Tories planned to save shops from rates rise
TORY ministers were so concerned about the impact of business rates on the high street that they were planning extra financial support before the election, The Sunday Telegraph has learnt.
The Department for Communities and Local Government is understood to have grown worried that retailers were being “completely clobbered” under the business rates formula and worked with the Treasury to better protect the sector. Plans were developed throughout 2014 and a review circulated before the 2015 election, but a Tory victory and a reshuffle meant the changes were never adopted and more modest reforms adopted instead.
The disclosure that recent senior Conservative politicians were ready to act to protect the high street will fuel
calls for Theresa May’s government to help those worst affected by an forthcoming rates change.
For the first time in seven years business rates are being updated in line with property prices this April, leaving some firms facing increases of up to 400 per cent.
This weekend, the heads of two of Britain’s biggest supermarkets called the business rates system “medieval”.
Andy Higginson, chairman of Morrisons, told this newspaper the system was “past its sell-by date” while Mike Coupe, chief executive at Sainsbury’s, said it was “flawed”.
Shopkeepers, business owners and residents in Monmouth, South Wales, held a protest in the main street against the planned increases, collecting more than 1,000 signatures.
Philip Hammond, the Chancellor, will hold talks about the rates with Tory MPs tomorrow.
Government figures insisted last night that “no U-turn” was being planned. They stressed that most firms would not be affected – rates will fall for 920,000 businesses, remain the same for 420,000 and rise for 510,000.
The Telegraph has learnt that senior government figures were preparing protection for shops before the 2015 election. A former Tory minister said: “Retail gets clobbered. It’s not beyond the wit of man to be able to put together a formula that takes that into consideration. Frankly [we] were working on that prior to the general election.”
Other sources familiar with the plans also confirmed the drive.
It was hoped that a deal could be produced that would effectively lower the rate that shops paid. The Department for Communities and Local Government and the Treasury are understood to have worked on this in 2014.
A consultation on reforming business rates was launched before the May 2015 election.
In March 2016, it was announced that the threshold for small business rate relief would rise from £6,000 to a maximum threshold of £15,000.
However, bolder reforms to support retail that had been hoped for were not included, according to those who worked on the initial plans. It is not known why this was the case, though a change in personnel at the relevant departments is believed to have played a role.
In a separate development, small business owners in the scenic Cotswold town of Stow-on-the-Wold warned yesterday its independents will “disappear” because of the new rates.
Seven shops on Digbeth Street in the town centre are paying more than double in business rates, per metre squared, than the local Tesco Superstore.
While the Tesco store will pay £246,685 for the year in April, its rate per square metre is just £220.
Richard Bufton, who owns Hamptons Delicatessen, which is valued at £500 per square metre, said: “The independents will all disappear and it will become one of those faceless places full of Costas, Starbucks and charity shops because those are the ones that can afford to come here.”