My Lords, the Government are conducting a review of business rates in response to concerns that the system is in need of reform. The system should be fit for a 21st-century economy, and that is why the review, which will conclude at the Budget, is looking at all aspects of the system, including reliefs and exemptions. We recognise the important contributions that the arts and museums make to the culture of the UK, education and the economy.
My Lords, I thank the Minister for that reply, but will he acknowledge that the loss of all, or even part, of what is in effect a well-established funding stream would significantly threaten the viability of many productive and highly respected arts bodies across the country, including art centres, independent museums, orchestras, and theatres large and small—from those of an international stature to the smallest local organisations—and that in the regions it would simply deepen what is already in some areas a calamitous situation for arts and cultural services?
I note the noble Earl’s concerns but it may give him some comfort to know that the Government recognise the importance of the charitable sector and that the stringent management of costs in managing charities can make a critical difference to their viability. The Government also understand that arts and culture generates 0.4% of the UK’s GDP, as highlighted by the Centre for Economics and Business Research. Museums and galleries are a key motivator for encouraging tourism. We committed that from 2017 the business rate system would better reflect our modern economy by providing clearer billing, better information-sharing and a more efficient appeals system.
My Lords, I declare my registered interests in charities, including membership of the board of the Royal Shakespeare Company, which is currently able to take advantage of tax relief on production costs, as indeed are all other performing arts companies. Is the Minister aware that the benefit of this very welcome and indeed enlightened tax reform will be entirely lost if mandatory business rate relief is withdrawn? Can he reassure the House that the Government are not proposing to give with one hand and take away with the other?
I cannot prejudge for the noble Baroness the result of the review. However, when we launched it, we did say that we recognise that some sectors, such as charities, play an important part in the community and that the Government have no intention of increasing business rates for those deserving of relief.
Is the Minister aware that many vulnerable communities depend on charitable organisations, particularly in the light of the public service cuts? Will he give an undertaking that before any such measures may be introduced, the impact on the most vulnerable communities will be assessed and taken into account?
My Lords, given the parlous state of many of these bodies, as we have heard, have the Government made a precise assessment—or will they—of exactly how much this relief helps these organisations and how they would be affected should it be cut?
I have no doubt that the review will also cover that. However, it is pretty clear that the business rate relief does indeed help those very important charitable organisations. As the noble Earl, Lord Clancarty, mentioned, orchestras and other similar organisations rely on this business rate relief.
My Lords, does the Minister agree that organisations including theatres, art centres, galleries and independent museums could be negatively affected by these changes? Therefore, will the Minister agree that a proportion of the business rate relief should be mandatory, considering the tight finances of these very important cultural organisations?
My Lords, will the Minister clarify the position of the review with regard to arts organisations based in Wales, Scotland and Northern Ireland? Given that the arts are a devolved matter, as are some responsibilities for business rating, will the review consider the circumstances in those three areas?
The review will take account of those areas but, as the noble Lord made clear, there is devolved responsibility, particularly for business rate relief. I am thinking particularly of Scotland but I am sure that it is the same in Wales. There is of course contact with the Governments in Wales and Scotland on this matter, and this will be part of the review.
My Lords, the discussion so far has been about mandatory rate relief, which is about 80% of the rates bill met by the institutions we are talking about. However, a problem is also arising in the discretionary relief for the last 20%, which can be a very substantial amount of money in some areas. Will the Government explain what they propose to do, because over 20% of institutions reported recently that they have had cuts in that area?