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28 Jan 2009 : Column 115WH—continued
I come now to the issue of valuation. I genuinely think that the offer from the Government of a fast-track revaluation was to be welcomed. Whatever happens about retrospection, we have to get the valuation right for the future. The companies have to know what their future liabilities will be, but the offer of a fast-track process, which the Minister made to us previously, has
fallen into disrepute already. This all goes back to the cumulo. Until perhaps three or four months ago, when Peter Aarosin of Danbrit Shipping in Goole mentioned it to me, few of us even knew what a cumulo was—I thought it was a new wave band from the 1980s, but there we are. It is a strange system. Nevertheless, that is what it is, the companies have been paying through it and it covers everything.
I received an e-mail from David Johnson, who runs a company called RMS in my constituency. He points out that the cumulo includes stevedoring licensing fees, tolls to use the River Ouse, electricity, security, cranage, berthing and mooring of vessels, third-party cargoes, water, maintenance of quays, ships dues and wharfage, and maritime security through TRANSEC—the transport security and contingencies directorate. However, nobody knows how much is allocated to any one element of the list—through it, there are business rates and rent, but the company just pays a fee.
RMS and many other companies have now taken up the offer of a fast-track appeal and their appeals have been thrown out, dismissed by the VOA. When I took the issue up on behalf of companies in Goole, I received a letter from the VOA:
“The appeals have been deemed invalid by the VOA as the forms submitted... contain no information on the amount paid by the company under its occupancy agreement... without this information, the VOA cannot make a proper assessment of the circumstances of the case and legally the appeal must be declared invalid. If the ratepayer disagrees with this decision, recourse is available to an independent Valuation Tribunal who can decide on the validity of their proposal.”
The valuation tribunal was always open to them, so where is the fast track, the help, the assistance?
Mr. Graham Stuart (Beverley and Holderness) (Con) rose—
Mr. Cawsey: I will give way to, on this occasion, my hon. Friend.
Mr. Stuart: I am extremely grateful to the hon. Gentleman for giving way and I am sorry that I was not here from the beginning of the debate. On the point about the fast-track process, I have had a letter from Tim Rix, managing director of JR Rix & Sons Ltd, who has a subsidiary company called Rix Shipping Co. Ltd, which carries on the business of terminal and ship operators at the port of Hull. He hoped that the fast track would offer real hope, but says that if it does not deal with the backdating of the tax and the huge imposition on his business, which threatens its very existence, it would be
“merely ineffective window dressing used by the government and the Valuation Office Agency to appear to be doing something substantive to resolve the problems... when, in fact, they are doing nothing to assist.”
Mr. Cawsey:
We can all say amen to that. What we have heard shows that the VOA has no idea at all of how the cumulo and the ports system have worked. The idea that people can now unpick the rent from their cumulo, but that if they cannot do so they cannot have a fast-track appeal, is a bit like handing back an omelette to the chef and saying, “Give me the yolk.” They cannot do it because there is just an overall figure. At no point have they been told what their rent is, because it is
part of an overall figure, and without the rent they cannot have a fast-track appeal, so even the little bit of help that the Government said they would give is now floundering in the water and it needs ministerial involvement to put it right.
We are hitting ports at a difficult time, as hon. Members have already said. Many of those who operate in Goole and at other ports are based not just in the UK; they are international. They do not have to be here, however. They are looking at future investment and the costs here compared to those in other ports around Europe. They are being hit at a very difficult time through the actions of the Government.
What is being done is contrary to everything else that the Government are trying to do. Everywhere I turn, I see the Government trying to give help to people who may be in danger of losing their jobs and to companies that are in difficulty, yet because of the actions of the VOA and the Government, companies are being affected in the way that hon. Members have described.
I like my right hon. Friend the Minister enormously. I have known him for more years than either of us would care to remember and I accept that he has in effect been dropped in it by the actions of his own agency, but that is how it falls—I think another hon. Member said, “That is why you get a car.” Whether it requires conversation with the Treasury, my right hon. Friend the Prime Minister or whoever, it is time to make things happen. We need to put right an injustice, helping our ports as a result.
3.28 pm
Lorely Burt (Solihull) (LD): I add my congratulations to those offered to the hon. Member for Great Grimsby (Mr. Mitchell), who made a passionate and detailed case. The story that we have heard is almost unbelievable to the uninitiated. There are no ports in Solihull—one could not get farther from the sea in England if one tried. Notwithstanding that, I can completely understand the problems and challenges so clearly outlined by hon. Members.
As I said, this is an almost unbelievable story of backdated demands almost as large as £10 million and of debt having to be reported in annual accounts, which will push a number of companies into insolvency. Whether or not there are eight years of interest-free payments, the repercussions of the backdated amount being suddenly foisted on those companies will be much greater than the Valuation Office Agency could ever have thought possible.
If a number of companies are pushed into liquidation, the upshot will be the Government not receiving the money anyway. The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) told us that many accounts will already be closed off, and that seemingly incompetent organisation seems to be flying in the face of every accounting procedure. I wonder what gives it the right to ride roughshod over such commercial practices.
