Small Business: Rates

Business, Energy and Industrial Strategy – in the House of Commons at 12:00 am on 16th October 2018.

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Photo of Edward Davey Edward Davey Liberal Democrat Spokesperson (Home Affairs) 12:00 am, 16th October 2018

What recent assessment he has made of the effect of business rates on the viability of small businesses.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The small business sector is thriving. We have 5.7 million small and medium-sized enterprises, and we are ranked in the top 10 in the world for ease of doing business. As the right hon. Gentleman knows, the Government have taken significant action on business rates in each of the last three Budgets, including £9 billion of support announced in 2016, making sure that nearly two thirds of a million small businesses pay no rates at all.

Photo of Edward Davey Edward Davey Liberal Democrat Spokesperson (Home Affairs)

Small retailers across Kingston and Surbiton have been hit by a combination of high rises in business rates and unfair competition from online retailers, who too often escape taxation. Will the Secretary of State talk to the Chancellor before the Budget, and to European colleagues before Brexit, to agree a new tax for internet retail, using the proceeds to slash business rates and save our high streets before it is too late?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

When the right hon. Gentleman was a Minister in the Business Department, he took part in a decision to defer revaluation, for reasons that he understands. I accept the point—it has been made strongly by the Retail Sector Council—that reflecting the contribution that high street businesses make to their communities is a significant need. As business rates are reviewed, that is one of the council’s recommendations that we will take forward.

Photo of Derek Thomas Derek Thomas Conservative, St Ives

The Secretary of State will know that I have been concerned about this issue for some time. I met a business on Saturday whose business rates, which are currently about £300 a month, will go up to over £1,000 a month next April. What can I take to that business to assure them that we are on its side?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend can reflect on the fact that the Government have taken action to permanently double business rates relief from 50% to 100% and to raise the threshold from £6,000 to £12,000. That means that a third of all properties, including small shops, now pay no business rates at all.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

With Small Business Saturday coming up on 1 December, I am sure everybody in this House will be celebrating their local small businesses. I will be launching my Small Business Saturday competition soon. Is it not a good opportunity to use the Budget to show that we are behind small businesses by doing something about business rates, which are hitting small businesses on the high street?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I join the hon. Gentleman in drawing attention to Small Business Saturday, which is coming up. I am sure colleagues right across the House will want to enthusiastically promote businesses in their constituencies. I hope that, being a fair-minded Member, he will reflect on the major changes that have been made. As I said, the Retail Sector Council has made some suggestions for the future, and I am sure the Chancellor will be listening.

Photo of Patrick McLoughlin Patrick McLoughlin Chair, European Statutory Instruments Committee

Does the Secretary of State believe there is a level playing field between high street providers and internet providers?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I think it is well known, and my right hon. Friend is aware, that we have been one of the leading forces in the world in ensuring that the rules should be changed, so that companies that currently pay little tax because of international agreements make a fair contribution. There is more to be done, but my right hon. Friend served in Cabinets in which this was put at the top of the agenda, and some progress has been made.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I warmly welcome the Under-Secretary of State, Kelly Tolhurst, to her new role. I am sure she will do fantastically.

All the major business representatives, from the CBI to the chambers of commerce and the Federation of Small Businesses, have highlighted the need for business rates reform and temporary relief. The CBI says:

“The…system is stifling growth and investment”,

and the FSB says it creates a significant barrier to small business growth. Can the Secretary of State confirm today whether there will be any action on this issue in the forthcoming Budget?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Lady knows that decisions on the Budget are for the Chancellor, but one of the measures we have taken, which I hope she would acknowledge, is a very substantial reduction in the burden of business rates on small businesses. That shows that the Government are alive to the importance of business rates for small businesses. We of course listen constantly to the organisations she mentions, but also to the Retail Sector Council.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee

I suddenly have a sense of déjà vu. At the last autumn statement, business groups warned of the devastating effect of business rates. In return, we saw only minor tinkering. Since then we have had a raft of store closures, with more than 100,000 retail jobs lost in the past three years. Many businesses cite business rates as a root cause. The Secretary of State has reportedly said that adjusting business rates would be one way to recognise the value of our high streets, yet the Chancellor said in July that there were no plans for reform. Just what is going on? Will there be action, or should we expect another year of meaningless tinkering from the Chancellor?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Lady knows, and retailers will tell her if she listens to them, that the change in the pattern of retail trade, as more of us are buying more goods online, is going to make a change to the high street. Everyone accepts that. Do business rates make a contribution, and can they help? Yes, of course. That has been behind the changes that have been made. I have said before, and I said it today, that it is reasonable for the taxation system to reflect the contribution that high street businesses make to communities.