Oral Answers to Questions
Debate between Simon Danczuk and Brandon Lewis
Brandon Lewis
I am happy to join my hon. Friend in congratulating the councillor. I thank him for giving us the chance to highlight the really good work that councils and councillors can do when they focus on delivering good, efficient, value-for-money front-line services for their residents.
Simon Danczuk (Rochdale) (Lab)
13. What assessment he has made of recent trends in the number of households being found homeless but not in priority need by local authorities.
Business Rates
Debate between Simon Danczuk and Brandon Lewis
Brandon Lewis
My hon. Friend has made an excellent point. I hope that the councillors in Enfield have heard what he said, and are thinking about what they can do. Council reserves have risen to a record level. Given £2 billion of uncollected council tax and £2 billion lost through fraud and error, there is an awful lot that councils can do to ensure that they have the right funding and make decisions that will benefit their communities by producing economic growth and jobs.
Some councils are already using the powers in the Localism Act that this Government introduced, although I agree with my hon. Friend that more should be encouraged to do so. Basildon council has supported a small computer repair shop which offers home visits to its elderly and less “tech-savvy” customers. That is a very good example of localism-focused help. Stockton is supporting new businesses, from cafes to retailers, filling empty shops in the town centre and attracting new businesses. Milton Keynes has helped the famous Stables theatre to maintain the substantial recruitment that it brings to the area.
The Localism Act has ensured that no new supplementary business rate can be imposed without a backing of local firms in a referendum. The supplementary rate introduced by the Labour Government allowed extra business rates to be imposed, in some cases, without the support of local businesses. We have brought in a democratic check on any new rates, just as we have on council tax rises.
We have also introduced 24 new enterprise zones across the country. Those zones benefit from a 100% business rate discount, worth up to £275,000 over five years for a firm moving into the zone. All business rate growth within a zone will be retained and shared by the local enterprise partnership area for at least 25 years to help to support local growth and investment. Under this Government, enterprise zones have generated £500 million in private investment, and they have already created 5,000 jobs.
The United Kingdom is becoming the No. 1 destination for expanding multinational companies. That worldwide ambition is feeding flourishing local economies from Newquay right up to the Tees valley. I declare my interest as the Member of Parliament for Great Yarmouth; our New Anglia enterprise zone is encouraging vast growth in the energy industry in the east coast region. We are rewarding councils for promoting local economic growth by allowing them to keep half the funds from locally raised business rates. It has been estimated that these reforms will increase economic growth by £10 billion over the next seven years.
As the hon. Member for Chesterfield (Toby Perkins) said, we have postponed the business rates revaluation in England until 2017, which will prevent 800,000 firms from facing double-digit hikes in their business rates bills. I know that surveyors have been quite grumpy about that. Let us remember that it is those surveyors who stand to lose money from charging firms for rate appeals. For the record, the Government will not benefit by a single penny.
Independent analysis by the Valuation Office Agency has shown that the 2015 revaluation would have meant soaring bills for the likes of pubs, petrol stations and food retail. That would have pushed up the cost of living for hard-working families: a more expensive shop, a more expensive tank of fuel and a more expensive pint. Falling rents would not necessarily have translated into falling business rates bills, as the multiplier would simply have gone up to compensate for lower rateable values. The winner of a 2015 revaluation would have been office space in central London. Across England, three times as many premises would have lost out as would have gained. Small firms would have been paying for tax breaks for bankers in London.
Simon Danczuk (Rochdale) (Lab)
Does the Minister accept the analysis provided by Bill Grimsey’s alternative high street review, which shows—[Interruption.] Listen! It shows that Rochdale businesses will pay over £8 million more because the revaluation is not taking place.
Brandon Lewis
As I explained to Bill Grimsey when I met him a couple of weeks ago, I do not accept his premise or the way in which he has carried out his calculations. He has simply not allowed for the way in which the multiplier works.
The postponement of the revaluation will provide tax stability and certainty for businesses, as there will be no real-terms increase in business rates over the next five years. Labour Members often speak, as they have today, as though business rates never existed under Labour. Well, I ask Labour critics to bear in mind that the Labour-led Welsh Government have copied us and postponed the rates revaluation in Wales. In the words of Welsh Labour Ministers, this will ensure a more “stable business environment”. The Scottish Government have done the same.
