Business has faced £66 billion of regulatory costs since the Government came to power. There are 800,000 people on the public sector payroll; only the wealth-producing sector has to support that. I am worried that we have seen little concern about that from Labour Members. All we have heard from them about the trials and tribulations of business people seems to involve the small minority who deliberately set out to twist the system. I am all for belting them as hard as we can, but, after 40 years in business, I have met very few such people. I have always been proud of the ethical base of most businesses in this country, especially in the small and medium-sized enterprise sector. I would like that to be on the record, and it will be now. I am grateful for the opportunity to do that.
We face a massive additional taxor potential for itin the business supplementary rate, which is the subject of the Bill, but it must be judged against the background of the business climate. You are right, Madam Deputy Speaker, that I have argued that enough, but it is important to make the point.
Where did the idea for a supplementary business rate come from? It will not surprise you, Madam Deputy Speaker, to learn that it came from the bowels of Government. I believe that it was first raised in a White Paper in 1998. The idea did not therefore originate from the business sector, the general public, or even local government. It came from the heart of national politicsthis place. After its publication in the 1998 White Paper, it resurfaced in a Government-sponsored balance of funding review in 2004. We face a Bill that is thoroughly new Labour, Government sponsored andbusiness feelsthoroughly anti-business. Business says that.
I want to quote from businesses that have expressed deep concern about the Bill. It is right that the House understands the breadth of feeling in the business community about the measure. On 23 December, the CBI, which represents a third of the private sector work force240,000 businessesstated:
The CBI is concerned that BRS could add significantly to the business tax burden.
That is the heart of the matter. The CBI does not trust BRS not to widen, and become the thin end of the wedge and a greater tax than it is innocently portrayed to be. It does not trust the Government on the matter.
The IOD strongly opposes BRS in principle. They would be an additional burden on business which bears no relation to profile and could jeopardise their commercial viability.
With the UK economy facing a recession the BCC is opposed to the introduction of BRS proposals across the country which could cost business up to £597 million per year.
I emphasise £597 million a year, to be doled out in a way thatin many business mens eyeswill not help businesses. They are most concerned that the money will leak out and be smoothed into other areas of activity. That is one of the Bills dangersit does not tie up the way in which money is spent anywhere near strongly enough to meet with businesses approval.
The BRC does not support the introduction of BRS... it has the potential to add significantlyand disappointinglyto retailers costs.
It saddles retailers with new costs when they can least afford itit could add an extra £160 million a year to tax bills. Retailers face a massive £16.6 billion cumulative increase in rate bills from 2010.
I do not need to point out to hon. Members how many retail businesses are going to the wall. They have read about high profile companies, but every Member will point to his own high street, shopping areas and retail businesses, and say, Hes gone, Shes gone, Thats up for sale and That shop is now vacant. That will increase dramatically in the coming year or two yearsperhaps even three years.
Let us consider construction, which is vital for this country. The Government say that they want to encourage it and look to it to build more houses, provided that they can get credit moving. On 6 January, the Federation of Master Builders stated:
At a time when 60 per cent. of FMB house builders are reporting falling workloads the last thing builders need is another tax.
Just at the time when we may begin to see green shootsmy prediction is April 2010; we might tell the Chancellor thatwe provide the opportunity to levy a new tax on business. The Federation of Master Builders is aghast.
BRS could prove a tax too farit could add up to 10 per cent. to a companys council tax bill.
The FPB is disappointed that despite vocal opposition the Government intends to press ahead with this legislation. It is deeply unpopular. It would be a considerable barrier to growth.
The FSB opposes the Bill. Small business rate bills are on average proportionally three times greater than larger businesses. The FSB will continue to oppose the BRS.
There could not be a more solid array of business organisations lined up against a proposal from a so-called business-friendly Government. We are for ever inundated with messages from the Prime Minister, the Chancellor and Labour Members about how they understand, support and want to help the business sector. One would therefore have thought that they might listen to business and help it in the way it wishes to be helped. However, the Bill is an example of how all the Governments words come to very little when action is required. As my grandmother said, and as I repeat again and again, fine words butter no parsnips. It is no accident that the business sectors trust in the Government and the Prime Minister has dropped dramatically, and this Bill is one of the reasons.
This is another stealth tax. My local Council
treats me as a cash cow in exchange for what I see as no increase in services provided.
Many companies are thinking of making redundancies because of the current economic environment and an increase in business rates will mean they will have to consider making even more.
No wonder business is horrified at the prospect of another tax. Businesses are horrified for a number of reasons. They have written to me in their hundreds and said that the Bill is inadequate, ill prepared, badly written and deficient in many respects. That is the message that I have received from business about the Bill. The Government tell us that the Bill is intended to enhance business partnerships and recreate a better understanding between local government and business, yet business is totally opposed and concerned about the quality of the Bill.
Let me voice some of those concerns, some of which have already been mentioned. There is a universal wish for a ballot on all projects. That is a must where proposals are made by local authorities. I have worked in local authorities as an elected councillor for nearly 12 years and I have been a party officer working at the constituency level for 50 years next year. That is a long time to be in politics, and one might feel that the effort that I have made to arrive in this place so late in the day has hardly been worth it. The truth is that local business is very wary indeed of estimates produced by local councils. Local business wants much more involvement in the business rate supplement process, if it comes to fruition,
and therefore wants a ballot for all projects, because it knows that local government estimates can be so way out.
Mr. Binley: You are absolutely right and I thank you again for your guidance, Madam Deputy Speaker. But the very fact that local government estimates are no better than Government estimates is why local business needs to be involved at every point. Local business knows that often estimates cannot be trusted. That is why we cannot set the level at a third of a given project, as is proposed, because there are too many ways of perverting any projection for local business to accept it at face value. What guarantee does business have that local government will not understate a project cost? What is to say that local government will not say afterwards, Oh yes, well, we shouldve had a ballot, because this has turned out to be more than a third of the total rate, but we didnt expect that when we made our projections? It is just not good enough.
