Peter Aldous calls on the Levelling Up Minister to respond to the East of England All-Party Parliamentary Group’s review of levelling up in the region and for the Government to make Lowestoft’s enterprise zone into an investment zone.

Peter Aldous (Waveney) (Con)

T6.   The all-party parliamentary group for the east of England has carried out a review of levelling up in the region. It has found that although a good start has been made, there are five of the White Paper missions in whose delivery there is low confidence, four in which there is medium confidence and only three in which confidence is high. I would be most grateful if the Minister provided a full written response to the report, but in the first instance will she seek to make Lowestoft’s enterprise zone an investment zone? That would underpin and support levelling up. (903007)

The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Dehenna Davison)

Pitch for Lowestoft heard loud and clear! The Chancellor announced at the time of the autumn statement that the existing investment zones programme would be refocused to

“catalyse a limited number of the highest potential knowledge-intensive growth clusters”.

Our Department will work closely with key partners on how best to identify and support those clusters. My officials have read the APPG’s report; we will respond in full in due course.

Hansard

Peter Aldous asks about the outcome of the annual fisheries negotiations with the EU and other North Atlantic states and raises concerns that the total UK fishing opportunity secured is considerably below the level of inflation and asks what is being done to ensure that the UK achieves better outcomes from negotiations now that we participate as an independent coastal state.

Annual Fisheries Negotiations with EU and North Atlantic States

12.38pm

Peter Aldous (Waveney) (Con)

To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the outcome of the annual fisheries negotiations with the European Union and other North Atlantic states. Thank you for granting the urgent question, Mr Speaker.

The Minister for Food, Farming and Fisheries (Mark Spencer)

I am responding on behalf of my right hon. Friend the Secretary of State.

As an independent coastal state, we have taken back control of our waters and have the freedom to negotiate on our own terms and push for deals that will deliver for the UK fishing industry, for the marine environment, and for all parts of the United Kingdom. I am delighted to say that this autumn the UK has secured vital deals for 2023 with our coastal state neighbours, including the European Union and Norway. Taken together, these deals have secured more than £750 million-worth of fishing opportunities for the UK fleet in 2023, £34 million more than last year.

The UK has put sustainability at the heart of these negotiations, and an initial estimate suggests that nine more catch levels align with the scientific advice than did so last year. This is an important step forward and will allow our most important stocks to be fished sustainably. That is essential for a thriving fishing industry for the future. The UK will continue to champion sustainability throughout all negotiation forums and push for other coastal states to do so too.

Through the trade and co-operation agreement we will also have the specialised committee on fisheries with our EU counterparts. We use this forum to consider a range of issues, including how to increase the sustainability of certain stocks, which we hope will improve the outcomes of the negotiation in the longer term.

The UK’s fishing opportunities are negotiated in three main forums. First, the UK-EU bilateral. Today the UK reached an agreement with the EU on total allowable catches in 2023 for 69 stocks, as well as arrangements for non-quota stocks. This deal provides fishing opportunities for more than 140,000 tonnes for the UK fleet and is worth around £282 million based on historical landing prices. As part of this deal, we have agreed access arrangements on albacore tuna and spurdog in the North sea for the first time through the UK-EU written record. For non-quota stocks, we have agreed a roll-over of access arrangements for 2023 to ensure continued access to fish non-quota stocks in EU waters, worth around £25 million a year to the UK fleet. The House will also want to note that, as a result of the quota share uplifts agreed in the trade and co-operation agreement, the UK has around 30,000 tonnes more quota from these negotiations than it would have received with its previous shares as a member of the EU.

The second main forum where we negotiate our fishing quotas is the trilateral arrangement that focuses on stocks that we share with the EU and Norway in the North sea. In that negotiation, there were significant increases for North sea whitefish quotas, all set at levels either in line with or below those recommended by scientists. This deal is worth over £202 million to the UK fishing industry in the North sea and a further £11 million in waters around the UK based on historical landing prices. The UK also reached a deal with Norway that ensures stability for the UK whitefish fishing industry through continued access to each other’s waters for 2023. Our arrangements with Norway also mean that our crucially important long-distance fleet has access to fishing opportunities worth over £12 million in the Arctic region at a time when the main quota in that area fell by 20%.

Many Members will know that the UK has a significant interest in pelagic stocks, and these form the third main negotiation each year. This autumn we have agreed quotas with the other coastal states in the north-east Atlantic for mackerel, blue whiting and Atlanto-Scandian herring. These quotas were all set at the level advised by scientists and will be worth over £250 million to the UK fleet in 2023.

These deals are crucial to the long-term health of our vital fishing industry, but it is not just about securing financial value for the year ahead, important though that is. These negotiations are a crucial route for the UK to protect our fish stocks, to safeguard the marine environment and, in turn, to ensure that the fishing industry can profit and thrive for future generations. As we head into 2023, I am excited to carry on working with the industry to maximise fishing opportunities and put sustainability at the forefront, and, in short, to continue to support a fantastic sector to profit, modernise and succeed.

