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17 Mar 2010 : Column 275WH—continued
The result in my constituency is that Scotline has ceased to trade-I fear that this may just be the first such case-because it was presented with a bill of just over £700,000 for current and backdated rates, with £200,000 owed now. The company has a turnover of just £800,000. Of course it has known about the situation, and in January 2009-not January 2010-it took its case to the Valuation Office Agency, requesting the fast-track appeal that the Government had offered. To back up its case, it pointed out that it had been charged for a large warehouse that it did not own and for a common wharf to which it merely had access, as do many other companies on the port. Despite its pleas no
reassessment was forthcoming. Eventually, the council issued a summons. The company went into liquidation on 25 February, and 10 people lost their jobs.
If the story ended there, that would be bad enough. However, in this world of "You couldn't make it up", what happened next is almost more unbelievable. Last week, the company received a letter saying that the fast-track reassessment was complete and its liability was not £700,000 but £114,500. That fast-track reassessment took 14 months and arrived days after the company folded.
Shona McIsaac (Cleethorpes) (Lab): I congratulate my hon. Friend on securing the debate, which I think is the second that we have had in Westminster Hall on this subject. Given what he has just revealed about what Scotline's liability should have been, does he think that there is a case for investigating the Valuation Office Agency?
Mr. Cawsey: The Treasury Committee made the point well that the Valuation Office Agency, which is a Government agency, has let down the ports and the companies badly. Even at this late stage, it has a duty to ensure that everyone is asked to pay on the basis of a fair rateable value that is comparable to others. It should be borne in mind that some companies in the ports have always paid business rates in the normal way, and it is important that all the companies should have a level playing field. My experience is that a number of companies have been given rateable values that are completely out of kilter with the businesses that they run and the properties that they use. Paying is putting them into immediate difficulties, but they face the further long-term unfairness of continuing to be unfairly rated compared with some of their competitors.
Scotline's chief executive, Peter Millat, said in a press statement issued after the company went into liquidation that if the revaluation had been more timely the company would not have folded and no jobs would have been lost. It is truly unbelievable that the agency should have taken so long when so much was at stake and that, despite many warnings about the declining position, the Government should have allowed it to happen on their watch. The problem affects not only Scotline; other companies are hanging on, waiting for something to happen or for sensible revaluations to reduce their liabilities.
I spoke earlier about East Riding of Yorkshire council, but I am aware also of the efforts that have been made by Hull city council and North East Lincolnshire council, which cover all the Humber ports-although I realise that the problem affects not only them. They have held off as long as possible and have tried to do the best that they can to support the industries in their areas, but they, too, are now under pressure. To put this into context, we should consider how much it is costing the UK economy. I was grateful to receive a briefing before the debate from the Federation of Small Businesses. It estimates that those companies are being chased for more than £33 million and that 150,000 jobs in UK ports are in jeopardy as a result.
I turn to what we might hope and expect my hon. Friend the Minister to do. In some respects, I feel sorry for her, as it all happened before she took over her present brief. However, as a colleague once said to me, "That's why you get a car." She comes from the Department
for Communities and Local Government, which has offered the limited assistance that we have so far secured. I guess that she shares my despair at the way the agency has acted and how the promise of a fast-track procedure simply raises a laugh whenever it is mentioned locally.
I have had private and public meetings about this, but we should be candid about it: DCLG would like to do more but cannot persuade the Treasury. I mean no offence to my hon. Friend the Minister, but I took the matter up directly with the Chancellor last week. I explained to him the difficulties that we were having and my belief-I do not think that I am wrong-that that is where the block is to be found. It is fair to say that my right hon. Friend was unaware of the reality of what had happened to Scotline, and especially about the cut in liability made after it went out of business. He offered to speak to his officials, and I sincerely hope that that will enable the Government to move matters forward. Too many jobs are at risk to do nothing.
My personal view is that retrospective rates should be cancelled; as companies cannot get their money back from their landlords, they will be paying twice. The agency should be made to finish all revaluations as an immediate priority, and councils should impose no financial penalties in respect of non-collection during this period, which should have a short but fixed time scale. If companies still have outstanding liabilities, there needs to be a deal to ensure that they cannot be placed in a position where they could go out of business through no fault of their own.
The problem has attracted strong support from all parties. I note from today's Grimsby Telegraph that Lord Bates, Opposition spokesman for the DCLG in the other place, has issued a statement saying that the Conservative party is in favour of a moratorium. Although that does not cancel the retrospection, it nevertheless offers a breathing space while rational decisions are made. At the very least, it would be a sensible start. The Government should respond in a similar way, content in the knowledge that other political parties would support them. The Government need to act as soon as possible. The clock is ticking; companies are folding; jobs are going. The Minister and her colleagues need to deliver. The problem is caused by their actions and their agency, and they need to resolve it.
