Examination ofWitnesses (Question Numbers
540-559)
MR STEPHEN
TIMMS MP, ANGELA
EAGLE MP AND
IAN PEARSON
MP
26 NOVEMBER 2008
Q540 Mr Todd: Finally, there were issues
raised when Kitty Ussher was before us in May concerning the linkage
between child tax credit payments where that is delayed and the
implications for supplementary payments for Child Trust Funds.
Kitty agreed the substance of the argument and went away to consider
what could be done. Have you an update on that?
Mr Timms: Yes. I know that Kitty
wrote to the Chairman on the 17 July explaining she would be introducing
new regulations to change the rules so that children otherwise
eligible for the additional payment under the Child Trust Fund
do not miss out because a tax credit claim is not made within
three months. Those new rules will extend the eligibility window
from three months to a minimum of 12 and regulations to achieve
that will be laid shortly.
Q541 Mr Todd: Those are not currently
in place.
Mr Timms: That is correct.
Q542 Mr Todd: Therefore the circumstance
this Committee identified remains true, that some may lose the
benefit. The examples given, mental illness, postnatal depression,
which might lead to a delay in a claim having a further additional
financial consequence, remain true.
Mr Timms: But the regulations
that are to be laid will deal with that and put that right. Once
the outstanding payments are made, along with further payments
which will be made in lieu of missed investment growth, no family
will have suffered a financial loss. The regulations have not
been laid yet but they soon will be.
Q543 Mr Todd: There is no intent
to backdate the implication of this regulation?
Mr Timms: What I am able to reassure
the Committee of is that no child or family will have suffered
a financial loss once all the regulations have been put in place.
The rule change will come into effect for children who become
eligible for a Child Trust Fund account from the 2008-09 tax year
onwards.
Q544 Mr Todd: You would agree that
this regulation ought to be placed quite urgently.
Mr Timms: Yes.
Q545 Mr Todd: It is slightly alarming
that a good case was presented to this Committee for change and
a welcome announcement of intent quite rapidly followed but the
action has not followed as a consequence.
Mr Timms: It very shortly will
do.
Q546 Mr Todd: The other point raised
at that time was the flagging of some of this critical information
on the website so people clearly understood how important rapid
communication was in some of these instances, not that it would
necessarily help some of the customers I just mentioned but nevertheless
the clarity of communication is vital. Has that been rectified?
I think the example that may have been raised by Mr Ainger who
took part in this exchange was that you went to page 8 of the
information pack before you encountered the critical piece of
information as to how rapidly you should do something.
Mr Timms: I am not sure what changes
have been made to the website. I entirely agree that the website
should be clear on this and I will check what changes have been
made.
Q547 Mr Todd: Can you make sure that
is done?
Mr Timms: Yes.
Chairman: We do need to speed this up.
We examined all this in May so it is a little disappointing to
hear nothing much has changed.
Q548 Mr Todd: To be fair, it was
accepted.
Mr Timms: Kitty Ussher wrote to
John at the end of July.
Chairman: This is November.
Mr Todd: Writing a letter does not change
the law or necessarily implement the website change.
Q549 Chairman: Can you give us an
assurance you will personally have a look at this and chase that
up?
Mr Timms: Yes.
Chairman: We will turn to the Valuation
Office Agency and the issue of ports rating. We are obviously
grateful for the letter you sent on 24 November and the speed
at which you got that reply to us. I have to say we have discussed
it collectively and we remain disappointed but Nick Ainger will
start with some questions on that.
Q550 Mr Ainger: Stephen, when you
came before us with John Healey we asked for a breakdown of all
the changes in the ports. When are we going to get that information?
Mr Timms: This is the figures
for pre-review of rateable value?
Q551 Nick Ainger: It is the changes
because, if you recall, the problem was we were told by the Valuation
Office that overall there had only been a 10% increase.
Mr Timms: That is correct.
Q552 Nick Ainger: And we had been
given information which indicated that there were some huge rises
and therefore we asked for a full breakdown.
