Gareth Thomas
MP for Harrow West · Labour (Co-op) · United Kingdom
“Local councils such as Harrow need to invest more in youth facilities that divert young people away from crime. Some of the CCTV projects in my constituency that Harrow council has turned down—in Wealdstone, south Harrow and central Harrow—should get funding.”
“I congratulate my hon. Friend the Member for Pendle and Clitheroe (Jonathan Hinder) on securing the debate and on the way in which he approached the subject. I join him and my hon.”
“I also want to suggest that the Metropolitan police does not get recognition across the whole of the UK for its hugely important work in tackling national and international crime, and that perhaps more recognition of that is required in the funding formula.”
“In particular, in Harrow, we recently saw enforcement teams contracted out to an organisation called Kingdom. The responsibility for that contract was with Harrow council. There was widespread criticism of the way some of the staff employed by Kingdom tried to levy fines on a number of young people in south Harrow, in my constituency.”
“One way we can further support the Metropolitan police is by allowing it to keep more of the proceeds from successful operations, such as recovering stolen funds hidden in bitcoin assets. I congratulate my hon.”
“Mayor of London Sadiq Khan has done a huge amount to try to redirect funding from other parts of his budget to minimise the impact of that cut.”
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“I admire the hon. Gentleman’s chutzpah, if nothing else. On the subject of mates’ rates, I shall deal with Surrey County Council in a moment. Just last month, the Secretary of State once again told the House: “In the last spending review, the Government allocated an additional £3.5 billion a year by 2020 to adult social care.” —[ Official Report , 16 January 2017; Vol. 619, c. 664.] That was based on £1.5 billion from the back-loaded better care fund and £2 billion from the social care precept, but when we look at those figures closely, we see that the £2 billion was simply rounded up from the Department’s estimate that £1.8 billion would be raised from the precept. The Government had casually added an extra £200 million.”
“Let me gently suggest to the right hon. Gentleman that he might like to think about the adequacy of the funding for services that are needed in that area. I suggest that, in that spirit, he might recognise the accuracy of the figures that I have just given.”
“This funding settlement will mean that the people of England are left with worse public services. It will deepen the divide between those parts of the country that are well-off and those that rank highest for deprivation. It is a settlement that will not remotely begin to tackle the social care crisis, and it will hit the pockets of those struggling to balance their budgets particularly hard. And it does not tackle the long-term problems facing councils from an increasing dependence on business rates. England deserves better, and that is why we will be voting against this report.”
“Ministers sing the praises of the new multi-year settlement as a way to give local government certainty, and then in their very first year make a late switch, leaving many councils with an unplanned gap in their budgets. No area of England has been spared from cuts to services. The doors have shut on libraries, day centres and care homes. Bus services, leisure centres and youth centres have all closed or had their hours and range of services restricted. Women’s refuges have been axed, funding and contracts for local charities taken away. Advice services have gone. Investment in parks and street cleaning has been sharply reduced. All these services and others, treasured by local communities, or vital lifelines for vulnerable residents, have been cut.”
“My hon. Friend has made a good point. That is all the more reason for continuing to hold the Government to account for their decision to axe revenue support grant in full under the Local Government Finance Bill. What this settlement also does not address are the huge pressures that councils face as a result of rising homelessness and temporary accommodation costs, as well as rapidly increasing children’s social care costs. Rough-sleeping rates fell to historical lows under Labour; they have more than doubled since 2010. The number of social homes being built is at the lowest level on record. With more than 1 million people on social housing waiting lists, councils’ spending on housing families in temporary accommodation has gone up by 46%. Instead, Ministers are taking money away from councils through the new homes bonus.”
“Further to that point of order, Mr Gapes. We are delighted that you and your fellow Chair have clearly had some influence on the Minister and finally managed to get those documents released. It would have been helpful, though, if the full 450 consultation responses had been published alongside the summary that the Minister released and if he had given a bit more of a clue about how the system will look by 2019. I have a further point of order.”
