Climbdown as Javid promises business rates relief package
SAJID Javid finally bowed to pressure over the business rates shake-up last night and pledged a relief package for firms struggling with the steepest rises. The Communities Secretary invoked the memory of his late father, a small shop owner, who he admitted would have lobbied him forcefully over the controversial revaluation.
He told MPs he was working with Chancellor Philip Hammond on help for independent shops in high-rental areas. The package will be unveiled in the Budget in two weeks’ time.
‘It is clear to me that more needs to be done to level the playing field and make the system fairer,’ he admitted.
But Mr Javid, who has faced fierce criticism over his response to the crisis and for staying on holiday when it erupted, offered no detail on the package.
And, on a day of chaos in Whitehall, Number 10 at first said the relief package would not actually mean more money being ploughed in to help companies, before later retracting the statement.
While it is expected that the package will involve more money, this was not confirmed last night, and Treasury sources have denied it will amount to ‘hundreds of millions’.
Last night, a group of business organisations representing more than 100,000 companies warned the relief package on its own would not be enough for the worst-hit firms. In a letter, ten trade bodies urged MPs to put the Chancellor’s ‘feet to the fire’ and demand a complete overhaul of the business rates system.
Mr Javid’s apparent climbdown follows a campaign by Tory backbenchers – backed by the Daily Mail – for a rethink on the first business rates revaluation in seven years, under which 500,000 companies will pay more. Some will be hit with 300 per cent increases in their bills.
His announcement came shortly after Theresa May said she had ordered him to make sure there was ‘appropriate relief’ for firms facing the largest rises this April.
Ministers had already set aside £3.6billion in transitional relief for the hardest hit, and Labour warned the Government not to simply take money from this pot to help struggling firms.
Business organisations have complained that the revaluation imposes stiff increases on some traditional high street shops and pubs, while out- oftown warehouses run by internet giants escape more lightly.
Ministers insist rates will decrease or stay the same for almost three-quarters of firms, while 600,000 of the smallest businesses will be taken out of the tax altogether.
Flanked by Mr Hammond in the Commons, Mr Javid told MPs: ‘Growing up above the family shop, I saw the impact that an increase in rates can have on small businesses.
‘My dad was never shy about sharing what he thought of outof-town retail parks and how they took customers away from his shop on the high street in Bedminster. If he were alive today, I am sure he would be the first to lobby me about the business rates revaluation.
‘In particular, I can imagine him telling me about how the treatment of large online retailers compares with that of more traditional shops.’
Pledging reform to help the high street against online retailers, Mr Javid suggested the property tax element of business rates could be reformed.
But last night ten trade organisations – including the British Retail Consortium, the Federation of Small Business and the British Chambers of Commerce – wrote to MPs saying the ‘burden of business rates is too high and at a tipping point’.
CBI chief economist Rain Newton-Smith said: ‘The whole system of business rates is not fit for purpose.’
No 10 denied the Government’s approach had been chaotic. A spokesman said: ‘We have set out our plans to provide a transitional relief fund.’
SAJID Javid spoke to the Commons yesterday about the business rates controversy. He was a figure reduced, at least in volume. Usually there are few ministers louder, but yesterday he was low-decibel, speaking in the reasonable tones of someone who has been on an anger-management course. And so polite! The normal Javid has been known to howl down opponents, whack the despatch box as though it were his thigh, and make highly partisan arguments. Yesterday he was the height of courtesy, diplomatic to one and all, admitting interventions, quite the Listerine Dragon.
Although Mr Javid is Local Government Secretary, he was not the only Cabinet minister present for the ill-attended mid-afternoon debate on Local Government finance. Two heavies had come along to keep an eye on him. Poor Mr Javid. Is he no longer trusted by Downing Street?
The Chancellor was sitting beside him. The Chief Secretary to the Treasury, David Gauke, who took a tremendous pasting from Monmouth wine merchant Tom Innes in the Mail on Saturday — Mr Javid had been away on holiday, as is his wont — was also there. Mr Gauke did not look entirely thrilled as he listened to Mr Javid’s opening sallies.
(I know wine merchant Innes, by the way. He sells a rose called Chateau Fany, greatly better than its name might suggest. Tom is the gentlest of men. For him to have lost his rag with a politician is a sign of how the Government’s proposed rate rises for some high street shops have driven small businesses to despair.)
Back to yesterday in the Commons. Mr Javid, little pinkies at an angle, a faintly harassed smile on his face, heard representations on council funding from the likes of Louise Ellman (Lab, Liverpool Riverside), Vernon Coaker (Lab, Gedling), Steve Double (Con, St Austell & Newquay) and James Heappey (Con, Wells). All of these he found fascinating. Such good points. I thank the Hon Member. We understand things can be done better. Etc. etc.
Minister in grovel mode, speaking of pilot schemes and a review. It was noticeable that at certain points both Mr Hammond and Mr Gauke muttered words of advice.
Owen Paterson (N Shropshire), a senior voice of the Tory shires, was pretty rude in a coded way, saying he would vote for the Government’s local-government report but without much enthusiasm. He told young Javid to extract his digit and make sure the review actually did some work and addressed long-standing injustices introduced in the Labour years when Blairites took money from the rural areas and spent more heavily in the inner cities.
When we reached the specific matter of business rates, Mr Javid took out the violin and told us about his childhood living above the family shop in Bedminster, Bristol. Even as a child, he said, he knew it was a worrying sign when you found a bundle of red final payment reminders at the back of the drawer. He said that his late father would have been first in the queue to lobby him about apparently preferential rates being offered to online businesses and retails in out-of-town shopping centres.
CHARLES Walker ( Con, Broxbourne), about whom there is often an air of suppressed but intense violence, intervened to speak of pubs facing a 200 per cent increase in their rates. That would mean fewer bar jobs for youngsters in his constituency. Mr Javid said, without much force, that he knew pubs were important for communities.
He finally got round to saying that he was ‘ working closely with my Right Hon Friend the Chancellor to help business’. For ‘with’ we can perhaps more accurately read ‘under’. There would, said Mr Javid, be an announcement at the Budget in a fortnight’s time.
So it would seem that if there is a rethink on this policy, Mr Hammond will take the credit for it. While Mr Gauke turns to Mr Javid and does that gesture of threatening to poke two stiff fingers in his eyeballs.