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Business Rates

Volume 539: debated on Monday 30 January 2012

10. What assessment he has made of the possible effects on local authorities in deprived areas of his planned localisation of national non-domestic rates. (92063)

12. What assessment he has made of the potential effect of his proposals for the localisation of business rates on regional inequality. (92065)

Currently, local authorities see no financial benefit from delivering growth. Our proposals will create a strong incentive for all local authorities, wherever they are in the country, to promote growth, local enterprise and jobs. We will ensure that no council will lose out as a result of its business rates base at the outset of the scheme.

Recent estimates show that, after year 1 of the business rates reforms, Hull council could lose up to £45.5 million, on top of the cuts that it has already targeted. With richer areas such as the City of London and Westminster benefiting at the expense of places such as Hull, how will this policy help to rebalance the economy between the poorest areas in the north and the richest in the south?

The hon. Lady neglects to mention that, throughout the period of the Labour Government, the economic position of the north deteriorated by 2%, while that of Greater London improved by 15%. Moreover, her city of Hull grew in excess of the national average over the past business rate period, as did Manchester, Leeds, Durham and Stockton-on-Tees. All those places will gain under our proposals; they did not do so under the system that her Government operated.

It is astonishing that the Minister has just completely failed to address my hon. Friend’s question. The poorer areas, which have already done badly under this Government in regard to their funding from central Government, are going to be even worse off unless they can guarantee to generate increased economic activity. Not every area can give that guarantee, however. Are these measures not simply going to make the poor poorer, and is that not morally unacceptable?

I am sorry that the hon. Gentleman is not pleased that his Manchester constituency grew at about 6.9%, as opposed to a national average of 5%. He might also like to take on board the fact that a baseline will be set for all local authorities that takes into account their needs and resources at the beginning of the scheme, and that they will thereafter be protected by the top-ups and tariffs that flow from the baseline being uprated in line with the retail prices index.

Does the Minister agree that the localisation of business rates will result not only in local councils taking a greater interest in the activities of local businesses, but in local business people taking an interest in the activities and performance of their councils? Does he agree that that will help deprived areas as well as others?

I entirely agree with my hon. Friend. The proposal has been welcomed by the Local Government Association, and—the hon. Member for Manchester Central (Tony Lloyd) might be interested to know—by the Association of Greater Manchester Authorities. It was of course one of the recommendations of the Lyons inquiry, which was set up by the previous Government, and then ignored by them.