Draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2023
Kevin Foster Excerpts(2 months, 3 weeks ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Nigel Huddleston)
I beg to move,
That the Committee has considered the draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2023.
It is an absolute pleasure to serve under your chairmanship this morning, Mrs Murray.
Business rates are a crucial element of the UK’s tax system. They raise over £20 billion per year, which goes to help local authorities fund our country’s vital local services. While business rates provide crucial revenue, over the past few years the Government have taken extensive action to hold the tax rates steady and target support towards those ratepayers who need it. At autumn statement 2023, the Government announced a package of cuts worth £4.3 billion over the next five years to support small businesses and the high street with local tax cuts, including freezing the small business multiplier for the fourth consecutive year and extending the retail, hospitality and leisure relief scheme at 75% for 2024-25.
It is essential that the business rates system runs smoothly, with continuity and stability. These regulations ensure exactly that: they are crucial to maintaining a healthy, stable system for the financial year 2024-25 and beyond. Their primary purpose is to maintain the threshold between the two business rates multipliers. There are two multipliers in the English business rates system—the higher, standard rate multiplier and the lower, small business multiplier. The threshold between the two has stood at a rateable value of £51,000 since 2017, but due to the passing of the Non-Domestic Rating Act 2023 these regulations are required to preserve it at the same level from 1 April 2024 onwards.
Kevin Foster (Torbay) (Con)
The Minister will know that, certainly in Torbay, things like the discount on tourism and retail are very much welcomed. But will he confirm that the effect of these regulations not being passed would be that thousands of small businesses across the country would end up paying more business rates?
Nigel Huddleston
My hon. Friend has embarrassed me, because he just summarised my eight pages of notes in one paragraph. He is absolutely correct. If we do not do this, hundreds of thousands of businesses across the country—those with a rateable value of between £15,000 and £51,000—would effectively have to pay far higher rates than they otherwise would, and that is the core purpose of the discussion today. I should probably sit down there, but I will carry on just a little bit for the edification of others who probably do not get the principles as keenly, enthusiastically and quickly as my hon. Friend.
The secondary purpose of the regulations is to extend the scope of the small business multiplier to include unoccupied properties, charities and properties on the central list—which I will explain in a moment—with a rateable value below £51,000 and which do not currently receive full rates relief. This will level the playing field for all types of properties, promoting consistency in the system; in other words, it is a simplification. Those properties that move to the small business multiplier for the first time will also receive a tax cut worth around £5 million in total per year.
Hon. Members may appreciate a very brief reminder of the business rates multiplier and what it is. The multiplier is the tax rate used to calculate business rates. The relevant multiplier is multiplied by the yearly rental value of a property, known as rateable value, to calculate its business rates bill before any reliefs are applied. As I have mentioned, there are two multipliers in operation—the small business multiplier and the standard multiplier. The legislative default is for both multipliers to rise by consumer price index inflation each year, but the Government took action at autumn statement 2023 to freeze the small business multiplier for the fourth consecutive year, protecting over 1 million ratepayers from an increase in bills.
The regulations must be made as a result of the passing of the Non-Domestic Rating Act 2023 in October.
Autumn Statement Resolutions
Kevin Foster Excerpts(5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Harriett Baldwin
I am very glad the right hon. Gentleman made that intervention because it allows me to repeat the point of my argument. Of course I remember what happened, and we all saw it; it is thanks to the new Prime Minister and the measures that the Chancellor took this time last year that those effects have been worked through. We can see the progress not only in reduced inflation but in the OBR’s increasing its growth expectations—a year ago it was expecting a recession and now it is forecasting growth. The right hon. Gentleman makes my point: we have heard from the Governor, on the record, that those effects have dissipated and that the year has made all the difference.
Kevin Foster (Torbay) (Con)
Does my hon. Friend reflect, as I do, that the US federal rate is currently very similar to our own interest rate? Can Opposition Members explain what was the effect on the US economy?
