Taxation: Small and Medium-sized Enterprises

Debate between Gregory Stafford and Dan Tomlinson

Tuesday 3rd February 2026 Westminster Hall

[Dan Tomlinson]

I thank my hon. Friend for her question and the representation that she provides in this place for the small businesses in her constituency—it is a wonderful part of the world. If my team have not been in touch already today, I am hoping that we can find time to meet next week for a conversation. I know that this issue is one that is really important to her. York is a fantastic, vibrant and growing part of our economy. I expect that some of what is happening here is that the businesses in her constituency have seen their values increase by more than others in parts of the country that have not been doing as well. That is why the Government have provided a range of support for businesses. I look forward to talking about that with her in the coming days.

We are fast running out of time, so let me turn to the topic of business rates, which Members have raised. It is worth noting that we are implementing significant reforms to the system. On the point around large online retailers, as far as I am aware, throughout the whole history of the business rates system—including the 14 years under the previous Government—the multiplier, otherwise known as the tax rate, for large online giants was exactly the same as that paid by a typical business on the high street. As part of fulfilling our manifesto commitment to reform the business rates system, we have introduced a really significant wedge into it: the multiplier for large online giants and their warehouses is now 33% higher than for a high street business.

I am aware, and we have had lots of discussions about it in this place, that that reform—the significant underlying reform to the business rates system—has happened at the same time as the revaluations since the pandemic have come into place, and at the same time as the Government have chosen to unwind, slowly and with significant transitional reliefs, the temporary pandemic support. That issue was raised by the hon. Member for Farnham and Bordon.

When the Conservatives stood for re-election, the OBR forecasts did not earmark any funding whatsoever for continued support within the business rates system for our high streets. The Conservatives say now that they would not have stuck with those plans, but had they done so—and they are the plans that they presented to the country before the election—the relief would have ended overnight in 2025.

[Gregory Stafford]

You are in charge now.

[Dan Tomlinson]

Yes, and we extended the relief by a year, at a lower rate, and now, rather than ending it overnight, we have introduced significant transitional relief, so many of the businesses in the hon. Member’s constituency will see their increases, if they experience increases, being capped at 15%.

Overall, across the system as a whole more than half of businesses are either seeing their bills flat-falling or staying at zero, and this tax change—this 33% wedge that has been introduced to the system—is, in effect, a transfer of almost £1 billion in business rate liabilities away from the high street and towards the largest businesses, which have properties worth £500,000 or more. This transfer will benefit 750,000 smaller properties on our high streets.

Pubs have also been mentioned. We saw 7,000 pubs close over the 14 years between 2010 and 2024. I am aware that pubs, and indeed all hospitality businesses, experienced challenges, particularly in 2022 when inflation surged to 11% as energy costs went up. To be clear, that was in large part a result of Putin’s illegal invasion of Ukraine and the impact it had on the global economy, but inflation did rise significantly, which impacted individuals and their bank balances. The Government understand that times are tough for businesses on the high street, in part because of that legacy.

The hon. Member for Farnham and Bordon mentioned some statistics about pubs that are now out of date because of the change that was introduced last year; the 76% increase is not going to happen any more. In fact, three quarters of pubs, live music venues and other businesses affected by the changes that were announced last week—

[Gregory Stafford]

It is delayed.

[Dan Tomlinson]

Three quarters will see their business rates fall or stay the same this year. Then, those rates will be frozen for two years. The crucial point, which relates to whether it is delayed or not, is that we are launching a review of the methodology that is used to assess pubs. I am sure that this issue will have come up in the roundtable on business rates organised by my hon. Friend the Member for York Central (Rachael Maskell) with businesses in her constituency, and in the engagement that other Members have with businesses in their constituencies.

Pubs are valued in a relatively distinct way: their takings are used to assess their value, rather than their floor space. That can be quite opaque for pubs. It can also mean that increases in their business rates can appear to be the result of higher takings but really just reflect underlying increases in higher costs, so they can feel like they are running to stand still. We will therefore look closely at the methodology used to value pubs, and hotels, and I hope that we can find a long-term—indeed, permanent—solution in time for the next revaluation, which will come in 2029, as planned.

