My Lords, Amendment 163 in the name of the noble Baroness, Lady Taylor of Stevenage, concerns the support for our pubs. We are all aware of the importance of our local pubs; they provide space for people to come together, they provide jobs and they support local economies. But we also know that the past few years have been a challenging time for our pubs, with the Covid-19 pandemic and the current high prices, caused by Russia’s invasion of Ukraine, conspiring to put pressure on already tight operating margins.
Through the pandemic, we recognised that the hospitality sector needed to be more resilient against economic shocks. That is why, in July 2021, we published our first hospitality strategy, Reopening, Recovery and Resilience, which covers cafés, restaurants, bars, nightclubs and pubs.
In 2021—this is important for the issue raised by the noble Baroness, Lady Taylor, of listening to the sector—we also established a Hospitality Sector Council to help deliver the commitments set out in the strategy. The council includes representatives from across the sector, including UKHospitality, the British Beer & Pub Association and the British Institute of Innkeeping, as well as some of our best-known pub businesses. While we fully agree with the aim behind the noble Baroness’s amendment, the strategy she asks for already exists.
Moving on to Amendment 279, I notice that my noble friend Lord Holmes of Richmond is not in his place, but the noble Baroness, Lady Taylor of Stevenage, brought it up on behalf of the noble Baroness, Lady Hayman of Ullock, as did the noble Baroness, Lady Pinnock, on behalf of the noble Lord, Lord Scriven, so I will respond. The amendment would require the Secretary of State to report to Parliament within three months of Royal Assent on the existing barriers to establishing regional mutual banks in the United Kingdom and instruct the Competition and Markets Authority to consult on barriers within competition law for this establishment and identify possible solutions.
I make it clear that the Government are supportive of the choice provided by mutual institutions in financial services. We recognise the contribution that these member-owned, democratically controlled institutions make to the local communities they serve and to the wider economy. However, regional mutual banks are still in the process of establishing themselves here in the United Kingdom, with some now in the process of obtaining their banking licences. It is therefore too early to report on the current regime and any possible limitations of it for regional mutual banks.
I know that my noble friend Lord Holmes was interested in how regional mutual banks have performed in other jurisdictions and how we could use these
examples to consider the UK’s own capital adequacy requirements. In this instance, international comparisons may not be the most helpful to make. The UK is inherently a different jurisdiction, with different legislation and regulatory frameworks from those in the US, Europe and elsewhere. Abroad, some regional mutual banks have been in existence for centuries and have been able to build up their capital base through retained earnings. In the UK, regional mutual banks are not yet established and are continuing to progress within the UK’s legislative framework.
Additionally, the Competition and Markets Authority plays a key role in making sure that UK markets remain competitive, driving growth and innovation while also protecting consumers from higher prices or less choice. It is very important to note that the CMA is independently responsible for enforcing UK competition and consumer law. The Government cannot instruct the CMA to undertake a consultation. The Treasury is continuing to engage with the mutuals sector and other industry members to assess how the Government can best support the growth of mutuals going forward. I hope that this provides sufficient reassurance to my noble friend on this issue.
1.15 pm
Finally, I thank the noble Baronesses, Lady Hayman of Ullock, Lady Taylor of Stevenage and Lady Pinnock for tabling their Amendments 273A and 282D, which I will take together. Both amendments would require the Chancellor to undertake a review of the business rates system. I understand the noble Baronesses’ concerns here, but, as noble Lords are no doubt aware, the Government have only recently concluded a comprehensive review of the business rates system, supported by an extensive public consultation exercise, with the final report on that review having been published in the Autumn Budget 2021.
The Government of course recognise that the conditions for business are a concern for many noble Lords and have taken action to help ratepayers up and down the country through a significant package of rates support. The review recognised the importance of the rates system in raising funds for critical local services in England, worth around £22.5 billion in 2022-23 and concluded that there was no consensus on an alternative model of taxation that would be able to replace business rates revenue.
The review did, however, identify several significant improvements to be made to the business rates system, and noble Lords will of course also be aware that the Non-Domestic Rating Bill, which was considered in this place only earlier this month, delivers on the major rates reforms called for by stakeholders. That Bill will bring into law the conclusions of the business rates review, most notably a move to more frequent revaluations. This will ensure that the system is fairer and more responsive to changes in the market and will mean that bills are more accurate and reflect current economic circumstances and trends.
In addition to modernising the tax by moving to more frequent revaluations, the Non-Domestic Rating Bill also brings forward changes to make the valuation process more transparent, to deliver new reliefs to support investment in property improvements and to
give local authorities greater flexibility to provide relief to local businesses. I trust that noble Lords will continue to support the safe passage of that legislation through this House.
This, of course, is on top of other changes emanating from the Government’s rates review that have already been delivered, including the exemption of renewable plant and machinery from rates. Together, these changes have reduced the burden on businesses in England through support for businesses worth £7 billion. But the Government are not resting on their laurels. In the Autumn Statement 2022, the Government went further and announced additional business rates measures, effective from 1 April 2023, worth an estimated £13.6 billion over the next five years. As part of that package, the Government announced that the tax rate would be frozen for 2023-24. This real-terms cut to the tax rate is worth around £9.3 billion over five years.
In addition, the retail, hospitality and leisure relief will be extended for a further year and made more generous. The retail, hospitality and leisure relief is, in 2023-24, providing eligible businesses with 75% off their bills, up to a maximum of £110,000 per business. This is worth an estimated £2.4 billion to ratepayers, many of whom are on our high streets.
In response to the concerns of businesses in England, the Government have delivered a transitional relief scheme for the 2023 revaluation, which, subject to the passage of the Non-Domestic Rating Bill, will be funded by the Government, not by the ratepayer. This is expected to save businesses £1.6 billion. This has meant that 300,000 ratepayers have seen reductions in their rateable value at the rate of revaluation and an immediate fall in their bills effective from 1 April 2023, rather than seeing reductions phased in over the life of the list. This makes the rates system fairer and more responsive, and it ensures that ratepayers can benefit from the revaluation as soon as possible.
The Government have also delivered a supporting small business relief scheme, which ensures that ratepayers losing some or all of their small business or rural rate relief as a result of the revaluation will see their increases capped at a maximum of £600 in 2023-24. This is worth over £0.5 billion over the next three years and will protect an estimated 80,000 small businesses. That is on top of the generous existing package of statutory support provided to small businesses through the small business rates relief, which ensures that over 700,000 of our small businesses can continue to pay no rates at all, with an additional 76,000 benefitting from reduced rates.
I reassure noble Lords that the amendment is entirely unnecessary. A review has only recently concluded, and the Government remain committed to delivering on the conclusions of that review. We have already taken the first steps towards that and are delivering on our further commitments through the Non-Domestic Rating Bill. I understand why noble Lords have raised their amendments, but I hope that I have provided assurance that the concerns underpinning the two amendments are already being addressed through the changes the Government are delivering to the business
rates system, through both legislation and the generous and wide-ranging support that we have made available to ratepayers. I therefore ask the noble Baronesses not to press their amendments.