Business Rates

Simon Kirby Excerpts

Wednesday 4th December 2013 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

I could talk for a long time about the Government’s economic policy, jobs and people’s incomes, and it would not surprise Government Members to know that I am not the biggest fan of their economic policy, but rather than do that today, I want to concentrate on small businesses in my constituency. Many of those businesses have worked incredibly hard to get through the past three years, and I feel that I owe it to them to stand up in the House and say a few words of support and congratulation, as well as to pass on some of the comments about business rates that they have made to me over recent weeks.

As I have mentioned, I am not a big fan of the Government’s economic policy, and I am not very keen on being in opposition—

[Simon Kirby (Brighton, Kemptown) (Con)]

Get used to it.

[Alison McGovern]

I promise the hon. Gentleman that I will do everything in my power to make sure that I do not have much more of it.

It would not be good enough if I just came to the House and shouted my head off, although I may do so on occasion. Some of the most rewarding work that I have done as a Member of Parliament has been with businesses in my community, not least those in Bromborough village and Heswall, and as part of the New Ferry town team.

Bromborough in my constituency is the place where I grew up. It is a lovely place. Last Saturday, we had the Christmas event that is organised by the Bromborough village community association, which is led by local traders. Back in 2010, the village was becoming like a ghost town and shops were shutting left, right and centre. Local traders decided that up with that they would not put. They came together and worked with me to reshape the local parking arrangements and to organise market and community events that would bring life back into the village. They have been incredibly successful. They pre-empted small business Saturday by having their event last week. They deserve the biggest congratulations for what they have done.

Heswall has seen a lot of change in recent years. I have spent a long time listening to businesses talk about the problems that they have had with business rates and, more specifically, with appeals. I am interested to know more about the review of the appeals system that the Minister has set out. I have made representations before about that process and about the valuation office. I will work with businesses in Heswall to ensure that their views on appeals are known by the Minister.

When I met the Heswall and District Business Association recently, one of the traders asked me to relay their views to the Government. I am doing so today. They asked me to say that businesses in Heswall are fighting for their lives. I hope that the Minister has heard that. Small businesses out there, especially those in Heswall, have not had an easy few years, not least because of business rates. Immediate attention must be given to business rates generally and to the appeals system in particular.

New Ferry, which is just south of Birkenhead, had a tough time in the recession. I have chaired a town team that has sought to bring the community back together and to support New Ferry. It has recently had the excellent success of getting its Christmas lights up again. It is holding an event this Saturday for small business Saturday in which local traders are coming together just before Christmas to offer a 10% discount to people who shop in New Ferry. I would contrast the proactive attitude of those small businesses with the lackadaisical Chancellor, who said that he wanted to rebalance the British economy but has done the exact opposite.

Small businesses in my constituency have been clear in what they have said to me. Soccerloco Ltd said:

“The business rates system needs to be fundamentally reformed…this would play a small part in reviving the local economy”.

Wirral Tachograph said:

“The business rate relief has been a big help over the past few years.”

It said that that relief needs to continue to support small businesses, as my party has suggested. Finally, the award-winning Stuart Henry Kitchens, which is based in Bromborough, said:

“A rise in business rates will only force retailers like ourselves out of already expensive shops with higher rates into business parks which will kill the high street.”

I hope that anybody who does not think that our high streets are under enough pressure will listen to Stuart Henry Kitchens, because it knows what it is talking about.

--- Later in debate ---

[Nick de Bois (Enfield North) (Con)]

Let me first make it clear that I believe that the business rates system we have essentially inherited over the years is fast becoming disproportionate for local shops and, frankly, it is an unfair tax. We inherited an appalling deficit, so we have to recognise that there is no easy fix. The Chancellor will inevitably want his £27 billion raised from business rates. However, the fact is that it is a property tax on business that is rightly perceived to be disproportionate for many, delivering no value, and unfair. Also, businesses cannot negotiate it, unlike just about everything else which is in their control. Shockingly, our business rates are a more significant tax on business property than comparable taxes in other European countries. Indeed, the Office for Budget Responsibility forecasts that business rates receipts will exceed council tax and fuel duties receipts in financial years 2014 and 2015.

There is a strong consensus—even in this House, I suspect—that the system is no longer fit for purpose, but we are in extremely difficult times, so there is no pretending there is an easy fix. I would like to see reforms that would have economic benefits, including a boost to jobs, which I believe will ultimately drive revenues through having more profitable businesses. There are serious concerns about the level of the tax on business, and there is a serious case for a review of the entire structure. I have lobbied publicly and privately for a commitment to that review and I think the case is overwhelming. The present situation means that businesses are at the mercy of an uprating system that is flawed and, to cut through the politics, the reality is that this has been going on for a long time. This is not a problem created by the Government parties.

Incidentally, I notice that although this is an Opposition day debate, there have been consistently more Conservative Members in the Chamber discussing this issue. I think it is worth putting that on the record. [Interruption.]. I pay tribute to all who have spoken in the debate, however, because all the contributions have been useful. [Interruption.] I am sorry Opposition Members do not like what I said, but it is a fact, so they will just have to deal with it.

According to the British Chambers of Commerce, an uprating of 3.2% would drive something like another £900 million in revenue. Interestingly, Opposition Members have been quoting the British Retail Consortium in support of their arguments, but they have not mentioned that the BRC said today that if speculation of a limit to a 2% rise is true, it would welcome that, as would its members, and that it sees see that as a clear indication of a direction of travel for business rates. As we on the Government Benches know, the key for businesses is as much the direction of travel of a tax—and having a sense of certainty as to where it is going—as having immediate relief. A real-terms cut is what will matter.

Having said that, we can do more, and we can do more now. I talked about section 69 of the Localism Act 2011 in an intervention, but the idea of scrutinising the powers of local authorities to make reductions did not seem to be met with universal approval by Opposition Members. I cannot understand why Opposition Members do not believe that local authorities should be challenging their expenditure and looking to apply discretionary relief by any means, supporting any sector of their local economy that they wish to support at a level that will attract 50% support from the Government. It is ludicrous that they do not embrace that and urge their councils to do it. I would welcome an intervention from anyone on that.

[Simon Kirby]

Is my hon. Friend surprised as I am that Brighton and Hove council spends £2.9 million on communication across the council, which could be used to help small businesses across the city, create employment and generate the economy?

[Nick de Bois]

I am grateful to my hon. Friend for his intervention and for drawing his local council to our attention. My council has spent £100,000 on conferences and, I understand, £106,000 on magazines, no doubt to promote a good message. That £200,000 in Enfield could have been subsidised by another 50% from the Government. If £100 million in rates and business rates is collected in our borough, and £3 million of discounts applied to the retail sector, or specific areas within the retail sector, that can translate into a significant cut to businesses. The council might not use those means, because it realises that there is a business audience scrutinising councils’ spending decisions and wondering why they do not manage the money they gather from taxpayers as if it was their own. That is what drives a business. Uncollected council tax seems to run year on year with no reduction. Enfield council is averaging nearly £1.5 million each year. Why is no effort made to improve that and divert those funds to support local businesses? The answer is that councils do not treat the money like it is their own.