Amendment of the Law

Part of the debate – in the House of Commons at 6:20 pm on 8th March 2017.

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Photo of Simon Danczuk Simon Danczuk Labour, Rochdale 6:20 pm, 8th March 2017

It is a pleasure to follow Andrew Selous.

In my speech, I shall concentrate mostly on business rates. The Chancellor was right to say that the business rates scheme must better reflect the digital economy—firms such as Amazon have had an unfair advantage over high-street companies for far too long—but I suspect that some business people will be sceptical about the Chancellor’s announcement that he is to conduct a review of business rates. The last Chancellor, Mr Osborne, proposed a review in the run-up to the 2015 general election, but we have seen nothing of it.

We must also bear in mind that the Chancellor is now trying to repair a business rates scheme which the Government damaged by refusing to carry out the previous revaluation. It is because they did not publish revaluation results in 2015, delaying until this year, that businesses in towns such as Rochdale had to carry a disproportionate burden for additional years when their rateable value had actually fallen as a result of the impact of the recession. Businesses in London, and particularly in the south-east, were advantaged by the revaluation cancellation. Businesses in Rochdale and similar towns will now be sceptical about the new £50 cap on any business rates increase, not least because no such limit was offered to them when they were experiencing difficulties in 2014, 2015 and 2016.

CAMRA, the Campaign for Real Ale, has been right to raise concerns about business rates affecting public houses. As Members will know, pubs’ business rates are based on turnover rather than rent levels. It does not matter whether they are profitable. In many respects, that is a tax on entrepreneurialism, because someone who builds up a business will pay a lot more in business rates. I think that those who conduct the review should consider looking into how pubs’ business rates are determined.

The Chancellor has announced a £1,000 discount for what we are told will be about 90% of pubs. While I am sure that that will be welcome, I suspect that it will not go very far, and that it will be “small beer” for pubs that face major business rate increases this year. The Baum in Rochdale, which was the national CAMRA pub of the year in 2012, faces a rateable value rise of a whopping 377%. I cannot help thinking that a £1,000 discount will not go that far in helping that particular business.

The Chancellor also announced a £300 million discretionary fund for local government. Rochdale council has already led the way in devising a business rates reduction scheme to help new independent retailers in our town centre, so I understand the logic, but we now need to see how that £300 million will be shared between local authorities across the country. If it follows other Government funding for councils, it could well fail to reach the parts of the country that really need it.

Talking of business rates and local government, I believe that the Government were right to adopt a 50% business rate retention scheme for local authorities, and I welcome the piloting of a 100% retention scheme. That should help to drive local economic development, and I hope that councils will step up to the mark. I would make the general observation that Surrey council’s situation is clearly a sweetheart deal; no other such authority has been offered that kind of deal so far.

Let me conclude by making a couple of brief points. First, there must be a proper review of the whole business rates scheme, including the Valuation Office Agency, which clearly is not fit for purpose. Secondly, I welcome councils retaining business rates, but the Government must now give local authorities more freedom over how they allocate, set and collect this tax. Thirdly, to avoid any more scepticism around business rates among businesspeople, the Government need finally to overhaul them to the point where they are seen as fair and equitable across all towns and cities in the country, not just some.