Draft Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2022

Sarah Owen Excerpts

Monday 12th December 2022 General Committees

[Sarah Owen (Luton North) (Lab)]

It is a pleasure to see you in the Chair, Mrs Murray. I welcome the opportunity to speak on this legislation, which will touch businesses in all our constituencies. Unfortunately, however, the Opposition would not vote with the Government in a Division, because we do not believe that the regulations go far enough. I will put on the record some points about the difficulties facing businesses and the local authorities attempting to support them.

On Saturday 3 December, we all celebrated Small Business Saturday, which is an opportunity to focus on independent traders who are making a big impact with little resource. All year round, however, my colleagues and I hear about the struggles of small businesses in our communities. Our high streets are already struggling as a result of the pandemic, and from the decade of under-investment before that.

As a result of climbing energy bills, the cost of goods rising with inflation, and stagnant wages driving consumer caution, businesses are desperate for a dramatic package of support. Tinkering with business rates, which is what this legislation does, is not what they want or need. Labour has a plan to back business by bringing business rates in line with the needs of the modern economy.

We are committed to cutting rates immediately for small firms, and they should be given any discount they are owed as a result of the revaluation at the nearest opportunity. To give the sector the stability and reassurance that it needs, and that I am sure we all want to see, we will bring in an annual revaluation of business rates, rather than holding ad hoc revaluations as the Government do, and as is outlined in the regulations. Under our model, the heavy burden of taxes will move from small and medium-sized enterprises and high-street businesses to online giants, which have, for far too long, got away with contributing far too little to our economy.

When Labour gets into government, it will deliver the transformation that businesses deserve, but we need an urgent increase now in the threshold for small business rates relief from £15,000 to at least £25,000. That discount for small and medium-sized enterprises would be a vital boost at this vulnerable moment. It would be funded by increasing the digital services tax for online business grants. That is just a taster of what could have been. I would be grateful for the Minister’s assessment of the financial health of SMEs compared with, for example, global tech companies, and would like to know why increases in the digital services tax have not made his priority list. The burden of business rates is disproportion-ately heavy on small businesses. Our hard-working high-street entrepreneurs are being driven into the ground, while the profits of major corporations soar.

This legislation, being at an early stage, will not arrive soon enough to allow businesses and local authorities to plan sufficiently for the year ahead. In July, the Local Government Association responded to a Government consultation by saying that

“any transitional arrangements for 2023, whether part of the formal scheme or supplementary, should be announced no later than autumn 2022 when the draft list and provisional multiplier are announced.”

It is not contentious to say that 12 December is beyond what we conventionally consider to be autumn. Councils will not have adequate time to consider and communicate the changes before they become law. Were the time and effort required for local authority staff to adopt the new process factored into the timetable for the legislation?

It is not just the billing authorities that need to prepare for the new non-domestic rates. Such financial and administrative overhauls can be costly for many of the individuals and groups paying the new rates. The LGA has highlighted the need for councils to be compensated for the cost of staff time, and for potential new technologies, involved in the revaluation of rates and in bringing in the transitional scheme. It is welcome that the Government have already announced that administrative costs for local authorities will be covered, as with previous schemes, under the new burdens doctrine. However, the insufficient time to input these changes will still cause problems that council staff do not need. For their peace of mind, will the Minister confirm that no further reliefs will be announced ahead of the new financial year starting on 1 April 2023?

We will not vote against the legislation. However, the Government clearly have work to do to catch up with the needs of small and medium-sized businesses, and to match what Labour’s fair taxation strategy offers those businesses, so that we can regenerate our high streets.