“On a point of order, Mr Gapes. You may have followed media reports of a letter from the Secretary of State for Communities and Local Government to some Members of Parliament about business rates. I have not yet received my copy, and I do not think other Opposition Members have either. I wonder whether you and Sir David might use your influence with the Minister to persuade him to release a copy of the full letter. Obviously we have seen transcripts in the media, but it would be good to have sight of the full letter.”
“I had hoped to catch your eye after my hon. Friend the Member for Oldham West and Royton to pick up on one particular concern, Mr Gapes, but I will ask the Minister about it now. As I understand it, there is no definitive and accurate record of property owners in the UK, so property owners wanting to take advantage of the clause and schedule may face difficulties in tracking down their fellow property owners. What further steps does the Minister envisage taking—perhaps through work with the Land Registry or other arrangements—to help to tackle that problem?”
“I wonder whether I could pursue that a little further. I hear the point that the Minister makes, but I wonder whether the Bill makes it easier for property owners wanting to take advantage of the legislation further down the line. For example, would it be sensible for Ministers to contemplate making it a requirement of property owners that they declare their ownership to the local billing authority, in order to make it easier for the local authority to collect other charges and, in the context of the clause, to make it easier for property owners to talk to each other about a possible BID in future?”
“Will my hon. Friend reflect on the point that I made in an intervention on the Minister? Attractive as the opportunity to set up BIDs will be for property owners, the worry that I suspect they will have when they come to do the hard yards of putting the BID together will be access to the information about who actually owns the properties. Does my hon. Friend share my view that the gap between Committee and Report might be a good opportunity for the Minister to reflect on what else could be done to make it easier for the initiators of a BID to find the details of who really owns properties?”
“The power of the success of the New West End Company, which has already raised £3.2 million just in its first year, is testimony to the potential strength of property owner-led BIDs. It is a sensible change, although it was brought on by Ministers having made a mistake with the 2014 regulations. Nevertheless, it does provide an opportunity to see whether we can do more to help property owners who want to establish a business improvement district. I fear that one of the key constraints on property owners will be accessing the details of who owns other properties. Some property owners like to hide their ownership.”
“It is always a pleasure to see the hon. Member for Swindon North tempted to speak in this Committee. He gave an interesting southern example to complement the example given by my hon. Friend for Oldham West and Royton of the potential benefits of the clause. We need to understand why we are having to discuss clause 37 and schedule 5. It appears to be because Ministers did not get it right when the Business Improvement Districts (Property Owners) (England) Regulations 2014 were made. That was an opportunity to solve the apparently odd situation whereby property owner-led business improvement districts could be established only where a business rate supplement was in place. As the Minister hinted, the only place where a business rate supplement is in place at the moment is in London, where the Crossrail supplement is kicking in.”
“Perhaps offshore, through myriad trusts or in other ways. I wonder whether it is time to require the beneficial owner of property or land to be registered and, therefore, accessible to the billing authority. That has got to be good for tax purposes in general but, in the context of clause 37, it surely has to be good for those property owners who, hearing of the success of what has happened in Swindon, Oldham or other business improvement districts, want to lead an effort in their area for such a district. Surely, we ought to make it as easy for them as possible to contact other property owners in their area.”
“I have always admired my hon. Friend’s prodigious research efforts before he attends a Bill Committee. He makes the fair point that legislation has been introduced to tackle this problem, but the less scrupulous and those who have something to hide have become more skilled and found new ways to hide their ownership. I gently suggest to the Minister that if, for the best of reasons, we want to make it easy for business improvement districts to be established where appropriate, surely we need to help property owners by making it easier to access the details of who else owns property in their district. I gently encourage the Minister to reflect on that at length and perhaps to bring forward amendments or at least more information on how Ministers are going to make that easier. I look forward to the Minister’s reply.”
