We’re banking on you, Mr Hammond, to lift the mood of the nation
With business rates set to rise even further, the Chancellor needs to find a way to encourage more economic growth
here than in almost any other country, and yet it is still the case that millions of people need at least two or more jobs to pay the bills. A huge proportion of working families and millions of selfemployed rely on additional state benefits to get through the month.
It is Philip Hammond’s misfortune to be Chancellor when it all begins to unravel. Without a major surge in economic growth there is no more money for the National Health Service; there is no more money for schools; there is no money for long-term care for the elderly, for nursery places for the young, nor for the defence of the realm. Choose your own favourite; there is no money for it. Complain all you like, there still will not be any money for it unless he decides to borrow even more.
In a situation like this you would hope that a Chancellor would adopt the Google maxim or a version of the doctors’ Hippocratic Oath, to do no harm. But instead the Government is poised to unleash an increase in business rates. For many the increase will be so severe that it will put them out of business.
Even with a blank sheet of paper, a room full of the finest brains and an unlimited supply of cooling ice-packs it would be hard to invent a worse tax than business rates. It is based on how much in theory the business could be charged as rent but it takes absolutely no account of the profitability of the tenant, nor the ability to pay. You would expect the Government to want small businesses to plough back their available cash into further expansion, to employ more people and go for growth. Business rates encourage the opposite. The more they have to pay in business rates, the less cash companies have to grow, and the more likely they are to give up the fight.
The Chancellor will no doubt offer some sop such as phasing in the increase or making a few more small firms exempt. But that is just a smokescreen to get him through the day.
A bold Chancellor would recognise that business rates are the most obvious example of why the British tax system needs a complete rethink. It was designed for a world that existed 50 or more years ago. It has to change to reflect the revolution in the world of business and the way in which we as individuals live, work, spend and are employed.
Is Hammond the man to seize the moment? Well, that really would be a Budget surprise.