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To be clear, when the VOA becomes aware that change is needed, such as in the ports, it is its legal duty to make the alteration to the ratings list and to specify
when that listing should take place. If the property existed before the beginning of the valuation list—in other words, from 1 April 2005—and arguably should have been separately rated before then, the VOA has no legal alternative other than to make the effective date 1 April 2005, from the beginning of that list. To do otherwise would require primary legislation. We simply do not have the power to change that by regulation.
Effectively, the review has increased the number of properties separately assessed for business rates in ports from 1,616 to 2,180—an extra 564 properties in England. In the meantime, the rateable value of some port operators has been reduced significantly, particularly in some places. In Liverpool, the rateable value for the port operator has been reduced to less than half of the previous rateable value; in Grimsby it has been reduced to almost a third, in Hull to around a third, and in Goole to less than a quarter of the previous rateable value. Across England and Wales, the port operators’ rateable value has been reduced by a total of £44 million. At the same time, the changes to the separately assessed properties have raised the total rateable value by £53 million, so the net increase in the rateable value across the ports is just over 4 per cent., taking it from around £200 million to about £209 million. However, as I accepted before the Treasury Committee, and before my hon. Friends, that disguises some big shifts in a small number of ports, about which my hon. Friends are concerned.
Mrs. Ellman: May I remind my right hon. Friend that in the port of Liverpool, the change has been concentrated on 70 companies, which now face major financial problems? We are seeking an equitable solution to that problem.
John Healey: Precisely so. The information that I was able to give the Treasury Committee is that the number of properties separately assessed within the port of Liverpool is now 91. I know from direct discussions with some of those port businesses, their lobby groups and my hon. Friends that there are two perceived unfairnesses. First, as my hon. Friends the Members for Liverpool, Riverside and for Great Grimsby (Mr. Mitchell) said, there are large backdated liabilities, and companies argue that they could not have made business provision to cover the costs of those liabilities.
Secondly, companies believe that they have already been making payments on business rates as part of their contractual fee to the port operator. I have to say to my hon. Friends that I have seen only one contract with any reference to business rates, and that is ambiguous. In other words, the contract does not explicitly say that where the property is not separately listed, the port operator will pay the relevant rates and recover them from the occupier. That being said, in my view, port companies that legitimately believe that they have contributed towards rates by means of payments made through the cumulo or through fees to the port operator should take the matter up with the operator. That is a private contractual matter, and I think that my hon. Friend the Member for Liverpool, Riverside would accept that it is not possible—
Mr. Austin Mitchell: Will my right hon. Friend give way on that point?
John Healey: I have given way; I want to finish my response to my hon. Friend the Member for Liverpool, Riverside.
John Healey: If my hon. Friend wants to seek an Adjournment debate, I shall be happy to turn up to the House and answer him as well. [Interruption.]
Mr. Speaker: Order. The Minister is not giving way.
John Healey: First, I have not seen any hard evidence that the arrangement is that rates are part of the fees. Secondly, where there is such an arrangement, it is a private contractual matter that the port businesses must take up with operators.
On backdating, as I have tried to explain, neither the Valuation Office Agency nor Ministers have the discretion simply to waive the backdated liability to taxation. Even if we were persuaded of the case for doing so, Ministers would have to come to the House to seek primary legislation to give us the power to waive taxation.
John Healey:
Finally, I accept that now that the full facts are available as a result of the review, the tax liability has been established in the cases in question. We cannot undo what has been established. As I made clear from the start, we are concerned about the potential impact of backdated rates liabilities, particularly on the trading prospects of businesses in the current economic conditions. That is why the Chancellor announced in
his pre-Budget report in November that we will legislate to give qualifying businesses the facility to pay their backdated liability for previous years in equal, interest-free instalments over eight years. I have already written to bidding authorities in England confirming that, and I will write to them again shortly with precise details of the way in which the scheme will operate and what the qualifying criteria will be. That will enable council officials to begin the process of negotiating and putting in place payment options with affected ratepayers. [ Interruption. ] We will put the regulations before the House.
On the question of accounts, I have taken advice from experts in the Insolvency Service. I will write to my hon. Friend the Member for Liverpool, Riverside and other hon. Friends who have participated in this debate. It is clear that the implications will depend on the individual circumstances of the businesses involved, but I think that I can give my hon. Friend an indication that it should not necessarily drive businesses into insolvency.
In the end, we face a situation in which those companies in the ports are legally liable for tax. As is the case for any other business, it is right that they should pay what is due, but it is right, too, for us to make special, unprecedented arrangements to allow them to pay in the longer term, which is more affordable, thus protecting them in this period of economic difficulty.
10.30 pm
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