the hon. Gentleman would no doubt hold me and Treasury Ministers to account if it were not the case. Typically, Select Committees would take evidence from HMRC in hearings as the system was being designed and rolled out over subsequent years, and I have no reason to doubt that that would happen in this instance.

The last question the hon. Gentleman posed was specifically about the frequency of payments. I am pleased to be able to tell him that this was also brought up on Second Reading. Currently, businesses tend to have at least the opportunity to spread their business rates payment over 10 different instalments over the year. That right is prescribed in regulation—the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989—so that flexibility is already in place and is taken up by many businesses. If there was to be any change to that, it would require this place to pass new regulations, so I think the hon. Gentleman can rest assured on that point.

I hope that answers all the hon. Gentleman’s questions, and I ask Members to agree that, if we can take clauses 1 and 2 together, they stand part of the Bill.

In answer to the Minister’s implied question, I have not put clause 2 to the Committee yet, and therefore before I put the questions on clauses 1 and 2 I will immediately, for the sake of clarity, rule that we are debating clause 1 and clause 2 together; I had not said that before, but as both the Minister and the Opposition Front-Bench spokesman appear to have done so I will retrospectively allow it. Also, I will just ensure that no one else wishes to speak on either clause 1 or clause 2 before I put either of the Questions, and I see that that is indeed the case, so let us proceed.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Third Reading

I beg to move, That the Bill be now read the Third time.

This simple, narrow measure will take the first steps towards improving the tax system for businesses by developing a new digital system to administrate business rates. It is part of the Government’s commitment to make Britain the best place in the world to do business.

I would like briefly to thank right hon. and hon. Members in all parts of the House for their contributions during the extensive Second Reading and Committee stages of the Bill. Specifically, I am grateful to those who supported it on Second Reading, highlighting the importance of our efforts to support business and our high streets and of our consulting widely on the development of this new digital system. I am grateful to the Clerks of the House and to officials in both my Department and Her Majesty’s Revenue and Customs for their work on the Bill.

This simple Bill will allow HMRC to develop a new system for the administration of business rates; it has wide support, and I commend it to the House.

I do not intend to talk at length, but I do wish to say that when people look at Parliament and the division that Brexit causes, they believe that our politics is in crisis. Although I know that the topic the Bill addresses is not interesting for many people and I doubt that many people will be watching, it has demonstrated that we can work across parties, and indeed that is how Parliament generally works, although it is not often seen. I accept that this is a technical matter and is not as controversial as Brexit, which I will leave for others. I thank the Minister for reaching out very early in this process, and I wish the Bill success in the other place.

Question put and agreed to.

Bill accordingly read the Third time and passed.