Port companies face insolvency

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Hundreds of companies operating in docks will be tipped into insolvency next year despite the chancellor’s decision to give them more time to pay backdated rates bills, they said on Monday.

Alistair Darling said that port companies such as cargo handlers and repair companies could pay bills in interest-free instalments over eight years.

A recent change in the law requires companies operating in ports to pay rates direct to local authorities, rather than through rents to the port authority.

The government took so long to value properties that bills from 2005, when the change was initially made, are only just being sent out.

However, Andrew Finfer, a lawyer representing Humberside campaigners, said that delaying payments would make little difference because the bills exceeded many companies’ assets, making them technically insolvent.

“We find it incredible that the government is pursuing an unworkable solution,” he said.

Mr Finfer is expected to meet Mr Darling on Wednesday in a last-ditch attempt to have the backdating, which affects 500 companies, scrapped.

Port campaigners have predicted the loss of businesses worth up to £20bn ($30.24bn) and 150,000 job losses among 55 ports. Some have already gone under.

Hull city council has announced that this year’s bills, up from £3m to £20m, would be issued at the end of the month and the backdated ones in January.

John Healey, the local government minister who was responsible for brokering the Treasury deal, said that it would ease cash-flow problems for companies.

“It is right that businesses pay the tax that is due,” Mr Healey said.

“But in the current economic climate we must do all we can to support business and safeguard jobs.”

However, a government official said that it was the duty of the companies’ directors to ensure liabilities did not exceed assets.

The government is also talking to port operators, who have seen business rate bills cut substantially, about passing on some of their rebate.

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