“That smacks of the nanny state—a mentality that “Whitehall knows best” and should be able to dictate what happens in Swindon, Cornwall, Totnes or Northamptonshire. We believe that the people of England should be trusted to make a decision in their particular areas about whether they have a Mayor. Denying them the chance to work with their business community to raise money for much-needed investment in infrastructure seems to be particularly unfair.”
“One would have thought that the principle of localism would allow local authority areas to come forward and decide whether they needed a Mayor, and that Ministers would respect the decisions of the people of England in that regard. In the particular case of business rate supplements, we should remember that a ballot of non-domestic ratepayers is required. A series of checks and balances is therefore built in to the levying of business rate supplements already. Given that, it seems even more unfair that non-mayoral combined authorities should not have the power to levy business rate supplements, if they have identified with their business community a significant need to raise money for investment in infrastructure.”
“I beg to move amendment 19, in clause 38, page 28, line 38, after “2009”, insert— “(f) any other billing authority.” This amendment would add any billing authority to the list of levying authorities with a power to impose business rate supplements. I hope not to detain the Committee too long on this amendment, although I do have a series of questions for the Minister. Amendment 19 seeks to put right the rather odd exclusion of non-mayoral combined authorities from the power to levy business rate supplements. It will be interesting to hear why Ministers think that the existence of a Mayor is the only thing that should be pivotal to whether an area should be allowed to raise money for investment in infrastructure.”
“The Federation of Small Businesses raised a particular concern with me about the potential for both business rate supplements and property owner levies in terms of BIDs to be covered. If the hon. Gentleman will forgive me, that issue probably works best as part of a clause 38 stand part debate. I want simply to equalise what Ministers are giving to mayoral combined authorities with those combined authorities that do not have a Mayor. It is called fairness. I appreciate that that is a concept that Conservative MPs sometimes struggle to come to terms with, but I hope that our efforts in the last two weeks have been helpful, particularly to the hon. Member for Thirsk and Malton.”
“I think that times have moved on and people have seen the success of business rate supplements as they have worked, particularly in London. Now is the time to make a sensible change. I certainly do not think it was the intention of the last Labour Government to say that if an area does not have a Mayor it must for ever be denied the chance to have investment in infrastructure.”
“I used the example of the non-mayoral combined authorities to make a crucial point. This is a probing amendment and I am interested in hearing why Ministers want to exclude non-mayoral combined authorities. I say that in the context of my huge support for the Mayor of London, Sadiq Khan, who is doing an excellent job. I am conscious, though, that many council leaders and councillors have strong relationships with their local business community. I gently suggest that we should trust both business owners and local people who have elected councils to look at the merits of a particular proposal on infrastructure, rather than dictating from Whitehall whether they have to have a Mayor in order to levy a business rate supplement.”
“My hon. Friend makes a good point. Now is the time to embrace the spirit of localism, which Ministers have previously professed to support, with investment in infrastructure and to trust local businesses. They will be able to smell perfectly easily whether a proposal for a business rate supplement is a sensible suggestion or not.”
“We have had consultations with a whole series of organisations which wanted reform to the Bill because of the poor way in which it has been drafted and brought forward by the Minister. I encourage the hon. Gentleman to have patience, as I hope to raise the question of double charging for investment under clause 38 stand part. He is not normally excitable, so I encourage him to be patient. I look forward with interest to hearing from the Minister why he thinks we should discriminate against those areas and people of England who do not have a Mayor.”
“Given the FSB’s considerable concern about the size of business rate bills following revaluation, it would be good to hear the Minister’s view about the potential for an extra 4% on top of existing business rates.”
“Briefly, I want to raise a concern that the Federation of Small Businesses put to me. It relates to the intervention by the hon. Member for Thirsk and Malton. The FSB’s concern is that the Bill already allows for two levies to be levied on small or medium, as well as large, businesses—the business rates supplement and the property owner-led business improvement districts. The FSB is concerned that that would potentially see another 4% on top of existing business rates as a result of the Bill as it is currently drafted. Its concern is that that would make business rate bills even higher. In particular, in some areas in London and, notably, the south-east—although not exclusively those areas—that would send business rate bills even higher.”
