Business Rates and the Recession

As many hon. Members will know, my party recently published a policy document called "Control Shift", in which we put forward a proposal to encourage local authorities to attract new business by giving them a stake in the revenue that new businesses bring—enabling them to keep the increase in council tax from attracting new businesses, without its being lost through equalisation, for a period of six years. That is an important point that we need to consider. I might add that it is ironic that we should be making that positive proposal to enable local councils when the Government have been slashing the support for business growth that they used to give through the local authorities business growth incentive—LABGI—which has essentially been emasculated for want of financial support from the Treasury. I may return to that point, which shows a clear contrast between the approach taken by the Government and that taken by the Opposition on support for businesses through local authorities. The overall situation is a double whammy, with a 5 per cent. increase based on outdated methodology and data, and the loss of the transitional relief, as well as those other matters to which we have referred. There is also concern about the impact on particular sectors. It is worth remembering that the retail sector is particularly likely to be hit in the current situation, because at the time of the revaluation data, which go back to April 2008, retail rentals were at a historically high level and the market was rather distorted. Since then, they have fallen back and come closer into line with rentals in other sectors, which is also closer to the position in the previous revaluation, in 2003. Small shops are therefore likely to be suffering particularly badly from the percentage increase. That is one sector that is being hit, but it is not the only one. There is also the whole question of small businesses, which are always particularly vulnerable to financial pressures. Equally, small businesses are particularly important to the economy, because they are the seedcorn of many others. I have always thought that when Napoleon called us a nation of shopkeepers he paid us a considerable compliment about the strength of entrepreneurialism and individual initiative that enabled this country to beat him at the end of the day. We therefore disregard small business at our great peril. It is particularly troubling, therefore, that so many businesses are in difficultly. In its current form, the small business rate relief scheme, which was introduced in 2005, involves businesses making an application. That brings us back to an experience that many of us will have had in dealing with small business: at the end of the day, when people have been working extremely long hours, the more form filling, the more hassle, the more paperwork there is to do, the harder it gets, so the forms and applications are more likely to be shoved to one side as something that will have to be dealt with later. The first matter—of actually getting the money over the counter and through the tills—has to be dealt with first.