Peter Aldous 

I am most grateful to my right hon. Friend for that answer. I should point out that I chair a community interest company, REAF—Renaissance of the East Anglian Fisheries—which has the objective of regenerating the East Anglian fishing industry. Much of our fleet is inshore in nature, pursuing non-quota species, and thus the outcome of these negotiations is only of some relevance with regard to stocks such as sole. That said, the matter is of vital importance to the whole industry, as it provides the foundation stone on which it can be rebuilt all around the four nations of the UK.

It used to be an annual tradition that the Minister would come to this Chamber to make a statement at the conclusion of the negotiations, and thus it is to be regretted that it has been necessary to submit this urgent question, particularly taking into account the enormous interest in fishing generated by Brexit and the role that the industry can play in levelling up coastal communities such as Lowestoft, which I represent.

My right hon. Friend highlighted the fact that the total UK fishing opportunity secured across the three main negotiating forums totals £750 million, an increase of £34 million on the previous year. This 4.7% increase is considerably below the level of inflation, which is currently hitting fishing businesses particularly hard.

I would be most grateful if my right hon. Friend could add to his statement by answering the following questions. Will he advise the House as to the preparatory work that is carried out to ensure that the UK achieves better outcomes from negotiations now that we participate as an independent coastal state and are not part of the EU? What monitoring work is carried out after each annual negotiation?

The negotiations were due to complete by 10 December; I would be most grateful if my right hon. Friend could advise the House as to the reason why they did not. Have the issues that caused the delay been concluded satisfactorily from the UK’s perspective?

To revive the fishing industry post Brexit, it is necessary to enhance trust and for the Government to work in partnership with the devolved nations, industry and conservation organisations. This is best achieved by increased transparency, so will my right hon. Friend publish the positions that the UK took in respect of the total allowable catch levels for each stock? Progress towards sustainable fishing requires accountability, and the Government would contribute to that by making that information available.

Finally, as mentioned, East Anglian fishermen will accrue limited immediate benefit from the outcome of the negotiations, but from that outcome should flow the improved management of fisheries and increased access to fishing opportunities for local fishermen. With that in mind, will my right hon. Friend provide a progress report on the Government’s plans in that regard?

Mark Spencer 

I pay tribute to my hon. Friend not only for tabling the urgent question but for the work he does to represent his constituency. It is a little disingenuous of him to say that he dragged me to the Chamber for the urgent question; the ink went on the agreement when it was signed this morning, just after 10.30 am—around quarter to 11—which was after the statement deadline, meaning that it was not possible for me to bring a statement to the House.

Nevertheless, I am delighted to be here to celebrate what is a great deal. As my hon. Friend has identified, we are 30,000 tonnes better off now that we are outside the EU than we would have been had we remained a member state.

My hon. Friend made reference to the 10 December deadline, which I think was a false deadline. We were of course always ambitious to try to conclude the negotiations, but as the Minister I was always clear that it is more important to get the right deal than to get a quick deal and that setting false deadlines does not always bring us to the right deal.

My hon. Friend mentioned our negotiating position and asked whether we would lay it out in public. I am afraid to say to him directly that no is the answer. I am not prepared to share our negotiating position. I do not think that is how we get a good deal for the UK, which is what we have secured. If we set out in public where our red lines are before we enter the room, we tend to move quickly towards those red lines and fall back from that position.

Hansard

Peter Aldous highlights the job-creation opportunities on the north East Anglian coast in technologies such as offshore wind, hydrogen and carbon capture and asks the Government what is being done to attract private sector investment in these exciting emerging sectors.

Peter Aldous (Waveney) (Con)

T7. The road to net zero provides many local job-creation opportunities on the north East Anglian coast in technologies such as offshore wind, hydrogen and carbon capture. The Government are backing these industries, but significant private sector investment is required. I would be grateful if my right hon. Friend outlined what her Department is doing to attract inward investment to these exciting emerging sectors. (902826)

The Parliamentary Under-Secretary of State for International Trade (Andrew Bowie)

I congratulate my hon. Friend on his work not only as the MP for Waveney but as the chairman of the all-party parliamentary group on the British offshore oil and gas industry. He is well apprised of what we are doing in the energy sector. DIT and the Office for Investment work directly with project leads, investors and financial institutions, and we are seeing excellent progress. For example, ScottishPower is investing £2.5 billion in its East Anglia ONE project, the first of four in the region, including a £25 million state-of-the-art operations and maintenance facility in Lowestoft. Events such as the recent green trade and investment expo in Gateshead, which I mentioned, are showcasing UK opportunities to the world in many technologies, such as carbon capture and hydrogen.

Hansard

Levelling up in the East of England is a welcome ambition but has a “very long way to go”, a ground-breaking report has revealed. 

The report has analysed the East of England’s level of confidence in achieving the Government’s twelve levelling up missions, which were announced in a White Paper in February this year with targets set for 2030. 

At the launch of the East of England’s Levelling Up the East of England 2023-2030 on 13th December, more than a hundred MPs, Peers, council leaders and regional partners heard that levelling up is a very welcome ambition to address inequality. However, there is still a “very long way to go” in the East of England if all twelve missions are to be achieved in the timescales indicated in the White Paper. 

