Contribution
My Lords, at this point in our first day in Committee, I ought to remind the Committee of my relevant interests as a councillor—we are reliant on business rates for what we do—and as a vice-president of the Local Government Association. I also remind the Committee, given the further amendment that I have, that I am a vice-chair of the University of Huddersfield’s council.
I very much thank the noble Lord, Lord Thurlow, and the noble Earl, Lord Lytton, for speaking to this group of amendments. The thrust of the amendment in the name of the noble Lord, Lord Thurlow, is to remove the higher multiplier. Without really understanding the combination of potential higher multipliers and the loss of what we could call the Covid business relief, because we do not have an impact assessment from the Government, it is difficult to understand the financial impact on businesses of both those changes. I will urge the Minister at every opportunity to provide for the Committee the financial impact on businesses; otherwise, we are debating in the dark a bit because we do not know exactly what the totality of the impact will be on different sectors of the business community.
One of the comments from the noble Earl, Lord Lytton, concerned the lack of targeting of specific businesses in the whole range of proposals in this Bill. It is really difficult to see how the current valuation assessments will result in a fair share of property taxation. I say “fair share” because, in his response to the first group of amendments, the Minister talked about the purpose of this Bill—I quote him—as being to create a fairer system. As we will come to understand in our debates on later groups, this Bill fails to do that because it fails to target businesses except on the basis of valuation. The purpose is ostensibly—I think it was the noble Baroness, Lady Scott, who called it the “Amazon tax”—to try to extract a fairer share of property taxation from distribution warehouses.
At this point, I shall quote what I have, I think, quoted before. The Valuation Office Agency has a figure for an Amazon warehouse near where I live in Yorkshire of £25 per square metre, whereas, in my own small town, a local shop is valued at £250 per square metre. That is at the heart of the problem, which this Bill does not address; it is fundamental. What is absolutely essential to getting a fairer system is a total rethink about property taxation.
Things have changed enormously since the non-domestic business rates regime was introduced. There are now significant out-of-town developments in warehouse distribution which did not exist 20 years ago, and large out-of-town retail parks, which did not exist 25 or 30 years ago. However, they do now, and they are benefiting from the way property is valued by the criteria set by the Valuation Office Agency, and they are benefiting at the expense of high streets. If the Government are certain in their aim to provide a fairer system for our high streets, then absolutely essential is this fundamental change to the way properties are valued, so that taxation can be fairly shared between out-of-town distribution centres, which currently benefit from very low rental values, as opposed to city and town centres, where rental values are high and landlords want to keep them high, because that is important for their income.
We will achieve nothing in this Bill unless that basis of the system is addressed. I agree with the thrust of what is being said, though I do not see how you can let people off a high multiplier if you introduce a lower one without losing that taxation take. I also agree with the final point that both the noble Lord, Lord Thurlow, and the noble Earl, Lord Lytton, made, which is that this arbitrary £500,000 figure as a cut-off between the lower and higher rates will lead to appeals. If I ran a business which had a rateable value of £510,000, I know what I would do: I would do my best to make it come up for £499,000.
I look forward to what the Minister has to say in response, but I hope it will be thoughtful.