Business Rates Reduction Services

Stella Creasy Excerpts

Wednesday 26th May 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is a pleasure, as ever, to serve under your chairmanship, Mr Hollobone. It is also a pleasure to follow the hon. Member for Thirsk and Malton (Kevin Hollinrake), who has been a doughty campaigner on this issue, and rightly so. He said that 13 of our colleagues are affected. I suspect there are many more but that they have not felt able to raise the issue.

Let us be honest: we recognise that we may not be the main event this morning in Parliament, but these issues are our bread and butter as MPs. They cut across the political parties because a rip-off is a rip-off. When we see companies preying on and exploiting our constituents, who are trying to do that most basic and important thing of setting up businesses and being successful in our local communities, selling a wide range of goods and services to those communities, it inspires anger in all of us and frustration that we cannot do something more quickly to help. I recognise that we may not be the box office hit this morning that we would want to be, but I agree with the Minister—consensus is breaking out—and I hope that we can make progress today on something with a longer lasting effect, because in some sense this should be a simple open and shut case.

Like the hon. Member for Thirsk and Malton, I was contacted by a local resident absolutely at their wits’ end dealing with RVA as a company. They have a small business with one or two employees—not a large multinational—and are trying their best to understand and navigate the range of regulations and rules that they have to abide by, and to understand what they can do to give their business the best fighting chance. Six years ago, like the hon. Gentleman’s constituent, my constituent was contacted by RVA and offered what appeared to be assistance. There are many different companies that would offer assistance to small businesses that seem, on the face of it, to be helpful. It is not just about small business rate relief; often it can be about recycling or rubbish collection—all sorts of areas where there are different rules for businesses than for individuals. For a small business, particularly a sole trader, having someone help them to get their head around them seems like a blessing. Unfortunately, it was anything but a blessing.

The stories are very similar, which is why some of us have been exasperated by the lack of reaction to the company —it has been going on for many years. My constituent was contacted and told that they could reduce their business rate cost; RVA visited the office and took measurements—allegedly on behalf of the council, as though it was part of a public service—and then billed the company for the savings on small business rate relief. But those savings would have been automatically due to the company anyway. My constituent, not unreasonably, did not know the ins and outs of business rate relief. I am sure that if the Minister gave us all a test on it, I would wager that the hon. Member for Thirsk and Malton would beat me, but even he would not know everything about this scheme. To expect our constituents who are setting up a business to know all that information is simply unreasonable. That is why I completely agree with the hon. Gentleman when he uses the term “carpet-bagging”. There might be some more choice terms, but I am very conscious that they would not be not parliamentary language.

My constituent is now part of a long-running legal battle with that company—I will limit what I say to ensure that there is no issue for them but, like the hon. Gentleman, they have issues with the documents that appear to have been falsified and claims about signatures. RVA claims that my constituent agreed to a seven-year contract, when they only had a five-year lease on the premises. It does not make any logical sense. My constituent has had years of torture, causing real distress, through the court case and the impact on their ability to run their business at all.

When people come to us—I am sure the Members participating virtually have had the same experience—we want to help. I thought, surely, this is almost a police matter if fraud is involved. To find that this company is able to continue to operate to this day, ripping off businesses around the country, is deeply distressing. Like the hon. Gentleman, I have pursued this issue with trading standards in the area where the company operates, but I am told that they cannot act. Many moons ago I scrutinised the Consumer Rights Act 2015, where we talked about providing a reasonable service at a reasonable timescale for a reasonable price. None of that is reasonable. I am at a loss to understand why we cannot have stronger enforcement. We have not seen stronger enforcement, which is why this debate is so important.

I hope the Minister is open. I know that he, like me and the hon. Member for Thirsk and Malton, would be aggrieved at seeing people ripped off. My constituent asks for a simple solution: she says that the small business rate should be automatic. Actually, the Federation of Small Businesses has been talking about licensing those companies, partly because, as I say, I do not think the rip-offs are restricted just to companies talking about business rate relief. Small businesses, especially in the post-covid environment, have really struggled over the past 18 months and are getting back on their feet, and they will desperately want help and advice about how best to navigate the new environment that they are operating in. It is entirely reasonable for the FSB to call for those companies to be licensed. We should be thinking about licensing business service companies so that we can stop what the FSB itself calls cowboy practices.

