Non-Domestic Rating (Multipliers and Private Schools) Bill)

Commons Reasons

Motion A

That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.

1A: Because the Lords Amendment interferes with the public revenue and affects the levy and application of local revenues, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

My Lords, in moving Motion A, I will also speak to Motion A1, Motions B and B1, Motions C to F, Motions G and G1, Motions H and H1, Motions J to M, Motions N and N1, Motions P and P1, and Motion R. These Motions concern the measures in the Bill to enable the introduction of new multipliers from April 2026 in line with the Chancellor’s intention set out at the Autumn Budget.

As a reminder, it is the Government’s intention to introduce two lower multipliers for qualifying retail, hospitality and leisure properties, and for that permanent tax cut for those RHL properties to be sustainably funded to also introduce one higher multiplier for all properties with a rateable value at or above £500,000. Given the challenging fiscal context, this prudent approach is essential to ensure that the new lower RHL multipliers can be adequately funded from within the business rates system.

Motions A to M ask noble Lords not to insist on their Amendments 1 to 12. The other place disagreed to these amendments on the basis that they interfere with public revenue and affect the levy and application of local revenues. The other place did not offer any further reason, trusting that this reason is sufficient.

The noble Baroness, Lady Pinnock, has tabled Amendments 1B and 7B in lieu of Amendments 1 and 7. These amendments seek to allow the Treasury to exclude healthcare hereditaments from the higher multiplier. The noble Baroness, Lady Scott, has tabled Amendments 2B and 8B in lieu of Amendments 2 and 8. These amendments seek to allow the Treasury to exclude anchor stores from the higher multiplier.

We have discussed during the passage of the Bill the importance of having a higher multiplier that applies to all properties at £500,000 rateable value and above, and why this is the only fair way of raising the revenue needed to fund the lower multiplier. We have ensured that the Valuation Office Agency has published data on those hereditaments in the healthcare and retail sectors with a rateable value of £500,000 or above. The impact is very limited and, for retail, mostly limited to supermarkets and retail warehouses. I have previously provided the House with the statistics that show that, and they have been published by the VOA.

At end insert “, and do propose Amendment 1B in lieu—

1B: Clause 1, page 2, line 6, at end insert— “(1A) Regulations under sub-paragraph (1)(a) may specify that occupied hospitals, medical and dental schools, and any other healthcare settings as may be prescribed in the regulations are not subject to the higher multiplier.””

My Lords, as the Minister said, the higher rate or multiplier being introduced in this Bill is to apply to all properties with a rateable value of more than £500,000. This is a worthy attempt by the Government to have a fairer approach to business rates.

However, 290 hospitals are captured by this new banding. It means a considerable increase in their business rates—potentially, a 20% increase—for which government funding has not made provision, so hospitals will have less funding to drive down waiting lists, which is an aim that has all our support. I give just one example: University College Hospital here in London has a rateable value of nearly £12 million. With the new higher multiplier, its business rates will increase by over £1.2 million.

Amendment 1B, in lieu of Amendment 1, would provide the Government with the option, by regulations, to exclude hospitals from this higher banding. At this late stage, I urge the Minister to agree. None of us wants to see waiting lists not going down as fast as they could because of the Government’s reluctance to exclude hospitals—not from business rates, just from the higher multiplier.

I will speak very briefly to the other Motions. Motion B1 in the name of the noble Baroness, Lady Scott of Bybrook, is very important to the viability and vitality of our town and city centres. We on these Benches are minded to support the noble Baroness on this issue if she wishes to take it to a vote.

Motion N1 in the name of the noble Lord, Lord Thurlow, would provide the Government with a way forward to address cliff-edge issues when there are hard divides between different multiplier levels. This is of concern to businesses and, again, we will support the noble Lord if he intends to divide the House on this issue. I beg to move Motion A1.

My Lords, first, I declare my interest as a vice-president of the Local Government Association. This group of amendments addresses the ongoing issues with Clauses 1 to 4 that have been debated throughout the progress of the Bill. These clauses present two major problems. They do not reflect the Government’s previously stated ambition to reform the business rates system in order to protect the high street and ensure that online businesses pay their fair share. The higher multiplier will damage businesses on the high street and drive them out of town centres.

The Bill is an attempt by the Government to deliver on their manifesto commitment to reform the business rates system, but they have instead used a blunt instrument as a cut-off. That means that a number of businesses will be paying this higher multiplier, which they should not be doing. The Government will be hitting stores up and down the high street. Despite promises that reform will follow, the Bill leaves a number of important high street businesses paying higher rates, with no certainty at all as to when the situation will improve.

My Motion B1 seeks to give the Secretary of State the discretionary power to retain the higher standard multiplier for anchor stores. This would allow the Secretary of State to remove the higher multiplier if it becomes apparent that there are a number of integral businesses leaving the high street or opening new stores outside town centres. It does not require any action, but instead gives the Secretary of State the discretion to exempt these shops should our fears that the Bill will harm our high streets prove to be correct. Nothing that I have heard from the noble Lord at the moment gives me any reason to believe that this has been dealt with. Therefore, I intend to test the opinion of the House on Motion B1.

