Port business rates – Defending the indefensible

Mention ports to the vast majority of the UK’s population and almost instantly you will see their eyes begin to glaze over. Sadly, that lack of interest or understanding probably explains why the whole sorry saga of backdated port business rates has scarcely been noticed by the mainstream media.

But persevere and explain the situation in which port businesses around England and Wales are facing horrendous business rates bills – backdated to 2005 and adding up to millions of pounds – and the reaction is one of incredulity at a blatant injustice.

Surely, this can’t really be happening? But it is, and still the government is refusing to back down.

Without warning, and in the midst of a nightmare recession, port companies – from stevedores to warehouse operators to agencies – have been landed with bills that are often many multiples of their very best year’s profit. In some cases, they exceed a whole year’s turnover.

No matter that they have subsequently been given an “unprecedented” eight years to pay for it – that only prolongs the agony, with many becoming technically insolvent in any case. And, as several of those affected have pointed out, it wouldn’t make any difference if they had 100 years to pay.

The Mersey and Humber campaign groups have led the way admirably in protesting, lobbying, campaigning, and pleading. These were two of the earliest areas to be hit as the new system was rolled out around English and Welsh ports.

Even now, there are companies in ports elsewhere that are unsure exactly what their liability will be – again, to be backdated to 2005. The anger is spreading.

Labour MPs with major ports in their constituencies, including Louise Ellman, Liverpool Riverside MP and respected chairman of the transport select committee, have worked tirelessly in an effort to persuade their “own side” to correct its mistakes.

The Conservatives have steadily increased their focus on the issue and the campaigners celebrated a notable triumph in March, when the House of Lords – in a rare division – voted in favour of shadow transport, maritime and shipping minister Earl Attlee’s motion of regret over the government’s policy on the matter.

The Tories are following this up with the promise of a series of amendments in Commons, in an attempt to force the issue.

The Valuation Office Agency, whose incompetence is at the centre of the whole crisis, has admitted its mistakes in terms of failing to consult, failing to communicate and failing – by as much as four years – to do its valuation job in time.

In January, the House of Commons treasury subcommittee recommended that as the VOA was to blame for the situation faced by the port firms, the bills should be scrapped and introduction of the new rating system should be put back to 2010.

Port companies continue to emphasise that they don’t have a problem paying rates – but they do have a problem paying them retrospectively, and twice. They are angered by government suggestions that they should have been paying rates before and it is therefore somehow “their fault”. These companies have been paying rates, via their landlords, the port owners, through the cumulo system, yet their new bills take no account of that.

As Grimsby MP Austin Mitchell asks: “Why are businesses on the docks being asked to pay rates twice – once through the cumulo, and once through the retrospective assessment?”

Local government minister John Healey told the House of Commons in a debate fittingly set on April 1 there was a “strong perceived unfairness” about the situation in which port businesses now find themselves. That surely must be the understatement of the year.

Liberal Democrat Julia Goldsworthy, MP for Falmouth and Camborne, accused John Healey of hiding behind the complexity of the situation “to defend the indefensible”.

“There will be opportunities to right this wrong but it seems that the minister is unwilling to do so,” she says. “That is deeply depressing.”

She adds: “For the people who are affected, it is simple; they face a tax bill for previous years for which they did not know they were liable, so they have not been expecting it. The burden was imposed after the terms and conditions with the operator had been agreed and after payment had been made. For many businesses, the impact is so devastating that they may face insolvency.”

The eight-years-to-pay concession did not right the wrong, she said. Businesses were “unwitting victims of the VOA’s complete incompetence”.

Throughout the debate, John Healey has said that scrapping the rates demands and starting again would involve primary legislation.

But as shadow local government minister Bob Neill says: “If Parliament is not here to legislate, what is it here for? If Parliament is not here to right an injustice, what is it here for?”