Supporting Small Business

David Johnston Excerpts

Tuesday 19th October 2021 Commons Chamber

[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.

[David Johnston (Wantage) (Con)]

My hon. Friend makes the point about the shortfall if we get rid of business rates. Those on the Opposition Benches also talk about the national insurance rise, which is raising £36 billion to go into the health service and social care. Is he as unclear as I am on how they would replace that money, as well?

[Huw Merriman]

Yes, I am. I do not want to go too off-piste in terms of the subject of this debate, but I certainly recall that when the Labour party rightly injected funds into the NHS back in 2001, it also agreed that national insurance was the best way to fund it. I have heard it said that wages are not growing at the same rate now as they were then. Actually, if we take a look back, we find that they are growing faster now, which seems to refute that argument.

When it comes to the business of running Government, we have to take these serious decisions and make sure that we do not continue to see this country going ever further into debt. When it comes to business rate replacement, which I would advocate, we need to look at something that brings in the same revenue, and I am left with the view I had previously: we can look at a tax on turnover or sales, but ultimately the simplest way of dealing with it is looking at the VAT system. We all know full well that business rates end up getting channelled all the way through to the individual consumer in any event, but some consumers do not have to pay, particularly with the online side of things, because business rates are not levied there as much as they perhaps are on the high street.

We should level with the public and say, “At the moment, business rates are coming on to your bills, but they are a tax on jobs.” If we were to put the tax instead on VAT or other forms, it would be a lot more transparent, a lot fairer and, most of all, it would make it economically viable for businesses to expand their space and employ more people. If we did that, we would level with the British public and see further investment from business. I do not agree with the motion, although I agree with the Opposition for bringing it forward. It is great that we are debating the ideas, and I welcome that from those on the shadow Front Bench, but I gently prod that ultimately we have to see a payment of like for like.

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[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

It is a pleasure, as always, to follow the thoughtful contribution by the hon. Member for Thirsk and Malton (Kevin Hollinrake).

I start by congratulating HullBID on winning its recent ballot. It had an 87% turnout from businesses in the city centre, and it won the vote by 81%. I am sure that every Member of this House would be delighted to have those percentages. I congratulate Kathryn Shillito, the executive director of HullBID, on her amazing work throughout the pandemic, offering advice, grants and financial support for businesses right in the city centre.

That support and advice has been needed more than ever, because we see from the data that more than 197 businesses in Hull West and Hessle are at risk, despite the excellent work that is going on in the city. Our independent retail scene is thriving. As some of the bigger names are moving out, we are home-growing our own talent and our own businesses in our own city. Trinity market is full of exciting independent shops, as is Hepworth arcade, and we were shortlisted for the Great British High Street awards just last year—I am sure they will look on us favourably again next year.

Although there has been some disagreement during the debate, there has been so much consensus, and there seems to be a consensus that the business rates system that we have at the moment is simply not fit for purpose. In my city of Hull, the high street has moved from one location to another, but the rating system for business rates has not moved with it. One part of the city centre used to be the thriving area where everyone shopped. It is now completely different, yet businesses there still pay higher business rates, because those rates are set on an old-fashioned and outdated model. That must change.

I want to mention Ye Olde White Harte pub in Hull, which I highly recommend to everyone. It has been there since 1550, and it is famous for its “plotting room”, where the people of Hull apparently got together to decide that they would turn away Charles I when he came to try to enter the city, thus starting the English civil war. I have no reason to start a civil war right here, right now, but I do want to point out the unfairness of the business rates and taxation system that that pub is under. When I visited, its landlord told me that its rates are based on “fair maintainable trade”, which has been criticised for lacking transparency, being open to manipulation and being biased in favour of pub companies and against landlords. I wrote to the Minister about this issue, raising the case of the White Harte, and I hope that he will review my letter again.

However, if we waited for the Government to fix the problems in Hull, we would be waiting an awfully long time. As I proved with my story about Ye Olde White Harte, we have nothing in my city if not an independent and fighting spirit, so we are coming to our own solutions and solving our own problems. I have been working closely with businesses in Hull to champion the city as the capital of home working and remote working, so it was very disappointing to read on the front page of one newspaper that the Prime Minister and the Chancellor want everyone to go back to the offices where they worked before. That seems to me to be re-establishing the inequality that existed previously. Why?

Why do people have to go back to the cities and offices in which they worked before? Why not look elsewhere, at other parts of our beautiful country? Look at the city of Hull, where we have the fastest broadband and affordable standards of living. We are right by the ferry—if someone wants to pop off to Holland, they can do so for £40 return on P&O—and we can get a direct train down to London in only two and a half hours on Hull Trains’ bespoke open railway service. We have everything we need to offer remote workers. We have a much higher standard of living than they would have if they were living in a tiny little flat and commuting. No offence to my colleagues from London, but the prices in London are extraordinary. Living in a small flat in London and getting stuck on the underground, or living in the city of Hull, in a beautiful, much bigger house, with the Yorkshire countryside and the beautiful east coast on the doorstep—which would we rather?

