Time to celebrate

The first thing Bob Neill did after being appointed the new Coalition Government’s local government minister was to sign an order freezing the millions of pounds worth of backdated business rates demands that had blighted the ports industry since 2008.

In opposition, he had been a strong supporter of the campaign against the bills faced by more than 600 port companies around England and Wales. Both Conservatives and Liberal Democrats had promised to end the threat of the retrospective rates; with the Labour Government refusing to back down over the issue, the approaching General Election became the final hope for many companies facing bills backdated to 2005 that were in some cases many multiples of their annual turnover.

The Coalition Government has promised to cancel the backdated bills via primary legislation as quickly as possible and reimburse companies that have already paid. Remarkably, in these austere times, the Treasury agreed to set aside £175m to finance the move.

Mr Neill also promised an urgent inquiry into the actions of the Valuation Office Agency, the government body which was at the centre of the rates crisis. “This should not have happened and we want to make sure that it never happens again,” he says.

His recent visit to the Port of Goole, where he met 200 representatives of the Humber ports sector, was final confirmation that, after two miserable years of campaigning, political manoeuvring and legal action, the ports sector finally had something to celebrate.

“We had a pretty clear way forward on this after drawing up the Coalition Agreement,” says Mr Neill. “I was very pleased to get a very positive reaction at Goole and it was nice to be able to give people good news when you are a minister.”

Two things struck him very strongly, he says – first, that the move would help business and jobs, and second, the personal nature of the crisis. “When you talk to these people, you realise this was their life’s work at stake. It was also very heart-warming to hear firms talking – including foreign firms – much more positively.”

Faced with enormous bills, many companies cut jobs and cancelled investments from mid 2008 onwards. At its Nordic Terminal in Immingham, DFDS Tor Line made 100 out of its 700-strong workforce redundant in the face of a £9.9m backdated bill.

Scotline’s Goole terminal went into liquidation shortly before the General Election, as a direct result of a £600,000 backdated bill. A number of other companies went bankrupt while many more were facing technical insolvency due to the liability on their books. Some kept going only because sympathetic local councils held back from demanding payment.

Speaking to Port Strategy, Mr Neill says he is really sorry that for some companies the government’s action came too late, but says he hopes it will help some to get afloat again. Importantly, the government action removes uncertainty. Companies will be able to tell their accountants and banks that the liability no longer exists – “it gives them a defence to any charge of technical insolvency, as the debt will be removed”, he says.

David Johnson, financial director of RMS and chairman of the Humber dock rating group, could not conceal his delight at the outcome.

“Getting rid of the backdated port rates means that we can push on through in these difficult economic times, creating wealth and protecting jobs, assured at least that we are not further burdened by this unfair backdated tax,” he says. “Business needs a stable and level playing field so we can get on with what we do, generating wealth and the jobs our country needs to get back on its feet. We are delighted with the magnificent support we received from the Conservatives and Liberal Democrats.”

He welcomes the promise of an inquiry into the VOA: “If they had done their job properly in the first place, we would never have had this mayhem,” he adds.

Port companies are “totally realistic” in that they will have to pay rates going forward, says Mr Neill. Meanwhile, the government would move fast to get the issue sorted out as quickly as possible.

“I hope that this will have got us on to a much more positive approach with the ports sector,” he adds. “We are a pro-business government and recognise the importance of the ports and port companies. We want to treat the port sector with respect, and give it support.”