All 2 Jim McMahon contributions to the Non-Domestic Rating (Nursery Grounds) Act 2018

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Tue 5th Jun 2018
Tue 10th Jul 2018
Non-Domestic Rating (Nursery Grounds) Bill
Commons Chamber

3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Legislative Grand Committee: House of Commons

Non-Domestic Rating (Nursery Grounds) Bill

Jim McMahon Excerpts
2nd reading: House of Commons
Tuesday 5th June 2018

(5 years, 9 months ago)

Commons Chamber
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Jim McMahon Portrait Jim McMahon (Oldham West and Royton) (Lab/Co-op)
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The Opposition welcome the provisions in the Bill. Broadly, we welcome the Government proactively seeking to iron out anomalies across the business rates system, bringing clarity to business, the Valuation Office Agency and local authorities. We agree with the principle that land and buildings associated with the operation of plant nurseries should not be liable for business rate payments, which is why we support both clauses in the Bill.

I should say, however, that the spirit with which the Government have approached this matter is not necessarily reflected in the state of our town and city centres. We recognise that support is being given to small businesses through small business rate relief, but many town centre locations are just above the threshold and do not qualify for any relief. The Minister, like me, will be a regular visitor to town and city centre businesses. He must hear first-hand, as I do, that many businesses on the high street find it a struggle to make ends meet, particularly when their online competitors have a distinct advantage with lower overheads. They can avoid the impact of town and city centre business rates, because they can operate in cheaper locations elsewhere. I think that all of us are pleased that digital taxation is being considered, but without a real and direct strategy to deal with the decline of our town centres and high streets, I am afraid that it will all be for nothing.

Returning to the Bill, since 1929 there has been a history of exempting such premises from paying non-domestic rates. The 2015 court ruling changed matters and it is good that the Government have responded, but let us be honest. It has taken three years for the judgment to work its way to becoming Government policy and to work its way through Parliament to be debated here today. Although it is correct that payments and refunds will be backdated, the point was made earlier on that compensation is not being paid and interest payments are not being made to businesses either.

From the Opposition’s perspective, it would be helpful to understand what the Government have in mind to iron out these types of anomalies across the system. We had the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill a month or two ago and we have this Bill today. If any others are in the forward plan, it would be helpful to see them, because they could well be wrapped up into a single Bill, which would save a lot of time on the Floor of the House and in Committee. These Bills are genuinely not controversial or divisive. They will not be divided on in Committee, provided that they are about dealing with the impact of court decisions that were never Parliament’s original intention.

We welcome the fact that the policy is being applied retrospectively. It will mean that businesses will not be at any direct financial disadvantage and will get back the money that they paid in business rates. However, we need to see what the Bill means for local authorities. The Government have been clear in this and previous Bills that when they are rectifying the decision of the court, their view is that the local authority involved effectively had a windfall for a short period. I just do not believe that is the case at all. Any money that is taken out of a local authority’s base budget, particularly when that local authority is part of a business rates retention pilot, will be a net loss with regard to the money that it has to spend on public services in its area.

While I acknowledge what the Minister said, I am not sure that “a handful” is a number. The Government do not know the number—[Interruption.] Let us say five then—no more than five. However, a very worrying precedent is being set whereby the Government can bring legislation through the House that has a direct impact on the funding of public services by local authorities and choose not to reimburse local authorities for the money that has been taken away. While we accept that only a handful of businesses have been affected in respect of this Bill, a Bill could come tomorrow that affects hundreds of local authorities and thousands of businesses, involving many millions of pounds, but the Government take the same approach and stance. It is not fair, proper or in the interests of good governance for us to make decisions without knowing their full impact. If we are to receive another Bill of this nature, I ask again that the Government come forward with a proper impact assessment by local authority so that we know exactly what impact it will have, including the financial impact, both for those that are not part of a retention pilot scheme and those that are part of the regular scheme.

We look forward to finding reasons to talk at length about the Bill in Committee, as well as to finding other reasons to talk about it at length on Third Reading when it comes back. I implore the Minister, however, to look at his forward plan to see what elements can be brought together to save time on the Floor of the House.

Non-Domestic Rating (Nursery Grounds) Bill

Jim McMahon Excerpts
3rd reading: House of Commons & Committee: 1st sitting: House of Commons & Legislative Grand Committee: House of Commons
Tuesday 10th July 2018

(5 years, 8 months ago)

Commons Chamber
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Rishi Sunak Portrait The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
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It is a pleasure to serve under your chairmanship today, Dame Rosie. I should like to start by reiterating this Government’s commitment to supporting the sustainable growth of farming and horticultural businesses. We firmly believe that the agricultural exemption from business rates plays an important role in supporting this aim and boosting agricultural productivity. This measure will therefore help to drive our ambitions for a more dynamic and self-reliant agricultural industry. Until a Court of Appeal ruling in 2015, the long-standing practice of the Valuation Office Agency had been to apply the agricultural exemption to all plant nurseries. However, the ruling clarified that the exemption did not apply to plant nurseries in buildings that were not occupied together with agricultural land, and used solely in connection with agricultural operations on that or other agricultural land. This does not reflect Government policy, and neither does it reflect our commitment to growth in the rural economy. The Bill will therefore amend the Local Government Finance Act 1988 and enable the Valuation Office Agency to return to its former practice of exempting all plant nurseries solely consisting of buildings. It will also enable the VOA to exempt those plant nurseries that have been assessed since the ruling.