The report was prepared by the East of England All Party Parliamentary Group (APPG) and the East of England LGA (EELGA) in conjunction with four universities, NHS partners and a range of private sector businesses including British Sugar, AstraZeneca, Anglian Water and London Stansted Airport. The report revealed there is currently only high confidence in achieving three levelling up missions: employment and pay; research and development (R&D); and wellbeing. 

There is medium confidence in achieving four of the missions – those that seek to improve digital connectivity, deliver pride in place, reduce crime and widen devolution. However, there is low confidence in five policy areas, many of which are those most important to the people and prospects of the East of England: improved educational attainment, more skills, better transport, longer healthy living and more affordable housing to buy and rent. 

The report examines each of the missions in detail, setting out why each mission is so important to our region; providing an assessment of whether the region is on track to deliver the mission; offering an analysis of the threats and opportunities relevant to the mission; and giving recommendations for the Government to be on track to deliver the mission by 2030. It also charts progress on a key issue for the region which was not explicitly included in the Levelling Up White Paper: sustainability, with particular reference to net zero, renewable energy and water security.  

The joint APPG and EELGA meeting was chaired by Peter Aldous MP, Daniel Zeichner MP and Cllr Matthew Hicks, Leader of Suffolk County Council and Chair of EELGA, and addressed by DLUHC Minister, Lucy Frazer MP, as well as council leaders from across the party political spectrum: 

• Conservative Councillor, Louise McKinlay, Deputy Leader Essex County Council and Levelling Up Portfolio Holder 
• Labour Councillor, Alan Waters, Leader of Norwich City Council  
• Liberal Democrat Councillor, Stephen Robinson, Leader of Chelmsford City Council  

 Peter Aldous MP for Waveney and Co-chair of the East of England APPG said:  

“This ground-breaking report reveals the East of England is an economic success story with high levels of employment and several clusters of R&D and innovation excellence. It is one of only three regions which are net contributors to the Exchequer. However, it is a region where there are also areas of significant deprivation - within our coastal and rural communities and in ‘pockets’ in our towns and cities. Levelling up is as relevant here as it is elsewhere in England. And whilst in some places a good start has been made there is still a very long way to go.” 

 Daniel Zeichner, MP for Cambridge and Co-chair of the East of England APPG, added: 

“Levelling up has to be more than a nice sounding phrase. That is why we advocate urgent Government attention on the five issues where we have found low confidence in meeting the proposed targets: improving education, delivering more skills, better transport, healthy life expectancy and more affordable housing. These sectors are being pushed to the brink, often running simply to stand still. Given the cost of living crisis and current recession, delivering substantial improvements in these missions will be challenging.” 

Cllr Matthew Hicks, Leader of Suffolk County Council and Chair of EELGA, said:   

“The role of local government is critical to every aspect of levelling up. Local Authorities are the leaders and conveners of place so a strong and financially sustainable local government sector is fundamental to the overall achievement of the levelling up policy. However, this is not all about money. Partnership and devolution will also be key. As an international gateway to the prosperity of the rest of the UK, all partners in the East of England stands ready to work with central government and make progress in 2023 and beyond.” 

SOME KEY STATISTICS FROM THE REPORT 

The East of England: 

• has increased in population size by over 8%, almost 500,000 people, between 2011 and 2021, making it the fastest growing English region 
• has the highest percentage of working age people in work than any region in the UK – 79% 
• has attainment in reading, writing and maths at Key Stage 2 below UK average – just 64%. Average is 65% and the Government’s levelling up target is 90% 
• has the highest level of owner occupation than any region in the UK – 67% - but homes are more than 9 times median incomes so are less affordable than the English average. Meanwhile 1 in 4 private rented homes are “non-decent” and currently 99,604 people are on councils’ waiting lists for social housing and 14,856 are homeless including those in temporary accommodation 
• has (just) above average healthy life expectancy - 65 years for both women and men - but there is a variation of up to 9 years between people living in different places: for women the biggest “gap” is between Peterborough at 59 years and Cambridgeshire at 68 years; the gap for men is also 9 years: between Central Bedfordshire at 68 years and Luton at 59 years.  

A short version of the report can be accessed here.  

Peter Aldous urges the Treasury to use the spring Budget to reform business rates. He says it would be fairer and better if the system was simplified, the tax base broadened by removing the myriad complicated reliefs, annual valuations proposed, a one-year antecedent valuation date set, and fast appeals and greater evidence-sharing between occupiers and the VOA introduced.

Peter Aldous (Waveney) (Con)

I beg to move,

That this House has considered business rates and levelling up.

It is a pleasure to see you in the Chair, Mr Mundell. I am grateful to the Backbench Business Committee for granting this debate. It is extremely apt that the debate is taking place on the same day that the Levelling-up and Regeneration Bill returns to the House of Commons. If we can successfully reform business rates so that they are fair to businesses right across the country, that really will help to deliver meaningful levelling up.

At present, with businesses having to contend with a level of inflation not seen for a generation, soaring utility bills and stubbornly high rents, business rates are a fixed cost from which occupiers cannot escape. They are an impediment to regional growth, and their impact needs to be significantly reduced, with the system being put on a long-term, easily understood footing. In that way, businesses will know where they stand and can then make long-term investment decisions.

