Taxation: Small and Medium-sized Enterprises

Rachael Maskell Excerpts

Tuesday 3rd February 2026 Westminster Hall

[Gregory Stafford]

I entirely agree with my hon. Friend. Like him, I have held roundtables with hospitality businesses, which are saying the same thing as others: they want to see a cut in business rates. The Conservative pledge to entirely scrap business rates for businesses with bills under £110,000 is the right step and would be welcomed by business. I hope the Minister will take up that idea; good ideas should be taken up by the Government, but they seem to have a problem with doing that.

In mentioning business rates, my hon. Friend reminds me that the Labour party manifesto—which I am sure you read, Mr Dowd—pledged that

“Labour will replace the business rates system, so we can raise the same revenue but in a fairer way.”

That clearly has not happened, because businesses are being hammered.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful to the hon. Member for securing this debate. I held a business rates summit in my constituency last week, and what came across is that in York we are seeing an average increase in business rates of 35% compared with the national average of 19.4%, so there is a geographical element to this issue too. Does he agree that we need to revise the whole system, not least because a profit-related tax or a turnover tax could bring in more revenue and cost small businesses far less?

[Gregory Stafford]

I hope the Minister is listening; this is a problem not just for constituencies in the south but across the country. It is not just Conservative or Lib Dem Members raising the issue—clearly Labour Members have the same problem. The Minister should look at all good ideas, but current Treasury orthodoxy is to carry on with what it is doing, and to tax anything that looks like enterprise, business or job creation, which will destroy our economy and harm our high streets.

--- Later in debate ---

[Dan Tomlinson]

I am always happy to receive representations from Members on both sides of the House. I will look out for correspondence from the hon. Member in my very large weekend correspondence box, which I always enjoy on a Sunday evening.

[Rachael Maskell]

It might not have filtered through, but I have written to the Chancellor on behalf of many Labour MPs regarding concerns about small businesses and the fact that many of them will not receive the vital support that they need. They are very fearful of what is going to happen in just eight weeks’ time. Will the Minister look particularly at small businesses, which are not getting the relief and support that they need, and ensure that we are able to mitigate some of that? These businesses form a vital part of the whole economic ecosystem. If they are not growing and are instead shrinking then that will have an impact on our whole economy.

[Dan Tomlinson]

I thank my hon. Friend for her question and the representation that she provides in this place for the small businesses in her constituency—it is a wonderful part of the world. If my team have not been in touch already today, I am hoping that we can find time to meet next week for a conversation. I know that this issue is one that is really important to her. York is a fantastic, vibrant and growing part of our economy. I expect that some of what is happening here is that the businesses in her constituency have seen their values increase by more than others in parts of the country that have not been doing as well. That is why the Government have provided a range of support for businesses. I look forward to talking about that with her in the coming days.

We are fast running out of time, so let me turn to the topic of business rates, which Members have raised. It is worth noting that we are implementing significant reforms to the system. On the point around large online retailers, as far as I am aware, throughout the whole history of the business rates system—including the 14 years under the previous Government—the multiplier, otherwise known as the tax rate, for large online giants was exactly the same as that paid by a typical business on the high street. As part of fulfilling our manifesto commitment to reform the business rates system, we have introduced a really significant wedge into it: the multiplier for large online giants and their warehouses is now 33% higher than for a high street business.

I am aware, and we have had lots of discussions about it in this place, that that reform—the significant underlying reform to the business rates system—has happened at the same time as the revaluations since the pandemic have come into place, and at the same time as the Government have chosen to unwind, slowly and with significant transitional reliefs, the temporary pandemic support. That issue was raised by the hon. Member for Farnham and Bordon.

When the Conservatives stood for re-election, the OBR forecasts did not earmark any funding whatsoever for continued support within the business rates system for our high streets. The Conservatives say now that they would not have stuck with those plans, but had they done so—and they are the plans that they presented to the country before the election—the relief would have ended overnight in 2025.