Business Rates Relief: High-street Businesses Debate
Full Debate: Read Full DebateMike Martin
Main Page: Mike Martin (Liberal Democrat - Tunbridge Wells)Department Debates - View all Mike Martin's debates with the HM Treasury
(3 days, 6 hours ago)
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The hon. Lady is absolutely right that we need reform. Such closures affect her constituent and many others, but these are not just businesses; they are someone’s hopes, dreams and aspirations to create something better and build a better life for themselves and other people. According to the Campaign for Real Ale, 125 pubs have already closed since 1 April. That is 125 communities that have lost something that they may never get back. It is 125 families—and many more, if we take into account the families of the many people working in those pubs—who have seen their livelihoods disappear.
We cannot just dismiss this problem. I thank the Chamber engagement team, which, in preparation for this debate, did a number of surveys asking for the views of people from across the country about the impact of business rates on their businesses. It is interesting to hear those stories. Lorraine, who has a hospitality business, said:
“It is time our industry had some real help. We had nothing left to give. I predict even more closures in the next two years.”
Karen, who runs a salon and health club, said:
“The rates are more than my rent and with the wage increases and massive hike in rates, I can’t survive. I’m on borrowed time.”
This is about not just those people, but the many people they employ. Rachel, who has a beauty salon, said:
“I used to employ 18 people and now only employ four, so it’s effectively made me shrink the business.”
James, who runs a hospitality business, said:
“The reduction in relief has led me to reduce my workforce by 33%.”
There are business out there that last year were perhaps thinking about expanding—maybe taking on another pub or opening another shop—but that is no longer viable. Most business owners—who, like the people employed, are working people—are the last ones to get paid. They take the risk, and the Government do not seem to want to encourage them, let them grow or give them the opportunity to succeed. They just make it harder.
This issue is not just about businesses; it is also about communities. Although there can be no finer high streets than the ones in my constituency—[Interruption.] Now we are getting into a real debate, but I will stand firm. However, there is nothing sadder than seeing an empty shop that was previously occupied. That is not just about the demise of a particular business; it brings down the whole high street.
We see so many businesses being impacted in multiple ways. We see the impact of the changes in business rate relief; we see the impact of the changes in national insurance, and not just in terms of the rate but in terms of when it starts to get paid; and we see the cumulative impact of changes to employment law. We want businesses to take on people and to make it as easy as possible for them to take on new starters. Sadly, it is becoming harder and harder for them to do so.
The reality is that young people are some of the most impacted. Almost half of those working in hospitality in my constituency are aged between 16 and 24. I appreciate that the Government may take the view that their jobs are not important ones and that they will go on to something else, but I think that it is vital that we provide opportunities for young people at the start of their careers. Hospitality and retail are vital for that, whether the jobs are full time or part time. The impact of the changes to rate relief means that fewer young people are in a position where they can get the jobs they need to get on in life.
The right hon. Member is making a very important point. This issue is important across the whole socioeconomic spectrum. I had a relatively privileged upbringing, but my first job was washing dishes in a hotel. That job taught me what hard work is. The lessons that we learn in those types of jobs last throughout our lives.
The hon. Member makes a very valid point. This issue is about ensuring that there is as much opportunity as possible for all people, whatever their background. We should not be dismissive of such jobs—I am sure that the Minister is not—but they are the jobs that have been squeezed out by the changes to rate relief.
The Minister knows that I am one of his biggest fans; indeed, I am a great admirer of him. I see him as a rising star. While the Chancellor hides, he is wheeled out. He is truly an impressive figure at the Treasury. I am not sure whether it is due to the diminished status of the Chancellor that he is looking taller, but he is certainly one of the rising stars of the Labour Front Bench. I actually enjoy reading some of his many comments. He is a very thoughtful and accomplished Minister. I imagine that he is a joy to work with and that his civil servants value him greatly.
However, I will just read out some of the things that the Minister has said in the past:
“As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), has set out, if Labour were in government, we would scrap and replace business rates, and shift the burden away from hospitality and retail businesses on the high street, which continue to shoulder a heavy burden compared with those that operate primarily in the digital economy.” —[Official Report, 31 January 2024; Vol. 744, c. 318WH.]
I do not think that there is a Member in this Chamber who would disagree with the Minister on that. I think everyone in the debate today would say, “All power to the Minister’s elbow, and we look forward to him announcing how that will be done.”
Most businesses I have spoken to have found that they are paying more today than they were just a year ago. When in opposition, the Minister was busy making many comments, including:
“A Labour Government will help to breathe new life into our high streets by calling time on the outdated model of business rates, so that British businesses in all parts of the country can play their part in creating economic growth and the jobs of the future.” —[Official Report, 13 December 2022; Vol. 724, c. 262WH.]
Sadly, at the moment, the Government are doing quite the reverse. Every small business in my constituency has been impacted by higher rates, not lower ones.
There is concern about what this will look like in the future. There is nervousness that even the reduced reliefs that have been put in place will have gone altogether. I very much hope that when the Minister responds, he will be able to give us every assurance that efforts are being made to deal with the impact of the change in business rates relief on businesses not just in Stone, Great Wyrley and Penkridge, but across England. I hope he will give them some comfort that the Government do not just say things in opposition, but do them in government.
