Lord Khan of Burnley (Lab)

I will come to the noble Baroness’s points when I come back to the valuations, rest assured. The Government have been clear that they intend to fund new lower multipliers by raising revenue within the business rates system. The lower multipliers are a necessary tax cut, but a tax cut that must be funded. By limiting it to properties with a rateable value of £500,000 and above, the Government are asking those with the most valuable 1% of properties to pay more to support the viability of high streets. Moreover, by including all sectors within this group, they are doing so equitably and will capture the majority of large distribution warehouses, including those used by online giants—a cohort that I know the noble Lord, Lord Thurlow, has previously raised in relation to imbalances in the business rates system. We are trying to make sure that we have prudent financial management of the economy and a system that is sustainable. I come back to some particular points. First, the noble Earl, Lord Lytton, spoke in relation to the potential rise of £39 billion, as indicated by the OBR’s Budget report. The OBR forecast assumes that business rates income will vary in line with forecast CPI inflation, estimated growth in the tax base and the change to business rates relief. The main business rates forecast is gross rates yield, net reliefs, net collection costs and other reductions to contributions. The forecast is higher for future years as it assumes that retail, hospitality and leisure relief is removed. The business rates forecast considers measures only after they have been announced at fiscal events. As in normal practice, forecasts beyond 2025-26 are based on a number of assumptions, as the Government have not yet set out their policy beyond that year. This will take place at the Budget later this year: the main business rates forecast will then be updated to reflect it. As I have highlighted today, the Bill includes constraints that I hope will reassure Members of this Committee. In addition to limiting it to the most valuable properties, the Government cannot set the higher multiplier more than 10 pence above the standard multiplier. The Government have also been clear that this is not the intended rate. It is there to provide flexibility to adapt to outcomes in 2026 following the next revaluation, while acting as a guardrail against concern about excessive increases. As the noble Lord, Lord Thurlow, will also be aware, the Government keep all taxes under review, including rates and thresholds. As such, I can assure the Committee that the Government will, as a matter of course, actively consider whether the £500,000 threshold should be amended at the 2029 revaluation, as they approach that revaluation.