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4.30 pm
Those of us who oppose this regime have had two Adjournment debates and endless meetings with previous Ministers. We have been very well received and we put our case, but the Ministers were all junior Ministers—we never got to see the Chancellor or the Secretary of State for Communities and Local Government, who are the deciding forces—and they told us, “As junior Ministers, our hands are tied.” It is the job of junior Ministers to defend the indefensible, and they have done that very well, but there have been no concessions at all—we are beating our heads against a brick wall. As my hon. Friend the Member for Brigg and Goole (Mr. Cawsey) pointed out, that is what Ministers get the car for.
Our warnings about the disaster that will come have made no impression at all. It is now going to hit us, but all we have had is a litany of excuses such as that if the retrospective rates demand were waived it would be an inappropriate aid to industry, and it would break a sacred principle of the ratings system in respect of retrospective charges. We have been told that the businesses, many of them small businesses, should have known—by divination or telepathy or some other form of spirit medium—that they would have to pay these charges. A load of rubbish has been told to us. We are in the position of mushrooms, with manure regularly thrown over us by junior Ministers of the Departments concerned. Frankly, I am fed up of being in that position and of talking about a situation that is so serious and of having Ministers take no notice. We had another Minister take no notice today; a new Minister adopted the old skills of taking no notice of the case.
The principle the Lords amendment proposes is a simple one, and it already operates. That principle is that where there is a reassessment that comes at the volition of the valuation agency and not the business, there will not be retrospective charging of that reassessment. That is a good and sensible principle, because what we have here is an inefficient agency with tyrannical powers, including the power to impose a large retrospective payment. It should not be allowed to use those tyrannical powers in defence of its own inefficiency. That is a good principle.
The Minister told us today that the increase is not backdated if the error relates to premises on the list, but is backdated if the error relates to premises that should have been entered on the list. The premises in question should have been entered on the list in 2005, so this is double-talk. They could be exempted from the retrospective payment, and this Lords amendment suggests that they must be. The Government could have done that of their own accord. Why did they not do so, and thereby save us all this trouble? Why did they impose this retrospective assessment that is causing so much trouble in the ports? The Government have the power; they should have used it. For the Minister to tell us, “Well, the premises should have been entered on the list,” is no excuse. Why were they not on the list, and what was their legal status? The owners of the premises were paying business rates; they were assessed for business rates separately in 2005, so why cannot this retrospective abolition of the retrospective principle be applied to them, as it should be? What is their situation?
The Minister told us that if we carried the amendment, it would have no effect. It is clearly not a retrospective amendment, but I will not believe it if I am told that if the Government accepted this principle—as they should, because that principle is in the legislation already—they would not retrospectively give way in the port operators’ case. They would, of course. They would obviously accept the general principle, and they would have to do justice even though the crime is only three months or so old. It is futile for the Minister to tell us that this measure would have no effect, because it would; even though the legislation is not retrospective, it would allow the abolition of the principle of retrospective demands for rates.
The state of these businesses is shown by some of the correspondence that has been sent to us by one of the lawyers advising us on this issue. He says:
“I was telephoned on Thursday by the accountant of one of the...businesses affected by the failures of the Valuation Office Agency. The accountant wanted to know the effect of the vote in the House of Lords”.
The effect of the Lords amendment was, of course, zero; it is not until we ratify it that it becomes effective, so this accountant is hanging on for today’s vote, in which we shall compel the Government to accept the Lords amendment. The correspondence continues by saying that the accountant
“was trying to decide whether he was obliged to qualify the company’s account with a note that it”—
the dock operator, one of several in such a position—
“was insolvent. He felt that he was obliged to do so but was desperately trying to find a reason not to qualify the accounts”.
We are told he did not want to complete the process by reporting the company insolvent. Like all of us, he is waiting for the relief of Mafeking, when the Minister
will tell us that she accepts the principle of what we are saying and he can tell that company that it can continue to trade. The Labour party and the Government must accept this principle, because we cannot pursue these port operators in this fashion and produce the kind of devastating effect that this measure will have in the ports. We are not exaggerating: there will be very serious consequences.
