Draft Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2026

David Simmonds Excerpts

Wednesday 21st January 2026 General Committees

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve with you in the Chair, Mr Turner, for what I think is the first time.

As the Minister outlined, the purpose of the draft regulations is to round off the otherwise larger increases in business rates, but it is important to put that in context. A short time ago, we had a general election, in which the Prime Minister said that there would be a new regime of “permanently lower business rates”. I appreciate that the Treasury is currently hiring a new business rates tax adviser, but this issue is not going away.

In Prime Minister’s questions this afternoon, my hon. Friend the Member for Rutland and Stamford (Alicia Kearns) referred to a 2,000% increase in the business rates applying to one of the pubs in her constituency. Previously, the hon. Member for York Central (Rachael Maskell) had reported that a survey showed an average increase of 41% for hospitality businesses, 44.4% for music venues and 27% for independent shops in her constituency. The body that represents the United Kingdom’s gym and health providers, ukactive, reports an average increase of 60% in the business rates for which its members are liable. The National Pharmacy Association has reported that its members are having to remortgage their homes and put their life savings into their businesses to meet the business rate increases proposed by the Government. To date, over the last 12 months, there have been a net 200,000 job losses in the retail sector, which businesses report are primarily due to increases in business rates and national insurance contributions.

It is clear that that reflects a very substantial, permanently higher rate of business rates and an unwelcome U-turn by the Government. All of us can see the practical impact in our communities, and I would bet that there is not a Member in this room who has not been lobbied by local pubs, cafés and shops about the impact that this is having on their business.

[Mr Andrew Snowden (Fylde) (Con)]

Does the shadow Minister agree that this is creating a perfect storm and that the reason so many people are getting in touch with us—many MPs on both sides of the House will have owners of pubs, restaurants and bars getting in touch with them—is that this business rates change will crystallise that? In coastal areas like Fylde, people have less money in their pockets, so there are fewer visitors to hospitality venues to start with. Those businesses already face significant cost increases because of changes to national insurance and other changes in the tax system. As a result, these 40%, 50% or 60% changes in business rates will be the final straw for many of those businesses.

[The Chair]

Order. We have an hour and a half to debate the regulations, but interventions must be a bit shorter.

[David Simmonds]

My hon. Friend has outlined in very clear terms what any of us in this room could on behalf of our constituencies. There will be different local dynamics, but everywhere is suffering as a consequence of the increased taxes on businesses. Government Members might not wish to hear such messages from Opposition Members—and that is understandable, because this is politics—but they might listen to the hon. Member for Burton and Uttoxeter (Jacob Collier). In Prime Minister’s questions, he said that “any wins” had been “wiped out” by the increase in business rates, compared with what was proposed through transitional relief, and he reported to the House 60% and 70% rises in business rates affecting his local pubs.

I will conclude with some questions for the Minister. First, what is the net benefit of all these measures—the increases in business rates and the transitional relief—to local councils? We know from the local government finance settlement that two thirds of local authorities in England lost net funding from central Government as a consequence. Given the substantial increase in business rates income that this would imply, what will the overall impact on local government funding be?

Secondly, what assessment has the Department made of the impact that this will have on high streets and local businesses in particular? Many of those business have been lobbying us because the family business tax, the rise in national insurance and the interaction with the changes in the point at which national insurance is charged have put huge pressure on them. The impact of these business rates on top of that is enormous.

Thirdly, what role have the local reliefs, which were briefly touched on by the Minister and are set out in the explanatory memo, played in the determination of the funding settlement? Although the fig leaf is offered that local reliefs may be available, it is clear that the Government’s assumption is that all these increases will be implemented in full before any consideration is given to additional funding. What consideration has the Minister given to a return to the local authority business growth incentive business rates regime, which was designed to incentivise local authorities, through additional support from central Government, to look to create opportunities to support local businesses and high streets, in a way that we know was very effective?

The Prime Minister said on 7 January that the Government were in talks to see

“what further support and action we can take.”—[Official Report, 7 January 2026; Vol. 778, c. 260.]

That was days after he acknowledged that as a result of this settlement, pubs and hospitality, in particular, “will struggle.” The question for Opposition Members is, is this it?

[The Chair]

Before I invite Members to bob if they want to catch my eye, may I ask them to stick strictly within the confines of the draft regulations, please?

--- Later in debate ---

[Samantha Dixon]

Today’s debate illustrates clearly how passionate Members are about their local high streets and the businesses in their constituencies, which I completely recognise. I will try to address Members’ comments.

The introduction of the permanently lower rates for eligible retail, hospitality and leisure properties, paid for by the high-value multiplier, is just the first step in the Government’s programme to transform the business rates system, which the hon. Member for Ruislip, Northwood and Pinner asked me about. In September 2025, the Government published an interim “Transforming Business Rates” report to set out what we will do next to meet our objective of delivering a fairer business rates system that supports investment and is fit for the 21st century. At the Budget, a call for evidence was published on the role of business rates in business investment, which will help us to develop a system that better supports investment and economic growth. The transformation of the business rates system is a multi-year programme happening throughout this Parliament, with much more to come.

I turn to other issues. The hon. Member asked about the impact on local government. We hope that the revaluation will be, as much as possible, neutral. We will adjust the business rates retention scheme to offset the impact on local revenues.

[David Simmonds]

I am grateful to the Minister for addressing that point. It slightly begs the question, however, if the main purpose of these increases—we have heard about 2,000%, 60% and 27% increases for independent shops, as well as 200,000 job losses—is to raise additional business rates income, but the effect on local government finance is neutral. What on earth is the point of inflicting all that pain on the business sector if it does not put a single extra penny in the pockets of local government?

[Samantha Dixon]

We do recognise that business rates make up about a quarter of local authorities’ core spending power and they support critical local services, but the revaluations maintain fairness in the system by redistributing business rate liabilities among ratepayers to reflect recent market conditions. Standard features of the business rates tax system mean that between financial years, tax take may increase or decrease due to inflation or changes in relief. Hon. Members will be aware that rates rise in line with inflation and change annually to reflect inflation. On the wider impact on local government, I will respond to the hon. Member for Ruislip, Northwood and Pinner in writing.

Members have raised the issue of the high street. It is important to note that the temporary and unfunded—I repeat unfunded—40% RHL relief for 2025-26 will end on 31 March, and will be replaced by the permanent lower retail, hospitality and leisure tax rates from 1 April. The change, coinciding with the revaluation, means that some retail, hospitality and leisure properties will need greater support to help them transition to their new bill.

We have provided exactly that through expanding the supporting small business relief scheme, which will, as I outlined, cap bill increases for ratepayers who are losing some or all of their small business rate relief, rural rate relief, 2025-26 retail, hospitality and leisure relief, or 2023 supporting small business relief, at the higher of either £800 or the equivalent transitional relief cap. My hon. Friend the Member for Crawley put it most ably: to vote against this particular measure would be to see businesses facing higher bills, which is not what the Government want.

I thank all Members for their contributions to the debate. As my right hon. Friend the Chanceller announced at the Budget, the business rates support package, of which this relief is a part, will help ratepayers facing bill increases as a result of the revaluation to move gradually over time to their new liability. I am grateful for the opportunity to speak on this matter today, and I commend the draft regulations to the Committee.