Rating and Valuation — House of Commons, 2020-02-04
Topic: Macroeconomics
Alexander Jesse Norman (Conservative, Centre-right): The autumn Budget 2017 brought forward this implementation date to April 2018. The switch makes a reduction to business rates that is estimated to be worth more than £6 billion over the next five years, and the benefit to business will continue to grow as the business rates multipliers are uprated by the lower rate of inflation year on year. The Government introduced regulations to make this change for previous years, and we are bringing forward this order to do the same for 2020-21 Before I proceed to outline the detail of the order itself, I would like to set out some of the background for the benefit of the House. The Government recognise that business rates can represent a high fixed cost for some businesses—indeed, many businesses—and we have taken repeated steps to reduce the burden of the tax. Reforms since Budget 2016 include, first, making 100% small business rate relief permanent and doubling the threshold of this relief from April 2017. As a result, more than 675,000 of the smallest businesses do not pay business rates at all. Secondly, increasing the threshold for the standard multiplier to £51,000 from April 2017 has removed many properties from the higher rate of the tax. Thirdly, moving to more frequent valuations by bringing the next revaluation forward one year to 2021 and moving to three-year revaluations after that will make bills fairer by ensuring they more closely reflect properties’ current rental values Finally, introducing a new retail discount has cut the business rates bills of small retailers by one third for two years from April 2019. This is providing up-front support to the retail sector at what is proving to be a challenging time for many retailers, and it is worth about £1 billion to businesses Looking forward, as confirmed in the statement I made on 27 January, from 1 April this year the Government will increase the retail discount to 50% in 2020-21, and extend eligibility to independent cinemas and grassroots music venues for the first time. We will provide additional support to pubs through a £1,000 discount for pubs with a rateable value of less than £100,000. We will extend the duration of the £1,500 discount for local newspaper office space for a further five years. However, it is important to be clear that the Government recognise that concerns remain about the impact of the tax. That is why we are committed to a further review of business rates, details of which will be announced in due course The order before the House is the necessary secondary legislation required to effect the change in the inflationary increase for business rates from RPI to CPI in the financial year 2020-21. It sets out the new equation for setting the business rates multipliers for the coming financial year, so that the September 1.7% CPI figure is used instead of the 2.4% RPI figure Given the difference in the multiplier from uprating this year, the small business multiplier in 2020-21 will be 49.9p, rather than 50.3p. The standard multiplier in 2020-21 will be 51.2p, rather than 51.6p. That change represents a cut in business rates every year, benefiting all rate payers and freeing up cash for businesses. The order applies to England—unlike in the last debate, Madam Deputy Speaker, there has not been quite the same interest from Scottish nationalists about this measure, although both provisions apply to England. The Government will provide the devolved Administrations with funding to enable them to offer similar support if they wish, and they will fully compensate local authorities for the income they will lose as a result of this measure This measure should not be viewed in isolation, and as I have said, it is one of many introduced by this Government, and their predecessor Governments, to support business. I have mentioned numerous cuts to business rates, including the two-year business rates relief for small retailers. Looking more widely, the UK corporate tax regime remains highly competitive, with the Government having lowered corporation tax from 28% in 2010 to 19% today—the lowest rate in the G20. Beyond that, businesses are benefiting from enhanced tax incentives, including the introduction of the new 2% structures and buildings allowance, and a temporary increase in the annual investment allowance to £1 million The statutory instrument that we are legislating for today will contribute to the Government’s efforts to reduce the burden of business rates and make them fairer for taxpayers. As I outlined, on top of the reliefs already in place, the Government are committed to a review of the business rates system, details of which will be announced in due course. In conclusion, this order will change the annual inflationary increase in business rates from the retail price index to the consumer prices index in financial year 2020-21, thereby reducing costs for all business rate payers in England and giving the economy a further boost. I commend the order to the House.