To be fair, all political parties have recognised the unfair and unjust nature of the current system and commitments have been made to both replacement and reform. From my perspective, I sense that the former—replacement—is the holy grail that is unachievable in the real world. To address the immediate threat that business rates pose to many businesses in different sectors and in different parts of the country, a wide variety of reliefs and exemptions have been introduced. Although welcome, they have made the system more complicated and difficult to comprehend.

Currently, the Labour party is committed to abolishing business rates and replacing them with a system fit for the 21st century. As I have said, I sense that it will be impossible for it to keep that promise, because, despite the drawbacks that business rates possess, they have inherent advantages for the Treasury: they yield approximately £25 billion per annum, are relatively easy to collect and are difficult to avoid. It is impossible to find an alternative system of taxation that has those advantages, and I believe that it is important to get on with reforming the current system.

Let me turn to the Government’s record. My right hon. Friend the Chancellor of the Exchequer made significant and largely welcome announcements in his autumn statement, which I shall detail later. However, I am mindful that we made commitments in the 2019 Conservative manifesto that we are yet to properly and fully implement. Those include carrying out a fundamental review of the system and reducing business rates in the long term for retail businesses, as well as extending the discounts to grassroots music venues, small cinemas, and pubs. Yes, we have provided a wide variety of short-term reliefs, but we have not yet provided the permanent fix that is so urgently needed.

It is appropriate to briefly describe business rates. They are a tax charged to most non-domestic properties, although there are some exceptions, such as small businesses with a rateable value of less than £12,000. They are calculated by multiplying the rateable value of the property by the uniform business rate multiplier. The rateable value is an assessment of the annual rent that the property would achieve if it were available to let on the open market at a specific, fixed valuation date. The UBR multiplier for 2022-23 is 51.2p in the pound, or 49.9p for small businesses.

Before I came to this place I was a chartered surveyor. Although I did not specialise in business rates, I did from time to time carry out business rates appeals. Invariably, that happened in situations with a lack of rental evidence on which to base an assessment of a property’s rateable value. As a result, it was difficult to agree a value, and there was the risk of a rateable value being imposed, which was abstract from reality and took no account of the ability of the business to pay and thus continue to exist and operate profitably. The Valuation Office Agency—the VOA—needs to be more transparent, open and collegiate in its dealings with businesses. I shall touch on that later.

As I have mentioned, the Chancellor made some significant announcements in his autumn statement, which included confirmation of a revaluation that will come into effect from April; the freezing of the uniform business rate multiplier; the reform of the transitional relief scheme; a supporting small business scheme; and a 75% retail, hospitality and leisure relief worth up to £110,000 per business. The revaluation is generally to be welcomed, although there are some notable exceptions, as it will on the whole bring down rates in economically depressed areas while raising rates in areas where rental values have risen.

The announcement that the downwards phasing of the transitional relief scheme for England is to abolished is good news, with upwards phasing being funded by the Treasury. The problem with transitional relief was that meaningful and full reductions in business rates, which businesses particularly in the retail sector desperately needed, took far too long to filter through. The measures will provide much needed support to help businesses get through the next few months, and they provide the foundation stone on which to now carry out the promised fundamental review.

Despite those measures, which in many respects can be likened to the application of yet more sticking plasters and, indeed, bandages, fundamental flaws remain to be addressed. Although the Government froze the UBR at 51p in the last two Budgets, it remains unsustainably high. In no other country in Europe do businesses pay half the rental value of premises in property taxes. Set at such a high level, business rates deter investment in retail, leisure and hospitality. It should be noted that the UBR was just 34p in the pound when it was first introduced in 1990.

The extension of business rates relief for retail premises from 50% to 75% in 2023-24 is welcome, even though it will help only smaller retailers because it applies to the first £110,000 of business rates paid. The Office for Budget Responsibility envisages that that relief will be removed from 1 April 2024, which would leave retailers with a massive tax hike at that point—in effect, a cliff edge. A tapering scheme will therefore need to be applied to overcome that particular problem.

In the recently published valuation list, which comes into effect next April, the valuation of retail premises fell by only 10% across the country in the six years from the last valuation date of April 2015. Without the Chancellor’s measures on downwards phasing to freeze the UBR, business rates would have had a massive levelling down impact on all retail, and on depressed regions in particular. That underlines the need for fundamental reform.

I shall move on to briefly highlight some of the inequities of the current system that need to be addressed. Business rates are a tax paid by businesses before a sale or a transaction has even been made. It is in effect a tax on existence rather than a tax based on success or failure. It therefore follows that it needs to be kept low so that it can be paid by all businesses. A high UBR discourages not only occupation, but investment in new accommodation and the physical expansion of existing premises. Ratepayers who have invested in improving their premises are penalised, as they then face higher bills. The system adversely affects physical retailers whose properties on high streets have significantly higher rateable values than the warehouses that serve online retailers. Similar challenges were faced by the hospitality sector.

