Bob Neill, UK parliamentary under secretary of state at the department of communities and local government (pictured centre), met companies at the port of Sheerness on Monday to update them on the action being taken to reverse damage many are still suffering because of backdated ports rates brought in under the previous administration. For many, the surprise sums have affected investment, trust and led to redundancy; for others, including those at Sheerness, it has even meant insolvency.
Neill was there at the behest of finished vehicle carrier Gefco UK, itself hit with a bill for £3m ($4.75m) by the Valuation Offices Agency (VOA), one third of the total sum levelled at the port when the office announced the backdated sums in 2008.
Having already threatened to withdraw from Sheerness, despite its ideal vicinity to Calais for Peugeot Citroën shipments from the European continent, Gefco has been fighting for a response from the government since then.
The charges stem from a decision in 2008 by the VOA to impose additional business rates on port companies. They have attracted controversy because the assessments preceding their introduction, which started in 2005, have failed to properly calculate properties or inform those affected. This has resulted in surprise backdated sums in the millions as the VOA’s main body, HM Revenue & Customs, attempts to retrieve a sum estimated to be £200m.
Following promises made in May this year by the then newly-elected Coalition government, Neill said a moratorium had now been established freezing the payments port companies have to make until March 31st next year, but added that final legislation to remove the ruling is likely to reach beyond the current financial year and into summer 2011. The government has committed £175m to waive backdated rates for all eligible properties amongst the 700 estimated to be affected.
While a definitive end-date to the liability period is yet to be established the government is going forward with the submission of primary legislation to remove the ruling.
“What I’ve done today is to submit a written statement to the House of Commons just confirming to Parliament that we will be including clauses in the Localisation and De-Centralisation Bill which will be introduced in the latter half of November/early December, formally telling Parliament that we will remove the backdated liability,” Neill told those gathered at the meeting.
The message was welcomed by Howard Nash, automotive director for Gefco UK (pictured far right), who said it would turn back the lack of trust felt by Gefco’s international management, which had lost confidence in further investment in its UK operations
“We’ve had serious damage to international trade. We are a foreign company that has invested heavily in ports around the country and [the backdated rates] appeared as a lack of trust,” said Nash. “What I’ve been trying to achieve with Bob and his colleagues is that we need to rebuild that trust.”
Nash said the issue has been damaging but that the action taken by the Coalition government was sending out the right message. “For me to go back and say we are at least going to stop paying the £3m that we were billed allows us to start looking at investment,” he said.
As evidence of this the company is looking at growing activity at its Portbury operation in Bristol and mention was also made of future development of existing rail links at the port of Sheerness.
It remains to be seen what changes will be made at the VOA. No impact assessment was made prior to the implementation of the previous charges and Neill admitted that future process would have to be reviewed with the VOA and treasury minister David Gauke.
“We need to look at ways of achieving a better flow of information so that when there are changes they can be communicated more swiftly,” said Neill. “We want to find out why in this particular case there was such a time lag in the process being completed.”
“Thirdly,” he continued, “we want to look more generally at the way we approach the business rating. Backdating has always been a part of the system but for it to work it needs to give people a lot more certainty and we need to look at ways of speeding up the process.”