4.15 pm
The Government make big play about the importance of information to enabling customers to switch and use their power of choice. If they are to have that power of choice, they need information, and I think that this would be a useful and easily accessible piece of information for them to have. Earlier this year, the Energy and Climate Change Committee uncovered the disturbing reality that some of the big six were paying little or no corporation tax at all, despite making major profits, and other hon. Members on both sides of the House have made clear their complete dissatisfaction with that.
Secondly, our constituents have a right easily to access information on fuel mix. The Minister tried to reassure me by saying that, because of the existing fuel mix disclosure obligation, that part of my amendment was redundant, but there is no point hiding away this
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information on a website. It needs to be in bills, so that people can make better judgments, and we need more than just one year’s information. To see trends and trajectories and to make proper comparisons, we need several years’ information, and it needs to be presented so that meaningful averages can be compared.
Sammy Wilson: Does the hon. Lady really envisage individuals getting fuel bills showing profit and loss accounts, fuel mixes, past fuel mixes, trajectories of fuel mixes and so on? She says that this is about transparency, but does she really believe that the ordinary consumer will understand half this information or even be interested in half of it?
Caroline Lucas: I have much greater confidence in the wisdom of my constituents than sadly the hon. Gentleman appears to have in his. The bottom line is that people want information. They are being encouraged to switch between energy suppliers, but to do that they need well-presented information—I accept that it must be accessibly presented. I have no doubt that our constituents could perfectly well understand information on corporation tax paid and fuel mix, by which I mean the amount from fossil fuels and renewables.
Many other people want to speak, so I will end my comments there. I simply say to the Minister that the existing fuel mix disclosure obligation is not enough. We need more information, including trajectories, and it should cover more than one year and be properly comparable between different energy companies.
Chris Williamson (Derby North) (Lab): I rise to speak in support of amendments 87 (a), (b), (c), (d), (e) and (f). I thank my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), the shadow Minister, for his kind remarks and for his support, in principle at least, for the sentiments expressed in my amendments.
I am pleased that the Minister said that the Government were committed to tackling fuel poverty, but actions speak louder than words, and if the Government are serious about it, they need to do a lot better than they have done so far and a lot better than the measures in the Bill. The 29% increase in excess winter deaths in this country is a scandal. As the hon. Member for Brighton, Pavilion (Caroline Lucas) said, this is not the coldest climate or one of the poorest nations on the planet, yet people are dying because their homes are too cold. That cannot be acceptable. That is why we need to place on the Government a clear and unambiguous obligation to eradicate fuel poverty.
I am not the only one critical of the Government’s record. Their own fuel poverty advisory group issued a press release recently stating that the Government were failing the vulnerable as winter deaths were rising, and the chair of the group said:
“No one should be dying because they cannot afford to heat their home.”
“Urgent action is needed now to prevent a repeat of this morally unforgiveable level of excess winter deaths.”
He is absolutely right that there is a moral imperative, and the Government seem to be failing dismally.
Indeed, not only are the Government failing, but in my view their response has been pretty shameful. They have changed the definition of fuel poverty, which at a stroke has taken a couple of million people out of that
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category. That reminds me a little of the 1980s, when the previous Conservative Government used to fiddle with the unemployment statistics in order to reduce the numbers. The Government have cut the funding to tackle fuel poverty and capitulated to the big six energy companies. There will be no energy price freeze under this Government, just £50 back, so energy bills will go up for everybody across the country—just not by as much as they might have otherwise. It is a bit like stealing someone’s shoes, giving them back the laces and then telling them to rejoice. On top of that, this Government have scrapped the Warm Front scheme, cut the winter fuel payment and mangled the energy company obligation.
Passing the Bill as it stands, without a clear and unambiguous commitment to eradicate fuel poverty, is a bit like passing a death sentence on thousands of people who are living in cold homes across our country. That is why I tabled the amendments that are before us: it is essential that we set meaningful targets for 2020 and 2030. I know it is a lot of money—bringing the housing stock up to energy performance certificate band B by 2030 for all low-income households is estimated to cost £47 billion—but the money, or a large proportion of it, is there. For example, something over £1 billion in the energy company obligation could be used for that purpose. Simply refocusing that ECO money would remove 70% of the fuel-poor from fuel poverty by 2020; I therefore think that should be done.
In addition, there are huge health benefits to tackling fuel poverty in bringing all low-income households up to EPC band B by 2030. The chief medical officer made it clear in her report that
“Every £1 spent keeping homes warm can save the NHS 42 pence in health costs.”
That has been estimated to be another £1 billion or so. It would be very sensible to reduce the costs on the national health and to allow that money to be refocused on paying for the required investment in tackling fuel poverty. If we can reduce the demand for energy, that could also reduce the cost of upgrading our energy infrastructure. We know already that £100 billion is being talked about to subsidise new nuclear energy in this country. We would not have to spend quite as much if we could manage down the demand for energy. There is also around £4 billion in carbon taxes that could be focused on tackling fuel poverty.
The other benefit that would flow from my proposal is that at least 130,000 jobs would be generated. Not only would that address a massive social need, given that there are more than 1 million unemployed young people in our country, but it would be a big boost to our economy. We also have our legal obligations, as set out in the Climate Change Act 2008. If we are serious about delivering on those obligations, it seems pretty clear that we need to do something about managing demand in our country and not simply look at creating additional capacity. If we are to reach that decarbonisation target, we must do more to reduce the demand for energy in the first place.
The Association for the Conservation of Energy estimates that investment in tackling cold homes would reduce household fuel bills by some £530 at today’s prices, but I am afraid that tackling fuel poverty and cold homes will not be achieved by the feeble efforts made by the Government so far.
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Mr Brian Binley (Northampton South) (Con): The hon. Gentleman is making a compelling case, and I appreciate the compassion with which he is making it. It is a good case to make. Does he agree, however, that the last Government did not act very wisely, or indeed very compassionately, in this regard? Fuel poverty increased each year when they were in office. While I accept the hon. Gentleman’s arguments, I should like to hear him accept that the last Government did not do too well either.
Chris Williamson: I think that the hon. Gentleman is getting his facts a little mangled. Fuel poverty diminished in many of the years during which Labour was in power between 1997 and 2010. [Interruption.] I am afraid that that is a fact. It is clear that the Labour Government’s investment in tackling fuel poverty through, for instance, the Warm Front scheme and the decent homes agenda had a huge impact. Yes, we could have done more, and perhaps we should have done more, but we did a damn sight more than the current Administration propose to do. Perhaps the hon. Gentleman will accept that fact, at least.
Mr Binley: I accept that I must apologise to the House for giving misleading figures. Fuel poverty increased every year from 2004 onwards, and those were the years when we were spending money like crazy. Does the hon. Gentleman accept that?
Chris Williamson: No, I do not.
The Minister of State, Department of Energy and Climate Change (Gregory Barker): Will the hon. Gentleman give way?
Chris Williamson: No. I will not take any more interventions, because I know that others want to speak in this important debate.
Chris Williamson: No. Others wish to speak.
This issue will not go away; it will run and run. The fact that people are dying in our country because they cannot afford to heat their homes properly is a stain on our national character. People should not be faced with the invidious choice between putting food on their tables and heating their homes adequately. We must do better than that, and, as one of the richest nations on the planet, we can do better than that.
I am grateful for the supportive comments of my hon. Friend the Member for Stalybridge and Hyde. I hope that Labour Front Benchers will look carefully at the amendments, and that, when we form the Government following the next general election, our programme will include meaningful targets which can have a real impact, enabling us to end the absolute scandal of people dying in our country because they are living in cold homes.
Mr Weir: I had not intended to say much, but the concerted attack on the Scottish Government by both Front Benches encouraged me to rise to oppose Lords amendment 54.
The purpose of the amendment, as the Minister briefly told us, is to close the renewables obligation throughout Great Britain. That is important, because until now the Scottish Government have been able to
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operate it distinctly from the renewables obligation in England and Wales, and have indeed used it in some different ways.
The closure of the renewables obligation and, in particular, the time scale were debated at some length in Committee, and I do not intend to repeat all that was said at that stage. However, the Minister said that the Scottish Government had full knowledge of the date when the Government intended to close the renewables obligation. I am sure that that is true, but the Government did not have the power to force the closure in Scotland, because it was a power that lay with the Scottish Government. Now the Government have introduced an amendment in the other place—in an unelected Chamber—to change the law and remove a power from the Scottish Parliament.
Successive Scottish Governments have used their devolved powers to advance renewables generation across Scotland, and the removal of that discretion has caused concern, particularly as there has been no prior consultation with the Scottish Government about its removal or about the introduction of this provision, especially at a time when the Scottish Government are conducting a live consultation on the closure of the renewables obligation. The Scottish Government have also used the renewables obligation to provide greater support for hydro schemes and higher renewables obligation certificate bands for floating offshore wind turbines.
4.30 pm
I recognise that the Secretary of State has today published more details of the contract for difference strike prices, which include greater support for hydro and increased strike prices for offshore wind. That is welcome, but it is unclear whether there will be increased support for floating offshore wind in particular. Will the Minister clarify that point? I also note that the Minister has proposed a consultation on the renewables obligation grace periods, but it seems to propose only limited grace periods. This is particularly important in the Scottish context in relation to floating wind turbines. They are important in the Scottish sector because they operate in much deeper waters than the traditional offshore turbines that are fixed to the sea bed. There is a strong possibility that it will be necessary to do this differently in regard to the RO grace periods, but all those powers have been taken away.
It is striking that when the matter was previously discussed, this Government said that no new law was needed to close the renewables obligation. Suddenly, however, when the Bill got to the House of Lords, it was decided that it was necessary. Call me a cynic, but it seems to me that the Government, having found out that they could not implement this measure because the power already lay with the Scottish Government, have slipped this provision in through the other place. That is unacceptable. They are taking away a power that the Scottish Parliament and Government had, and they are doing it by the back door. We had not even discussed it in this House; it has been proposed in the other place. I oppose Lords amendment 54, and given the chance, I would like to press it to a vote.
Joan Walley (Stoke-on-Trent North) (Lab):
I want to try to put this matter into context. In my constituency, 6,110 households are in fuel poverty. The Lords amendment
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would drastically change the definition of fuel poverty. At the moment, about 3.2 million people are classified as being in fuel poverty, but that figure would go down to about 2.7 million under the new definition. There is real concern about the proposed change. I am also concerned about the change in the Government’s ambition, which was previously to eradicate fuel poverty and now appears to be merely to address it. That is no longer a strong commitment. The Minister will have to do an enormous amount if he is to convince the House that fuel poverty is really going to be addressed.
This is a cross-cutting issue. It is not just about what is going on in the Department of Energy and Climate Change; it is also about the cost to the health service and the implications for skills and employment. There are now 7,000 fewer people in the construction industry working on insulation than there were in December 2012 and, in a double whammy, we have had the announcement this week that the energy company obligation is to be cut back. There are households that desperately need investment in their insulation, but that investment is now going to be cut back. To make matters worse, the goalposts have been moved and, instead of having to complete 100,000 measures in one year, that work can now be completed in four years. Connecting all that together, we can see that there will be huge reductions, making it more difficult to address fuel poverty precisely when we should be stepping up the measures to deal with it.
The Environmental Audit Committee examined the whole issue of energy subsidy and one of its conclusions was as follows:
“To aid transparency, if the Government introduces its proposed new measure of fuel poverty, it should also continue to publish statistics on the current metric for the remainder of this Parliament, alongside the new figures. In the Autumn Statement, the Government should make clear how any changes to green levies will change the amount that those in fuel poverty will have to pay, by how much and how soon.”
I would like the Minister to respond on that.
Dr Whitehead: I wish briefly to speak in support of the amendments to Lords amendment 87 tabled by my hon. Friend the Member for Derby North (Chris Williamson) and my Front-Bench colleagues on the issue of fuel poverty.
As someone who has sat through the whole process of this Bill, from the very start to the finish this afternoon, I can tell hon. Members that during its early passage we were promised amendments in another place that would address fuel poverty. Here they are in front of us, but they are very feeble. I say that because central to Lords amendment 87 is the word “addressing”. For all the rest of the material in the Lords amendments about a strategy and so on, the amendment concentrates on the various things that have to be done to bring about a position of
“addressing the situation of persons in England who live in fuel poverty.”
