Jim McMahon MP: speeches

Speeches

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  That was not my point. I did not use those words. Steve Alton: But having that assurance is a key part of it. Uncertainty has been impactful on business rates. It has stopped small operators from taking another site. If they take another site, you are talking about £300,000 to £400,000 of capital investment to build a new team of 40 employees, and there is a compound impact on the supply chain locally. A lot of people have held a station and have the ability to do it, but it is just not viable with the business rates bill as it is now. You could unlock some significant investment and growth, and, as we have shown previously, you could do so rapidly.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q These measures are very deliberately targeted at those smaller properties in retail, hospitality and leisure that are generally the backbone of our high streets and town centres. Your institutional members, who are investors in those places, must also reflect on the fact that many of those places are really struggling. Where they may be a landlord and the demand just is not there, it will be, by and large, because the business does not believe it can keep its head above water, notwithstanding the rent levels. Do you and your association think that a stable system that has a permanent relief—one that takes away the cliff edge and temporary support, which has been there since covid, to give long-term support—will be good not only for communities but for investors, who will be able to fill those vacant units? Rachel Kelly: I think having more predictability and certainty around the tax bill is important for both occupiers and investors, which goes to my point that the best thing you could do is go further and fix the tax rate. But yes, the greater predictability and stability is good for investors and occupiers alike. Does that answer your question?

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q Thank you for the evidence you have given, and for making the time to come to this evidence session, which is our opportunity to get an insight into the nuances and how things feel on the ground. We talk about private schools and the independent sector, but the truth is that those terms represent a broad spread of different types of schools in terms of their make-ups, pupil numbers, financial models and so on. It would be helpful to get a snapshot of the variety of schools in the system, including by perhaps comparing and contrasting a couple of different schools, and then I will follow up. Barnaby Lenon: We have a huge range of types of school. At one end, there are quite expensive boarding schools. Their fees are often quoted, but it is very expensive to run a boarding school. They are not typical, because the average independent school in our sector has 280 pupils—so it is pretty small—and half are smaller than that. I have been a governor of schools with 120 pupils, but the special needs schools we are talking about often have 50 pupils. There are plenty of faith schools, about which Simon will talk in a moment, that also have very small numbers, yet are quite important in their particular faith community. The average fee for a day school is about £18,000, but half are less than that, and there are some with incredibly small fees—just a couple of thousand a year, which is less than would normally be spent on a pupil in a state school. There is a massive range in terms of fee and size of school. We are particularly concerned about the low-cost and small schools, because those are the most vulnerable. They are already closing. Through our surveys, they have told us that they are going to close if the situation continues as, so far as one can see, it is going to continue. Simon Nathan: As Barnaby said, there is a range: 1,000 schools, or 40% of the schools in our sector, have fewer than 100 pupils, so they are not always very big schools. To touch briefly on faith schools, 20,000 children attend Muslim faith schools in our sector, and those schools charge an average of £3,000 per year in fees. There are Orthodox Jewish Haredi schools in our sector—65 schools that educate 20,000 children. On average, those schools ask for about £100 a week or less, and those schools are modelled in such a way that if a family comes in that cannot afford the fees, the school will accept them anyway. It is the community that steps in and fundraises to make up that financial difference. To give an example, those types of Orthodox Jewish Haredi schools run on a low-fee model, and quite a lot of them are in London where there are high property prices. As Haredi Jewish families tend to have more children on average, a lot of those schools will have pupil numbers of around 800, so they will be in quite large buildings and will have quite large rates bills when this change comes into effect. I have spoken to representatives of those communities who are extremely concerned by the impact that this will have. They use a low-fee model, so they do not get huge amounts of money in fees, but the rates bill could be tens of thousands of pounds, if not more. The only way that those schools can bridge that gap is through fundraising from the synagogues in the community. If that money cannot come forward, those schools just do not have the money to pay the bill, so they are very concerned.