Posted: 5 April, 2016 at 10:28 am

John urges Sajid Javid to ‘fill business rates black hole’ if Rotherham loses Tata

John confronts the Business Secretary over shocking new analysis of the financial impact the loss of Tata steel would have.

In a letter to the Business Secretary, he urged Mr Javid to demonstrate his support for UK steel and UK steel communities and ‘guarantee to fill the business rates gap in full.’

He wrote:

Dear Sajid

I am writing to inform you of the impact the loss of Tata steel in Rotherham would have on local business rates, council finances and council tax payers. As the Minister responsible both for business rates and the steel industry, I trust that you have already conducted a full assessment of this business rates black hole. Other steel towns will be put a similar position.

Our main Rotherham steel plant at Aldwarke is linked to Stocksbridge as part of Tata’s Specialty Steel operation, producing some of the highest-grade, highest performance and highest-value steel anywhere in the world. It is exported globally for critical defence, aerospace, automotive, oil and gas products. Our South Yorkshire steelmaking truly is a national strategic industry, and I am confident that this has a future either within or beyond Tata. However, if the very worst comes to the worst and Tata’s steel plant in Rotherham closes, I want you to be aware of the financial consequences.

Tata has 5 properties in Rotherham, with annual business rates bill set to be £3.2m in 2016/17. Tata is the single largest business ratepayer in Rotherham, and this sum is fully 4% of the total business rates base (£79.2m). Under the current business rates system, with central-local government sharing such risks 50-50, this would mean £1.6m in direct loss of council income and an increase of 1.8% on council tax to cover the shortfall. When the Government changes to ‘full retention’ of business rates by 2020, the council will bear the full £3.2m loss.

Beyond this, there are a further 100 or so Rotherham-based companies involved in the supply chain to Tata whose annual rates bill is around £2.4m. So, altogether the closure of this firm could lead to a 7% or £5.8m reduction in business rates raised.

You will see from this that there is even more at stake than the direct blow to local jobs and business, if Tata’s Rotherham steel plants close. This huge hit to our business rates base will be a secondary economic shockwave, which other steel areas will take as well.

Over recent days, the Prime Minister, you and your industry minister Anna Soubry have said that Government will look at all options to deal with the steel crisis.

The safety net and risk-sharing in the new system for funding local government through business rates is totally inadequate for losses on this scale. Local council taxpayers cannot be expected to cover the shortfall, nor can a council be expected to cut an extra 4% of their Budget when their area suffers such a big closure over which they have no influence, in this case business decisions taken in Mumbai.

If you want to demonstrate your support for UK steel and UK steel communities, then I ask you to confirm that you will guarantee to fill the business rates gap in full.

I look forward to hearing from you.

Yours ever

John

 

JOHN HEALEY MP

(WENTWORTH AND DEARNE CONSTITUENCY)