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That was after all that time—all those months and almost a year after the recession began. The Government could have headed off the problem months ago. Ministers threw out that option, and instead the Chancellor finally announced the business rate deferral scheme to help businesses on 31 March—the week after local authorities had issued new annual business rate bills to companies throughout the country.

Peter Luff (Mid-Worcestershire) (Con): My hon. Friend is making a very fine speech and I am sorry to interrupt, but she gives me the chance to give notice to the Minister for Regional Economic Development and co-ordinate that I intend to press her on that point. I withdrew my Bill in the face of Government opposition because of clear assurances that they would take on significant elements of it, at least. That has not happened, and I am very disappointed.

Justine Greening: I could not agree more. We all hoped that the Budget would contain some genuine measures to help businesses immediately, and the fact that it did not, in spite of the assurances that the Minister provided on the day, was very disappointing—more so for businesses than for MPs.

Ministers were clear about the objective of the business rate deferral scheme. In their press release, they said:

However, that scheme is already unravelling, because one thing that we can assess is that the promise to be able to defer 60 per cent. of the rise in business rates—Ministers’ key claim—is not likely to be kept. Until the scheme is operational, businesses have to pay the full rise, and those that have already forfeited the right to pay in instalments cannot take part in the scheme at all. Businesses that have already struggled most with paying the higher rates and need most help to improve cash flow will have no access to the scheme. The logic is completely flawed. We do not know how things stand for businesses that are already subject to recovery action; perhaps the Minister can tell us whether those businesses will be eligible to participate in the scheme.

As I am sure Members are aware, business rates are paid in 10 instalments, so businesses will have already paid 40 per cent. of their rise by July’s payment this year, but Ministers have admitted in answers to my
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parliamentary questions that their regulations will not even be in place until the end of July. So, how long after that will it take local authorities to issue business rate bills with deferred rises? The local authority representatives to whom I have spoken tell me that it is unlikely that they will be able to go through that process in anything less than five to six weeks, and that is the most optimistic timetable. They need time to write to businesses; businesses need time to decide what to do, to get financial advice, to fill in the relevant form and send it back to the local authority; and local authority and billing agencies need time to change the details on their billing system and then to reissue their bills.

By the time all that has taken place, we will almost certainly have passed the August payment date, so businesses will have already paid 50 per cent. of the rise and there will be no 60 per cent. left to defer. All that work, which we expect local authorities to do at the last minute, will take place in August, when most people are on annual leave. Again, the Minister might like to confirm our presumption that, as businesses gradually get around to claiming their deferrals, local authorities will end up with different businesses deferring different proportions, which will in turn lead to real complexity in billing, because the situation will depend on how quickly the business fills in the form and has it processed. Some will be able to claim 50 per cent. deferral, some 40 per cent., some 30 per cent. and so on. Ministers have met local authority representatives, so they must know that.

Will Ministers therefore today finally say that they will bring forward their business rate deferral scheme regulations faster, so that they can really deliver on their 60 per cent. deferral promise? Will they promise all businesses that they will be able to defer 60 per cent. of their business rate rise? Even now, more than two months after the scheme was announced, we have very few details of how Ministers expect their scheme to work.

For example, rebilling by local authorities for a second time will cost millions of pounds of taxpayers’ money, but Ministers say that they do not know how much taxpayers’ money will be spent on it. On 1 June, in a parliamentary question, I asked what I thought was a pretty straightforward question of the then Secretary of State for Communities and Local Government. I asked what estimate her Department had made of the cost to central Government and to local authorities in implementing the business rate deferral scheme, but I did not get a straightforward answer. I got a load of gobbledegook, telling me that I would have to wait until the impact statement had been prepared and the regulations laid, and that I would then get to see the impact statement. It did not answer the question at all.

Rob Marris: That was not gobbledegook.

