Caroline Spelman says business rates are too high

The Conservatives' new Communities and Local Government team debuted at oral questions yesterday.

Returning to a role she has occupied before, Shadow Secretary Caroline Spelman asked a question about business rates:

"I thank the Under-Secretary of State for Communities and Local Government, the hon. Member for Tooting (Mr. Khan), for his warm welcome, and may I say to colleagues how nice it is to be back? Business rates are set to rise by 5 per cent. in April, taking the average bill to £12,000 a year, yet today we heard that inflation has already fallen to 3.1 per cent., and the Government’s pre-Budget report predicts deflation, with the retail prices index inflation plummeting to minus 2.25 per cent. this year. How can the Secretary of State justify an inflation-busting business rate at a time when so many businesses are fighting for their very survival?

Hazel Blears: I welcome the hon. Lady and the hon. Member for Putney (Justine Greening) to their posts. It is nice to see so many women on the Front Bench. I thoroughly enjoyed debating these issues with the hon. Lady’s predecessor—I cannot for the life of me think why, but I did—and I have no doubt that we will enjoy such exchanges, too.

The hon. Lady may have been away from her current brief for some time, but the non-domestic rates system has not changed. It has always been tied to the assessment of inflation at a particular time in the cycle. She knows that it is essential to try to maximise the take from non-domestic rates, as I said to the hon. Member for Falmouth and Camborne (Julia Goldsworthy), in order to maintain the vital services that local government has to deliver to the communities out there. We all recognise that businesses and individuals are currently hard pressed, and we are doing everything that we can, including raising the reliefs on empty property taxes. The position on that has changed as a result of this Government’s decision since the hon. Member for Meriden (Mrs. Spelman) previously had her current brief. We are flexible and willing to take whatever steps are necessary to help people through these times, which, as I have said, stands in marked contrast to the policy of the Opposition to do nothing.

Mrs. Spelman: I am sure that the right hon. Lady would agree with me, however, that one of the saddest features of this recession is the increase in the number of empty premises on the high street. Will she therefore confirm that, even with the tiny relief in the pre-Budget report, the new empty property business rates are still set to raise £700 million this year? Does she accept that that additional tax could well make the difference between a business getting by and a business going to the wall?

Hazel Blears: I am sure that the hon. Lady is aware that empty property in this country has been subject to taxes for 40 years or so. We are not talking about a new innovation. In fact, the extra reliefs that have been introduced as a result of the pre-Budget report will give relief amounting to £205 million to businesses that would otherwise have to pay those taxes. That is not an inconsiderable sum and is a result of a decision made by this Government. She talks about inflation, but she will know that local authorities had to cope with the spike in fuel and energy prices. Although inflation is now coming down, they have had to cope with real volatility in the system. Therefore, it is important that business rates make their proper contribution to local services. Again, we are bringing forward a raft of measures, ranging from skills support, training and help for apprentices to support for small businesses, the enterprise guarantee system and the working capital system. Those are all innovative steps taken by this Government in the teeth of opposition from the Conservatives, who simply want to stand on the sidelines, wring their hands and do nothing to help people through this difficult period."