Business Rates and the Recession

Today's debate demonstrates the strength of feeling among all Members of the House on the subject of the importance of small businesses to the UK economy. We know that small businesses employ more people than any other kind of businesses in the private sector, and that there are a record 4.7 million small businesses in the country today. The UK business environment is recognised as being among the best in the world. Given the limited time that I have to respond to the debate, it is clear that I must focus on some of the major issues. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) spoke exclusively about rates in ports. Rather than responding in detail now, I refer him to the fact that there will be a debate on the Floor of the House next Wednesday on the regulations that the Government propose to introduce, so he will have the opportunity to debate them. My hon. Friend the Member for Stafford (Mr. Kidney) made an important speech. I very much take his point about the need for property managers to act reasonably at this time. He is also right to emphasise the procurement powers of local authorities. As my hon. Friend knows, the Minister for Local Government visited Staffordshire recently. We certainly welcome the freezing of rates for business centres across the county, to which he referred. That is a great example of a Labour-led county council taking effective action. I note the Budget representations that he made to me on empty property relief and on small business rate relief. Obviously, the Budget will be announced next month. The hon. Member for South-West Bedfordshire (Andrew Selous) raised a number of local examples of businesses in his constituency and variations in valuation practices, which I am sure he will take up through other channels. The hon. Member for Aldridge-Brownhills (Mr. Shepherd), a black country neighbour of mine, will no doubt welcome the fact that 7,340 companies in the west midlands have so far deferred taxes, to the tune of £134 million. I agree with him about the importance of retail to the economy of the west midlands and of the UK as a whole, and in many cases I do not think the importance of retail to regeneration has been properly emphasised. He talked about the recession of the early 1980s, which I remember well. I also remember the extremely limited policy response at that time, by contrast with the active measures that the present Government have introduced. The hon. Member for Northampton, South (Mr. Binley) did not have the opportunity to do much more than clear his throat, but I am sure we will benefit from his wisdom on another occasion. In the remaining time available, I want to cover the Government's response. First, I shall address the subject of the VAT cut, which was raised by a number of hon. Members. There is clear evidence that that cut has been passed on through reductions in prices, and it is transparently the case that it is a £12.4 billion boost to the economy. Opposition Members say that they would not have introduced the VAT cut, they would have done something else. They need to think about whether they are prepared to support a fiscal stimulus to the UK economy. They have opposed us on that all along the road, but they cannot spend money if they are not prepared to commit the resources. That is exactly the case with the Conservative proposals in relation to the loan guarantee scheme, which was raised by the hon. Member for Mid-Worcestershire (Peter Luff). The Conservative party is split on that. The shadow Chancellor says that he wants a loan guarantee scheme and pretends that it will not cost any money. The shadow Business Secretary says clearly that the taxpayer will take some of the hit. Whether on the loan guarantee scheme or on inheritance tax, there is clearly a difference of opinion at the heart of the Conservative party. Let me move on and explain the Government's enterprise finance guarantee. Hon. Members should be realistic about Government programmes. The enterprise finance guarantee is up and running and is providing support to businesses. The actions that the Government have taken to stimulate extra lending into the economy have, through the asset protection scheme commitments made by Lloyds Banking Group and by RBS, led to an additional £27 billion being introduced into the economy and made available for loans over the next 12 months. Under the enterprise finance guarantee scheme, about £30 million was offered to business last week. That is real progress. On the working capital scheme, a Government guarantee that supports £500 million more lending cannot be rustled up overnight. It requires extensive negotiations with the banks because it involves, potentially, taxpayers' guarantees that may be called. If the Opposition are serious, they should consider where the money will come from. They should recognise that such schemes take time and need to be negotiated. They must be right if the taxpayer is not to be exposed to completely unfair liabilities—