Mike Penning (Hemel Hempstead) (Con): It is a privilege and an honour to follow an hon. Friend with so much knowledge of the business sector. I support the Second Reading of the excellent Bill introduced by my hon. Friend the Member for Mid-Worcestershire (Peter Luff). So many of the arguments that we have heard today are simply common sense. It is striking that it requires a private Member’s Bill to introduce a measure that the Government and the House want and, more importantly, the business sector desperately needs.
Many of the arguments advanced today are relevant to my constituency. As we have heard, the measure is important for businesses in the rural community, but it is no less important for those in the urban community. As my hon. Friend the Member for The Wrekin (Mark Pritchard) said, it is small businesses that grow or that are taken over or amalgamated that become the larger organisations in this country. I represent a constituency that is both urban and rural, and there are pressures on both communities.
In my constituency the problems started long before the present recession reared its head. That was because of Buncefield in December 2005, when my business community and my residential community were devastated by the largest explosion and fire that the country has seen since the second world war. The business community and the local authority came together quickly and brilliantly, then a real issue arose. Many businesses had relocation insurance, but many did not, especially the small ones. Some moved to other premises if they could, but some went bankrupt straight away. They could not have survived.
When businesses moved to second premises, they still had a business rate liability for the premises that had been damaged by the explosion. I have raised the issue with Ministers before, but we still have not reached concluded how we can resolve the issue of special needs when something out of the ordinary happens. After three years, Lord Newton’s inquiry has concluded. I praise his chairmanship of the committee, but the inquiry was carried out behind closed doors. We have never had a public inquiry into the devastation in my constituency. The inquiry concluded that my constituency needed special status to help businesses regenerate. The Government have had the report for some time, but we have not yet received any indication of what that special help might be.
One small change, in addition to the Bill, would be to say that instead of the new rule on empty rate business rates going to 100 per cent. of the business rate after six months, if there are special circumstances, such as the fact that a factory has been blown to smithereens and it is physically impossible for workers to work there, the business is not charged 100 per cent. after six months. That seems to be common sense.
When special events occur—a natural disaster or an industrial disaster such as the one in my constituency—why should a business be penalised for trying to keep going in another premises by it having to pay 100 per cent. business rate there, as well as 100 per cent. business rate after six months on the unfit premises that it left? Perhaps the Minister will address that when he replies. If he cannot do so today, will he write to me? It is an important issue.
The Bill is excellent, but there are aspects of it that need to be fleshed out in Committee, such as the point that I made about businesses that get rate relief on premises that, for some reason beyond their control, they have to leave and then claim business rate relief on a second property. Under the present rules and as the Bill is drafted, a business is not allowed to claim for two premises, but if it cannot stay in its original premises why should it lose the relief on its second premises? That is important to the hundreds of businesses in my constituency that, through no fault of their own, had to move out of their premises to other premises and, under the present rules, cannot claim the relief on the second premises.
Another fact that the Bill should address is that many businesses are not big enough to be in premises of their own, so they go into buildings of multiple occupancy or into serviced offices or premises. In that case, part of the service rent that those very small businesses pay is the business rate on the whole building. The service provider should be able to claim relief for the small business in those premises. That is a big issue for people who are trying to start up in business, and for businesses in my constituency whose premises have been severely damaged.
Such businesses may have had to downsize for that reason or because of the current business situation, and may have moved into serviced premises or premises of multiple occupancy. They are still paying the full amount of the business rate, in proportionate terms. Even if they qualified for business rate relief, they would not get it because they are not the main service provider. If the Bill does not progress to Committee, the Minister must still address that issue. Thousands of small businesses are in such premises and the business rate is a huge burden on them as part of their rent.
