To ask Her Majesty’s Government whether they have proposals to reform or abolish business rates, particularly those applicable to the retail trade.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest, as a member of my family works in the retail trade.
My Lords, this Government have introduced a number of measures that have reduced business rates significantly. We have also published a discussion paper about ways to improve the administration of the rating system.
I thank my noble friend for that Answer, and in particular pay tribute to the way in which she has taken forward some of the earlier questions that I have asked on business rates. Is she aware that over the period from 2012 to 2016, business rates will have gone up by 18%? Thankfully, the production from corporation tax will have fallen by 18%. Against that background, is it not time that we had a complete reassessment of business rates and how they affect our high streets? Nowhere else in the world is our high street, or anybody else’s high street, affected by such a fixed-rate tax against, and regardless of, the trading that goes on in the retail scene.
My noble friend is a strong advocate for the retail trade and I am proud that this Government are a strong supporter of the retail sector. It is important for us not to see business rates in isolation. We have the most competitive tax system in the G20 for businesses. It is important that I emphasise to the House that the measures to reduce business rates for businesses announced in the Autumn Statement last year are worth £1 billion. Half of them were aimed specifically at the retail sector and town centres.
My Lords, does the Minister not agree that there is a big issue still to be addressed? In particular—there are many other points that I could make but time will not allow—there is the differential between small shops and the bigger retailers. There is a massive unfairness there which has been evident for some time, and I very much hope that the Minister and the Government will consider looking at this serious issue.
There is no difference in treatment in terms of the business rate between businesses on the high streets and those located outside town centres. As I mentioned, the Government have made sure that their support is very much focused on the retail sector. We have made other measures, particularly the £1,000 discount for those with rateable values of below £50,000, which is aimed very much at small businesses.
My Lords, does the noble Baroness agree that the best way to support small businesses would be to prioritise the cutting of business rates in 2015 and freezing them in 2016, as we have proposed, rather than provide a corporation tax cut to some 80,000 businesses? That would help 1.5 million small businesses. Is the noble Baroness aware of reports that identify the negative effects of the Government’s decision to delay the next business rate revaluation? In particular, due to the delay, struggling retailers in the north of England are now subsidising luxury retailers in London’s West End.
As the noble Lord knows, we decided to postpone revaluation to provide certainty and stability. The Valuation Office Agency suggests that 800,000 premises would have seen a real-term increase in their rates at a 2015 revaluation had we carried one out. This would compare to only 300,000 seeing reductions, so I suggest the decision that we made was the right one.
My Lords, how does my noble friend think that high street shops can compete when they have the burden of rents and rates, and are competing with online retailers such as Amazon, which pay no corporation tax? Is it not time that we looked at the tax system with a view to the implications of the growth of online shopping?
As my noble friend knows, the way in which the Government consider the tax regime for businesses as a whole is something that we continue to study. Fundamentally, we are anxious to ensure that we have the best tax system for British business and that we continue to encourage growth in this country.
My Lords, I draw attention to the register of interests in which I disclose that I am a director of Blue Inc, a profitable company with some 200 shops in the UK. Does my noble friend agree that the Labour Party proposals of an annual revaluation of all retail properties to assess rates would just produce another administrative burden on retailers at a time when they least need it?
The Labour Party policy paper to which I think my noble friend is referring suggests a range of measures. I can be very clear on one measure with which we disagree: a measure to introduce business rates for farmland and farm buildings, which would certainly lead to an increase in the cost of living by forcing up food prices.
The noble Lord might care to know that the paper to which he refers is not Labour Party policy or part of the Labour Party’s policy review. That is another fiction from Members opposite.
I am glad to hear that the noble Lord is not intending to introduce business rates for farmers. I am sure they will be very pleased to hear that.
With reference to the question asked by my noble friend Lord Forsyth, surely it would be right for the Government to look again at online retailing. Shops in the high street bring life to our communities; online retailing spells death for them.
Both my noble friends make an important point about the increase in online shopping, which is the new way in which people are spending their money and doing their shopping. It is important for us to introduce measures that support high streets and town centres, and that is what we are doing. Alongside these changes in business rates, we are making changes to reduce burdens on parking and making sure that town centres and high streets thrive. We have to be able to combine what we are doing on business rates with other measures that are particularly targeted at high streets.
My Lords, it is well known in the retail sector that a large number of the workers are part-time. They earn very little money. We have recently seen that not even the minimum wage is paid by some retailers in that area. Will the Minister look at the question of business rates and see the extent to which they will raise the standards of working people in the retail sector?
We have done a huge amount to support the retail sector in the context of business rates. Last year, in the Autumn Statement, we introduced measures worth £1 billion to the business sector, half of which went to the retail sector. Businesses are starting to thrive and it is important that we do not forget that today we were able to see that, under this Government, 2 million new private sector jobs have been created.