Businesses (North of England)

Simon Danczuk Excerpts

Wednesday 14th January 2015 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

It is a delight to serve under your chairmanship, Mrs Main. I commend the hon. Member for Macclesfield (David Rutley) on securing this important debate. Let me also thank hon. Members for the welcome I received on entering the Chamber.

Unlike other hon. Members, I have not been provided with a list of Government initiatives to read out during the debate. I like to consider myself to be something of a champion of small businesses in the north of England. I am a firm believer in the power of business to transform people’s life chances and spread prosperity and opportunity throughout the whole country. In that, the relationship between Government and business is vital.

The fashionable view held by some hon. Members—perhaps not those in the Chamber—is that the Government’s role should be simply to step out of the way of business. I certainly do not share that view, though I accept that we can have too much regulation and red tape. There are areas where business and Government can work more productively together. For that to happen, there needs to be proper engagement and an awareness of what Government policy means to people on the ground. I want to highlight a couple of areas where I believe more Government engagement with business is needed to tackle persistent problems.

The first example is business rates. As chair of the all-party parliamentary group on small shops, I hear that raised frequently by retailers, especially in northern towns, because they have been adversely affected. I was pleased to hear the Chancellor promise in the autumn statement a review of the business rates system along with other support for small businesses, but the reality is that the cancelled revaluation had a devastating effect on northern towns that were already hit hard by the recession. With property prices falling, shop owners in Rochdale were left facing artificially high business rates and effectively subsidising big retailers in fancy parts of London.

The clear unfairness in the business rates system has also led to a growing micro-economy of firms trying to exploit rates confusion. I recently raised the case of a surveyor based in Heywood, next door to Rochdale, which I believe is acting unethically and potentially illegally. For a start, that firm calls itself the Rating and Valuation Agency, which I am sure hon. Members will agree sounds like it is trying to masquerade as a Government agency. The firm’s tactic is to offer to get businesses a discount on their rates in exchange for a small fee and a share of any discount that it manages to secure as commission.

It will be no surprise to hon. Members to hear that the majority of businesses that used the firm got no reduction at all. What is surprising is that businesses then received letters from RVA aggressively demanding money and threatening court action. RVA claimed that it was owed money as a result of business rate reductions passed on by the Chancellor in the autumn statement. Outrageously, in some cases it was demanding more than 50% of the discount offered by the Government. Something needs to be done about that.

Similar things are going on all over the country, especially in the north where the rates are most damaging. I have seen research showing the activities of firms that charge fees of about £800 to submit business rates appeals on behalf of small businesses. In such cases, up to three quarters of appeals are withdrawn because they are considered to be of too poor a quality by the Valuation Office Agency. Businesses are clearly being ripped off, but I want to make a broader point. The only reason why such sharp business practices exist is that we have an unfair and antiquated rates system. If we had a fair system, based on regular revaluations, we could avoid all of the chaos and misery being caused to businesses.

Great work is being done by local authorities such as Rochdale and Blackburn—both Labour authorities—on business rates. In Rochdale, a scheme has been introduced recently that allows a reduction on business rates—80% in the first year and 50% in the second year—for people who take up vacant shops, in an attempt to fill empty shops and commercial properties on the high street. That revolutionary approach should give our town a real boost. Blackburn is doing something similar. However, all of that good work will be undermined unless central Government step up and sort out the mess in the business rates system. That is why I have talked about how the Government have failed to support businesses in the north of England with business rates.

Support for business comes not only from Government, but from the banks. Recently, I was shocked at my treatment when I was trying to open a business bank account in Rochdale. The local branch of the Royal Bank of Scotland told me there was a waiting list of two weeks to open a business bank account—I kid you not. Lloyds took my details, but failed to get back to me and several months have now passed. Those are two banks that have received significant sums of taxpayers’ money, and yet are failing to perform the primary function of supporting the local economy. The contrast between those two banks and Santander, a Spanish bank, where I received an excellent service, was telling. We need to see more action from the Government on bank support for businesses. Government need to play a more active role to ensure that banks lend properly to businesses and give them the level of service that they deserve.