The postponement of the 2015 rates revaluation has allowed the Valuation Office Agency to allocate more resources to clearing appeals. More than 641,000 appeals have been resolved since 1 April 2010, and the number of outstanding appeals has fallen in eight successive quarters. I recognise, however, that more needs to be done to speed up the rating appeals system that we inherited from the Labour Government. We also need to make it more transparent than it was under Labour. I can announce today that my Department will publish detailed proposals for consultation on that shortly.
Simon Danczuk
I do not agree with the hon. Gentleman at all. My area has the national average for the number of empty shops, and no more. Those rates encourage and enable landlords to fill the empty shops, because there is a need for them to have somebody paying business rates.
The revaluation policy has saved London businesses vast sums in business rates. Hackett on Regent street, a high-end fashion retailer, has saved nearly half a million pounds on business rates. Smythson on Bond street, where the Prime Minister’s wife is an adviser, has saved in excess of £850,000 on business rates because of the lack of a revaluation. Even the Government’s own adviser, Mary Portas, has said that this is “bloody mad”. Rochdale is subsidising Regent street, and it is just not fair. The Minister challenged my figures earlier. I have them here, and he has not seen them before because they were generated only today. Greater Manchester local authorities—all 10 combined—are paying an extra £61 million in business rates because the Minister decided to pull the revaluation.
The other significant point I wish to make is that the Government should cut business rates and then freeze them. They have the money to do that, because by stopping the revaluation, they have saved £1 billion by not implementing the transitional scheme that would have had to be in place under the revaluation. The Minister should explain something to us: if £300 million is being used by the Chancellor to make a cut to 2%, what is the other £700 million being used for?
Simon Danczuk
I will let the Minister deal with that when he winds up. I wish to make a few final points. We have the highest property taxes in the developed world and we need radically to reform business rates. The Minister should listen to his own Back Benchers. He should take heed of what Labour has been proposing. He should take heed of The Daily Telegraph and its excellent Fix The Rates campaign. We need a radical cut to business rates and we then need to see them frozen. I am glad that if this Government will not act on business rates, a Labour Government certainly will do.
Oral Answers to Questions
Debate between Simon Danczuk and Brandon Lewis(11 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
Brandon Lewis
My hon. Friend is quite right. The best thing would be to have no more strike action, and for the employers and the Fire Brigades Union to deal with the issues they are discussing so that we can reach a point at which we can deliver one of the most beneficial pension schemes in the public sector.
Simon Danczuk (Rochdale) (Lab)
Rochdale council’s leadership has only postponed its decision to increase some chief officers’ pay by over 30% and intends to bring it back. Does the Secretary of State share my view that such an inflated increase in pay is not acceptable at this time?
High Streets
Debate between Simon Danczuk and Brandon Lewis(11 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
Brandon Lewis
My right hon. Friend makes a good point. I agree and will come to that in a few moments.
Labour made it more difficult to park in town centres—my hon. Friend the Member for Colne Valley (Jason McCartney) has mentioned that point—with Whitehall guidance issued by John Prescott telling councils to cut the number of parking spaces, increase parking charges and hit drivers with fines. In 2008, the local government Minister, the right hon. Member for Wentworth and Dearne (John Healey), complained that councils were not using parking charges to their “full potential”. By the end of Labour’s time in office, 9 million parking fines a year were issued in England. What was the public’s response? Quite sensibly, they are taking their time to shop online or drive to out-of-town stores where they are not penalised for using their cars. That was Labour’s response to changing lifestyles and the internet—to make it as difficult as possible for people to shop in and visit our town centres.
Simon Danczuk (Rochdale) (Lab)
Does the Minister not accept that the elephant in the room is not the Secretary of State and his views on car parking, but business rates rapidly increasing and damaging small businesses?
Oral Answers to Questions
Debate between Simon Danczuk and Brandon Lewis
Simon Danczuk (Rochdale) (Lab)
I have been contacted by a Rochdale retailer who has just two instalments to pay on his business rates and should get until the end of the month to pay them. The council has involved the courts and the bailiffs are banging on the door, threatening to close the business down. Is this any way for a council to act to improve the high streets? Will the Minister have a look at this?