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q As a quick supplementary, what is your assessment of the number of your members that will benefit from the measures being taken? Kate Nicholls: The overwhelming majority of my members will benefit from the measures being taken, if they are taken to the maximum, but I reiterate exactly what Steve said: in the current circumstances, it needs to be 20p. It cannot be “up to”; it needs to be 20p for both tiers. A number of hospitality businesses across the UK—about 700—fall into the super-rate. That might sound like a very small number, but it is a large proportion when it comes to employment: those businesses account for about 7% of employment. That will be particularly impactful. Those will tend to be larger hotels, pubs, bars and restaurants, either in city centres—around 400 of them are in London—or in coastal communities, where we have our large hotels. Those will be very large premises. You asked about margins. Over the period since covid, margins in the sector have eroded by 40%, and many of our businesses are now operating at a net profit margin of between 4% and 6%. In Cornwall, Devon and deprived coastal areas, the big hotels will be the biggest employers by far: 20% of employment in those coastal areas is in the hospitality and tourism sector. If we hit those businesses and apply a super-rate at £500,000-plus, that will have a material impact on them, particularly when combined with the NICs increase. My final point on those 700 businesses is that we are going through the revaluation process at the moment, and we estimate that there are a further 300 in the band of £400,000 to £500,000 rateable value. Given that the revaluation is looking at 100% to 200% increases in their rateable value as covid support falls away, you could bring a further 300 business premises into that super-rate. As we read the Bill, there will be different rates above £500,000 for different types of premises. We urge you to keep that at zero for hospitality businesses, if you choose not to exempt them totally. There are two options: you can exempt them on the face of the Bill or you can apply a zero rate so they just pay the standard rate. Otherwise, you will further exacerbate closures across the big hospitality businesses in city centres and coastal tourism communities. Steve Alton: From a pubs perspective, a small number of those it will affect are subject to the small business rate relief, and we are obviously keen for that to stay in place, because they are small, essential community pubs. It will have a material impact. I also ask the Committee to look at the real impact numbers that the proposal will generate. It comes down to our objective of getting fairer taxation and a reduction in what those businesses pay. The maximum application—the 20p—is key, but you should also look at the multiplier alongside the revaluation. If that rises, which is highly likely, we need to think about the overall impact, and ultimately what the bill will be. We have a profitability issue right now. To come back to the Minister’s comment, rates are part of an unfair tax burden that we need to equalise.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  These are evidence sessions where we try to glean insights that we have not previously had to inform the Bill and any potential changes. But I am struggling to get from the evidence so far a real sense of the impact. If there is a pound for pound impact with this measure—the business rate treatment for private schools—it amounts to, on average, just over £300 per pupil if it is passed on in its entirety, which is less than £1 a day. On that basis, what assessment has been made on the impact of that from your perspective? Dr James: I have not actually looked at the impact of this particular measure in detail. I have looked at the impact of the taxation in general, but—

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q What I was trying to get to more was—to say “evidence” would be pushing it too far—the assessment that has been made of the impact. We hear language like, “Our parents are aspirational,” but all parents, by and large, are aspirational, regardless of the school their children go to. I am aspirational, and my son goes to a state school; that does not mean I am a lesser parent. But I do not want the conversation to be about that; I want it to be about making sure that we fully appreciate the Bill’s impact. A lot has been made of the potential displacement of pupils from the private and independent sector into the state sector. It would be helpful to get your assessment of that. Our assessment, based on May 2023 data, says that, in terms of the capacity to receive children, there are around 1 million unfilled vacancies in primary and secondary schools in the state sector. Of that 1 million, how many could come in from the private sector as a result of this measure? Simon Nathan: We did a pupil numbers survey this September that asked schools what their pupil numbers were in September 2024, compared to September 2023. That showed that pupil numbers were already down by 10,000. If you translated that into the additional costs to the state sector, it would cost the state sector around £80 million to educate those 10,000 pupils.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q If it is a stalking horse, it is a fairly mild one. The impact, even if every pound was passed on per pupil, is just over £300 a year—less than £1 a day. Dr James: I am sorry; I am having difficulty hearing what you are saying.