Harriett Baldwin
My hon. Friend is absolutely right. Central banks around the world have lessons to learn from this recent bout of inflation, but I am comforted by the evidence we got yesterday from the Governor, which, while acknowledging there are still risks to the upside, shows that the world is on a trajectory of having dealt with this.
Kevin Foster (Torbay) (Con)
It is a pleasure to speak in this debate. It is always easy to throw stones from the Opposition Benches, but it is slightly more difficult to be in government and make decisions based on the situation before us. I will focus on one or two of the things that directly affect Torbay.
Certainly, the Government need to have a clear and distinct Conservative message based on our being the party of aspiration, economic growth, home ownership and people keeping more of the fruits of their labour. Those are the principles that have seen us win general elections and reach out to a whole new group of Conservative supporters, whether in 1979, in the 1980s, or last time in 2019, when we were lucky enough to get a majority under the leadership of Boris Johnson. It is always a privilege to serve in government, and we need to ensure that we continue to deliver for those who put their faith in us.
I welcome in particular the business rates relief for tourism and hospitality. That will be of no surprise to anyone given that I represent the part of the country that we call “the English riviera”, where tourism plays a large part in the community. I was pleased to join colleagues in lobbying for the Chancellor to extend the relief, and am pleased that he has done so. We need to think about business rates because they penalise businesses that need a place to do business. Clearly, an online hospitality venue would not have quite the same outcome for people as being able to go somewhere to meet their friends and enjoy spending time together. Hospitality innately means having a place to get together, be part of a community and enjoy time with friends in celebrations and other events. That is a very serious business, so it is something that is there.
The promise to honour the triple lock will resonate strongly in Torbay among those who have worked hard all their lives and retired to enjoy the natural beauty of our bay. The other side of the issue is those who are of working age. Certainly, the rise in the national living wage will benefit quite a number of people working in the bay, and the national insurance changes are particularly welcome, enabling many workers to keep more of what they earn.
Sadly, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) is not in his place. I will miss him in the next Parliament, because he is standing down; even though we disagree on some quite profound points, particularly around the Union, he is right that we should move towards more tax simplification in the long run. Clearly, the issue with national insurance that those who are of state pension age do not pay it. Any unification would have to preserve that part of our system, so that those who are over state pension age do not end up paying the replacement or simplified tax. However, there are many arguments to be made—some of which were made very well by my right hon. Friend the Member for Witham (Priti Patel)—about how we can have not just lower taxes but simpler taxes, recognising that for many businesses, the cost can come from administering the tax as much as paying the amount that is due.
We have just heard some of the debate about welfare changes. It is welcome that we are going to make a difference to so many people’s lives by giving them support to get back into employment, and it is right that for the DWP to expect something in return. If we listen carefully to what the Chancellor actually said, it was about engagement with the DWP. It is not a high bar to say that people should at least engage with the projects and schemes that are being put in place to try to support them in getting into employment, because we know that employment makes a massive difference: it is the thing that lifts people out of poverty and gives them choices in their life, which is what all of us should aspire towards. My good and hon. Friend the Member for Corby (Tom Pursglove) is the Minister for Disabled People, and I know he is looking to make sure that the balance is struck correctly between encouragement and sending a clear sign that there is an expectation that the support that is being offered will be taken up—that that support comes with responsibilities.
Earlier this week, further support to develop Torbay’s economy was announced, in the form of an extremely welcome £20 million from the third round of the levelling-up fund. That brings the funding available to support Torbay’s regeneration to a total of around £100 million. However, I again emphasise that this is not just about Government funding for regeneration, but making sure that private businesses and investors have the confidence to invest. I very much welcome the news in the last 24 hours that two large groups, Willmott Dixon and another investment group, will not only be working with Torbay Council to deliver many of the Government-sponsored schemes, but investing in jobs and housing.
