Business Rates

Tom Blenkinsop Excerpts

Wednesday 4th December 2013 Commons Chamber

[Toby Perkins]

That is one viewpoint, but that of someone who has not seen an opinion poll recently, I think. Let us not hear anything from Conservative Members to suggest that Labour is the party of corporation tax rises, as history tells us that that is not the case.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

It is also worth reminding the Conservative party that it invented VAT, which has increased under every Tory Government since. No Labour Government have ever increased VAT. We also have to understand that since 2011, investment in small and medium-sized enterprises has decreased by £30 billion.

[Toby Perkins]

My hon. Friend makes an incredibly important point. He will remember, as I do, the Liberal Democrats’ posters and the Conservatives’ promises that there would be no VAT increases. He might well remember that the Chancellor, when he was shadow Chancellor, claimed that Labour would increase VAT and that it would be a bomb waiting to go off under the recovery. Of course, the Government then introduced the VAT rise before there was any kind of recovery, which is one reason why we have had three wasted years.

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[Toby Perkins]

The important question is this: how many of those businesses have gone under? In every recession, large numbers of people are unable to find a job, and they go on to set up their own businesses. I set up a business under similar circumstances—desperation is a pretty decent motive for setting up a business. The reality is that we have had three years of a flatlining economy and difficult circumstances. The hon. Gentleman might not be able to understand that, but the people in my community certainly do.

[Tom Blenkinsop]

Is my hon. Friend aware of the comments made by Hans Redeker from Morgan Stanley? He said:

“the UK recovery will turn out to be little more than a sugar rush unless investment picks up… The investment-to-consumption ratio is very low at 16% and falling. It is 22% in the eurozone and 23% in the US.”

Would my hon. Friend call that a copper-bottomed recovery?

[Toby Perkins]

I certainly would not. My hon. Friend makes an important point about the scale of the recovery, which so far has been less than a third of that predicted by the Office for Budget Responsibility in 2010. The full extent of the failure of the Government’s policy is there for all to see.

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[Brandon Lewis]

My hon. Friend makes an excellent point. All businesses can be liable for corporation tax, so it affects all businesses. Unlike the Labour party, we recognise that we have to look at the picture for business as a whole, not just bits in isolation.

With such a lukewarm response from business, the Labour party is still a long way from the heady days of its prawn cocktail offensive.

[Tom Blenkinsop]

In her question to the Minister, the hon. Member for Ealing Central and Acton (Angie Bray) effectively referred to a trickle-down form of economics, yet household savings in cash ISAs and deposits were actually down from October 2012 to 2013 by £23 billion, or £900 per household. What has happened is an absorption of capital from the bottom upwards. Those at the bottom have been used as a line of credit, not the big businesses.

[Brandon Lewis]

Bearing in mind that manufacturing is up, I think the hon. Gentleman misses the point that putting up corporation tax potentially hits every business that is successful. If he has worked through his economics, I assume that he would want those small businesses to be paying corporation tax because they are successful enough to become the big businesses of the future, rather than being penalised by a Labour Government. Businesses are the lifeblood of our economic recovery. This Government are cutting corporation tax to help businesses to invest and expand.

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[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I thank my hon. Friends the Member for Chesterfield (Toby Perkins) and for Sheffield South East (Mr Betts) for their excellent speeches detailing a lot of the problems that are very familiar in my local area.

Like many colleagues, I am looking forward to small business Saturday on 7 December, when we will celebrate and support local small businesses on one of the busiest shopping days of the year. For the rest of the year, though, many of those businesses will be struggling because of inflation, with business rates increasing by an average of over £250 next April and the north-east seeing some of the steepest hikes outside London and the south-east. The average business rates bill in the north-east will increase by about £360, on top of an average increase of £1,500 since the 2010 general election. How do small businesses cope with these hikes? They face the tough choice of trying to pass on the increases to customers through higher prices, adding to the cost of living crisis, or absorbing the cost, squeezing their finances until they can no longer afford to stay in business. No wonder our high streets are littered with empty shops.