While in theory, with the current UBR, business rates should represent 51% of the rental value of a property and hence one third of the cost of occupancy, retail has been struggling, and some landlords have agreed much lower rents to enable their tenants to stay in business. Rents are increasingly being linked to turnover, and are thus disconnected from the rental values that are used by the VOA to determine business rates bills. Therefore, many retail outlets will be paying business rates bills in excess of their actual rent, even after the revaluation takes effect. In the new list, rateable values for retail have gone down by 10% on average. That is surprisingly little, given that many shops were closed and paying no rent at all at the valuation date of 1 April 2021, when we were in the midst of a covid lockdown.

The valuation process that allocates properties their rateable value is not transparent, with the VOA not sharing the evidence that it uses to substantiate the basis of valuations. The only way for occupiers to assess that evidence is by challenging the valuation through the “check, challenge, appeal” process, which is lengthy and costly. There is therefore much concern that many challenges to the valuation process will be submitted over the coming months. The worry is that the VOA uses flimsy evidence when conducting property valuations. Those businesses that engage with the VOA through the appeals process, or by providing evidence leading up to the valuation, have more accurate valuations, while those that have not seen any reductions have not engaged with the VOA.

The VOA has outlawed 400,000 applications made by businesses in mitigation of rates bills on the basis of covid-19. Its view is that covid did not constitute what is known as a “material change in circumstances”, which can lead to a reassessment of a rateable value. That decision has been justified by the VOA on the basis of the allocation of the £1.5 billion covid relief fund, the distribution of which was devolved to local government. While some local authorities have been quick to distribute that relief, others have been slow. The lack of a uniform distribution mechanism has meant that receiving the relief payments is dependent on where the occupant is based, and a postcode lottery has, in effect, been created.

In the autumn statement, the Chancellor froze the UBR at 51p for one year only—that is, for 2023-24. As mentioned previously, the OBR’s figures indicate that the UBR will be index-linked thereafter. That means that as matters stand at present, business rates for retail premises will rise from April 2024. The Government have extended their 75% rate discount for shops paying up to £110,000 in rates until 2024. Likewise, unless the Government extend the relief, occupiers will again face a cliff edge when the scheme expires.

The Government will soon be bringing forward a non-domestic rating Bill. It is important that the contents of that Bill are fully debated, and that the opportunity is taken to ensure that it is a vehicle for delivering the fundamental reform of business rates that was promised in 2019. The Bill will include provisions such as the duty to notify of any change to a property; changes to the frequency of revaluation; and the removal of the need for transitional relief to be fiscally neutral. Alongside the duty to notify, there should also come a corresponding duty on the part of the VOA to share with occupiers the evidence it uses to assess rateable values.

Due to the complexity of the business rates system and the burden on ratepayers, occupiers quite understandably often seek advice from rating experts on how best to approach the whole process. Unlike with other professions, rating advisers do not need a licence to practice, resulting in some operators giving bad advice and cheating people out of their money. We need to find a way to outlaw such conduct.

Currently, property owners do not have to pay business rates on empty buildings for three months. After that period ends, most businesses have to pay business rates in full, although there are some exceptions. The outcome of the 2020-21 review was that the Government committed to an empty property relief consultation in 2022, but that has yet to take place. It is important that the relief is extended—it is probably best to extend it to 12 months—because rates will then be paid exclusively by revenue-generating businesses.

It is appropriate to highlight the particular challenges faced by the hospitality sector, which is a vital component part of many local economies all around the UK, including in the Waveney constituency that I represent. With a fair business rates system, the sector can play a key role in levelling up.

Looking at the revaluation list in the Waveney area, businesses that have invested and that are vital engines of local economic growth are being heavily penalised for their ambition and success. By way of example, the rateable value for the Kessingland Beach holiday park is due to rise from £291,450 to £388,500; for the Harbour Inn in Lowestoft, it will rise from £23,500 to £45,000; and for the Commodore in Oulton Broad, it will rise from £67,500 to £79,000.

The current system sees the hospitality sector overpay nationally by £2.4 billion a year relative to its turnover; in other words, it overpays by 300%. In the short term, the differential rates between large and small businesses should be removed and the eligibility rules for reliefs based on rateable value should be abolished. In the longer term, a significantly reduced UBR multiplier should be introduced.

To address the variety of problems that I have outlined, root-and-branch reform is urgently required. Business rates would be fairer and better if the system was simplified, the tax base broadened by removing the myriad complicated reliefs, annual valuations proposed, a one-year antecedent valuation date set, and fast appeals and greater evidence-sharing between occupiers and the VOA introduced.

Such reform could be achieved by making the following changes. First, the UBR could be reduced by 30%. By way of example, reducing the UBR from 51p to 34p, which was the rate in 1990, would reduce unsustainably high levels of business rates on retail and hospitality premises, and level the playing field for so many businesses. A lower UBR would also reduce the barriers to entry, expansion and innovation, thereby encouraging growth and broadening the tax base. In effect, this would plug the gaps in revenue that the Treasury might fear would result from a lower UBR.

Secondly, the Government have correctly moved from five-yearly to three-yearly valuations. That represents a step in the right direction, but yearly valuations would be far more equitable. By implementing yearly valuations, business rates would accurately reflect the dynamic movements of the market and allow occupiers to benefit immediately from changes to rateable values. The increased incidence of events such as the covid pandemic and the war in Ukraine further emphasise the need for a system that is able quickly to react to rapidly changing economic conditions.