However, things like planning can make such a huge difference. I welcome some of the Chancellor’s comments, particularly around major infrastructure, because it takes far too long to deliver key infrastructure in this country. I was one of those who said we should get shot of the effective moratorium on onshore wind. In the same way, it is high time that the Scottish Government got rid of their ridiculous blocks on new nuclear, given the potential for energy independence and security—as well as jobs and prosperity—that it would bring to Scotland. Overall, we need to look at cutting the time between making a decision to do something and something happening.
Turning to housing, as I said in the debate on the King’s Speech, we need to look again at cases where local councils have come forward to say they would be happy to have flexibility in some areas, mostly in town centres and areas that are in need of regeneration. I would, however, strike a slight note of caution about the idea of allowing virtually every property to be converted into two flats. I am not necessarily sure that that would produce the best of outcomes, particularly when I look at the experience in parts of Torbay, such as Melville in Torquay. Some properties have been subdivided there, and it is safe to say that that has not produced a great standard of accommodation. There are some issues that come with that, so from what I heard today, that is an area in which I would urge the Chancellor to exercise some caution.
However, I hope the statement is a sign of a Government pointing to where they may look to go further in future. Other colleagues have rightly raised the issue of tax thresholds, not just for personal taxation but for the taxation faced by businesses. The VAT threshold is probably the most dramatically visible impact of a tax threshold. We can see guest houses and small businesses closing literally the day before they would have reached the relevant amount. They are literally stopping doing business because, unless they can jump up significantly in their trade, the cost would not be worthwhile. That is particularly true in the hospitality sector, for example, with businesses not buying large amounts of product on which they could expect to reclaim the tax.
We heard some speculation in the run-up to this statement about inheritance tax. I have to be clear that there are those in Torbay who would find that quite a thought and would like to be able to hand on a little more to the next generation, but I do accept the point that there are other priorities for easing the burden of taxation first, not least those that affect working families.
Finally, it is right that productivity has been mentioned several times. It is what drives wage growth, drives prosperity and generates more income. Clearly, there is a need to link our efforts to increase productivity with a genuine labour market strategy that also covers our immigration policies. Again, my right hon. Friend the Member for Witham mentioned the need to try to link those together, because too often we find ourselves debating one day why a sector is not being invested in and then the next day arguing that we should provide visas to avoid having to do so.
Overall, this is a welcome autumn statement. I think it shows the right direction of travel towards key and core Conservative principles, because we will need to have within the next year a clear message for the electorate on how our party seeks to back their aspirations for them and their family, how we reward innovation and how we will be responsible with the nations finances, because those are the keys to winning another term in government.
Public Bodies and VAT
Kevin Foster Excerpts(11 months, 1 week ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kevin Foster (Torbay) (Con)
It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate my right hon. Friend the Member for Camborne and Redruth (George Eustice) on securing this very worthwhile debate. I agree with much of what he said about the impact this issue has on the further education sector, and that will be the focus of my remarks as well.
For background, there are 10,000 public sector organisations in the UK, the vast majority of which can claim the VAT they pay back from His Majesty’s Revenue and Customs, on the basis that that simplifies budgeting. Although public bodies may account for VAT on supplies of goods and services in the same way as any other business, they will often undertake non-business activities, which are outside the scope of VAT. As HMRC’s own guidance for local authorities and other public bodies explains:
“the general rule is that where a public body is funded by way of public expenditure (such as grant-in-aid) to do something for the public good, it’s unlikely to be engaging in business activities for VAT purposes.”
In that context, the term “public body” already includes Government Departments, non-departmental public bodies, NHS bodies, local government bodies, the police and fire and rescue services.
The impact of VAT on further education and sixth-form colleges—in particular, South Devon College in Paignton —is significant. The crucial background to the argument being made today is this: 228 further education and sixth- form colleges, operating from around 850 campuses across England, were reclassified as public sector organisations in November 2022 and are now subject to the same controls as academies and other local organisations, but they must still pay VAT, without having an opportunity to recover it, because they are not part of the refund scheme.
