Business Rates (North-East)

Debate between Julie Elliott and Sharon Hodgson

Tuesday 25th October 2011 Westminster Hall

[Julie Elliott]

Absolutely. Again, that is why it is important to have this debate and to give the Government the opportunity to hear concerns from formerly heavily industrialised areas as we move forward and try to grow.

In the north-east, councils rely on a small number of larger businesses to generate business rates, but that arrangement can be volatile and vulnerable to shocks, as we have seen in shipbuilding, coal mining, textiles and, more recently, steel making. We need an effective mechanism to manage economic risks and provide protection for areas of poor growth. I support the Government’s view that some of the proceeds of the levy and the set-aside should be used to protect against volatilities.

The Government must recognise that some places have greater economic potential than others. A council’s ability to generate business rates is mainly the result of location, location, location, combined with some effort and a lot of luck. The Government must therefore take account of the issues I have outlined. In particular, they must take longer to consider the wider and unforeseen consequences of their proposals, put in place a regular review of the new system, create a mechanism to protect against volatilities and, most important of all, make sure the system is fair, equitable and based on need.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

I think I just caught my hon. Friend before she reached her conclusion, so I am very grateful to her for giving way. She talked about the system being fair and equitable. We both represent the city of Sunderland, which will lose £60 million, as she highlighted. Does she think it fair or equitable that, according to what I have read, the City of Westminster will be able to keep all of the £1 billion it currently raises? How is that fair and equitable?

[Julie Elliott]

That is exactly the point. As currently proposed, the system is not fair and equitable, although we do not have the details. However, the Minister is listening to the debate, and we have an opportunity to highlight the real issues, as well as how unfair and unjust the Government’s proposed system will be if they do not introduce mechanisms to readjust it in more affluent and poorer areas. As the hon. Member for Newton Abbot (Anne Marie Morris) said, it is not just the north-east that suffers; we can find the problem in pockets right around the country. The question is how we get the balance right. We all want to promote growth—we are not opposed to promoting growth—but we must allow regions to do so sensibly, and we must support them so that they can provide the services their communities need.