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Business Rates

Volume 82: debated on Wednesday 10 July 1985

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asked the Secretary of State for the Environment what responses he has received to his letter of 8 March asking for details of the effects of business rates on the location of employment.

I have received six replies from organisations I consulted. A number of other bodies have also volunteered their interest.

Will the Minister accept the conclusions of the Cambridge report entitled "The Effects of Rates on the Location of Employment"? The report was commissioned by the Government at a cost of £50,000. It concludes that there is no evidence that rates or rate increases have an effect on employment. It states also that rating does not have an effect on the location of employment in local authority areas. Will the Minister accept the report in full?

The dossier which the CBI sent to me does not support what the hon. Gentleman says. If he believes what he says, let him make a speech in Birmingham, where the rates have gone up by 42p this year, or in Newcastle, where they have gone up by 54p. Let him try to persuade the business men in those two great industrial cities that rates are not important.

Is my right hon. Friend aware that a department store in Darlington has a rates bill this year of over £250,000, that many smaller businesses have to pay rates of over £100 a week and that high rates in the north are not only driving businesses away from the region but are dissuading them from coming to the north?

My hon. Friend is right — and hon. Members on both sides of the House know from experience that he is right—in saying that high rates by high-spending authorities affect areas adversely. That is true both in jobs and in the domestic area.

Why is the Minister refusing to accept the conclusions of the independent study which his Department established? Does he appreciate, since he referred to Birmingham, that that city had the fastest rate of job loss when the Conservatives were in control there and that the rates fell? Is he aware that the report not only said that there was no relationship between rates and unemployment but that it went on to say that higher levels of spending in Labour areas led to higher levels of employment? As there is now clear evidence that Labour policies by Labour-controlled authorities are working to bring down unemployment, when will the Minister change his policies, which have led to massive cuts in services and jobs and have in no way helped the businesses which he claims to represent?

The hon. Gentleman lives in an unreal world. After the big increase in Birmingham, Ericsons told the leader of Birmingham city council:

"Your decision to increase your prices, the rates, by 43 per cent. has, at a stroke, reversed our attitude towards our planned further expansion in Birmingham."
That is the real world. High rates affect business decisions and employment.