Business Rates

Debate between Simon Danczuk and Marcus Jones

Tuesday 30th October 2012 Westminster Hall

[Simon Danczuk]

I agree with the ACS, which does excellent work. The lack of consultation on the revaluation is a massive part of the problem in which the Government now find themselves. In fact, the property agents Colliers have called the decision

“nothing short of a scandal”

and have accused the Government of trying to

“pull the wool over the eyes of business.”

The policy will mean that many businesses will continue to pay more business rates than they should, and it will disproportionately hit regions outside the south-east. I cannot put it better than Richard Farr of Sanderson Weatherall chartered surveyors, who said in Newcastle’s The Journal:

“Those in lucrative locations such as London and the south-east, where rental values have increased, will benefit from the move, whilst hard-hit retailers in northern cities and elsewhere will continue to be suffocated by being charged business rates based on pre-recession values.”

The Minister attempted to defend his policy by saying in The Daily Telegraph this week:

“revaluations are revenue-neutral overall...Suspending the revaluation will not earn the Government a penny”.

What he failed to tell business is that by suspending the revaluation now, he need not increase business rates in the south-east and reduce them elsewhere. Like other examples such as the local government settlement, the new homes bonus and public health funding, business rates have been adjusted to serve a political purpose. If next year’s business rates revaluation were to go ahead as planned, new rates would come into force in April 2015, a month away from the general election. Rates would undoubtedly increase in the south-east and decrease significantly across the north and elsewhere to reflect the adjustment in property values. That is not the kind of news that the Government want to present to heartland supporters a month away from elections.

To top it all off, the Government are attempting to defend their policy further by telling journalists that the move to postpone next year’s revaluation will provide stability for businesses, and that they want to avoid the volatility of significant changes to business rates. The Government do not appear to understand the system of transitional relief, which is designed to reduce the impact of any significant changes in the rateable value.

[Mr Marcus Jones (Nuneaton) (Con)]

Much of the hon. Gentleman’s argument seems to be predicated on the north-south divide. However, there are town centres throughout the country—in the south-east, the south-west, the north, the midlands and across the piece—that are struggling. Does he not agree that the issue is not just a north-south issue but relates to the whole country?

[Simon Danczuk]

I agree. Not only the north but other areas outside the south-east will be adversely affected.

The Government also boast of offering small business rate relief, a policy introduced by the Labour Government. They say that they have given local authorities the power to reduce business rates under clause 69 of the Localism Act 2011, but what they never make clear is that the local authority must pay for any reduction in business rates. In order to cut business rates, a council must cut back on care for the elderly or disabled services. What a fantastic choice to offer local authorities. In Greater Manchester, an area with some of the highest numbers of empty shops in the country, freedom of information requests have shown that not one local authority is using clause 69 of the Localism Act 2011 to reduce business rates. It is a shocking indictment of a toothless Government policy that has made no impact whatever since it was introduced in April and is a completely ineffective tool against high street closures.

To conclude, the Government are trying to postpone a business rates revaluation to protect the south-east while being dangerously complacent about the consequences of businesses elsewhere having to pay until 2017 excessively and unfairly high rates that have lost touch with rental values. The Government are using the desperate euphemism of “stability” when what is really meant is political expediency, and they are boasting about localism powers to reduce business rates that councils are not using and cannot use due to massive budget cuts.

I say clearly to the Minister that businesses do not want an out-of-touch Government telling them that they will have to pay unfair taxes regardless. They want someone on their side who is prepared to fight for a system that takes a fair proportion of taxes and gives businesses the breathing space and support to grow and lead a proper, sustainable recovery.