Supporting Small Business

Bill Esterson Excerpts

Tuesday 19th October 2021 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

Both the Minister and the hon. Member for Bexhill and Battle (Huw Merriman) have said that they really want to do something about business rates, and they have—[Interruption.] I know the hon. Member said he wanted to do it. They are challenging us to come up with a way of replacing the revenue, but they cannot come up with one themselves. I want to know what their plan is as an alternative. Perhaps the Minister or his colleague, depending on who is winding up the debate, will tell us the Government’s plan for doing so. As the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves) said, this has been going on for a very long time. The Government have been talking about reviewing business rates for a very long time.

I ran a business for many years. Twenty years ago, I took a lease out on a commercial premises, and I was staggered by how much the business rates were. In fact, many in this Chamber pay business rates on their constituency premises. I had to pay for that, whether or not I had any income coming in the door. That fixed cost of doing business is the challenge. We face inequity in the system of business taxation, which is why it is so out of date and needs to be replaced when set against the competition from the online giants, as my hon. Friend the Member for Leeds West rightly said earlier.

More than 450 businesses in the borough of Sefton alone face going out of business as a result of problems that have been exacerbated during the covid crisis. They need action on business rates for the longer term, not just now. They need the kind of support that the Welsh Government are giving, as we have heard, to be extended by the Government now. They need longer-term reform and, in the end, the scrapping of the business rates system if they are to thrive.

The Minister made much of international comparisons. I wanted to intervene on him; it is a shame he did not let me. He named a number of countries that have significantly lower business property taxes than this country, so any business in this country that wants to compete with them faces an immediate competitive disadvantage. In Germany, business property taxes are four times lower than they are in this country. For our manufacturers to compete with that is very difficult, so they face a significant disadvantage.

On the question of how that would be paid for, I ask the Minister how other countries can raise business taxes with much lower property taxes. What can we learn from them? We are so far behind because we have the highest business taxes of any major country in the world, according to the OECD. That has to be addressed.

It is absolutely right that my hon. Friend the Member for Leeds West has brought this debate forward today, especially as businesses face huge debts as a result of covid. The last thing they need is a business rates bill dropping through their door and adding to that pressure. I will give a couple of constituency examples. MSP is in the events and creative sector and is owned by my constituent Lisa Richards, who makes the point that she now has huge debts. The problem is that the support during covid was simply not enough to avoid those debts going up—it is a story being told again and again. Businesses such as MSP need ongoing support. I hope that we will hear something next week to deal with that in the immediate term, but they need longer-term support too, which is why the overhaul of business rates is such an important part of the picture. Unless they get that support, they will struggle to play their part in the recovery.

There are high street businesses such as Coulson Flooring, which is run by another constituent who has to pay his business rates whether he is making any money or not. It is a thriving business that was hit hard by covid, just like everybody else on the high street. He needs that longer-term support too. That is the case for all those 450-plus businesses in my borough alone and for businesses in all our constituencies up and down the country, so I am delighted that we are taking the issue forward as a party.

Frankly, to those Conservative Members who say that their party still has the mantle of the party of business, I say that I think every business in the country knows the Prime Minister’s attitude, which was summed up by one short four-letter word. That is a topic he has returned to again and again. They collectively need to take a close look at themselves, the behaviour of the man who leads them and his attitude towards business and towards supporting our entrepreneurs, our wealth creators and those people who provide employment for so many of our constituents.

It is essential that an alternative system is found. My hon. Friend the Member for Leeds West has come forward with some credible alternatives for an interim approach that uses an increase in the digital services tax as a windfall and, in the long term, looks at the international approach to corporation tax and an overhaul of that. To answer the question of how we replace the £30 billion that the hon. Member for Thirsk and Malton (Kevin Hollinrake) mentioned, we have to work with the business community and the trade unions. We have to work in partnership to find alternatives that are workable in this country and internationally. That has to be the way forward.

At the moment, we have a curb on investment as a number of business groups have made clear. It is something that Mike Hawes of the Society of Motor Manufacturers and Traders has pointed out. He has said that the current arrangements are “overdue an overhaul” and that

“anyone wanting to invest in new equipment—especially green technologies”,

which are crucial to the car industry—

“sees their business rates rise”

which

“is a perverse disincentive to investment and productivity improvement”.

He puts it so well. It is true in manufacturing, and it is true in retail and in our high streets, which face competition from the out-of-town and online giants.

It is essential, if we are to recover for those high streets, businesses and communities, that we see this turned around. Such an approach has the support of the trade unions. With the Union of Shop, Distributive and Allied Workers, as the union representing shop workers, in exactly the same place as the shop owners, we potentially have a partnership. The only part of that partnership missing at the moment is for the Government to step up.

We have shown the way forward, and the CBI has shown the way forward. Tony Danker of the CBI has now said:

“More than half of business investment is subject to business rates; this unfair, uncompetitive system has become a tax on investment that simply isn’t fit for purpose.”

He has also said:

“The Labour Party should be applauded for grasping the nettle and putting forward a pro-growth, pro-investment package of reforms that will reflect our green ambitions, spur the economic recovery”.

That is the right way forward.

We have business looking at us and saying that we were the party that came out of the conference season—and this is the word of the Federation of Small Businesses, not mine—with a “pro-business” agenda and proposals that would help the economy, not the Conservatives. I want to see from the Chancellor next week some concrete details about the package the Minister talked about very nicely in his speech, otherwise it is our approach to which the business community is increasingly going to look. It is our approach that people will be voting on in the next general election, and unless this Government act, we will when we come in.