“Briefly, the clause raises the thorny question of the use of statutory instruments by the Executive and whether Ministers think they should be subject to affirmative procedure, requiring scrutiny in Committee, or allowed to slip through under negative procedure. Given the importance of business rates to our economy and the more general concern about them, we assert that if statutory instruments are used by Ministers further down the line to introduce regulations, they should be subject to the affirmative procedure and open for the public to see our debate in the House. The SIs should be introduced under the affirmative procedure. I look forward to the Minister confirming whether or not that will be the case.”
“I beg to move amendment 52, in clause 42, page 30, line 8, leave out from “14” to end of line 21 and insert “Schedule 3 and this section. (2) The remaining provisions of this Act come into force on 1 April 2019.” This amendment would provide that the provisions of the Bill as enacted, other than the provisions relating to telecoms relief, guidance about notices relating to non-domestic rates and the provision relating to preparatory expenditure for digital services come into force on 1 April 2019.”
“Clearly, some local authorities could experience that type of expansion, but others will not. I have given the example of Allerdale Borough Council, which has a whole series of natural barriers to that type of economic growth.”
“By then we might have some clue of what is emerging from that review, which might or might not give confidence to local authorities and the many critical charities such as Age UK that observe carefully what is happening. More importantly, it might reassure those who are getting older that the care they deserve will be in place. If we rush ahead and allow the Bill to become law before all those additional details are available, there is scope for concern about whether the problem will have been addressed. There are big concerns for those authorities that do not have huge amounts of space for business expansion of the sort provided by property-based, Amazon-style warehouses, of which I think the hon. Member for North Swindon is a fan. He sees Swindon potentially benefiting from that type of expansion as a result of this Bill.”
“We want key bits of the Bill to proceed, but there are many unknowns about how it will work in practice. It would be sensible to pause once the Bill comes into force, in order to allow more information to become available about how the system will work in practice. Let us remember the particular challenge currently faced by local authority public services: social care is in crisis. I am sure that no one in this Committee would want 100% business rates devolution inadvertently to worsen the situation. Efforts have apparently been made by the Cabinet Office, which has been tasked with coming up with proposals for the long-term future of social care.”
“There might be scope, where there are problems, for further conversations with Ministers before the legislation passes and we are set on a path that might be difficult for one or two local authority areas. A series of additional annual local government finance settlements will, of course, provide an opportunity to scrutinise the overall position of local government finances as details of the new systems bed down fully. When does the Minister expect the annual local government finance settlement provisions to be implemented? That will tell us whether tomorrow’s annual local government settlement debate will be the last one, or whether there will be other opportunities for hon. Members to raise concerns annually about the state of financing for local public services.”
“Amendment 52 would allow key provisions, including telecoms relief, the issuing of key bits of guidance and the commencement of digital preparatory work, to be implemented after the Bill receives Royal Assent, but it would delay the coming into force of all other provisions until 1 April 2019. The reason for the amendment is that the delay would allow more public scrutiny of the impact of 100% business rates devolution after the implementation of some of the other key elements of the proposals, such as the fair funding review, the needs assessment and the detailed regulations. A consultation was also launched by the Minister last week. One would hope that by 2019 the responses will have been made fully public and that we will be able to assess the impact of 100% business rates devolution in each local authority across the country.”
“In the constituency of my hon. Friend the Member for Lewisham, Deptford, the business rate is set to increase by an average of 36%. My hon. Friend the Member for Eltham, who could not be here this morning, will see business rates increase on average by 21% in his borough of Greenwich. Forgive me for being mildly parochial, but in Britain’s most important borough, Harrow, business rates are likely to rise by an average of 14%. In Hillingdon, which is next to Heathrow airport—set to benefit from a third runway—rates will increase by an average of just 1%.”