We have a sorely outdated model of billing businesses. I know the Treasury loves nothing more than the rates system, because it is one of the easiest ways to collect tax, but there are concerns that, whether or not under pressure from President Trump, when it comes to changing how digital services taxes will be done, the Treasury might come for more money from small businesses, the high street and family companies. I hope the Minister can clearly set out that that will not be the case. I appreciate that he will not wish to steal the Chancellor’s sandwiches for any future statements, but I hope he can say clearly that there will be help coming for so many businesses right across the country, and that we will support those job creators.
It is a pleasure to serve under your chairship, Ms Jardine. I thank the right hon. Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson) for securing what is probably the most important debate we could have to rejuvenate our town centres. As some hon. and right hon. Members have touched on, town centres are not just a series of business transactions but the centres of our community, where people go to meet friends or to be part of a place where they can do familiar things. It is the social glue that is created by town centres that is so important; once that is lost it does not come back.
In every town centre there is a mix of retail, leisure and hospitality. We have to get the balance right between those three things, because often someone will come in for one of the legs of the stool, as it were, but stay to do something else—thus they stay longer and have more touchpoints with their community. Business rates are the foundational tax rate that affects those three things. If business rates are not right, we are not incentivising the right mix in the community—because business rates affect those three things slightly differently—and we are undermining the support that those three things give to the idea of the town centre being a social glue. I am not going to talk about all three things, but I will talk about hospitality.
I start with Fuggles bar, which is around the corner from my house in Tunbridge Wells. Fuggles is great; it is run by Alex and has an extraordinary selection of craft beers, including local ones brewed in the constituency, and a number of gins, so I occasionally visit. Alex employs about 18 people. A number of Members have spoken about business rates relief being cut from 75% to 40%. That single change, announced at the Budget, has pushed up the cost of Alex’s business rates by 50%. To that we must add a number of other costs that have risen at the same time, such as national insurance, and before that, energy costs.
An independent bar that employs 18 people, many of them part time—as we know, the NI increase hit many businesses that were employing part-time people in particular—finds it really hard to stay afloat. Alex is a member of the Tunbridge Wells hospitality leaders forum, which I meet regularly. His story is the same as the rest of the members of the forum’s. We were so concerned that together we submitted a submission to the Treasury’s consultation on business rates, and I implore the Minister to look that up and read it.
I will not go through everything in the consultation, but there are two things I will focus on. The first is investment. The current business rates formula penalises investment. If someone invests in their premises, the rateable value goes up and their taxes go up—it is a tax on investment. The other is online. Amazon pays about 0.37% of its retail sales in business rates. Fuggles pays 3%. That is the exact opposite of what a tax system should do. I implore the Minister to look up the Tunbridge Wells hospitality leaders’ submission to the Treasury’s consultation. There are a lot of good ideas in there, and I hope that he takes them on board.
It is a pleasure to serve under your chairmanship, Ms Jardine. I thank my right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson) for securing this important debate.
Our high street shops and pubs are at the heart of our communities, yet many are threatened by big increases in business rates. Our high street businesses are already contending with Labour’s new tax on jobs. The hike in national insurance makes it more expensive to employ someone who works in a shop or a pub on our high street. The Employment Rights Bill will further increase costs, hitting small businesses with new regulations that make it harder and more expensive to operate. In that context, the decision to cut the retail, hospitality and leisure business rates relief from 75% to 40% is wrong.
I met recently with Mr Paul Davis of Styles Menswear in Bridgwater. His business rates have gone up from £3,000 a year to £9,000 a year. That new cost, before we can even consider Labour’s new jobs tax, puts his livelihood at risk. He will not be alone. Paul’s business has the double misfortune of being based in Eastover, where he has had to contend with extensive and lengthy roadworks. In Liberal Democrat-controlled Somerset, we have had a particular problem with various roadworks being scheduled at the same time and harming local businesses. It seems that the Liberal Democrats know little and care less about the damage that they are causing.
The roadworks in Eastover started in October with a partial road closure. As if that were not bad enough, the council then decided to impose a full road closure in January, which is now set to continue until at least September. Ironically, it is on the council’s “celebration mile” project, although to date there has been very little for local businesses to celebrate. The project has proved a hammer blow to many local businesses, which have seen footfall collapse: footfall in Bridgwater is down 400,000 in the past 12 months, mostly caused by the incompetent way in which Somerset council has handled the project.
I believe that those businesses deserve our support. Businesses disproportionately affected by council actions should have the right to claim rates relief. Will the Minister consider that proposal? The situation in Eastover is now desperate, and I fear that in the coming months we will see more shops and businesses closing their doors for good.
It seems that this Labour Government, with the able assistance of Liberal Democrat councillors in Somerset, are set on destroying those businesses. The truth is that, despite the Government’s claim to be going for growth, everything that they are doing appears designed to achieve the opposite. I say to the Minister, “Businesses in Bridgwater are suffering. They need your help now.”
On a point of order, Ms Jardine. It seems that the hon. Gentleman is confused and in the wrong debate. This is a debate about business rates, but he spent his entire time talking about local government sequencing of traffic works.
That is not a matter for me at the moment.