We heard about the strategic importance of the ports; the hon. Member for Great Grimsby said that they are the gateway to Europe. Our ports are the gateway to the world and vital to our economic prosperity, for exports as well as imports. It seems that the Government are
deliberately creating an unfair playing field for United Kingdom ports, particularly when competing with other European ports.
The charges being levied on some firms are higher than last year’s turnover. There have been increases of as much as 1,700 per cent. at a time when the Government say that they are trying to protect jobs. The charges will destroy jobs. DFDS Seaways, based at Immingham, has already announced that 71 jobs will be lost, with half those losses being directly attributable to the rates problem. It is facing a demand for almost £10 million. It has been estimated that as many as 150,000 jobs are threatened.
Several hon. Members spoke of the lack of consultation when the charges were introduced, but it is worse than that as no impact assessment has been made. How can one suddenly levy such charges on organisations without working out what their impact will be?
During a previous debate, the hon. Member for Liverpool, Riverside (Mrs. Ellman) talked about the terrible shock to many companies of seeing bills that were retrospective for the previous three and a half years, especially as they thought that they had already paid. It is a treble whammy. Where is the money that has been paid? The port operator’s fees have been reduced by £44 million, so where has the money gone? I hope that the Minister will produce a definitive answer, at some stage if not today.
We are asking for the new assessments to be brought in during 2010, but we have been told that that would require primary legislation. We have also been told that we have plenty of time, so there is no impediment to the Government enacting those provisions. That would not be a huge burden on the public purse. In fact, it may save money, as otherwise revenue would be lost from companies, and it may save costs, as benefits would need to be paid so that the families of redundant workers could keep going—and that before we start counting the human cost.
The traditional pattern of Westminster Hall debates is that an injustice is raised and the Minister replies but does not commit himself to making changes. Indeed, we heard this afternoon that it might be above the Minister’s pay grade to make such a decision. Sometimes—surely not today—we do not do even get a straight answer. If the Minister cannot commit himself to changing this injustice today, will he commit himself to taking the matter to whichever Minister is at the appropriate pay grade for further reflection?
The Government have the opportunity to show reasonableness and humanity. Yesterday, it was announced that £2.3 billion will be given to automotive manufacturing industry. Let today be the day when the Government exercise the same but much less costly compassion to help to keep our port companies afloat.
3.35 pm
Robert Neill (Bromley and Chislehurst) (Con):
I, too, congratulate the hon. Member for Great Grimsby (Mr. Mitchell) on raising this important subject. I also congratulate hon. Members in all parts of the Chamber who have spoken in the debate. I have not been a Member that long, but I cannot think of a Westminster Hall debate in which stronger feelings were more articulately
expressed. Frankly, neither can I think of a more damning and comprehensive indictment of the Government’s position.
In some respects, I feel for the Minister; he is a decent man, and I respect him as an opponent. When I was a barrister, I defended some pretty hopeless cases. I am sorry to say that, forensically, defending the Minister is rather like defending someone whose fingerprints have been found at the scene of the crime, where a DNA sample has been recovered and there is a signed confession—and with the Archbishop of Canterbury as an eye-witness. [Laughter.] The case is overwhelming; there is no other word for it. The only advice that I could give clients under such circumstances was, “Own up, and throw yourself on the mercy of the court.” I hope that the Minister finds a means of doing that.
The Minister is being asked to defend the indefensible. What has been set out in today’s debate—it was well referenced with correspondence by all hon. Members and through the Treasury Committee report—is a lamentable litany of failure by the Valuation Office Agency. It has been politely described by some hon. Members. I note that the Treasury Committee report quotes the director of the VOA as saying:
“Perhaps with hindsight we should have done more investigative work”.
In the league of mealy-mouthed statements, that makes Pontius Pilate’s hand-washing an act of generosity and decency.
Far worse, the VOA’s attitude is negligent in the extreme. Why is that? There was no consultation and no advance warning. Furthermore, as the hon. Member for Solihull (Lorely Burt) said, there was no impact assessment on the immediate effect nor on the wider impact on associated businesses and the supply chain, as hon. Members have indicated. Therefore, no assessment was made of the likely revenue that would be raised—another important point.
Because there was no assessment of revenue, the Government’s normal guidelines on dealing with retrospective taxation—namely, that it should be introduced only in limited circumstances and to protect revenue—could not be met in this case. That breached every rule. Subsequently, the VOA has compounded that error. First, as was pointed out, it offered a fast-track solution, which is effectively useless. Secondly, and regrettably, but no doubt with good intentions, the Minister offered a payment period that is useless in practice, for the reasons set out by the hon. Member for Great Grimsby—the liabilities have to be brought into this year’s accounts.
I do not wish to sound sarcastic, but an O-level accountancy student would understand that concept. I despair of the fact that no one at the Department for Communities and Local Government seems able to get that simple message. Because the liabilities would be brought into the current year’s accounts, the firms would be trading insolvent. They cannot legally afford to do that.
