Finance (No. 2) Bill

John Robertson Excerpts

Wednesday 25th March 2015 Commons Chamber

A huge, root-and-branch reform is required for business rates, partly to help bricks-and-mortar companies to compete against internet companies and partly to recognise the change in property values. The business rates of some shops on my local high street in Redcar are five times the amount that the landlord is seeking, so the whole decision about whether to take such premises is about business rates, not about rent.

[John Robertson (Glasgow North West) (Lab)]

Does the hon. Gentleman think it right for a Government to take money from a city where a lot is paid in rates—with people from outside the area coming into it—and then spread it around the rest of the country?

[Ian Swales]

Another thing that the Government have done is to move towards localising business rates again. Certainly my part of the world, which had huge industrial sites such as the one I have mentioned, was pretty nonplussed when all that money was collected by a Government in the 1980s, taken to the centre and then doled out in different proportions. We need to move towards more localisation, not least to incentivise councils to drive economic development. I would argue that that has not been happening sufficiently in some parts of the country, and I live in one of them.

I understand the hon. Gentleman’s point, and there is also the issue about where people live, where they work and what services they use. The south-west has a particular issue when its population doubles every summer, because people may not make a contribution through taxes paid directly in the south-west, but they are using services there. There is another whole argument to be had about the location of rates versus how they are collected.

I will not detain the Committee long. The Government are on the right track with corporation tax. Let us put it this way: there is plenty of work for the next Parliament to do, and I shall watch with interest from afar.

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[John Robertson]

The best way to get the tax contribution is to give people real jobs with real pay; then we will get the money in.

[Andrew Gwynne]

My hon. Friend is absolutely right, and that goes to the nub of the issue today. As my hon. Friend the Member for Birmingham, Ladywood eloquently set out from the Opposition Front Bench, the numbers are clear. In respect of corporation tax, we are talking about a very small number of large businesses operating across the country. The benefits of that tax cut will not necessarily be felt throughout the wider economy. I would argue—I know my hon. Friend makes the same argument—that targeting the same amount of money on a business rate cut for the first year and a freeze for the second year is much smarter, because it would affect 5.1 million small and medium-sized businesses and others. That is the right thing to do for the struggling high street.

I therefore urge the Minister to consider very seriously what the Labour Front-Bench team is asking for. We are not asking him to implement Labour party policy, as much as I would like him to, and we are not asking him to freeze business rates or to cut them. We are asking him to conduct a review so that we can have a proper debate on whether his approach of cutting corporation tax is the right one, or whether, as we argue and believe, cutting and then freezing business rates is a much smarter way of using the same amount of money, as it would create a bigger boost for the economies of towns, villages and cities across the country.

I want to add one note of caution. I am very supportive of the devolution agenda in England. As a Greater Manchester MP, Members would expect me to say that I very much support the efforts by the Greater Manchester combined authority and the 10 local authorities—eight are Labour, one is Conservative and one is Liberal Democrat controlled—and recognise the benefits of the conurbation working together. The Government’s announcement included the retention of additional business rates from growth, but I urge caution. I support the proposal, but we have to approach it on a conurbation, city region and county region basis. Growth areas in cities and counties are often located in particular geographical areas, whereas needs are spread across whole areas. With that, I urge the Minister to accept Labour’s amendment, which requires nothing more than a report that I think would back our plans 100%.