Reducing Costs for Businesses

Matthew Offord Excerpts

Tuesday 11th January 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

I am grateful for the opportunity to contribute to the debate.

I agree with the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) that this has been an extremely difficult time. He is right to highlight the impact on businesses across the country: it is difficult to overstate the stresses and strains that businesses face, and this has been one of the toughest periods for business and industry since the second world war. From restrictions to rising energy costs, from supply chain shortages to rising inflation, businesses have had to weather an especially turbulent storm. They have had to cope with the logistical and financial disruption brought about by the coronavirus, while keeping staff and customers safe against a disease that we did not initially know much about and that has frequently required rapid changes. We remain extremely grateful for their fortitude and resilience.

Throughout the pandemic, the Government have tried to do what we can, in the most extraordinary period of our lifetime, to support businesses through the tough times. The interventions that we have made are unprecedented, even for a politician like me who does not like talking about policy solely in terms of input. We have mobilised, necessarily, hundreds of billions of pounds in support from the taxpayer to provide one of the world’s most comprehensive and generous economic responses to the pandemic. Our plan backed business, because we know that only by supporting business can we enable it to create jobs, strengthen communities and support the whole economy. It came on top of other pro-business measures that have always been at the heart of how we, as a Conservative Government, run a strong economy.

In the Chancellor’s 2020 Budget, he announced a series of substantial interventions through a business rates relief package. The majority of businesses in the hospitality and leisure sectors will see a 75% reduction in their rates bill across this financial year and 50% capped business rates relief next year. We recognise that the hospitality and leisure sectors have been hit particularly hard, so there is a reduced 12.5% VAT rate to support cash flow and viability until the end of March, which has helped to keep 150,000 business afloat and has supported nearly 2.5 million jobs. On top of that, we had the £1.5 billion covid-19 additional relief fund for those who had not previously had business rates support.

[Dr Matthew Offord (Hendon) (Con)]

As the Minister will know, the threshold turnover for small businesses to register for VAT is £85,000. A constituent emailed me today to say that as a result of the pandemic, inflation has increased and he has had to increase his prices. Does the Minister agree with him that the Government could raise the VAT threshold to ensure that businesses can grow and the money can be used for investment?

[Lee Rowley]

My hon. Friend tempts me to get into policy, which is not the purpose of Opposition day debates—as much as the Opposition would like it to be—nor something that I have control over. He has made his point, however, for which I thank him.

We had all that support, and then when omicron came along, the Chancellor announced a further £1 billion of support for the most affected businesses, in particular, again, hospitality and leisure businesses, which had seen a steep drop in consumer demand. Taken together, that shows the Government acting in extraordinary times. I am pleased that the IMF praised our support measures as,

“one of the best examples of coordinated action globally”.