Mr. Andrew Finfer, a partner in the solicitors advising the firms, makes the point well:
“It is clearly irrational for the government to make businesses insolvent by demanding huge backdated business rates without warning and as a result of the failures of the Valuation Office Agency. Making a company unable to pay tax in the process of trying to collect tax is not the most sensible method of revenue collection.”
That is a pretty fair way to put it. The Government have got themselves into a perverse situation. As other hon. Members have said, it is the most bizarre contrast with what we are told the Government seek to do to assist business during a recession.
I shall add one more example in this nonsensical situation: a firm called Freshney Cargo used to make an annual payment of just over £48,000 per annum, but is now facing a backdated charge of £2.4 million. Like other hon. Members, I have spoken to other businesses about this matter and it is clear that the backdated demand often exceeds annual turnover, not to mention the profit margin. That is putting people under, and for no good reason, which cannot have been the intention.
Nobody would blame the Minister if he said, even at this late stage, “Well, that wasn’t our intention. There’s been a mess up. Let’s try and put it right.” Ultimately, that is what people look to Parliament and Ministers to do—put right injustices. That is what they are there for.
Ways have been postulated to the Government for setting things right. It has been suggested that we use prescription, which is still provided for on the statute book, as the hon. Member for Great Grimsby pointed out. Is it necessary, therefore, to use primary legislation? If so, the official Opposition will do everything they can to facilitate the passage of any legislation that the Minister introduces in this House or elsewhere. I mean that genuinely. We will do everything we can to help to set this right, and I am sure that that goes for other Opposition parties, too.
Lorely Burt: I am listening carefully to the hon. Gentleman, and I can confirm that the Liberal Democrats would be delighted to lend their support to any required legislation.
Robert Neill: I am grateful to the hon. Lady for making that point. This is a genuine offer to the Minister and the Government. In such times, we will do all we can to assist the Government in getting us out of the hole that they have dug.
We cannot underestimate the point about the damage to the competitiveness of port business. I was at a meeting where the UK director of DFDS Tor Line made the point that the hon. Member for Cleethorpes (Shona McIsaac) raised. I do not think that some people in the Department for Communities and Local Government appreciate how likely it is that shipping operations will be transferred to the continent and that goods will then be brought in either by air or by road. That would be economically, environmentally and socially undesirable, but that is the position into which the industry could be forced.
The revenue raised from this measure will be but a drop in the ocean. It is worth reminding ourselves, too, that the Government did not budget for it originally. In a sense, therefore, it is a windfall, precisely because there was no impact assessment or, as Ministers have confirmed in written answers, assessment of the revenue likely to be raised. Nothing was ever budgeted up; it is pure windfall. Forgoing it is not likely to cause any difficulties.
More to the point, however, if a firm goes bust, the money will not be collected anyway. It would be far better to keep firms in business and paying rates. Every
business to which I have spoken in this sad affair has said, “Of course, we know that we have to pay rates. We are willing to do that. And we know that they are likely to increase, because there was a review.” They accept all that. However, they are entitled to object to the lack of warning and the backdated, retrospective nature of the measure, which will cripple many of them.
I beseech the Minister to think again. This was not his responsibility to start with, but there comes a stage when the inaction of Ministers makes them as culpable as those who began the mess. I really hope that he will not get himself into that situation and will take the lifeline being offered to him from both sides of the Chamber.
3.44 pm
The Minister for Local Government (John Healey): Like everyone else who has spoken, I congratulate my hon. Friend the Member for Great Grimsby (Mr. Mitchell)—he is genuinely a friend, despite our differences—on securing this debate. We have more time for discussion than we did last week at the end of business in the Commons. Wide concerns have been forcibly expressed this afternoon in this very good debate about the serious situation being faced by many businesses. Despite some of the light touch and humour that has been expressed, it is important that we look as closely as we can at the concerns that have been raised.
I am grateful to my hon. Friend for some of his kind comments. I shall try to answer his points as meticulously as I can and not to cover ground covered before. Before that, however, I wish Hannah Cawsey a happy birthday; I hope that my hon. Friend the Member for Brigg and Goole (Mr. Cawsey) gets back in time for the birthday party, otherwise I shall obviously be blamed for something else.
What has been made clear by hon. Members was already clear to me and other Ministers: the outcome of the ports review undertaken by the Valuation Office Agency could create serious financial cash-flow pressures on companies newly listed on the valuation list, particularly at this time of general economic pressure. We will take all possible steps to prevent such businesses from being driven over the edge by the tax that they are now legally liable to pay. We are genuinely concerned about their situation, not least because we are trying, in many other ways, to support businesses and people in work during this difficult period, as has been acknowledged on both sides of the Chamber.
That concern was behind the announcement made by my right hon. Friend the Chancellor, in the pre-Budget report, to put in place arrangements allowing companies to pay their backdated, full-year liabilities over eight months.
John Healey: I have only just started. I ask my hon. Friend to bear with me and not to dismiss my comments in the way that his murmuring suggests.
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