Contribution
My hon. Friend is absolutely right that this broken business rates system is unfair in many ways and it is the big giants, online or otherwise, that are getting an easier ride.
The Bill fails to address many other problems with business rates. For example, it does nothing to support businesses outside the three sectors of retail, hospitality and leisure, meaning it excludes key sectors such as manufacturing that are particularly negatively affected by the current system. It does not address the £51,000 cliff edge. Properties with a value over that threshold are not eligible for the small business multiplier, even though they are small businesses, and with rates relief going down, business rates bills for small businesses will go up. From next April, business rates relief for retail, hospitality and leisure will be cut from 75% to 40% and this Bill does nothing to avert that blow.
The Minister said he wants to rebalance business rates. I welcome that direction of travel, if it turns out to be true, but in the absence of an impact assessment, I am particularly worried about unintended consequences. I say this in the spirit of constructive opposition: it appears as though the Government are moving from a system of temporary relief to a lower multiplier. At the moment, a small business enjoys 75% business rates relief, but a very large chain has its relief capped at £100,000. If I have understood it correctly, independent shops will see their relief drop from 75% to 40%, while big chains such as pubcos and supermarkets may see their relief uncapped, which could give them a tax reduction of tens of millions of pounds. I would be grateful if the Minister wrote to me to share some modelling to reassure me that that is not going to happen and that we will not see independent businesses inadvertently subsidising big chain stores and multinationals.
The impact of the Government’s changes to business rates will have a massive effect on small businesses in my constituency. The oldest pub in Britain—or so they claim—Ye Olde Fighting Cocks, will see a whopping increase of £30,000 per year in its business rates alone. The Save St Albans Pubs campaign says that even an average pub in St Albans, with a rateable value of £100,000, will face an additional £19,000 in its business rates bill from April. If we assume that an average pub makes 30p profit per pint, each of those pubs would need to sell an extra 60,000 pints a year, or almost 1,200 pints extra a week—and that is before factoring in the increase in national insurance contributions.
Other low-margin, large-premises businesses, such as children’s soft play activity centres, will also lose out under these changes. DJ’s Play runs much-loved indoor play centres across Hertfordshire, which exist in large warehouse-style premises. The buildings are large, but the profit margins are not. DJ’s Play and many others like it provide a valuable and enriching educational experience for children, but they too will struggle to keep their heads above water.
The Liberal Democrats are also opposed to the Bill because it would levy a tax on education by removing the business rates exemption for private schools that are charities. We are opposed in principle to the taxation of education, because it is a public good. We believe that parents must be given choice when it comes to their children’s education. Many families feel that, whether due to bullying, SEND provision, mental health issues or other factors, the state system cannot meet their child’s needs.