Let us suppose that my wife asked me whether I was going to cook the supper tonight and I said, “I will do rather better than that. I will address the issue of cooking the supper tonight. I will have a number of recipe books at the ready and I will produce a strategy
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for cooking the supper. I will have some vegetables, which will also be ready to address the strategy of cooking the supper.” She would probably conclude that we would be having a takeaway this evening. That shows the central problem with Lords amendment 87: it would not ensure, whether in relation to the previous definition or the Hills definition of fuel poverty, that there will be a strategy in the future to bring about changes that move towards the eradication of fuel poverty.
The amendments to the Lords amendment 87 would simply replace that lack; they would put in targets to ensure that we can address the eradication of fuel poverty through a requirement on Government to act over the next period, rather than suggesting that they may or may not act, depending on how they wish to proceed. Let us not forget that this Bill, when enacted, will bind not only this Government, whatever their intentions, but future Governments on what they need to do about fuel poverty.
One central point about the amendments to Lords amendment 87 is that they make an explicit link between the imperative of moving forward on energy efficiency and the imperative to eradicate fuel poverty. We know that through radical measures to improve the energy efficiency of our homes, we undertake radical measures to eradicate fuel poverty, because of the congruence between people living in fuel poverty and people living in the least insulated homes in our country. It is a singular fact that the price of energy in this country is by no means the highest in Europe, but the bills we pay are among the highest in Europe, simply because of the overall energy inefficiency of our homes. Setting targets and underpinning them with an explicit assault on fuel poverty over the period is a win-win in terms of the move towards greater energy efficiency in our homes, the investment that that requires and the attack on fuel poverty that results.
If the Government are, as they state, serious about continuing to make an assault on fuel poverty, they have to do better than simply produce amendments that talk about “addressing” a position. The amendments to the Lords amendment seek to do better, and I hope that the House will support them this afternoon.
Michael Fallon: With the leave of the House, let me reply briefly to the points made in the debate. The hon. Member for Brighton, Pavilion (Caroline Lucas) and I disagree about the amount of information that should be put in Bills. She wants corporation tax and more about the fuel mix. Let us see what Ofgem comes up with in its search for greater transparency and then perhaps we can debate the matter again.
The hon. Member for Angus (Mr Weir), who is still in his place, suggested that we were trying to do something against the Scottish Government by the back door. I do not think that taking primary legislation can be characterised as doing something by the back door in whichever House it is introduced; it is right there through the front door.
Let me answer the points that the hon. Gentleman made. First, he seemed to suggest that the Government and the House had no right to close the renewables obligation for Scotland. Yes, we do have that right. The need to close it to new capacity has arisen due to the electricity market reform programme, which is a
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fundamental change to our policy for supporting renewables electricity generation, and electricity is a reserved matter under the Scotland Act 1998.
The hon. Gentleman asked me specifically about the grace period. We consulted on the grace periods to be offered at the point of RO closure. That consultation closed on 28 November, and our response will be published early next year and we will set out the detailed arrangements.
Mr Weir: I understand what the Minister is saying, but will he not accept that under the renewables obligation, the Scottish Government had discretions over how to operate it in Scotland? Until this amendment was tabled, there was nothing to say that the Minister intended to change the law on this particular point.
Michael Fallon: We have made our intention absolutely clear that the renewables obligation was going to be closed by March 2017. That has been made clear to the Scottish Government by officials and Ministers in correspondence over many months now. It is only right that the renewables obligation should be closed evenly for England, Wales and Scotland. I do not accept the hon. Gentleman’s point.
The hon. Member for Derby North (Chris Williamson) suggested that some of those involved in the fuel poverty area were not supportive of our change. He quoted Derek Lickorish, the chairman of the fuel poverty advisory group, but let me now quote him. David Lickorish said:
“I very much welcome the announcement in Parliament today by the Secretary of State that will place an enduring requirement for this, and successive governments, to tackle fuel poverty beyond the current legislation.”
The hon. Gentleman also quoted the Association for the Conservation of Energy. Let me tell him what Mr Warren said:
“It has been our long-held view that fuel poverty-proofing our inefficient housing stock is the only permanent solution to the scourge of fuel poverty. We therefore welcome as a step in the right direction the Government’s stated intention to adopt a new target to improve the energy efficiency of the homes of the fuel poor.”
I just want to make it clear that those voluntary organisations that are the most concerned in this area welcome the change that we are making.
Chris Williamson: I think the Minister will find that the organisations to which he is referring took the view that something was better than nothing, because nothing was previously on offer. It is stretching the point to suggest that these organisations are endorsing the Government’s approach, because that is far from the truth.
Michael Fallon: The problem the hon. Gentleman has is that fuel poverty went up. It went up in the boom years when the economy was booming and public expenditure was increasing year after year. That has been the particular problem with his definition.
4.45 pm
Let me come briefly to the heart of the issue and the problem with amendment (g). It calls again for the eradication of fuel poverty and the independent review by Professor Hills made it clear that eradication is no longer the right approach. By focusing on energy efficiency, which is what we intend the target to do, we can make a
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real and lasting difference to people’s bills. We have not yet made final decisions on the date of the target, but we will make proposals to do so that will be subject to full parliamentary debate.
The aim across the House is exactly the same. We want to reduce the extent to which people are suffering the problem of fuel poverty. The new definition is relative. The number of households in fuel poverty is unlikely to change significantly from year to year although the depth of the problem, as measured by the fuel poverty gap, will. We agree with Professor Hills that this is the right way to measure the problem and a more accurate one. As standards improve, a relative measure will also ensure that the fuel-poor are not left behind. Given that, we think the best way to make progress is to improve the energy efficiency of people’s homes, as that will make a lasting difference to those struggling with their energy bills. We have therefore suggested that the target should be set on that basis. A reduction in the number of persons implies an absolute definition, which is not what we have proposed. However, we will continue to publish numbers setting out the headcount and the depth of the problem as well as progress against the target in our annual fuel poverty statistics report. For those reasons, if the Opposition choose to press amendment (g) to a vote, I urge the House to reject it.
Madam Deputy Speaker (Mrs Eleanor Laing): With the leave of the House, we shall take amendments 2 to 86 together.
Madam Deputy Speaker: We will take amendments 2 to 53.
Lords amendments 2 to 53 agreed to.
Madam Deputy Speaker: The question is that the House agrees with the Lords in their amendment 54. As many as are of that opinion say Aye.
Madam Deputy Speaker: As many as are of that opinion say No.
Madam Deputy Speaker: The Ayes have it.
Lords amendments 55 to 86 agreed to.
Fuel poverty
Amendment (g) proposed to Lords amendment 87.—(Jonathan Reynolds.)
Question put, That the amendment be made.
The House divided:
Ayes 226, Noes 311.
Division No. 152]
[
4.48 pm
AYES
Abbott, Ms Diane
Abrahams, Debbie
Ainsworth, rh Mr Bob
Alexander, rh Mr Douglas
Alexander, Heidi
Ali, Rushanara
Anderson, Mr David
Ashworth, Jonathan
Austin, Ian
Bailey, Mr Adrian
Bain, Mr William
Balls, rh Ed
Banks, Gordon
Beckett, rh Margaret
Begg, Dame Anne
Benn, rh Hilary
Benton, Mr Joe
Berger, Luciana
Betts, Mr Clive
Blackman-Woods, Roberta
Blomfield, Paul
Blunkett, rh Mr David
Bradshaw, rh Mr Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr Nicholas
Brown, Mr Russell
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burnham, rh Andy
Campbell, Mr Alan
Campbell, Mr Ronnie
Caton, Martin
Champion, Sarah
Chapman, Jenny
Clark, Katy
Clarke, rh Mr Tom
Clwyd, rh Ann
Coffey, Ann
Cooper, Rosie
Cooper, rh Yvette
Crausby, Mr David
Creagh, Mary
Creasy, Stella
Cruddas, Jon
Cryer, John
Cunningham, Alex
Cunningham, Mr Jim
Cunningham, Sir Tony
Curran, Margaret
Dakin, Nic
Danczuk, Simon
Darling, rh Mr Alistair
David, Wayne
Davidson, Mr Ian
Davies, Geraint
De Piero, Gloria
Dobbin, Jim
Dobson, rh Frank
Docherty, Thomas
Dodds, rh Mr Nigel
Doran, Mr Frank
Doughty, Stephen
Dowd, Jim
Doyle, Gemma
Dromey, Jack
Dugher, Michael
Eagle, Ms Angela
Eagle, Maria
Edwards, Jonathan
Efford, Clive
Elliott, Julie
Ellman, Mrs Louise
Esterson, Bill
Evans, Chris
Farrelly, Paul
Field, rh Mr Frank
Fitzpatrick, Jim
Flello, Robert
Flint, rh Caroline
Flynn, Paul
Fovargue, Yvonne
Francis, Dr Hywel
Galloway, George
Gapes, Mike
Gardiner, Barry
Gilmore, Sheila
Glass, Pat
Glindon, Mrs Mary
Godsiff, Mr Roger
Goggins, rh Paul
Goodman, Helen
Greatrex, Tom
Green, Kate
Greenwood, Lilian
Gwynne, Andrew
Hain, rh Mr Peter
Hamilton, Mr David
Hamilton, Fabian
Hanson, rh Mr David
Harris, Mr Tom
Havard, Mr Dai
Healey, rh John
Hendrick, Mark
Hepburn, Mr Stephen
Hermon, Lady
Hillier, Meg
Hilling, Julie
Hodge, rh Margaret
Hodgson, Mrs Sharon
Hoey, Kate
Hopkins, Kelvin
Howarth, rh Mr George
Irranca-Davies, Huw
Jackson, Glenda
Jamieson, Cathy
Jarvis, Dan
Johnson, rh Alan
Johnson, Diana
Jones, Graham
Kaufman, rh Sir Gerald
Keeley, Barbara
Kendall, Liz
Khan, rh Sadiq
Lammy, rh Mr David
Lavery, Ian
Lazarowicz, Mark
Lewell-Buck, Mrs Emma
Llwyd, rh Mr Elfyn
Love, Mr Andrew
Lucas, Caroline
Lucas, Ian
Mactaggart, Fiona
Mahmood, Mr Khalid
Mahmood, Shabana
Malhotra, Seema
Mann, John
Marsden, Mr Gordon
McCabe, Steve
McCarthy, Kerry
McClymont, Gregg
McDonagh, Siobhain
McDonald, Andy
McDonnell, Dr Alasdair
McDonnell, John
McFadden, rh Mr Pat
McGovern, Alison
McGovern, Jim
McGuire, rh Mrs Anne
McKechin, Ann
McKenzie, Mr Iain
McKinnell, Catherine
Meacher, rh Mr Michael
Mearns, Ian
Miller, Andrew
Moon, Mrs Madeleine
Morden, Jessica
Morrice, Graeme
(Livingston)
Morris, Grahame M.
