Growth and Infrastructure Bill

Anne Marie Morris Excerpts

Monday 5th November 2012 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

I refer Members to my declaration in the Register of Members’ Financial Interests.

It has been an interesting debate. The topic of growth is certainly front and foremost in all our minds, although we all want to address it in different ways. The fundamental focus has been on planning issues, and I certainly welcome the simplification and the removal of the need for excessive document production. The construction industry needs all the help it can get. I welcome anything that can help our broadband.

If I may, however, I would like to focus mainly on clause 22, which relates to business rates. The Government have proposed to defer revaluation from 2015 to 2017. It is argued that this will provide stability—clearly a good thing for any business, large or small—and that the only concern in the short term will be inflation. I would like to speak up for the small businesses in my constituency, which would say that they are hurting and that even just inflation gives them a pretty big bill. There is a growing sense that it would be useful to review inflation and to freeze it as we go forward.

The Government’s explanation and justification for the provision relates to how the business rate system works. They are right that this is a complicated mechanism: rateable value is taken and then multiplied by a multiplier. It is rather like a seesaw, and when the rateable value comes down, the multiplier goes up—the net-net bottom line is that the same sort of figure will be paid. I and many of the small businesses I speak to would like to see that explained. They find it bizarre when they look at the rate rise of 2010. One of my constituents said, “My rate’s doubled; this is all very peculiar.” We need a proper explanation from the Government as to exactly how this works, because it seems to work only in favour of increasing the tax take.

There are a number of good reasons for thoroughly overhauling this type of taxation. If I had a thought for the Government, it is that in some ways this is a missed opportunity. If action is not taken in this Bill, I hope the Government will take the matter more seriously in a future Bill, because the valuation method is simply not fit for purpose. I have businesses telling me that they are based in a street called “the High street” and that their rates are levied as if they really were based in the town’s main high street. Something is not right there.

The multiplier is a very blunt instrument. There are three levels: one for England, one for Wales and one for London. There is not much between them, but it makes it difficult—in my view and in theirs—for small rural or coastal communities to have a fair business rate set. The appeals system is not helpful either because it requires a business to show that the rate they are paying is unduly burdensome and inappropriate, and it requires them to show their year’s accounts to demonstrate how they suffered. By that time, however, for very small businesses, they are already out of business.

The empty property rate is another area that the Government could look at. It is a real challenge, particularly in today’s climate. After three or six months of vacancy, people can suddenly find themselves stuck with the rate without having the time to sort out the system. To the Government’s credit, however, the small business rate relief shines out as a wonderful step. The increase was made when we came into government—I say very well done; it is greatly appreciated. Indeed, if the mission of this Government is about stability, I would thoroughly recommend that they extend the small business rate relief to April 2015 and the end of this Parliament. If it comes to an end as currently predicted in 2013, it will coincide with the rise in inflation: there will be a double hit. I think that a number of aspects of small business rate relief could be changed apart from the timing. If a change in the timing is not accepted, the Government might consider extending the value of properties that are within the net, and/or reducing the small business multiplier.

One element that people running businesses really value is transparency. They want to understand how the valuation is carried out, they want to understand how the multiplier works, and, most important, they want to understand what services they are receiving. Some of them say to me, “My bins are not emptied, but they would be emptied if I paid council tax.” I do not think that we, as a Government, have made clear how they might benefit. Can they share the services of a town centre manager, for instance? Are they enjoying an improved street scene? What exactly are businesses getting in return for the tax that they pay? I should like to think that the changes resulting from the Local Government Finance Bill will give the Government an opportunity to incentivise local government to repay, with the part of the business rates that they retain, what has been taken from businesses that are contributing to the pot that they have to spend locally.

Let me summarise what I have said about just one clause in the Bill. I think that business rates need a thorough overhaul. We need a tax that is fair to individual businesses as well as being fair to the taxpayer, and we need transparency. We are trying to show individuals where the money that they pay in tax is going, and I think that we should do the same for businesses. I hope that the Government will take the opportunity to review the position at some time in the future, if not in the Bill. I hope that they will recognise that even now small businesses are hurting, and that if we proceed with an inflationary rise, they will really hurt.