I wrote to the Minister—we have never been able to see one of the top Ministers—asking that this Lords amendment be accepted. I also wrote to her asking that we should be provided with accurate information on how many of these port operators have paid, how many are still paying and how many have negotiated entry into the eight-year scheme. I have not received an answer. I do not think that the information is available. Ministers have tried to con us by saying, “A high proportion have paid. If some pay, we can’t abandon the charges on the rest.” That just ain’t true. We are talking about a unique category: port operators, who, under the new arrangements, are assessed for retrospective business rates. We need to know how many of them have paid. I hope that the Minister will tell us, because we can make these decisions only on the basis of that kind of information. I hope that if the Minister does not accept this amendment—I have been watching the flow of notes coming from the hard-faced men and women in the Box—
Mr. Deputy Speaker: Order. The hon. Gentleman is a very experienced Member of the House, so he will know that we do not refer to people who are not in the Chamber in that way.
Mr. Mitchell: I am sorry, Mr. Deputy Speaker. It was tactless of me to refer to the complexions of those people in the reference that I should not have made—and did not make. The Minister has been receiving notes and I hope that they have changed her mind, because it is important to seize this opportunity to change the Government’s mind. If that does not happen, I shall certainly vote for the amendment and, unusually for me, support proposals coming from the House of Lords, which the Government can make retrospectively effective.
Dan Rogerson: Our debate has become a little lively for this time of the afternoon. Interestingly, in many of our discussion we have discussed the potential for things to have an influence on local communities and for business rate supplement projects to be introduced, but we are now talking about the backdating of business rates for ports, which is having an impact on communities and businesses up and down this country.
The hon. Member for Bromley and Chislehurst (Robert Neill) referred to a certain irony, so I should refer him to remarks made earlier today by the hon. Member for Foyle (Mark Durkan) about irony in politics. We have heard references to the New Testament and the Boer war this afternoon, which goes to show that our debates are perhaps at their best when we can respond to real situations in the country. Although the Bill might not resolve the situation, it gives us the opportunity—as the hon. Member for Great Grimsby has just said—to send a clear signal of our intentions, to acknowledge the seriousness of the situation and to admit that it is the responsibility of the Government to put it right.
It must be acknowledged that the problem in Humberside and Merseyside has been caused by a mistake by a Government agency, although the businesses involved will have to pay the price. Even worse, their employees will pay the price if their jobs are lost. In the present economic circumstances, the Prime Minister has instructed, inasmuch as he can or is prepared to, banks that are now part-publicly owned to be as sympathetic as possible to businesses that are in difficulty and to support them as much as possible. HMRC has been instructed to be as flexible as possible in collecting taxes, to ensure that profitable businesses that want to invest in the future, provide employment and contribute to the economy are not put out of business needlessly by short-term demands that could be resolved. However, the Government are pressing ahead with the business rate system, which might make businesses unable to trade any longer. People will lose their jobs and it will affect investment in communities served by those businesses, with consequences for other businesses around the ports, including the construction and other ancillary industries. Although we might not have the opportunity to resolve the problem this afternoon, we can be part of the solution and contribute to addressing the issue.
Any problems that occur in port areas might have long-term consequences, as we have heard. If business is driven from the ports, it will find other routes and, probably, never come back. We need to reflect on just what the Government are asking us to do.
Will the amendment solve the problem? No, but it would give the Government the opportunity to acknowledge not only that the issue needs addressing, but that they have a way of dealing with it. It would also acknowledge that the situation in the ports is the fault not of the businesses but of the Government agency. The Government must admit that and try to do something to resolve the situation.
The Minister said that it would be inconsistent for the collection of business rate supplement to follow a different path from the collection of business rate. I can see what she means, and perhaps the amendment is an inelegant solution. But it will allow the House to vote and to show that many hon. Members feel that this problem needs to be resolved. If we can demonstrate the strength of that feeling, I hope that we can press the Government into action. That has happened in recent weeks with the Gurkhas. The Government said that there were insurmountable problems of precedent that could not be overcome. Members gave their view on that and, to their credit, the Government reacted. I hope that the same will happen this afternoon and we will reject the motion to disagree. If we stick with the amendments made in the other place, we will have a better Bill as a result.
