It is very important that we get our numbers right in this debate. I have not received any recent specific representations on the rate of small business rate relief.
May I make one, then? If the right hon. Lady wishes to give an across-the-board boost to the economy in a recession, will she consider dramatically increasing the rate of small business relief, and will she fund it by abolishing the useless and wasteful regional development agencies? They do absolutely nothing—certainly in the south-west—apart from looking after themselves and expanding the public sector. If she does that, I am sure that her colleagues in other Departments would agree that we may even see some green shoots in the economy next year, after we have won the election.
I am surprised that the right hon. Gentleman should be asking for an increase in small business rate relief. Perhaps he has a very short memory, but when the rate relief of 50 per cent. for small businesses was introduced in 2003, the Opposition voted against the Bill, and the Leader of the Opposition voted against it. Now we have a request for an increase. The right hon. Gentleman will recognise that the Government have done a huge amount to help small businesses in the current economic downturn, such as the small firms loan guarantee fund, the enterprise fund and the working capital fund. All of that stands in stark contrast to the attitude of the Opposition, which is to do nothing. If he thinks that the regional development agencies have done nothing to help, I suggest that he contact his regional development agency and look at the ways in which it has been able to sustain jobs and business in the current economic climate.
Business rates are, in some cases, a significant expense for small businesses. Given the current Government approach to corporation tax and VAT return, and the problems that some small businesses are suffering, will my right hon. Friend examine the possibility of a flexible approach to the collection of business rates?
My hon. Friend raises an important point, and we are constantly examining the ways in which we can help businesses get access to credit to meet their liabilities. We have introduced measures on prompt payment to try to increase cash flow for small businesses, which is important. Small business rate relief benefits just short of 400,000 firms, so they are getting extra help. The changes introduced in the pre-Budget report mean that someone setting up a small business can get rate relief in the year that they set it up, instead of having to be registered from 1 April. That will significantly help small businesses to cope with the demands from non-domestic rates. I understand my hon. Friend’s point, but it is important that we continue to ensure that local authorities have the income they need to provide services. Nevertheless, we are constantly looking at ways in which we can help businesses.
The Secretary of State knows my constituency well, and sadly, last week, we heard the news that the Kaydee bookshop, which has been in operation for more than 60 years, is to close. She knows that 37 pubs a week are closing in this country, and I have heard of a couple of pubs that have closed their doors recently, perhaps for the last time. She knows that business rates could tip a marginal enterprise into closure. What more can she do, particularly at this time of recession, to ensure greater relief for small and medium-sized enterprises?
My hon. Friend makes an excellent suggestion from a sedentary position.
The hon. Gentleman is rightly concerned about small businesses, and the campaign on pubs is a matter of general concern. However, it is a question of pubs not just in rural areas, but in some urban areas, too. Some rate relief is available, but I am concerned to ensure that those centres of the community are able to continue, and I am looking at some innovative ways to tackle that issue. We all know that many small firms are experiencing difficulty and the Government are putting in place some measures—I read out some of them earlier—to ensure that they get access to finance, which is the overriding issue for small business at the moment. They need that finance on reasonable terms, and without interest rates being hiked up. That is at the centre of our concerns.
I say to the hon. Gentleman in the kindest way possible that this Government are focused on introducing a range of measures to help business, which stands in marked contrast to the Opposition, who would simply say, “There’s nothing we can do.” I do not think that that is good enough.
We on the Labour Benches do welcome the rate relief that was brought in; it has been beneficial to small businesses. The question is whether we could extend it and give a little more—we know that the current figure is 50 per cent. Perhaps we could extend it to those medium-sized businesses that are also struggling, and put pressure on local authorities, which chase the money with great zeal and put businesses over the edge. Perhaps if they worked together, we could save businesses; that would be a common-sense approach. Any more help is always welcome.
My hon. Friend is renowned for his common sense and practicality. I assure him that we are constantly looking at ways in which we can help; we are not inflexible. If hon. Members look at the changes that we made to empty property relief in the pre-Budget report, they will see that we raised the threshold of rateable value from £2,200 to £15,000 because we received a lot of representations. We listened and we acted. That is evidence of the Government genuinely trying, in good faith, to do what they can to help businesses at this difficult time.
Whatever the past may hold, I think that we all now believe that small business rate relief was a very good idea. The problem is that only half the small businesses in England apply for it. In Scotland and Wales, the rate relief is given automatically. May I express the tentative hope that the Secretary of State will look sympathetically on my private Member’s Bill, which is being introduced tomorrow? It will make small business rate relief automatic for small businesses, just as it is in the two other parts of Great Britain that I mentioned.