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q It was more about a recognition from industry that, for the institutional investors in property, the Government are going a long way to bake a permanent relief into the system, rather than year-on-year reliefs. That relief can help to fill those units that investors maybe really struggle to let because, whatever the rent levels, they are just not commercially viable for the end user, and these measures will help in that end. Rachel Kelly: I think they will go some way to helping. If the ultimate goal of the Bill is to support high streets, there are probably areas where we would suggest that it is not as targeted as it could be. If you think of a really thriving high street in your area, retail and leisure will form a large part of it. However, a thriving high street also has offices and other businesses that provide footfall to those retail units. It has big anchor stores that might not benefit from this smaller relief but provide really important footfall for the other retail and leisure occupiers. It has car parks that are really vital to bring in customer bases for those high streets. It often has lots of asset classes, such as GP surgeries, libraries and some forms of education—you get my point. A thriving high street has a huge mix of different businesses all supporting each other. It is a really important—and maybe fragile—ecosystem. Yes, this measure will support some of those units, such as the smaller retail and leisure ones, but I am not sure whether that is enough to support the whole high street ecosystem.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q But those are provided for in the scope of the proposed legislation. Schools that have more than half of their intake of children in that situation would be exempt—for those in receipt of a local authority EHCP. Dr James: That indicates how far there is a problem with this and how far this is being used as a stalking horse to try to frustrate the bigger objective of reducing social inequalities.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q It is important to say, though, that the 1 million vacancies I referred to are in existing schools. So the teachers are in the classrooms, and the buildings are there. These are vacancies in the existing school system. Simon Nathan: I appreciate that. The point I was making was that some of the money that would be raised to support greater investment in state education will get eaten up by pupils moving over. In terms of hotspots, it would depend very much on the part of the country—obviously, our schools are predominantly in the south and in certain parts of London, in particular. We fully appreciate that, on a macro level, there is a certain level of vacancy, but our concern is that there will be particular parts of the country where there might be more hotspots.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  I think that rather than hearing a case from the evidence sessions that asserts that this does not need to happen, which we have just spent five minutes doing, it would be helpful to get a sense from you, given that the decision has been made to do this, of your assessment of the impact and the mitigations you would propose, within the scope of what is being proposed, to counter that. Dr James: For schools providing for special educational needs, you can always amend the Bill to exempt certain types of school, or certain situations with certain pupils. There is a bigger question of social justice: it is well known that the alumni of private schools are disproportionately represented in all sorts of professions, including Parliament. I have a quote here from a paper that that says that parents know that what they are paying for is lifelong membership of an exclusive and superior club. Talk about saying the quiet bit out loud! We can provide scholarships and exemptions for special educational needs, but—

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (Second sitting) · Hansard source

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  Q There is a variety of different schools with different specialisms, particularly those special needs schools. Clearly, we have made provisions to ensure that those with more than 50% of pupils in receipt of an EHCP are exempt from this, so they are out of scope. In the end, do you think that many parents feel the need to go to the independent sector because they do not feel that the mainstream provision is adequate? On that basis, is that a reflection that the Government’s priority of rebuilding that mainstream provision, including the significant investment of £1 billion this year, is essentially about fixing the system so that parents have genuine choice, and do not feel that they have to go to the independent sector? The second point I would make is about the quantum if it was followed through. There will be an assumption that, as a business, schools will look to absorb as much of the additional pressures as possible—I will be honest—in the way that state schools have had to over the last decade. These are the choices that every business has to make to try to make the numbers work at the end of the day. Even if every pound was passed on with these measures, by our assessment, it is about £300 per pupil per year, which clearly is less than a pound a day. I understand that you have given a wider context, but within the scope of the Bill, what assessment has been made of the impact of that average of £300 per pupil per year—if it was passed on in its entirety—on people potentially leaving the sector? Also, what headroom might schools have to absorb it within existing budgets? Simon Nathan: I think your first point was about SEN. I want to say at the outset that we support increased investment in SEN in state schools, and we support a well-funded state sector. At the moment, the situation in which many parents find themselves is that, to cater for the specific needs of their child, they find that they have to go to an independent school to have that need met, and that is the choice currently open to them. I said that, at the moment, we see our sector as providing