4.45 pm
Mr. Cawsey:
I shall not detain the House too long, because when we debate this issue I feel increasingly that I am turning into Bill Murray in “Groundhog Day”. I simply turn up and say exactly the same thing over and again and get exactly the same response. At the heart of the matter is the fact that we are discussing Lords amendments to the Business Rate Supplements Bill, but a lot of us who represent ports represent companies that think that they are already being charged a business rate supplement. They have paid their rates once through the cumulo system—that is not really
disputed, and, indeed, my hon. Friend the Minister said earlier that people should come forward with evidence of that if it exists. In a previous debate, I said to the previous Minister that Associated British Ports sent out a letter to those companies at a time when their business rates had been increased to say that the cumulo was being increased to cover the increase in business rates. If that does not prove that business rates are included in what they pay, I do not know what else can prove the point.
We have got ourselves into a completely unnecessary mess. The other place did this House a service by passing amendment 11. It has ensured that the issue comes back on to the agenda and that all Members can see that there is a solution. That solution might well have been directed at the problems in our ports, but the amendment is a good one in its own right. Even if the Government still feel uneasy about the port situation, what on earth is wrong with or offensive about the amendment? It should be passed and it should be applied to the ports companies. There can be no fairness when good companies are struggling to stay in business because they are being asked to pay, for a second time, business rates backdated to 2005. They can no longer go back to their customers and reclaim the money.
ABP, which is not the only owner of ports in this country but affects the area that I represent in Goole, has made it perfectly clear that the money that the Government have paid back to them will not be passed on. This is retrospection and double taxation. In fairness to ABP, it says that because although it might have got its money back in ports such as Goole its liability across the country has gone up, too. I do not think ABP sees itself as a winner out of this whole sorry tale, either.
I plead with the Minister, who is new to her post and who will have had all sorts of briefings and notes from officials that say, “Resist,” “Stick with the line,” and “Don’t let them grind you down.” We all know what happens in these scenarios. However, it needs dealing with because this problem will not go away. I might be wrong, but I think that the most likely thing that will happen today will be that the Government will win the day on the amendment, despite the fact that Members on both sides of the House will vote in favour of their lordships’ position. Of course, that will not be the end of it, because the amendment will go back to the other place. I hope that if we end up with that scenario, their lordships will take heart from the fact that there is cross-party consensus that the provision is just wrong and that it needs to be dealt with.
I had the great honour a few years ago, for one year, of being Parliamentary Private Secretary to the much missed Lord Williams when he was Leader of the House of Lords and I know what happens in this scenario. No Government want to lose legislation because of one bit of controversy, so at some point people have to sit down and to start talking about what will ensure that both Houses can reach an agreement. If we are unsuccessful today, I hope that their lordships will see that there is strong support in this House for the amendment and will sit down with representatives of the Government to thrash out a position that can be brought back to both Houses on which we will agree.
This matter will not go away, because it is manifestly and obviously unfair. Companies in ports up and down the nation are struggling in already difficult circumstances
because of the failure to grasp this simple matter, which is not of the Government’s making. We all accept that the Valuation Office Agency messed it up in the first place, but there is an obvious solution. I refuse to believe that it is beyond the wit of people in this House and the other place to reach a solution together, so for goodness’ sake let us get on and do it.
Sarah McCarthy-Fry: With the leave of the House, I shall respond briefly to some of the points raised in the debate, but I shall begin by reiterating a principle. Many hon. Members have spoken about fairness this afternoon, and the principle is that a tax system such as business rates must be equitable to all. Any solution to a perceived injustice must not confer a disadvantage on other taxpayers who have paid and who were billed on time.
Prior to the ports review, some 1,600 separately assessed properties were liable for rates from 1 April 2005. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) said that separate assessments were introduced in 2005, but that is not correct. The principle of separate assessment has been a long-standing feature of the rating system, and goes back as far as 1936.
