Cutting business rates is needed to save our high streets
As Conservative MPs, there are certain issues we constantly hear on the doorstep. The future of bricks-and-mortar retail is one of them.
Everybody has an opinion about what’s happening in their local area, from the declining high street to the out-of-town retail park vacated by many well-known shops. People recognise that retail supports much of what they love about the places they live – cafes, restaurants, and other forms of hospitality. Everyone wants thriving town centres and exciting high streets. They also know that the tax system is making it difficult to open a shop or start a high street business where they live. That’s especially the case in the North and Midlands, the places where the Conservatives won seats at the last election.
The business rates system is no longer fit for purpose
That’s one of the reasons why so many Tory MPs have been making a lot of noise in recent weeks about the issue of cutting business rates, effectively a “shops tax” on the British high street. A survey from the British Retail Consortium last month found that 4 in 5 retailers would likely have to close more shops unless their business rates bill was reduced. Unsurprisingly, new survey data out this month showed that three quarters of Red Wall voters also want to see business rates cut to save local shops.
We agree. The business rates system is no longer fit for purpose. Since 1990 when they were introduced, business rates receipts have shot up from £8.8bn to £27.3bn, an increase of 210 per cent compared with a 75 per cent increase in inflation. That’s not sustainable. New data suggests the actual tax rate will soon hit 51.5 per cent. It’s unaffordable and it isn’t fair.
Last week the Treasury suggested that change was in the pipeline, though not by the Budget this week. Although the delay is disappointing, reform would be extremely welcome, especially for the many Conservative MPs who have been championing this issue for years. But reform must benefit the places we represent.
Similarly, the Treasury’s suggestion that a so-called Amazon Tax could be introduced on online retail is welcome to many of our colleagues, but only if that new tax is offset by a reduction in rates. There is no point introducing yet another new tax on bricks-and-mortar retailers if we don’t at the same time free up their ability to invest in physical shops in local areas. The rate of empty shops is now twice as high in the North East than it is in the London – 20 per cent to 10 per cent - and we need to urgently rebalance, providing more opportunity to invest for companies across the UK.
Our high streets can’t afford a tax as usual approach. We’re sure the Chancellor recognises business rates were never meant to increase by this much. He won’t let the system sleepwalk into loading even greater costs onto our constituents at a time when they are already worried about the cost of living.
We therefore back calls to reduce business rates significantly on bricks-and-mortar retailers, bringing them closer to the original rate of around 35 per cent of market rent rather than over 50 per cent where they stand today. And introducing a new online sales tax to level the playing field between bricks-and-mortar and online.
We want to drive home the point that a reduction in rates is urgently necessary. Reform of the system has been included in every single Conservative manifesto since 2010. We cannot let down our voters.
As chair of the Northern Research Group, Jake Berry wrote in his call for the government to reduce business rates last week, “shops in constituencies across the country need levelling up, not boarding up.”
If the Conservative Party is to win more seats next time around then we will need to deliver on our manifesto promises, transforming communities for the better and returning pride to local places. It’s time to cut business rates, for the sake of all bricks-and-mortar retail and the communities which depend on it.
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