Supporting Small Business

Alyn Smith Excerpts

Tuesday 19th October 2021 Commons Chamber

[Huw Merriman]

I do agree. Interestingly, the CBI has talked about the challenge on business rates because every three or five years there is a revaluation and business does not have the certainty it needs. I think in Hackney there was a change of about 46%. The CBI recognised that the uncertainty of this type of big-shock fiscal events can absolutely impact business’s ability to plan and invest in the future. A referendum on the whole future as to whether Scotland will be part of the UK, its biggest trading partner, must surely have some impact.

[Alyn Smith (Stirling) (SNP)]

On the hon. Gentleman’s point about Princes Street, did he manage to make it along to the new, shiny, marvellous St James Quarter, where a number of the businesses he talked about relocated to? He is making a point in isolation about one street in the country, not the entire nation, and it is possibly unwise to draw too many conclusions from one street.

[Huw Merriman]

The hon. Member makes a fair point, because two out of four businesses have relocated to St James Quarter, with the interestingly shaped top that is called things that I would not repeat in this Chamber, but Jenners, a classic department store that is not relocating, is a good example of a casualty of changing trends.

It would be absolutely churlish not to recognise what this Government have done over the past 18 months. I represent a constituency in Sussex that is absolutely reliant in employment terms on small businesses in leisure, tourism and retail. The constituency I represent has businesses that were among the 750,000 that were given a business rate holiday. Furlough is not just keeping the employees going but making sure that they are returning back to the businesses. Some 15,300 workers in my constituency, about a third, were reliant on furlough to keep them going. When I went round to visit those businesses last summer—it had been very difficult for us to meet, but the changes in the summer allowed us to do that—they were absolutely of the view that had it not been for the Government’s support, their businesses would have shut down and their employees would have been made redundant. Everything that I am about to say has to be put in the context of the fact that this Government have absolutely supported business. I absolutely refute the point that the Conservative party is no longer the party of business; it absolutely is and it will always have the champions of business on these Benches.

In the six years since I have been a Member of this place, I have always championed the need to reform business rates. If we look across the G7, we see that the UK has the largest property taxes. They are a tax on jobs and a tax on business, and I would like to see them reformed. Over those years, we have had a number of reviews, and we are waiting on one at the moment. I would dearly like to see business rates replaced. The CBI is right when it says that business rates are a tax on business and jobs and lead to uncertainty. I see the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves) nodding her head.

What is also important is that I stand for fiscal responsibility. Something has to come in place of business rates that brings in the exact same yield. With respect to the shadow Chancellor, when she was pushed by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on how the £20 billion-plus that business rates bring in as revenue would be replaced, she was only able to give a figure of about £7 billion. That leads to a big deficit. That means there would either have to be public spending cuts to make up for the shortfall, or we would have to go into further debt, which is no good for business or the individual.

--- Later in debate ---

[Alyn Smith (Stirling) (SNP)]

I warmly commend the Labour party for bringing to the House for discussion the situation for high streets and small businesses, because it really is an issue that cuts across all our communities and all the places we represent. I am conscious that the situation in Scotland is different, as are many of the powers, which are reserved and devolved, so I shall focus more on the common issues that need resolution. I am also particularly supportive in general terms of the Labour motion. I think that we can all agree that business rates as they stand are not fit for purpose anywhere and that they need urgent reform. Worldwide, retail has experienced a disruptive event and an extreme transformation. Some of the points that were made earlier trying to draw distinctions and conclusions from local events miss the mark. This is a global phenomenon that we are seeing. The high street is undergoing a considerable evolution. I was struck by the shadow Chancellor saying that covid had changed everything. I slightly disagree; covid has accelerated trends that were already there. Although I do not think that it has changed quite everything, it has certainly accelerated the changes that we need to make as legislators to deal with the challenges that we are facing.

I commend the OECD for the research that it has done into the comparative analysis of different places and of how retail and consumer habits are changing worldwide. It is a very useful analysis. I was struck by the reference made by the hon. Member for Devizes (Danny Kruger) to the 1830s and how this is long-term change. In the same way that we saw industrialisation change retail habits, automation is changing several industries right now. What we have seen during covid is a massive step shift in the automation of retail. The fact is that a number of high street chains do not have a business model that will stand the test of time, because consumers are moving faster than their economic models. Covid has sped that up. Likewise, during covid, many of us have realised that soulless out-of-town retail developments are not a necessity in our lives when there is online retail. That trend will not stop; it will accelerate and continue.

Traditional retailers in the high street and in city centre developments are facing massive change in consumer spending and consumer trends. Let me share, or perhaps over-share this: if my dad has learned how to buy his pants online during covid—I am sure the House is delighted that I have shared that fact—retailers will need massively to change the space, the footprint and how they operate. That will have massive knock-on effects for central Government and for local government revenues and finances, and all sorts of other issues besides.

I think that we would all agree that it is the small, unique, interesting local businesses that are rooted in the community and that pay their taxes locally that will be the most resilient, as they give us a sense of place and a sense of community. It is surely incumbent on us to examine what we are doing that is holding them back and what we are doing that is militating against them.

We are seeing changes locally in Stirling, as we are in all of our communities. We have vibrant high streets in Callander, Bridge of Allan, Dunblane and Stirling City. We have a great retail offering and a great night-time economy as well, but we also have too many empty shop units. That is a problem that we must address, because we are not where we need to be. It needs to be addressed urgently if we are to avoid a deteriorating situation and to create an improving one. Many of the answers are local. I would like to see much more muscular use of compulsory repair orders by local government and more intervention against poor landlords where poor landlords exist. Business rates, as I have said, need urgent reform. There are no easy answers and I would caution that, as much as we are supporting the Labour motion, I am not sure that it has all of the answers.

We also need to stop doing things that are holding the high street back. That cuts across planning policy and local government. It also cuts across planning policy nationally in Scotland and in England. Issues that we can address in this House include proper consideration of VAT and business taxation generally and the lack of a workable digital tax, on which, much as I would acknowledge the work that has been done, we still have not seen sufficient results in the real world. We have tax avoidance on an industrial scale on occasion and that militates against the interests of our public Exchequer, against the interests of small and local businesses and against the interests of our high street.

We also need to be honest about the problems facing small business, including labour shortages and supply-chain problems occasioned by Brexit. Some Members earlier pretended that those problems do not exist or minimised their impact, and that really does not help an intellectually honest discussion.

We also need to be far more strategic and not do silly things that have hurt our businesses rather than help them. We need to be more strategic about how the high street operates. We have stepped forward on that in Stirling with the Stirling City working group, of which I am very supportive, listening to local people and local businesses and giving more resources to co-ordination and a longer-term strategic framework. We have seen, on occasion, too many well-intentioned but stop-start, short-term efforts of support which have often focused just on prettification or easy answers—on more bins or clean-ups of the high street, rather than on the long-term, strategic, macro issues that we need to address.

We have great businesses in Stirling and great businesses in Scotland. There are great businesses across the high streets that we all represent. In fact, we have a common endeavour to try to boost them and to stop doing things that are harming them. That is in all our interests.