TIN-EARED HAMMOND AND A BETRAYAL OF THE HIGH STREET
The British high street is in crisis – and the Chancellor needs to act decisively to help. Business rates lie at the heart of the problem. Based on property values and introduced in the last century, today they represent a crippling cost for retailers with a high street presence, already under pressure from the shift to online shopping and the introduction of the National Living Wage.
Where I live in Middlesbrough, the closure of the much-loved Binns store, the local branding for house of Fraser and a name that has been present in the town for nearly a century, stands to leave a gaping hole in the high street.
In small east Cleveland towns like Loftus, too many once- cherished shops stand empty, effectively unlettable. It is a situation that is replicated up and down the country, and business rates are playing a major part in deepening the problem.
As the Daily Mail’s important and timely Save Our high Streets campaign has highlighted, nearly 6,000 shops went bust last year and 50,000 retail jobs were lost. Outlets from small shops to major chains are closing with terrifying regularity.
Nobody is arguing that businesses shouldn’t pay tax. Only that taxes should be fair. And the British Retail Consortium has shown how the retail sector is stumping up more than its share – it pays 10 per cent of all business taxes while accounting for only 5 per cent of the UK economy’s GVA (Greater Value Added), the primary measure used by the Office of National Statistics to gauge economic productivity.
By international standards, UK businesses also pay higher taxes on property than in almost any other country.
The strain this is putting on businesses is immense and unjust. As a Conservative, I understand instinctively that my party should be on the side of enterprise.
We need to do better, and this means the Chancellor has to up his game. Too often since his appointment, he has shown a tin ear to the concerns of precisely the sorts of people the Conservative Party ought to be championing. A tidal wave of avoidable business closures due to an unwillingness to change course on business rates must not be added to that list of failings.
The Government’s position is that it has delivered help to struggling high street businesses in the form of billions of pounds’ worth of business rate relief.
But this is a case of trying to apply a sticking plaster to an ever-widening wound: the British Retail Consortium estimates that retailers will pay an additional £2billion over the next three years compared to the previous three.
The system itself is broken, and no amount of rate relief can get round that. We need to look at a wholly new system, probably based around the value of product sales rather than property, which would level the playing field between businesses which have a physical presence in our high streets and those operating online.
While this new system is designed and consulted on, we should give the high street breathing space by adopting the BRC’s proposal for a two-year freeze in rates increases. As a member of the Treasury select committee, I am anxious that in the meantime we should contribute to that consultation process.
Practical steps like this to back business are the right answer to the high street’s woes. Only if we sort out business rates can we distinguish between those businesses that fail because they no longer meet a market need and potentially good businesses which are being taken to the wall because of the current unfair tax regime.
Take one of my constituents, Shobu Barua, the owner of a popular new Thai restaurant, Coco & Rum, in the seaside resort of Saltburn. he recently took the plunge and moved into a vacant shop in the heart of the town.
Immediately, he was hit by a wickedly high business rates bill, which I am working with him to try to reduce. Shobu warns that he may have to close unless the bill comes down.
What kind of message are we sending to hard-working people like Shobu who want to invest in their business, take on staff and contribute to the economy?
The Chancellor has a duty to listen, and to act. If he gets this right, he will be remembered as a Chancellor who saved the high street. If he fails to act, he risks being remembered as the man who betrayed it.