(Easington)
Mudie, Mr George
Munn, Meg
Murphy, rh Paul
Murray, Ian
Nandy, Lisa
Nash, Pamela
O'Donnell, Fiona
Owen, Albert
Pearce, Teresa
Perkins, Toby
Phillipson, Bridget
Pound, Stephen
Powell, Lucy
Qureshi, Yasmin
Raynsford, rh Mr Nick
Reed, Mr Jamie
Reed, Mr Steve
Reeves, Rachel
Reynolds, Emma
Reynolds, Jonathan
Robertson, John
Robinson, Mr Geoffrey
Rotheram, Steve
Roy, Mr Frank
Roy, Lindsay
Ruane, Chris
Ruddock, rh Dame Joan
Sarwar, Anas
Sawford, Andy
Seabeck, Alison
Sharma, Mr Virendra
Sheerman, Mr Barry
Sheridan, Jim
Shuker, Gavin
Skinner, Mr Dennis
Slaughter, Mr Andy
Smith, rh Mr Andrew
Smith, Angela
Smith, Nick
Smith, Owen
Spellar, rh Mr John
Stuart, Ms Gisela
Sutcliffe, Mr Gerry
Tami, Mark
Thornberry, Emily
Timms, rh Stephen
Trickett, Jon
Turner, Karl
Twigg, Derek
Twigg, Stephen
Umunna, Mr Chuka
Vaz, Valerie
Walley, Joan
Watson, Mr Tom
Watts, Mr Dave
Whitehead, Dr Alan
Williams, Hywel
Williamson, Chris
Wilson, Phil
Wilson, Sammy
Winnick, Mr David
Winterton, rh Ms Rosie
Wood, Mike
Woodcock, John
Wright, David
Wright, Mr Iain
Tellers for the Ayes:
Susan Elan Jones
and
Tom Blenkinsop
NOES
Adams, Nigel
Afriyie, Adam
Aldous, Peter
Amess, Mr David
Andrew, Stuart
Arbuthnot, rh Mr James
Bacon, Mr Richard
Baker, Norman
Baker, Steve
Baldry, Sir Tony
Baldwin, Harriett
Barclay, Stephen
Barker, rh Gregory
Baron, Mr John
Barwell, Gavin
Bebb, Guto
Beith, rh Sir Alan
Bellingham, Mr Henry
Benyon, Richard
Beresford, Sir Paul
Berry, Jake
Bingham, Andrew
Binley, Mr Brian
Birtwistle, Gordon
Blackman, Bob
Blackwood, Nicola
Boles, Nick
Bone, Mr Peter
Bottomley, Sir Peter
Bradley, Karen
Brady, Mr Graham
Brake, rh Tom
Bray, Angie
Brazier, Mr Julian
Bridgen, Andrew
Brine, Steve
Brokenshire, James
Brooke, Annette
Browne, Mr Jeremy
Bruce, Fiona
Bruce, rh Sir Malcolm
Buckland, Mr Robert
Burley, Mr Aidan
Burns, Conor
Burns, rh Mr Simon
Burrowes, Mr David
Burstow, rh Paul
Burt, rh Alistair
Burt, Lorely
Byles, Dan
Cable, rh Vince
Cairns, Alun
Campbell, rh Sir Menzies
Carmichael, rh Mr Alistair
Carmichael, Neil
Carswell, Mr Douglas
Cash, Mr William
Chishti, Rehman
Chope, Mr Christopher
Clarke, rh Mr Kenneth
Clifton-Brown, Geoffrey
Coffey, Dr Thérèse
Collins, Damian
Colvile, Oliver
Crabb, Stephen
Crockart, Mike
Crouch, Tracey
Davey, rh Mr Edward
Davies, David T. C.
(Monmouth)
Davies, Glyn
Davies, Philip
Davis, rh Mr David
de Bois, Nick
Dinenage, Caroline
Dorrell, rh Mr Stephen
Dorries, Nadine
Doyle-Price, Jackie
Drax, Richard
Duddridge, James
Duncan, rh Mr Alan
Duncan Smith, rh Mr Iain
Dunne, Mr Philip
Ellis, Michael
Ellison, Jane
Ellwood, Mr Tobias
Elphicke, Charlie
Eustice, George
Evans, Graham
Evans, Mr Nigel
Evennett, Mr David
Fabricant, Michael
Fallon, rh Michael
Featherstone, Lynne
Field, Mark
Foster, rh Mr Don
Fox, rh Dr Liam
Freeman, George
Freer, Mike
Fuller, Richard
Garnier, Sir Edward
Garnier, Mark
Gauke, Mr David
George, Andrew
Gibb, Mr Nick
Gilbert, Stephen
Glen, John
Goodwill, Mr Robert
Gove, rh Michael
Grant, Mrs Helen
Gray, Mr James
Grayling, rh Chris
Green, rh Damian
Greening, rh Justine
Grieve, rh Mr Dominic
Griffiths, Andrew
Gummer, Ben
Gyimah, Mr Sam
Halfon, Robert
Hames, Duncan
Hammond, rh Mr Philip
Hancock, Matthew
Hancock, Mr Mike
Hands, Greg
Harper, Mr Mark
Harrington, Richard
Harris, Rebecca
Hart, Simon
Harvey, Sir Nick
Haselhurst, rh Sir Alan
Hayes, rh Mr John
Heald, Oliver
Heath, Mr David
Heaton-Harris, Chris
Hemming, John
Henderson, Gordon
Hendry, Charles
Herbert, rh Nick
Hinds, Damian
Hoban, Mr Mark
Hollingbery, George
Hollobone, Mr Philip
Holloway, Mr Adam
Hopkins, Kris
Horwood, Martin
Howarth, Sir Gerald
Howell, John
Hughes, rh Simon
Hunter, Mark
Huppert, Dr Julian
Hurd, Mr Nick
Jackson, Mr Stewart
Javid, Sajid
Johnson, Gareth
Johnson, Joseph
Jones, Andrew
Jones, rh Mr David
Jones, Mr Marcus
Kelly, Chris
Kennedy, rh Mr Charles
Kirby, Simon
Knight, rh Sir Greg
Kwarteng, Kwasi
Lamb, Norman
Lancaster, Mark
Lansley, rh Mr Andrew
Latham, Pauline
Leadsom, Andrea
Lee, Dr Phillip
Leech, Mr John
Lefroy, Jeremy
Leslie, Charlotte
Letwin, rh Mr Oliver
Lewis, Brandon
Lewis, Dr Julian
Lloyd, Stephen
Lopresti, Jack
Loughton, Tim
Luff, Peter
Macleod, Mary
Main, Mrs Anne
Maude, rh Mr Francis
McCartney, Jason
McCartney, Karl
McIntosh, Miss Anne
McLoughlin, rh Mr Patrick
McPartland, Stephen
McVey, Esther
Menzies, Mark
Mercer, Patrick
Metcalfe, Stephen
Mills, Nigel
Milton, Anne
Mitchell, rh Mr Andrew
Moore, rh Michael
Morgan, Nicky
Morris, Anne Marie
Morris, David
Morris, James
Mosley, Stephen
Mowat, David
Mulholland, Greg
Mundell, rh David
Munt, Tessa
Murray, Sheryll
Murrison, Dr Andrew
Neill, Robert
Newmark, Mr Brooks
Newton, Sarah
Nokes, Caroline
Norman, Jesse
Nuttall, Mr David
O'Brien, rh Mr Stephen
Offord, Dr Matthew
Ollerenshaw, Eric
Opperman, Guy
Ottaway, rh Richard
Paice, rh Sir James
Parish, Neil
Patel, Priti
Pawsey, Mark
Penning, Mike
Penrose, John
Percy, Andrew
Phillips, Stephen
Pickles, rh Mr Eric
Pincher, Christopher
Poulter, Dr Daniel
Prisk, Mr Mark
Pritchard, Mark
Pugh, John
Raab, Mr Dominic
Randall, rh Sir John
Reckless, Mark
Redwood, rh Mr John
Rees-Mogg, Jacob
Reevell, Simon
Reid, Mr Alan
Robathan, rh Mr Andrew
Robertson, rh Hugh
Robertson, Mr Laurence
Rogerson, Dan
Rosindell, Andrew
Ruffley, Mr David
Rutley, David
Sandys, Laura
Scott, Mr Lee
Selous, Andrew
Shapps, rh Grant
Sharma, Alok
Shelbrooke, Alec
Simmonds, Mark
Skidmore, Chris
Smith, Chloe
Smith, Henry
Smith, Julian
Smith, Sir Robert
Soames, rh Nicholas
Soubry, Anna
Spencer, Mr Mark
Stanley, rh Sir John
Stevenson, John
Stewart, Bob
Stewart, Iain
Streeter, Mr Gary
Stride, Mel
Stuart, Mr Graham
Stunell, rh Sir Andrew
Sturdy, Julian
Swales, Ian
Swayne, rh Mr Desmond
Swinson, Jo
Syms, Mr Robert
Tapsell, rh Sir Peter
Teather, Sarah
Thornton, Mike
Thurso, John
Tomlinson, Justin
Tredinnick, David
Truss, Elizabeth
Turner, Mr Andrew
Tyrie, Mr Andrew
Uppal, Paul
Vaizey, Mr Edward
Vara, Mr Shailesh
Vickers, Martin
Villiers, rh Mrs Theresa
Walker, Mr Charles
Walker, Mr Robin
Wallace, Mr Ben
Walter, Mr Robert
Ward, Mr David
Watkinson, Dame Angela
Weatherley, Mike
Webb, Steve
Wharton, James
Wheeler, Heather
White, Chris
Whittaker, Craig
Whittingdale, Mr John
Wiggin, Bill
Williams, Mr Mark
Williams, Roger
Williams, Stephen
Williamson, Gavin
Willott, Jenny
Wilson, Mr Rob
Wollaston, Dr Sarah
Wright, Jeremy
Wright, Simon
Yeo, Mr Tim
Young, rh Sir George
Tellers for the Noes:
Claire Perry
and
Amber Rudd
Question accordingly negatived.
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4 Dec 2013 : Column 988
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4 Dec 2013 : Column 990
5.3 pm
More than three hours having elapsed since the commencement of proceedings on consideration of Lords amendments, the proceedings were interrupted (Programme Order, this day).
The Speaker put forthwith the Question necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).
Lords amendments 87 to 104 and 106 to 113 agreed to.
4 Dec 2013 : Column 991
Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up a Reason to be assigned to the Lords for disagreeing to their amendment 105;
That Karen Bradley, Michael Fallon, Stephen Gilbert, Tom Greatrex and Bridget Phillipson be members of the Committee;
That Michael Fallon be the Chair of the Committee;
That three be the quorum of the Committee.
That the Committee do withdraw immediately.—(Anne Milton.)
Committee to withdraw immediately; reasons to be reported and communicated to the Lords.
Mr Speaker: I have now to announce the results of the deferred Divisions. On the question relating to the draft European Union (Definition of Treaties)(Colombia and Peru Trade Agreement) Order 2013, the Ayes were 333 and the Noes were 61, so the Ayes have it. On the question relating to the draft Categories of Gaming Machine (Amendment ) Regulations 2014, the Ayes were 322 and the Noes were 231, so the Ayes have it.
[The Division listsare published at the end of today’s debates.]
Robert Flello (Stoke-on-Trent South) (Lab): On a point of order, Mr Speaker. Further to the announcement you have just made, I think that hon. Members should be aware, especially those who voted for the free trade agreement or abstained, that on Monday, two days ago, peasant farmer Jorge Eliecer Calderón Chiquillo was killed by the Colombian army. I hope that hon. Members will think about that.
Mr Speaker: I am grateful to the hon. Gentleman, who has made his point with, if I may say so, great succinctness.
Thomas Docherty (Dunfermline and West Fife) (Lab) On a point of order, Mr Speaker.
Mr Speaker: I hope that it is a point of order and that it is comparably succinct.
Thomas Docherty: Today’s Evening Standard reports that when Camp Bastion was attacked some 14 months ago, more than half the towers under British control were unmanned. The Secretary of State for Defence and the Chief of the Defence Staff told the Defence Committee just a couple of weeks ago that Britain had no responsibility for the attack. Has the Secretary of State indicated to you whether he wishes to update the House in the light of the very serious allegations in the Evening Standard today?
Mr Speaker: No. I am grateful to the hon. Gentleman for his point of order nevertheless.
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Opposition Day
[Un-allotted Half Day]
Business Rates
Mr Speaker: I have selected the amendment in the name of the Prime Minister.
5.6 pm
Toby Perkins (Chesterfield) (Lab): I beg to move,
That this House recognises that the cost-of-living crisis is affecting businesses as well as families; notes that business rates have been rising and are due to increase further in April 2014, due to their link to the 3.2 per cent Retail Price Index increase in September 2013; and calls on the Government to take action to ease the burden of business rates on all sectors.
It is fitting that this debate should take place in the week leading up to small business Saturday, which has been so innovatively brought to the United Kingdom by my hon. Friend the Member for Streatham (Mr Umunna), and so graciously supported by the Prime Minister and the Secretary of State for Business, Innovation and Skills. It has become a truly cross-party initiative and a cross-Britain campaign. It says much about what we can achieve when the whole political and business world work together in support of Labour party ideas.