Brandon Lewis
I will happily have a look at it. I have to say that the local authority should do what it can to help deliver further economic growth locally by working with businesses, but if the business rates were due, the authority would obviously have to go through proper due process. I will be happy to talk to the hon. Gentleman outside the Chamber about this matter.
Business Rates
Debate between Simon Danczuk and Brandon Lewis(12 years, 1 month ago)
Westminster HallRead Full debate Read Hansard Text
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The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
It is a pleasure to respond to the debate under your chairmanship, Mr Caton. I join other hon. Members in congratulating the hon. Member for Rochdale (Simon Danczuk) on securing the debate, which is indeed on an important subject. I thank him for drawing it to the attention of the Chamber, and I thank all hon. Members who have spoken so passionately on the issue. It is useful for me to be able to set out the Government’s position on business rates, and on revaluation in particular.
First, let me correct the fundamental misunderstanding that some people have about revaluations. They do not change the amount of revenue raised through business rates. Revaluations simply redistribute the rates burden among ratepayers. Therefore, what revaluations ensure is that the share of the national rates bill paid by any one business reflects changes over time in the value of its property relative to others. That means—this is the important point—it is likely that very many businesses whose rents have fallen, but by less than the average, would have seen a tax increase from 2015. The detailed work of reassessing all 1.7 million properties has not yet started, but the estimates prepared by the Valuation Office Agency suggest that 800,000 premises would have seen a real-terms increase in their rates in a 2015 revaluation. Sectors facing big hikes would have included retail as well as petrol stations, hotels and pubs. My hon. Friend the Member for Nuneaton (Mr Jones) mentioned pubs; as the Minister responsible for community pubs, I fully appreciate that point.
Let me set out the action that we have taken. To provide certainty and stability to all businesses, the Government intend to postpone the next revaluation from 2015 to 2017. To answer one of the points raised, the date of 2017 is in the Growth and Infrastructure Bill. Thereafter, revaluations will continue to take place every five years. The required legislative changes are in the Growth and Infrastructure Bill.
Simon Danczuk
If the revaluation took place in 2015, and was not moved to 2017, how many businesses would pay less in business rates?
Brandon Lewis
I am not sure that I followed the hon. Gentleman’s point. Could he clarify it?
Simon Danczuk
If the revaluation took place in 2015, as it should, how many businesses would see their business rates reduced?
Brandon Lewis
As I published yesterday, the Valuation Office Agency’s view is that about 800,000 premises would have seen an increase and about 300,000 a decrease. We are talking about the retail sector, petrol stations, hotels and pubs. Those kinds of business would have been most affected by hikes. Postponing the revaluation—
Simon Danczuk
Where do the 300,000 businesses in the Government’s figures tend to be based—which regions?
Brandon Lewis
At the moment, the estimate is done across the country. We are looking at publishing these estimates, but what the Valuation Office Agency can and will publish is a matter for the VOA. We are looking to ensure that that is resolved before the Bill’s Second Reading on Monday.
Postponing the 2015 revaluation in England will avoid local firms and local shops having to face unexpected hikes in their business rate bills during the next five years. As business rates are linked to inflation, there will be no real-terms increase in rates over the period. The reform therefore provides certainty for businesses to plan and invest, supporting local economic growth.
Since the last revaluation, which was based on 2008 valuations, the economy and property market have faced exceptional changes. A revaluation at this point would therefore be likely to result in sharp changes to business rate bills in many parts of the country and in many sectors. Tax stability is vital to businesses that are looking to grow and to help improve the economy. The Government are committed to maintaining up-to-date rate bills through regular five-yearly revaluations, which will resume, as I said, after 2017.
We can look only at estimates for the revaluation in 2015, because the detailed work has not yet started. The estimates have been prepared by the Valuation Office Agency and are based on professional judgments informed by limited rental market evidence up to January 2012. They suggest that many smaller and medium-sized firms would have seen rate increases in 2015. Overall, the estimates suggest, as I have said, that 800,000 premises would have had a real-terms increase in their rates from a 2015 revaluation. The retail sector, some parts of which have criticised our decision to postpone the revaluation, would have faced big hikes in bills in 2015.
Brandon Lewis
I will certainly take that point back to the Department. May I highlight that any ratepayers with an outstanding appeal who are in financial hardship or facing enforcement action from a local authority should contact the VOA directly, because it will look at bringing appeals forward in such cases?
