My Lords, I was pleased to sign Amendment 474 tabled by the noble and learned Lord, Lord Etherton. I also support the other related amendment in this group, Amendment 428, tabled by the noble Baroness, Lady Pinnock.
Regeneration of high streets and town centres is particularly important in the context of levelling up. I cannot stress enough how important a thriving town centre and high street are for the morale of a city, for its togetherness and for its onward development. Many high streets and town centres in the regions, including in some areas in Derby, where I live, are struggling with low occupancy and empty premises. This must be resolved urgently if we are truly to level up the regions and bring back the economic dynamism that is required for further developments.
I know that the Government get this, and their plans for enhanced compulsory purchase powers and high street rental options could form part of the solution here. However, in my role as co-chair of the Midlands Engine All-Party Parliamentary Group, I
have canvassed many local stakeholders on what would really make a difference to high street regeneration, and the theme that comes at the top of the list time and time again is business rates.
The current structure of business rates makes it simply unviable for businesses to set up in certain locations. To expand on what the noble Baroness, Lady Pinnock, said, a property was being marketed on East Street, Derby last year at a lease of £35,000 per annum. It had a rateable value of £112,000 and rates payable of £56,000, so the rates were significantly higher than the rent. Another example, from the British Property Federation, is a property in a Hull for which the business rates bill was around three times higher than the rent a property in that location could reasonably demand. There are further cases of businesses not being willing to renew leases on their properties, even at zero rent.
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The current structure of business rates is a significant barrier to businesses setting up in high streets and town centres. Although the temporary rate reliefs to which other noble Lords have referred are welcome, compulsory purchase powers and high street rental auctions are tinkering at the edges of the problem; we must avoid the need for these temporary sticking plasters. Landlords do not usually want their properties to be empty. The core of the problem is that businesses need that incentive structure to set up in town centres, and this will be achieved only by the wholesale reform of business rates. Another way of phrasing it is that the problem is not the supply of empty units; it is the demand signal for businesses to set up there.
I am sure that many noble Lords have ideas about how this could be achieved. Clearly, we are not going to propose a new model for business rates in this Bill. The noble Baroness, Lady Hayman, set out some of the key areas of business rates reform which need to be looked at. The right way forward is a wide-ranging consultation, expanding on some of the evidence heard from noble Lords today, which proposes a new model for rates to make them fairer for businesses and to end the problems we have on high streets in the regions. I hope that the Government will seize this opportunity to bring back vibrancy, purpose and pride to many of our struggling high streets and town centres.