That has significant consequences. It means that money that Parliament voted to have spent on 16-to-19 education is taxed if spent on colleges. Colleges account for the vast majority of students taking T-levels, and their students in general are more likely to come from disadvantaged backgrounds, so those courses are essential to providing young people with the skills that they will need in a wide variety of sectors, including construction, engineering and health. Those funds would not be taxed in the same way if they were spent on schools, which, as my right hon. Friend the Member for Camborne and Redruth outlined, may similarly provide education for 16 to 19-year-olds on a range of subjects.
As my right hon. Friend will know from discussions in our previous roles, the skills that we are talking about are often those over which there is a debate about the balance between immigration and domestic supply. It is vital that we look to fill more of these skills gaps domestically, and ensure that colleges can step up and provide that training. He touched on his training in arc welding. For many jobs in which there are skills shortages across the economy, it is colleges that will be training people to meet that skills demand, so that they can then access the rewarding salary packages and careers that often come with them.
The impact on South Devon College is clear. Unlike Torbay’s schools or others in the public sector, South Devon College pays VAT that it cannot claim back, which gives it an immediate 20% disadvantage in spending power compared with a school. This becomes even more odd when we consider that South Devon College has South Devon High School within it. South Devon College’s non-pay spending each year is approximately £15 million, including VAT, so if it could reclaim the applicable VAT, it would have in the region of another £1 million to £2 million each year to invest directly in education, skills and training. That would obviously make a significant contribution to what the college can offer its students and the wider community that it serves across Torbay and south Devon.
Given the impact on South Devon College, I would be interested to hear the Minister’s thoughts on a few specific points. First, what assessment have the Government made of the financial impact on the further education sector of not being able to reclaim VAT? Secondly, why was that not changed during the reclassification of organisations as public sector organisations in November 2022? It would be a simple decision for Government to amend the Value Added Tax Act 1994, so that colleges such as South Devon College were included in the refund scheme, in the same way that previous Governments extended the refund rules to cover academies, national museums and various new regulatory bodies. The position of colleges seems even more odd when we consider the decisions taken previously. This is a logical step to take that will boost vital skills training and help provide the opportunities that our next generation needs, so I hope that this decision can be taken very quickly.
Mr Clive Betts (in the Chair)
We now move on to the Front Benchers, starting with Douglas Chapman for the SNP. There is no time limit; just take the necessary time.
Oral Answers to Questions
Kevin Foster Excerpts(11 months, 2 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Glen
I congratulate those successful across the country in last week’s elections, but what business leaders want and what the country wants is steady policy making, delivering growth in the economy, dealing with the biggest scourge on the economy, which is inflation—[Interruption.] The right hon. Lady says from a sedentary position that we have had 13 years. We spent £400 billion when we had a global pandemic, where we had to shut down the economy. When we came out of it, we had high inflation consequential on a war that we have not had in Europe for over 70 years. Those are the realities and that is what this Government have responded to.
Kevin Foster (Torbay) (Con)
John Glen
I am always happy to meet my hon. Friend. I congratulate him on his leadership of his council candidates last week and the excellent result that he secured. Of course, we have invested in many coastal communities across the country, and we are keen to discuss the specifics of how the Government can support him as he drives that local constituency and economy forward.
Oral Answers to Questions
Kevin Foster Excerpts(1 year, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Exchequer Secretary to the Treasury (James Cartlidge)
I answered the urgent question on this matter and said that we would consider what more can be done in these types of cases. That work is ongoing, but we will report in due course, when we have more to say.
Kevin Foster (Torbay) (Con)
The Chief Secretary to the Treasury (John Glen)
I take that report and my hon. Friend’s advocacy for the needs of coastal communities seriously, and I look forward to meeting him shortly. Alongside the rural England prosperity fund, the £2.6 billion UK shared prosperity fund gives local leaders in coastal areas the freedom to target local issues, but I look forward to further conversations with him.
Oral Answers to Questions
Kevin Foster Excerpts(1 year, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Glen
I obviously cannot answer that specifically, but I can say that the Government have, over recent weeks, shown the commitment to helping the most vulnerable across the United Kingdom. But I take the hon. Lady’s question seriously, and I am very happy to look into that and to work with colleagues across Government to find an answer.