We all know that the past few years have been tough, especially in many of our northern towns and cities. To turn the situation around, we need to help businesses to grow and develop. Businesses need all the support that they can get from Government. In the areas that I have highlighted, there is clearly room for improvement. In years gone by, the north led the way in innovation and economic growth. If we get the right support, I am convinced that we can do so again.

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[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

It is a delight to serve under your chairmanship yet again, Mrs Main, and to follow my hon. Friend the Member for Pendle (Andrew Stephenson), a fellow Lancastrian. It is great to see so much support for the debate, and I congratulate my hon. Friend the Member for Macclesfield (David Rutley) on securing it.

The issue before us is the diversity of the north and why the north is different. I was going to say that it is different from other regions because all of us there have to cope with Yorkshire, but I will not say that. What I will say is that a feature of our region going back over different Governments over the years has been its distance, in a sense, from this country’s powerhouse—Greater London. One of the oddest things for many of us who were new Members of Parliament in 2010 was that, for the 13 years of the previous Government, and indeed before, to be fair, the divide between the London powerhouse and the rest of the country, particularly the north-west region, had simply got wider and wider.

When I looked around my constituency as a new Member of Parliament in 2010, I saw its huge strengths. The Lancaster part had its university in the top 10, and it was spewing out businesses. Fleetwood perhaps felt that it was somewhat in decline because of the state of its fishing, but there were still incredible businesses there, such as Fisherman’s Friend, a family business that exports to more than 100 countries and reinvests in the town. The rural parts—other Members have mentioned rural areas—also had huge strengths in terms of their businesses and farming businesses, which had been through bad times and good times.

As the Member of Parliament, I was told that there was lots of potential, but there was a feeling that, “We can’t do anything unless London tells us what to do.” In 2010, businesses told me that banks wanted loans paid off quickly. There was a lack of confidence, and banks wondered whether they should invest their money. People were trying to get together, including with the county, to look at some kind of north-west or Lancashire investment bank or, indeed, at having a stock exchange in the north again—in 1914, there were 64 stock exchanges across the country.

There is potential in the region, but how do we open it up? To give the Government great credit, the single biggest thing they did to finally convince businesses in my area that it was worth investing again was committing to building the M6 link road to Heysham, with funding of £111 million. That was a difficult decision in 2010-11, in the midst of our worries about recession and of cutting back on the deficit. A plan for a motorway had been on the drawing board since 1938, so the Government’s commitment to implement it—it is nearly finished—was a massive statement of confidence in the area.

There is also the investment in the coastal communities fund, with £67 million going into Fleetwood’s flood defences. That was a Government commitment. The biggest commitment, however, as Members have mentioned, has been in infrastructure—in our connections with the rest of the country and, yes, with Yorkshire, which will allow people from Yorkshire to visit Lancashire to see how great it is. In particular, there are the connections with London, and High Speed 2 is vital, but we should not forget the investment in electrification from Preston all the way through to Blackpool, something the previous Government did nothing about. There is also the electrification from Manchester to Liverpool, something the previous Government, again, did nothing about.

The incredible thing for a new Conservative Member of Parliament in a north-west seat was the view that nothing seemed to have happened before and that we could not do anything without asking the Government. The Government tended to ignore the north-west, except, perhaps, what we in north Lancashire used to refer to as Greater Manchester and Merseyside. We need to get that balance right.

[Simon Danczuk]

I have been enjoying the hon. Gentleman’s speech, but I just want to correct him on one or two points. The truth is that the previous Labour Government put a lot of investment into the north-west, not least through the regional development agency, which did an excellent job of sharing out the money. That money went not least to Lancaster university, which had an absolute fortune spent on it under the Labour Government, and the hon. Gentleman’s constituents and others benefit from that.

[Eric Ollerenshaw]

I hate to disagree with the hon. Gentleman. I agreed with a great deal of what he said in his speech, but the absurdity of the previous economic strategy—the regional development agencies—was that London, which is the richest part of the country, had its own agency. I know something about that, having been a member of it. What the hon. Gentleman says was not the message I got from Lancaster university, Lancaster council or Lancashire county council when I was elected in 2010. As I said, the regional development agency for the north-west concentrated wholly and utterly on Merseyside and Greater Manchester, and we got precious little.