Revealed: Blair fails to pay business rates on Sedgefield office

The Prime Minister pays no local business rates, despite the fact that his constituency home contains a fully equipped office and is used "on a daily basis" by his constituency party.

Mr Blair rarely spends weekends at Myrobella, the largest house in Trimdon, Co Durham. But the office within the house is used regularly by Mr Blair's agent, Cllr John Burton, who lists the house as the location of his employer in his declaration of interests as a councillor.

News of the Prime Minister's oversight follows the revelation that John Prescott, the Deputy Prime Minister, did not pay council tax for eight years on his official residence.

Last night the Tories accused Mr Blair of applying "different rules" to avoid paying the taxes that hit small businesses and people who work from home across the country.

The Conservatives calculate that the Prime Minister is saving £1,145 a year by failing to pay business rates on the property.

Caroline Spelman, Conservative local government spokesman, said: "At the time when local firms are paying soaring levels of business rates and home workers are increasingly being charged prohibitive rates by John Prescott's tax inspectors, different rules seems to apply for Tony Blair and the Labour Party.

"We have a Deputy Prime Min-ister who didn't pay any council tax on his three homes, and now we have a Prime Minister who doesn't pay any business rates on his own office. Perhaps if Mr Blair started paying his way, he would realise the punishing level of local taxes under Labour on hard-working families and struggling firms."

Downing Street has confirmed in the past that the "house is also used as an office by local constituency staff".

Myrobella House is listed as Mr Blair's North East office. Last week Mr Blair's official spokesman said: "This is not just a house, it's a working house. It is used on a daily basis as a constituency office."

The Government's own regulations on business rates and council taxes say that homes partly converted into an office or business must pay council tax and business rates. The "composite property" tax regime applies to pubs and newsagents where the owner lives overhead. Business rates are the third-largest item of expenditure for many firms after wages and rent.

Downing Street insisted last night that the Prime Minister, who does pay council tax, had not broken any rules on paying local taxes.

"Mr Blair meets all his local tax obligations. The office is not used exclusively for constituency business; therefore no business rate is payable. It's used as an office," said a No 10 spokesman.

There is no personal gain for the Prime Minister in not paying business rates because the cost of the tax could be reclaimed by him as an MP under House of Commons expenses.

But the failure to pay business rates on a local office will raise fresh questions about the finances surrounding his constituency house.

A Freedom of Information request by the Conservatives to Sedgefield Borough Council has confirmed that Mr Blair's home does not pay business rates of any sort. However, the next door police office is listed as paying rates, and has a rateable value of £3,000.