Business Rates

It is with enormous pleasure that I wind up the debate. In response to the hon. Member for Peterborough (Mr. Jackson), it is only too clear that only this Government have been helping businesses through the current economic recession, and only this Government are prepared to take action now. In her opening remarks, my right hon. Friend the Minister for Regional Economic Development and Co-ordination eloquently made the point that we fully recognise the impact of the current economic climate on businesses across the country. That is why we have taken real action now to help business through this economic downturn. The hon. Member for Falmouth and Camborne (Julia Goldsworthy) took us through her contribution at breakneck speed. I appreciate why she did that, but it was sometimes difficult to keep up. I agreed with her critique of the Opposition motion, and I, too, noticed the striking similarity with the motion tabled on 25 March. I am sure that we all accept the importance of business rates, but I agree that the motion is narrow and ignores other issues about help for businesses. I am afraid that that is as far as I can go in agreeing with the hon. Lady. I do not accept that our actions are tinkering at the edges, because I believe that they are giving real help to businesses now. I was disappointed that she mentioned our VAT cut, because despite the complaints from both Opposition parties, which did not believe that it would be effective, Office for National Statistics data show that the cut has been passed on to consumers in around two thirds of prices and has contributed to recent falls in inflation. In January, the Institute for Fiscal Studies said that the VAT cut had had the same effect as a 1 per cent. cut in interest rates, and in February Goldman Sachs said:""The VAT cut appears to have had a clear positive impact."" My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) made a thoughtful and knowledgeable contribution, and I particularly welcome his comments about revaluation, which put the record straight after the opening contribution by the hon. Member for Putney (Justine Greening). The hon. Member for Northampton, South (Mr. Binley) made his contribution in his inimitable way, and he confined his remarks to small business rate relief. This Government introduced the scheme in the Local Government Act 2003, because we recognised the disproportionate burden that rates can have on small businesses. I am disappointed that the Opposition did not support that Bill on either Second or Third Reading. The hon. Gentleman made a point about making small business rate relief automatic, which was suggested in a private Member's Bill introduced by the hon. Member for Mid-Worcestershire (Peter Luff). It would present considerable challenges for local authorities, as they would themselves need to establish whether a ratepayer occupied more than one property. I cannot see how local authorities could do that if the ratepayer's property crossed local authority boundaries. There are difficulties with transferring that responsibility from businesses to local authorities, and we must consider whether it would be an administrative burden. The hon. Member for Northampton, South also mentioned Wales, but the system is not totally automatic there. It is only partly automatic, and the scheme is different from ours. However, we are sympathetic to the aim of finding ways to support small businesses through the economic downturn, and we have been considering what more we can do to improve the take-up of small business rate relief. We have already taken steps to amend legislation for 2009-10, so that all eligible businesses in new properties can receive rate relief from their first date of occupation. We are discussing with the Local Government Association the practical concerns—they are genuine practical concerns—to avoid an automatic scheme, which would award relief to businesses that are ineligible because they occupy multiple properties. I am happy to meet the hon. Member for Mid-Worcestershire to explain the position further. I believe that there is an outstanding meeting, at which he was due to meet my predecessor, and I am more than happy to take that up. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) spoke about a business improvement district project in his constituency. I do not have the details, but I am happy to discuss it with him further outside the debate. I assure the hon. Member for Hemel Hempstead (Mike Penning) that his concerns were certainly not ignored. There was a concern that not all Back Benchers would have the opportunity to speak, and I am glad that the hon. Gentleman had the opportunity to make his point. To respond to it, it is generally the case that property must be capable of beneficial occupation before it can be brought into the rating list and be liable for empty property rates. The issue is obviously so important that the hon. Gentleman is not even listening. There are some exceptions to what I outlined. When the property is close to being complete and building work has stopped, the general rule is that property not capable of beneficial occupation is not rateable. I am more than happy to meet the hon. Gentleman and discuss his concerns further. However, I repeat that the general principle is that, if the property is not capable of beneficial occupation, it is not rateable. I am grateful for the considerable knowledge and expertise of my hon. Friend the Member for Southampton, Test (Dr. Whitehead) on local government finance. I was heartened by his exposing the holes in the highly selective Opposition argument. The hon. Member for Braintree (Mr. Newmark) raised concerns about businesses' ability to pay their business rates. That is precisely why we have introduced the help with cash flow. Many hon. Members mentioned the deferral scheme. We recognise that businesses need help now to ease their cash flow when money is tight. That is why we introduced the deferral scheme for business rates. It is designed to smooth the effects of the inflation spike of 5 per cent. in September 2008, which would have meant an impact on businesses' cash flow this year. In the Budget, the Chancellor forecast that RPI inflation would fall to minus 3 per cent. by September 2009. The impact of uprating if RPI is negative would be to reduce total business rates in cash terms in 2010-11. The hon. Member for Putney asked how the full deferral of 60 per cent. could be delivered if the scheme is introduced halfway through the year. The deferral scheme will come into force at the end of July—that was made clear when it was announced. The scheme will offer the full deferral of 60 per cent. of the increase due to inflation and transitional relief by adjusting the instalments of business rates that remain outstanding. My hon. Friend the Member for Sheffield, Attercliffe mentioned revaluation. Regular revaluations are an important part of the rating system as they maintain fairness between all ratepayers. Revaluation ensures that each business contributes, based on up-to-date information. As my right hon. Friend the Minister said, all rateable values will be published at the end of September. At the same time, we will provide the business rates calculator to help ratepayers estimate their rates bill for 2010. By October, ratepayers will be able to estimate their 2010 rates bill, using their actual 2010 rateable value. [Interruption.]