that additional capacity to support state SEN services, and it is over 100,000 children. Our sector will be there to pick up that need, and often those who come to independent schools have more complex needs, but we wholeheartedly support more investment in state SEN. David Woodgate: I think the £308 per pupil translates into about £147,000 per school for the business rate relief alone. Our schools have been working very hard to manage their cost bases. Since covid, a lot of our schools dropped their fees by up to 50%, they provided hardship funding, and they educated and looked after children of key workers with no state support. Since then, we have been rebuilding. But I think the sector acknowledges that it cannot just keep putting this on to fees. Many of the parents who choose our education are aspirational parents—two-income families, with the second income going very much on providing independent education—so you cannot load the fees. It is about looking at the cost base. Costs are being cut back to the bone, and subjects are being dropped. Inevitably, this will result now in redundancies. I was speaking to a school just yesterday that said that the impact of NI and the business rate relief is over £500,000 a year. They will be making eight teachers redundant over the next two terms. That is indicative of what a lot of schools will have to do, which in turn impacts on all the other things a school offers.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q Thank you for giving time to give evidence today, Mr Woodall. You explained the nature of your members and the fact that their businesses are very much anchors of the community. They are the place that provides the food, but also, in many places, they provide access to finance, post office facilities, postal services and so on. How many of your members do you assess will benefit from the measures, given that the relief is targeted at retail, hospitality and leisure businesses of the scale you talk about? Edward Woodall: Very much the majority of the membership. The breakdown of the membership is that about 71% are independently operated across the convenience sector, and the other third are operated by multiple retailers—they might be a Co-operative, a Sainsbury’s Local or a Tesco Express. The large majority of those premises will sit under the £51,000 rateable value or still use the standard multiplier. Of course, when you take into account hospitality and leisure, we understand that that will be lower as well. So overall, most convenience retailers, as small format retailers trading from spaces under 280 square metres in secondary locations, will benefit from the lower multiplier.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q I accept that up to a point, but the temporary relief that the previous Government brought in to cover the impact of covid on the high street and retail, hospitality and leisure was introduced at a time when the sector was decimated and the country and the economy changed beyond recognition, in a way that none of us had experienced. That is not the world today, but the operating environment is still very difficult. Have you made an assessment of the impact of the previous temporary relief coming to an end in the form of a cliff edge? It was just going to stop and there was no provision for it to continue in any form in the Budget or the overall forecast. What impact would that have had on the high street? Stuart Adam: The short answer is that we have not, and I am not aware of any good empirical study of what that was likely to do. It is slightly interesting and strange the way it evolved, because of course it was introduced as a relief in desperate times during covid. But as covid was coming to an end, it was made more generous rather than less. It moved up from 50% to 75%, if I remember rightly, at that point. Again, I am absolutely not disputing in any way that it did provide and does provide much needed respite, particularly at times of crisis, but as a long-term permanent thing I do not think the effects are the same. One thing I completely welcome is that whatever you want to do with this—setting it up as a clear, long-term part of the system rather than having year-to-year uncertainty as to what the number will be and whether it will continue and so on—and whatever decision you make, making it a permanent part of the system is a very good thing.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q Thank you for coming to give evidence today, Mr Adam. I absolutely accept what you said—you are far more qualified than me on these matters, and I will not try to test some of it. However, I can say from my experience in Oldham that businesses are asking for respite and that they have found things very difficult. Although covid has been and gone, the operating environment before covid was difficult for many high streets and town centres, particularly for retail, hospitality and leisure. In some places, particularly where the economy is vibrant and there is high demand for premises, there might be a shift from business rates to rent as the system is moved round, but in most places, where there is not that high demand and there are lots of vacant units, it is about making the activity more affordable so that people can operate and keep their heads above water, and there probably will not be the shift that you talked about. Stuart Adam: I disagree. I think there still would be that shift over the longer term. Again, these things take time as rental contracts adjust as new tenants are found for premises. The theory is reasonably clear and the evidence that we have, which is fairly thin, supports it pretty much completely. I emphasise that in the short run we would absolutely expect respite for retail, hospitality and leisure sectors at the moment, until there is time for rents to adjust. One thing to bear in mind is that we have had more generous reliefs for retail, hospitality and leisure in recent years, and some rents have been renegotiated during that period. It is also possible that if people, firms and the market expect reliefs that are more like 75% to continue, rents may have gone up, and the fact that the relief is less generous than what it replaces means that they will be worse off in the short run than if the reliefs had never been introduced. Obviously, they are still better off than they would be if the relief were removed completely. My expectation is still that that will be reflected in rents over time.