This is a matter for Government, not least because it is changes in Government policy that these companies are exploiting. When changes in business rates relief happen, these companies make their money; they make their money in a way that undermines the very policy of the Government. Governments of all political persuasions have tried to support small businesses. They are trying to pass on money—they are trying to help small businesses with their costs—yet, because of the practices of these companies, they can inadvertently end up charging them more, because the bill comes for the fact that the relief has changed.

I hope the Minister will listen and be not just sympathetic, but proactive, in calling to account the Insolvency Service, asking for an investigation into RVA, and in helping to shut down this awful company once and for all, as well as in learning the lessons from this situation on how we can best support small businesses when it comes to regulation.

We cannot have a debate in this place without talking about the B word, Brexit, and I always thought the concept of red tape and how much more of it might be coming was ironic. Here is a very clear example of where removing red tape could really help to support our constituents and make sure that people are not being ripped off, if only we have the political will to do so. I genuinely hope that the Minister will listen to this cross-party call for action and respond accordingly.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for having secured this important debate on a matter that is of considerable public interest generally, but also locally in his constituency and to those affected by this company. It is a pleasure to speak in a debate that is not disfigured by party politics; all Members have made very constructive contributions, and I am grateful for them.

I will start by expressing my sadness that, inevitably, proceedings elsewhere in this House at the moment are going to be overshadowed by this very important consideration of business rates. I only hope that the media will find some time to indulge Mr Cummings in his comments in between reporting on this vital topic. In a slightly more serious vein, I apologise that the Government have not been able to supply a Minister with specific responsibility for this area to respond to the debate. As the hon. Member for Glenrothes (Peter Grant) rightly said, its focus is not on business rates—although there has been the occasional attempt to crowbar the rest of the business rates system in—but on the reduction services aspect that my hon. Friend raised. That aspect is a matter of business regulation, and therefore falls to the Department for Business, Energy and Industrial Strategy. He and the hon. Member for Walthamstow (Stella Creasy) have also focused on some individual cases of predatory practice by specific companies, and they will understand that I cannot comment in any detail on specific cases. It would set a very bad precedent for a Financial Secretary to do so, given the connection to the tax system in a different context.

I think Members recognise that, at its core, the system of business rates is a relatively simple and straightforward one. Companies and individuals who occupy non-domestic properties are liable for business rates. The rates bill is the product, in the literal, mathematical sense, of the rateable value of the property and the multiplier for the financial year concerned, offset by any rate reliefs. The rateable value is set by the Valuation Office Agency and, broadly speaking, it is the rental value at a set date —presently 1 April 2015.

In cases where businesses are unsure about the rateable value of properties, there are plenty of helpful resources on the website of the Valuation Office Agency. For example, I can go online and see a detailed valuation of No. 2, Marsham Street, which is the headquarters of the Home Office, and an explanation for how its valuation has been reached. You will be pleased to know, Mr Hollobone, that it has rather a high valuation, as befits its position in central London.

If ratepayers are unhappy with their rateable value, there is an online system known as check, challenge and appeal, which allows them to check the facts and, if necessary, to dispute the valuation that has been reached. This system was introduced to provide ratepayers with a service that is easier to use and understand than its predecessor and that enables quicker resolution of cases. An evaluation of the system last year found that it is working and that ratepayers are getting their cases resolved faster, without the automatic need to make appeals.

Rate reliefs are applied by individual local authorities, but most of these are automatic or require minimal information from the ratepayer. For example, transitional relief, which is used to phase in the effects of revaluations, is entirely automatic. For small business rate relief, rate- payers need only provide a little information about other properties on which they pay business rates, before being able to claim. All rate bills must explain the various reliefs available, and local authorities have many excellent websites that explain how to claim those reliefs.