I will respond briefly to the point that was made about the increase from £800 to £1,600. I urge the hon. Member to check with the particular pub that he mentioned, but I assume it will be the case—each business is different, and I should not comment on individual businesses precisely—that the 15% relief will probably apply there too now, so there should not be a further £800 increase. I note, of course, that there is an increase for that business, as he set out.

We are also publishing a high streets strategy. We will work on that in the coming months and it will be a cross-Government effort. Yes, the Treasury will be involved, but so will Departments such as the Home Office, so that we can support businesses that are struggling with shoplifting. We will also work with the Department for Business and Trade, and with the Ministry of Housing, Communities and Local Government.

I hope that I have responded to a range of points that were made in the debate, and I thank Members for their contributions to it. In the coming months, in my role as Exchequer Secretary I will of course continue to engage with businesses—small and large—on the important points that have been raised today, to see what more the Government can do to support them as they seek to grow, to support employment in their communities, and to support the life and vibrancy of our high streets and town centres.

Taxes

Debate between Gregory Stafford and Dan Tomlinson

Wednesday 12th November 2025 Commons Chamber

[Dan Tomlinson]

Let me make a bit more progress—I am only on page 2 of a six page speech—[Interruption.] I am taking many interventions, but I will take fewer.

The previous Government saddled us with much debt, as we have talked about, with £1 in every £10 of public money going towards debt interest payments, perpetuating a stop-start cycle of public investments that left us with roads full of potholes, train lines that cannot even make it between London and the north of England, and an unpredictable business environment, with business taxation going up and down all the time. All that gave us an incredibly narrow base for regional growth, with few parts of the country forging ahead, while too many in the rest of the country fell behind.

Levelling up was a Conservative slogan, not a solution. Instead, this Labour Government are growing the economy and lifting living standards in all parts of the country, investing in infrastructure to get Britain building again, and working with local leaders and Members of Parliament to build pride in place and revitalise communities. That is the change that we are bringing. The Conservatives had the opportunity to invest in our public services, to upgrade rail, roads and connectivity, and to protect our NHS, but instead they threw money around with little regard for its value.

A key factor in our stalled productivity is that, time and again, the Conservatives had the option to choose economic responsibility, but they chose political convenience instead. The austerity that they pursued after the financial crisis, when interest rates were at record lows, was a sledgehammer to our economy, gutting public services and cutting the essential flows of investment that would have aided a faster recovery. As the hon. Member for Witney (Charlie Maynard) said, and as Liberal Democrat Members are wont to mention, they then went ahead and implemented a rushed and ill-conceived Brexit deal that brought extra costs to businesses and extra disruption to trade. When the pandemic arrived, our country was not ready. Our public services and our economy have been severely weakened.

[Gregory Stafford]

As I told the hon. Member yesterday, he has the second worst job in Government, which I think he is feeling today. Even if what he has just said is true—I do not agree with him—after the Budget last year, the Chancellor said that the slate was wiped clean and that no more tax rises or borrowing would be needed. What has changed between then and now?

[Dan Tomlinson]

I was glad to attend the hon. Member’s Westminster Hall debate last night on wine producers across the UK. I am impressed by his close reading of all the words of members of the Cabinet; I hope one day to be as diligent as him in following the utterances of the Chancellor, the Prime Minister and all Ministers.

When it comes to the inheritance that this Government and the British people are dealing with, let me say that if wage growth since the financial crisis continued at the pace that it had before, it is not that families in my constituency, in the constituency of the hon. Member for Farnham and Bordon (Gregory Stafford) and across the country would be £1,000 or £2,000 a year better off; they would be £12,000 a year better off. Imagine the difference that that would make to the businesses and communities across our country if we had not had that productivity stagnation.

In the end, we will see at the Budget that the OBR is implementing its review of productivity. I will not pre-empt that review, but it is right and proper that we ensure our fiscal forecasts are based on accurate understandings of what has happened in the past to our productivity, because the past is a guide to the future. I hope that this Government will continue to beat the outcomes that happened under the previous Government, when productivity almost flatlined, and that is exactly what this Budget will be about.