Business Rates

David Ruffley Excerpts

Wednesday 4th December 2013 Commons Chamber

[Mr David Ruffley (Bury St Edmunds) (Con)]

In 2008 and 2009, 500,000 businesses failed in the UK as a result as a result of disastrous economic policy management. One in 10 of those businesses failed in the east of England. The financial crash was particularly bad news for small businesses, because as we know small businesses are much more reliant on, and exposed to, direct bank lending as they do not have the same kind of access as large businesses to debt equity markets and other forms of sophisticated finance. They are under pressure.

In Bury St Edmunds, which over the past 10 years has been consistently rated as one of the most profitable county market towns in the east of England, there are still too many empty business premises, including in prime sites such as the corn exchange and the butter market. In Churchgate street in the historic town centre, two independent retailers of long standing, a shoe shop and a book shop, have had to move out because they can no longer bear the burden of rates. So there is a problem.

I praise the Minister, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), for setting out in what I thought was an extremely powerful and convincing speech exactly what the coalition Government have done over the past three years to support small business. It leads me to the conclusion that we can rightly claim to be the party of small business. The Chancellor, in particular, has done his bit. With the cut to 20p, we now have the most competitive rate of corporation tax in the whole G20. Also, let us not forget that the first £2,000 of an employer’s national insurance contributions have been wiped out. That is important because 450,000 small businesses now pay no employer NICs as a result of the Government’s action.

I want to focus on two things that I would like to see in the autumn statement that would allow us to go further and deliver more help to small businesses in the area of business rates. Let us not forget that small businesses, which I define as those with fewer than 50 employees, constitute 99% of all businesses in the UK and represent one third of private sector turnover.

I would first like to praise the extension of the small business rate relief discount in a targeted way from 50% to 100%. However, the problem is that it is due to expire next April. I will pray in aid the words of my hon. Friend the Minister, who has stated:

“Tax stability is vital to businesses looking to grow and help improve the economy.”—[Official Report, 18 October 2012; Vol. 551, c. 32WS.]

He is so right. Businesses do not want tax uncertainty. In tomorrow’s statement, I would like to see the SBRR not just extended for another year or two, but made permanent.

My second point relates to RPI uprating. Last September RPI was running at 3.2%. In Mid Suffolk, where my biggest town is Stowmarket, the full 3.2% whack would mean an increase of £216, and in Bury St Edmunds, where the local authority is St Edmundsbury borough council, the average business rate bill after reliefs is £12,865 and a full-whack increase of 3.2% would jack up business rates by £411, so we are not talking about inconsequential sums of money. If we cannot have a 0% increase, I hope that the CBI’s proposal of 2%, which has been costed at around £327 million, would go some way towards relieving the rates burden.

Time is short, so I will end my comments with one parochial example of a small retail business in Stowmarket, the second biggest town in my constituency. The business has a rateable value of £6,000. If action is not taken, the failure to extend the deadline for the SBRR, which it currently enjoys, beyond April next year or make it permanent would cost the business, with the 3.2% increase, an extra £1,430. If it is faced with the increase of a 3.2% uprating, plus no extension of the rate relief it currently enjoys, it will go under.

The Government deserve a big tick, because a lot has been done, but there is a lot more to do. I commend the measures we have taken so far. Let us hope that we see a bit more tomorrow.