I would like to put on record my thanks to Redcar and Cleveland borough council, which bent over backwards in relation to the new SSI steelworks in Redcar. The council was owed to the tune of £20 million in rates and gave the company a lot of slack to make sure that we could keep steel production in Teesside—something very close to my heart. Having heard about that today, we also heard about job losses at the Lotte chemical site. In summer 2009, the former Labour Government, alongside One North East, the regional development agency, took the former company out of a position of administration and got a south Korean company called Lotte to come in and purchase it, and it got the polyethylene plant running again in April 2010. There are good examples from the past for the Government to look at, irrespective of which party was in power.

An important factor in my constituency—I raised this in a debate last week and the week before that—is female unemployment. Long-term female unemployment has risen by 144%, and that is having massive consequences on the high street. One element is weekly wages. Female average gross weekly earnings are down by £12.30 a week since the last general election, and that will have frightening effects on small businesses.

[Alison McGovern]

Does my hon. Friend agree that those statistics are all the more concerning when we consider that food price inflation has gone up by 18% since the crash?

[Tom Blenkinsop]

I keep coming back to that point time and again. This is not just about incomes but the availability of jobs and their levels of pay. As my hon. Friend the Member for Sheffield South East detailed, the number of jobs for women is limited, and that is particularly so in the north-east. In my area, the public sector, which was a large employer of females, has been haemorrhaging jobs, and 16% or 17% of workers are care workers, many of whom are women on zero-hours contracts. This has an effect on small businesses further down the supply line.

Every penny counts for smaller businesses who are constantly watching the bottom line, but when the worst comes to the worst—when a business is forced to close its doors for the last time—that leads directly to a decline in employment. Tackling soaring business rates would limit the number of shops closing, and this in turn would help to prevent unemployment rising. This Government set the business rates that so many are struggling with. At a time when the Government should be backing small business, they appear once again to be on the wrong side. Large companies will have already had about £10 billion in tax cuts by 2015. It is right that we should have a globally competitive corporation tax rate, and we have supported those tax cuts, but the next priority should be cutting business rates, supporting small and medium-sized businesses, and relieving the pressure on our high streets.

Small businesses are integral and, in many cases, long-standing institutions within our communities, but business rates keep going up and up. Our high streets and town centres need a blend of independent shops alongside bigger well-known retail stores. That mix is really important for a vibrant and thriving local economy.

[Justin Tomlinson (North Swindon) (Con)]

I completely agree about the importance of the high street. I am proud to be vice-chair of the all-party town centre group and the all-party retail group. One of the other big threats is internet sales—for example, an internet sports store may undercut traditional independent sports stores. What would the hon. Gentleman do in the business rates system to protect those outlets?

[Tom Blenkinsop]

In my area, going back to pre-1997 when the Major Government established the Teesside Development Corporation, we saw the birth of out-of-town shopping developments, which had a far more profound effect on creating new shopping habits in, for example, Stockton high street in my home town of Middlesbrough and in the market towns of east Cleveland. I take on board the hon. Gentleman’s comments: the situation is difficult. We need small businesses to absorb that new internet market, and rural broadband and other new, inventive technologies will be important for them in doing that.

This month the Forum of Private Business conducted a survey of its members on the cost of doing business, and the No. 1 demand of small firms was action to tackle the rising cost of business rates. Understandably, I am proud that my party is taking the lead where this Government are failing and that it is standing up for small business owners by announcing a cut in rates in 2015 and a freeze in 2016. That action could save small businesses such as pubs, shops and start-ups an average of nearly £450 over two years, while some firms could save £2,000.

It is worth reminding Government Members that VAT was a Tory invention and that every time a Tory Government come into power they increase it, while Labour never increases it, but decreases it. Air passenger duty is another Tory indirect tax, as is the fuel duty escalator of John Major’s Government. I repeat what I said last week: the Conservative party has an addiction to keep increasing indirect taxation on the individual and on business.

Unfortunately, 2015 will be too late for some businesses. The Government need to take action now, and tomorrow’s autumn statement seems the perfect opportunity to do so. Now more than ever small firms need our support. High streets are suffering due to pressure from high energy bills, rising business rates and a lack of bank lending. To get our economy growing at a respectable rate, we must support small businesses that have so much potential to deliver the jobs we need not only in the future, but right now in my constituency and high streets and town centres across the country.