Business Rates and the Recession

This debate has been short, but timely. It has shown that the Government's policies on business rates are causing real harm. We began with an excellent contribution, as one would expect, from my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), who brought to bear his characteristic charm and tremendous experience in the field. I thought that he exposed very neatly the weaknesses in the arguments over ports, and in the other issues raised by hon. Members on both sides of the Chamber. We then had a characteristically generous contribution from the Minister for Local Government. I confess that I have soft spot for him, as we spent more hours than I care to remember in Committee Room 10 debating the Finance Bill. He has always been what he was today—the defender of the indefensible—and he was on particularly good form this afternoon. I noticed that he struggled a bit when the googly came from his own side, in this case from the hon. Member for South Derbyshire (Mr. Todd), but he did do one very important thing: he put it on the record, I believe for the first time, that the Government are committed to reducing the poundage and therefore the burden of business rates if the retail prices index is negative in September. We look forward to holding the Government to that commitment. We then had a contribution from the hon. Member for Solihull (Lorely Burt) that was literally from another planet. It was a fascinating run through "Star Trek" and, I think, "Titanic". I suspect that the ending was nearer that of the latter movie than the former and, being a gentleman of a certain age, I thought that the metaphor was perhaps a little stretched. However, the hon. Lady is often right about these matters, and she made a good point about there being a genuine cost to small businesses. The hon. Member for Great Grimsby (Mr. Mitchell) made a contribution, and then we had an excellent speech, as one would expect, from my hon. Friend the Member for Mid-Worcestershire (Peter Luff). He was concise but thoughtful, and he set out the key arguments about why we need to look at making small business rate relief automatic. The hon. Member for Stafford (Mr. Kidney) made an excellent contribution, and his remarks were intelligent and balanced. I was pleased to see that, like the Minister for Local Government, the hon. Gentleman indicated his support for making small business rate relief automatic. We look forward to them joining us in the Division Lobby, should the opportunity arise. My hon. Friend the Member for South-West Bedfordshire (Andrew Selous) made an excellent contribution and, as he often does, he highlighted the human cost of failed Government policies. He did that in an extremely powerful manner, and he quoted a constituent of his who said that the problem with the Government is that there is not a lot of "practical help", and who wondered why the money could not be used better. Finally, my hon. Friends the Members for Aldridge-Brownhills (Mr. Shepherd) and for Northampton, South (Mr. Binley) both made strong and excellent contributions. Both have always fought the corner of small firms and, although my hon. Friend the Member for Northampton, South made a short speech, it was as effective as ever. I hope that the Economic Secretary to the Treasury was listening to what my hon. Friends said, and that he will answer the points that were raised when he replies to the debate. As you know, Mr. Speaker, Ministers' press releases regularly claim that they are providing real help for businesses, yet the view of business is that it is all talk and no action. For example, the Government's amendment talks proudly of their flagship working capital scheme. It was announced eight weeks ago as the centrepiece of Government proposals, and it was meant to provide £20 billion of loan guarantees from 1 March. However, it is nearly 1 April now, and not a single company has benefited financially from the scheme. Or what about the automotive assistance package? Promised in November and launched in January, it was valued at £2.3 billion and we were told that it would provide "real help" to the car industry. What has happened? How much of that money has reached businesses? Well, according to the answer from the Minister and despite all the talk, not a single loan guarantee has been issued yet. Since the fall of Lehman Brothers last September, it has been clear to everyone that urgent action is needed, both in the banking system and also to deliver working capital to the rest of the economy. That is why Conservatives set out a plan last November for a single, national loan guarantee scheme that would help viable businesses of all sizes and in all sectors. It would be simple, easy to access and of course easy to understand. As several Members pointed out, had Ministers taken our advice then the scheme would now be up and running, helping businesses through the recession. Despite Ministers' protestations that somehow the Opposition have nothing else to offer, the truth is that we have proposed a number of schemes, as my hon. Friend the Member for Mid-Worcestershire rightly pointed out. Payroll taxes for the smallest employers should be cut by 1 per cent. Small company corporation tax rates should return to 20p in the pound. As we have heard from many Members, rising business rates are causing real problems. When I meet businesses, as I am sure other Members do, one of the critical questions that is always raised, especially in small businesses, is about rates. The reasons are simple. First, firms pay out thousands of pounds in bills but they receive nothing directly in return. The hon. Member for Solihull was right to make that point. Secondly, business rates are a fixed overhead. They remain the same in the good years and the bad, so when the economy shrinks business rates hurt all the more. That is why we believe that the Government's rates policies cause serious damage. After all, what is the sense of imposing £1 billion of extra business rates on empty property just as we head into a recession? Why compound the problem with up to £600 million in supplementary rates? It just adds insult to injury. We heard a powerful contribution from the hon. Member for Great Grimsby about how the Government's policies on ports damage those enterprises. Without consultation or proper economic assessment—as the Minister admitted—the Valuation Office Agency issued new bills to each separate occupier. Those bills are retrospective and reach right back to 2005. As we have heard, the result could be ruinous for port businesses across the country; from London to Liverpool, from the Humber—it was nice that one of its representatives, the former Deputy Prime Minister, could join us, albeit momentarily—to other ports such as Falmouth in Cornwall.