Business Rates

Lord McKenzie of Luton Excerpts

Monday 25th November 2013 Lords Chamber

[Baroness Stowell of Beeston]

I am grateful to my noble friend for raising this important matter. Of course I recognise the difficulties faced by retailers around the country. I regret that I am not able to announce any new tax cuts today—my right honourable friend the Chancellor might have something to say if I did. He has a proven record in supporting business. It is worth reminding noble Lords that by 2015 corporation tax will have fallen eight percentage points to 20%. I also know that he is listening hard and considering all options before deciding what steps to take next towards reducing the deficit and stimulating growth.

[Lord McKenzie of Luton (Lab)]

My Lords, we know that small businesses are the driving force behind future jobs and growth. As the noble Lord, Lord Naseby, said, we know that many small business owners face a cost of living crisis as high streets struggle, and that many are under the pressures of rising business rates and energy bills. There are some 40,000 empty shops in the UK and more than one in 10 small businesses say they spend the same or more on business rates as on rents. While it is right that the UK has a competitive corporation tax rate, does the Minister not accept that the priority now is to direct more help to small and medium-sized businesses, as Ed Miliband proposed, by cutting the 2015 business rate on 1.5 million properties below the value of £50,000 and freezing it for 2016? This would be paid for by not cutting further in 2015 corporation tax for 80,000 larger companies and multinationals.

[Baroness Stowell of Beeston]

I think the Institute of Directors has already disagreed with that approach. We consider that it would be robbing Peter to pay Paul because all businesses benefit from a reduction in corporation tax. It is also worth reminding the noble Lord that this Government have given local authorities powers to grant their own business rate discounts. The local government sector now retains 50% of the business rates that are collected. If local authorities decide to reduce business rates further in their area, since April of this year the Government have been funding 50% of those costs.