Supporting Small Business

Sam Tarry Excerpts

Tuesday 19th October 2021 Commons Chamber

[Sam Tarry (Ilford South) (Lab)]

The impact of the covid pandemic has been excruciating for many people in Ilford South and for the majority of people in this country, not least the many who run businesses and their workers, and this is now coupled with the steep rise in living costs and the supply chain crisis caused, to be honest, by Brexit and the Government’s indecisive action as well as the global pandemic. Too many businesses in this country are now at breaking point, so we are debating today not just business rates but how imperative it is for the Government to give greater support to all sectors of our economy to ensure we emerge stronger, and especially to the small and independent businesses that are the bedrock of economic success in Britain, certainly in my constituency.

We on this side of the House have set out clear plans for how a Labour Government would increase the small business rates relief threshold from £15,000 to £25,000, exactly the kind of welcome tax cut small businesses so desperately need, and a future Labour Government would go further, scrapping business rates and putting in place a fairer taxation system that supports small businesses and boosts local economies such as that of Ilford South. Sadly, however, this Government have demonstrated time and again that “build back better” is little more than hollow rhetoric from a tired Cabinet devoid of ideas that has repeatedly let down so many people through a catalogue of policy failures, whether the derisory 1% pay rise for NHS workers, slashing welfare support for the most vulnerable in our society, or hiking national insurance for everyone. The failure to address business rates is the latest kick in the teeth for millions across this country.

In my constituency there are now 7,975 unemployment benefit claimants—8.4% of the population aged under 64. The number of new claimants has increased by 4,795, more than doubling, since just a year ago in March 2020. People are really suffering, and getting businesses back on their feet is crucial to moving us forward.

This is not just rhetoric; there are cold, hard facts that the Government are increasingly choosing to ignore. The Office for National Statistics published data last week revealing that a staggering 332,000 businesses are at risk of closure in the next three months; in the capital alone, that figure stands at 62,000. In Ilford South, over the past year the number of medium-sized businesses fell by 11%, and although smaller businesses and microbusinesses are doing well they need the right support to become sustainable and provide stable longer-term employment.

Understandably, the business sector has been united in its alarm at the current direction of travel. The national chair of the Federation of Small Businesses yesterday said that the ONS figures demonstrated

“just how desperate the need for business rates reform is.”

To give some sense of just how desperate businesses are, the British Retail Consortium has claimed that four out of five retailers will have to close branches if business rates are not alleviated. That was compounded by the Confederation of British Industry, and almost 50 trade associations representing a quarter of all jobs in Britain, adding that up to 50% of business investment is being harmed by business rates under the present system. Cutting those rates would unlock billions of pounds of investment in our economy and keep millions of people in work. The CBI’s chief economist was also crystal clear:

“Any can-kicking—or further business tax rises—would be seen a lost opportunity by firms of all sizes given the desire from both business and government to really go for growth.”

This was echoed by the director general of the British Chamber of Commerce, who last month stated emphatically that the current arrangements are

“a barrier to investment and cause an unnecessarily large burden to be placed upon businesses regardless of their ability to pay.”

That is a resounding call to action now.

If this Government will not listen to the overwhelming concerns of British businesses, perhaps they will listen to those on their own Benches, including the right hon. Members for Rossendale and Darwen (Jake Berry) and for Tatton (Esther McVey) who, on behalf of the Northern Research Group and Blue Collar Conservativism respectively, have called on the Chancellor to slash business rates, saying that

“failure to act will risk the party losing a string of northern seats at the next election.”

“Build back better” is not really turning out that way for small businesses.

Small independent businesses, which are the backbone of our communities, should not be made to pay the price for the pandemic. They need support, and they need it now. That is why we brought this debate forward today. I will be interested to hear whether the Minister can tell the House how we can expect to recover if we have let thousands of the businesses that prop up our economy go to the wall, as they have in Ilford South, with that 11% drop.

Just this week, the manager of Ilford business improvement district told me that covid has taken

“a catastrophic toll on many of our stakeholder businesses,”

adding that the majority are

“working their way back from the cliff edge of permanent closure in the midst of supply shortages, staff shortages, rising staff and operational costs”.

That comes on top of the withdrawal of support measures such as the furlough scheme, business rates relief and reductions in VAT.

One hotelier I spoke to expressed concerns about the impact of rising energy costs, the shortage of staff since Brexit and, again, supply chain shortages, which are leading to a never-ending situation of one problem after another. That hotelier, Ikram, and many others like him in Ilford South have requested breathing space in the form of a reduction in business rates, or at least a one- year exemption.

The Government must urgently initiate a full and fundamental review of business rates and look to permanently maintain the reduced 12.5% VAT rate for sectors such as the hospitality industry, as well as considering extending that offer to retail businesses. They must also look to offer further business rates relief and consider a similar phased approach in the next financial year, with a 60% threshold to support businesses.

The Government talk a lot about levelling up; they also need to level the playing field. Amazon and the like have made huge profits during the covid crisis while paying next to nothing in taxes as a proportion of their profit, often undercutting local high street shops and leaving so many high streets with boarded-up shops. We need to shift the burden of business taxation away from the high street and towards global online tech giants by adopting a higher global minimum rate of corporation tax to stop major tax dodging.

The pandemic has shown that taking an economic approach in which we are not afraid to intervene when necessary to protect our workers’ jobs and local businesses is surely better than taking one that sacrifices everything in the name of the market, with public sector commercialisation, communities destroyed by disappearing jobs, national identities distorted and, of course, environmental catastrophe. Pay increases and tax avoidance at the top warp any sense of social inclusion, and progressive and redistributive taxes seem to fall from the political agenda as so many workers face the perpetual slog of longer hours in ever more insecure work as white-collar jobs are outsourced and blue-collar jobs go abroad.

The power and unaccountability of global tech giants is now impacting our very democracy. We must use this moment to lay a different pathway for our economy, because there most definitely is an alternative.