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Business Rate Supplements Bill

My Lords, I am sympathetic to at least some of these amendments. While beginning this process, at Second Reading and in Committee I put on record my interests as director of a number of businesses that pay business rates. I probably should have done that with the first group of amendments, for which I apologise; I certainly put that on the record now. On the amendments that we support, anything that improves communication and information on business rate supplements clearly has to be welcomed. We have a problem with Amendment 29, which contains the notion of varying the cap on the business rate supplement of 2 pence; we already think that a very high burden on business. I know that the Minister, in responding to the first group of amendments, made the point that potentially relatively small sums will be involved, but the Local Government Association has calculated that if every authority used the 2p levy, then the total tax take would be in the region of £750 million, and possibly even more than that in 2010 after the rating revaluation takes place. These are significant sums. It is in the nature of taxation that when someone applies an upper limit, there is a tendency to go up to that limit. One also needs to remember—I am sure that the Minister will want to make this point—that the figure is a maximum, not a minimum. There is an issue that we feel strongly about, and I want to put it on the record. The noble Baroness, Lady Hamwee, talked about what attracts businesses. Business rates are either the second or third biggest charge faced by most businesses, and we know from experience in the 1980s and 1990s, with initiatives such as enterprise zones and the like, that when you offer a business-rate-free zone, that becomes attractive to businesses. Given that business rates have a major impact on businesses locating in particular areas, we would have liked the Government to consider the notion, which we would have supported from these Benches, that funds from the levy could be used to discount business rate bills. There are various reasons why businesses might locate in a particular area. People might want to use the funds raised through the business rate supplement to discount the cost of business rates, which are an incredible burden on many businesses, particularly as a result of the increases that have already been levied this year. Although the 5 per cent increase has been deferred for a year, that additional 3 per cent will be levied on businesses next year. Next year there will also be the rating revaluation, so this is becoming a bigger issue. We would have thought that in those circumstances, being able to say to people, "Listen, you can raise funds through the business rate supplement and you can actually use them to discount the cost of locating and operating in your particular area" would be a sensible use of that facility. If the aim is to promote economic regeneration, we on this side of the House—and we would expect there to be some sympathy on the other side of the House, given the body of evidence for this—suggest that lower tax rates tend to stimulate exactly that. And if that is the aim, anything that lowers tax rates has to be a good thing. From that point of view, we are basically sympathetic to the spirit of these amendments, although in the case of Amendment 29 we would have serious reservations. If there were an additional level of flexibility, allowing it to be used to cut the excessive burden of business tax, we would be minded to support it more than we shall be.