High Streets: Autumn Budget 2024

Rachel Gilmour Excerpts

Thursday 23rd January 2025 Commons Chamber

[Victoria Collins]

Absolutely; that is very much in line with the feedback I had from businesses. Indeed, it is with much disappoint that I share the impact of the autumn Budget on my local businesses. It is no secret that the Conservatives left our economy in a mess, and many of our businesses are still reeling from that. That is exactly why it is important for the Government to get this right.

Many of the proposals in the autumn Budget will not lead to growth on our high streets. I would like to have faith that Labour intended to do the right thing and that these are unintended consequences. I hope that the Government heed some of the warnings and take action to mitigate the impact and change course. In the words of one director in my constituency,

“it is a disaster…all planned investment has been cancelled, expansion plans cancelled. Prices will go up on 1st April by at least 10%. And we’re looking at ways to reduce staff count.”

[Rachel Gilmour (Tiverton and Minehead) (LD)]

Does my hon. Friend agree that the high streets of Tiverton and Minehead, as well as those of every other constituency in the country, will be hurt by this Government’s decision to lower the amount of relief offered to retail, hospitality and leisure businesses from 75% to 40%? Does she also agree that they should instead be looking to replace business rates with an entirely new commercial landowner levy, rather than tinkering around the edges and making an already bad system worse?

--- Later in debate ---

[Emma Reynolds]

The hon. Member pre-empts my next sentence, so I thank him for that. We have committed to reforming business rates, because we need a fairer system, fit for the 21st century. That important part of our reforms and plans will, I hope, benefit the businesses that the hon. Member for Harpenden and Berkhamsted spoke about.

[Rachel Gilmour]

In recent weeks, I have been working with an excellent organisation called Family Business UK. Before Christmas, it did some research on the impact of agricultural property relief and business property relief on family businesses, and it is about to do another round of research. Do the Minister’s officials want to avail themselves of the results of that research, so that they have better context?

[Emma Reynolds]

Ministers are always happy to hear from hon. Members. I suggest that the hon. Member writes to the Exchequer Secretary to the Treasury with that feedback. I should note that this is not my policy area; the Exchequer Secretary is visiting small businesses as we speak, so I am standing in for him, but I am sure that he will welcome that feedback from the hon. Lady.

I have listened carefully to the hon. Member for Harpenden and Berkhamsted and tried to note down all her questions, but if I do not get to all of them, I am happy to write to her after the debate; I hope that is helpful. She asked whether there were any mitigations, and I think she asked us to cancel some of the plans in the Budget. I am afraid that I cannot give her that assurance. The changes to national insurance will come into force on 1 April. As I said, we had to make difficult decisions, and that was one of the most difficult.

The hon. Member asked whether we were meeting small businesses. The Exchequer Secretary is meeting a range of small businesses, as are Treasury officials, before formulating our plan to reform business rates, which I will talk about briefly. She asked questions about inheritance tax; I will write to her on that, to ensure she gets the right answer. She also asked about local government. I was not entirely sure about the question, so perhaps we can clarify that, and I will write to her on that as well.

Turning in more detail to the hon. Member’s points about national insurance, one of the toughest decisions we took in the Budget was to raise the rate of employer national insurance contributions from 13.8% to 15%, but we recognised the need to protect the smallest businesses. The Federation of Small Businesses asked us specifically about that, which is why we have more than doubled the employment allowance to £10,500. That means that more than half of businesses with national insurance contribution liabilities will either see no change at all or be taken out of paying national insurance contributions. As I said, that was a key demand from small businesses.

To support businesses, including those on the high street, the Budget honoured the manifesto commitment to not raise corporation tax; it set out the tax road map for this Parliament, in which we will not change corporation tax, which means we have the lowest rate in the G7. All that will support businesses, from restaurants to retailers, to invest. On the high street, we announced at the Budget major support for pubs; we are cutting alcohol duty on qualifying draught products, which make up approximately 60% of the alcoholic drinks sold in pubs. That represents an overall reduction in duty bills of over £85 million a year, and is equivalent to a 1p duty reduction on a typical pint.

The hon. Member raised concerns about the business rate system; let me address those in more detail. We very much believe that for too long, the business rates system has placed an unfair burden on high-street retail, hospitality and leisure businesses, as she mentioned. To support those sectors, we intend to introduce permanently lower tax rates for retail, hospitality and leisure properties with rateable values of less than £500,000 from 2026-27. That will allow us to provide stability after the ongoing uncertainty of the one-year retail and hospitality leisure relief, which has been extended year by year since the pandemic. That tax cut will be sustainably funded not by increases in taxes on working people, which we promised not to introduce, but through a higher tax rate on the most valuable 1% of business properties in the country. That will capture the majority of large distribution warehouses, including those used by online giants, as well as other out-of-town businesses that draw footfall away from high streets.

Those business rates reforms provide the certainty that businesses need to invest while protecting the public finances. The Government have already introduced to the House primary legislation that will provide the underpinning of those reforms, and the exact rates for the new multipliers will be confirmed later this year in the autumn Budget.