MP Philip Dunne has led a House of Commons debate on the potential devastating effect of the new Business Rates on petrol stations. Speaking in
the Commons yesterday, the Conservative MP for Ludlow warned fellow MPs that the issue was threatening communities up and down the country, particularly in rural areas and was "a classic poison pill from this Government for the next Government to inherit".
He stated: "The Valuation Office Agency is beginning to realise that a problem is brewing, and not just in the level of appeals. It is also aware that the situation will lead to significant closures.
"In fact, the official from the VOA in the West Midlands has told one proprietor in my area that if the revaluation goes through, the economically logical conclusion would be to stop selling fuel. Not only would that lead to a significant reduction in the Government’s income from rates based on fuel sales, but the rates on the residual shop businesses would revert to a normal area basis, and therefore be significantly lower, which would be self-defeating for the VOA."
Addressing Barbara Follett, the Parliamentary Under-Secretary of State for Communities and Local Government, Dunne said he was aware that another petrol station had already had an approach from the VOA to halve its proposed increase.
He asked: "Will the Minister say whether that is an isolated case? Does the VOA know that it has made a mistake, and is it therefore seeking to negotiate deals? If so, how many deals is it negotiating? Does the Minister accept that that is a methodology that has to change?
"The Minister and the VOA are hiding behind transitional relief. They have put a cap of 11 per cent on the increase in the cash cost of rates to businesses, but we have examples of petrol stations facing much larger increases in the first year, and it is no coincidence that transitional relief applies in this, an election year. The escalation of rateable value increases kicks in faster in subsequent years, with increases of 25 per cent a year in the final two years of the five-year transitional scheme-a legacy that is a classic Gordon Brown poison pill for an incoming Government.
"The large tax rises will occur in two to four years, so closures are most likely to fall on the next Government’s watch."
Follett replied to earlier queries regarding deferring the revaluation, adding: "The hon. Gentleman asked why we did not defer the revaluation, but regular revaluations are an important part of the rating system, as they help to maintain fairness by rebalancing the burden within the overall envelope. If we were to defer the revaluation, as he has suggested, that would hit some businesses that are doing much less well.
"It is a redistribution, and I do understand that it will involve winners and losers."
Regarding the Valuation Office Agency’s methodology, she offered to "explore that matter in more detail with the Treasury, and perhaps with the hon. Gentleman himself", adding: "It is important to note that the Valuation Office Agency does not set the method, but follows industry practices. It has engaged with bodies such as the United Kingdom Petroleum Industry Association to gain a better understanding of the petrol filling station market.
Brian Madderson, RMI Petrol chairman, said that with the April 1 deadline fast approaching, it was vital to keep up pressure on Westminster over the Business Rates issue. He added: "Philip Dunne’s debate was excellent for doing that. We are still in discussion with the VOA though MUA Property Service and we remain hopeful. But obviously we are getting close to the deadline and nothing has been formally agreed."