As the challengers of tired orthodoxies and the drivers of social mobility, small businesses share one nation Labour’s values completely. In fact, we could say that small businesses and one nation Labour share the same DNA. That is why my right hon. Friend the Leader of the Opposition said that one nation Labour would be the party of enterprise and small business when he became party leader back in 2010. Just as there is a lineage from owners of small businesses through to one nation Labour, the Conservative party, the party of old money and vested interests—it has an average age of 67, I am told—is inextricably linked to the defenders of the status quo. That is why Labour has led the running on the No. 1 cost of doing business issue, business rates, and why we have brought forward this debate.
Today is not the first time that Government policy has suddenly changed in the run-up to a Labour party Opposition day debate. Let us be honest—barely a day goes by when this Government’s policy does not change. The Chancellor’s pre-announcement today that business rates would go up by only 2% this year will be met with a mirthless smile by the thousands of small firms that told the Forum of Private Business, among others, that business rates is the No. 1 cost of doing business issue.
A measure of how detached the Government have become from the realities faced by businesses away from the City is that after three and a half years of small business rate relief, which is a valuable support for the very smallest, and with business rates still the No. 1 issue—13% of all firms say that the tax they pay on their business premises is greater than the rent, and many more find that it is pretty much the same—they announce that they are locking in that unfairness by capping rates at 2%. It is absolutely pathetic. Only the Government, who tried to sell an extra £70 on people’s energy bills as a cut, could think that a 2% rise in business rates is a cause for celebration—they could not be more out of touch.
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Some of the Government’s policies seem to be dreamed up at a moment’s notice, but the announcement on business rates comes 71 days after my right hon. Friend announced the action that Labour will take on business rates. It is not even a rapid rebuttal. After all the speculation, it is no wonder that businesses are asking whether this is really it. We know that the Government are useless on this issue, so let us talk about the alternative—Labour’s proposal for real action.
We propose not a reduced increase, but a reduction of £410 a year on average for the 1.5 million businesses that have a rateable value of below £50,000. That will be followed by frozen rates in the year after that.
Sammy Wilson (East Antrim) (DUP): This is an important issue. I accept the hon. Gentleman’s point that for many businesses, their rates are higher than their rent. However, in Northern Ireland, we have frozen rates for the past seven years, given half of small businesses a 20% reduction in their rates and provided a 70% reduction in manufacturing rates, but still some businesses are under pressure. Rates are only one aspect of the problems that face businesses. We need a much more comprehensive approach to deal with those problems.
Toby Perkins: I am grateful to the hon. Gentleman for that point. He is right that business rates are only one aspect of the problems, but they are clearly a very important aspect because businesses say that they are the No. 1 cost of doing business issue. He is right that we need to go further, but on that basis, this pitiful move by the Government is very disappointing indeed.
Mary Macleod (Brentford and Isleworth) (Con): The hon. Gentleman has been to my constituency in west London. What would he do for businesses in London, because their business rates are high, but their rateable values are higher than the limit that he has set out?
Toby Perkins: That is an interesting point. I went to a newsagent in the hon. Lady’s constituency which certainly will not be paying business rates above the level that we have set. The vast majority of businesses will be below the £50,000 level. This policy is a significant step that will affect 1.5 million businesses. Every time we hear from Conservative Members, it is clear that the only voices in their ears are those of big business. They do not understand the reality of small businesses. That is coming across loud and clear once again today.
Even after today’s announcement, the bills this year will still go up by about £250, and that is when we are supposedly seeing action.
Seema Malhotra (Feltham and Heston) (Lab/Co-op): Will my hon. Friend give way?
Toby Perkins: I will give way to my hon. Friend, but I will not take too many interventions because I am conscious that a number of Members want to speak and I want them all to have the opportunity to do so.
Seema Malhotra: The British Retail Consortium has estimated that the business rate increase in April could mean that there is an increase of £240 million per annum, which could put more than 19,000 full-time jobs at risk. Does my hon. Friend share my concern that that will have a detrimental impact on retailers in our constituencies?
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Toby Perkins: Absolutely. The statement by the British Retail Consortium is incredibly powerful because its members are telling it every day how important this issue is. That is why it is important that we see serious action.
Nick de Bois (Enfield North) (Con): Will the hon. Gentleman give way?
Toby Perkins: I will make a little more progress, then I will let the hon. Gentleman come in.
British businesses will face a choice as we approach the next election between a Tory party that makes hollow gestures of this sort and a Labour Government who will offer them vital respite. Labour’s business rate cut is even more important than that; this is an important symbolic moment because a potential party of government is at last saying that enough is enough on business rates. That comes at a time when research by the British Council of Shopping Centres shows that Britain pays the highest rate of commercial property tax in the EU.
By contrast, we are set to have the lowest corporation tax in the G20 by 2015. Labour understands the importance of a competitive corporation tax rate. It might interest Conservative Members to learn that the biggest increase in corporation tax in the past 40 years was introduced by—I cannot hear the correct answer—Edward Heath in 1973. [Interruption.] It is true. In fact, no Labour leader has increased the main rate of corporation tax since then. For comparison, at the zenith of Thatcherism, in 1987, the main rate of corporation tax was 35%. The big cuts under the Labour Government saw it fall to 28% under my right hon. Friend the Member for Edinburgh South West (Mr Darling).
Mr Brian Binley (Northampton South) (Con): Having been inspired by Margaret Thatcher to start two businesses, and having seen those businesses grow to now having almost 300 employees, but having suffered massively under a Labour Government, may I tell the hon. Gentleman that small business does understand what Labour does and knows what happens when we have a Labour Government? Things become much more difficult, and it becomes much harder to survive.
Toby Perkins: That is one viewpoint, but that of someone who has not seen an opinion poll recently, I think. Let us not hear anything from Conservative Members to suggest that Labour is the party of corporation tax rises, as history tells us that that is not the case.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): It is also worth reminding the Conservative party that it invented VAT, which has increased under every Tory Government since. No Labour Government have ever increased VAT. We also have to understand that since 2011, investment in small and medium-sized enterprises has decreased by £30 billion.
Toby Perkins: My hon. Friend makes an incredibly important point. He will remember, as I do, the Liberal Democrats’ posters and the Conservatives’ promises that there would be no VAT increases. He might well remember that the Chancellor, when he was shadow Chancellor, claimed that Labour would increase VAT and that it would be a bomb waiting to go off under the recovery. Of course, the Government then introduced the VAT rise before there was any kind of recovery, which is one reason why we have had three wasted years.
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Yasmin Qureshi (Bolton South East) (Lab): Is my hon. Friend aware that a recent business survey by the Forum of Private Business found that action on business rates was small companies’ No. 1 demand, and that John Allan, the chairman of the Federation of Small Businesses, has welcomed Labour’s consistent argument and demand for a freeze on business rates?
Toby Perkins: That is an incredibly important point. When Members take interventions, we often worry that it will add to the length of our contributions, but when they include things that we were about to say, it saves us all a bit of time. I am grateful to my hon. Friend for that point.
Toby Perkins: I am going to make a bit more progress. A large number of Members wish to speak, which makes it clear how important the issue is.
Our proposal is not to increase corporation tax from the current rate but simply not to take forward the planned 2015 cut, instead using all the money planned for that to reduce the business rate burden.
The Government have tabled an amendment to the motion, the final line of which states that the House
“rejects the policy proposals from Her Majesty’s Opposition on rates which would involve increasing corporation tax on all firms”.
That is what Government Members will be asked to vote for. First, under our proposals the rate would still be lower than it is today. More importantly, it would alter the corporation tax rate only of businesses that make more than £300,000 of profit. Government Members might well think that every single firm earns more than that, but I can tell them that 80,000 businesses would be affected out of a total of 5 million in the UK. That is just over 1.5% of all the businesses in the UK, not “all firms” as the Government’s amendment states. If they think that 1.5% of firms is “all firms”, they are either incompetent or totally out of touch. I suspect that it is both.
Richard Fuller (Bedford) (Con): Will the hon. Gentleman give way?
Toby Perkins: For some reason, on the subject of incompetence, the hon. Gentleman wants to intervene.
Richard Fuller: I am extremely grateful for that nice introduction.
I draw the House’s attention to my registered interests. I am a director of a small technology business and of a manufacturing business. The Government are still dealing with the deficit that the hon. Gentleman’s party’s Government left, and money is therefore scarce. For every element of taxation that he wants to reduce, the money would have to be found from elsewhere. How would Labour’s proposal help technology and manufacturing businesses, which are surely what we need to secure growth in the economy, rather than retail?
Toby Perkins:
It is interesting the hon. Gentleman says that, because the point is that our business rate proposal was announced at the same time as we said how it would be paid for. It is the principle of ensuring that we do not make commitments unless it is clear how we will pay for it—in this case, the corporation tax cut is
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not being taken forward, and that will pay for the business rates. The Chancellor has just announced that he will not increase business rates, but I would be interested to hear from Government Members whether he will make it clear how that will be paid for. We have had numerous policies so far from this Government that seem to be just sticking it on the deficit.
Mr Clive Betts (Sheffield South East) (Lab): My hon. Friend has made an important point because as well as small businesses, local authorities are under real pressure. Can he assure the House that his proposals will not reduce by one penny the money going to local councils?
Toby Perkins: I absolutely give my hon. Friend that assurance. It is entirely costed and there will need to be a reworking of the Budget to ensure that local authorities do not miss out. The other important point is that, as my hon. Friend will be aware, the Government amendment refers to the fact that local authorities can reduce business rates if they want. The idea that we can give local authorities huge cuts and say, “Well, if you want to reduce business rates, you can”, bears no relationship to the reality of local authority finances in many areas.
Toby Perkins: I will crack on a bit and then I will happily take a few more interventions. I am conscious of the time.
Toby Perkins: Because he has been so persistent I will give the hon. Gentleman the chance to intervene and then I will crack on. I have a feeling we will now hear an intervention of considerable importance.
Nick de Bois: I am grateful for the hon. Gentleman’s introduction, but he might like to ask his constituents whether or not my intervention is important. He complains that councils do not have the money to offer rebate—which, incidentally, is subsidised up to 50% by councils for offering a discount—but his own council in Chesterfield has failed to collect £4 million in council tax. If it made a bit of effort, perhaps it could get some of that back to business rates.
Toby Perkins: That is a disgraceful point given the cost of living crisis facing many of our people who are desperately struggling. The idea that it is the council’s fault if it is struggling to raise money from people in my constituency is absolutely remarkable.
Toby Perkins: I will make progress because interventions are not taking us anywhere. Our policy is clear: to reduce the business rate bill for 1.5 million small firms and ask 80,000 larger firms to pay what is still historically low corporation tax, even if it is slightly higher than the Government propose. That choice says a lot about Her Majesty’s Opposition, and the fact the Government reject it says everything that people need to know about them and the kind of economy that they want Britain to have.
The Government seem to be sending the message that they welcome firms that move their books here, but not their staff. They are discouraging those who want to
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build, work, base themselves or run shops here—a tax haven for the few, not a balanced economy for the many. Encouraging speculation and discouraging production: that says it all about a Chancellor and Prime Minister who have ears only for one section of the business community, not the real-life heroes in shops, workshops, factories and building sites who make up the real economy that they appear to know so little about.
One business woman who attended our recent business consultation in Plymouth put it rather well. She said:
“I don’t mind paying tax on my profits, but what I do object to is when I am struggling to get by and the Government keep putting up the bills on my premises. Let me make some profit and I’ll gladly let the Government share a little of the wealth.”
I could not have put it better myself. That is the reality of what businesses out in the community are saying.
Caroline Lucas (Brighton, Pavilion) (Green): It is kind of the hon. Gentleman to give way and I support his motion, especially since vibrant and independent businesses in Brighton always tell me what a big challenge business rates are. Does he agree that since some of the smallest businesses are suffering the most, one thing the Chancellor could do tomorrow is increase the threshold for tapered relief to be funded—for example, from £12,000 to at least £15,000—so that more small businesses could be given some relief from those rates?
Toby Perkins: There are strong arguments in favour of increasing the threshold from £12,000 to £15,000 to help businesses, but the great thing about Labour’s policy is that it will benefit businesses right up to £50,000. Government Members do not think that that is relevant to businesses, but the reality of our economy is that it is very relevant indeed.