“I want to come on to Southwold in Suffolk, just south of the Waveney constituency. Sadly, the hon. Member for Waveney is not with us today. He might usefully have reflected on that story. However, we do know that many businesses in Suffolk have raised their concerns. How significant are the increases in London? You will be interested in this, Mr Gapes, given the constituency you represent. I am sure that the hon. Member for Thirsk and Malton will take this particularly seriously, even if he does not like London very much. The FSB says that business rates in the capital are set to increase by 11%. In some parts of London, the increases are much more significant than that. For example, in Islington, rates are set to increase on average by 27%, and in the City of London, by 25%. In some areas of Mayfair, the increase will be as high as 415%.”
“Friend the Member for Oldham West and Royton and, to be fair, the hon. Member for North Swindon alluded to the importance of our high streets as community centres and the sense of place that we all value. Reputable media outlets such as The Times have suggested that online retailers are rated at less than one eighth of the valuation per square metre of some small shops. That is a huge cost differential. Whether it is fair is an open question but, as our economy begins to change significantly and technology moves forward rapidly, we need to think about whether we are levying tax on business in the most appropriate way. Business rate revaluation hits businesses hardest in areas that have seen rapid property price increases. London is one of the most severely affected areas. It is not just London, though, that is severely hit.”
“Given that six of Amazon’s nine distribution warehouses are set to have a fall in business rates, given how little it pays in corporation tax and given how high the business rate bill is going to go up by for many small and medium-sized businesses in our high streets, we have to wonder whether we have the system as correct as we might. The British Retail Consortium has repeatedly voiced the concern—and so did we, earlier in the Committee’s consideration of the Bill—that online retailers have an advantage in terms of costs over businesses that rely on bricks and mortar, not just because their liabilities are lower but because they can offer cheaper prices compared with those on the high street who have to pay business rates. What does that mean for the long-term future of our high streets up and down the country? My hon.”
“There is huge concern across councils up and down the land—not only Surrey County Council, but across local government—about their finances. The last thing we want to do is to make the situation worse by getting wrong the implementation of this particular proposal. Let me turn to amendment 54, which you, Mr Gapes, very generously allowed the debate to begin on. The question is: do business rates work for businesses, do they work for local authorities and do they work for public services? It seems to me, given the huge concern that exists about the business rate revaluations and given other concerns about how local government will be financed, that there should be a full review of business rates before this Bill comes into force.”
“As a result, we will be in a better position to assess the long-term financing of local government. There is also the question of whether the system of business rates is affordable. I will dwell on that issue in speaking to amendment 54. One of the benefits of amendment 52 is that it would delay the triggering of the majority of the Bill’s provisions, which would give us the chance to have a period to assess properly whether the business rates system is fit for purpose. In that context, I offer amendment 52 as a sensible opportunity to pause, to reflect on local authority financing and to consider whether the business rates system is entirely fit for purpose, or whether there are other ways that we need to think about in terms of the financing of local government.”
“One of the few things we do know as a result of the summary consultation document published last week is that Ministers intend to axe the £3 billion public health grant that currently goes to local authorities, plus the rural services grant, which may interest the hon. Member for Thirsk and Malton. They have also confirmed the abolition of the Greater London Authority transport grant. Already, therefore, some of that potential additional £12.8 billion of business rates has been spent, just in the two weeks that we have been considering the Bill. Hopefully, by 2019, we will know exactly what additional responsibilities Ministers want to require of local government and whether there will be any section 31 grants to help to pay for those additional responsibilities.”
“I welcome that. I can only hope, given what the hon. Gentleman has just said, that there are no businesses in Swindon that are worried about the revaluation of business rates, which is what he implies. Perhaps we can discuss that issue when we consider amendment 54. We know that the social care system is in crisis. We do not want to make that worse, but we also know that a series of other statutory services are not being properly funded either. Full business rates devolution potentially provides the opportunity to close some of the £5.8 billion funding gap that the Local Government Association has identified. However, there is a “but” to that.”
