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Businesses: Business Rates

Volume 751: debated on Monday 13 January 2014


Asked by

To ask Her Majesty’s Government what assessment they have made of the impact on high street businesses and employment of measures relating to business rates announced in the Autumn Statement.

My Lords, our £1 billion package will benefit all 1.7 million business rate payers. The measures announced in the Autumn Statement include the annual increase to be capped at 2%, around 360,000 businesses to receive 100% small business relief, and around 300,000 shops, pubs and restaurants to get a £1,000 discount. The package exceeds expectations and was welcomed by the CBI and the British Retail Consortium, and it will provide the support that high streets need to grow and provide employment.

I thank my noble friend for that Answer, but does she agree about the importance of the problem of empty shops on the high streets, made worse by empty rates introduced by Gordon Brown and the Labour Party some time ago? What action are the Government taking to address that matter?

My noble friend is right that this pressure on businesses was made worse by the tax hikes on empty premises introduced by Gordon Brown. To help to relieve that pressure, and as part of our £1 billion business rate package announced at the Autumn Statement, we also included a relief that provides a 50% discount for 18 months for new occupiers of retail premises that have been empty for a year or more. This is on top of exempting all empty new-build property from business rates for 18 months.

Is my noble friend aware that the Government’s actions have been exceedingly well received and that many in the business community would like to say “Thank you for listening for once”? Nevertheless, is it not true that the business rate today, particularly in the retail sector, where more than 20% of trade is done online and those companies pay no business rate, is no longer fit for purpose? Therefore, will Her Majesty’s Government look to review in toto the impact and structure of the business rate as we move forward?

My noble friend is right that the measures that we introduced were born out of listening to businesses, and measures have been introduced that support them to grow the economy without adding any extra burdens on other taxpayers. I make two points. Online retailers do, of course, still pay taxes, including business rates, on the properties that they use to facilitate their businesses. As to the business rate system itself, as my noble friend will know, my right honourable friend the Chancellor keeps all taxes under review. He is certainly looking at the administration of business rates and this review will take place later this year.

My Lords, we are in the era of the business rate retention scheme but there are emerging representations from councils, via the LGA, that currently the risks of the new system outweigh the rewards. This is partly to do with appeals but also business rates avoidance—exploiting the current relief and discount framework. What specifically are the Government doing to address these concerns about business rates avoidance?

The noble Lord will know that one of the changes that we have introduced is to allow local authorities to retain 50% of all the business rates that they raise. This is so that they can enjoy and benefit from business activity in their area. We have also changed the law so that local authorities are able to introduce their own discounts, and since April this year central government is funding 50% of those discounts. We think this is the right thing to do to make sure that there is the incentive there for new businesses and local authorities to receive the benefit from that activity.

My Lords, many of the shops in secondary retail locations will never return to retail. Given the figures that we have seen on the growth of online shopping, it seems inevitable that they will remain empty. Does my noble friend agree that the sensible thing is for local authorities to encourage the ground-floor units, as well as those above, to turn into residential accommodation?

My noble friend is right to highlight the changes in the way that consumers are shopping and spending their money. We have introduced, as she has acknowledged, some flexibility to high streets and are currently consulting on additional measures that will allow towns and high streets to adapt even further to this new world.