Friday, March 9, 2012

Port Based Freight and Logistics Businesses Sigh with Relief

Government Comes Good on Promise of Rates Waiver
Shipping News Feature

UK – Regular readers interested in British ports may remember a series of articles we wrote in 2010 in relation to the perceived scandal of excessive port rates and the promise by the new coalition Government to right the previous wrongs, unfortunately too late for some freight and logistics businesses for whom the financial burden had simply become too heavy. Now it appears that the wheels of power have turned and this week port based businesses facing unfair and unexpected backdated business rates bills can breathe a sigh of relief.

On the 5th March whilst visiting AB Ports in Ipswich Local Government Minister Bob Neill said that the Government’s work to support port businesses, which he considered the backbone of Britain's global export industry, has already helped them continue to thrive and grow, and that they would now be able to move forward confidently without the unexpected return of extortionate business rate bills.

A review of ports by the Valuation Office Agency in 2008 meant that many port-based companies faced business rates bills backdated to 1 April 2005, cumulatively reaching into the millions. Up to 2008, a number of businesses in each of the 55 statutory ports in England (approximately 700) and Wales, understood that they were not individually liable for businesses rates, as they believed that there was a combined bill that was paid by each port operator (their landlords) on behalf of all the firms within it. Following the review the Valuation Office Agency decided that each firm must each pay an individual business rate bill, declaring them all ‘separate occupations’. The Agency retrospectively backdated the rating list, which led to new tax bills for local firms.

Government action to cancel these unfair, retrospective rates bills means that port-based businesses can now either scratch the debt entirely from their records or, if they had paid their bills already, expect a rebate in the near future. The policy will also benefit businesses outside of ports, which meet the criteria. Mr Neill said:

“For too long this unfair backdated port tax took its toll the port industry, with unexpected million pound bills damaging the businesses at the foundation of this country’s import and export infrastructure. The Government took swift action to reverse these effects, our freeze on paying the backdated tax helped prevent job losses and let companies plan for the future. From 31st March, affected businesses in ports and across England can at last breathe a sigh of relief as our action to waive their bills is completed. Now the looming threat of the unfair backdated port tax is finally behind us, I’m confident that the industry can move forward with putting that money to its rightful use – to build up their businesses, retain jobs and benefit from international trade.”

The total estimated value of the waived tax burden for the twenty five English ports affected totals in excess of £66 million ranging from just one business in Barrow in Furness at £3,000 to ninety two in Liverpool whose rates burden (now rescinded) amounted to £ 2,431,000.

Bodies like the Mersey Dock Rating group have worked together with other affected port groups and David Pendleton, Business Development Director for Mersey Maritime which represents a Maritime 'cluster' of more than 1000 businesses with an annual turnover of £2.5 billion per annum expressed his delight at winning through saying:

“At least 70 firms and 3000 jobs were estimated to be under threat on Merseyside and this in the midst of the worst recession in living memory. The Government’s determined effort in first freezing backdated payments and now removing them altogether means that these companies can finally concentrate on moving forward and creating jobs and wealth for the wider economy, which is vital at this time.”

Welsh ports have not fared so well, in Wales it lies within the remit of the Welsh Assembly Government and Wales has been given funding under the Barnett formula to reduce bills for firms in Welsh ports. However, so far the Welsh Assembly Government has resolved not to pass on these tax cuts and there appears little prospect of them doing so.

Photo: Barrow in Furness shows that even smaller ports can handle vital contracts.