The High Street

Debate between Nicholas Dakin and Simon Danczuk

Tuesday 21st May 2013 Westminster Hall

[Simon Danczuk]

My hon. Friend makes an important point. The question is about how Government can affect the situation locally. There are lots of examples of good practice at a local level, but we have not had a strong sense of direction or leadership from the Government on town centres and high streets.

Rather than talking about high street champions, I would like the Government to consider funding digital champions: experts in multichannel retail, who can make a real difference and work with the independent retail community to help it embrace multichannel retail to supplement shops and safeguard its future. Independents make up 69% of all shops, and we need to do everything we can to safeguard their presence on our high streets.

When we look back on high street policy carried out by the coalition Government, we see that the multitude of headline grabbing initiatives have blinded us to the elephant in the room that is causing the most damage on the high street. I refer of course to business rates. The Government have collected an extra £500 million over the past two years through increased business rates, and yet they have spent only £20 million on the Portas pilots. Week in, week out, businesses in Rochdale tell me that the tax is far too high and is dragging them close to the brink. Research published this year by the Forum of Private Business shows that 94% of small business owners think that business rates are far too high. There is a growing sense that the Government see the high street only as a cash cow to milk to exhaustion.

The sense of injustice is further embedded by the Government’s decision to postpone next year’s business rates revaluation. While London property prices continue to rise, business owners in more affluent metropolitan areas can breathe a sigh of relief knowing that the Government will keep their rates artificially low, but many northern businesses, which have seen property prices fall by 40% in some areas, have to pay the top-of-the-market 2008 rates until 2017. We end up with the absurd scenario of Burnley effectively subsidising Bond street, and Rochdale subsidising Regent street. Business rates for an Amazon fulfilment centre in Doncaster are calculated at £44 per square metre, yet for an out-of-town Comet store in Rochdale, which as we know subsequently closed, they were £125 per square metre. Even worse, the rates for one unit in a Rochdale shopping centre are calculated at £1,080 per square metre—24 times more expensive than the rates Amazon pay in Doncaster.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing the debate and I am pleased to serve under your chairmanship, Mr Davies. Does my hon. Friend agree that, although business rates show no flexibility, landlords are being flexible over rents? Business rates represent a barrier to trade.

[Simon Danczuk]

I completely agree with my hon. Friend. I have seen properties in Rochdale with business rates that exceed the price of the rent; that cannot be right. There is a significant and serious problem with business rates. There is no doubt that they are past their sell-by date. Will the Minister use today’s debate to acknowledge that this prehistoric tax regime is unfairly holding businesses back and is not fit for purpose? The Valuation Office Agency needs an urgent overhaul and business rates desperately need reform.

Many people are of course already doing their bit to try to reform our high streets and move away from the chain stores’ monopoly, to give a new generation of people the skills to set up new and diverse businesses. I pay tribute to Retail Ready People, an initiative led by vInspired and the Retail Trust, which works with young people in Rochdale to help them set up a pop-up shop on the high street. It is working all over the country to give young people the skills and confidence to take over empty shops.

Business Rates

Debate between Nicholas Dakin and Simon Danczuk

Tuesday 30th October 2012 Westminster Hall

[Simon Danczuk]

That is an interesting point about empty property taxes. I will not address it in my speech, but it undoubtedly deserves examination and should be investigated further to see what impact it has on businesses.

Let me make it clear: I have yet to hear a single retail voice supporting the Government’s proposal to cancel next year’s revaluation. The Minister seems to think that he is right and everyone else is wrong. If he can identify somebody who supports the revaluation, I would be interested to hear who it is.

To put it bluntly, the business rates revaluation postponement is no way to do government. The decision to postpone next year’s revaluation of business rates has compounded the sense of injustice already felt by retailers and other businesses. To add insult to injury, the Minister has defended the policy by saying on radio that it is simply like being locked into a fixed-rate mortgage. What he did not tell radio listeners is that it is like a fixed-rate mortgage with an interest rate set at more than 40% for many customers. The Government must think that businesses are daft. Current business rates are based on rents that were set close to the property boom peak in 2008. Since then, property prices have fallen by up to 40% in many parts of the north and elsewhere in the country.

[Nic Dakin (Scunthorpe) (Lab)]

I congratulate my hon. Friend on securing this timely and important debate. Does he not agree with the Association of Convenience Stores that what is needed now is a full consultation with business about the right approach going forward and a radical way of looking at business rates, instead of Government ploughing forward in a furrow of their own?

[Simon Danczuk]

I agree with the ACS, which does excellent work. The lack of consultation on the revaluation is a massive part of the problem in which the Government now find themselves. In fact, the property agents Colliers have called the decision

“nothing short of a scandal”

and have accused the Government of trying to

“pull the wool over the eyes of business.”

The policy will mean that many businesses will continue to pay more business rates than they should, and it will disproportionately hit regions outside the south-east. I cannot put it better than Richard Farr of Sanderson Weatherall chartered surveyors, who said in Newcastle’s The Journal:

“Those in lucrative locations such as London and the south-east, where rental values have increased, will benefit from the move, whilst hard-hit retailers in northern cities and elsewhere will continue to be suffocated by being charged business rates based on pre-recession values.”

The Minister attempted to defend his policy by saying in The Daily Telegraph this week:

“revaluations are revenue-neutral overall...Suspending the revaluation will not earn the Government a penny”.

What he failed to tell business is that by suspending the revaluation now, he need not increase business rates in the south-east and reduce them elsewhere. Like other examples such as the local government settlement, the new homes bonus and public health funding, business rates have been adjusted to serve a political purpose. If next year’s business rates revaluation were to go ahead as planned, new rates would come into force in April 2015, a month away from the general election. Rates would undoubtedly increase in the south-east and decrease significantly across the north and elsewhere to reflect the adjustment in property values. That is not the kind of news that the Government want to present to heartland supporters a month away from elections.

To top it all off, the Government are attempting to defend their policy further by telling journalists that the move to postpone next year’s revaluation will provide stability for businesses, and that they want to avoid the volatility of significant changes to business rates. The Government do not appear to understand the system of transitional relief, which is designed to reduce the impact of any significant changes in the rateable value.