Simon Danczuk
I do not know whether the Minister has ever tried to contact the VOA, but my office certainly has. I speak on behalf of many businesses that find it exceptionally difficult to deal with the VOA. Does he agree that its performance on appeals is completely unacceptable?
Brandon Lewis
The hon. Gentleman invites me to stray well outside the scope of the debate, but I take his point on board and will take it back to the Department. My offices speak and meet with the VOA regularly, and I will ensure that that matter is considered.
A specific point on out-of-town car parks was raised. The VOA independently assesses all properties, including out-of-town retail premises, for business rates on the same basis—annual rental value. I assure hon. Members that the rateable values reflect the value of car parking in an out-of-town location, to the extent that it is reflected in rents. I know that there is an issue with some councils seeing car parking in town centres as a cash cow; we have made changes to the rules around the transparency of car parking charges, so that residents can understand fully what councils are doing.
Of course, the Government have already taken action on business rates. We have doubled the level of small business rate relief in England for two and a half years, so the higher level of relief will apply throughout the 2012-13 billing year. We estimate that more than 500,000 businesses in England are benefiting, with approximately a third of a million businesses paying no rates. The measure therefore reduces fixed costs for existing and new small businesses, helping them to make the most of opportunities as the economy returns to growth. It is a useful measure. My hon. Friend the Member for Sherwood (Mr Spencer), who is no longer in his place, mentioned empty shops and start-up ventures. It is an interesting point, which I will take back to the Department to look at.
Through the Localism Act 2011, we simplified the process for claiming small business rate relief; waived £175 million of backdated business rates demands levied on businesses, including some in ports; and gave local authorities wide-ranging discretionary powers to grant business rates discounts. We listened to concerns about the RPI increase for 2012-13, and gave businesses the option of spreading the increase over three years.
As has been mentioned, we are also introducing the new business rates retention scheme. We want to give councils every encouragement to drive growth, so that they fully play their part in growing our economy through the planning system and their other levers. The business rates retention proposals represent a fundamental shift in the way that local authorities are funded. They give councils a strong financial incentive to drive local economic growth and to engage with local businesses to develop a positive approach to growth. Subject to the Local Government Finance Bill receiving Royal Assent, we will introduce the business rates retention scheme in April 2013.
We have taken other steps to boost the high street and growth. We have doubled the number of Portas pilots. Following applications by local MPs, over 300 town teams have signed up to become town team partners, and will benefit from a package of support. In March this year, we announced a £10 million high street innovation fund for the top 100 places most affected by the riots, or with the highest empty shop rates. In August, we announced the £1 million future high street X-fund. For those who have not yet applied, its closing date is 6 December.
We will shortly announce the details of a £500,000 fund to help set up business improvement districts. We will continue to support the high street by working with areas to remove barriers that prevent local high streets from prospering. We will publish a further response to Mary Portas’s review in spring 2013, building on the knowledge from the pilots, experiences across the country, and the progress that we have made on many of the other recommendations in the review since last December.
As was mentioned, next week is the Second Reading of the Growth and Infrastructure Bill, which will help the country to compete on the global stage by setting out a comprehensive series of practical reforms to reduce confusing and overlapping red tape that delays and discourages investment, new infrastructure and job creation. Postponing the revaluation until 2015 in England is the right thing to do.
Simon Danczuk
The Minister’s figures confirm that at least 300,000 businesses will pay more than they should in business rates for two years, from 2015 to 2017. Many businesses will have many more than one premises, so we cannot assume that that is 300,000 shops. Is that the right way to run a tax system?
Brandon Lewis
The hon. Gentleman omits to point out that 800,000 businesses would have had to pay more, and does not mention the uncertainty that would have been created over the next couple of years while businesses worked through the situation. That is not sensible in the current exceptional economic climate.
We want to provide local firms and local shops, including many of the most disadvantaged, with the certainty that they need to plan, invest and grow. VOA estimates suggest that the change will save 800,000 premises from a tax hike and protect key sectors such as retail. We recognise that regular revaluations are important to maintain up-to-date rates bills, but such immense volatility is not, at this time, in the public interest. Postponing revaluation will provide businesses with a stable economic environment in which to deliver growth.