Mr Timms: I have the full breakdown
in front of me and it says on it "sent to Committee on 5
November" so I would have hoped that would have reached the
Committee by now.
Q553 Nick Ainger: Everyone in the
room is shaking their heads.
Mr Timms: I can only apologise.
It certainly was sent and I have a copy here so we can leave that
here.[6]
Q554 Nick Ainger: I am sure we will now
get it. Since our exchanges on 29 October we have received a lot
more information from individual companies. Can I just take you
through some of them so you clearly understand the extent of the
problem. I have a letter here from Stena Line that operate out
of Fishguard, Holyhead, Fleetwood, and they used to operate out
of Harwich. In Fishguard, where they are not only a port user
they are the port operator as well, the change has been 227%,
which is an increase per annum of £400,000. In Holyhead the
percentage increase is 242%, an increase of £1.1 million.
In Fleetwood, where they are just a user, their increase is 430%.
In Harwich they used to have a berth which they closed in January
2007 and they have been given a bill by the Valuation Office back-dated
to April 2005 for £1.8 million for a berth that they have
not used since January 2007. What Stena Line say is that this
is going to have a significant impact on their business and on
their investment plans and there could even be redundancies as
a result of it, so that is Stena Line, a major company. We then
move on to some smaller operators in Liverpool. I have here a
letter from Mr Kirk of Stanton Grove Ltd who tells us that his
company faces a back-dated bill of £1.5 million with the
increase on-going of some £568,000. He only makes annual
profits of £250,000 and does not know how on earth he can
afford not only the back-dating but the actual increase that he
faces. Finally I have a letter here from Mr Dixon, the Managing
Director of Freshney Cargo Services in Grimsby and they are facing
a back-dated bill of £3 million and a £750,000 annual
increase. Your letter suggests that we can address this problem
by giving these companies eight years to pay back the back-dated
element, but it is clear from those figures that they will not
even be able to afford the actual annual increase never mind about
the back-dated increase. Your letter also refers to a fast-track
appeals system but as you intend to legislate in order to provide
them with this eight-year period, could that legislation not actually
look again at this back-dating issue and whether it should actually
be applied, bearing in mind that not one of these companies was
consulted, despite what the Valuation Office has said? Stena Line
make it absolutely clear that they had no consultation whatsoever
both as a port user and a port owner. Do you not think that you
should look at this again? While you have moved substantially,
and I accept that, I do not think it has gone far enough, and
I think the Committee would agree with that
Mr Timms: Let me just comment
on some of the figures. I have figures in front of me for a couple
of the ports that you mention—and again I apologise that
the Committee has not seen that yet—and for Fleetwood before
the review the port rateable value was £310,000, the non-port
was £324,000, so a total rateable value of £634,000.
Post the review the figures are for the port £245,000 and
non-port £325,000 so a total of £570,688, which is a
reduction in that particular case of the overall rateable value,
so I am a little puzzled. I suppose in that case Stena is not
the port operator, it is simply the tenant.
Q555 Nick Ainger: No, it is not the
port operator, it is a port user there. Their figures show a 430%
increase.
Mr Timms: Yes. On the question
of notification, as you know from our previous exchange, the Valuation
Office Agency did write to all the port operators affected as
soon as the appeal from Southampton was withdrawn, which was in
the early part of 2006. There was some discussion at the Committee
last time I appeared with John Healey about letters to port occupiers
in Hull and, in that particular case, because the Valuation Office
Agency did have some information about the occupiers in Hull,
72 letters were issued between November 2006 and February 2007.
What has happened is that it has become clear through this series
of events that some occupiers who previously were not being charged
rates actually should have been charged those rates for a very
long time. That has now been put right. I think the change that
has been announced in the PBR is a very significant one. It will
allow people to stage payments over eight years instead of having
to pay in the current financial year, which would otherwise have
been the case, but I do not think I can hold out to the Committee
the prospect of negating what clearly is a liability which does
need to be paid and indeed should have been raised in previous
years as well. My colleague, Jim Fitzpatrick, the Ports Minister,
will, as our letter to the Committee said, continue to speak to
the port operators because of course in many cases their rateable
value has reduced as a result of the changes as the counterpart
of the operators' rateable value being raised, and there may be
some help that some of the port operators therefore can provide.