Recent studies by the Association of Convenience Stores, which has a huge army of owner-shopkeepers among its membership, underline the point and tell the full tale. Small shopkeepers are among the hardest-working people in our country. The majority work over 50 hours a week, often many more, and their shops are a vital part of towns and villages in every community across the country. Some 55% of its members say that their average earnings last year equated to less than the minimum wage, yet the average store has a rateable value of £14,000. So go and tell them that the Government are taking action—tell them that another 1% off the corporation tax rate for big business is more important than cutting their business rates nightmare.
Huw Irranca-Davies (Ogmore) (Lab): Does my hon. Friend agree that there is another way that we could help these small businesses, whether Travella, the outfitters shop on the square in Maesteg, or the Talgarth bakery? Taking action on business rates is one way—and imitation is the best form of flattery, I say, as the Government try to mimic, in a pale way, what we are doing. Another way is to freeze the energy costs, which would save those businesses around £5,000 on average.
Toby Perkins: Absolutely. My hon. Friend accurately predicts a future part of my speech, which I might none the less give Members the benefit of, as the facts on energy prices are worth repeating and this is an incredibly important point.
Not by accident, one-nation Labour is in touch with the issues that small firms are facing. We have gone out of our way to ensure that the voice of entrepreneurial
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Britain is not only heard, but spoken by Labour. Around 1,000 businesses attended Labour’s business reception this summer, and from Harlow in Essex to Stockton in Teesside, we have listened to thousands of firms of all sizes.
It is incredibly important to me as a former small business owner to be Labour’s small business shadow Minister. There is a wealth of private sector experience across the shadow business, innovation and skills team, but I am excited that Labour will fight the 2015 election with many more strong business voices standing for election in our colours. From internet entrepreneur Victoria Groulef in Reading West and educational solutions entrepreneur James Frith in Bury North to business owners such as Sophy Gardner in Gloucester and Emily Darlington in Milton Keynes, the face of Labour will reflect that enterprise spirit that embodies what one-nation Labour is all about.
Bill Esterson (Sefton Central) (Lab): As another former business owner, I can guarantee my hon. Friend that the Labour party really does understand that the face of business in this country has changed. That is why this debate is so important. Government Members do not seem to appreciate just how many more businesses there are these days compared with when the business rate regime was set up. [Interruption.] That is why this debate and my hon. Friend’s proposal are so important. [Interruption.] The challenges of online trading and the number of businesses mean that we have to address this crucial issue not just on the high street but for businesses as a whole.
Toby Perkins: That is a powerful point, and it is revealing that when my hon. Friend talks about the reality facing those small businesses he faces barracking from the Government Members. They do not understand the reality of businesses in our communities, and they make that clear every day.
Susan Elan Jones (Clwyd South) (Lab): I find it rather disheartening that Government Members seem to downplay retail. Will they also downplay village shops, which are closing probably at a faster rate than ever before? This measure from the Labour party will prove a real lifeline to them if we are elected to government.
Toby Perkins: That is a vital point. In rural communities, village shops are absolutely crucial, and as Members have just heard, research from the Association of Convenience Stores says that many of the people who serve us in those stores are literally living in poverty. That should serve to show Government Members the reality of what is happening.
There is an inconsistency at the heart of the Government’s approach. They believe that the market decides and they do not believe in the role of government. That is why they scrapped the regional development agencies, which delivered and had real scope and expertise. That is why they scrapped Business Link, which was a useful single point of contact, and left businesses in need of support to fend for themselves. I do not pretend that Business Link or the RDAs were perfect, but they needed reforming, not scrapping, and the void left in their place has been one of the causes of the three wasted years of flatlining that we have seen since 2010.
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Local enterprise partnerships have spent much of those three wasted years trying to make it clear what their purpose is, and the Government’s “mentors me” website has received four times more visits from firms offering to be experts than from people who need expertise. That says absolutely everything about how effective the “mentors me” website has been.
Mr Brooks Newmark (Braintree) (Con): I am interested in the hon. Gentleman’s analysis. If the country has been flatlining, can he explain why 400,000 new businesses have set up since 2010?
Toby Perkins: The important question is this: how many of those businesses have gone under? In every recession, large numbers of people are unable to find a job, and they go on to set up their own businesses. I set up a business under similar circumstances—desperation is a pretty decent motive for setting up a business. The reality is that we have had three years of a flatlining economy and difficult circumstances. The hon. Gentleman might not be able to understand that, but the people in my community certainly do.
Tom Blenkinsop: Is my hon. Friend aware of the comments made by Hans Redeker from Morgan Stanley? He said:
“the UK recovery will turn out to be little more than a sugar rush unless investment picks up… The investment-to-consumption ratio is very low at 16% and falling. It is 22% in the eurozone and 23% in the US.”
Would my hon. Friend call that a copper-bottomed recovery?
Toby Perkins: I certainly would not. My hon. Friend makes an important point about the scale of the recovery, which so far has been less than a third of that predicted by the Office for Budget Responsibility in 2010. The full extent of the failure of the Government’s policy is there for all to see.
Toby Perkins: I hope that the hon. Gentleman’s intervention is rather better than the one he made last time. I will give him one more chance.
Mr Newmark: I just want to help the hon. Gentleman. Not only did the International Monetary Fund establish that we have the fastest growth of any major economy, but we have created 400,000 jobs. If we have failed so much, why is it that we have created 1.1 million net new jobs?
Toby Perkins: Once again, we hear from Conservative Members who think that it is a success if people are in work but in poverty. I had someone in my constituency surgery just two weeks ago who is doing three of the jobs that have been created and he still cannot afford to pay the mortgage—that is the reality of the recovery that they are delivering. The hon. Gentleman might sit there and tell his constituents, “Don’t worry, trust me, I’ve seen the figures and everything is getting better,” but people look in their wallets at the end of the month and know that in 40 out of the past 41 months wages have gone up by less than the costs that they face. That is the reality of the recovery that his party is delivering.
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Lending to small firms has been a major problem since the banking crisis. Labour’s enterprise finance guarantee scheme made a difference, but the funding problem for small and medium-sized enterprises has become a crisis since 2010. Net lending has fallen in 24 of the past 30 months and SMEs still rank access to finance as a key business issue.
The Government are failing on the high street. They failed to give the Portas review serious backing and the local authority funding bombshell undermined the very organisations that Mary Portas envisioned would lead the small shop revolution. A cost of doing-business crisis is hitting British business, with 87% of firms reporting that energy costs have gone up in the past year and 83% of firms believing that the cost of doing business will be higher next year.
Andrew Gwynne (Denton and Reddish) (Lab): My hon. Friend is absolutely right to set out the problems faced by small businesses. I have spoken to small businesses in my constituency across Tameside and Stockport. Many of them say that business rates are a major worry, not least because transitional relief is set to end in April next year. Does he agree that one reason why setting our proposal at £50,000 is absolutely right is that it allows small businesses to grow without getting clobbered by a massive business rates hike?
Toby Perkins: My hon. Friend is absolutely right: there is a real disincentive for many small businesses to grow. His local authority has taken innovative action to ensure that procurement goes to local small businesses, and that is an example to councils everywhere.
As much as anything, the Government’s failure on living standards has hit the pound in consumers’ pockets and pushed many of our stores to the brink. Three wasted years of wages falling behind bills every month means more hardship for Britain’s firms. Confronted by a stubborn opinion poll deficit, the Chancellor is simply flailing around in the dark for Labour policies that he can ape. He is convincing no one. We led on energy prices, but under this Government, bills still go up. We led on payday lending, on which he now thinks we were right. We told him that his funding for lending scheme was overheating the southern property market and failing to get finance to small firms, and now it appears that he agrees; and on business rates, we said things had gone too far, and now he says, “Okay, but just a little bit further.” We know that he does not have the answers. In fact, he does not even understand the questions.
Geraint Davies (Swansea West) (Lab/Co-op): I am sure that my hon. Friend is aware that the growth now is driven completely by a combination of mortgages and consumer debt. That sort of bank lending is at its 2008 level, whereas business lending is 32% down, and in fact the share of small business has gone from 40% to 33%. That enormous collapse in funding for business is why productivity is down and wages are so low. We would change that, would we not?
Toby Perkins:
Absolutely, and that brings me nicely to my next point. It is not all doom and gloom, because we are only 18 months away from a Labour Government. There is a better way under Labour. We are not just proposing a symbolic change to the role of business
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rates, but confirming real help for firms that, as the British Chambers of Commerce rightly said today, still face a hike in business rates.
On energy prices, we will save the average business £5,000 a year. On access to finance, we propose real action with the introduction of a proper business bank and a network of regional banks, alongside support for challenger banks and peer-to-peer lending. On business support, we are working on a proposal that recognises the support that is needed to make the most of great British business ideas. On late payments, which take more than 2,000 firms to the wall each year, we will take robust action to expose firms that pay late and end the scourge of late payments; and we will use the huge power of Government spending to point the way towards a future in which small firms finally pick up their fair share of Government contracts.
As we head towards small business Saturday, small firms can rejoice: at last there is a party ready to form a Government who understand why small firms think that business rates are so important. We have a party that gets that we will not solve the access to finance issue by expecting the banks to do differently with the next pound we give them from what they did with the last. We have a party that realises that business support matters and knows that shops will close if the people in their communities have no money in their pockets. The party that gets it is Labour. That is why we are calling for real action on business rates; that is why we will take action on the cost of living crisis facing businesses; and that is why all Members should back our motion. I commend it to the House.
5.37 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis): I beg to move an amendment, to leave out from ‘House’ to end and add:
“acknowledges that this Government is taking decisive action to back business and make Britain’s economy work for everyone; notes that the Government has cut business rates, National Insurance and corporation tax for small firms despite the need to tackle the deficit left by the last Administration; observes that the value of small business rate relief has trebled since the general election and small business rate relief will be considered in the Autumn Statement; notes how the overall multiplier has been frozen in real terms; applauds the abolition of the unfair port taxes; welcomes the Localism Act which has made small business rate relief easier to claim and allows councils to introduce local discounts; notes with approval the rate relief in 24 enterprise zones; further welcomes the new empty rate relief for new build in contrast to the last Administration’s increases in empty rates; endorses the way in which local rate retention now gives councils new incentives to support local enterprise; and rejects the policy proposals from Her Majesty’s Opposition on rates which would involve increasing corporation tax on all firms, undermining British jobs and businesses.”
I congratulate the Opposition on securing today’s debate. It is fantastic to see that Labour finally has a policy on local government. Unfortunately, it is its only policy and it is not a very good one. It is all well and good calling for a cut in business rates, but strangely the motion does not mention that it would hike up business taxes to pay for it. As the British Chambers of Commerce has said:
“Labour must realise that you can’t rob Peter to pay Paul.”
The Institute of Directors has warned—the shadow Minister seemed to miss this point—that:
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“The main corporation tax rate is paid not only by multinational corporations and FTSE 100 companies but by medium sized companies and smaller firms... It’s a dangerous move for Labour to risk our business-friendly environment in this way.”
“I just think it’s divisive to take from one part of the business community to give to another... Whether you are small, medium or large you need to invest as a business and grow as a business and higher taxes don’t do that.”
Angie Bray (Ealing Central and Acton) (Con): Like many people here, I want us to help businesses with business rates where we can, but not by cancelling the reduction in corporation tax, which is Labour’s policy. Does my hon. Friend agree that that would be totally counter-productive, because it is so often the larger businesses that provide the work and contracts on which smaller businesses often depend?
Brandon Lewis: My hon. Friend makes an excellent point. All businesses can be liable for corporation tax, so it affects all businesses. Unlike the Labour party, we recognise that we have to look at the picture for business as a whole, not just bits in isolation.
With such a lukewarm response from business, the Labour party is still a long way from the heady days of its prawn cocktail offensive.
Tom Blenkinsop: In her question to the Minister, the hon. Member for Ealing Central and Acton (Angie Bray) effectively referred to a trickle-down form of economics, yet household savings in cash ISAs and deposits were actually down from October 2012 to 2013 by £23 billion, or £900 per household. What has happened is an absorption of capital from the bottom upwards. Those at the bottom have been used as a line of credit, not the big businesses.