Thirdly, we need to look at the abolition of the system of complicated reliefs. Instead of the fundamental review that was promised, the Government have continued to apply sticking plasters to the system to ensure its continued functioning. That has culminated in a system of complicated reliefs that can be difficult to navigate. The business rates system comprises 12 reliefs. Those would be rendered unnecessary with the lowering of the UBR, which would mean a business benefiting from paying lower rates immediately instead of negotiating and navigating the VOA system of reliefs.

Fourthly, many of the problems I have detailed could be fixed by making the VOA more efficient. Its systems, which are predominantly paper based, are not fit for the 21st century. Digitisation would enable the VOA to make its collection systems more efficient and it could take a big step towards systems efficiencies such as annual valuations. The Government recently published a consultation to that effect, entitled the digitalising business consultation. However, unfortunately, it largely missed a point because instead of consulting on the measures that would reduce the administrative burdens on businesses and ratepayers, the Government are trying to increase those burdens by requiring more information so as more effectively to target reliefs.

I sense that I have spoken for far too long, and you will be pleased to hear, Mr Mundell, that I am nearing my conclusion. High business rates hold back economic growth, are a barrier to levelling up and are an added burden that many businesses simply cannot afford at present. To be fair, the Government have listened, and they are aware of the problem. The response has been the introduction of short-term reliefs, which are welcome, but they complicate the system further in the longer term.

We need to stop searching for that elusive holy grail and stop kicking the can down the road. Instead, we need to introduce pragmatic measures that can be delivered quickly, and we need to honour the commitment to a fundamental review. I therefore urge the Treasury to introduce those initiatives—in the spring Budget, I would suggest—and in the first instance I look forward to hearing the response from my hon. Friend the Minister.

Hansard

Peter Aldous 

I am conscious that I will have the opportunity to respond at the end of the debate, but I want to pick up now on one specific point that the Minister has mentioned. She said that the Treasury had carried out an assessment and if we were to go back to the UBR of just over 30p from when this system was introduced in 1990, that would cost an extra £9 billion. Did that assessment take into account a situation in which we had annual revaluations as well? If we had annual revaluations, that sort of margin would be much lower and we would fairly redistribute the burden of business rates across the UK.

The Financial Secretary to the Treasury (Victoria Atkins)

I will come back to that point, and particularly the detail on annual revaluations, because I think there is some sympathy with my hon. Friend’s point of view.

Hansard

Peter Aldous 

This debate has been short on quantity of colleagues but long on quality; once we get through a lot of the rhetoric, perhaps there is not much between us all. There is, though, a need for urgency to move forward and carry out that fundamental reform, and the Chancellor set the foundation stone for that last month.

The hon. Member for Ealing North (James Murray) is the odd one out here because, luckily for him, global warming and climate change mean that he is the only one of us who does not—yet—represent a coastal community. When it comes to levelling up, the dramatic impact of high business rates on coastal communities is quite noticeable. Our town centres—whether in Lowestoft, Torbay, St Ives or Strangford—are an important component part of attracting people and visitors, whether for a week’s holiday or just a day out. If they are hollowed out, there ain’t much to see.

In Lowestoft, there are exciting plans for regenerating the town centre. We are just about beginning to see that happening, but there is a danger that that reincarnation could be strangled at birth by high business rates. That is why we need the reform. Hotels, caravan parks, pubs and restaurants are vital to coastal economies. There is evidence that people who come in and invest in those businesses are being penalised for their investment under the current system. This debate has shown that we need to focus on the impact of high business rates on levelling up, particularly in coastal communities.

My hon. Friend the Member for St Ives (Derek Thomas) disagreed about the need to replace business rates. He outlined the need for a digital tax and to look at the VAT thresholds. I largely agree with my hon. Friend the Minister; it would probably be impossible to get rid of business rates. Reading between the lines of what the Opposition say—although it is probably not for me to do that—I sense that if they form the next Government, they will reach the same conclusion. We can probably get the sort of reforms that I want now in place much quicker, without having to wait until 2024 or beyond.

I would say to my hon. Friend the Member for St Ives that we should trial digital taxes and looking at the thresholds, but I do not think that is the holy grail to the full replacement of business rates. We need the fundamental reform that I have outlined, with a lower UBR multiplier coupled with annual valuations, which would produce the more dynamic and fairer system that we require.

The reliefs that we have talked about are welcome, but they make the system incredibly complicated. If a form of business taxation is simplified, the businesses and entrepreneurs that are investing can see a way towards making long-term investments, rather than saying, “Hang on! That particular relief is only around for a couple of years for certain. Do I need to be going ahead with this?” Providing that certainty is very important.

An ex-surveying colleague has texted me, using words to the effect of, “Don’t you realise the valuation coming up in April will be a bloodbath?” Those were his particular words. I suspect many people and businesses will get pleasant surprises; it might be a case of Christmas coming early for them. Others will fall off their chairs in shock and think, “What on earth are we going to do to address this?” The Government need to reach out and support those parties, and do all they can to assist them.

