Burnham's place-based government must save independent hospitality
3 min read
In June, Andy Burnham set out his vision for the country. Bringing Manchesterism to Labour’s 2024 manifesto, he is putting “place before party” – building non-partisan consensus on local issues.
‘Place’ refers to the areas that make a community – where social ties are formed and strengthened.
Andy recognises that high streets should become “the new symbol of Britain’s renaissance”. Independent hospitality businesses are an essential part of that landscape.
They know their customer inside out, setting up shop to offer something new to their neighbours – without a financial model crunching the numbers, identifying your high street as the most lucrative option for the next branch.
Manchester has successfully supported a growing number of local bars and restaurants. The number of food and beverage spaces in the centre has doubled over the past 10 years.
Labour’s £20m Pride in Place strategy forms the building blocks for stronger communities. We’ve bolstered High Street Rental Auctions to give councils more powers to take over empty units. We’ve launched a £30m crackdown on rogue vendors taking advantage of deserted town centres, a dedicated High Street Organised Crime Unit and increased enforcement measures for trading standards.
These measures are welcome and necessary to turn our high streets around. However, as new sites become available, the government needs to support entrepreneurs to take them over and keep their doors open.
A quarter of pubs, bars and restaurants are losing money, according to new survey data. Without intervention, there will be fewer businesses left to revive the high streets at the centre of a place-based politics.
One of the levers available to provide immediate relief to the sector is VAT reform. The UK’s standard 20 per cent rate on food and beverages is the second highest in Europe – double that of Spain, France and Italy. There are growing calls from independent businesses to reduce VAT to 10 per cent.
There is a significant fiscal cost associated with this plan, which HMRC claim would create a deficit of £1bn. However, with 21 hospitality businesses closing each week, the Treasury must also consider the revenue losses happening in real time.
The industry is in a state of paralysis; businesses are unable to hire new staff or invest. Some have taken to limiting their opening hours just to stay afloat. They’re built up over decades but are closing down each week. That’s income tax, corporation tax and key youth employers lost to the Treasury.
Any intervention should also be ringfenced for independent hospitality. Currently, VAT applies equally to all businesses with an annual turnover of over £90,000. The scale of (and taxes levied against) many chains are fundamentally different to those set up by local people.
Beyond VAT, our business rates system disproportionately burdens bricks-and-mortar venues taxed on the rateable property value. Rateable values can be calculated using three different methods which have been known to generate different results. They often jump significantly between the three-year assessment periods and multipliers are set at a cliff-edge, meaning higher rates apply to the whole property once the threshold is reached.
The removal of Small Business Rate Relief and Retail Hospitality and Leisure Relief has left independents facing significantly higher charges than in previous years.
In our manifesto, we promised to replace business rates with something more progressive. We need a fairer system that allows small businesses to settle into our high streets and grows with them. Whether that means partial landlord liability or tapered rates similar to income tax, the case for reform is clear.
A place-based government means economic growth where it matters: in the areas which were decimated during austerity and for the people who care about their community. The unique struggles faced by independent hospitality businesses must be considered under this approach.
Connor Naismith is Labour MP for Crewe and Nantwich
