Non-Domestic Rating (Deferred Payments) (England) Regulations 2009

My Lords, my script starts with the words, "I am grateful for the opportunity to debate this important issue and its effect on business", but of course, as the noble Lord, Lord Bates, said, we have been here before. I know that backdated liabilities and their effect on ports have been of concern to many in your Lordships’ House, and indeed in wider government. That is exemplified by the number of times that we have debated this issue through the passage of any legislation related to non-domestic rates. First, before I address the arguments put by the noble Lord, I shall place in a policy and regulatory context the regulations that came into force on 31 July—the underlying point of the Motion—and what they aim to achieve. I feel that the noble Lord may be confusing the issue of ports with the actual aims of the regulations. The regulations to which the noble Lord refers in the Motion are not aimed at ports, or indeed specifically at those who find themselves with backdated liabilities. They are intended to provide targeted help to business in the current economic climate by allowing them to spread the payment of increases in their 2009-10 business rates bills over three years. That is what the regulations are about. The effect of the scheme is to provide all ratepayers with the flexibility to help them manage their rate bills in the current economic climate, help their cash flow and give them time to adjust to the impact of inflation. The deferred payment scheme that the regulations establish is a separate policy from the schedule of payments scheme in place, under which businesses, including ports, are given an unprecedented eight years to pay certain significant and unexpected backdated liabilities. It may help if I provide some background about why the Government introduced the deferred payment scheme. As with many other rates and thresholds, business rates are increased in April each year to take account of inflation as measured by the retail prices index in the previous September. This is a consistent and generally accepted approach since the introduction of the national business rates in 1990. In September 2008 RPI was 5 per cent, much higher than the level of RPI in March 2009, which was 0.4 per cent. Ratepayers therefore faced a significant increase in their bills from 1 April 2009. In addition to this sharp increase in RPI, some ratepayers’ bills increased due to the end of the 2005 transitional relief scheme, which was designed to phase in increases from the previous revaluation. The transition period for the 2005 revaluation lasted for four years and ended in 2008-09. The rationale for the four-year period was to ensure that ratepayers paid their correct bill during the life of the 2005 rating list. However, this has resulted in higher rate bills in 2009-10 for those coming out of transition. The Government have listened to the concern of business and have taken action. In response we introduced the deferred payments regulations, enabling businesses to spread a proportion of the increase in their 2009-10 business rate bills over 2010-11 and 2011-12, thus providing practical help for businesses when they need it most. Noble Lords may be interested to know that the amount that ratepayers can defer is 3 per cent of the entire 2009-10 bill, equivalent to 60 per cent of the increase in bills and 60 per cent of any increase caused by the ending of the transitional relief scheme for the 2005 revaluation period. Ratepayers, including businesses in ports that wish to defer, need only to complete and return a simple application form to their local authority. In addition to the deferred payments and schedule of payments schemes, the Government have introduced other measures to help businesses, which must be seen within the wider context of the steps they have taken to aid the recovery of businesses through these economically hard times. This Government are providing real help for businesses, designed to address the cash flow, credit and investment needs of medium-sized businesses. For example, the £10 billion working capital scheme, the enterprise finance guarantee scheme, securing up to £1.3 billion of additional bank loans to small firms, and the £75 million capital for enterprise fund are all an integral part of a fiscal stimulus that the noble Lord’s party has opposed all the way. On the Motion of Regret in the name of the noble Lord, Lord Bates, you must forgive me but, as the effect of backdated liabilities on ports has been debated several times, in this House as well as in the other place, noble Lords will inevitably recognise much of what I say, as it has already been said. This Motion of Regret is about one thing—the waiving of the backdated liabilities for ports. Before I set out yet again why this cannot be done, I reiterate that although, unfortunately, the port businesses have been largely affected by backdated liabilities, they are not the only businesses to be affected by this and that backdating of rates is not a new concept in the world of rating. It happened under the noble Lord’s period of government, as well. Therein lies one of three important reasons why we cannot waive the backdated liability—backdating has been a fundamental and accepted part of the rating system for many years. It is not new.