We touched on unscrupulous so-called surveyors. There are some very good and highly professional people out there who are involved in business rates, but, as I have said, this issue is an incredibly complicated part of the property surveying world, so there is a small number of national and regional experts. That leaves a vacuum for the unscrupulous to fill, and fliers tend to appear from businesses from all over the place—not local ones—saying, “Come on. I can help you with this. Hand over a thousand quid and I will sort it.” When I was in practice, one very often got called in when a business had responded to such circulars and the person had taken the money up front and disappeared. We need to work together closely to sort that out.

In conclusion, I sense that we could be at the beginning of a journey to reforming business rates sensibly. On 17 November the Chancellor took a major step, but it is a journey that we can complete in a much shorter timescale than has been envisaged. I hope that my hon. Friend the Minister will set out the stepping stones on that journey sooner rather than later, both in the upcoming Bill and the spring Budget.

Hansard

Peter Aldous writes for BusinessGreen.

As the days grow shorter and the temperature creeps lower and lower, we are all too painfully aware of the unique challenges facing us this winter, which as you may remember, was promised to be the first ‘normal’ winter since the start of the pandemic. Unfortunately, global events beyond anyone’s control have intervened, sending households across the country into crisis. Rather than continuing to ruminate on the sequence of events that took us here, we must now focus on how we can help homes and businesses weather the cold period, whilst also keeping some money in their pockets.

One potential helper this winter is National Grid’s Demand Flexibility Service, which was approved by Ofgem at the beginning of November. Offering individuals and businesses the chance to earn money by simply reducing non-essential energy use for a couple of hours a day, the scheme puts power, and money, back in the hands of the people. Households with smart meters can sign up with their electricity supplier or with a third-party provider, who will offer them the opportunity to opt in to an ‘event’ the day before it takes place. Events are likely to take place during the hours when there is the highest demand for electricity, generally on weekdays between 4pm and 8pm. Customers do not need to take part in every event or even for all the hours of a scheduled event. They will be paid for the percentage decrease in electricity consumption below their typical usage and won’t be penalised if they don’t manage to make any reduction at all. Essentially, it is the equivalent of paying commuters to avoid travelling during rush hour but only if they’re happy to shift their schedule around. The scheme has already seen success, with Octopus Energy’s very first event seeing more than 200,000 households reduce their combined energy consumption by an amount equivalent to an entire gas-fired power station. With some providers offering households around £100 over the course of winter, it seems reasonable to ask – why is electricity demand reduction suddenly so valuable?

The Association for Decentralised Energy (ADE), a trade body that represents the flexibility industry, notes that the simple answer is that it has always been valuable, but highlights that the parties who are able to be paid to get involved in demand side reduction are changing, and will continue to change long after the current crisis is over.

Usually, when there is too much or too little demand for electricity, National Grid pays large gas plants to burn more or less fuel accordingly, keeping the supply/demand scale in balance and supplementing the energy generators’ profits as a result. However, as the price of gas rises, so too does the cost of this balancing act, costs that are eventually borne by the public. Of course, we all now know that gas can’t last forever.

But this begs the question, what then will happen in ten, twenty or thirty years, when we have largely abandoned gas as we abandoned coal before it? By then we will be using cleaner, cheaper, renewable energy sources, but how do we maintain the supply/demand balance when we can’t pay the wind to blow or ask the sun to shine? This is where the kind of demand flexibility National Grid is trialling this winter will prove an incredibly valuable tool in the UK’s shed. Tools like the Demand Flexibility Service mean homes and businesses will be indispensable participants in the electricity system rather than passive bystanders, and best of all, they’ll be able to get paid for it.

This is what so many commentators have gotten wrong over the past two decades, brought into stark light by the realities of this winter – cost-effective energy, security of supply and the transition to green energy are not a deck of competing trump cards, or some kind of zero-sum game. The truth is that they are entirely complimentary and we cannot achieve any one of them without the others.

In Cabinet Office Questions, Peter Aldous asks the Government how the Procurement Bill will help local dental practices successfully bid for NHS dental service contracts.

Peter Aldous (Waveney) (Con)

NHS dentistry faces many challenges, one of which is ensuring that locally based practices have every opportunity to bid for contracts successfully. Can my hon. Friend set out how the Procurement Bill will enable them to do so?

The Parliamentary Secretary, Cabinet Office (Alex Burghart)

This Government want NHS dental service contracts to be attractive. The intention is that the procurement of healthcare services such as dentistry will be subject to the rules set out under the anticipated provider selection regime as enacted by the Health and Care Act 2022. The Procurement Bill will apply to other services and help to break down barriers for small businesses of all kinds to engage in public sector procurement.

Hansard

Ahead of the peak of winter planning period, Peter Aldous questions the Government on efforts to ensure that Government Departments are properly co-ordinating with local authorities to ensure resilience in key services through the winter.

Winter Preparedness

Peter Aldous (Waveney) (Con)

9. What steps his Department is taking to support the operation of public services during the winter months. (902668)

The Chancellor of the Duchy of Lancaster (Oliver Dowden)

The Cabinet Office has well-established processes to support Departments and their sectors to ensure the effective delivery of key services over the winter. They are underpinned by comprehensive risk assessments and contingency plans for a wide range of risks, including industrial action and severe weather. The national resilience framework will be the first iteration of our new strategic approach. It will strengthen the systems, structures and capabilities that underpin the UK’s resilience to all risks.