It is also important to protect our healthcare properties. The noble Baroness, Lady Pinnock, as she said, is seeking to protect our health sector. Should she choose to divide the House on this issue, we will support her.

The amendment of the noble Lord, Lord Thurlow, calls on the Government to review both the £500,000 threshold and a specific use class for fulfilment warehouses. It is important that the Government follow through on their manifesto commitments, so I see no reason why they should not accept any amendment that calls on them to do so. If the noble Lord chooses to divide the House, we will support him, too.

My Lords, I shall speak to Motion N1. We have already had reference to this, but I have noted the Commons’ objections to my amendment on Report, and I have revised it and wish simply to sketch the alterations. This revised amendment, therefore, is about reviews exclusively—first, a review of the £500,000 threshold of rateable value, which is the cliff edge that the noble Baroness, Lady Pinnock, referred to, and the impact it will have on businesses. This is a vital review because at present, it will be untenable for organisations that just exceed the £500,000 rateable value and will be compelled to pay a higher band of rates. The second review concerns how to address the appropriate tax rateable value on the big warehouse retailers—the internet retailers such as, but not exclusively, Amazon. Fairness between the high street and these big-box retailers is what we seek. We want to establish a new use class, purely for the benefit of business rates and no other reason, but without insisting upon implementation, which was in the previous amendment and rejected in the other place. The Government will then be able to apply the new rateable value to these big gorilla retailers at the flick of a switch at any time in the future, but they are not compelled to do so.

All sides of the House want fairness for the high street against these big retailers. Let us not duck it or leave it in the long grass. I am afraid I am not convinced by the comments of the Minister so I, in turn, wish to press my Motion at the appropriate time.

My Lords, I declare my interest as a councillor in central Bedfordshire. I rise to speak in support of the noble Lord, Lord Thurlow, and his Motion N1. The noble Lord has been persistent in his efforts to get the Government to listen and bring forward a serious review of the case for a separate use class for retail fulfilment centres that are not on the high street. He is an excellent example of a Peer who brings his experience and expertise to your Lordships’ House. As a professional chartered surveyor, he has brought that expertise to bear during the debates on the Bill, and I am very grateful to him for that.

The Bill fails to deliver on the Government’s manifesto commitment to replace the business rates system and level up the playing field between the high street and the internet giants—a so-called Amazon tax. It fails on both counts. The reviews proposed in this amendment would provide the basis to achieve this. The new £500,000 threshold for the higher multiplier is a blunt tool that will impact many organisations that were never intended to be hit with higher business taxes. It does not deliver on the Government’s objective of targeting online giants. I have consistently made the point that a £500,000 threshold is a cliff edge that will create perverse incentives at the margins, disincentivising investment, particularly on the high street.

The noble Lord, Lord Thurlow, has gone further arguing forcefully that the Government must review the case for a separate use class for retail fulfilment centres that are not on the high street. I am grateful to him for including my concerns about the impact of the £500,000 threshold in his Motion N1, and I am pleased that my party will vote for it should he choose to test the opinion of the House.

My Lords, I realise that I omitted to refer to Motion P1, which is in the same group. It is consequential on Motion N1 and will depend on the outcome of that Division.

My Lords, I thank all noble Lords who took part in this short debate. We heard concerns that the measures in the Bill for new multipliers do not deliver on the stated intention of the policy as announced at the Budget. I do not agree with that. At the Budget, the Government announced their intention to introduce two lower multipliers for qualifying retail, hospitality and leisure properties and, in particular, to end the uncertainty of annual RHL relief. RHL is a temporary stopgap measure that has been extended year on year since the pandemic, and it does not provide the certainty that businesses require. The Government, through this Bill, are taking steps to address that. It was also announced at the Budget that the permanent tax cut for RHL businesses needs to be sustainably funded. This is an appropriate and prudent approach. The challenging fiscal environment that the Government face requires this, but it goes without saying that any tax cut must be funded as part of sound financial management. To do this, the Government intend to introduce a higher multiplier for the most valuable properties, those with a rateable value of £500,000 and above. The higher multiplier will affect less than 1% of properties in England. This delivers on the policy set out at the Budget by the Chancellor. Furthermore, it represents the Government’s first step to delivering on their manifesto commitment to transform the business rates system to one that is fairer, protects the high street and is fit for the 21st century.

I have explained to noble Lords here today while the amendments tabled in lieu are not necessary. For these reasons and the other reasons I have already set out, I respectfully ask noble Lords not to press their Motions containing Amendments 1B, 2B, 7B, 8B, 13B and 14B.

I thank the Minister for his response, which gave me no hope that the Government are considering relieving hospitals of the higher multiplier. We agree with him that retail, hospitality and leisure businesses should benefit from the lower multiplier in the Bill, but it should not be at the expense of the NHS. There are other ways of doing it, and I am appalled that the Minister has not sought to find alternative sources of income. So because we on these Benches wish to make sure that our hospitals do not lose a penny more in business rates to the Government, I beg leave to test the opinion of the House.