Brandon Lewis: Bearing in mind that manufacturing is up, I think the hon. Gentleman misses the point that putting up corporation tax potentially hits every business that is successful. If he has worked through his economics, I assume that he would want those small businesses to be paying corporation tax because they are successful enough to become the big businesses of the future, rather than being penalised by a Labour Government. Businesses are the lifeblood of our economic recovery. This Government are cutting corporation tax to help businesses to invest and expand.
Toby Perkins: I am grateful to the Minister for giving way, but he has repeated the mistake made in the amendment, and he would not want to mislead the House. Our policy will not increase corporation tax for all businesses; it will increase it for 1.6% of businesses. Will he correct the record?
Brandon Lewis: Increasing corporation tax will affect all businesses, for the very reason that my hon. Friend the Member for Ealing Central and Acton (Angie Bray) has already outlined. The hon. Gentleman is kind of missing the point.
Mr Betts: I presume that the Minister is not ruling out business rates not increasing by the retail prices index next year. If so, will he tell the House where the Government might find the money to achieve a lower increase in business rates? Will it come from local councils, the Exchequer or somewhere else?
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Brandon Lewis: I thank the Chairman of the Select Committee on Communities and Local Government for his question; I am sure he will be here tomorrow to learn what the Chancellor has to say in the autumn statement.
Let us remember the context of this debate. Corporation tax was 28% under Labour; this Government are cutting it to 20%, the lowest rate in the G20. Labour’s plans for higher corporation tax would put jobs and investment at risk, but I appreciate that the Labour party has form on that.
Brandon Lewis: I will make a little progress and give way in a moment.
Let us look at Labour’s record and let us take, for example, the ports tax. The Labour Government imposed retrospective business rates on ports across England—unexpected bills that threatened to sink England’s export trade and destroy the country’s car industry. In an astonishing break from Cabinet collective responsibility, the then Home Secretary, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), wrote to the Secretary of State for Communities and Local Government in 2009 slamming the policy. He said, “These businesses are” being
“damaged by a government that on the one hand is looking for ways to help small businesses through the recession, whilst at the same time is imposing a completely unfair retrospective system that will destroy jobs and put these companies out of business”.
He had a point. If the hon. Member for Swansea West (Geraint Davies) still wants to intervene, I am sure he will want to agree.
Geraint Davies: Further to the point I made earlier, the cuts in funding to business are particularly acute among small businesses. Given that, should not the priority be not to cut corporation tax across the piece, but to focus our fire where it is most needed, among small businesses, rather than giving the cut to all the big giants, who have more strength to weather the storm?
Brandon Lewis: I am not quite sure what cuts to business the hon. Gentleman is talking about, but he is absolutely right about targeting. I agree with him about that, which is why I am so proud of what this Government have done with small business rate relief, to which I shall turn in a few moments.
No impact assessment was made of the ports tax, no consultation was undertaken and no concern was shown about the effect on the wider economy.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): What has this got to do with the debate?
Brandon Lewis: This debate is about business rates and the ports tax was a business rate. If the hon. Gentleman has a look at his own motion, perhaps he will appreciate what he is here for. The ports tax policy also contravened the Treasury’s own guidance on retrospective taxation. However, as proposed by both coalition parties before the general election, this Government have scrapped Labour’s ports tax, cutting business rates by £175 million and reversing the smash-and-grab on small businesses.
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Let me take another example: empty property rate relief. As Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) hiked up business rates by cutting back empty property rate relief, with no offsetting reduction. When was the stealth tax rise introduced? It was introduced at the very start of the economic downturn—precisely when businesses cannot find tenants for their empty properties. The Royal Institution of Chartered Surveyors slammed the change, saying it was
“purely a revenue raising exercise with no thought of the potential consequences”.
That is what we inherited from Labour, as well as the biggest deficit in our peacetime history. Unfortunately, we have not been able to reverse every Labour tax rise—I wish we could—but we have introduced new rate relief for empty new build property to help to kick-start development.
Let me raise another issue, which relates to my response to the hon. Member for Swansea West a few moments ago. I recognise that small business rate relief was introduced under the previous Administration, albeit funded by a higher multiplier on medium and large firms, but Labour made it as difficult as possible for small firms to claim, requiring reams of complex paperwork every year. In 2009, Labour Ministers blocked a Conservative-supported private Member’s Bill from the hon. Member for Mid Worcestershire (Peter Luff) that would have simplified the relief. This Government have changed that—the Localism Act 2011 made it far easier to claim—but we have gone further: with central Government funding, we have doubled business rate relief for small firms year on year, and an estimated 330 small firms are now paying no rates at all as a result.
Kate Green (Stretford and Urmston) (Lab): Businesses report to me that when they appeal against business rates, it takes a long time for their appeals to be dealt with. The delays are due to the poor performance of the Valuation Office Agency, and I hope to have an opportunity to say more about that later. I realise that this is not the Minister’s direct responsibility, but will he undertake to have conversations with his colleagues in the Treasury to ensure that the agency performs as it should?
Brandon Lewis: I am delighted to be able to tell the hon. Lady that we have managed to reduce those delays. I shall say more about that shortly.
The value of small business rate relief granted in England has trebled, from £330 million in the last year of the Labour Government to £900 million in the last year. I note that the extra rate relief, which is temporary, is scheduled to end next April, but the Chancellor will be reviewing all taxes as part of his autumn statement. As I said to the Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), we must wait and see what lies before us tomorrow.
We have done far more. We have capped business rate increases at the rate of inflation, with the result that there has been no real-terms increase in annual business rates. We have given councils new powers, via the Localism Act, to allow local business rate discounts to support, for example, local shops, community pubs, new business parks or vital local facilities. Under the local business rates retention scheme that was introduced in April, central Government now fund part of any discount that
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is granted. The discretionary discount is not just for Christmas; it can be applied at any given moment throughout the life of the current Parliament. Councils can do that now, with no complications, no pen-pushing, no bureaucracy, and no questions asked. It is real, targeted, localist tax relief that can be delivered by councils today.
Nick de Bois (Enfield North) (Con): Does the Minister agree that what we are saying is that councils must make choices, and should think about how they spend their money? Enfield council, for instance, should ask itself whether it should spend £100,000 on sending councillors to conferences with officials and a further £100,000 on magazines promoting its work, when that money—with Government support—could be translated into nearly £300,000 for rate relief in specialist areas?
Brandon Lewis: My hon. Friend has made an excellent point. I hope that the councillors in Enfield have heard what he said, and are thinking about what they can do. Council reserves have risen to a record level. Given £2 billion of uncollected council tax and £2 billion lost through fraud and error, there is an awful lot that councils can do to ensure that they have the right funding and make decisions that will benefit their communities by producing economic growth and jobs.
Some councils are already using the powers in the Localism Act that this Government introduced, although I agree with my hon. Friend that more should be encouraged to do so. Basildon council has supported a small computer repair shop which offers home visits to its elderly and less “tech-savvy” customers. That is a very good example of localism-focused help. Stockton is supporting new businesses, from cafes to retailers, filling empty shops in the town centre and attracting new businesses. Milton Keynes has helped the famous Stables theatre to maintain the substantial recruitment that it brings to the area.
The Localism Act has ensured that no new supplementary business rate can be imposed without a backing of local firms in a referendum. The supplementary rate introduced by the Labour Government allowed extra business rates to be imposed, in some cases, without the support of local businesses. We have brought in a democratic check on any new rates, just as we have on council tax rises.
We have also introduced 24 new enterprise zones across the country. Those zones benefit from a 100% business rate discount, worth up to £275,000 over five years for a firm moving into the zone. All business rate growth within a zone will be retained and shared by the local enterprise partnership area for at least 25 years to help to support local growth and investment. Under this Government, enterprise zones have generated £500 million in private investment, and they have already created 5,000 jobs.
The United Kingdom is becoming the No. 1 destination for expanding multinational companies. That worldwide ambition is feeding flourishing local economies from Newquay right up to the Tees valley. I declare my interest as the Member of Parliament for Great Yarmouth; our New Anglia enterprise zone is encouraging vast growth in the energy industry in the east coast region. We are rewarding councils for promoting local economic growth by allowing them to keep half the funds from
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locally raised business rates. It has been estimated that these reforms will increase economic growth by £10 billion over the next seven years.
As the hon. Member for Chesterfield (Toby Perkins) said, we have postponed the business rates revaluation in England until 2017, which will prevent 800,000 firms from facing double-digit hikes in their business rates bills. I know that surveyors have been quite grumpy about that. Let us remember that it is those surveyors who stand to lose money from charging firms for rate appeals. For the record, the Government will not benefit by a single penny.
Independent analysis by the Valuation Office Agency has shown that the 2015 revaluation would have meant soaring bills for the likes of pubs, petrol stations and food retail. That would have pushed up the cost of living for hard-working families: a more expensive shop, a more expensive tank of fuel and a more expensive pint. Falling rents would not necessarily have translated into falling business rates bills, as the multiplier would simply have gone up to compensate for lower rateable values. The winner of a 2015 revaluation would have been office space in central London. Across England, three times as many premises would have lost out as would have gained. Small firms would have been paying for tax breaks for bankers in London.
Simon Danczuk (Rochdale) (Lab): Does the Minister accept the analysis provided by Bill Grimsey’s alternative high street review, which shows—[Interruption.] Listen! It shows that Rochdale businesses will pay over £8 million more because the revaluation is not taking place.
Brandon Lewis: As I explained to Bill Grimsey when I met him a couple of weeks ago, I do not accept his premise or the way in which he has carried out his calculations. He has simply not allowed for the way in which the multiplier works.
The postponement of the revaluation will provide tax stability and certainty for businesses, as there will be no real-terms increase in business rates over the next five years. Labour Members often speak, as they have today, as though business rates never existed under Labour. Well, I ask Labour critics to bear in mind that the Labour-led Welsh Government have copied us and postponed the rates revaluation in Wales. In the words of Welsh Labour Ministers, this will ensure a more “stable business environment”. The Scottish Government have done the same.
The postponement of the 2015 rates revaluation has allowed the Valuation Office Agency to allocate more resources to clearing appeals. More than 641,000 appeals have been resolved since 1 April 2010, and the number of outstanding appeals has fallen in eight successive quarters. I recognise, however, that more needs to be done to speed up the rating appeals system that we inherited from the Labour Government. We also need to make it more transparent than it was under Labour. I can announce today that my Department will publish detailed proposals for consultation on that shortly.
Geraint Davies:
The Minister mentioned Wales. Is he aware that properties there that have been empty for 12 months will now get 50% rate relief, and that new-build
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business properties will pay no business rates for 18 months? Will he look at that in a positive light when considering regeneration?
Brandon Lewis: I am sure that people in Wales looked at the powers we gave local authorities here and thought that it is something they want to do in Wales. I say again that we are talking about something that local authorities already, under this Government, have the power to do.
This Government absolutely recognise that the wrecked economy we inherited means that businesses are facing challenging times. It has been our job, where possible, to ease pressure on businesses of all sizes, and to use their skills and expertise to drive our recovery and ensure an economy that is ripe for growth. Some 1 million private sector jobs have been created and the deficit is down by a third. Those are not just happy coincidences; they are achievements of this Government’s economic plan.
Huw Irranca-Davies: Would the hon. Gentleman care to pass judgment on whether an increase in corporation tax, particularly for multinationals, from 20%, where the Government are taking it, to 21% would make us globally uncompetitive? My reading is that a 21% rate would put us very much in the top league of the internationally competitive on corporation tax rates.
Brandon Lewis: Again, I simply do not agree with the hon. Gentleman that putting up taxes on businesses is a good thing for business—it simply is not.
Alison McGovern (Wirral South) (Lab): I find it difficult hearing Ministers constantly talking about 1 million new jobs. For the record the Minister should say how many of those jobs arise from different re-categorisation and how many of them involve zero-hours contracts?
Brandon Lewis: These jobs are very real; I believe that the figure is 1.4 million jobs under this Government. Places such as my Great Yarmouth constituency have some of the most deprived wards in the country, and I am delighted that its level of unemployment has fallen under this Government, having risen consecutively under the Labour Government, who deserted areas such as mine.
