Supporting Small Business

Debate between David Johnston and Huw Merriman

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.