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Non-Domestic Rating Bill

Volume 833: debated on Monday 16 October 2023

Third Reading


Moved by

My Lords, I am grateful to noble Lords on all Benches for their co-operation on the Bill. The passage of the Bill will be a significant milestone in the reform of business rates, following our manifesto commitment and the subsequent Treasury review. When the Government examined the business rates system, they did so in the context of considerable upheaval due to the pandemic. Nevertheless, several themes emerged from which the conclusions of the review were formed.

The debates in this place have underlined the support for measures to improve the responsiveness of business rates to market changes. This was a key request from businesses during our review, the central achievement of the Bill and something I believe we can all be pleased to support.

With the first three-yearly revaluation cycle having now begun, the Government are already developing the new systems for data sharing that will enable regular three-yearly revaluations beyond 2026. Ratepayers and their representatives are the key stakeholders in these reforms, and the Valuation Office Agency will engage closely with them on the design of the future system. It has been pleasing to note that, while there is understandable appetite among noble Lords for even greater frequency, there is also a recognition that implementing such major changes to a tax requires a careful and incremental approach. I will repeat, then, what I said on Report: the Government will monitor these changes and keep the frequency of revaluations under consideration.

The Government’s review of business rates also identified the opportunity to reduce or remove business rates liability where this would support improvements to business premises or the decarbonisation of buildings.

The Bill enables the remaining parts of this package—namely, mandatory improvement relief and heat network relief—to be delivered from 1 April next year. This is a key part of producing a business rates system that better reflects our national priorities.

The Bill of course will now return to the other place for consideration of the Government’s amendments. As noble Lords are aware, these are of a technical but nevertheless important nature. That is true of much of this Bill, which shows the value of the expertise that we have witnessed in debate. Therefore, I will take the opportunity to repeat my thanks to the noble Earl, Lord Lytton, who identified those improvements and who more generally has offered the benefit of his considerable experience in rating to enrich the debates on this Bill. I also extend similar thanks to the noble Lord, Lord Thurlow, and other expert contributors to those debates, including the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Ravensdale.

I thank the Front-Benchers opposite for their highly constructive and pragmatic approach, especially the noble Baronesses, Lady Hayman of Ullock and Lady Pinnock, and the noble Lord, Lord Shipley. It has been clear that the Bill enjoys broad support, but their probing has opened fruitful areas of discussion and given us the chance to say more about the Government’s work. I am sure noble Lords will join me in thanking members of the Bill team for their engagement. As I have mentioned, this is a complex area, and the preparation and delivery of a Bill such as this rely on the commitment and experience of officials from across the Department for Levelling Up, Housing and Communities, the Treasury, the VOA and HMRC. I also thank parliamentary counsel for their drafting of the Bill and their wider support to the Bill team. With that, I beg to move.

My Lords, I thank the Minister very much for her conclusion to this Bill. I extend our thanks also to the noble Baroness, Lady Scott of Bybrook. As she said, the Bill has broad support in your Lordships’ Chamber. I am grateful for the Minister’s assertion that we have introduced a pragmatic approach to the content of the Bill, for I think it is true—we have done just that. I was particularly pleased to hear the Minister say that the Government have a commitment to monitor what actually happens. I know that, on all sides of the House, that will be very gratefully received.

The Bill has a number of very welcome changes: in particular, more regular revaluations, which will be a big help. However, problems remain. Crucially, the level of business rates is too high. Business rates used to be around half the rental level of a property; they are now almost equal. This financial burden is putting a huge pressure on many businesses, not least in the retail sector. I said on Report and at other stages of the Bill that small business rate relief should be further extended, particularly to assist the high street. I also think the Government should not be increasing the level of business rates next year by the rate of inflation.

I hope the Government will take on board comments made on all sides of the House about the need to review the non-domestic rates valuation process itself for its accuracy, its communications and its explanations to business rate payers. The noble Earl, Lord Lytton, has been particularly concerned about the issue of material change of circumstance. There is a new definition and there is a view that I share with the noble Earl, Lord Lytton, that it is too narrow. I am reconciled to what the Minister has said, which is that they will keep it under review.

Thirdly, the Government need to keep a close eye on the level of payments made by warehouses when those warehouses have a retail purpose.

In conclusion, I think that the NDR system is broken. This Bill is a welcome improvement, but it is not a solution. Business rates cannot just be a means of revenue raising by the Treasury. I hope that this Government, and any future Government, will simply bear in mind that we need a major reform of the business rates system.

My Lords, I thank the Minister for her opening remarks. I also thank the noble Baroness, Lady Scott, for all her work on the Bill; I wish her well from our Benches and we look forward to seeing her back in her place very shortly.

As others have done, I thank all noble Lords who took part in the debates on the Bill. It is a short Bill, but it is quite complex in areas, so it has been incredibly helpful to have real expertise and insight from noble Lords—such as the noble Lord, Lord Thurlow, and the noble Earl, Lord Lytton, who have been mentioned—not only for Government Ministers but for those of us leading on the Opposition Benches. It was good to be able to understand the implications of the Bill through the expertise noble Lords brought to the House. I agree with the noble Lord, Lord Shipley, that, having had that, the Bill is now in a better place than it was when it began in this House. It is an important Bill, and it is important that we improve the situation of business rates from how they currently stand. However, I also agree with the noble Lord, Lord Shipley, that there are still a few outstanding issues; that is why it is important that the Government keep their commitment to monitoring the outcomes of the Bill, particularly on the timescales of revaluation. As we discussed in Committee, some of us would have liked to see revaluation done more regularly, so it is important that we keep an eye on that.

As we discussed in the debates on the Levelling-up and Regeneration Bill, as well as on this Bill, there are a lot of concerns about our high streets and our small businesses on them—and business rates are a critical part of how they are supported. So, as we are also coming to the end of the Levelling-up and Regeneration Bill, I hope that, going forward, the Government will still consider different ways in which we can continue to support our high streets and small businesses. Having said that, we were pleased to support the Bill and we welcome it moving forward.

Bill passed.