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q The first part of the question was more about how agile the system can be. Providing for secondary legislation as part of this Bill is about having that agility and being able to move to recognise any shocks in the system to ensure that, if there is a hit to the local economy, or the high street in particular, the system can move quickly enough at the right point to save it. Gary Watson: That is one of the criticisms of the rating system. Outside of section 47, it was not flexible and could not adapt very quickly. I think it has to be a good thing to have that flexibility both in the multipliers, including the higher one and the lower one, and in how it allows you to direct the particular relief. It is good for the rating system, including those who pay the rates and local government.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q Leading on from that, one of the other measures in the proposals would remove the current cap on the temporary relief so that multiple operators, including national operators such as the Co-op and others, will benefit more from this scheme. I am interested in your view, because you will no doubt have a view on the tax system in the round and the impact it has on the business overall. Is it recognised that there is an attempt being made here to make sure that those national retailers are as important to the high street and communities as independent retailers, and actually it is the ecosystem overall that makes a place thrive? Paul Gerrard: I think it is very welcome. We are a national business of little shops; we have 2,500 little shops all around the country, and those little shops bring different economies of scale from, say, a big box in a huge retail park on the outskirts of town. This is very much looking at the kind of shop, rather than the kind of business, and I think that is important. As I said, we wholesale to 5,000 independent stores, and we see this all the time. It is about the nature of the shop, where it is and the impact it has on communities, not just commercially, but socially. A few years ago, we ran a campaign with the British Red Cross on loneliness, and our colleagues would tell me that very often, for the most vulnerable people in societies, the only people they would speak to were in the local shop, such as my colleagues in the Co-op or staff in a Nisa or a Sainsbury’s Local. They are really important as a kind of shop, and that is what I think this Bill recognises.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Let me make a point of clarity for the record. The 7.5% of total rateable value of the overall business rate tax take was just for retail, hospitality and leisure. It does not take into account offices or warehouses. I thought it was important that we set the context correctly in framing the conversation. Tom Ironside: We can provide you with clarity on the figures, which we can lay out in a subsequent note, if that is helpful.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q Is part of the tension not that the question described a broken market, but that response describes a functioning market? Is the real issue that many institutional investors would sooner have an empty property with a notional rent attached to it, even if the rent is never achieved, than accept a tenant for a lower rent that would have an impact on their overall balance sheet? Is there not a tension there? Stuart Adam: Yes, I think that is right. There is an interesting question as to why so many properties are left empty for so long, when it would seem to be in the landlord’s interest to have anyone in there paying them something, rather than no one in there paying them anything. There are certainly aspects in which the market does not function well, but on the whole it still looks to me like a market where, basically, prices are determined by supply and demand, and such evidence as we have seems to support that.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q Thank you, Mr Watson, for taking the time to be here and for the insight you have provided on that first question. I am interested in the point about the number of multipliers. If I understand you correctly, there is a risk that the more multipliers you provide, the more confusion there might be in the system. However, the counter-argument—this is certainty our position—is that the business rate system is a blunt tool almost by design, and that by creating this different approach, we can better target the support that we provide not only for retail, hospitality and leisure, but for the large footprint occupiers, warehouses and distributors, where we create that pool of funding. I am interested to get an insight into how you and your members would see that balance being struck in the right way. Gary Watson: As a professional body, we sometimes have quite diverse views, because we have those working