Non-Domestic Rating (Preparation for Digital Services) Bill

Eleanor Laing Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Monday 13th May 2019 Commons Chamber

[Rishi Sunak]

Madam Deputy Speaker, I am loth to get drawn on to topics that are much broader than the very narrow scope of this Bill. However, I am happy to reiterate that I do not think the £675 million high street fund my right hon. Friend the Secretary of State and my hon. Friend the high streets Minister introduced earlier this year is a case of fiddling while Rome burns. The Government are committed to the vibrancy of our high streets through various initiatives that will be outlined in my hon. Friend’s winding-up speech.

Indeed, the Bill is also an important measure; it is a measure that businesses have called for. Given the statutory nature of HMRC, it is impossible to move forward without this short piece of legislation. The reason for that is that businesses today receive separate business rates bills for each non-domestic property they occupy. Large businesses with property in different areas may receive bills from a number of local authorities responsible for issuing bills and collecting payment. It is worth bearing in mind that there are over 300 different billing authorities today, each with its own system of billing for business rates. While I pay tribute to the good work carried out by local authorities in administering business rates locally, the Government’s clear view is that reforming the system to more closely link with the wider management of business taxes led by HMRC could unlock long-term improvements to the current system.

Members will appreciate that implementing any reform of this scale takes significant time and that it is critical that the Government engage with businesses and local government in developing and designing any new digital system; indeed, the hon. Member for Oldham West and Royton brought that up in Committee during consideration of the previous Bill. I am pleased to tell him that the measure before us today will take many years to come to full fruition. The current intention announced by the Treasury is that any new design of the system will not come into force until after the next revaluation, in 2024. What we are doing today is therefore just a very small first step on a journey that requires an enormous amount of engagement and consultation.

The main measure in the Bill allows HMRC to expend resources on beginning to explore designs for a new digital service for business rates. That is necessary because HMRC’s current statutory functions do not include activity in connection with the administration of business rates. To be clear, the legislation we are considering simply permits HMRC to begin the necessary design and engagement work for a potential new digital service. It does not implement any reforms to the current system of business rates administration.

That is important because, as I have noted, the Government are clear on the need to engage with businesses and local government to seek views on any specific options for reform. For example, the local government sector will want to ensure that any changes are fully compatible with the local retention of business rates and with plans to increase rates retention in the future. Equally, business organisations such as the Federation of Small Businesses, the British Independent Retailers Association and the CBI will be keen to engage in future design work to ensure any reforms deliver benefits to businesses and minimise any burdens. Members should also be aware that any practical reforms to the system are likely to require further changes to legislation and, as such, there will be opportunity for full scrutiny of any proposals once the design work has concluded.

The Government’s efforts to improve digital tax services are already helping businesses seize the opportunities that digital technology offers. They are giving businesses more control over their finances, allowing them to spend their time focusing on innovation, growth and the creation of jobs. The Bill will support this by enabling HMRC simply to begin exploring potential options to link business rates with the administration of the wider tax system. It will also enable HMRC to undertake the necessary engagement with stakeholders to ensure any reforms work for business and for local government. While the Bill is just a small paving measure, it supports some potentially significant long-term improvements to the current system. I commend it to the House.

[Madam Deputy Speaker (Dame Eleanor Laing)]

Before I call the Opposition spokesman, with the leave of the House, and most unusually, I am sure the House would like to join me in wishing the Associate Serjeant at Arms, who occupies the Serjeant at Arms’ Chair, a very happy birthday.

--- Later in debate ---

[Dr Blackman-Woods]

I thank the Minister for that intervention, because perhaps I was not clear: I was not suggesting that those measures necessarily needed to be in this Bill, but they do need to be set out so that we can place the Bill within the context of the Government’s wider proposals, because the Government—

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Lady has explained that very well and I understand why the Minister made his point, but of course matters that are not in this Bill are not subject to discussion this afternoon. As I said, the hon. Lady has explained the context very well and I am sure the debate will not be widened—and actually it is not difficult for me to keep this as a narrow debate.

[Dr Blackman-Woods]

Thank you, Madam Deputy Speaker. I will do my best to keep to what is in the Bill. However, the Government cannot continue to rely on a system of ever-increasing council tax bills and supplements to make up for the lack of Government funding for our essential public services such as policing, youth services, housing and social care. That is why we are interested in the wider picture, as well as the matters we are discussing today, but I will keep my points as narrow as possible.

The Local Government Information Unit has been pressing for a clear vision for the future shape of the council funding system, and it is worried that councils could continue to fail if no such vision is put forward in the near future. We also need to know something about the redistribution mechanisms that could be attached to 100% business rate retention, and it would be extremely helpful if the Minister said something about that.

My hon. Friend the Member for Oldham West and Royton set out a series of questions for the Minister to address this afternoon. We need to know how the lessons from the retention pilots will become known and when they will be rolled out and whether there will be any additional costs for ratepayers. We need to know who will be responsible for collection rates and who will underwrite funds lost through non-collection. We also need to know how the system will be appealed and challenged, and who will administer the non-payment collection and the applications for discounts and exemptions. How will local government be involved, not only in the design of the new system but in bringing in the arrangements? I hope that the Minister will address all those detailed questions this afternoon. We understand the need for the Bill, and we will not seek to divide the House on it; instead, we look forward to improving it in Committee.