Business and the Economy

Caroline Johnson Excerpts

Wednesday 21st May 2025 Commons Chamber

[Gareth Thomas]

With due respect to the hon. Gentleman, he needs to track these things over a period of time. The Bank of England has revised the growth numbers up for this year, as a result of the measures that we have been taking.

As I said earlier, we have had to take some difficult decisions in the Budget to fill the £22 billion black hole left to us by the previous Government to tackle record NHS waiting lists, to invest in schools and to invest in our police. But we have been making headway to deliver on our manifesto pledge to reform business rates. One reason the Conservatives lost the confidence of the business community is that, time after time, they promised to reform business rates and never actually did. We are delivering lower tax rates for retail, hospitality and leisure properties from 2026-27. We are also scrapping the Conservative party’s policy of immunity for low-value shoplifting, and providing additional funding to crack down on the organised gangs who target retailers. We know that this has plagued businesses for years, with both staff and store owners feeling powerless. That changes now.

At the same time, we are reforming the British Business Bank to free up precious capital for businesses to expand. This includes our start-up loans and the growth guarantee scheme, so that, if people want to set up a new shop or business, the support is there to help them. It is why my Department launched a call for evidence on access to finance for SMEs last month, as part of our work on our upcoming small business strategy. All of this work is having a positive, tangible impact: the newest ONS statistics revealed that the number of businesses set up in this first quarter is up 2.8%, compared with quarter 1 last year.

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

The Minister mentioned talking to businesses, but I would urge him to do a little bit more listening to them. My right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson) asked how much in additional taxes and spending commitments was raised in the Budget, but I did not hear an answer. Can he please give the House an answer? If he does not know, will he agree to write to my right hon. Friend and leave a copy in the Library, so that we can all know the answer?

--- Later in debate ---

[Sarah Olney]

My hon. Friend is exactly right; there are so many things currently holding our small businesses back. The Conservatives failed to reform business rates. We are now looking to the Labour Government to bring forward measures that make it easier for people to set up businesses in their local communities.

Let me be clear: stripping support from many of the poorest pensioners while energy bills are still sky high was the wrong thing to do. I and my Liberal Democrat colleagues have listened to our constituents and have heard from countless pensioners who have been affected by the cut. We have heard warning calls from sector representatives including Age UK and Disability Rights UK, and indeed from many pensioners themselves, regarding the huge damage that the cuts have done. Some pensioners have been put in the position of having to choose between heating and eating.

Back in December last year, the Government admitted that their changes to the winter fuel payments will result in an additional 100,000 pensioners being pushed into poverty.

[Dr Caroline Johnson]

The hon. Lady is talking about the effect of the Government’s winter fuel payment cuts. Does she agree that the cuts were not just cruel and unpleasant for the elderly people who have suffered, but economically illiterate because of the increased cost to the NHS from individuals becoming sick as a result of being cold?

[Sarah Olney]

I am grateful to the hon. Lady for her intervention. I have engaged the Minister directly on this point and shown him examples of how the cuts have directly impacted on pensioners in my constituency very harshly.

The Liberal Democrats voted against the removal of the winter fuel payment to prevent millions of the most vulnerable in our society from losing out on vital support. Following the Prime Minister’s comments earlier today, we continue to call on the Government to reverse the cut in full, to guarantee that it will not be in place by next winter and to ensure that all pensioners who need support will receive it. I ask the Minister for full details of the proposed changes as soon as he is able to give them.

It is not just in their cuts that we hope to see a change of direction from the Government. After the last Government did so much damage to our high street businesses, the Labour Government’s national insurance jobs tax has made things even harder for businesses and their workers. The changes to employer national insurance contributions announced in the autumn Budget are an unfair jobs tax that will hit small businesses, social care providers and GPs. SMEs are the beating heart of our economy. They are at the centre of our local communities and create the jobs that we all rely on. Raising the employment allowance will shield only the very smallest employers, while thousands of local businesses will still feel the damaging impact of the changes. The Liberal Democrats voted against the changes to employer NICs at every opportunity, and I once again urge the Government to scrap these measures.

Even more damaging for our small businesses is our broken trading relationship with Europe. The Conservatives’ botched Brexit deal has been a complete disaster for our country, especially for small businesses, which are held back by reams of red tape and new barriers to trade, costing our economy billions in lost exports. The dismal picture of the financial impact of their terrible Brexit trade deal is becoming increasingly clear. While the Conservative party’s motion notes that

“over 200,000 businesses have closed since Labour took office”,

it was under its Administration, in the years 2020 to 2024, that the rate of small business closures in this country started to outpace the rate of new businesses starting up. Since 2019, there has been an average business closure rate of over 12%, outstripping the rate of businesses opening.

A recent survey of 10,000 UK businesses found that 33% of currently trading enterprises experienced

“extra costs directly related to changes in export regulations due to the end of the EU transition period”.

Small businesses have been particularly badly affected, with 20,000 small firms stopping all exports to the EU. Another recent study found that goods exports have fallen by 6.4% since the trade deal came into force in 2021.

I welcome the actions taken by the Government at Monday’s UK-EU summit—particularly the impact they will have on our seed potato trade—but I urge the Government to recognise that the deal should only be a first step toward negotiating a new UK-EU customs union, which would ease the pressure felt by so many businesses and boost the economy as a whole.

More broadly, we continue to call on the Government to introduce vital reform to the business rates system. Business rates are harmful for the economy because they directly tax capital investment in structures and equipment rather than profits or the fixed stock of land. Liberal Democrats would abolish the broken business rates system and replace it with a commercial landowner levy. We believe that we need to see a fundamental overhaul—not just tinkering around the edges or sticking-plaster solutions. We are disappointed that, yet again, serious reform of the system has been kicked down the road. We need fundamental reform of business rates if we wish to boost small businesses and high streets and to stop penalising productive investment.

The Liberal Democrats acknowledge that the Government inherited a dire economic landscape, compounded by the challenges posed by an aggressive Russia and an unreliable US Administration, but that cannot be an excuse for the mistakes they are making. People are still struggling with the cost of living crisis, just as small businesses are struggling with the cost of doing business, as energy prices soar, food costs keep going up and mortgage bills remain sky high. The Government must take bold action to boost our economy. We urge Ministers to U-turn on the winter fuel payment cut, scrap the national insurance jobs tax and row back on removing support for disabled people, many of whom need that support to stay in work.