The Government have been consistently clear that they would take action on this matter. In March 2017, we set out our intention to legislate in a written ministerial statement. A further written ministerial statement was made in 2018, restating our intention to legislate and for the first time confirming that the measure would have retrospective effect in England from 1 April 2015. In Wales, the measure will have effect from 1 April 2017. The Bill delivers on that commitment and, once enacted, it will restore the previous practice and enable refunds to be provided to the handful of plant nurseries that have already been assessed for business rates as a consequence of the Court of Appeal ruling. While the Bill will restore the practice of exempting plant nurseries and buildings, it will not otherwise disturb the existing boundary of the agricultural exemption. The Bill amends schedule 5 to the Local Government Finance Act 1988, which determines the extent to which certain hereditaments are exempt from business rates.

Turning specifically to clause 1, it amends paragraph 3 of schedule 5 to the 1988 Act, providing that a building that

“is or forms part of a nursery ground and is used solely in connection with agricultural operations at the nursery ground”

will, subject to the passage of this Bill, be exempt from business rates. Clause 1 also contains a provision that the measure will have effect from 1 April 2015 in England and from 1 April 2017 in Wales, as requested by the Welsh Government. That will ensure that the measure has the intended retrospective effect and that refunds can be provided as necessary.

Jim McMahon Portrait Jim McMahon (Oldham West and Royton) (Lab/Co-op)
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Dame Rosie, you will be pleased to hear that the Bill is non-contentious. It simply fixes the position as it was before the 2015 Court of Appeal ruling and, on that basis, the Opposition are happy to allow the Government to go ahead without objection.

It was said both in the press and when the Local Government Finance Bill was in Committee before the election that the Government were pledging to right the wrong of the Court of Appeal’s hearing after listening to businesses’ concerns, but several other similar representations have been made. For example, in towns where the banks have closed and there is no post office, a convenience store might step in to install a cash machine, but it would straight away be taxed on the turnover of the cash machine, which could take the store over the threshold for small business rate relief. There have been calls for that issue to be examined, but we are yet to see any progress.

Another big issue affecting many high streets and town and city centres is the impact of business rates on the viability of retail. We see companies go under on an almost weekly basis because they cannot afford to meet the high running costs of operating in primary locations. Communities resent seeing their local high streets and town centres go downhill, and businesses and representatives of other organisations have made the same point, but the Government have offered nothing comprehensive in response, because there would be a big bill.

However, the truth is that if we want to save our town centres and high streets, we must be bold and fully examine how such premises are taxed if they are to have any future. This goes beyond business; this is about communities. When people talk about how well or badly their communities are doing, they will often point to their town centres and high streets as a barometer. When people see the roller shutters pulled down or boards over windows, that has a material effect on how they feel about their community, and the Government ought to take note of that.

When the Local Government Finance Bill was in Committee, the Opposition made the offer that where there were non-contentious issues on which local government was seeking progress, we were happy to sit down and go through a plan for the legislation that ought to be brought forward. That would be done away from partisan interests because it is the right thing to do for our communities, and I look forward to the Minister arranging such a meeting.

Steve Double Portrait Steve Double (St Austell and Newquay) (Con)
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I am delighted to speak in support of a Bill that rights a wrong that was clearly never intended in the first place, and I have the honour of being the Member who first raised this issue when the Local Government Finance Bill was in Committee last year. Unfortunately, however, the Conservative party’s majority was not the only victim of last year’s general election, because that Bill fell at that point and the amendment that was likely to be made to it could not be passed, hence the need for this new Bill.

Plant nurseries play a vital role in this country’s food production supply chain. At a time when we want to increase domestic food supply and become less reliant on imported food, it is right to do all we can to support an important industry and ensure that we do not impose a further tax on producers that would see them struggle with the additional costs. Many of them would face the possibility of going out of business, with the loss of jobs that that would entail. The Bill sets out to put in place what the Local Government Finance Act 1988 always intended and to ensure that the exemption for nurseries continues. It will support our rural economy, ensuring that we support food production and that jobs are retained in the industry. I am therefore pleased to support the Bill to ensure that it becomes an Act as soon as possible.