Business Rates and the Recession

My right hon. Friend is absolutely right. He shows his business experience. If people are not advised in advance, they cannot plan. Despite all the Minister's protestations at the Dispatch Box earlier, the simple truth is that time and again the Government have shown themselves economically illiterate. I am afraid many businesses feel that is representative of all Ministers in whatever Department they happen to sit—although it is nice to see the Economic Secretary on day release from the Treasury. We look forward to his contribution. I hope that he will be able to improve the standard of economic literacy. I shall be honest. The Chancellor has made a concession on the issue, but his decision to let firms pay in instalments completely fails to tackle the problem in company law. It was touched on by the Minister, but the result is that the huge tax bills will still count as liabilities and could thus in some cases make firms insolvent. I conclude on that topic with the questions the hon. Member for Great Grimsby asked of his own Government—I am sorry he is not in the Chamber at the moment. Do we really want to cripple ports? Do we really want to put people out of work? I hope that the Economic Secretary will answer his colleague's questions. It is not just the ports that are suffering. As we heard from my hon. Friend the Member for Bromley and Chislehurst, the majority of councils have already reported that firms are struggling to pay their business rates, with small firms most at risk. Worse is to come. Over the next few weeks, thousands of firms will face a double whammy when rate bills rise by 5 per cent. and transitional relief ends. As several Members mentioned, the annual uplift of 5 per cent. is based on last September's retail prices index, yet, as we have also heard, that month's figure was a 17-year peak and is in sharp contrast to RPI today, which stands at zero. The cost? For business, it will be £1 billion. The cost in jobs will be equally grim. The uplift comes just as transitional relief from the last revaluation ends. That unhappy combination means that for some firms, the increase in their rates bill will be enormous. We have today heard of increases of 30 per cent., 100 per cent. and, in some cases, perhaps over 500 per cent. Retailers alone face paying an extra £250 million—a sum that they can ill afford, given the difficult state of our high streets. As my hon. Friend the Member for South-West Bedfordshire pointed out, it is often the smallest firms that hurt the most. In London council areas, the typical local newsagent faces a rise of £400 to £500; many of us can relate to that situation in our constituencies. For some small firms, that is £500 that they simply do not have. Of course, the arrangements for transitional relief and for the annual uplift have been in place for some time, but that makes it all the more puzzling why Ministers who profess their wish to help have stood idly by and, in the Prime Minister's phrase, done nothing. The same question hangs over small business rate relief, which was introduced in 2005. It provides up to 50 per cent. relief from business rates on premises worth up to £15,000 outside London. As such, it rightly seeks to help the smallest firms, yet last year it became increasingly clear that many firms were not claiming the relief. The Federation of Small Businesses estimated that up to half of eligible businesses were missing out, and many Members mentioned that we are talking about a potential saving of £1,100 each year. Although there were wide variations in take-up, it is clear that many businesses were either unaware of the relief or deterred by all the red tape and bureaucracy. For that reason, last year we put on our party website a very simple ready reckoner that would make the system simple and easy. That is the crucial reason why we want to make sure that the rate relief continues. Since then, of course, my hon. Friend the Member for Mid-Worcestershire has introduced his excellent Bill. He is right to raise points on the subject, and to question the Minister. I hope that the Minister will reply to those questions in his speech. To conclude, I have no doubt that Ministers wish to help, but when it comes to business rates, their policies are causing harm, not helping. Instead of helping retailers, they are taxing them another £250 million. Instead of promoting trade, they are retrospectively taxing our ports. Instead of keeping costs down, they are adding another £1 billion to rates bills, just as the recession bites. To cap it all, those poor souls who see their business fold will find that there is another £1 billion in tax on the properties where they once worked. There is a growing gap between ministerial rhetoric and the reality for businesses on the ground. My fear is that as a result of the gap between Ministers' words and deeds, hundreds of firms and thousands of jobs could yet be lost.