...

Peter Aldous 

As we approach the peak of winter planning, I would be most grateful if my right hon. Friend set out the role of the Cabinet Office in ensuring that Government Departments are properly co-ordinated, in both their communications and their actions, with local resilience forums and local authorities.

Oliver Dowden 

My hon. Friend is absolutely right that this is the central role of the Cabinet Office. We continually watch for emerging risks, and support Departments and their sectors to develop contingency plans for a wide range of scenarios. My officials work closely with the Department for Levelling Up, Housing and Communities to share intelligence on those risks with local authorities.

Hansard

A landmark devolution deal, which puts money and power over building, regeneration and skills into the hands of leaders in Suffolk will be signed today by Levelling Up Secretary Michael Gove.

Suffolk will be devolved power over their Adult Education budget, so they can shape provision in a way that best suits the needs of the local community and will receive immediate support to build new affordable homes on brownfield sites, as well as more capital funding to improve energy efficiency in houses. 

The deal will also see Suffolk County Council handed control over a £480 million investment fund – this will be guaranteed for the next thirty years. This will enable the county to drive growth and plan for the long-term with certainty as it looks to level up and unlock its full economic potential.

Suffolk will also get a directly elected leader of the council. This not only provides a single person who is accountable to the people of Suffolk but gives the county a local champion who can attract investment and be a stronger voice in discussions with central government.

The Levelling Up Secretary will today attend a ceremony in Bury St Edmunds with Cllr Matthew Hicks to officially sign the deal. Michael Gove will also visit Norfolk to sign a devolution agreement with Norfolk County Council, which will transfer further money and power out of Whitehall. The deals follow Cornwall Council who just last week signed their own devolution deal with the government, unlocking powers and long-term funding of £360 million.

With three new devolution deals signed in the last seven days, 50% of England will now be covered by a devolution deal and reaffirms the government’s commitment in the Levelling Up White Paper to offer a devolution deal to any area that wants one by 2030. 

The deal also sets out the government’s plans to devolve more power to Suffolk County Council through:

• Investment: It will bring decades of funding worth £480 million to improve the lives of Suffolk’s residents and spend on their local priorities.
• Housing: The deal will provide £5.8 million to regenerate brownfield land into beautiful, affordable homes and drive economic growth across the area; Suffolk will also receive greater compulsory purchase powers.
• Education: The agreement devolves the Adult Education Budget so they can shape provision in a way that best suits the needs of residents and the local Suffolk economy.
• Transport: An integrated transport settlement starting in 2024/25, to support the area to improve key transport infrastructure priorities.
• The Environment: The new deal will help Suffolk deliver on its ambitions to be the country’s greenest county with £3 million to improve energy efficiency in homes.

Levelling Up Secretary Michael Gove said:   

“I said we would give devolution deals to all that wanted them and today we are keeping that promise by putting power into the hands of the people who know best what Suffolk needs so they can level up the county and unleash its full economic potential.

“It is now people in places like Ipswich, Felixstowe and Newmarket who will have a greater say on how their areas are run. Because we know important decisions are best taken by those who know their areas inside out, not by those many miles away in Whitehall.

“This new deal will empower leaders in Suffolk to shape policies and direct spending to address issues that are unique to them, and I will commit to working with them even further to help drive through that change.”

Cllr Matthew Hicks, Leader of Suffolk County Council, said:

“This devolution deal is the first of its kind between the Government and a county council, making it a truly historic moment for Suffolk. The deal recognises Suffolk’s ambitions, would put more powers in the hands of local people and bring more than half a billion pounds of investment into the county.

“On the table are greater decision-making powers around transport, infrastructure, skills and more resources to help us achieve our net zero ambitions. Ultimately, this significant additional investment will improve the lives and outcomes of Suffolk’s residents. 

“Devolution is a journey, not a one-off event. This deal for Suffolk is the first step towards an exciting future for our great county.”

Cllr Suzie Morley, Leader of Mid Suffolk District Council and Chair of Suffolk Public Sector Leaders Group, said:

"This is an exciting deal for Suffolk, bringing more decision-making powers to the county and decades of investment.

"Suffolk's public sector leaders have shown ambition and determination to make this happen, and will continue to work together to do the very best for residents and businesses.”

These deals are just the first steps in transferring power away from Whitehall into areas that want them. The East Anglian agreements mean that six of 13 places invited to negotiate devolution deals in the Levelling Up White Paper have now signed agreements with government. Suffolk and Norfolk join Cornwall – who signed their own deal just last week - York and North Yorkshire, and the East Midlands who have already signed devolution deals this year - these deals equate to another five million being covered by a devolution deal in 2022 alone.

The deal is now subject to local consultation, a council resolution to change their governance model so that electors directly elect the council leader, and elements, such as the transfer of new powers, require parliamentary approval to secondary legislation. The deal envisages the election of a directly elected leader in May 2024. Subject to the passing of the relevant measures in the Levelling Up and Regeneration Bill, Suffolk and Norfolk would call the directly elected person the “elected leader” of the County Council.