Is the Government supporting small businesses properly?

On Monday of the previous week the Government held the second reading of the Non-Domestic Rating Bill and most of the MPs who took part in the debate were Conservatives. One of them was Sally-Ann Hart from Hastings and Rye. She ended up stating that “Overall, the Bill is welcome as a positive step in the right direction. We must do all we can to protect our retail sector. The Conservative party is always the party for small businesses. I would like a business rates system that flexes with profit rather than one based on the value of a property—that would be fairer.” Her open words had a focus on her region and indeed they were very credible words.

I would like to focus my remarks on our retail sector. The last few years have seen an acceleration in shop closures and job losses. The Centre for Retail Research found that more than 17,000 shops closed in 2022, equivalent to 47 a day and the highest total in five years. More than 5% of retail staff lost their jobs last year through insolvencies and store closures arising from rationalisation.

Retail, especially independent shops, is hugely important in beautiful Hastings and Rye, where over 30% of the local economy depends on the hospitality and tourism sectors. I know many local outlets have ceased to trade, and the town centre in Hastings is punctuated with empty or shuttered shop windows. Even key areas such as Robertson Street, which has seen something of a revival since the pandemic, now has prominent outlets closed and empty. Sadly, some businesses we lost were Hastings institutions, such as the fishmongers in Queens Arcade, which had been there for more than half a century. Others include the large Argos near Breeds Place, which remained empty for several years prior to the pandemic, and big names such as Game, in Priory Meadow. Several cafés across the town have also closed.

The next person who spoke was a Liberal Democrat Spokesperson Helen Morgan who was the only person from her party who took part. At the end of her contribution she stated

The current business rates system is broken. The Federation of Small Businesses said:

“these changes do not amount to the fundamental overhaul the system needs, to reduce the chilling impact of a regressive tax that you pay before even earning a penny in turnover, let alone profit.”

Fundamentally, Liberal Democrats disagree with business rates. They are harmful to high streets and our wider economy, and the current framework is a huge burden for small businesses. They tax productive business investment in structures and equipment, rather than taxing profits and land value.

The Liberal Democrats would abolish the broken business rates system and replace it with a commercial landowner levy. That levy would be paid initially by the landlords of commercial properties, not the businesses occupying them, and it would feature annual revaluations, which Netherlands has proved are possible administratively. It would tax only the land value of commercial sites, not productive investment. Removing buildings, utilities and other physical capital from taxation would boost business investment, in turn increasing productivity and wages.

Liberal Democrat plans would improve our high streets by boosting investment and helping shops that struggle. None of that will be achieved by today’s Bill.

After the contribution from Helen Morgan, the Conservative MP Peter Aldous spoke and at the end of his words Helen asked

The hon. Gentleman is making an excellent speech. On his point about advice, financial controllers are inundated daily by people cold calling them and offering to challenge their rates bills. They have no idea who they are, yet they take a cut of any saving that might be made. This indicates two things to me: first, that the system is not fit for purpose; and secondly, that the rating values are inadequate in the first place. Does he agree with me on those points?

And interesting Peter responded initially with the comment

I agree with the hon. Lady. This is a specialist area of valuation. When I was practising as a chartered surveyor, I quite often got called in because the client, the business owner, had gone down the line of paying money upfront to someone who had sent them a circular—they may have paid them £1,000 or £2,000—and that person had suddenly disappeared. I often got called in to try to sort out that type of situation.

The next person who spoke was a Labour Shadow Minister MP and it is possible to obtain the whole of the debate from here. It will be interesting to obtain responses from Parliament on this proposed Bill and it would clearly be very helpful for the experience of the Federation of Small Businesses to be listened to by the Government and MPs such as Sally-Ann Hart.

About ianchisnall

I am passionate about the need for public policies to be made accessible to everyone, especially those who want to improve the wellbeing of their communities. I am particularly interested in issues related to crime and policing as well as health services and strategic planning.
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