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Business Rates (Small Businesses)

Volume 513: debated on Thursday 15 July 2010

We are doubling the level of small business rate relief in England for one year, from 1 October 2010. More than 500,000 businesses in England are expected to benefit, with approximately 345,000 businesses paying no rates. That will be a valuable reduction in fixed costs for new and existing small businesses.

In Enfield North, we have been campaigning hard to bring in new businesses and start-ups and to encourage people to relocate to the area. What practical steps will the Under-Secretary take to allow my local authority to get behind that campaign?

I am aware of my hon. Friend’s campaign and I pay tribute to his work for small businesses in his area. The Government propose to introduce a business growth bonus, which will reward local authorities for giving planning permission for new business premises. We are also examining ways to enable local authorities to discount the business rate, and we will ensure that in areas where business rate supplement is considered, businesses have a proper opportunity to vote on it in a ballot.

Local councils’ powers to help small businesses in their areas and to help areas in need of economic regeneration, such as the town of Bedworth in my constituency, are limited. Does the Under-Secretary agree that local councils need more powers, such as the ability to vary business rates within a borough or district to create local economic regeneration zones, to help new and existing businesses invest in struggling towns and villages?

That is precisely why the Government propose to introduce the opportunity to discount the rate, to consider the way in which business rate supplement operates in an area and, above all, to ensure that, at the same time as we create the ability to attract housing into an area through our council tax incentive, we give an equal incentive—the business rate growth incentive—to provide jobs and business in an area.

Given that, regrettably, the Government are downgrading benefits to the consumer prices index rather than linking them to the retail prices index, will they be helping small businesses by linking business rates to CPI rather than RPI?

The most valuable assistance that we have given is ensuring an extension of the business rate relief. Moreover, we are assisting small businesses in particular and we have increased the threshold for empty property relief this year to £18,000—all of which the previous Government signally failed to do.

The Government often tell us that hard choices must be made in these difficult economic times. May I ask the Minister about port rates? The Labour Government recognised the difficult position of ports businesses that were faced with backdated rates by giving them eight years to pay. In those circumstances, how does the Minister justify spending hundreds of millions of pounds entirely wiping out the legal rates of those businesses, when other public services for which he is responsible are suffering? Is not that a pretty disgraceful piece of pork-barrelling, given that the measure is aimed at what were Tory target seats in the last general election? People up and down the country who face their services being cut will ask why that is a priority in these difficult times.

I think it is a better use of money than £2 million for the furniture in Eland House, if I might say so. With respect, the right hon. Gentleman neglects the fact that his Government’s policy was roundly condemned by the cross-party Select Committee on Communities and Local Government as being wholly inadequate, and condemned by a number of his hon. Friends who represented port constituencies.

The right hon. Gentleman’s policy neglected to reflect the reality that a discount for eight years did not remove the book liability that fell on ports businesses. That drove a number of them into balance-sheet insolvency, which in turn created cash-flow difficulties with their banks and actually put some out of business. The Government are keeping jobs in port constituencies and communities, and I am very proud that we are doing so.