Examination of Witnesses (Question Numbers
291-299)
RT HON
STEPHEN TIMMS
MP AND RT
HON JOHN
HEALEY MP
29 OCTOBER 2008
Q291 Chairman: Mr Healey, can we welcome
you back to the Sub-Committee. Perhaps you thought you had escaped!
John Healey: Thank you. I am delighted
to be here, Mr Fallon.
Q292 Chairman: Could you formally
introduce yourself and your colleague, please.
John Healey: I am John Healey.
I am the Minister for Local Government. I guess you could say
I am the prime client Minister in Parliament of the VOA and with
me obviously is Stephen Timms.
Mr Timms: Financial Secretary
at the Treasury to which HMRC reports and to which the Valuation
Office Agency reports.
Q293 Chairman: Indeed. Perhaps we
could start with you, Mr Timms. Two weeks ago the Valuation Office
could not answer us when we asked what the total revenue increase
would be for the Treasury from these revaluations.
Mr Timms: I think figures were
given by the Valuation Office Agency about the aggregate increase
in rateable value. I understand those figures were updated immediately
before the meeting. In broad terms, I think the revenue impact
is 50 pence in the pound, so we have the updated figures now for
the aggregate rateable value rise. From memory, the new total
is about £230 million, that is an increase of £16 million
on the figure previously. That £16 million increase in aggregate
rateable value corresponds roughly to an £8 million increase
in revenue.
Q294 Chairman The Agency told us
rateable values would rise from £181 million to £200
million, which is an increase of £19 million. You are now
saying they are going up to £230 million.
Mr Timms: A note has just been
sent in on this and I now have it in front of me. The aggregate
rateable values for assessments in these ports before the review,
which was initiated in May 2006, totalled £195 million in
England and £32 million in Wales. After the review those
figures become £211 million in England and £32.5 million,
so a tiny increase, in the case of Wales.
Q295 Chairman: The total increase
in rateable values is £16 million and the total increase
in revenue for the Treasury is only £8 million, is that right?
Mr Timms: I believe that is correct.
Q296 Chairman: Are you aware that
Beverley Hughes, who was then the Minister taking through the
Order in the year 2000 on the draft Docks and Harbours (Rateable
Values) (England) Order which postponed the first attempt of revaluation,
said: "Although the bills of individual companies will go
up or down, the overall effect across the country on tax-take
is neutral"?
Mr Timms: I have not seen the
transcript of that particular debate. It is certainly true from
the figures I have given that the overall impact on revenue is
a fairly small one compared with the very significant impact on
some individual businesses, but it is clearly not zero.
John Healey: Chairman, I think
the aggregate figures cover two important things below that. The
aggregate rateable value for both port operators and port occupiers
may have risen by around £16½ million, which are the
latest figures but, in fact, for port operators the rateable value
is £42 million down, for businesses that occupy the ports,
it is £56 million up. Although overall there may be relatively
little change, as perhaps Beverley Hughes might have indicated
before and Mr Timms has, nevertheless the distribution of the
changes in rateable value are significantly different between
port operators and port occupiers. The second thing is that across
the 51 statutory ports where the listings have now been completed
and notified, again it shows some very significant differences.
For some ports there has been virtually no change, in places like
Barrow, but in a place like Hull the rateable value for the port
operator has more than halved. Thirty eight new companies are
now being listed as being eligible to pay business rates separately
for the first time, even though those are companies that have
existed and operated in many cases in the ports for some time.
The rateable value for them has clearly gone up with the additional
problem given the timing of a backdated liability to pay the rates
off the back of those listings and ratings.
Q297 Chairman: Which we will come
to. Freshney Cargo Ltd, for example, on the Humber wrote to us
after the previous session two weeks ago saying the rates on the
four ports on the Humber had gone up by approximately £11
million, which would mean for the other 51 ports the increase
would only be £8 million. Somehow the Sub-Committee feels
we are not getting the right figures here. You are saying there
is a commensurate reduction for the port operators.
John Healey: I am not saying it
is commensurate. There are three things happening here if I may
say so. First of all, the rateable value of some port operators
has changed significantly, Hull, Liverpool and Immingham being
cases in point, Barrow in contrast not being a case in point,
with the new listing following the review the VOA has conducted.
The second thing that has happened is that by looking in more
detail at what actually happens in the ports, the VOA have been
able to identify a number of companies, many of which have operated
in the ports for some time, that should have been listed separately
and paying business rates separately but were not and they have
now been listed for the first time. In Hull's case, there is an
extra 38 companies and in Liverpool's case it is an extra 89 companies.
That is why the third thing is happening here, which is the rateable
value of the businesses occupying the ports, the port occupiers,
in some of these ports has gone up significantly. In Hull the
rateable value has gone up for the port businesses/occupiers by
over £11 million; in Liverpool it is a similar amount.
Q298 Chairman: It is the occupiers
who are now facing the prospect of going out of business. Are
you really going to stand idly by and watch that happen?
John Healey: The problem in the
perceived unfairness is two-fold here. First of all, for these
pre-existing businesses which have now been listed and therefore
face a business rates bill of their own for the first time, they
are having this confirmed for them and the amount confirmed midway
through 2008, three and a half years into the current listings
period and yet their liability dates under legislation from 1
April 2005. That is the first perceived unfairness. The second
perceived unfairness, and some have argued this as occupiers of
businesses, is they feel they have either paid their business
rates or in some senses paid a contribution to their business
rates as part of the fee that they pay to the port's operator.
Where they see their port operator in-line for a significant rebate
because their rateable value has gone down, they are facing a
business rates bill on the other hand of their own for the first
time, even though for a good number what we can say now, with
the hindsight the Valuation Office Agency offered you two weeks
ago, is that many of these businesses should have been listed
separately well before 2005 and paying business rates themselves
separately before 2005.
Q299 Chairman: Having imposed this
extra charge on the 55 statutory ports, are you going to go on
and impose a similar reassessment on the 60-odd commercial ports?
John Healey: Can I make two points.
In a sense, this is the VOA doing its job. Their job is to make
sure they have full and comprehensive listings of those businesses
which should be eligible for business rates in a way that we did
not for these statutory ports in 2005 and arguably did not in
the previous period as well. There are four ports for this work
which have still not been completed and they are Plymouth, Poole,
Ramsgate and Milford Haven.
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