Hon. Members should also bear in mind that we have cut business rates, cut corporation tax and cut national insurance—those are all measures that help business grow, as is shown in the development of the 400,000 new businesses mentioned earlier.
Mary Macleod: My hon. Friend is right to mention all the many things this Government have done for business. Will he be willing to sit with me to talk about a full review of business rates, because the issue of business and taxation needs to be re-examined for this age?
Brandon Lewis: I thank my hon. Friend for her intervention. Obviously, the Treasury always keeps all taxes under review, and I am happy to meet her at any time.
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Mr Newmark: Will my hon. Friend join me in congratulating Braintree district council on using the savings it has made to put aside £100,000 to give concessions to small businesses that want to come to the town or fill empty shops?
Brandon Lewis: My hon. Friend makes an excellent point, and I look forward to visiting Braintree this weekend for small business Saturday. He gives a good example of an area that has used its powers to do the right thing for local businesses, embracing some of the work through its Portas pilot and even going further. I congratulate Braintree district council and look forward to seeing in practice the excellent work it has done to bring down car parking charges for the benefit of local residents.
Let us be clear: Labour would have ducked the tough decisions taken to tackle the budget deficit—even within local government, Labour still has £52 billion-worth of cuts that it has not outlined. All Labour offers is more borrowing, more spending and more debt. Its plans do not reduce; they redistribute, in a sleight of hand.
Toby Perkins: I am confused by what the hon. Gentleman is saying because it bears no relation to reality. He will be aware that our business rate proposal is entirely costed. A moment ago, he appeared to be giving the impression that business rates were not a problem. If they are not a problem, why are so many businesses saying that business rates are the No. 1 cost to business issue in the country at the moment?
Brandon Lewis: The hon. Gentleman is kind of missing the point. Despite what the Labour Government did to this country, our Government have trebled small business rate relief to help the very small businesses that need that targeted help. We have reduced national insurance costs and corporation tax costs, and that has led to the 1.4 million extra jobs, the 400,000 new businesses and the growth in the economy that we are seeing at the moment.
Labour’s plans do not reduce; they redistribute, using a sleight of hand. By raising business tax, the Opposition are punishing those who have pulled us out of the previous Government’s economic abyss. Labour’s promise of tax cuts in the motion would breach the Trade Descriptions Act—read the small print. What the Opposition give with one hand, they take away in corporation tax with another. Only this Government are taking the bold action to get our economy working for everyone, to create more jobs and turn Britain around. I urge the House to reject the Opposition’s motion, and I commend the Government amendment to the House.
Madam Deputy Speaker (Dawn Primarolo): Order. As a large number of Members wish to take part in this afternoon’s debate, there will be a six-minute time limit to start with on all contributions by Back-Bench Members. We will have to review the time limit during the course of the debate. It might be necessary to reduce it further.
6 pm
Mr Clive Betts (Sheffield South East) (Lab):
This is an important debate because business rates are clearly an important cost—and a rising percentage cost—for
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many businesses, particularly small businesses, in the country. Business rates have gone up faster than turnover during times of economic difficulty. They are important for local councils because they comprise more than 50% of their revenue. If the Minister had until the end of the debate to explain the whole system to us, he would still need more time for the details. There is the retention of rates by local authorities, the provision of resources to the Exchequer which are then redistributed to local authorities, the set aside that the Treasury can keep, and the safety nets and the levies that go on to authorities that are in different positions. It is an incredibly complicated system.
One welcome thing that the Minister mentioned is a review of the appeal system. It is completely unacceptable that it can take up to 18 months or longer for appeals to be held. First, for the businesses themselves, they do not know how they will be placed when they are waiting for their appeal to be determined. Secondly, for the local authorities, an appeal casts doubts over their income stream. One thing the Minister could do before the review is announced and then carried out is to ensure that next year the element of hold-back for local authorities is removed. Ministers could take on board any uncertainties about the valuations and how they will work out through the appeal system, rather than leaving the problem for the local authorities to bear.
Andy Sawford (Corby) (Lab/Co-op): My hon. Friend is raising an incredibly important point. There were 173,000 appeals this financial year still waiting to be dealt with at the Valuation Office Agency, and 170,000 at the Valuation Tribunal Service. The review should be very quick, otherwise businesses will go under.
Mr Betts: It has to be quick, and it will need more resources being put into it as well. The Minister cannot do this at nil cost. It will be interesting to see how this develops. Hopefully, as my hon. Friend says, it will develop very quickly.
In the longer term, we need a complete review of the business rates system. We need to look at the way in which valuations are carried out. The Local Government Association has called for that review, and I thoroughly support it. It should form part of a wider review of local government finance, and the Select Committee, which I chair, will now be carrying out a review of fiscal devolution to cities on the back of the London Finance Commission, which the Mayor of London has commissioned and which Labour and Tory London boroughs and the core cities have supported. I will not come to a view about whether its proposals are right, but it is interesting that there is now a call for a wider look at the whole basis of property tax in this country and the extent to which it can be devolved down to local authorities.
Were the Chancellor to make any changes tomorrow to business rates for next year—and we hope there will not be a commitment to increase business rates by RPI, as has been the case for the past few years—any reduction must not come at the expense of local councils, which are very hard pressed at this time of austerity and restraint on their spending. Any commitment must be made clear. We need to know the impact of lower business rates not just on councils as a whole but on each individual council in the country— I ask the
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Minister to put the details in the Library—once the levies and safety nets are taken into account. That must be made explicitly clear for their benefit.
Business rates are a real problem for firms up and down the country. The percentage of their turnover paid in business rates has increased, and that is putting real pressure on small businesses in particular. If the Government recognise that, and recognise the need for action, why are they so mealy-mouthed as to say, “No increase in line with RPI—we will simply reduce that increase to 2%”? If there is a problem, which the Chancellor might recognise tomorrow, why not go that bit further and at least freeze business rates or, even better, take up the suggestion of my hon. Friend the Member for Chesterfield (Toby Perkins) and cut them? If there is a problem, why not address it properly? If there is not, why go for a 2% increase? The Government have a fundamental question to answer on this issue.
The Government must also deal with the disproportionate impact of business rate increases. Firms in different parts of the country are suffering in different ways. In parts of the country where demand has not recovered, where growth has not increased and where there is poverty and deprivation, businesses are suffering more. A revaluation would have addressed precisely that.
Alison McGovern (Wirral South) (Lab): Does my hon. Friend agree that that gives the lie to the Government’s claim to have rebalanced the economy?
Mr Betts: Absolutely. The economy is not rebalanced and some areas are doing better than others. The areas that are doing less well have businesses that are struggling and that is why revaluation would have been important.
The Minister says that a revaluation would somehow affect businesses adversely. No, it would not. A revaluation should be a zero-sum game as far as businesses are concerned. The Minister said that there was no benefit to the Treasury. Every previous revaluation has had dampening put in to protect firms that are likely to see a significant increase in their rates. There has always been a net cost to the Treasury as a result of any revaluation, particularly when there are big changes—as there could well have been if a revaluation had been carried out. The cost of any revaluation would have been borne not by businesses but by the Treasury, and I suggest that that is why the Government did not go ahead with it in the end. It was another stealth saving by the Chancellor to try to ensure that they did not have to put in the costs of protecting firms from large increases. At the same time, of course, he has caused additional costs for firms that are struggling in the less prosperous parts of the country, which has been the real disadvantage of not going ahead with revaluation.
I will also be critical of the previous Labour Government, who did not go ahead with a revaluation of council tax. In the longer term, delaying valuations has had major disbenefits. There might be short-term advantages, as it does not cause problems for the Government in explaining to some people why their taxes have gone up, but in the medium and longer term it is always a disaster to put off revaluations, because when they are eventually handled they become even larger, more difficult to deal with and more difficult to explain. That is the simple reality.
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If we are thinking about the retail sector, we must consider the greater benefits that the postponement of revaluation allows for out-of-town shopping centres. When we consider revaluation and the whole system in future, we must consider the fact that the value of rates for out-of-town shopping centres, compared with those for smaller shops in the high street, is not fair at all. Were we to have a revaluation now, I would suggest that we took account of the fact that an increase in empty properties on the high street would likely see the valuation of shops there go down. If the planning system works as the Government intend and we have a town and city centre-first policy, the constraint on future out-of-town developments should put a premium on the existing developments and cause a relative increase in the rateable value of such properties. Postponing the revaluation has had a disadvantage for the high street and an advantage for out-of-town centres, and we should take account of that.
There are a lot of issues for the Government to consider. We need a longer term reform of business rates and to go back and consider revaluation, as it was not fair to postpone it. If there is a problem and we are to have some change to the business rates next year, let us make it a cut not—
Madam Deputy Speaker (Dawn Primarolo): Order.
6.8 pm
Mr David Ruffley (Bury St Edmunds) (Con): In 2008 and 2009, 500,000 businesses failed in the UK as a result as a result of disastrous economic policy management. One in 10 of those businesses failed in the east of England. The financial crash was particularly bad news for small businesses, because as we know small businesses are much more reliant on, and exposed to, direct bank lending as they do not have the same kind of access as large businesses to debt equity markets and other forms of sophisticated finance. They are under pressure.
In Bury St Edmunds, which over the past 10 years has been consistently rated as one of the most profitable county market towns in the east of England, there are still too many empty business premises, including in prime sites such as the corn exchange and the butter market. In Churchgate street in the historic town centre, two independent retailers of long standing, a shoe shop and a book shop, have had to move out because they can no longer bear the burden of rates. So there is a problem.
I praise the Minister, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), for setting out in what I thought was an extremely powerful and convincing speech exactly what the coalition Government have done over the past three years to support small business. It leads me to the conclusion that we can rightly claim to be the party of small business. The Chancellor, in particular, has done his bit. With the cut to 20p, we now have the most competitive rate of corporation tax in the whole G20. Also, let us not forget that the first £2,000 of an employer’s national insurance contributions have been wiped out. That is important because 450,000 small businesses now pay no employer NICs as a result of the Government’s action.
I want to focus on two things that I would like to see in the autumn statement that would allow us to go
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further and deliver more help to small businesses in the area of business rates. Let us not forget that small businesses, which I define as those with fewer than 50 employees, constitute 99% of all businesses in the UK and represent one third of private sector turnover.
I would first like to praise the extension of the small business rate relief discount in a targeted way from 50% to 100%. However, the problem is that it is due to expire next April. I will pray in aid the words of my hon. Friend the Minister, who has stated:
“Tax stability is vital to businesses looking to grow and help improve the economy.”—[Official Report, 18 October 2012; Vol. 551, c. 32WS.]
He is so right. Businesses do not want tax uncertainty. In tomorrow’s statement, I would like to see the SBRR not just extended for another year or two, but made permanent.
My second point relates to RPI uprating. Last September RPI was running at 3.2%. In Mid Suffolk, where my biggest town is Stowmarket, the full 3.2% whack would mean an increase of £216, and in Bury St Edmunds, where the local authority is St Edmundsbury borough council, the average business rate bill after reliefs is £12,865 and a full-whack increase of 3.2% would jack up business rates by £411, so we are not talking about inconsequential sums of money. If we cannot have a 0% increase, I hope that the CBI’s proposal of 2%, which has been costed at around £327 million, would go some way towards relieving the rates burden.
Time is short, so I will end my comments with one parochial example of a small retail business in Stowmarket, the second biggest town in my constituency. The business has a rateable value of £6,000. If action is not taken, the failure to extend the deadline for the SBRR, which it currently enjoys, beyond April next year or make it permanent would cost the business, with the 3.2% increase, an extra £1,430. If it is faced with the increase of a 3.2% uprating, plus no extension of the rate relief it currently enjoys, it will go under.
The Government deserve a big tick, because a lot has been done, but there is a lot more to do. I commend the measures we have taken so far. Let us hope that we see a bit more tomorrow.
6.14 pm
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): I thank my hon. Friends the Member for Chesterfield (Toby Perkins) and for Sheffield South East (Mr Betts) for their excellent speeches detailing a lot of the problems that are very familiar in my local area.