Why are the Government insisting on sending everyone back to the office as they were before? No—send everyone instead to cities such as Hull, where they would be welcomed with open arms. They can give our high streets a boost by coming and living in our city centre, they can spend their money in our city, and they can truly achieve a bit more equality than the Government are offering. So I hope we are not going to return to business as normal. The first step in not returning to business as normal is to look at reforming the business rate system. It is outdated, it does not work and it is unfair to businesses in my constituency.

I hope that while we look at changing things for the better, we also change our attitude towards remote working, because it really can offer the skills revolution and the opportunities we need for cities like mine. For too long in cities such as Hull, if people wanted a good job, they had to leave. Remote working changes all that. People can have the job of their dreams in the city where they grew up, sitting behind a laptop.

[David Johnston]

I completely agree with the hon. Lady that we need jobs in other parts of the country, but does she agree with me that the big risk of remote working is that younger workers will not develop the skills, knowledge and connections that they do when they are in the workplace? They, at least, need to be able to go into the office to develop them.

[Emma Hardy]

I am so pleased the hon. Gentleman raises that point, because it brings me on to my second point. He is absolutely right and we are solving that problem here in the fine city of Hull by working with businesses to set up remote working hubs. We are looking at hotdesking situations and bringing together people who wish to have remote jobs, but who do not wish to be isolated forever in their bedrooms away from everybody else and not have those opportunities to network. We are looking at changing part of Princes Quay shopping centre into an area where we can have remote working desks based around particular industries, so that people can network, get to know each other and mix while still working remotely for different companies around the country or even around the world. This is happening right now. We have turned the old HSBC bank on Whitefriargate, owned by businessman Gerard Toplass, into the most stunning place to work. We will be setting up hotdesking opportunities right there in that old bank, utilising the assets we have in our high streets into new resources—resources for hotdesking and remote working, and bringing more residential living into the city, too.

To do all that, however—I could enthuse about this idea for hours, but I will stop now, Madam Deputy Speaker—we need to start with a fundamental reform of business rates. To give Hull a chance to help itself, we need fair taxation for everybody.

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[David Johnston (Wantage) (Con)]

It is a pleasure to speak in the debate.

I am blessed in having a great many small businesses in Wantage and Didcot, from those that create medical devices and vaccines to those that clear debris from space. I have more pubs in my constituency than all but seven other Members. I have high-quality farms—and we must not forget that our farms are businesses too. In fact, I have a huge range of businesses, including the Great British Mead Company. I do not know how many superhero film fans there are in the House, but while there may not be many similarities between me and Chris Hemsworth’s Thor character, being able to drink mead—thanks to the Great British Mead Company —is my one claim to similarity.

I have just issued to my constituents a leaflet reporting on what I have been doing. I have visited more than 300 organisations since I was elected, many of them businesses and many of them on the high street. I have to say to Opposition Members that, time and again, when I visit business people on the high street, they say, “I think the Government have done a really good job in supporting us.” Sometimes they preface that by saying, “I am not a Conservative voter.” The gratitude is real, and I suspect that Opposition Members have heard it when they have gone around their own constituencies—although I do not expect them to acknowledge that here—because the support has been phenomenal. As has already been mentioned, it has amounted to more than £400 billion. People generally think of furlough and the grant scheme, but there is also the money that has gone into the towns fund, the increase in employment support, and the money invested in the start-up loan scheme.

It is true that businesses have had differing experiences of the pandemic, with some doing better than others. It has already been pointed out that businesses in the travel sector have had a particularly difficult time. There are pubs whose regulars have still not come back. However, there are signs of optimism and steps in the right direction for all these sectors.

It is an interesting feature of this debate that the one thing on which we all seem to agree is that the present business rates system is not what it should be and needs to be reformed. That is precisely why the Government are conducting a review of it. The interim report has already given us an indication of what people have been saying about business rates, which is sometimes that they are too high, sometimes that there is too much admin, and sometimes that the reliefs do not seem to be targeted exactly as they should be. There is also the issue of online competition. I am as keen as anybody to see the playing field levelled with companies such as Amazon, but it is not just Amazon that does online sales. There are often very small businesses that do not have the cost of buildings and that might be competing on a slightly unlevel playing field with businesses on our high streets, so we need a system that is not just about whacking Amazon.

As Labour’s motion says, we have six months left of the current review. We are not making a decision this month, and the Government will bring out their proposals. Thanks to the action they have taken in this period, unemployment is lower than expected and GDP is higher. I have every confidence that in the coming months the Government will take whatever action is needed, including on business rates, because they have shown in the past 18 months that people’s jobs and people’s businesses, as well as people’s health, are right at the centre of their decision making.