Justine Greening: It was gobbledegook, because on 8 June I then asked whether any provision had been made in the 2009-10 departmental budget, as outlined in the Red Book, to fund local authorities’ administration of the scheme, and I was given a completely different answer about whether an estimate had been made of costs. In that case, the answer was:

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Which answer is the right one? Is there an estimate or not? Why cannot the Government be transparent for once? If there is an estimate, why cannot Ministers just be open about it—whatever the cost? If it is in the region of what it cost local authorities to administer the last-minute requirement—another one by Ministers—to put efficiency savings information on council tax bills, it will be about £4 million to £5 million. Surely, that money would be better spent on supporting businesses directly. Instead, it will be spent on dealing with another Government cock-up that undermines businesses throughout Britain. What about the liability of businesses that defer rises and then go out of business or move to a different location? Will they still be liable for payment of the deferred rise? I shall be interested to hear whether Ministers have reached a conclusion on that one.

Above all, will Ministers admit that the initiative was really a last-minute decision made to give the impression of doing something and that, in reality, it has achieved nothing of substance months later? Will they admit that they had no consultation with the business community or local government until after the initiative was announced? Ultimately, the scheme is too little, too late. It will not help the worst affected businesses and it is still not in place. On what basis can Ministers possibly think that the business rate deferral scheme is a better option than the Bill introduced by my hon. Friend the Member for Mid-Worcestershire?

All that is bad enough, but businesses that thought that some of the rises suffered this year were crippling should know that Ministers have even more lined up for them next year. The 2010 revaluation will be based on rateable values in April 2008—the very time when values were at their peak. Given the bust that we are now in, do Ministers really think that taking rateable values from the peak of the boom will lead to a sensible, fair conclusion on business rates? Do they still plan to go ahead with the revaluation? It is costing the Valuation Office Agency alone £51 million. Ministers may not have done an impact assessment for ending transitional relief, but have they made any assessment of where the worst 2010 revaluation rises will hit businesses and by how much? Alternatively, will we see another rerun of the dangerous shambles that we have had this year, with the transitional relief and the inflation-busting business rates rise?

Mr. Betts: Surely the hon. Lady recognises that, at the end of the day, the effect of the revaluation is neutral. It is simply a matter of distributing the total business rate to be collected between the various properties. The fact that the revaluation was carried out during an economic boom will not lead to more money being collected in rates.

Justine Greening: Try telling that to some of the businesses that end up paying more. The hon. Gentleman seems to be living in a dream world. He should go and talk to some of the businesses across London that face huge rises. Ministers have to be careful. He may think that the revaluation should take place, but he surely agrees that that has to be done on the basis of knowledge of how it will impact on businesses. He is right to say
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that the revaluation is not intended to raise business rates, but if it is badly implemented, with no understanding of how it will work in practice, the danger is that it could do just that. It could put companies out of business, and then they will not pay business rates at all. Dare I say it, but Labour Members are showing their lack of knowledge about how business rates actually work.

Julia Goldsworthy (Falmouth and Camborne) (LD): Some information might help the hon. Lady as she makes her argument. I am not sure whether she is taking the same approach as she does to council tax—that is, to say that the system is rubbish, but it should be based on a series of valuations that are decades out of date. According to the information provided to businesses, they will be sent draft rateable values in October. Does she not feel that that will give them the opportunity to make representations and understand perfectly the impact that the revaluation will have? Difficult though the issue may be, it is a fair way of going forward.

Justine Greening: I take the hon. Lady’s point on board. My question is not to businesses; I have no doubt that they will make their representations. I am asking Ministers whether they will do the work beforehand and understand whether the proposal is good or bad. All the evidence from transitional relief is that no work will be done to understand the impact on businesses. Ministers will simply say, “Here’s your new rateable value—do you like it or not?” Lo and behold, companies seeing a benefit from the revaluation will say that it is fine and the many companies with an increase will have real concerns. I presume that they will all be ignored once again.

I could have spent time on the retrospective ports tax, but we will have time in the House later this week to discuss that. That tax has put our nation’s ports and many businesses involved with the car industry under pressure. Yet Ministers are pushing on, with their heads in the sand. The inflation-busting rises, the early withdrawal of transitional relief, the pressing ahead with a 2010 revaluation that will raise bills further for many businesses and the carrying on with a retrospective port tax that puts more pressure on the car industry and our ports businesses are all happening because Ministers have been asleep on the job, oblivious to how their business rate hike would kill businesses.

Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Will the hon. Lady give way?

Justine Greening: I will not.