“I must gently say that not even we thought that the Government could get this so badly wrong. I want to come on to the question of resources for the Valuation Office Agency, which have been significantly cut and are leading to many delays in appeals by businesses that have genuine concerns about their revaluation, which has not helped either. There is a more general point. As politicians, we cannot always predict what is going to happen, but we should be willing to react when circumstances change. There is such concern across the business community about the potential impact of the revaluation on small and medium-sized businesses that it is time that we listened to those concerns.”
“Although transitional relief would be helpful, its argument is that the system needs a fundamental look-at to reflect the problem properly.”
“My hon. Friend makes his point and he may have the chance to expand on it. It is worth listening to the FSB. In a London context, it is calling for higher inner and outer London small business rate relief thresholds to reflect the specific problems faced by small businesses in the capital. In inner London, it argues that the threshold for 100% relief should be a £20,000 rateable value, tapering to £23,000. In outer London, where rateable values have fortunately increased by a slightly lower percentage, it believes that the threshold for 100% relief should be £15,000, tapering to £18,000. It suggests that Ministers might be tempted to look at a system of transitional relief. That has happened in previous revaluations. However, it wants small businesses to have certainty for the future.”
“I gently suggest that, if business rates do not have the support of the business community, it will make it very difficult for local councils that want to explore with that community the case for investment in infrastructure in their area, of the type we have been discussing, under the business improvement districts or the property owner levy. We have heard the Minister confirm that there is potential for an extra 4p on business rates as a result of the way the legislation has been drafted. In the context of the anger about the business rates revaluation, Labour Members are worried that local authorities may not have the support they need for investment in their authorities, if they want to encourage businesses to think about business improvement districts.”
“Absolutely, Mr Gapes. I would not want to do anything other than that. I gently make the point that businesses continue to have concerns about the way in which business rates are levied, and that local councils are concerned about whether the business rates system will provide sufficient revenue for the provision of statutory services. We can understand their concern. Therefore, I think that it is right that we have tabled amendment 54 to require the Secretary of State to review the future of business rates and their impact on local government finances before the commencement of the Bill.”
“When one considers too the impact on other public services, such as schools and hospitals—we will look at that, I hope, as part of new clause 4 or 8 I think, this afternoon—”
“The Minister is being inaccurate. As he knows full well, we did not oppose that change; we do want to help businesses. We are the party of small business in particular, but the party of business more generally. When business groups make serious representations to us, we listen. They are profoundly concerned about the business rates revaluation. Surely it is also the responsibility of all of us in the House to consider whether business rates will provide sufficient revenue for local authorities to fund essential public services. Local authorities express serious concern to us as to whether, given the huge cuts to revenue support grant, business rates, which will be one of only two key sources of local authority income down the line, will provide enough resource.”
“Definitely not this clause, but it is important to be aware of that in the context of the need for a full review of business rates. I gently suggest to Ministers that they need to take their fingers out of their ears, listen to the concerns of business, the LGA and others and agree to support amendment 54.”
“I ask the Minister for a little more clarity. Is he fully satisfied with the business rates regime as it is working at the moment and the proposals in the Bill?”
“The job of the Opposition is to seek clarity from the Minister, so let me seek clarity from him again now. Does he accept or believe that there is no case for a review of business rates at the moment? It is a simple question—yes or no?”
“‘(2) The remaining provisions of this Act shall only come into force after the Secretary of State— (a) has conducted a review into the future of business rates, and (b) has assessed the impact of the future of business rates on local government finances.”— (Mr Thomas.) This amendment would require the Secretary of State to conduct a review into the future of business rates and their impact on local government finances before the commencement of the Bill (save for the provisions under sections 8, 13, 14 and Schedule 3). Question put, That the amendment be made.”