The word “Damascus” came to mind when the hon. Gentleman sought to draw a veil over the Conservatives’ opposition to rate relief in the past. I am aware of his Bill. We wrote to local authorities in October last year, reminding them that it is their job to promote the scheme and encourage small businesses to make applications. I understand that my right hon. Friend the Minister for Local Government will meet the hon. Gentleman to discuss his private Member’s Bill. It is important to note that the rate relief is designed for those small businesses that occupy only one property. We have to make sure that there are checks in the system so that we do not get applications from multiple property owners. However, I am pleased to facilitate that discussion.
The Secretary of State’s Department has a very important job to do in supporting local small businesses through the credit crunch, not least because despite the billions thrown at the banks, the terms and charges for many small businesses locally are still being changed without any notice. The Secretary of State has given updated claim figures for small business rate relief, but many businesses still do not receive it. Will she give a clear indication of what her Department is doing to investigate making the entitlement automatic, so that businesses do not have to claim it, and will she also pursue making the payment terms more flexible, if it is possible for Her Majesty’s Revenue and Customs to do that? What can the Secretary of State do to support local authorities in offering similar support?
I have responded on the issue of automatic payment. As I say, we will look at the private Member’s Bill, but I want to make sure that the system has integrity and is very good. At the moment, the information about the small business rate relief scheme is sent out with the business rates bill. Perhaps there is more that local authorities can do to draw people’s attention to that application, and we will pursue that. We certainly do not want to hide the relief; we want to maximise take-up, because we recognise the contribution that small businesses make.
Several hon. Members have made points about the terms of payment and whether we can be more flexible on that. Again, we do not close our minds on that issue, but I remind hon. Members that local authorities have to provide essential services to the community, and that is dependent on high rates of collection of both council tax and non-domestic rates. The money has to be found somewhere. Equally, I am conscious that we do not want to tip an otherwise viable business over the edge and so lose employment opportunities. It is all a balancing act, but we have to make sure that we maximise our income as well as supporting business.
I thank the Under-Secretary of State for Communities and Local Government, the hon. Member for Tooting (Mr. Khan), for his warm welcome, and may I say to colleagues how nice it is to be back?
Business rates are set to rise by 5 per cent. in April, taking the average bill to £12,000 a year, yet today we heard that inflation has already fallen to 3.1 per cent., and the Government’s pre-Budget report predicts deflation, with the retail prices index inflation plummeting to minus 2.25 per cent. this year. How can the Secretary of State justify an inflation-busting business rate at a time when so many businesses are fighting for their very survival?
I welcome the hon. Lady and the hon. Member for Putney (Justine Greening) to their posts. It is nice to see so many women on the Front Bench. I thoroughly enjoyed debating these issues with the hon. Lady’s predecessor—I cannot for the life of me think why, but I did—and I have no doubt that we will enjoy such exchanges, too.
The hon. Lady may have been away from her current brief for some time, but the non-domestic rates system has not changed. It has always been tied to the assessment of inflation at a particular time in the cycle. She knows that it is essential to try to maximise the take from non-domestic rates, as I said to the hon. Member for Falmouth and Camborne (Julia Goldsworthy), in order to maintain the vital services that local government has to deliver to the communities out there. We all recognise that businesses and individuals are currently hard pressed, and we are doing everything that we can, including raising the reliefs on empty property taxes. The position on that has changed as a result of this Government’s decision since the hon. Member for Meriden (Mrs. Spelman) previously had her current brief. We are flexible and willing to take whatever steps are necessary to help people through these times, which, as I have said, stands in marked contrast to the policy of the Opposition to do nothing.
I am sure that the right hon. Lady would agree with me, however, that one of the saddest features of this recession is the increase in the number of empty premises on the high street. Will she therefore confirm that, even with the tiny relief in the pre-Budget report, the new empty property business rates are still set to raise £700 million this year? Does she accept that that additional tax could well make the difference between a business getting by and a business going to the wall?
I am sure that the hon. Lady is aware that empty property in this country has been subject to taxes for 40 years or so. We are not talking about an innovation. In fact, the extra reliefs that have been introduced as a result of the pre-Budget report will give relief amounting to £205 million to businesses that would otherwise have to pay those taxes. That is not an inconsiderable sum and is a result of a decision made by this Government. She talks about inflation, but she will know that local authorities had to cope with the spike in fuel and energy prices. Although inflation is now coming down, they have had to cope with real volatility in the system. Therefore, it is important that business rates make their proper contribution to local services. Again, we are bringing forward a raft of measures, ranging from skills support, training and help for apprentices to support for small businesses, the enterprise guarantee system and the working capital system. Those are all innovative steps taken by this Government in the teeth of opposition from the Conservatives, who simply want to stand on the sidelines, wring their hands and do nothing to help people through this difficult period.