The now-departed Secretary of State was, to use a phrase, too busy rocking the boat and deciding how to knife her incompetent Prime Minister. She is off the playing field now, but has since admitted that she could not even get that decision right. Businesses all over Britain are going bust every day and thousands of people are losing their jobs, but the right hon. Lady disgracefully and perversely prioritised her own political interest above her vital Government role on business rates.

In conclusion, many businesses are fighting for their lives, yet the Government have sleepwalked into a business rates fiasco that has tipped many businesses over the edge into insolvency. I am thinking of family-run businesses,
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often built up over years, whose failure has a catastrophic effect on household income and worklessness. They are all paying the price for the Government’s utter incompetence and inward-looking myopia on business rates. The Government have turned their back on businesses’ cry for help, but we will not. Businesses may not have a vote, but if they did, they would surely vote to consign to history the Government and their shambolic attitude towards small businesses.

8.16 pm

The Minister for Regional Economic Development and Co-ordination (Ms Rosie Winterton): I beg to move an amendment, to leave out from “House” to the end of the Question and add:

I ask the House to support the Government amendment, because the Opposition motion and the speech made by the hon. Member for Putney (Justine Greening) show scant regard for the facts of how the business rates system operates and breathtaking ignorance of the actions that we are taking to help small businesses—actions that, on many occasions, the Conservative party has opposed.

The Government are taking real action to help businesses through the current economic downturn—often, as I send in the teeth of Conservative opposition. The Government have recognised the effect that the downturn can have on small and medium-sized businesses, as well as on large businesses. We are taking action at international, national, regional and local levels. The Government have put in place a mechanism through which businesses can defer tax payments. We have introduced the enterprise finance guarantee and additional funding for SMEs through the European Investment Bank, and are providing support for small businesses during the economic downturn.

We continue to take measures. For example, in the Local Democracy, Economic Development and Construction Bill, which is being discussed in Committee, we are considering giving local authorities specific powers to help local businesses in the economic downturn. Every clause, however, has been opposed by the Conservative party, as my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) will acknowledge.

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Mr. Brian Binley (Northampton, South) (Con): The Government raised great expectations for small businesses through all the schemes that they broadcast left, right and centre, but they forgot to manage the process itself. In so doing, they did not provide the support in the sort of time required by small businesses. Many such businesses went to the wall because the Government did not understand management. Does the Minister recognise that fact?

Ms Winterton: I am surprised that the hon. Gentleman says that, particularly when so much of what we have tried to achieve has been opposed by Conservative Members.

Let me give some facts. Her Majesty’s Revenue and Customs has agreed with 100,000 businesses the deferral of more than £2.5 billion in business taxes. The enterprise finance guarantee has provided an initial £1.3 billion of bank lending to SMEs. So far, 26 lenders, representing 90 per cent. of SME lending, are signed up. Eligible applications from more than 3,600 small businesses, totalling more than £400 million, have been assessed, are being processed or have been granted. That does not seem to be an indication of a lack of action, as opposed to the do-nothing attitude of the Conservatives.

Christopher Fraser: The right hon. Lady talks about help for businesses. Will she, through her Department, give a breakdown, constituency by constituency, of how many businesses have benefited from any or all of the schemes to which she refers? I cannot see where that help is coming from, and nor can companies in my constituency. We need the reassurance of seeing the statistics that she has given broken down by every constituency, so that we can go back to our constituents and tell them where the money is coming from.

Ms Winterton: I would be extremely surprised if businesses in the hon. Gentleman’s constituency did not have, for example, access to free business health checks or the ability to apply for many of the schemes that I have outlined. However, I am more than happy to take away his request and to come back to him with information about the schemes that are available, which will be helped by local authorities or the regional development agencies. In so far as I can, I will also look to get specific information about businesses themselves.

Christopher Fraser: The Minister has given us some figures about what is happening. In a genuine bid to be helpful, I again ask her to break those down for all of us, constituency by constituency, and to give information, which I cannot get, on the companies that have actually received benefits from the schemes that she has mentioned.

Ms Winterton: The hon. Gentleman needs to bear one or two things in mind when he makes that sort of request. We would not always give the individual names of companies, because they do not necessarily want that information published, but we can look at the statistics in terms of numbers of companies. As for going right down to individual companies, I will see whether that is possible, probably working through the regional development agency. I do not know whether it will be possible for every constituency, but I will certainly take away his request and write to him about it.

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