COMPANIES across Southampton docks are celebrating today after the Government wiped out £3m in backdated rates owed by dozens of firms in the city.

The coalition Government fulfilled an election pledge to the 26 local firms and hundreds more across the country to cancel the controversial business taxes, which have crippled many port businesses.

Announcing the move to Parliament yesterday afternoon, Local Government Minister Bob Neill said the move was a “victory for common sense”.

Southampton Port director Doug Morrison hailed it as “the right decision”.

Across the UK the bill for backdated rates that will not now have to be paid totals £175m, with firms in the Humber ports bearing the brunt of it.

The 26 firms affected in Southampton found out in late 2008 that they faced a collective bill of more than £3m in back taxes – equivalent to £115,000 each – after the then Government changed the way rates were calculated and backdated the higher charges to 2005.

Local business leaders protested the move would hit jobs in the port, which employs 12,000 people just as the recession started to bite.

Nationally the charges were estimated to put 150,000 jobs at risk.

Mr Neill said: “The port industry has long been the backbone of this country’s export capability. Our decision to waive and repay these unexpected porttaxes is a victory for common sense, saving jobs and freeing firms from balance sheet insolvency.

“Despite the financial situation that we inherited, we have honoured our promise to find a permanent solution to the problem. Today I can confirmthat we will legislate in the Localism Bill to permanently cancel these port tax debts.

“As we look to get the country growing again it is right that port companies across the country are able to move forward confidently, unburdened by these unexpected debts.”

Port director Doug Morrison said: “As a company ABP has always struggled with the concept of that you can go back to 2005. You can accept an increase in charges. You can work that out with your customers but to do it retrospectively is unfair. Despite the hard times we live in this is the right decision.”