£40m question needs answer

Hartlepool MP Iain Wright.

Hartlepool MP Iain Wright.

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THE subject of business rates will not necessarily set the heart racing.

However, for many businesses in the town, as well as the local council trying to plan services, their level and the manner in which they might be changing as a result of Government proposals are of crucial importance.

This week there was a debate in Parliament about business rates and I spoke about the Hartlepool situation.

We are an unusual town in many respects – rightly proud of our special and unique place – but the peculiar status of our economy means that we are a special case and I sought to mention this in the Parliamentary debate.

Hartlepool collects about £27m every year from business rates, but receives £40m back from the Government in business rate income as a result of redistribution.

This concept has been accepted and in place for very many years, as a recognition that some places like Hartlepool, with complex social needs, require more assistance than their ability to raise taxes can generate.

Hartlepool Borough Council is very vulnerable as a result of the nature of the business rate make up. I mentioned in the debate in Parliament that, of the £27m collected in the town from business rates, some £11m, or over 40 per cent of the entire total, comes from just ten businesses.

One business, the nuclear power station, provides about £4m, or about 15 per cent of the entire total revenue collected through business rates.

If one of those businesses were to close or re-locate, the effect on Hartlepool’s tax raising abilities would be immense.

We therefore need real reassurance from the Government in the event of such a closure or move, Hartlepool and its public services would not be affected and that the Government would in some way make up the difference. After 2014, however, no such guarantee is in place.

Businesses, particularly retail, are affected by changes in business rates.

This is something that came out loud and strong in the debate from other MPs.

A quiet announcement from the Government this month revealed that the revaluation of business rates, which was due to take place in 2015, would now not take place until 2017.

This means that rates will continue to be valued on 2008 property levels. This seems a long time ago now, but you will recall that 2008 was a particularly buoyant time for the property market and that property values were very close to their all-time high.

The world has changed immensely since then, but businesses are still having their business rates assessed at 2008 levels. This is bound to be having an impact and act as a drag on growth.

I mentioned in the debate that for a number of factors, such as changing shopping habits, the existence of three large supermarkets in the centre of town, as well as the generally hostile financial climate in the North-East, Hartlepool has one of the worst performing retail centres in the country, with a vacancy rate of 28.8 per cent.

The Government decision to delay revaluation of rates will have a further knock back for struggling businesses in the town. I mentioned in Parliament that those retails areas like Hartlepool that are already struggling will be hit the hardest.

The balance of ensuring the right tax level whilst being fair and encouraging enterprise is one which all Governments have to contend with.

However, it is vital that, on the question of business rates, for the good of the town redistribution of rates has to continue, to allow the council to provide much needed services for the people of Hartlepool.