Non-Domestic Rating (Designated Area) Regulations 2021 — House of Lords, 2021-02-24
Topic: Macroeconomics
Stephen Greenhalgh (Conservative, Centre-right): My Lords, we have indeed had an interesting and extremely wide-ranging debate on the regulations before us. I thank noble Lords on all sides for their thoughtful contributions The noble Lord, Lord German, talked about looking at a land value taxation scheme. The noble Baroness, Lady Wheatcroft, the noble Lords, Lord Hain and Lord Kennedy, and a number of other noble Lords raised the issue of the future of business rates. We need to wait for the outcome of the fundamental review of business rates; it was recently declared that that will be published in the autumn. It is very important that we are cognisant of these seismic shifts that we have seen between physical retail on our high streets and town centres and the move to online, which of course has been accelerated by the Covid-19 pandemic The noble Lord, Lord Hain, gave an eloquent speech about how government can and should support our town centres, which are really hurting as a result of this pandemic in particular. I point to this Government’s sizeable towns fund, which is £3.6 billion and will be allocated in £25 million chunks, with town deals that look to unleash the economic success and vibrancy of our town centres and high streets—£1 billion of that is specifically for our high streets, which are such an important part of life in our towns and cities. In terms of support, that is something we are bringing forward On rates relief and the future of business rates relief, an incredible £10 billion has been saved by providing a business rates holiday. The decisions on the future of that for 2021-22 will, of course, be something that is considered by the Chancellor in the upcoming Budget A number of noble Lords, including the noble Baroness, Lady Wheatcroft, talked about the important issue of the simplification and reform of local government finance. It is fair to say that, before the pandemic, we had long and detailed discussions with local government about reforms to the local government finance system. These included possible reforms to the allocation of funding, by means of a review of relative needs and resources, and to the business rates retention system. Earlier in the financial year, we announced that the Government will not proceed with reform in 2021-22. The Government’s decision was to postpone reform and was taken in the interest of creating stability for local authorities, and it has allowed both the Government and councils to focus on meeting the immediate public health challenge posed by the Covid-19 pandemic However, once the pandemic is over—we have announced our road map to recovery—we will work with local government to understand the lasting impact it has had on both service demands and revenue raising. We will then revisit priorities for the reform of the local government finance system, taking into account wider work on the future of business rates and adult social care, so the final decisions about reform will be taken in the context of next year’s spending review Both the noble Lord, Lord Kennedy, and my noble friend Lord Kirkhope raised the issue of new designated areas and the process, which is essentially by application. We have already created 226 designated areas across 94 different local authorities in England, mostly in enterprise zones; this includes 22 in Yorkshire and another 30 in Humberside. While we currently have no plans to roll out more enterprise zones, we are considering creating designated areas as part of free ports, as set out in the prospectus we published in November 2020. We are currently considering the applications that we received in response to that prospectus and hope to make a further announcement shortly. More generally, we are always looking at how best to help local government and partners meet their regeneration needs and challenges My noble friend Lady Gardner and the noble Lord, Lord Kennedy, raised a number of points about the differences between the lengths of time for which areas are designated. The majority of designated areas run for 25 years. This is because we recognise that the effective regeneration of an area requires a sustained long-term commitment, which needs to be underpinned by long-term funding arrangements. A few designated areas, such as those mentioned by my noble friend, in Brent Cross and Croydon, were put in place solely to provide a funding stream to enable authorities to borrow for specific infrastructure developments. The period for which those designated areas run was worked out with the authorities concerned to ensure that, based on their projections of the likely additional business rates yield, they would have sufficient additional funding to repay their loans On the question of how many applications are refused, over the years designated areas have been selected in a number of ways. The first enterprise zones were created before the business rates retention scheme had come into force. Subsequent designated areas were created following discussions with local enterprise partnerships and local authorities. In 2016, we ran an open competition which led to the creation of 24 new enterprise zones—many comprising multiple designated areas—from some 60 applications. As with Brent Cross and Croydon, we have also created a handful of designated areas, having been approached by individual authorities to assist with the financing of specific infrastructure projects. In all, we have designated 226 separate areas across 94 different authorities. Since 2013, these have contributed nearly £240 million of additional investment in the regeneration of areas throughout England. Along with the noble Lord, Lord Kennedy, and as someone who was formerly a local authority leader, I pay tribute to the contribution of the noble Lord, Lord Heseltine. He is the regeneration impresario. In principle, it is about how we can take locally generated investment and reinvest it in the local area—effectively pump-priming money put in by the state by leveraging in money from the private sector. This is behind the approach we are taking in South Tees. The noble Lord, Lord Heseltine, took those principles and reapplied them again and again, because they work. He made a huge contribution in this field. With regeneration comes opportunities for good-quality jobs. It helps lift whole areas. It is important that we find measures within local finance to enable and encourage local authorities to grow so that they can reinvest in their local areas, so that we have that virtuous cycle The regulations will ensure that, from 1 April, any growth in business rates will be retained in its entirety by Redcar and Cleveland council and the Tees Valley Combined Authority. Instead of having to be shared with central government, this can be used for the benefit of the local area. They will provide those authorities with an income stream over 25 years that will be used to invest in the South Tees Development Corporation. This investment will secure the creation of new industries and 20,000 new jobs in an area blighted by the closure of the former steelworks In conclusion, these regulations make an important contribution to the redevelopment of one of the largest development sites in Europe. They underline the Government’s long-term commitment to the regeneration of South Tees, and I commend them to the House.