Draft Non-Domestic Rating (Rates Retention and Levy and Safety Net: Miscellaneous Amendments) Regulations 2026

David Simmonds Excerpts

Monday 16th March 2026 General Committees

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

It is a pleasure to serve under your chairmanship, Mrs Barker.

The Opposition do not propose to divide the Committee on this instrument, but I have some questions that I would like to put to the Minister. One of the challenges with an instrument of this nature is to understand what its consequences will be. We have just heard my hon. Friend the Member for Bromley and Biggin Hill raise a question on behalf of his constituents about what this will mean in practice.

The Government’s consultation on the business rates reset clearly described it as a “redistributive act”. The purpose of it is to take business rates growth away from places that have also had the consequences of developments, allocating it to other areas. We do not have the information in front of us to set out what the consequences will be at a local level, but we know that has been a key concern for council leaders of all parties, not least because if they consent to a very substantial development that leads to very significant growth in their business rates income, that growth in income is intended to offset its negative consequences. For example, the development might generate additional traffic or lead to a lot more workers travelling to a particular area, requiring additional emergency facilities. The loss of that income through redistribution to other parts of the country, through a formula that we do not have in front of us, could have quite a significant negative consequence.

Over the years—it is no different with the current Government—central Government have been very keen to encourage local authorities to give consent to developments that create additional business that pays more business rates, creates jobs and all the rest of it. We know that is facing a significant challenge at the moment, and local authorities looking at this instrument can see that they will be losing out, having put the cost of consenting to a development on to local taxpayers, which will certainly discourage them from being so willing in future.

Can the Minister set out briefly for the Committee what she expects to be the consequent changes in funding levels? Clearly, those could be quite substantial, and this is a system of top-ups and tariffs, as we have had in place to a degree for a long time, so it would be helpful to understand whether there are any significant winners or losers as a consequence of the decision that people are being asked to make.

Secondly, when the Minister refers to a reset of the business rates mechanism, what does she expect it to reset to, so that those local authorities have a clear line of sight that says, “This will be the consequence for your business rates collection at a local level”?

Finally, I draw the Minister’s attention to the explanatory memorandum that she has kindly circulated. Paragraph 5.6 addresses the way in which the funding is to flow. She is making a change to shift it from the general fund—that is part of the annual budget-setting process of a local authority—into the collection fund, which is subject to a longer period of decision making. I can see why there might be some arguments for doing that. However, it would be helpful to understand what she expects the consequence to be, so that when our local authority colleagues set their budgets, they have a clear sense of what the consequence will be of shifting the flow of that money from an account covered by the general provision on fixing council tax, which has to be balanced in-year, to a collection fund, where more flexible rules apply.

[Alison McGovern]

I thank the hon. Member for Ruislip, Northwood and Pinner for his speech. As ever, he made considered points and asked very reasonable questions.

[David Simmonds]

I apologise, but I meant paragraph 5.13, not paragraph 5.6, of the explanatory memorandum. I had turned over the page and misread my record.

[Alison McGovern]

I thank the hon. Gentleman for his diligence in making sure the Committee is absolutely clear on what he was referring to. I will write to him and circulate that response to the Committee, so that we all have absolute clarity on that point.

On the reset, the Committee will know that the business rates retention system was always designed to be reset periodically. It needs to redistribute locally raised business rates, so that we get a balance between aligning the funding system with need and providing local authorities with the incentive for growth, as I mentioned in my speech. As a matter of fact, it has been over a decade since we assessed how much business rates authorities can raise, which means that retained business rates have accumulated over that period. That is the point of the reset, which was always designed to be in the system.

The hon. Gentleman asked what the effect will be, and obviously it is part of the overall spending power that we set out as part of the settlement. Local authorities should now have a clear line of sight on their spending power and how this affects them. If any Members have concerns that they would like to raise with me directly, as the hon. Member for Bromley and Biggin Hill did, I would be very happy to engage with them on a one-to-one basis. As I said, I will write a note in response to the question raised by the hon. Member for Ruislip, Northwood and Pinner on the explanatory memorandum.

In conclusion, these technical amendment regulations are essential to the system. As I have just set out, we want to allow local authorities to grow and to feel the incentive of keeping local business rates. However, from time to time, the system needs to be reset to make sure that local council funding aligns with need, as it must.

Question put and agreed to.