HC Deb 22 January 1990 vol 165 cc604-6
3. Mr. Murphy

To ask the Secretary of State for Wales what representations he has received regarding the implementation of the new business rate in Wales.

15. Mr. Flynn

To ask the Secretary of State for Wales what representations he has had on the Welsh business rate level.

The Secretary of State for Wales (Mr. Peter Walker)

I have received a number of such representations.

Mr. Murphy

Is the Secretary of State aware of today's business news in south Wales—a staggering increase in the number of bankruptcies and liquidations of small businesses? Does he accept that the business tax will increase the possibility of such events? Why does he pretend to help industry in Wales but introduce a tax that is universally condemned by all organisations that represent commerce in the Principality?

Mr. Walker

I am well aware of today's commercial news. I have seen the survey done by the Cardiff chamber of commerce and industry which shows that 24 per cent. of firms expect to take on more people in 1990—three times more than those set to reduce their work force—that turnover is 75 per cent. higher than last year, and that firms expect 60 per cent. higher profits. That fits in with an industrial survey carried out by the Institute of Directors, which comes to similar conclusions. We are having record inward investment, record growth and a record drop in unemployment. I am sure that the news that factories and warehouses in Wales will have a 27 per cent. reduction in their business rate will be good news for the Welsh economy.

Mr. Flynn

Does the Secretary of State recall that when he was Minister of Agriculture, Fisheries and Food he gave farmers the incredible advice that if a nuclear attack was imminent they should drive their cows into ditches and cover them with a tarpaulin sheet? Is not the advice and protection that he has given to Welsh business men just about as effective as a tarpaulin sheet would be against a nuclear attack? In his long litany of records, the Secretary of State forgot that today we know that there are record bankruptcies among Welsh businesses. Why do Welsh businesses have to pay 5 per cent. more for their business rate than those in England? What will he do about it?

Mr. Walker

Once again, the hon. Gentleman's production of fiction is on the most extraordinary scale. As Minister for Agriculture, Fisheries and Food, I never made any such remarks, which are a total work of fiction by the hon. Gentleman. Welsh businesses will contribute 20 per cent. of the costs of local government and those in England, 30 per cent. If the hon. Gentleman calls that a disadvantage to Welsh business, that is a funny analysis.

Mr. Burns

When replying to representations he receives about the business rate, will my right hon. Friend tell those people that when the transitional phase is over, the maximum amount by which the business rate can increase in any one year will be the inflation rate? That will be infinitely superior to some of the rate increases faced by businesses in Wales over the past 10 to 15 years. Will he confirm that when we take the business rate and Government funding together, community charge payers in Wales will pay only 15 per cent. of local government finance?

Mr. Walker

My hon. Friend is quite correct—community charge payers will pay only 15 per cent. of local government finance. I am glad that it is also true that the rate burden of factories and warehouses throughout Wales will be reduced by 27 per cent. That should be a cause for celebration in the Principality.

Mr. Alan Williams

Is not the Secretary of State's early optimism likely to be hit on the head by the very tax that we are discussing? Will he confirm that the interim protection to which he has referred is lost if a firm changes premises? Premises will therefore become more difficult to sell or to rent; firms wanting to expand will find it difficult to move to larger presmises; and firms in trouble will find it difficult to move to smaller ones. Is not that contrary to the mobility that is essential to regional policy?

Mr. Walker

The figures that I gave have nothing to do with the transitional arrangements. I know of the right hon. Gentleman's passion to help the valleys, so he will be pleased to know that valleys factories will have their rate burden reduced by 35 per cent.

Mr. Gwilym Jones

Does my right hon. Friend agree that manufacturing industry will benefit particularly from the new business rate? How will that act on the valleys' initiative? As many concerns involved will be smaller businesses, will he give further consideration to the present threshold of £10,000 and increase it to, say, £15,000?

Mr. Walker

We shall keep the present figures. Factories in the valleys will pay £13 million less in rates, and warehouses £2 million less.

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