Rating (Business Premises Relief) (Hansard, 24 June 1981)

§ Mr. John Heddle (Lichfield and Tamworth)

I beg to move, That leave be given to bring in a Bill to grant partial relief from rates in the case of industrial and commercial hereditaments; to make further provision in respect of rating relief for industrial and commercial hereditaments in partial beneficial use; to extend the statutory rights of non-domestic ratepayers to pay rates by instalments; and for connected purposes. It is a timely coincidence that this Bill should be introduced before a major debate in the House on unemployment. Rate rises have gone beyond the fringe. High rates and the threat of supplementary rates this autumn will cause a further loss of jobs in the inner cities and the conurbations.

It is a timely coincidence that the proposed Bill should be introduced the day following the announcement by the West Midlands county council of a rate increase of 14 per cent. this autumn to be backdated to last April. That will send fear into the board rooms and workshops of the West Midlands. It is also a timely coincidence that it should be introduced soon after the London Chamber of Commerce and Industry has published a survey showing that, if the Greater London Council imposes a supplementary rate on the metropolis this autumn, it will cause a further loss of 25,000 jobs in Greater London.

There is no doubt that high rates imposed by spendthrift councils and supplementary rates contemplated by spendthrift councils on the silent majority of industrial and commercial ratepayers will mean further factory closures, further demolition of factories and, particularly, a further loss of jobs.

The industrial and commercial ratepayer is a voice in the wilderness. He has no vote. He has no say. He has no sanction he has no influence over the spending of his money by local authorities.

The Bill seeks to protect the silent majority who this year will have paid £4.4 billion in rates, £1 billion more than the domestic ratepayer. To put that in context, the industrial and commercial ratepayer will be paying what is in effect 85 per cent. of the anticipated yield from corporation tax this year.

This Bill therefore seeks to complement the aims of my right hon. Friend to impose a limit over which no local authority could levy rates on the commercial and industrial ratepayer. It also imposes upon rating authorities the inability to levy rates on vacant business premises. Notwithstanding the fact that the Government, rightly, in the Local Government, Planning and Land Act 1980, reduced that limit from 100 per cent. to 50 per cent., it is the view of my hon. Friends and myself that this right should be abolished. Empty factories make no profits for the owners. They simply involve the owners in the cost of upkeep. They do not provide the owners with value for money. The local authority provides the owners of these premises with no services.

This provision would remove the threat of a repetition of what happened in South Yorkshire recently where owners, frustrated because they were unable to afford void rates, were driven to start demolishing good quality factory premises. The owner said. "If a businessman's rates bill goes up by one-third and then, because of the recession, business is down by one-third, rates become an intolerable and crippling burden".

250 The Bill proposes mothball relief for business premises only partly occupied during the recession. This provision would exclude from rates those parts of the premises which have been taken out of productive use but which are maintained so that they can be brought back into productive use when the recession finishes and the boom starts again. This provision would be a valuable contribution to preservation of our industrial base.

The Bill also proposes the abolition of the penal and punitive rating surcharge imposed by the Labour Government under the General Rate Act 1967. Rightly again, this Government have frozen that mean and petty provision. I believe that it should be abolished entirely. The Bill further proposes that all business ratepayers should have the right enjoyed by domestic ratepayers and, under the provisions of the Local Government, Planning and Land Act 1980, small business men with premises with a rateable value of under £2,000 in the provinces and under £5,000 in the metropolis should be able to pay their rates by instalments. This would help BL in Birmingham now. It would help British Steel in Sheffield today. I believe that the Government should pay more regard to the cash flow of commerce than to the cash flow of councils.

Most importantly, the Bill proposes the introduction once more of industrial derating as a positive way of protecting industry and commerce from the worst effects of the recession. Agricultural derating was introduced in the 1920s. That concession is still with us. Industrial derating was introduced in 1929 at the depths of a recession similar to that endured today. Seventy-five per cent. industrial derating continued until 1958 when it was reduced to 50 per cent. It was abolished only in 1961. It is significant that industrial derating was introduced in a recession similar to that of today and removed when the boom came in the early 1960s. In the opinion of my hon. Friends and I, commercial rates are a tax on the means of production rather than on the results of production. They are a negation of democracy. They are taxation without representation.

My right hon. Friend is to publish a Green Paper in the autumn on the domestic rating system. He is also to introduce a Bill that will clip the wings of spendthrift councils which fly in the face of democracy and level excessive and punitive rates on the innocent and helpless shoulders of industry and commerce. Unless measures such as those in my proposed Bill are introduced to protect the silent majority, the rate burden will become the straw that breaks the commercial camel's back. More firms will be forced into liquidation. More people will be pursuaded to demolish otherwise good premises to avoid void rates. Yet still more jobs will be lost. It will not be the recession,—or employers,—or employees to blame. The blame will lie with extravagant local councils.