in local government, for example, and then we have those working in the private sector, and they can have some quite different views sometimes. Standing back and looking at what our preference would have been, before we saw the Bill, the whole relief system is very complicated at the moment. The reliefs do not interact with each other, and it is confusing for the ratepayer and perhaps for the local authority. We could have looked at the reliefs as a whole and started again. What we have are the multipliers, and that is what we have to work with. If we had the choice at the beginning, we might have looked at some more targeted form of mandatory relief, but we are where we are. The important thing is that we will make it work, and I think the Bill gives the Government the flexibility to change. What you found with the pandemic, for example, was that the property tax system, to some extent, came to the fore, because it allowed Government very quickly to not only get money out of the door but target it to certain types of business. The key issue will be that, assuming the Bill gets Royal Assent, the secondary legislation has to be very clear on the types of business that the Government want to support with the different multipliers, and perhaps the exclusions that they want to consider. That also allows the Bill to be flexible, so it is not as if that is all you have to work from. By keeping it in secondary legislation, things will change. Importantly, we have found over the last 10 years that, because it is all under section 47 of the Local Government Finance Act 1988, it allows Government to bring things in really quickly whether or not there is any new Bill. There is no delay, and local government can get that money and support out of the door really quickly. It also allows local government to plan on the financial side as well.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q On that point, is that not why this measure is so important? If we think about the types of shocks that many businesses face, the pandemic was exceptional but also profound. Having that flexibility to move quickly and adapt was very important to the system. With the current system, aside from it being temporary, short-lived and a cliff edge, the business did not know whether it was going to continue, and if it was going to continue, in what guise. It also had the impact of capping the amount of relief that could be given to any business at £110,000. How do you and your members perceive the high street? From the Oldham perspective, when I look at the high street, national retailers such as Boots and Specsavers are actually the foundation of many high streets alongside local independent retailers, but previously they were locked out of the temporary scheme. It would be interesting to get your views on that. Gary Watson: In terms of the high street, the companies that you named are there and they are often the draw, which is a benefit to the smaller ones. When we lose some of the more well-known retailers on the high street, those properties do not stay empty too long—certainly the smaller ones—because people move in very quickly. Sorry, I did not get the other part of the question.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q Thank you for attending the evidence session, and for the written evidence that you have provided by way of preparation for the meeting. I think there is an acceptance in the evidence that you have given that any business rate system ends up having to draw the line somewhere; it is the nature of the multipliers and of the value that you apply. It stands a fact that, when it comes to most of your members, despite the 4,000 that you say will be above the £500,000 threshold, 772,000 are below the threshold. Therefore, it stands the case that the vast majority of your members will be the beneficiaries of the measures taken here. Also, although it can be portrayed—and has been during this evidence session—that the relief is being decreased from 70% to 40%, the truth is that the temporary relief over covid was due to come to an end. That was a cliff edge, but this measure provides a permanent relief in legislation, which gives certainty over the long term. It would be interesting to know the views of your members on that. Helen Dickinson: I just heard the end of the previous session. Obviously we have got to get to the point of implementation, but once we are there the long-term certainty is going to be really important. I completely understand the context in which the covid support was given and how valuable that was. Painful as it may be for many businesses when transitioning from a higher discount to whatever the new system might be, longer-term certainty outweighs that because we will not be limping from year to year waiting to see what that might look like. In the context of your point about the proportion of businesses and shops that would benefit from the proposals as they stand, I completely agree that the 4,000 shops I mentioned is less than 5% of the total number of shops. Where it becomes much more difficult is that, if you look at that small proportion of shops, it is about a third of the rateable value of all shops. If you think about it within a retail context, what we are effectively doing is penalising some shops to support other shops. In the competitive landscape of retail, where businesses are competing for consumer business day in, day out, it is distortive to competition. We completely agree that you have to draw a line somewhere, but we think the line should sit outside retail and hospitality, rather than being drawn within retail—and hospitality, she says, with her retail hat on. Does that answer your question?