11.14 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Barbara Follett): It is a pleasure, Mr. Benton, to serve under your chairmanship. It is also a pleasure to respond to my hon. Friend the Member for Brigg and Goole (Mr. Cawsey) on a subject that is difficult because of the consequences of its complexity.
I congratulate my hon. Friend on giving such an extremely clear outline of what has happened. The situation arose from changes of ownership in the ports about 40 years ago. Previously, the port authorities paid the business rates of the businesses that operated within the ports. The situation has changed over the years, and that transition is the crux of the problem.
It became clear that some properties that should have been separately rated had not been separately rated. It became equally clear that some properties were still
paying what they considered to be their business rates to the port authority, but that some were not. The result was a loss not only to the Treasury but to the other businesses that had to make up the shortfall, because not all the business rates liability was being collected.
It became obvious in 2006 that the problem existed in the country's 55 ports. The Government undertook a review. The delay that my hon. Friend mentioned was not only caused by the fact that the mills of Government grind exceeding slow, as he will know from watching "Yes Minister". The review started in 2006 and took approximately two years, ending in 2008. The result was that ratepayers in 725 properties became liable for backdated bills.
Backdated bills are a feature of the business rate system, which is 100 years old. Every year, individual companies are found, for one reason or another, not to have paid all their liability, and they have to pay back that money. This is the first time that we have had a sector-specific review, and it obviously led to a great deal of hardship. I very much regret what has happened to Scotline in my hon. Friend's constituency. This is not a time to lose jobs, and I regret what has occurred.
One reason why the problem arose is that the system is so ancient. There is no requirement for potential ratepayers or the port authorities to inform the Valuation Office Agency that a separate hereditament may exist-I may have mispronounced that word, Mr. Benton. For example, if my hon. Friend decided to rent out his office in Parliament to my hon. Friend the Member for Cleethorpes (Shona McIsaac), it would become liable for business rates-if he were allowed to do so; I am using it as an example. However, there is no obligation on either of my hon. Friends to inform the Valuation Office Agency. It can therefore take quite a long time for the agency to find out where those separate heredi-
Barbara Follett: I thank the right hon. Member for Haltemprice and Howden (David Davis)-it can be difficult to find out where they exist. As a result, although there is no guilty party there is a lack of transparency in the system. On top of that, if the Valuation Office Agency discovered that my hon. Friend had rented his office to my hon. Friend the Member for Cleethorpes it would have a legal duty to investigate it and to charge.
Some companies continued to pay their fees to landlords, as my hon. Friend mentioned, and some are finding it difficult to get those fees back. The problem for Government is that the matter is not something in which we can interfere; it is between the port authorities and their businesses. In fact, some companies have had to pay rates twice, which does not seem in the least fair.
My Department announced that historical debt could be paid interest-free over an eight-year period, as my hon. Friend mentioned, and that there would be a fast-track appeal process via the Valuation Office Agency. However, once again, between the Government view and the business view of what constitutes fast track, there is a huge gulf-
Barbara Follett: Yes, and my hon. Friend illustrated that gulf marvellously well.
We now have a situation in which a company such as Scotline has ceased to trade because of the time taken by the Valuation Office Agency to arrive at the correct liability. I have heard the details of the situation in my hon. Friend's constituency and I have talked in huge detail about other specialist areas of valuation, such as the vexed question of petrol stations. I shall not go into that in any detail because you might be in danger of falling asleep, Mr. Benton. However, the question is vexed and keeps the owners of petrol stations and this Minister awake at night. Another specialist area is that of telecoms, with the differential ways in which BT and the fibre-optic providers are measured. That case has gone as far as the European courts and the Court of Appeal in this country.
I have spoken to Treasury Ministers because, owing to the way Government responsibilities are split, the Valuation Office Agency falls under the Treasury, whereas the structure for collection, which is local authorities-billing authorities-falls under my Department. I am in discussion with Treasury Ministers about what we can do to make the fast-track process truly fast track, and the system more responsive to the needs of business. I shall keep my hon. Friend informed of progress. I am taking the issue up as a matter of urgency-I am speaking to a Treasury Minister tomorrow-because I am aware of the cliff we are all facing.
David Davis: Like the hon. Member for Brigg and Goole (Mr. Cawsey), I am incredibly sympathetic to the Minister's position. She is caught in a "Yes Minister" time warp, with fast track being measured in geological time-
Shona McIsaac: That would be quick.
In the middle of all the complexity-the legal history and the antiquity of the system-the simple fact is that there are two injustices. One injustice is that the Government make a mistake and individuals or companies pay. The other injustice is that we are in effect subjecting our corporate citizens and their employees to double taxation. Both injustices are clear-whatever the reason, whoever the blame lands on, I do not care. I do care that constituents of virtually all the MPs in the Chamber are suffering. In the current economic circumstance, the only thing that can help is that whatever form such help takes, whether moratorium, cancellation or whatever, it has to be incredibly quick-not quick in geological time, but quick as in the next few weeks.