Like many colleagues, I am looking forward to small business Saturday on 7 December, when we will celebrate and support local small businesses on one of the busiest shopping days of the year. For the rest of the year, though, many of those businesses will be struggling because of inflation, with business rates increasing by an average of over £250 next April and the north-east seeing some of the steepest hikes outside London and the south-east. The average business rates bill in the north-east will increase by about £360, on top of an average increase of £1,500 since the 2010 general election. How do small businesses cope with these hikes? They face the tough choice of trying to pass on the increases to customers through higher prices, adding to the cost of living crisis, or absorbing the cost, squeezing their
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finances until they can no longer afford to stay in business. No wonder our high streets are littered with empty shops.
I would like to put on record my thanks to Redcar and Cleveland borough council, which bent over backwards in relation to the new SSI steelworks in Redcar. The council was owed to the tune of £20 million in rates and gave the company a lot of slack to make sure that we could keep steel production in Teesside—something very close to my heart. Having heard about that today, we also heard about job losses at the Lotte chemical site. In summer 2009, the former Labour Government, alongside One North East, the regional development agency, took the former company out of a position of administration and got a south Korean company called Lotte to come in and purchase it, and it got the polyethylene plant running again in April 2010. There are good examples from the past for the Government to look at, irrespective of which party was in power.
An important factor in my constituency—I raised this in a debate last week and the week before that—is female unemployment. Long-term female unemployment has risen by 144%, and that is having massive consequences on the high street. One element is weekly wages. Female average gross weekly earnings are down by £12.30 a week since the last general election, and that will have frightening effects on small businesses.
Alison McGovern: Does my hon. Friend agree that those statistics are all the more concerning when we consider that food price inflation has gone up by 18% since the crash?
Tom Blenkinsop: I keep coming back to that point time and again. This is not just about incomes but the availability of jobs and their levels of pay. As my hon. Friend the Member for Sheffield South East detailed, the number of jobs for women is limited, and that is particularly so in the north-east. In my area, the public sector, which was a large employer of females, has been haemorrhaging jobs, and 16% or 17% of workers are care workers, many of whom are women on zero-hours contracts. This has an effect on small businesses further down the supply line.
Every penny counts for smaller businesses who are constantly watching the bottom line, but when the worst comes to the worst—when a business is forced to close its doors for the last time—that leads directly to a decline in employment. Tackling soaring business rates would limit the number of shops closing, and this in turn would help to prevent unemployment rising. This Government set the business rates that so many are struggling with. At a time when the Government should be backing small business, they appear once again to be on the wrong side. Large companies will have already had about £10 billion in tax cuts by 2015. It is right that we should have a globally competitive corporation tax rate, and we have supported those tax cuts, but the next priority should be cutting business rates, supporting small and medium-sized businesses, and relieving the pressure on our high streets.
Small businesses are integral and, in many cases, long-standing institutions within our communities, but business rates keep going up and up. Our high streets and town centres need a blend of independent shops alongside bigger well-known retail stores. That mix is really important for a vibrant and thriving local economy.
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Justin Tomlinson (North Swindon) (Con): I completely agree about the importance of the high street. I am proud to be vice-chair of the all-party town centre group and the all-party retail group. One of the other big threats is internet sales—for example, an internet sports store may undercut traditional independent sports stores. What would the hon. Gentleman do in the business rates system to protect those outlets?
Tom Blenkinsop: In my area, going back to pre-1997 when the Major Government established the Teesside Development Corporation, we saw the birth of out-of-town shopping developments, which had a far more profound effect on creating new shopping habits in, for example, Stockton high street in my home town of Middlesbrough and in the market towns of east Cleveland. I take on board the hon. Gentleman’s comments: the situation is difficult. We need small businesses to absorb that new internet market, and rural broadband and other new, inventive technologies will be important for them in doing that.
This month the Forum of Private Business conducted a survey of its members on the cost of doing business, and the No. 1 demand of small firms was action to tackle the rising cost of business rates. Understandably, I am proud that my party is taking the lead where this Government are failing and that it is standing up for small business owners by announcing a cut in rates in 2015 and a freeze in 2016. That action could save small businesses such as pubs, shops and start-ups an average of nearly £450 over two years, while some firms could save £2,000.
It is worth reminding Government Members that VAT was a Tory invention and that every time a Tory Government come into power they increase it, while Labour never increases it, but decreases it. Air passenger duty is another Tory indirect tax, as is the fuel duty escalator of John Major’s Government. I repeat what I said last week: the Conservative party has an addiction to keep increasing indirect taxation on the individual and on business.
Unfortunately, 2015 will be too late for some businesses. The Government need to take action now, and tomorrow’s autumn statement seems the perfect opportunity to do so. Now more than ever small firms need our support. High streets are suffering due to pressure from high energy bills, rising business rates and a lack of bank lending. To get our economy growing at a respectable rate, we must support small businesses that have so much potential to deliver the jobs we need not only in the future, but right now in my constituency and high streets and town centres across the country.
6.21 pm
Andrew Griffiths (Burton) (Con): It probably will not surprise you to know, Madam Deputy Speaker, that I rise to talk about a specific type of small business, namely the pub. As chairman of the all-party beer group it is, of course, my role to promote and support the needs and aims of our brewing and pub industries. I think we all recognise that 80% of pubs in our constituencies are small businesses. On average, they employ 16 people. They are the lifeblood of our community—we meet there to socialise, have fun and hold public meetings—but they are also important drivers of the economy locally. They are important businesses in our communities.
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I am glad that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) is present, because he is both the pubs Minister and the Minister for the high street. I think that few in this House have done more than him to stand up for and represent our pubs and to understand the issues that affect them. He has been a fantastic advocate for the industry in other Departments. I think that this is the most pub-friendly Government for many years, but there is more to do, because our pubs, as small businesses, are struggling.
Pubs are important not just for our communities, but for our high streets, which are changing and adapting. I think the Minister could do three things to support and help these vital small businesses in our communities. Something we could all do for small business Saturday is support a small business by having a pint of British beer in our local pubs in our constituencies.
Yasmin Qureshi: Or an orange juice.
Andrew Griffiths: Or an orange juice, of course.
The first thing the Minister could do relates to small business rate relief, which my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) has spoken about. Small business rate relief was introduced in 2005 and is hugely important for pubs. It is a very good thing and was extended to 2013-14 by the Chancellor in the 2012 autumn statement. It offers 100% relief for small businesses and is worth £1,000 a year to pubs. For pubs that are struggling and trying to cope with changes in the economy, £1,000 a year is hugely important. Sixteen thousand pubs across the country benefit from small business rate relief and that is worth £27 million to the industry in total. The Minister could pick up the telephone to the Chancellor this evening to ensure that he listens not only to me but to all the hon. Members who have signed early-day motion 599. Let us extend small business rate relief for pubs in our constituencies to 2015, or permanently, as my hon. Friend the Member for Bury St Edmunds has suggested.
My second point is about discretionary rate relief. As the Minister will know, local authorities can offer it in relation to assets of community value, a fantastic thing brought in by this Government. Assisted by changes that came in earlier this year, local authorities can claim 50% of the discount back through the Treasury and the Department for Communities and Local Government. Will he do all he can to ensure that local authorities across the country take advantage of the scheme by offering it to their small businesses and helping pubs in their areas? I urge all right hon. and hon. Members to talk to their local authority about implementing the scheme.
My final point is about flexibility in relation to business rates. For commercial premises, business rates are assessed on square meterage, but for pubs, they are determined on turnover. Under previous legislation, if a pub’s turnover changed materially—“materially” is the important word—a concession could be offered. I urge the Minister to consider reintroducing such a provision to offer some relief to pubs that have a big change in turnover for the worse.
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Toby Perkins: The hon. Gentleman is making an important point about the significance of business rates for pubs. I am sure that he knows this from his perspective, but will he give us an idea of how many pubs have a rateable value of more than £50,000? I would think that there are very few, so virtually every pub would be able to drink to Labour’s business rate cut for all businesses below that £50,000 level. Will he support that policy for the sake of British pubs?
Andrew Griffiths: I am always prepared to listen to anything that might support the great British pub, but as the hon. Gentleman is from the party that introduced the hated beer duty escalator and the smoking ban, he needs to think long and hard about what he can do to support British pubs.
Damian Collins (Folkestone and Hythe) (Con): Does my hon. Friend agree that as Labour’s policy is barely worth more than £1 a day to businesses to which it will be offered, they would have to be pretty small beer indeed to get any value out of it?
Andrew Griffiths: I completely agree with my hon. Friend’s point. I also agree with those made by the hon. Member for Sheffield South East (Mr Betts) and, interestingly, by the hon. Member for Corby (Andy Sawford) on the speed of appeals. That issue is important because two thirds of pubs have appealed their business rates, and half of those decisions are still outstanding. Such delays can have a massive impact on small businesses that are really on a knife edge in terms of profitability and sustainability.
As I have said, the Minister is a passionate supporter of the great British pub and wants to lead a regeneration of our high streets, so will he take on board my three small points, pick up the phone to the Chancellor and do something to support our pubs?
6.28 pm
Alison McGovern (Wirral South) (Lab): I could talk for a long time about the Government’s economic policy, jobs and people’s incomes, and it would not surprise Government Members to know that I am not the biggest fan of their economic policy, but rather than do that today, I want to concentrate on small businesses in my constituency. Many of those businesses have worked incredibly hard to get through the past three years, and I feel that I owe it to them to stand up in the House and say a few words of support and congratulation, as well as to pass on some of the comments about business rates that they have made to me over recent weeks.
As I have mentioned, I am not a big fan of the Government’s economic policy, and I am not very keen on being in opposition—
Simon Kirby (Brighton, Kemptown) (Con): Get used to it.
Alison McGovern: I promise the hon. Gentleman that I will do everything in my power to make sure that I do not have much more of it.
It would not be good enough if I just came to the House and shouted my head off, although I may do so on occasion. Some of the most rewarding work that I have done as a Member of Parliament has been with
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businesses in my community, not least those in Bromborough village and Heswall, and as part of the New Ferry town team.
Bromborough in my constituency is the place where I grew up. It is a lovely place. Last Saturday, we had the Christmas event that is organised by the Bromborough village community association, which is led by local traders. Back in 2010, the village was becoming like a ghost town and shops were shutting left, right and centre. Local traders decided that up with that they would not put. They came together and worked with me to reshape the local parking arrangements and to organise market and community events that would bring life back into the village. They have been incredibly successful. They pre-empted small business Saturday by having their event last week. They deserve the biggest congratulations for what they have done.
Heswall has seen a lot of change in recent years. I have spent a long time listening to businesses talk about the problems that they have had with business rates and, more specifically, with appeals. I am interested to know more about the review of the appeals system that the Minister has set out. I have made representations before about that process and about the valuation office. I will work with businesses in Heswall to ensure that their views on appeals are known by the Minister.
When I met the Heswall and District Business Association recently, one of the traders asked me to relay their views to the Government. I am doing so today. They asked me to say that businesses in Heswall are fighting for their lives. I hope that the Minister has heard that. Small businesses out there, especially those in Heswall, have not had an easy few years, not least because of business rates. Immediate attention must be given to business rates generally and to the appeals system in particular.
New Ferry, which is just south of Birkenhead, had a tough time in the recession. I have chaired a town team that has sought to bring the community back together and to support New Ferry. It has recently had the excellent success of getting its Christmas lights up again. It is holding an event this Saturday for small business Saturday in which local traders are coming together just before Christmas to offer a 10% discount to people who shop in New Ferry. I would contrast the proactive attitude of those small businesses with the lackadaisical Chancellor, who said that he wanted to rebalance the British economy but has done the exact opposite.
Small businesses in my constituency have been clear in what they have said to me. Soccerloco Ltd said:
“The business rates system needs to be fundamentally reformed…this would play a small part in reviving the local economy”.
“The business rate relief has been a big help over the past few years.”
It said that that relief needs to continue to support small businesses, as my party has suggested. Finally, the award-winning Stuart Henry Kitchens, which is based in Bromborough, said:
“A rise in business rates will only force retailers like ourselves out of already expensive shops with higher rates into business parks which will kill the high street.”
I hope that anybody who does not think that our high streets are under enough pressure will listen to Stuart Henry Kitchens, because it knows what it is talking about.