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q For the record, I refer to my entry in the Register of Members’ Financial Interests. Mr Gerrard, many of the stores that you operate are not on the high street or in town and city centres; they are often the last remaining store on the estate in a community. How do you think this Bill might contribute to making those more viable? During the pandemic, when children were being educated from home and given vouchers to get meals during the day, we found that there were significant retail deserts in large parts of the country where that immediate meal was not available, bar the local convenience store on the estate or in the local neighbourhood. From that perspective, beyond the high street and town centres, what impact do you think these measures might have? Paul Gerrard: You are absolutely right; many of our stores are on high streets, but a lot are just local stores that will be the corner shop on a street. The rates bill is significant—as I said, it is one of the top three costs that we have, alongside our people. As you know the Co-op has always paid the Living Wage Foundation’s real living wage, because we think that is the right thing to do, and that is for every colleague, regardless of age or employment status. The other top cost is rent, and then the third one is rates. I do not think we close stores because of rates, but the current rate system makes it really difficult for some stores to be viable. If we then add to that issues around crime—I have given evidence in this place before on that—there are a lot of costs hitting us. The proposals here are particularly important for those small stores. I think about two thirds of our stores are underneath a £51,000 rateable value, and that rates bill will have a significant impact on the viability and profitability of those stores. You are right that, during the pandemic, when we were all told to stay at home to keep safe, my colleagues and shop workers throughout small stores went in and made sure that the shops were open so that people could get food and water to live. As I said before, I think we saw in technicolour how important small stores are. The retail sector is multichannel and there are lots of different parts to it, and those different parts play different roles and have different impacts. Small stores are the beating heart of communities. We have done some work, which we are just refreshing, that says that, if you have vibrant high streets, you have better mental health. You have a whole range of better outcomes, and those small stores are at the heart of it.

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q It does, a bit, but I am not entirely sure it hits at the facts, to be blunt about it. It is not the case, from the evidence, that properties above £500,000 are essentially cross-subsidising those below £500,000. Those above £500,000 are only 7.5% of the total rateable value in the whole system. It is not the case that we are seeing that transfer. Is it not also the case that many of your members who will occupy premises above the £500,000 will be the larger footprint occupiers, such as supermarkets and big department stores? If we were to move the centre of the cross-subsidy entirely over to warehousing and distribution, they would pay it on the back-end anyway, because Tesco, Sainsbury’s and the rest have huge warehousing and distribution models in their business. Helen Dickinson: I am trying to think of the best way to answer that without going into too many details and numbers. Again, I agree that with the cross-subsidy we are not talking about going from one to the other within retail. If you look within retail, the rateable value of all of the small and medium-sized retail properties is about £9.2 billion, and there is an additional £4.6 billion of larger properties. Taken together, that is about £13.8 billion, with one third large and two thirds small. As you say, there are many other properties that sit outside retail, including warehouses and distribution centres, but also offices. In fact, I think the biggest chunk of that is offices. We are not just talking about things that will impact retail, like warehouses, coming into the other side of the equation; we are talking about all those other sectors as well. Going back to what I said at the beginning, if the objective of this is to stimulate local investment in communities—that has to be the goal, because we all, as consumers and customers, want to see our high streets and town centres flourishing and vibrant with a diversity of offer—then we have to be able to find a way for that funding to come from right across the spectrum of properties, whether it is offices, distribution centres or whatever else sits outside. The modelling we have done shows that that is possible within the context of the framework you have laid out. Tom Ironside: Just to be clear, are we talking about the exemption of shops above £500,000, not the exemption of other sorts of properties?

• 11 Dec 2024 · Non-Domestic Rating (Multipliers and Private Schools) Bill (First sitting) · Hansard source

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  Q On the point that you made about the potential to improve the system more generally, clearly we want this to be a measure that supports the fabric of community. In the end, these are retail businesses, but they are often the places that bind communities together. That is very much the way that we as a Government perceive them, and perceive the value of our high streets and our precincts in our villages and towns. From your perspective, what measures could be taken to really target the measure to ensure the support is given where it is needed? Edward Woodall: On the multipliers, we will have to see if the rate of the multipliers is going to have an impact overall. I gave some examples of where you set the multipliers determining how much businesses can invest. What is described in the Bill is well targeted for retail, hospitality and leisure, to support the areas my members trade in and the types of businesses that the communities want in those locations. If we look at our polling about the most desired services on local parades, convenience stores, post offices and pharmacies come top, and all of those trade out of similar premises. Hopefully, it will help our sector, but it will also help the other businesses that trade in those locations as well to continue to deliver those services too.