Robert Neill: I appreciate that the Minister is new in her post, but does she accept that, although separate assessment has been a feature of the general rating system, the cumulo system operated in the 55 registered ports until the latest change? The 1,600 separate premises were rated as separate hereditaments only when that change, of which the ports did not have notice, was made.
Sarah McCarthy-Fry: As far as I am aware, and according to the figures that I have, the 1,600 properties were liable for rates from 1 April 2005, and paid rates in 2005-06 and 2007-08. Removing a backdated rates liability would turn a perceived advantage for newly assessed properties into an actual disadvantage for existing properties that have paid their rates liability for previous years.
On the earlier point about empty properties, a landlord who takes over a rateable property that is empty would be liable for rates.
Mr. Frank Field: The Minister has confused the position. We are not asking for an unfair redistribution of the rateable value costs to those who already pay. Employers in our ports want to pay rates, but they do not want to pay rates and have this poll tax imposed as well. If that happens, they simply will not survive.
Sarah McCarthy-Fry: We are talking about two different issues here. One is the principle that separate assessment would be unfair to those who have been paying their rates; the other has to do with the cumulo, which is a contractual agreement between the port operators. We are not unsympathetic to the ports, but the Lords amendments are not the answer to the problem. They would affect the ability to levy a business rate supplement on businesses occupying properties where the rateable value has been altered retrospectively, but they would not impact on the backdated rates liability of some port operators.
I have heard the arguments about sending a message and setting a precedent, but the principle of fairness demands that we look at the system as a whole, including those who have already paid their rates. As I have said,
we are not unsympathetic to the ports, and the House overwhelmingly supported the arrangements allowing liability backdated to 2005 to be discharged in instalments. I am pleased to be able to tell the House that that legislation is working well.
I can tell my right hon. Friend the Member for Birkenhead (Mr. Field) that, by 8 May this year, local authorities had reported that 185 properties covered by the ports review had paid £30 million of backdated liabilities in full, and that a further 88 business properties in ports had been granted a schedule of payments. In addition, my predecessor, who is now the Minister for Housing, met two of the port operators—Peel Holdings and Associated British Ports—to discuss the payment of fees and whether that included the payment of rates. Although the Government have facilitated discussions with some port operators about the merits of these issues, we cannot intervene directly between the ports and occupying businesses, as the responsibility for paying rates through tenancy agreements is a private contractual matter between the ports and the occupying businesses. I am happy to meet hon. Members who have ports in their constituency to discuss matters further, but I do not consider the amendments before us to be the way forward.
Dan Rogerson: I echo the comments that other hon. Members have made: the problem is not of the Minister’s creation. However, she said that the amendments are not the answer, which implies that there may well be an answer to the problem. Hon. Members in all parts of the House would welcome an idea of what that answer might be, so that they could decide whether they need to send a signal through the amendments. I gave the example earlier of the Gurkhas debate. Some Labour Members chose not to support the motion in the name of my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg), because they felt that as they had received a promise from the Government the issue would be resolved. I am not clear that we are in such a situation in this case, or that there is a way forward. If there is, it would be good to hear about it.
Sarah McCarthy-Fry: I doubt that I can give a great deal of comfort, because the solutions suggested by hon. Members are not a possible way forward. That is why we gave an unprecedented eight years in which to pay, and came up with the fast-track process. I know that hon. Members have said that the fast-track system is not working as it should, but 40 proposals have been resolved under the fast-track system. Some 195 remain outstanding, and they have been transmitted, as appeals, to the Valuation Tribunal Service. We are assuming that early hearings will follow. Ratepayers have been invited to support early listing dates, but very few have taken up that option. Once the appeal is with the tribunal, there is also an onus on the applicant to speed up the process.
Robert Neill: The Minister is being clear, but will she concede that, according to the figures she has given, only 230-odd properties have come to an arrangement, or are in the process of so doing? There are about 1,600 individual properties concerned. Secondly, on the fast-track process, I have details from RMS Holdings, which has been offered a fast-track hearing between now and September. It is difficult for it to take things up, if that is the best that it is offered under the fast-track proposals. Will she look again at the operation of the fast-track system?
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