Business Rates and the Recession
Opposition Day — [9th Allotted Day]
Peter Luff (Mid Worcestershire, Conservative)
I am glad that I gave way to my hon. Friend. She is absolutely right: small businesses are paying a very heavy price for the VAT reduction. It is doing them harm, not bringing them benefit. Even bigger members of the British Retail Consortium have complained about the bureaucracy and cost involved in its introduction, and are very worried about the timing of the return to a 17.5 per cent. rate during the winter sales period. They are pleading with the Government at least to delay it for an extra month. Today's newspapers are full of stories about retailers quietly putting prices back up this month in order to put the VAT cut on their bottom line instead, thus restoring their margins. It is possible that 70 per cent. of the rate reduction was being passed through, as the Minister said in his opening speech, but I think he will find that that is changing quite fast.
The priority for the last fiscal stimulus should have been businesses, not consumers. There are many things that it would be good to do, but can we afford to do them now? The Governor of the Bank of England says that we cannot, and I have to say reluctantly that I agree with him, but when it comes to business rates, can we afford to stay where we are? The Government are in a mess that is entirely of their own making, but I plead with them to stop digging and at least to do the smaller, cheaper things that they can do irrespective of the wider fiscal situation in which they find themselves, such as providing automatic rate relief for small firms. Even now, they could cancel the VAT cut immediately and use the money saved to bring about real change that will save jobs and businesses.