It is a delight to serve under your chairmanship, Mr Caton.
Since I became Rochdale’s Member of Parliament, the local business community has raised business rates with me time and again, which is one reason why I initiated this debate. The other reason is that I believe the Government’s handling of this particular tax is doing real damage to economic growth. It is also fair to say that, in many ways, the Government’s handling of business rates mirrors the way they have mishandled other broader economic issues and failed to manage Government change.
I will start by providing some broad examples. The Government have talked tough on red tape, but their handling of business rates is making life a misery for thousands of businesses. The Government claim to be interested in helping the high street, but they ignore every retail voice that raises concerns about business rates. The Government talk about transparency and accountability, but they are moving business rates revaluation without consulting business first. This weekend, through the Deputy Prime Minister, the Government talked about rebalancing our economy away from the City’s square mile to the rest of the country through more city deals, but they are now postponing business rates revaluation, which will have a major adverse effect on businesses in every region except the south-east.
The Conservatives have often peddled the myth that they are on the side of business. Well, if there is one policy that demolishes that myth—most businesses now know this—it is business rates. The Government are playing politics with business rates, which is hurting the high street and the wider business community.
On the recent business rate increases, the Government said in their recent circular:
“As business rates are linked to inflation, there will be no real terms increase in rates”.
On 2 July, the then Minister for Housing and Local Government, the right hon. Member for Welwyn Hatfield (Grant Shapps), said that business rates are having
“only an inflation-level rise”.—[Official Report, 2 July 2012; Vol. 547, c. 567.]
Do the Government think businesses believe that rhetoric? Does the Minister think that businesses are oblivious to the fact that last year’s increase was based on an exceptional September, when RPI was at 5.6%? Does the Minister think businesses are not aware that that major rise in business rates gave his Government a windfall in revenue? In 2011, the increase was 4.6%, a cumulative rise of more than £0.5 billion over those two years. Businesses see this Government as disingenuous when they talk about business rates increasing only by inflation.
Although the Government have had a windfall in business rates, including much from the retail sector, they have dedicated little to helping the high street. From the £350 million extra income last year, the Government spent just £10 million on the various Portas programmes. Latest figures show that more than 30 high street chain-store shops are closing every day. Empty shop numbers have gone up, year-on-year sales are down, footfall is down and insolvencies are up. That is the picture of the high street under this Government, and their mismanagement of business rates is a major factor in that.
Every week the newspapers are full of stories of businesses citing high business rates as their reason for pulling out of an area or being forced to close. The chief executive of Britain’s third largest shoe retailer, Kurt Geiger, recently said:
“Business rates actually are what are killing UK retail”.
Retail has accounted for 20% of our gross domestic product, and it accounts for 11% of UK jobs and is the largest private sector employer. Retail is often the first rung on the ladder into employment for young people, but the ladder is now being pulled away by the Government.
We are all aware of the Government’s Portas review, and we all had high hopes for what it might achieve. But we now know the Portas review was just window-dressing. It is no wonder that Mary Portas is now telling industry conferences that she fears her review may have been a “Government PR stunt.” One of Mary’s recommendations in her 28-point plan presented to Government was:
“Government should consider whether business rates can better support small businesses and independent retailers.”
Those words must have gone in one ear of Government and straight out the other, because they have been flatly ignored. Straight after the recommendation, the Government introduced the biggest business rates increase in 20 years.
The Minister said last month on “ConservativeHome”:
“I want to make myself obsolete.”
I do not have a problem with the Minister making himself obsolete—indeed, I welcome it—but I do have a problem with him and his Government making the high street obsolete.
Because of the inflation-busting business rate increases, it is no wonder the Valuation Office Agency has a total of 241,700 outstanding appeals on business rates for the fourth quarter of 2011-12. In that quarter, the VOA managed to clear just 11,960 appeals. Many businesses in Rochdale have testified to the slowness of that process.