Retail Sector

Derek Thomas Excerpts

Wednesday 6th June 2018 Commons Chamber

[Derek Thomas (St Ives) (Con)]

Thank you, Madam Deputy Speaker. I will reduce my speech to 40 pages now that you have said that.

In counties such as Cornwall, the retail sector is a significant contributor to the local economy, so I welcome the opportunity to discuss it. I am glad that the Secretary of State is still in his place, as it is really good to be able to speak directly to him. Most employees in Cornwall work in small and medium-sized businesses. A significant number of those are in retail, and many are on our high streets. High streets are the lifeblood of our communities in Cornwall—particularly west Cornwall and the constituency I represent.

The health of the high street is dependent on those small, independent retail outlets. They are made up of entrepreneurs who have often taken a risk in sinking their life savings into them, and who get up day after day to keep up an offer both to residents and visitors. Despite all their hard work and good efforts, they find staying open very difficult. They have had to contend with the living wage. I welcome, and they welcome, the living wage, but it is a significant challenge to them. Many have reduced their opening hours just to keep control of their staff costs. There is also auto-enrolment.

We have seen a significant rise in online shopping and a dramatic growth in out-of-town stores. In Penzance, just before Christmas, a new out-of-town store opened. I have spoken to businesses there who have seen a 40% drop in their business just since Christmas. There have been huge hikes in car-parking charges. Furthermore, I do not want to discourage Members from coming to Cornwall, but the roads are under par at the moment. We are working hard to improve connectivity on the roads. The weather can have an impact on whether people choose to go to the beach or to shop. These entrepreneurs, who are doing all they can, face all sorts of challenges that they have no control over. Those challenges are well documented and well rehearsed. I recognise that many of them, particularly planning and car parking, are matters for the local authority. We are working hard to see it rise to the challenge and to give opportunity rather than restrictions to our local businesses.

However, what the Government can and must do is address the issue of business rates. I recognise that for some time, even before I was elected, various measures have been introduced to address the difficulties that small businesses face with regard to business rates. I believe that nowadays business rates are indefensible. It is an outdated tax that reflects a business building rather than the business itself and causes significant harm, particularly to the high street. In my constituency, for lots of small businesses out of town in rural areas, business rate relief and various exemptions have been fantastic, and that is welcome. However, some businesses in the high street have seen extraordinary increases, particularly since 2016, and that has been extremely painful and uncomfortable for them.

In the three main towns in my constituency—Helston, St Ives and Penzance—I have been working with a number of businesses that tell me they will go out of business if we do not do something quickly. An independent business owner in Helston moved across the road in order to increase the size of her business, but even though her shop is smaller than her next-door neighbour’s and smaller than the shops opposite, which are both multiples, the business rates she pays are significantly higher. In Penzance, we have a new retailer who started his business after Christmas. He had no business rates charged whatsoever and was not expecting a charge, but in April he was stung with a new bill of thousands of pounds a year, unexpected and unplanned for. We are currently trying to discover why this has been the case.

In St Ives, we have seen the rate re-evaluation, high rents often charged by absent landlords, and a quick rotation of businesses that come into town thinking that St Ives is the place to be in business and will pay whatever rent is asked for. For several stores, that has led to year-on-year increases since 2016. Despite the voluntary support available from the local authority, they have not benefited. We have done all we can. We have had meetings with the Valuation Office Agency. We have done the checking challenge. We have met Treasury Ministers several times and raised individual cases. However, while Ministers are still engaged and helpful, at the moment we see no way forward.

For businesses under such pressure, the various things that the Government have done are helpful. However, I compare the situation with that of someone who has their hand in a bench vice. It is not helpful for the Government to say to them, “We will slow down the number of turns and how quickly we turn the bench vice so that the pain is not so great. We will just do half a turn a day, maybe.” What we actually need the Government to do is to remove the hand from the bench vice altogether.

I have three urgent requests—and they are really urgent. First, we must halt the increases above the consumer prices index that businesses in my constituency are facing. These increases are significant. They are introduced every year because of the re-evaluation. They are harmful and unacceptable, and I would like them to be frozen.

Secondly, I would like a discussion on—with perhaps legislation moved forward quickly—a measure to allow town councils to retain just 1% or 2% of the business rates collected in their area to support the high streets and build healthy and vibrant town centres. People would be able to go into town, park more cheaply and enjoy the public dwelling space, because the town council would have resources to invest in the town. As devolution has come to Cornwall Council, the money has stopped there. Devolution of sorts has gone down to town and parish councils, but money has not followed, and so they are continually strapped for cash and unable to help with the problems on the high streets. We do not have business improvement districts in any of the towns I am talking about. Helston would be a great place for a pilot scheme for the town council to keep 1% or 2% of business rates. That would give it a couple of hundred thousand pounds a year to really turn around the town centre, which has been under pressure for many years. Given the population around Helston—42,000 people—we could turn the town around. I am working with it do what I can.

Finally, I would like the Government—if they did this, they would earn themselves enormous brownie points within small businesses up and down the country—to commit to scrapping business rates altogether. I know that they need to continue to raise the £24 billion they collect from property-based taxes. However, that money could be collected through some form of transaction tax that would be based on the activity of the business rather than the location and size of the building it occupies. It would also be a fair tax, because it would tax equally high street businesses, out-of-town stores and online businesses simply on the business they do, not on the building they occupy.