Defeat for Tories fighting rate bill hike

A bid to derail Government plans that would mean higher business rates for pubs has failed.

But the controversial supplementary business tax proposal was slated by Conservative MPs during a heated debate in Parliament on Monday.

Under plans in the Business Rates Supplements Bill, from April 2010 at least one in seven pubs faces an extra £1,000 or more on its rates to promote economic development locally if its council deems it necessary.

Tory leader David Cameron and five other MPs tabled an amendment — defeated on Monday by 159 votes to 327 — for the plans to be scrapped.

Croydon MP Richard Ottaway said small firms in his constituency would pay for the Crossrail project in London but that it would give them "no benefit whatever".

"Where on earth is the equity?" he said.

Northampton MP Brian Binley said: "Pretty much all the bodies representing business have said that the rate is an extra tax, and another cash cow for local Government. They are totally opposed to it.

"We speak against a background of a serious recession, so what does the Government do? It proposes that we think about levying extra cost, through an extra tax, on businesses, which are suffering from massive past burdens."

Several MPs criticised the fact that — unlike business improvement districts — firms would have no say over whether charges are introduced.

Local Government minister John Healey said there would be a "full consultation" before charges can be levied and businesses would have a say over local projects.

"We are not imposing a new business tax, but introducing a new power to allow local authorities — with strong safeguards for business — to raise some of the money needed to boost local business and the local economy in the longer term."