A further issue that I wish to raise with the Minister arose in my constituency this week when bailiffs arrived at a small office. Although more recently Government bodies such Revenue and Customs and VAT seem to have got their act together, I am still getting calls from constituents who say that bailiffs are arriving to collect business rates, despite the fact that those business are clearly struggling. Promises were made by the Government, not least by the Prime Minister and the Chancellor, that businesses would be given all the help possible. That message is not getting through to all local authorities. As we have heard, some of them are doing well in promoting the relief on business rates through their good offices; it is clear, however, that others are not doing as well as they could. Has that anything to do with incentives? I do not mean financial incentives, but clearly it is a burden for a local authority to incentivise local businesses to come forward. If local authorities deploy members of staff day to day to promote the issue or give people the help that they need—rather than the bailiffs coming in—what is the benefit to them, given that their revenue streams, like those of all organisations, are suffering so much? I cannot see why a local authority would be keen to spend extra money on staff to promote the Government’s scheme, let alone the one proposed today, if there were no incentive.
As I said in my intervention, local authorities are just collectors of the tax on behalf of the Government. They have to seek the best value for their residents. Why would they do what I have mentioned? The Bill will take away from local authorities the pressure of having to decide whether to invest in extra staff to help small businesses. If the Bill is passed, that problem will go away; local authorities will not have to consider extra help or involvement. Personally, I think that they should help; it is important that my local authority helps small businesses in my constituency. However, we have to understand the pressures that local authorities are under. I do not know why, for instance, Havering, which is a London borough, is so different from the unitary Thurrock authority, which was alluded to earlier. It may simply be the fact that it does not have the money to put staff on the front line to promote the scheme.
The scheme in the Bill will take many money pressures from local authorities and simplify things. As has been said, when we visit small businesses we often see that their in-trays are much larger than their out-trays. The pressures mean that they do not have time to fill in forms or to work out whether they qualify for the small relief or not. That relief, however, could be what keeps them going that little bit longer while they wait for new business or a new order to come in.
As we have discussed for generations of Governments, we should remove bureaucracy. The issue is about deregulation. We had a deregulation Minister when we were in power, but all we see now is businesses having more regulation and paperwork. This small, simple Bill will remove so much from small businesses and local authorities. It will simply say that people are entitled to help from the scheme as long as they tick the box to say that they are entitled in the right way. As I said earlier, we need to look in Committee at why certain people have two business premises, so that they are not excluded because of circumstances out of their control.
Protecting small businesses is surely what government is all about, especially at this time and especially in my constituency, which still suffers so much from the devastation of the Buncefield explosion. The recession, on top of that, makes it all a real double whammy for my constituents, who are suffering enormously. I do not understand why the Bill cannot go through quickly; it could pass through Committee in a couple of sittings and be on the statute book before the Government even start discussing the Budget. That is what businesses want: action today, not jam tomorrow. ... Mike's other interventions in the same debate Mike Penning (Hemel Hempstead) (Con): My hon. Friend has raised a very important point, but the only way that small businesses could do that is to form—I think that he was alluding to this—a consortium; otherwise, the burden on them would be onerous. However, I completely agree that if we really want to understand what is happening in the business market, we must not talk just to blue chip companies; we must speak to the small companies that are at the forefront in dealing with this recession.
Mr. Evans: My hon. Friend is absolutely right. The vast majority of businesses in this country are small to medium-sized enterprises, and in many cases they could not take somebody on for 20-odd days, simply because they do not have the people to cope with that, but perhaps they could take on a MP on one day. An MP could, for example, be placed with 20 small businesses in a year, which would give them a fantastic grounding in the problems that small business people face. ... Mike Penning: It is important that people listening to this debate understand how business rates are collected, and that they do not blame their local authority for the size of the business rate. The Government set the business rate; the local authority is the debt collector on behalf of central Government.
Mr. Evans: The fact is that most small businesses do not have the faintest idea about the difference between the domestic rate and the business rate, who collects it, who benefits from it and where it all goes. All that they know is that they have to write a cheque for it or set up a direct debit from their bank account. That is the problem. They are not particularly bothered about the question of how it is spent or where it goes; all that they know is where it comes from. ... Mike Penning: I am sorry to interrupt my hon. Friend’s cogent argument, but it is not just the fact that small businesses are penalised with interest rates of 9 or 10 per cent. above base to get those loans and overdrafts, as there are often add-ons, particularly insurance cover, which is compulsory in many cases. When small businesses go to obtain a loan from their banks, they pay huge interest rates and, at the same time, there is a demand—sometimes implicit, sometimes not—that if they do not take the insurance cover, they will not receive a loan, which, as hon. Members can imagine, is hugely expensive for them.
