Business Rates Relief: High-street Businesses

Sarah Dyke Excerpts

Wednesday 4th June 2025 Westminster Hall

[Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)]

I beg to move,

That this House has considered the impact of changes to business rates relief on high street businesses.

What a pleasure it is to serve under your chairmanship, Ms Jardine. I am deeply privileged to have secured this debate.

When we think about the communities that we represent, we so often think about the centre of those communities—the town, village or city centres that truly define the communities that are our constituencies. That is certainly no different in my constituency. Even in some of the very small villages such as Salt or Great Chatwell, the main centre is sometimes the pub, which is the hive of community interest—I would recommend any of the pubs in my constituency to the Minister, if ever he wanted to visit them. They bring the community together. The larger towns and villages, such as Stone, Great Wyrley, Cheslyn Hay or Penkridge, have thriving high streets and centres that are vital for the people who live there. Centres give towns density and, critically, create employment for so many people in my constituency and all our constituencies.

The Government’s changes to business rates relief have already had a significant impact on so many businesses, not just in my constituency but right across Staffordshire, the west midlands and England itself. The change in relief, which was 75% but has been reduced to 40%, has had a material impact on the way that people run their businesses.

We are all aware that the initial rates relief was introduced at the height of the pandemic to help businesses. However, businesses, especially on our high streets, have taken time to recover from the pandemic, which saw a shift in the way that many people buy their goods, in people’s shopping habits and in the way that we use our town, city and village centres. The rates relief was vital to so many businesses, shops, pubs, hotels and people in adjusting to the new reality that they found themselves living in.

In my constituency, the hospitality industry contributes £70 million in gross value added and employs just short of 3,000 people. If it was a single employer, we would be talking about it all the time, but of course it is not one employer—it is many small family businesses. They may be individuals employing two or three people. They may be limited companies, although often they will be sole traders or partnerships. They are the backbone of England and of our economy, and they are feeling the pain of the changes that the Government introduced.

Many people in my constituency and across the country listened when Labour said, in opposition, that relief would be coming and that there would be changes, but they were not expecting those changes to cost them more money. Let us look at the analysis of the impact on a typical shop in terms of business rates. A typical shop has seen its bill climb from £3,589 to £8,613. For a typical restaurant, the bill has climbed from an average of £5,051 to £12,122. I appreciate that, in the Treasury’s view, those are not even rounding errors—they are not something that it should be concerned about or even think about—but for a business or an individual trying to work out how they will pay their employees’ wages, order in more stock or pay themselves a wage that month, that really matters. It impacts those who are in business and dampens the aspirations of those who wish to start one.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

April’s retail, hospitality and leisure relief reduction left Samantha, a shopkeeper from Langport in my constituency, with a £2,000 business rates bill, on top of a £5,000 bill, despite the fact that she was potentially eligible for exemption. She consequently faces losing her shop. When I spoke to her recently, she told me that the system has ended her livelihood. Does the right hon. Gentleman agree that we need to reform rates and exemptions to boost local high streets’ viability?

[Sir Gavin Williamson]

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.

--- Later in debate ---

[Steve Darling]

My hon. Friend makes a very good point. I congratulate him on coming from the glorious county of Somerset, where our Liberal Democrat colleagues have had to pick up the pieces after the disastrous Conservative-run council effectively ran it into the ground for many years.

[Sarah Dyke]

As my hon. Friend alluded to, the previous Conservative administration in Somerset was a disaster; indeed, it oversaw an irresponsible record six-year freeze on council tax. Does he agree that the Liberal Democrats in Somerset are now delivering a successfully run administration after a very difficult run of Conservative irresponsibility?

[Steve Darling]

My hon. Friend makes some very powerful points. In my experience, the Conservatives in county councils are more interested in painting the grass greener than in actually getting on and sorting out people’s services.

Back to the main point, we need to be reimagining our town centres. In my constituency of Torbay, a Merlin cinema has appeared where there used to be a department store, and there is an NHS diagnostic offer in our town centre. That reimagining of what the town centre should be about is essential. We have also seen a really popular new pool hall appear in the last few weeks. That is what we need to do to our town centres. Will the Minister do the right thing and undertake a root-and-branch reform of the system to drive the positive change that we want to see?

A couple of businesses have told me about their challenges. A photographer says that he sees no benefit in the doubling of the rates and has had to let a member of staff go due to the national insurance hike. Another business—a gaming café particularly for the LGBTQ community—told me that it is really challenged and is on a knife edge due to the business rates increase; it remains extremely worried.

The Liberal Democrats would like to see a commercial land value levy, which would ensure that we look at the value of the land rather than what is developed on the site. That would lead to a major rebalancing across the United Kingdom and significantly reduce land values in some of our more deprived communities, such as mine in Torbay, driving the productivity and regeneration in our town centres that we desperately need. The only saviour for the Labour Government would be growth in the economy, because that would get us out of the rut that we are in.

I would welcome any assurances the Minister can give us that we will have a root-and-branch reform of the system, rather than tinkering. An element of the Government’s scheme is a cap of £100,000 on what chains pay, and I fear that the books will be balanced on the backs of the poorer independents in our town centres.