Alison McGovern
Main Page: Alison McGovern (Labour - Wirral South)(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
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.
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 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.
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—
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 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.
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—
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 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”.
Wirral Tachograph said:
“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.
Toby Perkins
My hon. Friend spoke a moment ago about the challenges faced by businesses in her constituency. She says that businesses are fighting for their lives. What does she think those businesses will think of a Government who are saying, “We can’t do anything about your business rates because we have to reduce taxes even further for those who are making over £300,000”?
Alison McGovern
I think that those companies will be bemused, at best. I think that they will be angry and frustrated that the Government are not listening to the voices of businesses such as those that I have just quoted. It is not enough to say, “All that matters is the headline rate of corporation tax—we’ll just cut that.” The Chancellor used to talk about flat taxes, but that disappeared as he realised that they would be ineffective. The Government do not really seem to have learned the lesson, and they do not seem to understand what is necessary to rebalance our economy, so that it is stronger at the grass roots and less dictated to by corporations, many of which do a great job for our country but a number of which do not.
If the Government really listened to the voice of small business, they would focus on business rates, as we have, and consider the pro-business step that the Labour party has suggested. One of the most important and enjoyable jobs that I have done in opposition has been to work alongside the small businesses in Wirral South, and I will endeavour to keep doing so.