Small Businesses

Bob Russell Excerpts

Thursday 28th November 2013 Commons Chamber

[Sir Bob Russell (Colchester) (LD)]

The motion is entitled, “Issues facing small businesses”, and talks about

“addressing the complex tax structure”.

I will follow the last two speakers and confine my contribution to business rates. Indeed, what I am about to say could easily have been said in the Westminster Hall debate under way at this very moment on retail and the high street.

I note the pledge from the hon. Member for Rochdale (Simon Danczuk) that Labour would freeze and then reduce business rates, but for 13 years it went nowhere near it. In fact, it went in the opposite direction, as I will make clear in a minute. We now know, however, that Rochdale is the home not only of the Co-op, but of Danczuk’s Delicatessen. We await the growth of that organisation in the same way as the co-op movement has grown over the past 160 years or so.

I want to suggest something that I first proposed long before I became a Member of this House: the abolition of business rates for neighbourhood community and village shops, post offices, community stores, pubs and things like that. The way to make that fiscally neutral, which the Treasury would require, would be to put a charge on out-of-town car parks. That is exactly what the Labour Government proposed in 1997-98, before they were clobbered by the Tescos of this world, which in those days had the sort of power over the Labour Government that the trade unions today have over Her Majesty’s Opposition.

Generally speaking, business rates are assessed under two headings: the net internal area or the gross internal area. The NIA is used for small and medium-sized shops and businesses in town centres and neighbourhood communities, while the GIA is used for industrial properties, such as warehouses, factories and distribution centres, but now also supermarkets and large stores, mostly out of town. In that respect, the same principle should apply to the treatment of supermarkets as applies to neighbourhood stores.

What makes it even worse, as I am advised, is that the valuation office instructs surveyors when evaluating rates not to make an addition for customer car parking. The average rateable value for small and medium-sized shops in Colchester town centre is about £225 per square metre, whereas the average rateable value for supermarkets and other large out-of-town store premises is about £40 per square metre, so we are nowhere near a level playing field. The NIA system is assessed, in part, on benefits—shop windows, for example. To make it fair, supermarkets should be assessed on their benefits, which include free customer car parking and the other bits and pieces that go with it.

The two systems are obviously extremely unfair and biased against shopkeepers in town centres, neighbourhood communities and villages. I am grateful to Mr Ian Berry, a retired gentleman with an interest in the unfairness of rating values for small businesses. On behalf of him and just about every small shopkeeper in the country, I wish to put the following questions to the Government. Is it fair that shops in Colchester and other town centres have a rateable value five and a half times that of the out-of-town giants? Is it fair that shops with parking spaces in Colchester town centre are assessed at £500 per parking space, when those out of town are not? I am advised that one shop on Colchester high street is rated at £213 per square metre, whereas Amazon, which is in direct competition and which, incidentally, pays very little corporation tax, is rated at only £39 per square metre on its premises in Peterborough.

Let us have a level playing field. The last Government rightly referred to sustainable communities, and the coalition Government have rightly referred to localism, so let us have some fairness. One way of having fairness would be to put a levy on out-of-town car parks and abolish business rates for small shops, community stores and public houses.