Business Rates

Kate Green Excerpts

Wednesday 4th December 2013 Commons Chamber

[Brandon Lewis]

This debate is about business rates and the ports tax was a business rate. If the hon. Gentleman has a look at his own motion, perhaps he will appreciate what he is here for. The ports tax policy also contravened the Treasury’s own guidance on retrospective taxation. However, as proposed by both coalition parties before the general election, this Government have scrapped Labour’s ports tax, cutting business rates by £175 million and reversing the smash-and-grab on small businesses.

Let me take another example: empty property rate relief. As Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) hiked up business rates by cutting back empty property rate relief, with no offsetting reduction. When was the stealth tax rise introduced? It was introduced at the very start of the economic downturn—precisely when businesses cannot find tenants for their empty properties. The Royal Institution of Chartered Surveyors slammed the change, saying it was

“purely a revenue raising exercise with no thought of the potential consequences”.

That is what we inherited from Labour, as well as the biggest deficit in our peacetime history. Unfortunately, we have not been able to reverse every Labour tax rise—I wish we could—but we have introduced new rate relief for empty new build property to help to kick-start development.

Let me raise another issue, which relates to my response to the hon. Member for Swansea West a few moments ago. I recognise that small business rate relief was introduced under the previous Administration, albeit funded by a higher multiplier on medium and large firms, but Labour made it as difficult as possible for small firms to claim, requiring reams of complex paperwork every year. In 2009, Labour Ministers blocked a Conservative-supported private Member’s Bill from the hon. Member for Mid Worcestershire (Peter Luff) that would have simplified the relief. This Government have changed that—the Localism Act 2011 made it far easier to claim—but we have gone further: with central Government funding, we have doubled business rate relief for small firms year on year, and an estimated 330 small firms are now paying no rates at all as a result.

[Kate Green (Stretford and Urmston) (Lab)]

Businesses report to me that when they appeal against business rates, it takes a long time for their appeals to be dealt with. The delays are due to the poor performance of the Valuation Office Agency, and I hope to have an opportunity to say more about that later. I realise that this is not the Minister’s direct responsibility, but will he undertake to have conversations with his colleagues in the Treasury to ensure that the agency performs as it should?

[Brandon Lewis]

I am delighted to be able to tell the hon. Lady that we have managed to reduce those delays. I shall say more about that shortly.

The value of small business rate relief granted in England has trebled, from £330 million in the last year of the Labour Government to £900 million in the last year. I note that the extra rate relief, which is temporary, is scheduled to end next April, but the Chancellor will be reviewing all taxes as part of his autumn statement. As I said to the Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), we must wait and see what lies before us tomorrow.

We have done far more. We have capped business rate increases at the rate of inflation, with the result that there has been no real-terms increase in annual business rates. We have given councils new powers, via the Localism Act, to allow local business rate discounts to support, for example, local shops, community pubs, new business parks or vital local facilities. Under the local business rates retention scheme that was introduced in April, central Government now fund part of any discount that is granted. The discretionary discount is not just for Christmas; it can be applied at any given moment throughout the life of the current Parliament. Councils can do that now, with no complications, no pen-pushing, no bureaucracy, and no questions asked. It is real, targeted, localist tax relief that can be delivered by councils today.

--- Later in debate ---

[Kate Green (Stretford and Urmston) (Lab)]

It is a pleasure to follow the hon. Member for Newton Abbot (Anne Marie Morris) and to contribute to the debate on behalf of businesses in my constituency. We are obviously focusing on small businesses this evening, and this is a pertinent debate for them, but it is also pertinent for the mighty Trafford centre in my constituency. It is perhaps not surprising that the debate covers the whole range of businesses in my constituency, when we consider that the average increase in business rates in Trafford has been considerably higher than the English average.

I want to pick up, in particular, on the Minister’s welcome comment about the Government’s intention to review the Valuation Office Agency’s performance in the system of appeals, because that is an area of great concern to businesses in my constituency. The long delays before they can see appeals resolved are putting some businesses under huge cash-flow pressure and others at risk of insolvency. Although the Minister claimed that the Valuation Office Agency’s performance has improved in recent months, it is not good enough for us to be in any way complacent. At this point, in relation to the 2010 list, performance in clearing appeals is considerably worse than it was at the same point in relation to the 2005 list, so clearly there is real pressure building up in the system and we need to unblock that and identify the drivers of those pressures. It is worrying that the data that enable us to judge the VOA’s performance are apparently being suppressed. We were receiving quarterly performance data, but now we are to receive it only six-monthly, apparently on the basis that that will enhance the service to users. It is difficult to see how less frequent reporting can do that. I hope that the review will have a comprehensive and honest look at the difficulties in the system.

Let me highlight a few issues that I hope Ministers will be able to pick up when they embark on the review. First, the VOA repeatedly expresses concerns about the actions of agents in relation to the handling of appeals, and sometimes suggests that they are one of the drivers of delay. In fact, many of the processes that businesses have to go through are extremely complex, and so any opportunities to simplify the appeals process would be very welcome. I think that agents themselves would say that.

Secondly, the VOA often argues that in many cases submitted to appeal, there is no change in the assessment at the end of the appeal process. Let us remember, however, that those cases include quite a number that never complete the process because there is a protective appeal or because the business becomes insolvent before the appeal can be resolved, which is obviously not good and may be because of delays in handling it or because the case has been re-appealed. It will be important to understand what is driving these no-change decisions and to be clear that we are focusing on the real issues and not just taking a broad-brush approach.

The whole ethos of what the agency is seeking to achieve needs to be part of the scrutiny that I hope the Government will undertake. Its role is not simply to protect the list, as sometimes seems to be the case, but to ensure true and fair business rate assessments. It is very important that that purpose is put absolutely at the heart of the review.

I hope that the Minister will look at some of the recent changes to statements of practice and guidance, which seem to have led to an unwillingness on the part of the agency to enter into constructive and meaningful negotiations in order to arrive at the right level of business rates for a particular business. There are serious concerns about the agency’s ethos and approach, and I hope the review will be able to uncover that.

Of course, it will be important that the agency has the resources to carry out appeals expeditiously, efficiently and accurately. I hope that that, too, is something that Ministers will take on board.

[Several hon. Members]

rose—