Business is also concerned that there would be a reduction in spending on projects financed from Government sources. We have already experienced a reduction in the revenue support grant for local government because other items are reckoned to have more impact. Let me give an example. Grants for infrastructure have been used as a reason for not increasing the revenue support grant in my county. The truth of the matter is that grant is given and taken away, but we are still left with a lower base than we should have, had we received the proper amount of revenue support grant. We need a guarantee from the Minister when he replies to this debate that other Government spending can in no way be lessened because of the ability to levy an extra business rate on businesses.
Let me talk about the concern about the level of rateable value. You will know, Madam Deputy Speaker, that it is suggested, although not stated in the Bill, that the level for payment of a supplementary business rate will be a rateable value of £50,000. I do not know whether the Government will confirm that that will be the level before the end of this debate, but the Bill does not come into effect until 2010. We shall have a rate revaluation in 2010 and many more businesses will be caught in the net of that tax as a result. What is to say that, if the proposal does not work quite how the Government wish it to, we will not lower the level of the rateable value relevant to the calling for a particular tax under the Bill to be paid? There is massive concern about rateable value and, in particular, about the fact that we will have a reassessment that could affect the whole thing. We will vote on the proposal now, have a reassessment and then find that many more businesses are caught in the trap of extra taxation.
There is concern about consultation. I have had the experienceI was about to say good fortune, but it was not good fortuneof being in a business caught up in local government consultation. I was a marketing
and public relations professional for a long time, and the consultations that I saw emanating from local government were some of the most amateur and shoddy that I could expect to see. The lack of professional ability in that respect has been lamentable. It is therefore no wonder that business is concerned about the lack of good consultation.
Business is concerned that BIDs payments will not be offset against business rate supplements. The BIDs project is excellentI pay tribute to the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who introduced itbecause it has meant that business and local authorities work in partnership. That was the essence of the project, which had the effect of bringing business and local government together more and creating greater understanding. The Bill will do the opposite, because business will not be involved in the project. The businesses might simply have the chance to vote, but that would pretty much be all, until the project ended. If there is a good BID project going, the very least that we ought to be doing is to offset the business rate supplement against that project. That provision is not in the Bill, at least not in a form of words that the right hon. Gentleman and I know to be meaningful.
Let me introduce another point. I live in a sustainable communities project area. Northamptonshire is due to build 167,000 houses by 2031. It is expected that our population will grow by 50 per cent., and that most of the money for the infrastructure will come fromwould you believe it?the local construction industry. So the industry will have to make sustainable communities project payments on land, and perhaps pay a roof tax, and pay a business rate supplement on top of that. Asking it to take part in a BID project will simply not work.
I want to make a final point on the loopholes in the Bill. I hope that the Minister is noting these points, and that he will respond to each one in as much detail as I have used in trying to make them to him. Businesses are worried about how the cost of administration will be constrained, and about how well the funds will be ring-fenced. They have seen in local government what is loosely called unofficial virement across budgetary silos, along with work not being properly classified in one area of activity and being moved into another. They are very concerned about this proposal.
Businesses are also concerned because this is a long-term project. I have already mentioned that we are now in one of the worst business environments that we have ever faced, but we all hope that that will come to an end. In fact, we believe that it will do so. We might run a book in this place on when it will happen. Will it be in two years, or three? We do not know, but green shoots will appear, and that is the time at which we must take all the burdens off businesses that we possibly can. We want to release them from regulation and extra taxation, not add to their burdens when they are recovering from a recession that will do more damage than has been seen in living memory. After three years of recession, we shall have about 10 years of recoveryat least, that is what most business people tell mebefore we get back to where we were in 2007.
We shall also face a global challenge that will run for 30, 40 or 50 years. The only sector of our community that can fight that challenge is the business sector. It will be fighting massive growth from what is called BRIC
Brazil, Russia, India and Chinaand the underdeveloped nations. The world will be dramatically changed in business terms over the next 40 years, and this recession might have heightened that change. Yet the Government fail to recognise that every burden that they place on business is another millstone around its neck to be dealt with in the fight to stake our business claim in a global world.
I have heard very little from the Government that shows that they understand the need to nurture and help the wealth-producing sector rather than adding to the regulation and burdens placed on it. That is what business is most angry about. That is what I meant when I talked about the fine words that emanate from this Government but are not carried through into real actions when it comes to nurturing, nourishing, growing and helping to sustain the business sector in this country. The business sector wants help and understanding, not fine words and promises that are not very meaningful. It wants help and real understanding, but the Bill shows that it is not going to get it from this Government.
Mr. Lee Scott (Ilford, North) (Con): I shall try to be brief and to stick to the points raised in the Bill, which I am sure will please you, Madam Deputy Speaker. I agree with what the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) said earlier about Crossrail. I have been a supporter of Crossrail, both under the present excellent Mayor, Mayor Johnson, and under his predecessor, Mr. Livingstone. For many years, I have believed that it would benefit my constituents, even though it will not actually go through Ilford, Northit will go through the neighbouring constituency of Ilford, South. It will take pressure off the Central line and other lines in the area, as well as bringing in extra transport capacity. I fully support Crossrail; I believe that it is a separate issue from the remainder of the Bill and that it does indeed need funding.
Mr. Scott: He is shocked by that. I do not necessarily agree with his pessimism about Crossrail coming to fruition. I hope that it will do so as quickly as humanly possible, for the benefit of everyone in London and, indeed, the whole country.
I should like to talk about business improvement districts. My hon. Friend the Member for Northampton, South paid tribute to the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) for introducing those provisions