Kevin Foster (Torbay) (Con)
As the Minister will know, fiscal steps in investment zones can help to boost and level up communities—I am thinking in particular of Paignton in South Devon, where South Devon College and the photonics industry exist side by side. Will he meet me to discuss how that initiative could help to support growth in Paignton?
John Glen
I am very happy to meet my hon. Friend, who is, as ever, fighting strongly for his constituents. As he knows, the investment zones are designed to be a meaningful mechanism to catalyse growth, sometimes, although not exclusively, through university, looking at where we can find clusters across the United Kingdom to drive the economy forward.
Business Rates and Levelling Up
Kevin Foster Excerpts(1 year, 4 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Kevin Foster (Torbay) (Con)
It is a genuine pleasure to serve under your chairmanship, Mr Mundell. At the outset, I must congratulate my hon. Friend the Member for Waveney (Peter Aldous) on securing the debate and giving us all a chance to reflect on the impact of business rates and levelling up.
Like my hon. Friend I represent a coastal constituency, although with a shoreline that faces east rather than west, and I do not want the levelling-up agenda to be based on a crude caricature of north versus south—often, the communities facing the greatest challenges lie on the southern coast. My hon. Friend did not speak for a moment too long; I found his points very interesting, and I was in great agreement with many of them with respect to how we need to change this form of taxation.
Communities such as Torbay can see wealth alongside areas with challenges, and we need to see levelling up in not only the national context, but the local, with the clear aim of turning back the tide on poverty, which is affecting some of the communities that I am proud to represent.
For Torbay, levelling up means looking to attract investment, which generates long-term jobs and ensures a genuinely vibrant local economy. That is where business rates can have such an impact. They effectively penalise businesses for investing in bricks and mortar, putting physical retail—not just, nowadays, high street retail—at a disadvantage to online outlets and potentially putting off development more widely across sectors such as tourism and hospitality, where a business rates liability will pretty much inevitably be created as part of a new investment.
Business rates might have been an irritant in the past, but they can often be the make-or-break factor now, especially in light of the other pressures that businesses face. Business rates are the bill that is not flexible. That bill is enforced by the magistrates, and it is often the final blow, as it takes little or no account of the actual income that a business receives, as my hon. Friend mentioned. It is literally a tax on existence. Businesses must pay the tax simply to be in their premises, before they open the door to do any trade or business.
Like my hon. Friend the Member for Waveney, I found the figures around rental revaluation extraordinary. It does not strike me that rental values for shops have fallen by only 10%, as on most high streets agents are offering businesses “Will you pay the business rates?” style deals on properties for certain periods of time. The figures do not reflect where rentals would have been five, six or seven years ago, or even a couple of years ago, before the impact of the pandemic.
I will give a quick example of the impact of the cost of business rates, when combined with other costs. A company that runs four hotels in my constituency has, unsurprisingly, seen utility costs increase dramatically, meaning that the business needs an additional net income of £8 per room—a 12% increase—for all 125,000 room nights, just to pay the increased costs. That is simply not achievable in the current economic circumstances. The company pays £6.5 million in payroll to 470 employees in Torbay and spends £7 million a year through the supply chain, mostly in the west country. The moves we are seeing to increase wages are welcome, but they will mean the company will have a 9% payroll increase in April 2023. The retail, hospitality and leisure business rates relief scheme, which has been confirmed to be 75% for 2023-24, is welcome and it will offset around £300,000 of the additional costs for business, but it will not reach the wider amounts needed, as those bills still need to be paid.
Similarly, another example is an innovative holiday park, with caravans that are the equivalent of staying in a hotel suite; the era of putting 50p in a meter is long gone—think caravans with widescreen TV and central heating. That business will potentially see its bill double, courtesy of its investment.
