At yesterday's meeting the VOA was asked to explain why it is back-dating demands for rates to 2005 without full consultation and sufficient warning.

The VOA's actions meant that port based businesses, operating in an extremely competitive market, were kept in the dark about what the increase in rates would be. As a result, they are unable to pass these costs on to their customers and have been unable to accrue for any such increase in their accounts. It now leaves many businesses facing financial disaster.

The critically damaging effects of the problem emerged initially at the Port of Hull, the first to receive its rating demands, where 44 port operators have been asked to suddenly pay an extra £18.4m. Operators in the UK's other 55 statutory ports are now bracing themselves for similar backdated demands totaling millions of pounds, and 65 other commercial ports will be open to reassessment. Some individual operators who have already received backdated demands are facing bills of several million pounds, which it is impossible for them to pay and which will lead to certain closure of these businesses unless the Government takes action to implement the increased rates charges over time.

Leaders of businesses based in British ports estimate that, unless the ratings crisis is tackled by the Government, the industry faces the potential loss of business worth up to £20bn and job losses of over 150,000.

Solicitor Andrew Finfer, of Schofield Sweeney in Leeds, who is acting on behalf of port operators said, 'Ports based businesses are pleased that the Treasury Committee appreciates that the VOA's actions will have such a damaging effect on jobs, investment and ultimately on UK PLC at a time when the national economy can least afford it. The solution to this pending disaster is simple, we need urgent action by the Government to do what they should have done in 2005, which is to implement gradually a fair and consistent national rates regime in time for the next review in 2010. In the meantime, they should suspend the sudden implementation of the new system which has caused all the trouble. It is essential to save jobs and help future investment in UK ports.

'Businesses do not object to paying rates, nor do they object to paying increased rates but rather it is the inappropriate way in which the increases have been implemented that is so wrong. It has left operators with no way to manage the increases through their businesses and the harsh reality is that businesses might go bust.'

The first reported casualty, Fortress Warehousing and Distribution Limited, based at Tilbury Docks, went into receivership after receiving an unexpected bill for £2.4m. P&O in Hull has been hit with a backdated bill for £5m, which represents a 500% increase in rates.

Rory Clarke, director of Rix Petroleum based at Hull Docks, said that his business faces arrears of approximately £1m and an ongoing annual bill of over £300,000, the consequences of which will be job losses.

In Liverpool, stevedoring firm, Thomas Nichols Brown, is facing an overall liability of more than £1m, which the company will struggle to find from a turnover of £1.8m.