Labour urges Sunak to help firms with rates overhaul

RISHI SUNAK must overhaul business rates levied on high-street firms to tackle the cost-of-living crisis, according to the shadow business secretary.

Jonathan Reynolds warned that workers’ pay was likely to be hit as a result of the joint pressure businesses were facing from the levy and this week’s National Insurance rise.

The Labour frontbencher told The Sunday Telegraph the current system of business rates was “acting as a tax on growth”, with smaller firms facing sharp rises in their bills if they expanded.

Under the current system of small business rate relief, the bill for a typical hairdresser that expands from one to two sites would increase from zero to £5,000, while an average shop would go from paying nothing now to £10,000, according to Labour analysis.

Small business rate relief allows firms with one property with a rateable value of £12,000 or less to avoid paying the levy altogether. Any business that only uses one property is eligible for the relief if that property has a rateable value of less than £15,000.

Mr Sunak used October’s budget to announce a temporary 50 per cent cut in the rates paid by pubs, music venues, cinemas, restaurants, hotels, theatres and gyms. He also scrapped a planned increase in rates for all firms.

But Mr Reynolds said the Chancellor should have provided more help for firms in last month’s Spring Statement.

He said: “The more pressure that a business is undergoing in terms of its costs, the less they’ve got to put into

‘All the pressure added to businesses will feed into further cost-of-living pressures’

wages. All the pressure added to businesses is going to make the overall position on wages harder and that will feed into further cost-of-living pressures.

“I didn’t get a sense from the Chancellor at all that he understood that.”

Mr Reynolds, the MP for Stalybridge and Hyde in east Manchester, added: “I’ve had cases where successful independent businesses have expanded to a second premise in the nextdoor town and had to pull away because overheads are just so high.”