While we often focus on the impact of business rates on our high streets and town centres, the impact is much wider, especially in situations where it is not an option for staff to work from home or from remote locations, such as in the manufacturing or hospitality sectors. A holiday by Zoom or a pub night on Microsoft Teams will not be the same experience; a physical premises is needed to deliver those experiences.
What can be done? We need to look at providing further relief in the current system, particularly for small and medium-sized businesses. We need to realise that the days of retail and hospitality being a handy way to raise revenue for local services are now over. The high street corner is no longer the prime place to do business. There are department stores standing empty across many of our town centres, such as the former Debenhams on Torquay harbourside. We need not walk far from this Chamber to see what was once a large department store lying empty in what was a prime shopping area of London—a sight unimaginable back in 1990, when the uniform business rates were introduced.
It is increasingly the presence of business rates liability that can directly and adversely affect the chances of levelling up a community by discouraging investment in commercial properties. That was one reason why I supported the previous investment zone suggestion that allowed business rate reductions in key areas that needed regeneration.
Ultimately, a derelict and boarded-up building creates costs, not revenue, for the public purse. I urge the Government to look at what can be done further about business rates to ensure they do not become a barrier to the regeneration of our town centres, not least in the context of large national charities receiving a mandatory 80% relief, often increased to 100% relief by billing authorities. At the very least, parity for smaller businesses trading in retail, leisure and hospitality within our key areas for levelling up would be a welcome incentive, before finally getting on with what needs to be delivered: a major review of this form of taxation.
It is oft talked about, but there needs to be a better option for the future in a system that is fundamentally rooted in the pre-digital era of economic activity, when physical premises were an integral part of doing business. I appreciate that that is easily said and harder done, not least when we consider the £25 billion of revenue that has been referenced. However, we should not shy away from doing it simply because it would be hard. Taxes have changed in the past to reflect economic, scientific and technological changes. The same is needed now.
I cannot cover in a short speech every aspect of the links between business rates and levelling-up policy, alongside their impact. However, I hope the Minister in her response will reflect on how we need to consider the real disincentives of the tax for businesses such as hospitality, which must innately operate from a physical space, and the deterrent to operating retail from the high street, town centre or even the out-of-town shopping centre, which is facing huge competition. If we are to truly level up many coastal communities, those issues must be addressed and a revaluation on its own will simply not do that. If they are not, there is a danger that our taxation system, designed for an era when people went to a public payphone and had to go to a physical premises to buy something, will hit our town centres and not deliver the levelling up and regeneration that so much of Government spending is trying to achieve.
The Financial Secretary to the Treasury (Victoria Atkins)
It is a pleasure to serve under your chairmanship, Mr Mundell, and I congratulate my hon. Friend the Member for Waveney (Peter Aldous) on securing this important debate. I am delighted that on our side of the House we have so much of the English coastline represented—I include myself in that, proud as I am to represent the Lincolnshire coastline.
I am also delighted to be joined by the hon. Member for Strangford (Jim Shannon). I had many a happy time sailing in the famous Strangford lough in my childhood, and I know how important tourism and hospitality is to his constituency. I thank him for sharing his Northern Irish perspective, as he always does.
I hope colleagues are aware that the Government announced a significant support package for business rates in the autumn statement, and I welcome the opportunity to set that out. I also welcome the opportunity to discuss the substantial reforms to which we have already committed, which will make the business rates system fairer and more responsive to changes in the market. We have heard the concerns expressed about the status quo not just by hon. Members today, but by businesses in previous years. I will address some of those concerns and emphasise our keenness to make changes where appropriate.
Forgive me if first I go back to basics. The importance of business rates to public finances is perhaps lost in the understandable concerns raised about the impact on constituency businesses. Taxes on commercial property remain an important part of a fair and balanced business taxation system. Most advanced economies, including most OECD members, have a business property tax. Business rates raise over £20 billion a year in England alone. That money goes to fund vital public services—a priority that the Chancellor emphasised again and again in the autumn statement. Put simply, we do not believe that there is an alternative with widespread support that would raise sufficient revenue to replace business rates. For those reasons, we do not consider there is merit in a radical overhaul or abolition of business rates, but we have delivered meaningful change to improve the system and have continued to conduct several reviews on the issue. Those reviews reaffirmed the importance of business rates and concluded that they have several key advantages over other taxes. They are relatively easy to collect and hard to avoid, with a collection rate of around 98%, making them a vital and stable source of funding for local services.