I think I would need to point out to the Committee that the rates
liability does need to be met.
Q556 Nick Ainger: Again, we have
had correspondence from individual companies who had always understood
that the rent that they were paying to the port owner did cover
an element for rates. They have told us that the port owners are
refusing to offer them any compensation for the rates that have
been already paid and they do not seem to be negotiating any significant
reduction for future payments either, so they are being hit with
a double-whammy. They are being hit by the fact they believe that
they have already paid a substantial contribution towards their
rates between 2005 to date to the port owners and then they are
being hit by the Valuation Office saying that they have got to
pay their full rates with effect from April 2005. Talks can go
on but at the end of the day they want a clear decision in relation
to this back-dating element, and if there is no way that the port
owners can be made to compensate in some way, then the only way
is to look to the Valuation Office for some form of compensation
because at the end of the day—and I will quote you again
what Stena Line said: "The Valuation Office did not consult
with Stena Line either before the new valuation list came into
force or before any of the subsequent actions to alter the list."
It goes on to say: "This contrasts with the situation in
Scotland where a consultation exercise did take place with port
operators and we do not appear to have a problem in Scotland."
Thus it is clear that there is a lot of evidence that port operators
are being asked to pay twice, that they are being faced with very
high increases, and that they were not properly consulted at all,
and it came as a bombshell to them when they were informed of
the new valuations. I think we need to make some progress.
Mr Timms: I think we have made
some progress in the announcements in the PBR. On this point of
the port operators' rateable values, those have reduced from £127
million for England and £8.6 million for Wales to £84
million for England and £7.8 million for Wales, so there
has been a significant reduction in the port operators' rateable
values. In the case of Hull the figure has gone from £9 million
for the port operator before the review down to £3.1 million
now. I appreciate the position is going to vary considerably between
occupiers, but I would hope that the arrangements would have been
set out in a licence agreement between the port operators and
their occupiers and that on the basis of those agreements the
occupiers may perhaps be able to press their landlords for some
adjustments. I hear very clearly what you have said about what
is actually happening on the ground and I will draw that to the
attention of Jim Fitzpatrick for his discussions with the port
operators (which are continuing) but I do not think there is very
much more that I can offer or that the Valuation Office Agency
is likely to be able to offer beyond the very important step that
the Chancellor announced this week.
Q557 Nick Ainger: But you accept
that there is an issue of natural justice here as well if the
port occupiers/the port users, who are the people that actually
generate the wealth in those ports, they are the ones that employ
people and do the business there and so on, are faced with these
huge rises and their landlords, certainly in certain circumstances,
do not appear to be prepared to pass on their reductions to their
tenants. As you intend to legislate so that the eight-year period
can be addressed without interest being applied, can we not address
also the issue of the refusal of individual ports to pass on to
their tenants the savings that the Valuation Office has given
to them?
Mr Timms: You are suggesting that
we should legislate some new obligation on the port operators?
Q558 Nick Ainger: Indeed.
Mr Timms: I do not think the legislative
opportunity that allows us to stage these payments over eight
years would allow us to make the change that you have suggested.
I am perfectly happy to have a look at that, but I would not want
to encourage the Committee to think that that is something that
could readily be done. I do agree that the port operators do have
some responsibility here, and I think all that we can really do
is press upon them the importance of them fulfilling those obligations
because it is not in their interests that their tenants should
needlessly be put out of business, which in some cases may be
the consequence. However, I would not want to encourage unduly
the Committee to think that there is something in legislation
that we could quickly do.
Q559 Nick Ainger: Can you look at
that?
Mr Timms: I am very happy to have
a look at it.[7]
Chairman: Does any other colleague want
to ask about ports? Right, let us turn to the Debt Management
Office. Sir Peter Viggers?
6 Following the hearing the Committee Secretariat
was able to confirm receipt of the note on 5 November. Back
7
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