Lord Fuller (Con)

My Lords, having heard from the Deputy Chairman of Committees that we were going to the first Motion first, we have the second Motion first. I want to go back. I do not want to talk about studios. It is not that I do not know anything about recording studios; it is that I have nothing to add to what noble Lords have said. I want to raise a wider point about what happens when you make changes in the business rates system. It is important that the business rates system has the right incentives and is fair to small businesses, particularly those on the high street that make such a cultural contribution to our nation. We have seen in the newspapers as well as in these regulations what happens when you make alterations to the business rates that pertain to pubs, hotels, restaurants, between retail and industrial, and to large businesses versus small. It is one of those truths that the winners tend to keep quiet, but it can be existential for losers. That is partly because the amount of money that is raised by business rates is fixed and, as you give a relief in one place, it pops up as additional burdens elsewhere. That is just the way the system works. However, for local government, stability and buoyancy in the system are important. When you change the system, there are downstream consequences, because business rates very largely pay for the delivery of local government services. Yes, there is redistribution within the nation of the money that is raised. For example, we are in Westminster, which raises nearly £1 in every £12 raised in business rates in our nation, and that £2 billion or so is redistributed to Redcar, Redruth, Wroxham and all around the country with a complicated process of ceilings and floors. There are also systems within county areas, as they tend to be, so that all the councils can pool together to grow the economy. That is important, because the system is designed with powerful incentives for councils to grow the economy on the simple truth that the more you grow the economy, the more you keep. Of course, resets happen every now and again and they are a disincentive to grow. All that effort is wasted as the business rates baseline is washed away. That is the context within which I wish to make my subsequent remarks. In the past few weeks, there have been technical changes in the way that baselines and pooling are done that would have had material effects on district councils. For most councils, about 10% of their net budget would have been swept away, badly impacting on homelessness, recycling, building and all the things that we need to get the economy going. That is especially germane because district councils outside the M25 and the urban metropolitan centres tend to be the planning authorities that get growth going. I know that the District Councils’ Network and, more widely, the local government family are grateful that the technical changes that could have caused that 10% disaster have been fixed for the coming year, but for one year only. As we look at business rates more generally and at altering the application of business rates, we need to make sure that the Treasury and the local government department are better aligned in future years so that we avoid the perverse outcomes that we might have seen. It is not fair on councils to have the uncertainty. It is certainly not the right thing for the economy, because confidence and long-term stability provide that central alignment between central and local government to generate wealth in these islands. It is incumbent on the national Government to ensure that they do not accidentally damage that delicate balance that keeps the economy growing, people in work and taxes paid.