My hon. Friend the Member for Waveney suggested that the current tax rate discourages investment in new spaces and expansion of existing spaces, but there is little evidence of structural issues in property investment in the UK. As he would expect, we keep a close eye on that. We have the highest share of investment going to non-residential buildings of any member of the G7. We recognise the valuable role that businesses play in our economy and we have taken action to support them through the business rates system.
Kevin Foster
I find the Minister’s response interesting. She talks about the investment in commercial property—for example, we are seeing £140 million of investment in Torbay hotels. The issue is not so much the overall level of investment in commercial property, but the specific locations. We might have 34 million seafront hotels in Paignton, but in the town centre, which was once the main focus for the collection of business rates, we are struggling to get anywhere. Does she think there might be a link?
Victoria Atkins
Goodness me, I would not pretend to have an intimate knowledge of the economics of Torbay. My hon. Friend knows his constituency extremely well, but the realistic fact is that businesses in his high street have to pay taxes of some sort. That is why we have tried to mould the business rate support package to help the businesses that need it the most, which we recognise are those in the retail, hospitality and leisure industry. I will come on to that particular support, which is a very generous package that I hope will be of great benefit to businesses in his constituency.
We have a duty to ensure that the business rates system is fair and responsive, while raising sufficient revenue to support the public services that I have already talked about. Since 2017, when the Government doubled the 100% small business rate relief rateable value threshold from £6,000 to £12,000, a third of properties in England have paid no business rates whatever. In my own constituency, I know of many properties in my market towns that pay no business rates precisely because of that protection and they are, I hope, thriving as best they can as a result.
The Government provided £16 billion in business rates relief for the retail, hospitality and leisure sectors during the pandemic because it was such a difficult time for them when the economy was essentially closed down. That was an unprecedented level of support for the high street, on which so many communities depend. From my own constituency, I know how vital that support was in keeping businesses’ heads above water during the lockdowns. The Government also provided a £1.5 billion covid additional relief fund for businesses that were affected by the pandemic but which were not eligible for other reliefs. Local authorities, due to their knowledge of their local areas, were responsible for designing and establishing those schemes. Progress has been in line with our expectations, and final distribution data will be published on gov.uk shortly.
As the Chancellor stated in the autumn statement last month, it is an important principle that revaluations should reflect market values. Hon. Members have emphasised that point during the debate. The 2023 revaluation will therefore go ahead. From April 2023, all rateable values will be updated for all non-domestic properties, with evidence from April 2021. This will mean initial bills will reflect changes in market conditions since 2015, and will ensure a fairer distribution of the tax burden between online and physical retail.
The hon. Member for Strangford asked me why the Government have not introduced an online sales tax. He will know that we launched a consultation on the issue earlier this year. We received many responses, which will shortly be published, but it is fair to say that there was not unanimity. Indeed, there was not even agreement—I would not put it as highly as that—as to what such a tax should look like, because many of even the smallest businesses on the high streets of our constituencies now have some form of online presence. It may not be the main part of their business—that may be the shop—but, understandably and laudably in the 21st century, they are trying to diversify by having an online business.
Nobody could quite see how we could differentiate between the enormous multinationals that we are all keen to ensure pay taxes and those microbusinesses that my hon. Friend the Member for Waveney described so well. That is why in the autumn statement the Chancellor decided against an online sales tax, with the important caveat that the changes we are making to business rates, including with the revaluations, will mean that the distribution warehouses, which supply the multinationals that we are all keen to ensure pay their proper taxes, will see significant rises in their bills while we also protect the shops and microbusinesses to which he referred.