Non-Domestic Rating (Chargeable Amounts for Small Hereditaments) Regulations 1996 (Hansard, 17 December 1996)

§ Baroness Hollis of Heigham
My Lords, I realise that we are keeping the noble Earl from his dinner, so I apologise. Nevertheless, these are important regulations, and this one is no less important.
In these regulations the Government are freezing small business rates for this forthcoming year rather than allowing them to rise by inflation. As primary legislation requires them to rise by inflation, we need regulations to "do a Henry VIII". That will clearly benefit 1.1 million small businesses. As the Government, rather than local government, are picking up the Bill, it would be churlish to oppose this measure—though, given the pressures on government spending and the recent cuts in benefit and the like, the fact that the Government can find £100 million in additional relief for small businesses comes as some surprise, especially as it will absorb all the savings to be found apparently from the cuts in the notorious housing benefit regulations which we anticipate. Those regulations will force middle-aged men and women under 60 into bed-sit accommodation. The savings on the change in housing benefit will generate £105 million, of which, so far as I can see, every penny will go to ease and freeze the rate increase on small businesses.
That was an additional surprise to these Benches because the Government had insisted that, given the feel-good factor, local businesses would now be in a position to pay the proper input. Or do the Government accept that small businesses are so desperately in need that they require additional relief above and beyond what they would incur? It is a further surprise to these Benches because the Government have limited the revenue support grant to fund their tax cuts of one penny in the pound, thus forcing the council tax rate up by an average of 6 per cent.—double the rate of inflation. Or do the Government hope that the council tax rises will be blamed on Labour and Liberal local government while the freezing of the non-domestic rate will be to the benefit of the Government?
It is worth pointing out that the Government's timetable is short and local authorities will experience some costs in billing. If the Government can help us on 1495 the point, that would be welcome. Will they tell us whether the proposals require changes to the demand notice or to the accompanying explanatory notes?
What all this shows is the absurdity of the current arrangements for the business rate. Some areas are rather more prosperous than others and it is appropriate for businesses there to pay a higher non-domestic rate. In some areas business enjoys a higher level of services and it is appropriate that they should pay a higher level of non-domestic rate. It is also clear that small firms agree with that point of view. In the Department of Employment research of 1994 on the impact of rates on business, only 20 per cent. of firms thought that the current arrangements for the non-domestic rate had improved the system by removing variations in poundage between different local authorities. Three-quarters of firms agreed with the statement that business should pay rates according to the extent to which they benefited from local services.
Soon, I hope, we shall restore the business rate to local communities while ensuring that local authorities work in partnership with their local businesses to rebuild local economies which have been decimated over the past decade.

Earl Ferrers
My Lords, I always thought that the noble Baroness was fairly difficult to satisfy. Now she has shown that to be a fact. The festive spirit of good will does not seem to have entered her Benches. The Government are actually reducing liability for tax, freezing any increases in certain respects and reducing liability in other respects. All the noble Baroness can say is: "Oh well, if you used that money you would be able to help those in bed-sits".
The two are not comparable. As the noble Baroness knows, we must look at each facet and deal with it in the right way as an individual issue. What she said inferred that small businesses were in a bad way. Then she asked whether they needed the help. All I can tell the noble Baroness is that we on this side feel that small businesses and the part that they play in the economy are very important. It is interesting to note from her reply that the party opposite does not set such store by small businesses.

§ Baroness Hollis of Heigham
My Lords, will the Minister give way?

Earl Ferrers
My Lords, I shall give way in a minute. The noble Baroness is persistent and always tries to intervene. I gave way on the previous occasion and I will give way now.

§ Baroness Hollis of Heigham
My Lords, I thank the Minister for demonstrating the usual courtesies of the 1496 House. I did not object to the freezing of the benefit for local businesses because it is being funded by central government. However, I was making the point not that we were not anxious to assist small businesses but why the Government should think that small businesses needed assistance if the words of the Chancellor in his Budget speech that we have never had it so good were to be believed.

Earl Ferrers
My Lords, the noble Baroness cannot avoid bringing party politics into everything. That is her style. However, research has shown that small businesses pay a greater proportion of their outgoings in non-domestic rates and have been calling for action. We have taken that action. I should have thought that that would satisfy most people, even if we cannot satisfy the noble Baroness.
The noble Baroness referred to the changes in the billing regulations. We shall change the regulations in early January and have been consulting local authorities. I hope that the noble Baroness is in a minority of one in not rejoicing in the regulations. Nevertheless, I commend them to the House.