Barbara Follett: I take the right hon. Gentleman's point. As someone who came into this place at the ancient age of 54, with a business background, I found the geological time that is occasionally also Government time difficult to deal with.
None of what I have said diminishes the impact of backdated rates, combined with the current economic climate, on port-based ratepayers. We understand and sympathise with their plight, which is partly why we introduced the schedule of payments scheme and went in for an unprecedented eight years. The scheme is providing help, but there are still instances, as with Scotline, when that help comes too late or is not sufficient.
The fundamental issue is that we cannot selectively let some businesses off a legally established tax, actively disadvantaging companies that have paid it. Members present understand that, so we have to find a way through.
In conclusion, the Government and this Minister are as concerned as Members about the impact of backdated rates liability.
Mr. Cawsey: My hon. Friend is reaching the end of her comments. We welcome her sympathy, but it is important to have something tangible as well.
What companies need to know at this point in time is when the revaluations will be complete. Companies are trying to make arrangements to keep their businesses going while the revaluations happen. Scotline has been a shock through the entire system, because the company went and then the revaluation came. Every affected business I know fears that for itself. If the Minister can do no more today-I understand that conversations are still ongoing, not least the ones with the Chancellor that I alluded to-will she, please, at least give us an assurance that she will get back to us with some indication of when those decisions will be made and complete, so that the companies will know what their liabilities are and that they are fairly set?
Barbara Follett: My hon. Friend has been a Minister himself and understands the constraints under which we sometimes operate. However, I give the Chamber my assurance that we shall do everything in my power and the Secretary of State's power. I am glad that my hon. Friend has prayed in aid our right hon. Friend the Chancellor of the Exchequer, because that will be most useful. I shall report back to concerned Members about progress. We intend to move forward as swiftly as possible, because as we all know there is only an extremely short period in which to operate.
I commend my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who is in the Chamber today, for the work he has done on the issue. He has certainly kept my correspondence section extremely busy.
11.27 am
London Hospitals
[Mr. George Howarth in the Chair]
2.30 pm
Lynne Featherstone (Hornsey and Wood Green) (LD): It is a pleasure to stand before you this afternoon, Mr. Howarth. I am delighted to have secured this important debate on the vital issue of the future of London hospitals.
London is a world city, but its health care is not world class. It faces extreme health challenges, with the highest rates of child poverty, chlamydia, gonorrhoea and syphilis. It has 40 per cent. of the UK's tuberculosis cases and 52 per cent. of its HIV cases, the highest number of dependent drug users, and the highest rates of teenage pregnancies. Sadly, London tops the list in many other areas as well.
NHS London has sweeping plans that would monumentally change the delivery of health care in London. Through the local prism what is happening in my sector-the north central London sector-and specifically around the Whittington hospital, I will demonstrate what is happening across London. The proposals are being fought across the capital by all parties. I have no doubt that my hon. Friends and other hon. Members will wish to put their local situations on the record.
Shocking health inequalities exist in London. For example, a man will live seven and a half years longer in Kensington than in Haringey. We have six infant deaths per 1,000 live births in Haringey, against a London average of 4.8 per cent. We desperately need better health care to address such inequalities, and we welcome the fact that a review is under way. However, we are worried about the way in which the review is being conducted, the work that is not being done, the use of wrong and dangerous assumptions, the appalling lack of proper or meaningful consultation with local people, the absence of real clinical evidence and the neglect of key aspects that impact on medical training. Despite such a flawed, unsafe and unsound process, the juggernaut proceeds relentlessly. No proper case is being made that demonstrates that our health inequalities in Haringey will be reduced by the proposals of the north central London sector review panel.
The first news of the potential closure of the Whittington accident and emergency department was revealed in a leaked letter from Rachel Tyndall, who chairs the review panel. That letter was sent to the chief executive officers and the medical directors of all the relevant hospitals in the sector. It proposed four options, each one of which included the closure of the Whittington hospital's A and E department. It is an understatement to say that there was shock and horror at the possibility, let alone at the fact that no other possibility was proposed. In the public interest, I leaked the letter to everyone I could. How dare it be that that was the first that we in the sector knew of the proposal? In the furore that followed, the letter was hastily withdrawn, and we were told that no decisions had been made, and that various options and scenarios would be put to a public consultation next autumn.
That letter may have been withdrawn, but it showed us the way in which the thinking was going. A strategic plan has now been drawn up by north central, London.
Seven draft options affect the Whittington hospital in three different ways. Under scenarios 1, 2 and 3, described disarmingly as the "do minimum" scenario, the Whittington loses in-patient paediatric services, and possibly obstetrics, too. Under scenarios 4 and 5, we also lose 24/7 A and E cover, and under scenarios 6 and 7 we lose A and E altogether.
I should like to talk today about the evidence base. The Minister himself said in debate:
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