Business Rates

Shabana Mahmood Excerpts

Wednesday 4th December 2013 Commons Chamber

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

We have had an excellent debate, and many fine speeches have been made in support of our motion calling on the Government to take action to ease the burden of business rates on all sectors.

The Chair of the Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), welcomed the review of appeals announced by the Minister during his speech. That measure has been welcomed by hon. Members from both sides of the House. We of course await further details on the shape of that review.

My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) reminded the House about small business Saturday. That brilliant initiative, which is taking place on Saturday, was first championed by my hon. Friend the Member for Streatham (Mr Umunna). My hon. Friend the Member for Middlesbrough South and East Cleveland also reminded us that businesses need help throughout the year, and that would certainly be delivered by the cut and freeze in business rates that we are calling for today.

My hon. Friend the Member for Wirral South (Alison McGovern) spoke with passion about businesses in her constituency, and I congratulate them on their early small business Saturday. She told the House that small businesses are fighting for their lives. They need action now, which a cut and freeze in business rates would certainly deliver.

My hon. Friend the Member for Bolton South East (Yasmin Qureshi) reminded all hon. Members that the Leader of the Opposition has set the pace in this debate, just as he has on energy prices, leaving the Government to flounder and to make U-turn after U-turn.

My hon. Friend the Member for Sefton Central (Bill Esterson) spoke about the importance of retailers who, as he rightly said, are at the heart of our communities. They in particular are struggling with business rates, and they would certainly welcome our proposals to cut and freeze those rates.

My hon. Friend the Member for Rochdale (Simon Danczuk) has been campaigning on business rates for as long as he has been in the House. I congratulate him on his campaign to raise awareness about their impact. I look forward to visiting Danczuk’s Deli very soon, if he can sort out his own business rates issue.

My hon. Friend the Member for Swansea West (Geraint Davies) spoke eloquently on how Government is about choice. The Government are making the wrong choices for small businesses up and down our country.

My hon. Friend the Member for Stretford and Urmston (Kate Green) welcomed the review of the appeals process. She detailed the many concerns relating to the Valuation Office Agency that are shared by hon. Members on both sides of the House.

It is clear that businesses are facing a cost of doingbusiness crisis, alongside the cost-of-living crisis that is hitting families across Britain. Unless the Government change course tomorrow, businesses will be hit by an average rise in business rates of £430 next April, at a total cost to business of £700 million because of the impact of inflation. Business rates have already gone up by an average of £1,500 under this Government. The reality is that many businesses—in fact, more than one in 10 small ones—are now paying more in business rates than in rent.

Up and down the country, including in my constituency, businesses are being put in an impossible situation: either they pass on the increase in rates to their customers, or they continue to face a squeeze until they can no longer afford to stay in business. The pressures small businesses face are stark. Unless things change, business rates will have risen by an average of nearly £2,000 by the end of this Parliament. There are 40,000 empty shops in the UK—one in seven shops are empty—which is blighting the UK’s high streets and town centres.

The British Retail Consortium has estimated that the business rate increase from April next year will mean an increase of £242 million per annum for retailers. It has also said that the increase is likely to put 19,670 full-time jobs at risk, owing to potential shop closures and reduced investment. Our economy can afford neither change.

Why does this issue matter? Small businesses are the engine of our economy. Of the 4.9 million businesses in the UK, 99% are small or medium-sized enterprises. Between them, they employ nearly half the UK work force. Nearly 90% of the people who go from being unemployed to having a private sector job work for a small business. Small businesses are therefore making a huge contribution to tackling unemployment in this country. Small businesses are the driving force behind jobs and growth. They account for more than half the economy. Most of the new jobs in the next 15 years will be created by businesses that do not yet exist. Growth and small businesses go hand in hand. We cannot deliver excellent public services without the contribution that they make to the economy.

The cost of doing business crisis that has been delivered by the Government cannot go on. Our small businesses deserve better. That is why at our annual conference in September, we announced that the next Labour Government would cut business rates in 2015 and freeze them in 2016. That pledge would give businesses a much-needed boost and would mean an average saving of nearly £450 for more than 1.5 million business premises.

Some Government Members have said that that amounts to small beer. That is doing down the needs of businesses, particularly given that action on business rates is the single biggest thing that has been requested by businesses. I wonder whether the small beer phraseology will be used tomorrow if the Chancellor announces a cap of 2%, as is expected. No doubt, they will trumpet that saving of a couple of hundred pounds, even though our cut would deliver a saving of £450 on average.

Politics is about choices and priorities. It is right that the UK should have a competitive corporation tax rate, but it is also right to take decisions that help small businesses. We will cut business rates on properties with an annual rental value of below £50,000 in 2015 and freeze business rates for those properties in 2016. We will pay for that by reversing the additional cut in the main rate of corporation tax from 21% to 20% in 2015. The main rate of corporation tax is paid by companies with profits of more than £1.5 million—essentially, the larger multinational companies. Companies that have profits of less than £300,000 and that pay the lower rate of corporation tax will not be affected. By contrast, the Government have thus far failed to rise to the scale of the challenge. They have provided temporary relief for the very smallest properties up to a value of £6,000 and partial rate relief for properties up to a value of £12,000. Those measures do not go far enough.

As with energy prices, since our announcement in September, the Government have come under increasing pressure to listen and take action. We heard this morning that they have finally given in and that the Chancellor will announce tomorrow that business rate rises will be limited to 2% in England and Wales next year, rather than rising by 3.2% in line with the retail prices index. That still falls far short of what firms that are suffering from the cost of living crisis have been crying out for. Just as energy bills will still go up under the Government’s plans, business rates will still go up under this proposal. Firms will still see business rates rise by an average of more than £250 in April next year, and that comes on top of the £1,500 by which they have already gone up under this Government.

By contrast, under our plan, 1.5 million start-ups, workshops and shops would benefit from a cut and then a freeze in business rates. If the Government are going to change course, they should do so in a comprehensive and decisive way that would see rate bills cut. They should adopt Labour’s proposal. Nothing less than that comprehensive action will do because our small businesses deserve better than what the Government have delivered. I commend the motion to the House.