Much of the £16 billion of relief that the Government have provided to the retail, hospitality and leisure sectors in response to covid-19—this was picked up by the hon. Member for Strangford (Jim Shannon)—has been applied automatically to rates bills. So there are many automatic methods of applying reliefs currently within the system. The relevance of that to the present debate is that there is no reason why a ratepayer should have to use an agent to claim rate relief. If they believe they are eligible for relief, they should instead contact their local authority. Of course, that is not in any sense to criticise people who have been found to be clients or would-be clients of the predatory organisations that have been highlighted by Members in the debate.

Let me pick up on the nature of some of the protections that exist within the system, of which there are several. One is the rules that apply to business-to-business contracts and that arise from the Business Protection from Misleading Marketing Regulations 2008, which prohibit advertising that misleads traders. There is also the Misrepresentation Act 1967, which may also apply to business-to-business contracts, and which says that if someone has entered into a contract following misrepresentation by the other party, they would be entitled to rescind that contract. Additionally, if they have suffered loss, they can claim damages against the other party.

Small businesses can seek help through other channels. If a ratepayer feels that there may have been illegal or fraudulent activity, they can choose to take court action, as I understand a number of businesses have successfully done in at least one of the cases under discussion. Alternatively, my hon. Friend the Member for Thirsk and Malton mentioned the Insolvency Service, which offers some protections, although they appear not to have been availing in this case.

It is worth just picking up the point about consumer protections. At present, the services are provided to the businesses that I have described, and consumer protections do not apply in the case that we have described. I note, and my hon. Friend the Member for Thirsk and Malton has argued, that microbusinesses share many of the characteristics of consumers, and he and other Members have therefore argued that they are worthy of protections in their own right. Members have highlighted the predatory practices of the companies they have discussed, which are, I am afraid, also exercised by a relatively small number of other companies, and cause extreme distress to the people who are affected by them.

It is important to note that, in other markets—for example, financial markets—it has proved possible to differentiate between protections afforded to different kinds of people in the client relationship. Therefore, there is a clear case here for the Department for Business, Energy and Industrial Strategy to revisit this area and to assess what further protections can, in principle, be provided. Let me conclude with a very simple message.

[Stella Creasy]

I hesitate to stop the Minister in full flow, because it is very interesting to hear what he is saying. I just want to come back on a point he made about businesses being entitled to rates relief automatically. Of course, that does require businesses to know about that. I agree with him, and I think we all agree, that differentiating between businesses—often small businesses —and consumers does not make any sense in terms of the expectation of protection, which is the reason why we have consumer regulations.

However, might he be convinced that it would be helpful in these instances for Government to be proactive in telling people that they might be entitled to rates relief? One reason why this company has been able to exploit people is a lack of awareness of the scheme. Although the Minister may feel that it is relatively straightforward, for a new business, the idea that there might be some things that do not have to be paid and others that do adds complexity. Is there a case, perhaps, in the absence of the further consumer protections we are talking about, for requiring local authorities, when they send a bill, to say, “Most small businesses would be entitled to rate relief, and therefore it is worth your time investigating”?

[Jesse Norman]

I thank the hon. Lady for her question. I have already said that all rates bills are required to explain the various reliefs available and that local authorities have, in many cases, excellent websites that explain how to claim the reliefs. Of course, the fact that reliefs in the cases I have described are automatic means that they flow through in and of themselves. That is a very attractive feature, where that can be engineered into the system. Where it cannot, it is for good reasons, and it may not be possible.

I do not think it is right to suggest—I do not think anyone who has participated in this very thoughtful debate would suggest—that there is any easy fix here, but there is a clear case to be addressed. I thank my hon. Friend the Member for Thirsk and Malton for bringing it to our attention and for raising it with the Government. I think the Government—across my colleagues and myself—need to consider what more can be done, both by themselves and in their further discussions with local authorities.