Mr. Binley: My hon. Friend is absolutely right. I was about to move on to the additions placed on small businesses through that renegotiation process. Insurance, as he said, is one of the conditions that are appearing more and more. So, too, are personal guarantees. I have been told by the Federation of Small Businesses that 40 per cent. of the people they surveyed were considering packing up their business. My fear is that that was because they went home to their partner and said, “Look, we’re going to have to put the house on the line.” Their partner says, “We certainly are not: we worked hard for this house, and it’s all we’ve got.” That is another fearful story that is doing the rounds—a fact that, in itself, is a danger. ... Mike Penning: While the Government are pondering the matter and being thoughtful, businesses are going bust every single day of the week. Can we not have an announcement today that the measures in the Bill will be taken up? It could go through Committee in one day and we could soon be back for Report and Third Reading, and we could save thousands and thousands of jobs while instead the Government are still thinking about the matter. Surely the logical position is to move forward now.
Mr. Khan: If the hon. Gentleman, who is a friend, is a mind reader, he has misread mine. He does not know what I am going to say. I will let him intervene again towards the end of my contribution if he wishes to do so. ... Mike Penning: I am sorry if I misled the Under-Secretary, who has obviously not visited my constituency, but Buncefield is not in a rural part but smack bang in the middle of my town.
Mr. Khan: The hon. Gentleman pointed out that small businesses in rural parts of the country are also suffering. He argued persuasively about the special circumstances in his constituency, whether the challenges posed by the empty property rate relief after the fire, or the shared premises that have been serviced and the problems with small business rate relief and business rates generally. As for those points, he can be under no doubt that the Treasury will be reading this debate in Hansard. I will ensure that they are flagged up and that he is given a response. ... Mike Penning: We have heard how many businesses received the relief and how much money that was, but what percentage of the businesses entitled to the relief does that represent?
Mr. Khan: That is a very good question, and I will come to one of the challenges in answering it in a few moments. Variations around the country were referred to, and I will come to why the question is difficult to answer. ... Mike Penning: I am listening intently to the Minister’s explanation of why the Government do not know how much it would cost to implement the scheme, but the Treasury must have given the Department a certain sum on the assumption that a certain number of businesses would take up their entitlement. He has already told us how much that sum was and how many businesses were expected to take advantage of it. The Treasury’s business plan must include a presumption of the amount that would be spent. What percentage of that amount remains to be spent?
Mr. Khan: I am sure that the hon. Gentleman was listening carefully, as I was, when the hon. Member for Mid-Worcestershire explained that the amount given to bigger businesses in preceding years had been reduced because fewer businesses than expected had applied for the relief. The precept, which had been 0.7p, fell to 0.4p.
Mike Penning: The Minister has spoken of an increased cost burden. Some of that extra cost will be administrative, and some will be in physical terms. If it is being offset by the percentages given to larger businesses, I cannot see where the increased cost will be. At present, those running businesses must sign a form declaring that they are not defrauding the Department. New forms with the same requirement are already in place.
Mr. Khan: A number of criteria must be met before the relief can be received. That is the point of the forms. Under the automatic system, all businesses occupying properties below the rateable-value threshold would receive the relief. ... Mike Penning: I wish to raise again the issue of properties in Buncefield, in my constituency, that are not lettable because of the inquiry and problems associated with the depot explosion, but in respect of which a charge of 100 per cent. of the rate is being made—the charge is likely to go up when the new tariffs come in. My constituents are suffering enormously, and although these places are not lettable they are going to be charged 100 per cent. of the new rate—it is not even 100 per cent. of the current rate.
Mr. Chope: I sympathise enormously with my hon. Friend and his constituents. This is an example of what happens when unintended consequences flow from ill-thought-out Government legislation, of which we have had a plethora during the past 10 or 11 years. | 
